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Exhibit 10.2
REHABCARE GROUP, INC. TERMINATION COMPENSATION AGREEMENT
This agreement (“Agreement”) has been entered into as
of the 8th day of December, 2008, by and between RehabCare Group,
Inc., a Delaware corporation (the “Company”), and Jay W
Shreiner, an individual (the “Executive”).
The Company and the Executive previously entered into that certain
agreement dated as of the 29th day of March, 2006, regarding the
employment relationship between the Company and the Executive (the
“Existing Agreement”). The Company and the
Executive now desire to amend and restate the Existing Agreement in
its entirety as of the date hereof to conform to the provisions of
the final regulations under Section 409A of the Internal Revenue
Code. Therefore, the Company and the Executive hereby
amend and restate the Existing Agreement in its entirety to read as
follows:
RECITALS
The Board of Directors of the Company has determined that it is in
the best interests of the Company and its stockholders to reinforce
and encourage the continued attention and dedication of the
Executive to the Company as the Company’s EVP & Chief
Financial Officer and to assure that the Company will have the
continued dedication of the Executive, notwithstanding the
possibility or occurrence of a Change in Control (as defined
below). The Board desires to provide for the continued
employment of the Executive as EVP & Chief Financial Officer on
terms competitive with those of other corporations, and the
Executive is willing to rededicate himself and continue to serve
the Company as its EVP & Chief Financial
Officer. Additionally, the Board believes it is
imperative to diminish the inevitable distraction of the Executive
by virtue of the personal uncertainties and risks created by a
potential or pending Change in Control and to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any potential or pending Change in
Control, and to provide the Executive with compensation and
benefits arrangements upon any termination after a Change in
Control and certain terminations of employment prior to a Change in
Control which ensure that the compensation and benefits
expectations of the Executive will be
satisfied. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this
Agreement.
IT IS AGREED AS FOLLOWS:
Section
1: Definitions
and Construction.
1.1 Definitions.
For purposes of this Agreement, the following words and phrases,
whether or not capitalized, shall have the meanings specified
below, unless the context plainly requires a different meaning.
1.1(a) “Accrued
Obligations” has the meaning set forth in Section 4.1(a) of
this Agreement.
1.1(b) “Annual
Base Salary” has the meaning set forth in Section 2.4(a) of
this Agreement.
1.1(c) “Board”
means the Board of Directors of the Company.
1.1(d) “Cause”
has the meaning set forth in Section 3.3 of this Agreement.
1.1(e) “Change
in Control” means:
(i) The
acquisition by one person, or more than one person acting as a
group, of ownership of stock of the Company that, together with
stock held by such person or group, constitutes more than 50% of
the total fair market value or total voting power of the stock of
the Company;
(ii) The
acquisition by one person, or more than one person acting as a
group, of ownership of stock of the Company, that together with
stock of the Company acquired during the twelve-month period ending
on the date of the most recent acquisition by such person or group,
constitutes 30% or more of the total voting power of the stock of
the Company;
(iii) A
majority of the members of the Company’s board of directors
is replaced during any twelve-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Company’s board of directors before the date
of the appointment or election;
(iv) One
person, or more than one person acting as a group, acquires (or has
acquired during the twelve-month period ending on the date of the
most recent acquisition by such person or group) assets from the
Company that have a total gross fair market value (determined
without regard to any liabilities associated with such assets)
equal to or more than 40% of the total gross fair market value of
all of the assets of the Company immediately before such
acquisition or acquisitions.
Persons will not be considered to be acting as a group solely
because they purchase or own stock of the same corporation at the
same time, or as a result of the same public
offering. However, persons will be considered to be
acting as a group if they are owners of a corporation that enters
into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Company.
This definition of Change in Control shall be interpreted in
accordance with, and in a manner that will bring the definition
into compliance with, the regulations under Code Section 409A.
1.1(f) “Change
in Control Date” means the date that the Change in Control
first occurs.
1.1(g) “Company”
has the meaning set forth in the first paragraph of this Agreement
and, with regard to successors, in Section 6.2 of this
Agreement.
1.1(h) “Code”
shall mean the Internal Revenue Code of 1986, as amended.
1.1(i) “Date
of Termination” has the meaning set forth in Section 3.7 of
this Agreement. In all cases, a “Date of
Termination” shall only occur upon separation from service
from the Company and all of its affiliates, as defined in Treasury
regulations under Section 409A of the Code (generally, separation
from the 50% controlled group that includes the Company).
