EMPLOYMENT AGREEMENT
Exhibit
10.47
THIS
EMPLOYMENT AGREEMENT
(the
“Agreement”),
is
dated as of April 3, 2006, by and between NovaMed Management Services, LLC,
a
Delaware limited liability company (the “Company”)
and a
wholly owned subsidiary of NovaMed, Inc., and Xxxx Xxxxx (“Employee”).
PRELIMINARY
RECITALS
A. The
Company is engaged in the business of: (i) owning, operating and/or managing
ambulatory surgery centers and other outpatient surgical facilities, optical
dispensaries, wholesale optical laboratories, an optical supplies and equipment
purchasing organization and a marketing services and products company that
provides marketing services and products to eye care providers; and (ii)
providing comprehensive eye care services to eye care providers and businesses
ancillary thereto, including, without limitation, providing financial,
administrative, information technology, marketing and managed care services
and
ophthalmic surgical equipment to ophthalmic and optometric providers
(collectively, the “Business”).
B. The
Company desires to employ Employee, and Employee desires to be employed by
the
Company, as an Executive Vice President of the Company on the terms and
conditions contained herein.
NOW,
THEREFORE,
in
consideration of the premises, the mutual covenants of the parties hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
Employment
1.1. Engagement
of Employee.
The
Company agrees to employ Employee, and Employee accepts such employment by
the
Company, for the period beginning April 3, 2006 (the “Effective
Date”)
and
ending on April 2, 2010 (the “Initial
Employment Period”).
THE
INITIAL EMPLOYMENT PERIOD AND ANY RENEWAL PERIOD (AS HEREINAFTER DEFINED) SHALL
AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED
HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (THE “RENEWAL
PERIODS”),
UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT
PERIOD OR ANY RENEWAL PERIOD, EITHER PARTY SHALL GIVE WRITTEN NOTICE TO SUCH
OTHER PARTY ELECTING TO TERMINATE THIS AGREEMENT. The Initial Employment Period
and the Renewal Periods are hereinafter referred to as the “Employment
Period.”
For
purposes of this Agreement, any notice of termination electing not to renew
this
Agreement pursuant to this Section
1.1
shall be
deemed: (i) a termination without Cause if such notice is delivered by the
Company; or (ii) a voluntary termination of employment if such notice is
delivered by Employee; provided, however, that if the Employment Period is
terminated pursuant to this Section
1.1
by
Employee (except as provided in Section
3.4),
then
notwithstanding Article
III,
the
Company shall have no further obligations hereunder or otherwise with respect
to
Employee’s employment from and after the expiration of the Employment Period
(except payment of Employee’s Base Salary accrued through the expiration of the
Employment Period). Notwithstanding anything to the contrary contained herein,
the Employment Period is subject to termination pursuant to Article
III below.
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1.2. Duties
and Powers.
During
the Employment Period, Employee will have such responsibilities, duties and
authorities, and will render such services or act in such other capacity for
the
Company and its affiliates as the Board of Directors (the “Board”)
of
NovaMed, Inc. (the “Parent”),
the
manager and parent of the Company (or any designated officer of the Parent
or
the Company), may from time to time direct. Employee will devote his best
efforts, energies and abilities and his full business time, skill and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company, and shall perform
the duties and carry out the responsibilities assigned to him, to the best
of
his ability, in a diligent, trustworthy, businesslike and efficient manner
for
the purpose of advancing the Company. Employee acknowledges that his duties
and
responsibilities will require his full-time business efforts and agrees that
during the Employment Period he will not engage in any other business activity
or have any business pursuits or interests except activities or interests which
do not conflict with the business of the Company, the Parent and any of their
affiliated entities or interfere with the performance of Employee’s duties
hereunder.
1.3. No
Violation.
Employee represents and warrants that the execution of this Agreement by
Employee and the performance by Employee of his duties as an employee of the
Company will not violate, conflict with or result in a breach or default under
any agreements, arrangements or understandings to which Employee is or was
a
party, or by which he is or was bound, nor will the performance of Employee’s
duties as an employee of the Company be limited, restricted or impaired in
any
manner as a result of any agreements, arrangements or understandings to which
Employee is or was a party.
ARTICLE
II
Compensation
2.1. Base
Salary.
