SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
----------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to __________________
Commission file number 0-12927
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NATIONAL HOME HEALTH CARE CORP.
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(Exact name of Registrant as Specified in Its Charter)
Delaware 22-2981141
- ------------------------------- --------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
700 White Plains Road, Scarsdale, New York 10583
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(Address of Principal Executive Offices with Zip Code)
Registrant's Telephone Number Including Area Code: 914-722-9000
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- -------------------------------------------------------------------------------
Former Name,Former Address and Former Fiscal Year, if Changed Since Last Report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required by Section 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares of common stock outstanding as of March 13, 1998 was
5,223,164
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NATIONAL HOME HEALTH CARE CORP.
FORM 10-Q
FOR THE QUARTER ENDED JANUARY 31, 1998
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets as of January 31, 1998
and July 31, 1997(unaudited) 3-4
Consolidated Statements of Operations for the three
months ended January 31, 1998 and January 31, 1997 and
six months ended January 31, 1998 and January 31, 1997
(unaudited) 5
Consolidated Statements of Cash Flows for the six months
ended January 31, 1998 and January 31, 1997 (unaudited) 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13-14
SIGNATURES 15
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<PAGE>
NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
January 31, 1998 July 31, 1997
---------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 9,341,000 $ 9,324,000
Investments 498,000 508,000
Accounts receivable-less allowance for doubtful
accounts of $293,000 at January 31, 1998 and
$327,000 at July 31, 1997 9,174,000 8,176,000
Income taxes receivable 150,000 ---
Prepaid expenses and other assets 151,000 163,000
Deferred taxes 230,000 230,000
------- -------
Total current assets 19,544,000 18,401,000
Furniture, equipment and leasehold improvements, net 377,000 378,000
Excess of cost over fair value of net assets of
businesses acquired, net 3,265,000 3,350,000
Other intangible assets, net 846,000 947,000
Deposits and other assets 138,000 138,000
Investment in unconsolidated investee 1,099,000 2,010,000
--------- ---------
$25,269,000 $25,224,000
=========== ===========
TOTAL
(Continued)
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED
January 31, 1998 July 31, 1997
---------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,069,000 $ 1,331,000
Estimated third-party payor settlements 434,000 195,000
Income taxes payable ------- 22,000
------- ------
Total current liabilities 1,503,000 1,548,000
Deferred tax liability 6,000 316,000
----- -------
Total liabilities 1,509,000 1,864,000
Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 6,228,746 and
6,208,646 shares 6,000 6,000
Additional paid-in capital 18,525,000 18,476,000
Retained earnings 6,391,000 5,842,000
--------- ---------
24,922,000 24,324,000
Less treasury stock (997,000 and 957,500 shares)
at cost (1,162,000) (964,000)
---------- --------
Total stockholders' equity 23,760,000 23,360,000
---------- ----------
TOTAL $25,269,000 $25,224,000
=========== ===========
See accompanying notes to consolidated financial statements.
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
For the three months ended For the six months ended
January 31, January 31,
----------- -----------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net patient revenue $ 8,802,000 $ 8,692,000 $17,903,000 $ 17,378,000
----------- ----------- ----------- ------------
Operating expenses:
Cost of revenue 5,683,000 5,633,000 11,574,000 11,324,000
General and administrative 2,290,000 2,119,000 4,512,000 4,188,000
Amortization of intangibles 94,000 49,000 187,000 97,000
------ ------ ------- ------
Total operating expenses 8,067,000 7,801,000 16,273,000 15,609,000
--------- --------- ---------- ----------
Income from operations 735,000 891,000 1,630,000 1,769,000
Other income (loss):
Interest income 134,000 103,000 274,000 208,000
(Loss) from equity investee (564,000) (148,000) (911,000) (178,000)
-------- -------- -------- --------
Income from operations before taxes 305,000 846,000 993,000 1,799,000
Provision for income taxes 135,000 353,000 444,000 768,000
------- ------- ------- -------
NET INCOME $ 170,000 $ 493,000 $ 549,000 $ 1,031,000
=========== =========== =========== ============
Other data, including per share
information:
Net income available to common
stockholders $ 170,000 $ 493,000 $ 549,000 $ 1,031,000
Basic earnings per share $ 0.03 $ 0.09 $ 0.10 $ 0.20
====== ====== ====== ======
Basic weighted average shares
outstanding 5,244,543 5,248,285 5,248,184 5,248,285
Diluted net income available to
common stockholders $ 170,000 $ 493,000 $ 549,000 $ 1,031,000
Diluted earnings per share $ 0.03 $ 0.09 $ 0.10 $ 0.19
====== ====== ====== ======
Diluted weighted average shares 5,335,166 5,362,565 5,339,232 5,367,151
outstanding
See accompanying notes to consolidated financial statements.
</TABLE>
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS AND CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
For the six months ended
January 31,
-------------------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 549,000 $1,031,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 237,000 151,000
Provision for doubtful accounts 25,000 ----
Loss from equity investee 911,000 178,000
Deferred tax (310,000) (4,000)
Changes in:
Accounts receivable (1,023,000) 265,000
Prepaid expenses and other assets 12,000 (79,000)
Accounts payable, accrued expenses and other liabilities (262,000) (312,000)
Income taxes receivable/payable (172,000) (114,000)
Estimated third party payor settlements 239,000 (353,000)
------- --------
Net cash provided by operating activities 206,000 763,000
------- -------
Cash flows from investing activities:
Proceeds of investments 10,000 10,000
Purchase of furniture, equipment and leasehold improvements (50,000) (86,000)
------- -------
Net cash (used in) investing activities (40,000) (76,000)
------- -------
Cash flows from financing activities:
Proceeds from exercise of stock options 49,000 ----
Purchase of treasury shares (198,000) ----
-------- ----
Net cash (used in) financing activities (149,000) ----
-------- ----
NET INCREASE IN CASH AND CASH EQUIVALENTS 17,000 687,000
Cash and cash equivalents-beginning of period 9,324,000 8,929,000
--------- ---------
CASH AND CASH EQUIVALENTS-END OF PERIOD $9,341,000 $9,616,000
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes $ 946,000 $ 957,000
Interest 1,000 1,000
See accompanying notes to consolidated financial statements.
</TABLE>
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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended
January 31, 1998 are not necessarily indicative of the results that may be
expected for the year ended July 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended July 31, 1997.
NOTE 2 - INITIAL PUBLIC OFFERING OF SUNSTAR HEALTHCARE, INC.
On May 21, 1996, the initial public offering of common stock of SunStar
Healthcare, Inc. ("SunStar") was consummated. Prior to the offering, SunStar had
been a wholly-owned subsidiary of the Company, consisting of its Florida
outpatient medical center operations. As a result of the offering, the Company
currently owns 900,000 shares, or approximately 37.6% of SunStar. The Company is
accounting for its investment in SunStar using the equity method of accounting.
NOTE 3 - ACQUISITIONS
On March 25, 1997, the Company, through its wholly-owned subsidiary
Health Acquisition Corp., acquired, for $672,000 in cash, including acquisition
costs of $22,000, certain assets of C.J. Home Care, Inc. d/b/a Garden City Home
Care, a New York licensed home health care company which provides home care
services in Nassau County, New York.
On May 29, 1997, the Company, through its wholly-owned subsidiary
Health Acquisition Corp., acquired, for $1,213,000 in cash, including
acquisition costs of approximately $77,000, certain assets of Home Health Aides,
Inc. and H.H.A. Aides, Inc., two licensed home health care companies which
provide home care services in both Nassau and Suffolk Counties, New York.
NOTE 4 - PER SHARE DATA
The Company adopted Statement of Financial Accounting Standard No. 128
("SFAS 128"), "Earnings Per Share," during the fiscal quarter ended January 31,
1998. The adoption of SFAS 128 did not have a material effect on the Company's
earnings per share. Earnings per share and shares
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of Common Stock outstanding for the three and six months ended January 31, 1997
have been restated for comparative purposes.
Basic earnings per share. Basic earnings per share is calculated by
dividing income available to holders of Common Stock (the basic numerator) by
the weighted-average number of shares of Common Stock outstanding (the basic
denominator) during the period.
Diluted earnings per share. Diluted earnings per share is calculated by
adjusting the basic numerator to add back potentially issuable shares of Common
Stock and for any other changes in income or loss that would result from the
assumed conversion or exercise of potentially issuable shares. Additionally, the
basic denominator is increased to include the additional number of shares of
Common Stock that would have been outstanding if the potentially issuable shares
of Common Stock had been issued, if dilutive. The treasury stock method is used
to reflect the dilutive effect of outstanding options and warrants.
Under SFAS 128, the computation of diluted EPS does not assume the
conversion or exercise of securities that have an antidilutive effect on
earnings per share (i.e., increase the earnings per share amount or decrease the
loss per share amount).
NOTE 5 - MEDICARE REIMBURSEMENT REDUCTIONS
The Balanced Budget Act of 1997 (the "Act") was signed into law on
August 5, 1997. Under the Act, for cost reports beginning on or after October 1,
1997, Medicare-reimbursed home health agencies will be reimbursed under an
interim payment system ("IPS") for a two-year period prior to the implementation
of a prospective payment system. Under the interim payment system, home health
care providers will be reimbursed the lower of (i) the actual costs, (ii) cost
limits based on 105% of median costs of freestanding home health agencies, or
(iii) an agency-specific per-patient cost limits, based on 98% of 1994 costs
adjusted for inflation. The prospective payment system calls for payments to
Medicare providers for cost reporting periods on or after October 1, 1999 in
accordance with a prospective payment system to be established by the Secretary
of the Department of Health and Human Services.
The new IPS cost limits will apply to the Company's Medicare-certified
nursing agency for the cost reporting period beginning July 1, 1998. The Company
is currently analyzing the impact of the Act on its operations, liquidity and
cash flows and formulating plans to minimize the Act's negative impact. The
Company's future operating results could differ materially from results
previously achieved or previously projected in forward-looking statements made
by or on behalf of the Company.
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<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations and Effects of Inflation
- ----------------------------------------------
For the three months ended January 31, 1998, net patient revenue
increased $110,000 or 1.3% to $8,802,000 from $8,692,000 for the three months
ended January 31, 1997. Over the periods, net patient revenue from Health
Acquisition Corp., the subsidiary providing home health care services in the New
York metropolitan area, increased $847,000 or 17% to $5,823,000 from $4,976,000.
This increase is primarily attributable to acquisitions that Health Acquisition
Corp. completed in March and May of 1997. Over the periods, net patient revenue
from New England Home Care, Inc., the subsidiary that is Medicare certified and
licensed in the State of Connecticut, decreased $(785,000) or (26%) to
$2,245,000 from $3,030,000. This decrease is primarily attributable to a decline
of (49%) in Medicare visits from the corresponding three month period of 1997.
The Company's increasing internal audit and compliance with the rules and
regulations governing Medicare reimbursement resulted in the decline in both the
Company's Medicare patient base as well as its services to existing patients.
Over the periods, net patient revenue from Nurse Care, Inc., the licensed home
health care subsidiary in the State of Connecticut, increased $48,000 or 7% to
$734,000 from $686,000.
Cost of revenue as a percentage of net patient revenue decreased
slightly to 64.5% for the three months ended January 31, 1998 from 64.8% for the
three months ended January 31, 1997.
For the three months ended January 31, 1998, general and administrative
expenses increased $171,000 or 8% to $2,290,000 from $2,119,000 for the three
months ended January 31, 1997. This increase is primarily attributable to
additional administrative salaries and expenses incurred by Health Acquisition
Corp. as a result of it's acquisitions in 1997. As a percentage of net patient
revenue, general and administrative expenses increased to 26% for the three
months ended January 31, 1998 from 24% for the three months ended January 31,
1997. This increase is attributable to the decline in net patient revenue of New
England Home Care, Inc., which was not offset by a corresponding decline in
general and administrative expenses.
Amortization of intangibles increased to $94,000 for the three months
ended January 31, 1998 from $49,000 for the three months ended January 31, 1997.
This increase is attributable to the acquisitions made by Health Acquisition
Corp.
Interest income increased $31,000 or 30% to $134,000 for the three
months ended January 31, 1998 from $103,000 for the three months ended January
31, 1997. This increase is attributable to increased short-term investment
yields obtained by the Company and better cash management.
The loss from equity investee increased to $(564,000) for the three
months ended January 31, 1998 as compared to a loss from equity investee of
$(148,000) for the three months ended January
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31, 1997. The loss from equity investee represents the Company's share of the
SunStar net loss for the respective periods.
The Company's effective tax rate increased to approximately 44% for the
three months ended January 31, 1998 from 42% for the three months ended January
31, 1997 as the result of the increased loss from equity investee in the current
three month period.
As a result of the foregoing, net income for the three months ended
January 31, 1998 was $170,000, or $.03 per diluted share, as compared to a net
income of $353,000, or $.09 per diluted share, for the three months ended
January 31, 1997. Excluding the loss from equity investee, net income for the
three months ended January 31, 1998 was $542,000 or $.10 per diluted share, as
compared to $591,000 or $.11 per diluted share for the three months ended
January 31, 1997.
For the six months ended January 31, 1998, net patient revenue
increased $525,999 or 3% to $17,903,000 from $17,378,000 for the six months
ended January 31, 1997. Over the periods, net patient revenue from Health
Acquisition Corp. increased $1,832,000 or 19% to $11,731,000 from $9,899,000.
This increase is explained in the above three-month discussion. Over the
periods, net patient revenue from New England Home Care, Inc. decreased
($1,385,000) or (23%) to $4,637,000 from $6,022,000. This decrease is primarily
attributable to a decline of (47%) in Medicare visits from the corresponding six
month period of 1997. This decrease is explained in the above three-month
discussion. Over the periods, net patient revenue from Nurse Care, Inc.
increased $75,000 or 5% to $1,524,000 from $1,449,000.
