EXHIBIT 10.17
ANKLE & FOOT CENTERS OF AMERICA, L.L.C.
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of , between Ankle & Foot Centers of
America, L.L.C. a Delaware limited liability corporation (the "Company") and
Xxxxx Xxxxxx (the "Executive").
In consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive and the
Executive hereby agrees to serve the Company on the terms and conditions set
forth herein. In addition, the Executive and the Company hereby agree that
subject to and effective as of the closing of the proposed Initial Public
Offering ("IPO") of American Medical Providers, Inc., (formerly Podiatric
Newco, Inc., ("AMP"), this Employment Agreement (the "Agreement") shall be
assumed by "AMP" and shall supersede that certain letter agreement regarding
employment between the Company and the Executive dated as of (the
"Prior Agreement"), and the Prior Agreement shall thereupon automatically
terminate without further obligation by either Executive or the Company. Upon
AMP's assumption of this Agreement, all references to the Company herein shall
refer to AMP.
2. TERM OF EMPLOYMENT: DUTIES. From the period commencing on the date
hereof and ending immediately prior to the Effective Time (as defined in the S-1
registration filed by "AMP" in connection with its IPO, the employment of the
Executive shall be governed by the terms and conditions set forth in the Prior
Agreement. The term of this Agreement (the "Term") and Executive's employment
with the Company hereunder shall commence at the Effective Time and, unless
earlier terminated in accordance with the terms hereof, shall continue until the
third anniversary of the Effective Time (such initial term of the Agreement
referred to as the "Initial Term"); PROVIDED, HOWEVER, that the Term shall
automatically be renewed for successive, additional two year periods at the end
of the Initial Term and each renewal term thereafter, unless either the Company
or the Executive provides at least one year's notice to the other of its
intention not to renew the Term; and PROVIDED, FURTHER, that if the "IPO" is
terminated in accordance with its terms prior to the Effective Time or the
"IPO" is abandoned or otherwise does not close, (x) this Agreement shall
automatically terminate without further obligation by either party hereto, (y)
the terms and conditions set forth in this Agreement shall not apply and (z) the
employment of the Executive shall continue to be governed by the terms and
conditions set forth in the Prior Agreement.
During the Term, the Executive shall be employed as the of
the Company, reporting to the President of the Company, serving at the will of
the Board of Directors of the Company (the "Board") with the traditional
duties, responsibilities and authority of such office in companies similar in
size to the Company. The Executive agrees that he shall perform his duties
hereunder faithfully and to the best of his abilities and in furtherance of the
business of the Company and its subsidiaries and shall devote substantially all
of his business time, energy and attention to the business of the Company and
its subsidiaries, provided, however, that Executive shall be permitted to devote
a reasonable amount of business time, energy and attention to the pursuit of
activities on behalf of the entities described on the attached Exhibit B hereto
and disclosed to Company in connection with Company's acquisition of the assets
of Pyramid Anesthesiology Group, Inc. so long as such devotion does not
unreasonably interfere with the performance of Executive's duties hereunder.
3. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. During the Term, the Company shall pay to the Executive
an annual base salary (the "Base Salary") as set forth on Exhibit A per year,
payable in accordance with the Company's normal payroll practices or as the
Company and Executive may otherwise agree. The Base Salary shall be reviewed by
the Company annually and shall be subject to discretionary increase by the
Company from time to time, but shall not be decreased from the rate in effect at
any time and from time to time during the Term.
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(b) ANNUAL PERFORMANCE BONUS. Executive shall be entitled to participate
in the Company's Executive Officer Performance Bonus Plan or any similar or
successor annual bonus plan of the Company (the "Performance Bonus Plan") and
to receive an annual performance bonus upon the achievement of one or more
annual performance goals (the "Performance Goals") in accordance with the
terms of the Performance Bonus Plan; PROVIDED, that Executive's annual target
bonus under the Performance Bonus Plan (the "Annual Target Bonus") shall not
be less than 60% of the Base Salary in effect at the time the Performance Goals
for such plan year are established.
