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EXHIBIT 10.114
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), effective as of the Effective
Time set forth in Section 2.2 of that certain Agreement and Plan of Merger,
dated December 20, 1993, by and between Regency Health Services, Inc. and Care
Enterprises, Inc. ("Effective Date") is entered into by and between Cecil Mays
("Employee") and Regency Health Services, Inc., a Delaware corporation
("Company").
The Company desires to establish its right to the continued services
of the Employee, in the capacity described below, on the terms and conditions
and subject to the rights of termination hereinafter set forth, and the
Employee is willing to accept such employment on such terms and conditions.
In consideration of the mutual agreements hereinafter set forth, the
Employee and the Company have agreed and do hereby agree as follows:
1. EMPLOYMENT AS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER OF THE COMPANY AND OF CARE ENTERPRISES, INC. The Company does hereby
employ, engage, and hire the Employee as Chairman of the Board and Chief
Executive Officer of the Company and of Care Enterprises, Inc., a wholly-owned
subsidiary of the Company ("Care"), and the Employee does hereby accept and
agree to such hiring, engagement, and employment. The Employee's duties as
Chief Executive Officer during the Employment Period (defined below) shall be
such executive and managerial duties as the Board of Directors of the Company
and Care shall from time to time prescribe and as provided in the Bylaws of the
Company and Care. The Employee shall devote his full time, energy, and skill
to the performance of his duties for the Company and Care and for the benefit
of the Company and Care, reasonable vacations authorized by the Company's Board
of Directors and reasonable absences because of illness excepted. Furthermore,
the Employee shall exercise due diligence and care in the performance of his
duties to the Company under this Agreement.
2. TERM OF AGREEMENT. The term ("Term") of this Agreement shall
commence on the Effective Date and shall continue for a period of three (3)
years; provided, however, that on each anniversary of the Effective Date at
which time the remaining term of the Agreement is two (2) years, the Term of
the Agreement shall automatically be extended for one additional year unless,
not later than any such anniversary date, either party shall have given written
notice to the other that it does not wish to extend the Term of the Agreement.
The period of time commencing on the Effective Date and ending on the date of
termination of the Employee's employment ("Termination Date") under this or any
successor agreement shall be referred to as the "Employment Period."
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3. COMPENSATION.
(a) BASE SALARY. The Company shall pay the
Employee, and the Employee agrees to accept from the Company,
in full payment for his services to the Company a base salary
at the rate of Four Hundred Thousand Dollars ($400,000) per
year ("Base Salary"), payable in equal biweekly installments
or at such other time or times as the Employee and the Company
shall agree. Employee's Base Salary shall be reviewed at
least annually by the Company and may be increased as
determined by the Company's Board of Directors in its sole and
absolute discretion. Employee's Base Salary shall not be
decreased at any time during the Term of the Agreement from
the Base Salary then in effect.
(b) PERFORMANCE BONUS - BOARD OF DIRECTORS
DISCRETION. Employee shall be eligible to receive an annual
performance bonus based upon a percentage of his Base Salary.
Except as provided in Section 7, any such bonus awarded to the
Employee shall be payable in the amount, in the manner, and at
the time determined by the Company's Board of Directors in its
sole and absolute discretion; provided, however, that, with
respect to each fiscal year that ends during the Term of the
Agreement, in the event the Company's actual aggregate pre-tax
net income for such fiscal year, as reasonably determined by
the Company on the basis of its audited financial statements
prepared in accordance with generally accepted accounting
principles ("Pre-Tax Net Income"), exceeds the Company's
projected Pre-Tax Net Income, as established by the Company's
Board of Directors in its budget for such fiscal year, the
Company shall pay Employee a bonus in an amount equal to or in
excess of fifty percent (50%) of Employee's Base Salary as in
effect for such fiscal year. Such amount shall be paid within
sixty (60) days following the close of such fiscal year.
Employee's bonus payable pursuant to this Agreement for fiscal
(calendar) year 1994 shall be calculated based upon the amount
of Base Salary for the period beginning on the Effective Date
and ending December 31, 1994 and based upon the actual and
projected Pre-Tax Net Income for the same period. In no event
shall the provisions of this Paragraph 3(b) reduce or in any
other manner affect Employee's entitlement under any other
bonus program of the Company, including, but not limited to,
any bonus to which Employee may be entitled pursuant to his
Employment Agreement, dated April 1, 1993, in effect
immediately prior to the Effective Date, with respect to the
period beginning on July 1, 1993 and ending on the Effective
Date.
4. FRINGE BENEFITS. Employee shall be entitled to participate in
any benefit programs adopted from time to time by the Company for the benefit
of its executive employees, and Employee shall be entitled to receive such
other fringe benefits as may be granted to him from time to time by the
Company's Board of Directors.
