EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 11th day of March, 1998, is by and between
MEDI-CEN MANAGEMENT, INC., a Maryland corporation ("Employer") and XXXXXXX X.
XXXXXX ("Employee").
INTRODUCTORY STATEMENT
Employer is engaged in the business of providing medical practice
management and related services. Employee has agreed to be employed by Employer
and Employer has agreed to employ Employee pursuant to the terms and conditions
hereinafter set forth. The parties hereto acknowledge and agree that it would be
in the best interest of all parties to clearly define both the responsibilities
of Employee as well as set out the compensation and other benefits which will
accrue to Employee.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
the parties hereto do agree as follows:
1. Employment. Employer hereby employs, engages and hires Employee as
President of Employer to render such services as are typically required of the
President of a for profit corporation and such other services as may be required
from time to time, including, but not limited to, the following:
a. operating Employer in a manner that will increase Shareholder
value;
b. operating Employer in a manner that will maximize earnings;
c. accompanying the "Road Show" for the Initial Public Offering of
Employer's stock currently scheduled for the end of March, 1998;
d. interacting with hospitals to establish affiliations;
e. interacting with potential medical groups to explore acquisition
possibilities;
f. negotiating with HMO's and PPO's for group provider contracts;
g. overseeing stockholder relations;
h. making presentations to major investment groups; i. serving as
spokesman for Employer; and
j. performing such other duties as shall be assigned by the Board of
Directors from time to time.
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Employee hereby accepts and agrees to such hiring, engagement and employment
subject to the general supervision and pursuant to the orders, advice and
directions of the Board of Directors and Chief Executive Officer of Employer.
2. Best Efforts of Employee. Employee hereby agrees that at all times he
will faithfully, industriously and to the best of his ability, experience and
talents perform all duties that may be required of him pursuant to the expressed
and implicit terms hereof. Such duties shall be rendered at such times and
places as Employer in good faith shall require. Employee agrees that at no time
while this Agreement is in effect will Employee speak of, refer to, or comment
on Employer's businesses in any way that tends, either directly or indirectly,
to detract from or diminish the good reputation of Employer's businesses in the
community, the successful and effective conduct of Employer's businesses, or the
good will of Employer's businesses. Violation of any provision of this section
shall be deemed a material breach of this Agreement.
3. Term. The term of this Agreement shall be for a period of one (1) year
commencing as of the date hereof and shall be renewable in the discretion of
Employer's Board of Directors, subject, however, to prior termination as
hereinafter provided.
4. Compensation of Employee.
a. Compensation. Employee shall not be entitled to Compensation prior
to the date of the IPO. From and after the date of the IPO for all services
rendered by Employee during the term of this Agreement, Employer shall pay
Employee an amount equal to Two Hundred Fifty Thousand Dollars
($250,000.00) per annum in equal monthly installments on such dates as
Employer customarily pays its employees. The amount of Employee's
Compensation hereunder shall be reviewed periodically and shall be
increased based on the market price of Employer's stock.
b. Fringe Benefits. Employer shall provide to Employee all of the
ancillary benefits available to Employer's other executives. In addition,
Employer agrees to pay an additional Five Hundred Dollars ($500.00) per
month to enable Employee to obtain disability, life, dental and health
insurance and provide for a car allowance in excess of amounts currently
provided by Employer to its other executives.
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c. Stock Options. All options to purchase stock of Employer in
Employee's possession which have not already vested shall vest on the date
which is forty-five (45) days after the IPO date.
5. Recommendations for Improving Operations. Employee shall make available
to Employer all information of which Employee shall have any knowledge and shall
make all suggestions and recommendations that will give mutual benefit to
Employer and himself.
