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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement entered into this 1st day of September 1998,
by and between Diabetes Treatment Centers of America, Inc., a Delaware
corporation with its principal place of business at Xxx Xxxxxx Xxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000 ("Company"), and Xxx X. Xxxxxx ("Officer").
WITNESSETH:
A. Employment. In consideration of the mutual promises and agreements contained
herein and, as additional compensation for entering into this Employment
Agreement, the grant by the Company, simultaneously with this Employment
Agreement, to the Officer of an option to purchase 20,000 shares of American
Healthcorp, Inc.'s common stock, the Company employs Officer and Officer hereby
accepts employment under the terms and conditions hereinafter set forth.
1. Duties. Officer is engaged as a Senior Vice President of the Company. His
powers and duties in that capacity shall be those normally associated with the
position of Senior Vice President. During the terms of this Agreement, Officer
shall also serve without additional compensation in such other offices of the
Company or its subsidiaries or affiliates to which he may be elected or
appointed by the Board of Directors or by the Chief Executive Officer of the
Company. A significant change in the title or duties of Officer or a change in
the location in which such duties are to be performed to a location outside of
the Metropolitan Nashville Statistical Area without the written consent of
Officer shall be considered, at Officer's option, termination without just cause
and in such event officer shall receive the payments and benefits set forth in
Section 8 hereof, with the date of termination for purposes of Section 8 hereof
being the date Officer delivers written notice of his exercise of this option.
Officer may exercise this option by delivering written notice to the Company at
any time within a 30 day period following receipt of notice of such change.
1. Term. Subject to the terms and conditions set forth herein, Officer shall be
employed hereunder for a term beginning on September 1, 1998, and terminating on
August 31, 2001 (the "Expiration Date") unless sooner terminated or further
extended as hereinafter set forth. The Expiration Date shall be automatically
extended for one additional year beginning on August 31, 1999 and on each August
31 thereafter (so that on each August 31 anniversary date the term of this
Agreement shall be extended automatically to be three years and no more), unless
the Company notifies Officer in writing (the "Termination Notice") on or before
sixty (60) days prior to August 31 of the current contract year that this
automatic extension provision is canceled and is of no further force and effect.
Notwithstanding the automatic extension of the Expiration Date or any other
provisions herein, this Agreement shall expire on the date that Officer becomes
65 years of age.
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1. Compensation. For all duties rendered by Officer, the Company shall pay
Officer a minimum salary of $160,000.00 per year ("Minimum Salary"), payable in
equal monthly installments at the end of each month. In addition thereto,
commencing September 1, 1999, the Minimum Salary shall be increased and adjusted
upward, based upon any increase in the Consumer Price Index for Urban Wage
Earners and Clerical Workers, U.S. All City Average Report, of the U.S. Bureau
of Labor Statistics (the "Consumer Price Index") or such index fulfilling the
same or similar purpose in the event the Consumer Price Index is no longer
maintained. For purposes of determining the increase in the Minimum Salary, the
base month used in the Consumer Price Index shall be August, 1998. Such increase
shall not be made retroactive for the first year, but commencing September 1,
1999, such increase shall be made, no more frequently than annually, based upon
any such increase in the Consumer Price Index. In determining the amount of the
annual increase based on any increase in the Consumer Price Index, the
percentage of increase in the Consumer Price Index shall be multiplied times the
Minimum Salary plus all other salary increases previously granted by the Board
of Directors to Officer and plus all previous adjustments based upon increases
in the Consumer Price Index ("Base Salary"). In addition thereto, each year
beginning September 1, 1999, Officer's compensation will be reviewed by the
Chief Executive Officer of the Company and, after taking into consideration
performance, the Chief Executive Officer of the Company may increase Officer's
Base Salary. Officer shall participate in the Company's performance bonus plan
and any bonuses paid under such plan shall be in addition to the Base Salary
provided for in this Agreement but shall not be included as part of Base Salary
for the purpose of determining the increase or adjustment based upon the
Consumer Price Index. All compensation payable hereunder shall be subject to
withholding for federal income taxes, FICA and all other applicable federal,
state and local withholding requirements.
