Exhibit 10.2

 

SURGICAL CARE AFFILIATES, INC.

 

2013 OMNIBUS LONG-TERM INCENTIVE PLAN

 

CASH INCENTIVE AWARD AGREEMENT

 

This Cash Incentive Award Agreement (this “Agreement”) is entered into as of
_____________ (the “Grant Date”), by and between Surgical Care Affiliates, Inc.,
a Delaware corporation (the “Company”), and _____________, an employee of the
Company or one or more of its Subsidiaries (the “Participant”).

 

Pursuant to the Surgical Care Affiliates, Inc. 2013 Omnibus Long-Term Incentive
Plan, as amended (the “Plan”), the Board of Directors of the Company, or its
Compensation Committee or a designee thereof (the “Administrator”), has
determined that the Participant shall be granted an Incentive Award in the form
of a cash bonus (the “Cash Incentive Award”) upon the terms and subject to the
conditions hereinafter contained. Pursuant to Section 7 of the Plan, the
Administrator has the authority to designate, and has so designated, the Cash
Incentive Award as “Performance-Based Compensation” in order to qualify such
Cash Incentive Award as “performance-based compensation” under Section 162(m) of
the Code. Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Plan.

 

1. Cash Incentive Award and Payment. The Participant is hereby granted the right
to earn a Cash Incentive Award in the target amount of $_________ (the “Target
Award”), subject to the restrictions set forth herein. This Cash Incentive Award
represents the right to earn up to __________ percent (____%) of the Target
Award and the actual amount of the Participant’s Cash Incentive Award, if any,
shall be determined pursuant to Section 2 below, upon the terms and subject to
the conditions set forth in this Agreement and the Plan. For purposes of this
Agreement, the term “Performance Period” shall be the period commencing on
__________ and ending on __________.

 

2. Performance Goal; Earned Cash Award.

 

(a)The amount of the Cash Incentive Award earned by the Participant for the
Performance Period will be determined at the end of the Performance Period based
on the level of achievement of the Performance Goal in accordance with Exhibit
A.  Subject to the terms of this Agreement, if the threshold level of the
Performance Goal is not reached for the Performance Period, the Participant’s
right to receive the Cash Incentive Award pursuant to this Agreement shall
automatically expire and be forfeited without payment of any consideration,
effective as of the last day of the Performance Period.  All determinations of
whether the Performance Goal has been achieved, the amount of the Cash Incentive
Award earned by the Participant, and all other matters related to this Section 2
shall be made by the Administrator in its sole discretion.  

 

(b)Promptly following completion of the Performance Period, and in any event
within two and one-half (2 ½) months following the end of the Performance
Period, (a) the Administrator will review and certify in writing (i) whether,
and to what extent, the Performance Goal for the Performance Period has been
achieved, and (ii) the amount of the Cash Incentive Award that the Participant
has earned (the “Earned Cash Award”), and (b) the Company shall pay the amount
of the Earned Cash Award to the Participant. Such written certification of the
Administrator shall be final, conclusive and binding on the Participant, and on
all other persons, to the maximum extent permitted by law.  

 

3.Effect of Certain Changes.  Notwithstanding Section 4 hereof, in the event the
Company terminates the Participant’s Employment without Cause following the
consummation of a Change in Control, with such termination occurring during the
Performance Period, then the Cash Incentive Award shall be deemed earned at the
Target Award level on the effective date of the Change in Control and such
Earned Cash Award shall be paid as soon as practicable after such termination of

 

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Employment, and in any event not more than 30 days following such termination of
Employment, but only if permissible under Section 409A of the Code; if such
settlement is not permissible under Section 409A of the Code, then settlement
shall occur in accordance with the other terms of this Agreement.  For purposes
hereof, “Cause” shall mean, unless otherwise provided in an employment agreement
in effect immediately prior to such termination, (i) a failure of the
Participant to reasonably and substantially perform his or her duties to the
Company or any of its Subsidiaries (other than as a result of physical or mental
illness or injury); (ii) the Participant’s willful misconduct or gross
negligence; (iii) a breach by the Participant of the Participant’s fiduciary
duty or duty of loyalty to the Company or any of its Affiliates; (iv) the
commission by the Participant of any felony or other serious crime; or (v) a
breach by the Participant of the terms of any agreement with the Company or any
Subsidiary or any Company policies.   

