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EXHIBIT 10.12
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of December 17, 1996, between Brim,
Inc., an Oregon corporation (the "Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Executive"),
Principal Hospital Company (formerly known as Rural Hospital Corporation), a
Delaware corporation ("Principal") for the limited purpose specified in Section
11(l), Golder, Thoma, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Fund IV, L.P., a Delaware limited
partnership ("GTCR") for the limited purpose specified in Section 4 and Leeway &
Co., a Massachusetts general partnership ("Leeway") for the limited purpose
specified in Section 4.
Principal and Executive are parties to the Senior Management
Agreement, dated as of June 14, 1996, as supplemented by Supplement No. 1 to
Senior Management Agreement, dated as of July 26, 1996 between Principal and
Executive and Supplement No. 2 to Senior Management Agreement, dated as of
September 30, 1996 (as so supplemented, the "Original Management Agreement"),
pursuant to which Executive acquired certain securities of Principal and
Principal and Executive agreed to certain other matters.
Pursuant to a Plan and Agreement of Merger of even date
herewith among the Company, Principal Merger Company, a Delaware corporation and
the wholly owned subsidiary of the Company ("Newsub") and Principal, Newsub
agreed to merge with and into Principal, with Principal the surviving
corporation (the "Merger"). Pursuant to the Merger, Executive is entitled to
receive shares of the Company's Series B Junior Preferred Stock (the "Junior
Preferred") and the Company's Common Stock, no par value (the "Common Stock") as
consideration for his shares of Class A Common Stock and Class B Common Stock of
Principal. In addition, Executive has executed a counterpart (the "Investment
Agreement Counterpart") to the Investment Agreement, dated as of November 21,
1996, between the Company, the Investor and Principal (the "Investment
Agreement"), pursuant to which the Executive has agreed to be bound by the terms
of the Investment Agreement and to purchase certain securities of the Company.
All of the shares of Junior Preferred and Common Stock acquired by Executive
pursuant to the Merger or this Agreement, and all shares of Preferred Stock or
Common Stock hereafter acquired by Executive are referred to herein as
"Executive Stock".
The Company and Executive desire to terminate the Original
Management Agreement and enter into an agreement with respect to Executive's
ownership of Executive Stock, among other things, and the employment of the
Executive by the Company and its subsidiaries. Certain definitions are set forth
in paragraph 8 of this Agreement.
Certain provisions of this Agreement are intended for the
benefit of, and will be enforceable by, GTCR or an Affiliate thereof (the
"Investor").
The parties hereto agree as follows:
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PROVISIONS RELATING TO EXECUTIVE STOCK
1. Purchase and Sale of Common Stock.
(a) Upon execution of this Agreement, Executive will
purchase, and the Company will sell to Executive, 67,472 shares of Common Stock
at a price of $1 per share. The Company will deliver to Executive the
certificates representing such Common Stock, and Executive will deliver to the
Company a cashier's or certified check or wire transfer of funds or a promissory
note in the aggregate amount of $67,472. All of the shares purchased by
Executive pursuant to this Section 1(a) shall be "Vesting Shares" (as defined
below) pursuant to this Agreement.
(b) Upon the purchase from time to time by the Investor
pursuant to the Additional GTCR Commitment (as defined in the Stockholders
Agreement) of up to an additional 4,545 shares of Junior Preferred and up an
additional 454,500 shares of Common Stock pursuant to Section 6 of the
Stockholders Agreement, Executive shall have the right, but shall not be
required to, purchase from the Company at a price of $1 per share 26,975 shares
of Common Stock pro rata with GTCR's purchase of Junior Preferred and Common
Stock.
2. Vesting of Certain Executive Stock.
(a) Executive received 111,266 shares of Common Stock
pursuant to the Merger, and, after giving effect to the purchase of shares of
Common Stock pursuant to paragraph 1(a) of this Agreement, owns an aggregate of
197,938 shares of Common Stock, of which 110,404 shares shall, along with any
shares of Common Stock purchased pursuant to Section 6(d) of the Stockholders
Agreement, be "Vesting Shares" pursuant to this Agreement. Except as otherwise
provided in paragraph 2(b) below, the Vesting Shares will become vested in
accordance with the following schedule, if as of each such date Executive is
still employed by the Company or any of its Subsidiaries:
Cumulative
Percentage of
Vesting Shares
Date Vested
------------ --------------
July 26, 1997 20%
July 26, 1998 40%
July 26, 1999 60%
July 26, 2000 80%
July 26, 2001 100%
All other shares of Executive Stock vest immediately upon receipt of such shares
pursuant to the Merger or the Investment Agreement Counterpart, or upon purchase
by Executive.
