Common use of Conditions to Severance Payments Clause in Contracts

Conditions to Severance Payments. The payments described in Section 6(c) above are expressly contingent and conditioned upon (i) Employee’s execution of a standard separation and general release agreement, in a written form acceptable to the Company, containing a release of any and all claims by Employee against the Company, whether such claims are actual or potential, or known or unknown (the “Release”); and (ii) Employee’s compliance with the restrictive covenants and all post-termination obligations to which Employee is subject, including, but not limited to, the obligations set forth in Section 7 of this Agreement, and in that certain Confidentiality and Assignment Agreement executed by Employee in favor of the Company attached hereto as Exhibit A (the “Employee Assignment Agreement”). The Company retains the right, in good faith, to terminate the initiation or continuation of payments described in Section 6(c) (as well as to pursue any other remedies available at law or in equity) if it obtains evidence that Employee breached Employee’s obligations under any of the post-employment covenants set forth in this Agreement or in the Employee Assignment Agreement, or it is determined that Employee engaged in conduct which would have justified termination With Cause. Further, Company may, in its sole discretion, waive Employee’s compliance with the restrictive covenants contained in Section 7 of this Agreement, by delivering written notice of such waiver to Employee, and upon delivery of such written waiver Company shall not be obligated to make any payments or further payments, as the case may be, to Employee pursuant to Section 6(c)(i) above.

Conditions to Severance Payments. Except as provided below in this Article 5.3, none of the Severance Payments will be subject to reduction as the result of future compensation earned or received by Employee (including by self-employment), and Employee shall have no duty to mitigate his damages. The payments Severance Payments shall, however, be conditioned upon: 5.3.1. LifeCare’s receipt of a timely and effective Release of Claims executed and performed by Employee (or his legal representative, estate or heirs) ins substantially the form of Exhibit A to this Agreement (the “Release Agreement”) following termination of employment hereunder and by the deadline specified therein, and returning it to LifeCare within thirty (30) calendar days of the date of termination of employment; and EMPLOYMENT AGREEMENT 5 5.3.2. The compliance by Employee (or his legal representative, estate, or heirs) with Articles 6, 7, 8, and 9 after the Termination Date as specified in those Articles, as well as with the Release Agreement. For purposes of Articles 6, 7, 8 and 9, the term “LifeCare” shall be deemed to include LifeCare, LifeCare Holdings, Inc. and any of their respective subsidiaries or affiliates. (a) the compensation, benefits, and other payment described in this Agreement are intended to comply with the requirements of Code Section 6(c409A and the treasury regulations and other guidance issued thereunder, as in effect from time to time, to the extent they are subject to Code Section 409A, or to be exempt from such requirements, regulations and guidance (where an exemption is available), and shall be construed accordingly. For purposes of Code Section 409A, all references herein to termination of employment or similar terms, when used in a context that bears upon the payment or timing of payment of any amounts or benefits that constitute or could constitute “nonqualified deferred compensation” within the meaning of Code Section 409A, shall be construed to require a “separation from service” (as that term is defined in Treasury Regulation Section 1.409A-1(h), from LifeCare and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with LifeCare under Treasury Regulation Section 1.409A-1(h)(3). LifeCare may, but need not, elect in writing, subject to the applicable limitations under Code Section 409A, any of the special elective rules prescribed in Treasury Regulation Section 1.409A-1(h) above are expressly contingent for purposes of determining whether a “separation of service” has occurred. Any such written election shall be deemed part of this Agreement. In addition, each payment made under this Agreement shall be treated as a separate payment and conditioned upon the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments. In no event may Employee, directly or indirectly, designate the calendar year of payment (ib) Notwithstanding any provision of this Agreement to the contrary, if, at the time of the Employee’s execution termination of employment with LifeCare the Employee is a standard separation and general release agreement“specified employee” (as hereinafter defined), in a written form acceptable to the Company, containing a release of any and all claims amounts payable in connection with such separation from service that constitute “nonqualified deferred compensation” subject to Code Section 409A, as determined by Employee against the Company, whether such claims are actual or potential, or known or unknown (the “Release”); and (ii) Employee’s compliance with the restrictive covenants and all post-termination obligations to which Employee is subject, including, but not limited to, the obligations set forth in Section 7 of this Agreement, and in that certain Confidentiality and Assignment Agreement executed by Employee in favor of the Company attached hereto as Exhibit A (the “Employee Assignment Agreement”). The Company retains the right, in good faith, to terminate the initiation or continuation of payments described in Section 6(c) (as well as to pursue any other remedies available at law or in equity) if it obtains evidence that Employee breached Employee’s obligations under any of the post-employment covenants set forth in this Agreement or in the Employee Assignment Agreement, or it is determined that Employee engaged in conduct which would have justified termination With Cause. Further, Company may, LifeCare in its sole discretion, waive and that would (but for this sentence) be payable within six months following such separation from service, shall instead be paid a lump sum on the first payroll date after the date that follows the Employee’s compliance with separation from service by six (6) months, or, if the restrictive covenants contained Employee dies before such payment, within sixty (60) days after Employee’s death. For purposes of this Section, “specified employee” means an individual determined by LifeCare to be a specified employee as defined in subsection (a)(2)(B)(i) of Code Section 7 409A. LifeCare may, but need not elect in writing, subject to the applicable EMPLOYMENT AGREEMENT 6 limitations under Code Section 409A, any of the special elective rules prescribed in Treasury Regulation Section 1.409A-1(i) for purposes of determining “specified employee” status. Any such written election shall be deemed part of this Agreement. LifeCare may reduce the amount of or discontinue the Severance Payments to be made to Employee (or his legal representative, by delivering written notice of such waiver to Employeeestate, or heirs) if, and upon delivery LifeCare shall be entitled to a return of such written waiver Company shall not be obligated amounts of the Severance Payments made to make the extent that, there is or has been any payments violation of any of Articles 6, 7, 8, and 9 or further payments, as of the case may be, to Employee pursuant to Section 6(c)(i) aboveRelease Agreement.