EXHIBIT 10.14
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of March 15, 1998,
between MEDPARTNERS, INC., a Delaware corporation (together with any successor
corporation, "Company"), and XXXXXXX XXXXXXX XXXXX, M.D., a resident of La
Palma, California ("Executive").
WITNESSETH:
WHEREAS, Company and its subsidiaries and affiliates are engaged in
managing physician practices and providing health care services in locations
throughout the United States; and
WHEREAS, Executive is currently employed by Company as Chief Medical
Officer, and Company desires to continue Executive's employment in such capacity
pursuant to the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the premises, and other mutual promises
and covenants hereinafter contained, Company and Executive do hereby agree, for
their mutual benefit, as follows:
Section 1. Employment.
Executive shall be employed by Company under this Agreement, effective
March 15, 1998 and Executive accepts such employment upon the terms and
conditions hereinafter set forth.
Section 2. Term.
The term of employment provided for in this Agreement shall commence on
March 15, 1998, and shall remain in full force and effect through December 31,
2000. Such term shall be automatically extended for an additional year upon
expiration of its initial term or any renewal term, unless, at least 90 days
prior to such expiration, either Executive or Company gives the other party
written notice of intent to terminate the Agreement at the end of such term.
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Section 3. Powers and Duties.
Executive shall be employed by Company during the term of employment under
this Agreement as the Chief Medical Officer of Company. In addition, Executive
shall also hold similar offices with Company' subsidiaries and affiliates and/or
their successors, and shall perform such duties, as may be assigned to him from
time to time by the Chief Executive Officer of Company ("CEO") or the CEO's
designee.
In carrying out his duties under this Agreement, Executive shall have such
powers and duties usually incident to the office of Chief Medical Officer. The
performance by Executive of any duties assigned to him which are not of the type
provided for herein shall not constitute a waiver of his rights hereunder or an
abrogation, abandonment or termination of this Agreement.
Executive shall devote all of his working time and best efforts in the best
interest of and on behalf of Company throughout the term of this Agreement in a
manner appropriate for an executive having Executive's position, duties,
responsibilities and status. Executive shall not be restricted from investing
his assets in such form or manner as will not require any services on his part
in the operation of the affairs of the companies in which such investments are
made.
Section 4. Place of Performance.
The headquarters for the performance of Executive's duties shall be located
in Long Beach, California, but from time to time Executive shall be required to
travel to Company's other locations in the proper conduct of his
responsibilities under this Agreement. Due to the national scope of Company's
business, Company may require Executive to spend a reasonable amount of time
traveling, as his duties and the business of Company and its subsidiaries and
affiliates may require.
Section 5. Compensation.
For all services rendered by Executive pursuant to this Agreement, Company
shall pay Executive the following compensation:
(a) Executive shall be paid a Base Salary of $425,000.00 per year, payable
in accordance with Company's standard payroll practices for executive employees.
Executive's Base Salary shall be reviewed annually during the term of this
Agreement by the CEO or the CEO's designee.
(b) Executive shall be eligible to receive an annual Performance Bonus of
up to 50% of his Base Salary, based on Company's bonus plan in effect for its
executives. All bonus
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payments shall be made after January 1 of the year following the year for which
such bonus payments are earned.
(c) For purposes of administration, the terms of this Agreement shall be
given effect on a pro-rata basis for partial calendar years and otherwise
administered on a calendar year basis.
Section 6. Employee Benefits.
Subject to eligibility requirements, Executive will be entitled to
participate in any employee retirement, benefit or welfare plans provided by
Company to its employees and/or to its senior executives, such as life
insurance, health and dental, retirement, savings and disability plans which
Company has in effect or may adopt from time to time. Without limiting the
generality of the foregoing, Company shall provide Executive the following
during the term of this Agreement:
(a) reasonable vacation during each year of this Agreement;
(b) payment of dues for such professional societies and associations of
which Executive is a member in furtherance of his duties hereunder;
(c) consideration, at least annually, by the Board of Directors for the
grant to Executive of options to purchase Common Stock of Company, subject to
the terms of Company' stock option plans; and
(d) participation in the Company executive benefits program which shall
include, without limitation, an automobile allowance, an allowance for personal
estate and tax planning services, an insurance allowance for split-dollar life
insurance for Executive and Executive's spouse and payment of country club
membership initiation fees and dues.
