Agreement for Severance Benefits and Restrictive Covenants
Exhibit 10.17
Agreement for Severance Benefits and
Restrictive Covenants
Restrictive Covenants
This AGREEMENT FOR SEVERANCE BENEFITS AND RESTRICTIVE COVENANTS (“Agreement”) is entered
into between IASIS Management Company, a Delaware corporation (“Company”), and Xxxxxxx Xxxx
(“Employee”), as of March 1, 2001 (the “Effective Date”). The Company and Employee are
sometimes referred to herein individually as “Party” and collectively as the “Parties”.
WHEREAS, Employee is currently employed by the Company to provide executive
and administrative services in her capacity as Chief Executive Officer of Health
Choice Arizona, Inc., an affiliate of the Company (“Health Choice”);
WHEREAS, as consideration for the severance benefits herein described and the other
covenants herein provided, Employee is willing to enter into certain restrictive covenants in
favor of the Company as set forth in this Agreement; and
NOW, THEREFORE, as consideration for the mutual covenants contained in this Agreement
and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties hereby agree as follows:
1. Covenants Against Competition
(a) Company Business; Exposure to Confidential Matters. Employee acknowledges
that (i) the Company and its Affiliates (as hereinafter defined) are engaged in the
ownership, operation and management of acute care hospitals, and related healthcare
facilities, including Health Choice (all of which are referred to collectively as the
“Company Business”) and (ii) Employee’s work relating to Company Business will bring Employee
into close contact with information regarding the Company and its Affiliates that is not
readily available to the public. For purposes of this Agreement, the term “Affiliates” means
all persons that, directly or indirectly, through one or more intermediaries, control, are
controlled by or are under common control with the Company.
(b) Covenant Not to Compete. After Employee’s termination of employment and
continuing for a period of fifteen (15) months following the termination of Employee’s
employment with the Company, in the event Employee’s employment is terminated voluntarily by
Employee or for cause by the Company (as defined below in Section 5(f)) (collectively, the
“Restricted Period”), Employee covenants and agrees that Employee will not, without the prior
written consent of the Company, engage in any business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, employee, trustee,
consultant or in any other relationship or capacity, that is competitive with Health Choice;
provided, however, that Employee may, without violating this Section 1(b), (a) own, directly
or indirectly, solely as an investment, securities of any entity that is competitive with Health
Choice if Employee (i) does not own, directly or indirectly, five percent (5%) or more of any
class of the securities of such entity, and (ii) does not participate in the business of such
entity, and (b) perform uncompensated services for any tax exempt organization within the meaning
of section 170(c) of the Internal Revenue Code.
2. Confidential Information. Employee covenants and agrees that during
employment with the Company and continuing until the termination of the Restricted Period, Employee
will keep secret and not disclose to any person, other than authorized representatives of the
Company and its Affiliates, or appropriate to Employee’s own use or the use of any person other
than the Company and its Affiliates, any Confidential Information (as hereinafter defined). For
purposes of this Agreement, the term “Confidential Information” means all secret or confidential
information or knowledge pertaining to the Company Business heretofore or hereafter disclosed,
communicated or otherwise learned or made known to Employee while an employee of the Company,
including without limitation trade know-how, trade secrets, patient records, patient lists and
other patient information, customer or similar lists, pricing policies, operational methods,
marketing plans or strategies, financial statistics, financial projections and other financial
information, business acquisition plans, new personnel acquisition plans, drawings, designs and
design projects, inventions, research and developments, projects, and other information, written or
oral, marked, identified as or reasonably understood to be confidential at the time of disclosure
to Employee by, through or on behalf of the Company or any of its Affiliates. Notwithstanding the
foregoing, information shall not be deemed Confidential Information for purposes of this Agreement
to the extent (a) disclosure of such information is required pursuant to applicable law or order of
a court or other tribunal; (b) such information is in or subsequently enters the public domain
through means other than direct or indirect disclosure in violation of this Agreement; or (c) such
information is lawfully received from a third party who is not subject to restriction on further
disclosure. In addition to the foregoing, Employee shall abide by such other policies and
procedures as IASIS and/or the Company may adopt, from time to time, regarding privacy and
confidentiality.
