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EXHIBIT 10.26
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
XXXXXXX X. XXXXXXXX
THIS EMPLOYMENT AGREEMENT is made and entered into as of the date last
below written, by and between INTENSIVA HEALTHCARE CORPORATION, a Delaware
corporation, formerly known as Transitional Care of America, Inc., ("EMPLOYER"
or the "COMPANY"), and XXXXXXX X. XXXXXXXX, 00000 Xxxxxx Xxxxx Xxxxx,
Xxxxxxxxxxxx, Xxxxxxxx 00000 ("EMPLOYEE").
WHEREAS, the Company and Employee entered into an Employment Agreement
dated as of December 8, 1994, and the Company and Employee desire to amend and
restate said Employment Agreement; and
WHEREAS, the Company desires to retain the services of Employee, and
Employee desires to continue his employment with the Company, upon the terms and
conditions hereinafter set forth; and
WHEREAS, as an ancillary and integral part of this Agreement, the Company
desires to obtain Employee's covenant not to compete and other covenants, and
Employee desires to make a covenant not to compete and such other covenants as
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby forever acknowledged and confessed, the parties agree as
follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts such employment by Employer, upon the terms and conditions specified
herein for the "Term of Employment" (as hereinafter defined).
2. DUTIES OF EMPLOYEE. During the Term of Employment, Employee is hereby
employed as the Executive Vice President, Business Development and shall report
directly to the Company's Chief Executive Officer. Employee shall be responsible
for management of the Company's business development efforts for long term care
hospitals within hospitals, and for business development in such states or areas
as shall be assigned to Employee by the Company's Chief Executive Officer.
Employee will devote 25 percent of his full and entire working time and
attention to management of the Company's business development, and 75 percent of
his full and entire working time and attention to developing new long term care
hospitals within hospitals for the Company.
Employee shall have such authority and shall perform such duties as are
specified by the Chief Executive Officer from time to time in his sole
discretion. In furtherance of the foregoing, Employee shall, subject to the
direction and instruction of Employer: (a) devote Employee's full and entire
working time, attention and energies to Employer, and will diligently and to the
best of employee's ability perform all duties incident to Employee's employment
hereunder; (b) use Employee's best efforts to promote the interests of the
Company; and (c) perform such other duties as the Company may from time to time
direct.
The Company, in its sole discretion, shall establish development criteria
that define the hospitals for which Employee shall devote his development
efforts. The Company and Employee agree that during each year of the Initial
Term and successive terms, if any, of this Employment Agreement, Employee is
expected through his own personal development efforts, (a) to procure contracts
and open four (4) long term care hospitals within hospitals, and (b) in his
capacity as manager of the Company's business development efforts to open eleven
(11) long term care hospitals within hospitals (including the four (4) hospitals
that Employee is directly responsible for opening). Employee understands that he
will be required to travel extensively in the performance of his duties.
3. FINANCIAL ARRANGEMENTS.
3.1 Compensation. As compensation for Employee's services hereunder and in
consideration of Employee's covenant not to compete and other covenants as set
forth herein, the Company shall pay Employee a salary of One Hundred Thousand
Dollars ($100,000.00) per year, payable on a semi-monthly basis, subject to
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such payroll and withholding deductions as may be required by law. Employee's
base salary is subject to annual review.
Employee shall be reimbursed for all the reasonable actual costs and
expenses incurred by him in the performance of his duties. Employee shall be
entitled to an two (2) weeks paid vacation time each year and other benefits
(e.g., sick leave and health insurance) in accordance with Employer's policies
as from time to time established. Employee shall also be eligible to participate
in any other benefit plan adopted by Employer, including, but not limited to,
the Company's Stock Option Plan, subject to such terms as shall be approved by
the Company's Board of Directors or Compensation Committee thereof.
3.2 Commission. Employee shall be entitled to be paid a commission upon the
opening of each long term care hospital within a hospital for which Employee was
responsible for procuring the contract and opening such hospital through his own
personal development efforts; provided such hospital meets the development
criteria established by the Company. The target commission shall be in the
amount of $35,000 for any hospital that meets the average of the development
criteria. For hospitals that do not meet such average but do meet at least the
minimum development criteria, the commission shall be in an amount determined by
the Company, in its sole discretion, to represent the value of such contract to
the Company but in no event shall the commission be less than $25,000. For
contracts with hospitals that exceed such average the commission shall be in an
amount determined by the Company, in its sole discretion, to represent the value
of such contract to the Company but in no event shall such commission exceed
$50,000. The Company reserves the right to amend this commission plan at any
time in its sole discretion and such amendment shall not be a breach of this
Agreement.
