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EXHIBIT 10.24
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is entered into as of
October 9, 1997, by and between American Physician Partners, Inc., a Delaware
corporation (the "Company"), and Xxxxxxxx X. Xxxxxx, M.D., a resident of the
state of Florida (the "Consultant").
RECITALS
The Consultant has been an officer and director of the Company since its
inception.
The Consultant has gained valuable knowledge and experience as an
officer and director of the Company, a nationally-recognized speaker and
educator regarding radiology practice management and as a radiologist.
The Company desires to benefit from such knowledge and experience by
obtaining consulting services from the Consultant, and the Consultant is
willing to provide such consulting services to the Company.
AGREEMENT
Based on the recitals set forth above and the mutual promises contained
herein, the parties agree as follows:
ARTICLE 1
1.1 Engagement. The Company hereby engages the Consultant as
consultant and advisor, effective on the date following the consummation
of the Company's initial public offering of common stock under the
Securities Act of 1933, as amended (the "Effective Time"), with respect
to the matters specified herein, subject to the terms and conditions
hereof, and for the compensation provided herein. The Consultant
accepts this engagement, effective as of the Effective Time, as a
consultant and advisor to the Company, subject to the terms and
conditions hereof.
1.2 Tasks and Duties.
(a) Commitment. Throughout the Term (defined below), the
Consultant shall devote 50% of the Consultant's
professional time, energy, skill and efforts to the
performance of the Consultant's tasks and duties hereunder
in a manner that will faithfully and diligently further
the business and interests of the Company, its
subsidiaries and the medical practices, diagnostic imaging
centers and other entities affiliated or that potentially
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may be affiliated with the Company. The Consultant's
services as a director of the Company shall be separate
from the commitment pursuant to this Agreement.
(b) Tasks and Responsibilities of Parties. During the Term
hereof, Consultant will be subject to the direction of the
Company and will perform the consulting services requested
by the Company, at times and places as are mutually agreed
upon by Consultant and the Company; provided, however,
that Consultant shall be available for assignments,
meetings, and other projects during reasonable business
hours with reasonable advance notice from the Company.
Consultant's duties shall include, but not be limited to,
assisting the Company in recruiting, screening, evaluating
and recommending radiology practices and imaging centers
for affiliation with or acquisition by the Company. In
addition, Consultant shall assist the Company in its
efforts to develop and expand its (i) networks through the
addition of hospitals and/or managed care organizations,
(ii) strategic alliances with other health care providers
and payors, (iii) relationships with equipment and supply
vendors and (iv) plan for outsourcing imaging services
from hospitals. In addition, during the Term hereof,
Consultant will perform the duties associated with
Chairman of the Company's Physician Advisory Board.
(c) Standards of Duty. During the Term, the Consultant shall
apply reasonable efforts and skills to his duties
hereunder, at least consistent with such skills, duties,
and efforts performed on behalf of the Company from the
Company's inception through the date of this Agreement and
shall make available to the Company his judgment and
experience in the areas of radiology and radiology
management services.
(d) Cooperation. The Consultant shall use diligent efforts to
aid the Company, its subsidiaries, and the medical
practices they affiliate with in establishing and
maintaining the Company's and its subsidiaries' goodwill
and reputation with other medical groups, suppliers,
customers, creditors, and the investment and business
communities generally.
1.3 Term. The Term (herein so called) hereof shall be for a period
of one year from the Effective Time, and shall be automatically renewed
for successive one year periods unless earlier terminated in accordance
with the terms hereof.
1.4 Compensation and Expenses.
(a) Compensation. Subject to the terms and conditions hereof,
in consideration of the consulting services to be rendered
by the Consultant to the Company hereunder, and in
consideration of the covenants of the Consultant set forth
herein, the Company hereby agrees to pay the Consultant as
compensation $112,500 per annum, payable monthly. The
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Consultant shall be responsible for all federal, state and local
income taxes, Social Security, FICA, FUTA and other amounts
required by law. Consultant shall be eligible to participate in
the Level I category of the Company's Cash Bonus Program.
