EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of October 18,
1999 by and between Total Renal Care Holdings Corp. (the "Company") and Xxxx X.
Xxxxx ("Executive").
In consideration of the mutual covenants and agreements hereinafter set forth
and for other good and valuable consideration, the parties hereto, intending to
be legally bound hereby, agree as follows:
Section 1. Employment and Duties. The Company hereby employs Executive to serve
as Chief Executive Officer and Chairman of the Board of the Company during the
Term (as such term is defined in Section 3). Executive accepts such employment
on the terms and conditions set forth in this Agreement. Executive shall
perform the duties of Chairman of the Board and Chief Executive Officer of the
Company and shall perform such other duties consistent with such positions as
may be assigned to Executive from time to time by the Board of Directors of the
Company (the "Board"). Executive shall devote his best efforts and skills to
the business and interests of the Company on a full-time basis, provided,
however, that from the date hereof through November 22, 1999 or such earlier
date as Executive may determine (the "Transition Period"), Executive shall be
employed on a half-time basis to enable Executive to complete certain other
business activities in which he is currently involved (the "Transition
Activities"). Except for the Transition Activities during the Transition
Period, Executive shall not engage in any other business activity during the
Term; provided, however, that, to the extent such activities do not adversely
affect the performance of his responsibilities to the Company hereunder,
Executive may (i) manage his personal investments and participate in charitable
and civic affairs, (ii) serve on the boards of directors of the three for-
profit corporation boards on which he serves as of the date hereof, and (iii)
serve on such additional for-profit corporate boards as the Board may expressly
approve. Executive shall use his best efforts to establish a residence in the
greater Los Angeles metropolitan area no later than December 31, 1999, but
shall establish such a residence in any event no later than January 31, 2000.
Executive shall at all times observe and abide by the Company's policies and
procedures as in effect from time to time.
Section 2. Compensation. In consideration of the services to be performed by
Executive hereunder, Executive shall receive the following compensation and
benefits:
2.1 Base Salary. During the Transition Period, Executive shall be paid a base
salary at the rate of $250,000 per annum, payable in installments consistent
with the Company's payroll schedule. From and after the Transition Period and
for the remainder of the Term, Executive shall be paid an annual base salary
(the "Base Salary") which shall be payable in installments consistent with the
Company's payroll schedule. The Base Salary for the period beginning
immediately after the last day of the Transition Period through December 31,
2000 shall be $500,000 per year. The Base Salary shall be subject to increase
by the Board for each calendar year thereafter for increases, if any, in the
Consumer Price Index for the most proximate geographic area in which Executive
is then employed (as published by the United States Department of Labor for the
immediately preceding calendar year) and will be reviewed each year during the
Company's annual salary review and the Company may, in its sole discretion,
increase the Base Salary as a result of any such review.
2.2 Benefits. Commencing on the date hereof and for the remainder of the Term,
Executive shall (i) be provided with employee benefits (including health
insurance, long term disability insurance and dental insurance) on the same
basis as such benefits are generally made available to other senior executives
of the Company, (ii) be eligible to participate in the Company's 401(k) Plan on
the same basis as other senior executives of the Company, (iii) be provided
with $1,500,000 in term life insurance, (iv) receive an automobile allowance of
$1,000 per month, (v) be reimbursed in accordance with the Company's
reimbursement policies (or otherwise as expressly approved by the Board) for
travel and entertainment expenses, cell phone charges and other business
related expenses incurred in the performance of his duties hereunder, (vi) be
reimbursed for
expenses related to his involvement in the Young President's Organization, and
(vii) be entitled to four (4) weeks paid vacation per year. The Company shall
reimburse Executive for up to $150,000 in moving and related costs incurred in
establishing a residence in the greater Los Angeles metropolitan area as
required by Section 1 (and to the extent that such reimbursement is taxable to
Executive, the Company shall pay to Executive such additional amount as shall
be necessary to pay the taxes thereon on an after tax-basis).
