1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of March 24, 1999 (the "Agreement"),
between Sheridan Healthcare, Inc., a Delaware corporation (the "Company"), and
Xxxxxxxx Xxxxxxxxx (the "Executive").
PRELIMINARY STATEMENTS
WHEREAS, on the date hereof, Vestar/Calvary, Inc. ("Acquisition"),
Vestar/Calvary Holdings, Inc. ("Holdings") and the Company are entering into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
Acquisition will merge into the Company (the "Merger"), with the Company
constituting the surviving corporation;
WHEREAS, Acquisition and the Company desire that, effective upon the
purchase by Acquisition of shares of the Company's common stock pursuant to the
Offer (as defined in the Merger Agreement), the Company employ the Executive and
enter into an agreement embodying the terms of such employment and the Executive
desires to accept such employment with the Company and enter into such an
agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
AGREEMENT
1. Effectiveness of Agreement/Prior Agreements.
(a) Notwithstanding any other provision of this Agreement,
this Agreement shall constitute a binding obligation of the parties hereto as of
the date hereof but shall become effective only upon the date of Acquisition's
purchase of shares of the Company's common stock pursuant to the Offer (such
date being hereinafter referred to as the "Commencement Date"); provided,
however, that for this Agreement to continue to be effective after the ninetieth
day following the Merger, Holdings shall, within ninety (90) days following the
Merger, obtain shareholder approval intended to satisfy Section 280G(b)(5)(B) of
the Internal Revenue Code of 1986, as amended (the "Shareholder Approval"). If
the Shareholder Approval is not obtained or the Merger Agreement is terminated
for any reason without shares of the Company's common stock being purchased
pursuant to the Offer, this Agreement shall, at such time, be terminated without
further obligation or liability of either party.
(b) Effective as of the Commencement Date, this Agreement
shall supercede all prior agreements and understandings (including verbal
agreements) between the Executive and the Company and/or its affiliates
regarding the terms and conditions of Executive's employment with the Company
and its affiliates including, without limitation, the Executive Employment
Agreement dated as of December 1, 1994 with the Company (f/k/a SAMA Holdings,
Inc.) and Sheridan Healthcorp, Inc. (f/k/a Southeastern Anesthesia Management
Associates), as amended
2
2
(the "Prior Employment Agreement" and together with such other prior agreements
and understandings, collectively, the "Prior Agreements"); provided that this
Agreement shall not supercede the Executive's rights to expense reimbursement or
benefits under the Company's employee benefits plans, programs and arrangements.
It is expressly agreed that from and after the Commencement Date the Company and
its affiliates shall have no further obligations under, and the Executive shall
have no further rights under, the Prior Employment Agreement including, without
limitation, any severance, termination, or change of control related benefits.
2. Employment. Subject to the provisions of this Agreement, the Company
shall employ the Executive, and the Executive agrees that he will be so
employed, upon the terms and conditions hereinafter set forth.
3. Term of Employment. Subject to the provisions of this Agreement,
unless earlier terminated pursuant to Section 7, the term of Executive's
employment pursuant to this Agreement (the "Term of Employment") shall remain
effective until the fifth anniversary of the Commencement Date (the "Scheduled
Expiration Date"). Notwithstanding the preceding sentence, commencing with the
Scheduled Expiration Date and on each anniversary of the Scheduled Expiration
Date thereafter (each an "Extension Date"), the Term of Employment shall be
automatically extended for an additional one-year period, unless the Company or
the Executive provides the other party hereto six (6) months' prior written
notice before the next Extension Date that the Term of Employment shall not be
so extended. For the avoidance of doubt, the term "Term of Employment" shall
include any extension that becomes applicable pursuant to the preceding
sentence.
4. Duties.
(a) During the Term of Employment, beginning on the Commencement Date
the Executive (i) shall continue to serve as the President and Chief Executive
Officer of the Company or in a position carrying an equivalent or more senior
title, as reasonably determined by the Board of Directors, (ii) shall perform
such duties and responsibilities as may be determined by the Board of Directors
of the Company consistent with the Executive's title and position as an
executive officer of the Company pursuant to the preceding clause (i), (iii)
upon request of the Board of Directors of the Company, shall serve as an officer
and/or director of the Company and any of its subsidiaries and (iv) shall render
all services reasonably incident to the foregoing. The Executive agrees to use
the Executive's best efforts in, and shall devote the Executive's full working
time, attention, skill and energies to, the advancement of the interests of the
Company and/or its Subsidiaries and the performance of the Executive's duties
and responsibilities hereunder, except for (x) vacation time and absence for
sickness or similar disability and (y) to the extent that it does not interfere
with the performance of the Executive's duties hereunder, (A) such reasonable
time as may be devoted to service on the boards of directors of other
corporations and entities, subject to the provisions of Section 8, on which the
Executive currently serves and which are disclosed on Exhibit A hereto or any
other boards of directors on which the Executive may serve in the future,
subject to the consent of the Company's Board of Directors (not to be
unreasonably withheld), and the fulfillment of civic responsibilities and (B)
such reasonable time as may necessary from time to time for personal financial
matters.
