EXHIBIT 10.24
THE VENCOR, INC.
DEFERRED COMPENSATION PLAN
Effective January 1, 1996
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS............................................... 1
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY........................ 5
2.1 Selection by Committee......................................... 5
2.2 Enrollment Requirements........................................ 5
2.3 Eligibility; Commencement of Participation..................... 6
ARTICLE 3
DEFERRAL COMMITMENTS/INTEREST CREDITING................... 6
3.1 Minimum and Maximum Deferral................................... 6
3.2 Company Contribution........................................... 6
3.3 Election to Defer; Effect of Election Form..................... 7
3.4 Withholding of Deferral Amounts................................ 7
3.5 Interest Crediting Prior to Distribution....................... 7
3.6 Installment Distributions...................................... 8
3.7 FICA and Other Taxes........................................... 8
ARTICLE 4
UNFORESEEABLE FINANCIAL EMERGENCIES....................... 8
ARTICLE 5
RETIREMENT BENEFIT........................................ 9
5.1 Retirement Benefit............................................. 9
5.2 Payment of Retirement Benefits................................. 9
5.3 Death Prior to Completion of Retirement Benefits............... 9
ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT........................... 9
6.1 Pre-Retirement Survivor Benefit................................ 9
6.2 Payment of Pre-Retirement Survivor Benefits.................... 9
ARTICLE 7
TERMINATION BENEFIT....................................... 10
7.1 Termination Benefits........................................... 10
7.2 Payment of Termination Benefit................................. 10
i
ARTICLE 8
DISABILITY WAIVER AND BENEFIT...................... 11
8.1 Disability Waiver............................................... 11
8.2 Disability Benefit.............................................. 11
ARTICLE 9
BENEFICIARY DESIGNATION............................ 11
9.1 Beneficiary..................................................... 11
9.2 Beneficiary Designation; Change; Spousal Consent................ 12
9.3 Receipt by Committee............................................ 12
9.4 No Beneficiary Designation...................................... 12
9.5 Doubt as to Beneficiary......................................... 12
9.6 Discharge of Obligations........................................ 12
ARTICLE 10
LEAVE OF ABSENCE................................... 13
10.1 Paid Leave of Absence........................................... 13
10.2 Unpaid Leave of Absence......................................... 13
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION............. 13
11.1 Termination..................................................... 13
11.2 Termination on Change of Control Event.......................... 14
11.3 Amendment....................................................... 14
11.4 Effect of Payment............................................... 14
ARTICLE 12
ADMINISTRATION..................................... 14
12.1 Committee Duties................................................ 14
12.2 Agents.......................................................... 15
12.3 Binding Effect of Decisions..................................... 15
12.4 Indemnity of Committee.......................................... 15
12.5 Employer Information............................................ 15
ARTICLE 13
OTHER BENEFITS AND AGREEMENTS...................... 15
ARTICLE 14
CLAIMS PROCEDURES.................................. 15
14.1 Presentation of Claim........................................... 15
14.2 Notification of Decision........................................ 16
14.3 Review of a Denied Claim........................................ 16
ii
14.1 Decision of Review.............................................. 17
14.5 Legal Action.................................................... 17
ARTICLE 15
TRUST.............................................. 17
15.1 Establishment of the Trust...................................... 17
15.2 Interrelationship of the Plan and the Trust..................... 17
ARTICLE 16
MISCELLANEOUS...................................... 17
16.1 Unsecured General Creditor...................................... 17
16.2 Employer's Liability............................................ 18
16.3 Nonassignability................................................ 18
16.4 Not a Contract of Employment.................................... 18
16.5 Furnishing Information.......................................... 18
16.6 Terms........................................................... 19
16.7 Captions........................................................ 19
16.8 Governing Law................................................... 19
16.9 Notice.......................................................... 19
16.10 Successors...................................................... 19
16.11 Spouse's Interest............................................... 19
16.12 Incompetent..................................................... 20
16.13 Court Order..................................................... 20
16.14 Distribution in the Event of Taxation........................... 20
16.15 Legal Fees to Enforce Rights After a Change of Control Event.... 20
16.16 Taxes and Withholding........................................... 21
16.17 Severability.................................................... 21
iii
THE VENCOR, INC.
DEFERRED COMPENSATION PLAN
EFFECTIVE JANUARY 1, 1996
PURPOSE
The purpose of this Plan is to provide specified benefits to a select
group of management or highly compensated Employees who contribute materially to
the continued growth, development and future business success of Vencor, Inc., a
Delaware corporation and its subsidiaries and affiliates. This Plan shall be
unfunded for tax purposes and for purposes of Title I of ERISA.
ARTICLE 1
DEFINITIONS
For purposes hereof, unless otherwise clearly apparent from the context,
the following phrases or terms shall have the following indicated meanings:
1.1 "Account Balance" shall mean with respect to Participant the sum of (i)
his or her Deferral Amount, plus (ii) his or her company contributions,
contributed under Section 3.2 hereof plus (iii) interest credited in
accordance with all the applicable interest crediting provisions of this
Plan, less (iv) all distributions. This account shall be a bookkeeping
entry only and shall be utilized solely as a device for the measurement
and determination of the amounts to be paid to a Participant pursuant to
this Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to Base Annual
Salary, paid annually to a Participant and designated as an "Annual
Bonus" under rules adopted by the Committee.
