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EXHIBIT 10.76
[ ] Employee's Copy
[ ] Company's Copy
XXXXXXXXXX HEALTHCARE CORPORATION
EMPLOYMENT AGREEMENT
To XXXXX X. XXXXXXXXXXX
This Agreement establishes the terms of your continued employment with
Xxxxxxxxxx Healthcare Corporation, Inc., a California corporation (the
"Company") and reflects your new position as the Company's interim chief
executive officer ("CEO").
EMPLOYMENT AND DUTIES You and the Company agree to your employment as interim
CEO. In such position, you will report directly to the
Company's Board of Directors (the "Board"). You agree
to perform whatever duties the Board may assign you
from time to time that are consistent with those of the
CEO of a public company. During your employment, you
agree to devote your full business time, attention, and
energies to performing those duties (except as the
Board otherwise agrees from time to time). On
termination of this Agreement, you agree that you
resign as an officer and director and from all other
officer and director positions at the Company and
subsidiaries.
You agree that, if the Company hires or promotes a new
CEO during the Term but retains your services in some
other capacity, your change in position by itself does
not constitute termination without Cause and does not
entitle you to any Severance, whether under this
Agreement or otherwise. However, the hiring or
promotion of a new CEO does not alter the Company's
obligations to you under this Agreement, including
those obligations described under the Salary, Benefits,
Bonus, Payments on Termination, and Severance sections.
TERM OF EMPLOYMENT Your employment under this Agreement begins as of July
1, 1999 (the "Effective Date") and, unless sooner
terminated or extended, ends on December 31, 1999. The
period running from the Effective Date to the
applicable date in the preceding sentence is the
"Term."
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COMPENSATION
Salary The Company will pay you a salary (the "Salary")
from the Effective Date at the rate of not less than
$45,000 per month in accordance with its generally
applicable payroll practices.
Benefits During the Term, you will continue to be eligible to
participate in employee benefit and fringe benefit
plans and programs generally available to the
Company's executive officers and such additional
benefits as the Board may from time to time provide.
In addition, during the Term, you will continue to
be entitled to the following life insurance and
disability coverages and fringe benefits:
Life The Company will maintain for your benefit
Insurance life insurance coverage with a face amount
equal to three times the amount of your
annual Salary as in effect from time to
time; provided, however, that if the Company
cannot obtain the full amount of such life
insurance coverage at a reasonable cost, the
Company may instead provide you with a lump
sum death benefit, payable within 90 days
following your death, in such amount as
will, when added to any life insurance
coverage the Company actually obtains,
provide your beneficiary or beneficiaries
with a net amount, after payment of any
Federal and state income taxes, equal to the
net, after-tax amount such beneficiary or
beneficiaries would have received had the
Company obtained the full amount of life
insurance coverage provided for above. You
will have the right to name and to change
from time to time the beneficiary or
beneficiaries under such life insurance
coverage (and death benefits, if any). Such
life insurance coverage (and death benefits,
if any) will be in addition to any death
benefits that may be payable under any
accidental death and dismemberment plan, any
separate business travel accident coverage,
or any pension plan in which you may
participate, and such coverage will also be
in addition to any life insurance that you
purchase for yourself.
Long-Term If you become disabled (as defined in the
Disability long-term disability plan the Company
presently maintains), you are to receive
disability benefits in an amount equal to
60% of your then annual Salary. Any amount
payable under any
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salary continuation plan (including any
salary continuation provided under this
Agreement) or disability plan maintained by
the Company, and any amount payable to you
or to your immediate family as a Social
Security disability benefit or similar
benefit will be counted towards the
Company's fulfillment of such obligation.
Disability benefits will be payable monthly
beginning 30 days following disability and
will continue until you are no longer
disabled, or if earlier, until you reach age
65.
Vacations You will be entitled to such paid vacation
and time as you may reasonably take in your
Holidays discretion so long as such vacation time
does not interfere with the efficient
discharge of your duties and
responsibilities. You will be entitled to
all holidays as listed annually in the
Company's official holiday schedule.