(b) If Executive ceases to be employed by the Company and
its Subsidiaries on any date other than any July 26 prior to July 26, 2001, the
cumulative percentage of Vesting Shares
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to become vested will be determined on a pro rata basis according to the number
of days elapsed since the prior July 26. Upon the occurrence of a Sale of the
Company, all shares of Executive Stock which have not yet become vested shall
become vested at the time of such event. Shares of Executive Stock which have
become vested are referred to herein as "Vested Shares," and all other shares of
Executive Stock are referred to herein as "Unvested Shares."
3. Repurchase Option.
(a) In the event (i) Executive ceases to be employed by
the Company and its Subsidiaries for any reason (the "Termination") or (ii)
Executive fails to purchase any shares of Junior Preferred which he is required
to purchase pursuant to paragraph 6 of the Stockholders Agreement (a "Triggering
Event"), the Executive Stock (whether held by Executive or one or more of
Executive's transferees, other than the Company or an Exempt Transferee (as
defined in paragraph 4(e) below)) will be subject to repurchase by the Company
and the Investor pursuant to the terms and conditions set forth in this
paragraph 3 (the "Repurchase Option").
(b) In the event of Termination, the purchase price for
each Unvested Share will be Executive's Original Cost for such share, and the
purchase price for each Vested Share will be the Fair Market Value for such
share. Upon a Triggering Event, the Purchase price for each share of Executive
Stock (whether a Vested share or an Unvested Share) will be Executive's Original
Cost for such share.
(c) The Company's board of directors (the "Board") may
elect to purchase all or any portion of the Unvested Shares and the Vested
Shares by delivering written notice (the "Repurchase Notice") to the holder or
holders of the Executive Stock within 90 days after the Termination. The
Repurchase Notice will set forth the number of Unvested Shares and Vested Shares
to be acquired from each holder, the aggregate consideration to be paid for such
shares and the time and place for the closing of the transaction. The number of
shares to be repurchased by the Company shall first be satisfied to the extent
possible from the shares of Executive Stock held by Executive at the time of
delivery of the Repurchase Notice. If the number of shares of Executive Stock
then held by Executive is less than the total number of shares of Executive
Stock which the Company has elected to purchase, the Company shall purchase the
remaining shares elected to be purchased from the other holder(s) of Executive
Stock under this Agreement, pro rata according to the number of shares of
Executive Stock held by such other holder(s) at the time of delivery of such
Repurchase Notice (determined as nearly as practicable to the nearest share).
The number of Unvested Shares and Vested Shares to be repurchased hereunder will
be allocated among Executive and the other holders of Executive Stock (if any)
pro rata according to the number of shares of Executive Stock to be purchased
from such person.
(d) If for any reason the Company does not elect to
purchase all of the Executive Stock pursuant to the Repurchase Option, the
Investor shall be entitled to exercise the Repurchase Option for the shares of
Executive Stock the Company has not elected to purchase (the "Available
Shares"). As soon as practicable after the Company has determined that there
will be Available Shares, but in any event within 90 days after the Termination,
the Company shall give written notice (the "Option Notice") to the Investor
setting forth the number of Available Shares and the purchase price for the
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Available Shares. The Investor may elect to purchase any or all of the Available
Shares by giving written notice to the Company within one month after the Option
Notice has been given by the Company. As soon as practicable, and in any event
within ten days, after the expiration of the one-month period set forth above,
the Company shall notify each holder of Executive Stock as to the number of
shares being purchased from such holder by the Investor (the "Supplemental
Repurchase Notice"). At the time the Company delivers the Supplemental
Repurchase Notice to the holder(s) of Executive Stock, the Company shall also
deliver written notice to the Investor setting forth the number of shares the
Investor is entitled to purchase, the aggregate purchase price and the time and
place of the closing of the transaction. The number of Unvested Shares and
Vested Shares to be repurchased hereunder shall be allocated among the Company
and the Investor pro rata according to the number of shares of Executive Stock
to be purchased by each of them.
