Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“ Agreement ”) is made and executed to be
effective as of the consummation of the Merger, by and between
Symbion, Inc. (the “ Company ”), and
Richard E. Francis, Jr., an individual and resident of
Nashville, Tennessee (“ Executive ”).
Defined terms used herein have the meaning attributed thereto in
the text hereof or if not so defined, as set forth in
Section 18.
RECITALS:
WHEREAS, the Company, Symbol
Acquisition, L.L.C., a Delaware limited liability company, and
Symbol Merger Sub, Inc., a Delaware corporation entered into
an Agreement and Plan of Merger, dated as of April 24, 2007,
(the “ Merger Agreement ”) upon the consummation
of which Symbol Merger Sub, Inc. will be merged with and into
the Company, with the Company as the surviving
corporation;
WHEREAS, prior to but in connection
with the Merger, Symbol Acquisition, L.L.C. will be converted into
Symbion Holdings Corporation (the “ Parent ”),
which will become the parent holding company of the Company by
virtue of the Merger; and
WHEREAS, the Company and Executive
desire to memorialize in this Agreement the terms of
Executive’s employment with the Company effective as of the
consummation of such Merger, with the understanding that this
Agreement shall supersede any and all prior agreements relating to
Executive’s employment with the Company or any Company
Subsidiary in all respects;
NOW, THEREFORE, in consideration of
the mutual undertakings of the parties set forth in this Agreement,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and
Executive hereby agree as follows:
1.
Employment.
The Company hereby
employs Executive, and Executive hereby accepts employment with the
Company, on the terms and conditions hereinafter set
forth.
2.
Term. The initial term of this Agreement
shall commence and shall be effective as of the consummation of the
Merger, (the “ Effective Date ”) and shall
extend from that date for a period of three (3) years, unless
earlier terminated as provided in Section 8 of this
Agreement. At the beginning of each month after the Effective
Date in which Executive is employed by the Company, the term of
this Agreement shall automatically be extended for an
additional
month so that the Employment Term on such date
is a period of three (3) years (the initial term and any such
extensions, the “ Employment Term ”).
3.
Nature of Duties and
Responsibilities. (a) During the Employment Term,
Executive shall be employed by the Company as its Chairman and
Chief Executive Officer and shall have such duties, powers and
authority as generally inure to those offices. Executive
shall have the full authority and responsibility for formulating
the essential strategic plans and policies of the Company and for
administering the same. Executive shall report to only to the
Board or any designated committee thereof, and shall not be
subordinate to any officer or employee of the Company.
(b) The Company shall use its best efforts to cause
Executive to be elected to the Board of the Company and the Parent
and to be elected Chairman of the Board of the Company and the
Parent, such membership and service as Chairman to continue for so
long as Executive holds the offices set forth in
Section 3(a).
4. Extent of Services. (a) Executive shall devote his
full time, attention, skills and energies during the Employment
Term to the business of the Company. During the Employment
Term, Executive shall not be engaged in any other business activity
that conflicts with or detracts from his duty to the Company or
with the business of the Company, whether or not such business
activity is pursued for gain, profit or other pecuniary
advantage. Notwithstanding the foregoing, Executive may, at
his option, devote reasonable time and attention to personal
investments and to civic, charitable or social organizations as he
deems appropriate. With the Board’s prior written
consent, Executive may devote a reasonable amount of his time to
serve on the board of directors of one or more public or private
corporations, provided that such service will not interfere with
the performance of Executive’s duties hereunder and, provided
further, that the business activities of any such corporation are
not competitive with those of the Company.
(b) For the avoidance of doubt, neither the
existence nor terms of this Agreement shall be deemed to preclude
Executive from performing such duties to the Company as may be
required for the Company to satisfy its obligations under the
Merger Agreement.
5. Location. The permanent place of employment of
Executive shall be the corporate headquarters of the Company
located in Nashville, Tennessee. Executive shall not be
required to relocate his place of employment more than 35 miles
from such location at any time during the Employment Term without
his prior consent, which consent may be withheld by Executive for
any reason he deems appropriate. Executive may be required to
conduct reasonable travel in the course of the performance of his
duties on behalf of the Company.
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6. Compensation.
(a) For all services rendered by Executive under
this Agreement, the Company shall compensate Executive at
Executive’s current annual base rate as in effect on the date
hereof; provided, however, that effective January 1, 2008,
Executive’s annual base rate shall be increased to
$525,000.
