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Exhibit 10(A)
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of the 30th
day of May, 1999 by and between NovaCare, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive currently serves as Chief Executive
Officer of the Company pursuant to an Employment Agreement dated as of July 1,
1996, as amended as of May 15, 1998 and September 1, 1998; and
WHEREAS, it may be necessary or appropriate for the Company
to sell its interest in NovaCare Employee Services, Inc., a Delaware corporation
("NCES"), and/or its Physical Rehabilitation and Occupational Health division
(the "PROH Division") in order to refinance or repay certain bank indebtedness
and/or the Company's outstanding convertible subordinated debentures (the
"Subordinated Debentures"); and
WHEREAS, the sale of NCES or the PROH Division might trigger
rights of the Executive to substantial severance payments under the Employment
Agreement pursuant to the constructive termination or change of control
provisions thereof and the Company believes it is in the best interests of the
Company to obtain the agreement of the Executive to waive his rights to such
payments in order to ensure continuity of leadership to optimize shareholder
value and the Company's credit worthiness; and
WHEREAS, the Company's lenders have stated in writing that the
waiver of such rights is a pre-condition of any agreement to extend bank credit
arrangements beyond May 30, 1999; and
WHEREAS, the Executive is willing to waive such rights and the
Company and the Executive wish to amend and restate said Employment Agreement,
to set forth the terms and conditions on which the Executive will continue to
serve in his current positions.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto hereby agree as
follows:
1. EMPLOYMENT, TERM.
1.1 Employment. The Company agrees to employ the Executive,
and the Executive agrees to serve in the employ of the Company, for the term set
forth in Section 1.2, in the positions and with the responsibilities, duties and
authority set forth in Section 2 and on the other terms and conditions set forth
in this Agreement.
1.2 Term. The term of the Executive's employment under this
Agreement shall commence on the date hereof and shall terminate on July 1, 2001,
unless sooner terminated in accordance with this Agreement.
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2. POSITION, DUTIES.
The Executive shall serve in the position of Chief Executive
Officer of the Company. The Executive shall perform, faithfully and diligently,
such duties, and shall have such responsibilities, appropriate to said position,
as shall be assigned to him from time to time by the Board of Directors of the
Company. The Executive shall report to the Board of Directors of the Company.
The Executive shall also serve, if elected, as a member of the Board of
Directors of the Company. The Executive shall devote his full business time and
attention to the performance of his duties and responsibilities hereunder.
3. SALARY, BONUSES, STOCK OPTIONS.
3.1 Salary. During the term of this Agreement, in
consideration of the performance by the Executive of the services set forth in
Section 2 and his observance of the other covenants set forth herein, the
Company shall pay to the Executive, and the Executive shall accept, a base
salary at the rate of $500,000 per annum, payable in accordance with the
standard payroll practices of the Company. The Executive shall be entitled to
such increases in base salary during the term hereof as shall be determined by
the Compensation Committee of the Board of Directors of the Company and approved
by the Board of Directors of the Company in their sole discretion, taking
account of the performance of the Company and the Executive, the size of the
Company from time to time, and other factors generally considered relevant to
the salaries of officers holding similar positions with enterprises comparable
to the Company. In no event shall the base salary of the Executive be decreased
during the term of this Agreement.
3.2 Signing Bonus. In addition to the base salary provided for
in Section 3.1, the Company shall pay to the Executive, and the Executive shall
accept, a signing bonus (the "Signing Bonus") of $875,000. The Signing Bonus
shall be paid to the Executive upon the execution of this Agreement by the
Executive and the Company.
3.3 Transaction Bonuses. In addition to the base salary
provided for in Section 3.1 and the Signing Bonus, the Company shall pay to the
Executive one or more transaction bonuses (each, a "Transaction Bonus") in
accordance with the provisions of this Section 3.3.
(a) The Company shall pay to the Executive, and the Executive
shall accept, a Transaction Bonus of $475,000 upon the sale or other disposition
by the Company of all or substantially all of the Company's interest in NCES,
should the Company decide to undertake such a sale or other disposition of its
interest in NCES.
