EXHIBIT 10.32
CHANGE-IN-CONTROL SEVERANCE AGREEMENT
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THIS CHANGE-IN-CONTROL SEVERANCE AGREEMENT (the "Agreement") is made as of
the ____ day of _____________, 199__, by and between VENCOR, INC., a Delaware
corporation ("Vencor"), and ___________________________ (the "Employee").
RECITALS:
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A. The Employee is employed by Vencor, either directly or through one of
its wholly owned subsidiaries (collectively, the "Company").
B. The Company recognizes that the Employee's contribution to the Company's
growth and success has been and continues to be significant.
C. The Company wishes to encourage the Employee to remain with and devote
full time and attention to the business affairs of the Company and wishes to
provide income protection to the Employee for a period of time in the event of a
Change in Control.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT:
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1. DEFINITIONS.
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A. "BASE SALARY" shall mean the Employee's regular annual rate of base
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pay in gross as of the date of Employee's Termination of Employment or the
Change-in-Control Date, as determined under Section 3(a).
B. "CAUSE" shall mean the Employee's (i) conviction of or plea of nolo
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contendere to a crime involving moral turpitude; or (ii) willful and material
breach by Employee 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, but with respect to (ii) only if the Board of
Directors adopts a resolution by a vote of at least 75% of its members so
finding after giving the Employee and his attorney an opportunity to be heard by
the Board of Directors.
C. CHANGE IN CONTROL. The term "Change in Control" shall mean any one
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of the following events:
(i) An acquisition (other than directly from Vencor) of any voting
securities of Vencor (the "Voting Securities") by any "Person" (as defined in
Section 1(f) hereof) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 under the 0000 Xxx) of 20% or more
of the combined voting power of Vencor's then outstanding Voting Securities;
provided, however, that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in an acquisition by (i) Vencor or any of
its subsidiaries, (ii) an employee benefit plan (or a trust forming a part
thereof) maintained by Vencor or any of its subsidiaries or (iii) any Person in
connection with an acquisition referred to in the immediately preceding clauses
(i) and (ii) shall not constitute an acquisition which would cause a Change in
Control.
(ii) The individuals who, as of February 15, 1995, constituted the
Board of Directors of Vencor (the "Incumbent Board") cease for any reason to
constitute over 50% of the Board; provided, however, that if the election, or
nomination for election by Vencor's stockholders, of any new director was
approved by a vote of over 50% of the Incumbent Board, such new director shall,
for purposes of this Section 1.c.(ii), be considered as though such person were
a member of the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election Contest"
(as described in Rule 14a-11 promulgated under the 0000 Xxx) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors of Vencor (a "Proxy Contest"), including by reason
of any agreement intended to avoid or settle any Election Contest or Proxy
Contest.
(iii) Approval by stockholders of Vencor of a merger, consolidation
or reorganization involving Vencor, unless each of the following events occurs
in connection with such merger, consolidation or reorganization:
(A) the stockholders of Vencor, immediately before such merger,
consolidation or reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization, over 50% of the combined
voting power of all voting securities of the corporation resulting from such
merger or consolidation or reorganization (the "Surviving Company") over which
any Person has Beneficial Ownership in substantially the same proportion as
their ownership of the Voting Securities immediately before such merger,
consolidation or reorganization;
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute over 50% of the members of the board
of directors of the Surviving Company; and
(C) no Person (other than Vencor, any of its subsidiaries, any
employee benefit plan [or any trust forming a part thereof] maintained by
Vencor, the Surviving Company or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership of 20% or more
of the then outstanding Voting Securities) has Beneficial
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Ownership of 20% or more of the combined voting power of the Surviving Company's
then outstanding voting securities.
(iv) Approval by Vencor's stockholders of a complete liquidation or
dissolution of Vencor.
(v) Approval by stockholders of an agreement for the sale or other
disposition of all or substantially all of the assets of Vencor to any Person
(other than a transfer to a subsidiary of Vencor).
(vi) Any other event that the Committee shall determine constitutes
an effective Change in Control of Vencor.
(vii) Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by Vencor which,
by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person; provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by Vencor, and after such
share acquisition by Vencor, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
D. "CHANGE-IN-CONTROL DATE" shall mean the date immediately prior to
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the effectiveness of the Change in Control.
E. "GOOD REASON." The Employee shall have good reason to terminate
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employment with the Company if (i) the Employee's title, duties,
responsibilities or authority is reduced or diminished from those in effect on
the Change-in-Control Date without the Employee's written consent; (ii) the
Employee's compensation is reduced; (iii) the Employee's benefits are reduced,
other than pursuant to a uniform reduction applicable to all managers of the
Company; or (iv) the Employee is asked to relocate his office to a place more
than 30 miles from his business office on the Change-in-Control Date.
F. "PERSON" shall have the meaning ascribed to such term in Section
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3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d).
