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Exhibit 10.23
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of June 30, 1996, by and
between RENAL CARE GROUP, INC., a Delaware corporation (the "Company"), and XXXX
XXXXXXXX (hereinafter "Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee, and Employee desires to
be employed by the Company, on the terms and conditions contained herein; and
WHEREAS, in serving as an employee of the Company, Employee has and will
participate in the use and development of confidential proprietary information
about the Company, its customers and suppliers, and the methods used by the
Company and its employees in competition with other companies, as to which the
Company desires to protect fully its rights; and
WHEREAS, the Company wishes to enter into an agreement with Employee
whereby Employee shall agree not to compete with the Company in any current or
future business activity conducted or entered into by the Company and to hold
certain information obtained by and through Employee's employment in confidence.
NOW, THEREFORE, in consideration of the compensation payable to
Employee by the Company pursuant to this Agreement, and the mutual promises,
covenants, representations and warranties contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do agree as
follows:
1. Employment.
Effective on August 5, 1996, the Company hereby employs Employee,
and Employee hereby agrees to accept employment with the Company, upon the terms
and conditions hereinafter set forth.
2. Term.
This Agreement shall begin on July 22, 1996 (the "Effective
Date"), and shall continue for an initial period of thirty-six (36) months (the
"Initial Period"), subject to earlier termination by employee or the Company as
hereinafter provided. This Agreement shall renew automatically for additional
terms of twelve (12) months each, subject to earlier termination as hereinafter
provided, on the same terms and conditions (subject to mutually agreeable
modifications, if any).
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3. Compensation and Benefits.
(a) Base Compensation: The Company shall pay Employee an annual
salary of Two Hundred Twenty Thousand Dollars ($220,000), as may be adjusted as
provided herein (the "Base Compensation"), payable according to the pay periods
of the Company as may be in effect from time to time. Such payments shall be
prorated for periods less than a full pay period. The Base Compensation
shall be subject to withholding for federal, state and local payroll and all
other taxes or withholdings applicable to Employee. Any increase of the Base
Compensation shall be at the discretion of the Company, provided that any
decreases to the then current Base Compensation shall require the consent of
Employee.
(b) Benefits: During the term of this Agreement, Employee shall
also be entitled to participate in the insurance and other fringe benefits made
available generally to similar employees of the Company, as such benefits may be
determined from time to time by the Company, provided that Employee shall have
at least four (4) weeks of paid vacation time. In addition, Employee shall be
entitled to those other benefits described on the exhibit attached hereto and
incorporated herein by reference.
(c) Bonuses: In addition to the Base Compensation payable to
Employee, pursuant to Section 3(a) above, Employee shall also be entitled to an
annual incentive bonus as described in the exhibit attached hereto and
incorporated herein by reference.
(d) Expenses: The Company shall reimburse Employee for any and
all expenses reasonably incurred by employee incident to the performance of the
duties imposed upon Employee hereunder.
4. Duties, Extent of Services:
Employee is engaged as Executive Vice President and Chief Operating
Officer and shall perform such duties and responsibilities as are typically
incident thereto, and shall perform in a faithful and competent manner such
additional duties as may be reasonably assigned from time to time by the
Company. Such duties shall be performed on a full-time basis for the Company
at the Company's offices in Nashville, Tennessee. Employee may be required,
from time to time, to perform his duties temporarily hereunder at such other
place or places as the Company shall reasonably require, provided that such
period does not exceed thirty (30) consecutive days without Employee's consent
and that during any such period Employee is able to return to Nashville,
Tennessee at the Company's expense for weekends.
Employee shall devote all of Employee's business time, attention,
knowledge, and skill solely to the business and interest of the Company, and the
Company shall be entitled to all the benefits, profits, and other issues arising
from, or incident to, all work, services, and advice of Employee.
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5. Termination.
This Agreement may be terminated by the parties in the manners
specified below:
(a) Termination without Cause. Either the Company or the employee
may terminate Employee's employment under this Agreement at any time for any
reason upon thirty (30) day's prior written notice to the other party.
(b) Termination for Cause.
