EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into and effective as of this 7th day of August, 1994, by
and between FORUM GROUP, INC., an Indiana corporation (the
"Company"), and MARK L. PACALA (the "Executive").
In consideration of the promises and mutual covenants herein
contained, the parties hereto agree as follows:
1. Employment. The Company will employ the Executive, and the
Executive hereby accepts such employment, on the terms and conditions
set forth herein.
2. Term. The term of the Executive's employment hereunder
(the "Term") will commence on a date on or prior to January 1,
1995, to which the Company and the Executive mutually agree (the
"Commencement Date") and, subject to Section 9, will expire on
the fourth annual anniversary of the Commencement Date.
3. Duties of the Executive.
(a) Services as President and Chief Executive Officer.
During the Term, the Executive will be the president and chief
executive officer of the Company with responsibility for the
active overall and day-to-day direction and administration of the
business and affairs of the Company, subject, however, to legal
limitations and to the direction of the Board of Directors of the
Company. The Executive will serve, without additional
compensation, as an officer or director, or both, of any
subsidiary, division or affiliate of the Company or any other
entity in which the Company has an equity interest, provided,
however, that the Company will indemnify the Executive from
liabilities in connection with serving in any such capacity to
the same extent as the Executive is indemnified in the
performance of his duties as the chief executive officer of the
Company. In the event the Executive is compensated for serving
as an officer or director, or both, of any subsidiary, division
or affiliate of the Company or any other entity in which the
Company has an equity interest, such compensation will be deemed
to be earned by the Company and will be paid to the Company by
the Executive. The Executive will devote substantially all of
his time during normal business hours and his best efforts, full
attention and energies to the business and affairs of the
Company.
(b) Service on Board and Executive Committee. The
Company will use best efforts to cause the Executive to be
elected as a member of its Board of Directors of the Company
throughout the Term and include the Executive in the management
slate for election as a director at each shareholders' meeting at
which his term as a director would otherwise expire. The Company
will also use best efforts to cause the Executive to be appointed
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to serve as a member of the Executive Committee of the Board of
Directors of the Company for each year he is elected as a
director. As of the date hereof, the Board of Directors of the
Company has elected the Executive to the Board of Directors and
appointed the Executive to the Executive Committee, each
conditioned only upon the Executive's commencement of employment
hereunder and effective as of the Commencement Date.
(c) Service as Chairman of the Board. The Company
agrees to use its best efforts to cause the Executive to be
appointed as the Chairman of the Board of Directors at the
earlier of: (i) the first meeting of the Board of Directors of
the Company following the first annual meeting of shareholders
after the fiscal year ended March 31, 1995; or (ii) one year from
the Commencement Date.
4. Cash Compensation.
(a) Base Salary: The Executive's annual base salary
will be $450,000 for the initial year of the term, payable
monthly or otherwise as in effect for other senior executives of
the Company from time to time. Such base salary will be reviewed
annually by the Board, or the Compensation Committee thereof
(together, the "Board"), and may be adjusted annually, in the
Board's sole discretion, provided that in no year will the
Executive's base salary be less than $450,000 per annum.
(b) Annual Bonus: For each full fiscal year in which
the Executive is employed by the Company on the last day thereof,
the Executive will be eligible to receive an annual performance
bonus in an amount up to 60% of the Executive's then-current
annual base salary. Such bonus will be determined by the Board,
based upon performance objectives established by the Board after
consultation with the Executive relating to (i) achievement of
budgetary goals, (ii) resident satisfaction levels, (iii) the
achievement of organizational objectives, and (iv) any other
items to which the parties mutually agree. Such bonus, if any,
shall be paid within 90 calendar days after the end of the
Company's fiscal year.
(c) Bonuses for 94/95 Fiscal Year and 95/96 Fiscal
Year: Notwithstanding Section 4(b), the Company will not pay the
Executive a bonus after the end of the fiscal year ending March
31, 1995. The Company will, however, pay to the Executive a
bonus in the amount of $270,000 on the first anniversary of the
Commencement Date; provided, that any bonus which would otherwise
be payable to the Executive at the end of the fiscal year ending
March 31, 1996 will be reduced by the amount calculated by
multiplying $270,000 times a fraction, the numerator of which is
the number of days during the Executive's first 12 months of
employment with the Company which are in the fiscal year ending
March 31, 1996 and the denominator of which is 365.
