EXHIBIT 10.3
EMPLOYMENT AGREEMENT - FINAL REVISION
THIS AGREEMENT, made this 5th day of January 2000, is between AMERICAN
PSYCH SYSTEMS, INC. ("APS") and XXXX XXXXXX ("Employee").
RECITALS:
APS desires to employ Employee upon the following terms and conditions and
Employee desires to accept such employment.
NOW, THEREFORE, it is agreed as follows:
1) EMPLOYMENT: APS employees Employee and Employee accepts employment
with APS for a term commencing with the start date, and ending upon resignation
by Employee or termination by APS subject to the termination provisions of
paragraph 6 herein. Employee is expected to start employment with APS on
February 1, 2000.
2) MANAGEMENT DUTIES: Employee is hereby designated as Senior VP for
Employer Sales and has the essential duties that are designated as agreed upon
by Employee and APS management. APS may from time to time change Employee's
duties and responsibilities to other similar, reasonably related duties and
responsibilities as in its reasonable discretion are necessary based upon the
needs of APS.
3) COMPENSATION: As his entire compensation for all services rendered
to APS during the term of this Agreement in whatever capacity rendered, Employee
shall have and receive.
A) A Base Salary of $7,115.38 biweekly (annualized, $185,000).
Biweekly amount based on a twenty-six (26) payroll cycle.
Employee's performance will be reviewed annually and your base
salary will be adjusted upward, if appropriate based on your
performance during the immediately preceding year.
B) Employee will be eligible for sales commissions on sales for
the following types of sales for which the Employee was
principally responsible for securing that the Company as
determined by the good faith judgment of the senior management
of the company. Commissions will be based on the following
schedule for the contract secured by the Employee:
Full-risk commercial health plan business -
1.5% of collected revenues in year 1
0.75% for collected revenues in year 2
0.375% of collected revenue in year 3
ASO business including EAP-
3% of collected revenues in year 1
1.5% of collected revenues in year 2
0.75% of collected revenues in year 3
All commissions will be paid in the month following in which
they are earned. At Employee's option, up to 50 % of
commissions earned in years one through three may be paid in
APS stock, at the then current market price as determined by
the Company's Board of Directors, subject to limitations or
restrictions imposed by the Company's public offering of the
Company's shares. This election must be made at the outset of
each calendar year.
Additionally, Employee will be eligible for an override of 10%
of paid commissions earned by all sales people Employee
supervises. If APS terminates Employee's employment pursuant
to the termination provisions of paragraph 6.A. herein, or if
employee voluntarily resigns, dies or becomes disabled,
Employee shall be eligible for a period of one year following
Employee's termination to be paid to be paid any earned
commissions and overrides that would have been paid to
Employee if employed by APS during that year.
C) An Incentive Stock Option ("ISO") Stock Option Grant for One
Hundred and Fifty Thousand (150,000) shares of APS Class A
Common Stock with an exercise price of $2.85 per share, based
on a five year vesting schedule at twenty percent (20%) per
year. All stock options shall be in accordance with the rules
and regulations of the APS 1993 Stock Option Plan, as amended.
If the assets or stock of APS are sold, including an initial
public offering, you will be given advance notice and an
opportunity to exercise your vested options and to sell the
vested portion of your stock.
D) APS will provide Employee the amount of $250,000 to compensate
for expected year 2000 commission you will forfeit with your
current employer as follows: 75% of this amount ($187,500.00)
in cash payable monthly as the commission would have been
earned paid bi-weekly over a twelve (12) month period at the
rate of $7,211.53 per pay period and 25% in a grant of APS
stock valued at the current share price with the value of the
grant being $62,500.00. The stock is subject to vesting over
five (5) years at 20% per year. If the assets or stock of APS
are sold, including an initial public offering, Employee will
be given advance notice and an opportunity to sell the vested
portion of his stock. Employee will be responsible for all tax
liability required by law. In the event Employee is terminated
without cause pursuant to the termination provisions of
paragraph 6 herein, prior to an IPO initial stock offering,
APS will repurchase the vested portion of Employee APS stock
at the then current market value.
E) In the event that prior to an initial public offering of APS
stock or other sale of substantially all of APS' assets, you
die, become disabled, resign with cause as defined in this
agreement or are terminated by APS without cause, you will be
able to exercise your vested options and APS will repurchase
all of your vested APS stock, including shares received
pursuant to paragraph 3.B. For purposes of the foregoing you
will be considered to have been terminated by APS for "cause"
if (i) if you have failed to perform, or you have habitually
neglected to perform your duties and you do not cure that
failure or neglect within 30 days after written notice
thereof, (ii) you have breached a material term of this
agreement and you do not cure that breach within 30 days after
written notice thereof; (iii) you have committed any act of
dishonesty or breach of fiduciary duty against APS; or (iv)
you have been convicted of or pled guilty to a felony or to a
crime of moral turpitude. You will be considered to have
resigned "with cause" if you resign after (i) a sale of stock
or assets of APS; (ii) a material breach of this agreement by
APS and APS does not cure the breach within 30 days after
written notice thereof; or (iii) a material change in your job
duties or compensation. APS' repurchase of your stock will be
at fair market value with the purchase price being paid in
cash within 90 days after your termination of employment.