Tax Return The Company will provide you with the
Preparation; assistance of its regular auditors for the
Financial preparation of your Federal and state tax
Advice returns without charge to you. In addition,
the Company will reimburse you up to $5,000
per year for the costs you incur for
financial planning services .
Annual The Company will reimburse you 100% of the
Physical costs you incur in obtaining an annual
comprehensive physical examination to be
conducted by your choice of physician,
clinic, or medical group located within a
reasonable distance from your place of
employment.
Reimbursement for business expenses,
including travel and entertainment, will be
limited to reasonable and necessary expenses
you incur on the Company's behalf in
connection with performing duties on the
Company's behalf and subject to (i) timely
submission of a properly executed Company
expense report form accompanied by
appropriate supporting documentation, and
(ii) compliance with Company policies and
procedures governing business expense
reimbursement and reporting based upon
principles and guidelines established from
time to time by the Board's Audit Committee,
including periodic audits by the Company's
Internal Audit Department and/or the Audit
Committee.
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Bonus You will receive one but only one of the bonus
payments described below if the related event set
forth below (a "Bonus Determination") is completed
before December 31, 1999, with payment on the date
of completion:
o Upon a sale of the Salt Lake facilities
(Pioneer Valley Hospital, Salt Lake City
Regional Medical Center, State Street
Hospital, Xxxxx Hospital Medical Center,
Jordan Valley Hospital, and related
operating Utah assets), a bonus of
$125,000, plus 1% of the gross sales
proceeds in excess of $306 million
(excluding any payments for working
capital included in the gross sales
proceeds),
o Upon a sale of XXXXXXXXXXX, a bonus of
$125,000, plus 1% of the gross sales
proceeds in excess of XXXXXXX (excluding
any payments for working capital
included in the gross sales proceeds), *
o Upon a sale of all of the shares or
assets of the Company, a bonus of
$125,000, plus 1% of the total
enterprise value (gross sales proceeds
plus assumed funded indebtedness) in
excess of $700 million,
o Upon a recapitalization and sale of at
least $25 million of additional common
stock in a private transaction (i.e.,
other than through a public offering), a
bonus of $125,000, plus 1% of the total
amount received in excess of $1.50 per
common share sold (with appropriate
adjustments for stock splits).
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TERMINATION Subject to the provisions of this section, you and the
Company agree that it may terminate your employment, or
you may resign, except that, if you voluntarily resign,
you must provide the Company with 30 days' prior
written notice (unless the Board has previously waived
such notice in writing or authorized a shorter notice
period).
For Cause The Company may terminate your employment for "Cause"
if you:
* Represents material that has been redacted pursuant to a request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934. Omitted material for which Confidential treatment has been requested
has been filed separately with the Securities and Exchange Commission.
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(i) commit an act of gross negligence or
otherwise act with willful disregard for the
Company's best interests;
(ii) fail or refuse to perform any duties
delegated to you that are consistent with the
duties of similarly-situated executives or
are otherwise required under this Agreement;
(iii) seize a corporate opportunity for
yourself instead of offering such opportunity
to the Company; or
(iv) are convicted of or plead guilty or no
contest to a misdemeanor (other than a
traffic violation) or felony, or, with
respect to your employment, commit either a
material dishonest act or common law fraud or
intentionally violate any federal or state
securities or tax laws.
Your termination for Cause will be effective
immediately upon the Company's mailing or
transmission of notice of such termination. Before
terminating your employment for Cause under clauses
(i) - (iii) above, the Company will specify in
writing to you the nature of the act, omission,
refusal, or failure that it deems to constitute
Cause and, if the Board considers the situation to
be correctable, give you 30 days after you receive
such notice to correct the situation (and thus
avoid termination for Cause), unless the Company
agrees to extend the time for correction. You agree
that the Board will have the reasonable discretion
to determine whether the situation is correctable
and whether your correction is sufficient.
