EXHIBIT 10.66
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”)
dated as of December 31, 2008, is made by and between Vanguard
Health Systems, Inc., a Delaware corporation (the
“Company”), and Mark R. Montoney, MD (the
“Executive”).
WHEREAS, the Company desires to secure for itself or its subsidiary
the services of the Executive as its Executive Vice President &
Chief Medical Officer from and after the date hereof and the
Executive desires to render such services, in each case pursuant to
the terms and conditions hereof;
WHEREAS; the Company’s Board of Directors (the
“Board”; provided, that if a Compensation Committee of
the Board of Directors shall have been duly appointed, the term
“Board” as used herein shall mean either of such
Committee or the full Board of Directors) has approved and
authorized the Company’s entry into this Agreement with the
Executive;
WHEREAS, the parties desire to enter into this Agreement setting
forth the terms and conditions of the employment relationship of
the Executive with the Company; and
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the Company and the Executive hereby
agree as follows:
1.
Employment . The Company or its subsidiary hereby employs
the Executive, and the Executive hereby accepts employment with the
Company or its subsidiary, upon the terms and subject to the
conditions set forth herein.
2. Term .
This Agreement is for the five-year period (the “Term”)
commencing on the date first written above (the “Effective
Date”) and terminating on the fifth anniversary of the
Effective Date, or upon the Executive’s earlier death,
disability or other termination of employment pursuant to Section
10; provided, however, that commencing on the fifth anniversary of
the Effective Date and on each anniversary thereafter the Term
shall automatically be extended for one additional year unless, not
later than 90 days prior to any such anniversary, either party
hereto shall have notified the other party hereto that such
extension shall not take effect.
3. Position
. During the Term, the Executive shall serve as Executive Vice
President & Chief Medical Officer of the Company or in such
other senior executive position in the Company as the Executive
should approve.
4. Duties and
Reporting Relationship . During the Term, the Executive shall,
on a full time basis, use his skills and render services to the
best of his ability in supervising and conducting the operations of
the Company.
5. Place of
Performance . The Executive shall perform his duties and
conduct his business at the principal executive offices of the
Company, except for required travel on the Company’s
business.
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6. Salary and
Annual Bonus .
(a) Base Salary .
The Executive’s base salary hereunder shall be $500,000 per
year, payable semi-monthly. Commencing on January 1, 2010, the
Board shall review such base salary at least annually and make such
adjustments from time to time as it may deem advisable, but the
base salary shall not at any time be reduced from the base salary
in effect from time to time.
(b) Annual Bonus .
The Board (or if there is a compensation committee of the Board,
the compensation committee) shall provide the Executive with an
annual bonus plan providing the Executive with an opportunity to
earn annual bonus compensation and shall cause the Company to pay
to him any earned annual bonus in addition to his base salary.
7. Vacation,
Holidays and Sick Leave . During the Term, the Executive shall
be entitled to paid vacation, paid holidays and sick leave in
accordance with the Company’s standard policies for its
senior executive officers.
8. Business
Expenses . The Executive will be reimbursed for all ordinary
and necessary business expenses incurred by him in connection with
his employment upon timely submission by the Executive of receipts
and other documentation as required by the Internal Revenue Code
and in conformance with the Company’s normal procedures.
9. Pension and
Welfare Benefits . During the Term, the Executive shall be
eligible to participate fully in all health benefits, insurance
programs, pension and retirement plans and other employee benefit
and compensation arrangements available to senior officers of the
Company generally.
10. Termination of
Employment .
(a) General . The
Executive’s employment hereunder may be terminated without
any breach of this Agreement only under the following
circumstances.
(b) Death or
Disability .
(i) The
Executive’s employment hereunder shall automatically
terminate upon the death of the Executive.
(ii) If, as a result of
the Executive’s incapacity due to physical or mental illness,
the Executive shall have been absent from his duties with the
Company for any six (6) months (whether or not consecutive) during
any twelve (12) month period, the Company may terminate the
Executive’s employment hereunder for any such incapacity (a
“Disability”).
