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EXHIBIT 10.17
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Employment Agreement") is made as of the 1st
day of January, 1998, between RES-CARE, INC., a Kentucky corporation (the
"Company"), and XXXXX X. XXXXXXXXX, XX. (the "Employee").
RECITALS:
WHEREAS, the Company and the Employee entered into an Employment Agreement
dated as of January 1, 1997 (the "Original Agreement"), providing for an initial
term of one (1) year;
WHEREAS, the Original Agreement provided for automatic extensions of
successive periods of one (1) year each on the same terms and conditions,
subject to either party's written notice of its intention not to renew the same;
and
WHEREAS, the Company and Employee desire that Employee's employment with
the Company continue and they further desire to supersede the Original
Agreement, effective January 1, 1998, by executing this Employment Agreement and
agreeing to be bound by the terms thereof.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
1. EMPLOYMENT AND TERM. The Company hereby employs the Employee, and the
Employee accepts such employment, upon the terms and conditions herein set forth
for an initial term commencing on January 1, 1998, and ending on December 31,
2000, subject to earlier termination only in accordance with the express
provisions of this Employment Agreement ("Initial Term"). This Employment
Agreement shall be automatically extended on a year-to-year basis (January 1
through December 31 of each successive year), unless sooner terminated in
accordance with the express provisions of this Employment Agreement ("Additional
Terms"), upon the expiration of the Initial Term or any Additional Term, unless
prior to the commencement of a sixty (60) day period expiring at the end of such
Initial Term or any Additional Term, the Company or the Employee shall have
given written notice to the other stating that the term of this Employment
Agreement shall not be extended. For purposes of this Employment Agreement, the
term "Term" shall mean the Initial Term plus all Additional Terms.
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2. DUTIES.
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(1) EMPLOYMENT AS EXECUTIVE VICE PRESIDENT OF OPERATIONS FOR
THE DIVISION OF YOUTH SERVICES. During the Term, the Employee shall
serve as the Executive Vice President of Operations for the Division
for Youth Services of the Company. The Employee shall, subject to the
supervision and control of the President and Chief Executive Officer of
the Company (the "President") and the Board of Directors of the Company
(the "Board"), perform such duties and exercise such powers over and
with regard to the business of the Company's Division for Youth
Services as are presently being performed and exercised by him and such
additional duties which are similar in nature and responsibility to
those presently being performed by the Employee as may be prescribed
from time to time by the President or the Board, including, without
limitation, serving as an officer or director of one or more
subsidiaries or affiliates of the Company, if elected to such
positions, without any further salary or other compensation.
(2) TIME AND EFFORT. The Employee shall devote all of his
business time, energies and talents exclusively to the business of the
Company and to no other business during the Term of this Employment
Agreement; provided, however, that subject to the restrictions in
Section 7 hereof, the Employee may (i) invest his personal assets in
such form or manner as will not require his services in the operation
of the affairs of the entities in which such investments are made and
(ii) subject to satisfactory performance of the duties described in
Section 2(a) hereof, devote such time as may be reasonably required for
him to continue to maintain his current level of participation in
various civic and charitable activities.
3. COMPENSATION.
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(1) BASE SALARY. The Company shall pay to the Employee during
the first year of the Term a fixed, annual salary (the "Initial Base
Salary") of $127,500. Provided that this Employment Agreement or
Employee's employment hereunder shall not have been terminated for any
reason, commencing on January 1, 1999, the Company shall pay to the
Employee a fixed, annual salary (the "Revised Base Salary") of
$155,000. The Initial Base Salary and the Revised Base Salary shall
sometimes be collectively referred to as the "Base Salary". The Base
Salary shall be due and payable in substantially equal bi-weekly
installments or in such other installments as may be necessary to
comport with the Company's normal pay periods for all employees.
