EXHIBIT 10.1
ASSISTED LIVING CONCEPTS, INC.
2010 TANDEM STOCK OPTION/STOCK APPRECIATION RIGHTS AWARD AGREEMENT
Employee: [EMPLOYEE NAME]
Number of Stock Options/SARs: [NUMBER OF OPTIONS/SARS]
Grant Date: March 3, 2010
Exercise Price: $31.71
This Tandem Stock Option/Stock Appreciation Rights Award Agreement (the “Award
Agreement”) is entered into as of March 3, 2010, between Assisted Living
Concepts, Inc. (“ALC”) and Employee pursuant to the Assisted Living Concepts,
Inc. 2006 Omnibus Incentive Compensation Plan (the “Plan”). In consideration of
the mutual promises and covenants made in this Award Agreement and the mutual
benefits to be derived from this Award Agreement, ALC and the Employee agree as
follows:
THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN AND THIS AWARD
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE DISPUTE RESOLUTION PROVISIONS SET
FORTH IN SECTION 17 OF THIS AWARD AGREEMENT. BY SIGNING YOUR NAME BELOW, YOU
WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD
AGREEMENT.
1. Definitions. Capitalized terms used in this Award Agreement that are not
defined in this Award Agreement have the meanings as used or defined in the
Plan. As used in this Award Agreement, the following terms have the meanings set
forth below:
“Business Day” means a day that is not a Saturday, a Sunday or a day on which
banking institutions are legally permitted to be closed in the City of New York.
“Committee” means the Compensation/Nominating/Governance Committee of the Board
of Directors of ALC (the “Board”), or such other committee of the Board as may
be designated by the Board from time to time to administer the Plan.
“Common Stock” means Class A common stock of ALC, par value $0.01 per share.
“Determination Date” means the date during the first quarter of 2011, as
determined by the Committee, on which the Committee determines whether
Performance Criteria with respect to the Performance Period have been achieved.
“Fair Market Value” means the mean between the high and low market prices per
Share as reported on the New York Stock Exchange (or other relevant exchange) on
the applicable date or, in the event there shall be no public market for the
Shares on the applicable date, the fair market value of the Shares as determined
in good faith by the Committee.
“Performance Period” means the period from January 1, 2010 through December 31,
2010.
“Share” means a share of Common Stock.
2. Grant of Award. This Award Agreement sets forth the terms and conditions of
an award (the “Award”) under the Plan to the Employee as of the Grant Date of:
a. Stock Options. The right and option (the “Stock Options”) to purchase up to
[NUMBER OF OPTIONS/SARS] Shares at the Exercise Price per Share. Each Stock
Option is a Nonqualified Stock Option. Unless earlier terminated pursuant to the
terms of this Award Agreement, the Stock Options shall expire on the fifth
anniversary of the Grant Date.
b. Stock Appreciation Rights. Each Stock Option includes a stock appreciation
right (“SAR”) at the price per Share equal to the Exercise Price. The SAR
constitutes an unfunded and unsecured promise of ALC to deliver (or cause to be
delivered) to Employee a whole number of Shares, cash or a combination of Shares
and Cash at the time such SAR vests and is exercised, as provided herein, equal
in value to the excess, if any, of the Fair Market Value per Share over the
Exercise Price per Share of the SAR. Fractional shares will not be delivered and
the number of Shares to be delivered upon any exercise by you of SARs subject to
this Award shall be rounded down to the nearest whole Share. The Committee has
sole discretion to deliver such value in Shares, cash, or a combination of
Shares and cash. Until such delivery, Employee has only the rights of a general
unsecured creditor and no rights as a stockholder of ALC. Unless earlier
terminated pursuant to the terms of this Award Agreement, the SARs shall expire
on the fifth anniversary of the Grant Date.

