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Exhibit 10.6
REHABCARE GROUP, INC. SEVERANCE PLAN FOR COMPANY VICE PRESIDENTS
(As Amended and Restated Effective January 1, 2009)
1. Purpose
and Effective Date The RehabCare Group, Inc. Severance Plan
for Company Vice Presidents (“Plan”) was established to
provide severance benefits to eligible terminated Employees while
they seek alternative employment. In consideration for
such benefits, the Employee shall be subject to a one-year
non-compete agreement and shall release the Company and its
Affiliates from any claims related to employment
termination. The Plan was effective January 1,
2006. RehabCare Group, Inc. now wishes to amend and
restate the Plan to conform the Plan to the final regulations
issued by the Internal Revenue Service under Section 409A of the
Internal Revenue Code. This Amended and restated Plan is
effective January 1, 2009.
2. Definitions
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(a)
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Affiliate means any corporation or other business entity that
from time to time is, along with the Company, a member of a
controlled group of businesses as defined in Code sections 414(b)
and (c), as modified in accordance with Treas. Reg.
§1.409A-1(h)(3) (50% control test). A corporation
or business entity is an Affiliate only while a member of such
controlled group.
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(b)
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Cause means (i) the Employee’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 Employee by the Company, which specifically
identifies the manner in which the Employee has not substantially
performed his duties, or (ii) the Employee’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. For purposes
of this section, no act or failure to act on the Employee’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.
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Notwithstanding the foregoing, the Employee 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 Employee
was guilty of the conduct set forth in the notice of termination.
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(c)
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Code means the Internal Revenue Code of 1986, as
amended. Reference to a section of the Code shall
include that section and any comparable section or sections of any
future legislation that amends, supplements or supersedes said
section.
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(d)
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Company means RehabCare Group, Inc.
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(e)
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Employee means an individual employed by the Company or an
Affiliate.
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(f)
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ERISA means the Employee Retirement Income Security Act of 1974,
as amended.
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(g)
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Good Reason means the Employee’s right to terminate his
employment based upon the occurrence of one or more of the
following without the consent of the Employee: (i) a material
reduction in the Employee’s annual base salary; (ii) a
material reduction in the Employee’s authority, duties and
responsibilities; (iii) a material reduction in the budget over
which the Employee retains authority; or (iv) a material change in
the primary geographic location at which the Employee performs
services.
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Any termination of the Employee’s employment based
upon a good faith determination of "Good Reason" made by the
Employee shall be subject to a delivery of a notice of termination
by the Employee to the Company within 15 days of the first
occurrence of an event that would constitute Good Reason in the
manner prescribed herein, and subject further to the ability of the
Company to remedy within 30 days of receipt of such notice any such
action by the Company that may otherwise constitute Good Reason.
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(h)
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Plan means the RehabCare Group, Inc. Severance Plan for Company
Vice Presidents, as herein set forth and as amended from time to
time.
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(i)
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Plan Administrator means the Company or the Committee designated
by the Board of Directors of the Company to administer the
Plan.
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(j)
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Severance Period means the period commencing on the date an
eligible Employee is eligible to receive Severance Pay and
Severance Benefits and ending nine months thereafter.
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(k)
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Termination of Employment means separation from service with the
Company and its Affiliates (generally 50% common control with the
Company), as defined in IRS regulations under Code section 409A
(generally, a decrease in the performance of services to no more
than 20% of the average for the preceding 36-month period and
disregarding leaves of absence of up to six months where there is a
reasonable expectation the Employee will return).
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Each Employee whose title is Vice President of the
Company shall be eligible to participate in the Plan; provided,
however, an Employee who is entitled to severance benefits pursuant
to a separate written agreement between the Company and such
Employee shall not be entitled to participate in this Plan.
4. Severance
Pay and Benefits. Subject to Section 6, any eligible
Employee (i) who incurs a Termination of Employment as a result of
termination of Employee’s employment by the Company for any
reason other than Cause or disability or (ii) who terminates his
employment with the Company for Good Reason within 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 2(g),
shall be eligible for Severance Pay and Severance Benefits
hereunder. Severance Pay (as specified in subparagraph
(a) below) and Severance Benefits (as specified in subparagraph (b)
below) shall be offset by any severance pay payable to the eligible
Employee at the same time under any other severance program or plan
of the Company or an Affiliate.
