Execution Copy
Exhibit 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of May 4, 2004, is
by and between IASIS Healthcare Corporation, a Delaware corporation (the
"Company"), and W. Xxxx Xxxxxxx (the "Executive").
WHEREAS, after giving effect to the transactions (the "Transactions")
contemplated in the Agreement and Plan of Merger (the "Merger Agreement") by and
among the Company, IASIS Investment LLC (the "Purchaser") and Titan Acquisition
Corporation, the Company will become a wholly-owned subsidiary of Purchaser;
WHEREAS, the Executive has served as Chief Financial Officer of the
Company pursuant to an Employment Agreement with the Company, dated November 1,
2001 (the "Original Employment Agreement");
WHEREAS, the Executive has experience beneficial to the Company's
operations, management and business development of acute care hospitals,
outpatient facilities and ancillary medical services (the "Business");
WHEREAS, upon and subject to the consummation of the Transactions, the
Company desires that the Executive continue to serve as Chief Financial Officer
of the Company and the Executive desires to hold such position(s) under the
terms and conditions of this Agreement; and
WHEREAS, subject to, and effective as of immediately prior to the
consummation of the Transactions, the parties desire to enter into this
Agreement setting forth the terms and conditions of the employment relationship
of the Executive with the Company and desire that this Agreement shall supercede
the Original Employment Agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree as
follows:
1. Employment. The Company hereby employs the Executive and the Executive
hereby accepts employment with the Company, upon the terms and subject to the
conditions set forth herein.
2. Term.
(a) Subject to termination pursuant to Section 10 hereof, the term
of the employment by the Company of the Executive pursuant to this Agreement (as
the same may be extended, the "Term") shall commence subject to, and effective
as of, the Effective Time (as defined in the Merger Agreement) (the "Effective
Date"), and terminate on the fifth anniversary thereof. As of the time this
Agreement becomes effective, which shall be immediately prior to and subject to
the Effective Time the parties acknowledge that the Original Employment
Agreement and all liabilities thereunder shall immediately terminate.
(b) Commencing on the fourth anniversary of the Effective Date and
on each subsequent anniversary thereof, the Term shall automatically be extended
for a period of one (1) additional year following the expiration of the
otherwise applicable Term unless, not later than
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ninety (90) days prior to any such anniversary date, either party hereto shall
have notified the other party hereto in writing that such extension shall not
take effect.
3. Position; Location. During the Term, the Executive shall serve as Chief
Financial Officer of the Company, supervising the conduct of the business and
affairs of the Company and performing such other duties as the Board of
Directors of the Company (the "Board") shall determine, which duties shall not
be materially inconsistent with the duties to be performed by executives holding
similar offices in similarly-sized healthcare corporations. The Executive shall
report directly to the Chief Executive Officer. The parties acknowledge and
agree that during the Term (i) the Executive's principal office will not be
moved to a location more than 20 miles from Metropolitan Nashville and Davidson
County, Tennessee without his approval and (ii) the Company shall maintain, in
the organizational documents thereof, indemnification provisions providing for
the maximum indemnification permitted by applicable law of the Executive by the
Company for actions taken in his capacity as an officer or employee thereof.
4. Duties. During the Term, the Executive shall devote his full time and
attention during normal business hours to the business and affairs of the
Company. Notwithstanding the foregoing, the Executive may serve as a director of
other entities, provided that such entities do not directly compete with the
Company in any material respect, and provided further, that Executive's service
as a director does not interfere with the performance of his duties and
responsibilities hereunder and that the Executive may serve as a director of no
more than three for profit entities at any time.
5. Salary and Bonus.
(a) During the Term, the Company shall pay to the Executive a base
salary at the rate of Four Hundred Seventeen Thousand Two Hundred Dollars
($417,200.00) per year. Commencing on or before the first anniversary of the
Effective Date, the Board shall review the base salary annually and may increase
such amount from time to time as it may deem advisable, (such salary, as the
same may be increased, the "Base Salary"). The Base Salary shall be payable to
the Executive in substantially equal installments in accordance with the
Company's normal payroll practices.
(b) For the Company's fiscal year ending September 30, 2004, and for
each fiscal year thereafter during the Term, the Executive shall be eligible to
receive an annual cash target bonus (the "Bonus") of 50% of Base Salary (the
"Target") with a maximum annual bonus of one hundred percent (100%) of the Base
Salary, subject to the terms of the Company's executive bonus plan (the "Bonus
Plan") and subject to the satisfaction of certain performance objectives to be
determined by the Board (or a committee thereof) after consultation with the
Chief Executive Officer, or, to the extent more favorable to the Executive,
other incentive compensation plan established by the Board for the Company's
senior executive officers, as either of the same may be amended from time to
time (provided that no such amendment or alternative plan shall materially
diminish the Target and maximum bonus opportunity described above). For the 2004
fiscal year, the Bonus shall be administered in accordance with the Company's
Bonus Plan in effect immediately prior to the Effective Time with the
performance objectives set forth in Annex 1. For fiscal years 2004 and 2005 the
Company's earnings before interest, taxes, depreciation and amortization
("EBITDA"), for purposes of determining whether
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the Bonus Plan performance objectives are achieved, shall be calculated in a
manner that is consistent with past practices and without any deduction for
costs incurred by the Company in connection with the Transaction, including any
non-cash compensation expense incurred as a result of or in connection with the
Transaction. With respect to the 2005 fiscal year, the Executive will receive a
bonus of 10%, 50% or 100% of his Base Salary, respectively, if 95%, 100% or 105%
of the Company's budgeted EBITDA for fiscal year 2005, respectively, is
achieved. If the Company's EBITDA is between 95% and 105% of budgeted EBITDA for
such year, the bonus will be calculated based on straight-line interpolation.
