Exhibit 10(b)
HIGHLY CONFIDENTIAL
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EMPLOYMENT AGREEMENT
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BETWEEN
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PHYSICIANS HEALTH SERVICES, INC.
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AND
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XXXXXX X. XXXX
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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AGREEMENT, made as of the __th day of October, 1996, by and between
Physicians Health Services, Inc., a corporation organized under the laws of the
State of Delaware (hereinafter referred to as "PHS"), and Xxxxxx X. Xxxx an
individual residing at 00 Xxxxxxxx Xxxx, Xxxxxx, XX 00000 (hereinafter referred
to as "Employee").
WITNESSETH:
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WHEREAS, PHS and Employee are parties to an Employment Agreement dated as
of December 19, 1995 pursuant to which Employee was employed as the Company's
Executive Vice President and Chief Operating Officer; and
WHEREAS, PHS now desires that Employee serve in the capacity of
President and Co-Chief Executive Officer of the Company; and Employee desires to
accept such employment on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and other good and valuable considerations hereinafter set forth, the
parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES.
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(a) PHS hereby employs Employee as its President and Co-Chief Executive
Officer on the terms and conditions set forth in this Agreement, to
perform such services and to discharge such duties as may be assigned
to him from time to time by the President of PHS.
(b) Employee accepts such employment as above stated and for the
compensation hereinafter provided, and agrees that during the term of
this Agreement, he will serve PHS faithfully to the best of his ability
and, under the direction of the Board of Directors of PHS and shall
devote his full business time, energy and skills to his duties
hereunder.
(c) Without limiting the generality or scope of the services and duties
which may be assigned to him, Employee's duties shall include the
duties outlined in Employee's job description, as on file with PHS.
(d) Employee agrees to do such traveling and to attend such educational and
associational conferences and seminars as may be from time to time
directed or approved. Reasonable travel, lodging, registration and/or
attendance fees incurred and required in connection with such travel,
conferences and seminars shall be either paid by PHS or reimbursed by
PHS to Employee.
2. COMPENSATION
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(a) SALARY
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(i) For all services rendered by Employee under this Agreement, PHS
shall, for the period commencing upon November 1, 1995, pay to
Employee the annual sum of $260,000 Dollars, payable in bi-weekly
installments in accordance with PHS's standard payroll policies.
Retroactive adjustments shall be payable in a lump sum payment
promptly upon processing a salary adjustment.
(ii) For the remainder of the term of this Agreement, PHS shall set
Employee's salary at an annual sum which shall not be less than the
base salary in effect for the first year of the Agreement, adjusted
by the percentage increase or decrease, if any, during
that period of the Federal Bureau of Labor Statistics CPI-U All
Cities Index. Nothing in this Agreement shall preclude PHS from
increasing Employee's compensation by an amount greater than any
percentage increase in this Paragraph 2(a)(ii).
(b) ADDITIONAL COMPENSATION
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(i) In advance of the commencement of each twelve (12) month calendar
period during the term of this Agreement, PHS and the Employee
shall establish annual performance objectives with respect to
Employee's duties and obligations hereunder. These objectives shall
form the basis of an incentive compensation program which will
permit Employee to earn up to an additional 60 percent of his base
compensation as additional compensation in addition to his regular
annual compensation hereunder, as approved by the Compensation
Committee of the Board of Directors.
(ii) PHS's Board of Directors or its Compensation Committee, may also,
from time to time and in its discretion, direct PHS to pay or
provide additional compensation to Employee beyond the compensation
specified above in Paragraph 2(a)(i) and 2(b)(i), in such amounts
and in such form as the Board shall deem fit.
(c) FRINGE BENEFITS
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(i) Employee shall be entitled to the amount of annual vacation in
accordance with the policies then in effect at PHS.
(ii) Employee shall be entitled to participate in any qualified pension
plan, qualified profit-sharing plan, medical or dental
reimbursement plan, group term life insurance plan, or any other
employee or fringe benefit plan that is currently in effect at PHS
or that may be established in the future by PHS. Employee's right
to participate in such plans shall be subject to the respective
terms of the particular plans involved.
(iii) Employee shall be entitled to compensation provided hereunder
during the periods of actual illness or other incapacity which
exceed his accrued sick leave up to a total of 90 days.
(iv) Subject to such reasonable guidelines as may be adopted and
approved by the Board of Directors, PHS shall pay any necessary
business expenses incurred by Employee in direct furtherance of
the business and affairs of PHS.
(v) Employee shall be entitled to the use of a company owned or leased
automobile commensurate with other PHS employees at his grade
level. PHS shall reimburse Employee for reasonable maintenance,
operating and insurance expenses incurred with respect to use of
such automobile in connection with PHS's business affairs.
(vi) Employee shall be entitled to a group term life insurance policy,
purchased by PHS and with premiums paid by PHS, in an amount equal
to two times Employee's base salary, as it may be adjusted from
time to time, up to $750,000 (subject to insurability requirements
of the insurer).
3. NO COMPETING BUSINESS
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Notwithstanding any other term or provision herein contained, Employee
shall not, during the term of this Agreement, compete, directly or
indirectly, with PHS or any subsidiary of PHS without the prior written
consent of PHS.
4. TIME DEVOTED TO OTHER ACTIVITIES: FEES
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(a) Except as the Board of Directors of PHS may otherwise designate and
authorize, or as is provided in PHS's Personnel Policies Manual,
Employee shall not render any service or engage in any activity not
directly related to the business of PHS, its subsidiaries, or
physicians and other health care providers with which is contracts for
services.