1.3 "Annual Deferral Amount" shall mean that portion of a Participant's Base
Annual Salary and/or Annual Bonus to be paid during a Plan Year that a
Participant elects to have and is deferred in accordance with Article 3,
for any one Plan Year. In the event of Participant's Retirement,
Disability (if deferrals cease in accordance with Section 8.1), death or
Termination of Employment prior to the end of a Plan Year, such year's
Annual Deferral Amount shall be the actual amount deferred and withheld
prior to such event.
1
1.4 "Base Annual Salary" shall mean the annual compensation, including
commissions, and incentive payments (other than amounts considered
part of the Annual Bonus), but excluding overtime, severance pay,
compensation received as a result of deferral, any equity-based
compensation and fringe benefits (including but not limited to relocation
expenses, non-monetary awards, directors fees and other fees, automobile,
educational uniform, professional dues, and employee expense allowances),
paid to a Participant for employment services rendered to any Employer
before reduction for compensation deferred pursuant to all qualified,
non-qualified and Code Section 125 plans of any Employer. Notwithstanding
the foregoing, the Company may elect to permit directors fees to be
included in the definition of Base Annual Salary by written notice to
affected Participants.
1.5 "Beneficiary" shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to
receive benefits under this Plan upon the death of a Participant.
1.6 "Beneficiary Designation Form" shall mean the form established from time
to time by the Committee that a Participant completes, signs and returns
to the Committee to designate one or more Beneficiaries.
1.7 "Board" shall mean the board of directors of the Company.
1.8 For purposes of the Plan, a "Change of Control Event" shall occur upon
(i) the acquisition by any person after the date hereof of beneficial
ownership of 50% or more of the voting power of the Company's outstanding
voting stock, (ii) five or more of the current members of the Board
ceasing to be members of the Board unless any replacement director was
elected by a vote of either at least 75% of the remaining directors, or
of at least 75% of the shares entitled to vote on such replacement, or
(iii) approval by the stockholders of the Company of (a) a merger or
consolidation of the Company with another corporation if the stockholders
of the Company immediately before such vote will not, as a result of such
merger or consolidation, own more than 50% of the voting stock of the
corporation resulting from such merger or consolidation, or (b) a
complete liquidation of the Company or sale of all, or substantially all,
of the assets of the Company. Notwithstanding the foregoing, a Change of
Control Event shall not occur solely because 50% or more of the voting
stock of the Company is acquired by (i) a trust which is part of an
employee benefit plan maintained by the Company or its subsidiaries, or
(ii) a corporation which, immediately following such acquisition, is
owned directly or indirectly by the stockholders of the Company in the
same proportion as their ownership of stock in the Company immediately
prior to such acquisition.
1.9 "Claimant" shall have the meaning set forth in Section 14.1.
2
1.10 "Code" shall mean the Internal Revenue Code of 1986, as may be amended
from time to time.
1.11 "Committee" shall mean the committee described in Article 12.
1.12 "Company" shall mean Vencor, Inc., a Delaware corporation.
1.13 "Crediting Rate" shall mean an interest rate determined and announced by
the Committee before the Plan Year for which it is to be used that is
equal to 100% of the Moody's Rate. The Moody's Rate for a Plan Year shall
be an interest rate that is published in Moody's Bond Record under the
heading of "Moody's Corporate Bond Yield Baa Average" for the month of
October which precedes the Plan Year for which the rate is to be used.
1.14 "Deferral Amount" shall mean the sum of all of a Participant's Annual
Deferral Amounts.
1.15 "Deduction Limitation" shall mean the following described limitation on
the annual benefit that may be distributed pursuant to the provisions of
this Plan. The limitation shall be applied to distributions under this
Plan as set forth in this Plan. If the Company determines in good faith
prior to a Change of Control Event that there is a reasonable likelihood
that any compensation paid to a Participant for a taxable year of the
Company would not be deductible by the Company solely by reason of the
limitation under Code Section 162(m), then to the extent deemed necessary
by the Company to ensure that the entire amount of any distribution to
the Participant pursuant to this Plan prior to the Change of Control
Event is deductible, the Company may defer all or any portion of the
distribution. Any amounts deferred pursuant to this limitation shall
continue to be credited with interest in accordance with Section 3.5
below. The amounts so deferred and interest thereon in accordance with
Section 3.5 below. The amounts so deferred and interest thereon shall be
distributed to the Participant or his or her Beneficiary (in the event of
the Participant's death) at the earliest possible date, as determined by
the Company in good faith, on which the deductibility of compensation
paid or payable to the Participant for the taxable year of the Company
during which the distribution is made will not be limited by Section
162(m), or if earlier, the effective date of a Change of Control Event.
1.16 "Disability" shall mean a period of disability during which a Participant
qualifies for benefit payments under the Participant's Employer's long-
term disability plan.
1.17 "Disability Benefit" shall mean the benefit set forth in Article 8.
