EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of June 1,
1997 ("Effective Date"), by and between Primary Care Medical Centers of
America, Inc., a Delaware corporation ("Employer"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
III ("Employee"). Employer and Employee may be referred to herein
collectively as the "parties" and individually as a "party."
ARTICLE I
TERM OF EMPLOYMENT; FORMATION OF SUBSIDIARY
Employer hereby employs Employee and Employee hereby accepts employment
with Employer for a period (the "Term") beginning as of the Effective Date and
ending on the third (3rd) anniversary of the Effective Date (the "Scheduled
Termination Date"), subject, however, to earlier termination as hereinafter
provided.
ARTICLE II
DUTIES OF EMPLOYEE
2.1 Duties. Employee is engaged to be the President and Chief Operating
Officer of Employer. Employee shall be elected to the Board of Directors
of Employer and shall be reelected as necessary to permit Employee to serve
as a director throughout the Term. In general, Employee shall have such
authority, duties and responsibilities with respect to Employer as are
consistent with his title. Employee's specific duties and powers shall be
determined from time to time by Employer's Board of Directors. Employee
shall perform perform and discharge such duties well and faithfully.
Employee shall be subject to the supervision and direction of Employer's
Board of Directors and its Chairman.
2.2 Full Time Employment. Employee shall devote his entire productive time,
ability, and attention to the business of Employer during the Term. Except
for services provided to affiliates of Employer, during the Term, Employee
shall not, directly or indirectly, render any services of a business,
commercial or professional nature to any other person, corporation, firm or
organization, whether for compensation or otherwise, without the prior
written consent of Employer. Employee hereby represents and warrants to
Employer that the execution and performance of Employee's duties under this
Agreement do not and will not conflict with or result in a breach of or a
default under any agreement, contract, or instrument to which Employee is a
party or by which Employee is bound.
ARTICLE III
COMPENSATION AND BENEFITS
3.1 Base Salary. As partial compensation for services rendered and
Employee's covenants and agreements under this Agreement, Employee shall be
entitled to receive from Employer a base salary, initially set at $150,000
per year, payable in twenty-four equal semi-monthly installments for each
year during the Term. The salary of Employee may be adjusted from time to
time at the sole discretion of Employer's Board of Directors but shall not
be decreased below $150,000 without Employee's consent.
3.2 Performance Bonus. In addition to the compensation specified in Section
3.1, Employee shall also be entitled to receive from Employer for each
twelve-month Bonus Period, as defined below, an additional amount (the
"Performance Bonus") equal to five percent (5%) of Employer's net pre-tax
earnings ("NPTE") for the Bonus Period provided that Employer has achieved a
return on investment ("ROI") during the Bonus Period at least equal to 15.0%,
16.5% or 18.0% in the first, second or third Bonus Periods, respectively;
provided, however, that in the event Employee is employed by Employer for
less than all of any Bonus Period, the Employee's Performance Bonus for such
partial Bonus Period shall be determined by multiplying the amount
calculated pursuant to the previous sentence by a fraction, the numerator
of which shall be the number of days in the Bonus Period during which
Employee was employed by Employer, and the denominator of which shall be
the total number of days in the Bonus Period. Any Performance Bonus
payable with respect to a partial Bonus Period shall be paid within 90 days
after the end of each fiscal year. The "Bonus Period" shall mean each of the
three twelve-month periods commencing June 1, 1997, and the first and second
anniversaries of such date. NPTE shall equal Employer's consolidated net
income for the Bonus Period, prior to the deduction therefrom of any income
tax expense, but after application thereto of any monitoring or administrative
fees chargeable to the Subsidiary by any other company, including, but not
limited to, Seal Holdings Corporation (the "Parent"). The above
notwithstanding, in calculating NPTE, there shall be excluded from the gross
revenues of Employer the full amount of any consideration received by
Employer in any Special Event, as defined in Section 3.C, below. The ROI
for any Bonus Period shall equal that percentage of the shareholders' equity
of Employer on the last day of the Bonus Period shall equal that percentage
of the shareholders' equity of Employer on the last day of the Bonus Period
which is equal to the NPTE of Employer for that Bonus Period less (i) any
and all income taxes paid or payable by the Company or the Parent with
respect to such earnings and (ii) the sum of the Performance Bonuses payable
with respect to the Bonus Period hereunder and pursuant to that Employment
Agreement dated June 1, 1997, between Employer and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III.
