EMPLOYMENT AGREEMENT
This employment agreement ("Agreement") is made and entered into as of this date
by and between In-House Rehab, Inc., a wholly owned subsidiary of In-House Rehab
Corporation, a Colorado corporation ("Corporation"), and Xxxxxxx Xxxxxxx
("Employee").
WHEREAS, Corporation and Employee desire that the term of this Agreement begin
on January 1, 1997 ("Effective Date").
WHEREAS, Corporation desires to employ Employee as Vice President and Chief
Legal
Counsel, and Employee is willing to accept such employment by Corporation, on
the
terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Duties. During the term of this Agreement, Employee agrees to be
employed by and to serve Corporation, and its wholly owned subsidiary, In-House
Rehab, Inc., as Vice President and Chief Legal Counsel and Corporation agrees to
employ and retain Employee in such capacity. Employee shall devote a
substantial
portion of his business time, energy, and skill to the affairs of the
Corporation
as Employee shall report to the Corporation's President and Chief Executive
Officer and at all times during the term of this Agreement shall have powers and
duties at least commensurate with his position as Vice President and Chief Legal
Counsel.
Section 2. Term of Employment.
2.1 Definitions. For the purposes of this Agreement the following terms
shall
have the following meanings:
2.1.1 "Termination For Cause" shall mean termination by Corporation of
Employee's employment by Corporation by reason of Employee's willful dishonesty
towards, fraud upon, or deliberate injury or attempted injury to, Corporation or
by reason of Employee's willful material breach of this Agreement which has
resulted in material injury to Corporation, or continuance of failure by the
Employee to perform his duties in compliance with this Agreement after written
notice to the Employee by the President specifying such failure.
2.1.2 "Termination Other Than For Cause" shall mean termination by
Corporation of Employee's employment by Corporation (other than in a Termination
for Cause) and shall include constructive termination of Employee's employment
by reason of material breach of this Agreement by Corporation, such constructive
termination to be effective upon notice from Employee to Corporation of such
constructive termination.
2.1.3 Voluntary Termination" shall mean termination by Employee of
Employee's employment by Corporation other than (I) constrictive termination as
described in subsection 2.1.2., (ii) "Termination Upon a Change in Control," and
(iii) termination by reason of Employee's death or disability as described in
Sections 2.5 and 2.6.
2.1.4 "Termination Upon a Change in Control" shall mean a termination
by
Employee of Employee's employment with Corporation within 120 days following a
"Change in Control."
2.1.5 "Change in Control" shall mean (I) the time that Corporation
first
determines that any person and all other persons who constitute a group (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934
("Exchange
Act")) have acquired direct or indirect beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or more of
Corporation's outstanding securities.
2.2 Initial Term. The term of employment of Employee by Corporation shall
be
for a period of one (1) year beginning with Effective Date, unless terminated
earlier pursuant to this Section. This Agreement, and the one (1) year term
hereof shall be deemed to have been renewed the first day of each month after
the
effective date. At any time, Corporation and Employee may by mutual written
agreement extend or modify the term of Employee's employment under the terms of
this Agreement.
2.3 Termination For Cause. Termination For Cause may be effected by
Corporation at any time during the term of this Agreement after written
notification to Employee pursuant to Section 2.9 hereof. Upon Termination For
Cause, Employee shall promptly be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation (other than pension play or
profit sharing plan benefits which will be paid in accordance with the
applicable
plan), any benefits under any plans of the Corporation in which Employee is a
participant to the full extent of Employee's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by Employee in
connection with his duties hereunder, all to the date of termination, but
Employee shall not be paid any other compensation or reimbursement of any kind,
including without limitation, severance compensation
2.4 Termination Other Than For Cause. Notwithstanding anything else in
this
Agreement, Corporation may effect a Termination Other Than For Cause at any time
upon written notice to Employee of such termination in accordance with Section
2.9 hereof. Upon any Termination Other Than For Cause, Employee shall promptly
be paid all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits
which will be paid in accordance with the applicable plan), any benefits under
any plans of the Corporation in which Employee is a participant to the full
extent of Employee's rights under such plans (including accelerated vesting, if
any, of awards granted to Employee under the Corporation's stock option plan),
accrued vacation pay and any appropriate business expenses incurred by Employee
in connection with his duties hereunder, all to the date of termination, and all
severance compensation provided in Section 4.2, but no other compensation or
reimbursement of any kind.
