**Exhibit 10.1****Employment Agreement**     This Employment Agreement dated as of August 14, 2007 (the “Agreement”), is made byand between Skilled Healthcare, LLC., a Delaware limited liability company (together with itsParent and any successor thereto, the “Company”) and Chris Felfe (the “Executive”).**RECITALS**A. It is the desire of the Company to assure itself of the continued services of the Executiveby entering into this Agreement. B. The Executive and the Company mutually desire that Executive provide services to the Companyon the terms herein provided.**AGREEMENT**     NOW, THEREFORE, in consideration of the foregoing and of the respective covenants andagreements set forth below the parties hereto agree as follows:**1.****Employment.** (a) General. The Company shall employ the Executive and the Executive shallenter the employ of the Company, for the period set forth in Section 1(b), inthe position set forth in Section 1(c), and upon the other terms and conditionsherein provided.  (b) Employment Term. The initial term of employment under this Agreement(the “Initial Term”) shall be for the period beginning on August 10, 2007, (the“Effective Date”) and ending on (and including) the first anniversary thereof,unless earlier terminated as provided in Section 3. The employment termhereunder shall automatically be extended for successive one-year periods(“Extension Terms” and, collectively with the Initial Term, the “Term”)unless either party gives written notice of non-extension to the other no later thansixty (60) days prior to the expiration of the then-applicable Term and subject toearlier termination as provided in Section 3.  (c) Position and Duties. The Executive shall serve as the Senior VicePresident of Finance and Chief Accounting Officer of the Company with such customaryresponsibilities, duties and authority as may from time to time be assigned to theExecutive by the Chief Financial Officer, Chief Executive Officer of the Company, theBoard of Directors of the Company or by the Board of Directors of Parent (the“Board”). The Executive shall devote substantially all his working time andefforts to the business and affairs of the Company (which may include service to Parent,the Company and their respective direct and indirect subsidiaries). The Executiveagrees to observe and comply with the rules and policies of the Company as adopted by orunder the authority of the Board from time to time. During the Term, it shall not be aviolation of this Agreement for the Executive to serve on industry trade, civic orcharitable boards or committees and manage his personal investments and affairs, as
 

 
   long as such activities do not materially interfere with the performance of theExecutive’s duties and responsibilities as an employee of the Company. During hisemployment and following termination of his employment with the Company, theExecutive agrees not to disparage the Company, any of its products or practices, orany of its directors, officers, agents, representatives, stockholders or affiliates,either orally or in writing.  (d) Location. The Executive acknowledges that the Company’s principalexecutive offices are currently located at Foothill Ranch, California. The Executiveshall operate principally out of such executive offices, as they may be moved from timeto time within 40 miles of their current location in Foothill Ranch, California. TheCompany expects, and the Executive agrees, that the Executive shall be required totravel from time to time in order to fulfill his duties to the Company.**2.****Compensation and Related Matters.** (a) Annual Base Salary. During the Term, the Executive shall receive a basesalary at a rate of $ 225,000 per annum (the “Annual Base Salary”), which shallbe paid in accordance with the customary payroll practices of the Company, subject toupward adjustment as may be determined by the Board in its discretion.  (b) Annual Bonus. During the Term, the Executive will be eligible toparticipate in an annual performance-based bonus plan that provides an opportunity of30% of the Executive’s pro-rata Annual Base Salary on terms substantially the same asthe bonus plan adopted by the Board for other senior officers of the Company.  (c) Equity Plan. During the Term, and subject to Board approval, theExecutive shall be entitled to participate in the 2007 Equity Award Plan (the“Equity Plan”) of Parent pursuant to which, on the date the Board selects as thegrant date (the “Grant Date”), the Executive shall receive shares of commonstock of Parent, which equal approximately $ 250,000 in value based upon the closingmarket price of the Parent’s publicly traded stock on the Grant Date pursuant to Boarddiscretion and policy. Restricted Stock shall vest as to 25% of the shares granted oneach of the first four anniversaries of the Grant Date, but only to the extent theExecutive remains continuously employed by the Company through the applicable vestingdate.  (d) Benefits. During the Term, the Executive shall be entitled toparticipate in group medical insurance, 401(k) and other standard benefits provided bythe Company, as may be amended from time to time, which are applicable to the SeniorVice Presidents of the Company.  (e) Vacation. During the Term, the Executive shall not participate in anyCompany sponsored vacation plan; however the Executive will be expected to work aminimum of 49 weeks per calendar year which will allow three weeks off with pay. Theminimum work threshold is tied to the calendar year and no rollover is permitted fromone year to the next. Any vacation shall be taken at the reasonable and mutualconvenience of the Company and the Executive. The minimum threshold weeks for the firstpartial calendar year following the Effective Date shall be 18.
