SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.98
SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SIXTH AMENDMENT (the “Amendment”) is made as of the 18th day of December, 2008, by and
between SELECT MEDICAL CORPORATION, a Delaware corporation (“Employer”), having an address at 0000
Xxxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000, and XXXXX X. XXXXX, an individual (“Employee”),
residing at 0000 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000.
BACKGROUND
Employer and Employee executed and delivered that certain Employment Agreement, dated
December 16, 1998 (the “Agreement”). Employer and Employee subsequently amended the Agreement on
each of October 15, 2000, October 26, 2001, November 1, 2002, December 31, 2003 and April 25,
2005. Employer and Employee now desire to amend the Agreement to, among other things, comply with
Section 409A of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, covenant and agree
as follows:
AGREEMENT
1. Section 5(d) of the Agreement is hereby amended and restated in its entirety to
read as follows:
“(d) Following any involuntary termination of Employee’s
employment with Employer (other than a termination for cause in accordance with
Section 5(c) above), Employer shall (i) pay to Employee in a lump-sum on the first
business day of the seventh month following such termination of employment, an
amount equal to one year of Employee’s base salary at the rate in effect
immediately prior to such termination of employment and (ii) reimburse Employee for
the cost of his COBRA premiums until the earlier of (A) the date on which the then
current Employment Term would have expired had Employee remained employed by
Employer, (B) the date on which Employee becomes employed by another employer, (C)
eighteen (18) months following such termination of employment by Employer or (D)
Employee’s death (the earlier being the “Reimbursement Period”), with each such
reimbursement to be made on the last day of the month following the month in which
Employee incurred the applicable expenses and each such reimbursement obligation
being limited to the cost Employer would otherwise incur in providing such health
insurance coverage to Employee had Employee remained employed by Employer during
the Reimbursement Period. In addition, if Employee becomes employed by another
employer, but the
cost of health insurance coverage to Employee under his new employer’s health care plan
exceeds the cost of health insurance coverage to Employee under Employer’s health care
plan immediately prior to such termination, then Employer shall reimburse Employee such
difference until the earlier of (A) the date on which the then current Employment Term
would have expired had Employee remained employed by Employer, (B) eighteen (18) months
following Employee’s termination of employment with Employer or (C) Employee’s death, with
each such reimbursement to be made on the last day of the month following the month in
which Employee incurred the applicable expenses. Upon the death of Employee before receipt
of the severance payments described in this Section 5(d)(i) and any reimbursement of
eligible expenses incurred by Employee under this Section 5(d) prior to his death,
Employer shall make such severance payments and reimbursements to the executors or
administrators of Employee’s estate in the same manner as if Employee had not died.”
2. A new Section 10.11 is hereby added to the Agreement to read as follows:
“10.11 Section 409A of the Code. Notwithstanding any other provision of this
Agreement to the contrary, if Employee is a “specified employee” within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations issued thereunder, and a payment or benefit provided for in this Agreement
would be subject to additional tax under Code Section 409A if such payment or benefit is
paid within six months after Employee’s “separation from service” (within the meaning of
Code Section 409A), then such payment or benefit required under this Agreement shall not be
paid (or commence) during the six-month period immediately following Employee’s separation
from service except as provided in the immediately following sentence. In such an event,
any payments or benefits that would otherwise have been made or provided during such
six-month period and which would have incurred such additional tax under Code Section 409A
shall instead be paid to Employee in a lump-sum cash payment on the earlier of (i) the
first regular payroll date of the seventh month following Employee’s separation from
service or (ii) the 10th business day following Employee’s death. If Employee’s
termination of employment hereunder does not constitute a “separation from service” within
the meaning of Code Section 409A, then any amounts payable hereunder on account of a
termination of Employee’s employment and which are subject to Code Section 409A shall not
be paid until Employee has experienced a “separation from service” within the meaning of
Code Section 409A. In addition, no right to reimbursement hereunder or otherwise may be
liquidated or exchanged for any other benefit and any reimbursement to which Employee is
entitled hereunder shall be made later than the last day of the calendar year following the
calendar year in which such expenses were incurred.”
3. Except as amended hereby, the Agreement shall continue in effect in accordance with its terms.
Please indicate your acceptance of the above Amendment by signing below in the space
indicated.
| Very truly yours, SELECT MEDICAL CORPORATION, a |
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| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Xxxxxxx X. Xxxxxx, | ||||
| Executive Vice President | ||||
| /s/ Xxxxx X. Xxxxx | ||||