(b) The Company shall pay to the Executive, and the Executive
shall accept, a Transaction Bonus of $400,000 upon the first to occur of (i) the
refinancing by the Company of the Subordinated Debentures, but only if the
maturity date of the refinanced indebtedness is after December 31, 2000, (ii)
the sale or other disposition by the Company of all or substantially all of the
PROH Division should the Company decide to undertake such a sale or other
disposition of the PROH Division, and (iii) the repayment by the Company of the
Subordinated Debentures (other than through a refinancing), provided, however,
that in the event the PROH Division has not been sold or otherwise disposed of
and a petition for relief under title 11, United States Code,
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is filed by or against the Company prior to repayment by the Company of the
entire principal amount of the Subordinated Debentures, then the amount of any
Transaction Bonus payable pursuant to this Section 3.3(b)(iii) upon the
subsequent repayment of the Subordinated Debentures shall equal the product of
(x) $400,000 multiplied by (y) a fraction, the numerator of which is the
aggregate amount paid by the Company to repay the Subordinated Debentures, and
the denominator of which is the entire principal amount of the Subordinated
Debentures, and provided further that no Transaction Bonus shall be payable
under this Section 3.3(b)(iii) if all or substantially all of the PROH Division
has not been sold or otherwise disposed of and the Subordinated Debentures are
repaid for less than fifty per cent (50%) of the entire principal amount of such
Subordinated Debentures.
(c) The Executive understands and agrees that neither the
Company nor the Board of Directors has made a decision to sell or otherwise
dispose of the Company's interest in NCES or the PROH Division and that the
Company has no duty or obligation to the Executive to sell or attempt to sell
either such interest.
3.4 Retention Bonus. In addition to the base salary provided
for in Section 3.1, the Signing Bonus payable under Section 3.2 and the
Transaction Bonuses payable under Section 3.3, the Company shall pay to the
Executive and the Executive shall accept, a retention bonus (the "Retention
Bonus") of $1,000,000. The Retention Bonus shall be paid to the Executive (a)
$500,000 on January 2, 2000 and (b) $500,000 upon the earlier to occur of (i)
adoption of a plan of liquidation of the Company by the Board of Directors of
the Company, but only if all or substantially all of the PROH Division has been
sold or otherwise disposed of prior to the adoption of such plan of liquidation,
or (ii) June 30, 2000. The Executive understands and agrees that neither the
Company nor the Board of Directors has made a decision to adopt a plan of
liquidation of the Company in the event the PROH Division is sold or otherwise
disposed of and the Company has no duty or obligation to the Executive to adopt
such a plan of liquidation.
3.5 Retention Bonus After June 30, 2000. In the event the
employment of the Executive continues beyond June 30, 2000, the Company shall
pay to the Executive, and the Executive shall accept, a bonus of $500,000 on
January 2 and June 30 of each year, as long as the Executive is employed by the
Company on such January 2 or June 30. The Executive shall not be eligible to
participate in any other bonus or executive incentive compensation plan of the
Company after June 30, 2000.
3.6 Sale of the Company. In the event of a merger or
consolidation which results in the holders of the outstanding voting securities
of the Company (determined immediately prior to such merger or consolidation)
owning less than a majority of the outstanding voting securities of the
surviving corporation (determined immediately following such merger or
consolidation), or any acquisition, directly or indirectly, by any person or
group of more than fifty per cent (50%) of the then outstanding voting
securities of the Company, the Company shall pay to the Executive, on the date
of the closing (the "Closing Date") of such transaction:
(a) any amount of the Transaction Bonuses not
theretofore paid to the Executive pursuant to Section 3.3 hereof (whether or not
such Transaction Bonuses shall be payable pursuant to the terms of Section
3.3(a) and 3.3(b)); and
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(b) a pro-rated amount of each unpaid installment of
the Retention Bonus payable under Section 3.4 equal to the product of (x) the
amount of such unpaid installment of the Retention Bonus multiplied by (y) a
fraction, the numerator of which is the number of days from the date hereof to
the Closing Date, and the denominator of which is the number of days from the
date hereof until January 2, 2000, in the case of the installment payable
pursuant to Section 3.4(a), and June 30, 2000, in the case of the installment
payable pursuant to Section 3.4(b); and
(c) in the event that the Closing Date is after June
30, 2000, a bonus under Section 3.5, pro-rated (in accordance with the
principles of Section 3.6(b) from the prior June 30 or January 2, as applicable,
until the Closing Date.