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 (f) Expenses. During the Term, the Company shall reimburse the Executive forall reasonable travel and other business expenses incurred by him in the performance ofhis duties to the Company in accordance with the Company’s expense reimbursement policy.  (g) Key Person Insurance. At any time during the Term, the Company shallhave the right to insure the life of the Executive for the Company’s sole benefit. TheCompany shall have the right to determine the amount of insurance and the type ofpolicy. The Executive shall cooperate with the Company in obtaining such insurance bysubmitting to physical examinations, by supplying all information reasonably required byany insurance carrier, and by executing all necessary documents reasonably required byany insurance carrier. The Executive shall incur no financial obligation by executingany required document, and shall have no interest in any such policy.  (h) Annual Review. Approximately every 12 months during the Term, theExecutive and the Company’s Chief Financial Officer, Chief Executive Officer, Board orappropriate committee of the Board shall meet to discuss the Executive’s performance andterms of the Executive’s employment by the Company.**3.****Termination.**    The Term and the Executive’s employment hereunder may be terminated by the Company or theExecutive, as applicable, without any breach of this Agreement only under the followingcircumstances: (a) Circumstances. (i) Death. The Term and the Executive’s employmenthereunder shall terminate upon his death.  (ii) Disability. If the Executive has incurred aDisability, the Company may terminate the Term and the Executive’s employmenthereunder.  (iii) Termination for Cause. The Company may terminate theTerm and the Executive’s employment hereunder for Cause.  (iv) Termination without Cause. The Company may terminatethe Term and the Executive’s employment hereunder without Cause.  (v) Resignation by the Executive. The Executive may resignhis employment and terminate the Term for any reason.  (vi) Non-extension of Term by the Company. The Company maygive notice of non-extension to the Executive pursuant to Section 1(b).  (vii) Non-extension of Term by the Executive. The Executivemay give notice of non-extension to the Company pursuant to Section 1(b). (b) Notice of Termination. Any termination of the Executive’s employment bythe Company or by the Executive under this Section 3 (other than terminationpursuant to paragraph (a)(i)) shall be communicated by a written notice to the
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   other party indicating the specific termination provision in this Agreement reliedupon, and specifying a Date of Termination which, if submitted by the Executive,shall be at least two weeks following the date of such notice (a “Notice ofTermination”). A Notice of Termination submitted by the Company may provide fora Date of Termination on the date the Executive receives the Notice of Termination,or any date thereafter elected by the Company in its sole discretion. (c) Company obligations upon termination. Upon termination of theExecutive’s employment, the Executive (or the Executive’s estate) shall be entitled toreceive the sum of the Executive’s Annual Base Salary through the Date of Terminationnot theretofore paid, any expenses owed to the Executive under Section 2(f), andexcept as otherwise provided herein, any amount accrued and arising from the Executive’sparticipation in, or benefits accrued under any employee benefit plans, programs orarrangements under Section 2(d), which amounts shall be payable in accordancewith the terms and conditions of such employee benefit plans, programs or arrangements,and such other or additional benefits as may be, or become, due to him under theapplicable terms of applicable plans, programs, agreements, corporate governancedocuments and other arrangements of the Company and its parent and subsidiaries(collectively, the “Company Arrangements”).**4.****Severance Payments.** (a) Termination for Cause, Resignation by the Executive, Non-extension of Term bythe Executive or the Company, death or Disability. If the Executive’s employment isterminated pursuant to Section 3(a)(iii) for Cause, pursuant toSection 3(a)(v) for Resignation by the Executive, pursuant to Section3(a)(vii) due to non-extension of the Term by the Executive, or pursuant toSection 3(a)(iv) without cause during the first six months of employment, theExecutive shall not be entitled to any severance payment or benefits. If theExecutive’s employment is terminated pursuant to Section 3(a)(i) as a result ofExecutive’s death or pursuant to Section 3(a)(ii) as a result of the Executive’sDisability, the Company shall, subject to the Executive signing and not revoking, withinsixty days following delivery