EMPLOYMENT AGREEMENT
Employment Agreement (the "Agreement"), dated February 21, 1997 by
and between Physicians Resource Group, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxx ("Employee").
R E C I T A L S
1. The Company and Employee are parties to that certain
Employment Agreement dated April, 1995 (the "Old Employment Agreement").
2. The Company and Employee desire to terminate the Old
Employment Agreement and enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
conditions contained herein, the parties hereto agree as follows:
Section 1. Employment. The Company hereby agrees to employ
Employee, and Employee hereby accepts employment by the Company, upon
the terms and subject to the conditions hereinafter set forth.
Section 2. Duties. Employee shall serve as the Chairman and
Chief Executive Officer of the Company. Except as otherwise provided
pursuant to Section 11 hereof, Employee agrees to devote his full time
and best efforts to the performance of his duties to the Company.
Employee acknowledges that the executive offices of the Company will be
located in Dallas, Texas.
Section 3. Term. Except as otherwise provided in Section 6
hereof, the term of this Agreement shall be for three years (Initial
Term), commencing on the date of this Agreement. This Agreement shall
be automatically renewed thereafter for successive one year terms unless
either party gives to the other written notice of termination no fewer
than ninety (90) days prior to the expiration of any such term that it
does not wish to extend this Agreement.
Section 4. Compensation and Benefits. In consideration for the
services of the Employee hereunder, the Company will compensate Employee
as follows:
(a) Base Salary. Commencing on the date hereof, Employee
shall be entitled to receive a base salary of $345,000.00 per
annum or as increased from time to time by the Board of Directors
of the Company or the Option and Compensation Committee of the
Board of Directors (Compensation Committee) thereof.
(b) Bonus. Employee shall be eligible to receive a bonus
each year during the term of this Agreement in accordance with a
bonus plan to be established annually by the Compensation
Committee. The bonus plan for fiscal 1997 is attached to this
Agreement as Exhibit A.
(c) Benefits. During the term of this Agreement, Employee
shall be entitled to participate in and receive benefits under any
and all employee benefit plans and programs which are from time to
time generally made available to the executive employees of the
Company, subject to approval and grant by the appropriate committee
of the Board of Directors of the Company with respect to programs
calling for such approvals or grants.
Section 5. Expenses. It is acknowledged by the parties that
Employee, in connection with the services to be performed by him
pursuant to the terms of this Agreement, will be required to make
payments for travel, entertainment of business associates and similar
expenses. The Company will reimburse Employee for all reasonable
expenses of types authorized by the Company and incurred by Employee in
the performance of his duties hereunder. Employee will comply with such
budget limitations and approval and reporting requirements with respect
to expenses as the Company may establish from time to time.
Section 6. Termination. Employee's employment hereunder will
commence on the date of this Agreement and continue until the end of the
Initial Term and any renewals of such term, except that the employment
of Employee hereunder will terminate earlier upon the occurrence of the
following events:
(a) Death or Disability. Employee's employment will
terminate immediately upon the death of Employee during the term of
his employment hereunder or, at the option of the Company, in the
event of Employee's disability, upon 30 days notice to Employee.
Employee will be deemed disabled if, as a result of Employee's
incapacity due to physical or mental illness, Employee shall have
been absent from his duties with the Company on a full-time basis
for 120 consecutive business days. In the event of the termination
of this Agreement pursuant to this subsection, Employee will not be
entitled to any severance pay or other compensation except for any
portion of his base salary accrued but unpaid from the last monthly
payment date to the date of termination and expense reimbursements
under Section 5 hereof for expenses incurred in the performance of
his duties hereunder prior to termination.
(b) For Cause. The Company may terminate the Employee
employment for "Cause" immediately upon written notice by the
Company to Employee. For purposes of this Agreement, a termination
will be for Cause if: (i) Employee willfully and continuously fails
to perform his duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness), (ii)
Employee willfully engages in gross misconduct materially and
demonstrably injurious to the Company or (iii) Employee has been
convicted of a felony. In the event of the termination of this
Agreement pursuant to this subsection, Employee will not be
entitled to any severance pay or other compensation except for any
portion of his base salary accrued but unpaid from the last monthly
payment date to the date of termination and expense reimbursements
under Section 5 hereof for expenses incurred in the performance of
his duties hereunder prior to termination.
(c) By Company Without Cause. The Company may terminate this
Agreement at any time for any reason without cause. In the event
of the termination of this Agreement pursuant to this subsection at
any time prior to 90 days before the expiration of the Initial Term,
the Company will pay Employee, as Employee's sole remedy in
connection with such termination, severance pay in the amount
determined by multiplying (i) Employee's monthly base salary at the
rate in effect immediately preceding the termination of Employee's
employment, by (ii) the greater of twelve (12) months or the
remaining number of months of employment in the Initial Term
payable in equal monthly payments in arrears. The Company will also
pay Employee the portion of his base salary accrued but unpaid from
the last monthly payment date to the date of termination and
expense reimbursements under Section 5 hereof for expenses incurred
in the performance of his duties hereunder prior to termination.
(d) By Company Without Cause at the End of the Initial Term
and Thereafter. The Company may terminate this Agreement at the end
of the Initial Term and annually thereafter upon the anniversary
date of this Agreement by providing to the Employee ninety (90)
days prior written notice of its election to terminate this
Agreement, such termination being effective as of the 90th day
after notice is delivered. In the event of termination of this
Agreement pursuant to this subsection, the Company will pay to
Employee as Employee's sole remedy in connection with such
termination, severance pay in the amount of Employee's monthly base
salary at the rate in effect immediately preceding the termination
of Employee's employment from the date of termination for twelve
months from the date of termination, which severance will be paid
by the Company in equal monthly payments in arrears. The Company
will also pay the Employee for expense reimbursements under Section
5 hereof for expenses incurred in the performance of his duties
hereunder prior to termination.
(e) By Employee Without Cause at the End of the Initial Term
and Annually Thereafter. Employee may terminate this Agreement at
the end of the Initial Term and annually thereafter upon the
anniversary date of this Agreement by providing to the Company
ninety (90) days prior written notice of his election to terminate
this Agreement, such termination being effective as of the 90th day
after notice is delivered. In the event of termination of this
Agreement pursuant to this subsection, the Company will continue to
pay to Employee Employee's monthly base salary from the date of
delivery of notice of termination until the earlier of (i) the next
annual anniversary of the date of this Agreement or (ii) 90 days
from the date of termination of employment and Employee will be
entitled to receive expense reimbursements under Section 5 hereof
for expenses incurred in the performance of his duties hereunder
prior to the date of termination.
Section 7. Effect of Termination on Options. The Employee has
been granted options to purchase shares of the Company's Common Stock
and may continue to be granted such options from time to time. The
effect of the termination of the Employee's employment on such options
shall be determined by this Section. In the event of a conflict between
the termination provisions of an option agreement and the provisions of
this Agreement the terms of this Agreement shall control, except that if
the reason that the terms of an option agreement conflict with the terms
of this Agreement is necessary for the option in question to constitute
an "incentive stock option" under the Internal Revenue Code, the
Employee, in his discretion, may at the time of termination of
employment elect to have the termination provisions of the option
agreement control to the extent necessary to allow the option in
question to constitute an "incentive stock option" under the Internal
Revenue Code. Otherwise all options for the purposes of this Agreement
shall be treated as nonqualified.
(a) If the Employee voluntarily leaves the employment of the
Company in breach of this Agreement, his options will automatically
expire.
(b) If Employee dies or becomes disabled, as defined in
Section 6(a), while employed by the Company, his options shall
become fully exercisable on the date of his death or disability and
shall expire twelve months thereafter unless by its terms it
expires sooner.
(c) If the Employee's employment with the Company is
terminated for Cause, as defined in Section 6(b), his options will
automatically expire.
(d) If the Employee's employment with the Company is
terminated without cause, pursuant to Section 6(c), his options
will remain exercisable and will vest and expire in accordance with
the terms of the applicable option agreements.
(e) If Employee's employment with the Company is terminated
by the Company pursuant to Section 6(d), his options that are
vested as of the termination date shall remain exercisable for a
period of twelve months after the termination date and shall expire
at the end of such twelve month period and the options that would
have vested during the twelve months following the termination
date shall vest upon the termination date, shall remain exercisable
for a period of twelve months after the termination date and
expire at the end of such twelve month period.
(f) If the Employee's employment with the Company is
terminated by Employee pursuant to Section 6(e), his options that
are vested as of the termination date shall remain exercisable for
a period of twelve months after the termination date and shall
expire at the end of such twelve month period .
Section 8. Change In Control Termination Payment.
(a) Termination Payment.
(i) Amount. Notwithstanding anything to the contrary
contained in Section 6 hereof, in the event Employee's
employment with the Company terminates for any reason (other
than death) within the twelve month period following a Change
In Control (as defined in subsection 8(b) hereof) occurring
after the date of this Agreement, the Company will pay
Employee a lump sum payment (the "Termination Payment") in
cash equal to 2.99 times the sum of the items in the following
subsections (I) through (VI):
(I) Employee's annual base compensation determined
by reference to his base salary in effect immediately
prior to the Change In Control;
(II) 50% of the maximum bonus that Employee could
receive under the management incentive bonus plan
established by the Compensation Committee of the Board of
Directors of the Company for the year in which the Change
In Control occurs, assuming all incentives and financial
targets were achieved that are necessary to require
payment of the largest bonus amount by the Company to
Employee;
(III) the amount of Employee's base salary
accrued but unpaid from the last monthly payment date to
the date of termination;
(IV) expense reimbursement under Section 5 hereof
for expenses incurred in the performance of his duties
hereunder prior to the termination of his employment with
the Company;
(V) any other benefit accrued but unpaid as of the
date of such termination; and
(VI) the estimated cost to Employee of obtaining
medical, dental, life and disability insurance coverage
for a period of eighteen months after the expiration of
his continuation (COBRA) rights; provided that such
coverage will be substantially similar to the coverage
provided to Employee by the Company immediately prior to
the Change In Control; and provided further that this
subsection 8(a)(i)(VI) will be applied without regard to,
and the amount payable under this subsection 8(a)(i)(VI)
is in addition to, any continuation (COBRA) rights or
conversion rights under any plan provided by the Company,
which rights are not affected by any provision hereof.
(ii) Time for Payment; Interest. The Company will pay
the Termination Payment to Employee concurrent with Employee's
termination of employment. The Company's obligation to pay to
Employee any amounts under this Section 8, including without
limitation the Termination Payment, will bear interest at the
maximum rate allowed by law until paid by the Company, and all
accrued and unpaid interest will bear interest at the same
rate, all of which interest will be compounded daily.
(iii) Payment Authority. Any officer of the Company
(other than Employee) is authorized to issue and execute a
check, initiate a wire transfer or otherwise effect payment on
behalf of the Company to satisfy the Company's obligations to
pay all amounts due to Employee under this Section 8.
(iv) Termination. The Company's obligation to pay the
Termination Payment will not be affected by the manner in
which Employee's employment with the Company is terminated.
Without limiting the generality of the foregoing, the Company
will be obligated to pay the Termination Payment regardless of
whether Employee's termination of employment is voluntary,
involuntary, for cause, without cause, in violation of any
employment agreement or other agreement in effect at the time
of the Change In Control, or due to Employee's retirement or
disability. Employee's notice of his termination of
employment in connection with a Change In Control may be made
by any means.
(b) Change In Control. A Change In Control will be deemed to
have occurred for purposes hereof (i) when a change of stock
ownership of the Company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any successor Item of a similar nature has occurred; or
(ii) upon the acquisition of beneficial ownership, directly or
indirectly, by any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) of securities of the Company
representing 33% or more of the combined voting power of the
Company's then outstanding securities; or (iii) a change during any
period of two consecutive years of a majority of the members of the
Board of Directors of the Company for any reason, unless the
election, or the nomination for election by the Company's
shareholders, of each director was approved by a vote of a majority
of the directors then still in office who were directors at the
beginning of the period; provided that a Change In Control will not
be deemed to have occurred for purposes hereof with respect to any
person meeting the requirements of clauses (i) and (ii) of
Rule 13d-1(b)(1) promulgated under the Securities Exchange Act of
1934, as amended.
(c) Arbitration. Any controversy or claim arising out of or
relating to this Section 8, or the breach thereof, will be settled
exclusively by arbitration in Dallas, Texas, in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association then in effect. Judgment upon the award rendered by
the arbitrator(s) may be entered in, and enforced by, any court
having jurisdiction thereof.
(d) No Right To Continued Employment. This Section 8 will
not give Employee any right of continued employment or any right to
compensation or benefits from the Company except the rights
specifically stated herein.
(e) Exercise of Stock Options. Notwithstanding anything to
the contrary contained herein, all of Employee's options to
purchase the Company's Common Stock will become immediately
exercisable upon a Change In Control.
Section 9. Confidential Information. Employee recognizes and
acknowledges that certain assets of the Company and its affiliates,
including without limitation information regarding customers, pricing
policies, methods of operation, proprietary computer programs, sales,
products, profits, costs, markets, key personnel, formulae, product
applications, technical processes, and trade secrets (hereinafter called
"Confidential Information") are valuable, special and unique assets of
the Company and its affiliates. Employee will not, during or after his
term of employment, disclose any of the Confidential Information to any
person, firm, corporation, association, or any other entity for any
reason or purpose whatsoever, directly or indirectly, except as may be
required pursuant to his employment hereunder, unless and until such
Confidential Information becomes publicly available other than as a
consequence of the breach by Employee of his confidentiality obligations
hereunder. In the event of the termination of his employment, whether
voluntary or involuntary and whether by the Company or Employee,
Employee will deliver to the Company all documents and data pertaining
to the Confidential Information and will not take with him any documents
or data of any kind or any reproductions (in whole or in part) of any
items relating to the Confidential Information.
Section 10. Noncompetition. Until two years after termination
of Employee's employment hereunder, Employee will not (i) engage
directly or indirectly, alone or as a shareholder, partner, officer,
director, employee or consultant of any other business organization, in
any business activities which relate to the acquisition and
consolidation of medical practices which were either conducted by the
Company at the time of Employee's termination or Proposed to be
Conducted (as defined herein) by the Company at the time of such
termination (the Designated Industry), (ii) divert to any competitor
of the Company in the Designated Industry any customer of Employee, or
(iii) solicit or encourage any officer, employee, or consultant of the
Company to leave its employ for employment by or with any competitor of
the Company in the Designated Industry. The parties hereto acknowledge
that Employee's noncompetition obligations hereunder will not preclude
Employee from (i) owning less than 5% of the common stock of any
publicly traded corporation conducting business activities in the
Designated Industry, (ii) serving as an officer, director, stockholder
or employee of an entity engaged in the healthcare industry whose
business operations are not competitive with those of the Company or
(iii) notwithstanding the above, investing in or serving as an officer
or employee of an entity that owns and operates outpatient surgery
centers and that is not engaged in the business of physician practice
management, provided that if during the term of this Agreement Employee
is serving as an officer, director or employee of another entity, the
amount of time spent by Employee in connection with such service taken
together with the amount of consulting time spent by Employee in
accordance with Section 11 shall not exceed 10% of his professional time
or two (2) days per month. Proposed to be Conducted, as used herein,
shall include those business activities which are the subject of a
formal, written business plan approved by the Board of Directors prior
to termination of Employee's employment and which the Company takes
material action to implement within 12 months of the termination of
Employee's employment. Employee will continue to be bound by the
provisions of this Section 10 until their expiration and will not be
entitled to any compensation from the Company with respect thereto. If
at any time the provisions of this Section 10 are determined to be
invalid or unenforceable, by reason of being vague or unreasonable as to
area, duration or scope of activity, this Section 10 will be considered
divisible and will become and be immediately amended to only such area,
duration and scope of activity as will be determined to be reasonable
and enforceable by the court or other body having jurisdiction over the
matter; and Employee agrees that this Section 10 as so amended will be
valid and binding as though any invalid or unenforceable provision had
not been included herein.
Section 11. Consulting. During the term of this Agreement,
Employee may devote up to 10% of his professional time or two (2) days
per month to a consulting business independent from the Company.
Section 12. Old Employment Agreement.
(a) Termination. The Company and Employee agree that the Old
Employment Agreement is hereby terminated.
(b) Release by Company. The Company, its employees,
officers, directors, shareholders, affiliates, parents,
subsidiaries, divisions, predecessors, successors, assigns, agents,
and legal representatives forever release and discharge Employee
and his predecessors, successors, assigns, heirs, agents, and legal
representatives of and from any and all claims, demands,
controversies, debts, actions, or causes of action, of whatever
nature or character, whether now known or unknown, related to or in
any way arising out of the Old Employment Agreement. No waiver of
a breach by Employee of the Old Employment Agreement that arises
out of this release shall be deemed to constitute a waiver of a
breach by Employee of this Agreement.
(c) Release by Employee. Employee, his successors, assigns,
heirs, agents, and legal representatives forever release and
discharge the Company and its employees, officers, directors,
shareholders, affiliates, parents, subsidiaries, divisions,
successors, assigns, agents and legal representatives of and from
any and all claims, demands, controversies, debts, actions, or
causes of action, of whatever nature or character, whether now
known or unknown, related to or in any way arising out of the Old
Employment Agreement, including, without limitation, any
obligations by the Company related to payment to Employee of a
bonus related to fiscal 1996. No waiver of a breach by the Company
of the Old Employment Agreement shall be deemed to constitute a
waiver of a breach by the Company of this Agreement.
Section 13. General.
(a) Notices. Except as provided in Section 8(a) hereof, all
notices and other communications hereunder will be in writing or by
written telecommunication, and will be deemed to have been duly
given if delivered personally or if mailed by certified mail,
return receipt requested or by written telecommunication, to the
relevant address set forth below, or to such other address as the
recipient of such notice or communication will have specified to
the other party hereto in accordance with this Section 13(a):
If to the Company, to: with a copy to:
Physicians Resource Group, Inc. Xxxxxxx & Xxxxxx, L.L.P.
Three Lincoln Centre, Suite 1540 000 Xxxx Xxxxxx, Xxxxx 0000
0000 XXX Xxxxxxx Xxxxxx, Xxxxx 00000
Xxxxxx, XX 00000 Attn: Xxxxx X. Xxxx, III
Attn: Chief Executive Officer Fax No.:(000) 000-0000
Fax No.: (000) 000-0000
If to Employee, to:
Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
(b) Withholding; No Offset. All payments required to be made
by the Company under this Agreement to Employee will be subject to
the withholding of such amounts, if any, relating to federal, state
and local taxes as may be required by law. No payment under this
Agreement will be subject to offset or reduction attributable to
any amount Employee may owe to the Company or any other person.
(c) Equitable Remedies. Each of the parties hereto
acknowledges and agrees that upon any breach by Employee of his
obligations under any of Sections 9 and 10 hereof, the Company will
have no adequate remedy at law, and accordingly will be entitled to
specific performance and other appropriate injunctive and equitable
relief.
(d) Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable, such provision will be
fully severable and this Agreement will be construed and enforced
as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof will
remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as part
of this Agreement a provision as similar in its terms to such
illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.
(e) Waivers. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder will impair such
right, power or privilege, nor will any single or partial exercise
of any such right, power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege.
(f) Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of
which together will constitute one and the same instrument.
(g) Captions. The captions in this Agreement are for
convenience of reference only and will not limit or otherwise
affect any of the terms or provisions hereof.
(h) Reference to Agreement. Use of the words "herein,"
"hereof," "hereto" and the like in this Agreement refer to this
Agreement only as a whole and not to any particular subsection or
provision of this Agreement, unless otherwise noted.
(i) Binding Agreement. This Agreement will be binding upon
and inure to the benefit of the parties and will be enforceable by
the personal representatives and heirs of Employee and the
successors of the Company. If Employee dies while any amounts
would still be payable to him hereunder, such amounts will be paid
to Employee's estate. This Agreement is not otherwise assignable
by Employee.
(j) Entire Agreement. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and may not be
amended except by a written instrument hereafter signed by each of
the parties hereto.
(k) Governing Law. This Agreement and the performance hereof
will be construed and governed in accordance with the laws of the
State of Texas, without regard to its choice of law principles.
EXECUTED as of the date and year first above written.
PHYSICIANS RESOURCE GROUP, INC.
By: ___________________________________
Its: ___________________________________
EMPLOYEE
________________________________________
XXXXXX X. XXXXX
