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EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 6th day of January, 1995 by and between
NOVACARE, INC., a Delaware corporation (the "Company"), and XXXXX X. XXXXX (the
"Executive").
W I T N E S S E T H :
WHEREAS, the Executive has heretofore been employed in the
Contract Services Division of the Company, and the Company wishes to continue to
retain the Executive and the Executive wishes to continue to serve the Company,
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. EMPLOYMENT, TERM, AUTOMATIC EXTENSION.
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 the fifth
anniversary of the date hereof, unless extended or sooner terminated in
accordance with this Agreement.
1.3 Automatic Extension. As of the fourth anniversary hereof, and
as of each subsequent anniversary (each, an "Automatic Renewal Date"), unless
either party shall have given a notice of non-extension prior to such Automatic
Renewal Date, the term of this Agreement shall be extended automatically for a
period of one year to the anniversary of the expiration date of the then current
term of this Agreement. Once a notice of non-extension shall have been given by
either party, there shall be no further automatic extension of this Agreement.
2. POSITION, DUTIES.
The Executive shall serve the Company in the position of
President and General Manager - Contract Services Division. 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 Chief Executive Officer, the Chief Operating Officer and the
Board of Directors of the Company. The Executive shall report to the Chief
Operating Officer of the Company. The Executive shall devote his full business
time and attention to the performance of his duties and responsibilities
hereunder.
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3. SALARY, INCENTIVE BONUS, 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
$300,000 per annum, payable in accordance with the standard payroll practices of
the Company. The Executive shall be entitled to such increases in base salary,
commencing January 1, 1996 and thereafter during the term hereof, as shall be
determined by the Chief Operating Officer and approved by the Compensation
Committee of the Board of Directors of the Company in their sole discretion,
taking account of the performance of the Contract Services Division, the Company
and the Executive, 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 Bonus. (a) In addition to the base salary provided for in
Section 3.1, the Executive shall have a bonus opportunity of fifty percent (50%)
of his base salary (the "Target Bonus") with respect to each fiscal year of the
Company ending during the term of this Agreement, as determined by the Contract
Services Division Executive Compensation Plan (the "Plan"). The determination as
to the amount, if any, of the bonus which the Executive has earned shall be in
the sole discretion of the Company, based on the success of the Executive in
meeting annual objectives under the Plan; provided, however, that for the 1995
and 1996 fiscal years of the Company, the Executive shall be entitled to a
guaranteed bonus in an amount equal to sixty percent (60%) of the Target Bonus
for the applicable fiscal year. The bonus shall be payable upon or within a
reasonable period of time after the receipt of the Company's audited financial
statements for the applicable fiscal year in accordance with the Company's
normal practices.
(b) In the event of the termination of employment of the
Executive pursuant to Section 6.1 (Death), 6.2 (Disability), Section 6.4
(Without Cause) or 6.5 (Voluntary Termination) of this agreement, the Executive
(or his estate or other legal representative) shall be entitled to a bonus for
the fiscal year in which such termination takes place in an amount equal to the
product of (i) the bonus or guaranteed bonus for such fiscal year determined
pursuant to Section 3.2, multiplied by (ii) a fraction, the numerator of which
is the number of days from the beginning of such fiscal year to the date of
termination, and the denominator of which is 365. In the event of the
termination of employment of the Executive pursuant to Section 6.3 (Due Cause)
of this Agreement, the Executive shall
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not be entitled to a bonus for the fiscal year of the Company in which such
termination takes place. The Executive shall not be entitled to a bonus for any
fiscal year of the Company subsequent to the fiscal year in which the
termination of his employment takes place.
3.3 Stock Options. As of the date (the "Grant Date") of the
meeting of the Compensation Committee of the Board of Directors next following
the execution of this Agreement, the Company shall grant to the Executive
incentive stock options to purchase 25,000 shares of the Company's common stock,
par value $.01 per share ("Options"), at an exercise price per share equal to
the market value of the Company's common stock on the Grant Date. The Options
shall:
(i) have a term of ten (10) years from the
Grant Date;
(ii) become exercisable as to 20% of the shares
covered thereby on the first anniversary of the Grant Date, as to an additional
20% of such shares on each of the next three anniversaries of the Grant Date and
as to the final 20% of such shares on a date thirty (30) days prior to the fifth
anniversary of this agreement;
(iii) become exercisable in full upon a Change in
Control of the Company (as hereinafter defined), whether or not the employment
of the Executive shall be terminated.
