EXHIBIT 10.2
EMPLOYMENT AGREEMENT
Employment Agreement dated as of January 20, 1999 between C. Xxxxxxxxx
Xxxxxx (the "Executive") and Mariner Post-Acute Network, Inc. a Delaware
corporation (the "Company").
WHEREAS, the Company desires to employ the Executive as an Executive
Vice President, and the Executive desires to accept such employment, for the
term and upon the other conditions hereinafter set forth; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions of the employment relationship of the Executive with
the Company;
NOW, THEREFORE, the parties agree as follows:
1. Employment. The Company hereby employs the Executive, and the
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Executive hereby accepts employment with the Company, upon the terms and subject
to the conditions set forth herein.
2. Term. This Agreement shall commence on January 18, 1999 (the
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"Effective Date") and continue for the three-year period (the "Term")
terminating on the third anniversary of the Effective Date, or upon the
Executive's earlier death, disability or other termination of employment
pursuant to Section 13; provided, however, that commencing on the third
anniversary of the Effective Date and on each anniversary thereafter, the Term
shall automatically be extended for one additional year unless, not later than
90 days prior to any such anniversary, either party hereto shall have notified
the other party hereto in writing that such extension shall not take effect.
3. Position. During the Term, the Executive shall serve as Executive
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Vice President of the Company or in such other executive position in the
Company as the Executive shall approve.
4. Duties and Reporting Relationship. During the Term, the Executive
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shall, on a full time basis, use his skills and render services to the best of
his abilities in performing the duties of Executive Vice President of the
Company, and shall not engage in any other business activities except with the
prior written approval of the Board of Directors of the Company (the "Board") or
its duly authorized designee. The Executive shall perform such executive and
administrative duties (not inconsistent with the position of Executive Vice
President) as the Executive may reasonably be expected to be capable of
performing on behalf of the Company, as may from time to time be authorized or
directed by the Board. The Executive agrees to be employed by the Company in all
such capacities for the Term, subject to all the covenants and conditions
hereinafter set forth.
5. Place of Performance. The Executive shall perform his duties and
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conduct his business at the principal executive offices of the Company, except
for required travel on the Company's business.
6. Salary and Annual Bonus.
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(a) Base Salary. The Executive's base salary hereunder shall be
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$500,000.00 a year, payable monthly and prorated for any partial year of
employment. The Board shall review such base salary at least annually and
make such adjustment from time to time as it may deem advisable, but the
base salary shall not at any time be less than $500,000.00 a year.
(b) Annual Bonus.The Company shall provide the Executive with an
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annual bonus plan providing the Executive with an opportunity to earn an
annual bonus equal to between eighty percent (80%) (the "Target Bonus") and
one hundred fifty percent (150%) of his base salary if the Company achieves
for the relevant year certain financial targets established pursuant to
such plan.
7. Vacation, Holidays and Sick Leave. During the Term, the Executive
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shall be entitled to paid vacation, paid holidays and sick leave in accordance
with the Company's standard policies for its executive vice presidents.
8. Business Expenses. The Executive shall be reimbursed for all
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ordinary and necessary business expenses incurred by him in connection with his
employment upon timely submission by the Executive of receipts and other
documentation as required by the Internal Revenue Code and in conformance with
the Company's normal procedures. The Executive shall receive an automobile
allowance of $1,500 per month during the term of this Agreement.
9. Moving Expenses. The Executive shall receive reimbursement for
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moving expenses as provided in Company policy. In addition, upon the permanent
relocation of Executive's family and household to the Atlanta, Georgia, area,
Executive shall receive a one-time payment of $200,000.00.
10. Legal Fees. Executive shall receive reimbursement from the
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Company in an amount equal to fees and expenses charged to him by the law firm
of XxXxxxx & Xxxxx, L.L.P. in connection with its representation of him with
regard to employment matters through January 31, 1999. Company shall reimburse
Executive within thirty (30) days following submission by Executive to Company
of receipts from XxXxxxx & Xxxxx, L.L.P. that set out the amount of fees and
expenses paid by Executive.
11. Pension and Welfare Benefits. During the Term, the Executive
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shall be eligible to participate fully in all health benefits, insurance
programs, pension and retirement plans and other employee benefit and
compensation arrangements available to vice presidents of the Company generally.
