Exhibit 10.17
Agreement for Severance Benefits and
Restrictive Covenants
This AGREEMENT FOR SEVERANCE BENEFITS AND RESTRICTIVE COVENANTS (“Agreement”) is
entered into between IASIS Management Company, a Delaware corporation
(“Company”), and Carolyn Rose (“Employee”), as of March 1, 2001 (the “Effective
Date”). The Company and Employee are sometimes referred to herein individually
as “Party” and collectively as the “Parties”.
WHEREAS, Employee is currently employed by the Company to provide executive and
administrative services in her capacity as Chief Executive Officer of Health
Choice Arizona, Inc., an affiliate of the Company (“Health Choice”);
WHEREAS, as consideration for the severance benefits herein described and the
other covenants herein provided, Employee is willing to enter into certain
restrictive covenants in favor of the Company as set forth in this Agreement;
and
NOW, THEREFORE, as consideration for the mutual covenants contained in this
Agreement and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, the parties
hereby agree as follows:
1. Covenants Against Competition
(a) Company Business; Exposure to Confidential Matters. Employee acknowledges
that (i) the Company and its Affiliates (as hereinafter defined) are engaged in
the ownership, operation and management of acute care hospitals, and related
healthcare facilities, including Health Choice (all of which are referred to
collectively as the “Company Business”) and (ii) Employee’s work relating to
Company Business will bring Employee into close contact with information
regarding the Company and its Affiliates that is not readily available to the
public. For purposes of this Agreement, the term “Affiliates” means all persons
that, directly or indirectly, through one or more intermediaries, control, are
controlled by or are under common control with the Company.
(b) Covenant Not to Compete. After Employee’s termination of employment and
continuing for a period of fifteen (15) months following the termination of
Employee’s employment with the Company, in the event Employee’s employment is
terminated voluntarily by Employee or for cause by the Company (as defined below
in Section 5(f)) (collectively, the “Restricted Period”), Employee covenants and
agrees that Employee will not, without the prior written consent of the Company,
engage in any business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, employee, trustee, consultant
or in any other relationship or capacity, that is competitive with Health
Choice; provided, however, that Employee may, without violating this
Section 1(b), (a) own, directly or indirectly, solely as an investment,
securities of any entity that is competitive with Health Choice if Employee
(i) does not own, directly or indirectly, five percent (5%) or more of any class
of the securities of such entity, and (ii) does not participate in the business
of such entity, and (b) perform uncompensated services for any tax exempt
organization within the meaning of section 170(c) of the Internal Revenue Code.

 

 

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2. Confidential Information. Employee covenants and agrees that during
employment with the Company and continuing until the termination of the
Restricted Period, Employee will keep secret and not disclose to any person,
other than authorized representatives of the Company and its Affiliates, or
appropriate to Employee’s own use or the use of any person other than the
Company and its Affiliates, any Confidential Information (as hereinafter
defined). For purposes of this Agreement, the term “Confidential Information”
means all secret or confidential information or knowledge pertaining to the
Company Business heretofore or hereafter disclosed, communicated or otherwise
learned or made known to Employee while an employee of the Company, including
without limitation trade know-how, trade secrets, patient records, patient lists
and other patient information, customer or similar lists, pricing policies,
operational methods, marketing plans or strategies, financial statistics,
financial projections and other financial information, business acquisition
plans, new personnel acquisition plans, drawings, designs and design projects,
inventions, research and developments, projects, and other information, written
or oral, marked, identified as or reasonably understood to be confidential at
the time of disclosure to Employee by, through or on behalf of the Company or
any of its Affiliates. Notwithstanding the foregoing, information shall not be
deemed Confidential Information for purposes of this Agreement to the extent
(a) disclosure of such information is required pursuant to applicable law or
order of a court or other tribunal; (b) such information is in or subsequently
enters the public domain through means other than direct or indirect disclosure
in violation of this Agreement; or (c) such information is lawfully received
from a third party who is not subject to restriction on further disclosure. In
addition to the foregoing, Employee shall abide by such other policies and
procedures as IASIS and/or the Company may adopt, from time to time, regarding
privacy and confidentiality.
3. Employees of the Company and its Affiliates. After Employee’s termination of
employment and during the Restricted Period, without the prior written consent
of the Company, Employee shall not directly or indirectly through any other
person hire or solicit for hire any person who is employed by the Company or one
of its Affiliates at the time of the termination of Employee’s employment and
who is employed by the Company at the time of such hiring or solicitation;
provided, however, nothing in this Section 3 shall prevent Employee from hiring
an employee of the Company or its Affiliates as a result of such employee’s
unsolicited response to job opportunities, including advertisements placed in
newspapers, magazines or similar media of general circulation to the public.

