Document:

ex10-59

 

Exhibit 10.59

SELECT MEDICAL CORPORATION

P.O. Box 2034, 4716 Old Gettysburg Road

Mechanicsburg, Pennsylvania 17055

February 23, 2001

Mr. James J. Talalai

Select Medical Corporation

P.O. Box 2034

4716 Old Gettysburg Road

Mechanicsburg, PA 17055

         Re: Amendment to Agreement in the Event of a Change of Control of SMC

Dear Mr. Talalai:

         The following will confirm our desire to amend the Letter Agreement dated
as of March 1, 2000 (the Letter Agreement) of Select Medical Corporation, a
Delaware corporation (the Company), with you concerning the consequences upon
certain terminations of your employment in connection with a change in control
of the Company.

         In consideration of your past and continued service to the Company and in
consideration of the mutual covenants and agreements contained in this
Amendment to the Letter Agreement (the Amendment), the Company and you hereby
agree, intending to be legally bound hereby, as follows:

         1.     The portion of Section 1 of the Letter Agreement which appears before
clause (ii) is hereby amended and restated as follows:

	 	 	A Covered Termination shall be deemed to occur if (i) within the five-year
period immediately following a Change of Control (as defined below), (a)
your employment with the Company is terminated by the Company without
Cause (as defined below), (b) there is a reduction by the Company in your
compensation from that in effect prior to such Change of Control, or (c)
you are required to be based anywhere other than the Company’s principal
executive offices in (or within 25 miles of) Mechanicsburg, Pennsylvania
(except for required travel on the Company’s business to an extent
substantially consistent with your business travel obligations prior to
the Change of Control),

         2.     Section 3(c) of the Letter Agreement is hereby amended and restated as
follows:

 

 

         (c)  Good Reason. For purposes of this Letter Agreement, you shall have
Good Reason to terminate your employment after a Change of Control if you
make good faith determination that, as a result of such Change of Control,
you are unable to perform your services effectively or there is any
significant adverse change in your authority or responsibilities, as
performed immediately prior to such Change of Control.

         3.     The Letter Agreement is hereby amended by the addition of the following
Section 7 in its entirety, to be inserted immediately after Section 6 in its
entirety:

         7.     Claims Procedure. Any claim for benefits under this Letter Agreement by
you shall be made in writing and sent to the Company at its principal offices
in Mechanicsburg, Pennsylvania, or such other place as the Company shall
hereafter designate in writing. If you, or any beneficiary following your death
(collectively, the Claimant), believes he or she has been denied any benefits
or payments under this Letter Agreement, either in total or in an amount less
than the full benefit or payment to which the Claimant would normally be
entitled, the Company shall advise the Claimant in writing of the amount of the
benefit, or payment, if any, and the specific reasons for the denial within
thirty (30) days of the receipt of the Claimant’s claim. The Company shall also
furnish the Claimant at that time with a written notice containing:

         (A)  A specific reference to pertinent provisions of this Letter Agreement;

         (B)  A description of any additional material or information necessary for
the Claimant to perfect the claim if possible, and an explanation of why
such material or information is needed; and

         (C)  An explanation of the claim review procedure set forth in this Section 7.

Within sixty (60) days of receipt of the information described above, the
Claimant shall, if further review is desired, file a written request of
reconsideration of the Company’s decision with the Appeal Committee. The Appeal
Committee shall consist of those individuals who were serving as the
Compensation Committee of the Board of Directors of the Company immediately
prior to the Change of Control. The Appeal Committee shall select from its
membership a chairperson and a secretary and may adopt such rules and
procedures as it deems necessary to carry out its functions. In the event any
individual is unable to serve on the Appeal Committee, then the chairperson of
the Appeal Committee shall appoint a successor provided such successor must
have been a member of the Board of Directors of the Company prior to the Change
of Control (Prior Board Member). So long as the Claimant’s request for review
is pending with the Appeal Committee (including such 60-day period), the
Claimant, or his duly authorized representative, may review pertinent documents
and may submit issues and comments in writing to the Appeal Committee. A final
and binding decision shall be made by the Appeal Committee within thirty (30)
days of the filing by the Claimant of the request for reconsideration. The
Appeal Committee’s decision shall be conveyed to the Claimant in writing and
shall include specific reasons for the decision and specific references to the
pertinent provisions of this Letter