(c) LONG-TERM INCENTIVE. The Executive shall be eligible to participate
in any long-term incentive compensation and/or stock option plans maintained
from time to time by the Company. In addition, pursuant to prior action of the
Stock Option Committee of the Board, Executive has previously been granted an
option (the "Market Option") to purchase 15,000 shares of Company common
stock, no stated par value (the "Common Stock"), at an exercise price equal to
the price to the public in connection with AMP's IPO, with a term of 10 years
from the date of grant. The Market Option will vest twenty (20%) per annum over
5 years commencing with the Effective Time; PROVIDED, that the Market Option
will not become exercisable in whole or in part in the event the Market Option
is terminated in accordance with its terms prior to the Effective Time or if the
"IPO" is abandoned or otherwise does not close; and PROVIDED, FURTHER, that
the Market Option shall be subject to the terms of the American Medical
Providers, Inc., 1997 Stock Incentive Plan and the stock option agreement to be
entered into in connection with the grant of the Market Option.
(d) BENEFITS, PERQUISITES AND EXPENSES. During the Term, the Executive
shall be eligible to participate in employee benefit and fringe benefit plans
and programs generally available to the executive officers of the Company and
such additional benefits as the Board may from time to time provide. In
addition, Executive shall be entitled to receive the personal benefits described
on Exhibit A hereto. Executive shall be entitled to reimbursement for business
expenses, including travel and entertainment; PROVIDED, that such reimbursement
shall be limited to reasonable and necessary expenses incurred by Executive in
connection with the performance of duties on behalf of the Company subject to:
(i) timely submission of a properly executed Company expense report form
accompanied by appropriate supporting documentation, and (ii) compliance with
Company policies and procedures governing business expense reimbursement and
reporting based upon principles and guidelines established by the Audit
Committee of the Board, including periodic audits by the Internal Audit
Department of the Company and/or the Audit Committee of the Board.
Notwithstanding the foregoing, Executive shall in all events be entitled to
reimbursement for travel expenses incurred in the performance of job duties
commensurate with reimbursement policies generally available to similarly
situated Vice Presidents.
(e) RETIREMENT BENEFITS. The Executive shall be entitled to participate
in any Supplemental Executive Retirement Plan or any similar or successor plan
(the "SERP") and in any tax qualified and any other supplemental pension plans
should such plans become generally available to the executive officers of the
Company.
4. TERMINATION OF EXECUTIVE. Prior to the expiration of the Term and
subject to the payment of any amounts required under Section 5, the Executive's
employment with the Company may be terminated (a) by the Company for Cause (as
defined herein) or without Cause, (b) by the Executive for or without Good
Reason (as defined herein), (c) by reason of the Executive's death or Disability
(as defined herein) or (d) by the mutual written consent of the parties hereto.
For purposes of this Agreement:
(1) "Cause" means (A) conviction of, plea of guilty or settlement
for embezzlement, theft and fraud; (B) actions which have had or will
likely have a material adverse financial effect on the Company as a whole
for an extended period of time, where appropriate evidence exists that such
actions are directly attributable to the (I) gross management negligence or
repeated ineptitude of the Executive and/or (II) deliberate refusal of the
Executive to follow the instructions or directions of the Board; (C)
conviction of or a plea of guilty or NOLO CONTENDERE to a felony (other
than a felony involving a moving violation); (D) violation of the non
compete or confidentiality provisions of this Agreement, PROVIDED, that no
such violation will be deemed to have occurred if, within 30 days following
receipt by Executive of a notice from the Board identifying the violation,
the Executive (I)
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cures the violation and (II) establishes that the violation was
unintentional and not reasonably likely to result in harm to the Company,
in each case to the reasonable satisfaction of the Board; (E) material
incapacitation or repeated absence from work due to reckless and
self-abusive behavior or conduct, such as alcoholism and drug abuse, which
renders Executive incapable of performing his duties; PROVIDED, that
physical or mental disability due to injury or disease shall not be grounds
for termination for Cause; (F) gross insubordination or persistent refusal
to follow reasonable instructions; or (G) inability to perform the duties
of the Executive's office or consistent failure to perform in accordance
with reasonable expectations due to incompetence or due to repeated and
unexcused absence from work having a material adverse effect on the AMP
Subsidiary or other discrete business division to which the assets of
Pyramid Anesthesiology Group, Inc. were transferred; PROVIDED, that mere
failure to achieve performance targets or expectations (including without
limitation those set forth in the Performance Bonus Plan) shall not in and
of itself constitute Cause hereunder. Notwithstanding the foregoing, the
deliberate refusal of Executives to act shall not be deemed to constitute
Cause hereunder if such refusal is grounded in the Executive's good faith
belief that the course of action proposed would not be in the financial
interests of the Company (unless there is released to Executive free and
clear any and all property or funds remaining in the certain escrow account
established pursuant to the terms of that certain Asset Purchase Agreement
("Asset Purchase Agreement") among Executive, Company and Pyramid
Anesthesiology Group, Inc. ("Escrow Balance"), in which case such
deliberate refusal will constitute Cause if such deliberate refusal or
otherwise constitute Cause in accordance with the terms hereof).
