EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of June 1, 1997
("Effective Date"), by and between Primary Care Medical Centers of America,
Inc., a Delaware corporation ("Employer"), and Xxxxx X. Xxxxx ("Employee").
Employer and Employee may be referred to herein collectively as the "parties"
and individually as a "party."
ARTICLE I
TERM OF EMPLOYMENT; FORMATION OF SUBSIDIARY
Employer hereby employs Employee and Employee hereby accepts employment with
Employer for a period (the "Term") beginning as of the Effective Date and
ending on the third (3rd) anniversary of the Effective Date (the "Scheduled
Termination Date"), subject, however, to earlier termination as hereinafter
provided.
ARTICLE II
DUTIES OF EMPLOYEE
2.1 Duties. Employee is engaged to be the Chief Executive Officer of
Employer. Employee shall be elected to the Board of Directors of Employer
and shall be reelected as necessary to permit Employee to serve as a
director throughout the Term. In general, Employee shall have such
authority, duties and responsibilities with respect to Employer as are
consistent with his title. Employee's specific duties and powers shall be
determined from time to time by Employer's Board of Directors. Employee
shall perform and discharge such duties well and faithfully. Employee
shall be subject to the supervision and direction of Employer's Board
of Directors and its Chairman.
2.2 Full Time Employment. Employee shall devote his entire productive
time, ability, and attention to the business of Employer during the Term.
Except for services provided to affiliates of Employer, during the Term,
Employee shall not, directly or indirectly, render any services of a
business, commercial or professional nature to any other person, corporation,
firm or organization, whether for compensation or otherwise, without the
prior written consent of Employer. Employee hereby represents and warrants
to Employer that the execution and performance of Employee's duties under
this Agreement do not and will not conflict with or result in a breach of
or a default under any agreement, contract or instrument to which Employee
is a party or by which Employee is bound.
ARTICLE III
COMPENSATION AND BENEFITS
3.1 Base Salary. As partial compensation for services rendered and
Employee's covenants and agreements under this Agreement, Employee shall
be entitled to receive from Employer a base salary, initially set at
$150,000 per year, payable in twenty-four equal semi-monthly installments
for each year during the Term. The salary of Employee may be adjusted from
time to time at the sole discretion of Employer's Board of Directors but
shall not be decreased below $150,000 without Employee's consent.
3.2 Performance Bonus. In addition to the compensation specified in
Section 3.1, Employee shall also be entitled to receive from Employer
for each twelve-month Bonus Period, as defined below, an additional amount
(the "Performance Bonus") equal to five percent (5%) of Employer's net
pre-tax earnings ("NPTE") for the Bonus Period provided that Employer has
achieved a return on investment ("ROI") during the Bonus Period at least
equal to 15.0%, 16.5% or 18.0% in the first, second or third Bonus Periods,
respectively; provided, however, that in the event Employee is employed
by Employer for less than all of any Bonus Period, the Employee's
Performance Bonus for such partial Bonus Period shall be determined by
multiplying the amount calculated pursuant to the previous sentence by a
fraction, the numerator of which shall be the number of days in the Bonus
Period during which Employee was employed by Employer, and the denominator
of which shall be the total number of days in the Bonus period. Any
Performance Bonus payable with respect to a partial Bonus Period shall be
paid within 90 days after the end of such fiscal year. The "Bonus Period"
shall mean each of the three twelve-month periods commencing June 1, 1997,
and the first and second anniversaries of such date. NPTE
shall equal Employer's consolidated net income for the Bonus Period, prior
to the deduction therefrom of any income tax expense, but after application
thereto of any monitoring or administrative fees chargeable to the
Subsidiary by any other company, including, but not limited to, Seal Holdings
Corporation (the "Parent"). The above notwithstanding, in calculating
NPTE, there shall be excluded from the gross revenues of Employer the full
amount of any consideration received by Employer in any Special event, as
defined in section 3.3, below. The ROI for any Bonus Period shall equal
that percentage of the shareholders' equity of Employer on the last
day of the Bonus Period which is equal to the NPTE of Employer for that
Bonus Period less (i) any and all income taxes paid or payable by the
Company or Parent with respect to such earnings and (ii) the sum of the
Performance Bonuses payable with respect to the Bonus Period hereunder
and pursuant to that Employment Agreement dated June 1, 1997, between
Employer and Xxxxx X. Xxxxxxxxx III.
