Document:

ex10-57

 

Exhibit 10.57

SELECT MEDICAL CORPORATION

P.O. Box 2034, 4716 Old Gettysburg Road

Mechanicsburg, Pennsylvania 17055

February 23, 2001

Mr. Scott A. Romberger

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. Romberger:

         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/ Scott A. Romberger

Scott A. Romberger

-3-ex10-58

 

Exhibit 10.58

SELECT MEDICAL CORPORATION

4716 Old Gettysburg Road P.O. Box 2034

Mechanicsburg, Pennsylvania 17055

March 1, 2000

Mr. James J. Talalai

Select Medical Corporation

4716 Old Gettysburg Road

P.O. Box 2034

Mechanicsburg, PA 17055

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

Dear Mr. Talalai:

         The following will confirm the 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 letter
(this Letter Agreement), the Company and you hereby agree, intending to be
legally bound hereby, as follows:

         1.     Covered Termination. A Covered Termination shall be deemed to occur if
your employment with the Company terminates under any one of the following
circumstances: (i) within the two-year period immediately following a Change of
Control (as defined below), your employment with the Company (a) is terminated
by the Company without Cause (as defined below), (ii) within the six-month
period immediately following a Change of Control, you terminate your employment
with the Company for Good Reason (as defined below), or (iii) within the
six-month period preceding a Change of Control, your employment is terminated
by the Company other than for Cause, and you reasonably demonstrate that such
termination of employment was at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control.

         2.     Payments Upon a Covered Termination. If a Covered Termination occurs,
then (i) the Company agrees that such termination is not a voluntary
termination or a termination for cause as contemplated by any of the Company’s
stock option or other incentive plans and any stock option or other award
agreements entered into between you and the Company (including agreements that
may be entered into in the future in connection with additional awards granted
pursuant to any Company plan, the Award Agreements) and the Company agrees that
all unvested, unexercised stock options held by you which were granted to you
by the Company shall become fully vested and exercisable as of the date of the
Covered Termination and you will have the right to exercise, at any time prior
to the earlier of three months after the date of termination or the expiration
date of such option, all such options to purchase the Company’s stock
notwithstanding any contrary vesting

 

 

schedule that may be contained in the applicable plan or Award Agreement, and
(ii) the Company will, on or before your last day as an employee of the
Company, pay to you, in lieu of any other rights to cash compensation other
than the payment of your salary for services performed before the date of
termination and as a severance benefit, a lump sum cash payment equal to your
total base salary plus bonus compensation from the Company for the preceding
three years (or, if you shall have been employed for less than three years, an
amount equal to three times your average total annual cash compensation for
base salary and bonus for your years of service to the Company).

         3.     Definitions.

         (a)  Change of Control.

         (i)  Prior to a Public Offering(as defined below), a Change of Control
shall be deemed to have occurred, subject to Section 3(a)(iii) below, upon (i)
any sale, lease, exchange or other transfer of all or substantially all of the
property and assets of the Company (on a consolidated basis) to an entity,
other than an entity at least 75% of the combined voting power of the voting
securities of which are owned by persons in substantially the same proportion
as their ownership of the Company immediately prior to such sale or other
transfer, (ii) any merger or consolidation to which the Company is a party and
as a result of which the holders of the voting securities of the Company
immediately prior thereto own less than a majority of the outstanding voting
securities of the surviving entity immediately following such transaction, or
(iii) any person’s (excluding WCAS, GTCR and Thoma Cressey Partners, the
financial sponsors of the Company as of the date hereof), including a group’s,
becoming the beneficial owner of securities representing more than 50% of the
voting securities of the Company then outstanding.