For purposes of this Agreement, the Board shall have 60 days to
terminate the Executive for Cause following the date on which the Board
discovers the existence of a specific set of facts that, in the aggregate,
then constitute Cause, after which period no Cause with respect to such
specific set of facts shall be deemed to exist; PROVIDED, the repetition or
recurrence of the same or a similar set of facts shall constitute separate
ground for termination for Cause.
(i) "Disability" means the Executive's absence from the full-time
performance of his duties with the Company for one hundred eighty (180)
days or more within any period of 12 consecutive months as a result of the
Executive's incapacity due to mental or physical illness; PROVIDED, that
during any period prior to the termination of Executive's employment by
reason of Disability in which Executive is absent from the full-time
performance of his duties with the Company due to Disability, the Company
shall continue to pay Executive his Base Salary at the rate in effect at
the commencement of such period of Disability;
(iii) "Good Reason" means, without the Executive's express written
consent, the occurrence of any of the following events:
(A) a reduction by the Company in the Executive's Base Salary or
Annual Target Bonus in effect from time to time; (B) a material
reduction in the aggregate level of participation in and/or compensation
and benefit opportunities under all other compensation and employee
benefit plans in which Executive is entitled to participate from time to
time; PROVIDED, HOWEVER, that changes affecting the participation in or
benefits under such plans (other than the Performance Bonus Plan, any
SERP and the benefits described in Exhibit A) with respect to similarly
situated executives of the Company shall not constitute Good Reason
hereunder; (C) a reduction in the Executive's titles, duties or
authority with the Company; (D) notification by the Company of its
intention not to renew this Agreement pursuant to the provisions of
Section 2; (E) the termination of the Executive's employment for any
reason within 12 months following a Change in Control (as defined
herein); or (F) relocation by more than 25 miles from 0000 Xxxxxxx 000,
Xxxxxxxx X, Xxxxxx, Xxxxxxx.
(iv) "Change in Control" means the occurrence of any one of the
following events:
(A) any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as used
in Sections 13(d)(3) and 14(d)(2) of the "Exchange Act") and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) becomes an
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Acquiring Person (as such term is defined in the Company's Shareholder
Protection Rights Agreement to be adopted at the Effective Time) or any
person that is not bound by the Shareholder Agreement of the Company to
be entered into in connection with the Merger (the "Shareholder
Agreement") becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 25 or more of the undiluted total voting power of
the Company's then outstanding securities eligible to vote for the
election of members of the Board (the "Company Voting Securities");
PROVIDED, HOWEVER, that no event described in the immediately preceding
clause shall be deemed to constitute a Change in Control by virtue of
any of the following: (I) an acquisition of Company Voting Securities by
the Company and/or one or more direct or indirect majority-owned
subsidiaries of the Company; (II) an acquisition of Company Voting
Securities by any employee benefit plan sponsored or maintained by the
Company or any corporation controlled by the Company, (III) an
acquisition by any underwriter temporarily holding securities pursuant
to an offering of such securities; or (IV) any acquisition by the
Executive or any "group" (as such term is defined in Rule 3d-5 under
the Exchange Act) of persons including the Executive; or
(B) individuals who, at the beginning of any period of twenty-four
(24) consecutive months, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof;
PROVIDED, HOWEVER, that any person becoming a director subsequent to the
beginning of such twenty-four (24) month period, whose election, or
nomination for election, by the Company's shareholders was approved by
either (i) the Board consistent with the terms of the Shareholder
Agreement, during the period the Shareholder Agreement is in effect, or
(ii) a vote of at least 75% 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 the purposes of this
paragraph (B), considered as though such person were a member of the
Incumbent Board; PROVIDED, FURTHER, that no individual initially elected
or nominated as a director of the Company as a result of an actual or
threatened election contest with respect to directors or any other
actual or threatened solicitation of proxies or consents by or on behalf
of any person other than the Board shall be deemed to be a member of the
Incumbent Board; or
(C) there is consummated a merger or consolidation of the Company
or a subsidiary thereof with or into any other corporation other than a
merger or consolidation which would result in the holders of the voting
securities of the Company outstanding immediately prior thereto holding
securities which, in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, represent immediately after such merger or consolidation at
least 60% of the combined voting power of the then outstanding voting
securities of either the Company or the other entity which survives such
merger or consolidation or any parent of such other entity; or
(D) the stockholders of the Company approve (i) a plan of complete
liquidation or dissolution of the Company or (ii) an agreement for the
sale or disposition by the Company of all or substantially all the
Company's assets.
5. PAYMENTS UPON TERMINATION OF EXECUTIVE.
(a) If the employment of the Executive shall be terminated other than by
reason of death or Disability (i) by the Company (other than for Cause) or (ii)
by the Executive for Good Reason, then the Company shall pay or provide to the
Executive (or the Executive's beneficiary or estate):
(1) within thirty (30) days following the date of such termination of
employment ("Termination Date"), a lump-sum cash amount equal to the sum
of (i) the Executive's unpaid Base Salary through the Termination Date;
(ii) any accrued but unpaid annual bonus under the Performance Bonus Plan
in respect of the annual bonus period preceding the bonus period in which
the Termination Date occurs; (iii) any unpaid reimbursable business
expenses properly incurred through the Termination Date; and (iv) a bonus
payment equal to the Executive's Annual Target Bonus in the year of
termination,
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multiplied by a fraction the numerator of which is the number of months in
the bonus year of termination in which the Executive has worked at least
one day and the denominator of which is 12;
(2) within thirty (30) days following the Termination Date, a
lump-sum cash amount equal to the greater of (A) the Executive's then Base
Salary payable over the remainder of the Term plus a bonus equal to the
Executive's Annual Target Bonus in the year of termination multiplied by a
fraction the numerator of which is the number of complete months remaining
in the Term and the denominator of which is 12, or (B) 2.0 times the sum
of: (i) the Executive's annual rate of Base Salary as of the Termination
Date plus (ii) the Annual Target Bonus for the year in which the
Termination Date occurs (in each such case, Executive's Base Salary and
Annual Target Bonus being determined without taking into account any
reductions thereto constituting Good Reason); PROVIDED, HOWEVER, that the
Executive shall not be entitled to any severance benefits from the Company
or under any Company severance plan, policy or arrangement other than as
specified in this Agreement;
(3) for a period terminating on the earlier of (A) the commencement
of the provision of substantially equivalent benefits by a new employer or
(B) the later of (I) the last day of the Term, or (II) twenty-four (24)
months following the Termination Date, the Company shall continue to keep
in full force and effect (or otherwise provide) all policies of medical,
accident, disability and life insurance with respect to the Executive and
his dependents with substantially the same level of coverage, upon
substantially the same terms and otherwise substantially to the same extent
as such policies shall have been in effect immediately prior to the
Termination Date, and, as applicable, the Company and the Executive shall
share the costs of the continuation of such insurance coverage in the same
proportion as such costs were shared immediately prior to the date of
termination;
(4) for purposes of determining final average compensation (or making
any similar calculation) and years of service (for purposes of eligibility,
vesting and benefit accrual) under any tax-qualified or supplemental
defined benefit retirement plan (including without limitation any SERP),
Executive shall be deemed to have remained employed by the Company
hereunder until the end of the Term and to have received his then current
Base Salary and Annual Target Bonus through the end of the Term; PROVIDED,
that to the extent such benefits cannot be accrued under and paid from any
tax-qualified pension plan, such benefits shall be accrued under and paid
from any SERP or other supplemental plan.
