EXHIBIT 10.61
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT is made as of the 21st day of December,
2001 (the "Effective Date"), by and between Kindred Healthcare Operating, Inc.,
a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H:
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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; and
WHEREAS, the Company has determined that it is in the best
interests of the Company 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
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Executive hereby agrees to be employed by the Company on the terms and
conditions herein set forth. The initial term of this Agreement shall be for a
one-year period commencing on 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 (the "Term"). In such event, the Agreement shall terminate on
the first anniversary of the effective date of such election notice.
2. Duties. Executive is engaged by the Company in an executive
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capacity.
3. Extent of Services. Executive, subject to the direction and
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control of the Board of Directors (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.
4. Compensation. As compensation for services hereunder rendered,
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Executive shall receive during the Term:
(a) A base salary ("Base Salary") of not less than his current
base salary 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 will be eligible to
receive a bonus of his Base Salary and other incentive compensation as the
Board may approve from time to time.
5. Benefits.
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(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 officers of the Company and its
affiliates following the Company's standard waiting periods, if any.
(b) Executive shall be entitled to participate in such bonus,
stock option, or other incentive compensation plans of the Company and its
affiliates in effect from time to time for officers of the Company.
(c) Executive shall be entitled to four weeks of paid vacation
each year. The Executive shall schedule the timing of such vacations 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.
6. Termination of Employment.
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(a) Death or Disability. Executive's employment shall terminate
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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"),
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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's absence from his
full-time duties hereunder for a period of 90 days.
(b) Cause. The Company may terminate Executive's employment during
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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
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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
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
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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 an
executive officer of the Company, 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 Effective Date; or
(v) the failure of the Company to obtain the assumption of
this Agreement as contemplated by Section 9(c).
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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
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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,
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or by Executive for Good Reason, shall be communicated by Notice of
Termination given in accordance with this Agreement. For purposes of this
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 thirty 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
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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
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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 execution of a
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general release of claims in form satisfactory to the Company, Executive shall
be entitled to the following additional payments:
(a) Death or Disability. If, during the Term, Executive's employment
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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.
(b) Good Reason; Other than for Cause. If, during the Term, the
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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 1.5 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 incentive bonus that would be payable
to the Executive, assuming the targeted performance criteria on
which such annual 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 18 months 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. 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 18 months following the Date of Termination,
Parent shall maintain in force, at its expense, the Executive's life
insurance in effect under the Parent's Voluntary Life Insurance
Benefit Plan as of the Date of Termination.
(4) For a period of 18 months following the Date of Termination,
the Company or Parent shall provide short-term and long-
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term disability insurance benefits to Executive equivalent to the
coverage that the Executive would have had he remained employed
under the disability insurance plans applicable to Executive on the
Date of Termination. Should Executive become disabled during such
period, Executive shall be entitled to receive such benefits, and
for such duration, as the applicable plan provides.
(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 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 18 months of
vesting for purposes of all outstanding stock option awards and
restricted stock awards and Executive will have an additional 18
months following the Date of Termination in which to exercise such
stock 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.
(c) Cause; Other than for Good Reason. If Executive's employment
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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 under this Agreement.
(d) Death after Termination. In the event of the death of Executive
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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.
(e) Termination in Transition Period. If Executive voluntarily
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terminates his employment during the Transition Period (as defined),
Executive shall be credited with an additional one year of vesting of all
outstanding stock option awards and shall have 90 days in which to
exercise such options. For
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purposes of this Section 7(e), "Transition Period" shall mean the
180 day period beginning on the six month anniversary of the first
day of employment of the Company's new president/chief operating
officer hired in 2002. Executive shall provide a Notice of
Termination to the Company's Chief Executive Officer to initiate any
rights under this Section 7(e).
8. Disputes. Any dispute or controversy arising under, out of,
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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
Executive in connection therewith, including any litigation to enforce any
arbitration award.
9. Successors.
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(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
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consideration for the payments to be received under this Agreement,
Executive waives any and all rights to any payments or benefits under any
severance plans or arrangements of the Company or their respective
affiliates that specifically provide for severance payments, other than
the Change in Control Severance Agreement between the Company and
Executive (the "Change in Control Severance Agreement"); provided that any
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payments payable to Executive hereunder shall be offset by any payments
payable under the Change in Control Severance Agreement.
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11. Withholding. All payments to be made to Executive hereunder will
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be subject to all applicable required withholding of taxes.
12. No Mitigation. Executive shall have no duty to mitigate his
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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.
13. Notices. Any notice required or permitted to be given under this
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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 Executive:
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Xxxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
If to Company:
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Kindred Healthcare Operating, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: General Counsel
14. Waiver of Breach and Severability. The waiver by either party of
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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.
15. Entire Agreement; Amendment. This instrument 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 Executive and such officer of the
Company specifically designated by the Board.
16. Governing Law. This Agreement shall be construed in accordance
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with and governed by the laws of the State of Delaware.
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17. 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.
18. Counterparts. This Agreement may be executed in two 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.
19. Cancellation of Prior Agreement. The Executive hereby
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acknowledges and agrees that this Agreement is intended to and does hereby
replace that certain employment agreement, between the Company (or its
predecessor) and the Employee, and that such agreement is cancelled, terminated
and of no further force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
KINDRED HEALTHCARE OPERATING, INC.
By:/s/ Xxxxxxx X. Xxxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxxx
Senior Vice President
and Chief Financial Officer
Solely for the purpose
of Section 7
KINDRED HEALTHCARE, INC.
By:/s/ Xxxxxxx X. Xxxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxxx
Senior Vice President
and Chief Financial Officer
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
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