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EXHIBIT 10.48
SUMMIT CARE CORPORATION
SPECIAL SEVERANCE PAY PLAN
ARTICLE 1.
PURPOSE OF THE PLAN
The Summit Care Corporation Special Severance Pay Plan (the "Plan")
has been established by Summit in connection with, and effective upon the
consummation of, the "Offer," as defined in and, pursuant to the Agreement and
Plan of Merger, dated as of February 6, 1998 (as amended), among Summit,
Fountain View, Inc. ("Fountain View"), FV-SCC Acquisition Corp. ("Acquisition
Corp.") and Heritage Fund II, L.P. The Plan provides for the payment of
severance benefits to Participants whose employment is terminated under the
circumstances described herein. As of the Effective Date, the Plan supersedes
any and all previous severance pay practices, plans or policies of Summit or
any Subsidiary applicable to Participants.
ARTICLE 2.
DEFINITIONS
2.1 "Acquisition Corp." means FV-SCC Acquisition Corp. and any
successor thereto.
2.2 "Administrator" means Summit or any other person or committee
designated in writing by Summit from time to time to perform all or a specified
portion of the duties and responsibilities of the Administrator hereunder.
2.3 "Base Pay" means:
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(a) in the case of a Participant who is compensated on an hourly
basis, his or her monthly base pay, determined as the product of (i) his or her
highest standard hourly rate of pay (excluding overtime, holiday, vacation and
any other special rates of pay -- "Excluded Pay") in effect during the
Measurement Period and (ii) the number of hours he or she is regularly
scheduled to work (excluding Excluded Pay) in a standard work month (determined
on the basis of a regular work year of 2,080 hours), as determined by the
Administrator in its sole discretion; and
(b) in the case of each other Participant, his or her highest
monthly rate of base salary in effect during the Measurement Period.
2.4 "Cause" for termination of a Participant's employment means
such Participant's (i) dishonesty, fraud, willful misconduct or self-dealing;
(ii) breach of fiduciary duty (whether or not involving personal profit); (iii)
failure, neglect or refusal to perform the Participant's duties in any material
respect; or (iv) conviction of a crime involving moral turpitude; provided,
however, that a failure to achieve or meet business objectives as defined by
Summit, Fountain View or a Subsidiary, as applicable, shall not be considered
cause so long as the Participant has devoted his or her best and good faith
efforts and full attention to the achievement of such business objectives.
2.5 "Effective Date" means the date on which the "Offer" as
defined in the Merger Agreement is consummated.
2.6 "Fountain View" means Fountain View, Inc. a Delaware
corporation and, following the consummation of the Merger, parent of Summit.
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2.7 "Good Reason" for termination by a Participant of his or her
employment means the occurrence (without such Participant's express written
consent) of any one of the following acts or failures to act by Summit,
Fountain View or any Subsidiary that employs the Participant, as the case may
be, unless, in the case of any act or failure to act described below, such act
or failure to act is corrected prior to such Participant's Termination Date:
(a) a material diminution in such Participant's title, authorities
or responsibilities from those in effect immediately prior to such termination
or, if greater, those in effect immediately prior to the Effective Date:
(b) a reduction in such Participant's Base Pay as in effect
immediately prior to the Effective Date except for across-the-board pay
reductions similarly affecting all similarly situated employees of Summit and
all similarly situated employees of any entity and/or person then in control of
Summit.
(c) the relocation of such Participant's office at which he or she
is to perform his or her duties to a location that increases his or her one-way
commute by more than 30 miles from his or her commute to the location at which
such Participant performed his or her duties immediately prior to the Effective
Date, except for required travel on Summit's business to an extent
substantially consistent with his or her business travel obligations prior to
the Effective Date; or
(d) the failure to continue to provide such Participant with
benefits substantially similar in value in the aggregate to those enjoyed by
such Participant under Summit's medical, health, accident plans in which such
Participant was participating immediately prior to the Effective Date, unless
such Participant participates from and after the Effective Date in other
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comparable benefit plans generally available to employees of Summit and
employees of any person then in control of Summit.
2.8 "Measurement Period" means, with respect to a Participant, the
period beginning on the Effective Date and ending on such Participant's
Termination Date.
2.9 "Merger" means the merger of Summit with Acquisition Corp.
pursuant to the Agreement and Plan of Merger, dated as of February 6, 1998, as
amended, among Summit, Fountain View, Acquisition Corp. and Heritage Fund II,
L.P.
