Exhibit 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of December 27, 2005 (the "Agreement"),
is made by and between Skilled Healthcare Group, Inc., a Delaware corporation
(together with any successor thereto, the "Company") and John E. King (the
"Executive").
RECITALS
A. It is the desire of the Company to assure itself of the continued services
of the Executive by entering into this Agreement.
B. The Executive and the Company mutually desire that Executive provide
services to the Company on the terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. EMPLOYMENT.
(a) General. The Company shall employ the Executive and the Executive
shall enter the employ of the Company, for the period set forth in
Section 1(b), in the position set forth in Section 1(c), and upon the
other terms and conditions herein provided.
(b) Employment Term. The initial term of employment under this Agreement
(the "Initial Term") shall be for the period beginning on the Closing,
as such term is defined in the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of October 22, 2005 among the Company,
SHG Holding Solutions, Inc., a Delaware corporation ("Parent"), SHG
Acquisition Corp., a Delaware corporation, Heritage Partners
Management Company, LLP, Heritage Fund II, L.P., a Delaware limited
partnership, and Heritage Investors II, L.L.C., a Delaware limited
liability company (the date of such Closing is the "Effective Date")
and ending on (and including) the second anniversary thereof, unless
earlier terminated as provided in Section 3. Should the Closing not
occur, this Agreement shall be null and void and shall not become
effective. The employment term hereunder shall automatically be
extended for successive one-year periods ("Extension Terms" and,
collectively with the Initial Term, the "Term") unless either party
gives written notice of non-extension to the other no later than sixty
(60) days prior to the expiration of the then-applicable Term and
subject to earlier termination as provided in Section 3.
(c) Position and Duties. The Executive shall serve as the Chief Financial
Officer of the Company with such customary responsibilities, duties
and authority as may from time to time be assigned to the Executive by
the Chief Executive Officer of the Company, the Board of Directors of
the Company (the "Board") or by the Board of Directors of Parent. The
Executive shall devote substantially all his
working time and efforts to the business and affairs of the Company
(which may include service to Parent, the Company and their respective
direct and indirect subsidiaries). The Executive agrees to observe and
comply with the rules and policies of the Company as adopted by or
under the authority of the Board from time to time. During the Term,
it shall not be a violation of this Agreement for the Executive to
serve on industry trade, civic or charitable boards or committees and
manage his personal investments and affairs, as long as such
activities do not materially interfere with the performance of the
Executive's duties and responsibilities as an employee of the Company.
During his employment and following termination of his employment with
the Company, the Executive agrees not to disparage the Company, any of
its products or practices, or any of its directors, officers, agents,
representatives, stockholders or affiliates, either orally or in
writing.
(d) Location. The Executive acknowledges that the Company's principal
executive offices are currently located at Foothill Ranch, California.
The Executive shall operate principally out of such executive offices,
as they may be moved from time to time within 40 miles of their
current location in Foothill Ranch, California. The Company expects,
and the Executive agrees, that the Executive shall be required to
travel from time to time in order to fulfill his duties to the
Company.
2. COMPENSATION AND RELATED MATTERS.
(a) Annual Base Salary. During the Term, the Executive shall receive a
base salary at a rate of $335,000 per annum (the "Annual Base
Salary"), which shall be paid in accordance with the customary payroll
practices of the Company, subject to upward adjustment as may be
determined by the Board in its discretion.
(b) Annual Bonus. During the Term, the Executive will be eligible to
participate in an annual performance-based bonus plan established by
the Board that provides an opportunity substantially the same as the
bonus plan first adopted by the Board after the Effective Date.
(c) Restricted Stock Plan. During the Term, the Executive shall be
entitled to participate in the equity plan (the "Restricted Stock
Plan") of Parent pursuant to which, on the Effective Date, the
Executive shall receive a number of shares of common stock of Parent
equal to 1.2500% of the number of shares of common stock of Parent
outstanding on the Effective Date, excluding shares issued under the
Restricted Stock Plan. Restricted Stock shall vest as to 25% of the
shares granted on the Effective Date and each of the first three
anniversaries of the Effective Date, but only to the extent the
Executive remains continuously employed by the Company through the
applicable vesting date.
