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Exhibit 10.43
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, dated as of March 4, 1999 by and
between NEW AMERICAN HEALTHCARE CORPORATION, a Tennessee corporation (the
"Company"), and XXXXXX X. XXXXXXXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to induce the Executive to enter into
employment with the Company for the period provided in this Agreement, and the
Executive is willing to accept such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:
1. Employment. (a) The Company hereby employs the Executive,
and the Executive hereby accepts such employment with the Company, for the
period set forth in Section 2 hereof, all upon the terms and conditions
hereinafter set forth.
(b) The Executive affirms and represents that he is under no
obligation to any former employer or other party which is in any way
inconsistent with, or which imposes any restriction upon, the Executive's
acceptance of employment hereunder with the Company, the employment of the
Executive by the Company, or the Executive's undertakings under this Agreement.
2. Term of Employment. Unless earlier terminated as
hereinafter provided, the term of the Executive's employment under this
Agreement, subject to the provisions of Section 3(b) below, shall initially be
for a period beginning on the date hereof and ending on March 4, 2003 (such
period from the date hereof until March 4, 2003 or until the date of such
earlier termination being hereinafter called the "Employment Term").
(a) In the event that the Executive continues in the full-time
employ of the Company after the end of the Employment Term (it being expressly
understood and agreed that the Company does not now, nor hereafter shall have,
any obligation to continue the Executive in its employ whether or not on a
full-time basis, after said Employment Term ends), then, unless otherwise
expressly agreed to by the Executive and the Company in writing, the Executive's
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continued employment by the Company after the Employment Term shall,
notwithstanding anything to the contrary expressed or implied herein, be
terminable by the Company at will, but shall in all other respects be subject to
the terms and conditions of this Agreement.
3. Duties. (a) The Executive shall be employed as the
President and Chief Executive Officer of the Company, shall faithfully and
competently perform such duties as are specified in the by-laws of the Company
and shall also perform and discharge such other executive employment duties and
responsibilities consistent with his position as President and Chief Executive
Officer as the Board of Directors of the Company may from time to time
reasonably prescribe. The Executive shall perform his duties at such places and
times as the Board of Directors of the Company may reasonably prescribe. Except
as provided in paragraph (b) below or as may otherwise be approved in advance by
the Board of Directors of the Company, and except during vacation periods and
reasonable periods of absence due to sickness, personal injury or other
disability, personal affairs or non-profit public service activities, the
Executive shall devote his full time during normal business hours throughout the
Employment Term to the services required of him hereunder. The Executive shall
render his business services exclusively to the Company during the Employment
Term and shall use his best efforts, judgment and energy to improve and advance
the business and interests of the Company in a manner consistent with the duties
of his position.
(b) The parties recognize that during the 90-day period
commencing on the date hereof, the Executive will be effecting a transition from
his employment and duties at his prior employer, Quorum Health Group, Inc.
("Quorum"), and that during such period he will be spending approximately an
aggregate one-third of his business time on Quorum matters and the balance on
his duties hereunder, with the Company, it being understood that the Executive
will seek to concentrate the time so spent on Quorum matters in the early part
of such 90-day period. The Executive represents and warrants that he has full
authorization and permission from Quorum to work on this basis during such
90-day period, and that all such work will terminate at the end of such 90-day
period.
4. Salary and Bonus. (a) Salary. As compensation for the
performance by the Executive of the services to be performed by the Executive
hereunder during the Employment Term, the Company shall pay the Executive a base
salary at the annual rate of two hundred sixty thousand dollars ($260,000) (said
amount, together with any increases thereto as provided in this Section 4(a),
being hereinafter referred to as "Salary"). Any Salary payable hereunder shall
be paid in regular intervals (but in no event less frequently than monthly) in
accordance with the Company's payroll practices from time to time in effect. The
Salary payable to the Executive pursuant to this Section 4(a) shall be subject
to annual review and may be increased as determined from time to time by the
Board of Directors of the Company in its sole discretion, but may not be
decreased.