 

 

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ASSISTED LIVING CONCEPTS, INC.
c. Tandem Stock Option/Stock Appreciation Rights. An SAR with respect to a Share
shall vest, become exercisable, and terminate at the same times and under the
same terms as the Stock Option such Share is subject to. The exercise of a Stock
Option with respect to any Share shall cause the related SAR to automatically
terminate and the exercise of an SAR with respect to any Share shall cause the
related Stock Option to automatically terminate. Only one Stock Option or one
SAR, and not both, may be exercised with respect to any Share that is subject to
a Stock Option under this Award Agreement. The tandem Stock Option and SAR
rights with respect to a Share are referred to in this Award Agreement as the
“Stock Option/SAR.”
d. Award Subject to Both Time- and Performance-Based Vesting. The Award is
subject to both time-based and performance-based vesting. Except as otherwise
provided in any individual employment agreement between you and ALC or any of
its Affiliates (an “Employment Agreement”):
(i) Time-Based Vesting. Two elevenths (2/11) of the Award (the “Time-Based
Award”) shall become exercisable as follows: one-third of the Shares covered
thereby (rounded up to the next whole Share) on March 3, 2011, an additional
one-third of such Shares (rounded up to the next whole Share) on March 3, 2012,
and the remainder of such Shares on March 3, 2013, subject in each case to the
prior termination of the Stock Option/SAR.
(ii) Performance-Based Vesting. the vesting of your rights with respect to nine
elevenths (9/11) of the Award (the “Performance-Based Award”) is contingent on
the attainment of performance goals set forth on Exhibit A to this Award
Agreement (the “Performance Criteria”). Accordingly, unless otherwise provided
in your Employment Agreement, your rights with respect to the Performance-Based
Award will not become vested on the Determination Date unless the Committee
determines that the Performance Criteria with respect to the Performance Period
have been attained. Furthermore, pursuant to Section 6 and except as otherwise
provided in your Employment Agreement, in order for any of your rights with
respect to the Performance-Based Award to become vested on the Determination
Date, you must be employed by ALC or an Affiliate on the Determination Date. If,
on the Determination Date, the Committee determines in its sole discretion that
any of your rights with respect to the Performance-Based Award remain unvested,
your rights with respect to such Stock Options/SARs shall immediately terminate,
and you will be entitled to no further payments or benefits with respect
thereto. If the Committee determines that the threshold level Performance
Criteria specified in Exhibit A has been attained for the Performance Period,
the Committee will then determine the whole number of Stock Options/SARs that
vest on the Determination Date, up to the maximum number listed on the first
page of this Award Agreement, using the formula set forth in Exhibit A. Unless
earlier terminated, any Stock Options/SARs included in the the Performance-Based
Award that the Committee determines to be vested as of the Determination Date
shall become exercisable as follows: one-third of the Shares covered thereby
(rounded up to the next whole Share) on March 3, 2011, an additional one-third
of such Shares (rounded up to the next whole Share) on March 3, 2012, and the
remainder of such Shares on March 3, 2013, subject in each case to the prior
termination of the Stock Option/SAR.
e. Exercisability Upon Death, Disability or Change of Control. Notwithstanding
the foregoing, the Stock Options/SARs, to the extent outstanding, shall become
immediately vested and fully exercisable upon (a) a Change of Control or (b) a
Termination of Employment due to death or Disability. For purposes of this Award
Agreement, Disability means (1) “Disability” as defined in your Employment
Agreement, or (2) if there is no such employment or similar agreement or it does
not define “Disability,” permanent and total disability as determined under
ALC’s long-term disability plan applicable to Employee. For purposes of this
Award Agreement, Termination of Employment means the termination of Employee’s
employment with, or performance of services for, ALC and any of its Subsidiaries
or Affiliates. A participant employed by, or performing services for, a
Subsidiary or an Affiliate shall also be deemed to incur a Termination of
Employment if the Subsidiary or Affiliate ceases to be such a Subsidiary or an
Affiliate, as the case may be, and the participant does not immediately
thereafter become an employee of, or service-provider for, ALC or another
Subsidiary or Affiliate. Temporary absences from employment because of illness,
vacation or leave of absence and transfers among ALC and its Subsidiaries and
Affiliates shall not be considered Terminations of Employment.

