EXHIBIT 10.37
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of this 31st day of August
1994, between U. S. Diagnostic Labs Inc. (the "Company"), and Xxxxxxx X. Xxxxxxx
(the "Executive").
WHEREAS, the Company desires to employ Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
(a) TERM. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for a period commencing on the date
of this Agreement and ending five (5) years from the date hereof (the "Term").
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement at the end of the Term or otherwise, the provisions of Sections 6 and
7 shall remain in full force and effect and the provisions of Sections 6(a),
6(c) and 7 shall be binding upon the legal representatives, successors and
assigns of the Executive, except as otherwise provided in this Agreement.
2. DUTIES.
(a) GENERAL DUTIES. The Executive shall serve as Chairman of the
Board and Chief Financial Officer of the Company with duties and
responsibilities that are customary for such executives. The Executive will also
perform services for such subsidiaries as may be necessary. The Executive will
use its best efforts to perform his duties and discharge his responsibilities
pursuant to this Agreement competently, carefully and faithfully. In determining
whether or not the Executive has used his best efforts hereunder, the Company's
delegation of authority to other employees and all surrounding circumstances
shall be taken into account and the best efforts of the Executive shall not be
judged solely on the Company's earnings or other results of the Executive's
performance.
(b) DEVOTION OF TIME. The Executive will devote substantially full
time during normal business hours (exclusive of periods of sickness and
disability and of such normal holiday and vacation periods as have been
established by the Company) to the affairs of the Company subject to his prior
obligations to act as consultant to Goffman & Associates, CPA. It is expressly
understood that the Executive will not enter the employ of or serve as a
consultant to, or in any way perform any services with or without compensation
to, any other persons, business or organization (other than as set forth above)
without the prior consent of the board of directors of the Company; provided,
that the Executive shall be permitted to devote a limited amount of his time,
without compensation, to charitable or similar organizations.
3. COMPENSATION AND EXPENSES.
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(a) SALARY. For the services of the Executive to be rendered under
this Agreement, the Company shall pay the Executive an annual base salary of
$120,000 during the first year of the Term, which thereafter shall be increased
at least annually and such additional amounts as set by the discretion of the
board of directors. Provided, however, in no event shall the Executive's annual
base salary for the second year be less than 110% of the first year base salary
($132,000) nor shall the annual base salary for the third year of the Term be
less than 110% of the second year minimum base salary ($145,200). The annual
base salary under this Section 3(a) will be reduced, however, to the extent that
the Executive elects to defer any portion thereof under the terms of any
deferred compensation or savings plan maintained by the Company. The Company
will pay the Executive his annual salary in equal installments no less
frequently than monthly.
(b) BONUS. The Executive shall be paid an annual bonus based on the
increase of net income before taxes attributable to each individual center
operated by the Company or its subsidiaries, over the net income before taxes of
each center during the prior year. For the purpose of calculating this bonus,
the base year for each center (the "Base Year") shall be the 12 month period
ending (i) on the last day of the month prior to acquisition of a center (a "New
Center") and (ii) on April 30, 1994 for the centers currently owned by the
Company (the "Existing Centers"). The year for which the bonus is payable (the
"Bonus Year") shall be measured from the 12 months beginning on (i) the first
day of the month following acquisition of a New center and each 12 month period
thereafter, and (ii) May 1, 1994 and each 12 month period thereafter for an
Existing Center. During the first, second and third year of the Term, such bonus
shall be 10%, 5% and 2d%, respectively, of net income before taxes of each New
Center and Existing Center in excess of the Base Year of each New Center and
Existing Center. Except in the case of death or disability, only those New
Centers and Existing Centers for which a full 12 month Bonus Year has ended in
such year of the Term shall be included. In the case of death or disability, the
Base Year shall be pro-rated by multiplying the next income before taxes for
each New Center and Existing Center times a fraction, the numerator of which
shall be the number of days during the applicable 12 month period until death or
disability and the denominator of which shall be 365. For each New Center and
Existing Center, the Bonus Year shall be based upon the time elapsed until the
date of death or disability.