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(a) BENEFIT PLANS. Employee shall be entitled to
participate in any benefit plans relating to stock options,
stock purchases, pension, thrift, profit sharing, life
insurance, medical coverage, education, or other retirement or
employee benefits available to other executive employees of
the Company, subject to any restrictions (including waiting
periods) specified in such plans.
(b) AUTOMOBILE. The Company shall provide
Employee with a car allowance of Three Hundred Dollars ($300)
per month, which shall be applied by Employee towards the
purchase or lease of a suitable vehicle.
(c) VACATION. Employee shall be entitled to four
(4) weeks of paid vacation per calendar year, with such
vacation to be scheduled and taken in accordance with the
Company's standard vacation policies.
(d) DISABILITY INSURANCE. The Company shall
purchase and maintain or self insure and maintain a disability
insurance policy for Employee during the term of this
Agreement and any consulting period pursuant to Section 7(d)
hereof, which policy shall guarantee to Employee the payment
to Employee of a minimum of 60% of his Base Salary and bonus
(as described in Section 7(b) hereof), or a minimum of 100% of
such Base Salary and bonus in the event the policy is self
insured, for the period of such Disability or until Employee
attains the age of 67 years.
5. BUSINESS EXPENSES. The Company shall reimburse the Employee
for any and all necessary, customary, and usual expenses, properly receipted in
accordance with Company policies, incurred by Employee on behalf of the
Company.
6. TERMINATION OF EMPLOYEE'S EMPLOYMENT.
(a) DEATH. If the Employee dies while employed
by the Company, his employment shall immediately terminate.
The Company's obligation to pay the Employee's Base Salary
shall cease as of the date of Employee's death. Thereafter,
Employee's beneficiaries or his estate shall receive benefits
in accordance with the Company's retirement, insurance, and
other applicable programs and plans then in effect.
(b) DISABILITY. If, as a result of the
Employee's incapacity due to physical or mental illness,
Employee shall have been absent from the full-time performance
of his duties with the Company for six (6) consecutive months,
and, within thirty (30) days after written notice is provided
to him by the Company, he shall not have returned to the
full-time performance of his duties, Employee's employment
under this Agreement may be terminated by the Company for
Disability. During the period prior to such termination
during which the Employee is absent from the full-time
performance of his
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duties with the Company due to Disability, the Company shall
continue to pay Employee's Base Salary at the rate in effect
at the commencement of such Disability. Subsequent to such
termination, Employee's benefits shall be determined under the
Company's retirement insurance, and other compensation
programs then in effect in accordance with the terms of such
programs.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The
Company may terminate Employee's employment under this
Agreement for "Cause," at any time prior to expiration of the
Term of the Agreement, only in the event of the Employee's
conviction for fraud, misappropriation, or embezzlement or a
determination that Employee has been grossly negligent in the
execution of his duties under this Agreement. In such a case,
Employee's employment under this Agreement may be terminated
immediately without any advance written notice, and the
Company's obligation to pay Employee's Base Salary shall cease
as of the Termination Date.
(d) TERMINATION BY THE EMPLOYEE FOR GOOD REASON.
The Employee shall have the right to terminate this Agreement
for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, without the Employee's
express written consent, of any one or more of the following
events:
(i) The assignment to the Employee of any
duties that are inconsistent with, or the reduction
of powers or functions associated with Employee's
positions, duties, responsibilities, and status with
the Company as of the Effective Date; a change in
Employee's reporting responsibilities; or improper
intervention by the Company in the Employee's ability
to materially perform the duties and responsibilities
that have been assigned to the Employee under this
Agreement, except in connection with the Company's
termination of Employee's employment pursuant to
Section 6(c);
(ii) The Company's material breach of any of
the provisions of this Agreement, including, but not
limited to, a reduction by the Company in the
Employee's Base Salary in effect as of the Effective
Date, or as the same may be increased as provided
herein; or a change in the conditions of Employee's
employment (e.g., including, without limitation, a
failure by the Company to provide the Employee with
incentive compensation and benefit plans that
provide comparable benefits and amounts as such type
programs in effect as of the Effective Date, etc.);
or
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(iii) The relocation of the Company's
principal executive offices to a location more than
25 miles from its location as of the Effective Date
or the Company's requiring the Employee to be based
anywhere other than the Company's principal executive
offices, except for required travel on the Company's
business to an extent substantially consistent with
the Employee's present business travel obligations.
The Employee agrees to provide the Company thirty (30) days' prior
written notice of any termination for Good Reason, during which 30 day period
the Company shall have the right to cure the circumstances giving rise to the
Good Reason stated in such notice.
7. COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR
CAUSE, OR BY THE EMPLOYEE FOR GOOD REASON. If the Employee's employment shall
be terminated (i) by the Company other than for Cause, or (ii) by the Employee
for Good Reason, the Employee shall be entitled to the following benefits:
(a) PAYMENT OF UNPAID BASE SALARY. The Company
shall immediately pay the Employee any portion of the
Employee's Base Salary not paid prior to the Termination Date.
(b) LUMP SUM PAYMENT. Within five days from the
Termination Date, the Company shall pay to the Employee, in a
lump sum, an amount equal to the sum of (i) an amount equal to
all Base Salary that would have been payable to the Employee
pursuant to this Agreement had the Employee continued to be
employed for the remaining unexpired term of this Agreement
(such Base Salary for such remaining term being equal to the
Employee's Base Salary in effect as of the Termination Date),
and (ii) an amount equal to the bonus payments that would have
been payable to the Employee pursuant to this Agreement had
his annual bonus for each year, or portion thereof, of the
remaining unexpired term of this Agreement been equal to the
greater of (A) the total of any performance bonus or bonuses
paid to the Employee pursuant to Section 3(b) above in the
fiscal year of the Company ended immediately prior to the
fiscal year in which the Termination Date occurs, (B) the
average yearly amount of such bonuses with respect to the
three (or, if less, the number of years the Employee has been
employed by the Company or its predecessor) fiscal years ended
immediately prior to the fiscal year in which the Termination
Date occurs, and (C) fifty percent (50%) of Employee's Base
Salary in effect as of the Termination Date.
(c) IMMEDIATE VESTING OF STOCK OPTIONS.
Notwithstanding any provision in any applicable Company
benefit plans or agreements (including, but not limited to,
those relating to stock options,
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stock appreciation rights, restricted stock awards, stock
purchases, pensions, thrifts, profit sharing, or other
retirement or employee benefits) to the contrary, all rights
to such benefits previously granted to Employee shall, as of
the Termination Date, become immediately fully vested and
exercisable by the Employee and shall remain exercisable for a
period thereafter of not less than one (1) year. The
provisions of this Section 7(c) shall constitute an amendment
to any such plans or agreements of the Company referred to
above as of the Effective Date.
(d) CONSULTING AGREEMENT. For a period of two
years following the Termination Date, the Company shall pay
the Employee his annual Base Salary as of the Termination
Date, together with a yearly bonus equal to the amount
specified in Section 7(b)(ii), in exchange for the Employee's
agreement to provide, subject to his continuing availability
and discretion, consulting services to the Company during such
two-year period. Payments for Base Salary shall be made as
provided in Section 3(a), and bonus payments shall be made
within 30 days of the end of such fiscal year of the Company
ending within such two-year period. The provisions of this
Section 7(d) shall also accrue to Employee for two (2) years
following the Termination Date in the event of normal temporal
termination of this Agreement following a cessation in the
automatic renewal provided for in Section 2 hereof and in the
event Employee terminates his employment for any reason or the
Company terminates the Employee for any reason other than
Cause.
(e) CONTINUATION OF FRINGE BENEFITS. The Company
shall continue to provide the Employee with all Fringe
Benefits set forth in Section 4 throughout the remaining
unexpired Term of the Agreement, as if the Employee's
employment under the Agreement had not been terminated. If,
as the result of termination of Employee's employment,
Employee and/or his otherwise eligible dependents or
beneficiaries shall become ineligible for benefits under any
one or more of the Company's benefit plans, the Company shall
continue to provide the Employee and his eligible dependents
or beneficiaries with benefits at a level at least equivalent
to the level of benefits for which the Employee and his
dependents and beneficiaries were eligible under such plans
immediately prior to the Termination Date.
(f) NO MITIGATION REQUIRED; NO OTHER ENTITLEMENT
TO BENEFITS UNDER AGREEMENT. The Employee shall not be
required in any way to mitigate the amount of any payment
provided for in this Section 7, including, but not limited to,
by seeking other employment, nor shall the amount of any
payment provided for in this Section 7 be reduced by any
compensation earned by the Employee as the result of
employment with another employer after the Termination Date,
or
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otherwise. Except as set forth in this Section 7, following a
termination governed by this Section 7, the Employee shall not
be entitled to any other compensation or benefits set forth in
this Agreement, except as may be separately negotiated by the
parties and approved by the Board of Directors of the Company
in writing in conjunction with the termination of Employee's
employment under this Section 7.
