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Exhibit 10.25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of February 7,
2001, is by and between IASIS Healthcare Corporation, a Delaware corporation
(the "Company"), and Xxxxx X. Xxxxx (the "Executive").
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"); and
WHEREAS, the Company desires that the Executive serve as Chairman of
the Board of Directors of the Company (the "Board") and Chief Executive Officer
of the Company and the Executive desires to hold such positions under the terms
and conditions of this Agreement; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions of the employment relationship of the Executive with
the Company.
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 effective as
of December 1, 2000 (the "Effective Date"), and terminate on the fifth
anniversary thereof.
(b) Commencing on the fourth anniversary of the Effective
Date and on each subsequent anniversary thereof, the Term shall automatically be
extended for a period of one (1) additional year following the expiration of the
otherwise applicable Term unless, not later than 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 Chairman of the Board and Chief Executive Officer of the Company, supervising
the conduct of the business and affairs of the Company and performing such other
duties as 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 Board. The Company agrees to nominate the Executive for a
position on the Board at each election of directors held during the Term, and
the Executive agrees to serve, without any additional compensation (other than
customary director fees paid or benefits conferred as and to the extent paid to
or conferred on members of the board of directors who are members of management
or designees of substantial stockholders of the Company), as a director on the
Board and the board of directors of any subsidiary of the Company, and/or in one
or more chief executive officer positions with any subsidiary of the Company.
The parties acknowledge and agree that during the Term (i) the
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Executive's principal office will not be moved to a location more than 20 miles
from Metropolitan Nashville and Davidson County, Tennessee without his approval
and (ii) the Company shall maintain, in the organizational documents thereof,
indemnification provisions providing for the maximum indemnification permitted
by applicable law of the Executive by the Company for actions taken in his
capacity as an officer, director or employee thereof.
4. Duties. During the Term, the Executive shall devote
substantially all of his 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 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 $625,000 per year. Commencing on or
before the first anniversary of the Effective Date, the Board shall review the
base salary annually and may increase such amount from time to time as it may
deem advisable (such salary, as the same may be increased, the "Base Salary").
The Base Salary shall be payable to the Executive in substantially equal
installments in accordance with the Company's normal payroll practices.
(b) For the Company's fiscal year ending September 30,
2001, and for each fiscal year thereafter during the Term, the Executive shall
be eligible to receive an annual cash bonus equal to up to two hundred percent
(200%) of the Base Salary, subject to the terms of the Company's executive bonus
program, the principal terms of which are set forth on Exhibit A hereto (the
"Bonus Plan"), 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 benefits available to the Executive upon satisfaction of the conditions of
such plan).
6. Stock Option Plan; Initial Grant of Options. Reference is made
to the IASIS Healthcare Corporation 2000 Stock Option Plan, a copy of which is
set forth as Exhibit B hereto (the "Stock Option Plan"). As of the Effective
Date, the Company granted the Executive options under the Stock Option Plan to
purchase 61,247.1 shares of common stock of the Company on the terms set forth
in the Stock Option Agreement set forth as Exhibit C hereto. Thereafter during
the Term, the Executive shall be eligible to participate in the 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 to Executive hereunder), as and to the extent
other senior executive officers participate in the same.
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 six (6) weeks of such vacation, which shall not accrue from
year to year.
8. Business Expenses. The Executive shall be reimbursed for all
reasonable and necessary business expenses incurred by him in connection with
his employment (including, without limitation, expenses for travel and
entertainment incurred in conducting or promoting business for
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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 earnings before interest, taxes, depreciation and amortization
("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
I 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 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
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Date of Termination. All of the Executive's options to purchase capital stock of
the Company which are vested as of the Date of Termination 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 that
the Executive's spouse or heirs are entitled to receive a payment with respect
to the Pro Rata Bonus, all of such vested options may be exercised by the
Executive's spouse or heirs within two (2) years following the Date of
Termination and shall then terminate.
