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EXHIBIT 10-19
CONSULTING AND NON-COMPETE AGREEMENT
This CONSULTING AND NON-COMPETE AGREEMENT (the "Agreement"), entered into
this day of June, 1997, by and between MEDPARTNERS, INC., a Delaware
corporation ("MedPartners"), and XXXXXX X. XXXXXXXX, XX. (the "Consultant").
Capitalized terms not defined herein shall have the meaning assigned to them in
the Merger Agreement or Section 3 hereof.
WHEREAS, MedPartners intends to acquire InPhyNet Medical Management Inc.
("InPhyNet") pursuant to the terms and conditions of the Plan and Agreement of
Merger, dated as of January 20, 1997, as amended by Amendment No. 1 dated as of
May 21, 1997, by and among MedPartners, Inc., Seabird Merger Corporation and
InPhyNet (the "Merger Agreement"), and is engaged in the provision of healthcare
services in various locations;
WHEREAS, MedPartners recognizes that the reputation, knowledge and
expertise of Consultant represent a significant asset to InPhyNet and that the
services of Consultant will be of significant value to MedPartners and its
stockholders;
WHEREAS, InPhyNet and Consultant have entered into a Senior Executive
Employment Agreement, dated as of December 1, 1996 (the "Employment Agreement"),
providing for, among other things, the terms of Consultant's termination of
employment with InPhyNet; and
WHEREAS, MedPartners and Consultant wish to set forth their understanding
with respect to the terms and conditions relating to the Services to be
performed by Consultant hereunder.
NOW, THEREFORE, in consideration of the provisions hereof, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Termination of Employment/Duties of Consultant. MedPartners and
Consultant acknowledge that at the Effective Time, Consultant's employment with
InPhyNet shall have been terminated without cause entitling Consultant to the
payments and benefits provided for in Section 5 of the Employment Agreement.
During the Term of this Agreement, Consultant shall be retained by the
MedPartners as a consultant in connection with MedPartners' business. Consultant
shall report directly to the Chairman of the Board of Directors of MedPartners
(the "Chairman") and shall provide such consulting services as shall from time
to time be requested by MedPartners in writing or otherwise. In performing such
services, Consultant shall be retained by MedPartners as a consultant in
connection with MedPartners' acquisitions and in connection with the
consummation of the transactions contemplated by the Merger Agreement,
specifically in the Emergency Medicine and Correctional Care businesses.
Consultant agrees to assist MedPartners in the integration of the businesses
acquired by MedPartners on the Closing Date in connection with the consummation
of the transactions contemplated by the Merger Agreement and with the
development and implementation of plans and actions to realize synergies in
connection with the Merger. Further, Consultant shall consult with the Chairman
in
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identifying possible acquisitions, assisting MedPartners in negotiations related
to proposed acquisitions, including placing phone calls and writing letters as
necessary, and using all other contacts and other resources of Consultant to
consummate proposed acquisitions, identifying areas of potential synergy between
MedPartners and any such businesses generally, and shall consult with the
Chairman with respect to MedPartners' development and implementation of plans of
actions to realize such synergies for MedPartners, including cross-selling
opportunities and consolidation of certain functional areas.
It is understood and agreed by the parties to this Agreement that the
consulting services to be requested of and provided as set forth herein are
intended to help MedPartners in its efforts to integrate the businesses of the
companies combined pursuant to the Merger Agreement and that the benefit to be
obtained under the Agreement by MedPartners is the benefit of Consultant's
knowledge, experience and contacts gained over the years in the operation of
InPhyNet's business and in the healthcare industry generally. The amount of time
to be spent by Consultant in carrying out the duties to be requested of him
herein is not the key and it is agreed that it is MedPartners' intention that
the Consultant be requested to provide consulting services hereunder.
