EXHIBIT 10.15
EMPLOYMENT AGREEMENT
This Employment Agreement ("AGREEMENT") is made and entered into on this
30th day of November 2000, effective as of the date hereof by and between
AMERlPATH, INC., a Delaware corporation (the "COMPANY"), and XXXXX X. XXXX
(hereinafter, the "EXECUTIVE").
RECITALS
A. The Executive is currently employed by Pathology Consultants of
America, Inc. (d/b/a/ Inform DX) ("PATHOLOGY") as its Chief Executive Officer
pursuant to an employment agreement dated August 1, 1997 (the "PRIOR EMPLOYMENT
AGREEMENT").
B. The Company owns and maintains a one hundred percent (100%) interest
in AMP Merger Corp. (the "MERGER CORP.").
C. Pursuant to that certain Agreement and Plan of Merger, dated
November 7, 2000, by and among the Company, Pathology and Merger Corp. (the
"MERGER AGREEMENT") Merger Corp. shall be merged with and into Pathology (the
"MERGER"), and Pathology as a result shall become a wholly owned subsidiary of
the Company.
D. As a result and in connection with the Merger, the Company and the
Executive now wish to enter into this new Agreement, which is intended to
supercede and replace the Prior Employment Agreement in its entirety, to reflect
the Executive's new position and duties, his compensation, and other terms and
conditions of his employment as President of the Company. As of the Commencement
Date hereof, the Prior Agreement shall terminate and no longer have any force
and effect.
F. This Agreement will take effect upon, and solely in the event of, the
consummation of the transactions contemplated under the Merger Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 EMPLOYMENT AND TERM. During the Term of Employment under this
Agreement, the Company hereby agrees to employ the Executive and the Executive
hereby agrees to serve the Company on the terms and conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. During the Term of Employment under this
Agreement, the Executive shall serve as the President of the Company, shall
report directly to Xxxxx X. New, the Chairman of the Board of Directors (the
"BOARD") and CEO of the Company,
shall faithfully and diligently perform all services as may be assigned to him
by the Board, and shall exercise such power and authority as may from time to
time be delegated to him by the Board. The Executive shall devote his full time
and attention to the business and affairs of the Company, render such services
to the best of his ability, and use his reasonable best efforts to promote the
interests of the Company. The Executive shall comply with the Company's
employment policies and practices generally applicable to its officers and
employees including, without limitation, xxxxxxx xxxxxxx and confidentiality
policies. Notwithstanding the foregoing or any other provision of this
Agreement, it shall not be a breach or violation of this Agreement for the
Executive to (i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures, fulfill speaking engagements or teach at educational
institutions, or (iii) manage personal investments, so long as such activities
do not interfere with or detract from the performance of the Executive's
responsibilities to the Company in accordance with this Agreement.
2. TERM OF EMPLOYMENT. The term of employment under this Agreement, and
the employment of the Executive hereunder (the "TERM OF EMPLOYMENT"), shall
commence on the Effective Time of the Merger as defined in the Merger Agreement
(the "COMMENCEMENT DATE") and shall terminate upon the date on which the
employment of the Executive is terminated pursuant to and in accordance with
Section 5 hereof (the "EXPIRATION DATE").
3. COMPENSATION.
3.1 BASE SALARY. The Executive shall receive a base salary at the
annual rate of $270,000 (the "BASE SALARY") during the Term of Employment, with
such Base Salary payable in installments consistent with the Company's normal
payroll schedule, subject to applicable withholding and other taxes. The Base
Salary shall be reviewed, at least annually, for merit increases and may, by
action and in the discretion of the Board, be increased at any time or from time
to time.
3.2 BONUSES.
a. During the Term of Employment, for each Bonus Period
(as defined below), the Board shall establish a bonus pool from which the
Executive shall be eligible to receive an annual bonus potentially equal to
thirty five percent (35%) of the Executive's Base Salary (the "BONUS PAYMENT"),
to be determined by the Board and based upon the satisfaction by the Executive
and/or the Company of the goals (the "GOALS"), to be established by December 31,
2000. Notwithstanding the foregoing, in the event that the Goals are either
exceeded or not fully achieved for a Bonus Period, the Executive may be eligible
to receive a Bonus Payment in an amount in excess of or less than thirty-five
percent (35%) of the Executive's Base Salary, as determined by the Chairman of
the Board and CEO (the "CHAIRMAN") in his sole discretion. The amount of the
annual bonus payable to the Executive for a Bonus Period shall be equal to the
sum of the following Goals that have been satisfied with respect to such Bonus
Period:
(i) QUANTITATIVE GOALS: If the Quantitative Goals
(as set forth on Exhibit A) are satisfied for the Bonus Period, the Executive
shall receive an amount equal to sixty percent (60%) of the Bonus Payment; and
-2-
(ii) QUALITATIVE GOALS: If the Qualitative Goals
(as set forth on Exhibit A) are satisfied for the Bonus Period, the Executive
shall receive an amount equal to forty percent (40%) of the Bonus Payment.
