EX-10.1






EXHIBIT 10.1




SEPARATION AND RELEASE AGREEMENT




THIS SEPARATION and RELEASE AGREEMENT (“Agreement”) is entered into by and between Jeffrey Kao
(“Employee”) and Hill-Rom Holdings, Inc. (together with its subsidiaries and affiliates, the
“Company”). To wit, the Parties agree as follows:




	1.	 	Employee’s active employment by the Company shall terminate effective April 2, 2010
(Employee’s “Effective Termination Date”). Except as specifically provided by this Agreement,
Employee’s Employment Agreement, any Change in Control Agreement and any Indemnity Agreement
that may exist between the Company and Employee, Employee agrees that the Company shall have
no other obligations or liabilities to him following his Effective Termination Date and that
his receipt of the Severance Benefits provided herein shall constitute a complete settlement,
satisfaction and waiver of any and all claims he may have against the Company.






	2.	 	Employee further submits, and the Company hereby accepts, his resignation as an employee,
officer and director, as of his Effective Termination Date for any position he may hold. The
Parties agree that this resignation shall apply to all such positions Employee may hold with
the Company or any parent, subsidiary or affiliated entity thereof. Employee agrees to
execute any documents needed to effectuate such resignations. Employee further agrees to take
whatever steps are requested and necessary to facilitate and ensure the smooth transition of
his duties and responsibilities to others.






	3.	 	Employee acknowledges that he has been advised of the American Jobs Creation Act of 2004,
which added Section 409A (“Section 409A”) to the Internal Revenue Code, and significantly
changed the taxation of nonqualified deferred compensation plans and arrangements. Under
proposed and final regulations as of the date of this Agreement, Employee has been advised
that his severance pay may be treated by the Internal Revenue Service as providing
“nonqualified deferred compensation,” and therefore subject to Section 409A. In that event,
several provisions in Section 409A may affect Employee’s receipt of severance compensation.
These include, but are not limited to, a provision which requires that distributions to
“specified employees” of public companies on account of separation from service may not be
made earlier than six (6) months after the effective date of such separation. If applicable,
failure to comply with Section 409A can lead to immediate taxation of deferrals, with interest
calculated at a penalty rate and a 20% penalty. As a result of the requirements imposed by
the American Jobs Creation Act of 2004, Employee agrees if he is a “specified employee” at the
time of his termination of employment and if severance payments are covered as “non-qualified
deferred compensation” or otherwise not exempt, the severance pay benefits shall not be paid
until a date at least six (6) months after Employee’s Effective Termination Date from Company,
as more fully explained by Paragraph 4, below.






	4.	 	In consideration of the promises contained in this Agreement and contingent upon Employee’s
compliance with such promises, the Company agrees to provide Employee the following:






	 	(a)	 	Severance pay, in lieu of, and not in addition to any other contractual, notice or
statutory pay obligations (other than accrued wages and deferred compensation) in the
maximum total amount of Three Hundred Eighty Thousand Dollars and Zero Cents ($380,000.00),
less applicable deductions or other set offs, payable as follows:






	 	(i)	 	Commencing on the next regularly scheduled payroll immediately following the
earlier to occur of fifteen (15) days from April 2, 2010 or the expiration of sixty
(60) days after Employee’s Effective Termination Date, Employee shall be paid severance
equivalent to his current bi-weekly base salary, less applicable deductions or other
set-offs), for a period up to Fifty Two (52) weeks following Employee’s Effective
Termination Date; provided, however, that if the before-stated sixty (60) day period
ends in a calendar year following the calendar year in which the sixty (60) day period
commenced, then this severance pay shall only begin on the next regularly scheduled
payroll following the expiration of sixty (60) days after the Employee’s Effective
Termination Date.






	 	(b)	 	Payment for any earned but unused vacation as of Employee’s Effective Termination Date,
less applicable deductions permitted or required by law, payable in one lump sum within
fifteen (15) days after the Employee’s Effective Termination Date; and






	 	(c)	 	Group Life Insurance coverage until the above-referenced Severance Pay terminates.






