Exhibit 10(e)

 

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TENET

 

SECOND AMENDED AND RESTATED

 

EXECUTIVE SEVERANCE PLAN

 

 

As Amended and Restated Effective May 9, 2012

 

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TABLE OF CONTENTS
TENET SECOND AMENDED AND RESTATED EXECUTIVE SEVERANCE PLAN

 

ARTICLE I PREAMBLE AND PURPOSE

1

1.1

Preamble

1

1.2

Purpose

2

 

 

 

ARTICLE II DEFINITIONS AND CONSTRUCTION

3

2.1

Definitions

3

2.2

Construction

14

2.3

409A Compliance

15

 

 

 

ARTICLE III SEVERANCE BENEFITS

16

3.1

Severance Benefits not related to a Change of Control

16

3.2

Severance Benefits on and after a Change of Control

19

3.3

Termination Distributions to Key Employees

24

3.4

Distributions on Account of Death of the Covered Executive During the Severance
Period

24

3.5

Section 409A Gross-Up Payment

25

3.6

Alternate Plan Terms

25

3.7

Conditions to Payment of Severance Benefits

25

 

 

 

ARTICLE IV ADMINISTRATION

28

4.1

The PAC

28

4.2

Powers of PAC

28

4.3

Appointment of Plan Administrator

28

4.4

Duties of Plan Administrator

29

4.5

Indemnification of PAC and Plan Administrator

30

4.6

Claims for Benefits

30

4.7

Arbitration

31

4.8

Receipt and Release of Necessary Information

32

 

 

 

ARTICLE V OTHER BENEFIT PLANS OF THE COMPANY

33

5.1

Other Plans

33

 

 

 

ARTICLE VI AMENDMENT AND TERMINATION OF THE ESP

34

6.1

Continuation

34

6.2

Amendment of ESP

34

6.3

Termination of ESP

34

6.4

Termination of Affiliate’s Participation

34

 

 

 

ARTICLE VII MISCELLANEOUS

36

7.1

No Reduction of Employer Rights

36

7.2

Successor to the Company

36

7.3

Provisions Binding

36

APPENDIX A COVERED EXECUTIVES

A-1

APPENDIX B ESP AGREEMENTS

B-1

TENET EXECUTIVE SEVERANCE PLAN AGREEMENT

B-2

 

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TENET SECOND AMENDED AND RESTATED EXECUTIVE SEVERANCE PLAN

 

ARTICLE I
PREAMBLE AND PURPOSE

 

1.1          Preamble.  In January 2003, Tenet Healthcare Corporation (the
“Company”) adopted the Tenet Executive Severance Protection Plan (the “TESPP”)
to provide Covered Executives of the Company and its affiliates with certain
cash severance payments and/or other benefits in the event of a termination of
the executive’s employment as a result of a “qualifying termination,” as defined
in the TESPP, or under certain other circumstances following a “change of
control,” as defined in the TESPP.  Effective May 11, 2006, the Company amended
and restated the TESPP to:

 

(a)           expand the classification of employees eligible to participate in
such plan;

 

(b)           modify (and in the case of a change of control expand) the
severance payments and other benefits payable under such plan on account of a
qualifying termination;

 

(c)           amend, restate and replace the associated individual TESPP
agreements, the change of control agreements, and the severance provisions of
any employment agreements that cover eligible executives with a severance plan
agreement, a copy of which was attached to as such amended and restated plan as
Appendix B,

 

(d)           revise the definition of change of control;

 

(e)           modify the administration and claims review procedures under the
plan;

 

(f)            comply with the requirements of section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”); and

 

(g)           change the name of the plan to the “Tenet Executive Severance
Plan” (the “ESP”).

 

The Company intended that the ESP and Tenet Executive Severance Plan Agreement
attached thereto as Appendix B serve as an amendment and restatement of the
TESPP, the associated individual TESPP agreements, the change of control
agreements and the severance provisions of any employment agreement that covers
an eligible executive, as applicable, to comply with the requirements of section
409A of the Code, effective as of January 1, 2005, or, in the case of an
individual TESPP agreement, change of control agreement or employment agreement,
the effective date of such agreement, if later.  To the extent that an executive
did not elect to participate in this ESP, such executive’s TESPP agreement,
change of control agreement or employment agreement, as applicable, will remain
in effect and be amended to comply with the provisions of section 409A of the
Code.

 

Effective December 31, 2008, the Company amended and restated the ESP effective
to comply with final regulations issued under section 409A of the Code.  By this
instrument, the Company amends and restates the ESP effective May 9, 2012 to,
among other things, revise certain definitions and modify the benefits provided
herein. This amended

 

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and restated ESP will be known as the Tenet Second Amended and Restated
Executive Severance Plan.

 

The Company may adopt one or more domestic trusts to serve as a possible source
of funds for the payment of benefits under the ESP.

 

1.2          Purpose.  Through the ESP, the Company intends to permit the
deferral of compensation and to provide additional benefits to a select group of
management or highly compensated employees of the Company and its affiliates. 
Accordingly, it is intended that the ESP will not constitute a “qualified plan”
subject to the limitations of section 401(a) of the Code, nor will it constitute
a “funded plan,” for purposes of such requirements.  It also is intended that
the ESP will qualify as a “pension plan” within the meaning of section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that
is exempt from the participation and vesting requirements of Part 2 of Title I
of ERISA, the funding requirements of Part 3 of Title I of ERISA, and the
fiduciary requirements of Part 4 of Title I of ERISA by reason of the exclusions
afforded plans that are unfunded and maintained by an employer primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees.

 

End of Article I

 

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ARTICLE II

DEFINITIONS AND CONSTRUCTION

 

2.1          Definitions.  When a word or phrase appears in this ESP with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase will generally be a term defined in this Section 2.1.  The
following words and phrases with the initial letter capitalized will have the
meaning set forth in this Section 2.1, unless a different meaning is required by
the context in which the word or phrase is used.

 

(a)           “Affiliate” means a corporation that is a member of a controlled
group of corporations (as defined in section 414(b) of the Code) that includes
the Company, any trade or business (whether or not incorporated) that is in
common control (as defined in section 414(c) of the Code) with the Company, or
any entity that is a member of the same affiliated service group (as defined in
section 414(m) of the Code) as the Company.

 

(b)           “AIP” means the Company’s Annual Incentive Plan, as the same may
be amended, restated, modified, renewed or replaced from time to time.

 

(c)           “Base Salary” means the Covered Executive’s annual gross rate of
pay including amounts reduced from the Employee’s compensation and contributed
on the Employee’s behalf as deferrals under any qualified or non-qualified
employee benefit plans sponsored by the Employer in effect immediately prior to
a Qualifying Termination. Base Salary excludes bonuses, hardship withdrawal
allowances, Annual Incentive Plan Awards, housing allowances, relocation
payments, deemed income, income payable under the SIP or other stock incentive
plans, Christmas gifts, insurance premiums and other imputed income, pensions,
and retirement benefits.

 

(d)           “Board” means the Board of Directors of the Company.

 

(e)           “Bonus” means the amount payable to a Covered Executive, if any,
under the AIP.

 

(f)            “Cause” means

 

(1) when used in connection with a Qualifying Termination triggering benefits
pursuant to Section 3.1, a Covered Executive’s:

 

(i)            dishonesty,

 

(ii)           fraud,

 

(iii)          willful misconduct,

 

(iv)          breach of fiduciary duty,

 

(v)           conflict of interest,

 

(vi)          commission of a felony,

 

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(vii)         material failure or refusal to perform his job duties in
accordance with Company policies,

 

(viii)        a material violation of Company policy that causes harm to the
Company or an Affiliate, or

 

(ix)          other wrongful conduct of a similar nature and degree.

 

A failure to meet or achieve business objectives, as defined by the Company,
will not be considered Cause so long as the Covered Executive has devoted his
best efforts and attention to the achievement of those objectives.

 

(2)  when used in connection with a Qualifying Termination triggering benefits
pursuant to Section 3.2:

 

(i)            any intentional act or misconduct materially injurious to the
Company or any Affiliate, financial or otherwise, but not limited to,
misappropriation or fraud, embezzlement or conversion by the Covered Executive
of the Company’s or any Affiliate’s property in connection with the Covered
Executive’s employment with the Company or an Affiliate,

 

(ii)           Any willful act or omission constituting a material breach by the
Covered Executive of a fiduciary duty,

 

(iii)          A final, non-appealable order in a proceeding before a court of
competent jurisdiction or a final order in an administrative proceeding finding
that the Covered Executive committed any willful misconduct or criminal activity
(excluding minor traffic violations or other minor offenses), which commission
is materially inimical to the interests of the Company or any Affiliate, whether
for his personal benefit or in connection with his duties for the Company or an
Affiliate,

 

(iv)          The conviction (or plea of no contest) of the Covered Executive
for any felony,

 

(v)           Material failure or refusal to perform his job duties in
accordance with Company policies (other than resulting from the Covered
Executive’s disability as defined by Company policies), or

 

(vi)          A material violation of Company policy that causes material harm
to the Company or an Affiliate.

 

A failure to meet or achieve business objectives, as defined by the Company,
will not be considered Cause so long as the Covered Executive has devoted his
reasonable efforts and attention to the achievement of those objectives.  For
purposes of this Section, no act or failure to act on the part of the Covered
Executive shall be deemed “willful”, “intentional” or “knowing” if it was
undertaken in reasonable reliance on the advice of counsel or at the instruction
of the Company, including but not limited to the Board, a committee of the Board
or the CEO, or was due primarily to an error in judgment or negligence, but
shall be deemed “willful”, “intentional” or “knowing” only if done or omitted to
be done by

 

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the Covered Executive not in good faith and without reasonable belief that the
Covered Executive’s action or omission was in the best interest of the Company.

 

(3)  A Covered Executive will not be deemed to have been terminated for Cause,
under either this Section 2.1(f)(1) or 2.1(f)(2) above, as applicable, unless
and until there has been delivered to the Covered Executive written notice that
the Covered Executive has engaged in conduct constituting Cause.  The
determination of Cause will be made by the Compensation Committee with respect
to any Covered Executive who is employed as the Chief Executive Officer of Tenet
(“CEO”), by the CEO (or an individual acting in such capacity or possessing such
authority on an interim basis) with respect to any Covered Executive who is
employed as the Chief Operating Officer of the Company (the “COO”), the Chief
Financial Officer of the Company (the “CFO”), an Executive Vice President
(“EVP”) of the Company, a Senior Vice President or the equivalent thereof of the
Company (collectively “SVP”) or a Vice President of the Company (“VP”) and by
the COO (or an individual acting in such capacity or possessing such authority
on an interim basis) with respect to any Covered Executive who is employed as a
Hospital Chief Executive Officer (“Hospital CEO”).  A Covered Executive who
receives written notice that he has engaged in conduct constituting Cause, will
be given the opportunity to be heard (either in person or in writing as mutually
agreed to by the Covered Executive and the Compensation Committee, CEO or COO,
as applicable) for the purpose of considering whether Cause exists.  If it is
determined either at or following such hearing that Cause exists, the Covered
Executive will be notified in writing of such determination within five
(5) business days.  If the Covered Executive disagrees with such determination,
the Covered Executive may file a claim contesting such determination pursuant to
Article IV within thirty (30) days after his receipt of such written
determination finding that Cause exists.