8. DISPUTE RELATING TO EMPLOYEE'S TERMINATION OF EMPLOYMENT FOR
GOOD REASON. If the Employee resigns his employment with the Company alleging
in good faith as the basis for such resignation any of the grounds specified in
Section 6(d), and if the Company then disputes Employee's right to the payment
of benefits under Section 7, the Company shall continue to pay Employee the
full compensation (including, but not limited to, his Base Salary) in effect at
the date Employee provided notice of such resignation, and the Company shall
continue the Employee as a participant in all compensation, benefit, and
insurance plans in which the Employee was then a participant, until the earlier
of the expiration of the Term of the Agreement or the date the dispute is
finally resolved, either by mutual written agreement of the parties or by
decree of a court of competent jurisdiction that is not appealable or with
respect to which the time for appeal has expired and no appeal has been
perfected. For the purposes of this Section, the Company shall bear the burden
of proving that the grounds for Employee's resignation do not fall within the
scope of Section 6(d), and there shall be a rebuttable presumption that the
Employee alleged such grounds in good faith.
9. NONCOMPETITION PROVISIONS.
(a) RIGHT TO COMPANY MATERIALS. Employee agrees
that all styles, designs, lists, materials, books, files,
reports, correspondence, records, and other documents
("Company Materials") used, prepared, or made available to
Employee, shall be and shall remain the property of the
Company. Upon the termination of employment or the expiration
of this Agreement, all Company Materials shall be returned
immediately to the Company, and Employee shall not make or
retain any copies thereof.
(b) ANTISOLICITATION. Employee promises and
agrees that during the term of this Agreement he will not
influence or attempt to influence customers or suppliers of
the Company or any of its present or future subsidiaries or
affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or
other entity then in competition with the business of the
Company, or any subsidiary or affiliate of the Company.
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(c) SOLICITING EMPLOYEES. During the term of
this Agreement and for the 12-month period commencing on the
Termination Date, Employee promises and agrees that he will
not directly or indirectly solicit any of the Company's
employees to work for any business, individual, partnership,
firm, corporation, or other entity then in competition with
the business of the Company or any subsidiary or affiliate of
the Company.
10. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by fax or first class mail,
certified or registered with return receipt requested, and shall be deemed to
have been duly given three (3) days after mailing or twenty-four (24) hours
after transmission of a fax to the respective persons named below:
If to Company: Regency Health Services, Inc.
2742 Dow Avenue
Tustin, CA 92680
Phone: (714) 544-4443
Fax: (714) 544-2401
If to Employee: Cecil Mays
7 Muir Beach Circle
Corona Del Mar, CA 92625
Phone: (714) 721-9306
Either party may change such party's address for notices by notice duly given
pursuant hereto.
11. ATTORNEYS' FEES. In the event arbitral or judicial
determination is necessary of any dispute arising as to the parties' rights and
obligations hereunder, the Company and Employee shall bear their respective
attorneys' fees and costs associated with such dispute; provided, however, that
in the event that it is determined that the Company breached this Agreement,
the Company shall pay or reimburse Employee for all reasonable attorneys' fees
and costs associated with such dispute.
12. TERMINATION OF PRIOR AGREEMENTS. This Agreement terminates
and supersedes any and all prior agreements and understandings between the
parties with respect to employment or with respect to the compensation of the
Employee by the Company from and after the Effective Date.
13. ASSIGNMENT; SUCCESSORS. This Agreement is personal in its
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; provided that, in the event of the
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merger, consolidation, transfer, or sale of all or substantially all of the
assets of the Company with or to any other individual or entity, this Agreement
shall, subject to the provisions hereof, be binding upon and inure to the
benefit of such successor and such successor shall discharge and perform all
the promises, covenants, duties, and obligations of the Company hereunder.
14. GOVERNING LAW. This Agreement and the legal relations thus
created between the parties hereto shall be governed by and construed under and
in accordance with the laws of the State of California.
15. ENTIRE AGREEMENT; HEADINGS. This Agreement embodies the
entire agreement of the parties respecting the matters within its scope and may
be modified only in writing. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
16. WAIVER; MODIFICATION. Failure to insist upon strict
compliance with any of the terms, covenants, or conditions hereof shall not be
deemed a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right
or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times. This
Agreement shall not be modified in any respect except by a writing executed by
each party hereto.
17. SEVERABILITY. In the event that a court of competent
jurisdiction determines that any portion of this Agreement is in violation of
any statute or public policy, only the portions of this Agreement that violate
such statute or public policy shall be stricken. All portions of this
Agreement that do not violate any statute or public policy shall continue in
full force and effect. Further, any court order striking any portion of this
Agreement shall modify the stricken terms as narrowly as possible to give as
much effect as possible to the intentions of the parties under this Agreement.
18. INDEMNIFICATION. The Company shall indemnify and hold
Employee harmless to the maximum extent permitted by Section 317 of the
California Corporations Code or its successor statute.
19. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized Director, and the Employee has hereunto signed
this Agreement, as of the date first above written.
REGENCY HEALTH SERVICES, INC.
By: ____________________________
Gregory S. Anderson
Chairman, Compensation Committee
________________________________
Cecil Mays
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