EXHIBIT 10.23
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of July 1, 2004 by and between AHS Management Company, Inc., a Delaware
corporation (the "Company"), and Xxxxx Xxxxx, an individual ("Employee").
WITNESSETH:
WHEREAS, the Company desires to enter into this Agreement with Employee
and to provide him with the benefits set forth herein in recognition of the
valuable services he will render to the Company, and for the purposes evidenced
herein;
WHEREAS, Employee is ready and willing to render the services provided
for, and on the terms and conditions set forth herein, and he is willing to
refrain from activities competitive with the business of the Company during the
term of and after this Agreement on the terms and conditions set forth herein;
WHEREAS, in serving as an employee of the Company, Employee will
participate in the use and development of confidential proprietary information
about the Company, its customers and suppliers, and the methods used by the
Company and its employees in competition with other companies, as to which the
Company desires to protect fully its rights;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Employment. The Company hereby employs Employee and Employee accepts
such employment with the Company, subject to the terms and conditions set forth
herein. Employee shall be employed as President, Oklahoma Division and shall
perform all duties and services incident to such position, and such other
similar duties and services as may be prescribed by the Bylaws of the Company or
established by the Chairman of the Board of Directors (the "Board") of the
Company, or its parent corporation from time to time. During his employment
hereunder, Employee shall devote his best efforts and attention, on a full-time
basis, to the performance of the duties required of him as an employee of the
Company.
2. Principal Office. Employee's principal office and normal place of
work shall be at the Company's principal executive offices in Tulsa, Oklahoma
("Principal Office").
3. Compensation.
(a) As compensation for services rendered by Employee
hereunder, Employee shall receive:
(1) Salary. An annual salary of $330,000, or such
higher salary as shall be approved by the Board from time to
time, which shall be payable in arrears in equal monthly
installments ("Salary").
(2) Bonus. The Company shall pay Employee an annual
cash bonus in an amount to be determined by the Board based on
whether certain reasonable objectives established by the Board
prior to the beginning of each fiscal year as set forth in the
Company's Incentive Compensation Plan (the "Plan") have been
met. Such bonus and objectives may be stated in a written
incentive compensation program which the
Company intends to qualify as "performance based compensation"
described in Internal Revenue Code section 162(m). The bonus
payable during the first year will be prorated based on the
amount of time Employee is a Company employee during the first
year and shall be 75% of Employee's Salary if the Plan
objectives have been met, and 125% of Salary if the Plan is
met and exceeded by 10% or more. Thereafter, Employee shall be
a full participant in the Plan as adopted each year by the
Board.
(3) Fringe Benefits Employee shall be entitled during
the Term of this Agreement (as defined below) to such other
benefits of employment with Employer as are now or may
hereafter be in effect for Employer's senior executives with
duties comparable to Employee including, without limitation,
all incentive and deferred compensation, pension, life and
other insurance, disability (insured and uninsured), medical
and dental and other benefit plans or programs, paid time off
and stock option grants as approved by the Board.
Additionally, Employee shall be provided the opportunity to
buy additional life insurance at Employee's expense.
(4) Expenses. During the term of this Agreement, the
Company shall reimburse Employee promptly for all reasonable
travel, entertainment, parking, business meeting and similar
expenditures incurred in pursuance of Employer's business upon
receipt of reasonable supporting documentation as required by
Employer's policies applicable to its officers and other key
employees generally. As part of Employee's relocation to
Tulsa, Oklahoma, the Company will assist Employee with the
costs of his relocation in accordance with the Company's
relocation policy. In addition to the financial assistance
available under this policy, in the event the Employee's home
does not sell within a reasonable period of time, the Company
agrees after the expiration of that reasonable time period, to
provide reasonable financial assistance during the time period
the Employee's current home remains for sale.
(5) Withholdings. All amounts payable to Employee
hereunder shall be subject to such deductions or withholdings
as are required by law or the policies of the Company or as
may be authorized or directed by Employee.
(b) Benefits Review. Prior to the end of each fiscal year of
the Company, the Board shall review Employee's salary and benefits
payable hereunder. Any increases in salary or changes in fringe
benefits determined by the Board at such annual review shall become
effective the following month unless otherwise determined by the
Company. Employee understands and acknowledges that the opportunity of
an annual salary and benefit review by the Board shall not be construed
in any manner as an express or implied agreement by the Company to
raise or increase his salary or benefits.
