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EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of May 20,
1998 between AMERICAN PHYSICIAN PARTNERS, INC., a Delaware corporation (the
"Company"), and Xxxx X. Xxxxx ("Xxxxx").
In consideration of the mutual covenants and conditions set forth
herein, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Xxxxx in the capacity of
President and Chief Executive Officer. Xxxxx accepts such employment and
agrees to perform such services as are customary to such office and as shall
from time to time be assigned to him by the Board of Directors. The Company
and Xxxxx hereby acknowledge and agree that Xxxxx shall be required to move to,
and establish his primary residence in, the Dallas, Texas area to perform the
services contemplated by this Agreement.
2. TERM. The employment hereunder shall be for a period of 1 year,
commencing on May 20, 1998 (the "Commencement Date") and shall be automatically
renewed for successive one year periods unless earlier terminated as provided
in Section 5. Xxxxx'x employment will be on a full-time basis requiring the
devotion of such amount of his productive time as is necessary for the
efficient operation of the business of the Company.
3. COMPENSATION AND BENEFITS
3.1 SALARY. For the performance of Xxxxx'x duties hereunder, the
Company shall pay Xxxxx an annual salary of $350,000, payable (less required
withholdings) no less frequently than twice monthly.
3.2 BONUS. The Company shall also pay Xxxxx an annual cash bonus
for the first employment year, which bonus shall be payable in a single
installment within 30 days following the end of the employment year for which
it is earned. The annual bonus for the first employment year will be at least
$100,000. During the first employment year the Board of Directors and Xxxxx
will establish a mutually acceptable bonus plan for the second and subsequent
employment years, which plan (i) will provide Xxxxx with appropriate incentives
and the opportunity to earn bonus amounts comparable to those available to top
executives officers of similar companies, and (ii) may base the bonus awards on
the amount of earnings per share for the Company as defined by Generally
Accepted Accounting Principals (GAAP).
3.3 STOCK OPTIONS. Upon commencement of Xxxxx'x employment
hereunder, the Company shall grant to Xxxxx options under the Company's Stock
Option Plan to purchase 500,000 shares of the Company's common stock at an
exercise price of $8.75 per share (which is equal to the closing price of the
Company's Common Stock on May 20, 1998). The options will vest in accordance
with the Company's Stock
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Option Plan and each option will be exercisable for a period of ten years from
the commencement date. This option shall become exercisable as to one sixtieth
(1.66667%) of the original option shares at the end of each monthly anniversary
of the grant date over a term of five years. Option shares will not vest after
Termination. Xxxxx shall be considered for participation in plans granting
additional options or stock awards to top executive personnel.
3.4 BENEFITS. Xxxxx shall be entitled to such medical, disability
and life insurance coverage and such vacation, sick leave and holiday benefits,
if any, and any other benefits as are made available to the Company's top
executive personnel, all in accordance with the Company's benefits program in
effect from time to time.
3.5 REIMBURSEMENT OF EXPENSES. Xxxxx shall be entitled to be
reimbursed for all reasonable expenses, including but not limited to expenses
for travel, meals and entertainment, incurred by Xxxxx in connection with and
reasonably related to the furtherance of the Company's business.
3.6 MOVING AND RELOCATION EXPENSES. The Company will reimburse
Xxxxx for the reasonable out-of-pocket costs incurred by Xxxxx in connection
with the relocation of his personal property from his primary residence in
Agoura Hills, California ("Primary Residence") to the Dallas, Texas area;
provided, however, that the amount of such moving costs that the Company shall
be obligated to reimburse shall not exceed $25,000. The Company also will
reimburse Xxxxx up to $50,000 for real estate commissions at customary rates
incurred by Xxxxx in connection with the sale of his Primary Residence;
provided, however, that Xxxxx completes his move and establishes a primary
residence in the Dallas, Texas, area on or before July 31, 1998.
3.7 ANNUAL REVIEW. On each anniversary of the Commencement Date,
the Board of Directors will review Xxxxx'x performance and compensation
hereunder (including salary, bonus and stock options and/or other equity
incentives) and will consider whether to increase such compensation, but will
not have authority, as the result of such review, to decrease any portion of
such compensation without the written consent of Xxxxx.
4. CHANGE OF CONTROL. In the event of a Change of Control of the Company
(as defined below), all options then granted to Xxxxx which are unvested at the
date of the Change of Control will be immediately vested. In addition,
notwithstanding the provisions of Section 5.2(b), in the event of a termination
of Xxxxx'x employment hereunder by the Company following a Change of Control,
the Company will promptly pay Xxxxx, in addition to the amounts required under
Section 5.2(a), a lump sum severance amount, payable immediately upon such
termination of employment, equal to two (2) years of salary at the then
current rate, excluding bonus.