During
the Employment Period, the Company will pay Employee a base salary at the rate
of $245,000 per annum (which annual base salary, as increased from time to
time
in accordance with this Section
2.1,
shall
be referred to herein as the “Base
Salary”),
payable in regular installments in accordance with the Company’s general payroll
practices for salaried employees. If the Employment Period is terminated
pursuant to Section
3
(subject
to any severance provisions in Section
3.3 or
Section 3.4),
Employee’s Base Salary for any partial year will be prorated based upon the
number of days elapsed in such year during which services were actually
performed by Employee. The Board or any designated officer shall
perform an annual review of Employee’s Base Salary based on Employee’s
performance of his duties and the Company’s other compensation policies;
provided that any increase in the Base Salary shall require approval of the
Board or its Compensation Committee.
2.2. Discretionary
Bonus.
Following the end of each fiscal year, the Board or its Compensation Committee,
in its sole discretion, may elect to cause the Company to award to Employee
a
bonus for such year, in an amount to be determined by the Board or its
Compensation Committee, based on such performance targets as shall be
established, and adjusted from time to time, by the Board or its Compensation
Committee.
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2.3. Benefits.
In
addition to the Base Salary payable to Employee hereunder, Employee will be
entitled to the following benefits during the Employment Period, unless
otherwise altered by the Board with respect to all management employees of
the
Company (collectively, the “Benefits”):
(a) hospitalization,
disability, life and health insurance, to the extent offered by the Company
and
subject to the Company’s policies in effect from time to time, and in amounts
consistent with Company policy, for all management employees, as reasonably
determined by the Board;
(b) four
(4)
weeks paid vacation each year with salary, consistent with Company policy for
all management employees;
(c) reimbursement
for reasonable out-of-pocket business expenses incurred by Employee in the
ordinary course of his duties, subject to the Company’s policies in effect from
time to time with respect to travel, entertainment and other expenses, including
without limitation, requirements with respect to reporting and documentation
of
such expenses;
(d) other
benefit arrangements to the extent made generally available by the Company
to
its management employees; and
(e) participation
in the Parent’s Stock Incentive Plan or an equivalent plan such that Employee is
granted options to purchase an amount of the common equity interest in the
Parent consistent with the determination of the Board or its Compensation
Committee pursuant to such plan.
2.4. Taxes,
etc.
All
compensation payable to Employee hereunder is stated in gross amount and shall
be subject to all applicable withholding taxes, other normal payroll and any
other amounts required by law to be withheld.
ARTICLE
III
Termination
3.1. Termination
By Employee or the Company.
The
Employment Period (i) shall automatically terminate immediately upon Employee’s
resignation or death, or (ii) may be terminated immediately by the Company
as
set forth herein for Cause or without Cause, or by reason of Employee’s
Permanent Disability.
“Cause”
as
used
herein means the occurrence of any of the following events:
(a) a
material breach by Employee of any of the terms and conditions of this
Agreement; provided that Employee shall have a reasonable period of time during
which to cure such material breach following the date on which Employee receives
the Company’s written notice of such material breach;
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(b) Employee’s
material failure or willful refusal to substantially perform his duties;
provided that Employee shall have a reasonable period of time during which
to
cure such failure following the date on which Employee receives the Company’s
written notice of such failure;
(c) Employee’s
failure, as notified by the Company in writing, to comply with any of the
Company’s written guidelines or procedures promulgated by the Company and
furnished to Employee, including, without limitation, any guidelines or
procedures relating to marketing or community relations; provided that Employee
shall have a reasonable period of time during which to cure such failure
following the date on which Employee receives the Company’s written notice of
such failure; or
(d) the
determination by the Board in the exercise of its reasonable judgment that
Employee has committed an act or acts constituting a felony or other act
involving dishonesty, disloyalty or fraud against the Company.
“Permanent
Disability”
as
used
herein shall mean that Employee is unable to perform, with or without reasonable
accommodation, by reason of physical or mental incapacity, the essential
functions of his or her position. The Board shall determine, according to the
facts then available, whether and when a Permanent Disability has occurred.
Such
determination shall not be arbitrary or unreasonable, and shall be final and
binding on the parties hereto.
3.2. Termination
by Employee.
Employee has the right to terminate his employment under this Agreement at
any
time, for any or no reason, upon ninety (90) days written notice to the Company;
provided, however, that such ninety (90) day notice is not required for a
termination of employment during the Window Period (as defined in Section
3.4(g)).
3.3. Compensation
After Termination.