(d) Benefits. During the Term, the Executive shall be entitled to
participate in group medical insurance, 401(k) and other standard
benefits provided by the Company, as may be amended from time to time,
which are applicable to the senior officers of the Company.
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(e) Vacation. During the Term, the Executive shall be entitled to four
weeks paid vacation per calendar year and the maximum unused vacation
time that the Executive may accrue is eight weeks. Any vacation shall
be taken at the reasonable and mutual convenience of the Company and
the Executive.
(f) Expenses. During the Term, the Company shall reimburse the Executive
for all reasonable travel and other business expenses incurred by him
in the performance of his duties to the Company in accordance with the
Company's expense reimbursement policy.
(g) Key Person Insurance. At any time during the Term, the Company shall
have the right to insure the life of the Executive for the Company's
sole benefit. The Company shall have the right to determine the amount
of insurance and the type of policy. The Executive shall cooperate
with the Company in obtaining such insurance by submitting to physical
examinations, by supplying all information reasonably required by any
insurance carrier, and by executing all necessary documents reasonably
required by any insurance carrier. The Executive shall incur no
financial obligation by executing any required document, and shall
have no interest in any such policy.
(h) Medical Examination. During the Term, the Company shall bear the
expense of an annual medical examination of the Executive at the
Coopers Clinic or another facility selected by the Executive and
reasonably satisfactory to the Company.
(i) Annual Review. Approximately every 12 months during the Term, the
Executive and the Company's Chief Executive Officer, Board or
appropriate committee of the Board shall meet to discuss the
Executive's performance and terms of the Executive's employment by the
Company.
3. TERMINATION.
The Term and the Executive's employment hereunder may be terminated by the
Company or the Executive, as applicable, without any breach of this Agreement
only under the following circumstances:
(a) Circumstances.
(i) Death. The Term and the Executive's employment hereunder shall
terminate upon his death.
(ii) Disability. If the Executive has incurred a Disability, the
Company may terminate the Term and the Executive's employment
hereunder.
(iii) Termination for Cause. The Company may terminate the Term and
the Executive's employment hereunder for Cause.
(iv) Termination without Cause. The Company may terminate the Term and
the Executive's employment hereunder without Cause.
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(v) Resignation by the Executive. The Executive may resign his
employment and terminate the Term for any reason.
(vi) Non-extension of Term by the Company. The Company may give notice
of non-extension to the Executive pursuant to Section 1(b).
(vii) Non-extension of Term by the Executive. The Executive may give
notice of non-extension to the Company pursuant to Section 1(b).
(b) Notice of Termination. Any termination of the Executive's employment
by the Company or by the Executive under this Section 3 (other than
termination pursuant to paragraph (a)(i)) shall be communicated by a
written notice to the other party indicating the specific termination
provision in this Agreement relied upon, and specifying a Date of
Termination which, if submitted by the Executive, shall be at least
two weeks following the date of such notice (a "Notice of
Termination"). A Notice of Termination submitted by the Company may
provide for a Date of Termination on the date the Executive receives
the Notice of Termination, or any date thereafter elected by the
Company in its sole discretion.
(c) Company obligations upon termination. Upon termination of the
Executive's employment, the Executive (or the Executive's estate)
shall be entitled to receive the sum of the Executive's Annual Base
Salary through the Date of Termination not theretofore paid, any
expenses owed to the Executive under Section 2(f), any accrued
vacation pay owed to the Executive pursuant to Section 2(e), and any
amount accrued and arising from the Executive's participation in, or
benefits accrued under any employee benefit plans, programs or
arrangements under Section 2(d), which amounts shall be payable in
accordance with the terms and conditions of such employee benefit
plans, programs or arrangements, and such other or additional benefits
as may be, or become, due to him under the applicable terms of
applicable plans, programs, agreements, corporate governance documents
and other arrangements of the Company and its parent and subsidiaries
(collectively, the "Company Arrangements").