6. Trade Secrets.
a. Employee expressly acknowledges and agrees that Employee will be
given access to and become familiar with business methods, trade secrets,
and other proprietary information developed at Employer's expense (the
"Trade Secrets"), which are valuable, unique, and essential to the
performance of Employee's duties hereunder, as well as being essential to
the overall continued success and business goodwill of Employer. Employee
expressly acknowledges and agrees that the Trade Secrets are proprietary
and confidential and if any of the Trade Secrets were imparted to or became
known by any persons, including Employee engaging in a business in any way
competitive with that of Employer's, such would result in hardship, loss,
irreparable injury and damage to Employer, the measurement of which would
be difficult, if not impossible, to determine. Accordingly, Employee
expressly agrees that Employer has a legitimate interest in protecting the
Trade Secrets and its business from such hardship, loss, irreparable injury
and damage, that the following covenant is a reasonable means by which to
accomplish that purpose, and that violation of any of the protective
covenants contained herein shall constitute a breach of trust and is
grounds for immediate dismissal and for appropriate legal action for
damages, enforcement and/or injunction.
b. Employee acknowledges that the Trade Secrets give Employer an
advantage over its competitors, and that the same is not available to or
known by Employer's competitors or the general public. Employee further
acknowledges that Employer has devoted substantial time, money, and effort
in the development of the Trade Secrets and in maintaining the proprietary
and confidential nature thereof. Employee further acknowledges Employee's
position with Employer is one of the highest trust and confidence by reason
of
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Employee's knowledge of, access to, and contact with the Trade Secrets.
Employee agrees to use Employee's best efforts and exercise of utmost
diligence to protect and safeguard the Trade Secrets. Employee covenants
that, during the term of this Agreement regardless of which party
terminates this Agreement and whether such termination is for cause,
Employee will not disclose, disseminate or distribute to another, nor
induce any other person to disclose, disseminate or distribute, any Trade
Secrets of Employer, directly or indirectly, either for Employee's own
benefit or for the benefit of another, nor will Employee use or cause to be
used any Trade Secrets in any way except as is required in the course of
Employee's employment with Employer. Employee acknowledges and covenants
that all Trade Secrets relating to the business of Employer shall remain
the exclusive property of Employer, shall not be copied or otherwise
reproduced in whole or in part, and shall not be removed from the premises
of Employer, under any circumstances whatsoever without the prior written
consent of Employer.
7. Trade Secrets after Termination of Employment. All the terms of Section
6 shall remain in full force and effect for a period of two (2) years after the
termination of Employee's employment.
8. Injunctive Relief. In addition to the remedies cited herein, Employer
shall be entitled to injunctive relief against Employee from the violation of
the terms of Sections 6, 7, and 10 of this Agreement.
9. Termination.
a. This Agreement shall be terminated immediately upon the occurrence
of one of the following conditions or events: (i) in the event Employee
conducts himself in an immoral or fraudulent manner, or should the
Employee's conduct discredit Employer or be detrimental to the reputation,
character and standing of Employer; (ii) conviction of any crime of moral
turpitude or of any crime punishable as a felony; or (iii) the death of
Employee.
b. In accordance with Section 2-413 of Maryland's General Corporation
Law, Employer's Board of Directors may remove Employee and terminate this
Agreement at any time if, in the Board's judgment, the best interests of
Employer will be served thereby. In the event this Agreement is terminated
by Employer, Employee shall be entitled to receive compensation through the
date
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of termination. In addition, in the event Employee is terminated for any
reason whatsoever, other than for cause pursuant to Section 9.a, then
Employee shall be entitled to continue to receive compensation and
benefits, as set forth in Section 4 hereof for a period of two (2) months
after termination as severance.
c. Employee may terminate this Agreement at any time, for any reason
whatsoever, upon sixty (60) days written notice to Employer.
10. Restrictive Covenants.
a. Because of the unique value to Employer of the services for which
Employer has contracted hereunder, the nature of Employee's personal
contact with clients and potential clients of Employer, and because of the
confidential information to be obtained by Employee, all as aforementioned,
and in consideration of employment by Employer, Employee covenants and
agrees:
(1) that at no time during the term of this Agreement or for a
period of two (2) years immediately following the termination, for any
reason, of his employment hereunder, will he engage directly or
indirectly, either personally or as an employee, associate, partner,
manager, agent, or otherwise, or by means of any corporation or other
device, in a business similar to Employer's within a ten (10) mile
area of Employer's place of business or any of Employer's clients'
places of business.