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(d) Signing Bonus. The Company will pay the Executive
a one-time bonus of $100,000 (the "Signing Bonus") within 10
calendar days after the Commencement Date; provided, however,
that the Executive will use his best efforts to be awarded a
bonus from his previous employer (the "Previous Employer Bonus")
and further provided that, if the Executive is awarded a Previous
Employer Bonus after the date hereof, the Signing Bonus will be
reduced as follows: (i) if the Previous Employer Bonus is $75,000
or less, the Signing Bonus will be reduced by the amount of the
Previous Employer Bonus; and (ii) if the Previous Employer Bonus
is greater than $75,000, the Signing Bonus will be reduced to
$25,000. In the event that the Previous Employer Bonus is not
determined as of the date which is 10 calendar days after the
Commencement Date, the Company will pay the Executive $100,000,
provided, that, upon payment of the Previous Employer Bonus, the
Executive will reimburse the Company any amounts to which he is
not entitled hereunder by reason of receipt of such Previous
Employer Bonus.
5. Options.
(a) Conditional Grant of Options. As of the date
hereof, the Compensation Committee has granted the Executive non-
qualified options (the "Options") to purchase 800,000 shares of
Common Stock of the Company (or comparable form of equity-based
compensation), pursuant to an incentive plan to be established by
the Company. The exercise price per share of the Options is
$5 _, which is the average of the intraday high and low bid and
ask prices on the NASDAQ National Market System of the Common
Stock of the Company for the last trading day immediately
preceding the date hereof. The Options will vest and become
exercisable to the extent of 20% of the shares of Common Stock
covered thereby after each of the first five anniversaries of the
Commencement Date provided the Executive remains in the
continuous employ of the Company. Notwithstanding the foregoing,
the agreement pursuant to which the Options are granted will
provide that the Options will become fully vested and exercisable
upon the Executive's death, Disability (as defined herein) or by
the termination of the Executive's employment with the Company in
a manner in which he would be entitled to receive payments under
Section 9(b) hereof. The Options will terminate no later than
10 years from the date of grant. Notwithstanding anything herein
to the contrary, if the stockholders of the Company do not
approve an equity-based incentive plan at the next annual meeting
of stockholders or if the Executive does not commence his
employment with the Company prior to January 1, 1995, the Options
will be rescinded as of the later of such two dates.
(b) Antidilution.
(i) In addition to the antidilution provisions
provided in the agreement pursuant to which the Options are
granted, upon the issuance of Common Stock to the Company's
shareholders pursuant to a rights offering completed on or
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before the first anniversary of this Agreement to fund the
purchase of units in Forum Retirement Partners, L.P., the
Executive will be entitled to participate in such rights
offering on the same terms and conditions as if he had
exercised all the Options immediately prior to such rights
offering (calculated as if all Options had vested).
(ii) The Company will provide the Executive with
prompt notice (the "Notice") of any rights offering which
would provide the Executive with rights under Section
5(b)(i), which Notice will state the terms and conditions of
such issuance. In the event the Executive elects to
exercise his right to participate in the rights offering,
the Executive will so notify the Company within 10 days from
receipt of the Notice.
(iii) If the Executive elects to purchase shares under
this Section 5(b), the Company will make a recourse loan to
the Executive for the purchase price upon the signing by the
Executive of a promissory note. Amounts due under the
promissory note will bear interest at the prime rate as
published by Citibank, N.A. in New York, New York, to be
established on the date of the promissory note and the first
day of each calendar quarter thereafter, provided, however,
that the maximum interest rate under the promissory note
will be 10% per annum. Interest will accrue and be
compounded quarterly. The balance of the promissory note,
including the principal and all accrued interest, will be
due and payable on the fifth annual anniversary of the date
of the promissory note. Except as provided below, while any
amounts are owing under the promissory note, 25% of the
annual bonus to be paid to the Executive in accordance with
Section 4(b) hereof, will be applied to reduce such amounts,
provided, however, that such payments will no longer be
required, if on the first day of any calendar quarter, the
balance of the promissory note, including principal and all
accrued interest, is equal to or less than the product of
(x) the number of shares of the Company's Common Stock owned
by the Executive which were acquired through any rights
offering referenced in subparagraph (i) above, multiplied by
(y) 66.67% of the average of the intraday high and low bid
and ask prices on the NASDAQ National Market System of the
Common Stock of the Company for the 20 consecutive trading
days preceding the calculation date.
