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EXHIBIT 10.115
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 Richard K.
Matros ("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 PRESIDENT AND CHIEF OPERATING OFFICER OF THE
COMPANY AND OF CARE ENTERPRISES, INC. The Company does hereby employ, engage,
and hire the Employee as President and Chief Operating 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 during the Employment Period
(defined below) shall be the executive, managerial, and reporting duties set
forth on Exhibit A hereto and such other duties as the Board of Directors of
the Company shall from time to time prescribe and as provided in the Bylaws of
the Company. The Employee shall devote his full time, energy, and skill to the
performance of his duties for the Company and for the benefit of the Company,
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 Three Hundred Thousand Dollars ($300,000) 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 and Section 8, 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.
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.
(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, which policy shall guarantee to Employee the
payment to Employee of a minimum of 60% of his Base Salary and
bonus (as provided in Section 7(b) hereof), or a minimum of
100% of such Base
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Salary and bonus in the event the policy is self insured. In
the case of self insurance, the Company shall be
required to pay proceeds for the shorter of (i) the period of
such Disability or (ii) seven (7) years. Such insurance
policies will have customary exclusions, conditions and
elimination periods.
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 Employee's
mental or physical incapacity Employee shall be unable to
perform the services for the Company contemplated by this
Agreement in the manner in which he previously performed them
during an aggregate of 120 business days in any consecutive
seven (7) month period ("Disability"), Employee's employment
may be terminated by the Company for Disability. During any
period prior to such termination during which Employee is
absent from the full-time performance of his duties with the
Company due to Disability, the Company shall continue to pay
Employee his Base Salary at the rate in effect at the
commencement of such period of Disability. Any such payments
made to the Employee shall be reduced by amounts received from
disability insurance obtained or provided by the Company
pursuant to Section 4(d). Subsequent to the termination
provided for in this Section 6(b), 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. This Agreement may
be terminated by the Company only by the act of the Chief
Executive Officer of the Company. The Company, through such
act of the Chief Executive Officer, may terminate Employee's
employment under this Agreement for "Cause," at any time prior
to expiration of the Term of the Agreement, only upon the
occurrence of any one or more of the following events:
(i) The material breach of this Agreement by
Employee, including without limitation, repeated
willful neglect of Employee's duties as set forth
on Exhibit A hereto, Employee's material lack of
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diligence and attention in performing services as
provided in this Agreement, or Employee's repeated
willful failure to implement or adhere to policies
established by, or directives of, the Company's Board
of Directors.
(ii) Conduct of a criminal nature that may
have an adverse impact on the Company's reputation
and standing in the community; or
(iii) Fraudulent conduct in connection with
the business affairs of the Company, regardless of
whether said conduct is designed to defraud the
Company or others.
In the event of termination for Cause, the Company's obligation to pay
Employee's Base Salary shall cease as of the Termination Date. If Employee's
employment is terminated for Cause, Employee's employment may be terminated
immediately without any advance written notice.
(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
prior written consent, of any one or more of the following
events:
(i) The assignment to the Employee of any
duties that are materially inconsistent with, or
reflect a material continuing reduction of the powers
and responsibilities, or a change of the Employee's
reporting responsibilities, set forth on Exhibit A
hereto, or a material improper intervention by the
Company's Board of Directors in the Employee's
ability to materially perform the duties and
responsibilities set forth on Exhibit A hereto.
(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
(iii) The relocation of the Company's
principal executive offices to a location outside
the Southern California area or the Company's
requiring the Employee to be based anywhere other
than
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the Company's principal executive offices, except for
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.
In the event of termination for Good Reason, the Employee shall
receive compensation pursuant to the provisions of Section 7
hereof.
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 act of 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 AND BONUS. The
Company shall immediately pay the Employee any portion of the
Employee's Base Salary not paid prior to the Termination Date.
(b) CONTINUED PAYMENT OF BASE SALARY AND BONUS.