 

 

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ASSISTED LIVING CONCEPTS, INC.
f. Suspension or Termination of Stock Options/SARs. If at any time (including
after a notice of exercise has been delivered) the Committee, including any
administrator authorized pursuant to Section 3(e) of the Plan (any such person,
an “Authorized Officer”), reasonably believes that Employee has committed an act
of misconduct as described in this Section, the Committee or Authorized Officer
may suspend the Employee’s right to exercise any Stock Option/SAR pending a
determination of whether an act of misconduct has been committed. If the
Committee or an Authorized Officer determines Employee has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed to ALC,
breach of fiduciary duty or deliberate disregard of ALC rules resulting in loss,
damage or injury to ALC, or if Employee makes an unauthorized disclosure of any
ALC trade secret or confidential information, engages in any conduct
constituting unfair competition, or induces a customer to breach a contract with
ALC, neither Employee nor his or her estate shall be entitled to exercise any
Stock Option/SAR whatsoever. In addition, if Employee is designated an
“executive officer” by the Board and if the Committee determines that Employee
engaged in an act of embezzlement, fraud or breach of fiduciary duty during
Employee’s employment that contributed to an obligation to restate ALC’s
financial statements (“Contributing Misconduct”), Employee shall be required to
repay ALC, in cash and upon demand, the Option Proceeds (as defined below)
resulting from the sale or other disposition (including to ALC) of Shares issued
or issuable upon exercise of a Stock Option or SAR if the sale or disposition
was effected during the twelve-month period following the first public issuance
or filing with the Securities and Exchange Commission of the financial
statements required to be restated. The term “Option Proceeds” means, with
respect to any sale or other disposition (including to ALC) of Shares issued or
issuable upon exercise of a Stock Option or SAR, an amount determined
appropriate by the Committee to reflect the effect of the restatement on ALC’s
stock price, up to the amount equal to the number of Shares sold or disposed of
multiplied by the difference between the market value per Share at the time of
such sale or disposition and the exercise price. The return of Option Proceeds
is in addition to and separate from any other relief available to ALC due to the
executive officer’s Contributing Misconduct. Any determination by the Committee
with respect to the foregoing shall be final, conclusive and binding on all
interested parties.
3. The Plan. This Award is made pursuant to the Plan, all the terms of which are
hereby incorporated in this Award Agreement. In the event of any conflict
between the terms of the Plan and the terms of this Award Agreement, the terms
of this Award Agreement shall govern; provided, however, that, notwithstanding
the foregoing, it is understood that the provisions of Section 6(i)(vi)(D) of
the Plan, including but not limited to the concept of “negative discretion,”
shall not be applicable to the Stock Options/SARs. In the event of any conflict
between the terms of this Award Agreement and the terms of any Employment
Agreement, the terms of your Employment Agreement will govern.
4. Exercise of the Stock Options.
a. Stock Options as to which the Employee is vested, which have become
exercisable, and which have not terminated may be exercised by delivery to the
Secretary of ALC of a written or electronic notice, complying with the
applicable procedures established by the Committee or ALC, stating the number of
whole Shares to be purchased pursuant to this Award Agreement and the date on
which the Employee wants to exercise the Stock Option and accompanied by payment
of the full purchase price of the Shares to be purchased.
b. The full purchase price of the Stock Option (the Exercise Price multiplied by
the number of Stock Options exercised) shall be paid in cash, by wire transfer,
or by certified check or bank draft payable to the order of ALC, by exchange of
Shares of unrestricted Common Stock of ALC already owned by the Employee and
having an aggregate Fair Market Value equal to the full purchase price, or by
any other procedure approved by the Committee, or by a combination of the
foregoing.
c. Employees who are not Executive Officers (as such term is defined the by
Securities and Exchange Commission) may also give notice and make payment
through a brokerage firm pursuant to an arrangement approved by ALC in advance.

