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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into and
is effective as of April 23, 1997, by and between ARV ASSISTED LIVING, INC., a
California corporation (the "Company"), and Xxxxxx X. Xxxxxxx, an individual
("Employee").
R E C I T A L
The Company desires to employ Employee and Employee desires to be employed
by the Company upon the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee and Employee hereby
accepts employment with the Company on the terms and conditions set forth
herein.
2. DUTIES. At all times while Employee is an employee of the Company,
Employee shall perform the duties and obligations of the Vice President and
General Counsel of the Company or if applicable, of the Vice President and
General Counsel of the ultimate parent entity of the Company. Employee shall at
all times perform such duties and obligations faithfully, diligently, and to the
best of Employee's ability, under the supervision of, and in accordance with
lawful policies and directives from time to time established by, the Company's
Board of Directors (the "Board") and in compliance with all applicable laws and
the Company's Articles of Incorporation and Bylaws, and shall instruct and
require all those working with and under Employee to do the same. Employee's
employment hereunder shall be on a full-time basis and, except as permitted by
the prior written consent of the Board, Employee shall devote substantially all
of Employee's productive time, ability, and attention to the business of the
Company during the Term (as defined herein). Unless otherwise consented to in
writing by Employee, Employee's permanent office location shall be in Orange
County, California.
3. COMPENSATION.
3.1 BASE SALARY. For Employee's services hereunder, the Company
shall initially pay the Employee an annual salary of $175,000.00 (the "Base
Salary"). The Base Salary shall be paid in accordance with the Company's normal
procedures for paying salaried employees.
3.2 BASE SALARY INCREASES. The Base Salary shall be increased as of
each anniversary of Employee's hire date (the "Adjustment Date").
3.3 BONUSES. No later than December 31st of each year, Employee
shall receive such bonuses, in the form of cash or property, as determined in
the discretion of the Board or the Executive Officers of the Company (the
'Company's Management'), based on the earnings of the Company and other criteria
as determined by the compensation committee of the Board.
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3.4 TAXES. All amounts paid to Employee hereunder shall be subject
to the applicable withholding of social security, federal, state, and other
taxes and deductions as required by law.
4. BENEFITS.
4.1 GROUP MEDICAL, DISABILITY, AND LIFE INSURANCE BENEFITS. During
the Term, if any such plans are in effect, Employee shall be eligible to
participate and the premiums shall be paid by the Company, in any group medical,
disability, and life insurance program as provided generally for officers of the
Company.
4.2 VACATION. Employee shall be entitled to annual vacation during
the Term in accordance with the policies contained in the Company's Corporate
Employee Handbook.
4.3 RETIREMENT PLANS. During the Term, if any such plans are in
effect, Employee shall be included in and able to participate in any retirement,
pension, or other deferred or supplemental compensation plans operated by the
Company including without limitation, the Company's 401K plan.
4.4 STOCK OPTIONS. During the Term, Employee shall be eligible to
participate in any stock option plan instituted by the Company.
5. BUSINESS EXPENSES AND REIMBURSEMENT.
5.1 BUSINESS EXPENSES. Employee shall be entitled to reimbursement
by the Company within ten (10) days following written request for any ordinary
and necessary business expenses incurred by Employee in the performance of
Employee's duties for an on behalf of the Company during the Term, including,
without limitation, the cost of entertainment, travel, lodging and meals. All
such written requests shall be deemed accepted and finally approved if the
Company does not contest any such request within sixty (60) days following
submittal to the Company.
5.2 REIMBURSEMENT. Employee agrees that, if at any time after
Employee's receipt of a business expense reimbursement payment, an appropriate
taxing authority makes an Adverse Determination (as defined herein), Employee
shall reimburse the Company for the amounts subject to the Adverse
Determination. For the purposes of this Section, an "Adverse Determination"
means any determination by a taxing authority (not successfully appealed to or
overturned by a court) that an expense reimbursed to Employee under Section 5.1
hereof was either not: (i) substantiated as required by Section 274 of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder; or (ii) a bona fide business expense of the Company.
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6. CONFIDENTIALITY. During the Term, Employee will have access to and
become acquainted with what Employee and the Company acknowledge are trade
secrets and other confidential information which are owned by the Company,
including, without limitation, any and all files, records, documents,
specifications, equipment, and similar items of or related to the Company, its
operations, and its business, whether prepared by Employee or otherwise coming
into Employee's possession (collectively, the "Information"). Employee shall not
disclose the Information, directly or indirectly, or use it in any way, during
the Term or thereafter except as required in the course of Employee's employment
with the Company.
7. TERMINATION.
7.1 TERMINATION AT WILL.
7.1.1 BY THE COMPANY. Subject to Section 7.2 hereof, the
Company may terminate this Agreement at any time, for any reason, or for no
reason, either with or without cause, by delivering written notice to Employee.