(b) It is understood and agreed that during the term of this Agreement, PHS
may from time to time direct Employee to engage in certain specified
activities, solely on behalf of PHS. All fees and other compensation
payable with respect to such activities as may be so specified,
designated, authorized or approved shall be the property of and payable
to PHS. All fees and other compensation which may be payable with
respect to activities or services which Employee engaged in with the
approval of PHS and in accordance with PHS's Personnel Policies Manual,
but which are not on behalf of PHS, shall be the property of Employee.
5. TERM
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This Agreement shall be effective as of January 1, 1996 (hereinafter
referred to as the "Commencement Date"), and shall continue in full force
and effect until December 31, 2000, unless sooner terminated as hereinafter
provided (hereinafter referred to as the "Termination Date"). This
Agreement shall be automatically extended for another twelve (12) months,
unless notification to terminate or renegotiate it is made by PHS or the
Employee at any time prior to six (6) months prior to Termination Date.
This Agreement shall supersede all previous agreements between the parties,
whether written or oral, and all such Agreements are hereby rescinded.
6. TERMINATION
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(a) TERMINATION BY PHS FOR CAUSE
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PHS shall have the right to terminate Employee's employment hereunder
prior to the expiration of the term hereof, without liability to it,
but only for Cause as defined in Paragraph 6(e).
(b) TERMINATION BY PHS WITHOUT CAUSE
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PHS shall have the right to terminate Employee's employment hereunder
without cause at any time, with liability to it as provided pursuant to
Paragraph 6(d).
(c) TERMINATION BY EMPLOYEE
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Employee may terminate his employment hereunder, without liability to
him, by giving PHS notice thereof three (3) months in advance of the
effective date of such termination or at an earlier date if mutually
agreed upon by both PHS and Employee. Employee shall have no
obligation to mitigate damages to PHS if he terminates employment
pursuant to this Paragraph 6(c).
(d) EFFECT OF TERMINATION
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In the event PHS terminates this Agreement pursuant to Paragraph 6(b),
PHS shall pay to Employee an amount equal to the sum of the payments
due for the remainder of this Agreement or eighteen (18) months' of
annual compensation, whichever is greater, at the
rate in effect on the date of termination. In addition, the medical
insurance benefits noted in Paragraph 2(c)(ii) will continue in effect
for a period of twelve (12) months following the effective date of
termination. The provisions of Paragraph 3 hereof shall continue in
effect for a period of one year from the Termination Date, but only
within the geographic area served by PHS or any subsidiary thereof. In
the event employment is terminated as a result of the death of
Employee, PHS shall pay all amounts accrued and unpaid to the date of
termination to the estate of Employee (including credit for any
vacation earned but not taken and the amount, if any, of any bonus for
a past fiscal year which has not been awarded or paid to Employee).
(e) CAUSE
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(i) Termination for Cause as defined herein may only occur after the
expiration of a period of five business days following delivery of
a written notice from PHS to Employee setting forth the
determination of the Board of Directors made in good faith to
terminate his employment and specifying in reasonable detail the
facts and circumstances claimed to provide the basis for PHS's
right of termination pursuant to Paragraph 6(a).
(ii) So long as no "change of control" (as defined in the Conditional
Employment Agreement between PHS and Employee dated March 13, 1995
(the "Conditional Employment Agreement") shall have occurred and be
continuing, the term "Cause" as used herein shall mean: (a) fraud,
dishonesty or theft involving PHS; (b) Employee's being convicted
in a criminal proceeding (excluding motor vehicle misdemeanors);
(c) habitual intoxication, or abuse of any substance that impairs
Employee's performance of his duties hereunder; (d) illegal
business conduct; (e) breach of this Agreement not corrected within
the five business days notice period specified in Paragraph
6(e)(i); (f) failure of Employee for any reason, within 24 hours
after receipt by his written notice thereof from PHS, to correct,
cease or otherwise alter any insubordination, failure to comply
with instructions, or other omission to act that materially
adversely affects, or is likely to materially adversely effect,
PHS's business or operations; (g) gross negligence or willful
misconduct of Employee related to PHS's business.
After any Change of Control of PHS has occurred (as defined in the
Conditional Employment Agreement), "Cause" as used herein shall have
the meaning specified in the Conditional Employment Agreement.
7. ORAL NEGOTIATIONS SUPERSEDED: AMENDMENT
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This Agreement sets forth the entire Agreement of the parties and
supersedes all oral negotiations and prior writings with respect to the
subject matters hereof. This Agreement may not be amended or modified in
any manner, including the provision against oral amendment or modification,
except by an instrument in writing signed by the parties hereto.
8. BINDING EFFECT
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This Agreement shall inure to the benefit of and be binding upon PHS and
its respective successors, permitted assigns, executors and administrators.
9. PARAGRAPH HEADINGS
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Paragraph headings used herein are for convenience only and shall not
affect construction of this Agreement.
10. GOVERNING LAW
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This Agreement shall be governed by and construed under the laws of the
State of Connecticut.
11. COUNTERPARTS
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This Agreement may be executed in two or more counterparts which, taken
together, shall constitute one document.
12. SEVERABILITY
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In the event that any provision hereof shall be declared invalid or
unenforceable by any court, such invalidity shall not affect the validity
or enforceability of the remainder of this Agreement.
13. ARBITRATION
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Any controversy or claims arising out of or relating to this Agreement, or
the breach thereof, shall be settled in Bridgeport, Connecticut pursuant to
the rules of the American Arbitration Association; and judgment upon the
award rendered by the Arbitrator(s) may be entered in any court having
jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have affixed their hands and seals
as of the day and year first above written.
Physicians Health Services, Inc.
By: __________________________
__________________________
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Xxxxxx X. Xxxx