1
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of November 1, 1996, between PHYSICIANS TRUST, INC., a Delaware corporation
(the "Corporation"), and XXXXXXX X. XXXX ("Executive").
RECITALS
A. Executive desires to become employed by the Corporation as
Executive Vice President of Operations and Chief Operating Officer for the term
hereof pursuant to the terms and conditions set forth in this Agreement.
B. The Corporation desires to employ Executive in such capacity
pursuant to the terms and conditions set forth in this Agreement.
C. Executive recognizes that an important aspect of the
Corporation's business includes its trade secrets and proprietary information
and that it is appropriate and necessary for the Corporation to protect such
matters and Executive recognizes and acknowledges that it is reasonable and
necessary for certain restrictions to be placed on Executive's ability to
compete with the Corporation in order to protect the legitimate business
interest of the Corporation.
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions set forth below, the parties covenant and agree as follows:
1. DUTIES. During the term of this Agreement, Executive agrees
to be employed by and to serve the Corporation as Executive Vice President of
Operations and Chief Operating Officer, and the Corporation agrees to employ
and retain Executive in such capacity. Executive shall devote his best efforts
and his business time, energy, and skill in order to perform, consistent with
generally recognized responsibilities and authority of a Chief Operating
Officer his duties assigned to him. In the performance of his duties
hereunder, Executive shall at all times be subject to the directions of the
Board of Directors of the Corporation.
2. TERM AND TERMINATION.
2.1 BASIC TERM. Subject to the provisions for
termination as hereinafter set forth, the initial term of employment of
Executive by the Corporation shall be for a period of three years commencing on
the effective date hereof. The initial term shall be automatically extended
unless either party shall give written notice of termination of this Agreement
at least 60 days before the expiration of the initial three year term. In the
event that Executive shall continue in the full-time employment of the
Corporation after the additional two-year period without a written extension of
this Agreement, such continued employment shall be for successive annual
periods and shall be subject to the terms and conditions of this Agreement.
______________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
2
2.2 TERMINATION OF AGREEMENT. Executive's employment
under this Agreement may be terminated under any of the following
circumstances:
(a) Immediately by the Corporation, upon the
death of Executive.
(b) At the option of the Corporation in the event
that Executive should, in the reasonable judgment of the Board
of Directors of the Corporation, fail to perform his duties
under this Agreement on account of illness or physical or
mental incapacity, and such illness or incapacity shall
continue for a period of more than six months. The
Corporation's option shall be exercised in writing and
delivered to Executive and shall be effective upon delivery.
(c) Immediately, upon written notice by the
Corporation for cause which for purposes of this Agreement
shall be defined as (i) Executive's willful and persistent
inattention to his reasonable duties which amounts to gross
negligence or willful dishonesty towards, fraud upon, or
deliberate injury or attempted injury to, the Corporation,
(ii) Executive's willful breach of any term or provision of
this Agreement which breach shall have remained substantially
uncorrected for 30 days with an opportunity to cure following
written notice to the Executive; or (iii) the commission by
Executive of any act or any failure by Executive to act
involving serious criminal conduct or moral turpitude, whether
or not directly relating to the business and affairs of the
Corporation.
(d) Upon 60 days written notice by the
Corporation or the Executive, at any time, with or without
cause.
2.3 EFFECTS OF TERMINATION. In the event that this
Agreement is terminated pursuant to Section 2.2 or upon expiration of the term
of the Agreement, neither the Executive nor the Corporation shall have any
further obligations hereunder except for (a) obligations occurring prior to the
date of termination, and (b) obligations, promises or covenants contained
herein which are expressly made to extend beyond the term of this Agreement.
The obligations, promises or covenants contained herein that shall extend
beyond the term of this Agreement shall include, without limitation, those
obligations, promises or covenants contained herein regarding confidentiality
of information, indemnities and the Executive's covenants not to compete or
solicit customers or employees.
2.4 PAYMENTS UPON TERMINATION. Upon termination for any
of the foregoing causes, the Executive or his estate shall be entitled to
receive all accrued and unpaid compensation, including salary, deferred cash
compensation and bonuses and unpaid vacation and reimbursements for certain
expenses through the effective date of termination. In the event of the
Executive's termination by the Company for any reason other than for cause (in
accordance with Section 2.2(c)), Executive shall continue to be paid, as
severance pay, an amount equal to his monthly salary (including any deferred
salary portions) at the time of termination along with insurance benefits for
______________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
-2-
3
a period of six months if termination occurs during the initial term and for a
period of one year if termination occurs during the renewal term.
