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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") made as
of the first day of July, 1998 by and between NovaCare, Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxxxx (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 July 1, 1994, as amended on February 2, 1995 (the "Employment
Agreement"); and
WHEREAS, Executive has heretofore relinquished his position as Chief
Executive Officer of the Company, but continues to serve the Company as the
Chairman of its Board of Directors;
WHEREAS, the parties now wish to amend and restate the Employment
Agreement, effective as of July 1, 1998, to modify the Executive's annual salary
and the manner in which Executive's annual bonus shall be determined for the
fiscal years ending June 30, 1999 and thereafter;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereby amend and restate the Employment
Agreement 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 as of July 1, 1994 and shall terminate on June 30,
2000, unless extended or sooner terminated in accordance with this Agreement.
1.3 Automatic Extension. As of June 30, 1999, and June 30 on
each subsequent year (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.
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2. POSITION, DUTIES.
The Executive shall serve in the position of Chairman of the Board
of Directors of the Company. The Executive shall perform, faithfully and
diligently, such duties, and shall have such responsibilities, appropriate to
said positions, as shall be assigned to him from time to time by the Board of
Directors of the Company. The Executive shall report directly to the Board of
Directors of the Company. The Executive shall devote such time and attention to
the performance of his duties and responsibilities hereunder as shall be
necessary for the proper discharge thereof.
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 during the term hereof as shall be determined by
the Compensation Committee of the Board of Directors of the Company in its 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 chief executive officers of 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 Incentive Bonus
(a) In addition to the base salary provided for in
Section 3.1, the Executive shall be eligible for an incentive bonus target of
100% of base salary with respect to each fiscal year of the Company ending
during the term of this Agreement, payable in accordance with the terms of the
Company's Executive Incentive Compensation Plan based on attainment of stated
objectives, commencing with the fiscal year ending June 30, 1999.
The parties agree that, with respect to the fiscal
year ending June 30, 1998, Executive's incentive bonus shall be determined based
on the terms and conditions of the Employment Agreement, without regard to the
amendments contained in this Agreement.
(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), 6.5 (Voluntary Termination), 6.6 (Constructive Termination) or
6.7 (Change of Control) 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
"Termination Bonus" (as defined herein) 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. As used herein,
the term "Termination Bonus" shall mean an amount equal to the greater of (i)
the amount determined pursuant to Section 3.2 (a), or (ii) $580,000. In the
event of the termination of employment of the Executive pursuant to Section 6.3
(Due Cause) of this Agreement, the Executive shall not be entitled to a bonus
for the fiscal
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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 pursuant to Section 6.1
(Death), 6.2 (Disability), 6.3 (Due Cause) or 6.5 (Voluntary Termination) takes
place.
3.3 Stock Options. On November 3, 1993 (the "Grant Date"), the
Company granted to the Executive options (the "Options") to purchase 2,000,000
shares of the Company's common stock, par value $.01 per share ("Common Stock"),
at an exercise price per share equal to $19.50, which is 150% of the market
value of the Common Stock on the Grant Date. The Options:
(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 and as to an additional 20%
of such shares on each of the next four anniversaries of the Grant Date;
(iii) except as provided in clause (iv) of this Section
3.3, remain exercisable for a period of twelve (12) months commencing on the
date of termination of employment of the Executive, but only as to those shares
as to which the Options were exercisable at the date of termination;
(iv) become exercisable in full upon a Change in Control
of the Company (as defined in Section 6.7), whether or not the employment of the
Executive shall be terminated, and upon the termination of the employment of the
Executive pursuant to Section 6.1 (Death), Section 6.2 (Disability) or Section
6.4 (Without Due Cause) and, in any such case, shall remain exercisable for the
balance of the ten year term; and
(v) are transferable at any time by the Executive to
members of his immediate family or to trusts for the benefit of the Executive or
members of his immediate family.
The Options are or shall be evidenced by a Stock Option Agreement or other
appropriate documentation embodying the foregoing terms and other standard terms
and conditions not inconsistent with the foregoing terms. No additional stock
options are to be issued for the next five fiscal years.
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.
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5. BENEFITS, PERQUISITES.
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, subject to the provisions of such plans and programs as in effect
from time to time.
