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EXHIBIT 10.20
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is entered into as of
August 21, 1997, by and between American Physician Partners, Inc., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxxx, M.D., a resident of the
state of Maryland (the "Consultant").
RECITALS
The Consultant has gained valuable management knowledge and experience
as the President of Advanced Radiology, L.L.C. and as a radiologist.
The Company desires to benefit from such knowledge and experience by
obtaining consulting services from the Consultant, and the Consultant is
willing to provide such consulting services to the Company.
AGREEMENT
Based on the recitals set forth above and the mutual promises
contained herein, the parties agree as follows:
ARTICLE 1
1.1 Engagement. The Company hereby engages the Consultant as
consultant and advisor, effective as of the date immediately following
the consummation of the Company's initial public offering (the
"Effective Time"), with respect to the matters specified herein,
subject to the terms and conditions hereof, and for the compensation
provided herein. The Consultant accepts this engagement, effective as
of the Effective Time, as a consultant and advisor to the Company,
subject to the terms and conditions hereof.
1.2 Tasks and Duties.
(a) Commitment. Throughout the Term (defined below), the
Consultant, on a part-time basis, shall devote his
professional time, energy, skill and efforts to the
performance of the Consultant's tasks and duties hereunder in
a manner that will faithfully and diligently further the
business and interests of the Company, its subsidiaries and
the medical practices, diagnostic imaging centers and other
entities affiliated or that potentially may be affiliated
with the Company. The Company recognizes that the Consultant
(i) shall continue as the President of the professional
entity that succeeds Advanced Radiology, L.L.C. (the
"Advanced Professional Entity") following the Effective Time,
(ii) shall continue to provide medical services, and (iii)
(so long as there is not any breach of any restrictive
covenant between the Company and the Consultant including,
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but not limited to, (i) the restrictions regarding
non-solicitation and non-competition set forth in this
Agreement and the exhibit hereto, (ii) the Consultant's
employment agreement with the Advanced Professional Entity,
(iii) the Service Agreement between the Company and the
Advanced Professional Entity or (iv) the Agreement and Plan
of Reorganization and Merger by and between Advanced
Radiology, L.L.C. and the Company (collectively, the
"Restrictive Covenants") may pursue other professional and
business efforts. The Consultant, without his prior written
consent, shall not be required to commit more than twenty
percent (20%) of his annual professional time providing
services under this Agreement.
(b) Tasks and Responsibilities of Parties. During the Term
hereof, Consultant will be subject to the general direction
of the Company and will perform the consulting services
requested by the Company, at times and places as are mutually
agreed upon by Consultant and the Company; provided, however,
that Consultant, subject to his other responsibilities and
long-standing commitments, shall be available for
assignments, meetings, and other projects during reasonable
business hours with reasonable advance notice from the
Company. Consultant's duties shall include, but not be
limited to, assisting the Company in recruiting, screening,
evaluating and recommending radiology practices and imaging
centers for affiliation with or acquisition by the Company.
In addition, Consultant shall assist the Company in its
efforts to develop and expand its (i) networks through the
addition of hospitals and/or managed care organizations, (ii)
strategic alliances with other health care providers and
payors, (iii) relationships with equipment and supply vendors
and (iv) plan for outsourcing imaging services from
hospitals.
(c) Standards of Duty. During the Term, the Consultant shall
apply reasonable efforts and skills to his duties hereunder
and shall make available to the Company his judgment and
experience in the areas of radiology and radiology management
services.
(d) Cooperation. The Consultant shall use diligent efforts to aid
the Company, its subsidiaries, and the medical practices they
affiliate with in establishing and maintaining the Company's
and its subsidiaries' goodwill and reputation with other
medical groups, suppliers, customers, creditors, and the
investment and business communities generally.
1.3 Term. The Term (herein so called) hereof shall be for a period of
three years, commencing on the date immediately following the
consummation of the Company's initial public offering.
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1.4 Compensation and Expenses.
(a) Compensation. Subject to the terms and conditions hereof, in
consideration of the consulting services to be rendered by
the Consultant to the Company hereunder, and in consideration
of the covenants of the Consultant set forth herein, the
Company hereby agrees to pay the Consultant as compensation
$100,000 per annum, payable monthly. The Consultant shall be
responsible for all federal, state and local income taxes,
Social Security, FICA, FUTA and other amounts required by
law.