(2) that during the term of this Agreement, Employee shall not be
employed by, perform services for or receive compensation of any kind
for services rendered after the date hereof from any person or entity
other than Employer or any affiliates of Employer, it being the intent
of the parties that Employer shall have the sole and exclusive right
to the benefit of Employee's services; and
(3) that for a period of two (2) years after Employee ceases to
be employed by Employer for any reason whatsoever, Employee shall not,
without the prior consent of Employer, directly or indirectly, solicit
for employment or employ, directly or indirectly, any employee of
Employer.
b. Nothing in this Agreement shall be construed as prohibiting
Employer from pursuing any remedies available to it at
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law or in equity for a breach or threatened breach of Sections 6, 7, and 10
of this Agreement.
c. The parties hereto agree that if any court of competent
jurisdiction shall determine that the period, or any other term or
provision of this Agreement, is unreasonable, the said term, or provision
shall not be deemed to be null and void but shall be reformed to impose the
maximum enforceable period, term or other provisions as the case may be.
d. Notwithstanding anything contained in this Section 10 to the
contrary, (i) prior to the IPO date, Employee shall be permitted to
conclude business dealings in which he is currently involved and (ii)
during and after the term of this Agreement, Employee may continue his
activities with the American Academy of Medical Administrators, the
American Hospital Association, the American College of Health Care
Executive and other non-profit organizations which do not compete with
Employer.
11. Extension of Limitation Period. The parties acknowledge that if
Employee violates any of the protective covenants hereunder and Employer brings
legal action for injunctive or other relief hereunder, Employer shall, as a
result of the time involved in obtaining the relief, be deprived of the benefit
of the full Limitation Period of these protective covenants. Accordingly, the
Limitation Period shall be deemed to have the full duration of the period stated
therein, computed from the date relief is granted, but reduced by the time
between the period when the restriction began to run at the termination of
Employee's employment hereunder and the date of the first violation of the
covenant by Employee.
12. Vacation, Leave and Personal. Employee shall be entitled to vacation,
sick and personal leave in accordance with the general policies of Employer
regarding such leave with respect to executives.
13. Lock-Up Agreement. Employee agrees to execute a Lock-Up Agreement
("Lock-Up Agreement") in the event of an IPO in the form provided by the
underwriter of such public offering, provided that such Lock-Up Agreement shall
be substantially the same form executed by all officers, directors and principal
stockholders of Employer. In the event Employee shall fail to execute such
Lock-Up Agreement, within five (5) days after request for same by Employer,
Employee does hereby appoint any officer of the Company as his attorney-in-fact
to execute such agreement on his behalf. The
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power of attorney granted herein shall be irrevocable and coupled with an
interest.
14. Indemnification. Employer's charter provides that to the fullest extent
permitted by the Maryland General Corporation Law, Employer shall indemnify any
and all persons whom it shall have power to indemnify under the Maryland General
Corporation Law, in accordance with Sections 2-405.1, 2-405.2 and 2-418 thereof,
from and against any and all of the expenses, liabilities or other matters
referred to in or covered by said Maryland General Corporation Law. Pursuant to
Section 2-418 of Maryland's General Corporation Law, Employer may not indemnify
a person made a party to a proceeding if: (a) an act or omission of the person
was material to the matter giving rise to the proceeding and (i) was committed
in bad faith or (ii) was the result of active and deliberate dishonesty; or (b)
the person actually received an improper personal benefit in money, property, or
services; (c) the person had reasonable cause to believe that the act or
omission was unlawful, in the case of a criminal proceeding: (d) the person
shall have been adjudged to be liable to Employer in a proceeding by or in the
right of the Employer; (e) the person is adjudged to be liable on the basis that
personal benefit was improperly received in any proceeding charging improper
personal benefit to the person, whether or not involving action in the person's
official capacity; or (f) indemnification has not been authorized for a specific
proceeding after determination has been made, in the manner set forth in Section
2-418(e), that indemnification of the person is permissible in the circumstances
because the person has met the required standard of conduct. Employer agrees to
indemnify Employee to the fullest extent permitted by Maryland law and
Employer's charter.
15. Return of Documents. Upon termination of employment, whether such
termination be voluntary or involuntary, Employee shall deliver to Employer all
records, lists, receipts, contracts and other documents that belong to Employer,
as well as all other property that belongs to Employee.
