<PAGE>
Execution Copy
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of May 4, 2004,
is
by and between IASIS Healthcare
Corporation, a Delaware corporation (the
"Company"), and David R. White (the
"Executive").
WHEREAS,
after giving effect to the transactions (the "Transactions")
contemplated in the Agreement and Plan of
Merger (the "Merger Agreement") by and
among the Company, IASIS Investment LLC
(the "Purchaser") and Titan Acquisition
Corporation, the Company will become a
wholly-owned subsidiary of Purchaser;
WHEREAS,
the Executive has served as Chairman of the Board of Directors
of
the Company (the "Board") and Chief
Executive Officer of the Company pursuant to
an Employment Agreement with the Company,
dated February 7, 2001 (the "Original
Employment Agreement");
WHEREAS,
the Executive has experience beneficial to the Company's
operations, management and business
development of acute care hospitals,
outpatient facilities and ancillary medical
services (the "Business");
WHEREAS,
upon and subject to the consummation of the Transactions, the
Company desires that the Executive continue
to serve as Chairman of the Board
and Chief Executive Officer of the Company
and the Executive desires to hold
such positions under the terms and
conditions of this Agreement; and
WHEREAS,
subject to, and effective as of immediately prior to the
consummation of the Transactions, 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
desire that this Agreement shall supercede
the Original Employment Agreement.
NOW,
THEREFORE, intending to be legally bound hereby, the parties agree
as
follows:
1.
Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with
the Company, upon the terms and subject
to the conditions set forth herein.
2.
Term.
(a) Subject to
termination pursuant to Section 10 hereof, the term
of the employment by the Company of the
Executive pursuant to this Agreement (as
the same may be extended, the "Term") shall
commence subject to, and effective
as of, the Effective Time (as defined in
the Merger Agreement) (the "Effective
Date"), and terminate on the fifth
anniversary thereof. As of the time this
Agreement becomes effective, which shall be
immediately prior to and subject to
the Effective Time, the parties acknowledge
that the Original Employment
Agreement and all liabilities thereunder
shall immediately terminate.
1
<PAGE>
(b) Commencing
on the fourth anniversary of the Effective Date and
on each subsequent anniversary thereof, the
Term shall automatically be extended
for a period of one (1) additional year
following the expiration of the
otherwise applicable Term unless, not later
than ninety (90) days prior to any
such anniversary date, either party hereto
shall have notified the other party
hereto in writing that such extension shall
not take effect.
3.
Position;
Location. During the Term, the Executive shall serve as
Chairman of the Board ("Chairman"), Chief
Executive Officer of the Company and a
member of the compensation committee (or
similar committee) of the Board (the
"Compensation Committee") (for so long as
such Compensation Committee service is
permissible under any applicable laws and
regulations, including any listing
standards of any securities exchange on
which the Company's securities are
listed), supervising the conduct of the
business and affairs of the Company and
performing such other duties as the Board
shall determine, which duties shall
not be materially inconsistent with the
duties to be performed by executives
holding similar offices in similarly-sized
healthcare corporations. However,
upon an initial public offering of the
Company's common shares ("IPO"), the
Board may determine that the Executive
shall no longer serve as Chairman but
shall continue to serve as a director of
the Board. The Executive shall report
directly to the Board. The Company agrees
to nominate the Executive for a
position on the Board at each election of
directors held during the Term, and
the Executive agrees to serve, without any
additional compensation (other than
customary director fees paid or benefits
conferred as and to the extent paid to
or conferred on members of the board of
directors who are members of management
or designees of substantial stockholders of
the Company), as a director on the
Board and the board of directors of any
subsidiary of the Company, and/or in one
or more chief executive officer positions
with any subsidiary of the Company.
The parties acknowledge and agree that
during the Term (i) the Executive's
principal office will not be moved to a
location more than 20 miles from
Metropolitan Nashville and Davidson County,
Tennessee without his approval and
(ii) the Company shall maintain, in the
organizational documents thereof,
indemnification provisions providing for
the maximum indemnification permitted
by applicable law of the Executive by the
Company for actions taken in his
capacity as an officer, director or
employee thereof.
4.
Duties.
During the Term, the Executive shall devote substantially
all of his time and attention during normal
business hours to the business and
affairs of the Company. Notwithstanding the
foregoing, the Executive may serve
as a director of other entities, provided
that such entities do not directly
compete with the Company in any material
respect; and provided, further, that
the Executive may serve as a director of no
more than three for profit entities
at any time.
