Amendment No. 2 to EMPLOYMENT AGREEMENT
EXHIBIT
10.3
Amendment
No. 2
to
THIS
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (“Agreement”) effective as of October
31, 2007, by and between Xxxxxxx X. Xxxxxxx (“Xx. Xxxxxxx”) and
Sun Health Specialty Services, Inc., a New Mexico corporation
(“SHSS”);
WHEREAS,
SHSS is a wholly owned subsidiary of SunBridge Healthcare Corporation
(“SunBridge” or “Company”) which is a wholly owned subsidiary of Sun Healthcare
Group, Inc. (“SHG”);
WHEREAS,
SunBridge and its direct and indirect subsidiaries (collectively, “the LTC
subsidiaries”) provide inpatient services throughout the United
States;
WHEREAS,
SHSS has service agreements with the LTC subsidiaries to provide employees,
including Xx. Xxxxxxx, to the LTC subsidiaries;
WHEREAS,
Xx. Xxxxxxx has been appointed as President and Chief Operating Officer of
SunBridge and SHG Services, Inc., the subsidiary of SHG that is a
holding company for other operating subsidiaries of SHG that are not LTC
subsidiaries; and
WHEREAS,
SHSS and Xx. Xxxxxxx entered into an Employment Agreement dated as of February
28, 2002 and an Amendment No. 1 to Employment Agreement dated as of October
12,
2006 (collectively, the “Employment Agreement”), and they desire to amend the
Employment Agreement with respect to the terms and conditions of Xx. Xxxxxxx’
bonus eligibility, as approved by the Compensation Committee of the Board of
Directors of SHG on February 27, 2007 and, as to the quality of care component
referenced in Schedule A attached hereto, August 22, 2007), as set forth below
(capitalized terms used in this Agreement without definition shall have the
meanings provided in the Employment Agreement).
NOW,
THEREFORE, in consideration of the above recitals and the mutual covenants
and
agreements contained herein, Xx. Xxxxxxx and SHSS agree as follows:
1. Amendment. Schedule
A to the Employment Agreement is amended by deleting it in its entirety and
inserting Schedule A hereto in lieu thereof.
2. Miscellaneous.
|
|
(a)
|
Amendments,
Waivers, Etc. Except as otherwise provided herein,
no provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing
signed by both parties. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with,
any
condition or provision of this Agreement to be performed by such
other
party shall be deemed a waiver of similar or dissimilar provisions
or
conditions at the same or at any prior or subsequent
time.
|
|
|
(b)
|
Entire
Agreement. The Employment Agreement, as amended by
this Agreement, sets forth the entire agreement and understanding
of the
parties hereto
|
1
|
|
with
respect to the matters covered hereby and supersedes all prior agreements
and understandings of the parties with respect to the subject matter
hereof. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have
been
made by either party which are not expressly set forth in the Employment
Agreement, as amended hereby, and the Employment Agreement, as so
amended,
shall supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written,
with
respect to the subject matter hereof. Except for the changes
set forth in Section 1 and Schedule A hereto, the Employment Agreement
shall remain in full force and
effect.
|
|
|
(c)
|
Counterparts. This
Agreement may be executed in one or more counterparts, each of which,
when
so executed and delivered, shall be deemed an original, but all such
counterparts together shall constitute one and the same
instrument.
|
The
parties hereto have executed this
Agreement as of the date first above written.
| /s/ Xxxxxxx X. Xxxxxxx | October 31, 2007 |
|
Xxxxxxx
X. Xxxxxxx
|
Date
|
|
SUN
HEALTH SPECIALTY SERVICES, INC.
|
|
|
By /s/
Xxxxxxx Xxxxxx
|
October
31, 2007
|
|
Its
Vice President
|
Date
|
2
Schedule
A
Xx.
Xxxxxxx’ Bonus for any fiscal year (the “Applicable Fiscal Year”) shall be based
on the criteria set forth below. There are two components
to his Bonus: EBITDA and quality of care. In the
event the EBITDA performance threshold is met as outlined below, his minimum
bonus shall be no less than 10% of his Base Salary for the Applicable Fiscal
Year, and his maximum Bonus shall be no more than 120% of his Base Salary for
the Applicable Fiscal Year.
1. Maximum
Amount. The maximum amount of the Bonus shall be based upon
the earnings before interest, taxes, depreciation and amortization of SHG
(“EBITDA”), as published by SHG in its press release announcing financial
results for the Applicable Fiscal Year, but excluding the effect of actuarial
adjustments for self-insurance for general and professional
liability. The Compensation Committee reserves the right to make
adjustments to the calculation, including the inclusion or exclusion of
discontinued operations and other normalizing adjustments.
The
Compensation Committee shall
establish the EBITDA target each year.The potential amount
of
the Bonus shall be based upon actual EBITDA attained as a percentage
of the target EBITDA as follows: if actual EBITDA is less than 85% of
target EBITDA, the maximum amount of the Bonus (the “Maximum Amount”) will be
zero; if actual EBITDA is 85% of target EBITDA, the Maximum Amount will be
10%
of Base Salary; if actual EBITDA is 100% of target EBITDA, the Maximum Amount
will be 50% of Base Salary (if actual EBITDA is greater than 85% but less than
100% of target EBITDA, the amount will be pro rated between 10% and 50% of
Base
Salary); and if actual EBITDA is 115% (or greater) of target EBITDA, the Maximum
Amount will be 120% of Base Salary (if actual EBITDA is greater than 100% but
less than 115% of target EBITDA, the Maximum Amount will be pro rated between
50% and 120% of Base Salary).
2. EBITDA
Component.
Subject to the provisions of paragraph 3 below, in the event that the Maximum
Amount is greater than zero, then Xx. Xxxxxxx shall be paid 100% of the Maximum
Amount in recognition of the achievement of the EBITDA
target.
3. Quality
of
Care Component. If
the quality of care target is met, the EBITDA Component shall be paid in the
amount determined as set forth above. If the quality of care target
is not met, the Compensation Committee shall deduct such amount of the EBITDA
Component as it determines in its discretion from the amount otherwise
payable. The quality of care target is met if quality of care at
skilled nursing centers operated by the LTC subsidiaries is better than or
equal
to the quality of care at skilled nursing centers of SunBridge’s for-profit peer
group of companies for the Applicable Fiscal Year (or the twelve month period
ending as close as possible to the end of Applicable Fiscal Year for which
data
are available at the time the Compensation Committee considers the amount of
the
Bonus), in each case as measured by the Health Deficiency Index reported by
the
Long Term Care Institute.
4. Timing
of Payment. The Bonus shall be paid to Xx. Xxxxxxx at the
time specified in Section 3(b).
3