1. Extent of Service. Officer shall devote substantially all of his working
time, attention and energies to the business of the Company and shall not during
the term of this Agreement take directly or indirectly an active role in any
other business activity without the prior written consent of the Chief Executive
Officer of the Company; but this Section shall not prevent Officer from making
real estate or other investments of a passive nature or from participating
without compensation in the activities of a nonprofit charitable organization
where such participation does not require a substantial amount of time and does
not adversely affect his ability to perform his duties under this Agreement.
Officer shall not serve on the board of directors of an entity outside of the
Company and its affiliates without prior the approval of the Chief Executive
Officer of the Company.
1. Disability. During any period in which Officer fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness, Officer
shall continue to receive his Base Salary until his employment is terminated
hereunder. In the case of incapacity due to physical or mental illness resulting
in Officer being absent from his duties hereunder on a full time basis for more
than ninety (90) consecutive days or for more than one hundred and twenty (120)
days in any consecutive six (6) month period or in the case of a determination
by the Board of Directors that Officer is permanently and totally disabled from
performing his duties hereunder, the Company may terminate Officer's employment
hereunder by the delivery of written notice of termination. In the event the
Company so terminates Officer under this Section, such termination shall be
considered termination without just cause
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and the Company shall pay Officer such amounts and provide such benefits as are
required by Section 8 hereof, reduced by the benefits payable to Officer under
the Company's disability insurance policies.
For purposes of this Section, the determination of whether Officer is
incapacitated due to physical or mental illness and therefore disabled shall be
made by the Chief Executive Officer of the Company upon advice of a licensed
physician.
In the event of Officer's incapacity due to physical or mental illness,
Officer shall be entitled to participate in the Company's health insurance and
life insurance programs so long as is permitted under the provisions of these
coverages. If Officer is no longer eligible for coverage in the Company's health
insurance plan, the Company shall pay the difference between the cost of COBRA
medical insurance coverage (available after active eligibility has ended) and
Officer's contribution to the plan immediately preceding the disability but in
no event shall the Company pay this difference for any period beyond the
unexpired term of this Agreement or beyond the period of Officer's eligibility
to participate in COBRA health insurance benefits. Following Officer's
termination for disability, Officer's benefits for past participation in the
Company's bonus, capital accumulation and stock option plans shall be determined
in accordance with the provisions of those plans and Officer shall not be
eligible for further participation in these plans beyond the date of
termination.
1. Termination for Just Cause. For purposes of this Agreement, the Company shall
have the right to terminate Officer for "just cause" if, in the good faith
opinion of the Chief Executive Officer of the Company, Officer is guilty of (i)
intoxication while on duty, (ii) theft or dishonesty in the conduct of the
Company's business, (iii) conviction of a crime involving moral turpitude, or
(iv) willful and continued neglect or gross negligence by Officer in the
performance of his duties as an officer. For purposes of this Section 7,
"willful" shall be determined by the Chief Executive Officer of the Company. In
making such determination, the Chief Executive Officer of the Company shall not
act unreasonably or arbitrarily.
1. Termination Without Just Cause. Officer's employment under this Agreement may
be terminated (i) by the Company at any time "without just cause" by providing
Officer with written notice and (ii) by Officer at any time within twelve (12)
months following the occurrence of a Change In Control (as defined in Section 19
herein) for Good Reason (as defined in Section 19). Officer's termination date
shall be deemed the date Officer receives his written notice of termination from
the Company or the date the Company receives notice from the Officer of his
termination in accordance with Section 8.(ii) herein. In the event of such
termination:
(a) Subject to compliance by Officer with the provisions of
Section 11 herein, the Company shall pay Officer from the
termination date for a total of two (2) years or the remaining
term of this Agreement, whichever is greater, monthly during
his lifetime, an amount equal to his monthly Base Salary on
the termination date.
(b) Officer shall cease as of the termination date his further
participation in the Company's stock option plans, capital
accumulation plans, bonus plans, monthly automobile
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allowance and any other benefit or compensation plan in which
Officer participated or was eligible to participate except as
set forth in Section 8(c) below. The Officer's termination
date shall be utilized for any vesting provisions of the plans
listed above in this subparagraph (b).
(c) Following termination by the Company without just cause,
Officer shall be eligible to obtain COBRA health insurance
coverage under the Company's health insurance plan for a
period of time generally available to other participants
eligible for such coverage. If the Officer elects this COBRA
health insurance coverage, Officer's contribution to such
coverage will continue at rates contributed by the Company's
other officers as may be in effect from time to time while the
Officer's COBRA health insurance coverage is in place. While
life and disability insurance coverage can not be provided
following the Officer's termination under the terms of these
group insurance plans, the Company will pay to officer the
equivalent amount of the Company's contribution to the
premiums for these coverages for the remaining payment term of
this contract in an amount equal to the amount contributed by
the Company for these coverages for other officers of the
Company in effect while Officer's coverage following
termination is in place. If Officer maintains COBRA health
coverage with the Company upon new employment following
termination from the Company, the full cost of the COBRA
health insurance coverage shall be the responsibility of the
Officer. In addition, upon new employment following
termination from the Company, the Company's reimbursement of
life and disability insurance premium contributions will also
terminate.
(d) No payments of Base Salary or of any other type or character
shall be made to Officer after Officer becomes sixty five (65)
year of age.
(e) The Company shall be entitled to offset and reduce any
payments due to Officer hereunder by the amount earned by
Officer in any active employment that he may receive during
the remaining unexpired payment term of this Agreement from
any other source whatsoever, except said funds shall not
include income from dividends, investments or passive income.
As a condition for Officer receiving payments from the
Company, he agrees to furnish Company annually with full
information regarding such other employment, to permit
inspection of his records regarding any such employment and to
provide a copy of his federal income tax returns for such
periods on a timely basis.
(f) The Company shall be entitled to offset and reduce any
payments due to Officer hereunder by the amounts of
unemployment insurance, social security insurance or like
benefits received by Officer.
(g) All payments hereunder will cease upon the death of Officer.
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1. Termination by Officer. Officer may terminate his employment hereunder at any
time upon sixty (60) days written notice. Upon such termination by Officer,
other than termination in accordance with Section 8.(ii) herein, the Company
shall pay the Officer his Base Salary due through the date on which his
employment is terminated at the rate in effect at the time of notice of
termination. The Company shall then have no further obligation to Officer under
this Agreement.
1. Termination Upon Death. If Officer dies during the term of this Agreement,
the Company shall pay his Base Salary due through the date of his death at the
rate in effect at the time of his death. The Company shall then have no further
obligations to Officer or any representative of his estate or his heirs except
that Officer's estate or beneficiaries as the case may be shall be paid such
amounts as may be payable under the Company's life insurance policies and other
plans as they relate to benefits following death then in effect for the benefit
of Officer.
1. Restrictive Covenants.
(a) Confidential Information. Officer agrees not to disclose,
either during the time he is employed by the Company or
following termination of his employment hereunder, to any
person other than a person to whom disclosure is necessary in
connection with the performance of his duties or to any person
specifically authorized by the Chief Executive Officer of the
Company any material confidential information concerning the
Company, including, but not limited to identities of customers
and prospective customers, identities of individual contacts
at customers, information about Company colleagues, models and
strategies, contract formats, business plans and related
operation methodologies, financial information or measures,
data bases, computer programs, treatment protocols, operating
procedures and organization structures.
(b) Non-Competition. During the term of employment provided
hereunder and continuing during the period while any amounts
are being paid to Officer pursuant to the terms of the
Agreement, and for a period of one (1) year thereafter,
Officer will not (a) directly or indirectly own, manage,
operate, control or participate in the ownership, management,
operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or any have
financial interest in, or aid or assist anyone else in the
conduct of, any business which is in competition with any
business conducted by the Company or which Officer knew or had
reason to know the Company was actively evaluating for
possible entry, provided that ownership of five (5) percent or
less of the voting stock of any public corporation shall not
constitute a violation hereof.
(c) Non-Solicitation. During the term of employment provided for
hereunder and continuing during the period while any amounts
are being paid to Officer pursuant to the terms of this
Agreement, and for a period
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of one (1) year thereafter, Officer will not (a) directly or
indirectly solicit business which could reasonably be expected
to conflict with the Company's interest from any entity,
organization or person which has contracted with the Company,
which has been doing business with the Company, from which the
Company was soliciting business at the time of the termination
of employment or from which Officer knew or had reason to know
that Company was going to solicit business at the time of
termination of employment, or (b) employ, solicit for
employment, or advise or recommend to any other persons that
they employ or solicit for employment, any employee of the
Company.
(d) Consultation. Officer shall, at the Company's written request,
during the period he is receiving any payment from the Company
hereunder, cooperate with the Company in concluding any
matters in which Officer was involved during the term of his
employment and will make himself available for consultation
with the Company on other matters otherwise of interest to the
Company. The Company agrees that such requests shall be
reasonable in number and will consider Officer's time required
for other employment and/or employment search.
(e) Enforcement. Officer and the Company acknowledge and agree
that any of the covenants contained in this Section 11 may be
specifically enforced through injunctive relief but such right
to injunctive relief shall not preclude the Company from other
remedies which may be available to it.
(f) Continuing Obligation. Notwithstanding any provision to the
contrary or otherwise contained in this Agreement, the
Agreement and covenants contained in this Section 11 shall not
terminate upon Officer's termination of his employment with
the Company or upon the termination of this Agreement under
any other provision of this Agreement.
1. Vacation. During each year of this Agreement, Officer shall be entitled to
vacation in accordance with Company policy in effect from time to time.
1. Benefits. In addition to the benefits specifically provided for herein,
Officer shall be entitled to participate while employed by the Company in all
benefit plans maintained by the Company for officers generally according to the
terms of such plans.
14. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered or certified
mail to his residence in the case of Officer, or to its principal office in the
case of the Company and the date of mailing shall be deemed the date which such
notice has been provided.
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15. Waiver of Breach. The waiver by either party of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach by the other party.
16. Assignment. The rights and obligations of the Company under this
Agreement shall enure to the benefit of and shall be binding upon the successors
and assigns of the Company. The Officer acknowledges that the services to be
rendered by him are unique and personal, and Officer may not assign any of his
rights or delegate any of his duties or obligations under this Agreement.
17. Entire Agreement. This instrument contains the entire agreement of
the parties and supersedes all other prior agreements, employment contracts and
understandings, both written and oral, express or implied with respect to the
subject matter of this Agreement and may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought. This Agreement shall be
governed by the laws of the State of Tennessee.
18. Headings. The sections, subjects and headings of this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) A "Change of Control" shall be deemed to mean:
(i) a transaction or series of transactions (occurring
within 24 months of each other) in which all or any
substantial (defined as more than fifty percent (50%)
of the assets of American Healthcorp, Inc. have been
acquired through a merger, business combination,
purchase or similar transaction by any entity or
person, other than an entity controlled by American
Healthcorp, Inc. or
(ii) a transfer or series of transfers (occurring within
24 months of each other) in which securities
representing control of American Healthcorp, Inc.
("control" being defined as greater than fifty
percent (50%) of the outstanding voting power of the
outstanding securities of American Healthcorp, Inc.)
are acquired by or otherwise are beneficially owned,
directly or indirectly, by any corporation, person or
"group" (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934).
(b) A "Good Reason" shall exist if after the occurrence of a
Change of Control:
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(i) there is a significant change in the nature or scope
of the Officer's authority and responsibilities;
(ii) there is a reduction in Officer's rate of base salary
or (for reasons other than Company performance)
overall compensation; or
(iii) the Company changes the principal location in which
Officer is required to perform services outside a
fifty mile radius of such location without Officer's
consent.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written.
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Xxx X. Xxxxxx
DIABETES TREATMENT CENTERS OF AMERICA, INC.
By:
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Title: President & Chief Executive Officer
