EXHIBIT 10.42
AGREEMENT
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This Separation Agreement and Release of Claims ("Agreement") is
entered into by W. ▇▇▇▇ ▇▇▇▇, III 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").
WHEREAS, Employee and Company hereby desire to settle all disputes and
issues related to the resignation 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 hereby resigns from all capacities and
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positions with the Company effective September 30, 1998 ("Date of Termination").
2. Obligations of the Company. Following the execution of this
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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 shall be entitled to the
following additional payments and benefits:
(a) $111,000 representing the prorated portion of the
Employee's target bonus for 1998.
(b) 13,876 shares of Vencor common stock representing the
prorated portion of his Performance Share Award for 1998.
(c) $499,500 representing an amount equal to 1.5 times the
Employee's base salary for 1998.
(d) $249,750 representing an amount equal to 1.5 times the
Employee's target bonus for 1998.
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(e) 31,221 shares of Vencor common stock representing an amount
equal to 1.5 times the number of performance shares to be awarded to the
Employee pursuant to the Vencor, Inc. 1998 Incentive Compensation Plan
(including assumed awards granted under the Vencor, Inc. 1987 Incentive
Compensation Program).
(f) For a period of 18 months following the Date of
Termination, the Employee shall be treated as if he had continued to be an
executive for all purposes 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 18 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 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. 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.
(j) The Company shall adopt such resolutions and amendments to
its employee benefit plans, if any, as are necessary to effectuate the
provisions of this Agreement.
(k) The Company shall take such action as is required to cause
the promissory note, dated June 15, 1998 in an original principal amount of
$623,500 (the "Tax Loan") entered into in connection with the loan made to
Employee to cover certain taxes owed by Employee, to be amended to provide that
the Tax Loan and any payments scheduled to be made in respect thereof shall not
be due and payable prior to the fifth anniversary of the Date of Termination.
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(l) 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 in an original principal amount of $990,000 (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 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.
(m) Employee shall be credited with an additional 18 months of
vesting for purposes of all outstanding stock option awards to purchase Vencor
common stock and Employee will have an additional 18 months in which to exercise
such stock options.
(n) 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.
(o) Employee shall receive additional cash consideration of
$1,000.
(p) 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.
(q) All commitments made to Employee under paragraphs (a)-(e)
and (o) above shall be paid or issued upon the later of 14 days from the Date of
Termination or the expiration of the seven day period referenced in Section 16.
3. Death after Resignation. In the event of the death of Employee
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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.
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4. Employee Acknowledgment and Release. Employee expressly
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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, 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 and all 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 does not admit that
it engaged in any discrimination, wrong doing or violation of law on the
Company's
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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
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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. 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
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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. If the
Company is contacted regarding a letter of reference for Employee, Company
agrees to provide the form of reference letter attached hereto as Exhibit A.
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7. Ability to Revoke.
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(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 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vencor, Inc.,
3300 Aegon Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, before
the expiration of the revocation period.
8. Restrictive Covenants.
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(a) 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.
(b) For a period of 12 months from the Date of Termination,
Employee agrees that he will not, directly or indirectly or by action in concert
with others, induce, solicit, or influence or seek to induce or influence any
person who has been engaged as an employee, agent, independent contractor or
otherwise by the Company, to terminate his or her relationship with the Company.
(c) If the agreement set forth in this Section 8 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
Employee will be subject to restrictions which are reasonable under the
circumstances and enforceable by the Company.
(d) Employee understands and agrees that any violation of this
Agreement will cause the Company irreparable harm which cannot adequately be
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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.
9. Cooperation. Employee agrees that should the Company request
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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.
10. Disputes. Any dispute or controversy arising under, out of, or
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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
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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. Employee hereby agrees that in
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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 the Employee
and Vencor Operating, Inc.
13. Withholding. All payments and stock issuances to be made to
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Employee hereunder will be subject to all applicable required withholding of
taxes.
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14. No Mitigation. Employee shall have no duty to mitigate his
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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
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and deliver the executed Agreement to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vencor, Inc., 3300
Aegon Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
16. Termination of Waiting Period. After receipt of the executed
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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.
17. Voluntary Action. Employee acknowledges that he has read and
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fully understands all of the provisions of this Agreement and that he is
entering into this Agreement freely and voluntarily.
18. Notices. Any notice required or permitted to be given under
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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. ▇▇▇▇ ▇▇▇▇, III
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
Winston & ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
If to Company:
Vencor Operating, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Legal Department
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19. Governing Law. This Agreement shall be governed by the laws
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of the Commonwealth of Kentucky.
20. Waiver of Breach and Severability. The waiver by either party
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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
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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.
22. 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.
23. Counterparts. This Agreement may be executed in one 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
VENCOR, INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chief Executive Officer
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EMPLOYEE
/s/ W. ▇▇▇▇ ▇▇▇▇, III
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W. ▇▇▇▇ ▇▇▇▇, III
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EXHIBIT A
FORM OF REFERENCE LETTER
This letter will attest that W. ▇▇▇▇ ▇▇▇▇, III was employed by Vencor,
Inc. from 1987 to September 30, 1998. During that time, Mr. Red served in
various executive capacities with the Company, most recently as Executive Vice
President and Chief Executive Officer since 1995. ▇▇. ▇▇▇▇ was a member of the
Company's Board of Directors from 1987 to 1998. His departure from the Company
was under good and friendly terms.
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