1
[Input]
EXHIBIT 10.19
EMPLOYMENT AGREEMENTS
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. GOLD
▇▇▇▇ ▇. ▇▇▇▇▇▇
2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT by and between ▇▇▇▇▇-▇▇▇▇▇▇▇ HEALTH SERVICES
CORP., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the
"Executive") dated as of the ____ day of ____________, 2000.
W I T N E S S E T H
WHEREAS, Executive has been employed with the Company on a continuous
basis since 1968; and
WHEREAS, the Company desires to maintain the services of Executive at
Executive's current level of base compensation for a period of five (5) years;
and
WHEREAS, the Company desires to provide for the orderly succession of
management of the Company; and
WHEREAS, the Company considers it essential for the best interests of its
stockholders to ▇▇▇▇▇▇ the continuous employment of key management personnel
and, in this connection, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control may exist; the possibility and the
uncertainty and questions that it may raise among management may result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of the
Company's management, including Executive, to the assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of in a change in control of the Company; and
WHEREAS, to induce Executive to remain in the employ of the Company, in
consideration of Executive's Agreement set forth below, the Company desires that
Executive enter into this Agreement providing for a term of employment and
severance benefits in the event Executive's employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 4(c)(i)(G) below) under the circumstances described below; and
WHEREAS, Executive wishes to serve the Company in the capacities and on
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of Executive's continued employment and
the parties' agreement to be bound by the terms in this Agreement, the parties
agree as follows:
3
SECTION 1. EMPLOYMENT PERIOD. The Company shall employ Executive, and Executive
shall serve the Company, on the terms and conditions set forth in this
Agreement. This Agreement shall commence on June 15, 2000 and shall continue in
effect through June 14, 2005 (the "Employment Period").
SECTION 2. POSITION AND DUTIES.
(a) During the Employment Period, the Executive shall serve as the Chief
Executive Officer of the Company and Chairman of the Board of Directors of the
Company. The Executive shall serve in each such case as an employee of the
Company and with such duties and responsibilities as are customarily assigned to
such positions, and such other duties and responsibilities not inconsistent
therewith as may from time to time be assigned to him by the Board. The
Executive shall be a member of the Board and the Board shall propose the
Executive for reelection for the Board through the Employment Period.
(b) During the Employment Period, and excluding any periods of vacation
and sick leave to which Executive is entitled, the Executive shall devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive under this Agreement, use the Executive's
reasonable best efforts to carry out such responsibilities faithfully and
efficiently. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic or charitable boards or
committees, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(c) The Executive's services shall be performed primarily at the Company's
headquarters in Columbus, Ohio and at such other locations within or without
Ohio, as the Executive reasonably deems appropriate to conduct and perform his
duties under the terms of this Agreement.
SECTION 3. COMPENSATION.
(a) BASE SALARY. The Executive's compensation during the Employment Period
shall be $200,000.00 per year, payable in accordance with the customary
practices of the Company for its senior executives as in effect from time to
time.
(b) FRINGE BENEFITS. During the Employment Period, Executive shall be
entitled to receive fringe benefits on the same terms and conditions as the
greater of (i) the fringe benefits received by, or available to, him from the
Company immediately before commencement of the term of this Agreement or (ii)
the fringe benefits provided by the Company or its subsidiaries which are
available to the next highest executive officer of the Company for the year.
2
4
(c) OTHER BENEFITS. In addition, the Executive shall be entitled to
participate in all applicable incentive, savings and retirement plans,
practices, policies and programs of the Company and its subsidiaries to the same
extent as other senior executives of the Company; and the Executive and/or the
Executive's family as the case may be, shall be eligible for participation in
and shall receive all benefits under all applicable welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries,
other than severance plans, practices, policies and programs but including,
without limitation, medical, prescription, dental, disability, sick leave,
employee life insurance, group life insurance, accidental death and travel
accident insurance plans and programs, to the same extent as other senior
executives of the Company.
SECTION 4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. The
Company shall be entitled to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability" means that (i)
the Executive has been unable, for a period of One Hundred Eighty (180)
consecutive business days, to perform the Executive's duties under this
Agreement, as a result of physical or mental illness or injury, and (ii) a
physician selected by the Company or its insurers, and acceptable to the
Executive or the Executive's legal representative, has determined that the
Executive's incapacity is total and permanent. A termination of the Executive's
employment by the Company for Disability shall be communicated to the Executive
by written notice, and shall be effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), unless the Executive
returns to full-time performance of the Executive's duties before the Disability
Effective Date.
(b) BY THE COMPANY.
(i) The Company may terminate the Executive's employment during the
Employment Period for Cause or without Cause. "Cause" means illegal
conduct or gross misconduct by the Executive, in either case that is
willful and results in material and demonstrable damage to the business or
reputation of the Company. No act or failure to act on the part of the
Executive shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that
the Executive's action or omission was in the best interests of the
Company. Any act or failure to act that is based upon authority given
pursuant to a resolution duly adopted by the Board, or the advice of
counsel for the Company, shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company.
(ii) A termination of the Executive's employment for Cause shall be
effected in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination for Cause") of
its intention to terminate the Executive's employment for Cause, setting
forth in reasonable detail the specific conduct of the Executive that it
considers to constitute Cause and the specific provision(s) of this
3
5
Agreement on which it relies, and stating the date, time and place of the
Special Board Meeting for Cause. The "Special Board Meeting for Cause"
means a meeting of the Board called and held specifically for the purpose
of considering the Executive's termination for Cause, that takes place not
less than ten (10) and not more than twenty (20) business days after the
Executive receives the Notice of Termination for Cause. The Executive
shall be given an opportunity, together with counsel, to be heard at the
Special Board Meeting for Cause. The Executive's termination for Cause
shall be effective when and if a resolution is duly adopted at the Special
Board Meeting for Cause by affirmative vote of at least two-thirds (2/3)
of the entire membership of the Board (excluding the Executive who shall
not vote on this matter) stating that in the good faith opinion of the
Board, the Executive is guilty of the conduct described in the Notice of
Termination for Cause, and that conduct constitutes Cause under this
Agreement.
(iii) A termination of the Executive's employment without Cause shall be
effective in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination without Cause")
of its intention to terminate the Executive's employment without Cause,
stating the date, time and place of the Special Board Meeting without
Cause. The "Special Board Meeting without Cause" means a meeting of the
Board called and held specifically for the purpose of considering the
Executive's termination without Cause, that takes place not less than ten
(10) nor more than twenty (20) business days after the Executive receives
the Notice of Termination without Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Special Board
Meeting without Cause. The Executive's termination without Cause shall be
effective when and if a resolution is duly adopted at the Special Board
Meeting without Cause by an affirmative vote of at least two-thirds (2/3)
of the entire membership of the Board (excluding the Executive who shall
not vote on this matter).
(c) BY EXECUTIVE FOR GOOD REASON.
