UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 10, 2010

SELECT MEDICAL HOLDINGS CORPORATION
SELECT MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
         
Delaware
Delaware 		  001-34465
001-31441 		  20-1764048
23-2872718
(State or other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)
     
4714 Gettysburg Road, P.O. Box 2034
Mechanicsburg, PA
  17055
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (717) 972-1100
 
Not Applicable
(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

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Item 5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On November 10, 2010, Select Medical Corporation, a Delaware corporation (“Select”), amended the employment agreement of each of Rocco A. Ortenzio, Robert A. Ortenzio and Patricia A. Rice (each, an “Amendment,” and collectively, the “Amendments”).

The Amendments were generally made to reflect recent guidance issued under the Internal Revenue Code. The Amendments include (i) providing that any severance benefits owed to the executives as the result of a termination of employment within one year after a change in control (as defined in each executive’s employment agreement) will be paid in equal installments over the remainder of the then current employment term rather than in a lump sum and (ii) specifying the period of time during which the executives must execute a release of claims in order to receive severance benefits. The Amendments also provide for the payment of a pro-rata bonus in the event of certain terminations of employment within one year after a change in control (such benefit is already provided in the case of certain pre-change in control terminations of employment, as well as certain terminations of employment that occur more than one year after a change in control). In addition, Ms. Rice’s Amendment clarifies that the definition of “good reason” contained in her employment agreement means, generally: (i) the assignment to Ms. Rice of any duties inconsistent in any material respect with her position, authority, duties or responsibilities, or any other action by Select which results in a material diminution or material adverse change in such position, status, authority, duties or responsibilities; (ii) any failure by Select to comply with any of the provisions of Article 3 of Ms. Rice’s employment agreement; (iii) Select’s failure to comply with the provisions of Ms. Rice’s employment agreement permitting her to perform work at her home offices; or (iv) any failure by Select to comply with and satisfy Section 7.01 of Ms. Rice’s employment agreement, other than, with respect to clauses (i) and (ii), an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied within 15 days after receipt of notice by Ms. Rice. In all other material respects, the employment agreements for Messrs. Rocco and Robert Ortenzio and Ms. Rice remain in full force and effect.

The above is a brief summary of the Amendments and does not purport to be complete.  A copy of the Amendment to Rocco A. Ortenzio’s employment agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. A copy of the Amendment to Robert A. Ortenzio’s employment agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K. A copy of the Amendment to Patricia A. Rice’s employment agreement is filed as Exhibit 10.3 to this Current Report on Form 8-K. The content of each such Exhibit is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

     
10.1
  Amendment Number 7 to Employment Agreement, by and between Select and Rocco A. Ortenzio, dated November 10, 2010.
     
10.2
  Amendment Number 7 to Employment Agreement, by and between Select and Robert A. Ortenzio, dated November 10, 2010.
     
10.3
  Amendment Number 8 to Employment Agreement, by and between Select and Patricia A. Rice, dated November 10, 2010.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.  

         
    SELECT MEDICAL HOLDINGS CORPORATION
    SELECT MEDICAL CORPORATION
     
Dated: November 15, 2010
  By:   /s/    Michael E. Tarvin
 
       
 
  Name:   Michael E. Tarvin
 
  Title:   Executive Vice President, General Counsel and Secretary

 

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EXHIBIT INDEX

     
Exhibit Number   Description
10.1
  Amendment Number 7 to Employment Agreement, by and between Select and Rocco A. Ortenzio, dated November 10, 2010.
     
10.2
  Amendment Number 7 to Employment Agreement, by and between Select and Robert A. Ortenzio, dated November 10, 2010.
     
10.3
  Amendment Number 8 to Employment Agreement, by and between Select and Patricia A. Rice, dated November 10, 2010.

 