3. SALARY AND BENEFITS.
3.1 BASE SALARY. As payment for the services to be
rendered by Executive, the Corporation agrees to pay to Executive a monthly
base salary in an amount not less than the amounts set forth on Schedule A
attached to this Agreement. All compensation of any kind paid to Executive
under this Agreement will be payable in accordance with the Corporation's
regular payroll policies and subject to customary withholding and employment
taxes.
3.2 BONUS. During each calendar quarter commencing one
full calendar quarter after the IPO (as defined on Schedule "A"), Executive
shall receive a bonus equal to 4% of the increase in the pre tax net income per
share (over the net income per share for the most recent calendar quarter)
times the number of shares outstanding at the end of the quarterly period for
which the bonus is granted, except that such bonus shall not exceed 100% of the
base salary for the same calendar quarter. Shares outstanding shall be
determined on a fully diluted basis including for such purpose all vested stock
options and all delayed delivery shares of common stock required to be issued
by the Corporation. Increases shall only be measured on increases in net
income (i.e., from break even) and no bonus shall be payable for any quarter
unless there is net income.
3.3 FOUNDER'S STOCK AND STOCK OPTIONS. Upon execution of
this Agreement, Executive shall have the right to acquire 135,000 shares of the
Corporation's common stock for a purchase price of $135. Such stock shall be
delivered to Executive following receipt by the Corporation of the purchase
price. In addition to the base salary payable pursuant to Section 3.1 and the
bonus payable pursuant to Section 3.2, the Corporation agrees to grant
Executive stock options as follows: on the effective date of this Agreement,
Executive shall be granted options to purchase (i) 135,000 shares of common
stock for a price of one xxxxx per share, exercisable in equal quarterly
increments over 36 months, at the end of each successive quarter from the
effective date, and (ii) 135,000 shares of common stock at an option price of
$.50 per share, exercisable in equal quarterly increments over 24 months at the
end of each successive quarter from the start date of the additional term.
Such options shall be issued pursuant to the Corporation's 1996 Stock Option
Plan and shall immediately become exercisable in the event of Executive's
termination by the Corporation without cause or a constructive termination (a
significant change in Executive's job description or duties such that Executive
would no longer be performing the duties of an executive officer) or in the
event of a sale or merger of the Corporation. In the event of termination for
cause (as provided in Section 2.2(c)), all nonvested options shall immediately
be forfeited.
3.4 EMPLOYEE HEALTH BENEFIT PLANS. Executive shall be
eligible to participate in the Corporation's medical, dental, and health
insurance benefit plans which will be established by the Board of Directors of
the Corporation and made generally available to officers of the Corporation
until termination of this Agreement. Said Health Insurance Plan shall cover
Executive, spouse and dependents with per person deductibles of not more than
$250.00 per year and maximum co-insurance of not more than twenty (20%)
percent.
______________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
-3-
4
3.5 VACATION. Executive shall be entitled to all federal
"bank" holidays plus 20 additional days of vacation time without loss of
compensation during each year of employment. Such vacation time may be accrued
and carried over if not used in full in each year.
3.6 BUSINESS EXPENSES. Executive will also be entitled
to reimbursement for his reasonable business expenses incurred in connection
with the performance of his duties hereunder, including expenditures for mobile
telephone service, entertainment, gifts and travel, provided (a) that each such
expenditure is of a nature qualifying it as a prior deduction on the federal
and state income tax returns of the Corporation and (b) Executive furnishes to
the Corporation adequate records and other documentary evidence required by
federal and state statutes and regulations issued by the appropriate tax
authorities for the substantiation of each such expenditure as an income tax
deduction.
3.7 CONTINUING EDUCATION ALLOWANCE. The Executive shall
be entitled to an allowance of $1,500 annually to be used for continuing
education costs including professional dues.
3.8 INDEMNIFICATION. The Corporation will indemnify and
hold harmless Executive in connection with the defense of any action, suit or
proceeding to which he is a party or threat thereof, by reason of his being or
having been an Executive or director of the Corporation to the fullest extent
that may be permitted by applicable law. Furthermore, the Corporation hereby
expressly releases, acquits and forever discharges the Executive, his heirs,
assigns, executors, administrators, agents, successors in interest, and legal
representatives, of and from any and all claims, demands, complaints,
liabilities, causes of action, controversies, damages, charges, agreements,
promises, obligations, rights, actions, remedies, suits, injuries, debts,
expenses and claims for attorney's fees whether at law or in equity, based
upon, resulting from or arising out of actions or conduct undertaken by the
Executive in good faith on behalf of the Corporation, within the scope of
duties as an officer, director or employee of the Corporation.