to Executive, a separation and release agreement in theform attached hereto, (i) pay to the Executive an amount equal to the product of (x) thebonus that the Executive would have earned during the calendar year in which the Date ofTermination occurs, if any, and (y) a fraction, the numerator of which is the number ofdays that elapsed in such calendar year through the Date of Termination and thedenominator of which is 365, payable when bonuses would have otherwise been payable hadthe Executive’s employment not terminated and (ii) in the case of termination pursuantto Section 3(a)(ii) as a result of the Executive’s Disability, pay to theExecutive an amount equal to the excess, if any, of (x) the amount that would have beenpayable to the Executive pursuant to Section 4(b)(i) if the Executive had beenterminated by the Company without Cause pursuant to Section 3(a)(iv) after sixmonths of continuous employment over (y) the present value of the benefits to bereceived by the Executive (or his beneficiaries) under any disability plan sponsored bythe Company or its affiliates (for purposes of this clause (ii) the amounts in (x) and(y) shall be determined by the Company on an after-tax basis to the extent that theirreceipt by the Executive (or his beneficiaries) would be subject to tax and on actuarialassumptions satisfactory to the Company). If the Executive’s
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   employment is terminated pursuant to Section 3(a)(vi) due to non-extension ofthe Term by the Company, the Company shall, subject to the Executive signing and notrevoking, within sixty days following delivery to Executive, a separation and releaseagreement in the form attached hereto at Annex A, (i) pay to the Executive an amountequal to the product of (x) the bonus that the Executive would have earned during thecalendar year in which the Date of Termination occurs, if any, and (y) a fraction,the numerator of which is the number of days that elapsed in such calendar yearthrough the Date of Termination and the denominator of which is 365, payable whenbonuses would have otherwise been payable had the Executive’s employment notterminated and (ii) pay to the Executive, in a lump sum, an amount equal to theAnnual Base Salary that the Executive would have been entitled to receive if theExecutive had continued his employment hereunder for a period of 12 months followingthe Date of Termination.  (b) Termination without Cause. If after continuous employment with theCompany for a period of six months the Executive’s employment shall be terminated by theCompany without Cause pursuant to Section 3(a)(iv) the Company shall, subject tothe Executive signing and not revoking, within sixty days following delivery toExecutive, a separation and release agreement in the form attached hereto: (i) pay to the Executive, in a lump sum, an amount equal to theAnnual Base Salary that the Executive would have been entitled to receive ifthe Executive had continued his employment hereunder for a period of 12 monthsfollowing the Date of Termination;  (ii) pay to the Executive an amount equal to the product of (x) thebonus that the Executive would have earned during the calendar year in whichthe Date of Termination occurs, if any, and (y) a fraction, the numerator ofwhich is the number of days that elapsed in such calendar year through the Dateof Termination and the denominator of which is 365, payable when bonuses wouldhave otherwise been payable had the Executive’s employment not terminated; and  (iii) cover the premium costs for medical benefits under COBRA forthe Executive and, where applicable, his spouse and dependents, life insuranceand disability insurance (all as in effect immediately prior to the Date ofTermination) for a period of 12 months following the Date of Termination. (c) Survival. The expiration or termination of the Term shall not impair therights or obligations of any party hereto, which shall have accrued prior to suchexpiration or termination.  (d) 409A. Notwithstanding anything to the contrary in this Section 4, nopayments in this Section 4 will be paid during the six-month period following theExecutive’s termination of employment unless the Company determines, in its good faithjudgment, that paying such amounts at the time or times indicated in this Section wouldnot cause the Executive to incur an additional tax under Section 409A of the InternalRevenue Code of 1986, as amended (the “Code”) (in which case such amounts shall be paidat the time or times indicated in this Section). If the payment of any amounts aredelayed as a