(e) The closing of the purchase of the Executive Stock
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice or Supplemental Repurchase Notice, which date
shall not be more than one month nor less than five days after the delivery of
the later of either such notice to be delivered. The Company and/or the Investor
will pay for the Executive Stock to be purchased pursuant to the Repurchase
Option by delivery of a check or wire transfer of funds in the aggregate amount
of the purchase price for such shares. In addition, the Company may pay the
purchase price for such shares by offsetting amounts outstanding under any bona
fide debts owed by Executive to the Company. The Company and the Investor will
be entitled to receive customary representations and warranties from the sellers
regarding such sale and to require all sellers' signatures be guaranteed.
(f) The right of the Company and the Investor to
repurchase Vested Shares pursuant to this paragraph 3 shall terminate upon the
first to occur of the Sale of the Company or a Public Offering.
(g) Notwithstanding anything to the contrary contained in
this Agreement, all repurchases of Executive Stock by the Company shall be
subject to applicable restrictions contained in the Delaware General Corporation
Law and in the Company's and its Subsidiaries' debt and equity financing
agreements. If any such restrictions prohibit the repurchase of Executive Stock
hereunder which the Company is otherwise entitled or required to make, the
Company may make such repurchases as soon as it is permitted to do so under such
restrictions.
(h) All shares of Executive Stock purchased by the
Company pursuant to this paragraph 3 and pursuant to paragraph 4 shall remain
available for reissuance to new executives as determined by the Board.
4. Restrictions on Transfer of Executive Stock.
(a) Retention of Executive Stock. Until the fifth
anniversary of the date of the Original Management Agreement, Executive shall
not sell, transfer, assign, pledge or otherwise dispose of any interest in any
shares of Executive Stock, except for Exempt Transfers (as defined in paragraph
5(b) below) other than sales to the public pursuant to Rule 144 promulgated
under the Securities Act or any similar rule then in force).
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(b) Transfer of Executive Stock. Subject to paragraph
4(a) above, Executive shall not Transfer any interest in any shares of Executive
Stock, except pursuant to (i) the provisions of paragraph 3 hereof, a Public
Sale or a Sale of the Company ("Exempt Transfers") or (ii) the provisions of
this paragraph 4; provided that in no event shall any Transfer of Executive
Stock pursuant to this paragraph 4 be made for any consideration other than cash
payable upon consummation of such Transfer or in installments over time. Prior
to making any Transfer other than an Exempt Transfer, Executive will give
written notice (the "Sale Notice") to the Company, the Investor and Leeway. The
Sale Notice will disclose in reasonable detail the identity of the prospective
transferee(s), the number of shares to be transferred and the terms and
conditions of the proposed transfer. Executive will not consummate any Transfer
until 60 days after the Sale Notice has been given to the Company, the Investor
and Leeway, unless the parties to the Transfer have been finally determined
pursuant to this paragraph 4 prior to the expiration of such 60-day period. (The
date of the first to occur of such events is referred to herein as the
"Authorization Date").
(c) First Refusal Rights. The Company may elect to
purchase all (but not less than all) of the shares of Executive Stock to be
transferred upon the same terms and conditions as those set forth in the Sale
Notice by delivering a written notice of such election to Executive, the
Investor and Leeway within 30 days after the Sale Notice has been given to the
Company. If the Company has not elected to purchase all of the Executive Stock
to be transferred, the Investor may elect to purchase all (but not less than
all) of the Executive Stock to be transferred upon the same terms and conditions
as those set forth in the Sale Notice by giving written notice of such election
to Executive within 45 days after the Sale Notice has been given to the
Investor. If neither the Company nor the Investor elect to purchase all of the
shares of Executive Stock specified in the Sale Notice, Executive may transfer
the shares of Executive Stock specified in the Sale Notice, subject to the
provisions of paragraph 4(d) below, at a price and on terms no more favorable to
the transferee(s) thereof than specified in the Sale Notice during the 60-day
period immediately following the Authorization Date. Any shares of Executive
Stock not transferred within such 60-day period will be subject to the pro
visions of this paragraph 4(c) upon subsequent transfer. The Company may pay the
purchase price for such shares by offsetting amounts outstanding under any bona
fide debts owed by Executive to the Company.
