EXHIBIT 10.5
EMPLOYMENT AGREEMENT
XXXXXX X. XXXXXX
This employment agreement ("Agreement") is made and entered into as of this date
by and between PHYMED, Inc., a Texas corporation ("Corporation"), and XXXXXX X.
XXXXXX, ("Executive").
WHEREAS, the Corporation and the Executive desire that the term of this
Agreement begin on October 1, 1993; and
WHEREAS, the Corporation desires to employ the Executive, currently serving as
Chairman of the Board, (which position he will continue to hold) as its
President and Chief Executive Officer and Executive is willing to accept such
employment by the Corporation, on the terms and subject to the conditions set
forth in this Agreement.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Duties. During the term of this Agreement, the Executive agrees to be
employed by and to serve the Corporation as its President and Chief Executive
Officer, and the Corporation agrees to employ and retain the Executive in such
capacities. In such capacity, the Executive shall render such managerial,
administrative and other services as are customarily associated with or incident
to such position and shall perform such other duties and responsibilities for
the Corporation as the Corporation may reasonably require, consistent with such
position. The Executive shall devote a substantial portion of his business time,
energy, and skill to the affairs of the Corporation as the Executive shall
report to the Corporation's board of directors.
The Corporation shall not appoint any individual to whom the Executive shall
report, or who shall have the right to supervise the Executive, provided,
however, that the Corporation's board of directors may appoint one or more
members of the board of directors to coordinate the reporting from the Executive
to the board of directors. In the event that the Corporation changes the
Executive's title, working conditions or specifies duties so that the
Executive's powers and duties are diminished or reduced, or include powers,
duties or working conditions which are not generally consistent with the title
of Chief Executive Officer, or if the Corporation changes the reporting
relationship so that the Executive reports to another officer or employee, other
than the Corporation's board of directors as a whole, then at any time
thereafter, at the Executive's option and upon thirty days notice, and provided
that such changes shall not have been rescinded or corrected to the reasonable
satisfaction of the Executive within said thirty day period, the Executive shall
have the right to terminate the employment relationship, and in such event, the
employment shall be deemed to have been terminated by the Corporation without
cause.
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Section 2. Term of Employment.
2.1 Definitions. For the purposes of this Agreement the following terms shall
have the following meanings:
2.1.1 "Termination For Cause" shall mean termination by the Corporation
of the Executive's employment by the Corporation by reason of the Executive's
willful dishonesty towards, fraud upon, or deliberate injury or attempted injury
to the Corporation, or by reason of the Executive's willful material breach of
this Agreement which has resulted in material injury to the Corporation.
2.1.2 "Termination Other Than For Cause" shall mean termination by the
Corporation of the Executive's employment by the Corporation (other than in a
Termination for Cause) and shall include constructive termination of the
Executive's employment by reason of material breach of this Agreement by the
Corporation, such constructive termination to be effective upon notice from the
Executive to the Corporation of such constructive termination.
2.1.3 "Voluntary Termination" shall mean termination by the Executive
of the Executive's employment by the Corporation other than (i) constructive
termination as described herein, (ii) "Termination Upon a Change in Control,"
and (iii) termination by reason of the Executive's death or disability as
described herein.
2.1.4 "Termination Upon a Change in Control" shall mean a termination
by the Executive of the Executive's employment with the Corporation within 120
days following a "Change in Control."
2.1.5 "Change in Control" shall mean (i) the time that the Corporation
first determines that any person and all other persons who constitute a group
(within the meaning of ' 13(d)(3) of the Securities Exchange Act of 1934
("Exchange Act")) have acquired direct or indirect beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of twenty percent (20%) or
more of the Corporation's outstanding securities, unless a majority of the
"Continuing Directors" approves the acquisition not later than ten (10) business
days after the Corporation makes that determination, or (ii) the first day on
which a majority of the members of the Corporation's board of directors are not
"Continuing Directors."
2.1.6 "Continuing Directors" shall mean, as of any date of
determination, any member of the Corporation's board of directors of the
Corporation who (i) was a member of that board of directors on [DATE], (ii) has
been a member of that board of directors for the two years immediately preceding
such date of determination, or (iii) was nominated for election or elected to
the Corporation's board of directors with the affirmative vote of the greater of
(x) a majority of the Continuing Directors who were members of the Corporation's
board of directors at the time of such nomination or election or (y) at least
[NUMBER] Continuing Directors.