The Options shall be granted under the 1986 Stock Option Plan of the Company and
shall be evidenced by a Stock Option Certificate embodying the foregoing terms
and other terms and conditions of such Stock Option Plan not inconsistent with
the foregoing terms. For purposes of this Agreement, a Change in Control of the
Company shall be deemed to have occurred if:
(A) a "person" (meaning an individual, a
partnership, or other group or association as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, other than the Executive or a
group including the Executive), either (i) acquires twenty percent (20%) or more
of the combined voting power of the outstanding securities of the Company having
a right to vote in elections of directors and such acquisition shall not have
been approved within sixty (60) days following such acquisition by a majority of
the Continuing Directors (as hereinafter defined) then in office or (ii)
acquires fifty percent (50%) or more of the combined voting power of the
outstanding securities of the Company having a right to vote in elections of
directors; or
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(B) Continuing Directors shall for any reason
cease to constitute a majority of the Board of Directors of the Company; or
(C) all or substantially all of the business
and/or assets of the Company is disposed of by the Company to a party or
parties other than a subsidiary or other affiliate of the Company, in which
the Company owns less than a majority of the equity, pursuant to a partial or
complete liquidation of the Company, sale of assets (including stock of a
subsidiary of the Company) or otherwise.
For purposes of this Agreement, the term "Continuing Director"
shall mean a member of the Board of Directors of the Company who either was a
member of the Board of Directors on the date hereof or who subsequently became a
Director and whose election, or nomination for election, was approved by a vote
of at least two-thirds of the Continuing Directors then in office.
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 Benefit Plans. During the term of this Agreement, the
Executive will be eligible to participate in all employee benefit plans and
programs (including, without limitation Supplemental Benefits Plan, 401(k) Plan,
group life, disability, hospitalization, surgical and major medical insurance
plans of the Company) offered by the Company from time to time to its senior
executive officers, subject to the provisions of such plans and programs as in
effect from time to time.
5.2 Vacation. The Executive shall be entitled to four (4)
weeks vacation per annum.
5.3 Professional Licensure & Association Dues. During the term
of this Agreement, the Company shall pay the Executive's professional licensure
and association dues and costs associated with continuing education credits
including travel and living expenses.
5.4 Loan. (a) The Company agrees to make a loan to the Executive
in the principal amount of $450,000. Such loan shall be made promptly following
the execution of this Agreement, shall bear no interest, and shall be payable in
equal annual
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installments of $90,000 over five years and in full on the fifth
anniversary of the date hereof. The loan shall be evidenced by a Promissory Note
to be executed by the Executive embodying the foregoing terms and other standard
terms and conditions. Notwithstanding the foregoing, $90,000 of the principal
amount of such loan shall be forgiven on each anniversary of the date hereof
(beginning on the first anniversary) that the Executive is employed by the
Company until the fifth anniversary hereof (when the full amount of the loan
will have been forgiven).
(b) On the first business day of 1996, 1997, 1998, 1999,
2000 and 2001, the Company shall pay to the Executive the Additional Payment set
forth in the second column of Schedule A attached hereto opposite such year, in
reimbursement of a portion (equal to such Additional Payment) of the additional
federal, state and local income, health insurance and other taxes to which it is
projected he will become subject as a result of the interest-free loan from the
Company referred to in this Section 5.4. In the event of the termination of the
Executive's employment pursuant to Section 6.1 (Death) or Section 6.2
(Disability), a pro rata portion of the Additional Payment applicable to the
calendar year during which termination occurred shall become due and payable
thirty (30) days after the date of termination. In the event of termination of
the Executive's employment pursuant to Section 6.4 (Without Cause) the Company
shall continue to pay Additional Payments pursuant to Schedule A.
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
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. Any unpaid balance of the loan referred to in Section 5.4 shall be
forgiven on the date of termination of employment. Rights and benefits of the
estate or other legal representative of the Executive (a) with respect to stock
options shall be determined in accordance with the applicable option grant and
(b) 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.