Section 7. Expenses.
Executive is authorized to incur reasonable expenses in promoting the
business of Company and its subsidiaries and affiliates, including expenses, to
the extent used for business purposes, for entertainment, travel and similar
items. Company will reimburse Executive for all such expenses, upon the
presentation by him of an itemized account of such expenditures in accordance
with the Company expense reimbursement procedures.
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Section 8. Definitions.
As used in this Agreement, the following terms shall have the meanings set
forth below:
(a) "Cause" shall mean (i) failure of Executive to comply with a lawful
order or request of the Chairman of the Board, CEO, President, the Board of
Directors or other executive of Company to whom Executive reports that is
consistent with the duties of Executive; (ii) any act of moral turpitude or
other conduct by the Executive amounting to fraud, dishonesty, negligence,
willful misconduct or insubordination, as determined by the CEO in his
reasonable judgment; (iii) Executive's engagement in conduct detrimental to the
operations, reputation or business interests of the Company or any of its
subsidiaries and affiliates, as determined by the CEO in his reasonable
judgment; (iv) Executive's conviction for any felony; (v) inattention to or
unsatisfactory performance of Executive's duties or performance objectives
assigned to him from time to time during the term of this Agreement; or (vi) any
other breach by Executive of this Agreement or any other agreement between
Company and Executive.
(b) "Change in Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of Common Stock of
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities
of Company entitled to vote generally in the election of
directors ("the Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control:
(1) any acquisition directly from Company, (2) any acquisition
by Company, (3) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Company or any
corporation controlled by Company, or (4) any acquisition by any
corporation pursuant to a transaction which complies with
clauses (1), (2) and (3) of subsection (iii) below;
(ii) Individuals who, as of the date of this Agreement, constitute
the Board of Directors of Company (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by Company' stockholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such
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individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
assets of Company (a "Business Combination"), in each case,
unless, following such Business Combination, (1) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns Company or all or substantially all of
Company' assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (2) no party (excluding any
corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination, and (3) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Board of Directors of Company at the time of the
execution of the initial agreement, or of the action of the
Board of Directors, providing for such Business Combination; or
(iv) Approval by the stockholders of Company of a complete
liquidation or dissolution of Company.
(c) "Code" shall mean the Internal Revenue Code of 1986 and all regulations
promulgated thereunder, as the same may be amended from time to time.
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(d) "Disability" shall be deemed to have occurred if Executive makes
application for or is otherwise eligible for disability benefits under any
Company-sponsored long-term disability program covering Executive, and Executive
qualifies for such benefits. In the absence of a Company-sponsored long-term
disability program covering Executive, Executive shall be presumed totally and
permanently disabled if so determined by the [TITLE OF OFFICER] following
reasonable review of a medical opinion certifying that Executive will be unable
to perform his duties under this Agreement for at least 90 days due to a
physical or mental condition.
(e) "Good Reason" shall mean:
(i) A reduction in Executive's Base Salary, as the same may be
increased from time to time, other than a reduction in connection with an
across-the-board salary reduction affecting Company' employees at a comparable
level to Executive;
(ii) A material reduction in Executive's title or responsibilities
unless replaced with a new title or new responsibilities of comparable stature
or value to Company within 30 days;
(iii) A material breach of this Agreement by Company that is not
remedied within 30 days after receiving written notice from Executive of such
failure;
(iv) Any purported termination for Cause or Disability without
reasonable grounds therefor; or
(v) Following the occurrence of a Change in Control, any decision by
Executive to terminate his employment during the period from the Change in
Control through the first anniversary of the Change in Control.