2.5 Termination by Reason of Disability. If, during the term of this
Agreement, Employee, in the reasonable judgment of the President or officer
acting in his place, has failed to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such illness or
incapacity continues for a period of more than twelve (12) consecutive months,
Corporation shall have the right to terminate Employee's employment hereunder by
written notification to Employee and payment to Employee of all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of the Corporation in
which Employee is a participant to the full extent of Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by Employee in connection with his duties hereunder, all to the date of
termination, with the exception of medical and dental benefits which shall
continue through the expiration of this Agreement, but Employee shall not be
paid
any other compensation or reimbursement of any kind, including without
limitation, severance compensation.
2.6 Death. In the event of Employee's death during the term of this
Agreement,
Employee's employment shall be deemed to have terminated as of the last day of
the month during which his death occurs and Corporation shall promptly pay to
his
estate or such beneficiaries as Employee may from time to time designate all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
the Corporation in which Employee is a participant to the full extent of
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by Employee in connection with his duties hereunder,
all to the date of termination. The Employee's estate shall not be paid any
other compensation, including without limitation, severance compensation.
2.7 Voluntary Termination. In the event of a Voluntary Termination,
Corporation shall promptly pay all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan),
any benefits under any plans of the Corporation in which Employee is a
participant to the full extent of Employee's rights under such plans, accrued
vacation pay and any appropriate business expenses incurred by Employee in
connection with his duties hereunder, all to the date of termination, but no
other compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.8 Termination Upon a Change in Control. In the event of a Termination
Upon
a Change in Control, Employee shall immediately be paid all accrued salary,
bonus
compensation to the extent earned, vested deferred compensation (other than
pension plan or profit sharing plan benefits which will be paid in accordance
with the applicable plan), any benefits under any plans of the Corporation in
which Employee is a participant to the full extent of Employee's rights under
such plans (including accelerated vesting, if any, of any awards granted to
Employee under Corporation's Stock Option Plan), accrued vacation pay and any
appropriate business expenses incurred by Employee in connection with his duties
hereunder, all to the date of termination, and all severance compensation
provided in Section 4.1, but no other compensation or reimbursement of any kind.
2.9 Notice of Termination. Corporation may effect a termination of this
Agreement pursuant to the provisions of this Section upon giving thirty (30)
days' written notice to Employee of such termination. Employee may effect a
termination of this Agreement pursuant to the provisions of this Section upon
giving thirty (30) days' written notice to Corporation of such termination.
Section 3. Salary, Benefits and Bonus Compensation.
3.1 Base Salary. As payment for the services to be rendered by Employee as
provided in Section 1 and subject to the terms and conditions of Section 2,
Corporation, through its subsidiary, In-House Rehab, Inc., agrees to pay to
Employee a "Base Salary" at the rate of $93,375.00 per annum payable in
twenty-six equal, bi-weekly installments of $3,591.35. Employee's Base Salary
shall be
reviewed annually by the Compensation Committee of the Board of Directors
("Compensation Committee"), and the Base Salary for each year (or portion
thereof) beginning January 1, 1998 shall be determined by the Compensation
Committee which shall authorize an increase in Employee's Base Salary for such
year in an amount which, at a minimum, shall be equal to the cumulative cost-
of-living increment on the Base Salary as reported in the "Consumer Price Index,
Seattle, Washington, All Items," published by the U.S. Department of Labor
(using
January 1, 1997 as the base date for computation). 3.2 Bonuses. Employee shall
be eligible to receive bonuses for each year (or portion thereof) during the
term
of this Agreement and any extensions thereof, in accordance with the executive
bonus plan adopted by the Corporation.