(c) Disability. The Executive's employment pursuant to
this Agreement may be terminated by written notice to the Executive by the
Company or to the Company by the Executive in the event that (i) the Executive
becomes unable to perform his duties as set forth in Section 3 by reason of
physical or mental illness or accident for any six (6) consecutive month period
or (ii) the Company receives written opinions from both a physician for the
Company and a physician for the Executive that the Executive will be so
disabled. In the event the Executive's employment is terminated pursuant to this
Section 10(c), the Executive shall be entitled to receive (A) all Base Salary
and benefits to be paid or provided to the Executive under this Agreement
through the Date of Termination, (B) an amount equal to one hundred percent
(100%) of the Executive's Base Salary at the then-current rate of Base Salary;
provided, however, that in the event that the Date of Termination is the date of
delivery of the last physician's opinion referred to in Section 10(c)(ii), the
payment with respect to Base Salary, together with all Base Salary paid to the
Executive following the first date that Executive was unable to perform his
duties set forth in Section 3, shall equal one hundred and fifty percent (150%)
of Executive's Base Salary and; provided, further, that amounts payable to the
Executive under this Section 10(c) shall be reduced by the proceeds of any short
or long-term disability payments to which the Executive may be entitled during
such period under policies maintained at the expense of the Company as and to
the extent such disability payments compensate the insured for lost wages
resulting from the disability, and (C) to the extent applicable, an amount equal
to the Pro Rata Bonus. In the event that the Executive is entitled to receive a
payment with respect to the Pro Rata Bonus, he shall also be entitled to an
additional severance amount equal to one hundred percent (100%) of the Pro Rata
Bonus. All of the payments required to be paid pursuant to this Section 10(c)
shall be paid to the Executive no later than ten (10) days following the Date of
Termination; provided, however, that any Pro Rata Bonus and any additional
severance amount related thereto shall be paid to the Executive no later than
five (5) days following the determination of the amount of such payments, if
any. The Company will also provide the Executive and his eligible dependents
continued health and medical benefits as contemplated by Section 9 hereof
through the date one (1) year after the Date of Termination (provided, however,
that in the event that the Date of Termination is the date of delivery of the
last physician's opinion referred to in Section 10(c)(ii), the Company will
provide such health and medical benefits through the date that is eighteen (18)
months following the first date that Executive was unable to perform his duties
as set forth in Section 3); the Company may satisfy this obligation by paying
COBRA premium payments with respect to Executive and his eligible dependents
(with the Executive paying the portion of such COBRA payments that Executive was
required to pay prior to the Date of Termination). Additionally, in the event
that the Executive's employment is terminated pursuant to this Section 10(c),
all of the Executive's options to purchase shares of capital stock of the
Company 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. All of the Executive's options to purchase capital stock of the
Company which are vested as of the Date of Termination or become vested pursuant
to the immediately preceding sentence may be exercised by the Executive within
one (1) year following the Date of Termination
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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.
(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 Company 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 Company Board, or (iv) any material breach of the
Executive of this Agreement, including, without limitation, a material breach of
Section 14 hereof, which breach remains uncorrected for a period of fifteen (15)
days after receipt by the Executive of written notice from the Company setting
forth the breach. In the event the Executive's employment is terminated pursuant
to this Section 10(d), the Executive shall be entitled to receive all Base
Salary and benefits to be paid or provided to the Executive under this Agreement
through the Date of Termination and no more.
(e) By the Company Without Cause. The Executive's
employment pursuant to this Agreement may be terminated by the Company at any
time without Cause by delivery of a Notice of Termination to the Executive. In
the event that the Executive's employment is terminated pursuant to this Section
10(e), the Executive shall be entitled to receive (i) all Base Salary and
benefits to be paid or provided to the Executive under this Agreement through
the Date of Termination, (ii) an amount equal to two hundred percent (200%) of
the Executive's Base Salary at the then-current rate of Base Salary, (iii) to
the extent applicable, an amount equal to the Pro Rata Bonus, (iv) in the event
that the Executive is entitled to receive a payment with respect to the Pro Rata
Bonus, a severance amount equal to two hundred percent (200%) of the Pro Rata
Bonus and (v) a lump sum payment equal to the then present value of all major
medical, disability and life insurance coverage to be provided pursuant to
Section 9 above through the date two (2) years after the Date of Termination,
provided that under such circumstances the Executive shall make all COBRA
premium payments on his own behalf. The sum of the amounts described in clauses
(ii), (iv) and (v) above are hereafter referred to as the "Section 10(e)
Severance Amount." All of the amounts described in clauses (i) and (iii) shall
be paid to the Executive no later than ten (10) days following the Date of
Termination; provided that any amount payable under clause (iii) shall be paid
to the Executive no later than five (5) days following the determination of the
amount of such payment, if any. All of the Section 10(e) Severance Amount shall
be paid to the Executive no later than ten (10) days following the later of (x)
the Date of Termination and (y) the execution of an agreement by the Executive,
in form 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
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Section 10(e), all of the Executive's options to purchase shares of capital
stock of the Company 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. All of the Executive's options to purchase capital
stock of the Company that are vested as of the Date of Termination 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.
