Exhibit 10(b)
EMPLOYMENT AGREEMENT
AGREEMENT made as of May 1, 1996, by and between OrNda Healthcorp, a
Delaware corporation (the "Company"), and William L. Hough (the "Executive").
WHEREAS, the Executive currently serves as Executive Vice President
and Chief Operating Officer of the Company and has served in such capacity since
August 1995;
WHEREAS, the Company desires to secure for itself the continuing
services of the Executive from and after the date hereof and the Executive
desires to render such services, in each case pursuant to the terms and
conditions hereof;
WHEREAS, the Compensation Committee (the "Compensation Committee")
of the Company's Board of Directors (the "Board") has approved and authorized
the Company's entry into this Agreement with the Executive; and
WHEREAS, the parties desire to enter into this Agreement setting
forth the terms and conditions of the employment relationship of the Executive
with the Company.
NOW, THEREFORE, the parties agree as follows:
1. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and subject
to the conditions set forth herein.
2. Term. This Agreement is for the three-year period (the "Term")
commencing on May 1, 1995 (the "Effective Date") and terminating on the third
anniversary of the Effective Date, or upon the Executive's earlier death,
disability or other termination of employment pursuant to Section 10; provided,
however, that at the end of each day during the Extension Period (as defined
below) the Term shall automatically be extended for one additional day; and
provided, further, that commencing on the fifth anniversary of the Effective
Date and on each anniversary thereafter the Term shall automatically be extended
for one additional year unless, not later than 90 days prior to any such
anniversary, either party hereto shall have notified the other party hereto that
such extension shall not take effect. For purposes of this Section 2, the
Extension Period shall be the period beginning on the Effective Date and ending
on the earlier of (i) the Date of Termination (as defined below) and (ii) the
day preceding the second anniversary of the Effective Date.
3. Position. During the Term, the Executive shall serve as
Executive Vice President and Chief Operating Officer of the Company or in such
other senior executive position in the Company as the Executive should approve.
4. Duties and Reporting Relationship. During the Term, the
Executive shall, on a full time basis, use his skills and render services to the
best of his abilities in supervising and conducting the operations of the
Company.
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5. Place of Performance. The Executive shall perform his duties
and conduct his business at the principal executive offices of the Company,
except for required travel on the Company's business.
6. Salary and Annual Bonus.
(a) Base Salary. The Executive's base salary hereunder shall
be $550,000 a year, payable monthly. The Board shall review such base salary at
least annually and make such adjustment from time to time as it may deem
advisable, but the base salary shall not at any time be less than $550,000 a
year.
(b) Annual Bonus. The Compensation Committee shall provide
the Executive with an annual bonus plan providing the Executive with an
opportunity to earn annual bonus compensation and shall cause the Company to pay
to him any earned annual bonus in addition to his base salary.
7. Vacation, Holidays and Sick Leave. During the Term, the
Executive shall be entitled to paid vacation, paid holidays and sick leave in
accordance with the Company's standard policies for its senior executive
officers.
8. Business Expenses. The Executive will be reimbursed for all
ordinary and neces sary business expenses incurred by him in connection with his
employment upon timely submission by the Executive of receipts and other
documentation as required by the Internal Revenue Code and in conformance with
the Company's normal procedures.
9. Pension and Welfare Benefits. During the Term, the Executive
shall be eligible to participate fully in all health benefits, insurance
programs, pension and retirement plans and other employee benefit and
compensation arrangements available to senior officers of the Company generally.
10. Termination of Employment.
(a) General. The Executive's employment hereunder may be
terminated with out any breach of this Agreement only under the following
circumstances.
(b) Death or Disability.
(i) The Executive's employment hereunder shall
automatically terminate upon the death of the Executive.
(ii) If, as a result of the Executive's incapacity due
to physical or mental illness, the Executive shall have been absent from
his duties with the Company for any six (6) months (whether or not
consecutive) during any twelve (12)
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month period, the Company may terminate the Executive's employment
hereunder for any such incapacity (a "Disability").
