EXHIBIT 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is entered
into and effective as of the 24th day of May, 2007, by and between U. S.
Physical Therapy, Inc. a Nevada corporation ("Employer") and Xxxxxxxxxxx X.
Reading ("Employee"), and supersedes that certain Employment Agreement between
the parties effective November 1, 2004. Employer and Employee may be referred to
herein collectively as the "Parties" and individually as a "Party." For the
purposes of this Agreement, "Employer" includes U.S.P.T. Management, Inc.; for
the purposes of Sections 11, 12, and 13 "Employer" shall include all
subsidiaries and affiliates (as defined under the Securities Exchange Act of
1934, as amended and regulations promulgated thereunder).
Section 1. Term. Employer hereby continues the employment of Employee and
Employee hereby accepts continued employment with Employer for a term (the
"Term") beginning on the effective date hereof ("Commencement Date") and
continuing until December 31, 2009.
Section 2. Duties of Employee. Employee is engaged to serve as President
and Chief Executive Officer of Employer and to perform such duties and
responsibilities as are customarily performed by persons acting in such capacity
or such other duties as may be assigned by Employer from time to time. Employee
shall report to the Employer's Board of Directors and shall perform his duties
in accordance with the policies and objectives established by such Board of
Directors or its Chairman.
Section 3. Full-Time Employment. Employee shall devote substantially all of
his working time and talent to the business of Employer during the term hereof
and shall diligently and to the best of his ability perform all duties incident
to his employment hereunder, using his best efforts to promote the interests of
Employer. Employee agrees that he shall not serve as an officer, director,
consultant, or employee of any other person or entity, whether or not for
compensation, without the prior consent of the Employer's Board of Directors.
Section 4. Position on the Board of Directors. Employer agrees to use its
best efforts to cause Employee to be elected to the Board of Directors of
Employer.
Section 5. Base Compensation. Subject to the terms and conditions of this
Agreement, as compensation for services rendered and Employee's covenants and
agreements under this Agreement, Employer shall pay to Employee a base salary of
THREE HUNDRED FIFTY-FIVE THOUSAND AND NO/100THS DOLLARS ($355,000.00) per year
("Base Compensation"), payable in accordance with Employer's then-prevailing pay
practices. From time to time (but at least once a year) Employer and Employee
shall review Employee's performance, and at that time Employer, in its sole
discretion, shall determine whether Employee's Base Compensation should be
increased. At no time during the Term hereof will Employee's Base Compensation
be decreased.
Section 6. Additional Compensation. Subject to the terms and conditions of
this Agreement, in addition to the Base Compensation, Employer may provide
incentive compensation in the form of cash bonuses and other incentive awards,
including stock option and restricted shares. The amount of any cash bonus and
the award of any additional stock options or restricted shares is completely
discretionary and will be determined solely by the Board of Directors of
Employer or a compensation committee thereof, taking into consideration any
factor the Board of Directors or compensation committee deems relevant.
Section 7. Business Expenses. Employer shall reimburse Employee for
business expenses directly and reasonably incurred in the performance of his
duties.
Section 8. Benefits and Plans. Employee shall be entitled to such fringe
benefits, including 20 vacation, 7 sick and personal days, and company holidays
per calendar year, as well as insurance (health, disability and life) generally
available to the executive officers of Employer, and Employee shall be entitled
to participate, subject to all conditions of eligibility, in any employee
benefit plans which may be adopted by Employer, including without limitation,
qualified retirement plan(s), deferred compensation plans, and salary
continuation, disability insurance, hospitalization insurance, major medical
insurance, medical reimbursement and life insurance benefit plans. Also,
Employer shall continue Employee's monthly salary for a period of up to ninety
(90) continuous days during any period of Employee's sickness or disability.