3.7 Stock Options. The Executive shall not be eligible to
receive grants of options to purchase the Company's common stock during the term
of this Agreement.
4. EXPENSE REIMBURSEMENT.
During the term of this Agreement, the Company shall reimburse
the Executive for all reasonable and necessary out-of-pocket expenses incurred
by him in connection with the performance of his duties hereunder, upon the
presentation of proper accounts therefor in accordance with the Company's
policies.
5. BENEFITS.
5.1 Generally. During the term of this Agreement, the
Executive will be eligible to participate in all employee benefit plans and
programs offered by the Company from time to time to its employees of comparable
seniority on terms no less favorable than those in effect as of the date hereof.
5.2 Perquisites.
During the term of this Agreement, the Company shall also
provide the Executive with the following: (i) a telephone in his automobile (for
which the Company shall pay for all installation, service and other charges),
(ii) first class airfare for travel in connection with the performance of his
duties hereunder, (iii) a corporate credit card of the Executive's choosing and
(iv) an amount of paid vacation each year in accordance with the Company's
policy for senior executives. Any unused vacation days, and any other accrued
paid time off as of December 31 of each year, shall be carried over from year to
year to the extent unused without limitation.
6. TERMINATION OF EMPLOYMENT.
6.1 Death. In the event of the death of the Executive, the
Company shall pay to the estate or other legal representative of the Executive
(a) the base salary provided for in Section 3.1 (at the annual rate then in
effect) accrued to the date of the Executive's death and not theretofore paid to
the Executive and (b) any unpaid Retention Bonus under Section 3.4 (whether or
not such Retention Bonus shall be due and payable pursuant to the terms of
Section 3.4 hereof) and (c) any amount of the Transaction Bonuses not
theretofore paid to the Executive
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pursuant to Section 3.3 hereof (whether or not such Transaction Bonuses shall be
payable pursuant to the terms of Section 3.3(a) and 3.3(b)), provided, however,
that in the event the Company attempts to sell or otherwise dispose of the PROH
Division and fails to do so and ceases such efforts (such determination to be
made by resolution of the Board of Directors of the Company) on or before the
date of termination of the Executive's employment, then the Transaction Bonus
payable upon a sale or other disposition of the PROH Division shall not be
payable hereunder (unless due and payable pursuant to Section 3.3(b) as a result
of the prior refinancing or repayment of the Subordinated Debentures), and (d)
in the event that the employment of the Executive is terminated pursuant to this
Section 6.1 after June 30, 2000, a Retention Bonus under Section 3.5 pro-rated
in accordance with the principles of Section 6.4(a)(iii) hereof. Rights and
benefits of the estate or other legal representative or transferee of the
Executive under the benefit plans and programs of the Company shall be
determined in accordance with the provisions of such plans and programs. Neither
the estate or other legal representative of the Executive nor the Company shall
have any further rights or obligations under this Agreement, except as provided
in Section 15.
6.2 Disability. If the Executive shall become incapacitated by
reason of sickness, accident or other physical or mental disability and shall be
unable to perform his normal duties hereunder for a period of six (6)
consecutive months, then, at any time following the conclusion of such six (6)
month period, the employment of the Executive hereunder may be terminated by the
Company or the Executive, upon thirty (30) days' prior written notice to the
other. In the event of such termination, the Company shall pay to the Executive
(a) the base salary provided for in Section 3.1 (at the annual rate then in
effect) accrued to the date of such termination and not theretofore paid, and
(b) any unpaid Retention Bonus under Section 3.4 (whether or not such Retention
Bonus shall be due and payable pursuant to the terms of Section 3.4 hereof), and
(c) any amount of the Transaction Bonuses not theretofore paid to the Executive
pursuant to Section 3.3 hereof (whether or not such Transaction Bonuses shall be
payable pursuant to the terms of Section 3.3(a) and 3.3(b)), provided, however,
that in the event the Company attempts to sell or otherwise dispose of the PROH
Division and fails to do so and ceases such efforts (such determination to be
made by resolution of the Board of Directors of the Company) on or before the
date of termination of the Executive's employment, then the Transaction Bonus
payable upon a sale or other disposition of the PROH Division shall not be
payable hereunder (unless due and payable pursuant to Section 3.3(b) as a result
of the prior refinancing or repayment of the Subordinated Debentures), and (d)
in the event that the employment of the Executive is terminated pursuant to this
Section 6.2 after June 30, 2000, a Retention Bonus under Section 3.5, pro-rated
in accordance with the principles of Section 6.4(a)(iii) hereof. Rights and
benefits of the Executive or his transferee under the other benefit plans and
programs of the Company shall be determined in accordance with the terms and
provisions of such plans and programs. Neither the Executive nor the Company
shall have any further rights or obligations under this Agreement, except as
provided in Sections 7, 8, 9 and 15.
