EXHIBIT 10.26
Final
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Amended
Agreement") is made and entered into as of March 8, 2004 (the "Amendment Date")
by and between Boyd Hendrickson ("Executive") and Skilled Healthcare Group Inc.,
formerly known as Fountain View, Inc., a Delaware corporation (the "Company").
RECITALS
The Company and Executive are parties to that certain Employment
Agreement dated March 2002 ("Original Agreement"), which sets forth certain
terms of employment including provisions concerning an Alternative Equity Bonus
Program.
Pursuant to the Original Agreement, the Company may elect to institute
the Alternative Equity Bonus Program, and the Company and Executive desire to
implement an amended Alternative Equity Bonus Program.
The Company and Executive desire to amend and restate the Original
Agreement to set forth, in full, the understanding of the parties concerning
employment and the amended Alternative Equity Bonus Program to be implemented.
This Amended Agreement shall govern the employment relationship between
the parties from and after the Amendment Date and supersedes and negates all
previous agreements made between the parties, whether written or oral relating
to the Executive's employment relationship with the Company. The Original
Agreement governs the relationship between the parties prior to the Amendment
Date.
AGREEMENT
The Executive and the Company agree as follows:
1. DUTIES.
1.1 RETENTION. The Company shall employ the Executive for the Period of
Employment and the Executive agrees to such employment on the terms and
conditions set forth in this Amended Agreement. The "Period of
Employment" commenced on April 1, 2002 (the "Effective Date") and shall
continue until March 31, 2007, unless earlier terminated pursuant to
Section 4.
1.2 DUTIES, REPORTING. During the Period of Employment, the Executive shall
be employed by the Company as the Company's Chief Executive Officer and
shall have the duties and responsibilities typical of the position of
chief executive officer of a corporation, subject to the legal
directives of the Company's Board of Directors (the "Board"). During
the Period of Employment, the Executive shall report to the Board and
also may be employed by one or more of the Affiliated Entities (as
defined in Section 4.5) as determined by the Board. During the Period
of Employment, the Executive shall use the Executive's best efforts to
promote the interests of the Company and the direct and indirect
subsidiaries of
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the Company (collectively, the "Companies"), and to maximize the value
of the Company, and shall devote the Executive's full business time,
attention and best efforts to their business and affairs. The Company
acknowledges that, as of the Effective Date, the Executive owns (but
does not operate) the long-term care facilities identified on Schedule
1 hereto. The Company agrees that such ownership interests shall not
constitute a breach of this Section 1.2 or Section 5(vi) of this
Amended Agreement by the Executive; provided that (1) the Executive
does not acquire any additional ownership interests in long-term care
facilities, (2) the Executive is not actively involved in the operation
of any of such long-term care facilities, and (3) such ownership
interests do not otherwise materially interfere with the Executive's
duties to the Company hereunder.
1.3 NO BREACH OF CONTRACT. The Executive hereby represents and warrants
that the execution and delivery of this Amended Agreement by the
Executive and the Company and the performance by the Executive of the
Executive's duties hereunder shall not constitute a breach of, or
otherwise contravene, the terms of any employment or other agreement or
policy to which the Executive is a party or otherwise bound.
1.4 LOCATION. The Executive acknowledges that the Company's principal
executive offices are currently located in Foothill Ranch, California.
The Executive shall operate principally out of such executive offices,
as they may be moved from time to time within Southern California. The
Company expects, and the Executive agrees, that the Executive shall be
required to travel from time to time to Company facilities, suppliers
and customers in order to fulfill his duties to the Company.
1.5 BOARD MEMBERSHIP. The Company shall use its reasonable best efforts to
cause the Executive to be elected to the Board. If Bill Scott is no
longer Chairman of the Board, the Company shall also use its reasonable
best efforts to cause Executive to be named the Chairman of the Board.
The Executive agrees to resign his directorship and positions with the
Company when his employment by the Company terminates (regardless of
the reason for such termination).
2. COMPENSATION.
2.1 BASE SALARY. During the Period of Employment, the Executive will
receive a salary at the rate of $450,000 annually (the "Base Salary"),
payable in accordance with the Company's regular payroll practices in
effect from time to time, but not less frequently than in monthly
installments.
