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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of December 31, 1996, between ProMedCo,
Inc. a Texas corporation (the "Company"), and Xxxxxx X. Xxxxx ("Executive").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive, and Executive
accepts employment with the Company, under the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Period"). The date on which
Executive ceases to be employed by the Company and/'or its Subsidiaries (as
defined below) or its successors or assigns is referred to herein as the
"Termination Date."
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall perform such
duties for the Company, its affiliates and its
Subsidiaries as the Company's Chief Executive Officer (the
"CEO") may specify in his sole discretion. Executive shall
serve as Vice President & Controller of the Company.
(b) Executive shall devote Executive's best efforts and full
business time and attention (except for permitted vacation
periods and reasonable periods of illness or other
incapacity) to the business and affairs of the Company,
its affiliates and its Subsidiaries. Executive shall
perform such duties and responsibilities to the best of
Executive's abilities in a diligent, trustworthy,
businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean
any corporation of which the securities having at least
50% of the voting power in electing directors are, at the
time of determination, owned by the Company, directly or
through one or more Subsidiaries.
3. COMPENSATION AND BENEFITS.
(a) During the Employment Period, Executive's Base Salary (the
"Base Salary") shall be $120,000 per annum or such higher
rate as the Compensation Committee may designate from time
to time. The Base Salary shall be subject to annual
increases of no less than the increase in the Consumer
Price Index for all goods and services, U.S. All City
Average Report, published by the United States Department
of Labor for the preceding 12 months. The Base Salary
shall be payable in regular installments in accordance
with the Company's general payroll practices.
(b) The Company shall reimburse Executive for all reasonable
expenses incurred by him in the course of performing his
duties under this Agreement which are consistent with the
Company's policies in effect from time to time with
respect to travel, entertainment and other business
expenses, subject to the Company's requirements with
respect to reporting and documentation of such expenses.
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(c) The Company will pay relocation expenses as follows:
(i) moving expenses will be reimbursed, based on
competitive bids as approved by the CEO.
(ii) the Company will "gross up" the reimbursement of such
expenses that are taxable as compensation to the
Executive.
The Company will assist Executive in the event he incurs
significant "double housing" costs by advancing funds to
him in an amount, and for a time period, to be mutually
determined, based on the circumstances at the time.
(d) In addition to the Base Salary, the Company may award a
bonus to Executive following the end of each fiscal year
during the Employment Period based upon the
Company's achievement of operating goals during such
fiscal year. The percentage and goals shall be as
approved by the Compensation Committee of the Board of
Directors for each such fiscal year, and will typically
be structured such that a portion will be payable after
the end of the fiscal year (the "Current Portion") with
the remaining balance payable in equal amounts after the
end of each of the following three fiscal years, provided
Executive is still employed by Company on such payment
dates. The Current Portion of the bonus, if any, shall be
payable upon determination of the amounts due,
approximately 75 days after the end of the fiscal year.
(e) In addition to the Base Salary and any bonuses payable to
Executive pursuant to this paragraph, during the
Employment Period Executive shall be entitled to
participate in all benefit plans adopted by Company for
all or a select group of its employees, including:
(i) term life insurance, health insurance and disability
insurance coverage.
(ii) participation in a stock option program with grants
as approved by the Option Committee from time to
time, with an initial grant of 50,000 shares
exercisable at 85% of the IPO price, if IPO is
completed within six (6) weeks, and if IPO is not
completed within said time frame, the exercise price
shall be $12.00 per share.
(iii)annual paid vacation in accordance with Company's
policies as from time to time established.
4. TERM.
(a) The Employment Period is for a term of two years ending on_____________, 19
, provided that (i) the Employment Period shall terminate prior to such
date upon Executive's resignation, death or permanent disability or
incapacity (as determined by the Board in its good faith judgement) and
(ii) the Employment Period may be terminated by the Company at any time
prior to such date For Cause (as defined below) or Without Cause. The
Employment Period is automatically extended for
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successive years unless notice to the contrary is given not later than
ninety (90) days preceding the end of the final year of the contract.