Notwithstanding the foregoing, for the 2001 Bonus Period, the bonus
payable by the Company to the Executive shall in no event be less than Fifty
Thousand Dollars ($50,000).
b. For the Bonus Period in which the Executive's employment
with the Company terminates for any reason other than by the Company for Cause
under Section 5.1 hereof, provided that the Executive has been continuously
employed with the Company for a minimum of six (6) months during such Bonus
Period, the Company shall pay the Executive a pro rata portion (based upon the
period beginning on the first day of the Bonus Period and ending on the date on
which the Executive's employment with the Company terminates) of the bonus
otherwise payable under Section 3.2a for the Bonus Period in which such
termination of employment occurs; provided, however, that (i) the Bonus Period
shall be deemed to end on the last day of the calendar quarter in which the
Executive's employment so terminates, and (ii) the business criteria used to
determine the bonus for this short Bonus Period shall be annualized and shall be
determined based upon audited financial information prepared in accordance with
generally accepted accounting principles, applied consistently with prior
periods, and reviewed and approved by the Compensation Committee of the Board.
The Incentive Compensation for this Bonus Period is sometimes hereinafter
referred to as the "TERMINATION YEAR BONUS".
c. The Executive shall receive such additional bonuses, if
any, as the Board may in its sole and absolute discretion determine.
d. Any bonuses payable pursuant to this Section 3.2 are
sometimes hereinafter referred to as "INCENTIVE COMPENSATION." Each period for
which Incentive Compensation is payable hereunder is sometimes hereinafter
referred to as a "BONUS PERIOD." Unless otherwise specified by the Board, the
Bonus Period shall be the calendar year.
e. Notwithstanding the above, the Executive shall receive a
year 2000 bonus (the "Year 2000 Bonus Plan") as prescribed on Exhibit A hereto
payable in accordance with the Company's regular bonus payment schedule for
similar situated executives.
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 REIMBURSEMENT OF EXPENSES. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt with respect to the reimbursement of
expenses of executive personnel, the Company shall reimburse the Executive for
all reasonable expenses actually paid or incurred by the Executive during the
Term of Employment in the course of and pursuant to the business of the Company.
The Executive shall account to the Company in writing for all expenses for which
reimbursement is sought and shall supply to the Company copies of all relevant
invoices, receipts or other evidence reasonably requested by the Company.
4.2 COMPENSATION/BENEFIT PROGRAMS. During the Term of Employment,
the
-3-
Executive shall be entitled to participate in all medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and life
insurance plans, and any and all other plans as are presently and hereinafter
offered by the Company to its executive personnel, including savings, pension,
profit-sharing and deferred compensation plans, subject to the general
eligibility and participation provisions set forth in such plans.
4.3 WORKING FACILITIES. During the Term of Employment, the Company
shall furnish the Executive with an office, secretarial help and such other
facilities and services suitable to his position and adequate for the
performance of his duties hereunder.
4.4 STOCK OPTIONS. During the Term of Employment hereunder, and
subject to the execution of any other applicable agreements, the Executive shall
be eligible to receive options (the "INITIAL STOCK OPTIONS") to purchase up to
35,000 shares of common stock (the "COMMON STOCK") of the Company, to be
determined by the Chairman of the Company based upon the Executive's performance
and services rendered to the Company in calendar year 2001, and subject to the
approval by both the Compensation Committee and the Board at their regular
annual review of employee performance to be held in calendar year 2002. If and
to the extent awarded, the Initial Stock Options shall be granted under (and
therefore subject to all terms of) the Company's stock option plan (the "STOCK
OPTION PLAN") and pursuant to the terms of a certain stock option agreement (the
"OPTION AGREEMENT") to be entered into by and between the Executive and the
Company. In addition, during the Term of Employment, the Executive shall be
eligible to be granted additional options under the Company's Stock Option Plan.
The number, if any, of additional options and terms and conditions thereof shall
be determined by the Committee appointed pursuant to the Stock Option Plan, or
by the Board of Directors of the Company, in its discretion and pursuant to the
Stock Option Plan.
4.5 OTHER BENEFITS. The Executive shall accrue up to four (4) weeks
of paid vacation each calendar year during the Term of Employment, to be taken
at such times as the Executive and the Company shall mutually determine and
provided that no vacation time shall significantly interfere with the duties
required to be rendered by the Executive hereunder. Any accrued vacation time
not taken by Executive during any calendar year may be carried forward into any
succeeding calendar year. Notwithstanding the foregoing, in no event shall the
Executive's accrued vacation time exceed four (4) weeks at any point in time.
The Executive shall receive such additional benefits, if any, as the Board of
the Company shall from time to time determine.
