Exhibit 10.25
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and effective this 16th day of May, 2002, by and
between Assisted Living Concepts, Inc., a Nevada corporation with a principal
address at 00000 XX Xxxxx Xxxxxx Xxxxx, Xxxxxxxx X, Xxxxxxxx, Xxxxxx 00000-0000
(together with its successors and assigns, the "Corporation") and Xxxxxxx X.
Xxxxxxx, an individual residing at 0000 Xxxxx xx Xxxxxx, X.X., Xxxxxxxxxxx, Xxx
Xxxxxx, 00000 (the "Employee").
WITNESSETH:
WHEREAS, the Corporation desires to employ the Employee as the Chief
Financial Officer of the Corporation; and
WHEREAS, the Employee desires to be so employed by the Corporation; and
WHEREAS, the Corporation and the Employee desire to set forth in writing
their agreements regarding the employment and compensation of the Employee;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the Employee
agree as follows:
1. Employment. The Corporation hereby employs the Employee as Chief
Financial Officer of the Corporation, for the Term (as defined in Section 7) of
this Agreement, and the Employee hereby accepts such employment, upon the terms
and conditions hereinafter set forth.
2. Duties; Location. In his capacity as the Chief Financial Officer of
the Corporation, the Employee shall timely and faithfully perform and discharge
the duties of such position set forth in the by-laws of the Corporation, as
amended and in effect from time to time, as well as such other duties
commensurate with such position as shall be prescribed from time to time by the
President and Chief Executive Officer and/or Board of Directors of the
Corporation. The Employee shall report to, and be subject to the supervision and
control of the President and Chief Executive Officer and/or Board of Directors
of the Corporation. The Employee shall also serve as an officer and director of
the Corporation and/or affiliates of the Corporation, and shall do so without
additional compensation. The Employee shall devote his full time to the business
of the Corporation and shall faithfully perform the duties assigned to him to
the best of his ability, provided however, Employee may serve on civic or
charitable boards or committees, fulfill speaking engagements, and manage a
financial portfolio of personal investments so long as such activities do not
interfere with the performance of Employee's duties hereunder.
Employee's location of employment shall be at the Company's executive
offices in Dallas, Texas. The Corporation may not transfer Employee to any
other location without Employee's prior written consent unless the transfer is
at the Corporation's expense and results from the relocation of the Company's
executive offices and the relocation thereto of other executive officers of the
Corporation.
3. Compensation. As compensation for the services to be rendered by the
Employee to the Corporation pursuant to this Agreement during the Term:
(a) Salary. The Corporation shall pay the Employee a base salary
at the annualized rate of One Hundred Seventy-Five Thousand Dollars
($175,000.00), payable in accordance with the Corporation's usual payroll
practices, and subject to withholding therefrom of federal and state income
taxes, any other employment taxes required to be collected or withheld by the
Corporation, and other amounts required or requested by Employee to be
withheld. Such salary shall be subject to annual review but not reduction by
the Board of Directors and Compensation Committee of the Corporation.
(b) Bonus Advance. The Corporation shall pay the Employee, as an
advance, against his bonus for fiscal year 2002, twenty-five thousand dollars
($25,000.00) less applicable taxes and withholding within ten (10) days of the
execution of this Agreement by the parties.
(c) Bonus. The Corporation shall pay the Employee a bonus to be
calculated according to the following formula; the bonus shall be in the amount
of twenty-five thousand dollars ($25,000) for each million dollars of earnings
of the Corporation, for fiscal year 2002, before depreciation, amortization
(excluding the amortization on loan fees and other finance costs shown in the
other expense section of the projected income statement for 2002, as presented
to the Board of Directors on January 3, 2002) and taxes, excluding the
five-hundred thousand dollar ($500,000.00) restructuring charge of the
Corporation for the year 2002, and excluding any one-time gain from the sale of
assets and any one-time charge. The bonus shall be calculated after the
Corporation's audit for the year 2002. If the bonus is insufficient to cover
the advance, such advance shall be credited against the following year's bonus
to the extent it exceeds the 2002 bonus. The Employee's total compensation for
the years 2003 and 2004 shall be determined by the Board of Directors and
Compensation Committee of the Corporation.
