EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of January 19, 1998, by and
between Alliance Imaging, Inc., a Delaware corporation (hereinafter called the
"Corporation"), and Xxxxxxx X. Xxx (hereinafter called the "Executive").
WITNESSETH THAT:
The Corporation desires to employ the Executive as its Senior Vice
President and Chief Financial Officer ("CFO"), and the Executive desires to
accept such employment;
NOW, THEREFORE, the Corporation and the Executive, each intending to
be legally bound, hereby mutually covenant and agree as follows:
1. EMPLOYMENT AND TERM.
(a) Employment. The Corporation shall employ the Executive as the CFO of the
Corporation, and the Executive shall so serve, for the term set forth in
Paragraph 1(b).
(b) Term. The term of the Executive's employment under this Agreement
shall commence on the date hereof (the "Effective Time") and shall end on the
second anniversary of the Effective Time, subject to the extension of such term
as hereinafter provided and subject to earlier termination as provided in
Paragraph 8. The expiration of the term of this Agreement shall be extended
automatically by an additional three months as of the last day of each quarterly
period following the Effective Time unless either party desires to modify or
terminate this Agreement and notifies the other party of its desire to modify or
terminate this Agreement at least 30 days prior to any such quarterly renewal
date. The period of employment as provided in this Paragraph 1(b) is sometimes
referred to herein as the "Term".
2. DUTIES.
During the Term, the Executive shall serve as CFO of the
Corporation and have all powers and duties consistent with such position.
The Executive shall devote substantially his entire time during reasonable
business hours (reasonable sick leave and vacations excepted) and use
diligent efforts to fulfill faithfully, responsibly and to the best of his
ability his duties hereunder; PROVIDED, HOWEVER, that Executive may engage in
and devote time to other non-competitive activities to the extent that such
time spent is immaterial and does not interfere with Executive's obligations
hereunder. During the Term, Executive shall report to the Chairman and Chief
Executive Officer of the Corporation. Executive's duties shall be performed,
initially, principally at the Corporation's current offices located in
Anaheim, California, unless Executive otherwise agrees in writing.
Notwithstanding, the foregoing, Executive may be required to travel in the
conduct of the Corporation's business and to discharge his duties hereunder,
provided that the amount and nature of such travel is reasonably consistent
with the amount and
nature of travel engaged in by Executive (or his predecessor) during the
twelve-month period immediately preceding the date of this Agreement.
3. SALARY.
The Corporation shall pay to the Executive as compensation for his
services a salary of $250,000 per year, payable in accordance with the
Corporation's payroll procedures. From time to time, the Board of Directors of
the Corporation or a committee thereof (the "Board") will review the Executive's
performance and compensation, and will consider adjustments thereto.
4. ANNUAL BONUSES.
For each calendar year during the term of employment, the Executive
shall be eligible to receive a cash bonus based on the Corporation's achievement
of certain operating and/or financial or other goals established by the Board in
its sole discretion, with an annual target bonus amount (based on the
Corporation's achievement of a reasonable operating budget to be approved by the
Board) equal to 50% (the "Target Bonus") of the Executive's then current annual
base salary. The bonus plan shall be adopted and administered by the
Compensation Committee of the Board.
5. EQUITY INCENTIVE COMPENSATION.
During the term of employment hereunder the Executive shall be
eligible to participate in the Corporation's Stock Option Plan in effect as of
the date hereof.
6. OTHER BENEFITS.
In addition to the compensation described in Paragraphs 3 through 5,
above, the Executive shall also be entitled to the following:
(a) Expense Reimbursement. Executive will be reimbursed all reasonable,
ordinary and necessary business expenses, including expenses for entertainment,
travel and similar items that are approved by the Corporation in accordance with
its regular policy(ies) for business expense reimbursement. The Corporation
will reimburse Executive for all expenses upon a presentation by Executive of
itemized accounts of such expenditures in accordance and in the manner and on a
form reasonably prescribed by the Corporation.
(b) Car Allowance. The Corporation shall pay to the Executive, on the
first day of each month during the term of employment, a monthly automobile
allowance (the "Automobile Allowance") of not less than $600, to help defray the
costs associated with Executive's acquisition or maintenance (by lease or
otherwise) of an automobile and the related insurance and maintenance therefor.
(c) Vacation. The Executive shall be entitled to all legal holidays, and
three weeks paid vacation per annum, in accordance with the Corporation's
policies.
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(d) Insurance and Benefits. The Executive and his "dependents," to the
extent eligible thereunder, shall be entitled to participate in all employee and
executive benefit plans, programs and policies currently available to other
Corporation employees of comparable status, title and experience, as well as any
plans, programs and policies adopted by the Corporation during the Term of this
Agreement.