 

(g)           “Change of Control” means the occurrence of one of the following:

 

(i)            A “change in the ownership of the Company” which will occur on
the date that any one person, or more than one person acting as a group within
the meaning of Section 409A of the Code, acquires, directly or indirectly,
whether in a single transaction or series of related transactions, ownership of
stock in the Company that, together with stock held by such person or group,
constitutes more than fifty percent (50%) of the total fair market value or
total voting power of the stock of the Company (“Ownership Control”).  However,
if any one person or more than one person acting as a group, has previously
acquired ownership of more than fifty percent (50%) of the total fair market
value or total voting power of the stock of the Company, the acquisition of
additional stock by the same person or persons will not be considered a “change
in the ownership of the Company” (or to cause a “change in the effective control
of the Company” within the meaning of Section 2.1(g)(ii) below).  Further, an
increase in the effective percentage of stock owned by any one person, or
persons acting as a group, as a result of a transaction in which the Company
acquires its stock in exchange for cash or property will be treated as an
acquisition of stock for purposes of this paragraph; provided, that for purposes
of this Section 2.1(g)(i), the following acquisitions of Company stock will not
constitute a Change of Control:

 

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(A) any acquisition, whether in a single transaction or series of related
transactions, by any employee benefit plan (or related trust) sponsored or
maintained by the Company or an Affiliate which results in such employee benefit
plan obtaining “Ownership Control” of the Company or (B) any acquisition,
whether in a single transaction or series of related transactions, by the
Company which results in the Company acquiring stock of the Company representing
“Ownership Control” or (C) any acquisition, whether in a single transaction or
series of related transactions, after which those persons who were owners of the
Company’s stock immediately prior to such transaction(s) own more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of the Company (or if after the consummation of such transaction(s) the Company
(or another entity into which the Company is merged into or otherwise combined,
such the Company does not survive such transaction(s)) is a direct or indirect
subsidiary of another entity which itself is not a subsidiary of an entity, then
the more than fifty percent (50%) ownership test shall be applied to the voting
securities of such other entity) in substantially the same percentages as their
respective ownership of the Company immediately prior to such transaction(s). 
This Section 2.1(g)(1) applies either when there is a transfer of the stock of
the Company (or issuance of stock) and stock in the Company remains outstanding
after the transaction or when there is a transfer of the stock of the Company
(including a merger or similar transaction) and stock in the Company does not
remain outstanding after the transaction.

 

(ii)           A “change in the effective control of the Company” which will
occur on the date that either (A) or (B) occurs:

 

(A)          any one person, or more than one person acting as a group within
the meaning of Section 409A of the Code, acquires (taking into consideration any
prior acquisitions during the twelve (12) month period ending on the date of the
most recent acquisition by such person or persons), directly or indirectly,
ownership of stock of the Company possessing thirty-five percent (35%) or more
of the total voting power of the stock of the Company (not considering stock
owned by such person or group prior to such twelve (12) month period) (i.e.,
such person or group must acquire within a twelve (12) month period stock
possessing at least thirty-five percent (35%) of the total voting power of the
stock of the Company) (“Effective Control”), except for (i) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or an Affiliate which results in such employee benefit plan obtaining
“Effective Control” of the Company or (ii) any acquisition by the Company.  The
occurrence of “Effective Control” under this Section 2.1(g)(ii)(A) may be
nullified by a vote of that number of the members of the Board of Directors of
the Company (“Board”), that exceeds two-thirds of the independent members of the
Board, which vote must occur prior to the time, if any, that a “change in the
effective control of the Company” has occurred under
Section 2.1(g)(ii)(B) below.  In the event of such a

 

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supermajority vote, such transaction or series of related transactions shall not
be treated as an event constituting “Effective Control”.  For avoidance of
doubt, the ESP provides that in the event of the occurrence of the acquisition
of ownership of stock of the Company that reaches or exceeds the 35% ownership
threshold described above, if more than two-thirds of the independent members of
the Board take action to resolve that such an acquisition is not a “change in
the effective control of the Company” and a majority of the members of the Board
have not been replaced as provided under Section 2.1(g)(ii)(B) below, then such
Board action shall be final and no “Effective Control” shall be deemed to have
occurred for any purpose under the ESP.

 

(B)          a majority of the members of the Board are replaced during any
twelve (12) month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the
appointment or election.

 

For purposes of a “change in the effective control of the Company,” if any one
person, or more than one person acting as a group, is considered to effectively
control the Company within the meaning of this Section 2.1(g)(ii), the
acquisition of additional control of the Company by the same person or persons
is not considered a “change in the effective control of the Company,” or to
cause a “change in the ownership of the Company” within the meaning of
Section 2.1(g)(i) above.

 

(iii)          A sale, exchange, lease, disposition or other transfer of all or
substantially all of the assets of the Company.

 

(iv)          A liquidation or dissolution of the Company that is approved by a
majority of the Company’s stockholders.

 

For purposes of this Section 2.1(g), the provisions of section 318(a) of the
Code regarding the constructive ownership of stock will apply to determine stock
ownership; provided, that, stock underlying unvested options (including options
exercisable for stock that is not substantially vested) will not be treated as
owned by the individual who holds the option.

 

(h)           “COBRA” means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.

 

(i)            “Code” means the Internal Revenue Code of 1986, as amended from
time to time.

 

(j)            “Company” means Tenet Healthcare Corporation.

 

(k)           “Compensation Committee” means the Compensation Committee of the
Board, which has the authority to amend and terminate the ESP as provided in
Article VI.

 

(l)            “Covered Executive” means:

 

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(i)            the Chief Executive Officer (“CEO”) of the Company,

 

(ii)           the Chief Operating Officer (“COO”) of the Company,

 

(iii)          the Chief Financial Officer (“CFO”) of the Company,

 

(iv)          an Executive Vice President (“EVP”) of the Company,

 

(v)           a Senior Vice President or the equivalent thereof (collectively
“SVP”) of the Company,

 

(vi)          a Vice President (“VP”) of the Company, or

 

(vii)         a Hospital Chief Executive Officer (“Hospital CEO”).

 

(viii)        The term Covered Executive will also include any Employee who is
designated as a Covered Executive by the Compensation Committee with any such
designation being reflected in an Appendix A attached hereto.  Such Appendix A
may be modified by the Compensation Committee from time to time without the need
for a formal amendment to the ESP, in which case an updated Appendix A will be
attached hereto.  To the extent permitted by applicable law, an individual will
cease to be a Covered Executive as of the date he attains age sixty-five (65).

 

(m)          “DCP” means the Tenet 2001 Deferred Compensation Plan, the Tenet
2006 Deferred Compensation Plan and any other deferred compensation plan
maintained by the Employer that covers Covered Executives.

 

(n)           “Effective Date” means May 9, 2012.  The original effective date
of the Plan as restated to be the Tenet Executive Severance Plan was May 11,
2006, except that those provisions of the ESP and the associated ESP Agreement
required by section 409A of the Code (e.g., the six (6) month delay specified in
Section 3.3) were effective as of January 1, 2005.

 

(o)           “Employee” means each select member of management or highly
compensated employee receiving remuneration, or who is entitled to remuneration,
for services rendered to the Employer, in the legal relationship of employer and
employee.  The term “Employee” does not include a consultant, independent
contractor or leased employee even if such consultant, leased employee or
independent contractor is subsequently determined by the Employer, the Internal
Revenue Service, the Department of Labor or a court of competent jurisdiction to
be a common law employee of the Employer.  Further, the term “Employee” does not
include a person who is receiving severance pay from the Employer.

 

(p)           “Employer” means the Company and each Affiliate that has adopted
the ESP as a participating employer.  Unless provided otherwise by the
Compensation Committee or the Board, all Affiliates will be participating
employers in the ESP.  Each such Affiliate may evidence its adoption of the ESP
either by a formal action of its governing body or taking administrative actions
with respect to the ESP on behalf of its Covered Executives (e.g., communicating
the terms of the

 

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ESP, etc.).  An entity will cease to be a participating employer as of the date
such entity ceases to be an Affiliate.

 

(q)           “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

 

(r)            “ESP” means the Tenet Executive Severance Plan as set forth
herein and as the same may be amended from time to time.  The ESP was formerly
known as the TESPP.

 

(s)            “ESP Agreement” means the written agreement between a Covered
Executive and the Plan Administrator, on behalf of the Employer substantially in
the form attached hereto in Appendix B.  This form ESP Agreement may differ with
respect to a Covered Executive who was covered by the TESPP prior to May 11,
2006 or as determined by the Compensation Committee in its sole and absolute
discretion as provided in Section 3.6.  Each ESP Agreement will form a part of
the ESP with respect to the affected Covered Executive.

 

(t)            “Equity Plan” means any equity plan, agreement or arrangement
maintained or sponsored by the Employer other than the SIP (e.g., the 1999
broad-based stock option plan and the 1995 stock incentive plan).

 

(u)           “Five Percent Owner” means any person who owns (or is considered
as owning within the meaning of section 318 of the Code as modified by section
416(i)(1)(B)(iii) of the Code) more than five percent (5%) of the outstanding
stock of the Company or an Affiliate or stock possessing more than five percent
(5%) of the total combined voting power of all stock of the Company or an
Affiliate.  The rules of sections 414(b), (c) and (m) of the Code will not apply
for purposes of applying these ownership rules.  Thus, this ownership test will
be applied separately with respect to the Company and each Affiliate.

 

(v)           “401(k) Plan” means the Tenet Healthcare Corporation 401(k)
Retirement Savings Plan or any other qualified retirement plan with a cash or
deferred arrangement that is maintained or sponsored by the Employer.

 

(w)          “409A Exempt Amount” means that portion of the distributions under
the ESP to a Covered Executive that does not exceed two (2) times the lesser of:

 

(i)            the sum of the Covered Executive’s annualized compensation based
upon the annual rate of pay for services provided to the Employer for the
taxable year of the Covered Executive preceding the taxable year of the Covered
Executive in which he has a Qualifying Termination, provided that such
termination constitutes a “separation from service” with such Employer within
the meaning of section 409A of the Code (adjusted for any increase during that
year that was expected to continue indefinitely if the Covered Executive had not
separated from service); or

 

(ii)           the maximum amount that may be taken into account under a
qualified plan pursuant to section 401(a)(17) of the Code for the year in which
the Covered Executive has a Qualifying Termination, provided that such

 

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termination constitutes a “separation from service” within the meaning of
section 409A of the Code.

 

In the event that a Covered Executive is a Key Employee, no distributions in
excess of the 409A Exempt Amount will be made during the six (6) month period
following the date of the Covered Executive’s Qualifying Termination.

 

(x)           “Good Reason” means:

 

(1) In the case of a voluntary termination of employment by a Covered Executive
preceding or more than two years following a Change of Control:

 

(i)            a material diminution in the Covered Executive’s job authority,
responsibilities or duties;

 

(ii)           a material diminution of the Covered Executive’s Base Salary;

 

(iii)          an involuntary and material change in the geographic location of
the workplace at which the Covered Executive must perform services; or

 

(iv)          any other action or inaction that constitutes a material breach by
the Employer or a successor of the agreement under which the Covered Executive
provides services.

