EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") dated as of May 13, 2002,
is between Xxxx X. Xxxxxx (the "Executive") and Mariner Health Care Management
Company, a Delaware corporation (the "Company").
WHEREAS, the Company has employed the Executive as SVP, Treasurer and
wishes to redefine the terms of the Executive's employment with the Company and
the Executive desires to accept such employment, for the term and upon the other
conditions hereinafter set forth; and
WHEREAS, as a condition of entering into this Agreement, the Executive
agrees to waive the Executive's rights, if any, against the Company and any
predecessor company or any affiliate of the foregoing under any employment
agreement between the Executive and the Company or any such predecessor company
or affiliate; 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. This Agreement shall constitute a binding
agreement between the parties as of the date hereof (the "Effective Date").
2. Term. Subject to the provisions of Section 10 of this
Agreement, this Agreement shall commence on the Effective Date and shall
continue during the period in which the Executive remains employed by the
Company (the "Term"). The Executive shall be considered an at-will employee and
his employment may be terminated by either party subject to the obligations of
the parties upon such termination as may be set forth hereinafter.
3. Position. During the Term, the Executive shall serve as SVP,
Treasurer 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 shall, on a full time basis, use the Executive's skills and render
services to the best of the Executive's abilities in supervising and conducting
the operations 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
also perform such other executive and administrative duties (not inconsistent
with the position of SVP, Treasurer) 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 or the Chief Executive Officer. 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. Salary and Annual Bonus.
(a) Base Salary. The Executive's base salary hereunder
shall be $325,000 a year, payable no less frequently than monthly and
prorated for any partial year of employment. The Board shall review
such base salary at least annually and may increase, but not decease,
such base salary as it may deem advisable.
(b) Annual Bonus. The Company shall provide the Executive
with an opportunity to earn upon achievement of target performance
goals, an annual bonus equal to sixty percent (60%) of the Executive's
base salary (the "Target Bonus").
6. Vacation, Holidays and Sick Leave. During the Term, the
Executive shall be entitled to paid vacation, paid holidays and sick leave in
accordance with the Company's standard policies for its senior executive
officers.
7. Business Expenses. The Executive shall be reimbursed for all
ordinary and necessary business expenses incurred by the Executive in connection
with the Executive's 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.
8. Pension and Welfare Benefits. During the Term, the Executive
shall be eligible to participate fully in all health benefits, insurance
programs, pension and retirement plans and other employee benefit and
compensation arrangements, as in effect from time to time, available to senior
executive officers of the Company generally.
9. Stock Options On the Effective Date, the Company shall cause
Mariner Health Care, Inc. (the "Parent") to grant to the Executive, pursuant to
the terms of the Mariner Health Care, Inc. 2002 Stock Incentive Plan (the "2002
Plan"), options to purchase 65,000 shares of common stock of the Parent, all of
which shall have such terms and be subject to such conditions as are set forth
in the form of Stock Option Agreement promulgated under the 2002 Plan.
Thereafter, the Board of Directors of the Parent or the Compensation Committee
thereof, may grant to the Executive such other and additional awards under the
2002 Plan as may from time to time be deemed appropriate.
10. Termination of Employment.
(a) General. The Executive's employment hereunder may be
terminated without any breach of this Agreement only under the
following circumstances.
(b) Death or Disability.
(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 or
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her job for one hundred eighty (180) days (whether or not
consecutive) during any period of eighteen (18) consecutive
months, and no reasonable accommodation can be made that will
allow Executive to perform his or her 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 Executive's employment hereunder at any time, whether or not for
Cause. For purposes of this Agreement, "Cause" shall mean (i) continued
failure by the Executive to substantially perform the duties
contemplated by Section 4 hereof, which failure is not remedied within
twenty (20) days after a written notice of such failure is delivered to
the Executive by the Company, which notice identifies with
particularity the manner in which the Company believes that the
Executive has failed to perform his duties under Section 4 of this
Agreement; (ii) the conviction (after exhausting all appeals) of the
Executive of, or the entering of a plea of nolo contendere by, the
Executive with respect to a felony; (iii) Executive's willful
malfeasance or willful misconduct in connection with Executive's duties
hereunder or any willful act or willful omission which is materially
injurious to the financial condition or business reputation of the
Company or any significant subsidiary; or (iv) Executive's breach of
the provisions of Section 14 of this Agreement.