(a) Except
as
described in Section
3.4
hereof,
or except as may be specifically required by law, if the Employment Period
is
terminated (i) by the Company for Cause or due to the death or Permanent
Disability of Employee, or (ii) by Employee (including a termination resulting
from Employee’s election not to renew this Agreement under Section
1.1 hereof),
then the Company shall have no further obligations hereunder or otherwise with
respect to Employee’s employment from and after the termination or expiration
date (except payment of Employee’s Base Salary accrued through the date of
termination or expiration), and the Company shall continue to have all other
rights available hereunder (including, without limitation, all rights under
Article
IV hereof)
at law or in equity;
(b) Except
as
described in Section
3.4
hereof,
if the Employment Period is terminated by the Company without Cause (including
a
termination resulting from the Company’s election not to renew this Agreement
under Section
1.1
hereof):
(i) Employee shall be entitled to receive all items described in Section
3.3(a)
above;
and (ii) subject to the conditions hereinafter set forth, Employee shall be
entitled to receive as severance compensation, the following (collectively,
the
“Severance
Pay”):
(A)
Employee’s then-current monthly Base Salary hereunder for a period of twelve
(12) months (such time period to be hereinafter referred to as the “Severance
Period”
(unless
modified by Section
3.4)),
payable in regular installments in accordance with the Company’s general payroll
practices for salaried employees; (B) the bonus, if any, that Employee would
have been entitled under Section
2.2
hereof
at the end of the year during which the termination without Cause occurs had
such termination not occurred, which bonus shall be (1) prorated based on the
amount of time that Employee was employed by the Company during the year (not
including the Severance Period) for which such bonus is being calculated, and
(2) determined and paid to Employee contemporaneously with the determination
and
payment of bonuses for comparable employees of the Company; and (C) continuation
of the welfare benefits described in Section
2.3(a)
for the
Severance Period, to the extent permissible under the terms of the relevant
benefit plans. The bonus described in subclause (B) above shall not be the
“Target Bonus” (as defined in Section
3.4(b)),
but
rather the bonus that would have been payable pursuant to Section
2.2
hereof,
as modified by this Section
3.3(b).
Employee’s right to receive Severance Pay hereunder is conditioned upon: (x)
Employee executing and delivering to the Company a written separation agreement
and general release of all claims, in form and substance acceptable to the
Company, which shall among other things, contain a general release by Employee
of all claims arising out of his employment and termination of employment by
the
Company; and (y) Employee’s compliance with all of his obligations which survive
termination of this Agreement, including without limitation those described
in
Article
IV
below.
The Severance Pay is intended to be in lieu of all other payments to which
Employee might otherwise be entitled in respect of his termination without
Cause. The Company shall have no further obligations hereunder or otherwise
with
respect to Employee’s employment from and after the date of termination of
employment with the Company for any reason (the “Termination
Date”),
and
the Company shall continue to have all other rights available hereunder
(including without limitation, all rights hereunder (including without
limitation, all rights under Article
IV
hereof)
at law or in equity. For
purposes of this Section
3.3(b)
only,
the Severance Period shall increase based on additional years of service by
Employee as follows: Beginning on April 3, 2007 and each anniversary thereafter
for so long as Employee continues to be employed by Employer, the Severance
Period shall be increased by one (1) month every April 3rd
(e.g.
on
April
3, 2007, the Severance Period shall be increased to thirteen (13) months; on
April 3, 2008, the Severance Period shall be increased to fourteen (14) months,
etc.), provided that in no event shall the Severance Period payable under this
Section
3.3(b)
be
greater than fifteen (15) months.
4
3.4. Compensation
After Termination Following a Change in Control.
(a) If
the
Employment Period is terminated following a Change in Control (as defined below)
(i) by the Company for Cause or due to the death or Permanent Disability of
Employee or (ii) by Employee (including a termination resulting from Employee’s
election not to renew this Agreement under Section
1.1
hereof)
other than for Good Reason (as defined below) or during the Window Period (as
defined below), then the Company shall have no further obligations hereunder
or
otherwise with respect to Employee’s employment from and after the termination
or expiration date (except payment of Employee’s Base Salary accrued through the
date of termination or expiration), and the Company shall continue to have
all
other rights available hereunder (including without limitation, all rights
under
Article
IV
hereof)
at law or in equity.
(b) If
the
Employment Period is terminated following a Change in Control (i) by the Company
without Cause (including a termination resulting from the Company’s election not
to renew this Agreement under Section
1.1
hereof)
or (ii) by Employee for Good Reason, then subject to the conditions described
in
Section
3.4(d)
below,
Employee shall be entitled to receive the following as Severance Pay in lieu
of
any amounts payable under Section
3.3:
(A) one
hundred fifty percent (150%) times the sum of Employee’s Base Salary and Target
Bonus, payable within 30 days following the Termination Date and (B)
continuation of the welfare benefits described in Section
2.3(a)
for
eighteen (18) months (the “Severance
Period”)
to the
extent permissible under the terms of the relevant benefit plans. For purposes
of this Agreement, “Target
Bonus”
shall
mean the greater of (x) an amount equal to the bonus that would have been
payable to Employee following the calendar year in which the Termination Date
occurs pursuant to the Company’s Executive Compensation Plan (the “Executive
Plan”),
based
on attaining one hundred percent (100%) of Employee’s applicable target measure
established pursuant to the Executive Plan or (y) thirty-five percent (35%)
of
Base Salary. The Target Bonus shall not be adjusted based on whether the Company
anticipates attaining such target measure as of the Termination Date, whether
the target measure is ultimately attained or whether any bonus amounts payable
under the Executive Plan would have ultimately been approved by either the
Compensation Committee or the Board.
