EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
DIVERSIFIED SENIOR SERVICES, INC.
AND
WILLIAM G. BENTON
THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated as of this 1st day of
January, 1997 ("Effective Date") by and between DIVERSIFIED SENIOR SERVICES,
INC., a North Carolina corporation (the "Company"), and WILLIAM G. BENTON (the
"Executive").
1. EMPLOYMENT AND DUTIES. The Company hereby employs Executive and Executive
accepts employment with the Company as the Company's Chairman of the Board
and Chief Executive Officer, or in such other position of the same or
greater stature as the Company may direct or desire, subject at all times
to the control of the Company's Board of Directors ("Board"). Executive
shall perform such other or additional duties as shall reasonably be
assigned to him from time to time by the Board, which duties shall be those
customarily performed by a corporate officer having executive
responsibilities of the indicated offices in a business similar to the
Company.
2. EXTENT OF SERVICES. Executive shall use his best efforts, skills and
abilities to promote the interest of the Company, and, subject to Paragraph
1, will perform such duties as are assigned to him by the Board.
3. TERM. The term of this Agreement shall be for five (5) years from the
Effective Date and shall be extended a day for each day Executive is
employed by the Company so that the Agreement shall always be effective for
a term ending five (5) years from his most recent date of employment with
the Company subject to the following:
A. TERMINATION BY THE COMPANY:
(1) CAUSE OR MATERIAL BREACH: The Company may terminate this
Agreement at any time for Cause or Material Breach hereof by
Executive. As used herein, "Cause" is defined to mean:
(i) any act of fraud, misappropriation, embezzlement or like act
of dishonesty;
(ii) conviction of a felony;
(iii) material failure to perform the services and duties
described herein (except in the case of death or
disability), material violation of any of the provisions set
forth herein, or material breach of any fiduciary duty to
the Company, if the material failure, violation or breach
unreasonably continues after written notice thereof is given
to Executive by the Company;
(iv) if Executive is guilty of gross misconduct, misfeasance or
malfeasance in connection with his employment hereunder
which shall include, but not be limited to, excessive
absences from work, failure to follow reasonable directives
from the Board, neglect of duty, negligence, disloyalty,
dishonesty, intemperance, immorality, disobedience of the
Company's rules, disrespect, unnecessarily
endangering, damaging or destroying life or property, or
similar conduct injurious to the Company; or
(v) other behavior which adversely reflects on the reputation of
the Company such as substance abuse, public intoxication,
etc.
As used herein "Material Breach" is defined to mean a material
violation of any of the provisions and conditions set forth
herein. In the event of termination for Cause or Material Breach
by Executive, the Company shall continue to pay Executive his
then current salary for thirty (30) days following the date of
the delivery of the notice of termination, which date shall be
for all purposes of this Agreement, the date of termination of
his employment.
(2) FUNDAMENTAL CHANGES: Notwithstanding anything herein contained to
the contrary, the Company may terminate this Agreement, subject
to Executive's rights to severance pay under Paragraph 5 hereof,
upon thirty (30) days notice to Executive, upon the happening of
any of the following events:
(i) the bankruptcy, receivership or dissolution of the Company;
(ii) the sale by the Company of substantially all of its assets
to a single purchaser or a group of associated or affiliated
purchasers who are not affiliated with the Company;
(iii) the sale, exchange or other disposition, in one transaction
to an entity or entities not affiliated with the Company, of
more than 50% of the outstanding capital stock of the
Company other than a sale, exchange or disposition of the
capital stock of the Company resulting from a public or
private offering of capital stock or other security
convertible into capital stock of the Company which offering
is sponsored or initiated by the Company and approved by its
Board of Directors.
(iv) a bona fide decision by the Company to terminate its
business and liquidate its assets; or
(v) the merger or consolidation of the Company in a transaction
in which the stockholders of the Company receive less than
50% of the outstanding voting stock of the new or continuing
entity.