-2-

 

Agreement on which the decision is based. The Appeal Committee shall discharge
its duties under this claims procedure in accordance with the fiduciary
standards of the Employee Retirement Income Security Act of 1974, as amended
(ERISA), and in doing so, to the extent permitted by law, shall be indemnified
and held harmless by the Company (to the extent not indemnified or saved
harmless under any liability insurance or other indemnification arrangement
with the Company) for or against all liability to which the Appeal Committee
may be subjected by reason of any act done in good faith with respect to the
adjudication of any claim under this Letter Agreement, including reasonable
expenses. Notwithstanding anything to the contrary herein contained, the
Claimant shall be entitled to submit his or her claim for determination to any
court having competent jurisdiction regardless of whether he or she has first
exercised his or her right to have the Company’s decision reconsidered by the
Appeal Committee.

         4.     Except as amended hereby, the Letter 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 Delaware

Corporation
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:
	 	/s/ Robert A. Ortenzio,

Robert A. Ortenzio,
President

Agreed to and accepted:

	 	 	 	 	 

	/s/ James J. Talalai

	      James J. Talalaiex10-60

 

Exhibit 10.60

CONFORMED COPY

		
	 	         FOURTH AMENDMENT dated as of October 5,
2001 (this “Amendment”) to the Credit Agreement
dated as of September 22, 2000 (the “Credit
Agreement”) as heretofore amended, among Select
Medical Corporation, a Delaware corporation (the
“Company”), Canadian Back Institute Limited, an
Ontario corporation and a wholly owned subsidiary
of the Company (“CBIL” and, together with the
Company, the “Borrowers”), the Lenders party
thereto, The Chase Manhattan Bank, as US Agent and
US Collateral Agent, The Chase Manhattan Bank of
Canada, as Canadian Agent and Canadian Collateral
Agent, Banc of America Securities, LLC, as
Syndication Agent, and CIBC, Inc., as
Documentation Agent.

         WHEREAS, the Borrowers have requested that the
Lenders (such term and each other capitalized term used but
not otherwise defined herein having the meaning assigned to
it in the Credit Agreement) approve amendments to certain
provisions of the Credit Agreement;

         WHEREAS, the undersigned Lenders are willing, on
the terms and subject to the conditions set forth herein, to
approve such amendments to the Credit Agreement;

         NOW, THEREFORE, in consideration of these
premises, the Borrowers and the undersigned Lenders hereby
agree as follows:

         SECTION 1. Amendments. Effective as of the
Amendment Effective Date (as defined in Section 4 hereof):

         (a)  Paragraph (g) of Section 6.04 of the Credit
Agreement is hereby amended by inserting at the end thereof,
immediately prior to the semicolon, the words “and
Investments in connection with the repurchase of common
stock of the Company permitted under subsection 6.11(g)”.

         (b)  Section 6.11 of the Credit Agreement is
hereby amended by deleting the word “and” at the end of
paragraph (e), replacing the period at the end of
paragraph (f) with “; and” and adding a new paragraph (g) as
follows:

		
	 	         "(g) so long as no Default shall have occurred and
be continuing or would result therefrom, purchase,
redeem or otherwise acquire shares of its common stock
in an aggregate amount not to exceed US$10,000,000 for
all such purchases, redemptions or other acquisitions.”

 

 

2

         SECTION 2. Representations and Warranties. Each
of the Borrowers represents and warrants to each of the
Lenders that, after giving effect to the amendments
contemplated hereby, (a) the representations and warranties
of such Borrower set forth in the Credit Agreement are true
and correct in all material respects on and as of the date
of this Amendment, except to the extent such representations
and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and
correct in all material respects as of the earlier date) and
(b) no Default has occurred and is continuing.

         SECTION 3. Effectiveness. This Amendment shall
become effective as of the date (the “Amendment Effective
Date”) when the Administrative Agent (or its counsel) shall
have received copies hereof that, when taken together, bear
the signatures of the Borrowers and the Required Lenders.

