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EXECUTION COPY
EMPLOYMENT AGREEMENT dated as of
January 21, 1998, between ADVANCED HEALTH
CORPORATION, a Delaware corporation (the
"Company"), and XXXXXXX X. XXXXXX (the Employee").
The Company desires to formalize the employment arrangements between the
Company and the Employee and to continue to employ the Employee as the Executive
Vice President - Chief Financial and Corporate Development Officer of the
Company and the Employee desires to accept such continued employment by the
Company, on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, upon the terms and subject to the
conditions hereinafter set forth.
2. Term. The employment of the Employee hereunder shall be for the
four-year period commencing on February 16, 1998, and ending on February 16,
2002 (the "Base Term"). The Base Term shall automatically renew for consecutive
one-year terms (each, a "Renewal Term" and together with the Base Term
collectively, the "Employment Period") unless either the Company or the Employee
gives the other party hereto at least 90 days' prior written notice before the
end of the Employment Period of its intent not to renew this Agreement.
3. Duties. The Employee shall be employed as the Executive Vice President
-- Chief Financial and Corporate Development Officer of the Company or in such
other position as the Company and the Employee shall agree in writing. The
Employee shall perform such duties and services as are appropriate and
commensurate with the Employee's position as Executive Vice President -- Chief
Financial and Corporate Development Officer of the Company and would otherwise
be consistent in stature and prestige with the position of Executive Vice
President -- Chief Financial and Corporate Development Officer of a corporation
with similar operations as the Company, as the same may be assigned to him from
time to time by the Board of Directors of the Company (the "Board").
4. Time to be Devoted to Employment; Place of Employment. (a) Except for
twenty-two days of paid time off per year (in addition to public holidays) and
absences due to temporary illness, during the Employment Period the Employee
shall devote substantially all of his business time, attention and energies to
the business and affairs of the Company.
(b) During the Employment Period, the Employee shall not be engaged in any
other business activity which conflicts with the duties of the Employee
hereunder, whether or not such activity is pursued for gain, profit or other
pecuniary advantage.
(c) During the Employment Period, the Company shall maintain its primary
business location in the greater New York City metropolitan area and the
Employee shall not be required to relocate outside such area without his written
consent.
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5. Compensation; Reimbursement. (a) Commencing on February 16, 1998, and
continuing during the Employment Period, the Company (or at the Company's
option, any subsidiary or affiliate thereof) shall pay to the Employee an annual
salary (the "Base Salary") of not less than $190,000, payable in such
installments as is the policy of the Company with respect to its senior
executive officers. Such Base Salary will be reviewed at least annually and may
be increased by the Board (or, if such authority shall be delegated by the Board
to the Compensation Committee thereof, then by such Committee) in its sole
discretion. The Employee will be reimbursed $600 per month for car allowance.
(b) The Employee will be eligible to participate in the Employer's annual
bonus program in accordance with the provisions of that plan. The bonus
opportunity for the Employee is up to 30% of base salary, prorated in the first
year of employment for the Employee's date of hire. Payment of bonus is
dependent upon company performance and the Employee's individual performance of
pre-established goals, and is payable in cash.
(c) Following the expiration or termination of this Agreement for any
reason, the Employee shall have the right to maintain any (i) health and life
insurance benefits provided by the Company to the extent provided under
applicable law and (ii) any life insurance benefits provided by the Company so
long as the Employee makes the premium payments relating to such life insurance.
(d) During the Employment Period and to the extent available to employees
of the Company, the Employee shall be entitled to participate in all of the
Company's benefit plans, pension and retirement plans, life insurance,
hospitalization and surgical and major medical coverages, sick leave, vacation
and holiday policies, long-term disability coverage and such other fringe
benefits enjoyed by other employees at substantially the same employment level
as the Employee.
(e) The Company shall reimburse the Employee, in accordance with the
practice from time to time for other employees of the Company, for all
reasonable and necessary travelling expenses, disbursements and other reasonable
and necessary incidental expenses incurred by him for or on behalf of the
Company in the performance of his duties hereunder upon presentation by the
Employee to the Company of appropriate vouchers.
