AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the “Agreement”) is made
and entered into on this 1st day of
March 2010 (the “Effective Date”), by
and between METROPOLITAN HEALTH NETWORKS, INC., a Florida corporation (the
“Company”), and
Xxxxxxx X. Xxxxxx (hereinafter called the “Executive”).
RECITALS
A.
The Company and the Executive are parties to that certain
amended and restated employment agreement dated December 4, 2009 (the “Original Employment
Agreement”).
B.
The Company and the Executive desire to amend and
restate the Original Employment Agreement, in its entirety, as set forth
herein.
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.
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.
(a) During
the Term of Employment (as defined herein) under this Agreement, the Executive
shall serve as the Chief Executive Officer of the Company, shall report to the
Board of Directors of the Company (the “Board”), shall
diligently perform all services as may be assigned to him by the Board (provided
that, such services shall not materially differ from the services currently
provided by the Executive in his capacity as Chief Executive Officer), and shall
exercise such power and authority as may from time to time be delegated to him
by the Board. Notwithstanding the foregoing, the Executive shall
secure the approval of the Board prior to taking any actions on behalf of the
Company outside of the ordinary course of the Company’s business. The
Executive shall devote such time and attention to the business and affairs of
the Company as is reasonably necessary to discharge his duties hereunder, render
such services to the best of his ability, and use his best efforts to promote
the interests of the Company. It shall not be a 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, (iii) manage personal investments or (iv)
investigate alternative employment opportunities, so long as such activities do
not significantly interfere with the performance of the Executive’s
responsibilities to the Company in accordance with this Agreement.
(b) In
addition to the duties set forth in Section 1.2(a) above, during the Term of
Employment, the Executive shall use his commercially reasonable efforts to
assist the Company conduct a search (the “CEO Search Process”) for a person to
serve as the Executive’s successor as Chief Executive Officer of the Company (a
“Successor CEO”). In furtherance, but not limitation, of the
foregoing, the Executive shall diligently perform all duties and services as may
be reasonably assigned to him by the Board in connection with the CEO Search
Process. On the Company’s written request following the Company’s
engagement of a Successor CEO, the Executive shall automatically and without
further action be deemed to have resigned as Chief Executive Officer of the
Company, and if requested by the Board, the Executive hereby agrees to
immediately execute a resignation letter to such effect in form and substance
reasonably acceptable to the parties.
1.3 Duties of Executive
following the Term of Employment.
(a) In
the event that, prior to the Outside Separation Date (as defined in Section 2.1
below), the Executive ceases to serve as Chief Executive Officer of the Company,
the Executive shall, if requested by the Board, act as a consultant to the
Company during the period commencing on the date of the Executive’s cessation of
service as Chief Executive Officer and ending on the Outside Separation Date
(the “Transition
Period”). In his role as consultant to the Company, the
Executive shall, if and to the extent requested by the Board, in good faith
endeavor to perform the following services to assist the Company provide for an
orderly CEO succession process:
(i) prepare
and deliver to the Board a report that generally identifies the duties, roles
and functions that have previously been performed by him;
(ii) at
the request of the Board, from time to time transition and hand over his
responsibilities to such other person(s) that the Board designates;
(iii) use
reasonable efforts to generally transfer knowledge regarding the Company as
reasonably requested;
(iv) perform
such other tasks and duties that the Board may reasonably assign to Executive to
assist in the CEO transition process.
(b) During
the Transition Period, the Executive shall devote such amount of his time and
attention to the business and affairs of the Company as is reasonably necessary
to fulfill the duties set forth in Section 1.3(a). During the Transition Period,
the Executive may perform the duties set forth in Section 1.3(a) at the
Company’s headquarters in West Palm Beach, Florida or at such other locations
selected by Executive that reasonably enable Executive to fulfill the duties set
forth in Section 1.3(a).
(c) It
is agreed and understood by the parties to this Agreement that, for all
purposes, during the Transition Period, the Executive shall serve solely as an
independent contractor of the Company and shall not be an executive nor an
employee of the Company in any capacity. Nothing in this Agreement
shall be interpreted or construed as creating or establishing the relationship
of employer and employee between the Executive and the Company during the
Transition Period.
2.
Term.
2.1 Term. Unless
earlier terminated in accordance with Section 5 hereof, the Term of Employment
under this Agreement shall commence on the Effective Date and shall expire on
June 30, 2010 (the “Outside Separation
Date”).
2.2 Term of Employment and
Expiration Date. The period during which the Executive shall
be employed by the Company pursuant to the terms of this Agreement is sometimes
referred to in this Agreement as the “Term of Employment”,
and the date on which the Term of Employment shall expire is sometimes referred
to in this Agreement as the “Expiration
Date”.