5.
Salary and
Bonus.
(a) During the
Term, the Company shall pay to the Executive a base
salary at the rate of $700,000 per year.
Commencing on or before the first
anniversary of the Effective Date, the
Board shall review the base salary
annually and may increase such amount from
time to time as it may deem advisable
(such salary, as the same may be increased,
the "Base Salary"). The Base Salary
shall be payable to the Executive in
substantially equal installments in
accordance with the Company's normal
payroll practices.
2
<PAGE>
(b) For the
Company's fiscal year ending September 30, 2004, and
for each fiscal year thereafter during the
Term, the Executive shall be eligible
to receive an annual cash target bonus (the
"Bonus") of 100% of Base Salary (the
"Target") with a maximum annual bonus of
two hundred percent (200%) of the Base
Salary, subject to the terms of the
Company's executive bonus plan (the "Bonus
Plan") and subject to the satisfaction of
certain performance objectives to be
determined by the Board (or a committee
thereof) after consultation with the
Executive, or, to the extent more favorable
to the Executive, other incentive
compensation plan established by the Board
for the Company's senior executive
officers, as either of the same may be
amended from time to time (provided that
no such amendment or alternative plan shall
materially diminish the Target and
maximum bonus opportunity described above).
For the 2004 fiscal year, the Bonus
shall be administered in accordance with
the Company's Bonus Plan in effect
immediately prior to the Effective Time
with the performance objectives set
forth in Annex 1. For fiscal years 2004 and
2005 the Company's earnings before
interest, taxes, depreciation and
amortization ("EBITDA"), for purposes of
determining whether the Bonus Plan
performance objectives are achieved, shall be
calculated in a manner that is consistent
with past practices and without any
deduction for costs incurred by the Company
in connection with the Transaction,
including any non-cash compensation expense
incurred as a result of or in
connection with the Transaction. With
respect to the 2005 fiscal year, the
Executive will receive a bonus of 20%, 100%
or 200% of his Base Salary,
respectively, if 95%, 100% or 105% of the
Company's budgeted EBITDA for fiscal
year 2005, respectively, is achieved. If
the Company's EBITDA is between 95% and
105% of budgeted EBITDA for such year, the
bonus will be calculated based on
straight-line interpolation. For the 2006
fiscal year and thereafter the Bonus
Plan will be administered by the
Compensation Committee, and while Target and
maximum bonus levels will remain the same
as described above, the performance
objectives will be set by the Compensation
Committee after consultation with the
Executive. For purposes of this Agreement,
the 2004 fiscal year shall mean the
twelve-month period ending September 30,
2004.
6.
Stock
Options. Upon the Effective Time, certain stock options held
by Executive in the Company shall be
converted into options to purchase shares
of common and preferred stock in the
Company and the letter evidencing the
rollover option attached hereto as Exhibit
A (the "Rollover Option") shall be
delivered to and executed by the Executive
at the same time as this Agreement
reflecting the terms and conditions of such
converted options. Upon the
Effective Time, (i) the Company shall adopt
the IASIS Healthcare Corporation
2004 Stock Option Plan, attached hereto as
Exhibit B (the "2004 Stock Option
Plan"), (ii) Executive shall be issued
options to acquire 2% of total
outstanding shares of the Company's primary
common stock immediately after the
Effective Time, determined without regard
to any options to acquire the
company's common stock, (the "New Option")
pursuant to the 2004 Stock Option
Plan by delivery to and execution by the
Executive and delivery to and execution
by the Company of the Stock Option
Agreement attached hereto as Exhibit C and
(iii) Executive shall execute and deliver
to the Company and the Company shall
execute and deliver to the Executive the
Stockholders Agreement attached hereto
as Exhibit D. Thereafter during the Term,
the Executive shall be eligible to
participate in the 2004 Stock Option Plan
or, to the extent more favorable to
the Executive, other equity plans
established by the Board for the Company's
senior executive officers, as the same may
be amended from time to time
(provided that no such amendment shall
materially diminish the benefits already
granted to Executive hereunder or
thereunder), as and to the extent other senior
executive officers are eligible to
participate in such equity plans.
3
<PAGE>
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; provided
that the Executive shall during each year
of the Term be entitled to at least
six (6) weeks of such vacation, which shall
not accrue from year to year.
