DEFERRED COMPENSATION AGREEMENT
AGREEMENT made this _________ day of _____________________, 20__ by and
between EXTENDICARE HEALTH SERVICES, INC., a Delaware corporation, with offices
at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 (hereinafter, inclusive
of its direct and indirect subsidiaries, the "Corporation"), and
___________________________________________________ (hereinafter referred to as
the "Participant").
WITNESSETH:
WHEREAS, an employment relationship does exist between the
Corporation and the Participant; and
WHEREAS, the Corporation desires to enter into a Deferred
Compensation Agreement with the Participant, so as to further the long-term
growth and earnings of the Corporation by offering long-term incentives in
addition to current compensation to those management or highly compensated
employees of the Corporation who are or will be largely responsible for such
growth;
NOW, THEREFORE, in consideration of the premises and covenants
and agreements herein set forth, and for other good, valuable and sufficient
consideration, receipt of which is hereby acknowledged, the Corporation and the
Participant covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Deferred Compensation Account" means a book reserve established by
the Corporation in the name of the Participant to which funds will be credited
as provided for in this Agreement.
Section 1.2 "Deferred Compensation Committee" means those individuals, whose
numbers shall be no fewer than three (3), which shall be selected by the
Corporation to administer the provisions of this agreement on its behalf. In the
event that the individual covered by this agreement is also a member of the
Deferred Compensation Committee, such individual will not participate on behalf
of the corporation in administering the provisions of this agreement.
Section 1.3 "Plan" means this Deferred Compensation Agreement as it may be
amended from time to time (hereinafter sometimes the "Agreement").
Section 1.4 "Total and Permanent Disability" means that Participant is found, on
the basis of a written medical opinion, furnished by a licensed physician
appointed by the corporation, to be incapable of engaging in the participant's
regular occupation with the Corporation at the location where the Participant
last worked, and that, to a reasonable medical probability, such incapacity will
continue to exist during the remainder of the Participant's life.
ARTICLE II
DEFERRED COMPENSATION ACCOUNT
Section 2.1 The Participant shall hereinafter be entitled to designate for
deferral up to ten percent (10%) of the Participant's base salary for services
rendered after the execution of this Agreement. Such deferred salary shall be
credited to the Deferred Compensation Account.
Section 2.2 The Corporation agrees to contribute to the deferred Compensation
Account an amount equal to fifty percent (50%) of the Participant's Deferred
Compensation contribution, subject to the investing provisions set forth in
Article III hereof. Corporate Contributions shall be credited to the Deferred
Compensation Account as the Participant's Contributions are credited to the
Deferred Compensation Account.
Section 2.3 All funds credited to the Deferred Compensation Account shall be
increased by an amount equal to the interest that would have been earned on
funds represented by the Deferred Compensation Account credited monthly on the
last day of each month (based on each month's average of the Prime Interest Rate
of the First Wisconsin National Bank of Milwaukee applied to the average
Deferred Compensation account balance each month).
ARTICLE III
VESTING
Section 3.1 The right of the Participant or any other person to payment of
deferred compensation from funds credited to the Deferred Compensation Account
as a result of the Corporation's contributions, and increased on that portion of
the Deferred Compensation Account created by the Corporation's contribution
pursuant to Article II, Section 2.2 are subject to the vesting provisions of
this Article.
Section 3.2 While the Corporation's contributions shall be credited to the
Deferred Compensation account as shall the interest factor thereon, such
contributions and the interest factor thereon shall not begin vesting until this
Agreement has been in full force and effect for two (2) continuous years without
suspension of the Participant from the Plan as herein provided for.
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Section 3.3 The Participant's right to the attainment of that portion of the
Deferred Compensation represented by Corporation's contributions shall vest as
follows:
Completed Years
of Continuous
Employment With
The Corporation
From Date of Percentage
This Agreement Vested
-------------- ------
2 10%
3 25%
4 40%
5 55%
6 70%
7 85%
8 100%
Section 3.4 Notwithstanding the above, if the Participant's employment is
terminated by reason of Participant's death or Total and Permanent Disability,
the Participant or the Participant's beneficiary, shall be entitled to receive
the entire amount of the Deferred Compensation Account otherwise payable
according to the terms hereof, including all of the funds contributed by the
Corporation pursuant to Article II, Section 2.2 hereof, and the interest factor
thereon.
Section 3.5 For purposes of meeting the vesting criteria set forth above, the
Participant shall be credited with continuous employment time during any excused
periods of absence from employment taken with the advanced approval of the
Corporation if, during such periods the Participant does not work for Services
of the United States of America and the Participant returns to the Participant's
employment with the Corporation immediately after termination of such military
service.
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ARTICLE IV
PAYMENT OF DEFERRED COMPENSATION
Section 4.1 In the event that employment of the Participant with the Corporation
is terminated for any reason, including retirement, death or Total and Permanent
Disability, the Company shall pay to the Participant or the Participant's
beneficiary upon written notice to the Corporation, from the Deferred
Compensation Account:
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ARTICLE V
BENEFICIARY DESIGNATION
Section 5.1 The beneficiary referred to in this Agreement may be designated or
changed (meaning the alternate beneficiary, if the beneficiary dies before the
Participant) by the Participant, without the consent of any prior beneficiary,
on a form to be provided by the Corporation, and delivered to the Corporation by
the Participant before the Participant's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Participant, payments due hereunder shall be payable to the Participant's estate
or according to the applicable laws of descent and distribution.