Within five (5) days of the Termination Date, the Company or
Care 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) in the fiscal
year of the Company or Care ended immediately prior to the
fiscal year in which the Termination Date occurs, and (B)
the average of the annual bonuses paid to him by the
Company or Care (or their predecessors) with respect to the
three (or, if less, the number of years the Employee has
been employed with the Company or Care or their predecessor)
fiscal years ended immediately prior to the fiscal year in
which the Termination Date occurs.
(c) 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.
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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.
(d) STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
Commencing as of the date one (1) year following the Effective
Date, notwithstanding any provision in any applicable Company
benefit plans or agreements (including, but not limited to,
those relating to stock options, 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 become immediately fully vested and
exercisable as of the Termination Date and shall remain
exercisable for a period thereafter of not less than one (1)
year. If any such plan or agreement provides for an exercise
period ending after the one (1) year period following the
Termination Date, then such provision shall control. The
provisions of this Section 7(d) shall constitute an amendment
to any such plans or agreements of the Company referred to
above as of the Effective Date.
(e) 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 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 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 "Good Reasons" specified in
Section 6(d) and if the Company then disputes Employee's right to the payment
of benefits under
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Section 7, the Company shall, at the option of the Employee (a written
notice of which shall be given to the Company), 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. In the event the Employee opts to continue receiving compensation
and benefits during the term of such dispute as provided in this Section 8,
then until the earlier of the expiration of the Term of this Agreement or the
date the dispute is finally resolved as provided above, the Employee shall not,
without the prior written consent of the Company, provide consultative service
to or be employed by any entity that is then in competition with the Company or
any affiliate thereof. In the event the Court (or other trier of fact)
determines that no "Good Reason" justifying Employee's resignation existed,
then Employee shall repay to Company all compensation and benefits paid to
Employee by Company from and after the date of termination of employment.
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.
(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
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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: Richard K. Matros
2742 Dow Avenue
Tustin, CA 92680
Phone: (714) 544-4443
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 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 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
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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.
20. SUCCESSOR SECTIONS. References herein to sections or rules of
the Code or Exchange Act shall be deemed to include any successor sections or
rules.
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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
_______________________________________
Richard K. Matros
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EXHIBIT "A"
DUTIES OF RICHARD K. MATROS ("EMPLOYEE")
AS A DIRECTOR, PRESIDENT AND CHIEF OPERATING OFFICER
OF THE COMPANY AND CARE
PRESIDENT
In his capacity as President of the Company and Care, the Employee
shall report directly to the Chairman of the Board and the Chief Executive
Officer of the Company and shall have supervisory and monitoring
responsibilities for the preparation, development, and implementation of the
Company's strategic business plan and shall have such other powers and perform
such other duties as may be deemed necessary or appropriate to the operation of
a publicly held corporation and as may be prescribed from time to time by the
Chairman of the Board and the Chief Executive Officer of the Company.
CHIEF OPERATING OFFICER
In his capacity as Chief Operating Officer of the Company and Care,
the Employee shall report to the Chairman of the Board and the Chief Executive
Officer of the Company and shall have supervisory and monitoring
responsibilities for all Company operations and shall have such other powers
and perform such other duties as may be prescribed from time to time by the
Chairman of the Board and the Chief Executive Officer of the Company,
including, but not limited to, the following:
o Be involved in all key decisions impacting current and future
strategies of the Company.
o Implement plans to improve financial performance of the
Company's operations and maximize returns to stockholders.
o Oversee the delivery of quality healthcare services at all
Company operating units.
o Actively seek new business ventures and acquisitions for the
Company to improve margins and profitability.
o Participation in investment banking conferences, analyst
and/or stockholder meetings, "road show" presentations, and
other investor relations functions.
o Develop an organizational culture that promotes a positive
approach to employee relations.
o Review profit and loss performance of all operating units
monthly, and other reports, i.e., quality assurance, as
necessary.
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o Work with local, state, and national healthcare and political
organizations to improve the regulatory, fiscal, and political
environment governing the Long Term Care and Home Care
industries.