6.3 Due Cause. The employment of the Executive hereunder may
be terminated by the Company at any time for Due Cause (as hereinafter defined).
In the event of such termination, the Company shall pay to the Executive the
base salary provided for in Section 3.1 (at the annual rate then in effect)
accrued to the date of such termination and not theretofore paid to the
Executive. Rights and benefits of the Executive or his transferee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of
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such plans and programs. For purposes hereof, "Due Cause" shall mean (i)
willful, gross neglect or willful, gross misconduct in the Executive's discharge
of his duties and responsibilities under this Agreement, or (ii) the Executive's
conviction of a felony; provided, however, that the Executive shall be given
written notice by the Chairman of the Board of the Company that it intends to
terminate the Executive's employment for Due Cause, which written notice shall
specify the act or acts upon which the Chairman of the Board of the Company
intends so to terminate the Executive's employment, and the Executive shall then
be given the opportunity, within fifteen (15) days of his receipt of such
notice, to have a meeting with the Chairman of the Board of the Company to
discuss such act or acts. If the basis of such written notice is other than an
act or acts described in clause (ii), the Executive shall be given sixty (60)
days after such meeting within which to cease or correct the performance (or
nonperformance) giving rise to such written notice and, upon failure of the
Executive within such sixty (60) days to cease or correct such performance (or
nonperformance), the Executive's employment by the Company shall automatically
be terminated hereunder for Due Cause. Neither the Executive nor the Company
shall have any further rights or obligations under this Agreement, except as
provided in Sections 7, 8, 9 and 15.
6.4 Termination by the Company Without Cause. (a) The Company
may terminate the Executive's employment at any time for whatever reason it
deems appropriate or without reason; provided, however, that in the event that
such termination is not pursuant to Section 6.1 (Death), 6.2 (Disability), 6.3
(Due Cause) or 6.5 (Voluntary Termination), the Company shall pay to the
Executive:
(i) on the date of termination, the base salary
provided for in Section 3.1 (at the annual rate then in effect) accrued to the
date of termination and not theretofore paid to the Executive; and
(ii) on the date of termination, any amount of the
Transaction Bonuses not theretofore paid to the Executive pursuant to Section
3.3 hereof (whether or not such Transaction Bonuses shall be payable pursuant to
the terms of Section 3.3(a) and 3.3(b)), provided, however, that in the event
the Company attempts to sell or otherwise dispose of the PROH Division and fails
to do so and ceases such efforts (such determination to be made by resolution of
the Board of Directors of the Company) on or before the date of termination of
the Executive's employment, then the Transaction Bonus payable upon a sale or
other disposition of the PROH Division shall not be payable hereunder (unless
due and payable pursuant to Section 3.3(b) as a result of the prior refinancing
or repayment of the Subordinated Debentures); and
(iii) on the date of termination, a pro-rated amount
of each unpaid installment of the Retention Bonus payable under Section 3.4
equal to the product of (x) the amount of such unpaid installment of the
Retention Bonus multiplied by (y) a fraction, the numerator of which is the
number of days from the date hereof to the date of termination of the
Executive's employment, and the denominator of which is the number of days from
the date hereof until January 2, 2000, in the case of the installment payable
pursuant to Section 3.4(a), and June 30, 2000, in the case of the installment
payable pursuant to Section 3.4(b); and
(iv) in the event that such termination occurs after
June 30, 2000, a bonus under Section 3.5, pro-rated (in accordance with the
principles of
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Section 6.4(a)(iii)) from the prior June 30 or January 2, as applicable, until
the date of termination of the Executive's employment.
(b) Rights and benefits of the Executive or his transferee
under the other benefit plans and programs of the Company shall be continued for
two (2) years following the date of termination of the Executive's employment.
