EXHIBIT 10.41

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT is made as of the 28th day of October, 2003 (the
“Execution Date”), by and between Kindred Healthcare Operating, Inc., a Delaware
corporation (the “Company”), and Paul J. Diaz (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive is employed by the Company, a wholly-owned subsidiary of
Kindred Healthcare, Inc. (“Parent”), and the parties hereto desire to provide
for the terms of Executive’s employment by the Company as Chief Executive
Officer and President; and

 

WHEREAS, the Executive Compensation Committee of the Board of Directors of the
Parent has determined that it is in the best interests of the Company and Parent
to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the respective covenants
and agreements contained herein, and intending to be legally bound hereby, the
Company and Executive agree as follows:

 

1. Employment. The Company hereby agrees to employ Executive and Executive
hereby agrees to be employed by the Company on the terms and conditions herein
set forth. The initial term (the “Term”) of this Agreement shall be for a
three-year period commencing on January 1, 2004 (the “Effective Date”). The Term
shall be automatically extended by one additional day for each day beyond the
Effective Date that the Executive remains employed by the Company until such
time as the Company elects to cease such extension by giving written notice of
such election to the Executive. In such event, the Agreement shall terminate on
the third anniversary of the date of such election notice, unless a later date
is specified.

 

2. Duties. Executive is engaged by the Company as its Chief Executive Officer
and President. The Executive will have the same titles with the Parent.
Executive shall perform such duties commensurate with his title and as otherwise
designated by the Board of Directors of the Parent (the “Board”).

 

3. Extent of Services. Executive, subject to the direction and control of the
Board, shall have the power and authority commensurate with his executive status
and necessary to perform his duties hereunder. During the Term, Executive shall
devote his entire working time, attention, labor, skill and energies to the
business of the Company, and shall not, without the consent of the Company, be
actively engaged in any other business activity, whether or not such business
activity is pursued for gain, profit or

--------------------------------------------------------------------------------

other pecuniary advantage. Notwithstanding the foregoing, it shall not be a
breach or violation of this Agreement for the Executive to (i) serve on
corporate boards with the prior approval of the Board, (ii) serve on civic or
charitable boards or committees, or (iii) manage personal investments, so long
as such activities do not reasonably interfere with or reasonably detract from
the performance of the Executive’s responsibilities to the Company in accordance
with this Agreement.

 

4. Compensation. As compensation for services hereunder rendered, Executive
shall receive during the Term:

 

(a) A base salary (“Base Salary”) of Eight Hundred Thousand Dollars ($800,000)
per year payable in equal installments in accordance with the Company’s normal
payroll procedures. Executive may receive increases in his Base Salary from time
to time, as approved by the Board.

 

(b) In addition to Base Salary, Executive shall be entitled to receive bonuses
and other incentive compensation as the Board may approve from time to time,
including participation in the Company’s annual short-term incentive
compensation plan and its long-term incentive compensation plan.

 

5. Benefits.

 

(a) Executive shall be entitled to participate in any and all pension benefit,
welfare benefit (including, without limitation, medical, dental, disability and
group life insurance coverages) and fringe benefit plans from time to time in
effect for executives of the Company and its affiliates.

 

(b) On the Execution Date, the Executive shall be granted 60,000 options to
purchase common stock of the Parent and 60,000 shares of restricted common stock
of the Parent pursuant to the Kindred Healthcare, Inc. 2001 Stock Incentive Plan
(the “Plan”). The stock options shall vest equally over three years from the
date of grant and be exercisable for a period of ten years following the grant
date. The restricted stock will vest equally over three years from the date of
grant. Executive and Parent shall execute appropriate agreements to evidence
these awards. Executive shall be eligible for additional grants of options and
restricted stock under the Plan, any successor plan thereto, in such amounts and
subject to such terms and conditions as determined by the Board. Executive shall
also be entitled to participate in other bonus, stock option, or other incentive
compensation plans of the Company and its affiliates in effect from time to time
for executives of the Company.

 

(c) Executive shall be entitled to paid time off benefits of the Company and its
affiliates in effect from time to time for executives of the

 

2

--------------------------------------------------------------------------------

Company but such paid time off shall be equivalent to at least 26 days of paid
time off per year. The Executive shall schedule the timing of such paid time off
in a reasonable manner. The Executive may also be entitled to such other leave,
with or without compensation, as shall be mutually agreed by the Company and
Executive.

 

(d) Executive may incur reasonable expenses for promoting the Company’s
business, including expenses for entertainment, travel and similar items. The
Company shall reimburse Executive for all such reasonable expenses in accordance
with the Company’s reimbursement policies and procedures.

 

(e) While this Agreement is in effect, the Company shall provide the Executive
with (i) director’s and officer’s liability insurance coverage; (ii) life
insurance for which the Executive may designate the beneficiary or
beneficiaries; and (iii) long-term disability insurance, consistent with the
benefits provided to the Company’s executive officers.

 

6. Termination of Employment.

 

(a) Death or Disability. Executive’s employment shall terminate automatically
upon Executive’s death during the Term. If the Company determines in good faith
that the Disability of Executive has occurred during the Term (pursuant to the
definition of Disability set forth below) it may give to Executive written
notice of its intention to terminate Executive’s employment. In such event,
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive’s duties. For purposes of this
Agreement, “Disability” shall mean Executive shall be unable, or fail, to
perform the essential functions of his position with or without reasonable
accommodation, for any period of 90 days or more.

 

(b) Cause. The Company may terminate Executive’s employment during the Term for
Cause. For purposes of this Agreement, “Cause” shall mean the Executive’s (i)
conviction of or plea of nolo contendere to a crime involving moral turpitude;
or (ii) willful and material breach by Executive of his duties and
responsibilities, which is committed in bad faith or without reasonable belief
that such breaching conduct is in the best interests of the Company and its
affiliates, but with respect to (ii) only if the Board adopts a resolution by a
vote of at least 75% of its members so finding after giving the Executive and
his attorney an opportunity to be heard by the Board. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon advice of counsel for the Company shall be conclusively
presumed to be done, or

 

3

--------------------------------------------------------------------------------

omitted to be done, by Executive in good faith and in the best interests of the
Company.

 

(c) Good Reason. Executive’s employment may be terminated by Executive for Good
Reason. “Good Reason” shall exist upon the occurrence, without Executive’s
express written consent, of any of the following events:

 

(i) the Company shall assign to Executive duties of a substantially nonexecutive
or nonmanagerial nature;

 

(ii) an adverse change in Executive’s status or position as Chief Executive
Officer of the Company or the Parent, including, without limitation, an adverse
change in Executive’s status or position as a result of a diminution in
Executive’s duties and responsibilities (other than any such change directly
attributable to the fact that the Company is no longer publicly owned);

 

(iii) the Company shall (A) materially reduce the Base Salary or bonus
opportunity of Executive, or (B) materially reduce his benefits and perquisites
(other than pursuant to a uniform reduction applicable to all similarly situated
executives of the Company);

 

(iv) the Company shall require Executive to relocate Executive’s principal
business office more than 30 miles from its location on the Execution Date; or

 

(v) the failure of the Company to obtain the assumption of this Agreement as
contemplated by Section 9(c).

 

For purposes of this Agreement, “Good Reason” shall not exist until after
Executive has given the Company notice of the applicable event within 90 days of
such event and which is not remedied within 30 days after receipt of written
notice from Executive specifically delineating such claimed event and setting
forth Executive’s intention to terminate employment if not remedied; provided,
that if the specified event cannot reasonably be remedied within such 30-day
period and the Company commences reasonable steps within such 30-day period to
remedy such event and diligently continues such steps thereafter until a remedy
is effected, such event shall not constitute “Good Reason” provided that such
event is remedied within 60 days after receipt of such written notice.

 

(d) Notice of Termination. Any termination by the Company for Cause, or by
Executive for Good Reason, shall be communicated by Notice of Termination given
in accordance with this Agreement. For purposes of this

 

4

--------------------------------------------------------------------------------

Agreement, a “Notice of Termination” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive’s employment under the provision so indicated
and (iii) specifies the intended termination date (which date, in the case of a
termination for Good Reason, shall be not more than 30 days after the giving of
such notice). The failure by Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of Executive or the Company,
respectively, hereunder or preclude Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing Executive’s or the Company’s
rights hereunder.

 

(e) Date of Termination. “Date of Termination” means (i) if Executive’s
employment is terminated by the Company for Cause, or by Executive for Good
Reason, the later of the date specified in the Notice of Termination or the date
that is one day after the last day of any applicable cure period, (ii) if
Executive’s employment is terminated by the Company other than for Cause or
Disability, or Executive resigns without Good Reason, the Date of Termination
shall be the date on which the Company or Executive notified Executive or the
Company, respectively, of such termination and (iii) if Executive’s employment
is terminated by reason of death or Disability, the Date of Termination shall be
the date of death of Executive or the Disability Effective Date, as the case may
be.

 

7. Obligations of the Company Upon Termination. Following any termination of
Executive’s employment hereunder, the Company shall pay Executive his Base
Salary through the Date of Termination and any amounts owed to Executive
pursuant to the terms and conditions of the benefit plans and programs of the
Company at the time such payments are due. In addition, subject to Executive’s
(or his designated beneficiary’s or estate’s, as the case may be) execution of a
general release of claims in a form substantially similar to Exhibit A,
Executive shall be entitled to the following additional payments:

 

(a) Death or Disability. If, during the Term, Executive’s employment shall
terminate by reason of Executive’s death or Disability, the Company shall pay to
Executive (or his designated beneficiary or estate, as the case may be) the
prorated portion of any Target Bonus (as defined below) Executive would have
received for the year of termination of employment. Such amount shall be paid
within 30 days of the date when such amounts would otherwise have been payable
to the Executive if Executive’s employment had not terminated.

 

 

5

--------------------------------------------------------------------------------

(b) Good Reason; Other than for Cause. If, during the Term, the Company shall
terminate Executive’s employment other than for Cause (but not for Disability),
or the Executive shall terminate his employment for Good Reason:

 

(1) Within 14 days of Executive’s Date of Termination, the Company shall pay to
Executive (i) the prorated portion of the Target Bonus for Executive for the
year in which the Date of Termination occurs, and (ii) an amount equal to three
times the sum of the Executive’s Base Salary and Target Bonus as of the Date of
Termination.

 

For purposes of this Agreement: “Target Bonus” shall mean the full amount of the
targeted annual short-term incentive bonus that would be payable to the
Executive, assuming the targeted performance criteria on which such annual
short-term incentive bonus is based were deemed to be satisfied, in respect of
services for the calendar year in which the date in question occurs.

 

(2) For a period of three years following the Date of Termination, the Executive
shall be treated as if he had continued to be an executive for all purposes
under the Parent’s health insurance plan and dental insurance plan; or if the
Executive is prohibited from participating in such plan, the Company or Parent
shall otherwise provide such benefits. Executive shall be responsible for any
employee contributions for such insurance coverage. Following this continuation
period, the Executive shall be entitled to receive continuation coverage under
Part 6 of Title I or ERISA (“COBRA Benefits”) treating the end of this period as
a termination of the Executive’s employment if allowed by law.

 

(3) For a period of three years following the Date of Termination, Parent shall
maintain in force, at its expense, the Executive’s life insurance in effect
under the Parent’s life insurance benefit plan as of the Date of Termination.
Executive shall be responsible for any employee contributions for such insurance
coverage.

 

(4) For a period of three years following the Date of Termination, the Company
or Parent shall provide short-term and long-term disability insurance benefits
to Executive equivalent to the coverage that the Executive would have had if he
had remained employed under the disability insurance plans applicable to
Executive on the Date of Termination. Executive shall be responsible for any
employee contributions for such insurance coverage. Should Executive become
disabled during such period, Executive shall be entitled to receive such
benefits, and for such duration, as the applicable plan provides.

 

6

--------------------------------------------------------------------------------

(5) To the extent not already vested pursuant to the terms of such plan, the
Executive’s interests under the Parent’s retirement savings plan shall be
automatically fully (i.e., 100%) vested, without regard to otherwise applicable
percentages for the vesting of employer matching contributions based upon the
Executive’s years of service with the Company.

 

(6) Parent or the Company may adopt such amendments to its executive benefit
plans, if any, as are necessary to effectuate the provisions of this Agreement.

 

(7) Executive shall be entitled to an additional three years of vesting for
purposes of all outstanding stock option awards and restricted stock awards and
other similar equity compensation awards. Executive will have an additional
three years following the Date of Termination in which to exercise any stock
options but not to exceed the lives of such options.

 

(8) Following the Executive’s Date of Termination, the Executive shall receive
the computer which Executive is utilizing as of the Date of Termination. In
addition, Executive shall be entitled to the furniture in Executive’s office
suite as of the Date of Termination. In addition, for a period of three years
following Executive’s Date of Termination, the Company shall provide Executive
with an office suite and administrative assistant, each substantially comparable
to the office suite and administrative assistant that were furnished to
Executive as of the Date of Termination.

 

(c) Cause; Other than for Good Reason. If Executive’s employment shall be
terminated for Cause or Executive terminates employment without Good Reason (and
other than due to such Executive’s death) during the Term, this Agreement shall
terminate without further additional obligations to Executive except as
otherwise provided under this Agreement or under any of the Company’s benefit
plans and programs.

 

(d) Death after Termination. In the event of the death of Executive during the
period Executive is receiving payments pursuant to this Agreement, Executive’s
designated beneficiary shall be entitled to receive the balance of the payments;
or in the event of no designated beneficiary, the remaining payments shall be
made to Executive’s estate.

 

7

--------------------------------------------------------------------------------

(e) If the Company is unable to provide the Executive with any benefits required
hereunder by reason of the termination of the Executive’s employment pursuant to
this Section 7, then the Company shall pay the Executive cash equal to the value
of the benefit that otherwise would have accrued for the Executive’s benefit
under the plan, for the period during which such benefits could not be provided
under the plans, said cash payments to be made within 45 days after the end of
the year for which such contributions would have been made or would have
accrued.

 

8. Disputes. Any dispute or controversy arising under, out of, or in connection
with this Agreement shall, at the election and upon written demand of either
party, be finally determined and settled by binding arbitration in the City of
Louisville, Kentucky, in accordance with the National Employment Arbitration
rules and procedures of the American Arbitration Association, and judgment upon
the award may be entered in any court having jurisdiction thereof. The Company
shall pay all costs of the arbitration and all reasonable attorneys’ and
accountants’ fees of the Executive in connection therewith, including any
litigation to enforce any arbitration award.

 

9. Successors.

 

(a) This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive’s legal representatives.

 

(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.

 

(c) The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, or any business of the Company for which
Executive’s services are principally performed, to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used this Agreement, “Company” shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.

 

10. Other Severance Benefits. Executive hereby agrees that in consideration for
the payments to be received under paragraph 7(b) of this Agreement, Executive
waives any and all rights to any payments or benefits under any severance plans
or arrangements of the Company or its affiliates that specifically provide for
severance payments, other than the Change in Control Severance Agreement between
the

 

8

--------------------------------------------------------------------------------

Company and Executive dated January 28, 2002 (the “Change in Control Severance
Agreement”); provided that any payments otherwise payable to Executive under
paragraph 7(b) shall be offset by any payments payable under the Change in
Control Severance Agreement.

 

11. Withholding. All payments to be made to Executive hereunder will be subject
to all applicable required withholding of taxes.

 

12. Non-solicitation. Until the last day of the Term or the Date of Termination,
whichever occurs first, and for a period of one year thereafter (collectively,
the “Non-solicitation Period”), Executive shall not directly or indirectly,
individually or on behalf of any person other than the Company, aid or endeavor
to solicit or induce any of the Company’s or its affiliates’ employees to leave
their employment with the Company or such affiliates in order to accept
employment with Executive or any other person, corporation, limited liability
company, partnership, sole proprietorship or other entity; provided, however,
that the foregoing shall not restrict Executive or any other person from
conducting general solicitations or advertisements not directed specifically at
employees of the Company or its affiliates, or from employing any employee who
responds to any such general solicitation or advertisement or who otherwise
initiates a request for employment. If the restrictions set forth in this
section would otherwise be determined to be invalid or unenforceable by a court
of competent jurisdiction, the parties intend and agree that such court shall
exercise its discretion in reforming the provisions of this Agreement to the end
that Executive will be subject to a non-solicitation covenant which is
reasonable under the circumstances and enforceable by the Company. It is agreed
that no adequate remedy at law exists for the parties for violation of this
section and that this section may be enforced by any equitable remedy, including
specific performance and injunction, without limiting the right of the Company
to proceed at law to obtain such relief as may be available to it. The running
of the Non-solicitation Period shall be tolled for any period of time during
which Executive is in violation of any covenant contained herein, for any reason
whatsoever.

 

13. No Mitigation. Executive shall have no duty to mitigate his damages by
seeking other employment and, should Executive actually receive compensation
from any such other employment, the payments required hereunder shall not be
reduced or offset by any such compensation. Further, the Company’s and Parent’s
obligations to make any payments hereunder shall not be subject to or affected
by any setoff, counterclaims or defenses which the Company or Parent may have
against Executive or others.

 

14. Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or sent by telephone facsimile transmission, personal or overnight couriers, or
registered mail with confirmation or receipt, addressed as follows:

 

9

--------------------------------------------------------------------------------

If to Executive:

Paul J. Diaz

Loganberry Court

Louisville, KY 40207

Facsimile: 502-893-8883

 

If to Company:

Kindred Healthcare Operating, Inc.

680 South Fourth Avenue

Louisville, KY 40202

Attn: General Counsel

Facsimile: 502-596-4075

 

15. Waiver of Breach and Severability. The waiver by either party of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by either party. In the event any
provision of this Agreement is found to be invalid or unenforceable, it may be
severed from the Agreement and the remaining provisions of the Agreement shall
continue to be binding and effective.

 

16. Entire Agreement; Amendment. This instrument and the Change in Control
Severance Agreement dated January 28, 2002 contain the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
and warranties between them, whether written or oral with respect to the subject
matter hereof; provided, however, that the Employment Agreement dated January
28, 2002 between the Company and the Executive shall remain in effect until the
Effective Date, at which time it shall terminate and be of no further force or
effect. No provisions of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing signed by
Executive and such officer of the Company specifically designated by the Board.

 

17. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

18. Headings. The headings in this Agreement are for convenience only and shall
not be used to interpret or construe its provisions.

 

19. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

 

10

--------------------------------------------------------------------------------

20. Indemnification.

 

(a) The Parent and Executive shall enter into the Indemnification Agreement
attached hereto as Exhibit B simultaneously with the execution of this
Agreement.

 

(b) No claim, action, suit or proceeding of any kind related to this Agreement,
the Executive’s employment with the Company, or otherwise may be asserted or
brought by the Company, the Parent or any of their affiliates more than one year
after the date that the Company, the Parent or any affiliate first obtains
knowledge of, or should have obtained knowledge of, any facts or allegations
giving rise to such claim, action, suit or proceeding, and any such claim,
action, suit or proceeding asserted or brought after such one-year period shall
be barred. This Section 20(b) shall survive the expiration or termination, for
any reason, of this Agreement.

 

11

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

KINDRED HEALTHCARE OPERATING, INC.

By:   /s/    Edward L. Kuntz            

--------------------------------------------------------------------------------

   

Edward L. Kuntz

Chairman and Chief Executive Officer

 

For purposes of Section 7 and as guarantor of Company’s obligations under this
Agreement

 

KINDRED HEALTHCARE, INC.

By:   /s/    Edward L. Kuntz            

--------------------------------------------------------------------------------

   

Edward L. Kuntz

Chairman and Chief Executive Officer

/s/    Paul J. Diaz        

--------------------------------------------------------------------------------

Paul J. Diaz

 

12

--------------------------------------------------------------------------------

Exhibit A

 

Employee Acknowledgment and Release. Employee expressly acknowledges that the
payments hereunder include consideration for the settlement, waiver, release and
discharge of any and all claims or actions arising from Employee’s employment,
the terms and conditions of Employee’s employment, or Employee’s termination of
employment with the Company, including claims of employment discrimination,
wrongful termination, unemployment compensation or any claim arising under law
or equity, express or implied contract, tort, public policy, common law or any
federal, state or local statute, ordinance, regulation or constitutional
provision.

 

(a) The claims released and discharged by Employee include, but are not limited
to, claims arising under Title VII of the Civil Rights Act of 1964, as amended;
the Civil Rights Act of 1991; The Older Workers Benefit Protection Act
(“OWBPA”); the Age Discrimination in Employment Act of 1967 (“ADEA”), as
amended; the Americans with Disabilities Act (“ADA”); the Fair Labor Standards
Act; the Employee Retirement Income and Security Act of 1974, as amended; the
National Labor Relations Act; the Labor Management Relations Act; the Equal Pay
Act of 1963; the Pregnancy Discrimination Act of 1978; the Rehabilitation Act of
1973; workers’ compensation laws; Kentucky Wage and Hours Laws, claims before
the Kentucky Commission for Human Rights and Kentucky Revised Statutes sections
341 et seq.

 

(b) Employee recognizes that by signing this Agreement, he may be giving up some
claim, demand or cause of action which he now has or may have, but which is
unknown to him.

 

(c) Employee agrees not to file any charges, complaints, lawsuits or other
claims against the Company that relate in any manner to the Employee’s
employment or the resignation or termination of Employee’s employment with the
Company.

 

(d) Employee expressly waives any claims against the Company for alleged race,
color, religious, sex, national origin, age or disability discrimination or
harassment under Title VII of the Civil Rights Act of 1964, as amended; the
Civil Rights Act of 1991; the Equal Pay Act of 1963; the Americans with
Disabilities Act; the Family Medical Leave Act; the Age Discrimination in
Employment Act of 1967; the Older Workers Benefit Protection Act; the
Rehabilitation Act of 1973; or any other federal or state law protecting against
such discrimination or harassment.

 

(e) Employee acknowledges that the Company has not and does not admit that it
engaged in any discrimination, wrong doing or violation of law on the Company’s
part concerning Employee. Employee and the Company agree that by entering into
this Agreement no discrimination, wrong doing, or violation of law has been

 

13

--------------------------------------------------------------------------------

acknowledged by the Company or assumed by Employee. Employee and the Company
further acknowledge that this Agreement is not an admission of liability.

 

Confidentiality. Employee and the Company agree to keep the contents and terms
of this Agreement confidential and not to voluntarily disclose the terms or
amount of settlement to third parties. The only exception is that Employee may
reveal the terms of this Agreement to his spouse, attorney, tax preparer or as
otherwise required by law. The Company may reveal the terms of this Agreement to
its attorneys, accountants, financial advisors, managerial employees, and any
disclosure required by law or business necessity. In the event that Employee
breaches the confidentiality of this Agreement, Employee understands that the
Company shall have the right to pursue all appropriate legal relief, including,
but not limited to, attorneys’ fees and costs.