(i) The Executive may terminate his employment for Good Reason or without
Good Reason. "Good Reason" means:
(A) the assignment to the Executive of any duties inconsistent in
any respect with Section 2(a) of this Agreement, or any other action
by the Company that results in a diminution in the Executive's
position, authority, duties, or responsibilities, other than an
isolated, insubstantial and inadvertent action that is not taken in
bad faith and is remedied by the Company promptly after receipt of
notice thereof from the Executive;
(B) any failure by the Company to comply with any provision of
Section 3 of this Agreement, other than an isolated, insubstantial
and inadvertent failure that is
4
6
not taken in bad faith and is remedied by the Company promptly after
receipt of notice thereof from the Executive;
(C) the assignment or reassignment by the Company of the Executive
without the Executive's consent to another place of employment
outside of the Columbus, Ohio metropolitan area;
(D) any purported termination of the Executive's employment by the
Company for a reason or in a manner not expressly permitted by this
Agreement;
(E) any failure by the Company to comply with Section 11(c) of this
Agreement;
(F) any other substantial breach of this Agreement by the Company
that either is not taken in good faith or is not remedied by the
Company promptly after receipt of notice thereof from the Executive;
or
(G) a Change of Control. For purposes of this section, a "Change of
Control" means the happening of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and as used in Sub-Sections 13(d) and 14(d) thereof,
including a "group" as defined in section 13(d) of the
Exchange Act but excluding the Company and any subsidiary
thereof and any employee benefit plan sponsored or maintained
by the Company or any subsidiary (including any trustee of
such plan acting as trustee), directly or indirectly, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time), of securities of
the Company representing twenty (20%) percent or more of the
combined voting power of the Company's then outstanding
securities;
(ii) When, during any period after the commencement date of
this Agreement, the individuals who, at the beginning of such
period, constitute the Board (the "Incumbent Directors") cease
for any reason other than death to constitute at least a
majority thereof, provided that a director who was not a
director at the beginning of period shall be deemed to have
satisfied such requirement (and be an Incumbent Director) if
such director was elected by, or on the recommendation of or
with the approval of, at least two-thirds (2/3) of the
directors who then qualified as Incumbent Directors either
actually (because they were directors at the beginning of such
period) or by prior operation of this Section 4(c)(i)(G)(ii);
or
5
7
(iii) The occurrence of a transaction requiring stockholder
approval for the acquisition of the Company by an entity other
than the Company or a subsidiary through purchase of assets,
or by merger, or otherwise.
The Company and the Executive, upon mutual written agreement, may
waive any of the foregoing provisions which would otherwise constitute
Good Reason.
(ii) A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Company written notice ("Notice of Termination
for Good Reason") of the termination, setting forth in reasonable detail
the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies. A
termination of employment by the Executive for Good Reason shall be
effective on the fifth (5th) business day following the date when the
Notice of Termination of or Good Reason is given, unless the notice sets
forth a later date (which date shall in no event be later than thirty (30)
days after the notice is given). For purposes of this Section 4(c), any
good faith determination of "Good Reason" made by the Executive shall be
conclusive.
(iii) A termination of the Executive's employment by the Executive without
Good Reason shall be effected by giving the Company written notice of the
termination.
(d) NO WAIVER. The failure to set forth any fact or circumstance in a
Notice of Termination for Cause, a Notice of Termination without Cause, or a
Notice of Termination for Good Reason shall not constitute a waiver of the right
to assert, and shall not preclude the party giving notice from asserting such
fact or circumstance in an attempt to enforce any right under or provision of
this Agreement.
(e) DATE OF TERMINATION. The "Date of Termination" means the date of the
Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason is effective, or the date on which the
Executive gives the Company notice of a termination of employment without Good
Reason, as the case may be.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) BY THE COMPANY OTHER THAN FOR CAUSE OR DISABILITY; BY THE EXECUTIVE
FOR GOOD REASON. If during the Employment Period, the Company terminates the
Executive's employment, other than for Cause or Disability, or the Executive
terminates employment for Good Reason, the Company shall continue to provide the
Executive with the compensation and benefits set forth in Section 3(a), (b) and
(c) as if he had remained employed by the Company pursuant to this Agreement
through the end of the Employment Period and then retired (at which time he will
be treated as eligible for all retiree welfare benefits and other benefits
provided to retired senior executives, as set forth In Section 3(c); provided,
at the election of Executive by
6
8
written notice to the Company given at any time within sixty (60) days of the
Date of Termination, the Base Salary set forth in Section 3(a) for the entire
remaining Employment Period shall be paid in a lump sum to Executive within
thirty (30) business days of the Company's receipt of Executive's notice of such
election; provided, further, that in lieu of stock options, restricted stock and
other stock-based awards, the Executive shall be paid cash equal to the fair
market values as of the Date of Termination (without regard to any restrictions
and based upon a valuation model generally utilized for purposes of valuing
comparable stock based compensation awards) of the stock options, restricted
stock and other stock-based awards that would otherwise have been granted with
such cash being paid within ninety (90) days after the Date of Termination;
provided, further, that to the extent any benefits described in Section 3(c)
cannot be provided pursuant to the plan or program maintained by the Company for
its executives, the Company shall provide such benefits outside such plan or
program at no additional cost (including without limitation tax cost) to the
Executive and his family; and provided, finally, that during any period when the
Executive is eligible to receive benefits of the type described in Section 3(c)
under another employer-provided plan, the benefits provided by the Company under
Section 5(a) may be made secondary to those provided under another plan. In
addition to the foregoing, any restricted stock outstanding on the Date of
Termination shall be fully vested and exercisable and shall remain in effect and
exercisable through the end of their respective terms, without regard to the
termination of the Executive's employment. The payments and benefits provided
pursuant to this Section 5(a) are intended as liquidated damages for a
termination of the Executive's employment by the Executive for Good Reason, and
shall be the sole and exclusive remedy therefore.
(b) DEATH OR DISABILITY. If the Executive's employment is terminated by
reason of the Executive's death or Disability during the Employment Period, the
Company shall pay to the Executive or, in the case of the Executive's death, to
the Executive's designated beneficiaries (or, if there is no such beneficiary,
to the Executive's estate or legal representative) in a lump sum in cash within
thirty (30) days after the Date of Termination, the sum of the following amounts
(the "Accrued Obligations"): (1) any portion of the Executive's Annual Base
Salary through the Date of Termination that has not yet been paid; (2) any
compensation previously deferred by Executive (together with any accrued
interest or earnings thereon) that has not yet been paid; and (3) any accrued
but unpaid vacation pay; and the Company shall have no further obligations under
this Agreement, except as specified in Section 6 below. If the Executive's
employment is terminated by reason of Disability, he shall be entitled to
receive the maximum disability payments which can be provided under the
disability plans described in Section 3(c), reduced, however, by actual
disability benefits received under such plans.
(c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD REASON.
If the Executive's employment is terminated by the Company for Cause during the
Employment Period, the Company shall pay the Executive the Annual Base Salary
through the Date of Termination and the amount of any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), in each case to the extent not yet paid, and the Company shall have no
further obligations under this Agreement, except as specified in Section 6
7
9
below. If the Executive voluntarily terminates employment during the Employment
Period, other than for Good Reason, the Company shall pay the Accrued
Obligations to the Executive in a lump sum in cash within thirty (30) days of
the Date of Termination, and the Company shall have no further obligations under
this Agreement, except as specified in Section 6 below.