Neither the Executive nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Sections 7, 8, 9 and 15.
6.5 Voluntary Termination. The Executive may terminate his
employment with the Company at any time upon thirty (30) days prior written
notice to the Company. In the event of such termination, the Company shall pay
to the Executive the base salary provided for in Section 3.1 (at the annual rate
then in effect) accrued to the date of such termination and not theretofore paid
to the Executive. The Executive shall forfeit all claims and rights to any
amount of the Retention Bonus that is not due and payable on the date of
termination of the Executive's employment. In the event that the Executive
terminates his employment with the Company pursuant to this Section 6.5 prior to
January 1, 2000, the Executive shall pay to the Company, within ten (10) days of
such termination, an amount equal to the amount that the Company paid to the
Executive pursuant to Section 3.2 of this Agreement, net of all taxes applicable
to such payment (including Medicare tax), provided, however, that the Company
may, in the sole discretion of the Board of Directors of the Company, waive
payment of all or any portion of such amount (such waiver to be in writing). For
purposes of this Section 6.5, all calculations with respect to Federal, state
and local income taxes shall be based on the highest individual marginal
Federal, state and local income tax rates applicable to the Executive for 1999.
Rights and benefits of the Executive or his transferee under the benefit plans
and programs of the Company shall be determined in accordance with the
provisions of such plans and programs. Neither the Executive nor the Company
shall have any further rights or obligations under this Agreement, except as
provided in Sections 7, 8, 9 and 15.
6.6 Payout of Transaction Bonus. In the event that the
Executive's employment is terminated pursuant to Section 6.1 (Death), Section
6.2 (Disability) or Section 6.4 (Termination by the Company Without Cause) and
the Transaction Bonus under Section 3.3(b) has not been paid (and is not due and
payable) on or prior to the date of the Executive's termination of employment
then the provisions of this Section 6.6 shall apply:
(a) In the event that the Company repays the entire principal
amount of the Subordinated Debentures (including through a refinancing) within
one year of the date of the Executive's termination of employment, then the
Company shall pay to the Executive, on the date the Subordinated Debentures are
repaid, the Transaction Bonus provided for in Section 3.3(b), unless previously
paid pursuant to Section 6.6(b).
(b) In the event that the Company sells or otherwise disposes
of all or substantially all of the PROH Division within one year of the date of
the Executive's termination of employment, then the Company shall pay to the
Executive, on the date of closing of the sale of the PROH Division, the
Transaction Bonus provided for in Section 3.3(b), unless previously paid
pursuant to Section 6.6(a).
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6.7 Acceleration of Payments. In the event that the Company
shall fail to pay to the Executive any amount payable pursuant to this Section 6
at the time such payment is due, all amounts to be paid to the Executive (or his
estate or legal representative) pursuant to this Section 6, Section 3 and any
other provision of this Agreement shall become immediately due and payable
without any further action by the Executive (or his estate or legal
representative).
6.8 No Change of Control or Constructive Termination. In
consideration of the Company's agreements hereunder, the Executive surrenders
all rights under any "change of control" or "constructive termination" provision
of any prior agreement between the Executive and the Company.
7. CONFIDENTIAL INFORMATION.
7.1 Nondisclosure. The Executive shall, during the term of
this Agreement and at all times thereafter, treat as confidential and, except as
required in the performance of his duties and responsibilities under this
Agreement, not disclose, publish or otherwise make available to the public or to
any individual, firm or corporation any confidential information (as hereinafter
defined).
7.2 Confidential Information Defined. For the purposes hereof,
the term "confidential information" shall mean all information acquired by the
Executive in the course of the Executive's employment with the Company in any
way concerning the products, projects, activities, business or affairs of the
Company or the Company's customers, including, without limitation, all
information concerning trade secrets and the products or projects of the Company
and/or any improvements therein, all sales and financial information concerning
the Company, all customer and supplier lists, all information concerning
projects in research and development or marketing plans for any such products or
projects, and all information in any way concerning the products, projects,
activities, business or affairs of customers of the Company which is furnished
to the Executive by the Company or any of its agents or customers, as such;
provided, however, that the term "confidential information" shall not include
information which (a) becomes generally available to the public other than as a
result of a disclosure by the Executive, (b) was available to the Executive on a
non-confidential basis prior to his employment with the Company or (c) becomes
available to the Executive on a non-confidential basis from a source other than
the Company or any of its agents or customers provided that such source is not
bound by a confidentiality agreement with the Company or any of such agents or
customers.