(c) Indemnification. This Agreement hereby incorporates and
makes a part of this agreement the Indemnification Agreement dated July
1, 2004, by and between Employee and Ardent Health Services LLC. The
provisions and rights guaranteed under that Agreement shall survive any
termination of this Agreement.
4. Confidential Information and Trade Secrets.
(a) Trade Secrets. Employee recognizes that Employee's
position with the Company requires considerable responsibility and
trust, and, in reliance on Employee's loyalty, the Company may entrust
Employee with highly sensitive confidential, restricted and proprietary
information involving Trade Secrets and Confidential Information. For
purposes of this
2
Agreement, a "Trade Secret" is any scientific or technical information,
design, process, procedure, formula or improvement that is valuable and
not generally known to competitors of the Company. "Confidential
Information" is any data or information, other than Trade Secrets, that
is important, competitively sensitive, and not generally known by the
public, including, but not limited to, the Company's business plan,
acquisition targets, training manuals, product development plans,
pricing procedures, market strategies, internal performance statistics,
financial data, confidential personnel information concerning employees
of the Company, supplier data, operational or administrative plans,
policy manuals, and terms and conditions of contracts and agreements.
The terms "Trade Secret" and "Confidential Information" shall not apply
to information which is (1) made available to the general public
without restriction by the Company, (2) obtained from a third party by
Employee in the ordinary course of Employee's employment by the
Company, or (3) required to be disclosed by Employee pursuant to
subpoena or other lawful process, provided that Employee notifies the
Company in a timely manner to allow the Company to appear to protect
its interests.
(b) Non-disclosure. Except as required to perform Employee's
duties hereunder, Employee will not use or disclose any Trade Secrets
or Confidential Information of the Company during employment, or at any
time after termination of employment and prior to such time as they
cease to be Trade Secrets or Confidential Information through no act of
Employee in violation of this Agreement.
(c) Material Surrender. Upon termination of Employee's
employment with the Company, Employee will surrender to the Company all
files, correspondence, memoranda, notes, records, manuals or other
documents or data pertaining to the Company's business or Employee's
employment (including all copies thereof) however prepared and whether
maintained in paper or electronic format. Employee will also leave with
the Company all materials involving any Trade Secrets or Confidential
Information of the Company. All such information and materials, whether
or not made or developed by Employee, shall be the sole and exclusive
property of the Company, and Employee hereby assigns to the Company all
of Employee's right, title and interest in and to any and all of such
information and materials.
5. Covenants. Employee shall be subject to the following covenants and
obligations:
(a) Non-competition covenant. While employed by the Company,
Employee shall not compete or plan or prepare to compete with the
Company regarding the ownership of, investment in, management of or
operation of medical/surgical hospitals ("Hospital") in Oklahoma. For a
period of eighteen (18) months following the termination of his
employment, Employee shall not within the state of Oklahoma directly
solicit any patient, third party payer, doctor or any other customer of
the Company or any Company affiliate to purchase or provide healthcare
services from or for Employee or his designee or new company or
organization.
(b) Non-solicitation covenant. Following the termination of
Employee's employment with the Company, for a period equal to the term
of the non-competition covenant under Section 5(a), Employee shall not
directly or indirectly solicit the services of or otherwise induce or
attempt to induce any Company Employee to sever his/her employment
relationship with the Company. For purposes of this section "Company
Employee" shall mean (i) any employee who performs or performed (on the
Termination Date or within the previous six (6) months of such date)
any of his/her services at the Company's Principal Office and (ii) any
member of the senior management staff of any Hospital owned, operated
or managed by the Company or any affiliate of the Company.
3
(c) Scope and Duration: Severability. The Company and Employee
understand and agree that the scope and duration of the covenants
contained in this Section 5 are reasonable both in time and
geographical area and are fairly necessary to protect the business of
the Company. Except as otherwise stated herein, such covenants shall
survive the termination of Employee's employment. It is further agreed
that such covenants shall be regarded as divisible and shall be
operative as to time and geographical area to the extent that they may
be made so and, if any part of such covenants are declared invalid or
unenforceable, the validity and enforceability of the remainder shall
not be affected.