Section 9. Termination. This Agreement shall terminate prior to the
expiration of the Term hereof upon the occurrence of any one of the following
events:
(a) Disability. In the event that Employee is unable fully to perform
his duties and responsibilities hereunder to the full extent required by
Employer by reason of illness, injury or incapacity for ninety (90)
consecutive days, this Agreement may be terminated by Employer, and
Employer shall have no further liability or obligation to Employee for
compensation or otherwise hereunder; provided, however, that Employee shall
continue to be compensated as provided in this Agreement during such
ninety- (90) day period and until termination under this Section 9, and
provided further, that Employee will be entitled to receive the benefits,
rights and/or payments prescribed under any employee welfare or benefit
plan in which Employee was participating at the time of such disability in
accordance with the terms and conditions of such plans. In the event of any
dispute under this Section 9, Employee shall submit to a physical
examination by a licensed physician selected by Employer and reasonably
acceptable to Employee.
(b) Death. In the event that Employee dies during the term hereof,
Employer shall pay to his executors, legal representatives or
administrators an amount equal to one (1) year's base compensation set
forth in Section 5 hereof, and thereafter Employer shall have no further
liability or obligation hereunder to Employee's executors, legal
representatives, administrators, heirs or assigns or any other person
claiming under or through Employee; provided, however, that Employee's
heirs, legal representatives or administrators will be entitled to receive
the benefits, rights and/or payments prescribed under any employee welfare
or benefit plans in which Employee was participating at the time of his
death in accordance with the terms and conditions of such plans.
(c) Cause. Nothing in this Agreement shall be construed to prevent its
termination by Employer at any time for "cause". For purposes of this
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Agreement, "cause" shall mean (i) the willful and material failure of
Employee to perform or observe (other than by reason of disability as
contemplated in paragraph 9(a)) any of the terms or provisions of this
Agreement, including the failure of Employee to follow the reasonable
written directions of Employer's Board of Directors, (ii) dishonesty or
misconduct on the part of Employee that is or is reasonably likely to be
damaging or detrimental to the business of Employer, (iii) conviction of a
crime involving moral turpitude, (iv) habitual insobriety or failure to
perform duties due to abuse of alcohol or drugs, or (v) misappropriation of
funds. Prior to terminating this Agreement on account of Employee's failure
to perform or observe any of the terms and conditions of this Agreement
(but not for any of the other enumerated "causes" stated in (ii) through
(v) above), Employer shall give Employee thirty (30) days written notice
and an opportunity to cure such failure to the satisfaction of Employer.
Upon termination for cause, Employer shall pay to Employee all sums due to
Employee through the date of such termination. Following such a
termination, Employer shall have no further duty or obligation to Employee;
provided, however, that Employee shall continue to be bound by Sections 11
through 17.
Section 10. Special Benefits.
A. Special Benefit in the Event of a Change in Control. Employee shall be
entitled to a Change of Control benefit of $500,000 in the event of a "Change in
Control", defined as:
(a) The transfer or sale by Employer of all or substantially all of
the assets of Employer whether or not this Agreement is assigned or
transferred as a part of such sale;
(b) The transfer or sale of more than fifty percent (50%) of the
outstanding shares of Common Stock of Employer;
(c) A merger or consolidation involving Employer in a transaction in
which the shareholders of Employer immediately prior to the merger or
consolidation own less than fifty percent (50%) of the company surviving
the merger or consolidation; or
(d) A merger or consolidation involving Employer in a transaction in
which the board members of Employer after the merger or consolidation
constitute less than fifty percent (50%) of the board of the company
surviving the merger or consolidation; or
(e) The voluntary or involuntary dissolution of Employer.
However, if a Change in Control occurs, the Term shall be modified to end one
(1) year from the date the Change in Control occurs, regardless of the remaining
Term immediately prior to the Change of Control.
B. Special Benefit in the Event of Termination Without Cause or Resignation
for Good Cause. Employee shall also be entitled to the special benefit described
below in the event of the occurrence of either of the following events
(individually or collectively, a "Termination Event"):
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(a) The termination of employment of Employee by Employer without
"cause" as cause is defined in Section 9(c) hereof; or
(b) Employee resigns "for good reason" as defined in Section 10 F.
hereof.
