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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement (the "Amendment") made as of the
14th day of October, 1998, by and between NovaCare, Inc., a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxxx, Xx. (the "Executive"),
W I T N E S S E T H:
WHEREAS, the parties have heretofore entered into an Employment
Agreement dated as of June 13, 1997 (the "Employment Agreement"); and
WHEREAS, the parties wish to amend the Employment Agreement to modify
the benefits to which the Executive shall be entitled in the event of a
termination of Executive's employment "Without Cause"; and
WHEREAS, the parties also wish to add a Constructive Termination
provision to the Employment Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree as follows:
1. Paragraph 6.4 (i) of the Employment Agreement is hereby deleted and
replaced with the following new paragraph 6.4(i):
(i) The Company shall continue to pay to the Executive (or his
estate or other legal representative in the case of the death of the Executive
subsequent to such termination), in the same periodic installments as his base
salary is paid at the time of termination, the base salary provided for in
Section 3.1 (at the annual rate then in effect), for a period of two (2) years
following such termination (the applicable period hereinafter being referred to
as the "Severance Period"). In addition, the Company shall pay to Executive, on
the date of termination, an amount equal to the product derived by multiplying
one and one-half (1.5) times the "Final Bonus". As used herein, (a) if the date
of termination of the Executive's employment shall occur during the first six
months of any fiscal year of the Company, the term "Final Bonus" shall mean an
amount equal to the bonus earned by the Executive for the last completed fiscal
year of the Company preceding the date of termination of his employment and (b)
if the date of termination of Executive's employment shall occur during the last
six months of any fiscal year of the Company, the term "Final Bonus" shall mean
an amount equal to the greater of (X) the bonus earned by the Executive for the
last completed fiscal year of the Company preceding the date of termination of
his employment or (Y) the bonus for the fiscal year in which the termination of
employment occurs, as determined pursuant to Section 3.2.
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2. A new Paragraph 6.7 is added to the Employment Agreement as follows:
6.7. Constructive Termination. Anything herein to the contrary
notwithstanding, if the Company:
(A) demotes the Executive to a lesser position than provided
in Section 2;
(B) causes a material diminution in the nature or scope of the
authorities, powers, functions, duties, or responsibilities initially or
subsequently assigned to the Executive; or
(C) decreases the Executive's base salary, or changes the
amount of the bonus for which the Executive is eligible;
then, within thirty (30) days after learning of the action (or inaction), the
Executive may advise the Company in writing that the action (or inaction)
constitutes a termination of his employment by the Company pursuant to Section
6.4 (Without Cause), in which event the Company shall have thirty (30) days (the
"Correction Period") in which to correct such action (or inaction). If the
Company does not correct such action (or inaction) during the Correction Period,
such action (or inaction) shall (unless consented to in writing by the
Executive) constitute a termination of the Executive's employment by the Company
pursuant to Section 6.4 (Without Cause) effective on the first business day
following the end of the Correction Period.
3. In all other respects the Employment Agreement shall remain in full
force and effect without change.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
NOVACARE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Chief Executive Officer
/s/ Xxxxxx X. Xxxxx, Xx.
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Xxxxxx X. Xxxxx, Xx.