6.2 Disability. If the Executive shall become incapacitated by
reason of sickness, accident or other physical or mental disability and shall be
entitled to payment of benefits under the Company's Supplemental Benefits Plan
disability provision, the employment of the Executive hereunder may be
terminated by the Company or the Executive. In the event of such termination,
the Company shall pay to the Executive the
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difference between disability income and the base salary then in effect for
twenty-four (24) months following termination. Any unpaid balance of the loan
referred to in Section 5.4 shall be forgiven on the date of termination of
employment. Rights and benefits of the Executive (a) with respect to stock
options shall be determined in accordance with the applicable option grant and
(b) 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 and 9.
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. Any
unpaid balance of the loan referred to in Section 5.4 shall be paid by the
Executive to the Company within sixty (60) days after the date of termination of
employment. Rights and benefits of the Executive or his transferee (a) with
respect to stock options shall be determined in accordance with the applicable
option grant and (b) under the benefit plans and programs of the Company shall
be determined in accordance with the provisions of such plans and programs. For
purposes hereof, "Due Cause" shall include (a) the Executive's willful and
continuing failure to discharge his duties and responsibilities under this
Agreement or (b) any material act of dishonesty involving the Company or (c)
conviction of (i) a felony or (ii) any crime or offense involving moral
turpitude. After the satisfaction of any claim of the Company against the
Executive incidental to such 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 and 9.
6.4 Termination by the Company Without Cause. 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
severance pay in the form of salary continuation for a period of two (2) years
commencing on the date of termination, at a rate equal to the base salary
provided for in Section 3.1 (at the annual rate then in effect). The Executive
shall be under no obligation to seek other employment and shall be under no
obligation to offset any amounts earned from such other employment (whether as
an employee, a consultant or otherwise) against such payments. During the two
(2) year severance pay period referred to in this Section 6.4, the Company shall
continue to carry the group life, disability, Supplemental
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Benefits Plan (excluding Company match payable during severance period),
hospitalization, surgical and major medical insurance coverage for the Executive
which were being provided to the Executive immediately prior to the termination
of his employment (or such other benefits as shall be provided to senior
executives of the Company in lieu of such benefits from time to time during such
two (2) year period) on the same basis, including Company payment of premiums
and Company contributions, as such benefits are provided to other senior
executives of the Company. Any unpaid balance of the loan referred to in Section
5.4 shall continue to be forgiven by the Company in installments as provided in
Section 5.4 (but without regard to the requirement that the Executive be
employed by the Company). Rights and benefits of the Executive or his transferee
(a) with respect to stock options shall be determined in accordance with the
applicable option grant and (b) under the other 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
and 9.
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. Any unpaid balance of the loan referred to in Section 5.4
shall be paid by the Executive to the Company within sixty (60) days after the
date of termination of employment. Rights and benefits of the Executive or his
transferee (a) with respect to stock options shall be determined in accordance
with the applicable stock option grant and (b) 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 and 9.
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
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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, (x) whether as
principal, consultant, employee, partner, agent, stockholder, limited partner or
other investor (other than an investment 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 ("Competing
Business"), except that, as to any entity whose business is diversified and that
has derived during each of the preceding three calendar years less
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than fifty percent (50%) of its revenues from Competing Business, the Executive
may so engage in that part of the business that is not Competing Business,
provided that the Company, prior to the Executive's having accepted such
engagement, shall receive separate written assurances satisfactory to the
Company from such entity and from the Executive that the Executive will not
render services directly or indirectly to the part(s) of the entity engaged in
Competing Business or (y) as a principal, consultant, employee, partner, agent,
stockholder, limited partner or other investor of or with Manor Care, Inc. (the
"Competition Restriction); or
(b) solicit or entice or endeavor to solicit or entice
away from the Company any person who was an "officer" (as such term is used in
Rule 16a-1 under Section 16 of the Securities Exchange Act of 1934) of the
Company, 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 officer (as defined above) of the Company 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) twelve (12) months in the case of a termination
of employment pursuant to Section 6.3 (Due Cause) or Section 6.5 (Voluntary
Termination);
(b) twenty-four (24) months as to the Competition
and Solicitation Restrictions and twelve (12) months as to the Hiring
Restriction in the case of a termination of employment pursuant to Section 6.4
(Without Due Cause) or in the case of a termination of employment upon or
following expiration of the term of this Agreement; and
(c) twenty-four (24) months as to the Competition and
Solicitation Restrictions and twelve (12) months as to the Hiring Restriction in
the case of a termination pursuant to Section 6.2 (Disability), 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, and subject to the Company's continued payment to the Executive
during such twenty-four (24) month
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period of the base salary provided for in Section 3.1 (at the annual rate in
effect at the date of termination).