MedPartners and Consultant acknowledge that any difference between the
compensation to be paid to Consultant pursuant to this Agreement and the total
compensation paid to Consultant when Consultant was a full-time employee is a
result of arm's length negotiations between Consultant and MedPartners and
reflects MedPartners' desire to have access to Consultant's unique skills and
abilities and Consultant's agreement to make his services available to
MedPartners on less than a full-time basis. MedPartners acknowledges that
Consultant will have other business activities and will use his reasonable best
efforts to perform Services under this Agreement on a prompt basis consistent
with such other activities.
2. Term of Agreement. Unless terminated sooner in accordance with the
provisions of this Agreement, MedPartners shall engage Consultant, and
Consultant accepts such engagement, under the terms and conditions set forth
herein, for a Term beginning at the Effective Time and ending upon the close of
business on the second anniversary of the Effective Time.
3. Definitions. The following terms shall have the meanings set forth
below:
"Board" shall mean the Board of Directors of MedPartners.
"Consulting Fee" shall mean the consulting fee provided for in
Paragraph 4(a) hereof.
"Services" shall mean the services to be performed by Consultant
pursuant to this Agreement, as further described in Section 1 hereof.
"Term of this Agreement" shall mean the period of time specified in
Paragraph 2 hereof.
"Termination of Services" shall mean the termination of Consultant's
Services for any reason whatsoever, including death.
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4. Consultants Rights From and After the Closing Date. (a) Consulting
Fee. Consultant shall be paid a consulting fee by MedPartners (the "Consulting
Fee") in the amount of $600,000, $350,000 of which shall be paid at the
Effective Time and $250,000 of which shall be paid on the first anniversary of
the Effective Time. In addition, as used herein, "Consulting Fee" shall be
deemed to include such other fees and amounts as may be paid or reimbursed to
Consultant under this Agreement. Each portion of the Consulting Fee shall be
deemed fully earned as of the date MedPartners becomes obligated to pay such
portion.
(b) Independent Contractor. Consultant shall be an independent contractor
of MedPartners and not an employee, and Consultant shall not be authorized to
bind or act on behalf of MedPartners.
(c) Expense Reimbursement. During the Term of this Agreement, Consultant
shall be entitled to reimbursement of reasonable expenses, including travel and
lodging expenses, incurred by Consultant in performance of his Services
hereunder consistent with MedPartners' policies and practices applicable to
members of senior management at the time.
(d) Non-Competition Fee. Consultant shall be paid a non-compete fee in
the amount of $400,000 by MedPartners on the Effective Date as compensation for
the restrictions set forth in Section 5 of this Agreement.
5. Confidentiality and Competition Restrictions. During the one (1) year
period commencing on the Effective Date of this Agreement, Consultant shall not,
without prior written consent of the Board or pursuant to and consistent with
the order of any court, legislative body or regulatory agency: (a) engage
directly in any business which competes with MedPartners in a manner which could
adversely affect MedPartners' contractual relationships as in effect at the
Effective Time; or (b) disclose to any third party, either directly or
indirectly, any non-public information regarding MedPartners' business,
customers, financial conditions, strategies or operations, the disclosure of
which could possibly harm MedPartners in any material respect. Clause (a) above
shall not apply to any investment by Consultant in the stock of a
publicly-traded corporation, provided such investment constitutes less than five
percent of such corporation's total outstanding capital stock. The provisions of
Section 5(a) supersede the provisions of Section 6.02 of the Employment
Agreement.
6. Termination. MedPartners may terminate this Agreement if the Chairman,
in his sole discretion, shall determine that Consultant has not effectively and
timely performed the consulting duties requested of Consultant under this
Agreement, or if Consultant violates the provisions of Section 5 of this
Agreement, or shall otherwise engage in conduct that is demonstrably and
materially injurious to MedPartners, upon 30 days written notice to Consultant;
provided, however, that no such termination by reason of non-performance by
Consultant of the Services described in Section 1 of this Agreement shall be
effective unless MedPartners shall have first given Consultant written notice at
least 30 days prior to the time it intends to terminate the Agreement, detailing
the reason for such termination. Consultant shall then have that 30-day period
to cure the reasons for such termination. It is agreed that no such termination
shall be effected so long as Consultant is making a good
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faith effort in all the circumstances to fulfill his obligations hereunder. This
Agreement may not be terminated by MedPartners other than for Consultant's
non-performance, which termination shall be in the manner described in this
Section 6. Termination of the Agreement shall extinguish all further obligations
of payment or performance hereunder.