6. Benefits.
(a) Welfare: During the Term, the Executive will be
entitled to participate in all medical and dental insurance and
other welfare benefit plans of the Company in which other senior
executives of the Company participate, whether currently in
effect or placed in effect by the Company after the date hereof.
The Executive's rights under such plans will be governed by the
terms thereof and will not be enlarged hereunder or otherwise
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affected hereby. The Executive acknowledges that the Company, in
its sole discretion, may amend or terminate any such plan at any
time.
(b) Alternative Health Insurance Benefits. For the
maximum period permitted by law, the Executive may elect to
continue the welfare benefits provided by his current employer
under COBRA. In such event, the Company agrees to reimburse the
Executive for any payments required to keep such coverage in
effect.
(c) Term Life Insurance. For the first year of the
Term, the Company agrees to provide the Executive, and to pay the
premiums of, one or more term life insurance policies which in
the aggregate provide for total coverage of $500,000.
(d) Additional Disability Insurance. For the first
year of the Term, the Company agrees to supplement any other long-
term disability policies of the Company, whether through
insurance or through self-funding, so that, in the event of long-
term disability, the Executive will receive a minimum of $7,500
per calendar month after a maximum 90 day waiting period.
(e) Moving Expenses: The Company will promptly pay or
reimburse the Executive for moving and relocation expenses as
follows:
(i) actual direct moving costs incurred in
relocating the Executive and his family and their belongings
and household furnishings to the locale of the principal
executive offices of the Company;
(ii) real estate brokerage commissions (up to a
maximum of 6% of the sales price of the Executive's current
residence) paid in connection with the sale of the
Executive's current residence in Florida;
(iii) closing costs, including "points" and any
other financing fees, paid by the Executive in connection
with the purchase and financing by the Executive of a new
home in the same locale as the principal executive offices
of the Company;
(iv) reasonable travel expenses, determined in
good faith by the Company, for the Executive and his family
to travel to the locale of the principal executive offices
to search for a new home, to visit schools, and for other
purposes reasonably associated with the Executive's
relocation;
(v) reimbursement of forfeitures of advances which
the Executive has paid in connection with private schools;
and
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(vi) temporary living expenses of the Executive
from the Commencement Date until the relocation of the
Executive's family to the locale of the principal executive
offices of the Company, provided, however, that the
Executive agrees to use his best efforts to accomplish such
relocation as soon as reasonably possible.
(f) Alternatives Related to Home Sale or Purchase: In
addition to the above, the Company will, at the Executive's
option and substantially concurrent with the relocation by the
Executive to the locale of the principal executive offices of the
Company, do one of the following:
(i) advance the down payment and fund the
carrying costs of the Executive's new home in the locale of
the principal executive offices until the Executive's
existing home is sold, in which case the Executive agrees to
use his reasonable efforts to sell his existing home;
(ii) protect the Executive against a loss relative
to his adjusted cost basis of the Executive's existing home
upon the sale of his existing home up to $100,000; or
(iii) purchase the Executive's current home for
the appraised value of the Executive's home, up to $500,000.
(g) Income Tax Reimbursement. The Company will pay
the Executive such additional sums necessary to pay any federal
and state income tax obligations caused by Sections 6(b), 6(c)
6(d), 6(e) and 6(f)(i) and (ii).
7. Expenses. The Company will pay or reimburse the Executive
for reasonable and necessary expenses incurred by the Executive in
connection with his duties on behalf of the Company
in accordance with the general policies of the Company in effect
from time to time for other senior executives of the Company.
8. Place of Performance. The Executive will be based at the
principal executive offices of the Company except for travel
reasonably required for Company business. Prior to the
Executive's relocation to the locale of the principal executive
offices of the Company, any commuting time of the Executive from
Florida to the principal executive offices of the Company will
not detract from his full time responsibilities as chief
executive officer of the Company.
