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EXHIBIT 10.10
SECOND AMENDED EMPLOYMENT AGREEMENT
This SECOND AMENDED EMPLOYMENT AGREEMENT ("Agreement"), effective as of
April 1, 1997 between HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, an
Ohio corporation (the "Company"), HEALTH CARE AND RETIREMENT CORPORATION, a
Delaware corporation and sole stockholder of the Company ("HCR) and M. KEITH
WEIKEL ("Employee"), supersedes and replaces all prior employment agreements
between the parties hereto.
RECITALS
A. The Company has agreed to employ Employee in the position and at the base
rate of pay set forth on Schedule I.
B. The Company has further agreed to provide severance benefits to Employee
upon a termination of Employee's employment resulting from certain
specified events.
C. The Company wishes to insure that its senior executives and other key
employees are not practically disabled from discharging their duties in
respect to a proposed or actual transaction involving a Change in Control.
D. The Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executive officers and other
key employees, including Employee, applicable in the event of a Change in
Control.
EVENTS
In consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged,
Employee and the Company hereby agree as follows:
1. CERTAIN DEFINED TERMS. The following terms have the meanings set forth
below:
(a) "Accounting Firm" is defined in Section 10(b).
(b) "Aggregate Cash Compensation" means the sum of Base Pay and
Employee's cash bonuses pursuant to the Company's Annual Incentive Plan
and Performance Award Plan as in effect at any time of determination.
(c) "Base Pay" means Employee's annual base salary as in effect at
any time of determination.
(d) "Board" means the Board of Directors of HCR.
(e) "Cause" means Employee's financial dishonesty, fraud in the
performance of his duties, willful failure to perform assigned duties
hereunder or the commission of a felony.
(f) "Change in Control" means the occurrence during the Protected
Term of any of the following events:
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(i) HCR is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than sixty-five
percent of the combined voting power of the then outstanding
securities of such resulting corporation or person immediately
after such transaction are held in the aggregate by the holders of
Voting Stock of HCR immediately prior to such transaction;
(ii) HCR sells or otherwise transfers all or substantially all
of its assets to another corporation or other legal person, and as
a result of such sale or transfer less than sixty-five percent of
the combined voting power of the then outstanding Voting Stock of
such corporation or person immediately after such sale or transfer
is held in the aggregate by the holders of Voting Stock of HCR
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Exchange Act, disclosing that any
person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner (as
the term "beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of
15% or more of the then outstanding Voting Stock of HCR;
(iv) HCR files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) that a Change in Control of HCR has
occurred or will occur in the future pursuant to any then existing
contract or transaction; or
(v) If, during any consecutive twelve month period,
individuals who at the beginning of any such period constitute the
Directors cease for any reason to constitute at least a majority
thereof, provided, however, that for purposes of this clause (v)
each Director who is first elected, or first nominated for election
by HCR's stockholders, by a vote of at least one-half of the
Directors (or a committee thereof) then still in office who were
Directors at the beginning of any such period will be deemed to
have been a Director at the beginning of such period.
Notwithstanding the foregoing provisions of Sections 1(f)(iii) or
1(f)(iv), unless otherwise determined in a specific case by majority vote
of the Board, a "Change in Control" shall not be deemed to have occurred
for purposes of Sections 1(f)(iii) or 1(f)(iv) solely because (1) HCR,
(2) any Subsidiary (including, without limitation, the Company) or (3)
any employee stock ownership plan or any other employee benefit plan of
HCR or any Subsidiary either files or becomes obligated to file a report
or a proxy statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) under the Exchange Act disclosing beneficial
ownership by it of shares of Voting Stock of HCR, whether in excess of
15% or otherwise, or because HCR reports that a change in control of HCR
has occurred or will occur in the future by reason of such beneficial
ownership.
