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Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of 12-17-96, 1996 (this
"Agreement"), is made and entered into by and between Xxxxxx X. Xxxxxx, an
individual resident of the State of Oregon ("Executive"), and Brim, Inc., an
Oregon corporation (the "Company").
Recitals
1. The Company desires to secure the services of Executive as an
employee of the Company for the period provided in this Agreement.
2. Executive is willing to enter into this Agreement for such period
and on the terms and conditions hereinafter set forth.
3. This Agreement is being entered into in connection with the
transactions contemplated by that certain Investment Agreement (the
"Agreement") dated as 12-17-96, 1996 among the Company, and Golder, Thoma,
Xxxxxxx, Xxxxxx Fund IV, L.P. and its designees.
Agreement
In consideration of the promises and covenants herein contained, the
Company and Executive hereby agree as follows:
Section 1. Employment. During the term of employment set forth in
Section 2 of this Agreement, the Company shall employ Executive, and Executive
shall serve, as a Senior Vice President of the Company, or shall serve in such
other similar capacity, with such other similar title, as the Company shall
reasonably determine from time to time consistent with the skills and
experience of Executive. Executive agrees to perform faithfully his duties
under this Agreement to the best of his ability.
SECTION 2. Terms and Place of Employment. Executive's term of
employment under this Agreement shall be for a period of three years commencing
on the date hereof, unless sooner terminated as provided in Section 8 below
(the "Term"). Executive shall perform his duties principally in Portland,
Oregon, and shall not be required to change his place of residence in
connection with his employment hereunder. The Company maintains its executive
offices in Brentwood, Tennessee. Executive may be required from time to travel
to Brentwood, Tennessee in the performance of his duties, but shall not be
obligated to stay for any extended period in Tennessee.
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Section 3. Compensation.
(a) Base Salary. For all services to be rendered by Executive to the
Company under this Agreement, the Company shall pay to Executive the base
salary described in Schedule A to this Agreement payable in accordance with the
Company's standard payroll practices (the "Base Salary").
(b) Bonus. In addition to the Base Salary, Executive shall
be eligible for an annual bonus as described in Schedule A to this Agreement,
(the "Bonus").
Section 4. Benefits. During the term of employment hereunder,
Executive shall be entitled, to the extent that he is otherwise eligible, to
participate in the benefits listed on Schedule A attached hereto with such
changes as may be adopted from time to time for all similarly situated officers
of the Company. In addition, the Company shall honor any sick leave and
vacation time of Executive whether earned or accrued or unpaid as of the date
of this Agreement.
Section 5. Reimbursement of Expenses. The parties recognize that in
the course of performing his duties hereunder, Executive will necessarily incur
out-of-pocket expenses for the account of the Company. Executive shall be
entitled to reimbursement for all reasonable out-of-pocket expenses so incurred
by him in the performance of duties hereunder and in keeping with Company
policies, upon submission of an adequate accounting for such expenses.
Section 6. Covenant Not to Compete.
(a) During the Term of this Agreement, Executive shall not,
directly or indirectly, whether as an employee, consultant, partner or in any
other corporate or representative capacity, (i) engage in any activity intended
to (x) divert from the Company, or from any subsidiary or affiliate, any
business of the Company, or any subsidiary or affiliate, relating to any
facility owned, leased or managed under a management contract or managed care
contract at the time of the termination of Executive's employment or (y) to
interfere with any relationship between any facility owned, leased or managed
under a management contract or managed care contract at the time of the
termination of Executive's employment and any or all of the members of the
medical staff thereof (the "Medical Staff"), or (ii) enter into a healthcare
related business relationship with any member of any of the Medical Staff.
(b) During the Term of this Agreement, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
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employees of the Company or any subsidiary to leave the employ of the Company
or such subsidiary or in any way interfere with the relationship between the
Company or any subsidiary and any employees of the Company or any subsidiary or
(ii) hire any more than two persons who were employees of the Company or any
subsidiary within a six month period prior to the termination of Executive's
employment; provided, however, that the Executive shall not be in breach of its
obligations hereunder in the event the event it solicits or hires two or fewer
employees or former employees of the Company who would otherwise be subject to
the terms of this Section 6(b).
(c) It is the intent of the parties that the restrictions contained in
this Section 6 shall be reasonable in both duration and geographic scope. If
any court of competent jurisdiction shall find the provisions of this Section
unreasonable, the restrictions contained in this Section shall be reduced in
duration and/or geographic scope to the extent necessary to be deemed
reasonable by such court, and shall be enforceable as so modified.