(f) "Retirement Date" shall mean the date Executive reaches age 70 1/2, or
the date Executive retires in accordance with Company' retirement arrangements
established for Executive with Executive's consent.
Section 9. Termination.
This Agreement shall terminate upon the occurrence of any of the following
termination events:
(a) Executive gives notice to Company prior to the occurrence of a Change
in Control that Executive wishes to terminate this Agreement for any reason
other than Good Reason not less than 180 days after such notice is given, such
termination to be effective on the date specified in such notice;
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(b) Executive gives notice to Company prior to the occurrence of a Change
in Control that Executive wishes to terminate this Agreement for Good Reason not
less than 90 days after such notice is given, such termination to be effective
on the date specified in such notice;
(c) Company gives notice to Executive that Company wishes to terminate this
Agreement for Cause, such termination to be effective upon receipt by Executive
of such notice;
(d) Executive dies or Executive ceases to be able to perform his duties
hereunder due to death or Disability, such termination to be effective
immediately upon such death or Disability;
(e) Executive reaches his Retirement Date, such termination to be effective
upon such Retirement Date;
(f) Company gives notice to Executive prior to the occurrence of a Change
in Control that Company wishes to terminate this Agreement for any reason other
than for Cause or due to Executive's death, Disability or Retirement Date not
less than 90 days after such notice is given, such termination to be effective
on the date specified in such notice.
(g) Company gives notice to Executive following the occurrence of a Change
in Control that Company wishes to terminate this Agreement for any reason other
than for Cause or due to Executive's death, Disability or Retirement Date, such
termination to be effective upon receipt by Executive of such notice; or
(h) Executive gives notice to Company following the occurrence of a Change
in Control that Executive wishes to terminate this Agreement for Good Reason,
such termination to be effective upon receipt by Company of such notice.
Section 10. Termination Benefits.
(a) Upon the occurrence of an event of termination described in Section
9(a) or 9(c), Executive shall be entitled to receive the following as severance
compensation:
(i) payment of any previously unpaid Base Salary through the date of
termination;
(ii) continued payment of Executive's annual Base Salary at the time
of termination (or, if greater, of Executive's annual Base Salary in effect
immediately prior to the current annual Base Salary rate) for a period of six
(6) months; and
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(iii) payment of any life insurance, disability or other benefits, if
any, for which Executive is then eligible under the terms of Company' employee
retirement, benefit and welfare plans.
(b) Upon the occurrence of an event of termination described in Section
9(d) or 9(e), Executive (or Executive's estate in the event of Executive's
death) shall be entitled to receive the following as severance compensation:
(i) payment of any previously unpaid Base Salary through the date of
termination;
(ii) payment of Executive's Performance Bonus under Section 5(b)
through the date of termination, calculated on the basis of the sum of the total
achievable amounts of the Performance Bonus for the current fiscal year, divided
by twelve months, and multiplied by the number of months Executive is employed
during such fiscal year through the date of termination, with any partial month
of employment to be treated as a full month;
(iii) a lump sum payment equal to six (6) months of Executive's annual
Base Salary at the time of termination (or, if greater, of Executive's annual
Base Salary in effect immediately prior to the current annual Base Salary rate);
(iv) payment of any life insurance, disability or other benefits, if
any, for which Executive is then eligible under the terms of Company' employee
retirement, benefit and welfare plans; and
(v) a right to immediately vest in 100% of all options to purchase
Common Stock of Company that have been granted to Executive by Company and a
period of at least 90 days following termination for Executive to exercise all
such options in accordance with the terms thereof.