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   result of the previous sentence, on the first day following the end of the six-monthperiod, the Company will pay the Executive a lump-sum amount equal to the cumulativeamounts that would have otherwise been previously paid to the Executive under thisSection 4. Thereafter, payments will resume in accordance with this Section.**5.****Competition.** (a) The Executive shall not, at any time during the Term or during the two-yearperiod following the Date of Termination, directly or indirectly engage in, have anyequity interest in, or manage or operate any person, firm, corporation, partnership orbusiness (whether as director, officer, employee, agent, representative, partner,security holder, consultant or otherwise) that engages in any business (x) whichcompetes with any business of the Company anywhere in the States of California, Kansas,Missouri, Nevada or Texas, (y) which competes with any business of the Company in anyState in which the Company operated a facility at any time (whether before or after thedate of this Agreement) that the Executive was employed by the Company or (z) whichderives $500,000,000 or more in annual consolidated revenues from the operation ofskilled nursing facilities in the United States; provided, however, thatthe Executive shall be permitted to acquire a passive stock interest in such a businessprovided the stock acquired is publicly traded and is not more than five percent (5%) ofthe outstanding interest in such business.  (b) The Executive shall not at any time during the Term or during the two-year periodfollowing the date of Termination, directly or indirectly, recruit or otherwise solicitor induce or encourage any employee, contractor, customer or supplier of the Company(i) to terminate its employment or arrangement with the Company, (ii) to otherwisechange its relationship with the Company or (iii) to establish any relationship with theExecutive or any other person, firm, corporation or other entity for any businesspurpose competitive with the business of the Company.  (c) In the event the terms of this Section 5 shall be determined by any courtof competent jurisdiction to be unenforceable by reason of its extending for too great aperiod of time or over too great a geographical area or by reason of its being tooextensive in any other respect, it will be interpreted to extend only over the maximumperiod of time for which it may be enforceable, over the maximum geographical area as towhich it may be enforceable, or to the maximum extent in all other respects as to whichit may be enforceable, all as determined by such court in such action.  (d) As used in this Section 5, the term “Company” shall includeParent, the Company and their respective direct or indirect subsidiaries.**6.****Nondisclosure of Proprietary Information.** (a) Except in connection with the faithful performance of the Executive’s dutieshereunder or pursuant to Section 6(c), the Executive shall, in perpetuity,maintain in confidence and shall not directly, indirectly or otherwise, use,disseminate, disclose or publish, or use for his benefit or the benefit of any person,firm, corporation or other entity any confidential or proprietary information or tradesecrets of or relating to the Company (including, without
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   limitation, intellectual property in the form of patents, trademarks and copyrightsand applications therefor, ideas, inventions, works, discoveries, improvements,information, documents, formulae, practices, processes, methods, developments, sourcecode, modifications, technology, techniques, data, programs, other know-how ormaterials, owned, developed or possessed by the Company, whether in tangible orintangible form, information with respect to the Company’s operations, processes,products, inventions, business practices, finances, principals, vendors, suppliers,customers, potential customers, marketing methods, costs, prices, contractualrelationships, regulatory status, prospects and compensation paid to employees orother terms of employment), or deliver to any person, firm, corporation or otherentity any document, record, notebook, computer program or similar repository of orcontaining any such confidential or proprietary information or trade secrets. Theparties hereby stipulate and agree that as between them the foregoing matters areimportant, material and confidential proprietary information and trade secrets andaffect the successful conduct of the businesses of the Company (and any successor orassignee of the Company). Confidential Information shall not include any informationwhich has entered the public domain through no fault of the Executive.  (b) Upon termination of the Executive’s employment with the Company for any reason,the Executive will promptly deliver to the Company all correspondence, drawings,manuals, letters, notes, notebooks, reports, programs, plans, proposals, financialdocuments, or any other documents concerning the Company’s customers, business plans,marketing strategies, products or processes.  (c) The Executive may respond to a lawful and valid subpoena or other legal processbut shall give the Company the earliest possible notice thereof, shall, as much inadvance of the return date as possible, make available to the Company and its counselthe documents and other information sought and shall assist such counsel at Company’sexpense in resisting or otherwise responding to such process.  (d) As used in this Section 6 and Section 7, the term“Company” shall include the Company and its direct or indirect parents, if any,and subsidiaries.  (e) Nothing in this Agreement shall prohibit the Executive from (i) disclosinginformation and documents when required by law, subpoena or court order (subject to therequirements of Section 6(c) above), (ii) disclosing information and documents to hisattorney or tax adviser on a confidential basis for the purpose of securing legal ortax advice, (iii) disclosing the post-employment restrictions in this Agreement inconfidence to any potential new employer, or (iv) retaining, at any time, his personalcorrespondence, his personal rolodex and documents related to his own personalbenefits, entitlements and obligations.**7.****Inventions.**    All rights to discoveries, inventions, improvements and innovations (including all data andrecords pertaining thereto) related to the business of the Company, whether or not patentable,copyrightable, registrable as a trademark, or reduced to writing, that the Executive may discover,invent or originate during the Term, either alone or with others and
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whether or not during working hours or by the use of the facilities of the Company(“Inventions”), shall be the exclusive property of the Company. The Executive shallpromptly disclose all Inventions to the Company, shall execute at the request of the Company anyassignments or other documents the Company may deem reasonably necessary to protect or perfect itsrights therein, and shall assist the Company, upon reasonable request and at the Company’s expense,in obtaining, defending and enforcing the Company’s rights therein. The Executive hereby appointsthe Company as his attorney-in-fact to execute on his behalf any assignments or other documentsreasonably deemed necessary by the Company to protect or perfect its rights to any Inventions.**8.****Injunctive Relief.**     It is recognized and acknowledged by the Executive that a breach of the covenants contained inSections 5, 6 and 7 will cause irreparable damage to Company and its goodwill, the exactamount of which will be difficult or impossible to ascertain, and that the remedies at law for anysuch breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach ofany of the covenants contained in Sections 5, 6 and 7, in addition to any other remedywhich may be available at law or in equity, the Company will be entitled to specific performanceand temporary, preliminary and permanent injunctive relief.**9.****Assignment and Successors.**    The Company may assign its rights and obligations under this Agreement to any successor to allor substantially all of the business or the assets of the Company (by merger or otherwise), and mayassign or encumber this Agreement and its rights hereunder as security for indebtedness of theCompany and its affiliates. This Agreement shall be binding upon and inure to the benefit of theCompany, the Executive and their respective successors, assigns, personnel and legalrepresentatives, executors, administrators, heirs, distributees, devisees, and legatees, asapplicable. None of the Executive’s rights or obligations may be assigned or transferred by theExecutive, other than the Executive’s rights to payments hereunder, which may be transferred onlyby will or operation of law. Notwithstanding the foregoing, the Executive shall be entitled, tothe extent permitted under applicable law and applicable Company Arrangements, to select and changea beneficiary or beneficiaries to receive compensation hereunder following his death by givingwritten notice thereof to the Company.**10.****Certain Definitions.** (a) Cause. The Company shall have “Cause” to terminate the Term and theExecutive’s employment hereunder upon: (i) the Executive’s failure to perform substantially his duties asan employee of the Company (other than any such failure resulting from theExecutive’s incapacity due to physical or mental illness), which is not curedwithin 15 days after a written demand for performance is given to the Executiveby the Board specifying in reasonable detail the manner in which the Executivehas failed to perform substantially his duties as an employee of the Company;  (ii) the Executive’s failure to carry out, or comply with, in anymaterial respect any lawful and reasonable directive of the Board consistentwith the terms of this Agreement that, if capable of cure, is not curedby the Executive within 15 days after written notice given to the Executivedescribing such failure in reasonable detail;