3.3 Additional Benefits. During the term of this Agreement, Employee
shall be
entitled to the following fringe benefits:
3.3.1 Employee Benefits. Employee shall be eligible to participate in
such of Corporation's benefits and deferred compensation plans as are now
generally available or later made generally available to executive officers of
the Corporation, including, without limitation, Corporation's Stock Option Plan,
profit sharing plans, annual physical examinations, dental and medical plans,
and
disability insurance. For purposes of establishing the length of service under
any benefit plans or programs of Corporation, Employee's employment with the
Corporation will be deemed to have commenced on October 1, 1996.
3.3.2 Vacation. Employee shall be entitled to two (2) weeks of
vacation
during each year during the term of this Agreement and any extensions thereof,
prorated for partial years.
3.3.4 Automobile Allowance. For the term of this agreement and any
extensions thereof the corporation shall provide officer with an automobile
allowance in the amount of $400.00 per month after taxes.
3.3.5 Reimbursement for Expenses. During the term of this Agreement,
Corporation shall reimburse Employee for reasonable and properly documented
out-of-pocket business and/or entertainment expenses incurred by Employee in
connection with his duties under this Agreement.
3.3.6. Maintenance of Licenses. During the term of this Agreement,
Corporation shall pay/reimburse Employee for any and all fees, dues, continuing
education programs, or other amounts to satisfy other obligations in connection
with maintaining in good standing with the Kentucky, Indiana and American Bar
associations.
Section 4. Severance Compensation.
4.1 Severance Compensation in the Event of a Termination Upon a Change in
Control. In the event Employee's employment is terminated in a Termination Upon
a Change in Control, Employee shall be paid as severance compensation his Base
Salary (at the rate payable at the time of such termination), for a period of
one
(1) year, however, if Employee is employed by a new employer during such period,
the severance compensation payable to Employee during such period will be
reduced
by the amount of compensation that Employee actually receives from the new
employer. However, Employee is under no obligation to mitigate the amount owed
Employee pursuant to this Section by seeking other employment or otherwise.
Employee shall also be entitled to an accelerated vesting of any awards granted
to Employee under the Corporation's Stock Option Plan to the extent provided in
the stock option agreement entered into at the time of grant. Employee shall
continue to accrue retirement benefits and shall continue to enjoy any benefits
under any plans of the Corporation in which Employee is a participant to the
full
extent of Employee's rights under such plans, including any perquisites provided
under this Agreement, for the same period, and in direct proportion to the
Severance received hereunder; provided, however, that the benefits under any
such
plans of the Corporation in which Employee is a participant, including any such
perquisites, shall cease upon re-employment by a new employer.
4.2 Severance Compensation in the Event of a Termination Other Than for
Cause.
In the event Employee's employment is terminated in a Termination Other Than for
Cause, Employee shall be paid as severance compensation his Base Salary (at the
rate payable at the time of such termination), for a period of twelve (12)
months, however, that if Employee is employed by a new employer during such
period, the severance compensation payable to Employee during such period will
be reduced by the amount of compensation that Employee actually receives
from the
new employer, officer is under no obligation to mitigate the amount owed to the
officer pursuant to this Section by seeking employment or other Employee shall
be entitled to an accelerated vesting of any awards granted to Employee under
Corporation's Stock Option Plan to the extent provided in the stock option
agreement entered into at the time of grant.
4.3 No Severance Compensation Upon Other Termination. In the event of a
Voluntary Termination, Termination For Cause, termination by reason of
Employee's
disability pursuant to Section 2.6, Employee or his estate shall not be paid any
severance compensation.
