Exhibit 10.6
Xxx. Xxxxxx Xxxxx
October 14, 1999
Page 1
October 14, 1999
Xxx. Xxxxxx Xxxxx
0000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Dear Xxxxxx:
This letter confirms our agreement that Lifemark Corporation ("Lifemark") has
agreed to employ you and you have agreed to serve as President and Chief
Executive Officer of Lifemark effective immediately.
Your base salary will be $200,000 annually (or in future years, such increased
amount as we may agree) commencing today. You will also participate in
Lifemark's bonus plan with a targeted onus of 40% of your salary in accordance
with the Company's customary practices and formulae. You will also receive the
same benefit package as other Lifemark employees and additional benefits
described in this letter.
In addition to your regular bonus, you will be entitled to receive on January 1
of each year commencing on January 1, 2000, an additional bonus equal to the
amount of interest due on any Company Loans (as defined below) (provided,
however, that if you have prepaid interest in the prior calendar year and the
Company has not previously paid you an additional bonus in the amount of your
prepaid interest, the bonus shall include the amount of such prepaid interest).
For this purpose, "Company Loans" shall mean and include loans by the Company to
you to purchase stock of the Company from the Company.
Concurrently with the execution of this letter, Lifemark has granted you ten
year stock options to purchase 150,000 shares of Lifemark common stock. Lifemark
has also agreed to permit you to exercise your 150,000 options at the time of
their vesting accepting as payment your secured nine-year promissory note in the
full amount of your exercise price. 90,000 of the options granted to you vest
immediately and 60,000 granted under the newly approved Executive Stock Option
and Ownership Plan will vest immediately upon approval of the Plan by the
Company's stockholders. You have agreed to exercise the options immediately upon
vesting.
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The loans provided for in the preceding paragraph will become due and payable
(including accrued interest) 180 days following termination of employment except
that they will become immediately due and payable if you breach the Key Employee
Non-Disclosure Agreement or if you are terminated for just cause (as defined
below) at any time.
For purposes of this letter, termination by Lifemark "for just cause" shall mean
termination on account of gross negligence, dishonesty, or any willful material
violation of any reasonable rule or regulation of Lifemark of which you have
been advised in writing.
In the event of a Change in Control (as defined below) of Lifemark, Lifemark
agrees that if without your consent Lifemark materially changes your duties or
responsibilities or the location of your principal place of work and as a result
of such change or changes you voluntarily terminate your employment, then, in
either such event, (i) all of your outstanding unexercised options will vest and
become exercisable on the date of termination of your employment, and (ii) you
will be entitled to the same severance payments as those provided for below with
respect to termination without cause.
For purposes of this letter, "Change in Control" shall mean the occurrence of
any of the following events:
(i) The acquisition, by new stockholders (being any person or group of persons
other than the current directors of the Company, Xxxxxx Xxxxxxx, their
respective families, estates, trusts and other affiliates) acting in concert, of
a beneficial ownership interest in the Company, resulting in the total
beneficial ownership of such persons or group of persons equaling or exceeding
50% of the outstanding common stock and warrants of the Company; provided,
however, that no such person or group of persons shall be deemed to beneficially
own (i) any common stock or warrants acquired directly from the Company or (ii)
any common stock or warrants held by the Company or any of its subsidiaries or
any employee benefit plan (or any related trust) of the Company or its
subsidiaries. The Change in Control shall be deemed to occur on the date the
beneficial ownership of the acquiring person or group of persons first equals or
exceeds 50% of the outstanding common stock and warrants of the Company.
(ii) A merger, consolidation or other reorganization having substantially the
same effect, or the sale of all or substantially all the consolidated assets of
the Company in each case, with respect to which the persons or group of persons
who were the respective beneficial owners of the outstanding common stock
immediately prior to such event do not, following such event, beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
voting stock of the corporation resulting from such event or the corporation
purchasing or receiving assets pursuant to such event.
If more than one of the foregoing events shall occur, each such event shall
constitute a separate Change in Control.
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For purposes of this letter, a change in duty or responsibility shall be broadly
interpreted. Thus, by way of example, a change in your autonomy or role in
setting strategy and policies of the company would be deemed to constitute a
change in duty or responsibility even if you remained in title chief executive
officer of the Lifemark business. Similarly, if you were no longer chief
executive officer of a publicly traded company, your duties and responsibilities
would be deemed to have changed.
Lifemark further confirms that it will abide by both the letter and the spirit
of the adjustment provisions contained in its Stock Option Plans and the Stock
Option Certificates which you hold, pursuant to which Lifemark has agreed to
adjust the outstanding options appropriately in the event of a sale or merger of
the corporation.
In the event the Company terminates your employment other than for cause, you
will be entitled to severance pay equal to eighteen months of your base salary
($300,000 or an appropriately increased amount if your base salary has
increased). In addition, you will be entitled to a pro rated portion of your
targeted bonus regular bonus, and a pro rated portion of the additional bonus
provided for in the third paragraph of this letter, in each case pro rated on
the portion of the fiscal year prior to termination. The pro rated regular bonus
will be payable at the time other Executive bonuses are paid and will be based
on the entire year of Company performance. The pro rated additional bonus will
be paid within 30 days of termination. You will be entitled to payment in full
of any bonus for the last completed fiscal year prior to termination which has
not yet been paid as of the date of termination, with such bonus to be paid at
the time other Executive bonuses for such year are paid. You will also be
entitled to continuing family medical coverage for a period of twelve months.
As a condition to your employment, you reconfirm your execution of Lifemark's
Standard Key Employee Executive Nondisclosure Agreement.
Again, I would like to take this opportunity to say how excited I am about your
taking on these new responsibilities.
The substance of the terms of this letter was negotiated and agreed to in
Arizona and it is solely for the convenience of the parties that it is being
signed by facsimile outside of Arizona. Arizona law applicable to contracts made
and to be performed in Arizona shall therefore apply to and govern all aspects
of this Agreement.
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Please confirm your agreement with and acceptance of the provisions of this
letter by signing and returning the enclosed copy of this letter where
indicated.
Sincerely,
/s/ XXXXXXX X. XXXXXXX
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Chairman
ACCEPTED AND AGREED:
/s/ XXXXXX XXXXX
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