(e) Participation in Other Benefit Plans. In addition to the foregoing,
the Executive shall be entitled to participate in all of the other various
retirement, welfare, fringe benefit, executive perquisite, and expense
reimbursement plans, programs and arrangements of the Corporation to the same
extent that employees generally of the Corporation are eligible for
participation under the terms of such plans, programs and arrangements.
7. CONFIDENTIALITY.
In view of the fact that Executive's work as an executive of the
Corporation will bring Executive into close contact with many confidential
affairs of the Corporation, including matters of a business nature, such as
information about customers (including pricing information), costs, profits,
markets, sales, strategic plans for future development and any other information
not readily available to the public, Executive hereby agrees:
(a) To keep secret all confidential matters of the Corporation (including
without limitation such matters which the Corporation notifies Executive are
confidential) learned prior to the date of this Agreement and in the course of
Executive's employment hereunder, and not to disclose them to anyone outside of
the Corporation, either during or after Executive's employment with the
Corporation, or both, until such time as the Corporation gives its written
consent to such disclosure;
(b) To deliver promptly to the Corporation on termination of Executive's
employment by the Corporation or at any other time the Corporation may so
request, all memoranda, notes, records, reports and other documents (and all
copies thereof) relating to the Corporation's business which Executive may then
possess or have under Executive's control; and
(c) That violation of this Paragraph 7 would cause the Corporation
irreparable damage for which the Corporation cannot be reasonably compensated in
damages in an action at law, and therefore in the event of any breach or
threatened breach by Executive of this Paragraph 7, the Corporation shall be
entitled to make application to a court of competent jurisdiction for equitable
relief by way of injunction or otherwise (without being required to post a
bond). This provision shall not, however, be construed as a waiver of any of
the rights which the Corporation may have for damages under this Agreement or
otherwise, and all of the Corporation's rights and remedies shall be
unrestricted and cumulative.
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8. TERMINATION.
Unless earlier terminated in accordance with the following provisions
of this Paragraph 8, the Corporation shall continue to employ the Executive and
the Executive shall remain employed by the Corporation during the entire Term.
Paragraph 9 hereof sets forth certain obligations of the Corporation in the
event that the Executive's employment hereunder is terminated. Certain
capitalized terms used in this Xxxxxxxxx 0, Xxxxxxxxx 9 and Paragraph 10 hereof
are defined in Paragraph 8(d), below.
(a) Death or Disability. Except to the extent otherwise provided in
Paragraph 9 with respect to certain post-Date of Termination payment obligations
of the Corporation, this Agreement shall terminate immediately as of the Date of
Termination in the event of the Executive's death or in the event that the
Executive becomes disabled. The Executive will be deemed to be disabled upon
the earlier of (i) the end of a six (6)-consecutive month period during which,
by reason of physical or mental injury or disease, the Executive has been unable
to perform substantially all of his usual and customary duties under this
Agreement or (ii) the date that a reputable physician selected by the Board, and
as to whom the Executive has no reasonable objection, determines in writing that
the Executive will, by reason of physical or mental injury or disease, be unable
to perform substantially all of the Executive's usual and customary duties under
this Agreement for a period of at least six (6) consecutive months. If any
question arises as to whether the Executive is disabled, upon reasonable request
therefor by the Board, the Executive shall submit to reasonable medical
examination for the purpose of determining the existence, nature and extent of
any such disability. In accordance with Paragraph 14, the Board shall promptly
give the Executive written notice of any such determination of the Executive's
disability and of any decision of the Board to terminate the Executive's
employment by reason thereof.
(b) Discharge for Cause. In accordance with the procedures hereinafter
set forth, the Board may discharge the Executive from his employment hereunder
for Cause. Except to the extent otherwise provided in Paragraph 9 with respect
to certain post-Date of Termination obligations of the Corporation, this
Agreement shall terminate immediately as of the Date of Termination in the event
the Executive is discharged for Cause. Any discharge of the Executive for Cause
shall be communicated by a Notice of Termination to the Executive given in
accordance with Paragraph 14 of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon and (ii) if the
Date of Termination is to be other than the date of receipt of such notice,
specifies the termination date (which date shall in all events be within fifteen
(15) days after the giving of such notice). In the case of a discharge of the
Executive for Cause, the Notice of Termination shall include a copy of a
resolution duly adopted by the Board at a meeting called and held for such
purpose authorizing such action. No purported termination of the Executive's
employment for Cause shall be effective without a Notice of Termination.
