EXHIBIT 10.32
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT CONTRACT AGREEMENT ("Agreement") is made effective as of the
1st day of October, 2005, 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 Fifty Thousand Dollars
($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. In addition to such compensation as is to be payable to the Employee
pursuant to the provisions of Section 1, the Employee shall be
entitled to received an annual performance bonus defined as follows:
a. For the year ended September 30, 2006, the Employee shall
receive a performance bonus derived from the percentage increase
in net revenue in fiscal 2006 compared to fiscal 2005. For
example, if the increase in net revenue is 15%, then the
performance bonus shall be $37,500 ($250,000 multiplied by
15%).The calculation, derived from the audited financial
statements, shall be approved by the Compensation Committee and
shall be payable on December 31, 2006.
b. For the years ended September 30, 2007 and 2008, the
performance shall continue to be derived from the percentage
increase in net revenue.
3. Employee shall be considered for additional 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").
4. 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 therefore.
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
Thirty (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.
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 One
Thousand Dollars ($1,000.00) per month, and reasonable costs for
Employee's mobile telephone and a fax and/or internet line at his
personal residence.
5. Company shall pay up to One Thousand Five Hundred Dollars
($1,500.00) per calendar year toward the cost of continuing
professional education 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.
6. Company shall pay on behalf of Employee his annual licenses and dues
for two (2) professional organizations of Employee's choice that are
directly related to his employment.
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 twelve (12) 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.
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
prescribed in this section for the payment of severance pay.
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) in
providing management and consulting services to healthcare
professionals throughout the United States of America and (iii)
and is the owner of a discount health dental program, (iv) owner
of a pharmacy, which activities are permitted to the extent they
do not interfere with Employee's duties hereunder. Employee will
refrain from soliciting or attempting to solicit to employ any
employees of the Company or 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 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 entities), 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:
If to the Company:
American HealthChoice, Inc.
0000 Xxxxxx Xxxx Xxxxx000-000
Xxxxxx Xxxxx, Xxxxx 00000
If to the Employee:
Dr. J. Xxx 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 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 County,
Texas and both parties agree to submit to jurisdiction in State of
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. Severability: 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 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EMPLOYEE: COMPANY:
___________________________________ __________________________________
Dr. J. Xxx Xxxxxx Xxxxx Xxxxxxx, Chairman of the
Compensation Committee
