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Execution Copy
Exhibit 10.23
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 W. Carl Whitmer (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 Chief Financial Officer of the
Company pursuant to an Employment Agreement
with the Company, dated November 1,
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 Chief Financial Officer
of the Company and the Executive desires to
hold such position(s) 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.
(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
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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
Chief
Financial Officer of the Company,
supervising the conduct of the business and
affairs of the Company and performing such
other duties as the Board of
Directors of the Company (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. The Executive shall
report directly to the Chief Executive
Officer. 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 or employee thereof.
4. Duties.
During the Term, the Executive shall devote his full 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 Executive's service
as a director does not interfere with the
performance of his duties and
responsibilities hereunder and 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 Four Hundred
Seventeen Thousand Two Hundred Dollars
($417,200.00) 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.
(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 50% of Base Salary (the
"Target") with a maximum annual bonus of
one hundred percent (100%) 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
Chief Executive Officer, 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
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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 10%, 50% or 100% 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 or similar
committee of the Board (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 Chief
Executive Officer. For purposes of
this Agreement, the 2004 fiscal year shall
mean the 12-month period ending
September 30, 2004.
6. Stock
Options. Upon the Effective Time, certain stock options held by
Executive shall be converted into options
to purchase shares of common and
preferred stock of the Company (the
"Rollover Option") and the letter evidencing
the Rollover Option attached hereto as
Exhibit A 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 0.8
percent of the total outstanding shares
of the Company's primary common stock
immediately following 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.
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 five
(5) 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.
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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 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
that 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
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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
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 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 that 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
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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 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 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