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3.
Compensation.
3.1 Base
Salary. Until the Outside Separation Date, the Executive shall
receive cash compensation at the annual rate of $375,000 (the “Cash Compensation”),
with such Cash Compensation payable in installments consistent with the
Company's normal base salary payroll schedule, subject to applicable withholding
and other taxes.
3.2 Additional
Compensation. Subject to Section 5.1 and 5.5(b) below, in
further consideration for entering into this Agreement, the Executive shall
receive an additional payment of $375,000 (the “Additional
Compensation”), payable for the period commencing on July 1, 2010 and
ending on June 30, 2011, in twelve (12) equal monthly installments according to
the Company’s normal base salary payroll schedule, subject to applicable
withholding and other taxes.
3.3 Bonus
Compensation.
(a) Subject
to Section 5.1 and 5.5(b) below, the Company shall pay the Executive no later
than March 31, 2010 the annual bonus that the Executive would have received
under the Company’s 2009 executive bonus plan (the “2009 Bonus”) as it
existed prior to the date hereof as if Executive had worked until the end of
2009. In determining whether and to what extent the Company
performance metrics have been satisfied for purposes of the 2009 Bonus (the
“Performance Metric
Determinations”), the Compensation Committee shall make adjustments to
exclude any and all expenses directly or indirectly related to the CEO Search
Process and changes, this transition and/or the related discussions occurring
with respect thereto in 2009 (including, but not limited to, the following to
the extent they impact the Performance Metric Determinations: search and legal
fees and termination and bonus expenses and all amounts accrued, incurred or
paid to the Executive under this Agreement in excess of those which would have
accrued, incurred or been paid to Executive had this Agreement not been amended
and restated and all amounts accrued, incurred or paid to Executive’s
successor). Notwithstanding the foregoing, nothing in this Agreement
shall preclude the Compensation Committee from making in good faith any and all
other adjustments it deems necessary or desirable in a manner reasonably
intended to be consistent with past practice in connection with the Performance
Metric Determinations provided that any such adjustments are also taken into
in a consistent and equitable
manner account
when determining bonuses for all other executives eligible to receive bonuses
under the 2009 executive bonus plan.
(b) Subject
to Section 5.1 and 5.5(b) below, the Company shall pay the Executive no later
than August 15, 2010, or as soon a reasonably possible thereafter, a prorated
annual bonus for 2010 (the “2010 Bonus”) calculated by:
first,
determining the percentage by which the Company’s actual income before taxes
(“IBT”) in the six month period ended June 30, 2010 missed or exceeded the
Company’s budgeted IBT for such period (the “Six Month IBT
Percentage”);
second,
determining the bonus that Executive would be entitled to receive under the
Company’s recently adopted 2010 Bonus Plan assuming the Executive had served as
the Chief Executive Officer for all of 2010 and the Company’s IBT for fiscal
2010 missed or exceeded the IBT budgeted for fiscal 2010 by the same percentage
as the Six Month IBT Percentage (the “Full Year Bonus”);
third,
multiplying the Full Year Bonus bythe percentage of the year that the Executive
actually served as the Chief Executive Officer of the Company or as a consultant
pursuant to Section 1.3. In the course of calculating the 2010 Bonus,
the Compensation Committee shall make adjustments to : (i) exclude from the
actual IBT for the six month period ending June 30, 2010 any extraordinary or
non-recurring items not anticipated in the 2010 budget; and
(ii) exclude any and all expenses directly or indirectly related to
the CEO Search Process and changes, this transition and/or the related
discussions occurring with respect thereto in 2010 (including, but not limited
to, the following to the extent they impact the 2010 Bonus calculations: search
and legal fees and termination and bonus expenses and all amounts accrued,
incurred or paid to the Executive under this Agreement in excess of those which
would have accrued, incurred or been paid to Executive had this Agreement not
been amended and restated and all amounts accrued, incurred or paid to
Executive’s successor). Notwithstanding the foregoing, nothing in
this Agreement shall preclude the Compensation Committee from making in good
faith any and all other adjustments it deems reasonable necessary or desirable
to calculate the 2010 Bonus in a manner that is consistent with the Company’s
past practice of calculating bonus payments for senior executive
officers.
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3.4 Automobile and Telephone
Expenses. Subject to Section 5.1 and 5.5(b) below, during the
period commencing on the Effective Date and terminating on June 30, 2011, the
Executive shall receive an automobile allowance of $850 per month and a mobile
telephone allowance of $250 per month (collectively, the “Automobile and Telephone
Expense”).
4.
Expense Reimbursement and
Other Benefits.
