Exhibit 10.38
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is entered into as of this
14 day of October 2001 between US Diagnostic Inc. (the "COMPANY") and P. ▇▇▇▇▇▇
▇▇▇▇ (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 a
continuation of Executive's current 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 continue its employment of the
Executive, and the Executive hereby accepts the continued employment with the
Company, for a period commencing on the date of this Agreement and continuing
through December 31, 2002 (the "TERM"). This Agreement shall be automatically
renewed for an additional one (1) year term (the "ADDITIONAL TERM"), unless a
notice electing not to renew is provided from either party to the other prior to
December 1, 2002 but not before November 1, 2002.
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement at the end of the Term, the Additional 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 title shall be Executive Vice
President and Chief Financial Officer of the Company and he shall have such
duties and responsibilities as may be established by the Board of Directors of
the Company and which are generally consistent with and customary for the
Executive's positions. 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) OPPORTUNITIES. The Executive agrees to present to the Company all
potential opportunities for acquisitions, joint ventures and similar
transactions. The 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 rendered by the Executive pursuant to
this Agreement, the Company shall pay the Executive an annual base salary of (i)
$165,000 during the period commencing on July 1, 2001 and concluding on December
31, 2001 and (ii) $180,000 during the period commencing on January 1, 2002 and
concluding on December 31, 2002. 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) BONUSES.
(i) RETENTION BONUS. In the event the Executive remains
employed by the Company on December 31, 2001 or his employment is terminated by
the Company without Cause (as defined below) prior thereto, the Company shall
pay the Executive a retention bonus of $75,000 (the "RETENTION BONUS") no later
than January 4, 2002.
(ii) PERFORMANCE BONUSES.
(A) 2001 BONUSES. Upon achievement of the following
objectives prior to December 31, 2001, the Company shall pay the Executive the
bonuses set forth below no later than January 31, 2002:
(I) DEBT RESTRUCTURING. The Company
currently is exploring various alternatives for restructuring (the
"RESTRUCTURING") its approximately $70 million of outstanding debt. In the event
that upon completion of the Restructuring the current equity holders of the
Company retain at least a [40%] interest in the restructured entity, then the
Company shall pay the Executive a bonus of $50,000.
(II) COLLECTION OF ACCOUNTS RECEIVABLE. In
the event that the Company is able to collect greater than $3.9 million of the
Old Accounts Receivable (as defined in the Projections (the "PROJECTIONS")
attached hereto as EXHIBIT A), during the period commencing on June 1, 2001 and
concluding on December 31, 2001, then the Company shall pay the Executive a
bonus of $50,000.
(III) EBITDA LESS CAPITAL EXPENDITURES. In
that the Company's EBITDA less Capital Expenditures from Continuing Centers for
the period commencing on the date hereof and concluding December 31, 2001
exceeds 95% of the amount set forth on EXHIBIT B, then the Company shall pay the
Executive a bonus of $25,000.
-2-
(IV) INTENTIONALLY DELETED.
Notwithstanding the foregoing, in the event that the objectives set forth in
Subsection 3(b)(ii)(A)(IV) above are achieved, then the Executive shall not be
eligible to receive the bonus for the objective set forth in Subsection
3(b)(ii)(A)(I) above. In the event that the Executive receives the Retention
Bonus and any one or more of the objectives set forth in Subsections
3(b)(ii)(A)(I)-(IV) above are achieved, then the amount of the bonus paid by the
Company to the Executive pursuant Subsections 3(b)(ii)(A)(I)-(IV) shall be
reduced by the amount of the Retention Bonus paid to the Executive, but in no
event shall that amount be less than zero.
(B) 2002 BONUSES. Upon achievement of the following
objectives after December 31, 2001 but prior to December 31, 2002, the Company
shall pay the Executive the bonuses set forth below:
(I) EBITDA LESS CAPITAL EXPENDITURES. In the
event that the Company's EBITDA less Capital Expenditures from Continuing
Centers for the period commencing on January 1, 2002 and concluding on December
31, 2002 exceeds 95% of the amount set forth in the Projections for such period,
then the Company shall pay the Executive a bonus of $50,000.
(II) SALE OF CENTERS. In the event that (i)
the Company completes the Sale, (ii) upon completion of the Restructuring the
current equity holders of the Company retain at least a [40%] interest in the
restructured entity, and (iii) the Company retains after payment of all debt and
other expenses at least $[10] million cash and an ordinary Net Operating Loss
tax carryforward of at least $25 million, then the Company shall pay the
Executive a bonus of $125,000.
(c) STOCK OPTIONS. All existing stock options currently held by the
Executive shall remain in full force and effect.
(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 the Company's policies and procedures in effect from
time to time relating to reimbursement of or advances to executive officers.
(e) SEVERANCE. In the event that this Agreement is renewed for the
Additional Term and the Company terminates the Executive's employment without
Cause (as defined below) or the Executive resigns for Good Reason (as defined
below) during the Additional Term, then the Company shall pay the Executive an
amount equal to his annual salary of $180,000.
(i) "CAUSE" means: (i) the material and repeated failure by
the Executive to perform his job responsibilities competently after written
notice from the Company to the Executive of five (5) days and failure by the
Executive to cure, (ii) dishonesty, fraud, conviction of a felony, theft or
misappropriation in the performance of his job responsibilities, or (iii) any
material breach of any provision of Sections 2(a), 6 or 7.
(ii) "GOOD REASON" means: (I) any failure by the Company to
comply with any of the provisions of Section 3 of this Agreement other than an
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company within five (5) business days after receipt of notice
thereof given by the Executive; (II) the Company's requiring the Executive to be
based or to perform services at any site or location more than fifteen (15)
miles from West Palm Beach, Florida, except for travel reasonably required in
the performance of the Executive's responsibilities; or (III) without the
express prior written
-3-
consent of the Executive (which consent the Executive has the absolute right to
withhold), (i) the assignment to the Executive of any duties inconsistent in any
material respect with the Executive's position (including titles and reporting
relationships), authority, responsibilities or status as Chief Financial Officer
and Executive Vice President of the Company or (ii) any other material adverse
change in such position, authority, responsibility or status.
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.
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. 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 material and repeated failure by the
Executive to perform his job responsibilities competently, (ii) dishonesty,
fraud, theft or misappropriation in the performance of his 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.
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 24
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 (including any company buying all or substantially
all of the centers owned by the Company or its subsidiaries) 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
-4-
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 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, or solicit any employees to leave the Company or its subsidiaries
or affiliates. 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.
-5-
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 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.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
To the Executive: P. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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 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
-6-
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. In the event it is determined that the prevailing
party is not 100% correct in the disputed issue, then the prevailing party shall
only be entitled to that percentage of its attorneys' fees as the prevailing
party is deemed correct in the dispute. As an example, if the prevailing party
is 75% correct and the nonprevailing party is 25% correct, then the
nonprevailing party shall be required to pay 75% of the prevailing party's
attorneys' fees.
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. Any other
pre-existing agreements relating to a bonus are superceded by this Agreement.
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: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Title: Chairman
------------------------------
/s/ P. ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
P. ▇▇▇▇▇▇ ▇▇▇▇
-7-
