EMPLOYMENT AGREEMENT
Employment Agreement (the "Agreement"), dated February 21, 1997 by
and between Physicians Resource Group, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxx ("Employee").
R E C I T A L S
1. The Company and Employee are parties to that certain
Employment Agreement dated April, 1995 (the "Old Employment Agreement").
2. The Company and Employee desire to terminate the Old
Employment Agreement and enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
conditions contained herein, the parties hereto agree as follows:
Section 1. Employment. The Company hereby agrees to employ
Employee, and Employee hereby accepts employment by the Company, upon
the terms and subject to the conditions hereinafter set forth.
Section 2. Duties. Employee shall serve as the President of
the Company. Except as otherwise provided pursuant to Section 11
hereof, Employee agrees to devote his full time and best efforts to the
performance of his duties to the Company. Employee acknowledges that
the executive offices of the Company will be located in Dallas, Texas.
Section 3. Term. Except as otherwise provided in Section 6
hereof, the term of this Agreement shall be for two years (Initial
Term), commencing on the date of this Agreement. This Agreement shall
be automatically renewed thereafter for successive one year terms unless
either party gives to the other written notice of termination no fewer
than ninety (90) days prior to the expiration of any such term that it
does not wish to extend this Agreement.
Section 4. Compensation and Benefits. In consideration for the
services of the Employee hereunder, the Company will compensate Employee
as follows:
(a) Base Salary. Commencing on the date hereof, Employee
shall be entitled to receive a base salary of $250,000.00 per annum
or as increased from time to time by the Board of Directors of the
Company or the Option and Compensation Committee of the Board of
Directors (Compensation Committee) thereof.
(b) Bonus. Employee shall be eligible to receive a bonus
each year during the term of this Agreement in accordance with a
bonus plan to be established annually by the Compensation
Committee. The bonus plan for fiscal 1997 is attached to this
Agreement as Exhibit A.
(c) Benefits. During the term of this Agreement, Employee
shall be entitled to participate in and receive benefits under
any and all employee benefit plans and programs which are
from time to time generally made available to the executive employees
of the Company, subject to approval and grant by the appropriate
committee of the Board of Directors of the Company with respect to
programs calling for such approvals or grants.
Section 5. Expenses. It is acknowledged by the parties
that Employee, in connection with the services to be performed by
him pursuant to the terms of this Agreement, will be required to
make payments for travel, entertainment of business associates
and similar expenses. The Company will reimburse Employee for
all reasonable expenses of types authorized by the Company and
incurred by Employee in the performance of his duties hereunder.
Employee will comply with such budget limitations and approval
and reporting requirements with respect to expenses as the
Company may establish from time to time.
Section 6. Termination. Employee's employment hereunder
will commence on the date of this Agreement and continue until
the end of the Initial Term and any renewals of such term, except
that the employment of Employee hereunder will terminate earlier
upon the occurrence of the following events:
(a) Death or Disability. Employee's employment will
terminate immediately upon the death of Employee during the
term of his employment hereunder or, at the option of the
Company, in the event of Employee's disability, upon 30 days
notice to Employee. Employee will be deemed disabled if, as
a result of Employee's incapacity due to physical or mental
illness, Employee shall have been absent from his duties
with the Company on a full-time basis for 120 consecutive
business days. In the event of the termination of this
Agreement pursuant to this subsection, Employee will not be
entitled to any severance pay or other compensation except
for any portion of his base salary accrued but unpaid from
the last monthly payment date to the date of termination and
expense reimbursements under Section 5 hereof for expenses
incurred in the performance of his duties hereunder prior to
termination.
(b) For Cause. The Company may terminate the Employee
employment for "Cause" immediately upon written notice by
the Company to Employee. For purposes of this Agreement, a
termination will be for Cause if: (i) Employee willfully and
continuously fails to perform his duties with the Company
(other than any such failure resulting from incapacity due
to physical or mental illness), (ii) Employee willfully
engages in gross misconduct materially and demonstrably
injurious to the Company or (iii) Employee has been
convicted of a felony. In the event of the termination of
this Agreement pursuant to this subsection, Employee will
not be entitled to any severance pay or other compensation
except for any portion of his base salary accrued but unpaid
from the last monthly payment date to the date of
termination and expense reimbursements under Section 5
hereof for expenses incurred in the performance of his
duties hereunder prior to termination.