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, "Cause" shall
mean (i) the willful failure or refusal by the Executive to perform his duties
hereunder (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness), which has not ceased within ten (10) days
after a written demand for substantial performance is delivered to the Executive
by the Company, which demand identifies the manner in which the Company believes
that the Executive has not performed such duties, (ii) the willful engaging by
the Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise (including, but not limited to, conduct described in
Section 14) or (iii) the conviction of the Executive of, or the entering of a
plea of nolo contendere by the Executive with respect to, a felony.
Notwithstanding the foregoing, the Executive's employment hereunder shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board (after written notice to the Executive and a
reasonable opportunity for the Executive, together with the Executive's counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board the Executive should be terminated for Cause.
(d) Termination by the Executive. The Executive shall be
entitled to terminate his employment hereunder (A) for Good Reason or (B) if his
health should become impaired to an extent that makes his continued performance
of his duties hereunder hazardous to his physical or mental health, provided
that the Executive shall have furnished the Company with a written statement
from a qualified doctor to such effect and provided, further, that, at the
Company's request, the Executive shall submit to an examination by a doctor
selected by the Company and such doctor shall have concurred in the conclusion
of the Executive's doctor. For purposes of this Agreement, "Good Reason" shall
mean, (i) without the Executive's express written consent, any failure by the
Company to comply with any material provision of this Agreement, which failure
has not been cured within ten (10) days after notice of such noncompliance has
been given by the Executive to the Company or (ii) the occurrence (without the
Executive's express written consent), following a Change of Control during the
term of this Agreement, of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or failure to act
described below, such act or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination given in respect thereof:
(I) any change in the Executive's title, authorities,
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, represents an adverse change from his
status, title, position or responsibilities (including reporting
responsibilities) which were in effect immediately prior to the Change in
Control or from his status, title, position or responsibilities (including
reporting responsibilities) which were in effect following a Change in
Control pursuant to the Executive's consent to accept any such change; the
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assignment to him of any duties or work responsibilities which, in his
reasonable judgment, are inconsistent with such status, title, position or
work responsibilities; or any removal of the Executive from, or failure to
reappoint or reelect him to any of such positions, except if any such
changes are because of Disability, retirement, death or Cause;
(II) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the same may be
increased from time to time except for across-the-board salary reductions
similarly affecting all senior executives of the Company and all senior
executives of any Person (as defined in Section 10(h)(i) below) in control
of the Company provided in no event shall any such reduction reduce the
Executive's base salary below $550,000;
(III) the relocation of the Executive's office at which
he is to perform his duties, to a location more than thirty (30) miles
from the location at which the Executive performed his duties prior to the
Change in Control, except for required travel on the Company's business to
an extent substantially consistent with his business travel obligations
prior to the Change in Control;
(IV) if the Executive had been based at the Company's
principal executive offices immediately prior to the Change of Control,
the relocation of the Company's principal executive offices to a location
more than 30 miles from the location of such offices immediately prior to
the Change in Control;
(V) the failure by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's current
compensation, or to pay to the Executive any portion of an installment of
deferred compensation under any deferred compensation program of the
Company, within seven (7) days of the date such compensation is due;
(VI) the failure by the Company to continue in effect
any stock-based and/or cash annual or long-term incentive compensation
plan in which the Executive participates immediately prior to the Change
in Control, unless the Executive participates after the Change in Control
in other comparable plans generally available to senior executives of the
Company and senior executives of any Person in control of the Company;
(VII) the failure by the Company to continue to provide
the Executive with benefits substantially similar in value to the
Executive in the aggregate to those enjoyed by the Executive under any of
the Company's pension, life insurance, medical, health and accident, or
disability plans in which the Executive was participating immediately
prior to the Change in Control, unless the Executive participates after
the Change in Control in other comparable benefit plans generally
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available to senior executives of the Company and senior executives of any
Person in control of the Company;
(VIII) the adverse and substantial alteration of the
nature and quality of the office space within which the Executive
performed his duties prior to a Change in Control as well as in the
secretarial and administrative support provided to the Executive,
provided, however, that a reasonable alteration of the secretarial or
administrative support provided to the Executive as a result of reasonable
measures implemented by the Company to effectuate a cost-reduction or
consolidation program shall not constitute Good Reason hereunder; or
(IX) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 10(f) below; for purposes of this
Agreement, no such purported termina tion shall be effective.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting Good
Reason hereunder.
