Exhibit 10.2

AMENDED AND RESTATED

KINDRED HEALTHCARE, INC. LONG-TERM INCENTIVE PLAN

 

1. Purpose of the Plan

The purpose of the Kindred Healthcare, Inc. 2000 Long-Term Incentive Plan, dated
effective as of January 1, 2009 (the “Plan”), is to promote the success of the
Company and the interests of its shareholders by attracting, motivating,
retaining and rewarding key employees of the Company for assisting the Company
and its Affiliates to emerge from bankruptcy and to provide Participants with
incentives to contribute toward the improvement and growth of the Company.

 

2. Definitions

As used in this Plan, the following capitalized terms shall have the following
meanings:

(a) “Affiliate” shall mean any of Kindred Healthcare, Inc.’s direct or indirect
subsidiaries within the meaning of Section 424 of the Code.

(b) “Award” shall mean a cash bonus payable pursuant to the terms and conditions
of this Plan.

(c) “Award Percentage” shall mean, with respect to each Performance Period, a
percentage corresponding to the achievement of the Performance Targets for such
Performance Period. The Award Percentage shall represent the portion of the
Maximum Award that each Participant is entitled to receive with respect to each
Performance Period.

(d) “Base Salary” shall mean, with respect to each Participant, such
Participant’s annual base compensation, exclusive of any bonuses (whether under
this Plan or otherwise), stock option benefits, or other compensatory or fringe
benefits.

(e) “Beneficiary” shall mean the Participant’s estate.

(f) “Board” shall mean the Board of Directors of Kindred Healthcare, Inc.

(g) “Cause”, when used in connection with the termination of a Participant’s
employment with the Company, shall mean (i) dishonesty; (ii) deliberate and
continual refusal to perform employment duties on substantially a full-time
basis; (iii) failure to act in accordance with any specific lawful instructions
given to the Participant in connection with the performance of his duties for
the Company or any of its subsidiaries or affiliates, unless the Participant has
an existing permanent Disability; (iv) deliberate misconduct that is reasonably
likely to be materially damaging to the Company without a reasonable good faith
belief by the Participant that such conduct was in the best interests of the
Company; or (v) conviction of or plea of nolo contendere to a crime involving
moral turpitude.

 

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(h) “Change of Control” shall mean any one of the following events:

(i) any Person (as this term is used in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act, but excluding any person described in and satisfying the
conditions of Rule 13d-1)b)(i) thereunder) (an “Acquiring Person”) becomes the
“beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act (a “Beneficial Owner”), directly or indirectly, of securities of
Kindred Healthcare, Inc. representing 50% or more of the combined voting power
of Kindred Healthcare, Inc.’s then outstanding securities, other than beneficial
ownership by a Participant, the Company, any employee benefit plan of the
Company or any Person organized, appointed or established pursuant to the terms
of any such benefit plan;

(ii) Kindred Healthcare, Inc.’s stockholders approve an agreement to merge or
consolidate Kindred Healthcare, Inc. with another corporation, or an agreement
providing for the sale of substantially all of the assets of Kindred Healthcare,
Inc. to one or more Persons, in any case other than with or to an entity 50% or
more of which is controlled by, or is under common control with, Kindred
Healthcare, Inc.;

(iii) during any two-year period, commencing after the Effective Date,
individuals who at the date on which the period commences constitute a majority
of the Board of Directors (the “Incumbent Directors”) cease to constitute a
majority thereof for any reason; provided, however, that a director who was not
an Incumbent Director shall be deemed to be an Incumbent Director if such
director was elected by, or on the recommendation of, at least two-thirds of the
Incumbent Directors (either actually or by prior operation of this provision),
other than any director who is so approved in connection with any actual or
threatened contest for election to positions on the Board of Directors; or

(iv) the Company is merged, combined, consolidated, recapitalized or otherwise
organized with one or more other entities that are not Affiliates, as a result
of which less than 50% of the outstanding voting securities of the surviving or
resulting entity immediately after the reorganization are, or will be, owned,
directly or indirectly, by shareholders of the Company, determined on the basis
of record ownership as of the date of determination of holders entitled to vote
on the transaction (or in the absence of a vote, the day immediately prior to
the event).

(i) “Code” shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.

(j) “Committee” shall mean the Compensation Committee of the Board or such other
committee as the Board may designate from time to time.

(k) “Common Stock” shall mean the common stock of Kindred Healthcare, Inc., par
value $ 0.25 per share.

(l) “Company” shall mean Kindred Healthcare, Inc. and its Affiliates.

(m) “Disability” shall mean (i) a Participant’s inability to engage in any
substantial gainful activity or (ii) a Participant’s receiving income
replacement benefits for a

 

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period of not less than three months under an accident and health plan of the
Company, in each case by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than twelve months, in each case as
evidenced by documentation submitted pursuant to the Company’s long-term
disability plan or documentation from the Social Security Administration.

(n) “Effective Date” shall mean the date on which the Company’s bankruptcy plan
is confirmed by the United States Bankruptcy Court for the District of Columbia.

(o) “Maximum Award” shall mean the highest amount that may be awarded to
Participants in certain positions or employment levels of the Company, expressed
as percentages of such Participants’ Base Salary, as follows:

 

Position/Level:

   Percentage of Base Salary:  

Chief Executive Officer

   100 %

Members of Executive Committee

   90 %

Senior Vice Presidents

   60 %

Vice Presidents

   40 %

Senior Corporate Managers

   25 %

Other Key Employees

   15 %

(p) “Participant” shall mean an officer or key employee of the Company who is in
a position to contribute materially to the success of the Company, as selected
for participation in the Plan by the Committee in its sole discretion.

(q) “Performance Period” shall mean any period of one or more years during which
the Company’s performance against the Performance Targets is measured for the
purpose of determining whether and at what level Awards under this Plan shall be
granted.

(r) “Performance Targets” shall mean the performance targets for the Company
that the Committee shall establish in its discretion for each Performance Period
to be used in determining Participants’ Awards.

(s) “Person” shall mean an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.

(t) “Plan” shall mean this Kindred Healthcare, Inc. 2000 Long-Term Cash
Incentive Compensation Plan.

(u) “Qualified Change of Control” shall mean a Change of Control that qualifies
as either a change in the (i) ownership of the Company, (ii) effective control
of the Company, or (iii) ownership of a substantial portion of the assets of the
Company, under Section 409A of the Code.

(v) “Retirement” shall mean the termination of the employment of a Participant
on or after the Participant’s attainment of fifty-five (55) years of age.

 

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3. Administration

This Plan shall be administered by the Committee. The Committee shall have full
authority to interpret and construe any provision of the Plan, to adopt such
rules and regulations and make any decisions necessary for the administration of
the Plan, and to determine the eligibility of Participants under the Plan.
Determinations of the Committee shall be conclusively binding and final upon all
parties. The Committee shall not be liable to any Participant or other person
for any action, omission or determination relating to the Plan.

 

4. Eligibility

The Committee may, in its sole discretion, select to participate in the Plan
those officers and other key employees of the Company who are in a position to
contribute materially to the success of the Company.

 

5. Determination of Awards

The Award payable to each Participant for each Performance Period shall be
determined as follows:

(a) Not later than ninety (90) days after the commencement of each Performance
Period, the Committee shall identify (i) the Participants in the Plan for such
Performance Period, (ii) the Maximum Award for each such Participant (based on
positions or employment levels in the Company) as provided in Section 2(o)
hereof, and (iii) the Award Percentages applicable to the Performance Targets
established for such Performance Period.

(b) Not later than ninety (90) days after the commencement of each Performance
Period, the Committee shall establish Performance Targets for such Performance
Period.

(c) As soon as practicable, but not later than ninety (90) days, following the
end of each Performance Period, the Committee shall (i) determine the level at
which the Performance Targets for such Performance Period were reached, if at
all and (ii) calculate the amount of the Award payable to each Participant with
respect to such Performance Period, which shall be the product of (A) the
Participant’s Maximum Award for such Performance Period, (B) the Award
Percentage for such Performance Period, and (C) such Participant’s Base Salary
in effect on the last day of the applicable Performance Period, but which shall
not exceed $1.5 million per year in such Performance Period.

 

6. Payment of Awards

Except as otherwise provided herein, the Award, as calculated pursuant to
Section 5(c) hereof, shall be payable to each Participant with respect to any
Performance Period, in a lump sum in cash as follows: one-third ( 1/3) shall be
payable in the calendar year in which each of the first, second and third
anniversaries of the termination of the applicable Performance Period occurs.

 

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7. Effect of Termination of Employment

(a) In the event of the termination of the employment of a Participant by the
Company for Cause or by the Participant for any reason prior to the payment to
him of any portion of the Award related to any Performance Period, the
Participant shall not be entitled to such unpaid portion.

(b) In the event of the termination of the employment of a Participant as a
result of the Participant’s Retirement, or by the Company other than for Cause,
during a Performance Period, the Participant shall be eligible to receive a
prorated Award for such Performance Period based on the number of full months
elapsed in such Performance Period before the date of such termination of
employment. Such prorated Award shall be calculated based on actual achievement
of performance results in accordance with Section 5 hereof and paid following
the end of such Performance Period at the time and in the manner specified in
Section 6 hereof; provided, however, that such Awards which total $5,000 or less
shall be paid in full to the Participant in a lump sum in cash as soon as
reasonably practicable following the applicable Performance Period but no later
than the date that is two and one-half months following the end of the
applicable Performance Period. In addition, in the event of the termination of
the employment of a Participant as a result of the Participant’s Retirement, or
by the Company other than for Cause, following the termination of a Performance
Period and prior to the payment to the Participant of any portion of the Award
with respect to such Performance Period, such unpaid portion shall continue to
be paid at the time and in the manner specified in Section 6 hereof.

(c) In the event of a Participant’s death or Disability during a Performance
Period, the Participant (or in the event of his death, his Beneficiary) shall be
entitled to receive a prorated Award for such Performance Period equal to the
Award that would be payable to him if the Award Percentage would have been fifty
percent (50%) based on the number of days elapsed in such Performance Period
before the date of the Participant’s death or Disability. Such Award shall be
paid as soon as administratively feasible (but in no event later than thirty
(30) days) after the date of the Participant’s death or Disability, in a lump
sum in cash. In addition, in the event of a Participant’s death or Disability
following the termination of a Performance Period and prior to the payment to
the Participant of any portion of the Award with respect to such Performance
Period, such unpaid portion shall be paid as soon as administratively feasible
(but in no event later than thirty (30) days) after the date of the
Participant’s death or Disability, in a lump sum in cash. In the event of
Participant’s death, the Company will pay all unpaid awards in accordance with
this Agreement and applicable state and federal laws and regulations.

(d) The provisions of this Section 7 shall be subject to the terms of any
separate written employment or similar agreement between the Company and a
Participant in effect at the time of his termination of employment.

(e) Notwithstanding anything herein to the contrary, if at the time of the
Participant’s separation from service the Participant is a “specified employee”
as defined in Section 409A of the Code and the deferral of the payment of any
Award payable pursuant to this Section 7 is necessary in order to prevent any
accelerated or additional tax under Section 409A of the Code, then the payment
to which the Participant would otherwise be entitled during the first six months
following his separation from service shall be deferred and accumulated (without

 

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any reduction in such payment ultimately paid to the Participant) for a period
of six months from the date of separation from service and paid in a lump sum on
the first day of the seventh month following such separation from service (or,
if earlier, the date of the Participant’s death), together with simple interest
during such period at a rate computed by adding 2.00% to the Prime Rate as
published in the Money Rates section of the Wall Street Journal, or other
equivalent publication if the Wall Street Journal no longer publishes such
information, on the first publication date of the Wall Street Journal or
equivalent publication after the date of the Participant’s separation from
service (provided that if more than one such Prime Rate is published on any
given day, the highest of such published rates shall be used).

 

8. Certain Adjustments

(a) In the event of the merger or consolidation of the Company, or the
acquisition or disposition by the Company of any substantial business unit, or
the occurrence of any other transaction or event, which could reasonably be
expected to have a substantial impact on the Performance Targets, the Committee
will review, in good faith, the effect of such occurrence on the operation of
this Plan and will adjust the Performance Targets and Award Percentages for such
Performance Period as the Committee, in its absolute discretion, exercised in
good faith, determines to be appropriate in light of the circumstances. The
Committee shall consult with management of the Company concerning the magnitude
of any such adjustment prior to coming to a final decision with respect thereto.

(b) The Chief Executive Officer of the Company (the “Chief Executive Officer”)
may, in his sole discretion, designate an individual who commences employment
with the Company following the beginning of a Performance Period as a
Participant for such Performance Period, in which case the Chief Executive
Officer shall simultaneously determine the Maximum Award for such Participant
for such Performance Period in accordance with Section 2(o), and the Chief
Executive Officer may specify that the Award otherwise payable to such
Participant for such Performance Period shall be prorated to reflect the
Participant’s performance of services for less than the entire Performance
Period. In the event that a Participant is a promoted or demoted during a
Performance Period, the Committee may, in its absolute discretion, adjust the
Maximum Award for such Participant for such Performance Period to reflect such
change.

 

9. Change of Control

(a) No later than fifteen (15) days after a Qualified Change of Control, the
Company shall pay, in a lump sum in cash, to each Participant an amount equal to
the sum of (i) the unpaid portion of any Award relating to a Performance Period
that ends prior to the occurrence of such Qualified Change of Control and
(ii) the amount of the Maximum Award for such Participant for the Performance
Period during which such Qualified Change of Control occurs (determined, for
purposes of clarity, without proration and as if the highest applicable
Performance Target had been reached).

(b) Notwithstanding anything in Section 7 to the contrary, in the event of a
Change of Control that does not constitute a Qualified Change of Control, each
Participant shall be entitled to the payment of any Award outstanding as of the
date of such Change of Control in accordance with the terms and conditions of
Section 5 and Section 6 hereof.

 

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10. Amendment, Modification and Termination

The Company reserves the right to amend, modify or terminate the Plan at any
time; provided that no such amendment, modification or termination shall affect
the determination or payment of Awards for any Performance Period that commences
prior to such amendment, modification or termination, except that the Committee
may at any time determine to accelerate the payment of Awards provided such
acceleration is permissible under, and complies with, Section 409A of the Code.

 

11. Miscellaneous

(a) Awards shall not be assigned, transferred, pledged or encumbered, and any
purported assignment, transfer, pledge or encumbrance shall be null and void.

(b) This Plan and all rights under the Plan shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware without regard
to the provisions governing conflict of laws.

(c) All payments required to be paid hereunder shall be subject to any required
governmental withholdings or deductions as determined by the Company.

(d) Nothing contained in the Plan shall confer upon any Participant any right
with respect to the continuation of such Participant’s employment by the Company
or prohibit the Company at any time from terminating such employment or
increasing or decreasing the base salary or other compensation of any
Participant.

(e) This Plan shall be unfunded. Awards shall be paid from the general assets of
the Company and Participants in this Plan shall be general unsecured creditors
of the Company. No Participant shall have any right, title, claim or interest in
or with respect to any specific assets of the Company in connection with his
participation in this Plan.

(f) In addition to the remedies of the Company elsewhere provided for herein, if
a Participant is terminated for Cause, the Committee may cancel and cause the
Participant to forfeit any Award to which such Participant would have otherwise
been entitled, in whole or in part.

(g) Headings and captions are given to the sections of this Plan solely as a
convenience to facilitate reference, and shall not be deemed in any way material
or relevant to the construction or interpretation of this Plan or any provision
thereof. All references herein to the masculine gender shall include the
feminine.

(h) The Company intends that the Plan and each Award granted hereunder shall, to
the extent applicable, comply with Section 409A of the Code and any regulations
promulgated thereunder and that the Plan shall be interpreted, operated and
administered accordingly. In the event any of the compensation or benefits
provided to a Participant pursuant

 

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to this Plan would result in a violation of Section 409A of the Code (including
any regulations promulgated thereunder), the Company will use its reasonable
efforts to amend the Plan in the least restrictive manner necessary in order,
where applicable (i) to ensure that such compensation is not considered
“nonqualified deferred compensation” for purposes of Section 409A of the Code,
or (ii) to comply with the provisions of Section 409A, in each case, where
possible, without any diminution in the value of the compensation or benefits to
be paid or provided to the Participant pursuant to this Agreement; provided,
that nothing in herein shall require the Company to provide any gross-up or
other tax reimbursement to the Participant in connection with any violation of
Section 409A or otherwise.

 

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