For the 2006 fiscal year and thereafter the Bonus Plan will be administered by
the compensation committee or similar committee of the Board (the "Compensation
Committee"), and while Target and maximum bonus levels will remain the same as
described above, the performance objectives will be set by the Compensation
Committee after consultation with the Chief Executive Officer. For purposes of
this Agreement, the 2004 fiscal year shall mean the 12-month period ending
September 30, 2004.
6. Stock Options. Upon the Effective Time, certain stock options held by
Executive shall be converted into options to purchase shares of common and
preferred stock of the Company (the "Rollover Option") and the letter evidencing
the Rollover Option attached hereto as Exhibit A shall be delivered to and
executed by the Executive at the same time as this Agreement reflecting the
terms and conditions of such converted options. Upon the Effective Time, (i) the
Company shall adopt the IASIS Healthcare Corporation 2004 Stock Option Plan,
attached hereto as Exhibit B (the "2004 Stock Option Plan"), (ii) Executive
shall be issued options to acquire 0.8 percent of the total outstanding shares
of the Company's primary common stock immediately following the Effective Time
determined without regard to any options to acquire the Company's common stock,
(the "New Option") pursuant to the 2004 Stock Option Plan by delivery to and
execution by the Executive and delivery to and execution by the Company of the
Stock Option Agreement attached hereto as Exhibit C and (iii) Executive shall
execute and deliver to the Company and the Company shall execute and deliver to
the Executive the Stockholders Agreement attached hereto as Exhibit D.
Thereafter during the Term, the Executive shall be eligible to participate in
the 2004 Stock Option Plan or, to the extent more favorable to the Executive,
other equity plans established by the Board for the Company's senior executive
officers, as the same may be amended from time to time (provided that no such
amendment shall materially diminish the benefits already granted to Executive
hereunder or thereunder), as and to the extent other senior executive officers
are eligible to participate in such equity plans.
7. Vacation, Holidays and Sick Leave. During the Term, the Executive shall
be entitled to paid vacation, paid holidays and sick leave in accordance with
the Company's standard policies for its senior executive officers; provided that
the Executive shall during each year of the Term be entitled to at least five
(5) weeks of such vacation, which shall not accrue from year to year.
8. Business Expenses. The Executive shall be reimbursed for all reasonable
and necessary business expenses incurred by him in connection with his
employment (including, without limitation, expenses for travel and entertainment
incurred in conducting or promoting business for the Company) upon timely
submission by the Executive of receipts and other documentation in accordance
with the Company's normal expense reimbursement policies.
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9. Other Benefits. During the Term, the Executive shall be eligible to
participate fully in all health and other employee benefit arrangements
available to senior executive officers of the Company generally.
10. Termination of Agreement. The Executive's employment by the Company
pursuant to this Agreement shall not be terminated prior to the end of the Term
hereof except as set forth in this Section 10.
(a) By Mutual Consent. The Executive's employment pursuant to this
Agreement may be terminated at any time by the mutual written agreement of the
Company and the Executive.
(b) Death. The Executive's employment pursuant to this Agreement
shall be terminated upon the death of the Executive, in which event the
Executive's spouse or heirs shall receive (i) all Base Salary and benefits to be
paid or provided to the Executive under this Agreement through the Date of
Termination (as defined in Section 10(h) hereof), (ii) an amount equal to one
hundred percent (100%) of the Executive's Base Salary at the then-current rate
of Base Salary and (iii) to the extent applicable, an amount equal to the pro
rata bonus (the "Pro Rata Bonus") determined by comparing the Company's actual
aggregate EBITDA for the period beginning on the first day of the fiscal year
during which the Date of Termination occurs and ending on the last day of the
month in which the Date of Termination occurs, (such period, the "Bonus
Measuring Period") with the aggregate budgeted EBITDA as reflected in the
monthly budgets prepared by the Company and accepted by the Board with respect
to such period. The Pro Rata Bonus shall be in an amount equal to the product of
(I) a fraction, the numerator of which equals the number of months in the Bonus
Measuring Period and the denominator of which equals twelve and (II) the bonus
set forth in the Bonus Plan for the fiscal year in which the Date of Termination
occurs, treating the Bonus Measuring Period as if it was the full fiscal year
for purposes of determining the Executive's bonus percentage. The parties
acknowledge that Annex 2 sets forth certain examples of the calculation of the
Pro Rata Bonus. In the event that the Executive's spouse or heirs are entitled
to receive a payment with respect to the Pro Rata Bonus, they shall also be
entitled to an additional severance amount equal to one hundred percent (100%)
of the Pro Rata Bonus. All of the payments required to be paid pursuant to this
paragraph 10(b) shall be paid to the Executive's spouse or heirs no later than
ten (10) days following the Date of Termination; provided, however, that any Pro
Rata Bonus and any additional severance amount related thereto shall be paid to
the Executive's spouse or heirs no later than five (5) days following the
determination of the amount of such payments, if any. The Company will also
provide the Executive's eligible dependents continued health and medical
benefits as contemplated by Section 9 hereof through the date one (1) year after