3
3
(b) In performing the Executive's duties under this Agreement, the
Executive shall use reasonable good faith efforts to comply with and follow all
written policies, standards, rules and regulations established by the Company
from time to time and shall be bound by and comply with the terms and conditions
of other written agreements to which the Company is a party, or to which it may
become a party during the Term of Employment, that are applicable to executive
officers of the Company in their capacity as such and not in their capacity as
physicians, in any case under this Section 4(b), provided Executive has
knowledge of such policies, standards, rules, regulations or agreements, as the
case may be.
(c) During and subsequent to the Term of Employment, the Executive
agrees that the Executive shall immediately notify the Company of any and all
notices of claims made or threats thereof of which the Executive has knowledge
arising out of the Executive's services during or prior to the Term of
Employment as soon as the Executive becomes aware of this information and shall
cooperate in any investigation and in the defense of any claims made or threats
thereof.
(d) During and subsequent to the Term of Employment, the Executive
shall assign, account and pay to the Company all accounts receivable,
compensation and any other form of remuneration due from or paid by any source
other than the Company that is paid to the Executive and is attributable to
services he has rendered in the Executive's professional capacity on behalf of
the Company during the Term of Employment or sums which come into the
Executive's possession which are attributable to the services of other employees
of the Company on behalf of the Company.
5. Compensation.
(a) During the Term of Employment, the Company shall pay the Executive
as compensation for the performance of the Executive's duties under this
Agreement, a salary at an annual rate of $375,000 per annum from the
Commencement Date (as such base salary may be increased from time to time, the
"Base Salary"). Such salary shall be subject to such increases, if any (but not
decreases), as may be determined in the sole discretion of the compensation
committee of the Company's Board of Directors. Executive's salary shall be
subject to withholding under applicable law and shall be payable in periodic
installments in accordance with the Company's usual practice for its senior
executives, as in effect from time to time.
(b) During the Term of Employment, the Company shall maintain an annual
incentive compensation plan (the "Annual Bonus Plan") for its senior executives
in which the Executive shall be entitled to participate in accordance with the
terms thereof as in effect from time to time, at a level commensurate with the
Executive's position and duties with the Company. During the Term of Employment,
the Executive shall be eligible to receive an annual target bonus equal to 50%
of the Base Salary pursuant to the Annual Bonus Plan, based upon the
satisfaction of performance targets established by the Company's Board of
Directors in its sole discretion. It is the Company's intention that its Board
of Directors shall use its best commercial efforts to establish such performance
targets during the first 120 days of each fiscal year.
4
4
(c) Upon the occurrence of the Effective Time (as defined in the Merger
Agreement), the Company shall pay the Executive a cash bonus in the amount of
$650,000.
6. Benefits.
(a) During the Term of Employment, the Executive shall be entitled to
participate in any and all pension, profit sharing, medical, dental and/or life
insurance plans (collectively, the "Benefits") as may be in effect from time to
time for senior executives of the Company. Such participation shall be subject
to (i) the terms of the applicable plan documents, (ii) policies of the Company
generally applicable to senior executives and (iii) the discretion of the Board
of Directors of the Company or any administrative or other committee provided
for in or contemplated by such plans, including discretion with respect to
creation, maintenance and continuation of particular benefits, plans and
arrangements. Notwithstanding anything to the contrary contained herein, the
Executive shall at any time be entitled to at least those Benefits that are
equivalent in nature to those Benefits available at such time to the employees
or executives of the Company generally.
(b) The Company shall promptly reimburse the Executive for all
reasonable business expenses (including business travel and entertainment
expenses) incurred by the Executive during the Term of Employment in accordance
with the Company's practices for senior executives of the Company, as in effect
from time to time.
(c) During the Term of Employment, the Executive shall be entitled to
five (5) weeks paid vacation time during each calendar year the Executive is
employed under this Agreement (pro-rated for the final partial calendar year of
the Term of Employment). Vacation time shall be used within the calendar in
which they accrue, and vacation time shall only be used at the times and
intervals mutually agreed upon between Executive and the Company. The Executive
shall not be entitled to any additional compensation for unused vacation days.
(d) During the Term of Employment the Executive shall receive a car
allowance of $500 per month and the Executive shall provide an automobile which
shall be available at all times for the purpose of performing the Executive's
duties under this Agreement and for carrying on the business activities of the
Company. The Executive shall adequately insure such automobile and the
Executive, in accordance with all applicable laws and regulations, against
claims for bodily injury, death or property damage occurring as a result of the
use of the automobile and all other automobiles used by the Executive in
connection with the Executive's employment under this Agreement.
(e) During the Term of Employment, the Company shall pay the
Executive's applicable hospital medical staff fees and professional license fees
as reasonably requested by the Executive.