SECTION 6. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
for which the Executive may qualify, nor, subject to Section 12(f), shall
anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Vested benefits and other amounts that the Executive
is otherwise entitled to receive under SERP or any other plan, policy, practice
or program of, or any contract or agreement with, the Company or any of its
affiliated companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program, contract
or agreement, as the case may be, except as explicitly modified by this
Agreement.
SECTION 7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense, or
other claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as
specifically provided in Section 5(a) with respect to benefits described in
Sections 3(a) and (b), such amounts shall not be reduced, regardless of whether
the Executive obtains other employment.
SECTION 8. NONCOMPETITION PROVISION AND CONFIDENTIAL
INFORMATION.
(a) Without prior written consent of the Company, for the greater of (i)
the twenty-four (24) month period following the Date of Termination, or (ii)
the remaining Employment Period of this Agreement, the Executive shall not, as a
shareholder, officer, director, partner, consultant or otherwise, engage
directly or indirectly in any business or enterprise which is "in competition"
with the Company or its successors or assigns; provided, however, that the
Executive's ownership of less than five (5%) percent of the issued and
outstanding voting securities of a publicly traded company shall not be deemed
to constitute such competition. A business or enterprise is deemed to be "in
competition" if it is engaged in the business of providing medical diagnostic
imaging and radiation therapy services in Ohio.
(b) The Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies and their respective
businesses that the Executive obtains during the Executive's employment by the
Company or any of its affiliated companies and that is not public
8
10
knowledge (other than as a result of the Executive's violation of this Section
8) ("Confidential Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the Executive's
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process. In no event shall any
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
SECTION 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue code of 1986, as amended (the "Code") or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of this Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Executive (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the company and the Executive within fifteen (15) business days of the receipt
of notice from the Executive that there has been a Payment, or such earlier time
as is requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive within
five (5) days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the company should have been made ("Underpayment") consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to this Section 9(c), and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
9
11
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim the
Executive shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such
claim:; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority
in respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
the Executive pay such claim and ▇▇▇ for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further,
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is
10
12
limited solely to such contested amount. Furthermore, the Company's
control, of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to this Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of this Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If after the receipt by the
Executive of an amount advanced by the Company pursuant to this Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
SECTION 10. ATTORNEYS' FEES. The Company agrees to pay, as incurred, to the
fullest extent permitted by law, all legal fees and expenses that the Executive
may reasonably incur as a result of any contest (regardless of the outcome) by
the Company, the Executive or others of the validity or enforceability of or
liability under, or otherwise involving, any provision of this Agreement,
together with interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code.
SECTION 11. SUCCESSORS.
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean both the Company as
defined above and any such successor that assumes and agrees to perform this
Agreement, by operation off law or otherwise.
SECTION 12. MISCELLANEOUS.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Ohio, without reference to principles of conflict of
laws. The captions of this
11
13
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇ Health Services Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IF TO THE COMPANY: ▇▇▇▇▇-▇▇▇▇▇▇▇ Health Services Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as either party furnishes to the other in writing in
accordance with this Section 12(b). Notices and communications shall be
effective when actually received by the addressee.
(c) Subject to the last sentence of this Section 12(c), the invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any
provision of this Agreement shall be held invalid or unenforceable in part, the
remaining portion of such provision, together with all other provisions of this
Agreement, shall remain valid and enforceable and continue in full force and
effect to the fullest extent consistent with law. However, the enforceability of
Section 8(a) shall be dependent upon the validity and enforceability of Section
5.
(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from amounts payable under this Agreement all federal, state, local and
foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 4(c) of this Agreement) shall not
be deemed to be a waiver of such provision or right or of any other provision of
or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes and terminates any other severance and employment agreements between
the Executive and the Company or the Company's affiliates.
(g) The rights and benefits of the Executive under this Agreement may not
be anticipated, assigned, alienated or subject to attachment, garnishment, levy,
execution or other legal or equitable process except as required by law. Any
attempt by the Executive to anticipate,
12
14
alienate, assign, sell, transfer, pledge, encumber or charge the same shall be
void. Payments hereunder shall not be considered assets of the Executive in the
event of insolvency or bankruptcy.
(h) This Agreement may be executed in several counterparts, each of which
shall be deemed an original and said counterparts shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
COMPANY: EXECUTIVE:
▇▇▇▇▇-▇▇▇▇▇▇▇ HEALTH
SERVICES CORP.
BY: /s/ /s/
---------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
13
15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT by and between ▇▇▇▇▇-▇▇▇▇▇▇▇ HEALTH SERVICES
CORP., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇ ▇. GOLD (the
"Executive") dated as of the ____ day of ____________, 2000.
W I T N E S S E T H
WHEREAS, Executive has been employed with the Company on a continuous
basis since 1970; and
WHEREAS, the Company desires to maintain the services of Executive at
Executive's current level of base compensation for a period of five (5) years;
and
WHEREAS, the Company desires to provide for the orderly succession of
management of the Company; and
WHEREAS, the Company considers it essential for the best interests of its
stockholders to ▇▇▇▇▇▇ the continuous employment of key management personnel
and, in this connection, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control may exist; the possibility and the
uncertainty and questions that it may raise among management may result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of the
Company's management, including Executive, to the assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of in a change in control of the Company; and
WHEREAS, to induce Executive to remain in the employ of the Company, in
consideration of Executive's Agreement set forth below, the Company desires that
Executive enter into this Agreement providing for a term of employment and
severance benefits in the event Executive's employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 4(c)(i)(G) below) under the circumstances described below; and
WHEREAS, Executive wishes to serve the Company in the capacities and on
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of Executive's continued employment and
the parties' agreement to be bound by the terms in this Agreement, the parties
agree as follows:
16
SECTION 1. EMPLOYMENT PERIOD. The Company shall employ Executive, and Executive
shall serve the Company, on the terms and conditions set forth in this
Agreement. This Agreement shall commence on June 15, 2000 and shall continue in
effect through June 14, 2005 (the "Employment Period").
SECTION 2. POSITION AND DUTIES.
(a) During the Employment Period, the Executive shall serve as the
President and CFO of the Company. The Executive shall serve in each such case as
an employee of the Company and with such duties and responsibilities as are
customarily assigned to such positions, and such other duties and
responsibilities not inconsistent therewith as may from time to time be assigned
to him by the Board. The Executive shall be a member of the Board and the Board
shall propose the Executive for reelection for the Board through the Employment
Period.
(b) During the Employment Period, and excluding any periods of vacation
and sick leave to which Executive is entitled, the Executive shall devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive under this Agreement, use the Executive's
reasonable best efforts to carry out such responsibilities faithfully and
efficiently. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic or charitable boards or
committees, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(c) The Executive's services shall be performed primarily at the Company's
headquarters in Columbus, Ohio and at such other locations within or without
Ohio, as the Executive reasonably deems appropriate to conduct and perform his
duties under the terms of this Agreement.