Section 5.2 If any beneficiary designated pursuant to the terms of this
Agreement shall pass away within twenty-four (24) hours immediately following
the death of the Participant, all benefits payable under this Agreement shall be
paid as if such beneficiary had died prior to the Participant.
ARTICLE VI
FUNDING
Section 6.1 Title to and beneficial ownership of any assets, whether cash or
investments, which the Corporation may designate to pay the Deferred
Compensation account shall at all times remain in the Corporation, and the
Participant and the Participant's designated beneficiary shall not have any
property interests whatsoever in any of the specific assets of the Corporation.
Subject to the other provisions of this Article, the Corporation's obligation
under this Agreement shall be an unfunded and
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unsecured promise to pay. The Corporation shall not be obligated under any
circumstances to fund its obligations under this Agreement, but the Corporation
may, in its sole and exclusive discretion, elect to fund all or any portion of
the Deferred Compensation Account. If the Corporation shall elect such funding
the manner and continuance of same shall be determined in the sole and absolute
discretion of the Corporation. The Corporation may also determine to provide for
funding of the Deferred Compensation Account issuing same and the amounts
thereof, shall be determined in the sole and absolute discretion of the
Corporation. In the event of use of life insurance, the Participant hereby
agrees to submit to whatever medical examinations may be required, and the
Participant further agrees to supply by the insurance company(ies) to whom the
Corporation applies for such insurance. Such policies of insurance may also be
canceled at any time, for any reason, in the sole and absolute discretion of the
Corporation.
ARTICLE VII
SUSPENSION AND WITHDRAWAL FROM
THE PLAN
Section 7.1 The Participant may request in writing to the Deferred Compensation
Committee that all or a portion of the vested balances in the Participant's
Deferred Compensation Account contributed by the Participant including interest
thereon, may be withdrawn from the Deferred Compensation Account in the event of
"hardship" being demonstrated by the Participant. Hardship is construed to mean
unforeseen events or circumstances arising subsequent to the date of this
agreement that could result in an adverse affect on the overall well being of
the Participant or the Participant's immediate family that could be alleviated
by virtue of having such amounts available to the Participant. The decision as
to whether the hardship request will be approved will be evaluated by the
Deferred Compensation Committee taking into consideration both the Participant's
request and the Corporation's financial situation before deciding on whether or
not to approve such payment.
Section 7.2 In the event of a withdrawal under the provisions of Section 7.1,
the Participant shall be deemed to be suspended from plan eligibility for a
period of one (1) year. During such suspension period, the Participant's
Deferred Compensation Account shall not be credited with any additional
contributions from the Corporation, and the Participant may not make any
contributions to the Deferred Compensation Account; however, interest shall
continue to accrue on the remaining balance.
Section 7.3 In the event that a withdrawal from the Deferred Compensation
Account is made as provided in this Article, the Corporation shall make payment
to the Participant within three (3) business days after receipt of notice of
approval from the Deferred Compensation Committee.
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ARTICLE VIII
ARBITRATION
Section 8.1 Any controversy or claim arising out of or relating to this
Agreement and any amendments thereto, or the breach thereof, shall be settled by
arbitration in the city of Milwaukee, Wisconsin, in accordance with The
Wisconsin Arbitration Act, Chapter 788, Wis. Stats. The arbitration panel shall
consist of one (1) member selected by the Participant or the Participant's
beneficiary, another selected by the corporation, and a third member selected by
the first two appointed members. A judgement upon the arbitration award may be
entered by the Circuit Court in and for Milwaukee County, Wisconsin.
ARTICLE IX
NON-TRANSFERABILITY OF INTEREST
Section 9.1 This Agreement, and the parties rights and obligations hereunder,
shall be binding upon and inure to be the benefit of their successors, assigns,
personal representatives, heirs, and beneficiaries. Neither the Participant, nor
any other person entitled to payments pursuant to this Agreement, shall have any
right to commute, encumber, pledge, hypothecate, sell or otherwise transfer any
of such Participant's or beneficiaries' rights or interests under this
Agreement, except as expressly provided for, without the express prior written
consent of the Corporation, which consent may in the Corporation's sole and
absolute discretion be withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1 Any contribution of the Corporation to the Deferred Compensation
Account shall not be deemed salary or other compensation to the Participant for
the purpose of computing the benefits to which the Participant may be entitled
under any pension plan or other arrangement of the Corporation for the benefit
of the Participant, nor shall any Participant's deferred amount serve to reduce
base compensation for such purpose.
Section 10.2 The benefits payable under this Agreement shall be independent of,
and in addition to, any other benefits or compensation, whether by salary, bonus
or otherwise, payable under any employment agreements that now exist or may
hereafter exist between the Corporation and the Participant. This Agreement does
not involve a reduction in salary or the foregoing of any increase of future
salary by the Participant, nor shall this Agreement in any way affect or reduce
any existing compensation or other benefits of the Participant.
