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Exhibit 10.12
PROVINCE HEALTHCARE COMPANY
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is entered into as
of
this 1st day of January 2004, by and
between Province Healthcare Company (the
"Company") and ROBERTO PANTOJA
("Employee").
W I T N E S S E T H:
WHEREAS, Employee is employed as Vice President & Controller of
the
Company; and
WHEREAS, the Company desires to provide certain severance payments
to
Employee in the event that Employee's
employment with the Company is terminated
without cause or in connection with a
change in control of the Company;
NOW, THEREFORE, based upon the premises set forth herein and for
other
good and valuable consideration, the
receipt and sufficiency of which is hereby
acknowledged, the parties agree as
follows:
ARTICLE I. DEFINITIONS
Terms used in this Agreement that are defined are indicated by
initial
capitalization of the term. References to
an "Article" or a "Section" mean an
article or a section of this Agreement. In
addition to those terms that are
specifically defined herein, the following
terms are defined for purposes
hereof:
"Administrator" means a committee consisting of the Company's
chief
executive officer, the secretary of the
Company, the vice president of human
resources, and any other individuals
appointed by the chief executive officer.
The Administrator may delegate any of its
duties or authorities to any person or
entity. If a Change in Control occurs, as
described in this Agreement, the
Administrator shall be the committee of
individuals who were committee members
immediately prior to the Change in
Control.
"Benefit" means the benefits described in Article II and Article
III.
"Change in Control" means a transaction or circumstance in which
any of
the following have occurred:
(a) any "person" as such term is used in sections 13(d) and 14(d)
of
the Exchange Act, other than the Company or
a wholly-owned Subsidiary thereof or
any employee benefit plan of the Company,
becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of
the Company representing more than 50% of
the total voting power represented by
the Company's then outstanding Voting
Securities (as defined below), or
(b) during any period of two consecutive years, individuals who at
the
beginning of such period constitute the
Board and any new director whose
election by the Board or nomination for
election by the Company's shareholders
was approved by a vote of at least
two-thirds 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 a majority thereof,
or
(c) the shareholders of the Company approve a merger or
consolidation
of the Company with any other corporation,
other than a merger or consolidation
which would result in the Voting Securities
(i.e., any securities of the entity
which vote generally in the election of its
directors) of the Company
outstanding immediately prior thereto
continuing to represent (either by
remaining outstanding or by being converted
into Voting Securities of the
surviving entity) more than 50% of the
total voting power represented by the
Voting Securities of the Company or such
surviving entity outstanding
immediately after such merger or
consolidation, or
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(d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement
for the sale or disposition by the
Company of all or substantially all of its
assets.
"Code" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"Subsidiary" means any subsidiary of the Company or of any of
its
subsidiaries.
ARTICLE II. CHANGE IN CONTROL TERMINATION PAYMENT
SECTION 2.1 BENEFITS ON TERMINATION.
(a) Amount. Subject to the conditions, limitations and adjustments
that
are provided for herein, the Company will
provide Benefits to Employee equal to
the sum of the amounts described below if,
within the 24 month period following
a Change in Control, Employee's employment
with the Company terminates for any
reason:
(1) An amount
equal to 100% of the Employee's annual base
compensation determined by reference to his base salary in
effect at the time of Change in Control.
(2) An amount
equal to 100% of the highest annual bonus that
Employee would be eligible to receive during the fiscal year
ending during which the Change in Control occurs.
(3) For a
period of 12 months, participation in medical, life,
disability and similar benefit plans that are offered to
similarly situated employees of the Company immediately prior
to the applicable Change in Control for the Eligible Employee
and his dependents. Such participation may be pursuant to the
continuation coverage rights of Eligible Employees pursuant to
Part 6 of Title I of ERISA ("COBRA") or the Company may
provide such benefits directly through the purchase of
insurance or otherwise. Notwithstanding the foregoing, the
period for participation in a self-funded medical plan
pursuant to this paragraph 3 shall not exceed the maximum
period of continuation coverage provided under COBRA. If
benefits are provided pursuant to COBRA continuation rights,
the Company shall pay a cash amount to the Eligible Employee
at the time of severance that is sufficient to cover all
premiums required for such COBRA coverage under the
appropriate benefit plans.
(4) For a
period of 12 months, participation in general and
executive fringe benefits offered to similarly situated
executive employees immediately prior to the applicable Change
in Control.