the Date of Termination; the Company may satisfy this obligation by paying such
dependents' health and medical continuation coverage ("COBRA") premium payments
(with the dependents paying the portion of such COBRA payments that Executive
was required to pay with respect to such dependents prior to the Date of
Termination). Additionally, in the event that the Executive's employment is
terminated pursuant to this Section 10(b), all of the Executive's options to
purchase shares of capital stock of the Company (including the New Option) which
are unvested as of the Date of Termination but otherwise scheduled to vest on
the first vesting date scheduled to occur following the Date of Termination,
shall immediately vest and become exercisable on the Date of Termination and all
remaining unvested options shall terminate as of the Date of
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Termination. In the event the executive's employment is terminated pursuant to
this Section 10(b), all of the Executive's options to purchase capital stock of
the Company which are vested as of the Date of Termination (other than the
Rollover Option) or become vested pursuant to the immediately preceding sentence
may be exercised by the Executive's spouse or heirs within one (1) year
following the Date of Termination and shall then terminate; provided, however,
that in the event the Executive's spouse or heirs are entitled to receive a
payment with respect to the Pro Rata Bonus, all of such vested options may be
exercised by the Executive's spouse or heirs within two (2) years following the
Date of Termination and shall then terminate.
(c) Disability. The Executive's employment pursuant to this
Agreement may be terminated by written notice to the Executive by the Company or
to the Company by the Executive in the event that (i) the Executive becomes
unable to perform his duties as set forth in Section 3 by reason of physical or
mental illness or accident for any six (6) consecutive month period or (ii) the
Company receives written opinions from both a physician for the Company and a
physician for the Executive that the Executive will be so disabled. In the event
the Executive's employment is terminated pursuant to this Section 10(c), the
Executive shall be entitled to receive (A) all Base Salary and benefits to be
paid or provided to the Executive under this Agreement through the Date of
Termination, (B) an amount equal to one hundred percent (100%) of the
Executive's Base Salary at the then-current rate of Base Salary; provided,
however, that in the event the Date of Termination is the date of delivery of
the last physician's opinion referred to in Section 10(c)(ii), the payment with
respect to Base Salary, together with all Base Salary paid to the Executive
following the first date that Executive was unable to perform his duties set
forth in Section 3, shall equal one hundred and fifty percent (150%) of
Executive's Base Salary and; provided, further, that amounts payable to the
Executive under this Section 10(c) shall be reduced by the proceeds of any short
or long-term disability payments to which the Executive may be entitled during
such period under policies maintained at the expense of the Company as and to
the extent such disability payments compensate the insured for lost wages
resulting from the disability, and (C) to the extent applicable, an amount equal
to the Pro Rata Bonus. In the event that the Executive is entitled to receive a
payment with respect to the Pro Rata Bonus, he shall also be entitled to an
additional severance amount equal to one hundred percent (100%) of the Pro Rata
Bonus. All of the payments required to be paid pursuant to this Section 10(c)
shall be paid to the Executive no later than ten (10) days following the Date of
Termination; provided, however, that any Pro Rata Bonus and any additional
severance amount related thereto shall be paid to the Executive no later than
five (5) days following the determination of the amount of such payments, if
any. The Company will also provide the Executive and his eligible dependents
continued health and medical benefits as contemplated by Section 9 hereof
through the date one (1) year after the Date of Termination (provided, however,
that in the event the Date of Termination is the date of delivery of the last
physician's opinion referred to in Section 10(c)(ii), the Company will provide
such health and medical benefits through the date that is eighteen (18) months
following the first date that Executive was unable to perform his duties as set
forth in Section 3); the Company may satisfy this obligation by paying COBRA
premium payments with respect to Executive and his eligible dependents (with the
Executive paying the portion of such COBRA payments that Executive was required
to pay prior to the Date of Termination). Additionally, in the event that the
Executive's employment is terminated pursuant to this Section 10(c), all of the
Executive's options to purchase shares of capital stock of the Company
(including the New Option) which are unvested as of the Date of Termination but
otherwise scheduled to vest on the first vesting date scheduled to occur
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following the Date of Termination, shall immediately vest and become exercisable
on the Date of Termination and all remaining unvested options shall terminate as
of the Date of Termination. In the event the executive's employment is
terminated pursuant to this Section 10(c), all of the Executive's options to
purchase capital stock of the Company which are vested as of the Date of
Termination (other than the Rollover Option) or become vested pursuant to the
immediately preceding sentence may be exercised by the Executive within one (1)
year following the Date of Termination and shall then terminate; provided,
however, that in the event the Executive is entitled to receive a payment with
respect to the Pro Rata Bonus, all of such vested options may be exercised by
the Executive within two (2) years following the Date of Termination and shall
then terminate.