Provided that this Employment Agreement or Employee's
employment hereunder shall not have been terminated for any reason,
commencing on January 1, 2000, the Revised Base Salary shall be
increased, effective as of the first day of each year of the Term, in
proportion to the increase in the Consumer Price Index "All-Items"
category, as published by the Bureau of Labor Statistics (the "CPI")
established for the month of December immediately preceding the date on
which the adjustment is to be made over that
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established for the month of December 1998. If the Bureau of Labor Statistics
suspends or terminates its publication of the CPI, the parties agree that a
reasonably comparable price index shall be substituted for the CPI.
(2) ANNUAL BONUS PLAN. The Employee shall participate with
the other executive officers of the Company in the Annual Bonus Plan
established by the Board, and in connection therewith shall be eligible
for an annual bonus of up to twenty-five percent (25%) of his Base
Salary (as adjusted by the CPI for the calendar year for which the
bonus is determined, to the extent the CPI adjustment is applicable for
such year), in accordance with and based upon the mutually agreeable
performance goals established for the Employee by the President and the
Employee and as such Annual Bonus Plan shall be modified by the Board
from time to time.
(3) PARTICIPATION IN BENEFIT, INSURANCE, VACATION AND SICK
LEAVE PLANS. Employee shall be entitled to participate in the standard
Company benefit package which is to be implemented generally as
reflected in Company's Flex-Care Employee guide currently in effect, as
modified by the Company from time to time. Employee acknowledges that
the Company is in the process of modifying its Flex-Care Plan. During
the Initial Term and each Additional Term, Employee will be entitled to
three (3) weeks of vacation, which vacation may be utilized as earned.
Employee will accrue ten (10) days of sick leave for each year of
employment. The Employer reserves the right to amend or modify in their
entirety or any of the above-mentioned fringe benefit programs.
(4) PARTICIPATION IN STOCK OPTION PLAN. Employee shall be
entitled to participate in the Company stock option plan which is
applicable to its managerial employees. Provided Employee continues to
be employed hereunder, on August 15, 1998, Employee shall be granted
options to purchase 25,000 shares of Company common stock, which
options shall vest and be exercisable on August 15, 1999 if Employee is
then employed hereunder. Provided Employee continues to be employed
hereunder, on August 15, 1999, Employee shall be granted options to
purchase 50,000 shares of Company common stock, and provided Employee
continues to be employed hereunder, 25,000 of such options shall vest
and be exercisable on August 15, 2000 and the remaining 25,000 of such
options shall vest and be exercisable on August 15, 2001. Any stock
options granted to Employee pursuant to this paragraph (d) shall have
an exercise price based upon the closing sale price of Company common
stock as reported on the NASDAQ National Market System on the
respective date of grant and the number of shares which are subject to
such option shall be equitably adjusted for stock splits, stock
dividends, recapitalizations and the like occurring after the date
hereof.
(5) PARTICIPATION IN RETIREMENT AND PROFIT SHARING PLANS.
Employee shall continue to be eligible to participate in any retirement
and/or profit sharing plans applicable to the Company's managerial
employees, as modified by the Company from time to time.
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(6) OUT-OF-POCKET EXPENSES. The Company shall promptly pay
the ordinary, necessary and reasonable expenses incurred by Employee in
the performance of Employee's duties hereunder (or if such expenses are
paid directly by Employee shall promptly reimburse him for such
payment), consistent with the reimbursement policies adopted by the
Board from time-to-time. Provided, however, such payment or
reimbursement shall be subject to prior written approval by the
President.
(7) WITHHOLDING OF TAXES; INCOME TAX TREATMENT. If, upon the
payment of any compensation or benefit to the Employee under this
Employment Agreement (including, without limitation, in connection with
the exercise of any option), the Company determines in its discretion
that it is required to withhold or provide for the payment in any
manner of taxes, including but not limited to, federal income or social
security taxes, state income taxes or local income taxes, the Employee
agrees that the Company may satisfy such requirement by:
(1) withholding an amount necessary to satisfy such
withholding requirement from the Employee's compensation or
benefit; or
(2) conditioning the payment or transfer of such
compensation or benefit upon the Employee's payment to the
Company of an amount sufficient to satisfy such withholding
requirement.