3. Employees of the Company and its Affiliates. After Employee’s termination of
employment and during the Restricted Period, without the prior written consent of the Company,
Employee shall not directly or indirectly through any other person hire or solicit for hire any
person who is employed by the Company or one of its Affiliates at the time of the termination of
Employee’s employment and who is employed by the Company at the time of such hiring or
solicitation; provided, however, nothing in this Section 3 shall prevent Employee from hiring an
employee of the Company or its Affiliates as a result of such employee’s unsolicited response to
job opportunities, including advertisements placed in newspapers, magazines or similar media of
general circulation to the public.
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4. Property of the Company and its Affiliates. Employee will make
full and prompt disclosure to the Company of all inventions, improvements, formulas, data,
programs, processes, discoveries, methods, developments, software, Internet website
addresses (URLs), and works of authorship, whether or not copyrightable, trademarkable or
patentable, which relate to actual or anticipated Company Business and either (i) are created,
made or conceived by Employee, either alone, under his direction or jointly with others during the
period of his employment with the Company, (ii) result from work performed by Employee 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, Employee 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, and Employee agrees to
cooperate with the Company to provide such additional documentation as may be necessary to carry
out the intent of this Section 4.
5. Severance Benefits. As consideration for Employee’s execution of this
Agreement, the Company hereby agrees to provide Employee the following severance benefits (the
“Severance Benefits”) upon termination of Employee’s employment without cause by the Company:
(a) Severance Payment. So long as Employee is not in material breach of any provision
of this Agreement, the Company agrees to pay Employee severance in an amount equal to Employee’s
monthly base salary at the time of termination for a period of nine (9) consecutive months (the
“Severance Period”), less applicable federal and state taxes, Employee’s portion of benefits
premiums, withholdings and other appropriate payroll deductions. This severance payment shall be
payable beginning the immediately succeeding routine payroll period after Employee’s employment by
the Company is terminated and continuing monthly to the end of the Severance Period. During the
Severance Period, the Company will continue to pay its portion of Employee’s benefits premiums
pursuant to Section 5(d) of this Agreement below.
(b) Unused Vacation Payment. Additionally, on or before the time of the Company’s
immediately succeeding routine payroll period after Employee’s employment by the Company is
terminated, the Company will make a one-time cash payment to Employee in an amount equal to all of
Employee’s unused sick leave, vacation time and/or paid time off (consistent with Company policy
for employees of the Company with similar rank or pay grade level as Employee), less applicable
federal and state taxes, benefits and other withholding payable.
(c) Outplacement Assistance. As additional consideration of the promises contained
herein, immediately upon termination of Employee’s employment by the Company, the Company shall pay
Employee Two Thousand Five Hundred and No/100 Dollars ($2,500.00) to provide Employee with
outplacement assistance, including resume preparation, interview technique, and lead generation and
which amount shall be paid on or before the time of the Company’s immediately succeeding routine
payroll period after Employee’s employment by the Company is terminated.
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(d) COBRA continuation coverage. Employee shall have a right to continue coverage
under the Company’s group medical or health benefits plans in accord with the provisions of 29
U.S.C. § 1161, as amended (“COBRA”). Employee may exercise the option of continuing such coverage
consistent with, for the duration allowed by, and under the conditions imposed under applicable
federal and state laws. If Employee elects COBRA coverage, the Company will subsidize the cost of
premiums for the Employee so that premiums charged to Employee do not exceed those charged to
active Employees for the 18-month term COBRA is in effect.
(e) Stock Options. Upon termination of employment by the Company,
treatment of any vested and unvested incentive stock options granted to Employee by the Company
during the term of employment shall be governed by separate Stock Option Plan and Stock Option
Agreement entered into by the parties, and nothing herein shall be deemed to modify any such stock
option arrangement.
(f) Cause. For purpose of this Agreement, the following shall constitute “cause” for
termination: (i) Employee commits any act of gross negligence, incompetence, fraud or willful
misconduct causing harm to the Company, (ii) the conviction of Employee of a felony that could
adversely affect the Company or its reputation, (iii) Employee intentionally obtains personal gain,
profit or enrichment at the expense of the Company or from any transaction in which Employee has an
interest which is adverse to the interest of the Company unless Employee shall have obtained the
prior written consent of the Company’s Board of Directors, (iv) Employee willfully acts in a manner
which is materially detrimental or damaging to the Company’s reputation, business operations or
relations with its employees, suppliers, payors or physicians, or (v) any material breach by
Employee of this Agreement, which breach remains uncorrected for a period of fifteen (15) days
after receipt by Employee of written notice from the Company setting forth the breach. In the event
Employee’s employment is terminated for cause, Employee shall be entitled to receive all base
salary and benefits to be paid or provided to Employee by the Company through the date of
termination and no more.