G. "PRIOR YEAR'S BONUS" shall mean the full amount of bonuses and/or
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performance compensation (other than Base Salary and awards under the Company's
1997 Incentive Compensation Program) to the Employee from Vencor and its
subsidiaries in respect of services for the most recent calendar year
immediately preceding the date in question.
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H. "TERMINATION OF EMPLOYMENT" shall mean (i) the termination of the
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Employee's employment by the Company other than such a termination in connection
with an offer of immediate reemployment by a successor or assign of the Company
or a purchaser of the Company or its assets under terms and conditions which
would not permit the Employee to terminate his employment for Good Reason or
otherwise during any Window Period; or (ii) the Employee's termination of
employment with the Company for Good Reason or during any Window Period.
I. "WINDOW PERIOD" shall mean either of two 30-day periods of time
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commencing 30 days after (i) a Change in Control and (ii) one year after a
Change in Control.
2. TERM. The initial term of this Agreement shall be for a three-year
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period commencing on _______________, 199__ (the "Effective Date"). The Term
shall be automatically extended by one additional day for each day beyond the
Effective Date that the Employee 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 Employee. In such event, the Agreement shall terminate on the
third anniversary of the effective date of such election notice.
Notwithstanding the foregoing, this Agreement shall automatically terminate if
and when the Employee terminates his employment with the Company or two years
after the Change-in-Control Date, whichever first occurs.
3. SEVERANCE BENEFITS. If at any time following a Change in Control and
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continuing for two years thereafter, the Company terminates the Employee without
Cause, or the Employee terminates employment with the Company either for Good
Reason or during any Window Period, then as compensation for services previously
rendered the Employee shall be entitled to the following benefits:
A. CASH PAYMENT. The Employee shall be paid cash equal to three times
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the greater of:
(i) the sum of the Employee's Base Salary and Prior Year's Bonus as
of the Termination of Employment, or
(ii) the sum of the Employee's Base Salary and Prior Year's Bonus as
of the Change-in-Control Date.
In addition, notwithstanding any provision to the contrary in the Company's
bonus plan, Employee shall be paid a pro rata portion of the maximum bonus to
which he or she would have been entitled if (i) Employee had been employed by
the Company as of the year-end in which the Termination of Employment had
occurred, and (ii) the Company had achieved the highest targeted goals under the
bonus plan at year-end. The pro rata portion shall be determined based on the
number of days within the year that Employee was employed by the Company,
divided by 365 days. Payment shall be made in a single lump sum within ten days
following the date in which Employee's Termination of Employment occurs.
B. CONTINUATION OF BENEFITS.
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(i) For a period of three years following the Termination of
Employment, the Employee shall be treated as if he or she had continued to be an
employee for all purposes under the Company's Health Insurance Plan and Dental
Insurance Plan; or if the Employee is prohibited from participating in such
plan, the Company shall otherwise provide such benefits. Following this
continuation period, the Employee 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 Employee's employment if allowed by law.
(ii) For a period of three years following the Termination of
Employment, the Company shall maintain in force, at its expense, the Employee's
life insurance in effect under the Company's Voluntary Life Insurance Benefit
Plan as of the Change-in-Control Date or as of the date of Termination of
Employment, whichever coverage limits are greater.
(iii) For a period of three years following the Employee's
Termination of Employment, 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 Company's disability
insurance plans applicable to Employee on the date of Termination of Employment,
or, at the Employee's election, the plans applicable to Employee as of the
Change-in-Control Date. Should Employee become disabled during such period,
Employee shall be entitled to receive such benefits, and for such duration, as
the applicable plan provides.
C. RETIREMENT SAVINGS PLAN. To the extent not already vested pursuant
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to the terms of such plan, the Employee's interests under the Company'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 Employee's years of service with the
Company.
D. PLAN AMENDMENTS. The Company shall adopt such amendments to its
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employee benefit plans, if any, as are necessary to effectuate the provisions of
this Agreement.
4. GOLDEN PARACHUTE TAX REIMBURSEMENT. Whether or not any payments are
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made pursuant to Section 3 above, if a Change in Control of the Company occurs
at any time and the Employee reasonably determines that any payment or
distribution by the Company to or for the benefit of the Employee, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any restricted stock,
stock option, stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or exerciseablility of any of
the foregoing (individually and collectively, the "Payment"), would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code") (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto), or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and
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penalties, being hereinafter collectively referred to as the "Excise Tax"), then
the Company shall pay to the Employee an additional payment or payments
(individually and collectively, the "Gross-Up Payment"). The Gross-Up Payment
shall be in an amount such that, after payment by the Employee of all taxes
required to be paid by the Employee with respect to the receipt thereof under
the terms of any federal, state or local government or taxing authority
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed with respect to the Gross-Up Payment, the
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment. The Company shall pay the Gross-Up Payment to the
Employee within 30 days of its receipt of written notice from the Employee that
such Excise Tax has been paid or will be payable at any time in the future.
