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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of the 22nd day of
April, 1997 by and between RENEX CORP., a Florida corporation ("Company"), and
XXXXX X. XXXXXX ("XXXXXX").
R E C I T A L S:
A. The Company is a provider of kidney dialysis treatments in
various parts of the United States to individuals suffering from end stage renal
disease (the "Business"); and
X. XXXXXX has been in the continuous employ of the Company since
August 1993; and
C. The Company desires to continue to employ ANDERS as the
Company's Vice President/Business Develpoment and ANDERS desires to continue to
be employed by the Company in such position on the terms and conditions provided
herein; and
D. The Company believes that it is in the best interest of the
Company to assure ANDERS of a secure minimum compensation and to diminish the
inevitable distraction of ANDERS that may result in the event of the
possibility, threat or occurrence of a change of control, by providing for
certain compensation arrangements upon a change of control.
NOW THEREFORE, in consideration of the mutual promises and
covenants contained in this Agreement and such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. RECITATIONS. The above recitations are true and correct and
are incorporated herein by this reference.
2. EMPLOYMENT.
2.1. POSITION OF EMPLOYMENT. The Company hereby continues
the employment of ANDERS as its Vice President/Business Development upon all of
the terms and conditions hereinafter set forth. ANDERS shall perform such duties
as are usually performed by a Vice President/Business Development of a business
similar in scope as the Business and such other reasonable additional duties as
may be prescribed from time to time by the Company's Board of Directors, taking
into account ANDERS' education, experience and job responsibilities. ANDERS
shall report directly to the President. All actions shall be subject and
subordinate to review and approval by the Board of Directors and any and all
committees of the Board of Directors. The precise responsibilities of ANDERS may
be modified from time to time in accordance with reasonable policy established
by the Board of Directors of the Company consistent with ANDERS' qualifications
and experience.
2.2. DEVOTION OF TIME. During the term of ANDERS'
employment, ANDERS shall devote her full business time, ability and attention to
the business affairs of the Company. ANDERS agrees to use her best efforts to
perform faithfully and efficiently such responsibilities. ANDERS shall be
permitted to (i) serve on corporate, civic or charitable boards or committees;
and (ii) deliver lectures, fulfill speaking engagements or teach at educational
institutions. All income received from such other endeavors shall be for the
exclusive benefit of ANDERS and the Company shall have no interest therein.
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2.3. WORKING FACILITIES. During the term of this
Agreement, the Company shall furnish, at ANDERS' principal place of employment,
an office, furnishings, secretary and such other facilities commensurate and
suitable to her position and adequate for the performance of her duties
hereunder.
2.4. LOCATION OF EMPLOYMENT. Unless otherwise agreed to
by XXXXXX, XXXXXX' principal place of business shall be within Dade or Broward
Counties, Florida.
3. TERM OF EMPLOYMENT
3.1. TERM OF EMPLOYMENT. The term of this Agreement shall
begin on the date hereof (the "Commencement Date") and shall end two years
thereafter, subject to earlier termination or extension as otherwise set forth
in this Agreement.
3.2. AUTOMATIC EXTENSION. This Agreement shall be
automatically extended for successive two (2) year periods at the end of the
initial or any extended term, unless either party provides written notice of
termination to the other party at least 120 days prior to the expiration of the
initial or extended term respectively.
3.3. TERMINATION OF EMPLOYMENT BY THE COMPANY FOR CAUSE.
The Company may terminate ANDERS' employment upon fifteen (15) days written
notice for the reasons set forth in Section 3.3.1 below, if such default is not
cured within such notice period, or such additional time as is reasonably
necessary to cure such default if ANDERS is using diligent efforts to cure such
default. The Company shall be entitled to terminate ANDERS's employment without
notice or an opportunity to cure for the reasons set forth in Section 3.3.2
herein.
