EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into on October 9, 1997 by and between
U.S. PHYSICIANS, Inc. (the "Company"), a Pennsylvania corporation, and Xxxxxx X.
Xxxxx (the "Executive").
W I T N E S S E T H T H A T:
The Company desires to employ the Executive and the Executive desires to
enter into the employ of the Company in such capacity and on the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties, intending to be legally bound, agree as follows:
1. Employment and Term. The Company agrees to employ the Executive, and the
Executive agrees to be employed by the Company, upon the terms and conditions
contained in this Agreement for a period commencing on October 9, 1997 and
continuing until October 8, 2000 (the "Initial Term"). The Initial Term will be
extended for additional one (1) year terms (the "Additional Term") if neither
party has given the other notice of termination at least ninety (90) days prior
to the end of the Initial or then current Additional Term. The Executive hereby
represents and warrants that he has the legal capacity to execute and perform
this Agreement, that it is a valid agreement binding upon him according to its
terms, and that its execution and performance by him does not violate the terms
of any existing agreement or understanding to which the Executive is a party. In
addition, the Executive represents and warrants that he knows of no reason why
he is not physically capable of performing his obligations under this Agreement
in accordance with its terms.
2. Position and Duties. During the Initial Term and any Additional Term,
the Company agrees to employ the Executive to serve as President, Chairman of
the Board, and Chief Executive Officer. The Executive will have such powers and
duties as are commensurate with those positions and as may be assigned to him
from time to time by the Company's Board of Directors (the "Board"). During the
Term, and except for illness or incapacity and vacation periods in accordance
with the Company's regular practice for executives, the Executive shall devote
all of his business time, attention, skill and efforts exclusively to the
business and affairs of the Company and its subsidiaries and affiliates. The
term "affiliates" includes any entity for which the Company is providing
management services pursuant to a management agreement. During the Initial Term
and any Additional Term, the Executive's titles and responsibilities may not be
changed or materially diminished without the written consent of the Executive.
3. Compensation. For all services rendered by the Executive in any capacity
required hereunder during the Term, including, without limitation, services as
an employee, officer, director, or member of any committee of the Company, or
any subsidiary, affiliate or division thereof, the Executive shall be
compensated as follows:
a. Base Salary. The Company shall pay the Executive a fixed salary of
$157,532 per annum ("Base Salary") which will not be reduced without the written
consent of the Executive. Base Salary shall be payable in accordance with the
customary payroll practices of the Company, but in no event less frequently than
monthly. Executive shall, during the Initial Term and any Additional Term, be
eligible to receive annual increases in Base Salary as may be approved by the
Company's Board of Directors.
b. Bonus. The Executive will be included, in a manner consistent with his
position, in any bonus system, pool or incentive compensation program for senior
executives and/or the Chief Executive Officer, that may be implemented from time
to time by the Board.
c. Additional Benefits. Except as modified by this Agreement, the Executive
shall be entitled to participate in the Company's health insurance plan and such
other benefit plans as are generally made available to the employees of the
Company. The Executive will be provided with term life insurance with a benefit
amount equal to two times his annual Base Salary. The premiums for this policy
will be paid by the Company. Notwithstanding the foregoing, nothing in this
Agreement shall preclude the amendment or termination of the Company's health
insurance plan or any other plan or program, provided that such amendment or
termination is applicable generally to the employees of the Company. The
Executive shall be entitled to be paid for vacation, sick days and personal days
in the amount of twenty-two (22) days per year during the Initial Term and any
Additional Term. Any unused vacation, sick time and personal days may be carried
over into the subsequent year in accordance with Company policy.
4. Business Expenses. The Company shall pay or reimburse the Executive for
all reasonably necessary and usual business expenses incurred by the Executive
in connection with the performance of his duties and obligations under this
Agreement, subject to the Executive's presentation of appropriate vouchers in
accordance with such procedures as the Company may from time to time establish
for its executives, consistent with the need to preserve any deductions to which
the Company may be entitled for federal income tax purposes.