The special benefit payable upon the occurrence of a Termination Event shall be
the sum of the following components:
(a) Employee's Base Compensation then in effect for the remainder of
the Term; and
(b) The greater of (i) the bonus paid or payable to Employee with
respect to last fiscal year of Employer completed prior to the occurrence
of the Termination Event or (ii) the average of the bonuses paid to
Employee over the three (3) fiscal years of Employer ending with last
fiscal year of Employer completed prior to the occurrence of the
Termination Event; and
(c) Employee's accrued but unused vacation days.
If a Change in Control has occurred prior to a Termination Event, Employee shall
also be entitled to a benefit under this Section 10 B. with the reduced Term
described above.
C. Employee's accrued but unused vacation days shall be paid to Employee
within thirty (30) days of the actual date of the termination of Employee's
employment. The other benefits described in Sections 10 A. and 10 B. shall be
paid in equal amounts over the remaining Term as if the Employee remained as an
Employee after the occurrence of the Change in Control or the Termination Event,
as the case may be.
D. In the event Employee's employment is terminated (whether by Employer or
Employee) as a result of a Termination Event, Employee shall be entitled to such
medical insurance benefits as he enjoyed prior to his termination for the
remainder of the Term and at the same cost to Employee of such benefits as in
effect prior to such termination.
E. If Employee's employment is terminated (whether by Employer or Employee)
as the result of a Termination Event within 12 months of a Change in Control,
the period after termination during which the obligations imposed by Sections 11
and 12 remain in effect shall be reduced from two (2) years to one (1) year,
subject to a one-year extension option in accordance with the terms of clause
(c) of the second paragraph of Section 11. If Employee continues to be employed
by Employer for more than one (1) year after a Change in Control occurs, the
obligations imposed by Sections 11 and 12 shall remain in effect for the period
after termination stated therein. Employee shall be entitled to the Change in
Control benefit specified in Section 10 A. only if he remains an employee of
Employer to the date of consummation of the Change in Control, unless Employee
is terminated within twelve (12) months prior to such date pursuant to a
Termination Event or as the result of disability or death as provided in
Sections 9(a) and 9(b). Should any special benefits provided in this Section 10
become payable, the covenants contained in Sections 11 through 17 hereof shall
continue to apply except as otherwise provided in this Section 10, and should
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Employee violate the terms of such covenants Employer may cease payment of the
benefits and terminate any and all future payments otherwise called for under
this Section 10.
F. For purposes of this Agreement, "for good reason" means the occurrence
of any one or more of the following: (i) removal or other termination of
Employee as the President and/or Chief Executive of Employer, without Employee's
express written consent; (ii) a reduction of Employee's duties, authority or
responsibilities or the assignment to Employee of such reduced duties, authority
or responsibilities, in either case without Employee's express written consent,
(iii) a reduction by Employer in Employee's Base Compensation; or (iv) the
relocation of Employee to a facility or a location more than 30 miles from
Employee's then present location without Employee's express written consent.
Section 11. Non-Competition. At all times that Employee remains employed by
the Employer and after the termination of employment, for a period which is the
lesser of (1) a two- (2) year period following the termination of his employment
under this Agreement for any reason or (2) the remaining Term as of the date of
his termination of employment (unless extended pursuant to the second paragraph
of this Section 11), Employee shall not, directly or indirectly, for himself or
on behalf of any other person or entity as an employee, employer, consultant,
agent, lender, principal, partner, stockholder, corporate officer, director, or
in any other individual or representative capacity, (i) invest, engage in, or
permit his name to be used in connection with any business that is in
competition with Employer, (ii) accept employment with or render services to a
competitor of Employer, as a director, officer, agent partner, employee or
consultant, or (iii) solicit or accept from any of the customers of Employer or
from any person or entity whose business Employer is soliciting, any business of
the type which Employer is engaged in or in which Employer is actively preparing
to so engage, in each case described in clauses (i), (ii) or (iii), within the
Territory. Employee shall be prohibited from engaging in the activities
described above within, or with respect to any business in competition with the
Employer located within, fifty (50) miles of any of Employer's rehabilitation
clinic locations (the "Territory").
