Contract
Exhibit 10.1
CONSULTING
AND NONCOMPETITION AGREEMENT (“Agreement”) made May 1, 2008 between Five Star
Quality Care, Inc. (“Company”) and Xxxxxx X. Xxxxxx ("Xxxxxx").
RECITAL
Xxxxxx is
an employee of the Company and has been its President and Chief Executive
Officer since 2001. Xxxxxx has determined terminate his full time
employment with the Company on the date of this Agreement. Xxxxxx and
the Company desire to set forth certain understandings in connection with his
termination and to provide for his continuing to provide consulting services to
the Company.
NOW,
THEREFORE, the parties agree as follows:
Section
1. Resignation. By
execution of this Agreement, Xxxxxx hereby resigns as President and Chief
Executive Officer of the Company and of each of the Company’s subsidiaries,
effective the date of this Agreement.
Section
2. Consulting. From
the date of this Agreement through November 30, 2011 (“Consulting Period”),
Xxxxxx will make himself available for consultation by the Company and its
subsidiaries, at reasonable times and on reasonable advance notice, but shall
not be obliged to provide more than 100 hours of consulting services in any
calendar year during the Consulting Period (prorated for any portion of a
calendar year).
Section
3. Compensation;
Restricted Share Agreements.
(a) During
the Consulting Period, Xxxxxx will receive aggregate compensation of $408,500,
payable one-half on the date of this Agreement and one half on February 2,
2009. Additionally, the Company shall reimburse Xxxxxx for all
reasonable travel and lodging expenses incurred at the request of the Company
subject to supply of such receipts and other documentation as is consistent with
the Company’s policies and procedures in effect from time to time.
(b) During
the Consulting Period, Xxxxxx will be entitled to continue to participate in the
Company’s group health plans in effect from time to time, provided that Xxxxxx
shall pay the same portions of the premiums for coverage under such group health
plans as are paid from time to time by senior executives of the
Company.
(c) Xxxxxx
and the Company agree that for purposes of Section 2(b) of each of the
Restricted Share Agreements between Xxxxxx and the Company listed on Exhibit A
(collectively, the “Share Agreements”), Xxxxxx shall be deemed to be providing
“significant services” to the Company through the earlier of (i) November
30, 2011 (i.e., the date on which all the Shares (as defined in the Share
Agreements) issued to Xxxxxx pursuant to the Share Agreements would be fully
vested pursuant to the terms thereof), (ii) the date on which Xxxxxx ceases to
timely perform consulting services and (iii) the date on which Xxxxxx commits a
breach of any of the Restrictive Covenants (defined below).
(d) All
payments to Xxxxxx under this Agreement shall be reduced by withholdings
required by law. Additionally, if withholding is required and at a
time there is no cash payment being made to Xxxxxx, Xxxxxx agrees, on 3 days
prior notice from the Company, to pay to the Company by check or wire transfer
of immediately available funds, an amount equal to the estimated withholding tax
(as determined by the Company) that will be due and payable.
Section
4. Covenants. Xxxxxx
acknowledges that (i) the Company and its subsidiaries are engaged in the
business of operating rehabilitation hospitals and senior living communities,
including independent living and congregate care communities, assisted living
communities and nursing homes (the “Company’s Business”); (ii) Xxxxxx’x work for
the Company’s Business has given him, and will continue to give him, trade
secrets of, and confidential and/or proprietary information concerning, the
Company’s Business; (iii) the agreements and covenants contained in this Section
4 are essential to protect the Company’s Business and the goodwill associated
with it. Accordingly, Xxxxxx covenants and agrees as
follows:
(a) Non-Compete. During
the Consulting Period, Benton shall not, in the United States of America and
Canada, directly or indirectly, (x) enter the employ of or render any services
to any person engaged in a business competitive with the Company’s Business, or
(y) have an interest in any such competitor, whether such interest is direct or
indirect, and including any interest as a partner, shareholder, trustee,
consultant, officer or similarly situated person; provided, however, that in any
case, Xxxxxx may own solely as an investment, securities of any such competitor
that are publicly traded if Xxxxxx (i) is not a controlling person and (ii) does
not, directly or indirectly, own five percent (5%) or more of any class of
securities of such person..
