Exhibit 10.1
CONSULTING AND NONCOMPETITION AGREEMENT
CONSULTING
AND NONCOMPETITION AGREEMENT (“Agreement”) made
May 1, 2008 between Five Star Quality Care, Inc.
(“Company”) and Evrett W. Benton
("Benton").
RECITAL
Benton
is an employee of the Company and has been its President and
Chief Executive Officer since 2001. Benton has
determined terminate his full time employment with the Company
on the date of this Agreement. Benton and the
Company desire to set forth certain understandings in
connection with his termination and to provide for his
continuing to provide consulting services to the
Company.
NOW,
THEREFORE, the parties agree as follows:
Section
1. Resignation
. By execution of this Agreement, Benton hereby
resigns as President and Chief Executive Officer of the
Company and of each of the Company’s subsidiaries,
effective the date of this Agreement.
Section
2. Consulting
. From the date of this Agreement through November
30, 2011 (“Consulting Period”), Benton will make
himself available for consultation by the Company and its
subsidiaries, at reasonable times and on reasonable advance
notice, but shall not be obliged to provide more than 100
hours of consulting services in any calendar year during the
Consulting Period (prorated for any portion of a calendar
year).
Section
3. Compensation;
Restricted Share Agreements .
(a) During
the Consulting Period, Benton will receive aggregate
compensation of $408,500, payable one-half on the date of this
Agreement and one half on February 2,
2009. Additionally, the Company shall reimburse
Benton for all reasonable travel and lodging expenses incurred
at the request of the Company subject to supply of such
receipts and other documentation as is consistent with the
Company’s policies and procedures in effect from time to
time.
(b) During
the Consulting Period, Benton will be entitled to continue to
participate in the Company’s group health plans in
effect from time to time, provided that Benton shall pay the
same portions of the premiums for coverage under such group
health plans as are paid from time to time by senior
executives of the Company.
(c) Benton
and the Company agree that for purposes of Section 2(b) of
each of the Restricted Share Agreements between Benton and the
Company listed on Exhibit A (collectively, the “Share
Agreements”), Benton shall be deemed to be providing
“significant services” to the Company through the
earlier of (i) November 30, 2011 (i.e., the date on which
all the Shares (as defined in the Share Agreements) issued to
Benton pursuant to the Share Agreements would be fully vested
pursuant to the terms thereof), (ii) the date on which Benton
ceases to timely perform consulting services and (iii) the
date on which Benton commits a breach of any of the
Restrictive Covenants (defined below).
(d) All
payments to Benton under this Agreement shall be reduced by
withholdings required by law. Additionally, if
withholding is required and at a time there is no cash payment
being made to Benton, Benton agrees, on 3 days prior notice
from the Company, to pay to the Company by check or wire
transfer of immediately available funds, an amount equal to
the estimated withholding tax (as determined by the Company)
that will be due and payable.
Section
4. Covenants
. Benton acknowledges that (i) the Company and its
subsidiaries are engaged in the business of operating
rehabilitation hospitals and senior living communities,
including independent living and congregate care communities,
assisted living communities and nursing homes (the
“Company’s Business”); (ii) Benton’s
work for the Company’s Business has given him, and will
continue to give him, trade secrets of, and confidential
and/or proprietary information concerning, the Company’s
Business; (iii) the agreements and covenants contained in this
Section 4 are essential to protect the Company’s
Business and the goodwill associated with
it. Accordingly, Benton covenants and agrees as
follows:
(a)
Non-Compete
. During the Consulting Period, Benton shall not,
in the United States of America and Canada, directly or
indirectly, (x) enter the employ of or render any services to
any person engaged in a business competitive with the
Company’s Business, or (y) have an interest in any such
competitor, whether such interest is direct or indirect, and
including any interest as a partner, shareholder, trustee,
consultant, officer or similarly situated person; provided
, however ,
that in any case, Benton may own solely as an investment,
securities of any such competitor that are publicly traded if
Benton (i) is not a controlling person and (ii) does not,
directly or indirectly, own five percent (5%) or more of any
class of securities of such person..
(b)
Confidential
Information . During the Consulting Period
and at any time thereafter, Benton shall not (i) disclose to
any person not employed by the Company or a subsidiary, or not
engaged to render services to the Company or a subsidiary or
(ii) use for the benefit of himself or others, any
confidential information of the Company, any of the
Company’s subsidiaries or of the Company’s
Business obtained by him, including, without limitation,
“know-how,” trade secrets, details of
customers’ or suppliers’ contracts with the
Company or any of the Company’s subsidiaries, pricing
policies, financial data, operational methods, marketing and
sales information, marketing plans or strategies, development
techniques or plans, plans to enter into any contract with any
person or any strategies relating thereto, technical
processes, designs and design projects, and other proprietary
information of the Company, the Company’s subsidiaries
or of the Company’s Business or the business of any of
the Company’s subsidiaries; provided
, however ,
that this provision shall not preclude Benton from (a) making
any disclosure required by law or court order or (b) using or
disclosing information (i) known generally to the public
(other than information known generally to the public as a
r
