EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of this
20th day of October 1997 between US Diagnostic Inc. (the "Company") and Xxxx
Xxxxxxx (the "Executive").
WHEREAS, the Company desires to ensure the availability to the Company
of the Executive's services, and the Executive is willing to enter into 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 agrees to employ the Executive, and the
Executive hereby accepts employment with the Company, for a period commencing on
the date of this Agreement and continuing through November 1, 2000 (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's initial title shall be Executive
Vice President and Chief Operating Officer of the Company and he shall have such
duties and responsibilities as may be established by the Board of Directors or
Chief Executive Officer of the Company. The Executive will use his best efforts
to perform his duties and discharge his responsibilities pursuant to this
Agreement competently, carefully and faithfully.
(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, businesses or organizations 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 himself only if first declined in writing by the Board of
Directors of the Company.
3. COMPENSATION AND EXPENSES.
(a) SALARY. For the services of the Executive to be rendered under
this Agreement, the
-1-
Company shall pay the Executive an annual base salary of $200,000. 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 twice monthly in accordance with the Company's policies.
(b) BONUS. The Executive will have the opportunity to participate in
bonuses at the end of each fiscal year during which he is employed, which bonus
shall be set forth by the Board of Directors and/or the CEO in its discretion.
Bonus will be based on achievement of earnings per share based on the adopted
budget. The bonus will be payable as the Company achieves 90% of the budget for
the year. For every $.01 increase over 90% of the budget, you will be entitled
to $7,500. By way of example: if the budgeted earnings per share is $.50 for
1998, the bonus would begin after the Company achieves $.45 per share. For every
$.01 over that amount, the bonus would be paid at $7,500 per $.01 increase.
(c) STOCK OPTIONS. Executive is hereby granted 80,000 options under
the Company's 1995 Long Term Incentive Plan ("Plan") at an exercise price of FMV
per share. The options shall vest ratably over the term of the contract. In the
event of a change in control of the Company, as defined in the plan, any
remaining portion of the 80,000 options not yet vested shall automatically vest.
Executive may also receive discretionary grants of options under the Plan in the
sole discretion of the Company's Board of Directors.
(d) EXPENSES. In addition to any compensation received pursuant to
Section 3(a), (b), and (c), 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.
Executive will be entitled to reimbursement for relocation expenses from Boston,
Massachusetts to West Palm Beach, Florida.
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 as shall be convenient for the affairs of
the Company.
(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 $750 per month which includes all costs
associated with the use of an automobile including, without limitation, lease or
loan payments, fuel, maintenance and insurance.
-2-
5. TERMINATION.
(a) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment for Cause at any time by giving written notice of termination to the
Executive, which shall be effective on the effective date set forth in paragraph
10 hereof. 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 material and repeated failure by Executive to
perform his/her job responsibilities competently, (ii) dishonesty, fraud, theft
or misappropriation in the performance of his/her job responsibilities, or (iii)
any material breach of any provision of Sections 2(a), 6 or 7.
(b) DEATH OR DISABILITY. 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.
(c) SPECIAL TERMINATION. In the event that (i) the Company materially
breaches this Agreement or the performance of its duties and obligations
hereunder; or (ii) 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 40% or more of the Company's common stock or (iii) the merger, consolidation,
reorganization or liquidation of the Company (a "Change in Control"), 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 receive lump sum compensation equal to 2.0 times
his annual salary and incentive or bonus payments, if any, as shall have been
paid to the Executive during the Company's most recent fiscal year. If the total
amount of compensation under this paragraph were to exceed three (3) times the
Executive's base amount (the average annual taxable compensation of the
Executive for the five (5) years preceding the year in which the Change of
Control occurs) the Company and the Executive may agree to reduce the lump sum
compensation to be received by Executive in order to avoid the imposition of the
"golden parachute" tax. 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.
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
-3-
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 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.
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.
-4-
9. SEVERABILITY.
(a) The Executive expressly agrees that the character, duration and
geographical scope of the provisions set forth in paragraphs 6 and 7 of 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 in any arbitration
or judicial 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 or judicial 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, acceptances 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: US Diagnostic Inc.
000 X. Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx
To the Executive: Xxxx Xxxxxxx
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.
-5-
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 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 attorneys'
fees, 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 and interpreted according to the internal laws of the State of
Florida 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 both parties.
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.
US DIAGNOSTIC. INC.
By:______________________________
Xxxxxx X. Xxxx, President &
Chief Executive Officer
____________________________
Xxxx Xxxxxxx
-6-