4) FACILITIES: APS shall provide and maintain or cause to be provided
and maintained such facilities, equipment supplies and assistance as deemed
necessary by APS management for Employee's performance of his/her duties under
this Agreement.
5) LOYALTY: Employee shall devote his/her full time and best efforts to
the performance of his employment under this Agreement. Employee will not engage
in any other business activity during the term of this agreement without the
prior consent of APS management.
6) TERMINATION:
A. APS reserves the right to terminate Employee's employment
without cause at anytime upon thirty (30) days prior notice.
B. Employee may be terminated without notice for Cause at
anytime. Termination for "Cause" shall exist if (i) if you
have failed to perform, or you have habitually neglected to
perform your duties and you do not cure that failure or
neglect within 30 days after written notice thereof; (ii) you
have breached a material term of this agreement and you do not
cure that breach within 30 days after written notice thereof;
(iii) you have committed any act of dishonesty or breach of
fiduciary duty against APS; or (iv) you have been convicted of
or pled guilty to a felony or to a crime of moral turpitude.
The date on which Employee ceases to be employed by APS for
any reason shall deemed to be the "Termination Date" for all
purposes herein.
7) SEVERANCE: If Employee resigns or is terminated by APS pursuant to
paragraph 6 above and APS elects to exercise the Non-Competition provision 8.E.
of this agreement, Employee shall be entitled to receive "Severance Benefits"
including a payment equal to the prorated salary that otherwise would have been
paid to Employee under this Agreement from the date of termination through one
year from the termination date. Payments for all severance benefits will be made
in accordance to APS' regular payroll system and schedule on a bi-weekly basis
until the total payment amount is exhausted. Employee will also be eligible for
any other related APS employee benefits at the current level including
commissions and overrides assuming that you do not violate your Non-Compete
Agreement with APS.
8) CONFIDENTIALITY:
A. PROPERTY RIGHTS. I agree that all data, designs, discoveries
invention, improvements, advances, programs (computer or
otherwise), methods, practices, techniques and developments
and relationships with customers and prospective customers
which I may conceive, make, invent, or suggest during my
employment with the Company relating generally to any matter
or thing, which is connected to the Company's existing or
contemplated products, services or business shall become the
absolute property of the Company immediately as soon as made
or conceived. I agree to assign the rights of such property to
the Company upon request of the Company and such agreement
shall survive the termination of my employment for any reason.
B. ACTIONS REQUIRED ON TERMINATION. Upon termination of my
employment for any reason, I agree immediately to return to
the Company all property of the Company of which I had custody
and to deliver to the Company all notebooks, business card
files, customers or prospective customer lists, memoranda,
diaries, computer printouts and other documentation of any
kind, as well as any other data relating to the Company's
products, services or business.
C. COMPLIANCE NOT CONTINGENT UPON ADDITIONAL CONSIDERATION.
Except as provided in my employment agreement with APS, I have
not been promised, and I shall not claim, any additional or
special payment for such assignments and compliance with the
other covenants and agreements herein contained.
D. TRADE SECRETS. I agree that, during and after my employment
with the Company, I will maintain in secrecy and not disclose,
duplicate or use for myself or any other person or entity, and
Trade Secrets of Company (as defined below), except for the
purpose of performing my employment duties at Company or as
authorized in writing in advance by Company. "Trade Secrets"
shall mean all information that is not generally known to the
public and is important to Company which I learn of in the
course of my employment with Company, including, but not
limited to, any information relating to Company's products and
services, rates and pricing
policies for its clients and payors, cost estimates, marketing
strategies, financial information, customer list, referral
sources and methods of operation, business plans, procedures
and strategies and any scientific or technical information.
Trade Secrets shall not include information that is or becomes
generally known to the public other than through my breach of
this agreement. I agree that all copies of materials
containing Trade Secrets are the exclusive property of the
Company and, if in my possession, shall be immediately
returned to Company upon request and upon termination of my
employment.