7.1.2 BY EMPLOYEE. Subject to Section 7.2 hereof, Employee may
terminate this Agreement at any time, for any reason, or for no reason, either
with or without cause, by delivering thirty (30) days' prior written notice to
the Company; provided, however, that the Company may reduce such thirty (30) day
period in its sole discretion.
7.2 SEVERANCE PAY.
7.2.1 TERMINATION BY THE COMPANY WITHOUT CAUSE. If the Company
terminates Employee without cause (as defined below), in addition to payment of
Employee's Base Salary, accrued vacation and reimbursable expenses through the
date of termination, the Company shall pay to Employee upon such termination a
lump-sum amount equal to three (3) months' Base Salary. For the purposes of this
Section 7.2.1, termination "without cause" shall include termination by the
Company for any reason other than if: (a) Employee willfully breaches any
material provision of this Agreement or habitually neglects Employee's duties;
or (b) Employee is convicted of a felony. In addition, Employee shall be deemed
to be terminated by the Company if Employee's title or responsibilities are
changed and such change reduces Employee's responsibility, authority or
supervisory abilities within the Company.
7.2.2 VOLUNTARY TERMINATION BY EMPLOYEE. Within ten (10) days
following such termination, Employee shall be paid Employee's Base Salary,
accrued vacation and reimbursable expenses payable through the date of the
termination of Employee's employment and a lump-sum amount equal to three (3)
months' Base Salary. Termination by Employee shall include the death or
Disability (as defined herein) of Employee. For the purposes of this Section,
"Disability" shall mean any physical or mental disability which causes Employee
to be unable to substantially perform Employee's normal duties as an employee of
the Company; provided, however, that Employee shall not be considered disabled
until: (i) Employee has been so disabled
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for one hundred eighty (180) days; (ii) Employee's attending physician shall
have furnished to the Company certification that the return of Employee to his
duties as an employee of the Company is impossible or improbable; and (iii)
Employee is determined to be totally disabled by the disability insurer then
insuring Employee, if any.
7.3 CHANGE IN CONTROL. Notwithstanding anything to the contrary
contained in Section 7.2 hereof, following a change in the ownership, or
effective control of the Company or in the ownership of a substantial portion of
the Company's assets (any one of which shall be referred to herein as "Change in
Control"), in the event Employee's employment is terminated either voluntarily
or involuntarily within three (3) months of the Change in Control, the Company
shall immediately pay to Employee the Base Salary, Employee's accrued vacation
and reimbursable expenses through the date of Change in Control and an amount
equal to three (3) times the total compensation received by Employee during the
immediately preceding calendar year (the "Change in Control Bonus"); provided,
however, that, if applicable, the amount of the Change in Control Bonus shall be
reduced so that no portion of the Change in Control Bonus shall be deemed to be
an "excess parachute payment" under Section 280G of the Internal Revenue Code of
1986, as amended, or any replacement statute. The determination of the existence
of an "excess parachute payment" shall be made by the Company's independent
accountants who prepare and file the federal income tax returns for the Company.
In addition, any options to purchase the common stock of the Company previously
granted to Employee and not otherwise vested shall be fully vested as of the
date of the Change in Control. The Company shall pay the expenses incurred by
such accountants pursuant to this Section. Generally, for the purposes of this
Section: (i) "change in the ownership of the Company" shall mean the date that
any person or persons acting as a group, acquires ownership of the capital stock
of the Company and the acquired capital stock together with capital stock held
by such person or group, gives the acquiring person or group possession of more
than fifty percent (50%) of the total fair market value or the total voting
power of the capital stock of the Company; (ii) "change in effective control of
the Company" shall mean that either: (A) any one person, or more than one person
acting as a group, would acquire (or had acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) ownership of the capital stock of the Company possessing fifty percent
(50%) or more of the total voting power of the capital stock of the Company; or
(B) a majority of the members of the Board was replaced during any twelve (12)
month period by directors whose appointment or election was not endorsed by a
majority of the members of the Board prior to the date of such appointment or
election; and (iii) "change in ownership of a substantial portion of the
Company's assets" shall mean the date on which one person, or more than one
person acting as a group, would acquire (or had acquired during the twelve (12)
- month period ending on the date of the most recent acquisition by such person
or persons) assets from the Company that have a total fair market value equal
to, or more than, thirty three and one-third percent (33-1/3%) of the total fair
market value of all of the assets of the Company immediately prior to such
acquisitions. All determinations of the applicability of this Section shall be
made consistent with the Proposed Regulations Section 1.280G-1 promulgated by
the Internal Revenue Service, or any successor regulations.
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7.4 RETURN OF DOCUMENTS AND NONDISCLOSURE. Upon termination
(voluntary or otherwise) of this Agreement, Employee shall immediately deliver
to the Company any and all property, files, records and other documents in
Employee's possession or under Employee's control belonging to the Company,
including all copies of such documents and credit cards.