(5) all options to purchase Common Stock held by the Executive shall
immediately become fully vested and exercisable and shall remain
exercisable until the later of (A) the date that is 24 months following the
Termination Date and (B) the expiration of the stated term of such options:
(6) payment of the Escrow Balance to Executive; and
(b) If the employment of the Executive shall be terminated (i) by
reason of the Executive's death or Disability, (ii) by the Company for
Cause, (iii) by the Executive without Good Reason, or (iv) by the mutual
written consent of the parties hereto (each a "Non qualifying
Termination"), then the Company shall pay to the Executive (or the
Executive's beneficiary or estate) within thirty (30) days following the
Termination Date a lump-sum cash amount equal to the sum of the Executive's
unpaid Base Salary through the Termination Date plus any bonus payments
which have been earned or become payable, to the extent not theretofore
paid, plus any unpaid reimbursable business expenses properly incurred
through the Termination Date (in addition to, in the case of employment
termination by mutual consent, any amounts required to be paid in
accordance with the written agreement between Company and Executive). In
addition, Executive (or the Executive's beneficiary or estate) shall have
no less than ninety days following the termination of his employment
pursuant to a Non qualifying Termination to exercise any outstanding
options to the extent vested and exercisable as of the Termination Date.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Notwithstanding anything in this Agreement to the contrary, in the
event that any payment or distribution by the Company, by any affiliate of the
Company or by any person whose actions result in a
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change in control of the Company (to the extent the Company approves of the
arrangements pursuant to which the payment by such person is made to the
Executive) to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 6) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes) including, without limitation, any income and employment taxes
and Excise Tax, imposed upon the Gross-Up Payment but before deduction for any
federal, state or local income or other tax upon the Payments, the Executive
will retain a net amount equal to the sum of (i) the Payments and (ii) an amount
equal to the product of any deductions (or portions thereof) disallowed because
of the inclusion of the Gross-Up Payment in the Executive's adjusted gross
income for federal income tax purposes and the highest applicable marginal rate
of federal income taxation for the calendar year in which the Gross-Up Payment
is to be made. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to (1) pay applicable federal income taxes at the
highest applicable marginal rates of federal income taxation (including
surcharges) for the calendar year in which the Gross-Up Payment is to be made,
(2) pay applicable state and local income taxes at the highest applicable
marginal rate of taxation (including surcharges) for the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes and (3) have otherwise allowable deductions for federal income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in the Executive's adjusted gross income.
(b) Subject to the provisions of Section 6(a), all determinations required
to be made under this Section 6, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the change in control (the "Accounting firm") which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen
(15) business days of the receipt of notice from the Company or the Executive
that there has been a Payment, or such earlier time as is requested by the
Company (collectively, the "Determination"). In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the change in control, the Executive may appoint another nationally
recognized public accounting firm reasonably acceptable to the Company to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All reasonable fees and expenses
of the Accounting Firm shall be borne solely by the Company and, subject to
applicable law and obligations to the Company's stockholders, the Company shall
enter into any agreement reasonably requested by the Accounting Firm that is
generally recognized as standard in connection with the performance of the
services hereunder. The Gross-Up Payment under this Section 6 with respect to
any Payment shall be made no later than thirty (30) days following the date of
such Payment. If the Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall furnish the Executive with a written opinion to such
effect, and to the effect that failure to report the Excise Tax, if any, on the
Executive's applicable federal income tax return should not result in the
imposition of a negligence or similar penalty. The Determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of uncertainty in the application of Section 4999 of the Code at the time of the
Determination, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment") or Gross-Up
Payments are made by the Company which should not have been made
("Overpayment"), consistent with the calculations required to be made
hereunder. In the event that the Executive thereafter is required to make
payment of any additional Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall
be promptly paid by the Company to or for the benefit of the Executive. In the
event the amount of the Gross-Up Payment exceeds the amount
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necessary to reimburse the Executive for his Excise Tax, the Accounting Firm
shall determine the amount of the Overpayment that has been made and any such
Overpayment (together with interest at the rate provided in Section 1274(b)(2)
of the Code) shall be promptly paid by the Executive to or for the benefit of
the Company. The Executive shall cooperate, to the extent his reasonable
expenses in connection therewith are reimbursed by the Company, with any
reasonable request by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.
7. WITHHOLDING TAXES. The Company shall have the right to withhold from
any and all payments due to the Executive (or his beneficiary or estate)
hereunder all taxes which, by applicable federal, state, local or other law, the
Company is required to withhold therefrom.
8. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement is personal in nature and none of the parties hereto
shall, without the consent of the other, assign, or transfer this Agreement or
any rights or obligations hereunder; PROVIDED, that in the event of the merger,
consolidation, transfer or sale of substantially all of the assets of the
Company with or to any other individual or entity, this Agreement shall, subject
to the provisions hereof, be binding upon and inure to the benefit of such
successor and such successor shall discharge and perform all the promises,
covenants, duties and obligations of the Company hereunder, and all references
herein to the "Company" shall refer to such successor.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amounts remain payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this agreement to such person or persons appointed in writing by the
Executive to receive such amounts or, if no person is so appointed, to the
Executive's estate.