2.10 "Notice of Termination" means a written notice of termination
indicating the Termination Date and delivered (i) to the Participant in the
case of a termination by Fountain View, Summit or a Subsidiary and, if such
termination is for Cause, specifying in reasonable detail the facts and events
forming a basis for such termination and (ii) to the Administrator in the case
of a termination by the Participant and, if such termination is for Good
Reason, specifying in reasonable detail the facts and events forming a basis
for such termination.
2.11 "Summit" means Summit Care Corporation and any successor
thereto.
2.12 "Participant" means each individual who (i) is employed as of
the day prior to the Effective Date by Summit or a Subsidiary and (ii) is
listed on Exhibits I through VI attached hereto.
2.13 "Severance Pay" means the applicable amount determined under
Section 6.1 which a Terminated Participant will be entitled to receive as
severance benefits under the Plan, subject to the provisions of Article 5.
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2.14 "Subsidiary" means any corporation, partnership, joint venture
or entity, a majority of whose outstanding voting securities is owned, directly
or indirectly, by Summit and any successor thereto.
2.16 "Term of the Plan" means the period commencing on the
Effective Date and ending on the second anniversary of the Effective Date for
Plan Participants.
2.17 "Terminated Participant" has the meaning set forth in Article
5.
2.18 "Termination Date" means the date as of which a Participant's
employment with Summit or a Subsidiary terminates as specified in the
applicable Notice of Termination, which date, in the case of any termination by
Fountain View, Summit or a Subsidiary, other than any such termination for
Cause, shall be thirty (30) days from the date such Notice of Termination is
provided to the Participant and, in the case of any termination by the
Participant, shall be thirty (30) days from the date such Notice of Termination
is provided to the Administrator.
ARTICLE 3.
ADMINISTRATION
The Plan shall be administered by the Administrator.
The Administrator shall have the exclusive authority and
responsibility for all matters in connection with the operation and
administration of the Plan. The Administrator's powers and duties shall
include, but not be limited to, the following: (i) discretionary authority to
interpret and construe the Plan; (ii) discretionary authority to determine
eligibility for benefits under the Plan; (iii) authorizing the payment of all
benefits under the Plan; (iv) authority to engage such
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legal, accounting and other professional services as it may deem proper; and
(v) responsibility for the compilation and maintenance of all records necessary
in connection with the Plan. Decisions by the Administrator shall be final and
binding upon the Company and each Participant, unless arbitrary or capricious.
The Administrator shall be the Plan Administrator of the Plan for
purposes of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Accordingly, it is intended that, insofar as the Administrator acts
in a fiduciary capacity in the performance of any of its duties or obligations
under the Plan, the standards of fiduciary conduct set forth in ERISA shall
apply.
ARTICLE 4.
ELIGIBILITY
Participation in the Plan is limited to those individuals who fall
within the definition of a "Participant" as defined in Section 2.10. No other
individual shall be eligible to participate in the Plan.
ARTICLE 5.
ENTITLEMENT TO BENEFITS
If a Participant's employment with Fountain View, Summit or a
Subsidiary is terminated during the Term of the Plan either (i) by Fountain
View, Summit or a Subsidiary other than for Cause or (ii) by such Participant
for Good Reason (such a Participant referred to herein as a "Terminated
Participant"), such Terminated Participant shall be entitled to receive the
greater of the applicable severance benefits described in Article 6 or the
severance benefits to which
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Terminated Participant is entitled under a then effective severance program of
Fountain View, but not both; provided, however that no such benefits shall be
payable unless and until the Terminated Participant executes a standard form of
general release, substantially in the form attached hereto as Exhibit A, to be
furnished by Fountain View, Summit or a Subsidiary, as applicable, of all
claims arising out of his or her employment with Fountain View, Summit and any
Subsidiary or affiliate thereof, other than claims hereunder or for vested
amounts or benefits under any other applicable plan, policy, payroll practice
or policy of Fountain View, Summit or a Subsidiary.
In the event a Participant's employment is terminated during the Term
of the Plan by Fountain View, Summit or a Subsidiary without delivery of a
Notice of Termination to the Participant, it shall be presumed for purposes of
the Plan that such termination is Without Cause. In the event a Participant's
employment is terminated during the Term of the Plan by the Participant without
delivery of a Notice of Termination to the Administrator, it shall be presumed
for purposes of the Plan that such termination is not for Good Reason.
A Participant whose employment is terminated after the expiration of
the Term of the Plan for any reason shall not be entitled to receive any
benefits hereunder.
ARTICLE 6.
