EXHIBIT 10.24
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is effective as of the 1st day
of January, 1998 (the "Effective Date"), by and between Physician Health
Corporation, Delaware Corporation (the "Company") and J. Xxxxxxx Xxxxxxx, M.D.
("Employee").
W I T N E S S E T H:
WHEREAS, Employee is employed as the President of the Ancillary Division of
the Company; and
WHEREAS, the Company and Employee wish to document certain terms of the
employment of Employee in such capacity;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I. RESPONSIBILITIES
SECTION 1.1 SCOPE OF EMPLOYMENT. Employee is employed by Company to serve
as President of the Ancillary Division of the Company with the powers and
responsibilities set forth for such position in the Bylaws of the Company or as
may be designated from time to time by the Chief Executive Officer ("CEO") or
President of the Company. Employee accepts employment upon the terms set forth
in this Agreement and will perform diligently to the best of his abilities those
duties set forth in the Bylaws or as may be designated from time to time by the
CEO or President of the Company and in this Agreement in a manner that promotes
the interests and goodwill of the Company. Employee will faithfully devote his
best efforts and substantially all his working time to and for the benefit of
the Company; provided, however, that Employee may, at his option, devote
reasonable time and attention to civic, charitable, business or social
organizations or speaking engagements as he deems appropriate.
ARTICLE II. COMPENSATION
SECTION 2.1 GENERAL TERMS. The Company agrees to compensate Employee on a
salary basis at an annual rate of Two Hundred Thousand Dollars ($200,000),
payable in accordance with the Company's ordinary payroll policies and
procedures subject to annual review and adjustment by the Board of Directors of
the Company (the "Board") or the Compensation Committee thereof.
Notwithstanding the foregoing, upon the consummation of the underwritten initial
public offering (the "IPO") of the Company's common stock, Employee will be
compensated at an annual rate of Two Hundred Fifty Thousand Dollars ($250,000).
SECTION 2.2 REIMBURSEMENT. It is acknowledged by the parties that
Employee, in connection with the services to be performed by him pursuant to the
terms of this Agreement, will be required to make payments for travel,
communications, entertainment of business associates and similar expenses. The
Company will reimburse Employee for all reasonable documented expenses of types
authorized by the Company and incurred by Employee in the performance of his
duties hereunder. Employee will comply with such budget limitations and
approval and reporting requirements with respect to expenses as the Company may
establish from time to time.
SECTION 2.3 EMPLOYEE BENEFITS. During the term of this Agreement,
Employee shall be entitled to participate in and receive benefits under any and
all employee benefit plans and programs which are from time to time generally
made available to the executive employees of the Company including, without
limitation, health and disability insurance and bonuses.
ARTICLE III.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 3.1 DEFINITIONS. For purposes of this Agreement, "Confidential
Information" is any data or information that is unique to the Company,
proprietary, competitively sensitive, and not generally known by the public,
including, but not limited to, the Company's initial business plan, prospective
customers ("prospective customers" is understood to mean those potential
customers with whom or with which the Company is engaged in active discussion
about a business relationship), training manuals, product development plans,
bidding and pricing procedures, market plans and strategies, business plans and
projections, internal performance statistics, financial data, confidential
personnel information concerning employees of the Company, operational or
administrative plans, policy manuals, terms and conditions of contracts and
agreements, and all similar information related to the business of the Company's
customers or potential customers or suppliers, other than information that is
publicly available. The term "Confidential Information" shall not apply to
information which is (i) already in Employee's possession (unless such
information was obtained by Employee from the Company in the course of
Employee's employment by the Company); (ii) received by Employee from a third
party with no restriction on disclosure or (iii) required to be disclosed by any
applicable law or by an order of a court of competent jurisdiction.
SECTION 3.2 USE AND DISCLOSURE. Employee recognizes and acknowledges that
the Confidential Information constitutes valuable, special and unique assets of
the Company and its affiliates. Except as required to perform Employee's duties
as an employee of the Company, until such time as they cease to be Confidential
Information through no act of Employee in violation of this Agreement, Employee
will not use or disclose any Confidential Information of the Company.