3.3 Special Event Bonus. In addition to the compensation specified in
Sections 3.1 and 3.2, Employee shall also be entitled to receive from
Employer an additional amount (the "Special Event Bonus") in the event of
the occurrence of any "Special Event," as defined below. "Special Event"
means the sale by Employer of a network of multi-disciplinary primary care
clinics or any group of such networks. Upon the occurrence of any Special
Event, Employee shall receive a Special Event Bonus equal to twenty
percent (20%) of the gross proceeds of the Special event, which shall be
payable in cash, except that Employer may, in its discretion, pay up to
40% (40%) of any Special event Bonus in the Class A Common Stock of the
Parent, which shall be valued for the purposes of such payment at the
average bid price of such stock in the market over the ten business days
immediately preceding the date of the Special Event. The Special Event
Bonus payable with respect to any Special Event shall be paid within
ninety (90) days after the occurrence of the Special event, except that any
portion of the Special Event Bonus based upon any amounts received by
Employer on a deferred basis may be similarly deferred by Employer, provided
that such deferred payments shall be made no alter than ninety (90) days
after the receipt by Employer of such deferred consideration. In the
event that any Special event involves the receipt by the Company of
consideration other than cash, the Special event Bonus shall be calculated
based upon the fair market value of the consideration received, as
determined by the board of directors of Employer.
3.4 Incentive Stock Options. Simultaneously with the execution of this
Agreement, Employer shall grant to Employee an incentive stock option to
purchase up to ten thousand (10,000) shares of the common stock of Employer
on such terms and conditions as shall be approved by Employer's Board of
Directors.
3.5 Securities Law Compliance. Employee recognizes that the stock options
provided for in Section 3.4, above, any shares of the common stock of the
Company issuable thereunder and any shares of the Class A Common Stock of
the Parent issued pursuant to Section 3.3, above, will be granted or issued
to Employee without registration under the Securities Act of 1933 (the "Act")
or any qualification under any applicable state "blue sky laws" and are
subject to significant restrictions upon resale. Employee recognizes that
the stock option agreement to be entered into by the parties pursuant to
Section 3.4 and all certificates representing securities issued to Employee
pursuant to such options or pursuant to Section 3.3 shall bear legends
reflecting the restrictions upon transferability of such securities resulting
from applicable securities laws. As a condition to his receipt of any such
securities, Employee shall execute a letter of ivnestment intent in a form
reasonably satisfactory to Employer.
3.6 Other Benefits. During the period of his employment hereunder,
Employee shall also be entitled to receive all other benefits of employment
which are, and which may be in the future, generally available to members
of Employer's management, and, specifically, an allowance for the use of
an automobile as provided from time to time by action of the Board of
Directors of Employer, as well as, without limitation, group health and
life insurance benefits, participation in any company pension plan, and
paid vacation consistent with the vacation policies of Employer. The
above notwithstanding, in view of the benefits expressly granted to
Employee hereunder, Employee shall not be entitled to participate in
any benefit plans of Employer or any of its affilitates which provide for
cash bonuses, stock bonuses, stock options or similar cash or equity
incentives.
3.7 Expenses. Employer, in accordance with the rules and regulations that
Employer may issue and revise from time to time, shall reimburse Employee for
business expenses directly and reasonably incurred in the performance of his
duties.
ARTICLE IV
TERMINATION
This Agreement shall terminate prior to the expiration of its Term upon the
occurrence of any one of the following events:
4.1 Disability. In the event that Employee is unable fully to perform
his duties and responsibilities hereunder to the full extent required by
the Board of Directors of Employer by reason of illness, injury or
incapacity for ninety (90) consecutive calendar days, during which time
Employee shall continue to be compensated as provided in Sections 3.1
hereof (but not Section 3.2 or Section 3.3), this Agreement may be
terminated by Employer, and Employer shall have no further liability or
obligation to Employee for compensation hereunder; provided, however,
that Employee will be entitled to receive the payments prescribed under
any disability benefits plan in which Employee was participating, and
Employee shall continue to be bound by Article V. In the event of any
dispute between Employer and Employee under this Section 4.1 as to
whether Employee's employment may be terminated under this Section,
Employee shall submit to a physical examination by a licensed physician
selected by Employer, and the determination of such physician shall be
binding on the parties.
