1
EXHIBIT 10.22
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of March 23, 1998
(the "Effective Date"), by and between MedicalControl Network Solutions, Inc.
(the "Corporation") and Xxxx X. Xxxxxx ("Employee").
WITNESSETH
WHEREAS, the Corporation operates a preferred provider organization
business and may develop a utilization review and case management business (the
"Business"); and
WHEREAS, Employee has competence and experience in network development,
utilization management and other related areas of the managed care business; and
WHEREAS, the Corporation desires to hire Employee as a Senior Vice
President, Network Services of the Corporation, and Employee is willing and
desirous to be so employed under mutually satisfactory terms and conditions; and
WHEREAS, the Corporation and the Employee will be developing its PPO
networks and potentially a utilization review and case management product; and
WHEREAS, the parties desire to provide a full statement of their
agreement in connection with Employee providing the services to the Corporation
during the term of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration hereinafter recited,
the Corporation and Employee agree as follows:
1. Employment as Senior Vice President, Network Services. The
Corporation hereby offers and Employee hereby accepts employment as a Senior
Vice President, Network Services of the Corporation and shall perform the duties
described on Exhibit A and such other similar services for the Corporation as
may be directed from time to time by the President of the Corporation. Employee
shall also use his best efforts to preserve the business of the Corporation and
the goodwill of all employees, customers, suppliers and other persons having
business relations with the Corporation and its affiliates.
2. Reporting Relationship. Employee, in performing his services as a
Senior Vice President, Network Services shall be subject to the control and
direction of the President of the Corporation, shall perform his duties in a
diligent, trustworthy, loyal, businesslike and efficient manner, and shall abide
by all company policies and rules, all for the purpose of advancing the business
of the Corporation.
3. Exclusive Contract. Employee will engage in no other business
activities or affairs whatsoever, neither for another party nor in his own
behalf, and without regard as to whether such services are performed after
established work hours or on weekends without prior approval of the President of
the Corporation.
4. Base Salary. The Corporation shall pay to Employee, and Employee
agrees to accept as full consideration for his employment, $10,833.34 per month
during the term of this Agreement, payable in two equal installments each month,
subject to all withholdings (i) required by federal, state or local law and (ii)
pursuant to any agreement with Employee. Such salary will be increased to
$11,666.67 per
2
month on or about September 23, 1998 if Employee's performance is acceptable to
the President of the Corporation, in his sole discretion. Employee will also be
given a monthly car allowance of $450 and accrue vacation at a rate of four (4)
weeks per year. Employee shall by entitled to participate in the management
incentive program designed for senior staff as adopted from time to time by the
Board of Directors of MedicalControl, Inc.
5. Term. This Agreement shall remain in full force and effect for a
term of three (3) years concluding on March 23, 2001 ("Initial Term"). This
Agreement shall be automatically renewed for one (1) year periods (each a
"Renewal Term"). After the Initial Term, either party may terminate this
Agreement by giving written notice of termination to the other party at least
ninety (90) days prior to such termination.
6. Restrictive Covenants.
(a) Nonemployment Agreement. For a period of eighteen (18) months after
the termination or cessation of his employment with the Corporation for any
reason whatsoever, Employee shall not, on his own behalf or on behalf of any
other person, partnership, association, corporation or other entity, hire or
solicit or in any manner attempt to influence or induce any employee of the
Corporation or its affiliates to leave the employment of the Corporation or its
affiliates, nor shall he use or disclose to any person, partnership,
association, corporation or other entity any information obtained while an
employee of the Corporation concerning the names and addresses of the
Corporation's employees. Businesses that are competitive with the Corporation,
for the purpose of this Section 6, shall be only those that develop, implement
or sell provider network management, utilization review/case management services
or repricing software for preferred provider organizations or provider service
organizations or their industries.