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Exhibit 10.1
AMENDMENT NO. 7 TO
EMPLOYMENT AGREEMENT
This is an amendment, dated as of November 10, 2010 (the “Amendment”) to the Employment Agreement made as of the 1 st day of March, 2000 (the “Employment Agreement”), by and between SELECT MEDICAL CORPORATION , a Delaware corporation (the “Employer”), and ROCCO A. ORTENZIO , an individual (the “Employee”).
Background
Employer and Employee executed and delivered the Employment Agreement, that certain Amendment No. 1 to the Employment Agreement, dated as of August 8, 2000, that certain Amendment No. 2 to the Employment Agreement, dated as of February 23, 2001, that certain Amendment No. 3 to the Employment Agreement, dated as of April 24, 2001, that certain Amendment No. 4 to the Employment Agreement, dated as of September 17, 2001, that certain Amendment No. 5 to the Employment Agreement, dated as of February 24, 2005 and that certain Amendment No. 6 to the Employment Agreement, dated as of December 18, 2008. Employer and Employee now desire to amend the Employment Agreement as provided herein.
Agreement
1. The last sentence of Section 3.01 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“The Employee will also be eligible to receive bonus compensation, annual or otherwise, in an amount to be determined by the Employer’s Board of Directors in its sole discretion, with any such bonus compensation to be paid to the Employee by no later than March 15 th of the year following the year to which such bonus relates.”
2. Section 5.01 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“5.01. Change of Control Termination . If, during the Term, (1) there should be a Change of Control (as defined in Section 5.02), and within the one-year period immediately following the Change of Control the Employee’s employment with the Employer (i) is terminated by the Employer without cause as defined in Section 2.02(b), or (ii) is terminated by the Employee for any reason or (2) (i) the Employee’s employment is terminated by the Employer other than for cause, (ii) within the six-month period following such termination, a Change of Control occurs and (iii) the Employee reasonably demonstrates 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, then in lieu of the payments described in Section 2.02(e)(iv) hereof, the Employer shall pay to the Employee an amount equal to the Employee’s total cash compensation for base salary and bonus for the immediately preceding three completed calendar years (or equal to three times his average total annual cash compensation for base salary and bonus for his years of service to the Employer, if less than three years), with such amount to be paid in equal installments on each of the Employer’s regular payroll dates over the remainder of the Term; provided, however, that the commencement of

 

 

 

such payments shall be delayed until the first payroll date of the seventh month following such termination; provided further, that, the first payment made hereunder shall include the payments that otherwise would be made had the delay described in the preceding clause not been imposed. For the avoidance of doubt, a termination pursuant to Section 5.01(1)(ii) shall be treated as a termination for good reason (as defined in Section 2.02(c)) and shall entitle the Employee to the payments and benefits set forth in Section 2.02(e), as modified by this Section 5.01.”
3. Section 7.02 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“7.02. Release . As a condition to payment of any amount required under Section 2.02(e) or Section 5.01 hereof, the Employee shall deliver to the Employer a general release of liability of the Employer and its officers and directors in a form reasonably satisfactory to the Employer, such that such release is effective, with all revocation periods having expired unexercised, by no later than the 60 th day after such termination.”
4. The last sentence of Section 7.10 of the Employment Agreement is hereby deleted and replaced with the following:
“In addition, no reimbursement or in-kind benefit shall be subject to liquidation or exchange for another benefit and the amount available for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount available for reimbursement, or in-kind benefits to be provided, in a subsequent calendar year. Any reimbursement to which Employee is entitled hereunder shall be made no later than the last day of the calendar year following the calendar year in which such expenses were incurred. This Agreement is intended to comply with Code Section 409A (to the extent applicable) and the parties hereto agree to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Employer.”
5. Except as amended hereby, the Employment 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/ Michael E. Tarvin       /s/ Rocco A. Ortenzio
 
           
 
  Michael E. Tarvin,       Rocco A. Ortenzio
 
  Executive Vice President        

 

 