Without Cause Subject to the provisions below under Payments on
Termination, the Company may terminate your
employment under this Agreement before the end of
the Term without Cause. The termination will take
effect 15 days after the Company gives you written
notice.
Payments on If you resign or the Company terminates your
Termination employment with or without Cause or because of
disability or death or this Agreement expires, the
Company will pay you any unpaid portion of your
Salary pro-rated through the date of actual
termination (and unless your termination is for
Cause, any bonus payments (i) already determined by
such date but not yet paid or (ii) whose Bonus
Determination occurs within 30 days of your actual
termination), reimburse any substantiated but
unreimbursed business expenses, pay any accrued and
unused vacation time (to
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the extent consistent with the Company's policies),
and provide such other benefits as applicable laws
or the terms of the benefits require. Except to the
extent the law requires otherwise or as provided in
the Severance paragraph, neither you nor your
beneficiary or estate will have any rights or
claims under this Agreement or otherwise to receive
severance or any other compensation, or to
participate in any other plan, arrangement, or
benefit, after such termination or resignation.
Severance In addition to the foregoing payments, if before
the end of the Term, the Company terminates your
employment without Cause, the Company will pay you
severance equal to the Salary due between the date
of termination and December 31, 1999, in a single
lump sum, on your actual date of termination. The
Company will also, to the extent permissible by the
terms of its benefit plans, insurance contracts,
and applicable law and except as provided in the
next sentence, cover you for a period of 36 months
under the medical, accident, disability, and life
insurance programs of the Company, or, if shorter,
until you are provided a substantially equivalent
benefit by a new employer. You acknowledge that
such continued coverage may not be possible or
practical and agree to accept in lieu of such
coverage (i) payment by the Company of the premiums
for the period indicated above on individual
insurance policies either you or the Company obtain
that provide substantially equivalent benefits or
(ii) if you are unable to obtain such coverage
(because you are uninsurable at commercially
reasonable rates or, as with disability, because
coverage may be unavailable if you are not
working), one or more payments totaling 150% of the
combined premium cost the Company paid on your
behalf in 1999 (annualized) for any of those
coverages under which you cannot participate after
employment ends.
You are not required to mitigate amounts payable
under the Severance paragraph by seeking other
employment or otherwise. Expiration of this
Agreement, whether because of notice of non-renewal
or otherwise, does not constitute termination
without Cause and does not entitle you to
Severance.
NONCOMPETITION You specifically agree that the noncompetition and
AND SECRECY confidentiality obligations referenced in ""10 and
12 of the Memorandum of Understanding among the
Company, you, and certain others dated as of
November 25, 1998 ("MOU") bar you from competition
and
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disclosure or use of confidential information for
the periods stated or incorporated by reference and
according to the terms of those paragraphs. You
further specifically agree that, for 36 months
after your employment ends, you will not become
employed by or a consultant to the Dakota Clinic.
You agree that you were separately and adequately
compensated for the noncompetition obligations,
that they are ancillary to the MOU and other
agreements, and that they reasonably reflect the
need for the Company to protect its business
interests.
ASSIGNMENT The Company may assign or otherwise transfer this
Agreement and any and all of its rights, duties,
obligations, or interests under it to any of the
affiliates or subsidiaries of the Company. Upon
such assignment or transfer, any such business
entity will be deemed to be substituted for the
Company for all purposes. You agree that assignment
or transfer does not entitle you to Severance. This
Agreement binds and benefits the Company and its
assigns and your heirs and the personal
representatives of your estate. Without the Board's
prior written consent, you may not assign or
delegate this Agreement or any or all rights,
duties, obligations, or interests under it.
SEVERABILITY If the final determination of an arbitrator or a
court of competent jurisdiction declares, after the
expiration of the time within which judicial review
(if permitted) of such determination may be
perfected, that any term or provision of this
Agreement is invalid or unenforceable, the
remaining terms and provisions will be unimpaired,
and the invalid or unenforceable term or provision
will be deemed replaced by a term or provision that
is valid and enforceable and that comes closest to
expressing the intention of the invalid or
unenforceable term or provision.
