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Exhibit 10.03
FORM OF NONCOMPETITION AND NONSOLICITATION
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. COVENANT NOT TO COMPETE AND ENGAGE IN SOLICITATION. The Shareholder
agrees that for a period of fifteen (15) years after the date hereof, he shall
not:
(a) Other than his ownership of Res-Care Shares (as defined in
the Agreement) or other securities of Res-Care and except as provided
in subparagraph (d) below, own, manage, operate, join, have an interest
in, control or participate in the ownership, management, operation or
control of, be employed by, assist in, act as a consultant to, be an
officer, director, shareholder, member, partner, proprietor, employee,
agent, independent contractor, or have any direct financial interest,
including, without limitation, an interest as a secured creditor or as
a lessor, in the Business (as defined below) in any state in the United
States of America. For purposes of this Agreement, the term "Business"
shall mean any form of business of providing residential, day program,
waiver program or individualized supported living, respite or related
services to persons with mental retardation, developmental
disabilities, dual diagnoses of mental retardation and mental illness
or acquired or traumatic brain injury (collectively "MR/DD"), or
providing services to at risk or troubled youth (whether or not
adjudicated); provided, however, that notwithstanding the above, the
Shareholder may own, directly or indirectly, solely as an investment,
securities of any Person (as defined in Section 2 hereof) engaged in
the Business which securities are traded on any national securities
exchange or the Nasdaq National Market if (i) Shareholder is not a
controlling person of, or a member of a group which controls, such
Person, and (ii) Shareholder does not, directly or indirectly, own one
percent (1%) or more of (A) the voting power, (B) equity or (C) any
class of securities of such Person.
(b) Except for the individuals listed on Exhibit 1, hire,
solicit to hire, or promote to others, the hiring of any of the
Res-Care Companies' employees, during and for a period of one (1) year
following termination of the respective employee's employment with any
of the Res-Care Companies.
(c) Solicit, or promote to others, the solicitation of clients
of any of the Res-Care Companies for the purpose of causing any of such
clients to terminate his or her relationship with a Res-Care Company or
a Managed Provider (as defined in the Merger Agreement) or to become
clients of any other Person.
(d) Notwithstanding any contrary provision herein, the
provisions of this Noncompetition Agreement shall not, and shall not be
interpreted to, preclude or restrict the
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Shareholder from engaging in the following activities which have any
relationship to the Business, all subject to the provisions of Section
2 of this Noncompetition Agreement:
(i) Publishing books, newsletters, articles or
interviews; and participating in seminars, panels, or programs
relating to the Business;
(ii) Holding public office (whether elected or
appointed);
(iii) Being a member of a not-for-profit, charitable,
educational or statutorily established organization's board of
trustees or directors or committee thereof; provided that (A)
such not-for-profit, charitable, educational or statutorily
established organization is not engaged in the Business, and
(B) Shareholder's position as such a member does not violate
any applicable rules involving conflicts of interest;
(iv) Practicing individual, family or group
counseling;
(v) Leasing any of the properties listed on Exhibit 2
attached hereto to any of the Target Entities (as defined in
the Merger Agreement) or Managed Providers, or to the extent
that any of such Target Entities or Managed Providers do not
renew such a lease, the lease or sale of such property to any
other entity, including but not limited to an entity engaged
in the Business, or managing or operating the leasing (as so
limited) of such properties;
(vi) Making loans to any of the entities currently
owning the properties listed on Exhibit 2 attached hereto or
assuming or purchasing any indebtedness of such entities; or
(vii) Teaching at any educational institution or
business or professional seminar.
2. COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. At any time
following the date hereof, the Shareholder will not, directly or indirectly,
disclose to any other Person or use or otherwise exploit for his own benefit, or
the benefit of any other Person, any Confidential Information (as defined
below). For purposes of this Agreement, the term "Confidential Information"
shall mean any business or financial information relating to any of the Res-Care
Companies or to the Business of the Res-Care Companies (whether or not
constituting a trade secret), which is not in the public domain. The term
"Confidential Information" will not, however, include information which (i) is
or becomes publicly available other than as a result of a contractually or
statutorily prohibited disclosure by Shareholder, the Res-Care Companies or
their officers, employees, affiliates, financial advisors, attorneys,
consultants and accountants
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(collectively, "Representatives") or (ii) is or becomes available to Shareholder
on a non-confidential basis from a source (other than Res-Care or its
Representatives) which, to the best of Shareholder's knowledge after due
inquiry, is not prohibited from disclosing such information to Shareholder by a
legal, contractual or fiduciary obligation to Res-Care. Subject to any other
contractual, statutory or fiduciary obligations of Shareholder, the
confidentiality restrictions in this Section 2 shall not apply to any
information obtained by Shareholder solely by reason of his position as a
director of Res-Care. Confidential Information, subject to the foregoing
exceptions, shall include, but shall not be limited to, the following
information regarding any of the Res-Care Companies:
(a) any patent application, "know-how" or trade secrets;
(b) customer lists and information relating to (i) any client
of any Res-Care Company or (ii) any client of the operations of any
other person or entity for which operations any Res-Care Company
provides management services;
(c) supplier lists, pricing policies, management contracts,
consulting contracts and competitive bid information;
(d) records of the Res-Care Companies, operational methods and
policies of the Res-Care Companies and procedures, including manuals
and forms;
(e) marketing data, plans and strategies;
(f) business acquisition, development, expansion or capital
investment plan or activities;
(g) software and any other confidential technical programs;
(h) personnel information, employee payroll and benefits data;
(i) accounts receivable and accounts payable;
(j) other financial information, including financial
statements, budgets, projections, earnings and any unpublished
financial information; and
(k) correspondence of the Res-Care Companies and
communications with outside parties.
As used in this Noncompetition Agreement, the term "Person" shall mean an
individual, a partnership, an association, a corporation, a trust, an
unincorporated organization, a limited liability company, a registered limited
liability partnership or any other business entity or enterprise.
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Notwithstanding the provisions of this Section 2 to the contrary, the
Shareholder shall not be prohibited hereunder from making any disclosure
required by law. In the event that Shareholder or, to the actual knowledge of
Shareholder, any of his Representatives is requested pursuant to, or required
by, applicable law, regulation or legal process to disclose any of the
Confidential Information derived through Shareholder, Shareholder will notify
Res-Care promptly so that Res-Care may seek a protective order or other
appropriate remedy or, in its sole discretion, waive compliance with the terms
of this Noncompetition Agreement, Shareholder will furnish only that portion of
the Confidential Information which he is advised by counsel is legally required
and will exercise all reasonable efforts to obtain reasonable assurances that
confidential treatment will be accorded the Confidential Information.
3. INJUNCTIVE RELIEF; INVALIDITY OF ANY PROVISION. The Shareholder
acknowledges that (a) his ownership of and positions as a significant
shareholder, a director, member of the senior management team and an employee of
the Company and its subsidiaries afforded him access to Confidential Information
regarding the Business of the Company and its subsidiaries, (b) he will benefit
from the consummation of the transactions contemplated by the Agreement by
reason of the issuance of a substantial number of Res-Care Shares to him, (c)
the nature and periods of restrictions imposed by the covenants contained in
Sections 1 and 2 hereof are fair, reasonable and necessary to protect the
Res-Care Companies, (d) the Res-Care Companies would sustain irreparable loss
and damage if the Shareholder were to breach any of such covenants, (e) the
Res-Care Companies actively conduct the Business and are actively expanding the
Business throughout the geographic area covered by such restrictive covenants,
and (f) the Res-Care Companies' remedy at law for such a breach will be
inadequate. Accordingly, the Shareholder agrees and consents that the Res-Care
Companies, in addition to all other remedies available to any of them, at law or
in equity, shall be entitled to seek both preliminary and permanent injunctions
to prevent and/or halt a breach or threatened breach by the Shareholder of any
covenant contained in either Sections 1 or 2 hereof. If any provision of either
of Sections 1 or 2 of this Noncompetition Agreement is determined by a court of
competent jurisdiction to be invalid in whole or in part, it shall be deemed to
have been amended, whether as to time, area covered or otherwise, as and to the
extent required for its validity under applicable law, and as so amended, shall
be enforceable. The parties further agree to execute all documents necessary to
evidence such amendment.
