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EXHIBIT 10.33
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 1st day of August, 1996, by and
between BALANCED CARE CORPORATION, a Delaware corporation with its principal
place of business at 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxxxx, Xxxxxxxxxxxx
00000, on behalf of it and each of its subsidiaries (the "Company") and XXXX X.
XXXXXXXXX, an individual residing at 0000 Xxxx Xxxx Xxxx, Xxxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the services of
Employee as Chairman of its Board of Directors and its Chief Executive Officer
for the benefit of itself and each of its subsidiaries throughout the term of
this Agreement, and Employee is willing to be employed by the Company in the
foregoing capacities for such period, upon the terms and conditions herein set
forth.
WHEREAS, the Company and the Employee are parties to an
Employment Agreement dated as of September 20, 1995 which is superseded in its
entirety by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and intending to be legally bound, the parties hereto hereby
agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee and
Employee hereby accepts employment by the Company subject to all the terms and
conditions hereafter set forth.
2. CAPACITY. Employee shall serve as a Chairman of the Board
and Chief Executive Officer of the Company and Chief Executive Officer and
President of each subsidiary of the Company, whether in existence at the time
this Agreement is executed or formed thereafter (each a "Subsidiary").
3. DUTIES. During the term of this Agreement, Employee shall
devote his business attention and best efforts to the performance of the duties
customarily performed by the Chairman of the Board and Chief Executive Officer
of the Company and, with respect to each Subsidiary, by the Chief Executive
Officer and President of such Subsidiary, together with such other duties, not
inconsistent with duties typically and customarily performed by the chairmen of
the board of directors and chief executive officers of comparable companies, as
the Employee may reasonably be requested to perform by the Board of Directors.
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4. TERM OF EMPLOYMENT. Unless earlier terminated as hereafter
provided, this Agreement shall commence on August 1, 1996 and shall expire on
July 31, 2001, provided however, that upon expiration of such term, this
Agreement shall be extended from year to year without further action on the
part of the parties hereto, unless either party gives written notice of
termination to the other party at least ninety (90) days prior to the
expiration of the then current term.
5. TERMINATION.
(a) DEATH. The employment of Employee under this Agreement
shall immediately terminate upon the death of Employee and the Company
shall have no further obligation to the Employee except to the extent
of any employee benefit plans or practices of the Company or as
required by law.
(b) DISABILITY. In the event the Employee becomes "Disabled",
as defined below, the Company may elect to terminate the employment of
the Employee and make claim on his behalf with respect to an insurance
policy purchased as provided in Section 6(e). The Employee shall be
Disabled if the Employee is absent from his duties for medical reasons
for a period of six (6) months and, upon written notice from the Board
to return to his duties, he is unable to or fails to return.
(c) TERMINATION FOR CAUSE. The employment of Employee under
this Agreement shall terminate immediately if the Board of Directors
of the Company discharges Employee for Cause and the Company shall
have no further obligations to the Employee, except to the extent
required by law. For purposes of this subsection (c), "Cause" shall
mean termination for reason of the Employee's willful misconduct,
intentional and material failure to perform stated duties or
conviction of a felony. For purposes of this subsection (c), no act or
omission shall be regarded as intentionally or willfully done unless
done or omitted to be done by the Employee following receipt of
written notice from the Board advising the Employee the particular act
or omission would be regarded as an intentional or wilful act or
omission. No termination for Cause shall be effective unless and until
(i) there shall have been delivered to the Employee a copy of a
resolution duly adopted by a three quarters majority of the Board
stating that, in the good faith opinion of the Board, a particular act
or omission constitutes Cause under this Agreement, (ii) the Employee
is given a reasonable opportunity during the sixty (60) day period
commencing on delivery of such resolution to correct or cure the
particular act or omission complained of and (iii) the Employee is
given a reasonable opportunity, together with his counsel, to be heard
before the Board during the sixty (60) day period following delivery
of such resolution.
(d) VOLUNTARY RESIGNATION OR RETIREMENT. If the Employee
voluntarily resigns from employment or chooses to retire from active
service with the Company, the employment of the employee shall
terminate on the effective date of his resignation or retirement and
the Company shall have no further obligations to the Employee except
to the extent required by law.
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(e) GOOD REASON. If the Employee resigns or retires for Good
Reason within a reasonable time following the occurrence of any one or
more of the events described below at subsections (i), (ii), (iii),
(iv), (v), (vii) or (viii) or within one year of the occurrence of the
event described in subsection (vi), each as defined below, his
employment under this Agreement shall terminate immediately and the
Company shall have the obligations set forth in Section 6(g) hereof.