(f) By the Executive for Good Reason. The Executive's
employment pursuant to this Agreement may be terminated by the Executive by
written notice of his resignation ("Notice of Resignation") delivered within
twelve (12) months after the occurrence of any of the following events (each of
which shall constitute "Good Reason" for resignation): (i) any Change of Control
(as defined below) shall occur, (ii) the removal of the Executive from or the
failure to elect or re-elect the Executive to the position of Chairman and Chief
Executive Officer of the Company, (iii) the removal of the Executive from or the
failure to elect or re-elect the Executive to the Board, (iv) 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.
Notwithstanding the provisions of clause (i), (ii), (iii) or (iv) above, in the
event the Executive is elected as chief executive officer and a member of the
board of directors of any entity which acquires control of more than 50% of the
voting securities of the Company or, if such entity is a subsidiary of another
entity, the ultimate parent of such subsidiary, with responsibility for (1) no
fewer facilities than the Company controlled at the end of the fiscal year
ending immediately preceding such Change of Control and (2) operating revenues
equal to or greater than the Company's operating revenues during such fiscal
year, and is provided with a written employment agreement by the entity or, if
such entity is a subsidiary of another entity, the ultimate parent of such
subsidiary, on substantially the same terms as those contained in this
Agreement, the appointment to such position shall not constitute Good Reason for
purposes of this Agreement. In the event that the Executive resigns for Good
Reason pursuant to this Section 10(f), the Executive shall be entitled to
receive, (A) all Base Salary and benefits to be paid or provided to the
Executive under this Agreement through the Date of Termination, (B) an amount
equal to two hundred percent (200%) of the Executive's Base Salary at the
then-current rate of Base Salary, (C) to the extent applicable, an amount equal
to the Pro Rata Bonus, (D) in the event that the Executive is entitled to
receive a payment with respect to the Pro Rata Bonus, a severance amount equal
to two hundred percent (200%) of the Pro Rata Bonus and (E) a lump sum payment
equal to the then present value of all major medical, disability and life
insurance coverage to be provided pursuant to Section 9 above through the date
two (2) years after the Date of Termination, provided that under such
circumstances the Executive shall make all COBRA premium payments on his own
behalf. The sum of the amounts described in clauses B, D and E above are
hereafter referred to as the "Section 10(f) Severance Amount." All of the
amounts described in clauses (A) and (C) shall be paid to the Executive no later
than ten (10) days following the Date of Termination; provided that any amount
payable under clause (C) shall be paid to the Executive no later than five (5)
days following the determination of the amount of such payment, if any. All of
the Section 10(f) Severance Amount shall be paid to the Executive no later than
ten (10) days following the later of (x) the Date of Termination and (y) the
execution of an agreement by the
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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), all of the Executive's options to purchase
shares of capital stock of the Company 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. All of the Executive's options to
purchase capital stock of the Company that are vested as of the applicable Date
of Termination 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 be
deemed to have occurred (A) at such time as any Person (as defined in Section
13(d)(3) or 14(d)(2) of the Securities and Exchange Act of 1934, as amended form
time to time (the "Exchange Act")) or "group" of Persons (as defined in Section
13(d) of the Exchange Act), other than any of the parties to that certain
Stockholders Agreement, dated October 7, 1999, among the Company, JLL
Healthcare, LLC, a Delaware limited liability company, and certain other
stockholders, as the same may be amended (the "Stockholders Agreement"),
directly or indirectly, acquires beneficially or of record, more than 50% of the
outstanding voting securities of the Company (by operation of law or otherwise)
or (B) upon a sale of all or substantially all of the assets of the Company.
(g) By the Executive Without Good Reason. 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. In the event that
the Executive's employment is terminated pursuant to this Section 10(g), the
Executive shall receive all Base Salary and benefits to be paid or provided to
the Executive under this Agreement through the Date of Termination and no more.