(b) Noncompetition Agreement. Employee acknowledges and agrees that the
training he will receive, the experience he will gain while employed and the
information he will acquire regarding the Corporation's trade secrets and
confidential and proprietary information will enable him to injure the
Corporation if (x) during the term of his employment he should compete with the
Corporation in a business that is competitive with the business conducted or to
be conducted by the Corporation or (y) at any time he should solicit the
customers of the Corporation. For these reasons, Employee hereby agrees as
follows:
(i) Without the prior written consent of the Corporation, Employee
shall not, during the period of employment with the Corporation, directly or
indirectly, either as an individual, a partner or a joint venturer, or in any
other capacity, (i) invest (other than investments in publicly-owned companies
which constitute not more than 1% of the voting securities of any such company)
or engage in any business that is competitive with that of the Corporation or
its affiliates, (ii) accept employment with or render services to a competitor
of the Corporation or any of its affiliates as a director, officer, agent,
employee or consultant, (iii) contact, solicit or attempt to solicit or accept
business from any (A) customers of the Corporation or its affiliates or (B)
person or entity whose business the Corporation or its affiliates is soliciting,
(iv) contact, solicit or attempt to solicit or accept or direct business that is
competitive with such business being conducted by the Corporation during
Employee's employment under this Agreement from any of the customers of the
Corporation or any of its affiliates, or (v) take any action inconsistent with
the fiduciary relationship of an employee to his employer. As used in this
Section 6 of this Agreement, "affiliates" shall mean persons or entities that
directly, or indirectly through one or more intermediaries, control or are
controlled by, or are under common control with, the Corporation. For purposes
of this Agreement, a competitor specifically includes persons, firms, sole
proprietorships, partnerships, companies, corporations or other entities that
market products and/or perform services in
2
3
direct or indirect competition with those marketed and/or performed by the
Corporation or its affiliates within Restricted Area.
(ii) Upon any termination or cessation of his employment with the
Corporation for any reason whatsoever, and for a period of eighteen (18) months
thereafter, Employee shall not, directly or indirectly, either as an individual,
a partner or a joint venturer, or in any other capacity, within Texas, New
Mexico, Oklahoma, Arkansas and Louisiana (the "Restricted Area"), (i) invest
(other than investments in publicly-owned companies which constitute not more
than 1% of the voting securities of any such company) or engage in any business
that is competitive with that of the Corporation or its affiliates or (ii)
contact, solicit or attempt to solicit or accept business (A) from any of the
customers of the Corporation or its affiliates as of the date of this Agreement
or at the time of Employee's termination or cessation of employment, or (B) from
any person or entity whose business the Corporation or its affiliates were
soliciting as of such time.
(c) Severability. The parties hereto intend all provisions of this
Section 6 to be enforced to the fullest extent permitted by law. Employee
acknowledges and agrees that the restrictive covenants in this Section 6 are
reasonable and valid in geographic and temporal scope and in all other respects.
Employee also acknowledges that the enforcement of the restrictive covenants in
this Section 6 will not prevent Employee from finding other employment.
Accordingly, should a court of competent jurisdiction determine that the scope
of any provision of this Section 6 is too broad to be enforced as written, the
parties intend that the court reform the provision to such narrower scope as it
determines to be reasonable and enforceable. In addition, however, Employee
agrees that the noncompetition agreements and nonemployment agreements set forth
above each constitute separate agreements independently supported by good and
adequate consideration and shall be severable from the other provisions of, and
shall survive, this Agreement. The existence of any claim or cause of action of
Employee against the Corporation, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Corporation
of the covenants and agreements of Employee contained in the noncompetition, or
nonemployment agreements. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part of this Agreement; and the remaining provisions
of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
7. Termination. The Corporation may terminate Employee's employment and
this Agreement at any time for just cause. For purposes of this Section 7, "just
cause" for termination shall include (a) the failure or inability for any reason
of Employee to devote his full business time to the Corporation's business, (b)
the failure of Employee to diligently or effectively perform his duties under
this Agreement, (c) the conviction of Employee of any felony, (d) any breach by
Employee of any of the terms of, or the failure to perform any covenant
contained in, this Agreement, or (e) the violation by Employee of instructions
or policies established by the Corporation with respect to the operation of its
business and affairs or Employee's failure to carry out the reasonable
instructions of the President of the Corporation. Prior to asserting any act or
failure to act as just cause for Employee's termination pursuant to this Section
7 (each a "Breach"), the Corporation shall provide Employee a written notice
referencing this Section 7 and setting out the conduct asserted to constitute a
Breach and affording Employee the opportunity and a reasonable time period to
cease the conduct or otherwise cure the Breach. Notwithstanding the foregoing,
in no event shall the Corporation be required to give Employee an opportunity to
cure any Breach more often than once for any specific act or failure to act
during any twelve (12) month period.