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(b) Bonus. The Executive shall be eligible to receive bonus
compensation from the Company in respect of each fiscal year (or portion
thereof) occurring during the Employment Term in an amount up to 50% of his then
current Salary, based on meeting performance targets to be established by the
Board of Directors of the Company. Any bonus payable hereunder shall be paid as
promptly as practicable as determined by the Board of Directors.
(c) Withholding, Etc. The payment of any Salary and bonus
hereunder shall be subject to applicable withholding and payroll taxes, and such
other deductions as may be required under the Company's employee benefit plans.
5. Other Benefits. During the Employment Term, the Executive
shall:
(i) be eligible to participate in employee fringe benefits
and pension and/or profit sharing plans that may be provided by the
Company for its senior executive employees in accordance with the
provisions of any such plans, as the same may be in effect from time to
time;
(ii) be eligible to participate in any medical and health
plans or other employee welfare benefit plans that may be provided by
the Company for its senior executive employees in accordance with the
provisions of any such plans, as the same may be in effect from time to
time;
(iii) be entitled to the number of paid vacation days in
each calendar year determined by the Company from time to time for its
senior executive officers. The Executive shall also be entitled to all
paid holidays given by the Company to its senior executive officers;
(iv) be entitled to sick leave, sick pay and disability
benefits in accordance with any Company policy that may be applicable
to senior executive employees from time to time; and
(v) be entitled to reimbursement for all reasonable and
necessary out-of-pocket business expenses incurred by the Executive in
the performance of his duties hereunder in accordance with the
Company's policies applicable thereto.
6. Confidential Information. The Executive hereby covenants,
agrees and acknowledges as follows:
(a) The Executive has and will have access to and will
participate in the development of or be acquainted with confidential or
proprietary information and trade secrets related to the business of
the Company, and any present or future subsidiaries or affiliates
thereof (collectively with the Company, the "Companies"), including but
not limited to
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(i) customer lists; claims histories and related records and
compilations of information; the identity, lists or descriptions of
any new patients, referral sources or organizations; financial
statements; cost reports or other financial information; contract
proposals or bidding information; business plans; training and
operations methods and manuals; personnel records; software programs;
reports and correspondence; fee structures; and management systems,
policies or procedures, including related forms and manuals; (ii)
information pertaining to future developments such as future marketing
or acquisition plans or ideas, and potential new business locations
and (iii) all other tangible and intangible property, which are used
in the business and operations of the Companies but not made public.
The information and trade secrets relating to the business of the
Companies described hereinabove in this paragraph (a) are hereinafter
referred to collectively as the "Confidential Information", provided
that the term Confidential Information shall not include any
information (x) that is or becomes generally publicly available (other
than as a result of violation of this Agreement by the Executive) or
(y) that the Executive receives on a nonconfidential basis from a
source (other than the Companies or their representatives) that is not
known by him to be bound by an obligation of secrecy or
confidentiality to any of the Companies.
(b) The Executive shall not disclose, use or make known for
his or another's benefit any Confidential Information or use such
Confidential Information in any way except as is in the best interests
of the Companies in the performance of the Executive's duties under
this Agreement. The Executive may disclose Confidential Information
when required by a third party and applicable law or judicial process,
but only after providing (i) immediate notice to the Company at any
third party's request for such information, which notice shall include
the Executive's intent with respect to such request, and (ii)
sufficient opportunity for the Company to challenge or limit the scope
of the disclosure on behalf of the Companies, the Executive or both.
(c) The Executive acknowledges and agrees that a remedy at law
for any breach or threatened breach of the provisions of this Section 6
would be inadequate and, therefore, agrees that the Companies shall be
entitled to injunctive relief in addition to any other available rights
and remedies in case of any such breach or threatened breach, provided,
however, that nothing contained herein shall be construed as
prohibiting the Companies from pursuing any other rights and remedies
available for any such breach or threatened breach.
(d) The Executive agrees that upon termination of his
employment with the Company for any reason, the Executive shall
forthwith return to the Company all Confidential Information in
whatever form maintained (including, without limitation, computer disks
and other electronic media).
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(e) The obligations of the Executive under this Section 6
shall, except as otherwise provided herein, survive the termination of
the Employment Term and the expiration or termination of this Agreement
and shall terminate twenty-four months after the termination of the
Employment Term or, if later, twenty-four months after termination of
his employment with the Company.