(b) The annual rate of compensation provided in
Section 6(a) may be adjusted upward effective on
January 1 for each year beginning after January 1, 2008
during the Employment Term by an amount determined by the
Compensation Committee of Parent’s Board of Directors (the
“ Board ”) in its sole discretion.
Executive is not entitled to any guaranteed annual increase in his
rate of compensation.
(c) During the Employment Term, Executive shall be
eligible to receive a bonus payment each year that is equal to a
percentage of the amount of compensation that is in effect under
Section 6(a). The percentage shall be determined by
reference to the level of achievement by Executive of the annual
performance goals that are established by the compensation
committee of the Board so that the target bonus opportunity is 100%
of the amount specified in Section 6(a) if Executive
achieves at least 100% of the performance goals. The
percentage shall be reduced to correspond to achievement that is
less than 100%, provided that no bonus shall be payable under this
provision if achievement is at a level of less than 80% of the
performance goals. The Executive shall be eligible for
additional bonus payments upon achievement of such other
performance targets that are specified by the compensation
committee of the Board.
(d) The Company shall be entitled to withhold such
amounts on account of employment and payroll taxes and similar
matters required by applicable law, rule or regulation of any
appropriate governmental authority.
(e) The Company shall continue to pay Executive his
compensation during any period of physical or mental incapacity or
disability, but shall not be obligated to pay Executive any
compensation for any continuous period of physical or mental
incapacity or disability after Executive is determined to be
disabled by the Board, as provided in Section 8(g).
(f) During the Employment Term, the Company shall
pay the reasonable expenses incurred by Executive (based on
business development objectives and within limits that may be
established by the Board) in the performance of his duties under
this Agreement (or shall reimburse Executive on account of such
expenses paid directly by Executive) in accordance with the
Company’s policies and procedures promptly upon the
submission to the Company by Executive of documentation reasonably
satisfactory to the Company.
7. Other Benefits.
(a) Executive shall be entitled to and eligible for
group health, life and disability insurance coverage, vacation, and
any other fringe benefits that
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may from time to time be available to other
salaried employees of the Company. Executive may participate in any
other pension, profit sharing or other employee benefit plan of the
Company or in which the Company participates. Any and all
such benefits provided in this Section 7(a) shall
terminate on the expiration or earlier termination of this
Agreement, except as otherwise required by law or as otherwise
provided herein.
(b) (i)
The Company shall recommend to the
Board that, and shall use its best efforts to cause, the grant to
Executive at the Effective Date, of non-qualified options to
purchase Parent common stock under a Parent plan, with customary
terms and conditions, the material terms of which such grant are
set forth on Schedule A hereto.
(ii)
All shares of common stock of the
Parent and all awards convertible or exercisable into such shares,
whether acquired pursuant to Section 7(b)(i) or
otherwise, shall be subject to the terms and conditions set forth
in the Shareholders Agreement.
7.A. Purchased Equity . Executive shall invest at the
Effective Time $4,700,000 in Parent in connection with the
Merger.
8. Termination.
(a) Termination for Cause. Prior to the end of
the Employment Term, the Company may terminate this Agreement for
Cause, without any further liability hereunder to Executive;
provided that the Company shall pay all accrued but unpaid
compensation earned to the date of termination.
(b) Termination Without Cause. Prior to the
end of the Employment Term, the Company may terminate this
Agreement other than as provided in Section 8(a), upon thirty
(30) days prior written notice to Executive. In such event,
the Company shall pay to Executive the amounts required under
Section 8(h).
(c) Death of Executive. In the event
Executive’s death occurs during the Employment Term, the
Company shall pay to the estate of Executive all accrued but unpaid
compensation earned to the date of death. This Agreement
otherwise shall terminate in all respects upon Executive’s
death.
(d) Voluntary Resignation. Executive may, upon
thirty (30) days prior written notice to the Company, voluntarily
resign and thereby terminate this Agreement at any time prior to
the expiration of the Employment Term. In such event, the
Company shall pay to Executive all accrued but unpaid compensation
earned to the effective date of resignation. Executive shall
not be entitled to any benefits under this Agreement after the
effective date of resignation.
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(e) Good Reason. Executive may resign and
thereby terminate this Agreement for Good Reason upon prior written
notice from Executive (as provided in the definition of Good
Reason). In such event, the Company shall pay to Executive
the amounts required under Section 8(h).
