Form 8-K U S PHYSICAL THERAPY For: Feb 09
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 2016
U.S. PHYSICAL THERAPY, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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1-11151
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76-0364866
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(State or other jurisdiction
of incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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1300 West Sam Houston Parkway South,
Suite 300, Houston, Texas
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77042
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant's telephone number, including area code: (713) 297-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
As described below under Item 5.02, effective February 9, 2016, U. S. Physical Therapy, Inc. (the "Company") entered into amended and restated Employment Agreements individually with the following executive officers: Christopher J. Reading, President and Chief Executive Officer, Lawrance W. McAfee, Executive Vice President and Chief Financial Officer, and Glenn D. McDowell, Chief Operating Officer.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENT OF CERTAIN OFFICERS.
Effective February 9, 2016, the Company entered into amended and restated Employment Agreements (collectively, the "Employment Agreements") individually with the following executive officers: Christopher J. Reading, President and Chief Executive Officer, Lawrance W. McAfee, Executive Vice President and Chief Financial Officer, and Glenn D. McDowell, Chief Operating Officer (hereinafter referred to collectively as "Executive Officers"). The Employment Agreements were executed in order to (i) extend the term of each of the Employment Agreements for an additional two-year period commencing as of January 1, 2016, along with automatic two-year extensions as of the end of each expiring term; (ii) modify the severance and other benefits to which the Executive Officers are entitled in the event of an involuntary termination of employment without cause, a voluntary termination for good reason, or due to death or disability; and (iii) provide for additional benefits in the event of a change in control of the Company.
The salaries of each of Messrs. Reading, McAfee and McDowell remain at current levels of $595,000, $430,000 and $400,000, respectively. Each of the Employment Agreements may be terminated by the Company prior to the expiration of their respective terms for cause or without cause, and due to the death or disability of the Executive Officer, as well as by the Executive Officer for good reason or based a disability. In the event of (A) an involuntary termination by the Company without "cause" (as defined in each of the Employment Agreements) or (B) a voluntary termination by the Executive Officer for "good reason" (as defined in each of the Employment Agreements), the affected Executive Officer is entitled to receive (1) salary continuation for two years, based on his base compensation then in effect, (2) the greater of: (a) the bonus paid or payable to the Executive Officer with respect to the last fiscal year completed prior to such termination, or (b) the average of the bonuses paid to the Executive Officer over the last three fiscal years of employment ending with the last fiscal year prior to such termination, (3) the Executive Officer's accrued but unused vacation days, (4) an immediate acceleration of vesting for all outstanding equity incentive awards, and (5) medical insurance benefits currently in effect for the twenty-four months following such termination. If an Employment Agreement is terminated based on a qualified disability (as described in the Employment Agreements), the terminated Executive Officer is entitled to receive a lump-sum payment equal to two times such Executive Officer's base compensation then in effect, as well as an immediate acceleration of vesting for all outstanding equity incentive awards. If an Employment Agreement is terminated based on the death of an Executive Officer, the Executive Officers' estate (or his heirs) will receive a lump-sum payment equal to such Executive Officers base compensation then in effect, and all outstanding equity incentive awards held by such Executive Officer shall immediately vest. Finally, in the event of a "change in control" (as defined in the Employment Agreements), the Executive Officers, as applicable, will be entitled to (A) a change of control benefit of $500,000 for Mr. Reading and McAfee and $283,333 for Mr. McDowell, and (B) the immediate acceleration of vesting for all outstanding equity incentive awards held by the Executive Officers.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibits Description of Exhibits
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10.1
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Second Amended and Restated Employment Agreement by and between the Company and Christopher J. Reading dated effective February 9, 2016. *
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10.2
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Second Amended and Restated Employment Agreement by and between the Company and Lawrance W. McAfee dated effective February 9, 2016. *
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10.3
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Amended and Restated Employment Agreement by and between the Company and Glenn D. McDowell dated effective February 9, 2016. *
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* Filed herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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U.S. PHYSICAL THERAPY, INC.
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Dated: February 12, 2016
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By:
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/s/ LAWRANCE W. MCAFEE
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Lawrance W. McAfee
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Chief Financial Officer
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(duly authorized officer and principal
financial and accounting officer)
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EXHIBIT 10.1
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is entered into and effective as of the 9th day of February, 2016, by and between U. S. Physical Therapy, Inc. a Nevada corporation ("Employer") and Christopher J. Reading ("Employee"), and supersedes that certain Amended and Restated Employment Agreement between the parties effective May 24, 2007, as amended March 8, 2013. Employer and Employee may be referred to herein collectively as the "Parties" and individually as a "Party." For the purposes of this Agreement, "Employer" includes U.S.P.T. Management, Inc.; for the purposes of Sections 11, 12, and 13 "Employer" shall include all subsidiaries and affiliates (as defined under the Securities Exchange Act of 1934, as amended and regulations promulgated thereunder).
Section 1. Term. Employer hereby continues the employment of Employee and Employee hereby accepts continued employment with Employer for a two-year term (the "Term") commencing as of January 1, 2016. The Term shall automatically renew as of the end of each expiring Term for an additional two-year period. For purposes hereof, the "Term" shall refer to the current Term and any renewal of such Term.
Section 2. Duties of Employee. Employee is engaged to serve as President and Chief Executive Officer of Employer and to perform such duties and responsibilities as are customarily performed by persons acting in such capacity or such other duties as may be assigned by Employer from time to time. Employee shall report to the Employer's Board of Directors and shall perform his duties in accordance with the policies and objectives established by such Board of Directors or its Chairman.
Section 3. Full-Time Employment. Employee shall devote substantially all of his working time and talent to the business of Employer during the term hereof and shall diligently and to the best of his ability perform all duties incident to his employment hereunder, using his best efforts to promote the interests of Employer. Employee agrees that he shall not serve as an officer, director, consultant, or employee of any other person or entity, whether or not for compensation, without the prior consent of the Employer's Board of Directors.
Section 4. Position on the Board of Directors. Employer agrees to use its best efforts to cause Employee to be elected to the Board of Directors of Employer.
Section 5. Base Compensation. Subject to the terms and conditions of this Agreement, as compensation for services rendered and Employee's covenants and agreements under this Agreement, Employer shall pay to Employee a base salary of FIVE HUNDRED NINETY FIVE THOUSAND DOLLARS ($595,000.00) per year (as adjusted from time to time, the "Base Compensation"), payable in accordance with Employer's then-prevailing pay practices. From time to time (but at least once a year) Employer and Employee shall review Employee's performance, and at that time Employer, in its sole discretion, shall determine whether Employee's Base Compensation should be increased. At no time during the Term hereof will Employee's Base Compensation be decreased without the express written consent of Employee.
Section 6. Additional Compensation. Subject to the terms and conditions of this Agreement, in addition to the Base Compensation, Employer may provide incentive compensation in the form of cash bonuses and other incentive awards, including stock option and restricted shares. The amount of any cash bonus and the award of any additional stock options or restricted shares is completely discretionary and will be determined solely by the Board of Directors of Employer or a compensation committee thereof, taking into consideration any factor the Board of Directors or compensation committee deems relevant.
Section 7. Business Expenses. Employer shall reimburse Employee for business expenses directly and reasonably incurred in the performance of his duties.