(f) Without limiting the generality of Section 10 hereof, the
Executive hereby expressly agrees that the foregoing provisions of this
Section 6 shall be binding upon the Executive's heirs, successors and
legal representatives.
7. Termination. (a) The Executive's employment hereunder shall
be terminated upon the occurrence of any of the following:
(i) death of the Executive;
(ii) termination of the Executive's employment hereunder by
the Company because of the Executive's inability to perform his duties
on account of disability or incapacity for 180 days in any period of
twelve (12) consecutive months;
(iii) termination of the Executive's employment hereunder by
the Company at any time "for cause" (as defined below), such
termination to take effect immediately upon written notice from the
Company to the Executive to such effect; and
(iv) termination of the Executive's employment hereunder by
the Executive at any time for any reason whatsoever (including, without
limitation, resignation or retirement), other than pursuant to clause
(v)(B) below;
(v) termination of the Executive's employment hereunder (A) by
the Company at any time, other than (x) termination by reason of death,
disability or incapacity as contemplated by clause (i) or (ii) above or
(y) termination by the Company "for cause" as contemplated by clause
(iii) above or (B) by the Executive for the breach of any material
provision of this Agreement by the Company after written notice and a
reasonable opportunity to cure the same shall have been provided by the
Executive to the Company .
The following actions, failures and events by or affecting the
Executive shall constitute "cause" for termination within the meaning of clause
(iii) above: (A) conviction of the Executive for, or the entering of a plea of
nolo contendere by the Executive with respect to, having committed a felony, (B)
acts of dishonesty or moral turpitude by the Executive that are materially
detrimental to one or more of the Companies, (C) abuse of controlled substances
or alcohol by the Executive (in the case of alcohol abuse, that has a material
adverse effect on the Executive's performance of his obligations hereunder), (D)
acts or omissions by the Executive that the Executive knew were likely to
materially damage the business of one or more of the
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Companies, (E) reckless or willful disregard by the Executive of his obligations
hereunder or otherwise relating to his employment, or (F) failure by the
Executive to obey the reasonable and lawful orders of the Board of Directors
that are consistent with the provisions of this Agreement with respect to any
material matter (provided that, in the event such failure does not also
constitute "cause" under any of clauses (A) through (E) above, the Executive
shall have received written notice of such failure and a reasonable opportunity
to discuss the matter with the Board of Directors, followed by a notice that the
Board of Directors adheres to its position and a reasonable opportunity to
comply with such orders). In any litigation between the parties relating to this
Agreement involving "cause" (as defined herein), the burden of proof to
establish cause shall be on the Company, regardless of which party is the
plaintiff in such litigation.
(b) In the event that the Executive's employment is terminated
pursuant to clause (v) of Section 7(a) above, whether before, during, at or
after the end of the Employment Term, the Company shall pay to the Executive, as
severance pay or liquidated damages or both, monthly payments at the rate per
annum of his Salary at the time of such termination and shall provide the
Executive with the benefits provided by Section 5(ii) of this Agreement, for a
period from the date of such termination until 24 months after such termination
(or, if the Executive shall have made the election contemplated by Section 9(g)
below, 12 months after such termination, provided, however, that if the
Executive shall accept employment with another employer during such 24-month
period or 12-month period, as the case may be, then, from and after the first
day of the next month, (i) each monthly payment pursuant to this paragraph (b)
shall be reduced (but not below zero) by the amount of his monthly compensation
from such other employer and (ii) if such other employer shall provide benefits
substantially equivalent to those provided by Section 5(ii) of this Agreement,
such benefits pursuant to this paragraph (b) shall cease.
(c) Notwithstanding anything to the contrary expressed or
implied herein, except as required by applicable law and except as set forth in
Section 7(b) above, the Company (and its affiliates) shall not be obligated to
make any payments to the Executive or on his behalf of whatever kind or nature
by reason of the Executive's cessation of employment (including, without
limitation, by reason of termination of the Executive's employment by the
Company for "cause"), other than (i) such amounts, if any, of his Salary and
bonus as shall have accrued and remained unpaid as of the date of said cessation
and (ii) such other amounts, if any, which may be then otherwise payable to the
Executive from the Company's benefits plans or reimbursement policies.