Cost of revenue as a percentage of net patient revenue decreased to
64.6% for the six months ended January 31, 1998 from 65.2% for the six months
ended January 31, 1997.
For the six months ended January 31, 1998, general and administrative
expenses increased $324,000 or 8% to $4,512,000 from $4,188,000 for the six
months ended January 31, 1997. Approximately $292,000 or 90% of this increase is
attributable to additional administrative salaries and expenses incurred by
Health Acquisition Corp. as a result of it's acquisitions in 1997. As a
percentage of net patient revenue, general and administrative expenses increased
to 25% for the six months ended January 31, 1998 from 24% for the six months
ended January 31, 1997. This increase is attributable to the decline in net
patient revenue of New England Home Care, Inc., which was not offset by a
corresponding decline in general and administrative expenses.
Amortization of intangibles increased to $90,000 to $187,000 for the
six months ended January 31, 1998 from $97,000 for the six months ended January
31, 1997. This increase is attributable to the acquisitions made by Health
Acquisition Corp.
Interest income increased $66,000 or 32% to $274,000 for the six months
ended January 31, 1998 from $208,000 for the six months ended January 31, 1997.
This increase is attributable to increased short-term investment yields obtained
by the Company and better cash management.
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The loss from equity investee increased to $(911,000) for the six
months ended January 31, 1998 as compared to a loss from equity investee of
$(178,000) for the six months ended January 31, 1997. The loss from equity
investee represents the Company's share of the SunStar net loss for the
respective periods.
The Company's effective tax rate increased to approximately 45% for the
six months ended January 31, 1998 from 43% for the six months ended January 31,
1997 as the result of the increased loss from equity investee in the current six
month period.
As a result of the foregoing, net income for the six months ended
January 31, 1998 was $549,000 or $.10 per diluted share, as compared to a net
income of $.19 per diluted share for the six months ended January 31, 1997.
Excluding the loss from equity investee, net income for the six months ended
January 31, 1998 was $1,150,000 or $.22 per diluted share, as compared to
$1,149,000 or $.21 per diluted share for the six months ended January 31, 1997.
The rate of inflation had no material effect on operations for the six
months ended January 31, 1998.
Financial Condition and Capital Resources
- -----------------------------------------
Current assets increased to approximately $19,544,000 and current
liabilities decreased to $1,503,000, respectively, at January 31, 1998. These
results increased working capital by $1,188,000 from $16,853,000 at July 31,
1997 to $18,041,000 at January 31, 1998. Cash and cash equivalents at January
31, 1997 was $9,341,000 as compared with $9,324,000 at July 31, 1997.
The Company provided net cash from operating activities of $206,000 for
the six months ended January 31, 1998 as compared to net cash provided by
operating activities of $763,000 for the six months ended January 31, 1997. The
decrease in operating cash flow is primarily attributable to the increase in
accounts receivable of $1,023,000 for the six months ended January 31, 1997,
offset by the increase in estimated third-party payor settlements of $239,000
for the six months ended January 31, 1998 as compared to the decrease of
$353,000 for the six months ended January 31, 1997. The increase in accounts
receivable is the result of the Company's current Medicare reimbursement rate
not reflecting actual costs of services being provided by New England Home Care,
Inc. and a delay in reimbursement for certain Medicaid services provided by
Health Acquisition Corp. The Company expects to have these matters resolved in
the third fiscal quarter of 1998. Historically, the Company has financed its
working capital requirements through cash flow from operating activities. Net
cash used in investing activities for the six months ended January 31, 1998 and
1997 reflects the purchase of equipment, reduced by the proceeds of investments.
Net cash used in financing activities for the six months ended January 31, 1998
reflects the purchase of treasury shares offset by the proceeds from the
exercise of stock options. For the six months ended January 31, 1997 the Company
had no financing cash flow activities.
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The Company has available a $2,000,000 secured line of credit with its
bank. In addition, a subsidiary of the Company has a secured line of credit. The
maximum amount that can be borrowed under the secured advised line of credit may
not exceed the lesser of eligible accounts receivable or $2,000,000. Both credit
facilities bear interest at the alternate base commercial lending rate of the
bank and expire January 31, 1999. At January 31, 1998, there were no outstanding
balances under either line of credit.
The Company intends to meet both its short and long term liquidity
needs with its current cash balances, cash flow from operations and available
lines of credit. The Company believes that its current cash balances will also
allow it to continue to make acquisitions in the home health care field without
affecting its liquidity needs.
In July 1997, the Board of Directors authorized a stock repurchase plan
authorizing the Company to repurchase up to $1,000,000 of its Common Stock. The
buyback program will be financed out of existing cash balances. To date, the
Company has repurchased approximately $246,000 under the stock repurchase plan.
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PART II. OTHER INFORMATION
Item 1. Acquisitions
On February 25, 1998, the Company entered into an agreement to
acquire certain assets of a New York State licensed agency that provides home
health care services in Westchester County, New York. The consummation of this
proposed acquisition is subject to regulatory and other approvals and
conditions. The agency has annual revenues of approximately $5,700,000. The
acquisition is expected to be completed by July of 1998.
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders of the Company (the "Meeting") was
held on December 8, 1997. Proxies for the Meeting were solicited pursuant to
Rule 14A of the Securities Exchange Act of 1934, as amended, and there was no
solicitation in opposition.
At the Meeting, Frederick H. Fialkow, Bernard Levine, M.D., Steven
Fialkow, Ira Greifer, M.D. and Robert C. Pordy, M.D. were elected as directors
of the Company to serve until the Company's next annual meeting of shareholders
and until their respective successors are elected and qualified. The votes for
each director were as follows:
For Withheld
--- --------
Frederick H. Fialkow 4,559,172 9,083
Bernard Levine, M.D. 4,559,172 9,083
Steven Fialkow 4,559,172 9,083
Ira Greifer, M.D. 4,559,172 9,083
Robert C. Pordy, M.D. 4,559,172 9,083
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits:
10.1 Letter Agreement dated February 20, 1998 providing a
Secured Advised Line of Credit from The Bank of New
York to National Home Health Care Corp.
10.2 Letter Agreement dated February 20, 1998 providing a
Secured Advised Line of Credit from The Bank of New
York to New England Home Care, Inc.
10.3 Employment Agreement dated as of November 1, 1997
between the Company and Frederick H. Fialkow.
10.4 Employment Agreement dated as of November 1, 1997
between the Company and Steven Fialkow.
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10.5 Employment Agreement dated as of November 1, 1997
between the Company and Richard Garafolo.
10.6 Employment Agreement dated as of November 1, 1997
between the Company and Robert P. Heller.
(b) Reports on Form 8-K
None
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
National Home Health Care Corp.
Date: March 13, 1998 /s/ Robert P. Heller
--------------------
Robert P. Heller
Vice President of Finance,
Chief Financial and
Accounting Officer
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Commission File No. 0-12927
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED JANUARY 31, 1998
NATIONAL HOME HEALTH CARE CORP.
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Exhibit
Number Document
- ------ --------
10.1 Letter Agreement dated February 20, 1998 providing a
Secured Advised Line of Credit from The Bank of New York
to National Home Health Care Corp.
10.2 Letter Agreement dated February 20, 1998 providing a Secured Advised Line
of Credit from The Bank of New York to New England Home Care, Inc.
10.3 Employment Agreement dated as of November 1, 1997 between the Company
and Frederick H. Fialkow.
10.4 Employment Agreement dated as of November 1, 1997 between the Company
and Steven Fialkow.
10.5 Employment Agreement dated as of November 1, 1997 between the Company
and Richard Garafolo.
10.6 Employment Agreement dated as of November 1, 1997 between the Company
and Robert P. Heller.
27 Financial Data Schedule.
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Exhibit 10.1
THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON
8 EAST PARKWAY, SCARSDALE, NEW YORK 10583
February 20, 1998
Mr. Robert P. Heller, Vice President &
Chief Financial Officer
National Home Health Care Corp.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
Dear Bob:
This letter confirms that The Bank of New York (the "Bank") holds available a
$2,000,000 secured advised line of credit to National Home Health Care Corp.
(the "Borrower").
Advances under the line of credit shall be payable on demand and bear interest
at a rate per annum equal to the alternate base commercial lending rate of the
Bank as publicly announced to be in effect from time to time (the "Alternate
Base Rate"), such rate to change on the effective date of any change in the
Alternate Base Rate.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the higher of (i) the Prime Rate in effect
on such day and (ii) the Federal Funds Rate in effect on
such day plus 1/2 of 1%.
For purposes of this definition:
"Prime Rate" shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or if such day
is not a business day, for the next preceding business
day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank.
All advances and all principal payments hereunder shall be endorsed by the Bank
on the sheet attached to the Promissory Grid Note and shall be secured by all
assets of the borrower pursuant to a security agreement. The Borrower authorizes
the Bank to accept telephonic instructions from a duly authorized representative
of the Borrower, as indicated by the latest Corporate Resolution on file with
the Bank, to make an advance or receive a repayment hereunder and to endorse the
sheet attached to this Promissory Grid Note accordingly. All advances made
hereunder shall be credited
<PAGE>
to the Borrower's deposit account referred to above, which credits shall be
confirmed to the borrower by standard advice of credit. The Borrower agrees that
the actual crediting of the sum of money so borrowed to the Borrower's deposit
account shall constitute conclusive evidence that the advance was made, and the
failure of the Bank to endorse the amount of any advance on the sheet attached
to this note or to forward to the borrower an advice of credit shall not affect
the obligation of the borrower to repay such advance.
In addition, all advances under the line of credit shall be jointly and
severally guaranteed by Health Acquisition Corp., New England Home Care, Inc.
and Nurse Care, Inc. Each guarantee shall be secured by all assets of the
respective guarantors pursuant to a security agreement. The form of note,
security agreement and guarantee to be furnished to the Bank shall be in form
and substance acceptable to the Bank and its counsel.
Advances under the line of credit are subject to the Bank's satisfaction with
(i) the specific purpose and expected time and source of repayment of each
advance, and (ii) the Borrower's and the guarantors' financial condition,
business prospects and operations at the time of each advance. As you know,
lines of credit may be cancelled by either party at any time, however, unless
cancelled earlier, the line of credit shall be held available until January 31,
1999.
Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30 consecutive days during each twelve (12) month
calendar period in which the line of credit is held available.
Very truly yours,
THE BANK OF NEW YORK
/s/ Vito Caraccio
- -----------------
Vito Caraccio
Assistant Vice President
<PAGE>
Exhibit 10.2
THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON
8 EAST PARKWAY, SCARSDALE, NEW YORK 10583
February 20, 1998
Mr. Robert P. Heller, Vice President &
Chief Financial Officer
New England Home Care, Inc.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
Dear Bob:
This letter confirms that The Bank of New York (the "Bank") holds available a
$2,000,000 secured advised line of credit to New England Home Care, Inc. (the
"Borrower").
Advances under the line of credit shall be payable on demand and bear interest
at a rate per annum equal to the alternate base commercial lending rate of the
Bank as publicly announced to be in effect from time to time (the "Alternate
Base Rate"), such rate to change on the effective date of any change in the
Alternate Base Rate.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the higher of (i) the Prime Rate in effect
on such day and (ii) the Federal Funds Rate in effect on
such day plus 1/2 of 1%.
For purposes of this definition:
"Prime Rate" shall mean, for any day, the weighted average
of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or if such day
is not a business day, for the next preceding business
day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank.
All advances and all principal payments hereunder shall be endorsed by the Bank
on the sheet attached to the Promissory Grid Note and shall be secured by all
assets of the borrower pursuant to a security agreement. The Borrower authorizes
the Bank to accept telephonic instructions from a
<PAGE>
duly authorized representative of the Borrower, as indicated by the latest
Corporate Resolution on file with the Bank, to make an advance or receive a
repayment hereunder and to endorse the sheet attached to this Promissory Grid
Note accordingly. All advances made hereunder shall be credited to the
Borrower's deposit account referred to above, which credits shall be confirmed
to the borrower by standard advice of credit. The Borrower agrees that the
actual crediting of the sum of money so borrowed to the Borrower's deposit
account shall constitute conclusive evidence that the advance was made, and the
failure of the Bank to endorse the amount of any advance on the sheet attached
to this note or to forward to the borrower an advice of credit shall not affect
the obligation of the borrower to repay such advance.
In addition, all advances under the line of credit shall be jointly and
severally guaranteed by National Home Health Care, Inc., Nurse Care, Inc., and
Health Acquisition Corp. Each guarantee shall be secured by all assets of the
respective guarantors pursuant to a security agreement. The form of note,
security agreement and guarantee to be furnished to the Bank shall be in form
and substance acceptable to the Bank and its counsel.
Advances under the line of credit are subject to the Bank's satisfaction with
(i) the specific purpose and expected time and source of repayment of each
advance, and (ii) the Borrower's and the guarantors' financial condition,
business prospects and operations at the time of each advance. As you know,
lines of credit may be cancelled by either party at any time, however, unless
cancelled earlier, the line of credit shall be held available until January 31,
1999.
Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30 consecutive days during each twelve (12) month
calendar period in which the line of credit is held available.
Very truly yours,
THE BANK OF NEW YORK
/s/ Vito Caraccio
- -----------------
Vito Caraccio
Assistant Vice President
<PAGE>
Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
This Employment Agreement dated as of November 1, 1997,
between National Home Health Care Corp., a Delaware corporation having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Frederick H. Fialkow, an individual having an address at 700 White Plains Road,
Scarsdale, New York 10583 ("EMPLOYEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Company desires that Employee be employed by it
and render services to it, and Employee is willing to be so employed and to
render such services to the Company, all upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. Subject to and upon the terms and conditions
contained in this Agreement, the Company hereby agrees to employ Employee and
Employee agrees to enter the employ of the Company, for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.