(c) Upon the occurrence of an event of termination described in Sections
9(b) or 9(f), Executive shall be entitled to receive the following as severance
compensation:
(i) payment of any previously unpaid Base Salary through the date of
termination;
(ii) payment of Executive's Performance Bonus under Section 5(b)
through the date of termination, calculated on the basis of the sum of the total
achievable amounts of the Performance Bonus for the current fiscal year, divided
by twelve months, and multiplied by the number of months Executive is employed
during such fiscal year through the date of termination, with any partial month
of employment to be treated as a full month;
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(iii) continued payment of Executive's annual Base Salary at the time
of termination (or, if greater, of Executive's annual Base Salary in effect
immediately prior to the current annual Base Salary rate) for a period of three
(3) years;
(iv) continued payment of the total achievable amounts of Executive's
Performance Bonus under Section 5(b) for the current fiscal year (or, if
greater, of the total achievable amounts of Executive's Performance Bonus in
effect for the fiscal year most recently ended) for a period of three (3) years;
(v) payment of any life insurance, disability or other benefits, if
any, for which Executive is then eligible under the terms of Company' employee
retirement, benefit and welfare plans;
(vi) subject to the terms and eligibility requirements of any such
plan, continued coverage, for a period of three (3) years following the date of
termination, under any employee retirement, benefit and welfare plans of Company
for which Executive is then eligible; provided that, (A) if Executive's
participation in any such plan is not permitted under the terms thereof, Company
will use reasonable best efforts to provide or arrange comparable coverage for
Executive, (B) Company' obligation under this paragraph (vi) will terminate with
respect to any plan on the date Executive first becomes eligible for the same
type of coverage under another employer's plan, and (C) to the extent
applicable, upon termination of coverage under any Company plan pursuant to this
paragraph (vi), Executive shall have the option to have assigned to him at no
cost and with no apportionment for prepaid premiums, any assignable insurance
policy owned by Company and relating specifically to Executive; and
(vii) a right to immediately vest in 100% of all options to purchase
Common Stock of Company that have been granted to Executive by Company and a
period of at least 90 days following termination for Executive to exercise all
such options in accordance with the terms thereof.
(d) Upon the occurrence of an event of termination described in Section
9(g) or 9(h), Executive shall be entitled to receive the following as severance
compensation:
(i) payment of any previously unpaid Base Salary through the date of
termination;
(ii) payment of Executive's Performance Bonus under Section 5(b)
through the date of termination, calculated on the basis of the sum of the total
achievable amounts of the Performance Bonus for the current fiscal year, divided
by twelve months, and multiplied by the number of months Executive is employed
during such fiscal year through the date of termination, with any partial month
of employment to be treated as a full month;
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(iii) a lump sum payment equal to three (3) times Executive's annual
Base Salary at the time of termination (or, if greater, of Executive's annual
Base Salary in effect immediately prior to the current annual Base Salary rate);
(iv) a lump sum payment equal to three (3) times the total achievable
amounts of Executive's Performance Bonus under Section 5(b) for the current
fiscal year (or, if greater, of the total achievable amounts of Executive's
Performance Bonus in effect for the fiscal year most recently ended);
(v) payment of any life insurance, disability or other benefits, if
any, for which Executive is then eligible under the terms of Company' employee
retirement, benefit and welfare plans;
(vi) subject to the terms and eligibility requirements of any such
plan, continued coverage, for a period of three (3) years following the date of
termination, under any employee retirement, benefit and welfare plans of Company
for which Executive is then eligible; provided that, (A) if Executive's
participation in any such plan is not permitted under the terms thereof, Company
will use reasonable best efforts to provide or arrange comparable coverage for
Executive, (B) Company' obligation under this paragraph (vi) will terminate with
respect to any plan on the date Executive first becomes eligible for the same
type of coverage under another employer's plan, and (C) to the extent
applicable, upon termination of coverage under any Company plan pursuant to this
paragraph (vi), Executive shall have the option to have assigned to him at no
cost and with no apportionment for prepaid premiums, any assignable insurance
policy owned by Company and relating specifically to Executive; and
(vii) a right to immediately vest in 100% of all options to purchase
Common Stock of Company that have been granted to Executive by Company and a
period of at least 90 days following termination for Executive to exercise all
such options in accordance with the terms thereof.
(e) Payment of severance compensation under paragraphs (c) and (d) of this
Section 10 shall be conditioned upon Executive signing a Separation Agreement
and General Release in substantially the form attached hereto as Exhibit A, or
such other form of similar scope and content as may be mutually agreed by the
parties.
Section 11. Certain Additional Payments By Company.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, if it shall be determined that any payment or distribution
by Company to or for Executive's benefit (whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
11) (a "Payment") would be subject to the excise tax imposed by
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Section 4999 of the Code or any interest or penalties are incurred by Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax") , then Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 11, if it shall be
determined that Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount that could be paid to
Executive such that the receipt of Payments would not give rise to any Excise
Tax (the "Reduced Amount"), then no Gross-Up Payment shall be made to Executive
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.
All determinations required to be made under this Section 11, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by a nationally recognized accounting firm as may be designated by
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to Company and Executive within 15 business days of the
receipt of notice from Executive that there has been a Payment, or such earlier
time as is requested by Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne by Company. Any Gross-Up Payment,
as determined pursuant to this Section 11, shall be paid by Company to Executive
within five days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon Company and
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Company exhausts
its remedies pursuant to Section 11(b) and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by Company to or for Executive's benefit.
(b) Executive shall notify Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but
no later then ten business days after Executive is informed in writing of such
claim and shall apprise Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such
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claim prior to the expiration of the 30-day period following the date on which
it gives such notice to Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give Company any information reasonably requested by Company
relating to such claim,
(ii) take such action in connection with contesting such claim as
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by Company,
(iii) cooperate with Company in good faith in order effectively to
contest such claim, and
(iv) permit Company to participate in any proceeding relating to such
claim; provided, however, that Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an after-
tax basis, from any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment of
costs and expense. Without limitation on the foregoing provisions of this
Section 11, Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct Executive to
pay the tax claimed and xxx for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as Company shall determine; provided, however, that if
Company directs Executive to pay such claim and xxx for a refund, Company shall
advance the amount of such payment to Executive, on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for Executive's taxable year with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, Company' control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(c) If, after Executive's receipt of an amount advanced by Company pursuant
to Section 11(b), Executive becomes entitled to receive any refund with respect
to such claim, Executive shall (subject to Company' complying with the
requirements of this Section 11(b)) promptly pay to Company the amount of such
refund (together with any interest paid or credited
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thereon after taxes applicable thereto). If, after Executive's receipt of an
amount advanced by Company pursuant to Section 11(b), a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
Section 12. Non-Competition.
(a) In the event that Executive's employment under this Agreement shall
terminate during its term, for the period of time with respect to which
Executive is entitled to receive compensation hereunder after such termination
(but in any event for a period of not less than one year), Executive shall not,
directly or indirectly, (i) own, operate, be employed by, be a director of, act
as a consultant for, be associated with, or be a partner or have a proprietary
interest in, any enterprise, partnership, association, corporation, joint
venture or other entity, which is competitive with the businesses of Company, or
any subsidiary or affiliate thereof, in any county in a state where Company or
its subsidiaries or affiliates are conducting such business at the time of such
termination, or (ii) hire, permit the hiring of, offer to hire, entice away or
otherwise persuade or attempt to persuade any employee (including any employee
during the six (6) month period prior to Executive's termination of service),
officer, affiliated health care provider, supplier or any prospective health
care provider or supplier then negotiating with Company, to discontinue or alter
its or their relationship with Company or any of its subsidiaries and
affiliates; provided, however, that if such termination shall occur as a result
of a Change in Control, this Section 12 shall be void and shall be of no further
force and effect.
(b) The parties have entered into this Section 12 of this Agreement in good
faith and for the reasons set forth in the recitals hereto and assume that this
Agreement is legally binding. If, for any reason, this Section 12 is not
binding because of its geographical scope or because of its term, then the
parties agree that this Agreement shall be deemed effective to the widest
geographical area and/or the longest period of time (but not in excess of one
year) as may be legally enforceable.
(c) Executive acknowledges that the rights and privileges granted to
Company in this Section 12 are of special and unique character, which gives them
a peculiar value, the loss of which may not be reasonably or adequately
compensated for by damages in an action of law, and that a breach thereof by
Executive of this Section 12 will cause Company great and irreparable injury and
damage. Accordingly, Executive hereby agrees that Company shall be entitled to
remedies of injunction, specific performance or other equitable relief to
prevent a breach of this Section 12 of this Agreement by Executive. This
provision shall not be construed as a waiver of any other rights or remedies
Company may have for damages or otherwise.
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Section 13. Non-Assignability.
Executive shall not have the right to assign, transfer, pledge, hypothecate
or dispose of any right to receive payments hereunder or any rights, privileges
or interest hereunder, all of which are hereby expressly declared to be non-
assignable and non-transferable, except after termination of his employment
hereunder. In the event of a violation of the provisions of this Section 13, no
further sums shall hereafter become due or payable by Company or its
subsidiaries and affiliates to Executive or his assignee, transferee, pledgee or
to any other person whatsoever, and Company shall have no further liability
under this Agreement to Executive.
Section 14. Claims; Arbitration.
(a) All claims by Executive for compensation and benefits under this
Agreement shall be directed to and determined by the CEO and shall be in
writing. Any denial by the CEO of a claim for benefits under this Agreement
shall be delivered to Executive in writing and shall set forth the specific
reasons for the denial and specific provisions of this Agreement relied upon.
The CEO shall afford a reasonable opportunity to Executive for a review of a
decision denying a claim and shall further allow Executive to appeal any such
decision to the Board Of Directors within 60 days after notification by the CEO
that Executive's claim has been denied.
(b) To the extent permitted by applicable law, any further dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in the State of California, in accordance with the
rules of the American Arbitration Association then in effect. The agreement set
forth herein to arbitrate shall be specifically enforceable under the prevailing
arbitration law.
(c) By initialing below, the parties hereto (i) acknowledge that they have
read and understood the provisions of this Section regarding arbitration and
(ii) that performance of this Agreement will be an interstate commerce as that
term is used in the Federal Arbitration Act, 9 U.S.C. (S) 1 et seq., and the
parties contemplated substantial interstate activity in the performance of this
Agreement including, but not limited to, interstate travel, the use of
interstate phone lines, the use of the U.S. mail services and other interstate
courier services.
Xxxxxxx Xxxxxxx Xxxxx, M.D. For Company:
--------------------------- ---------------------------
(d) Notice of the demand for arbitration shall be filed in writing with the
other party to this Agreement and with the American Arbitration Association.
The demand for arbitration shall be made within a reasonable time after the
claim, dispute or other matter in question has arisen, and in no event shall it
be made after the date when institution of legal or equitable
14
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations.
(e) The award rendered by the arbitrator shall be final and judgment may be
entered upon it in accordance with applicable law in any court having
jurisdiction thereof.
(f) Unless otherwise agreed in writing, Company shall continue to make
payments and provide benefits in accordance with this Agreement, and Executive
shall continue to perform his obligations hereunder during any arbitration
proceedings.
(g) Each party shall pay its own legal fees and other expenses associated
with any dispute arising under this Agreement.
Section 15. Employment Taxes.
All compensation paid pursuant to this Agreement, including compensation
paid pursuant to Section 5 and Section 10 of this Agreement, shall be subject to
reduction by all applicable withholding, social security and other federal,
state and local taxes and deductions.
Section 16. Binding Effect.