(g) "Competing Business" shall mean any person, corporation or other
entity engaged in the United States of America in providing long-term
care, skilled nursing or rehabilitative services or selling or attempting
to sell or providing or attempting to provide any
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other product or service which is the same as or similar to products or
services sold or provided by the Company within the last 2 years prior to
termination of Employee's employment hereunder.
(h) "Continuation Period" means the thirty-six months immediately
following the Termination Date.
(i) "Director" means a member of the Board.
(j) "Employee Benefits" means the perquisites and benefits as
provided under any and all employee retirement income and welfare benefit
policies, plans, programs or arrangements in which Employee is entitled
to participate at any time of determination, including, without
limitation, any stock option, stock purchase, stock appreciation,
savings, pension, supplemental employee retirement, or other retirement
income or welfare benefit, deferred compensation, incentive compensation,
group or other life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company), disability,
salary continuation, expense reimbursement and other employee benefit
policies.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Excise Tax" is defined in Section 10(a).
(m) "Gross-Up Payment" is defined in Section 10(a).
(n) "ISO" is defined in Section 10(a).
(o) "Payment" is defined in Section 10(a).
(p) "Protected Term" means the period commencing as of the date
hereof and expiring as of the close of business on March 31, 2000;
provided, however, that: (i) commencing on April 1, 1998 and each April 1
thereafter, the term of this Agreement will automatically be extended for
an additional year unless, not later than December 31 of the immediately
preceding year, the Company or Employee shall have given notice that it
or Employee, as the case may be, does not wish to have the Protected Term
extended; and (ii) except as otherwise provided in the last sentence of
Section 12, if, prior to a Change in Control, Employee ceases for any
reason to be an employee of the Company, thereupon without further action
the Protected Term shall be deemed to have expired and Sections 8, 10, 11
and 14(a) and the last sentence of Section 12 of this Agreement and the
portion of any other provision of this Agreement that incorporates such
provisions will immediately terminate and be of no further effect. For
purposes of this Section 1(p), Employee shall not be deemed to have
ceased to be an employee of the Company by reason of the transfer of
Employee's employment between or among HCR and the Company or any other
Subsidiary.
(q) "Severance Period" means the period of time commencing on the
date of the occurrence of a Change in Control and continuing until the
earliest of (i) the third anniversary of the occurrence of the Change in
Control (ii) Employee's death, or (ii) Employee's attainment of age 65.
(r) "Severance Benefits" are defined in Section 8(b).
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(s) "Subsidiary" means any entity in which HCR directly or
indirectly beneficially owns 50% or more of the then outstanding Voting
Stock.
(t) "Termination Date" means the effective date of Employee's
termination of employment with the Company; provided that for purposes of
this Section 1(t), Employee shall not be deemed to have ceased to be an
employee of the Company by reason of the transfer of Employee's
employment between or among HCR and the Company or any other Subsidiary.
(u) "Underpayment" is defined in Section 10(a).
(v) "Voting Stock" means securities entitled to vote generally in
the election of directors.
2. SALARY AND POSITION. Employee's Base Pay and job title shown on
Schedule I are correct as of the date hereof and in accordance with Employee's
understanding.
3. AT-WILL EMPLOYMENT. Employee's employment with the Company is not for
any specified term and may be terminated by Employee or by the Company at any
time for any reason, with or without Cause.
4. NO OTHER AGREEMENTS. Except as specifically set forth herein and in
Schedule II attached hereto, Employee represents and warrants that there are no
other written or oral agreements, understandings or commitments relating to
Employee's future employment, work assignments, compensation (including
compensation upon termination), benefits, or any other term or condition of
employment.
5. ENTIRE AGREEMENT. This Agreement and the agreements listed in Schedule
II attached hereto constitute the complete agreement between Employee and the
Company regarding any and all aspects of their employment relationship and
supersede any and all prior written or oral agreements, understandings or
commitments. Employee understands that no representative of the Company has
been authorized to enter into any agreement, understanding or commitment with
Employee which is inconsistent in any way with the terms of this Agreement.
