1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT dated as of
June 8, 1999, between ADVANCED HEALTH
CORPORATION, a Delaware corporation (the
"Company"), which is doing business as AHT
Corporation, and XXXXXXXX X. XXXXXXX,
M.D. (the "Employee").
The Company desires to formalize the employment arrangements between the
Company and the Employee and to continue to employ the Employee as the Chairman
and Chief Executive Officer of the Company and the Employee desires to accept
such continued employment by the Company, on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, upon the terms and subject to the
conditions hereinafter set forth.
2. Term. The employment of the Employee hereunder shall be for the
four-year period commencing on the date hereof and ending on June 8, 2003 (the
"Base Term"). The Base Term shall automatically renew for consecutive one-year
terms (each, a "Renewal Term" and together with the Base Term, collectively, the
"Employment Period") unless either the Company or the Employee gives the other
party hereto at least 90 days' prior written notice before the end of the
Employment Period of such party's intent not to renew this Agreement.
3. Duties. The Employee shall be employed as the Chairman and Chief
Executive Officer (and President, effective March 31, 1999) of the Company or in
such other position as the Company and the Employee shall agree in writing. The
Employee shall perform such duties and services as are appropriate and
commensurate with the Employee's position as Chairman and Chief Executive
Officer (and President, when appropriate) of the Company and would otherwise be
consistent in stature and prestige with the position of Chairman and Chief
Executive Officer (and President, when appropriate) of a corporation with
similar operations as the Company, as the same may be assigned to him from time
to time by the Board of Directors of the Company (the "Board").
4. Time to be Devoted to Employment; Place of Employment. (a) Except for
three weeks vacation per year (in addition to public holidays) and absences due
to temporary illness, during the Employment Period the Employee shall devote
substantially all of his business time, attention and energies to the business
and affairs of the Company.
(b) During the Employment Period, the Employee shall not be engaged in any
2
other business activity which conflicts with the duties of the Employee
hereunder, whether or not such activity is pursued for gain, profit or other
pecuniary advantage.
(c) During the Employment Period, the Company shall maintain its primary
business location in the greater New York City metropolitan area and the
Employee shall not be required to relocate outside such area without his written
consent.
5. Compensation; Reimbursement. (a) During the Employment Period, the
Company (or at the Company's option, any subsidiary or affiliate thereof) shall
pay to the Employee an annual salary (the "Base Salary") of not less than
$300,000, payable in such installments as is the policy of the Company with
respect to its senior executive officers. Such Base Salary will be reviewed at
least annually and may be increased by the Board (or, if such authority shall be
delegated by the Board to the Compensation Committee thereof, then by such
Committee) in its sole discretion.
(b) From time to time the Employee may also receive cash bonuses at the
discretion of the Board or the Compensation Committee.
(c) The Employee shall maintain a suitable automobile for business use.
During the Employment Period, the Company shall pay the Employee a $600 per
month car allowance towards the costs of leasing, using, insuring, repairing and
maintaining such automobile.
(d) Following the expiration or termination of this Agreement for any
reason, the Employee shall have the right to maintain any (i) health and life
insurance benefits provided by the Company to the extent provided under
applicable law and (ii) any life insurance benefits provided by the Company so
long as the Employee makes the premium payments relating to such life insurance.
(e) During the Employment Period and to the extent available to employees
of the Company, the Employee shall be entitled to participate in all of the
Company's benefit plans, pension and retirement plans, life insurance,
hospitalization and surgical and major medical coverages, sick leave, vacation
and holiday policies, long-term disability coverage and such other fringe
benefits enjoyed by other employees at substantially the same employment level
as the Employee. Notwithstanding anything to the contrary contained in this
Section 5(e), at no time during the Employment Period shall the long-term
disability coverage and life insurance benefits that the Company provides to the
Employee be reduced to a level below that being provided to the Employee as of
the date hereof.
2
3
(f) The Company shall reimburse the Employee, in accordance with the
practice from time to time for other employees of the Company, for all
reasonable and necessary travelling expenses, disbursements and other reasonable
and necessary incidental expenses incurred by him for or on behalf of the
Company in the performance of his duties hereunder upon presentation by the
Employee to the Company of appropriate vouchers.
6. Involuntary Termination. (a) If the Employee is incapacitated or
disabled by accident, sickness or other cause so as to render him mentally or
physically incapable of performing the services required to be performed by him
under this Agreement for a period of 90 days or longer during any six-month
period (such condition being herein referred to as a "Disability"), prior to the
Employee resuming the performance of his duties as contemplated herein, the
Company may terminate the employment of the Employee under this Agreement (an
"Involuntary Termination"). Until the Company or the Employee shall have
terminated the Employee's employment hereunder, the Employee shall be entitled
to receive his compensation and other benefits as set forth in this Agreement
notwithstanding any such physical or mental disability.
