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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of July 31,
1996 between AMERICAN PHYSICIAN PARTNERS, INC., a Delaware corporation (the
"Company"), and Xxxx Xxxxx ("Jolas").
In consideration of the mutual covenants and conditions set forth
herein, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Jolas in the capacity of
General Counsel and Senior Vice President, reporting directly to the CEO. Jolas
accepts such employment and agrees to perform such services as are customary to
such office and as shall from time to time be assigned to him by the Board of
Directors.
2. TERM. The employment hereunder shall be for a period of 1 year,
commencing on August 1, 1996 (the "Commencement Date") and shall be
automatically renewed for successive one year periods unless earlier terminated
as provided in Section 5. Jolas's employment will be on a full-time basis
requiring the devotion of such amount of his productive time as is necessary for
the efficient operation of the business of the Company.
3. COMPENSATION AND BENEFITS
3.1 SALARY. For the performance of Jolas's duties hereunder, the
Company shall pay Jolas an annual salary of $140,000, payable (less required
withholdings) no less frequently than twice monthly.
3.2 BONUS. The Company shall also pay Jolas an annual cash bonus for
the first employment year, which bonus shall be payable in a single installment
within 30 days following the end of the employment year for which it is earned.
The annual bonus for the first employment year will be $10,000. During the first
employment year the Board of Directors and Jolas will establish a mutually
acceptable bonus plan for the second and subsequent employment years, which plan
(i) will provide Jolas with appropriate incentives and the opportunity to earn
bonus amounts comparable to those available to top executive officers of similar
companies, and (ii) may base the bonus awards on the amount of earnings per
share for the Company as defined by Generally Accepted Accounting Principals
(GAAP).
3.3 STOCK OPTIONS. Upon commencement of Jolas's employment
hereunder, the Company shall grant to Jolas options under the Company's Stock
Option Plan to purchase 140,000 shares of the Company's common stock at an
exercise price of $.125 per share. The options will vest in accordance with the
Company's Stock Option Plan and each option will be exercisable for a period of
ten years from the Commencement Date. This option shall become exercisable as to
one sixtieth (1.66667%) of the original option
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shares at the end of each monthly anniversary of the grant date over a term of
five years. In the event Jolas is employed by the Company upon the closing of
its Initial Public Offering, 25% of Jolas's then granted options shall become
vested. In the event the Initial Public Offering is completed and 25% of Jolas's
then granted options vest, the remaining options will become exercisable evenly
over the remaining months ending on the fifth anniversary of the Commencement
Date. Option shares will not vest after Termination. Jolas shall be considered
for participation in plans granting additional options or stock awards to top
executives.
3.4 BENEFITS. Jolas shall be entitled to such medical, disability
and life insurance coverage and such vacation, sick leave and holiday benefits,
if any, and any other benefits as are made available to the Company's top
executive personnel, all in accordance with the Company's benefits program in
effect from time to time. The Company will assume Jolas's medical insurance
costs up to $500 per month until Jolas joins the Company provided plan.
3.5 REIMBURSEMENT OF EXPENSES. Jolas shall be entitled to be
reimbursed for all reasonable expenses, including but not limited to expenses
for travel, meals and entertainment, incurred by Jolas in connection with and
reasonably related to the furtherance of the Company's business.
3.6 ANNUAL REVIEW. On each anniversary of the Commencement Date, the
Board of Directors will review Jolas's performance and compensation hereunder
(including salary, bonus and stock options and/or other equity incentives) and
will consider whether to increase such compensation, but will not have
authority, as the result of such review, to decrease any portion of such
compensation without the written consent of Jolas.
3.7 CONTINUING PROFESSIONAL EDUCATION. Employer shall pay for or
reimburse Jolas for all expenses incurred by Jolas in furtherance of Jolas's
duties hereunder, including, but not limited to (i) all taxes, fees, duties,
assessments, licenses, permits and franchises, applicable to attorneys licensed
to practice law in the jurisdictions where Jolas currently is, or may be
required to be, licensed to practice law, (ii) all fees, dues, assessments, and
other costs associated with Jolas's membership in all bar associations,
sections, and other professional organizations and groups, and (iii) all
expenses associated with Jolas's attendance at or participation in continuing
legal education seminars, programs or events, including, but not limited to,
travel, lodging, tuition, books, meals, and other expenses relating to such
continuing legal education events. Jolas's attendance at such continuing legal
events shall not be deemed or accounted for as vacation or personal days/time.