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Section 10.3 This Agreement shall not be deemed to constitute a contract of
employment, express or implied, between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Participant for cause or any other reason; nor shall this Agreement restrict the
right of the Participant to terminate Participant's employment with the
Corporation.
Section 10.4 Notices hereunder shall be given in writing and sent by U.S. mail,
postage prepaid, return receipt requested, and addressed to the respective party
or beneficiary at the address first given above, or otherwise given in writing
to the party giving the Notice.
Section 10.5 The terms of this Agreement shall be construed in accordance with
and governed by the laws of the State of Wisconsin.
Section 10.6 The provisions in this Agreement providing for further
contributions of the corporation to the Deferred Compensation Account or for
deferral of further income of the Participant may be revoked or amended at any
time from that time forward but only by written notice of the Corporation to the
Participant.
Section 10.7 This Agreement may be executed in counterpart by each of the
parties, and when so executed by each of the parties, it shall be deemed to be
the Agreement of the parties, and such counterparts shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
the Corporation having signed same by a duly authorized officer thereof, all as
of the day and year first written above.
CORPORATION: EXTENDICARE HEALTH
SERVICES, INC.
Witness _____________________ By ________________________________
Vice President
Witness _____________________
PARTICIPANT: ______________________
Witness _____________________
Witness _____________________
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BENEFICIARY DESIGNATION FORM
The following beneficiary and alternative beneficiary are hereby designated by
the undersigned Participant to receive such payments as may be due on or
following the death of such Participant pursuant to a Deferred Compensation
Agreement dated ______________________, 20___, between the Participant and
Extendicare Health Services, Inc.
Primary Beneficiary:_____________________________________
Name
_____________________________________
Relationship
_____________________________________
Address
Alternate Beneficiary:___________________________________
Name
____________________________________
Relationship
____________________________________
Address
The primary beneficiary and alternate beneficiary named above are hereby
designated as primary and alternate beneficiary pursuant to the above-referenced
Deferred Compensation Agreement. In the event that the primary beneficiary (if a
person, as opposed to my estate or trustee) has passed away prior to my death,
then, and only in such event, my alternate beneficiary shall be entitled to the
benefit of the provisions of such Deferred Compensation Agreement.
Dated:_________________, 20_____
Witness ________________________
Witness ________________________
________________________________
Participant
Receipt Acknowledged this ________
day of __________________, 20____.
EXTENDICARE HEALTH SERVICES, INC.
By _____________________________
Its _________________________
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DEFERRED COMPENSATION PAYMENT OPTIONS
The following payment options are available to individuals
participating in a deferred compensation agreement with the Company. One of
these options must be selected at the time of entering into a deferred
compensation agreement.
(1) A single distribution within thirty (30) days of termination of
employment of the Participant with the Company; or
(2) Five (5) annual installments each equal to one-fifth (1/5) of the total
value of the Deferred Compensation Account with the first of such
installments to be paid on the first day of the first month following
the Participant's termination date. The interest factor provided for in
article II, Section 2.3 shall continue to accrue on the balance
remaining in the Deferred compensation Account from time to time, and
the total amount payable to the Participant annually shall be
pro-ratably increased annually by the appreciation in the Deferred
Compensation Account due to the accrued interest factor; or
(3) Ten (10) annual installments each equal to one-tenth (1/10) of the
total value of the Deferred Compensation Account with the first of such
installments to be paid on the first day of the first month following
the Participant's termination date. The interest factor provided for in
Article II, Section 2.3 shall continue to accrue on the balance
remaining in the Deferred Compensation Account from time to time, and
the total amount payable to the Participant annually shall be
pro-ratably increased annually by the appreciation in the Deferred
Compensation 'Account due to the accrued interest factor; or
(4) Twenty (20) annual installments each equal to one-twentieth (1/20) of
the total value of the Deferred Compensation Account with the first of
such installments to be paid on the first day of the first month
following the Participant's termination date. The interest factor
provided for in Article II, Section 2.3 shall continue to accrue on the
balance remaining in the Deferred Compensation Account from time to
time, and the total amount payable to the Participant annually shall be
pro-ratably increased annually by the appreciation in the Deferred
Compensation Account due to the accrued interest factor.
[NOTE: The option selected by Participant is to be included in Article IV,
Section 4.1 of the Plan.]
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EXTENDICARE HEALTH SERVICES, INC.
DEFERRED COMPENSATION AUTHORIZATION
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Name: _____________________________________
Address: _____________________________________
_____________________________________
_____________________________________
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I wish to participate in the Deferred Compensation Program offered by
Extendicare Health Services, Inc. Please defer __________% (please indicate the
percent to be deferred, not to exceed 10%) of my base salary on a:
Please circle one: Semi-Monthly Basis Monthly Basis
Other (Specify) __________________________________________
I understand that I am able to defer up to and including 10% of my base salary.
__________________________________ ______________________
Signature Date