For purpose of this Agreement, "Good Reason" shall mean, absent the
Employee's express written consent, the occurrence of one or more of
the following:
(i) removal of the Employee as Chairman of the Board
of Directors and/or Chief Executive Officer or as Chief
Executive Officer or President of any Subsidiary or failure
to renominate the Employee as a Director of the Company (by
reason other than death, Disability or Cause), or any other
material breach (which shall include, but shall not be
limited to, any termination or purported termination of the
Employee's employment by the Company for reasons other than
death, disability or cause) by the Company of its obligations
contained in this Agreement;
(ii) the assignment to the Employee of any duties
inconsistent with his position as Chairman of the Board of
Directors and/or Chief Executive Officer or as Chief
Executive Officer and President of any Subsidiary or as a
Director of the Company or a substantial diminution in the
nature or status of the Employee's duties and
responsibilities, provided, however, the Board's temporary
assignment to the Employee of supervision of the operations
of a subsidiary or a division, in addition to his other
duties under this Agreement, shall not be an event of Good
Reason under this subsection;
(iii) a reduction by the Company in the Employee's
annual base salary as in effect on the date hereof or as the
same may be increased from time to time, except for
proportional across-the-board salary reductions similarly
affecting all executive officers of the Company; provided,
however, that in no event shall the Employee's base salary be
reduced below the per year amount set forth in Section 6(a)
hereof without the Employee's express, written consent;
(iv) failure of the Company to continue in effect
and/or the Employee's participation in any compensation plan,
program or arrangement in which the Employee then
participates (whether existing at the date this agreement was
first or thereafter adopted) unless (i) an equitable
arrangement reasonably acceptable to the Employee and
embodied in an on-going plan, program or arrangement has been
made with respect to such plan or (ii) the failure to
continue a plan, program or arrangement or the Employee's
participation therein is pursuant to an action which equally
affects all executive officers of the Company;
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(v) any material reduction by the Company of the
benefits enjoyed by the Employee under any of the life
insurance, medical, health-and-accident, disability or other
employee welfare benefit plans or programs, including
vacation days or corporate perquisites or arrangements as in
effect from time to time;
(vi) the occurrence of a Change in Control as defined
in Section 8 hereof;
(vii) the termination of the Employee's employment
with the Company for any reason other than Cause within the
one year period following the occurrence of a Change in
Control; or
(vii) the failure of the Company to secure the
specific, written consent of each and any successor to be
bound by the terms and conditions hereof.
6. COMPENSATION.
(a) CASH COMPENSATION. During the term of this Agreement or
any extension thereof, as compensation for services to the Company, the Company
shall pay to Employee a base salary, in semi-monthly installments, in the
respective amounts as follows:
a. for the period beginning August 1, 1996 and ending June 30,
1997, semi-monthly installments of $6,458.33;
b. for the period beginning July 1, 1997 and ending June 30,
1998, semi-monthly installments of $8,333.33;
c. for the period beginning July 1, 1998 and for the duration of
the term hereof, semi-monthly installments of $9,375.
The Board of Directors of the Company may, in its sole discretion from time to
time, increase the base compensation to be paid to Employee as provided in this
paragraph, or provide additional compensation to Employee, including but not
limited to the annual bonus provided for in Section 6(b) hereof, whether
permanently or for a limited time period, based upon the earnings or
performance of the Employee or otherwise in order to recognize and fairly
compensate Employee for the value of his services to the Company. In addition,
Employee shall be entitled to receive all fringe benefits provided to its
employees and officers by Company, including but not limited to insurance
benefits, which are appropriate for an employee or officer holding his office.
(b) ANNUAL BONUS. For each fiscal year of the Company during the term
of this Agreement, Employee shall be entitled to receive an annual bonus in an
amount not less than 75% of Employee's base salary, at the rate then in effect,
upon achievement of the level of pre-tax earnings (determined in accordance
with generally accepted accounting principles and after giving effect, to the
extent appropriate, to minority interests), as such level is approved by the
Board of Directors in the annual operating budget for a particular year. Each
fiscal year of the
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Company shall represent a separate opportunity to receive a bonus and one fiscal
year's earnings shall not be cumulated with any other fiscal year's earnings for
this purpose. If the level of earnings actually achieved for a particular year
exceeds the level approved by the Board for that year, the Board, in its sole
discretion, may award the Employee additional bonus compensation for such year.