5
(c) If
the
Employment Period is terminated following a Change in Control by Employee for
any reason or no reason during the Window Period, then subject to the conditions
described in Section
3.4(d)
below,
Employee shall be entitled to receive the following as Severance Pay in lieu
of
any amounts payable under Section
3.3:
(i)
fifty
percent (50%) of the
product of: (x) one hundred fifty percent (150%); multiplied by (y) the sum
of
Employee’s Base Salary and Target Bonus,
payable
within thirty (30) days following the Termination Date and (ii) continuation
of
the welfare benefits described in Section
2.3(a)
for nine
(9) months (the “Severance
Period”)
to the
extent permissible under the terms of the relevant benefit plans.
(d) Employee’s
right to receive any Severance Pay under Section
3.4(b)
or
Section
3.4(c)
above is
conditioned upon (i) Employee executing and delivering to the Company a written
separation agreement and general release of all claims, in form and substance
acceptable to the Company, which shall, among other things, contain a general
release by Employee of all claims arising out of his employment and termination
of employment by the Company; (ii) Employee’s compliance with all terms of that
separation agreement and general release; and (iii) Employee’s compliance with
all of his obligations which survive termination of this Agreement, including
without limitation those described in Article
IV
below.
The Severance Pay is intended to be in lieu of all other payments to which
Employee might otherwise be entitled in respect of his termination without
Cause. The Company shall have no further obligations hereunder or otherwise
with
respect to Employee’s employment from and after the Termination Date, and the
Company shall continue to have all other rights available hereunder (including
without limitation, all rights under Article
IV
hereof)
at law or in equity.
(e) For
the
purpose of this Agreement, a “Change
in Control”
means:
(i) the
acquisition, other than from the Parent, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934) of beneficial ownership of 30% or more of the then outstanding
shares of common stock of the Parent or the combined voting power of the then
outstanding voting securities of the Parent entitled to vote generally in the
election of directors; provided,
however,
that
any acquisition by the Parent or any of its subsidiaries, or any employee
benefit plan (or related trust) of the Parent or its subsidiaries, or any
corporation with respect to which, following such acquisition, more than 50%
of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of
such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of
the
individuals and entities who were the beneficial owners respectively, of the
common stock and voting securities of the Parent in substantially the same
portion as their ownership, immediately prior to such acquisition, of the then
outstanding shares of common stock of the Parent or the combined voting power
of
the then outstanding voting securities of the Parent entitled to vote generally
in the election of directors as the case may be, shall not constitute a Change
in Control; or
6
(ii) approval
by the shareholders of the Parent of a reorganization, merger or consolidation
of the Parent, in each case, with respect to which the individuals and entities
who were the respective beneficial owners of the common stock and voting
securities of the Parent immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding voting securities entitled to vote generally in the election
of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or a complete liquidation or
dissolution of the Parent or of the sale or other disposition of all or
substantially all of the assets of the Parent.
(f) “Good
Reason” shall
mean without the written consent of Employee:
(i) a
material change in Employee’s duties or responsibilities which results in or
reflects a material diminution of the scope or importance of Employee’s
position;
(ii) a
reduction in Employee’s Base Salary;
(iii) a
material reduction in the level of Benefits available or awarded to
Employee;
(iv) a
relocation by the Company of Employee’s primary employment location to a
location which is more than 50 miles from Employee’s primary employment location
before the Change in Control; or
(v) any
failure by the Company to comply with Section
3.5
of this
Agreement.
(g) “Window
Period”
shall
mean the 30-day period following the first anniversary of a Change in
Control.
7
3.5. Special
Tax Payments.