12. Stock Options. The Company, pursuant to the terms of its stock
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option plan, may grant to the Executive stock options to purchase a number of
shares of common stock.
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13. Termination of Employment.
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(a) General. The Executive's employment hereunder may be terminated
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without any breach of this Agreement only under the following
circumstances.
(b) Death or Disability.
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(i) The Executive's employment hereunder shall automatically
terminate upon the death of the Executive.
(ii) If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive is unable to perform the
essential functions of his job for any one hundred eighty (180) days
(whether or not consecutive) during any eighteen (18) month period,
and no reasonable accommodation can be made that would allow the
Executive to perform his essential functions, the Company may
terminate the Executive's employment hereunder for any such incapacity
(a "Disability").
(c) Termination by the Company. The Company may terminate the
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Executive's employment hereunder at any time, whether or not for Cause.
For purposes of this Agreement, "Cause" shall mean (i) the failure or
refusal by the Executive to perform his duties hereunder (other than any
such failure resulting from the Executive's incapacity due to physical or
mental illness), which has not ceased within ten (10) days after a written
demand for substantial performance is delivered to the Executive by the
Company, which demand identifies the manner in which the Company believes
that the Executive has not performed such duties, (ii) the engaging by the
Executive in willful misconduct or an act of moral turpitude which is
materially injurious to the Company, monetarily or otherwise (including,
but not limited to, conduct which violates Section 17 hereof) or (iii) the
conviction of the Executive of, or the entering of a plea of nolo
contendere by the Executive with respect to, a felony.
(d) Termination by the Executive. The Executive shall be entitled to
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terminate his employment hereunder (A) for Good Reason, (B) if his health
should become impaired to an extent that makes his continued performance of
his duties hereunder hazardous to his physical or mental health, provided
that the Executive shall have furnished the Company with a written
statement from a qualified doctor to such effect and provided, further,
that, at the Company's request, the Executive shall submit to an
examination by a doctor selected by the Company and such doctor shall have
concurred in the conclusion of the Executive's doctor or (C) without the
Executive's express written consent, any failure by the Company to comply
with any material provision of this Agreement, which failure has not been
cured within ten (10) days after notice of such noncompliance has been
given by the Executive to the Company. For purposes of this Agreement,
"Good Reason" shall mean the occurrence of any one of the following acts by
the Company, or failures by the Company to act, unless, in the case of any
act or failure to act described below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
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(i) any material diminution in the Executive's authorities or
responsibilities (including reporting responsibilities) or from his
status, title, position or responsibilities (including reporting
responsibilities); except if any such changes are because of
Disability, retirement, death or Cause;
(ii) a reduction by the Company in the Executive's base salary
or Target Bonus as in effect on the date hereof or as the same may be
increased from time to time, except for across-the-board salary
reductions similarly affecting all senior executives of the Company
and all senior executives of any Person (as defined in Section
13(h)(i) below) in control of the Company provided in no event shall
any such reduction reduce the Executive's base salary below
$500,000.00;
(iii) the failure by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation;
(iv) the failure by the Company to continue to provide the
Executive with benefits substantially similar in value to the
Executive in the aggregate to those enjoyed by the Executive under any
of the Company's pension, life insurance, medical, health and
accident, or disability plans in which the Executive is participating
during the term of this Agreement;
(v) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 13(f) below; for purposes of this
Agreement, no such purported termination shall be effective; or
(vi) any other material breach of this Agreement by the Company.
Notwithstanding the foregoing, a termination on account of a reason
described in Section 13(d) hereof shall be deemed not to be for Good Reason
unless the Executive (i) gives the Company prior written notice that Good
Reason exists, and (ii) gives the Company the opportunity to cure the
condition that purports to be Good Reason, and (iii) the Company fails to
cure that condition within sixty (60) days after the receipt of such notice
(or, with respect to the failure to make any payment when due to the
Executive within ten (10) days after the receipt of such notice). The
Executive's continued employment for 6 months following any act or failure
to act constituting Good Reason hereunder without the delivery of a Notice
of Termination shall constitute consent to, and a waiver of rights with
respect to, such act or failure to act.
(e) Voluntary Resignation. Should the Executive wish to resign from
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his position with the Company or terminate his employment for other than
Good Reason during the Term, the Executive shall give sixty (60) days
written notice to the Company ("Notice Period"), setting forth the reasons
and specifying the date as of which his resignation is to become effective.