(b) Stock Options.
(i) On May 1, 1996, the Company granted to Consultant (who at
that time was an employee of the Company) options under
the Company's 1996 Stock Option Plan to purchase 200,000
shares of the Company's Common Stock at an exercise price
of $0.125 per share (the "Xxxxxx Options"). The Xxxxxx
Options are evidenced by that certain Notice of Grant of
Stock Option and related exhibits and are subject to the
terms and conditions set forth therein.
(ii) In addition to the Xxxxxx Options, the Consultant was
granted options to purchase 30,000 shares of the Company's
Common Stock at an exercise price of $0.125 per share
outside of the Company's 1996 Stock Option Plan, (i)
10,000 of such options vest on May 1, 1997 and (ii) the
remaining 20,000 options vest monthly over the 24 months
immediately following May 1, 1997 provided that the
Consultant is a member of the Company's Board of Directors
on such dates. The Consultant recognizes and acknowledges
that since he was an employee of the Company at the time
he commenced service on the Company's Board of Directors,
that he is ineligible to receive grants of options as a
non-employee director pursuant to Article Three (or its
successor) of the Company's 1996 Stock Option Plan. The
options referenced in this section (b)(ii) are evidenced
by that certain Notice of Grant of Stock Option and
related exhibits and are subject to the terms and
conditions set forth therein.
(c) Payment and Reimbursement of Expenses. During the Term, the
Company shall pay or reimburse the Consultant for all reasonable
travel and other expenses incurred by the Consultant in
performing the Consultant's obligations hereunder in accordance
with the policies and procedures of the Company for its
consultants and in the same manner as the Consultant was
reimbursed as an employee prior to the Effective Time, provided
that the Consultant properly accounts therefor in accordance with
the regular policies of the Company. Any single expense (other
than an air fare shown to be the best rate then available) in
excess of the greater of (i) the threshold amount established by
the Company immediately following the commencement of the
Consultant's duties hereunder and on or near the annual
anniversary of such date during the Term or (ii) $1,000
individually shall be approved in advance by the Company in
writing.
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(d) Annual Review. On each anniversary of the date of this
Agreement, the Board of Directors will review Consultant's
performance and compensation hereunder.
1.5 Independent Contractor. While serving as a Consultant, the
Consultant shall at all times be an independent contractor rather than a
co-venturer, or employee of the Company or its subsidiaries.
1.6 Termination. This Agreement will terminate upon the occurrence
of any of the following events:
(a) the Consultant dies;
(b) the Company, by written notice to the Consultant or his
court-appointed guardian, after a determination by the
Company's Board of Directors, terminates this Agreement
due to the inability of the Consultant to perform the
duties, tasks and responsibilities under this Agreement
for a period exceeding 120 days by reason of injury,
physical or mental illness or other disability, which
condition has been certified by a physician; provided,
however, that prior to terminating this Agreement due to
such disability, the Company shall give a written
statement of findings to the Consultant or his court-
appointed guardian setting forth specifically the nature
of the disability and the resulting performance failures,
and the Consultant shall have a period of ten (10) days
thereafter to respond in writing to the Board of
Directors' findings;
(c) the Consultant is convicted of (or pleads guilty or nolo
contendre to) a felony or any misdemeanor involving
dishonesty or moral turpitude, after a determination by
the Company's Board of Directors; provided, however, that
prior to terminating this Agreement pursuant to this
subsection, the Company shall give a written statement of
findings to the Consultant setting forth specifically the
grounds on which cause is based, and the Consultant shall
have a period of ten (10) days thereafter to respond in
writing to the Board of Directors' findings;
(d) the willful and continued failure of the Consultant to
substantially perform his services pursuant to the terms
of this Agreement (other than any such failure resulting
from illness or disability) after a written demand for
substantial performance is requested by the Company's
Board of Directors. Any such written demand must
specifically identify the manner in which it is claimed
that (i) the Consultant has not substantially performed
his duties or (ii) the Consultant is willfully engaged in
misconduct which has, or can reasonably be expected to
have, a direct and material adverse monetary effect on the
Company. For purposes of this section, no act or failure
to act on the Consultant's part
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shall be considered "willful" if done, or omitted to be
done by the Consultant in good faith and with reasonable
belief that the Consultant's action or omission was in the
best interest of the Company. No termination shall be
effected under this subsection (d) unless the Consultant
has been provided with specific information in the form of
a notice as to the acts or omissions which form the basis
of the allegation of the reasons for termination and the
Consultant has had an opportunity to be heard, with
counsel if so desired, before the Board of Directors and
such Board determines, by majority vote, in good faith
that the Consultant acted or failed to act in a manner
that constitutes grounds for termination.