B. DISABILITY: If Executive becomes disabled (as hereinafter defined) the
Company may, if Executive has not returned to active full-time
employment with the Company, terminate his employment by furnishing
him notice of such termination and the Company shall be obligated to
pay Executive his salary to the date of such notice, which date shall
be for all purposes of this Agreement the date of termination of his
employment. As used herein, Executive shall be deemed to be "disabled"
if he:
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(1) has been declared legally incompetent by a final decree of a
court of competent jurisdiction (the date of such decree being
deemed to be the date on which the disability occurred);
(2) receives disability insurance benefits for a period of six (6)
consecutive months from any disability income insurance policy
maintained by the Company; or
(3) has become permanently disabled, which shall be deemed to exist
upon a determination by the Board:
(i) that Executive has become physically or mentally
incapacitated or disabled; and
(ii) that such incapacity or disability has continued for a
period of six (6) consecutive months or for shorter periods
aggregating nine (9) months during any consecutive fifteen
(15)-month period.
In determining disability under item (3) above, the Board shall rely
upon the written opinion of the physician regularly attending
Executive in determining whether a disability is deemed to exist. If
the Board disagrees with the opinion of such physician, the Board may
choose a second physician, and the two (2) physicians shall choose a
third physician, and the written opinion of a majority of the three
(3) physicians shall be conclusive as to Executive's disability. The
date of any written opinion conclusively finding Executive to be
disabled is the date on which the disability will deemed to have
occurred. The expenses associated with the utilization of any
physician other than the physician regularly attending Executive shall
be borne solely by the Company. Executive hereby consents to any
required medical examination and agrees to furnish any medical
information requested by the Company and to waive any applicable
physician/patient privilege that may arise because of such
determination.
C. DEATH: If Executive shall die, thereupon his employment shall
terminate, and the Company shall pay his salary for three months after
the month in which Executive dies.
D. EARLY RETIREMENT: The Company currently does not have an early
retirement policy, and, therefore, no rights to early retirement shall
obtain for Executive.
4. SALARY, OTHER COMPENSATION AND BENEFITS. As compensation for the services
to be rendered by Executive to the Company pursuant to this Agreement,
Executive shall be paid the following compensation and shall receive the
following benefits:
A. SALARY: Executive's initial annual salary shall be as set forth on the
"Schedule of Compensation" attached to this Agreement as Exhibit A and
made a part hereof by this reference. Such salary shall be payable in
accordance with the Company's regular payroll procedures. In the event
Executive receives any periodic payments representing lost
compensation under any health, disability, accident and/or salary
continuation insurance policy, the premiums for which have been paid
by the Company, the amount of salary that Executive would be entitled
to receive from the Company shall be decreased by the amount of such
payments. The Company
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and Executive from time to time by mutual
agreement may reflect increases in Executive's Base Compensation by
entering any such increase upon Exhibit A. If an increase is entered
on Exhibit A and duly signed by the Company and Executive, such entry
shall constitute an amendment to this Agreement as of the effective
date of such entry designated in such Exhibit A and shall supersede
the compensation provided for in this Section 4.01 or any other
increase or increases previously made in Exhibit A. In the event that
the Company requests and Executive agrees to the deferral of part or
all of Executive's compensation, Executive shall be entitled to
repayment of such base amount, plus an additional amount as shall be
provided in detail on the "Schedule for Repayment and Computation of
Deferred Compensation" attached to this Agreement as Exhibit B and
made a part of this Agreement by this reference. The parties
acknowledge that the Company has assumed the liability for certain
accrued, but unpaid, compensation due to Executive for startup
activities incurred by the Company's parent organization prior to the
incorporation of the Company, and relating to fiscal year ended
December 31, 1996, which amounts are reflected and subject to the
terms set forth on Exhibit B. At the time of any entry on Exhibit B,
such entry shall be duly signed by the Company and Executive and such
entry shall constitute an amendment to this Agreement as of the
effective date of such entry designed in such Exhibit B.