Section 7. Confidential Information.
(a) The Executive shall not, during the term of his employment or
thereafter, without the prior written consent of the Company, divulge, disclose
or make accessible to any other person, firm, partnership or corporation,
except while employed by the Company in the business of and for the benefit of
the Company or when required to do so by a lawful order of a court of competent
jurisdiction, Confidential Information (as defined herein). "Confidential
Information" shall mean all nonpublic information respecting to the business of
the Company and its subsidiaries including, but not limited to, their
contracts, leases, management plans, products, research and development,
processes, customer lists, marketing plans and strategies. Confidential
Information does not include information that is or becomes generally known to
and available for use by the public unless such availability occurs through an
unauthorized act or omission on the part of Executive.
(b) Except as may be otherwise consented to in writing by the
Company, at the termination of his employment, all memoranda, diaries, notes,
records, cost information, customer lists, marketing plane and strategies, and
any other documents containing any Confidential Information made or compiled
by, or delivered or made available to, or otherwise obtained by Executive in
his possession or subject to his control at such time except that Executive may
proffer a legible copy, and retain the original, of any personal diary or
personal notes.
(c) Executive agrees that the provisions of this Section shall
survive the termination of this Agreement.
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Section 8. Termination; Termination Benefits. The term of employment
hereunder shall be terminated upon the first to occur of the following:
(a) The expiration of the term of employment pursuant to Section 2 of
this Agreement;
(b) Executive's death or Permanent Disability. "Permanent Disability"
shall mean physical or mental incapacity of a nature which prevents Executive,
in the judgment of an independent qualified physician of good standing, from
performing his duties under this Agreement for a period of three months. If the
term of employment is terminated because of Executive's death or Permanent
Disability, the Company shall pay (in the case of death) to Executive's
beneficiary or beneficiaries designated in writing to the Company, or to
Executive's estate in the absence or lapse of such designation, or (in the case
of Permanent Disability) to Executive or his representative, any insurance
proceeds attributable to Executive's death or disability;
(c) Executive's employment being terminated by the Company for Cause.
Termination "for Cause" shall mean termination because of: (i) the refusal,
neglect or failure without good reason of Executive to perform a major portion
of the services to be performed by him under this Agreement, provided Executive
shall first have been given written notice of such refusal, neglect or failure
and shall fail within thirty (30) days following delivery of such notice to
cure such refusal, neglect or failure; (ii) gross negligence or willful
misconduct in the performance of Executive's duties hereunder; (iii) the
habitual intoxication or inexcusable repeated or prolonged absence from work of
Executive; (iv) the perpetration by Executive of a fraud against the Company;
or (v) the conviction of Executive of a felony. Termination for Cause shall
occur upon delivery to Executive of a written notice of such action by the
Company, which written notice shall specify the grounds for such termination.
If Executive's employment is terminated for Cause, the Company's only
obligation shall be payment of the Base Salary for such period of time as is
consistent with the standard practice of the Company;
(d) Executive's Voluntary Termination of employment with the Company.
"Voluntary Termination" shall mean the termination of Executive's employment
with the Company as a result of his resignation or by mutual agreement between
Executive and the Company. If Executive's employment is terminated as a result
of a Voluntary Termination, the Company's only obligation to Executive shall be
payment of the Base Salary for such period of time as is consistent with the
standard practice of the Company, but not less than 90 days from the date such
termination occurs; or
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SCHEDULE A
EXECUTIVE: XXXXXX X. XXXXXX
TITLE WITHIN THE COMPANY: Senior Vice President
COMPENSATION:
Executive's Base Salary shall be paid at the rate of $176,000 per
year. Executive shall also be entitled to such annual incremental increases in
Base Salary as may be given to similarly situated executives of the Company.
Executive shall be paid Bonus compensation in an amount equal to fifty
percent (50%) of Executive's Base Salary, the payment of which Bonus
compensation shall be contingent upon the Company meeting or exceeding its
annual target budget.
Executive shall be entitled to the advance payment of twenty percent
(20%) of Executive's Bonus compensation following the first six months of the
first year of the term hereof, if the Company shall have met its target budget
for such period.
Executive shall be entitled to the standard employee benefits package
provided by the Company to Executive immediately prior to consummation of the
transaction that is the subject of the Investment Agreement, subject to the
Company's right to substitute reasonably comparable alternative benefits;
provided, however, Executive shall be entitled to accrue vacation time without
limit. Executive shall be entitled to any carry forward and continue, on its
existing terms, that certain loan made from U.S. Bank of Oregon to Executive in
the amount of $200,000, including the continued payment by the Company of the
interest thereon; provided, however, that such loan shall be due and payable in
full by no later than the effective date of an initial public offering of the
stock of the Company.
