AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT (“Amendment”) dated as of January 31, 2008 is by and
between IASIS Healthcare Corporation, a Delaware corporation (the “Company”) and Xxxxxx X. XxXxx
(the “Executive”). The Company and Executive are sometimes referred to herein individually as
“party” and collectively as the “parties”.
WHEREAS, the Company and Executive entered into that certain Employment Agreement dated May 4,
2004 (the “Agreement”), a copy of which is attached hereto as Exhibit A.
WHEREAS, the Company and Executive desire to amend the Agreement on the terms and conditions
set forth herein.
NOW, THEREFORE, as consideration of the mutual covenants contained in this Amendment and other
good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and
intending to be legally bound, the parties hereby agree as follows:
1. Amendment to Section 2. Section 2 of the Agreement shall be deleted in
its entirety and superseded with the following language:
“2. Term. 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 May
31, 2011.
2. Amendment to Section 3. The first sentence of Section 3 of the Agreement shall be
amended to read as follows: “During the Term, the Executive shall serve as President and Chief
Operating 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 remainder of
Section 3 remain unchanged and in full force and effect.
3. Amendment to Section 5(a). The following language shall be added to the end of
Section 5(a) of the Agreement: “Commencing January 1, 2008, the Base Salary shall be Six Hundred
Thousand Dollars ($600,000.00) per year.”
4. Entire Agreement and Amendments. No other term, condition or provision of the
Agreement shall be waived, changed, modified, extended or discharged by this Amendment. This
Amendment and the Agreement contain the entire agreement
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of the parties relating to the matters contained herein and supersedes all prior agreements and
understandings, oral or written, between the Parties with respect to the subject matter hereof.
This Amendment and the Agreement may be changed only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or discharge is sought.
5. Execution. This Agreement may be executed in multiple counterparts each of which
shall be deemed an original and all of which shall constitute one and the same instrument.
6. Controlling Law. The laws of the State of Delaware shall govern the
execution, validity, interpretation and performance of this Amendment.
7. Headings. Headings used in this Amendment are for convenience of reference
only and for no other purpose.
IN WITNESS WHEREOF, the parties have executed this Amendment on and caused the same to be duly
delivered on their behalf on the day and year first written above.
| IASIS Healthcare Corporation, a Delaware corporation |
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| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Chief Executive Officer | |||
| EXECUTIVE: |
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| /s/ Xxxxxx X. XxXxx | ||||
| Name: Xxxxxx X. XxXxx | ||||
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Execution Copy
THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of May 4, 2004, is by and
between IASIS Healthcare Corporation, a Delaware corporation (the “Company”), and
Xxxxxx X. XxXxx (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,
Titan Acquisition Corporation and IASIS Investment LLC (the “Purchaser”), the Company
will become a wholly-owned subsidiary of Purchaser;
WHEREAS, the Executive has served as Chief Operating Officer of the Company pursuant
to an Employment Agreement with the Company, dated May 21,2001 (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 Operating Officer of the Company and
to serve as President 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)
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additional year following the expiration of the otherwise applicable Term unless, not later than
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 President and
Chief Operating 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 her 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 her capacity as an officer or employee thereof.
4. Duties. During the Term, the Executive shall devote her 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 her 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 Sixty Eight Thousand Dollars ($468,000.00) 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.
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
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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 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 the
Transaction. With respect to the 2005 fiscal year, the Executive will receive a bonus of 10%, 50%
or 100% of her 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 twelve-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 in 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 her in connection with her employment (including,
without limitation, expenses for travel and entertainment incurred in conducting or promoting
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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.
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
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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(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 her 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 her
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, she
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 her 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 her duties as set
forth in Section 3); the Company may satisfy this obligation by paying COBRA premium
payments with respect to Executive and her 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
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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 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 her 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)
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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 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 her
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) the one-year anniversary of the date of any Change of Control (as defined
below) unless the acquirer is in the healthcare facilities business, in which case the
one-year anniversary shall be reduced to six months after the date of the Change in
Control; (ii) the removal of the Executive from or the failure to elect or re-elect the
Executive to the position of President and Chief Operating 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 (v) 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. In addition to the foregoing, in the event of a
Transaction (as defined in the Option Grant Agreement attached hereto as Exhibit C) after
which the Executive may terminate her Employment on account of Xxxxx Xxxxx’x employment
terminating as provided in Section 5(c)(2) of the Option Grant Agreement, such termination
shall be treated as a termination under this Section 10(f) provided the Executive complies
with the time periods for terminating her employment under Section 10(f)(i) above except
that the time periods shall commence on the Date of Termination of Xx. Xxxxx’x employment
(as determined under Xx. Xxxxx’x employment agreement) instead of on the date of
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the Change in Control. 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 her 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 that 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), (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
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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 her 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 her 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 her 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 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
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that under such circumstances the Executive shall make all COBRA premium payments on her 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 she is not a party to any agreement or
instrument, which would prevent her from entering into or performing her duties in any way under
this Agreement, and that this is a valid and binding agreement of the Executive enforceable against
her in accordance with its terms.
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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 her, 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 her 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 her 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 her devisee,
legatee or other designee or, if there is no such designee, to her 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 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
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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 her 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 her 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 she will not, directly or
indirectly, for her benefit or for the benefit of any other person, firm or entity, do any of the
following:
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(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 her direction or jointly with others during the period of her
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 her 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 her 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 her 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.
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, she does not rely and has not relied
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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:
200 XxXxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Xxxxxxxxxx, Xxxxxxxxx 00000
With copies to:
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx
Naxxxxxxx Xxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxxx, XX 00000-0000
Xttention: Xxxxx Xxxxxx, Esquire
Naxxxxxxx Xxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxxx, XX 00000-0000
Xttention: Xxxxx Xxxxxx, Esquire
To the Company at:
IASIS Healthcare Corporation
110 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxx, XX 00000
Xttention: General Counsel
110 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxx, XX 00000
Xttention: General Counsel
With copies to Purchaser at:
IASIS Investment LLC
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300 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Xttention: Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Xttention: Xxxxxxx X. Xxxxxxxxx, Esq.
and
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Onx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Xttention: Xxxxxx X. Xxxxxxx, Esquire
Onx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Xttention: 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/ Xxxxxx X. XxXxx | ||||
| Xxxxxx X. XxXxx | ||||
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