3.3.1. NOTICE. Notice or an opportunity to cure
shall be required for the following reasons:
(a) A default or breach by ANDERS of
any of the material provisions of this Agreement detrimental to the Company;
(b) refusal to follow reasonable and
lawful directives of the Company's Board of Directors or any committee thereof
which are consistent with ANDERS' duties and responsibility outlined in this
Agreement; or
3.3.2. NO NOTICE. No notice or an opportunity to
cure shall be required for the following:
(a) actions by ANDERS constituting
fraud, embezzlement or dishonesty;
(b) the deliberate and knowing breach
by ANDERS of the Company's internal financial controls;
(c) ANDERS furnishing false,
misleading, or omissive information or omitting to furnish material information
to the Company's Board of Directors, or any committee thereof, in the reasonable
judgment of the Board of Directors;
(d) any action by ANDERS which
constitutes a breach of the confidentiality of the Business and/or trade secrets
of the Company;
(e) ANDERS' gross negligence in the
performance of her duties as outlined in this Agreement;
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(f) any violation of federal or state
law by ANDERS which have a material detrimental impact on the Company;
(g) at such time as ANDERS shall have
failed, by reason of mental or physical disability or illness ("Disability" as
hereinafter defined), to perform his services pursuant to this Agreement for a
period of one hundred eighty (180) days. Disability shall be defined to mean the
inability of ANDERS to perform her duties under this Agreement, based on injury,
illness or physical or mental conditions as determined by the Company's Board of
Directors, which determination must be supported by two licensed physicians, one
of each selected by the Company and ANDERS; provided, however, if the Company
maintains a policy insuring against the disability of ANDERS, Disability shall
have the meaning ascribed in such policy. Upon the Board's initial determination
of disability, ANDERS will submit to mental and physical examinations which
shall be paid by the Company, unless otherwise covered by health benefits
provided by the Company to ANDERS. The failure of ANDERS to submit to such
reasonable examinations within fifteen (15) days of such request shall be
conclusive that such Disability exists.
3.3.3. NO ADDITIONAL COMPENSATION. Upon
termination for the reasons set forth in Section 3.3 herein, the Company shall
not be liable for any further compensation or benefits following the date of
termination, other than accrued Base Salary. Notwithstanding, ANDERS shall be
entitled to receive all appropriate benefits mandated by the Consolidated Budget
Reconciliation Act of 1985 ("COBRA").
3.4. TERMINATION BY ANDERS. ANDERS may terminate this
Agreement upon thirty (30) days written notice, upon the occurrence of a
material default of this Agreement by the Company, which default is not cured
within the thirty (30) day notice period. Such notice shall set forth with
particularity the facts underlying the claimed default.
3.5. TERMINATION WITHOUT CAUSE. The Company shall have
the right to terminate this Agreement, without cause, upon thirty (30) days
written notice to ANDERS. Notwithstanding such termination, the Company shall be
obligated to pay to ANDERS as severance herein the following:
3.5.1. PRIOR TO CHANGE OF CONTROL. If
termination without cause is prior to a "Change of Control," ANDERS shall be
entitled to severance equal to the greater of (i) the Base Salary which would
have been paid for the balance of the term of this Agreement if it were not
terminated, or (ii) one (1) year's Base Salary. The severance payment under this
Section 3.5.1 shall be payable in twelve (12) equal monthly installments
commencing on the first day of the month following termination. In addition,
during such twelve (12) month period, all benefits to ANDERS set forth on
Section 4.5 herein shall continue to be paid.
3.5.2. FOLLOWING A CHANGE OF CONTROL. If ANDERS
is terminated without cause at any time following a Change of Control, ANDERS
shall be entitled to severance equal to the greater of (i) two times the Base
Salary which would have been paid for the remainder of the term had the
Agreement not been terminated, or (ii) two times the sum of (A) one year's Base
Salary then in effect, and (B) any and all bonuses paid to ANDERS in the
eighteen (18) months prior to the effective date of termination. The severance
payments under this Section 3.5.2 shall be paid 50% in cash on the effective
date of termination and the balance in twelve (12) equal monthly payments on the
1st day of each month commencing on the 1st day of the month following
termination. In addition, all benefits set forth in Section 4.5 herein shall
continue to be paid during such twelve month period.