 

 

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ASSISTED LIVING CONCEPTS, INC.
5. Exercise of Stock Appreciation Rights. SARs as to which the Employee is
vested, which have become exercisable, and which have not terminated may be
exercised by delivery to the Secretary of ALC of a written or electronic notice,
complying with the applicable procedures established by the Committee or ALC,
stating the whole number of SARs that are thereby exercised. Upon exercise, ALC
shall deliver to Employee or Employee’s legal representative, at the absolute
discretion of the Committee, either (i) the number of Shares (rounded down to
the nearest whole Share) (the “Number of Equivalent Shares”) equal to (x)
(A) the excess, if any, of the Fair Market Value per Share on the exercise date
over the Exercise Price per Share of the SAR, multiplied by (B) the number of
SARs being exercised pursuant to such notice, divided by (y) the Fair Market
Value per Share on the exercise date, (ii) cash equal to the Fair Market Value
per Share on the exercise date multiplied by the Number of Equivalent Shares, or
(iii) any combination of cash and Shares with an aggregate value equal to the
Fair Market Value per Share on the exercise date multiplied by the Number of
Equivalent Shares.
6. Expiration of Stock Options/SARs. Unless the Committee determines otherwise
and except as otherwise provided in Section 7 or in your Employment Agreement,
unexercised Options/SARs expire (i) automatically on the date of your
Termination of Employment for Cause (as defined in your Employment Agreement or,
if your Employment Agreement does not contain a definition of Cause, as
determined according to Section 7(e) hereof) or (ii) 90 days after the effective
date of your Termination of Employment for any reason other than Cause; provided
that any portion of the Stock Options/SARs that is not vested as of such
effective date ceases vesting and terminates immediately; and provided further
that all Options/SARs will automatically expire on the fifth anniversary of this
Award Agreement.
7. Termination of Employment.
a. If the Employee incurs a Termination of Employment due to Disability, the
Stock Options/SARs, to the extent outstanding at the time of such Termination of
Employment, shall become immediately vested and fully exercisable and may be
exercised by the Employee at any time prior to the first to occur of (i) one
year after such Termination of Employment or (ii) the expiration date of the
Stock Options/SARs, and shall thereafter expire.
b. If the Employee incurs a Termination of Employment due to death, the Stock
Options/SARs, to the extent outstanding at the time of such Termination of
Employment, shall become immediately vested and fully exercisable and may be
exercised by the Employee’s estate or by a person who acquired the right to
exercise such Stock Options/SARs by bequest or inheritance or otherwise by
reason of the death of the Employee at any time prior to the first to occur of
(i) one year after such Termination of Employment or (ii) the expiration date of
the Stock Options/SARs, and shall thereafter expire.
c. If the Employee incurs a Termination of Employment due to retirement at or
after age 65, the portion of the Stock Options/SARs, if any, which is
exercisable at the time of such Termination of Employment may be exercised at
any time prior to the first to occur of (i) three years after such Termination
of Employment or (ii) the expiration date of the Stock Options/SARs, and shall
thereafter expire. Any portion of the Stock Options/SARs that is not exercisable
at the time of such Termination of Employment due to retirement at or after age
65 shall expire as of such Termination of Employment.
d. If the Employee incurs a voluntary Termination of Employment by the Employee
(other than retirement at or after age 65), the portion of the Stock
Options/SARs, if any, which is exercisable at the time of such Termination of
Employment may be exercised at any time prior to the first to occur of
(i) 30 days after such Termination of Employment or (ii) the expiration date of
the Stock Options/SARs, and shall thereafter expire. Any portion of the Stock
Option/SAR that is not exercisable at the time of such Termination of Employment
shall expire as of such Termination of Employment.

