Compensation and Severance Letter Agreement between Educational Medical, Inc. and Gary D. Kerber

Summary

This agreement between Educational Medical, Inc. and Gary D. Kerber outlines compensation terms if the company is sold or undergoes a change in control. If the sale price per share meets or exceeds $10, Kerber and another executive will receive a bonus based on their salaries and the sale price. If Kerber is terminated without cause within 12 months after such a transaction, he will receive one year's salary, continued health benefits, and outplacement services. The agreement also clarifies that changes in salary or responsibilities may trigger these benefits.

EX-10.77 2 ex10-77.txt LETTER AGREEMENT BETWEEN THE CO. & GARY D. KERBER 1 Exhibit 10.77 January 8, 1998 PERSONAL AND CONFIDENTIAL Mr. Gary D. Kerber Educational Medical, Inc. 1327 Northmeadow Parkway Suite 132 Roswell, GA 30076 Re: Educational Medical, Inc. (the "Company") Various Compensation Issues Dear Gary: The Board of Directors (the "Board") has requested me to set forth the agreement reached between the Board, on behalf of the Company, and yourself concerning various compensation issues relating to any sale or change in control of the Company resulting from the current undertaking to find a strategic or financial buyer (an "Investment Transaction"). If the Company completes any Investment Transaction with respect to which the aggregate gross consideration per share (the "Purchase Price Per Share") with respect to each share of the Company's outstanding Common Stock equals or exceeds $10.00 per share, you and Mr. Pisano will receive, pro rata based on your then current regular cash compensation, $500,000 plus 2% of the amount by the total Purchase Price Per Share for all then outstanding shares exceeds $10.00 per share. These payments will be made to you and Mr. Pisano simultaneously with the closing of the Investment Transactions, but only if the Board determines that each of you has made a good faith effort to complete the Investment Transaction as intended and have taken no action which reasonably could be considered as intended to impair the completion of the Investment Transaction. Should you be terminated from your employment with the Company for any reason other than for cause within twelve (12) months after the closing of an Investment Transaction, you will receive monthly payments equaling one year's salary, at your regular cash compensation level at the time of termination, after offsetting any cash compensation you receive from any other employment or consulting activities during such period. A reduction in salary or material change in responsibility, exclusive of change in title only (e.g. becoming the division head of a division operating substantially all of the Company's business but without the title of Chief Executive Officer or President), will constitute termination other than for 2 Mr. Gary D. Kerber PERSONAL AND CONFIDENTIAL January 8, 1998 Page 2 cause. Except as otherwise provided in this Agreement, your employment is subject to the terms of your existing employment contract with the Company. In the event that your employment with the Company is terminated without cause within the twelve (12) month period following the completion of an Investment Transaction, health and related benefits will be continued by the Company for twelve (12) months following date of termination. Such health and related benefits shall be continued at the level in place on the date of termination. Additionally, the Company will provide, upon request, outplacement services at a cost not to exceed $35,000. Stock options concerns have been addressed by separate correspondence. Should any element of this agreement be proposed for amendment by management at a later date, all elements will be subject to reconsideration. If the above accurately reflects your understanding of the agreement between yourself and the Board, please sign the enclosed duplicate copy of this letter and return it to me at your earliest convenience. Sincerely, /s/ Morris C. Brown Morris C. Brown, Secretary Acknowledged and Agreed: /s/ Gary D. Kerber - ----------------------------------- Gary D. Kerber Date: January 8, 1998