EXHIBIT 10.41
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of this 1st day of May
1996, between U. S. Diagnostic Labs Inc. (the "Company"), and Xxxx 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 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 Senior Vice
President of the Company with duties and responsibilities that are customary for
such executives. The Executive will also be president and chief executive
officer of the one or more subsidiaries operating imaging centers owned by the
Company in the New York/New Jersey/Pennsylvania area. The Executive will use his
best efforts to perform his duties and discharge his responsibilities pursuant
to this Agreement competently, carefully and faithfully. The Executive shall be
appointed to the managment committee composed of other senior executives of the
Company.
(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. 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.
(c) MEDICAL OPPORTUNITIES. Executive agrees to present to the Company
all potential opportunities for acquisitions, joint ventures and similar
transactions in the medical or healthcare field. Executive may pursue such
opportunities if declined the Company.
3. COMPENSATION AND EXPENSES.
(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
$200,000 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 105% of the first year base salary ($210,000) nor shall the annual base
salary for the remaining years of the Term be less than 105% of the previous
year's minimum base salary. 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 bimonthly in accordance with the
Company's policies.
(b) BONUS. The Executive shall be paid an annual bonus of $50,000 in
each of the first two years of the Term. For the remaining years of the Term,
Executive shall be paid a bonus of $50,000 only in each year in which the net
income before taxes attributable to the six imaging centers previously operated
by Medical Marketing Development, Inc. is at least $3 million (the "Income
Target"). Such bonus will be paid within 120 days of the end of each fiscal
year.
(c) STOCK OPTIONS. Employee shall be granted 100,000 options under
the Company's 1995 Long Term Incentive Plan ("Plan") at fair market value on the
date of grant by the Board of Directors. Such options will vest 20,000 in each
year in which the Income Target is met. If such options do not vest in any year,
they will be automatically cancelled. Executive shall also be entitled to
discretionary grants of options under the Plan. All options granted to Executive
shall vest if Executive is terminated without cause or upon a change in control
of the Company.
(d) 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.
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.
(b) EMPLOYEE BENEFIT PROGRAMS. 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.
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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 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 Sections 2, 6 or 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.
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 radiology products or services, including radiology practice
management services, that are competitive with the products or services offered
by the Company as of the date of this Agreement, or any other business engaged
in by the Company after the date of this Agreement in which Executive is
actively involved on behalf of 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 5% of the securities of any publicly-traded enterprise provided
Executive is not an employee, director, officer, consultant to such enterprise
or otherwise reimbursed for
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services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. 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 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(b), 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.
(c) 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.
(d) RELEASE. The provisions of this Section 6 shall not apply if this
Agreement is terminated by the Company without cause or by Executive upon a
material breach by the Company.
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
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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 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 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:
To the Company: U.S. Diagnostic Labs Inc.
000 X. Xxxxxxx Xxxxx
Xxxxx 0000 Xxxx
Xxxx Palm Beach, Florida 33401
With a Copy to: Xxxxxxx Xxxxxx, Esq.
Bachner, Tally, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
To the Executive: Xxxx X. Xxxxxxx
c/o Medical Marketing Development, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
With a Copy to: Xxxxxxx Xxxxxx, Esq.
Meltzer, Lippe, Goldstein, Wolfe, Xxxxxxxxx
& Sazer, P.C.
The Chancery
000 Xxxxxx Xxxxxx
Xxxxxxx, 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
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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 New York, New York (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 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 12 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 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.
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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:
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Xxxxxxx X. Xxxxxxx, Chairman
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Xxxx X. Xxxxxxx
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