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3.5.3. STOCK OPTIONS. Notwithstanding anything
herein to the contrary, in the event that ANDERS' employment is terminated in
accordance with this Section 3.5, ANDERS rights under any and all employee stock
option programs or individual stock option arrangements shall remain in effect
and provide to ANDERS the ability to exercise any and all stock options vested
as of the date of termination through the remainder of the terms of such
options, which termination dates shall not be accelerated based on the
termination of employment.
3.6. TERMINATION UPON DEATH. This Agreement shall be
terminated immediately upon the death of ANDERS. Within thirty (30) days
following such termination, the Company shall pay to ANDERS' estate: (i) all
accrued Base Salary and bonuses; and (ii) a sum equal to six (6) months' Base
Salary. In addition, upon the determination of bonuses for the fiscal year in
which ANDERS died, the Company shall pay to ANDERS's estate, a prorated bonus
based on the number of days ANDERS provided services hereunder during the year
of his death.
3.7. TERMINATION BY ANDERS UPON CHANGE OF CONTROL. ANDERS
may terminate this Agreement at any time within one hundred eighty (180) days
following a "Change of Control" of the Company by providing thirty (30) days
written notice of termination, which notice must be sent within the 180 day
period. Upon such termination, ANDERS shall be entitled to a severance payment
equal to the greater of (i) two times the Base Salary which would have been paid
for the remainder of the term had the Agreement not been terminated, or (ii) two
times the sum of (A) one year's Base Salary then in effect, and (B) any and all
bonuses paid to ANDERS in the eighteen (18) months prior to the effective date
of termination. The severance payment under this Section 3.7 shall be paid 50%
in cash on the effective date of termination and the balance in twelve (12)
equal monthly payments on the 1st day of each month commencing on the 1st day of
the month following termination. In addition, all benefits set forth in Section
4.5 herein shall continue to be paid during such twelve month period.
Notwithstanding anything herein to the contrary, in the event that ANDERS'
employment is terminated in accordance with this Section 3.5, ANDERS rights
under any and all employee stock option programs or individual stock option
arrangements shall remain in effect and provide to ANDERS the ability to
exercise any and all stock options vested as of the date of termination through
the remainder of the terms of such options, which termination dates shall not be
accelerated based on the termination of employment.
3.8. DEFINITION OF CHANGE OF CONTROL. Change of Control
is defined for the purposes of this Agreement as any of the following acts:
3.8.1. The acquisition by any person, entity or
"group" within the meaning of ss. 13(d) or 14(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of twenty-five (25%) percent or more
of either the then outstanding shares of the Company's common stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors. Notwithstanding, any
purchase by underwriters pursuant to a firm commitment underwriting shall not
constitute a Change of Control; or
3.8.2. If the individuals who serve on the
Company Board of Directors as of the Commencement Date (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any person who becomes a director subsequent
to the Commencement Date whose election or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of the
directors then compiling the Incumbent Board shall be for purposes of this
Agreement considered as if such person was a member of the Incumbent Board; or
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3.8.3. Approval by the Company's stockholders of
(i) a merger, reorganization or consolidation whereby the Company's shareholders
immediately prior to such approval do not, immediately after consummation of
such reorganization, merger or consolidation own more than 50% of the combined
voting power entitled to vote generally in the election of directors of the
surviving entity's then outstanding voting securities; or (ii) liquidation or
dissolution of the Company; or (iii) the sale of all or substantially all of the
assets of the Company.