8.3 Payment in the Event of Breach. In the event that the
Executive shall breach the Competition Restriction referred to in Section
8.1(a)(y) (relating to Manor Care, Inc.), the Executive shall repay to the
Company on demand an amount equal to the sum of (i) the unpaid balance of the
loan referred to in Section 5.4, plus (ii) the amount of the loan theretofore
forgiven by the Company pursuant to Section 5.4, plus (iii) the amount
theretofore paid to the Executive by the Company pursuant to Section 5.4(b). The
Executive acknowledges and agrees that the loan, forgiveness of the loan and
payments to be made to him, all as provided in Section 5.4, are made by the
Company in consideration of the agreement by the Executive to the Competition
Restriction referred to in Section 8.1(a)(y) (relating to Manor Care, Inc.) and,
accordingly, that the payment to be made by him to the Company pursuant to this
Section 8.3 in the event of the breach of such covenant by the Executive is fair
and reasonable. Further, it is understood and agreed that the foregoing payment
shall be in addition to, and not in lieu of, any other right or remedy which the
Company may have at law or in equity against the Executive in the event of
breach of such covenant.
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.
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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 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. 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 Operating Officer
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If to the Executive:
Xxxxx X. Xxxxx
0 Xxxxxxx Xxx
Xxxxxxxxxxxx, XX 00000
16. 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.
17. 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.
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18. 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.
19. 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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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
NOVACARE, INC.
By /s/ XXXXXXX X. XXXXXX
--------------------------
Xxxxxxx X. Xxxxxx
President and Chief
Operating Officer
/s/ XXXXX X. XXXXX
------------------------------
Xxxxx X. Xxxxx
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SCHEDULE A
Year Additional Payment
---- ------------------
1996 $8,741.25
1997 6,993.00
1998 5,244.75
1999 3,496.50
2000 1,748.25
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PROMISSORY NOTE
$450,000 January 6, 1995
FOR VALUE RECEIVED, the undersigned, XXXXX X. XXXXX (the
"Borrower"), hereby promises to pay to NOVACARE, INC., a Delaware corporation
(the "Lender"), the principal sum of Four Hundred Fifty Thousand Dollars
($450,000), without interest. Principal shall be payable in five equal annual
installments of $90,000 on January 6 of each year beginning January 6, 1996 and
ending January 6, 2000. Any principal that is not paid when due (whether at the
stated maturity, by acceleration or otherwise) shall thereafter bear interest at
the rate of seven percent (7%) per annum until paid in full.
All payments hereunder shall be made in money of the United
States of America which at the time of payment is legal tender for the payment
of public and private debts, at the offices of the Lender, 0000 Xxxx Xxxxx
Xxxxxx, Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000 (or at such other office as the
Lender may from time to time designate by notice to the Borrower).
Section 1. Prepayment.
1.1 Optional. This Promissory Note may be prepaid in full or in
part, at any time and without notice, at the option of the Borrower, without
charge, premium or penalty therefor.
1.2 Mandatory. This Promissory Note shall be prepaid within sixty
(60) days after termination of the employment of the Borrower with the Lender.
Section 2. Events of Default, Etc.