(d) Participation Rights. If neither the Company nor the
Investor has elected to purchase all of the Executive Stock specified in the
Sale Notice pursuant to paragraph 4(c) above, each of the Investor and Leeway
may elect to participate in the contemplated Transfer by delivering written
notice to Executive and the Company within 50 days after receipt by the Investor
and Leeway of the Sale Notice. If the Investor or Leeway has elected to
participate in such sale, the Investor and Leeway, if electing to participate,
will be entitled to sell in the contemplated sale, at the same price and on the
same terms, a number of shares of the each class of the Company's capital stock
to be sold in the contemplated transaction equal to the product of (i) the
quotient determined by dividing the percentage of such class of capital stock
(on a fully diluted basis) held by such Person by the aggregate percentage of
such class of capital stock (on a fully diluted basis) held by Executive
(including both Vested and Unvested Shares), the Investor and Leeway if
participating in such sale and (ii) the number of shares of such class of
capital stock to be sold in the contemplated sale. In addition, any purchaser in
a sale subject to this Section 4(d) will be required to purchase from each of
the Investor and Leeway, at the election of the Investor and Leeway, a portion
of the Junior
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Preferred held by the Investor equal to the greater of the percentage of (x) the
Investor's or Leeway's, as the case may be Common Stock being sold in such
transaction and (y) Executive's Junior Preferred being sold in such transaction.
For example, if:
(i) the Sale Notice contemplated a sale of 100 shares of
Common Stock and no Junior Preferred;
(ii) Executive was at such time the owner of 120 shares of
Common Stock (which was equal to 30% of the Common Stock on a fully
diluted basis); and
(iii) the Investor elected to participate and the Investor
owned 40 shares of Common Stock (which was equal to 10% of the Common
Stock on a fully diluted basis) and 200 shares of Junior Preferred; and
(iv) Leeway elected to participate and Leeway owned 40 shares
of Common Stock (which was equal to 10% of the Common Stock on a fully
diluted basis) and 50 shares of Junior Preferred;
then
(A) Executive would be entitled to sell 60 shares of
Common Stock (30% / 50% x 100 shares); and
(B) the Investor would be entitled to sell 20 shares of
Common Stock (10% / 50% x 100 shares) and 100 shares of Junior
Preferred (the same percentage of the Investor's Junior Preferred as
the percentage of the Investor's Common Stock being sold, i.e., 50%);
and
(C) Leeway would be entitled to sell 20 shares of Common
Stock (10% / 50% x 100 shares) and 25 shares of Junior Preferred (the
same percentage of Leeway's Junior Preferred as the percentage of
Leeway's Common Stock being sold, i.e., 50%).
Executive will use his best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Investor and Leeway in the
contemplated Transfer and will not transfer any Executive Stock to the
prospective transferee(s) if such transferee(s) refuses to allow the
participation of the Investor and Leeway. The aggregate transaction fees and
expenses incurred in connection with any such transfer shall be borne on a pro
rata basis by each Person participating in such transfer.
(e) Certain Permitted Transfers. The restrictions
contained in this paragraph 4 will not apply with respect to (i) transfers of
shares of Executive Stock pursuant to applicable laws of descent and
distribution or (ii) transfer of shares of Executive Stock among Executive's
Family Group; provided that such restrictions will continue to be applicable to
the Executive Stock after any
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such transfer and the transferees of such Executive Stock have agreed in writing
to be bound by the provisions of this Agreement.
(f) Termination of Restrictions. The restrictions on the
Transfer of shares of Executive Stock set forth in this paragraph 4 will
continue with respect to each share of Executive Stock until the date on which
such Executive Stock has been transferred in a transaction permitted by this
paragraph 4 (except in a transaction contemplated by subparagraph 4(e));
provided that in any event such restrictions will terminate on the first to
occur of a Sale of the Company or a Public Offering.
5. Additional Restrictions on Transfer of Executive
Stock.
(a) Legend. The certificates representing the Executive
Stock will bear substantially the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN A SENIOR MANAGEMENT AGREEMENT BETWEEN THE
COMPANY AND AN EXECUTIVE OF THE COMPANY DATED AS OF DECEMBER 17, 1996.