4.1 Reimbursement of
Expenses. Upon the submission of proper documentation by the Executive,
and subject to such rules and guidelines as the Company may from time to time
adopt, the Company shall reimburse the Executive for all reasonable expenses
actually paid or incurred by the Executive during the Term of Employment or the
Transition Period 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. Any required reimbursements shall be paid to Executive no later
than the last day of the calendar year following the calendar year in which the
underlying expense was incurred by the Executive, and the amount of expenses
eligible for reimbursement during any year may not affect the expenses eligible
for reimbursement in any other year.
4.2 Compensation/Benefit
Programs. During the Term of Employment, the 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 executives, including savings, pension, profit-sharing and deferred
compensation plans, subject to the general eligibility and participation
provisions set forth in such plans. Subject to Section 5.1 and 5.5(b) below,
during the period following Executive’s termination of employment and ending on
June 30, 2011, the Executive shall be entitled to participate in all medical,
dental, hospitalization, accidental death and dismemberment, disability, travel,
life insurance and other welfare benefit plans of the Company (but
excluding vacation pay and other benefits that are payroll-type
arrangements). In the event that the Company is unable to provide the
Executive with any benefits required hereunder by reason of the termination of
the Executive’s employment pursuant to this Agreement, then the Company shall
make a cash payment, each month, equal to the value of the Benefits that
otherwise would have accrued for the Executive’s benefit under each such plan
for such month, for the period during which such Benefits could not be provided
under any such plan. The Company’s good faith determination of the
amount that would have been contributed or the value of any Benefits that would
have accrued under any plan shall be binding and conclusive on the
Executive. For this purpose, the Company may use as the value of any
Benefit the cost to the Company of providing that Benefit to the
Executive.
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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/her position and adequate for the performance of
his/her duties hereunder.
4.4 Stock Options and Restricted
Shares. Subject to Section 5.1 and 5.5(b) below, on the later
of (i) the date of the termination of the Executive’s employment under any of
Section 5.2, 5.3, 5.4 or 5.5(a) below or (ii) June 30, 2010, all outstanding
unvested Stock Options and restricted shares of Common Stock (“Restricted
Shares”) held by the Executive shall immediately become fully vested and the
Executive shall have until the earlier of (x) the options’ stated maturity date
assuming the Executive remained an executive of the Company and (y) March 31,
2011 to exercise any or all of his vested Stock Options.
4.5 Other
Benefits. The Executive shall be entitled to four (4) weeks of
vacation each calendar year during the Term of Employment (subject to the
general eligibility provisions set forth in the Company’s personnel policy), to
be taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall interfere with the duties required to
be rendered by the Executive hereunder. Any vacation time not taken
by Executive during any calendar year may be carried forward into any succeeding
calendar year. Within thirty days of the termination of the
Executive’s employment, the Company shall pay Executive for any unused vacation
days accumulated as of the date of termination The Executive shall receive such
additional benefits, if any, as the Board shall from time to time
determine.
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. For purposes of this Agreement, the term “Cause” shall mean a
court ordered determination that the Executive committed fraud in connection
with his services hereunder. Any termination for Cause shall be made
in writing to the Executive, which notice shall set forth in detail all acts or
omissions upon which the Company is relying for such termination. The
Executive shall have the right to address the Board regarding the acts set forth
in the notice of termination. Upon any termination pursuant to this
Section 5.1, the Company shall have no further liability hereunder and the
Executive shall automatically forfeit any right to receive any further
compensation or benefits under Sections 3 or 4 hereof (including any
acceleration of vesting or extension of exercise period rights with respect to
his Stock Options and Restricted Shares as set forth in Section 4.4); except
that: (i) the Company shall pay to the Executive that portion of his Cash
Compensation earned through the date of termination; and (ii) the Company shall
reimburse the Executive for reasonable business expenses incurred prior to the
date of termination, subject to the provisions of Section 4.1.
5.2 Termination Without
Cause. At any time the Company shall have the right to
terminate the Term of Employment by written notice to the
Executive. A termination pursuant to this Section 5.2 shall have no
impact whatsoever on the Executive’s right to receive all of the compensation
and benefits set forth in Section 3 and 4 hereof. Once such
compensation and benefits are paid, the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of the Executive's termination, subject, however to
the provisions of Section 4.1).
5.3 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 group disability policy or any individual
disability policy 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 90 days in any 12-month
period. The Company shall have sole discretion based upon competent
medical advice to determine whether the Executive continues to be
disabled. A termination pursuant to this Section 5.3 shall have no
impact whatsoever on the Executive’s right to receive all of the compensation
and benefits set forth in Section 3 and 4 hereof. Once such
compensation and benefits are paid, the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of the Executive's disability, subject, however to
the provisions of Section 4.1).
