EXHIBIT 10.14
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("AGREEMENT") is made
and entered into on this 8th day of December 2002, by and between AMERIPATH,
INC., a Delaware corporation (the "COMPANY"), and XXXXX X. NEW (the
"EXECUTIVE"), amending and restating the Employment Agreement dated April 9,
2001 (the "PRIOR EMPLOYMENT AGREEMENT") between the Company and the Executive.
RECITALS
WHEREAS the Executive is currently employed by the Company pursuant to
the Prior Employment Agreement.
WHEREAS the Company and the Executive now wish to enter into this new
Agreement, which is intended to amend, restate, supersede and replace the Prior
Employment Agreement in its entirety (except as otherwise provided in Section
14), to reflect the Executive's position and duties, his compensation, and other
terms and conditions of his employment as Chief Executive Officer of the
Company. Following the execution of this Agreement by both the Executive and the
Company, on the Effective Date (as hereinafter defined), the Prior Employment
Agreement (except as otherwise provided in Section 14) shall terminate and no
longer have any force and effect.
NOW, THEREFORE, in consideration of the promises and mutual covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Executive and the Company agree
as follows:
1. EFFECTIVE DATE. The effective date of this Agreement (the
"Effective Date") is the date of the closing of the transactions contemplated by
that certain Agreement and Plan of Merger, dated as of December 8,2002 (the
"MERGER AGREEMENT") among the Company, Xxx Holding Company, a Delaware
corporation (the "PARENT"), and a newly-formed subsidiary of Parent.
2. EMPLOYMENT.
2.1 EMPLOYMENT. The Company hereby agrees to employ the
Executive and the Executive hereby accepts such employment with the Company, for
the periods set forth in Section 3 hereof, all on the terms and conditions set
forth herein.
2.2 DUTIES OF EXECUTIVE. During the Employment Term (as
hereinafter defined), the Executive shall serve as Chief Executive Officer of
the Company, shall report directly to the Board of Directors of the Company (the
"BOARD"), shall faithfully and diligently perform all services as may be
assigned to him by the Board, and shall exercise such power and authority as may
from time to time be delegated to him by the Board. The Executive shall devote
his full time and attention to the business and affairs of the Company, render
such services to the best of his ability, and use his reasonable best efforts to
promote the interests of the Company. The Executive shall comply with the
Company's employment policies and practices generally applicable to its officers
and employees. Notwithstanding the foregoing or any other provision of this
Agreement, it shall not be a breach or violation of this Agreement for
the Executive to (i) serve on corporate, civic or charitable boards or
committees, (ii) deliver lectures, fulfill speaking engagements or teach at
educational institutions, or (iii) manage personal investments, so long as such
activities do not interfere with or detract from the performance of the
Executive's responsibilities to the Company in accordance with this Agreement.
3. EMPLOYMENT TERM.
(a) Unless earlier terminated as provided in this Agreement,
the initial term of the Executive's employment under this Agreement shall be for
a period beginning on the Effective Date and ending on the third anniversary of
the Effective Date (the "INITIAL TERM").
(b) Upon the expiration of the Initial Term, the term of the
Executive's employment under this Agreement shall be automatically renewed for
additional one-year terms, up to a maximum of two one-year renewals (each a
"RENEWAL TERM"), unless the Company or the Executive delivers to the other, at
least three months prior to the expiration of the Initial Term or the first
Renewal Term, as the case may be, a written notice specifying that the term of
the Executive's employment will not be renewed at the end of the Initial Term or
such Renewal Term.
(c) For purposes of this Agreement, the "EMPLOYMENT TERM" shall
mean the period from the Effective Date hereof until the expiration of the
Initial Term or the applicable Renewal Term, as the case may be, but no later
than the fifth anniversary of the Effective Date or, in the event that the
Executive's employment hereunder is earlier terminated as provided in Section 7
herein, such shorter period, as the case may be. It is understood that the
Executive's employment may be terminated at any time at the option of the
Company or the Executive, as the case may be, on the terms and subject to the
conditions set forth in this Agreement.
4. COMPENSATION.
4.1 BASE SALARY. The Executive shall receive a base salary at
the annual rate of $500,000 (the "BASE SALARY") during the Employment Term, with
such Base Salary payable in installments consistent with the Company's normal
payroll schedule, subject to required withholding and other taxes. The Base
Salary shall be reviewed by the Board at least annually, and increases thereto,
if any, shall be solely in the Board's good faith discretion. Base Salary
payable for less than a full calendar year shall be proportionately adjusted for
the partial year. Once increased, the Base Salary shall not be decreased below
such increased amount. Any increase in Base Salary shall not be used to offset
any other obligation of the Company under this Agreement.