(d) No interest shall accrue on or be paid with respect to any
portion of any payments hereunder, except that any payment pursuant to paragraph
(b) above that shall remain unpaid for more than five days after the same shall
be due and payable shall bear interest from and after such due date at the
"prime rate" from time to time announced by The Chase Manhattan Bank.
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8. Non-Assignability. (a) Neither this Agreement nor any right
or interest hereunder shall be assignable by the Executive or his beneficiaries
or legal representatives without the Company's prior written consent, provided,
however, that nothing in this Section 8(a) shall preclude the Executive from
designating a beneficiary to receive any benefit payable hereunder upon his
death or incapacity.
(b) Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment, levy or similar process or to assignment by operation of law, and
any attempt, voluntary or involuntary, to effect any such action shall be null,
void and of no effect.
9. Restrictive Covenants. (a) Competition. During the
Employment Term (subject to the provisions of Section 3(b) above) and during the
twenty-four (24) month period following the end of the Employment Term for any
reason whatsoever (or, if later, the twenty-four (24) month period following
termination of the Executive's employment with the Company), provided that
payments, if any, required pursuant to Section 7(b) hereof are made in full and
in a timely fashion, the Executive will not directly or indirectly (as a
director, officer, executive employee, manager, consultant, independent
contractor, advisor or otherwise) engage in competition with, or own any
interest in, perform any services for, participate in or be connected with any
business or organization which engages in competition with any of the Companies
in any state of the United States of America, provided, however, that the
provisions of this Section 9(a) shall not be deemed to prohibit the Executive's
ownership of not more than two percent (2%) of the total shares of all classes
of stock outstanding of any publicly held company, or ownership, whether through
direct or indirect stock holdings or otherwise, of one percent (1%) or more of
any other business.
(b) Non-Solicitation. During the Employment Term and during
the twenty-four (24) month period following the end of the Employment Term for
any reason whatsoever (or, if later, the twenty-four (24) month period following
termination of the Executive's employment with the Company), provided that
payments, if any, required pursuant to Section 7(b) hereof are made in full and
in a timely fashion, the Executive will not directly or indirectly induce or
attempt to induce any employee of any of the Companies to leave the employ of
the Company or such subsidiary or affiliate, or in any way interfere with the
relationship between any of the Companies and any employee thereof. This Section
9(b) shall not prohibit the Executive from employing any employee of the Company
if such employee initially contacts Executive seeking such employment, and such
employee has stated to the Company his or her intention to terminate his or her
employment with the Company.
(c) Non-Interference. During the Employment Term and during
the twenty-four (24) month period following the end of the Employment Term for
any reason whatsoever (or, if later, the twenty-four (24) month period following
termination of the Executive's employment
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with the Company), provided that payments, if any, required pursuant to Section
7(b) hereof are made in full and in a timely fashion, the Executive will not
directly or indirectly hire, engage, send any work to, place orders with, or in
any manner be associated with any supplier, contractor, subcontractor or other
business relation of any of the Companies if such action by him would have a
material adverse effect on the business, assets or financial condition of any of
the Companies, or materially interfere with the relationship between any such
person or entity and any of the Companies.
(d) Certain Definitions.
(i) For purposes of this Section 9, a person or entity
(including, without limitation, the Executive) shall be deemed to be a
competitor of one or more of the Companies, or a person or entity
(including, without limitation, the Executive) shall be deemed to be
engaging in competition with one or more of the Companies, if such
person or entity (A) subject to the proviso set forth below, is a
for-profit general acute care hospital company, or (B) in any way
conducts, operates, carries out or engages in the business of managing
for-profit general acute care hospitals, in either case in any state of
the United States of America, provided, however, nothing in this
Agreement shall prohibit the Executive from becoming associated in any
capacity at a single for-profit general acute care hospital as long as
such hospital is not owned, operated or managed by a for-profit
multi-facility hospital company or management company.