 

4. Termination of Employment.

 

(a)In the event that the Participant ceases to be Employed by the Company or any
of its Subsidiaries for any reason other than death or disability prior to the
last day of the Performance Period, the Participant’s right to receive the Cash
Incentive Award pursuant to this Agreement shall automatically expire and be
forfeited without payment of any consideration, effective as of the date of the
termination of Employment.  

 

(b)In the event that the Participant ceases to be Employed by the Company or any
of its Subsidiaries as a result of the Participant’s death or disability prior
to the last day of the Performance Period, the Participant will receive a pro
rata portion of the Earned Cash Award otherwise payable pursuant to Section 2
hereof, with such pro rata portion calculated by multiplying the Earned Cash
Award that would have been paid had the Participant’s Employment not terminated
during the Performance Period by a fraction, the numerator of which equals the
number of days that the Participant was employed during the Performance Period
and the denominator of which equals the total number of days in the Performance
Period.  The Company shall pay the pro rata portion of the Earned Cash Award in
accordance with the timing specified in Section 2(b) hereof.  

 

5. Taxes. The Participant shall be liable for the taxes with respect to the
Earned Cash Award.  The Company shall be entitled to offset the amount due for
any such taxes against any amounts, including shares of Common Stock, owed by
the Company to the Participant, whether under this Agreement or otherwise, to
the extent permitted by Section 409A of the Code.

 

6. No Guarantee of Employment. Nothing set forth herein or in the Plan shall
(i) confer upon the Participant any right of continued Employment for any period
by the Company or any of its Subsidiaries, (ii) entitle the Participant to
remuneration or benefits not set forth in the Plan, or (iii) interfere with or
limit in any way the right of the Company or any Subsidiary to terminate such
Participant’s Employment.

 

7. Notices. Any notice required or permitted under this Agreement shall be in
writing and deemed given when (i) delivered personally, (ii) mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
or (iii) delivered by overnight courier service. Such notices shall be sent to
the Participant at the last address specified in the Company’s records (or such
other address as the Participant may designate in writing to the Company), or to
the Company at the following address (or such other address as the Company may
designate in writing to the Participant):

 

Surgical Care Affiliates, Inc.

569 Brookwood Village, Suite 901

Birmingham, AL 35209

Attn: General Counsel

2

 

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8. Failure To Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.

 

9. Governing Law. This Agreement shall be governed by and construed according to
the laws of the State of Delaware, without regard to its conflict of law
principles.

 

10. Incorporation of Plan. A copy of the Plan is attached hereto and
incorporated herein by reference and made a part of this Agreement. This
Agreement and the Performance Shares shall be subject to the terms of the Plan,
as it may be amended from time to time, provided that such amendment of the Plan
is made in accordance with Section 16 of the Plan.

 

11. Clawback Policies.  Notwithstanding anything in the Plan to the contrary,
the Company will be entitled, to the extent permitted or required by applicable
law (including Section 409A of the Code), Company policy and/or the requirements
of an exchange on which the Company’s shares are listed for trading, in each
case, as in effect from time to time, to recoup compensation of whatever kind
paid by the Company or any of its Affiliates at any time to a Participant under
the Plan and the Participant, by accepting this award of Performance Shares
pursuant to the Plan and this Agreement, agrees to comply with any Company
request or demand for such recoupment.   

 

12. Section 162(m).  The payment of the Earned Cash Award under this Agreement
is intended to constitute “qualified performance-based compensation” within the
meaning of Section 162(m) of the Code.  This Cash Incentive Award shall be
construed and administered in a manner consistent with such intent.  

 

13.Employment Agreement.  Notwithstanding anything contained in this Agreement
to the contrary, to the extent that the terms set forth in this Agreement are
inconsistent with equivalent terms of any employment agreement between the
Participant and the Company (including, without limitation, the terms relating
to the consequences of a termination of the Participant’s Employment), the terms
of such employment agreement shall control.

 

14.Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original but all of which together shall represent one
and the same agreement.

 

 

SURGICAL CARE AFFILIATES, INC.:

 

PARTICIPANT:

By:

 

 

 

 

Name:

 

[Name]

 

Title:

 

 

 

 

Date:

 

 

 

3

 

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Exhibit A

 

Performance Goal

 

The Participant’s Target Award is $_______ and the Earned Cash Award will be
based ___% on the Company’s attainment of the Adjusted E‑NCI Target (as defined
below), ___% on the Company’s attainment of the Patient Satisfaction Net
Promoter Score (“NPS”) Target (as defined below) and ___% on the Company’s
attainment of the New Investments Performance Target (as defined below)
(collectively, the “Performance Goal”).  The Participant is eligible to receive
(i) $_______ if the Company attains the Adjusted E-NCI Target (the “Adjusted
E-NCI Award”), (ii) $_______ if the Company attains the Patient Satisfaction NPS
Target (the “Patient Satisfaction NPS Award”) and (iii) $_______ if the Company
attains the New Investments Performance Target (the “New Investments Performance
Award”).  Depending on the Company’s achievement of the Performance Goal, the
Participant may earn between 0% (if the minimum thresholds set forth below are
not reached) and ___% of the Target Award (if the maximum thresholds set forth
below are reached).  