(b) Payment and Reimbursement of Expenses. During the Term, the
Company shall pay or reimburse the Consultant for all
reasonable travel and other expenses incurred by the
Consultant in performing the Consultant's obligations
hereunder in accordance with the policies and procedures of
the Company for its consultants, provided that the Consultant
properly accounts therefor in accordance with the regular
policies of the Company. Any single expense (other than an
air fare shown to be the best rate then available) in excess
of the greater of (i) the threshold amount established by the
Company immediately following the commencement of the
Consultant's duties hereunder and on or near the annual
anniversary of such date during the Term or (ii) $1,000
individually shall be approved in advance by the Company in
writing.
(c) Annual Review. On each anniversary of the date of this
Agreement, the Board of Directors will review Consultant's
performance and establish assignments for the Consultant
hereunder for the up-coming year.
(d) Stock Options for Board of Directors. The compensation
provided to the Consultant by this Agreement shall be
distinct and separate from any stock option grants or other
compensation hereafter committed to be made by the Company to
the Consultant for service upon the Company's Board of
Directors or any committee thereof.
1.5 Independent Contractor. While serving as a Consultant, the
Consultant shall at all times be an independent contractor rather than
a co-venturer, agent, employee or representative of the Company or its
subsidiaries and, as a result, Consultant shall have no authority to
bind the Company.
1.6 Termination. This Agreement will terminate upon the occurrence of
any of the following events:
(a) the Consultant dies;
(b) the Company, by written notice to the Consultant or his
court-appointed guardian, after a determination by the
Company's Board of Directors, terminates this Agreement due
to the inability of the Consultant to perform the duties,
tasks and responsibilities under this Agreement for a period
exceeding 90 days by reason of injury, physical or mental
illness
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or other disability, which condition has been certified by a
physician; provided, however, that prior to terminating this
Agreement due to such disability, the Company shall give a
written statement of findings to the Consultant or his
court-appointed guardian setting forth specifically the
nature of the disability and the resulting performance
failures, and the Consultant shall have a period of twenty
(20) days thereafter to respond in writing to the Board of
Directors' findings;
(c) the Consultant is convicted of (or pleads guilty or nolo
contendre to) a felony or any misdemeanor involving
dishonesty or moral turpitude; after a determination by the
Company's Board of Directors, provided, however, that prior
to terminating this Agreement pursuant to this subsection,
the Company shall give a written statement of findings to the
Consultant setting forth specifically the grounds on which
cause is based, and the Consultant shall have a period of
twenty (20) days thereafter to respond in writing to the
Board of Directors' findings;
(d) the willful and continued failure of the Consultant to
substantially perform his services pursuant to the terms of
this Agreement (other than any such failure resulting from
illness or disability) after a written demand for substantial
performance is requested by the Company's Board of Directors,
which demand specifically identifies the manner in which it
is claimed that (i) the Consultant has not substantially
performed his duties or (ii) the Consultant is willfully
engaged in misconduct which has, or can reasonably be
expected to have, a direct and material adverse monetary
effect on the Company.
(e) The Consultant terminates this Agreement due to the default by
the Company in the performance of any of its obligations
hereunder and such default remains unremedied by the Company
for a period of twenty (20) days following its receipt of
written notice thereof from the Consultant;
(f) The Consultant voluntarily terminates this Agreement for any
reason upon at least 30 days advance written notice;
(g) The Consultant breaches any Restrictive Covenant; or
(h) For purposes of this section, no act or failure to act on the
Consultant's part shall be considered "willful" if done, or
omitted to be done by the Consultant in good faith and with
reasonable belief that the Consultant's action or omission
was in the best interest of the Company. No termination shall
be effected under subsections (d) or (g) unless the
Consultant has been provided with specific information in the
form of a notice as to the acts or omissions which form the
basis of the allegation of the reasons for termination and
the Consultant has had an opportunity to be heard, with
counsel if so desired, before the Board of Directors and
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such Board determines, by majority vote, in good faith that
the Consultant (i) for purposes of subsection (g), breached a
Restrictive Convenant and failed to cure such breach within
20 days of such notice or (ii) for purposes of subsection
(c), was guilty of conduct resulting in the basis of
termination under such subsection, specifying the particulars
thereof in detail.
1.7 Effects of Termination.
(a) Upon termination of this Agreement for any reason, the
Company will pay the Consultant all compensation owed to the
Consultant and unpaid through the date of termination
(including expense reimbursements).