(b) Confidential
Information. During the Consulting Period and at any time
thereafter, Xxxxxx shall not (i) disclose to any person not employed by the
Company or a subsidiary, or not engaged to render services to the Company or a
subsidiary or (ii) use for the benefit of himself or others, any confidential
information of the Company, any of the Company’s subsidiaries or of the
Company’s Business obtained by him, including, without limitation, “know-how,”
trade secrets, details of customers’ or suppliers’ contracts with the Company or
any of the Company’s subsidiaries, pricing policies, financial data, operational
methods, marketing and sales information, marketing plans or strategies,
development techniques or plans, plans to enter into any contract with any
person or any strategies relating thereto, technical processes, designs and
design projects, and other proprietary information of the Company, the Company’s
subsidiaries or of the Company’s Business or the business of any of the
Company’s subsidiaries; provided, however, that this
provision shall not preclude Xxxxxx from (a) making any disclosure required by
law or court order or (b) using or disclosing information (i) known generally to
the public (other than information known generally to the public as a result of
a violation of this Section 4(a) by Xxxxxx), (ii) acquired by Xxxxxx
independently of his affiliation with the Company or any of the Company’s
subsidiaries, or (iii) of a general nature (that is, not related specifically to
the Company’s Business) that ordinarily would be learned, developed or obtained
by individuals similarly active and/or employed in similar capacities by other
companies in the same business as the Company or any of the Company’s
subsidiaries. Xxxxxx agrees that all confidential information of the
Company or any of the Company’s subsidiaries shall remain the Company’s or the
Company’s subsidiaries, as the case may be, and to promptly return any
confidential
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information
embodied in any physical or electronic medium to the owner thereof upon the
termination of Xxxxxx’x employment with the Company or at any other time on
request.
(c) No
Solicitation. During the Consulting Period, Xxxxxx shall not,
directly or indirectly, (a) solicit any employee to leave the employment of the
Company or the employment of any of the Company’s subsidiaries or (b) hire any
employee who has left the employ of the Company or the employ of any of the
Company’s subsidiaries within six (6) months after termination of such
employee’s employment with the Company or such employee’s employment with any of
the Company’s subsidiaries, as the case may be (unless such employee was
discharged by the Company without cause).
(d) Cooperation. From
and after the date hereof, Xxxxxx shall reasonably cooperate with the Company
and its subsidiaries with respect to all matters arising during or related to
his employment, including all matters (formal or informal) in connection with
any government investigation, internal investigation, litigation (potential or
ongoing), regulatory or other proceeding which may have arisen or which may
hereafter arise. The Company will reimburse Xxxxxx for all out-of
-pocket expenses (not including lost time or opportunity), and will provide
appropriate legal representation in a manner determined by the Company and
reasonably acceptable to Xxxxxx.
Section
5. Rights
and Remedies upon Breach of Covenants.
(a) If
Xxxxxx breaches, or threatens to commit a breach of, any of the provisions of
Section 4 (the “Restrictive Covenants”), the Company shall have the right and
remedy to have the Restrictive Covenants specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company, that
such injury shall be presumed and need not be proven, and that money damages
will not provide an adequate remedy to the Company. Such rights and
remedies shall be independent of the others and severally enforceable, and all
of which rights and remedies shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company at law or in
equity.
(b) Xxxxxx
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in temporal scope and in all other respects. If any court determines
that any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect to the greatest extent possible, without
regard to the invalid portions.
(c) If
any court construes any of the Restrictive Covenants, or any part thereof, to be
unenforceable because of the duration of such provision or the scope, such court
shall have the power to reduce the duration or scope of such provision and, in
its reduced form, such provision shall be enforceable and shall be enforced to
the greatest extent possible.