(b) If the Employee dies during the Employment Period, his employment
hereunder shall be deemed to cease as of the date of his death, and the
termination of his employment occasioned thereby shall be deemed an Involuntary
Termination.
7. Termination for Cause. The Company may terminate the Employee's
employment hereunder for "Cause" (a "Termination for Cause"). For purposes of
this Agreement, "Cause" shall be limited to:
(i) the willful and continued failure by the Employee substantially to
perform the duties described in Section 3 (other than any failure resulting
from an illness or other similar incapacity or disability), for 30 days
after a written demand for performance is delivered to the Employee on
behalf of the Board that specifically identifies the manner in which it is
alleged that the Employee has not substantially performed his duties; or
(ii) the commission by the Employee of misappropriation of funds,
properties or assets of the Company, sexual harassment of employees of the
Company, chronic alcoholism or drug addiction, slander or libel concerning
the Company or a material tort relating to his office or employment with
the Company that has a material adverse effect on the Company.
8. Termination Without Cause. (a) The Company may terminate the employment
of the Employee hereunder at any time during the Employment Period without
"Cause" and (b) the Employee may terminate his employment hereunder at any time
3
4
during the Employment Period in the event of (i) the willful and continued
failure by the Company to perform its obligations hereunder for 30 days
hereunder for 30 days after a written demand for performance is delivered to the
Board on behalf of the Company by the Employee that specifically identifies the
manner in which it is alleged that the Company has not performed its
obligations; or (ii) the commission by the Company of slander or libel
concerning the Employee or a material tort relating to his office or employment
with the Company of slander or libel concerning the Employee or a material tort
relating to his office or employment with the Company that has a material
adverse effect on the Employee (each, a "Termination Without Cause"). It is
expressly acknowledged that non-renewal of this Agreement as contemplated by
Section 2 shall not constitute a Termination Without Cause.
9. Voluntary Termination. Any termination of the employment of the Employee
hereunder otherwise than as a result of an Involuntary Termination, a
Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination." A Voluntary Termination shall be deemed to be effective
immediately upon written notice of such termination to the Company.
10. Change in Control. Anything contained in this Agreement to the contrary
notwithstanding, if, within 12 months of a Change in Control (as herein
defined), the employment of the Employee shall terminate for any reason, then
such termination shall be deemed to constitute a Termination Without Cause. In
addition, on a Change in Control, all options to purchase common stock of the
Company then held by the Employee shall immediately vest and shall be
exercisable for a period of five years from the date of the Change in Control.
For purposes of this Agreement, a "Change in Control" of the Company shall be
deemed to have occurred if (a) there shall be consummated (x) any consolidation
or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the common stock of the Company (the
"Common Stock") would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or (b) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; or (c) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company's
outstanding Common Stock; or (d) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board of
Directors shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's stockholders, of each
4
5
new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
11. Effect of Termination of Employment. (a) Upon the termination of the
Employee's employment hereunder pursuant to a Voluntary Termination or a
Termination For Cause, neither the Employee nor his beneficiary or estate shall
have any further rights or claims against the Company under this Agreement
except to receive:
(i) any unpaid portion of the Base Salary provided for in Section
5(a), computed on a pro rata basis to the date of termination;
(ii) cash compensation equal to the product of (A) the number of days
of accrued vacation, if any, accumulated by the Employee to the effective
date of termination divided by the total number of work days per annum for
which the Employee receives a Base Salary multiplied by (B) the Base
Salary; and
(iii) reimbursement for any expenses for which the Employee shall not
have theretofore been reimbursed as provided in Section 5(e).
In addition, current arrangements concerning indemnification, including but not
limited to payment of expenses of officers, directors, and employees in
connection with litigation involving the Company shall remain in full force and
effect following termination.
(b) Upon the termination of the Employee's employment hereunder pursuant to
an Involuntary Termination, neither the Employee nor his beneficiary or estate
shall have any further rights or claims against the Company under this Agreement
except the right (i) to receive a termination payment equal to that provided for
in Section 11(a) hereof, plus (ii) to receive a cash severance payment in an
aggregate amount equal to the cash compensation received by the Employee during
the 3-month period immediately prior to the effective date of the Involuntary
Termination, payable in equal monthly installments, plus (iii) to be immediately
vested in all stock options granted to the Employee by the Company that would
have vested during the three-month period immediately following the effective
date of the Involuntary Termination. In addition, the Employee will have the
right and obligation to repay any outstanding loans to the Company, including
principal and interest, in equal monthly installments, over a period of 12
months commencing one year after the date of Termination. Current arrangements
concerning indemnification, including but not limited to payment of expenses of
officers, directors, and employees in connection with litigation involving the
Company shall remain in full force and effect following termination.
5
6
(c) Upon the termination of the Employee's employment hereunder pursuant to
a Termination Without Cause, neither the Employee nor his beneficiary or estate
shall have any further rights or claims against the Company under this Agreement
except the right (i) to receive a termination payment equal to the amount
provided for in Section 11(a) hereof, plus (ii) to receive a cash severance
payment in an aggregate amount equal to twice your most recent base annual
salary payable in one lump sum within 10 days of such termination, plus (iii) to
receive a consulting agreement for a one year period commencing one year after
the date of termination of full-time employment with the Company. Such
consulting agreement will consist of a commitment by the Employee of up to 24
business days in a manner reasonably requested by the Board of Directors. The
Employee will receive one times his most recent annual base salary as
compensation for such consulting over a one year period in equally divided
portions at the normal payment intervals provided employees at the Company. For
a one year period following termination, at the Company's expense, the Company
will provide the Employee and his family health insurance ( as is provided
Company employees), provided the Employee and his family are not otherwise
provided coverage; life insurance, including payment by the Company of the
premiums related to the Employee's $250,000 whole life policy and the
supplemental disability policy with Massachusetts Casualty Company; a $600 per
month car allowance; reasonable cellular and phone and pager use; and inclusion
in the Company's 401K plan. In addition, on a Termination Without Cause, all
options to purchase common stock of the Company then held by the Employee shall
immediately vest and shall be exercisable for a period of five years from the
date of the Termination. The Employee will have the right and obligation to (i)
repay any outstanding loans to the Company, including principal and interest, in
equal monthly installments, over a period of 12 months commencing one year after
the date of Termination, or (ii) prepay any such loans and interest without any
penalties. In addition, current arrangements concerning indemnification,
including but not limited to payment of expenses of officers, directors, and
employees in connection with litigation involving the Company shall remain in
full force and effect following termination.
12. Non-Competition; Non-Disclosure of Information. (a) The Employee shall
not, for a period of one year following the termination of Employment , (i)
directly or indirectly engage in any Competitive Business (as defined below),
whether such engagement shall be as an employee, employer, owner, consultant,
partner or other participant in any Competitive business, (ii) assist others in
engaging in any Competitive Business in the manner described in the foregoing
clause (i), (iii) induce employees of the Company to terminate their employment
with the Company or engage in any Competitive Business or (iv) induce customers
or vendors of the Company to alter or terminate their business relationship with
the Company; provided, however, that the Employee may own directly or
indirectly, solely as a passive investment, securities of any Competitive
Business traded on any national securities exchange if the Employee is not a
controlling person of, nor a member of a group which controls such person and
does not, directly or indirectly, own 5% or more of any class of securities of
such person. As used herein, the term "Competitive Business" shall mean any
business which, directly or indirectly, competes with the Company in the
business of primarily providing physician practice management, physician network
management and/or clinical information technology to or for ambulatory
physicians; provided, however, that a business conducted directly by the
6
7
Employee which provides physician practice management, physician network
management and/or clinical information technology to or for physician groups
consisting of three or fewer physicians shall not be deemed to be a "Competitive
Business". Notwithstanding any other provision of this Agreement to the
contrary, the Employee's ownership interest in or any business activities
engaged in by the Employee on behalf of, or in connection with Employee's
employment by, or service as a director or consultant to, any subsidiary or
affiliate of the Company or Physicians' Online, a corporation engaged in the
business of providing on-line services to health care professionals and
consumers, shall not be deemed to violate the provisions of this Agreement.
(b) The Employee understands that the foregoing restrictions may limit his
ability to earn a livelihood in a Competitive Business, but he nevertheless
believes that he has received and will receive sufficient consideration and
other benefits in connection with his employment to clearly justify such
restrictions which, in any event, the Employee does not believe would prevent
him from earning a living. Nothing herein contained shall prohibit the Employee
from engaging in a business that is not a Competitive Business.
(c) The Employee agrees that he will not, at any time during or after the
Employment Period, disclose to any person, firm, corporation or other entity,
except as required by law, any secret or confidential information concerning the
business, clients or affairs of the Company or any subsidiary or affiliate
thereof for any reason or purpose whatsoever other than in furtherance of the
Employee's work for the Company nor shall the Employee make use of any of such
secret or confidential information for his own purpose or for the benefit of any
person, firm, corporation or other business entity except the Company or any
subsidiary or affiliate thereof.
13. Company Right to Inventions. The Employee shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and all
inventions, improvements, technical information, methods and suggestions (the
"Inventions") relating in any way to the business of providing physician
practice management, physician network management and/or clinical information
technology to or for ambulatory physicians, which he may develop or acquire
during the period of the Employee's employment with the Company prior to any
termination of employment (whether or not during usual working hours), together
with all patent applications, patents, copyrights and reissues thereof that may
at any time be granted for or upon any such Inventions, excluding those
Inventions directly relating to any business activities engaged in by the
Employee on behalf of or in connection with the Employee's employment by, or
service as a director or consultant to Physicians' Online. In connection
therewith:
(a) the Employee shall without charge, but at the expense of the
Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
reasonably necessary or proper in the reasonable opinion of the Company
7
8
to vest title to any such inventions, improvements, technical information,
methods, patent applications, patents, copyright applications, copyrights
or reissues of any thereof in the Company and to enable it to obtain and
maintain the entire right and title thereto throughout the world; and
(b) the Employee shall render to the Company at its expense (including
a reasonable payment for the time involved in case he is not then in its
employ) all such assistance as it may reasonably require in the prosecution
of applications for said patents, copyrights or reissues thereof, in the
prosecution or defense or interferences which may be declared involving any
said applications, patents or copyrights and in any litigation in which the
Company may be involved relating to any such patents, copyrights,
inventions, improvements, technical information or methods.
14. Enforcement. It is the desire and intent of the parties hereto that
the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction
in which enforcement is sought. Accordingly, if any particular provision of
this Agreement shall be adjudicated to be invalid or unenforceable, such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such amendment to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made; provided, however, that if any one or more of
the provisions contained in this Agreement shall be adjudicated to be invalid
or unenforceable because such provision is held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
deemed amended by limiting and reducing it so as to be valid and enforceable
to the maximum extent compatible with the applicable laws of such jurisdiction,
such amendment to apply only with respect to the operation of such provision
in the particular jurisdiction in which such adjudication is
made.
15. Remedies; Survival. (a) The Employee acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be accurately compensated for in damages by an action at law, and
that the breach of the provisions of this Agreement would cause the Company
irreparable harm. In the event of a breach by the Employee of the provisions of
Section 12 or 13 hereof, the Company shall be entitled to an injunction
restraining him from such breach. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available for any
breach of this Agreement.
(b) Notwithstanding anything contained in this Agreement to the contrary,
the provisions of Sections 12, 13, 14 and this Section 15 shall survive the
8
9
expiration or other termination of this Agreement until, by their terms, such
provisions are no longer operative.
(c) It is understood and agreed that the provisions of Sections 12 and 13
of this Agreement are separate and distinct from any other agreement between the
parties hereto. Accordingly, in the event of a breach of such provisions, the
breaching party shall only be held responsible for damages arising under such
provisions and not for any damages which may be claimed to arise under or with
respect to any other agreement that is not separately breached.
16. Notices. Notices and other communications hereunder shall be in
writing and shall be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows:
If to the Employee:
Xxxxxxxx Xxxxxxx, M.D.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
If to the Company:
Advanced Health Corporation
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All notices and
other communications hereunder shall be deemed to have been given on the date of
delivery if personally delivered; on the business day after the date when sent
if sent by air courier; and on the third business day after the date when sent
if sent by mail, in each case addressed to such party as provided in this
Section 16.
17. Binding Agreement. This Agreement shall inure to the benefit of and be
9
10
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees and devisees. If the Employee
should die while any amount would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the beneficiary
designated by the Employee in a writing delivered to the Company, or if there be
no such designated beneficiary, to his estate.
18. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
19. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing and shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
20. Entire Agreement; Amendments; Execution. This Agreement, the
Indemnification Agreement to be entered into between the Company and the
Employee, the Stock Option Agreements and the other agreements referred to
herein contain the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior agreements or
understandings among the parties with respect thereto. This Agreement may be
amended only by an agreement in writing signed by the parties hereto. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original document but all of which shall constitute but one agreement.
21. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
23. Assignment. With respect to the Employee, this Agreement is personal in
its nature and the Employee shall not assign or transfer this Agreement or any
rights or obligations hereunder. The Company may in its sole discretion assign
or otherwise transfer this Agreement and the provisions hereof (including,
without limitation, Sections 12, 13 and 14) shall inure to the benefit of, and
be binding upon, each successor of the Company, whether by merger,
10
11
consolidation, transfer of all or substantially all assets, or otherwise.
* * *
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ADVANCED HEALTH CORPORATION
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Senior Vice President
Business and Legal Affairs
General Counsel
/s/ Xxxxxxxx Xxxxxxx
------------------------------
Xxxxxxxx Xxxxxxx, M.D.
11
