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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is made this 1st day of February, 2000 between
PhyCor, Inc., a Tennessee corporation (the "Company"), and Xxxxxxx X. Xxxxx
("Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Employee and Employee
desires to accept such employment by the Company subject to the terms and
conditions contained herein;
WHEREAS, in serving as an employee of the Company, Employee
will be in a position in which Employee will participate in the use and
development of confidential proprietary information about the Company's, its
subsidiaries' and affiliates' present and future products, its customers and
suppliers and the methods which the Company and its employees use in competition
with other companies, as to which the Company desires to protect fully its
rights;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and in consideration of
the promises and the mutual covenants and agreements herein set forth, the
parties agree as follows:
1. Employment. The Company hereby employs Employee as
Executive Vice President, Chief Financial Officer, and Employee accepts such
employment with the Company, subject to the terms and conditions set forth
herein. Employee shall perform all duties and services incident to the position
of Chief Financial Officer and Employee shall perform such other duties and
services as may be prescribed by the Bylaws of the Company or established by the
Chief Executive Officer or the Board of Directors of the Company from time to
time. During his employment hereunder, Employee shall devote his best efforts
and attention, on a full-time basis, to the performance of the duties required
of him as an employee of the Company.
2. Compensation. As compensation for services rendered by
Employee hereunder, Employee shall receive:
(a) An annual salary of $375,000, or such higher
salary as shall be determined by the Company at Employee's
annual evaluation and compensation review;
(b) Insurance and other benefits equivalent to the
benefits provided generally to an Executive Vice President
(which are the same for all levels of corporate Vice
Presidents);
(c) Six (6) weeks of vacation;
(d) Participation in the Company's employee bonus
program (with a target of 40% of base salary) as such program
may be amended or modified by the Company from time to time;
(e) Participation, when eligible, in the Company's
retirement plan as such plan may be amended or modified by the
Company from time to time; and
(f) Reimbursement for all reasonable expenses
incurred by Employee in the performance of his duties under
this Agreement, provided that Employee submits verification of
such expenses in accordance with the policies of the Company.
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A recommendation will be made to the Compensation Committee of
the Board of Directors to award you options to purchase 250,000 shares of
PhyCor, Inc. Common Stock at a price equal to the market price of the stock on
the first day of your employment.
Prior to the end of each calendar year of this Agreement, the
Company may review with Employee his compensation hereunder. Any increase in
salary or changes in fringe benefits agreed upon by Employee and the Company at
such annual review shall become effective the following January 1 unless
otherwise agreed to by the Company and Employee.
3. Confidential Information and Trade Secrets.
3.1 Employee recognizes that Employee's position with the
Company requires considerable responsibility and trust, and, in reliance on
Employee's loyalty, the Company may entrust Employee with highly sensitive
confidential, restricted and proprietary information involving Trade Secrets and
Confidential Information.
3.2 For purposes of this Agreement, a "Trade Secret" is any
scientific or technical information, design, process, procedure, formula or
improvement that is valuable and not generally known to competitors of the
Company, its subsidiaries and affiliates. "Confidential Information" is any data
or information, other than Trade Secrets, that is important, competitively
sensitive, and not generally known by the public, including, but not limited to,
the Company's business plan, business prospects, training manuals, product
development plans, bidding and pricing procedures, market strategies, internal
performance statistics, financial data, confidential personnel information
concerning employees of the Company, supplier data, operational or
administrative plans, policy manuals, and terms and conditions of contracts and
agreements and such similar information relating to subsidiaries and affiliates
of the Company. The terms "Trade Secret" and "Confidential Information" shall
not apply to information which is (i) already in Employee's possession (unless
such information was obtained by Employee from the Company or was obtained by
Employee in the course of Employee's employment by the Company), (ii) received
by Employee from a third party with no restriction on disclosure, or (iii)
required to be disclosed by any applicable law.
3.3 Except as required to perform Employee's duties as an
employee, Employee will not use or disclose any Trade Secrets or Confidential
Information of the Company during employment, at any time after termination of
employment and prior to such time as they cease to be Trade Secrets or
Confidential Information through no act of Employee in violation of this Section
3.
3.4 Upon the request of the Company and, in any event, upon
the termination of employment hereunder, Employee will surrender to the Company
all memoranda, notes, records, drawings, manuals or other documents pertaining
to the Company's business, Employee's employment (including all copies thereof)
or the business of the Company's subsidiaries or affiliates. Employee will also
leave with the Company all materials involving any Trade Secrets or Confidential
Information of the Company. All such information and materials, whether or not
made or developed by Employee, shall be the sole and exclusive property of the
Company, and Employee hereby assigns to the Company all of Employee's right,
title and interest in and to any and all of such information and materials.