4.6 RELOCATION ALLOWANCE. Upon submission of proper documentation
to the Company by the Executive, the Company shall reimburse the Executive for
all reasonable relocation expenses incurred by the Executive. For this purpose,
relocation expenses shall include house-hunting trips, realtor's fees for the
sale of Executive's current home, moving expenses for household items, costs of
obtaining a new mortgage including associated closing costs and points, and
travel/transition of the Executive's family to Florida. In addition, the Company
shall reimburse the Executive on a grossed-up basis in the event that any
federal, state and local taxes are assessed upon the Executive with respect to
payments made pursuant to this Section 4.6. If the Executive terminates his
employment with the Company pursuant to Section 5.5 hereof (a) prior to the
first anniversary of the Commencement Date hereof, then the
-4-
Executive immediately shall refund to the Company the full amount of any
relocation expenses reimbursed by the Company pursuant to this Section 4.7, or
(b) on or after the first anniversary of the Commencement Date hereof but prior
to the second anniversary of the Commencement Date (the "SECOND YEAR"), then the
Executive shall refund to the Company a portion of any relocation expenses
reimbursed by the Company pursuant to this Section 4.7, determined by
multiplying the total amount of relocation expenses paid to the Executive by a
fraction the numerator of which shall be equal to the number of full calendar
months the Executive was employed by the Company during the Second Year and the
denominator of which is 12. The Company shall be entitled to offset the refund
payable by the Executive pursuant to the prior sentence against any amounts
payable by the Company to the Executive.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE. The Company shall at all times have the
right, upon written notice to the Executive, to terminate the Term of
Employment, for Cause as defined below. For purposes of this Agreement, the term
"CAUSE" shall mean (i) an action or omission of the Executive which constitutes
a willful and material breach of, or willful and material failure or refusal
(other than by reason of his disability or incapacity) to perform his duties
under, this Agreement which is not cured within fifteen (15) days after receipt
by the Executive of written notice of same, (ii) fraud, embezzlement,
misappropriation of funds or breach of trust in connection with his services
hereunder, (iii) a conviction of any crime which involves dishonesty or a breach
of trust, or (iv) gross negligence in connection with the performance of the
Executive's duties hereunder, which the Board in its reasonable discretion deems
to be good and sufficient cause to terminate the Executive's employment with the
Company. Any termination for Cause shall be made by notice in writing to the
Executive, which notice shall set forth in reasonable detail all acts or
omissions upon which the Company is relying for such termination. Upon any
termination pursuant to this Section 5.1, the Company shall (i) pay to the
Executive any unpaid Base Salary through the date of termination and (ii) pay to
the Executive his accrued but unpaid Incentive Compensation, if any, for any
Bonus Period ending on or before the date of the termination of Executive's
employment with the Company. Upon any termination effected and compensated
pursuant to this Section 5.1, the Company shall have no further liability
hereunder (other than for (x) reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Section 4.1, and (y) payment of compensation for accrued and unused vacation
days).
5.2 DISABILITY. The Company shall at all times have the right, upon
written notice to the Executive, to terminate the Term of Employment, if the
Executive shall become entitled to benefits under the Company's long term
disability plan as then in effect, or, if the Executive shall as the result of
mental or physical incapacity, illness or disability, become unable to perform
his obligations hereunder for a period of 180 days in any 12-month period. The
Board shall have sole discretion based upon competent medical advice to
determine whether the Executive is or continues to be disabled. Upon any
termination pursuant to this Section 5.2, the Company shall (i) pay to the
Executive any unpaid Base Salary through the effective date of termination
specified in such notice, (ii) pay to the Executive his accrued but unpaid
Incentive Compensation, if any, for any Bonus Period ending on or before the
date of termination of the Executive's employment with the Company, and (iii)
pay to the Executive his Termination Year
-5-
Bonus, if any, at the time provided in Section 3.2b hereof. Upon any termination
effected and compensated pursuant to this SECTION 5.2, the Company shall have no
further liability hereunder (other than for (x) reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the provisions of Section 4.1, and (y) payment of compensation for accrued
and unused vacation days).
5.3 DEATH. Upon the death of the Executive during the Term of
Employment, the Company shall (i) pay to the estate of the deceased Executive
any unpaid Base Salary through the Executive's date of death, (ii) pay to the
estate of the deceased Executive his accrued but unpaid Incentive Compensation,
if any, for any Bonus Period ending on or before the Executive's date of death,
and (iii) pay to the estate of the deceased Executive, the Executive's
Termination Year Bonus, if any, at the time provided in Section 3.2b hereof.
Upon any termination effected and compensated pursuant to this SECTION 5.3, the
Company shall have no further liability hereunder (other than for (x)
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1, and (y) payment
of compensation for accrued and unused vacation days).
5.4 TERMINATION WITHOUT CAUSE. At any time the Company shall have
the right to terminate the Term of Employment by written notice to the
Executive. Upon any termination pursuant to this Section 5.4 (that is not a
termination under any of Sections 5.1, 5.2, 5.3, 5.5 or 5.6), the Company shall
(i) pay to the Executive any unpaid Base Salary through the date of termination
specified in such notice, (ii) pay to the Executive the accrued but unpaid
Incentive Compensation, if any, for any Bonus Period ending on or before the
date of the termination of the Executive's employment with the Company, (iii)
continue to pay the Executive's Base Salary for a period of twelve (12) months
following the termination of the Executive's employment with the Company, in the
manner and at such times as the Base Salary otherwise would have been payable to
the Executive, and (iv) pay to the Executive his Termination Year Bonus, if any,
at the time provided in Section 3.2b. Upon any termination effected and
compensated pursuant to this SECTION 5.4. the Company shall have no further
liability hereunder (other than for (x) reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1, and (y) payment of compensation for accrued and
unused vacation days).
