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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of the 22nd day of February
2007 by and between Kindred Healthcare, Inc., a Delaware
corporation (the "Company") and Edward L. Kuntz ("Kuntz").
WITNESSETH :
WHEREAS, Kuntz is serving as Executive Chairman of the Board and
the Company desires to continue the services of Kuntz in that
capacity; 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 Kuntz agree as
follows:
1. Employment as Executive Chairman of the Board .
A. Term . The Company or one of its subsidiaries hereby
agrees to employ Kuntz and Kuntz hereby agrees to be employed as
Executive Chairman of the Board of Directors ("Executive Chairman")
effective on the date hereof on the terms and conditions herein set
forth. The term of this Agreement (the "Term") shall be for a
one-year period commencing on the date hereof (the "Effective
Date"). The Term shall be automatically extended by one additional
day for each day beyond the Effective Date that Kuntz remains
employed by the Company until such time as the Board of Directors
elects to cease such extension by giving written notice of such
election to Kuntz. In such an event, the Agreement shall terminate
on the first anniversary of the date of such election notice,
unless a later date is specified.
B. Duties . As Executive Chairman, Kuntz 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) continue his responsibility
for public lobbying and relationships with various healthcare
related organizations; (iii) advise the chief executive
officer and senior management on strategic initiatives including
financing, acquisition and development activities; (iv) advise
the chief executive officer and senior management concerning all
compliance and regulatory matters including the Corporate Integrity
Agreement; and (v) such other similar matters as reasonably
requested by the Board.
C. Extent of Services . Kuntz, subject to the direction
and control of the Board, shall have the power and authority
commensurate with his status as Executive Chairman and necessary to
perform his duties hereunder. During the Chairman Term, Kuntz shall
devote approximately two days a week or 60 hours a month to the
business of
the Company. With notice to the Board, Kuntz may
engage in any other business activities, whether or not such
business activities are pursued for gain, profit or other pecuniary
advantage provided such activities do not conflict with the
Company’s objectives and operations.
D. Compensation . As compensation for services rendered
as Executive Chairman, Kuntz shall receive during the Chairman
Term:
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(i) A salary ("Chairman Salary") of not less than $855,000 per
year payable in equal installments in accordance with the
Company’s normal payroll procedures. Kuntz may receive
increases in his Chairman Salary from time to time, as approved by
the Executive Compensation Committee.
(ii) Kuntz may be eligible to receive additional compensation as
the Executive Compensation Committee may approve from time to time
but is not intended that Kuntz will continue to participate in the
Company’s standard bonus or long-term incentive plans.
E. Benefits . During the Term:
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(i) Kuntz 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) Kuntz may incur reasonable expenses for promoting the
Company’s business, including expenses for entertainment,
travel and similar items. The Company shall reimburse Kuntz for all
such reasonable expenses in accordance with the Company’s
reimbursement policies and procedures.
(iii) Kuntz will continue to vest in his existing stock options,
restricted stock and accrued long-term incentive benefits.
(iv) The Company shall provide Kuntz with an office suite in
Houston, Texas and an administrative assistant substantially
comparable to his existing office suite and administrative
assistant being furnished as of the date of this Agreement.
2. Termination of Employment .
A. Death or Disability . Kuntz’s employment shall
terminate automatically upon Kuntz’s death during the Term.
If the Board determines in good faith that the Disability of Kuntz
has occurred during the Term (pursuant to the definition of
Disability set forth below) it may give to Kuntz written notice of
its intention to terminate Kuntz’s employment. In such event,
Kuntz’s employment with the Company shall terminate effective
on the 30th day after receipt of such notice by Kuntz (the
"Disability
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Effective Date"), provided that, within the 30
days after such receipt, Kuntz shall not have returned to
performance of Kuntz’s duties. For purposes of this
Agreement, "Disability" shall mean Kuntz’s absence from his
duties hereunder for a period of 90 days.
B. Cause . The Company may terminate Kuntz’s
employment during the Term for Cause. For purposes of this
Agreement, "Cause" shall mean Kuntz’s (i) conviction of
or plea of nolo contendere to a crime involving moral
turpitude; or (ii) willful and material breach by Kuntz 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 Kuntz and his
attorney an opportunity to be heard by the Board. 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 Kuntz in good faith and in the best interests of the
Company.
C. Good Reason . Kuntz’s employment may be
terminated by Kuntz for Good Reason. "Good Reason" shall exist upon
the occurrence, without Kuntz’s express written consent, of
any of the following events:
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(i) The Company shall (A) materially reduce the
compensation of Kuntz or (B) materially reduce his benefits
and perquisites;
(ii) The Company shall require Kuntz to relocate Kuntz’s
principal business office more than 30 miles from its location on
the date of this Agreement;
(iii) If Kuntz ceases to be Chairman of the Board, for any
reason, including failing to be elected at any annual or special
meeting of the shareholders of the Company; or
(iv) the failure of the Company to obtain the assumption of this
Agreement as contemplated by Section 5(c).
For purposes of this Agreement, "Good Reason" shall not exist
until after Kuntz has given the Company notice of the applicable
event within 10 days of such event and which is not remedied within
10 days after receipt of written notice from Kuntz specifically
delineating such claimed event and setting forth Kuntz’s
intention to terminate employment if not remedied; provided
, that if the specified event cannot reasonably be remedied within
such 10-day period and the Company commences reasonable steps
within such 10-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 30 days after receipt of such written
notice.
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D. Retirement . Kuntz’s employment
shall be terminated upon Retirement. For purposes of this
Agreement, "Retirement" means an election by either Kuntz or the
Company to terminate this Agreement upon Kuntz reaching age 65 or
anytime thereafter.
E. Notice of Termination . Any termination by the Company
for Cause, by Kuntz for Good Reason or by either Kuntz or the
Company upon Retirement, 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 Kuntz’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 10 days after the giving of such notice). The failure
by Kuntz 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 Kuntz or the Company,
respectively, hereunder or pr
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