2.3 Bonuses.
(a) For each calendar year commencing with calendar year 2000, Executive
shall be eligible to receive a bonus (the "Bonus") based upon the
achievement of performance goals to be mutually agreed upon by Executive
and the Board from year to year, with the target bonus to be equal to 100%
of the Base Salary for such year and the maximum bonus to be equal to 150%
of such Base Salary; provided, however, that, subject to the provisions of
Section 2.3(b) below, Executive shall be guaranteed a Bonus of at least
$500,000 for calendar year 2000. In addition to the foregoing, the Board
shall develop an appropriate bonus package for Executive for the period
following the Transition Period through December 31, 1999.
(b) The Bonus for each year shall be paid within 75 days after the last day
of such year. Executive must be employed by the Company (or an affiliate)
on the date any Bonus is paid to be eligible to receive such Bonus and, if
Executive is not employed by the Company (or an affiliate) on the date any
Bonus is paid for any reason whatsoever, Executive shall not be entitled to
receive such Bonus; provided, however, that in the event Executive dies or
is terminated by the Company by reason of Disability (as defined below),
Executive (or his estate) shall be entitled to receive, at such time as
bonuses for such year are otherwise paid, a pro rated Bonus for that
portion of any year prior to such termination (or for the whole year and a
portion of a year if such termination occurs after December 31 of any year
and prior to the date on which the Bonus for such year is paid) regardless
of whether Executive is employed on the date such Bonus is paid; and
provided further, that, in the event Executive is terminated without
Material Cause (as defined below) or resigns following Constructive
Discharge (as defined below) at any time, Executive shall be entitled to
receive a Bonus for the year in which such termination occurs equal to the
Bonus, if any, which he received for the immediately preceding calendar
year (or, if such termination occurs prior to December 31, 2000, Executive
shall be entitled to receive a bonus equal to $500,000), which Bonus shall
be payable within five business days of the effective date of such
termination.
2.4 Stock Options.
(a) Executive shall receive two nonqualified stock options under the
Company's 1997 Equity Compensation Plan (the "Stock Options"), one of which
shall be granted on the date hereof and shall entitle Executive to purchase
up to 500,000 shares of the Company's common stock ("Common Stock") and
shall have an exercise price of $6.00 (the last sale price on October 15,
1999 (i.e., the last trading day prior to the date hereof), and one of
which shall be granted on January 26, 2000 (i.e., 100 days after the date
hereof) and shall entitle Executive to purchase 500,000 shares of Common
Stock and shall have an exercise price equal to the average of the last
sale price for the Common Stock on January 19, 2000 through January 26,
2000, inclusive. Each of the Stock Options shall vest 25% on each
anniversary of the date hereof, such that all of the Stock Options shall be
fully vested on October 18, 2003; provided, however, that the Stock Options
shall become fully vested immediately upon a Change of Control; and
provided further, that the Stock Options shall provide for automatic
acceleration of the vesting of the final annual installment at such time as
the closing price for the Common Stock as reported on the New York Stock
Exchange exceeds $16.89 for any ten days out of any twenty day period.
Section 3. Term.
3.1 Commencement. The term of Executive's employment hereunder shall commence
on the date hereof and, unless sooner terminated as provided herein, shall
continue thereafter until December 31, 2001; provided, however, that such term
shall automatically be extended for an additional period of one year on
December 31, 2001 and on each December 31 thereafter unless the Company
delivers written notice to Executive of the Company's intention not to so
extend the term no later than the September 30 prior to any such December 31.
The term of Executive's employment hereunder is referred to herein as the
"Term."
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3.2 Termination for Material Cause. The Company may terminate Executive's
employment for Material Cause (as defined below) upon at least thirty (30)
days' advance written notice specifying in detail the cause for termination and
the intended termination date. Prior to the effective date of any termination
for Material Cause, Executive shall have been offered an opportunity to meet
and confer in person with at least two (2) Board members regarding the grounds
for such intended termination. Upon termination for Material Cause, Executive
shall (i) be entitled to receive the Base Salary and benefits as set forth in
Section 2.1 and Section 2.2, respectively, through the effective date of such
termination and (ii) not be entitled to receive any other compensation,
benefits or payments of any kind, except as otherwise required by law or by the
terms of any benefit or retirement plan or other arrangement that would, by its
terms, apply.
