Employment Agreement - Columbia/HCA Healthcare Corp. and R. Clayton McWhorter
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of April 24, 1995, by and between
COLUMBIA/HCA HEALTHCARE CORPORATION, a Delaware corporation (the "Corporation"),
and R. CLAYTON MCWHORTER ("Employee").
W I T N E S S E T H
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WHEREAS, the Corporation desires to recognize the outstanding
contributions made by Employee to Healthtrust, Inc. - The Hospital Company and
to secure the continuation of his services with the Corporation; and
WHEREAS, the Compensation Committee (the "Compensation Committee") of
the Board of Directors of the Corporation (the "Board"), by unanimous written
consent, authorized and directed the Corporation to enter into an Employment
Agreement with Employee;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants herein contained, the parties hereto agree as follows:
1. Terms and Duties
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(a) The Corporation hereby employs Employee for a term commencing on
April 24, 1995, and ending on April 24, 1997 and Employee hereby agrees to serve
as Chairman of the Board of the Corporation during said period upon the terms
and conditions herein contained. As used in this Agreement, the phrase "term of
this Agreement" shall mean the period of time from April 24, 1995, to April 24,
1997, unless the parties agree to extend this Agreement, pursuant to Paragraph
1(c) below, in which case the term of this Agreement shall also include the
extension of such period pursuant to such agreement.
(b) During the term of this Agreement, Employee shall perform such
duties and assignments for the Corporation as may be determined from time to
time by the Chief Executive Officer of the Corporation and as are reasonable and
customary for a full-time Chairman of the Board.
(c) The Corporation and Employee hereby acknowledge that this
Agreement may be extended for an additional period, provided both parties agree
on the terms and conditions in writing at any time prior to April 24, 1997.
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2. Minimum Base Compensation, Bonus and Severance Payments
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(a) Commencing as of April 24, 1995, the Corporation agrees to pay
Employee a base salary (in addition to the other compensation and benefits
provided herein) at the rate per year of $800,000.00. Commencing as of July 1,
1995, the Corporation agrees to pay Employee a base salary (in addition to the
other compensation and benefits proposed herein) at the rate per year of
$600,000.00. Employee's annual base salary payable pursuant to this Paragraph
(including any changes thereto pursuant to Paragraph 2(b) below) is hereinafter
sometimes referred to as "Employee's Base Compensation". Employee's Base
Compensation shall be payable in accordance with the customary payroll practices
of the Corporation, but in no event less frequently than monthly. During the
term of this Agreement, the Compensation Committee may increase but not decrease
Employee's Base Compensation at any time by such amounts as it deems proper.
(b) Employer shall be eligible to receive such bonus awards or other
incentive compensation as shall be determined from time to time by the
Compensation Committee in its sole discretion. Nothing contained in this
Agreement shall preclude the Board from eliminating, reducing or otherwise
changing any term or condition of any such bonus award.
(c) The Corporation and the Employee hereby agree to terminate the
Severance Protection Agreement (the "Severance Agreement") dated as of October
1, 1994 between Employee and Healthtrust, Inc. - The Hospital Company
("Healthtrust") in consideration of the payment by the Corporation to Employee
of the sum of $2,400,000. The payment by the Corporation to the Employee shall
be made on or about July 1, 1995. The Employee agrees that acceptance of the
$2,400,000 from the Company, or any subsidiary thereof, constitutes the entire
obligation of the Company, and any subsidiary thereof, to the Employee and
constitutes full settlement of any claim for severance pay under the Severance
Agreement. Furthermore, the payment of the sum of $2,400,000 shall be in lieu
of any other severance or termination pay to which the Employee may be entitled.
(d) The restricted period with respect to the 20,115 shares of
Restricted Stock of the Corporation held by the Employee pursuant to the
Healthtrust Restricted Stock Program is hereby accelerated to vest as of July 1,
1995.
3. Participation in Benefit Plans
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While employed under this Agreement, Employee shall be eligible to
participate in all executive compensation and employee benefit plans or programs
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generally applicable to senior management employees of the Corporation. Except
as otherwise provided herein, any such participation shall be in accordance with
the provisions of such plans or programs and nothing contained in this Agreement
is intended to or shall be deemed to affect adversely any of the Employee's
rights as a participant under any such plan or program. Nothing in this
Agreement shall preclude the Corporation from terminating or amending any such
plan or program so as to eliminate, reduce or otherwise change any benefit
payable thereunder. Notwithstanding the foregoing, Employee shall continue to
receive, during the term of this Agreement and at the Corporation's expense,
bookkeeping services, an auto allowance, medical spending account benefits, and
executive disability benefits substantially similar to those which he was
entitled to receive at Healthtrust.
4. Vacation
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Employee shall be entitled to vacation in accordance with the policies
of the Corporation in effect from time to time.