(f) The Company shall reimburse the Employee for reasonable relocation
expenses incurred by the Employee in order to relocate to the greater New York
City metropolitan area (the "Relocation Expenses"), including expenses relating
to housing search visits to the greater New York City metropolitan area for the
Employee and the Employee's spouse, temporary living expenses in the greater New
York metropolitan area through May 16, 1998, packing and moving of the
Employee's and the Employee's family's goods, closing costs in connection with
the purchase of a house upon relocation to the greater New York City
metropolitan area and real estate commissions incurred in connection with the
sale of the Employee's house in Winchester, Massachusetts; provided that the
Company shall not be obligated to reimburse the Employee more than $55,000 in
the aggregate for all Relocation Expenses, excluding housing search visits to
the greater New York City metropolitan area. All Relocation Expenses shall be
approved in advance by another officer of the Company. The Employee shall be
fully relocated to the greater New York City metropolitan area as of May 16,
1998. Prior to May 16, 1998, the Company shall reimburse the Employee for the
expenses incurred by the Employee in connection with the Employee's trips to and
from Winchester, Massachusetts. The Employer will grant an additional
"gross-up-payment" of all expenses paid which are not tax deductible under the
Internal Revenue Code. The "gross-up-payment" will be calculated as a percentage
of applicable expenses based on the Employee's annualized base salary at the
time the Employee's move is completed.
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6. Involuntary Termination. (a) If the Employee is incapacitated or
disabled by accident, sickness or other cause so as to render him mentally or
physically incapable of performing the services required to be performed by him
under this Agreement for a period of 90 days or longer during any six-month
period (such condition being herein referred to as a "Disability"), prior to the
Employee resuming the performance of his duties as contemplated herein, the
Company may terminate the employment of the Employee under this Agreement (an
"Involuntary Termination"). Until the Company or the Employee shall have
terminated the Employee's employment hereunder, the Employee shall be entitled
to receive his compensation and other benefits as set forth in this Agreement
notwithstanding any such physical or mental disability.
(b) If the Employee dies during the Employment Period, his employment
hereunder shall be deemed to cease as of the date of his death, and the
termination of his employment occasioned thereby shall be deemed an Involuntary
Termination.
(c) In the event of Involuntary Termination as provided in Section 6(a) and
(b), all stock options granted to the Employee by the Company shall become
immediately vested as of the date of such event.
7. Termination for Cause. The Company may terminate the Employee's
employment hereunder for "Cause" (a "Termination for Cause"). For purposes of
this Agreement, "Cause" shall be limited to:
(i) the willful and continued failure by the Employee
substantially to perform the duties described in Section 3 (other
than any failure resulting from an illness or other similar
incapacity or disability), for 30 days after a written demand for
performance is delivered to the Employee on behalf of the Board
that specifically identifies the manner in which it is alleged
that the Employee has not substantially performed his duties;
(ii) the commission by the Employee of misappropriation of
funds, properties or assets of the Company, sexual harassment of
employees of the Company, chronic alcoholism or drug addiction,
slander or libel concerning the Company or a material tort
relating to his office or employment with the Company that has a
material adverse effect on the Company; or
(iii) the Employee's conviction of a crime constituting a
felony.
8. Termination Without Cause. (a) The Company may terminate the employment
of the Employee hereunder at any time during the Employment Period without
"Cause" and (b) the Employee may terminate his employment hereunder at any time
during the Employment Period in the event of the willful and continued failure
by the Company to perform its obligations hereunder for 30 days after a written
demand for performance is delivered to the Board on behalf of the Company by the
Employee that specifically identifies the manner in which it is alleged that the
Company has not performed its obligations (each, a "Termination Without Cause").
It is expressly acknowledged and agreed that nonrenewal of this Agreement as
contemplated by Section 2 shall not constitute a Termination Without Cause.
9. Voluntary Termination. Any termination of the employment of the Employee
hereunder otherwise than as a result of an Involuntary Termination, a
Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination." A Voluntary Termination shall be deemed to be effective
immediately upon written notice of such termination to the Company.
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10. Change in Control. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if (a) there shall be
consummated (x) any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or pursuant to which shares of
the common stock of the Company (the "Common Stock") would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company; or (b) the stockholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company; or (c) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
30% or more of the Company's outstanding Common Stock; or (d) during any period
of two consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period. If the Employee is Terminated Without
Cause or Terminates With Good Reason within six months of a Change in Control,
all stock options granted to the Employee by the Company shall become
immediately vested as of the date of such event. For the purpose of this Section
10, "Good Reason" shall mean (i) a reduction in the level of the Employee's
compensation without the Employee's written consent, or (ii) a material
diminishment in the Employee's authority or responsibilities.