3
1.18 "Election Form" shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the
Committee to make an election under the Plan.
1.19 "Employee" shall mean a person who is an employee of any Employer.
1.20 "Employer(s)" shall mean the (i) the Company, and all of the legal
entities that are part of a controlled group of affiliated service group
with Company pursuant to the provisions of Code Sections 414(b), (c), or
(m); (ii) partnerships in which the Company or a wholly-owned subsidiary
owns an interest; (iii) any entity that has entered into a contract with
the Company or a subsidiary for the receipt of management services at one
or more facilities owned by such entity if the entity has been selected
by the Committee to participate in the Plan; and (iv) any entity which
the consent of the Board becomes a sponsoring Employer hereunder.
Obligations of each Employer hereunder shall be separate except where
Vencor, Inc. has by specific action of its Board of Directors or other
written agreement executed by a duly authorized officer agreed that it
and/or its wholly-owned subsidiaries will undertake joint and several
liability.
1.21 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
1.22 "Participant" shall mean any Employee (i) who is selected to participate
in the Plan; (ii) who elects to participate in the Plan; (iii) who signs
a Plan Agreement and an Election Form; (iv) whose signed Plan Agreement
and Election Form are received by the Committee; (v) who commences
participation in the Plan; and (vi) whose Plan Agreement has not
terminated. A Participant shall also include a former Employee who has an
Account Balance hereunder. By addendum to this Plan, the Board or the
Committee may permit directors of any of the Employers to become
Participants hereunder regardless of whether they are Employees.
1.23 "Plan" shall mean the Company's Deferred Compensation Plan, which shall
be evidenced by this instrument and, with respect to each Participant, by
his or her one or more Plan Agreements, as may be amended from time to
time.
1.24 "Plan Agreement" shall mean a written agreement which is entered into by
and between the Company and a Participant. A Participant may be required
to enter into more than one Agreement depending on the entity employing
him or her any time and the manner in which the Company and another
Employer have agreed to allocate and assume responsibility for
liabilities accrued hereunder.
4
1.25 "Years of Plan Participation" shall mean the total number of full Plan
Years a Participant has been a Participant in the Plan. For purposes of a
Participant's first Plan Year of participation only, any partial Plan
Year of participation shall be treated as a full Plan Year.
1.26 "Plan Year" shall be the calendar year.
1.27 "Pre-Retirement Survivor Benefit" shall mean the benefit set forth in
Article 6.
1.28 "Retirement", "Retires" or "Retired" shall mean severance from employment
with all Employers or retirement from directorship for any reason other
than a leave of absence, death or Disability on or after the attainment
of age 65.
1.29 "Retirement Benefit" shall mean the benefit set forth in Article 5.
1.30 "Termination Benefit" shall mean the benefit set forth in Article 7.
1.31 "Termination of Employment" shall mean the ceasing of employment with all
Employers voluntarily or involuntarily, for any reason other than death.
1.32 "Trust" shall mean a grantor, or "rabbi" trust, within the meaning of
Code Section 671.
1.33 "Unforeseeable Financial Emergency" shall mean an unanticipated emergency
that is caused by an event beyond the control of the Participant that
would result in severe financial hardship to the Participant resulting
from (i) a sudden and unexpected illness or accident of the Participant
or a dependent of the Participant, (ii) a loss of the Participant's
property due to casualty, or (iii) such other extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant, all as determined in the sole discretion of
the Committee.
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
2.1 Selection by Committee. Participation in the Plan shall be limited to a
----------------------
select group of management or highly compensated Employees. From that
group, the Committee shall select, in its sole discretion, Employees to
participate in the Plan.
2.2 Enrollment Requirements. Individuals may commence participation as soon
-----------------------
as they complete, execute and return to the Committee a Plan Agreement
and Election Form, provided such documents are returned within 30 days of
5
notification of eligibility to participate. In addition, the Committee
may establish from time to time such other enrollment requirements as it
determines, in its sole discretion, are necessary.
2.3 Eligibility: Commencement of Participation. Participation in this Plan
------------------------------------------
shall commence on the first day of the month following the month in which
the Employee completes all enrollment requirements. If an Employee fails
to meet in a timely fashion all such requirements then he or she shall
not be eligible to participate in the Plan until the first day of the
Plan Year following the delivery to and receipt by the Committee of the
required documents.
ARTICLE 3
DEFERRAL COMMITMENTS/INTEREST CREDITING
3.1 Minimum and Maximum Deferral. For each Plan Year, a Participant may elect
----------------------------
to defer Base Annual Salary and Annual Bonus that would otherwise be
received during a Plan Year. The Committee may permit a separate election
to be applied to Annual Bonus. The Following minimum and maximum amounts
shall apply to the deferral election:
Minimum Amount 1%
Maximum Amount 50%
If not election is made for a particular Plan Year, the amount deferred
for each type of compensation on the most recent preceding election shall
control. All amounts deferred under this Section 3.1(a) shall at all
times be fully vested and nonforfeitable.
