EXHIBIT 10.50
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, entered into on
December 9, 1994 (the "Signing Date"), amended on February 24, 1995, October 11,
1996, April 21, 1997 and July 15, 1997 and dated as of the 1st day of July, 1994
(the "Effective Date"), between DOCTORS HEALTH, INC. (formerly Doctors Health
System, Inc.), a Maryland corporation (the "Company") and XXXXX X. XXXXXX (the
"Physician Executive").
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BACKGROUND
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The Company is engaged, directly or through service contracts
with others, in the business of (i) negotiating contracts to provide health care
services and products, (ii) managing health care providers, and (iii) providing
health care services and products (the "Business").
The Physician Executive is a primary care physician with
substantial skills and knowledge in the management and development of physician
practices, and is experienced in creating and expanding a physician run equity
model group practice working with hospitals, managed care organizations and
other physicians.
The Executive and the Company previously entered into an
Amended and Restated Employment Agreement dated April 21, 1997, a copy of which
is attached hereto (the "Prior Agreement"), and each desires to amend and
restate the Prior Agreement in its entirety to incorporate certain additional
matters.
The Company desires to hire the Physician Executive, and the
Physician Executive desires to work for the Company, on the terms and conditions
set forth in this Agreement.
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT. (a) Effective upon the Effective
Date, the Company shall employ the Physician Executive as its Executive
Vice President and Director of Development. In such capacities, the
Physician Executive shall have the duty, responsibility and authority
for designing and implementing medical and non-medical policies and
procedures, and investigating, structuring and negotiating on behalf of
the Company and its Subsidiaries the
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purchase of primary care physician practices, and shall assist with the
creation of, contractual relationships with hospitals, physician
specialists, medical institutions and providers, negotiating managed
care and other contracts, and related matters involving the growth and
development of the Business, all after consultation with the Company's
Executive Vice President and Director of Medical Affairs and subject to
the guidelines, policies and control of the Company's Chief Executive
Officer and Board of Directors (the "Board"), to whom he shall report.
The Physician Executive shall perform such other duties within these
general parameters as the Chief Executive Officer or the Board may from
time to time designate. The Physician Executive shall perform his duties
faithfully and to the best of his abilities. The Physician Executive
shall also serve (A) during the Term, as a director of the Company
(subject to the power of the Board and the Shareholders of the Company
to remove him as set forth in the Company's Bylaws), (B) as a director
of all of the Company's Subsidiaries (as defined in SECTION 5.2), and
(C) until the "Financing Date" (as defined in SECTION 3.1(B)), as the
Chairman of the Board, all without any additional compensation.
(b) The Physician Executive shall
devote a significant portion of his working time and creative energies
to the performance of his duties hereunder and will at such times devote
such efforts as are reasonably sufficient for fulfilling the significant
responsibilities entrusted to him. So long as such activities, in the
aggregate, do not interfere with the performance by the Physician
Executive of his duties hereunder: (i) the Physician Executive shall be
permitted a reasonable amount of time to engage in the practice of
medicine as an employee of Baltimore Medical Group, Inc. and to
supervise his personal, passive, investments; (ii) the Physician
Executive shall be permitted a reasonable amount of time to participate
(as board member, officer or volunteer) in civic, political and
charitable activities; (iii) the Physician Executive shall be permitted
to deliver lectures to and teach at educational institutions and
business organizations; and (iv) subject to the provisions of SECTION 5
hereof, the Physician Executive may serve as a director or trustee of
one or more corporations not affiliated with the Company.
1.2 PLACE OF EMPLOYMENT. The Physician Executive's
principal place of employment shall be in the Baltimore, Maryland metropolitan
area, subject to such travel as may be reasonably required by his
employment pursuant to the terms hereof. The Physician Executive shall
not be required to relocate outside of the Baltimore, Maryland
metropolitan area during the Term, except by mutual agreement.
2. TERM OF EMPLOYMENT. The term of the Physician Executive's
employment under this Agreement (the "Term") shall commence on the Effective
Date and shall end on April 1, 2000 unless sooner terminated, or later extended,
as herein provided. Not later than February 1, 2000 (and each February 1 of each
calendar year during any Extension Period (defined below)), the Company and the
Physician Executive shall enter into good faith negotiations to determine
whether and on what terms to extend or renew this Agreement
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beyond April 1 of such calendar year. If by October 15, 1999 (and
October 15 of any calendar year occurring during an Extension Period)
either party gives written notice to the other of its desire to
terminate this Agreement as of April 1, then this Agreement shall so
terminate, and the Physician Executive shall be permitted a reasonable
amount of time during the balance of the Term within which to explore
alternative employment opportunities. If no such written notice to
terminate is given by either party by October 15, 1999 (or by October 15
of any calendar year occurring during an Extension Period), then the
Term shall, without further act or deed, automatically be extended upon
the same terms and conditions as previously in effect, for an additional
12 month period, commencing on April 1 of the applicable calendar year
and ending on March 31 of the immediately following calendar year. Each
such 12 month extension during the Term is referred to herein as an
"Extension Period", and shall constitute a part of the Term of this
Agreement for all purposes, including the provisions regarding
extensions contained in this Section 2.
