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EXHIBIT 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT CONTRACT AGREEMENT ("Agreement") is made effective as of the 1st
day of June, 1997, between American HealthChoice (Texas), Inc., a Texas
corporation, (hereinafter called the "Company"), and Dr. J. Xxx Xxxxxx
(hereinafter called the "Employee").
WITNESSETH
WHEREAS, the Company owns and operates various health care service
businesses (all such businesses hereinafter being referred to collectively as
the "Business"); and
WHEREAS, The company desires to employ the Employee upon the terms and
conditions hereinafter set forth, and the Employee desires to accept employment
with the Company and render services to the Company on such terms and
conditions;
NOW, THEREFORE, in consideration of the covenants and agreements herein
made, the parties hereto agree as follows:
A. Recitals: The above recitals are incorporated by reference herein and made
a part thereof as if set forth herein verbatim.
B. Employment: The Company hereby employs Employee, and Employee hereby
accepts employment with the Company, to serve as the Chief Executive
Officer of the Company. The Employee's duties shall include, but not be
limited to those duties of a Chief Executive and such other duties as the
Company may from time to time reasonably direct.
C. Term and Duties
1. The period of Employee's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall
continue for a period of three (3) years thereafter.
2. During the period of employment hereunder and except for illness,
reasonable vacation periods and reasonable leaves of absence, the
Employee shall devote the Employee's time, attention, skill and
efforts to the faithful performance of the Employee's duties
hereunder and the furtherance of the Company's business.
D. Compensation
1. For all services rendered by Employee hereunder, Employer shall
pay Employee base salary of two hundred and fifty thousand,
($250,000.00) per year, payable in equal installments at the same
intervals as other Company employees. Deductions shall be made
from Employee's compensation for social security, withholding tax
and such other taxes as may from time to time be required by
governmental authorities.
2. Employee at the beginning of each year of employment, shall
receive 50,000 shares of the Company common stock, issued with a
"Rule 144" restrictive legend.
3. Employee shall receive five hundred thousand (500,000) stock
options, with an exercise term of five years, of the Company
common stock, issued under a S-8 Company Executive Stock Bonus
Plan, at an exercise price of two dollars and thirty four cents
($2.34) per share, upon the occurrence of any of the following
events:
a. The Company reports three consecutive quarters of profit in
accordance with Generally Accepted Accounting Principles
(GAAP) less all financing costs associated with any
raise(s) of capital; or
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b. If any of the events take place under Section G herein.
4. Employee shall be considered for bonus compensation annually from
time to time based upon the overall performance and financial
condition of the Company and in particular those areas of the
Company's business operations for which the Employee has primary
responsibility. Such bonus amounts shall be determined by the
Company's Compensation Committee (the "Committee").
5. If the Clinics sustain cash losses, less non cash costs for
financing, interest charges, etc., of over one million five
hundred thousand ($1,500,000.00) in fiscal year 1998, based on
Clinics owned by Company on January 1, 1998, the Board shall have
the right to adjust compensation under items one and two above.
6. Employee is encouraged, from time to time, to incur reasonable
expenses in promoting the business of the Company, provided that
the business name and logo are used, all in accordance with the
directives of the Company's Board of Directors. Such expenses
include, but are not limited to, expenses for travel,
entertainment and miscellaneous expenses incurred in the conduct
of the business of the Company. Employee shall be entitled to
reimbursement from the Company for such expenses upon submission
of proper documentation therefor.
7. The Company is obligated to file any necessary S-8 registration
statements to effectuate the above compensation.
E. Benefits
1. At such reasonable times as the Company shall, in its discretion,
permit Employee shall be entitled, without loss of pay, up to 30
business days per calendar year of combined vacation, personal,
sick, and holiday leave. Such leave shall be taken in such a
manner and at such times as shall be agreed upon by Employee and
the Company, subject to the following conditions:
a. All leaves shall be scheduled in a reasonable manner by
the Employee with reasonable prior notice to the Company.