(d) By the Company for Cause. The Executive's employment pursuant to
this Agreement may be terminated by written notice to the Executive ("Notice of
Termination") upon the occurrence of any of the following events (each of which
shall constitute "Cause" for termination): (i) the Executive commits any act of
gross negligence, fraud or willful misconduct causing material harm to the
Company, (ii) the conviction of the Executive of a felony that would reasonably
be expected by the Board to adversely affect the Company or its reputation,
(iii) the Executive intentionally obtains material personal gain, profit or
enrichment at the expense of the Company or from any transaction in which the
Executive has an interest which is adverse to the interest of the Company,
unless the Executive shall have obtained the prior written consent of the Board,
or (iv) any material breach of the Executive of this Agreement, including,
without limitation, a material breach of Section 14 hereof, which breach remains
uncorrected for a period of fifteen (15) days after receipt by the Executive of
written notice from the Company setting forth the breach. In the event the
Executive's employment is terminated pursuant to this Section 10(d), the
Executive shall be entitled to receive all Base Salary and benefits to be paid
or provided to the Executive under this Agreement through the Date of
Termination and no more.
(e) By the Company Without Cause. The Executive's employment
pursuant to this Agreement may be terminated by the Company at any time without
Cause by delivery of a Notice of Termination to the Executive. In the event that
the Executive's employment is terminated pursuant to this Section 10(e), the
Executive shall be entitled to receive (i) all Base Salary and benefits to be
paid or provided to the Executive under this Agreement through the Date of
Termination, (ii) an amount equal to two hundred percent (200%) of the
Executive's Base Salary at the then-current rate of Base Salary, (iii) to the
extent applicable, an amount equal to the Pro Rata Bonus, (iv) in the event that
the Executive is entitled to receive a payment with respect to the Pro Rata
Bonus, a severance amount equal to two hundred percent (200%) of the Pro Rata
Bonus and (v) a lump sum payment equal to the then present value of all major
medical, disability and life insurance coverage to be provided pursuant to
Section 9 above through the date two (2) years after the Date of Termination,
provided that under such circumstances the Executive shall make all COBRA
premium payments on his own behalf. The sum of the amounts described in clauses
(ii), (iv) and (v) above are hereafter referred to as the "Section 10(e)
Severance Amount." All of the amounts described in clauses (i) and (iii) shall
be paid to the Executive no later than ten (10) days following the Date of
Termination; provided that any amount payable under clause (iii) shall be paid
to the Executive no later than five (5) days following the determination of the
amount of such payment, if any. All of the Section 10(e) Severance Amount shall
be paid to the Executive no later than ten (10) days following the later of (x)
the Date of Termination and (y) the execution of an agreement by the Executive,
in form
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and substance reasonably satisfactory to the Company, providing for (I) a full
release by the Executive of the Company, its officers, directors,
representatives and affiliates from all liabilities, obligations or claims,
other than those obligations specifically provided in this Section 10(e) (and
the Company shall provide a mutual release of the Executive), (II) an
affirmation of the Executive's obligations pursuant to Section 14 hereof and
(III) an agreement by the Executive to immediately repay to the Company one
hundred percent (100%) of the Section 10(e) Severance Amount upon any breach of
such agreement; provided, however, that any Section 10(e) Severance Amount
payable pursuant to Section 10(e)(iv) shall be paid to the Executive no later
than five (5) days following the determination of the amount of such payments,
if any. Additionally, in the event that the Executive's employment is terminated
pursuant to this Section 10(e), all of the Executive's options to purchase
shares of capital stock of the Company (including the New Option) which are
unvested as of the Date of Termination but otherwise scheduled to vest on the
first vesting date scheduled to occur following the Date of Termination, shall
immediately vest and become exercisable on the Date of Termination and all
remaining unvested options shall terminate as of the Date of Termination. In the
event the executive's employment is terminated pursuant to this Section 10(e),
all of the Executive's options to purchase capital stock of the Company that are
vested as of the Date of Termination (other than the Rollover Option) or become
vested pursuant to the immediately preceding sentence may be exercised by the
Executive within one (1) year following the Executive's Date of Termination and
shall then terminate; provided, however, that in the event the Executive is
entitled to receive a payment with respect to the Pro Rata Bonus, all of such
vested options may be exercised by the Executive within two (2) years following
the Date of Termination and shall then terminate.