CASH SEVERANCE BENEFITS
6.1 Severance Pay.
(a) Exempt Employees. A Terminated Participant who is classified
as an exempt employee (Exhibits I through V) immediately prior to the Effective
Date will be entitled to receive severance pay under the Plan determined by
taking the maximum number of months of severance
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pay to which the Terminated Participant is entitled as set forth below,
subtracting the number of whole months in the Terminated Participant's
Measurement Period and multiplying the result by the Participant's Base Pay.
Title Prior to Effective Date Severance Pay
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Senior Executives and Related Positions See Exhibit I
Vice President, Regional Vice President or See Exhibit II
Pharmacy President
Title Prior to Effective Date Severance Pay
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Center Administrator, Executive Twelve months
Director or Corporate Main
Office Department Head (Exhibit III)
Directors and Related
Positions (Exhibit IV) Nine months
Other exempt employee (Exhibit V) Six months
(b) Non-Exempt Employees. A Terminated Participant who is
classified as a non-exempt employee (Exhibit VI) immediately prior to the
Effective Date will be entitled to receive severance pay under the Plan
determined by taking the maximum number of months of severance pay to which the
Terminated Participant is entitled as set forth below, subtracting the number
of whole months in the Terminated Participant's Measurement Period and
multiplying the result by the Participant's Base Pay.
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Number of Years of
Service Completed
Prior to Termination Severance Pay
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Less than one Two months
At least one but less than three Three months
At least three but less than five Five months
Five or more Six months
6.2 Manner and Timing of Payment. Severance benefits, if any,
payable under Section 6.1 shall be paid in cash, in a lump sum, less deductions
required by law, within two weeks after execution of the release provided for
in Article 5 above.
ARTICLE 7.
AMENDMENT AND TERMINATION
During the Term of the Plan, Fountain View, Summit and/or Subsidiary
shall have the right to amend the Plan, by resolution of the appropriate Board
of Directors, in a manner that does not and will not, in any way, (i) reduce
any benefits paid or that may become payable hereunder, (ii) modify the
circumstances upon which a Participant is or may become eligible to receive
benefits hereunder, (iii) modify the class of individuals who qualify as
"Participants" hereunder or (iv) otherwise adversely affect the interests of
any Participant hereunder.
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The Plan shall terminate upon expiration of the Term of the Plan;
provided, that the Plan shall continue to be administered in accordance with
its terms until all benefits accrued hereunder as of such expiration date have
been paid and satisfied.
ARTICLE 8.
NOTICES
For the purpose of the Plan, notices and all other communications
provided for in the Plan shall be in writing and shall be deemed to have been
duly given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed, if to a Participant, to the
address on file with the Participant's employer and, if to the Administrator,
to the address set forth below, or to such other address as either the
Participant or the Administrator may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
Chairman
Summit Care Corporation
2600 West Magnolia Blvd.
Burbank, CA 91505
with a copy to:
Senior Vice President, Human Resources
_________________________
_________________________
_________________________
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ARTICLE 9.
CLAIMS PROCEDURE
9.1 Claim for Benefits: Written Notice of Denial. A Participant
may file with the Administrator a written claim for benefits under the Plan.
The Administrator shall, within a reasonable time not to exceed thirty (30)
days, unless special circumstances require an extension of time of not more
than an additional twenty (20) days (in which event a Participant will be
notified of the delay during the first thirty (30) day period), provide
adequate notice in writing to any Participant whose claim for benefits shall
have been denied, setting forth the following in a manner calculated to be
understood by the Participant:
(i) the specific reason or reasons for the denial;
(ii) specific reference to the provision or provisions of the, Plan
on which the denial is based;
(iii) a description of any additional material or information
required to perfect the claim, and an explanation of why such material or
information is necessary; and
(iv) information as to the steps to be taken in order that the
detail of the claim may be reviewed.
9.2 Appeal of Denied Claim. A Participant whose claim for
benefits shall have been denied in whole or in part, may, within thirty (30)
days from the date notice is provided of the denial of the claim (unless the
notice of denial grants a longer period within which to respond), appeal such
denial to the Administrator. During the thirty (30) day appeal period, the
Participant
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may, upon request, review documents pertinent to his or her claim and may
submit written issues and comments to the Administrator. Failure to file such
appeal within the applicable time period shall be a bar to all further
proceedings with respect to the claim.