SECTION 3. COMPENSATION.
(a) BASE SALARY. The Executive's compensation during the Employment Period
shall be $160,000.00 per year, payable in accordance with the customary
practices of the Company for its senior executives as in effect from time to
time.
(b) FRINGE BENEFITS. During the Employment Period, Executive shall be
entitled to receive fringe benefits on the same terms and conditions as the
greater of (i) the fringe benefits received by, or available to, him from the
Company immediately before commencement of the term of this Agreement or (ii)
the fringe benefits provided by the Company or its subsidiaries which are
available to the next highest executive officer of the Company for the year.
(c) OTHER BENEFITS. In addition, the Executive shall be entitled to
participate in all applicable incentive, savings and retirement plans,
practices, policies and programs of the
2
17
Company and its subsidiaries to the same extent as other senior executives of
the Company; and the Executive and/or the Executive's family as the case may be,
shall be eligible for participation in and shall receive all benefits under all
applicable welfare benefit plans, practices, policies and programs provided by
the Company and its subsidiaries, other than severance plans, practices,
policies and programs but including, without limitation, medical, prescription,
dental, disability, sick leave, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs, to the same
extent as other senior executives of the Company.
SECTION 4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. The
Company shall be entitled to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability" means that (i)
the Executive has been unable, for a period of One Hundred Eighty (180)
consecutive business days, to perform the Executive's duties under this
Agreement, as a result of physical or mental illness or injury, and (ii) a
physician selected by the Company or its insurers, and acceptable to the
Executive or the Executive's legal representative, has determined that the
Executive's incapacity is total and permanent. A termination of the Executive's
employment by the Company for Disability shall be communicated to the Executive
by written notice, and shall be effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), unless the Executive
returns to full-time performance of the Executive's duties before the Disability
Effective Date.
(b) BY THE COMPANY.
(i) The Company may terminate the Executive's employment during the
Employment Period for Cause or without Cause. "Cause" means illegal
conduct or gross misconduct by the Executive, in either case that is
willful and results in material and demonstrable damage to the business or
reputation of the Company. No act or failure to act on the part of the
Executive shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that
the Executive's action or omission was in the best interests of the
Company. Any act or failure to act that is based upon authority given
pursuant to a resolution duly adopted by the Board, or the advice of
counsel for the Company, shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company.
(ii) A termination of the Executive's employment for Cause shall be
effected in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination for Cause") of
its intention to terminate the Executive's employment for Cause, setting
forth in reasonable detail the specific conduct of the Executive that it
considers to constitute Cause and the specific provision(s) of this
Agreement on which it relies, and stating the date, time and place of the
Special Board Meeting for Cause. The "Special Board Meeting for Cause"
means a meeting of the
3
18
Board called and held specifically for the purpose of considering the
Executive's termination for Cause, that takes place not less than ten (10)
and not more than twenty (20) business days after the Executive receives
the Notice of Termination for Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Special Board
Meeting for Cause. The Executive's termination for Cause shall be
effective when and if a resolution is duly adopted at the Special Board
Meeting for Cause by affirmative vote of at least two-thirds (2/3) of the
entire membership of the Board (excluding the Executive who shall not vote
on this matter) stating that in the good faith opinion of the Board, the
Executive is guilty of the conduct described in the Notice of Termination
for Cause, and that conduct constitutes Cause under this Agreement.
(iii) A termination of the Executive's employment without Cause shall be
effective in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination without Cause")
of its intention to terminate the Executive's employment without Cause,
stating the date, time and place of the Special Board Meeting without
Cause. The "Special Board Meeting without Cause" means a meeting of the
Board called and held specifically for the purpose of considering the
Executive's termination without Cause, that takes place not less than ten
(10) nor more than twenty (20) business days after the Executive receives
the Notice of Termination without Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Special Board
Meeting without Cause. The Executive's termination without Cause shall be
effective when and if a resolution is duly adopted at the Special Board
Meeting without Cause by an affirmative vote of at least two-thirds (2/3)
of the entire membership of the Board (excluding the Executive who shall
not vote on this matter).
(c) BY EXECUTIVE FOR GOOD REASON.
(i) The Executive may terminate his employment for Good Reason or without
Good Reason. "Good Reason" means:
(A) the assignment to the Executive of any duties inconsistent in
any respect with Section 2(a) of this Agreement, or any other action
by the Company that results in a diminution in the Executive's
position, authority, duties, or responsibilities, other than an
isolated, insubstantial and inadvertent action that is not taken in
bad faith and is remedied by the Company promptly after receipt of
notice thereof from the Executive;
(B) any failure by the Company to comply with any provision of
Section 3 of this Agreement, other than an isolated, insubstantial
and inadvertent failure that is not taken in bad faith and is
remedied by the Company promptly after receipt of notice thereof
from the Executive;
4
19
(C) the assignment or reassignment by the Company of the Executive
without the Executive's consent to another place of employment
outside of the Columbus, Ohio metropolitan area;
(D) any purported termination of the Executive's employment by the
Company for a reason or in a manner not expressly permitted by this
Agreement;
(E) any failure by the Company to comply with Section 11(c) of this
Agreement;
(F) any other substantial breach of this Agreement by the Company
that either is not taken in good faith or is not remedied by the
Company promptly after receipt of notice thereof from the Executive;
or
(G) a Change of Control. For purposes of this section, a "Change of
Control" means the happening of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and as used in Sub-Sections 13(d) and 14(d) thereof,
including a "group" as defined in section 13(d) of the
Exchange Act but excluding the Company and any subsidiary
thereof and any employee benefit plan sponsored or maintained
by the Company or any subsidiary (including any trustee of
such plan acting as trustee), directly or indirectly, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time), of securities of
the Company representing twenty (20%) percent or more of the
combined voting power of the Company's then outstanding
securities;
(ii) When, during any period after the commencement date of
this Agreement, the individuals who, at the beginning of such
period, constitute the Board (the "Incumbent Directors") cease
for any reason other than death to constitute at least a
majority thereof, provided that a director who was not a
director at the beginning of period shall be deemed to have
satisfied such requirement (and be an Incumbent Director) if
such director was elected by, or on the recommendation of or
with the approval of, at least two-thirds (2/3) of the
directors who then qualified as Incumbent Directors either
actually (because they were directors at the beginning of such
period) or by prior operation of this Section 4(c)(i)(G)(ii);
or
(iii) The occurrence of a transaction requiring stockholder
approval for the acquisition of the Company by an entity other
than the Company or a subsidiary through purchase of assets,
or by merger, or otherwise.
5
20
The Company and the Executive, upon mutual written
agreement, may waive any of the foregoing provisions which
would otherwise constitute Good Reason.
(ii) A termination of employment by the Executive for Good
Reason shall be effectuated by giving the Company written
notice ("Notice of Termination for Good Reason") of the
termination, setting forth in reasonable detail the specific
conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive
relies. A termination of employment by the Executive for Good
Reason shall be effective on the fifth (5th) business day
following the date when the Notice of Termination of or Good
Reason is given, unless the notice sets forth a later date
(which date shall in no event be later than thirty (30) days
after the notice is given). For purposes of this Section 4(c),
any good faith determination of "Good Reason" made by the
Executive shall be conclusive.
(iii) A termination of the Executive's employment by the
Executive without Good Reason shall be effected by giving the
Company written notice of the termination.
(d) NO WAIVER. The failure to set forth any fact or circumstance in a
Notice of Termination for Cause, a Notice of Termination without Cause, or a
Notice of Termination for Good Reason shall not constitute a waiver of the right
to assert, and shall not preclude the party giving notice from asserting such
fact or circumstance in an attempt to enforce any right under or provision of
this Agreement.
(e) DATE OF TERMINATION. The "Date of Termination" means the date of the
Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason is effective, or the date on which the
Executive gives the Company notice of a termination of employment without Good
Reason, as the case may be.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) BY THE COMPANY OTHER THAN FOR CAUSE OR DISABILITY; BY THE EXECUTIVE
FOR GOOD REASON. If during the Employment Period, the Company terminates the
Executive's employment, other than for Cause or Disability, or the Executive
terminates employment for Good Reason, the Company shall continue to provide the
Executive with the compensation and benefits set forth in Section 3(a), (b) and
(c) as if he had remained employed by the Company pursuant to this Agreement
through the end of the Employment Period and then retired (at which time he will
be treated as eligible for all retiree welfare benefits and other benefits
provided to retired senior executives, as set forth In Section 3(c); provided,
at the election of Executive by written notice to the Company given at any time
within sixty (60) days of the Date of Termination, the Base Salary set forth in
Section 3(a) for the entire remaining Employment Period shall be paid in a lump
sum to Executive within thirty (30) business days of the Company's receipt of
Executive's notice of such election; provided, further, that in lieu of stock
options, restricted
6
21
stock and other stock-based awards, the Executive shall be paid cash equal to
the fair market values as of the Date of Termination (without regard to any
restrictions and based upon a valuation model generally utilized for purposes of
valuing comparable stock based compensation awards) of the stock options,
restricted stock and other stock-based awards that would otherwise have been
granted with such cash being paid within ninety (90) days after the Date of
Termination; provided, further, that to the extent any benefits described in
Section 3(c) cannot be provided pursuant to the plan or program maintained by
the Company for its executives, the Company shall provide such benefits outside
such plan or program at no additional cost (including without limitation tax
cost) to the Executive and his family; and provided, finally, that during any
period when the Executive is eligible to receive benefits of the type described
in Section 3(c) under another employer-provided plan, the benefits provided by
the Company under Section 5(a) may be made secondary to those provided under
another plan. In addition to the foregoing, any restricted stock outstanding on
the Date of Termination shall be fully vested and exercisable and shall remain
in effect and exercisable through the end of their respective terms, without
regard to the termination of the Executive's employment. The payments and
benefits provided pursuant to this Section 5(a) are intended as liquidated
damages for a termination of the Executive's employment by the Executive for
Good Reason, and shall be the sole and exclusive remedy therefore.
(b) DEATH OR DISABILITY. If the Executive's employment is terminated by
reason of the Executive's death or Disability during the Employment Period, the
Company shall pay to the Executive or, in the case of the Executive's death, to
the Executive's designated beneficiaries (or, if there is no such beneficiary,
to the Executive's estate or legal representative) in a lump sum in cash within
thirty (30) days after the Date of Termination, the sum of the following amounts
(the "Accrued Obligations"): (1) any portion of the Executive's Annual Base
Salary through the Date of Termination that has not yet been paid; (2) any
compensation previously deferred by Executive (together with any accrued
interest or earnings thereon) that has not yet been paid; and (3) any accrued
but unpaid vacation pay; and the Company shall have no further obligations under
this Agreement, except as specified in Section 6 below. If the Executive's
employment is terminated by reason of Disability, he shall be entitled to
receive the maximum disability payments which can be provided under the
disability plans described in Section 3(c), reduced, however, by actual
disability benefits received under such plans.
(c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD REASON.
If the Executive's employment is terminated by the Company for Cause during the
Employment Period, the Company shall pay the Executive the Annual Base Salary
through the Date of Termination and the amount of any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), in each case to the extent not yet paid, and the Company shall have no
further obligations under this Agreement, except as specified in Section 6
below. If the Executive voluntarily terminates employment during the Employment
Period, other than for Good Reason, the Company shall pay the Accrued
Obligations to the Executive in a lump sum in cash within thirty (30) days of
the Date of Termination, and the Company shall have no further obligations under
this Agreement, except as specified in Section 6 below.
7
22
SECTION 6. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
for which the Executive may qualify, nor, subject to Section 12(f), shall
anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Vested benefits and other amounts that the Executive
is otherwise entitled to receive under SERP or any other plan, policy, practice
or program of, or any contract or agreement with, the Company or any of its
affiliated companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program, contract
or agreement, as the case may be, except as explicitly modified by this
Agreement.
SECTION 7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense, or
other claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as
specifically provided in Section 5(a) with respect to benefits described in
Sections 3(a) and (b), such amounts shall not be reduced, regardless of whether
the Executive obtains other employment.
SECTION 8. NONCOMPETITION PROVISION AND CONFIDENTIAL
INFORMATION.
(a) Without prior written consent of the Company, for the greater of (i)
the twenty-four (24) month period following the Date of Termination, or (ii)
the remaining Employment Period of this Agreement, the Executive shall not, as a
shareholder, officer, director, partner, consultant or otherwise, engage
directly or indirectly in any business or enterprise which is "in competition"
with the Company or its successors or assigns; provided, however, that the
Executive's ownership of less than five (5%) percent of the issued and
outstanding voting securities of a publicly traded company shall not be deemed
to constitute such competition. A business or enterprise is deemed to be "in
competition" if it is engaged in the business of providing medical diagnostic
imaging and radiation therapy services in Ohio.
(b) The Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies and their respective
businesses that the Executive obtains during the Executive's employment by the
Company or any of its affiliated companies and that is not public knowledge
(other than as a result of the Executive's violation of this Section 8)
("Confidential Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the Executive's
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process.
8
23
In no event shall any asserted violation of the provisions of this Section 8
constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
SECTION 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue code of 1986, as amended (the "Code") or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of this Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Executive (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the company and the Executive within fifteen (15) business days of the receipt
of notice from the Executive that there has been a Payment, or such earlier time
as is requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive within
five (5) days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the company should have been made ("Underpayment") consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to this Section 9(c), and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10)
9
24
business days after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim the Executive shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such
claim:; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority
in respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
the Executive pay such claim and ▇▇▇ for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further,
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control, of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
10
25
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to this Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of this Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If after the receipt by the
Executive of an amount advanced by the Company pursuant to this Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
SECTION 10. ATTORNEYS' FEES. The Company agrees to pay, as incurred, to the
fullest extent permitted by law, all legal fees and expenses that the Executive
may reasonably incur as a result of any contest (regardless of the outcome) by
the Company, the Executive or others of the validity or enforceability of or
liability under, or otherwise involving, any provision of this Agreement,
together with interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code.