(c) By Company Without Cause. The Company may
terminate this Agreement at any time for any reason without
cause. In the event of the termination of this Agreement
pursuant to this subsection at any time prior to 90 days
before the expiration of the Initial Term , the Company will
pay Employee, as Employee's sole remedy in connection with
such termination, severance pay in the amount determined by
multiplying (i) Employee's monthly base salary at the rate
in effect immediately preceding the termination of
Employee's employment, by (ii) the greater of twelve (12)
months or the remaining number of months of employment in
the Initial Term payable in equal monthly payments in
arrears. The Company will also pay Employee the portion of
his base salary accrued but unpaid from the last monthly
payment date to the date of termination and expense
reimbursements under Section 5 hereof for expenses incurred
in the performance of his duties hereunder prior to
termination.
(d) By Company Without Cause at the End of the Initial
Term and Thereafter. The Company may terminate this
Agreement at the end of the Initial Term and annually
thereafter upon the anniversary date of this Agreement by
providing to the Employee ninety (90) days prior written
notice of its election to terminate this Agreement, such
termination being effective as of the 90th day after notice
is delivered. In the event of termination of this Agreement
pursuant to this subsection, the Company will pay to
Employee as Employee's sole remedy in connection with such
termination, severance pay in the amount of Employee's
monthly base salary at the rate in effect immediately
preceding the termination of Employee's employment from the
date of termination for twelve months from the date of
termination, which severance will be paid by the Company in
equal monthly payments in arrears. The Company will also
pay the Employee for expense reimbursements under Section 5
hereof for expenses incurred in the performance of his
duties hereunder prior to termination.
(e) By Employee Without Cause at the End of the
Initial Term and Annually Thereafter. Employee may terminate
this Agreement at the end of the Initial Term and annually
thereafter upon the anniversary date of this Agreement by
providing to the Company ninety (90) days prior written
notice of his election to terminate this Agreement, such
termination being effective as of the 90th day after notice
is delivered. In the event of termination of this Agreement
pursuant to this subsection, the Company will continue to
pay to Employee Employee's monthly base salary from the date
of delivery of notice of termination until the earlier of
(i) the next annual anniversary of the date of this
Agreement or (ii) 90 days from the date of termination of
employment and Employee will be entitled to receive expense
reimbursements under Section 5 hereof for expenses incurred
in the performance of his duties hereunder prior to the date
of termination.
Section 7. Effect of Termination on Options. The
Employee has been granted options to purchase shares of the
Company's Common Stock and may continue to be granted such
options from time to time. The effect of the termination of the
Employee's employment on such options shall be determined by this
Section. In the event of a conflict between the termination
provisions of an option agreement and the provisions of this
Agreement the terms of this Agreement shall control, except that
if the reason that the terms of an option agreement conflict with
the terms of this Agreement is necessary for the option in
question to constitute an "incentive stock option" under the
Internal Revenue Code, the Employee, in his discretion, may at
the time of termination of employment elect to have the
termination provisions of the option agreement control to the
extent necessary to allow the option in question to constitute an
"incentive stock option" under the Internal Revenue Code.
Otherwise all options for the purposes of this Agreement shall be
treated as nonqualified.
(a) If the Employee voluntarily leaves the employment
of the Company in breach of this Agreement, his options will
automatically expire.
(b) If Employee dies or becomes disabled, as defined
in Section 6(a), while employed by the Company, his options
shall become fully exercisable on the date of his death or
disability and shall expire twelve months thereafter unless
by its terms it expires sooner.
(c) If the Employee's employment with the Company is
terminated for Cause, as defined in Section 6(b), his
options will automatically expire.
(d) If the Employee's employment with the Company is
terminated without cause, pursuant to Section 6(c), his
options will remain exercisable and will vest and expire in
accordance with the terms of the applicable option
agreements.
(e) If Employee's employment with the Company is
terminated by the Company pursuant to Section 6(d), his
options that are vested as of the termination date shall
remain exercisable for a period of twelve months after the
termination date and shall expire at the end of such twelve
month period and the options that would have vested during
the twelve months following the termination date shall vest
upon the termination date, shall remain exercisable for a
period of twelve months after the termination date and
expire at the end of such twelve month period.