3. COMPENSATION.
3.1 SALARY. As compensation for all services to be
rendered pursuant to this Agreement, the Company shall pay to the
Physician Executive, during the Term, a "Base Salary" (as defined in
this SECTION 3.1) less such deductions as shall be required to be
withheld by applicable laws and regulations. The "Base Salary" from July
1, 1997 to December 31, 1997 shall be a salary of $187,500 per annum,
subject to upward adjustment as determined by the Executive Committee of
the Board of Directors of the Company. The amount of the Base Salary has
been established based upon the mutual assumption by the Company and the
Physician Executive that the Physician Executive shall devote
approximately seventy-five percent (75%) of his working time and
creative energies to the performance of his duties hereunder. The
Company and the Physician Executive acknowledge and agree that because
the performance by the Physician Executive of his duties hereunder will
be of critical importance to the growth and prosperity of the Company,
the Company shall from time to time, in its reasonable discretion,
evaluate and determine the working time and creative energies that the
Physician Executive has devoted to the performance of his duties
hereunder during any preceding three (3) month period (it being
understood and agreed that the Physician Executive's use of permitted
vacation hereunder shall not be included in such determination). If the
Company determines that the Physician Executive has devoted
significantly more or significantly less of his working time and
creative energies to his duties hereunder during any such period, his
Base Salary will be adjusted, up or down, by the Company (in the
exercise of its reasonable discretion) on each such occasion, commencing
with the beginning of the fiscal quarter of the Company immediately
following the Signing Date. The Base Salary shall accrue from and after
the Effective Date, and shall be payable in arrears in equal monthly
installments each year.
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3.2 BONUS. The Physician Executive shall be eligible to
receive an annual bonus based upon the extent to which the Physician
Executive's performance meets or exceeds agreed upon performance
standards or the Physician Executive otherwise performs in an exemplary
manner, all in the sole discretion of the President and the Compensation
Committee of the Board of Directors of the Company.
3.3 STOCK; OPTION GRANT.
(a) The Company has transferred to the Physician
Executive twenty-five (25) shares of the voting common stock of the
Company. As a result of duly adopted resolutions of the Company's
directors and shareholders, and the filing with the Maryland SDAT of
Amended Articles of Incorporation of the Company, such 25 shares of
voting common stock have been reclassified and a stock dividend
declared, so that the Physician Executive on the date hereof is the
registered owner of 100,000 shares of the Company's Class A Common Stock
(the "Class A Common Stock"). On August 10, 1995, the Company issued to
the Physician Executive, in addition to the Stock, an option (the
"Option") to purchase an additional 100,000 shares of its Class A Common
Stock (the "Additional Stock").
(b) So long as the Physician Executive's employment
hereunder has not been earlier terminated by the Company pursuant to
the provisions of SECTION 4.3(A) hereof, the Option shall vest in full
upon the earlier to occur of (i) a Change in Control of the Company, or
(ii) twenty-four (24) months from the Signing Date, or (iii) termination
of the Physician Executive's employment pursuant to SECTION 4.3(B) or
SECTION 4.4 (such earlier date, the "Vesting Date"). The option price
for the Additional Shares shall be $25 in the aggregate; to the extent
the number of shares, or the class, or designation, of the Stock is
changed as the result of a reclassification, stock split, stock dividend
or other similar event, the number and/or class of shares of Additional
Stock issuable under the Option shall be adjusted accordingly. The
Option may not be exercised within one year of the Vesting Date, except
upon an earlier Change in Control of the Company.
(c) All Stock and Additional Stock transferred to
the Physician Executive hereunder is and shall remain subject to any
transfer restrictions and other protections as are set forth in the
Company's Charter, By-laws, or in any Shareholder's Agreement, and the
certificates or other instruments representing such stock shall bear or
contain a legend or statement regarding such transfer restrictions.
(d) "Change in Control" shall mean the earlier to
occur of (i) a liquidating distribution to Company's shareholders (or
similar event); (ii) a contribution, consolidation or merger where Company is
not the survivor; (iii) any sale, exchange or other disposition of all, or
substantially all of Company's assets; (iv) any public offering of
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Company's securities at a company value of at least $25,000,000 with
proceeds to Company of at least $15,000,000.