5. Termination of Employment.
a. Termination for Cause. Company may discharge Executive at any time for
"Cause", which shall include any of the following: 1) any act of fraud or
dishonesty, misappropriation, self dealing or personal dishonesty; 2) indictment
of a crime that constitutes a felony; 3) a breach by Executive of any of his
obligations regarding confidential information and non-competition as set forth
in Section 6 of this Agreement; 4) if Executive fails or refuses to perform
material assigned duties; 5) if Executive engages in conduct that causes
material harm or damage to the Company; or 6) any material breach of any
provision in this Agreement. In addition, subject to applicable law, Company may
discharge Executive for "Cause" in the event Executive becomes physically or
mentally disabled and is therefore unable to substantially carry out his duties
for a period of 120 days or more in any twelve (12) month period, provided that
the Executive's Company-sponsored long-term disability insurance program
contains an elimination period of not more than 90 days, or the Company
continues to
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pay the Executive his regular salary until such time as the Company's long term
disability elimination period has expired. In the event of a discharge for
"Cause", Executive shall be ineligible for any additional salary, severance or
other payments or benefits under this Agreement or otherwise.
b. Other Termination. If Executive's employment is terminated for any
reason other than death or for Cause (as defined in paragraph 5.a.) or if the
Company elects not to renew Executive's employment under this Agreement or to
extend this Agreement for an Additional Term, then the Company agrees to
continue Executive's then current base salary for a period of six (6) months or
the remainder of the Initial Term or any Additional Term, whichever is greater,
or until such time as Executive commences other full-time employment.
c. Termination for Change in Control. If the Executive's employment is
terminated without Cause upon a consolidation, merger or the sale or transfer of
substantially all of the assets of the Company to another corporation in which
the Company is not the surviving entity, then the Executive will be entitled to
receive a lump sum payment upon such termination equal to 300% of his then
current Base Salary plus 300% of his annual incentive compensation for the prior
year, and the Executive shall not be entitled to any further payments pursuant
to this Agreement.
6. Other Duties of Executive During and After Term.
a. Confidential Information. The Executive recognizes and acknowledges that
all information pertaining to the affairs, business, clients, or customers of
the Company or any of its subsidiaries or affiliates (any or all of such
entities being hereinafter referred to as the "Business"), as such information
may exist from time to time, other than information that the Company has
previously made publicly available or which is in the public domain, is
confidential information and is a unique and valuable asset of the Business,
access to and knowledge of which are essential to the performance of the
Executive's duties under this Agreement. The Executive shall not divulge to any
person, firm, association, corporation, or governmental agency, any information
concerning the affairs, business, clients or customers of the Business (except
such information as required by law to be divulged to a government agency or
pursuant to lawful process), or make use of any such information for his own
purposes or for the benefit of any person, firm, association or corporation
(except the Business) and shall use his reasonable best efforts to prevent the
disclosure of any such information by others. All records, memoranda, letters,
books, papers, reports, accountings, experience or other data, and other records
and documents relating to the Business, whether made by the Executive or
otherwise coming into his possession, are confidential information and are,
shall be, and shall remain the property of the Business. No copies thereof shall
be made which are not retained by the Business, and the Executive agrees, on
termination of his employment or on demand of the Company, to deliver the same
to the Company.
b. Non-compete. Through the term of this Agreement, and for a period of one
year thereafter the ("Restricted Period"), the Executive shall not in the
Restricted Area (as defined below), without express prior written approval of
the Company's Board of Directors,
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directly or indirectly, own or hold any proprietary interest in, serve as
Director of, or be employed by or receive remuneration from, a Competitor (as
defined below). The Executive also agrees that, during the Restricted Period, he
will not solicit for the account of any Competitor, any customer or client of
the Business, or, in the event of the Executive's termination of employment, any
entity or individual that was such a customer or client preceding the
Executive's termination of employment. The Executive also agrees, during the
Restricted Period, not to interfere with the relationship between the Business
and their employees by soliciting their employment for any entity other than the
Business or otherwise.