5.2 Perquisites.
(a) [intentionally omitted]
(b) [intentionally omitted]
(c) During the term of this Agreement, the Company shall
provide the Executive with first priority use of a private corporate jet both
(i) for travel in connection with the performance of his duties hereunder and
(ii) for personal travel. The obligation of the Company to provide the Executive
with the use of a private corporate jet for personal travel shall be on the
terms heretofore approved by the Compensation Committee of the Board of
Directors and shall cease during any period that the Company does not own or
lease a private corporate jet.
(d) The Company will provide the Executive and/or
members of his family with life insurance through a split dollar arrangement on
terms to be agreed upon by the Company and the Executive. The Company's premium
costs shall be applied against the Executive's incentive bonuses hereunder.
6. TERMINATION OF EMPLOYMENT.
6.1 Death. In the event of the death of the Executive, the
Company shall (i) 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 incentive bonus which shall be or become
payable pursuant to Section 3.2. Rights and benefits of the estate or other
legal representative or transferee of the Executive (a) with respect to the
Options and other benefit plans shall be determined in accordance with Section
3.3 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 nor 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
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' notice to the other. In the
event of such termination, the Company shall (a) 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
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not theretofore paid and (b) pay to the Executive any bonus which shall be or
become payable under Section 3.2. Rights and benefits of the Executive or his
transferee (a) with respect to the Options shall be determined in accordance
with Section 3.3 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,
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. The Company shall also pay to the Executive any bonus which shall be
or become payable to the Executive under Section 3.2 with respect to any fiscal
year of the Company ended prior to the date of such termination. Rights and
benefits of the Executive or his transferee (a) with respect to the Options
shall be determined in accordance with Section 3.3 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
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 a majority of the Board of Directors 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 majority of the
Board of Directors 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
Board of Directors 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 seven (7) 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 seven (7) 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. 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):
(i) the Company shall pay to the Executive:
(A) 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;
(B) 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 greater of
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$580,000 per annum or the base salary provided for in Section 3.1 (at the annual
rate then in effect);
(C) any incentive bonus which shall be or become
payable to the Executive pursuant to Section 3.2 (b);
(D) 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, the term "Final Bonus" shall mean an amount equal to the greater
of (i) $580,000 or (ii) the annual 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. The
Company shall continue to pay any premiums payable on any split dollar life
insurance policies for a period of two (2) years commencing on the date of
termination. Rights and benefits of the Executive or his transferee (a) with
respect to the Options shall be determined in accordance with Section 3.3 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, 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 (unless such termination
is within one year following a Change in Control of the Company, in which case
the provisions of Section 6.7 hereof shall be applicable), 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 Company shall also pay to the Executive any bonus which
shall be or become payable pursuant to Section 3.2. Rights and benefits of the
Executive or his transferee (a) with respect to the Options shall be determined
in accordance with Section 3.3 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,
9 and 15.
6.6 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 change in the nature or scope
of the authorities, powers, functions, duties, or responsibilities attached
to the Executive's position as described in Section 2;
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(C) decreases the Executive's base salary, changes
the bonus formula provided for in Section 3 or eliminates any of the benefits
or perquisites provided for in Section 5; or
(D) fails to cause the election of the Executive to
the Board of Directors of the Company and as Chairman of the Board of
Directors;
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 (other than for Due
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.
6.7 Termination of Employment Following a Change in Control.
Anything herein to the contrary notwithstanding, the Executive may terminate his
employment with the Company during the one (1) year period following a Change in
Control, and such termination shall constitute a termination of the Executive's
employment by the Company pursuant to Section 6.4 (Without Cause); provided,
however, that the amounts referred to under clause (i) of Section 6.4 shall be
paid to the Executive in a lump sum on the date of termination. 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
(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
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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.
6.8 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).
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:
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(a) engage, directly or indirectly, whether as
principal, consultant, employee, partner, 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, provided that,
the Executive shall not be prohibited from continuing to conduct the existing
lines of business of Apogee, Inc. and Hearing Health Services 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);
(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 Section 6.6 (Constructive Termination);
(c) twenty-four (24) months as to the Competition
Restriction and twelve (12) months as to the Solicitation and Hiring
Restrictions in the case of a termination pursuant to Section 6.7 (Change in
Control); and
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(d) 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) 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, and subject to the
Company's continued payment to the Executive during such twenty-four (24) month
period of the base salary provided for in Section 3.1 (at the annual rate in
effect at the date of termination).
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.
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.
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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 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.
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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 Operating Officer
If to the Executive:
Xxxx X. Xxxxxx
c/x Xxxxxx Management Company
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, 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.
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
Chief Executive Officer
/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
