Exhibit 10.39
EMPLOYMENT AGREEMENT
This EMPLOYMENT
AGREEMENT (this “Agreement”) is made as of the
18 th day of December, 2008 (the
“Effective Date”), by and between Kindred Healthcare
Operating, Inc., a Delaware corporation (the
“Company”), and Christopher M. Bird (the
“Executive”).
W I T N E S
S E T H :
WHEREAS, the Executive is employed
by the Company, a wholly-owned subsidiary of Kindred Healthcare,
Inc. (“Parent”), and the parties hereto desire to
provide for the terms of Executive’s employment by the
Company; and
WHEREAS, the Executive Compensation
Committee of the Board of Directors of the Parent has determined
that it is in the best interests of the Company and Parent 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
Executive agree as follows:
1. Employment . The Company
hereby agrees to employ Executive and Executive hereby agrees to be
employed by the Company on the terms and conditions herein set
forth. The term of this Agreement shall be for a one-year period
commencing on the Effective Date and shall be automatically
extended by one additional day for each day beyond the Effective
Date that the Executive 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 Executive (the
“Term”) specifying the effective date of such notice.
In such event, the Agreement shall terminate on the first
anniversary of the effective date of such election
notice.
2. Duties . Executive is
engaged by the Company as President, Peoplefirst Rehabilitation,
reporting directly to Frank J. Battafarano, Chief Operating
Officer.
3. Extent of Services .
Executive, subject to the direction and control of the Board and
the Company, shall have the power and authority commensurate with
his executive status and necessary to perform his duties hereunder.
During the Term, Executive shall devote his entire working time,
attention, labor, skill and energies to the business of the
Company, and shall not, without the consent of the Company, be
actively engaged in any other business activity, whether or not
such business activity is pursued for gain, profit or other
pecuniary advantage. Notwithstanding the foregoing, during the
Term, Executive may, subject to the approval of the Board which
approval may be withheld in the Board’s sole discretion,
devote reasonable time to activities other than those required
under this Agreement involving professional, charitable, community,
educational and similar organizations, including membership on the
board of directors of such organizations.
4. Compensation . As
compensation for services hereunder rendered, Executive shall
receive during the Term:
(a) A base salary (“Base
Salary”) of no less than his current base salary per year
payable in equal installments in accordance with the
Company’s normal payroll procedures. Executive may receive
increases in his Base Salary from time to time, as approved by the
Board in its sole discretion.
(b) During the Term, in addition to
Base Salary, Executive will be eligible to participate in the
Company’s short-term and long-term incentive plans, as such
plans may be in effect from time to time, on a pro-rated basis for
2008 based on an April 21, 2008 start date, and in each
subsequent full or partial year of employment, subject to the
following:
(1) the Executive’s target
bonus under the short-term incentive plan is 60% of Base Salary
(the “Target Bonus”), with a maximum of 75%.
(2) the Executive’s target
bonus under the long-term incentive plan is 45% of Base Salary (the
“Target Long-Term Bonus”), with a maximum of
90%.
5. Benefits . During the
Term:
(a) Executive shall be entitled to
participate in any and all pension benefit (whether tax qualified
or non-qualified), welfare benefit (including, without limitation,
medical, dental, disability and group life insurance coverages) and
fringe benefit plans from time to time in effect for officers of
the Company and its affiliates.
(b) Executive shall be entitled to
participate in such bonus, stock option, or other incentive
compensation plans of the Company and its affiliates as in effect
from time to time for officers of the Company.
(c) Executive shall be entitled to
earn paid time off each year up to a maximum of 208 hours per year,
subject to the Company’s policies, as in effect from time to
time. The Executive shall schedule the timing of such paid time off
in a reasonable manner. The Executive also may be entitled to such
other leave, with or without compensation, as shall be mutually
agreed by the Company and Executive.
(d) Executive may incur reasonable
expenses for promoting the Company’s business, including
expenses for entertainment, travel and similar items. The Company
shall reimburse Executive for all such reasonable expenses in
accordance with the Company’s reimbursement policies and
procedures, as may be in effect from time to time.
(e) Executive acknowledges that the
Company has reimbursed Executive for certain relocation expenses
incurred by Executive in accordance with the Company’s
Officer Relocation Policy. In the event Executive voluntarily
terminates his employment with the Company without Good Reason on
or before April 21, 2009, Executive will reimburse the Company
for a pro rata amount of Executive’s relocation and other
expenses paid pursuant to the Company’s Officer Relocation
Policy and the full
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amount of any payments made by the Company
related to any expenses invoiced to Executive under the Tenet
Relocation Benefit Agreement between Executive and Tenet Healthcare
Corporation.
6. Termination of Employment
.
(a) Death or Disability .