3.4. WITHHOLDING. The Company is authorized to withhold
from the amount of any Salary and Bonuses and any other things of value
paid to or for the benefit of the Physician Executive (other than
transfers of Stock), all sums authorized by the Physician Executive or
required to be withheld by law, court decree, or Physician Executive
order, including (but not limited to) such things as income taxes,
employment taxes, and employee contributions to fringe benefit plans
sponsored by the Company.
3.5 PARTICIPATION IN PHYSICIAN EXECUTIVE BENEFIT PLANS.
The Physician Executive shall be permitted during the Term, if and to
the extent eligible, to participate in any group life, hospitalization
or disability insurance plan, health program, automobile allowance,
pension plan or similar benefit plan of the Company which may be
available to other comparable executives and professional employees of
the Company, generally on the same terms as such other executives.
3.6 VACATION. The Physician Executive will receive at
least 4 weeks vacation per year, to be scheduled and taken at the
Physician Executive's option at such times as his duties may permit.
Should the Company's policy provide for more vacation to comparable
Physician Executives the Physician Executive will be accorded such
higher vacation. Unused vacation time shall not be cumulated or carried
over nor shall the Physician Executive receive any compensation for
unused vacation time.
3.7 EXPENSES. Subject to such policies as may from time
to time be established by the Board, the Company shall pay or reimburse
the Physician Executive for all ordinary, necessary and reasonable
expenses (including, without limitation, travel, meetings, dues,
subscriptions, fees, educational expenses, computer equipment and the
like) actually incurred or paid by the Physician Executive during the
Term in the performance of the Physician Executive's services under this
Agreement (including, without limitation, expenses incident to
attendance at board or management meetings of the Company, or its
Subsidiaries or Affiliates), upon presentation of expense statements or
vouchers or such other supporting information as the Board may require.
3.8 DEFERRED COMPENSATION. As soon as practicable
following execution of this Agreement, the Company shall pay the
Physician Executive $75,000 in full satisfaction of all deferred
compensation obligations of the Company to him for services performed
from the Signing Date to June 30, 1997.
4. TERMINATION.
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4.1 TERMINATION UPON DEATH. If the Physician
Executive dies during the Term, the Physician Executive's employment
shall terminate as of the date of death of the Physician Executive.
4.2 TERMINATION UPON DISABILITY. Notwithstanding any
other provision of this Agreement (except the other provisions of this
Section 4.2), if during the Term the Physician Executive becomes
physically, mentally or emotionally disabled, whether totally or
partially, as determined by an independent qualified physician, so that
the Physician Executive is, in the good faith determination of the
Board, substantially unable to perform his services hereunder for (i) a
period of three consecutive months, or (ii) shorter periods aggregating
three months during any twelve month period, the Company may (a)
continue the Physician Executive's employment hereunder until one (1)
year following the end of the Term at a Base Salary equal to the Base
Salary in effect at the time of the determination of the disability, or
(b) by written notice to the Physician Executive, terminate the
Physician Executive's employment hereunder as of the date of such
written notice and pay the Physician Executive as severance an amount
equal to the amount he would have been paid (at the Base Salary that is
in effect on the date of termination) for the period from the date of
termination until one (1) year following the end of the Term if his
employment had not been terminated. The preceding sentence shall be in
effect only until, and shall terminate upon, the occurrence of any of
the following events: (a) the cessation of the Company's business, (b)
the bankruptcy, liquidation, receivership, or dissolution of, or
assignment for the benefit of creditors by, the Company, (c) any Change
in Control of the Company (as defined in the Company's Amended and
Restated Stockholders Agreement, as it may be amended from time to
time), or (d) the consummation of any public offering of the Company's
capital stock (the "Extraordinary Events"). If any Extraordinary Event
occurs and thereafter the Physician Executive becomes physically,
mentally or emotionally disabled, whether totally or partially, as
determined by an independent qualified physician, so that the Physician
Executive is, in the good faith determination of the Board,
substantially unable to perform his services hereunder for (i) a period
of three consecutive months, or (ii) shorter periods aggregating three
months during any twelve month period, the Company may at any time after
the last day of the three consecutive months of disability or on the
last day of the shorter period aggregating three months of disability,
by written notice to the Physician Executive, terminate the Physician
Executive's employment hereunder as of the date such written notice
becomes effective.
4.3 TERMINATION AT ELECTION OF COMPANY.
(a) Notwithstanding any other
provision of this Agreement, the Company may terminate the Physician
Executive's employment hereunder at any time upon: (i) the continued
failure or refusal by, or manifest inability of, the Physician Executive
to perform his duties after reasonable prior notice to the Physician
Executive; (ii) the Physician
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Executive engaging in any acts or omissions involving dishonesty or acts or
omissions that demonstrate a lack of integrity; (iii) the conviction of the
Physician Executive of a felony; (iv) the Physician Executive engaging in acts
or omissions that demonstrably and materially injure the business and affairs
of the Company, monetarily or otherwise; and/or (v) any knowing material
misrepresentation made by the Physician Executive to the Company or any
material breach by the Physician Executive of his obligations hereunder.
