Exhibit 10.3
AGREEMENT
This Separation Agreement and Release of Claims ("Agreement") is entered
into by Xxxxxx X. Xxxxxx and all of his agents, successors and assigns
("Employee"), and Kindred Healthcare, Inc. ("Kindred") and all companies related
to Kindred and all of its affiliates, subsidiaries or related companies, past
and present (collectively, the "Company").
WHEREAS, Employee and Company hereby desire to settle all disputes and
issues related to the termination of Employee from his services 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 is hereby terminated without cause and
voluntarily resigns from all capacities and positions with the Company effective
August 23, 2002 ("Date of Termination").
2. Obligations of the Company. Following the execution of this
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 13), Employee will be entitled to the
following additional payments and benefits:
(a) $116,091 representing the prorated portion of the Employee's
target bonus for 2002.
(b) $450,777 representing an amount equal to one and one-half
times the Employee's base salary for 2002.
(c) $270,466 representing an amount equal to one and one-half
times the Employee's target bonus for 2002.
(d) For a period of 18 months following the Date of Termination,
the Employee shall be treated as if he had continued to be an employee for all
purposes under the Company's health insurance plans and dental insurance plans,
provided, however, that such benefits shall be provided only as long as similar
benefits are provided to employees of the Company. Employee shall be responsible
for any Employee
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contributions for such insurance coverage. 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.
(e) For a period of 18 months following the Date of Termination,
the Company shall maintain in force the Employee's life insurance in effect
under the Company's life insurance benefit plans as of the Date of Termination,
provided, however, that such benefits shall be provided only as long as similar
benefits are provided to employees of the Company. Employee shall be responsible
for any Employee contributions for such insurance coverage.
(f) 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, provided, however, that such benefits shall be provided
only as long as similar benefits are provided to employees of the Company.
Should Employee become disabled during such period, Employee shall be entitled
to receive such benefits, and for such duration, as the applicable plan
provides. Employee shall be responsible for any Employee contributions for such
insurance coverage.
(g) To the extent not already vested pursuant to the terms of such
plan, the Employee's interests under the Company's 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.
(h) The Company may adopt such amendments to its employee benefit
plans, if any, as are necessary to effectuate the provisions of this Agreement.
(i) Employee shall continue to vest in all shares of restricted
common stock of Kindred previously awarded to Employee according to the vesting
schedule set forth in the Employee's Restricted Share Agreement dated May 21,
2001.
(j) Employee shall be entitled to the unpaid portion of the award
under the Company's Long-Term Incentive Plan ("LTIP") for the 2000 and 2001
performance periods. In addition, if the Board of Directors grants awards under
the LTIP for the 2002 performance period, Employee shall be entitled to 7/12 of
the award Employee would have received if employed by the Company at such time.
Employee acknowledges that any award for 2002 is contingent upon approval by the
Board of Directors of awards under the LTIP for the 2002 performance period. Any
amounts
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credited to Employee under this Section 2(k) shall be paid at the time and in
the manner specified in Section 6 of the LTIP.
(k) Employee shall be credited with an additional 18 months of
vesting for purposes of all outstanding stock option awards to purchase Kindred
common stock and Employee will have 18 months in which to exercise such stock
options.
(l) Employee shall receive the computer that Employee is utilizing
as of the Date of Termination.
(m) All commitments made to Employee under paragraphs (a) through
(c) above shall be paid upon the later of 14 days from the Date of Termination
or the expiration of the seven-day period referenced in Section 16. All other
commitments shall be paid as provided in this Agreement.
3. Death after Resignation. In the event of the death of Employee
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
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.
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(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 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. 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.
6. 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
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negative remarks or comments about Employee to any third parties, and 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.
7. Ability to Revoke.
(a) Employee acknowledges and agrees that 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 age 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, Xxxxxxx Healthcare,
Inc., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, before the expiration
of the revocation period.
8. 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. In the event the
Employee fails to abide by this Section 8, Employee understands that the Company
shall have the right to pursue reimbursement or setoff of all monies and
benefits paid or to be paid hereunder.
9. 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 Company or its designated agents, any information which
Employee obtained during the
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course and scope of his employment with the Company, and to which other
employees of the Company were not privy. In the event the Employee fails to
abide by this Section 9, Employee understands that the Company shall have the
right to pursue reimbursement or setoff of all monies and benefits paid or to be
paid hereunder.
10. Disputes. Except in connection with a breach of Section 8 above,
any other 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. 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.
11. Successors. This Agreement is personal to Employee and without
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.
12. Other Severance Benefits. Except as specifically provided in this
Agreement, Employee hereby agrees that in 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 the Company dated as of January 4, 1999, as amended, and the Change
in Control Severance Agreement between the Employee and the Company.
13. Withholdings. All payments to be made to Employee hereunder will
be subject to all applicable required withholding of taxes.
14. No Mitigation. Employee shall have no duty to mitigate his
damages by seeking other employment and, should Employee actually receive
compensation from any such other employment, the payments required hereunder
shall not be reduced or offset by any such compensation.
15. Execution by Employee. Employee will execute this Agreement and
deliver the executed Agreement to Xxxxxx X. Xxxxxxxxxx, Xxxxxxx Healthcare,
Inc., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
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16. Termination of Waiting Period. After receipt of the executed
Agreement by Employee, and after the expiration of the seven (7) day waiting
period referenced in Section 7(b) of this Agreement, the Company will execute
the Agreement.
17. Voluntary Action. Employee acknowledges that he has read and
fully understands all of the provisions of this Agreement and that he is
entering into this Agreement freely and voluntarily.
18. Notices. Except as expressly provided herein, 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 of receipt, addressed as follows:
If to Employee:
Xxxxxx X. Xxxxxx
______________________
______________________
If to Company:
Kindred Healthcare, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Legal Department
19. Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Kentucky.
20. 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.
21. Entire Agreement; Amendment. This Agreement contains 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. 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.
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22. Headings. The headings in this Agreement are for convenience only
and shall not be used to interpret or construe its provisions.
23. Counterparts. This Agreement may be executed in one or more
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.
KINDRED HEALTHCARE, INC.
By: /s/ Xxxxxx X. Xxxxx
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Title: Chief Executive Officer
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EMPLOYEE
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
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