8.
Business
Expenses. The Executive shall be reimbursed for all
reasonable and necessary business expenses
incurred by him in connection with
his employment (including, without
limitation, expenses for travel and
entertainment incurred in conducting or
promoting business for the Company) upon
timely submission by the Executive of
receipts and other documentation in
accordance with the Company's normal
expense reimbursement policies.
9.
Other
Benefits. During the Term, the Executive shall be eligible to
participate fully in all health and other
employee benefit arrangements
available to senior executive officers of
the Company generally.
10.
Termination of
Agreement. The Executive's employment by the Company
pursuant to this Agreement shall not be
terminated prior to the end of the Term
hereof except as set forth in this Section
10.
(a) By Mutual
Consent. The Executive's employment pursuant to this
Agreement may be terminated at any time by
the mutual written agreement of the
Company and the Executive.
(b) Death. The
Executive's employment pursuant to this Agreement
shall be terminated upon the death of the
Executive, in which event the
Executive's spouse or heirs shall receive
(i) all Base Salary and benefits to be
paid or provided to the Executive under
this Agreement through the Date of
Termination (as defined in Section 10(h)
hereof), (ii) an amount equal to one
hundred percent (100%) of the Executive's
Base Salary at the then-current rate
of Base Salary and (iii) to the extent
applicable, an amount equal to the pro
rata bonus (the "Pro Rata Bonus")
determined by comparing the Company's actual
aggregate EBITDA for the period beginning
on the first day of the fiscal year
during which the Date of Termination occurs
and ending on the last day of the
month in which the Date of Termination
occurs, (such period, the "Bonus
Measuring Period") with the aggregate
budgeted EBITDA as reflected in the
monthly budgets prepared by the Company and
accepted by the Board with respect
to such period. The Pro Rata Bonus shall be
in an amount equal to the product of
(I) a fraction, the numerator of which
equals the number of months in the Bonus
Measuring Period and the denominator of
which equals twelve and (II) the bonus
set forth in the Bonus Plan for the fiscal
year in which the Date of Termination
occurs, treating the Bonus Measuring Period
as if it was the full fiscal year
for purposes of determining the Executive's
bonus percentage. The parties
acknowledge that Annex 2 sets forth certain
examples of the calculation of the
Pro Rata Bonus. In the event that the
Executive's spouse or heirs are entitled
to receive a payment with respect to the
Pro Rata Bonus, they shall also be
entitled to an additional severance amount
equal to one hundred percent (100%)
of the Pro Rata Bonus. All of the payments
required to be paid pursuant to this
paragraph 10(b) shall be paid to the
Executive's spouse or heirs no later than
ten (10) days following the Date of
Termination; provided, however, that any Pro
Rata Bonus and any additional severance
amount related thereto shall be paid to
the Executive's spouse or heirs no
4
<PAGE>
later than five (5) days following the
determination of the amount of such
payments, if any. The Company will also
provide the Executive's eligible
dependents continued health and medical
benefits as contemplated by Section 9
hereof through the date one (1) year after
the Date of Termination; the Company
may satisfy this obligation by paying such
dependents' health and medical
continuation coverage ("COBRA") premium
payments (with the dependents paying the
portion of such COBRA payments that
Executive was required to pay with respect
to such dependents prior to the Date of
Termination). Additionally, in the event
the Executive's employment is terminated
pursuant to this Section 10(b), all of
the Executive's options to purchase shares
of capital stock of the Company
(including the New Option) which are
unvested as of the Date of Termination but
otherwise scheduled to vest on the first
vesting date scheduled to occur
following the Date of Termination, shall
immediately vest and become exercisable
on the Date of Termination and all
remaining unvested options shall terminate as
of the Date of Termination. In the event
the Executive's employment is
terminated pursuant to this Section 10(b),
all of the Executive's options to
purchase capital stock of the Company which
are vested as of the Date of
Termination (other than the Rollover
Option) or become vested pursuant to the
immediately preceding sentence may be
exercised by the Executive's spouse or
heirs within one (1) year following the
Date of Termination and shall then
terminate; provided, however, that in the
event the Executive's spouse or heirs
are entitled to receive a payment with
respect to the Pro Rata Bonus, all of
such vested options may be exercised by the
Executive's spouse or heirs within
two (2) years following the Date of
Termination and shall then terminate.