The Company may terminate this Agreement on written notice at any
time for "cause". For purposes of this Agreement, "cause" shall mean: (i)
Employee is convicted of, pleads guilty to, or confesses to a felony or any
crime involving any act of dishonesty, fraud, misappropriation, embezzlement or
moral turpitude, in which event the Company may terminate this Agreement
immediately, (ii) the gross misconduct or gross negligence by Employee in
connection with the performance of Employee's duties hereunder, (iii) the
engaging by Employee in any fraudulent, disloyal or unprofessional conduct
which results in a material injury to the Company, its affiliates or any of its
or their centers, monetarily or otherwise, (iv) Employee breaches any provision
of Section 6 of this Agreement, or (v) the failure by Employee to otherwise
substantially perform his duties with the Company (other than any such failure
resulting from the disability of Employee under Section 5(c)(i)) or the breach
of any provision of this Agreement other than Section 6. In the event of any
termination for cause pursuant to the provisions of (ii), (iii), (iv) or (v) of
this subsection, the Company shall give Employee written notice prior to such
termination detailing the specific acts, actions, failures, or events upon
which the forecast termination is based, and Employee shall have fifteen (15)
days after such written notice to cease such actions or otherwise correct any
such failure or breach. If Employee does not cease such action or otherwise
correct such failure or breach within such fifteen day time period, or having
once received such written notice and ceased such actions or corrected such
failure or breach, Employee at any time thereafter again so acts, fails or
breaches, the Company may terminate this Agreement immediately.
(c) Involuntary Termination.
The employment of Employee hereunder shall be automatically
terminated by the death or disability of Employee as outlined below.
(i) Disability. The Company may terminate this Agreement at the
time Employee shall have been Disabled for a continuous period of six (6)
months during any continuous twelve month period. For purposes of this
Paragraph 5(c)(i), the term "Disabled" shall mean Employee's inability to
perform the essential functions of his duties, with or without reasonable
accommodation. During Employee's six month period of Disability or such longer
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wait period as may be provided for in any policy of disability that may be
maintained by the Company for the benefit of Employee, the Company agrees to
continue to pay Employee's Base Compensation (less regular withholdings for
payroll or other taxes and other required or proper items, and less any
payments from all disability plans provided by the Company). In the event of
a termination of Employee on account of Disability, however, the Company shall
be obligated to pay only Employee's Base Compensation that has been earned
through the effective date of termination (less regular withholdings for
payroll or other taxes and other required or proper times, and less any
payments from all disability plans provided by the Company).
(ii) Death. In the event Employee shall die during the term of this
Agreement, this Agreement shall terminate and Employee's estate shall receive
the remainder of the Base Compensation set forth in Section 3(a) hereof accrued
to the last day of the month in which death occurs.
(d) Post-Termination Compensation. Except as provided in Section 5(c)
above, upon termination of this Agreement, the Company shall be relieved of all
of its obligations hereunder notwithstanding any period of time remaining under
the initial or any renewal term, subject to the following:
(i) Termination without Cause. In the event that the Company
terminates Employee's employment hereunder without Cause under Section 5(a)
above, then Employee shall, after the effective date of such termination, as
Employee's sole and exclusive remedy, receive the Base Compensation (as then in
effect) for a period of twelve (12) months after the termination date. If the
Employee's employment is terminated by the Company without Cause, the Employee
shall be under no duty to seek or accept other employment; but if he shall do
so, any compensation he shall receive therefrom shall not diminish the
Company's obligation to make payments required to the Employee hereunder. In
the event that Employee terminates his or her employment under Section 5(a)
above, the Company's obligation to pay Employee's Base Compensation shall
terminate as of the date of termination.
(ii) Termination for Cause. In the event that the Company
terminates Employee's employment hereunder with Cause under Section 5(b) above,
then Employee shall, after the effective date of such termination, as
Employee's sole and exclusive remedy, receive the Base Compensation (as then in
effect) for a period of one (1) month after the termination date.