(5) Upon the
effective date of any Change in Control, any stock
purchase options held by Employee pursuant to any qualified or
nonqualified Company option plan shall immediately vest and
become exercisable in accordance with the applicable plan. The
provisions of this Section 2.1 shall supersede any contrary
provisions of any other agreement by and between the parties
hereto, now existing or hereafter created, unless the
provisions of this Section 2.1 shall be referred to
specifically therein and modified, amended or waived by both
parties hereto.
(b) Adjustments to the Amount of Benefit. Notwithstanding
anything
herein to the contrary, the amounts due to
Employee under Section 2.1(a) shall
be adjusted in accordance with Section 2.2
if any payment provided to Employee
is determined to be subject to the excise
tax described in section 4999 of the
Code.
(c) Time for Payment; Interest. The cash Benefits payable made
under
this Section 2.1 shall be paid to Employee
in a single lump sum within ten days
following the date of termination. The
Company's obligation to pay to Employee
any amounts under this Section 2.1 will
bear interest at the lesser of (i) 10%
or (ii) the maximum rate allowed
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by law until paid by the Company, and all
accrued and unpaid interest will bear
interest at the same rate, all of which
interest will be compounded annually.
2.2 BENEFIT
ADJUSTMENTS.
(a) Gross Up
Payment. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be
determined that any payment or
distribution by or on behalf of the Company
to or for the benefit of Employee as
a result of a "change in control," as
defined in 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, (a
"Payment") would be subject to the
excise tax imposed by section 4999 of the
Code or any interest or penalties are
incurred by Employee 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 Employee shall
be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount
such that after payment by Employee
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, Employee retains an amount of the
Gross-Up Payment equal to the Excise
Tax imposed upon the Payments.
(b) Tax
Opinion. Subject to the provisions of Section 2.2(c), all
determinations required to be made under
this Section 2.2, 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 Company
(the "Tax Firm"); provided, however, that
the Tax Firm shall not determine that
no Excise Tax is payable by Employee unless
it delivers to Employee 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 Employee's
applicable federal income tax return will
not result in the imposition of an
accuracy-related or other penalty on
Employee. 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 Employee that there
has been a Payment, or such earlier
time as is requested by the Company, the
Tax Firm shall make all determinations
required under this Section, shall provide
to the Company and Employee 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 Employee.
Any Gross-Up Payment, as determined
pursuant to this Section, shall be paid by
the Company to Employee within
fifteen days of the receipt of the Tax
Firm's determination. Subject to the
remainder of this Section 2.2, any
determination by the Tax Firm shall be
binding upon the Company and Employee;
provided, however, that Employee 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 it is
ultimately determined in accordance with
the procedures set forth in Section
2.2(c) that Employee 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 Employee. In determining the
reasonableness of Tax Firm's
determinations hereunder, and the effect
thereof, Employee shall be provided a
reasonable opportunity to review such
determinations with Tax Firm and
Employee's tax counsel. Tax Firm's
determinations hereunder, and the Tax
Opinion, shall not be deemed reasonable
until Employee's reasonable objections
and comments thereto have been
satisfactorily accommodated by Tax Firm.
(c) Notice of
IRS Claim. Employee shall notify the Company in
writing of any claims by the Internal
Revenue Service that, if successful, would
require the payment by the Company of the
Gross-Up Payment. Such notification
shall be given as soon as practicable but
no later than 30 calendar days after
Employee actually receives notice in
writing of such claim and shall apprise the
Company of the nature of such claim and the
date on which such claim is
requested to be paid; provided, however,
that the failure of Employee to notify
the Company of such claim (or to provide
any required information with respect
thereto) shall not affect any rights
granted to Employee under this Section 2.2
except to the extent that the Company is
materially prejudiced in the defense of
such claim as a direct result of such
failure. Employee shall not pay such claim
prior to the expiration of the 30-day
period following the date on which he
gives such notice to the Company (or such
shorter period ending on the date that
any payment of taxes with respect to
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such claim is due). If the Company notifies
Employee in writing prior to the
expiration of such period that it desires
to contest such claim, Employee shall
do all of the following:
(1) give the Company
any information reasonably requested by the
Company relating to such claim;
(2) take such
action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
selected by the Company and reasonably acceptab