1.1(j) “Disability”
has the meaning set forth in Section 3.2 of this Agreement.
1.1(k) “Disability
Effective Date” has the meaning set forth in Section 3.2 of
this Agreement.
1.1(l) “Effective
Date” means the date of this Agreement specified in the first
paragraph of this Agreement.
1.1(m) “Employment
Period” means the period beginning on the Effective Date and
ending on the later of (i) December 31, 2009, or (ii) December 31
of any succeeding year during which notice is given by either party
(as described in Section 2.1 of this Agreement) of such
party’s intent not to renew this Agreement.
1.1(n)
“Excise Tax” has the meaning set forth in Section
4.2(f)(i) of this Agreement.
1.1(o) “Good
Reason” has the meaning set forth in Section 3.4 of this
Agreement.
1.1(p) “Gross-Up
Payment” has the meaning set forth in Section 4.2(f)(i) of
this Agreement.
1.1(q)
“Notice of Termination” has the meaning set forth in
Section 3.6 of this Agreement.
1.1(r) “Other
Benefits” has the meaning set forth in Section 4.1(e) of this
Agreement.
1.1(s)
“Payment” has the meaning set forth in Section
4.2(f)(i) of this Agreement.
1.1(t) “Prorated
Target Bonus” has the meaning set forth in Section 4.2(a) of
this Agreement.
1.1(u) “Specified
Employee” has the meaning set forth in Section 4.9 of this
Agreement.
1.1(v) “Target
Bonus” has the meaning set forth in Section 2.4(b) of this
Agreement.
1.1(w) “Term”
means the period that begins on the Effective Date and ends on the
earlier of: (i) the Date of Termination, or (ii) the close of
business on the later of December 31, 2009 or December 31 of any
renewal term.
1.2 Gender
and Number. When appropriate, pronouns in this Agreement
used in the masculine gender include the feminine gender, words in
the singular include the plural, and words in the plural include
the singular.
1.3 Headings. All
headings in this Agreement are included solely for ease of
reference and do not bear on the interpretation of the
text. Accordingly, as used in this Agreement, the terms
“Article” and “Section” mean the text that
accompanies the specified Article or Section of the Agreement.
1.4 Applicable
Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Missouri,
without reference to its conflict of law principles.
Section
2: Terms
and Conditions of Employment.
2.1 Period
of Employment. The Executive shall remain in the employ
of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement. This
Agreement will automatically renew for annual one-year periods
unless either party gives the other written notice, by September
30, 2009, or September 30 of any succeeding year, of such
party’s intent not to renew this Agreement.
2.2 Positions
and Duties.
2.2(a) Throughout
the Term of this Agreement, the Executive shall serve as EVP &
Chief Financial Officer of the Company subject to the reasonable
directions of the Board. The Executive shall have such
authority and shall perform such duties as are specified by the
Bylaws of the Company and the Board for the office of EVP &
Chief Financial Officer, subject to the control exercised by the
Board from time to time.
2.2(b) Throughout
the Term of this Agreement (but excluding any periods of vacation
and sick leave to which the Executive is entitled), the Executive
shall devote reasonable attention and time during normal business
hours to the business and affairs of the Company and shall use his
reasonable best efforts to perform faithfully and efficiently such
responsibilities as are assigned to him under or in accordance with
this Agreement; provided that, it shall not be a violation of this
Section 2.2(b) for the Executive to (i) serve on corporate, civic
or charitable boards or committees with or without compensation,
(ii) deliver lectures or fulfill speaking engagements, with or
without compensation, or (iii) manage personal investments, so long
as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement, violate
the terms of this Agreement or any other agreement between
Executive and the Company, or violate the Company’s conflict
of interest policy or any applicable law.
2.3 Situs
of Employment. Throughout the Term of this Agreement, the
Executive’s services shall be performed at and out of the
Company’s executive offices located in the greater St. Louis,
Missouri metropolitan area or such other office as shall be agreed
to between the Executive and the President and Chief Executive
Officer of the Company.
2.4 Compensation.
2.4(a) Annual
Base Salary. At the date of this Agreement, the
Executive will be paid a base salary (“Annual Base
Salary”) at an annual rate of Three Hundred Sixty Five
Thousand Dollars ($365,000), which shall be paid in equal or
substantially equal semi-monthly installments. During
the Term of this Agreement, the Annual Base Salary payable to the
Executive shall be reviewed at least annually after the end of the
first calendar quarter (starting with calendar year 2009) and shall
be increased at the discretion of the Board or the Compensation and
Nominating/Corporate Governance Committee of the Board but shall
not be reduced.
