EXHIBIT 10.17
AMENDMENT No. 1 TO
EMPLOYMENT AGREEMENT
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This is an Amendment, dated August 8, 2000 (the "Amendment") to the
Employment Agreement made as of the 1st day of March, 2000 (the "Employment
Agreement") by and between SELECT MEDICAL CORPORATION, a Delaware corporation
(the "Company"), and XXXXX X. XXXXXXXX, an individual (the "Employee").
Background
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The Company and the Employee executed and delivered the Employment
Agreement. The Company and the Employee now desire to amend the Employment
Agreement as hereinafter provided.
Accordingly, and intended to be legally bound hereby, the Company and the
Employee agree as follows:
Agreement
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1. Effective as of the first of the Company's payroll periods beginning
after the Refinancing Date (as defined in paragraph 3 of this Amendment), the
Employee's base salary under Section 3.01 of the Employment Agreement shall be
increased to $800,000.
2. Effective upon the Refinancing Date, the Employment Agreement is hereby
amended by addition of the following new Section 3.07:
"3.07 Split Dollar Life Insurance. Provided that the Employee is then
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employed by the Company, and that the conditions of subsections a. through d.
below are satisfied, the Company will pay premiums on the life insurance
policies held in the Xxxxx X. Xxxxxxxx Irrevocable Trust under deed of trust
dated October 10, 1987, of which Xxxxxxx X. Xxxxxxx ("Trustee") is trustee
("Employee's Insurance Trust"), as follows:
(1) during the year 2000, the Company will pay a total of
$750,000, plus;
(2) during each of the nine calendar years beginning with the year
2001, the amount of $1,250,000; provided that:
a. Split Dollar Agreement. The Trustee of Employee's Life
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Insurance Trust shall have entered into a split dollar agreement with Company,
substantially in the form attached as Exhibit 1 to this Amendment pursuant to
which the Company is entitled to be repaid the aggregate amount of the premiums
paid under this Section 3.07 within 60 days following the earlier of the
surrender of the life insurance policies with respect to which the Company has
paid premiums, or the death of the Employee. If some, but fewer than all of such
policies are surrendered, the Company will be entitled to be repaid that
percentage of the aggregate premiums paid hereunder that the cash value received
upon such surrender is of the total cash value of the policies upon with the
Company has paid premiums hereunder.
b. Collateral Assignment. The Trustee of Employee's Life Insurance
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Trust shall have entered into a collateral assignment with respect to each
policy upon which the Company is to pay premiums, substantially in the form
attached as Exhibit 2 to this Amendment, pursuant to which the obligation to
repay the Company the premiums paid by it, as described in paragraph a. above,
will be secured.
c. Delivery to Insurance Company. The Trustee of Employee's Life
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Insurance Trust shall provide the Company with evidence, reasonably satisfactory
to the Company, that the collateral assignments described in paragraph b above
have been delivered to and received by each insurance company issuing any policy
which is the subject of such a collateral assignment.
d. Assurances to Company. The Employee and the Trustee of Employee's
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Life Insurance Trust shall have delivered to the Company assurances, reasonably
satisfactory to the Company, that the cash values of the insurance policies on
which the Company is to pay premiums hereunder, net of any policy loans or other
encumbrances that exist with respect to such policies, are sufficient, or will
be immediately following the payment of such premiums, to discharge the
obligation to repay the Company the aggregate amount of premiums paid by it in
the event of the surrender of those policies by the Employee or the Trustee of
Employee's Life Insurance Trust."
3. For purposes of the Employment Agreement, as amended by Amendment No. 1,
the term "Refinancing Date" shall mean the first date upon which:
a. the Company has closed the refinancing of its Second Amended and
Restated Credit Agreement dated as of November 19, 1999, to the reasonable
satisfaction of the Company; and
b. after that refinancing has been accomplished, the debt created
thereby is solely that of the Company (and its subsidiaries) and no shareholder
or other investor in the Company guarantees or is otherwise directly obligated
to repay that debt.
4. Survival. The obligation to repay the Company the aggregate amount of
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premiums paid by under Section 3.07 of the Employment Agreement as amended by
this Amendment No. 1, shall survive the termination of the Employment Agreement
until the Company has fully recovered the aggregate amount of the premiums paid
by it as described in this Section 3.07.
5. Except as amended hereby, the Employment Agreement shall continue in
effect in accordance with its terms.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SELECT MEDICAL CORPORATION
Attest: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxxxx,
Secretary Vice President and Controller
Witness: [ILLEGIBLE] /S/ Xxxxx X. Xxxxxxxx (SEAL)
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Xxxxx X. Xxxxxxxx
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