3.3 Special Event Bonus. In addition to the compensation specified in
Sections 3.1 and 3.2, Employee shall also be entitled to receive from
Employer an additional amount (the "Special Event Bonus") in the event of the
occurrence of any "Special Event," as defined below. "Special Event" means
the sale by Employer of a network of multi-disciplinary primary care clinics
or any group of such networks. Upon the occurrence of any Special Event,
Employee shall receive a Special Event Bonus equal to twenty percent (20%) of
the gross proceeds of the Special Event, which shall be payable in cash,
except that Employer may, in its discretion, pay up to forty percent (40%) of
any Special Event Bonus in the Class A Common Stock of the Parent, which shall
be valued for the purposes of such payment at the average bid price of such
stock in the market over the ten business days immediately preceding the
date of the Special Event. The Special Event Bonus payable with respect to
any Special Event shall be paid within ninety (90) days after the occurrence
of the Special Event, except that any portion of the Special Event Bonus
based upon any amounts received by Employer on a deferred basis may be
similarly deferred by Employer, provided that such deferred payments shall
be made no later than ninety (90) days after the receipt by Employer of
such deferred consideration. In the event that any Special Event involves
the receipt by the Company of consideration other than cash, the Special
Event Bonus shall be calculated based upon the fair market value of the
consideration received, as determined by the Board of Directors of Employer.
3.4 Incentive Stock Options. Simultaneously with the execution of this
Agreement, Employer shall grant to Employee an incentive stock option to
purchase up to ten thousand (10,000) shares of the common stock of Employer
on such terms and conditions as shall be approved by Employer's Board of
Directors.
3.5 Securities Law Compliance. Employee recognizes that the stock options
provided for in Section 3.4, above, any shares of the common stock of the
Company issuable thereunder and any shares of the Class A Common Stock of the
Parent issued pursuant to Section 3.3, above, will be granted or issued to
Employee without registration under the Securities Act of 1933 (the "Act") or
any qualification under any applicable state "blue sky laws" and are subject
to significant restrictions upon resale. Employee recognizes that the stock
option agreement to be entered into by the parties pursuant to such options
or pursuant to Section 3.4 and all certificates representing securities issued
to Employee pursuant to such options or pursuant to Section 3.3 shall bear
legends reflecting the restrictions upon transferability of such securities
resulting from applicable securities law. As a condition to his receipt of
any such securities, Employee shall execute a letter of investment intent in
a form reasonably satisfactory to Employer.
3.6 Other Benefits. During the period of his employment hereunder, Employee
shall also be entitled to receive all other benefits of employment which are,
and which may be in the future, generally available to members of Employer's
management, and, specifically, an allowance for the use of an automobile as
provided from time to time by action of the Board of Directors of Employer,
as well as, without limitation, group health and life insurance benefits,
participation in any company pension plan, and paid vacation consistent with
the vacation policies of Employer. The above notwithstanding, in view of
the benefits expressly granted to Employee hereunder, Employee shall not be
entitled to participate in any benefit plans of Employer or any of its
affiliates which provide for cash bonuses, stock bonuses, stock options or
similar cash or equity incentives.
3.7 Expenses. Employer, in accordance with the rules and regulations that
Employer may issue and revise from time to time, shall reimburse Employee for
business expenses directly and reasonably incurred in the performance of his
duties.
ARTICLE IV
TERMINATION
This Agreement shall terminate prior to the expiration of its Term upon the
occurrence of any of the following events:
4.1 Disability. In the event that Employee is unable fully to perform his
duties and responsibilities hereunder to the full extent required by the
Board of Directors of Employer by reason of illness, injury or incapacity
for ninety (90) consecutive calendar days, during which time Employee shall
continue to be compensated as provided in Section 3.1 hereof (but not Section
3.2 or Section 3.3), this Agreement may be terminated by Employer, and
Employer shall have no further liability or obligation to Employee for
compensation hereunder; provided, however, that Employee will be entitled
to receive the payments prescribed under any disability benefits plan in
which Employee was participating, and Employee shall continue to be bound
by Article V. In the event of any dispute between Employer and Employee
under this Section 4.A as to whether Employee's employment may be terminated
under this Section, Employee shall submit to a physical examination by a
licensed physician selected by Employer, and the determination of such
physician shall be binding on the parties.