(f) If the Employee's employment with the Company is
terminated by Employee pursuant to Section 6(e), his options
that are vested as of the termination date shall remain
exercisable for a period of twelve months after the
termination date and shall expire at the end of such twelve
month period .
Section 8. Change In Control Termination Payment.
(a) Termination Payment.
(i) Amount. Notwithstanding anything to the
contrary contained in Section 6 hereof, in the event
Employee's employment with the Company terminates for
any reason (other than death) within the twelve month
period following a Change In Control (as defined in
subsection 8(b) hereof) occurring after the date of
this Agreement, the Company will pay Employee a lump
sum payment (the "Termination Payment") in cash equal
to 2.99 times the sum of the items in the following
subsections (I) through (VI):
(I) Employee's annual base compensation
determined by reference to his base salary in
effect immediately prior to the Change In Control;
(II) 50% of the maximum bonus that Employee
could receive under the management incentive bonus
plan established by the Compensation Committee of
the Board of Directors of the Company for the year
in which the Change In Control occurs, assuming
all incentives and financial targets were achieved
that are necessary to require payment of the
largest bonus amount by the Company to Employee;
(III) the amount of Employee's base
salary accrued but unpaid from the last monthly
payment date to the date of termination;
(IV) expense reimbursement under Section 5
hereof for expenses incurred in the performance of
his duties hereunder prior to the termination of
his employment with the Company;
(V) any other benefit accrued but unpaid as
of the date of such termination; and
(VI) the estimated cost to Employee of
obtaining medical, dental, life and disability
insurance coverage for a period of eighteen months
after the expiration of his continuation (COBRA)
rights; provided that such coverage will be
substantially similar to the coverage provided to
Employee by the Company immediately prior to the
Change In Control; and provided further that this
subsection 8(a)(i)(VI) will be applied without
regard to, and the amount payable under this
subsection 8(a)(i)(VI) is in addition to, any
continuation (COBRA) rights or conversion rights
under any plan provided by the Company, which
rights are not affected by any provision hereof.
(ii) Time for Payment; Interest. The Company will
pay the Termination Payment to Employee concurrent with
Employee's termination of employment. The Company's
obligation to pay to Employee any amounts under this
Section 8, including without limitation the Termination
Payment, will bear interest at the maximum rate allowed
by law until paid by the Company, and all accrued and
unpaid interest will bear interest at the same rate,
all of which interest will be compounded daily.
(iii) Payment Authority. Any officer of the
Company (other than Employee) is authorized to issue
and execute a check, initiate a wire transfer or
otherwise effect payment on behalf of the Company to
satisfy the Company's obligations to pay all amounts
due to Employee under this Section 8.
(iv) Termination. The Company's obligation to pay
the Termination Payment will not be affected by the
manner in which Employee's employment with the Company
is terminated. Without limiting the generality of the
foregoing, the Company will be obligated to pay the
Termination Payment regardless of whether Employee's
termination of employment is voluntary, involuntary,
for cause, without cause, in violation of any
employment agreement or other agreement in effect at
the time of the Change In Control, or due to Employee's
retirement or disability. Employee's notice of his
termination of employment in connection with a Change
In Control may be made by any means.
(b) Change In Control. A Change In Control will be
deemed to have occurred for purposes hereof (i) when a
change of stock ownership of the Company of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and any successor
Item of a similar nature has occurred; or (ii) upon the
acquisition of beneficial ownership, directly or indirectly,
by any person (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) of securities of the Company
representing 33% or more of the combined voting power of the
Company's then outstanding securities; or (iii) a change
during any period of two consecutive years of a majority of
the members of the Board of Directors of the Company for any
reason, unless the election, or the nomination for election
by the Company's shareholders, of each director was approved
by a vote of a majority of the directors then still in
office who were directors at the beginning of the period;
provided that a Change In Control will not be deemed to have
occurred for purposes hereof with respect to any person
meeting the requirements of clauses (i) and (ii) of
Rule 13d-1(b)(1) promulgated under the Securities Exchange
Act of 1934, as amended.
(c) Arbitration. Any controversy or claim arising
out of or relating to this Section 8, or the breach thereof,
will be settled exclusively by arbitration in Dallas, Texas,
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Judgment
upon the award rendered by the arbitrator(s) may be entered
in, and enforced by, any court having jurisdiction thereof.