6. PROHIBITION AGAINST AMENDMENT. Employee's Base Pay may be modified by
the Company at any time in its sole discretion. The retirement and benefit
plans set forth in Schedule II attached hereto in which Employee is entitled to
participate may be improved, reduced or terminated by the Company at any time
in its sole discretion; provided, however, that no vested or accrued benefit
shall be adversely affected. No term set forth in this Agreement, including
without limitation the terms set forth in Section 3 hereof, may be modified in
any way except by a written agreement signed by Employee and by an authorized
representative of the Company which expressly states the intention of the
parties to modify the terms of this Agreement.
7. SEVERANCE PAYMENT NOT FOLLOWING A CHANGE IN CONTROL. Except as
provided in Section 8:
(a) Upon the termination of Employee's employment as a result of
Employee's electing to resign his employment or to retire without the
consent of the Company, no payments shall be required or made pursuant to
this Section 7.
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(b) Upon the termination of Employee's employment by the Company for
Cause, no payments shall be required or made pursuant to this Section 7.
(c) Upon the termination of Employee's employment by the Company for
any reason other than for Cause or disability, the Company shall continue
payment of Employee's Base Pay, at the rate then in effect on the
Termination Date, for a period of one year after such Termination Date.
The Company shall give thirty (30) days written notice of any such
termination which notice shall specify the Termination Date.
(d) Upon the termination of Employee's employment as a result of the
death of Employee, the Company shall continue payment of Employee's Base
Pay, at the rate then in effect on the Termination Date, for a period of
one year after such Termination Date; provided, however, that such
payments shall be offset by any survivor benefits, excluding life
insurance proceeds, received by Employee's spouse or other designated
beneficiary under the Company's plans, programs and policies.
(e) Upon the termination of Employee's employment as a result of his
becoming unable to perform his duties due to a disability as established
by the award of long-term disability benefits under the Company's
long-term disability plan, the Company may terminate Employee's
employment by giving Employee thirty (30) days written notice of its
intention to terminate. In such event, Company shall continue payment of
Employee's Base Pay, at the rate then in effect on the Termination Date,
for a period of one year after such Termination Date; provided, however,
that such payments shall be offset by any disability benefits received by
Employee, or his legal guardian, under the Company's plans, programs and
policies.
(f) Notwithstanding anything to the contrary contained in this
Section 7, upon the termination of Employee's employment for any reason
other than pursuant to Section 8, whether voluntarily or involuntarily
and whether with or without Cause, Employee shall be entitled to the
payments provided for hereunder and such rights as he otherwise has under
the Company's Restricted Stock Plan and the Company's Stock Option Plan
in the circumstances of his particular termination.
8. TERMINATION FOLLOWING A CHANGE IN CONTROL.
(a) Eligibility for Severance Benefits.
(i) If, during the Severance Period, Employee's employment is
terminated by the Company other than for Cause and other than as a
result of his death or disability pursuant to Section 7(d) or (e),
Employee shall be entitled to the Severance Benefits.