9. RESOLUTION OF DISPUTES; LEGAL FEES; NO MITIGATION.
(a) Except as provided in Sections 10 and 11, all disputes hereunder shall
be settled by final, binding arbitration, conducted before a panel of three (3)
arbitrators in Texas in accordance with the rules of the American Arbitration
Association then in effect. Judgment on the arbitration award may be entered in
any court having jurisdiction. The Company shall bear the expenses of such
arbitration.
(b) If any contest or dispute shall arise under this Agreement involving
termination of the Executive's employment with the Company or involving the
failure or refusal of the Company to perform fully in accordance with the terms
hereof, the Company shall advance and reimburse the Executive, on a current
basis, all legal fees and expenses, if any, incurred by the Executive in
connection with such contest or dispute; PROVIDED, that the Executive agrees to
return any advanced or reimbursed expenses to the extent the arbitrators (or the
court, in the case of a dispute described in Section 10 or 11) determine that
the Company has prevailed as to the material issues raised in determination of
the dispute.
(c) The Company's obligation to make any payments provided for in this
Agreement to the Executive and otherwise to perform its obligations hereunder
shall not be affected by any setoff, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement, and such amounts shall not be
reduced whether or not the Executive obtains other employment.
10. NONCOMPETITION.
(a) DISCLOSURE. The Executive has disclosed to the Board, in writing, all
healthcare-related interests, investments, or business activities, whether as
proprietor, stockholder, partner, co-venturer, director, officer, employee,
independent contractor, agent, consultant, or in any other capacity or manner
whatsoever. The Executive shall notify the Board, in writing, of any changes in
or additions to such interests, activities or investments permitted in
accordance with the terms of this Agreement, within 15 days of such change or
addition.
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(b) PROHIBITED ACTIVITY. Without the written consent of a majority of the
Independent Directors, the Executive may not engage in any of the following
actions during the period that is (A) prior to the Executive's termination of
employment with the Company, (B) within the two years following the termination
of his employment with the Company during the Initial Term if such termination
is by the Company for Cause or by the Executive other than for Good Reason and
(C) within one year following his termination of employment during the Term but
after the Initial Term if such termination is by the Company for Cause or by the
Executive other than for Good Reason.
(i) own, either directly or indirectly, any interest in any business
that competes with the "Primary Business" in which the Company or any
subsidiary or affiliate is engaged, within a radius of 30 miles from any
site, facility, or location which is owned, managed or operated by or
affiliated with the Company or any of its subsidiaries and affiliates,
including physician practices of any kind. For purposes of this Agreement,
"Primary Business" shall mean the delivery of integrated healthcare
services in markets where the Company or its subsidiaries own, operate or
manage Physician Practices or Ambulatory Surgery Centers. These integrated
healthcare services can include but are not limited to (A) individual
Physician Practices and/or physician-based organizations such as primary
care and specialty clinics, physician-hospital organizations ("PMOs") or
medical service organizations ("MSOs"), or physician medical groups and
(B) ambulatory programs such as home health care, ambulatory surgery,
occupational and sports medicine centers, and other diagnostic,
rehabilitative and treatment services. Some of these services, sites and
facilities may be located in satellite areas for the purpose of extending
the Physician Practice's geographic service area and to serve as access
points and/or referral sources for either the local delivery system or the
Physician Practice's geographic service area and to serve as access points
and/or referral sources for either the local delivery system or the
Physician Practice's. The Board may modify, from time to time, the
definition of Primary Business to include any additional business or
service activity in which the Company may engage during the Term or to
exclude any business or service in which the Company ceases to engage. The
definition of "Primary Business" may also be modified to include any
business or service into which, as of the Termination Date, the Company
definitively intends to expand, regardless of whether such expansion
actually occurs after the Executive's termination. For purposes of the
preceding sentence, the date on which a modification of the definition of
"Primary Business" shall be effective shall be the date on which the
Executive is provided written notice of such modification (the "Notice
Date"); PROVIDED, HOWEVER, that no such modification as to which notice is
provided on or after the Termination Date shall be effective against the
Executive; and PROVIDED, FURTHER, that no such modification shall be
effective with respect to any interests, investments or business activities
engaged in by Executive prior to the Notice Date of such modification and
properly disclosed prior to such Notice Date pursuant to Section 10(a) or
in the Asset Purchase Agreement;