 

In the case of (ii) above, such reduction will not constitute good reason if it
results from a general across-the-board reduction for executives at a similar
job level within the Employer.

 

(2)  In the case of a voluntary termination of employment by a Covered Executive
upon or within two (2) years following a Change of Control:

 

(i)            a material downward change in job functions, duties, or
responsibilities which reduces the rank or position of the Covered Executive ;

 

(ii)           a reduction in the Covered Executive’s annual base salary;

 

(iii)          a reduction in the aggregate value of the Covered Executive’s
annual base salary and annual incentive plan target bonus opportunity;

 

(iv)          a material reduction in the Covered Executive’s retirement or
supplemental retirement benefits;

 

(v)           an involuntary and material change in the geographic location of
the workplace at which the Covered Executive must perform services; or

 

(vi)          any other action or inaction that constitutes a material breach by
the Employer or a successor of the agreement under which the Covered Executive
provides services.

 

During this period, no adverse change may be made to a Covered Executive’s (1)
Base Salary, (2) Base Salary and annual incentive plan target bonus

 

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opportunity in the aggregate, or (3) retirement or supplemental retirement
benefits.

 

For avoidance of doubt, if the Covered Executive holds the title of Chief
Executive Officer immediately prior to the occurrence of a Change of Control, in
the event of the occurrence of a Change of Control in which the Covered
Executive retains the same position with the Company, and any of the following
events occur on or within two (2) years after the date of the Change of Control,
such new role shall be treated as a “material downward change in job functions,
duties or responsibilities” within the meaning of Section 2.1(x)(2)(i)  above:

 

                (a)  Covered Executive ceases to be a member of the Board of
Directors of the Company (or if the Company becomes directly or indirectly
controlled by Parent, Covered Executive does not become a member of the Board of
Directors of Parent);

 

                (b)  the Company either (x) ceases to have a class of equity
securities that is actively traded on a national securities exchange or
comparable public securities market or (y) becomes directly or indirectly
controlled by Parent and the Covered Executive does not serve as the Chief
Executive Officer of Parent; or

 

                (c)  Covered Executive is directed by the Board of Directors of
the Company (or by Parent, if the Company becomes directly or indirectly
controlled by Parent) to engage in an act or omission, which if performed would
provide the Company with a basis for terminating Covered Executive for Cause.

 

(3)  If the Covered Executive believes that an event constituting Good Reason
has occurred, in accordance with this Section 2.1(x)(1) or Section 2.1(x)(2)
above, as applicable, the Covered Executive must notify the Plan Administrator
of that belief within ninety (90) days of the occurrence of the Good Reason
event, which notice will set forth the basis for that belief.  The Plan
Administrator will have thirty (30) days after receipt of such notice (the
“Determination Period”) in which to either rectify such event, determine that an
event constituting Good Reason does not exist, or determine that an event
constituting Good Reason exists.  If the Plan Administrator does not take any of
such actions within the Determination Period, the Covered Executive may
terminate his employment with the Employer for Good Reason immediately at the
end of the Determination Period by giving written notice to the Employer within
ninety (90) days after the end of the Determination Period, which termination
will be a Qualifying Termination effective on the date that such notice is
received by the Employer, provided that such date constitutes the Covered
Executive’s “separation from service” within the meaning of section 409A of the
Code.  If the Plan Administrator determines that Good Reason does not exist,
then (A) the Covered Executive will not be entitled to rely on or assert such
event as constituting Good Reason, and (B) the Covered Executive may file a
claim pursuant to Article IV within thirty (30) days after the Covered
Executive’s receipt or written notice of the Plan Administrator’s
determination.  A termination of employment for Good Reason will be treated as
an involuntary termination for purposes of the ESP.

 

11

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(y)           “Key Employee” means any employee or former employee of the
Employer (including any deceased employee) who at any time during the Plan Year
was:

 

(i)            an officer of the Company or an Affiliate having compensation of
greater than one hundred thirty thousand dollars ($130,000) (as adjusted under
section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002)
(such limit is one hundred fifty thousand dollars ($150,000) for 2008);

 

(ii)           a Five Percent Owner; or

 

(iii)          a One Percent Owner having compensation within the meaning of
section 415(c) of the Code of more than one hundred fifty thousand dollars
($150,000).

 

For purposes of the preceding paragraphs, the Company has elected to determine
the compensation of an officer or One Percent Owner in accordance with section
1.415(c)-2(d)(4) of the Treasury Regulations (i.e., W-2 wages plus amounts that
would be includible in wages except for an election under section 125(a) of the
Code (regarding cafeteria plan elections) under section 132(f) of the Code
(regarding qualified transportation fringe benefits) or section 402(e)(3) of the
Code (regarding section 401(k) plan deferrals)) without regard to the special
timing rules and special rules set forth, respectively, in sections
1.415(c)-2(e) and 2(g) of the Treasury Regulations.

 

The determination of Key Employees will be based upon a twelve (12) month period
ending on December 31 of each year (i.e., the identification date).  Employees
that are Key Employees during such twelve (12) month period will be treated as
Key Employees for the twelve (12) month period beginning on the first day of the
fourth month following the end of the twelve (12) month period (i.e., since the
identification date is December 31, then the twelve (12) month period to which
it applies begins on the next following April 1).

 

The determination of who is a Key Employee will be made in accordance with
section 416(i)(1) of the Code and other guidance of general applicability issued
thereunder.  For purposes of determining whether an employee or former employee
is an officer, a Five Percent Owner or a One Percent Owner, the Company and each
Affiliate will be treated as a separate employer (i.e., the controlled group
rules of sections 414(b), (c), (m) and (o) of the Code will not apply). 
Conversely, for purposes of determining whether the one hundred thirty thousand
dollar ($130,000) adjusted limit on compensation is met under the officer test
described in Section 2.1(y)(i), compensation from the Company and all Affiliates
will be taken into account (i.e., the controlled group rules of sections 414(b),
(c), (m) and (o) of the Code will apply).  Further, in determining who is an
officer under the officer test described in Section 2.1(y)(i), no more than
fifty (50) employees of the Company or its Affiliates (i.e., the controlled
group rules of sections 414(b), (c), (m) and (o) of the Code will apply) will be
treated as officers.  If the number of officers exceeds fifty (50), the
determination of which employees or former Employees are officers will be
determined based on who had the largest annual compensation from the Company and
Affiliates for the Plan Year.

 

12

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(z)           “One Percent Owner” means any person who would be described as a
Five Percent Owner in Section 2.1(u) if “one percent (1%)” were substituted for
“five percent (5%)” each place where it appears therein.

 

(aa)         “PAC” means the individual or committee appointed by the
Compensation Committee to administer the ESP. If the Compensation Committee does
not appoint a PAC, the Compensation Committee will serve as the PAC.

 

(bb)         “Parent” means an entity that controls another entity directly, or
indirectly through one or more intermediaries, and that itself is not a
Subsidiary.

 

(cc)         “Plan Administrator” means the individual or committee appointed by
the PAC to handle the day-to-day administration of the ESP.  If the PAC does not
appoint an individual or committee to serve as the Plan Administrator, the PAC
will be the Plan Administrator.

 

(dd)         “Plan Year” means the fiscal year of the ESP, which will commence
on January 1 each year and end on December 31 of such year.

 

(ee)         “Potential Change of Control” means the earliest to occur of:

 

(i)            the Company enters into an agreement the consummation of which,
or the approval by the stockholders of which, would constitute a Change of
Control;

 

(ii)           proxies for the election of members of the Board are solicited by
any person other than the Company;

 

(iii)          any person publicly announces an intention to take or to consider
taking actions which, if consummated would constitute a Change of Control; or

 

(iv)          any other event occurs which is deemed to be a potential change of
control by the Board and the Board adopts a resolution to the effect that a
Potential Change of Control has occurred.

 

(ff)          “Protection Period” means the period beginning on the date that is
six (6) months prior to the occurrence of a Change of Control and ending
twenty-four (24) months following the occurrence of a Change of Control.

 

(gg)         “Qualifying Termination” means the Covered Executive’s “separation
from service” (within the meaning of section 409A of the Code) by reason of:

 

(i)            the involuntary termination of a Covered Executive’s employment
by the Employer without Cause, or

 

(ii)           the Covered Executive’s resignation from the employment of the
Employer for Good Reason;

 

provided, however, that a Qualifying Termination will not occur by reason of the
divestiture of an Affiliate with respect to a Covered Executive employed by such

 

13

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Affiliate who is offered a comparable position with the purchaser and either
declines or accepts such position as provided in Section 6.4.

 

(hh)         “Reimbursement Period” means the period of time commencing as of
the date of the Covered Executive’s Qualifying Termination and ending as of the
close of the second taxable year of the Covered Executive that follows the
taxable year in which such Qualifying Termination occurred.

 

(ii)           “SERP” means the Tenet Healthcare Corporation Supplemental
Executive Retirement Plan or any other supplemental executive retirement plan
maintained by the Employer in which Covered Executives participate.

 

(jj)           “Severance Pay” means, except as provided otherwise in the
Covered Executive’s ESP Agreement, the sum of the Covered Executive’s Base
Salary and Target Bonus as of the date of a Qualifying Termination.

 

(kk)         “Severance Period” means, except as provided otherwise in the
Covered Executive’s ESP Agreement:

 

(i)            the period specified in Section 3.1(a) with respect to Severance
Pay payable on account of a Qualifying Termination not related to a Change of
Control, and

 

(ii)           the period specified in Section 3.2(a) on account of a Qualifying
Termination in connection with a Change of Control.

 

(ll)           “SIP” means the Third Amended and Restated Tenet Healthcare
Corporation 2001 Stock Incentive Plan or the Tenet Healthcare 2008 Stock
Incentive Plan.

 

(mm)      “Subsidiary” means an entity controlled by another entity directly, or
indirectly through one or more intermediaries.

 

(nn)         “Target Bonus” means the target bonus percent applicable to the
Covered Executive under the AIP multiplied by his Base Salary at the time of a
Qualifying Termination.  For example, if the Covered Executive earns one hundred
and fifty thousand dollars ($150,000) and has a Target Bonus of fifty percent
(50%), his Target Bonus equals seventy-five thousand dollars ($75,000).

 

(oo)         “TESPP” means the ESP as in effect immediately prior to May 11,
2006.

 

2.2          Construction.  If any provision of the ESP is determined to be for
any reason invalid or unenforceable, the remaining provisions of the ESP will
continue in full force and effect.  All of the provisions of the ESP will be
construed and enforced in accordance with the laws of the State of Texas and
will be administered according to the laws of such state, except as otherwise
required by ERISA, the Code or other applicable federal law.  When delivery to
the PAC, Plan Administrator or the Covered Executive is required under this ESP,
such delivery requirement will be satisfied by delivery to a person or persons
designated by the PAC, Plan Administrator or the Covered Executive, as
applicable.  Delivery will be deemed to have occurred only when the form or
other communication is actually received.  Headings and subheadings are for the
purpose of reference only and are not to be considered in the construction of
the ESP.  The pronouns “he,” “him” and

 

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“his” used in the ESP will also refer to similar pronouns of the female gender
unless otherwise qualified by the context.

