EXHIBIT 10.28
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made this first day of
October, 2000, by and between American HealthChoice, Inc, a New York
corporation (the "Company"), with its principal offices at 0000 X. Xxxxxx
Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx, 00000 and Xxxx X. Xxxxxxxxx as Chief
Financial Officer (hereinafter "CFO"), residing at 0000 Xxxxx Xxxx., Xxxxx
000, Xxxxxxxxx, Xxxxx, 00000, an individual.
ARTICLE I
Employment and Duties
Section 1.1. Employment. The Company hereby agrees to employ the CFO,
and the CFO hereby agrees to such employment with the Company as an employee
of the Company, upon the terms and conditions hereinafter set forth.
Section 1.2. Duties. The CFO shall devote substantially all of his
business time and energies to the business of the Company. The CFO agrees to
perform such services not inconsistent with his position as CFO and as
Controller as shall from time to time be assigned to him by the President of
the Company.
ARTICLE II
Term of Employment
Section 2.1. Term. The CFO shall be employed by the Company for a
period commencing on November 1, 2000. and, except as otherwise provided
herein, ending three (3) years from such date. The term of this Agreement
shall be extended by twelve months from the then effective expiration date
if either party fails to give sixty (60) days notice of cancellation prior
to the expiration date of this Agreement. The period of the CFO's
employment hereunder, including any extension or extensions pursuant to the
foregoing sentence, is referred to hereinafter as the "Employment Term".
Section 2.2. Termination. This Agreement, and the employment of the
CFO hereunder, shall terminate prior to the expiration of the Employment
Term in the following manner:
a. Retirement.
(1) This Agreement shall terminate automatically upon the
CFO's Retirement, as defined hereinafter.
(2) For purposes of this Agreement, "Retirement" means the
termination of the CFO's employment initiated by the CFO
whereby the CFO is entitled to receive an immediately
payable benefit, including an early retirement benefit,
under the Company's retirement plan, if any, generally
applicable to its salaried employees or, under any
retirement arrangement established with respect to the CFO
with his consent, in eithercase, whether or not the CFO
commences to receive such benefit at the time of such
termination.
(3) Upon termination of the CFO's employment by reason of
Retirement, the CFO shall be entitled to benefits
determined in accordance with the Company's retirement,
benefit and insurance programs in effect at such time.
b. Terminationfor Cause.
(1) The CFO's employment under this Agreement may be terminated for
cause at any time, effective upon written notice by the President of the
Company.
(2) As used in this Agreement, "cause" shall be deemed to mean
one or more of the following:
(a) The CFO's embezzlement or misappropriation of funds;
(b) The CFO's conviction of a felony involving moral turpitude;
(c) The CFO's commission of acts of dishonesty, fraud, or deceit;
(d) The CFO's breach of any material provision of this Agreement;
(e) The CFO's habitual or willful neglect of his duties;
(f) The CFO's breach of fiduciary duty to the Company involving
personal profit; or
(g) The CFO's material violation of any other duty to the Company
or its stockholders imposed by law or by the Board of Directors.
(3) In the event that the Board of Directors acts to terminate
the CFO for cause in accordance with paragraph (1), the CFO shall be
paid all compensation and other sums due to him through the date of
termination, including, without limitation, reimbursements for allowable
expenses incurred by the CFO, but shall not be entitled toreceive any
compensation or benefits thereafter.
c. Termination Without Cause.
(1) Either Party can terminate this agreement without cause within
the first ninety (90) days, which such time is the CFO's Probation
Period. Should said termination take place within the Probation
Period, then the Company would not be obligated to any obligations
under Article III herein and CFO would still be subject to the
provisions under Article IV. Should the Company and CFO agree to
continue employment after the Probationary Period, then CFO shall
be vested in the stock grant and stock options subject to the terms
herein.
(2) The Company may, at any time, terminate this Agreement without
cause on sixty (60) days written notice to the CFO.
(3) As used in this Agreement, the phrase "termination without
cause" means termination of employment other than:
(a) Termination pursuant to Section 2.2.b. of this Agreement; or
(b) Termination pursuant to Section 2.2.d. of this Agreement; or
(c) The CFO's voluntary termination of his employment pursuant to
Section 2.2.a. or otherwise.
