EMPLOYMENT AGREEMENT
Exhibit 10.5
THIS EMPLOYMENT AGREEMENT (the “Agreement”) dated as of
October 16, 2006 by and between
Assisted Living Concepts, Inc. a Nevada corporation with its principal place of business at 000
Xxxx Xxxxxxxx, Xxxxxxxxx, XX 00000, (the “Company”) and Xxxx Xxxxx, Chief Financial Officer (the
“Employee”).
The Company desires to employ the Employee as an employee of the Company or its
subsidiaries, and the Employee desires to provide services to the Company or its subsidiaries, all
upon the terms and conditions hereinafter set forth.
performance, at a level consistent with Employee’s then assigned position(s) with the Company
or certain of its subsidiaries and other affiliates and the Company’s then current policies and
practices.
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or continuing failure to attempt, without proper cause and, other than by reason of illness,
to follow the lawful directions of the senior officers or the Board of Directors of the Company,
(iv) willful violation of any material policy of the Company or material agreement with the
Company, or (v) or other conduct that may be detrimental to the best interests of the Company or
any affiliate thereof as determined by the Board.
(i) the provision of written notice from the Company to the Employee that the Employee’s work
location is being shifted to a location more than 50 miles away from the Employee’s current work
location; or
(ii) there is a material diminution of the Employee’s assigned duties and responsibilities
including any material diminution of the powers associated with such
position; and
(iii) within
30 days after receipt of notice from the Company of the
occurrence of an event described in (i) and/or (ii) above, the Employee advises the Company, in writing, that the amendments to the conditions of
employment in (i) and/or (ii) above are not acceptable.
(i) if Employee’s employment is terminated under paragraph (c) of this Section 3, the date of
death;
(ii) if the Employee’s employment is terminated under paragraph (a) or (b) of this Section 3,
the date specified in the Notice of Termination (which shall not be less than 7 days in case of
paragraph (a) and 60 days in case of paragraph (b) nor more than 180 days from the date such Notice
of Termination is given);
(iii) in the case of an event described in paragraph (d) of this Section 3 the last day of the
month following 30 days after which such event occurs; or
(iv) Employee may terminate voluntarily and, in such event, the Employee’s Date of Termination
shall be the date which is two weeks after the date the Employee provides notice to the Company of
voluntary termination.
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In the event the Company terminates the Employee pursuant to paragraph (b) or (d) of Section
3, then:
(i) the Company shall make a lump sum payment (less applicable deductions to include
withholdings for taxes) to the Employee as follows no later than thirty (30) days after the month
in which the Date of Termination occurs equal to the sum of the following:
(A) Payment of any Base Salary owed to the Date of Termination which has not yet been paid.
(B) Severance pay in the amount of one year of Base Salary at the rate in effect at the time
of the event described in Section 3(b) or (d) (whichever is applicable) plus $30,000.
(C) A payment in lieu of bonus in an amount equivalent to 45% of Base Salary (as described in
clause (B) above) and, also, for the year in which termination occurs, a bonus shall be paid to the
Employee on a pro-rata basis for the portion of the year in which the Employee was employed, up to
the Date of Termination, on the assumption that 100% of the bonus payment would have been achieved.
(D) The cash equivalent of 12 months of auto allowance.
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(E) The amount that the Company would have credited as Company contributions over the 12 month
period of time beginning immediately after the Date of Termination to any of the deferred
compensation (including Executive Retirement) plans in which the Employee was a participant.
(ii) Employee shall also be entitled to all vested deferred compensation (including Executive
Retirement) of any kind at such times and in such amounts provided under the terms of applicable
deferred compensation plans.
(iii) For
the 12 month period beginning with the Date of Termination, the Employee shall be treated
as if the Employee had continued to be employed for all purposes under insured welfare benefit
plans (other than plans providing medical benefits) sponsored or maintained by the Company on the
same participation terms as if still employed. Beginning with the Date of Termination, the
Employee shall be entitled to receive medical plan continuation coverage required under ERISA
(“COBRA Benefits”) subject to payment of full COBRA premiums by Employee.
(iv) In order to receive the payments described in (c)(i) above, the Employee must (no later
than thirty (30) days following the month in which the Date of Termination occurs) execute (and not
revoke during the seven day revocation period), a release in form substantially similar to that
attached as Exhibit A hereto.
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matter when or how acquired concerning the conduct and details of Company’s business,
including without limitation, names of customers and suppliers, marketing methods, trade secrets,
policies, prospects and financial condition. For purposes of this Section 6, confidential
information shall not include any information which is now known by or readily available to the
general public or which becomes known by or readily available to the general public other than as a
result of any improper act or omission of Employee.
(i) solicit or hire any Person who is or during such period becomes a customer, supplier,
employee, salesman, agent or representative of Company, in any manner which interferes or might
interfere with such Person’s relationship with Company, or in an effort to obtain such Person as a
customer, supplier, employee, salesman, agent, or representative of any business in competition
with Company which conducts operations within 50 miles of the
Employee’s present office; or
(ii) establish, engage, own, manage, operate, join or control, or participate in the
establishment, ownership (other than as the owner of less than one percent of the stock of a
corporation whose shares are publicly traded), management, operation or control of, or be a
director, officer, employee, salesman, agent or representative of, or be a consultant to, any
Person in any business in competition with Company, if such Person has any office or facility at
any location within 50 miles of any location of the Company over which the Employee has direct
responsibility or within 100 miles of the Employee’s current office, or conduct himself in any
manner which he would have reason to believe inimical or contrary to the best interests of Company.
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agreement of Employee to be bound by the Covenants, Company would not have agreed to enter
into this Agreement.
(a) The Employee shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of
payment provided for under this Agreement be reduced by any compensation earned by the Employee as
the result of employment by another employer after the Date of Termination, or otherwise. The
amounts payable to Employee under Section 4 hereof shall not be treated as damages but as severance
compensation to which Employee is entitled by reason of termination of his employment in the
circumstances contemplated by this Agreement.
(b) The provisions of this Agreement, and any payment provided for hereunder, shall not reduce
any amounts otherwise payable, or in any way diminish the Employee’s existing rights, or rights
which would accrue solely as a result of the passage of time, under any benefit plan, employment
agreement or other contract, plan or arrangement.
If to Company, to:
Assisted Living Concepts, Inc.
000 X. Xxxxxxxx
Xxxxxxxxx, XX 00000
000 X. Xxxxxxxx
Xxxxxxxxx, XX 00000
Attention: President and Chief Executive Officer
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Facsimile: (000) 000-0000
If to Employee, to:
Xx.
Xxxx Xxxxx
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(j) Controlling Law. This Agreement is made under, and shall be governed by,
construed and enforced in accordance with, the substantive laws of the State of Wisconsin
applicable to agreements made and to be performed entirely therein.
(k) Settlement of Disputes. The Company and Employee agree that any claim, dispute or
controversy arising under or in connection with this Agreement, or otherwise in connection with
Employee’s employment by the Company (including, without limitation, any such claim, dispute or
controversy arising under any federal, state or local statute, regulation or ordinance or any of
the Company’s employee benefit plans, policies or programs) shall be resolved solely and
exclusively by binding arbitration. The arbitration shall be held in Milwaukee County, Wisconsin
(or at such other location as shall be mutually agreed by the parties). The arbitration shall be
conducted in accordance with the Expedited Employment Arbitration Rules (the “Rules”) of the
American Arbitration Association (the “AAA”) in effect at the time of the arbitration, except that
the arbitrator shall be selected by alternatively striking from a list of five arbitrators supplied
by the AAA. All fees and expenses of the arbitration, including a transcript if either requests,
shall be borne equally by the parties. Each party will pay for the fees and expenses of its own
attorneys, experts, witnesses, and preparation and presentation of proofs and post-hearing briefs
(unless the party prevails on a claim for which attorney’s fees are recoverable under the Rules).
Any action to enforce or vacate the arbitrator’s award shall be governed by the Federal Arbitration
Act, if applicable, and otherwise by applicable state law.
(m) Notwithstanding anything herein to the contrary, if the severance payment(s) described
herein are considered deferred compensation subject to the provisions of Code Section 409A, then
this Agreement shall be deemed automatically amended to comply with the requirements thereof in a
manner that would cause the payments to comply with the provisions of Code Section 409A, including
but not limited to providing that the severance payment shall be made only upon the Executive’s
separation from service within the meaning of Code Section 409A and requiring that if the Executive
is a “specified employee” within the meaning of Code Section 409A, that
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any severance payment(s) due hereunder shall not be paid until six months following the date
of the Executive’s separation from service to the extent required by Code Section 409A.