4. SEVERANCE PAYMENTS.
(a) Termination for Cause, Resignation by the Executive, Non-extension of
Term by the Executive or the Company, death or Disability. If the
Executive's employment is terminated pursuant to Section 3(a)(iii) for
Cause, pursuant to Section 3(a)(v) for Resignation by the Executive,
or pursuant to Section 3(a)(vii) due to non-extension of the Term by
the Executive, the Executive shall not be entitled to any severance
payment or benefits. If the Executive's employment is terminated
pursuant to Section 3(a)(i) as a result of Executive's death or
pursuant to Section 3(a)(ii) as a result of the Executive's
Disability, the Company shall, subject to the Executive signing and
not revoking, within sixty days following delivery to Executive, a
separation and release agreement in the form attached hereto, (i) pay
to the Executive an amount equal to the product of (x) the bonus that
the Executive would have earned during the calendar year in which the
Date
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of Termination occurs, if any, and (y) a fraction, the numerator of
which is the number of days that elapsed in such calendar year through
the Date of Termination and the denominator of which is 365, payable
when bonuses would have otherwise been payable had the Executive's
employment not terminated and (ii) in the case of termination pursuant
to Section 3(a)(ii) as a result of the Executive's Disability, pay to
the Executive an amount equal to the excess, if any, of (x) the amount
that would have been payable to the Executive pursuant to Section
4(b)(i) if the Executive had been terminated by the Company without
Cause pursuant to Section 3(a)(iv) over (y) the present value of the
benefits to be received by the Executive (or his beneficiaries) under
any disability plan sponsored by the Company or its affiliates (for
purposes of this clause (ii) the amounts in (x) and (y) shall be
determined by the Company on an after-tax basis to the extent that
their receipt by the Executive (or his beneficiaries) would be subject
to tax and on actuarial assumptions satisfactory to the Company). If
the Executive's employment is terminated pursuant to Section 3(a)(vi)
due to non-extension of the Term by the Company, the Company shall,
subject to the Executive signing and not revoking, within sixty days
following delivery to Executive, a separation and release agreement in
the form attached hereto at Annex A, (i) pay to the Executive an
amount equal to the product of (x) the bonus that the Executive would
have earned during the calendar year in which the Date of Termination
occurs, if any, and (y) a fraction, the numerator of which is the
number of days that elapsed in such calendar year through the Date of
Termination and the denominator of which is 365, payable when bonuses
would have otherwise been payable had the Executive's employment not
terminated and (ii) pay to the Executive, in a lump sum, an amount
equal to the Annual Base Salary that the Executive would have been
entitled to receive if the Executive had continued his employment
hereunder for a period of 12 months following the Date of Termination.
(b) Termination without Cause. If the Executive's employment shall be
terminated by the Company without Cause pursuant to Section 3(a)(iv)
the Company shall, subject to the Executive signing and not revoking,
within sixty days following delivery to Executive, a separation and
release agreement in the form attached hereto:
(i) pay to the Executive, in a lump sum, an amount equal to the
Annual Base Salary that the Executive would have been entitled to
receive if the Executive had continued his employment hereunder
for a period of 18 months following the Date of Termination;
(ii) pay to the Executive an amount equal to the product of (x) the
bonus that the Executive would have earned during the calendar
year in which the Date of Termination occurs, if any, and (y) a
fraction, the numerator of which is the number of days that
elapsed in such calendar year through the Date of Termination and
the denominator of which is 365, payable when bonuses would have
otherwise been payable had the Executive's employment not
terminated; and
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(iii) cover the premium costs for medical benefits under COBRA for the
Executive and, where applicable, his spouse and dependents, life
insurance and disability insurance (all as in effect immediately
prior to the Date of Termination) for a period of 12 months
following the Date of Termination.
If the Executive's employment shall be terminated by the Company
without cause pursuant to Section 3(a)(iv), the Non-Competition
Agreement dated December 27, 2005 between Parent and the Executive
shall terminate on the earlier of the date it would have terminated
without regard to this paragraph and a number of months after the Date
of Termination equal to the number of months of Base Salary taken into
account pursuant to Section 4(b)(i).