	5.	 	Except as may be required by Section 409A, the above Severance Pay shall be paid in
accordance with the Company’s standard payroll practices (e.g. bi-weekly). The Parties agree
that the initial two (2) weeks of the foregoing Severance Pay shall be allocated as
consideration provided to Employee in exchange for his execution of a release in compliance
with the Older Workers Benefit Protection Act. The balance of the severance benefits and
other obligations undertaken by the Company pursuant to this Agreement shall be allocated as
consideration for all other promises and obligations undertaken by Employee, including
execution of a general release of claims.






	6.	 	The Company further agrees to provide Employee with limited out-placement counseling with a
company of its choice provided that Employee participates in such counseling immediately
following termination of employment. Notwithstanding anything in this Section 6 to the
contrary, the out-placement counseling shall not be provided after the last day of the second
calendar year following the calendar year in which termination of employment occurs.






	7.	 	As of his Effective Termination Date, Employee will become ineligible to participate in the
Company’s health insurance program and continuation of coverage requirements under COBRA (if
any) will be triggered at that time. However, as additional consideration for the promises
and obligations contained herein (and except as may be prohibited by law), the Company agrees
to continue to pay the employer’s share of such coverage as provided under the health care
program selected by Employee as of his Effective Termination Date, subject to any approved
changes in coverage based on a qualified election, until the above-referenced Severance Pay
terminates, provided Employee (i) timely completes the applicable election of coverage forms
and (ii) continues to pay the employee portion of the applicable premium(s). Thereafter, if
applicable, coverage will be made available to Employee at his sole expense (i.e.,
Employee will be responsible for the full COBRA premium) for the remaining months of the COBRA
coverage period made available pursuant to applicable law. In the event Employee is deemed to
be a highly compensated employee under applicable law, Employee acknowledges that the value of
the benefits provided hereunder may be subject to taxation. The medical insurance provided
herein does not include any disability coverage.






	8.	 	Should Employee become employed before the above-referenced Severance Benefits are exhausted
or terminated, Employee agrees to so notify the Company in writing within five (5) business
days of Employee’s acceptance of such employment, providing the name of such employer (or
entity to whom Employee may be providing consulting services), his intended duties as well as
the anticipated start date. Such information is required to ensure Employee’s compliance with
his non-compete obligations as well as all other applicable restrictive covenants. Failure to
timely provide such notice shall be deemed a material breach of this Agreement entitling the
Company to recover as damages the value of all benefits provided to Employee hereunder plus
attorneys fees.






	9.	 	Employee agrees to fully indemnify and hold the Company harmless for any taxes, penalties,
interest, cost or attorneys’ fee assessed against or incurred by the Company on account of
such benefits having been provided to him or based on any alleged failure to withhold taxes or
satisfy any claimed obligation. Employee understands and acknowledges that neither the
Company, nor any of its employees, attorneys, or other representatives has provided him with
any legal or financial advice concerning taxes or any other matter, and that he has not relied
on any such advice in deciding whether to enter into this Agreement. To the extent
applicable, Employee understands and agrees that he shall have the responsibility for, and he
agrees to pay, any and all appropriate income tax or other tax obligations for which he is
individually responsible and/or related to receipt of any benefits provided in this Agreement
not subject to federal withholding obligations






	10.	 	In exchange for the foregoing Severance Benefits, JEFFREY KAO on behalf of himself, his
heirs, representatives, agents and assigns hereby RELEASES, INDEMNIFIES, HOLDS HARMLESS, and
FOREVER DISCHARGES (i) HILL-ROM HOLDINGS, INC., employees, shareholders, and agents, as well
as, (iv) all predecessors, successors and assigns thereof from any and all actions, charges,
claims, demands, damages or liabilities of any kind or character whatsoever, known or unknown,
which Employee now has or may have had through the effective date of this Agreement.






	11.	 	Without limiting the generality of the foregoing release, it shall include:  (i) all claims
or potential claims arising under any federal, state or local laws relating to the Parties’
employment relationship, including any claims Employee may have under the Civil Rights Acts of
1866, 1964 and 1991, as amended, 42 U.S.C. §§ 1981 and 2000(e) et seq.; the
Age Discrimination in Employment Act, as amended, 29 U.S.C. §§ 621 et seq.;
the Americans with Disabilities Act of 1990, as amended, 42 U.S.C §§ 12,101 et
seq.; the Fair Labor Standards Act 29 U.S.C. §§ 201 et seq.; the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101, et seq.;
the Sarbanes-Oxley Act of 2002, specifically including the Corporate and Criminal Fraud
Accountability Act, 18 USC §1514A et seq.; and any other federal, state or
local law governing the Parties’ employment relationship; (ii) any claims on account of,
arising out of or in any way connected with Employee’s employment with the Company or leaving
of that employment; (iii) any claims alleged or which could have been alleged in any charge or
complaint against the Company; (iv) any claims relating to the conduct of any employee,
officer, director, agent or other representative of the Company; (v) any claims of
discrimination, harassment or retaliation on any basis; (vi) any claims arising from any legal
restrictions on an employer’s right to separate its employees; (vii) any claims for personal
injury, compensatory or punitive damages or other forms of relief; and (viii) all other causes
of action sounding in contract, tort or other common law basis, including (a) the breach of
any alleged oral or written contract, (b) negligent or intentional misrepresentations, (c)
wrongful discharge, (d) just cause dismissal, (e) defamation, (f) interference with contract
or business relationship or (g) negligent or intentional infliction of emotional distress.






	12.	 	Employee further agrees and covenants not to sue the Company or any entity or individual
subject to the foregoing General Release with respect to any claims, demands, liabilities or
obligations release by this Agreement provided, however, that nothing contained in this
Agreement shall:






	 	(a)	 	prevent Employee from filing an administrative charge with the Equal Employment
Opportunity Commission or any other federal, state or local agency; or






	 	(b)	 	prevent employee from challenging, under the Older Worker’s Benefit Protection Act (29
U.S.C. § 626), the knowing and voluntary nature of his/her release of any age claims in
this Agreement in court or before the Equal Employment Opportunity Commission.






	13.	 	Notwithstanding his right to file an administrative charge with the EEOC or any other
federal, state, or local agency, Employee agrees that with his release of claims in this
Agreement, he has waived any right he may have to recover monetary or other personal relief in
any proceeding based in whole or in part on claims released by him in this Agreement. For
example, Employee waives any right to monetary damages or reinstatement if an administrative
charge is brought against the Company whether by Employee, the EEOC, or any other person or
entity, including but not limited to any federal, state, or local agency. Further, with his
release of claims in this Agreement, Employee specifically assigns to the Company his right to
any recovery arising from any such proceeding.






	14.	 	The Parties acknowledge that it is their mutual and specific intent that the above waiver
fully complies with the requirements of the Older Workers Benefit Protection Act (29 U.S.C. §
626) and any similar law governing release of claims. Accordingly, Employee hereby
acknowledges that:






	 	(a)	 	He has carefully read and fully understands all of the provisions of this Agreement and
that he has entered into this Agreement knowingly and voluntarily;






	 	(b)	 	The Severance Benefits offered in exchange for Employee’s release of claims exceed in
kind and scope that to which he would have otherwise been legally entitled absent the
execution of this Agreement;






	 	(c)	 	Prior to signing this Agreement, Employee had been advised, and is being advised by
this Agreement, to consult with an attorney of his choice concerning its terms and
conditions; and






	 	(d)	 	He has been offered at least twenty-one (21) days within which to review and consider
this Agreement.






	15.	 	The Parties agree that this Agreement shall not become effective and enforceable until the
date this Agreement is signed by both Parties or seven (7) calendar days after its execution
by Employee, whichever is later. Employee may revoke this Agreement for any reason by
providing written notice of such intent to the Company within seven (7) days after he has
signed this Agreement, thereby forfeiting Employee’s right to receive any Severance Benefits
provided hereunder and rendering this Agreement null and void in its entirety. This
revocation must be sent to the Employee’s HR representative with a copy sent to the Company
Office of General Counsel and must be received by the end of the seventh day after the
Employee signs this Agreement to be effective.






	16.	 	The Parties agree that nothing contained herein shall purport to waive or otherwise affect
any of Employee’s rights or claims that may arise after he signs this Agreement. It is
further understood by the Parties that nothing in this Agreement shall affect any rights
Employee may have under any Company sponsored Deferred Compensation Program, Executive Life
Insurance Bonus Plan, Stock Grant Award, Stock Option Grant, Restricted Stock Unit Award,
Pension Plan and/or Savings Plan (i.e., 401(k) plan) provided by the Company as of the
date of his termination, such items to be governed exclusively by the terms of the applicable
agreements or plan documents.






	17.	 	Similarly, notwithstanding any provision contained herein to the contrary, this Agreement
shall not constitute a waiver or release or otherwise affect Employee’s rights with respect to
any vested benefits, any rights he has to benefits which can not be waived by law, any
coverage provided under any Directors and Officers (“D&O”) policy, any rights Employee may
have under any indemnification agreement he has with the Company prior to the date hereof, any
rights he has as a shareholder, or any claim for breach of this Agreement, including, but not
limited to the benefits promised by the terms of this Agreement.






	18.	 	Except as provided herein, Employee acknowledges that he will not be eligible to receive or
vest in any additional stock options, stock awards or restricted stock units (“RSUs”) as of
his Effective Termination Date. Failure to exercise any vested options within the applicable
period as set for in the plan and/or grant will result in their forfeiture. Employee
acknowledges that any stock options, stock awards or RSUs held for less than the required
period shall be deemed forfeited as of the effective date of this Agreement. All terms and
conditions of such stock options, stock awards or RSUs shall not be affected by this
Agreement, shall remain in full force and effect, and shall govern the Parties’ rights with
respect to such equity based awards.






	19.	 	Employee acknowledges that his termination and the Severance Benefits offered hereunder were
based on an individual determination and were not offered in conjunction with any group
termination or group severance program and waives any claim to the contrary.






	20.	 	Employee hereby affirms and acknowledges his continued obligations to comply with the
post-termination covenants contained in his Employment Agreement, including but not limited
to, the non-compete, trade secret and confidentiality provisions. Employee acknowledges that
a copy of the Employment Agreement has been attached to this Agreement as Exhibit A or has
otherwise been provided to him and, to the extent not inconsistent with the terms of this
Agreement or applicable law, the terms thereof shall be incorporated herein by reference.
Employee acknowledges that the restrictions contained therein are valid and reasonable in
every respect and are necessary to protect the Company’s legitimate business interests.
Employee hereby affirmatively waives any claim or defense to the contrary. Employee hereby
acknowledges that the definition of Competitor, as provided in his Employment Agreement shall
include but not be limited to those entities specifically identified in the updated Competitor
List, attached hereto as Exhibit B.






	21.	 	Employee acknowledges that the Company as well as its parent, subsidiary and affiliated
companies (“Companies” herein) possess, and he has been granted access to, certain trade
secrets as well as other confidential and proprietary information that they have acquired at
great effort and expense. Such information includes, without limitation, confidential
information regarding products and services, marketing strategies, business plans, operations,
costs, current or, prospective customer information (including customer contacts,
requirements, creditworthiness and like matters), product concepts, designs, prototypes or
specifications, regulatory compliance issues, research and development efforts, technical data
and know-how, sales information, including pricing and other terms and conditions of sale,
financial information, internal procedures, techniques, forecasts, methods, trade information,
trade secrets, software programs, project requirements, inventions, trademarks, trade names,
and similar information regarding the Companies’ business (collectively referred to herein as
“Confidential Information”).






	22.	 	Employee agrees that all such Confidential Information is and shall remain the sole and
exclusive property of the Company. Except as may be expressly authorized by the Company in
writing, or as may be required by law after providing due notice thereof to the Company,
Employee agrees not to disclose, or cause any other person or entity to disclose, any
Confidential Information to any third party for as long thereafter as such information remains
confidential (or as limited by applicable law) and agrees not to make use of any such
Confidential Information for Employee’s own purposes or for the benefit of any other entity or
person. The Parties acknowledge that Confidential Information shall not include any
information that is otherwise made public through no fault of Employee or other wrong doing.






	23.	 	On or before Employee’s Effective Termination Date or per the Company’s request, Employee
agrees to return the original and all copies of all things in his possession or control
relating to the Company or its business, including but not limited to any and all contracts,
reports, memoranda, correspondence, manuals, forms, records, designs, budgets, contact
information or lists (including customer, vendor or supplier lists), ledger sheets or other
financial information, drawings, plans (including, but not limited to, business, marketing and
strategic plans), personnel or other business files, computer hardware, software, or access
codes, door and file keys, identification, credit cards, pager, phone, and any and all other
physical, intellectual, or personal property of any nature that he received, prepared, helped
prepare, or directed preparation of in connection with his employment with the Company.
Nothing contained herein shall be construed to require the return of any non-confidential and
de minimis items regarding Employee’s pay, benefits or other rights of employment such as pay
stubs, W-2 forms, 401(k) plan summaries, benefit statements, etc.






	24.	 	Employee hereby consents and authorizes the Company to deduct as an offset from the
above-referenced severance payments the value of any Company property not returned or returned
in a damaged condition as well as any monies paid by the Company on Employee’s behalf (e.g.,
payment of any outstanding American Express bill).






	25.	 	Employee agrees to cooperate with the Company in connection with any pending or future
litigation, proceeding or other matter which has been or may be brought against or by the
Company before any agency, court, or other tribunal and concerning or relating in any way to
any matter falling within Employee’s knowledge or former area of responsibility. Employee
agrees to immediately notify the Company, through the Office of the General Counsel, in the
event he is contacted by any outside attorney (including paralegals or other affiliated
parties) unless (i) the Company is represented by the attorney, (ii) Employee is represented
by the attorney for the purpose of protecting his personal interests or (iii) the Company has
been advised of and has approved such contact. Employee agrees to provide reasonable
assistance and completely truthful testimony in such matters including, without limitation,
facilitating and assisting in the preparation of any underlying defense, responding to
discovery requests, preparing for and attending deposition(s) as well as appearing in court to
provide truthful testimony. The Company agrees to reimburse Employee for all reasonable out
of pocket expenses incurred at the request of the Company associated with such assistance and
testimony.






	26.	 	Employee agrees not to make any written or oral statement that may defame, disparage or cast
in a negative light so as to do harm to the personal or professional reputation of (a) the
Company, (b) its employees, officers, directors or trustees or (c) the services and/or
products provided by the Company and its subsidiaries or affiliate entities. The Parties
acknowledge that nothing contained herein shall be construed to prevent or prohibit the
Company or the Employee from providing truthful information in response to any court order,
discovery request, subpoena or other lawful request.






	27.	 	EMPLOYEE SPECIFICALLY AGREES AND UNDERSTANDS THAT THE EXISTENCE AND TERMS OF THIS AGREEMENT
ARE STRICTLY CONFIDENTIAL AND THAT SUCH CONFIDENTIALITY IS A MATERIAL TERM OF THIS AGREEMENT.
Accordingly, except as required by law or unless authorized to do so by the Company in
writing, Employee agrees that he shall not communicate, display or otherwise reveal any of the
contents of this Agreement to anyone other than his spouse, legal counsel or financial advisor
provided, however, that they are first advised of the confidential nature of this Agreement
and Employee obtains their agreement to be bound by the same. The Company agrees that
Employee may respond to legitimate inquiries regarding the termination of his employment by
stating that the Parties have terminated their relationship on an amicable basis and that the
Parties have entered into a Confidential Separation and Release Agreement that prohibits him
from further discussing the specifics of his separation. Nothing contained herein shall be
construed to prevent Employee from discussing or otherwise advising subsequent employers of
the existence of any obligations as set forth in his Employment Agreement. Further, nothing
contained herein shall be construed to limit or otherwise restrict the Company’s ability to
disclose the terms and conditions of this Agreement as may be required by business necessity.






	28.	 	In the event that Employee breaches or threatens to breach any provision of this Agreement,
he agrees that the Company shall be entitled to seek any and all equitable and legal relief
provided by law, specifically including immediate and permanent injunctive relief. Employee
hereby waives any claim that the Company has an adequate remedy at law. In addition, and to
the extent not prohibited by law, Employee agrees that the Company shall be entitled to
discontinue providing any additional Severance Benefits upon such breach or threatened breach
as well as an award of all costs and attorneys’ fees incurred by the Company in any successful
effort to enforce the terms of this Agreement. Employee agrees that the foregoing relief
shall not be construed to limit or otherwise restrict the Company’s ability to pursue any
other remedy provided by law, including the recovery of any actual, compensatory or punitive
damages. Moreover, if Employee pursues any claims against the Company subject to the
foregoing General Release, or breaches the above confidentiality provision, Employee agrees to
immediately reimburse the Company for the value of all benefits received under this Agreement
to the fullest extent permitted by law.