2.4(b) Incentive
Bonuses. In addition to Annual Base Salary, the
Executive shall be awarded the opportunity to earn an incentive
bonus on an annual basis under any incentive compensation plan
which is generally available to other peer executives of the
Company. The Board of Directors or the Compensation and
Nominating/Corporate Governance Committee shall establish at the
beginning of each calendar year a target incentive award equal to a
designated percentage of the Executive’s Annual
Base Salary paid during that plan year (the “Target
Bonus”). The Board and/or the Compensation and
Nominating/Corporate Governance Committee may also establish
minimum and maximum incentive bonus opportunities on an annual
basis in addition to the Target Bonus. The Board of Directors shall
be exclusively responsible for decisions relating to administration
of the executive incentive plans.
2.4(c) Incentive,
Savings and Retirement Plans. Throughout the Term of
this Agreement, the Executive shall be entitled to participate in
all equity incentive, savings and retirement plans generally
available to other peer executives of the Company; provided,
however, that the nature and level of any equity incentive awards
shall be solely determined by the Board or the Compensation and
Nominating/Corporate Governance Committee in its
discretion. Also, during the Term, the Executive shall
be eligible to participate in the Company’s long term cash
incentive plan. During the Term, the percentage of
Annual Base Salary upon which a potential award shall be based
shall be established by the Board or the Compensation and
Nominating/Corporate Governance Committee in its
discretion. For each three (3) year performance period
during the Term and under the plan, the financial metrics for
receiving a payout will be established by the Board or the
Committee in its discretion and otherwise determined by the terms
of the plan. Payment of awards under the long term cash incentive
plan, and eligibility to receive any payment, will be determined
under and according to the terms of that plan and based upon
performance criteria established annually by the Board or the
Committee under the plan. Nothing herein prevents the
Company from terminating or changing the long term cash incentive
plan in its discretion, subject to a participant’s right
under the plan as to any incentive award which has already been
earned.
2.4(d) Welfare
Benefit Plans. Throughout the Term of this Agreement
(and thereafter, subject to Section 4.1(d) or 4.2(d) hereof), the
Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent generally available to
other peer executives of the Company.
2.4(e) Expenses. Throughout
the Term of this Agreement, the Executive shall be entitled to
receive prompt reimbursement for all reasonable business expenses
incurred by the Executive in accordance with the policies,
practices and procedures of the Company. Such
expense reimbursements shall be made no later than the end of the
calendar year following the calendar year in which the expenses
were incurred.
2.4(f) Fringe
Benefits. Throughout the Term of this Agreement, the
Executive shall be entitled to such fringe benefits as generally
are provided to other peer executives of the Company.
2.4(g) Office
and Support Staff. Throughout the Term of this
Agreement, the Executive shall be entitled to an office or offices
at the Company’s executive offices in the greater St. Louis,
Missouri metropolitan area and/or at such other location as the
Executive and the President and Chief Executive Officer of the
Company shall agree of a size and with furnishings and other
appointments, and to personal secretarial and other assistance, as
are generally provided to other peer executives of the Company.
2.4(h) Vacation. Throughout
the Term of this Agreement, the Executive shall be entitled to paid
vacation in accordance with the plans, policies, programs and
practices as are generally provided to other peer executives of the
Company.
Section
3: Termination
of Employment.
3.1 Death. The
Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period.
3.2 Disability. If
the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), the Company may give
to the Executive written notice in accordance with Section 7.2 of
its intention to terminate the Executive’s
employment. In such event, the Executive’s
employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the Executive
(the “Disability Effective Date”), provided that,
within the thirty (30) days after such receipt, the Executive shall
not have returned to full-time performance of the Executive’s
duties. For purposes of this Agreement,
“Disability” shall mean that the Executive has been
unable with reasonable accommodation to perform the services
required of the Executive hereunder on a full-time basis for a
period of one hundred eighty (180) consecutive business days by
reason of a physical and/or mental
condition. “Disability” shall be deemed to
exist when certified by a physician selected by the Company and
acceptable to the Executive or the Executive’s legal
representative (such agreement as to acceptability not to be
withheld unreasonably). The Executive will submit to
such medical or psychiatric examinations and tests as such
physician deems necessary to make any such Disability
determination.