(ii) participate or serve, either directly or indirectly, whether as
a proprietor, stockholder, partner, co-venturer, director, officer,
employee, independent contractor, agent, consultant, or in any other
capacity or manner whatsoever in any business or service activity that
competes with the Primary Business;
(iii) directly or indirectly, solicit or recruit any individual
employed by the Company, its subsidiaries or affiliates for the purpose of
being employed by him or by any competitor of the Company on whose behalf
he is acting as an agent, representative or employee, or convey any
confidential information or trade secrets regarding other employees of the
Company, its subsidiaries or affiliates to any other person; or
(iv) directly or indirectly, influence or attempt to influence
customers of the Company or any of its subsidiaries or affiliates to direct
their business to any competitor of the Company;
PROVIDED, HOWEVER, that neither (i) the "beneficial ownership" by Executive,
either individually or as a member of a "group," as such terms are used in
Rule 13d under the Exchange Act, as a passive investment, of not more than five
percent (5%) of the voting stock of any publicly held corporation, nor (ii) the
beneficial ownership by Executive of any interest described in the first
sentence of Section 10(a) and
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properly and timely disclosed in accordance with the terms therewith or
disclosed in connection with the Asset Purchase Agreement, shall alone
constitute a violation of this Agreement, PROVIDED, FURTHER, that nothing herein
shall be deemed to prohibit Executive after termination of employment for any
reason from engaging in the provision of professional anesthesia services to
patients.
In the event that the Executive engages in the conduct proscribed by this
Section 10, the Executive agrees to repay any lump-sum severance amount received
pursuant to Section 5 of this Agreement (but not any Escrow Balance received),
and all outstanding stock options held by the Executive shall expire as of the
date of the Executive's commencement of such proscribed conduct. It is further
expressly agreed that the Company will or would suffer irreparable injury if
Executive were to compete with the Company or any subsidiary or affiliate in
violation of this Agreement and that the Company would by reason of such
competition be entitled to preliminary or injunctive relief in a court of
appropriate jurisdiction, and Executive further consents and stipulates to the
entry of such preliminary or injunctive relief in such a court prohibiting
Executive from competing with the Company or any subsidiary or affiliate of the
Company in violation of this Agreement upon an appropriate finding by such court
that Executive has violated this Section 10.
(c) UNENFORCEABLE PROVISIONS. It is the desire and the intent of the
parties that the provisions of this Section 10 shall be enforceable to the
fullest extent permissible under applicable law and public policy. Accordingly,
if this Section 10 or any portion thereof shall be adjudicated to be invalid or
unenforceable whether because of the duration and scope of the covenants set
forth herein or otherwise, the length and scope of the restrictions set forth in
this Section 10 shall be reduced to the extent necessary so that this covenant
may be enforced to the fullest extent possible under applicable law.
11. CONFIDENTIAL INFORMATION. The Executive acknowledges that in his
employment hereunder, and during prior periods of employment with the Company
and/or its subsidiaries, he has occupied and will continue to occupy a position
of trust and confidence. The Executive shall not, except as may be required to
perform his duties hereunder or as required by applicable law, until the
expiration of the applicable periods described in Section 10(b) or until such
information shall have become public other than by the Executive's unauthorized
disclosure, disclose to others or use, whether directly or indirectly, any
Confidential Information regarding the Company, its subsidiaries and affiliates.
"Confidential Information" shall mean information about the Company, its
subsidiaries and affiliates, and their respective clients and customers that is
not publicly disclosed by the Company or otherwise generally available to
members of the public seeking such information and that was learned by the
Executive in the course of his employment by the Company, its subsidiaries and
affiliates, including (without limitation) any proprietary knowledge, trade
secrets, data, formulae, information and client and customer lists and all
papers, resumes, and records (including computer records) of the documents
containing such Confidential Information. The Executive acknowledges that such
Confidential Information is specialized, unique in nature and of great value to
the Company, its subsidiaries and affiliates, and that such information gives
the Company, its subsidiaries and affiliates a competitive advantage. The
Executive agrees to deliver or return to the Company, at the Company's request
at any time or upon termination or expiration of his employment or as soon
thereafter as possible, all documents, computer tapes and disks, records, lists,
data, drawings, prints, notes and written information (and all copies thereof)
furnished by the Company, its subsidiaries or affiliates or prepared by the
Executive during the term of his employment by the Company, its subsidiaries and
affiliates.