4. CHANGE OF CONTROL. In the event of a Change of Control of the
Company (as defined below), all options then granted to Jolas which are unvested
at the date of the Change of Control will be immediately vested. In addition,
notwithstanding the provisions of Section 5.2(b), in the event of a termination
of Jolas's employment hereunder by the Company following a Change of Control,
the Company will promptly pay Jolas, in
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addition to the amounts required under Section 5.2(a), a lump sum severance
amount, payable immediately upon such termination of employment, equal to two
(2) years of salary at the then current rate, excluding bonus.
As used herein, a "Change of Control" of the Company shall be deemed to
have occurred:
a. Upon the consummation, in one transaction or a series of related
transactions, of the sale or other transfer of voting power (including voting
power exercisable on a contingent or deferred basis as well as immediately
exercisable voting power) representing effective control of the Company to a
person or group of related persons who, on the date of this Agreement, does not
have effective voting control of the Company, whether such sale or transfer
results from a tender offer or otherwise; or
b. Upon the consummation of a merger or consolidation in which the
Company is a constituent corporation and in which the Company's shareholders
immediately prior thereto will beneficially own, immediately thereafter,
securities of the Company or any surviving or new corporation resulting
therefrom having less than a majority of the voting power of the Company or any
such surviving or new corporation; or
c. Upon the consummation of a sale, lease, exchange or other
transfer or disposition by the Company of all or substantially all its assets to
any person or group or related persons.
5. TERMINATION
5.1 TERMINATION EVENTS. The employment hereunder will terminate upon
the occurrence of any of the following events:
x. Xxxxx dies;
b. the Company, by written notice to Jolas or his personal
representative, discharges Jolas due to the inability to perform the duties
assigned to him hereunder for a continuous period exceeding 120 days by reason
of injury, physical or mental illness or other disability, which condition has
been certified by a physician; provided, however, that prior to discharging
Jolas due to such disability, the Company shall give a written statement of
findings to Jolas or his personal representative setting forth specifically the
nature of the disability and the resulting performance failures, and Jolas shall
have a period of ten (10) days thereafter to respond in writing to the Board of
Directors' findings;
x. Xxxxx is discharged by the Board of Directors of the Company for
cause. As used in this Agreement, the term "cause" shall mean:
(1) Jolas's conviction of (or pleading guilty or nolo contendere
to) a felony or any misdemeanor involving dishonesty or moral turpitude;
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provided, however, that prior to discharging Jolas for cause, the Company shall
give a written statement of findings to Jolas setting forth specifically the
grounds on which cause is based, and Jolas shall have a period of ten (10) days
thereafter to respond in writing to the Board of Directors' findings;
(2) the willful and continued failure of Jolas to substantially
perform his duties with the Company (other than any such failure resulting from
illness or disability) after a written demand for substantial performance is
requested by the Company's Board of Directors, which specifically identifies the
manner in which it is claimed Jolas has not substantially performed his duties,
or Jolas is willfully engaged in misconduct which has, or can reasonably be
expected to have, a direct and material adverse monetary effect on the Company.
For purposes of this Section no act or failure to act on Jolas's part shall be
considered "willful" if done, or omitted to be done, by Jolas in good faith and
with reasonable belief that Jolas's action or omission was in the best interest
of the Company. No termination shall be effected for Cause unless Jolas has been
provided with specific information as to the acts or omissions which form the
basis of the allegation of Cause, and Jolas has had an opportunity to be heard,
with counsel if he so desired, before the Board of Directors and such Board
determines, by majority vote, in good faith that Jolas was guilty of conduct
constituting "Cause" as herein defined, specifying the particulars thereof in
detail;
x. Xxxxx is discharged by the Board of Directors of the Company
without cause, which the Company may do at any time, with at least 30 days
advance written notice; or
x. Xxxxx voluntarily terminates his employment due to either (i) a
default by the Company in the performance of any of its obligations hereunder,
or (ii) an Adverse Change in Duties (as defined below), which default or Adverse
Change in Duties remains unremedied by the Company for a period of ten days
following its receipt of written notice thereof from Jolas; or
x. Xxxxx voluntarily terminates his employment for any reason other
than the Company's default or an Adverse Change in Duties, which Jolas may do at
any time with at least 30 days advance notice.