5.5 TERMINATION BY EXECUTIVE.
a. The Executive shall at all times have the right, by
written notice not less than one hundred and eighty (180) days prior to the
termination date, to terminate his Employment Term.
b. Upon termination of the Term of Employment pursuant to
this Section 5.5 (that is not a termination under Section 5.6) by the Executive,
the Company shall (i) pay to the Executive any unpaid Base Salary through the
effective date of termination specified in such notice and (ii) pay to the
Executive his accrued but unpaid Incentive Compensation, if any, for any Bonus
Period ending on or before the termination of Executive's employment with the
Company. Upon any termination effected and compensated pursuant to this Section
5.5(b), the Company shall have no further liability hereunder (other than for
(x) reimbursement for
-6-
reasonable business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 4.1, and (y) payment of compensation for
accrued and unused vacation days).
5.6 CHANGE IN CONTROL OF THE COMPANY.
a. Unless otherwise provided in Section 5.7 hereof, in the
event that a Change in Control (as defined in paragraph (b) of this Section 5.6)
in the Company shall occur during the Term of Employment, the Company shall pay
to the Executive, within thirty (30) days of the Change in Control, a lump sum
payment equal to one times the Executive's annual Base Salary. In addition, if a
Change in Control of the Company occurs during the Term of Employment, and prior
to one year after the date of the Change in Control, the Term of Employment is
terminated by the Company without Cause, pursuant to Section 5.4 hereof, the
Company shall (1) pay to the Executive any unpaid Base Salary through the
effective date of the termination, (2) pay to the Executive the Incentive
Compensation, if any, not yet paid to the Executive for any year prior to such
termination, at such time as the Incentive Compensation otherwise would have
been payable to the Executive, (3) pay to the Executive his Termination Year
Bonus, if any, at the time provided in Section 3.2 hereof, and (4) pay to the
Executive, within 30 days of the termination of his employment hereunder, a lump
sum payment equal to two times the Executive's annual Base Salary. The Company
shall have no further liability hereunder (other than for (1) reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 4.1, and (2) payment of compensation for
accrued and unused vacation days).
b. For purposes of this Agreement, the term "CHANGE IN
CONTROL" shall mean:
(i) Approval by the shareholders of the Company of
(x) a reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to which
persons who were the shareholders of the Company immediately prior to such
reorganization, merger or consolidation or other transaction do not, immediately
thereafter, own more than 50% of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, in substantially the
same proportions as their ownership immediately prior to such reorganization,
merger, consolidation or other transaction, or (y) a liquidation or dissolution
of the Company or (z) the sale of all or substantially all of the assets of the
Company (unless such reorganization, merger, consolidation or other corporate
transaction, liquidation, dissolution or sale is subsequently abandoned);
(ii) Individuals who, as of the Commencement Date of
this Agreement, constitute the Board (the "INCUMBENT BOARD") cease for any
reason to constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the Commencement Date of this Agreement whose
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption, of office is in connection with an actual or threatened election
contest relating
-7-
to the election of the Directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or
(iii) the acquisition (other than by or from the
Company) by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act, of beneficial ownership
within the meaning of Rule 13-d promulgated under the Securities Exchange Act of
50% or more of either the then outstanding shares of the Company's Common Stock
or the combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors [(hereinafter referred
to as the ownership of a "CONTROLLING INTEREST") excluding, for this purpose,
any acquisitions by (1) the Company or its Subsidiaries, (2) any person, entity
or "group" that as of the Commencement Date of this Agreement owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act) of a Controlling Interest or (3) any employee benefit plan of the
Company or its Subsidiaries].
5.7 CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.
a. For purposes of this section, (i) A PAYMENT shall mean
any payment or distribution in the nature of compensation to or for the benefit
of the Executive, whether paid or payable pursuant to this Agreement or
otherwise; (ii) AGREEMENT PAYMENT shall mean a Payment paid or payable pursuant
to this Agreement (disregarding this Section 5.7); (iii) NET AFTER TAX RECEIPT
shall mean the Present Value of a Payment net of all taxes imposed on the
Executive with respect thereto under Sections 1 and 4999 of the Code, determined
by applying the highest marginal rate under Section 1 of the Code which applied
to the Executive's taxable income for the immediately preceding taxable year;
(iv) "PRESENT VALUE" shall mean such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "REDUCED AMOUNT" shall mean the smallest
aggregate amount of Payments which (a) is less than the sum of all Payments and
(b) results in aggregate Net After Tax Receipts which are equal to or greater
than the Net After Tax Receipts which would result if the aggregate Payments
were any other amount equal to or less than the sum of all Payments.