During the Notice Period, the Executive shall cooperate fully with the
Company in achieving a smooth transition of the Executive's duties and
responsibilities to such person(s) as may be designated by the Company. The
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Company reserves the right to accelerate the Date of Termination by giving
the Executive notice and payment of amounts due to the Executive under
Section 6(a) and, to the extent applicable, Section 6(b) for the balance of
the Notice Period. The Company's obligation to continue to employ the
Executive or to continue payment of the amounts described in the preceding
sentence shall cease immediately if: (1) the Executive has not satisfied
his obligations to cooperate fully with a smooth transition or (2) the
Company has grounds to terminate the Executive's employment immediately for
Cause.
(f) Notice of Termination. Any purported termination of the
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Executive's employment by the Company or by the Executive shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 21. "Notice of Termination" shall mean a notice
that shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(g) Date of Termination. "Date of Termination" shall mean (i) if the
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Executive's employment is terminated because of death, the date of the
Executive's death, (ii) if the Executive's employment is terminated for
Disability, the date Notice of Termination is given, (iii) if the
Executive's employment is terminated pursuant to Subsection (c), (d) or (e)
hereof or for any other reason (other than death or Disability), the date
specified in the Notice of Termination which shall not be less than sixty
(60) days from the date such Notice of Termination is given.
(h) Change in Control. For purposes of this Agreement, a Change in
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Control of the Company shall have occurred if
(i) any "Person" (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the "Exchange Act") as modified and used in
Sections 13(d) and 14(d) of the Exchange Act (other than (1) the
Company or any of its subsidiaries, (2) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
any of its subsidiaries, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, (4) any
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
the Company's common stock or (5) Apollo Management, LAP, any of its
affiliates and any investments funds managed by it (collectively,
"Apollo"))), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing more than 50% of the combined voting power
of the Company's then outstanding voting securities;
(ii) during any period of not more than two (2) consecutive
years, not including any period prior to the date of this Agreement,
individuals who at the beginning of such period constitute the Board,
and any new director (other than a director designated by a person
(other than Apollo) who has entered into an agreement with the Company
to effect a transaction described in clause (i), (iii),
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or (iv) of this Section 13(h)) whose election by the Board or
nomination for election by the Company's stockholders was (A) made
pursuant to the Stockholders Agreement affecting the Company dated
November 4, 1997, or (B) approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
both (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent entity)
50% or more of the combined voting power of the voting securities of
the Company or such surviving or parent entity outstanding immediately
after such merger or consolidation or (B) a merger or consolidation in
which no person acquires 50% or more of the combined voting power of
the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets (or
any transaction having a similar effect) other than such a sale or
disposition to Apollo.
(i) Return of Property. When the Executive ceases to be employed by
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the Company, the Executive will promptly surrender to the Company all
Company property, including, without limitation, all records and other
documents obtained by him or entrusted to him during the course of his
employment with the Company, provided, however, that the Executive may
retain copies of such documents as necessary for the Executive's personal
records for federal income tax purposes.
14. Compensation During Disability; Death or Upon Termination.
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(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("Disability Period"), the Executive shall continue to receive his base
salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 13(b)(ii) hereof, provided that payments so
made to the Executive during the Disability Period shall be reduced by the
sum of the amounts, if any, payable to the Executive with respect to such
period under disability benefit plans of the Company or under the Social
Security disability insurance program, and which amounts were not
previously applied to reduce any such payment.
(b) If the Executive's employment is terminated by his death or
Disability, the Company shall pay (i) any base salary due to the Executive
under Section 6(a) through the date of such termination and (ii) an amount
equal to the Target Bonus he would have
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received for the fiscal year that ends on or immediately after the Date of
Termination, assuming the Company achieved the lowest target level for
which a bonus is paid under the plan described in Section 6(b), prorated
for the period beginning on the first day of the fiscal year in which
occurs the Date of Termination through the Date of Termination. In
addition, if the Executive's employment is terminated by his death, the
Company shall continue to pay to his devisee, legatee or other designee or,
if there is no such designee, to his estate, his salary for an additional
six months at the rate then in effect.
(c) If the Executive's employment is terminated by the Company for
Cause or by the Executive for other than Good Reason, the Company shall pay
the Executive his base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, and the Company shall
have no further obligations to the Executive under this Agreement.