16. Waiver. No evidence of any waiver of any provision of this Agreement
shall be offered or received in evidence at any proceeding, arbitration or
litigation between the parties hereto arising out of or affecting this
Agreement, or the rights or obligations of the parties hereunder, unless such
waiver is in writing and is duly executed by the party to be charged therewith,
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and the parties further agree that the provisions of this section may not be
waived except as herein set forth.
17. Severability. All agreements and covenants contained herein are
severable, and in the event any of them, with the exception of those contained
in Sections 1 and 4 hereof, shall be held to be invalid by any competent court,
this Agreement shall be interpreted as if such invalid agreements or covenants
were not contained herein. Notwithstanding the foregoing, the parties hereto
agree that to the extent that any provision or portion of Section 10 of this
Agreement shall be held, found or deemed to be unreasonable, unlawful or
unenforceable by a court of competent jurisdiction, then any such provision or
portion thereof shall be deemed to be modified to the extent necessary in order
that any such provision or portion thereof shall be legally enforceable to the
fullest extent permitted by applicable law; and the parties hereto do further
agree that any court of competent jurisdiction shall and the parties hereto do
hereby expressly authorize, request and empower any court of competent
jurisdiction to enforce any such provision or portion thereof or to modify any
such provision or portion thereof in order that any such provision or portion
thereof shall be enforced by such court to the fullest extent permitted by
applicable law.
18. Notices. Any notices to be given hereunder by either party to the other
may be effected by personal delivery, in writing or by mail, registered or
certified, postage prepaid with return receipt requested. Mailed notices shall
be addressed to the parties at the addressees set forth below, but each party
may change its address by written notice in accordance with this Section.
Notices delivered personally shall be deemed communicated as of the actual
receipt; mailed notices shall be deemed communicated as of three (3) days after
mailing.
If to Employee:
Xxxxxxx X. Xxxxxx
X.X. Xxx 000
Xxx Xxxx, Xxx Xxxxxx 00000
If to Employer:
Medi-Cen Management, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
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19. Choice of Law. It is the intention of the parties hereto that this
Agreement and the performance hereunder and all suits and special proceedings
hereunder be construed in accordance with and under and pursuant to the laws of
the State of Maryland, and that in any action, special proceedings or other
proceedings that may be brought arising out of, in connection with, or by reason
of this Agreement, the laws of the State of Maryland shall be applicable and
shall govern to the exclusion of the law of any other forum, without regard to
the jurisdiction in which any action or special proceeding may be instituted.
20. Attorneys' Fees. In any action at law or equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in any final judgment or decree, shall
pay the successful party or parties all costs, expenses and reasonable
attorneys' fees incurred therein by such party or parties (including without
limitation such costs, expenses and fees on any appeal or in connection with any
bankruptcy proceedings), and if the successful party recovers judgment in any
such action or proceeding, such costs, expenses and attorneys' fees shall be
included in and as a part of such judgment.
21. Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by Employer and contains all of the covenants and
agreements between the parties with respect to such employment. Each party to
this Agreement acknowledges that no representations, inducements or agreements,
oral or otherwise, have been made by any party, or anyone acting on behalf of
any party, which are not embodied herein, and no other agreement, statement or
promise not contained in this agreement shall be valid or binding. Any
modification of this Agreement will be effected only if it is in writing signed
by the party to be charged.
22. Termination of Prior Agreements. Employee acknowledges and agrees that
upon execution of this Agreement, any and all existing agreements between
Employee and Employer, Medi-Cen, Corp. of America or any affiliates of Medi-Cen,
Corp. of America shall be deemed automatically terminated.
23. Counterparts. Separate copies of this Agreement may be signed by the
parties hereto, with the same effect as though all of the parties had signed one
copy of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
date first above written.
WITNESS: EMPLOYER:
MEDI-CEN MANAGEMENT, INC.
By:/s/ Xxxxxxx Xxxxxx (SEAL)
------------------------- ----------------------------
Name: Xxxxxxx Xxxxxx
--------------------------
Title:Chief Executive Officer
-------------------------
WITNESS: EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxx (SEAL)
------------------------- -------------------------
Xxxxxxx X. Xxxxxx
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