EMPLOYMENT AGREEMENT
The Employment Agreement ("Agreement") is entered into as of
August 19, 1996 between, THE CARE GROUP, INC., a Delaware corporation (the
"Company"), and XXXXXXX XXXX ("Xxxx").
In consideration of the mutual covenants and conditions set
forth herein, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Jung in the capacity of
President and Chief Executive Officer. Jung accepts such employment
and agrees to perform such services as are customary to such office
and as shall from time to time be assigned to him by the Board of
Directors.
2. TERM. The employment hereunder shall be for a period of 1 year,
commencing on August 19, 1996 (the "Commencement Date") and shall be
automatically renewed for successive one year periods unless earlier
terminated as provided in Section 5. Jung's employment will be on a
full-time basis requiring the devotion of such amount of his
productive time as is necessary for the efficient operation of the
business of the Company.
3. COMPENSATION AND BENEFITS
3.1 SALARY. For the performance of Jung's duties hereunder, the
Company shall pay Jung an annual salary of $200,000, payable
(less required withholdings) no less frequently than twice
monthly with the annual salary changing to $250,000, payable
(less required withholdings) no less frequently than twice
monthly effective January 1, 1997.
3.2 BONUS. The Company shall also pay Jung a guaranteed bonus of
$50,000 payable in the first quarter of 1997. During the
first fiscal year the Board of Directors and Jung will
establish a mutually acceptable bonus plan for the second and
subsequent fiscal years, which plan (i) will provide Jung
with appropriate incentives and the opportunity to earn bonus
amounts comparable to those available to top executive
officers of similar companies, (ii) will provide Jung with
the opportunity to earn bonus amounts of up to $100,000 for
1997 payable in the first quarter of 1998 and (iii) may base
the bonus awards on the amount of earnings per share for the
Company as defined by Generally Accepted Accounting
Principles ("GAAP").
3.3 STOCK OPTIONS. Upon commencement of Jung's employment
hereunder, the Company shall grant to Jung 300,000 options
under the Company's Stock Option Plan at a price of $2.31
per share. 60,000 options shall vest on the date of this
Agreement, and 60,000 options shall vest on each of January
1, 1997, 1998, 1999 and 2000.
3.4 BENEFITS. Jung shall be entitled to such medical, disability
and life insurance coverage and such vacation, sick leave
and holiday benefits, if any, as are made available to the
Company's top executive personnel, all in accordance with
the Company's benefits program in effect from time to time.
3.5 REIMBURSEMENT OF EXPENSES. Jung shall be entitled to be
reimbursed for all reasonable expenses, including but not
limited to expenses for travel, meals and entertainment,
incurred by Jung in connection with and reasonably related
to the furtherance of the Company's business.
3.6 ANNUAL REVIEW. On each anniversary of the Commencement Date,
the Board of Directors will review Jung's performance and
compensation hereunder (including salary, bonus and stock
options and/or other equity incentives) and will consider
whether to increase such compensation, but will not have
authority, as the result of such review, to decrease any
portion of such compensation without the written consent
of Jung.
4. CHANGE OF CONTROL. Upon the occurrence of a Change in Control of the
Company (as defined below), all options then granted to Jung which are
unvested at the time of the Change in Control will be immediately
vested. In addition, notwithstanding the provisions of Section 5.2(b),
in the event of a termination of Jung's employment hereunder by the
Company following a Change of Control, the Company will promptly pay
Jung, in addition to the amounts required under Section 5.2(a), a lump
sum severance amount, payable immediately upon such termination of
employment, equal to six (6) months of salary, excluding bonus.
As used herein, a "Change of Control" of the Company shall be deemed
to have occurred:
(a) Upon the consummation, in one transaction or a
series of related transactions, of the sale or other
transfer of voting power (including voting power
exercisable on a contingent or deferred basis as
well as immediately exercisable voting power)
representing effective control of the Company to a
person or group of related persons who, on the date
of this Agreement, does not have effective voting
control of the Company, whether such sale or
transfer results from a tender offer or otherwise; or
(b) Upon the consummation of a merger or consolidation
in which the Company is a constituent corporation
and in which the Company's shareholders immediately
prior thereto will beneficially own, immediately
thereafter, securities of the Company or any
surviving or new corporation resulting therefrom
having less than a majority of the voting power of
the Company or any such surviving or new
corporation; or
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(c) Upon the consummation of a sale, lease, exchange or
other transfer or disposition by the Company of all
or substantially all of its assets to any person or
group or related persons.