(f) [RESERVED]
(g) Disability. In the event that Executive is
unable to perform his services under this Agreement for a
continuous period of one hundred eighty (180) days during the term
of this Agreement and Executive is determined to be disabled under
the Company’s long-term disability plan, the Company may
terminate Executive’s employment and the Board may remove
Executive from his position on the Board without further liability
to Executive, except as specified in Section 8(h).
(h) Severance Benefits. Except for a
termination of employment as provided in Sections 8(a), (c),
(d) or (g), if (i) the Company terminates the employment
of Executive without Cause or (ii) Executive elects to resign
and terminate this Agreement for Good Reason, then, in addition to
all accrued but unpaid compensation earned to the effective date of
such termination, subject to Executive’s and the
Company’s execution and delivery of mutual releases of claims
reasonably satisfactory to the Company and Executive, the Company
shall pay to Executive a severance benefit in an amount equal to
(1) three times the Executive’s rate of annual base
compensation determined by reference to the highest base salary
rate in effect at any time during the 12-month period prior to the
effective date of such termination; (2) three times an amount
equal to the 100% target bonus opportunity provided under
Section 6 (c) in respect of the year in which such
termination occurs, as if the performance goals set by the Board
had been fully achieved without regard to actual achievement; and
(3) continuation of benefits at no cost under the benefit
programs specified in Section 7(a) for the period of time
that he is eligible for continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“
COBRA ”). Upon a termination of employment due
to Executive’s disability pursuant to Section 8(g),
Company shall pay Executive 75% of the base salary then in effect
as set forth in Section 6(a) (reduced by any
Company-provided disability insurance benefits), commencing upon
the determination of Employee’s disability by the Board and
continuing until the first to occur of (i) 36 months or
(ii) the death of Executive, and Executive shall receive
benefits at no cost under the benefit programs specified in
Section 7(a) for the period of time that he is eligible
for continuation coverage under COBRA. Nothing in this
Section 8(h) is intended to affect any vesting provisions
applicable to any stock option or stock award of Executive in
effect as of the date his employment is terminated.
9.
Gross-Up Payment.
(a) Gross Up Payment. Anything in this
Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or
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distribution by or on behalf of the Company to
or for the benefit of Executive as a result of a change in control
of the Company (within the meaning of section 280G of the Code
(whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this
Section 9 (a “ Payment ”)) would be subject
to the 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 ”), then Executive shall be
entitled to receive an additional payment (a “ Gross-Up
Payment ”) in an amount such that after payment by
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(i) Tax Opinion. Subject to the provisions of
Sections 9(a) and (b), all determinations required to be made
under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall
be made by a nationally recognized accounting firm or law firm
selected by the Executive (subject to the reasonable consent of the
Company) (the “ Tax Firm ”) provided, however,
that the Tax Firm shall not determine that no Excise Tax is payable
by Executive unless it delivers to Executive a written opinion (the
“ Tax Opinion ”) that failure to pay the Excise
Tax and to report the Excise Tax and the payments potentially
subject thereto on or with Executive’s applicable federal
income tax return will not result in the imposition of an
accuracy-related or other penalty on Executive. All fees and
expenses of the Tax Firm shall be borne solely by the
Company. Within 15 business days of the receipt of notice
from Executive that there has been a Payment, or such earlier time
as is requested by the Executive or the Company, the Tax Firm shall
make all determinations required under this Section 9, shall
provide to the Company and Executive a written report setting forth
such determinations, together with detailed supporting
calculations, and, if the Tax Firm determines that no Excise Tax is
payable, shall deliver the Tax Opinion to Executive. Any
Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to Executive within fifteen days of
the receipt of the Tax Firm’s determination. Subject to
the remainder of this Section 9, any determination by the Tax
Firm shall be binding upon the Company and Executive; provided,
however, that Executive shall only be bound to the extent that the
determinations of the Tax Firm hereunder, including the
determinations made in the Tax Opinion, are reasonable and
reasonably supported by applicable law. As a result of the
uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Tax Firm hereunder, it
is possible that Gross-Up Payments which will not have been made by
the Company should have been made (“ Underpayment
”), consistent with the calculations required to be made
hereunder. In the event that
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it is ultimately determined in accordance with
the procedures set forth in Section 9(c)(ii) that
Executive is required to make a payment of any Excise Tax, the Tax
Firm shall reasonably determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit, of Executive. In
determining the reasonableness of Tax Firm’s determinations
hereunder, and the effect thereof, Executive shall be provided a
reasonable opportunity to review such determinations with Tax Firm
and ExecutiveR