The Employee agrees that he will treat all of the amounts payable
pursuant to this Employment Agreement as compensation for income tax
purposes.
4. TERMINATION. The Employee's employment hereunder may be terminated under
this Employment Agreement as follows, subject to the Employee's rights pursuant
to Section 5 hereof:
(1) DEATH. The Employee's employment hereunder shall terminate
upon his death.
(2) DISABILITY. If, as a result of the Employee's incapacity due
to physical or mental illness, the Employee shall have been absent
from his duties hereunder on a full-time basis for 180 consecutive
calendar days, and within thirty (30) days after written Notice of
Termination is given (which may occur no earlier than thirty (30) days
before, but at any time after, the end of such 180-day period), the
Employee shall not have returned to the performance of his duties
hereunder on a full-time basis, the Company may terminate the
Employee's employment hereunder.
(3) CAUSE. The Company may terminate the Employee's
employment hereunder for Cause. For purposes of this Employment
Agreement, the Company shall
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have "Cause" to terminate the Employee's employment because of the
Employee's personal dishonesty, intentional misconduct, breach of
fiduciary duty involving personal profit, failure to perform his duties
hereunder, conviction of, or plea of nolo contendere to, any law, rule
or regulation (other than traffic violations or similar offenses) or
breach of any provision of this Employment Agreement.
(4) WITHOUT CAUSE. By appropriate action of the Board, the
Company shall have the right to terminate the Employee's employment
under this Employment Agreement at any time without Cause (as defined
in Subsection 4(c)).
(5) VOLUNTARY TERMINATION. By not less than thirty (30) days
prior written notice to the President, Employee may voluntarily
terminate his employment hereunder.
(6) NOTICE OF TERMINATION. Any termination during the term of
this Employment Agreement of the Employee's employment hereunder (other
than termination pursuant to Section 4(a) above) shall be communicated
by written Notice of Termination to the Employee hereto (except in the
case of termination as described in Section 4(e) above written Notice
of Termination shall be delivered by the Employee). For purposes of
this Employment Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Employment Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so
indicated.
(7) DATE OF TERMINATION. The "Date of Termination" shall, for
purposes of this Employment Agreement, mean: (i) if the Employee's
employment is terminated by his death, the date of his death; (ii) if
the Employee's employment is terminated on account of disability
pursuant to Section 4(b) above, thirty (30) days after Notice of
Termination is given (provided that the Employee shall not, during such
30-day period, have returned to the performance of his duties on a
full-time basis), (iii) if the Employee's employment is terminated by
the Company for Cause pursuant to Section 4(c) above, the date
specified in the Notice of Termination, (iv) if the Employee's
employment is terminated by the Employer without Cause, pursuant to
Section 4(d) above, thirty (30) days after Notice of Termination is
given, (v) if the Employee's employment is terminated voluntarily
pursuant to Section 4(e) above, the date specified in the Notice of
Termination, and (vi) if the Employee's employment is terminated by
reason of an election by either party not to extend the Term, the last
day of the then effective Term.
5. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
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(1) DEATH. If the Employee's employment shall be terminated
by reason of his death, the Employee shall continue to receive his full
Base Salary until the date of his death and a Cash Bonus, prorated
based upon the number of full months that have elapsed from the
immediately preceding January 1 until the date of his death (plus any
earned but unpaid Cash Bonus for a prior period).
(2) DISABILITY. During any period that the Employee fails to
perform his duties hereunder as a result of incapacity due to physical
or mental illness, the Employee shall continue to receive his full Base
Salary until the Date of Termination and shall be entitled to receive a
Cash Bonus, prorated based upon the number of full months that have
elapsed from the immediately preceding January 1 until the Date of
Termination (plus any earned but unpaid Cash Bonus for a prior period).
Upon termination due to death prior to a termination as specified in
the preceding sentence, Section 5(a) above shall apply.