3.3 Other Termination. The Company may terminate the employment of Executive
prior to the expiration of the Term for any reason or for no reason at any time
upon at least thirty (30) days' advance written notice. If the Company
terminates the employment of Executive prior to the expiration of the Term
other than for Material Cause or Disability, or if Executive resigns within
sixty (60) days following Constructive Discharge, Executive shall (i) be
entitled to receive the Base Salary and benefits as set forth in Section 2.1
through the effective date of such termination, (ii) be entitled to receive the
Bonus provided for in Section 2.3(b), (iii) be entitled to continue to receive
the Base Salary in effect as of the date of such termination for the two year
period following the effective date of such termination (the "Severance
Period"), subject to the limitation set forth below, (iv) be entitled to
continue to receive during the Severance Period the employee health insurance
benefits set forth in Section 2.2 to the extent such benefits can be provided
under the Company's health insurance policies and programs in effect at the
effective time of such termination and, to the extent such benefits cannot be
provided under such policies and programs, the Company shall purchase for
Executive reasonably equivalent health insurance benefits during the Severance
Period, subject to the limitation set forth below, and (v) not be entitled to
receive any other compensation, benefits or payments of any kind, except as
otherwise required by law or by the terms of any benefit or retirement plan or
other arrangement that would, by its terms, apply. The foregoing
notwithstanding, in the event Executive accepts employment with another
employer during the Severance Period, (x) Executive shall immediately notify
the Company of such employment, (y) the Company's obligation to continue to pay
the Base Salary pursuant to clause (ii) of the immediately preceding sentence
shall be reduced by the amount of any compensation earned by Executive during
the Severance Period in connection with such employment, and (z) the Company's
obligation to continue to provide certain health insurance benefits pursuant to
clause (iii) of the immediately preceding sentence shall terminate.
3.4 Voluntary Resignation. Executive may resign from the Company at any time
upon at least ninety (90) days' written notice. If Executive resigns from the
Company other than within sixty (60) days following Constructive Discharge,
Executive shall (i) be entitled to receive the Base Salary and benefits as set
forth in Section 2.1 and Section 2.2, respectively, through the effective date
of such termination and (ii) not be entitled to receive any other compensation,
benefits or payments of any kind, except as otherwise required by law or by the
terms of any benefit or retirement plan or other arrangement that would, by its
terms, apply. In the event Executive resigns from the Company at any time, the
Company shall have the right to make such resignation effective as of any date
prior to the expiration of any required notice period.
3.5 Death. In the event of Executive's death, Executive's estate shall (i) be
entitled to receive the Base Salary and benefits as set forth in Section 2.1
and Section 2.2, respectively, through the date of Executive's death, (ii) be
entitled to receive the Bonus provided for in Section 2.3(b) pro rated for the
period through the date of Executive's death and (iii) not be entitled to
receive any other compensation, benefits or payments of any kind, except as
otherwise required by law or by the terms of any benefit or retirement plan or
other arrangement that would, by its terms, apply.
3.6 Disability. Upon thirty (30) days' notice (which notice may be given prior
to the completion of the periods described herein), the Company may terminate
Executive's employment for Disability, provided that either (i) immediately
upon the effective date of such termination, Executive shall be eligible to
receive full disability benefits under the disability insurance, if any,
provided to Executive by the Company, or (ii) the
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Company shall continue to pay the Base Salary to Executive until the first to
occur of (A) full disability benefits are received or (B) one (1) year from the
effective date of such termination.
3.7 Definition. For the purposes of this Section 3 the following terms shall
have the meanings indicated:
(a) "Change of Control" shall mean (i) any transaction or series of
transactions in which any person or group (within the meaning of Rule 13d-5
under the Exchange Act and Sections 13(d) and 14(d) of the Exchange Act)
becomes the direct or indirect "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), by way of a stock issuance, tender offer, merger,
consolidation, other business combination or otherwise, of greater than 40%
of the total voting power (on a fully diluted basis as if all convertible
securities had been converted and all warrants and options had been
exercised) entitled to vote in the election of directors of the Company
(including any transaction in which the Company becomes a wholly owned or
majority owned subsidiary of another corporation), (ii) any merger or
consolidation or reorganization in which the Company does not survive,
(iii) any merger or consolidation in which the Company survives, but the
shares of the Company's Common Stock outstanding immediately prior to such
merger or consolidation represent 40% or less of the voting power of the
Company after such merger or consolidation, and (iv) any transaction in
which more than 40% of the Company's assets are sold.