3.2 Company Contribution.
--------------------
(a) In order to receive Employer contributions hereunder, a Participant
must elect to make elective deferrals under the Code Section 401(k)
Plan for which he or she is eligible in an amount equal to the
lesser of (i) the amount which would result in the maximum Employer
match, or (ii) the maximum amount permitted under the
nondiscrimination rules applicable to elective deferrals. Subject to
amendment or termination of the Plan and applicable limitations
herein, as of the last day of each pay period, each Employer shall
credit to the account of each Participant in its employ as of the
last day of such pay period an amount equal to (1) 100% of the
Participant's Annual Deferral Amount for the pay period, not in
excess of the first 3% of the Participant's Base Annual Salary and
Annual Bonus received during such pay period less; (2) the maximum
Employer matching
6
contribution to which the Participant would be entitled under the
401(k) Plan for which he or she is eligible without regard to the
Participant's completed years of service.
(b) Subject to Section 3.2(c), all amounts deferred under Section 3.2(a)
shall at all times be fully vested and nonforfeitable.
(c) Notwithstanding any other provision of this Plan including Section
3.2(b), the Committee shall have the right in its sole discretion to
cause any or all of the Employer contributions credited to an
Account Balance, including earnings, to be forfeited if the
Committee at any time determines that:
(i) The Participant has divulged Employer confidential
information to the competitors of the Employer which is detrimental
to the Employer; or
(ii) The Participant has engaged in criminal conduct which
is detrimental to the Employer.
3.3 Election to Defer: Effect of Election Form. In connection with a
------------------------------------------
Participant's commencement of participation in the Plan, the Participant
shall make a deferral election by delivering to the Committee a completed
and signed Election Form, which election and form must be accepted by the
Committee for valid election to exist. For each succeeding Plan Year, a
new Election Form must be delivered to the Committee, in accordance with
its rules and procedures, before the end of the Plan Year preceding the
Plan Year for which the election is made in order to increase, decrease
or terminate a contribution election. If no Election Form is timely
delivered for a Plan Year, the prior year's deferral election shall
remain in effect.
3.4 Withholding of Deferral Amounts. For each Plan Year, the Base Annual
-------------------------------
Salary portion of the Annual Deferral Amount shall be withheld each
payroll period in accordance with the Participant's election as a
percentage of Base Annual Salary. The Annual Bonus portion of the Annual
Deferral Amount shall be withheld at the time the Annual Bonus is or
otherwise would be paid to the Participant.
3.5 Interest Crediting Prior to Distribution. Prior to any distribution of
----------------------------------------
benefits under Articles 4, 5, 6, 7 or 8, interest shall be credited and
compounded annually on a Participant's Account Balance as though the
Participant's Annual Deferral Amount and Employer contributions were made
in two installments, one-half on the first day of the year and the
balance on the last day of the year. The rate of interest for crediting
shall be the Crediting Rate.
7
3.6 Installment Distributions. In the event a benefit is paid in
-------------------------
installments under Articles 5, 6, 7, 8 or 11, installment payment
amounts shall be determined in the following manner:
(a) Interest Rate. The interest rate to be used to calculate installment
-------------
payment amounts shall be a fixed interest rate that is equal to the
Crediting Rate for the Plan Year preceding the Plan Year in which
installment payments commence.
(b) "Deemed" Installment Payments. For purposes of calculating
-----------------------------
installment payment amounts only (and notwithstanding the fact that
installment payments shall be paid monthly), installment payments
for each 3 month period, starting with the date that the
Participant became eligible to receive a benefit under this Plan
(the "Eligibility Date") and continuing thereafter for each
additional 3 month period until the Participant's Account Balance is
paid in full, shall be deemed to have been paid in one sum as of the
first day of each such 3 month period.
(c) Amortization. Based on the interest rate determined in accordance
------------
with Section 3.6(a) above and the "deemed" form of installment
payments determined in accordance with Section 3.6(b) above, the
Participant's Account Balance shall be amortized in equal quarterly
installment payments over the term of the specified payment period
(starting as of the Eligibility Date and Stated in quarters rather
than months).
(d) Monthly Payments. The quarterly installment payment determined in
----------------
Section 3.6(c) above shall be divided by 3, and the resulting number
shall be the monthly installment payment that is to be paid each
month during the specified monthly installment payment period in
accordance with the other terms and conditions of this Plan.
3.7 FICA and Other Taxes. For each Plan Year in which an Annual Deferral
--------------------
Amount is being withheld, the Participant's Employer(s) shall ratably
withhold from that portion of the Participant's Base Annual Salary that
is not being deferred, the Participant's share of FICA and other
employment taxes. If necessary, the Committee shall reduce the Annual
Deferral Amount in order to comply with this Section 3.7.
8
ARTICLE 4
UNFORESEEABLE FINANCIAL EMERGENCIES
If the Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Committee to (i) suspend any deferrals required to
be made by a Participant and/or (ii) receive a partial or full payout from the
Plan. The petition shall be accompanied by such documentation in support of the
existence of the Unforeseeable Financial Emergency as the Committee shall
require. The payout shall not exceed the lesser of the Participant's Account
Balance, calculated as if such Participant were receiving a Termination Benefit,
or the amount reasonably needed to satisfy the Unforeseeable Financial
Emergency. If, subject to the sole discretion of the Committee, the petition for
a suspension and/or payout is approved, suspension shall take effect upon the
date of approval and any payout shall be made within 90 days of the date of
approval.
ARTICLE 5
RETIREMENT BENEFIT
5.1 Retirement Benefit. Subject to the Deduction Limitation, a Participant
------------------
who Retires shall receive, as a Retirement Benefit, his or her Account
Balance.
5.2 Payment of Retirement Benefits. A participant, in connection with his or
------------------------------
her commencement of participation in the Plan, shall elect on an Election
Form to receive the Retirement Benefit in a lump sum or in equal monthly
payments (the latter determined in accordance with Section 3.6 above)
over a period 5, 10, or 15 years. The lump sum payment shall be made, or
installment payments shall commence, no later than 90 days after the date
the Participant Retires.
5.3 Death Prior to Completion of Retirement Benefits. If a Participant dies
------------------------------------------------
after Retirement but before the Retirement Benefit is paid in full, the
Participant's unpaid Retirement Benefit payments shall continue and shall
be paid to the Participant's Beneficiary over the remaining number of
months and in the same amounts as that benefit would have been paid to
the Participant had the Participant survived.
ARTICLE 6
PRE-RETIREMENT SURVIVOR BENEFIT
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction Limitation, if
-------------------------------
a Participant dies before he or she Retires, experiences a Termination
of Employment or suffers a Disability, the Participant's Beneficiary
shall receive a Pre-Retirement Survivor Benefit equal to the
Participant's Account Balance.
9
6.2 Payment of Pre-Retirement Survivor Benefits. A Participant, in connection
-------------------------------------------
with his or her commencement of participation in the Plan shall elect on
an Election Form whether the Pre-Retirement Survivor Benefit shall be
received by his or her Beneficiary in a lump sum or in equal monthly
payments (the latter determined in accordance with Section 3.6 above)
over a period of 60, 120 or 180 months. The Participant may change this
election to an allowable alternative payout period by submitting a new
Election Form to the Committee, which form must be accepted by the
Committee in its sole discretion. The Election Form most recently
accepted by the Committee prior to the Participant's death shall govern
the payout of the Participant's Pre-Retirement Survivor Benefit. Despite
the foregoing, if the Participant's Account Balance at the time of his or
her death is less than $50,000, payment of the Pre-Retirement Survivor
Benefit may be made, in the sole discretion of the Committee, in a lump
sum or in installment payments that do no exceed five years in duration.
The lump sum payment shall be made, or installment payments shall
commence, no later than 90 days after the date the Committee is provided
with proof that is satisfactory to the Committee of the Participant's
death. In no event may the Beneficiary select the manner of payment
either before or after the Participant's death.
ARTICLE 7
TERMINATION BENEFIT
7.1 Termination Benefits. Subject to the Deduction Limitation, if a
--------------------
Participant experiences a Termination of Employment prior to his or her
Retirement, death or Disability, the Participant shall receive a
Termination Benefit, which shall be equal to the Participant's vested
Account Balance, with interest credited in the manner provided in Section
3.5 above.
7.2 Payment of Termination Benefit. The Termination Benefit shall be paid
------------------------------
commencing within 90 days of the Termination of Employment as follows:
(a) A Termination Benefit of $50,000 or less shall be paid in a lump
sum.
(b) A Termination Benefit in excess of $50,000 shall be paid in 60
approximately equal monthly installments.
(c) Notwithstanding (b), the Committee in its sole discretion may
authorize a lump sum payment or installments over a period of less
than five years.
If payment is made in installments, the interest rate to be credited to
the Account Balance during the installment payout shall be the otherwise
applicable rate determined in accordance with Section 3.6.
10
ARTICLE 8
DISABILITY WAIVER AND BENEFIT
8.1 Disability Waiver.
-----------------
(a) Eligibility. By participating in the Plan, all Participants are
-----------
eligible for this waiver.
(b) Waiver of Deferral. A Participant who qualifies for Disability
------------------
payments under the Participant's Employer's long-term disability
plan shall, if the Disability originated while the Participant was
employed by an Employer, shall be excused from fulfilling that
portion of the Annual Deferral Amount commitment that would
otherwise have been withheld from a Participant's Base Annual Salary
or Annual Bonus for the Plan Year during which the Participant first
suffers a Disability. During the period of Disability, the
Participant shall not be allowed to make any additional deferral
elections.
(c) Return to Work. If a Participant returns to employment with an
--------------
Employer after a Disability ceases, the Participant may elect to
defer an Annual Deferral Amount for the Plan Year of his or her
return to employment or service and for every Plan Year thereafter
while a Participant in the Plan; provided such deferral elections
are otherwise allowed and an Election Form is delivered to and
accepted by the Committee for each such election in accordance with
Section 3.3 above.
8.2 Disability Benefit. A Participant suffering a Disability shall, for all
------------------
purposes under this Plan, continue to be considered to be employed by an
Employer and shall be eligible for the benefits provided for in Articles
4, 5, 6 or 7 in accordance with the provisions of those Articles.
Notwithstanding the above, the Committee shall have the right, in its
sole and absolute discretion and for purposes of this Plan only, to treat
------------------------------
the Participant as terminated at any time after such Participant is
determined to be permanently disabled under the Participant Employer's
long-term disability plan.
ARTICLE 9
BENEFICIARY DESIGNATION
9.1 Beneficiary. Each Participant shall have the right, at any time, to
-----------
designate his or her Beneficiary(ies) (both primary as well as
contingent) to receive any benefits payable under the Plan to a
beneficiary upon the death of a Participant. The Beneficiary designated
under this Plan may be the same as or different from the
11
Beneficiary designation under any other plan of an Employer in which the
Participant participates.
9.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
------------------------------------------------
designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or its
designated agent. A Participant shall have the right to change a
Beneficiary by completing, signing, and otherwise complying with the
terms of the Beneficiary Designation Form and the Committee's rules and
procedures, as in effect from time to time. If the Participant names
someone other than his or her spouse as a Beneficiary, a spousal consent,
in the form designated by the Committee, must be signed by that
Participant's spouse and returned to the Committee. Upon the acceptance
by the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be cancelled. The Committee shall be
entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.
9.3 Receipt by Committee. Not designation or change in designation of a
--------------------
Beneficiary shall be effective until received by the Committee or its
designated agent. The Committee may reject a designation in its
discretion for any reason.
9.4 No Beneficiary Designation. If a Participant fails to designate a
--------------------------
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant's benefits, then the
Participant's designated Beneficiary shall be deemed to be his or her
surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be
payable to the executor or personal representative of the Participant's
estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
-----------------------
Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the
Participant's Employer to withhold such payments until this matter is
resolved to the Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the Plan to a
------------------------
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to
the Participant, and that Participant's Plan Agreement shall terminate
upon such full payment of benefits.
12
ARTICLE 10
LEAVE OF ABSENCE
10.1 Paid Leave of Absence. If a Participant is authorized by the
---------------------
Participant's Employer for any reason to take a paid leave of absence
from the employment of the Employer, the Participant shall continue to be
considered employed by the Employer and the Annual Deferral Amount shall
continue to be withheld during such paid leave of absence in accordance
with Article 3. Notwithstanding the foregoing, a Participant who incurs
undue hardship as a result of continued deferrals may petition the
Committee for a suspension of deferrals during the paid leave of absence,
which suspension may be granted by the Committee in its sole discretion.
10.2 Unpaid Leave of Absence. If a Participant is authorized by the
-----------------------
Participant's Employer for any reason to take an unpaid leave of absence
from the employment of the Employer, the Participant shall continue to be
considered employed by the Employer and the Participant shall be excused
from making deferrals until the earlier of the date the leave of absence
expires or the Participant returns to a paid employment status. Upon such
expiration or return, deferrals shall resume for the remaining portion of
the Plan Year in which the expiration or return occurs, based on the
deferral election, if any, made for that Plan Year. If no election was
made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
TERMINATION, AMENDMENT OR MODIFICATION
11.1 Termination. Any Employer reserves the right to terminate the Plan at any
-----------
time with respect to its participating Employees by the action of its
board of directors. Upon the termination of the Plan, all Plan Agreements
of a Participant shall terminate and his or her Account Balance,
determined as if he or she had experienced a Termination of Employment on
the date of Plan termination or, if Plan termination occurs after the
date upon which the Participant was eligible to Retire, the Participant
had Retired on the date of Plan termination, shall be paid to the
Participant in the discretion of the Employer (a) in a lump sum, or (b)
in monthly installments up to 15 years. The Employer shall have the right
in its sole discretion to accelerate installment payments at any time and
pay the Participant's remaining Account Balance in one lump sum amount.
Except as provided above, the termination of the Plan shall not adversely
affect any Participant or Beneficiary who has become entitled to the
payment of any benefits under the Plan as of the date of termination.
13
11.2 Termination on Change of Control Event. Upon the occurrence of a Change
--------------------------------------
of Control Event, the Plan shall immediately terminate and the Account
Balance of each Participant shall be paid to the Participant in a lump
sum as soon as administratively possible.
11.3 Amendment. Any Employer may, at any time, amend or modify the Plan in
---------
whole or in part with respect to that Employer by the action of its board
of directors; provided, however, that no amendment or modification shall
be effective to decrease or restrict the value of a Participant's Account
Balance in existence at the time the amendment or modification is made,
calculated as if the Participant had experienced a Termination of
Employment as of the effective date of the amendment or modification; or,
if the amendment or modification occurs after the date upon which the
Participant was eligible to Retire, the Participant had Retired as of the
effective date of the amendment or modification. The amendment or
modification of the Plan shall not affect any Participant or Beneficiary
who has become entitled to the payment of benefits under the Plan as of
the date of the amendment or modification; provided, however, that the
Employer shall have the right to accelerate installment payments by
paying Participant's remaining Account Balance in one lump sum amount.
11.4 Effect of Payment. The full payment of the applicable benefit under
-----------------
Articles 5, 6, or 7 of the Plan shall completely discharge all
obligations to a Participant and his or her designated Beneficiaries
under this Plan and the Participant's Plan Agreement shall terminate.
ARTICLE 12
ADMINISTRATION
12.1 Committee Duties. This Plan shall be administered by the Executive
----------------
Compensation Committee of the Board. An Employee who is a member of the
Committee may be a Participant under this Plan. The Committee shall have
the authority in its sole and unfettered discretion to (i) make, amend,
interpret, and enforce all appropriate rules and regulations for the
administration of this Plan; and (ii) decide or resolve any and all
questions including claims for benefits and interpretations of this Plan,
as may arise in connection with the Plan. Notwithstanding the foregoing,
the Committee may in its discretion delegate to the Retirement Committee
of Vencor, Inc. as defined in the Vencor, Inc. Retirement Savings Plan
any or all of its responsibilities hereunder, in which event the actions
of such Retirement Committee shall have the same force and effect as if
taken by the Committee.
14
12.2 Agents. In the administration of this Plan, the Committee may, from time
------
to time, employ agents and delegate to them such administrative duties as
it sees fit (including acting through a duly appointed representative)
and may from time to time consult with counsel who may be counsel to any
Employer.
12.3 Binding Effect of Decisions. The decision or action of the Committee with
---------------------------
respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
12.4 Indemnity of Committee. All Employers shall indemnify and hold harmless
----------------------
the members of the Committee, and in the event of delegation or
responsibility to the Retirement Committee of Vencor, Inc., the members
of that Committee, against any and all claims, losses, damages, expenses
or liabilities arising from any action or failure to act with respect to
this Plan, except in the case of willful misconduct by the Committee or
any of its members.
12.5 Employer Information. To enable the Committee to perform its functions,
--------------------
each Employer shall supply full and timely information to the Committee
on all matters relating to the compensation of its Participants, the date
and circumstances of the Retirement, Disability, death or Termination of
Employment of its Participants, and such other pertinent information as
the Committee may reasonably require.
ARTICLE 13
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and Participant's Beneficiary
under the Plan are in addition to any other benefits available to such
Participant under any other plan or program for employees of the Participant's
Employer. The Plan shall supplement and shall not supersede, modify or amend any
other such plan or program except as may otherwise be expressly provided.
ARTICLE 14
CLAIMS PROCEDURES
14.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
---------------------
Participant (such Participant or Beneficiary being referred to below as a
"Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. The claim must state
15
with particularity the determination desired by the Claimant. All other
claims must be made within 180 days of the date on which the event that
caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.
14.2 Notification of Decision. The Committee shall consider a Claimant's
------------------------
claim within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or in
part, to the Claimant's requested determination, and such notice
must set forth in a manner calculated to be understood by the
Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 Review of a Denied Claim. Within 60 days after receiving a notice from
------------------------
the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file with
the Committee a written request for a review of the denial of the claim.
Thereafter, but not later than 30 days after the review procedure began,
the Claimant (or the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion,
may grant.
16
14.4 Decision on Review. The Committee shall render its decision on review
------------------
promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based; and
(c) such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing provisions of
------------
this Article 14 is a mandatory prerequisite to a Claimant's right to
commence any legal action with respect to any claim for benefits under
this Plan.
ARTICLE 15
TRUST
15.1 Establishment of the Trust. The Company may establish a Trust and in
--------------------------
that event the Employers shall transfer over to the Trust such assets as
the Employers determine, in their sole discretion, are necessary to
assist in providing funds to meet the Employers' liabilities created
hereunder.
15.2 Interrelationship of the Plan and the Trust. If the Company establishes
-------------------------------------------
a Trust, the provisions of the Plan and the Plan Agreement shall govern
the rights of a Participant to receive distributions pursuant to the
Plan. The provisions of the Trust shall govern the rights of the
Employers, Participants and the creditors of the Employers to the assets
transferred to the Trust. Each Employer shall at all times remain liable
to carry out its obligations under the Plan. Each Employer's obligations
under the Plan may be satisfied with Trust assets distributed pursuant to
the terms of the Trust, and any such distribution shall reduce the
Employer's obligations under this Agreement.
ARTICLE 16
MISCELLANEOUS
16.1 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
--------------------------
successors and assigns shall have no legal or equitable rights, interests
or claims in any property or assets of any Employer. Any and all of
Employers' assets shall
17
be, and remain, the general, unpledged unrestricted assets of the
Employers. An Employer's obligation under the Plan shall be merely that
of an unfunded and unsecured promise to pay money in the future and a
Participant shall have only an unsecured contractual right to the
amounts, if any, payable hereunder, against the Company or a particular
Employer, as reflected in the Participant's one or more Plan Agreements.
16.2 Employer's Liability. An Employer's liability for the payment of
--------------------
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer shall
have no obligation to a Participant under the Plan except as expressly
provided in the Plan and his or her Plan Agreement.
16.3 Nonassignability. Neither a Participant nor any other person shall have
----------------
any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt, the amounts, if any, payable hereunder, or any
part thereof, which are, and all rights to which are expressly declared
to be, unassignable and non-transferable, except that the foregoing shall
not apply to any family support obligations set forth in a court order.
No part of the amounts payable shall, prior to actual payment, be subject
to seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
16.4 Not a Contract of Employment. The terms and conditions of this Plan
----------------------------
shall not be deemed to constitute a contract of employment between any
Employer and the Participant. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be terminated at any
time for any reason, with or without cause, unless expressly provided in
a written employment agreement. Nothing in this Plan shall be deemed to
give a Participant the right to be retained in the service of any
Employer, either as an Employer or a Director, or to interfere with the
right of any Employer to discipline or discharge the Participant at any
time.
16.5 Furnishing Information. A Participant or his or her Beneficiary will
----------------------
cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be
requested in order to facilitate the administration of the Plan and the
payments of benefits hereunder, including but not limited to taking such
physical examinations as the Committee may deem necessary.
18
16.6 Terms. Whenever any words are used herein in the masculine, they shall
-----
be construed as though they were also in the feminine in all cases where
they would so apply; and whenever any words are used herein in the
singular or in the plural, they shall be construed as though they were
used in the plural or the singular, as the case may be, in all cases
where they would so apply.
16.7 Captions. The captions of the articles, sections and paragraphs of this
--------
Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
16.8 Governing Law. Subject to ERISA, the provisions of this Plan shall be
-------------
construed and interpreted according to the laws of the State of Kentucky
without regard to its conflicts of laws principles.
16.9 Notice. Any notice or filing required or permitted to be given to the
------
Committee under this Plan shall be sufficient if in writing and hand-
delivered, or sent by registered or certified mail, to the address below:
General Counsel
Vencor, Inc.
3300 Providian Center
400 West Market Street
Louisville, KY 40202
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Participant.
16.10 Successors. The provisions of this Plan shall bind and inure to the
----------
benefit of the Participant's Employer and its successors and assigns and
the Participant and the Participant's designated Beneficiaries.
16.11 Spouse's Interest. The interest in the benefits hereunder of a spouse of
-----------------
a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in
any manner, including but not limited to such spouse's will, nor shall
such interest pass under the laws of intestate succession.
19
16.12 Incompetent. If the Committee determines in its discretion that a
-----------
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person's property, the Committee may direct payment of such benefit to
the guardian, legal representative or person having the care and custody
of such minor, incompetent or incapable person. The Committee may require
proof of minority, incompetency, incapacity or guardianship, as it may
deem appropriate prior to distribution of the benefit. Any payment of a
benefit shall be a payment for the account of the Participant and the
Participant's Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Plan for such payment amount.
16.13 Court Order. The Committee is authorized to make any payments directed
-----------
by court order in any action in which the Plan or the Committee has been
named as a party.
16.14 Distribution in the Event of Taxation.
-------------------------------------
(a) General. If, for any reason, all or any portion of a Participant's
-------
benefit under this Plan becomes taxable to the Participant prior to
receipt, a Participant may petition the Committee for a distribution
of that portion of his or her benefit that has become taxable. Upon
the grant of such a petition, which grant shall not be unreasonably
withheld, a Participant's Employer shall distribute to the
Participant immediately available funds in an amount equal to the
taxable portion of his or her benefit (which amount shall not exceed
a Participant's unpaid vested Account Balance under the Plan). If
the petition is granted, the tax liability distribution shall be
made within 90 days of the date when the Participant's petition is
granted. Such a distribution shall affect and reduce the benefits to
be paid under this Plan.
(b) Trust. If the Company establishes a Trust, the Trust terminates,
-----
and benefits are distributed from the Trust to a Participant, the
Participant's benefits under this Plan shall be reduced to the
extent of such distributions.
16.15 Legal Fees to Enforce Rights After a Change of Control Event. The
------------------------------------------------------------
Company is aware that upon the occurrence of a Change of Control Event,
the Board (which might then be composed of new members) or a shareholder
of the Company, or of any successor corporation might then cause or
attempt to cause the Company or such successor to refuse to comply with
its obligations under the Plan and might cause or attempt to cause the
Company to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated. Accordingly,
if,
20
following a Change of Control Event, it should appear to any Participant
that the Company or the Trustee has failed to comply with any of its
obligations under the Plan or any agreement thereunder or, if the Company
or any other person takes any action to declare the Plan void or
unenforceable or institutes any litigation or other legal action designed
to deny, diminish or to recover from any Participant the benefits
intended to be provided, then the Participant may retain counsel to
represent such Participant in connection with the initiation or defense
of any litigation, whether by or against the Company or any director,
officer, shareholder or other person affiliated with the Company or any
successor thereto in any jurisdiction. Company shall then indemnify
Participant for the cost of such litigation and reasonable attorney's
fees if the Participant prevails in such litigation.
16.16 Taxes and Withholding. The Participant's Employer(s) or the trustee of
---------------------
the Trust if the Company establishes a Trust, may withhold from any
distribution under this Plan any and all employment and income taxes that
are required to be withheld under applicable law.
16.17 Severability. If and to the extent any provision hereof is held to be
------------
void or unenforceable, the Plan shall remain in full-force and effect
with such provision severed as though such provision had not been
included in the original Plan.
IN WITNESS WHEREOF, the Company has executed this plan document as of
November 29, 1995.
VENCOR, INC., a Delaware corporation
By:____________________________________
Title:_________________________________
21