4.2 Death. In the event that Employee dies during the Term, Employer shall
pay to his executors, legal representatives or administrators an amount
equal to the installment of Employee's compensation set forth in
Sections 3.1, 3.2 and 3.3 hereof for the month in which Employee dies, and
thereafter Employer shall have no further liability or obligation hereunder
to Employee's executors, legal representatives, administrators, heirs or
assigns or any other person claiming under or through Employee; provided,
however, that Employee's executors, legal representatives and administrators
will be entitled to receive and disburse to the proper persons the payments
prescribed under any death or disability benefits plan in which Employee was
participating.
4.3 Cause. Nothing in this Agreement shall be construed to prevent the
termination of this Agreement by Employer for "cause." For purposes of this
Agreement, "cause" shall mean (i) Employee's failure to perform or observe
(other than by reason of illness, injury or incapacity) any of the terms or
provisions of this Agreement, including the failure of Employee to follow the
directions of the Board of Directors of Employer or the Chairman of Employer,
(ii) dishonesty, misconduct or action on the part of Employee that is or is
reasonably likely to be materially damaging or detrimental to the business of
the Employer, (iii) conviction of a felony, or of any misdemeanor involving
moral turpitude, (iv) insobriety or drug addition that is materially affecting
or is likely materially to affect Employee's ability to perform the services
required of him hereunder, or (v) misappropriation of funds. Subject to
applicable cure periods as set out in the next sentence, Employee's
employment may be terminated for cause at any time. Prior to terminating
this Agreement on account of a cause described in clause (i) above (but not
for any of the enumerated "causes"), Employer shall give Employee thirty
(30) days' written notice and an opportunity to cure such failure to the
satisfaction of Employer. Upon termination for cause, Employer shall pay to
Employee all sums due to Employee through the date of such termination.
Following a termination for cause and payment of the amounts required under
this Section, Employer shall have no further duty or obligation to Employee;
provided, however, that Employee shall continue to be bound by Article V.
4.4 Termination Upon Lack of Positive Cash Flow. Employee and Employer
recognize that Employer is embarking on a business venture with significant
risks of business failure. If, after the first twelve (12) months of the
Term, Employer has not achieved positive cash flow, as defined below,
Employee's employment hereunder shall terminate on June 1, 1998, and
Employer shall pay to Employee all sums due to Employee through such date.
Following such a termination and payment of the amounts required under this
Section, Employer shall have no further duty or obligation to Employee;
provided, however, that Employee shall continue to be bound by Article V.
Employer shall be deemed not to have achieved positive cash flow after the
first twelve (12) months of the Term if Employer fails to generate cash
collections in excess of cash disbursements during each of the months of
April and May of 1998.
4.5 Termination Without Cause. Employer may terminate Employee's
employment hereunder pursuant to this Section 4.5 at any time upon thirty
(30) days' prior written notice of termination; provided that Employer
shall pay to Employee all sums due to Employee hereunder through the date
of termination and, in addition, severance compensation in the amount of
$150,000. Following such a termination and the payment of the amounts
required under this Section, Employer shall have no further duty or
obligation to Employee; provided, however, that Employee shall continue to
be bound by Article V.
4.6 Initial Public Offering. In the event Employer effects an underwritten
public offering of its securities pursuant to a registration statement filed
under the Act (a "Public Offering"), the stock options provided for in
Section 3.4, above, shall, by their terms, become immediately exercisable
by Employee, subject to any further terms and conditions contained in the
agreements embodying such incentive stock options or in the stock option
plan pursuant to which they are granted. This Agreement shall continue in
full force and effect notwithstanding any such Public Offering and, to the
extent deemed appropriate by Employer's Board of Directors, Employee shall
be granted such further stock options and benefits as are appropriate to
reflect the status of Employee as an Employee of a public company.