(3) CAUSE. If the Employee's employment shall be terminated
for Cause, the Company shall, through the Date of Termination, continue
to pay the Employee his full Base Salary but the Employee shall not be
entitled to receive a Cash Bonus (other than any earned but unpaid Cash
Bonus for a prior period), and shall not be eligible for any severance
payment of any nature.
(4) WITHOUT CAUSE. If the Employee's employment shall be
terminated without Cause, and such Notice of Termination shall have
been given after a Change of Control (as defined below) shall be
applicable to the Company, the Employee shall continue to receive his
full Base Salary until the Date of Termination and for one (1) year
after the Date of Termination. In all other cases in which the
Employee's employment shall be terminated without Cause, the Employee
shall continue to receive his full Base Salary until the Date of
Termination and for six (6) months after the Date of Termination. In
all cases in which Employee's employment shall be terminated without
Cause, the Employee shall also be entitled to receive a Cash Bonus,
prorated based upon the number of full months that have elapsed from
the immediately preceding January 1 until the Date of Termination (plus
any earned but unpaid Cash Bonus for a prior period). A "Change of
Control" shall be applicable to the Company --
(1) if any person shall acquire more than fifty
percent (50%) of the common capital stock of the Company
through a tender offer, exchange offer or otherwise;
(2) if the Company shall be a party to a binding
agreement to any merger, consolidation or reorganization in
which any person who on the date hereof does not own more than
ten percent (10%) of the issued and outstanding common capital
stock of the Company acquires, beneficially or of record, more
than fifty percent (50%) of such stock; or
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(3) there shall be a sale of all or substantially all
of the assets of the Company.
(5) EXPIRATION OF TERM. If the Employee's employment shall be
terminated by reason of expiration of the Term (irrespective of which
party elected not to extend the Term), the Company shall, through the
Date of Termination, continue to pay the Employee his full Base Salary
and the Company shall pay the Employee his Cash Bonus for the last
calendar year of the Term.
(6) VOLUNTARY TERMINATION. If the Employee's employment shall
be terminated pursuant to Section 4(e) hereof, the Company shall,
through the Date of Termination, continue to pay the Employee his full
Base Salary but the Employee shall not be entitled to receive a Cash
Bonus (other than any earned but unpaid Cash Bonus for a period), and
the Employee shall not be entitled to any severance payment of any
nature.
(7) NO FURTHER OBLIGATIONS AFTER PAYMENT. After all payments,
if any, have been made to the Employee pursuant to any of paragraphs
(a) through (f) of this Section 5, the Company shall have no further
obligations to the Employee under this Employment Agreement other than
the provision of any employee benefits required to be continued under
applicable law.
6. DUTIES UPON TERMINATION. Upon the termination of Employee's
employment hereunder for any reason whatsoever (including but not limited to the
failure of the parties hereto to agree to the extension of this Employment
Agreement pursuant to Section 2 hereof), Employee shall promptly return to the
Company any Confidential Information (as defined in Section 7(d)(iii) hereof)
and whether or not constituting Confidential Information, any technical data,
performance information and reports, sales or marketing plans, documents or
other records, rolodexes, and any manuals, drawings, tape recordings, computer
programs, discs, and any other physical representations of any other information
relating to the Company, its subsidiaries or affiliates or to the Business (as
defined in Section 7(d)(iv) hereof) of the Company. Employee hereby acknowledges
that any and all of such documents, items, physical representations and
information area and shall remain at all times the exclusive property of the
Company.