SECTION 3.3 SURRENDER. Upon the request of the Company and, in any event,
upon the termination of this Agreement for any reason, Employee will surrender
to the Company (i) all memoranda, notes, records, drawings, manuals or other
documents pertaining to the Company's
-2-
business including all copies and/or reproductions thereof and (ii) all
materials involving any Confidential Information of the Company.
ARTICLE IV. NONCOMPETITION
SECTION 4.1 RESTRICTION. In consideration of the severance provisions
contained herein and the access to the Confidential Information granted to
Employee, Employee hereby agrees that, until two years after the termination of
Employee's employment hereunder (the "Restricted Period"), Employee will not,
without the prior written consent of the Company, directly or indirectly, within
a fifty (50) mile radius of any Company location at which the Company conducts
its business (i) provide as a manager, employee, officer or consultant any
services of the type included in Employee's employment duties described below
for any medical management services company which develops, owns or manages
physician networks, engages in managed care contracting services, the delivery
of ancillary health care services or provides management services to physician
practices, or (ii) solicit or attempt to solicit any employee of the Company
other than Xxxxx Block either to work for Employee personally or on behalf of
any other person or entity. For purposes of this section, Employee's employment
duties shall consist of acting as President of the Ancillary Division.
Notwithstanding the foregoing, in the event that this Agreement is terminated by
the Company without cause as provided in Section 6.1(a) hereof, or by the
Company following a Change In Control as defined in Section 7.2 hereof, the
restrictions set forth in this Section 4.1 shall not apply; provided, however,
that should the Company terminate this Agreement following a Change In Control
and continue to pay Employee his then current salary as of the date of
termination for a period of two (2) years following such termination, the
restrictions set forth in this Section 4.1 shall apply for such two (2) year
period.
SECTION 4.2 REFORMATION AND SEVERANCE. If a judicial determination is
made that any of the provisions of the above restriction constitutes an
unreasonable or otherwise unenforceable restriction against Employee, it shall
be rendered void only to the extent that such judicial determination finds such
provisions to be unreasonable or otherwise unenforceable. In this regard, the
parties hereby agree that any judicial authority construing this Agreement shall
be empowered to sever any portion of the prohibited business activity from the
coverage of this restriction and to apply the restriction to the remaining
portion of the business activities not so severed by such judicial authority.
Moreover, notwithstanding the fact that any provisions of this restriction are
determined by a court not to be specifically enforceable through injunctive
relief, the Company shall nevertheless be entitled to seek to recover monetary
damages as a result of the breach of such provision by Employee. The time
period during which the restrictions shall apply shall be tolled and suspended
as to Employee for a period equal to the aggregate quantity of time during which
Employee violates such prohibitions in any respect.
ARTICLE V. TERM
This Agreement shall continue in full force and effect commencing on the
Effective Date until either party terminates the Agreement pursuant to the terms
of Article VI hereof.
-3-
ARTICLE VI. TERMINATION
SECTION 6.1 TERMINATION. Employee's employment hereunder will terminate
upon the occurrence of any of the following events:
(a) By Company Without Cause. The Company may terminate this
Agreement at any time without cause. In the event of the termination of
this Agreement pursuant to this Subsection, Employee's salary shall be paid
at the then current rate, for a period of one (1) year after termination
pursuant to this Subsection. Employee also shall be entitled to receive
expense reimbursements under Section 2.2 hereof for expenses incurred in
the performance of his duties prior to termination.
(b) By Employee Without Cause. Employee may terminate this Agreement
at any time without cause. Upon termination of his employment pursuant to
this Subsection, the Company will pay any portion of Employee's salary at
the then current rate and benefits, if any, accrued but unpaid from the
last monthly payment date to the date of termination. Employee shall also
be paid expense reimbursements under Section 2.2 hereof for expenses
incurred in the performance of his duties hereunder prior to termination.