6. Termination for Good Reason. At any time within twelve (12) months
after a Change in Control (as defined below), Employee’s employment with the Company may be
terminated by Employee by written notice of his resignation (“Notice of Resignation”) upon the
occurrence of any of the following events without the consent of Employee (each of which shall
constitute “Good Reason” for resignation): (i) the removal of Employee from or the failure to elect
or re-elect Employee to the position of Chief Executive Officer of Health Choice, (ii) any material
reduction by the Company of Employee’s duties or responsibilities or the assignment to Employee of
duties materially inconsistent with such position, or (iii) any material breach by the Company of
this Agreement, which breach remains uncorrected for a period of fifteen (15) days after receipt by
the Company of written notice from Employee. Notwithstanding the provisions of clause (i) or (ii)
above, in the event that Employee is elected as Chief Executive Officer of a division or subsidiary
of any entity which acquires the business of Health Choice as a result of acquisition of control of
more than 50% of the voting
securities of the Company, the appointment to such position shall not, by itself, constitute Good
Reason for purposes of this Agreement. In the event that Employee resigns within twelve (12)
months after a Change in Control for Good Reason pursuant to this Section 6, Employee shall be
entitled to receive the Severance Benefits as described in Section 5 as if Employee had been
terminated without cause.
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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 from time to time (the “Exchange Act”)) or “group” of Persons (as defined
in Section 13(d) of the Exchange Act), other than IASIS Healthcare Corporation or any of the
parties to the 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 Health Choice or (B) upon a sale of
all or substantially all of the assets of the Health Choice.
7. Indemnity and Insurance. In the event Employee was, is or becomes a party or
witness or other participant in, or is threatened to be made a party to or witness or participant
in any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation
(whether instituted by the Company or any other party) that Employee in good faith believes might
lead to the institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other, which arises out of an Indemnifiable Event (as defined
below), the Company shall indemnify Employee and hold Employee harmless to the fullest extent
permitted by law as soon as practicable, but in any event no later than thirty days after written
demand is presented to the Company, against any and all expenses, judgments, fines, penalties and
amounts paid in settlement of such claim, including reasonable attorneys’ fees and other related
costs and obligations paid or incurred in connection with investigating, defending, being a witness
in or participating in, or preparing to defend, be a witness in or participate in any claim, and
all interest, assessments and other charges paid or payable in connection with or in respect
thereof. As used herein, the term “Indemnifiable Event” shall mean any event or occurrence related
to the fact that Employee is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not done by Employee in any such
capacity. If so requested by Employee, the Company shall advance (within two business days of such
request) to Employee any and all expenses, including reasonable attorneys’ fees and other
reasonable costs and obligations paid or incurred in investigating, defending, being a witness in
or participating in (including on appeal), or preparing to defend, be a witness in or participate
in any claim relating to any Indemnifiable Event. To the extent the Company maintains an insurance
policy or policies providing officers liability insurance, Employee shall be covered by such policy
or policies, in accordance with its or their terms to the maximum extent of the coverage available
for any Company officer.
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8. Rights and Remedies Upon Breach. If Employee breaches, or threatens to commit a
breach of, any of the provisions of Section 1,2, 3, or 4 of this Agreement (collectively, the
“Restrictive Covenants”), the Company shall have the right and remedy, in addition to, and not in
lieu of, any other rights and remedies available to the Company, to have any of the Restrictive
Covenants specifically enforced by any court having jurisdiction, without the posting of bond or
other surety, it being hereby acknowledged and agreed by Employee that any such breach or
threatened breach will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company.
9. Enforceability of Restrictive Covenants. Employee acknowledges that the Restrictive
Covenants are reasonable and necessary to protect the business of the Company and its Affiliates
and that adequate consideration has been given therefor. Accordingly, if any provision of the
Restrictive Covenants is determined by a court of competent jurisdiction to be unenforceable by
reason of the duration of such provision or geographical area covered thereby being too extensive,
or by reason of such provision being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period of time and geographical area for which it may
be enforceable and to the maximum extent in all other respects as to which it may be enforceable
and the Restrictive Covenants, in such form, shall then be enforceable and shall be enforced. In
addition, if it is determined that any provision of the Restrictive Covenants is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected, but shall
be given full effect, without regard to the invalid provisions.
