AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Exhibit 10.35
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement (the “Amendment”) is made and entered into on and
as of the 20th day of February, 2007, between Heartland Employment Services, LLC, an Ohio limited
liability company (the “Company”), Manor Care, Inc., a Delaware corporation (Manor Care”), and
Xxxxxxx X. Xxxxxxxx (“Employee”).
RECITALS
A. The Company, Manor Care, and Employee are parties to a certain Employment Agreement, dated
May 16, 2005 (the “Employment Agreement”).
B. The Company, Manor Care, and Employee now desire to make certain changes to the Employment
Agreement, as set forth below, which changes the Company, Manor Care, and Employee each deems to be
necessary, desirable, and in its or his best interests.
EVENTS
In consideration of the foregoing and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company, Manor Care, and Employee hereby
agree as follows:
1. Defined Terms. Terms used herein with their initial letters capitalized and not
otherwise defined herein have the respective meanings assigned to them in the Employment Agreement.
2. Severance Payment Without Change in Control. Section 6 of the Employment Agreement
is hereby amended to read in its entirety as follows:
“6. Severance Payment Without Change in Control. Except as provided in
Paragraph 7:
(a) Upon the termination of Employee’s employment as a result of Employee’s
electing to resign his employment or to retire without the consent of the Company,
no payments shall be required or made pursuant to this Paragraph 6 except as
provided in Paragraph 6(f).
(b) Upon the termination of Employee’s employment by the Company for “Cause”,
no payments shall be required or made pursuant to this Paragraph 6. “Cause” shall
mean Employee’s financial dishonesty, fraud in the performance of his duties,
willful failure to perform assigned duties hereunder (following written notice and a
reasonable opportunity to cure) or the commission of a felony.
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(c) Upon the termination of Employee’s employment by the Company for any reason
other than for Cause or disability, the Company shall continue payment of Employee’s
annual base salary, at the rate then in effect on the date of such termination, for
a period of three (3) years after such date of termination. The Company shall give
thirty (30) days written notice of any such termination which notice shall specify
the date of termination.
(d) Upon the termination of Employee’s employment as a result of the death of
Employee, the Company shall continue payment of Employee’s annual base salary, at
the rate then in effect on the date of such termination, for a period of three (3)
years after such date of termination; provided, however, that such
payments shall be offset by any survivor benefits, excluding life insurance
proceeds, received by Employee’s spouse or other designated beneficiary under the
Company’s plans, programs and policies.
(e) Upon the termination of Employee’s employment as a result of his becoming
unable to perform his duties due to a disability as established by the award of
long-term disability benefits under the Company’s long-term disability plan, the
Company may terminate Employee’s employment by giving Employee thirty (30) days
written notice of its intention to terminate. In such event, Company shall continue
payment of Employee’s annual base salary, at the rate then in effect on the date of
such termination, for a period of three (3) years after such date of termination;
provided, however, that such payments shall be offset by any
disability benefits received by Employee, or his legal guardian, under the Company’s
plans, programs and policies.
(f) Upon termination of Employee’s employment for any reason, voluntarily or
involuntarily, with or without Cause, Employee shall be entitled to such rights as
he otherwise has under the benefit programs listed on Schedule II, as amended from
time to time, in the circumstances of his particular termination.”
3. Severance Payments Following a Change in Control. Section 7 of the Employment
Agreement is hereby amended to read in its entirety as follows:
“7. Severance Payments Following A Change In Control.
(a) In the event Employee’s employment is terminated within two years following
a Change in Control of Manor Care (as defined below) under circumstances which would
otherwise entitle Employee to receive a severance payment under Paragraph 6,
Employee’s severance payment shall be paid in a lump sum within five (5) business
days of such termination and shall be equal to three (3) times the sum of Employee’s
annual base salary at the rate then in effect plus (i) the target amount of his
award under the Annual Incentive Plan for the year in which he
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is terminated; and
(ii) the target amount of his award under the Performance Award Plan, for the award
period ending with the year in which the termination occurs or with the year nearest
to the year in which termination occurs. In addition, the Company will arrange to
provide Employee with group medical, dental and vision benefits substantially
similar to those which Employee was receiving or entitled to receive immediately
prior to the Change In Control for a period of three (3) years.