(f) By the Executive for Good Reason. The Executive's employment
pursuant to this Agreement may be terminated by the Executive by written notice
of his resignation ("Notice of Resignation") delivered within twelve (12) months
after the occurrence of any of the following events (each of which shall
constitute "Good Reason" for resignation): (i) any Change of Control (as defined
below) shall occur; (ii) the removal of the Executive from or the failure to
elect or re-elect the Executive to the position of Chief Financial Officer of
the Company; (iii) any material reduction by the Company of the Executive's
duties or responsibilities or the assignment to the Executive of duties
materially inconsistent with such position or (iv) any breach by the Company of
this Agreement (including the provisions of Section 3), which breach remains
uncorrected for a period of fifteen (15) days after receipt by the Company of
written notice from the Executive. Notwithstanding the provisions of clause (i),
(ii), (iii) or (iv) above, in the event the Executive is elected as Chief
Financial Officer of any entity which acquires control of more than 50% of the
voting securities of the Company or is otherwise the surviving entity after a
Change in Control or, if such entity is a subsidiary of another entity, the
ultimate parent of such subsidiary (except as provided below), with
responsibility for (1) no fewer facilities than the Company controlled at the
end of the fiscal year ending immediately preceding such Change of Control and
(2) operating revenues equal to or greater than the Company's operating revenues
during such fiscal year, and is provided with a written employment agreement by
the entity or, if such entity is a subsidiary of another entity, the ultimate
parent of such subsidiary (except as provided below) on substantially the same
terms as those contained in this Agreement (provided that if the surviving
entity that acquires control of the Company is owned by a financial purchaser,
the positions and the employment agreement shall be at the Company level or
entity level and not the ultimate parent level) the appointment to
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such position (and the fact that a Change in Control has occurred) shall not
constitute Good Reason for purposes of this Agreement. In the event that the
Executive resigns for Good Reason pursuant to this Section 10(f), the Executive
shall be entitled to receive, (A) all Base Salary and benefits to be paid or
provided to the Executive under this Agreement through the Date of Termination,
(B) an amount equal to two hundred percent (200%) of the Executive's Base Salary
at the then-current rate of Base Salary, (C) to the extent applicable, an amount
equal to the Pro Rata Bonus, (D) in the event that the Executive is entitled to
receive a payment with respect to the Pro Rata Bonus, a severance amount equal
to two hundred percent (200%) of the Pro Rata Bonus and (E) a lump sum payment
equal to the then present value of all major medical, disability and life
insurance coverage to be provided pursuant to Section 9 above through the date
two (2) years after the Date of Termination, provided that under such
circumstances the Executive shall make all COBRA premium payments on his own
behalf. The sum of the amounts described in clauses B, D and E above are
hereafter referred to as the "Section 10(f) Severance Amount." All of the
amounts described in clauses (A) and (C) shall be paid to the Executive no later
than ten (10) days following the Date of Termination; provided that any amount
payable under clause (C) shall be paid to the Executive no later than five (5)
days following the determination of the amount of such payment, if any. All of
the Section 10(f) Severance Amount shall be paid to the Executive no later than
ten (10) days following the later of (x) the Date of Termination and (y) the
execution of an agreement by the Executive, in form and substance reasonably
satisfactory to the Company, providing for (I) a full release by the Executive
of the Company, its officers, directors, representatives and affiliates from all
liabilities, obligations or claims, other than those obligations specifically
provided in this Section 10(f) (and the Company shall provide a mutual release
of the Executive), (II) an affirmation of the Executive's obligations pursuant
to Section 14 hereof and (III) an agreement by the Executive to immediately
repay to the Company one hundred percent (100%) of the Section 10(f) Severance
Amount upon any breach of such agreement; provided, however, that any Section
10(f) Severance Amount payable under Section 10(f)(D) shall be paid to the
Executive no later than five (5) days following the determination of the amount
of such payments, if any. Additionally, in the event that the Executive's
employment is terminated pursuant to this Section 10(f) other than in the case
of a Change in Control, all of the Executive's options to purchase shares of
capital stock of the Company (including the New Option) which are unvested as of
the Date of Termination but otherwise scheduled to vest on the first vesting
date scheduled to occur following the Date of Termination, shall immediately
vest and become exercisable on the Date of Termination and all remaining
unvested options shall terminate as of the Date of Termination. In the event the
executive's employment is terminated pursuant to this Section 10(f), all of the
Executive's options to purchase capital stock of the Company that are vested as
of the applicable Date of Termination (other than the Rollover Option) or become
vested pursuant to the immediately preceding sentence may be exercised by the
Executive within one (1) year following the Executive's Date of Termination and
shall then terminate; provided, however, that in the event the Executive is
entitled to receive a payment with respect to the Pro Rata Bonus, all of such
vested options may be exercised by the Executive within two (2) years following
the Date of Termination and shall then terminate.
For purposes of this Agreement, a "Change in Control" shall
mean any transactions or series of related transactions pursuant to which any
Person (as defined in Section 13(d)(3) or 14(d)(2) of the Securities and
Exchange Act of 1934, as amended from time to time (the "Exchange Act")) or
"group" of Persons (as defined in Section 13(d) of the Exchange Act),
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(other than TPG Partners IV, LP and the other parties to the operating agreement
of IASIS Investment LLC, a Delaware limited liability company, on the Effective
Time or their respective affiliates), in the aggregate, directly or indirectly,
acquires beneficially or of record, (i) equity of a Designated Person, as
hereinafter defined, possessing the voting power to elect a majority of the
Designated Person's governing body (whether by merger, consolidation,
reorganization, combination, sale or transfer of equity, stockholder or voting
agreement, proxy, power of attorney or otherwise) or (ii) all or substantially
all of a Designated Person's assets. For purposes of this Agreement, Designated
Person shall mean IASIS Investment LLC and the Company. Notwithstanding the
foregoing, in no event will a Change in Control occur as a result of the initial
public offering of the Company's shares of common stock or any secondary
offering to the public.
(g) By the Executive Without Good Reason or Executive's Failure to
Extend Term. The Executive's employment pursuant to this Agreement may be
terminated by the Executive at any time by delivery of a Notice of Resignation
to the Company or by the Executive providing notice to the Company of his intent
not to extend the Term for any additional period as provided in Section 2(b). In
the event that the Executive's employment is terminated pursuant to this Section
10(g), the Executive shall receive all Base Salary and benefits to be paid or
provided to the Executive under this Agreement through the Date of Termination
and no more.
(h) Date of Termination. The Executive's Date of Termination shall
be (i) if the Executive's employment is terminated pursuant to Section 10(b),
the date of his death, (ii) if the Executive's employment is terminated pursuant
to Section 10(c), the last day of the six-month period referred to in Section
10(c)(i) or the date of delivery of the last physician's opinion referred to in
Section 10(c)(ii), as the case may be, (iii) if the Executive's employment is
terminated pursuant to Section 10(d), the date on which a Notice of Termination
is given, (iv) if the Executive's employment is terminated pursuant to Section
10(e), sixty (60) days after the date the Notice of Termination is given;
provided, however, that the Company may waive such notice in the event of a
termination pursuant to Section 10(e) in which event, the Executive's Date of
Termination shall be five (5) days after the Notice of Termination, (v) if the
Executive's employment is terminated pursuant to Section 10(f), five (5) days
after the date the Notice of Resignation is given, (vi) if the Executive's
employment is terminated pursuant to Section 10(g) (other than as a result of
Executive's failure to extend the Term), one hundred twenty (120) days after the
date the Notice of Resignation is given or such shorter period as may be
determined by the Company and (vii) if the Company or Executive provides notice
of its or his intent not to extend the Term for any additional period as
provided in Section 2(b), the expiration of the Term.
(i) Company's Failure to Extend Term. In the event the Company
provides notice of its intent not to extend the Term for any additional period
as provided in Section 2(b) and the Executive is not then in violation of
Section 14 hereof, the Executive shall be entitled to receive (i) all Base
Salary and benefits to be paid or provided to the Executive under this Agreement
through the Date of Termination; (ii) an amount equal to one hundred percent
(100%) of the Executive's Base Salary at the then-current rate of Base Salary;
(iii) to the extent applicable, an amount equal to the Pro Rata Bonus; (iv) in
the event that the Executive is entitled to receive a payment with respect to
the Pro Rata Bonus, an additional severance amount equal to one hundred percent
(100%) of the Pro Rata Bonus; and (v) a lump sum payment equal to the
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then present value of all major medical, disability and life insurance coverage
to be provided pursuant to Section 9 above through the date one (1) year after
the Date of Termination, provided that under such circumstances the Executive
shall make all COBRA premium payments on his own behalf. The sum of the amounts
described in clauses (ii), (iv) and (v) above are hereafter referred to as the
"Section 10(i) Severance Amount." All of the amounts described in clauses (i)
and (iii) shall be paid to the Executive no later than ten (10) days following
the Date of Termination; provided that any amount payable under clause (iii)
shall be paid to the Executive no later than five (5) days following the
determination of the amount of such payment, if any. All of the Section 10(i)
Severance Amount shall be paid to the Executive no later than ten (10) days
following the later of (x) the Date of Termination and (y) the execution of an
agreement by the Executive, in form and substance reasonably satisfactory to the
Company, providing for (I) a full release by the Executive of the Company, its
officers, directors, representatives and affiliates from all liabilities,
obligations or claims, other than those obligations specifically provided in
this Section 10(i) (and the Company shall provide a mutual release of the
Executive), (II) an affirmation of the Executive's obligations pursuant to
Section 14 hereof and (III) an agreement by the Executive to immediately repay
to the Company one hundred percent (100%) of the Section 10(i) Severance Amount
upon any breach of such agreement; provided, however, that any Section 10(i)
Severance Amount payable under Section 10(i)(iv) shall be paid to the Executive
no later than five (5) days following the determination of the amount of such
payments, if any. Additionally, in the event that the Executive's employment is
terminated pursuant to this Section 10(i), all of the Executive's options to
purchase shares of capital stock of the Company which are unvested as of the
expiration of the Term but otherwise scheduled to vest on the first vesting date
scheduled to occur following the expiration of the Term, shall immediately vest
and become exercisable upon the expiration of the Term and all remaining
unvested options shall terminate as of such date. In the event the executive's
employment is terminated pursuant to this Section 10(i), all of Executive's
options to purchase capital stock of the Company that are vested as of the
expiration of the Term (other than the Rollover Option) or become vested
pursuant to the immediately preceding sentence may be exercised by the Executive
at any time within one (1) year following the expiration of the Term and shall
then terminate; provided, however, that in the event the Executive is entitled
to receive a payment with respect to the Pro Rata Bonus, all of such vested
options may be exercised by the Executive within two (2) years following the
Date of Termination and shall then terminate.
11. Shareholder Approval. This Agreement and the equity awards described
in Section 6 herein shall be approved by the stockholders of the Company in
accordance with Section 280G of the Code and Treas. Reg. 1.280G-1 Q/A-7 and if
such approval is not obtained prior to the Effective Time, this Agreement shall
become null and void on the Effective Time.
12. Representations.
(a) The Company represents and warrants that this Agreement has been
authorized by all necessary corporate action of the Company and is a valid and
binding agreement of the Company enforceable against it in accordance with its
terms.
(b) The Executive represents and warrants that he is not a party to
any agreement or instrument, which would prevent him from entering into or
performing his duties in
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any way under this Agreement, and that this is a valid and binding agreement of
the Executive enforceable against him in accordance with its terms.