(c) Survival. The expiration or termination of the Term shall not impair
the rights or obligations of any party hereto, which shall have
accrued prior to such expiration or termination.
(d) 409A. Notwithstanding anything to the contrary in this Section 4, no
payments in this Section 4 will be paid during the six-month period
following the Executive's termination of employment unless the Company
determines, in its good faith judgment, that paying such amounts at
the time or times indicated in this Section would not cause the
Executive to incur an additional tax under Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code") (in which case
such amounts shall be paid at the time or times indicated in this
Section). If the payment of any amounts are delayed as a result of the
previous sentence, on the first day following the end of the six-month
period, the Company will pay the Executive a lump-sum amount equal to
the cumulative amounts that would have otherwise been previously paid
to the Executive under this Section 4. Thereafter, payments will
resume in accordance with this Section.
5. COMPETITION.
(a) The Executive shall not, at any time during the Term or during the
two-year period following the Date of Termination, directly or
indirectly engage in, have any equity interest in, or manage or
operate any person, firm, corporation, partnership or business
(whether as director, officer, employee, agent, representative,
partner, security holder, consultant or otherwise) that engages in any
business (x) which competes with any business of the Company anywhere
in the States of California, Kansas, Missouri, Nevada or Texas, (y)
which competes with any business of the Company in any State in which
the Company operated a facility at any time (whether before or after
the date of this Agreement) that the Executive was employed by the
Company or (z) which derives $500,000,000 or more in annual
consolidated revenues from the operation of skilled nursing facilities
in the United States; provided, however, that the Executive shall be
permitted to acquire a passive stock interest in such a business
provided the stock acquired is publicly traded and is not more than
five percent (5%) of the outstanding interest in such business.
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(b) The Executive shall not at any time during the Term or during the
two-year period following the date of Termination, directly or
indirectly, recruit or otherwise solicit or induce or encourage any
employee, contractor, customer or supplier of the Company (i) to
terminate its employment or arrangement with the Company, (ii) to
otherwise change its relationship with the Company or (iii) to
establish any relationship with the Executive or any other person,
firm, corporation or other entity for any business purpose competitive
with the business of the Company.
(c) In the event the terms of this Section 5 shall be determined by any
court of competent jurisdiction to be unenforceable by reason of its
extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other
respect, it will be interpreted to extend only over the maximum period
of time for which it may be enforceable, over the maximum geographical
area as to which it may be enforceable, or to the maximum extent in
all other respects as to which it may be enforceable, all as
determined by such court in such action.
(d) As used in this Section 5, the term "Company" shall include Parent,
the Company and their respective direct or indirect subsidiaries.
6. NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Except in connection with the faithful performance of the Executive's
duties hereunder or pursuant to Section 6(c), the Executive shall, in
perpetuity, maintain in confidence and shall not directly, indirectly
or otherwise, use, disseminate, disclose or publish, or use for his
benefit or the benefit of any person, firm, corporation or other
entity any confidential or proprietary information or trade secrets of
or relating to the Company (including, without limitation,
intellectual property in the form of patents, trademarks and
copyrights and applications therefor, ideas, inventions, works,
discoveries, improvements, information, documents, formulae,
practices, processes, methods, developments, source code,
modifications, technology, techniques, data, programs, other know-how
or materials, owned, developed or possessed by the Company, whether in
tangible or intangible form, information with respect to the Company's
operations, processes, products, inventions, business practices,
finances, principals, vendors, suppliers, customers, potential
customers, marketing methods, costs, prices, contractual
relationships, regulatory status, prospects and compensation paid to
employees or other terms of employment), or deliver to any person,
firm, corporation or other entity any document, record, notebook,
computer program or similar repository of or containing any such
confidential or proprietary information or trade secrets. The parties
hereby stipulate and agree that as between them the foregoing matters
are important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of
the Company (and any successor or assignee of the Company).