	29.	 	Similarly, in the event that the Company breaches or threatens to breach any provision of
this Agreement, Employee shall be entitled to seek any and all equitable or other available
relief provided by law, specifically including immediate and permanent injunctive relief. In
the event Employee is required to file suit to enforce the terms of this Agreement, the
Company agrees that Employee shall be entitled to an award of all costs and attorneys’ fees
incurred by him in any wholly successful effort (i.e. entry of a judgment in his favor) to
enforce the terms of this Agreement. In the event Employee is wholly unsuccessful, the
Company shall be entitled to an award of its costs and attorneys’ fees.






	30.	 	Both Parties acknowledge that this Agreement is entered into solely for the purpose of
terminating Employee’s employment relationship with the Company on an amicable basis and shall
not be construed as an admission of liability or wrongdoing by the Company or Employee, both
Parties having expressly denied any such liability or wrongdoing.






	31.	 	Each of the promises and obligations shall be binding upon and shall inure to the benefit of
the heirs, executors, administrators, assigns and successors in interest of each of the
Parties.






	32.	 	The Parties agree that each and every paragraph, sentence, clause, term and provision of this
Agreement is severable and that, if any portion of this Agreement should be deemed not
enforceable for any reason, such portion shall be stricken and the remaining portion or
portions thereof should continue to be enforced to the fullest extent permitted by applicable
law.






	33.	 	This Agreement shall be governed by and interpreted in accordance with the laws of the State
of Indiana without regard to any applicable state’s choice of law provisions.






	34.	 	Employee represents and acknowledges that in signing this Agreement he does not rely, and has
not relied, upon any representation or statement made by the Company or by any of the
Company’s employees, officers, agents, stockholders, directors or attorneys with regard to the
subject matter, basis or effect of this Agreement other than those specifically contained
herein.






	35.	 	This Agreement represents the entire agreement between the Parties concerning the subject
matter hereof, shall supersede any and all prior agreements which may otherwise exist between
them concerning the subject matter hereof (specifically excluding, however, the
post-termination obligations contained in an Employee’s Employment Agreement, or any
obligation contained in any other legally-binding document), and shall not be altered,
amended, modified or otherwise changed except by a writing executed by both Parties.





PLEASE READ CAREFULLY. THIS SEPARATION AND RELEASE

AGREEMENT INCLUDES A COMPLETE RELEASE OF ALL

KNOWN AND UNKNOWN CLAIMS.




IN WITNESS WHEREOF, the Parties have themselves signed, or caused a duly authorized agent
thereof to sign, this Agreement on their behalf and thereby acknowledge their intent to be bound by
its terms and conditions.



	 	 	 
	JEFFREY KAO	 	HILL-ROM HOLDINGS, INC.
	Signed: /s/ Jeffrey Kao

	 	By: /s/ John H. Dickey
	Printed: Jeffrey Kao

	 	Title: Senior Vice President
	Dated: 2/26/2010

	 	Dated: 3/1/2010






Exhibit A




The Employment Agreement dated as of March 31, 2008 between Hill-Rom Holdings, Inc. and
Jeffery Kao is incorporated herein by reference to Exhibit 10.14 filed with the Company’s Form 10-Q
for the quarter ended March 31, 2008.



The Letter Agreement effective October 1, 2009 between Hill-Rom Holdings, Inc. and Jeffrey Kao,
which amended the aforementioned Employment Agreement, is incorporated herein by reference to
Exhibit 10.41 filed with the Company’s Form 10-K for the year ended September 30, 2009.



1



Exhibit B




The Illustrative Competitor List is included as Exhibit B to the Employment Agreement dated as
of March 31, 2008 between Hill-Rom Holdings, Inc. and Jeffery Kao which is incorporated herein by
reference to Exhibit 10.14 filed with the Company’s Form 10-Q for the quarter ended March 31, 2008.




2