(e) anytime upon 30 days advance written notice from the
Company;
(f) the Consultant terminates this Agreement due to the
default by the Company in the performance of any of its
obligations hereunder and such default remains unremedied
by the Company for a period of thirty (30) days following
its receipt of written notice thereof from the Consultant;
or
(g) the Consultant voluntarily terminates this Agreement for
any reason upon at least 30 days advance written notice.
1.7 Effects of Termination.
(a) Upon termination of this Agreement for any reason, the
Company will pay Consultant all compensation owed to
Consultant and unpaid through the date of termination
(including expense reimbursements).
(b) In addition, if this Agreement is terminated under
Sections 1.6 (e) or (f), then the Company shall also pay
Consultant a lump sum equal to six months of the then-
applicable annual rate.
(c) Upon termination of this Agreement for any reason, except
termination pursuant to Section 1.6 (f), the Consultant
agrees that for the one-year period following the
termination of this Agreement:
(i) The Consultant shall not directly or indirectly,
whether as an individual, employee, director,
consultant or advisor, or in any other capacity
whatsoever, provide services to any person, firm,
corporation or other business enterprise which is
involved in the acquisition or management of
radiology physician practices or other service
company that provides management services in the
area of radiology where the Company is operating at
the time of termination, unless Consultant obtains
the prior written consent of the Company's Board of
Directors. Notwithstanding the
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foregoing, the Consultant shall not be prohibited
from continuing his (i) activities with respect to
physician educational activities related to
Educational Symposium or (ii) management, technical
or other similar consulting to physician practices.
(ii) The Consultant will not directly or indirectly
encourage or solicit, or attempt to encourage or
solicit, any individual to leave the Company's
employ for any reason or interfere in any other
manner with the employment relationships at the
time existing between the Company and its current
or prospective (individuals involved in discussions
with the Company regarding employment arrangements)
employees.
(iii) The Consultant will not induce or attempt to induce
any provider, payor, customer, supplier,
distributor, licensee or other business relation of
the Company to cease doing business with the
Company or in any way interfere with the existing
business relationship between any such customer,
supplier, distributor, licensee or other business
relation and the Company.
The Consultant acknowledges that monetary damages may not be
sufficient to compensate the Company for any economic loss which
may be incurred by reason of breach of the foregoing restrictive
covenants. Accordingly, in the event of any such breach, the
Company shall, in addition to any remedies available to the
Company at law, be entitled to obtain equitable relief in the
form of an injunction precluding the Consultant from continuing
to engage in such breach. If any restriction set forth in this
paragraph is held to be unreasonable, then the Consultant and the
Company agree, and hereby submit, to the reduction and limitation
of such prohibition to such area or period as shall be deemed
reasonable.
1.8 General Provisions.
(a) Assignment. Neither party may assign or delegate
any of his or its rights or obligations under this
Agreement without the prior written consent of the
other party.
