Exhibit 10.18
CHAIRMAN & CEO
EMPLOYMENT
AGREEMENT
TABLE OF CONTENTS
TERMS AND CONDITIONS OF EMPLOYMENT......................................................................... 1
COMPENSATION............................................................................................... 2
TERM AND TERMINATION OF EMPLOYMENT......................................................................... 4
COMPENSATION UPON TERMINATION OF EMPLOYMENT................................................................ 4
TAX WITHHOLDING............................................................................................ 8
RESTRICTIVE COVENANTS...................................................................................... 8
SUCCESSORS................................................................................................. 11
NOTICES.................................................................................................... 12
GOVERNING LAW.............................................................................................. 12
ENTIRE AGREEMENT........................................................................................... 12
SEVERABILITY............................................................................................... 12
NO ASSIGNMENT BY EXECUTIVE; BINDING EFFECT................................................................. 13
HEADINGS................................................................................................... 13
DEFINITIONS................................................................................................ 13
COUNTERPARTS............................................................................................... 18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of June
25, 2001 (the "Effective Date"), between LifePoint CSGP, LLC, a Delaware limited
liability company ("LifePoint" or the "Company") and Xxxxxxx X. Xxxxxxx (the
"Executive").
W I T N E S S E T H:
WHEREAS, LifePoint desires to secure the services of the
Executive as its Chairman of the Board of Directors and Chief Executive Officer,
on the terms and conditions set forth herein; and
WHEREAS, the Executive is willing to serve LifePoint as the
Chairman of the Board of Directors, a member of such Board and Chief Executive
Officer of LifePoint Hospitals, Inc. on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby covenant and agree as follows:
1. TERMS AND CONDITIONS OF EMPLOYMENT
(a) Employment. LifePoint hereby agrees to employ the
Executive and the Executive hereby agrees to remain in the employ of LifePoint
on and subject to the terms and conditions of this Agreement.
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(b) Positions, Duties and Responsibilities. The Executive at
all times shall serve as, and with the title, office, and authority of, the
Chief Executive Officer of LifePoint, reporting directly to the Board of
Directors of LifePoint (the "Board of Directors" or "Board") as well as serving
as a member of the Board and as the Chairman of the Board. LifePoint shall use
its best efforts to take such action as may be required to maintain the
Executive's status as such.
(c) Full-Time Employment. The Executive agrees to devote
substantially all of his professional working time and attention to the benefit
of LifePoint under the terms of this Agreement; provided, however, that nothing
in this Agreement is intended nor shall be construed as limiting or restricting
the Executive's right to engage in any activity that is unrelated to his
position specified in paragraph (b) above, including, without limitation,
managing private, passive investments, engaging in church, community, and civic
activities and other activities approved by the Board, and serving as a director
or a member of an advisory committee of any corporation or other entity on which
the Executive is serving as of the Effective Date or any other corporation or
entity that is not in competition with LifePoint, provided that such activities
do not impinge in any material way upon the requirement that the Executive
devote substantially all of his professional working time and attention to the
Company and perform the duties of his position specified in paragraph (b) above.
2. COMPENSATION
In consideration of the services rendered by the Executive
during the Agreement Term (as defined below), LifePoint shall (except as
otherwise provided in item (iii) of paragraph (b) below), pay or provide the
Executive with the compensation and benefits set forth below.
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(a) Salary. The Executive shall be paid a base salary (the
"Base Salary") equal to $520,000 per annum, payable in bi-weekly installments.
The Executive's Base Salary shall be reviewed not less than once each calendar
year by the Compensation Committee of the Board of Directors of LifePoint and
may be increased, but not decreased, in such Compensation Committee's sole and
absolute discretion.
(b) Annual Bonus. Effective for calendar year 2001, and
continuing for each subsequent calendar year ending during the Agreement Term,
the Executive shall be entitled to receive a bonus (an "Annual Bonus") based on
the extent to which LifePoint achieves or exceeds its target performance goals
for the relevant calendar year (the "Annual Targets"). Such Annual Bonus for any
calendar year shall equal 75% of the Executive's Base Salary (as in effect on
the last day of such year) if LifePoint shall achieve but not exceed the
applicable Annual Targets and shall exceed 75% of such Base Salary if LifePoint
shall exceed the applicable Annual Targets, but in no event shall such Annual
Bonus exceed 100% of such Base Salary. The establishment of Annual Targets for
each calendar year, the adjustment to be made in the Annual Bonus in the event
of attainment of specified percentages of such Annual Targets, and the method
for determining the achievement of such Annual Targets shall be established by
the Compensation Committee of the LifePoint Board of Directors in consultation
with the Executive.