4.7 Change in Control. Upon the occurrence of a "Change in Control" of
Employer, as defined below, Employee shall be entitled to terminate his
employment hereunder, whereupon Employer shall be obligated to pay to
Employee a lump sum equal to $150,000 together with any and all other sums
due Employee hereunder through the date of the termination. Following
such a termination and payment of the amounts required under this section,
Employer shall have no further duty or obligation to Employee; provided,
however, that Employee shall continue to be bound by Article V. The term
"Change in Control" shall mean the occurrence at any time during the term
of the Agreement of any of the following events: (i) Employer is merged,
consolidated or reorganized into or with another corporation or other
legal person and as a result of such merger, consolidation or reorganization
less than fifty-one percent (51%) of the combined voting power of the then-
outstanding securities of such corporation or persons immediately after such
transaction are held in the aggregate by holders of voting securities of
Employer immediately prior to such transaction; (ii) Employer sells all or
substantially all of its assets to any other corporation or other legal
person less than fifty-one percent (51%) of the combined voting power of
the then-outstanding voting securities of which are held in the aggregate
by holders of the voting securities of Employer immediately prior to such
sale; or (iii) More than fifty percent (50%) of the voting securities of
Employer are held by persons other than the Parent, Employee and Cuden;
provided, however, that no Public Offering shall be deemed to be a Change
in Control, no transaction provided for an items (i) through (iii), above,
which occurs after a Public Offering shall be deemed to be a Change in
Control, and the provisions of this Section 4.G shall terminate upon a
Public Offering.
ARTICLE V
PROPERTY RIGHTS
5.1 Non-Competition. During the Term and for a twelve month period
following the termination of his employment under this Agreement, Employee
shall not, directly or indirectly, either as an employee, employer,
consultant, agent, lender, principal, partner, stockholder, corporate
officer, director, or in any other individual or representative capacity,
engage or participate in the health care business or any business that is
in competition with the business of Employer in any state in which
Employer has established a commercial relationship, except as approved in
writing by Employer. For the purposes of this Section 5.A, the business
of Employer shall include any business in which Employer has engaged or has
taken substantial steps to enter as of the date of the termination of
Employee's employment hereunder.
5.2 Solicitation. For a twelve month period following the termination of
his employment under this Agreement, Employee shall not, directly or
indirectly, call on or solicit, any person, firm, corporation or other
entity who or which during the Term was or had been a customer, referral
source, supplier, or employee of the Employer.
5.3 Confidential Information. Employee will not, during the Term of or
after the termination of his employment under this Agreement, disclose any
confidential information of Employer to any person or entity for any reason
whatsoever, nor shall Employee make use of any such confidential information
for his own purposes or for the benefit of any person or entity (except
Employer) under any circumstances during the Term, or after the
termination, of this Agreement. Employee agrees that, upon termination
of his employment under this Agreement or on demand of Employer, he shall
immediately deliver any such printed or written material and copies
thereof to Employer.
5.4 Reasonableness of Restrictions. Employee agrees that (a) the covenants
contained in Sections 5.1, 5.2 and 5.3 hereof are necessary for the
protection of Employer's business goodwill and trade secrets, (b) a portion
of the compensation paid to Employee under this Agreement is paid in
consideration of the covenants herein contained, the sufficiency of which
consideration is hereby acknowledged, (c) Employee is not, and under this
Agreement, will not be engaged in a common calling, and (d) if the scope of
any restriction contained in Sections 5.1, 5.2, or 5.3 is too broad to
permit enforcement of such restriction to its full extent, then such
restriction shall be enforced to the maximum extent permitted by law, and
the parties hereto hereby consent that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction. The
existence of any claim or cause of action of Employee against Employer,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Employer of these convenants.
5.5 Enforcement. Employee acknowledges that the restrictions contained in
Sections 5.1, 5.2, and 5.3 hereof are reasonable and necessary to protect the
legitimate interests of Employer and its affiliates, that Employer would not
have entered into this Agreement in the absence of such restrictions, and
that any violation of any provision of those Sections will result in
irreparable injury to Employer. Employee also acknowledges that Employer
shall be entitled to preliminary and permanent injunctive relief, without
the necessity of proving actual damages, as well as an equitable accounting
of all earnings, profits and other benefits arising from any such violation,
which rights shall be cumulative and in addition to any other rights or
remedies to which Employer may be entitled.