(d) No Right To Continued Employment. This Section 8
will not give Employee any right of continued employment or
any right to compensation or benefits from the Company
except the rights specifically stated herein.
(e) Exercise of Stock Options. Notwithstanding
anything to the contrary contained herein, all of Employee's
options to purchase the Company's Common Stock will become
immediately exercisable upon a Change In Control.
Section 9. Confidential Information. Employee
recognizes and acknowledges that certain assets of the Company
and its affiliates, including without limitation information
regarding customers, pricing policies, methods of operation,
proprietary computer programs, sales, products, profits, costs,
markets, key personnel, formulae, product applications, technical
processes, and trade secrets (hereinafter called "Confidential
Information") are valuable, special and unique assets of the
Company and its affiliates. Employee will not, during or after
his term of employment, disclose any of the Confidential
Information to any person, firm, corporation, association, or any
other entity for any reason or purpose whatsoever, directly or
indirectly, except as may be required pursuant to his employment
hereunder, unless and until such Confidential Information becomes
publicly available other than as a consequence of the breach by
Employee of his confidentiality obligations hereunder. In the
event of the termination of his employment, whether voluntary or
involuntary and whether by the Company or Employee, Employee will
deliver to the Company all documents and data pertaining to the
Confidential Information and will not take with him any documents
or data of any kind or any reproductions (in whole or in part) of
any items relating to the Confidential Information.
Section 10. Noncompetition. Until two years after
termination of Employee's employment hereunder, Employee will not
(i) engage directly or indirectly, alone or as a shareholder,
partner, officer, director, employee or consultant of any other
business organization, in any business activities which relate to
the acquisition and consolidation of medical practices which were
either conducted by the Company at the time of Employee's
termination or Proposed to be Conducted (as defined herein) by
the Company at the time of such termination (the Designated
Industry), (ii) divert to any competitor of the Company in the
Designated Industry any customer of Employee, or (iii) solicit or
encourage any officer, employee, or consultant of the Company to
leave its employ for employment by or with any competitor of the
Company in the Designated Industry. The parties hereto
acknowledge that Employee's noncompetition obligations hereunder
will not preclude Employee from (i) owning less than 5% of the
common stock of any publicly traded corporation conducting
business activities in the Designated Industry or (ii) serving as
an officer, director, stockholder or employee of an entity
engaged in the healthcare industry whose business operations are
not competitive with those of the Company, provided that if
during the term of this Agreement Employee is serving as an
officer, director or employee of another entity, the amount of
time spent by Employee in connection with such service taken
together with the amount of consulting time spent by Employee in
accordance with Section 11 shall not exceed 10% of his
professional time or two (2) days per month. _Proposed to be
Conducted_, as used herein, shall include those business
activities which are the subject of a formal, written business
plan approved by the Board of Directors prior to termination of
Employee's employment and which the Company takes material action
to implement within 12 months of the termination of Employee's
employment. Employee will continue to be bound by the provisions
of this Section 10 until their expiration and will not be
entitled to any compensation from the Company with respect
thereto. If at any time the provisions of this Section 10 are
determined to be invalid or unenforceable, by reason of being
vague or unreasonable as to area, duration or scope of activity,
this Section 10 will be considered divisible and will become and
be immediately amended to only such area, duration and scope of
activity as will be determined to be reasonable and enforceable
by the court or other body having jurisdiction over the matter;
and Employee agrees that this Section 10 as so amended will be
valid and binding as though any invalid or unenforceable
provision had not been included herein.
Section 11. Consulting. During the term of this
Agreement, Employee may devote up to 10% of his professional time
or two (2) days per month to a consulting business independent
from the Company.
Section 12. Old Employment Agreement.
(a) Termination. The Company and Employee agree that
the Old Employment Agreement is hereby terminated.
(b) Release by Company. The Company, its employees,
officers, directors, shareholders, affiliates, parents,
subsidiaries, divisions, predecessors, successors, assigns,
agents, and legal representatives forever release and
discharge Employee and his predecessors, successors,
assigns, heirs, agents, and legal representatives of and
from any and all claims, demands, controversies, debts,
actions, or causes of action, of whatever nature or
character, whether now known or unknown, related to or in
any way arising out of the Old Employment Agreement. No
waiver of a breach by Employee of the Old Employment
Agreement that arises out of this release shall be deemed to
constitute a waiver of a breach by Employee of this
Agreement.