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 (iii) the Executive’s conviction, plea of no contest, plea of *nolocontendere*, or imposition of unadjudicated probation for any felony or, to theextent involving fraud, dishonesty, theft, embezzlement or moral turpitude, anyother crime;  (iv) the Executive’s violation of a material regulatory requirementrelating to the business of the Company and its subsidiaries that, in the goodfaith judgment of the Board, is injurious to the Company in any materialrespect;  (v) the Executive’s unlawful use (including being under theinfluence) or possession of illegal drugs on the Company’s premises or whileperforming the Executive’s duties and responsibilities under this Agreement;  (vi) the Executive’s breach of this Agreement in any materialrespect that, if capable of cure, is not cured by the Executive within 15 daysafter written notice given to the Executive describing such breach inreasonable detail; or  (vii) the Executive’s commission of an act of fraud, embezzlement,misappropriation, willful misconduct, gross negligence or breach of fiduciaryduty with respect to the Company or any of its affiliates; (b) Date of Termination. “Date of Termination” shall mean (i) if theExecutive’s employment is terminated by his death, the date of his death; (ii) if theExecutive’s employment is terminated pursuant to Section 3(a)(ii) – (v) eitherthe date indicated in the Notice of Termination or the date specified by the Companypursuant to Section 3(b), whichever is earlier; (iii) if the Executive’semployment is terminated pursuant to Section 3(a)(vi) orSection 3(a)(vii), the expiration of the then-applicable Term.  (c) Disability. “Disability” shall mean, at any time the Company or any ofits affiliates sponsors a long-term disability plan for the Company’s employees in whichthe Executive participates, “disability” as defined in such long-term disability planfor the purpose of determining a participant’s eligibility for benefits, provided,however, if the long-term disability plan contains multiple definitions of disability,“Disability” shall refer that definition of disability which, if the Executive qualifiedfor such disability benefits, would provide coverage for the longest period of time. Thedetermination of whether the Executive has a Disability shall be made by the person orpersons required to make disability determinations under the long-term disability plan.At any time the Company does not sponsor a long-term disability plan for its employeesin which the Executive participates, Disability shall mean the Executive’s inability toperform, with or without reasonable accommodation, the essential functions of hisposition hereunder for a total of six months during any 12-month period as a result ofincapacity due to mental or physical illness as determined by a physician selected bythe Board and acceptable to the Executive or the Executive’s legal representative, suchagreement as to acceptability not to be unreasonably withheld or delayed. Any refusalby the Executive to submit to amedical examination for the purpose of determining Disability shall be deemed toconstitute conclusive evidence of the Executive’s Disability.
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**11.****Governing Law.**     This Agreement shall be governed, construed, interpreted and enforced in accordance with itsexpress terms, and otherwise in accordance with the substantive laws of the State of California,without reference to the principles of conflicts of law, and where applicable, the federal laws ofthe United States.**12.****Validity.**     The invalidity or unenforceability of any provision or provisions of this Agreement shall notaffect the validity or enforceability of any other provision of this Agreement, which shall remainin full force and effect.**13.****Notices.**     Any notice, request, claim, demand, document and other communication hereunder to any partyshall be effective upon receipt (or refusal of receipt) and shall be in writing and deliveredpersonally or sent by facsimile or certified or registered mail, postage prepaid, or any nationallyrecognized overnight courier service with signature certification of receipt, as follows: (a) If to the Company:   Skilled Healthcare, LLC27442 Portola ParkwaySuite 200Foothill Ranch, California 92610Attn: CEO/ Boyd Hendrickson    with copies to:    Skilled Healthcare, LLC27442 Portola ParkwaySuite 200Foothill Ranch, California 92610Attn: General Counsel/Roland Rapp (b) If to the Executive:   Chris Felfe1524 Sylvia LaneNewport Beach, CA 92660     or at any other address as any party shall have specified by notice in writing to the otherparty.