Confidential Information shall not include any information which has
entered the public domain through no fault of the Executive.
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(b) Upon termination of the Executive's employment with the Company for
any reason, the Executive will promptly deliver to the Company all
correspondence, drawings, manuals, letters, notes, notebooks, reports,
programs, plans, proposals, financial documents, or any other
documents concerning the Company's customers, business plans,
marketing strategies, products or processes.
(c) The Executive may respond to a lawful and valid subpoena or other
legal process but shall give the Company the earliest possible notice
thereof, shall, as much in advance of the return date as possible,
make available to the Company and its counsel the documents and other
information sought and shall assist such counsel at Company's expense
in resisting or otherwise responding to such process.
(d) As used in this Section 6 and Section 7, the term "Company" shall
include the Company and its direct or indirect parents, if any, and
subsidiaries.
(e) Nothing in this Agreement shall prohibit the Executive from (i)
disclosing information and documents when required by law, subpoena or
court order (subject to the requirements of Section 6(c) above), (ii)
disclosing information and documents to his attorney or tax adviser on
a confidential basis for the purpose of securing legal or tax advice,
(iii) disclosing the post-employment restrictions in this Agreement in
confidence to any potential new employer, or (iv) retaining, at any
time, his personal correspondence, his personal rolodex and documents
related to his own personal benefits, entitlements and obligations.
7. INVENTIONS.
All rights to discoveries, inventions, improvements and innovations
(including all data and records pertaining thereto) related to the business of
the Company, whether or not patentable, copyrightable, registrable as a
trademark, or reduced to writing, that the Executive may discover, invent or
originate during the Term, either alone or with others and whether or not during
working hours or by the use of the facilities of the Company ("Inventions"),
shall be the exclusive property of the Company. The Executive shall promptly
disclose all Inventions to the Company, shall execute at the request of the
Company any assignments or other documents the Company may deem reasonably
necessary to protect or perfect its rights therein, and shall assist the
Company, upon reasonable request and at the Company's expense, in obtaining,
defending and enforcing the Company's rights therein. The Executive hereby
appoints the Company as his attorney-in-fact to execute on his behalf any
assignments or other documents reasonably deemed necessary by the Company to
protect or perfect its rights to any Inventions.
8. INJUNCTIVE RELIEF.
It is recognized and acknowledged by the Executive that a breach of the
covenants contained in Sections 5, 6 and 7 will cause irreparable damage to
Company and its goodwill, the exact amount of which will be difficult or
impossible to ascertain, and that the remedies at law for any such breach will
be inadequate. Accordingly, the Executive agrees that in the event of a breach
of any of the covenants contained in Sections 5, 6 and 7, in addition to any
other remedy
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which may be available at law or in equity, the Company will be entitled to
specific performance and temporary, preliminary and permanent injunctive relief.
9. ASSIGNMENT AND SUCCESSORS.
The Company may assign its rights and obligations under this Agreement to
any successor to all or substantially all of the business or the assets of the
Company (by merger or otherwise), and may assign or encumber this Agreement and
its rights hereunder as security for indebtedness of the Company and its
affiliates. This Agreement shall be binding upon and inure to the benefit of the
Company, the Executive and their respective successors, assigns, personnel and
legal representatives, executors, administrators, heirs, distributees, devisees,
and legatees, as applicable. None of the Executive's rights or obligations may
be assigned or transferred by the Executive, other than the Executive's rights
to payments hereunder, which may be transferred only by will or operation of
law. Notwithstanding the foregoing, the Executive shall be entitled, to the
extent permitted under applicable law and applicable Company Arrangements, to
select and change a beneficiary or beneficiaries to receive compensation
hereunder following his death by giving written notice thereof to the Company.