B. BONUS: In addition to Executive's salary as described above, for each
of the Company's fiscal years during the term of this Agreement,
Executive shall have the right to participate in any bonus plan of the
Company. The Board shall determine the parameters of any bonus plan
and it shall be a duty of Executive as Chief Executive Officer to
determine the allocation of such total amount among participating
employees.
C. EXPENSES: Executive shall be entitled to reimbursement for all
reasonable travel and other business expenses incurred by him in the
performance of services under this Agreement upon presentation of
expense statements or vouchers and such other supporting information
as the Company may reasonably request.
D. OTHER COMPENSATION: In the discretion of the Board, Executive may be
entitled to receive additional compensation in excess of Executive's
salary and incentive compensation as set forth in Paragraphs 4.a. and
b. Subject to the terms of any of the Company's employee benefit
plans, agreements and arrangements, Executive shall be entitled to
participate in the major medical, hospitalization, life insurance,
vacation, sick leave or disability, pension or retirement,
profit-sharing, stock-based incentive and other fringe benefit plans
maintained by the Company for the benefit of employees of the Company
in like positions of responsibility as Executive.
5. SEVERANCE PAY:
A. SEVERANCE PAY EVENTS; SEVERANCE PAY; SEVERANCE PAY CAP: In the event
the Company terminates Executive's employment without either Cause or
a Material Breach by Executive, as both terms are defined herein; or
in the event a
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Fundamental Change occurs and within three (3) months prior to or
eighteen (18) months after such Fundamental Change, the Company:
(1) terminates Executive's employment for reasons other than Cause,
Material Breach, death or disability;
(2) removes Executive as Chairman of the Board and/or Chief Executive
Officer of the Company or otherwise causes a meaningful reduction
in Executive's title, duties or responsibilities;
(3) reduces Executive's base salary; or
(4) requires Executive to relocate beyond a 30-mile radius from
either the Company's principal office in Winston-Salem, North
Carolina or Executive's then current principal residence,
(any of the foregoing events herein deemed to be a "Severance Pay
Event"), the Company shall pay to Executive an amount of severance pay
equal to the following, less one (1) dollar: (i) three (3) times the
Executive's average annual base compensation received for the
immediately preceding five (5) fiscal years; or, (ii) if Executive has
been employed by the Company for less than five (5) years, then the
annualized average of any base compensation received during such
period. This provision is intended to comply with the definitions set
forth in Sections 280G(b)(3) and (d)(1) and (2) of the Internal
Revenue Code of 1986, as amended (the "Code"). For purposes of this
Agreement, the term "Severance Pay Cap" shall mean the maximum amount
which may be paid to Executive without constituting an "excess
parachute payment" under Section 280G(b) of the Code. The value of any
non-cash benefit or any deferred cash payments shall be determined by
the Company in accordance with the principles of Section 280G(d)(3)
and (4) of the Code. The Company reserves the right, after
consultation with its chosen tax counsel, to make a reasonable
determination of the Severance Pay Cap under Section 280G of the Code.
It is the intention of the parties hereto that Executive's Severance
Pay shall not exceed an amount which is deductible in full by the
Company when paid if this alternative method of calculation is chosen
except as permitted under Paragraph 5.b. hereof.
The Company shall pay such Severance Pay to Executive thirty (30) days
after the Severance Pay Event. As used herein, the term "Fundamental
Change" shall mean the events described in paragraphs 3.a.(2)(ii),
(iii) or (v) or a change in control of the Company's Board of
Directors as presently constituted.
B. ACCRUED BONUS: The Company shall pay to Executive, not later than the
twentieth (20th) day following the date of such termination of
employment or Severance Pay Event, a lump sum amount equal to any
bonus compensation which has been allocated, accrued or awarded for a
fiscal year preceding the date of such termination of employment or
Severance Pay Event, but has not yet been paid, and in no event shall
such payment be a reduction in Severance Pay.