 

2.3          409A Compliance.  The ESP is intended to comply with the
requirements of section 409A of the Code.  The provisions of the ESP will be
construed and administered in a manner that enables the ESP to comply with the
provisions of section 409A of the Code.

 

End of Article II

 

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ARTICLE III

SEVERANCE BENEFITS

 

3.1                               Severance Benefits not related to a Change of
Control.  Except as provided otherwise in a Covered Executive’s ESP Agreement, a
Covered Executive who incurs a Qualifying Termination occurring outside of the
Protection Period, subject to the limitations contained in the ESP, receive the
following severance benefits.

 

(a)                                 Severance Period.  The Covered Executive
will be entitled to the payment of Severance Pay over the Severance Period set
forth below:

 

COVERED EXECUTIVE

 

SEVERANCE PERIOD

CEO

 

Three (3) years

COO and CFO

 

Two and one-half (2.5) years

SVPs and EVPs

 

One and one-half (1.5) years

VPs and Hospital CEOs

 

One (1) year

 

Such Severance Pay will be paid on a bi-weekly basis commencing as of the date
of the Qualifying Termination pursuant to the Employer’s ordinary payroll
schedule for the duration of the Severance Period, subject to the six (6) month
delay applicable to Key Employees described in Section 3.3 (i.e., the payment of
Severance Pay in excess of the 409A Exempt Amount that would otherwise be
payable to a Key Employee during the six (6) month period following the
Qualifying Termination will be delayed).  All distributions from the ESP will be
taxable as ordinary income when received and subject to appropriate withholding
of income taxes and reported on Form W-2.  Except as otherwise provided herein,
a Covered Executive who incurs a Qualifying Termination will have formally
terminated his employment relationship with the Employer as of the date of such
Qualifying Termination and will not be deemed to be an Employee at any time
during the Severance Period or thereafter.

 

(b)           Other Accrued Obligations.  The Covered Executive will be entitled
to payment of all accrued Base Salary, accrued time off and any other accrued
and unpaid obligations as of the date of the Qualifying Termination.  Such
accrued obligations will be included and paid as part of the Covered Executive’s
final paycheck from the Employer.

 

(c)           Bonus.  The Covered Executive will be entitled to payment of the
Bonus earned in accordance with the terms of the AIP as acted on by the
Compensation Committee during the calendar year of the Qualifying Termination. 
Such Bonus will be pro rated as a fraction of twelve (12) for full months worked
by the Covered Executive for the Employer or an Affiliate during such calendar
year and will be paid to the Covered Executive, at the time and in the same
manner specified in the AIP.

 

(d)           Continued Welfare Benefits.  During the Severance Period, the
Covered Executive and his dependents will be entitled to continue to participate
in any medical, dental, vision, life and long-term care benefit programs
maintained by the Employer in which such persons were participating immediately
prior to the date of the Qualifying Termination; provided, that the continued
participation of

 

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such persons is possible under the general terms and provisions of such benefit
programs.  If such continued participation is barred, then the Employer will
arrange to provide such persons with substantially similar coverage to that
which such persons would have otherwise been entitled to receive under such
benefit programs from which such continued participation is barred.  In either
case, however, the Covered Executive will be required to continue to pay, on a
pre-tax or after-tax basis, as applicable, his portion of the cost of such
coverages as in effect at the time of the Qualifying Termination, and the
Employer will continue to pay its portion of such costs, as in effect at the
time of the Qualifying Termination.  Any coverage provided pursuant to this
Section 3.1(d) will be limited and reduced to the extent equivalent coverage is
otherwise provided by (or available from or under) any other employer of the
Covered Executive.  The Covered Executive must advise the Plan Administrator of
the attainment of any such subsequent employer benefit coverages within thirty
(30) days following such attainment.

 

The pre-tax or after-tax payroll deductions for the continued medical, dental,
vision life and long-term care benefits described above will be taken from the
Covered Executive’s Severance Pay pursuant to the Employer’s normal payroll
practices; provided, however, that if any of such coverages are provided on a
self-insured basis, the Covered Executive will be required to pay his portion of
the cost of such coverages on an after-tax basis and the remainder of such cost
will be included in the Covered Executive’s income and reported as wages on Form
W-2.  Any continued medical, dental or vision benefits provided to the Covered
Executive and his dependents pursuant to this Section 3.1(d) is in addition to
any rights the Covered Executive and such dependents may have to continue such
coverages under COBRA.  The provisions of this Section 3.1(d) will not prohibit
the Company from changing the terms of such medical, dental, life vision or
long-term care benefit programs provided that any such changes apply to all
executives of the Company and its Affiliates (e.g., the Company may switch
insurance carriers or preferred provider organizations.

 

(e)           Outplacement Services.  The Covered Executive will be entitled to
reimbursement of any expenses reasonably incurred by him for outplacement
services in an amount equal to the lesser of ten percent (10%) of his Base
Salary or twenty-five thousand dollars ($25,000).  In order to comply with the
exemption applicable to post-separation reimbursement plans under section 409A
of the Code: (i) the reimbursement of such expenses for outplacement services
only will be permitted with respect to expenses that are incurred during the
shorter of the Severance Period or the Reimbursement Period and (ii) any
reimbursement of such expenses that are incurred during a particular taxable
year of the Covered Executive must be made by the last day of the Covered
Executive’s immediately following taxable year.

 

(f)            Payment of Legal Expenses.  The Covered Executive will be
entitled to reimbursement of any legal expenses reasonably incurred by him in
order to obtain benefits under the ESP; provided, that, the payment of such
expenses is subject to an arms-length, bona fide dispute as to the Covered
Executive’s right to such benefits.  In order to comply with the exemption
applicable to post-separation reimbursement plans under section 409A of the
Code, in the event such legal expenses are otherwise deductible under section
162 or 167 of the

 

17

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Code (without regard to any limitation on the Covered Executive’s adjusted gross
income): (i) the reimbursement of such legal expenses only will be permitted
with respect to expenses that are incurred during the shorter of the Severance
Period or the Reimbursement Period; and (ii) any reimbursement of such legal
expenses that are incurred during a particular taxable year of the Covered
Executive must be made by the last day of the Covered Executive’s immediately
following taxable year.  In the event that the legal expenses are not otherwise
deductible under section 162 or 167 or the Code (without regard to any
limitation on the Covered Executive’s adjusted gross income), then in order to
comply with the expense reimbursement provisions of section 409A of the Code,
the reimbursement of such expenses will be made pursuant to the terms of Section
3.1(f)(i) and Section 3.1(f)(ii) above; provided, that the amount of legal
expenses reimbursed or eligible for reimbursement during a taxable year of the
Covered Executive that occurs during the Severance Period or Reimbursement
Period will not affect the legal expenses that are eligible for reimbursement in
any other taxable year of the Covered Executive that occurs during the Severance
Period or Reimbursement Period and that such legal expense reimbursement amounts
will be subject to the six (6) month delay (when applicable) for distributions
in excess of the 409A Exempt Amount as set forth in Section 3.3.

 

(g)           Equity Compensation Adjustments.  Except as provided otherwise in
the Covered Executive’s ESP Agreement, upon a Qualifying Termination, any
equity-based compensation awards granted to the Covered Executive by the
Employer under the SIP or an Equity Plan prior to such termination that are
outstanding and vested as of the date of the Qualifying Termination will be
exercisable or settled pursuant to the terms of the SIP or the Equity Plan, as
applicable.  All unvested equity-based compensation awards held by the Covered
Executive as of the date of the Qualifying Termination will expire and be of no
effect, except to the extent that the terms of such awards provide for continued
vesting and/or acceleration.  With respect to performance cash awards, upon a
Qualifying Termination, a Covered Executive will be entitled to “banked” amounts
for past plan years and a pro-rated amount for performance in the year in which
the Qualifying Termination occurs, in accordance with the terms of such awards. 
No Covered Executive will be entitled to any new equity-based compensation
awards following the date of his Qualifying Termination or during the Severance
Period.

 

(h)           SERP.  A Covered Executive who is also a participant in the SERP
and became such a participant before August 3, 2011 will be entitled to age and
service credit for the duration of the Severance Period under the SERP.  A
Covered Executive who is also a participant in the SERP but became such a
participant on or after August 3, 2011 will not be entitled to age and service
credit for the duration of the Severance Period under the SERP.  Benefits under
the SERP will be payable to the Covered Executive pursuant to the terms of the
SERP; provided, however, that if the Covered Executive is entitled to commence
SERP benefits during the Severance Period pursuant to the terms of the SERP; the
amount of Severance Pay payable to Executive pursuant to the ESP will be offset
(i.e., reduced) by the amount of the SERP benefits payable during the Severance
Period.  With respect to a Covered Executive who became a SERP participant
before August 3, 2011, for purposes of determining the amount of the Covered
Executive’s SERP benefits, any actuarial reduction that would otherwise apply
under the

 

18

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SERP due to the commencement of SERP benefits during the Severance Period will
be disregarded (i.e., the SERP benefits will only be actuarially reduced for
early commencement beginning with the last day of the Severance Period). 
Further, while the age credit will accrue throughout the course of the Severance
Period, at the end of the Severance Period, the Covered Executive’s SERP
benefits will be recalculated to take into account the additional service credit
provided under the ESP during the Severance Period.  With respect to a Covered
Executive who became a SERP participant on or after August 3, 2011, for purposes
of determining the amount of the Covered Executive’s SERP benefits, the
actuarial reduction will be determined under the terms of the SERP as of the
date of the Covered Executive’s Qualifying Termination.  A Covered Executive’s
Severance Pay will not be considered in calculating the Covered Executive’s
“Final Average Earnings” under the SERP.  Notwithstanding the foregoing, in no
event will any provision in this Section 3.1(h) be construed to permit the
distribution of any SERP benefits during the six (6) month restriction period,
as described in the SERP, which follows a Key Employee’s Qualifying Termination.

 

(i)                                     DCP.  The Covered Executive will incur a
termination of employment for purposes of the DCP at the time of a Qualifying
Termination and accordingly will not be entitled to defer any portion of his
Severance Pay to the DCP during the Severance Period.  The Covered Executive’s
DCP benefits will be paid to him pursuant to the terms of the DCP and the
Covered Executive’s distribution election under the DCP in a manner that
complies with section 409A of the Code.

 

(j)                                    401(k).  The Covered Executive will incur
a severance from employment for purposes of the 401(k) Plan on the date of the
Qualifying Termination and accordingly will not be entitled to defer any portion
of his Severance Pay to the 401(k) Plan during the Severance Period.  The
Covered Executive’s 401(k) Plan benefits will be payable to him under the 401(k)
Plan pursuant to the terms of the 401(k) Plan.