(f) During the Term of Employment, the Company shall reimburse the
Executive for dues and fees for the period of membership covering such Term of
Employment for any of the following professional associations which are paid by
the Executive during the Executive's Term of Employment: (i) American Medical
Association; (ii) Florida Medical Association; (iii)
5
5
American Society of Anesthesiologists; (iv) Florida Society of
Anesthesiologists; and (v) an applicable County Medical Association.
Reimbursement shall be made after Executive's presentation of an expense
statement and paid receipt and any other supporting information the Company may
reasonably request.
7. Termination of Employment of the Executive. Notwithstanding any
other provision of this Agreement, the provisions of this Section 7 shall
exclusively govern the Executive's rights under this Agreement upon a
termination of the Executive's employment with the Company and its affiliates.
Notwithstanding the foregoing, the Executive shall be entitled to receive such
expense reimbursement and benefits accrued under any plan, policy or program of
the Company in accordance with the terms of such plan, policy or program,
including, without limitation, reimbursement for reasonable business expenses
incurred. During the Term of Employment, this Agreement and the Executive's
employment hereunder may be terminated as follows under subparagraph (a) through
(h) inclusive:
(a) At any time by the mutual consent of the Executive and the
Company. Upon termination pursuant to this Section 7(a), all
obligations of the Company under this Agreement thereupon immediately
shall terminate, other than obligations with respect to earned but
unpaid Base Salary and professional liability insurance as provided in
Section 10(c), to the extent applicable.
(b) At any time for "cause" by the Company upon written notice
of termination to the Executive, which notice specifies in reasonable
detail the facts and circumstances claimed to give rise to the
Company's right to terminate the Executive's employment for cause;
provided that, for any termination for cause to be effective, the
Executive and his counsel must be permitted to attend a meeting of the
Board of Directors within 30 days (and the Board may insist within 20
days) after delivery to the Executive of such notice of termination
pursuant to this Section 7(b) to explain why the Executive should not
be terminated for cause (a "Cause Meeting") and, following any such
explanation, the Board of Directors must confirm that the Company has
cause to terminate the Executive's employment; provided further that
(i) if the Executive declines or fails to attend the Cause Meeting,
such termination shall be effective immediately upon such declination
or failure and (ii) the Company may require the Executive to cease
performing further duties to the Company until the conclusion of the
Cause Meeting without constituting grounds for the Executive's
termination of employment pursuant to Section 7(f). For purposes of
this Agreement, a termination shall be for "cause" if the Board of
Directors of the Company reasonably determines that:
(i) the Executive has committed an act of
fraud, embezzlement, misappropriation or breach of
fiduciary duty against the Company or its affiliates
or felony involving the business, assets or customers
or clients of the Company or its affiliates or has
been convicted by a court of competent jurisdiction
or has plead guilty or nolo contendere to any other
felony; or
(ii) the Executive has committed a material
breach of any of the covenants, terms or provisions
of Sections 8, 9 or 12 hereof; or
6
6
(iii) the Executive substantially has failed
to perform the Executive's duties hereunder,
including by committing a material breach of any of
the covenants, terms or provisions hereof (other than
pursuant to Sections 8, 9, or 12), which failure or
breach has not been remedied within a reasonable time
specified by the Company that is not less than thirty
(30) days after delivery to the Executive by the
Company of written notice thereof; or
(iv) the Executive has breached the
Executive's obligation contained in Section 13 of
this Agreement.
Upon termination for cause as provided in this Section 7(b),
(A) all obligations of the Company under this Agreement thereupon
immediately shall terminate, other than any obligations with respect to
earned but unpaid Base Salary and professional liability insurance as
provided in Section 10(c), to the extent applicable, and (B) the
Company shall have any and all rights and remedies under this Agreement
and applicable law.
(c) Upon the Executive's death or upon the Executive's
permanent disability (as defined below) continuing for a period of one
hundred eighty (180) days. Upon termination in the event of death or
permanent disability as provided in this Section 7(c), such termination
will be treated as a termination by the Company without Cause and the
rights and obligations of the parties shall be as set forth in Section
7(e), provided that in the case of the death of the Executive, any
payments shall be made to the Executive's estate. As used herein, the
term "permanent disability" or "permanently disabled" is hereby defined
as the inability of the Executive, by reason of injury, illness or
other similar cause, to perform a major part of the duties and
responsibilities which the Executive had been performing pursuant to
this Agreement prior to the date of disability in connection with the
conduct of the business and affairs of the Company.
(d) At any time by the Executive upon ninety (90) days' prior
written notice to the Company. Upon termination by the Executive as
provided in this Section 7(d), all obligations of the Company under
this Agreement thereupon immediately shall terminate, other than any
obligations with respect to the earned but unpaid Base Salary, any
accrued but unpaid incentive bonus in accordance with Section 5(b)
hereof for any previously completed fiscal year and professional
liability insurance as provided in Section 10(c), to the extent
applicable.