(b) In addition, if this Agreement is terminated under Section
1.6 (e), then the Company shall also pay the Consultant a
lump sum equal to the number of months remaining in the
original Term from the termination date at the
then-applicable annual rate.
(c) Upon termination of this Agreement for any reason (other
than under Section 1.6(e)), the Consultant agrees that for
the one-year period following the termination of this
Agreement:
(i) The Consultant shall not directly or indirectly, whether
as an individual, employee, director, consultant or
advisor, or in any other capacity whatsoever, provide
services to any person, firm, corporation or other
business enterprise (other than the Advanced
Professional Entity or its affiliated entities;
provided, that the Advanced Professional Entity or any
of its affiliated entities remains a party to and is in
compliance with a service agreement with the Company)
which is involved in the acquisition or management of
radiology physician practices or other service company
that provides management services in the area of
radiology where the Company is operating at the time of
termination, unless the Consultant obtains the prior
written consent of the Company's Board of Directors.
(ii) The Consultant will not directly or indirectly encourage
or solicit, or attempt to encourage or solicit, any
individual to leave the Company's employ for any reason
or materially interfere with the employment
relationships at the time existing between the Company
and its current or prospective (individuals involved in
discussions with the Company regarding employment
arrangements) employees.
(iii) The Consultant will not induce or attempt to induce any
provider, payor, customer, supplier, distributor,
licensee or other business relation of the Company to
cease doing business with the Company or materially
interfere with the existing business relationship
between any
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such customer, supplier, distributor, licensee or other
business relation and the Company.
The Consultant acknowledges that monetary damages may not be
sufficient to compensate the Company for any economic loss which may
be incurred by reason of breach of the foregoing restrictive
covenants. Accordingly, in the event of any such breach, the Company
shall, in addition to any remedies available to the Company at law, be
entitled to obtain equitable relief in the form of an injunction
precluding the Consultant from continuing to engage in such breach. If
any restriction set forth in this paragraph is held to be
unreasonable, then the Consultant and the Company agree, and hereby
submit, to the reduction and limitation of such prohibition to such
area or period as shall be deemed reasonable.
1.8 General Provisions.
(a) Assignment. Neither party may assign or delegate any of his
or its rights or obligations under this Agreement without the
prior written consent of the other party.
(b) Entire Agreement. This Agreement, including Exhibit 1
attached hereto, contains the entire agreement between the
parties with respect to the subject matter hereof and
supersedes any and all prior agreements between the parties
relating to such subject matter.
(c) Modifications. This Agreement may be changed or modified
only by an agreement in writing signed by both parties
hereto.
(d) Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the
Consultant, the Consultant's spouse, heirs, assigns,
executors or personal or legal representatives (collectively,
the "Consultant's Affiliates") against the Company or any
Company Affiliate (defined below) after the expiration of two
years from the date of accrual of such cause of action, and
any claim or cause of action of the Consultant or any
Consultant Affiliate shall be extinguished and deemed
released unless asserted by the timely filing of a legal
action within such two-year period.
(e) Indulgences, Etc. Neither the failure nor any delay on the
part of either party to exercise any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy,
power or privilege preclude any other or further exercise of
the same or of any right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power, or privilege
with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any
other occurrence.
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(f) Successors and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon the
Company, its successors and permitted assigns, and the
purchaser of all or substantially all of the assets of the
Company and the Consultant whether or not any such person
shall have become a party to this Agreement and have agreed
in writing to join and be bound by the terms and conditions
hereof.
(g) Governing Law. This Agreement shall be governed by and
construed, interpreted and applied in accordance with the
laws of the State of Maryland, excluding any choice-of-law
rules that would refer the matter to the laws of another
jurisdiction.
(h) Provisions Separable. The provisions hereof are independent
of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of
the fact that for any reason any other or others of them may
be invalid or unenforceable in whole or in part. If any
provision hereof, or the application thereof to any situation
or circumstance, shall be invalid or unenforceable in whole
or in part, then the parties shall seek in good faith to
replace any such legally invalid provision or portion thereof
with a valid provision that, in effect, will most nearly
effectuate the parties' intentions in entering into this
Agreement.