4. Covenant Not to Compete.
4.1 Employee hereby covenants and agrees with the Company that
during the term of his employment with the Company and for a period of eighteen
(18) months after the termination of his employment, for any reason, with or
without cause, Employee will not directly or indirectly (i) operate, develop or
own any interest other than the ownership of less than 5% of the equity
securities of a publicly traded company, in any business which has significant
activities (viewed in relation to the business of the Company, its subsidiaries
or affiliates), or has announced intentions to focus significant resources,
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relating to the ownership, management or operation of multi-specialty medical
clinics, physician group practices, independent practice associations, or other
similar entities (a "Business"); (ii) compete with the Company or its
subsidiaries and affiliates in the operation or development of any Business
within the United States of America; (iii) be employed by any business which
owns, manages, or operates a Business; (iv) interfere with, solicit, disrupt or
attempt to disrupt any past, present or prospective relationship, contractual or
otherwise, between the Company, or its subsidiaries or affiliates, and any
customer, client, supplier or employee of the Company, or its subsidiaries or
affiliates; or (v) solicit any employee of the Company, or its subsidiaries or
affiliates, to leave their employment with the Company or its subsidiaries or
affiliates, as the case may be, or hire any such employee to work for a
Business. The definition of Business set forth above is intended to include
entities that own, manage and operate multiple clinics, practices, IPAs,
physician organizations, etc., and does not restrict the Employee from
employment (i) with a single clinic, group, IPA, etc., provided such employment
is not primarily focused upon the acquisition and management of multiple
physician organizations similar to the operations of the Company or (ii) with an
enterprise that owns, manages or operates multiple entities as a single business
enterprise in a single market. Employee shall not be entitled to circumvent the
provisions of this Section 4.1 by entering into a relationship with a Business
as a consultant, director, advisor, or otherwise, which has the effect of
competing with the Company, its affiliates or subsidiaries.
4.2 If a judicial determination is made that any of the
provisions of this Section 4 constitutes an unreasonable or otherwise
unenforceable restriction against Employee, the provisions of this Section 4
shall be rendered void only to the extent that such judicial determination finds
such provisions to be unreasonable or otherwise unenforceable. In this regard,
the parties hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the territory or prohibited
business activity from the coverage of this Section 4 and to apply the
provisions of this Section 4 to the remaining portion of the territory or the
remaining business activities not so severed by such judicial authority.
Moreover, notwithstanding the fact that any provisions of this Section 4 are
determined not to be specifically enforceable, the Company shall nevertheless be
entitled to recover monetary damages as a result of the breach of such provision
by Employee. The time period during which the prohibitions set forth in this
Section 4 shall apply shall be tolled and suspended as to Employee for a period
equal to the aggregate quantity of time during which Employee violates such
prohibitions in any respect.
4.3 The Company recognizes that Employee is a major
shareholder of Cardiology Partners of America, Inc. ("CPA"). CPA was engaged in
business that were comparative with the operations of the Company. Employee is
currently winding down the operations of CPA which no longer has any ongoing
activities. Company agrees that Employee's relationship with CPA as described
herein will be exempt from the covenant not to compete contained herein.
5. Specific Enforcement. Employee specifically acknowledges
and agrees that the restrictions set forth in Sections 3 and 4 hereof are
reasonable and necessary to protect the legitimate interest of the Company and
that the Company would not have employed Employee in the absence of such
restrictions. Employee further acknowledges and agrees that any violation of the
provisions of Sections 3 or 4 hereof will result in irreparable injury to the
Company, that the remedy at law for any violation or threatened violation of
such Sections will be inadequate and that in the event of any such breach, the
Company, in addition to any other remedies or damages available to it at law or
in equity, shall be entitled to temporary injunctive relief before trial from
any court of competent jurisdiction as a matter of course and to permanent
injunctive relief without the necessity of proving actual damages. The existence
of any claim or cause of action on the part of Employee against the Company,
whether arising from this Agreement or otherwise, shall not constitute a defense
to the granting or enforcement of this injunctive relief. If the Company is
required to enforce any of its rights under this Agreement, the Company shall be
entitled to recover from Employee all attorneys' fees, court costs and other
expenses incurred by the Company in connection with the enforcement of those
rights.
6. Term of Agreement. This Agreement shall be effective as of
February 1, 2000
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and shall continue for a term of three (3) years unless terminated by either
party in the manner set forth herein. This Agreement shall be automatically
renewed for successive one (1) year terms unless notice of termination is given
by either party at least 180 days prior to the end of the then current term.
7. Termination Upon Death or Disability of the Employee. In
the event the Employee dies during the term of this Agreement, or the Employee
is disabled and unable to perform his duties in any material respect for a
period of three (3) months, this Agreement shall immediately terminate and
neither the Employee nor the Company shall have any further obligations
hereunder, except that the Company shall continue to be obligated under Section
2 hereof for any unpaid salary, accrued benefits or unreimbursed expenses owed
to Employee or his estate that have accrued but not been paid as of the
Termination Date.