6. CONFIDENTIAL INFORMATION AND DISCOVERIES: Executive agrees that all
information of a technical or business nature such as know-how, trade
secrets, secret business information,
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plans, data, processes, techniques, etc., except such information and
skills generally known in the Company's trade and business, information
made public by the Company or generally of a public nature, and knowledge
of Executive not constituting a trade secret (the "Confidential
Information"), acquired by Executive in the course of his employment by the
Company, is a valuable business property right of the Company. Executive
agrees that such Confidential Information, whether in written, verbal or
model form, shall not be disclosed to anyone outside the employment of the
Company without the express written authorization of the Company. The
Confidential Information shall include, without limitation, vendor lists
and records, customer lists, business policies, business methods, financial
information and any other similar material of any kind relating to the
business of the Company. In the event of an actual or threatened breach of
this provision, the Company shall be entitled to an injunction restraining
Executive from such action, and the Company shall not be prohibited in
obtaining such equitable relief or from pursuing any other available
remedies for such breach or threatened breach, including recovery of
damages from Executive.
7. SOLICITATION OF EMPLOYEES: Executive agrees that for a period of eighteen
(18) months following the termination of Executive's employment with the
Company, Executive shall not directly or indirectly, personally or with any
other employees, agents or otherwise, on behalf of himself or any other
person, firm or corporation, solicit or cause any person under his control
to solicit any employee of the Company, or any employee of any Company
subsidiary or affiliate, to terminate his or her employment with the
Company or such subsidiary or affiliate. In the event of an actual or
threatened breach of this provision, the Company shall be entitled to an
injunction restraining Executive from such action, and the Company shall
not be prohibited in obtaining such equitable relief or from pursuing any
other available remedies for such breach or threatened breach, including
recovery of damages from Executive.
8. ENFORCEMENT: Both parties recognize that the services to be rendered under
this Agreement by Executive are special, unique and of extraordinary
character and that in the event of the breach by Executive of any of the
terms and conditions of this Agreement to be performed by him, then the
Company shall be entitled, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either at law or in
equity, to obtain damages for any breach hereof, or to enjoin Executive
from performing acts prohibited hereby, but nothing herein contained shall
be construed to prevent such other remedy in the courts as the Company may
elect to invoke.
9. RETURN OF DOCUMENTS: Upon the termination of this Agreement, Executive
shall forthwith return and deliver to the Company and shall not retain any
original or copies of any books, papers, price lists or vendor contracts,
bids or customer lists, files, books of account, notebooks and other
documents and data relating to the performance of services rendered by
Executive hereunder, all of which materials are hereby agreed to be the
property of the Company.
10. PLACE OF EXECUTIVE'S RESIDENCE: The Company shall not require Executive to
relocate his place of residence, principal or otherwise, except upon
Executive's consent. If Executive consents to any change of residence, the
Company shall pay all reasonable relocation expenses.
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11. RESIGNATION UPON TERMINATION: In the event of termination of this Agreement
other than by death, Executive shall, and shall be deemed to have, resigned
from all positions held with the Company, including without limitation, any
position as a director, officer, agent, trustee or consultant of the
Company or any affiliate of the Company effective the date of termination
of employment.