7. Successors. The rights and duties of a party hereunder shall not be
assignable by that party; provided, however, that this Agreement shall be
binding upon and shall inure to the benefit of any successor of MedPartners, and
any such successor shall be deemed substituted for MedPartners under the terms
of this Agreement. The term "successor" as used herein shall include any Person
which at any time, by merger, purchase or otherwise, acquires substantially all
of the assets of MedPartners.
8. Attorneys Fees. In any action at law in equity brought by any party
hereto to enforce any of the provisions or rights under this Agreement, the
non-prevailing party shall reimburse the prevailing party for all costs and
expenses incurred by the prevailing party, including reasonable attorneys fees,
in connection with such action.
9. Entire Agreement. With respect to the matters specified herein, this
Agreement, together with the Employment Agreement, contains the entire agreement
between MedPartners and Consultant and supersedes all prior written agreements,
understandings and commitments between MedPartners and Consultant. No amendments
to this Agreement may be made except through a written document signed by
Consultant and approved in writing by the Board.
10. Validity. In the event that any provisions of this Agreement are held
to be invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Agreement.
11. Sections and Other Headings. Sections and other headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
12. Notice. Any notice or demand required or permitted to be given under
this Agreement shall be made in writing and shall be deemed effective upon the
personal delivery thereof if delivered or, if mailed, 48 hours after having been
deposited in the United States mail, postage prepaid, and addressed in the case
of MedPartners to the attention of the Board at MedPartners' then principal
place of business, presently 0000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxx,
Xxxxxxx 00000 and in the case of Consultant to 0000 Xxxxxx Xxxxxx, Xxxxx,
Xxxxxxx 00000. Either party may change the address to which such notices are to
be addressed by giving the other party notice of such change in the manner
herein set forth.
13. Right of Retention. Nothing stated in or implied by this Agreement
shall prevent MedPartners from terminating the Services of Consultant at any
time nor prevent Consultant from voluntarily terminating his Services at any
time, on the terms and conditions provided herein.
14. Withholding Taxes and Other Deductions. To the extent required by
law, MedPartners shall withhold from any payments due Consultant under this
Agreement any applicable federal, state or local taxes and such other deductions
as are prescribed by law.
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15. Applicable Law. To the full extent controllable by stipulation of
MedPartners and Consultant, this Agreement shall be interpreted and enforced
under Delaware law.
16. Cooperation. Consultant acknowledges and agrees that following the
termination of Consultant's services with MedPartners, Consultant may be
contacted by MedPartners or its legal counsel concerning various lawsuits or
other legal matters about which Consultant may have knowledge. Consultant agrees
to cooperate with all reasonable requests for assistance from MedPartners in
this regard. Consultant further agrees to notify MedPartners if Consultant is
served with a subpoena or other legal process, or otherwise contacted by or
asked to provide information to, any other party (including government agencies)
concerning investigations, lawsuits or other legal proceedings involving either
or both of MedPartners. MedPartners agrees to compensate Consultant after the
Term of this Agreement on a basis agreed upon by Consultant and MedPartners and
to reimburse Consultant for all reasonable expenses incurred by Consultant
following the termination of this Agreement in fulfilling these obligations.
These obligations are subject to any and all personal rights and privileges that
Consultant may have concerning any of these matters.
17. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, MedPartners has caused this Consulting and Non-Compete
Agreement to be executed by its duly authorized representative and Consultant
has executed this Agreement as of the date first above written.
MEDPARTNERS, INC.
By:
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Xxxxx X. House
Chairman of the Board, President
and chief Executive Officer
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XXXXXX X. XXXXXXXX, XX., ESQ.