A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) Opinion of Counsel. No holder of Executive Stock may
sell, transfer or dispose of any Executive Stock (except pursuant to an
effective registration statement under the Securities Act) without first
delivering to the Company an opinion of counsel (reasonably acceptable in form
and substance to the Company) that neither registration nor qualification under
the Securities Act and applicable state securities laws is required in
connection with such transfer.
PROVISIONS RELATING TO EMPLOYMENT
6. Employment. The Company agrees to employ Executive as
chief financial officer of each of the Company and Principal and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to paragraph 6(b) hereof (the "Employment
Period"). Executive will not be assigned duties inconsistent with the duties
customarily assigned to chief financial officers of comparable business
organizations.
(a) Salary, Bonus and Benefits. During the Employment
Period, the Company will pay Executive a base salary (the "Annual Base Salary")
as the Board may designate from time to time, at the rate of not less than
$175,000 per annum, which amount shall be reviewed annually by the Board in its
sole discretion with a view toward determining whether Executive's Annual Base
Salary is competitive with the salaries of similarly situated executives at
comparable business organizations. Executive will be eligible for a bonus equal
to 50% of Executive's Annual Base Salary for such year. It is anticipated that
such bonus will be awarded by the Board if Executive meets or exceeds the annual
operational and financial objectives agreed to by the Board and senior
management of the
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Company, and that the Company's performance meets or exceeds the targets
outlined in the five-year plan attached hereto as Exhibit B (inclusive of the
bonus expense). If the Company has not met or exceeded its financial or
operational objectives, a bonus of less than 50% of Executive's Annual Base
Salary may be awarded in the Board's discretion. Executive's Annual Base Salary
for any partial year will be prorated based upon the number of days elapsed in
such year. In addition, during the Employment Period, Executive will be entitled
to such other benefits approved by the Board and made available to the Company's
senior management.
(b) Termination. The Employment Period will continue
until Executive's resignation, disability (as determined by the Board in its
good faith judgment) or death or until the Board determines in its good faith
judgment that termination of Executive's employment is in the best interests of
the Company. If Executive's employment is terminated by the Company without
cause or as a result of Executive's disability (as determined by the Board in
its good faith judgment) or death, the Company shall pay to Executive (or his
estate), in twelve equal monthly installments, an amount equal to Executive's
Annual Base Salary; provided that the severance payments set forth in this
paragraph 6(b) shall cease and the Company shall have no further obligation
hereunder upon Executive's acceptance of employment with any entity whose
business is within the Company's core business of owning and operating rural
hospitals.
(c) Headquarters. The headquarters of the Company will be
located in or near Nashville, Tennessee, and the Company presently intends that,
for so long as Executive remains employed with the Company, the headquarters
will not be moved from such location. Any relocation of the Company's
headquarters outside of the Nashville, Tennessee area during the Employment
Period will be deemed a termination of Executive's employment by the Company
without cause, entitling Executive to severance pay under the provisions of
paragraph 6(b).
7. Confidential Information. Executive acknowledges that
the information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and its affiliates are the property of the Company. Therefore, Executive
agrees that he will not disclose to any unauthorized person or use for his own
account any of such information, observations or data without the Board's
written consent, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
Executive's acts or omissions to act. Executive agrees to deliver to the Company
at the termination of his employment, or at any other time the Company may
request in writing, all memoranda, notes, plans, records, reports and other
documents (and copies thereof) relating to the business of the Company and its
affiliates (including, without limitation, all acquisition prospects, lists and
contact information) which he may then possess or have under his control.
8. Noncompetition and Nonsolicitation
(a) Noncompetition. Executive acknowledges that in the
course of his employment with the Company he will become familiar with the
Company's trade secrets and with other confidential information concerning the
Company and that his services will be of special, unique and extraordinary value
to the Company. Therefore, Executive agrees that, during the Employment Period
and for one year thereafter (the "Noncompete Period"), he shall not directly or
indirectly own,
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manage, control, participate in, consult with or render services for, (i) any
business, the operating facilities of which compete with the operating
facilities of the Company or its Subsidiaries within the geographical area
included in the 50-mile radius around each location where the Company or any
Subsidiary owns, leases, manages or otherwise maintains an operating facility,
engages in business or, on the date of Executive's termination, plans to own,
lease, manage or otherwise maintain a facility or engage in business, or (ii)
any business in which the Company or any of its Subsidiaries has entered into a
letter of intent or is or has been within one year prior to the date of
termination of Executive's employment in active negotiations relating to the
acquisition of such business by the Company or its Subsidiaries.