Employee is responsible for ensuring appropriate
supervision of those areas of the business for which the
Employee has primary responsibility during such leaves.
b. Unused time off shall accrue or carry over from one
calendar year to the next only up to 36 months, provided
that Employee shall be entitled to compensation (at the
Employee's normal per them rate) for unused time off.
2. So long as group health insurance is generally available in the
marketplace, and subject to such exclusions and underwriting
conditions as the insurer may impose as to Employee, the Company
shall pay the cost of group health insurance for the Employee and
his dependents. The insurance provided for Employee shall be the
same as that provided for all other employees of the Company, as
the same may be modified from time to time. This Agreement does
not guarantee Employee's insurability; rather; it merely requires
the Company to pay for the Employee's insurance on the same basis
as for other employees of the Company so long as it is
commercially available, until termination thereof.
3. So long as the Company shall have a 401(k) and/or any other
deferred compensation plan, Employee shall be entitled to
participate in all such deferred compensation plans.
4. Company shall pay employee an automobile expense allowance of
$1,000.00 (one thousand) per month, and reasonable costs for
employees mobile telephone and a fax line at his personal
residence.
5. Company shall pay up to' $1,500 per calendar year toward the cost
of continuing professional education
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courses for Employee, provided that same are relevant to
Employee's duties hereunder. Expenditures of any amount exceeding
an aggregate total of $1,500 during any one calendar year for
continuing professional education for Employee shall be submitted
to the Board for its prior approval.
F. Termination: Severance Pay
1. Subject to the provision of subsection (4) below, this Agreement
shall be terminated upon the happening of the first of any of the
following events:
a. Whenever the Company and the Employee mutually agree to
terminate this Agreement; or
b. Upon the death of the Employee; or
c. At the latter of such time as Employee (i) has been
absent from work, disabled or otherwise impaired from
performing the Employee's duties hereunder on a full-time
basis for a continuous period of ten (10) weeks or a
total of eighteen (18) weeks in any consecutive twelve
(12) month period, or (ii) begins receiving disability
insurance benefits; or
d. If the Employee violates any provision of this Agreement
and is given written notice of the same, and fails or
refuses to cure same within thirty (30) days after notice
thereof from the Company (cure may be effected by written
acknowledgment of such violation if it is not a
continuing course of conduct); or
e. Employee's failure or refusal to comply with the accepted
professional policies and standards of the Company after
written notice thereof specifying the nature of such
failure or refusal; or
f. Any behavior which is repeated or persistent following
written notice from the Company and which is egregious or
materially adverse to the normally harmonious and
productive conduct of the Company's Businesses; or
g. At the Company's option, at any time for "cause", as
hereinafter defined.
2. For purposes of this Agreement, the term "cause" is defined to
include: (a) the matters set forth in sections (1)(d) through
(1)(g) above; or (b) a conviction of fraud or embezzlement; or
(c) Employee becomes substantially dependent on alcohol or drugs.
3. Unless the Company determines, by unanimous vote of its Board of
Directors (exclusive of Employee), that immediate termination of
the Employee is necessary for protection of the Company's
Businesses or property, the Company shall notify Employee in
writing, by certified mail, at least thirty (30) days in advance
of any proposed termination pursuant to subsection (1)(d) through
(1)(f) of this Section F (which notice shall state the event for
which Employee is proposed to be discussed in such detail as to
permit a reasonable assessment by Employee of the bona fides
thereof), and shall give Employee (a) such thirty (30) days to
cure any breach or misconduct, if the same is capable of being
cured within such period; or (b) such reasonable amount of time
that the Board of Directors determines is required in order to
cure said breach or misconduct.
4. In the event of termination of this Agreement for any reason
Employee shall be entitled to termination/severance pay equal to
six (6) months of full salary (based on the Employee's most
recent monthly salary payment) (less any amounts due the Company
from the Employee). Upon receipt by Employee of such
termination/severance pay, all of Employee's rights hereunder
shall terminate.