8. TERM. This Agreement shall commence upon the date hereof and shall
terminate three (3) years thereafter (the "Termination Date"), unless sooner
terminated as provided herein; provided, however, that if the Company has not
given Employee written notice of the Company's intent to terminate this
Agreement at least thirty (30) days prior to the Termination Date, the
Termination Date shall automatically be extended for a period of one (1) year,
upon all of the same terms and conditions. The Termination Date shall continue
to be extended annually unless and until the Company timely delivers such
written notice of termination at least thirty (30) days prior to the then
effective Termination Date (the "Term").
9. COVENANT NOT TO COMPETE. During the Term, and for a period of one (1)
year following expiration of the Term, in all counties of California, the other
States of the United States and the other countries of the world where the
Company or its affiliates are engaged in business, Employee shall not, directly
or indirectly, whether as an employee, employer, consultant, agent, principal,
partner, member, stockholder, corporate officer or director, or in any other
individual or representative capacity, whether or not for compensation, engage
in or participate in or render services to any business or activity which is
competitive in any manner whatsoever with the Company or any of its affiliates
in the business of assisted living or long-term healthcare.
This Section 9 shall not apply in the event of a Change in Control
under Section 7.3. Further, this Section 9 shall not apply in the event of
termination of employment as described in Section 7.2.1 or Section 7.2.2;
provided, however, that Employee shall first waive in writing all rights to
receive severance pay other than amounts due by law.
10. MISCELLANEOUS PROVISIONS.
10.1 NOTICES. Except as otherwise provided in this Agreement, all
notices, requests, demands, and other communications under this Agreement shall
be given in writing and shall be served either personally, by facsimile or
delivered by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
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If to the Company: ARV Assisted Living, Inc.
000 Xxxxxxx Xxxxxx, Xxxx. X-0
Xxxxx Xxxx, XX 00000-0000
Attention: Board of Directors
Fax No. (000) 000-0000
If to Employee: Xxxxxx X. Xxxxxxx, Esq.
0000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Notices shall be deemed received at the earliest of the actual
receipt, confirmed facsimile or three (3) days following mailing.
10.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter contained
herein and supersedes all prior agreements, representations, and understandings
of the parties.
10.3 ATTORNEYS' FEES. In the event of any proceeding arising
out of or related to this Agreement, the prevailing party shall be entitled to
recover all of its costs and expenses incurred in connection with such
proceeding, including, without limitation, court costs and reasonable attorneys'
fees, whether or not such proceeding is prosecuted to judgment.
10.4 AMENDMENTS. This Agreement may not be amended,
supplemented, canceled, or discharged except by written instrument executed by
the parties hereto.
10.5 WAIVERS. All waivers hereunder shall be in writing. No
wavier by any party hereto of any breach or anticipated breach of any provision
of this Agreement by any other party shall be deemed a waiver of any other
contemporaneous, preceding, or succeeding breach or anticipated breach, whether
or not similar, on the part of the same or any other party.
10.6 SEVERABILITY. In the event that any provision of this
Agreement shall be unenforceable or inoperative as a matter or law, the
remaining portions or provisions shall remain in full force and effect.
10.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
representatives, executors, administrators, successors, and assigns; provided,
however, that Employee may not assign any or all of his rights or duties
hereunder except following the prior written consent of the Company.
10.8 COUNTERPARTS. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same Agreement.
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10.9 SECTION HEADINGS. The section headings used in this
Agreement are inserted for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
10.10 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of California.
10.11 ADVICE OF COUNSEL. Employee acknowledges that Employee
has been advised to seek independent legal counsel for advice regarding the
effect of the terms and provisions hereof, and has either obtained such advice
of independent legal counsel, or has voluntarily and without compulsion elected
to enter into and be bound by the terms of this Agreement without such advice of
independent legal counsel.
10.12 ARBITRATION. Any dispute arising out of or related to
this Agreement shall be submitted to arbitration in Orange County, California,
before a sole arbitrator selected from Judicial Arbitration and Mediation
Services, Inc., Orange County, California, or its successor ("JAMS"), or if JAMS
is no longer able to supply the arbitrator, such arbitrator shall be selected
from the American Arbitration Association, and shall be conducted in accordance
with the provisions of California Code of Civil Procedure Section 1280 et seq.
as the exclusive remedy of such dispute; provided, however, that provisional
injunctive relief may, but need not, be sought in a court of law while
arbitration proceeding are pending, and any provisional injunctive relief
granted by such court shall remain effective until the matter is finally
determined by the Arbitrator. Final resolution of any dispute through
arbitration may include any remedy or relief which the Arbitrator deems just and
equitable, including permanent injunctive relief or specific performance, or
both, and the Arbitrator is hereby empowered to award such relief. Any award or
relief granted by the Arbitrator hereunder shall be final and binding on the
partes hereto and may be enforced by any court of competent jurisdiction.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Employment
Agreement as of the date first above written.
THE COMPANY
ARV ASSISTED LIVING, INC., a
California corporation
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
President and Chief Executive Officer
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