Exhibit 10.2
AMENDMENT NO. 7 TO
EMPLOYMENT AGREEMENT
This is an amendment, dated as of November 10, 2010 (the “Amendment”) to the Employment Agreement made as of the 1 st day of March, 2000 (the “Employment Agreement”), by and between SELECT MEDICAL CORPORATION , a Delaware corporation (the “Employer”), and ROBERT A. ORTENZIO , an individual (the “Employee”).
Background
Employer and Employee executed and delivered the Employment Agreement, that certain Amendment No. 1 to the Employment Agreement, dated as of August 8, 2000, that certain Amendment No. 2 to the Employment Agreement, dated as of February 23, 2001, that certain Amendment No. 3 to the Employment Agreement, dated as of September 17, 2001, that certain Amendment No. 4 to the Employment Agreement, dated as of December 10, 2004, that certain Amendment No. 5 to the Employment Agreement, dated as of February 24, 2005 and that certain Amendment No. 6 to the Employment Agreement, dated as of December 18, 2008. Employer and Employee now desire to amend the Employment Agreement as provided herein.
Agreement
1. The last sentence of Section 3.01 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“The Employee will also be eligible to receive bonus compensation, annual or otherwise, in an amount to be determined by the Employer’s Board of Directors in its sole discretion, with any such bonus compensation to be paid to the Employee by no later than March 15 th of the year following the year to which such bonus relates.”
2. Section 5.01 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“5.01. Change of Control Termination . If, during the Term, (1) there should be a Change of Control (as defined in Section 5.02), and within the one-year period immediately following the Change of Control the Employee’s employment with the Employer (i) is terminated by the Employer without cause as defined in Section 2.02(b), or (ii) is terminated by the Employee for any reason or (2) (i) the Employee’s employment is terminated by the Employer other than for cause, (ii) within the six-month period following such termination, a Change of Control occurs and (iii) the Employee reasonably demonstrates 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, then in lieu of the payments described in Section 2.02(e)(iv) hereof, the Employer shall pay to the Employee an amount equal to the Employee’s total cash compensation for base salary and bonus for the immediately preceding three completed calendar years (or equal to three times his average total annual cash compensation for base salary and bonus for his years of service to the Employer, if less than three years), with such amount to be paid in equal installments on each of the Employer’s regular payroll dates over the remainder of the Term; provided, however, that the commencement of

 

 

 

such payments shall be delayed until the first payroll date of the seventh month following such termination; provided further, that, the first payment made hereunder shall include the payments that otherwise would be made had the delay described in the preceding clause not been imposed. For the avoidance of doubt, a termination pursuant to Section 5.01(1)(ii) shall be treated as a termination for good reason (as defined in Section 2.02(c)) and shall entitle the Employee to the payments and benefits set forth in Section 2.02(e), as modified by this Section 5.01.”
3. Section 7.02 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“7.02. Release . As a condition to payment of any amount required under Section 2.02(e) or Section 5.01 hereof, the Employee shall deliver to the Employer a general release of liability of the Employer and its officers and directors in a form reasonably satisfactory to the Employer, such that such release is effective, with all revocation periods having expired unexercised, by no later than the 60 th day after such termination.”
4. The last sentence of Section 7.10 of the Employment Agreement is hereby deleted and replaced with the following:
“In addition, no reimbursement or in-kind benefit shall be subject to liquidation or exchange for another benefit and the amount available for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount available for reimbursement, or in-kind benefits to be provided, in a subsequent calendar year. Any reimbursement to which Employee is entitled hereunder shall be made no later than the last day of the calendar year following the calendar year in which such expenses were incurred. This Agreement is intended to comply with Code Section 409A (to the extent applicable) and the parties hereto agree to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Employer.”
5. Except as amended hereby, the Employment 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/ Michael E. Tarvin       /s/ Robert A. Ortenzio
 
           
 
  Michael E. Tarvin,       Robert A. Ortenzio
 
  Executive Vice President        

 

 