8. INTERFERENCE WITH THE COMPANY.
8.1 Restrictions. The Executive acknowledges that the services
to be rendered by him to the Company are of a special and unique character. In
order to induce the Company to enter into this Agreement, and in consideration
of his employment hereunder, the Executive agrees, for the benefit of the
Company, that he will not, during the period of his employment with the Company
and thereafter, for the Applicable Period (as hereinafter defined) commencing on
the date of termination of his employment with the Company:
(a) engage, directly or indirectly, whether as principal,
consultant, employee, partner, stockholder, limited partner or other investor
(other than a passive investment
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of (i) not more than five percent (5%) of the stock or equity of any corporation
the capital stock of which is publicly traded or (ii) not more than five percent
(5%) of the ownership interest of any partnership or other entity) or otherwise,
within the United States of America, with any firm or person in any activity or
business venture which is in competition with any line or lines of business
being conducted by the Company or any subsidiary of the Company at the date of
termination of the Executive's employment with the Company, accounting for ten
percent (10%) or more of the Company's consolidated gross sales, revenues or
earnings before taxes for the fiscal year ended immediately prior to the conduct
in question (the "Competition Restriction"); or
(b) solicit or entice or endeavor to solicit or entice
away from the Company any person who was an employee of the Company at job grade
numbering 32 or higher, either for his own account or for any individual, firm
or corporation, whether or not such person would commit any breach of his
contract of employment by reason of leaving the service of the Company (the
"Solicitation Restriction"); or
(c) employ, directly or indirectly, any person who was
an employee of the Company at job grade numbering 32 or higher at any time
during the one year period ending on the date of termination of the Executive's
employment with the Company, except that this restriction shall not apply in the
case of any person whose employment shall have been terminated by the Company
(the "Hiring Restriction").
8.2 Time Periods. As used in this Section 8, the term
"Applicable Period" shall mean:
(a) twenty-four (24) months in the case of a
termination of employment pursuant to Section 6.3 (Due Cause) or Section 6.4
(Without Due Cause); and
(b) twenty-four (24) months in the case of a
termination pursuant to Section 6.2 (Disability) or Section 6.5 (Voluntary
Termination), but only if the Company gives notice to the Executive within
thirty (30) days of the date of termination of employment of its intention to
enforce such restrictions against the Executive.
9. EQUITABLE RELIEF.
In the event of a breach or threatened breach by the Executive
of any of the provisions of Sections 7 or 8 of this Agreement, the Executive
hereby consents and agrees that the Company shall be entitled to an injunction
or similar equitable relief from any court of competent jurisdiction restraining
the Executive from committing or continuing any such breach or threatened breach
or granting specific performance of any act required to be performed by the
Executive under any of such provisions, without the necessity of showing any
actual damage or that money damages would not afford an adequate remedy and
without the necessity of posting any bond or other security. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
at law or in equity which it may have.
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10. SUCCESSORS AND ASSIGNS.
10.1 Assignment by the Company. The Company shall require any
successors (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 assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place. As used in this Section, the "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law and this Agreement shall be
binding upon, and inure to the benefit of, the Company, as so defined.
10.2 Assignment by the Executive. The Executive may not assign
this Agreement or any part thereof without the prior written consent of a
majority of the Board of Directors of the Company; provided, however, that
nothing herein shall preclude one or more beneficiaries of the Executive from
receiving any amount that may be payable following the occurrence of his legal
incompetency or his death and shall not preclude the legal representative of his
estate from receiving such amount or from assigning any right hereunder to the
person or persons entitled thereto under his will or, in the case of intestacy,
to the person or persons entitled thereto under the laws of intestacy applicable
to his estate. The term "beneficiaries", as used in this Agreement, shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Executive
(in the event of his incompetency) or the Executive's estate.