(d) If, following a Change in Control, (A) the Company terminates the
Executive's employment without Cause, or (B) the Executive terminates his
employment for Good Reason, then
(i) the Company shall pay the Executive his base salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given and all other unpaid amounts, if any,
to which the Executive is entitled as of the Date of Termination under
any compensation plan or program of the Company, at the time such
payments are due;
(ii) the Company shall pay the Executive two and one-half times
(1) his base salary at the rate in effect of the Date of Termination
plus (2) his Target Bonus at the rate in effect as of the Date of
Termination;
(iii) if it is determined that the Company has met financial
objectives established pursuant to its Incentive Compensation Plan and
to pay bonuses to eligible employees for the fiscal year within which
the Date of Termination occurs, the Company shall pay the Executive,
as long as the Executive is otherwise eligible for such payment, his
bonus prorated for the period beginning on the first day of the fiscal
year in which occurs the Date of Termination through the Date of
Termination, payable at the same time and in the same manner as the
Company customarily pays other bonuses;
(iv) the Company shall continue coverage for the Executive, on
the same terms and conditions as would be applicable if the Executive
were an active Employee, under the Company's life insurance, medical,
health and similar welfare benefit plans (other then group disability
benefits) for a period of thirty-six (36) months. Benefits otherwise
receivable by the Executive pursuant to this Section 14(d)(iv) shall
be reduced to the extent comparable benefits are actually received by
the Executive from a subsequent employer during the period during
which the Company is required to provide such benefits, and the
Executive shall report any such benefits actually received by him to
the Company; and
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(v) the payments provided for in this Section 14(d) (other than
Section 14(d)(iv)) shall be made not later than the thirtieth (30th)
day following the Date of Termination, provided, however, that if the
amounts of such payments, and the limitation on such payments set
forth in Section 16 hereof, cannot be finally determined on or before
such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company, of the minimum
amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at
the rate provided in section 1274(b)(2)(B) of the Code (as defined in
Section 18(a))) as soon as the amount thereof can be determined but in
no event later than the sixtieth (60th) day after the Date of
Termination. In the event that the amount of the estimated payments
exceeds the amount determined by the Company within six (6) months
after payment to have been due, such excess shall constitute a loan by
the Company to the Executive, payable no later than the thirtieth
(30th) business day after demand by the Company (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code).
At the time that payments are made under this Section 14(d), the
Company shall provide the Executive with a written statement setting
forth the manner in which such payments were calculated and the basis
for such calculations including, without limitation, any opinions or
other advice the Company has received from outside counsel, auditors
or consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
(vi) If the Executive has not given Notice of Termination for
Good Reason by the later of (A) one (1) year after a Change of
Control, or (B) one (1) year after the occurrence of the act or
failure to act which constitutes Good Reason, the Executive will have
waived his right to exercise his rights under Section 14(d) hereof
with respect to any act or failure to act which constitutes Good
Reason.
(e) If, prior to a Change in Control, (A) the Company terminates the
Executive's employment without Cause, or (B) the Executive terminates his
employment for Good Reason, then
(i) the Company shall pay the Executive his base salary through
the later of (A) the Date of Termination or (B) two years from the
Effective Date, at the rate in effect at the time Notice of
Termination is given and all other unpaid amounts, if any, to which
the Executive is entitled as of the later of (A) the Date of
Termination or (B) two years from the Effective Date under any
compensation plan or program of the Company, at the time such payments
are due;
(ii) if it is determined that the Company has met financial
objectives established pursuant to its Incentive Compensation Plan and
to pay bonuses to eligible employees through the later of (A) the
fiscal year within which the Date of Termination occurs or (B) the
fiscal year in which the second anniversary of
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the Effective Date occurs, the Company shall pay the Executive his
Target Bonus(es) prorated for the period (A) beginning on the first
day of the fiscal year in which occurs the Date of Termination through
the Date of Termination, or (B) beginning on the first day of the
fiscal year in which the second anniversary of the Effective Date
occurs through the second anniversary of the Effective Date, whichever
is later, payable at the same time and in the same manner as the
Company customarily pays other bonuses;
(iii) the Company shall continue coverage for the Executive, on
the same terms and conditions as would be applicable if the Executive
were an active Employee, under the Company's life insurance, medical,
health and similar welfare benefit plans (other then group disability
benefits) for the later of (A) the Date of Termination or (B) two
years from the Effective Date. Benefits otherwise receivable by the
Executive pursuant to this Section 14(e)(iii) shall be reduced to the
extent comparable benefits are actually received by the Executive from
a subsequent employer during the period during which the Company is
required to provide such benefits, and the Executive shall report any
such benefits actually received by him to the Company.