(b) In addition to the Company's
right to terminate the Physician Executive's employment pursuant to
SECTION 4.3(A), and notwithstanding any other provision of this
Agreement, the Company may, for any or for no reason, terminate the
Physician Executive's employment upon 60 days prior written notice to
the Physician Executive.
4.4 TERMINATION BY THE PHYSICIAN EXECUTIVE.
(a) Provided that the Physician
Executive has delivered to the Board at least sixty (60) days prior
written notice setting forth in reasonable detail any alleged material
breach by the Company of this Agreement or other acts or omissions
engaged in by the Company constituting "constructive termination" of the
Physician Executive's employment with the Company, which breach, acts or
omissions have not been cured by the Company as of the end of such
period to the reasonable satisfaction of the Physician Executive, then,
notwithstanding any other provision of this Agreement, the Physician
Executive shall be entitled to terminate his employment for such
reasons, effective immediately upon the delivery by the Physician
Executive to the Board of a notice to the effect that such breach, acts
or omissions have not been cured to the reasonable satisfaction of the
Physician Executive; provided, however, that if such constructive
termination is caused by the Physician Executive's incapacity or
inability to serve due to a disability of the type described in SECTION
4.2 above and the Company elects to terminate the Physician Executive
pursuant to the provisions of SECTION 4.2, the Physician Executive
shall, for purposes of this Agreement, be deemed to have been terminated
pursuant to the provisions of SECTION 4.2 and not of this SECTION 4.4.
(b) For purposes of this SECTION
4.4, "constructive termination" shall be limited to those circumstances
where (i) the Company creates working conditions that a reasonable
person in the Physician Executive's position would consider unreasonable
or intolerable which is not remedied by the Company sixty (60) days
after notice thereof given by the Physician Executive;; and (ii) such
working conditions are not generally applicable to other Physician
executives of the Company.
4.5 COMPENSATION AND BENEFITS FOLLOWING
TERMINATION OF EMPLOYMENT.
(a) In the event of termination
of the Physician Executive's employment for any reason other than a
termination pursuant to SECTION 4.3(B) or SECTION 4.4
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(or a termination caused merely by the expiration of the Term): (i) all
compensation and other benefits payable or provided hereunder shall
cease as of the date of termination; and (ii) Base Salary (if any) then
payable or accrued through the date of termination and all accrued
benefits (if any) then payable to the Physician Executive pursuant to
the terms of any plans or arrangements referred to in SECTION 3.5 shall
be paid to the Physician Executive (or to his heirs, legatees and/or
legal representatives) through the date of termination.
(b) In the event of termination
of the Physician Executive's employment pursuant to SECTION 4.3(B)
or SECTION 4.4, the Physician Executive (or, in the event of the
Physician Executive's subsequent death or disability, his heirs,
legatees and/or legal representatives) shall receive, when and as the
same would have been payable hereunder if the Physician Executive's
employment had not been so terminated, each of the following payments
and benefits:
(i) all accrued
benefits (if any) then payable to the Physician Executive pursuant
to the terms of any plans or arrangements referred to in SECTION 3.5;
(ii) with respect to any
periods after June 30, 1996, 50% of the Base Salary which would have
been due to the Physician Executive from July 1, 1996 through the
remainder of the Term, at the times such payments would otherwise be
made, all as if this Agreement were still in effect; and
(iii) subject to the
provisions of the Company's Amended and Restated Articles, By-laws, the
Shareholder's Agreement, and the Option Agreement all of the shares of
Additional Stock issuable under the Option pursuant to SECTION 3.3 shall
be issued to the Physician Executive free of any restrictions.
(c) In the event of termination
under SECTION 4.2 (disability), the Physician Executive or his legal
representative, as the case may be, shall, in addition to such other
payments as may be due hereunder, be entitled to receive the proceeds of
any disability policies maintained by the Company and payable to the
Physician Executive.
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5. CERTAIN COVENANTS OF THE PHYSICIAN EXECUTIVE.
5.1 NECESSITY FOR COVENANTS. The Physician
Executive acknowledges that (i) the Company, its Subsidiaries and its
Affiliates (as defined in SECTION 5.2) are engaged in the Business, and
will in the future be engaged in the Business; (ii) his work and
providing management services to health care entities for the Company
and its Affiliates will give him access to customers and suppliers of,
and trade secrets of and confidential information concerning, the
Company, its Subsidiaries and its Affiliates; and (iii) the agreements
and covenants contained in this SECTION 5 are essential to protect the
business and goodwill of the Company, its Subsidiaries and its
Affiliates. In order to induce the Company to enter into this Agreement
and pay the compensation and other benefits at the levels requested by
the Physician Executive, the Physician Executive enters into the
following covenants:
5.2 DEFINITIONS.
(a) For purposes of SECTIONS 5.3
through 5.8 only, the term "Company" shall include the Company and
all of the Company's, Subsidiaries and Affiliates.