11. GOVERNING LAW.
This Agreement shall be deemed a contract made under, and for
all purposes shall be construed in accordance with, the laws of the Commonwealth
of Pennsylvania applicable to contracts to be performed entirely within such
state. In the event that a court of any jurisdiction shall hold any of the
provisions of this Agreement to be wholly or partially unenforceable for any
reason, such determination shall not bar or in any way affect the Company's
right to relief as provided for herein in the courts of any other jurisdiction.
Such provisions, as they relate to each jurisdiction, are, for this purpose,
severable into diverse and independent covenants. Service of process on the
parties hereto at the addresses set forth herein shall be deemed adequate
service of such process.
12. ENTIRE AGREEMENT.
This Agreement contains all the understandings and
representations between the parties hereto pertaining to the subject matter
hereof and supersedes all undertakings and agreements, whether oral or in
writing, if any there be, previously entered into by them with respect thereto.
13. AMENDMENT, MODIFICATION, WAIVER.
No provision of this Agreement may be amended or modified
unless such amendment or modification is agreed to in writing and signed by the
Executive and by a duly authorized representative of the Company other than the
Executive. Except as otherwise
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specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other 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 provision or condition at the same or any prior or subsequent time,
nor shall the failure of or delay by either party hereto in exercising any
right, power or privilege hereunder operate as a waiver thereof to preclude any
other or further exercise thereof or the exercise of any other such right, power
or privilege.
14. ARBITRATION.
Any controversy or claim arising out of or relating to this
Agreement, or any breach thereof, shall, except as provided in Section 9, be
settled by arbitration in accordance with the rules of the American Arbitration
Association then in effect and judgment upon such award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitration shall be held in the area where the Company then has its principal
place of business. The arbitration award shall include attorneys' fees and costs
to the prevailing party.
15. ADVANCE OF DEFENSE EXPENSES.
In the event of any action, proceeding or claim against the
Executive arising out of his serving or having served in his capacity as an
officer and/or director of the Company, which in the Executive's sole judgment
requires him to retain counsel (such choice of counsel to be made in his sole
and absolute discretion) or otherwise expend his personal funds for his defense
in connection therewith, the Company shall be obligated to advance to the
Executive (or pay directly to his counsel) counsel fees and other costs
associated with the Executive's defense of such action, proceeding or claim;
provided, however, that in such event the Executive shall first agree in
writing, without posting bond or collateral, to repay all sums paid or advanced
to him pursuant to this Section 15 in the event that the final disposition of
such action, proceeding or claim is one for which the Executive would not be
entitled to indemnification pursuant to the provisions of the laws of the State
of Delaware or the Certificate of Incorporation or By-laws of the Company.
16. NOTICES.
Any notice to be given hereunder shall be in writing and
delivered personally or sent by certified mail, postage prepaid, return receipt
requested, addressed to the party concerned at the address indicated below or at
such other address as such party may subsequently designate by like notice:
If to the Company:
NovaCare, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Executive Officer
If to the Executive:
Xxxxxxx X. Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxxxxxx 00000
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17. SEVERABILITY.
Should any provision of this Agreement be held by a court or
arbitration panel of competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties hereto with
any such modification to become a part hereof and treated as though originally
set forth in this Agreement. The parties further agree that any such court or
arbitration panel is expressly authorized to modify any such unenforceable
provision of this Agreement in lieu of severing such unenforceable provision
from this Agreement in its entirety, whether by rewriting the offending
provision, deleting any or all of the offending provision, adding additional
language to this Agreement, or by making such other modifications as it deems
warranted to carry out the intent and agreement of the parties as embodied
herein to the maximum extent permitted by law. The parties expressly agree that
this Agreement as so modified by the court or arbitration panel shall be binding
upon and enforceable against each of them. In any event, should one or more of
the provisions of this Agreement be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or provisions are not
modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
18. WITHHOLDING.
Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or his
beneficiaries, including his estate, shall be subject to withholding of such
amounts relating to taxes as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, in whole or in part, the Company, may, in its sole discretion,
accept other provision for payment of taxes as permitted by law, provided it is
satisfied in its sole discretion that all requirements of law affecting its
responsibilities to withhold such taxes have been satisfied.
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. TITLES.
Titles of the sections and paragraphs of this Agreement are
intended solely for convenience and no provision of this Agreement is to be
construed by reference to the title of any section or paragraph.
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21. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
NOVACARE, INC.
By /s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Senior Vice President, Finance
and Chief Financial Officer
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