5. TERMINATION.
5.1 TERMINATION EVENTS. The employment hereunder will terminate
upon the occurrence of any of the following events:
(a) Jung dies;
(b) the Company, by written notice to Jung or his
personal representative, discharges Jung due to the
inability to perform the duties assigned to him
hereunder for a continuous period exceeding 90 days
by reason of injury, physical or mental illness or
other disability, which condition has been
certified by a physician; provided, however, that
prior to discharging Jung due to such disability,
the Company shall give a written statement of
findings to Jung or his personal representative
setting forth specifically the nature of the
disability and the resulting performance failures,
and Jung shall have a period of ten (10) days
thereafter to respond in writing to the Board of
Directors' findings.
(c) Jung is discharged by the Board of Directors of the
Company for cause. As used in this Agreement, the
term "cause" shall mean:
(i) Jung's conviction of (or pleading guilty
or nolo contendere to) a felony or any
misdemeanor involving dishonesty or moral
turpitude; provided, however, that prior
to discharging Jung for cause, the Company
shall give a written statement of findings
to Jung setting forth specifically the
grounds on which cause is based, and Jung
shall have a period of ten (10) days
thereafter to respond in writing to the
Board of Directors' findings;
(ii) the willful and continued failure of Jung
to substantially perform his duties with
the Company (other than any such failure
resulting from illness or disability)
after a demand for substantial performance
is requested by the Company's Board of
Directors, which specifically identifies
the manner in which it is claimed Jung has
not substantially performed his duties, or
(b) Jung is willfully engaged in
misconduct which has, or can reasonably be
expected to have, a direct and material
adverse monetary effect on the Company.
For purposes of this Section no act or
failure to act on Jung's part shall be
considered "willful" if done, or omitted
to be done, by Jung in good faith and with
reasonable belief that Jung's action or
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omission was in the best interest of the
Company. No termination shall be effected
for Cause unless Jung has been provided
with specific information as to the acts or
omissions which form the basis of the
allegation of Cause, and Jung has had an
opportunity to be heard, with counsel if
he so desired, before the Board of
Directors and such Board determines in
good faith that Jung was guilty of conduct
constituting "Cause" as herein defined,
specifying the particulars thereof in
detail.
(d) Jung is discharged by the Board of Directors of the
Company without cause, which the Company may do at
any time, with at least 30 days advance notice; or
(e) Jung voluntarily terminates his employment due to
either (i) a default by the Company in the
performance of any of its obligations hereunder, or
(ii) an Adverse Change in Duties (as defined
below), which default or Adverse Change in Duties
remains unremedied by the Company for a period of
ten days following its receipt of written notice
thereof from Jung; or
(f) Jung voluntarily terminates his employment for any
reason other than the Company's default or an
Adverse Change in Duties, which Jung may do at any
time with at least 30 days advance notice.
As used herein, "Adverse Change in Duties" means an
action or series of actions taken by the Company, without
Jung's prior written consent, which results in:
(1) A change in Jung's reporting
responsibilities, titles, job
responsibilities or offices which results
in a material diminution of his status,
control or authority; or
(2) The assignment to Jung of any positions,
duties or responsibilities which are
materially inconsistent with Jung's
positions, duties and responsibilities or
status with the Company; or
(3) A requirement by the Company that Jung be
based or perform his duties anywhere other
than (i) at the Company's corporate office
location on the date of this Agreement, or
(ii) if the Company's corporate office
location is moved after the date of this
Agreement, at a new location that is no
more than 60 miles from such prior
location; or
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(4) A failure by the Company to provide for
Jung's participation in any newly adopted
benefits or plans at a level or to an
extent commensurate with that of other top
executives of the Company.
5.2 EFFECTS OF TERMINATION
(a) Upon termination of Jung's employment hereunder for
any reason, the Company will promptly pay Jung all
compensation owed to Jung and unpaid through the
date of termination (including, without limitation,
salary, any bonus compensation earned as of the
date of termination and employee expenses
reimbursements).