The rights and obligations of Company and its subsidiaries under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Company. Executive shall not assign or alienate any interest of
his in this Agreement, except as provided in Section 11 hereof.
Section 17. Waiver of Breach.
The waiver by either party to this Agreement of a breach of any provision
thereof by the other party shall not operate or be construed as a waiver of any
subsequent breach of such party.
Section 18. Notices.
Any notice required or permitted to be given under this Agreement shall be
sufficient if in writing and if sent by certified or registered mail to
Executive's residence (if such notice is addressed to Executive), or to the
principal executive offices of Company in Birmingham, Alabama, Attention: CEO
and Legal Department (if such notice is addressed to Company).
15
Section 19. Entire Agreement.
This instrument shall be governed by the laws of the State of California
and contains the entire agreement of the parties with respect to the subject
matter hereof and supersedes Executive's Employment Agreement dated as of
September 1, 1997 previously executed by the parties and any other agreements,
whether written or oral, between the parties relating to the subject matter
hereof. This Agreement may not be changed orally, but only by an instrument in
writing signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
Section 20. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall for all purposes be deemed to be an original, but each of which, when so
executed, shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
MEDPARTNERS, INC.
_______________________________ By:_______________________________
XXXXXXX XXXXXXX XXXXX, M.D. Title:______________________________
Date Executed:___________________ Date Executed:______________________
16
EXHIBIT A
SEPARATION AGREEMENT AND GENERAL RELEASE
----------------------------------------
1. General Release. I, _____________________________ ("Executive"),
---------------
hereby release and discharge forever MedPartners, Inc. ("Company") and each of
its divisions, affiliates and subsidiaries, and each of their respective current
and former directors, officers, boards, administrators, shareholders, employees,
trustees, agents, attorneys, related and affiliated companies and entities,
predecessors, successors and assigns (hereinafter collectively referred to as
the "Released Parties"), of and against all liabilities, claims, causes of
action, charges, complaints, obligations, costs, losses, damages, injuries,
attorneys' fees, and other legal responsibilities (collectively referred to as
"claims"), of any form whatsoever, including but not limited to any claims in
law, equity, contact or tort, or any claims under the California Labor Code,
California Business and Professions Code, California Fair Employment and Housing
Act, Title VII of the Civil Rights Act of 1964, as amended, Americans With
Disabilities Act, Employee Retirement Income Security Act (except of vested
benefits with are not affected by this Agreement), the Age Discrimination in
Employment Act, or any other claim under any local ordinance or federal or state
statute, or any claims for wages, stock, commissions, overtime, sick pay,
vacation pay, paid leave benefits, severance pay, bonuses, penalties, interest
or any other compensation, employment perquisites or benefits, whether known or
unknown, unforeseen, unanticipated, unsuspected or latent, which Executive or
his successors in interest now own or hold, or have at any time heretofore owned
or held, or may at any time own or hold by reason of any matter or thing arising
from any cause whatsoever prior to the date of execution of this instrument, and
without limiting the generality of the foregoing, from all claims, demands and
causes of action based upon, relating to, or arising out of Executive's
employment relationship with Company or any of the Released Parties and the
termination of that relationship, or arising from Company's rejection of any
application of Executive subsequent to the Separation Date (as hereinafter
defined) to be employed by Company or any of Company's affiliated organizations,
in any capacity, at any location, at any time.
2. Separation Date. Executive acknowledges that the last day of his
---------------
employment with Company was ______________, ________________, 199__. Following
the Separation Date, Executive agrees to cooperate with Company in effecting a
smooth transition of his duties and to cooperate with Company in connection with
any litigation or other business matters relating to Company activities during
the period Executive was employed by Company. Executive shall receive no
additional compensation for such cooperation, except for reimbursement of
reasonable out-of-pocket fees and expenses submitted in accordance with standard
Company policies and procedures.