(i) The Consultant's Sole Remedy. The Consultant's sole remedy
shall be against the Company (or any assignee or successor to
all or substantially all the assets of the Company or any
transferee in receipt of material assets of the Company
transferred in fraud of creditors (collectively, "Assigns"))
for any Consultant Claim (defined below). The Consultant
shall have no claim or right of any nature whatsoever against
any of the Company's or any of its subsidiaries' directors,
officers, employees, direct and indirect stockholders,
owners, trustees, beneficiaries or agents, irrespective of
when any such person held such status (collectively, the
"Company Affiliates") (other than Assigns) arising out of any
Consultant Claim (unless the conduct of such persons
constitutes intentional or grossly negligent conduct on the
part of such persons). The Consultant, on his own behalf and
on behalf of the Consultant Affiliates, hereby releases and
covenants not to xxx any person other than the Company or its
Assigns over any Consultant Claim. The Company Affiliates
shall be third-party beneficiaries of this Agreement for
purposes of enforcing the terms of this Section 1.8(i)
("Consultant's Sole Remedy") against the Consultant and the
Consultant Affiliates. Except as set forth in the immediately
preceding sentence, nothing herein, express or implied, is
intended to confer upon any party, other than the parties
hereto, any rights, remedies, obligations or liabilities
under or by reason hereof and no person who is not a party
hereto may rely on the terms hereof.
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Upon termination of the Consultant's engagement, the
sole claim of the Consultant and the Consultant Affiliates
against the Company and its Assigns for the Consultant Claims
will be for the amounts described in Section 1.4
(Compensation and Expenses) and Section 1.7, as applicable,
and the Consultant and the Consultant Affiliates shall have
no claim against the Company or its Assigns for any
Consultant Claim, other than those set forth in Sections 1.4
and 1.7 or against any Company Affiliate (other than Assigns)
for the Consultant Claims, including without limitation any
claim for damages of any nature, be they actual, direct,
indirect, special, punitive or consequential. The Consultant,
on his own behalf and on behalf of the Consultant Affiliates,
hereby releases and covenants not to xxx for, collect or
otherwise recover any amount against the Company or its
Assigns for any Consultant Claim, other than the amounts set
forth in Sections 1.4 and 1.7, or against any Company
Affiliate (other than Assigns) for any Consultant Claim.
"The Consultant Claim" shall mean any claim,
liability or obligation of any nature whatsoever arising out
of this Agreement or an alleged breach of this Agreement or
the termination of this Agreement; provided, however, that
the term "The Consultant Claim" shall not include claims
arising in favor of creditors of the Company generally,
including claims arising out of any fraudulent conveyance or
other transfer of assets in fraud of creditors or claims not
directly relating to this Agreement.
(j) Indemnification by the Company.
(a) The Company shall indemnify the Consultant who was or
is a party or is threatened to be made a party to any
threatened, pending or completed action, suit, or proceeding,
whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by
reason of the fact that he is or was a Consultant against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit, or proceeding if
he acted in good faith and a manner he reasonably believed to
be in or not opposed to the best interests of the Company,
and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
determination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Consultant did not act in good faith and
in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company, and with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
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(b) Any indemnification under this subsection (j) shall
be made by the Company only as authorized in the specific
case upon its determination that indemnification of the
Consultant is proper in the circumstances because he has met
the applicable standard of conduct set forth in the preceding
paragraph. Such determination shall be made (1) by a majority
vote of the directors who are not parties to such action,
suit, or proceeding, even though less than a quorum, or (2)
if there are no such directors or if such directors so
direct, by independent legal counsel in a written opinion or
(3) by the stockholders. Expenses (including attorneys' fees)
incurred by the Consultant in defending any civil, criminal,
administrative or investigative action, suit or proceeding
shall be paid by the Company following final disposition of
such action, suit or proceeding if it is determined that he
is entitled to indemnification by the Company as specified in
this subsection (j).
1.9 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by
certified or registered mail, postage prepaid with return receipt
requested, telecopy (with hardcopy delivered by overnight courier
service), or delivered by hand, messenger or overnight courier service
(if appropriate receipt or other evidence of delivery is obtained),
and shall be deemed given when received at the addresses of the
parties set forth below, or at such other address furnished in writing
to the other parties hereto.
If to the Consultant: Xxxxxxx X. Xxxxxxx, M.D.
000 Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
with a copy to : Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx and Xxxxxxx
0000 Xxxxxxx Xxxxxx Xxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
If to Company: American Physician Partners, Inc.
0000 XxxxxxxXxxx Xxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxx
(000) 000-0000 (fax)
2.0 Headings; Index. The headings of paragraphs and Sections herein
are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions hereof. The
words "herein," "hereof," "hereto" and "hereunder" and other words of
similar import refer hereto as a whole and not to any particular
Article, Section or other subdivision.