(b) For the purposes of this Paragraph 7, “Change in Control” shall mean a
transaction or other event in which (i) Manor Care is merged, consolidated or
reorganized into or with another corporation or other legal person, and as a result
of such merger, consolidation or reorganization less than sixty-five percent of the
combined voting power of the then outstanding securities of such resulting
corporation or person immediately after such transaction are held in the aggregate
by the holders of Voting Stock of Manor Care immediately prior to such transaction;
or (ii) Manor Care sells or otherwise transfers all or substantially all of its
assets to another corporation or other legal person, and as a result of such sale or
transfer less than sixty-five percent of the combined voting power of the then
outstanding Voting Stock of such corporation or person immediately after such sale
or transfer is held in the aggregate by the holders of Voting Stock of Manor Care
immediately prior to such sale or transfer.”
4. Non-Competition/Non-Solicitation. Section 8 of the Employment Agreement is hereby
amended to read in its entirety as follows:
“8. Non-Competition/Non-Solicitation.
(a) Covenant Not to Compete. Employee covenants and agrees that during
the period of Employee’s employment hereunder and for a period of three (3) years
following the termination of Employee’s employment, including without limitation
termination by the Company for cause or without cause, Employee shall not, in the
United States of America, engage, directly or indirectly, whether as principal or as
agent, officer, director, employee, consultant, shareholder or otherwise, alone or
in association with any other person, corporation or other entity, in any Competing
Business. For purposes of this Agreement, the term “Competing Business” shall mean
any person, corporation or other entity engaged in providing skilled nursing,
assisted living, home health, hospice or rehabilitation services or providing or
attempting to provide any other product or service which is the same as or similar
to products or services sold or provided by the Company or any Manor Care Subsidiary
within the three (3) years prior to termination of Employee’s employment hereunder;
provided, however, that Employee’s continuing equity interest in
Harborside Healthcare Corporation, to the extent of such interest on the day prior
to the effective date of this Agreement, shall not constitute a violation of this
Agreement.
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(b) Non-Solicitation of Customers. Employee agrees that during his
employment with the Company he shall not, directly or indirectly, solicit the
business of, or do business with, any customer or prospective customer of the
Company or any Manor Care Subsidiary for any business purpose other than for the
benefit of the Company or a Manor Care Subsidiary. Employee further agrees that for
three (3) years following termination of his employment with the Company, including
without limitation termination by the Company for cause or without cause, Employee
shall not, directly or indirectly, solicit the business of, or do business with, any
customers or prospective customers of the Company or any Manor Care Subsidiary;
provided, however, that this provision shall not apply to soliciting
to provide or providing any services which the Company or any Manor Care subsidiary
does not provide, or has not traditionally sought to provide.
(c) Non-Solicitation of Employees. Employee agrees that, during his
employment with the Company and for three (3) years following termination of
Employee’s employment with the Company, including without limitation termination by
the Company for cause or without cause, Employee shall not, directly or indirectly,
solicit or induce, or attempt to solicit or induce, any employee of the Company to
leave the employment of the Company for any reason whatsoever, or hire any employee
of the Company except into the employment of the Company; provided, that the
foregoing shall not apply to any employee hired through a general hiring process
without any direct or indirect involvement by Employee in recruiting such person for
hire.”
5. No Change. Except as expressly modified by this Amendment, the Employment
Agreement shall continue in effect unchanged.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on and as of the date
first above written.
| THE COMPANY: | ||||||
| HEARTLAND EMPLOYMENT SERVICES, LLC | ||||||
| By: | Health Care and Retirement Corporation of America Managing Member | |||||
| By: | /s/ Xxxx X. Xxxxxx | |||||
| President and Chief Executive Officer | ||||||
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| MANOR CARE: | ||||||
| MANOR CARE, INC. | ||||||
| By: | /s/ Xxxx X. Xxxxxx | |||||
| President and Chief Executive Officer | ||||||
| EMPLOYEE: | ||||||
| /s/ Xxxxxxx X. Xxxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxxx | ||||||
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