2.2 ANNUAL PERFORMANCE BONUS. Executive will be eligible to receive an
annual performance bonus ("Annual Performance Bonus") for each fiscal
year of the Company that ends during the Period of Employment if he is
employed by the Company at the end of that fiscal year. The Annual
Performance Bonus for a fiscal year will be based on a target EBITDA
and patient care/quality goals determined annually by the Company and
other factors identified below. Subject to the following paragraphs of
this Section 2.2, the Executive shall receive an Annual Performance
Bonus for the Company's 2004 fiscal year of $50,000 for each $1 million
that the Company's consolidated EBITDA for that
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fiscal year exceeds $47 million. The Annual Performance Bonus formula,
EBITDA targets, and other bonus factors for subsequent years shall be
determined by the Board.
The Annual Performance Bonus shall not be pro rated for consolidated
EBITDA increments of less than $1 million. Notwithstanding anything
else contained herein to the contrary, the Annual Performance Bonus
shall not exceed $300,000 for any one fiscal year.
For this purpose, "EBITDA" means, for the applicable fiscal year, net
income (or loss) of the Company (after eliminating (x) all
extraordinary items of income or loss and (y) all income or loss
related to non-cash change in interest rate hedge), as reflected in the
Company's financial statements for such fiscal year, plus to the extent
deducted in computing such net income (or loss), without duplication,
(i) all interest and other similar expense in respect of indebtedness
for borrowed money and similar expense in respect of capitalized leases
and preferred stock, plus (ii) all expenses for income taxes (whether
paid, accrued or deferred), plus (iii) depreciation and amortization
expenses, less (iv) interest and other similar income in respect of
money loaned by the Company and deposits of the Company, all of the
foregoing as determined on a consolidated basis for Company and its
Affiliated Entities. EBITDA shall be determined after all compensation
accruals, including all compensation payable to Executive but before
giving effect to any Annual Performance Bonuses payable to Executive or
any other executive officers.
The Annual Performance Bonus for any given year will be paid after the
Company's annual audit for that year is completed and in no event later
than the April 15th of the following year. Executive shall have earned
and will receive the appropriate Annual Performance Bonus if he is
employed by the Company on December 31st of the applicable fiscal year,
regardless of whether he is employed between January 1st and the
payment date in the following year.
The Executive's Annual Performance Bonus opportunity for each fiscal
year (including, without limitation, the 2004 fiscal year) shall be
subject to patient care/quality goals to be established by the Company
for that year and such other performance goals and targets (which may
include, without limitation, cash generation goals and targets) as may
be established by the Company for that year; provided, however, that
any such goals and targets established with respect to the Executive's
Annual Performance Bonus opportunity for a year shall be consistent
with the goals and targets established under the Company's general
employee incentive program for that year.
The Company may make reasonable adjustments to performance goals and
targets (including, without limitation, the EBITDA targets set forth
above) and the Annual Performance Bonus formula with respect to a year
to account for any mergers, reorganizations, acquisitions,
dispositions, recapitalizations, changes in accounting principles or
practices or similar events.
2.3 SALE BONUS. If during the Period of Employment or, if the Period of
Employment terminates before March 31, 2007 as a result of a
termination by the Company without Cause (as defined
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in Section 4.5) or due to the Executive's death or Disability (as
defined in Section 4.5), within nine (9) months following such
termination, either (i) all or substantially all of the Company's
assets are sold ("Asset Sale"), (ii) the Company closes a public
offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the Company to the public and the
Common Stock becomes listed or quoted on a national security exchange
or in the Nasdaq National Market Quotation System (an "IPO"), or (iii)
at least a majority of the Company's then outstanding common stock is
sold in a single transaction or series of substantially related
transactions, and unless otherwise approved by the Company's Board, for
cash or marketable securities ("Stock Sale")(any of an Asset Sale, IPO
or Stock Sale is referred to as a "Trigger Event"), and the Terminal
Equity Value (defined below) of the Company at such Trigger Event is
less than [the minimum Terminal Equity Value], the Company will pay the
Executive a $1,000,000 cash bonus (the "Sale Bonus") at the time of the
consummation of the transaction.