(a) Anything
in this Agreement to the contrary notwithstanding, if it is determined that
any
payment or distribution by the Company to or for the benefit of Employee,
whether paid or payable or distributed or distributable pursuant to the terms
of
this Agreement or otherwise (any such payment or distribution being referred
to
herein individually as a “Payment”),
would
constitute an “excess parachute payment” within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”)
(or
any successor provision), the Company will pay Employee an additional amount
(the “Gross-Up
Payment”)
such
that the net amount retained by Employee after deduction of any excise tax
imposed under Section 4999 of the Code (or any successor provision), and any
Federal, state and local income, employment and excise tax imposed upon any
Gross-Up Payment shall be equal to the Payment. For purposes of determining
the
amount of the Gross-Up Payment, Employee shall be deemed to pay Federal income
tax and employment taxes at the highest marginal rate of Federal income and
employment taxation in the calendar year in which the Gross-Up Payment is to
be
made and state and local income taxes at the highest marginal rate of taxation
in the state and locality of Employee’s residence on the Termination Date, net
of the maximum reduction in Federal income taxes that may be obtained from
the
deduction of such state and local taxes.
(b) All
determinations to be made under this Section
3.5
will
initially be made, at the Company’s expense, by the Company’s independent public
accountant immediately prior to the Change in Control (the “Accounting
Firm”).
The
Accounting Firm shall provide detailed supporting legal authorities,
calculations and documentation both to the Company and Employee. If the
Accounting Firm makes the initial determination that no excise tax is payable
by
Employee with respect to any Payment, Employee will have the right to dispute
the determination (a “Dispute”)
within
20 business days after receipt by Employee of the Accounting Firm’s
determination and the related supporting information. The Company will pay
the
Gross-Up Payment, if any, as determined by the Accounting Firm, to Employee
within five business days after Employee’s receipt of the Accounting Firm’s
initial determination. The existence of a Dispute will in no way affect
Employee’s right to receive the Gross-Up Payment in accordance with the
Accounting Firm’s initial determination. If there is no Dispute, the Accounting
Firm’s initial determination will be binding, final and conclusive upon the
Company and Employee, subject in all respects, however, to the provisions of
Sections
3.5(c) and
3.5(d),
below.
As a result of the uncertainty in the application of Sections 4999 and 280G
of
the Code, it is possible that a Gross-Up Payment (or portion thereof) should
have been made by the Company and was not made (an “Underpayment”).
If
upon any reasonable written request by Employee or the Company to the Accounting
Firm, or upon the Accounting Firm’s own initiative, the Accounting Firm (at the
Company’s expense) thereafter determines that Employee is required to make
payment of any excise tax or any additional excise tax, as the case may be,
the
Accounting Firm will determine the amount of the Underpayment that has occurred
and the Company will pay any such Underpayment to Employee promptly. If (i)
Employee delivers to the Company a notice from the Internal Revenue Service
stating in effect that an excise tax is due with respect to any Payment, or
(ii)
Employee delivers to the Company an opinion of tax counsel selected by Employee
and acceptable to the Company (and such acceptance may not be unreasonably
withheld) that all or a portion of a Payment is subject to excise tax and the
applicable amount of excise tax, in each case, together with a written claim
based upon such notice or such opinion that there has been an Underpayment
(a
“Notice
of Underpayment”),
the
Company will promptly, but in no event later than five business days after
receipt of the Notice of Underpayment, pay to Employee in cash the amount of
the
Underpayment set forth in the Notice of Underpayment.
8
(c) The
Company will defend, hold harmless and indemnify Employee on a fully grossed-up
after tax basis from and against any and all claims, losses, liabilities,
obligations, damages, interest, penalties, impositions, assessments, demands,
judgments, settlements, costs and expenses (including reasonable attorneys’,
accountants’ and experts’ fees and expenses) (collectively, “Damages”)
with
respect to any tax liability of Employee resulting from any Underpayment, and
will promptly, but in no event later than five business days after receipt
of
any reasonable notice from Employee to the Company of any claim for Damages,
pay
to Employee in cash the amount of Damages set forth in such notice.
(d) If
any
Underpayment or Damages are ultimately determined to be less than the applicable
amount previously paid by the Company to Employee, Employee will promptly pay
to
the Company the amount of any overpayment previously paid by the Company to
Employee with respect to such purported Underpayment or Damages.
3.6. Code
Section 409A.
In the
event that any amount due to Employee hereunder shall be considered to be
deferred compensation pursuant to Section 409A of the Code, and it is determined
by Employee that it is desirable to delay the payment of such amount in order
to
comply with the requirements of Section 409A(a)(2)(B)(i) of the Code, then
the
Company shall delay the payment of such amount for the shortest amount of time
necessary to comply with such requirements. The parties agree to make such
other
amendments to this Agreement as are necessary to comply with the requirements
of
Section 409A of the Code.
ARTICLE
IV
Restrictive
Covenants
4.1. Employee’s
Acknowledgment.