5. NO MITIGATION REQUIRED OR SETOFF PERMITTED. In no event shall Employee
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be obligated to seek other employment or take other action by way of mitigation
of the amounts payable to Employee under the terms of this Agreement, and all
such amounts shall not be reduced whether or not Employee obtains other
employment. Further, the Company's obligations to make any payments hereunder
shall not be subject to or affected by any setoff, counterclaims or defenses
which the Company may have against Employee or others.
6. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable pursuant to
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this Agreement are in lieu of any other severance benefits which may otherwise
be payable by the Company to the Employee upon termination of employment
pursuant to a Company-wide severance program (including, without limitation, any
benefits to which Employee might otherwise be entitled under any other severance
or change in control or similar agreement previously entered into between
Employee and Company).
7. EMPLOYMENT AT WILL. Notwithstanding anything to the contrary contained
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herein, the Employee's employment with the Company is not for any specified term
and may be terminated by the Employee or by the Company at any time, for any
reason, with or without cause, without any liability, except with respect to the
payments provided hereunder or as required by law or any other contract or
employee benefit plan.
8. DISPUTES. Any dispute or controversy arising under, out of, or in
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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 attorneys' and accountants' fees of the
Employee in connection therewith, including any litigation to enforce any
arbitration award.
9. SUCCESSORS; BINDING AGREEMENT. This Agreement shall not be terminated
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by the voluntary or involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or upon any
transfer of all or substantially all of the Company's stock assets or any other
Change in Control. In the event of such merger, consolidation or transfer, or
other Change in Control, the provisions of this Agreement shall be
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binding upon and shall inure to the benefit of the surviving corporation or
corporation to which such stock or assets of the Company shall be transferred.
10. NOTICES. Any notice or other communication hereunder shall be in
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writing and shall be effective upon receipt (or refusal of receipt) if delivered
personally, or sent by overnight courier if signature for the receiving party is
obtained, or sent by certified or registered mail, postage prepaid, to the other
party at the address set forth below:
If to the Company: Vencor, Inc.
Suite 3300, 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Secretary
If to Employee: ____________________________
____________________________
____________________________
Either party may change its specified address by giving notice in
writing to the other.
11. INDEMNIFICATION. The Company shall indemnify, defend and hold the
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Employee harmless from and against any liability, damages, costs and expenses
(including attorneys' fees) in connection with any claim, cause of action,
investigation, litigation or proceeding involving him by reason of his having
been an officer, director, employee or agent of the Company, except to the
extent it is judicially determined that the Employee was guilty of gross
negligence or willful misconduct in connection with the matter giving rise to
the claim for indemnification. This indemnification shall be in addition to and
shall not be substituted for any other indemnification or similar agreement or
arrangement which may be in effect between the Employee and the Company or may
otherwise exist. The Company also agrees to maintain adequate directors and
officers liability insurance, if applicable, for the benefit of Employee for the
term of this Agreement and for five years thereafter.
12. ERISA. Many or all of the employee benefits addressed in Sections 3(c)
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and (d) exist under plans which constitute employee welfare benefit plans
("Welfare Plans") within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). Any payments pursuant to
this Agreement which could cause any of such Plans not to constitute a Welfare
Plan shall be deemed instead to be made pursuant to a separate "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA or a "top hat" plan
under Section 201(2) of ERISA as to which the applicable portions of the
document constituting the Welfare Plan shall be deemed to be incorporated by
reference. None of the benefits hereunder may be assigned in any way.
13. SEVERABILITY. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision, which other provisions shall remain in full force and effect.
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14. INTERPRETATION. The headings used herein are for convenience only and
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do not limit or expand the contents of this Agreement. Use of any male gender
pronoun shall be deemed to include the female gender also.
15. NO WAIVER. No waiver of a breach of any provision of this Agreement
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shall be construed to be a waiver of any other breach of this Agreement. No
waiver of any provision of this Agreement shall be enforceable unless it is in
writing and signed by the party against whom it is sought to be enforced.
16. SURVIVAL. Any provisions of this Agreement creating obligations
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extending beyond the term of this Agreement shall survive the expiration or
termination of this Agreement, regardless of the reason for such termination.
17. AMENDMENTS. Any amendments to this Agreement shall be effective only if
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in writing and signed by the parties hereto.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
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the parties with respect to the subject matter hereof.
19. GOVERNING LAW. This Agreement shall be interpreted in accordance with
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and governed by the law of the State of Delaware.
20. COUNTERPARTS. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed to be an original, and 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. EMPLOYEE
By: __________________________ _____________________
W. Xxxxx Xxxxxxxx
Chairman, President and
Chief Executive Officer
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