(c) EXPENSES. In addition to any compensation received pursuant to
Section 3(a) and (b), the Company will reimburse or advance funds to the
Executive for all reasonable travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties under this Agreement,
provided that the Executive properly accounts for such expenses to the Company
in accordance with the Company's practices. Such reimbursement or advances will
be made in accordance with policies and procedures of the Company in effect from
time to time relating to reimbursement of or advances to executive officers.
(d) STOCK GRANT. Upon execution of this Agreement, the Executive
shall be granted 50,000 fully vested Incentive Stock Options to purchase shares
of the Company's common stock at an exercise price of $5.00 or the initial
public offering price, whichever is lower.
4. BENEFITS.
(a) VACATION. For each 12-month period during the Term, the Executive
will be entitled to four (4) weeks of vacation without loss of compensation or
other benefits to which he is entitled under this Agreement, to be taken at such
times as the Executive may select and the affairs of the Company may permit.
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(b) EMPLOYEE BENEFIT PROGRAMS. Within limiting the compensation to
which the Executive is entitled pursuant to the provisions of Section 3 or this
Section 4, during the Term, the Executive will be entitled to participate in any
pension, insurance or other employee benefit plan that is maintained at that
time by the Company for its executive officers, including programs of life and
medical insurance and reimbursement of membership fees in civic, social and
professional organizations.
(c) AUTOMOBILE. The Company shall provide the Executive with a
non-accountable automobile allowance of $1,000 per month which includes all
costs associated with the use of an automobile including, without limitation,
lease or loan payments, fuel, maintenance and insurance.
5. TERMINATION.
(a) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment pursuant to the terms of this Agreement at any time for cause by
giving written notice of termination. Such termination will become effective
upon the giving of such notice, except that termination based upon clause (iii)
below shall not become effective unless the Executive shall fail to correct such
breach within three (3) months of receipt of written notice. At the conclusion
of such three-month period, this alleged breach shall be deemed to have been
cured unless written notice to the contrary is given. Upon any such termination
for cause, the Executive shall have no right to compensation, bonus or
reimbursement under Section 3, or to participate in any employee benefit
programs under Section 4 for any period subsequent to the effective date of
termination. "Cause" shall mean: (i) the Executive is convicted of a felony
which is related to the Executive's employment or the business of the Company;
(ii) the Executive, in carrying out his duties hereunder, has been found in a
civil action to have committed gross negligence, willful gross misconduct
resulting, misappropriated Company funds or otherwise defrauded the Company, in
any case, in material harm to the Company; and (iii) the Executive materially
breaches any provision of Section 6 or Section 7.
(b) DEATH OR DISABILITY. Except for the Company's obligations
contained in this Section 5, this Agreement and the obligations of the Company
hereunder will terminate upon the death or disability of the Executive. For
purposes of this Section 5(b), "disability" shall mean that for a period of six
months in any 12-month period the Executive is incapable of substantially
fulfilling the duties set forth in Section 2 because of physical, mental or
emotional incapacity resulting from injury, sickness or disease.
Upon termination by death or disability, the Company will pay the
Executive or his legal representative, as the case may be: (i) his annual salary
at such time through the date of such termination of employment and (ii) the
Executive's pro-rata bonus due under Section 3(b) of this Agreement. Such sums
shall be paid upon the same terms and conditions as if this Agreement were in
fully force and effect.
(c) SPECIAL TERMINATION. In the event that (i) the Executive, with or
without change in title or formal corporate action, shall no longer exercise all
of the duties and responsibilities and shall no longer possess substantially all
the authority set forth in Section 2; or (ii) the Company materially breaches
this Agreement or the performance of its duties and obligations hereunder; or
(iii) any entity or person not now an executive officer of the Company becomes
either individually or as part of a group the beneficial owner of 408 or more of
the Company's common stock, the Executive, by written notice to the Company, may
elect to deem the Executive's employment hereunder to have been terminated by
the Company without cause, in which event the Executive shall be entitled to the
compensation, reimbursement and
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benefits payable pursuant to Section 3 and 4 herein for the remaining term of
this Agreement. If the remaining term of the Agreement is less than one year,
the Executive shall receive one year's salary at his then current rate, benefits
and bonus which bonus shall not be less than the last year [Fiscal].