(f) If the Executive experiences a termination under Section 14(d) or
14(e) hereof, until the Executive finds another full-time position or for 6
months, whichever is earlier, the Company shall provide the Executive with
professional outplacement services of the Executive's choosing and shall
reimburse the Executive documented incidental outplacement expenses
directly related to the Executive's job search such as resume mailing,
interview trips, and clerical support, subject to a maximum cost of $10,000
for such outplacement services and incidental expenses. The Executive's
choice of professional outplacement services is subject to the Company's
reasonable prior approval. If the Company has not approved or disapproved
of the Executive's choice within ten (10) business days of receiving notice
of such choice, the Company will be deemed to have given its approval. Any
approval by the Company will be in writing and will state the basis for
such disapproval. The Executive will not be entitled to receive cash in
lieu of the professional outplacement services provided pursuant to this
Section.
(g) If the Executive shall terminate his employment under clause (B)
of Section 13(d) hereof, the Company shall pay the Executive his base
salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, and the Company shall have no further
obligations to the Executive under this Agreement.
(h) The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 14 by seeking other employment or
otherwise, and, except as provided in Sections 14(d)(iv), or 14(e)(iii)
hereof, the amount of any payment or benefit provided for in this Section
14 shall not be reduced by any compensation earned by the Executive as the
result of employment by another employer or by retirement benefits.
(i) Prior to making any payment or providing any benefit pursuant to
Sections 14(d) or 14(e), whichever is applicable, the Company shall have
the right to require the
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Executive to sign, and the Executive hereby agrees to sign, an agreement to
be bound by the terms of Section 17 of this Agreement and a waiver of all
claims the Executive may have (including any claims under the Age
Discrimination in Employment Act), and the Company may withhold payment of
such amount until the period during which the Executive may revoke such
waiver (normally seven days) has elapsed.
15. Representations and Covenants.
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(a) The Company represents and warrants that this Agreement has been
authorized by all necessary corporate action of the Company and is a valid
and binding agreement of the Company enforceable against it in accordance
with its terms.
(b) The Executive represents and warrants that he is not a party to
any agreement or instrument which would prevent him from entering into or
performing his duties in any way under this Agreement. The Executive agrees
and covenants that he will obtain, and submit to, such physical
examinations as may be necessary to facilitate the Company obtaining an
insurance policy for its benefit insuring the life of the Executive.
16. Successors: Binding Agreement.
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(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place.
(b) This Agreement is a personal contract and the rights and
interests of the Executive hereunder may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him, except as otherwise
expressly permitted by the provisions of this Agreement. This Agreement
shall inure to the benefit of and be enforceable by the Executive and his
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Executive should die
while any amount would still be payable to him hereunder had the Executive
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to his
devisee, legatee or other designee or, if there is no such designee, to his
estate.
17. Confidentiality and Non-Competition Covenants.
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(a) The Executive covenants and agrees that he will not at any time
during or at any time after the end of the Term, directly or indirectly,
use for his own account, or disclose to any person, firm or corporation,
other than authorized officers, directors and employees of the Company or
its subsidiaries, Confidential Information (as hereinafter defined) that is
treated as trade secrets by the Company and will not at any time during or
for a period equal to the number of payments which are being made under
Section 14(e) hereof directly or indirectly, use for his own account, or
disclose to any person, firm or
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corporation, other than authorized officers, directors and employees of the
Company or its subsidiaries, any other Confidential Information. As used
herein, "Confidential Information" of the Company means information of any
kind, nature or description which is disclosed to or otherwise known to the
Executive as a direct or indirect consequence of his association with the
Company, which information is not generally known to the public or in the
business in which the Company is engaged or which information relates to
specific investment opportunities within the scope of the Company's
business which were considered by the Executive or the Company during the
term of this Agreement. Confidential Information that is treated as
confidential trade secrets by the Company shall include, but not be limited
to, strategic operating plans and budgets, policy and procedure manuals,
computer programs, financial forms and information, patient or resident
lists and accounts, supplier information, accounting forms and procedures,
personnel policies, information pertaining to the salaries, positions and
performance reviews of the Company's employees, information on the methods
of the Company's operations, research and data developed by or for the
benefit of the Company and information relating to revenues, costs, profits
and the financial condition of the Company. During the Term and for a
period of two years following the termination of the Executive's
employment, the Executive shall not induce any employee of the Company or
its subsidiaries to terminate his or her employment by the Company or its
subsidiaries in order to obtain employment by any person, firm or
corporation affiliated with the Executive.