(h) Date of Termination. The Executive's Date of
Termination shall be (i) if the Executive's employment is terminated pursuant to
Section 10(b), the date of his death, (ii) if the Executive's employment is
terminated pursuant to Section 10(c), the last day of the six-month period
referred to in Section 10(c)(I) or the date of delivery of the last physician's
opinion referred to in Section 10(c)(ii), as the case may be, (iii) if the
Executive's employment is terminated pursuant to Section 10(d), the date on
which a Notice of Termination is given, (iv) if the Executive's employment is
terminated pursuant to Section 10(e), sixty (60) days after the date the Notice
of Termination is given; provided, however, that the Company may waive such
notice in the event of a termination pursuant to Section 10(e) in which event,
the Executive's Date of Termination shall be five (5) days after the Notice of
Termination, (v) if the Executive's employment is terminated pursuant to Section
10(f), five (5) days after the date the Notice of Resignation is given, (vi) if
the Executive's employment is terminated pursuant to Section 10(g), one hundred
twenty (120) days after the date
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the Notice of Resignation is given or such shorter period as may be determined
by the Company and (vii) if the Company provides notice of its 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 that under such circumstances the Executive shall
make all COBRA premium payments on his own behalf. The sum of the amounts
described in clauses (ii), (iv) and (v) above are hereafter referred to as the
"Section 10(i) Severance Amount." All of the amounts described in clauses (i)
and (iii) shall be paid to the Executive no later than ten (10) days following
the Date of Termination; provided that any amount payable under clause (iii)
shall be paid to the Executive no later than five (5) days following the
determination of the amount of such payment, if any. All of the Section 10(i)
Severance Amount shall be paid to the Executive no later than ten (10) days
following the later of (x) the Date of Termination and (y) the execution of an
agreement by the Executive, in form and substance reasonably satisfactory to the
Company, providing for (I) a full release by the Executive of the Company, its
officers, directors, representatives and affiliates from all liabilities,
obligations or claims, other than those obligations specifically provided in
this Section 10(i) (and the Company shall provide a mutual release of the
Executive), (II) an affirmation of the Executive's obligations pursuant to
Section 14 hereof and (III) an agreement by the Executive to immediately repay
to the Company one hundred percent (100%) of the Section 10(i) Severance Amount
upon any breach of such agreement; provided, however, that any Section 10(i)
Severance Amount payable under Section 10(i)(iv) shall be paid to the Executive
no later than five (5) days following the determination of the amount of such
payments, if any. Additionally, in the event that the Executive's employment is
terminated upon expiration of the Term, 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. All of Executive's options to
purchase capital stock of the Company that are vested as of the expiration of
the Term 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.
(j) Option Term - Change of Control. Notwithstanding any
provision contained herein to the contrary, (i) all options to purchase shares
of capital stock of the Company held by Executive (A) at the time of a Change of
Control which occurs prior to the Date of Termination or (B) on the Date of
Termination if a Change of Control occurs after the Date of Termination and such
termination was in anticipation of a Change of Control (in which case any such
options which otherwise would have terminated as of the Date of Termination will
be deemed not to have
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terminated as of the Date of Termination), shall immediately vest and become
exercisable upon the occurrence of such Change of Control and (ii) all options
held by Executive (A) at the time of a Change in Control which occurs prior to
the Date of Termination or (B) on the Date of Termination if a Change of Control
occurs after the Date of Termination and such termination was in anticipation of
a Change of Control (in which case any such options which otherwise would have
terminated as of the Date of Termination will be deemed not to have terminated
as of the Date of Termination), shall be exercisable at any time or from time to
time before the expiration of the original stated term of the option. For
purposes of this Agreement, Executive's termination shall be deemed in
anticipation of a Change of Control only if (1) any party to the Change of
Control transaction is a party, or an affiliate of a party, which, within the
three month period immediately prior to the Date of Termination, engaged in
substantive negotiations with the Company and/or publicly made an offer to the
Company or its shareholders with respect to a transaction which, if consummated,
would constitute a Change of Control transaction and (2) the Change of Control
occurred within six months following the Date of Termination. If, as a result of
a Change of Control occurring prior to any Date of Termination or within six
months immediately following any Date of Termination which was in anticipation
of a Change of Control, the Company is not the surviving entity after the
transaction, or survives only as a subsidiary or is otherwise controlled by
another entity, all options that are held by the Executive immediately prior to
the Change of Control shall, at the option of the Company, be (x) assumed by the
entity which is the survivor of the transaction (or at the option of the
Executive, the ultimate parent of the survivor), (y) converted into options to
purchase the common stock of the surviving entity (or at the option of the
Executive, the ultimate parent of the survivor) in the transaction to which
section 424(a) of the Code applies or (z) replaced by an arrangement that is
reasonably acceptable to the Executive.