(c) Termination for Other Reasons. The Corporation may discharge the
Executive without Cause by giving written notice to the Executive in accordance
with Paragraph 14 at least thirty (30) days prior to the Date of Termination.
The Executive may resign from
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his employment by giving written notice to the Corporation in accordance with
Paragraph 14 at least thirty (30) days prior to the Date of Termination.
Except to the extent otherwise provided in Paragraph 9 with respect to
certain post-Date of Termination obligations of the Corporation, this
Agreement shall terminate immediately as of the Date of Termination in the
event the Executive is discharged without Cause or resigns.
(d) Definitions. For purposes of this Agreement, the following
capitalized terms shall have the meanings set forth below:
(i) "Accrued Obligations" shall mean, as of the Date of Termination, the
sum of (A) the Executive's base salary under Paragraph 3 through the
Date of Termination to the extent not theretofore paid, (B) the amount
of any bonus, incentive compensation, deferred compensation and other
cash compensation accrued by the Executive as of the Date of
Termination to the extent not theretofore paid and (C) any vacation
pay, expense reimbursements and other cash entitlements accrued by the
Executive as of the Date of Termination to the extent not theretofore
paid. For the purpose of this Paragraph 8(d)(i), the amount of bonus
accrued shall be equal to (A) the Average Bonus, multiplied by (B) a
fraction equal to the number of days in such year preceding the Date
of Termination divided by 365.
(ii) "Average Bonus" means (A) if a termination of employment of the
Executive occurs prior to January 1, 1999, the Target Bonus of the
Executive payable in respect of the calendar year in which such
termination occurs and (B) if a termination of employment of the
Executive occurs on or after January 1, 1999, the actual cash bonus
earned by the Executive pursuant to Section 4 for the calendar year
completed immediately prior to the time in question.
(iii) "Cause" means that any of the following has occurred with respect
to Executive: (A) Executive has committed a felony (other than a
motor vehicle moving violation); (B) Executive has stolen funds or
property from the Corporation or otherwise engaged in fraudulent
conduct against the Corporation; (C) Executive has engaged in knowing
and willful misconduct which is materially injurious to the
Corporation; (D) Executive has failed or refused to comply with the
directions of the Board that are reasonably consistent with
Executive's current executive employee title and the terms of this
Agreement, the failure with which to comply is materially injurious to
the Corporation; or (E) Executive has repeatedly failed or refused to
comply with the directions of the Board that are reasonably consistent
with Executive's current executive employee title and the terms of
this Agreement. Notwithstanding clause (E) of the preceding sentence,
no act or omission by the Executive shall constitute Cause hereunder
unless the Corporation has given detailed written notice thereof to
the Executive, and the Executive has failed to remedy such act or
omission within a reasonable time after receiving such notice.
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(iv) "Date of Termination" shall mean (A) in the event of a discharge of
the Executive by the Board for Cause, the date the Executive receives
a Notice of Termination, or any later date specified in such Notice of
Termination, as the case may be, (B) in the event of a discharge of
the Executive without Cause or a resignation by the Executive, the
date specified in the written notice to the Executive (in the case of
discharge) or the Corporation (in the case of resignation), which date
shall be no less than thirty (30) days from the date of such written
notice, (C) in the event of the Executive's death, the date of the
Executive's death, and (D) in the event of termination of the
Executive's employment by reason of disability pursuant to Paragraph
8(a), the date the Executive receives written notice of such
termination (or, if earlier, six (6) months following the date the
Executive's disability began).
(v) "Good Reason" shall mean any of the following:
(A) the Corporation reduces Executive's base salary; or
(B) the assignment to the Executive of any duties inconsistent in any
material respect with the Executive's positions with the
Corporation as set forth in this Agreement (including status,
offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Paragraph 2; or
(C) any material failure by the Corporation to comply with any of the
provisions of this Agreement, which is not remedied within 15
days after notice thereof from the Executive.
(D) the Corporation requires Executive to change the location of his
principal office or offices in a manner inconsistent with
Paragraph 2 hereof;
(E) the Corporation or the Board shall notify the Executive that it
does not want to renew the Term pursuant to Paragraph 1(b); or
(F) the Corporation otherwise subjects Executive to abusive, critical
or adversarial conditions such that there is a material worsening
of the general quality of Executive's job conditions immediately
prior to such change.
9. OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
The following provisions describe the obligations of the Corporation
to the Executive under this Agreement upon termination of his employment.