12. ARBITRATION: Any claim, dispute or controversy arising out of or relating
to this Agreement, the parties' relationship under this Agreement or the
breach of this Agreement, shall be determined by a single arbitrator
pursuant to the applicable rules of practice and procedures of either the
Private Adjudication Center, Inc., an affiliate of the Duke University
School of Law, or of the American Arbitration Association, as such rules
shall be in effect at the time the demand for arbitration is filed, at the
Company's sole election. The parties hereby agree that the arbitration
proceeding shall be private and confidential and shall not be published in
any form or manner. The location of the arbitration shall be at the Private
Adjudication Center's facilities at the Duke Law School, Durham, North
Carolina in the event that the Company elects to apply the rules of
practice and procedure of the Center or shall be in Winston-Salem, North
Carolina in the event the Company elects to apply the rules of the American
Arbitration Association. The decision of the arbitrator shall be final and
binding. Judgment to enforce the decision or award of the arbitrator may be
entered in any court having jurisdiction and the parties hereby agree not
to object to the jurisdiction of the North Carolina General Court of
Justice for such purpose. Nothing contained herein shall in any way deprive
the Company of its claim to obtain an injunction or other equitable relief
arising out of Executive's breach of the provisions of Sections 6 and 7 of
this Agreement. In the event of the termination of Executive's employment,
Executive's sole remedy shall be arbitration as herein provided. The
parties agree that no punitive damages shall be awarded pursuant to any
claim brought hereunder.
The parties agree that service of process relating to any arbitration
proceeding shall be made by certified mail. In any judicial proceeding to
enforce this agreement to arbitrate, the only issues to be determined shall
be the existence of the agreement to arbitrate and the failure of one party
to comply with that agreement, and those issues shall be determined
summarily by the court without a jury. All other issues shall be decided by
the arbitrator, whose decision therein shall be final and binding. There
may be no appeal of an order compelling arbitration except as part of an
appeal concerning confirmation of the decision of the arbitrator.
13. MISCELLANEOUS:
A. NOTICES: Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered
or certified mail to Executive or the Company at the address set forth
below their signatures at the end of this Agreement or to such other
address as they shall notify each other in writing.
B. ASSIGNMENT: This Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns and Executive
and his personal representatives, heirs, legatees and beneficiaries,
but shall not be assignable by Executive.
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C. APPLICABLE LAW: This Agreement shall be construed in accordance with
the laws of the State of North Carolina in every respect, including
without limitation, validity, interpretation and performance.
D. HEADINGS: Section headings and numbers herein are included for
convenience of reference only and this Agreement is not to be
construed with reference thereto. If there be any conflict between
such numbers and headings and the text hereof, the text shall control.
E. SEVERABILITY: If for any reason any portion of this Agreement shall be
held invalid or unenforceable, it is agreed that the same shall not
affect the validity or enforceability of the remainder hereof.
F. ENTIRE AGREEMENT: This Agreement contains the entire agreement of the
parties with respect to its subject matter and supersedes all previous
agreements between the parties. No director, officer, employee or
representative of the Company has any authority to make any
representations or promises in connection with this Agreement or the
subject matter hereof that is not contained herein, and Executive
represents and warrants that he has not executed this Agreement in
reliance upon any such representation or promise. No modification of
this Agreement shall be valid unless made in writing and signed by the
parties hereto.
G. WAIVER OF BREACH: The waiver by a party hereto of a breach of any
provision of this Agreement by the other party hereto shall not
operate or be construed as a waiver of any subsequent breach by such
party.
H. 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 shall constitute one agreement.
I. IMPLIED TERMS: The terms, conditions, obligations and duties expressed
in this Agreement are in addition to any duties and obligations
implied in law to an employment relationship except where any
expressed condition is contrary to the implied condition and in which
case, the express condition will apply and control.
J. BINDING DETERMINATIONS: All reasonable determinations and
interpretations of the Code and this Agreement made by the Company or
its chosen tax counsel, shall be binding and conclusive on all parties
hereto.
K. WITHHOLDING OF TAXES: The Company may withhold from any benefits
payable under this Agreement all federal, state and other taxes as
shall be required pursuant to any law or governmental regulation or
ruling.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and Executive has signed this Agreement as of
the day and year first above written.
COMPANY:
DIVERSIFIED SENIOR SERVICES, INC.