8. Termination by Employee. Employee may at any time terminate
his employment by giving the Company sixty (60) days prior written notice of his
intent to terminate the Agreement. At the Termination Date, the Company shall
have no further obligation to Employee and Employee shall have no further rights
or obligations hereunder, except as set forth in Sections 3 and 4 above, and
except for the Company's obligation under Section 2 hereof for unpaid salary,
accrued benefits or unreimbursed expenses that have accrued but have not been
paid as of the Termination Date.
9. Termination for Cause. The Company shall have the right at
any time to terminate Employee's employment immediately for cause, which shall
include any of the following reasons:
(a) If Employee shall violate the provisions of Sections 3
or 4 of this Agreement, or shall fail to comply with any other
material term or condition of this Agreement, or shall fail to
perform competently and efficiently the tasks assigned to him
by his supervisor, or shall engage in any material misconduct,
neglect of duties or failure to act which materially and
adversely affects the business or affairs of the Company; or
(b) If Employee shall (i) be convicted of a felony or (ii)
commit an act of dishonesty, fraud or embezzlement against the
Company or its affiliates.
Employee's obligations under Sections 3 and 4 hereof shall survive the
termination of the Agreement pursuant to this Section 9. In the event Employee's
employment hereunder is terminated in accordance with this Section, the Company
shall have no further obligation to make any payments to Employee hereunder
except for unpaid salary, accrued benefits or unreimbursed expenses that have
accrued but have not been paid as of the Termination Date.
10. Termination Without Cause. The Company may terminate
Employee without cause (which shall not include a termination pursuant to
Sections 7, 8 or 9) by giving Employee 15 days prior written notice. In the
event Employee is terminated without cause during the term hereof, the Company
shall pay Employee all accrued benefits and unreimbursed expenses owed to
Employee that have accrued but have not been paid as of the Termination Date.
The Company shall continue to pay to Employee his salary set forth in Section
2(a) hereof for a period of eighteen (18) months after the Termination Date and
shall continue to provide the health insurance benefits hereof for a period of
eighteen (18) months. Such payments shall be made in accordance with Employee's
regular salary schedule. Payment of the severance benefits set forth herein
shall be subject to the execution and delivery of a Separation Agreement
containing appropriate releases of the Company as agreed to by the parties. The
Company's obligations pursuant to this Section 10 shall terminate immediately
(I) UPON ACCEPTANCE OF EMPLOYMENT IN VIOLATION OF SECTION 4, OR (II) UPON NOTICE
BY EMPLOYEE TO EMPLOYER, WHETHER OR NOT IN WRITING, THAT EMPLOYEE DOES NOT
INTEND TO HONOR THE PROVISIONS OF SECTION 4, OR THE TAKING OF ANY OTHER ACTION
BY EMPLOYEE THAT WOULD HAVE THE EFFECT OF DECLARING THE PROVISIONS OF SECTION 4
NOT ENFORCEABLE.
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11. Assignment.
(a) The rights and benefits of Employee under this
Agreement, other than accrued and unpaid amounts due under
Section 2 hereof, are personal to him and shall not be
assignable. Discharge of Employee's undertakings in Sections 3
and 4 hereof shall be an obligation of Employee's executors,
administrators, or other legal representatives or heirs.
(b) This Agreement may not be assigned by the Company
except to an affiliate of the Company, provided, however, that
if the Company shall merge or effect a share exchange with or
into, or sell or otherwise transfer substantially all its
assets to, another corporation, the Company shall assign its
rights hereunder to that corporation and cause such
corporation to assume the Company's obligations under this
Agreement.
12. Notices. Any notice or other communications under this
Agreement shall be in writing, signed by the party making the same, and shall be
delivered personally or sent by certified or registered mail, postage prepaid,
addressed as follows:
If to Employee: Xxxxxxx X. Xxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
If to the Company: PhyCor, Inc.
Xxxxx 000
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President
or to such other address as may hereafter be designated by either party hereto.
All such notices shall be deemed given on the date personally delivered or
mailed.
13. Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Tennessee.
14. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid, but
if any one or more of the provisions contained in this Agreement shall be
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability for any such provisions in every other respect and
of the remaining provisions of this Agreement shall not be in any way impaired.
15. Entire Agreement. This Agreement contains the entire
agreement of the parties hereto with respect to the subject matter contained
herein. There are no restrictions, promises, covenants, or undertakings, other
than those expressly set forth herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter. This Agreement may not be changed except by a writing executed by the
parties.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement on the day and year first above written.
PHYCOR, INC.
Attest: By: /s/ Xxxxxx X. Xxxxx
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/s/ N. Xxxxxxx Xxxxxxxx Title: Chairman and Chief Executive Officer
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Title: Secretary
Witness: EMPLOYEE
/s/ Xxxxx Xxxxxx /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