(b) Nonsolicitation. During the Noncompete Period,
Executive shall not directly or indirectly through another entity (i) induce or
attempt to induce any employee of the Company or any Subsidiary to leave the
employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any Subsidiary and any employee thereof,
(ii) hire any person who was an employee of the Company or any Subsidiary within
six months prior to termination of Executive's employment, or (iii) induce or
attempt to induce any customer, supplier, licensee or other business relation of
the Company or any Subsidiary to cease doing business with the Company or such
Subsidiary.
(c) Enforcement. If, at the time of enforcement of
paragraph 7 or 8 of this Agreement, a court holds that the restrictions stated
herein are unreasonable under circumstances then existing, the parties hereto
agree that the maximum duration, scope or geographical area reasonable under
such circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed to revise the restrictions contained herein to
cover the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
(d) Submission to Jurisdiction. Each of the parties (i)
submits to the jurisdiction of any state or federal court sitting in Delaware in
any action or proceeding arising out of or relating to paragraphs 7 and/or 8 of
this Agreement, (ii) agrees that all claims in respect of such action or
proceeding may be heard or determined in any such court and (iii) agrees not to
bring any action or proceeding arising out of or relating to paragraphs 7 and/or
8 of this Agreement in any other court. Each of the parties waives any defense
of inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety or other security that might be required of any
other party with respect thereto. Each party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law.
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GENERAL PROVISIONS
9. Definitions.
"Affiliate" of the Investor means any direct or indirect
general or limited partner of the Investor, or any employee or owner thereof, or
any other person, entity or investment fund controlling, controlled by or under
common control with the Investor, and will include, without limitation, Golder,
Thoma, Cressey, Rauner, Inc. and its owners and employees.
"Common Stock" means the Company's Common Stock, no par value.
"Core Business" means the ownership and operation of rural
hospitals.
"Executive's Family Group" means Executive's spouse and
descendants (whether natural or adopted) and any trust solely for the benefit of
Executive and/or Executive's spouse and/or descendants.
"Executive Stock" will continue to be Executive Stock in the
hands of any holder other than Executive (except for the Company and the
Investor and except for transferees in a Public Sale), and except as otherwise
provided herein, each such other holder of Executive Stock will succeed to all
rights and obligations attributable to Executive as a holder of Executive Stock
hereunder. Executive Stock will also include shares of the Company's capital
stock issued with respect to Executive Stock by way of a stock split, stock
dividend or other recapitalization. Notwithstanding the foregoing, all Unvested
Shares shall remain Executive Stock after any Transfer thereof.
"Fair Market Value" of each share of Executive Stock means 95%
of the average of the closing prices of the sales of the class of stock on all
securities exchanges on which such stock may at the time be listed, or, if there
have been no sales on any such exchange on any day, 95% of the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such stock is not so listed, 95% of the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M.,
New York time, or, if on any day such stock is not quoted in the NASDAQ System,
95% of the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time such stock is not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, the Fair Market Value will be the
fair value of such stock determined in good faith by the Board.
"Junior Preferred" means the Company's Series B Junior
Preferred Stock, no par value.
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"Original Cost" means (i) with respect to each share of Junior
Preferred purchased by Executive, $1,000 (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations) and (ii)
with respect to each share of Common Stock purchased by Executive, $1 (as
proportionately adjusted for all subsequent stock splits, stock dividends and
other recapitalizations).
"Permitted Transferee" means any holder of Executive Stock who
acquired such stock pursuant to a transfer permitted by paragraph 4(e).
"Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of Common Stock approved
by the Board.
"Public Sale" means any sale pursuant to a registered public
offering under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means any transaction or series of
transactions pursuant to which any person(s) or entity(ies) (including any
Affiliates of the Investor) other than the Investor in the aggregate acquire(s)
(i) capital stock of the Company possessing the voting power (other than voting
rights accruing only in the event of a default, breach or event of
noncompliance) to elect a majority of the Company's board of directors (whether
by merger, consolidation, reorganization, combination, sale or transfer of the
Company's capital stock, shareholder or voting agreement, proxy, power of
attorney or otherwise) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis; provided that the term "Sale of the Company"
shall not include an initial Public Offering.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Stockholders Agreement" means the Stockholders Agreement, of
even date herewith, among the Company, Executive, the Investor, and the other
stockholders of the Company listed therein, as may be amended, modified and
supplemented from time to time.