(d) Other Benefits. Subject to the Employee's meeting the
eligibility requirements of the provider(s) (including without limitation any
waiting periods), the Employee shall be eligible to participate in any health
care plan, dental care plan, life insurance plan, long-term disability insurance
plan, retirement plan, 401(k) plan and any other employee benefit plan sponsored
or maintained by the Corporation from time to time, on the same basis as other
employees of the Corporation similarly situated. Nothing is this Agreement shall
obligate the Corporation to sponsor, maintain or provide access to any such plan
generally or limit the discretion of the Corporation to terminate or modify the
terms of any such plan or change providers thereof.
(e) Vacation. The Employee shall be entitled to four (4) weeks of
vacation per calendar year. Fifty percent (50%) of any unused vacation time
shall expire at the close of business on December 31 of each year. The Employee
shall not be entitled to any payment or other compensation in lieu of unused
vacation time.
(f) Expenses. The Corporation shall reimburse the Employee's
documented, reasonable and necessary out-of-pocket business expenses incurred
by the Employee in the performance and discharge of his duties on behalf of the
Corporation in accordance with and subject to the Corporation's policies and
procedures regarding expense reimbursement in effect from time to time.
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(g) Moving Expenses. The Corporation shall pay directly or reimburse
the Employee, at the Employee's option, for all reasonable, itemized allocable
moving expenses, up to fifty thousand ($50,000.00) dollars, incurred in
connection with the Employee relocating to the Dallas, Texas area.
(h) Apartment. In connection with the Employee relocating to the
Dallas, Texas area, the Corporation shall reimburse the Employee for all rental
and related payments for an apartment in Dallas, Texas for up to six months,
provided that the cost of the apartment shall not be unreasonable in the
reasonable opinion of the Board of Directors of the Corporation.
(i) Stock Options. Pursuant to a separate stock option agreement to
be entered into between the Corporation and the Employee, the Employee shall
receive options for the purchase of thirty two thousand five hundred (32,500)
shares of the Corporation's common stock, par value $.01 per share (the "Common
Stock"). The options shall vest over three years at the rate of 29.65328 shares
per calendar day. The exercise price for each share of Common Stock shall be
the lower of (i) $4.85 ($31,500,000 equity valuation divided by 6,500,000
shares outstanding) or (ii) the average closing price of a share of Common
Stock as quoted on the OTC Bulletin Board, for the thirty (30) trading days
commencing on the later of (x) the next trading day after the day this
Agreement is executed by all parties, and (y) the first day that the Common
Stock is publicly traded. The Employee acknowledges that all options shall be
governed by the Corporation's stock option plan, which is currently being
developed, and that any inconsistencies between this section and said stock
option plan shall be controlled by the stock option plan, provided that the
exercise price, number of shares and vesting schedule shall not be adversely
affected thereby.
4. "Key Man" Life Insurance. The Corporation, in its discretion, may
apply for and procure in its own name and for its own benefit, life insurance
on the life of the Employee in any amount or amounts considered advisable by
the Corporation, and the Employee shall submit to any medical or other
examination, and shall execute and deliver any application or other instrument
in writing, reasonably necessary to effectuate such insurance.
5. Restrictions on the Disclosure of Proprietary Information.
(a) Proprietary Information. For purposes of this Agreement, the
term "Proprietary Information" shall mean all confidential knowledge and
information in any form or medium which the Employee acquires, learns or
becomes aware of as a result of or in connection with his employment with the
Corporation concerning (i) the Corporation's business, financial condition,
operations, strategic planning, research and development activities, current or
proposed products, product designs, trade secrets, competitive business
information, patents, patent rights, inventions, technology, copyrights,
software (including without limitation, source code, object code and firmware),
improvements, applications, processes, services, cost and pricing policies,
client lists, vendor relationships and contact lists, and (ii) information of
the kind, type or nature described in the foregoing clause (i) of or with
respect to each third party with whom the Corporation at any time and from time
to time enters a confidentiality or non-disclosure agreement pursuant to which
the Corporation is obligated to keep such third party's information
confidential. Notwithstanding the foregoing, Proprietary Information does not
include information (1) which is or becomes part of the public domain through
no fault of the
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Employee, or (2) which the Employee can demonstrate was independently developed
by him without use of or reference to any Proprietary Information.