(b) Entire Agreement. This Agreement, including
Exhibit 1 attached hereto, contains the entire
agreement between the parties with respect to the
subject matter hereof and supersedes any and all
prior agreements between the parties relating to
such subject matter.
(c) Modifications. This Agreement may be changed or
modified only by an agreement in writing signed by
both parties hereto.
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(d) Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or on behalf of the
Consultant, the Consultant's spouse, heirs, assigns, executors or
personal or legal representatives (collectively, the
"Consultant's Affiliates") against the Company or any Company
Affiliate (defined below) after the expiration of two years from
the date of accrual of such cause of action, and any claim or
cause of action of the Consultant or any Consultant Affiliate
shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two-year period.
(e) Indulgences, Etc. Neither the failure nor any delay on the part
of either party to exercise any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of the same or of any
right, remedy, power or privilege, nor shall any waiver of any
right, remedy, power, or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.
(f) Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon the Company and its
successors and permitted assigns and Consultant and Consultant's
Affiliates whether or not any such person shall have become a
party to this Agreement and have agreed in writing to join and be
bound by the terms and conditions hereof.
(g) Governing Law. This Agreement shall be governed by and
construed, interpreted and applied in accordance with the laws of
the State of Texas, excluding any choice-of-law rules that would
refer the matter to the laws of another jurisdiction.
(h) Provisions Separable. The provisions hereof are independent of
and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that
for any reason any other or others of them may be invalid or
unenforceable in whole or in part. If any provision hereof, or
the application thereof to any situation or circumstance, shall
be invalid or unenforceable in whole or in part, then the parties
shall seek in good faith to replace any such legally invalid
provision or portion thereof with a valid provision that, in
effect, will most nearly effectuate the parties' intentions in
entering into this Agreement.
(i) The Consultant's Sole Remedy. The Consultant's and the
Consultant Affiliates' sole remedy shall be against the Company
(or any assignee or successor to all or substantially all the
assets of the Company or any transferee in receipt of material
assets of the Company transferred in
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fraud of creditors (collectively, "Assigns")) for any Consultant
Claim (defined below). The Consultant and the Consultant
Affiliates shall have no claim or right of any nature whatsoever
against any of the Company's or any of its subsidiaries'
directors, officers, employees, direct and indirect stockholders,
owners, trustees, beneficiaries or agents, irrespective of when
any such person held such status (collectively, the "Company
Affiliates") (other than Assigns) arising out of any Consultant
Claim. The Consultant, on his own behalf and on behalf of the
Consultant Affiliates, hereby releases and covenants not to xxx
any person other than the Company or its Assigns over any
Consultant Claim. The Company Affiliates shall be third-party
beneficiaries of this Agreement for purposes of enforcing the
terms of this Section 1.8(i) (Consultant's Sole Remedy) against
the Consultant and the Consultant Affiliates. Except as set
forth in the immediately preceding sentence, nothing herein,
express or implied, is intended to confer upon any party, other
than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason hereof and no person who is not a
party hereto may rely on the terms hereof.
Upon termination of the Consultant's engagement, the sole
claim of the Consultant and the Consultant Affiliates against the
Company and its Assigns for Consultant Claims will be for the
amounts described in Section 1.4 (Compensation and Expenses) and
Section 1.7 as applicable and the Consultant and the Consultant
Affiliates shall have no claim against the Company or its Assigns
for any Consultant Claim, other than those set forth in Sections
1.4 and 1.7, or against any Company Affiliate (other than
Assigns) for Consultant Claims, including without limitation any
claim for damages of any nature, be they actual, direct,
indirect, special, punitive or consequential. The Consultant, on
his own behalf and on behalf of the Consultant Affiliates, hereby
releases and covenants not to xxx for, collect or otherwise
recover any amount against the Company or its Assigns for any
Consultant Claim, other than the amounts set forth in Sections
1.4 and 1.7, or against any Company Affiliate (other than
Assigns) for any Consultant Claim. IT IS EXPRESSLY UNDERSTOOD
AND AGREED THAT THE LIMITATIONS ON THE CONSULTANT'S REMEDIES
EXPRESSED IN THIS SECTION 1.8 (CONSULTANT'S SOLE REMEDY) APPLY
WITHOUT LIMITATION TO CONSULTANT CLAIMS RELATING TO NEGLIGENCE.