3.3 Supplemental Management Commission. As compensation for Employee's
management of the Company's business development efforts, Employee shall be paid
a supplemental management commission upon the opening of each long term care
hospital within a hospital, except those hospitals for which employee receives a
commission pursuant to SECTION 3.2. The amount of such supplemental management
commission shall be equal to 13 percent of the commission paid by the Company to
the employee responsible for the procuring the contract and opening the long
term care hospital in a hospital. The Company reserves the right to amend this
supplemental management commission plan at any time in its sole discretion and
such amendment shall not be a breach of this Agreement.
4. CONFIDENTIALITY. Employee agrees to keep confidential and not to use or
to disclose to others, except as expressly consented to in writing by Employer,
or as required by law to be disclosed, any trade secrets or confidential
technology, proprietary information, customer lists, or knowledge belonging to
or relating to the affairs or Employer or any subsidiary or parent of Employer
(an "AFFILIATE"), or any matter or thing ascertained by Employee through
Employee's association with Employer or an Affiliate, the use or disclosure of
which matter or thing might reasonably be construed to be contrary to the best
interests of Employer or an Affiliate. Employee further agrees that should
Employee leave the active service of Employer, Employee will neither take nor
retain, without prior written authorization from Employer, any papers, data,
client lists, books, records, files, or other documents (or copies thereof) or
other confidential information of any kind belonging to Employer or an Affiliate
pertaining to the business, sales, financial condition, products or other
activities thereof.
5. ITEM OWNERSHIP. All patents, formulae, inventions, ideas of inventions,
processes, copyrights, know-how, proprietary information, trademarks, tradenames
or other developments, or future improvements thereto (collectively "ITEMS"),
developed or conceived by Employee during the term of this Agreement are the
property of Employer and shall be promptly disclosed to Employer. Employee shall
further execute an assignment of such Items to Employer and execute such other
instruments as Employer shall request to protect Employer's interest in such
Items. Employee represents that his performance of this Agreement does not and
will not breach any agreement to keep in confidence items acquired by him in
confidence or in trust prior to his employment with Employer. Employee agrees
not to disclose to Employer or induce Employer to use any Items belonging to any
previous employer or others. Employee further agrees not to enter into any
agreement, either written or oral, in conflict herewith. This covenant shall be
perpetual and shall survive the termination or expiration of this Agreement.
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6. NON-COMPETITION AGREEMENT. Employee recognizes that Employer's entering
into this Agreement is induced primarily because of the covenants and assurances
made by Employee, that Employee's covenant not to compete is necessary to insure
that continuation of the business of Employer and its Affiliates, and that
irreparable harm and damage will be done to Employer and its Affiliates in the
event that Employee competes with Employer or its Affiliates within the
geographic areas described below. Therefore, Employee agrees that during the
Term of Employment, and for a period of twelve (12) months thereafter Employee
will not directly or indirectly own, manage, operate, control, participate in
the management or control of, be employed by, lend Employee's name to or
maintain or continue any interest whatsoever in any enterprise (a) having to do
with the provision, distribution, marketing, promotion, or advertising of any
type(s) of service(s) or product(s) in direct competition to those offered by
Employer within (i) the fifty (50) states of the United States, (ii) United
States territories and possessions, and (iii) each foreign country, possession
or territory in which Employer may be engaged in business at the termination of
Employee's employment or at any time within twelve (12) months prior thereto;
but only if Employee was directly or indirectly responsible for such business
while he was employed by Employer or if Employee was directly or indirectly
involved or exposed to plans for such business at any time within twelve (12)
months prior to termination. Employee further agrees that if any restriction
contained in this SECTION 6 is held by any court to be unenforceable or
unreasonable, a lesser restriction shall be severable therefrom and be enforced
in its place, and the remaining restrictions contained herein shall be
enforceable independently of each other.
7. TERM AND TERMINATION OF AGREEMENT.
7.1 Term of Employment. As used herein, "Term of Employment" shall mean the
period commencing on December 2, 1996 and expiring at 12:00 A.M. CST on the
second (2nd) anniversary of such date.
7.2 Termination.
(a) Death. Employee's employment hereunder shall terminate immediately
upon death.
(b) For Cause. Employer may terminate Employee's employment hereunder
at any time, effective immediately upon written notice, for cause. For the
purpose of this Agreement "cause" shall mean:
i. The willful and continued failure by Employee to substantially
perform Employee's duties hereunder, other than any such failure
resulting from Employee's incapacity due to physical or mental illness,
or resulting from a diminution of Employee's duties following a Change
of Control. For purposes of this Agreement, a "Change of Control" shall
mean and be deemed to have occurred if: (a) there shall be consummated
(x) any consolidation or merger of Employer with another corporation or
entity and, as a result of such consolidation or merger, less than sixty
percent (60%) of the outstanding voting securities of the surviving or
resulting corporation or entity shall be owned in the aggregate by the
stockholders of Employer, other than affiliates (within the meaning of
the Securities Exchange Act of 1934, as amended) of any party to such
consolidation or merger, as the same shall have existed immediately
prior to such consolidation or merger, or (y) any sale, lease, exchange
or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of Employer,
or (b) the stockholders of Employer shall have approved any plan or
approval for the liquidation or dissolution of the company, or (c) any
"person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934), shall have become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act), of twenty
percent (20%) or more of Employer's outstanding common stock, without
the prior approval of Employer's Board of Directors, or (d) if the
majority of the Directors of Employer are replaced in a contested
election.
ii. The willful engaging by Employee in conduct which is
demonstrably and materially injurious to Employer, monetarily or
otherwise.
iii. Employee's conviction of, or plea of nolo contendere to a
felony, provided any right of appeal has been exercised or has lapsed.
iv. Employee's failure to achieve in any year the expected openings
set forth in SECTION 2.
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In the event that Employee is terminated for cause, Employer shall pay
Employee's salary through the date of termination, and shall thereafter have no
further obligation to Employee, provided, however, that Employee's obligations
pursuant to the Non-Competition Agreement contained herein shall continue in
full force and effect for a period equal to the balance of the Term of
Employment had this Agreement not been terminated and for twelve (12) months
thereafter. For purposes of this section, no act, or failure to act, on the part
of the Employee shall be deemed "willful" unless done, or omitted to be done, by
the Employee without good faith and without reasonable belief that the action or
omission was in the best interest of Employer.
(c) Long-Term Disability. Should Employee commence a Long-Term
Disability, as hereinafter defined, Employee's base compensation shall be
continued during the first six (6) months of such disability. Should such
Long-Term Disability continue beyond six (6) months, Employee's employment
hereunder shall automatically terminate and Employer shall have no further
obligations to Employee. Employee shall have commenced a "Long-Term
Disability" if: (i) Employee cannot perform the essential functions of his
employment position, with or without a reasonable accommodation for his
disability; or (ii) Employee cannot perform the essential functions of his
employment position without an accommodation that would be an undue
hardship for Employer to provide. The foregoing definition of Long-Term
Disability is not intended to and shall not affect the definition of
"disability" or any similar term in any insurance policy Employer may
provide.
(d) Without Cause. Employee's employment hereunder may be terminated
by Employer at any time, effective upon two (2) weeks written notice of
termination; provided, however, if Employer shall terminate Employee's
employment hereunder without cause, then upon any such termination, and as
a condition to the effectiveness thereof, Employer shall be obligated to
pay to Employee as severance pay an amount equal to Employee's salary for
one (1) year, payable in substantially equal semi-monthly installments at
the level then being paid to Employee, and the Employee's obligations
pursuant to the Non-Competition Agreement contained herein shall continue
in full force and effect for a period of twelve (12) months. In such event,
Employee will only be eligible for the accrued bonus payable.
(e) By Employee.