In the event that the Executive engages in any conduct proscribed by this
Section 11, the Executive agrees to repay any lump-sum severance amount received
pursuant to Section 5 of this Agreement (but not any Escrow Balance received),
and all outstanding stock options held by the Executive shall expire as of the
date of the Executive's commencement of such proscribed conduct. It is further
expressly agreed that the Company will or would suffer irreparable injury if
Executive were to disclose or threaten to disclose Confidential Information
regarding the Company or any subsidiary or affiliate in violation of this
Agreement or otherwise fail to comply with the provisions of this Section 11,
and that the Company would, by reason of such disclosure or threatened
disclosure or other failure to comply, be entitled to preliminary or permanent
injunctive relief in a court of appropriate jurisdiction, and Executive further
consents and
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stipulates to the entry of such preliminary or permanent injunctive relief in
such a court prohibiting Executive from disclosing Confidential Information in
violation of this Agreement or otherwise requiring Executive to comply with the
provisions of this Section 11 upon an appropriate finding by such court that
Executive has violated this Section 11.
12. NOTICE. For the purposes of this agreement, any notices, demands and
all other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or (c) the expiration of five business days after the day when
mailed by certified or registered mail, postage prepaid, addressed as follows
(or at such other address as the parties hereto shall specify by like notice):
If to Executive: Xx. Xxxxx Xxxxxx
0000, Xxxxxxx 000
Xxxxxxxx X
Xxxxxx, Xxxxxxx 00000
If to Company: American Medical Providers, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
13. AMENDMENT WAIVER. No provisions of this Agreement may be waived,
modified or discharged unless such waiver, modification or discharge is agreed
to in a written document signed by the Executive and such officer of the
Company, as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
14. ENTIRE AGREEMENT. This Agreement and Exhibit A hereto set forth the
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
15. GOVERNING LAW; VENUE; VALIDITY. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Texas without regard to the
principle of conflicts of laws and, at the election of the Executive, the venue
of any dispute arising under this Agreement shall be Texas. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which other
provisions shall remain in full force and effect.
16. HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
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17. SEVERABILITY. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or
public policy, only the portions of this Agreement that violate such statute or
public policy shall be stricken. All portions of this Agreement that do not
violate any statute or public policy shall continue in full force and effect.
Further, any court order striking any portion of this Agreement shall modify the
stricken terms as narrowly as possible to give as much effect as possible to the
intentions of the parties under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first written above.
American Medical Providers, Inc.
By: /s/XXXX X. XxXXXXX
Xxxx X. XxXxxxx
President
Executive: /s/XXXXX XXXXXX
Xxxxx Xxxxxx
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EXHIBIT A
COMPENSATION AND LEAVE POLICIES
BASE COMPENSATION
Executive shall be paid a base salary of One Hundred Fifty Thousand Dollars
($150,000) per annum, subject to annual merit increases as determined by the
Compensation Committee of the Company.
INCENTIVE COMPENSATION
Executive shall participate in the Company's Executive Officers Performance
Plan with his annual "Target Bonus" not being less than 60 per cent of his
Base Salary.
LEAVE-VACATION AND HOLIDAYS
Executive shall be entitled to leave of at least four (4) weeks per annum
(or, if greater, to the number of vacation days to which Senior Vice Presidents
of the Company are entitled), to be taken in accordance with Employer's regular
vacation policies. Executive shall be entitled to nine (9) paid holidays per
annum in accordance with Employer regular paid holidays policies.
BENEFITS
Health Insurance including major medical for personal, family and
dependents
Life Insurance equivalent to 3 times Executive salary.
Disability insurance equivalent to 60% of Executives salary upon permanent
disability (provided, however, that Company shall upon request pay to
Executive the cash equivalent of the premium cost for such coverage)
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EXHIBIT B
OutMed Board meetings 2nd Thursday each month
Executive meetings 2nd Tuesday each month
SCNA Board meetings 2nd Monday each month
SCA Board meeting 2nd Monday each month
Heritage School Board meeting monthly
GRC Board meeting monthly
As to SCA, SCNA, and GRC, Xxxxxx will devote whatever time is necessary to
ensure the maintenance and renewal of existing contracts and future contracts
for the provision of services by AMP Subsidiary. Further, Xxxxxx shall be
entitled to pursue fellow status in the following professional associations:
American College of Healthcare Executives; Healthcare Financial Managers
Association; Medical Group Management Association.
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