4. COVENANTS OF EXECUTIVE.
4.1 NON-COMPETITION. During the term of his employment
under this Agreement, Executive shall not directly or indirectly, as an owner,
partner, shareholder, employee, consultant, or in any similar manner, engage in
any physician practice management company, magnetic resonance imaging or
diagnostic imaging business. Notwithstanding the foregoing, Executive shall be
free, without the Corporation's consent, to purchase or hold as an investment
or otherwise, up to five percent of the outstanding stock or other securities
of any corporation which has its securities publicly traded on any recognized
securities exchange or in the over-the-counter market or, five percent of the
stock or other securities of any privately held corporation that might be in
competition with the Corporation.
4.2 NON-SOLICITATION. Upon expiration of the term or
termination of this Agreement, Executive covenants that he shall not for one
year following such termination directly or indirectly as an owner, partner,
shareholder, employee in an executive capacity, consultant, or in any similar
manner (i) solicit, divert or attempt to solicit or divert any entity or person
which has an
_____________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
-4-
5
existing client or customer relationship with the Corporation to avail
themselves of the services, provides or programs of any other person or entity
which are competitive, in the Corporation's existing markets with any of the
services, products or programs provided by the Corporation, and (ii) solicit,
encourage or induce any employee of the Corporation to terminate his or her
employment with the Corporation. For purposes of this Agreement, the business
of the Corporation shall mean physician practice management and ancillary
services including magnetic resonance imaging and diagnostic imaging in the
areas of orthopedics and neurology.
4.3 NON-DISPARAGEMENT. During the term of Executive's
employment under this Agreement and upon expiration of the term or termination
of this Agreement, the Executive promises and agrees not to say, write,
express, communicate or relate anything derogatory, disparaging or defamatory
about the Corporation, its business practices and activities. Furthermore, the
Executive promises and agrees not to make any oral or written statements or
take any action detrimental to the goodwill of the Corporation, its officers,
directors, agents or to the relationships of the Corporation with it suppliers,
customers, employees and other persons having dealings with the Corporation.
The Corporation promises and agrees not to communicate anything orally or in
writing, disparaging or defamatory about the Executive to any person or entity
not employed by the Corporation.
4.4 COOPERATION. The Executive promises and agrees that
at all times after the termination of his employment with the Corporation, to
cooperate fully, without cost to the Executive, with the Corporation, its
officers, directors, employees, agents, and legal counsel, at the Corporation's
sole discretion, in connection with any claim, complaint, charge, suit or
action previously or thereafter asserted or filed against the Corporation which
relates to directly or indirectly with the Executive's employment with the
Corporation.
4.5 INVALID PROVISIONS. If any provision of this Section
4 is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term, including renewals, of this Agreement, such
provision shall be fully severable; this Section 4 shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Section 4; and the remaining provisions of this
Section 4 shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance from this
Section 4. Furthermore, in lieu of each such illegal, invalid, or
unenforceable provision there shall be added automatically as part of this
Section 4 a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible to make it legal, valid, and
enforceable.
5. CONFIDENTIALITY. Executive agrees that all confidential and
proprietary information (including without limitation any and all information,
books, records, and documents relating to the Corporation's operations,
customer lists, financial data, any and all reports to the Corporation by
Executive during the course of his employment by the Corporation, and any and
all information regarding personnel, customers, pricing, terms of sale,
research and development, or otherwise relating to the business of the
Corporation) relating to the business or operations of the Corporation or of
its affiliates, shall be kept and treated as confidential both during and after
the term of this Agreement, provided that Executive shall not incur any
liability for disclosure of information which (a) was permitted in writing by
the Corporation's Board of Directors, or (b) is within the public
______________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
-5-
6
domain or comes within the public domain without any breach of this Agreement.
All notes, memoranda, reports, drawings, blueprints, manuals, computer
programs, records, materials, data and other papers of every kind which were in
or shall come into Executive's possession at any time during Executive's
employment by the Corporation relating to any such confidential and proprietary
information shall be the sole and exclusive property of the Corporation. Upon
termination of Executive's employment with the Corporation, for any reason,
Executive promptly shall deliver the same, and all copies thereof, to the
Corporation.
6. COPYRIGHT. Executive agrees that, except as provided in the
preceding sentence, any and all writings produced at any time during the term
hereof by Executive as a part of the performance of his duties hereunder are
and will be the sole property of the Corporation, and that the Corporation will
have the exclusive right to copyright such writings in any country.
7. MISCELLANEOUS.
7.1 WAIVER. The waiver of the breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of the same or other provision hereof.