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2.2 Initial Term. The term of employment of the Executive by the Corporation
shall be for a period of Ten years beginning with Effective Date October 1,
1993, unless terminated earlier pursuant to this Agreement. At any time prior to
the expiration of the Initial Term, the Corporation and the Executive may by
mutual written agreement extend the Executive's employment under the terms of
this Agreement for such additional periods as they may agree.
2.3 Termination For Cause. Termination For Cause may be effected by the
Corporation at any time during the term of this Agreement and shall be effected
by written notification to the Executive. Upon Termination For Cause, the
Executive shall promptly be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension play or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which the Executive is
a participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, from the date of termination
through the term of the Agreement. Additionally, Executive shall be paid market
value as of the date of termination for all shares of stock which he chooses to
sell to the Company. The right to sell shares to the Company shall exist for a
period of 90 days after the date of termination.
2.4 Termination Other Than For Cause. Notwithstanding anything else in this
Agreement, the Corporation may effect a Termination Other Than For Cause at any
time upon giving written notice to the Executive of such termination. Upon any
Termination Other Than For Cause, the Executive shall promptly be paid all
accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
the Corporation in which the Executive is a participant to the full extent of
the Executive's rights under such plans (including accelerated vesting, if any,
of awards granted to the Executive under the Corporation's stock option plan),
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, from the date of termination
through the period remaining on the contract term. Additionally, Executive shall
be paid market value as of the date of termination for all shares of stock which
he chooses to sell to the Company. The right to sell shares to the Company shall
exist for a period of 90 days after the date of termination.
2.5 Termination by Reason of Disability. If, during the term of this Agreement,
the Executive, in the reasonable judgment of the Corporation's board of
directors, has failed to perform his duties under this Agreement on account of
illness or physical or mental incapacity, and such illness or incapacity
continues for a period of more than twelve (12) consecutive months, the
Corporation shall have the right to terminate the Executive's employment
hereunder by written notification to the Executive and payment to the Executive
of all accrued salary, bonus compensation to the extent earned, vested deferred
compensation (other than pension plan or profit sharing plan benefits which will
be paid in accordance with the applicable plan), any benefits under any plans of
the Corporation in which the Executive is a participant to the full extent of
the Executive's rights under such plans, accrued vacation pay and any
appropriate business expenses incurred by the Executive in connection with his
duties hereunder, all to the date of termination, with the exception of medical
and dental benefits which shall continue through the expiration of this
Agreement, but the Executive shall not be paid any other compensation or
reimbursement of any kind, including without limitation, Severance Compensation.
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2.6 Death. In the event of the Executive's death during the term of this
Agreement, the Executive's employment shall be deemed to have terminated as of
the last day of the month during which his death occurs and the Corporation
shall promptly pay to his estate or such beneficiaries as the Executive may from
time to time designate all accrued salary, bonus compensation to the extent
earned, vested deferred compensation (other than pension plan or profit sharing
plan benefits which will be paid in accordance with the applicable plan), any
benefits under any plans of the Corporation in which the Executive is a
participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, but the Executive's estate shall not be paid any other compensation
or reimbursement of any kind, including without limitation, Severance
Compensation.
2.7 Voluntary Termination. In the event of a Voluntary Termination, the
Corporation shall promptly pay all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension plan or profit
sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of the Corporation in which the Executive is
a participant to the full extent of the Executive's rights under such plans,
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all to the date of
termination, but no other compensation or reimbursement of any kind, including
without limitation, Severance Compensation.
2.8 Termination Upon a Change in Control. In the event of a Termination Upon a
Change in Control, the Executive shall immediately be paid all accrued salary,
bonus compensation to the extent earned, vested deferred compensation (other
than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of the
Corporation in which the Executive is a participant to the full extent of the
Executive's rights under such plans (including accelerated vesting, if any, of
any awards granted to the Executive under the Corporation's Stock Option Plan),
accrued vacation pay and any appropriate business expenses incurred by the
Executive in connection with his duties hereunder, all from the date of
termination through the term of the contract.