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G. Termination for Good Reason
1. Definitions: For purposes of this Section G the following will be
applicable:
a. Change in Control: (i) Acquisition by an individual,
business organization or related group of individuals and
business organizations of the beneficial ownership of 25%
or more of the Company's voting securities; or (ii)
election, at an annual election of a class of directors,
of persons who are not nominated by the Board and who
comprise more than one-half of the class so elected.
b. Good Reason: (i) Without the Employee's express written
consent, the assignment to the Employee of any duties
inconsistent with the Employee's positions, duties,
responsibilities and status with the Company immediately
prior to a Change in Control, or a change in the
Employee's reporting responsibilities, titles or offices
as in effect immediately prior to a Change in Control, or
the Employee's removal from or any failure to re-elect
the Employee to any of such positions, except in
connection with the termination of the Employee's
employment in accordance with provisions of Section F
above, or by the Employee other than for Good Reason;
(ii) a reduction by the Company in the Employee's base
salary as in effect on the date hereof or as the same may
be increased from time to time; (iii) a failure by the
Company to continue any incentive compensation plans in
which the Employee is presently entitled to participate
(the "Incentive Plans") as the same may be modified from
time to time but substantially in the forms currently in
effect, or a failure by the Company to continue the
Employee as a participant in the Incentive Plans on at
least the same basis as Employee presently participates
in accordance with the Incentive Plans; (iv) without the
Employee's written consent, the Employee's reassignment
by the practicality dictates a change in the Employee's
residence, except for required travel on the Company's
business to an extent substantially consistent with the
Employee's present business travel obligations; (v) the
failure by the Company to continue in effect any benefit
or compensation, life insurance, health and accident, or
disability plan in which the Employee is participating at
the time of a Change in Control (or plans providing the
Employee with substantially similar benefits), the taking
of any action by the Company that would adversely affect
the Employee's participation in or materially reduce the
Employee's benefits pursuant to any such plans or deprive
the Employee at the time of the Change in Control, or the
failure of the Company to provide the Employee with a
number of paid vacation days to which the Employee is
then entitled in accordance with the Company's normal
vacation policy in effect on the date hereof; or (vi) any
purported termination of the Employee's employment that
is not effected in accordance with the provisions of
subsection F (3) above, which purported termination shall
not be effective for purposes of the Agreement.
c. Person: Any individual, partnership, corporation, limited
liability company or other group or entity, including two
or more persons acting as a partnership, limited
partnership, syndicate, association or other group for
the purpose of the acquisition, possession or disposition
of stock.
d. Effective Annual Compensation: The aggregate total of the
Employee's then current base salary amount and bonus
amount received by the Employee from the Company based on
services provided to the Company during the previous
fiscal year.
2. Severance Benefits for Termination For Good Reason: If the
Employee, following a Change in Control, terminates the Employee's
employment as the President and Chief Executive Officer of the
Company for Good Reason prior to the end of this contract, the
Employee will be entitled to severance pay in the aggregate amount
of two (2) times the Employee's then current Effective Annual
Compensation, to be payable in twelve (12) equal monthly
installments with the first installment to be paid within thirty
(30) days after the Employee's termination. The Employee will also
be entitled to the continuation of all the Employee's employee
benefits as of the date of the Change in Control from the
Employee's termination through the end of the time period
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prescribed in this section for the payment of severance pay. In
the event that employment is terminated due to insolvency or
bankruptcy severance benefit will be waived.
H. Employee Cooperation: The Employee agrees to cooperate fully with the
Company during as well as after the Employee's association with the
Company has terminated in the investigation or defense of all claims
and/or any audits or other reviews conducted by or on behalf of any
third-party payer (including the Federal or state government) arising out
of or relating to the Businesses during the Employee's association with
the Company, and/or any proceedings connected with the collection of any
fees relating thereto. The Employee agrees to complete, sign and furnish
to the Company promptly and documentation required or requested by any
third-party payer in connection with the examination, verification or
review of any payment relating to any services rendered by the Employee
during the Employee's association with the Company.