5. Reimbursement of Business Expenses
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Employee is authorized to incur reasonable expenses related to and for
promoting the business of the Corporation, including expenses for entertainment,
travel and similar items, and any such expenses paid by Employee from his own
funds shall be promptly reimbursed to him by the Corporation in accordance with
the policies and procedures of the Corporation in effect from time to time.
6. Source of Payments
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In any case where coverage or benefits are required to be provided
under this Agreement but cannot be provided in accordance with the terms of the
Corporation's plans which are maintained for the Corporation's senior executive
or other employees generally, or both, such coverage and benefits shall be
provided from the general assets of the Corporation. No special or separate
fund shall be established and no other segregation of assets shall be made to
assure the payment of any such amounts. To the extent that any person acquires
a right to receive payments from the Corporation under this Agreement, such
right shall be no greater that the right of an unsecured general creditor of the
Corporation.
7. Termination by the Corporation of Employee's Employment for Cause
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(a) Notwithstanding any other provision of this Agreement, the
Corporation shall have the right to terminate Employee's employment upon written
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notice to Employee that the Board has found, based upon reasonable evidence
presented in writing to Employee, that Employee has materially breached this
Agreement by engaging in dishonest or fraudulent actions or willful misconduct
or has materially harmed the Corporation by performing his duties in a grossly
negligent manner. Employee shall upon receipt of such written notice and
evidence immediately cease to be an employee of the Corporation.
(b) In case of a termination by the Corporation on account of a breach
hereunder pursuant to Paragraph 7(a) above, the Corporation's obligations to
Employee under this Agreement shall cease upon the effective date of such
termination and the Corporation shall not be liable to continue paying Employee
the Employee's Base Compensation nor shall Employee be entitled to any rights or
benefits pursuant to Paragraph 3 above, other than as may be provided under the
terms of such plans which are generally applicable to participants who have
terminated employment under similar circumstances.
8. Disability
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(a) In the event of the total disability (as hereinafter defined) of
Employee during the term of this Agreement, the Corporation shall continue to
pay Employee's Base Compensation and shall continue Employee's participation in
its various executive compensation and employee benefit plans and programs
pursuant to Paragraph 3 above during the period of his total disability until
the end of the term of this Agreement; provided, however, that in the event
Employee is totally disabled for a continuous period exceeding one hundred fifty
(150) days the Corporation may, at its election, terminate Employee's employment
upon thirty (30) days' written notice, in which event Employee shall be entitled
to receive the benefits described in Paragraph 8(b) below. As used in this
Agreement, the term "total disability" shall mean the complete inability of
Employee to perform all of the duties of his position with the Corporation by
reason of any physical or mental ailment.
(b) In the event that Employee is totally disabled for a period
described in Paragraph 8(a) above and the Corporation elects to terminate
Employee's employment, the Corporation shall continue to pay Employee a
disability benefit ("Disability Benefit") equal to Employee's Base Compensation
in effect at the time of such termination for the greater of (i) the entire term
of this Agreement and (ii) one year from the date of termination. Payment of
the Disability Benefit under this Paragraph 8(b) shall commence within thirty
(30) days of the termination of Employee's employment under Paragraph 8(a)
above. In addition, Employee's participation (including dependent coverage) in
any life, accident, disability, health and dental insurance plans, and any other
similar welfare plans of the Corporation in effect immediately prior to the
effective date of the termination shall be continued, or
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equivalent benefits provided, by the Corporation during the period in which the
Disability Benefit is paid at no cost to Employee or his dependents.
(c) If Employee becomes entitled to and receives other disability
benefits under any disability payment plan paid for by the Corporation,
including disability insurance, the Disability Benefit otherwise payable by the
Corporation to Employee pursuant to Paragraph 8(b) above shall be reduced (but
not below zero) by the amount of any such other disability benefits received by
him, but only to the extent such benefits are attributable to payments made by
the Corporation.
9. Death
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If Employee should die during the term of this Agreement, the
Corporation shall continue to pay his estate or designated beneficiary or
beneficiaries a death benefit ("Death Benefit") equal to Employee's Base
Compensation in effect at the date of his death for the greater of (i) the
entire term of this Agreement or (ii) one year from the date of his death.
Payment of the Death Benefit shall commence within thirty (30) days of the date
of Employee's death. The Corporation shall also pay Employee's estate or
designated beneficiary or beneficiaries such other death benefits as become
payable under the terms of such travel accident, life insurance, and employee
stock ownership plan, and other executive compensation and employee benefit
plans and programs of the Corporation in which Employee was a participant on his
date of death. In addition, dependant coverage provided by any life, accident,
disability, health and dental insurance plans, and any other similar welfare
plans of the Corporation in effect immediately prior to the date of Employee's
death shall be continued, or equivalent benefits provided, by the Corporation
during the period in which the Death Benefit is paid at no cost to Employee or
his dependents.