As used in this Amended Agreement, "Terminal Equity Value" shall mean
(i) in the case of an IPO, the equity value of the Company's
outstanding common stock determined based on the public offering price
of the Company's common stock in the IPO and the number of shares of
common stock outstanding immediately prior to the IPO; (ii) in the case
of a Stock Sale, the equity value of the Company's outstanding common
stock determined based on the net proceeds distributable in respect of
the common stock of the Company that is sold in the Stock Sale and the
number of shares of common stock outstanding; and (iii) in the case of
an Asset Sale, the aggregate net proceeds that are or would be
distributable in respect of all outstanding common stock of the Company
assuming that the Company paid off its debt and preferred stock and
debt securities, and liquidated on the Asset Sale, and assuming that
any right, warrant or option to acquire any common stock of the Company
entitled to be exercised is converted immediately prior to the
distribution.
Once a Sale Bonus becomes payable pursuant to this Section 2.3,
Executive shall have no right to any other bonus under this Section 2.3
with respect to any subsequent event or occurrence and no right with
respect to the Restricted Shares granted pursuant to Section 2.4, which
Restricted Shares shall be deemed automatically forfeited and
cancelled.
2.4 RESTRICTED SHARES. The Executive shall be issued, concurrently with the
execution of this Amended Agreement, 39,439 shares of Class B
Non-Voting Common Stock, subject to all of the restrictions set forth
in the Restricted Stock Agreement attached hereto as Exhibit A
("Restricted Stock Agreement"), the terms of which are incorporated
herein by reference. Executive understands and agrees that the
Restricted Shares shall not vest and shall have no value unless and
until certain trigger events occur, including trigger events requiring
a liquidity transaction wherein the Terminal Equity Value of the
Company is equal to or in excess of [the minimum Terminal Equity
Value]. The Restricted Shares are issued in satisfaction of the equity
incentive program contemplated by Section 2.4 of the Original
Agreement.
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3. BENEFITS.
3.1 HEALTH, WELFARE AND FRINGE BENEFITS. During the Period of Employment,
the Executive shall be entitled to participate in all pension, welfare
and fringe benefit plans and programs made available by the Company to
its executive and managerial employees generally, as such plans or
programs may be in effect from time to time. Without limiting the
foregoing, the Executive shall be entitled to participate in a
Company-paid disability plan or program pursuant to which the Executive
shall be entitled to no less than $225,000 if his employment by the
Company terminates due to his Disability during the Period of
Employment.
3.2 EXPENSE REIMBURSEMENT. The Company shall reimburse the Executive for
the reasonable expenses and disbursements incurred by the Executive in
the performance of the Executive's duties for the Company during the
Period of Employment, subject to the Company's employee expense
reimbursement policies in effect from time to time.
3.3 VACATION. During the Period of Employment, the Executive shall receive
four (4) weeks paid vacation per year; provided that the maximum unused
vacation time that the Executive may accrue is eight (8) weeks.
3.4 CAR ALLOWANCE. The Executive shall be entitled to a car allowance of
$750 per month for the Period of Employment.
4. TERMINATION.
4.1 TERMINATION BY THE COMPANY. The Executive's employment by the Company
and the Period of Employment may be terminated at any time by the
Company with Cause (as defined below) or without Cause or in the event
of the death or Disability of the Executive.
4.2 TERMINATION BY THE EXECUTIVE. The Executive's employment by the Company
and the Period of Employment may be terminated at any time by the
Executive.
4.3 BENEFITS UPON TERMINATION. If the Executive's employment by the Company
is terminated during the Period of Employment for any reason by the
Company or by the Executive, the Company shall have no further
obligation to make any payments or provide any benefits to the
Executive except (a) the Company shall pay the Executive any Accrued
Obligations (as defined below), and (b) the Company shall continue for
three months following the termination (one month following the
termination if the Executive resigns) (but in no event after Executive
becomes employed by a new employer) the Executive's medical insurance
as in effect immediately prior to the termination or similar coverage
or reimburse the Executive for similar coverage. Those rights that are
expressly contemplated pursuant to Section 2.3 or pursuant to the
Restricted Stock Agreement to continue following a termination of
employment are outside of the scope of the preceding sentence. If the
Executive resigns on any day other than the last day of a fiscal year
of the Company or if the Executive's employment is terminated by the
Company with Cause, the Executive shall not be entitled to any Annual
Performance Bonus (or pro rated Annual Performance Bonus) for the year
in which his employment terminates.