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**14.****Counterparts.**     This Agreement may be executed in several counterparts, each of which shall be deemed to be anoriginal, but all of which together will constitute one and the same Agreement. Signaturesdelivered by facsimile shall be deemed effective for all purposes.**15.****Entire Agreement.**     The terms of this Agreement are intended by the parties to be the final expression of theiragreement with respect to the employment of the Executive by the Company and supersede all priorunderstandings and agreements, whether written or oral. The parties further intend that thisAgreement shall constitute the complete and exclusive statement of their terms and that noextrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legalproceeding to vary the terms of this Agreement.**16.****Amendments; Waivers.**     This Agreement may not be modified, amended, or terminated except by an instrument in writing,signed by the Executive and a duly authorized officer of Company. By an instrument in writingsimilarly executed, the Executive or a duly authorized officer of the Company may waive complianceby the other party or parties with any specifically identified provision of this Agreement thatsuch other party was or is obligated to comply with or perform; provided, however, that such waivershall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. Nofailure to exercise and no delay in exercising any right, remedy, or power hereunder preclude anyother or further exercise of any other right, remedy, or power provided herein or by law or inequity. Except as otherwise set forth in this Agreement, the respective rights and obligations ofthe parties under this Agreement shall survive any termination of Executive’s employment.**17.****No Inconsistent Actions.**     The parties hereto shall not voluntarily undertake or fail to undertake any action or courseof action inconsistent with the provisions or essential intent of this Agreement. Furthermore, itis the intent of the parties hereto to act in a fair and reasonable manner with respect to theinterpretation and application of the provisions of this Agreement.**18.****Construction.**     This Agreement shall be deemed drafted equally by both the parties. Its language shall beconstrued as a whole and according to its fair meaning. Any presumption or principle that thelanguage is to be construed against any party shall not apply. The headings in this Agreement areonly for convenience and are not intended to affect construction or interpretation. Any referencesto paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unlessthe context clearly indicates to the contrary. Also, unless the context clearly indicates to thecontrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and“or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means“any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”;(e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to theentire Agreement and not to any particular paragraph, subparagraph, section or subsection; and(f) all pronouns and any variations thereof shall be deemed to refer to the masculine,feminine, neuter, singular or plural as the identity of the entities or persons referred tomay require.
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**19.****Arbitration.**     Any controversy arising out of or relating to this Agreement, its enforcement orinterpretation, or because of an alleged breach, default, or misrepresentation in connection withany of its provisions, or any other controversy arising out of the Executive’s employment by theCompany, including, but not limited to, any state or federal statutory claims, shall be submittedto arbitration in Los Angeles County, California, before a sole neutral arbitrator (the“Arbitrator”), mutually selected and agreeable to both parties and selected from JudicialArbitration and Mediation Services, Inc., Los Angeles County, California, or its successor(“JAMS”), or if JAMS is no longer able to supply the Arbitrator, such Arbitrator shall be selectedfrom the American Arbitration Association, and shall be conducted in accordance with the provisionsof California Code of Civil Procedure §§ 1280 et seq. as the exclusive forum for the resolution ofsuch dispute; provided, however, that provisional injunctive relief (including, but not limited to,temporary restraining orders and preliminary injunctions) may, but need not, be sought by eitherparty to this Amended Agreement in any court of competent jurisdiction while arbitrationproceedings are pending, and any provisional injunctive relief granted by such court shall remaineffective until the matter is finally determined by the Arbitrator; no bond or other security shallbe required in connection therewith.     Final resolution of any dispute through arbitration may include any remedy or relief that theArbitrator deems just and equitable, including any and all remedies provided by applicable state orfederal statutes. At the conclusion of the arbitration, the Arbitrator shall issue a writtendecision that sets forth the essential findings and conclusions upon which the Arbitrator’s awardor decision is based. Any award or relief granted by the Arbitrator hereunder shall be final andbinding on the parties hereto and may be enforced by any court of competent jurisdiction.     The parties acknowledge and agree that they are hereby waiving any rights to trial by jury inany action, proceeding or counterclaim brought by either of the parties against the other inconnection with any matter whatsoever arising out of or in any way connected with this AmendedAgreement or the services rendered hereunder. The parties agree that the Company Shall beresponsible for payment of the forum costs of any arbitration hereunder, including the Arbitrator’sfee. The Executive and the Company further agree that in any proceeding to enforce the terms ofthis Amended Agreement, the prevailing party shall be entitled to its or her reasonable attorneys’fees and costs (other than forum costs associated with the arbitration) incurred by it or him inconnection with resolution of the dispute up to a maximum of Fifty Thousand Dollars ($50,000.00) inaddition to any other relief granted.**20.****Enforcement.**     If any provision of this Agreement is held to be illegal, invalid or unenforceable underpresent or future laws effective during the term of this Agreement, such provision shall be fullyseverable; this Agreement shall be construed and enforced as if such illegal, invalid orunenforceable provision had never comprised a portion of this Agreement; and the remainingprovisions of this Agreement shall remain in full force and effect and shall not be affected by theillegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore,in lieu of such illegal, invalid or unenforceable provision there shall be added automatically aspart of this Agreement a provision as similar in terms tosuch illegal, invalid or unenforceable provision as may be possible and be legal, valid andenforceable.