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As used herein, a "Change of Control" of the Company shall be deemed
to have occurred:
(a) Upon the consummation, in one transaction or a series of
related transactions, of the sale or other transfer of voting power (including
voting power exercisable on a contingent or deferred basis as well as
immediately exercisable voting power) representing effective control of the
Company to a person or group of related persons who, on the date of this
Agreement, does not have effective voting control of the Company, whether such
sale or transfer results from a tender offer or otherwise; or
(b) Upon the consummation of a merger or consolidation in which
the Company is a constituent corporation and in which the Company's
shareholders immediately prior thereto will beneficially own, immediately
thereafter, securities of the Company or any surviving or new corporation
resulting therefrom having less than a majority of the voting power of the
Company or any such surviving or new corporation; or
(c) Upon the consummation of a sale, lease, exchange or other
transfer or disposition by the Company of all or substantially all its assets
to any person or group or related persons:
5. TERMINATION
5.1 TERMINATION EVENTS. The employment hereunder will terminate
upon the occurrence of any of the following events:
(a) Xxxxx dies;
(b) the Company, by written notice to Xxxxx or his
personal representative, discharges Xxxxx due to the inability to perform the
duties assigned to him hereunder for a continuous period exceeding 120 days by
reason of injury, physical or mental illness or other disability, which
condition has been certified by a physician; provided, however, that prior to
discharging Xxxxx due to such disability, the Company shall give a written
statement of findings to Xxxxx or his personal representative setting forth
specifically the nature of the disability and the resulting performance
failures, and Xxxxx shall have a period of ten (10) days thereafter to respond
in writing to the Board of Directors' findings:
(c) Xxxxx is discharged by the Board of Directors of the
Company for cause. As used in this Agreement, the term "cause" shall mean:
(i) Xxxxx'x conviction of (or pleading guilty or
nolo contendere to) a felony or any misdemeanor involving dishonesty or moral
turpitude; provided, however, that prior to discharging Xxxxx for cause, the
Company shall give a written statement of findings to Xxxxx setting forth
specifically the grounds on which cause is based, and Xxxxx shall have a period
of ten (10) days thereafter to respond in writing to the Board of Directors'
findings;
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(ii) the willful and continued failure of Xxxxx to
substantially perform his duties with the Company (other than any such failure
resulting from illness or disability) after a written demand for substantial
performance is requested by the Company's Board of Directors, which
specifically identifies the manner in which it is claimed Xxxxx has not
substantially performed his duties, or (b) Xxxxx is willfully engaged in
misconduct which has, or can reasonably be expected to have, a direct and
material adverse monetary effect on the Company. For purposes of this Section
no act or failure to act on Xxxxx'x part shall be considered "willful" if done,
or omitted to be done, by Xxxxx in good faith and with reasonable belief that
Xxxxx'x action or omission was in the best interest of the Company. No
termination shall be effected for Cause unless Xxxxx has been provided with
specific information as to the acts or omissions which form the basis of the
allegation of Cause, and Xxxxx has had an opportunity to be heard, with counsel
if he so desired, before the Board of Directors and such Board determines, by
majority vote, in good faith that Xxxxx was guilty of conduct constituting
"Cause" as herein defined, specifying the particulars thereof in detail.
(d) Xxxxx is discharged by the Board of Directors of the
Company without cause, which the Company may do at any time, with at least 30
days advance written notice; or
(e) Xxxxx voluntarily terminates his employment due to
either (i) a default by the Company in the performance of any of its
obligations hereunder, or (ii) an Adverse Change in Duties (as defined below),
which default or Adverse Change in Duties remains unremedied by the Company for
a period of ten days following its receipt of written notice thereof from
Xxxxx; or
(f) Xxxxx voluntarily terminates his employment for any
reason other than the Company's' default or an Adverse Change in Duties, which
Xxxxx may do at any time with at least 30 days advance notice.
As used herein, "Adverse Change in Duties" means an action or series
of actions taken by the Company, without Xxxxx'x prior written consent, which
results in:
(1) A change in Xxxxx'x reporting responsibilities, titles, job
responsibilities or offices which results in a material diminution of his
status, control or authority; or
(2) The assignment to Xxxxx of any positions, duties or
responsibilities which are materially inconsistent with Xxxxx'x positions,
duties and responsibilities or status with the Company; or
(3) A requirement by the Company that Xxxxx be based or perform
his duties anywhere other than (i) at the Company's corporate office location
on the date of this Agreement, or (ii) if the Company's corporate office
location is moved after the date of this Agreement, at a new location that is
no more than 60 miles from such prior location; or
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(4) A failure by the Company to provide for Xxxxx'x participation
in any current or future benefits or plans at a level or to an extent
commensurate with that of other top executives of the Company.