I. Disclosure of Confidential Information; Patient Records: The Employee
acknowledges that as a result of the Employee's association with the
Company, the Employee will be making use of, acquiring and/or adding to
confidential information of a special and unique nature and value,
relating to such matters as the Company's confidential reports, lists of
referring physicians, third-party and direct payor contracts, contracts
with managed care plans, lists of patients and the fees paid by such
patients, and other confidential matters. As material inducement to
Company to enter into this Agreement, and to pay to the Employee the
compensation referred to in Section D hereof, the Employee covenants and
agrees that the Employee shall not, at any time during or following the
term of this Agreement, directly or indirectly, divulge, disclose or make
any use of, for any purpose whatsoever, any confidential information which
has been obtained by or disclosed to the Employee as a result of or
otherwise in connection with the Employee's provision of services
hereunder. Such information of a confidential nature includes, but is not
limited to, referral source information, medical records, scans, patient
charts, patient ledgers, records of amount received from patients, patient
lists, other financial records of the Company and of patients, any and all
insurance. Medicare and other such records, and any other information of a
private, internal or confidential nature pertaining to the Company's
Businesses, functions or operations, including, without limitation, the
nature of its contractual relationships. In accordance with the foregoing,
the Employee further agrees that the Employee will at no time retain or
remove from the premises of the Company records of any kind or description
whatsoever for any purpose unconnected with the strict performance of the
Employee's association with the Company for any reason, the Employee will
promptly return to the Company all lists, books and records of or
pertaining to the Company's patients and Businesses, and all other
property belonging to the Company, in the Employee's custody, control or
possession.
In the event of a breach or threatened breach acted upon by the Employee
of any of the provisions of this Section 1, the Company, in addition to
and not in limitation of any other rights, remedies or damages available
to the Company at law or in equity, shall be entitled to preliminary and
permanent injunctive relief in order to prevent or to restrain any such
breach by the Employee, or by the Employee's partners, agents,
representatives, servants, employers, employees and/or any and all
persons, directly or indirectly, acting for or with the Employee. The
provisions of this Section I shall survive the termination of this
Agreement.
J. Covenants Against Competition:
1. The Employee acknowledges that the Employee's services to be
rendered hereunder are of a special and unusual character
which have a unique value to Company, the loss of which may
not adequately be compensated by damages in an action at law,
and
2. It is acknowledged by both parties to this Agreement that
Employee is engaged in (i) the ownership of health care
clinics, (ii) diagnostic facilities and (iii) in providing
management and consulting services to healthcare professionals
throughout the United States of America, which activities are
permitted to the extent they do not interfere with Employee's
duties hereunder. The companies that are exempt from this
covenant not to compete section are listed on Schedule A.
Employee will refrain from soliciting or attempting to solicit
to employ any employ of the Company of any of its
subsidiaries, or committing any act the primary purpose of
which is to induce any employee of the Company to leave the
Company's
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employ, or significantly interfere with, disrupt or attempt to
disrupt any past, present or prospective relationship,
contractual or otherwise, relating to the Company's business
activities, between the Company and its customers and
suppliers.
3. In view of the foregoing and of the confidential information
to be obtain by or disclosed to the Employee as hereinabove
set forth (including, without limitation, the confidential
referral source lists and information which are the
proprietary property of Company), and further as a material
inducement to the Company to enter into this Agreement and pay
to the Employee the compensation referred to in this
Agreement, the Employee covenants and agrees that, during the
term of this Agreement and for a period of two (2) years after
termination of this Agreement in accordance with the
provisions of Subsection G (2) including, but not limited to,
the expiration of this Agreement without renewal, neither the
Employee nor any person or entity, under the Employee's own
account or as agent, servant, partner, employee or shareholder
of any corporation, invest in (other than passive 'investments
of 5% or less in publicly traded entitles), manage or control
any individual or entity that is engaged in the trade or
business of providing medical chiropractic or physical
services, staffing or health care personnel or diagnostic
health care services in Dallas or Dallas County, Texas. or
within a ten (10) mile radius of any facility at which the
Company or any of its subsidiaries is then providing services.
Such covenant shall not be deems or constructed to prohibit
the Employee from simply treating, patients (as opposed to
being involved in management, ownership or consulting). This
section shall apply only to transactions and situations
arising or occurring after the date of this Agreement, and
shall not apply to passive investments in entities publicly
traded over a regulated securities exchange and does not apply
to those entities listed in Schedule A.