Section 8. Benefits and Plans. Employee shall be entitled to such fringe benefits, including 20 vacation, 7 sick and personal days, and company holidays per calendar year, as well as insurance (health, disability and life) generally available to the executive officers of Employer, and Employee shall be entitled to participate, subject to all conditions of eligibility, in any employee benefit plans which may be adopted by Employer, including without limitation, qualified retirement plan(s), deferred compensation plans, and salary continuation, disability insurance, hospitalization insurance, major medical insurance, medical reimbursement and life insurance benefit plans. Also, Employer shall continue Employee's monthly salary for a period of up to ninety (90) continuous days during any period of Employee's sickness or disability.
Section 9. Termination. This Agreement shall terminate prior to the expiration of the Term hereof upon the occurrence of any one of the following events:
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(a)
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Disability. In the event that Employee is unable fully to perform his duties and responsibilities hereunder to the full extent required by Employer by reason of illness, injury or incapacity for ninety (90) consecutive days, this Agreement may be terminated by Employee or Employer; provided, however, that Employee shall continue to be compensated as provided in this Agreement during such ninety- (90) day period and until termination under this Section 9, Employee also shall be paid, in a lump sum, a special benefit equal to two (2) year's Base Compensation, and all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents; and, provided further, that Employee will be entitled to receive the benefits, rights and/or payments prescribed under any employee welfare or benefit plan in which Employee was participating at the time of such disability in accordance with the terms and conditions of such plans. In the event of any dispute under this Section 9, Employee shall submit to a physical examination by a licensed physician selected by Employer and reasonably acceptable to Employee.
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(b)
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Death. In the event that Employee dies during the term hereof, Employer shall pay to his executors, legal representatives or administrators an amount equal to one (1) year's Base Compensation, and thereafter Employer shall have no further liability or obligation hereunder to Employee's executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through Employee; provided, however, that all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents, and Employee's heirs, legal representatives or administrators will be entitled to receive the benefits, rights and/or payments prescribed under any employee welfare or benefit plans in which Employee was participating at the time of his death in accordance with the terms and conditions of such plans.
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(c)
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Cause. Nothing in this Agreement shall be construed to prevent its termination by Employer at any time for "cause". For purposes of this Agreement, "cause" shall mean (i) the willful and material failure of Employee to perform or observe (other than by reason of disability as contemplated in paragraph 9(a)) any of the terms or provisions of this Agreement, including the failure of Employee to follow the reasonable written directions of Employer's Board of Directors, (ii) dishonesty or misconduct on the part of Employee that is or is reasonably likely to be damaging or detrimental to the business of Employer, (iii) conviction of a crime involving moral turpitude, (iv) habitual insobriety or failure to perform duties due to abuse of alcohol or drugs, or (v) misappropriation of funds. Prior to terminating this Agreement on account of Employee's failure to perform or observe any of the terms and conditions of this Agreement (but not for any of the other enumerated "causes" stated in (ii) through (v) above), Employer shall give Employee thirty (30) days written notice and an opportunity to cure such failure to the satisfaction of Employer. Upon termination for cause, Employer shall pay to Employee all sums due to Employee through the date of such termination. Following such a termination, Employer shall have no further duty or obligation to Employee; provided, however, that Employee shall continue to be bound by Sections 11 through 17.
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(d)
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Voluntary Resignation by Employee not for good reason. Upon a voluntary resignation by Employee not "for good reason" as defined in Section 10 F. herein, Employer shall pay to Employee all sums due to Employee through the date of such termination. Following such a termination, Employer shall have no further duty or obligation to Employee; provided, however, that Employee shall continue to be bound by Sections 11 through 17.
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Section 10. Special Benefits.
A. Special Benefit in the Event of a Change in Control. Employee shall be entitled to a Change of Control benefit of $500,000 in the event of a "Change in Control", defined as:
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(a)
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The transfer or sale by Employer of all or substantially all of the assets of Employer whether or not this Agreement is assigned or transferred as a part of such sale;
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(b)
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The transfer or sale of more than fifty percent (50%) of the outstanding shares of Common Stock of Employer;
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(c)
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A merger or consolidation involving Employer in a transaction in which the shareholders of Employer immediately prior to the merger or consolidation own less than fifty percent (50%) of the company surviving the merger or consolidation; or
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(d)
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A merger or consolidation involving Employer in a transaction in which the board members of Employer after the merger or consolidation constitute less than fifty percent (50%) of the board of the company surviving the merger or consolidation; or
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(e)
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The voluntary or involuntary dissolution of Employer.
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In addition, in the event of a Change in Control, all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents.
B. Special Benefit in the Event of Termination Without Cause or Resignation for Good Cause.
In the event of the termination of employment of Employee by Employer without "cause" as cause is defined in Section 9(c) hereof, or the resignation of employment by Employee "for good reason" as defined in Section 10 F. hereof (in either case, a "Termination Event"), Employee shall be entitled to the following special benefits:
(i) Two (2) year's Base Compensation; and
(ii) The greater of (i) the bonus paid or payable to Employee with respect to last fiscal year of Employer completed prior to the occurrence of the Termination Event or (ii) the average of the bonuses paid to Employee over the three (3) fiscal years of Employer ending with last fiscal year of Employer completed prior to the occurrence of the Termination Event; and
(iii) Employee's accrued but unused vacation days; and
(iv) All Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents.
The aggregate dollar amount of the special benefits described in subsections (i) and (ii) above shall be aggregated and paid ratably on a bi-weekly basis over the 24 month period following the Termination Event. If a Change in Control has occurred prior to a Termination Event, Employee shall also be entitled to the special benefits under this Section 10 B.
C. Employee's accrued but unused vacation days shall be paid to Employee within thirty (30) days of the actual date of the termination of Employee's employment.
D. In the event Employee's employment is terminated (whether by Employer or Employee) as a result of a Termination Event, Employee shall be entitled to such medical insurance benefits as he enjoyed prior to his termination for the twenty-four months following such termination of employment and at the same cost to Employee of such benefits as in effect prior to such termination.
E. Employee shall be entitled to the Change in Control benefit specified in Section 10 A. only if he remains an employee of Employer to the date of consummation of the Change in Control, unless Employee is terminated within six (6) months prior to such date pursuant to a Termination Event or as the result of disability or death as provided in Sections 9(a) and 9(b). Should any special benefits provided in this Section 10 become payable, the covenants contained in Sections 11 through 17 hereof shall continue to apply, and should Employee violate the terms of such covenants, in addition to any legal or equitable remedies, Employer may cease payment of the benefits and terminate any and all future payments otherwise called for under this Section 10.
F. For purposes of this Agreement, "for good reason" means the occurrence of any one or more of the following: (i) removal or other termination of Employee as the President and/or Chief Executive of Employer, without Employee's express written consent; (ii) a reduction of Employee's duties, authority or responsibilities or the assignment to Employee of such reduced duties, authority or responsibilities, in either case without Employee's express written consent, (iii) a reduction by Employer in Employee's Base Compensation without Employee's express written consent; or (iv) the relocation of Employee to a facility or a location more than 30 miles from Employee's then present office location without Employee's express written consent.