10. Board Membership
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In any instance where employee ceases to be an employee of the
Corporation pursuant to Paragraph 7(a) of this Agreement and if Employee is then
a member of the Board, Employee hereby agrees that, unless otherwise requested
by the Board, he shall simultaneously submit his resignation as a member of the
Board in writing on or before the date he ceases to be an employee of the
Corporation. If Employee fails or neglects to submit such resignation in
writing, this Paragraph 10 may be deemed by the Corporation to constitute
Employee's written resignation as a member of the Board effective on the same
date that Employee ceases to be an employee of the Corporation. If Employee
ceases to be an employee of the Corporation for any other reason, he shall not
be required to resign as a member of the Board.
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11. Waiver
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Failure of either party hereto to insist upon strict compliance by the
other party with any term, covenant or condition hereof shall not be deemed a
waiver of such term, covenant or condition, nor shall any waiver or
relinquishment or failure to insist upon strict compliance of any right or power
hereunder at any one time or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
12. Withholding of Taxes
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The Corporation may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
13. Facility of Payment
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If the Board shall find that any person to whom any amount is or was
payable hereunder is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then the Board, if it so elects, may
direct that any payment due him or his estate (unless a prior claim therefor has
been made by a duly appointed legal representative) or any part thereof be paid
or applied for the benefit of such person or to or for the benefit of his
spouse, children or other dependents, an institution maintaining or having
custody of such person, any other person deemed by said Board to be a proper
recipient on behalf of such person otherwise entitled to payment, or any of
them, in such manner and proportion as the Board may deem proper. Any such
payment shall be in complete discharge of the liability of the Corporation
therefor.
14. Prior Agreements
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This instrument sets forth the entire agreement between the parties
hereto with respect to the subject matter hereof.
15. Consolidation or Merger
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Nothing in this Agreement shall preclude the Corporation from
consolidating or merging into or with, or transferring all or substantially all
of its assets to, another corporation or other entity (the "Successor Employer")
which assumes this Agreement and all obligations of the Corporation hereunder by
operation of law or affirmative action. Upon such a consolidation, merger or
transfer of assets and assumption, the term "Corporation" shall refer to the
Successor Employer and this Agreement shall continue in full force and effect.
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16. Unsecured Creditor Status
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Employee shall have no right, title or interest whatsoever in or to
any investments which the Corporation may make to aid it in meeting its
obligations under this Agreement. Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Corporation and
Employee, his beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Corporation
under this Agreement, such right shall be no greater than the right of an
unsecured general creditor of the Corporation. All payments to be made
hereunder shall be paid from the general funds of the Corporation and no special
or separate fund shall be established and no segregation of assets shall be made
to assure payment of such amounts.
17. Non-Alienation of Benefits
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Except insofar as applicable law may otherwise require, no amount
payable to or in respect of Employee at any time under this Agreement shall be
subject in any manner to alienation by anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge or encumbrance of any kind, and any
attempt to so alienate, sell, transfer, assign, pledge, attach, charge or
otherwise encumber any such amount, whether presently or thereafter payable
shall be void; provided, however, that nothing in this Paragraph 17 shall
preclude Employee from designating a beneficiary or beneficiaries to receive any
benefit on his death.
18. Benefits
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Except as otherwise expressly provided herein, this Agreement shall
inure to the benefit of and be binding upon the Corporation, its successors and
assigns, and upon Employee, his beneficiaries, heirs, executors and
administrators.
19. Amendment
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No amendment or modification of this Agreement shall be deemed
effective unless and until executed in writing by Employee and the Corporation.
20. Severability
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If for any reason any provision of this Agreement shall be held
invalid, such invalidity shall not affect any other provision of this Agreement
not held so
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invalid, and all other such provisions shall to the full extent consistent with
law continue in full force and effect. If any such provision shall be held
invalid in part, such invalidity shall in no way affect the remaining portion of
such provision not held so invalid, and the remaining portion of such provision,
together with all other provisions of this Agreement, shall likewise to the full
extent consistent with law continue in full force and effect.
21. Headings
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The headings of paragraphs are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.
22. Governing Law
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This Agreement shall be governed by the laws of the State of
Tennessee.
23. Notices
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Any notices required or desired to be given pursuant to this Agreement
shall be sufficient if in writing and transmitted by hand delivery or by
registered or certified mail. All communications to Employee shall be addressed
to:
R. Clayton McWhorter
400 Hyde Park
Nashville, TN 37215
All communications to the Corporation shall be addressed to:
Richard L. Scott
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, TN 37203
Notwithstanding the foregoing, the Corporation and Employee may, by
notice in accordance herewith, designate a different address than contained
herein.
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IN WITNESS WHEREOF, the Corporation has caused its name to be ascribed
to this Agreement by its duly authorized representative and Employee has
executed this Agreement as of the day and year first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION
BY:______________________________________
Richard L. Scott
President and Chief Executive Officer
_________________________________________
R. Clayton McWhorter
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