9. Termination.
(a) Termination Pay Other than after a Change in
Control, or For Death, Disability or For Cause. If the
Executive's employment hereunder during the Term is terminated by
the Company other than as a result of the Executive's death,
Disability, for Cause or a Change in Control, then the Company
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will pay the amounts and make available the benefits specified in
this Section 9(a).
(i) For a period commencing on the date of the
Executive's termination of employment with the Company
("Termination Date") and ending on the second anniversary of
the Termination Date (such period, the "Two-Year Severance
Period"), the Executive will receive his then-current base
salary. Such payments will be made periodically in
accordance with Section 4(a); provided, however, that the
Company will be entitled to offset against its obligation to
make such periodic payments pursuant to Section 9(a)(i) an
amount equal to all compensation, exclusive of welfare
benefits, received by the Executive from parties other than
the Company and its affiliates for services rendered (as an
employee or otherwise) during such period. The Executive
will notify the Company of the receipt of any such
compensation at least monthly.
(ii) For the Two-Year Severance Period, the
Company will continue to provide the Executive with the
welfare benefits that he was receiving from the Company
immediately prior to the Termination Date ("Welfare
Benefits") on the same terms and conditions (including
employee contributions toward the premium payments) under
which the Executive was entitled to participate immediately
prior to the Termination Date. Such Welfare Benefits may be
modified or terminated by the Company following the
Termination Date provided such change is applicable to
senior executives of the Company generally. Notwithstanding
the foregoing, the Company's obligation to provide Welfare
Benefits pursuant to this Section 9(a)(ii) will terminate
when the Executive commences any other employment during the
Two-Year Severance Period and when the Executive receives
welfare benefits in connection with such other employment
that are reasonably comparable, but not necessarily as
beneficial, to the Executive as the Welfare Benefits then
being provided to the Executive pursuant to the terms
hereof.
(b) Termination Pay Following a Change in Control. If
the Executive's employment with the Company is terminated
contemporaneously with or within 12 months following a Change in
Control by the Company other than as a result of the Executive's
death, Disability or for Cause, or if the Executive terminates
his employment with the Company for any reason contemporaneously
with or within 12 months following a Change in Control, the
Company will pay the amounts and make available the benefits
specified in this Section 9(b).
(i) The Executive will receive a lump sum
severance payment in an amount equal to two times the
Executive's then-current base salary. Such payment shall be
made within 10 calendar days following the Termination Date.
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(ii) Until the second anniversary of the date of
termination following a Change in Control (the "CIC
Termination Date") the Company will continue to provide the
Executive Welfare Benefits. Notwithstanding the foregoing,
the Company's obligation to provide Welfare Benefits
pursuant to this Section 9(b)(ii) will terminate when the
Executive commences any other employment during the two-year
period following the CIC Termination Date and when the
Executive receives welfare benefits in connection with such
other employment that are reasonably comparable, but not
necessarily as beneficial, to the Executive as the Welfare
Benefits then being provided to the Executive pursuant to
the terms hereof.
(iii) In the event that a Change in Control occurs
within the first 18 months of the Term, the Executive will
have the right to cause the Company to repurchase the
outstanding Options for $0.625 each. The Company will make
such payment within 10 calendar days of receipt of a notice
from the Executive exercising such right.
(iv) Contemporaneous with any Change in Control,
the Company will provide to the Executive security
reasonably satisfactory to the Executive to secure payment
of the obligations of the Company under this Section 9(b)
should either party exercise its right of termination
provided under this Section 9(b). Without limiting the
Company's ability to evaluate other forms of security which
may be reasonably satisfactory to the Executive, for
purposes of this Section 9(b)(iv), security in the form of a
letter of credit issued by a bank with a rating of AA or
better or a security interest in U.S. government securities
will be deemed to be reasonably satisfactory to the
Executive.
(c) Termination for Cause, Death or Disability. The
Executive's employment hereunder may be terminated by the Company
for any reason, or without reason, by written notice as provided
in Section 16, subject to the provisions of this Section 9. In
the event the Executive's employment hereunder is terminated by
the Company for Cause or is terminated by the Executive, or in
the event of the Executive's death or Disability, the
compensation obligations of the Company under this Agreement will
cease as of the effective date of such termination, except for
any compensation earned or accrued but unpaid through such date.