Section 11. Non-Competition. At all times that Employee remains employed by the Employer and for a two- (2) year period following the termination of his employment under this Agreement for any reason, Employee shall not, directly or indirectly, for himself or on behalf of any other person or entity as an employee, employer, consultant, agent, lender, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, (i) invest, engage in, or permit his name to be used in connection with any business that is in competition with Employer, (ii) accept employment with or render services to a competitor of Employer, as a director, officer, agent partner, employee or consultant, or (iii) solicit or accept from any of the customers of Employer or from any person or entity whose business Employer is soliciting, any business of the type which Employer is engaged in or in which Employer is actively preparing to so engage, in each case described in clauses (i), (ii) or (iii), within the Territory. Employee shall be prohibited from engaging in the activities described above within, or with respect to any business in competition with the Employer located within, fifty (50) miles of any of Employer's rehabilitation clinic locations (the "Territory").
Notwithstanding the foregoing, Employee may own the voting common stock of any publicly held corporation so long as it does not exceed more than five percent (5%) of the outstanding stock thereof.
Section 12. Non-Solicitation. For a two (2) year period following the termination of the employment of the Employee under this Agreement for any reason, Employee agrees not to, directly or indirectly, for himself or on behalf of any other person or entity (a) solicit or induce, or attempt to solicit or induce, any person employed by, or any agent of, Employer, to terminate employee's or agent's relationship with Employer, nor (b) call on, solicit or divert, or attempt to call on, solicit or divert any person, firm, corporation or other entity who was or had been a customer or a patient referral source (including, without limitation, any physician) of Employer who referred ten or more customers or patients to Employer, who is a customer or a patient referral source of Employer who has referred ten or more customers or patients to Employer, or who is a prospective customer or a patient referral source of Employer with whom Employee had contact as an employee of Employer and who, within six months of such solicitation, Employer was or is actively recruiting as a customer or patient referral source.
Section 13. Confidential Information. Employee will not, during or after the termination of this Agreement, disclose any trade secrets, financial and accounting information, customer lists, customer mailing lists, prospective customer lists, lists of referral sources or prospective referral sources, or pricing, marketing or advertising plans or methods used by Employer (the "Confidential Information") to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall Employee make use of the Confidential Information for his own purposes or for the benefit of any person, firm, corporation or other entity (except Employer) under any circumstances during or after the termination of this Agreement. On demand of Employer, at any time, Employee shall immediately deliver all printed or written Confidential Information to Employer. To the extent that Employee's property does not contain Confidential Information, Employee may remove all of Employee's property (such as computer software and tapes) upon termination of this Agreement. Confidential Information does not include information that (i) currently is generally available to or known by the public or hereafter becomes generally available to or known by the public through no fault of Employee, (ii) was already in the possession of Employee on the date of inception of Employee's employment by Employer, or (iii) is obtained by Employee from a third party who is under no obligation of confidence to Employer.
Section 14. Reasonableness of Restrictions. Employee agrees that (a) the covenants contained in Sections 11, 12 and 13 hereof are necessary for the protection of Employer's business goodwill and trade secrets, (b) a portion of the compensation paid to Employee under this Agreement is paid in consideration of the covenants herein contained, the sufficiency of which consideration is hereby acknowledged, and if the scope of any restriction contained in Sections 11, 12 and 13 is too broad to permit enforcement of such restriction to its full extent, then such restriction shall be enforced to the maximum permitted by law, and the parties hereby consent that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction.
Section 15. Enforcement. Employee acknowledges Employee's employment with Employer is special and unique in character and that Employee will acquire special skill and training and gain special knowledge during Employee's employment with Employer, that the restrictions contained in Sections 11, 12 and 13 hereof are reasonable and necessary to protect the legitimate interests of Employer and its affiliates, that Employer would not have entered into this Agreement in the absence of such restrictions, and that any violation of any provision of those Sections will result in irreparable injury to Employer. Employee also acknowledges that Employer shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages as well as an equitable accounting of all earnings, profits and other benefits arising from any such violation, which rights shall be cumulative and in addition to any other rights or remedies to which Employer may be entitled. The existence of any claim or cause of action of Employee against Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Employer of these covenants, except for Employer's breach of this Agreement relating to its payment obligations to Employee after the termination of Employee's employment under the terms of this Agreement.
Section 16. Copy of Covenants. Until the expiration of the applicable restrictions, Employee will provide, and Employer similarly may provide, a copy of the covenants contained in Sections 11, 12 and 13 of this Agreement to any business or enterprise which Employee may (i) directly or indirectly own, manage, operate, finance, join, control or participate in the ownership, management operation, financing, or control of, (ii) serve as an officer, director, employee, partner, principal, agent, representative, consultant, lender or otherwise, or (iii) with which he may use or permit his name to be used.
Section 17. Special Definition of Employer. For the purposes of Sections 11 through 16 above, the definition of Employer shall include any subsidiary or affiliate of Employer, including all affiliated physical therapy partnerships of Employer.
Section 18. Notices. Any notices to be given hereunder by either Party to the other may be effected in writing either by personal delivery, via facsimile or by mail, registered or certified, postage prepaid with return receipt requested:
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If to Employer:
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U.S. Physical Therapy, Inc.
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1300 West Sam Houston Parkway South
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Suite 300
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Houston, Texas 77042
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Attention: Chairman of the Board
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If to Employee:
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Christopher J. Reading
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22115 Terrace Gate Lane
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Houston, Texas 77450
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Mailed notices shall be addressed to the Parties at the addresses set forth above, but each Party may change the address by written notice in accordance with this Section 18. Notices delivered personally or by facsimile shall be deemed communicated upon actual receipt. Mailed notices shall be deemed communicated three (3) days after mailing.
Section 19. Entire Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Employee by Employer, and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever.
Section 20. Headings. The headings or titles to sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the heading or title of any section.
Section 21. Amendment or Modification; Waiver. No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver is authorized by Employer and is agreed to in writing, signed by Employee and by an officer of Employer (other than Employee) thereunto duly authorized. Except as otherwise specifically provided in this Agreement, no waiver by any Party hereto of any breach by any other Party hereto of any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar provision or condition at the same or at any prior or subsequent time nor shall the receipt or acceptance of Employee's employment be deemed a waiver of any condition or provision hereof.
Section 22. Assignability. Employee shall not assign, pledge or encumber any interest in this Agreement or any part thereof without the express written consent of Employer, this Agreement being personal to Employee. This Agreement shall, however, inure to the benefit of Employee's estate, dependents, beneficiaries and legal representatives. This Agreement shall not be assignable by Employer without the written consent of Employee which will not be unreasonably withheld. Subject to the terms of this Agreement, Employer may merge or consolidate with or into, or transfer substantially all of its assets to, another corporation or other form of business organization without Employee's consent, and as a result of such merger, consolidation or transfer, this Agreement shall bind the successor of Employer resulting from such merger, consolidation or transfer. No such merger, consolidation or transfer, however, shall relieve the Parties from liability and responsibility for the performance of their respective duties and obligations hereunder.
Section 23. Governing Law. This Agreement shall be interpreted, construed and governed by and in accordance with the internal substantive law of the State of Texas.
Section 24. Severability. Each provision of this Agreement constitutes a separate and distinct undertaking, covenant and/or provision hereof. In the event that any provision of this Agreement shall finally be determined to be unlawful, such provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect, and in substitution for any such provision held unlawful, there shall be substituted a provision of similar import reflecting the original intent of the Parties hereto to the extent permissible under law.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day first written above.