2. TERM. Employee's term of employment under this Agreement
shall commence on the date hereof (the "Commencement Date") and shall continue
for a period through and including the fifth anniversary of the Commencement
Date (the "Employment Term") unless extended in writing by both parties or
earlier terminated pursuant to the terms and conditions set forth herein.
3. DUTIES. (a) Employee shall be employed as the Company's
Chairman of the Board and Chief Executive Officer. It is agreed that Employee
shall perform his services in any of the Company's Scarsdale, New York
facilities, facilities maintained by the Company in Boca Raton, Florida for such
purposes (which facilities the Company agrees to maintain consistent with past
practice) or any other facilities mutually agreeable to the parties. The rights
and duties of Employee shall not in any way be curtailed by the Company without
his consent nor shall he be deprived of the dignity ordinarily associated with
his offices.
(b) Employee agrees to abide by all By-laws and
applicable policies of the Company promulgated from time to time by the Board
of Directors of the Company, including without limitation the Business Policies
of the Company annexed hereto as Annex A.
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<PAGE>
4. EXCLUSIVE SERVICES AND BEST EFFORTS. Employee shall
devote all of his working time, attention, best efforts and ability during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.
5. COMPENSATION. As compensation for his services and
covenants hereunder, the Company shall pay Employee the following:
(a) BASE SALARY. The Company shall pay Employee a minimum base salary
("Salary") of $285,000 per year. The Salary shall be subject to review and
adjustment on an annual basis beginning November 1, 1998, (if this contract is
then in effect) or, at the Company's discretion, on such earlier date as the
Company may designate; provided, however, that in no event shall Employee's
Salary be adjusted below the Salary designated herein.
(b) BONUS COMPENSATION. The Company shall pay Employee annual
bonus compensation equal to five percent of the amount by which the Pre-Tax
Income in any fiscal year during the Employment Term exceeds $3,000,000. As
additional annual bonus compensation, in order to effect a cost-of-living
adjustment to the Salary, the Company shall pay Employee an amount equal to the
cumulative annual Consumer Price Index percentage increase on the Salary since
1992, the year in which such Salary was first established. The foregoing bonus
compensation shall be paid by the Company within thirty (30) days after
completion of the audited financial results of the Company for the applicable
fiscal year.
(c) For purposes of this Agreement, "Pre-Tax Income" shall mean for
each fiscal year the net income of Company and its consolidated subsidiaries for
such fiscal year before any charges for federal, state or other taxes relating
to income, determined in accordance with generally accepted accounting
principles, consistently applied; and "Consumer Price Index" shall mean the
Consumer Price Index for Urban Wage Earners and Clerical Workers prepared by the
Bureau of Labor Statistics of the U.S. Department of Labor, or, if that index is
not then being published, the most nearly comparable successor index that the
parties may agree upon or, if they fail to agree, an index designated by
Company's independent certified public accountants shall make such adjustments
to the index as may be appropriate to carry out the intention of this Paragraph
5 and the accountants' determination shall be final and binding on the parties.
6. BUSINESS EXPENSES. Employee shall be reimbursed for, and
entitled to advances (subject to repayment to the Company if not actually
incurred by Employee) with respect to, those business expenses incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement in accordance with policies established from time to time by the
Company.
7. EMPLOYEE BENEFITS. (a) During the Employment Term,
Employee shall be entitled to such insurance, disability and health and medical
benefits and be entitled to participate in such retirement plans or programs as
generally made available to executive officers of the Company
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<PAGE>
pursuant to the policies of the Company; provided that Employee shall be
required to comply with the conditions attendant to coverage by such plans and
shall comply with and be entitled to benefits only in accordance with the terms
and conditions of such plans. Employee shall be entitled to three weeks paid
vacation each year during the Employment Term at such times as does not, in the
reasonable opinion of the Board of Directors, interfere with Employee's
performance of his duties hereunder. The Company may withhold from any benefits
payable to Employee all federal, state, local and other taxes and amounts as
shall be permitted or required pursuant to law, rule or regulation. In addition
to the foregoing, the Company shall pay to Employee the full amount of
Employee's annual contribution under the Company's Premium Conversion Plan,
payable in accordance with the Company's normal payment practices.
(b) Employee shall be entitled to receive the sum of [$1,100] per month
as an automobile allowance provided at the expense of the Company from the
Commencement Date and during the Employment Term, which allowance shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile, which expenses also shall be the responsibility of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years. Notwithstanding the foregoing, the Company may, at its
option, elect to provide Employee an automobile of the make, model and year
mutually agreeable to the Company and Employee, all costs of which associated
with insurance, repairs, maintenance and other expenses shall be the
responsibility of the Company, in lieu of the above described automobile
allowances, all as may be mutually agreed between Employee and the Company.
Employee acknowledges that some or all of the foregoing may be deemed
compensation to him.
8. DEATH AND DISABILITY. (a) The Employment Term shall
terminate on the date of Employee's death, in which event Employee's Salary,
reimbursable expenses and benefits owing to Employee through the date of
Employee's death shall be paid to his estate. Employee's estate will not be
entitled to any other compensation upon termination of this Agreement pursuant
to this Paragraph 8(a). The Company shall, at its expense, maintain for the
benefit of Employee during the Employment Term a life insurance policy on the
life of Employee, payable to such beneficiaries of Employee as Employee may from
time to time designate, in an amount equal to three times Employee's Salary.
(b) If, during the Employment Term, in the opinion of a duly licensed
physician selected by Employee and reasonably acceptable to the Company,
Employee, because of physical or mental illness or incapacity, shall become
substantially unable to perform the duties and services required of him under
this Agreement for a period of twelve consecutive months the Company may, upon
at least twenty (20) days' prior written notice given at any time after the
expiration of such twelve month period to Employee of its intention to do so,
terminate this Agreement as of such date as may be set forth in the notice. In
case of such termination, Employee shall be entitled to receive his Salary,
reimbursable expenses and benefits owing to Employee through the date of
termination. Employee will not be entitled to any other compensation upon
termination of this Agreement pursuant to this Paragraph 8(b). The Company shall
pay the premiums for a
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<PAGE>
disability insurance policy which will provide Employee with disability payments
after termination of this Agreement pursuant to this Paragraph 8(b) equal to
one-half of Employee's Salary during the period of disability or until Employee
becomes 70 years old, whichever is sooner.
9. TERMINATION FOR CAUSE. (a) The Company may terminate the
employment of Employee for Cause (as hereinafter defined). Upon such
termination, the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay Employee
his Salary, reimbursable expenses and benefits owing to Employee through the day
on which Employee is terminated. Employee will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).
(b) As used herein, the term "Cause" shall mean: (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof, which
failure is not cured by Employee within thirty days following written notice
thereof from the Company; or (ii) the commission by Employee of an act involving
moral turpitude, dishonesty, theft, unethical business conduct, or any other
conduct which significantly impairs the reputation of, or harms, the Company,
its subsidiaries or affiliates. [One year prior notice for termination by
Employee?]
10. CHANGE IN CONTROL. [Parachute of any kind?; Other
Severance?; Expiration Payment? - must discuss] In the event of a Change in
Control, as defined below, of the Company, the Company shall pay to Employee a
lump-sum amount equal to one-half of Employee's Salary at the time of the
occurrence of such Change in Control, which amount shall be paid within ten days
after such occurrence. The foregoing payment shall be in addition to and shall
not reduce or in any way affect the terms of payment of any amounts to which
Employee shall be entitled hereunder. The Company hereby agrees to obtain an
agreement from any successor to assume and agree to honor and perform this
Agreement. For purposes of this Agreement, a "Change in Control" shall have
occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(ii) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for election by the
Company's
-4-
<PAGE>
shareholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
11. DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT.
Employee acknowledges that, by his employment, he has been and will be in a
confidential relationship with the Company and will have access to confidential
information and trade secrets of the Company, its subsidiaries and affiliates.
Confidential information and trade secrets include, but are not limited to,
customer, supplier and client lists, price lists, marketing, distribution and
sales strategies and procedures, operational and equipment techniques, business
plans and systems, quality control procedures and systems, special projects and
technological research, including projects, research and reports for any entity
or client or any project, research, report or the like concerning sales or
manufacturing or new technology, employee compensation plans and any other
information relating thereto, and any other records, files, drawings,
inventions, discoveries, applications, processes, data and information
concerning the business of the Company which are not in the public domain.
Employee agrees that in consideration of the execution of this Agreement by the
Company, except in any way with respect to foreign affiliates of the Company as
of the date hereof:
(a) Employee will not, during the term of this Agreement or at any
time thereafter, use, or disclose to any third party, trade secrets or
confidential information of the Company, including, but not limited to,
confidential information or trade secrets belonging or relating to the Company,
its subsidiaries, affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries, affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information which is known or intended to be known only to employees of the
Company, its respective subsidiaries and affiliates or others in a confidential
relationship with the Company or its respective subsidiaries and affiliates
which relates to business matters.
-5-
<PAGE>
(b) Employee will not, during the term of this Agreement and, unless
Employee's employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter, directly or
indirectly, under any circumstance other than at the direction and for the
benefit of the Company, engage in or participate in any business activity,
including, but not limited to, acting as a director, officer, employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee, proprietor, syndicate member, shareholder or creditor or with a
person having any other relationship with any other business, company, firm
occupation or business activity, in any geographic area within the United States
that is, directly or indirectly, competitive with any business conducted by the
Company or any of its subsidiaries or affiliates during the term of this
Agreement or thereafter. Should Employee own 5% or less of the issued and
outstanding shares of a class of securities of a corporation the securities of
which are traded on a national securities exchange or in the over-the-counter
market, such ownership shall not cause Employee to be deemed a shareholder under
this Paragraph 11(b).
(c) Employee will not, during the term of this Agreement and for a
period of one (1) year thereafter, on his behalf or on behalf of any other
business enterprise, directly or indirectly, under any circumstance other than
at the direction and for the benefit of the Company, solicit or induce any
creditor, customer, supplier, officer, employee or agent of the Company or any
of its subsidiaries or affiliates to sever its relationship with or leave the
employ of any of such entities.
(d) If Employee's employment is terminated (constructively or
otherwise) by the Company for any reason then, in consideration for his
covenants contained in this paragraph 11 and not as severance pay, Employee
shall be entitled to receive, for the year following the date his employment so
terminates, an amount equal to Employee's annual salary at the rate in effect
immediately prior to his cessation of employment with the Company (or, if
greater, at the highest annual salary rate in effect at any time during the
one-year period preceding the date of such termination). Such amounts shall be
in addition to any amount otherwise payable under this Agreement and shall be
paid in equal monthly installments, with the first such installment commencing
on the last day of the month in which Employee's employment so terminates.
(e) This Paragraph 11 and Paragraphs 12, 13 and 14 hereof shall
survive the expiration or termination of this Agreement for any reason.
(f) It is expressly agreed by Employee that the nature and scope of
each of the provisions set forth above in this Paragraph 11 are reasonable and
necessary. If, for any reason, any aspect of the above provisions as it applies
to Employee is determined by a court of competent jurisdiction to be
unreasonable or unenforceable, the provisions shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be. Employee acknowledges and agrees that his services are of a
unique character and expressly grants to the Company or any subsidiary,
successor or assignee of the Company, the right to enforce the provisions above
through the use of all remedies available at law or in equity, including, but
not limited to, injunctive relief.
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<PAGE>
12. COMPANY PROPERTY. (a) Any patents, inventions,
discoveries, applications or processes, designs, devised, planned, applied,
created, discovered or invented by Employee in the course of Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective subsidiaries' or affiliates' business shall be the sole and
absolute property of the Company, and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents reasonably requested
to assure the Company the full and complete ownership thereof.
(b) All records, files, lists, including computer generated lists,
drawings, documents, equipment and similar items relating to the Company's
business which Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive property. Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession. Employee further represents that he will not copy or cause to be
copied, print out or cause to be printed out any software, documents or other
materials originating with or belonging to the Company. Employee additionally
represents that, upon termination of his employment with the Company, he will
not retain in his possession any such software, documents or other materials.
13. REMEDY. It is mutually understood and agreed that
Employee's services are special, unique, unusual, extraordinary and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, in the event of any breach of this Agreement by Employee,
including, but not limited to, the breach of the non-disclosure,
non-solicitation and non-compete clauses under Paragraph 11 hereof, the Company
shall be entitled to equitable relief by way of injunction or otherwise in
addition to damages the Company may be entitled to recover. In addition, the
Company shall be entitled to reimbursement from Employee, upon request, of any
and all reasonable attorneys' fees and expenses incurred by it in enforcing any
term or provision of this Agreement.
14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement, Employee hereby represents
and warrants to the Company as follows: (i) Employee has the legal capacity and
unrestricted right to execute and deliver this Agreement and to perform all of
his obligations hereunder; (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument, agreement, document,
arrangement or other understanding to which Employee is a party or by which he
is or may be bound or subject; and (iii) Employee is not a party to any
instrument, agreement, document, arrangement or other understanding with any
person (other than the Company) requiring or restricting the use or disclosure
of any confidential information or the provision of any employment, consulting
or other services.
(b) Employee hereby agrees to indemnify and hold harmless the Company
from and against any and all losses, costs, damages and expenses (including,
without limitation, its
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<PAGE>
reasonable attorneys' fees) incurred or suffered by the Company resulting from
any breach by Employee of any of his representations or warranties set forth in
Paragraph 14(a) hereof.
15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed effectively given when mailed, if sent by registered or
certified mail, return receipt requested, addressed to Employee at his address
set forth on the first page of this Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention: Gary J. Simon, Esq., or at such address as
such party shall have designated by a notice given in accordance with this
Paragraph 15, or when actually received by the party for whom intended, if sent
by any other means.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter and no change,
alteration or modification hereof may be made except in writing signed by the
parties hereto. Any prior or other agreements, promises, negotiations or
representations not expressly set forth in this Agreement are of no force or
effect.