(c) Release by Employee. Employee, his successors,
assigns, heirs, agents, and legal representatives forever
release and discharge the Company and its employees,
officers, directors, shareholders, affiliates, parents,
subsidiaries, divisions, successors, assigns, agents and
legal representatives of and from any and all claims,
demands, controversies, debts, actions, or causes of action,
of whatever nature or character, whether now known or
unknown, related to or in any way arising out of the Old
Employment Agreement, including, without limitation, any
obligations by the Company related to payment to Employee of
a bonus related to fiscal 1996. No waiver of a breach by
the Company of the Old Employment Agreement shall be deemed
to constitute a waiver of a breach by the Company of this
Agreement.
Section 13. General.
(a) Notices. Except as provided in Section 8(a)
hereof, all notices and other communications hereunder will
be in writing or by written telecommunication, and will be
deemed to have been duly given if delivered personally or if
mailed by certified mail, return receipt requested or by
written telecommunication, to the relevant address set forth
below, or to such other address as the recipient of such
notice or communication will have specified to the other
party hereto in accordance with this Section 13(a):
If to the Company, to: with a copy to:
Physicians Resource Group, Inc. Xxxxxxx & Xxxxxx, L.L.P.
Three Lincoln Centre, Suite 1540 000 Xxxx Xxxxxx, Xxxxx 0000
0000 XXX Xxxxxxx Xxxxxx, Xxxxx 00000
Xxxxxx, XX 00000 Attn: Xxxxx X. Xxxx, III
Attn: Chief Executive Officer Fax No.: (000) 000-0000
Fax No.: (000) 000-0000
If to Employee, to:
Xxxxxxx X. Xxxx
0000 Xxxxx
Xxxxxxxx, Xxxxx 00000
(b) Withholding; No Offset. All payments required to
be made by the Company under this Agreement to Employee will
be subject to the withholding of such amounts, if any,
relating to federal, state and local taxes as may be
required by law. No payment under this Agreement will be
subject to offset or reduction attributable to any amount
Employee may owe to the Company or any other person.
(c) Equitable Remedies. Each of the parties hereto
acknowledges and agrees that upon any breach by Employee of
his obligations under any of Sections 9 and 10 hereof, the
Company will have no adequate remedy at law, and accordingly
will be entitled to specific performance and other
appropriate injunctive and equitable relief.
(d) Severability. If any provision of this Agreement
is held to be illegal, invalid or unenforceable, such
provision will be fully severable and this Agreement will be
construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and
the remaining provisions hereof will remain in full force
and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically
as part of this Agreement a provision as similar in its
terms to such illegal, invalid or unenforceable provision as
may be possible and be legal, valid and enforceable.
(e) Waivers. No delay or omission by either party
hereto in exercising any right, power or privilege hereunder
will impair such right, power or privilege, nor will any
single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the
exercise of any other right, power or privilege.
(f) Counterparts. This Agreement may be executed in
multiple counterparts, each of which will be deemed an
original, and all of which together will constitute one and
the same instrument.
(g) Captions. The captions in this Agreement are for
convenience of reference only and will not limit or
otherwise affect any of the terms or provisions hereof.
(h) Reference to Agreement. Use of the words
"herein," "hereof," "hereto" and the like in this Agreement
refer to this Agreement only as a whole and not to any
particular subsection or provision of this Agreement, unless
otherwise noted.
(i) Binding Agreement. This Agreement will be binding
upon and inure to the benefit of the parties and will be
enforceable by the personal representatives and heirs of
Employee and the successors of the Company. If Employee
dies while any amounts would still be payable to him
hereunder, such amounts will be paid to Employee's estate.
This Agreement is not otherwise assignable by Employee.
(j) Entire Agreement. This Agreement contains the
entire understanding of the parties, supersedes all prior
agreements and understandings relating to the subject matter
hereof and may not be amended except by a written instrument
hereafter signed by each of the parties hereto.
(k) Governing Law. This Agreement and the performance
hereof will be construed and governed in accordance with the
laws of the State of Texas, without regard to its choice of
law principles.
EXECUTED as of the date and year first above written.
PHYSICIANS RESOURCE GROUP, INC.
By:
_____________________________
Its:
_____________________________
EMPLOYEE
_______________________________
XXXXXXX X. XXXX