3.9. CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.
Notwithstanding anything in this Agreement to the contrary, in the event that it
is determined that any payment or distribution required to be made by the
Company to ANDERS following a Change of Control under Sections 3.5.2 or 3.7
herein (a "Change of Control Payment"), would be nondeductible by the Company
for Federal income tax purposes because of Section 280G of the Internal Revenue
Code of 1986, as amended, then the aggregate amounts payable or distributable
pursuant to this Agreement shall be reduced to the "Reduced Amount." The Reduced
Amount shall be the greater of (i) an amount which is the maximum amount of
Change of Control Payments possible without causing any such Change of Control
Payment to be nondeductible by the Company because of Section 280G of the Code,
or (ii) the Change of Control Payment, if the Change of Control Payments
provides ANDERS with a greater after tax benefit than (i) herein. The Reduced
Amount specified in (i) above shall be expressed in present value which
maximizes the aggregate present value of Change of Control Payments without
causing any Reduced Amount to be non-deductible by the Company under Section
280G. In addition, if the Change of Control Payments can be restructured through
the provision by ANDERS of personal services or otherwise following a Change of
Control, then the parties shall in good faith attempt to agree to a change in
such relationship necessary for ANDERS to receive the full benefits of the
Change of Control Payment. However, any restructuring of the relationship shall
not require ANDERS to be employed by the Company or be subject to a
non-competition agreement. The determinations required herein shall be made by
the independent certified public accounting firm which was engaged by the
Company to audit the Company's financial statements for the fiscal year
preceding the year in which the Change of Control occurs. ANDERS shall have the
right to contest such determination.
4. COMPENSATION AND BENEFITS
4.1. SALARY. Subject to the provisions of Section 4.2
herein, the Company shall pay to ANDERS, a base salary at a total annual rate of
$65,000 (the "Base Salary") payable in cash. Base Salary shall be paid in
regular payroll intervals consistent with payroll policy established by the
Company from time to time. Base Salary shall be automatically increased to
$90,000 per year on the earlier of (i) the date that the Company's registration
statement of its initial public offering is declared effective by the Securities
and Exchange Commission; or (ii) a Change of Control.
4.2. COST OF LIVING INCREASE. On each anniversary date of
this Agreement during the term hereof or any extension, Base Salary shall be
increased by the greater of (i) six (6%) percent of then existing Base Salary,
or (ii) the percentage increase, if any, of the consumer price index for Urban
Wage Earners and Clerical Workers (Greater Metropolitan Miami area; all items)
issued by the Bureau of Labor Statistics of the U.S. Department of Labor. The
Company's Board of Directors shall have the discretion to grant increases in
Base Salary in excess of the amounts provided herein.
4.3. BONUS. Prior to the commencement of each fiscal
year, the Board of Directors or its compensation committee, if any, shall
establish in good faith a reasonable and justifiable incentive bonus plan for
ANDERS for such fiscal year. The incentive bonus plan shall provide ANDERS the
ability to earn a bonus based upon certain goals and objectives to be
established in such incentive bonus plan. Such bonus, if any, shall be payable
within thirty (30) days following the completion of the Company's audit for such
fiscal year by its independent auditors.
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4.4. STOCK OPTIONS. ANDERS shall be eligible from time to
time to receive grants of stock options, under stock option plans or otherwise,
in such amounts and at such times as determined by the Board of Directors or any
committee thereof. All options granted to ANDERS shall:
(a) have a minimum term of five (5) years within
which to exercise such options;
(b) have a vesting schedule of no worse than
twenty-five (25%) percent as of the date of grant and twenty-five (25%) on each
anniversary date of such grant thereafter;
(c) vesting shall be accelerated upon a change
of control of the Company;
(d) have an exercise price no greater than the
market price of the underlying securities as of the date of grant; and
(e) such other terms and conditions as are
customary for similar types of options.
4.5. ADDITIONAL BENEFITS.
4.5.1. VACATION. ANDERS shall be entitled to a
reasonable number of discretionary paid vacation days consistent with her level
of employment, duties and seniority during each twelve-month period during the
term of this Agreement, but in no event less than fifteen (15) days during each
period. Vacation time may be accumulated for a period of not longer than two (2)
years. ANDERS shall not receive compensation for days not used.