7. RESTRICTIVE COVENANTS.
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(1) ACKNOWLEDGMENTS. Employee acknowledges that (i) his
services hereunder are of a special, unique and extraordinary character
and that his position with the Company places him in a position of
confidence and trust with the operations of the Company, its
subsidiaries and affiliates (collectively, the "Res-Care Companies")
and allows him access to Confidential Information, (ii) the Company has
provided Employee with a unique opportunity as its Executive Vice
President of Operations for the Division for Youth Services, (iii) the
nature and periods of the restrictions imposed by the covenants
contained in this Section 7 are fair, reasonable and necessary to
protect and preserve for the
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Company the benefits of Employee's employment hereunder, (iv) the
Res-Care Companies would sustain great and irreparable loss and damage
if Employee were to breach any of such covenants, (v) the Res-Care
Companies conduct and are aggressively pursuing the conduct of their
business actively in and throughout the entire Territory (as defined
in paragraph (d)(ii) of this Section 7), and (vi) the Territory is
reasonably sized because the current Business of the Res-Care
Companies is conducted throughout such geographical area, the Res-Care
Companies are aggressively pursuing expansion and new operations
throughout such geographic area and the Res-Care Companies require the
entire Territory for profitable operations.
(2) CONFIDENTIALITY COVENANT. Having acknowledged the
foregoing, Employee covenants that without limitation as to time, he
will not directly or indirectly disclose or use or otherwise exploit
for his own benefit, or the benefit of any other person, except as may
be necessary in the performance of his duties hereunder, any
Confidential Information.
(3) COVENANTS. Having acknowledged the statements in Section
7(a) hereof, Employee covenants and agrees with the Res-Care Companies
that he will not, directly or indirectly, from the date hereof until
the Date of Termination of Employee's employment hereunder, and for a
period of one (1) year thereafter, directly or indirectly (i) solicit,
divert or appropriate to himself or any other person, any business or
services (similar in nature to the Business) of any person who was an
employee or an agent of any of the Res-Care Companies at any time
during the last twelve (12) months of Employee's employment hereunder;
or (ii) own, manage, operate, join, control, assist, participate in or
be connected with, directly or indirectly, as an officer, director,
shareholder, partner, proprietor, employee, agent, consultant,
independent contractor or otherwise, any person which is, at the time,
directly or indirectly, in competition within the Territory with the
Business of the Res-Care Companies.
(4) DEFINITIONS. For purposes of this Employment Agreement:
(1) For purposes of this Section 7, "termination of
Employee's employment" shall include any termination pursuant
to paragraphs (b), (c), (d) and (e) of Section 5 hereof, the
termination of such Employee's employment by reason of the
failure of the parties hereto to agree to the extension of
this Agreement pursuant to Section 1 hereof or the voluntary
termination of Employee's employment hereunder.
(2) The "Territory" shall mean the forty-eight (48)
contiguous states of the United States, the United States
Virgin Islands and Puerto Rico.
(3) "Confidential Information" shall mean any
business information relating to the Res-Care Companies or to
the Business (whether or not constituting
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a trade secret), which has been or is treated by any of the
Res-Care Companies as proprietary and confidential and which
is not generally known or ascertainable through proper
means. Without limiting the generality of the foregoing, so
long as such information is not generally known or
ascertainable by proper means and is treated by the Res-Care
Companies as proprietary and confidential, Confidential
Information shall include the following information
regarding any of the Res-Care Companies:
(1) any patent, patent application,
copyright, trademark, trade name,
service xxxx, service name,
"know-how" or trade secrets;
(2) customer lists and information
relating to (i) any client of any of
the Res-Care Companies or (ii) any
client of the operations of any
other person or entity for which
operations any of the Res-Care
Companies provides management
services;
(3) supplier lists, pricing policies,
consulting contracts and competitive
bid information;
(4) records, operational methods and
Company policies and procedures,
including manuals and forms;
(5) marketing data, plans and strategies;
(6) business acquisition, development,
expansion or capital investment plan
or activities;
(7) software and any other confidential
technical programs;
(8) personnel information, employee
payroll and benefits data;
(9) accounts receivable and accounts
payable;
(10) other financial information,
including financial statements,
budgets, projections, earnings and
any unpublished financial
information; and
(11) correspondence and communications
with outside parties.