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2.1 Authorization and Voluntary Agreement. The Company represents that
this Agreement has been duly authorized by its Board of Directors and
is binding on the Company in accordance with its terms. The Consultant
acknowledges that he has had sufficient time and opportunity to read
and understand this Agreement and to consult with his legal counsel
and other advisors regarding the terms and conditions set forth
herein.
2.2 Further Assurances. The parties will execute such further
instruments and take such further actions as may be reasonably
necessary to carry out the intent of this Agreement.
2.3 Legal Fees and Expenses. In the event of any disputes under this
Agreement, each party shall be responsible for their own legal fees
and expenses which it may incur in resolving such dispute, unless
otherwise prohibited by applicable law or a court of competent
jurisdiction.
2.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Xxxxxxx have executed this
Consulting Agreement, effective as of the day and year first above
written.
COMPANY SHERMAN
AMERICAN PHYSICIAN PARTNERS, INC.
-----------------------------
a Delaware corporation Xxxxxxx X. Xxxxxxx, M.D.
Address:
-----------------------------
-----------------------------
By:
---------------------------
Xxxxxxx X. Xxxxxxx
President & CEO
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EXHIBIT 1
CONFIDENTIALITY, PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT
This Agreement (the "Agreement"), is made and entered into as of August 21,
1997 by and between American Physician Partners, Inc., a Delaware corporation
(hereafter together with its affiliates known as the "Company"), and Xxxxxxx X.
Xxxxxxx, M.D. (the "Consultant"), a resident of the State of Maryland as of the
date of this Agreement. In consideration of the Consultant's continued
retention by the Company and in further consideration of the mutual covenants,
promises and conditions set forth in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Treatment of Confidential Information. The Consultant
recognizes and acknowledges that the trade secrets and confidential information
of the Company (the "Proprietary Information"), as they may exist from time to
time, are valuable, special and unique assets of the Company's Business (as
defined below). The Consultant further acknowledges that access to such
Proprietary Information is essential to the performance of the Consultant's
duties as a Company consultant. Therefore, in order to obtain access to such
Proprietary Information, the Consultant agrees that the Consultant will not in
whole or in part, disclose such Proprietary Information to any person, firm,
corporation, association or any other entity for any reason or purpose
whatsoever (other than in furtherance of his duties as Consultant, e.g.,
negotiations with other parties), nor will the Consultant make use of any
such information for the Consultant's own purposes or for the benefit of any
person, firm, corporation, association, or other entity (except the Company,
its directors, officers, employees, attorneys, accountants and other advisors)
under any circumstances. For purposes of this Agreement, the term "trade
secrets" means the whole or any portion of any scientific or technical or
non-technical information, design, process, procedure, formula, computer
software product, documentation or improvement relating to the Company's
Business which (1) derives economic value, actual or potential, from not being
generally known to other persons who can obtain economic value from its
disclosure or use and (2) is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy or confidentiality, including, but
not limited to: (i) any technical or non-technical data, design, process,
procedure, formula, pattern, compilation, program, device, method, technique,
drawing, financial data, financial plan, product plan; (ii) computer software
programs including application operating system, data base, communication and
other computer software whether now or hereafter existing or developed for use
on any operating system; (iii) all modifications, enhancements and all options
available with respect thereto, and all future products developed or derived
therefrom; (iv) source and object codes, flow charts, coding sheets, routines,
subroutines, compilers, assemblers, designs, and related documentation and
manuals; (v) production processes, marketing techniques, arrangements, and
plans, mailing lists, purchasing information, pricing policies, quoting
procedures, financial information, strategies, forecasts, the compensation and
terms of employment of other consultants, customer and prospect names and
requirements,
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consultant, customer, supplier, and distributor data and other materials or
information; and (vi) results of research and development activities, including
new processes, formulas, inventions, computer related equipment or technology,
and design drawings and specifications.
The term "confidential information" means any and all data and information
relating to the Company's Business, other than trade secrets (1) which has
value to the company; (2) is not generally known by its competitors or the
public; and (3) is treated as confidential by the Company. The provisions of
this Section 1 will apply during the Consultant's retention by the Company and
for a three (3)-year period thereafter with respect to confidential
information, and during the Consultant's retention by the Company and at any
and all times thereafter with respect to trade secrets.