10. Notice. All notices, requests, demands and other communications given under or by
reason of this Agreement shall be in writing and shall be deemed given (a) on the date of delivery,
when delivered in person, (b) on the date of transmission, when delivered by facsimile or other
electronic transmission with confirmation of receipt, (c) on the date following dispatch if placed
with a nationally recognized overnight courier or delivery service maintaining records of receipt,
or (d) two (2) days following deposit in the mail when mailed, by certified mail (return receipt
requested), postage prepaid, addressed as follows (or to such other address as a party may specify
by notice pursuant to this provision, provided that in such event such notice shall be effective
only upon receipt):
(a) If to the Company:
IASIS Management Company
c/o IASIS Healthcare Corporation
000 Xxxxxxxx Xxxx, Xxx. X-000
Xxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Executive Officer
c/o IASIS Healthcare Corporation
000 Xxxxxxxx Xxxx, Xxx. X-000
Xxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Executive Officer
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(b) If to Employee:
Xxxxxxx Xxxx
0000 Xxxxxx Xx.
Xxxx Xxxx, XX 00000
0000 Xxxxxx Xx.
Xxxx Xxxx, XX 00000
11. Warranties. As a material inducement to the Company to enter into this Agreement,
Employee represents and warrants to the Company as follows: (a) Employee is not a party to any
other agreement or obligation that would prohibit, limit or restrict Employee’s power, rights or
ability to serve as an employee of the Company or enter into this Agreement and to perform
Employee’s duties and obligations hereunder; and (b) performance of Employee’s obligations
hereunder or as an employee of the Company will not violate or conflict with any agreement to which
Employee is presently subject.
12. Controlling Law and Performability. The laws of the State of Delaware shall govern
the execution, validity, interpretation and performance of this Agreement.
13. Additional Instruments. The Parties shall execute and deliver any and all
additional instruments and agreements that may be necessary or proper to carry out the purposes of
this Agreement.
14. Entire Agreement and Amendments. This Agreement contains the entire agreement of
the Parties relating to the matters contained herein and supersedes all prior agreements and
understandings, oral or written, between the Parties with respect to the subject matter hereof.
This Agreement may be changed only by an agreement in writing signed by the Party against whom
enforcement of any waiver, change, modification, extension or discharge is sought.
15. No Assurance of Employment. Nothing in this Agreement shall be construed as
an obligation on the part of the Company to employ Employee for any period of time or in any
position, it being intended that Employee shall be deemed an “employee at will” of the
Company.
16. Assignments. The Company may freely assign its rights and obligations under this
Agreement, whether by operation of law or otherwise. The rights and obligations of Employee under
this Agreement are personal to Employee, and no such rights, benefits or obligations shall be
subject to voluntary or involuntary alienation, assignment or transfer.
17. Effect of Agreement. Subject to the provisions of Section 16 of this Agreement
with respect to assignments, this Agreement shall be binding upon and inure to the benefit of
Employee and Employee’s heirs, executors, administrators, legal representatives and assigns and the
Company and its respective successors and assigns.
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18. Execution. This Agreement may be executed in multiple counterparts each of which
shall be deemed an original and all of which shall constitute one and the same instrument.
19. Waiver of Breach. The waiver by either Party of a breach of any provision of
the Agreement by the other Party shall not operate or be construed as a waiver by such Party
of any subsequent breach by such other Party.
20. Headings. Headings used in this Agreement are for convenience of reference
only and for no other purpose.
IN WITNESS WHEREOF, the Parties have executed this Agreement on and caused the same to be duly
delivered on their behalf on the day and year first written above.
| IASIS Management Company, a Delaware corporation |
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| By: | /s/ Xxxx X. Xxxxxxxx | |||
| Xxxx X. Xxxxxxxx | ||||
| Executive Vice President & Chief Financial Officer |
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| EMPLOYEE: |
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| /s/ Xxxxxxx Xxxx | ||||
| Print Name: Xxxxxxx Xxxx | ||||
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