(e) Voluntary Resignation. Should the Executive wish to
resign from his position with the Company or terminate his employment for other
than Good Reason during the Term, the Executive shall give sixty (60) days
written notice to the Company, setting forth the reasons and specifying the date
as of which his resignation is to become effective.
(f) Notice of Termination. Any purported termination of the
Executive's employment by the Company or by the Executive shall be communicated
by written Notice of Termination to the other party hereto in accordance with
Section 18. "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
(g) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated because of death, the date of the
Executive's death, (ii) if the Executive's employment is terminated for
Disability, the date Notice of Termination is given, (iii) if the Executive's
employment is terminated pursuant to Subsection (c), (d) or (e) hereof or for
any other reason (other than death or Disability), the date specified in the
Notice of Termination (which, in the case of a termination for Good Reason shall
not be less than fifteen (15) nor more than sixty (60) days from the date such
Notice of Termination is given, and in the case of a termination for any other
reason shall not be less than thirty (30) days (sixty (60) days in the case of a
termination under Subsection (e) hereof) from the date such Notice of
Termination is given).
(h) Change in Control. For purposes of this Agreement, a
Change in Control of the Company shall have occurred if
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(i) any "Person" (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") as modified and used
in Sections 13(d) and 14(d) of the Exchange Act (other than (1) the
Company or any of its subsidiaries, (2) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries, (3) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (4) any corporation owned,
di rectly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of the Company's
common stock)), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing more than 50% of the combined voting power of the
Company's then outstanding voting securities;
(ii) during any period of not more than two consecutive
years, not including any period prior to the date of this Agreement,
individuals who at the beginning of such period constitute the Board, and
any new director (other than a di rector designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clause (i), (iii), or (iv) of this Section 10(h)) whose
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than
both (A)(1) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving or parent entity) 50% or more of the
combined voting power of the voting securities of the Company or such
surviving or parent entity outstanding immediately after such merg er or
consolidation or (2) a merger or consolidation in which no person acquires
50% or more of the combined voting power of the Company's then outstanding
securities; and (B) immediately after the consummation of such merger or
consolidation described in clause (A)(1) or (A)(2) above (and for at least
180 days thereafter) neither the Company's Chief Executive Officer nor its
Chief Financial Officer change from the people occupying such positions
immediately prior to such merger or consolidation except as a result of
their death or Disability and neither of such officers shall have changed
prior to such merger or consolidation at the direction of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change in Control of the Company; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the
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Company of all or substantially all of the Company's assets (or any
transaction having a similar effect).
(i) Resignation as Member of Board. If the Executive's
employment by the Company is terminated for any reason, the Executive hereby
agrees that he shall simultaneously submit his resignation as a member of the
Board in writing on or before the Date of Termination if the Executive is a
member of the Board at such time. If the Executive fails to submit such required
resignation in writing, the provisions of this Subsection 10(i) may be deemed by
the Company to constitute the Executive's written resignation as a member of the
Board effective as of the Date of Termination.
11. Compensation During Disability, Death or Upon Termination.
(a) During any period that the Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental illness
("Disability Period"), the Executive shall continue to receive his full salary
at the rate then in effect for such period until his employment is terminated
pursuant to Section 10(b)(ii) hereof, provided that payments so made to the
Executive during the Disability Period shall be reduced by the sum of the
amounts, if any, payable to the Execu tive with respect to such period under
disability benefit plans of the Company or under the Social Security disability
insurance program, and which amounts were not previously applied to reduce any
such payment.
(b) If the Executive's employment is terminated by his death
or Disability, the Company shall pay (i) any amounts due to the Executive under
Section 6 through the date of such termination and (ii) all such amounts that
would have become due to the Executive under Section 6 had the Executive's
employment hereunder continued until the last day of the calendar year in which
such termination of employment occurred, in each case in accordance with Section
13(b), if applicable.
(c) If the Executive's employment shall be terminated by the
Company for Cause or by the Executive for other than Good Reason, the Company
shall pay the Executive his full salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given, and the Company shall
have no further obligations to the Executive under this Agreement.