 

 

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ASSISTED LIVING CONCEPTS, INC.
e. If the Employee incurs a Termination of Employment by ALC without Cause, the
portion of the Stock Options/SARs, if any, which is exercisable at the time of
such Termination of Employment may be exercised at any time prior to the first
to occur of (i) 90 days after such Termination of Employment or (ii) the
expiration date of the Stock Option/SAR, and shall thereafter expire. Any
portion of the Stock Options/SARs that is not exercisable at the time of such
Termination of Employment shall expire as of such Termination of Employment. For
purposes of this Award Agreement, Cause means, unless otherwise provided by the
Committee, (1) “Cause” as defined in any Employment Agreement, or (2) if there
is no such Employment Agreement or if it does not define Cause: (A) conviction
of Employee for committing a felony under federal law or the law of the state in
which such action occurred, (B) dishonesty in the course of fulfilling
Employee’s employment duties, (C) willful and deliberate failure on the part of
Employee to perform his or her employment duties in any material respect, or
(D) prior to a Change in Control, such other events as shall be determined by
the Committee. The Committee shall, unless otherwise provided in any employment
or similar agreement between Employee and ALC, have the sole discretion to
determine whether “Cause” exists, and its determination shall be final.
8. Voting Rights; Dividend Equivalents. Prior to the date on which your rights
with respect to Options/SARs have become vested and you exercise such
Options/SARs, you shall not be entitled to exercise any voting rights with
respect to such Options/SARs or any Shares with respect thereto, and shall not
be entitled to receive dividends or other distributions with respect thereto.
9. Non-Transferability of Options/SARs. Unless otherwise provided by the
Committee in its discretion, Options/SARs may not be sold, assigned, alienated,
transferred, pledged, attached or otherwise encumbered except as provided in
Section 9(a) of the Plan. Any purported sale, assignment, alienation, transfer,
pledge, attachment or other encumbrance of Options/SARs in violation of the
provisions of this Section 9 and Section 9(a) of the Plan shall be void.
10. Adjustment in the Event of Change in Stock. In the event of any change in
corporate capitalization (including, but not limited to, a change in the number
of shares of Common Stock outstanding), such as a stock split or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of ALC, any reorganization
(whether or not such reorganization comes within the definition of such term in
Section 368 of the Code), or any partial or complete liquidation of ALC, the
number and kind of shares subject to the Stock Option/SAR and/or the exercise
price per share shall be adjusted by the Board or Committee as the Board or
Committee may determine to be appropriate in its sole discretion; provided,
however, that the number of shares subject to the Stock Options/SARs shall
always be a whole number. The determination of the Board or Committee regarding
any adjustment will be final and conclusive.
11. Payment of Transfer Taxes, Fees and Other Expenses. ALC agrees to pay any
and all original issue taxes and stock transfer taxes that may be imposed on the
issuance of Shares acquired pursuant to exercise of the Stock Options/SARs,
together with any and all other fees and expenses necessarily incurred by ALC in
connection therewith.
12. Other Restrictions on Exercisability. The exercise of the Stock Options/SARs
and the delivery of share certificates upon such exercise shall be subject to
the requirement that, if at any time the Committee shall determine that (a) the
listing, registration or qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any state or federal law
or (b) the consent or approval of any government regulatory body is, in the case
or (a) or (b), necessary or desirable as a condition of, or in connection with,
such exercise or the delivery or purchase of shares pursuant thereto, then in
any such event such exercise shall not be effective unless such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
13. Taxes and Withholdings. No later than the date of exercise of the Stock
Options/SARs granted hereunder, the Employee shall pay to ALC or make
arrangements satisfactory to the Committee regarding payment of any federal,
state and local taxes, and any non-U.S. taxes applicable to the Employee, of any
kind required by law to be withheld upon the exercise of such Stock
Options/SARs. In the event that there is withholding tax liability in connection
with the exercise of Options/SARs, you may satisfy, in whole or in part, any
withholding tax liability by having ALC withhold from the number of Shares you
would be entitled to receive pursuant to the exercise of the Options/SARs, a
number of Shares having a Fair Market Value equal to such withholding tax
liability. ALC shall, to the extent permitted or required by law, have the right
to deduct from any payment of any kind otherwise due to the Employee federal,
state, local and applicable non-U.S. taxes of any kind required by law to be
withheld upon the exercise of such Stock Options/SARs.