7.2 ENTIRE AGREEMENT; MODIFICATIONS. Except as otherwise
provided herein, this Agreement represents the entire understanding among the
parties with respect to the subject matter hereof, and this Agreement
supersedes any and all prior understandings, agreements, plans and
negotiations, written or oral, with respect to the subject matter hereof,
including without limitation any understandings, agreements or obligations
respecting any past or future compensation, bonuses, reimbursements, or other
payments to Executive from the Corporation. All modifications to the Agreement
must be in writing and signed by the party against whom enforcement of such
modification is sought.
7.3 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be delivered personally or given
by telegraph or facsimile transmission or first class mail and shall be deemed
to have been duly given when personally delivered or seven days after mailing
or one day after facsimile or telegraph transmission to the respective persons
named below:
If to the Corporation: Physicians Trust, Inc.
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Xx.
If to Executive: Xxxxxxx X. Xxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000-0000
Any party may change its address for notices by notice duly given
pursuant to this Section 7.3.
_____________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
-6-
7
7.4 HEADINGS. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
7.5 GOVERNING LAW; CONSENT TO JURISDICTION. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas. Executive and the Corporation each agree that service upon them
in any such action may be made by first class mail, certified or registered, in
the manner provided for delivery of notices in Section 7.3.
7.6 INJUNCTIVE RELIEF. The parties acknowledge and agree
that the extent of damages to the Corporation in the event of a breach of
Sections 4, 5 or 6 of this Agreement and damages to Executive in the event of a
breach of Section 3, would be difficult or impossible to ascertain and that
there is and will be available to either the Corporation or Executive no
adequate remedy at law in the event of any such breach. Accordingly, Executive
and the Corporation agree that, in the event of such breach, the Corporation or
Executive shall be entitled to enforce such sections by injunctive or other
equitable relief in addition to any other relief to which the Corporation or
Executive may be entitled.
7.7 SURVIVAL; NON-ASSIGNABILITY. The Corporation's
obligations hereunder shall not be terminated by reason of any liquidation,
dissolution, bankruptcy, cessation of business, or similar event relating to
the Corporation. This Agreement shall not be terminated by any merger or
consolidation or other reorganization of the Corporation. In the event any such
merger, consolidation, or organization shall be accomplished by transfer of
stock or by transfer of assets or otherwise, the provisions of this Agreement
shall be binding upon and shall inure to the benefit of the surviving or
resulting corporation or person. This Agreement shall be binding upon and inure
to the benefit of the executors, administrators, heirs, successors and assigns
of Executive; provided, however, that, except as herein expressly provided,
this Agreement shall not be assignable either by the Corporation (except to an
affiliate of the Corporation) or by Executive.
7.8 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which taken together shall constitute one and the
same Agreement.
7.9 SEVERABILITY. If any portion of this Agreement is
determined to be invalid or unenforceable, the remainder shall be valid and
enforceable to the maximum extent possible.
7.10 ATTORNEY'S FEES. In the event legal action is
brought to interpret or enforce this Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys fees and related costs.
7.11 EFFECTIVE DATE. This Agreement shall be effective
beginning with the Executive's first day of employment, which date is agreed to
be November 4, 1996.
______________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
-7-
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
ATTEST: CORPORATION:
PHYSICIANS TRUST, INC.
_________________________ By: /s/ XXXXXX X. XXXXXXX, XX.
--------------------------------------
Xxxxxx X. Xxxxxxx, Xx., President
EXECUTIVE:
/s/ XXXXXXX X. XXXX
-------------------------------------------
Xxxxxxx X. Xxxx
______________________________________________
Employment Agreement - Physician's Trust, Inc.
and Xxxxxxx X. Xxxx
-8-
9
EXHIBIT "A"
Year Amount
---- ------
First Year $162,000 per year ($13,500 per month)
(Paid according to the table below with the accrued portion paid at
the earlier of (i) the IPO, (ii) on termination of employment, or (iii) the
closing of transactions with total consideration of at least $20 million.)
Second Year $185,000 per year ($15,417 per month)
Third Year $200,000 per year ($16,666 per month)
Fourth Year $200,000 per year ($16,666 per month)
Fifth Year $210,000 per year ($17,500 per month)
Current Cash Deferred &
Payment Accrued Payment Total
------- --------------- -----
November 1996 $ 9,000 $ 4,500 $13,500
December 1996 $ 9,500 $ 4,000 $13,500
January 1997 $10,000 $ 3,500 $13,500
February 1997 $10,500 $ 3,000 $13,500
March 1997 $11,000 $ 2,500 $13,500
April 1997 $11,500 $ 2,000 $13,500
May 1997 and
thereafter $13,500 - 0 -
Until IPO or 10/31/97
For purposes of this Agreement, IPO shall mean (i) any public or
private stock offering which raises cash of at least $5 million, or (ii) any
public or private financing of at least $15 million.
__________________________________
Exhibit A - Employment Agreement
Page 1 of 1