Action or inaction by Executive shall not be considered
"willful" unless done or omitted by Executive intentionally and without
Executive's reasonable belief that Executive's action or inaction was
in the best interests of the Company, and shall not include failure to
act by reason of total or partial incapacity due to physical or mental
illness. The cessation of employment of the Executive shall not be
deemed to be for Cause unless prior to such termination there shall
have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the
disinterested membership of the Board of Directors at a meeting of such
Board of Directors called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before such Board of
Directors), finding, that, in the good faith opinion of the Board of
Directors, the Executive is guilty of the conduct described in clause
(i), (ii) (iii) or (iv) above, and specifying the particulars thereof
in detail.
(d) Termination by the Executive. The Executive shall be
entitled to terminate his or her employment hereunder (A) upon sixty
(60) days' prior written notice, for Good Reason or (B) if his or her
health should become impaired to an extent that makes his or her
continued performance of his or her duties hereunder hazardous to his
or her 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.
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For purposes of this Agreement, "Good Reason" shall mean any
one of the following acts by the Company, or failures by the Company to
act, occurring during a Potential Change of Control or on or within one
year following a Change of Control, 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:
(i) any material diminution in the Executive's
authorities or responsibilities (including reporting
responsibilities) or from his or her title or position without
the Executive's express written consent to accept any such
change; the assignment to him or her of any duties or work
responsibilities which are inconsistent with such status,
title, position or work responsibilities; or any removal of
the Executive from, or failure to reappoint or reelect him or
her to any of such positions, except if any such changes are
because of Disability, resignation, death or termination by
the Company with Cause;
(ii) the relocation of the Executive's office at
which the Executive is to perform the Executive's duties, to a
location more than fifty (50) miles from the location at which
the Executive previously performed the Executive's duties,
except for required travel on the Company's business to an
extent substantially consistent with the Executive's business
travel obligations prior to the Effective Date;
(iii) 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 was participating immediately prior to
the Effective Date, unless the Executive participates after
the Effective Date in employee benefit plans generally
available to senior executives of the Company;
(iv) 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 twenty (20) days after notice of such
noncompliance has been given by the Executive to the Company;
(v) any cessation of his or her status, title,
position or responsibilities (including reporting
responsibilities) as an officer of, Mariner Health Care, Inc.,
without the Executive's express written consent to accept any
such change;
(vi) the failure of the Company to have the right
through management agreements to manage the operations of at
least seventy (70%) percent of the facilities operated by the
operating subsidiaries of Mariner Health Care, Inc. unless the
Executive's authority, duties and responsibilities over such
operations remain undiminished through other means; or
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(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 10(f)
below; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's continued employment for ninety (90) days 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 his or her position with the Company or terminate his or
her employment for other than Good Reason during the Term, the
Executive shall give sixty (60) days written notice to the Company
("Notice Period"), specifying the date as of which his or her
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 Company reserves the
right to accelerate the Date of Termination by giving the Executive
prior written notice
(f) Notice of Termination. Any purported termination of
the 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 17. "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 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 or termination by the Company for Cause, the
date Notice of Termination is given, (iii) if the Executive's
employment is terminated pursuant to Subsection (d) or (e) hereof or
for any other reason (other than death, Disability or by the Company
for Cause), 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 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) Mariner Health Care, Inc. (the "Parent"),
the Company or any of its subsidiaries, (2) any trustee or
other fiduciary holding securities under an employee benefit
plan of the Parent 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
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the stockholders of the Parent in substantially the same
proportions as their ownership of the Parent's common stock or
(5) any of Oaktree Capital Management, LLC, Xxxxxxx Xxxxx
Credit Partners, LP, Foothill Partners, LP, Highland Capital
Management, LP or their respective affiliates (each a "Bank
Permitted Holder" and (1) through (5), collectively, the
"Permitted Holders"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Parent representing more than
25% of the combined voting power of the Parent's then
outstanding voting securities;
(ii) during any period of not more than two (2)
consecutive years, not including any period prior to the
Effective Date, individuals who at the beginning of such
period constitute the Board of Directors of the Parent (the
"Parent Board"), and any new director (other than a director
designated by a person who has entered into an agreement with
the Parent to effect a transaction described in clause (i),
(iii), or (iv) of this Section 10(h)) whose election by the