         (ii)  Following a Public Offering, a Change of Control shall be deemed to
have occurred if, subject to Section 3(a)(iii) below, (i) any person including
a group, but excluding any stockholder of the Company who immediately prior to
the Public Offering beneficially owned 12% or more of the Company’s outstanding
shares, becomes the beneficial owner of shares of the Company having more than
50% of the total number of votes that may be cast for the election of directors
of the Company, (ii) any person including a group, other than you or any group
of which you are a party, increases its beneficial ownership of shares of the
Company beyond such person’s ownership immediately after the Public Offering by
a number of shares equal to or greater than 33% of the total number of votes
that may be cast for the election of directors; (iii) the individuals who serve
on the Board of Directors of the Company as of the effective date hereof (the
Incumbent Directors) cease for any reason to constitute at least a majority of
the Board of Directors of the Company; provided, however, any person who
becomes a director subsequent to the effective date hereof, whose election or
nomination for election was approved by a vote of at least a majority of the
directors then constituting the Incumbent Directors, shall for purposes of this
clause (iii) be considered an Incumbent Director; (iv) the consummation of a
merger or consolidation of the Company in which the stockholders of the Company
immediately prior to such merger or consolidation, would not, immediately after
the merger or consolidation, beneficially own, directly or indirectly, shares
representing in the aggregate more than 50% of the combined voting power of the

-2-

 

voting securities of the corporation issuing cash or securities in the merger
or consolidation (or of its ultimate parent corporation, if any); or (v) there
is consummated an agreement for the sale or disposition by the Company of all
or substantially all of the Company’s assets (on a consolidated basis), other
than a sale or disposition by the Company of all or substantially all of the
Company’s assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by persons in substantially the same
proportion as their ownership of the Company immediately prior to such sale.

         (iii)  Notwithstanding the foregoing, in no event shall a Change of Control
be deemed to occur for purposes of this Letter Agreement, whether prior to or
following a Public Offering, unless the total consideration for the transaction
or transactions which would, absent this clause (iii), constitute a Change of
Control, has a value that is equal to or greater than $3.75 per share of common
stock of the Company (the Minimum Value); provided that such Minimum Value
shall be adjusted to reflect changes to such common stock in the event of a
stock dividend, stock split, reverse stock split, stock combination,
reclassification, recapitalization, or other similar change in the structure or
capitalization of the Company, or any other event which in the discretion of
the Board of Directors of the Company necessitates such an adjustment.

         (iv)  For purposes of this Section 3(a), (A) the terms person, group,
beneficial owner, and beneficially own have the same meanings as such terms
under Section 13(d) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, (B) the term Public Offering
shall mean the consummation of the first public offering of shares of common
stock of the Company in a firm commitment underwritten offering registered
under the Securities Act of 1933, as amended, on Form S-1 or its successor
forms, and (C) the term voting securities shall mean securities, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect the
corporate directors (or persons performing similar functions).

         (b)  Cause. For purposes of this Letter Agreement, Cause shall mean (i)
your willful and continued failure to substantially perform your duties
hereunder (other than any such failure resulting from incapacity due to
physical or mental illness); (ii) your engaging in willful or reckless
misconduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise; or (iii) your conviction of a felony involving moral
turpitude; provided that an act, or failure to act, on your part shall be
considered willful or reckless only if done, or omitted to be done, by you not
in good faith and without a reasonable belief that his action or omission was
in the best interest of the Company. Your employment shall not be deemed to
have been terminated for Cause unless the Company shall have given or delivered
to you (i) reasonable notice setting forth the reasons for the Company’s
intention to terminate your employment for Cause; (ii) an opportunity to cure
any such breach during the 30-day period after your receipt of such notice;
(iii) a reasonable opportunity, at any time during the 30-day period after your
receipt of such notice, together with your counsel, to be heard before the
Board of Directors; and (iv) a notice of termination stating that, in the good
faith opinion of not less than a majority of the entire membership of the Board
of Directors of the Company, you are guilty of the conduct set forth in any of
clauses (i), (ii) or (iii) of the definition of Cause above.

         (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, (x) 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, (y) there is a reduction by the Company in
your compensation from that in effect prior to such Change of Control, or (z)
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).