(a) Death, Disability, Discharge for Cause, or Resignation Without Good
Reason. In the event this Agreement terminates pursuant to Paragraph 8(a) by
reason of the death or disability of the Executive, or pursuant to Paragraph
8(b) by reason of the discharge of
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the Executive by the Corporation for Cause, or pursuant to Paragraph 8(c) by
reason of the resignation of the Executive other than for Good Reason, the
Corporation shall pay to the Executive, or his heirs or estate, in the event
of the Executive's death, all Accrued Obligations in a lump sum in cash
within thirty (30) days after the Date of Termination; provided further that
in the event this Agreement terminates pursuant to Paragraph 8(a) by reason
of the disability of the Executive, the Corporation shall continue to provide
to the Executive, for a period of twenty-four (24) months from the
commencement of such disability, all health benefits at least equal to those
which would have been provided to Executive in accordance with the plans,
programs and arrangements referred to in Paragraph 7 of this Agreement, in
addition to any other benefits or payments to which Executive is entitled
hereunder or otherwise.
(b) Discharge Without Cause or Resignation with Good Reason. In the event
that this Agreement terminates pursuant to Paragraph 8(c) by reason of the
discharge of the Executive by the Corporation other than for Cause, death or
disability or by reason of the resignation of the Executive for Good Reason (any
such termination, a "Severance"):
(i) The Corporation shall pay all Accrued Obligations to the Executive in
a lump sum in cash within thirty (30) days after the Date of
Termination;
(ii) For a period equal to the greater of two years and the remainder of
the Term (assuming the Term had not expired on the Date of
Termination), the Corporation shall continue to provide benefits to
the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the plans,
programs and arrangements referred to in Paragraph 6 of this
Agreement; and
(iii) The Corporation shall, at its sole expense (not to exceed
$25,000), provide the Executive with outplacement services the scope
and provider of which shall be selected by the Executive.
10. DEFRA LIMITATION.
(a) Notwithstanding anything in this Agreement to the contrary, in the event
that the provisions of the Deficit Reduction Act of 1984 ("DEFRA") relating to
"excess parachute payments" shall be applicable to any payment or benefit
received or to be received by Executive in connection with a termination of the
Executive's employment with the Corporation, then the total amount of payments
or benefits payable to Executive which are deemed to constitute parachute
payments shall be reduced to the largest amount such that provisions of DEFRA
relating to "excess parachute payment" shall no longer be applicable. Should
such a reduction be required, the Executive shall determine, in the exercise of
his sole discretion, which payment or benefit to reduce or eliminate. Pending
such determination, the Corporation shall continue to make all other required
payments to Executive at the time and in the manner provided herein and shall
pay the largest portion
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of any parachute payments such that the provisions of DEFRA relating to
"excess parachute payments" shall no longer be applicable.
(b) Recharacterization of Payments. Due to the complexity in the
application of Section 280(G) of the Internal Revenue Code of 1986, as amended
(the "Code") it is possible that payments made or benefits received hereunder
should not have been made under Paragraph 10(a) (an "Overpayment"). In the event
that it is determined in writing by the Corporation's outside auditors in their
reasonable good faith judgment or by any court of competent jurisdiction that an
Overpayment has been made resulting in an "Excess Parachute Payment" as defined
in Section 280G(b)(1) of the Code, then any such Overpayment shall be treated
for all purposes as an unsecured, long-term loan from the Corporation to the
Executive, his personal representative, his successors or assigns, as the case
may be, that is payable, together with accrued interest from the date of the
making of the Overpayment at the rate of 8% per annum on the later to occur of
the third anniversary of the payment of such Overpayment, or 6 months following
the date upon which it is determined an Overpayment was made. Should it be
determined that such an Overpayment has been made, the Executive shall
determine, in the exercise of his sole discretion, which payments or benefits
shall be deemed to constitute the Overpayment.
11. NO SET-OFF OR MITIGATION.
The Corporation's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Corporation 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 such amounts shall not be reduced
whether or not the Executive obtains other employment.
12. PAYMENT OF CERTAIN EXPENSES.
The losing party in any suit or proceeding to enforce this Agreement
shall reimburse the prevailing party for all reasonable costs and expenses
incurred in connection with such suit or proceeding.
13. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of the Executive and the successors and assigns of the
Corporation. The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation, acquisition of
property or stock, liquidation, or otherwise) to all or a substantial portion of
its assets, by agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
this Agreement if no such succession had taken place. Regardless of whether such
an agreement is executed, this Agreement shall be binding upon any
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successor of the Corporation in accordance with the operation of law, and
such successor shall be deemed the "Corporation" for purposes of this
Agreement.