 

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4. Property of the Company and its Affiliates. Employee will make full and
prompt disclosure to the Company of all inventions, improvements, formulas,
data, programs, processes, discoveries, methods, developments, software,
Internet website addresses (URLs), and works of authorship, whether or not
copyrightable, trademarkable or patentable, which relate to actual or
anticipated Company Business and either (i) are created, made or conceived by
Employee, either alone, under his direction or jointly with others during the
period of his employment with the Company, (ii) result from work performed by
Employee for the Company or (iii) result, to any extent, from use of the
Company’s premises or property (all of which are collectively referred to in
this Agreement as “Works”). All Works shall be the sole property of the Company,
and, to the extent that the Company is not already considered the owner thereof
as a matter of law, Employee hereby assigns to the Company, without further
compensation, all his right, title and interest in and to such Works and any and
all related intellectual property rights (including, but not limited to,
patents, patent applications, copyrights, copyright applications, and
trademarks) in the United States and elsewhere, and Employee agrees to cooperate
with the Company to provide such additional documentation as may be necessary to
carry out the intent of this Section 4.
5. Severance Benefits. As consideration for Employee’s execution of this
Agreement, the Company hereby agrees to provide Employee the following severance
benefits (the “Severance Benefits”) upon termination of Employee’s employment
without cause by the Company:
(a) Severance Payment. So long as Employee is not in material breach of any
provision of this Agreement, the Company agrees to pay Employee severance in an
amount equal to Employee’s monthly base salary at the time of termination for a
period of nine (9) consecutive months (the “Severance Period”), less applicable
federal and state taxes, Employee’s portion of benefits premiums, withholdings
and other appropriate payroll deductions. This severance payment shall be
payable beginning the immediately succeeding routine payroll period after
Employee’s employment by the Company is terminated and continuing monthly to the
end of the Severance Period. During the Severance Period, the Company will
continue to pay its portion of Employee’s benefits premiums pursuant to Section
5(d) of this Agreement below.
(b) Unused Vacation Payment. Additionally, on or before the time of the
Company’s immediately succeeding routine payroll period after Employee’s
employment by the Company is terminated, the Company will make a one-time cash
payment to Employee in an amount equal to all of Employee’s unused sick leave,
vacation time and/or paid time off (consistent with Company policy for employees
of the Company with similar rank or pay grade level as Employee), less
applicable federal and state taxes, benefits and other withholding payable.
(c) Outplacement Assistance. As additional consideration of the promises
contained herein, immediately upon termination of Employee’s employment by the
Company, the Company shall pay Employee Two Thousand Five Hundred and No/100
Dollars ($2,500.00) to provide Employee with outplacement assistance, including
resume preparation, interview technique, and lead generation and which amount
shall be paid on or before the time of the Company’s immediately succeeding
routine payroll period after Employee’s employment by the Company is terminated.

 