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If, during the Period of Employment, the Executive's employment is
terminated by the Company without Cause (and other than due to the
Executive's Disability or death), the Executive shall make himself
reasonably available to the Company following such termination for such
transition and other consulting services as the Company may reasonably
request from time to time. If the termination of the Executive's
employment by the Company occurs on or after December 31, 2002, the
Executive's obligation to perform such services, and the Company's
obligation to retain the Executive to perform such services, shall
terminate on the earlier of (1) the second anniversary of the date that
the Executive's employment is terminated by the Company, or (2) March
31, 2007. Notwithstanding the preceding sentence, the Company shall
have no obligation to retain or to continue to retain, as the case
maybe, the Executive as a consultant if the Executive has previously
breached any provision of Section 1.5 or Section 5 hereof. For the
period of such consulting services, the Company shall have the
exclusive right to the Executive's services that relate to any of the
following businesses in any county in which the Company at such time
has any operations: stalled nursing facilities, assisted living
facilities, inpatient or outpatient therapy services, pharmacies,
urological supplies, enteral feeding supplies, and orthodics. For the
period of such consulting services, the Company shall pay the Executive
a monthly consulting fee of $37,500 (pro rated for any partial month of
service). The Company shall initially deposit the full consulting fee
for the entire scheduled consulting period with a third-party escrow
agent reasonably selected by the Company, which escrow agent shall pay
(on behalf of the Company) the monthly consulting fee to the Executive;
provided that the escrow agent shall cease paying the Executive and
shall return any unpaid balance to the Company in the event that the
Company terminates the consulting services due to a breach of Section
1.5 of Section 5 by the Executive. The Company shall be entitled to any
earnings on the escrowed amounts.
If, during the Period of Employment, the Executive's employment is
terminated by the Company without Cause (and other than due to the
Executive's Disability or death), the Company shall, but only as long
as the Executive remains in compliance with the provisions of Sections
1.5 and 5:
(a) pay the Executive a pro-rated Annual Performance
Bonus (based on the Company's consolidated EBITDA for
the fiscal year up until the termination of
employment and a pro-rated EBITDA target) for the
year in which the termination occurs, and
(b) continue for twelve months (as opposed to three
months) following the termination (but in no event
after Executive becomes employed by a new employer)
the Executive's medical insurance as in effect
immediately prior to the termination or similar
coverage or reimburse the Executive for similar
coverage.
4.4 CHANGE OF CONTROL. The Executive shall be deemed to have been
terminated by the Company without Cause for purposes of this Section 4
if the Executive resigns from the Company within six (6) months after a
Change of Control (as defined below) as a result of a diminution of his
Base Salary, the Company's termination of his status as an
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executive officer of the Company, and/or a material diminution in his
duties and/or responsibilities from their level in effect immediately
prior to the Change of Control.
4.5 CERTAIN DEFINED TERMS.
As used herein, "Accrued Obligations" means Base Salary that had
accrued but had not been paid prior to the date of termination, and any
Annual Performance Bonus previously earned but unpaid.
As used herein, "Affiliated Entities" shall mean Skilled Healthcare LLC
and any entity that is controlled by and consolidated with in the
financial statements of either the Company or Skilled Healthcare LLC.
As used herein, "Cause" shall mean the reasonable and good faith
determination by a majority of the Board, that, during the Period of
Employment, any of the following events or contingencies exists or has
occurred:
- the Executive has breached a fiduciary duty to the Company or
any of its Affiliated Entities or breached of any of the
Executive's obligations under Section 5;
- the Executive has been convicted of a felony or misdemeanor
that involves fraud, dishonesty, theft, embezzlement, and/or
an act of violence or moral turpitude, or the Executive has
plead guilty or no contest (or a similar plea) to any such
felony or misdemeanor; or
- the Executed has committed an act or an omission that
constitutes fraud, gross negligence, or willful misconduct in
connection with Executive's employment by the Company or any
of its Affiliated Entities.