(b) Non-disclosure and Non-use Obligations. The Employee agrees that
he will not at any time, without the prior written consent of the Corporation
(which shall be evidenced by a writing signed by a majority of the Corporation's
Board of Directors or by action taken by the Board of Directors at a meeting),
either during or after any termination of this Agreement, divulge or disclose to
anyone outside the Corporation or its professional advisers, or use or permit
any third party to use for its own benefit, any such Proprietary Information.
The Employee will not, during his or her engagement by the Corporation hereunder
or at any time thereafter, use or attempt to use any such Proprietary
Information for any purpose other than the Employee's provision of services to
the Corporation, and in no event in any manner which may injure or cause loss or
may be calculated or reasonably expected to injure or cause loss to the
Corporation. Notwithstanding the provisions of this paragraph, Employee may
divulge or disclose Proprietary Information to Employee's legal advisers,
provided that such advisors agree to keep such Proprietary Information
confidential, or in response to a court or arbitration order.
The Employee further agrees not to make any notes, memoranda, flow charts,
logic diagrams, specifications, reports, compilations, analyses, sketches,
drawings, technical data, source code, object code, models or other physical
manifestations (or copies thereof) relating to any matter within the scope of
the Proprietary Information at any time otherwise than for the benefit of the
Corporation, or, either during or after the termination of this Agreement, to
use or permit to be used any such information (or copies thereof) otherwise
than for the benefit of the Corporation. Upon termination of this Agreement,
the Employee shall deliver to the Corporation at its address set forth above
all such notes, memoranda, flow charts, logic diagrams, specifications',
reports, compilations, analyses, sketches, drawings, technical data, source
code, object code, models and other physical manifestations and any other
related information and all copies thereof made during the term of this
Agreement. Notwithstanding the provisions of this paragraph, Employee may
retain, for a reasonable time, such copies as Employee reasonably believes may
be necessary for legal reasons or upon advice of legal counsel for the purpose
of defending Employee in any pending or threatened litigation.
6. Certain Covenants of the Employee.
(a) Property and Non-Solicitation.
(i) Non-Compete. During the time Employee is employed under this
Agreement (the "Restricted Period"), the Employee shall not,
in the United States of America or in any foreign country,
directly or indirectly, (i) engage in the Corporation
Business for his own account; (ii) enter the employ of or
render any services to, any persons engaged in such
activities; or (iii) become interested in any person engaged
in the Corporation Business, directly or indirectly, as an
individual, partner, shareholder, officer, director,
principal, agent, employee, trustee, consultant or in any
other relationship or capacity; provided, however, that the
Employee may own, directly or indirectly, solely as an
investment, securities of any person
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which are traded on any national securities exchange or NASDAQ if
the Employee (a) is not a controlling person of, or a member of a
group which controls such person or (b) does not, directly or
indirectly, own 4% or more of any class of securities of such
person.
(ii) Property of the Corporation. Subject to Section 5(b), all
memoranda, notes, lists, records and other documents (and all
copies thereof) made or compiled by the Employee or made
available to the Employee concerning the business of the
Corporation or any of its affiliates shall be the Corporation's
property and shall be delivered to the Corporation promptly upon
the termination of the Employee's employment with the
Corporation or any of its affiliates or at any other time on
request.
(iii) Employees of the Corporation. During the Restricted Period and
for a period of six months following the termination (whether for
cause of otherwise) of the Employee's employment with the
Corporation or any of its affiliates, the Employee shall not,
directly or indirectly, hire, solicit or encourage to leave the
employment of the Corporation or any of its affiliates, any
employee of the Corporation or its affiliates or hire any such
employee who has left the employment of the Corporation or any of
its affiliates within six (6) months of the termination of such
employee's employment with the Corporation or any of its
affiliates.
(iv) Consultants and Independent Contractors of the Corporation.
During the Restricted Period and for a period of six months
following the termination (whether for cause of otherwise) of the
Employee's employment with the Corporation or any of its
affiliates, the Employee shall not, directly or indirectly, hire,
solicit or encourage to cease to work with the Corporation or any
of its affiliates, any consultant, sales representative or other
person then under contract with the Corporation or any of its
affiliates.