(4) The "Business" of the Res-Care Companies shall
mean the business of providing juvenile treatment or services,
services to persons with mental
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retardation and other developmental disabilities, including
but not limited to persons who have been dually diagnosed,
services to persons with acquired brain injuries, training
services, or providing management and/or consulting services
to third parties relating to the foregoing.
(5) The term "person" shall mean an individual, a
partnership, an association, a corporation, a trust, an
unincorporated organization, or any other business entity or
enterprise.
(5) INJUNCTIVE RELIEF, INVALIDITY OF ANY PROVISION. Employee
acknowledges that his breach of any covenant contained in this Section
7 will result in irreparable injury to the Res-Care Companies and that
the remedy at law of such parties for such a breach will be inadequate.
Accordingly, Employee agrees and consents that each of the Res-Care
Companies in addition to all other remedies available to them at law
and in equity, shall be entitled to seek both preliminary and permanent
injunctions to prevent and/or halt a breach or threatened breach by
Employee of any covenant contained in this Section 7. If any provision
of this Section 7 is invalid in part or in whole, it shall be deemed to
have been amended, whether as to time, area covered, or otherwise, as
and to the extent required for its validity under applicable law and,
as so amended, shall be enforceable. The parties further agree to
execute all documents necessary to evidence such amendment.
8. ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Employment Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties, including but not limited to
the Original Agreement. No supplement, modification, or amendment of this
Employment Agreement shall be binding unless executed in writing by all parties
hereto (other than as provided in the next to last sentence of Section 7(e)
hereof). No waiver of any of the provisions of this Employment Agreement will be
deemed, or will constitute, a waiver of any other provision, whether or not
similar, nor will any waiver constitute a continuing waiver. No waiver will be
binding unless executed in writing by the party making the waiver.
9. SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Employment Agreement shall
be binding on, and inure to the benefit of, the parties hereto and their
respective heirs, executors, legal representatives, successors and assigns;
PROVIDED, HOWEVER, that this Employment Agreement is intended to be personal to
the Employee and the rights and obligations of the Employee hereunder may not be
assigned or transferred by him.
10. NOTICES. All notices, requests, demands and other communications
required or permitted to be given or made under this Employment Agreement, or
any other agreement executed in connection therewith, shall be in writing and
shall be deemed to have been given on the date of delivery personally or upon
deposit in the United States mail postage prepaid by registered or certified
mail, return receipt requested, to the appropriate party or parties at the
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following addresses (or at such other address as shall hereafter be designated
by any party to the other parties by notice given in accordance with this
Section):
To the Company:
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Res-Care, Inc.
00000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx,
President and Chief Executive Officer
To the Employee:
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Xxxxx X. Xxxxxxxxx, Xx.
0000 Xxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
11. EXECUTION IN COUNTERPARTS. This Employment Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
12. FURTHER ASSURANCES. The parties each hereby agree to execute and
deliver all of the agreements, documents and instruments required to be executed
and delivered by them in this Employment Agreement and to execute and deliver
such additional instruments and documents and to take such additional actions as
may reasonably be required from time to time in order to effectuate the
transactions contemplated by this Employment Agreement.
13. SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of
any particular provision of this Employment Agreement shall not affect the other
provisions hereof and this Employment Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.
14. GOVERNING LAW. This Employment Agreement is executed and delivered
in, and shall be governed by, enforced and interpreted in accordance with the
laws of, the Commonwealth of Kentucky.
15. TENSE; CAPTIONS. In construing this Employment Agreement, whenever
appropriate, the singular tense shall also be deemed to mean the plural, and
vice versa, and the captions contained in this Employment Agreement shall be
ignored.
16. SURVIVAL. The provisions of Sections 5, 6 and 7 hereof shall
survive the termination, for any reason, of this Employment Agreement, in
accordance with their terms.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on the day and year set forth above.
RES-CARE, INC.
By: __________________________________________
Xxxxxx X. Xxxxx
President and Chief Executive Officer
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Xxxxx X. Xxxxxxxxx, Xx.
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