Employee acknowledges that:
(a) the
Company is and will be engaged in the Business during the Employment Period
and
thereafter;
(b) Employee
is one of a limited number of persons who will be developing the
Business;
(c) Employee
will occupy a position of trust and confidence with the Company after the date
of this Agreement, and during such period and Employee’s employment under this
Agreement, Employee will become familiar with the Company’s trade secrets and
with other proprietary and confidential information concerning the Company
and
the Business;
(d) the
agreements and covenants contained in this Article
IV are
essential to protect the Company and the goodwill of the Business and are a
condition precedent to the Company entering into this Agreement;
9
(e) Employee’s
employment with the Company has special, unique and extraordinary value to
the
Company and the Company would be irreparably damaged if Employee were to provide
services to any person or entity in violation of the provisions of this
Agreement;
(f) Employee
has means to support himself and his dependents other than by engaging in the
Business, or a business similar to the Business, and the provisions of this
Article
IV will
not
impair such ability; and
(g) for
purposes of this Article
IV,
the
term “Company” shall include the Company, the Parent and any of their respective
subsidiaries and affiliates.
4.2. Non-Compete.
Employee hereby agrees that for a period commencing on the date hereof and
ending on the Termination Date, and thereafter, through the later of (a) the
period ending on the first anniversary of the Termination Date or (b) the period
ending at the conclusion of the Severance Period (collectively, the
“Restrictive
Period”),
he
shall not, directly or indirectly, as employee, agent, consultant, stockholder,
director, co-partner or in any other individual or representative capacity,
own,
operate, manage, control, engage in, invest in or participate in any manner
in,
act as a consultant or advisor to, render services for (alone or in association
with any person, firm, corporation or entity), or otherwise assist any person
or
entity (other than the Company) that engages in or owns, invests in, operates,
manages or controls any venture or enterprise that directly or indirectly
engages or proposes to engage in any element of the Business anywhere within
a
100-mile radius of the Chicago metropolitan area or within a 100-mile radius
of
any area (or in the event such area is a major city, the metropolitan area
relating to such city) in which the Company on the Termination Date engages
in
any element of the Business (the “Territory”);
provided, however, that nothing contained herein shall be construed to prevent
Employee from investing in the stock of any competing corporation listed on
a
national securities exchange or traded in the over-the-counter market, but
only
if Employee is not involved in the business of said corporation and if Employee
and his associates (as such term is defined in Regulation 14(A) promulgated
under the Securities Exchange Act of 1934, as in effect on the date hereof),
collectively, do not own more than an aggregate of 3% of the stock of such
corporation. With respect to the Territory, Employee specifically acknowledges
that the Company intends to expand the Business into and throughout the United
States.
4.3. Interference
with Relationships.
Without
limiting the generality of the provisions of Section
4.2 hereof,
Employee hereby agrees that, during the Restrictive Period, he will not,
directly or indirectly, solicit or encourage, or participate as employee, agent,
consultant, stockholder, director, partner or in any other individual or
representative capacity, in any business which solicits or encourages (a) any
person, firm, corporation or other entity which has executed, or proposes to
execute, a management services agreement or other services agreement with the
Company at any time during the term of this Agreement, or from any successor
in
interest to any such person, firm, corporation or other entity, for the purpose
of securing business or contracts related to any element of the Business, or
(b)
any present or future customer or patient of the Company or any of its
affiliated practices or facilities to terminate or otherwise alter his, her
or
its relationship with the Company or such affiliated practice or facility;
provided, however, that nothing contained herein shall be construed to prohibit
or restrict Employee from soliciting business from any such parties on behalf
of
the Company in performance of his duties as an employee of the Company required
under and as specifically contemplated by Section
1.2 above.
In
addition, at all times from and after the Termination Date, Employee shall
not
contact or communicate in any manner with any of the Employer’s suppliers or
vendors, or any other third party providing services to Employer, regarding
Employer or any Employer-related matter (which suppliers, vendors or third
party
service providers will include, without limitation, any third party with whom
Employer was, during the term of Employee’s employment with Employer,
contemplating engaging, or negotiating with, for the future provision of
products or services).
10
4.4. Nonsolicitation.
Other
than in the performance of his duties hereunder, during the Restrictive Period,
Employee shall not, directly or indirectly, as employee, agent, consultant,
stockholder, director, co-partner or in any other individual or representative
capacity, employ or engage, recruit or solicit for employment or engagement,
any
person who is or becomes employed or engaged by the Company or any of its
affiliated practices during the Restrictive Period, or otherwise seek to
influence or alter any such person’s relationship with the Company.