(ii) Following the consummation of a Change in Control,
Employee may elect, within the 60-day period following the
occurrence of one of the following events, to terminate employment
with the Company and receive the Severance Benefits (pursuant to
written notice to the Board specifying the effective date of such
termination which shall not be earlier than the date of the Board's
receipt of such notice and shall not be later than the end of such
60-day period):
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(A) Failure to elect or reelect or otherwise to maintain
Employee in the office or position, or a substantially
equivalent office or position, of or with the Company or
successor, as the case may be, which Employee held
immediately prior to a Change in Control, or the removal of
Employee as a Director (or as a member of the board of
directors of any successor thereto) if Employee shall have
been a Director immediately prior to the Change in Control;
(B) The occurrence of any of the following:
(I) a significant adverse change in the nature or
scope of the authorities, powers, functions,
responsibilities or duties attached to the position
with the Company or successor, as the case may be,
which Employee held immediately prior to the Change in
Control;
(II) a reduction in Employee's Base Pay as in
effect immediately prior to the Change in Control;
(III) a material reduction in the scope or value
of Employee Benefits as in effect immediately prior to
a Change in Control; or
(IV) any material breach of this Agreement by the
Company or any successor thereto,
which situation is not remedied within 10 calendar days
after written notice to the Board (or the board of any
successor) from Employee;
(C) The liquidation, dissolution, merger, consolidation
or reorganization of the Company or transfer of all or
substantially all of its business and/or assets, unless the
surviving or successor entity, if other than the Company (by
liquidation, merger, consolidation, reorganization, transfer
or otherwise), to which all or substantially all of such
business and/or assets have been transferred (directly or by
operation of law) assumes all duties and obligations of the
Company under this Agreement pursuant to Section 16(a); or
(D) The Company or any successor, as the case may be, by
which Employee is employed relocates its principal executive
offices, or requires Employee to have his principal location
of work changed, to any location which increases by more than
25 miles Employee's commute to such location immediately
prior to the Change in Control, or requires Employee to
travel away from his office in the course of discharging his
responsibilities or duties hereunder at least 20% more (in
terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison
to any prior year) than the average of such time that was
required of Employee in the three full years immediately
prior to the Change of Control without, in either case, his
prior written consent.
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(iii) If Employee elects to terminate employment with the
Company or any successor, as the case may be, for any reason, or
without reason, during such portion of the 180-day period
immediately following the first anniversary of the occurrence of
any Change in Control that falls within the Severance Period,
Employee shall be entitled to the Severance Benefits.
(b) Severance Benefits. If, following the occurrence of a Change in
Control, Employee's employment with the Company is terminated pursuant to
Section 8(a)(i), (ii) or (iii), the Company will pay to Employee the
following amounts within five business days after the Termination Date
and will provide to Employee the following benefits (collectively, the
"Severance Benefits"):
(i) A lump sum payment equal to three times the highest
Aggregate Cash Compensation paid or payable to Employee for any of
the three calendar years preceding the year in which the
Termination Date occurs or for the year in which the Termination
Date occurs if the Termination Date occurs after the end of the
first quarter; for purposes of this Section 8(b)(i), if the
Company's financial performance for the year-to-date period
preceding the Termination Date is consistent with budgeted levels
(as certified by the Compensation Committee) then the Aggregate
Cash Compensation for the year in which the Termination Date occurs
shall be assumed to be equal to the sum of: (A) the Employee's Base
Pay, (B) the Employee's Annual Incentive Plan bonus payable for the
year in which the Termination Date occurs, calculated by
multiplying the product of the Employee's Base Pay and the
Employee's bonus percentage by 150%, and (C) the Employee's
Performance Award Plan award payable for the award period ending
with the year in which the Termination Date occurs as if the
earnings per share growth rate for such year were assumed to be the
actual growth rate for the year-to-date period prior to the
Termination Date;
(ii) During the Continuation Period:
(A) the Company will arrange to provide Employee with
group medical, dental and vision benefits substantially
similar to those which Employee was receiving or entitled to
receive immediately prior to the Change in Control; and
(B) the Company (or successor) will provide Employee the
use of office space, furnishings and secretarial support
services comparable to those provided to Employee immediately
prior to the Change in Control;
If and to the extent that any benefit described in
Section 8(b)(ii)(A) is not or cannot be paid or provided
under any policy, plan program or arrangement of the Company,
then the Company will pay or provide for the payment to
Employee, his dependents and beneficiaries, of such Employee
Benefits in any manner selected by the Company. Without
otherwise limiting the purposes or effect of Section 8,
Employee Benefits otherwise receivable by Employee pursuant
to Section 8(b)(ii)(A) will be reduced to the extent
comparable welfare benefits are actually received by Employee
from another employer during the Continuation Period, and any
such benefits received by Employee shall be reported by
Employee to the Company.
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