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(a)
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Severance Pay. The amount of Severance Pay to which
an eligible Employee is entitled hereunder shall be nine
months’ base salary at the base salary rate in effect on the
date of Termination of Employment.
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Severance Pay shall be paid to an eligible Employee
during the Severance Period on a monthly basis in an amount equal
to one-twelfth of Employee’s annual base salary rate on the
date of Termination of Employment. Anything herein to the
contrary notwithstanding, in the event that all or any portion of
the Employee’s Severance Pay is subject to Code section 409A
and the Employee is a “specified employee,” as defined
in the regulations under Code section 409A, at the time of the
Employee’s Termination of Employment, the Severance Pay that
is subject to 409A shall not be paid until the expiration of six
months following Termination of Employment. In such
event, any Severance Pay that would otherwise have been paid in the
preceding six month period shall be paid in a lump sum on
expiration of such period.
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(1)
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Health benefits. The eligible Employee and his or her
spouse and other eligible dependents may elect to continue to be
covered by the medical, dental, vision and prescription drug
plan(s) maintained by the Company in which the eligible Employee
and his or her spouse or other dependents were participating
immediately prior to the date of his or her Termination of
Employment in accordance with the COBRA provisions of Code section
4980B and ERISA section 602. During the Severance
Period, the Company shall pay the COBRA cost for the same level of
coverage in which the Employee is enrolled at Termination of
Employment. In addition, to the extent that the COBRA
premiums paid by the Company are taxable to the Employee, the
Company shall pay to the Employee a gross-up payment for applicable
taxes. Such payment shall be made monthly during the
Severance Period; provided that if the gross-up payments are
subject to Code section 409A and the Employee is a “specified
employee,” as defined in the regulations under Code section
409A, at the time of the Employee’s Termination of
Employment, no payment shall be made until the expiration of six
months following Termination of Employment. In such
event, the gross-up payments for the preceding six months shall be
paid in a lump sum on expiration of such period.
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(2)
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Outplacement Services. During the Severance Period
and for three months thereafter, the Company shall provide for an
eligible Employee executive-level outplacement services by a vendor
selected by the Company.
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In addition to the Severance Pay and Severance Benefits
provided in this Section 4, the eligible Employee shall be entitled
to payment of any base salary or vacation pay accrued on the Date
of Termination in accordance with the Company’s policies for
such payments.
5. Reductions
or Offsets to Severance Pay
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(a)
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The Company has the right to offset from any Severance Pay under
this Plan the amount of any monies that the Employee owes at the
time of separation to the Company or any Affiliate or to any
employee benefit plan maintained by the Company or any of its
Affiliates.
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(b)
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The Company has the right to offset from any Severance Pay under
this Plan the replacement value of any personal property owned by
the Company or any Affiliate but not returned by an eligible
Employee to the Company by the date of Termination of
Employment.
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Notwithstanding the preceding, the total offset under
this Section 5 from any Severance Pay that is subject to Code
section 409A shall not exceed $5,000.
6. Limitations
on Severance Pay and Severance Benefits The Company is not
obligated to make any payment or provide any benefit under this
Plan to an otherwise eligible Employee if:
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(a)
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the eligible Employee voluntarily terminates his employment
without Good Reason, dies, or becomes disabled;
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(b)
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the eligible Employee is discharged for Cause;
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(c)
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the eligible Employee’s employment with the Company and
all Affiliates ceases upon the sale of all or substantially all of
the Company’s assets, or upon the sale, spin-off, divestiture
or other disposition of a business unit, division or facility, and
the eligible Employee is offered comparable employment with (or
thereafter is employed by) the successor, new employer or purchaser
of such assets, business unit, division or facility;
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(d)
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the eligible Employee’s employment with the Company and
all Affiliates ceases due to its merger, dissolution or
reorganization, and as a result of such transaction, the eligible
Employee is employed by the successor or other new employer;
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(e)
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the eligible Employee transfers employment among the Company and
any of its Affiliates;
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(f)
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the eligible Employee is granted a leave of absence pursuant to
the Company’s normal leave of
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