5.6 Copy of Covenants. Until the expiration of the applicable restrictions,
Employee will provide, and Employer similarly may provide, a copy of the
covenants contained in Sections 5.1, 5.2 and 5.4 of this Agreement to any
business or enterprise which Employee may directly or indirectly own, manage,
operate, finance, join, control or participate in the ownership, management,
operation, financing, or control of, or serve as an officer, director,
employee, partner, principal, agent, representative, consultant, lender or
otherwise, or with which he may use his name or permit his name to be used.
ARTICLE VI
GENERAL PROVISIONS
6.1 Arbitration. If a dispute or claim shall arise with respect to any
of the terms or provisions of this Agreement, or with respect to the
performance of either of the parties under this Agreement, either party
may require that the dispute be submitted for arbitration under the
Commercial Arbitration Rules of the American Arbitration Association.
Each party shall bear one-half (1/2) of the cost of any such proceedings,
including the payment of the arbitrator's fees. The arbitration shall
be conducted before a single arbitrator in Palm Beach County, Florida.
The written decision of the arbitrator shall be binding and conclusive
upon the parties. Judgment may be entered upon any such award in any
court having jurisdiction thereof.
6.2 Notices. Any notices to be given hereunder by either party to the other
may be effected either by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested:
If to Employer:
Primary Care Medical Centers of America, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Employee:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
Palm Beach Polo
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Mailed notices shall be addressed to the parties at the addresses set forth
above, but each party may change his address by written notice in accordance
with this Section 6.2. Notices delivered personally shall be deemed
communicated as of the date of actual receipt; mailed notices shall be deemed
communicated as of ten (10) days after mailing.
6.3 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of Employee by Employer, and contains all of
the covenants and agreements between the parties with respect to such
employment.
6.4 Headings. The headings or titles to sections in this Agreement are
intended solely for convenience, and no provision of this Agreement is to be
construed by reference to the heading of title of any section.
6.5 Certain Acknowledgments. Employee by his execution and delivery of this
Agreement represents to Employer as follows:
1. That Employee has been advised by Employer to have this Agreement
reviewed by an attorney representing Employee, and Employee has either
had this Agreement reviewed by an attorney or has chosen not to have this
Agreement reviewed because Employee, after reading the entire Agreement,
fully and completely understands each provision and has determined not to
obtain the services of an attorney.
2. Employee either on his own or with the assistance and advice of his
attorney has in particular reviewed Article V and understands and accepts
that the restrictions imposed on Employee by Article V are reasonable and
necessary for the protection of the property rights of Employer.
6.6 Amendment or Modification; Waiver. No provision of this Agreement
may be amended, modified or waived unless such amendment, modification or
waiver is authorized by the Board of Directors of Employer and is agreed
to in writing, signed by Employee and by an officer of Employer (other
than Employee) thereunto duly authorized. Except as otherwise
specifically provided in this Agreement, no waiver by either party of
any breach by the other party of any provision of this Agreement shall
be deemed a waiver of a similar or disimilar provision at the same or at
any prior or subsequent time; not shall the receipt or acceptance of
Employee's continuing services be deemed a waiver of any provision hereof.
6.7 Assignability. Employee shall not assign, pledge or encumber any
interest in this Agreement or any part thereof without the express written
consent of Employer, this Agreement being personal to Employee. This
Agreement shall not be assignable by Employer without the written consent of
Employee, except that Employer may assign this Agreement without obtaining
Employee's consent either to the Staffing Subsidiary or to the successor
to Employer resulting from any transaction in which Employer shall merge
or consolidate with or into, or transfer substantially all of its assto,
another person or entity.
6.8 Governing Law. This Agreement shall in all respects be interpreted,
construed and governed by and in accordance with the internal substantive
law of the State of Florida.
I. Severability. Each provision of this Agreement constitutes a separate
and distinct undertaking, covenant and/or provision. In the event that any
provision shall be determined to be unlawful, such provision shall be deemed
severed from this Agreement, but every other provision shall remain in full
force and effect, and in substitution for any such provision held unlawful,
there shall be substituted a provision of similar import reflecting the
original intent of the parties to the extent permissible under law.
EXECUTED as of the day and year first above written.
EMPLOYER:
PRIMARY CARE MEDICAL CENTERS
OF AMERICA, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman
EMPLOYEE:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III