13. Assignment; Binding Agreement. This Agreement is a personal contract
and the rights and interests of the Executive hereunder may not be sold,
transferred, assigned, pledged, encumbered, or hypothecated by him, except as
otherwise expressly permitted by the provisions of this Agreement. This
Agreement shall inure to the benefit of and be enforceable by the Executive and
his personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Executive should die while
any amount would still be payable to him hereunder had the Executive continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there is no such designee, to his estate.
14. Confidentiality; Non-Competition; Ownership of Works.
(a) The Executive acknowledges that: (i) the Business is intensely
competitive and that the Executive's employment by the Company will require that
the Executive have access to and knowledge of confidential information of the
Company relating to the Business, including, but not limited to, the identity of
the Company's employees, physicians, payors or suppliers, the kinds of services
provided by the Company, the manner in which such services are performed or
offered to be performed, the service needs of actual or prospective patients,
physicians or payors, pricing information and other contractual terms,
information concerning the creation, acquisition or disposition of products and
services, creative ideas and concepts, including clinical and financial systems,
compliance programs and physician relation and retention programs, computer
software applications and other programs, research data, personnel information
and other trade secrets, in each case other than as and to the extent such
information is generally known or publicly available through no violation of
this Section 14 by the Executive or such information is readily discernible (the
"Confidential Information"); (ii) the disclosure of any such Confidential
Information may place the Company at a competitive disadvantage and may do
damage, monetary or otherwise, to the Company's business; and (iii) the engaging
by the Executive in any of the activities prohibited by this Section 14 may
constitute improper appropriation and/or use of such Confidential Information.
The Executive expressly acknowledges the trade secret status of the Confidential
Information and that the Confidential Information constitutes a protectable
business interest in the Company. Accordingly, the Company and the Executive
agree as follows:
(b) For purposes of this Section 14, the Company shall be construed
to include the Company and its parents and subsidiaries engaged in the Business,
including any divisions managed by the Executive.
(c) During the Executive's employment with the Company, and at all
times after the termination of the Executive's employment by expiration of the
Term or otherwise, the Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, partner, employee, principal or
agent of any business, or in any other capacity, make known, disclose, furnish,
make available or utilize any of the Confidential Information, other than in the
proper performance of the duties contemplated herein, or as expressly permitted
herein, or as required by a court of competent jurisdiction or other
administrative or legislative body, provided
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that the Executive shall promptly notify the Company so that the Company may
seek a protective order or other appropriate remedy. The Executive agrees to
return all documents or other materials containing Confidential Information,
including all photocopies, extracts and summaries thereof, and any such
information stored electronically on tapes, computer disks or in any other
manner to the Company at any time upon request by the Company and immediately
upon the termination of his employment for any reason.
(d) For a period of two (2) years following the Executive's Date of
Termination (or one (1) year following the expiration of the Term in the case of
the Company's delivery of notice of its intent not to extend the Term for any
additional period as provided in Section 2(b)), whether upon expiration of the
Term or otherwise, the Executive shall not engage in Competition, as defined
below, with the Company or its subsidiaries within twenty-five (25) miles of the
location of any hospital managed by the Company (or other facility managed by
the Company from which in excess of five percent (5%) of the Company's annual
revenues are derived) at the time of, or within six (6) months prior to, the
Executive's Date of Termination or the expiration of the Term, as applicable
(each, an "Affected Facility"), or in which, during the three (3) month period
immediately prior to the Executive's Date of Termination or the expiration of
the Term (as applicable), the Company had made substantial plans with the
intention of establishing operations in such locality or region. For purposes of
this Agreement, "Competition" by the Executive shall mean the Executive's
engaging in any activities relating to, or otherwise directly or indirectly
being employed by or acting as a consultant or lender to, or being a director,
officer, employee, principal, agent, stockholder, member, owner or partner of,
or permitting his name to be used in connection with the activities of any
entity engaged in significant activities relating to, the Business.
Notwithstanding the foregoing, it shall not be a violation of this paragraph for
the Executive to (ii) be a consultant to, or a director, officer, employee, or
agent of, any entity engaged in the Business which has hospitals or other
facilities within twenty-five (25) miles of any Affected Facility, so long as
the Executive does not provide any services or advice to, or have any management
supervision of, or responsibility for, any hospital or other facility located
within twenty-five (25) miles of any Affected Facility; or (ii) become the
registered or beneficial owner of up to five percent (5%) of any class of the
capital stock of any one or more competing corporations registered under the
Securities Exchange Act of 1934, as amended, provided that the Executive does
not actively participate in the business of such corporation until such time as
this covenant expires. In the event that the Executive breaches the restrictions
set forth in Section 14(d) following a termination pursuant to Section 10(e),
10(f) or 10(i), the Executive shall pay the Company "Liquidated Damages" (as
hereinafter defined) within ten (10) days following any such breach. If
Executive's employment is terminated pursuant to Section 10(e), 10(f) or 10(i)
and the Executive has repaid the full amount of the Liquidated Damages as
provided pursuant to the immediately preceding sentence, the Company shall not
be entitled to any remedy, including, without limitation, additional damages or
injunctive relief, upon Executive's breach of Section 14(d). "Liquidated
Damages" shall mean the Section 10(e) Severance Amount, Section 10(f) Severance
Amount or Section 10(i) Severance Amount received by the Executive, as the case
may be.