4.2 Death. In the event that Employee dies during the Term, Employer
shall pay to his executors, legal representatives or administrators an
amount equal to the installment of Employee's compensation set forth
in Sections 3.1, 3.2 and 3.3 hereof for the month in which Employee dies,
and thereafter Employer shall have no further liability or obligation
hereunder to Employee's executors, legal representatives, administrators,
heirs or assigns or any other person claiming under or through Employee;
provided, however, that Employee's executors, legal representatives and
administrators will be entitled to receive and disburse to the proper
persons the payments prescribed under any death or disability benefits
plan in which Employee was participating.
4.3 Cause. Nothing in this Agreement shall be construed to prevent the
termination of this Agreement by Employer for "cause." For purposes of this
Agreement, "cause" shall mean (i) Employee's failure to perform or observe
(other than by reason of illness, injury or incapacity) any of the terms or
provisions of this Agreement, including the failure of Employee to follow the
directions of the Board of Directors of Employer or the Chairman of Employer,
(ii) dishonesty, misconduct or action on the part of Employee that is or is
reasonably likely to be materially damaging or detrimental to the business of
the Employer, (iii) conviction of a felony, or of any misdemeanor involving
moral turpitude, (iv) insobriety or drug addiction that is materially
affecting or is likely materially to affect Employee's ability to perform
the services required of him hereunder, or (v) misappropriation of funds.
Subject to applicable cure periods as set out in the next sentence,
Employee's employment may be terminated for cause at any time. Prior to
terminating this Agreement on account of a cause described in clause
(i) above (but not for any of the other enumerated "causes"), Employer
shall give Employee thirty (30) days' written notice and an opportunity to
cure such failure to the satisfaction of Employer. Upon termination for
cause, Employer shall pay to Employee all sums due to Employee through
the date of such termination. Following a termination for cause and
payment of the amounts required under this Section, Employer shall have
no further duty or obligation to Employee; provided, however, that
Employee shall continue to be bound by Article V.
4.4 Termination Upon Lack of Positive Cash Flow. Employee and Employer
recognize that Employer is embarking on a business venture with
significant risks of business failure. If, after the first twelve (12)
months of the Term, Employer has not achieved positive cash flow,
as defined below, Employee's employment hereunder shall terminate
on June 1, 1998, and Employer shall pay to Employee all sums due to
Employee through such date. Following such a termination and payment
of the amounts required under this section, Employer shall have no
further duty or obligation to Employee; provided, however, that Employee
shall continue to be bound by Article V. Employer shall be deemed not
to have achieved positive cash flow after the first twelve (12) months
of the Term if Employer fails to generate cash collections in excess of cash
disbursements during each of the months of April and May of 1998.
4.5 Termination Without Cause. Employer may terminate Employee's employment
hereunder pursuant to this Section 4.5 at any time upon thirty (30) days'
prior written notice of termination; provided that Employer shall pay to
Employee all sums due to Employee hereunder through the date of
termination and, in addition, severance compensation in the amount of
$150,000. Following such a termination and the payment of the amounts
required under this section, Employer shall have no further duty or
obligation to Employee; provided, however, that Employee shall continue
to be bound by Article V.
4.6 Initial Public Offering. In the event Employer effects an underwritten
public offering of its securities pursuant to a registration statement filed
under the Act (a "Public Offering"), the stock options provided for in Section
3.4, above, shall, by their terms, become immediately exercisable by
Employee, subject to any further terms and conditions contained in the
agreements embodying such incentive stock options or in the stock option
plan pursuant to which they are granted. This Agreement shall continue in
full force and effect notwithstanding any such Public Offering and, to
the extent deemed appropriate by Employer's Board of Directors, Employee
shall be granted such further stock options and benefits as are
appropriate to reflect the status of Employee as an Employee of a public
company.
4.7 Change in Control. Upon the occurrence of a "Change in Control" of
Employer, as defined below, Employee shall be entitled to terminate his
employment hereunder, whereupon Employer shall be obligated to pay to
Employee a lump sum equal to $150,000 together with any and all other
sums due Employee hereunder through the date of the termination.
