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SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement (the "Amendment") made
this 1st day of July, 1998, by and between NovaCare, Inc., a Delaware
corporation (the "Company"), and Xxxxx 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 April 14, 1997, amended as of May 12, 1998 (the
"Employment Agreement"); and
WHEREAS, the parties now wish to amend the Employment Agreement to
modify the benefits to which Executive is entitled in the event of a termination
of Executive's employment "without cause";
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree as follows:
1. Section 6.4(a)(D) is hereby deleted and replaced with the following
new subsection (a)(D):
"(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, (X) if the date of termination of the Executive's employment shall
occur during the first six months of any fiscal year of the Company, the term
"Final Bonus" shall mean an amount equal to the bonus earned by the Executive
for the last completed fiscal year of the Company preceding the date of
termination of his employment and (Y) if the date of termination of the
Executive's employment shall occur during the last six months of any fiscal year
of the Company, the term "Final Bonus" shall mean an amount equal to the greater
of (i) the bonus earned by the Executive for the last completed fiscal year of
the Company preceding the date of termination of his employment or (ii) the
bonus for the fiscal year in which the termination of employment occurs, as
determined pursuant to Section 3.2(a) and before prorating pursuant to Section
3.2(b)."
2. Section 6.4 is hereby further amended by adding new subsections (d)
and (e) as follows:
"(d) During the Severance Pay Period, the Company shall
continue to provide life, disability, Supplemental Benefits Plan
(excluding Company match payable during the Severance Pay Period),
medical, and dental coverage for the Executive at the levels 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 twelve (12) month 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.
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(e) Notwithstanding the foregoing, if the termination of
Executive's employment under this Section 6.4 occurs within two years
after a Change in Control (as defined in Section 6.7), the amounts
referred to in subsection 6.4 (a) shall be paid to Executive in a lump
sum on the date of termination; and 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."
3. Section 6.7 is hereby amended to provide that, in the event of a
termination of employment following a Change of Control as addressed in that
Section, the amount referred to in paragraph (D) of Section 6.4 shall be paid on
the date of termination (and references in Section 6.7 to the "Payment Date"
shall be disregarded).
4. In all other respects the Employment Agreement shall remain in full
force and effect without change.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
NOVACARE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Chief Executive Officer
/s/ Xxxxx X. XxXxxx
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Xxxxx X. XxXxxx
