EXHIBIT 10.11
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") made
effective as of January 1, 2002 by and between PSYCHIATRIC SOLUTIONS, INC., a
Delaware corporation (the "Company"), and XXXX XXXXXX (the "Executive").
WHEREAS, the Company and the Executive are parties to that certain
Employment Agreement dated January 1, 1997 (the "Original Agreement"); and
WHEREAS, the Company and the Executive now intend to amend certain
terms of the Original Agreement and to restate all other terms contained in the
Original Agreement.
In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:
SECTION I
EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to
be employed by the Company for the Period of Employment as provided in Section
III.A. below upon the terms and conditions provided in the Agreement.
SECTION II
POSITION AND RESPONSIBILITIES
During the Period of Employment, the Executive agrees to serve as
President and Chief Executive Officer of the Company and to be responsible for
the typical management responsibilities expected of an officer holding such
positions and such other responsibilities as may be assigned to Executive from
time to time by the Board of Directors of the Company.
SECTION III
TERMS AND DUTIES
A. Period of Employment.
The period of Executive's employment under this Agreement will commence
as of January 1, 2002, and shall continue through December 31, 2002, subject to
extension or termination as provided in this Agreement ("Period of Employment").
On each anniversary of the commencement of the Period of Employment, the period
of Executive's employment shall be extended for additional one (1) year periods,
unless either party gives notice thirty (30) days in advance of the expiration
of the then current period of employment of such party's intent not to extend
the Period of Employment.
B. Duties.
During the Period of Employment, the Executive shall devote all of his
business time, attention and skill to the business and affairs of the Company
and its subsidiaries. The Executive will perform faithfully the duties which may
be assigned to him from time to time by the Board of Directors.
SECTION IV
COMPENSATION AND BENEFITS
A. Compensation.
For all services rendered by the Executive in any capacity during the
Period of Employment, the Executive shall be compensated as follows:
1. Base Salary.
The Company shall pay the Executive an annual base salary ("Base
Salary") of Two Hundred Thirty Thousand Dollars ($230,000).
Base Salary shall be payable according to the customary payroll
practices of the Company but in no event less frequently than once each month.
The base salary shall be reviewed each fiscal period and shall be subject to
adjustment according to the policies and practices adopted by the Company from
time to time.
B. Annual Incentive Award.
The Executive shall be eligible for annual cash incentive compensation
awards tied to objective criteria to be established by the Board or a
Compensation Committee ("Bonus").
C. Additional Benefits.
The Executive will be eligible to participate in all compensation or
employee benefit plans or programs and receive all benefits and perquisites for
which any salaried employees are eligible under any existing or future plan or
program established by the Company for salaried employees. The Executive will
participate to the extent permissible under the terms and provisions of such
plans or programs in accordance with program provisions. These may include group
hospitalization, health, dental care, life or other insurance, tax qualified
pension, savings, thrift and profit sharing plans, termination pay programs,
sick leave plans, travel or accident insurance, disability insurance, and
contingent compensation plans including capital accumulation programs,
Restricted Stock programs, stock purchase programs and stock option plans.
Nothing in this Agreement will preclude the Company from amending or terminating
any of the plans or programs applicable to salaried or senior executives as long
as such amendment or termination is applicable to all salaried employees or
senior executives. The Executive will be entitled to an annual paid vacation of
four (4) weeks.
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SECTION V
BUSINESS EXPENSES
The Company will reimburse the Executive for all reasonable travel and
other expenses incurred by the Executive in connection with the performance of
his duties and obligations under this Agreement.