Such annual bonus shall be paid no later than seventy five (75) days after the
end of the fiscal year to which such bonus relates. If this Agreement is
terminated for reasons set forth in Sections 5(a), (b) or (d) other than at the
end of a fiscal year, Employee's bonus for the year of termination shall be
calculated and paid in the normal manner but pro-rated based upon the number of
days in such years prior to such termination; provided, however, that if the
termination is under Section 5(c) hereof, no bonus shall be paid for the year of
termination.
(c) STOCK OPTIONS. The Company hereby grants to the Employee the right
to purchase (the "Option"), at any time or from time to time hereafter, (i)
effective as of the date of this Agreement, up to 50,000 shares of the common
stock of the Company at a purchase price of $1.50 per share and (ii) effective
as of the June 30, 1997, up to 50,000 shares of the common stock of the
Company, in addition to the shares described in subsection (i), at a per share
purchase price equal to the fair market value of a share of common stock of the
Company on June 30, 1997. The Option granted hereunder shall be non-qualified
stock options. The Option shall be vested in accordance with the Balanced Care
Corporation 1996 Stock Incentive Plan (the "Option Plan") as approved by the
Company's Board of Directors. In the event this Agreement is terminated for
Good Reason, all options shall become fully vested and exercisable as of the
date of such termination and may then be exercised thereafter at any time or
from time to time, at the election of the Employee, within one year following
the termination of this Agreement. This grant of stock options may be further
documented, to the extent not inconsistent with the foregoing, under the Option
Plan.
(d) VACATION AND BENEFITS. Employee shall receive six (6) weeks per
year, such vacation to be taken when and as desired by the Employee. Any time
spent by the Employee at professional meetings, instructional causes and other
similar meetings so as to better enable the Employee to perform professional
services in the employ of the Company shall not be considered vacation time.
The Employee shall participate in any and all employee benefit and fringe
benefits plans of the Company to extent under the same terms and conditions
applicable to employees of the Company generally.
(e) DISABILITY PAYMENTS. Company shall purchase and pay for a
disability insurance policy paying disability benefits, in a monthly amount not
less than 80% of his base pay at the rate then in effect, to the Employee
commencing on the date he becomes Disabled as defined in Section 5(b) hereof
and continuing until the earliest of his attaining age 65, his becoming able to
return to gainful employment in any occupation reasonably consistent with his
education, training and experience or his death. Such policy may exclude
disablement resulting from automobile racing.
Any insurance policy purchased in connection with this subsection (e) must
contain provisions no less favorable tot he Employee than that the Employee's
Disability shall be considered continuing if he is unable because of injury or
sickness to perform the substantial and material
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duties of the Employee's regular occupation, while under the regular care of a
licensed physician, and while not gainfully employed in any occupation
reasonably consistent with the Employee's education, training and experience.
(f) ADDITIONAL COMPENSATION. Nothing set forth in the foregoing shall
prevent the Board of Directors, from time to time, to provide such additional
compensation and/or pension and profit sharing or other benefits as the Board
of Directors of the Company shall deem appropriate.
(g) PAYMENT ON GOOD REASON TERMINATION. In the event the Employee
terminates his employment for Good Reason, he shall receive, in addition to the
vesting of the stock options as set forth in Section 6(c) above, a single cash
payment delivered within ten (10) business days following his termination of
employment in an amount equal to the sum of (i) the amount determined by
multiplying by three (3) the annual cash compensation of the Employee at the
rate then in effect under Section 6(a) hereof and (ii) the amount of the annual
bonus payable under Section 6(b) hereof for the year in which the termination
took place if the annual operating budget was achieved and the Employee was
employed for the full year. This single cash payment will be made in
recognition of the Employee's performance prior to termination of employment
and the obligations not to compete as set forth in Section 7 as applicable
after termination of employment. It is the intention of the parties that the
payment described in this subsection (f) shall have been approved by the
shareholders of the Company within the meaning of and in a manner consistent
with Section 280G(b)(5) of the Internal Revenue Code of 1986, as amended (the
"Code"), and that the payments hereunder shall be exempt from the provisions of
Section 280G of the Code, provided, however, in the event that the payments
under this subsection (f) are not exempt under Section 280G of the Code, the
Company shall pay to the Employee an amount equal to the amount necessary to
pay any excise tax due with respect to this payment together with the amount
necessary to pay any additional federal, state and local income taxes due with
respect to such additional payment.
7. NON-COMPETITION.
(a) DEFINITIONS. The following definitions apply to this
paragraph 7.