(b) In addition, if the employment is terminated under
Sections 5.1(d) or (e): (x) the Company shall pay
Jung, immediately upon such termination of
employment, a lump sum severance amount equal to
one-half of the then applicable annual salary,
including any bonus compensation earned as of the
date of termination and (y) all options then
granted to Jung which are unvested at the date of
termination will be immediately vested.
(c) Upon termination of Jung's employment hereunder for
any reason, Jung agrees that for the six-month
period following the Termination Event:
(i) Jung will not directly or indirectly,
whether for his own account or as an
individual, employee, director, consultant
or advisor, or in any other capacity
whatsoever, provide services to any
person, firm, corporation or other
business enterprise which is involved in
the acquisition or management of physician
practices or other service company that
directly provides management services in
the area of home healthcare, unless he
obtains the prior written consent of the
Board of Directors.
(ii) Jung will not directly or indirectly
encourage or solicit, or attempt to
encourage or solicit, any individual to
leave the Company's employ for any reason
or interfere in any other manner with the
employment relationships at the time
existing between the Company and its
current or prospective employees.
(iii) Jung will not induce or attempt to induce
any provider, payor, customer, supplier,
distributor, licensee or other business
relation of the Company to cease doing
business with the Company or in any way
interfere with the existing business
relationship between any such
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customer, supplier, distributor, licensee
or other business relation and the Company.
Jung acknowledges that monetary damages may not be
sufficient to compensate the Company for any economic loss which may
be incurred by reason of breach of the foregoing restrictive
covenants. Accordingly, in the event of any such breach, the Company
shall, in addition to any remedies available to the Company at law,
be entitled to obtain equitable relief in the form of an injunction
precluding Jung from continuing to engage in such breach.
In any restriction set forth in this paragraph is held to be
unreasonable, then Jung and the Company agree, and hereby submit, to
the reduction and limitation of such prohibition to such area or
period as shall be deemed reasonable.
6. GENERAL PROVISIONS
6.1 ASSIGNMENT. Neither party may assign or delegate any of his
rights or obligations under this Agreement without the prior
written consent of the other party.
6.2 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject
matter hereof and supersedes any and all prior agreements
between the parties relating to such subject matter.
6.3 MODIFICATIONS. This Agreement may be changed or modified
only by an agreement in writing signed by both parties hereto.
6.4 SUCCESSOR AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the
Company and its successors and assigns and Jung and Jung's
legal representatives, heirs, legatees, distributees,
assigns and transferees by operation of law, whether or not
any such person shall have become a party to this Agreement
and have agreed in writing to join and be bound by the terms
and conditions hereof.
6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
New York.
6.6 FURTHER ASSURANCES. The parties will execute such further
instruments and take such further actions as may be
reasonably necessary to carry out the intent of this
Agreement.
6.7 SEVERABILITY. If any provision of the Agreement is held by a
court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall nevertheless
continue in full force and effect.
6.8 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed
received by the recipient
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when delivered personally or, if mailed, five (5) days after
the date of deposit in the United States mail, certified or
registered, postage prepaid and address, in the case of the
Company, to: The Care Group, Inc., 0 Xxxxxx Xxxx Xxxxx 000,
Xxxx Xxxxxxx, Xxx Xxxx, 00000, Attn: Xxx Xxxxxxxx, Chairman
with a copy to Xxxxxxx, Phleger & Xxxxxxxx, LLP, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx
Xxxxxxxxx, Esq., and in the case of Jung, to the address
shown for Jung on the signature page hereof, or to such
other address as either party may later specify by at least
ten (10) days advance written notice delivered to the other
party in accordance herewith.
6.9 NO WAIVER. The failure of either party to enforce any
provision of this Agreement shall not be construed as a
waiver of that provision, nor prevent that party thereafter
from enforcing that provision or any other provision of this
Agreement.
6.10 LEGAL FEES AND EXPENSES. In the event of any disputes under
this Agreement, each party shall be responsible for their
own legal fees and expenses which it may incur in resolving
such dispute.
6.11 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and Jung have executed this
Agreement, effective as of the day and year first above written.
COMPANY
JUNG
The Care Group, Inc.
a Delaware corporation
By: /s/ Xxx Xxxxxxxx /s/ Xxxxxxx Xxxx
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Xxx Xxxxxxxx, Chairman Xxxxxxx Xxxx
Address:
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