 

Determining the Earned Cash Award

 

Except as otherwise provided in the Plan or the Agreement, the Earned Cash Award
with respect to the Performance Period shall be based on the following three (3)
Performance Criteria:

 

1.

Adjusted E-NCI:

 

 

(a)

“Adjusted EBITDA-NCI” (or “Adjusted E-NCI”) is defined as net income (loss)
attributable to the Company before interest income, income tax expense, debt
related interest expense and amortization of debt discount, depreciation and
amortization, income or loss from discontinued operations (net of income tax
expense), and gains or losses on sale of investments or disposal of assets; and
any other adjustments for non-recurring items as approved by the Compensation
Committee.

 

 

(b)

The target Adjusted E-NCI (the “Adjusted E-NCI Target”) for the Performance
Period is $__________, and the percentage of the Adjusted E-NCI Award that the
Participant will earn is based on the Company’s Adjusted E-NCI in ____ (“Actual
Adjusted E-NCI”) compared to the Adjusted E-NCI Target, as follows:

 

 

·

Threshold:  ___% of the Adjusted E-NCI Award is earned if Actual Adjusted E-NCI
is ___% of the Adjusted E-NCI Target.  None of the Adjusted E-NCI Award is
earned if Actual Adjusted E-NCI is less than ___% of the Adjusted E-NCI Target.

 

 

·

Target:  ___% of the Adjusted E-NCI Award is earned if Actual Adjusted E‑NCI is
___% of the Adjusted E-NCI Target.

 

 

·

Maximum:  ___% of the Adjusted E-NCI Award is earned if Actual Adjusted E-NCI
equals or exceeds ___% of the Adjusted E-NCI Target.

 

 

·

Interpolation:  The Company will interpolate between the threshold, target and
maximum goals.

A-1

 

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2.

Patient Satisfaction NPS:  

 

 

(a)

“Patient Satisfaction Net Promoter Score” (or “Patient NPS”) is a measure of
loyalty based on asking patients whether they would recommend our facilities to
a friend or family member or colleague.

 

 

(b)

The target Patient Satisfaction NPS (the “Patient Satisfaction NPS Target”) for
the Performance Period is a Patient Satisfaction NPS of ___, and the percentage
of the Patient Satisfaction NPS Award that the Participant will earn is based on
the Company’s Patient Satisfaction NPS in ____ (“Actual Patient Satisfaction
NPS”), as follows:

 

 

·

Threshold:  ___% of the Patient Satisfaction NPS Award is earned if the Actual
Patient Satisfaction NPS is ___.  None of the Patient Satisfaction NPS Award is
earned if the Actual Patient Satisfaction NPS is less than ___.

 

 

·

Target:  ___% of the Patient Satisfaction NPS Award is earned if the Actual
Patient Satisfaction NPS is ___.

 

 

·

Interpolation:  The Company will interpolate between the threshold and target
goals.

 

3.

New Investments Performance:

 

 

(c)

“New Investments Performance” is the performance of investments in new
facilities for the trailing 24 months compared to the projected performance.

 

 

(d)

The target New Investments Performance (the “New Investments Performance
Target”) for the Performance Period is ___%, and the percentage of the New
Investments Performance Award that the Participant will earn is based on the
Company’s New Investments Performance in ____ (“Actual New Investments
Performance”), as follows:

 

 

·

Threshold:  ___% of the New Investments Performance Award is earned if Actual
New Investments Performance is ___%.  None of the New Investments Performance
Award is earned if Actual New Investments Performance is less than ___%.

 

 

·

Target:  ___% of the New Investments Performance Award is earned if Actual New
Investments Performance is ___%.

 

 

·

Maximum:  ___% of the New Investments Performance Award is earned if Actual New
Investments Performance equals or exceeds ___%.

 

Interpolation:  The Company will interpolate between the threshold, target and
maximum goals.

 

 

A-2