(i) BUSINESS ACTIVITIES. The "Business Activities"
include managing, leasing or owning long-term care facilities
or assisted living centers, or managing, leasing or owning
subacute operations or facilities of nursing homes within a
ninety (90) mile radius of a Company facility.
(ii) COMPANY CUSTOMERS. The "Company Customers" are
(y) those persons or entities Employee or other Employee
personnel sold, solicited or service within the six (6)
months preceding the end of Employee's employment; and (z)
those persons or entities about which Employee had access to
proprietary information within six (6) months preceding the
end of Employee's employment.
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(b) RESTRICTION ON UNFAIR COMPETITION. While employed by
Company and for two (2) years after Employee's employment ends, Employee agrees
not to do any of the following: (i) directly or indirectly own an interest in,
manage, or control a business engaged in the Business Activities; or (ii)
otherwise engage in the Business Activities in a fashion which completes with
the Company; or (iii) provide to a competitor of Company consulting service or
services as an employee, partner or owner, which services relate to the
Business Activities.
(c) RESTRICTION ON SOLICITATION. While employed by the
Company and for two (2) years after Employee's employment ends, Employee agrees
not to do any of the following: (i) directly or indirectly solicit or encourage
Company Customers to deal with Employee or any other person or entity other
than the Company in connection with the Company's Customer's requirements for
the Business Activities, or assist or aid any others to do so; or (ii) directly
or indirectly solicit or encourage other personnel subject to the provisions of
this paragraph 7 to engage in any of the activities restricted in this
Agreement; or (iii) directly or indirectly solicit for Employee's benefit or
the benefit of others the employment or services of any then-present employee
of Company.
(d) LISTED STOCK OWNERSHIP EXCEPTION. Nothing in this
paragraph 7 shall prevent Employee from acquiring as a passive investor up to
five percent (5 %) of the equity of a publicly traded, competing enterprise.
8. CHANGE OF CONTROL.
A "Change of Control" shall be deemed to have taken place if;
(i) any person, including a group but not excluding the Company or any current
stockholder of the Company who beneficially owns five percent (5%) or more of
the Company's outstanding shares, becomes the beneficial owner of shares of the
Company having twenty percent (20%) or more of the total number of votes that
may be cast for the election of directors; (ii) there occurs any cash tender or
exchange offer for shares of the Company, merger or other business combination,
sale of assets or contested election, or any combination of the foregoing
transaction, and as a result of or in connection with any such event persons
who were directors of Company before the event shall cease to constitute a
majority of the Board of Directors of the Company or any successor to Company.
As used herein, the terms "person" and "beneficial owner" have the same meaning
as such terms under Section 13(d) of the Securities Exchange Act of 1934 and
the rules and regulations thereunder.
9. ASSIGNMENT. This Agreement shall not be assignable by the
Employee; and shall be assignable by the Company only to a person, firm or
corporation which may become a successor in interest (by purchase, merger or
otherwise) to the Company with respect to the business or portion of the
business presently operated by it. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume and expressly agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place.
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10. ENTIRE AGREEMENT. This writing represents the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and it may not be altered or amended except by an agreement in writing.
11. BINDING EFFECT. Subject to Section 9, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, executors and administrators. This
Agreement is personal in nature and neither of the parties hereto shall,
without the consent of the other, assign or transfer this Agreement or any
rights or obligations hereunder, except as provided in Paragraph 1l(b) above.
Without limiting the foregoing, the Employee's right to receive payments
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by his will or by
the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this Subsection 11 the Company shall have no
liability to pay any amount so attempted to be assigned or transferred. If any
provision of this Agreement shall be or become illegal or unenforceable in
whole or in part for any reason whatsoever, the remaining provisions shall
nevertheless be deemed valid, binding and enforceable.
12. GOVERNING LAW. This Agreement has been negotiated
and executed within the Commonwealth of Pennsylvania, and the validity,
interpretation and enforcement of this Agreement shall be governed by the laws
of Pennsylvania without regard to its principles of conflicts of laws.
13. HEADINGS. The headings of paragraphs in this Agreement are
for convenience only; they form no part of this Agreement and shall not affect
its interpretation.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
BALANCED CARE CORPORATION
Attest:
By: /s/ Xxxxx X. Xxxxxxxxx
_______________________________
__________________________________ Its: Chairman-Compensation Committee
______________________________
(Corporate Seal)
WITNESS /S/ Xxxxxx X. Xxxxxxxxx /s/ Xxxx X. Xxxxxxxxx
_______________________ ___________________________________
Employee
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