(e) At any time without "cause" (as defined in Section 7(b))
by the Company upon written notice to the Executive of not less than
thirty (30) days. In the event of termination of the Executive by the
Company pursuant to this Section 7(e), the Company shall, subject to
the Executive's continued compliance with the provisions of Section 8,
(i) pay to the Executive an amount equal to twice the Executive's Base
Salary according to the terms of Section 5(a) hereof, in equal
installments over the 12 months following the termination of employment
pursuant to the Company's payroll practices, (ii) continue the
Executive's benefits, car allowance and reimbursements as provided in
Section 6 hereof from the effective date of termination through the
date that is twelve (12) months from the date of such termination,
(iii) pay to the Executive the Executive's pro rata
7
7
portion (based on the number of days the Executive is employed during
the applicable year as compared to 365 days) of the bonus that the
Executive would have been eligible to receive pursuant to Section 5(b)
hereof if he had been employed pursuant to this Agreement for the whole
year based upon the Company's actual financial performance for the
applicable year as measured against the performance objectives for such
year, determined and calculated in accordance with the terms of the
Annual Bonus Plan (the "Pro-Rata Bonus"), payable when bonuses are
generally paid to the Company's senior executives and (iv) any accrued
but unpaid incentive bonus in accordance with Section 5(b) for any
previously completed fiscal year. In addition, in the event such
termination of the Executive's employment by the Company without cause
occurs within one year following the occurrence of a Change of Control,
then, in addition to the amounts described in clauses (i), (ii), (iii)
and (iv) above, the Company shall, subject to the Executive's continued
compliance with the provisions of Section 8, pay to the Executive a
lump sum cash payment on the first anniversary of the date of the
Executive's termination of employment in an amount equal to the excess,
if any, of (A) the greater of (1) $1 million or (2) twice the sum of
(x) Executive's Base Salary as in effect on the date of termination and
(y) the bonus he received in respect of the year prior to the year of
the Executive's termination over (B) the amounts paid pursuant to (i)
above. Notwithstanding the foregoing provisions of this Section 7(e),
if the Executive terminates the Executive's employment pursuant to
Section 7(f) following any reduction in the Base Salary, the Base
Salary amount applicable under this Section 7(e) shall be the amount in
effect prior to any reduction thereof. Upon termination by the Company
without cause as provided in this Section 7(e), except for the
compensation and benefits expressly provided in this Section 7(e), all
obligations of the Company under this Agreement thereupon immediately
shall terminate, other than any obligations with respect to earned but
unpaid Base Salary and professional liability insurance as provided in
Section 10(c), if applicable.
For purposes of this Agreement, "Change of Control" shall mean Change
of Control as defined in the Vestar/Calvary Holdings, Inc. 1999 Stock
Option Plan.
(f) Upon written notice by the Executive upon the continuation
of any of the following (without the Executive's written consent) after
written notice (the "Good Reason Notice") by the Executive to the
Company describing in reasonable detail the occurrence of one or more
of the following events and the failure by the Company to remedy such
event(s) within thirty (30) days after receipt of the Good Reason
Notice: (i) the Company has failed to pay the Executive the Base Salary
(or any installment thereof) provided for in Section 5(a) or (if
applicable) the annual incentive bonus, if any, payable under Section
5(b) upon such date as payment is due in accordance with Section 5(a)
or (if applicable) Section 5(b), (ii) the Company fails to make
available to the Executive any benefit plan or compensation plan
(including any pension, profit sharing, life insurance, health,
accidental death or dismemberment or disability plan) that has been
made available generally to the senior executives of the Company
(subject to applicable eligibility and waiting periods applicable to
senior executives generally) or reduces the Benefits to which the
Executive is entitled so that they are not at least equivalent in
nature to those Benefits available at such time to the employees or
executives of the
8
8
Company generally, provided that nothing in this Section 7(f) shall be
construed to mean that the Company shall be constrained in any manner
from amending or eliminating any benefit or compensation plan as such
is applied to the Executive and the other senior executives of the
Company generally, (iii) the principal offices of the Company are moved
to a location more than 30 miles from the Company's current
headquarters in Broward County in the State of Florida, or (iv) the
Company has substantially failed to perform any of its obligations
hereunder, including by committing a material breach of any of the
covenants, terms or provisions hereof, by a demotion in Executive's
titles from those contemplated by this Agreement or by assigning to the
Executive duties representing a diminution from those contemplated by
this Agreement. The Executive shall have no right of termination under
this Section 7(f) in the event the relevant default described in the
Good Reason Notice is cured within the 30 day period following the
Company's receipt of the Good Reason Notice. In the event of the
Executive's termination of employment pursuant to this Section 7(f),
such termination shall be treated for purposes of this Agreement as a
termination by the Company without "cause" and the provisions of
Section 7(e) shall apply, including if the Executive's termination of
employment pursuant to this Section 7(f) occurs within the one year
period following a Change of Control, the provisions of Section 7(e)
concerning the rights and obligations of the parties in the event of
the Executive's termination by the Company without cause following a
Change of Control.