EMPLOYER:
U.S. PHYSICAL THERAPY, INC.
/s/ Jerald L. Pullins
By: Jerald L. Pullins
Chairman of the Board of Directors
EMPLOYEE:
/s/ Christopher J. Reading
CHRISTOPHER J. READING
EXHIBIT 10.2
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is entered into and effective as of the 9th day of February, 2016, by and between U. S. Physical Therapy, Inc. a Nevada corporation ("Employer") and Lawrance W. McAfee ("Employee"), and supersedes that certain Amended and Restated Employment Agreement between the parties effective May 24, 2007. Employer and Employee may be referred to herein collectively as the "Parties" and individually as a "Party." For the purposes of this Agreement, "Employer" includes U.S.P.T. Management, Inc.; for the purposes of Sections 11, 12, and 13 "Employer" shall include all subsidiaries and affiliates (as defined under the Securities Exchange Act of 1934, as amended and regulations promulgated thereunder).
Section 1. Term. Employer hereby continues the employment of Employee and Employee hereby accepts continued employment with Employer for a two-year term (the "Term") commencing as of January 1, 2016. The Term shall automatically renew as of the end of each expiring Term for an additional two-year period. For purposes hereof, the "Term" shall refer to the current Term and any renewal of such Term.
Section 2. Duties of Employee. Employee is engaged to serve as Executive Vice President and Chief Financial Officer of Employer and to perform such duties and responsibilities as are customarily performed by persons acting in such capacity or such other duties as may be assigned by Employer from time to time. Employee shall report to the Employer's President and Chief Executive Officer and Board of Directors and shall perform his duties in accordance with the policies and objectives established by Employer.
Section 3. Full-Time Employment. Employee shall devote substantially all of his working time and talent to the business of Employer during the term hereof and shall diligently and to the best of his ability perform all duties incident to his employment hereunder, using his best efforts to promote the interests of Employer. Employee agrees that he shall not serve as an officer, director, consultant, or employee of any other person or entity, whether or not for compensation, without the prior consent of the Employer's Board of Directors.
Section 4. Position on the Board of Directors. Employer agrees to use its best efforts to cause Employee to be elected to the Board of Directors of Employer.
Section 5. Base Compensation. Subject to the terms and conditions of this Agreement, as compensation for services rendered and Employee's covenants and agreements under this Agreement, Employer shall pay to Employee a base salary of FOUR HUNDRED THIRTY THOUSAND AND NO/100THS DOLLARS ($430,000.00) per year (as adjusted from time to time, the "Base Compensation"), payable in accordance with Employer's then-prevailing pay practices. From time to time (but at least once a year) Employer and Employee shall review Employee's performance, and at that time Employer, in its sole discretion, shall determine whether Employee's Base Compensation should be increased. At no time during the Term hereof will Employee's Base Compensation be decreased without the express written consent of Employee.
Section 6. Additional Compensation. Subject to the terms and conditions of this Agreement, in addition to the Base Compensation, Employer may provide incentive compensation in the form of cash bonuses and other incentive awards, including stock option and restricted shares. The amount of any cash bonus and the award of any additional stock options or restricted shares is completely discretionary and will be determined solely by the Board of Directors of Employer or a compensation committee thereof, taking into consideration any factor the Board of Directors or compensation committee deems relevant.
Section 7. Business Expenses. Employer shall reimburse Employee for business expenses directly and reasonably incurred in the performance of his duties.
Section 8. Benefits and Plans. Employee shall be entitled to such fringe benefits, including 20 vacation, 7 sick and personal days, and company holidays per calendar year, as well as insurance (health, disability and life) generally available to the executive officers of Employer, and Employee shall be entitled to participate, subject to all conditions of eligibility, in any employee benefit plans which may be adopted by Employer, including without limitation, qualified retirement plan(s), deferred compensation plans, and salary continuation, disability insurance, hospitalization insurance, major medical insurance, medical reimbursement and life insurance benefit plans. Also, Employer shall continue Employee's monthly salary for a period of up to ninety (90) continuous days during any period of Employee's sickness or disability.
Section 9. Termination. This Agreement shall terminate prior to the expiration of the Term hereof upon the occurrence of any one of the following events:
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(a)
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Disability. In the event that Employee is unable fully to perform his duties and responsibilities hereunder to the full extent required by Employer by reason of illness, injury or incapacity for ninety (90) consecutive days, this Agreement may be terminated by Employee or Employer; provided, however, that Employee shall continue to be compensated as provided in this Agreement during such ninety- (90) day period and until termination under this Section 9, Employee also shall be paid, in a lump sum, a special benefit equal to two (2) year's Base Compensation, and all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents; and, provided further, that Employee will be entitled to receive the benefits, rights and/or payments prescribed under any employee welfare or benefit plan in which Employee was participating at the time of such disability in accordance with the terms and conditions of such plans. In the event of any dispute under this Section 9, Employee shall submit to a physical examination by a licensed physician selected by Employer and reasonably acceptable to Employee.
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(b)
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Death. In the event that Employee dies during the term hereof, Employer shall pay to his executors, legal representatives or administrators an amount equal to one (1) year's Base Compensation, and thereafter Employer shall have no further liability or obligation hereunder to Employee's executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through Employee; provided, however, that all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents, and Employee's heirs, legal representatives or administrators will be entitled to receive the benefits, rights and/or payments prescribed under any employee welfare or benefit plans in which Employee was participating at the time of his death in accordance with the terms and conditions of such plans.
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(c)
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Cause. Nothing in this Agreement shall be construed to prevent its termination by Employer at any time for "cause". For purposes of this Agreement, "cause" shall mean (i) the willful and material failure of Employee to perform or observe (other than by reason of disability as contemplated in paragraph 9(a)) any of the terms or provisions of this Agreement, including the failure of Employee to follow the reasonable written directions of Employer's President and Chief Executive Officer or Board of Directors, (ii) dishonesty or misconduct on the part of Employee that is or is reasonably likely to be damaging or detrimental to the business of Employer, (iii) conviction of a crime involving moral turpitude, (iv) habitual insobriety or failure to perform duties due to abuse of alcohol or drugs, or (v) misappropriation of funds. Prior to terminating this Agreement on account of Employee's failure to perform or observe any of the terms and conditions of this Agreement (but not for any of the other enumerated "causes" stated in (ii) through (v) above), Employer shall give Employee thirty (30) days written notice and an opportunity to cure such failure to the satisfaction of Employer. Upon termination for cause, Employer shall pay to Employee all sums due to Employee through the date of such termination. Following such a termination, Employer shall have no further duty or obligation to Employee; provided, however, that Employee shall continue to be bound by Sections 11 through 17.
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(d)
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Voluntary Resignation by Employee not for good reason. Upon a voluntary resignation by Employee not "for good reason" as defined in Section 10 F. herein, Employer shall pay to Employee all sums due to Employee through the date of such termination. Following such a termination, Employer shall have no further duty or obligation to Employee; provided, however, that Employee shall continue to be bound by Sections 11 through 17.
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Section 10. Special Benefits.