(d) If (A) following a Change of Control the Company shall
terminate the Executive's employment in breach of this Agreement, or (B)
following a Change of Control the Executive shall terminate his employment for
Good Reason, then
(i) the Company shall pay the Executive his full salary
through the Date of Termination at the rate in effect at the time Notice
of Termination is given and all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination under any compensation
plan or program of the Company, at the time such payments are due;
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(ii) in lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the Company
shall pay as liquidated damages to the Executive an aggregate amount equal
to the product of (A) the sum of (1) the Executive's annual salary rate in
effect as of the Date of Termination and (2) the average of the annual
bonuses actually paid to the Executive by the Company with respect to the
two fiscal years which immediately precede the year of the Term in which
the Date of Termination occurs provided if there was a bonus or bonuses
paid to the Executive with respect only to one fiscal year which
immediately precedes the year of the Term in which the Date of Termination
occurs, then such single year's bonus or bonuses shall be utilized in the
calculation pursuant to this clause (2) and (B) the number three (3);
(iii) the Company shall (x) continue coverage for the
Executive under the Company's life insurance, medical, health, disability
and similar welfare benefit plans (or, if continued coverage is barred
under such plans, the Company shall provide to the Executive substantially
similar benefits) for the remainder of the Term, and (y) provide the
benefits which the Executive would have been entitled to receive pursuant
to any supplemental retirement plan maintained by the Company had his
employment continued at the rate of compensation specified herein for the
remainder of the Term. Benefits otherwise receivable by the Executive
pursuant to clause (x) of this Subsection 11(d)(iii) shall be reduced to
the extent comparable benefits are actually received by the Executive from
a subsequent employer during the period during which the Company is
required to provide such benefits, and the Executive shall report any such
benefits actually received by him to the Company; and
(iv) the payments provided for in this Section 11(d)
(other than Section 11(d)(iii)) shall be made not later than the fifth day
following the Date of Termination, provided, however, that if the amounts
of such payments, and the limitation on such payments set forth in Section
15 hereof, cannot be finally deter mined on or before such day, the
Company shall pay to the Executive on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such payments to
which the Executive is clearly entitled and shall pay the remainder of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code (as defined in Section 15)) as soon as the
amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount determined by the Company within
six (6) months after payment to have been due, such excess shall
constitute a loan by the Company to the Executive, payable no later than
the thirtieth (30th) business day after demand by the Company (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code).
At the time that payments are made under this Section 11(d), the Company
shall provide the Executive with a written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any
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opinions or other advice the Company has received from outside counsel,
auditors or consultants (and any such opinions or advice which are in
writing shall be attached to the statement).
(e) If prior to any Change of Control the Company shall
terminate the Executive's employment in breach of this Agreement, then
(i) the Company shall pay the Executive his full salary
through the Date of Termination at the rate in effect at the time Notice
of Termination is given and all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination under any compensation
plan or program of the Company, at the time such payments are due;
(ii) in lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the Company
shall pay as liquidated damages to the Executive an aggregate amount equal
to the product of (A) the sum of (1) the Executive's annual salary rate in
effect as of the Date of Termination and (2) the average of the annual
bonuses actually paid to the Executive by the Company with respect to the
two fiscal years which immediately precede the year of the Term in which
the Date of Termination occurs provided if there was a bonus or bonuses
paid to the Executive with respect only to one fiscal year which
immediately precedes the year of the Term in which the Date of Termination
occurs, then such single year's bonus or bonuses shall be utilized in the
calculation pursuant to this clause (2) and (B) the lesser of (x) the
number three (3) and (y) the greater of (aa) the number of years
(including partial years) remaining in the Term and (bb) the number two
(2); such amount to be paid in substantially equal monthly installments
during the period commencing with the month immediately following the
month in which the Date of Termination occurs and ending with the month
corresponding to the end of the Term hereunder; and
(iii) the Company shall (x) continue coverage for the
Executive under the Company's life insurance, medical, health, disability
and similar welfare benefit plans (or, if continued coverage is barred
under such plans, the Company shall provide to the Executive substantially
similar benefits) for the remainder of the Term, and (y) provide the
benefits which the Executive would have been entitled to receive pursuant
to any supplemental retirement plan maintained by the Company had his
employment continued at the rate of compensation specified herein for the
remainder of the Term. Benefits otherwise receivable by the Executive
pursuant to clause (x) of this Subsection 11(e)(iii) shall be reduced to
the extent comparable benefits are actually received by the Executive from
a subsequent employer during the period during which the Company is
required to provide such benefits, and the Executive shall report any such
benefits actually received by him to the Company.