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5.4 Death. In
the event of the death of the Executive during the Term of Employment, the
Company shall pay to the estate of the deceased Executive the compensation
specified in Section 3 and 4 hereof. Once such compensation and
benefits are paid, the Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of the Executive's death, subject, however to the provisions of Section
4.1).
5.5 Termination by
Executive.
(a) The
Executive shall at all times have the right, upon forty-five (45) days written
notice to the Company, to terminate the Term of Employment; provided, however,
that the Executive shall be deemed to have provided the requisite prior notice
to the Company in the event (i) the Executive resigns as Chief Executive Officer
as of the Outside Separation Date or (ii) the Executive resigns as Chief
Executive Officer at the written request of the Company pursuant to Section
1.2(b). At the Company's sole option, upon receipt of notice from the
Executive pursuant to this Section, the Company may immediately terminate the
Term of Employment, which termination shall be deemed to be a termination
without Cause.
(b) If
the Executive resigns without providing written notice in accordance with
Section 5.5(a), the Executive shall automatically forfeit any right to receive
any further compensation or benefits under Sections 3 or 4 hereof (including any
acceleration of vesting or extension of exercise period rights with respect to
his Stock Options and Restricted Shares as set forth in Section 4.4); except
that the Company shall pay to the Executive that portion of his Cash
Compensation earned through the date of resignation. The Company
shall have no further liability hereunder (other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 4.1).
(c) If
the Executive resigns and provides written notice in accordance with Section
5.5(a), such resignation shall have no impact whatsoever on the Executive’s
right to receive all of the compensation and benefits set forth in Section 3 and
4 hereof. Once such compensation and benefits are paid, the Company
shall have no further liability hereunder (other than for reimbursement for
reasonable business expenses incurred prior to the date of the Executive's
termination, subject, however to the provisions of Section 4.1).
5.6 Change in Control of the
Company.
(a) 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 as a single lump sum payment, within 30 days of the Change
in Control, a lump sum payment equal to the sum of (i) the unpaid portion of the
Executive’s Cash Compensation, Additional Compensation, 2009 Bonus and
Automobile and Telephone Expense, and the value of the annual fringe benefits
(based upon their cost to the Company) required to be provided to the Executive
under Sections 4.2 and 4.4 hereof during the period commencing on the date of
the Change in Control and ending on June 30, 2011, plus (ii) the value of the
portion of his benefits under any savings, pension, profit sharing or deferred
compensation plans that are forfeited under those plans by reason of the
termination of his employment hereunder. The Company shall have no
further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the provisions of Section 4.1).
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(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 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);
or
(ii) the
acquisition (other than 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 more than 50% 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
Effective Date 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.
Notwithstanding
anything in this Section 5.6 to the contrary, no Change in Control of the
Company shall be deemed to occur unless such Change in Control constitutes, with
respect to the Company, a "Change in the Ownership or Effective Control of a
Corporation or in the Ownership of a Substantial Portion of the Assets of a
Corporation" as such term is defined under Treasury Department Regulation
1.409A-3(i)(5), as revised from time to time.
5.7 Director Service. The
Executive shall continue to serve as a member of Board in accordance with and
subject to the Company’s Articles of Incorporation, By-laws and prevailing
law.
5.8 Release of
Claims. The Executive hereby agrees that, following a
termination of employment under Section 5 (other than a termination pursuant to
Section 5.4), he shall, within fifteen five (5) business days of the date of
termination, execute and deliver to the Company a general release of claims, in
form attached hereto as Exhibit A (the
“Release”), by which the Executive releases the Company from any claim arising
from the Executive’s employment by, provision of consulting services to,
termination of employment with or provision of services as a director of, the
Company, in consideration for the payment and Benefits. In the event
the Executive fails to execute the Release within five (5) business days of the
termination of his employment or revokes the Release before it becomes
effective, the Executive shall automatically forfeit any right to receive any
further compensation or benefits under Sections 3 or 4 hereof (including any
acceleration of vesting or extension of exercise period rights with respect to
his Stock Options and Restricted Shares as set forth in Section 4.4); except
that the Company shall pay to the Executive that portion of his Cash
Compensation earned but not yet paid; provided, however, that if Executive is
disabled and unable to execute the Release, Executive shall not forfeit his
rights to receive any further compensation or benefits under Sections 3 or 4
hereof. The Release shall only become effective upon the execution of the
Release by the Company.
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5.9 Survival. The
provisions of this Article 5 shall survive the termination of this Agreement, as
applicable.