2.9 Notice of Termination. The Corporation may effect a termination of this
Agreement pursuant to the provisions of this Section upon giving thirty (30)
days' written notice to the Executive of such termination. The Executive may
effect a termination of this Agreement pursuant to the provisions of this
Section upon giving thirty (30) days' written notice to the Corporation of such
termination.
Section 3. Salary, Benefits and Bonus Compensation.
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3.1 Base Salary. As payment for the services to be rendered by the Executive as
provided in Section 1 and subject to the terms and conditions of Section 2, the
Corporation agrees to pay to the Executive a "Base Salary" for the twelve (12)
calendar months beginning the Effective Date at the rate of $240,000 per annum
payable in 12 equal monthly installments of $20,000 per month. The Executive's
Base Salary shall be reviewed annually by the Compensation Committee of the
Corporation's board of directors ("Compensation Committee"), and the Base Salary
for each year (or portion thereof) beginning October 1, 1993 shall be determined
by the Compensation Committee which shall authorize an increase in the
Executive's Base Salary for such year in an amount which, at a minimum, shall be
equal to the cumulative cost-of-living increment on the Base Salary as report in
the "Consumer Price Index, Dallas, Texas, All Items," published by the U.S.
Department of Labor (using January 1, 1993 as the base date for computation).
3.2 Bonuses. The Executive shall be eligible to receive a discretionary bonus
for each year (or portion thereof) during the term of this Agreement and any
extensions thereof, with the actual amount of any such bonus to be determined in
the sole discretion of the Corporation's board of directors based upon its
evaluation of the Executive's performance during such year. All such bonuses
shall be reviewed annually by the Compensation Committee.
3.3 Additional Benefits. During the term of this Agreement, the Executive
shall be entitled to the following fringe benefits:
3.3.1 Executive Benefits. The Executive shall be eligible to
participate in such of the Corporation's benefits and deferred compensation
plans as are now generally available or later made generally available to
executive officers of the Corporation, including, without limitation, the
Corporation's Stock Option Plan, profit sharing plans, annual physical
examinations, dental and medical plans, personal catastrophe and disability
insurance, financial planning, retirement plans and supplementary executive
retirement plans, if any. For purposes of establishing the length of service
under any benefit plans or programs of the Corporation, the Executive's
employment with the Corporation will be deemed to have commenced on the
Effective Date.
3.3.2 Vacation. The Executive shall be entitled to two (2) weeks of
vacation during each year during the term of this Agreement and any extensions
thereof, prorated for partial years.
3.3.3 Stock Option. Any stock option rights granted to Executive shall
not be affected by this Employment Agreement.
3.3.4 Automobile Allowance. For the term of this Agreement and any
extensions thereof the Corporation shall provide the Executive with an
automobile of his choosing and all expenses related thereto.
3.3.5 Reimbursement for Expenses. During the term of this Agreement,
the Corporation shall reimburse the Executive for reasonable and properly
documented out-of-pocket business and/or entertainment expenses incurred by the
Executive in connection with his duties under this Agreement.
3.3.6 Other Benefits. The Corporation recognizes that Executive will be
expected to devote considerable time and effort on behalf of the Corporation.
Therefore, the Corporation shall provide at least one employee at the
Corporation's sole expense for the performance of duties as assigned by the
Executive.
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Section 4. Severance Compensation. In the event the Executive's employment is
terminated, the Executive shall be paid as severance compensation, in lieu of
Base Salary (at the rate payable at the time of such termination), for a period
of the greater of the remaining portion of the Initial Term or twelve (12)
months from the date of such termination provided. Notwithstanding anything in
this Section to the contrary, the Executive may in the Executive's sole
discretion, by delivery of a notice to the Corporation within thirty (30) days
following a Termination, elect to receive from Compensation a lump sum Severance
Compensation payment by bank cashier's check equal to the present value of the
flow of cash payments that would otherwise be paid to the Executive pursuant to
this Section. The Executive shall also be entitled to an accelerated vesting of
any awards granted to the Executive under the Corporation's Stock Option Plan to
the extent provided in the stock option agreement entered into at the time of
grant. The Executive shall continue to accrue retirement benefits and shall
continue to enjoy any benefits under any plans of the Corporation in which the
Executive is a participant to the full extent of the Executive's rights under
such plans, including any perquisites provided under this Agreement, through the
remaining term of this Agreement; provided, however, that the benefits under any
such plans of the Corporation in which the Executive is a participant, including
any such perquisites, shall cease upon re-employment by a new employer.
Section 5. Outside Activities of Executive. The Corporation acknowledges that
the Executive has commitments and business activities related to the management
of other health care related companies; A/G Partners, Medical Imaging of Plano,
and A.M.I.C. There shall be no restriction on the Executive's ability to fulfill
such commitments or engage in such business activities, provided that during the
term of the Executive's employment under this Agreement or for a period of six
months after the termination of such employment the Executive shall not divert
away from the Corporation, for officers personal benefit, or for the benefit of
an organization in which officer has a material financial interest, any
opportunity, arising during such period unless the Corporation's board of
directors have determined not to pursue such opportunity. Nothing in this
Agreement shall preclude the Executive from devoting time during reasonable
periods required for investing personal assets and/or those of family members in
such form or manner that will not violate this Agreement and these activities
will be permitted so long as they do not materially adversely affect the
performance of the Executive's duties and obligations to the Corporation.
Section 6. Payment Obligations. The Corporation's obligation to pay the
Executive the compensation and to make the arrangements provided herein shall be
unconditional, and the Executive shall have no obligation whatsoever to mitigate
damages hereunder. If litigation after a Change in Control shall be brought to
enforce or interpret any provision contained herein, the Corporation, to the
extent permitted by applicable law and the Corporations' articles of
incorporation and bylaws, hereby indemnifies the Executive for the Executive's
reasonable attorneys' fees and disbursements incurred in such litigation.
Section 7. Confidentiality. The Executive agrees that all confidential and
proprietary information relating to the Corporation's business shall be kept and
treated as confidential both during and after the term of this Agreement, except
as may be permitted in writing by the Corporation's board of directors or as
such information is within the public domain or comes within the public domain
without any breach of this Agreement.
Section 7. Withholdings. All compensation and benefits to the Executive
hereunder shall be reduced by all federal, state, local and other withholdings
and similar taxes and payments required by applicable law.
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Section 8. Indemnification. In addition to any rights to indemnification to
which the Executive is entitled to under the Corporation's articles of
incorporation and bylaws, the Corporation shall indemnify the Executive at all
times during and after the term of this Agreement to the maximum extent
permitted under the Texas Business Corporation Act or any successor provision
thereof and any other applicable state law, and shall pay the Executive's
expenses in defending any civil or criminal action, suit, or proceeding in
advance of the final disposition of such action, suit or proceeding, to the
maximum extent permitted under such applicable state laws.
Section 9. Notices. Any notice under this Agreement shall be in writing and
shall be effective when actually delivered in person or three days after being
deposited in the U.S. mail, registered or certified, postage prepaid and
addressed to the party at the address stated in this Agreement or such other
address as either party may designate by written notice to the other.
addressed to the Corporation at:
----------------------
----------------------
addressed to XXXXXX X. XXXXX at:
----------------------
----------------------
addressed to Xxxxx X. Xxxx
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
or at any other address as any party may, from time to time, designate by notice
given in compliance with this section.
Section 10. No Release. Both parties agree that the termination of this
Agreement or the expiration of the term of this Agreement shall not release
either party from any obligations under Sections 3, 4, 6 and 9 herein.
Section 11. Waiver. Failure of either party at any time to require performance
of any provision of this Agreement shall not limit the party's right to enforce
the provision, nor shall any waiver of any breach of any provision be a waiver
of any succeeding breach of any provision or a waiver of the provision itself
for any other provision.
Section 12. Assignment. Except as otherwise provided within this Agreement,
neither party hereto may transfer or assign this Agreement without prior written
consent of the other party.
Section 13. Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas with venue in the County of
Dallas.
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Section 14. Arbitration. If at any time during the term of this Agreement any
dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
Section 14. Attorney Fees. In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
Section 15. Presumption. This Agreement or any section thereof shal not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
Section 16. Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
Date:
PhyMed, Inc.
By: /s/ Xxxxxx X. Xxxxxx, President
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Xxxxxx X. Xxxxxx
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