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(d) COBRA continuation coverage. Employee shall have a right to continue
coverage under the Company’s group medical or health benefits plans in accord
with the provisions of 29 U.S.C. § 1161, as amended (“COBRA”). Employee may
exercise the option of continuing such coverage consistent with, for the
duration allowed by, and under the conditions imposed under applicable federal
and state laws. If Employee elects COBRA coverage, the Company will subsidize
the cost of premiums for the Employee so that premiums charged to Employee do
not exceed those charged to active Employees for the 18-month term COBRA is in
effect.
(e) Stock Options. Upon termination of employment by the Company, treatment of
any vested and unvested incentive stock options granted to Employee by the
Company during the term of employment shall be governed by separate Stock Option
Plan and Stock Option Agreement entered into by the parties, and nothing herein
shall be deemed to modify any such stock option arrangement.
(f) Cause. For purpose of this Agreement, the following shall constitute “cause”
for termination: (i) Employee commits any act of gross negligence, incompetence,
fraud or willful misconduct causing harm to the Company, (ii) the conviction of
Employee of a felony that could adversely affect the Company or its reputation,
(iii) Employee intentionally obtains personal gain, profit or enrichment at the
expense of the Company or from any transaction in which Employee has an interest
which is adverse to the interest of the Company unless Employee shall have
obtained the prior written consent of the Company’s Board of Directors,
(iv) Employee willfully acts in a manner which is materially detrimental or
damaging to the Company’s reputation, business operations or relations with its
employees, suppliers, payors or physicians, or (v) any material breach by
Employee of this Agreement, which breach remains uncorrected for a period of
fifteen (15) days after receipt by Employee of written notice from the Company
setting forth the breach. In the event Employee’s employment is terminated for
cause, Employee shall be entitled to receive all base salary and benefits to be
paid or provided to Employee by the Company through the date of termination and
no more.
6. Termination for Good Reason. At any time within twelve (12) months after a
Change in Control (as defined below), Employee’s employment with the Company may
be terminated by Employee by written notice of his resignation (“Notice of
Resignation”) upon the occurrence of any of the following events without the
consent of Employee (each of which shall constitute “Good Reason” for
resignation): (i) the removal of Employee from or the failure to elect or
re-elect Employee to the position of Chief Executive Officer of Health Choice,
(ii) any material reduction by the Company of Employee’s duties or
responsibilities or the assignment to Employee of duties materially inconsistent
with such position, or (iii) any material breach by the Company of this
Agreement, which breach remains uncorrected for a period of fifteen (15) days
after receipt by the Company of written notice from Employee. Notwithstanding
the provisions of clause (i) or (ii) above, in the event that Employee is
elected as Chief Executive Officer of a division or subsidiary of any entity
which acquires the business of Health Choice as a result of acquisition of
control of more than 50% of the voting securities of the Company, the
appointment to such position shall not, by itself, constitute Good Reason for
purposes of this Agreement. In the event that Employee resigns within twelve
(12) months after a Change in Control for Good Reason pursuant to this
Section 6, Employee shall be entitled to receive the Severance Benefits as
described in Section 5 as if Employee had been terminated without cause.

 

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For purposes of this Agreement, a “Change in Control” shall be deemed to have
occurred (A) at such time as any Person (as defined in Section 13(d)(3) or
14(d)(2) of the Securities and Exchange Act of 1934, as amended from time to
time (the “Exchange Act”)) or “group” of Persons (as defined in Section 13(d) of
the Exchange Act), other than IASIS Healthcare Corporation or any of the parties
to the Stockholders Agreement dated October 7,1999, among the Company, JLL
Healthcare, LLC, a Delaware limited liability company, and certain other
stockholders, as the same may be amended (the “Stockholders Agreement”),
directly or indirectly, acquires beneficially or of record, more than 50% of the
outstanding voting securities of Health Choice or (B) upon a sale of all or
substantially all of the assets of the Health Choice.
7. Indemnity and Insurance. In the event Employee was, is or becomes a party or
witness or other participant in, or is threatened to be made a party to or
witness or participant in any threatened, pending or completed action, suit or
proceeding, or any inquiry or investigation (whether instituted by the Company
or any other party) that Employee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other, which arises out of an Indemnifiable
Event (as defined below), the Company shall indemnify Employee and hold Employee
harmless to the fullest extent permitted by law as soon as practicable, but in
any event no later than thirty days after written demand is presented to the
Company, against any and all expenses, judgments, fines, penalties and amounts
paid in settlement of such claim, including reasonable attorneys’ fees and other
related costs and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in, or preparing to defend, be a
witness in or participate in any claim, and all interest, assessments and other
charges paid or payable in connection with or in respect thereof. As used
herein, the term “Indemnifiable Event” shall mean any event or occurrence
related to the fact that Employee is or was a director, officer, employee, agent
or fiduciary of the Company, or is or was serving at the request of the Company
as a director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by Employee in any such
capacity. If so requested by Employee, the Company shall advance (within two
business days of such request) to Employee any and all expenses, including
reasonable attorneys’ fees and other reasonable costs and obligations paid or
incurred in investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or participate in
any claim relating to any Indemnifiable Event. To the extent the Company
maintains an insurance policy or policies providing officers liability
insurance, Employee shall be covered by such policy or policies, in accordance
with its or their terms to the maximum extent of the coverage available for any
Company officer.