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**21.****Withholding.**     The Company shall be entitled to withhold from any amounts payable under this Agreement anyfederal, state, local or foreign withholding or other taxes or charges which the Company isrequired to withhold. The Company shall be entitled to rely on an opinion of counsel if anyquestions as to the amount or requirement of withholding shall arise.**22.****Indemnification.**     The Company agrees that (a) if the Executive is made a party, or is threatened to be made aparty, to any threatened or actual action, suit or proceeding whether civil, criminal,administrative, investigative, appellate or other (a “Proceeding”) by reason of the fact that he isor was a director, officer, employee, agent, manager, consultant or representative of the Companyor (b) if any claim, demand, request, investigation, controversy, threat, discovery request orrequest for testimony or information (a “Claim”) is made, or threatened to be made, that arises outof or relates to the Executive’s service in any of the foregoing capacities, then the Executiveshall promptly be indemnified and held harmless by the Company to the fullest extent permitted bythe laws of the state of incorporation of the Company, against any and all costs, expenses,liabilities and losses incurred or suffered by the Executive in connection therewith, and suchindemnification shall continue as to the Executive even if he has ceased to be a director, member,employee, agent, manager, consultant or representative of the Company and shall inure to thebenefit of the Executive’s heirs, executors and administrators. The Company may assume the defenseof any Proceeding or Claim with counsel selected by the Company and reasonably satisfactory to theExecutive and, if it does so, the Executive shall not be entitled to be reimbursed for any separatecounsel he may retain in connection with such Proceeding or Claim.     Neither the failure of the Company (including its Board, independent legal counsel orstockholders) to have made a determination in connection with any request for indemnification thatthe Executive has satisfied any applicable standard of conduct, nor a determination by the Company(including its Board, independent legal counsel or stockholders) that the Executive has not met anyapplicable standard of conduct, shall create a presumption that the Executive has not met anapplicable standard of conduct.     During the period of Employment and for a period of time thereafter determined as providedbelow, the Company shall keep in place a directors and officers’ liability insurance policy (orpolicies) providing coverage, or such coverage may be provided under a policy that providescoverage to Onex Corporation or Onex Partners LP and their affiliates, to the Executive if and tothe extent that the Company provides such coverage to its directors and such coverage (or otherdirectors and officers liability insurance coverage) shall continue after the termination of thePeriod of Employment if and for the period of time that such coverage is extended to the Company’sformer director, other than former directors who are employees of Onex Corporation, Onex PartnersLP or their affiliates.**23.****Cooperation in Litigation.**     The Executive promises and agrees that, following the date his employment by the Companyterminates, he will reasonably cooperate with the Company in any litigation in which the Company isa party or otherwise involved which arises out of events occurring prior to the termination of hisemployment, including but not limited to, serving as aconsultant (at a reasonable hourly rate) or witness and producing documents and informationrelevant to the case or helpful to the Company.
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**24.****Employee Acknowledgement.**     The Executive acknowledges that he has read and understands this Agreement, is fully aware ofits legal effect, has not acted in reliance upon any representations or promises made by theCompany other than those contained in writing herein, and has entered into this Agreement freelybased on his own judgment.     IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first abovewritten.         **SKILLED HEALTHCARE GROUP, INC.**           By: /s/ Boyd W. Hendrickson             Name: Boyd W. Hendrickson      Title:   Chief Executive Officer           **EXECUTIVE**           By: /s/ Chris Felfe             Chris Felfe  
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