2.1 Events of Default. If any one or more of the following
events ("Events of Default") shall happen:
(a) default shall be made by the Borrower in the payment of
principal or interest under this Promissory Note when and as the same shall
become due and payable; or
(b) default shall be made by the Borrower in the due performance
or observation of any other covenant, agreement or provision contained in this
Promissory Note to be performed or observed by the Borrower, or a breach shall
exist in any representation or warranty by the Borrower contained herein and
such default or breach shall continue for a period of ten (10) days after notice
to the Borrower with respect thereto; or
(c) the Borrower shall:
(i) admit in writing his inability to pay his debts
generally as they become due;
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(ii) file a petition in bankruptcy under the bankruptcy
laws of the United States or any other jurisdiction (as such laws are
now or in the future amended) or any admission seeking the relief
therein provided;
(iii) make an assignment for the benefit of his
creditors;
(iv) consent to the appointment of a receiver or
trustee for all or a substantial part of his property or to the filing
of a petition against him under said bankruptcy laws; or
(v) be adjudicated a bankrupt; or
(d) a proceeding shall have been instituted seeking a decree or
order for relief in respect of the Borrower in an involuntary case under
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Borrower or for any
substantial part of his property and such proceeding shall remain undismissed or
unstayed and in effect for a period of thirty (30) days or such court shall
enter a decree or order granting the relief sought in such proceeding; or
(e) a court of competent jurisdiction shall assume custody of
or sequester all or substantially all the property of the Borrower; or
(f) an attachment shall be made on any substantial part of
the property of the Borrower;
then in each and every case the Lender may (unless every such Event of Default
shall have been made good and cured) by notice in writing to the Borrower
declare the unpaid principal of this Promissory Note to be forthwith due and
payable and thereupon such principal together with interest accrued to the date
of payment shall become so due and payable without presentation, protest or
further demand or notice of any kind, all of which are hereby expressly waived;
provided that in the case of an Event of Default specified in subsections (c),
(d), (e) or (f) above, no notice to the Borrower shall be required and upon the
occurrence of such Event of Default the unpaid principal of this Promissory Note
together with interest accrued to the date of payment shall become immediately
due and payable.
2.2 Collection Costs. The Borrower covenants that if default be
made in any payment on this Promissory Note, the Borrower will pay to the Lender
such further amount, to the extent lawful, as shall be sufficient to cover the
cost and
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expense of collection, including reasonable compensation to counsel of
the Lender for all services rendered in that connection.
2.3 Cumulative Powers. All powers and remedies given hereunder to
the Lender shall, to the extent permitted by law, be deemed cumulative and shall
not be exclusive of any other powers and remedies available to the Lender
hereunder, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Promissory Note,
and every power and remedy given hereunder or by law to the Lender may be
exercised from time to time, and as often as shall be deemed expedient by the
Lender.
Section 3. Miscellaneous.
3.1 No Waiver. No waiver by the Lender of any breach hereof or
default hereunder shall be deemed a waiver of any preceding or succeeding breach
or default and no failure of the Lender to exercise any right or privilege
hereunder shall be deemed a waiver of the Lender's rights to exercise the same
or any other right or privilege at any subsequent time or times.
3.2. Notice. Each notice or communication required or
permitted hereunder shall be deemed validly given and received if delivered
personally or if sent by registered or certified mail, return receipt
requested, addressed as follows:
(a) If to the Lender:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
(b) If to the Borrower:
0 Xxxxxxx Xxx
Xxxxxxxxxxxx, XX 00000
or to such other address as the party to whom notice is to be given may
subsequently designate by like notice. A notice given in accordance with the
preceding sentence shall be deemed to have been duly given upon receipt, if
delivered personally, or upon mailing, if given by registered or certified mail,
return receipt requested.
3.3 Waiver of Presentment and Notice of Dishonor. The Borrower
and all endorsers, guarantors and any other parties that may be liable under
this Promissory Note hereby waive presentment, notice of dishonor, protest and
all other demands and notices in connection with the delivery, acceptance,
performance or enforcement of this Promissory Note.
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3.4. Binding Effect. This Promissory Note shall be binding
upon the Borrower and his heirs, personal representatives, successors and
assigns and shall inure to the benefit of the Lender and its successors and
assigns.
3.5. Governing Law. This Promissory Note shall be construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of law thereof.
3.6. Contemporaneous Agreement. This Note is being delivered
in conjunction with a certain Employment Agreement dated this date between
Lender and Borrower and is subject to certain terms and conditions set forth
in the Employment Agreement.
3.7. Headings. The headings of the Sections and subparagraphs
of this Promissory Note are inserted for convenience only and shall not
constitute a part hereof.
IN WITNESS WHEREOF, the Borrower has duly executed and delivered
this Promissory Note as of the date first above written.
/s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