(4) If the CFO's employment with the Company is terminated without
cause after the Probation Period, then Company will continue to pay
as liquidated damages his then current Base Salary (as defined
herein) for the next one hundred eighty (180) days immediately
following the date of such termination (the "Severance Period") but
at no time shall the said liquidated damages or Severance Period
exceed the initial one year term of this Agreement.
(5) If the Company elects to terminate this Agreement during the
Probationary Period without cause, then the Company will agree to
pay one month's salary to CFO over the same period, without
incurring any other obligations.
d. Termination Upon Death or Disability.
(1) If the CFO dies or becomes permanently disabled to the extent
that he is unable to perform his duties under this Agreement, at such
time as he is determined to be permanently disabled or upon death, he
shall be deemed terminated and he, his heirs, or assigns, as
applicable, shall receive an amount equal to eighty percent (80%) of
his Base Salary for two (2) months, plus any bonus compensation to
which the CFO would be entitled, pro rated to the date of death or
permanent disability; provided, however, that the payment of such Base
Salary shall be reduced by an amount equal to the sum of all benefits
received by the CFO from (i) federal or state disability programs or
(ii) any private disability plan provided by the Company. Payment of
such sum shall be made in accordance with Section 3.1 hereof.
(2) For purposes of this Agreement, the terin "permanently
disabled" shall mean the CFO's inability to perform services by reason
of illness or other incapacity for a period of more than one (1) month,
established by medical evidence satisfactory to the Company.
(3) All other benefits to which the CFO may be entitled following
the CFO's termination for death or disability shall be determined in
accordance with the plans, policies and practices of the Company then
in effect.
Section 2.3. Other Occurrences Upon Termination. Upon termination of
this Agreement:
a. The Company's obligation to provide the CFO with compensation
and benefits as provided herein shall discontinue at the termination
date of this Agreement except as otherwise required by law.
b. The CFO shall comply fully with the provisions of Article IV.
herein, including, without limitation, the surrender to the Company's
designated agent of all property of the Company belonging thereto that
is in the possession, custody or control of the CFO at the time of
termination, including, but not limited to, keys, files, furnishings,
reports, records, documents and the like; and
c. With respect to any stock options, restricted stock, incentive
plans, deferred compensation arrangements or other plans or programs
in which the CFO is participating at the time of tennination of his
employment, the CFO's rights and benefits under each such plan shall
be determined in accordance with the terms, conditions, and
limitations of the plan, this Agreement, and any separate agreement
executed by the CFO which may then be in effect.
Section 2.4. Mitigation of Amounts Payable Upon Termination. The CFO
shall be required to mitigate the amount of any payment provided for in
this Article H. by seeking other employment or otherwise, and the amount of
any payment provided for in this Article H. shall be reduced by any
compensation earned by the CFO as the result of employment by another
employer after the date of the CFO's termination of employment, or
otherwise.
ARTICLE III
Compensation and Benefits
Section 3.1. Base Salary.
a. For all services rendered by the CFO during his employment under
this Agreement, the Company shall pay the CFO as compensation a salary at
the rate of one hundred ten thousand ($110,000) per year. All taxes and
governmentally required withholdings shall be deducted in conformity with
applicable laws.
b. During the Employment Term, the CFO's salary shall be reviewed at
least annually. Such review shall be conducted by the President of the
Company.
Section 3.2. Performance Bonus. In addition to such compensation as is
to be payable to the CFO pursuant to the provisions of Section 3.1, the CFO
shall be entitled to received an annual performance bonus defined as
follows:
a. For the year ended September 30, 2001, the CFO shall receive a Ten
Thousand Dollar ($10,000.00) performance bonus if the Earnings Before
Interest, Taxes, Depreciation and Amortization ("EBITDA") of American
HealthChoice, Inc. for the fiscal year ended September 30, 2001, exceeds One
Million Dollars ($1,000,000.00). The calculation, derived from the audited
financial statements, shall be approved by the Compensation Committee and
shall be paylable on December 31, 2001.
b. For the years ended September 30, 2002 and 2003, the Compensation
Committee shall determine the target EBITDA and the amount of the
performance bonus by January 1, 2002 and 2003 respectively.
Section 3.3. Stock Award. In addition to such compensation as is to be
payable to the CFO pursuant to the provisions of Section 3.1, the CFO shall
be entitled to receive a stock award defined as follows:
a. As added consideration for extending the term of the employment
agreement, the Company, at its cost, will issue Five Hundred Thousand
(500,000) shares of restricted common stock to CFO.
b. For financial reporting and tax purposes, the share price shall
be $.025 per share, which is the estimated fair market value as of
October 1, 2000. The price per share is subject to review by the
Company's auditors. The Company will report the market value as
additional compensation on the CFO's Form W-2 in the calendar year in
which the stock is issued.
Section 3.4. Benefits. In addition to, and not in lieu of, Base
Salary, bonus or other compensation payable to the CFO hereunder, the CFO
shall be entitled to the following benefits:
a. Employee Benefits. The CFO shall be entitled to participate
in the employee benefit programs generally available to employees of
the Company, all in accordance with the Company's policies as in
effect from time to time during the Employment Term.
b. Health Insurance: Health insurance will be made available
for the CFO, spouse, and children living at home, effective with date
of employment, on the same terms as is generally available to
employees of the Company, all in accordance with the Company's
policies as in effect from time to time during the Employment Term.
c. Vacations. The CFO shall be entitled to two (2) weeks of
vacation (pro rated for periods of less than 12 months). After one
year of employment CFO shall be entitled to three weeks or such
greater length of time as may be approved from time to time by the
President of the Company during each full year of his employment
hereunder, with full pay in accordance with the vacation policy of the
Company, such vacation to be taken by the CFO at such time or times as
are consistent with the reasonable business needs of the Company.
Vacation shall accrue as of the date hereof with respect to the
Company's fiscal year 2001, and thereafter, any accrued vacation time
not used during the year in which it is available to be taken will be
lost.
d. Business Expenses. The CFO shall be reimbursed in accordance
with Company policies for any and all necessary and reasonable
business expenses incurred by the CFO during the Employment Term.
e. Holidays. The CFO shall be entitled to such holidays as the
Board of Directors may approve for all employees of the Company.
f. Sick Leave. The CFO shall be entitled to a maximum of five
(5) days paid sick leave per year because of sickness or accident.
g. Dues and Licenses. The Company will pay on behalf of the CFO
his annual licenses and dues to two professional organizations of
CFO's choice, that is directly related to his employment.
h. Continuing Professional Education. The Company will support
the CFO's annual continuing professional education (CPE) requirements
for up to forty (40) hours per year. Accordingly, the Company will
reimburse the CFO to attend such professional meetings and seminars,
to cover expenses for materials, course fees, travel, lodging, meals,
etc. All expenses incurred by the CFO and to be reimbursed by the
Company shall be reasonable.
ARTICLE IV
Miscellaneous Provisions
Section 4.1. Covenant Not to Compete with the Company.
a. If this Agreement is terminated for any reason, the CFO, for a
period of one (1) year after the date of termination (the "Noncompete
Term"), shall not directly or indirectly own, manage, operate or control, or
be employed by or participate in or be connected in any manner with the
ownership, management, operation, or control of, any business or type of
business, located within a ten (10) mile radius of any facility owned or
operated by any member of the Company Group (as defined below) which renders
medical, chiropractic or physical therapy services competitive with those of
such member.
b. In addition, the CFO agrees that for the duration of the Noncompete
Term, he will not, either directly or indirectly: (i) make any use of or
make known to any competing person, firm, or corporation the names or
addresses of any potential or pending acquisition and/or the names of the
patients of any member of the Company Group or any other information
pertaining to said businesses, acquisitions, and/or patients; (ii) call on,
solicit or take away, or attempt to call on, solicit or take away, any of
the business, acquisitions, and/or patients of any member of the Company
Group with whom the CFO became acquainted during his employment or
association with the Company or any other member of the Company Group, for
commercial or competitive purposes either for himself or for any other
person, firm, or corporation; or (iii) solicit or take away or attempt to
solicit or take away any person then employed (including any employee who
had been employed by the Company or any other member of the Company Group
within six (6) months prior to the time of the termination of this
Agreement) by the Company or any other member of the Company Group, for
purposes of employment by or any consulting relationship with himself or any
other person, firm or corporation.
c. As used herein, the phrase "Company Group" means the Company, and
any entity that directly or indirectly controls, is controlled by, or is
under common control with, the Company, and for purposes of this definition
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such entity,
whether through the ownership of voting securities, by contract or
otherwise.
d. Notwithstanding the provisions of paragraph "a" above in this
Section, the CFO may invest in the securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if (i) such
securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of
1934 and (ii) the CFO does not beneficially own (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934) in excess of 5% of
the outstanding capital stock of such enterprise.
e. The CFO agrees that if a court of competent jurisdiction determines
that the length of time or any other restriction, or portion thereof, set
forth in this Section 4.3 is overly restrictive and unenforceable, the court
may reduce or modify such restrictions to those which it deems reasonable
and enforceable under the circumstances, and as so reduced or modified, the
parties hereto agree that if a court of competent jurisdiction determines
that any provision of this Section is invalid or against public policy, the
remaining provisions of this Section and the remainder of this Agreement
shall not be affected thereby, and shall remain in full force and effect.
f. The CFO acknowledges that the business of the Company and the other
members of the Company Group is national in scope and that the restrictions
imposed by this Agreement are legitimate, reasonable and necessary to
protect the Company's and the other members of the Company Group's
investment in their respective businesses and the goodwill thereof. The CFO
acknowledges that the scope and duration of the restrictions contained
herein are reasonable in light of the time that the CFO has been engaged in
the business of the Company, the CFO's reputation in the markets for the
businesses of the Company and the other members of the Company-Group and the
CFO's relationship with the patients of the members of the Company Group.
The CFO further acknowledges that the restrictions contained herein are not
burdensome to the CFO in light of the consideration paid therefore and the
other opportunities that remain open to the CFO. Moreover, the CFO
acknowledges that he has other means available to him for the pursuit of his
livelihood.
9. The CFO acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section
would be inadequate and, in recognition of this fact, the CFO agrees that,
in the event of such a breach or threatened breach, in addition to any
remedies at law, the Company, without posting any bond, shall be entitled to
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available.
Section 4.2. Confidentiality; Specific Performance.
a. The CFO will not at any time (whether during or after his
employment with the Company) disclose or use for his own benefit or
purposes, or the benefit or purposes of any other person, firm, partnership,
joint venture, association, corporation or other business organization,
entity or enterprise other than the Company and any other member of the
Company Group, any Trade Secrets (as defined below) of the Company without
first obtaining the written consent of the Company.
b. The CFO will not at any time during his employment with the Company
or for a period of two (2) years after termination of his employment,
disclose or use for his own benefit or purposes or the benefit or purposes
of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise other than
the Company and any other member of the Company Group, any Confidential
Information (as defined below) of the Company or any other member of the
Company Group which is disclosed to or learned by the CFO during employment
with the Company. The CFO acknowledges that Confidential Information and
materials developed by the CFO, or Confidential Information and materials
received by the Company in confidence from third parties, are also included
within the meaning and provisions of this Section.
c. As used herein, "Trade Secrets" means the whole or any portion or
phase of technical information, design, process, procedure, formula or
improvement known or used by the Company or any other member of the Company
Group that is valuable and secret (in the sense that it is not generally
known to competitors of the Company). To the extent consistent with the
foregoing, Trade Secrets include (without limitation) the specialized
information and technology that provide any member of the Company Group with
an advantage over competitors or potential competitors in its industry.
d. As used herein, "Confidential Information" means, with respect to
any person, any data or information known by that person related to the
business of the person, other than Trade Secrets, that is of competitive
significance to the person and not generally known by or available to the
public or are maintained as confidential by such person. To the extent
consistent with the foregoing, "Confidential Information" includes (without
limitation): patient records; cost data (such as labor or material costs
pertaining to services) of the Company; the identity and location of vendors
and the terms of sales (including prices) negotiated with such vendors; data
relating to sales - by patient, by location, by service category, or by
sales price; patient lists; financial information that has not been released
to the public; future business plans, marketing strategies, or advertising
campaigns; and personnel files.
e. The CFO agrees that upon termination of his employment with the
Company for any reason, he will return to the Company immediately all
memoranda, books, papers, plans, information, letters and other data, and
all copies thereof or therefrom in any way relating to the business of the
Company and any other member of the Company Group, except that he may retain
personal notes, notebooks and diaries. The CFO ftirther agrees that he will
not retain or use for his account at any time any trade names, trademark or
other proprietary business designation used or owned in connection with the
business of the Company or any other member of the Company Group.
f. The CFO acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section
would be inadequate and, in recognition of this fact, the CFO agrees that,
in the event of such a breach or threatened breach, in addition to any
remedies at law, the Company, without posting any bond, shall be entitled to
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available.
Section 4.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 4.4. Arbitration.
a. As part of the consideration for this contract, both Employer and
Employee agree that any disputes under this agreement shall be resolved
through binding arbitration in accordance with the rules of the American
Arbitration Association. Venue for such arbitration shall be in Dallas,
Texas. The decision and/or award of the arbitrator(s) shall be final and
may be enforced in any court having jurisdiction over the party against
whom enforcement is sought. In the event either party resorts to legal
action to enforce the terms and provisions of this Agreement, the
prevailing party shall be entitled to recover the costs of such action so
incurred, including, without limitation, reasonable attorneys' fees.
b. Awards shall be final and binding on all parties to the extent and
in the manner provided by Texas law; provided that an arbitration award
shall not be binding on the Company to the extent such award exceeds the
maximum amount the Company would be required to pay the CFO pursuant to the
express terms of this Agreement. All awards may be filed by any party with
the Clerk of the District Court in the County of Dallas, Texas and an
appropriate judgment entered thereon and execution issued therefore. At the
election of any party said award may also be filed, and judgment entered
thereon and execution issued therefore, with the clerk of one or more other
courts, state or federal, having jurisdiction over the party against whom
such award is rendered or its property.
Section 4.5. Entire Agreement: Amendments; Effectiveness. This
Agreement shall supersede any and all existing employment, change in
control or severance agreements between the CFO and the Company or any of
its respective affiliates and contains the entire understanding of the
parties with respect to the employment of the CFO by the Company. There are
no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter hereof
other than those expressly set forth herein. No provisions of this
Agreement may be amended or modified unless such amendment or modification
is in writing and signed by each of the parties hereto. THIS AGREEMENT AND
ANY AMENDMENT HERETO SHALL NOT BE EFFECTIVE UNLESS AND UNTIL SIGNED BY THE
COMPANY AND THE CFO.
Section 4.6. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the
right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
Section 4.7. Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not be affected thereby.
Section 4.8. Assignment. This Agreement is personal to each of the
parties hereto, and, except as otherwise provided, neither party hereto may
assign, transfer in any way, or delegate any of their respective rights or
obligations hereunder. This Agreement and all of the rights and obligations
of Company hereunder may be assigned or transferred by it, in whole but not
in part, to and shall be binding upon and inure to the benefit of any
"affiliate" of Company, but any such assignment or transfer shall not
relieve Company of any obligations hereunder.
Section 4.9. Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or
mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
in the opening of this Agreement; provided that all notices to the Company
shall be directed to the attention of the Chief Operating Officer or the
President, or to such other address as either party may have Rimished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
Section 4.10. Headings. The headings contained in this Agreement are
for convenience only and shall in no manner be construed as a part of this
Agreement.
Section 4.11. Enforcement. In the event either party resorts to legal
action to enforce the terms and provisions of this Agreement, the prevailing
party shall be entitled to recover the costs of such action so incurred,
including, without limitation, reasonable attorneys' fees.
Section 4.12. Counterparts. This Agreement (and any written amendment
thereto) may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and
the same instrument.
Section 4.13. Survival of the CFO's Obligations. The CFO's
obligations under this Agreement shall survive regardless of whether the
CFO's employment by the Company is terminated, voluntarily or involuntarily,
by the Company or the CFO, with or without cause.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
COMPANY:
CFO: American HealthChoice, Inc.
_____________________________ ____________________________
Xxxx X. Xxxxxxxxx Dr. J. Xxx Xxxxxx, President