 

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8. Rights and Remedies Upon Breach. If Employee breaches, or threatens to commit
a breach of, any of the provisions of Section 1,2, 3, or 4 of this Agreement
(collectively, the “Restrictive Covenants”), the Company shall have the right
and remedy, in addition to, and not in lieu of, any other rights and remedies
available to the Company, to have any of the Restrictive Covenants specifically
enforced by any court having jurisdiction, without the posting of bond or other
surety, it being hereby acknowledged and agreed by Employee that any such breach
or threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.
9. Enforceability of Restrictive Covenants. Employee acknowledges that the
Restrictive Covenants are reasonable and necessary to protect the business of
the Company and its Affiliates and that adequate consideration has been given
therefor. Accordingly, if any provision of the Restrictive Covenants is
determined by a court of competent jurisdiction to be unenforceable by reason of
the duration of such provision or geographical area covered thereby being too
extensive, or by reason of such provision being too extensive in any other
respect, such provision shall be interpreted to extend only over the maximum
period of time and geographical area for which it may be enforceable and to the
maximum extent in all other respects as to which it may be enforceable and the
Restrictive Covenants, in such form, shall then be enforceable and shall be
enforced. In addition, if it is determined that any provision of the Restrictive
Covenants is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected, but shall be given full effect, without
regard to the invalid provisions.
10. Notice. All notices, requests, demands and other communications given under
or by reason of this Agreement shall be in writing and shall be deemed given
(a) on the date of delivery, when delivered in person, (b) on the date of
transmission, when delivered by facsimile or other electronic transmission with
confirmation of receipt, (c) on the date following dispatch if placed with a
nationally recognized overnight courier or delivery service maintaining records
of receipt, or (d) two (2) days following deposit in the mail when mailed, by
certified mail (return receipt requested), postage prepaid, addressed as follows
(or to such other address as a party may specify by notice pursuant to this
provision, provided that in such event such notice shall be effective only upon
receipt):
(a)    If to the Company:
IASIS Management Company
c/o IASIS Healthcare Corporation
113 Seaboard Lane, Ste. A-200
Franklin, Tennessee 37067
Attn: Chief Executive Officer

 

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(b)    If to Employee:
Carolyn Rose
1261 Catter La.
Park City, UT 84098
11. Warranties. As a material inducement to the Company to enter into this
Agreement, Employee represents and warrants to the Company as follows:
(a) Employee is not a party to any other agreement or obligation that would
prohibit, limit or restrict Employee’s power, rights or ability to serve as an
employee of the Company or enter into this Agreement and to perform Employee’s
duties and obligations hereunder; and (b) performance of Employee’s obligations
hereunder or as an employee of the Company will not violate or conflict with any
agreement to which Employee is presently subject.
12. Controlling Law and Performability. The laws of the State of Delaware shall
govern the execution, validity, interpretation and performance of this
Agreement.
13. Additional Instruments. The Parties shall execute and deliver any and all
additional instruments and agreements that may be necessary or proper to carry
out the purposes of this Agreement.
14. Entire Agreement and Amendments. This Agreement contains the entire
agreement of the Parties relating to the matters contained herein and supersedes
all prior agreements and understandings, oral or written, between the Parties
with respect to the subject matter hereof. This Agreement may be changed only by
an agreement in writing signed by the Party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
15. No Assurance of Employment. Nothing in this Agreement shall be construed as
an obligation on the part of the Company to employ Employee for any period of
time or in any position, it being intended that Employee shall be deemed an
“employee at will” of the Company.
16. Assignments. The Company may freely assign its rights and obligations under
this Agreement, whether by operation of law or otherwise. The rights and
obligations of Employee under this Agreement are personal to Employee, and no
such rights, benefits or obligations shall be subject to voluntary or
involuntary alienation, assignment or transfer.
17. Effect of Agreement. Subject to the provisions of Section 16 of this
Agreement with respect to assignments, this Agreement shall be binding upon and
inure to the benefit of Employee and Employee’s heirs, executors,
administrators, legal representatives and assigns and the Company and its
respective successors and assigns.

 

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18. Execution. This Agreement may be executed in multiple counterparts each of
which shall be deemed an original and all of which shall constitute one and the
same instrument.
19. Waiver of Breach. The waiver by either Party of a breach of any provision of
the Agreement by the other Party shall not operate or be construed as a waiver
by such Party of any subsequent breach by such other Party.
20. Headings. Headings used in this Agreement are for convenience of reference
only and for no other purpose.
IN WITNESS WHEREOF, the Parties have executed this Agreement on and caused the
same to be duly delivered on their behalf on the day and year first written
above.

            IASIS Management Company,
a Delaware corporation
      By:   /s/ John K. Crawford         John K. Crawford        Executive Vice
President &
Chief Financial Officer        EMPLOYEE:
      /s/ Carolyn Rose      Print Name: Carolyn Rose  

 

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