E. RESTRICTIONS ON COMPETITIVE EMPLOYMENT. During the term of my
employment and for a period of one (1) year after termination,
for any reason, of my employment, absent the Company's prior
written approval and terms indicated in the offer of
employment letter (if any), I will not (as an individual,
principal, agent, employee, contractor, consultant, or
otherwise), in any service area where Company arranges for or
provides, directly or indirectly, behavioral health care
services ("Territory"), engage, directly or indirectly, in
activities with, or render services to, any individual or
business that competes with the Company in the managed
behavioral health care services industry including EAP
services. For purposes of this paragraph, the definition of
"managed behavioral health care services industry" shall not
prohibit me from providing clinical services as a clinical
psychologist or service as an administrator of a hospital or
other provider of mental health services, other than a managed
behavioral health care organization. In addition, during my
employment and for one (1) year thereafter, I will not have an
equity interest in any such firm other than as 1% or less
shareholder of a public corporation.
F. RECRUITMENT. During my employment for a period of one (1)
years after termination, for any reason, of my employment, I
will not, directly or indirectly (i) induce, or attempt to
induce, any employee, agents or consultants of or to the
Company to do anything from which I am restricted by reason of
this Agreement; (ii) pursue, , or contact, or cause any other
party in my behalf to pursue or solicit or otherwise contact,
for business purposes any existing customer of the Company or
any perspective customer of the Company with which I had
contact during the term of my employment; (iii) offer or aid
to offer employment to any employees of the Company; or (iv)
interfere with existing or proposed contracts, business
agreements or other arrangements, between the Company and any
other individual, firm or enterprise including, but not
limited to, third party payors, through disrupting or
diverting or attempting to divert such contracts, business
agreements or other arrangements to any other individual, firm
or enterprises.
G. I acknowledge and agree that the foregoing restrictions are
fair and reasonable to protect the Company's legitimate
business interest and do not unfairly impair my ability to
secure other appropriate employment.
H. INJUNCTIVE RELIEF. I hereby acknowledge and agree that Company
shall suffer irreparable harm in the event that I breach any
of my obligations under this agreement and that monetary
damages shall be inadequate to compensate the Company for such
Breach. Therefore, I agree that if I should breach this
Agreement, Company will be entitled, in addition to any other
lawful remedies, to have me enjoined from further breach of
this Agreement and to recover the monetary damages it has
suffered as a result of that breach. I further agree that
Company will be entitled to recover from me all of the legal
expenses and costs it incurs in enforcing its rights under
this Agreement.
I. BURDEN AND BENEFIT. I agree that this Agreement shall insure
to the benefit of, and be binding upon, my heirs, executors,
administrators and assigns and the successor and assigns of
the Company.
J. GOVERNING LAW. I agree that this Agreement is made and shall
be construed in accordance with and governed for all purposes
by the state of operation of APS.
10) NON-COMPETITION AGREEMENT: APS will indemnify and defend you against
any claims made against you for having violated the Non-Compete Agreement you
have with Options as a result of your signing a Non-Compete Agreement with
American Psych Management dated March 3, 1993.
11) EXPENSE ACCOUNT: Employee shall be reimbursed for reasonable and
necessary expenses in accordance with APS' policies and in a manner as agreed
upon by the Board of Directors of APS.
12) NO ASSIGNMENTS: This Agreement is personal to each party and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party.
13) AMENDMENTS: No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties expect as herein otherwise
provided.
14) SEVERABILITY: If any provision of this Agreement shall be declared
invalid or unenforceable by a court of competent jurisdiction or becomes invalid
or unenforceable by passage or operation of any law such actions shall not
invalidate or render unenforceable the remaining provisions of this Agreement.
15) APPLICABLE LAW: This Agreement shall be governed in all respects
whether relative to validity, construction, capacity and performance or
otherwise by the laws of the state of operations of APS and Employee.
16) PARAGRAPH HEADINGS: Paragraph headings used in this Agreement are
included solely for convenience and shall not effect or be used in connection
with the interpretation of this Agreement.
17) EXCLUSIVITY: This Employment Agreement, as supplemented by actions
of the APS Board of Directors as contemplated herein, expresses exclusively all
terms of the employment of Employee by APS.
18) ARBITRATION OF DISPUTES: If any dispute arises with respect to any
of the terms or provisions of this Agreement, the parties agree that such
dispute will be settled in Xxxxxxxxxx County, Maryland, in accordance with the
commercial arbitration rules of the American Arbitration Association.
19) VOLUNTARY EXECUTION: Employee and APS hereby acknowledge that this
Agreement is entered into voluntarily and that Employee understands the
consequences of signing this Agreement.
EMPLOYEE EMPLOYER
AMERICAN PSYCH SYSTEMS, INC.
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Date: 1/7/00 By: /s/ Xxx Xxxxxxx
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Xxx Xxxxxxx, MD
President & Chief Executive Officer
Witness:
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Date: 1/7/00
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Witness:
