EXHIBIT 10.41
AGREEMENT
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This Separation Agreement and Release of Claims ("Agreement") is
entered into by Xxxxxxx X. Xxxx and all of his agents, successors and assigns
("Employee"), and Vencor, Inc. ("Vencor") and all companies related to Vencor
and all of its affiliates, directors, officers, supervisors, employees, agents,
successors, assigns, representatives, subsidiaries or related companies, past
and present (collectively, the "Company").
Employee and the Company hereby desire to settle all disputes and
issues related to the resignation of Employee from his services as an employee
to the Company.
NOW, THEREFORE, in consideration of the premises and the terms and
conditions contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties agree as follows:
1. Resignation. Employee hereby resigns from all capacities and
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positions with the Company effective October 31, 1998 ("Date of Termination").
2. Obligations of the Company. Following the execution of this
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Agreement, the Company shall pay Employee his base salary through the Date of
Termination and any amounts owed to Employee pursuant to the Company's standard
reimbursement procedures. In addition, subject to the terms and conditions of
this Agreement (including Section 14), Employee shall be entitled to the
following additional payments and benefits:
(a) $138,750 representing the prorated portion of the
Employee's target bonus for 1998.
(b) 17,345 shares of Vencor common stock representing the
prorated portion of his Performance Share Award for 1998.
(c) $499,500 representing an amount equal to 1.5 times the
Employee's base salary for 1998.
(d) $249,750 representing an amount equal to 1.5 times the
Employee's target bonus for 1998.
(e) 31,221 shares of Vencor common stock representing an amount
equal to 1.5 times the number of performance shares to be awarded to the
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Employee pursuant to the Vencor, Inc. 1998 Incentive Compensation Plan
(including assumed awards granted under the Vencor, Inc. 1987 Incentive
Compensation Program).
(f) For a period of 18 months following the Date of
Termination, the Employee shall be treated as if he had continued to be an
executive for all purposes under the Vencor Health Insurance Plan and Dental
Insurance Plan. Following this continuation period, the Employee shall be
entitled to receive continuation coverage under Part 6 of Title I of ERISA
("COBRA Benefits") treating the end of this period as a termination of the
Employee's employment if allowed by law.
(g) For a period of 18 months following the Date of
Termination, the Company shall maintain in force, at its expense, the Employee's
life insurance in effect under the Vencor, Inc. Voluntary Life Insurance Benefit
Plan as of the Date of Termination.
(h) For a period of 18 months following the Date of
Termination, the Company shall provide short-term and long-term disability
insurance benefits to Employee equivalent to the coverage that the Employee
would have had had he remained employed under the disability insurance plans
applicable to Employee on the Date of Termination. Should Employee become
disabled during such period, Employee shall be entitled to receive such
benefits, and for such duration, as the applicable plan provides.
(i) To the extent not already vested pursuant to the terms of
such plan, the Employee's interests under the Vencor Retirement Savings Plan
shall be automatically fully vested, without regard to otherwise applicable
percentages for the vesting of employer matching contributions based upon the
Employee's years of service with the Company.
(j) The Company shall adopt such amendments to its employee
benefit plans, if any, as are necessary to effectuate the provisions of this
Agreement.
(k) The Company shall take such action as is required to cause
the promissory note, dated June 15, 1998 in an original principal amount of
$1,025,000 (the "Tax Loan") entered into in connection with the loan made to
Employee to cover certain taxes owed by Employee, to be amended to provide that
the Tax Loan and any payments scheduled to be made in respect thereof shall not
be due and payable prior to the fifth anniversary of the Date of Termination.
Pursuant to the terms of the Tax Loan, upon a change in control of the Company
(as defined therein) the principal and interest on the Tax Loan will be forgiven
regardless of the employment status of Employee.
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(l) The Company shall take such action as is required to cause
the promissory note entered into in connection with the loan to Employee, dated
April 30, 1998 in an original principal amount of $1,296,000 (the "Preferred
Stock Loan") to be amended to provide that (w) the Preferred Stock Loan shall
not be due and payable until April 30, 2008, (x) any payments scheduled to be
made in respect to the Preferred Stock Loan shall not be due and payable prior
to the fifth anniversary of the Date of Termination, (y) if the average closing
price of Vencor common stock for the 90 days prior to any interest payment date
is less than $8.00, such interest payment shall be forgiven and (z) during the
five-day period following the expiration of the fifth anniversary of the Date of
Termination, the Employee shall have the right to put the preferred stock
underlying the Preferred Stock Loan to the Company at a price of $1,000 per
share.
