Consulting and Non-Compete Agreement - Tenet Healthcare Corp. and Michael H. Focht Sr.
CONSULTING AND NON-COMPETE AGREEMENT
This Consulting and Non-Compete Agreement ("Agreement") is made and
entered into by and between Michael H. Focht, Sr. (hereinafter referred to
as "Mr. Focht") and Tenet Healthcare Corporation (hereinafter referred to
as "Tenet").
WHEREAS, Mr. Focht has served as the President and Chief Operating
Officer of Tenet Healthcare Corporation; and
WHEREAS, Mr. Focht has indicated his plans to resign from employment with
Tenet and retire on or about December 31, 1999; and
WHEREAS, Tenet desires to retain Mr. Focht as a consultant for a period
of time to perform certain consulting services for Tenet in conjunction with
matters with which he has had previous experience with Tenet or which are
within his area of expertise or experience, and Mr. Focht desires to provide
such consulting services to Tenet;
NOW, THEREFORE, the parties hereto agree as follows:
1. This Agreement shall become effective on January 1, 2000 following
Mr. Focht's retirement and resignation from employment with Tenet ("the
Effective Date") and shall continue for the next thirty-six months ("the
Consulting Period"). Notwithstanding any other provision of this Agreement,
Tenet shall have no obligation to renew or continue this Agreement beyond the
Consulting Period and shall have no further obligation to Mr. Focht if this
Agreement or Mr. Focht's services hereunder are terminated by Tenet for cause
as defined below or this Agreement expires by its terms.
2. Mr. Focht agrees that during the Consulting Period, he will provide
consulting services and hold himself available to provide such services to
Tenet and/or its representatives in connection with any matter with which he
previously has had experience at Tenet or which is otherwise within his area
of expertise or experience. Mr. Focht acknowledges and agrees that he shall
make himself available at reasonable time(s) and place(s) for such consulting
services upon reasonable notice from Tenet's Chairman and Chief Executive
Officer or his/her authorized designee.
3. Mr. Focht acknowledges and agrees that he shall not be an employee of
Tenet during the Consulting Period, and that he shall perform all consulting
services under this Agreement as an independent contractor. Mr. Focht shall
have no authority to bind Tenet to any obligation except with prior written
authorization from Tenet's Chairman and Chief Executive Officer or his/her
authorized designee.
4. As compensation for Mr. Focht's holding himself available to provide
consulting services and for providing such services under this Agreement,
Tenet agrees to pay Mr. Focht a monthly gross fee of Forty Three Thousand Six
Hundred Sixty Six Dollars ($43,666). Mr. Focht agrees that he is responsible
to report his own taxes; however, Tenet will, as an accommodation to Mr.
Focht, withhold taxes from its payments to him. Mr. Focht further
acknowledges that Tenet makes no warranties as to any tax consequences of
such payments, and specifically agrees that the determination of any tax
liability or other consequences of the payments set forth above is
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Mr. Focht's sole and complete responsibility and that he will pay
all state, federal and/or local taxes, if any, assessed against him on such
payments.
5. Tenet further agrees to reimburse Mr. Focht for any and all
reasonable expenses incurred at Tenet's request and with Tenet's consent in
connection with his providing consulting services during the consulting
period, including, but not limited to, such expenses as (i) local automobile
mileage at the rate established by the United States Internal Revenue
Service; (ii) first class airline tickets purchased for domestic travel;
(iii) first class airline tickets purchased for international travel; and
(iv) all authorized reasonable hotel, meal, telephone, fax and other
out-of-pocket expenses incurred in connection with Mr. Focht's approved
travel and consulting services, so long as Mr. Focht provides to Tenet
acceptable documentation of or receipts for such expenses. Tenet further
agrees to provide secretarial support as required to support Mr. Focht's
consulting assignments and during the first twenty-four months of the
consulting period Tenet will provide a full-time executive assistant
acceptable to Mr. Focht to assist Mr. Focht in the transition from his office
as President and Chief Operating Officer. Tenet will pay for the necessary
and reasonable travel and lodging expenses of the executive assistant as
required to provide the support to Mr. Focht. Such travel and lodging shall
be limited to no more than one round trip from Dallas, Texas to Santa Ynez,
California every 45 days and two nights of lodging per trip.
6. Tenet acknowledges that Mr. Focht is retiring from the company with
its consent. Tenet further agrees that, as a retiree, Mr. Focht also may
exercise, for a period of three (3) years after the Effective Date, and in
accordance with the terms of the applicable Tenet benefit plan, any stock
options he may have been granted under the NME 1983 Stock Incentive Plan
prior to the Effective Date. Tenet further agrees that, as a retiree, Mr.
Focht also may exercise any stock options he may have been granted under the
NME 1991 Stock Option Plan, or the Tenet 1995 Stock Incentive Plan, in
accordance with the terms of the applicable Tenet stock option plan. Mr.
Focht acknowledges that the stock options granted June 24, 1998 will not be
permitted to vest and will not be exercisable since Mr. Focht will not be in
compliance with the terms of that grant.