b. Anything in this Agreement to the contrary
notwithstanding, in the event that the Company's independent auditors or, at the
Executive's Option, any other nationally or regionally recognized firm of
independent accountants selected by the Executive and approved by the Company,
which approval shall not be unreasonably withheld (the "ACCOUNTING FIRM"), shall
determine that receipt of all Payments would subject the Executive to tax under
Section 4999 of the Code, it shall determine whether some amount of Payments
would meet the definition of a "REDUCED AMOUNT." If the Accounting Firm
determines that there is a Reduced Amount, the aggregate Agreement Payments
shall be reduced to such Reduced Amount; provided, however, that if the Reduced
Amount exceeds the aggregate Agreement Payments, the aggregate Payments shall,
after the reduction of all Agreement Payments, be reduced (but not below zero)
in the amount of such excess.
c. If the Accounting Firm determines that aggregate
Agreement Payments or Payments, as the case may be, should be reduced to the
Reduced Amount, the Company shall promptly give the Executive notice to that
effect and a copy of the detailed
-8-
calculation thereof, and the Executive may then elect, in his sole discretion,
which and how much of the Agreement Payments or Payments, as the case may be,
shall be eliminated or reduced (as long as after such election the present value
of the aggregate Payments equals the Reduced Amount), and shall advise the
Company in writing of his election within ten days of his receipt of notice. If
no such election is made by the Executive within such ten-day period, the
Company may elect which of the Agreement Payments or Payments, as the case may
be, shall be eliminated or reduced (as long as after such election the present
value of the aggregate Payments equals the Reduced Amount) and shall notify the
Executive promptly of such election. All determinations made by the Accounting
Firm under this Section shall be binding upon the Company and the Executive and
shall be made within 60 days of a termination of employment of the Executive. As
promptly as practicable following such determination, the Company shall pay to
or distribute for the benefit of the Executive such Payments as are then due to
the Executive under this Agreement and shall promptly pay to or distribute for
the benefit of the Executive in the future such Payments as become due to the
Executive under this Agreement.
d. While it is the intention of the Company and the
Executive to reduce the amounts payable or distributable to the Executive
hereunder only if the aggregate Net After Tax Receipts to the Executive would
thereby be increased, as a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that amounts will not have been paid
or distributed by the Company to or for the benefit of the Executive pursuant to
this Agreement which should not have been so paid or distributed ("OVERPAYMENT")
or that additional amounts which will have not been paid or distributed by the
Company to or for the benefit of the Executive pursuant to this Agreement could
have been so paid or distributed ("UNDERPAYMENT"), in each case, consistent with
the calculation of the Reduced Amount hereunder. In the event that the
Accounting Firm, based either upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Executive which the Accounting Firm
believes has a high probability of success or controlling precedent or other
substantial authority, determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of the
Executive shall be treated for all purposes as a loan AB INITIO to the Executive
which the Executive shall repay to the Company together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no loan shall be deemed to have been made and no amount
shall be payable by the Executive to the Company if and to the extent such
deemed loan and payment would not either reduce the amount on which the
Executive is subject to tax under Section I and Section 4999 of the Code or
generate a refund of such taxes. In the event that the Accounting Firm, based
upon controlling precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.
5.8 RESIGNATION. Upon any termination of employment pursuant to
this Article 5, the Executive shall be deemed to have resigned as an officer,
and if he or she was then serving as a director of the Company, as a director,
and if required by the Board, the Executive hereby agrees to immediately execute
a resignation letter to the Board.
-9-
5.9 SURVIVAL. The provisions of this Article 5 shall survive the
termination of this Agreement, as applicable.
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION. At all times while the Executive is employed
by the Company and for a one (1) year period immediately following the
termination of the Executive's employment with the Company for any reason, the
Executive shall not, directly or indirectly, engage in or have any interest in
any sole proprietorship, corporation, company, partnership, association, venture
or business or any other person or entity (whether as an employee, officer,
director, partner, agent, security holder, creditor, consultant or otherwise)
that directly or indirectly (or through any affiliated entity) competes with the
Company's business (for purposes of this Agreement, any business that engages in
the management or provision of anatomic pathology diagnostic services {whether
through physician practices, laboratories, hospitals, medical or surgery centers
or otherwise} shall be deemed to compete with the Company's business); provided
that such provision shall not apply to the Executive's ownership of common stock
of the Company or the acquisition by the Executive, solely as an investment, of
securities of any issuer that are registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and that are listed or admitted for
trading on any United States national securities exchange or that are quoted on
the National Association of Securities Dealers Automated Quotations System, or
any similar system or automated dissemination of quotations of securities prices
in common use, so long as the Executive does not control, acquire a controlling
interest in or become a member of a group which exercises direct or indirect
control of, more than five percent (5.0%) of any class of capital stock of such
corporation.
