EXHIBIT 10.42
CONSULTING AND NONCOMPETITION AGREEMENT
THIS CONSULTING AND NONCOMPETITION AGREEMENT (this "Agreement") is made
and entered into as of November 1, 1999, by and among AMERIPATH, INC., a
Delaware corporation (the "Company") and XXXXX X. NEW (the "Consultant").
R E C I T A L S
A. The Consultant is currently employed by the Company as its President
and Chief Executive Officer.
B. The Company and the Consultant have entered into a letter agreement,
dated October 24, 1995 (the "Letter Agreement"), relating to certain severance
compensation payable by the Company to the Consultant. The Compensation
Committee of the Board of Directors of the Company has previously approved
certain additional severance compensation payable to the Consultant, the terms
and conditions of which are documented and set forth herein.
C. The Company recognizes that the Consultant possesses extensive
knowledge and experience regarding the businesses in which the Company is
engaged and all aspects of the Company's operations. The Company believes that
the Consultant's knowledge and business advice will be extremely beneficial to
the Company even after the Consultant's employment with the Company is
terminated.
D. In the event of the termination of the Consultant's employment with
the Company (i) for any reason other than death, Disability, voluntary
resignation by the Consultant prior to the "Change in Control Date" or by the
Company for "Cause" (as such terms are defined herein), or (ii) by reason of the
voluntary resignation by the Consultant of his employment with the Company on or
after the Change in Control Date (any such termination of employment described
in clause (i) or (ii) hereof being referred to herein as a "Qualifying
Termination"), the Company desires to retain the services of and obtain certain
restrictive covenants from the Consultant, and the Consultant desires to provide
those services and is willing to agree to those restrictive covenants, upon and
subject to the payments, terms and conditions set forth in this Agreement. For
purposes of this Agreement, "Change in Control Date" shall have the same meaning
as provided in that certain Executive Retention Agreement, dated August 12,
1999, by and between the Company and the Consultant (the "Executive Retention
Agreement").
O P E R A T I V E P R O V I S I O N S
In consideration of the foregoing recitals, the mutual promises and
agreements hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged hereby, the parties hereto,
intending to be legally bound, hereby covenant and agree as follows:
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ARTICLE I
ENGAGEMENT OF SERVICES
1.1 TERM OF CONSULTING SERVICES. The consulting services to be provided
by the Consultant to the Company pursuant to this Article I shall commence as of
the date on which a Qualifying Termination occurs (the "Commencement Date") and
shall continue for twenty-four (24) consecutive months thereafter (the
"Consulting Term"). For purposes of this Agreement, "Cause" shall mean and
include (i) an act or acts of fraud or personal dishonesty taken by the
Consultant and intended to result in substantial personal enrichment of the
Consultant at the expense, and to the detriment, of the Company, (ii) repeated
violations by the Consultant of the Consultant's obligations to the Company or
under this Agreement which are demonstrably willful and deliberate on the
Consultant's part and which are not remedied in a reasonable period of time
after receipt of written notice by the Consultant from the Company, or (iii) the
conviction of the Consultant by a court of competent jurisdiction of a felony
crime. The determination of Cause shall be made in good faith by the Board of
Directors of the Company (the "Board") at a meeting of the Board called and held
for such purpose, where the Consultant shall be provided reasonable advance
written notice of such meeting and of the acts or omissions alleged to
constitute "Cause," and shall be provided an opportunity to address the Board in
person regarding the acts or omissions of which he is accused. Any termination
for Cause shall be made in writing to the Consultant by the Board, which notice
shall set forth in detail all acts or omissions upon which the Company is
relying for such termination.