(c) By Company With Cause. This Agreement may be terminated by
Company at any time upon written notice for any of the following reasons:
I. a substantial breach by the Employee of a material provision of
this Agreement, which breach remains uncorrected for more than
thirty (30) days following written notice detailing the specific
provision for which a breach is alleged, and setting forth the
actions, which, when taken, will correct the breach;
II. conviction of the Employee for a felony which in the reasonable
judgment of the CEO materially affects Employee's ability to
perform his duties pursuant to this Agreement;
III. commission by Employee of an act of fraud, embezzlement, or
material dishonesty against the Company or its affiliates; or
IV. intentional neglect of or material inattention to Employee's
duties, which neglect or inattention remains uncorrected for more
than thirty (30) days following written notice from the Board
detailing the Board's concern.
Employee will not be entitled to any severance pay or other compensation
upon termination of his employment pursuant to this Subsection except for
any portion of his base salary accrued but unpaid from the last monthly
payment date to the date of termination and
-4-
expense reimbursements under Section 2.2 hereof for expenses incurred in
the performance of his duties hereunder prior to termination.
(d) Termination on Death. In the event of Employee's death, this
Agreement will be deemed to have terminated on the date of his death. In
the event of his death, the Company will pay to the testamentary trusts
created by Employee's will, or if there are no such trusts, to his estate,
any portion of Employee's salary at the then current rate and benefits, if
any, accrued but unpaid from the last monthly payment date to the date of
termination. Additionally, the Company will pay to such testamentary trusts
or Employee's estate expense reimbursements under Section 2.2 hereof for
expenses incurred in the performance of his duties hereunder prior to his
death.
(e) Termination on Disability. This Agreement will terminate
immediately in the event Employee becomes physically or mentally disabled.
Employee will be deemed disabled if, as a result of Employee's incapacity
due to physical or mental illness, Employee shall have been absent from his
duties with the Company on a full-time basis for 120 consecutive business
days. In the event of the termination of this Agreement pursuant to this
Subsection, Employee's salary shall be paid at the then current rate for a
period of three (3) months. Additionally, the Company will pay Employee
expense reimbursements under Section 2.2 hereof for expenses incurred in
the performance of his duties hereunder prior to termination.
ARTICLE VII. CHANGE IN CONTROL TERMINATION PAYMENT
SECTION 7.1 TERMINATION PAYMENT. Notwithstanding anything to the contrary
contained in Article VI hereof, if, after a Change In Control (as defined in
Section 7.2 hereof), Employee's employment with the Company terminates pursuant
to Section 6.1(a) of this Agreement following a Change In Control or Employee
terminates this Agreement because he is requested to relocate, his salary is
reduced from the amount in effect immediately prior to the Change in Control,
his title is reduced or his duties and responsibilities are substantially
diminished, the Company will pay Employee a lump sum payment (the "Termination
Payment") in cash equal to three years salary at the then current rate in effect
immediately prior to the Change In Control.
SECTION 7.2 CHANGE IN CONTROL. A Change In Control will be deemed to have
occurred for purposes hereof, upon any one of the following events: (i) any
person (within the meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than the Company
(including its subsidiaries, directors, and executive officers) has become the
beneficial owner, within the meaning of Rule 13d-3 under the Exchange Act, of
fifty percent (50%) or more of the combined voting power of the Company's then
outstanding Common Stock or equivalent in voting power of any class or classes
of the Company's outstanding securities ordinarily entitled to vote in elections
of directors ("voting securities"); or (ii) shares representing fifty percent
(50%) or more of the combined voting power of the Company's voting securities
are purchased pursuant to a tender offer or exchange offer (other than an offer
by the Company or its subsidiaries
-5-
or affiliates); or (iii) as a result of, or in connection with, any tender offer
or exchange offer, merger or other business combination, sale of assets, or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were Directors of the Company before the
Transaction shall cease to constitute a majority of the Board of the Company or
of any successor to the Company; or (iv) following the Effective Date, the
Company is merged or consolidated with another corporation and as a result of
such merger or consolidation less than fifty percent (50%) of the outstanding
voting securities of the surviving or resulting corporation shall then be owned
in the aggregate by the former shareholders of the Company, other than (A) any
party to such merger or consolidation, or (B) any affiliates of any such party;
or (v) the Company transfers more than fifty percent (50%) of its assets, or the
last of a series of transfers results in the transfer of more than fifty percent
(50%) of the assets of the Company, to another entity that is not wholly-owned
by the Company. For purposes of this subsection (v), the determination of what
constitutes fifty percent (50%) of the assets of the Company shall be made by
the Board, as constituted immediately prior to the events that would constitute
a Change in Control if fifty percent (50%) of the Company's assets were
transferred in connection with such events, in its sole discretion.
Notwithstanding anything to the contrary contained in this Section 7.2, a Change
In Control shall not be deemed to have occurred for the purposes hereof, upon
any of the following events: (1) the consummation of an IPO; or (2) the
conversion of existing classes of Class A Stock and Preferred Stock of the
Company into Common Stock.
SECTION 7.3 NO RIGHT TO CONTINUED EMPLOYMENT. This Article VII will not
give Employee any right of continued employment or any right to compensation or
benefits from the Company except the rights specifically stated herein.
SECTION 7.4 ARBITRATION. Any dispute arising under this Article VII will
be resolved in the manner provided in Article VIII.
ARTICLE VIII. ARBITRATION
SECTION 8.1 SCOPE. The Company and Employee acknowledge and agree that
any claim or controversy arising out of or relating to Section VII of this
Agreement shall be settled by final and binding arbitration in the city in which
the Company's principal executive offices are located in accordance with the
National Rules of the American Arbitration Association for the Resolution of
Employment Disputes in effect on the date of the event giving rise to the claim
or controversy. The Company and Employee further acknowledge and agree that
either party must request arbitration of any claim or controversy within sixty
(60) days of the date of the event giving rise to the claim or controversy by
giving written notice of the party's request for arbitration. Failure to give
notice of any claim or controversy within sixty (60) days of the event giving
rise to the claim or controversy shall constitute waiver of the claim or
controversy.
SECTION 8.2 PROCEDURES. All claims or controversies subject to
arbitration shall be submitted to arbitration within six (6) months from the
date that a written notice of request for arbitration is effective. All claims
or controversies shall be resolved by a panel of three (3) arbitrators at least
-6-
one of whom is licensed to practice law in the State of Georgia and who are
experienced in the arbitration of labor and employment disputes. These
arbitrators shall be selected in accordance with the National Rules of the
American Arbitration Association for the Resolution of Employment Disputes in
effect at the time the claim or controversy arises. Either party may request
that the arbitration proceeding be stenographically recorded by a Certified
Shorthand Reporter. The arbitrators shall issue a written decision with respect
to all claims or controversies within thirty (30) days from the date the claims
or controversies are submitted to arbitration. The parties shall be entitled to
be represented by legal counsel at any arbitration proceedings. Employee and
the Company acknowledge and agree that each party will bear fifty percent (50%)
of the cost of the arbitration proceeding, and each party shall be responsible
for paying its own attorneys' fees, if any, unless the arbitrators determine
otherwise.
SECTION 8.3 ENFORCEMENT. The Company and Employee acknowledge and agree
that the arbitration provisions in this Agreement may be specifically enforced
by either party, and that submission to arbitration proceedings may be compelled
by any court of competent jurisdiction. The Company and Employee further
acknowledge and agree that the decision of the arbitrators may be specifically
enforced by either party in any court of competent jurisdiction.
SECTION 8.4 LIMITATIONS. Notwithstanding the arbitration provisions set
forth herein, Employee and the Company acknowledge and agree that nothing in
this Agreement shall be construed to require the arbitration of any claim or
controversy arising under Articles III or IV of this Agreement. These
provisions shall be enforceable by any court of competent jurisdiction and shall
not be subject to arbitration. Employee and the Company further acknowledge and
agree that nothing in this Agreement shall be construed to require arbitration
of any claim for workers' compensation or unemployment compensation.
ARTICLE IX. GENERAL TERMS
SECTION 9.1 NOTICES. All notices and other communications hereunder will
be in writing or by written telecommunication, and will be deemed to have been
duly given if delivered personally or if sent by overnight courier or by written
telecommunication, to the relevant address set forth below, or to such other
address as the recipient of such notice or communication will have specified to
the other party hereto in accordance with this Section:
If to the Company to:
Physician Health Corporation
One Lakeside Commons
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
Fax No.: (000) 000-0000
-7-
with a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxx X. Xxxx, III
Fax No.: (000) 000-0000
If to Employee, to:
J. Xxxxxxx Xxxxxxx, M.D.
000 Xxxxx Xxx Xxxxxx Xxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxx
Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Fax No.: 000-000-0000
SECTION 9.2 WITHHOLDING; NO OFFSET. All payments required to be made by
the Company under this Agreement to Employee will be subject to the withholding
of such amounts, if any, relating to federal, state and local taxes as may be
required by law. No payment under this Agreement will be subject to offset or
reduction attributable to any amount Employee may owe to the Company or any
other person.