Following such a termination and payment of the amounts required under
this section, Employer shall have no further duty or obligation to
Employee; provided, however, that Employee shall continue to be bound
by Article V. The term "Change in Control" shall mean the occurrence
at any time during the term of the Agreement of any of the following events:
(i) Employer is merged, consolidated or reorganized into or with another
corporation or other legal person and as a result of such merger,
consolidation or reorganization less than fifty-one percent (51%) of the
combined voting power of the then-outstanding securities of such
corporation or persons immediately after such transaction are held in the
aggregate by holders of voting securities of Employer immediately prior
to such transaction; (ii) Employer sells all or substantially all of
its assets to any other corporation or other legal person less than
fifty-one percent (51%) of the combined voting power of the then-
outstanding voting securities of which are held in the aggregate by
holders of the voting securities of Employer immediately prior to
such sale; or (iii) More than fifty percent (50%) of the voting
securities of Employer are held by persons other than Parent, Employee
and Morgenier; provided, however, that no Public Offering shall be
deemed to be a Change in Control, no transaction provided for in items (i)
through (iii), above, which occurs after a Public Offering shall be deemed to
be a Change in Control, and the provisions of this Section 4.7 shall
terminate upon a Public Offering.
ARTICLE V
PROPERTY RIGHTS
5.1 Non-Competition. During the Term and for a twelve month period
following the termination of his employment under this Agreement,
Employee shall not, directly or indirectly, either as an employee,
employer, consultant, agent, lender, principal, partner, stockholder,
corporate officer, director, or in any other individual or
representative capacity, engage or participate in the health care
business or any business that is in competition with the business of
Employer in any state in which Employer has established a commercial
relationship, except as approved in writing by Employer. For the
purposes of this Section 5.1, the business of Employer shall include
any business in which Employer has engaged or has taken substantial
steps to enter as of the date of the termination of Employee's
employment hereunder.
5.2 Solicitation. For a twelve month period following the termination
of his employment under this Agreement, Employee shall not, directly or
indirectly, call on or solicit, any person, firm, corporation or other
entity who or which during the Term was or had been a customer, referral
source, supplier, or employee of the Employer.
5.3 Confidential Information. Employee will not, during the Term of
or after the termination of his employment under this Agreement,
disclose any confidential information of Employer to any person or
entity for any reason whatsoever, nor shall Employee make use of any
such confidential information for his own purposes or for the benefit
of any person or entity (except Employer) under any circumstances
during the Term, or after the termination, of this Agreement. Employee
agrees that, upon termination of his employment under this
Agreement or on demand of Employer, he shall immediately deliver any such
printed or written material and copies thereof to Employer.
5.4 Reasonableness of Restrictions. Employee agrees that (a) the
covenants contained in Sections 5.1, 5.2 and 5.3 hereof are necessary
for the protection of Employer's business goodwill and trade secrets,
(b) a portion of the compensation paid to Employee under this Agreement
is paid in consideration of the covenants herein contained, the
sufficiency of which consideration is hereby acknowledged, (c) Employee
is not, and under this Agreement, will not be engaged in a common calling,
and (d) if the scope of any restriction contained in Sections 5.1, 5.2,
or 5.3 is too broad to permit enforcement of such restriction to its
full extent, then such restriction shall be enforced to the maximum
extent permitted by law, and the parties hereto hereby consent that
such scope may be judicially modified accordingly in any proceeding
brought to enforce such restriction. The existence of any claim or
cause of action of Employee against Employer, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by Employer of these covenants.
5.5 Enforcement. Employee acknowledges that the restrictions
contained in Sections 5.1, 5.2, and 5.3 hereof are reasonable and
necessary to protect the legitimate interests of Employer and its
affiliates, that Employer would not have entered into this Agreement
in the absence of such restrictions, and that any violation of any
provision of those Sections will result in irreparable injury to Employer.
Employee also acknowledges that Employer shall be entitled to preliminary
and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings,
profits and other benefits arising from any such violation, which
rights shall be cumulative and in addition to any other rights or
remedies to which Employer may be entitled.