Alternatively, in such event, the Executive, by written notice to the Company,
may elect to refuse all further obligations of the Company under Section 3 and
Section 4 and to release the Company with respect thereto, in which event the
Company shall release the Executive from the provisions of Section 6.
(d) VOLUNTARY TERMINATION. The Executive, on 30 days prior written
notice to the Company, may terminate his employment voluntarily (i) at any time
following termination of the initial Term or (ii) at any time following the
death or disabling illness of a member of the Executive's immediate family or
similar personal, non-business related occurrence as a result of which the
Executive concludes he must devote a substantial amount of his time and energies
to his family or other personal matter and not to his business activities so as
to preclude his fulfilling his obligations under this Agreement. Upon any such
termination, the Company will pay the Executive (i) his annual salary at such
time pursuant to Section 3(a) through the date of such termination of employment
and (ii) any bonus on a pro-rata basis which would have been payable through the
date of termination pursuant to Section 3(b). Such sums shall be paid upon the
same terms and conditions as if this Agreement were in fully force and effect.
(e) CONTINUING EFFECT. Notwithstanding any termination of the
Executive's employment as provided in this Section 5 or otherwise the Provisions
of Sections 6 and 7 shall remain in full force and effect, except as otherwise
provided in Sections 5(a) and (c).
6. NONCOMPETITION AGREEMENT.
(a) COMPETITION WITH THE COMPANY. Except as provided for in Sections
2(b) and 6(b) hereof, until termination of his employment and for a period of 12
months commencing on the date of termination, the Executive, directly or
indirectly, in association with or as a stockholder, director, officer,
consultant, employee, partner, joint venturer, member or otherwise of or through
any person, firm, corporation, partnership, association or other entity, will
not compete with the Company or any of its affiliates in the offer, sale or
marketing of products or services that are competitive with the products or
services offered by the Company, within any metropolitan area in the United
States or elsewhere in which the Company is then engaged in the offer and sale
of competitive products or services except as provided in (b) below.
Additionally, the foregoing shall not prevent Executive from accepting
employment with an enterprise engaged in two or more lines of business, one of
which is the same or similar to the Company's business (the "Prohibited
Business") if Executive's employment is totally unrelated to the Prohibited
Business; provided, further, the foregoing shall not prohibit Executive from
owning up to 58 of the securities of any publicly-traded enterprise provided
Executive is not an employee, director, officer, consultant to such enterprise
or otherwise reimbursed for services rendered to such enterprise.
(b) EXECUTIVE'S OTHER ON-GOING BUSINESS. It is hereby understood that
the Executive is currently affiliated with certain businesses enumerated in
Section 2(b) hereof. The Company acknowledges that the operation of such
businesses, even if in the future they should compete with the Company, will not
violate the Provisions of this Section 6.
(c) SOLICITATION OF CUSTOMERS. Except as provided for in Section
6(b), during the periods in which the provisions of Section 6(a) shall be in
effect, the Executive, directly or indirectly, will not seek Prohibited Business
from any Customer (as defined below) on behalf of any enterprise or business
other than the Company, refer Prohibited Business from any Customer to any
enterprise or business other
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than the Company or receive commissions based on sales or otherwise relating to
the Prohibited Business from any Customer, or any enterprise or business other
than the Company. For purposes of this Section 6(c), the term "Customer" means
any person, firm, corporation, partnership, association or other entity to which
the Company or any of its affiliates sold or provided goods or services during
the 12 month period prior to the time at which any determination is required to
be made as to whether any such person, firm, corporation, partnership,
association or other entity is a Customer.
(d) NO PAYMENT. The Executive acknowledges and agrees that no separate
or additional payment will be required to be made to him in consideration of his
undertakings in this Section 6.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Executive
acknowledges that during his employment he will learn and will have access to
confidential information regarding the Company and its affiliates, including
without limitation (i) confidential or secret plans, programs, documents,
agreements or other material relating to the business, services or activities of
the Company and its affiliates and (ii) trade secrets, market reports, customer
investigations, customer lists and other similar information that is proprietary
information of the Company or its affiliates (collectively referred to as
"Confidential Information"). All records, files, materials and Confidential
Information excluding personal items, obtained by the Executive in the course of
his employment with the Company are confidential and proprietary and shall
remain the exclusive property of the Company or its affiliates, as the case may
be. The Executive will not, except in connection with and as required by his
performance of his duties under this Agreement, for any reason use for his own
benefit or the benefit of any person or entity with which he may be associated
or disclose any such Confidential Information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever without the
prior written consent of the board of directors of the Company, unless such
Confidential Information previously shall have become public knowledge through
no action by or omission of the Executive.
8. ASSIGNABILITY. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and be binding upon the successors
or assigns of the Company, provided that such successor or assign shall acquire
all or substantially all of the assets and business of the Company. The
Executive's obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
9. SEVERABILITY.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in this Agreement are reasonable
in light of the circumstances as they exist on the date hereof. Should a
decision, however, be made at a later date by an arbitration proceeding that the
character, duration or geographical scope of such provisions is unreasonable,
then it is the intention and the agreement of the Executive and the Company that
this Agreement shall be construed by the tribunal in such a manner as to impose
only those restrictions on the Executive's conduct that are reasonable in the
light of the circumstances and as are necessary to assure to the Company the
benefits of this Agreement. If in an arbitration proceeding, a tribunal shall
refuse to enforce all of the separate covenants deemed included herein because
taken together they are more extensive 13 than necessary to assure to the
Company the intended benefits of this Agreement, it is expressly understood and
agreed by the parties hereto that the provisions of this Agreement that, if
eliminated, would permit the remaining separate provisions to be enforced in
such proceeding shall be deemed eliminated, for the purposes of such
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proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other. The remaining provisions of this Agreement
shall be valid and binding and of like effect as though such provision were not
included.
10. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
With a Copy to: Xxxxxxx Xxxxxx, Esq.
Xxxxxxx Xxxxx Xxxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
To the Company: U.S. Diagnostic Labs Inc.
00 X. Xxxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
To the Executive: Xxxxxxx X. Xxxxxxx
00 X. Xxxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
11. COUNTERPARTS. This Agreement 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. The execution of this
Agreement may be by actual or facsimile signature.
12. ARBITRATION. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by mutual
agreement, shall be settled by submission by either party of the controversy,
claim or dispute to binding arbitration in West Palm Beach, Florida (unless the
parties agree in writing to a different location), before a single arbitrator in
accordance with the rules of the American Arbitration Association then in
effect. In any such arbitration proceeding the parties agree to provide all
discovery deemed necessary by the arbitrator. The decision and award made by the
arbitrator shall be final, binding and conclusive on all parties hereto for all
purposes, and judgment may be entered thereon in any court having jurisdiction
thereof.
13. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating
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to this Agreement, or to the interpretation, breach or enforcement thereof, and
any action or proceeding including that in arbitration as provided for in
Section 13 of this Agreement, is commenced to enforce the provisions of this
Agreement, the prevailing party shall be entitled to an award by the court or
arbitrator, as appropriate, of reasonable attorney's fee, costs and expenses.
14. GOVERNING LAW. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
New York without regard to choice of law considerations.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision 16 hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
16. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
U.S. DIAGNOSTIC LABS. INC.
By:_________________________
Xxxxxx Xxxxx, President
_________________________
Xxxxxxx X. Xxxxxxx
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