(d) Assignment. Employee agrees that the covenants contained
in this Section 5 shall inure to the benefit of any successor or assign
of the Company, with the same force and effect as if such covenant had
been made by Employee with such successor or assign.
(e) Exclusion. Notwithstanding the provisions of this Section
5, Employee's non-competition obligations shall not preclude Employee
from owning less than one percent (1%) of the voting power or common
interest in any publicly traded corporation conducting business
activities in the healthcare industry in competition with the Company
or any affiliate.
(f) Company. For purposes of this Section 5, "Company" shall
mean Ardent Health Services LLC, Ardent Health Services, Inc., AHS
Management Company, Inc. and Ardent Medical Services, Inc.
6. Program Participation. Employee represents that he is, and will for
the term of this Agreement be eligible to participate in Medicare, Medicaid,
CHAMPUS, Tri-Care, and other federal health programs, and Employee shall not
have been sanctioned by the Health and Human Services Office of the Inspector
General, Cumulative Sanctions Report, or excluded by the General Services
Administration, as set forth on the List of Excluded Providers [see
xxxx://xxx.xxx.xxx/xxxxx/xxxxxxxxxx.xxxx and xxxx://xxxx.xxxxx.xxx/.]
7. Specific Enforcement. Employee specifically acknowledges and agrees
that the restrictions set forth in Sections 4 and 5 hereof are reasonable and
necessary to protect the legitimate interests of the Company and that the
Company would not have entered into this Agreement in the absence of such
restrictions. Employee further acknowledges and agrees that any violation of the
provisions of Sections 4 and 5 hereof will result in irreparable injury to the
Company, that the remedy at law for any violation or threatened violation of
such Sections will be inadequate and that in the event of any such breach, the
Company, in addition to any other remedies or damages available to it at law or
in equity, shall be entitled to temporary injunctive relief before trial from
any court of competent jurisdiction as a matter of course and to permanent
injunctive relief without the necessity of proving actual damages. The Company
shall also have available all remedies provided under state and federal
statutes, rules and regulations as well as any and all other remedies as may
otherwise be contractually or equitably available. In addition to any other
remedy herein granted or available to Company, either at law or in equity,
Employee shall forfeit and forever release any claim or right Employee may have
to any benefits remaining under this Agreement from the date Employee breached
Section 5 of this Agreement. Any monetary damages sought by the Company under
this Section shall not include the benefits forfeited under this Section.
8. Term. This Agreement shall continue for two (2) years from the date
first written above ("Initial Term"), unless sooner terminated in the manner set
forth herein; provided, however, that following the Initial Term, this Agreement
shall automatically renew at the end of the Initial Term for additional terms of
one (1) year (collectively the "Term") unless either party gives notice of
termination to the other not later than thirty (30) days prior to any annual
anniversary of this Agreement (a "Notice of
4
Non-Renewal"). The date upon which this Agreement and Employee's employment
hereunder shall terminate, whether pursuant to the terms of this Section or
pursuant to any other provision of this Agreement shall hereafter be referred to
as the "Termination Date."
9. Non-Renewal Termination. In the event this Agreement terminates
pursuant to a Notice of Non-Renewal, the Company shall have no further
obligation to Employee and Employee shall have no further rights or obligations
hereunder except that if the Company is the non-renewing party, the Company
shall be obligated to pay Employee, as severance compensation, the salary and
benefits set forth in Sections 14(a) and (b) of this Agreement. Employee's
obligations under Section 4 hereof shall survive the termination of this
Agreement pursuant to a Notice of Non-Renewal by either party. Notwithstanding
anything to the contrary herein, Employee's obligations under Section 5 hereof
shall only apply for twelve (12) months if the Company is the non-renewing
party, but shall continue in full force and effect if Employee is the
non-renewing party.
10. Termination Upon Death of Employee. In the event Employee dies
during the Term of this Agreement, this Agreement shall immediately terminate
and neither Employee nor the Company shall have any further obligations
hereunder.