SECTION VI
DISABILITY
A. In the event of disability of the Executive during the Period of
Employment, the Company will continue to pay the Executive according to the
compensation provisions of this Agreement during the period of his disability,
until such time as Executive's long term disability insurance benefits are
available. However, in the event the Executive is disabled for a continuous
period of six (6) months after the Executive first becomes disabled, the Company
may terminate the employment of the Executive. In this case, normal compensation
will cease, except for earned but unpaid Base Salary and Incentive Compensation
Awards which would be payable on a pro-rated basis for the year in which the
disability occurred. In the event of, and upon such termination, (i) all then
unvested stock options that otherwise would vest during the immediately
succeeding eighteen (18) month period shall vest immediately, and (ii) stock
held by Executive then subject to the Repurchase Option (as defined in the Stock
Restriction Agreement between the Company and Executive dated April 11, 1997)
shall vest immediately according to the vesting schedules set forth in such
Stock Restriction Agreement.
B. During the period the Executive is receiving payments of either
regular compensation or disability insurance described in this Agreement and as
long as he is physically and mentally able to do so, the Executive will furnish
information and assistance to the Company and from time to time will make
himself 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 the
Agreement, the Executive's obligation to fulfill information and assistance will
end.
C. The term "disability" will have the same meaning as under any
disability insurance provided pursuant to this Agreement or otherwise.
SECTION VII
DEATH
In the event of the death of the Executive during the Period of
Employment, the Company's obligation to make payments under this Agreement shall
cease as of the date of death, except for earned but unpaid Base Salary and
Incentive Compensation Awards which will be paid on a prorated basis for that
year. The Executive's designated beneficiary will be entitled to receive the
proceeds of any life or other insurance or other death benefit programs provided
in this Agreement.
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SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
A. If the Executive's employment terminates due to either a Without
Cause Termination or a Constructive Discharge, as defined later in this
Agreement, the Company will pay the Executive in a lump sum upon such Without
Cause Termination or Constructive Discharge an amount equal to 150% of the
amount of Base Salary and Bonus earned by the Executive during the twelve month
period prior to the Without Cause Termination or Constructive Discharge. Earned
but unpaid Base Salary and Incentive Compensation Awards, if any, will be paid
in a lump sum at such time. The benefits and perquisites described in this
Agreement as in effect at the date of termination of employment will be
continued for eighteen (18) months. If the Executive's employment terminates due
to either a Without Cause Termination or a Constructive Discharge, or pursuant
to Section XI, (i) all then unvested stock options that otherwise would vest
during the immediately succeeding eighteen (18) month period shall vest
immediately, and (ii) stock held by Executive then subject to the Repurchase
Option (as defined in the Stock Restriction Agreement between the Company and
Executive dated April 11, 1997) shall vest immediately according to the vesting
schedules set forth in such Stock Restriction Agreement . The Company shall
cause any Options so vested to remain exercisable for twelve (12) months from
the date of termination.
B. If the Executive's employment terminates due to a Termination for
Cause, earned but unpaid Base Salary will be paid on a pro-rated basis for the
year in which the termination occurs. No other payments will be made or benefits
provided by the Company.
C. Upon termination of the Executive's employment other than for
reasons due to death, disability, or pursuant to Paragraph A of this Section or
Section XI, the Period of Employment and the Company's obligation to make
payments under this Agreement will cease as of the date of the termination
except as expressly defined in this Agreement.
D. For this Agreement, the following terms have the following meanings:
1. "Termination for Cause" means termination of the Executive's
employment by the Company's Board of Directors acting in good faith by the
Company by written notice to the Executive specifying the event relied upon for
such termination, due to the Executive's serious, willful misconduct with
respect to his duties under this Agreement, including but not limited to
conviction for a felony, misdemeanor involving moral turpitude or perpetration
of a common law fraud, in each case which has resulted or is likely to result in
material economic damage to the Company.
2. "Constructive Discharge" means termination of the Executive's
employment by the Executive due to a failure of the Company to fulfill its
obligations under this Agreement in any material respect including any reduction
of the Executive's Base Salary or other compensation other than reductions
applicable to all employees of the Company or failure to appoint or reappoint
the Executive to the position specified in Section II hereof, or other material
change by the Company in the functions, duties or responsibilities of the
position which would reduce the ranking or level, responsibility, importance or
scope of the position. The
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Executive will provide the Company a written notice which describes the
circumstances being relied on for the termination with respect to the Agreement
within ninety (90) days after the event giving rise to the notice. The Company
will have thirty (30) days to remedy the situation prior to the Termination for
Constructive Dismissal.