5.2 EFFECTS OF TERMINATION
(a) Upon termination of Xxxxx'x employment hereunder for
any reason, the Company will promptly pay Xxxxx all compensation owed to Xxxxx
and unpaid through the date of termination (including, without limitation,
salary and employee expenses reimbursements).
(b) In addition, if the employment is terminated under
Sections 5.1(b), (d) or (e), the Company shall also pay Xxxxx, immediately upon
such termination of employment, a lump sum severance amount equal to one-half
of the then applicable annual salary, excluding bonus. Xxxxx shall be entitled
to receive up to an additional six months of his then applicable salary,
excluding bonus, if he is unable to secure a position with (i) reasonably
equivalent duties and (ii) a cash compensation package substantially similar to
his base salary at the time of termination (an "Equivalent Position");
provided, however, that payments pursuant to this sentence would be paid
monthly and only until such time as Xxxxx secured an Equivalent Position.
(c) Upon termination of Xxxxx'x employment hereunder for
any reason, Xxxxx agrees that for the one year period following the Termination
Event:
(i) Xxxxx will not directly or indirectly,
whether as an individual, employee, director, consultant or advisor, or in any
other capacity whatsoever, provide services to any person, firm, corporation or
other business enterprise which is involved in the acquisition or management of
radiology physician practices or other service company that directly provides
management services in the area of radiology, unless he obtains the prior
written consent of the Board of Directors.
(ii) Xxxxx will not directly or indirectly
encourage or solicit, or attempt to encourage or solicit, any individual to
leave the Company's employ for any reason or interfere in any other manner with
the employment relationships at the time existing between the Company and its
current or prospective employees.
(iii) Xxxxx will not induce or attempt to induce
any provider, payor, customer, supplier, distributor, licensee or other
business relation of the Company to cease doing business with the Company or in
any way interfere with the existing business relationship between any such
customer, supplier, distributor, licensee or other business relation and the
Company.
Xxxxx acknowledges that monetary damages may not be sufficient to
compensate the Company for any economic loss which may be incurred by reason of
breach of the foregoing restrictive covenants. Accordingly, in the event of
any such breach, the Company shall, in addition to any remedies available to
the Company at law, be entitled to obtain equitable relief in the form of an
injunction precluding Xxxxx from continuing to engage in such breach.
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If any restriction set forth in this paragraph is held to be
unreasonable, then Xxxxx and the Company agree, and hereby submit, to the
reduction and limitation of such prohibition to such area or period as shall be
deemed reasonable.
6. GENERAL PROVISIONS
6.1 ASSIGNMENT. Neither party may assign or delegate any of his
or its rights or obligations under this Agreement without the prior written
consent of the other party.
6.2 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior agreements between the parties relating to such
subject matter.
6.3 MODIFICATIONS. This Agreement may be changed or modified only
by an agreement in writing signed by both parties hereto.
6.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its
successors and permitted assigns and Xxxxx and Xxxxx'x legal representatives,
heirs, legatees, distributees, assigns and transferees by operation of law,
whether or not any such person shall have become a party to this Agreement and
have agreed in writing to join and be bound by the terms and conditions hereof.
6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
6.6 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect.
6.7 FURTHER ASSURANCES. The parties will execute such further
instruments and take such further actions as may be reasonably necessary to
carry out the intent of this Agreement.
6.8 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed received by the
recipient when delivered personally or, if mailed, five (5) days after the date
of deposit in the United States mail, certified or registered, postage prepaid
and addressed, in the case of the Company, to 2301 NationsBank Plaza, 000 Xxxx
Xxxxxx, Xxxxxx, Xxxxx 00000, and in the case of Xxxxx, to the address shown for
Xxxxx on the signature page hereof, or to such other address as either party
may later specify by at least ten (10) days advance written notice delivered to
the other party in accordance herewith.
6.9 NO WAIVER. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver of that
provision, nor prevent that party thereafter from enforcing that provision of
any other provision of this Agreement.
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6.10 LEGAL FEES AND EXPENSES. In the event of any disputes under
this Agreement, each party shall be responsible for their own legal fees and
expenses which it may incur in resolving such dispute, unless otherwise
prohibited by applicable law or a court of competent jurisdiction.
6.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Xxxxx have executed this Agreement,
effective as of the day and year first above written.
COMPANY XXXXX
AMERICAN PHYSICIAN PARTNERS, INC.,
a Delaware corporation
By: By:
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Xxxxxxxx Xxxxxx, M.D. Xxxx X. Xxxxx
Chairman of the Board 0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
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