(e) For a period of two (2) years following the Executive's Date of
Termination (or one (1) year following the expiration of the Term in the case of
the Company's delivery of notice of its intent not to extend the Term for any
additional period as provided in Section 2(b)), whether upon expiration of the
Term or otherwise, the Executive agrees that he
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will not, directly or indirectly, for his benefit or for the benefit of any
other person, firm or entity, do any of the following:
(i) solicit from any physician or physician group doing
business with the Company as of the Executive's termination, business of
the same or of a similar nature to the business of the Company with such
physician or physician group;
(ii) solicit from any known potential physician group business
of the same or of a similar nature to that which has been the subject of a
known written or oral bid, offer or proposal by the Company, or of
substantial preparation with a view to making such a bid, proposal or
offer, within six (6) months prior to the Executive's termination; or
(iii) recruit or solicit the employment or services of any
person who was employed by the Company upon termination of the Executive's
employment and is employed by the Company at the time of such recruitment
or solicitation.
(f) The Executive will make full and prompt disclosure to the
Company of all inventions, improvements, formulas, data, programs, processes,
ideas, concepts, discoveries, methods, developments, software, and works of
authorship, whether or not copyrightable, trademarkable or patentable, which
relate to the actual or anticipated business, activities or research of the
Company and either (i) are created, made, conceived or reduced to practice by
the Executive, either alone, under his direction or jointly with others during
the period of his employment with the Company, (ii) result from or are suggested
by work performed by the executive for the Company or (iii) result, to any
extent, from use of the Company's premises or property (all of which are
collectively referred to in this Agreement as "Works"). All Works shall be the
sole property of the Company, and, to the extent that the Company is not already
considered the owner thereof as a matter of law, the Executive hereby assigns to
the Company, without further compensation, all his right, title and interest in
and to such Works and any and all related intellectual property rights
(including, but not limited to, patents, patent applications, copyrights,
copyright applications, and trademarks) in the United States and elsewhere.
(g) The Executive acknowledges that the services to be rendered by
him to the Company are of a special and unique character, which gives this
Agreement a peculiar value to the Company, the loss of which may not be
reasonably or adequately compensated for by damages in an action at law, and
that a breach or threatened breach by him of any of the provisions contained in
this Section 14 may cause the Company irreparable injury. The Executive
therefore agrees that the Company may be entitled, in addition to any other
right or remedy, to a temporary, preliminary and permanent injunction, without
the necessity of proving the inadequacy of monetary damages or the posting of
any bond or security, enjoining or restraining the Executive from any such
violation or threatened violations.
(h) If any one or more of the provisions contained in this Agreement
shall be held to be excessively broad as to duration, activity or subject, such
provisions shall be construed by limiting and reducing them so as to be
enforceable to the fullest extent permitted by law.
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15. Entire Agreement. This Agreement contains all the understandings
between the parties hereto pertaining to the matters referred to herein, and
supersedes any other undertakings and agreements, whether oral or in writing,
previously entered into by them with respect thereto. The Executive represents
that, in executing this Agreement, he does not rely and has not relied upon any
representation or statement not set forth herein made by the Company with regard
to the subject matter or effect of this Agreement or otherwise.
16. Amendment or Modification Waiver. No provision of this Agreement may
be amended or waived, unless such amendment or waiver is agreed to in writing,
signed by the Executive and by a duly authorized officer of the Company. No
waiver by any party hereto of any breach by another party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.
17. Expenses. Each party shall bear its own expenses in connection with
the negotiation, execution, delivery and performance of this Agreement and the
resolution of any disputes hereunder; provided, however, that the Company shall
pay the Executive's reasonable legal costs and expenses incurred in connection
with the negotiation, execution and delivery of this Agreement.
18. Notices. Any notice to be given hereunder shall be in writing and
shall be deemed given when delivered personally, sent by courier or facsimile or
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently give notice hereunder in writing:
To the Executive at:
Mr. W. Xxxx Xxxxxxx
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxxxxxx, Xxxxxxxxx 00000
With copies to:
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx
Xxxxxxxxx Xxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx, Esquire
To the Company at:
IASIS Healthcare Corporation
000 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxx, XX 00000
Attention: General Counsel
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With copies to Purchaser at:
IASIS Investment LLC
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
and
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esquire
Any notice delivered personally or by courier under this Section 18
shall be deemed given on the date delivered and any notice sent by facsimile or
registered or certified mail, postage prepaid, return receipt requested, shall
be deemed given on the date transmitted by facsimile or three business days
after it is mailed.
19. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable, shall not be affected thereby, and each provision
hereof shall be validated and shall be enforced to the fullest extent permitted
by law.
20. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
21. Governing Law; Venue. This Agreement will be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof.
22. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
23. Withholding. All payments to the Executive under this Agreement shall
be reduced by all applicable withholding required by federal, state or local
law.
24. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement on May 4, 2004 to be effective as of the Effective Date.
IASIS HEALTHCARE CORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman & CEO
/s/ W. Xxxx Xxxxxxx
------------------------------
W. Xxxx Xxxxxxx
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