(b) The Executive covenants and agrees that any information,
materials, ideas, discoveries, techniques or programs developed or
discovered by the Executive in connection with the performance of his
duties hereunder shall remain the sole and exclusive property of the
Company and, to the extent it constitutes Confidential Information, shall
be subject to the covenants contained in the preceding paragraph.
(c) The Executive covenants and agrees that during the Term and, if
the Executive's employment is terminated by the Executive for other than
Good Reason, for a period of two (2) years following the termination of the
Executive's employment, the Executive shall not, directly or indirectly,
own an interest in, operate, join, control, or participate as a partner,
director, principal, officer, or agent of, enter into the employment of, or
act as a consultant to, in any case in which he has control or supervision
over a significant portion of any entity (i) whose principal business is
the operation of one or more skilled nursing facilities or (ii) which
operates a skilled nursing business that is material in relation to the
Company's comparable business and (iii) in either case, which derives at
least 10% of its skilled nursing facility revenue from facilities which are
located within 35 miles of centers or facilities operated by the Company.
Notwithstanding anything herein to the contrary, the foregoing provisions
of this Section 15(c) shall not prevent the Executive from acquiring
securities representing not more than 5% of the outstanding voting
securities of any publicly held corporation.
(d) Without limiting the right of the Company to pursue all other
legal and equitable remedies available for violation by the Executive of
the covenants contained in this Section 17, it is expressly agreed by the
Executive and the Company that such other
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remedies cannot fully compensate the Company for any such violation and
that the Company shall be entitled to injunctive relief, without the
necessity of proving actual monetary loss, to prevent any such violation or
any continuing violation thereof. Each party intends and agrees that if in
any action before any court or agency legally empowered to enforce the
covenants contained in this Section 17, any term, restriction, covenant or
promise contained herein is found to be unreasonable and accordingly
unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such
court or agency. The covenants contained in Section 17 shall survive the
conclusion of the Executive's employment by the Company.
18. Prohibition on Parachute Payments.
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(a) Notwithstanding any other provisions of this Agreement, in the
event that at any time on or after the first anniversary of the Effective
Date any payment or benefit received or to be received by the Executive in
connection with a Change in Control of the Company or the termination of
the Executive's employment (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person
whose actions result in a Change in Control or any Person affiliated with
the Company or such Person) (all such payments and benefits, including,
without limitation, base salary and bonus payments, being hereinafter
called "Total Payments") would not be deductible (in whole or in part), by
the Company, an affiliate or any Person making such payment or providing
such benefit as a result of section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), then, to the extent necessary to make such
portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of section 280G of the
Code in such other plan, arrangement or agreement), (A) such cash payments
shall first be reduced (if necessary, to zero), and (B) all other non-cash
payments by the Company to the Executive shall next be reduced (if
necessary, to zero). For purposes of this limitation (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive shall have
effectively waived in writing prior to the Date of Termination shall be
taken into account, (ii) no portion of the Total Payments shall be taken
into account which in the opinion of tax counsel selected by the Company's
independent auditors and reasonably acceptable to the Executive does not
constitute a "parachute payment" within the meaning of section 280G(b)(2)
of the Code, including by reason of section 280G(b)(4)(A) of the Code,
(iii) such payments shall be reduced only to the extent necessary so that
the Total Payments (other than those referred to in clauses (i) or (ii)) in
their entirety constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of the
tax counsel referred to in clause (ii); and (iv) the value of any non-cash
benefit or any deferred payment or benefit included in the Total Payments
shall be determined by the Company's independent auditors in accordance
with the principles of sections 280G(d)(3) and (4) of the Code.