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(f) If the Executive shall terminate his employment under
clause (C) of subsection 10(d) hereof, the Company shall pay the Executive his
full salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, and the Company shall have no further
obligations to the Executive under this Agreement.
(g) The Executive shall not be required to mitigate the amount
of any payment provided for in this Section 11 by seeking other employment or
otherwise, and, except as provided in Sections 11(d) and 11(e) hereof, the
amount of any payment or benefit provided for in this Section 11 shall (i) not
be reduced by any compensation earned by the Executive as the result of
employment by another employer or by retirement benefits and (ii) be the sole
amount due to the Executive from the Company upon such termination of
employment, the Executive hereby waiving any claim for other compensation or
related damages (whether consequential, punitive or other) as a result of such
termination.
12. Representations.
(a) The Company represents and warrants that this Agreement
has been autho rized by all necessary corporate action of the Company and is a
valid and binding agreement of the Company enforceable against it in accordance
with its terms.
(b) The Executive represents and warrants that he is not a
party to any agreement or instrument which would prevent him from entering into
or performing his duties in any way under this Agreement.
13. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
(b) This Agreement is a personal contract and the rights and
interests of the Executive hereunder may not be sold, transferred, assigned,
pledged, encumbered, or hypothecated by him, except as otherwise expressly
permitted by the provisions of this Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Executive and his personal or legal
represen tatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount would still
be payable to him hereunder had the Executive continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to his devisee, legatee or other designee or, if there
is no such designee, to his estate.
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14. Confidentiality and Non-Competition Covenants.
(a) The Executive covenants and agrees that he will not at any
time during and after the end of the Term, directly or indirectly, use for his
own account, or disclose to any person, firm or corporation, other than
authorized officers, directors and employees of the Company or its subsidiaries,
Confidential Information (as hereinafter defined) of the Company. As used
herein, "Confidential Information" of the Company means information of any kind,
nature or description which is disclosed to or otherwise known to the Executive
as a direct or indirect consequence of his association with the Company, which
information is not generally known to the public or in the businesses in which
the Company is engaged or which information relates to specific investment
opportunities within the scope of the Company's business which were considered
by the Executive or the Company during the term of this Agreement. During the
Term and for a period of two years following the termination of the Executive's
employment, the Executive shall not induce any employee of the Company or its
subsidiaries to terminate his or her employment by the Company or its
subsidiaries in order to obtain employment by any person, firm or corporation
affiliated with the Executive.
(b) The Executive covenants and agrees that during the Term
and for a period of two (2) years following the termination of the Executive's
employment, the Executive shall not, directly or indirectly, own any interest
in, operate, join, control, or participate as a partner, director, principal,
officer, or agent of, enter into the employment of, act as a consultant to, or
perform any services for any entity which has material operations which compete
with any business in which the Company is engaged at the time of the Executive's
termination of employment unless such entity disposes of the competing
operations during the one-year period following the commencement of the
Executive's relationship with the entity that is prohibited by this Section
14(b). Notwithstanding anything herein to the contrary, (1) the foregoing
provisions of this Section 14(b) shall not prevent the Executive from acquiring
securities representing not more than 5% of the outstanding voting securities of
any publicly held corporation and (2) the foregoing provisions of this Section
14(b) shall not be applicable to a termination of the Executive's employment (i)
by the Company following a Change of Control in breach of this Agreement, (ii)
by the Executive for Good Reason following a Change of Control or (iii) by the
Company for Cause.