(b) "Constructive Discharge" shall mean the occurrence of any of the
following events after the date of a Change of Control without Executive's
express written consent: (i) the scope of Executive's authority, duties and
responsibilities are materially diminished or are not (A) in the same area
of operations, (B) in the same corporate and reporting capacity (and
standing in the same relationship to the ultimate parent entity, e.g.,
reporting to the Board of Directors of a subsidiary will not be deemed to
constitute the same corporate and reporting capacity as reporting to the
Board of Directors of the ultimate parent entity) or (C) of the same
general nature as Executive's authority, duties and responsibilities with
the Company immediately prior to such Change of Control; (ii) the failure
by the Company to provide Executive office accommodations and assistance
substantially equivalent to the accommodations and assistance provided to
Executive immediately prior to such Change of Control; (iii) the principal
office to which Executive is required to report is changed to a location
which is more than twenty (20) miles from the principal office to which
Executive is required to report immediately prior to such Change of
Control; or (iv) a reduction by the Company in Executive's Base Salary,
bonus arrangement or other material benefits as in effect on the date of
such Change of Control or as the same may be increased thereafter.
(c) "Disability" shall mean the inability, for a period of six (6) months
to adequately perform Executive's regular duties, with or without
accommodation, due to a physical or mental illness, condition or
disability.
(d) "Material Cause" shall mean: (i) conviction of a felony involving moral
turpitude relating to the business of the Company and which does, in fact,
adversely and directly affect the business of the Company; (ii) the
adjudication by a court of competent jurisdiction that Executive has
committed any act of fraud or dishonesty resulting or intended to result
directly or indirectly in personal enrichment at the expense of the
Company; (iii) repeated failure or refusal by Executive to follow policies
or directives reasonably established by the Board that goes uncorrected for
a period of thirty (30) consecutive days after written notice has been
provided to Executive; or (iv) a material breach by Executive of this
Agreement that goes uncorrected for a period of thirty (30) consecutive
days after written notice has been provided to Executive.
3.8 Notice of Termination. Any purported termination of Executive's employment
by the Company or by Executive shall be communicated by a written Notice of
Termination to the other party hereto in accordance with Section 8.5 hereof. A
"Notice of Termination" shall mean a written notice that indicates the specific
termination provision in this Agreement relied upon and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment.
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3.9 Rights and Obligations Upon Termination. The termination of Executive's
employment shall not modify or affect the rights and obligations of the
parties, if any, under this Section 3 or under Section 5, Section 6, Section 7
or Section 8.
Section 4. Board of Directors. By action taken at a special meeting held on
October 14, 1999, the Board increased the authorized number of Directors from
five to seven and elected Executive to fill one of the newly created vacancies,
such election to be subject to the execution of this Agreement and to be
effective as of the date hereof. In connection with the annual meeting of the
Company's stockholders scheduled for December, 1999, the Board shall designate
a nominating committee to recommend to the Board a slate of directors to stand
for election at such annual meeting and shall appoint Executive to serve as one
of the members of such committee, it being understood and agreed that the slate
of Directors to be nominated at such meeting shall be approved by the Board as
a whole. The termination of Executive's employment for any reason shall
constitute Executive's resignation from the Board without any further action on
the part of the Company or Executive. The foregoing notwithstanding, Executive
shall execute upon request a written resignation from the Board following the
termination of his employment for any reason.
Section 5. Certain Covenants of Executive.
5.1 Confidential Information.
(a) Executive acknowledges and agrees that: (i) in the course of his
employment or continued employment by the Company, it will or may be
necessary for Executive to create, use or have access to (A) technical,
business, or customer information, materials, or data relating to the
Company's present or planned business which has not previously been
released to the public with the Company's authorization, including, but not
limited to, confidential information, materials or proprietary data
belonging to the Company or relating to the Company's affairs
(collectively, "Confidential Information") and (B) information and
materials that concern the Company's business that come into Executive's
possession by reason of employment with the Company (collectively,
"Business Related Information"); (ii) all Confidential Information and
Business Related Information are the property of the Company; (iii) the
use, misappropriation or disclosure of any Confidential Information or any
Business Related Information would constitute a breach of trust and could
cause serious and irreparable injury to the Company; and (iv) it is
essential to the protection of the Company's goodwill and to the
maintenance of the Company's competitive position that all Confidential
Information and Business Related Information be kept confidential and that
Executive not disclose any Confidential Information or Business Related
Information to others or use any Confidential Information or Business
Related Information to Executive's own advantage or the advantage of
others.
(b) In recognition of the acknowledgments contained in Section 5.1(a)
above, Executive agrees that, during the Term and thereafter until the
Confidential Information and Business Related Information becomes publicly
available (otherwise than through breach by Executive), Executive shall:
(i) hold and safeguard all Confidential Information and Business Related
Information in trust for the Company, its successors and assigns; (ii) not
appropriate or disclose or make available to anyone for use outside of the
Company's organization at any time, either during employment with the
Company or subsequent to the termination of employment with the Company for
any reason, any Confidential Information or Business Related Information,
whether or not developed by Executive, except as required in the
performance of Executive's duties to the Company; (iii) keep in strictest
confidence any Confidential Information or Business Related Information;
and (iv) not disclose or divulge, or allow to be disclosed or divulged by
any person within Executive's control, to any person, firm or corporation,
or use directly or indirectly, for Executive's own benefit or the benefit
of others, any Confidential Information or Business Related Information.
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5.2 Competition.
(a) Executive agrees that, during the Term and for a period following the
Term ending on the first to occur of (A) the second anniversary of the
termination of Executive's employment and (B) the period following the Term
which is equal to the length of the Term, Executive shall not: (i) directly
or indirectly, on Executive's behalf or as an officer, director,
consultant, partner, owner, stockholder, employee, creditor, agent, trustee
or advisor of any individual, partnership or limited liability company,
corporation, independent practice association or management services
organization or other entity ("Person") that is in the business of, or
directly or indirectly derives any economic benefit from, providing,
arranging, offering, managing or subcontracting dialysis services or renal
care services; or (ii) in any other capacity, own, manage, control,
operate, invest or acquire an interest in or otherwise engage in or act for
or on behalf of any Person (other than the Company and its subsidiaries and
affiliates) engaged in any activity in the United States and those
countries outside the United States in which the Company or any of its
subsidiaries or affiliates is conducting any business as of the date on
which Executive's employment hereunder terminates, where such activity is
similar to or competitive with the activities carried on by the Company or
any of its subsidiaries or affiliates. As used herein, the term "dialysis
services" or "renal care services" includes, but shall not be limited to,
all dialysis services and nephrology-related services provided by the
Company as of the date on which Executive's employment hereunder
terminates, including, but not limited to, hemodialysis, acute dialysis,
apheresis services, peritoneal dialysis of any type, staff-assisted
hemodialysis, home hemodialysis, dialysis-related laboratory and pharmacy
services, access-related services, Method II dialysis supplies and
services, and any other service or treatment for persons diagnosed as
having end stage renal disease ("ESRD") or pre-end stage renal disease, as
well as any dialysis services provided in an acute hospital. To the extent
such regulation is changed or amended, the term "ESRD" shall have the same
meaning as set forth in Title 42, Code of Federal Regulations 405.2101 et
seq. or any successor thereto. Executive acknowledges that the nature of
the Company's activities is such that competitive activities could be
conducted effectively regardless of the geographic distance between the
Company's place of business and the place of any competitive business.
Notwithstanding anything herein to the contrary, such activity shall not
include the ownership of 5% or less of the issued and outstanding stock of
a public company.
(b) Executive agrees that, during the Term and for a period of two (2)
years from the date Executive's employment terminates for any reason,
Executive shall not, directly or indirectly: (i) induce any patient or
customer of the Company, either individually or collectively, to patronize
any competing dialysis facility; (ii) request or advise any patient,
customer or supplier of the Company to withdraw, curtail or cancel such
person's business with the Company; (iii) enter into any contract the
purpose or result of which would benefit Executive if any patient or
customer of the Company were to withdraw, curtail or cancel such person's
business with the Company; (iv) solicit, induce or encourage any physician
(or former physician) affiliated with the Company or induce or encourage
any other person employed by or under contract with the Company to curtail
or terminate such person's affiliation or employment or contractual
relationship with the Company; (v) disclose to any Person the names or
physician addresses of any customer of the Company; or (vi) disparage the
Company or any of its agents, employees or affiliate physicians in any
fashion.
5.3 Enforcement. In the event that any part of this Section 5 shall be held
unenforceable or invalid, the remaining parts hereof shall nevertheless
continue to be valid and enforceable as though the invalid portions had not
been a part hereof. In the event that the area, period of restriction, activity
or subject established in accordance with this Section 5 shall be deemed to
exceed the maximum area, period of restriction, activity or subject that a
court of competent jurisdiction deems enforceable, such area, period of
restriction, activity or subject shall, for the purpose of this Section 5, be
reduced to the extent necessary to render them enforceable.
5.4 Equitable Relief. Executive agrees that any violation by Executive of any
covenant in this Section 5 may cause such damage to the Company as will be
serious and irreparable and the exact amount of which will be difficult to
ascertain, and for that reason, Executive agrees that the Company shall be
entitled, as a matter of
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right, to a temporary, preliminary and/or permanent injunction and/or other
injunctive relief, ex parte or otherwise, from any court of competent
jurisdiction, restraining any further violations by Executive. Such injunctive
relief shall be in addition to and in no way in limitation of, any and all
other remedies the Company shall have in law and equity for the enforcement of
such covenants and provisions.
5.5 Documents. Upon the termination of Executive's employment with the Company
for any reason, Executive shall promptly deliver to the Company all materials
and documents belonging to or concerning the Company or relating to its affairs
and, without limiting the foregoing, will promptly deliver to the Company any
and all other documents or materials containing or constituting Confidential
Information or Business Related Information.
Section 6. Excess Parachute Payment. In the event that any payment or benefit
received or to be received by Executive in connection with a Change of Control,
whether payable pursuant to the terms of this Agreement or any other plan,
arrangement or agreement by the Company, any predecessor or successor to the
Company or any corporation affiliated (within the meaning of Section 1504 of
the Internal Revenue Code of 1986, as amended (the "Code")) with the Company or
which becomes so affiliated pursuant to the transactions resulting in a Change
of Control (collectively all such payments are hereinafter referred to as the
"Total Payments") is deemed to be an "Excess Parachute Payment" (in whole or in
part) to Executive within the meaning of Section 280G(b)(1) of the Code, as in
effect at such time, no change shall be made to the Total Payments to be made
in connection with the Change of Control, except that, in addition to all other
amounts to be paid to Executive by the Company hereunder, the Company shall,
within thirty (30) days of the date on which any Excess Parachute Payment is
made, pay to Executive, in addition to any other payment, coverage or benefit
due and owing hereunder, an amount determined by (i) multiplying the rate of
excise tax then imposed by Code Section 4999 by the amount of the "Excess
Parachute Payment" received by Executive (determined without regard to any
payments made to Executive pursuant to this Section 6 and (ii) dividing the
product so obtained by the amount obtained by subtracting (A) the aggregate
local, state and Federal income tax rates (including the value of the loss of
itemized deductions under Section 68 of the Internal Revenue Code) applicable
to the receipt by Executive of the "Excess Parachute Payment" (taking into
account the deductibility for Federal income tax purposes of the payment of
state and local income taxes thereon) from (B) the amount obtained by
subtracting from 1.00 the rate of excise tax then imposed by Section 4999 of
the Code. It is the Company's intention that Executive's net after-tax position
be identical to that which would have obtained had Sections 280G and 4999 not
been part of the Code. For purposes of implementing this Section 6, (i) no
portion, if any, of the Total Payments, the receipt or enjoyment of which
Executive shall have effectively waived in writing prior to the date of payment
of the Total Payments, shall be taken into account, and (ii) the value of any
non-cash benefit or any deferred cash payment included in the Total Payments
shall be determined by the Company's independent auditors in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code.