3
4
8. Death. This Agreement shall terminate automatically upon the death
of Employee.
9. Disability. If at the end of any month Employee is, and has been for
substantially all the normal working days during six or more consecutive months,
unable to perform the duties specified pursuant to this Agreement, due to mental
or physical disability, then Employee's employment may be terminated by the
Corporation. Any determination of such an inability to perform shall be made
only by the President of the Corporation with such professional advice as he may
deem appropriate. Any determination of disability made by the Corporation's
President shall be final and conclusive. Nothing in this Section 9 shall affect
Employee's disability insurance contract rights.
10. Post-Termination Payments. Upon termination pursuant to Sections 7,
8 and 9 of this Agreement, the Corporation shall pay Employee or his estate any
base salary earned and unpaid to the date of termination, and any outstanding
funds advanced by the Corporation to or on behalf of Employee shall become
immediately due and payable. In the event that any funds are due from Employee
to the Corporation, the Corporation shall, upon termination of Employee's
employment, have a right to reduce any payment due to Employee by the sums owed
to the Corporation. In addition, if termination is pursuant to Sections 8 or 9
of this Agreement, then within ninety (90) days after the end of the
Corporation's fiscal year during which Employee's death or commencement of
disability occurred, the Corporation shall pay Employee or his estate a portion
of the annual incentive compensation, if any has been earned, as prorated by the
Corporation's President, which proration shall be final and conclusive.
11. Prior Agreements. This Agreement terminates, cancels and supersedes
all prior verbal and written understandings between the Corporation and Employee
regarding services covered under this Agreement other than the Employee
Confidentiality Agreement executed by Employee for the benefit of the
Corporation, which is in full force and effect.
12. Complete Agreement. This Agreement embodies the complete, full and
exclusive understanding of the Corporation and Employee with respect to
Employee's employment by the Corporation. Any amendments, additions, or
supplements to or cancellation of this Agreement shall be effective and binding
on the Corporation and Employee if in writing and signed by both parties.
Subject to the provision of Section 14 hereof, this Agreement shall be binding
upon the successors and assigns of the parties. No waiver of a breach hereof
shall be deemed to constitute a waiver of a future breach, whether of a similar
or a dissimilar nature.
13. No Assignment. Neither party hereto may transfer or assign its
rights or interests under this Agreement without the other party's written
consent.
14. Notice. Any written notice given under this Agreement by either
party shall be delivered via certified mail, return receipt requested, via
courier or in person directed to the addressee at the address of such addressee
as hereinafter set forth, unless prior written notice of a change of address has
been furnished, in which case such changed address shall be used:
MedicalControl Network Solutions, Inc.
P. O. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Xxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxx, Xxxxx 00000
4
5
Notice shall be deemed to be given upon the date when delivery is first
attempted at the address of the addressee.
15. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
16. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.
17. Attorney. Employee acknowledges that the General Counsel of the
Corporation represents the Corporation and not Employee. Employee further
acknowledges that the General Counsel of the Corporation advised the Employee
that he should seek legal counsel for the review of this Agreement.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers, and Employee has executed this
Agreement by hereunto setting hand as of the day and year first above written.
/s/ Xxxx X. Xxxxxx
-------------------------------------------
Xxxx X. Xxxxxx
MedicalControl Network Solutions, Inc.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx, President and Chief
Executive Officer
5