11. Excise Tax.
(a) Whether or not the Executive becomes entitled to any
payments hereunder, if any of the payments or benefits received or to be
received by the Executive in connection with a Change in Control or the
Executive's termination of employment pursuant to the terms of this Agreement or
the Stock Option Plan (all such payments and benefits, excluding the Gross-Up
Payment, being hereinafter referred to as the "Total Payments") will be subject
to excise tax imposed by section 4999 of the Code, or any interest or penalties
are incurred by Executive with respect to such excise tax (such excise tax
together with any such interest and penalties are hereinafter collectively
referred to as the "Excise Tax"), the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments.
(b) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(I) all of the Total Payments shall be treated as "parachute payments" (within
the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel ("Tax Counsel") selected by the Company and reasonably acceptable to the
Executive, such payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of section 280G(b)(4)(A) of the Code,
and (ii) all "excess parachute payments" within the meaning of section
280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the
meaning of section 280G(b)(4)(B) of the Code) in excess of the Base Amount
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax. For purposes of determining the
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amount of the Gross-Up Payment, the Executive shall be deemed to pay federal
income tax at the highest marginal rate of federal income taxation in the
calendar year in which the Gross-Up Payment is to be made and state and local
income taxes at the highest marginal rate of taxation in the state and locality
of the Executive's residence on the Date of Termination (or if there is no Date
of Termination, then the date on which the Gross-Up Payment is calculated for
purposes of this Section 11), net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes.
(c) In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, the Executive shall repay to the Company,
within five (5) business days following the time that the amount of such
reduction in the Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by the Executive),
to the extent that such repayment results in a reduction in the Excise Tax and a
dollar-for-dollar reduction in the Executive's taxable income and wages for
purposes of federal, state and local income and employment taxes, plus interest
on the amount of such repayment at 120% of the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined, in
accordance with the procedures set forth in Section 11(d) below, to exceed the
amount taken into account hereunder in calculating the Gross-Up Payment, in
accordance with the procedures set forth in Section 11(d) below. The Executive
and the Company shall each reasonably cooperate with the other in connection
with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments.
(d) Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require the
payment by the Company of an additional Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty (30) calendar
days after Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid; provided, however, that the failure of Executive to
notify the Company of such claim (or to provide any required information with
respect thereto) shall not affect any rights granted to the Executive under this
Section except to the extent that the Company is materially prejudiced in the
defense of such claim as a direct result of such failure. Executive shall not,
unless otherwise required by the Internal Revenue Service, pay such claim prior
to the expiration of the 30-day period following the date on which he gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such 30-day period that it
desires to contest such claim, the Executive shall:
(1) give the Company any information reasonably
requested by the Company relating to such claim;
(2) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to
Executive;
(3) cooperate with the Company in good faith in order
effectively to contest such claim; and
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(4) if the Company elects not to assume and control
the defense of such claim, permit the Company to participate
in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any additional Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses, without, however, any duplication of the
previously paid Gross-Up Payments. Without limiting the foregoing provisions of
this paragraph, the Company shall have the right, at its sole option, to assume
the defense of and control all proceedings in connection with such contest, in
which case it may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may either direct the Executive to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any additional Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance, without, however, any duplication
of the previously paid Gross-Up Payments; and provided, further, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's right to assume the defense of and control the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder, and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(e) The payments provided in this Section 11 shall be
made not later than the fifth (5th) day following the Date of Termination (or if
there is no Date of Termination, then the date on which the Gross-up Payment is
calculated for purposes of this Section 11); provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, in accordance with
this Section 11, of the minimum amount of such payments to which the Executive
is clearly entitled and shall pay the remainder of such payments (together with
interest on the unpaid remainder (or on all such payments to the extent the
Company fails to make such payments when due) at 120% of the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at 120% of the rate provided
in section 1274(b)(2)(B) of the Code).
(f) The Company agrees promptly to submit this Agreement
to the stockholders of the Company for their approval in accordance with Section
280G Prop. Reg. Section 1.280G-1 Q/A7, and if such approval is not obtained by
February 28, 2001, this Agreement shall become null and void as of such date.
12. Representations.
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(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 both in
accordance with its terms.
(b) The Executive represents and warrants that he is not
a party to any agreement or instrument which would prevent him from entering
into or performing his duties in any way under this Agreement.
13. Assignment; Binding Agreement. This Agreement is a personal
contract and the rights and interests of the Executive hereunder may not be
sold, transferred, assigned, pledged, encumbered, or hypothecated by him, except
as otherwise expressly permitted by the provisions of this Agreement. This
Agreement shall inure to the benefit of and be enforceable by the Executive and
his personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Executive should die while
any amount would still be payable to him hereunder had the Executive continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there is no such designee, to his estate.
14. Confidentiality; Non-Competition; Ownership of Works.
(a) The Executive acknowledges that: (i) the Business is
intensely competitive and that the Executive's employment by the Company will
require that the Executive have access to and knowledge of confidential
information of the Company relating to the Business, including, but not limited
to, the identity of the Company's employees, physicians, payors or suppliers,
the kinds of services provided by the Company, the manner in which such services
are performed or offered to be performed, the service needs of actual or
prospective patients, physicians or payors, pricing information and other
contractual terms, information concerning the creation, acquisition or
disposition of products and services, creative ideas and concepts, including
clinical and financial systems, compliance programs and physician relation and
retention programs, computer software applications and other programs, research
data, personnel information and other trade secrets, in each case other than as
and to the extent such information is generally known or publicly available
through no violation of this Section 14 by the Executive or such information is
readily discernible (the "Confidential Information"); (ii) the disclosure of any
such Confidential Information may place the Company at a competitive
disadvantage and may do damage, monetary or otherwise, to the Company's
business; and (iii) the engaging by the Executive in any of the activities
prohibited by this Section 14 may constitute improper appropriation and/or use
of such Confidential Information. The Executive expressly acknowledges the trade
secret status of the Confidential Information and that the Confidential
Information constitutes a protectable business interest in the Company.
Accordingly, the Company and the Executive agree as follows:
(b) For purposes of this Section 14, the Company shall be
construed to include the Company and its parents and subsidiaries engaged in the
Business, including any divisions managed by the Executive.
(c) During the Executive's employment with the Company,
and at all times after the termination of the Executive's employment by
expiration of the Term or otherwise, the Executive shall not, directly or
indirectly, whether individually, as a director, stockholder, owner, partner,
employee, principal or agent of any business, or in any other capacity, make
known, disclose, furnish, make available or utilize any of the Confidential
Information, other than in the proper
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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, the Executive shall promptly notify the Company so that the
Company may seek a protective order or other appropriate remedy. The Executive
agrees to return all documents or other materials containing Confidential
Information, including all photocopies, extracts and summaries thereof, and any
such information stored electronically on tapes, computer disks or in any other
manner to the Company at any time upon request by the Company and immediately
upon the termination of his employment for any reason.
(d) For a period of two (2) years following the
Executive's Date of Termination (or one (1) year following the expiration of the
Term in the case of the Company's delivery of notice of its intent not to extend
the Term for any additional period as provided in Section 2(b)), whether upon
expiration of the Term or otherwise, the Executive shall not engage in
Competition, as defined below, with the Company or its subsidiaries within
twenty-five (25) miles of the location of any hospital managed by the Company
(or other facility managed by the Company from which in excess of five percent
(5%) of the Company's annual revenues are derived) at the time of, or within six
(6) months prior to, the Executive's Date of Termination or the expiration of
the Term, as applicable (each, an "Affected Facility"), or in which, during the
three (3) month period immediately prior to the Executive's Date of Termination
or the expiration of the Term (as applicable), the Company had made substantial
plans with the intention of establishing operations in such locality or region.
For purposes of this Agreement, "Competition" by the Executive shall mean the
Executive's engaging in any activities relating to, or otherwise directly or
indirectly being employed by or acting as a consultant or lender to, or being a
director, officer, employee, principal, agent, stockholder, member, owner or
partner of, or permitting his name to be used in connection with the activities
of any entity engaged in significant activities relating to, the Business.