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(c) Cause . The
Company may terminate the Executive’s employment. hereunder
for Cause. For purposes of this Agreement, “Cause”
shall mean (i) the willful failure or refusal by the Executive to
perform his duties hereunder (other than any such failure resulting
from the Executive’s incapacity due to physical or mental
illness), which has not ceased within ten (10) days after a written
demand for substantial performance is delivered to the Executive by
the Company, which demand identifies the manner in which the
Company believes that the Executive has not performed such duties,
(ii) the willful engaging by the Executive in misconduct which is
materially injurious to the Company, monetarily or otherwise
(including, but not limited to, conduct described in Section 14) or
(iii) the conviction of the Executive of, the entering of a plea of
nolo contendere by the Executive with respect to, a felony.
Notwithstanding the foregoing, the Executive’s employment
hereunder shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board at a
meeting of the Board (after written notice to the Executive and a
reasonable opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive should be
terminated for cause.
(d) Termination by the
Executive . The Executive shall be entitled to terminate his
employment hereunder (A) for Good Reason or (B) for any other
reason. To be a valid termination of employment by the Executive
under this Agreement for Good Reason, the date of the actual
termination of the Executive’s employment due to any of the
Good Reason acts or conditions set forth in Sections 10(d)(i)
through 10(d)(vi) below must occur within a period of two years
following the initial existence of such Good Reason act or
condition which arose without the consent of the Executive. For
purposes of this Agreement, “Good Reason” shall mean,
(i) without the Executive’s express written consent, any
failure by the Company to comply with any material provision of
this Agreement, which failure has not been cured within ten (10)
days after notice of such noncompliance has been given by the
Executive to the Company or (ii) the occurrence (without the
Executive’s express written consent), following a Change in
Control during the term of this Agreement, of any one of the
following acts by the Company, or failures by the Company to act,
unless, in the case of any act or failure to act described below,
such act or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination given in respect
thereof:
(i) a material
diminution in the Executive’s base compensation, except for
across-the-board salary reductions similarly affecting all senior
executives of the Company and all senior executives of any Person
(as defined in Section 10(h)(i) below) in control of the Company
provided in no event shall any such reduction reduce the
Executive’s base salary below $500,000;
(ii) a material
diminution in the Executive’s authority, duties or
responsibilities;
(iii) a material diminution in
the authority, duties or responsibilities of the supervisor to whom
the Executive is required to report, including a requirement that
the Executive’s supervisor report to a corporate officer or
employee instead of reporting directly to the Board of Directors of
the Company;
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(iv) a material diminution in
the budget over which the Executive retains authority;
(v) a material change in
the geographic location at which the Executive must perform
services under this Agreement , except for required travel
on the Company’s business to an extent substantially
consistent with his business travel obligations prior to the Change
in Control; or
(vi) any other action or
inaction that constitutes a material breach by the Company of the
terms of this Agreement.
The Executive's continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to
act constituting Good Reason hereunder.
(e) Voluntary
Resignation . Should the Executive wish to resign from his
position with the Company or terminate his employment for other
than Good Reason during the Term, the Executive shall give sixty
(60) days written notice to the Company, setting forth the reasons
and specifying the date as of which his resignation is to become
effective.
(f) Notice of
Termination . Any purported termination of the
Executive’s employment by the Company or by the Executive
shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 18. “Notice of
Termination” shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. In respect of a Notice
of Termination sent by the Executive as a result of any of the Good
Reason acts or conditions set forth in Sections 10(d)(i) through
10(d)(vi) above, it must be sent by the Executive to the Company
within 90 days following the initial existence of such Good Reason
act or condition which arose without the consent of the Executive
and if not sent within such 90 days, it shall not be a valid Notice
of Termination.