(m) Employee shall be credited with an additional 18 months of
vesting for purposes of all outstanding stock option awards to purchase Vencor
common stock and Employee will have an additional 18 months in which to exercise
such stock options.
(n) Employee shall receive the computer which Employee is
utilizing as of the Date of Termination. Employee shall provide the Company with
access to such computer so that Company files and information may be deleted
from the memory.
(o) The Company shall provide Employee with assistance in
complying with his reporting obligations under Section 16 of the Securities Act
of 1934, as amended, for a period of six months following the Date of
Termination. Following the effectiveness of this Agreement, the Company will not
designate Employee as a Section 16 officer. Employee acknowledges that Employee
continues to have obligations under Section 16 as the result of his previous
status as a Section 16 officer.
(p) In the event of a change in control (as defined in the 1998
Incentive Compensation Plan of Vencor, Inc.) of the Company on or before October
31, 1999, the Company shall pay Employee $300,000 of additional consideration.
(q) The Company hereby acknowledges that Employee is entitled
to the indemnification provided by the Company's Certificate of Incorporation
and bylaws as a result of Employee's former status as a director and officer of
the Company. The Company further acknowledges that such indemnification may
include reasonable out-of-pocket expenses incurred by Employee including fines
or monetary penalties incurred in settlement of any indemnifiable matter.
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(r) All commitments made to Employee under paragraphs (a), (b),
(c), (d), and (e) above shall be paid or issued upon the later of 14 days from
the Date of Termination or the expiration of the seven day period referenced in
Section 17.
3. Death after Resignation. In the event of the death of Employee
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during the period Employee is receiving payments pursuant to this Agreement,
Employee'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 Employee's estate.
4. Employee Acknowledgment and Release. Employee expressly
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acknowledges that the above payments 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. Employee also acknowledges that he is giving up any
right to seek future employment with the Company, that the Company has no
obligation to rehire him at any future date, and agrees that he will not apply
for work with the Company.
(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.
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(d) Employee expressly waives any present or future 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 acknowledged by the Company or assumed by Employee. Employee and the
Company further acknowledge that this Agreement is not an admission of
liability.
5. Consulting Services. At the request of the Company, Employee shall
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provide consulting services to the Company for a one year period following the
Date of Termination on the dates and times requested by the Company. The Company
shall pay Employee a consulting fee of $150 per hour for any services rendered
hereunder payable on the first day of each month after such services are
rendered. In addition, the Company shall promptly reimburse Employee for all
reasonable, pre-approved expenses incurred by Employee in performing the
services requested by the Company, provided that Employee properly accounts
therefor in accordance with the Company's established policies. Employee shall
provide the services requested by the Company at the principal office of the
Company or at such location as agreed to by the Company and Employee. In
providing these services, Employee shall perform these services diligently and
to the standards generally recognized in the industry and shall use his best
efforts, skills and abilities to promote the interests of the Company. Any
information, reports, ideas, inventions, or work product developed or produced
solely by Employee or with third parties in the course of providing services
hereunder will be the exclusive property of the Company. Employee agrees to take
any and all actions requested by the Company to further evidence the ownership
of such information by the Company. Employee agrees that in providing consulting
services, Employee shall be an independent contractor and not an agent or
employee of the Company and shall not hold himself out as a legal
representative, agent, joint venturer, partner, or employee of the Company for
any purpose whatsoever.
6. Confidentiality. Employee and the Company agree to keep the
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contents and terms of this Agreement confidential and not to voluntarily
disclose its terms. 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.
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Employee and the Company agree that in the event the terms of this Agreement are
disclosed to the third parties as allowed or required herein, the third parties
will be advised of the obligation to keep the terms of this Agreement
confidential, and will obtain the third party's agreement to abide by the terms
of the confidentiality provisions set forth in this Agreement. 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 unlimited to, attorneys' fees and costs.
7. Public Statement. Employee further agrees not to make derogatory
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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.
8. Ability to Revoke.
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(a) Employee acknowledges and agrees of the Company has advised
him and encouraged him to consult with an attorney, and he has consulted with an
attorney regarding this Agreement prior to signing below, and that he has been
given a period of at least twenty one (21) days within which to consider this
Agreement, including waiver of any ADEA and OWBPA aged claims before voluntarily
signing this Agreement.
(b) Employee agrees and understands that he may revoke this
Agreement within seven (7) days after signing the Agreement, and that the
Agreement shall not become effective or enforceable until the revocation period
has expired.