 

3.2                               Severance Benefits on and after a Change of
Control.  Except as provided otherwise in a Covered Executive’s ESP Agreement, a
Covered Executive who incurs a Qualifying Termination during the Protection
Period with respect to a Change of Control will, subject to the limitations
contained in the ESP, receive the severance benefits described in Section 3.1,
(provided, however, that a Covered Executive will only receive the additional
age and service credit as set forth in Section 3.1(h) herein in accordance with
the terms and provisions of the SERP), plus the additional severance benefits,
if any, provided in this Section 3.2.  Further, within five (5) business days
following the occurrence of a Change of Control, the Company must contribute to
a domestic rabbi trust an amount sufficient to fully fund the severance benefits
accrued as of the date of the Change of Control pursuant to this Section 3.2. 
Such funding obligation will continue for each calendar quarter during the
twenty-four (24) month period following such Change of Control, with such
funding to be made within five (5) business days following the end of each such
calendar quarter.

 

(a)                                 Severance Period.  The Severance Period set
forth below will apply to a Covered Executive who incurs a Qualifying
Termination at any time during the Protection Period with respect a Change of
Control described in Section 2.1(g)(i), Section 2.1(g)(ii) or Section
2.1(g)(iii) or during that portion of the Protection Period that occurs on or
after a Change of Control described in Section 2.1(g)(iv):

 

19

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COVERED EXECUTIVE

 

SEVERANCE PERIOD

CEO

 

Three (3) years

COO and CFO

 

Three (3) years

SVPs and EVPs

 

Two (2) years

VPs and Hospital CEOs

 

One and one-half (1.5) years

 

The Severance Period specified in Section 3.1(a) will apply to a Covered
Executive who incurs a Qualifying Termination during that portion of the
Protection Period that precedes a Change of Control described in Section
2.1(g)(iv).

 

(b)                                 Payment of Severance Pay.  In the event that
a Covered Executive’s Qualifying Termination occurs during the portion of the
Protection Period that precedes any Change of Control described in Section
2.1(g)(i), Section 2.1(g)(ii) or Section 2.1(g)(iii), the Covered Executive will
receive Severance Pay that will be paid on a bi-weekly basis commencing on the
date of the Qualifying Termination pursuant to the Employer’s ordinary payroll
schedule for the duration of the Severance Period specified in Section 3.2
subject to the six (6) month delay applicable to Key Employees described in
Section 3.3 (i.e., the payment of Severance Pay in excess of the 409A Exempt
Amount that would otherwise be payable to a Key Employee during the six (6)
month period following the Qualifying Termination will be delayed).  To the
extent that such Change of Control is described in Section 2.1(g)(iv), such
Severance Pay in excess of the 409A Exempt Amount will be paid on a bi-weekly
basis commencing on the date of the Qualifying Termination pursuant to the
Employer’s ordinary payroll schedule for the duration of the Severance Period
specified in Section 3.1(a) subject to the six (6) month delay applicable to Key
Employees described in Section 3.3 (i.e., the payment of Severance Pay in excess
of the 409A Exempt Amount that would otherwise be payable to a Key Employee
during the six (6) month period following the Qualifying Termination will be
delayed).

 

In the event that a Covered Executive’s Qualifying Termination occurs during the
portion of the Protection Period that occurs on or after a Change of Control
described in Section 2.1(g)(i), Section 2.1(g)(ii) or Section 2.1(g)(iii), the
Covered Executive will receive, subject to the six (6) month delay for
distributions in excess of the 409A Exempt Amount as set forth in Section 3.3, a
lump sum payment of Severance Pay, in the amount determined pursuant to Section
3.2(a), within ninety (90) days following such Qualifying Termination.  To the
extent that such Change of Control is described in Section 2.1(g)(iv), such
Severance Pay in excess of the 409A Exempt Amount will be paid on a bi-weekly
basis commencing on the date of the Qualifying Termination pursuant to the
Employer’s ordinary payroll schedule for the duration of the Severance Period
specified in Section 3.2(a) (as noted in Section 3.1(a)) subject to the six (6)
month delay applicable to Key Employees described in Section 3.3 (i.e., the
payment of Severance Pay in excess of the 409A Exempt Amount that would
otherwise be payable to a Key Employee during the six (6) month period following
the Qualifying Termination will be delayed).

 

The payment provisions of this Section 3.2(b) are summarized below:

 

20

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CHANGE OF CONTROL
EVENT

 

QUALIFYING TERMINATION
DURING PROTECTION PERIOD
OCCURRING BEFORE CHANGE
OF CONTROL

 

QUALIFYING TERMINATION
DURING PROTECTION PERIOD
OCCURRING ON AND AFTER A
CHANGE OF CONTROL

Section 2.1(g)(i) - change in stock ownership

 

·        Bi-weekly payment of Severance Pay specified in Section 3.2(a) over
Severance Period set forth in Section 3.2(a)

·        Amounts in excess of 409A Exempt Amount subject to six (6) month delay

 

·        Lump sum payment of 409A Exempt Amount

·        Remainder of Severance Pay specified in Section 3.2(a) paid in Lump sum
subject to six (6) month delay

Section 2.1(g)(ii) - change in effective control

 

·        Bi-weekly payment of Severance Pay specified in Section 3.2(a) over
Severance Period set forth in Section 3.2(a)

·        Amounts in excess of 409A Exempt Amount subject to six (6) month delay

 

·        Lump sum payment of 409A Exempt Amount

·        Remainder of Severance Pay specified in Section 3.2(a) paid in Lump sum
subject to six (6) month delay

Section 2.1(g)(iii) - sale of assets

 

·        Bi-weekly payment of Severance Pay specified in Section 3.2(a) over
Severance Period set forth in Section 3.2(a)

·        Amounts in excess of 409A Exempt Amount subject to six (6) month delay

 

·        Lump sum payment of 409A Exempt Amount

·        Remainder of Severance Pay specified in Section 3.2(a) paid in Lump sum
subject to six (6) month delay

Section 2.1(g)(iv) - liquidation or dissolution

 

·        Bi-weekly payment of Severance Pay specified in Section 3.1(a) (as
noted in Section 3.2(a)) over Severance Period set forth in Section 3.1(a) (as
noted in Section 3.2(a))

·        Amounts in excess of 409A Exempt Amount subject to six (6) month delay

 

·        Lump sum payment of 409A Exempt Amount

·        Remainder of Severance Pay specified in Section 3.2(a) paid bi-weekly
over Severance Period set forth in Section 3.2(a) subject to six (6) month delay

 

(c)                                  Equity Compensation Adjustments.

 

(i)                                     Except as provided otherwise in the
Covered Executive’s ESP Agreement, in the event of a Change of Control, if the
successor to the Company does not assume the SIP or the applicable Equity Plan
or grant comparable awards in substitution of the outstanding awards under the
SIP or applicable Equity Plan as of the date of the Change of Control, then any
equity-based compensation awards granted to the Covered Executive by the
Employer under the SIP or Equity Plan and outstanding as of the date of the
Change of Control will become immediately fully vested and/or exercisable and
will no longer be subject to a substantial risk of forfeiture or restrictions on
transferability, other than those imposed by applicable legislative or
regulatory requirements.  With

 

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respect to performance cash awards, however, in the event the successor to the
Company does not assume the awards, the awards will become payable at earned
levels for completed plan years and at target performance levels for the year in
which the Change of Control occurs and future plan years, as applicable, payable
in accordance with the terms of such awards, and if not addressed in an award
agreement, then payable on the date of the Change of Control.

 

(ii)  Except as provided otherwise in the Covered Executive’s ESP Agreement, if
the successor to the Company assumes the SIP or the applicable Equity Plan or
substitutes the awards under the SIP or applicable Equity Plan with comparable
awards; then any equity-based compensation awards granted to the Covered
Executive by the Employer under the SIP or Equity Plan prior to such termination
and outstanding as of the date of the Change of Control or any substituted
awards given with respect to such outstanding awards will continue to be
maintained pursuant to their terms; provided, however, that upon a Covered
Executive’s Qualifying Termination during the Protection Period in connection
with such Change of Control, any such equity compensation awards outstanding as
of the date of the Qualifying Termination will become immediately vested and/or
exercisable, in accordance with the terms of such awards, except as set forth
below in this paragraph, on the date of the Qualifying Termination or, if the
Qualifying Termination occurs during the portion of the Protection Period that
precedes the Change of Control, then on the date of the Change of Control, and
will no longer be subject to a substantial risk of forfeiture or restrictions on
transferability, other than those imposed by applicable legislative or
regulatory requirements. With respect to performance cash awards, however, upon
a Qualifying Termination during the Protection Period in connection with such
Change of Control, a Covered Executive will be paid earned amounts for completed
plan years and target amounts for the year in which the Qualifying Termination
occurs and future plan years, as applicable, payable on the scheduled payment
date.  Furthermore, with respect to performance-based restricted stock units and
performance options, upon a Qualifying Termination during the Protection Period
in connection with such Change of Control, accelerated vesting is only provided
to the extent that the applicable performance criteria are achieved (with pro
rata vesting based on service during the performance period if the termination
occurs during the performance period).  No Covered Executive will be entitled to
any new equity-based compensation awards following the date of his Qualifying
Termination or during the Severance Period.

 

(d)                                 Parachute Limitation.

 

(1) If at any time or from time to time, it shall be determined by an
independent nationally known financial accounting or law firm experienced in
such matters selected by the Company (“Tax Professional”) that any payment or
other benefit to the Covered Executive pursuant to the ESP or otherwise
(“Potential Parachute Payment”) is or will, but for the provisions of this
Section 3.2(d), become subject to the excise tax imposed by Section 4999 of the
Code or any similar tax payable under any state, local, foreign or other law,
but expressly excluding any income taxes and penalties or interest imposed
pursuant to Section 409A of the Code (“Excise Taxes”), then the Covered
Executive’s Potential Parachute Payment shall be either (a) provided to the
Covered Executive in full, or (b) provided to the

 

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Covered Executive as to such lesser extent which would result in no portion of
such benefits being subject to the Excise Taxes, whichever of the foregoing
amounts, when taking into account applicable federal, state, local and foreign
income and employment taxes, the Excise Tax, and any other applicable taxes,
results in the receipt by the Covered Executive, on an after-tax basis, of the
greatest amount of benefits, notwithstanding that all or some portion of such
benefits may be taxable under the Excise Taxes (“Payments”).

 

(2) In the event of a reduction of benefits pursuant to Section 3.2(d)(1), the
Tax Professional shall determine which benefits shall be reduced so as to
achieve the principle set forth in Section 3.2(d)(1).  For purposes of making
the calculations required by Section 3.2(d)(1), the Tax Professional may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of the
Code and other applicable legal authority.  The Company and the Covered
Executive shall furnish to the Tax Professional such information and documents
as the Tax Professional may reasonably request in order to make a determination
under Section 3.2(d)(1).  The Company shall bear all costs the Tax Professional
may reasonably incur in connection with any calculations contemplated by Section
3.2(d)(1).