9.3 Notice of Determination of-Claim upon Appeal. The
Administrator shall notify a Participant of its decision within thirty (30)
days after an appeal is received by the Administrator, unless special
circumstances require an extension of time of not more than an additional
twenty (20) days (in which event a Participant will be notified of the delay
during the first thirty (30) day period). Such decision shall be given in
writing in a manner calculated to be understood by the Participant and shall
include the following:
(i) specific reasons for the decision; and
(ii) specific reference to the provision or provisions of the Plan
on which the decision is based.
9.4 Arbitration. Any dispute or controversy arising under or in
connection with the Plan that cannot be settled through the procedures set
forth in Sections 9.1 through 9.3 hereof shall be first submitted to mediation
administered by the American Arbitration Association ("AAA"). In the event the
dispute or controversy cannot be resolved through mediation, it shall be
settled exclusively by arbitration in the location in which the Participant was
employed immediately prior to the Termination Date by an arbitrator in
accordance with the rules of the AAA in effect at the time of submission to
arbitration. The arbitrator shall be authorized to award to either party to
the arbitration reimbursement for his, her or its reasonable costs and expenses
incurred in any such arbitration if such award of costs is warranted in the
judgment of the
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arbitrator. The arbitrator's authority shall be limited to questions involving
the interpretation and/or application of this Plan. The arbitrator shall not
have authority to add to or modify the Plan or to award relief, monetary or
otherwise, different from or in addition to that provided for by the Plan.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
ARTICLE 10.
GENERAL PROVISIONS
10.1 Waiver; Entire Plan. No waiver by Fountain View, Summit, any
Subsidiary or any Participant at any time of any breach by any other such
person of, or of any lack of compliance with, any condition or provision of the
Plan to be performed by such other person shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or
subsequent time. All other plans, policies and arrangements of Fountain View,
Summit or any Subsidiary in which the Participant participates during the Term
of the Plan shall be interpreted so as to avoid the duplication of benefits
provided hereunder, and each Participant's participation in the Plan shall be
in lieu of his or her rights under any other plan of Fountain View, Summit or
any Subsidiary providing severance benefits of any kind.
10.2 No Right to Employment. Nothing contained in this Plan or any
documents relating to the Plan shall (i) confer upon any Participant any right
to continue in the employ of Fountain View, Summit or any Subsidiary or
affiliate thereof, (ii) constitute any contract or agreement of employment, or
(iii) interfere in any way with the right of Fountain View, Summit or any
Subsidiary to reduce such Participant's compensation, to change the position
held by such Participant, or terminate the employment of such Participant, with
or without Cause.
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10.3 No Assignment of Benefits. No right or interest of any
Participant under the Plan shall be assignable or transferable, in whole or in
part, either directly or by operation of law or otherwise, including, without
limitation, by execution, levy, garnishment, attachment, pledge or in any
manner; no attempted assignment or transfer thereof shall be effective; and no
right or interest of any Participant under the Plan shall be subject to any
obligation or liability of such Participant to any third party. When a payment
is due under the Plan to a Participant who is unable to care for his or her
affairs, payment may be made directly to his or her legal guardian or personal
representative.
10.4 Governing Law. Except to the extent preempted by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California without reference to the principles of conflicts of law.
10.5 Severability; Validity. In the event that a court of
competent jurisdiction determines that any provision of the Plan is in
violation of any statute or public policy, only those provisions of the Plan
that violate such statute or public policy shall be stricken. All provisions
the Plan that do not violate any statute or public policy shall continue in
full force and effect. Further, any court order striking any provision of the
Plan shall modify the stricken terms as narrowly as possible to give as much
effect as possible to the intentions of Summit in establishing the Plan.
10.6 Payroll and Withholding Taxes. Fountain View, Summit or a
Subsidiary, as applicable, shall withhold from any amounts payable to a
Terminated Participant hereunder all
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federal, state, local and other taxes required to be withheld in connection
with the benefits provided hereunder pursuant to any applicable law or
regulation.
10.7 Unfunded Status of the Plan. The Plan shall be unfunded for
purposes of ERISA and the Internal Revenue Code of 1986, as amended. Benefits
under the Plan shall be paid from the general assets of Fountain View, Summit
or a Subsidiary, as applicable.
10.8 Construction of the Plan. The titles to Articles and Sections
are for general information only and the Plan is not to be construed by
reference thereto. As used in the Plan, the masculine pronoun includes the
feminine and, except as may otherwise be apparent from the context, the
singular form includes the plural.
IN WITNESS WHEREOF, Summit has caused this plan document to be
executed by its duly authorized officer, this 6th day of February, 1998.
SUMMIT CARE CORPORATION
By: ____________________________________
Chairman and Chief Executive Officer
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