The restrictions of this Section 1 will not apply to any Proprietary
Information which, (a) is, at the time of disclosure, in the public domain,
provided that the Consultant was not responsible, directly or indirectly, for
such Proprietary Information entering the public domain without the Company's
prior written consent, or (b) such Proprietary Information as was known to the
Consultant upon the signing of this Agreement (excluding Proprietary
Information obtained from the Company) or becomes so known to the Consultant
solely from other sources. This Section 1, along with Sections 2, 3, and 4 of
this Agreement will survive any termination of this Agreement.
All documents, charts, graphs, notebooks, customer lists, computer disks, tapes
or printouts and other printed, typewritten or handwritten documents, whether
or not pertaining to Proprietary Information (collectively, "Company
Materials") furnished to the Consultant by the Company or the Business or
produced by the Consultant or others in connection with the Consultant's
retention shall be and remain the sole property of the Company. The Consultant
agrees that during the Consultant's retention by the Company, the Consultant
will not remove any Company Materials from the business premises of the Company
or deliver any Company Materials to any person or entity outside the Company,
except in connection with performing the duties of the Consultant's retention
by the Company.
The Consultant acknowledges, warrants and agrees to return to the Company all
Company assets, apparatus, equipment, other physical property, and Proprietary
Information, and Company Materials, in the Consultant's possession or to which
the Consultant has access including, without limitation, documents, drawings,
manuals, specifications, notes, computer programs, and other proprietary
materials, and any copies or excerpts thereof, and any other properties, client
lists, client contracts, files or documents obtained as a result of the
Consultant's retention by the Company immediately upon the termination of the
Consultant's consulting agreement with the Company by the Consultant or the
Company for any reason (or no reason) or during the term of the Consultant's
retention by the Company if requested by the Company; provided, however, that
the Consultant shall not be required to return (i) the Consultant's personal
copies of records relating to the Consultant's compensation, (ii) the
Consultant's personal copies of any materials previously distributed generally
to stockholders of the
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Company, and (iii) the Consultant's copy of this Agreement. The Company
recognizes that the Consultant is considerably experienced in the Company's
line of business and, while engaged with the Company, shall continue to pursue
compatible endeavors which are reviewed and approved in advance by the
Company's Board of Directors.
If the Consultant is requested or becomes compelled pursuant to a
civil lawsuit or any criminal investigation, indictment, or proceeding (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any of the
Confidential Information, the Consultant shall provide the Company with prompt
written notice prior to such request or demand for disclosure so that the
Company may seek a protective order or other appropriate remedy and the
Consultant agrees to use his best efforts to assist the Company in such matter.
In the event that such protective order or other remedy is not obtained, the
Company shall furnish only that portion of the Confidential Information that is
legally required, in the opinion of legal counsel reasonably acceptable to the
Company and shall exercise his best efforts to obtain reliable assurance that
confidential treatment will be accorded the Confidential Information.
2.A. Non-Solicitation Covenants. The Consultant agrees that, during the
Consultant's retention by the Company and for a period of one (1) year
following the termination of the Consultant's consulting agreement for whatever
reason (other than as set forth in Section 1.6(e) therein), the Consultant will
not directly or indirectly, on the Consultant's own behalf or in the service or
on behalf of any other individual or entity, with respect to the business of
the Company, (i) divert, solicit, or attempt to solicit any individual or
entity (a) who is a Client of the Company at any time during the twelve
(12)-month period prior to the Consultant's termination with the Company, or
was within such period actively sought by the Company as a prospective client,
and (b) with whom the Consultant had material contact while retained by the
Company, to provide Business services to such Clients or prospects; or (ii)
divert, solicit or hire away, or attempt to divert, solicit or hire away, to or
for any individual or entity which is engaged in providing Business services,
any person employed by the Company, whether or not such consultant is a
full-time consultant or temporary consultant, whether or not such consultant is
retained pursuant to written agreement and whether or not such consultant is
retained for a determined period or at will. For purposes of this Agreement,
"material contact" exists between the Consultant and each Client or actively
sought prospective client (i) with whom the Consultant dealt on behalf of the
Company; (ii) whose dealings with the Company were coordinated or supervised by
the Consultant; or (iii) about whom the Consultant obtained confidential
information in the course of the Consultant's retention by the Company.
For purposes of this Agreement, (i) "Business" means rendering billing,
accounts receivable, management and collection services, financial management
services, and practice management services to physicians and physician groups;
(ii) "Client" means any individual or entity to whom the Consultant has
provided services at any time during the period of the Consultant's retention
by the Company, as well as any entity employing or made up in part of an
individual who was the recipient (whether directly or indirectly
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through another entity) of the Company's Business services provided by the
Consultant at any time during the Consultant's retention.