Notwithstanding the foregoing: (a) Employee may own the voting common stock
of any publicly held corporation so long as it does not exceed more than five
percent (5%) of the outstanding stock thereof; (b) in the event that Employee is
terminated for "cause" or if Employee terminates other than "for good reason",
as defined in this Agreement, Employee agrees not compete with the Employer
under the terms of the preceding paragraph for two (2) years after his
employment terminates; (c) Employer and Employee agree that regardless of the
terms of the first paragraph of this Section 11, if Employee is terminated other
than for "cause" or if Employee terminates "for good reason", Employer shall
have the right and option to require that Employee not compete with the Employer
under the terms of the preceding paragraph for up to two (2) years after his
employment terminates notwithstanding the period stated in the preceding
paragraph so long as Employer continues to pay Employee his Base Compensation
after the termination of his employment in accordance with Employer's standard
pay practices whether such payments are made pursuant to the provisions of
section 10 or this section 11. Employer, however, may terminate such extended
payments of Base Compensation at any time pursuant to this Section 11, and the
restrictions of Employee under this Section 11 shall thereupon cease.
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Section 12. Non-Solicitation. For a two- (2) year period following the
termination of the employment of the Employee under this Agreement for any
reason, Employee agrees not to, directly or indirectly, for himself or on behalf
of any other person or entity (a) solicit or induce, or attempt to solicit or
induce, any person employed by, or any agent of, Employer, to terminate
employee's or agent's relationship with Employer, nor (b) call on, solicit or
divert, or attempt to call on, solicit or divert any person, firm, corporation
or other entity who was or had been a customer or a patient referral source
(including, without limitation, any physician) of Employer who referred ten or
more customers or patients to Employer, who is a customer or a patient referral
source of Employer who has referred ten or more customers or patients to
Employer, or who is a prospective customer or a patient referral source of
Employer with whom Employee had contact as an employee of Employer and who,
within six months of such solicitation, Employer was or is actively recruiting
as a customer or patient referral source.
Section 13. Confidential Information. Employee will not, during or after
the termination of this Agreement, disclose any trade secrets, financial and
accounting information, customer lists, customer mailing lists, prospective
customer lists, lists of referral sources or prospective referral sources, or
pricing, marketing or advertising plans or methods used by Employer (the
"Confidential Information") to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, nor shall Employee make use
of the Confidential Information for his own purposes or for the benefit of any
person, firm, corporation or other entity (except Employer) under any
circumstances during or after the termination of this Agreement. On demand of
Employer, at any time, Employee shall immediately deliver all printed or written
Confidential Information to Employer. To the extent that Employee's property
does not contain Confidential Information, Employee may remove all of Employee's
property (such as computer software and tapes) upon termination of this
Agreement. Confidential Information does not include information that (i)
currently is generally available to or known by the public or hereafter becomes
generally available to or known by the public through no fault of Employee, (ii)
was already in the possession of Employee on the date of inception of Employee's
employment by Employer, or (iii) is obtained by Employee from a third party who
is under no obligation of confidence to Employer.
Section 14. Reasonableness of Restrictions. Employee agrees that (a) the
covenants contained in Sections 11, 12 and 13 hereof are necessary for the
protection of Employer's business goodwill and trade secrets, (b) a portion of
the compensation paid to Employee under this Agreement is paid in consideration
of the covenants herein contained, the sufficiency of which consideration is
hereby acknowledged, and if the scope of any restriction contained in Sections
11, 12 and 13 is too broad to permit enforcement of such restriction to its full
extent, then such restriction shall be enforced to the maximum permitted by law,
and the parties hereby consent that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
Section 15. Enforcement. Employee acknowledges Employee's employment with
Employer is special and unique in character and that Employee will acquire
special skill and training and gain special knowledge during Employee's
employment with Employer, that the restrictions contained in Sections 11, 12 and
13 hereof are reasonable and necessary to protect the legitimate interests of
Employer and its affiliates, that Employer would not have entered into this
Agreement in the absence of such restrictions, and that any violation of any
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provision of those Sections will result in irreparable injury to Employer.