(c) Benefits. The Executive, as of any date, shall be entitled
to participate in the benefit plans offered at such time at a level which is no
less than commensurate with the benefit level offered generally to other senior
executives at such time.
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3. TERM AND TERMINATION OF EMPLOYMENT
(a) Term. The term of this Agreement shall commence on the
Effective Date and shall end on the third anniversary of the Effective Date (the
"Agreement Term"); provided, however, that the Agreement Term shall be
automatically extended for an additional year on the second anniversary of the
Effective Date and on each succeeding anniversary of the Effective Date, unless
written notice of non-extension is provided by LifePoint or the Executive to the
other party at least 90 days prior to the applicable anniversary.
(b) Termination of Employment. Nothing in this Agreement shall
be construed to prevent the Executive from voluntarily terminating his
employment with LifePoint at any time or to prevent LifePoint from terminating
the Executive's employment at any time. Upon such termination, the provisions of
Section 4 shall apply.
4. COMPENSATION UPON TERMINATION OF EMPLOYMENT.
If the Executive's employment with LifePoint is terminated
during the Agreement Term, the Executive shall be entitled to the following in
full satisfaction of his rights under this Agreement, notwithstanding anything
elsewhere in this Agreement:
(a) Involuntary Termination Without Cause or Termination for
Good Reason. In the event the Executive's employment is terminated by the
Company other than for Cause, death, or Disability, or is terminated by the
Executive for Good Reason, the Company shall pay the Executive, and provide him
with, the following:
(i) His earned but unpaid Base Salary through the date of
termination, any earned but unpaid bonus under Section 2(b) for the
calendar year that ended prior to the
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date of termination and amounts due to the Executive from the Company
as of the date of termination, all of which amounts shall be paid in a
lump sum no later than fifteen (15) days after the date the Executive's
employment terminates, and any payments, rights and benefits due as of
the date of termination under the terms of all employee benefit plans
and programs (in which he was a participant) in accordance with the
terms of such plans and programs (collectively the "Accrued Rights").
(ii) Continued monthly payments at an annual rate of 100% of
the Base Salary from the date of such termination until the second
anniversary of such termination (the "Cut-Off Date").
(iii) 75% of Base Salary (based on his Base Salary at the time
of his termination) for each calendar year or fraction of a calendar
year in the period from the first day of the calendar year in which
such termination occurs through the Cut-Off Date, with the amount
payable hereunder for the calendar year in which the Cut-Off Date
occurs to be prorated (based on calendar days), all of which amounts
shall be paid in a lump sum no later than fifteen (15) days after the
date the Executive's employment terminates.
(iv) His Insurance Coverage.
(b) Voluntary Termination; Termination for Cause. In the event
the Executive voluntarily terminates his employment hereunder or is terminated
by the Company for Cause, the Company shall pay the Executive, and provide him
with, any Accrued Rights.
(c) Disability; Death. In the event the Executive's
employment is terminated by reason of the Executive's death, or the Board of
Directors determines in good faith that the
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Executive is Disabled, the Company shall pay, and provide the Executive (or his
legal representative) with, the following:
(i) His Accrued Rights.
(ii) Continued monthly payments at an annual rate of 100% of
his then Base Salary from the date of such termination until the
Cut-Off Date.
(iii) 75% of his Base Salary (based in each case on the Base
Salary at the time of his termination) for each calendar year or
fraction of a calendar year in the period from the first day of the
calendar year in which such termination occurs through the Cut-Off
Date, with the amount payable hereunder for the calendar year in which
the Cut-Off Date occurs to be prorated (based on calendar days) and
with the amount payable hereunder for any calendar year to be payable
as promptly as practicable after the close of such calendar year.
(iv) His Insurance Coverage (if he is Disabled).
For purposes of this Agreement, "Disability" shall mean the
inability of the Executive, after reasonable accommodation, to perform the
duties required hereunder for a period equal to or in excess of the waiting
period under the Company's long term disability insurance policy, as determined
in good faith by the Board of Directors.
(d) Termination after Agreement Term. If the Executive's
employment with the Company is terminated upon or following the close of the
Agreement Term, he shall be entitled to the following in full satisfaction of
his rights under this Agreement, notwithstanding anything elsewhere in this
Agreement:
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(i) His Accrued Rights.