2.B. Non-Interference. During the Consultant's retention by the Company and
for a one (1)-year period thereafter, the Consultant will not, directly or
indirectly, on the Consultant's own behalf or in the service of or on behalf of
any other individual or entity, interfere with, impair, disrupt, or attempt to
disrupt the Business, for the purpose of assisting a competitor of the Company
or for the purpose of intentionally harming the Company, whether by way of
interfering with (i) or raiding its consultants or employees, (ii) past,
present, or prospective relationships, contractual or otherwise, between the
Company and any supplier, vendor, consultant, distributor, representative, or
(iii) a Client of the Company with whom the Consultant had material contact
during the Consultant's retention. The term "prospective relationship" means
any relationship where the Company has actively sought an individual or entity
as a prospective supplier, consultant or client.
2.C. Construction. It is the primary goal of the Company to protect its
interests while preserving the Consultant's ability to earn a livelihood in the
Consultant's present domicile and to continue performing the approved
activities set forth in the Consultant's Consulting Agreement with the Company
and such other professional endeavors subject to review and approval in advance
by the Company's Board of Directors. Accordingly, this Section 2 will not
prohibit the Consultant from establishing the Consultant's own company,
provided however, that the Consultant, in any event is bound by Sections 2A and
2B above and by Sections 3 and 4 below. For purposes of these covenants, the
Consultant acknowledges that (i) the Company's business is or may become
national or international in scope, (ii) the number of potential persons and
entities for whom the Consultant can provide Business services (other than
Clients and prospective clients) is vast and consequently these covenants will
not unreasonably impair the Consultant's ability to engage in Business
activities after the termination of the Consultant's retention by the Company,
and (iii) the Consultant's training experience or technical skills are of such
breadth that they can be employed to advantage in other ways and consequently
the foregoing obligation will not unreasonably impair the Consultant's ability
to engage in business activities after the termination of the Consultant's
retention by the Company. The Company recognizes the Consultant's present
professional endeavors. Furthermore, the parties hereto agree that any judicial
authority construing all or any portion of this Section 2 will be empowered to
sever any portion of the applicable area, client base, prospective relationship
or prospect list of any prohibited business activity from the coverage of this
Section and to apply the provisions of this Section to the remaining portion of
the applicable area, the client base or the prospective relationship or
prospect list, or the remaining business activities not so severed by such
judicial authority. In addition, it is the intent of the parties that the
judicial authority replace each severed provision with a provision as similar
in terms to such severed provision as may be possible and be legal, valid, and
enforceable. It is the intent of the parties that this Section be enforced to
the maximum extent permitted by law. In the event that any provision of this
Section is determined not to be specifically enforceable, the Company
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will nevertheless be entitled to recover monetary damages as a result of the
breach of such provision by the Consultant.
3. Existing Restrictive Covenants. The Consultant represents and warrants
that the Consultant's retention by the Company, including the performance of
and compliance with all of the terms and provisions of this Agreement, do not
and will not breach any agreement which the Consultant has with any person,
entity, or former employer to keep in confidence confidential information or
not to compete with any such person, entity, or former employer. The Consultant
will not disclose to the Company or use on its behalf any confidential
information of any other party required to be kept confidential by the
Consultant.