 

(3) If, notwithstanding any calculations performed or reduction in benefits
imposed as described in Section 3.2(d)(1), the IRS determines that the Covered
Executive is liable for Excise Taxes as a result of the receipt of any payments
made pursuant to this ESP or otherwise, then the Covered Executive shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS
determination or in the event that the Covered Executive challenges the final
IRS determination, a final judicial determination, a portion of the Payments
equal to the “Repayment Amount.”  The Repayment Amount shall be the smallest
such amount, if any, as shall be required to be paid to the Company so that the
Covered Executive’s net after-tax proceeds with respect to the Payments (after
taking into account the payment of the Excise Taxes and all other applicable
taxes imposed on such benefits) shall be maximized.  The Repayment Amount shall
be zero if a Repayment Amount of more than zero would not result in the Covered
Executive’s net after-tax proceeds with respect to the Payments being
maximized.  If the Excise Taxes are not eliminated pursuant to this Section
3.2(d)(3), the Covered Executive shall pay the Excise Taxes.

 

(4) Notwithstanding any other provision of this Section 3.2(d), if (i) there is
a reduction in the payments to a Covered Executive as described above in this
Section 3.2(d), (ii) the IRS later determines that the Covered Executive is
liable for Excise Taxes, the payment of which would result in the maximization
of the Covered Executive’s net after-tax proceeds (calculated based on the full
amount of the Potential Parachute Payment and as if the Covered Executive’s
benefits had not previously been reduced), and (iii) the Covered Executive pays
the Excise Tax, then the Company shall pay to the Covered Executive those
payments which were reduced pursuant to Section 3.2(d)(1) or 3.2(d)(3) as soon
as administratively possible after the Covered Executive pays the Excise Taxes
to the extent that the Covered Executive’s net after-tax proceeds with respect
to the payment of the Payments are maximized.

 

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(e)                                  Non-Compete.  At the discretion of the
Employer, a Covered Executive will be entitled to enter into a non-compete
agreement whereby the Covered Executive will be precluded from competing with
the Employer following a Qualifying Termination that occurs during the Severance
Period described in Section 3.2(a) or such other period as may be set forth in a
written agreement in consideration for a cash payment in an amount as determined
at the discretion of the Employer.  Such non-compete will be evidenced by a
written agreement signed by the Employer and the Covered Executive.  In the
event that a Covered Executive enters into a non-compete agreement as described
in this Section 3.2(e) and any provisions therein conflict with any of the
provisions as set forth in this ESP, the provisions of the non-compete agreement
will control.

 

3.3                               Termination Distributions to Key Employees.  A
portion of the distributions under the ESP that are payable to a Covered
Executive who is a Key Employee on account of a Qualifying Termination will be
delayed for a period of six (6) months following such Covered Executive’s
Qualifying Termination to the extent such distributions under the ESP exceed the
409A Exempt Amount.  Upon the expiration of such six (6) month period, amounts
that would have been paid to the Covered Executive during such six (6) month
period, will be paid to him on the first business day following the close of
such period in the form of a lump sum payment and the remaining amounts payable
to the Covered Executive under the ESP will be paid with respect to the
remainder of the Severance Period pursuant to the terms of this Article III
(e.g., Severance Pay will be paid on a bi-weekly basis for the remainder of the
Severance Period in the case of (i) Severance Pay that is not payable on account
of a Change in Control, (ii) Severance Pay that is payable on account of a
Qualifying Termination during the portion of the Protection Period that precedes
a Change in Control described in Section 2(g), and (iii) Severance Pay that is
payable on account of a Qualifying Termination during the portion of the
Protection Period that occurs on and after a Change of Control described in
Section 2.1(g)(iv)).  This six (6) month restriction will not apply, or will
cease to apply, with respect to distributions by reason of the death of the
Covered Executive pursuant to Section 3.4.

 

3.4                               Distributions on Account of Death of the
Covered Executive During the Severance Period.  Except as provided otherwise in
the Covered Executive’s ESP Agreement, if a Covered Executive dies during the
Severance Period specified in Section 3.1(a) or Section 3.2(a), the following
benefits will be payable:

 

(a)                                 Severance Pay.  Any remaining Severance Pay
payable to the Covered Executive as of the date of his death will continue to be
paid to the Covered Executive’s estate pursuant to Section 3.1(a) or 3.2(a), as
applicable.

 

(b)                                 Other Accrued Obligations.  Any unpaid Base
Salary, time off and any other accrued and unpaid obligations that remain
outstanding as of the date of the Covered Executive’s death will be paid to the
Covered Executive’s estate pursuant to Section 3.1(b).

 

(c)                                  Bonus.  Any unpaid Bonus described under
Section 3.1(c) that remains outstanding as of the date of the Covered
Executive’s death will be paid to his estate pursuant to Section 3.1(c).

 

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(d)                                 Continued Welfare Benefits.  The Covered
Executive’s dependents will be entitled to continue to participate in any
medical, dental, vision, life and long-term care benefit programs maintained by
the Employer in which such persons were participating immediately prior to the
date of the Covered Executive’s death for the remainder of the Severance Period,
subject to the provisions of Section 3.1(d).  At the end of the Severance Period
such dependents will be eligible to elect to continue their medical, dental or
vision coverage pursuant to COBRA.

 

(e)                                  Outplacement Services.  Any outplacement
service benefits payable to the Covered Executive pursuant to Section 3.1(e)
will cease as of the date of the Covered Executive’s death; provided, that any
eligible outplacement expenses incurred prior to the Covered Executive’s death
will be reimbursable to the Covered Executive’s estate pursuant to Section
3.1(e).

 

(f)                                   Payment of Legal Expenses.  The obligation
to reimburse the Covered Executive for any legal fees will continue pursuant to
the terms of the ESP following his death, except that such legal fees or excise
tax reimbursement will be payable to the Covered Executive’s estate.

 

(g)                                  Equity Compensation Adjustments.  Any
outstanding equity-based compensation awards granted to the Covered Executive
that are outstanding as of the date of his death will be exercisable or settled
pursuant to the terms of the SIP or the Equity Plan, as applicable.

 

3.5                               Section 409A Gross-Up Payment.  In the event
that a Covered Executive (or his estate) pays the excise taxes and any other
interest and penalty payments (as applicable) pursuant to section 409A of the
Code (“409A Excise Tax”) with respect to the benefits payable under the ESP, the
Covered Executive (or his estate) will be entitled to a reimbursement equal to
the amount of any 409A Excise Tax paid by the Covered Executive (or his estate)
pursuant to section 409A of the Code.  The Company will provide a reimbursement
to the Covered Executive with respect to any payment of the 409A Excise Tax (or
portion thereof) no later than the close of the Covered Executive’s taxable year
that immediately follows the taxable year in which such payment is made.  If the
Covered Executive is a Key Employee, payment of the amounts described in this
Section 3.5 will be subject to a six (6) month delay (when applicable) for
distributions in excess of the 409A Exempt Amount as provided in Section 3.3.

 

3.6                               Alternate Plan Terms.  Subject to the
requirements of section 409A of the Code, the Compensation Committee reserves
the right to modify the terms of this ESP with respect to any Covered Executive
(e.g., to provide different benefits than those set forth herein).  Such
modified terms will be set forth in the Covered Executive’s ESP Agreement or in
such other form as may be determined by the Compensation Committee, in its sole
and absolute discretion.

 

3.7                               Conditions to Payment of Severance Benefits. 
As a condition of obtaining benefits under the ESP, the Covered Executive will
be required to execute a Severance Agreement and General Release.  Such
Severance Agreement and General Release will contain the restrictive covenants
set forth below regarding non-competition, confidentiality, non-disparagement
and non-solicitation as well as a general release of claims against the Company
and its Affiliates.

 

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(a)                                 Non-Competition.  Payment of any and all
severance benefits provided under the ESP will cease if, at any time during the
Severance Period described in Section 3.1(a), the Covered Executive directly or
indirectly, carries on or conducts, in competition with the Company and its
Affiliates, any business of the nature in which the Company or its Affiliates
are then engaged in any geographical area in which the Company or its Affiliates
engage in business at the time of the Covered Executive’s Qualifying Termination
or in which any of them, prior to such Qualifying Termination, evidenced in
writing, at any time during the six (6) month period prior to such termination,
an intention to engage in such business.  This prohibition extends to the
Covered Executive’s conducting or engaging in any such business either as an
individual on his own account or as a partner or joint venturer or as an
executive, agent, consultant or salesman for any other person or entity, or as
an officer or director of a corporation or as a shareholder in a corporation of
which he will then own ten percent (10%) or more of any class of stock.  The
provisions of this Section 3.7(a) will not apply during the Severance Period
described in Section 3.2(a).

 

(b)                                 Confidential Information.  Payment of any
and all severance benefits will cease if, at any time during the Severance
Period described in either Section 3.1(a) of 3.2(a), the Covered Executive
directly or indirectly reveals, divulges or makes known to any person or entity,
or uses for the Covered Executive’s personal benefit (including without
limitation for the purpose of soliciting business, whether or not competitive
with any business of the Company or any of its Affiliates), any information
acquired during the Covered Executive’s employment with the Company or its
Affiliates with regard to the financial, business or other affairs of the
Company or any of its Affiliates (including without limitation any list or
record of persons or entities with which the Company or any of its Affiliates
has any dealings), other than:

 

(i)                                     information already in the public
domain,

 

(ii)                                  information of a type not considered
confidential by persons engaged in the same business or a business similar to
that conducted by the Company or its Affiliates, or

 

(iii)                               information that the Covered Executive is
required to disclose under the following circumstances:

 

(A)                               at the express direction of any authorized
governmental entity;

 

(B)                               pursuant to a subpoena or other court process;

 

(C)                               as otherwise required by law or the rules,
regulations, or orders of any applicable regulatory body; or

 

(D)                               as otherwise necessary, in the opinion of
counsel for the Covered Executive, to be disclosed by the Covered Executive in
connection with any legal action or proceeding involving the Covered Executive
and the Company or any Affiliate in his capacity as an employee, officer,
director, or stockholder of the Company or any Affiliate.

 

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Executive will, at any time requested by the Company (either during his
employment with the Company and its Affiliates or during the Severance Period),
promptly deliver to the Company all memoranda, notes, reports, lists and other
documents (and all copies thereof) relating to the business of the Company or
any of its Affiliates which he may then possess or have under his control.

 

(c)                                  Agreement Not To Solicit Employees. 
Payment of any and all severance benefits will cease if, at any time during the
Severance Period described in either Section 3.1(a) of 3.2(a), the Covered
Executive directly or indirectly solicits or induces, or in any manner attempts
to solicit or induce, any person employed by, or any agent of, the Company or
any of its Affiliates to terminate such employee’s employment or agency, as the
case may be, with the Company or any Affiliate.

 

(d)                                 Nondisparagement.  Payment of any and all
severance benefits will cease if, at any time during the Severance Period
described in either Section 3.1(a) of 3.2(a), the Covered Executive disparages
the Company or its Affiliates and their respective boards of directors or other
governing body, executives, employees and products or services.  The Company
will not disparage the Covered Executive during the Covered Executive’s period
of employment with the Company and its Affiliates or thereafter.  For purposes
of this Section 3.7(d), disparagement does not include:

 

(i)                                     compliance with legal process or
subpoenas to the extent only truthful statements are rendered in such compliance
attempt,

 

(ii)                                  statements in response to an inquiry from
a court or regulatory body, or

 

(iii)                               statements or comments in rebuttal of media
stories or alleged media stories.