Parent Board or nomination for election by the Parent's
stockholders was approved by a vote of at least a majority 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 consummation of a merger or
consolidation of the Parent with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Parent 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 Parent or such
surviving or parent entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation in
which no persons (other than the Permitted Holders) acquire
25% or more of the combined voting power of the Parent's or
such surviving or parent entity's then outstanding securities;
(iv) the consummation of a plan of complete
liquidation of the Parent or an agreement for the sale or
disposition by the Parent of at least a majority of the assets
of the Parent and its operating subsidiaries, taken as a whole
(or any transaction having a similar effect) or the Board, the
Board of Directors of the Parent or the Board of Directors of
one or more of its subsidiaries approve the entering into of
an agreement with one or more unrelated third parties under
which such one or more unrelated third parties are given the
power to control the management or operations of at least a
majority of the assets of the Parent and its subsidiaries,
taken as a whole;
(v) the Parent fails to own outstanding
securities of the Company representing at least 51% of the
voting power and value of the Company; or
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(vi) in the event of the occurrence of a
Potential Change of Control described in Section 11(f)(5) or
(6), the subsequent occurrence at any time thereafter of any
of the following events:
(A) the consummation of a merger or
consolidation of the Company, Parent or any of their
respective affiliates with any other Competitive
Business (as defined in Section 14 hereof) having
gross revenues in excess of 50% of the gross revenues
of the Parent and following such merger or
consolidation, a Bank Permitted Holder whose
acquisition of securities triggered a Potential
Change of Control pursuant to Section 11(f)(5) or (6)
hereof, owns at least 25% of the outstanding voting
securities of the entity resulting from such
combination; or
(B) the acquisition by the Company, Parent
or their affiliates of substantially all of the
assets or securities of any Competitive Business (as
defined in Section 14 hereof) having gross revenues
in excess of 50% of the gross revenues of Parent and
(i) in the case of an acquisition of securities, the
securities acquired represent more than 50% of the
combined voting power of the Competitive Business's
then outstanding voting securities and (ii) following
such acquisition, a Bank Permitted Holder whose
acquisition of securities triggered a Potential
Change of Control pursuant to Section 11(f)(5) or (6)
hereof, owns at least 25% of the outstanding voting
securities of the Company or Parent.
11. Compensation During Disability; Death or Upon Termination.
Notwithstanding any other provision of this Agreement, the provisions of this
Section 11 shall exclusively govern Executive's rights upon termination of
employment with the Company and its affiliates.
(a) During any period that the Executive fails to perform
his or her duties hereunder as a result of incapacity due to a
Disability ("Disability Period"), the Executive shall continue to
receive his or her base salary at the rate then in effect for such
period until his or her employment is terminated pursuant to Section
10(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 or
her death or Disability, the Company shall pay (i) any base salary due
to the Executive under Section 5(a) through the date of such
termination and (ii) an amount equal to the Target Bonus he or she
would have received for the fiscal year that ends on or immediately
after the Date of Termination, assuming the Company achieved the target
level for which a bonus is paid under the plan described in Section
5(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.
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(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 or her 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 within one (1) year following a Change in Control
the Company terminates the Executive's employment without Cause, or the
Executive terminates his or her employment for Good Reason, then
(i) the Company shall pay the Executive his or
her 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) in lieu of any further salary payments to
the Executive for periods subsequent to the Date of
Termination, the Company shall pay as liquidated damages to
the Executive an aggregate amount equal to the product of (A)
the sum of (1) the Executive's base salary at the rate in
effect of the Date of Termination and (2) the greater of (I)
the average of the annual bonuses actually paid to the
Executive by the Company with respect to the two (2) fiscal
years which immediately precede the year in which the Date of
Termination occurs (provided if there was a bonus paid to the
Executive with respect only to one fiscal year that
immediately precedes the year in which the Date of Termination
occurs, then such single year's bonus shall be utilized in the
calculation pursuant to this subclause (I)) and (II) the bonus
the Executive would earn based on the target level of bonus
applicable for the year of termination and (B) the number two
and one-half (2.5);
(iii) the Company shall pay the Executive an
amount equal to the prorated Target Bonus that would have been
paid for the period beginning on the first day of the fiscal
year in which the Date of Termination occurs;
(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 11(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 to the
Company any such benefits actually received by him or her;
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(v) all options, shares of restricted stock,
performance shares and any other equity based awards shall be
and become fully vested as of the Date of Termination; and
(vi) the payments provided for in this Section
11(d) (other than Section 11(d)(iv)) shall be made not later
than the thirtieth (30th) day following the Date of
Termination.
