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EXHIBIT 10.7
CHAIRMAN'S SERVICE AGREEMENT
AGREEMENT, made as of this 10th day of June, 1998, by and between
HEALTH CARE AND RETIREMENT CORPORATION, a Delaware corporation (the "Company"),
and XXXXXXX XXXXXX, XX. ("Xx. Xxxxxx").
W I T N E S S E T H
WHEREAS, the Company and Manor Care, Inc. ("Manor Care") have
entered into an Agreement and Plan of Merger (the "Merger Agreement")
pursuant to which Manor Care will become a wholly-owned subsidiary of the
Company; and
WHEREAS, the Company wishes to retain the services of Xx. Xxxxxx as
Chairman of the Board of Directors of the Company, effective as of the
"Effective Time" as defined in the Merger Agreement (the "Effective Time"); and
WHEREAS, Xx. Xxxxxx is willing, for the consideration provided, to
serve as Chairman of the Board of Directors of the Company;
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Service as Chairman. The Company hereby agrees to appoint
Xx. Xxxxxx as Chairman of the Board of Directors of the Company effective as of
the Effective Time, and Xx. Xxxxxx hereby accepts such position, upon the
terms and conditions set forth in
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this Agreement. This Agreement shall become effective if and only if the
transactions contemplated by the Merger Agreement are consummated.
2. Term. The term (the "Term") of Xx. Xxxxxx'x service under this
Agreement shall be the period commencing at the Effective Time and shall
continue until the third anniversary of the Effective Time or until such
earlier date as determined by the Board of Directors of the Company consistent
with their fiduciary duties.
3. Compensation. The Company shall provide Xx. Xxxxxx with the
following compensation and other benefits:
(a) Chairman's Fees. The Company shall pay to Xx. Xxxxxx compensation
for his services hereunder during the Term at the same rate as other directors
of the Company and in accordance with the standard payment practices of
the Company relating to payment of directors' fees.
(b) Welfare Benefits. For the six-year period commencing at the
Effective Time (including the portion of such six-year period following the end
of the Term of this Agreement), the Company shall provide Xx. Xxxxxx with
medical, dental, life insurance, and long-term disability benefits that
are at least substantially equivalent to the benefits provided by the Company
to its executive officers.
(c) Other Benefits. In addition to the compensation and
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benefits otherwise specified in this Agreement, Xx. Xxxxxx shall be
entitled during the Term to participate in, and to receive benefits under, the
Company's benefit plans and programs that are or may be available to directors
generally and on terms and conditions that are no less favorable than those
generally applicable to other directors of the Company.
(d) Expenses. Xx. Xxxxxx shall be entitled to prompt reimbursement of
all reasonable expenses incurred by him in performing services hereunder,
provided he properly accounts therefor in accordance with the Company's
policies.
(e) Office and Services Furnished. The Company shall furnish to
Xx. Xxxxxx, in a place selected by Xx. Xxxxxx, suitable office space and
secretarial assistance, together with access to a telephone, computer, printer,
fax machine, and other necessary office equipment for the six-year period
commencing at the Effective Time (including the portion of such six-year period
following the end of the Term of this Agreement).
4. Termination of Service By Death. In the event of the death of
Xx. Xxxxxx during the Term, Xx. Xxxxxx'x estate shall be entitled to receive
the compensation pursuant to Section 3(a) and any other compensation and
benefits to the extent actually earned by Xx. Xxxxxx pursuant to this
Agreement or any other benefit plan or program of the Company as of the date of
such termination at the normal time for payment of such compensation or
benefits,
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and any amounts owing under Section 3(d), and Xx. Xxxxxx'x spouse shall be
entitled to medical and dental benefits described in Section 3(b) for the
balance of the six-year period described in Section 3(b).
5. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall, if Xx. Xxxxxx so elects, be settled by
arbitration, conducted before a panel of three arbitrators in Washington, D.C.
in accordance with the applicable rules and procedures of the American
Arbitration Association then in effect. Judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction. Such
arbitration shall be final and binding on the parties. The panel of arbitrators
shall be selected as follows: Xx. Xxxxxx and the Company shall each designate
an individual to act as arbitrator; the two arbitrators shall then jointly
designate a third arbitrator.
6. Legal Expenses. If any dispute or controversy arises under or in
connection with this Agreement, the Company shall promptly pay all legal fees
and expenses, including, without limitation, reasonable attorneys' fees,
incurred by Xx. Xxxxxx in seeking to obtain or enforce any right or benefit
under this Agreement, provided, however, that this obligation of the Company
shall not apply unless Xx. Xxxxxx prevails in whole or in part.
7. Successors. This Agreement shall be binding upon and inure to the
benefit of Xx. Xxxxxx and his estate and the Company
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and any successor of the Company, but neither this Agreement nor any rights
arising hereunder may be assigned or pledged by Xx. Xxxxxx.
8. Severability. Any provision in this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9. Notices. All notices required or permitted to be given under this
Agreement shall be given in writing and shall be deemed sufficiently given if
delivered by hand or mailed by registered mail, return receipt requested, to
his residence in the case of Xx. Xxxxxx and to its principal executive
offices in the case of the Company. Either party may by giving written notice
to the other party in accordance with this Section 9 change the address at
which it is to receive notices hereunder.
10. Controlling Law. This Agreement shall in all respects be governed
by and construed in accordance with the laws of the State of Delaware
(without giving effect to principles of conflict of laws).
11. Changes to Agreement. This Agreement may not be changed orally but
only in a writing, signed by the party against
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whom enforcement is sought.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but
all of which together shall constitute one and the same instrument.
13. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to its subject matter and supersedes all
prior agreements, drafts, and written or oral representations of either party.
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first above written.
HEALTH CARE AND RETIREMENT CORPORATION
----------------------- By:
Xxxxxxx Xxxxxx, Xx.
ATTEST:
BY:
