EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of November 15, 1994, between ProMedCo, Inc., a
Texas corporation (the "Company"), and Xxxx X. Xxxxxxx ("Executive").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company shall employ Executive, and Executive
accepts employment with the Company, under the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Period"). The date on which
Executive ceases to be employed by the Company and/or its Subsidiaries (as
defined below) or its successors or assigns is referred to herein as the
"Termination Date."
2. Position and Duties.
(a) During the Employment Period, Executive shall perform such duties for
the Company, its affiliates and its Subsidiaries as the Company's Chief
Executive Officer or other Company officer to whom Executive reports may from
time to time direct. Executive shall be a Vice President of the Company.
(b) Executive shall initially report to the Company's President, but
reporting relationship may change as Company develops. Executive shall devote
his best efforts and his full business time and attention (except for permitted
vacation periods and reasonable periods of illness or other incapacity) to the
business and affairs of the Company, its affiliates and its Subsidiaries.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having at least 50% of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be $110,000
per annum or such higher rate as the Board may designate from time to time (the
"Base Salary"), provided that the Base Salary shall be subject to annual
increases of no less than the increase in the Consumer Price Index announced
from time to time. The Base Salary shall be payable in regular installments in
accordance with the Company's general payroll practices.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) In addition to the Base Salary, the Company shall award a bonus to
Executive following the end of each fiscal year during the Employment Period
based upon the Company's achievement of operating goals during such fiscal year.
The percentage and goals shall be mutually agreed upon by the Company and
Executive prior to each such fiscal year. The initial Bonus Plan for the partial
fiscal year ending June 30, 1995, is attached as Appendix A.
(d) In addition to the Base Salary and any bonuses payable to Executive
pursuant to this paragraph, during the Employment Period Executive shall be
entitled to participate in all benefit plans adopted by Company for all or a
select group of its employees, including:
(i) term life insurance, health insurance and disability insurance
coverage,
(ii) participation in a stock option program approved by the Board of the
Company granting options for an initial 20,000 shares of Common Stock of the
Company at $1.00 per share,
(iii) annual paid vacation in accordance with Company's policies as from
time to time established.
(e) The Company shall issue to Executive 20,000 shares of the Company's
Common Stock on the date hereof. Purchase price of the stock is $1.00 per share.
Company will receive payment by withholding $10,000 per year, plus interest,
from Executive's payroll check in equal amounts each pay period, in accordance
with a promissory note, bearing interest at the rate of 5.71% per annum. If
Executive is terminated prior to the second anniversary of the date of this
Agreement, Company shall have the right to purchase the stock for Executive's
purchase price, less any amount still owed the Company by Executive. If
Executive is terminated after the second anniversary but prior to the fourth
anniversary of the date of this Agreement, Company shall have the right to
purchase 10,000 shares of the stock for Executive's purchase price, less any
amount still owed the Company by Executive.
4. Term.
(a) Unless renewed by the mutual agreement of the Company and Executive,
the Employment Period shall end on November 14, 1996, provided that (i) the
Employment Period shall terminate prior to such date upon Executive's
resignation, death or permanent disability or incapacity (as determined by the
Board in its good faith judgement) and (ii) the Employment Period may be
terminated by the Company at any time prior to such date For Cause (as defined
below) or Without Cause. The Employment Period is automatically extended for
successive years unless notice to the contrary is given not later than 90 days
preceding November 14 of the final year of the contract. In the event the
Company is liquidated and has cumulative net losses at the time of liquidation,
this Agreement will terminate with the Company having no further obligation to
Executive, beyond November 14, 1995.
(b) If the Employment Period is terminated by the Company without Cause
prior to the second anniversary of the date of this Agreement, except in the
event of liquidation as outlined in 4(a), Executive shall be entitled to receive
his Base Salary, as in effect immediately prior to the Termination Date, through
the second anniversary of this
Agreement, so long as Executive has not breached the provisions of
paragraphs 5, 6 and 7 hereof. The Base Salary payments described in this
paragraph 4(b) shall be payable in regular installments in accordance with the
Company's general payroll practice. The amounts payable pursuant to this
paragraph 4(b) shall be reduced by the amount of any compensation Executive
receives with respect to any other employment during the period prior to the
second anniversary hereof. Upon request from time to time, Executive shall
furnish the Company with a true and complete certificate specifying any such
compensation due to or received by him.
(c) If the Employment Period is terminated by the Company For Cause or is
terminated as a result of Executive's resignation or normal expiration of the
Agreement, Executive shall be entitled to receive his Base Salary through the
Termination Date.
(e) All of Executive's rights to fringe benefits and bonuses hereunder (if
any) accruing after the termination of the Employment Period shall cease upon
termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or a crime involving moral turpitude or the commission of any other
act involving dishonesty, disloyalty or fraud with respect to the Company or any
of its Subsidiaries, (ii) conduct tending to bring the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii) substantial
and repeated failure to perform duties as reasonably directed by the Company's
Chief Executive Officer or other Company Officer to whom Executive reports, (iv)
gross negligence or willful misconduct with respect to the Company or any of its
Subsidiaries, or (v) any other material breach of this Agreement.
5. Confidential Information. The Executive acknowledges that the information,
observations and data obtained by him while employed by the Company concerning
the business or affairs of the Company, any of its affiliates or any Subsidiary
("Confidential Information") are the property of the Company or such affiliate
or Subsidiary, as the case may be. Therefore, Executive agrees not to disclose
to any unauthorized person or use for Executive's own account any Confidential
Information without the prior written consent of the Board, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Executive's acts or omissions to
act. Executive shall deliver to the Company at the termination of the Employment
Period, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work Product
or the business of the Company, any of its affiliates or any Subsidiary which
Executive may then possess or have under his control.
6. Inventions and Patents. Executive agrees that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports, and
all similar or related information which relates to the Company's or any of its
Subsidiaries' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by the Company and/or its Subsidiaries ("Work
Product") belong to the Company or such Subsidiary. Executive will promptly
disclose such Work Product to the Board and perform all actions reasonably
requested by the Board (whether during or after the Employment Period) to
establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).
7. Non-Compete, Non-Solicitation.
(a) Executive acknowledges that in the course of his employment with the
Company he will become familiar with the information concerning the Company, its
affiliates, Subsidiaries and its predecessors and that his services have been
and will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that, during the Employment Period and for the
period of two years thereafter, the Executive shall not directly or indirectly
own, manage, control, participate in, consult with, render services for, or in
any manner engage in any business competing with the business of the Company or
its Subsidiaries as such businesses exist or are in process on the date of the
termination of Executive's employment, within any geographic area in which the
Company, its affiliates or its Subsidiaries engage or plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation which
is publicly traded, so long as Executive has no active participation in the
business of such corporation.
(b) During the Non-compete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company, any of its affiliates or any Subsidiary to leave the employ of
the Company or such affiliate or Subsidiary, or in any way interfere with the
relationship between the Company, any of its affiliates or any Subsidiary and
any employee thereof, (ii) hire any person who was an employee of the Company,
any of its affiliates or any Subsidiary at any time during the Employment
Period, or (iii) induce or attempt to induce any customer, supplier, licensee or
other business relation of the Company, any of its affiliates or any Subsidiary
to cease doing business with the Company or such affiliate or Subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company, any of its affiliates or any
Subsidiary.
(c) If Executive is terminated by the Company Without Cause or the Company
is liquidated, the Non-compete provisions of this Agreement will also terminate
upon the Termination Date or date of liquidation.
8. Enforcement. If, at the time of enforcement of paragraph 5, 6 or 7 of this
Agreement, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to Confidential Information and Work
Product, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
9. Executive Representations. Executive hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by
Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgement or decree to
which Executive is a party or by which he is bound, (ii) Executive is not a
party to or bound by an employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
10. Survival. Paragraphs 5, 6 and 7 shall survive and continue in full
force in accordance
with their terms notwithstanding any termination of the Employment Period,
unless such termination was without cause.
11. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the address indicated below:
Notice to Executive: 0000 Xxx Xxxx Xxxxx
Xxx Xxxxx, Xx. 00000
Notices to Company: 000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xx. 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
12. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13. Complete Agreement. This Agreement, those documents expressly referred to
herein and other documents of even date herewith embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may be related to the subject matter hereof in any way.
14. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be in an original and all of which taken together
constitute one and the same agreement.
15. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign his rights
or delegate his obligations hereunder without the prior written consent of the
Company.
16. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Texas or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Texas. In furtherance of the
foregoing, the internal law of the State of Texas shall control the
interpretation and construction of this Agreement, even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
17. Amendment and Waiver. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company and Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
18. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
19. No Strict Construction; Interpretation. The language used in this agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent and no rule of strict construction will be applied against any
person. The term "including" as used in this Agreement is used to list items by
way of example and shall not be deemed to constitute a limitation of any term or
provision contained herein. As used in this Agreement, the singular or plural
number shall be deemed to include the other whenever the context so requires.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
ProMedCo, Inc.
BY: /s/ H. XXXXX XXXXX
H. Xxxxx Xxxxx
ITS: President and CEO
"Executive"
/s/ XXXX X. XXXXXXX
Xxxx X. Xxxxxxx
Appendix A
ProMedCo, Inc.
Bonus Plan
Xxxx X. Xxxxxxx
Fiscal Year ending 6/30/95
The bonus plan for fiscal 1994-95 will entitle Xxxx Xxxxxxx to accrue a bonus of
up to 100% of base salary dependent upon the accomplishments relative to Net
Income and # of Physicians as indicated in the following table:
Total
Net Income % Bonus # Physicians % Bonus % Bonus
($000 omitted)
(476)or more 0 19 or less 0 0
(475) 2 20 3 5
(402) 4 25 6 10
(325) 4 30 11 15
(250) 6 35 16 22
(150) 6 40 24 30
0 8 45 32 40
150 10 50 40 50
300 12 55 43 55
400 14 60 46 60
500 16 65 49 65
600 18 75 57 75
700 20 85 65 85
800 22 95 73 95
900 or more 25 100 or more 75 100
The "# Physicians" is the number of affiliated physicians (acquired or managed)
at June 30, 1995. Based upon preliminary financial results, ninety percent of
the indicated bonus will be paid on July 31, 1995. The balance will be paid when
final results are available. The maximum total amount payable for the twelve
months ended June 30, 1995 will be limited to 50% of base salary for that
period, with the balance deferred and payable in equal increments following the
end of each of the following three fiscal years, provided Xxxx is still an
employee of Company on the date of payment.
ProMedCo Inc. Xxxx X. Xxxxxxx
/s/ H. XXXXX XXXXX /s/ XXXX X. XXXXXXX
Date: 11/15/1994 Date: 11/15/1994