4.5. Confidential
Information.
Other
than in the performance of his duties hereunder, during the Restrictive Period
and thereafter, Employee shall keep secret and retain in strictest confidence,
and shall not, without the prior written consent of the Company, furnish, make
available or disclose to any third party or use for the benefit of himself
or
any third party, any Confidential Information. As used in this Agreement,
“Confidential
Information”
shall
mean any information relating to the business or affairs of the Company or
the
Business, including but not limited to any technical or non-technical data,
formulae, compilations, programs, devices, methods, techniques, designs,
processes, procedures, improvements, models, manuals, financial data,
acquisition strategies and information, information relating to operating
procedures and marketing strategies, and any other proprietary information
used
by the Company in connection with the Business, irrespective of its form;
provided, however, that Confidential Information shall not include any
information which is in the public domain or becomes known in the industry
through no wrongful act on the part of Employee. Employee acknowledges that
the
Confidential Information is vital, sensitive, confidential and proprietary
to
the Company.
4.6. Inventions
and Discoveries.
(a) Employee
understands and agrees that all inventions, discoveries, ideas, improvements,
whether patentable, copyrightable or not, pertaining to the Business of the
Company or relating to the Company’s actual or demonstrably anticipated
research, development or inventions (collectively, “Inventions
and Discoveries”)
that
result from any work performed by Employee solely or jointly with others for
the
Company which Employee, solely or jointly with others, conceives, develops,
or
reduces to practice during the course of Employee’s employment with the Company,
are the sole and exclusive property of the Company. Employee will promptly
disclose all such matters to the Company and will assist the Company in
obtaining legal protection for Inventions and Discoveries. Employee hereby
agrees on behalf of himself, his executors, legal representatives and assignees
that he will assign, transfer and convey to the Company, its successors and
assigns the Inventions and Discoveries.
(b) THE
COMPANY AND EMPLOYEE ACKNOWLEDGE AND AGREE THAT SECTION
4.6(a)
SHALL
NOT APPLY TO AN INVENTION OF EMPLOYEE FOR WHICH NO EQUIPMENT, SUPPLIES, FACILITY
OR TRADE SECRET INFORMATION OF THE COMPANY WAS USED AND WHICH WAS DEVELOPED
ENTIRELY ON EMPLOYEE’S OWN TIME, UNLESS (A) THE INVENTION RELATED (I) TO THE
BUSINESS OF THE COMPANY OR (II) TO THE COMPANY’S ACTUAL OR DEMONSTRABLY
ANTICIPATED RESEARCH OR DEVELOPMENT, OR (B) THE INVENTION RESULTS FROM ANY
WORK
PERFORMED BY EMPLOYEE FOR THE COMPANY. EMPLOYEE AND THE COMPANY FURTHER
ACKNOWLEDGE AND AGREE THAT SECTION
4.6(a)
SHALL
NOT APPLY TO ANY INVENTIONS OR WORK PRODUCT DEVELOPED OR VESTED BY EMPLOYEE
PRIOR TO THE EFFECTIVE DATE.
11
(c) EMPLOYEE
ACKNOWLEDGES THAT HE HAS READ THIS SECTION
4.6 AND
FULLY
UNDERSTANDS THE LIMITATIONS WHICH IT IMPOSES UPON HIM AND HAS RECEIVED A
DUPLICATE COPY OF THIS AGREEMENT FOR HIS RECORDS.
4.7. Blue-Pencil.
If any
court of competent jurisdiction shall at any time deem the term of this
Agreement or any particular Restrictive Covenant (as defined) too lengthy or
the
Territory too extensive, the other provisions of this Article
IV shall
nevertheless stand, the Restrictive Period herein shall be deemed to be the
longest period permissible by law under the circumstances and the Territory
herein shall be deemed to comprise the largest territory permissible by law
under the circumstances. The court in each case shall reduce the time period
and/or Territory to permissible duration or size.
4.8. Remedies.
Employee acknowledges and agrees that the covenants set forth in this
Article
IV (collectively,
the “Restrictive
Covenants”)
are
reasonable and necessary for the protection of the Company’s business interests,
that irreparable injury will result to the Company if Employee breaches any
of
the terms of said Restrictive Covenants, and that in the event of Employee’s
actual or threatened breach of any such Restrictive Covenants, the Company
will
have no adequate remedy at law. Employee accordingly agrees that in the event
of
any actual or threatened breach by him of any of the Restrictive Covenants,
the
Company shall be entitled to immediate temporary injunctive and other equitable
relief, without bond and without the necessity of showing actual monetary
damages, subject to hearing as soon thereafter as possible. Nothing contained
herein shall be construed as prohibiting the Company from pursuing any other
remedies available to it for such breach or threatened breach, including the
recovery of any damages which it is able to prove.