As used herein, "Disability" shall mean an illness (mental or physical)
or injury that, in the good faith and reasonable determination of a
majority of the Board, based on the report of a reputable physician
selected jointly by the parties, renders the Executive unable to
perform the Executive's duties for six (6) months during any twelve
(12) month period.
As used herein, "Change of Control" shall mean (i) any time at which
the current holders of Company stock (common and preferred) and their
affiliates do not continue to own, in the aggregate, at least a
majority of the outstanding shares of the Company's common stock and at
which Heritage partners and its affiliates do not collectively
constitute the single largest holder of Company common stock, or (ii)
any sale of all or substantially all of the assets of the Company.
5. CONFIDENTIALITY, NON-SOLICITATION, ETC.
In consideration of the mutual promises contained herein, and to
preserve the goodwill of the Companies, the Executive agrees as
follows:
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(i) The Executive will not at any time, directly or indirectly,
disclose or divulge, except as reasonably required in
connection with the performance of the Executive's duties for
the Company, any Confidential Information (as hereinafter
defined) acquired by the executive during the Executive's
affiliation with or employment by the Companies. As used
herein, "Confidential Information" means all trade secrets and
all other proprietary or non-public information of a business,
financial, marketing, technical or other nature pertaining to
any of the Companies or their affairs and all information of
others that any of the Companies have agreed not to disclose;
provided, that Confidential Information shall not include any
information which has entered or enters the public domain
through no fault of the Executive or which the Executive is
required to disclose by law or legal process.
(ii) The Executive shall make no use whatsoever, directly or
indirectly, of any Confidential Information, except as
reasonably required in connection with the performance of the
Executive's duties for the Company.
(iii) Upon any of the Companies' request at any time and for any
reason, the Executive shall immediately deliver to the Company
all materials (including all copies) in the Executive's
possession which contain or relate to Confidential
Information.
(iv) All inventions, developments or improvements made by the
Executive, either alone or in conjunction with others, at any
time or at any place during the term of the Executive's
employment by the Company, whether or not reduced to writing
or practice during such term, which relate to the Business (as
defined below), or which were developed or made in whole or in
part using any of the Companies' facilities, shall be the
exclusive property of the Companies. The Executive shall
promptly disclose any such invention, development or
improvement to the Company, and, at the request and expense of
any of the Companies, shall assign a all of the Executive's
rights to the same to the Companies. The Executive shall sign
all instruments necessary for the filing and prosecution of
any applications for or extension or renewals of letters
patent of the United States or any foreign country which any
of the Companies desire to file. "Business" shall mean any
long-term care facility business, assisted living facility
business, pharmacy business and/or therapy business of any of
the Companies.
(v) All copyrightable work by the Executive during the term of the
Executive's employment by the Company which relates to the
Business is intended to be "work made for hire" as defined in
Section 101 of the Copyright Act of 1976, and shall be the
property of the Companies. If the copyright to any such
copyrightable work is not the property of the Companies by
operation of law, the Executive will, without further
consideration, assign to the Companies all right, title and
interest in such copyrightable work and will assist the
Companies and their nominees in every way, at the Companies'
expense, to secure, maintain and defend for the Companies'
benefit copyrights and any extensions and renewals thereof on
any and all such work including translations thereof in any
and all countries, such
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work to be and to remain the property of the Companies whether
copyrighted or not.
(vi) The Executive will not directly or indirectly, individually or
as a consultant to, or executive, officer, director,
stockholder, partner or other owner or participant in any
business entity, engage in or assist any other person to
engage in the businesses of skilled nursing facilities,
assisted living facilities, inpatient or outpatient therapy
services, pharmacies, urological supplies, enteral feeding
supplies and orthodics, in each instance in any county in
which the Company at such time has any operations; provided,
however, that the Executive may own not more than a 5% equity
interest in any publicly-traded company.
(vii) The Executive will not directly or indirectly, individually or
as a consultant to, or as employee, officer, director,
stockholder, partner or other owner or participant in any
business entity other than the Companies, (a) solicit or
endeavor to entice away from any of the Companies, or
otherwise materially interfere with the business relationship
of any of the Companies with, any person who is, or was within
the six-month period immediately prior to the termination of
the Executive's employment with the Company, employed by, a
consultant to or associated with any of the Companies, or (b)
materially interfere with the business relationship of any of
the Companies with any person or entity who is, or was within
the two-year period immediately prior to the termination of
the Executive's employment with the Company, a supplier to any
of the Companies.