17. SEVERABILITY. If any provision of this Agreement shall
be unenforceable under any applicable law, then notwithstanding such
unenforceability, the remainder of this Agreement shall continue in full force
and effect.
18. WAIVERS, MODIFICATIONS, ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by each of the parties hereto, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
19. ASSIGNMENT. Neither this Agreement, nor any of
Employee's rights, powers, duties or obligations hereunder, may be assigned by
Employee. This Agreement shall be binding upon and inure to the benefit of
Employee and his heirs and legal representatives and the Company and its
successors and assigns. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring, directly or indirectly,
all or substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.
20. APPLICABLE LAW. This Agreement shall be deemed to have
been made, drafted, negotiated and the transactions contemplated hereby
consummated and fully performed in the State of New York and shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the conflicts of law rules thereof. Nothing contained in this
Agreement shall be construed so as to require the commission of any act contrary
to law, and whenever there is any conflict between any provision of this
Agreement and any statute, law, ordinance, order or regulation, contrary to
which the parties hereto have no legal right to contract,
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<PAGE>
the latter shall prevail, but in such event any provision of this Agreement so
affected shall be curtailed and limited only to the extent necessary to bring it
within the legal requirements.
21. JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's award by any court having jurisdiction thereof
and the parties consent to the jurisdiction of any court located in the City of
New York, County of New York, for this purpose.
22. FULL UNDERSTANDING. Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this right, that he has carefully read and fully understands all of the
provisions of this Agreement, that he is competent to execute this Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely and voluntarily enters into it, and that he has read this
document in its entirety and fully understands the meaning, intent and
consequences of this document which is that it constitutes an agreement of
employment.
23. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: ___________________________________
Name:
Title:
-----------------------------------
Frederick H. Fialkow
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<PAGE>
ADDENDUM TO EMPLOYMENT AGREEMENT:
---------------------------------
Business Policies of National Home Health Care Corp.
----------------------------------------------------
This addendum supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this addendum basic principles and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal responsibility to abide by each of the standards.
Each person, alone, is responsible for his actions. No one will be permitted to
justify an illegal act by claiming it was ordered by someone higher in
management. No one, regardless of level of position, is ever authorized to
direct an employee to commit an illegal or unethical act.
As a summary of basic principles, this addendum does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction covering a particular situation does not
relieve an employee from exercising the highest ethical standards applicable to
the circumstances. If an employee has questions as to what the proper course of
conduct should be in any given situation, consult the Chairman of the Board of
the Company and the Company's legal counsel.
Violations of the guidelines set forth below can result in
disciplinary action, including dismissal, and possible criminal prosecution.
Any reprisal against an employee who is good faith reports a
violation or suspected violation of law or company policies is strictly
forbidden.
1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.
Since the Company is a medical services company, there are many state
and federal law and regulation which affect and define the responsibilities of
each employee. These laws and regulations must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation the employee must check with corporate counsel or special counsel.
The employee is responsible for designing, implementing and monitoring quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance. In connection with any compliance program, it is
vital that the employee be sure that no falsification of records be allowed and
the employee must undertake to have programs developed to assure that this does
not happen.
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2. The Company shall not tolerate any unfair competition.
Additional guidelines relating to this general policy are:
- do not interfere with contracts made between a prospective customer
and a competitor.
- never engage in commercial bribery.
- do not disparage a competitor's services.
- be accurate and truthful in all dealings
with customers and be careful not to
misrepresent the state and qualify, features
or availability of our services.
3. The Company awards business to suppliers solely on merit.
No employee should have any relationship, financial or otherwise, with any
supplier or competitor that might be construed as a conflict of interest or that
might even appear to impair his or her independent judgment on behalf of the
Company. Gifts, loans or any other thing of significant value should not be
accepted or solicited, even indirectly.
4. Each employee's primary obligation is to the Company, and,
therefore, any form of outside activity must be kept totally separate from
employment with the Company. no outside activity should involve the use of
Company assets, materials or facilities.
5. No employee may use his or her position in the Company for
outside gain or benefit, nor should any employee use property or other
confidential or private confidential information in any outside activity.
6. The law requires that the Company's books and records
accurately and fairly reflect transactions in reasonable detail, and that the
Company's internal accounting controls provide reasonable assurances that:
- transactions are carried out in an authorized matter.
- transactions have been reported and recorded
to permit correct preparation of financial
statements and to maintain accurate records
of assets. Access to assets is in accordance
with management's authorization.
- inventories of assets are taken periodically and appropriate action is
taken to correct discrepancies.
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7. Every employee who has control over Company funds is
personally accountable for such funds. There are no exceptions to this rule.
When spending Company money or personal money that will be reimbursed,
or requesting services that will cause Company money to be spent, the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.
Anyone responsible for the handling of Company revenue, and the
associated records and materials, is accountable for their safe keeping.
8. The Company categorically forbids the use of corporate
funds for the support of political parties or candidates. No employee is
authorized to make or approve such a contribution.
9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.
10. Records containing personal data on patients and the
Company's employees are confidential. As such, they are to be carefully
safeguarded and kept current and accurate. They should be disclosed only to
authorized personnel having a "need to know" or pursuant to lawful processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.
11. When a dishonest act by an employee is discovered it
should be reported immediately and directly to the Chairman of the Board of the
Company.
12. The Company encourages employees to participate in its
future by investing in its securities. However, in trading in Company securities
each employee should be aware that it may be illegal (and possible result in
civil or criminal penalties) to buy or sell Company securities while in
possession of material non-public information about the Company.
Material information can be anything that could have actual
significance in an investors decision such as acquisition plans, dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major management changes or other business plans. Employees aware of such
information prior to its being made public, should not buy or sell Company
securities until the information has been made public.
Employees should not trade in the securities of other companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract
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or any other information which could have actual significance in an investor's
decision about the securities of the other company.
Employees should keep any such information about the Company or any
other company secret and use it only for Company purposes, because it is
unlawful to "tip" others who may buy or sell such securities, even though the
tipper does not.
Some types of trading -- even if innocent -- could appear to the
public and to public officials to be based on the misuse of inside information
concerning the Company. To avoid even an appearance of impropriety, employees
are not to engage in short term speculation in company securities (that is, the
purchase and sale on the open market within a six month period). Nor should an
employee engage in any transaction when he stands to profit due to the short
term savings in the value of the Company's securities. An example of this type
of trading includes "short sales" (selling borrowed securities which the seller
hopes can be purchased at a lower price when they are due for deliver.
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Exhibit 10.4
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EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement dated as of November 1, 1997,
between National Home Health Care Corp., a Delaware corporation having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Steven Fialkow, an individual having an address at 700 White Plains Road,
Scarsdale, New York 10583 ("EMPLOYEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Company desires that Employee be employed by it
and render services to it, and Employee is willing to be so employed and to
render such services to the Company, all upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. Subject to and upon the terms and conditions
contained in this Agreement, the Company hereby agrees to employ Employee and
Employee agrees to enter the employ of the Company, for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.
2. TERM. Employee's term of employment under this Agreement
shall commence on the date hereof (the "Commencement Date") and shall continue
for a period through and including the fourth anniversary of the Commencement
Date (the "Employment Term") unless extended in writing by both parties or
earlier terminated pursuant to the terms and conditions set forth herein.
3. DUTIES. (a) Employee shall be employed as the Company's
President, Chief Operating Officer and Secretary. It is agreed that Employee
shall perform his services in the Company's Scarsdale, New York facilities, or
any other facilities mutually agreeable to the parties. The rights and duties of
Employee shall not in any way be curtailed by the Company without his consent
nor shall he be deprived of the dignity ordinarily associated with his offices.
(b) Employee agrees to abide by all By-laws and applicable policies of
the Company promulgated from time to time by the Board of Directors of the
Company, including without limitation the Business Policies of the Company
annexed hereto as Annex A..
4. EXCLUSIVE SERVICES AND BEST EFFORTS. Employee shall
devote all of his working time, attention, best efforts and ability during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.
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5. COMPENSATION. As compensation for his services and
covenants hereunder, the Company shall pay Employee the following:
(a) BASE SALARY. The Company shall pay Employee a minimum base salary
("Salary") of $157,500 per year. The Salary shall be subject to review and
adjustment on an annual basis beginning November 1, 1998, (if this contract is
then in effect) or, at the Company's discretion, on such earlier date as the
Company may designate; provided, however, that in no event shall Employee's
Salary be adjusted below the Salary designated herein.
(b) BONUS COMPENSATION. The Company shall pay Employee annual bonus
compensation ("Bonus Compensation") equal to three percent of the amount by
which the income from operations in any fiscal year during the Employment Term
(determined in accordance with general accepted accounting principles
consistently applied) exceeds $3,300,000. The foregoing Bonus Compensation shall
be paid by the Company within thirty (30) days after completion of the audited
financial results of the Company for the applicable fiscal year.
(c) OPTIONS. The Company shall grant to Employee as soon as
practicable following the date hereof an option to purchase thirty thousand
(30,000) shares of the Company's common stock for a period of ten years from the
date of grant and having an exercise price per share equal to the fair market
value of such common stock on the date of grant, pursuant to the terms of the
Company's 1992 Stock Option Plan, as amended to date (the "Plan"), and any
related stock option agreement required to be executed in connection therewith.
Such option shall be immediately exercisable as to all the shares covered
thereby and shall be, to the extent permitted by the terms of the Plan and
applicable laws, rules and regulations, an incentive stock option as
contemplated by the Internal Revenue Code of 1986, as amended.
6. BUSINESS EXPENSES. Employee shall be reimbursed for, and
entitled to advances (subject to repayment to the Company if not actually
incurred by Employee) with respect to, those business expenses incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement in accordance with policies established from time to time by the
Company.
7. EMPLOYEE BENEFITS. (a) During the Employment Term,
Employee shall be entitled to such insurance, disability and health and medical
benefits and be entitled to participate in such retirement plans or programs as
generally made available to executive officers of the Company pursuant to the
policies of the Company; provided that Employee shall be required to comply with
the conditions attendant to coverage by such plans and shall comply with and be
entitled to benefits only in accordance with the terms and conditions of such
plans. Employee shall be entitled to three weeks paid vacation each year during
the Employment Term at such times as does not, in the reasonable opinion of the
Board of Directors, interfere with Employee's performance of his duties
hereunder. The Company may withhold from any benefits payable to Employee all
federal, state, local and other taxes and amounts as shall be permitted or
required pursuant to law, rule or
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regulation. In addition to the foregoing, the Company shall pay to Employee the
full amount of Employee's annual contribution under the Company's Premium
Conversion Plan, payable in accordance with the Company's normal payment
practices.
(b) Employee shall be entitled to receive the sum of $550 per month as
an automobile allowance provided at the expense of the Company from the
Commencement Date and during the Employment Term, which allowance shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile, which expenses also shall be the responsibility of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years. Notwithstanding the foregoing, the Company may, at its
option, elect to provide Employee an automobile of the make, model and year
mutually agreeable to the Company and Employee, all costs of which associated
with insurance, repairs, maintenance and other expenses shall be the
responsibility of the Company, in lieu of the above described automobile
allowances, all as may be mutually agreed between Employee and the Company.
Employee acknowledges that some or all of the foregoing may be deemed
compensation to him.
8. DEATH AND DISABILITy. (a) The Employment Term shall
terminate on the date of Employee's death, in which event Employee's Salary,
reimbursable expenses and benefits owing to Employee through the date of
Employee's death shall be paid to his estate. Employee's estate will not be
entitled to any other compensation upon termination of this Agreement pursuant
to this Paragraph 8(a).
(b) If, during the Employment Term, in the opinion of a duly licensed
physician selected by Employee and reasonably acceptable to the Company,
Employee, because of physical or mental illness or incapacity, shall become
substantially unable to perform the duties and services required of him under
this Agreement for a period of six consecutive months the Company may, upon at
least twenty (20) days' prior written notice given at any time after the
expiration of such six-month period to Employee of its intention to do so,
terminate this Agreement as of such date as may be set forth in the notice. In
case of such termination, Employee shall be entitled to receive his Salary,
reimbursable expenses and benefits owing to Employee through the date of
termination. Employee will not be entitled to any other compensation upon
termination of this Agreement pursuant to this Paragraph 8(b).
9. TERMINATION FOR CAUSE. (a) The Company may terminate the
employment of Employee for Cause (as hereinafter defined). Upon such
termination, the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay Employee
his Salary, reimbursable expenses and benefits owing to Employee through the day
on which Employee is terminated. Employee will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).
(b) As used herein, the term "Cause" shall mean: (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof, which
failure is not cured by
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Employee within thirty days following written notice thereof from the Company;
(ii) any other material breach of this Agreement by Employee, including any of
the material representations or warranties made by Employee; (iii) any act, or
failure to act, by Employee in bad faith or intentionally to the detriment of
the Company; (iv) the commission by Employee of an act involving moral
turpitude, dishonesty, theft, unethical business conduct, or any other conduct
which significantly impairs the reputation of, or harms, the Company, its
subsidiaries or affiliates; or (v) any misrepresentation, concealment or
omission by Employee of any material fact in seeking employment hereunder.
10. CHANGE IN CONTROL. In the event of a Change in Control,
as defined below, of the Company, the Company shall pay to Employee a lump-sum
amount equal to one-half of Employee's Salary at the time of the occurrence of
such Change in Control, which amount shall be paid within ten days after such
occurrence. The foregoing payment shall be in addition to and shall not reduce
or in any way affect the terms of payment of any amounts to which Employee shall
be entitled hereunder. The Company hereby agrees to obtain an agreement from any
successor to assume and agree to honor and perform this Agreement. For purposes
of this Agreement, a "Change in Control" shall have occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(ii) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B)
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a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as hereinabove defined)
acquires more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
11. DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT.
Employee acknowledges that, by his employment, he has been and will be in a
confidential relationship with the Company and will have access to confidential
information and trade secrets of the Company, its subsidiaries and affiliates.