3. Non-Admission. Executive agrees and acknowledges that neither this
-------------
Agreement nor Company's offer to enter into this Agreement should be construed
as an admission by
17
Company that it has acted wrongfully towards Executive or any other employee,
and that Company expressly denies any liability to, or wrongful acts against
Executive on the part of itself, its employees or its agents.
4. Severance Consideration. In full consideration and as material
-----------------------
inducement of signing this Agreement, Company will, upon the expiration of the
revocation period set forth in paragraph 7(e) herein, pay or provide the
compensation and benefits described in Paragraph 5(a) of the Employment
Agreement dated as of September 1, 1997 with Company.
5. Other Employment Documents. Company specifically retains the right to
--------------------------
enforce terms and provisions of Executive's Employment Agreement,
Confidentiality and Conflict of Interest Agreement and Property Agreement, Stock
Option Agreement and related documents, and other documents signed by Executive
to the extent such terms and provisions survive termination of Executive's
employment.
6. Confidentiality. Executive represents and agrees that Executive will
---------------
keep the terms, amount and fact of this Agreement completely confidential and
that Executive will not hereafter disclose any information concerning this
Agreement to anyone, except Executive's immediate family, investment advisor,
tax advisor, outplacement advisor, accountant and attorney, provided that they
agree to keep this information confidential, or to enforce the terms of this
Agreement.
7. Compliance with Law. Executive hereby acknowledges and agrees that
-------------------
this Agreement and the termination of his employment and all actions taken in
connection therewith are in compliance with the Age Discrimination in Employment
Act and the Older Workers Benefits Protection Act and that the release set forth
in paragraph 1 hereof shall be applicable, without limitation, to any claims
brought under these Acts. Executive further acknowledges and agrees that:
(a) The release given by Executive in this Agreement are given solely
in exchange for the consideration set forth in paragraph 4 of this Agreement and
such consideration is in addition to anything of value to which Executive
received prior to entering into this Agreement;
(b) By entering into this Agreement, Executive does not waive rights
or claims that may arise after the date of this Agreement is executed;
(c) Executive has been advised to consult an attorney prior to
entering into this Agreement, and this provision of this Agreement satisfies the
requirement of the Older Workers Benefits Protection Act that Executive be so
advised in writing;
(d) Executive has had at least twenty-one (21) days from
________________, 199__ within which to consider this agreement; and
18
(e) For a period of seven (7) days following execution of this
Agreement, Executive may revoke this Agreement and this Agreement shall not
become effective or enforceable until such seven (7) day period has expired.
8. Executive further understands and agrees that all rights under Section
1542 of the California Civil Code are hereby expressly waived by Executive.
Said Section reads as follows:
"Section 1542. [Certain claims not affected by general release.] A
general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known to him must have materially affected his
settlement with the debtor."
Notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release and discharge of all claims, Executive
expressly acknowledges that this Agreement is intended to include in its effect,
without limitation, all claims which Executive does not know or suspect to exist
in his favor at the time of execution hereof, and that the settlement agreed
upon contemplates the extinguishment of any such claim or claims.
9. Knowledgeable Decision by Executive. Executive has read all of the
-----------------------------------
terms of this Agreement and has had an opportunity to discuss it with
individuals of Executive's own choice, as limited by paragraph 6 of this
Agreement, who are not associated with Company. Executive understands the terms
of this Agreement and that this Agreement releases Company forever from any
legal action arising from Executive's employment relationship and the
termination of his employment relationship by Company. Executive signs this
Agreement of his own free will in exchange for the consideration to be given to
Executive, which Executive acknowledges is adequate and satisfactory. Neither
Company nor its agents, representatives, or employees have made any
representations to Executive concerning the terms or effects of this Agreement,
other than those contained in the Agreement.
In witness whereof, the parties have executed this Agreement this ____ day
of __________________, 199__.
Executive: Company:
MEDPARTNERS, INC.
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Scrusny
----------------------------- ----------------------------------
Title: Chief Executive Officer
-------------------------------
19