(g) Date of
Termination . “Date of Termination” shall mean (i)
if the Executive's employment is terminated because of death, the
date of the Executive's death, (ii) if the Executive's employment
is terminated for Disability, the date Notice of Termination is
given, or (iii) if the Executive's employment is terminated
pursuant to Subsection (c), (d) or (e) hereof or for any other
reason (other than death or Disability), the date specified in the
Notice of Termination (which, in the case of a termination for Good
Reason shall not be less than thirty (30) nor more than sixty (60)
days from the date such Notice of Termination is given, and in the
case of a termination for any other reason shall not be less than
thirty (30) days (sixty (60) days in the case of a termination
under Subsection (e) hereof) from the date such Notice of
Termination is given); provided, that in the case of a termination
for Cause, nothing herein shall prevent the Company from
immediately terminating the Executive’s employment, so long
as the Company continues to meet all of its responsibilities
hereunder with respect to payment of salary, benefits and other
obligations during the minimum notice period described in this
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Subsection (g) (and for purposes of measuring such obligations,
the Date of Termination shall be deemed to be the end of such
minimum notice period).
(h) Change in
Control . For purposes of this Agreement, a Change in Control
of the Company shall have occurred if
(i) any
“Person” (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the “Exchange Act”) as
modified and used in Sections 13(d) and 14(d) of the Exchange Act
(other than (1) the Company or any of its subsidiaries, (2) any
trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of
its subsidiaries, (3) an underwriter temporarily holding securities
pursuant to an offering of such securities, (4) any entity owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of the
Company’s common stock, (5) any Person that was a stockholder
of the Company on September 23, 2004 and any affiliates of such
Person, or (6) Blackstone (as defined in the Company’s 2004
Stock Incentive Plan), or any of its affiliates), is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of the
Company’s then outstanding voting securities;
(ii) during any period of
not more than two consecutive years, not including any period prior
to the date of this Agreement, individuals who at the beginning of
such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (i),
(iii), or (iv) of this Section 10(h)) whose election by the Board
or nomination for election by the Company’s stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least
a majority thereof;
(iii) the stockholders of the
Company approve a merger or consolidation of the Company with any
other corporation, other than both (A) (1) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing, directly
or indirectly, to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or parent
entity) 50% or more of the combined voting power of the voting
securities of the Company or such surviving or parent entity
outstanding immediately after such merger or consolidation or (2) a
merger or consolidation in which no person acquires 50% or more of
the combined voting power of the Company’s then outstanding
securities; and (B) immediately after the consummation of such
merger or consolidation described in clause (A) (1) or (A) (2)
above (and for at least 180 days thereafter) neither the
Company’s Chief Executive Officer nor its Chief
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Operating Officer change from the people occupying such
positions immediately prior to such merger or consolidation except
as a result of their death or Disability and neither of such
officers shall have changed prior to such merger or consolidation
at the direction of a Person who has entered into an agreement with
the Company the consummation of which will constitute a Change in
Control of the Company; or
(iv) the stockholders of the
Company approve (A) a plan of complete liquidation of the Company
or (B) an agreement for the sale or disposition by the Company of
all or substantially all of the Company’s assets (or any
transaction having a similar effect).
For purposes of Section 10(h)(i), 10(h)(ii) and I0(h)(iv)(B) of
this Agreement only, the “Company” shall mean any of
Vanguard Health Systems, Inc., Vanguard Health Holding Company 1,
LLC, or Vanguard Health Holding Company II, LLC; provided that, any
reorganization involving solely the “Company” and its
subsidiaries shall not constitute a change in control under this
Agreement.
(i) Resignation
as Member of Board . If the Executive's employment by the
Company is terminated for any reason, the Executive hereby agrees
that he shall simultaneously submit his resignation as a member of
the Board in writing on or before the Date of Termination if the
Executive is a member of the Board at such time. If the Executive
fails to submit such required resignation in writing, the
provisions of this Subsection 10(i) may be d