4. The Employee covenants and agrees that, if the Employee shall
violate any of the Employee's covenants or agreements provided
for pursuant to the foregoing subsections of this Section J,
the Company shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remunerations or
benefits which the Employee directly or indirectly has
realized and/or may realize as a result of, growing out of or
in connection with any such violation.
5. The foregoing covenants by the Employee shall be construed as
an agreement independent of any claim or right of the Employee
hereunder. The existence or alleged existence of any claim or
cause of action by the Employee against the Company, whether
predicted on this employment relationship or otherwise, shall
in no event constitute a defense against or waiver of the
Company's right to enforce the foregoing covenants.
K. Reasonableness of Restrictions
1. The Employee has carefully read and considered the provisions
of Sections I and J hereof and, having done so, agrees that
the restrictions and remedies set forth in such sections
(including, but not limited to, the time period of
restriction, the geographical area of restriction and the
damages and injunctive relief provisions therein) are fair and
reasonable and are reasonably required for the protection of
the interests of the Company.
2. In the event that, notwithstanding the foregoing, any of the
provisions of Section I or J shall be held to be invalid or
unenforceable, the remaining provisions thereof shall
nevertheless continue to be valid and enforceable as though
the invalid or unenforceable parts had not been included
therein. In the event that any provision of Section J hereof
relating to time period and/or area of restriction shall be
declared by a court of competent jurisdiction to exceed the
maximum time period or area such court deems reasonable and
enforceable, said time period and/or area of restriction shall
be deemed to become and thereafter be the maximum time period
and/or area which such court deems reasonable and enforceable.
L. Notices: Any notice or document required or desired to be given to either
party herein shall be in writing and shall be deemed given (a) when sent
registered mail, return receipt requested and postage prepaid, addressed
to the party at the address indicated below (or such other address as that
party may hereafter designate); or (b) when delivered personally to that
party at said address:
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If to the Company:
American HealthChoice, Inc.
0000 X. Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
If to the Employee:
Xx. X. X. Xxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxx Xxx, Xxxxx 00000
M. Arbitration: Any claim, controversy or dispute with respect to this
Agreement shall be promptly submitted to arbitration ("Arbitration") for
determination. The Arbitration shall be binding upon the parties
thereto, without a right by any party to a trial de novo in a court of
competent jurisdiction, and shall be conducted under the auspices of the
American Arbitration Association (herein referred to as "Association")
with venue in Dallas County, Texas, and in accordance with its
Commercial Arbitration Rules, however:
1. The party seeking Arbitration shall give written notice of a
Demand to Arbitrate (herein referred to as "Demand") to the other
party and to the Association; the Demand shall include (a) the
issues to be determined, (b) a copy of this arbitration provision
and c) the Association to designate three arbitrators;
2. Within ten (10) days after receipt of the Demand, the other party
shall give (a) written notice (herein referred to as "Response")
to the party that demanded arbitration and to the Association of
any additional issues to be arbitrated. (b) its answer to the
issues raised by the party that sent the Demand and c) its
designation of a second arbitrator.
3. If a Response designating a second arbitrator is not received
within the aforesaid ten day time, the Association shall
designate the second arbitrator forthwith.
4. The two arbitrators as designated pursuant to the foregoing
provisions shall then designate a third arbitrator within ten
(10) days after the designation of the second arbitrator. If the
two arbitrators cannot agree on the designation of the third
arbitrator within the ten day time period allotted, the
Association shall designate the third arbitrator forthwith.
5. The arbitration panel as thus designated shall proceed with the
Arbitration by giving written notice to all parties of its
proceedings and hearings in accordance with the Association's
applicable procedures. The Arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the
Association except as modified by this Agreement. The arbitrators
shall follow and apply the substantive laws of the State of
Texas, and, at all hearings where evidence is taken, they shall
follow and apply the rules of evidence as then in effect in the
State of Texas. The cost of the Arbitration shall be borne and
paid equally between the parties thereto, but that cost, along
with all other costs and expenses, including attorneys' fees,
shall be subject to award, in whole or in part by the arbitrators
in their discretion to the prevailing party on the various issues
arbitrated.