4.2 BONUSES.
(a) During the Employment Term, for each calendar year during
the Employment Term (the "BONUS PERIOD"), the Board shall establish a bonus pool
from which the Executive shall be eligible to receive an annual bonus (the
"BONUS PAYMENT") potentially equal to a maximum of one hundred percent (100%) of
the Executive's Base Salary in the event of superior performance above the goals
to be established by the Company after good faith
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consultation with the Executive (the "GOALS") or potentially equal to fifty
percent (50%) of the Executive's Base Salary if the Goals are met, in each case,
as determined by the Board.
(b) For the Bonus Period in which the Executive's employment
with the Company terminates pursuant to Sections 7.2 (Disability), 7.3 (Death),
7.4 (Termination Without Cause) or 7.5 (Termination by the Executive for Good
Reason), the Company shall pay the Executive a pro rata portion of the bonus
otherwise payable under Section 4.2(a) for the Bonus Period in which such
termination of employment occurs (based upon the period beginning on the first
day of the Bonus Period and ending on the last day of the calendar quarter in
which the Executive's employment with the Company terminates (herein referred to
as the "PARTIAL BONUS PERIOD")); PROVIDED, HOWEVER, that the business criteria
used to determine the bonus for the Partial Bonus Period shall be annualized and
shall be determined based upon financial information prepared in accordance with
generally accepted accounting principles, applied consistently with prior
periods, and reviewed and approved by the Board or the Compensation Committee of
the Board. The incentive compensation for this Partial Bonus Period is sometimes
hereinafter referred to as the "TERMINATION YEAR BONUS".
5. STOCK OPTIONS. On the Effective Date, the Board of Directors of
the Parent (the "PARENT BOARD") shall grant to the Executive: (i) options to
purchase that number of shares of the Parent's Common Stock ("COMMON Stock")
equal to 2.5% of the Common Stock outstanding on a fully-diluted basis as of the
Effective Date, which options shall vest over time based on the Executive's
continued employment and on the occurrence of certain enumerated events (the
"TIME-BASED OPTIONS"), a portion of which will be "incentive stock options" and
the balance of which will be "non-qualified stock options", and (ii) an option
to purchase that number of additional shares of Common Stock equal to 2.5% of
the Common Stock outstanding on a fully-diluted basis as of the Effective Date,
which shall vest on the seventh anniversary of the Effective Date, so long as
the Executive continues to be employed by the Company (or any subsidiary, parent
or affiliate thereof) subject to earlier vesting based on the attainment of
performance goals and on the occurrence of certain enumerated events
(collectively, referred to as the "OPTIONS") (it being understood that (x) such
5% amount has been determined assuming that, on the Effective Date, Welsh,
Carson, Xxxxxxxx & Xxxxx IX, L.P. and its affiliated investors (collectively,
"WCAS") will provide the equity and debt financing contemplated in the financing
commitment letters for the transactions contemplated by the Merger Agreement and
(y) if WCAS is required to provide additional equity financing to Parent in
order to consummate the transactions contemplated by the Merger Agreement, the
equity issued to WCAS in connection with such additional financing will reduce
such percentage (i.e., the 5%) on the same basis as other holders of Parent
common equity securities). The Options shall be granted under the Parent's 2003
Stock Option and Restricted Stock Purchase Plan and shall be evidenced by, and
subject to, the terms and conditions in the stock option agreements attached
hereto as Exhibit A (the "OPTION AGREEMENTS").
6. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
6.1 REIMBURSEMENT OF EXPENSES. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as
(the Company may from time to time adopt with respect to the reimbursement of
expenses of executive personnel, the Company shall reimburse the Executive for
all reasonable expenses actually paid or incurred
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by the Executive during the Employment Term in the course of and pursuant to the
business of the Company. The Executive shall account to the Company in writing
for all expenses for which reimbursement is sought and shall supply to the
Company copies of all relevant invoices, receipts or other evidence reasonably
requested by the Company.
6.2 COMPENSATION/BENEFIT PROGRAMS. During the Employment Term,
the Executive shall be entitled to participate in all medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and life
insurance plans, and any and all other plans as are presently and hereinafter
offered by the Company to its executive personnel at a level commensurate with
the Executive's position, including savings, pension, profit-sharing and
deferred compensation plans, subject to the general eligibility and
participation provisions set forth in such plans. Furthermore, the Company will
continue to assume premium costs for the long-term disability and life policies
rolled over from Novacare up to a maximum of $7,000 per annum.
6.3 OTHER BENEFITS. (a) The Executive shall accrue up to four
(4) weeks of paid vacation each calendar year during the Employment Term, to be
taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall significantly interfere with the duties
required to be rendered by the Executive hereunder. Up to a maximum of four (4)
weeks of accrued vacation time not taken by the Executive during any calendar
year may be carried forward into any succeeding calendar year. The Executive
shall receive such additional benefits, if any, as the Board shall from time to
time determine.
(b) The Company shall acquire a one-eighth share in an airplane
(up to a maximum of 100 hours per year) on terms acceptable to the Board to be
used by the Executive for purposes of the Executive's business travel. The
Executive shall be entitled to use such airplane for personal reasons provided
that the costs and expenses incurred by the Company in connection with such
personal use shall be treated as additional compensation to the Executive by the
Company.
7. TERMINATION AND/OR CHANGE OF CONTROL.
7.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, upon written notice to the Executive, to terminate Executive's
employment for Cause as defined below. For purposes of this Agreement, the term
"FOR CAUSE" shall mean (i) an action or omission of the Executive which
constitutes a willful and material breach of, or willful and material failure or
refusal (other than by reason of his disability or incapacity) to perform his
duties under, this Agreement or as reasonably directed by the Board, in each
case which, if curable, is not cured within fifteen (15) days after receipt by
the Executive of written notice of same, (ii) fraud, embezzlement,
misappropriation of funds, breach of trust or material violation of the
Company's code of ethics in connection with Executive's services hereunder or
with respect to the Company, (iii) a conviction or indictment of the Executive
for, or the entering into a plea of nolo contendere by the Executive with
respect to, a felony or any crime which involves dishonesty, fraud,
embezzlement, misappropriation of funds or breach of trust, or (iv) gross
negligence, reckless or willful misconduct by the Executive in connection with
the performance of the Executive's duties hereunder, which the Board in its
reasonable discretion deems to be
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good and sufficient cause to terminate the Executive's employment with the
Company. Any termination for Cause shall be made by notice in writing to the
Executive, which notice shall set forth in reasonable detail all acts or
omissions upon which the Company is relying for such termination. Upon any
termination pursuant to this Section 7.1, the Company shall pay to the Executive
any accrued and unpaid Base Salary through the date of termination and (A) the
amount of any bonus declared and earned with respect to a completed fiscal year
ending prior to such termination, if any, (B) accrued and unused vacation days,
(C) reimbursement for reasonable business expenses incurred prior to the date of
termination subject to Section 6.1 and (D) amounts or benefits owing to the
Executive under the then applicable employee benefit plans and programs of the
Company subject to the terms and conditions thereof (items (A) through (D) above
being referred to herein collectively as the "Accrued Amounts"). Upon any
termination effected and compensated pursuant to this Section 7.1, the Company
shall have no further liability hereunder except as otherwise provided herein.
7.2 DISABILITY. The Company shall at all times have the right,
upon written notice to the Executive, to terminate Executive's employment, if
the Executive shall become entitled to benefits under the Company's long term
disability plan as then in effect, or, if the Executive shall as the result of
mental or physical incapacity, illness or disability, become unable to perform
his obligations hereunder for a period of one hundred eighty (180) days in any
twelve (12) month period. The Board shall have sole discretion based upon
competent medical advice to determine whether the Executive is or continues to
be disabled. Upon any termination pursuant to this Section 7.2, the Company
shall (i) pay to the Executive any accrued and unpaid Base Salary through the
effective date of termination specified in such notice, (ii) pay to the
Executive an amount equal to his annual Base Salary for the year prior to such
termination, payable in twelve (12) equal installments commencing from the date
of termination, (iii) pay to the Executive the Accrued Amounts through the date
of such termination, (iv) pay to the Executive his Termination Year Bonus, if
any, at the time provided in Section 4.2(b) hereof and (v) pay the COBRA
premiums for the Executive's (and his dependents') medical and dental insurance
coverage in effect on the termination date, for a period of twenty-nine (29)
months following the termination of the Executive's employment with the Company.
Upon any termination effected and compensated pursuant to this Section 7.2, the
Company shall have no further liability hereunder except as otherwise provided
herein.
7.3 DEATH. Upon the death of the Executive during the
Employment Term, the Company shall pay to the estate of the deceased Executive
(i) any accrued and unpaid Base Salary through the date of death, (ii) the
Accrued Amounts through the date of death and (iii) the Executive's Termination
Year Bonus, if any, at the time provided in Section 4.2(b) hereof. Upon any
termination effected and compensated pursuant to this Section 7.3, the Company
shall have no further liability hereunder except as otherwise provided herein.
7.4 TERMINATION WITHOUT CAUSE.
(a) The Company shall have the right to terminate Executive's
employment at any time by delivery of written notice to the Executive.
(b) Upon any termination of Executive's employment during the
Initial Term pursuant to this Section 7.4, the Company shall (i) pay to the
Executive any accrued
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and unpaid Base Salary through the date of termination specified in such notice
and (ii) pay to the Executive as severance pay an amount equal to two (2) times
the Executive's Base Salary and Bonus Payment for the prior year, payable in
twelve equal monthly installments from the date of termination.
(c) Upon any termination of Executive's employment during any
Renewal Term pursuant to this Section 7.4, the Company shall (i) pay to the
Executive any accrued and unpaid Base Salary through the date of termination
specified in such notice and (ii) pay to the Executive as severance pay an
amount equal to one (1) times the Executive's Base Salary and Bonus Payment for
the prior year, payable in twelve (12) equal monthly installments from the date
of termination.
(d) Upon any termination of the Employment Term pursuant to
this Section 7.4, the Executive shall be entitled, in addition to the payments
provided in Section 7.4(b) or (c), as the case may be, to the following: (i) the
Termination Year Bonus, if any, payable at the time provided in Section 4.2(b)
hereof, (ii) the Accrued Amounts through the date of such termination and (iii)
the Executive (and his dependents) shall be entitled to continued medical and
dental coverage under the Company's health plans at the Company's sole expense
at the same level immediately prior to such termination for a period of eighteen
(18) months after such termination, and such period of coverage shall not reduce
or count towards the Executive's rights to coverage under COBRA, which rights
shall commence after the aforementioned eighteen (18) month period. Upon any
termination effected and compensated pursuant to this Section 7.4, the Company
shall have no further liability hereunder except as otherwise provided herein.
7.5 TERMINATION BY EXECUTIVE FOR GOOD REASON. The Executive
shall at all times have the right, upon written notice given to the Company
within forty five (45) days after the occurrence of the Good Reason (as defined
below) event, to terminate his employment for Good Reason unless such
circumstances are fully corrected as provided below. For purposes of this
Agreement, "Good Reason" shall mean the occurrence or failure to cause the
occurrence, as the case may be, without Executive's express written consent, of
any of the following circumstances: (i) any adverse change or any diminution in
Executive's then positions, titles, duties, responsibilities or authority, or
the assignment to the Executive of duties that are inconsistent with his then
position, (ii) the Executive is caused to report to anyone other than the Board,
(iii) a relocation of the Company's principal executive office to a location
more than twenty five (25) miles from its current location, or a relocation of
the Executive to anywhere other than the Company's headquarters, (iv) failure of
the Company to enter into the Option Agreements with the Executive, (v) any
material breach by the Company of any provision of this Agreement, any of the
Option Agreements or any other material written agreement between the Company
and the Executive that such parties shall have agreed to list on a Schedule to
this Agreement as constituting an agreement subject to this clause (v) or (vi)
failure of any successor to the Company (whether direct or indirect and whether
by merger, acquisition, consolidation or otherwise) to assume in a writing
delivered to the Executive upon the assignee becoming such, the obligations of
the Company hereunder. Any termination for Good Reason shall be made by notice
in writing to the Company, which notice shall set forth in reasonable detail all
acts or omissions upon which the Executive claims to be grounds for a Good
Reason termination. The Company shall have fifteen (15) days from the receipt of
such notice to cure the facts and
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circumstances, if curable, leading to the giving of such notice of termination
for Good Reason. Upon any termination pursuant to this Section 7.5, the
Executive's termination of employment shall be deemed to be a termination by the
Company without Cause, and the Executive shall be entitled to all of the
benefits and payments as if the Executive's employment was terminated by the
Company without Cause pursuant to Section 7.4. Upon any termination of the
Employment Term pursuant to this Section 7.5, the Company shall have no further
obligations hereunder except as otherwise provided herein.
7.6 TERMINATION BY EXECUTIVE WITHOUT GOOD REASON.
(a) The Executive shall at all times have the right, by written
notice not less than sixty (60) days prior to the termination date, to terminate
his employment.
(b) Upon termination by Executive of his employment pursuant to
this Section 7.6, the Company shall pay to the Executive (i) any accrued and
unpaid Base Salary through the effective date of termination specified in such
notice and (ii) any Accrued Amounts through such termination date. Upon any
termination effected and compensated pursuant to this Section 7.6, the Company
shall have no further liability hereunder except as otherwise provided herein.
7.7 CHANGE OF CONTROL PAYMENT.
(a) In the event that a Change of Control (as defined below) in
the Company shall occur during the Employment Term, the Company shall pay to the
Executive, within thirty (30) days of the date of the Change of Control, a lump
sum bonus equal to two (2) times the sum of the Executive's annual Base Salary
and Bonus Payment for the prior year (the "CHANGE OF CONTROL PAYMENT"). In
addition, upon the occurrence of a Change of Control in the Company, all
outstanding unvested Time-Based Options held by the Executive shall immediately
vest and become exercisable.
(b) If the Executive's Employment Term is terminated by the
Company without Cause pursuant to Section 7.4 hereof or by the Executive for
Good Reason pursuant to Section 7.5 hereof, in either case prior to the date on
which a Change of Control occurs, and it is reasonably demonstrated that such
termination or Good Reason (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control, or (ii) otherwise
arose in connection with or anticipation of a Change of Control, then for all
purposes hereunder, a "Change of Control Payment" shall be payable.
(c) For purposes of this Agreement, the term "CHANGE OF
CONTROL" shall mean:
(i) approval by the shareholders of the Parent of (x) a
reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to which
persons who were the shareholders of the Parent immediately prior to such
reorganization, merger or consolidation or other transaction do not,
immediately thereafter, own more than fifty percent (50%) of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same
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proportions as their ownership immediately prior to such reorganization,
merger, consolidation or other transaction, (y) a liquidation or
dissolution of the Parent or (z) the sale of all or substantially all of
the assets of the Parent unless such reorganization, merger, consolidation
or other corporate transaction, liquidation, dissolution or sale is
subsequently abandoned;
(ii) individuals who, as of the commencement date of this
Agreement, constitute the Parent Board (the "INCUMBENT BOARD") cease for
any reason to constitute at least a majority of the Parent Board, provided
that any person becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Parent's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of
the Parent) shall be, for purposes of this Agreement, considered as though
such person were a member of the Incumbent Board; or
(iii) the acquisition (other than by or from the Parent) by any
person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), of beneficial ownership within the meaning of
Rule 13-d promulgated under the Securities Exchange Act of fifty percent
(50%) or more of either the then out standing shares of Common Stock or the
combined voting power of the Parent's then outstanding voting securities
entitled to vote generally in the election of directors (hereinafter
referred to as the ownership of a "CONTROLLING INTEREST") excluding, for
this purpose, any acquisitions by (i) the Parent or its Subsidiaries, (ii)
any person, entity or "group" that as of the Effective Date of this
Agreement owns beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a Controlling Interest or
(iii) any employee benefit plan of the Parent or its subsidiaries.
Notwithstanding any other provision of this Section to the contrary, for
purposes of the definition of a Change of Control, the "Parent" shall mean
either the Company or the Parent.
7.8 GROSS-UP PAYMENT FOR GOLDEN PARACHUTE EXCISE TAX.
(a) ACKNOWLEDGEMENT. The Company shall use its best efforts to
cause its own shareholders and the shareholders of the Parent, as applicable,
immediately prior to a Change of Control, to approve any payment or benefit (the
"PAYMENT") that the Company and/or the Parent is required to make to the
Executive upon or in connection with the occurrence of a Change of Control of
the Company or the Parent in a manner that satisfies Section 280G(b)(5)(B) of
the Code and the regulations promulgated thereunder.
(b) ADDITIONAL PAYMENT. In the event that any portion of the
payments and benefits provided to Executive under this Agreement (without regard
to any amount payable under this Section) and any other payments and benefits
under any other agreement with or plan of the Company or otherwise (in the
aggregate, "TOTAL PAYMENTS") would be subject to the excise tax imposed by
Section 4999 of the Code (the "EXCISE TAX"), then Executive shall be entitled to
receive an additional payment (a "GROSS-UP PAYMENT") in an amount such that
after
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payment by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, Executive retains the Total Payments as if
such Excise Tax did not apply.
(c) DETERMINATION BY ACCOUNTING FIRM. Subject to the provisions
of subsection (d) below, all determinations required to be made under this
Section, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by the Company's independent auditors or,
at the Executive's option, any other nationally or regionally recognized firm of
independent accountants selected by the Executive and approved by the Company,
which approval shall not be unreasonably withheld, (the "ACCOUNTING FIRM") which
shall provide detailed supporting calculations both to the Company and
Executive. All fees and expenses of the Accounting Firm shall be paid solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section, shall
be paid by the Company to Executive not later than the due date for the payment
of any Excise Tax. Any determination by the Accounting Firm shall be binding
upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("UNDERPAYMENT"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section subsection (d) and
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall he promptly paid by the Company to or for
Executive's benefit.
(d) COMPANY'S RIGHT TO CONTEST EXCISE TAX. Executive agrees to
notify the Company in writing of any claim by the Internal Revenue Service that,
if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten
(10) business days after Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive agrees to:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
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(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company agrees to bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this subsection (d), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearing and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for Executive's taxable year with respect to which such contested amount
is claimed to be due is limited solely to such contested amount. Furthermore,
the Company control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(e) REPAYMENT TO THE COMPANY. If, after the receipt by
Executive of an amount advanced by the Company pursuant to subsection (d),
Executive becomes entitled to receive any refund with respect to such claim,
Executive agrees to promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by Executive of an amount advanced by the
Company pursuant to subsection (d), a determination is made that Executive is
not entitled to any refund with respect to such claim and the Company does not
notify Executive in writing of its intent to contest such denial of refund prior
to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
7.9 RESIGNATION. Upon any termination of employment pursuant to
this Article 7, the Executive shall be deemed to have resigned as an officer,
and if he was then serving as a director of the Company, as a director, and if
required by the Board, the Executive hereby agrees to immediately execute a
resignation letter to the Board.
7.10 SURVIVAL. The provisions of this Article 7 shall survive
the termination of this Agreement, as applicable.
8. RESTRICTIVE COVENANTS.
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8.1 NON-COMPETITION. At all times while the Executive is
employed by the Company and for a two (2) year period if the Executive's
employment terminates during the Initial Term (or, one (1) year period if the
Executive's employment terminates during any Renewal Term) immediately following
the termination of the Executive's employment with the Company for any reason,
the Executive shall not, directly or indirectly, engage in or have any interest
in any sole proprietorship, corporation, company, partnership, association,
venture or business or any other person or entity (whether as an employee,
officer, director, partner, agent, security holder, creditor, consultant or
otherwise) that directly or indirectly (or through any affiliated entity)
competes with the Company's business (for purposes of this Agreement, any
business that engages in the management or provision of anatomic pathology
diagnostic services (whether through physician practices, laboratories,
hospitals, medical or surgery centers or otherwise) shall be deemed to compete
with the Company's business); provided that such provision shall not apply to
the Executive's ownership of common stock of the Company or the acquisition by
the Executive, solely as an investment, of securities of any issuer that are
registered under Section 12(b) or 12(g) of the Securities Exchange Act, and that
are listed or admitted for trading on any United States national securities
exchange or that are quoted on the National Association of Securities Dealers
Automated Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control of, more than one percent (1.0%) of any
class of capital stock of such corporation.
8.2 CONFIDENTIAL INFORMATION. The Executive shall not at any
time divulge, communicate, use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information (as hereinafter defined) pertaining to the business of the Company.
Any Confidential Information or data now or hereafter acquired by the Executive
with respect to the business of the Company (which shall include, but not be
limited to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, employees, employee compensation or benefits,
employment practices and methods of doing business) shall be deemed a valuable,
special and unique asset of the Company that is received by the Executive in
confidence and as a fiduciary, and Executive shall remain a fiduciary to the
Company with respect to all of such information. For purposes of this Agreement,
"CONFIDENTIAL INFORMATION" means information disclosed to the Executive or known
by the Executive as a consequence of or through the unique position of his
employment with the Company (including information conceived, originated,
discovered or developed by the Executive) prior to or after the date hereof, and
not generally or publicly known, about the Company or its business.
Notwithstanding the foregoing, nothing herein shall be deemed to restrict the
Executive from disclosing Confidential Information to promote the best interests
of the Company or to the extent required by law, provided, however, that
Executive shall take all actions reasonably necessary to assure that any such
disclosure does not unnecessarily risk unauthorized further disclosure of such
Confidential Information.
8.3 NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times
while the Executive is employed by the Company and for the two (2) year period
if the Executive's employment terminates during the Initial Term (or, one (1)
year period if the Executive's employment terminates during any Renewal Term)
immediately following the termination of the Executive's employment with the
Company for any reason, the Executive shall not, directly or
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indirectly, for himself or for or on behalf of any other person, firm,
corporation, partnership, association or other entity (a) employ or attempt to
employ or solicit the termination of employment of or enter into any contractual
arrangement with any employee or former employee of the Company, unless such
employee or former employee has not been employed by the Company for a period in
excess of six (6) months, and/or (b) call on or solicit any of the actual or
targeted prospective customers or clients of the Company (or of its physician
practices or laboratories) on behalf of any person or entity in connection with
any business that competes with the Company's business, nor shall the Executive
make known the names and/or addresses of such employees, customers or clients or
any information relating in any manner to the Company's trade or business
relationships with such employees, customers or clients, other than in
connection with the performance of Executive's duties under this Agreement.
Notwithstanding the foregoing, nothing herein shall prevent the Executive from:
(i) placing general advertisements or otherwise generally advertising for
employees or (ii) serving as a reference for an employee of the Company.
8.4 OWNERSHIP OF DEVELOPMENTS. All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by Executive during the course of performing work for the Company or its
clients (collectively, the "WORK PRODUCT") shall belong exclusively to the
Company and shall, to the extent possible, be considered a work made by the
Executive for hire for the Company within the meaning of Title 17 of the United
States Code. To the extent the Work Product may not be considered work made by
the Executive for hire for the Company, the Executive agrees to assign, and
automatically assign at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product. Upon the request of the Company, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.
8.5 BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the actual or prospective customers or clients of the
Company, whether prepared by the Executive or otherwise coming into the
Executive's possession, shall be the exclusive property of the Company and shall
be returned immediately to the Company on termination of the Executive's
employment hereunder or on the Company's request at any time. Notwithstanding
the foregoing, the Executive shall be permitted to retain his rolodex and
similar address and telephone directories.
8.6 DEFINITION OF COMPANY. Solely for purposes of this
Article 8, the term "COMPANY" also shall include any existing or future
subsidiaries of the Company that are operating during the time periods described
herein and any other entities that directly or indirectly, through one or more
intermediaries, control, arc controlled by or are under common control with the
Company during the periods described herein.
8.7 ACKNOWLEDGMENT BY EXECUTIVE. The Executive acknowledges and
confirms that (a) the restrictive covenants contained in this Article 8 are
reasonably necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Article 8 (including without
limitation the length of the term of the provisions of this Article 8)
13
are not overbroad, overlong, or unfair and are not the result of overreaching,
duress or coercion of any kind. The Executive acknowledges and confirms that his
special knowledge of the business of the Company is such as would cause the
Company serious injury or loss if he were to use such ability and knowledge to
the benefit of a competitor or were to compete with the Company in violation of
the terms of this Article 8. The Executive further acknowledges that his ability
to provide for himself and his family shall not be unduly or adversely effected
by the restrictive covenants contained in this Article 8. The Executive further
acknowledges that the restrictions contained in this Article 8 are intended to
be, and shall be, for the benefit of and shall be enforceable by, the Company's
successors and assigns.
8.8 REFORMATION BY COURT. In the event that a court of
competent jurisdiction shall determine that any provision of this Article 8 is
invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of this Article 8 within the
jurisdiction of such court, such provision shall be interpreted and enforced as
if it provided for the maximum restriction permitted under such governing law.
8.9 EXTENSION OF TIME. If the Executive shall be in violation
of any provision of this Article 8, then each time limitation set forth in this
Article 8 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks injunctive
relief from such violation in any court, then the covenants set forth in this
Article 8 shall be extended for a period of time equal to the pendency of such
proceeding including all appeals by the Executive.
8.10 SURVIVAL. The provisions of this Article 8 shall survive
the termination of this Agreement, as applicable.
9. INJUNCTION. It is recognized and hereby acknowledged by the
parties hereto that a breach by the Executive of any of the covenants contained
in Article 8 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation or threatened violation of any or all of
the covenants contained in Article 8 of this Agreement by the Executive or any
of his affiliates, associates, partners or agents, either directly or
indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other remedies the Company may possess.
10. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Palm Beach County, Florida, in accordance with the Rules of the American
Arbitration Association then in effect (except to the extent that the procedures
outlined below differ from such rules). Within thirty (30) days after written
notice by either party has been given that a dispute exists and that arbitration
is required, each party must select an arbitrator and those two arbitrators
shall promptly, but in no event later than thirty (30) days after their
selection, select a third arbitrator. The parties agree to act as expeditiously
as possible to select arbitrators and conclude the dispute. The selected
arbitrators must render their decision in writing. The cost and expenses of the
arbitration and of enforcement of any award in any court shall be borne by the
non-prevailing party. If advances are required, each party will advance one-half
of the estimated fees and expenses of the
14
arbitrators. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. Although arbitration is contemplated to resolve disputes
hereunder, either party may proceed to court to obtain an injunction to protect
its rights hereunder, the parties agreeing that either could suffer irreparable
harm by reason of any breach of this Agreement. Pursuit of an injunction shall
not impair arbitration on all remaining issues.
11. SECTION 162(m) LIMITS. Notwithstanding any other provision of
this Agreement to the contrary, if and to the extent that any remuneration
payable by the Company to the Executive for any year would exceed the maximum
amount of remuneration that the Company may deduct for that year under Section
162(m) ("SECTION 162(m)") of the Code, payment of the portion of the
remuneration for that year that would not be so deductible under Section 162(m)
shall, in the sole discretion of the Board, be deferred and become payable at
such time or times as the Board determines that it first would be deductible by
the Company under Section 162(m), with interest at the "short term applicable
rate" as such term is defined in Section 1274(d) of the Code. The limitation set
forth under this Section 11 shall not apply with respect to any amounts payable
to the Executive pursuant to Article 7 hereof.
12. ASSIGNMENT. Except as otherwise provided in the Option Agreements
entered into pursuant to Section 5, neither party shall have the right to assign
or delegate his rights or obligations hereunder, or any portion thereof, to any
other person. Any purported assignment or delegation shall be void and of no
effect.
13. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida, without
reference to principles of conflict of laws.
14. ENTIRE AGREEMENT; PRIOR AGREEMENTS. Except as otherwise set forth
herein, this Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and, upon its effectiveness,
shall supersede all prior agreements, understandings and arrangements, both oral
and written, between the Executive and the Company (or any of its affiliates)
with respect to such subject matter. In addition, except as otherwise set forth
herein, this Agreement shall supersede and replace the Executive's Prior
Employment Agreement as well as any and all other agreements between the
Executive and the Company and, upon execution of this Agreement by the Executive
and the Company, the Prior Employment Agreement and any and all other agreements
between the Executive and the Company shall terminate and shall no longer have
any force and effect. Notwithstanding this Article 14 or any other provision of
this Agreement, (i) the Option Agreements, (ii) the option agreements entered
into by the Executive and the Company prior to the date of this Agreement, (iii)
Section 6.6(a) of the Prior Employment Agreement with respect to the "Change in
Control Date Bonus" (as defined therein) and (iv) Section 6.7 of the Prior
Employment Agreement with respect to any payments or benefits made to the
Executive as a result of, or in connection with, the transactions contemplated
by the Merger Agreement, shall remain in full force and effect. This Agreement
may not be modified in any way unless by a written instrument signed by the
Company, the Parent and the Executive. The parties hereto acknowledge pursuant
to Section 6.6(a) of the Prior Employment Agreement that, within thirty (30)
days of the Effective Date, the Company shall pay to the Executive a lump sum
cash bonus equal to $1,425,000, which represents two (2) times the sum of the
Executive's annual Base Salary and Bonus Payment.
15
15. NOTICES: All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxx X. New
000 Xxx Xxxxx Xxx
Xxxx Xxxxx Xxxxxxx, XX 00000
If to the Company:
AmeriPath, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention:
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
16. NO MITIGATION; NO SET-OFF. In the event of any termination of
employment hereunder, the Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts due the Executive
under this Agreement on account of any remuneration attributable to any
subsequent employment that the Executive may obtain. The Company's obligation to
pay the Executive the amounts provided hereunder shall not be subject to setoff,
counterclaim or recoupment of amounts owed by the Executive to the Company
except for any specific, stated amounts owed by the Executive to the Company.
Any amounts due under Section 7 are in the nature of severance payments and are
not in the nature of a penalty.
17. INDEMNIFICATION AND INSURANCE. The Company shall indemnify and
hold harmless Executive to the fullest extent permitted by law for any action or
inaction of Executive while serving as an officer or director of the Company or,
at the Company's request, as an officer or director of any other entity or as a
fiduciary of any benefit plan, except for any activity by the Executive that
constitutes willful misconduct or fraud. The Company shall cover the Executive
under directors and officers liability insurance both during and, while
potential liability exists, after the Employment Term at a level which equals or
exceeds the greater of the coverage in effect on the Effective Date or on the
date of the Executive's termination of employment.
18. LEGAL FEES. The Company shall pay the Executive's reasonable
legal fees and costs associated with entering into, negotiating and advising the
Executive with respect to this Agreement and any agreements related hereto. The
Company shall advance all reasonable legal fees, arbitration costs and expenses
incurred by the Executive if the Executive contests any termination hereunder or
the Executive seeks to enforce or defend his rights, payments and/or
16
benefits under this Agreement (or any related agreement), provided that the
Executive shall reimburse to the Company any such advances if the Executive's
claim is deemed frivolous.
19. SURVIVAL. The provisions of Sections 14, 16, 17 and 18 shall
survive the termination of this Agreement.
20. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where permitted and
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
21. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part thereof, all of which are inserted conditionally on their
being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall be declared invalid, this Agreement shall be construed as if
such invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, provisions or provisions, section or sections or article or articles
had not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
22. WAIVER. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
23. SECTION HEADINGS. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
24. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
25. WITHHOLDING TAXES. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
26. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument and agreement.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
EXECUTIVE: COMPANY:
AMERIPATH, INC.
/s/ Xxxxx X. New By: /s/ X. Xxx Stamps, IV
------------------------------- ------------------------------------
Xxxxx X. New X. Xxx Stamps, IV
Compensation Committee of the Board of
Directors
By:
------------------------------------
E. Xxxxxx Xxxxxx
Compensation Committee of the Board of
Directors
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
EXECUTIVE: COMPANY:
AMERIPATH, INC.
/s/ Xxxxx X. New By:
------------------------------- ------------------------------------
Xxxxx X. New X. Xxx Stamps, IV
Compensation Committee of the Board of
Directors
By: /s/ E. Xxxxxx Xxxxxx
------------------------------------
E. Xxxxxx Xxxxxx
Compensation Committee of the Board of
Directors