11. Effect of Termination of Employment. (a) Upon the termination of the
Employee's employment hereunder pursuant to a Voluntary Termination or a
Termination For Cause, neither the Employee nor his beneficiary or estate shall
have any further rights or claims against the Company under this Agreement
except to receive:
(i) any unpaid portion of the Base Salary provided for in
Section 5(a), computed on a pro rata basis to the date of
termination;
(ii) cash compensation equal to the product of (A) the
number of days of accrued paid time off, if any, accumulated by
the Employee to the effective date of termination divided by the
total number of work days per annum for which the Employee
receives a Base Salary multiplied by (B) the Base Salary; and
(iii) reimbursement for any expenses for which the Employee
shall not have theretofore been reimbursed as provided in Section
5(e) and (f).
(b) Upon the termination of the Employee's employment hereunder pursuant to
an Involuntary Termination, neither the Employee nor his beneficiary or estate
shall have any further rights or claims against the Company under this Agreement
except the right (i) to receive a termination payment equal to that provided for
in Section 11(a) hereof and (ii) to receive a cash severance payment in an
aggregate amount equal to the cash compensation received by the Employee during
the 3-month period immediately prior to the effective date of the Involuntary
Termination, payable in equal monthly installments.
(c) Upon the termination of the Employee's employment hereunder pursuant to
a Termination Without Cause, neither the Employee nor his beneficiary or estate
shall have any further rights or claims against the Company under this Agreement
except the right (i) to receive a termination payment equal to the
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amount provided for in Section 11(a) hereof and (ii) to receive a cash severance
payment in an aggregate amount equal to the cash compensation received by the
Employee during the 6-month period immediately prior to the effective date of
the Termination Without Cause, payable in equal monthly installments; provided,
however, that in the event that the Employee obtains full-time employment of
comparable scope and duties to the Employee's current position with the Company
during the 6-month period following the Termination Without Cause or Termination
For Good Reason, then the severance payments contemplated by clause (ii) above
shall terminate on the later of (A) the date when the Employee commences such
employment and (B) the six-month anniversary of the effective date of the
Termination Without Cause. Notwithstanding the foregoing, upon Termination
Without Cause or Termination for Good Reason within six months of a Change In
Control, as defined in Section 10 herein, such cash severance payment referred
to in Section 11(c)(ii) shall be 12 months subject to modification for
comparable employment described in this paragraph.
12. Non-Competition; Non-Disclosure of Information. (a) Except as provided
in Section 12(d) below, the Employee shall not, for a period of one year
following the termination of the Employment Period, (i) directly or indirectly
engage in any Competitive Business (as defined below), whether such engagement
shall be as an employee, employer, owner, consultant, partner or other
participant in any Competitive Business, (ii) assist others in engaging in any
Competitive Business in the manner described in the foregoing clause (i), (iii)
induce employees of the Company to terminate their employment with the Company
or engage in any Competitive Business or (iv) induce customers or vendors of the
Company to alter or terminate their business relationship with the Company;
provided, however, that the Employee may own directly or indirectly, solely as a
passive investment, securities of any Competitive Business traded on any
national securities exchange if the Employee is not a controlling person of, nor
a member of a group which controls such person and does not, directly or
indirectly, own 5% or more of any class of securities of such person. As used
herein, the term "Competitive Business" shall mean any business which, directly
or indirectly, competes with the Company in the business of primarily providing
physician practice management, physician network management and/or clinical
information technology to or for physicians to physician groups and physician
networks consisting, at any time during the one year period following the
termination of the Employment Period, of greater than three physicians;
provided, however, that a business conducted directly by the Employee which
provides physician practice management, physician network management and/or
clinical information technology to or for physician groups consisting of three
or fewer physicians shall not be deemed to be a "Competitive Business".
(b) The Employee understands that the foregoing restrictions may limit his
ability to earn a livelihood in a Competitive Business, but he nevertheless
believes that he has received and will receive sufficient consideration and
other benefits in connection with his employment to clearly justify such
restrictions which, in any event, the Employee does not believe would prevent
him from earning a living. Nothing herein contained shall prohibit the Employee
from engaging in a business that is not a Competitive Business.
(c) The Employee agrees that he will not, at any time during or after the
Employment Period, disclose to any person, firm, corporation or other entity,
except as required by law, any secret or confidential information concerning the
business, clients or affairs of the Company or any subsidiary or affiliate
thereof for any reason or purpose whatsoever other than in furtherance of the
Employee's work for the Company nor shall the Employee make use of any of such
secret or confidential information for his own purpose or for the benefit of any
person, firm, corporation or other business entity except the Company or any
subsidiary or affiliate thereof.