Section 7. Representations, Warranties and Agreements of Executive. Executive
represents and warrants to the Company that (i) he has resigned as an officer
of VSP Holdings, Inc. and all affiliated companies (except that he has not
resigned as the non-executive Chairman of the Board of VSP Holdings, Inc. and
Vivra Asthma-Allergy, Inc.) and, as of the date hereof, is not an officer of
any other corporation or other entity, (ii) the performance of this Agreement
will not breach any other agreement or obligation by which Executive is bound
to keep in confidence proprietary information acquired by Executive or in
confidence or in trust prior to employment by the Company and or any agreement
restricting or purporting to restrict his right to perform services for the
Company and (iii) he has not taken and does not have in his possession or
control any confidential information or property relating to any former
employer. Executive agrees that he will not use confidential information or
property of any other employer while employed by the Company. Executive shall
indemnify and hold the Company harmless for any breach the representations,
warranties and agreements set forth in this Section 7, including reasonable
attorney's fees and costs of suit.
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Section 8. Miscellaneous.
8.1 Mediation of Disputes Concerning Employment. In the event of any dispute
concerning Executive's employment by the Company, whether or not relating to
this Agreement, Executive and the Company shall first attempt to resolve such
dispute through mediation as provided in this Section 8.1 before instituting
any legal action or other proceedings with respect thereto; provided, however,
that neither party shall be required to utilize such mediation procedures to
the extent that equitable relief is being sought by a party in the good faith
belief that an immediate remedy is required to avoid irreparable injury to such
party. Except as otherwise provided in the proviso to the immediately preceding
sentence, in the event that either party desires to institute litigation or
other legal proceedings to resolve a dispute concerning Executive's employment
by the Company, such party shall first give written notice to the other party
setting forth in detail the nature of the dispute and the facts which such
party believes supports such party's position in such dispute. The parties
shall then promptly (and, in any event, within ten (10) business days of the
giving of notice of a dispute) engage the services of an impartial, experienced
employment mediator (the "Mediator") under the auspices of JAMS/Endispute (or
such other mediation service as the parties may mutually select) in Los Angeles
County, California and shall promptly schedule a mediation session with the
Mediator for a date which is not later than forty five (45) days after the date
of the selection of the Mediator. The Mediator shall conduct a one-day
mediation session, attended by both parties and their counsel, in an attempt to
informally resolve the dispute. By oral or written agreement of both parties,
follow-up or additional mediation sessions may be scheduled, but neither party
shall be required to participate in more than one day of mediation. Neither
party shall be required to submit briefs or position papers to the Mediator,
but both parties shall have the right to do so, subject to such rules and
procedures as the Mediator may establish in his or her sole discretion. Except
as otherwise agreed by the parties, all written submissions to the Mediator
shall remain confidential as between the submitting party and the Mediator. The
mediation process shall be treated as a settlement negotiation and no evidence
introduced in the mediation process may be used in any way by either party or
any other person in connection with any subsequent litigation or other legal
proceedings (except to the extent independently obtained through discovery in
such litigation or proceedings) and the disclosure of any privileged
information to the Mediator shall not operate as a waiver of privilege with
respect to such information. Each party shall bear all of its own costs,
attorneys' fees and expenses related to preparing for and attending any
mediation conducted under this Agreement. The fees and expenses of the Mediator
and the mediation service used, if any, shall be borne equally by the Company
and Executive.
8.2 Entire Agreement; Amendment. This Agreement and the Stock Options represent
the entire understanding of the parties hereto with respect to the employment
of Executive and supersede all prior agreements with respect thereto. This
Agreement may not be altered or amended except in writing executed by both
parties hereto.
8.3 Assignment Benefit. This Agreement is personal and may not be assigned by
Executive. This Agreement may be assigned by the Company and shall inure to the
benefit of and be binding upon the successors and assigns of the Company.
8.4 Applicable Law. This Agreement shall be governed by the laws of the State
of California, without regard to the principles of conflicts of laws.
8.5 Notice. Notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the Company at its principal office and to Executive at
Executive's principal residence as shown in the Company's personnel records,
provided that all notices to the Company shall be directed to the attention of
the Board of Directors with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
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8.6 Waiver. The waiver by any party of a breach of any provision of this
Agreement by the other shall not operate or be construed as a waiver of any
other or subsequent breach of such or any provision.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
as of the date and year first above written.
TOTAL RENAL CARE HOLDINGS, INC. EXECUTIVE
/s/ Xxxxx Xxxxxxxxx /s/ Xxxx X. Xxxxx
By: ____________________________________ ________________________________________
Xxxxx Xxxxxxxxx, Director Xxxx X. Xxxxx
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