1.2 SERVICES TO BE PROVIDED.
(a) SERVICES. During the Consulting Term, the Consultant shall
make himself available to consult with the Board (or, at the Board of Directors'
direction, to consult with the Company's Chief Executive Officer) upon
reasonable advance notice from the Company, during the Company's normal business
hours. The Consultant shall report exclusively to the Board (or such Chief
Executive Officer) and shall perform such consulting services (consistent with
the services the Consultant previously provided to the Company while he was an
employee) as shall be requested by the Board from time to time and which are
reasonably acceptable to the Consultant (collectively referred to herein as the
"Services")
(b) PERFORMANCE OF SERVICES. The Consultant is responsible
for reasonably determining the method, details and means of performing the
Services required under this Agreement. The Consultant shall maintain all
permits, licenses and authorizations necessary to Consultant's performance of
Services hereunder and shall at all times perform such Services and conduct
Consultant's business and affairs in accordance with all applicable federal,
state and local laws and regulations. Such consultation may be by telephone, in
writing or by other method of communication selected in the reasonable exercise
of the Consultant's discretion. Unless otherwise agreed to in writing by the
Consultant, the Consultant shall provide the Services required hereunder at the
location or locations which the Consultant deems appropriate; provided, however,
that at least once per fiscal quarter, the Consultant agrees that he will use
his best efforts to make himself available to provide Services at the Company's
executive offices located in Riviera Beach, Florida.
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(c) HOURS. During the Consulting Term, it is agreed that the
Consultant shall not be required to devote more than ten (10) hours (the "Agreed
Hours") in any calendar month to the performance of the Services set forth in
subsection 1.2(a) hereof.
1.3 NATURE OF CONSULTING RELATIONSHIP. It is agreed and understood by
the parties to this Agreement that, for all purposes, during the Consulting
Term, the Consultant shall serve solely as an independent contractor of the
Company and shall not be an employee of the Company in any capacity. Nothing in
this Agreement shall be interpreted or construed as creating or establishing the
relationship of employer and employee between the Consultant and Company. As an
independent contractor, the Consultant shall accept any directions issued by the
Company pertaining to the goals to be attained and the results to be achieved by
him (solely to the extent consistent with the required Services), but shall be
solely responsible for the manner and hours in which he will perform his
services under this Agreement.
ARTICLE II
COMPENSATION
2.1 CONSULTING FEES. In consideration for the services to be provided
by the Consultant pursuant to Section 1.2 hereof, the Company shall pay a fee to
the Consultant equal to One Hundred Thousand Dollars ($100,000) for the
Consulting Term, payable in twelve (12) equal consecutive monthly installments
of Eight Thousand Three Hundred Thirty Three Dollars and 33 Cents ($8,333.33)
per month, which monthly payments shall commence on the first anniversary of the
Commencement Date.
2.2 COMPENSATION FOR RESTRICTIVE COVENANTS. In consideration for the
Consultant's agreement to abide by the restrictive covenant provisions contained
in Article III of this Agreement during the Consulting Term, the Company shall
pay to the Consultant an additional amount equal to Two Hundred Fifty Thousand
Dollars ($250,000), payable in twelve (12) equal consecutive monthly
installments of Twenty Thousand Eight Hundred Thirty Three Dollars and 33 Cents
($20,833.33) per month, which monthly payments shall commence on the first
anniversary of the Commencement Date.
2.3 SEVERANCE PAYMENTS. The payments required pursuant to Sections 2.1
and 2.2 do not begin until the first anniversary of the Commencement Date
because, during the first twelve (12) months of the Consulting Term, the
Consultant is entitled to receive severance payments pursuant to the Letter
Agreement. Except for any applicable reduction in payments due to the operation
of Section 7 of the Executive Retention Agreement, the provisions of this
Agreement shall not in any way alter or reduce or affect any amounts or benefits
payable by the Company to the Consultant, whether under the Letter Agreement,
the Executive Retention Agreement or otherwise.
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2.4 EXPENSE REIMBURSEMENTS. During the Consulting Term, the Company
shall reimburse the Consultant for all reasonable business expenses actually
paid or incurred by the Consultant in the course of and pursuant to the
performance of the Services or the advancement of the business interests of the
Company, upon submission of supporting documentation by the Consultant and in
accordance with such policies and guidelines as from time to time may be
established by the Company (as applicable to the Company's executive officers).
2.5 BENEFIT CONTINUATION. During the period commencing on the first
anniversary of the Commencement Date and ending on the last day of the
Consulting Term, the Company will provide Consultant with benefits under the
Company's benefit programs, at substantially the same coverage and limits as
Consultant had in his role as Chief Executive Officer of the Company, and at no
cost to Consultant. The benefits required to be provided to Consultant pursuant
to this Sections 2.5 do not begin until the first anniversary of the
Commencement Date because during the first twelve (12) months of the Consulting
Term the Consultant is entitled to receive these benefits under the Letter
Agreement.
ARTICLE III
DEATH & DISABILITY
3.1 DEATH OR DISABILITY. Notwithstanding anything to the contrary
contained in this Agreement, in the event of the Consultant's death or
Disability during the Consulting Term, the Consultant, his beneficiary, his
estate or personal representative shall continue to receive the compensation
provided for in Sections 2.1 and 2.2 hereof, at such times and in such amounts
as if the Consultant had not died or suffered a Disability. For purposes of this
Agreement, "Disability" shall mean if the Consultant shall, as a result of
mental or physical incapacity, illness or disability, become unable to perform
his obligations hereunder for a period of 180 days during any 12-month period.
ARTICLE IV
RESTRICTIVE COVENANTS
4.1 NON-COMPETITION. At all times during the Consulting Term, the
Consultant shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, partnership, corporation 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) engages in the business of conducting or
performing anatomic pathology services (whether such services are provided by
physicians or laboratories; provided that such provision shall not apply to the
Consultant's ownership of Common Stock of the Company or the acquisition or
ownership by the Consultant, solely as an investment, of securities of any
issuer that is registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, 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
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quotations of securities prices in common use, so long as the Consultant does
not control, acquire a controlling interest in or become a member of a group
which exercises direct or indirect control or, more than five percent (5.0%) of
any class of voting securities of such corporation.
4.2 NONSOLICITATION OF EMPLOYEES AND CLIENTS. At all times during the
Consulting Term, the Consultant shall not, directly or indirectly, for himself
or for any other person, firm, corporation, partnership, association or other
entity (a) employ or attempt to employ or solicit the employment of 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 clients
of the Company on behalf of any person or entity in connection with any business
competitive with the business of the Company on the date hereof, nor shall the
Consultant make known the names and addresses of such clients or any information
relating in any manner to the Company's trade or business relationships with
such customers, other than in connection with the performance of Consultant's
duties under this Agreement.
4.3 NONDISCLOSURE. The Consultant shall not at any time divulge,
communicate, use to the detriment of the Company or for the benefit of any other
person or persons any Confidential Information (as hereinafter defined)
pertaining to the business of the Company. Any Confidential Information or data
now or hereafter acquired by the Consultant with respect to the business of the
Company (which shall include, but not be limited to, information concerning the
Company's business, financial condition, prospects, personnel, technology,
customers and methods of doing business) shall be deemed a valuable, special and
unique asset of the Company that is received by the Consultant in confidence and
as a fiduciary, and Consultant shall remain a fiduciary to the Company with
respect to all of such information for the term of this agreement. For purposes
of this Agreement, "Confidential Information" means information disclosed to the
Consultant or known by the Consultant as a consequence of or through his
employment by or services with the Company (including information conceived,
originated, discovered or developed by the Consultant) prior to or after the
date hereof, and not generally known or available to the public, competitors or
the Consultant, about the Company or its business. Notwithstanding the
foregoing, nothing herein shall be deemed to restrict the Consultant from
disclosing Confidential Information to the extent required by law.
4.4 REFORMATION BY COURT. In the event that a court of competent
jurisdiction shall determine that any provision of this Article IV is invalid or
more restrictive than permitted under the governing law of such jurisdiction,
then only as to enforcement of this Article IV 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.
4.5 SURVIVAL. The provisions of this Article IV shall survive the
termination of this Agreement, as applicable.
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4.6 INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Consultant of any of the covenants contained in
Article IV 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 Consultant recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Article IV of this Agreement by the Consultant 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.
ARTICLE V
MISCELLANEOUS
5.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the specific subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, both written and oral, among the parties hereto with respect to
such specific matter. This Agreement may not be amended or modified in any way
except by a written instrument executed by the Company and the Consultant.
5.2 NOTICE. All notices under this Agreement shall be in writing and
shall be given by personal delivery, or by registered or certified United States
mail, postage prepaid, return receipt requested, to the address set forth below:
If to the Consultant, to: Xxxxx X. New
000 Xxxxxxxx Xxxx Xxxxx
Xxxx Xxxxx Xxxxxxx, XX 00000
If to the Company, to: AmeriPath, Inc..
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: President
or to such other person or persons or to such other address or addresses as the
Consultant and the Company or their respective successors or assigns may
hereafter furnish to the other by notice similarly given. Notices, if personally
delivered, shall be deemed to have been received on the date of delivery, and if
given by registered or certified mail, shall be deemed to have been received on
the fifth business day after mailing.
5.3 GOVERNING LAW. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Florida, without
giving effect to the conflict of laws principles of each State. With respect to
any disputes concerning federal law, such disputes shall be determined in
accordance with the law as it would be interpreted and applied by the United
States Court of Appeals for the Eleventh Circuit.
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5.4 ASSIGNMENT: SUCCESSORS AND ASSIGNS. Neither the Consultant nor the
Company may make an assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that this Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns (whether by merger,
sale, consolidation, sale or transfer of assets or otherwise) and the Consultant
and his heirs, personal representatives, executors, legal representatives or
assigns.
5.5 WAIVER. The waiver by any party hereto of the other party's prompt
and complete performance or breach or violation of any provision of this
Agreement shall not operate nor be construed as a waiver of any subsequent
breach or violation, and the waiver by any party hereto to exercise any right or
remedy which he or it may possess shall not operate nor be construed as the
waiver of such right or remedy by such party or as a bar to the exercise of such
right or remedy by such party upon the occurrence of any subsequent breach or
violation.
5.6 SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, sections or subsections 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, sections or subsections contained in this Agreement shall be
declared invalid by a court of competent jurisdiction, then this Agreement shall
be construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, section or sections, or subsection or subsections
had not been inserted.
5.7 ARBITRATION. Except to the extent the Company has the right to seek
an injunction under Section 4.6 hereof, 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 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.
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5.9 COMPLIANCE WITH LEGAL REQUIREMENTS. The Company shall not be
required, by reason of this Agreement, to provide workers' compensation,
disability insurance, Social Security or unemployment compensation coverage nor
any other statutory benefit to the Consultant. The Consultant shall comply at
his expense with all applicable provisions of workers' compensation laws,
unemployment compensation laws, federal Social Security law, the Fair Labor
Standards Act, federal, state and local income tax laws, and all other
applicable federal, state and local laws, regulations and codes relating to
terms and conditions of employment required to be fulfilled by employers or
independent contractors.
5.10 GENDER AND NUMBER. Wherever the context shall so require, all
words herein in the male gender shall be deemed to include the female or neuter
gender, all singular words shall include the plural and all plural words shall
include the singular.
5.11 SECTION HEADINGS. The section or other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of any or all of the provisions of this Agreement.
5.12 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
firm, corporation, partnership, association or other entity, other than the
parties hereto and each of their respective heirs, personal representatives,
legal representatives, successors and assigns, any rights or remedies under or
by reason of this Agreement.
5.13 NO AUTHORITY TO BIND COMPANY. During the Consulting Term, the
Consultant does not and shall not have any authority to enter into any contract
or agreement for, on behalf of or in the name of the Company, or to legally bind
the Company to any commitment or obligation, except as expressly authorized by
the Company.
5.14 INDEMNIFICATION. To the maximum extent permitted by law, the
Company shall indemnify, hold harmless, protect and defend (with counsel
reasonably acceptable to the Consultant) Consultant and all others who could be
liable for the obligations of any of them from and against any and all claims,
demands, actions, fines, penalties, liabilities, losses, taxes, damages,
injuries and expenses (including without limitation, actual attorneys',
consultant's and expert witness' fees and costs at the pre-trial, trial and
appellate levels and in bankruptcy proceedings) related to, arising out of or
resulting from the performance by the Consultant of his obligations and duties
hereunder in accordance with the terms hereof, provided, however, that the
Company does not hereby agree, and shall not be obligated to, so indemnify, the
Consultant from any such loss, cost, damage, liability or expense arising out of
any act or omission of the Consultant or any of his agents, officers, employees,
independent contractors or representatives, which act or omission constitutes
gross negligence, willful misconduct or fraud or is in material breach of this
Agreement. Notwithstanding any other provisions of this Agreement to the
contrary, the Company's obligations under this Section shall survive the
expiration, termination or cancellation of this Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE COMPANY:
AMERIPATH, INC.
/s/ XXXXXX X. XXXXXXX
-------------------------------
By: Xxxxxx X. Xxxxxxx
` Chairman of the Board's
Compensation Committee
THE CONSULTANT:
/s/ XXXXX X. NEW
-------------------------------
XXXXX X. NEW
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