Employee also acknowledges that Employer shall be entitled to preliminary and
permanent injunctive relief, without the necessity of proving actual damages as
well as an equitable accounting of all earnings, profits and other benefits
arising from any such violation, which rights shall be cumulative and in
addition to any other rights or remedies to which Employer may be entitled. The
existence of any claim or cause of action of Employee against Employer, whether
predicated on this Agreement or otherwise, except for nonpayment of amounts
payable after the termination of Employee's employment under the terms of this
Agreement shall not constitute a defense to the enforcement by Employer of these
covenants.
Section 16. Copy of Covenants. Until the expiration of the applicable
restrictions, Employee will provide, and Employer similarly may provide, a copy
of the covenants contained in Sections 11, 12 and 13 of this Agreement to any
business or enterprise which Employee may (i) directly or indirectly own,
manage, operate, finance, join, control or participate in the ownership,
management operation, financing, or control of, (ii) serve as an officer,
director, employee, partner, principal, agent, representative, consultant,
lender or otherwise, or (iii) with which he may use or permit his name to be
used.
Section 17. Special Definition of Employer. For the purposes of Sections 11
through 16 above, the definition of Employer shall include any subsidiary or
affiliate of Employer, including all affiliated physical therapy partnerships of
Employer.
Section 18. Notices. Any notices to be given hereunder by either Party to
the other may be effected in writing either by personal delivery, via facsimile
or by mail, registered or certified, postage prepaid with return receipt
requested:
If to Employer: U.S. Physical Therapy, Inc.
0000 Xxxx Xxx Xxxxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Chairman of the Board
with a copy to: Xxxxxx & Xxxxxx, L.L.P.
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
If to Employee: Xxxxxxxxxxx X. Reading
00000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Mailed notices shall be addressed to the Parties at the addresses set forth
above, but each Party may change the address by written notice in accordance
with this Section 18. Notices delivered personally or by facsimile shall be
deemed communicated upon actual receipt. Mailed notices shall be deemed
communicated three (3) days after mailing.
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Section 19. 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 in any manner
whatsoever.
Section 20. Headings. The headings or titles to sections in this Agreement
are intended solely for convenience and no provision of this Agreement is to be
construed by reference to the heading or title of any section.
Section 21. Amendment or Modification; Waiver. No provision of this
Agreement may be amended, modified or waived unless such amendment, modification
or waiver is authorized by Employer and is agreed to in writing, signed by
Employee and by an officer of Employer (other than Employee) thereunto duly
authorized. Except as otherwise specifically provided in this Agreement, no
waiver by any Party hereto of any breach by any other Party hereto of any
condition or provision of this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or at any prior or subsequent time nor shall the receipt or acceptance
of Employee's employment be deemed a waiver of any condition or provision
hereof.
Section 22. Assignability. Employee shall not assign, pledge or encumber
any interest in this Agreement or any part thereof without the express written
consent of Employer, this Agreement being personal to Employee. This Agreement
shall, however, inure to the benefit of Employee's estate, dependents,
beneficiaries and legal representatives. This Agreement shall not be assignable
by Employer without the written consent of Employee which will not be
unreasonably withheld. Subject to the terms of this Agreement, Employer may
merge or consolidate with or into, or transfer substantially all of its assets
to, another corporation or other form of business organization without
Employee's consent, and as a result of such merger, consolidation or transfer,
this Agreement shall bind the successor of Employer resulting from such merger,
consolidation or transfer. No such merger, consolidation or transfer, however,
shall relieve the Parties from liability and responsibility for the performance
of their respective duties and obligations hereunder.
Section 23. Governing Law. This Agreement shall be interpreted, construed
and governed by and in accordance with the internal substantive law of the State
of Texas.
Section 24. Severability. Each provision of this Agreement constitutes a
separate and distinct undertaking, covenant and/or provision hereof. In the
event that any provision of this Agreement shall finally be determined to be
unlawful, such provision shall be deemed severed from this Agreement, but every
other provision of this Agreement shall remain in full force and effect, and in
substitution for any such provision held unlawful, there shall be substituted a
provision of similar import reflecting the original intent of the Parties hereto
to the extent permissible under law.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
first written above.
EMPLOYER:
U.S. PHYSICAL THERAPY, INC.
By:
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Name:
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Position:
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EMPLOYEE:
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XXXXXXXXXXX X. READING
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