(viii) The Executive agrees that if the Executive, individually or as
a consultant to, or as an employee, officer, director,
stockholder, partner or other owner or participant in any
business entity other than the Companies, is directly involved
in the hiring or employing of any person who is or was
employed by, a consultant to or associated with any of the
Companies within one year prior to the employ or hiring of
such person, then for each such person the Executive shall pay
to the Company a lump sum equal to nine (9) months of that
person's most recent salary from the Companies, payable on the
first date of that person's employ or hiring, whichever is
first, plus the Company's reasonable attorneys' fees incurred
to enforce this paragraph. Nothing within this paragraph shall
be construed to limit or modify in any way the Executive's
non-solicitation covenants contained in clause (vii) above.
(ix) Without limiting the remedies available to the Companies and
notwithstanding Section 2.3, the Executive acknowledges that a
breach of any of the covenants contained in this Section 5
could result in irreparable injury to the Companies for which
there might be no adequate remedy at law, and that, in the
event of such a breach or threat thereof, the Companies shall
be entitled to obtain a temporary restraining order and/or a
preliminary injunction and a permanent injunction restraining
the Executive from engaging in any activities prohibited by
this Section 5 or such other equitable relief as may be
required to enforce specifically any of the covenants of this
Section 5.
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(x) The Executive shall at no time make any derogatory or
disparaging remarks about any of the Companies, or any of
their respective officers, directors or principal
stockholders.
(xi) The provisions of this Section 5 shall continue in full force
and effect during the course of the Executive's employment by
the Company and shall further continue in full force and
effect after the Executive's employment by the Company
terminates; provided that (a) the restrictions set forth in
Section 5(vi) shall terminate upon the earlier to occur of (i)
the date that is two years after the Executive's employment by
the Company terminates, or (ii) the last day of the remaining
scheduled portion of the Period of Employment, and (b) the
provisions set forth in Sections 5(vii) and 5(viii) shall
terminate two years after the Executive's employment by the
Company terminates.
6. ASSIGNMENT.
This Amended Agreement is personal in its nature and neither of the
parties hereto shall, without the consent of the other, assign or
transfer this Amended Agreement or any rights or obligations hereunder;
provided, however, that, in the event of a merger, consolidation, or
transfer or sale of all or substantially all of the assets of the
Company with or to any other individual(s) or entity, This Amended
Agreement shall be binding upon and inure to the benefit of such
successor and such successor shall discharge and perform all the
promises, covenants, duties, and obligations of the Company hereunder.
7. GOVERNING LAW.
This Amended Agreement and the legal relations hereby created between
the parties hereto shall be governed by and construed under and in
accordance with the laws of the State of California, without regard to
choice of law provisions thereof.
8. ENTIRE AGREEMENT.
This Amended Agreement embodies the entire agreement of the parties
hereto respecting the matters within its scope. Effective as of the
Amendment Date, this Amended Agreement supersedes and replaces all
prior agreements of the parties hereto on the subject matter hereof,
including without limitation the Original Agreement. The Original
Agreement governs the relationship of the parties prior to the
Amendment Date. Any prior negotiations, correspondence, agreements,
proposals or understandings relating to the subject matter hereof shall
be deemed to be merged into this Amended Agreement and to the extent
inconsistent herewith, such negotiations, correspondence, agreements,
proposals, or understandings shall be deemed to be of no force or
effect. There are no representations, warranties, or agreements,
whether express or implied, or oral or written, with respect to the
subject matter hereof, except as set forth herein.
9. AMENDMENT; WAIVER.
No amendment or waiver of this Amended Agreement or any term, covenant,
or condition hereof shall be binding upon the party against whom
enforcement of such
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amendment or waiver is sought unless it is made in writing and signed
by or on behalf of such party. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be
deemed a waiver of such term, covenant, or condition, nor shall any
waiver or relinquishment of, or failure to insist upon strict
compliance with, any right or power hereunder at any one or more times
be deemed a waiver or relinquishment of such right or power at any
other time or times.