5.6 Copy of Covenants. Until the expiration of the applicable
restrictions, Employee will provide, and Employer similarly may provide,
a copy of the covenants contained in Sections 5.1, 5.2 and 5.3 of this
Agreement to any business or enterprise which Employee may directly or
indirectly own, manage, operate, finance, join, control or participate
in the ownership, management, operation, financing, or control of, or
serve as an officer, director, employee, partner, principal, agent,
representative, consultant, lender or otherwise, or with which he may
use his name or permit his name to be used.
ARTICLE VI
GENERAL PROVISIONS
6.1 Arbitration. If a dispute or claim shall arise with respect to any
of the terms or provisions of this Agreement, or with respect to the
performance of either of the parties under this Agreement, either party
may require that the dispute be submitted for arbitration under the
Commercial Arbitration Rules of the American Arbitration Association.
Each party shall bear one-half (1/2) of the cost of any such proceedings,
including the payment of the arbitrator's fees. The arbitration shall
be conducted before a single arbitrator in Palm Beach County, Florida.
The written decision of the arbitrator shall be binding and conclusive
upon the parties. Judgment may be entered upon any such award in
any court having jurisdiction thereof.
6.2 Notices. Any notices to be given hereunder by either party to the
other may be effected either by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested:
If to Employer:
Primary Care Medical Centers of America, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxxx, Xxxxxxx & XxXxxxxx LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to Employee:
Xxxxx X. Xxxxx
404 Sabal Xxxx Xxxx
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Mailed notices shall be addressed to the parties at the addresses set forth
above, but each party may change his address by written notice in accordance
with this Section 6.2. Notices delivered personally shall be deemed
communicated as of the date of actual receipt; mailed notices shall be deemed
communicated as of ten (10) days after mailing.
6.3 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of Employee by Employer, and contains all of
the covenants and agreements between the parties with respect to such
employment.
6.4 Headings. The headings or titles to sections in this Agreement are
intended solely for convenience, and no provision of this Agreement is to be
construed by reference to the heading of title of any section.
6.5 Certain Acknowledgments. Employee by his execution and delivery of
this Agreement represents to Employer as follows:
1. That Employee has been advised by Employer to have this Agreement
reviewed by an attorney representing Employee, and Employee has either
had this Agreement reviewed by an attorney or has chosen not to have
this Agreement reviewed because Employee, after reading the entire
Agreement, fully and completely understands each provision and has
determined not to obtain the services of an attorney.
2. Employee either on his own or with the assistance and advice of his
attorney has in particular reviewed Article V and understands and accepts
that the restrictions imposed on Employee by Article V are reasonable
and necessary for the protection of the property rights of Employer.
6.6 Amendment or Modification; Waiver. No provision of this Agreement
may be amended, modified or waived unless such amendment, modification
or waiver is authorized by the Board of Directors of Employer and is
agreed to in writing, signed by Employee and by an officer of Employer
(other than Employee) thereunto duly authorized. Except as otherwise
specifically provided in this Agreement, no waiver by either party of
any breach by the other party of any provision of this Agreement shall
be deemed a waiver of a similar or dissimilar provision at the same or
at any prior or subsequent time; nor shall the receipt or acceptance
of Employee's continuing services be deemed a waiver of any provision hereof.
6.7 Assignability. Employee shall not assign, pledge or encumber any
interest in this Agreement or any part thereof without the express
written consent of Employer, this Agreement being personal to Employee.
This Agreement shall not be assignable by Employer without the written
consent of Employee, except that Employer may assign this Agreement
without obtaining Employee's consent either to the Staffing Subsidiary
or to the successor to Employer resulting from any transaction in which
Employer shall merge or consolidate with or into, or transfer
substantially all of its assets to, another person or entity.
6.8 Governing Law. This Agreement shall in all respects be interpreted,
construed and governed by and in accordance with the internal substantive law of
the State of Florida.
6.9 Severability. Each provision of this Agreement constitutes a
separate and distinct undertaking, covenant and/or provision. In the
event that any provision shall be determined to be unlawful, such
provision shall be deemed severed from this Agreement, but every other
provision shall remain in full force and effect, and in substitution
for any such provision held unlawful, there shall be substituted a
provision of similar import reflecting the original intent of the
parties to the extent permissible under law.
EXECUTED as of the day and year first above written.
EMPLOYER:
PRIMARY CARE MEDICAL CENTERS
OF AMERICA, INC.
By:
Name:
Title:
EMPLOYEE:
Xxxxx X. Xxxxx