Confidential information and trade secrets include, but are not limited to,
customer, supplier and client lists, price lists, marketing, distribution and
sales strategies and procedures, operational and equipment techniques, business
plans and systems, quality control procedures and systems, special projects and
technological research, including projects, research and reports for any entity
or client or any project, research, report or the like concerning sales or
manufacturing or new technology, employee compensation plans and any other
information relating thereto, and any other records, files, drawings,
inventions, discoveries, applications, processes, data and information
concerning the business of the Company which are not in the public domain.
Employee agrees that in consideration of the execution of this Agreement by the
Company, except in any way with respect to foreign affiliates of the Company as
of the date hereof:
(a) Employee will not, during the term of this Agreement or at any
time thereafter, use, or disclose to any third party, trade secrets or
confidential information of the Company, including, but not limited to,
confidential information or trade secrets belonging or relating to the Company,
its subsidiaries, affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries, affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information which is known or intended to be known only to employees of the
Company, its respective subsidiaries and affiliates or others in a confidential
relationship with the Company or its respective subsidiaries and affiliates
which relates to business matters.
(b) Employee will not, during the term of this Agreement and, unless
Employee's employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter, directly or
indirectly, under any circumstance other than at the direction and for the
benefit of the Company, engage in or participate in any business activity,
including, but not limited to, acting as a director, officer, employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee, proprietor, syndicate member, shareholder or creditor or with a
person having any other relationship with any other business, company, firm
occupation or business activity, in any geographic area within the United States
that is, directly or indirectly, competitive with any business conducted by the
Company or any of its subsidiaries or affiliates during the term of this
Agreement or thereafter. Should Employee own
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5% or less of the issued and outstanding shares of a class of securities of a
corporation the securities of which are traded on a national securities exchange
or in the over-the-counter market, such ownership shall not cause Employee to be
deemed a shareholder under this Paragraph 11(b).
(c) Employee will not, during the term of this Agreement and for a
period of one (1) year thereafter, on his behalf or on behalf of any other
business enterprise, directly or indirectly, under any circumstance other than
at the direction and for the benefit of the Company, solicit or induce any
creditor, customer, supplier, officer, employee or agent of the Company or any
of its subsidiaries or affiliates to sever its relationship with or leave the
employ of any of such entities.
(d) If Employee's employment is terminated (constructively or
otherwise) by the Company for any reason then, in consideration for his
covenants contained in this paragraph 11 and not as severance pay, Employee
shall be entitled to receive, for the year following the date his employment so
terminates, an amount equal to Employee's annual salary at the rate in effect
immediately prior to his cessation of employment with the Company (or, if
greater, at the highest annual salary rate in effect at any time during the
one-year period preceding the date of such termination). Such amounts shall be
in addition to any amount otherwise payable under this Agreement and shall be
paid in equal monthly installments, with the first such installment commencing
on the last day of the month in which Employee's employment so terminates.
(e) This Paragraph 11 and Paragraphs 12, 13 and 14 hereof shall
survive the expiration or termination of this Agreement for any reason.
(f) It is expressly agreed by Employee that the nature and scope of
each of the provisions set forth above in this Paragraph 11 are reasonable and
necessary. If, for any reason, any aspect of the above provisions as it applies
to Employee is determined by a court of competent jurisdiction to be
unreasonable or unenforceable, the provisions shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be. Employee acknowledges and agrees that his services are of a
unique character and expressly grants to the Company or any subsidiary,
successor or assignee of the Company, the right to enforce the provisions above
through the use of all remedies available at law or in equity, including, but
not limited to, injunctive relief.
12. COMPANY PROPERTY. (a) Any patents, inventions,
discoveries, applications or processes, designs, devised, planned, applied,
created, discovered or invented by Employee in the course of Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective subsidiaries' or affiliates' business shall be the sole and
absolute property of the Company, and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents reasonably requested
to assure the Company the full and complete ownership thereof.
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(b) All records, files, lists, including computer generated lists,
drawings, documents, equipment and similar items relating to the Company's
business which Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive property. Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession. Employee further represents that he will not copy or cause to be
copied, print out or cause to be printed out any software, documents or other
materials originating with or belonging to the Company. Employee additionally
represents that, upon termination of his employment with the Company, he will
not retain in his possession any such software, documents or other materials.
13. REMEDY. It is mutually understood and agreed that
Employee's services are special, unique, unusual, extraordinary and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, in the event of any breach of this Agreement by Employee,
including, but not limited to, the breach of the non-disclosure,
non-solicitation and non-compete clauses under Paragraph 11 hereof, the Company
shall be entitled to equitable relief by way of injunction or otherwise in
addition to damages the Company may be entitled to recover. In addition, the
Company shall be entitled to reimbursement from Employee, upon request, of any
and all reasonable attorneys' fees and expenses incurred by it in enforcing any
term or provision of this Agreement.
14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement, Employee hereby represents
and warrants to the Company as follows: (i) Employee has the legal capacity and
unrestricted right to execute and deliver this Agreement and to perform all of
his obligations hereunder; (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument, agreement, document,
arrangement or other understanding to which Employee is a party or by which he
is or may be bound or subject; and (iii) Employee is not a party to any
instrument, agreement, document, arrangement or other understanding with any
person (other than the Company) requiring or restricting the use or disclosure
of any confidential information or the provision of any employment, consulting
or other services.
(b) Employee hereby agrees to indemnify and hold harmless the Company
from and against any and all losses, costs, damages and expenses (including,
without limitation, its reasonable attorneys' fees) incurred or suffered by the
Company resulting from any breach by Employee of any of his representations or
warranties set forth in Paragraph 14(a) hereof.
15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed effectively given when mailed, if sent by registered or
certified mail, return receipt requested, addressed to Employee at his address
set forth on the first page of this Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention: Gary J. Simon, Esq., or at such address as
such party shall have
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designated by a notice given in accordance with this Paragraph 15, or when
actually received by the party for whom intended, if sent by any other means.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter and no change,
alteration or modification hereof may be made except in writing signed by the
parties hereto. Any prior or other agreements, promises, negotiations or
representations not expressly set forth in this Agreement are of no force or
effect.
17. SEVERABILITY. If any provision of this Agreement shall
be unenforceable under any applicable law, then notwithstanding such
unenforceability, the remainder of this Agreement shall continue in full force
and effect.
18. WAIVERS, MODIFICATIONS, ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by each of the parties hereto, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
19. ASSIGNMENT. Neither this Agreement, nor any of
Employee's rights, powers, duties or obligations hereunder, may be assigned by
Employee. This Agreement shall be binding upon and inure to the benefit of
Employee and his heirs and legal representatives and the Company and its
successors and assigns. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring, directly or indirectly,
all or substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.
20. APPLICABLE LAW. This Agreement shall be deemed to have
been made, drafted, negotiated and the transactions contemplated hereby
consummated and fully performed in the State of New York and shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the conflicts of law rules thereof. Nothing contained in this
Agreement shall be construed so as to require the commission of any act contrary
to law, and whenever there is any conflict between any provision of this
Agreement and any statute, law, ordinance, order or regulation, contrary to
which the parties hereto have no legal right to contract, the latter shall
prevail, but in such event any provision of this Agreement so affected shall be
curtailed and limited only to the extent necessary to bring it within the legal
requirements.
21. JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's award by any court having jurisdiction thereof
and the parties consent to the jurisdiction of any court located in the City of
New York, County of New York, for this purpose.
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22. FULL UNDERSTANDING. Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this right, that he has carefully read and fully understands all of the
provisions of this Agreement, that he is competent to execute this Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely and voluntarily enters into it, and that he has read this
document in its entirety and fully understands the meaning, intent and
consequences of this document which is that it constitutes an agreement of
employment.
23. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: ___________________________________
Name:
Title:
-----------------------------------
Steven Fialkow
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ADDENDUM TO EMPLOYMENT AGREEMENT:
---------------------------------
Business Policies of National Home Health Care Corp.
----------------------------------------------------
This addendum supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this addendum basic principles and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal responsibility to abide by each of the standards.
Each person, alone, is responsible for his actions. No one will be permitted to
justify an illegal act by claiming it was ordered by someone higher in
management. No one, regardless of level of position, is ever authorized to
direct an employee to commit an illegal or unethical act.
As a summary of basic principles, this addendum does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction covering a particular situation does not
relieve an employee from exercising the highest ethical standards applicable to
the circumstances. If an employee has questions as to what the proper course of
conduct should be in any given situation, consult the Chairman of the Board of
the Company and the Company's legal counsel.
Violations of the guidelines set forth below can result in
disciplinary action, including dismissal, and possible criminal prosecution.
Any reprisal against an employee who is good faith reports a
violation or suspected violation of law or company policies is strictly
forbidden.
1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.
Since the Company is a home health care company, there are many state
and federal law and regulation which affect and define the responsibilities of
each employee. These laws and regulations must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation the employee must check with corporate counsel or special counsel.
The employee is responsible for designing, implementing and monitoring quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance. In connection with any compliance program, it is
vital that the employee be sure that no falsification of records be allowed and
the employee must undertake to have programs developed to assure that this does
not happen.
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<PAGE>
2. The Company shall not tolerate any unfair competition.
Additional guidelines relating to this general policy are:
- do not interfere with contracts made between a prospective customer
and a competitor.
- never engage in commercial bribery.
- do not disparage a competitor's services.
- be accurate and truthful in all dealings
with customers and be careful not to
misrepresent the state and qualify, features
or availability of our services.
3. The Company awards business to suppliers solely on merit.
No employee should have any relationship, financial or otherwise, with any
supplier or competitor that might be construed as a conflict of interest or that
might even appear to impair his or her independent judgment on behalf of the
Company. Gifts, loans or any other thing of significant value should not be
accepted or solicited, even indirectly.
4. Each employee's primary obligation is to the Company, and,
therefore, any form of outside activity must be kept totally separate from
employment with the Company. no outside activity should involve the use of
Company assets, materials or facilities.
5. No employee may use his or her position in the Company for
outside gain or benefit, nor should any employee use property or other
confidential or private confidential information in any outside activity.
6. The law requires that the Company's books and records
accurately and fairly reflect transactions in reasonable detail, and that the
Company's internal accounting controls provide reasonable assurances that:
- transactions are carried out in an authorized matter.
- transactions have been reported and recorded
to permit correct preparation of financial
statements and to maintain accurate records
of assets. Access to assets is in accordance
with management's authorization.
- inventories of assets are taken periodically and appropriate action is
taken to correct discrepancies.
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<PAGE>
7. Every employee who has control over Company funds is
personally accountable for such funds. There are no exceptions to this rule.
When spending Company money or personal money that will be reimbursed,
or requesting services that will cause Company money to be spent, the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.
Anyone responsible for the handling of Company revenue, and the
associated records and materials, is accountable for their safe keeping.
8. The Company categorically forbids the use of corporate
funds for the support of political parties or candidates. No employee is
authorized to make or approve such a contribution.
9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.
10. Records containing personal data on patients and the
Company's employees are confidential. As such, they are to be carefully
safeguarded and kept current and accurate. They should be disclosed only to
authorized personnel having a "need to know" or pursuant to lawful processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.
11. When a dishonest act by an employee is discovered it
should be reported immediately and directly to the Chairman of the Board of the
Company.
12. The Company encourages employees to participate in its
future by investing in its securities. However, in trading in Company securities
each employee should be aware that it may be illegal (and possible result in
civil or criminal penalties) to buy or sell Company securities while in
possession of material non-public information about the Company.
Material information can be anything that could have actual
significance in an investors decision such as acquisition plans, dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major management changes or other business plans. Employees aware of such
information prior to its being made public, should not buy or sell Company
securities until the information has been made public.
Employees should not trade in the securities of other companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract or any other information which could have
actual significance in an investor's decision about the securities of the other
company.
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Employees should keep any such information about the Company or any
other company secret and use it only for Company purposes, because it is
unlawful to "tip" others who may buy or sell such securities, even though the
tipper does not.
Some types of trading -- even if innocent -- could appear to the
public and to public officials to be based on the misuse of inside information
concerning the Company. To avoid even an appearance of impropriety, employees
are not to engage in short term speculation in company securities (that is, the
purchase and sale on the open market within a six month period). Nor should an
employee engage in any transaction when he stands to profit due to the short
term savings in the value of the Company's securities. An example of this type
of trading includes "short sales" (selling borrowed securities which the seller
hopes can be purchased at a lower price when they are due for deliver.
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Exhibit 10.5
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EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement dated as of November 1, 1997,
between National Home Health Care Corp., a Delaware corporation having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Richard Garofalo, an individual having an address at 700 White Plains Road,
Scarsdale, New York 10583 ("EMPLOYEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Company desires that Employee be employed by it
and render services to it, and Employee is willing to be so employed and to
render such services to the Company, all upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. Subject to and upon the terms and conditions
contained in this Agreement, the Company hereby agrees to employ Employee and
Employee agrees to enter the employ of the Company, for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.
2. TERM. Employee's term of employment under this Agreement
shall commence on the date hereof (the "Commencement Date") and shall continue
for a period through and including the fourth anniversary of the Commencement
Date (the "Employment Term") unless extended in writing by both parties or
earlier terminated pursuant to the terms and conditions set forth herein.
3. DUTIES. (a) Employee shall be employed as the President
of Health Acquisition Corporation ("HAC"), a wholly owned subsidiary of the
Company. It is agreed that Employee shall perform his services in HAC's Queens,
New York facilities, or any other facilities mutually agreeable to the parties.
The rights and duties of Employee shall not in any way be curtailed by the
Company without his consent nor shall he be deprived of the dignity ordinarily
associated with his offices.