 

 

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ASSISTED LIVING CONCEPTS, INC.
14. Consents and Legends.
a. Consents. Your rights in respect of the Options/SARs that are subject to this
Award are conditioned on the receipt to the full satisfaction of the Committee
of any required consents that the Committee may reasonably determine to be
necessary or advisable (including, without limitation, your consenting to ALC’s
supplying to any third-party record keeper of the Plan such personal information
as ALC or the Committee deems advisable to administer the Plan).
b. Legends. ALC may affix to certificates for Shares issued pursuant to this
Award Agreement any legend that ALC or the Committee determines to be necessary
or advisable (including to reflect any restrictions to which you may be subject
under any applicable securities laws). ALC may advise the transfer agent to
place a stop order against any legended Shares.
15. Successors and Assigns of ALC. The terms and conditions of this Award
Agreement shall be binding upon and shall inure to the benefit of ALC and its
successors and assigns.
16. Committee Discretion. Subject to the terms of your Employment Agreement, the
Committee shall have full and plenary discretion with respect to any actions to
be taken or determinations to be made in connection with this Award Agreement,
and its determinations shall be final, binding and conclusive.
17. Dispute Resolution.
a. Jurisdiction and Venue. Notwithstanding any provision in your Employment
Agreement, you and ALC irrevocably submit to the exclusive jurisdiction of
(i) the United States District Court for the Eastern District of Wisconsin and
(ii) the courts of the State of Wisconsin for the purposes of any suit, action
or other proceeding arising out of this Award Agreement or the Plan. You and ALC
agree to commence any such action, suit or proceeding either in the United
States District Court for the Eastern District of Wisconsin or, if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the courts of the State of Wisconsin. You and ALC further agree that
service of any process, summons, notice or document by U.S. registered mail to
the other party’s address set forth below shall be effective service of process
for any action, suit or proceeding in Wisconsin with respect to any matters to
which you have submitted to jurisdiction in this Section 17(a). You and ALC
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Award Agreement or the Plan
in (A) the United States District Court for the Eastern District of Wisconsin or
(B) the courts of the State of Wisconsin, and hereby and thereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
b. Waiver of Jury Trial. You and ALC hereby waive, to the fullest extent
permitted by applicable law, any right either of you may have to a trial by jury
in respect to any litigation directly or indirectly arising out of, under or in
connection with this Award Agreement or the Plan.
c. Confidentiality. You hereby agree to keep confidential the existence of, and
any information concerning, a dispute described in this Section 17, except that
you may disclose information concerning such dispute to the court that is
considering such dispute or to your legal counsel or other advisors (provided
that such counsel or other advisors agree not to disclose any such information
other than as necessary to the prosecution or defense of the dispute).
18. Notice. All notices, requests, demands and other communications required or
permitted to be given under the terms of this Award Agreement shall be in
writing and shall be deemed to have been duly given when delivered by hand or
overnight courier or three Business Days after they have been mailed by U.S.
registered mail, return receipt requested, postage prepaid, addressed to the
other party as set forth below:

 

 

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ASSISTED LIVING CONCEPTS, INC.

         
 
  If to ALC:   Assisted Living Concepts, Inc.
 
      W140 N8981 Lilly Road
 
      Menomonee Falls, WI 53051
 
      Attention: Corporate Secretary
 
       
 
  If to Employee:   Address contained in payroll records

The parties may change the address to which notices under this Award Agreement
shall be sent by providing written notice to the other in the manner specified
above.
19. Headings. Headings are given to the Sections and subsections of this Award
Agreement solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Award Agreement or any provision thereof.
20. Amendment of this Award Agreement. The Committee may waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate this Award Agreement prospectively or retroactively; provided,
however, that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would materially and adversely
impair your rights under this Award Agreement shall not to that extent be
effective without your consent (it being understood, notwithstanding the
foregoing proviso, that this Award Agreement and the Options/SARs shall be
subject to the provisions of Section 7(c) of the Plan).
21. Counterparts. This Award Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of
the date first written above.
ASSISTED LIVING CONCEPTS, INC. EMPLOYEE
By:                                         
                                            
Title:                                          [EMPLOYEE NAME]