SECTION 9.3 ENTIRE AGREEMENT; MODIFICATION. This Agreement and its
Attachments (i) read together with the Letter Agreement of even date herewith
between the Company, Employee, Metropolitan Plastic & Reconstructive Surgery,
Ltd. ("MPRS") and PHC-St. Louis Acquisition Subsidiary I, Inc. ("PHC-Sub") and
that certain General Undertakings Agreement among the Company, Employee, MPRS
and PHC-Sub, as amended (collectively, the "Related Agreements") constitute the
complete and entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements between the parties. The
parties have executed this Agreement based upon the express terms and provisions
set forth herein and have not relied on any communications or representations,
oral or written, which are not set forth in this Agreement.
SECTION 9.4 AMENDMENT. The covenants or provisions of this Agreement may
not be modified by an subsequent agreement unless the modifying agreement: (i)
is in writing; (ii) contains an express provision referencing this Agreement;
(iii) is signed and executed on behalf of the
-8-
Company by an officer of the Company other than Employee; (iv) is approved by
resolution of the Board; and (v) is signed by Employee.
SECTION 9.5 LEGAL CONSULTATION. Both parties have been accorded a
reasonable opportunity to review this Agreement with legal counsel prior to
executing this Agreement.
SECTION 9.6 CHOICE OF LAW. This Agreement and the performance hereof will
be construed and governed in accordance with the laws of the State of Georgia,
without regard to its choice of law principles.
SECTION 9.7 ATTORNEY'S FEES. If legal action is commenced by either party
to enforce or defend its rights under this Agreement, the party substantially
obtaining the relief requested in such action shall be entitled to recover its
costs and reasonable attorneys' fees in addition to any other relief granted.
SECTION 9.8 SUCCESSORS AND ASSIGNS. The obligations, duties and
responsibilities of Employee under this Agreement are personal and shall not be
assignable. In the event of Employee's death or disability, this Agreement
shall be enforceable by Employee's estate, executors or legal representatives.
SECTION 9.9 WAIVER OF PROVISIONS. Any waiver of any terms and conditions
hereof must be in writing and signed by the parties hereto. The waiver of any
of the terms and conditions of this Agreement shall not be construed as a waiver
of any subsequent breach of the same or any other terms and conditions hereof.
SECTION 9.10 SEVERABILITY. The provisions of this Agreement shall be
deemed severable, and if any portion shall be held invalid, illegal or
enforceable for any reason, the remainder of this Agreement shall be effective
and binding upon the parties provided that the substance of the economic
relationship created by this Agreement remains materially unchanged.
SECTION 9.11 REMEDIES. The parties hereto acknowledge and agree that upon
any breach by Employee of his obligations under either of Articles III and IV
hereof, the Company will have no adequate remedy at law, and accordingly will be
entitled to specific performance and other appropriate injunctive and equitable
relief. No remedy set forth in this Agreement or otherwise conferred upon or
reserved to any party shall be considered exclusive of any other remedy
available to any party, but the same shall be distinct, separate and cumulative
and may be exercised from time to time as often as occasion may arise or as may
be deemed expedient.
SECTION 9.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
[intentionally left blank]
-9-
IN WITNESS WHEREOF, Company and Employee have caused this Agreement to be
executed on the day and year indicated below to be effective on the day and year
first written above.
EMPLOYEE:
/s/ J. Xxxxxxx Xxxxxxx
--------------------------------------------- ---------------------------
J. Xxxxxxx Xxxxxxx, M.D. Date
COMPANY:
Physician Health Corporation
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------- ---------------------------
Xxxxx X. Xxxxxx, President Date
-10-