(b) Employee agrees to abide by all By-laws and applicable policies of
the Company promulgated from time to time by the Board of Directors of the
Company, including without limitation the Business Policies of the Company
annexed hereto as Annex A..
4. EXCLUSIVE SERVICES AND BEST EFFORTS. Employee shall
devote all of his working time, attention, best efforts and ability during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.
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<PAGE>
5. COMPENSATION. As compensation for his services and
covenants hereunder, the Company shall pay Employee the following:
(a) BASE SALARY. The Company shall pay Employee a minimum base salary
("Salary") of $157,500 per year. The Salary shall be subject to review and
adjustment on an annual basis beginning November 1, 1998, (if this contract is
then in effect) or, at the Company's discretion, on such earlier date as the
Company may designate; provided, however, that in no event shall Employee's
Salary be adjusted below the Salary designated herein.
(b) BONUS COMPENSATION. The Company may pay Employee bonus
compensation in such amounts and at such times as the Board of Directors or the
Chairman of the Board of the Company shall determine.
(c) OPTIONS. The Company shall grant to Employee as soon as
practicable following the date hereof an option to purchase twenty thousand
(20,000) shares of the Company's common stock for a period of ten years from the
date of grant and having an exercise price per share equal to the fair market
value of such common stock on the date of grant, pursuant to the terms of the
Company's 1992 Stock Option Plan, as amended to date (the "Plan"), and any
related stock option agreement required to be executed in connection therewith.
Such option shall be immediately exercisable as to all the shares covered
thereby and shall be, to the extent permitted by the terms of the Plan and
applicable laws, rules and regulations, an incentive stock option as
contemplated by the Internal Revenue Code of 1986, as amended.
6. BUSINESS EXPENSES. Employee shall be reimbursed for, and
entitled to advances (subject to repayment to the Company if not actually
incurred by Employee) with respect to, those business expenses incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement in accordance with policies established from time to time by the
Company.
7. EMPLOYEE BENEFITS. (a) During the Employment Term,
Employee shall be entitled to such insurance, disability and health and medical
benefits and be entitled to participate in such retirement plans or programs as
generally made available to executive officers of the Company pursuant to the
policies of the Company; provided that Employee shall be required to comply with
the conditions attendant to coverage by such plans and shall comply with and be
entitled to benefits only in accordance with the terms and conditions of such
plans. Employee shall be entitled to three weeks paid vacation each year during
the Employment Term at such times as does not, in the reasonable opinion of the
Board of Directors, interfere with Employee's performance of his duties
hereunder. The Company may withhold from any benefits payable to Employee all
federal, state, local and other taxes and amounts as shall be permitted or
required pursuant to law, rule or regulation. In addition to the foregoing, the
Company shall pay to Employee the full amount of Employee's annual contribution
under the Company's Premium Conversion Plan, payable in accordance with the
Company's normal payment practices.
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<PAGE>
(b) Employee shall be entitled to receive the sum of $550 per month as
an automobile allowance provided at the expense of the Company from the
Commencement Date and during the Employment Term, which allowance shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile, which expenses also shall be the responsibility of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years. Notwithstanding the foregoing, the Company may, at its
option, elect to provide Employee an automobile of the make, model and year
mutually agreeable to the Company and Employee, all costs of which associated
with insurance, repairs, maintenance and other expenses shall be the
responsibility of the Company, in lieu of the above described automobile
allowances, all as may be mutually agreed between Employee and the Company.
Employee acknowledges that some or all of the foregoing may be deemed
compensation to him.
8. DEATH AND DISABILITY. (a) The Employment Term shall
terminate on the date of Employee's death, in which event Employee's Salary,
reimbursable expenses and benefits owing to Employee through the date of
Employee's death shall be paid to his estate. Employee's estate will not be
entitled to any other compensation upon termination of this Agreement pursuant
to this Paragraph 8(a).
(b) If, during the Employment Term, in the opinion of a duly licensed
physician selected by Employee and reasonably acceptable to the Company,
Employee, because of physical or mental illness or incapacity, shall become
substantially unable to perform the duties and services required of him under
this Agreement for a period of six consecutive months the Company may, upon at
least twenty (20) days' prior written notice given at any time after the
expiration of such six-month period to Employee of its intention to do so,
terminate this Agreement as of such date as may be set forth in the notice. In
case of such termination, Employee shall be entitled to receive his Salary,
reimbursable expenses and benefits owing to Employee through the date of
termination. Employee will not be entitled to any other compensation upon
termination of this Agreement pursuant to this Paragraph 8(b).
9. TERMINATION FOR CAUSE. (a) The Company may terminate the
employment of Employee for Cause (as hereinafter defined). Upon such
termination, the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay Employee
his Salary, reimbursable expenses and benefits owing to Employee through the day
on which Employee is terminated. Employee will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).
(b) As used herein, the term "Cause" shall mean: (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof, which
failure is not cured by Employee within thirty days following written notice
thereof from the Company; (ii) any other material breach of this Agreement by
Employee, including any of the material representations or warranties made by
Employee; (iii) any act, or failure to act, by Employee in bad faith or
intentionally to the detriment of the Company; (iv) the commission by Employee
of an act involving moral
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<PAGE>
turpitude, dishonesty, theft, unethical business conduct, or any other conduct
which significantly impairs the reputation of, or harms, the Company, its
subsidiaries or affiliates; or (v) any misrepresentation, concealment or
omission by Employee of any material fact in seeking employment hereunder.
10. CHANGE IN CONTROL. In the event of a Change in Control,
as defined below, of the Company, the Company shall pay to Employee a lump-sum
amount equal to one-half of Employee's Salary at the time of the occurrence of
such Change in Control, which amount shall be paid within ten days after such
occurrence. The foregoing payment shall be in addition to and shall not reduce
or in any way affect the terms of payment of any amounts to which Employee shall
be entitled hereunder. The Company hereby agrees to obtain an agreement from any
successor to assume and agree to honor and perform this Agreement. For purposes
of this Agreement, a "Change in Control" shall have occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(ii) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or
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<PAGE>
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
11. DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT.
Employee acknowledges that, by his employment, he has been and will be in a
confidential relationship with the Company and will have access to confidential
information and trade secrets of the Company, its subsidiaries and affiliates.
Confidential information and trade secrets include, but are not limited to,
customer, supplier and client lists, price lists, marketing, distribution and
sales strategies and procedures, operational and equipment techniques, business
plans and systems, quality control procedures and systems, special projects and
technological research, including projects, research and reports for any entity
or client or any project, research, report or the like concerning sales or
manufacturing or new technology, employee compensation plans and any other
information relating thereto, and any other records, files, drawings,
inventions, discoveries, applications, processes, data and information
concerning the business of the Company which are not in the public domain.
Employee agrees that in consideration of the execution of this Agreement by the
Company, except in any way with respect to foreign affiliates of the Company as
of the date hereof:
(a) Employee will not, during the term of this Agreement or at any
time thereafter, use, or disclose to any third party, trade secrets or
confidential information of the Company, including, but not limited to,
confidential information or trade secrets belonging or relating to the Company,
its subsidiaries, affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries, affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information which is known or intended to be known only to employees of the
Company, its respective subsidiaries and affiliates or others in a confidential
relationship with the Company or its respective subsidiaries and affiliates
which relates to business matters.
(b) Employee will not, during the term of this Agreement and, unless
Employee's employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter, directly or
indirectly, under any circumstance other than at the direction and for the
benefit of the Company, engage in or participate in any business activity,
including, but not limited to, acting as a director, officer, employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee, proprietor, syndicate member, shareholder or creditor or with a
person having any other relationship with any other business, company, firm
occupation or business activity, in any geographic area within the United States
that is, directly or indirectly, competitive with any business conducted by the
Company or any of its subsidiaries or affiliates during the term of this
Agreement or thereafter. Should Employee own 5% or less of the issued and
outstanding shares of a class of securities of a corporation the securities of
which are traded on a national securities exchange or in the over-the-counter
market, such ownership shall not cause Employee to be deemed a shareholder under
this Paragraph 11(b).
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<PAGE>
(c) Employee will not, during the term of this Agreement and for a
period of one (1) year thereafter, on his behalf or on behalf of any other
business enterprise, directly or indirectly, under any circumstance other than
at the direction and for the benefit of the Company, solicit or induce any
creditor, customer, supplier, officer, employee or agent of the Company or any
of its subsidiaries or affiliates to sever its relationship with or leave the
employ of any of such entities.
(d) This Paragraph 11 and Paragraphs 12, 13 and 14 hereof shall
survive the expiration or termination of this Agreement for any reason.
(e) It is expressly agreed by Employee that the nature and scope of
each of the provisions set forth above in this Paragraph 11 are reasonable and
necessary. If, for any reason, any aspect of the above provisions as it applies
to Employee is determined by a court of competent jurisdiction to be
unreasonable or unenforceable, the provisions shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be. Employee acknowledges and agrees that his services are of a
unique character and expressly grants to the Company or any subsidiary,
successor or assignee of the Company, the right to enforce the provisions above
through the use of all remedies available at law or in equity, including, but
not limited to, injunctive relief.
12. COMPANY PROPERTY. (a) Any patents, inventions,
discoveries, applications or processes, designs, devised, planned, applied,
created, discovered or invented by Employee in the course of Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective subsidiaries' or affiliates' business shall be the sole and
absolute property of the Company, and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents reasonably requested
to assure the Company the full and complete ownership thereof.
(b) All records, files, lists, including computer generated lists,
drawings, documents, equipment and similar items relating to the Company's
business which Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive property. Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession. Employee further represents that he will not copy or cause to be
copied, print out or cause to be printed out any software, documents or other
materials originating with or belonging to the Company. Employee additionally
represents that, upon termination of his employment with the Company, he will
not retain in his possession any such software, documents or other materials.
13. REMEDY. It is mutually understood and agreed that
Employee's services are special, unique, unusual, extraordinary and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, in the event of any breach of this Agreement by Employee,
including, but not limited to, the breach of the non-disclosure,
non-solicitation and non-compete clauses under Paragraph 11
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hereof, the Company shall be entitled to equitable relief by way of injunction
or otherwise in addition to damages the Company may be entitled to recover. In
addition, the Company shall be entitled to reimbursement from Employee, upon
request, of any and all reasonable attorneys' fees and expenses incurred by it
in enforcing any term or provision of this Agreement.
14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement, Employee hereby represents
and warrants to the Company as follows: (i) Employee has the legal capacity and
unrestricted right to execute and deliver this Agreement and to perform all of
his obligations hereunder; (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument, agreement, document,
arrangement or other understanding to which Employee is a party or by which he
is or may be bound or subject; and (iii) Employee is not a party to any
instrument, agreement, document, arrangement or other understanding with any
person (other than the Company) requiring or restricting the use or disclosure
of any confidential information or the provision of any employment, consulting
or other services.
(b) Employee hereby agrees to indemnify and hold harmless the Company
from and against any and all losses, costs, damages and expenses (including,
without limitation, its reasonable attorneys' fees) incurred or suffered by the
Company resulting from any breach by Employee of any of his representations or
warranties set forth in Paragraph 14(a) hereof.
15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed effectively given when mailed, if sent by registered or
certified mail, return receipt requested, addressed to Employee at his address
set forth on the first page of this Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention: Gary J. Simon, Esq., or at such address as
such party shall have designated by a notice given in accordance with this
Paragraph 15, or when actually received by the party for whom intended, if sent
by any other means.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter and no change,
alteration or modification hereof may be made except in writing signed by the
parties hereto. Any prior or other agreements, promises, negotiations or
representations not expressly set forth in this Agreement are of no force or
effect.
17. SEVERABILITY. If any provision of this Agreement shall
be unenforceable under any applicable law, then notwithstanding such
unenforceability, the remainder of this Agreement shall continue in full force
and effect.
18. WAIVERS, MODIFICATIONS, ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by each
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of the parties hereto, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
19. ASSIGNMENT. Neither this Agreement, nor any of
Employee's rights, powers, duties or obligations hereunder, may be assigned by
Employee. This Agreement shall be binding upon and inure to the benefit of
Employee and his heirs and legal representatives and the Company and its
successors and assigns. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring, directly or indirectly,
all or substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.
20. APPLICABLE LAW. This Agreement shall be deemed to have
been made, drafted, negotiated and the transactions contemplated hereby
consummated and fully performed in the State of New York and shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the conflicts of law rules thereof. Nothing contained in this
Agreement shall be construed so as to require the commission of any act contrary
to law, and whenever there is any conflict between any provision of this
Agreement and any statute, law, ordinance, order or regulation, contrary to
which the parties hereto have no legal right to contract, the latter shall
prevail, but in such event any provision of this Agreement so affected shall be
curtailed and limited only to the extent necessary to bring it within the legal
requirements.
21. JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's award by any court having jurisdiction thereof
and the parties consent to the jurisdiction of any court located in the City of
New York, County of New York, for this purpose.
22. FULL UNDERSTANDING. Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this right, that he has carefully read and fully understands all of the
provisions of this Agreement, that he is competent to execute this Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely and voluntarily enters into it, and that he has read this
document in its entirety and fully understands the meaning, intent and
consequences of this document which is that it constitutes an agreement of
employment.
-8-
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23. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: ___________________________________
Name:
Title:
-----------------------------------
Richard Garofalo
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ADDENDUM TO EMPLOYMENT AGREEMENT:
---------------------------------
Business Policies of National Home Health Care Corp.
----------------------------------------------------
This addendum supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this addendum basic principles and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal responsibility to abide by each of the standards.
Each person, alone, is responsible for his actions. No one will be permitted to
justify an illegal act by claiming it was ordered by someone higher in
management. No one, regardless of level of position, is ever authorized to
direct an employee to commit an illegal or unethical act.