4.5.2. AUTOMOBILE EXPENSES. During the term of
this Agreement, the Company shall pay to ANDERS an automobile allowance of $500
per month, which shall be inclusive of all expenses associated with the
operation of such automobile, including depreciation, gasoline, insurance,
repairs and maintenance.
4.5.3. REIMBURSEMENT OF EXPENSES. ANDERS shall
be reimbursed by the Company, upon presentation of adequate receipts, for all
business expenses which are reasonably incurred by ANDERS in the performance of
his duties under this Agreement, including but not limited to travel, cellular
phone and similar expenses. All travel expenses shall be incurred in accordance
with reasonable policy established by the Board of Directors.
4.5.4. PARTICIPATION IN EMPLOYEE BENEFIT PLANS.
ANDERS shall be entitled to participate, subject to eligibility and other terms
generally established by the Company's Board of Directors, in any group
hospitalization, health, dental care, profit sharing and pension, and other
benefit plans, as may be adopted or amended by the Company from time to time as
affecting employees of similar status. The Company shall provide health
insurance for ANDERS and her dependents and shall pay all premiums incurred
thereby.
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5. REPRESENTATIONS. ANDERS hereby represents to the Company that
she is in good health, she is physically and mentally capable of performing her
duties hereunder and she has no knowledge of any present or past physical or
mental condition which would cause an insurance company to reject an application
by ANDERS for life insurance or for accident, sickness or disability insurance.
ANDERS represents and warrants that to the best of her knowledge she is not
subject to any restrictive covenants under any other agreements prohibiting her
performance in full hereunder, or which would subject the Company to any valid
claims for tortious interference.
6. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION.
6.1. CONFIDENTIALITY. ANDERS shall not, during the term
of this Agreement or at any time thereafter, divulge, furnish or make accessible
to anyone without the Company's prior written consent, any knowledge or
information with respect to any aspect of the Business, including but not
limited to: the Company's costs; fees or models; physician or patient names;
provider names; referral sources; addresses and telephone numbers of patients
and referral sources; billing procedures, prices and terms; its business
techniques, computer programs and printouts; identity of prospective patients,
providers or referral sources; information disclosed by the Company's patients
to the Company; or other information concerning the Business or its employees.
All information given to ANDERS in connection with his employment shall be
considered confidential and proprietary.
6.2. OWNERSHIP OF INFORMATION. ANDERS recognizes that all
records; patient lists; provider lists; referral lists; material cost data; fees
or models; files and correspondence with patients, referral services,
physicians, and providers of services; computer printouts; contracts; reports;
notes; business plans; compilations of other recorded matter; and copies or
reproductions thereof, relating to the Company's operations and activities made
or received by ANDERS in the course of her employment are the exclusive property
of the Company and ANDERS holds and uses same as trustee for the Company and
subject to the Company's sole control and will deliver same to the Company at
the termination of her employment, or earlier if so requested. All of such
information, which if used by ANDERS outside the scope of his employment, could
cause irreparable and continuing injury to the Business for which there may not
be an adequate remedy at law.
7. RESTRICTIVE COVENANT. As an inducement to cause the Company to
enter into this Agreement, ANDERS covenants and agrees that during her
employment, and for a period of one (1) year after she ceases to be employed by
the Company, regardless of the manner or cause of termination:
7.1. NON-COMPETITION. ANDERS will not be an employee,
agent, director, stockholder or owner (except of not more than 1% of the
securities of any publicly traded entity), partner, consultant, financial
backer, creditor or be otherwise directly or indirectly connected with or
participate in the management, operation or control of any business, firm,
proprietorship, corporation, partnership, association, entity or venture engaged
in the provision of services similar to the Company's business as of termination
(a "Competing Business") within 100 miles of any office, center, clinic or other
location of the Company, or any of its subsidiaries or affiliates;
7.2. SOLICITATION OF BUSINESS. ANDERS will not contact,
call upon, solicit business from, sell or render services to any patient,
provider, insurer, HMO, managed care company or contract party of the Company,
or any of its affiliates with respect to a Competing Business or purchase from
any supplier or potential supplier any materials for same and ANDERS shall not
directly or indirectly aid or assist any other person, firm or corporation to do
any of the aforesaid acts; or
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7.3. SOLICITATION OF EMPLOYEES. ANDERS will not directly
or indirectly, as principal, agent, owner, partner, stockholder, officer,
director, employee, independent contractor or consultant or in any individual or
representative capacity for himself or on behalf of any business, firm,
corporation, partnership, association or proprietorship enter into any
agreements with, solicit, or directly or indirectly cause others to solicit the
employment of any officer, sales person, agent, or other employee of the
Company, or any of its subsidiaries or affiliates for the purpose of causing
said officer, sales person, agent or other employee to terminate employment with
the Company.