"Subsidiary" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or
otherwise dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law).
"Vesting Shares" means 110,404 shares of the Common Stock
acquired by Executive and any shares of Common Stock acquired by Executive
pursuant to Section 6(d) of the Stockholders Agreement.
10. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested)
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or sent by reputable overnight courier service (charges prepaid) to the
recipient at the address below indicated:
If to the Company:
Brim, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
If to the Executive:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Principal Hospital Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Investor:
Golder, Thoma, ▇▇▇▇▇▇▇ Fund IV, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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If to Leeway:
Leeway & Co.
c/o State Street Bank and Trust Company
Master Trust Division - Q4W
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
11. General Provisions.
(a) Expenses. The Company agrees to pay and hold
Executive harmless against liability for the payment of, (i) the fees and
expenses of its counsel arising in connection with the negotiation and execution
of this Agreement and the consummation of the transactions contemplated by this
Agreement, and (ii) if Executive is the prevailing party in a judicial
proceeding involving a dispute hereunder, the fees and expenses of its counsel
incurred in connection with such dispute and/or proceeding.
(b) Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Stock as the owner of
such stock for any purpose.
(c) Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and
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understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
(e) Counterparts. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company, the Investor and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Stock hereunder;
provided further that the rights and obligations of the Investor under this
Agreement and the agreements contemplated hereby may be assigned by the Investor
at any time, in whole or in part, to any investment fund managed by Golder,
Thoma, Cressey, Rauner, Inc., or any successor thereto. The rights and
obligations of GTCR and Leeway under Section 4(d) of this Agreement shall inure
to the benefit of and be enforceable by the transferees of each of GTCR and
Leeway.
(g) Choice of Law. All questions concerning the
construction, validity and interpretation of this Agreement and the exhibits
hereto will be governed by and construed in accordance with the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(h) Remedies. Each of the parties to this Agreement
(including the Investor) will be entitled to enforce its rights under this
Agreement specifically, to recover damages and costs (including attorney's fees)
caused by any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
and/or other injunctive relief in order to enforce or prevent any violations of
the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this
Agreement may be amended and waived only with the prior written consent of the
Company, Executive and the Investor.
(j) Business Days. If any time period for giving notice
or taking action hereunder expires on a day which is a Saturday, Sunday or
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
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(k) Waiver of Acceleration of Vesting. Executive hereby
waives any vesting of Vesting Shares which may be triggered by the Merger, and
agrees that the Merger will not constitute a "Sale of the Company" under the
Original Management Agreement.
(l) Termination of Original Management Agreement. The
Original Management Agreement will be terminated automatically upon the
effectiveness of this Agreement, and from and after such time, shall have no
further force or effect.
(m) Termination. This Agreement (except for the
provisions of paragraph 6) shall survive the termination of Executive's
employment with the Company and shall remain in full force and effect after such
termination.
(n) Adjustment of Numbers. All numbers set forth herein
which refer to share prices or amounts will be appropriately adjusted to reflect
stock splits, stock dividends, combinations of shares and other
recapitalizations affecting the subject class of stock.
*****
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
BRIM, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Its Chief Executive Officer
PRINCIPAL HOSPITAL COMPANY
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Its Chief Executive Officer
LEEWAY & CO.
By State Street Bank & Trust Company
Its Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
-----------------------------------------
Its Vice President
GOLDER, THOMA, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
FUND IV, L.P.
By GTCR IV, L.P.,
Its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
Its General Partner
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Its: Principal
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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CONSENT
The undersigned spouse of Executive hereby acknowledges that I
have read the foregoing Senior Management Agreement and that I understand its
contents. I am aware that the Agreement provides for the repurchase of my
spouse's shares of stock under certain circumstances and imposes other
restrictions on the transfer of such stock. I agree that my spouse's interest in
the stock subject to this Agreement and any interest I may have in such stock
shall be irrevocably bound by this Agreement and further that the my community
property interest, if any, shall be similarly bound by this Agreement.
/s/ ▇▇▇▇ ▇▇▇▇
----------------------------------------
Spouse's Name
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Witness