4. SHAREHOLDER BOOK. Shareholder is writing a proposed book on the
topic of selection of long-term care for individuals with physical and mental
disabilities. The writing of such book is contingent on Shareholder securing an
acceptable publishing contract with a book publisher. The content of such book
will reference the Company and/or the Res-Care Companies and will portray them
in a positive and generally laudatory manner. It is anticipated that publication
of the book and Shareholder's activities in marketing and promoting sales of the
book will be beneficial to the Res-Care Companies. Shareholder agrees that
Res-Care shall have the right to review such book prior to its production and
publication and to object to any material or content in the book which it
reasonably believes portrays the Company and/or any of the Res-Care Companies in
a negative or
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unfavorable manner. Shareholder shall have any of such negative or unfavorable
material deleted from the book prior to its production and publication. Subject
to the provisions of the two immediately preceding sentences and the
restrictions of Section 2 hereof, the Res-Care Companies consent to the use of
their names (or their predecessors') in the book and in promotional activities
connected with the book. The Res-Care Companies agree that the book will not be
considered a work made for hire for copyright purposes and that Shareholder will
be the sole author of the book and the owner of the copyright interest in the
book. If, for any reason, the book is considered a work made for hire, the
Res-Care Companies agree to assign any copyright interest it may have in the
book to Shareholder. Res-Care agrees to pay fees and costs associated with the
preparation and marketing of such book, including but not limited to ghost
writer's fees, agent's fees, legal fees, publisher's fees and promotional
expenses up to an aggregate amount of $10,000. Shareholder agrees that he will
reimburse Res-Care for the amounts paid by it as described in the preceding
sentence out of the first royalties received by Shareholder with respect to the
book. The Res-Care Companies agree to purchase 2,000 copies of the book at the
regular publisher's price for gratis distribution for promotional purposes,
including those distributions chosen by Shareholder. Shareholder agrees to use
reasonable efforts to secure promotional appearances in connection with
publication of the book and to portray the Res-Care Companies in a positive and
laudatory manner during those promotional appearances. Royalties from book sales
belong solely to Shareholder.
5. NOTICES. All notices, requests, demands and other communications
required or permitted to be given or made under this Noncompetition Agreement
shall be in writing and shall be deemed to have been given on the date of
delivery personally or upon deposit in the United States mail postage prepaid by
registered or certified mail, return receipt requested, to the appropriate party
or parties at the following addresses (or at such other address as shall
hereafter be designated by any party to the other parties by notice given in
accordance with this Section):
To the
Shareholder: Xxxxxxx X. Xxxxxxxxxx
0000 XxxXxxx Xxxx
Xxxxxx, Xxxx 00000
To Res-Care: Res-Care, Inc.
00000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Chairman,
President and Chief
Executive Officer
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6. CONSTRUCTION OF AGREEMENT.
(a) Written Changes Only. This Noncompetition Agreement may
not be changed or terminated orally, and no modification, termination
or attempted waiver shall be valid unless in writing and signed by the
party against whom enforcement is sought (other than as provided in the
last sentence of Section 3 hereof).
(b) Tense; Captions. In construing this Noncompetition
Agreement, whenever appropriate, the singular tense shall also be
deemed to mean the plural, and vice versa, and the captions contained
in this Agreement shall be ignored.
(c) Governing Law and Severability. This Noncompetition
Agreement shall be governed by, construed and enforced in accordance
with, the laws of the Commonwealth of Kentucky. If any court holds any
provision of this Noncompetition Agreement or the application of the
provision to any person or circumstance invalid, the remaining
provisions of this Noncompetition Agreement, and the application of the
provision to persons or circumstances other than those to which it is
held invalid, shall not be affected.
(d) Assignment Prohibited. The Shareholder's obligations
hereunder shall not be assignable to any other person or entity.
(e) Binding Effect; Benefit. Except as otherwise specifically
provided herein, this Agreement shall be binding upon, and shall inure
to the benefit of, the Res-Care Companies and their respective
successors and assigns.
(f) Integrated Agreement. This Agreement constitutes the
entire agreement between the parties by which they agreed to be bound
and supersede all prior and contemporaneous agreements, correspondence,
arrangements and understanding (whether written or oral) relating to
its subject matter and the transactions contemplated by it.
(g) Execution in Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(h) Third Party Beneficiaries. With respect to the provisions
of Sections 1 and 2 hereof, the direct and indirect subsidiaries of
Res-Care, together with any future direct or indirect Affiliates (as
defined below) of such parent corporation, are hereby made third-party
beneficiaries of this Agreement. As used herein, the term "Affiliates"
of Res-Care refers to any corporation or entity that controls, is
controlled by or is under common control with either such parent
corporation, or any successor or assignee of such parent corporation.
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(i) Recovery of Attorneys' Fees. If either party brings an
action against the other to enforce any condition or covenant of this
Agreement, the prevailing party in such action shall be entitled to
recover its court costs and reasonable attorneys' fees in the judgment
rendered through such action.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RES-CARE, INC.
By:
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Its:
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("Res-Care")
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Xxxxxxx X. Xxxxxxxxxx
(the "Shareholder")
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