         SECTION 4. Applicable Law.THIS AMENDMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.

         SECTION 5. No Other Amendments. Except as
expressly set forth herein, this Amendment shall not by
implication or otherwise limit, impair, constitute a waiver
of, or otherwise affect the rights and remedies of any party
under, the Credit Agreement, nor alter, modify, amend or in
any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement,
all of which are ratified and affirmed in all respects and
shall continue in full force and effect. This Amendment
shall apply and be effective only with respect to the
provisions of the Credit Agreement specifically referred to
herein. This Amendment shall constitute a “Loan Document”
for all purposes of the Credit Agreement and the other Loan
Documents.

         SECTION 6. Counterparts. This Amendment may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which when taken together
shall constitute but one contract. Delivery of an executed
counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of
a manually executed counterpart of this Amendment.

         SECTION 7. Headings. Section headings used
herein are for convenience of reference only, are not part
of this Amendment and are not to affect the construction of,
or to be taken into consideration in interpreting, this
Amendment.

 

 

3

         IN WITNESS WHEREOF, the Borrower and the
undersigned Lenders have caused this Amendment to be duly
executed by their duly authorized officers, all as of the
date first above written.

	 	 	 	 	 	 	 
	 	 	 	SELECT MEDICAL CORPORATION,
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	by:

	 	/s/ Michael E. Tarvin

Name: Michael E. Tarvin

Title: Senior Vice

President

	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	
CANADIAN BACK INSTITUTE

LIMITED,
	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	by:

	 	/S/ Michael E. Tarvin

Name: Michael E. Tarvin

Title: Vice President

	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	
THE CHASE MANHATTAN BANK,

individually and as US Agent

and US Collateral Agent,

	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	by:

	 	/s/ Dawn Lee Lum

Name: Dawn Lee Lum

Title: Vice President

	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	
THE CHASE MANHATTAN BANK OF

CANADA, individually and as

Canadian Agent and Canadian

Collateral Agent,

	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	by:

	 	/s/ Christine Chan

Name: Christine Chan

Title: Vice President

	
	
	
	

	 	 	 	 	 	 	 
	
	
	
	

	 	 	 	 	by:

	 	/s/ Drew McDonald

Name: Drew McDonald

Title: Vice President

 

 

4

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	Name of Institution:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	CIBC Inc.

	
	
	
	

	 	 	 
	
	
	
	

	 	 	by	 	/s/ Terence Moore

Name: Terence Moore

Title: Executive Director

 

 

5

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	Name of Institution:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	First Union National Bank

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	by	 	/s/ Jeanette A. Griffin

Name: Jeanette A. Griffin

Title: Vice President

 

 

6

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

 

	
	
	
	

	 	 	Name of Institution:
	
	
	
	

	 	 	KZH Cypress Tree-1 LLC

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	by	 	/s/ Susan Lee

Name: Susan Lee

Title: Authorized Agent

 

 

7

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

	
	
	
	

	 	 	 
Name of Institution:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	KZH Sterling LLC

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	by	 	/s/ Susan Lee

Name: Susan Lee

Title: Authorized Agent

 

 

8

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

 

	
	
	
	

	 	 	Name of Institution:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	Merrill Lynch Capital Corp.

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	by	 	/s/ Carol J.E. Feeley

Name: Carol J.E. Feeley

Title: Vice President

 

 

9

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

 

	
	
	
	

	 	 	Name of Institution:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	PNC Bank, National Association

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	by	 	/s/ Marie T. Boyer

Name: Marie T. Boyer

Title: Vice President

 

 

10

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

 

	
	
	
	

	 	 	Name of Institution:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	Morgan Guaranty Trust Co.

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	by	 	/s/ Dawn Lee Lum

Name: Dawn Lee Lum

Title: Vice President

 

 

11

	 	 	 	 	 
	 	 	To approve the Fourth Amendment

dated as of October 5, 2001 (the

“Amendment”) to the Select Medical

Corporation Credit Agreement dated

as of September 22, 2000:

 

	
	
	
	

	 	 	Name of Institution:
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	Societe Generale

	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	by	 	/s/ Richard Bernal

Name: Richard Bernal

Title: Director

Corporate Banking

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