(ii) If his employment terminates in the calendar year in
which the Agreement Term ends and is not for Cause, 75% of his Base
Salary prorated (based on calendar days) for the portion of such
calendar year prior to the close of the Agreement Term (based on the
Base Salary on the last day of the Agreement Term), all of which
amounts shall be paid in a lump sum no later than fifteen (15) days
after the date his employment terminates.
(e) Stock Options. Any options covering shares of Common Stock
held by the Executive at the time of the Executive's termination of employment
shall be exercisable on or after the date of such termination in accordance with
their terms.
(f) Taxes. If there is a determination that the payments and
other benefits called for under this Agreement, in combination with any other
payments or benefits to or for the benefit of the Executive from LifePoint or
any predecessor or successor organization, will result in the Executive's being
subject to an excise tax under Section 4999 of the Code and/or if such an excise
tax is assessed against the Executive as a result of such payments or other
benefits, LifePoint shall make a Gross Up Payment (as defined in this Section
4(f)) to or on behalf of the Executive as and when such determination(s) and
assessment(s), as appropriate, are made, provided the Executive takes such
action as LifePoint reasonably requests under the circumstances to mitigate or
challenge, or to mitigate and challenge, such tax and LifePoint complies with
its obligations described below in this Section 4(f).
A "Gross Up Payment" means a payment to or on behalf of the Executive
which shall be sufficient to pay (i) any such excise tax in full, (ii) any
federal, state and local income tax and
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social security and other employment tax on the payment made to pay the
Executive's excise tax as well as any additional excise tax on such payment and
(iii) any interest or penalties assessed by the Internal Revenue Service on the
Executive if such interest or penalties are attributable to LifePoint's failure
to comply with its obligations under this Section 4(f) or applicable law. Any
determination under this Section 4(f) by LifePoint or LifePoint's accountants
shall be made in accordance with Section 280G of the Code and any applicable
related regulations (whether proposed, temporary or final) and any related
Internal Revenue Service rulings and any related case law and, if LifePoint
reasonably requests that the Executive take action to mitigate or challenge, or
to mitigate and challenge, any such tax or assessment and the Executive complies
with such request, LifePoint shall provide Executive with such information and
such expert advice and assistance from LifePoint's accountants, lawyers and
other advisors as he may reasonably request and shall pay for all expenses
incurred in effecting such compliance and any related fines, penalties, interest
and other assessments.
5. TAX WITHHOLDING
All compensation payable pursuant to this Agreement shall be
subject to reduction by all applicable withholding, social security and other
federal, state and local taxes and deductions.
6. RESTRICTIVE COVENANTS
(a) Confidentiality/Trade Secrets. The Executive acknowledges
that his position with the Company will be one of the highest trust and
confidence, both by reason of his position and by reason of his access to and
contact with the trade secrets and confidential and proprietary business
information of the Company and all of its Affiliates (which term as used in this
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Agreement shall include, any person, corporation, partnership, general partner
or other entity that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Company), both
during the term of this Agreement and thereafter. The Executive covenants and
agrees as follows:
(i) Protection. That he shall at all times use his best
efforts and exercise diligence to protect and safeguard the trade
secrets and confidential and proprietary information of the Company and
its Affiliates, including, without limitation, the identity of their
patients or customers (including third-party payers of any kind or
nature) and suppliers, their arrangements with their patients or
customers and suppliers, and their technical data, records,
compilations of information, processes, computer software, and
specifications relating to their patients or customers, suppliers,
products and services.
(ii) Nondisclosure. That he shall not at any time disclose any
of such trade secrets and confidential and proprietary information,
except as Executive reasonably decides may be required in the course of
his employment with the Company under Section 1 hereof or as may be
required by law.
(iii) Nonusage. That he shall not at any time use, directly or
indirectly, for his own benefit or for the benefit of another, any of
such trade secrets and confidential and proprietary information.
The covenants contained in this Section 6(a) shall not be
applicable to any information which is in the public domain, other than as a
result of action by the Executive in violation of this Section 6(a), or which
was obtained from sources other than the Company or its Affiliates who are not
under a duty of nondisclosure. All files, records, documents, drawings,
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specifications, computer software, memoranda, notes, or other documents relating
to the business of the Company and its Affiliates, whether prepared by the
Executive or otherwise coming into his possession, shall be the exclusive
property of the Company and its Affiliates and shall be delivered to the Company
or its Affiliates as appropriate, and not retained by the Executive, upon
termination of his employment for any reason whatsoever.