 

(e)                                  409A Compliance.  If any payment made under
the ESP (1) is subject to the execution of an effective release of claims, (2)
“provides for the deferral of compensation” within the meaning of section 409A
of the Code and is not otherwise exempt from the application of section 409A of
the Code, and (3) could be made in either one of two consecutive taxable years
on account of the requirement of the execution of an effective release of
claims, then such payment shall be made in the later taxable year.

 

The violation of this Section 3.7 by Covered Executive will entitle the Company
to complete relief from such violation including, but not limited to, injunctive
relief and damages as determined by an arbitrator, the cessation of severance
benefits and a return of all severance benefits paid to the Covered Executive
pursuant to the terms of the ESP.  Such relief will apply regardless of whether
such violation is discovered after the expiration of the Severance Period.  The
violation of Section 3.7(d) by the Company will entitle the Covered Executive to
complete relief from such violation including, but not limited to, injunctive
relief and damages as determined by an arbitrator.

 

End of Article III

 

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ARTICLE IV
ADMINISTRATION

 

4.1                               The PAC.  The overall administration of the
ESP will be the responsibility of the PAC.

 

4.2                               Powers of PAC.  The PAC will have sole and
absolute discretion regarding the exercise of its powers and duties under the
ESP.  In order to effectuate the purposes of the ESP, the PAC will have the
following powers and duties:

 

(a)                                 To appoint the Plan Administrator;

 

(b)                                 To review and render decisions respecting a
denial of a claim for benefits under the ESP;

 

(c)                                  To construe the ESP and to make equitable
adjustments for any mistakes or errors made in the administration of the ESP;
and

 

(d)                                 To determine and resolve, in its sole and
absolute discretion, all questions relating to the administration of the ESP and
any trust established to secure the assets of the ESP:

 

(i)                                     when differences of opinion arise
between the Company, an Affiliate, the Plan Administrator, the trustee, a
Covered Executive, or any of them, and

 

(ii)                                  whenever it is deemed advisable to
determine such questions in order to promote the uniform and nondiscriminatory
administration of the ESP for the greatest benefit of all parties concerned.

 

The foregoing list of express powers is not intended to be either complete or
conclusive, and the PAC will, in addition, have such powers as it may reasonably
determine to be necessary or appropriate in the performance of its powers and
duties under the ESP.

 

4.3                               Appointment of Plan Administrator.  The PAC
will appoint the Plan Administrator, who will have the responsibility and duty
to administer the ESP on a daily basis.  The PAC may remove the Plan
Administrator with or without cause at any time.  The Plan Administrator may
resign upon written notice to the PAC.

 

4.4                               Duties of Plan Administrator.  The Plan
Administrator will have sole and absolute discretion regarding the exercise of
its powers and duties under the ESP.  The Plan Administrator will have the
following powers and duties:

 

(a)                                 To enter into, on behalf of the Employer, an
ESP Agreement with an Employee who is deemed a Covered Executive pursuant to
Section 2.1(l);

 

(b)                                 To direct the administration of the ESP in
accordance with the provisions herein set forth;

 

(c)                                  To adopt rules of procedure and regulations
necessary for the administration of the ESP, provided such rules are not in
consistent with the terms of the ESP;

 

(d)                                 To determine all questions with regard to
rights of Covered Executives and Beneficiaries under the ESP including, but not
limited to, questions involving

 

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eligibility of an Employee to participate in the ESP and the amount of a Covered
Executive’s benefits;

 

(e)                                  to make all final determinations and
computations concerning the benefits to which the Covered Executive or his
estate is entitled under the ESP;

 

(f)                                   To enforce the terms of the ESP and any
rules and regulations adopted by the PAC;

 

(g)                                  To review and render decisions respecting a
claim for a benefit under the ESP;

 

(h)                                 To furnish the Employer with information
that the Employer may require for tax or other purposes;

 

(i)                                     To engage the service of counsel (who
may, if appropriate, be counsel for the Employer), actuaries, and agents whom it
may deem advisable to assist it with the performance of its duties;

 

(j)                                    To prescribe procedures to be followed by
Covered Executives in obtaining benefits;

 

(k)                                 To receive from the Employer and from
Covered Executives such information as is necessary for the proper
administration of the ESP;

 

(l)                                     To create and maintain such records and
forms as are required for the efficient administration of the ESP;

 

(m)                             To make all initial determinations and
computations concerning the benefits to which any Covered Executive is entitled
under the ESP;

 

(n)                                 To give the trustee of any trust established
to serve as a source of funds under the ESP specific directions in writing with
respect to:

 

(i)                                     making distribution payments, giving the
names of the payees, specifying the amounts to be paid and the time or times
when payments will be made; and

 

(ii)                                  making any other payments which the
trustee is not by the terms of the trust agreement authorized to make without a
direction in writing by the Plan Administrator;

 

(o)                                 To comply with all applicable lawful
reporting and disclosure requirements of ERISA;

 

(p)                                 To comply (or transfer responsibility for
compliance to the trustee) with all applicable federal income tax withholding
requirements for benefit distributions; and

 

(q)                                 To construe the ESP, in its sole and
absolute discretion, and make equitable adjustments for any errors made in the
administration of the ESP.

 

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The foregoing list of express duties is not intended to be either complete or
conclusive, and the Plan Administrator will, in addition, exercise such other
powers and perform such other duties as it may deem necessary, desirable,
advisable or proper for the supervision and administration of the ESP.

 

4.5                               Indemnification of PAC and Plan
Administrator.  To the extent not covered by insurance, or if there is a failure
to provide full insurance coverage for any reason, and to the extent permissible
under corporate by-laws and other applicable laws and regulations, the Employer
agrees to hold harmless and indemnify the PAC and Plan Administrator against any
and all claims and causes of action by or on behalf of any and all parties
whomsoever, and all losses therefrom, including, without limitation, costs of
defense and reasonable attorneys’ fees, based upon or arising out of any act or
omission relating to or in connection with the ESP other than losses resulting
from the PAC’s, or any such person’s commission of fraud or willful misconduct.

 

4.6                               Claims for Benefits.

 

(a)                                 Initial Claim.  In the event that a Covered
Executive or his estate claims (a “claimant”) to be eligible for benefits, or
claims any rights under the ESP or seeks to challenge the validity or terms of
the Severance Agreement and General Release described in Section 3.5, such
claimant must complete and submit such claim forms and supporting documentation
as will be required by the Plan Administrator, in its sole and absolute
discretion.  Likewise, any claimant who feels unfairly treated as a result of
the administration of the ESP must file a written claim, setting forth the basis
of the claim, with the Plan Administrator.  In connection with the determination
of a claim, or in connection with review of a denied claim, the claimant may
examine the ESP, and any other pertinent documents generally available to
Covered Executives that are specifically related to the claim.

 

A written notice of the disposition of any such claim will be furnished to the
claimant within ninety (90) days after the claim is filed with the Plan
Administrator.  Such notice will refer, if appropriate, to pertinent provisions
of the ESP, will set forth in writing the reasons for denial of the claim if a
claim is denied (including references to any pertinent provisions of the ESP)
and, where appropriate, will describe any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary.  If the claim is denied, in whole or in
part, the claimant will also be notified of the ESP’s claim review procedure and
the time limits applicable to such procedure, including the claimant’s right to
arbitration following an adverse benefit determination on review as provided
below.  All benefits provided in the ESP as a result of the disposition of a
claim will be paid as soon as practicable following receipt of proof of
entitlement, if requested.

 

(b)                                 Request for Review.  Within ninety (90) days
after receiving written notice of the Plan Administrator’s disposition of the
claim, the claimant may file with the PAC a written request for review of his
claim.  In connection with the request for review, the claimant will be entitled
to be represented by counsel and will be given, upon request and free of charge,
reasonable access to all pertinent documents for the preparation of his claim. 
If the claimant does not file a written request for review within ninety (90)
days after receiving written notice of the Plan Administrator’s

 

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disposition of the claim, the claimant will be deemed to have accepted the Plan
Administrator’s written disposition, unless the claimant was physically or
mentally incapacitated so as to be unable to request review within the ninety
(90) day period.

 

(c)                                  Decision on Review.  After receipt by the
PAC of a written application for review of his claim, the PAC will review the
claim taking into account all comments, documents, records and other information
submitted by the claimant regarding the claim without regard to whether such
information was considered in the initial benefit determination.  The PAC will
notify the claimant of its decision by delivery or by certified or registered
mail to his last known address.

 

A decision on review of the claim will be made by the PAC at its next meeting
following receipt of the written request for review.  If no meeting of the PAC
is scheduled within forty-five (45) days of receipt of the written request for
review, then the PAC will hold a special meeting to review such written request
for review within such forty-five (45) day period.  If special circumstances
require an extension of the forty-five (45) day period, the PAC will so notify
the claimant and a decision will be rendered within ninety (90) days of receipt
of the request for review.  In any event, if a claim is not determined by the
PAC within ninety (90) days of receipt of written submission for review, it will
be deemed to be denied.

 

The decision of the PAC will be provided to the claimant as soon as possible but
no later than five (5) days after the benefit determination is made.  The
decision will be in writing and will include the specific reasons for the
decision presented in a manner calculated to be understood by the claimant and
will contain references to all relevant ESP provisions on which the decision was
based.  Such decision will also advise the claimant that he may receive upon
request, and free of charge, reasonable access to and copies of all documents,
records and other information relevant to his claim and will inform the claimant
of his right to arbitration in the case of an adverse decision regarding his
appeal.  The decision of the PAC will be final and conclusive.

 

4.7                               Arbitration.  In the event the claims review
procedure described in Section 4.6 of the ESP does not result in an outcome
thought by the claimant to be in accordance with the ESP document, he may appeal
to a third party neutral arbitrator.  The claimant must appeal to an arbitrator
within sixty (60) days after receiving the PAC’s denial or deemed denial of his
request for review and before bringing suit in court.  The arbitration will be
conducted pursuant to the American Arbitration Association (“AAA”) Rules on
Employee Benefit Claims.

 

The arbitrator will be mutually selected by the claimant and the PAC from a list
of arbitrators who are experienced in nonqualified deferred compensation plan
benefit matters that is provided by the AAA.  If the parties are unable to agree
on the selection of an arbitrator within ten (10) days of receiving the list
from the AAA, the AAA will appoint an arbitrator.  The arbitrator’s review will
be limited to interpretation of the ESP document in the context of the
particular facts involved.  The claimant, the PAC and the Employer agree to
accept the award of the arbitrator as binding, and all exercises of power by the
arbitrator hereunder will be final, conclusive and binding on all interested
parties, unless found by a court of competent jurisdiction, in a final judgment
that is no longer subject to review or appeal, to be arbitrary and capricious. 
The claimant, PAC

 

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and the Employer agree that the venue for the arbitration will be in Dallas,
Texas.  The costs of arbitration will be paid by the Employer; the costs of
legal representation for the claimant or witness costs for the claimant will be
borne by the claimant; provided, that, as part of his award, the arbitrator may
require the Employer to reimburse the claimant for all or a portion of such
amounts.