11. Termination by Employee For Cause. Employee may terminate this
Agreement thirty (30) days after delivery to the Board of Managers of Ardent
Health Services LLC of written notice of his intent to terminate this Agreement,
which notice alleges the occurrence of: (a) a material diminution in Employee's
office, duties or responsibilities, or (b) a material breach by the Company of
this Agreement. Notwithstanding the foregoing, however, Employee shall not have
the ability to terminate this Agreement if the facts alleged in such written
notice have been cured prior to the expiration of such thirty (30) day notice
period. In the event Employee's employment hereunder is terminated in accordance
with this Section, the Company shall have no further obligation to Employee and
Employee shall have no further rights or obligations hereunder, except as set
forth in Section 4 above, and except for the Company's obligation to pay
Employee, as severance compensation, the salary and benefits set forth in
Sections 14(b) and (c) of this Agreement. Notwithstanding anything to the
contrary herein, in the event of a termination pursuant to this Section,
Employee shall have no obligations under Section 5 hereof from and after the
Termination Date.
12. Termination by the Company for Cause. The Company shall have the
right at any time to terminate Employee's employment immediately for cause. The
term "Cause" shall mean (a) Employee's willful refusal to perform, or gross
negligence in performing, the reasonable duties of Employee's office delegated
under Section 1 of this Agreement or comply with the Company's Policy on Ethics
and Compliance, (b) Employee's conviction of or guilty plea to any crime
punishable as a felony, or involving fraud or embezzlement, (c) Employee's
change in status under Section 6 of this Agreement, (d) any act by Employee
involving moral turpitude that materially affects the performance of his duties
hereunder, or (e) Employee's use of chemical substances in a manner that
materially affects the performance of his duties hereunder. Employee's
obligations under Sections 4 and 5 hereof shall survive in full force and effect
the termination of the Agreement pursuant to this Section 12. In the event
Employee's employment hereunder is terminated in accordance with this Section,
the Company shall have no further obligation to make any payments to Employee
hereunder except for unpaid salary or unreimbursed expenses that have accrued
but have not been paid as of the Termination Date.
13. Termination Without Cause.
(a) In the event that Employee is terminated by the Company
without cause during the Term hereof (which shall not include a
termination pursuant to Sections 9, 10, 11, 12, or 15), the Company
shall: (1) pay Employee all bonuses and unreimbursed expenses owed to
Employee
5
that have accrued but have not been paid as of the Termination Date;
and (2) pay to Employee, as severance compensation, the salary and
benefits set forth in Sections 14(a) and (b) of this Agreement.
Employee's obligations under Section 4 hereof shall survive the
termination of this Agreement pursuant to this Section. Notwithstanding
anything to the contrary herein, in the event of a termination pursuant
to this Section, Section 5 shall apply in full force and effect for
only twelve (12) months from the Termination Date.
(b) In the event that Employee terminates his employment with
the Company without cause during the term hereof (which shall not
include a termination pursuant to Sections 10, 11, 12, or 15), the
Company shall only be obligated to pay Employee any salary and
unreimbursed expenses owed to Employee that have accrued but have not
been paid as of the Termination Date. Employee's obligations under
Sections 4 and 5 hereof shall survive in full force and effect the
termination of the Agreement pursuant to this Section 13(b).
14. Severance.
(a) Amount. Employee shall receive as severance benefits,
under the conditions set out above, eighteen (18) months salary in
effect for Employee at the time of his termination. Employee shall also
be eligible to continue to participate, at the Company's expense, in
the Company's health and welfare plans (i.e. medical, dental, life and
disability) for eighteen (18) months after the Termination Date at the
level he was participating in as of the Termination Date. He shall also
remain eligible to participate, on a pro rata basis, in the Company's
Incentive Compensation Plan only for the year in which any such
termination should occur. Employee shall also be entitled to receive
reasonable attorney's fees and costs incurred in making a successful
claim for compensation and benefits hereunder, including all costs of
arbitration, mediation, or litigation, if necessary.
(b) Schedule of Payments. The Company will make cash payments
due under this Section 14 in the manner described below following
Employee's termination of employment. All other amounts and allowances
will be provided or promptly paid upon submission of receipts or other
evidence of expenses eligible for reimbursement.
(1) All cash and benefits will be paid over eighteen
(18) months, beginning on the first day of the month following
the Termination Date.
(2) In the event of the death of Employee prior to
the payment of all cash due hereunder, all remaining payments
may, at the Company's sole discretion either continue to be
paid in accordance with this section or be made in a single
sum to Employee's surviving spouse. If Employee is not married
at the time of death, such cash payments may be made to
Employee's estate.