(i) Employee may resign his employment for cause and receive the
same benefits as he would be entitled to and be bound by the same
obligations as if the Employer terminated his employment pursuant to the
provisions of SECTION 7(D) above if (a) the Company breaches a material
provision of this Agreement and the Company has not cured such breach
within thirty (30) days after receipt of written notice of such breach,
(b) the Company significantly alters Employee's employment as set forth
in SECTION 2 above to the detriment of Employee, (c) there is a Change
of Control, or (d) Employee is required to move his residence to a
location which is not acceptable.
(ii) If Employee resigns without cause (including any resignation
or repudiation of this Agreement after the date of its execution but
before the date that the Employee commences work) (a) all compensation
and benefits Employee is to receive pursuant to the terms of this
Agreement shall cease as of the effective date of such resignation, and
(b) Employee will be subject to the obligations of the Non-Competition
Agreement contained herein for what would have been the remaining term
of the Agreement and for twelve (12) months thereafter.
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8. ADDITIONAL PROVISIONS.
8.1 Notices. Any notice, demand, or communication required, permitted, or
desired to be given hereunder, shall be deemed effectively given when personally
delivered or mailed by prepaid, certified mail, return receipt requested,
addressed as follows:
EMPLOYEE EMPLOYER
-------- --------
Xxxxxxx X. Xxxxxxxx Intensiva HealthCare Corporation
00000 Xxxxxx Xxxxx Xxxxx 0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000 Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
or to such other address, and to the attention of such other person(s) or
officer(s) as either party may designate by written notice.
8.2 Governing Law. This Agreement has been executed and delivered in, and
shall be interpreted, construed, and enforced pursuant to and in accordance with
the laws of Missouri.
8.3 Assignment. This Agreement and the rights and obligations hereunder
shall bind and inure to the benefit of any successor or successors of the
Company by way of reorganization, merger or consolidation, and any assignee of
all or substantially all of its business and properties, but, except as to any
such successor or assignee of the Company, neither this Agreement nor any rights
or benefits hereunder may be assigned by either party.
8.4 Waiver of Breach. The waiver by either party of a breach or violation
of any provision of this Agreement shall not operate as, or be construed to be,
a waiver of any subsequent breach of the same or other provision hereof.
8.5 Enforcement. Without limiting other possible remedies to Employer for
the breach of this Agreement, Employee agrees that injunctive or other equitable
relief shall be available to enforce the covenants set forth in Sections 4, 5
and 6, such relief to be without the necessity of posting a bond, cash or
otherwise. Employee further agrees that if any restriction contained in any such
Section is held by any court to be unenforceable or unreasonable, a lesser
restriction shall be enforced in its place and all remaining restrictions
contained herein shall be enforced independently of each other.
8.6 Gender and Number. Whenever the context hereof requires, the gender of
all words shall include the masculine, feminine and neuter, and the number of
all words shall include the singular and plural.
8.7 Additional Assurances. The provisions of this Agreement shall be
self-operative and shall not require further agreement by the parties except as
may be herein specifically provided to the contrary; provided, however, at the
request of Employer, Employee shall execute such additional instruments and take
such additional acts as Employer may deem necessary to effectuate this
Agreement.
8.8 Severability. In the event any provision of this Agreement is held to
be unenforceable for any reason, the unenforceability thereof shall not effect
the remainder of this Agreement, which shall remain in full force and effect and
enforceable in accordance with its terms.
8.9 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.10 Entire Agreement. This Agreement supersedes all previous contracts,
and constitutes the entire Agreement between parties. Employee shall be entitled
to no other benefits than those specified herein. No oral statements or prior
written material not specifically incorporated herein shall be of any force and
effect, and no changes in or additions to this Agreement shall be recognized
unless incorporated herein by amendment as provided herein, such amendment(s) to
become effective on the date stipulated therein. Employee specifically
acknowledges that in entering into and executing this Agreement, Employee relies
solely upon the representations and agreements contained in this Agreement and
no others.
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IN WITNESS WHEREOF the parties have executed this Agreement as of the 2nd
day of December, 1996.
EMPLOYER: INTENSIVA HEALTHCARE CORPORATION
By: /s/ XXXXX X. XXXXX
------------------------------------
Xxxxx X. Xxxxx, President
EMPLOYEE: By: /s/ XXXXXXX X. XXXXXXXX
------------------------------------
Xxxxxxx X. Xxxxxxxx
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