SECTION 11. SUCCESSORS.
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean both the Company as
defined above and any such successor that assumes and agrees to perform this
Agreement, by operation off law or otherwise.
SECTION 12. MISCELLANEOUS.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Ohio, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This
11
26
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE: ▇▇▇▇▇▇▇ Gold
▇▇▇▇▇-▇▇▇▇▇▇▇ Health Services Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IF TO THE COMPANY: ▇▇▇▇▇-▇▇▇▇▇▇▇ Health Services Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as either party furnishes to the other in writing in
accordance with this Section 12(b). Notices and communications shall be
effective when actually received by the addressee.
(c) Subject to the last sentence of this Section 12(c), the invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any
provision of this Agreement shall be held invalid or unenforceable in part, the
remaining portion of such provision, together with all other provisions of this
Agreement, shall remain valid and enforceable and continue in full force and
effect to the fullest extent consistent with law. However, the enforceability of
Section 8(a) shall be dependent upon the validity and enforceability of Section
5.
(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from amounts payable under this Agreement all federal, state, local and
foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 4(c) of this Agreement) shall not
be deemed to be a waiver of such provision or right or of any other provision of
or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes and terminates any other severance and employment agreements between
the Executive and the Company or the Company's affiliates.
(g) The rights and benefits of the Executive under this Agreement may not
be anticipated, assigned, alienated or subject to attachment, garnishment, levy,
execution or other legal or equitable process except as required by law. Any
attempt by the Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void. Payments
12
27
hereunder shall not be considered assets of the Executive in the event of
insolvency or bankruptcy.
(h) This Agreement may be executed in several counterparts, each of which
shall be deemed an original and said counterparts shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
COMPANY: EXECUTIVE:
▇▇▇▇▇-▇▇▇▇▇▇▇ HEALTH
SERVICES CORP.
BY: /s/ /s/
----------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. GOLD
13
28
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT by and between ▇▇▇▇▇-▇▇▇▇▇▇▇ HEALTH SERVICES
CORP., a Delaware corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇ (the "Executive")
dated as of the ____ day of ____________, 2000.
W I T N E S S E T H
WHEREAS, Executive has been employed with the Company on a continuous
basis since 1982; and
WHEREAS, the Company desires to maintain the services of Executive at
Executive's current level of base compensation for a period of five (5) years;
and
WHEREAS, the Company desires to provide for the orderly succession of
management of the Company; and
WHEREAS, the Company considers it essential for the best interests of its
stockholders to ▇▇▇▇▇▇ the continuous employment of key management personnel
and, in this connection, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control may exist; the possibility and the
uncertainty and questions that it may raise among management may result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of the
Company's management, including Executive, to the assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of in a change in control of the Company; and
WHEREAS, to induce Executive to remain in the employ of the Company, in
consideration of Executive's Agreement set forth below, the Company desires that
Executive enter into this Agreement providing for a term of employment and
severance benefits in the event Executive's employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 4(c)(i)(G) below) under the circumstances described below; and
WHEREAS, Executive wishes to serve the Company in the capacities and on
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of Executive's continued employment and
the parties' agreement to be bound by the terms in this Agreement, the parties
agree as follows:
29
SECTION 1. EMPLOYMENT PERIOD. The Company shall employ Executive, and Executive
shall serve the Company, on the terms and conditions set forth in this
Agreement. This Agreement shall commence on June 15, 2000 and shall continue in
effect through June 14, 2005 (the "Employment Period").
SECTION 2. POSITION AND DUTIES.
(a) During the Employment Period, the Executive shall serve as the
Executive Vice President of the Company. The Executive shall serve in each such
case as an employee of the Company and with such duties and responsibilities as
are customarily assigned to such positions, and such other duties and
responsibilities not inconsistent therewith as may from time to time be assigned
to him by the Board. The Executive shall be a member of the Board and the Board
shall propose the Executive for reelection for the Board through the Employment
Period.
(b) During the Employment Period, and excluding any periods of vacation
and sick leave to which Executive is entitled, the Executive shall devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive under this Agreement, use the Executive's
reasonable best efforts to carry out such responsibilities faithfully and
efficiently. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic or charitable boards or
committees, so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
(c) The Executive's services shall be performed primarily at the Company's
headquarters in Columbus, Ohio and at such other locations within or without
Ohio, as the Executive reasonably deems appropriate to conduct and perform his
duties under the terms of this Agreement.
SECTION 3. COMPENSATION.
(a) BASE SALARY. The Executive's compensation during the Employment Period
shall be $105,000.00 per year, payable in accordance with the customary
practices of the Company for its senior executives as in effect from time to
time.
(b) FRINGE BENEFITS. During the Employment Period, Executive shall be
entitled to receive fringe benefits on the same terms and conditions as the
greater of (i) the fringe benefits received by, or available to, him from the
Company immediately before commencement of the term of this Agreement or (ii)
the fringe benefits provided by the Company or its subsidiaries which are
available to the next highest executive officer of the Company for the year.
(c) OTHER BENEFITS. In addition, the Executive shall be entitled to
participate in all applicable incentive, savings and retirement plans,
practices, policies and programs of the
2
30
Company and its subsidiaries to the same extent as other senior executives of
the Company; and the Executive and/or the Executive's family as the case may be,
shall be eligible for participation in and shall receive all benefits under all
applicable welfare benefit plans, practices, policies and programs provided by
the Company and its subsidiaries, other than severance plans, practices,
policies and programs but including, without limitation, medical, prescription,
dental, disability, sick leave, employee life insurance, group life insurance,
accidental death and travel accident insurance plans and programs, to the same
extent as other senior executives of the Company.
SECTION 4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. The
Company shall be entitled to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability" means that (i)
the Executive has been unable, for a period of One Hundred Eighty (180)
consecutive business days, to perform the Executive's duties under this
Agreement, as a result of physical or mental illness or injury, and (ii) a
physician selected by the Company or its insurers, and acceptable to the
Executive or the Executive's legal representative, has determined that the
Executive's incapacity is total and permanent. A termination of the Executive's
employment by the Company for Disability shall be communicated to the Executive
by written notice, and shall be effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), unless the Executive
returns to full-time performance of the Executive's duties before the Disability
Effective Date.
(b) BY THE COMPANY.
(i) The Company may terminate the Executive's employment during the
Employment Period for Cause or without Cause. "Cause" means illegal
conduct or gross misconduct by the Executive, in either case that is
willful and results in material and demonstrable damage to the business or
reputation of the Company. No act or failure to act on the part of the
Executive shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that
the Executive's action or omission was in the best interests of the
Company. Any act or failure to act that is based upon authority given
pursuant to a resolution duly adopted by the Board, or the advice of
counsel for the Company, shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the Company.