Section 5. Outside Activities of Employee. Corporation acknowledges that
Employee has commitments and business activities not related to the
Corporation.
There shall be no restriction on Employee's ability to fulfill such commitments
or engage in such business activities. However, for activities other than those
required for the maintenance of professional licensees, Employee shall conduct
such activities on the Employees own time.
Section 6. Payment Obligations. Corporation's obligation to pay Employee the
compensation and to make the arrangements provided herein shall be
unconditional,
and Employee shall have no obligation whatsoever to mitigate damages hereunder.
If litigation after a Change in Control shall be brought to enforce or interpret
any provision contained herein, Corporation, to the extent permitted by
applicable law and the Corporations' Articles of Incorporation and Bylaws,
hereby
indemnifies Employee for Employee's reasonable attorneys' fees and disbursements
incurred in such litigation.
Section 7. Confidentiality. Employee agrees that all confidential and
proprietary information relating to the business of Corporation shall be kept
and
treated as confidential both during and after the term of this Agreement, except
as may be permitted in writing by Corporation's Board of Directors or as such
information is within the public domain or comes within the public domain
without
any breach of this Agreement.
Section 8. Withholdings. All compensation and benefits to Employee hereunder
shall be reduced by all federal, state, local and other withholdings and similar
taxes and payments required by applicable law.
Section 9. Indemnification. In addition to any rights to indemnification to
which Employee is entitled to under the Corporation's Articles of Incorporation
and Bylaws, Corporation shall indemnify Employee at all times during and after
the term of this Agreement to the maximum extent permitted under Kentucky
Business Corporation Act or any successor provision thereof and any other
applicable state law, and shall pay Employee's expenses in defending any civil
or criminal action, suit, or proceeding in advance of the final disposition of
such action, suit or proceeding, to the maximum extent permitted under such
applicable state laws.
Section 10. Notices. Any notices permitted or required under this Agreement
shall be deemed given upon the date of personal delivery or forty-eight (48)
hours after deposit in the United States mail, postage fully prepaid, return
receipt requested, addressed to the Corporation at:
000 Xxxx Xxxx Xxxxxx Xxxxx 0000 X
Xxxxxxxxxx, Xxxxxxxx 00000
addressed to the Employee at:
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
or at any other address as any party may, from time to time, designate by notice
given in compliance with this Section.
Section 11. Law Governing. This Agreement shall be governed by and
construed in
accordance with the laws of the Commonwealth of Kentucky.
Section 12. Titles and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
Section 13. Entire Agreement. This Agreement contains the entire
understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
Section 14. Agreement Binding. This Agreement shall be binding upon the
heirs,
executors, administrators, successors and assigns of the parties hereto.
Section 15. Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
Section 16. Computation of Time. In computing any period of time pursuant to
this Agreement, the day of the act, event or default from which the designated
period of time begins to run shall be included, unless it is a Saturday, Sunday,
or a legal holiday, in which event the period shall begin to run on the next day
which is not a Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next day thereafter which is not a Saturday,
Sunday, or legal holiday.
Section 17. Pronouns and Plurals. All pronouns and any variations thereof
shall
be deemed to refer to the masculine, feminine, neuter, singular, or plural as
the
identity of the person or persons may require.
Section 18. Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
Section 19. Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
Section 20. Further Action. The parties hereto shall execute and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
Section 21. Parties in Interest. Nothing herein shall be construed to be
to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
Section 22. Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
Section 23. Separate Counsel. The parties acknowledge that the Corporation
has
been represented in this transaction by outside counsel, and that the Employee
has not been represented in this transaction by the Corporation's attorneys, and
the Employee has been advised that it is important for the Employee to seek
separate legal advise and representation in this matter.
Date:
In-House Rehab Corporation
a Colorado Corporation
by:/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx, President
/s/ Xxxxxxx X. Kitchen
Xxxxxxx X. Kitchen, Personally