4. Proprietary Rights. During the course of the Consultant's retention by
the Company and in the fulfillment of the Consultant's services to the Company,
and for a period of one (1) year thereafter, the Consultant may, either alone
or jointly with others, make, develop, or have developed or conceive or reduce
to practice any useful process, machine, composition of matter, computer
software or program, algorithm, work of authorship expressing such algorithm,
or any other discovery, document, invention, design, data or improvement which
relates to or is useful to the Company's Business (the "Inventions") whether or
not subject to copyright or patent protection, which relate to or are useful in
the business activities of the Company and which may or may not be considered
Proprietary Information. The Consultant acknowledges that all such Inventions
will be promptly disclosed to the Company's President and will be "works made
for hire" and will remain the sole and exclusive property of the Company. The
Consultant also hereby assigns and agrees to assign to the Company, in
perpetuity, all right, title and interest the Consultant may have in and to
such Inventions, including without limitation, all copyrights, and the right to
apply for any form of patent, utility model, industrial design or similar
proprietary right recognized by any state, country, or jurisdiction. The
Consultant further agrees, at the Company's request and expense, to do all
things and sign all documents or instruments necessary, in the opinion of the
Company, to eliminate any ambiguity as to the ownership of, and rights of the
Company to, such Inventions, including filing copyright and patent
registrations and defending and enforcing in litigation or otherwise all such
rights. The Company shall compensate the Consultant at a reasonable rate after
termination of the consulting agreement for time actually spent by the
Consultant at the Company's request on such assistance. In the event that the
Company is unable for any reason whatsoever to secure the Consultant's
signature to any lawful and necessary documents required to apply for or
execute any patent, copyright, or other applications with respect to such
Inventions and improvements (including renewals, extensions, continuations,
divisions or continuations in part thereof), the Consultant hereby irrevocably
designates and appoints the Company and its duly authorized officers and
agents, and each of them, as the Consultant's agents and attorneys-in-fact to
act for and in the Consultant's behalf and instead of the Consultant, to
execute and file any such application and to do all other lawfully permitted
acts to further the prosecution and issuance of patents, copyrights or other
rights thereof with the same legal force and effect as if executed by the
Consultant. The Consultant will not be obligated to assign to the Company any
Invention made by the Consultant while engaged
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by the Company which does not relate to any business or activity in which the
Company is or may become engaged, except that the Consultant is so obligated if
the same relates to or is based on Proprietary Information to which the
Consultant will have had access during and by virtue of the Consultant's
employment or which arises out of work assigned to the Consultant by the
Company. The Consultant will not be obligated to assign any Invention which may
be wholly conceived by the Consultant after the Consultant's consulting
agreement with the Company is terminated, except that the Consultant is so
obligated if such Invention involves the utilization of Proprietary Information
obtained while retained by the Company. The Consultant is not obligated to
assign any Invention which relates to or would be useful in any business or
activities in which the Company is engaged if such Invention was conceived and
reduced to practice by the Consultant prior to the Consultant's retention by
the Company.
5. Remedies. The Consultant agrees and acknowledges that the violation of
any of the covenants or agreements contained in Sections 1, 2, 3 and 4 of this
Agreement would cause irreparable injury to the Company, that the remedy at law
for any such violation or threatened violation thereof would be inadequate and
that the Company will be entitled, in addition to any other remedy, temporary
and permanent injunctive or other equitable relief without the necessity of
proving actual damages or posting a bond. The Consultant also acknowledges that
a breach of any of the terms of this agreement may result in action against the
Consultant, including immediate termination of the Consultant's retention by
the Company.
6. The Consultant's Status. Nothing in this Agreement will be construed
constituting a commitment, guarantee, agreement, or understanding of any kind
or nature that the Company will continue to retain the Consultant, nor will
this Agreement affect in any way the right of the Company, as expressly
provided therein, to terminate the consulting agreement of the Consultant at
any time and for any reason whatsoever. No change of the Consultant's duties as
a consultant of the Company will result in, or be deemed to be, a modification
of the terms of this Agreement.
7. Severability. Subject to the application of Section 2.C. to the
interpretation of Section 2, in case one or more of the provisions contained in
this Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect, the same will not affect any other provision in this Agreement,
and this Agreement will be construed as if such invalid or illegal or
unenforceable provision had never been contained herein. It is the intent of
the parties that this Agreement be enforced to the maximum extent permitted by
law.
8. Miscellaneous. This Agreement and the Consulting Agreement executed
contemporaneously herewith embody the entire Agreement of the parties relating
to the narrow subject matter of this Agreement and specifically supersedes any
previously existing written or verbal, express or implied consulting agreements
between the Consultant and the Company. No amendment or modification of this
Agreement will be valid or binding upon the parties until made in writing and
signed by the parties. This Agreement will be binding upon the parties and
their respective heirs, representatives,
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successive transferees and permitted assigns. This Agreement is one for
personal service and will not be assigned by the Consultant. The Company may
assign this Agreement to any of its subsidiaries or affiliated companies,
provided that parent or any subsidiary or Affiliate fulfills the obligations of
the Company under the Consulting Agreement. This Agreement is entered into and
will be interpreted and enforced pursuant to the laws of the State of Texas
(without regard for conflicts of law), as of the date of this Agreement, as
first reflected above.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
AMERICAN PHYSICIAN PARTNERS, INC. CONSULTANT:
By: By:
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Title: President and CEO
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