5.10 Termination of
Employment. For purposes of any benefit to be provided or any
amount payable under this Agreement that is subject to Section 409A of the Code,
termination of employment shall not be deemed to occur unless it is reasonably
expected that Executive will provide no further services to the Company or its
affiliates, as defined in Section 414(b) or (c) of the Code, or that the level
of bona fide services
will not exceed 20% of the average level of services provided by Executive over
the thirty-six (36) months preceding Executive’s termination of
employment. If Executive continues to provide bona fide services to the
Company or any of its affiliates at a level that is more than 20% of the average
level of services provided by Executive over such thirty-six (36) month period,
then Executive shall be deemed not to have experienced a termination of
employment.
5.11 Delay of Certain
Payments. In the event that Executive is a “specified
employee” within the meaning of Section 409A of the Code (as determined by the
Company or its delegate), any payments hereunder subject to Section 409A of the
Code shall not be paid or provided until the earlier of (A) the Executive’s
death, or (B) the expiration of the 6-month period following Executive’s
termination of employment (“Delay Period”). Any payments that are
delayed by virtue of this subparagraph shall (I) be paid in one payment at the
conclusion of the Delay Period and (II) include interest computed at five
percent (5%) per annum for the duration of the Delay Period.”
6.
Restrictive
Covenants.
6.1 Non-competition. At
all times while the Executive is employed by the Company or during the
Transition Period, the Executive shall not, directly or indirectly, engage in or
have any interest in any sole proprietorship, partnership, corporation 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) engages in
competition with the Company (based on the business in which the Company was
engaged or was actively planning on being engaged as of the date of termination
of the Employee’s employment and in the geographic areas in which the Company
operated or was actively planning on operating as of date of termination of
the Employee’s employment); 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 is 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 or, more than five percent of any class of capital stock of such
corporation.
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6.2 Nondisclosure. 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,
sources of leads 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 the 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 his employment by the Company
(including information conceived, originated, discovered or developed by the
Executive) prior to or after the date hereof, and not generally known, about the
Company or its business. Notwithstanding the foregoing, nothing
herein shall be deemed to restrict the Executive from disclosing Confidential
Information to the extent required by law.
6.3 Nonsolicitation of Employees
and Clients. At all times while the Executive is employed by
the Company and for a two (2) year period after the termination of the
Executive’s employment with the Company for any reason, the Executive shall not,
directly or indirectly, for himself or for any other person, firm, corporation,
partnership, association or other entity (a) employ or attempt to employ 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 months, and/or (b) call on or
solicit any of the actual or targeted prospective clients of the Company on
behalf of any person or entity in connection with any business competitive with
the business of the Company, nor shall the Executive make known the names and
addresses of such clients or any information relating in any manner to the
Company's trade or business relationships with such customers, 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.
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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 further acknowledges and confirms that his full,
uninhibited and faithful observance of each of the covenants contained in this
Article 6 will not cause him any undue hardship, financial or otherwise, and
that enforcement of each of the covenants contained herein will not impair his
ability to obtain employment commensurate with his abilities and on terms fully
acceptable to him or otherwise to obtain income required for the comfortable
support of him and his family and the satisfaction of the needs of his
creditors. 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
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 his 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.
Releases.
8.1 Executive’s Release of the
Company. The Executive releases and discharges the
Company, the Company’s present and former officers, directors, employees,
representatives, attorneys, agents, insurers, parent companies, subsidiaries,
predecessors, affiliates, and successors from any and all claims, liabilities or
obligations of every kind and nature to the extent relating to the Company,
whether now known or unknown, suspected or unsuspected, which Executive ever had
or now has arising prior to the
date of the signing of this Agreement, including but not
limited to all claims arising out of or in connection with (i) his employment by
the Company or the termination of his employment by the Company, including but
not limited to any contention that Executive was discriminated or retaliated
against, harassed, wrongfully terminated, constructively terminated or injured
by the Company in any way or that the Company breached any agreement with
Executive or other obligation to Executive, (ii) any illness, injury,
impairment, or other physical, mental, psychological or other medical condition,
any claim for benefits, including without limitation long term disability
benefits, short term disability benefits, other disability benefits, and (iii)
any other employment-related benefits. This release includes all federal and
state common law claims (including those for contract and tort), and claims
under any federal or state statute or ordinance, including, without limitation,
the Employee Retirement Security Income Act of 1974, the Americans with
Disabilities Act, Title VII of the Civil Rights Act of 1964 (as amended), the
Age Discrimination in Employment Act, 42 U.S.C. §1981, 42 U.S.C. § 1983, the
Family Medical Leave Act, the United States Constitution and the Xxxxxxxx-Xxxxx
Act, 18 U.S.C. § 1514. This release does not apply to and is not intended to be
a release of, any indemnification agreements or similar agreements between the
Company and Executive, any rights under this Agreement or that certain
Registration Rights Agreement entered into by and between the Company and the
Executive dated as of December 4, 2009 hereof or the Executive’s right, title
and interest in the securities of the Company owned by him.