10. NUMBER AND GENDER.
Where the context requires, the singular shall include the plural, the
plural shall include the singular, and any gender shall include all
other genders.
11. SECTION HEADINGS.
The section headings in this Amended Agreement are for the purpose of
convenience only and shall not limit or otherwise affect any of the
terms hereof.
12. SEVERABILITY.
In the event that a court of competent jurisdiction determines that any
portion of this Amended Agreement is in violation of any statute or
public policy, then only the portions of this Amended Agreement which
violate such statute or public policy shall be stricken, and all
portions of this Amended Agreement which do not violate any statute or
public policy shall continue in full force and effect. Furthermore, if
any one or more of the provisions contained in this Amended Agreement
are for any reason held to be excessively broad as to duration,
geographical scope, activity or subject, such provisions shall be
construed by limiting and reducing them so as to be enforceable to the
maximum extent permitted under applicable law.
13. NOTICES.
Any notice or other communication given pursuant to this Amended
Agreement shall be in writing and shall be personally delivered, sent
by overnight courier or express mail, or mailed by first class
certified or registered mail, postage prepaid, return receipt requested
as follows:
(i) if to the Company:
Skilled Healthcare Group, Inc.
27442 Portola Parkway,
Suite 200
Foothill Ranch, California 92610
With copies to:
Independent Subcommittee of the Board
Skilled Healthcare Group, Inc.
27442 Portola Parkway,
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Suite 200
Foothill Ranch, California 92610
and
Heritage Partners, Inc.
30 Rowes Wharf, Suite 300
Boston, MA 02110
Attn: Mark J. Jrolf
(ii) if to Executive:
Boyd Hendrickson
Most current address of record
Either party may change its address set forth above by written notice
given to the other party in accordance with the foregoing. Any notice
shall be effective when personally delivered, two (2) business days
after being delivered to overnight courier or express mail, or five (5)
business days after by first class certified or registered mail,
postage prepaid, return receipt requested.
14. COUNTERPARTS.
This Amended Agreement may be executed in any number of counterparts,
and with counterpart signature pages, each of which shall be deemed an
original and all of which together shall constitute one and the same
instrument.
15. WITHHOLDING TAXES.
The Company may withhold from any amounts payable under this Amended
Agreement such federal, state and local income, employment, or other
taxes as may be required to be withhold pursuant to any applicable law
or regulation.
16. MUTUAL DRAFTING.
Each party has cooperated in the drafting and preparation of this
Amended Agreement. Hence, in any construction to be made of this
Amended Agreement, the same shall not be construed against any party on
the basis that the party was the drafter.
17. RETURN OF PROPERTY.
The Executive agrees to truthfully and faithfully account for and
deliver to the Company all property belonging to the Company or any of
its affiliates which the Executive may receive from or on account of
the Company or its affiliates, and upon the termination of the Period
of Employment, or the Company's demand, the Executive shall immediately
deliver to the Company all such property belonging to the Company or
any of its affiliates.
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18. PROVISIONS THAT SURVIVE TERMINATION.
Except as otherwise provided herein, the provisions of Sections 2.3,
2.4, 4 through 17, 19, 20 and this Section 18 shall survive any
termination of the Period of Employment.
19. 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.
Neither the failure of the Company (including its Board of Directors,
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 of Directors, 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 policy (or policies)
providing comprehensive coverage to the Executive to the extent that
the Company provides such coverage to its directors and such coverage
shall continue after the termination of the Period of Employment for
the period of time that such coverage is extended (or to be extended,
as the case may be) to the Company's former directors.
20. RESOLUTION OF DISPUTES.
Any controversy arising out of or relating to this Amended 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,
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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 may, but need not, be sought by either party to this
Amended Agreement in a court of law 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.
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.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company and the Executive have executed this
Amended Agreement as of the Amendment Date.
THE COMPANY
Skilled Healthcare Group, Inc.,
a Delaware corporation
By: /s/ BOYD HENDRICKSON
------------------------------------
Print Name: Boyd Hendrickson
Title:
---------------------------------
THE EXECUTIVE
----------------------------------------
Boyd Hendrickson
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EXHIBIT A
RESTRICTED STOCK AGREEMENT
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