(g) Upon the expiration of the Term of Employment due to the
Executive's election not to extend the Term of Employment pursuant to
Section 3. Upon termination of the Term of Employment by the Executive
as provided in this Section 7(g), unless the Executive's employment is
earlier terminated pursuant to paragraphs (a) through (f) of this
Section 7, the Executive's termination of employment hereunder (whether
or not the Executive continues as an employee of the Company
thereafter) shall be deemed to occur on the close of business on the
day immediately preceding the next scheduled Extension Date and all
obligations of the Company under this Agreement thereupon immediately
shall terminate, other than any obligations with respect to the earned
but unpaid Base Salary, any accrued but unpaid incentive bonus in
accordance with Section 5(b) for any previously completed fiscal year,
the Pro-Rata Bonus for the year in which such termination occurs and
professional liability insurance as provided in Section 10(c), to the
extent applicable.
(h) Upon the expiration of the Term of Employment due to the
Company's election not to extend the Term of Employment pursuant to
Section 3. Upon termination of the Term of Employment by the Company as
provided in this Section 7(h), unless the Executive's employment is
earlier terminated pursuant to paragraphs (a) through (f) of this
Section 7, the Executive's termination of employment hereunder (whether
or not the Executive continues as an employee of the Company
thereafter) shall be deemed to occur on the close of business on the
day immediately preceding the next scheduled Extension Date and all
obligations of the Company under this Agreement thereupon immediately
shall terminate, other than any obligations with respect to earned but
unpaid Base Salary, any accrued but unpaid incentive bonus in
accordance with Section 5(b) for any previously completed fiscal year,
the Pro-Rata Bonus for the year in which such
9
9
termination occurs, and professional liability insurance as provided in
Section 10(c), to the extent applicable. In addition, the Company
shall, subject to the Executive's continued compliance with the
provisions of Section 8, pay to the Executive an amount equal to twice
the Executive's annual Base Salary according to the terms of Section
5(a) hereof, in equal installments over the 12 months following the
termination of employment pursuant to the Company's payroll practices.
In the event of any termination of this Agreement as provided in this
Section 7, the Executive shall immediately resign from, and surrender, all
medical staff and other privileges ("Privileges"), at any hospital, ambulatory
surgical center or other facility where the Company provides services and
Executive waives any and all due claims of any kind whatsoever, including due
process claims, the Executive or the Executive's estate may have against the
Company and all other parties with respect to the termination of the Executive's
Privileges.
Unless the Company and the Executive otherwise agree in writing,
continuation of the Executive's employment with the Company beyond the
expiration or termination of the Term of Employment shall be deemed an
employment at will and shall not be deemed to extend any of the provisions of
this Agreement and the Executive's employment may thereafter be terminated at
will by either the Executive or the Company.
8. Non-Competition.
(a) Except as provided below, during the Term of Employment and for the
Non-Competition Period, the Executive shall not, without the express written
consent of the Company, directly or indirectly, engage in any activity which is,
or participate or invest in or assist (whether as owner, part-owner,
stockholder, partner, director, officer, trustee, employee, agent, independent
contractor or consultant, or in any other capacity) any Competitive Enterprise,
except that the Executive may make passive investments in a Competitive
Enterprise the shares of which are publicly traded if such investment
constitutes less than one percent of the outstanding equity of such enterprise.
Without implied limitation, the forgoing covenant shall include hiring or
attempting to hire for or on behalf of any such Competitive Enterprise any
officer or other employee of the Company or any Subsidiary of the Company or any
Controlled Entity, encouraging any officer, Health Care Provider or employee to
terminate his or her relationship or employment with the Company or any
Subsidiary of the Company or Controlled Entity, soliciting for or on behalf of
any such Competitive Enterprise any client or customer (including any Medical
Customer) of the Company or any Subsidiary of the Company or any Controlled
Entity, and diverting to any Person any client or business opportunity of the
Company, or any Subsidiary of the Company or Controlled Entity.
(b) The term "Non-Competition Period" shall mean the period commencing
on the last day of the Term of Employment and ending on the first anniversary of
the last day of the Term of Employment or, in the event the Executive fails to
commence employment with the Company as of the Commencement Date, until the
first anniversary of the Commencement Date.
(c) For purposes of this Section 8:
10
10
"Affiliate" shall mean, as to any Person, (i) each direct or
indirect Subsidiary of such Person, (ii) each other Person of which
such Person is a direct or indirect Subsidiary, and (iii) each other
direct or indirect Subsidiary of such other Person.
"Columbia" means the hospitals and ambulatory surgical
facilities owned by Columbia/HCA Healthcare, Inc.
"Competitive Enterprise" means any Person the activities,
products or services of which (A) are competitive with activities,
products or services of the Company or any of its Controlled Entities
in any state in which the Company is engaged or intends to engage in
the same or a similar business during the one year period preceding the
Executive's termination of employment or during the Non-Competition
Period, and (B) include (1) the provision of medical services,
including without limitation, the provision of anesthesia services,
pain management services, emergency room services, primary medical care
services, neonatology, perinatology and radiology services; (2) the
provision of Payor Services; (3) the provision of administrative
services for medical services and Payor Services, including without
limitation, quality assurance services, utilization management
services, billing services, recruitment services and medical management
information services; or (4) the provision of services or products of
any nature to Columbia.