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8.2 Company’s Release of
Executive. The Company releases and discharges Executive from
any and all claims, liabilities or obligations of every kind and nature, whether
now known or unknown, suspected or unsuspected, which the Company ever had or
now has arising prior to the date
of the signing of this Agreement, including but not limited to all claims
arising out of or in connection with his employment by the
Company. This release includes all federal and state common law
claims (including those for contract and tort), and claims under any federal or
state statute or ordinance. Notwithstanding the above, nothing in this Agreement
shall act as a release or waiver of any claim by the Company against Executive
for the theft, misuse, or improper disclosure of the Company’s confidential,
proprietary or trade secret information and the Company knows of no such acts as
of the date hereof.
8.3 No Assignment of
Claims. Executive acknowledges and agrees that he has not
assigned, transferred or conveyed to any person or entity any claim, demand,
liability, obligation or cause of action released by this
Agreement. Executive agrees to indemnify, defend and hold harmless
the Company and/or any present or former officers, directors, employees,
representatives, attorneys, agents, insurers, parent companies, predecessors,
affiliates, subsidiaries or successors of the Company from any claims which may
be asserted against them based on, or arising out of, any such assignment,
transfer, or conveyance.
9.
Non-Disparagement. The
Company agrees to cause the officers and directors of the Company agree not to
make any defamatory remarks about the Executive to third parties. The Executive
agrees not to make any defamatory remarks about the Company (including its
employees, officers, directors, agents, products, services, or business
practices). The parties understand that by agreeing to the provisions
of this Section, they are waiving rights guaranteed by the First Amendment of
the United States Constitution and State law counterparts. Subject to
the Company’s disclosure obligations under the federal securities laws, the
parties shall mutually agree to the content of any public announcements or press
releases made by the Company or Executive regarding the termination of
Executive’s employment with the Company and the terms of this
Agreement.
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10. Preservation of Indemnity
and Directors and Officers Insurance rights;
Mitigation. Nothing in this Agreement is intended to, or
does, waive the Executive’s rights to indemnity and defense from the Company
arising out of his duties as an employee, officer and director of the Company to
the extent that he is entitled to indemnity and defense pursuant to Florida law,
the Company’s Articles of Incorporation and/or the Company’s
Bylaws. This Agreement shall not divest the Executive of any
liability insurance rights, if any, he may have by virtue of his employment with
the Company. The
earnings, payments, equity and benefits contemplated by this Agreement, shall
not be reduced by any earnings, payments, equity and benefits that Executive may
receive from any other source.
11. Attorney’s
Fees. The Company shall reimburse the Executive for the
Executive’s actual and reasonable attorney’s fees incurred in connection with
the negotiation of this Agreement in an amount up to
$5,000, as documented to the Company by detailed invoices provided to the
Executive by his attorney and forwarded to the Company’s General Counsel (the
“Legal
Fees”). The Company will pay the Legal Fees within five
business days of receiving a detailed invoice.
12. Assignment. Neither
party shall have the right to assign or delegate his rights or obligations
hereunder, or any portion thereof, to any other person.
13. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. To the extent applicable, this
Agreement is intended to comply with the distribution and other requirements
under Section 409A of the Code. For any payments or reimbursements to
be made (or in-kind benefits to be provided) under this Agreement that are
subject to Section 409A of the Code, the Agreement shall be interpreted and
applied in a manner consistent with the requirements of Section 409A of the Code
and the regulations promulgated thereunder.
14. 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 Internal Revenue Code of 1986, as amended (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 15 shall not apply
with respect to any amounts payable to the Executive pursuant to Article 5
hereof.
15 Entire
Agreement. 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, including, without
limitation, the Original Employment Agreement. This Agreement may not
be modified in any way unless by a written instrument signed by both the Company
and the Executive.
16. Notices: All
notices required or permitted to be given hereunder shall be in writing and
shall be personally delivered by courier, sent by registered or certified mail,
return receipt requested or sent by confirmed facsimile transmission addressed
as set forth herein. Notices personally delivered, sent by facsimile
or sent by overnight courier shall be deemed given on the date of delivery and
notices mailed in accordance with the foregoing shall be deemed given upon the
earlier of receipt by the addressee, as evidenced by the return receipt thereof,
or three (3) days after deposit in the U.S. mail. Notice shall be
sent (i) if to the Company, addressed to Metropolitan Health Networks,
Inc., 000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx Xxxxx, Xxxxxxx 00000,
Attn: Xxxxxxx X. Xxxxxxxxxx, General Counsel, and (ii) if to the
Executive, to Xxxxxxx X. Xxxxxx, 00 X.X. Xxxxxx Xxxxx, #000, Xxxx Xxxxx, Xxxxxxx
00000, with a copy to: Akerman Senterfitt, 0 XX Xxxxx Xxx., 00xx Xxxxx,
Xxxxx, Xxxxxxx 00000 Attn: Xxxx Xxxxxx, Esq., or to such other address as either
party hereto may from time to time give written notice of to the
other.