(b) If it is established pursuant to a final determination of a court
or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the
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Executive and the Company in applying the terms of this Section 18, the
aggregate "parachute payments" paid to or for the Executive's benefit are
in an amount that would result in any portion of such "parachute payments"
not being deductible by reason of section 280G of the Code, then the
Executive shall have an obligation to pay the Company upon demand an amount
equal to the sum of (i) the excess of the aggregate "parachute payments"
paid to or for the Executive's benefit over the aggregate "parachute
payments" that could have been paid to or for the Executive's benefit
without any portion of such "parachute payments" not being deductible by
reason of section 280G of the Code; and (ii) interest on the amount set
forth in clause (i) of this sentence at the rate provided in section
1274(b)(2)(B) of the Code from the date of the Executive's receipt of such
excess until the date of such payment.
19. Entire Agreement. This Agreement contains all the understandings
----------------
between the parties hereto pertaining to the matters referred to herein, and on
the Effective Date shall supersede all undertakings and agreements, whether oral
or in writing, previously entered into by them with respect thereto. The
Executive represents that, in executing this Agreement, he does not rely and has
not relied upon any representation or statement not set forth herein made by the
Company with regard to the subject matter, bases or effect of this Agreement or
otherwise.
20. Amendment or Modification. Waiver. No provision of this Agreement
---------------------------------
may be amended or waived unless such amendment or waiver is agreed to in
writing, signed by the Executive and by a duly authorized officer of the
Company. No waiver by any party hereto of any breach by another party hereto of
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.
21. Notices. Any notice to be given hereunder shall be in writing and
-------
shall be deemed given when delivered personally, sent by courier or telecopy or
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently give notice of hereunder in writing:
To Executive at: Mr. C. Xxxxxxxxx Xxxxxx
00000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
To the Company at: Mariner Post-Acute Network, Inc.
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Any notice delivered personally or by courier under this Section 21
shall be deemed given on the date delivered and any notice sent by telecopy or
registered or certified mail, postage prepaid, return receipt requested, shall
be deemed given on the date telecopied or mailed.
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22. Severability. If any provision of this Agreement or the application
------------
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances, other than those to which it is so determined to be
invalid and unenforceable, shall not be affected thereby, and each provision
hereof shall be validated and shall be enforced to the fullest extent permitted
by law.
23. Survivorship. The respective rights and obligations of the parties
------------
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
24. Governing Law: Attorney's Fees.
------------------------------
(a) This Agreement will be governed by and construed in accordance
with the laws of the State of Georgia, without regard to its conflicts of
law principles.
(b) The prevailing party in any dispute arising out of this Agreement
shall be entitled to be paid its reasonable attorney's fees incurred in
connection with such dispute from the other party to such dispute.
25. Dispute Resolution. The Executive and the Company shall not initiate
------------------
legal proceedings relating in any way to this Agreement or to the Executive's
employment or termination from employment with the Company until thirty (30)
days after the party against whom the claim is made ("respondent") receives
written notice from the claiming party of the specific nature of any purported
claims and the amount of any purported damages attributable to each such claim.
The Executive and the Company further agree that if respondent submits the
claiming party's claim to the CPR Institute for Dispute Resolution,
JAMS/Endispute, or other local dispute resolution service for nonbinding
mediation prior to the expiration of such thirty (30) day period, the claiming
party may not institute arbitration or other legal proceedings against
respondent until the earlier of: (a) the completion of good-faith mediation
efforts or (b) 90 days after the date on which the respondent received written
notice of the claimant's claim(s); provided, however, that nothing in this
Section 25 shall prohibit the Company from pursuing injunctive or other
equitable relief against the Executive prior to, contemporaneous with, or
subsequent to invoking or participating in these dispute resolution processes.
The Company shall pay the cost of the mediator.
26. Headings. All descriptive headings of sections and paragraphs in
--------
this Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
27. Withholdings. All payments to the Executive under this Agreement
------------
shall be reduced by all applicable withholding required by federal, state or
local tax laws.
28. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MARINER POST-ACUTE NETWORK, INC.
BY: /s/ Xxxxx X. Xxxxx
----------------------------------
NAME: Xxxxx X. Xxxxx
--------------------------------
TITLE: Chief Executive Officer
-------------------------------
EXECUTIVE
/s/ Xxxxx Xxxxxx
--------------------------------------
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