4.9. Covenant
Not to Disparage.
During
the Restrictive Period and thereafter, Employee shall not disparage, denigrate
or derogate in any way, directly or indirectly, any of the Company, its agents,
officers, directors, employees, parent, subsidiaries, affiliates, affiliated
practices, affiliated doctors, representatives, attorneys, executors,
administrators, successors and assigns (collectively, the “Protected
Parties”),
nor
shall Employee disparage, denigrate or derogate in any way, directly or
indirectly, his experience with any Protected Party, or any actions or decisions
made by any Protected Party.
12
ARTICLE
V
Miscellaneous
5.1. Notices.
Any
notice provided for in this Agreement must be in writing and must be either
(i)
personally delivered, (ii) mailed by registered or certified first class mail,
prepaid with return receipt requested or (iii) sent by a recognized overnight
courier service, to the recipient at the address below indicated:
To
the
Company:
|
NovaMed
Management Services, LLC
000
X. Xxxxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxx
|
|
Xxxx
X. Xxxxxxxx, Xx.
|
with
a copy to:
|
NovaMed
Management Services, LLC
000
X. Xxxxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxxxx,
Esq.
|
To
Employee: at his home address then on file with the Company.
or
such
other address or to the attention of such other person as the recipient party
shall have specified by prior written notice to the sending party. Any notice
under this Agreement will be deemed to have been given (a) on the date such
notice is personally delivered, (b) three (3) days after the date of mailing
if
sent by certified or registered mail, or (c) one (1) day after the date such
notice is delivered to the overnight courier service if sent by overnight
courier.
5.2. Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
5.3. Entire
Agreement.
This
Agreement, those documents expressly referred to herein and other documents
of
even date herewith embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
13
5.4. Counterparts.
This
Agreement may be executed on separate counterparts, each of which is deemed
to
be an original and all of which taken together constitute one and the same
agreement.
5.5. Successors
and Assigns.
This
Agreement is intended to bind and inure to the benefit of and be enforceable
by
Employee and the Company and their respective successors and permitted assigns.
Employee may not assign any of his rights or obligations hereunder without
the
written consent of the Company.
5.6. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.
5.7. Amendments
and Waivers.
Any
provision of this Agreement may be amended or waived only with the prior written
consent of the Company and Employee.
5.8. Governing
Law.
This
Agreement shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Agreement shall be governed by, the laws of the State of Illinois, without
giving effect to provisions thereof regarding conflict of laws.
5.9. Income
Tax Treatment.
Employee and the Company acknowledge that it is the intention of the Company
to
deduct all amounts paid under this Agreement as ordinary and necessary business
expenses for income tax purposes. Employee agrees and represents that he will
treat all such amounts as ordinary income for income tax purposes, and should
he
report such amounts as other than ordinary income for income tax purposes,
he
will indemnify and hold the Company harmless from and against any and all taxes,
penalties, interest, costs and expenses, including reasonable attorneys’ and
accounting fees and costs, which are incurred by Company directly or indirectly
as a result thereof.
5.10. CONSENT
TO JURISDICTION.
THE
COMPANY AND EMPLOYEE HEREBY CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY
AGREE
THAT SUBJECT TO THE COMPANY’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EMPLOYEE
ACCEPTS FOR HIMSELF AND IN CONNECTION WITH HIS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
5.11. WAIVER
OF JURY TRIAL.
THE
PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE
RELATIONSHIP THAT IS BEING ESTABLISHED. THE PARTIES HERETO ALSO WAIVE ANY BOND
OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF THE OTHER PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT
RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, DISCRIMINATION CLAIMS,
AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO ACKNOWLEDGE THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
THE
COMPANY AND EMPLOYEE FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH THEIR RESPECTIVE LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES THEIR RESPECTIVE JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED
HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
14
[Signature
Page to Follow]
15
IN
WITNESS WHEREOF,
the
parties have executed this Agreement on the day and year first above
written.
THIS
AGREEMENT CONTAINS AUTOMATIC RENEWAL PROVISIONS.
| COMPANY: | ||
| NovaMed Management Services, LLC, a Delaware limited liability company | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxx | |
|
|
||
|
Xxxxxx
X. Xxxx, President and Chief
Executive Officer
|
||
| EMPLOYEE: | ||
| /s/ Xxxx Xxxxx | ||
| |
Xxxx Xxxxx |
|
16