Subject to any benefit continuation requirements of applicable
law, in the event the Executive's employment hereunder is
terminated for Cause, the benefit obligations of the Company
under this Agreement will cease as of the effective date of such
termination, except for any benefits earned and accrued but
unpaid through such date. In the event of the Executive's death
or Disability, the Company will provide the Executive and his
family with Welfare Benefits for a period of two years from the
date of the Executive's death or Disability.
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(d) Termination by the Executive. If the Executive
voluntarily terminates his employment with the Company, other
than contemporaneously with or within 12 months following a
Change in Control, subject to any benefit continuation
requirements of applicable law, the Executive will receive no
severance payments or welfare benefits after the date of
termination, other than those which are accrued but unpaid as of
the date of termination.
(e) Limitation on Parachute Payments. Anything in
this Agreement to the contrary notwithstanding, if it shall be
determined that any payment or distribution by the Company or any
of its affiliates to or for the benefit of the Executive
hereunder would be subject to the excise tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986 (the
"Code") (or any successor provision thereto) but for the
application of this Section 9(e), then the payments and benefits
to be provided hereunder will be reduced to the minimum extent
necessary so that no portion thereof shall be subject to Excise
Tax but only if by reason of, and giving effect to such
reduction, the Executive's net after-tax benefit will exceed the
Executive's net after-tax benefit if such reduction were not
made. In the event that any reduction is required by this
Section 9(e) in the payments and benefits hereunder, such
reduction will first be made in the payments to be received under
Section 9(b)(i).
(f) Release. Acceptance by the Executive of three
months' compensation pursuant to Section 9(a)(i) or acceptance by
the Executive of any other amounts pursuant to this Section 9,
other than Welfare Benefits, will constitute a full and complete
release by the Executive of any and all claims the Executive may
have against the Company, its officers, directors and affiliates,
arising from the Executive's cessation of employment with the
Company.
(g) Definition of "Cause." For purposes of this
Agreement, the term "Cause" means:
(i) the willful and continued failure by the
Executive substantially to perform his duties hereunder
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness), after written
notice demanding substantial performance is delivered to the
Executive by the Board, which notice identifies in
reasonable detail the manner in which the Board believes the
Executive has not substantially performed; provided,
however, that the failure of the Executive or the Company to
meet performance objectives, such as operational or
financial objectives established by the Board, will not be
considered failure by the Executive substantially to perform
his duties hereunder; or
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(ii) an act of fraud which is known to the
Executive, embezzlement or theft by the Executive in
connection with his duties or in the course of his
employment with the Company.
(h) Definition of "Disability." For the purposes of
this Agreement, the term "Disability" means the Executive's
incapacity due to physical or mental illness substantially to
perform his duties on a full-time basis for six consecutive
months and within 30 calendar days after a notice of termination
is thereafter given by the Company the Executive shall not have
returned to the full-time performance of the Executive's duties.