15. Prohibition on Parachute Payments.
(a) Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the
Executive in connection with a Change in Control of the Company or the
termination of the Executive's employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
Person whose actions result in a Change in Control or any Person affiliated with
the Company or such Person) (all such payments and benefits, including, without
limitation, base salary and bonus payments, being hereinafter called "Total
Payments") would not be deductible (in whole or part), by the Company, an
affiliate or any Person making such payment or providing such benefit as a
result of section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then, to the extent
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necessary to make such portion of the Total Payments deductible (and after
taking into account any reduction in the Total Payments provided by reason of
section 280G of the Code in such other plan, arrangement or agreement), (A) such
cash payments shall first be reduced (if necessary, to zero), and (B) all other
non-cash payments by the Company to the Executive shall next be reduced (if
necessary, to zero). For purposes of this limitation (i) no portion of the Total
Payments the receipt or enjoyment of which the Executive shall have effectively
waived in writing prior to the Date of Termination shall be taken into account,
(ii) no portion of the Total Payments shall be taken into account which in the
opinion of tax counsel selected by the Company's independent auditors and
reasonably acceptable to the Executive does not constitute a "parachute payment"
within the meaning of section 280G(b)(2) of the Code, including by reason of
section 280G(b)(4)(A) of the Code, (iii) such payments shall be reduced only to
the extent necessary so that the Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety constitute reasonable compensation for
services actually rendered within the meaning of section 280G(b)(4)(B) of the
Code or are otherwise not subject to disallowance as deductions, in the opinion
of the tax counsel referred to in clause (ii); and (iv) the value of any
non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent auditors in accordance
with the principles of sections 280G(d)(3) and (4) of the Code.
(b) If it is established pursuant to a final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the Executive and the Company in applying the terms of this Section 15,
the aggregate "parachute payments" paid to or for the Executive's benefit are in
an amount that would result in any portion of such "parachute payments" not
being deductible by reason of section 280G of the Code, then the Executive shall
have an obligation to pay the Company upon demand an amount equal to the sum of
(i) the excess of the aggregate "parachute payments" paid to or for the
Executive's benefit over the aggregate "parachute payments" that could have been
paid to or for the Executive's benefit without any portion of such "parachute
payments" not being deductible by reason of section 280G of the Code; and (ii)
interest on the amount set forth in clause (i) of this sentence at the rate
provided in section 1274(b)(2)(B) of the Code from the date of the Executive's
receipt of such excess until the date of such payment.
16. Entire Agreement. This Agreement contains all the understandings
between the parties hereto pertaining to the matters referred to herein, and on
the Effective Date shall supersede all undertakings and agreements, whether oral
or in writing, previously entered into by them with respect thereto. The
Executive represents that, in executing this Agreement, he does not rely and has
not relied upon any representation or statement not set forth herein made by the
Company with regard to the subject matter, bases or effect of this Agreement or
otherwise.
17. Amendment or Modification, Waiver. No provision of this
Agreement may be amended or waived unless such amendment or waiver is agreed to
in writing, signed by the Executive and by a duly authorized officer of the
Company. No waiver by any party hereto of any breach by another party hereto of
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.
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18. Notices. Any notice to be given hereunder shall be in writing
and shall be deemed given when delivered personally, sent by courier or telecopy
or registered or certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently give notice of hereunder in writing:
To Executive at: William L. Hough
704 Nantucket Circle
Franklin, TN 37064
To the Company at: OrNda HealthCorp
3401 West End Avenue
Suite 700
Nashville, Tennessee 37203
Attn: General Counsel
Telecopy: (615) 783-1232
Any notice delivered personally or by courier under this Section 18
shall be deemed given on the date delivered and any notice sent by telecopy or
registered or certified mail, postage prepaid, return receipt requested, shall
be deemed given on the date telecopied or mailed.
19. Severability. If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law.
20. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
21. Governing Law; Attorney's Fees.
(a) This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflicts of laws principles.
(b) The prevailing party in any dispute arising out of this
Agreement shall be entitled to be paid its reasonable attorney's fees incurred
in connection with such dispute from the other party to such dispute.
22. Headings. All descriptive headings of sections and paragraphs
in this Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
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23. Withholdings. All payments to the Executive under this
Agreement shall be reduced by all applicable withholding required by federal,
state or local tax laws.
24. Severance Protection Agreement. The Severance Protection
Agreement dated as of July 27, 1995, between the Company and the Executive is
hereby terminated effective as of May 1, 1996.
25. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
ORNDA HEALTHCORP
BY: /s/ Ronald P. Soltman
Ronald P. Soltman
Senior Vice President
THE EXECUTIVE
/s/ William L. Hough
William L. Hough
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