Executive shall be eligible to participate in any stock option/stock
purchase plans or similar equity programs to be developed for key employees.
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If to the Company:
c/o Principal Hospital Company
0000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx X-00
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxx, President
Phone: 615/000-0000
Fax: 615/000-0000
Section 12. Full and Complete Agreement. This Agreement, including the
exhibits and schedules hereto constitutes the full and complete understanding
and agreement of the parties and supersedes all prior understandings and
agreements regarding Executive's employment by the Company or any of its
subsidiaries or affiliates.
Section 13. Amendment. This Agreement may be modified only by a
written instrument executed by both parties.
Section 14. Nonassignability. This Agreement and the rights and
benefits hereunder are personal to the Company and are not assignable or
transferable, nor may the services to be performed hereunder be assigned by the
Company to any person, firm or corporation; provided, however, that this
Agreement and the rights and benefits hereunder shall be assigned by the
Company to any corporation acquiring all or substantially all of the assets of
the Company or to any corporation into which the Company may be merged or
consolidated, and this Agreement and the rights and benefits hereunder will
automatically be deemed assigned to any such corporation without any future
action by Executive or the Company. Executive's right and interests under this
Agreement may not be assigned, pledged or encumbered by Executive. The
provisions of this Agreement shall inure to the benefit of Executive's heirs,
executors, administrators and successors in interest.
Section 15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee.
Section 16. Execution in Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
Section 17. Titles and Headings. Titles and section headings herein are
for purposes of reference only, and shall in no way limit, define or otherwise
affect the meaning or interpretation of any of the provisions of this
Agreement.
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(e) Executive's employment being terminated by the Company without
Cause. Termination "without cause" shall mean termination by the Company of
Executive's employment on any basis other than those provided in paragraphs
(al, (b) (c) or (d) of this Section 8. If the term of employment is terminated
without Cause, the Company shall give 10 days written notice thereof to
Executive and Executive shall be entitled to receive in full at the time of
termination the Base Salary and all Bonus payments as if earned in full, in
respect of the unexpired portion of the term of employment in the amounts and
at the times provided in Section 3.
Section 9. Injunctive Relief. Executive acknowledges that the Company
has no adequate remedy at law and would be irreparably harmed if the Executive
breaches or threatens to breach the provisions of Section 6 or Section 7 above,
and, therefore, agrees that the Company shall be entitled to injunctive relief
to prevent any breach or threatened breach of any of those sections, and to
specific performance of the terms of each of such sections in addition to any
other legal or equitable remedy it may have. Executive further agrees that he
shall not, in any equity proceeding involving him relating to the enforcement
of Section 6 or Section 7 above, raise the defense that the Company has an
adequate remedy at law. Nothing in this Agreement shall be construed as
prohibiting the Company from pursuing any other remedies at law or in equity
that it may have or any other rights that it may have under any other
instrument.
Section 10. Withholding of Taxes. Any payments to Executive, or to
his designated beneficiary or beneficiaries, pursuant to the terms of this
Agreement shall be reduced by such amounts as may be required to be withheld
with respect thereto under all present and future federal, state and local tax
laws and regulations and other laws and regulations.
Section 11. Notice. Any notice, demand, approval or other
communication which may or is required to be given under this Agreement shall
be in writing and shall be deemed to have been given on the earlier of the day
actually received or on the close of business on the third business day next
following the day when deposited in the United States mail, postage prepaid,
registered or certified, addressed to the party at the address set forth after
its name below or such other address as may be given by such party in writing
to the other:
If to Executive:
Xxxxxx X. Xxxxxx
0000 XX Xxxx Xxxxxxx Xx.
Xxxxxxxx, XX 00000
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
COMPANY
BIRM, INC.
By: /s/
---------------------------
Name:
-------------------------
Title:
-------------------------
EXECUTIVE
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
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Section 18. Severability. If any portion of this Agreement is deemed
invalid or unenforceable for any reason by a court of competent jurisdiction,
then such provision will continue in effect only to the extent that is remains
valid, and all other provisions in this Agreement in all other respects shall
remain valid and enforceable.
Section 19. Attorney Fees. In the event that suit or action is
instituted to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover his or its attorney fees and costs,
including those incurred on appeal, as determined by the court.
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