Exhibit 10.2
AGREEMENT
---------
This Separation Agreement and Release of Claims ("Agreement") is
entered into by W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
-----------
positions with the Company effective January 22, 1999 ("Date of Termination").
2. Obligations of the Company. Following the execution of this
--------------------------
Agreement, the Company shall pay Employee his base salary through February 1,
1999 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 12), Employee shall be entitled to the
following additional payments and benefits:
(a) $550,000 representing an amount equal to 1.0 times
the Employee's base salary for 1999.
(b) $275,000 representing an amount equal to 1.0 times
the Employee's target bonus for 1999.
(c) 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, as amended, in an original principal amount of
$4,088,700 (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
-1-
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.
(d) Employee shall be credited with an additional 36 months of
vesting for purposes of all outstanding stock option awards to purchase Vencor
common stock and Employee will have an additional 36 months in which to exercise
such stock options beginning on November 9, 1999.
(e) 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
February 1, 2001, the Employee shall be entitled to receive a payment of
$500,000 in immediately available funds. The payment of such amount shall be
made within 10 days of any such change in control.
(f) For a period of 36 months following the Date of Termination, the
Company shall maintain in force, at its expense, the Employee's existing
coverage 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 36 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 36 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.
-2-
(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) 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. In addition, for a period of three years following the Date of
Termination, the Company shall provide the Employee with an office suite and
administrative assistant substantially comparable to the office suite and
administrative assistant that were furnished to the Employee as of the Date of
Termination. Moreover, the Employee shall be entitled to the furniture in the
Employee's office suite as of the Date of Termination.
(l) 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.
(m) The Company shall provide Employee with assistance in preparing
his 1998 and 1999 tax returns. Such assistance also shall include the services
of the Company's outside tax advisors as is deemed necessary by the Employee.
(n) 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 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.
(o) All commitments made to Employee under paragraphs (a) and (b)
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 15.
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.
-3-
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.
(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.
(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
-4-
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 its terms. The only exception is that Employee may reveal the terms of
this Agreement to his immediate family, 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. 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.
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 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.
7. Ability to Revoke.
-----------------
(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.
-5-
(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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vencor, Inc., 3300
Aegon Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, before the
expiration of the revocation period.
8. 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 course and scope of his employment with the
Company, and to which other employees of the Company were not privy.
9. 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. 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.
10. 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.
11. Other Severance Benefits. Except as 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 Vencor Operating, Inc. dated as of July 28, 1998 and the Change in
Control Severance Agreement between Vencor Operating, Inc. and the Employee.
This Agreement does not affect the Employee's right to receive the benefits
accruing to the Employee under the Company's Supplemental Executive Retirement
Plan.
-6-
12. Withholding. All payments, stock issuances and forgiveness of
-----------
debt to be made to Employee hereunder will be subject to all applicable required
withholding of taxes.
13. 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.
14. Execution by Employee. Employee will execute this Agreement and
---------------------
deliver the executed Agreement to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vencor, Inc., 3300 Aegon
Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
15. Termination of Waiting Period. After receipt of the executed
-----------------------------
Agreement by Employee, and after the expiration of this seven (7) day waiting
period in Section 7(b) of this Agreement, the Company will execute the
Agreement.
16. 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.
17. Notices. Except as expressly provided in this Agreement, 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 Employee:
--------------
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Company:
-------------
Vencor Operating, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal Department
18. Governing Law. This Agreement shall be governed by the laws of
-------------
the Commonwealth of Kentucky.
-7-
19. 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.
20. 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.
21. Headings. The headings in this Agreement are for convenience
--------
only and shall not be used to interpret or construe its provisions.
22. 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.
VENCOR, INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇
-----------------
Title: Vice Chairman
EMPLOYEE
/s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-8-