(c) Disability.
The Executive's employment pursuant to this
Agreement may be terminated by written
notice to the Executive by the Company or
to the Company by the Executive in the
event that (i) the Executive becomes
unable to perform his duties as set forth
in Section 3 by reason of physical or
mental illness or accident for any six (6)
consecutive month period or (ii) the
Company receives written opinions from both
a physician for the Company and a
physician for the Executive that the
Executive will be so disabled. In the event
the Executive's employment is terminated
pursuant to this Section 10(c), the
Executive shall be entitled to receive (A)
all Base Salary and benefits to be
paid or provided to the Executive under
this Agreement through the Date of
Termination, (B) an amount equal to one
hundred percent (100%) of the
Executive's Base Salary at the then-current
rate of Base Salary; provided,
however, that in the event the Date of
Termination is the date of delivery of
the last physician's opinion referred to in
Section 10(c)(ii), the payment with
respect to Base Salary, together with all
Base Salary paid to the Executive
following the first date that Executive was
unable to perform his duties set
forth in Section 3, shall equal one hundred
and fifty percent (150%) of
Executive's Base Salary and; provided,
further, that amounts payable to the
Executive under this Section 10(c) shall be
reduced by the proceeds of any short
or long-term disability payments to which
the Executive may be entitled during
such period under policies maintained at
the expense of the Company as and to
the extent such disability payments
compensate the insured for lost wages
resulting from the disability, and (C) to
the extent applicable, an amount equal
to the Pro Rata Bonus. In the event that
the Executive is entitled to receive a
payment with respect to the Pro Rata Bonus,
he shall also be entitled to an
additional severance amount equal to one
hundred percent (100%) of the Pro Rata
Bonus. All of the payments required to be
paid pursuant to this Section 10(c)
shall be paid to the Executive no later
than ten (10) days following the Date of
Termination; provided, however, that any
Pro Rata Bonus and any additional
severance amount related thereto shall be
paid to the Executive no later than
five (5) days following the determination
of the amount of such payments, if
any. The Company will also provide the
5
<PAGE>
Executive and his eligible dependents
continued health and medical benefits as
contemplated by Section 9 hereof through
the date one (1) year after the Date of
Termination (provided, however, that in the
event that the Date of Termination
is the date of delivery of the last
physician's opinion referred to in Section
10(c)(ii), the Company will provide such
health and medical benefits through the
date that is eighteen (18) months following
the first date that Executive was
unable to perform his duties as set forth
in Section 3); the Company may satisfy
this obligation by paying COBRA premium
payments with respect to Executive and
his eligible dependents (with the Executive
paying the portion of such COBRA
payments that Executive was required to pay
prior to the Date of Termination).
Additionally, in the event the Executive's
employment is terminated pursuant to
this Section 10(c), all of the Executive's
options to purchase shares of capital
stock of the Company (including the New
Option) which are unvested as of the
Date of Termination but otherwise scheduled
to vest on the first vesting date
scheduled to occur following the Date of
Termination, shall immediately vest and
become exercisable on the Date of
Termination and all remaining unvested options
shall terminate as of the Date of
Termination. In the event the Executive's
employment is terminated pursuant to this
Section 10(c), all of the Executive's
options to purchase capital stock of the
Company which are vested as of the Date
of Termination (other than the Rollover
Option) or become vested pursuant to the
immediately preceding sentence may be
exercised by the Executive within one (1)
year following the Date of Termination and
shall then terminate; provided,
however, that in the event that the
Executive is entitled to receive a payment
with respect to the Pro Rata Bonus, all of
such vested options may be exercised
by the Executive within two (2) years
following the Date of Termination and
shall then terminate.
(d) By the
Company for Cause. The Executive's employment pursuant
to this Agreement may be terminated by
written notice to the Executive ("Notice
of Termination") upon the occurrence of any
of the following events (each of
which shall constitute "Cause" for
termination): (i) the Executive commits any
act of gross negligence, fraud or willful
misconduct causing material harm to
the Company, (ii) the conviction of the
Executive of a felony that would
reasonably be expected by the Board to
adversely affect the Company or its
reputation, (iii) the Executive
intentionally obtains material personal gain,
profit or enrichment at the expense of the
Company or from any transaction in
which the Executive has an interest which
is adverse to the interest of the
Company, unless the Executive shall have
obtained the prior written consent of
the Board, or (iv) any material breach of
the Executive of this Agreement,
including, without limitation, a material
breach of Section 14 hereof, which
breach remains uncorrected for a period of
fifteen (15) days after receipt by
the Executive of written notice from the
Company setting forth the breach. In
the event the Executive's employment is
terminated pursuant to this Section
10(d), the Executive shall be entitled to
receive all Base Salary and benefits
to be paid or provided to the Executive
under this Agreement through the Date of
Termination and no more.