13. Company Right to Inventions. The Employee shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and all
inventions, improvements, technical information, methods and suggestions
relating in any way to the business of providing physician practice management,
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physician network management and/or clinical information technology to or for
physicians, which he may develop or acquire during the period of the Employee's
employment with the Company prior to any termination of employment (whether or
not during usual working hours), together with all patent applications, patents,
copyrights and reissues thereof that may at any time be granted for or upon any
such invention, improvement, technical information or method. In connection
therewith:
(a) the Employee shall without charge, but at the expense of the
Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as
may be reasonably necessary or proper in the reasonable opinion
of the Company to vest title to any such inventions,
improvements, technical information, methods, patent
applications, patents, copyright applications, copyrights or
reissues of any thereof in the Company and to enable it to obtain
and maintain the entire right and title thereto throughout the
world; and
(b) the Employee shall render to the Company at its expense
(including a reasonable payment for the time involved in case he
is not then in its employ) all such assistance as it may
reasonably require in the prosecution of applications for said
patents, copyrights or reissues thereof, in the prosecution or
defense or interferences which may be declared involving any said
applications, patents or copyrights and in any litigation in
which the Company may be involved relating to any such patents,
copyrights, inventions, improvements, technical information or
methods.
14. Enforcement. It is the desire and intent of the parties hereto that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated to be invalid or unenforceable, such provision
shall be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such amendment to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication is made; provided, however, that if any one or more of the
provisions contained in this Agreement shall be adjudicated to be invalid or
unenforceable because such provision is held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
deemed amended by limiting and reducing it so as to be valid and enforceable to
the maximum extent compatible with the applicable laws of such jurisdiction,
such amendment to apply only with respect to the operation of such provision in
the particular jurisdiction in which such adjudication is made.
15. Remedies; Survival. (a) The Employee acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be accurately compensated for in damages by an action at law, and
that the breach of the provisions of this Agreement would cause the Company
irreparable harm. In the event of a breach by the Employee of the provisions of
Section 12 or 13 hereof, the Company shall be entitled to an injunction
restraining him from such breach. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available for any
breach of this Agreement.
(b) Notwithstanding anything contained in this Agreement to the contrary,
the provisions of Sections 12, 13, 14 and this Section 15 shall survive the
expiration or other termination of this Agreement until, by their terms, such
provisions are no longer operative.
(c) It is understood and agreed that the provisions of Sections 12 and 13
of this Agreement are separate and distinct from any other agreement between the
parties hereto. Accordingly, in the event of a breach of such provisions, the
breaching party shall only be held responsible for damages arising under such
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provisions and not for any damages which may be claimed to arise under or with
respect to any other agreement that is not separately breached.
16. Notices. Notices and other communications hereunder shall be in writing
and shall be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows:
If to the Employee:
Xxxxxxx X. Xxxxxx
0 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Company:
Advanced Health Corporation
000 Xxxxx Xxxxxx Xxxx, Xxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: President and COO
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All notices and
other communications hereunder shall be deemed to have been given on the date of
delivery if personally delivered; on the business day after the date when sent
if sent by air courier; and on the third business day after the date when sent
if sent by mail, in each case addressed to such party as provided in this
Section 16.
17. Binding Agreement. This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees and devisees. If the Employee
should die while any amount would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the beneficiary
designated by the Employee in a writing delivered to the Company, or if there be
no such designated beneficiary, to his estate.
18. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
19. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing and shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
20. Entire Agreement; Amendments; Execution. This Agreement and the other
agreements referred to herein contain the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements or
understandings among the parties with respect thereto. This Agreement may be
amended only by an agreement in writing signed by the parties hereto. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original document but all of which shall constitute but one agreement.
21. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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22. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
23. Assignment. With respect to the Employee, this Agreement is personal in
its nature and the Employee shall not assign or transfer this Agreement or any
rights or obligations hereunder. The Company may in its sole discretion assign
or otherwise transfer this Agreement and the provisions hereof (including,
without limitation, Sections 12, 13 and 14) shall inure to the benefit of, and
be binding upon, each successor of the Company, whether by merger,
consolidation, transfer of all or substantially all assets, or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ADVANCED HEALTH CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------
Name: Xxxx X. Xxxxxxx
Title: President
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Xxxxxxx X. Xxxxxx
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