A. Special Benefit in the Event of a Change in Control. Employee shall be entitled to a Change of Control benefit of $500,000 in the event of a "Change in Control", defined as:
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(a)
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The transfer or sale by Employer of all or substantially all of the assets of Employer whether or not this Agreement is assigned or transferred as a part of such sale;
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(b)
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The transfer or sale of more than fifty percent (50%) of the outstanding shares of Common Stock of Employer;
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(c)
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A merger or consolidation involving Employer in a transaction in which the shareholders of Employer immediately prior to the merger or consolidation own less than fifty percent (50%) of the company surviving the merger or consolidation; or
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(d)
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A merger or consolidation involving Employer in a transaction in which the board members of Employer after the merger or consolidation constitute less than fifty percent (50%) of the board of the company surviving the merger or consolidation; or
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(e)
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The voluntary or involuntary dissolution of Employer.
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In addition, in the event of a Change in Control, all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents.
B. Special Benefit in the Event of Termination Without Cause or Resignation for Good Cause.
In the event of the termination of employment of Employee by Employer without "cause" as cause is defined in Section 9(c) hereof, or the resignation of employment by Employee "for good reason" as defined in Section 10 F. hereof (in either case, a "Termination Event"), Employee shall be entitled to the following special benefits:
(i) Two (2) year's Base Compensation; and
(ii) The greater of (i) the bonus paid or payable to Employee with respect to last fiscal year of Employer completed prior to the occurrence of the Termination Event or (ii) the average of the bonuses paid to Employee over the three (3) fiscal years of Employer ending with last fiscal year of Employer completed prior to the occurrence of the Termination Event; and
(iii) Employee's accrued but unused vacation days; and
(iv) All Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents.
The aggregate dollar amount of the special benefits described in subsections (i) and (ii) above shall be aggregated and paid ratably on a bi-weekly basis over the 24 month period following the Termination Event. If a Change in Control has occurred prior to a Termination Event, Employee shall also be entitled to the special benefits under this Section 10 B.
C. Employee's accrued but unused vacation days shall be paid to Employee within thirty (30) days of the actual date of the termination of Employee's employment.
D. In the event Employee's employment is terminated (whether by Employer or Employee) as a result of a Termination Event, Employee shall be entitled to such medical insurance benefits as he enjoyed prior to his termination for the twenty-four months following such termination of employment and at the same cost to Employee of such benefits as in effect prior to such termination.
E. Employee shall be entitled to the Change in Control benefit specified in Section 10 A. only if he remains an employee of Employer to the date of consummation of the Change in Control, unless Employee is terminated within six (6) months prior to such date pursuant to a Termination Event or as the result of disability or death as provided in Sections 9(a) and 9(b). Should any special benefits provided in this Section 10 become payable, the covenants contained in Sections 11 through 17 hereof shall continue to apply, and should Employee violate the terms of such covenants, in addition to any legal or equitable remedies, Employer may cease payment of the benefits and terminate any and all future payments otherwise called for under this Section 10.
F. For purposes of this Agreement, "for good reason" means the occurrence of any one or more of the following: (i) removal or other termination of Employee as the Executive Vice President and Chief Financial Officer of Employer, without Employee's express written consent; (ii) a reduction of Employee's duties, authority or responsibilities or the assignment to Employee of such reduced duties, authority or responsibilities, in either case without Employee's express written consent, (iii) a reduction by Employer in Employee's Base Compensation without Employee's express written consent; or (iv) the relocation of Employee to a facility or a location more than 30 miles from Employee's then present office location without Employee's express written consent.
Section 11. Non-Competition. At all times that Employee remains employed by the Employer and for a two- (2) year period following the termination of his employment under this Agreement for any reason, Employee shall not, directly or indirectly, for himself or on behalf of any other person or entity as an employee, employer, consultant, agent, lender, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, (i) invest, engage in, or permit his name to be used in connection with any business that is in competition with Employer, (ii) accept employment with or render services to a competitor of Employer, as a director, officer, agent partner, employee or consultant, or (iii) solicit or accept from any of the customers of Employer or from any person or entity whose business Employer is soliciting, any business of the type which Employer is engaged in or in which Employer is actively preparing to so engage, in each case described in clauses (i), (ii) or (iii), within the Territory. Employee shall be prohibited from engaging in the activities described above within, or with respect to any business in competition with the Employer located within, fifty (50) miles of any of Employer's rehabilitation clinic locations (the "Territory").
Notwithstanding the foregoing, Employee may own the voting common stock of any publicly held corporation so long as it does not exceed more than five percent (5%) of the outstanding stock thereof.
Section 12. Non-Solicitation. For a two (2) year period following the termination of the employment of the Employee under this Agreement for any reason, Employee agrees not to, directly or indirectly, for himself or on behalf of any other person or entity (a) solicit or induce, or attempt to solicit or induce, any person employed by, or any agent of, Employer, to terminate employee's or agent's relationship with Employer, nor (b) call on, solicit or divert, or attempt to call on, solicit or divert any person, firm, corporation or other entity who was or had been a customer or a patient referral source (including, without limitation, any physician) of Employer who referred ten or more customers or patients to Employer, who is a customer or a patient referral source of Employer who has referred ten or more customers or patients to Employer, or who is a prospective customer or a patient referral source of Employer with whom Employee had contact as an employee of Employer and who, within six months of such solicitation, Employer was or is actively recruiting as a customer or patient referral source.
Section 13. Confidential Information. Employee will not, during or after the termination of this Agreement, disclose any trade secrets, financial and accounting information, customer lists, customer mailing lists, prospective customer lists, lists of referral sources or prospective referral sources, or pricing, marketing or advertising plans or methods used by Employer (the "Confidential Information") to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall Employee make use of the Confidential Information for his own purposes or for the benefit of any person, firm, corporation or other entity (except Employer) under any circumstances during or after the termination of this Agreement. On demand of Employer, at any time, Employee shall immediately deliver all printed or written Confidential Information to Employer. To the extent that Employee's property does not contain Confidential Information, Employee may remove all of Employee's property (such as computer software and tapes) upon termination of this Agreement. Confidential Information does not include information that (i) currently is generally available to or known by the public or hereafter becomes generally available to or known by the public through no fault of Employee, (ii) was already in the possession of Employee on the date of inception of Employee's employment by Employer, or (iii) is obtained by Employee from a third party who is under no obligation of confidence to Employer.
Section 14. Reasonableness of Restrictions. Employee agrees that (a) the covenants contained in Sections 11, 12 and 13 hereof are necessary for the protection of Employer's business goodwill and trade secrets, (b) a portion of the compensation paid to Employee under this Agreement is paid in consideration of the covenants herein contained, the sufficiency of which consideration is hereby acknowledged, and if the scope of any restriction contained in Sections 11, 12 and 13 is too broad to permit enforcement of such restriction to its full extent, then such restriction shall be enforced to the maximum permitted by law, and the parties hereby consent that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction.
Section 15. Enforcement. Employee acknowledges Employee's employment with Employer is special and unique in character and that Employee will acquire special skill and training and gain special knowledge during Employee's employment with Employer, that the restrictions contained in Sections 11, 12 and 13 hereof are reasonable and necessary to protect the legitimate interests of Employer and its affiliates, that Employer would not have entered into this Agreement in the absence of such restrictions, and that any violation of any provision of those Sections will result in irreparable injury to Employer. Employee also acknowledges that Employer shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages as well as an equitable accounting of all earnings, profits and other benefits arising from any such violation, which rights shall be cumulative and in addition to any other rights or remedies to which Employer may be entitled. The existence of any claim or cause of action of Employee against Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Employer of these covenants, except for Employer's breach of this Agreement relating to its payment obligations to Employee after the termination of Employee's employment under the terms of this Agreement.
Section 16. Copy of Covenants. Until the expiration of the applicable restrictions, Employee will provide, and Employer similarly may provide, a copy of the covenants contained in Sections 11, 12 and 13 of this Agreement to any business or enterprise which Employee may (i) directly or indirectly own, manage, operate, finance, join, control or participate in the ownership, management operation, financing, or control of, (ii) serve as an officer, director, employee, partner, principal, agent, representative, consultant, lender or otherwise, or (iii) with which he may use or permit his name to be used.
Section 17. Special Definition of Employer. For the purposes of Sections 11 through 16 above, the definition of Employer shall include any subsidiary or affiliate of Employer, including all affiliated physical therapy partnerships of Employer.
Section 18. Notices. Any notices to be given hereunder by either Party to the other may be effected in writing either by personal delivery, via facsimile or by mail, registered or certified, postage prepaid with return receipt requested:
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If to Employer:
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U.S. Physical Therapy, Inc.
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1300 West Sam Houston Parkway South
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Suite 300
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Houston, Texas 77042
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Attention: Chairman of the Board
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If to Employee:
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Lawrance W. McAfee
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221 Bryn Mawr Circle
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Houston, Texas 77024
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Mailed notices shall be addressed to the Parties at the addresses set forth above, but each Party may change the address by written notice in accordance with this Section 18. Notices delivered personally or by facsimile shall be deemed communicated upon actual receipt. Mailed notices shall be deemed communicated three (3) days after mailing.
Section 19. Entire Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Employee by Employer, and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever.
Section 20. Headings. The headings or titles to sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the heading or title of any section.
Section 21. Amendment or Modification; Waiver. No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver is authorized by Employer and is agreed to in writing, signed by Employee and by an officer of Employer (other than Employee) thereunto duly authorized. Except as otherwise specifically provided in this Agreement, no waiver by any Party hereto of any breach by any other Party hereto of any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar provision or condition at the same or at any prior or subsequent time nor shall the receipt or acceptance of Employee's employment be deemed a waiver of any condition or provision hereof.
Section 22. Assignability. Employee shall not assign, pledge or encumber any interest in this Agreement or any part thereof without the express written consent of Employer, this Agreement being personal to Employee. This Agreement shall, however, inure to the benefit of Employee's estate, dependents, beneficiaries and legal representatives. This Agreement shall not be assignable by Employer without the written consent of Employee which will not be unreasonably withheld. Subject to the terms of this Agreement, Employer may merge or consolidate with or into, or transfer substantially all of its assets to, another corporation or other form of business organization without Employee's consent, and as a result of such merger, consolidation or transfer, this Agreement shall bind the successor of Employer resulting from such merger, consolidation or transfer. No such merger, consolidation or transfer, however, shall relieve the Parties from liability and responsibility for the performance of their respective duties and obligations hereunder.
Section 23. Governing Law. This Agreement shall be interpreted, construed and governed by and in accordance with the internal substantive law of the State of Texas.
Section 24. Severability. Each provision of this Agreement constitutes a separate and distinct undertaking, covenant and/or provision hereof. In the event that any provision of this Agreement shall finally be determined to be unlawful, such provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect, and in substitution for any such provision held unlawful, there shall be substituted a provision of similar import reflecting the original intent of the Parties hereto to the extent permissible under law.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day first written above.
EMPLOYER:
U.S. PHYSICAL THERAPY, INC.:
/s/ Jerald L. Pullins
By: Jerald L. Pullins
Chairman of the Board of Directors
EMPLOYEE:
/s/ Lawrance W. McAfee
LAWRANCE W. MCAFEE
EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is entered into and effective as of the 9th day of February, 2016, by and between U. S. Physical Therapy, Inc. a Nevada corporation ("Employer"), and Glenn D. McDowell ("Employee"), and supersedes that certain Employment Agreement between the parties effective May 24, 2007, as amended March 8, 2013. Employer and Employee may be referred to herein collectively as the "Parties" and individually as a "Party." For the purposes of this Agreement, "Employer" includes U.S.P.T. Management, Inc.; for the purposes of Sections 10, 11, and 12 "Employer" shall include all subsidiaries and affiliates (as defined under the Securities Exchange Act of 1934, as amended and regulations promulgated thereunder)
Section 1. Term. Employer hereby continues the employment of Employee and Employee hereby accepts continued employment with Employer for a two-year term (the "Term") commencing as of January 1, 2016. The Term shall automatically renew as of the end of each expiring Term for an additional two-year period. For purposes hereof, the "Term" shall refer to the current Term and any renewal of such Term.
Section 2. Duties of Employee. Employee is engaged to serve as Chief Operating Officer of Employer and to perform such duties and responsibilities as are customarily performed by persons acting in such capacity or such other duties as may be assigned by Employer from time to time. Employee shall report to the Employer's President and Chief Executive Officer and shall perform his duties in accordance with the policies and objectives established by Employer.
Section 3. Full-Time Employment. Employee shall devote substantially all of his working time and talent to the business of Employer during the term hereof and shall diligently and to the best of his ability perform all duties incident to his employment hereunder, using his best efforts to promote the interests of Employer. Employee agrees that he shall not serve as an officer, director, consultant, or employee of any other person or entity, whether or not for compensation, without the prior consent of the Employer's Board of Directors.
Section 4. Base Compensation. Subject to the terms and conditions of this Agreement, as compensation for services rendered and Employee's covenants and agreements under this Agreement, Employer shall pay to Employee a base salary of FOUR HUNDRED THOUSAND AND NO/100THS DOLLARS ($400,000.00) per year (as adjusted from time to time, the "Base Compensation"), payable in accordance with Employer's then-prevailing pay practices. From time to time (but at least once a year) Employer and Employee shall review Employee's performance, and at that time Employer, in its sole discretion, shall determine whether Employee's Base Compensation should be increased. At no time during the Term hereof will Employee's Base Compensation be decreased, without the express written consent of Employee.
Section 5. Additional Compensation. Subject to the terms and conditions of this Agreement, in addition to the Base Compensation, Employer may provide incentive compensation in the form of cash bonuses and other incentive awards, including stock options and restricted shares. The amount of any cash bonus and the award of any additional stock options or restricted shares is completely discretionary and will be determined solely by the Board of Directors of Employer or a compensation committee thereof, taking into consideration any factor the Board of Directors or compensation committee deems relevant.
Section 6. Business Expenses. Employer shall reimburse Employee for business expenses directly and reasonably incurred in the performance of his duties.
Section 7. Benefits and Plans. Employee shall be entitled to fringe benefits, including vacation days, sick and personal days and company holidays pursuant to the Employer's paid time off plan as per the Employer's employee handbook, and insurance (health, disability and life), and Employee shall be entitled to participate, subject to all conditions of eligibility, in any employee benefit plans which may be adopted by Employer, including without limitation, qualified retirement plan(s), deferred compensation plans, and salary continuation, disability insurance, hospitalization insurance, major medical insurance, medical reimbursement and life insurance benefit plans. Also, Employer shall continue Employee's monthly salary for a period of up to ninety (90) continuous days during any period of Employee's sickness or disability.
