EXHIBIT 10.8
XXXXX, XXXXXX, XXXXXXXX & XXXXX
000 XXXX XXXXXX
SUITE 2500
NEW YORK, NEW YORK 10022-6815
TELEPHONE NO
(000) 000-0000
FACSIMILE NO
(212) 893-9575
January 30, 2002
Xx. Xxxxx X. Xxxxxxxxxx
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
RE: RELATIONSHIP WITH ARDENT HEALTH SERVICES LLC (THE "COMPANY")
AND BEHAVIORAL HEALTHCARE CORPORATION ("BHC")
Dear Xxxxx,
As you recall, when Xx Xxxxx resigned from BHC (the predecessor to the
business of the Company), BHC recruited you to provide operational and
managerial oversight as BHC's Chairman of the Board and President. During this
time, Vencor was auctioning its BHC ownership interest. On or about May 1, 2001
when Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx IX, L.P. ("WCAS") acquired a controlling
interest in BHC from Vencor, BHC's Board appointed you to be President and CEO
of BHC. In conjunction with the formation of the Company in August 2001 and the
restructuring of BHC, you became the President/CEO of the Company. During your
involvement with the Company and BHC, we have spoken on several occasions
regarding your compensation package and discussed many alternatives and options.
These conversations occurred on behalf of WCAS regarding your cash investment in
the Company and then on behalf of the Company's Board regarding your employment
and compensation. Accordingly, I want to take this opportunity to memorialize
both WCAS's and the Company's understanding of your relationship with the
Company.
Pursuant to our discussions to bring you into this venture, you agreed
to invest $2,000,000.00 on substantially the same basis as WCAS as part of your
commitment to the ongoing future of the Company, except that your entire
investment was for the purchase of common membership units of the Company and
you were not asked to fund additional amounts as part of WCAS's future financial
commitments to the Company under the Subscription Agreement or any other equity
infusion. We acknowledge that your investment was funded in full in September
2000 and that you are entitled to the rights as a holder of common membership
units set forth in the Company's LLC Agreement.
Furthermore, as part of your participation in this enterprise, WCAS agreed to
cause the Company to adopt, and the Company has adopted, an option plan
reserving a pool of options equaling 12% of the outstanding common units, fully
diluted, for option grants to Company management, including you, in accordance
with the plan. The Company will grant you options, out of the option pool, to
allow you to purchase 4% of the total common equity of the Company, computed
from time to time on a fully diluted basis (the "4% Anti-dilution Feature").
Your options will be adjusted, as appropriate, for any reclassification, split,
dividend, combination, subdivision, conversion, or similar issuance of equity
interests of the Company. The 4% Anti-dilution Feature will terminate upon the
earlier to occur of the closing of an initial public offering by the Company of
its equity securities registered under the Securities Act of 1933, as amended,
with net cash proceeds to the Company of at least $75,000,000 (a "Qualified
IPO") or a change of control of the Company. Your initial option grant will be
4% of the total common equity of the Company, assuming WCAS has funded in full
its commitment under its Subscription Agreement with the Company, subject to
claw-back if some lesser amount is funded. The strike price for your initial
option grant will be $3.43, the same price that WCAS invested all its monies
under its Subscription Agreement with the Company. If any additional equity is
invested in the Company prior to the expiration of the 4% Anti-Dilution Feature,
your strike price for any additional options granted pursuant to the option plan
resulting from this additional equity investment will be at the same price per
common unit that the additional equity is invested.
Regarding your relationship with the Company, during your employment by
the Company or any of its subsidiaries you will be the President and CEO of the
Company and a member of the Board with compensation to be reviewed annually
starting at $350,000.00. You will be eligible for a bonus each year based on the
bonus plan adopted by the Board. Your participation level will be at 100% of
your salary for the year in which the bonus threshold is achieved, subject to
any withholdings as set forth in the plan. The Company will also purchase a
five-year life insurance policy of five million dollars for a beneficiary
designated in your sole discretion. You will receive the normal and customary
employment benefits provided in the Company's benefit plans, except that the
Company will provide a disability benefit to you which will provide for 100% of
your annual salary upon the onset of a permanent disability as defined in and
pursuant to the Company's disability plan. Assuming you continue to be employed
by the Company at the time the Company has a Qualified IPO, the Company will
offer you a five-year employment agreement, on such terms as may be agreed.
The arrangements described in this letter shall exist while you are an
employee of the Company or any of its subsidiaries and shall cease to exist upon
the termination of your employment.
If you agree that the terms set forth above accurately state our
arrangement, please sign below and return a copy to me for inclusion in your
employment file with the Company. If you disagree with any of the above or
believe that other terms should be included, please call me to discuss.
Very truly yours
/s/ X. Xxxxx Xxxxxxx
------------------------
X. Xxxxx Xxxxxxx,
Manager, Ardent Health Services LLC
General Partner, Welsh, Xxxxxx, Xxxxxxxx & Xxxxx IX, L.P.
cc: Xxxxxxx X. Xxxxxx, Chairman Ardent Health Services LLC
Xxxxxxx X. Xxxxxxxxx, General Counsel and Secretary
/s/ Xxxxx X. Xxxxxxxxxx
------------------------------
Xxxxx X. Xxxxxxxxxx