6.2 CONFIDENTIAL INFORMATION. The Executive shall not at any time
divulge, communicate, use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any Confidential Information
(as hereinafter defined) pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by the Executive with
respect to the business of the Company (which shall include, but not be limited
to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, employees, employee compensation or benefits,
employment practices and methods of doing business) shall be deemed a valuable,
special and unique asset of the Company that is received by the Executive in
confidence and as a fiduciary, and Executive shall remain a fiduciary to the
Company with respect to all of such information. For purposes of this Agreement,
"CONFIDENTIAL INFORMATION" means information disclosed to the Executive or known
by the Executive as a consequence of or through the unique position of his
employment with the Company (including information conceived, originated,
discovered or developed by the Executive) prior to or after the date hereof, and
not generally or publicly known, about the Company or its business.
Notwithstanding the foregoing, nothing herein shall be deemed to restrict the
Executive from disclosing Confidential Information to promote the best interests
of the Company or to the extent required by law.
6.3 NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times while
the Executive is employed by the Company and for the two (2) year period
immediately following the termination of the Executive's employment with the
Company for any reason, the Executive
-10-
shall not, directly or indirectly, for himself or for or on behalf of any other
person, firm, corporation, partnership, association or other entity (a) employ
or attempt to employ or solicit the termination of employment of or enter into
any contractual arrangement with any employee or former employee of the Company,
unless such employee or former employee has not been employed by the Company for
a period in excess of six (6) months, and/or (b) call on or solicit any of the
actual or targeted prospective customers or clients of the Company (or of its
physician practices or laboratories) on behalf of any person or entity in
connection with any business that competes with the Company's business, nor
shall the Executive make known the names and/or addresses of such employees,
customers or clients or any information relating in any manner to the Company's
trade or business relationships with such employees, customers or clients, other
than in connection with the performance of Executive's duties under this
Agreement.
6.4 OWNERSHIP OF DEVELOPMENTS. All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by Executive during the course of performing work for the Company or its
clients (collectively, the "WORK PRODUCT") shall belong exclusively to the
Company and shall, to the extent possible, be considered a work made by the
Executive for hire for the Company within the meaning of Title 17 of the United
States Code. To the extent the Work Product may not be considered work made by
the Executive for hire for the Company, the Executive agrees to assign, and
automatically assign at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product. Upon the request of the Company, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.
6.5 BOOKS AND RECORDS. All books, records, and accounts relating in
any manner to the customers or clients of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of the Executive's employment hereunder or on the
Company's request at any time.
6.6 DEFINITION, OF COMPANY. Solely for purposes of this Article 6,
the term "COMPANY" also shall include any existing or future subsidiaries of the
Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.
6.7 ACKNOWLEDGMENT BY EXECUTIVE. The Executive acknowledges and
confirms that (a) the restrictive covenants contained in this Article 6 are
reasonably necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Article 6 (including without
limitation the length of the term of the provisions of this Article 6) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion of any kind. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Article 6. The Executive further acknowledges that the
-11-
restrictions contained in this Article 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company's successors and
assigns.
6.8 REFORMATION BY COURT. In the event that a court of competent
jurisdiction shall determine that any provision of this Article 6 is invalid or
more restrictive than permitted under the governing law of such jurisdiction,
then only as to enforcement of this Article 6 within the jurisdiction of such
court, such provision shall be interpreted and enforced as if it provided for
the maximum restriction permitted under such governing law.
6.9 EXTENSION OF TIME. If the Executive shall be in violation of
any provision of this Article 6, then each time limitation set forth in this
Article 6 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks injunctive
relief from such violation in any court, then the covenants set forth in this
Article 6 shall be extended for a period of time equal to the pendency of such
proceeding including all appeals by the Executive.
6.10 SURVIVAL. the provisions of this Article 6 shall survive the
termination of this Agreement, as applicable.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Article 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Article 6 of this Agreement by the Executive or any of its affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Palm Beach County, Florida, in accordance with the Rules of the American
Arbitration Association then in effect (except to the extent that the procedures
outlined below differ from such rules). Within thirty (30) days after written
notice by either party has been given that a dispute exists and that arbitration
is required, each party must select an arbitrator and those two arbitrators
shall promptly, but in no event later than thirty (30) days after their
selection, select a third arbitrator. The parties agree to act as expeditiously
as possible to select arbitrators and conclude the dispute. The selected
arbitrators must render their decision in writing. The cost and expenses of the
arbitration and of enforcement of any award in any court shall be borne by the
non-prevailing party. If advances are required, each party will advance one-half
of the estimated fees and expenses of the arbitrators. Judgment may be entered
on the arbitrators' award in any court having jurisdiction. Although arbitration
is contemplated to resolve disputes hereunder, either party may proceed to court
to obtain an injunction to protect its rights hereunder, the parties agreeing
that either could suffer irreparable harm by reason of any breach of this
Agreement. Pursuit of an injunction shall not impair arbitration on all
remaining issues.