(e) Except as provided in Subsection (f) hereof, if
either prior to or following the first anniversary of a Change of
Control, the Company terminates the Executive's employment without
Cause, then
(i) the Company shall pay the Executive his or
her 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) subject to the Executive's continued
compliance with Section 14 of this Agreement, in lieu of any
further salary payments to the Executive for period subsequent
to the Date of Termination, the Executive shall, for a period
of two and one-half (2 1/2) years from the Date of Termination
(the "Severance Period"), be entitled to continued payment of
the Executive's base salary at the rate in effect as of the
Date of Termination; provided, however, that in the event that
the Executive engages in a Competitive Business, provides
services for pay (including, without limitation, deferred
compensation, equity awards or other property) to a
Competitive Business or obtains a financial interest in a
Competitive Business from the date Executive's employment
hereunder is terminated until the second anniversary of the
Date of Termination, the Executive shall no longer be entitled
to any further payments of Executive's base salary;
(iii) the Company shall pay the Executive his or
her Target 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;
(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) for a period not
to exceed the number of months the Executive will be paid
under Section 11(e)(ii) beginning on the Date of Termination;
(v) benefits otherwise receivable by the
Executive pursuant to clause (iv) of this Section 11(e) shall
be reduced to the extent comparable benefits are actually
received by the Executive from a subsequent employer during
the period
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which the Company is required to provide such benefits, and
the Executive shall report to the Company any such benefits
actually received by him or her; and
(vi) all options, shares of restricted stock,
performance shares and any other equity based awards shall be
and become fully vested as of the Date of Termination.
(f) If during the Term, the Company (i) terminates the
Executive's employment other than for Cause, or the Executive
terminates his or her employment for Good Reason and (ii) the Date of
Termination occurs during the pendency of a Potential Change of
Control, and if a Change of Control occurs before the expiration of the
pendency of the Potential Change of Control during which the Date of
Termination occurred, the Executive shall be entitled to upon such
Change of Control to:
(i) the cash payments that would have been made
under Section 11(d) hereof as if the Date of Termination had
occurred immediately on the date of the Change of Control,
reduced by any other severance, salary continuation or similar
payments previously made to the Executive under Section 11(e)
hereof or otherwise, if any;
(ii) benefit continuation provided for under
Section 11(d) in excess of the benefit continuation to which
he was otherwise entitled;
The payments provided for in this Section 11(f) shall be made
not later than the thirtieth (30th) day following the date of the
Change of Control.
As used in this Subsection (f), a "Potential Change of
Control" shall be deemed to have occurred if:
(1) the commencement of a tender or exchange
offer by any third person (other than a tender or exchange
offer which, if consummated, would not result in a Change of
Control) for twenty percent (20%) or more of the then
outstanding shares of common stock or combined voting power of
the Parent's then outstanding voting securities;
(2) the execution of an agreement by the Parent
or Company, the consummation of which would result in the
occurrence of a Change of Control;
(3) the public announcement by any person
(including the Parent or Company) of an intention to take or
to consider taking actions which if consummated would
constitute a Change of Control other than through a contested
election for directors of the Parent;
(4) the adoption by the Board, as a result of
other circumstances, including circumstances similar or
related to the foregoing, of a resolution to the
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effect that, for purposes of this Agreement, a Potential
Change of Control has occurred; or
(5) the acquisition by a Bank Permitted Holder
of securities of the Company or Parent representing more than
30% of the combined voting power of the Company's or Parent's
then outstanding voting securities; or
(6) the consummation of a merger or
consolidation of the Company or Parent with any other
corporation which is not a Change of Control, but in which a
Bank Permitted Holder acquires 30% or more of the combined
voting power of the Company's, Parent's or such surviving
entity's then outstanding securities.
A Potential Change of Control will be deemed to be pending from the
occurrence of the event giving rise to the Potential Change of Control
until the earlier of the first anniversary thereof or the date the
Board of Directors of the Company determines in good faith that such
events will not result in the occurrence of a Change of Control.
