EXHIBIT 10.12
NONCOMPETITION AGREEMENT
AGREEMENT, made as of this 10th day of June, 1998, by and among MANOR CARE,
INC., a Delaware corporation ("Manor Care"), HEALTH CARE AND RETIREMENT
CORPORATION, a Delaware corporation ("HCR"), and XXXXXXX XXXXXX, XX. ("Xx.
Xxxxxx").
W I T N E S S E T H
WHEREAS, HCR and 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 HCR; and
WHEREAS, Manor Care wishes to retain the services of Xx. Xxxxxx as Chairman
of the Board, President and Chief Executive Officer of Manor Care for the period
of time up to the consummation of the merger contemplated by the Merger
Agreement (the "Merger"); and
WHEREAS, HCR upon the consummation of the Merger wishes to retain the
services of Xx. Xxxxxx as Chairman of the Board of HCR and as Special Consultant
to HCR; and
WHEREAS, HCR and Manor Care wish to assure themselves that Xx. Xxxxxx will
not compete with HCR or Manor Care for the Noncompetition Period specified in
this Agreement; and
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WHEREAS, Xx. Xxxxxx is willing to agree not to compete for such period in
exchange for the payment of the cash payment described herein;
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. In consideration of the payment of the compensation described in Section
2 of this Agreement, Xx. Xxxxxx agrees that during the Noncompetition Period (as
hereinafter defined), he will not:
(a) accept a position as an officer, director, employee, agent, or
consultant of a person or entity that is engaged in the skilled
nursing, assisted living, institutional pharmacy, and/or home health
care industry (such a person or entity is referred to in this
Agreement as a "Competitor" and such activities are referred to in
this Agreement as "Competing Activities"); or
(b) hire or engage any employee of the Company or any of its subsidiaries
or induce any employee of the Company or any of its subsidiaries to
leave his or her employment with the Company or any of its
subsidiaries on behalf of any Competitor; provided,
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however, that the reference to "employee" in this subsection (b) shall
not include any person who is not an employee of the Company or any of
its subsidiaries at the applicable time by reason of having been laid
off or otherwise terminated by the Company or any of its subsidiaries.
For purposes of this Agreement, the "Noncompetition Period" shall be the
period beginning on the date of this Agreement and ending on the later of: (i)
the last day of the two-year period beginning on the date on which Xx. Xxxxxx
ceases to be an employee of the Company (as hereinafter defined) and any of its
subsidiaries or (ii) June 9, 2001. In addition, for purposes of this Agreement,
"Company" shall mean (i) prior to the consummation of the merger contemplated by
the Merger Agreement, Manor Care, and (ii) on any after the consummation of said
merger, HCR (which will be renamed HCR Manor Care, Inc.).
2. Compensation Payable to Xx. Xxxxxx. In consideration of Xx. Xxxxxx'x
agreement to the terms of Section 1 of this Agreement, the Company agrees to pay
to Xx. Xxxxxx, within 30 days after consummation of the Merger, an amount equal
to the Applicable Multiple (as hereinafter defined) times the sum of $840,000.
For purposes of this Agreement, the Applicable
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Multiple shall be the greater of (i) two or (ii) the number of years from the
date of termination of Xx. Xxxxxx'x employment until June 9, 2001 (such number
of years to be determined by treating each full 12-month period as one year and
each month or part thereof in excess of full 12-month periods as one-twelfth of
a year).
3. Remedies. Without intending to limit the remedies available to the
Company, Xx. Xxxxxx acknowledges that a breach or threatened breach of any of
the covenants contained in Section 1 of this Agreement may result in material
irreparable injury to the Company or one of its subsidiaries for which there is
no adequate remedy at law, that it may not be possible to measure damages for
such injuries precisely, and that in the event of such a breach or threat
thereof, the Company shall be entitled to obtain a temporary restraining order,
a preliminary or permanent injunction, or other comparable provisional or
equitable relief restraining Xx. Xxxxxx from engaging in activities prohibited
by Section 1, and such other relief as may be required to enforce specifically
any of the covenants in such Section 1.
4. Reformation. (a) Xx. Xxxxxx agrees that the restrictions in Section 1 of
this Agreement are reasonable in
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scope and duration in light of the business and competitors of the Company and
its subsidiaries.
(b) If any provision of Section 1 of this Agreement is held by a court or
arbitrator to be unreasonable in scope or duration, the court or arbitrator
shall, to the extent permitted by law, reform such provision so that it is
enforcable, and enforce the applicable provision as so reformed. Reformation
pursuant to this Section 4 shall not affect any other provision of this
Agreement or render this Agreement unenforcable or void.
5. No Consummation of Merger. HCR shall have no rights or obligations under
this Agreement unless and until the merger contemplated by the Merger Agreement
is consummated.
6. 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).
7. Changes to Agreement. This Agreement may not be changed orally but only
in a writing, signed by the party against whom enforcement is sought.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed
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shall be deemed an original but all of which together shall constitute one and
the same instrument.
9. 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.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first above written.
MANOR CARE, INC.
______________________ By:_____________________________
Xxxxxxx Xxxxxx, Xx.
ATTEST:
By:______________________________
HEALTHCARE AND RETIREMENT CORPORATION
By:_______________________________
ATTEST:
By:_______________________________