-12-
9. SECTION 162(m) LIMITS. Notwithstanding any other provision of this
Agreement to the contrary, if and to the extent that any remuneration payable by
the Company to the Executive for any year would exceed the maximum amount of
remuneration that the Company may deduct for that year under Section 162(m)
("SECTION 162(m)") of the Code, payment of the portion of the remuneration for
that year that would not be so deductible under Section 162(m) shall, in the
sole discretion of the Board, be deferred and become payable at such time or
times as the Board determines that it first would be deductible by the Company
under Section 162(m), with interest at the "short-term applicable rate" as such
term is defined in Section 1274(d) of the Code. The limitation set forth under
this Section 9 shall not apply with respect to any amounts payable to the
Executive pursuant to Article 5 hereof.
10. ASSIGNMENT. Neither party shall have the right to assign or delegate
his rights or obligations hereunder, or any portion thereof, to any other
person.
11. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Florida, without reference
to principles of conflict of laws.
12. ENTIRE AGREEMENT: PRIOR AGREEMENTS. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and, upon its effectiveness, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between the Executive
and the Company (or any of its affiliates) with respect to such subject matter.
In addition, this shall supercede and replace the Executive's Prior Employment
Agreement, as well as any and all other Employment and Severance Agreements, and
as of the Commencement Date hereof, the Prior Employment and Severance
Agreements shall terminate and shall no longer have any force and effect. This
Agreement may not be modified in any way unless by a written instrument signed
by both the Company and the Executive.
13. NOTICES: All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE:
XXXXX XXXX
2l52 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
IF TO THE COMPANY:
AmeriPath, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Chairman of the Board
-13-
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
14. BENEFITS: BINDING EFFECT. This Agreement shall be for the benefit of
and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where permitted and
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
15. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part thereof, all of which are inserted conditionally on their
being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, provisions, sections or articles contained in this
Agreement shall be declared invalid, this Agreement shall be construed as if
such invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, provisions or provisions, section or sections or article or articles
had not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
16. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
17. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement, In the event that either party hereto brings
suit for the collection of any damages resulting from, or the injunction of any
action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable court
costs and attorneys' fees of the other.
18. SECTION HEADINGS. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
19. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
20. WITHHOLDING TAXES. The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each
-14-
of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument and agreement.
[SIGNATURES ON FOLLOWING PAGE]
-15-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
COMPANY:
AMERIPATH, INC., a Delaware
corporation
By: /s/ Xxxxx X. New
--------------------------------
Name: Xxxxx X. New
Title: Chairman and Chief Executive
Officer
EXECUTIVE:
/s/ Xxxxx X. Xxxx
-----------------------------------
XXXXX X. XXXX
-16-
EXHIBIT A
2000 Bonus Targets
PERCENTAGE XXXXX XXXX
------------------------------------------ -------------------------------------------
2000 100% Base Total Opportunity $80,000
2000 discretionary $47,000
base
2000 non-discretionary portion $33,000
40% of discretionary base Annual pre-corporate EBITDA of $5.883
Sliding scale below 100%; at 69% no bonus million on existing regions (an increase of
100% goal = 100% base 22.7% over 1999)
110% goal = 120% base
120% goal = 140% base
130% goal = 160% base
140% goal = 180% base
150% goal = 200% base
% as indicated on discretionary base Implementation of additional 2000
compliance programs and procedures
5%
% as indicated on discretionary base N/A
%10 on discretionary base Integrate PathSource with minimum of
(only applicable if PathSource closes) $1.0 million corporate/operating synergies
% as indicated; sliding scale down, no bonus Add new groups with minimum total
earned at 69% or below. annualized EBITDA (precorporate)of
$5.5 million
20%
Subjective amount 25%
-17-
AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO
EMPLOYMENT AGREEMENT ("Amendment") is made this 1st
day of April, 2001, by and between AMERIPATH, INC., a Delaware corporation (the
"Company") and XXXXX X. XXXX (the "Executive").
WITNESSETH
WHEREAS, the Company and the Executive entered into an
Employment
Agreement on November 30, 2000 (the "Agreement"); and
WHEREAS, the Company and the Executive wish to amend the Agreement.
NOW, THEREFORE, in consideration of the Executive's continued
employment with the Company and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive agree as follows.
1. RECITALS. The foregoing recitals are true and correct and are
incorporated herein by this reference.
2. REPAYMENT OF RELOCATION EXPENSE. Delete the fourth and fifth
sentences of Subsection 4.6 and insert the following at the end of third
sentence of Subsection 4.6 of the Agreement: "The Executive shall have no
obligation to refund any relocation expenses reimbursed by the Company."
3. VESTING OF OPTIONS UPON AND AFTER CHANGE IN CONTROL. Insert the
following at the end of the first sentence in Subsection 5.6 a. of the
Agreement: "and accelerate the vesting of all AmeriPath Stock Options which have
been granted to the Executive, so that the unvested shares are one hundred (100)
percent vested." Insert the following at the end of the second sentence in
Subsection 5.6 a. of the Agreement: "and (5) accelerate the vesting of all
AmeriPath Stock Options which have been granted to the Executive since the
Change in Control but are unvested, so that the unvested shares are one hundred
(100) percent vested."