As a summary of basic principles, this addendum does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction covering a particular situation does not
relieve an employee from exercising the highest ethical standards applicable to
the circumstances. If an employee has questions as to what the proper course of
conduct should be in any given situation, consult the Chairman of the Board of
the Company and the Company's legal counsel.
Violations of the guidelines set forth below can result in
disciplinary action, including dismissal, and possible criminal prosecution.
Any reprisal against an employee who is good faith reports a
violation or suspected violation of law or company policies is strictly
forbidden.
1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.
Since the Company is a home health care company, there are many state
and federal law and regulation which affect and define the responsibilities of
each employee. These laws and regulations must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation the employee must check with corporate counsel or special counsel.
The employee is responsible for designing, implementing and monitoring quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance. In connection with any compliance program, it is
vital that the employee be sure that no falsification of records be allowed and
the employee must undertake to have programs developed to assure that this does
not happen.
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2. The Company shall not tolerate any unfair competition.
Additional guidelines relating to this general policy are:
- - do not interfere with contracts made between a prospective customer
and a competitor.
- - never engage in commercial bribery.
- - do not disparage a competitor's services.
- - be accurate and truthful in all dealings
with customers and be careful not to
misrepresent the state and qualify, features
or availability of our services.
3. The Company awards business to suppliers solely on merit.
No employee should have any relationship, financial or otherwise, with any
supplier or competitor that might be construed as a conflict of interest or that
might even appear to impair his or her independent judgment on behalf of the
Company. Gifts, loans or any other thing of significant value should not be
accepted or solicited, even indirectly.
4. Each employee's primary obligation is to the Company, and,
therefore, any form of outside activity must be kept totally separate from
employment with the Company. no outside activity should involve the use of
Company assets, materials or facilities.
5. No employee may use his or her position in the Company for
outside gain or benefit, nor should any employee use property or other
confidential or private confidential information in any outside activity.
6. The law requires that the Company's books and records
accurately and fairly reflect transactions in reasonable detail, and that the
Company's internal accounting controls provide reasonable assurances that:
- - transactions are carried out in an authorized matter.
- - transactions have been reported and recorded
to permit correct preparation of financial
statements and to maintain accurate records
of assets. Access to assets is in accordance
with management's authorization.
- - inventories of assets are taken periodically and appropriate action is
taken to correct discrepancies.
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<PAGE>
7. Every employee who has control over Company funds is
personally accountable for such funds. There are no exceptions to this rule.
When spending Company money or personal money that will be reimbursed,
or requesting services that will cause Company money to be spent, the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.
Anyone responsible for the handling of Company revenue, and the
associated records and materials, is accountable for their safe keeping.
8. The Company categorically forbids the use of corporate
funds for the support of political parties or candidates. No employee is
authorized to make or approve such a contribution.
9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.
10. Records containing personal data on patients and the
Company's employees are confidential. As such, they are to be carefully
safeguarded and kept current and accurate. They should be disclosed only to
authorized personnel having a "need to know" or pursuant to lawful processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.
11. When a dishonest act by an employee is discovered it
should be reported immediately and directly to the Chairman of the Board of the
Company.
12. The Company encourages employees to participate in its
future by investing in its securities. However, in trading in Company securities
each employee should be aware that it may be illegal (and possible result in
civil or criminal penalties) to buy or sell Company securities while in
possession of material non-public information about the Company.
Material information can be anything that could have actual
significance in an investors decision such as acquisition plans, dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major management changes or other business plans. Employees aware of such
information prior to its being made public, should not buy or sell Company
securities until the information has been made public.
Employees should not trade in the securities of other companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract or any other information which could have
actual significance in an investor's decision about the securities of the other
company.
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Employees should keep any such information about the Company or any
other company secret and use it only for Company purposes, because it is
unlawful to "tip" others who may buy or sell such securities, even though the
tipper does not.
Some types of trading -- even if innocent -- could appear to the
public and to public officials to be based on the misuse of inside information
concerning the Company. To avoid even an appearance of impropriety, employees
are not to engage in short term speculation in company securities (that is, the
purchase and sale on the open market within a six month period). Nor should an
employee engage in any transaction when he stands to profit due to the short
term savings in the value of the Company's securities. An example of this type
of trading includes "short sales" (selling borrowed securities which the seller
hopes can be purchased at a lower price when they are due for deliver.
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Exhibit 10.6
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EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement dated as of November 1, 1997,
between National Home Health Care Corp., a Delaware corporation having an
address at 700 White Plains Road, Scarsdale, New York 10583 (the "COMPANY"), and
Robert P. Heller, an individual having an address at 700 White Plains Road,
Scarsdale, New York 10583 ("EMPLOYEE").
W I T N E S S E T H :
---------------------
WHEREAS, the Company desires that Employee be employed by it
and render services to it, and Employee is willing to be so employed and to
render such services to the Company, all upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. Subject to and upon the terms and conditions
contained in this Agreement, the Company hereby agrees to employ Employee and
Employee agrees to enter the employ of the Company, for the period set forth in
Paragraph 2 hereof, to render the services to the Company, its affiliates and/or
subsidiaries described in Paragraph 3 hereof.
2. TERM. Employee's term of employment under this Agreement
shall commence on the date hereof (the "Commencement Date") and shall continue
for a period through and including the fourth anniversary of the Commencement
Date (the "Employment Term") unless extended in writing by both parties or
earlier terminated pursuant to the terms and conditions set forth herein.
3. DUTIES. (a) Employee shall be employed as the Company's
Executive Vice President of Finance, Chief Financial Officer and Treasurer. It
is agreed that Employee shall perform his services in the Company's Scarsdale,
New York facilities, or any other facilities mutually agreeable to the parties.
The rights and duties of Employee shall not in any way be curtailed by the
Company without his consent nor shall he be deprived of the dignity ordinarily
associated with his offices.
(b) Employee agrees to abide by all By-laws and applicable policies of
the Company promulgated from time to time by the Board of Directors of the
Company, including without limitation the Business Policies of the Company
annexed hereto as Annex A.
4. EXCLUSIVE SERVICES AND BEST EFFORTS. Employee shall
devote all of his working time, attention, best efforts and ability during
regular business hours exclusively to the service of the Company, its affiliates
and subsidiaries during the term of this Agreement.
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<PAGE>
5. COMPENSATION. As compensation for his services and
covenants hereunder, the Company shall pay Employee the following:
(a) BASE SALARY. The Company shall pay Employee a minimum base salary
("Salary") of $122,500 per year. The Salary shall be subject to review and
adjustment on an annual basis beginning November 1, 1998, (if this contract is
then in effect) or, at the Company's discretion, on such earlier date as the
Company may designate; provided, however, that in no event shall Employee's
Salary be adjusted below the Salary designated herein.
(b) BONUS COMPENSATION. The Company may pay Employee bonus
compensation in such amounts and at such times as the Board of Directors or the
Chairman of the Board shall determine.
(c) OPTIONS. The Company shall grant to Employee as soon as
practicable following the date hereof an option to purchase ten thousand
(10,000) shares of the Company's common stock for a period of ten years from the
date of grant and having an exercise price per share equal to the fair market
value of such common stock on the date of grant, pursuant to the terms of the
Company's 1992 Stock Option Plan, as amended to date (the "Plan"), and any
related stock option agreement required to be executed in connection therewith.
Such option shall be immediately exercisable as to all the shares covered
thereby and shall be, to the extent permitted by the terms of the Plan and
applicable laws, rules and regulations, an incentive stock option as
contemplated by the Internal Revenue Code of 1986, as amended.
6. BUSINESS EXPENSES. Employee shall be reimbursed for, and
entitled to advances (subject to repayment to the Company if not actually
incurred by Employee) with respect to, those business expenses incurred by him
which are reasonable and necessary for Employee to perform his duties under this
Agreement in accordance with policies established from time to time by the
Company.
7. EMPLOYEE BENEFITS. (a) During the Employment Term,
Employee shall be entitled to such insurance, disability and health and medical
benefits and be entitled to participate in such retirement plans or programs as
generally made available to executive officers of the Company pursuant to the
policies of the Company; provided that Employee shall be required to comply with
the conditions attendant to coverage by such plans and shall comply with and be
entitled to benefits only in accordance with the terms and conditions of such
plans. Employee shall be entitled to three weeks paid vacation each year during
the Employment Term at such times as does not, in the reasonable opinion of the
Board of Directors, interfere with Employee's performance of his duties
hereunder. The Company may withhold from any benefits payable to Employee all
federal, state, local and other taxes and amounts as shall be permitted or
required pursuant to law, rule or regulation. In addition to the foregoing, the
Company shall pay to Employee the full amount of Employee's annual contribution
under the Company's Premium Conversion Plan, payable in accordance with the
Company's normal payment practices.
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<PAGE>
(b) Employee shall be entitled to receive the sum of $550 per month as
an automobile allowance provided at the expense of the Company from the
Commencement Date and during the Employment Term, which allowance shall be
exclusive of all expenses related to insurance, repairs and maintenance for such
automobile, which expenses also shall be the responsibility of the Company.
Employee agrees not to lease any automobile covered by such allowance for a term
longer than two years. Notwithstanding the foregoing, the Company may, at its
option, elect to provide Employee an automobile of the make, model and year
mutually agreeable to the Company and Employee, all costs of which associated
with insurance, repairs, maintenance and other expenses shall be the
responsibility of the Company, in lieu of the above described automobile
allowances, all as may be mutually agreed between Employee and the Company.
Employee acknowledges that some or all of the foregoing may be deemed
compensation to him.
8. DEATH AND DISABILITY. (a) The Employment Term shall
terminate on the date of Employee's death, in which event Employee's Salary,
reimbursable expenses and benefits owing to Employee through the date of
Employee's death shall be paid to his estate. Employee's estate will not be
entitled to any other compensation upon termination of this Agreement pursuant
to this Paragraph 8(a).
(b) If, during the Employment Term, in the opinion of a duly licensed
physician selected by Employee and reasonably acceptable to the Company,
Employee, because of physical or mental illness or incapacity, shall become
substantially unable to perform the duties and services required of him under
this Agreement for a period of six consecutive months the Company may, upon at
least twenty (20) days' prior written notice given at any time after the
expiration of such six-month period to Employee of its intention to do so,
terminate this Agreement as of such date as may be set forth in the notice. In
case of such termination, Employee shall be entitled to receive his Salary,
reimbursable expenses and benefits owing to Employee through the date of
termination. Employee will not be entitled to any other compensation upon
termination of this Agreement pursuant to this Paragraph 8(b).
9. TERMINATION. (a) The Company may terminate the employment
of Employee for Cause (as hereinafter defined). Upon such termination, the
Company shall be released from any and all further obligations under this
Agreement, except that the Company shall be obligated to pay Employee his
Salary, reimbursable expenses and benefits owing to Employee through the day on
which Employee is terminated. Employee will not be entitled to any other
compensation upon termination of this Agreement pursuant to this Paragraph 9(a).
(b) As used herein, the term "Cause" shall mean: (i) the willful
failure of Employee to perform his duties pursuant to Paragraph 3 hereof, which
failure is not cured by Employee within thirty days following written notice
thereof from the Company; (ii) any other material breach of this Agreement by
Employee, including any of the material representations or warranties made by
Employee; (iii) any act, or failure to act, by Employee in bad faith or
intentionally to the detriment of the Company; (iv) the commission by Employee
of an act involving moral
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<PAGE>
turpitude, dishonesty, theft, unethical business conduct, or any other conduct
which significantly impairs the reputation of, or harms, the Company, its
subsidiaries or affiliates; or (v) any misrepresentation, concealment or
omission by Employee of any material fact in seeking employment hereunder.
(c) Notwithstanding anything to the contrary herein, including without
limitation Paragraph 2 hereof, the Company may terminate the employment of
Employee without Cause. Upon such termination, the Company shall be released
from any and all further obligations under this Agreement, except that the
Company shall be obligated to pay Employee his Salary, any amount payable
pursuant to Paragraph 10 hereof, reimbursable expenses and benefits owing to
Employee through the six-month anniversary of the day on which Employee is so
terminated. Employee will not be entitled to any other compensation upon
termination of this Agreement.
10. CHANGE IN CONTROL. In the event of a Change in Control,
as defined below, of the Company during the Employment Term, the Company shall
pay to Employee a lump-sum amount equal to one-half of Employee's Salary at the
time of the occurrence of such Change in Control, which amount shall be paid
within ten days after such occurrence. The foregoing payment shall be in
addition to and shall not reduce or in any way affect the terms of payment of
any amounts to which Employee shall be entitled hereunder. The Company hereby
agrees to obtain an agreement from any successor to assume and agree to honor
and perform this Agreement. For purposes of this Agreement, a "Change in
Control" shall have occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(ii) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto
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<PAGE>
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires more
than 30% of the combined voting power of the Company's then outstanding
securities; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
11. DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT.
Employee acknowledges that, by his employment, he has been and will be in a
confidential relationship with the Company and will have access to confidential
information and trade secrets of the Company, its subsidiaries and affiliates.
Confidential information and trade secrets include, but are not limited to,
customer, supplier and client lists, price lists, marketing, distribution and
sales strategies and procedures, operational and equipment techniques, business
plans and systems, quality control procedures and systems, special projects and
technological research, including projects, research and reports for any entity
or client or any project, research, report or the like concerning sales or
manufacturing or new technology, employee compensation plans and any other
information relating thereto, and any other records, files, drawings,
inventions, discoveries, applications, processes, data and information
concerning the business of the Company which are not in the public domain.
Employee agrees that in consideration of the execution of this Agreement by the
Company, except in any way with respect to foreign affiliates of the Company as
of the date hereof:
(a) Employee will not, during the term of this Agreement or at any
time thereafter, use, or disclose to any third party, trade secrets or
confidential information of the Company, including, but not limited to,
confidential information or trade secrets belonging or relating to the Company,
its subsidiaries, affiliates, customers and clients or proprietary processes or
procedures of the Company, its subsidiaries, affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information which is known or intended to be known only to employees of the
Company, its respective subsidiaries and affiliates or others in a confidential
relationship with the Company or its respective subsidiaries and affiliates
which relates to business matters.
(b) Employee will not, during the term of this Agreement and, unless
Employee's employment hereunder is terminated by Employer for Good Reason or by
the Company without Cause, for a period of one (1) year thereafter, directly or
indirectly, under any circumstance other than at the direction and for the
benefit of the Company, engage in or participate in any business activity,
including, but not limited to, acting as a director, officer, employee, agent,
independent contractor, partner, consultant, licensor or licensee, franchisor or
franchisee, proprietor, syndicate member, shareholder or creditor or with a
person having any other relationship with any other
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<PAGE>
business, company, firm occupation or business activity, in any geographic area
within the United States that is, directly or indirectly, competitive with any
business conducted by the Company or any of its subsidiaries or affiliates
during the term of this Agreement or thereafter. Should Employee own 5% or less
of the issued and outstanding shares of a class of securities of a corporation
the securities of which are traded on a national securities exchange or in the
over-the-counter market, such ownership shall not cause Employee to be deemed a
shareholder under this Paragraph 11(b).
(c) Employee will not, during the term of this Agreement and for a
period of one (1) year thereafter, on his behalf or on behalf of any other
business enterprise, directly or indirectly, under any circumstance other than
at the direction and for the benefit of the Company, solicit or induce any
creditor, customer, supplier, officer, employee or agent of the Company or any
of its subsidiaries or affiliates to sever its relationship with or leave the
employ of any of such entities.
(d) This Paragraph 11 and Paragraphs 12, 13 and 14 hereof shall
survive the expiration or termination of this Agreement for any reason.
(e) It is expressly agreed by Employee that the nature and scope of
each of the provisions set forth above in this Paragraph 11 are reasonable and
necessary. If, for any reason, any aspect of the above provisions as it applies
to Employee is determined by a court of competent jurisdiction to be
unreasonable or unenforceable, the provisions shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be. Employee acknowledges and agrees that his services are of a
unique character and expressly grants to the Company or any subsidiary,
successor or assignee of the Company, the right to enforce the provisions above
through the use of all remedies available at law or in equity, including, but
not limited to, injunctive relief.
12. COMPANY PROPERTY. (a) Any patents, inventions,
discoveries, applications or processes, designs, devised, planned, applied,
created, discovered or invented by Employee in the course of Employee's
employment under this Agreement and which pertain to any aspect of the Company's
or its respective subsidiaries' or affiliates' business shall be the sole and
absolute property of the Company, and Employee shall make prompt report thereof
to the Company and promptly execute any and all documents reasonably requested
to assure the Company the full and complete ownership thereof.
(b) All records, files, lists, including computer generated lists,
drawings, documents, equipment and similar items relating to the Company's
business which Employee shall prepare or receive from the Company shall remain
the Company's sole and exclusive property. Upon termination of this Agreement,
Employee shall promptly return to the Company all property of the Company in his
possession. Employee further represents that he will not copy or cause to be
copied, print out or cause to be printed out any software, documents or other
materials originating with or belonging to the Company. Employee additionally
represents that, upon termination of his
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<PAGE>
employment with the Company, he will not retain in his possession any such
software, documents or other materials.
13. REMEDY. It is mutually understood and agreed that
Employee's services are special, unique, unusual, extraordinary and of an
intellectual character giving them a peculiar value, the loss of which cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, in the event of any breach of this Agreement by Employee,
including, but not limited to, the breach of the non-disclosure,
non-solicitation and non-compete clauses under Paragraph 11 hereof, the Company
shall be entitled to equitable relief by way of injunction or otherwise in
addition to damages the Company may be entitled to recover. In addition, the
Company shall be entitled to reimbursement from Employee, upon request, of any
and all reasonable attorneys' fees and expenses incurred by it in enforcing any
term or provision of this Agreement.
14. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE. (a) In order
to induce the Company to enter into this Agreement, Employee hereby represents
and warrants to the Company as follows: (i) Employee has the legal capacity and
unrestricted right to execute and deliver this Agreement and to perform all of
his obligations hereunder; (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument, agreement, document,
arrangement or other understanding to which Employee is a party or by which he
is or may be bound or subject; and (iii) Employee is not a party to any
instrument, agreement, document, arrangement or other understanding with any
person (other than the Company) requiring or restricting the use or disclosure
of any confidential information or the provision of any employment, consulting
or other services.
(b) Employee hereby agrees to indemnify and hold harmless the Company
from and against any and all losses, costs, damages and expenses (including,
without limitation, its reasonable attorneys' fees) incurred or suffered by the
Company resulting from any breach by Employee of any of his representations or
warranties set forth in Paragraph 14(a) hereof.
15. NOTICES. All notices given hereunder shall be in writing
and shall be deemed effectively given when mailed, if sent by registered or
certified mail, return receipt requested, addressed to Employee at his address
set forth on the first page of this Agreement and to the Company at its address
set forth on the first page of this Agreement, Attention: Chairman of the Board,
with a copy to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas,
New York, New York 10036, Attention: Gary J. Simon, Esq., or at such address as
such party shall have designated by a notice given in accordance with this
Paragraph 15, or when actually received by the party for whom intended, if sent
by any other means.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties with respect to its subject matter and no change,
alteration or modification hereof may be made except in writing signed by the
parties hereto. Any prior or other agreements, promises, negotiations or
representations not expressly set forth in this Agreement are of no force or
effect.
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17. SEVERABILITY. If any provision of this Agreement shall
be unenforceable under any applicable law, then notwithstanding such
unenforceability, the remainder of this Agreement shall continue in full force
and effect.
18. WAIVERS, MODIFICATIONS, ETC. No amendment, modification
or waiver of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by each of the parties hereto, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
19. ASSIGNMENT. Neither this Agreement, nor any of
Employee's rights, powers, duties or obligations hereunder, may be assigned by
Employee. This Agreement shall be binding upon and inure to the benefit of
Employee and his heirs and legal representatives and the Company and its
successors and assigns. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring, directly or indirectly,
all or substantially all of the assets of the Company, whether by merger,
consolidation, purchase, lease or otherwise, and such successor shall thereafter
be deemed "the Company" for the purpose hereof.
20. APPLICABLE LAW. This Agreement shall be deemed to have
been made, drafted, negotiated and the transactions contemplated hereby
consummated and fully performed in the State of New York and shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the conflicts of law rules thereof. Nothing contained in this
Agreement shall be construed so as to require the commission of any act contrary
to law, and whenever there is any conflict between any provision of this
Agreement and any statute, law, ordinance, order or regulation, contrary to
which the parties hereto have no legal right to contract, the latter shall
prevail, but in such event any provision of this Agreement so affected shall be
curtailed and limited only to the extent necessary to bring it within the legal
requirements.
21. JURISDICTION AND VENUE. It is hereby irrevocably agreed
that all disputes or controversies between the Company and Employee arising out
of, in connection with or relating to this Agreement shall be exclusively heard,
settled and determined by arbitration to be held in the City of New York, County
of New York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The parties also agree that judgment may
be entered on the arbitrator's award by any court having jurisdiction thereof
and the parties consent to the jurisdiction of any court located in the City of
New York, County of New York, for this purpose.
22. FULL UNDERSTANDING. Employee represents and agrees that
he fully understands his right to discuss all aspects of this Agreement with his
private attorney, that to the extent, if any that he desired, he availed himself
of this right, that he has carefully read and fully understands all of the
provisions of this Agreement, that he is competent to execute this Agreement,
that his agreement to execute this Agreement has not been obtained by any duress
and that he freely and voluntarily enters into it, and that he has read this
document in its entirety and fully understands
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the meaning, intent and consequences of this document which is that it
constitutes an agreement of employment.
23. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
NATIONAL HOME HEALTH CARE CORP.
By: ___________________________________
Name:
Title:
-----------------------------------
Robert P. Heller
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ADDENDUM TO EMPLOYMENT AGREEMENT:
---------------------------------
Business Policies of National Home Health Care Corp.
----------------------------------------------------
This addendum supplements and is hereby incorporated into the
terms of the Employment Agreement to which this is attached. The Company has set
forth in this addendum basic principles and standards of conduct that senior
management of the Company are expected to follow in all respects. Every employee
of the Company has a personal responsibility to abide by each of the standards.
Each person, alone, is responsible for his actions. No one will be permitted to
justify an illegal act by claiming it was ordered by someone higher in
management. No one, regardless of level of position, is ever authorized to
direct an employee to commit an illegal or unethical act.
As a summary of basic principles, this addendum does not
include all the rules and regulations that apply to every situation. The absence
of a specific practice or instruction covering a particular situation does not
relieve an employee from exercising the highest ethical standards applicable to
the circumstances. If an employee has questions as to what the proper course of
conduct should be in any given situation, consult the Chairman of the Board of
the Company and the Company's legal counsel.
Violations of the guidelines set forth below can result in
disciplinary action, including dismissal, and possible criminal prosecution.
Any reprisal against an employee who is good faith reports a
violation or suspected violation of law or company policies is strictly
forbidden.
1. It is the Company's policy to comply fully with the law. We
should avoid even the appearance of wrongdoing and, at all times, should conduct
our business according to the highest ethical standards.
Since the Company is a home health care company, there are many state
and federal law and regulation which affect and define the responsibilities of
each employee. These laws and regulations must be adhered to at all times. If
there is ever any doubt on the part of an employee about the meaning of a law or
regulation the employee must check with corporate counsel or special counsel.
The employee is responsible for designing, implementing and monitoring quality
control programs to assure that Company policies are being followed and that all
personnel are in compliance. In connection with any compliance program, it is
vital that the employee be sure that no falsification of records be allowed and
the employee must undertake to have programs developed to assure that this does
not happen.
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2. The Company shall not tolerate any unfair competition.
Additional guidelines relating to this general policy are:
- do not interfere with contracts made between a prospective customer
and a competitor.
- never engage in commercial bribery.
- do not disparage a competitor's services.
- be accurate and truthful in all dealings
with customers and be careful not to
misrepresent the state and qualify, features
or availability of our services.
3. The Company awards business to suppliers solely on merit.
No employee should have any relationship, financial or otherwise, with any
supplier or competitor that might be construed as a conflict of interest or that
might even appear to impair his or her independent judgment on behalf of the
Company. Gifts, loans or any other thing of significant value should not be
accepted or solicited, even indirectly.
4. Each employee's primary obligation is to the Company, and,
therefore, any form of outside activity must be kept totally separate from
employment with the Company. no outside activity should involve the use of
Company assets, materials or facilities.
5. No employee may use his or her position in the Company for
outside gain or benefit, nor should any employee use property or other
confidential or private confidential information in any outside activity.
6. The law requires that the Company's books and records
accurately and fairly reflect transactions in reasonable detail, and that the
Company's internal accounting controls provide reasonable assurances that:
- transactions are carried out in an authorized matter.
- transactions have been reported and recorded
to permit correct preparation of financial
statements and to maintain accurate records
of assets. Access to assets is in accordance
with management's authorization.
- inventories of assets are taken periodically and appropriate action is
taken to correct discrepancies.
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7. Every employee who has control over Company funds is
personally accountable for such funds. There are no exceptions to this rule.
When spending Company money or personal money that will be reimbursed,
or requesting services that will cause Company money to be spent, the employee
involved should make sure the Company received proper value in return and should
be sure the expenditure is for a legitimate business purpose.
Anyone responsible for the handling of Company revenue, and the
associated records and materials, is accountable for their safe keeping.
8. The Company categorically forbids the use of corporate
funds for the support of political parties or candidates. No employee is
authorized to make or approve such a contribution.
9. Company business records must always be prepared accurately
and reliably, since they are of critical importance to the Company's meeting its
financial, legal and management obligations.
10. Records containing personal data on patients and the
Company's employees are confidential. As such, they are to be carefully
safeguarded and kept current and accurate. They should be disclosed only to
authorized personnel having a "need to know" or pursuant to lawful processes.
Should you have any questions about disclosure, consult with the Company's legal
counsel before disclosing.
11. When a dishonest act by an employee is discovered it
should be reported immediately and directly to the Chairman of the Board of the
Company.
12. The Company encourages employees to participate in its
future by investing in its securities. However, in trading in Company securities
each employee should be aware that it may be illegal (and possible result in
civil or criminal penalties) to buy or sell Company securities while in
possession of material non-public information about the Company.
Material information can be anything that could have actual
significance in an investors decision such as acquisition plans, dividends,
earnings, new contracts, products, major regulatory, court or legislative events
and major management changes or other business plans. Employees aware of such
information prior to its being made public, should not buy or sell Company
securities until the information has been made public.
Employees should not trade in the securities of other companies when
they know material non-public information about these companies which they learn
as part of their job. For example, an employee may learn that another company is
being considered for a major contract or any other information which could have
actual significance in an investor's decision about the securities of the other
company.
-12-
<PAGE>
Employees should keep any such information about the Company or any
other company secret and use it only for Company purposes, because it is
unlawful to "tip" others who may buy or sell such securities, even though the
tipper does not.
Some types of trading -- even if innocent -- could appear to the
public and to public officials to be based on the misuse of inside information
concerning the Company. To avoid even an appearance of impropriety, employees
are not to engage in short term speculation in company securities (that is, the
purchase and sale on the open market within a six month period). Nor should an
employee engage in any transaction when he stands to profit due to the short
term savings in the value of the Company's securities. An example of this type
of trading includes "short sales" (selling borrowed securities which the seller
hopes can be purchased at a lower price when they are due for deliver.
-13-
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<NAME> NATIONAL HOME HEALTH CARE CORP.
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