Section 8. Termination. This Agreement shall terminate prior to the expiration of the Term hereof upon the occurrence of any one of the following events:
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(a)
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Disability. In the event that Employee is unable fully to perform his duties and responsibilities hereunder to the full extent required by Employer by reason of illness, injury or incapacity for ninety (90) consecutive days, this Agreement may be terminated by Employee or Employer; provided, however, that Employee shall continue to be compensated as provided in this Agreement during such ninety- (90) day period and until termination under this Section 8 and Employee also shall be paid, in a lump sum, a special benefit equal to two (2) year's Base Compensation, and all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents; and, provided further, that Employee will be entitled to receive the benefits, rights and/or payments prescribed under any employee welfare or benefit plan in which Employee was participating at the time of such disability in accordance with the terms and conditions of such plans. In the event of any dispute under this Section 8, Employee shall submit to a physical examination by a licensed physician selected by Employer and reasonably acceptable to Employee.
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(b)
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Death. In the event that Employee dies during the term hereof, Employer shall pay to his executors, legal representatives or administrators an amount equal to one (1) year's Base Compensation, and thereafter Employer shall have no further liability or obligation hereunder to Employee's executors, legal representatives, administrators, heirs or assigns or any other person claiming under or through Employee; provided, however, that all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents, and Employee's heirs, legal representatives or administrators will be entitled to receive the benefits, rights and/or payments prescribed under any employee welfare or benefit plans in which Employee was participating at the time of his death in accordance with the terms and conditions of such plans.
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(c)
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Cause. Nothing in this Agreement shall be construed to prevent its termination by Employer at any time for "cause". For purposes of this Agreement, "cause" shall mean (i) the willful and material failure of Employee to perform or observe (other than by reason of disability as contemplated in paragraph 9(a)) any of the terms or provisions of this Agreement, including the failure of Employee to follow the reasonable written directions of Employer's President and Chief Executive Officer or Board of Directors, (ii) dishonesty or misconduct on the part of Employee that is or is reasonably likely to be damaging or detrimental to the business of Employer, (iii) conviction of a crime involving moral turpitude, (iv) habitual insobriety or failure to perform duties due to abuse of alcohol or drugs, or (v) misappropriation of funds. Prior to terminating this Agreement on account of Employee's failure to perform or observe any of the terms and conditions of this Agreement (but not for any of the other enumerated "causes" stated in (ii) through (v) above), Employer shall give Employee thirty (30) days written notice and an opportunity to cure such failure to the satisfaction of Employer. Upon termination for cause, Employer shall pay to Employee all sums due to Employee through the date of such termination. Following such a termination, Employer shall have no further duty or obligation to Employee; provided, however, that Employee shall continue to be bound by Sections 10 through 16.
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(d)
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Voluntary Resignation by Employee not for good reason. Upon a voluntary resignation by Employee not "for good reason" as defined in Section 9 F. herein, Employer shall pay to Employee all sums due to Employee through the date of such termination. Following such a termination, Employer shall have no further duty or obligation to Employee; provided, however, that Employee shall continue to be bound by Sections 10 through 16.
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Section 9. Special Benefits.
A. Special Benefit in the Event of a Change in Control. Employee shall be entitled to a Change of Control benefit of $283,333 in the event of a "Change in Control", defined as:
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(a)
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The transfer or sale by Employer of all or substantially all of the assets of Employer whether or not this Agreement is assigned or transferred as a part of such sale;
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(b)
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The transfer or sale of more than fifty percent (50%) of the outstanding shares of Common Stock of Employer;
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(c)
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A merger or consolidation involving Employer in a transaction in which the shareholders of Employer immediately prior to the merger or consolidation own less than fifty percent (50%) of the company surviving the merger or consolidation; or
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(d)
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A merger or consolidation involving Employer in a transaction in which the board members of Employer after the merger or consolidation constitute less than fifty percent (50%) of the board of the company surviving the merger or consolidation; or
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(e)
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The voluntary or involuntary dissolution of Employer.
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B. In addition, in the event of a Change in Control, all Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents. Special Benefit in the Event of Termination Without Cause or Resignation for Good Cause.
In the event of the termination of employment of Employee by Employer without "cause" as cause is defined in Section 8(c) hereof, or the resignation of employment by Employee "for good reason" as defined in Section 9 F. hereof (in either case, a "Termination Event"), Employee shall be entitled to the following special benefits:
(i) Two (2) years' Base Compensation; and
(ii) The greater of (i) the bonus paid or payable to Employee with respect to last fiscal year of Employer completed prior to the occurrence of the Termination Event or (ii) the average of the bonuses paid to Employee over the three (3) fiscal years of Employer ending with last fiscal year of Employer completed prior to the occurrence of the Termination Event; and
(iii) Employee's accrued but unused vacation days; and
(iv) All Restricted Stock owned by Employee shall immediately become Vested Shares, as such term is defined in the applicable grant agreement and plan documents
The aggregate dollar amount of the special benefits described in subsections (i) and (ii) above shall be aggregated and paid ratably on a bi-weekly basis over the 24 month period following the Termination Event. If a Change in Control has occurred prior to a Termination Event, Employee shall also be entitled to the special benefits under this Section 9 B.
C. Employee's accrued but unused vacation days shall be paid to Employee within thirty (30) days of the actual date of the termination of Employee's employment.
D. In the event Employee's employment is terminated (whether by Employer or Employee) as a result of a Termination Event, Employee shall be entitled to such medical insurance benefits as he enjoyed prior to his termination for the twenty-four months following such termination and at the same cost to Employee of such benefits as in effect prior to such termination.
E. Employee shall be entitled to the Change in Control benefit specified in Section 9 A. only if he remains an employee of Employer to the date of consummation of the Change in Control, unless Employee is terminated within six (6) months prior to such date pursuant to a Termination Event or as the result of disability or death as provided in Sections 8(a) and (b). Should any special benefits provided in this Section 9 become payable, the covenants contained in Sections 10 through 16 hereof shall continue to apply, and should Employee violate the terms of such covenants Employer may, in addition to any legal or equitable remedies, cease payment of the benefits and terminate any and all future payments otherwise called for under this Section 9.
F. For purposes of this Agreement, "for good reason" means the occurrence of any one or more of the following: (i) removal or other termination of Employee as the Chief Operating Officer of Employer, without Employee's express written consent; (ii) a reduction of Employee's duties, authority or responsibilities or the assignment to Employee of such reduced duties, authority or responsibilities, in either case without Employee's express written consent, (iii) a reduction by Employer in Employee's Base Compensation without Employee's express written consent; or (iv) the relocation of Employee to a facility or a location more than 30 miles from Employee's then present office location without Employee's express written consent.
Section 10. Non-Competition. At all times that Employee remains employed by the Employer and for a two (2) year period following the termination of his employment under this Agreement for any reason, Employee shall not, directly or indirectly, for himself or on behalf of any other person or entity as an employee, employer, consultant, agent, lender, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, (i) invest, engage in, or permit his name to be used in connection with any business that is in competition with Employer, (ii) accept employment with or render services to a competitor of Employer, as a director, officer, agent partner, employee or consultant, or (iii) solicit or accept from any of the customers of Employer or from any person or entity whose business Employer is soliciting, any business of the type which Employer is engaged in or in which Employer is actively preparing to so engage, in each case described in clauses (i), (ii) or (iii), within the Territory. Employee shall be prohibited from engaging in the activities described above within, or with respect to any business in competition with the Employer located within, fifty (50) miles of any of Employer's rehabilitation clinic locations (the "Territory").
Notwithstanding the foregoing, Employee may own the voting common stock of any publicly held corporation so long as it does not exceed more than five percent (5%) of the outstanding stock thereof.
Section 11. Non-Solicitation. For a two (2) year period following the termination of the employment of the Employee under this Agreement for any reason, Employee agrees not to, directly or indirectly, for himself or on behalf of any other person or entity (a) solicit or induce, or attempt to solicit or induce, any person employed by, or any agent of, Employer, to terminate employee's or agent's relationship with Employer, nor (b) call on, solicit or divert, or attempt to call on, solicit or divert any person, firm, corporation or other entity who was or had been a customer or a patient referral source (including, without limitation, any physician) of Employer who referred ten or more customers or patients to Employer, who is a customer or a patient referral source of Employer who has referred ten or more customers or patients to Employer, or who is a prospective customer or a patient referral source of Employer with whom Employee had contact as an employee of Employer and who, within six months of such solicitation, Employer was or is actively recruiting as a customer or patient referral source.
Section 12. Confidential Information. Employee will not, during or after the termination of this Agreement, disclose any trade secrets, financial and accounting information, customer lists, customer mailing lists, prospective customer lists, lists of referral sources or prospective referral sources, or pricing, marketing or advertising plans or methods used by Employer (the "Confidential Information") to any person, firm, corporation, association or other entity for any reason or purpose whatsoever, nor shall Employee make use of the Confidential Information for his own purposes or for the benefit of any person, firm, corporation or other entity (except Employer) under any circumstances during or after the termination of this Agreement. On demand of Employer, at any time, Employee shall immediately deliver all printed or written Confidential Information to Employer. To the extent that Employee's property does not contain Confidential Information, Employee may remove all of Employee's property (such as computer software and tapes) upon termination of this Agreement. Confidential Information does not include information that (i) currently is generally available to or known by the public or hereafter becomes generally available to or known by the public through no fault of Employee, (ii) was already in the possession of Employee on the date of inception of Employee's employment by Employer, or (iii) is obtained by Employee from a third party who is under no obligation of confidence to Employer.
Section 13. Reasonableness of Restrictions. Employee agrees that (a) the covenants contained in Sections 10, 11 and 12 hereof are necessary for the protection of Employer's business goodwill and trade secrets, (b) a portion of the compensation paid to Employee under this Agreement is paid in consideration of the covenants herein contained, the sufficiency of which consideration is hereby acknowledged, and if the scope of any restriction contained in Sections 10, 11 and 12 is too broad to permit enforcement of such restriction to its full extent, then such restriction shall be enforced to the maximum permitted by law, and the parties hereby consent that such scope may be judicially modified accordingly in any proceeding brought to enforce such restriction.
Section 14. Enforcement. Employee acknowledges Employee's employment with Employer is special and unique in character and that Employee will acquire special skill and training and gain special knowledge during Employee's employment with Employer, that the restrictions contained in Sections 10, 11 and 12 hereof are reasonable and necessary to protect the legitimate interests of Employer and its affiliates, that Employer would not have entered into this Agreement in the absence of such restrictions, and that any violation of any provision of those Sections will result in irreparable injury to Employer. Employee also acknowledges that Employer shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages as well as an equitable accounting of all earnings, profits and other benefits arising from any such violation, which rights shall be cumulative and in addition to any other rights or remedies to which Employer may be entitled. The existence of any claim or cause of action of Employee against Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Employer of these covenants, except for Employer's breach of this Agreement relating to its payment obligations to Employee after the termination of Employee's employment under the terms of this Agreement.
Section 15. Copy of Covenants. Until the expiration of the applicable restrictions, Employee will provide, and Employer similarly may provide, a copy of the covenants contained in Sections 10, 11 and 12 of this Agreement to any business or enterprise which Employee may (i) directly or indirectly own, manage, operate, finance, join, control or participate in the ownership, management operation, financing, or control of, (ii) serve as an officer, director, employee, partner, principal, agent, representative, consultant, lender or otherwise, or (iii) with which he may use or permit his name to be used.
Section 16. Special Definition of Employer. For the purposes of Sections 10 through 15 above, the definition of Employer shall include any subsidiary or affiliate of Employer, including all affiliated physical therapy partnerships of Employer.
Section 17. Notices. Any notices to be given hereunder by either Party to the other may be effected in writing either by personal delivery, via facsimile or by mail, registered or certified, postage prepaid with return receipt requested:
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If to Employer:
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U.S. Physical Therapy, Inc.
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1300 West Sam Houston Parkway South
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Suite 300
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Houston, Texas 77042
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Attention: Chairman of the Board
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If to Employee:
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Glenn D. McDowell
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12870 Kingsbridge Lane
Houston, Texas 77077
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Mailed notices shall be addressed to the Parties at the addresses set forth above, but each Party may change the address by written notice in accordance with this Section 17. Notices delivered personally or by facsimile shall be deemed communicated upon actual receipt. Mailed notices shall be deemed communicated three (3) days after mailing.
Section 18. Entire Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Employee by Employer, and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever.
Section 19. Headings. The headings or titles to sections in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the heading or title of any section.
Section 20. Amendment or Modification; Waiver. No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver is authorized by Employer and is agreed to in writing, signed by Employee and by an officer of Employer (other than Employee) thereunto duly authorized. Except as otherwise specifically provided in this Agreement, no waiver by any Party hereto of any breach by any other Party hereto of any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar provision or condition at the same or at any prior or subsequent time nor shall the receipt or acceptance of Employee's employment be deemed a waiver of any condition or provision hereof.
Section 21. Assignability. Employee shall not assign, pledge or encumber any interest in this Agreement or any part thereof without the express written consent of Employer, this Agreement being personal to Employee. This Agreement shall, however, inure to the benefit of Employee's estate, dependents, beneficiaries and legal representatives. This Agreement shall not be assignable by Employer without the written consent of Employee which will not be unreasonably withheld. Subject to the terms of this Agreement, Employer may merge or consolidate with or into, or transfer substantially all of its assets to, another corporation or other form of business organization without Employee's consent, and as a result of such merger, consolidation or transfer, this Agreement shall bind the successor of Employer resulting from such merger, consolidation or transfer. No such merger, consolidation or transfer, however, shall relieve the Parties from liability and responsibility for the performance of their respective duties and obligations hereunder.
Section 22. Governing Law. This Agreement shall be interpreted, construed and governed by and in accordance with the internal substantive law of the State of Texas.
Section 23. Severability. Each provision of this Agreement constitutes a separate and distinct undertaking, covenant and/or provision hereof. In the event that any provision of this Agreement shall finally be determined to be unlawful, such provision shall be deemed severed from this Agreement, but every other provision of this Agreement shall remain in full force and effect, and in substitution for any such provision held unlawful, there shall be substituted a provision of similar import reflecting the original intent of the Parties hereto to the extent permissible under law.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day first written above.
EMPLOYER:
U.S. PHYSICAL THERAPY, INC.
/s/ Jerald L. Pullins
By: Jerald L. Pullins
Chairman of the Board of Directors
EMPLOYEE:
/s/ Glenn D. McDowell
GLENN D. McDOWELL
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