6. Upon written demand on any party to the Arbitration for the
production of documents reasonably related to the issues being
arbitrated, the party upon which such demand is made shall
forthwith produce, or make available for inspection and copying,
such documents without the necessity of any action by the
arbitrators.
7. The arbitrators shall have the power to grant any and all relief
and remedies, whether at law or in equity, that
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the courts in the State of Texas may grant. The decision of the
arbitrators shall be final and may be enforced by any court
having jurisdiction. The parties to this Agreement expressly
consent to the jurisdiction of the Association in Dallas Texas.
M. Miscellaneous
1. Further Assurances: At any time, and from time to time, each
party will execute such additional instruments and take such
action as may be reasonably requested by the other party to carry
out the intent and purposes of this Agreement.
2. Costs' and Expenses: Each party hereto agrees to pay its own
costs and expenses incurred in negotiating this Agreement and
consummating the transactions described herein.
3. Time: Time is of the essence.
4. Entire Agreement: This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter
hereof. It supersedes all prior negotiations, letters and
understandings relating to the subject matter hereof.
5. Amendment: This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing
signed by the party or parties against whom enforcement of any
such amendment, supplement or modification is sought.
6. Assignment: This Agreement may not be assigned to any party
hereto without prior written consent of the other party.
7. Choice of Law Venue, Jurisdiction: This Agreement will be
interpreted, construed and enforced in accordance with the laws
of the State of Texas. Both parties agree that venue is Dallas,
Texas. Both parties agree to submit to jurisdiction in Texas.
8. Headings: The section and subsection headings in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
9. Pronouns: All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural
as the context may require.
10. Number and Gender: Words used in this Agreement, regardless of
the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and
any other gender, masculine, feminine or neuter, as the context
indicates is appropriate.
11. Construction: The parties hereto participated in the preparation
of this Agreement; therefore, this Agreement shall be construed
neither against nor in favor of any of the parties hereto, but
rather in accordance with the fair meaning thereof.
12. Effect of Waiver: The failure of any party at any time or times
to require performance of any provision of this Agreement will in
no manner affect the right to enforce the same. The waiver by any
party of any breach of any provision of this Agreement will not
be construed to be a waiver by any such party of any succeeding
breach of that provision or a waiver by such party of any breach
of any other provision.
13. Severabilily: The invalidity, illegality or unenforceability of
any provision or provisions of this Agreement will not affect any
other provision of this Agreement, which will remain in full
force and effect, nor will the invalidity, illegality or
unenforceability of a portion of any provision of this Agreement
affect the balance of such provision. In the event that any one
or more of the provisions contained in this Agreement or any
portion
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thereof shall for any reason be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be reformed,
construed and enforced as if such invalid, illegal or
unenforceable provision had never been contained herein.
14. Enforcement: Should it become necessary for any party to
institute legal action to enforce the terms and conditions of
this Agreement, the successful party will be awarded reasonable
attorneys' fees at all trial and appellate levels, expenses and
costs.
15. Binding Nature: This Agreement will be binding upon and will
inure to the benefit of any successor successors of the parties
hereto.
16. No Third-Party Beneficiaries: No person shall be deemed to
possess any third-party beneficiary right pursuant to this
agreement. It is the intent of the parties hereto that no direct
benefit to any third-party is intended or implied by the
execution of this Agreement.
17. Counterparts: This Agreement maybe executed in one or more
counterparts, each of which will be deemed an original and all of
which together will constitute one and the same instrument.
18. Representation: The Company by its Board of Directors
specifically requested Xxx X. Xxxxxx to finalize the terms of
this agreement and both parties indemnify and hold harmless Xxx
X. Xxxxxx for any claims or disputes that arise under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
EMPLOYEE:
/s/ Xx. X.X. Xxxxxx
------------------------------
Xx. X.X. Xxxxxx
COMPANY:
/s/ Xxx X. Xxxxxx
------------------------------
Xxx X. Xxxxxx, CFO
/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx, Director
/s/ Xxxxxx XxXxxx
------------------------------
Xxxxxx XxXxxx, Director