"Controlled Entity" shall have the meaning ascribed thereto in
the Merger Agreement.
"Health Care Provider" means any physician, nurse, technician
or allied health care provider providing medical services on behalf of
the Company or any Controlled Entity on a full or part-time basis as an
independent contractor or consultant.
"Medical Customers" means patients, health maintenance
organizations, preferred payer organizations, third party payors, IPAs,
PHOs, MSOs, PSOs (or similar arrangements), employers, labor unions,
hospitals, clinics, ambulatory surgery centers, Medicare intermediaries
and Medicaid intermediaries.
"Payor Services" means payor services in the area of managed
care, third party payors, provider networks, IPAs, TPAs, PHOs, MSOs,
HMOs, PSOs, capitation pools and other similar arrangements.
"Person" shall mean an individual, a corporation, an
association, a partnership, an estate, a trust, and any other entity or
organization.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association or other business entity of which
fifty percent (50%) or more of the total voting power of shares of
capital stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof, or fifty percent (50%) or more of the equity interest therein,
is at the time owned or controlled,
11
11
directly or indirectly, by any Person or one or more of the other
Subsidiaries of such Person or a combination thereof.
(d) In furtherance and not in limitation of the foregoing restrictions,
during the Term of Employment and the Non-Competition Period, subject to Section
4, the Executive shall not devote any time to consulting, lecturing or engaging
in other self-employment or employment activities without the prior written
consent of the Company.
9. Business Opportunities. The Executive agrees, while he is employed
by the Company, to offer or otherwise make known or available to the Company or
any subsidiary, as directed by the Company and without additional compensation
or consideration, any business prospects, contracts or other business
opportunities that he may discover, find, develop or otherwise have available to
him in any field in which the Company is engaged, and further agrees that any
such prospects, contracts or other business opportunities shall be the property
of the Company.
10. Professional Liability Insurance. During the Term of Employment, if
the Executive's duties hereunder include provision of medical services, the
following will apply:
(a) the Company shall make all reasonable efforts to obtain (and if
obtained, shall pay the cost of) adequate professional liability insurance
coverage (subject to availability) at commercially reasonable rates to provide
protection for the Executive and the Company for the Executive's provision of
medical services while acting in the scope of the Executive's employment
pursuant to the terms and conditions of this Agreement, as determined and
approved by the Company's Board of Directors, in its absolute sole discretion;
(b) the Company may, in its absolute discretion, cancel, modify,
change, replace or substitute any professional liability insurance coverage for
the Executive and/or the Company for the Executive's provision of medical
services while acting in the scope of the Executive's employment pursuant to the
terms and conditions of this Agreement which was obtained by the Company
pursuant to its obligations under this Section 10; provided, however, that if
any such cancellation, modification, change, replacement or substitution results
in the reduction of the coverage limits below one million dollars ($1,000,000)
per occurrence and three million dollars ($3,000,000) in the annual aggregate,
then not less than ninety (90) days prior to the effectiveness of such
reduction, the Company will provide written notice thereof to the Executive and,
in the Executive's sole discretion, the Executive may elect not less than thirty
(30) days after such notice to terminate the Term of Employment under this
Agreement in accordance with Section 7(d), provided that the notice period with
respect to such termination shall be reduced to sixty (60) days and the notice
provided for in Section 7(d) shall (i) indicate that such termination is being
effected in accordance with the provisions of this Section 10(b), and (ii)
describe the cancellation, modification, change, replacement or substitution,
and state that the Executive has determined in good faith that the resulting
coverage constitutes inadequate liability protection for the Executive for the
Executive's provision of medical services pursuant to this Agreement;
12
12
(c) upon termination of the Term of Employment under this Agreement for
any reason other than in connection with the reduction of professional liability
insurance coverage limits as contemplated in Section 10(b), the Company shall,
at the Company's expense, continue to cover the Executive, from the date of
termination through the expiration of all applicable statutes of limitation, for
medical malpractice claims arising out of the Executive's employment under this
Agreement by, at the Company's option and subject to availability at
commercially reasonable rates: (i) continuing the continuous claims made
professional liability insurance policy in effect on the last day of the Term of
Employment; (ii) purchasing a replacement continuous claims made professional
liability insurance policy with retroactive coverage that does not create any
lapse in coverage; or, (iii) purchasing an appropriate extended reporting
endorsement ("tail coverage");
(d) upon termination of the Term of Employment under this Agreement in
connection with the reduction of professional liability insurance coverage
limits as contemplated in Section 10(b), the Company shall reimburse the
Executive in an aggregate amount of up to Ten Thousand Dollars ($10,000) for the
costs of the Executive's purchase of appropriate tail coverage for medical
malpractice claims arising out of the Executive's employment under this
Agreement that are made during the period from the date of termination of the
Term of Employment through the second anniversary of such termination, with
coverage limits equal to the coverage limits of the professional liability
insurance provided by the Company prior to the reduction;
(e) the Executive shall immediately execute and deliver, in strict
accordance with Company's instructions, all documents and instruments necessary
to effectuate the provisions of this Section 10;
(f) the Executive agrees to act in full accordance with the terms and
conditions of any and all professional liability insurance policies; and
(g) each party (i) recognizes that time is of the essence with respect
to each of their obligations in this Agreement and (ii) agrees to act as soon as
practicable in light of the particular circumstances and use the Executive's or
its best efforts in as timely a fashion as possible to maximize the intended
benefits of this Agreement.