-3-

 

         4.     Additional Payments.

         (a)  If all, or any portion, of the payments or other benefits provided
under any section of this Agreement, either alone or together with other
payments and benefits that you receive or are entitled to receive from the
Company or its affiliates, (whether or not under an existing plan, arrangement
or other agreement) (collectively the Payments) would constitute an excess
parachute payment within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the Code) and would result in the imposition on you
of an excise tax under Section 4999 of the Code, (such excise tax, together
with any interest and penalties related thereto, are hereinafter collectively
referred to as the Excise Tax) then, in addition to any other benefits to which
you are entitled under this Agreement, you will be entitled to receive an
additional payment (a Gross-Up Payment) in cash, in an amount such that after
you pay all taxes including, without limitation, (i) any income taxes (and any
interest and penalties imposed with respect thereto) and (ii) any Excise Tax,
imposed upon the Gross-Up Payment, you will retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Unless you and the
Company otherwise agree in writing, any determination required under this
Section 4, including without limitation, the amount of payments under this
Article 6 (the Parachute Gross-up) shall be computed and made in writing by the
Employer’s then independent public accountants (the Accountants), whose
determination shall be, subject to the Employee’s reasonable approval of the
calculations required under this Article 6, conclusive and binding upon the
Employee and the Employer for all purposes. For purposes of making the
calculations required by this Section 4, the Accountants may rely on
reasonable, good faith interpretations concerning the application of Section
280G and 4999 of the Code. You and the Company shall furnish to the Accountants
such information and documents as the Accountants may reasonably request in
order to make a determination under this Section 4. The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.

         (b)  As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accountants hereunder,
it is possible that (i) Gross-Up Payments which will not have been made by the
Company should have been made (an Underpayment), consistent with the
calculations required to be made hereunder or that (ii) Gross-Up Payments that
have been made will be determined to have been in excess of the Gross-Up
Payments actually required (an Overpayment). In the event that you are required
to make a payment of any Excise Tax, the Accountants shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for your benefit. In the event that it is
finally determined that an Overpayment has occurred, you will promptly, and in
any event within 30 days of such determination, refund the amount of the
Overpayment, plus any interest actually paid to you with respect to the
Overpayment, to the Company. The Company shall have the right with respect to
the determination of either an Underpayment or an Overpayment to you to appeal
the assertion of any Underpayment or to claim, and sue for, a refund of any
Excise Tax paid by you upon any Payment or Gross-Up Payment, provided that the
Company shall promptly reimburse you for all expenses, including counsel and
accounting fees, incurred in connection with any such proceeding.
Alternatively, the Company may undertake any such proceeding, and you shall
cooperate with the Company in any such proceeding.

-4-

 

         5.     Miscellaneous.

         (a)  The Company will require any purchaser of all or substantially all of
the assets of the Company, by agreement in form and substance reasonably
satisfactory to you, to expressly assume and agree to perform this Letter
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such purchase had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Letter Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if a Covered Termination had occurred. As used in
this Letter Agreement, Company shall mean the Company as hereinbefore defined
and any purchaser of its assets as aforesaid which executed and delivers the
agreement provided for herein.

         (b)  This Letter Agreement shall remain in effect for so long as you are
employed by the Company. This Letter Agreement may not be modified or waived
except in writing and agreed to by the Company and you. This Letter Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania and shall
inure to the benefit of your heirs.

         (c)  The Company represents that this Letter Agreement has been duly
authorized and is binding on and enforceable against the Company. The
invalidity or unenforceability of any provision of this Letter Agreement shall
not affect the validity or enforceability of any other provision, which shall
remain in full force and effect.

         (d)  Upon payment of the amount required under paragraph 1 hereof, you
shall deliver to the Company a general release of liability of the Company and
its officers and directors in a form reasonably satisfactory to the Company.

         (e)  All payments made pursuant to this Letter Agreement shall be subject
to withholding of applicable deductions and income and employment taxes.

         (f)  Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally or sent by
facsimile transmission or, if mailed, five days after the date of deposit in
the United States mails to the following addresses:

If to Employee:

James J. Talalai

5224 Meadowbrook Drive

Mechanicsburg, PA 17055

If to the Company:

Select Medical Corporation

4716 Old Gettysburg Road

Mechanicsburg, PA 17055

Attention: General Counsel

-5-

 

         6.     Entire Agreement. This writing represents the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior agreements, written or oral, with respect thereto. This
Agreement may not be altered or amended except by an agreement in writing.

Please indicate your acceptance of the above agreement 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. Talalai	  

-6-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}]]