10. CERTAIN DEFINITIONS.
(a) Cause. The Company shall have "Cause" to terminate the Term and the
Executive's employment hereunder upon:
(i) the Executive's failure to perform substantially his duties as an
employee of the Company (other than any such failure resulting
from the Executive's incapacity due to physical or mental
illness), which is not cured within 15 days after a written
demand for performance is given to the Executive by the Board
specifying in reasonable detail the manner in which the Executive
has failed to perform substantially his duties as an employee of
the Company;
(ii) the Executive's failure to carry out, or comply with, in any
material respect any lawful and reasonable directive of the Board
consistent with the terms of this Agreement that, if capable of
cure, is not cured by the Executive within 15 days after written
notice given to the Executive describing such failure in
reasonable detail;
(iii) the Executive's conviction, plea of no contest, plea of nolo
contendere, or imposition of unadjudicated probation for any
felony or, to the extent involving fraud, dishonesty, theft,
embezzlement or moral turpitude, any other crime;
(iv) the Executive's violation of a material regulatory requirement
relating to the business of the Company and its subsidiaries
that, in the good faith judgment of the Board, is injurious to
the Company in any material respect;
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(v) the Executive's unlawful use (including being under the
influence) or possession of illegal drugs on the Company's
premises or while performing the Executive's duties and
responsibilities under this Agreement;
(vi) the Executive's breach of this Agreement in any material respect
that, if capable of cure, is not cured by the Executive within 15
days after written notice given to the Executive describing such
breach in reasonable detail; or
(vii) the Executive's commission of an act of fraud, embezzlement,
misappropriation, willful misconduct, gross negligence or breach
of fiduciary duty with respect to the Company or any of its
affiliates;
(b) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by his death, the date of his
death; (ii) if the Executive's employment is terminated pursuant to
Section 3(a)(ii) - (v) either the date indicated in the Notice of
Termination or the date specified by the Company pursuant to Section
3(b), whichever is earlier; (iii) if the Executive's employment is
terminated pursuant to Section 3(a)(vi) or Section 3(a)(vii), the
expiration of the then-applicable Term.
(c) Disability. "Disability" shall mean, at any time the Company or any of
its affiliates sponsors a long-term disability plan for the Company's
employees in which the Executive participates, "disability" as defined
in such long-term disability plan for the purpose of determining a
participant's eligibility for benefits, provided, however, if the
long-term disability plan contains multiple definitions of disability,
"Disability" shall refer that definition of disability which, if the
Executive qualified for such disability benefits, would provide
coverage for the longest period of time. The determination of whether
the Executive has a Disability shall be made by the person or persons
required to make disability determinations under the long-term
disability plan. At any time the Company does not sponsor a long-term
disability plan for its employees in which the Executive participates,
Disability shall mean the Executive's inability to perform, with or
without reasonable accommodation, the essential functions of his
position hereunder for a total of six months during any 12-month
period as a result of incapacity due to mental or physical illness as
determined by a physician selected by the Board and acceptable to the
Executive or the Executive's legal representative, such agreement as
to acceptability not to be unreasonably withheld or delayed. Any
refusal by the Executive to submit to a medical examination for the
purpose of determining Disability shall be deemed to constitute
conclusive evidence of the Executive's Disability.
11. GOVERNING LAW.
This Agreement shall be governed, construed, interpreted and enforced in
accordance with its express terms, and otherwise in accordance with the
substantive laws of the State of
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California, without reference to the principles of conflicts of law, and where
applicable, the federal laws of the United States.
12. VALIDITY.
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
13. NOTICES.
Any notice, request, claim, demand, document and other communication
hereunder to any party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by facsimile or
certified or registered mail, postage prepaid, or any nationally recognized
overnight courier service with signature certification of receipt, as follows:
(a) If to the Company:
Skilled Healthcare Group, Inc.
27442 Portola Parkway
Suite 200
Foothill Ranch, California 92610
Attn: General Counsel
with copies to:
Onex Partners LP
712 Fifth Avenue
New York, New York 10019
Facsimile: (212) 582-0909
Attention: Robert M. LeBlanc
and:
Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
Facsimile: (212) 836-8211
Attention: Joel I. Greenberg
(b) If to the Executive:
John E. King
[_________________________]
[_________________________]
Facsimile: [__________]
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or at any other address as any party shall have specified by notice in
writing to the other party.
14. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original, but all of which together will constitute one and
the same Agreement. Signatures delivered by facsimile shall be deemed effective
for all purposes.
15. ENTIRE AGREEMENT.
The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of the Executive by
the Company and supersede all prior understandings and agreements, whether
written or oral. The parties further intend that this Agreement shall constitute
the complete and exclusive statement of their terms and that no extrinsic
evidence whatsoever may be introduced in any judicial, administrative, or other
legal proceeding to vary the terms of this Agreement.
16. AMENDMENTS; WAIVERS.
This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by the Executive and a duly authorized officer of
Company. By an instrument in writing similarly executed, the Executive or a duly
authorized officer of the Company may waive compliance by the other party or
parties with any specifically identified provision of this Agreement that such
other party was or is obligated to comply with or perform; provided, however,
that such waiver shall not operate as a waiver of, or estoppel with respect to,
any other or subsequent failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder preclude any other or further
exercise of any other right, remedy, or power provided herein or by law or in
equity. Except as otherwise set forth in this Agreement, the respective rights
and obligations of the parties under this Agreement shall survive any
termination of Executive's employment.
17. NO INCONSISTENT ACTIONS.
The parties hereto shall not voluntarily undertake or fail to undertake any
action or course of action inconsistent with the provisions or essential intent
of this Agreement. Furthermore, it is the intent of the parties hereto to act in
a fair and reasonable manner with respect to the interpretation and application
of the provisions of this Agreement.
18. CONSTRUCTION.
This Agreement shall be deemed drafted equally by both the parties. Its
language shall be construed as a whole and according to its fair meaning. Any
presumption or principle that the language is to be construed against any party
shall not apply. The headings in this Agreement are only for convenience and are
not intended to affect construction or interpretation. Any references to
paragraphs, subparagraphs, sections or subsections are to those parts of this
Agreement, unless the context clearly indicates to the contrary. Also, unless
the context clearly indicates to the contrary, (a) the plural includes the
singular and the singular includes the plural;
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(b) "and" and "or" are each used both conjunctively and disjunctively; (c)
"any," "all," "each," or "every" means "any and all," and "each and every"; (d)
"includes" and "including" are each "without limitation"; (e) "herein,"
"hereof," "hereunder" and other similar compounds of the word "here" refer to
the entire Agreement and not to any particular paragraph, subparagraph, section
or subsection; and (f) all pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the entities or persons referred to may require.
19. ARBITRATION.
Any controversy arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or
misrepresentation in connection with any of its provisions, or any other
controversy arising out of the Executive's employment by the Company, including,
but not limited to, any state or federal statutory claims, shall be submitted to
arbitration in Los Angeles County, California, before a sole neutral arbitrator
(the "Arbitrator"), mutually selected and agreeable to both parties and selected
from Judicial Arbitration and Mediation Services, Inc., Los Angeles 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 Sections 1280 et seq. as the exclusive forum
for the resolution of such dispute; provided, however, that provisional
injunctive relief (including, but not limited to, temporary restraining orders
and preliminary injunctions) may, but need not, be sought by either party to
this Amended Agreement in any court of competent jurisdiction while arbitration
proceedings are pending, and any provisional injunctive relief granted by such
court shall remain effective until the matter is finally determined by the
Arbitrator; no bond or other security shall be required in connection therewith.
Final resolution of any dispute through arbitration may include any remedy
or relief that the Arbitrator deems just and equitable, including any and all
remedies provided by applicable state or federal statutes. At the conclusion of
the arbitration, the Arbitrator shall issue a written decision that sets forth
the essential findings and conclusions upon which the Arbitrator's award or
decision is based. Any award or relief granted by the Arbitrator hereunder shall
be final and binding on the parties hereto and may be enforced by any court of
competent jurisdiction.