(b) Rights and Remedies Upon Breach. If the Employee breaches, or
threatens to commit a breach of, any of the provisions of Section 6(a) (the
"Restrictive Covenants"), the Corporation shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
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
Corporation under law or in equity.
(i) Specific Performance. 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
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Corporation and its affiliates and that money damages will
not provide an adequate remedy to the Corporation.
(ii) Accounting. The right and remedy to require the Employee to
account for and pay over to the Corporation all
compensation, profits, monies, accruals, increments or other
benefits (collectively, "Benefits") derived or received by
the Employee as a result of any transactions constituting a
breach of any of the Restrictive Covenants, and the Employee
shall account for and pay over such Benefits to the
Corporation.
(c) Severability of Covenants. If any court determines that any of
the Restrictive Covenants, or any parts thereof are invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
(d) "Blue-Penciling". 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 area covered thereby, such court shall have the power to
reduce the duration or area of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.
(e) Enforceability in Jurisdictions. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of such Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the Restrictive Covenants
wholly unenforceable under the law of that jurisdiction by reason of the breadth
of such scope or otherwise, it is the intention of the parties that such
determination not bar or in any way affect the Corporation's right to the relief
provided above in the courts of any other jurisdiction within the geographical
scope of such Restrictive Covenants, as to breaches of such Restrictive
Covenants in such other respective jurisdictions, such Restrictive Covenants as
they relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.
7. Termination.
(a) Term. This Agreement shall commence as of the date first above
written and shall continue in effect for three (3) years unless earlier
terminated in one of the following manners, or upon the occurrence of one of the
following events (with the period from the date hereof until the date of such
expiration or earlier termination being referred to herein as the ("Term");
(i) upon the Employee's death.
(ii) if the Employee becomes "Disabled." As used herein, the term
"Disabled" shall mean the inability of the Employee to
substantially perform the Employee's duties under this
Agreement for a period in excess of either three (3)
consecutive months or a total of one hundred eighty (180)
days in any twelve (12) month period by reason of any
incapacity, physical or mental, which the
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Corporation's Board of Directors, based upon medical advice
or an opinion provided by Employee's treating physician,
determines to have incapacitated the Employee from
satisfactorily performing all of the Employee's usual
services for the Corporation during the foreseeable future.
The Board of Directors may elect to have Employee examined
by a duly licensed independent physician, and Employee
agrees to submit to such examination. In the event
Employee's treating physician and any such independent
physician are unable to agree as to whether Employee is
Disabled, then the two physicians shall select a third
physician and the opinion of any two of the three physicians
shall be determinative.
(iii) by mutual agreement of the Employee and the Corporation.
(iv) by the Corporation for "Cause." As used herein, "Cause"
shall mean the failure by the Employee to observe any
material provision of this Agreement or any other agreement,
or any breach of any of the Employee's covenants,
agreements, representations or warranties in any agreement
between the Corporation and the Employee which default or
breach continues ten (10) days after Employee receives
notice thereof specifying each claimed breach or default, or
any act committed by the Employee involving fraud, gross
negligence or willful disregard of duty, insubordination
(after written notice of the particulars and a reasonable --
under the circumstances -- opportunity to correct the
conduct constituting the basis for such alleged
insubordination), or other willful misconduct, the
Employee's indictment or arraignment on any felony charges,
or any conduct involving moral turpitude.
(b) Termination of Obligations. Upon the termination of the Employee's
employment hereunder, all benefits hereunder shall thereupon terminate as of the
date of termination, and the Employee shall return to the Corporation all of the
Corporation's property in his possession or under his control, including all
files, keys, reports and other tangible and intangible property of any kind,
nature or description. The provisions of Sections 5 through 19 shall survive any
expiration or earlier termination of this Agreement. The Employee shall receive
all salary, bonuses and stock options pro rata to the extent earned as of the
date of termination, as well as any other compensation to which he may be
entitled under Section 7(d).
(c) Repayment of Moving Expenses. If, within one year of the date of
this Agreement, (i) the Employee voluntarily (excluding death and disability)
terminates his Employment with the Corporation, or (ii) the Corporation
terminates the Employee's employment for Cause, then the Employee shall
reimburse the Corporation for all moving expenses previously paid to the
Employee or on the Employee's behalf within thirty (30) days.