3. "Without Cause Termination" means termination of the Executive's
employment by the Company (a) other than due to death, disability, Termination
for Cause or pursuant to Section XI; or (b) upon expiration of the Period of
Employment as a result of the giving of notice by the Company of its intent not
to extend the Period of Employment as provided in Section III A.
SECTION IX
OTHER DUTIES OF THE EXECUTIVE DURING
AND AFTER THE PERIOD OF EMPLOYMENT
A. The Executive will, with reasonable notice during or after the
Period of Employment, furnish information as may be in his possession and
cooperate with the Company as may reasonably be requested in connection with any
claims or legal actions in which the Company is or may become a party.
B. The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company, as hereinafter defined, is confidential and is a unique and
valuable asset of the Company. Access to and knowledge of this information are
essential to the performance of the Executive's duties under this Agreement. The
Executive will not during the Period of Employment or after except to the extent
reasonably necessary in performance of the duties under this Agreement, give to
any person, firm, association, corporation or governmental agency any
information concerning the affairs, business, clients, customers or other
relationships of the Company, except as required by law. The Executive will not
make use of this type of information for his own purposes or for the benefit of
any person or organization other than the Company. The Executive will also use
his best efforts to prevent the disclosure of this information by others. All
records, memoranda, etc. relating to the business of the Company, whether made
by the Executive or otherwise coming into his possession, are confidential and
will remain the property of the Company.
C. During the Period of Employment and for a twelve (12) month period
thereafter, the Executive will not use his status with the Company to obtain
loans, goods or services from another organization on terms that would not be
available to him in the absence of his relationship to the Company. During the
Period of Employment and for a twelve (12) month period following termination of
the Period of Employment, other than termination due to a Without Cause
Termination, the Executive will not make any statements or perform any acts
intended to advance the interest of any existing or prospective competitors of
the Company in any way that will injure the interest of the Company; the
Executive, without prior express written approval by the Board of Directors of
the Company, will not directly or indirectly own or hold any proprietary
interest in or be employed by or receive compensation from any party engaged in
the behavioral health business in the same geographic areas the Company does
business; and the Executive, without express prior written approval from the
Board of Directors, will not solicit
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any members of the then current clients of the Company or discuss with any
employee of the Company information or operation of any business intended to
compete with the Company. For the purposes of the Agreement, proprietary
interest means legal or equitable ownership, whether through stock holdings or
otherwise, of a debt or equity interest (including options, warrants, rights and
convertible interests) in a business firm or entity, or ownership of more than
1% of any class of equity interest in a publicly-held company. The Executive
acknowledges that the covenants contained herein are reasonable as to geographic
and temporal scope. For a twelve (12) month period after termination of the
Period of Employment for any reason, the Executive will not directly or
indirectly hire any employee of the Company or solicit or encourage any such
employee to leave the employ of the Company.
D. The Executive acknowledges that his breach or threatened or
attempted breach of any provision of Section IX would cause irreparable harm to
the Company not compensable in monetary damages and that the Company shall be
entitled, in addition to all other applicable remedies, to a temporary and
permanent injunction and a decree for specific performance of the terms of
Section IX without being required to prove damages or furnish any bond or other
security.
E. The Executive shall not be bound by the provisions of Section IX in
the event of the default by the Company in its obligations under this Agreement
which are to be performed upon or after termination of this Agreement.
SECTION X
INDEMNIFICATION, LITIGATION
The Company will indemnify the Executive to the fullest extent
permitted by the laws of the state of incorporation in effect at that time, or
certificate of incorporation and by-laws of the Company whichever affords the
greater protection to the Executive. The Executive will be entitled to any
insurance proceeds related to any award, or any fees or expenses incurred in
connection with any action, suit or proceeding to which he may be made a party
by reason of being a director or officer of the Company.