Notwithstanding the foregoing, it shall not be a violation of this paragraph for
the Executive to (ii) be a consultant to, or a director, officer, employee, or
agent of, any entity engaged in the Business which has hospitals or other
facilities within twenty-five (25) miles of any Affected Facility, so long as
the Executive does not provide any services or advice to, or have any management
supervision of, or responsibility for, any hospital or other facility located
within twenty-five (25) miles of any Affected Facility; or (ii) become the
registered or beneficial owner of up to five percent (5%) of any class of the
capital stock of any one or more competing corporations registered under the
Securities Exchange Act of 1934, as amended, provided that the Executive does
not actively participate in the business of such corporation until such time as
this covenant expires. In the event that the Executive breaches the restrictions
set forth in Section 14(d) following a termination pursuant to Section 10(e),
10(f) or 10 (i), the Executive shall pay the Company "Liquidated Damages" (as
hereinafter defined) within ten (10) days following any such breach. If
Executive's employment is terminated pursuant to Section 10(e), 10(f) or 10(i)
and the Executive has repaid the full amount of the Liquidated Damages as
provided pursuant to the immediately preceding sentence, the Company shall not
be entitled to any remedy, including, without limitation, additional damages or
injunctive relief, upon Executive's breach of Section 14(d). "Liquidated
Damages" shall mean the Section 10(e) Severance Amount, Section 10(f) Severance
Amount or Section 10(i) Severance Amount received by the Executive, as the case
may be.
(e) For a period of two (2) years following the
Executive's Date of Termination (or one (1) year following the expiration of the
Term in the case of the Company's delivery of notice of its intent not to extend
the Term for any additional period as provided in Section 2(b)), whether upon
expiration of the Term or otherwise, the Executive agrees that he will not,
directly or indirectly, for his 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 his direction or jointly with others
during the period of his employment with the Company, (ii) result from or are
suggested by work performed by the executive for the Company or (iii) result, to
any extent, from use of the Company's premises or property (all of which are
collectively referred to in this Agreement as "Works"). All Works shall be the
sole property of the Company, and, to the extent that the Company is not already
considered the owner thereof as a matter of law, the Executive hereby assigns to
the Company, without further compensation, all his right, title and interest in
and to such Works and any and all related intellectual property rights
(including, but not limited to, patents, patent applications, copyrights,
copyright applications, and trademarks) in the United States and elsewhere.
(g) The Executive acknowledges that the services to be
rendered by him to the Company are of a special and unique character, which
gives this Agreement a peculiar value to the Company, the loss of which may not
be reasonably or adequately compensated for by damages in an action at law, and
that a breach or threatened breach by him of any of the provisions contained in
this Section 14 may cause the Company irreparable injury. The Executive
therefore agrees that the Company may be entitled, in addition to any other
right or remedy, to a temporary, preliminary and permanent injunction, without
the necessity of proving the inadequacy of monetary damages or the posting of
any bond or security, enjoining or restraining the Executive from any such
violation or threatened violations.
(h) If any one or more of the provisions contained in
this Agreement shall be held to be excessively broad as to duration, activity or
subject, such provisions shall be construed by limiting and reducing them so as
to be enforceable to the fullest extent permitted by law.
15. Entire Agreement. This Agreement contains all the
understandings between the parties hereto pertaining to the matters referred to
herein, and supersedes any other undertakings and agreements, whether oral or in
writing, previously entered into by them with respect thereto. The Executive
represents that, in executing this Agreement, he does not rely and has not
relied upon any representation or statement not set forth herein made by the
Company with regard to the subject matter or effect of this Agreement or
otherwise.
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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:
0000 Xxxxxxx-Xxxxxxxxxxxx Xxxx
Xxxxxxx Xxxxxxx, XX 00000
With copies to:
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx
Xxxxxxxxx Xxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx, Esquire
To the Company at:
IASIS Healthcare Corporation
000 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxx, XX 00000
Attention: General Counsel
With copies to:
Xxxxxx Xxxxxxxxxx & Xxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
One Xxxxxx Xxxxxx
00
00
XX Xxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esquire
Any notice delivered personally or by courier under this
Section 16 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 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 February 7, 2001 to be effective as of the Effective Date.
IASIS HEALTHCARE CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President & CFO
/s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
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