15. Disability of Employee.
(a) In the event Employee becomes disabled during the Term of
this Agreement, the Company will continue to pay Employee according to
the compensation provisions of this Agreement during the period of his
disability, until such time as Employee's long term disability
insurance benefits become available. However, in the event Employee is
disabled for more than six (6) continuous months, the Company may
terminate Employee's employment. In this case, the compensation
provided for under this Agreement will cease, except for earned but
unpaid Salary and Plan awards and other benefits and unreimbursed
expenses that would be payable on a prorated basis for the fiscal year
in which the disability occurred.
6
(b) During the period Employee is disabled but is receiving
payments of regular compensation described in this Agreement and as
long as he is physically and mentally able to do so, Employee will
furnish information and assistance to the Company and from time to time
will make himself reasonably available to the Company to undertake
assignments consistent with his prior position with the Company and his
physical and mental health. If the Company fails to make a payment or
provide a benefit required as part of this Agreement, Employee's
obligation to furnish information and assistance will end immediately.
The term "Disability" shall mean the inability of Employee to
perform the duties of his employment due to physical or emotional
incapacity or illness (including, without limitation, alcohol or
chemical dependency), where such inability has continued or is expected
to continue for more than one hundred eighty (180) days in any one (1)
year period. In the event of a dispute, the determination of Disability
shall be made as follows: the Company and Employee (or his executor or
personal representative, as the case may be) shall each appoint a
physician competent in the field of medicine to which such incapacity
or illness relates, and two physicians so selected shall select a third
physician who shall be similarly competent. The decision of a majority
of such physicians as to the Disability of Employee shall be binding on
the parties hereto.
16. Cooperation. For the duration of the non-compete in Section 5,
Employee shall provide his full cooperation to and support of the Company and
its affiliates in the defense or prosecution of one or more existing or future
court actions, governmental investigations, arbitrations, mediations or other
legal, equitable or business matters or proceedings which involve the Company,
its affiliates or any of their respective employees, officers or directors. If
Employee shall be required to travel in excess of fifty (50) miles from his
principal place of residence pursuant to this section, the Company shall
reimburse him for his reasonable travel, meal and lodging expenses.
17. Assignment. Employee may not assign this Agreement to anyone
without the Company's prior written consent. Discharge of Employee's
undertakings in Section 4(c) hereof shall be an obligation of Employee's
executors, administrators, or other legal representatives or heirs.
18. Notices. Any notice or other communications under this Agreement
shall be in writing, signed by the party making same, and shall be delivered
personally or sent by certified or registered mail, postage prepaid, addressed
as follows:
If to Employee: Xxxxx Xxxxx
If to the Company: AHS Management Company, Inc.
Attention: General Counsel
Xxx Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
or to such other address as may hereafter be designated by either party hereto.
All such notices shall be deemed given on the date personally delivered or
mailed.
19. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Tennessee, without giving effect to the
choice of law provisions of such State.
20. Arbitration and Waiver of Jury Trial. Any dispute among the parties
hereto shall be settled by arbitration in Nashville, Tennessee, in accordance
with the then applicable rules of the Model
7
Employment Arbitration Procedures of American Arbitration Association and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof. The arbitrator shall award all costs, legal expenses and fees to the
successful party. The Company and Employee each hereby waive any right to trial
by jury of any dispute arising under this Agreement.
21. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any one
or more of the provisions contained in this Agreement shall be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability for any such provisions in every other respect and of the
remaining provisions of this Agreement shall not be in any way impaired.
22. Modification. No waiver or modification of this Agreement or of any
covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith and no evidence
of any waiver or modification shall be offered or received in evidence of any
proceeding, arbitration or litigation between the parties hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid and the parties
further agree that the provisions of this section may not be waived except as
herein set forth.
23. Entire Agreement. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter contained herein. There
are no restrictions, promises, covenants or undertakings, other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
24. Employer Policies. Regulations and Guidelines for Employee.
Employer may issue, and Employee agrees to abide by, policies, rules,
regulations, guidelines, procedures or other informational material, whether in
the form of handbooks, memoranda, or otherwise, relating to its employees
("Policies"). If any provision of this Agreement conflicts with those Policies,
then this Agreement governs.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the day and year first above written.
AHS MANAGEMENT COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Title: COO
-------------------------------
EMPLOYEE
/s/ Xxxxx Xxxxx
--------------------------------------
Xxxxx Xxxxx
8