 

Public Statement. Employee further agrees not to make derogatory or negative
remarks or comments about the Company, its affiliates and their respective
directors, officers, shareholders, agents or employees, to any third parties,
and not to otherwise defame the Company in any manner. In the event that
Employee defames the Company, its affiliates and their respective directors,
officers, shareholders, agents or employees, Employee understands that the
Company shall have the right to pursue all appropriate legal relief, including
but not limited to, attorneys’ fees and costs, and reimbursement of all monies
paid hereunder. Company agrees not to make derogatory or negative remarks or
comments about Employee to any third parties, not to otherwise defame the
Employee in any manner. In the event that the Company defames Employee, Company
understands that the Employee shall have the right to pursue all appropriate
legal relief, including but not limited to, attorneys’ fees and costs.

 

Confidential Information. At no time shall Employee divulge, furnish, or make
accessible to anyone any confidential knowledge or information about the
Company’s businesses or operations (except as required by law or order of court
or other governmental agency) or any of the clients, patients, customers or
suppliers of the Company or with respect to any other confidential aspect of the
businesses of the Company. Employee understands and agrees that any violation of
this provision will cause the Company irreparable harm which cannot adequately
be compensated by an award of money damages. As a result, Employee agrees that,
in addition to any other remedy the Company may have, a violation of this
Agreement may be restrained by issuance of an injunction by any court of
competent jurisdiction. Employee further agrees to accept service of process by
first class or certified United States mail.

 

Cooperation. Employee agrees that should the Company request Employee’s
cooperation in connection with litigation, government investigations or other
administrative or legal proceeding, Employee shall cooperate fully with the
Company or its designated agents. Employee further agrees to cooperate fully in
disclosing to the

 

14

--------------------------------------------------------------------------------

Company or its designated agents, any information that Employee obtained during
the course and scope of his employment with the Company, and to which other
employees of the Company were not privy.

 

Disputes. Any dispute or controversy arising under, out of, or in connection
with this Agreement shall, at the election and upon written demand of either
party, be finally determined and settled by binding arbitration in the City of
Louisville, Kentucky, in accordance with the labor arbitration rules and
procedures of the American Arbitration Association, and judgment upon the award
may be entered in any court having jurisdiction thereof. The Company shall pay
all costs of the arbitration and all reasonable attorneys’ and accountants’ fees
of the Employee incurred in connection therewith, including any litigation to
enforce any arbitration award.

 

Non-solicitation. For a period of one year from the date hereof (collectively,
the “Non-solicitation Period”), Employee shall not directly or indirectly,
individually or on behalf of any person other than the Company, aid or endeavor
to solicit or induce any of the Company’s or its affiliates’ employees to leave
their employment with the Company or such affiliates in order to accept
employment with Employee or any other person, corporation, limited liability
company, partnership, sole proprietorship or other entity; provided, however,
that the foregoing shall not restrict Employee or any other person from
conducting general solicitations or advertisements not directed specifically at
employees of the Company or its affiliates, or from employing any employee who
responds to any such general solicitation or advertisement or who otherwise
initiates a request for employment. If the restrictions set forth in this
section would otherwise be determined to be invalid or unenforceable by a court
of competent jurisdiction, the parties intend and agree that such court shall
exercise its discretion in reforming the provisions of this Agreement to the end
that Employee will be subject to a non-solicitation covenant which is reasonable
under the circumstances and enforceable by the Company. It is agreed that no
adequate remedy at law exists for the parties for violation of this section and
that this section may be enforced by any equitable remedy, including specific
performance and injunction, without limiting the right of the Company to proceed
at law to obtain such relief as may be available to it. The running of the
Non-solicitation Period shall be tolled for any period of time during which
Employee is in violation of any covenant contained herein, for any reason
whatsoever.

 

Indemnification. Nothing herein shall be construed to terminate or limit the
Company’s indemnification obligations under the Indemnification Agreement dated
as of October 28, 2003 between the Parent and Employee or paragraph 10 of
Employee’s Change-in-Control Severance Agreement dated January 28, 2002.

 

15