By: /S/ SUSAN L. CHRISTIANSEN
EXECUTIVE:
/S/ WILLIAM G. BENTON (SEAL)
William G. Benton
915 West Fourth Street
Winston-Salem, NC, 27101
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EXHIBIT A
SCHEDULE OF COMPENSATION
The undersigned hereby agree that the Base Compensation due Executive under
Section 4.01 of the attached Agreement shall be $104,000, payable in accordance
with the Company's regular payroll procedures beginning January 1, 1997, and for
each successive year thereafter during the remaining term of the Agreement,
unless and until further changed by mutual agreement as provided in Section
4.01.
This the 24th day of June, 1997.
COMPANY:
DIVERSIFIED SENIOR SERVICES, INC.
By: /S/ SUSAN L. CHRISTIANSEN
EXECUTIVE:
/S/ WILLIAM G. BENTON (SEAL)
William G. Benton
915 West Fourth Street
Winston-Salem, North Carolina 27101
EXHIBIT B
SCHEDULE FOR REPAYMENT
AND COMPUTATION OF DEFERRED COMPENSATION
The undersigned hereby agree that accrued but unpaid compensation due Executive
under Section 4.01 of the attached Agreement for the period January 1, 1996
through December 31, 1996 is due and payable to Executive as follows:
Base Compensation $168,263
Bonus Compensation $84,132
In addition, Executive is due accrued, but unpaid, compensation for the period
January 1, 1997 through June 30, 1997, as follows:
Base Compensation $94,632
Bonus Compensation $47,316
The parties agree that the total Bonus in the amount of $131,448, at the
election of Executive, may be paid in cash or may be used by Executive to
purchase shares of the common stock of the Company at a purchase price of $5.00
per share. Executive shall have the right to purchase such stock until the
latest to occur of the following: (a) June 30, 2002, or (b) a period of one year
from the date upon which the Company offers to pay Executive the total bonus
amount in cash. The parties agree that the purchase of stock provided for in
this Exhibit B may be made in whole or in part until such time as Executive has
received the entire amount of the Bonus described herein.
THIS the 24th day of June, 1997.
COMPANY:
DIVERSIFIED SENIOR SERVICES, INC.
By: /S/ SUSAN L. CHRISTIANSEN
EXECUTIVE:
/S/ WILLIAM G. BENTON (SEAL)
William G. Benton
915 West Fourth Street
Winston-Salem, North Carolina 27101
EXHIBIT B
AMENDED AND RESTATED
SCHEDULE FOR REPAYMENT
AND COMPUTATION OF DEFERRED COMPENSATION
The undersigned hereby agree that accrued but unpaid compensation due Executive
under Section 4.01 of the attached Agreement for the period January 1, 1996
through December 31, 1996 is due and payable to Executive as follows:
Base Compensation $168,263
Bonus Compensation $84,132
In addition, Executive is due accrued, but unpaid, compensation for the period
January 1, 1997 through June 30, 1997, as follows:
Base Compensation $94,632
Bonus Compensation $47,316
The parties agree that the total Bonus in the amount of $131,448, at the
election of Executive, may be paid in cash or may be used by Executive to
purchase shares of the common stock of the Company at a purchase price equal to
50% of the public price per share pursuant to any public sale of stock by the
Company. Executive shall have the right to purchase such stock until the latest
to occur of the following: (a) June 30, 2002, or (b) a period of one year from
the date upon which the Company offers to pay Executive the total bonus amount
in cash. The parties agree that the purchase of stock provided for in this
Exhibit B may be made in whole or in part until such time as Executive has
received the entire amount of the Bonus described herein.
THIS the 6th day of August, 1997.
COMPANY:
DIVERSIFIED SENIOR SERVICES, INC.
By: /S/ SUSAN L. CHRISTIANSEN
EXECUTIVE:
/S/ WILLIAM G. BENTON (SEAL)
William G. Benton
915 West Fourth Street
Winston-Salem, North Carolina 27101
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