For purposes of the preceding paragraph, (i) the term "proprietary
interest" means legal or equitable ownership, whether through stockholdings,
stock options, stock appreciation rights or any similar right, of any equity
interest in a business, firm or entity, except that the Executive shall be
allowed to own less than 3% of the stock of any publicly-traded company; (ii)
the term "Competitor" means any person or entity which is engaged in, or during
the Restricted Period becomes engaged in any of the following activities: (A)
the business of managing the medical practices of physicians, or (B) any other
business engaged in by the Business; and (iii) the term "Restricted Area" means
the greater of the states of Pennsylvania, New Jersey and Delaware, or any other
area within fifty (50) miles of any city in which the Business engages in any of
the activities listed in the definition of Competitor above or has plans to
conduct such activities (which plans are publicly announced, or are communicated
to Executive, or are demonstrated by discussions, of which the Executive is
aware, with physicians about management of their practices, or which otherwise
become known to Executive).
c. Remedies. The Company's obligation to make payments, deliver shares of
Stock subject to Options (except to the extent then exercisable) or provide for
any benefits under this Agreement shall cease upon a violation of the preceding
provisions of this Section 6. Executive acknowledges that the Company may be
severely and irreparably damaged in the event Executive violates the provisions
of paragraphs 6.a. or 6.b. above, and that the extent of the damage may be
difficult or impossible to determine. Therefore, the Executive agrees that, in
addition to the remedies provided above, the Company shall be entitled to
equitable relief, including a preliminary as well as a permanent injunction
(without the necessity of posting a bond). The Executive's agreement as set
forth in this Section 6 shall (i) continue throughout the duration of the
Executive's employment with the Company; and (ii) survive the Executive's
termination of this Agreement and/or Executive's employment with the Company,
whether or not such termination is voluntary or is the result of termination of
Executive by the Company with or without Cause.
d. Modification of Terms. If any restriction in this Section 6 of the
Agreement is adjudicated to exceed the time, geographic, service or other
limitations permitted by applicable law in the applicable jurisdiction, then
Executive agrees that such a restriction may be modified and narrowed, either by
a court or the Company, to the maximum time, geographic, service or other
limitations permitted by applicable law, so as to preserve and protect the
Company's legitimate business interest, without negating or impairing any other
restrictions or undertaking set forth in this Agreement.
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7. Withholding Taxes. The Company may directly or indirectly withhold from
any payments made under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
8. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement and all obligations and undertakings of the Company
hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term "Company" as used herein shall mean such other corporation
and this Agreement shall continue in full force and effect.
9. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be given in writing and shall be deemed to
have been duly given if delivered or mailed, postage prepaid, by same day or
overnight mail or overnight courier service (e.g. Federal Express) as follows:
a. To the Company:
U.S. PHYSICIANS, Inc.
000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
b. To the Executive:
Xxxxxx X. Xxxxx
000 Xxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
or to such other address as either party shall have previously specified in
writing to the other.
10. Contents of Agreement; Amendment. This Agreement supersedes all prior
agreements between Executive and the Company or any of its subsidiaries and
affiliates including, but not limited, to the Employee Nondisclosure and
Developments Agreement and the Non-Competition Agreement, each dated as of
February 1, 1995, and sets forth the entire understanding between the parties
with respect to its subject matter and cannot be changed, modified, extended or
terminated except upon written amendment executed by the parties.
11. Binding Agreement. This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive and the Company and their respective
permitted successors, assignees, heirs, beneficiaries and representatives.
12. Severability. If any provision of this Agreement or application thereof
to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or
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application and shall not invalidate or render unenforceable such provision or
application in any other jurisdiction.
13. Governing Law. The validity, interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has signed this Agreement, all as
of the first date above written.
U.S. PHYSICIANS, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: Sr. Vice President & Secretary
EXECUTIVE
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
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