As used herein, "Adverse Change in Duties" means an action or series of
actions taken by the Company, without Jolas's prior written consent, which
results in:
(1) A change in Jolas's reporting responsibilities, titles, job
responsibilities or offices which results in a material diminution of his
status, control or authority; or
(2) The assignment to Jolas of any positions, duties or
responsibilities which are materially inconsistent with Jolas's positions,
duties and responsibilities or status with the Company; or
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(3) A requirement by the Company that Jolas be based or perform
his duties anywhere other than (i) at the Company's corporate office location on
the date of this Agreement, or (ii) if the Company's corporate office location
is moved after the date of this Agreement, at a new location that is no more
than 60 miles from such prior location; or
(4) A failure by the Company to provide for Jolas's
participation in any current or future benefits or plans at a level or to an
extent commensurate with that of other top executives of the Company.
5.2 EFFECTS OF TERMINATION.
(a) Upon termination of Jolas's employment hereunder for any
reason, the Company will promptly pay Jolas all compensation owed to Jolas and
unpaid through the date of termination (including, without limitation, salary
and employee expense reimbursements).
(b) In addition, if the employment is terminated under Sections
5.1(b), (d) or (e), the Company shall also pay Jolas, immediately upon such
termination of employment, a lump sum severance amount equal to one-half of the
then applicable annual salary, excluding bonus.
(c) Upon termination of Jolas's employment hereunder for any
reason, Jolas agrees that for the one year period following the Termination
Event:
i) Jolas will not directly or indirectly, whether as an
individual, employee, director, consultant or advisor, or in any other
capacity whatsoever, provide services to any person, firm, corporation
or other business enterprise which is involved in the acquisition or
management of radiology physician practices or other service company
that directly provides management services in the area of radiology
where currently operating, unless he obtains the prior written consent
of the Board of Directors.
ii) Jolas will not directly or indirectly encourage or
solicit, or attempt to encourage or solicit, any individual to leave
the Company's employ for any reason or interfere in any other manner
with the employment relationships at the time existing between the
Company and its current or prospective employees.
iii) Jolas will not induce or attempt to induce any provider,
payor, customer, supplier, distributor, licensee or other business
relation of the Company to cease doing business with the Company or in
any way interfere with the existing business relationship between any
such customer, supplier, distributor, licensee or other business
relation and the Company.
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Jolas acknowledges that monetary damages may not be sufficient to
compensate the Company for any economic loss which may be incurred by reason of
breach of the foregoing restrictive covenants. Accordingly, in the event of any
such breach, the Company shall, in addition to any remedies available to the
Company at law, be entitled to obtain equitable relief in the form of an
injunction precluding Jolas from continuing to engage in such breach.
If any restriction set forth in this paragraph is held to be
unreasonable, then Jolas and the Company agree, and hereby submit, to the
reduction and limitation of such prohibition to such area or period as shall be
deemed reasonable.
6. GENERAL PROVISIONS
6.1 ASSIGNMENT. Neither party may assign or delegate any of his or
its rights or obligations under this Agreement without the prior written consent
of the other party.
6.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all prior agreements between the parties relating to such subject matter.
6.3 MODIFICATIONS. This Agreement may be changed or modified only by
an agreement in writing signed by both parties hereto.
6.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Company and its successors and
permitted assigns and Jolas and Jolas's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join and be bound by the terms and conditions hereof.
6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
6.6 SEVERABILITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect.
6.7 FURTHER ASSURANCES. The parties will execute such further
instruments and take such further actions as may be reasonably necessary to
carry out the intent of this Agreement.
6.8 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed received by the
recipient when delivered personally or, if mailed, five (5) days after the date
of deposit in the United States
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mail, certified or registered, postage prepaid and addressed, in the case of the
Company, to ___________________________________________________________________,
and in the case of Jolas, to the address shown for Jolas on the signature page
hereof, or to such other address as either party may later specify by at least
ten (10) days advance written notice delivered to the other party in accordance
herewith.
6.9 NO WAIVER. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of that provision, nor
prevent that party thereafter from enforcing that provision or any other
provision of this Agreement.
6.10 LEGAL FEES AND EXPENSES. In the event of any disputes under
this Agreement, each party shall be responsible for their own legal fees and
expenses which it may incur in resolving such dispute, unless otherwise
prohibited by applicable law or a court of competent jurisdiction.
6.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Jolas have executed this Agreement,
effective as of the day and year first above written.
COMPANY JOLAS
AMERICAN PHYSICIAN PARTNERS, INC.
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a Delaware corporation Xxxx Xxxxx
By: 0000 Xxxxxxxx Xxxxxx
---------------------------- Xxxx X
Xxxxxxx X. Xxxxxxx Xxxxxx, XX 00000-0000
President & CEO
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