11. Representations and Warranties of Executive/Indemnification.
(a) The Executive represents and warrants to the Company (i) that the
Executive (A) is able to enter into and perform all duties under this Agreement,
and (B) is in good mental and, except as set forth on Exhibit B hereto, physical
health and does not suffer from any illness or disability which could prevent
him from fulfilling the Executive's responsibilities under this Agreement; (ii)
that the Executive is not a party to or bound by any agreement, arrangement or
understanding that would interfere with, hinder or conflict with the performance
of the Executive's duties hereunder, and (iii) that none of the representations
or warranties made by the Executive in this Agreement or in any interviews,
references, resumes or curricula vitae submitted to the Company or in any
insurance applications or any staff membership applications submitted to any
third party in connection with this Agreement, contains or will contain any
13
13
untrue statement of a material fact, or omits or will omit to state a material
fact necessary in order to make the statements or provisions therein and in this
Agreement not misleading or incomplete.
(b) The Executive agrees to immediately notify the Company of any fact
or circumstance of which he becomes aware during the Term of Employment, which
in itself or with the passage of time and/or the combination with other
reasonably anticipated factors known to the Executive does render or will render
any of these representations and warranties to be untrue.
(c) The Company hereby agrees that it shall indemnify and hold harmless
the Executive to the fullest extent permitted by Delaware law from and against
any and all liabilities, costs, claims, and expenses, including all costs and
expenses incurred in defense of litigation (including attorneys' fees), arising
out of the employment of the Executive with the Company. Costs and expenses
incurred by the Executive in defense of such litigation (including attorneys'
fees) shall be paid by the Company in advance of the final disposition of such
litigation upon receipt by the Company of (a) a written request, (b) appropriate
documentation evidencing the incurrence, amount and nature of the costs and
expense for which payment is being sought, and (c) an undertaking made by or on
behalf of the Executive to repay the amounts so paid if it shall ultimately be
determined that the Executive is not entitled to be indemnified by the Company
under Delaware law. During the Term of Employment, the Company shall maintain in
effect, at its sole expense, directors' and officers' liability insurance
policies providing for coverage and reimbursement amounts and policies that are
customary and appropriate for companies of similar size and nature to the
Company and that cover claims (subject to customary exceptions) arising from
facts or events that occur at any time during the period of the Executive's
employment with the Company.
12. Confidentiality.
(a) The Executive acknowledges that as a result of the Executive's
employment with the Company, the Executive has and will necessarily become
informed of, and have access to, certain valuable and confidential information
of the Company, including, without limitation, trade secrets, technical
information, plans, lists of patients, data, records, fee schedules, computer
programs, manuals, processes, methods, intangible rights, contracts, agreements,
licenses, personnel information and the identity of health care providers
(collectively, the "Confidential Information"), and that the Confidential
Information, even though it may be contributed, developed or acquired in whole
or in part by the Executive, is the Company's exclusive property to be held by
the Executive in trust and solely for the Company's benefit. Accordingly, except
as required by law, by an order of a court having jurisdiction or under subpoena
from a government agency, the Executive shall not, at any time, either during or
subsequent to the Term of Employment, use, reveal, report, publish, copy,
transcribe, transfer or otherwise disclose to any person, corporation or other
entity, any of the Confidential Information without the prior written consent of
the Company, except to officers and employees of the Company and other persons
who are in a contractual or fiduciary relationship with the Company and except
for information which is or becomes of general public knowledge from sources
other than the Executive.
14
14
(b) Upon the termination of this Agreement, the Executive shall
promptly deliver to the Company all Company property and possessions including
all drawings, manuals, letters, notes, notebooks, reports, copies, deliverable
Confidential Information and all other materials relating to the Company's
business which are in the Executive's possession or control.
13. Substance Abuse Policy. It is the Company's policy that none of its
employees shall use or abuse any controlled substances at any time or be under
the influence of alcohol or be affected by the use of alcohol during the time
period required to perform their duties and obligations under any employment
agreements. Company and the Executive both acknowledge and agree that the
purpose of this policy is for the benefit of the Company, the Executive and the
individuals whom they serve.