Notwithstanding the foregoing, a Potential Change of Control described
in Subsections (5) or (6) hereof will not end earlier than two (2)
years from the occurrence of the event giving rise to the Potential
Change of Control. It is understood and expressly agreed that a
Potential Change of Control described in Subsections (5) and (6) hereof
will be applicable and given effect only if such Potential Change of
Control is followed by an event described in Section 10(h)(vi) hereof.
(g) If the Executive shall terminate his or her
employment under clause (B) of Section 10(d) or under Section 10(e)
hereof, the Company shall pay the Executive his or her 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 11 by seeking other
employment or otherwise, and, except as provided in Sections 11(e)
hereof, the amount of any payment or benefit provided for in this
Section 11 shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer or by
retirement benefits.
(i) Release. Prior to making any payment pursuant to
Sections 11(e)(ii) and 11(e)(iii), the Company shall have the right to
require the Executive to sign, and the Executive hereby agrees to sign,
an agreement to be bound by the terms of Section 14 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.
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12. Representations and Covenants.
(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 or she
is not a party to any agreement or instrument which would prevent him
or her from entering into or performing his or her duties in any way
under this Agreement. The Executive agrees and covenants that he or she
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.
13. Successors: Binding Agreement.
(a) This Agreement shall not be assignable by Executive.
This Agreement may be assigned by the Company to a person or entity
which is an affiliate or a successor in interest to substantially all
of the business operations of the Company. 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 or her, 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 or her 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 or her 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 or her devisee, legatee or
other designee or, if there is no such designee, to his or her estate.
14. Confidentiality and Non-Competition Covenants.
(a) Executive will not (whether during or after
Executive's employment with the Company) disclose, retain, or use for
Executive's own benefit, purposes or account or the benefit, purposes
or account of any other person, firm, partnership, joint venture,
association, corporation or other business organization, entity or
enterprise other than the Company and any of its subsidiaries or
affiliates, any trade secrets, Company know-how, software developments,
inventions, formulae, technology, designs and drawings or other works
of authorship, or any Company property or confidential information
relating to research, operations, finances, current and proposed
products and services, vendors, customers, advertising, costs,
marketing, trading, investment, sales activities, promotion,
manufacturing processes, or the business and affairs of the Company
generally, or of any subsidiary or affiliate of the Company
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("Confidential Information") without the written authorization of the
Board; provided that the foregoing obligation (i) shall not apply to
information which is not unique to the Company or which is generally
known to the industry or the public other than as a result of
Executive's breach of this covenant or the wrongful acts of others who
were under confidentiality obligations to the Company as to the item or
items involved and (ii) shall survive the termination of Executive's
employment for a period of three years with respect to Confidential
Information that does not qualify as a trade secret and, with respect
to trade secrets, for so long as the information qualifies as a trade
secret. Executive agrees that upon termination of Executive's
employment with the Company for any reason, he will return to the
Company immediately all memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way
relating to the business of the Company, its affiliates and
subsidiaries, except that he may retain only those portions of personal
notes, notebooks and diaries that do not contain Confidential
Information of the type described in the preceding sentence. Executive
further agrees that he will not retain or use for Executive's own
benefit, purposes or account or the benefit, purposes or account of any
other person, firm, partnership, joint venture, association,
corporation or other business designation, entity or enterprise, other
than the Company and any of its subsidiaries or affiliates, at any time
any trade names, trademark, service xxxx, other proprietary business
designation, patent, or other intellectual property used or owned in
connection with the business of the Company or its affiliates.
(b) The Executive covenants and agrees that any
Confidential Information, including any confidential or proprietary
materials, ideas, discoveries, inventions, 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 Executive hereby assigns all of his right,
title and interest in and to any such Confidential Information.
(c) Executive acknowledges and recognizes the highly
competitive nature of the businesses of the Company and its affiliates
and accordingly agrees as follows:
(i) During the Term and, for a period of two (2)
years following the date Executive ceases to be employed by
the Company for any reason (the "Restricted Period"),
Executive will not, whether on Executive's own behalf or on
behalf of or in conjunction with any person, company, business
entity or other organization whatsoever, directly or
indirectly solicit or assist in soliciting in competition with
the Company, the business of any client or prospective client:
(A) with whom Executive had personal contact
or dealings on behalf of the Company during the one
(1) year period preceding Executive's termination of
employment; or
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(B) with whom employees reporting directly
to Executive have had personal contact or dealings on
behalf of the Company during the one year immediately
preceding the Executive's termination of employment;
(ii) During the Term and, for a period of one (1)
year following the date the Executive ceases to be employed by
the Company due to the Executive's resignation without Good
Reason, Executive will not directly or indirectly:
(A) engage in a capacity that involves
duties and responsibilities similar to those duties
and responsibilities performed by Executive on behalf
of the Company or its subsidiaries, in any business
that competes with the business of the Company or its
subsidiaries in any geographical area that is within
15 miles of any geographical area where the Company
or its subsidiaries provide their products or
services (a "Competitive Business");
(B) acquire a financial interest in any
Competitive Business, as an individual, partner,
shareholder, officer, director, principal, agent,
trustee or consultant; or
(C) interfere with, or attempt to interfere
with, business relationships (whether formed before,
on or after the date of this Agreement) between the
Company or any of its affiliates and customers,
clients, suppliers or investors.