(ii) For purposes of this Section 9, no corporation or entity
that may be deemed to be an affiliate of the Company solely by reason
of its being controlled by, or under common control with, Welsh,
Carson, Xxxxxxxx & Xxxxx VII, L.P. or any of its affiliates other than
the Company, will be deemed to be an affiliate of the Company.
(e) Certain Representations of the Executive. In connection
with the foregoing provisions of this Section 9, the Executive represents that
his experience, capabilities and circumstances are such that such provisions
will not prevent him from earning a livelihood. The Executive further agrees
that the limitations set forth in this Section 9 (including, without limitation,
time and territorial limitations) are reasonable and properly required for the
adequate protection of the current and future businesses of the Companies. It is
understood and agreed that the covenants made by the Executive in this Section 9
(and in Section 6 hereof) shall survive the expiration or termination of this
Agreement.
(f) Injunctive Relief. The Executive acknowledges and agrees
that a remedy at law for any breach or threatened breach of the provisions of
Section 9 hereof would be inadequate and, therefore, agrees that the Company and
any of its subsidiaries or affiliates shall be entitled to injunctive relief in
addition to any other available rights and remedies in cases of any such breach
or threatened breach, provided, however, that nothing contained herein shall be
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construed as prohibiting the Company or any of its affiliates from pursuing any
other rights and remedies available for any such breach or threatened breach.
(g) Early Termination. Anything in this Section 9 to the
contrary notwithstanding, in the event that the employment of the Executive
hereunder shall have been terminated pursuant to clause (v) of Section 7(a)
above, the twenty-four (24) month period referred to herein may be shortened to
a twelve (12) month period by written notice from the Executive to the Company
at any time not more than 90 or less than 30 days prior to the end of such
twelve (12) month period by written notice to the Company irrevocably electing
to shorten both such period and the period during which severance is payable
pursuant to Section 7(b) above.
10. Binding Effect. Without limiting or diminishing the effect
of Section 8 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and (i) delivered personally,
(ii) mailed by certified or registered mail, return receipt requested and
postage prepaid, (iii) sent via a nationally recognized overnight courier or
(iv) sent via facsimile confirmed in writing to the recipient, if to the Company
at the Company's principal place of business, and if to the Executive, at his
home address most recently filed with the Company, or to such other address or
addresses as either party shall have designated in writing to the other party
hereto.
12. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee.
13. Severability. The Executive agrees that in the event that
any court of competent jurisdiction shall finally hold that any provision of
Section 6 or 9 hereof is void or constitutes an unreasonable restriction against
the Executive, the provisions of such Section 6 or 9 shall not be rendered void
but shall apply with respect to such extent as such court may judicially
determine constitutes a reasonable restriction under the circumstances. If any
part of this Agreement other than Section 6 or 9 is held by a court of competent
jurisdiction to be invalid, illegible or incapable of being enforced in whole or
in part by reason of any rule of law or public policy, such part shall be deemed
to be severed from the remainder of this Agreement for the purpose only of the
particular legal proceedings in question and all other covenants and provisions
of this Agreement shall in every other respect continue in full force and effect
and no covenant or provision shall be deemed dependent upon any other covenant
or provision.
14. Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions hereof shall not be deemed a waiver of
such term, covenant or condition,
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nor shall any waiver or relinquishment of any right or power hereunder at any
one or more times be deemed a waiver or relinquishment of such right or power at
any other time or times.
15. Entire Agreement; Modifications. This Agreement, together
with the Stock Option Agreement, dated as of March 4, 1999 (the "Stock Option
Agreement"), among the Company and the Executive), constitutes the entire and
final expression of the agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, oral and written, between the
parties hereto with respect to the subject matter hereof. This Agreement may be
modified or amended only by an instrument in writing signed by both parties
hereto.
16. Counsel Fees. The Company shall pay the reasonable fees
and expenses of counsel for the Executive in connection with the negotiation,
execution and delivery of this Agreement and the Stock Option Agreement, upon
submission of invoices therefor supported in reasonable detail.
17. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Executive have duly
executed and delivered this Agreement as of the day and year first above
written.
NEW AMERICAN HEALTHCARE
CORPORATION
By
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Name:
Title:
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Xxxxxx X. Xxxxxxxxx
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