Attest: | COMPANY: | |||
/s/ Xxx Xxxxxx
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By: | /s/ Xxx Xxxxxxxxxxx | ||
Executive Assistant
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Name: | Xxx Xxxxxxxxxxx | ||
Title: | President and Chief Executive Officer, EHSI | |||
/s/ Xxx Xxxxxx
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By: | /s/ Xxxxxx Bebo | ||
Executive Assistant
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Name: | Xxxxxx Bebo | ||
Title: | President and Chief Operating Officer, ALC, Inc. | |||
Witness: /s/ Xxxxxxx Xxxxxx | EMPLOYEE: /s/ Xxxx Xxxxx | |||
Xxxx Xxxxx |
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Exhibit A — Severance Release (actual release would be similar to, but not exactly like the following:
ASSISTED LIVING CONCEPTS, INC.
COMPLETE AND PERMANENT RELEASE AGREEMENT
(NAME)
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(SS#) | |
Name
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Social Security Number |
To indicate your election to receive the severance pay described in the Assisted Living
Concepts, Inc.’s employee agreement to you of (DATE), (the “Severance Pay”), please sign and date
this Agreement on the next page and make sure that it is returned to Assisted Living Concepts, Inc.
I elect to receive the Severance Pay and provide the following Complete and Permanent Release:
In consideration for the Severance Pay which I specifically acknowledge to be
sufficient consideration to support this Release, I agree to release and forever
discharge Assisted Living Concepts, Inc., (as well as its subsidiaries,
affiliates, successors and assigns, and its present and former agents, directors,
employees, officers and representatives, or any of them, hereinafter collectively
referred to as “ALC”) of and from any and all claims that I might have arising out
of my employment by ALC and the termination thereof, by reason of any act or
omission on the part of ALC arising at any time up to and including the date I
sign this Agreement. To the fullest extent permitted by law, I agree never to
bring or cause to be brought or permit to be brought on my behalf any charges or
actions against ALC with respect to the claims released herein (and I agree to
immediately withdraw and dismiss with prejudice any such pending charges, claims,
suits, demands, grievances and actions). The claims that I am releasing include,
but are not limited to, claims for wrongful or other discharge, breach of
contract, harassment, unlawful terms and conditions of employment, retaliation,
defamation, invasion of privacy, and discrimination of any kind, including
discrimination on the basis of age under the Age Discrimination in Employment Act
and state and local law. I further agree that I will not make any statements that
defame or disparage the reputation of ALC, the care provided at its facilities, or
the reputation of any employees of ALC.
I have not relied on any representations, promises or agreements of any kind made to me in
connection with my decision to accept the Severance Pay except for those set forth in ALC’s (DATE),
letter/employment agreement.
If I bring or cause to be brought or continued or permit to be brought or continued on my
behalf a charge or claim against ALC in violation of this Release or asking that (or seeking relief
which would require that) all or any part of this Release be held unenforceable, invalid or void, I
agree that prior to the commencement or continuation of such action I will tender back to ALC the
Severance Pay which I have received as consideration. I acknowledge and understand that any
obligation on ALC’s part to pay any unpaid Severance Pay to me in return for this Release will
permanently cease as of the date such action is instituted or continued.
If any part of this Release is held to be unenforceable, invalid or void, then the balance of
this Release shall nonetheless remain in full force and effect.
I ACKNOWLEDGE I HAVE READ AND UNDERSTAND THIS RELEASE; THAT MY SIGNATURE ON THIS RELEASE IS
TRULY VOLUNTARY; AND THAT I HAVE ENTERED INTO THIS RELEASE AGREEMENT KNOWINGLY AND VOLUNTARILY.
I understand that my election of the Severance Pay and my acceptance of the terms of this
Release may be revoked if, within seven (7) calendar days following the date I sign this Agreement,
I give written notice of revocation to Assisted Living Concepts, 000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000. This Release shall not become effective, binding, or enforceable until
the seven (7) calendar day revocation period has expired. Once that seven (7) calendar day period
has elapsed, I can no longer revoke this Release or my election of the Severance Pay. TIME IS OF
THE ESSENCE AS TO THIS SEVEN (7) DAY PERIOD.
(Signature)
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(Date)
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