The parties acknowledge and agree that they are hereby waiving any rights
to trial by jury in any action, proceeding or counterclaim brought by either of
the parties against the other in connection with any matter whatsoever arising
out of or in any way connected with this Amended Agreement or the services
rendered hereunder. The parties agree that the Company Shall be responsible for
payment of the forum costs of any arbitration hereunder, including the
Arbitrator's fee. The Executive and the Company further agree that in any
proceeding to enforce the terms of this Amended Agreement, the prevailing party
shall be entitled to its or her reasonable attorneys' fees and costs (other than
forum costs associated with the arbitration) incurred by it or him in connection
with resolution of the dispute up to a maximum of Fifty Thousand Dollars
($50,000.00) in addition to any other relief granted.
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20. ENFORCEMENT.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a portion of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
21. WITHHOLDING.
The Company shall be entitled to withhold from any amounts payable under
this Agreement any federal, state, local or foreign withholding or other taxes
or charges which the Company is required to withhold. The Company shall be
entitled to rely on an opinion of counsel if any questions as to the amount or
requirement of withholding shall arise.
22. INDEMNIFICATION.
The Company agrees that (a) if the Executive is made a party, or is
threatened to be made a party, to any threatened or actual action, suit or
proceeding whether civil, criminal, administrative, investigative, appellate or
other (a "Proceeding") by reason of the fact that he is or was a director,
officer, employee, agent, manager, consultant or representative of the Company
or (b) if any claim, demand, request, investigation, controversy, threat,
discovery request or request for testimony or information (a "Claim") is made,
or threatened to be made, that arises out of or relates to the Executive's
service in any of the foregoing capacities, then the Executive shall promptly be
indemnified and held harmless by the Company to the fullest extent permitted by
the laws of the state of incorporation of the Company, against any and all
costs, expenses, liabilities and losses incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even if he has ceased to be a director, member, employee, agent,
manager, consultant or representative of the Company and shall inure to the
benefit of the Executive's heirs, executors and administrators. The Company may
assume the defense of any Proceeding or Claim with counsel selected by the
Company and reasonably satisfactory to the Executive and, if it does so, the
Executive shall not be entitled to be reimbursed for any separate counsel he may
retain in connection with such Proceeding or Claim.
Neither the failure of the Company (including its Board, independent legal
counsel or stockholders) to have made a determination in connection with any
request for indemnification that the Executive has satisfied any applicable
standard of conduct, nor a determination by the Company (including its Board,
independent legal counsel or stockholders) that the Executive has not met any
applicable standard of conduct, shall create a presumption that the Executive
has not met an applicable standard of conduct.
During the period of Employment and for a period of time thereafter
determined as provided below, the Company shall keep in place a directors and
officers' liability insurance
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policy (or policies) providing coverage, or such coverage may be provided under
a policy that provides coverage to Onex Corporation or Onex Partners LP and
their affiliates, to the Executive if and to the extent that the Company
provides such coverage to its directors and such coverage (or other directors
and officers liability insurance coverage) shall continue after the termination
of the Period of Employment if and for the period of time that such coverage is
extended to the Company's former director, other than former directors who are
employees of Onex Corporation, Onex Partners LP or their affiliates.
23. COOPERATION IN LITIGATION.
The Executive promises and agrees that, following the date his employment
by the Company terminates, he will reasonably cooperate with the Company in any
litigation in which the Company is a party or otherwise involved which arises
out of events occurring prior to the termination of his employment, including
but not limited to, serving as a consultant (at a reasonable hourly rate) or
witness and producing documents and information relevant to the case or helpful
to the Company.
24. EMPLOYEE ACKNOWLEDGEMENT.
The Executive acknowledges that he has read and understands this Agreement,
is fully aware of its legal effect, has not acted in reliance upon any
representations or promises made by the Company other than those contained in
writing herein, and has entered into this Agreement freely based on his own
judgment.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
SKILLED HEALTHCARE GROUP, INC.
By:
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Name: Boyd W. Hendrickson
Title: Chief Executive Officer
EXECUTIVE
By:
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Name: John E. King
[SIGNATURE PAGE -- EMPLOYMENT AGREEMENT]
ANNEX A