7. Tenet further agrees that the Consulting Period shall be considered
for purposes of determining Mr. Focht's final SERP benefit under the Tenet
Supplemental Executive Retirement Plan and that Mr. Focht will be eligible to
receive the early retirement benefit from that plan as of the end of the
consulting period. The SERP benefit payable as of the end of the consulting
period will be approximately $546,430 per year with the final amount to be
determined when Mr. Focht's actual salary and bonus through December 31, 1999
are known. Tenet agrees to provide such payment if the plan does not.
8. Tenet agrees that during the Consulting Period, Tenet will continue
to provide health insurance benefits either by Tenet's paying the COBRA
premium for health coverage or such benefits to be provided under a
commercially available health insurance policy from a carrier which is
acceptable to Mr. Focht to be purchased by Tenet, unless such policy is
impracticable to obtain due to preexisting conditions (as defined by such
policy) or other limitations, in which event Tenet shall continue to provide
such health insurance benefits under Tenet's existing benefit plan(s). Tenet
further agrees that any health insurance coverage provided to Mr. Focht and
his spouse during the Consulting Period shall be the same as provided to
Tenet's then current President and Chief Operating Officer or substantially
equal to the health insurance coverage previously provided to Mr. Focht.
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9. Should Mr. Focht become disabled and otherwise be unable to perform
under this agreement, all consulting payments under the agreement shall cease
and the SERP benefits described in Paragraph 7 above shall become immediately
payable. If Mr. Focht dies during the term of this agreement, the consulting
payments under this agreement shall cease and the survivor benefits as
appropriate under the SERP shall begin to be paid at fifty percent (50%) of
the amount shown in Paragraph 7 above.
10. Mr. Focht agrees that either by mutual agreement with the Chairman
and Chief Executive Officer or by instruction from the Board of Directors of
Tenet, Mr. Focht will surrender his positions, titles and responsibilities as
President and Chief Operating Officer, or either of such positions, prior to
December 31, 1999. Following the date of any such surrender and until the
Effective Date, Mr. Focht shall continue to be an employee of Tenet and shall
continue to receive salary, benefits and Annual Incentive Plan awards as in
effect before such surrendering of title, position and responsibilities, and
shall provide such similar services and in a similar manner to Tenet as set
forth in Paragraph 2.
11. Mr. Focht agrees that should he continue to be a member of the Board
of Directors of Tenet during all or any portion of the Consulting Period, he
shall not receive any fees including the normal fees and retainer paid to
non-employee directors. Further, Mr. Focht shall not be entitled to receive
benefits under the Director's Retirement Plan or the 1994 Directors Stock
Option plan.
12. Mr. Focht acknowledges that he has held sensitive executive positions
with Tenet and its subsidiaries and that, by virtue of having held such
positions, he has had access to, and has received or developed confidential
information and trade secrets pertaining to Tenet's operations which are
proprietary to Tenet and which have not been disclosed to the public. Mr.
Focht agrees that he shall keep all such information confidential and that he
shall not disclose any such information to any other person, except as may be
required by law or with the consent of Tenet. Without limiting the
generality of the foregoing, Mr. Focht agrees that he will not respond to or
in any way participate in or contribute to any public discussion, notice or
other publicity concerning or in any way related to the confidential
information concerning Tenet, its operations, officers or directors which is
proprietary to Tenet and which has not been disclosed to the public, or any
other matters concerning his employment with Tenet. Mr. Focht further agrees
that he will not talk to or provide any documents to any non-governmental
third party concerning any allegation of unlawful or fraudulent activity or
conduct, except as may be required by law. Mr. Focht further agrees that he
promptly will notify Tenet's General Counsel, Scott M. Brown, or his
successor, in the event that any request is made of him by anyone for the
disclosure or release of any information or documents referred to herein.
Mr. Focht further agrees that any disclosure by him or any of Tenet's
confidential or proprietary information referred to herein in violation of
this agreement, which disclosure is materially adverse to Tenet, its
subsidiaries or related companies or entities, or its and/or their
operations, officers or directors, shall constitute a material breach of this
Agreement.
13. Mr. Focht agrees that during the Consulting Period he will cooperate
fully with Tenet, upon request, in relation to Tenet's defense, prosecution
or other involvement in any continuing or future claims, lawsuits, charges,
and internal or external investigations which arise out of events or business
matters which occurred during Executive's prior employment by Tenet. Such
continuing duty of cooperation shall include making himself available to
Tenet, upon reasonable notice, for depositions, interviews, and appearance as
a witness, and furnishing information to Tenet and its legal counsel upon
request. Tenet will reimburse Mr. Focht for any expenses, including legal
expenses, incurred by Mr. Focht in satisfying his obligation under this
Paragraph 13.
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14. Mr. Focht agrees not to accept any employment, provide any services
to any entity or person or engage in any enterprise during the Consulting
Period that would interfere or conflict with his ability to provide the
consulting services or other services required under this Agreement. Mr.