(iii) Notwithstanding anything to the contrary in
this Agreement, Executive may, directly or indirectly own,
solely as an investment, securities of any person engaged in
the business of the Company or its affiliates which are
publicly traded on a national or regional stock exchange or on
the over-the-counter market if Executive (i) is not a
controlling person of, or a member of a group which controls,
such person and (ii) does not, directly or indirectly, own 5%
or more of any class of securities of such person.
(iv) During the Restricted Period, Executive will
not, whether on Executive's own behalf or on behalf of or in
conjunction with any person, company, business entity or other
organization whatsoever, directly or indirectly:
(A) solicit or encourage any employee (other
than employees below the administrator level) of the
Company or its affiliates to leave the employment of
the Company or its affiliates; or
(B) hire any such employee who was employed
by the Company or its affiliates as of the date of
Executive's termination of employment with the
Company or who left the employment of the Company or
its affiliates coincident with, or within one year
prior to or after, the termination of Executive's
employment with the Company.
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(d) It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in this
Section 14 to be reasonable, if a final judicial determination is made
by a court of competent jurisdiction that the time or territory or any
other restriction contained in this Agreement is an unenforceable
restriction against Executive, the provisions of this Agreement shall
not be rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if
any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction
cannot be amended so as to make it enforceable, such finding shall not
affect the enforceability of any of the other restrictions contained
herein.
(e) Executive acknowledges and agrees that the Company's
remedies at law for a breach or threatened breach of any of the
provisions of Section 14 would be inadequate and the Company would
suffer irreparable damages as a result of such breach or threatened
breach. In recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any
remedies at law, the Company, without posting any bond, shall be
entitled to cease making any payments or providing any benefit
otherwise required by this Agreement and obtain equitable relief in the
form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be
available.
15. 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
or she 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.
16. 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.
17. 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:
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To the Company at: Mariner Health Care Management Company
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Any notice delivered personally or by courier under this
Section 17 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.
18. 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.
19. 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.
20. Governing Law: Attorney's Fees.
(a) This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without regard to
its conflicts of laws 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.
21. 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 21 shall prohibit the Company from pursuing injunctive or other
equitable relief against the Executive prior to, contemporaneous with, or
16
subsequent to invoking or participating in these dispute resolution processes.
The Company shall pay the cost of the mediator.
22. 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.
23. Withholdings. All payments to the Executive under this
Agreement shall be reduced by all applicable withholding required by federal,
state or local tax laws.
24. 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.
25. Release of Prior Employment Agreement. The Executive hereby
releases the Company and any predecessor company (including GranCare, Inc.,
Living Centers of America, Inc. and Paragon Health Network, Inc.) from all
obligations under any employment agreement entered into by the Executive and the
Company, including any obligation to pay severance or other post-termination
benefits, which shall be upon the execution hereof terminated and of no further
force or effect; provided, however, that in no event shall this release affect
the Executive's rights under any grant or award under any stock option or stock
award plans of the Company and any predecessor company (including GranCare,
Inc., Living Centers of America, Inc. and Paragon Health Network, Inc.).
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
MARINER HEALTH CARE MANAGEMENT COMPANY
BY:
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NAME:
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TITLE:
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EXECUTIVE
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UNCONDITIONAL GUARANTY OF PERFORMANCE
Mariner Health Care, Inc., a Delaware corporation, does hereby
guarantee the prompt performance of all obligations of the Company under this
Agreement and the payment of all amounts owed to the Executive under Section 11
of this Agreement.
MARINER HEALTH CARE, INC.
BY:
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TITLE:
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