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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of June 12,
1996 between AMERICAN PHYSICIAN PARTNERS, INC., a Delaware corporation (the
"Company"), and Xxxx Xxxxxx ("Xxxxxx").
In consideration of the mutual covenants and conditions set forth
herein, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Xxxxxx in the capacity of
Chief Operating Officer. Xxxxxx accepts such employment and agrees to perform
such services as are customary to such office and as shall from time to time be
assigned to him by the Board of Directors.
2. TERM. The employment hereunder shall be for a period of 1 year,
commencing on June 12, 1996 (the "Commencement Date") and shall be automatically
renewed for successive one year periods unless earlier terminated as provided in
Section 5. Xxxxxx'x employment will be on a full-time basis requiring the
devotion of such amount of his productive time as is necessary for the efficient
operation of the business of the Company.
3. COMPENSATION AND BENEFITS
3.1 SALARY. For the performance of Xxxxxx'x duties hereunder, the
Company shall pay Xxxxxx an annual salary of $160,000, payable (less required
withholdings) no less frequently than twice monthly.
3.2 BONUS. The Company shall also pay Xxxxxx an annual cash bonus
for the first employment year, which bonus shall be payable in a single
installment within 30 days following the end of the employment year for which it
is earned. The annual bonus for the first employment year will be $30,000.
During the first employment year the Board of Directors and Xxxxxx will
establish a mutually acceptable bonus plan for the second and subsequent
employment years, which plan (i) will provide Xxxxxx with appropriate incentives
and the opportunity to earn bonus amounts comparable to those available to top
executive officers of similar companies, and (ii) may base the bonus awards on
the amount of earnings per share for the Company as defined by Generally
Accepted Accounting Principals (GAAP).
3.3 STOCK OPTIONS. Upon commencement of Xxxxxx'x employment
hereunder, the Company shall grant to Xxxxxx options under the Company's Stock
Option Plan to purchase 180,000 shares of the Company's common stock at an
exercise price of $.125 per share. The options will vest in accordance with the
Company's Stock Option Plan and each option will be exercisable for a period of
ten years from the Commencement Date.
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This option shall become exercisable as to one sixtieth (1.66667%) of the
original option shares at the end of each monthly anniversary of the grant date
over a term of five years. In the event Xxxxxx is employed by the Company upon
the closing of its Initial Public Offering, 50% of Xxxxxx'x then granted options
shall become vested. In the event the Initial Public Offering is completed and
50% of Xxxxxx'x then granted options vest, the remaining options will become
exercisable evenly over the remaining months ending on the fifth anniversary of
the Commencement Date. Option shares will not vest after Termination. Xxxxxx
shall be considered for participation in plans granting additional options or
stock awards to top executives.
3.4 BENEFITS. Xxxxxx shall be entitled to such medical, disability
and life insurance coverage and such vacation, sick leave and holiday benefits,
if any, and any other benefits as are made available to the Company's top
executive personnel, all in accordance with the Company's benefits program in
effect from time to time. The Company will assume Xxxxxx'x medical insurance
costs up to $500 per month until Xxxxxx joins the Company provided plan.
3.5 REIMBURSEMENT OF EXPENSES. Xxxxxx shall be entitled to be
reimbursed for all reasonable expenses, including but not limited to expenses
for travel, meals and entertainment, incurred by Xxxxxx in connection with and
reasonably related to the furtherance of the Company's business.
3.6 RELOCATION EXPENSES. The Company will reimburse Xxxxxx for
reasonable relocation costs incurred by Xxxxxx in connection with his relocation
to the Dallas area.
3.7 ANNUAL REVIEW. On each anniversary of the Commencement Date, the
Board of Directors will review Xxxxxx'x performance and compensation hereunder
(including salary, bonus and stock options and/or other equity incentives) and
will consider whether to increase such compensation, but will not have
authority, as the result of such review, to decrease any portion of such
compensation without the written consent of Xxxxxx.
4. CHANGE OF CONTROL. In the event of a Change of Control of the
Company (as defined below), all options then granted to Xxxxxx which are
unvested at the date of the Change of Control will be immediately vested. In
addition, notwithstanding the provisions of Section 5.2(b), in the event of a
termination of Xxxxxx'x employment hereunder by the Company following a Change
of Control, the Company will promptly pay Xxxxxx, in addition to the amounts
required under Section 5.2(a), a lump sum severance amount, payable immediately
upon such termination of employment, equal to two (2) years of salary at the
then current rate, excluding bonus.
As used herein, a "Change of Control" of the Company shall be deemed to
have occurred:
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a. Upon the consummation, in one transaction or a series of
related transactions, of the sale or other transfer of voting power (including
voting power exercisable on a contingent or deferred basis as well as
immediately exercisable voting power) representing effective control of the
Company to a person or group of related persons who, on the date of this
Agreement, does not have effective voting control of the Company, whether such
sale or transfer results from a tender offer or otherwise; or
b. Upon the consummation of a merger or consolidation in which
the Company is a constituent corporation and in which the Company's shareholders
immediately prior thereto will beneficially own, immediately thereafter,
securities of the Company or any surviving or new corporation resulting
therefrom having less than a majority of the voting power of the Company or any
such surviving or new corporation; or
c. Upon the consummation of a sale, lease, exchange or other
transfer or disposition by the Company of all or substantially all its assets to
any person or group or related persons.
5. TERMINATION
5.1 TERMINATION EVENTS. The employment hereunder will terminate upon
the occurrence of any of the following events:
x. Xxxxxx dies;
b. the Company, by written notice to Xxxxxx or his personal
representative, discharges Xxxxxx due to the inability to perform the duties
assigned to him hereunder for a continuous period exceeding 120 days by reason
of injury, physical or mental illness or other disability, which condition has
been certified by a physician; provided, however, that prior to discharging
Xxxxxx due to such disability, the Company shall give a written statement of
findings to Xxxxxx or his personal representative setting forth specifically the
nature of the disability and the resulting performance failures, and Xxxxxx
shall have a period of ten (10) days thereafter to respond in writing to the
Board of Directors' findings;
x. Xxxxxx is discharged by the Board of Directors of the Company
for cause. As used in this Agreement, the term "cause" shall mean:
(1) Xxxxxx'x conviction of (or pleading guilty or nolo
contendere to) a felony or any misdemeanor involving dishonesty or moral
turpitude; provided, however, that prior to discharging Xxxxxx for cause, the
Company shall give a written statement of findings to Xxxxxx setting forth
specifically the grounds on which cause is based, and shall have a period of ten
(10) days thereafter to respond in writing to the Board of Directors' findings;
(2) the willful and continued failure of Xxxxxx to
substantially perform his duties with the Company (other than any such failure
resulting from
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illness or disability) after a written demand for substantial performance is
requested by the Company's Board of Directors, which specifically identifies the
manner in which it is claimed Xxxxxx has not substantially performed his duties,
or Xxxxxx is willfully engaged in misconduct which has, or can reasonably be
expected to have, a direct and material adverse monetary effect on the Company.
For purposes of this Section no act or failure to act on Xxxxxx'x part shall be
considered "willful" if done, or omitted to be done, by Xxxxxx in good faith and
with reasonable belief that Xxxxxx'x action or omission was in the best interest
of the Company. No termination shall be effected for Cause unless Xxxxxx has
been provided with specific information as to the acts or omissions which form
the basis of the allegation of Cause, and Xxxxxx has had an opportunity to be
heard, with counsel if he so desired, before the Board of Directors and such
Board determines, by majority vote, in good faith that Xxxxxx was guilty of
conduct constituting "Cause" as herein defined, specifying the particulars
thereof in detail;
x. Xxxxxx is discharged by the Board of Directors of the Company
without cause, which the Company may do at any time, with at least 30 days
advance written notice; or
x. Xxxxxx voluntarily terminates his employment due to either
(i) a default by the Company in the performance of any of its obligations
hereunder, or (ii) an Adverse Change in Duties (as defined below), which default
or Adverse Change in Duties remains unremedied by the Company for a period of
ten days following its receipt of written notice thereof from Xxxxxx; or
x. Xxxxxx voluntarily terminates his employment for any reason
other than the Company's default or an Adverse Change in Duties, which Xxxxxx
may do at any time with at least 30 days advance notice.
As used herein, "Adverse Change in Duties" means an action or series of
actions taken by the Company, without Xxxxxx'x prior written consent, which
results in:
(1) A change in Xxxxxx'x reporting responsibilities, titles,
job responsibilities or offices which results in a material diminution of his
status, control or authority; or
(2) The assignment to Xxxxxx of any positions, duties or
responsibilities which are materially inconsistent with Xxxxxx'x positions,
duties and responsibilities or status with the Company; or
(3) A requirement by the Company that Xxxxxx be based or
perform his duties anywhere other than (i) at the Company's corporate office
location on the date of this Agreement, or (ii) if the Company's corporate
office location is moved after the date of this Agreement, at a new location
that is no more than 60 miles from such prior location; or
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(4) A failure by the Company to provide for Xxxxxx'x
participation in any current or future benefits or plans at a level or to an
extent commensurate with that of other top executives of the Company.
