EXHIBIT 10.2

 

AMENDMENT NO. 2

TO THE

KINDRED & AFFILIATES 401(k) PLAN

 

This is Amendment No. 2 to the Kindred & Affiliates 401(k) Plan (the “Plan”) as
last amended and restated as of January 1, 2003, which amendment shall be
effective for distributions made to Participants after March 28, 2005.

 

RECITAL

 

Kindred Healthcare, Inc. (the “Company”) maintains the Plan and has reserved the
right in Section 9.1 of the Plan to amend the Plan from time to time in its
discretion, including an amendment adopted by the Retirement Committee to modify
Plan provisions as required by law. This Amendment No. 2 shall supersede the
provisions of the Plan to the extent those provisions are inconsistent with the
provisions of this amendment.

 

AMENDMENTS

 

1. Section 3.5(e) of the Plan is hereby deleted, and that Section reserved.

 

2. Sections 5.6(a) and (b) of the Plan are hereby amended so that as amended
they shall read in their entirety as follows:

 

  (a) Any benefits payable under this Article shall be paid as soon as
reasonably possible following the actual date of severance, at the value
determined as of the Valuation Date coincident with or immediately preceding
receipt of properly completed distribution forms from the Participant, subject
to the Participant’s consent. The Committee may not require a distribution
without the consent of the Participant prior to his reaching his Required
Beginning Date (i) unless the vested value of the Individual Account (including
any Rollover Account) is $1,000 or less, or (ii) unless the Participant has
attained the Plan’s Normal Retirement Age and the vested Individual Account
(without regard to any balance in Rollover Account) is valued at $5,000 or less,
or (iii) if the Participant is deceased, the Committee may not require a
distribution without the consent of the spouse if the spouse is living and if
the spouse is the Participant’s Beneficiary unless the vested value of the
Individual Account (without regard to any balance in the Rollover Account) is
$5,000 or less. If the vested value of the Participant’s Individual Account is
below the limit set forth above, the benefits payable will be paid as soon as
reasonably possible following the actual date of severance notwithstanding lack
of consent.

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  (b) Except for a Participant who has an Individual Account to which Section
5.6(d) applies (Required Beginning Date), Section 5.6(a) applies (with respect
to Individual Accounts with a vested value of $1,000 [or, in some cases, $5,000]
or less, for which no consent is required), or Sections 5.6(g) and 5.7(c)
applies (death benefit distribution requirements), a Participant may defer
distribution to a subsequent date. When the Participant consents to a
distribution as provided above, such distribution shall be made based on the
value of the Individual Account as of the date the check for the distribution is
prepared and shall be delivered as soon as reasonably practical after notice to
the Committee of the election to receive a distribution.

 

3. Sections 5.6(g) of the Plan is hereby amended so that as amended it shall
read in its entirety as follows:

 

  (g) If the Participant dies before distribution occurs, (i) the Participant’s
entire interest will be distributed in a single sum at the Beneficiary’s(ies’)
election no later than December 31st of the fifth calendar year following the
calendar year of the Participant’s death, or (ii) at the Beneficiary’s election,
and if the account (without regard to any balance in the Rollover Account) is
valued at more than $5,000, the Participant’s Account may be paid in
installments over a period not longer than the life expectancy of the
Beneficiary(ies) if the payments begin no later than the December 31 of the
calendar year following the year of death. If the designated Beneficiary is the
Participant’s surviving spouse, the distribution must be made in a single sum no
later than December 31st of the calendar year in which the Participant would
have attained age 70½. If a Participant dies after distribution commences but
before the entire vested account is paid, it shall continue to be paid at the
time and manner elected by the Participant but to the Beneficiary instead.

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4. Sections 5.7(c) of the Plan is hereby amended so that as amended it shall
read in its entirety as follows:

 

  (c) A non-spouse Beneficiary of an Account (without regard to any balance in
the Rollover Account) valued at more than $5,000 who qualifies as a “designated
Beneficiary” in accordance with the regulations under Code Section 401(a)(9) and
who, on or before the December 31 of the calendar year following the calendar
year of the Participant’s death, may elect to be paid in monthly, quarterly or
annual installments over a fixed period of time, not exceeding the life
expectancy of the Beneficiary as provided in Code Section 401(a)(9) and the
applicable Treasury Regulations. The election shall be on a form prescribed by
the Committee. The minimum distribution for a calendar year equals the deceased
Participant’s Account as of the latest Valuation Date preceding the beginning of
the calendar year divided by the Beneficiary’s life expectancy. In computing a
minimum distribution, the Committee shall use the unisex life expectancy
multiples under Treasury Regulation Section 1.72-9. The minimum distribution for
each distribution calendar year is due by December 31 of that year. Any
installment benefit to be paid under this Plan shall be paid by the purchase and
distribution of a single premium, nontransferable fixed or variable annuity
contract issued by an insurance company which provides for payment in accordance
with this Section. Any difference between the premium and the amount of the
Participant’s Account shall be paid to the Beneficiary in one lump sum payment
not later than the time when the annuity contract is delivered. If the
Beneficiary receives distribution in the form of a nontransferable annuity
contract, the distribution satisfies this Section if the contract complies with
the requirements of Code Section 401(a)(9) and the applicable Treasury
Regulations.

 

5. Sections 10.5(b) of the Plan is hereby amended so that as amended it shall
read in its entirety as follows:

 

  (b)

This Plan specifically permits a distribution to an alternate payee under a
qualified domestic relations order at any time, irrespective of whether the
Participant has attained his earliest retirement age (as defined under Code
Section 414(p)) under the Plan. A distribution to an alternate payee prior to
the Participant’s attainment of earliest retirement age is available only if:
(a) the order specifies distribution at that time or permits an agreement
between the Plan and

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the alternate payee to authorize an earlier distribution; and (b) if the present
value of the alternate payee’s benefits under the Plan exceeds $5,000 (without
regard to any balance in Rollover Account attributable thereto), and the order
requires, the alternate payee consents to any distribution occurring prior to
the Participant’s attainment of earliest retirement age. Nothing in this Section
10.5 gives a Participant a right to receive distribution at a time otherwise not
permitted under the Plan nor does it permit the alternate payee to receive a
form of payment not permitted under the Plan.

 

IN WITNESS WHEREOF, the Employer has caused this Amendment No. 2 to be executed
this 8th day of March, 2005.

 

KINDRED HEALTHCARE, INC.

By:

 

/s/ Richard E. Chapman

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Title:

 

Executive Vice President, Chief

   

    Administrative & Information Officer