In compliance with this policy, the Executive agrees to submit
to random drug testing immediately upon the Company's request in accordance with
practices and policies in effect from time to time for physician employees of
the Company. Testing may include, but shall not be limited to, the taking of
blood and urine samples and utilization of gas chromatography. Unless otherwise
provided in the practices and policies in effect from time to time for physician
employees of the Company, in the event that a positive test result is reached
indicating a violation of the Company's policy, the Executive may, at the
Executive's own expense and subject to the supervision and approval of the
Company of the manner and testing facilities utilized, elect to have a second
drug test performed on a second portion of the same sample. The Company may, in
its sole and absolute discretion, terminate the Executive for cause pursuant to
Section 7(b) of this Agreement in the event either: (a) a positive test result
is received in the initial drug test and the Executive fails to exercise the
Executive's option for a second test in the manner provided for in this Section
13 or in accordance with practices and policies in effect from time to time for
physician employees of the Company; or (b) positive test results are received
from both tests. In the event that the second test result is negative, the
Company may, at any time, retest the Executive pursuant to the terms of this
Section 13 and the practices and policies in effect from time to time for
physician employees of the Company.
14. Specific Performance; Severability. It is specifically understood
and agreed that any breach of the provisions of Sections 8, 9 and 12 hereof and
the obligations referred to and incorporated therein by the Executive is likely
to result in irreparable injury to the Company, that the remedy at law alone
will be an inadequate remedy for such breach and that, in addition to any other
remedy it may have, the Company shall be entitled to enforce the specific
performance of this Agreement by the Executive through both temporary and
permanent injunctive relief, and through any other appropriate equitable relief,
without the necessity of showing or proving actual damages. In case any of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, including without limitation
geographic scope, duration or functional coverage, any such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had been limited or modified (consistent with its
general intent) to the extent necessary to make it valid, legal and enforceable,
or if it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision or part of a provision, this Agreement shall be
construed as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained in this Agreement.
15
15
15. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed by certified or registered mail (return receipt
requested) as follows:
To the Company:
Sheridan Healthcare, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: General Counsel
(000) 000-0000
Fax: (000) 000-0000
With copies to:
Vestar Capital Partners III, L.P.
Att: Xxxxxx X. Xxxxxx
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Fax: (000) 000-0000
and,
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Fax: (000) 000-0000
To the Executive:
Xxxxxxxx Xxxxxxxxx
0000 XX 00xx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
(000) 000-0000
or to such other address of which any party may notify the other parties as
provided above. Notices shall be effective as of the date of such delivery or
mailing.
16. Miscellaneous. This Agreement shall be governed by and construed
under the laws and solely in the courts of the State of Florida without regard
to the conflicts of law provisions thereof, and shall not be amended, modified
or discharged in whole or in part except by an agreement in writing signed by
each of the parties hereto. The failure of any of the parties to
16
16
require the performance of a term or obligation or to exercise any right under
this Agreement or the waiver of any breach hereunder shall not prevent
subsequent enforcement of such term or obligation or exercise of such right or
the enforcement at any time of any other right hereunder or be deemed a waiver
of any subsequent breach of the provision so breached, or of any other breach
hereunder. This Agreement shall inure to the benefit of successors of the
Company by way of merger, consolidation or transfer of all or substantially all
of the assets of the Company, shall be binding upon the heirs, executors,
administrators and legal representatives of the Executive and may not be
assigned by the Executive. This Agreement supersedes all prior understandings
and agreements among the parties relating to the subject matter hereof
including, without limitation, the Prior Agreements. The Company may withhold
from any amounts payable under this Agreement such Federal, state and local
taxes as may be required to be withheld pursuant to applicable law or
regulation.
17. Jurisdiction; Venue; Inconvenient Forum; Jury Trial. ANY SUIT,
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, OR ANY JUDGMENT ENTERED BY
ANY COURT IN RESPECT TO THIS AGREEMENT SHALL BE BROUGHT IN THE COURTS OF THE
STATE OF FLORIDA OR IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
FLORIDA IN BROWARD COUNTY, AND THE PARTIES ACCEPT THE EXCLUSIVE PERSONAL
JURISDICTION OF THOSE COURTS FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING.
IN ADDITION, THE PARTIES KNOWINGLY, INTENTIONALLY AND IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR LATER HAVE
TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY JUDGMENT ENTERED BY ANY COURT BROUGHT IN THE
STATE OF FLORIDA, AND FURTHER, KNOWINGLY, INTENTIONALLY AND IRREVOCABLY WAIVE
ANY CLAIM THAT ANY SUIT, ACTION OR PROCEEDING BROUGHT IN THE STATE OF FLORIDA
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY WAIVES ALL RIGHTS TO ANY
TRIAL BY JURY IN ALL LITIGATION RELATING TO OR ARISING OUT OF THIS AGREEMENT.
17
17
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first set forth above.
SHERIDAN HEALTHCARE, INC.
By: /s/ Xxx X. Xxxxxx
-----------------------------------
XXX X. XXXXXX
Vice President
EXECUTIVE:
/s/ Xxxxxxxx Xxxxxxxxx
----------------------------------------
XXXXXXXX XXXXXXXXX