(ii) A termination of the Executive's employment for Cause shall be
effected in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination for Cause") of
its intention to terminate the Executive's employment for Cause, setting
forth in reasonable detail the specific conduct of the Executive that it
considers to constitute Cause and the specific provision(s) of this
Agreement on which it relies, and stating the date, time and place of the
Special Board Meeting for Cause. The "Special Board Meeting for Cause"
means a meeting of the
3
31
Board called and held specifically for the purpose of considering the
Executive's termination for Cause, that takes place not less than ten (10)
and not more than twenty (20) business days after the Executive receives
the Notice of Termination for Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Special Board
Meeting for Cause. The Executive's termination for Cause shall be
effective when and if a resolution is duly adopted at the Special Board
Meeting for Cause by affirmative vote of at least two-thirds (2/3) of the
entire membership of the Board (excluding the Executive who shall not vote
on this matter) stating that in the good faith opinion of the Board, the
Executive is guilty of the conduct described in the Notice of Termination
for Cause, and that conduct constitutes Cause under this Agreement.
(iii) A termination of the Executive's employment without Cause shall be
effective in accordance with the following procedures. The Company shall
give the Executive written notice ("Notice of Termination without Cause")
of its intention to terminate the Executive's employment without Cause,
stating the date, time and place of the Special Board Meeting without
Cause. The "Special Board Meeting without Cause" means a meeting of the
Board called and held specifically for the purpose of considering the
Executive's termination without Cause, that takes place not less than ten
(10) nor more than twenty (20) business days after the Executive receives
the Notice of Termination without Cause. The Executive shall be given an
opportunity, together with counsel, to be heard at the Special Board
Meeting without Cause. The Executive's termination without Cause shall be
effective when and if a resolution is duly adopted at the Special Board
Meeting without Cause by an affirmative vote of at least two-thirds (2/3)
of the entire membership of the Board (excluding the Executive who shall
not vote on this matter).
(c) BY EXECUTIVE FOR GOOD REASON.
(i) The Executive may terminate his employment for Good Reason or without
Good Reason. "Good Reason" means:
(A) the assignment to the Executive of any duties inconsistent in
any respect with Section 2(a) of this Agreement, or any other action
by the Company that results in a diminution in the Executive's
position, authority, duties, or responsibilities, other than an
isolated, insubstantial and inadvertent action that is not taken in
bad faith and is remedied by the Company promptly after receipt of
notice thereof from the Executive;
(B) any failure by the Company to comply with any provision of
Section 3 of this Agreement, other than an isolated, insubstantial
and inadvertent failure that is
4
32
not taken in bad faith and is remedied by the Company promptly after
receipt of notice thereof from the Executive;
(C) the assignment or reassignment by the Company of the Executive
without the Executive's consent to another place of employment
outside of the Columbus, Ohio metropolitan area;
(D) any purported termination of the Executive's employment by the
Company for a reason or in a manner not expressly permitted by this
Agreement;
(E) any failure by the Company to comply with Section 11(c) of this
Agreement;
(F) any other substantial breach of this Agreement by the Company
that either is not taken in good faith or is not remedied by the
Company promptly after receipt of notice thereof from the Executive;
or
(G) a Change of Control. For purposes of this section, a "Change of
Control" means the happening of any of the following:
(i) When any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and as used in Sub-Sections 13(d) and 14(d) thereof,
including a "group" as defined in section 13(d) of the
Exchange Act but excluding the Company and any subsidiary
thereof and any employee benefit plan sponsored or maintained
by the Company or any subsidiary (including any trustee of
such plan acting as trustee), directly or indirectly, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act, as amended from time to time), of securities of
the Company representing twenty (20%) percent or more of the
combined voting power of the Company's then outstanding
securities;
(ii) When, during any period after the commencement date of
this Agreement, the individuals who, at the beginning of such
period, constitute the Board (the "Incumbent Directors") cease
for any reason other than death to constitute at least a
majority thereof, provided that a director who was not a
director at the beginning of period shall be deemed to have
satisfied such requirement (and be an Incumbent Director) if
such director was elected by, or on the recommendation of or
with the approval of, at least two-thirds (2/3) of the
directors who then qualified as Incumbent Directors either
actually (because they were directors at the beginning of such
period) or by prior operation of this Section 4(c)(i)(G)(ii);
or
5
33
(iii) The occurrence of a transaction requiring stockholder
approval for the acquisition of the Company by an entity other
than the Company or a subsidiary through purchase of assets,
or by merger, or otherwise.
The Company and the Executive, upon mutual written agreement, may
waive any of the foregoing provisions which would otherwise constitute
Good Reason.
(ii) A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Company written notice ("Notice of Termination
for Good Reason") of the termination, setting forth in reasonable detail
the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies. A
termination of employment by the Executive for Good Reason shall be
effective on the fifth (5th) business day following the date when the
Notice of Termination of or Good Reason is given, unless the notice sets
forth a later date (which date shall in no event be later than thirty (30)
days after the notice is given). For purposes of this Section 4(c), any
good faith determination of "Good Reason" made by the Executive shall be
conclusive.
(iii) A termination of the Executive's employment by the Executive without
Good Reason shall be effected by giving the Company written notice of the
termination.
(d) NO WAIVER. The failure to set forth any fact or circumstance in a
Notice of Termination for Cause, a Notice of Termination without Cause, or a
Notice of Termination for Good Reason shall not constitute a waiver of the right
to assert, and shall not preclude the party giving notice from asserting such
fact or circumstance in an attempt to enforce any right under or provision of
this Agreement.
(e) DATE OF TERMINATION. The "Date of Termination" means the date of the
Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason is effective, or the date on which the
Executive gives the Company notice of a termination of employment without Good
Reason, as the case may be.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) BY THE COMPANY OTHER THAN FOR CAUSE OR DISABILITY; BY THE EXECUTIVE
FOR GOOD REASON. If during the Employment Period, the Company terminates the
Executive's employment, other than for Cause or Disability, or the Executive
terminates employment for Good Reason, the Company shall continue to provide the
Executive with the compensation and benefits set forth in Section 3(a), (b) and
(c) as if he had remained employed by the Company pursuant to this Agreement
through the end of the Employment Period and then retired (at which time he will
be treated as eligible for all retiree welfare benefits and other benefits
provided to retired senior executives, as set forth In Section 3(c); provided,
at the election of Executive by
6
34
written notice to the Company given at any time within sixty (60) days of the
Date of Termination, the Base Salary set forth in Section 3(a) for the entire
remaining Employment Period shall be paid in a lump sum to Executive within
thirty (30) business days of the Company's receipt of Executive's notice of such
election; provided, further, that in lieu of stock options, restricted stock and
other stock-based awards, the Executive shall be paid cash equal to the fair
market values as of the Date of Termination (without regard to any restrictions
and based upon a valuation model generally utilized for purposes of valuing
comparable stock based compensation awards) of the stock options, restricted
stock and other stock-based awards that would otherwise have been granted with
such cash being paid within ninety (90) days after the Date of Termination;
provided, further, that to the extent any benefits described in Section 3(c)
cannot be provided pursuant to the plan or program maintained by the Company for
its executives, the Company shall provide such benefits outside such plan or
program at no additional cost (including without limitation tax cost) to the
Executive and his family; and provided, finally, that during any period when the
Executive is eligible to receive benefits of the type described in Section 3(c)
under another employer-provided plan, the benefits provided by the Company under
Section 5(a) may be made secondary to those provided under another plan. In
addition to the foregoing, any restricted stock outstanding on the Date of
Termination shall be fully vested and exercisable and shall remain in effect and
exercisable through the end of their respective terms, without regard to the
termination of the Executive's employment. The payments and benefits provided
pursuant to this Section 5(a) are intended as liquidated damages for a
termination of the Executive's employment by the Executive for Good Reason, and
shall be the sole and exclusive remedy therefore.