Executive’s employment hereunder shall terminate
automatically upon Executive’s death. If the Company
determines in good faith that the Disability of Executive has
occurred during the Term (pursuant to the definition of Disability
set forth below) it may give to Executive written notice of its
intention to terminate Executive’s employment. In such event,
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by Executive
(the “Disability Effective Date”), provided that,
within the 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive’s duties. For
purposes of this Agreement, “Disability” shall mean
Executive’s 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 Executive by the Company.
(b) Cause . The Company may
terminate Executive’s employment hereunder for Cause. For
purposes of this Agreement, “Cause” shall mean the
Executive’s (i) conviction of or plea of nolo
contendere to a crime involving moral turpitude; or
(ii) willful and material breach by Executive 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
(ii) only if the Board adopts a resolution by a vote of at
least 75% of its members so finding after giving the Executive 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 Executive in good faith and in the best interests of the
Company.
(c) Good Reason .
Executive’s employment may be terminated during the Term by
Executive for Good Reason. “Good Reason” shall exist
upon the occurrence, without Executive’s express written
consent, of any of the following events:
(1) a material adverse change in
Executive’s authority, duties or responsibilities (including,
without limitation, the Company assigning to Executive duties of a
substantially nonexecutive or nonmanagerial nature) (other than any
such change directly attributable to the fact that the Company is
no longer publicly owned);
(2) the Company shall materially
reduce the Base Salary or annual bonus opportunity of
Executive;
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(3) the Company shall require
Executive to relocate Executive’s principal business office
more than 30 miles, provided that the Executive and the Company
acknowledge that Executive’s principal business office is 680
South Fourth Street, Louisville, Kentucky 40202; or
(4) a material breach by the Company
of Section 5(a) or Section 9(c) of this
Agreement.
For purposes of this Agreement,
“Good Reason” shall not exist until after Executive has
given the Company notice of the applicable event within 90 days of
the initial occurrence of such event and which is not remedied
within 30 days after receipt of written notice from Executive
specifically delineating such claimed event and setting forth
Executive’s intention to terminate employment if not
remedied; provided , that if the specified event cannot
reasonably be remedied within such 30-day period and the Company
commences reasonable steps within such 30-day period to remedy such
event and diligently continues such steps thereafter until a remedy
is effected, such event shall not constitute “Good
Reason” provided that such event is remedied within 60 days
after receipt of such written notice.
(d) Notice of Termination .
Any termination by the Company for Cause, or by Executive for Good
Reason, 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 Executive’s employment under the provision so
indicated and (iii) specifies the intended termination date
(which date, in the case of a termination for Good Reason, shall be
not more than thirty days after the giving of such notice). The
failure by Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of Executive or
the Company, respectively, hereunder or preclude Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing Executive’s or the Company’s rights
hereunder.
(e) Date of Termination .
“Date of Termination” means (i) if
Executive’s employment is terminated by the Company for
Cause, or by Executive for Good Reason, 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
Executive’s employment is terminated by the Company other
than for Cause or Disability, or Executive resigns without Good
Reason, the Date of Termination shall be the date on which the
Company or Executive notified Executive or the Company,
respectively, of such termination, and (iii) if
Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
Executive or the Disability Effective Date, as the case may
be.
7. Obligations of the Company
Upon Termination . Following the termination of
Executive’s employment during the Term for any reason, the
Company shall pay Executive his Base Salary through the Date of
Termination and any amounts owed to Executive pursuant to the terms
and conditions of the benefit plans and programs of the Company at
the time such payments are due.
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In addition, subject to Section 7(e) hereof
and the conditions set forth below, Executive shall be entitled to
the following additional payments:
(a) Death or Disability . If,
during the Term, Executive’s employment shall terminate by
reason of Executive’s death or Disability, the Company shall
pay to Executive (or his designated beneficiary or estate, as the
case may be) an amount equal to the product of (i) the annual
bonus to which the Executive would have been entitled for the year
of termination of employment had Executive’s employment with
the Company not been terminated, as determined in accordance with
Section 4(b) hereof, if any, multiplied by (ii) a
fraction, the numerator of which is the number of days in the
period beginning on the first day of the calendar year in which
such termination occurs and ending on the Date of Termination and
the denominator of which is 365. Such amount shall be paid on the
date when such amounts would otherwise have been payable to the
Executive if Executive’s employment with the Company had not
terminated, as determined in accordance with the terms and
conditions of the applicable short-term incentive plan.
(b) Good Reason; Other than for
Cause . If, during the Term, the Company shall terminate
Executive’s employment other than for Cause (but not for
Disability), or the Executive shall terminate his employment for
Good Reason:
(1) in satisfaction of the annual
bonus Executive would otherwise be eligible to receive under the
short-term incentive plan in respect of the calendar year in which
the Date of Termination occurs, the Company shall pay to Executive
an amount equ