"Consultant Claim" shall mean any claim, liability or
obligation of any nature whatsoever arising out of this Agreement
or an alleged breach of this Agreement or for any other claim
arising out of the Consultant's engagement by the Company or the
termination thereof; provided, however, that the term "Consultant
Claim" shall not include claims arising (i) in favor of creditors
of the Company generally, including claims arising out of any
fraudulent conveyance or other transfer of assets in fraud of
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creditors or (ii) as a result of fraud committed by the Company
or any of its Assigns.
(j) Indemnification by the Company.
(a) The Company shall indemnify the Consultant who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative (other than an action
by or in the right of the Company) by reason of the fact that he
is or was a Consultant against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action,
suit, or proceeding if he acted in good faith and a manner he
reasonably believed to be in or not opposed to the best interests
of the Company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The determination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Consultant did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to
the best interests of the Company, and with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(b) Any indemnification under this subsection (j) shall be
made by the Company only as authorized in the specific case upon
its determination that indemnification of the Consultant is
proper in the circumstances because he has met the applicable
standard of conduct set forth in the preceding paragraph. Such
determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit, or
proceeding, even though less than a quorum, or (2) if there are
no such directors or if such directors so direct, by independent
legal counsel in a written opinion or (3) by the stockholders.
Expenses (including attorneys' fees) incurred by the Consultant
in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Company following
final disposition of such action, suit or proceeding if it is
determined that he is entitled to indemnification by the Company
as specified in this subsection (j).
1.9 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by certified
or registered mail, postage prepaid with return receipt requested,
telecopy (with hardcopy delivered by overnight courier service), or
delivered by hand, messenger or overnight courier service (if
appropriate receipt or other evidence of delivery is obtained), and
shall be deemed given when received at the addresses of the parties set
forth below, or at such other address furnished in writing to the other
parties hereto.
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If to Consultant: Xxxxxxxx X. Xxxxxx, M.D.
000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
with a copy to: Xxxxxxx Xxxxxx, Esq.
Xxxxxx & Xxxx
X.X. Xxx 00
Xxxxx, Xxxxxxx 00000-0000
If to Company: American Physician Partners, Inc.
0000 XxxxxxxXxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxx
(000) 000-0000 (fax)
2.0 Headings; Index. The headings of paragraphs and Sections herein
are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions hereof. The
words "herein," "hereof," "hereto" and "hereunder" and other words of
similar import refer hereto as a whole and not to any particular
Article, Section or other subdivision.
2.1 Voluntary Agreement. The Consultant acknowledges that he has had
sufficient time and opportunity to read and understand this Agreement
and to consult with his legal counsel and other advisors regarding the
terms and conditions set forth herein.
2.2 Further Assurances. The parties will execute such further
instruments and take such further actions as may be reasonably necessary
to carry out the intent of this Agreement.
2.3 Legal Fees and Expenses. In the event of any disputes under this
Agreement, each party shall be responsible for their own legal fees and
expenses which it may incur in resolving such dispute, unless otherwise
prohibited by applicable law or a court of competent jurisdiction.
2.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and Consultant have executed this
Agreement, effective as of the day and year first above written.
COMPANY CONSULTANT
AMERICAN PHYSICIAN PARTNERS, INC.
a Delaware corporation
-----------------------------
Xxxxxxxx X. Xxxxxx, M.D.
By:
--------------------------------
Xxxxxxx X. Xxxxxxx Address:
President & CEO 000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