(b) DEATH OR DISABILITY. If the Executive's employment is terminated by
reason of the Executive's death or Disability during the Employment Period, the
Company shall pay to the Executive or, in the case of the Executive's death, to
the Executive's designated beneficiaries (or, if there is no such beneficiary,
to the Executive's estate or legal representative) in a lump sum in cash within
thirty (30) days after the Date of Termination, the sum of the following amounts
(the "Accrued Obligations"): (1) any portion of the Executive's Annual Base
Salary through the Date of Termination that has not yet been paid; (2) any
compensation previously deferred by Executive (together with any accrued
interest or earnings thereon) that has not yet been paid; and (3) any accrued
but unpaid vacation pay; and the Company shall have no further obligations under
this Agreement, except as specified in Section 6 below. If the Executive's
employment is terminated by reason of Disability, he shall be entitled to
receive the maximum disability payments which can be provided under the
disability plans described in Section 3(c), reduced, however, by actual
disability benefits received under such plans.
(c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD REASON.
If the Executive's employment is terminated by the Company for Cause during the
Employment Period, the Company shall pay the Executive the Annual Base Salary
through the Date of Termination and the amount of any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon), in each case to the extent not yet paid, and the Company shall have no
further obligations under this Agreement, except as specified in Section 6
7
35
below. If the Executive voluntarily terminates employment during the Employment
Period, other than for Good Reason, the Company shall pay the Accrued
Obligations to the Executive in a lump sum in cash within thirty (30) days of
the Date of Termination, and the Company shall have no further obligations under
this Agreement, except as specified in Section 6 below.
SECTION 6. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
for which the Executive may qualify, nor, subject to Section 12(f), shall
anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Vested benefits and other amounts that the Executive
is otherwise entitled to receive under SERP or any other plan, policy, practice
or program of, or any contract or agreement with, the Company or any of its
affiliated companies on or after the Date of Termination shall be payable in
accordance with the terms of each such plan, policy, practice, program, contract
or agreement, as the case may be, except as explicitly modified by this
Agreement.
SECTION 7. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in, and otherwise to perform its obligations under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense, or
other claim, right or action that the Company may have against the Executive or
others. In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as
specifically provided in Section 5(a) with respect to benefits described in
Sections 3(a) and (b), such amounts shall not be reduced, regardless of whether
the Executive obtains other employment.
SECTION 8. NONCOMPETITION PROVISION AND CONFIDENTIAL
INFORMATION.
(a) Without prior written consent of the Company, for the greater of (i)
the twenty-four (24) month period following the Date of Termination, or (ii)
the remaining Employment Period of this Agreement, the Executive shall not, as a
shareholder, officer, director, partner, consultant or otherwise, engage
directly or indirectly in any business or enterprise which is "in competition"
with the Company or its successors or assigns; provided, however, that the
Executive's ownership of less than five (5%) percent of the issued and
outstanding voting securities of a publicly traded company shall not be deemed
to constitute such competition. A business or enterprise is deemed to be "in
competition" if it is engaged in the business of providing medical diagnostic
imaging and radiation therapy services in Ohio.
(b) The Executive shall hold in a fiduciary capacity for the benefit of
the Company all secret or confidential information, knowledge or data relating
to the Company or any of its affiliated companies and their respective
businesses that the Executive obtains during the Executive's employment by the
Company or any of its affiliated companies and that is not public
8
36
knowledge (other than as a result of the Executive's violation of this Section
8) ("Confidential Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the Executive's
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process. In no event shall any
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
SECTION 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue code of 1986, as amended (the "Code") or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of this Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by the Executive (the
"Accounting Firm"), which shall provide detailed supporting calculations both to
the company and the Executive within fifteen (15) business days of the receipt
of notice from the Executive that there has been a Payment, or such earlier time
as is requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive within
five (5) days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the company should have been made ("Underpayment") consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to this Section 9(c), and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
9
37
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim the
Executive shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such
claim:; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority
in respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
the Executive pay such claim and ▇▇▇ for a refund, the Company shall
advance the amount of such payment to the Executive, on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and provided, further,
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is
10
38
limited solely to such contested amount. Furthermore, the Company's
control, of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to this Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of this Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If after the receipt by the
Executive of an amount advanced by the Company pursuant to this Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
SECTION 10. ATTORNEYS' FEES. The Company agrees to pay, as incurred, to the
fullest extent permitted by law, all legal fees and expenses that the Executive
may reasonably incur as a result of any contest (regardless of the outcome) by
the Company, the Executive or others of the validity or enforceability of or
liability under, or otherwise involving, any provision of this Agreement,
together with interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code.
SECTION 11. SUCCESSORS.
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean both the Company as
defined above and any such successor that assumes and agrees to perform this
Agreement, by operation off law or otherwise.
SECTION 12. MISCELLANEOUS.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Ohio, without reference to principles of conflict of
laws. The captions of this
11
39
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇ Health Services Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IF TO THE COMPANY: ▇▇▇▇▇-▇▇▇▇▇▇▇ Health Services Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address as either party furnishes to the other in writing in
accordance with this Section 12(b). Notices and communications shall be
effective when actually received by the addressee.
(c) Subject to the last sentence of this Section 12(c), the invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any
provision of this Agreement shall be held invalid or unenforceable in part, the
remaining portion of such provision, together with all other provisions of this
Agreement, shall remain valid and enforceable and continue in full force and
effect to the fullest extent consistent with law. However, the enforceability of
Section 8(a) shall be dependent upon the validity and enforceability of Section
5.
(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from amounts payable under this Agreement all federal, state, local and
foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 4(c) of this Agreement) shall not
be deemed to be a waiver of such provision or right or of any other provision of
or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes and terminates any other severance and employment agreements between
the Executive and the Company or the Company's affiliates.
(g) The rights and benefits of the Executive under this Agreement may not
be anticipated, assigned, alienated or subject to attachment, garnishment, levy,
execution or other legal or equitable process except as required by law. Any
attempt by the Executive to anticipate,
12
40
alienate, assign, sell, transfer, pledge, encumber or charge the same shall be
void. Payments hereunder shall not be considered assets of the Executive in the
event of insolvency or bankruptcy.
(h) This Agreement may be executed in several counterparts, each of which
shall be deemed an original and said counterparts shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
COMPANY: EXECUTIVE:
▇▇▇▇▇-▇▇▇▇▇▇▇ HEALTH
SERVICES CORP.
BY: /s/ /s/
----------------------------- ---------------------------------
▇▇▇▇ ▇▇▇▇▇▇
13