Section
6. Assignment.
In the event that the Company shall be merged with, or consolidated into, any
other person or entity, or in the event that it shall sell and transfer
substantially all of its assets to another person or entity, the terms of this
Agreement shall inure to the benefit of, and be assumed by, the person or entity
resulting from such merger or
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consolidation,
or to which the Company’s assets shall be sold and transferred. This Agreement
shall not be assignable by Xxxxxx.
Section
7. Governing
Law. This Agreement will be governed by the laws of the Commonwealth of
Massachusetts without regard to conflicts of laws principles that might lead to
the application of the laws of another jurisdiction.
Section
8. Jurisdiction;
Service of Process. Except as otherwise provided in Section 12, any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against either of the parties in
the state courts of Massachusetts or in the United States District Court in
Boston, Massachusetts and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on either
party anywhere in the world.
Section
9. Counterparts.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement, but in
proving this Agreement, it shall not be necessary to produce more than one of
such counterparts.
Section
10. Section
Headings; Construction. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to “Section” or “Sections” refer to the
corresponding Section or Sections of this Agreement unless otherwise specified.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word “including” does not
limit the preceding words or terms.
Section
11. Notices.
All notices, consents, waivers, and other communications under this Agreement
shall be in writing and will be deemed to have been duly given when
(a) delivered by hand, (b) sent by facsimile (with a copy sent by
nationally recognized overnight delivery service) or (c) when sent by
nationally recognized overnight delivery service, in each case to the
appropriate addresses set forth below (or to such other addresses as a party may
designate by notice to the other parties):
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Xxxxxx:
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00
Xxxxxx Xxxx
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Xxxxxxx,
XX 00000
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Facsimile:
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the
Company:
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Five
Star Quality Care, Inc.
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000
Xxxxxx Xxxxxx
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Xxxxxx,
XX
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Attention:
President
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Facsimile:
617.796.8385
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Section
12. Arbitration. Notwithstanding
Section 8, if requested in writing by either Xxxxxx or the Company, any claim or
controversy arising out of or relating to the interpretation, construction and
performance of this Agreement, or any alleged breach hereof, shall be finally
resolved by arbitration conducted in accordance with such rules as may be agreed
upon by the parties within thirty (30) days following written notice by either
party to the other identifying the issue in dispute and the position of the
party giving notice, or failing to achieve such agreement, in accordance with
the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association. Any award rendered in connection with the
foregoing arbitration shall be in writing and shall be final and binding upon
the parties, and judgment upon any such award may be entered and enforced in any
court of competent jurisdiction in accordance with the Federal Arbitration
Act. The forum for such arbitration shall be in Boston, Massachusetts
and the governing law shall be the laws of the Commonwealth of Massachusetts
without giving effect to conflict of laws provisions. Notwithstanding
any provision in this Section 12 to the contrary, the Company shall have the
right and power to seek and obtain equitable relief in accordance with Section
5.
Section
13. Entire
Agreement. This Agreement and the Share Agreements constitute the entire
agreement between the Company and Xxxxxx with respect to the subject matter and
supersedes all prior written and oral agreements and understandings between the
Company and Xxxxxx with respect thereto. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
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EXECUTED
under seal as of the date first above written.
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Five
Star Quality Care, Inc.
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By: /s/ Xxxxx X. Xxxxxx,
Xx.
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Xxxxx
X. Xxxxxx, Xx., President
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/s/Xxxxxx X.
Xxxxxx
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Xxxxxx
X. Xxxxxx
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EXHIBIT
A
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Restricted
Share Agreement between Xxxxxx X. Xxxxxx and Five Star Quality Care, Inc.
dated November 17, 2004
Restricted
Share Agreement between Xxxxxx X. Xxxxxx and Five Star Quality Care, Inc.
dated November 11, 2005
Restricted
Share Agreement between Xxxxxx X. Xxxxxx and Five Star Quality Care, Inc.
dated November 15, 2006
Restricted
Share Agreement between Xxxxxx X. Xxxxxx and Five Star Quality Care, Inc.
dated November 19, 2007