AMENDMENT; WAIVER Neither you nor the Company may modify, amend, or
waive the terms of this Agreement other than by a
written instrument signed by you and a director of
the Company duly authorized by the Board. Either
party's waiver of the other party's compliance with
any provision of this Agreement is not a waiver of
any other provision of this Agreement or of any
subsequent breach by such party of a provision of
this Agreement.
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WITHHOLDING The Company will reduce its compensatory payments
to you for withholding and FICA taxes and any other
withholdings and contributions required by law.
GOVERNING LAW The laws of the State of Texas (other than its
conflict of laws provisions) govern this Agreement.
NOTICES Notices must be given in writing by personal
delivery, by certified mail, return receipt
requested, by telecopy, or by overnight delivery.
You must send or deliver your notices to the
Company's corporate headquarters. The Company will
send or deliver any notice given to you at your
address as reflected on the Company's personnel
records. You and the Company may change the address
for notice by like notice to the others. You and
the Company agree that notice is received on the
date it is personally delivered, the date it is
received by certified mail, the date of guaranteed
delivery by the overnight service, or the date the
fax machine confirms effective transmission.
SUPERSEDING EFFECT Except as set forth below, this Agreement
supersedes any prior oral or written employment,
severance, or fringe benefit agreements between you
and the Company, other than with respect to your
eligibility for generally applicable employee
benefit plans and supersedes any other prior or
contemporaneous negotiations, commitments,
agreements, and writings, with respect to this
Agreement, relating to the subject matter of this
Agreement, except as specified in this Agreement.
All such other negotiations, commitments,
agreements, and writings, with respect to this
Agreement, will have no further force or effect;
and the parties to any such other negotiation,
commitment, agreement, or writing will have no
further rights or obligations thereunder.
Notwithstanding the previous paragraph, this
Agreement does not supersede or render invalid the
following agreements into which you previously
entered: (1) the MOU, as amended by the Derivative
Settlement Agreement dated March 17, 1999, should
that agreement become effective, except to the
extent a matter specifically addressed in this
Agreement conflicts with the MOU, in which event,
this Agreement will control; (2) the Derivative
Settlement Agreement dated March 17, 1999, except
with respect to those conflicts referenced in
subparagraph (1) of this paragraph; (3) the Class
Action Memorandum of Understanding dated
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March 24, 1999; (4) the Stipulation of Settlement
dated May 11, 1999; (5) the Settlement Agreement
referencing the Great American Insurance Company
Policy bearing policy number DFX0009397; and (6)
the XxxXxxxxxxx to Xxxxxxxxxx Release of SERP
Benefits dated as of December 3, 1998. This
Agreement must not be construed to deprive you of
any of your rights created or preserved in any
agreement or order entered into after the Effective
Date and relating to the settlement of the In re:
Xxxxxxxxxx Securities Corp., the Xxxxx, or the
Xxxxxxx litigation, unless such agreement or order
specifically provides that this Agreement will
control. This Agreement must not be construed to
abrogate or render invalid any obligation or right
of indemnification or advancement of costs or
expenses that may be owed to you under any
contract, the Company's Articles of Incorporation
or Bylaws, California law, or Texas law or to alter
any right created or preserved as part of the
pending settlement of the In re: Xxxxxxxxxx
Securities Corp., the Xxxxx, or the Xxxxxxx
litigation, unless such right is specifically
altered by this Agreement. This Agreement does not
impair the effectiveness of the release between the
parties to this Agreement delivered to you on April
14, 1999, by Bank One as escrow agent.
If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors you choose.
XXXXXXXXXX HEALTHCARE CORPORATION
By:
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Name:
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Title:
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I accept and agree to the terms of employment set
forth in this Agreement:
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Xxxxx X. XxxXxxxxxxx
Dated:
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