7.4. NON-ENFORCEMENT OF RESTRICTIVE COVENANT:
Notwithstanding anything herein to the contrary, if this Agreement is terminated
(a) by ANDERS as a result of the material breach of this Agreement by the
Company, (b) if the Company fails to make any severance payment required herein
within ten (10) days after such payment is due, or (c) in accordance with
Sections 3.5.2 or 3.7 herein, then in such event the Restrictive Covenants
contained in this Section 7 shall thereafter be unenforceable by the Company.
Notwithstanding termination of the restrictive covenants, the Company will still
be obligated to pay the remaining severance due.
8. ACKNOWLEDGEMENT. ANDERS HEREBY ACKNOWLEDGES AND UNDERSTANDS
THIS AGREEMENT INHIBITS ANDERS' ABILITY TO WORK FOR THE SAME OR SIMILAR KIND OF
BUSINESS FOR A PERIOD OF ONE (1) YEAR AFTER THE END OF ANDERS' EMPLOYMENT WITH
THE COMPANY. ANDERS acknowledges and confirms that the length of the term and
geographic restrictions contained in this Agreement are fair and reasonable and
not the result of overreaching, duress or coercion of any kind. ANDERS further
acknowledges and confirms that her full, uninhibited and faithful observance of
each of the covenants contained in this Agreement will not cause any undue
hardships, financial or otherwise and that enforcement of this Agreement will
not impair ANDERS' ability to obtain employment commensurate with ANDERS'
abilities and on terms fully acceptable to ANDERS. ANDERS acknowledges that
ANDERS will be receiving significant information regarding the Business which
ANDERS has not previously received and would not receive without being employed
by the Company. ANDERS acknowledges and confirms that such information would
cause the Company serious injury and loss if used by ANDERS for the benefit of a
competitor.
9. MATERIAL VIOLATION. A violation of Sections 6 or 7 shall
constitute a material and substantial breach of this Agreement and shall result
in the imposition of the Company's remedies contained in Section 11. ANDERS
acknowledges that compliance with the provisions of Sections 6 and 7 are
necessary to protect the goodwill and proprietary interests of the Company and
is a material condition of employment. ANDERS acknowledges and agrees that proof
of one such personal solicitation by ANDERS of a patient, referral source, HMO,
managed care company, insurance company, supplier or employee, shall constitute
absolute and conclusive evidence that ANDERS has substantially and materially
breached the provisions of this Agreement.
10. MATERIAL COVENANTS. It is understood by and between the
parties that the foregoing covenants set forth in Sections 6 and 7 are essential
elements of this Agreement, and that but for the agreement of ANDERS to comply
with such covenants, the Company would not have entered into this Agreement.
Such covenants by ANDERS shall be construed as agreements independent of any
other provision of this Agreement and the existence of any claim or cause of
action ANDERS may have against the Company whether predicated on this Agreement
or otherwise, shall not constitute a defense to the enforcement by the Company
of these covenants.
11. REMEDIES. ANDERS hereby acknowledges, covenants and agrees
that in the event of a material default or breach under this Agreement:
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