(b) Non-Competition. The Executive covenants and agrees that,
so long as he is employed by the Company, and for a period of two years
following his termination of employment for Good Reason or his voluntary
termination under Section 4(b), the Executive shall not, without the prior
written consent of the Company, directly or indirectly, as an employee, company,
agent, principal, proprietor, partner, ten percent (10% or more) stockholder,
consultant, director, or corporate officer, engage in any business that is in
competition with the hospitals owned by the Company at the time of termination.
(c) Modification. If the scope of any of the restrictions
contained in this Section 6 is too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be enforced to
the maximum extent permitted by law, and the Executive hereby consents and
agrees that such scope may be modified accordingly in any proceeding brought to
enforce such restrictions.
(d) Remedies for Breach of Restrictive Covenants. The
covenants set forth in this Section 6 shall continue to be binding upon the
Executive notwithstanding the termination of his employment with the Company for
any reason whatsoever. Such covenants shall be deemed and construed as separate
agreements independent of any other provision of this Agreement. The existence
of any claim or cause of action by the Executive against the Company or any of
its
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Affiliates, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company or any of its Affiliates
of any or all of such covenants. It is expressly agreed that the remedy at law
for the breach of any such covenant is inadequate and that temporary and
permanent injunctive relief shall be available to prevent the breach or any
threatened breach thereof, without the necessity of proof of actual damages and
without the necessity of posting a bond, cash or otherwise.
7. SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to
the benefit of LifePoint, its successors and assigns and any person, firm,
corporation or other entity which succeeds to all or substantially all of the
business, assets or property of LifePoint in accordance with Section 7. Any
successor to LifePoint shall be treated the same as LifePoint under this
Agreement. LifePoint will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business, assets or property of such company, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that such
company would be required to perform it if no such succession had taken place.
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are due and payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid to the legal representatives of the Executive's
estate.
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8. NOTICES
Any notice, demand, or communication required, permitted or
desired to be given hereunder must be in writing to be effective, and shall be
deemed effectively given when personally delivered or mailed by prepaid
certified mail, return receipt requested, addressed as follows:
If to the Executive: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
If to LifePoint: LifePoint Hospitals, Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Senior Vice President, Human Resources
9. GOVERNING LAW
This Agreement has been executed and delivered and shall be
interpreted, construed, and enforced in accordance with the laws of the State of
Tennessee.
10. ENTIRE AGREEMENT
This Agreement shall constitute the entire agreement of the
parties hereto and may not be amended except in writing signed by all of the
parties hereto. No oral statements or prior written materials not specifically
incorporated herein shall be of any force or effect.
11. SEVERABILITY
In the event any provision of this Agreement is held to be
unenforceable or void for any reason, the remainder of this Agreement shall be
unaffected and shall remain in full force and effect in accordance with its
terms.
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12. NO ASSIGNMENT BY EXECUTIVE; BINDING EFFECT
The Executive shall not assign this Agreement to any other
party or parties without the prior written consent of LifePoint. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
13. HEADINGS
The headings used herein are for convenience only and do not
limit the contents of this Agreement.
14. DEFINITIONS
(a) For purposes of this Agreement, "Cause" shall mean:
(i) The conviction of the Executive of a felony under the laws
of the United States or any state thereof, whether or not appeal is
taken, as determined by the Board of Directors in good faith.
(ii) The conviction of the Executive for a violation of
criminal law involving the Company and its business that materially
damages the Company as determined by the Board of Directors in good
faith.
(iii) The willful misconduct of the Executive, or the willful
or continued failure by the Executive (except in the case of a
Disability as provided in Section 4(c) hereof) to substantially perform
his duties hereunder, in either case which has a material adverse
effect on the Company as determined by the Board of Directors in good
faith.
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(iv) The willful fraud or material dishonesty of the Executive
in connection with his performance of his duties to the Company and
involving the finances of the Company as determined by the Board of
Directors in good faith.
(v) Executive's repeated use of alcohol in a manner which in
the opinion of the Board of Directors materially impairs the ability of
the Executive to effectively perform the Executive's duties and
obligations under this Agreement, or the illegal use, possession, or
sale of, or impaired performance due to the illegal use of, controlled
substances.