Focht agrees that during the Consulting Term, unless express prior written
permission is granted by Tenet, he shall not, directly or indirectly, for his
own benefit or as agent for another, carry on or participate in the
ownership, management or control of, or be employed by, or serve as a
director of, or consult for, or license or provide know how to, or otherwise
render services to, or allow his name or reputation to be used in or by, any
other present or future business enterprise that competes with Tenet or its
subsidiaries or affiliates in any of the lines of business in which Tenet or
such subsidiaries or affiliates are then engaged anywhere in the world;
PROVIDED that nothing contained herein shall limit the right of Mr. Focht, as
an investor, to hold and make investments in securities of any corporation or
other entity that competes in the lines of business in which Tenet, its
subsidiaries or its affiliates are engaged. Mr. Focht acknowledges that he
considers the restrictions set forth in this Paragraph 14 to be reasonable
and necessary both individually and in the aggregate for the proper
fulfillment of his consulting obligations hereunder. Mr. Focht further
acknowledges and agrees that if he engages in any activity proscribed by this
Paragraph 14, Tenet shall have no further obligation to make any payments to
Mr. Focht under this Agreement. If Tenet should cease to make payments under
this agreement then Mr. Focht would be free to compete.
15. Tenet agrees to indemnify, defend and hold harmless Mr. Focht to the
fullest extent permitted by Tenet's by-laws and articles of incorporation, in
connection with any action brought against Mr. Focht involving his proper
performance of the consulting services required of him under this Agreement.
16. The parties agree that no provision in this Agreement shall be
construed or interpreted in any way to limit, restrict or preclude either
party hereto from cooperating with any internal or external investigation or
of any governmental agency in the proper performance of its investigatory or
other lawful duties.
17. Tenet may terminate this agreement for cause. For purposes of this
Agreement, "cause" shall be defined to include, without limitation, Mr.
Focht's dishonesty, fraud, willful misconduct, willful breach of his duties,
self-dealing, failure or habitual neglect or refusal to perform his duties in
any material respect, violation of law in the performance of his consulting
duties (except traffic violations or similar minor infractions), continued
incapacity to perform his duties and any failure or refusal by Mr. Focht to
comply with any reasonable instructions from Tenet, including instructions to
surrender his position as further set forth in Paragraph 10.
18. The parties agree that any dispute, controversy or claim whatsoever
arising out of or relating to this Agreement or the termination thereof, or
otherwise between Tenet and Mr. Focht shall, in lieu of a jury or other civil
trial, be settled by final and binding arbitration in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association
before an arbitrator selected by mutual consent who is a member of the
National Academy of Arbitrators. This includes all claims whether arising in
tort or contract and whether arising under statute or common law. The
obligation to arbitrate such claims shall survive the termination of this
Agreement, and the arbitrator shall have jurisdiction to determine the
arbitrability of any claim. The arbitrator shall not have the right to add
to, subtract from or modify any of the terms of this Agreement. Judgment on
any award rendered by the arbitrator may be entered or enforced by any court
having jurisdiction thereof. The arbitrator's fees shall be borne equally by
the parties, and each party shall be
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responsible for paying its own costs for the arbitration, including without
limitation, attorneys' fees, witness fees, transcripts or other expenses.
However, the arbitrator may award attorneys' fees and costs to the prevailing
party where expressly authorized by statute.
19. This Agreement shall in all respects be interpreted, enforced and
governed under the laws of the State of California without regard to
conflicts of laws principles. The language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning,
and not strictly for or against any of the parties.
20. Should any provision of this Agreement be declared and/or be
determined by any court to be illegal or invalid, the validity of the
remaining parts, terms or provisions shall not be affected thereby, and said
illegal or invalid part, term or provision shall be deemed not to be a part
of this Agreement. Notwithstanding the foregoing, Mr. Focht acknowledges and
agrees that if Paragraph 14 of this Agreement is found to be illegal, invalid
or in any way unenforceable or if Mr. Focht initiates any proceeding of any
nature or kind or seeks to challenge the validity or enforceability of
Paragraph 14, Tenet shall have no further obligation to make any payments to
Mr. Focht under this Agreement and Mr. Focht shall have no responsibility to
continue to provide services
21. The parties hereby agree that this Agreement contains the entire
agreement between the parties hereto regarding the subject matter hereof, and
fully supersedes any and all prior agreements or understandings between the
parties hereto pertaining to the subject matter hereof.
22. Tenet further agrees that all of its obligations under this Agreement
shall be binding and enforceable against any and all of its successor
companies and entities. Tenet hereby represents that it has the authority to
so bind such successor(s).
IN WITNESS WHEREOF, the parties hereto, having first read the same, have
executed this Consulting and Non-Compete Agreement on the dates hereinafter
set forth and hereby warrant and represent that they have the authority to
enter into this agreement.
DATED ___________________, 199_ __________________________________
Michael H. Focht, Sr.
DATED ___________________, 199_ TENET HEALTHCARE CORPORATION
By:_______________________________
Title:____________________________
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