(c) Any revocation of this Agreement must be made in writing and
delivered by hand or certified mail to Xxxxxx X. Xxxxxxxxxx, Vencor, Inc., 3300
Aegon Center, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, before the
expiration of the revocation period.
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9. Restrictive Covenants.
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(a) For a period of one year from the Date of Termination (the
"Restrictive Period"), the Employee shall not, directly or indirectly, own,
manage, operate, join, have an interest in, control or participate in the
ownership, management, operation or control of, or be employed or otherwise
connected in any manner with any Publicly Held Company (as defined herein) which
engages, within the United States, in the business of developing, advising,
managing or operating nursing centers, hospitals, or ancillary services. At no
time during or after the Restrictive Period shall Employee divulge, furnish, or
make accessible to anyone any 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 aspect of the businesses of the
Company, including those learned in connection with any consulting services
provided by Employee. Notwithstanding anything to the contrary contained herein,
Employee may acquire five percent or less beneficial interest in the outstanding
securities of any Publicly Held Company without violating this Agreement. For
purposes of this Agreement, a "Publicly Held Company" shall mean any entity with
an equity security registered with the Securities and Exchange Commission under
the Securities Act of 1933, as amended.
(b) During the Restrictive Period, Employee agrees that he will
not, directly or indirectly or by action in concert with others, induce,
solicit, or influence or seek to induce or influence any person who has been
engaged as an employee, agent, independent contractor or otherwise by the
Company, to terminate his or her relationship with the Company.
(c) If the agreement set forth in this Section 9 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 restrictions which are reasonable under the
circumstances and enforceable by the Company.
(d) Employee understands and agrees that any violation of this
Agreement 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.
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(e) The running of the Restrictive Period shall be tolled for
any period of time during which Employee is in violation of any covenant
contained herein, for any reason whatsoever.
10. Cooperation. Employee agrees that should the Company request
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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 Company or its designated agents, any information which
Employee obtained during the course and scope of his employment with the
Company, and to which other employees of the Company were not privy.
11. Disputes. Any dispute or controversy arising under, out of, or
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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. Each party shall pay
their costs of the arbitration and all reasonable attorneys' and accountants'
fees incurred in connection therewith, including any litigation to enforce any
arbitration award.
12. Successors. This Agreement is personal to Employee and without
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the prior written consent of the Company shall not be assignable by Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Employee's legal
representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
13. Other Severance Benefits. Employee hereby agrees that in
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consideration for the payments to be received under this Agreement, Employee
waives any and all rights to any payments or benefits under any plans, programs,
contracts or arrangements of the Company that provide for severance payments or
benefits upon a termination of employment, including, without limitation, the
Employment Agreement between Employee and Vencor Operating, Inc. dated as of
July 28, 1998 and the Change in Control Severance Agreement between the Employee
and Vencor Operating, Inc.
14. Withholding. All payments, stock issuances and forgiveness of
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debt to be made to Employee hereunder will be subject to all applicable required
withholding of taxes.
15. No Mitigation. Employee shall have no duty to mitigate his
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damages by seeking other employment and, should Employee actually receive
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compensation from any such other employment, the payments required hereunder
shall not be reduced or offset by any such compensation.
16. Execution by Employee. Employee will execute this Agreement and
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deliver the executed Agreement to Xxxxxx X. Xxxxxxxxxx, Vencor, Inc., 3300 Aegon
Center, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
17. Termination of Waiting Period. After receipt of the executed
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Agreement by Employee, and after the expiration of this seven (7) day waiting
period in Section 8(b) of this Agreement, the Company will execute the
Agreement.
18. Voluntary Action. Employee acknowledges that he has read and
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fully understands all of the provisions of this Agreement and that he is
entering into this Agreement freely and voluntarily.
19. Notices. Except as expressly provided in this Agreement, any
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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:
If to Employee:
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Xxxxxxx X. Xxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
If to Company:
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Vencor Operating, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Legal Department
20. Governing Law. This Agreement shall be governed by the laws of
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the Commonwealth of Kentucky.
21. Waiver of Breach and Severability. The waiver by either party of a
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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.
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22. Entire Agreement; Amendment. This Agreement contains the entire
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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. No provisions of this Agreement
may be modified, waived or discharged unless such modification, waiver or
discharge is agreed to in writing signed by Employee and a designated officer of
the Company.
23. Headings. The headings in this Agreement are for convenience
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only and shall not be used to interpret or construe its provisions.
24. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
VENCOR, INC.
By: /s/ W. XXXXX XXXXXXXX
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Title: Chief Executive Officer
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EMPLOYEE
/s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
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