(vi) a violation of the Company's policies on sexual or other
illegal harassment of a Company employee by the Executive as determined
by the Board of Directors in good faith.
In no event, however, shall the Executive's employment be considered to have
been terminated for "Cause" under this Agreement unless and until the Executive
receives written notice from the Board of Directors stating in detail the acts
or omissions constituting Cause and the Executive has the opportunity to cure to
the Board of Directors' satisfaction any such acts or omissions, in the case of
(iii), (v) or (vi) above, within 30 days of the Executive's receipt of such
notice. The foregoing shall not limit the right of the Board of Directors to
suspend the Executive from his day-to-day responsibilities with the Board of
Directors pending the completion of such notice and cure procedures.
(b) For purposes of this Agreement, "Good Reason" shall mean: (i) the
assignment to the Executive of any duties inconsistent with the Executive's
position (including the loss of any of his titles or position as Chairman of the
Board, a member of the Board and Chief Executive
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Officer, and any other status, offices, titles or reporting relationships),
authority, duties or responsibilities as contemplated by Section 1 hereof, any
adverse change in the Executive's reporting responsibilities, or any action by
LifePoint that results in a diminution in such position, authority, duties or
responsibilities, but excluding for these purposes an isolated and insubstantial
action not taken in bad faith and which is remedied by LifePoint promptly after
receipt of notice thereof given by the Executive; (ii) any diminution in
Executive's total compensation in violation of Section 2; (iii) the relocation,
without the consent of the Executive, of LifePoint's principal executive offices
or the offices of the Executive to a location more than 40 miles from Nashville,
Tennessee, (iv) a termination of Executive's employment for any reason (other
than his death) within twelve months after a Change in Control, or (v) any
breach under Section 7 of this Agreement.
(c) For purposes of this Agreement, "Change in Control" shall mean:
(i) An acquisition (other than directly from LifePoint) of any
voting securities of LifePoint (the "Voting Securities") by any
"Person" (as the term Person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act")) immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the 0000 Xxx) of
twenty percent (20%) or more of the combined voting power of the then
outstanding Voting Securities; provided, however, that in determining
whether a Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would cause a Change in Control. A
"Non-Control Acquisition" shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof) maintained by (A)
LifePoint or (B) any corporation or
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other Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by
LifePoint (a "Subsidiary") or (ii) LifePoint or any Subsidiary.
(ii) The individuals who are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election or
nomination for election by LifePoint's stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; provided further,
however, that no individual shall be considered a member of the
Incumbent Board if (1) such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 0000 Xxx) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest or (2) such individual was designated by a
Person who has entered into an agreement with LifePoint to effect a
transaction described in clause (i) or (iii) of this Section 14(c); or
(iii) The consummation, after approval by stockholders of
LifePoint, of:
(A) merger, consolidation or reorganization involving
LifePoint unless
(1) The stockholders of LifePoint, immediately before
such merger, consolidation or reorganization, own,
directly or indirectly immediately following such
merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting
power of the outstanding
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Voting Securities of the corporation resulting from
such merger or consolidation or reorganization or its
parent corporation (the "Surviving Corporation") in
substantially the same proportion as their ownership
of the Voting Securities immediately before such
merger, consolidation or reorganization;
(2) The individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation; and
(3) No Person (other than LifePoint, any Subsidiary,
any employee benefit plan (or any trust forming a
part thereof) maintained by LifePoint, the Surviving
Corporation or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or
reorganization, had Beneficial Ownership of twenty
percent (20%) or more of the then outstanding Voting
Securities) has Beneficial Ownership of twenty
percent (20%) or more of the combined voting power of
the Surviving Corporations then outstanding Voting
Securities.
(B) A complete liquidation or dissolution of LifePoint; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of LifePoint to any Person (other than a
transfer to a Subsidiary).
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Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by LifePoint
which, by reducing the number of Voting Securities outstanding, increased the
proportional number of shares Beneficially Owned by the Subject Person;
provided, however, if a Change in Control would occur (but for the operation of
this sentence) as a result of the acquisition of Voting Securities by LifePoint,
and after such share acquisition by LifePoint, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
15. COUNTERPARTS
This Agreement may be executed in counterparts, each of which
will deem to be an original, but all of which together will constitute one in
the same Agreement.
IN WITNESS WHEREOF, LifePoint and the Executive have executed
this Agreement as of the date first above written.
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EXECUTIVE
LIFEPOINT CSGP, LLC
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