(iii) Termination following Change in Control. If within twelve (12)
months following a Change in Control (as defined below), either (A) the Company
terminates the employment of Employee hereunder without Cause under Section
5(a) above or (B) Employee resigns from a declined reassignment of a job that
is not reasonably equivalent in responsibility or compensation that is not in
the same geographic area, then, in lieu of any other compensation that may be
specified herein, Employee shall continue to receive the Base Compensation (as
then in effect) for a period of thirty-six (36) months from the date of
termination payable in the same manner as it was being paid as of the date of
termination, provided, however, that the salary payment provided for hereunder
may at the option of the
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Company be paid in a single lump-sum payment, to be paid not later than thirty
(30) days after termination. In the event such obligation arises, no
compensation received from other employment (or otherwise) shall reduce the
obligation to make the payment(s) described in this paragraph.
(e) Change in Control. "Change in Control" means a change in control
of the Company of a nature that would be required to be reported (assuming such
event has not been "previously reported") in response to Item 1(a) of a Current
Report on Form 8-K pursuant to Section 13 of 15(d) of the Exchange Act of 0000
(xxx "Xxxxxxxx Xxx"); provided that, without limitation, a Change in Control
shall also be deemed to have occurred at such time as:
(i) any "person" within the meaning of Section 14(d) of the
Exchange Act, other than the Company; a subsidiary, or any employee benefit
plan(s) sponsored by the Company or any Subsidiary, is or has become the
"beneficial owner," as defined in rule 13d-3 under the Exchange Act, directly or
indirectly, of 25% or more of the combined voting power of the outstanding
securities of the Company ordinarily having the right to vote at the election of
directors, or
(ii) individuals who constitute the Board immediately prior to
any meeting of stockholders (the "Incumbent Board") have ceased for any reason
to constitute at least a majority thereof, provided that any person becoming a
director whose election, or nomination for election by the Company's
stockholders, was approved by a vote of a least three-quarters (3/4 )of the
directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as
a nominee for director without objection to such nomination shall be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board; or
(iii) upon approval by the Company's stockholders of a
reorganization, merger, share exchange or consolidation, other than one with
respect to which those persons who were the beneficial owners, immediately
prior to such reorganization, merger, share exchange or consolidation, or
outstanding securities of the Company ordinarily having the right to vote in the
election of directors own, immediately after such transaction, more than 75% of
the outstanding securities of the resulting corporation ordinarily having the
right to vote in the election of directors; or
(iv) upon approval by the Company's stockholders of a complete
liquidation and dissolution of the Company or the sale or other disposition of
all or substantially all of the assets of the Company other than to a
Subsidiary.
Notwithstanding the occurrence of any of the foregoing, the Board may
determine, if it deems it to be in the best interest of the Company and
consistent with a good faith interpretation of this Agreement, that an event
otherwise constituting a Change in Control shall not be so considered. Such
determination shall only be effective (A) if it is made by the Board prior to
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the occurrence of an event that otherwise would be or probably will lead to a
Change in Control or after such event if made by the Board a majority of which
is composed of directors who were members of the Board immediately prior to the
event that otherwise would be or probably will lead to a Change in Control and
75% or more of such directors vote in favor of such determination, and (B) if it
is made with respect to all executive officers of the Company. Upon such
determination, such event or events shall not be deemed to be a Change in
Control for any purposes hereunder.
6. Nondisclosure, Confidentiality; Competition.
(a) Employee agrees that, during the term of this Agreement and
of Employee's employment by the Company, and for a period twelve (12) months
after the termination of Employee's employment with the Company, Employee will
not in any manner, directly or indirectly, by himself or in conjunction with any
other person, (i) conduct any of the activities or perform any of the
responsibilities or duties that Employee provided the Company during his
employment by the Company for any business entity that is competitive with the
business of the Company or its affiliates or (ii) establish or own any
financial, beneficial or other interest in (other than an interest consisting of
less than one percent (1%) of a class of publicly traded security), make any
loan to or for the benefit of, or render any managerial, marketing or other
business advice, to any entity that is then conducting activities that are
competitive with those of the business of the Company or its affiliates, in
either case within a geographic territory defined as the greater of (i) a
seventy-five (75) mile radius of any renal dialysis center, unit or facility
owned or operated by the Company or an affiliate of the Company (an "RCG
Center"), or (ii) the geographic area, as narrowly construed as is practicable,
from which the Company received patients at each of the RCG Centers. For
purposes of this Section, the "business of the Company or its affiliates" shall
mean owning or operating a renal dialysis center, unit or facility, and
providing practice management services to nephrologists.