(i) Definition of "Change in Control." For the
purposes of this Agreement, the term "Change in Control" means
the occurrence of any of the following events:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or other legal
person; provided, however, that such merger, consolidation
or reorganization will not constitute a change in control
if, after such merger, consolidation or change in control,
any of Apollo FG Partners, L.P., Forum Holdings, L.P. (an
investment partnership affiliated with The Hampstead Group),
Healthcare Resources I, L.P. (an investment partnership
affiliated with Evergreen Resources, Inc.) or affiliates of
any of the foregoing (collectively, the "FGI Investors"),
individually or in the aggregate, has the power to elect a
majority of the board of directors of the surviving
corporation immediately after such merger, consolidation or
reorganization;
(ii) The Company sells or otherwise transfers all
or substantially all of its assets to another corporation or
other legal person, other than another corporation or other
legal person controlled by the Company, provided, however,
that such sale or transfer will not constitute a change in
control if the Company leases the assets from such
transferee and immediately after such sale and leaseback
transaction the operations of the Company have not been
materially changed relative to the operations of the Company
immediately prior to such sale and leaseback transaction,
and further provided that after such sale and leaseback
transaction the FGI Investors, individually or in the
aggregate, have the power to elect a majority of the board
of directors of the Company;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Exchange Act, disclosing
that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (other than one or
more of the FGI Investors) has become the beneficial owner
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(as determined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of the then-
outstanding securities of the Company entitled to vote
generally in the election of directors (the "Voting Stock")
representing more than 50% of the then-outstanding Voting
Stock of the Company and such person filing the Schedule 13D
or Schedule 14D-1 has actually become the beneficial owner
of Voting Stock representing more than 50% of the then-
outstanding Voting Stock. In such circumstances, the Change
in Control will be deemed to have occurred on the date on
which a majority of the board of directors is constituted of
persons who are not affiliates or nominees of the FGI
Investors, individually or in the aggregate;
(iv) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or Schedule
14A (or any successor schedule, form or report or item
therein) that (x) a change in control of the Company has
occurred or (y) a change in control of the Company will
occur in the future pursuant to any then-existing contract
or transaction and such change in control of the Company
actually occurs. In such circumstances, the Change in
Control will be deemed to have occurred on the date on which
a majority of the board of directors is constituted of
persons who are not affiliates or nominees of the FGI
Investors, individually or in the aggregate; or
(v) A majority of the board of directors of the
Company, or any other corporation or entity to which
substantially all of the assets of the Company have been
transferred (other than in a sale and leaseback transaction
described in Section 9(i)(v)), is composed of the nominees
or affiliates of any person, corporation, partnership or
other organization, or any group of persons, corporations,
partnerships or other organizations acting in concert, other
than any of the FGI Investors or affiliates thereof,
individually or in the aggregate.
10. Confidentiality and Noncompetition.
(a) Confidentiality: The Executive acknowledges that
in the course of his employment by the Company, he will or may
have access to and become informed of confidential and/or
proprietary information which is a competitive asset of the
Company, including, without limitation, (i) the terms of any
agreement between the Company and any employee, customer or
supplier, (ii) pricing strategy, (iii) marketing methods, (iv)
development ideas and strategies, (v) personnel training and
development programs, (vi) financial results, (vii) strategic
plans and demographic analyses, (viii) proprietary computer and
systems software, and (ix) any other non-public information
concerning the Company, its employees, suppliers or customers
(collectively, "Confidential Information"). The Executive will
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keep all Confidential Information in strict confidence during the
Term and thereafter and will never directly or indirectly make
known, divulge, reveal, furnish, make available or use any
Confidential Information (except in the course of his regular
authorized duties on behalf of the Company). The Executive's
obligations of confidentiality hereunder will survive termination
of his employment at the Company, whether terminated by the
Company or by the Executive and regardless of any actual or
alleged breach by the Company of this Agreement, until and unless
any such Confidential Information becomes, through no fault of
the Executive, generally known to the public or the Executive is
required by law to make disclosure (after giving the Company
notice and an opportunity to contest such requirement). The
Executive's obligations under this Section 10 are in addition to,
and not in limitation of or preemption of, all other obligations
of confidentiality which the Executive may have to the Company
under general legal or equitable principles.
(b) Noncompetition: While any payments are being made
to the Executive under Section 9(a) hereof, or for a period of
two calendar years following the receipt of the payment by the
Executive pursuant to Section 9(b)(i) hereof, the Executive will
not, without the prior written consent of the Company in its sole
discretion, engage in any Competitive Activity. For purposes of
this Agreement, the term "Competitive Activity" means the
Executive's participation, without the written consent of the
Board, in the management of any business enterprise, over 50% of
the gross revenue for the immediately preceding fiscal year of
which was derived from operations in the congregate care or
retirement services business in a market in which the Company
competes or in which the Company intends to compete pursuant to a
business plan created by the Company during the Term.
(c) Remedies: The Executive acknowledges that a
violation of any of the provisions of this Section 10 could cause
irreparable harm to the Company, and that the Company's remedy at
law for any such violation could be inadequate. Accordingly, in
addition to any other relief afforded by law or this Agreement,
including damages sustained by a breach of this Agreement, and
without any necessity or proof of actual damages, the Company
will have the right to enforce this Agreement by specific
remedies, which will include, among other things, temporary and
permanent injunctions, it being the understanding of the parties
hereto that damages, the forfeitures described above and
injunctions are proper modes of relief and are not to be
considered as alternative remedies.