4. CHANGE CONTROL ANNIVERSARY BONUS. Insert the following as
Subsection 5.6 c. in the Agreement:
If, on the date of the one-year anniversary of the date of the Change In
Control, the Executive is in the employ of the Company, or any successor
thereto or assign thereof, the Executive shall be paid, on such one-year
anniversary date, an additional lump sum bonus equal to one times the
Executive's annual Base Salary as determined immediately prior to the Change in
Control Date (the "Anniversary Bonus").
5. CONFLICTING TERMS & SURVIVAL OF AGREEMENT. Except as
specifically set forth herein, the Agreement shall remain in full force and
effect. In the event the terms of this Amendment shall conflict with the terms
of the Agreement, the terms of this Amendment shall control.
6. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together constitute one documents.
7. FINAL AGREEMENT. The Agreement, as amended by this Amendment,
constitute the final agreement between the parties hereto and supercedes any
prior or contemporaneous agreement or representation, oral or written, among
them with respect to the matters set forth in the Agreement and this Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
date set forth above.
COMPANY
AMERIPATH, INC.
By: /s/ Xxxxx X. New
-------------------------------------
Xxxxx X. New
Chairman and Chief Executive Officer
EXECUTIVE
/s/ Xxxxx X. Xxxx
------------------------------------------
Xxxxx X. Xxxx
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT ("Second Amendment") is made
this 6 day of December, 2002, by and between AMERIPATH, INC., a Delaware
corporation (the "Company") and XXXXX X. XXXX (the "Executive").
W I T N E S S E T H
WHEREAS, the Company and the Executive entered into an Employment Agreement
on November 30, 2000 (the "Employment Agreement"); and
WHEREAS, the Company and the Executive entered into an Amendment to the
Employment Agreement on April 1, 2001 (the "First Amendment"); and
WHEREAS, the Company and the Executive wish to further amend both the
Employment Agreement and the First Amendment only if there is a Change in
Control transaction of the Company on or before December 31, 2003.
NOW, THEREFORE, in consideration of the Executive's exemplary efforts on
behalf of the Company and his continued employment with the Company and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged. the Company and the Executive further agree as follows:
1. RECITALS: The foregoing recitals are true and correct and are
incorporated herein by this reference.
2. CHANGE IN CONTROL BONUS: Insert the following as subsection 5.6 a. in
the Employment Agreement and in place of subsection 4. in the First
Amendment:
1
Unless otherwise provided in Section 5.7 hereof, in the event that a Change in
Control (as defined in paragraph (b) of this Section 5.6) in the Company shall
occur during the Turn of Employment, the Executive shall be paid Nine Hundred
Seventy Five Thousand Dollars Exactly ($975,000) in a lump sum, less applicable
withholding and other taxes, no later than the effective date of the Change in
Control. This sum of $975,000 equals three year's annual Base Salary at the
Executive's current rate of $300,000 and the payments of the Executive's 2002
performance bonus equal to $75,000. In the event the Executive is terminated for
any reason or the Executive terminates the agreement after a Change in Control,
the Company shall (i) pay to the Executive any unpaid Base Salary through the
effective date of the Executive's termination, and (ii) pay to the Executive the
accrued but unpaid Incentive Compensation, if any, for any Bonus Period ending
on or before the date of the termination. Upon any termination effected and
compensated pursuant to this paragraph, the Company shall have no further
liability hereunder (other than for (1) reimbursement of reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1, (2) payment of compensation for accrued and unused
vacation days, and (3) Continuation of Benefits pursuant to Section 3 of this
Second Amendment).
3. CONTINUATION OF BENEFITS: The Company, or its successor, agrees to
pay the premiums for health insurance benefit continuation coverage for
Executive and his family under the same terms and conditions as though he were
an employee, for a period of one year following his effective date of
termination. Thereafter, Executive shall be responsible for payments to continue
such coverage in effect at that time at the group rates applicable pursuant to
COBRA continuation coverage.
2
4. NON-COMPETITION. In the first sentence of Section 6.1 of the
Employment Agreement, replace "one (1) year period" with "two (2) year period".
5. CONFLICTING TERMS & SURVIVAL OF AGREEMENT. Except as specifically set
forth herein, the Agreement shall remain in full force and effect. In the event
the terms of this Second Amendment shall conflict with the terms of either the
Employment Agreement or the First Amendment, the terms of this Second Amendment
shall control.
6. COUNTERPART. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together constitute one document.
7. FINAL AGREEMENT. The Employment Agreement, the First Amendment and
the Second Amendment constitute the final agreement between the parties hereto
and supersedes any prior or contemporaneous agreement or representation, oral
written, among them with respect to the matters set forth in the Agreement and
this Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
set forth above.
COMPANY - AMERIPATH, INC.
By: /s/ Xxxxx X. New
-------------------------------------
Xxxxx X. New
Chairman and Chief Executive Officer
EXECUTIVE
/s/ Xxxxx X. Xxxx
-----------------------------------------
Xxxxx X. Xxxx
3