Exhibit 10.3
AMENDMENT NO. 8 TO
EMPLOYMENT AGREEMENT
This is an amendment, dated as of November 10, 2010 (the “Amendment”) to the Employment Agreement made as of the 1 st day of March, 2000 (the “Employment Agreement”), by and between SELECT MEDICAL CORPORATION , a Delaware corporation (the “Employer”), and PATRICIA A. RICE , an individual (the “Employee”).
Background
Employer and Employee executed and delivered the Employment Agreement, that certain Amendment No. 1 to the Employment Agreement, dated as of August 8, 2000, that certain Amendment No. 2 to the Employment Agreement, dated as of February 23, 2001, that certain Amendment No. 3 to the Employment Agreement, dated as of December 10, 2004, that certain Amendment No. 4 to the Employment Agreement, dated as of February 24, 2005, that certain Amendment No. 5 to the Employment Agreement, dated as of April 27, 2005, that certain Amendment No. 6 to the Employment Agreement, dated as of February 13, 2008 and that certain Amendment No. 7 to the Employment Agreement, dated as of December 18, 2008. Employer and Employee now desire to amend the Employment Agreement as provided herein.
Agreement
1. Section 2.02(d) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
"(d) Good Reason . The Employee’s employment may be terminated by the Employee for good reason. For purposes of this Agreement, “good reason” shall mean, unless otherwise consented to by the Employee: (i) the assignment to the Employee of any duties inconsistent in any material respect with the Employee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 1.02 of this Agreement, or any other action by the Employer which results in a material diminution or material adverse change in such position, status, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied within 15 days after receipt of the Notice of Termination given by the Employee, which specifies the Employee’s grounds for good reason; provided that in order for such assignment or other action to constitute good reason hereunder, the Employee must give or deliver to the Employer the Notice of Termination, in accordance with Section 2.02(c), no later than 30 days after the time at which the assignment or action purportedly giving rise to good reason first occurs; (ii) any failure by the Employer to comply with any of the provisions of Article 3 of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Employer within 15 days after receipt of the Notice of Termination given by the Employee, which specifies the Employee’s grounds for good reason; provided that in order for such failure to constitute good reason hereunder, the Employee must give or deliver to the Employer the Notice of Termination, in accordance with Section 2.02(c), no later than 30 days after the time at which the failure purportedly giving rise to good reason first occurs; (iii) the Employer’s failure to comply with the last  _____  sentence of Section 1.03 hereof; or (iv) any failure by the Employer to comply with and satisfy Section 7.01 of this Agreement. For purposes of this Section 2.02(c) any good faith determination of “good reason” made by the Employee shall be conclusive.”

 

 

 

2. The last sentence of Section 3.01 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“The Employee will also be eligible to receive bonus compensation, annual or otherwise, in an amount to be determined by the Employer’s Board of Directors in its sole discretion, with any such bonus compensation to be paid to the Employee by no later than March 15 th of the year following the year to which such bonus relates.”
3. Section 5.01 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“5.01. Change of Control Termination . If, during the Term (1) there should be a Change of Control (as defined in Section 5.02), and within the one-year period immediately following the Change of Control the Employee’s employment with the Employer (i) is terminated by the Employer without cause as defined in Section 2.02(b), or (ii) is terminated by the Employee for any reason or (2) (i) the Employee’s employment is terminated by the Employer other than for cause, (ii) within the six-month period following such termination, a Change of Control occurs and (iii) the Employee reasonably demonstrates 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, then in lieu of the payments described in Section 2.02(e)(iv) hereof, the Employer shall pay to the Employee an amount equal to the Employee’s total cash compensation for base salary and bonus for the immediately preceding three completed calendar years (or equal to three times her average total annual cash compensation for base salary and bonus for her years of service to the Employer, if less than three years), with such amount to be paid in equal installments on each of the Employer’s regular payroll dates over the remainder of the Term; provided, however, that the commencement of such payments shall be delayed until the first payroll date of the seventh month following such termination; provided further, that, the first payment made hereunder shall include the payments that otherwise would be made had the delay described in the preceding clause not been imposed. For the avoidance of doubt, a termination pursuant to Section 5.01(1)(ii) shall be treated as a termination for good reason (as defined in Section 2.02(d)) and shall entitle the Employee to the payments and benefits set forth in Section 2.02(e), as modified by this Section 5.01.”
4. Section 7.02 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“7.02. Release . As a condition to payment of any amount required under Section 2.02(e) or Section 5.01 hereof, the Employee shall deliver to the Employer a general release of liability of the Employer and its officers and directors in a form reasonably satisfactory to the Employer, such that such release is effective, with all revocation periods having expired unexercised, by no later than the 60 th day after such termination.”

 

 

 

5. The last sentence of Section 7.10 of the Employment Agreement is hereby deleted and replaced with the following:
“In addition, no reimbursement or in-kind benefit shall be subject to liquidation or exchange for another benefit and the amount available for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount available for reimbursement, or in-kind benefits to be provided, in a subsequent calendar year. Any reimbursement to which Employee is entitled hereunder shall be made no later than the last day of the calendar year following the calendar year in which such expenses were incurred. This Agreement is intended to comply with Code Section 409A (to the extent applicable) and the parties hereto agree to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Employer.”
6. The reference in Section 2.02(e) to Section 2.02(c) is hereby changed to refer to Section 2.02(d).
7. Except as amended hereby, the Employment 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/ Michael E. Tarvin    
    Michael E. Tarvin,   
    Executive Vice President   
 
     
  /s/ Patricia A. Rice    
  Patricia A. Rice