14. NOTICES.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered by
hand or mailed within the continental United States by first class certified
mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to the Board or the Corporation, to:
Alliance Imaging, Inc.
0000 Xxxxx XxxxxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Apollo Management, L.P.
1301 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
(b) If to the Executive, to:
Xxxxxxx X. Xxx
00 Xxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Such addresses may be changed by written notice sent to the other party at the
last recorded address of that party.
15. INDEMNIFICATION.
The Corporation agrees to indemnify the Executive to the fullest
extent permitted by law for his services to, or on behalf of the Corporation, as
an Executive hereunder, as a director (as applicable) and in any and every other
capacity in which he may serve the Corporation or its interests. In furtherance
of such agreement to indemnify, but not by way of limitation, the terms of the
Corporation's certificate of incorporation and by-laws providing for such
indemnification and payment of expenses, as in effect on the date hereof (and,
which are attached hereto as Exhibit A), are hereby incorporated by reference as
if fully stated herein. For the purpose of this Agreement, any amendment to
said certificate of incorporation or by-laws shall not be effective to reduce,
qualify or
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otherwise limit the scope, benefit or enforceability of this provision;
provided, however, if any such amendment extends or improves the scope,
benefit or enforceability of the indemnification and payment of expenses
contained in such certificate of incorporation or by-laws for any officer,
director, employee or agent, such extended or improved provisions shall be
deemed to be incorporated by reference herein for the benefit of the
Executive without any further action by the Corporation or the Executive.
16. TAX WITHHOLDING.
The Corporation shall provide for the withholding of any taxes
required to be withheld by federal, state, or local law with respect to any
payment in cash, shares of stock and/or other property made by or on behalf of
the Corporation to or for the benefit of the Executive under this Agreement or
otherwise. The Corporation may, at its option: (a) withhold such taxes from any
cash payments owing from the Corporation to the Executive, (b) require the
Executive to pay to the Corporation in cash such amount as may be required to
satisfy such withholding obligations and/or (c) make other satisfactory
arrangements with the Executive to satisfy such withholding obligations.
17. ARBITRATION.
Except as to any controversy or claim which the Executive elects, by
written notice to the Corporation, to have adjudicated by a court of competent
jurisdiction, any controversy or claim arising out of or relating to this
Agreement or the breach hereof shall be settled by arbitration in Los Angeles,
California in accordance with the laws of the State of California. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association. The costs and expenses of the arbitrator(s) shall be
borne by the Corporation. The award of the arbitrator(s) shall be binding upon
the parties. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction.
18. NO ASSIGNMENT.
Except as otherwise expressly provided herein, this Agreement is not
assignable by any party and no payment to be made hereunder shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
other charge.
19. EXECUTION IN COUNTERPARTS.
This Agreement may be executed by the parties hereto in two (2) or
more counterparts, each of which shall be deemed to be an original, but all such
counterparts shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart.
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20. JURISDICTION AND GOVERNING LAW.
Except as provided in Paragraph 17, jurisdiction over disputes with
regard to this Agreement shall be exclusively in the courts of the State of
California, and this Agreement shall be construed and interpreted in accordance
with and governed by the laws of the State of California, other than the
conflict of laws provisions of such laws.
21. SEVERABILITY.
If any provision of this Agreement shall be adjudged by any court of
competent jurisdiction to be invalid or unenforceable for any reason, such
judgment shall not affect, impair or invalidate the remainder of this Agreement.
Furthermore, if the scope of any restriction or requirement contained in this
Agreement is too broad to permit enforcement of such restriction or requirement
to its full extent, then such restriction or requirement shall be enforced to
the maximum extent permitted by law, and the Executive consents and agrees that
any court of competent jurisdiction may so modify such scope in any proceeding
brought to enforce such restriction or requirement.
22. PRIOR UNDERSTANDINGS.
This Agreement embodies the entire understanding of the parties hereto
and, upon its effectiveness, will supersede all other oral or written agreements
or understandings between them regarding the subject matter hereof. No change,
alteration or modification hereof may be made except in a writing, signed by
each of the parties hereto. The headings in this Agreement are for convenience
and reference only and shall not be construed as part of this Agreement or to
limit or otherwise affect the meaning hereof.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
Attest: ALLIANCE IMAGING, INC.
/s/ Xxxxxxx X. Xxxxxxxx, Xx. by: /s/ Xxxxxxx X. Xxxxxx
------------------------------- ------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx. Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
EXECUTIVE
By: /s/ Xxxxxxx X. Xxx
------------------------
Name: Xxxxxxx X. Xxx
Senior Vice President and
Chief Financial Officer
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