11. No Mitigation Obligation. The Company hereby acknowledges
that it will be difficult, and may be impossible,
for the Executive to find reasonably comparable employment
following the Termination Date and that the noncompetition
covenant contained in Section 10(b) hereof may further limit the
employment opportunities for the Executive. Accordingly, the
payment of the severance compensation by the Company to the
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Executive in accordance with the terms of this Agreement will be
liquidated damages, and the Executive will not be required to
mitigate the amount of any payment provided for in this Agreement
by seeking other employment or otherwise, provided, however, that
nothing herein will affect the provisions of Section 9.
12. Indemnification Agreement. The Company agrees that it
will, within the first 30 days of the Term, enter into an
indemnification agreement with the Executive upon the same terms
and conditions as the indemnification agreements of the other
senior executives and members of the Board of Directors of the
Company.
13. Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or in writing, between the
parties hereto with respect to the subject matter hereof and
contains all of the covenants and agreements between the parties
with respect to such subject matter. Each party to this
Agreement acknowledges that, except as aforesaid, no
representations, inducements, promises or other agreements,
orally or otherwise, have been made by any party, or anyone
acting on behalf of any party, pertaining to the subject matter
hereof, which are not embodied herein, and that no other
agreement, statement, or promise pertaining to the subject matter
hereof that is not contained in this Agreement shall be valid or
binding on either party.
14. Publicity. Each party agrees that it will not make any
public disclosure or announcement of this Agreement or of the
Executive's contemplated employment with the Company, including
in any press releases or in any disclosures made to governmental
agencies, without the prior written consent of the other party.
15. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state or
other taxes as the Company is required to withhold pursuant to
any law or government regulation or ruling.
16. Successors and Binding Agreement. This Agreement will be
binding upon and inure to the benefit of and be enforceable by
(i) the Company and any successor to the Company, including
without limitation any persons acquiring directly or indirectly
all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or
otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but will not
otherwise be assignable, transferable or delegable by the Company
and (ii) the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
legatees. This Agreement is personal in nature and neither of
the parties hereto may, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided herein. Without limiting
the generality or effect of the foregoing, the Executive's right
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to receive payments hereunder will not be assignable,
transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by
Executive's will or by the laws of descent and distribution and,
in the event of any attempted assignment or transfer contrary to
this Section 16, the Company will have no liability to pay any
amount so attempted to be assigned, transferred or delegated.
17. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents,
requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof confirmed), or five business days after having
been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after
having been sent by a nationally recognized overnight courier service
such as Federal Express or
UPS, addressed to the Company (to the attention of the Chairman
of the Board of the Company) at its principal executive office
and to the Executive at his principal residence, or to such other
address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
18. Governing Law. The validity, interpretation, construction
and performance of this Agreement will be governed
by and construed in accordance with the substantive laws of the
State of Indiana, without giving effect to the principles of
conflict of laws of such State.
18A. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or
circumstances is held invalid, unenforceable or otherwise
illegal, the remainder of this Agreement and the application of
such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable
or otherwise illegal will be reformed to the extent (and only to
the extent) necessary to make it enforceable, valid or legal.
19. Survival of Provisions. Notwithstanding any other
provision of this Agreement, the parties' respective rights and
obligations under Sections 9 and 10 will survive any termination
or expiration of this Agreement or the termination of the
Executive's employment for any reason whatsoever.
20. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by the Executive and
the Company. No waiver by either party hereto at any time of any
breach by the other party hereto or compliance with any condition
or provision of this Agreement to be performed by such other
party will be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.
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Unless otherwise noted, references to "Sections" are to sections
of this Agreement. The captions used in this Agreement are
designed for convenient reference only and are not to be used for
the purpose of interpreting any provision of this Agreement.
21. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereof have executed this
Agreement as of the day and year first written above.
FORUM GROUP, INC.
By: /s/ Robert A. Whitman
----------------------
Robert A. Whitman,
Chairman of the Board
/s/ Mark L. Pacala
---------------------
Mark L. Pacala
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