AGREEMENT
EXHIBIT 10.12
This AGREEMENT is made as of the 12th day of December, 2013 (the “Effective Date”) by and between Kindred Healthcare, Inc., a Delaware corporation (the “Company”) and Xxxxxx X. Xxxxx (“Xxxxx”).
W I T N E S S E T H:
WHEREAS, the Company desires to continue the services of Xxxxx in a role as Chairman of the Board pursuant to the terms of this Agreement; and
WHEREAS, the Executive Compensation Committee (the “Executive Compensation Committee”) of the Board of Directors (the “Board”) has determined that it is in the best interests of the Company and its subsidiaries 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 Xxxxx agree as follows:
1. Employment as Chairman of the Board.
(a) Effective Date. The Company or one of its subsidiaries hereby agrees to employ Xxxxx and Xxxxx hereby agrees to be employed as Chairman of the Board of Directors (“Chairman”) effective on the Effective Date subject to the terms and conditions herein set forth. Xxxxx shall serve as Chairman until the earlier of (i) the date Xxxxx resigns from the Board, (ii) the date Xxxxx’x service as Chairman is terminated as set forth in Section 2 of this Agreement, or (iii) the later of the conclusion of the first shareholders meeting at which the Board has not nominated Xxxxx for election to the Board or May 30, 2014 (the “Expiration Date”).
(b) Duties. As Chairman, Xxxxx shall perform the following duties: (i) coordinate all Board matters and committee activities and act as the principal liaison between the Board and senior management, (ii) provide information and guidance, based on his significant knowledge of, and experience in, the Company’s businesses, to the Board of Directors and Chief Executive Officer, and (iii) perform such other duties as may be requested by the Board from time to time.
(c) Extent of Services. Xxxxx, subject to the Bylaws, Corporate Governance Guidelines and Code of Conduct of the Company and the direction and control of the Board, shall have the power and authority commensurate with his status as Chairman and necessary to perform his duties hereunder.
(d) Compensation. As compensation for services rendered as Chairman, Xxxxx shall receive during his service as Chairman a salary of $315,000 per year payable in equal installments in accordance with the Company’s normal payroll procedures; provided, however, that if the 2012 reductions in base salaries for the Company’s executive officers are restored, then the salary for Xxxxx shall be restored in the same manner.
(e) Benefits. During Xxxxx’x service as Chairman:
(i) Xxxxx shall be entitled to participate in any and all 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.
(ii) Xxxxx may incur reasonable business expenses for promoting the Company’s business, including expenses for entertainment, travel and similar items. The Company shall reimburse Xxxxx for all such reasonable expenses in accordance with the Company’s reimbursement policies and procedures, as may be in effect from time to time.
(iii) Xxxxx will not be eligible to participate in any cash incentive plan of the Company. Xxxxx will continue to vest in any equity awards outstanding as of the Effective Date in accordance with their original terms and conditions but Xxxxx will not be eligible for additional awards under the Company’s equity incentive plans unless Xxxxx is re-elected to the Board in 2014.
(iv) The Company shall provide Xxxxx with an office in Houston, Texas and an administrative assistant substantially comparable to his existing office and administrative assistant being furnished as of the Effective Date.
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2. Termination of Employment.
(a) Death or Disability. Xxxxx’x employment with the Company shall terminate automatically upon Xxxxx’x death. If the Board determines in good faith that the Disability of Xxxxx has occurred (pursuant to the definition of Disability set forth below) it may give to Xxxxx written notice of its intention to terminate Xxxxx’x employment. In such event, Xxxxx’x employment with the Company shall terminate effective on the 30th day after receipt of such notice by Xxxxx (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Xxxxx shall not have returned to performance of Xxxxx’x duties. For purposes of this Agreement, “Disability” shall mean Xxxxx’x absence from his full-time duties hereunder for a period of 90 days due to disability as defined in the long-term disability plan provided to Xxxxx by the Company.
(b) Cause. The Company may terminate Xxxxx’x employment at any time for Cause. For purposes of this Agreement, “Cause” shall mean Xxxxx’x (i) conviction of, guilty plea or plea of nolo contendere to a crime involving moral turpitude; or (ii) willful and material breach by Xxxxx 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 clause (ii) only if the Board adopts a resolution by a vote of at least a majority of its members so finding after giving Xxxxx and his attorney an opportunity to be heard by the Board and a reasonable opportunity of not less than 30 days to remedy or correct the purported breaching conduct. 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 Xxxxx in good faith and in the best interests of the Company.
(c) Notice of Termination. Any termination by the Company for Cause 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 Xxxxx’x employment under the provision so indicated and (iii) specifies the intended termination date. The failure by the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company hereunder or preclude the Company, from asserting such fact or circumstance in enforcing the Company’s rights hereunder.
(d) Date of Termination. “Date of Termination” means (i) if Xxxxx’x employment is terminated by the Company for Cause 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 Xxxxx’x employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of Xxxxx or the Disability Effective Date, as the case may be, and (iii) if Xxxxx’x employment is terminated as a result of not being nominated for election to the Board, the Date of Termination shall be the Expiration Date.
3. Other Obligations of the Company. Following any termination of Xxxxx’x employment hereunder, the Company shall pay Xxxxx his accrued wages through the Date of Termination and any vested amounts owed to Xxxxx 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 Section 3(d) hereof, Xxxxx shall be entitled to the following additional benefits:
(a) Death or Disability; Cause. Except as provided in Section 3(b) hereof, Xxxxx shall not be entitled to any additional benefits by reason of his death or Disability. Xxxxx shall not be entitled to any additional benefits, including benefits under Section 3(b) hereof, if his employment shall be terminated for Cause.
(b) Termination upon Expiration Date. If Xxxxx’x employment is terminated on the Expiration Date, then he shall be entitled to the following benefits:
(i) For a period of two years following the Date of Termination (the “Benefit Continuation Period”), Xxxxx shall be treated as if Xxxxx had continued to be an employee for all purposes under the Company’s health care plan and dental care plan; or if Xxxxx is prohibited from participating in such plans, the Company shall otherwise provide such benefits. Xxxxx shall be responsible for any costs for such insurance coverage; provided, however, that the Company will pay to Xxxxx a lump sum payment equal to the monthly employer subsidy of such costs for the duration of the Benefit Continuation Period, plus an amount necessary to cover any incremental taxes incurred by Xxxxx related to such payment. Following the Benefit Continuation Period, Xxxxx shall be entitled to receive continuation coverage under Part 6 of Title I of ERISA by treating the end of this period as the applicable qualifying event (i.e., as a termination of employment) for the purposes of ERISA Section 603(2) and with the concurrent loss of coverage occurring on the same date, to the extent allowed by applicable law.
(ii) Xxxxx shall receive the computer which Xxxxx is utilizing on the Date of Termination. In addition, Xxxxx shall be entitled to the furniture in Xxxxx’x office.
(c) Death after Termination. In the event of the death of Xxxxx during the period Xxxxx is receiving payments or benefits pursuant to this Agreement, Xxxxx’x designated beneficiary shall be entitled to receive the balance of such payments and benefits; or in the event of no designated beneficiary, the remaining payments shall be made to Xxxxx’x estate.
(d) General Release and Waiver. Notwithstanding anything herein to the contrary, the benefits provided under this Section 3 are in consideration of Xxxxx’x agreement to execute, within the 60 day period following the Date of Termination (the “Release Period”),
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an irrevocable general release of claims in a form satisfactory to the Company. Any payment or benefit pursuant to this Section 3 that otherwise would be paid or provided pursuant to this Section 3 during the Release Period shall be paid on the first business day following the conclusion of the Release Period; provided that in-kind benefits provided pursuant to subsections (b)(i) of this Section 3 shall continue in effect during the Release Period; provided further that if such release is not executed and delivered within the Release Period, Xxxxx shall reimburse the Company for the full cost of such benefits. Furthermore, in the event Xxxxx does not execute and deliver the release contemplated by this Section 3(d) during the Release Period, Xxxxx shall reimburse the Company for the full cost of any payment or benefit that was paid or provided to Xxxxx pursuant to this Section 3.
4. 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 Xxxxx in connection therewith, including any litigation to enforce any arbitration award, if Xxxxx prevails in any portion of the underlying dispute or controversy.
5. Successors.
(a) This Agreement is personal to Xxxxx and without the prior written consent of the Company shall not be assignable by Xxxxx otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Xxxxx’x 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 Xxxxx’x 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.
6.Other Severance Benefits. Xxxxx hereby agrees that in consideration for the payments to be received under this Agreement, Xxxxx waives any and all rights to any payments or benefits under any plans, programs, contracts or arrangements of the Company or their respective affiliates that provide for severance payments or benefits upon a termination of employment.
7. Withholding. All payments to be made to Xxxxx hereunder will be subject to all applicable required withholding of taxes.
8. Non-solicitation. During his service as Chairman and for a period of one year thereafter (collectively, the “Non-solicitation Period”), Xxxxx 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 Xxxxx or any other person, corporation, limited liability company, partnership, sole proprietorship or other entity. 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 Xxxxx 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 Xxxxx is in violation of any covenant contained herein, for any reason whatsoever.
9. No Mitigation. Xxxxx shall have no duty to mitigate his damages by seeking other employment and, should Xxxxx 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 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 Xxxxx or others.
10. 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:
If to Xxxxx:
Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
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If to Company:
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: General Counsel
Facsimile: 000-000-0000
11. Assignment to Subsidiary. The Company may assign its obligations under this Agreement to one or more of its subsidiaries but such assignment will not relieve the Company of its obligations and liabilities hereunder.
12. 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.
13. Entire Agreement; Amendment. This instrument contains the entire agreement of the parties with respect to the subject matter hereof and, as of the Effective Date, supersedes all prior agreements (including the Employment Agreement dated March 20, 2009 between the Company and Xxxxx), promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter hereof, each of which shall terminate as of the Effective Date. No provisions of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Xxxxx and such officer of the Company specifically designated by the Board.
14. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Kentucky.
15. Headings. The headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.
16. 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.
17. Section 409A. If any provision of this Agreement (or any award of compensation or benefits provided under this Agreement) would cause Xxxxx to incur any additional tax or interest under Section 409A of the Code, the Company shall reform such provision to comply with 409A and agrees to maintain, to the maximum extent practicable without violating 409A of the Code, the original intent and economic benefit to Xxxxx of the applicable provision; provided that nothing herein shall require the Company to provide Xxxxx with any gross-up for any tax, interest or penalty incurred by Xxxxx under Section 409A of the Code.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
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By: |
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/s/ Xxxx X. Xxxx |
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Xxxx X. Xxxx, |
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Chief Executive Officer |
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By: |
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/s/ Xxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxx |
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