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17. 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 applicable, assigns,
including, without limitation, any successor to the Company, whether by merger,
consolidation, sale of stock, sale of assets or otherwise.
18. Severability. The
invalidity of any one or more of the words, phrases, sentences, clauses or
sections 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 or sections 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, or section or sections 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.
19. 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.
20. 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.
21. Section
Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. 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 assigns, any rights
or remedies under or by reason of this Agreement.
23. No Offset.
Notwithstanding anything to the contrary set forth herein, until the entry of a
court ordered determination pursuant to Section 5.1, the Company’s obligations
to make payments hereunder are absolute and unconditional and not subject to
offset, defense, counterclaim, dilatory plea or the like.
24. Prevailing Parties.
In the event of any dispute relating to this Agreement, the non prevailing party
shall pay the expenses and costs of the prevailing party, including but not
limited to legal fees and costs.
[signature
page follows]
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.
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COMPANY:
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METROPOLITAN
HEALTH NETWORKS, INC.
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By:
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Name:
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Title:
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THE
EXECUTIVE:
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XXXXXXX
X. XXXXXX
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EXHIBIT
A
FORM OF
RELEASE
This Release of Claims (“Release”) is made and entered into by and
between XXXXXXX X.
XXXXXX, on behalf of
himself and his agents, representatives, heirs, executors, administrators,
survivors and assigns (hereinafter collectively “Executive”) and METROPOLITAN HEALTH NETWORKS,
INC., and each of its affiliates, subsidiaries, successors, and their respective
employees, officers, directors, agents, legal representatives and assigns
(hereinafter collectively the “Company”). Executive and the Company are
hereinafter referred to as the “Parties.”
For and in consideration of the mutual
promises, covenants, and undertakings contained herein and for other good and
sufficient consideration receipt of which is hereby acknowledged, the Parties
agree to the terms of this Release as follows:
1. This Release, and compliance with this
Release, shall not be construed as an admission by either party of a violation
of the rights or interests of the other party or of any other individual or
entity; nor shall this Release and compliance with this Release be construed as
an admission of a violation of any order, ruling, law, statute, regulation,
contract or covenant, express or implied. The parties disclaim and deny any such
violation and any liability that would be incurred as a
result.
2. Executive releases and discharges the
Company, the Company’s present and former officers, directors, employees,
representatives, attorneys, agents, insurers, parent companies, subsidiaries,
predecessors, affiliates, and successors from any and all claims, liabilities or
obligations of every kind and nature to the extent relating to the
Company, whether now known
or unknown, suspected or unsuspected, which Executive ever had or now has,
including but not limited to all claims arising out of or in connection with (i)
his employment by the Company, his provision of consulting services
to the Company or
the termination of his employment with or his provision of consulting services
to the Company, including
but not limited to any contention that Executive was discriminated or retaliated
against, harassed, wrongfully terminated, constructively terminated or injured
by the Company in any way or that the Company breached any agreement with
Executive or other obligation to Executive, (ii) any illness, injury,
impairment, or other physical, mental, psychological or other medical condition,
any claim for benefits, including without limitation long term disability
benefits, short term disability benefits, other disability benefits, and
(iii) any other
employment-related benefits. This release includes all federal,
state, and non-U.S. statutory claims, federal, state, and non-U.S. common law
claims (including those for contract and tort), and claims under any federal,
state, or non-U.S. statute or ordinance, including, without limitation, the
Employee Retirement Security Income Act of 1974, the Americans with Disabilities
Act, Title VII of the Civil Rights Act of 1964 (as amended), the Age
Discrimination in Employment Act, 42 U.S.C. §1981, 42 U.S.C. § 1983, the Family
Medical Leave Act, the United States Constitution and the Xxxxxxxx-Xxxxx Act, 18
U.S.C. § 1514. This release does not apply to and is not intended to be a
release of, any indemnification agreements or similar agreements between the
Company and Executive, any rights under this Agreement or that certain
Registration Rights Agreement entered into by and between the Company and the
Executive dated as of December 4, 2009 or the Executive’s right, title and
interest in the securities of the Company owned by him.