(b) Employee further agrees that, for a period of three (3) years
after the termination of Employee's employment with the Company, Employee will
keep confidential and not directly divulge, or allow through a lack of
reasonable care to be divulged to anyone, or use or otherwise appropriate for
Employee's own benefit or for the benefit of others, any knowledge or
information of a confidential nature with respect to the Company's and its
affiliates' current business, the Company itself, or any of its affiliates,
including all trade secrets, pricing information, marketing information or
technical information (hereinafter referred to as the "Confidential Data"),
except for (i) a disclosure that is required by law; or (ii) information that
has been made generally available to the public by the act of one who has the
right to disclose such information; or (iii) information that has become part of
the public domain through no fault of the Employee; and (iv) was known to the
Employee prior to June 1996. Employee hereby acknowledges and agrees that the
prohibitions against disclosure of Confidential Data recited herein are in
addition to, and not in lieu of, any rights or remedies which the Company may
have available pursuant to the laws of any jurisdiction or at common law to
prevent the disclosure of confidential information, and the enforcement by the
Company of its rights and remedies
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pursuant hereto shall not be construed as a waiver of any other rights or
available remedies which the Company may possess in law or equity. Employee
acknowledges that the Company has taken reasonable and appropriate steps to
ensure the confidentiality and non-disclosure of all such Confidential Data.
For purposes of this Section the Company's and its affiliates' "current
business" shall mean owning or opening a renal dialysis center, unit or
facility.
(c) Employee further agrees that, for a period of three (3) years
after the termination of Employee's employment with the Company, Employee will
not, for his own benefit or the benefit of others, solicit any person or entity
that has or has had, or disrupt or attempt to disrupt, any relationship,
contractual or otherwise, with the Company or an affiliate of the Company
(including any patient, payor, physician, provider, managed care organization or
supplier) at any time during Employee's employment with the Company, for the
purpose of assisting, or creating such a relationship for, any business entity
that is competitive with the Company or an affiliate of the Company. For
purposes of this Section, a business entity is competitive with the Company or
an affiliate of the Company if it provides or offers any renal dialysis service
that is provided by the Company or an affiliate of the Company.
(d) Employee further agrees that, for a period of three (3) years
after the termination of Employee's employment with the Company, Employee shall
not induce, nor attempt to induce, any employee of the Company, or any of its
affiliates, to terminate such employee's association with the Company or any of
its affiliates.
(e) These post-employment covenants are considered by the parties
hereto to be fair, reasonable and integral for the protection of the Company.
The parties mutually agree that if a violation of any of these covenants occurs,
such violation or any threatened violation will cause irreparable injury to the
Company and the remedy at law for any such violation or threatened violation
will be inadequate. The parties acknowledge that these covenants will survive,
and remain in effect and enforceable after, termination of this Agreement.
(f) Employee agrees to indemnify and hold harmless the Company from
and against any and all claims, causes of action, damages and/or any other
losses suffered or incurred by the Company as a result of any breach or
purported breach by Employee of any agreement applicable to Employee which
existed prior to the time of the entering into of this Agreement. Such
obligations of Employee to indemnify and hold the Company harmless shall include
any and all costs of defense of any such claim or threatened claim, including
reasonable attorneys' fees.
7. Severability.
The parties hereto hereby expressly agree and contract that it is
not the intention of either party to violate any public policy, or any statutory
or common law, and that if any paragraph, sentence, clause or combination of the
same of this Agreement shall be in violation of the laws of any state where
applicable, such paragraph, sentence, clause or the combination of
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the same shall be void in the jurisdictions where it is unlawful, and
the remainder thereof shall remain binding on the parties hereto. It is the
intention of the parties to make the covenants of this Agreement binding only
to the extent that they may be lawfully done under existing applicable laws.
In the event that any part of any term or covenant of this Agreement is
determined by a court of law or equity to be overly broad or otherwise
unenforceable, the parties hereto agree that such court shall be empowered to
substitute, and it is the intent of the parties hereto that such court
substitute, a reasonably judicially enforceable term or limitation in the place
of such unenforceable term or covenant, and that as so modified this Agreement
shall be fully enforceable.
8. Entire Agreement; Modification.
This Agreement constitutes the entire agreement between the
parties and supersedes any and all prior understandings or agreements, and any
changes or additions hereto must be in writing and signed by both parties.
9. Assignment.
(a) The rights and benefits of Employee under this Agreement,
other than accrued and unpaid amounts due under Section 3(a) hereof, are
personal to Employee and shall not be assignable.
(b) This Agreement may not be assigned by the Company except to
an affiliate of the Company, provided that such affiliate assumes the Company's
obligations under this Agreement; provided, further, that if the Company shall
merge or effect a consolidation or share exchange with or into, or sell or
otherwise transfer substantially all its assets to, another business entity, the
Company may assign its rights hereunder to that business entity without the
consent of the Employee provided that it causes such business entity to assume
the Company's obligations under this Agreement.
10. Notice.
The references to the notice periods of certain "days" contained
in this Agreement shall mean calendar days. Any notice provided for in this
Agreement shall be delivered to Employee at the most recent address of employee
listed in the Company's then current employment records. Notice to the Company
shall be delivered to the following address: c/o Renal Care Group, Inc., 0000
Xxxx Xxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: President.
11. Waiver.
The waiver by any party to this Agreement of a breach of any of the
provisions contained herein shall not operate or be construed as a waiver of any
subsequent breach.
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12. Disputes and Governing Law.
The Company and employee agree that any dispute arising in connection
with, or relating to, this Agreement or the termination of this Agreement, to
the maximum extent allowed by applicable law, shall be subject to resolution
through informal methods and, failing such efforts, through arbitration.
Either party may notify the other party of the existence of a dispute by
written notice to the address indicated above in Section 10. The parties shall
thereafter attempt in good faith to resolve their differences within thirty
(30) days after the receipt of such notice. If the dispute cannot be resolved
within such 30-day period, then the parties will submit the dispute for
mediation. If mediation efforts are not successful, then either party may file
a written demand for arbitration with the other party. The arbitration shall
proceed in accordance with the terms of the Federal Arbitration Act and the
rules and procedures of the American Arbitration Association. A single
arbitrator shall be appointed through the American Arbitration Association's
procedures to resolve the dispute.
The parties agree that in the event arbitration is necessary, the laws of
the State of Tennessee and any applicable federal law shall apply. The place of
the arbitration shall be Nashville, Tennessee.
The award of the arbitrator shall be binding and conclusive upon the
parties. Either party shall have the right to have the award made the judgment
of a court of competent jurisdiction in the State of Tennessee.
In the event of a dispute arising under this Agreement, the prevailing
party shall be entitled to all reasonable attorney's fees incurred in connection
with such dispute. The Company agrees, to the maximum extent permitted by law
and the By-laws of the Company, to defend and indemnify the Employee against and
to hold the Employee harmless from any and all claims, suits, losses,
liabilities, and expenses (including disputes arising under this Agreement and
including reasonable attorneys' fees and payment of reasonable expenses incurred
in defending against such claim or suite as such expenses are incurred) asserted
against the Employee for actions taken or omitted to be taken by the Employee in
good faith and within the scope of his responsibilities as an officer or
employee of the Company. If requested by the Employee, the Company shall
advance to the Employee, promptly following the Company's receipt of any such
request, any and all expenses for which indemnification is available hereunder.
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IN WITNESS WHEREOF, the Company and Employee have executed this Agreement
on the day and year first above written.
COMPANY:
RENAL CARE GROUP, INC.
By: /s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
President
[Corporate Seal]
EMPLOYEE:
/s/ Xxxx Xxxxxxxx (Seal)
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Xxxx Xxxxxxxx
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