3.3 Termination
for Cause or without Cause. The Company may terminate
the Executive’s employment during the Employment Period for
“Cause,” which shall mean termination based upon: (i)
the Executive’s willful and continued failure to
substantially perform his duties with the Company (other than as a
result of incapacity due to physical or mental condition), after a
written demand for substantial performance is delivered to the
Executive by the Company, which specifically identifies the manner
in which the Executive has not substantially performed his duties,
(ii) the Executive’s commission of an act constituting a
criminal offense that would be classified as a felony under the
applicable criminal code or involving moral turpitude, dishonesty,
or breach of trust, or (iii) the Executive’s material breach
of any provision of this Agreement. For purposes of this
Section, no act or failure to act on the Executive’s part
shall be considered “willful” unless done, or omitted
to be done, without good faith and without reasonable belief that
the act or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause unless and
until (i) he receives a Notice of Termination from the Company,
(ii) he is given the opportunity, with counsel, to be heard before
the Board, and (iii) the Board finds, in its good faith opinion,
that the Executive was guilty of the conduct set forth in the
Notice of Termination. The Company also may terminate the
Executive’s employment at any time during the Employment
Period without Cause.
3.4 Termination
by Executive for Good Reason. The Executive may
terminate his employment with the Company during the Employment
Period for “Good Reason,” which shall mean termination
based upon the occurrence of one or more of the following without
the consent of the Executive: (i) a material reduction in the
Executive’s authority, duties and responsibilities; (ii) a
material reduction in Executive’s Annual Base Salary; (iii) a
material reduction in the budget over which the Executive retains
authority; (iv) a material change in the primary geographic
location at which the Executive performs his duties under this
Agreement; or (v) any other action or inaction that constitutes a
material breach by the Company of any provision of this Agreement.
Any termination of the Executive’s employment based upon a
good faith determination of “Good Reason” made by the
Executive shall be subject to a delivery of a Notice of Termination
by the Executive to the Company in the manner prescribed in Section
3.6 within fifteen (15) days of the first occurrence of an event
that would constitute Good Reason and subject further to the
ability of the Company to remedy within thirty (30) days of receipt
of such notice any action that may otherwise constitute Good Reason
under this Section 3.4.
3.5 Voluntary
Termination by the Executive. The Executive may
voluntarily terminate his employment with the Company for any
reason or for no reason at any time during the Employment
Period.
3.6 Notice
of Termination. Any termination by the Company for
Cause, without Cause, or Disability, or by the Executive for any
reason or no reason, shall be communicated by Notice of Termination
to the other party, given in accordance with Section
7.2. 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)
to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and
(iii) if the Date of Termination (as defined in Section 3.7 hereof)
is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen (15)
days after the giving of such notice). The failure of
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.
3.7 Date
of Termination. “Date of Termination” means
(i) if the Executive’s employment is terminated by the
Company for Cause, the Date of Termination shall be the date of
receipt by the Executive of the Notice of Termination or any later
date specified therein, as the case may be; (ii) if the
Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be;
(iii) if the Executive’s employment is voluntarily terminated
by the Executive for any reason or no reason, the Date of
Termination shall be a date specified in the Notice of Termination,
provided that termination by Executive for Good Reason shall not be
effective until thirty (30) days following the date of the Notice
of Termination; or (iv) if the Executive’s employment is
terminated by the Company other than for Cause, death, or
Disability, the Date of Termination shall be the date of receipt by
the Executive of the Notice of Termination.
Section
4: Certain
Benefits Upon Termination.
4.1 Termination
Without Cause or Timely Termination for Good Reason Prior to a
Change in Control. Subject to the provisions of Section
4.9, if, prior to a Change in Control during the Employment Period,
the Company terminates the Executive’s employment without
Cause or the Executive terminates his employment with the Company
for Good Reason within forty-five (45) days of the first occurrence
of an event that would constitute Good Reason that has not been
remedied by the Company as described in Section 3.4, the Executive
shall be entitled to the payment of the benefits provided
below:
4.1(a) Accrued
Obligations. Within thirty (30) days after the Date of
Termination, the Company shall pay to the Executive the sum of (1)
the Executive’s accrued salary through the Date of
Termination, and (2) any accrued and unused paid days off; in each
case to the extent not previously paid (hereinafter referred to as
the “accrued obligations”). In addition, Executive
shall be entitled to the accrued benefit payable to the Executive
under any deferred compensation plan, program or arrangement in
which the Executive is a participant, which shall be payable in the
time and manner provided under the applicable plan, program or
arrangement. Payment under any annual or long-term cash
incentive plan shall be determined and governed solely by the terms
of the applicable plan.
4.1(b) Annual
Base Salary and Target Bonus Continuatio
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