5.2 EFFECTS OF TERMINATION.
(a) Upon termination of Xxxxxx'x employment hereunder for any
reason, the Company will promptly pay Xxxxxx all compensation owed to Xxxxxx and
unpaid through the date of termination (including, without limitation, salary
and employee expense reimbursements).
(b) In addition, if the employment is terminated under Sections
5.1(b), (d) or (e), the Company shall also pay Xxxxxx, immediately upon such
termination of employment, a lump sum severance amount equal to one-half of the
then applicable annual salary, excluding bonus.
(c) Upon termination of Xxxxxx'x employment hereunder for any
reason, Xxxxxx agrees that for the one year period following the Termination
Event:
i) Xxxxxx will not directly or indirectly, whether as an
individual, employee, director, consultant or advisor, or in any other
capacity whatsoever, provide services to any person, firm, corporation
or other business enterprise which is involved in the acquisition and
management of radiology physician practices where currently operating,
unless he obtains the prior written consent of the Board of Directors.
ii) Xxxxxx will not directly or indirectly encourage or
solicit, or attempt to encourage or solicit, any individual to leave
the Company's employ for any reason or interfere in any other manner
with the employment relationships at the time existing between the
Company and its current or prospective employees.
iii) Xxxxxx will not induce or attempt to induce any provider,
payor, customer, supplier, distributor, licensee or other business
relation of the Company to cease doing business with the Company or in
any way interfere with the existing business relationship between any
such customer, supplier, distributor, licensee or other business
relation and the Company.
Xxxxxx acknowledges that monetary damages may not be sufficient to
compensate the Company for any economic loss which may be incurred by reason of
breach of the foregoing restrictive covenants. Accordingly, in the event of any
such breach, the Company shall, in addition to any remedies available to the
Company at law, be entitled to obtain equitable relief in the form of an
injunction precluding Xxxxxx xxxx continuing to engage in such breach.
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If any restriction set forth in this paragraph is held to be
unreasonable, then Xxxxxx and the Company agree, and hereby submit, to the
reduction and limitation of such prohibition to such area or period as shall be
deemed reasonable.
6. GENERAL PROVISIONS
6.1 ASSIGNMENT. Neither party may assign or delegate any of his or
its rights or obligations under this Agreement without the prior written consent
of the other party.
6.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all prior agreements between the parties relating to such subject matter.
6.3 MODIFICATIONS. This Agreement may be changed or modified only by
an agreement in writing signed by both parties hereto.
6.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Company and its successors and
permitted assigns and Xxxxxx and Xxxxxx'x legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join and be bound by the terms and conditions hereof.
6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
6.6 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect.
6.7 FURTHER ASSURANCES. The parties will execute such further
instruments and take such further actions as may be reasonably necessary to
carry out the intent of this Agreement.
6.8 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed received by the
recipient when delivered personally or, if mailed, five (5) days after the date
of deposit in the United States mail, certified or registered, postage prepaid
and addressed, in the case of the Company, to 0000 Xxxxxxxxxxx Xxxxx, Xxxxxx,
Xxxxx 00000, and in the case of Xxxxxx, to the address shown for Xxxxxx on the
signature page hereof, or to such other address as either party may later
specify by at least ten (10) days advance written notice delivered to the other
party in accordance herewith.
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6.9 NO WAIVER. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of that provision, nor
prevent that party thereafter from enforcing that provision or any other
provision of this Agreement.
6.10 LEGAL FEES AND EXPENSES. In the event of any disputes under
this Agreement, each party shall be responsible for their own legal fees and
expenses which it may incur in resolving such dispute, unless otherwise
prohibited by applicable law or a court of competent jurisdiction.
6.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Xxxxxx have executed this
Agreement, effective as of the day and year first above written.
COMPANY XXXXXX
AMERICAN PHYSICIAN PARTNERS, INC.
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a Delaware corporation Xxxx Xxxxxx
By: 0000 Xxxxxxxx Xxxxx
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Xxxxxxx X. Xxxxxxx
President & CEO
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