(e) By the
Company Without Cause. The Executive's employment
pursuant to this Agreement may be
terminated by the Company at any time without
Cause by delivery of a Notice of
Termination to the Executive. In the event that
the Executive's employment is terminated
pursuant to this Section 10(e), the
Executive shall be entitled to receive (i)
all Base Salary and benefits to be
paid or provided to the Executive under
this Agreement through the Date of
Termination, (ii) an amount equal to two
hundred percent (200%) of the
Executive's Base Salary at the then-current
rate of Base Salary, (iii) to the
extent applicable, an amount equal to the
Pro Rata Bonus, (iv) in the event that
the Executive is entitled to receive a
payment with
6
<PAGE>
respect to the Pro Rata Bonus, a severance
amount equal to two hundred percent
(200%) of the Pro Rata Bonus and (v) a lump
sum payment equal to the then
present value of all major medical,
disability and life insurance coverage to be
provided pursuant to Section 9 above
through the date two (2) years after the
Date of Termination, provided that under
such circumstances the Executive shall
make all COBRA premium payments on his own
behalf. The sum of the amounts
described in clauses (ii), (iv) and (v)
above are hereafter referred to as the
"Section 10(e) Severance Amount." All of
the amounts described in clauses (i)
and (iii) shall be paid to the Executive no
later than ten (10) days following
the Date of Termination; provided that any
amount payable under clause (iii)
shall be paid to the Executive no later
than five (5) days following the
determination of the amount of such
payment, if any. All of the Section 10(e)
Severance Amount shall be paid to the
Executive no later than ten (10) days
following the later of (x) the Date of
Termination and (y) the execution of an
agreement by the Executive, in form and
substance reasonably satisfactory to the
Company, providing for (I) a full release
by the Executive of the Company, its
officers, directors, representatives and
affiliates from all liabilities,
obligations or claims, other than those
obligations specifically provided in
this Section 10(e) (and the Company shall
provide a mutual release of the
Executive), (II) an affirmation of the
Executive's obligations pursuant to
Section 14 hereof and (III) an agreement by
the Executive to immediately repay
to the Company one hundred percent (100%)
of the Section 10(e) Severance Amount
upon any breach of such agreement;
provided, however, that any Section 10(e)
Severance Amount payable pursuant to
Section 10(e)(iv) shall be paid to the
Executive no later than five (5) days
following the determination of the amount
of such payments, if any. Additionally, in
the event that the Executive's
employment is terminated pursuant to this
Section 10(e), all of the Executive's
options to purchase shares of capital stock
of the Company (including the New
Option) which are unvested as of the Date
of Termination but otherwise scheduled
to vest on the first vesting date scheduled
to occur following the Date of
Termination, shall immediately vest and
become exercisable on the Date of
Termination and all remaining unvested
options shall terminate as of the Date of
Termination. In the event the Executive's
employment is terminated pursuant to
this Section 10(e), all of the Executive's
options to purchase capital stock of
the Company that are vested as of the Date
of Termination (other than the
Rollover Option) or become vested pursuant
to the immediately preceding sentence
may be exercised by the Executive within
one (1) year following the Executive's
Date of Termination and shall then
terminate; provided, however, that in the
event the Executive is entitled to receive
a payment with respect to the Pro
Rata Bonus, all of such vested options may
be exercised by the Executive within
two (2) years following the Date of
Termination and shall then terminate.
(f) By the
Executive for Good Reason. The Executive's employment
pursuant to this Agreement may be
terminated by the Executive by written notice
of his resignation ("Notice of
Resignation") delivered within twelve (12) months
after the occurrence of any of the
following events (each of which shall
constitute "Good Reason" for resignation):
(i) the one-year anniversary of the
date of any Change of Control (as defined
below) unless the acquirer is in the
healthcare facilities business, in whic