 

The following discovery may be conducted by the parties: interrogatories,
demands to produce documents, requests for admissions and oral depositions.  The
arbitrator will resolve any discovery disputes by such pre-hearing conferences
as may be needed.  The Employer, PAC and claimant agree that the arbitrator will
have the power of subpoena process as provided by law.  Disagreements concerning
the scope of depositions or document production, its reasonableness and
enforcement of discovery requests will be subject to agreement by the Employer
and the claimant or will be resolved by the arbitrator.  All discovery requests
will be subject to the proprietary rights and rights of privilege and other
protections granted by applicable law to the Employer and the claimant and the
arbitrator will adopt procedures to protect such rights.  With respect to any
dispute, the Employer, PAC and the claimant agree that all discovery activities
will be expressly limited to matters directly relevant to the dispute and the
arbitrator will be required to fully enforce this requirement.

 

The arbitrator will have no power to add to, subtract from, or modify any of the
terms of the ESP, or to change or add to any benefits provided by the ESP, or to
waive or fail to apply any requirements of eligibility for a benefit under the
ESP.  Nonetheless, the arbitrator will have absolute discretion in the exercise
of its powers in the ESP.  Arbitration decisions will not establish binding
precedent with respect to the administration or operation of the ESP.

 

4.8                               Receipt and Release of Necessary Information. 
In implementing the terms of the ESP, the PAC and Plan Administrator, as
applicable, may, without the consent of or notice to any person, release to or
obtain from any other insuring entity or other organization or person any
information, with respect to any person, which the PAC or Plan Administrator
deems to be necessary for such purposes.  Any Covered Executive or estate
claiming benefits under the ESP will furnish to the PAC or Plan Administrator,
as applicable, such information as may be necessary to determine eligibility for
and amount of benefit, as a condition of claiming and receiving such benefit.

 

4.9                               Overpayment and Underpayment of Benefits.  The
Plan Administrator may adopt, in its sole and absolute discretion, whatever
rules, procedures and accounting practices are appropriate in providing for the
collection of any overpayment of benefits.  If a Covered Executive or his estate
receives an underpayment of benefits, the Plan Administrator will direct that
payment be made as soon as practicable to make up for the underpayment.  If an
overpayment is made to a Covered Executive or his estate, for whatever reason,
the Plan Administrator may, in its sole and absolute discretion, withhold
payment of any further benefits under the ESP until the overpayment has been
collected or may require repayment of benefits paid under the ESP without regard
to further benefits to which the Covered Executive or his estate may be
entitled.

 

End of Article IV

 

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ARTICLE V
OTHER BENEFIT PLANS OF THE COMPANY

 

5.1                               Other Plans.  Nothing contained in the ESP
will prevent a Covered Executive prior to his death, or a Covered Executive’s
spouse or other beneficiary after such Covered Executive’s death, from
receiving, in addition to any payments provided for under the ESP, any payments
provided for under any other plan or benefit program of the Employer, or which
would otherwise be payable or distributable to him, his surviving spouse or
beneficiary under any plan or policy of the Employer or otherwise.  Nothing in
the ESP will be construed as preventing the Company or any of its Affiliates
from establishing any other or different plans providing for current or deferred
compensation for employees and/or members of the Board.

 

5.2                               Controlling Document.  In the event that the
provisions of any other plan or benefit program of the Employer conflict with
any of the provisions contained in the ESP, the provisions of the ESP will
control; provided, however, that in the event that a Covered Executive enters
into a non-compete agreement as described in Section 3.2(e) and any provisions
therein conflict with any of the provisions as set forth in this ESP, the
provisions of the non-compete agreement will control.

 

End of Article V

 

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ARTICLE VI
AMENDMENT AND TERMINATION OF THE ESP

 

6.1                               Continuation.  The Company intends to continue
the ESP indefinitely, but nevertheless assumes no contractual obligation beyond
the promise to pay the benefits described in the ESP.

 

6.2                               Amendment of ESP.  The Company, through an
action of the Compensation Committee, reserves the right in its sole and
absolute discretion to amend the ESP in any respect at any time; provided,
however, that except as required to comply with section 409A of the Code or
other applicable law, no amendment to the ESP will be made that reduces or
diminishes the rights of any Covered Executive to the benefits described herein
for the five (5) year period following the original effective date of the ESP,
which such date was May 11, 2006.  Following the expiration of the five (5) year
period described in this Section 6.2, the Company may amend the ESP in its sole
and absolute discretion, in any respect and at any time; provided, that no
amendment may be made that reduces or diminishes the rights of any Covered
Executive to the benefits described herein unless the affected Covered Executive
receives at least one (1) year’s advance notice of such amendment.  Further,
such advance notice to the Covered Executive will not be effective to enable the
amendment of the ESP in either of the following two scenarios (a) if a Potential
Change of Control occurs during the one (1) year notice period, or (b) within
twenty four (24) months following a Change of Control.

 

6.3                               Termination of ESP.  Following the expiration
of the five (5) year period described in Section 6.2, the Company, through an
action of the Compensation Committee, may terminate or suspend the ESP in whole
or in part at any time subject to the rules regarding the amendment of the ESP
in Section 6.2 (i.e., that one (1) year’s advance notice is required and no such
notice will be effective to enable the termination of the ESP if a Potential
Change of Control occurs during the one (1) year notice period or within twenty
four (24) months following a Change of Control).  Notwithstanding any provision
of the ESP to the contrary, upon the complete termination of the ESP pursuant to
the provisions of this Section 6.3, the Compensation Committee, in its sole and
absolute discretion, may direct that the Plan Administrator treat each Eligible
Executive as having incurred a Qualifying Termination and to commence the
distribution of the benefits described in Article III to each such Eligible
Executive or his estate, as applicable, to the extent that the commencement of
such distribution comports with the requirements of section 409A of the Code.

 

6.4                               Termination of Affiliate’s Participation. 
Subject to (i) the five (5) year period described in Section 6.2 and (ii) the
period relating to a Change of Control or Potential Change of Control described
in Section 6.2, the Company may terminate an Affiliate’s participation in the
ESP at any time by an action of the Compensation Committee and providing written
notice to the Affiliate.  The effective date of any such termination will be the
later of the date specified in the notice of the termination of participation or
the date on which the Plan Administrator can administratively implement such
termination.  If an Affiliate is disposed of by the Company pursuant to a stock
or asset sale and a Covered Executive employed by such Affiliate is offered a
comparable position with the purchaser of such stock or assets and refuses such
position, the Covered Executive will not have incurred a Qualifying Termination
for purposes of the ESP.  Similarly, if an Affiliate is disposed of by the
Company pursuant to a stock or asset sale and a Covered Executive employed by
such Affiliate is offered a comparable position with the purchaser of such

 

34

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stock or assets and accepts such position, the Covered Executive will not have
incurred a Qualifying Termination for purposes of the ESP.

 

End of Article VI

 

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ARTICLE VII
MISCELLANEOUS

 

7.1                               No Reduction of Employer Rights.  Nothing
contained in the ESP will be construed as a contract of employment between the
Employer and a Covered Executive, or as a right of any Covered Executive to
continue in the employment of the Employer, or as a limitation of the right of
the Employer to discharge any of its Covered Executives, with or without cause.

 

7.2                               Successor to the Company.  The Company will
require any successor or assign (whether direct or indirect, by purchase,
exchange, lease, merger, consolidation, or otherwise) to all or substantially
all of the property and assets of the Company and its Affiliates taken as a
whole, to expressly assume the ESP and to agree to perform under this ESP in the
same manner and to the same extent that the Company and its Affiliates would be
required to perform it if no such succession had taken place.  This Section 7.2
will not require any successor or assign of an Affiliate (whether direct or
indirect, by purchase, exchange, lease, merger, consolidation or otherwise) to
all or substantially all of the property and assets of such Affiliate to
continue the ESP.

 

7.3                               Provisions Binding.  All of the provisions of
the ESP will be binding upon the Company and its Affiliates and any successor to
the Company or any such Affiliate.  Likewise, the provisions of the ESP will be
binding upon all persons who will be entitled to any benefit hereunder, their
heirs and personal representatives.

 

End of Article VII

 

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IN WITNESS WHEREOF, this Second Amended and Restated Tenet Executive Severance
Plan has been executed effective as of May 9, 2012, except as specifically
provided otherwise herein.

 

 

TENET HEALTHCARE CORPORATION

 

 

 

 

 

 

By:

/s/ Paul Slavin

 

 

Paul Slavin, Vice President, Executive &
Corporate HR Services

 

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APPENDIX A(1)

 

COVERED EXECUTIVES

 

Section 2.1(l) of the Tenet Executive Severance Plan (the “ESP”) provides the
Compensation Committee with the authority to designate additional Employees of
Tenet Healthcare Corporation or its participating affiliates (collectively the
“Employer”) as eligible to participate in the ESP at any time and states that
any such designation will be set forth in this Appendix A.  The following
additional Employees of the Employer are eligible to participate in the ESP, as
of the date specified below:

 

--------------------------------------------------------------------------------

(1)         This Appendix A may be updated from time to time without the need
for a formal amendment to the ESPP.

 

A-1

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APPENDIX B

 

ESP AGREEMENTS

 

Section 2.1(s) of the Tenet Executive Severance Plan (the “ESP”) provides that
each Covered Executive will enter into an ESP Agreement which sets forth the
terms and conditions of his benefits under the ESP and a form copy of such
agreement will be attached to the ESP as Appendix B.

 

B-1

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TENET EXECUTIVE SEVERANCE PLAN AGREEMENT

 

THIS EXECUTIVE SEVERANCE PLAN AGREEMENT is made as of                   , 20    
by and between the Plan Administrator of the Tenet Executive Severance Plan (the
“ESP”) on behalf of
                                                                                                                            
(the “Employer”), and
                                                                                                     
(the “Covered Executive”). Capitalized terms used in this Agreement that are not
defined herein will have the meaning set forth in the ESP.

 

1.                                      This Agreement and the ESP amends,
restates, and replaces any prior TESPP Agreement, change of control agreement or
the severance provisions of the Covered Executive’s CEO Employment Agreement, if
any, and serves as an amendment of such agreement to comply with the provisions
of section 409A of the Code, effective as of January 1, 2005, or if later, the
effective date of such agreement. By execution of this Agreement, the Covered
Executive acknowledges and agrees to such amendment, restatement and replacement
of his prior agreement or the severance provisions thereof, as applicable.

 

2.                                      As a condition of obtaining benefits
under the ESP the Covered Executive agrees to comply with the restrictive
covenants set forth in Section 3.7 of the ESP.

 

3.                                      Any dispute or claim for benefits under
the ESP must be resolved through the claims procedure set forth in Article IV of
the ESP which procedure culminates in binding arbitration.  By accepting the
benefits provided under the ESP, the Covered Executive hereby agrees to binding
arbitration as the final means of dispute resolution with respect to the ESP.

 

4.                                     The ESP is hereby incorporated into and
made a part of this Agreement as though set forth in full herein.  The parties
will be bound by and have the benefit of each and every provision of the ESP, as
amended from time to time.

 

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement on
                                        , 20      .

 

 

COVERED EXECUTIVE

 

EMPLOYER

 

 

 

 

 

By:

 

 

 

 

Plan Administrator

 

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

B-2

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