(b) If the Employment Period is terminated by the Company Without Cause prior
to the second anniversary of the date of this Agreement, Executive shall be
entitled to receive his Base Salary, as in effect immediately prior to the
Termination Date, plus the average of bonuses paid during the prior three
years, through the second anniversary of this Agreement, or one year,
whichever is greater, so long as Executive has not breached the provisions
of paragraphs 5, 6, and 7 hereof. The Base Salary and bonus payments
described in this paragraph 4(b) shall be payable in regular installments
in accordance with the Company's general payroll practice.
(c) If the Employment Period is terminated by the Company For Cause or is
terminated as a result of Executive's resignation or normal expiration of
the Agreement, Executive shall be entitled to receive only his Base Salary
through the Termination Date. In the case of normal expiration, any earned
bonus which is due will be paid.
(d) All of Executive's rights to fringe benefits and bonuses hereunder (if any)
accruing after the termination of the Employment Period shall cease upon
termination, provided however, if Employment Period is terminated by the
Company Without Cause ((4(b) above)), term life, health and disability
insurance will continue through the second anniversary of this Agreement,
or one year, which ever is greater, so long as Executive has not breached
the provisions of paragraphs 5, 6, and 7 hereof.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission of a
felony or a crime involving moral turpitude, (ii) the commission of any act
involving dishonesty, embezzlement or fraud with respect to the Company or
any of its Subsidiaries, (iii) conduct tending to bring the Company or any
of its Subsidiaries into substantial public disgrace or disrepute, (iv)
failure to perform duties as reasonably directed by the Company's CEO, (v)
gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries, (vi) Executive's violation of the non-competition
provisions of Section 7, (vii) Executive's material breach of any duty owed
to be Company, including without limitation the duty of loyalty, or (vii)
any other material breach of this Agreement, all of the above as determined
solely by the CEO of the Company. Cause shall not include acts or failure
to act if Executive has exercised substantial efforts in good faith to
perform the duties reasonably assigned or appropriate to him position, as
determined solely by the CEO.
(f) If a "Change of Control" occurs and the Employment Period is terminated or
Executive voluntarily resigns within 12 months, such termination shall
constitute a termination Without Cause. For this purpose, a "Change of
Control" occurs when:
- any "Person or "Group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934 ("Exchange Act")), other than
the Executive or the Founders (Xxxxxxx X. Xxxxxxxx,
H. Xxxxx Xxxxx, E. Xxxxxx Xxxxxx, and Xxxx X.
XxXxxxxx), or an entity the majority of the voting
stock of which is owned or controlled by the
Executive or the Founders becomes the "beneficial
owner" (within the meaning of Rule 13d-3 and/or Rule
13d-5 under
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the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares
that such Person has the right to acquire without
condition, other than the passage of time, whether
such right is exercisable immediately or only after
the passage of time), directly or indirectly 30% or
more of the total voting power of the then
outstanding voting stock of the Company; or
- the Company consolidates with or merges into another
Person or conveys, transfers or leases all or
substantially all of its assets to any Person, or
any corporation consolidates with or merges into the
Company pursuant to a transaction in which the
outstanding voting stock of the Company is changed
into or exchanged for cash, securities or other
property, other than a transaction between the
Company and (i) an Affiliate of the Company, or (ii)
any other entity owned or controlled by the
Founders.
In addition to the severance rights provided in section 4
(b), if a Change of Control occurs, any unvested options
will vest immediately and Executive shall have 36 months
to exercise all options. Notwithstanding the 36 month
exercise period, the exercise of an option shall not be
permitted more than ten years after the date on which the
option was granted.
5. CONFIDENTIAL INFORMATION. The Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
concerning the business or affairs of the Company, any of its affiliates or any
Subsidiary ("Confidential Information") are the property of the Company or such
affiliate or Subsidiary, as the case may be. Therefore, Executive agrees not to
disclose to any unauthorized person or use for Executive's own account any
Confidential Information without the prior written consent of the Company,
unless and to the extent that the aforementioned matters become generally known
to and available for use by the public other than as a result of Executive's
acts or omissions to act. Executive shall deliver to the Company at the
termination of the employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, Work Product or the business of the Company, any of
its affiliates or any Subsidiary which Executive may then possess or have under
him control.
6. INVENTION AND PATENTS. Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to the Company's
or any of its Subsidiaries' actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by Executive while employed by the Company and/or its
Subsidiaries ("Work Product") belong to the Company or such Subsidiary.
Executive will promptly disclose such Work Product to the Board and perform all
actions reasonably requested by the Board (whether during or after the
Employment Period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).
7. NON-COMPETE, NON-SOLICITATION.
(a) Executive acknowledges that in the course of his employment with the
Company he will become familiar with the information concerning the
Company, its affiliates,
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Subsidiaries and its predecessors and that his services
have been and will be of special, unique and extraordinary
value to the Company. Therefore, Executive agrees that,
during the Employment Period and for the period of two
years thereafter, the Executive shall not directly or
indirectly own, manage, control, participate in, consult
with, render services for, or in any manner engage in any
business competing with the business of the Company or its
Subsidiaries as such businesses exist or are in process on
the date of the termination of Executive's employment,
within any geographic area in which the Company, its
affiliates or its Subsidiaries engage or plan to engage in
such businesses. Nothing herein shall prohibit Executive
from being a passive owner of not more than 3% of the
outstanding stock of any class of a corporation which is
publicly traded, so long as Executive has no active
participation in the business of such corporation.
(b) During the non-complete Period, executive shall not directly or indirectly
through another entity (i) induce or attempt to induce any employee of the
Company, any of its affiliates or any Subsidiary to leave the employ of the
Company or such affiliate or Subsidiary, or in any way interfere with the
relationship between the Company, any of its affiliates or any Subsidiary
and any employee thereof, (ii) hire any person who was an employee of the
Company, any of its affiliates or any Subsidiary at any time during the
Employment Period, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company, any of its
affiliates or any subsidiary to cease doing business with the Company or
such affiliate or Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, license or business relation and the
Company, any of its affiliates or any Subsidiary.
(c) If Executive is terminated by the Company Without Cause or the Company is
liquidated, the Non-compete provisions of this Agreement will also
terminate upon the Termination Date or date of liquidation.
8. ENFORCEMENT. If at the time of enforcement of paragraph 5, 6 or 7
of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area. Because
Executive's services are unique and because Executive has access to Confidential
Information and Work Product, the parties hereto agree that money damages would
be an inadequate remedy for any breach of this Agreement. Therefore, in the
event of a breach or threatened breach of this Agreement, the Company or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the previsions hereof (without posting a bond or other
security).
9. EXECUTIVE REPRESENTATION. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgement or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by an employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity, and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
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10. SURVIVAL. Paragraphs 5, 6 and 7 shall survive and continue in
full force in accordance with their terms notwithstanding any termination of
the Employment Period unless such termination was Without Cause.
11. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the Address indicated below:
Notice of Executive
Notices to Company 000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
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 when so delivered
or mailed.
12. 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.
13. COMPLETE 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 be related to the subject hereof in any way.
14. COUNTERPARTS. This agreement may be executed in separate
counterparts, each of which is deemed to be in an original and all of which
taken together constitute one and the same agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
16. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Texas, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) has would cause the application of the
laws of any jurisdiction other than the State of Texas. In furtherance of the
foregoing, the internal law of the State of Texas shall control the
interpretation and construction of this Agreement, even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
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17. AMENDMENT AND WAIVER. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
18. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
19. NO STRICT CONSTRUCTION; INTERPRETATION. 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 person. The term "including" as used in this Agreement is used to
list items by way of example and shall not be deemed to constitute a limitation
of any term or provision contained herein. As used in this Agreement, the
singular or plural number shall be deemed to include the other whenever the
context so requires.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of date first written above.
ProMedCo, Inc. Execute"
BY:
H. Wayne Pose Xxxxxx Xxxxx
President and CEO