(d) Severance. If, within two years of the date of this Agreement, the
Corporation terminates the Employee's employment without Cause, then the
Corporation shall continue to pay the Employee his then current salary, bonuses
and stock options pro rata, and
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other benefits (to the extent eligible), as of the date of termination, for six
months following the date of the termination. Upon the termination of
Employee's employment hereunder due to Employee's death or due to Employee
becoming Disabled, Employee's salary, bonuses and stock options pro rata, and
other benefits (to the extent eligible) hereunder shall continue for a period
of six months following such termination.
8. Prior Agreements. The Employee represents and warrants that he is
not a party to or bound by an agreement which in any way prevents, limits,
impairs or otherwise affects his ability to enter into and/or fully and timely
perform his obligations under this Agreement, other than the terms of a
Separation Agreement between Employee and his current employer, which terms
have been furnished to the Corporation.
9. Waiver. A party's failure to insist on compliance or enforcement of
any provision of this Agreement, shall not affect the validity or
enforceability or constitute a waiver of future enforcement of that provision
or of any other provision of this Agreement by that party or any other party.
10. Governing Law Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas as applied to
agreements between Texas residents entered and to be performed entirely within
Texas. Any dispute between the Employee and the Corporation arising under or
related to this Agreement or otherwise concerning the employment of Employee by
the Corporation or the termination of such employment shall be resolved by
submitting the matter to binding arbitration in accordance with this Section 11.
Arbitration shall be conducted in Dallas, Texas pursuant to the procedural rules
then in effect of the American Arbitration Association and shall be heard by a
single arbitrator, reasonably agreed to by the parties, who shall be an
attorney-at-law licensed to practice and in good standing in the State of Texas
and knowledgeable in employment matters. The decision of such arbitrator shall
be final and binding on the parties and may be entered for enforcement in any
court or tribunal of competent jurisdiction and authority. The arbitrator shall
award such damages or other relief, as he deems appropriate and may, but shall
not be required to, award legal fees and costs to the prevailing party. All
costs of such arbitration (excluding fees, disbursements and expenses of
counsel, advisors, witnesses and experts) shall be borne equally by the parties,
subject to the arbitrator's award of costs and legal fees, if any. This Section
10 shall not prevent the Corporation from seeking or obtaining injunctive relief
where such remedy is the appropriate form of remedy under the circumstances,
including, without limitation, for any breach of Section 6 or 7 above.
11. Severability. The invalidity or unenforceability of any provision in
the Agreement shall not in any way affect the validity or enforceability of any
other provision of this Agreement and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision had never been in the
Agreement.
12. Notice. Any and all notices required or permitted herein shall be
deemed given if hand delivered or if mailed by registered or certified mail,
return receipt requested, or by nationally recognized overnight courier, to the
Corporation at its principal place of business, addressed to the attention of
the Chief Executive Officer, and to the Employee at the address
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specified in the preamble of this Agreement, or at such other address or
addresses as either party may hereafter designate in writing to the other.
13. Assignment. This Agreement, together with any amendments hereto, shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, assigns, heirs and personal representatives, except that
the rights and benefits of either of the parties under this Agreement may not be
assigned without the prior written consent of the other party.
14. Amendments. This Agreement may be amended at any time, but only by
mutual consent of the parties hereto in writing, signed by the Corporation and
the Employee.
15. Right to Advice of Counsel. The Employee acknowledges that he has
consulted with counsel and is fully aware of his rights and obligations under
this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.
17. Entire Agreement. This Agreement represents the final and entire
agreement between the parties respecting its subject matter, and merges and
supersedes any and all prior and contemporaneous agreements, promises,
commitments, statements and communications, written and oral, between them
relating to such subject matter.
18. Approval of Board of Directors. This Agreement shall be effective upon
execution by both parties.
19. Headings. The various headings in this Agreement are inserted for
convenience only and are not part of this Agreement.
IN WITNESS WHEREOF, the Corporation and the Employee have duly executed
this Employment Agreement as a sealed instrument as of the day and year first
above written.
CORPORATION:
BY: /s/ Xxxxxx Xxxx
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Name: Xxxxxx Xxxx
Title: Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxx
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