SECTION XI
CHANGE IN CONTROL
In the event there is a Change in Control of the ownership of the
Company, the Executive may at any time thereafter immediately resign upon
written notice to the Company. In this event, the Company shall pay to the
Executive in a lump sum upon such resignation an amount equal to 150% of the
amount of Base Salary and Bonus earned by the Executive during the twelve (12)
month period prior to the Change of Control. In addition, earned but unpaid Base
Salary and Incentive Compensation Awards, if any, will be paid on a pro-rated
basis for the year in which resignation occurs. The benefits and perquisites
described in this Agreement as in effect at the date of termination of
employment will also be continued for eighteen (18) months from the effective
date of termination pursuant to Change of Control.
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A "Change in Control" shall be deemed to have occurred if (i) a tender
offer shall be made and consummated for the ownership of more than 50% of the
outstanding voting securities of the Company, (ii) the Company shall be merged
or consolidated with another corporation and as a result of such merger or
consolidation less than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, as the same shall have existed immediately prior to
such merger or consolidation, (iii) the Company shall sell all or substantially
all of its assets to another corporation which is not a wholly-owned subsidiary,
or (iv) a person, within the meaning of Section 3(a)(9) or of Section 13(d)(3)
(as in effect on the date hereof) of the Securities and Exchange Act of 1934
("Exchange Act")), shall acquire more than 50% of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or of
record). For purposes hereof, ownership of voting securities shall take into
account and shall include ownership as determined by applying the provisions of
Rule 13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the Exchange
Act.
SECTION XII
WITHHOLDING TAXES
The Company may directly or indirectly withhold from any payments under
this Agreement all federal, state, city or other taxes that shall be required
pursuant to any law or governmental regulation.
SECTION XIII
EFFECTIVE PRIOR AGREEMENTS
This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter and supersedes the Original
Agreement and any other prior employment or severance agreements between the
Company and its affiliates, and the Executive.
SECTION XIV
CONSOLIDATION, MERGER OR SALE OF ASSETS
Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to, another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a Consolidation, Merger or Sale
of Assets, the term "the Company" as used will mean the other corporation and
this Agreement shall continue in full force and effect. This Section XIV is not
intended to modify or limit the rights of the Executive hereunder, including
without limitation, the rights of Executive under Section XI.
SECTION XV
MODIFICATION
This Agreement may not be modified or amended except in writing signed
by the parties. No term or condition of this Agreement will be deemed to have
been waived, except in writing
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by the party charged with waiver. A waiver shall operate only as to the specific
term or condition waived and will not constitute a waiver for the future or act
on anything other than that which is specifically waived.
SECTION XVI
GOVERNING LAW; ARBITRATION
This Agreement has been executed and delivered in the State of
Tennessee and its validity, interpretation, performance and enforcement shall be
governed by the laws of that state.
Any dispute among the parties hereto shall be settled by arbitration in
Nashville, Tennessee, in accordance with the then applicable rules of the
American Arbitration Association and judgment upon the award rendered may be
entered in any court having jurisdiction thereof.
SECTION XVII
NOTICES
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid by registered mail, return receipt requested,
or when delivered if by hand, overnight delivery service or confirmed facsimile
transmission, to the following:
(a) If to the Company, at 000 Xxxxxxxx Xxxx, Xxxxx X-000,
Xxxxxxxx, Xxxxxxxxx 00000, Attention: Chairman, or at such other address as may
have been furnished to the Executive by the Company in writing, copy to Xxxx
Manner, Xxxxxxx, Xxxxxx, Xxxx, Xxxxxxx & Manner, P.C., 000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000; or
(b) If to the Executive, at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000, or such other address as may have been furnished to the Company
by the Executive in writing.
SECTION XVIII
BINDING AGREEMENT
This Agreement shall be binding on the parties' successors, heirs and
assigns.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY:
PSYCHIATRIC SOLUTIONS, INC.
By: /s/ Xxxxx Xxxx
--------------------------------
Title: Director
--------------------------------
EXECUTIVE:
/s/ Xxxx Xxxxxx
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XXXX XXXXXX
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