1
Exhibit 10.17
EMPLOYMENT AGREEMENT dated as of November 1, 1998,
between ADVANCED HEALTH CORPORATION, a Delaware
corporation (the "Company"), and XXXXXXX X. XXXXXXXXX
(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
Senior Vice President, Finance 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 the date hereof and ending on November
1, 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 such
party's intent not to renew this Agreement.
3. Duties. The Employee shall be employed as the Senior Vice President,
Finance 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 with
the Company and would otherwise be consistent in stature and prestige
with the position of Senior Vice President, Finance 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 three weeks vacation per year (in addition to
public holidays), 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.
5. Compensation; Reimbursement. (a) 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.
2
(b) From time to time the Employee may also receive cash
bonuses at the discretion of the Board or the Compensation
Committee.
(c) 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, disability coverage and such other fringe benefits
enjoyed by other employees at substantially the same
employment level as the Employee.
(d) 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 traveling 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.
(e) The Employee shall maintain a suitable automobile for
business use. During the Employment Period, the Company shall
pay the Employee a $550 per month car allowance towards the
costs of leasing, using, insuring, repairing and maintaining
such automobile.
(f) 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.
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.
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
2
3
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; or
(ii) the conviction by the Employee of misappropriation of
funds, properties or assets of the Company, sexual
harassment, 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
business, affairs, conditions (financial or
otherwise), operations, results of operations,
assets, properties or rights, liabilities or
obligations, customer or employee relationships or
prospects of the Company.
8. Termination Without Cause. The Company may terminate the
employment of the Employee hereunder at any time during the
Employment Period without "Cause" (a "Termination Without
Cause"). It is expressly acknowledged that if Employee shall
not report to the CEO of the Company, such change in reporting
structure shall constitute a Termination Without Cause. It is
expressly acknowledged that non-renewal of this Agreement as
contemplated by Section 2 shall not constitute a Termination
Without Cause. Further, if either (I) Employee's Base Salary
shall be reduced without Employee's consent, or (ii) Employee
shall be required to relocate outside the New York
metropolitan area, such action by Employer shall 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.
10. Change in Control. On a Change of Control, all options to
purchase common stock of the Company then held by the Employee
shall immediately vest and shall be exercisable for a period
of five years from the date of the 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 shall
cease for any reason to constitute a majority thereof
3
4
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.
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 vacation, 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(d).
In addition, current arrangements concerning indemnification, including
but not limited to payment of expenses of officers, directors, and employees in
connection with litigation involving the Company shall remain in full force and
effect following termination.
(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, plus (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, plus (iii) to be immediately vested in all stock options granted
to the Employee by the Company that would have vested during the three-month
period immediately following the effective date of the Involuntary Termination.
In addition, current arrangements concerning indemnification, including but not
limited to payment of expenses of officers, directors, and employees in
connection with litigation involving the Company shall remain in full force and
effect following termination.
(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 amount
provided for in Section 11(a) hereof , (ii) to receive a cash severance payment
in an aggregate amount equal to the base salary and bonus received by the
Employee during the 12-month period immediately prior to the effective date of
the Termination Without Cause, plus car allowance, health insurance and life
insurance premium payments, professional licensing and membership fees and dues
for such one year period, payable in one lump sum within 10 days of such
termination if such termination occurs within six months of a Change in Control,
and otherwise in 12 equal monthly installments, (iii) reasonable cell phone and
pager use, and inclusion in the Company's 401(k) plan for the 12-month period
following such termination; plus (iv) all options to purchase common stock of
the Company, which shall include any parent or affiliated entity shall fully
vest and shall be exercisable for a period of five years following the date of
such Termination. In addition, current arrangements concerning
4
5
indemnification, including but not limited to payment of expenses of officers,
directors, and employees in connection with litigation involving the Company
shall remain in full force and effect following termination.
12. Non-Competition; Non-Disclosure of Information. (a) The
Employee shall not during the Employment Period, and 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 or any of its subsidiaries in the business of
primarily providing physician practice management, physician
network management and/or clinical information technology to
or for physicians to the extent such businesses are conducted
by the Company and its subsidiaries at the time of any
termination of the Employment Period.
(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 (the "Inventions")
relating in any way to the business of providing physician
practice management, 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,
5
6
copyrights and reissues thereof that may at any time be
granted for or upon any such Inventions. 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.
6
7
(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 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. Xxxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
If to the Company:
Advanced Health Corporation
000 Xxxxx Xxxxxx Xxxx, Xxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Chairman and CEO
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
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
contains the entire agreement between the parties with respect
to the subject matter contained herein 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,
7
8
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.
22. Severability. Any provisions 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
--- /s/ Xxxxxxxx X. Xxxxxxx, MD ----
Name: Xxxxxxxx X. Xxxxxxx, MD
Title: Chairman and CEO
---/s/-- Xxxxxxx X. Xxxxxxxxx---
Xxxxxxx X. Xxxxxxxxx
8