3. The Company releases and discharges
Executive from any and all claims, liabilities or obligations of every kind and
nature, whether now known or unknown, suspected or unsuspected, which the
Company ever had or now has, including but not limited to all claims arising out
of or in connection with his employment by the Company. This release includes
all federal, state, and non-U.S. statutory claims, federal, state and non-U.S.
common law claims (including those for contract and tort), and claims under any
federal, state, or non-U.S. statute or ordinance. Notwithstanding the above,
nothing in this Release shall act as a waiver or release of any claims by the
Company against Executive for the theft, misuse, or improper disclosure of the
Company’s confidential, proprietary and trade secret information and the
Company knows of no such acts as of the date hereof.
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4. The Parties understand and expressly
agree that, except as provided in this
Release, this Release extends to all claims
arising prior to the date of their signing of this Release of every nature and
kind whatsoever, whether known to them or not, except any rights or obligations
created by this Release or the Executive’s amended and restated
employment agreement with the Company dated as of March 1, 2010 (the “Employment
Agreement”). Notwithstanding the foregoing, nothing in this
Release is intended to, or does, waive the Executive’s rights to indemnity and
defense from the Company arising out of his duties as an employee, officer and
director of the Company to the extent that he is entitled to indemnity and
defense pursuant to Florida law, the Company’s Articles of Incorporation and/or
the Company’s Bylaws. This Release shall not divest the Executive of
any liability insurance rights, if any, he may have by virtue of his employment
with the Company.
The parties have had the opportunity to
consult with and be advised by counsel regarding the meaning and effect of this
provision and agree voluntarily to waive their rights, except as described in
this paragraph, and affirm their intention to release not only claims known but
those unknown to them which arose or may arise out of Executive’s employment
with the Company or its termination, and they hereby do release all such known
and unknown claims.
5. The Parties hereto acknowledge that
they: a) have carefully read and understood all of the terms and conditions of
this Release; b) have discussed and reviewed this Release with their respective
attorneys; c) agree with the terms and conditions of this Release; and d) enter
into this Release voluntarily and knowingly. The Release’s terms shall not be
construed against the drafter.
6. The Parties agree that this Release
shall be final and binding upon the Parties, their successors, and assigns, and
that any changes in this Release, whether by additions, deletions, waivers,
amendments or modifications, may be made only in writing and signed by all
Parties.
7. The Parties agree that this Release sets
forth the entire agreement between the Parties and supersedes any other
understanding, promise or Release directly or indirectly related to it, except
the Employment Agreement to which it is attached,
which it does not supercede. The parties agree that, notwithstanding the terms
of this Release, they will honor the terms of the Employment Agreement. Other than as provided by
this Release, no promise or inducement has been offered to the respective
parties.
8. If any part of this Release shall be
determined to be illegal, invalid or unenforceable, the remaining part shall not
be affected thereby, and said illegal, unenforceable or invalid parts shall be
deemed not to be a part of this Release.
9. This Release is to be interpreted in
accordance with Florida law without regard to its conflict of law
provisions.
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10. Prior to execution of this Release,
Executive and the Company have apprised themselves of sufficient information in
order that they might intelligently exercise their own judgment concerning
whether to sign it. The Company has informed Executive in writing to consult an
attorney before signing this Release, and he has done so. The Company has also
given Executive 21 days in which to consider this Release, if he wishes.
Executive also understands that for a period of 7 days after he signs this
Release he may revoke this Release and that the Release shall not become
effective until the eighth day after he signs it. In order to revoke this
Release, Executive must deliver to the Company’s General Counsel, Xxxxxxx X.
Xxxxxxxxxx, on or before seven (7) days after the execution of this Agreement, a
letter stating that he is revoking this Release. Should Executive revoke this
Release, he will not be entitled to receive any benefits under the Employment Agreement to which this Release is
attached as an Exhibit.
11. The Parties represent that they have
discussed thoroughly all aspects of this Release with their respective
attorneys, fully understand all of the provisions of the Release, and are
voluntarily entering into this Release.
12. The Parties acknowledge that, except as
expressly set forth herein, no representation of any kind or character has been
made to induce the execution of this Release.
13. This Release may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A faxed signature page
shall be deemed the equivalent of an original for the purpose of effecting this
Release.
14. The Company represents and warrants that
the undersigned has the authority to act on behalf of the Company and to bind
the Company and all who may claim through it to the terms and conditions of this
Release and the person signing below on behalf of the Company warrants that he
or she has the authority to bind the Company. Executive represents and warrants
that he has the capacity to act on his own behalf and on behalf of all who might
claim through him to bind them to the terms and conditions of this Release. Each
party warrants and represents that there are no liens or claims of lien or
assignments in law or equity or otherwise of or against any of the claims
released herein.
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COMPANY:
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METROPOLITAN
HEALTH NETWORKS, INC.
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By:
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Date:
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Name:
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Title:
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THE
EXECUTIVE:
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Date:
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XXXXXXX
X. XXXXXX
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