(b) "Provider" shall mean any health
care service provider or Affiliate thereof to whom the Company provided
management or other services.
(c) "Payor" means any insurer,
employer, health maintenance organization, preferred provider
organization, health benefit plan or other entity or organization to
which, or to whose members, insured's, employees, enrollees,
beneficiaries or other persons affiliated with it (collectively
"Beneficiaries"), the Company provides services or products.
(d) "Service Area" means the
geographic area in which the Company provides health care services and
in which the Beneficiaries of those services generally reside, which
shall include all areas within a 25 mile radius of the site of any
Provider's office.
(e) "Subsidiary" means any
person or entity in which the Company owns, beneficially or
otherwise, an equity interest of more than 50%.
(f) "Affiliate" means a
Subsidiary of the Company; a person or entity which is owned,
controlled, or operated by the Company; any person owning an equity
interest in the Company; any person who has appointed the Company as its
exclusive agent for the provision of professional services and the
collection of revenues therefrom; and any partner, member, employee,
owner or agent of any Affiliate and any person or entity which is under
common ownership, control or operation with the specified person or
entity.
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5.3 RESTRICTIONS. During the Term and,
unless the Physician Executive's employment is terminated other than
pursuant to SECTIONS 4.3(B) or 4.4 hereof, for a period of twelve (12)
months after the Physician Executive's employment hereunder is
terminated (the "Termination Date") (the "Restricted Period"), the
Physician Executive shall not, directly or indirectly, for himself or on
behalf of any other person, firm, corporation or other entity, whether
as a principal, agent, employee, stockholder, partner, officer, member,
director, sole proprietor, or otherwise:
(a) call upon or solicit any
Provider for the purpose of persuading the Provider to engage the
Physician Executive or any other person, firm, corporation or other
entity to provide services which are the same or similar to those the
Company provided to the Provider;
(b) call upon or solicit any
Payor for the purpose of persuading the Payor to engage any person or
entity other than the Company to provide health care services to the
Payor with respect to any of its Beneficiaries in the Service Area;
(c) solicit, participate in or
promote the solicitation of any person who was employed by the Company
or a Provider at any time during the twelve (12) months preceding the
Termination Date to leave the employ of the Company, or hire or engage
any of those persons;
(d) make any disparaging remarks
about the Company's business, services or personnel;
(e) interfere in any way with
the Company's business, prospects or personnel; or
(f) become affiliated with or render
services to any person engaged in any business that competes with the
Business within the Service Area, directly or indirectly, in any
capacity, including, without limitation, as an individual, partner,
shareholder, officer, director, principal, agent, employee, trustee or
consultant; provided, however, that the Physician Executive may own,
directly or indirectly, solely as an investment, securities which are
publicly traded if the Physician Executive (a) is not a controlling
person of, or a member of a group which controls, the issuer and (b)
does not, directly or indirectly, own 5% or more of any class of
securities of the issuer.
5.4 TRADE SECRETS AND CONFIDENTIAL INFORMATION
5.4.1 TRADE SECRETS DEFINED.
The term "Trade Secrets," as used in this Agreement, includes,
without limitation, (i) all information concerning billing practices and
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procedures of the Company, (ii) the rates and amounts that the Company
pays to its personnel, (iii) information about the Company's contracts
with insurers, health maintenance organizations, employers, and other
payors, (iv) all formulae, compilations, programs, devices, lists,
methods, techniques or processes of the Company, and (v) all other
information of the Company that would be deemed to be "trade secrets"
within the meaning of the Maryland Uniform Trade Secrets Act (the
"Act").
5.4.2 CONFIDENTIAL INFORMATION
DEFINED. Any other information not qualifying as a Trade Secret, but
relating to the business of the Company which is disclosed by the
Company to the Physician Executive, or is discovered by the Physician
Executive in the course of employment, is Confidential Information.
5.4.3 DUTY TO MAINTAIN SECRECY
AND CONFIDENTIALITY. During the Period of the Physician Executive's
employment with the Company, the Physician Executive shall maintain the
secrecy and confidentiality of the Trade Secrets and the Confidential
Information and shall not (i) divulge, furnish or make accessible to
anyone or in any way or use, for his own benefit or for the benefit of
any other individual firm or entity (other than in the ordinary course
of the Company's business), any Trade Secret or Confidential
Information; (ii) take or permit any action to be taken which would
reduce the value of the Trade Secrets or Confidential Information to the
Company; or (iii) otherwise misappropriate or suffer the
misappropriation of the Trade Secrets or the Confidential information,
within the meaning of the Act. After the Termination Date, Physician
Executive shall continue to maintain the secrecy and confidentiality of
such information, but only to the extent that the Physician Executive is
prohibited from directly or indirectly competing with Company pursuant
to the provisions of SECTION 5.3.
5.4.4 INFORMATION WHICH IS
PUBLICLY KNOWN. Notwithstanding anything herein to the contrary,
the obligations of secrecy and confidentiality set forth herein shall
not apply to any information which is now generally publicly known or
which subsequently becomes generally publicly known other than as a
direct or indirect result of the breach of this Agreement by the
Physician Executive, or which is required by law or order of any court
to be disclosed.
5.5 PROPERTY OF THE COMPANY. All
memoranda, notes, lists, records and other documents or papers (and
all copies thereof), including but not limited to, such items stored in
computer memories, on microfiche or by any other means, made or compiled
by or on behalf of the Physician Executive, or made available to the
Physician Executive concerning the Business, are and shall be the
property of the Company and shall be delivered to the Company promptly
upon the termination of the Physician Executive's employment with the
Company or at any other time on request; provided however, that the
Physician Executive may inspect during normal business hours such
records as shall be necessary for the purpose
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of assisting the Physician Executive to file, or prepare for an audit
of, his personal income tax returns.
5.6 PHYSICIAN EXECUTIVE'S IDEAS, ETC.
All inventions, prototypes, discoveries, improvements, innovations
and the like ("Inventions") and all works of original authorship or
images that are fixed in any tangible medium of expression and all
copies thereof ("Works") which are designed, created or developed by
Physician Executive, solely or in conjunction with others, in the course
of performance of the Physician Executive's duties which relate to the
Business, shall be made or conceived for the exclusive benefit of and
shall be the exclusive property of the Company. The Physician Executive
shall immediately notify the Company upon the design, creation or
development of all Inventions and Works. At any time thereafter, the
Physician Executive, at the request and expense of the Company, shall
execute and deliver to the Company all documents or instruments which
may be necessary to secure or perfect the Company's title to or interest
in the Inventions and Works, including but not limited to applications
for letters of patent, and extensions, continuations or reissues
thereof, applications for copyrights and documents or instruments of
assignment or transfer. All Works are agreed and stipulated to be "works
made for hire," as that term is used and understood within the Copyright
Act of 1976, as amended. To the extent any Works are not deemed to be
works made for hire as defined above, and to the extent that title to or
ownership of any Invention or Work and all other rights therein are not
otherwise vested exclusively in the Company, the Physician Executive
shall, without further consideration but at the expense of the Company,
assign and transfer to the Company the Physician Executive's entire
right, title and interest (including copyrights and patents) in or to
those Inventions and Works.
5.7 RIGHTS AND REMEDIES UPON BREACH. If
the Physician Executive breaches, or threatens to commit a breach of,
any of the provisions of SECTIONS 5.1 through 5.6 (the "Restrictive
Covenants"), the Company shall, in addition to its right immediately to
terminate this Agreement, have the right and remedy (which right and
remedy shall be independent of others and severally enforceable, and
which shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity) to have the
Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach could cause irreparable injury to the Company or its
Affiliates and that money damages may not provide adequate remedy to the
Company.
5.8 COVENANTS CURRENTLY BINDING
PHYSICIAN EXECUTIVE. The Physician Executive warrants that his
employment by the Company will not (a) violate any non-disclosure
agreements, covenants against competition, or other restrictive
covenants made by the Physician Executive to or for the benefit of any
previous employer or partner, or (b) violate or constitute a breach or
default under, any statute, law, judgment, order, decree, writ,
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injunction, deed, instrument, contract, lease, license or permit to
which the Physician Executive is a party or by which the Physician
Executive is bound.
5.9 LITIGATION. There is no litigation,
proceeding or investigation of any nature (either civil or criminal)
which is pending or, to the best of the Physician Executive's knowledge,
threatened against or affecting the Physician Executive or which would
adversely affect his ability to substantially perform the duties herein.
5.10 REVIEW. The Physician Executive
has received or been given the opportunity to review the provisions of
this Agreement, and the meaning and effect of each provision, with
independent legal counsel of the Physician Executive's choosing.
5.11 SEVERABILITY OF COVENANTS. The
Physician Executive acknowledges and agrees that the Restrictive
Covenants are reasonable and valid in geographical and temporal scope
and in all respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.
5.12 BLUE-PENCILING. If any court
determines that any of the Restrictive Covenants, or any part thereof,
is unenforceable because of the duration or geographic scope of such
provision, such court shall have the power to reduce the duration or
scope of such provision, as the case may be, and, in its reduced form,
such provision shall then be enforceable and shall be enforced. If any
such court declines to so revise such covenant, the parties agree to
negotiate in good faith a modification that will make such duration or
scope enforceable.
5.13 ENFORCEABILITY IN JURISDICTIONS.
The parties intend to and hereby confer jurisdiction to enforce the
Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Covenants. If the courts of any one or more
of such jurisdictions hold any Restrictive Covenant unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of
the parties that such determination not bar or in any way affect the
Company's right to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such Covenants, as to
breaches of such Covenants in such other respective jurisdictions, such
Covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
5.14 EXTENSION. If the Physician
Executive violates any Restrictive Covenant, the Company shall not be
deprived of the full benefit of the period of the covenant. Accordingly,
the duration of that covenant shall be extended by the period of any
violation of that covenant.
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5.15 REMEDIES. The Company shall be
entitled to injunctive or other equitable relief because it will be
caused irreparable injury and damage by a breach of the provisions of
any of the Restrictive Covenants. The right to injunctive relief shall
include the right to both preliminary and permanent injunctions. The
Company shall not be required to post a bond or other similar assurance
if it brings an action to enforce the provisions of any of the
Restrictive Covenants. The Company's right to equitable relief shall not
preclude any other rights or remedies which the Company may have, all of
which rights and remedies are cumulative.
6. DISPUTE RESOLUTION.
6.1 COSTS OF LITIGATION. If either party
files suit or brings an arbitration proceeding to enforce its rights
under this Agreement, the prevailing party shall be entitled to recover
from the other party all expenses incurred by it in preparing for and in
trying the case, including, but not limited to, investigative costs,
court costs and reasonable attorney's fees.
6.2 CONSENT TO JURISDICTION. The
parties submit to the jurisdiction and venue of the courts of the
State of Maryland.
6.3 NO JURY TRIAL. NEITHER PARTY SHALL
ELECT A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT.
6.4 ARBITRATION. Any dispute between
the Company and the Physician Executive concerning any part of the
Physician Executive's compensation arising under SECTION 3 or SECTION 4
hereof shall be resolved by binding arbitration pursuant to the terms of
SCHEDULE 6.4, attached hereto as a part hereof.
7. OTHER PROVISIONS.
7.1 NOTICES. Any notice or other
communication required or which may be given hereunder shall be in
writing and shall be delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered or express mail,
postage paid, and shall be deemed given when so delivered personally,
telegraphed, telexed or sent by facsimile transmission or, if mailed,
four days after the date of mailing, as follows:
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(i) if to the Company, to:
Doctors Health System, Inc.
00000 Xxxx Xxx Xxxxxx
00xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: President
Doctors Health System, Inc.
00000 Xxxx Xxx Xxxxxx
00xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Director of Legal Services
(ii) if to the Physician Executive, to:
Xxxxx X. Xxxxxx
Doctors Health System, Inc.
00000 Xxxx Xxx Xxxxxx
00xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Any party may by notice given in accordance with this Section
to the other party designate another address or person for receipt of notices
hereunder.
7.2 ENTIRE AGREEMENT. This Agreement
contains the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements and
understandings, written or oral, with respect thereto, including the
Prior Agreement.
7.3 WAIVERS AND AMENDMENTS. This
Agreement may be amended, modified, superseded, canceled, renewed
or extended, and the terms and conditions hereof may be waived, only by
a written instrument signed by the Physician Executive and a duly
authorized officer of the Company (each, in such capacity, a party) or,
in the case of a waiver, by the party waiving compliance. No delay on
the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the
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part of any party of any right, power or privilege hereunder, nor any
single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.
7.4 GOVERNING LAW. This Agreement
has been negotiated and is to be performed in the State of Maryland,
and shall be governed and construed in accordance with the laws of the
State of Maryland applicable to agreements made and to be performed
entirely within such State.
7.5 COUNTERPARTS. This Agreement may
be executed in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and
the same instrument.
7.6 CONFIDENTIALITY. Neither party
shall disclose the contents of this Agreement or of any other agreement
they have simultaneously entered into to any person, firm or entity,
except the agents or representatives of the parties, or except as
required by law.
7.7 WORD FORMS. Whenever used herein,
the singular shall include the plural and the plural shall include the
singular. The use of any gender, tense or conjugation shall include all
genders, tenses and conjugations.
7.8 HEADINGS. The Section headings have
been included for convenience only, are not part of this Agreement,
and are not to be used to interpret any provision hereof.
7.9 BINDING EFFECT AND BENEFIT. This
Agreement shall be binding upon and inure to the benefit of the
parties, their successors, heirs, personal representatives and other
legal representatives. This Agreement may be assigned by the Company to
any entity which buys substantially all of the Company's assets.
However, the Physician Executive may not assign this Agreement without
the prior written consent of the Company.
7.10 SEPARABILITY. The covenants
contained in this Agreement are separable, and if any court of
competent jurisdiction declares any of them to be invalid or
unenforceable, that declaration of invalidity or unenforceability shall
not affect the validity or enforceability of any of the other covenants,
each of which shall remain in full force and effect.
7.11 CONSENT OR APPROVAL. Whenever under
the terms of this Agreement the approval or consent of the Company is
required or the Company must make any determination, the Company, unless
this Agreement specifically requires otherwise, may not unreasonably
withhold or delay that consent or approval.
7.12 BACKGROUND. The Background is a part of this
Agreement.
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IN WITNESS WHEREOF, the parties, intending to be legally
bound, have executed this Agreement or caused it to be executed and attested by
their duly authorized officers as a document under seal on the day and year
first above written.
ATTEST/WITNESS: DOCTORS HEALTH, INC.
/s/ Xxxx Xxxxxx By: /s/ Stewart B. Gold
___________________, Secretary _________________________(SEAL)
Stewart B. Gold, President
PHYSICIAN EXECUTIVE:
/s/ Xxxxxx Xxxx /s/ Xxxxx X. Xxxxxx
___________________ _________________________(SEAL)
Xxxxx X. Xxxxxx
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SCHEDULE 6.4
ARBITRATION PROCEDURE
1. INSTITUTION OF ARBITRATION PROCEEDING.
1.1. Any party to this Agreement (an "Initiating Party") may initiate
an arbitration proceeding (the "Proceeding") to resolve a dispute subject to
resolution under this Schedule (a "Dispute") by giving written notice (the
"Dispute Notice") to the other party (the "Responding Party") to such Dispute.
The Dispute Notice shall describe the substance of the Dispute with sufficient
specificity to give the Responding Party adequate notice of its nature. Unless
otherwise specified, time periods specified in this Schedule 6.4 shall be
calculated from the date of the Dispute Notice (the "Commencement Date").
2. SELECTION OF ARBITRAL PANEL.
2.1. The Arbitral Panel (the "Panel") shall consist of three
arbitrators, two of whom (the "Party Designated Arbitrators") shall be selected
by the parties pursuant to Section 2.2 hereof. The third arbitrator shall be a
"Neutral Arbitrator" selected by the Party Designated Arbitrators pursuant to
Section 2.3 hereof.
2.2. The Initiating Party shall designate its Party Designated
Arbitrator in the Dispute Notice. Within fifteen days of the Commencement Date,
the Responding Party shall designate its Party Designated Arbitrator.
2.3. Within forty-five days of the Commencement Date, the two Party
Designated Arbitrators shall agree upon and appoint a Neutral Arbitrator who
shall be an accountant and a partner in an international, "Big Six" accounting
firm.
2.4. Each party agrees promptly to disclose to the other party any
circumstances known to it which would cause reasonable doubt regarding the
impartiality of an individual under consideration or appointed as the Neutral
Arbitrator and any such individual shall also promptly disclose to the parties
any such circumstances.
2.5. During the process of selecting the Neutral Arbitrator and
thereafter during the course of this Proceeding, ex parte communications with
the Neutral Arbitrator or any individual under consideration as the Neutral
Arbitrator are prohibited and shall be disclosed by the party making any ex
parte communication, the Neutral Arbitrator or any individual under
consideration as a Neutral Arbitrator immediately upon discovery.
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3. PRE-HEARING PROCEDURES.
3.1. Within fifteen days of the appointment of the Neutral Arbitrator,
the Panel may convene a Pre-Hearing Conference to, inter alia, familiarize the
Neutral Arbitrator with the nature of the Dispute between the Parties, determine
the need for and the nature of discovery and establish a procedural schedule for
the further conduct of the Proceeding.
4. DISCOVERY.
4.1. Discovery, appropriately limited by the nature of the Dispute, is
expressly contemplated and permitted. However, the Parties acknowledge and agree
that one of the benefits of resolving Disputes through arbitration is the
opportunity reasonably to limit discovery. The Parties further agree that they
will endeavor to agree upon procedures and a schedule for discovery that will
result in a prompt and fair hearing under these procedures.
4.2. Discovery requests and responses need not be served upon the Panel
but the Panel shall promptly convene upon motion of either party to resolve
discovery disputes, if any.
4.3. Discovery will be completed within sixty days of the Pre-Hearing
Conference.
5. SUBMISSION OF EVIDENCE AND HEARING.
5.1. The Panel may receive evidence in the form of written statements
filed prior to Hearing for cross-examination on such statements or may receive
oral testimony at Hearing. Each party shall be entitled to submit rebuttal
testimony. The Panel may also permit opening and closing statements of counsel
at Hearing.
5.2. The Panel shall convene for Hearing the evidence and argument of
the parties at a time and place to be established by the Panel. The Hearing
shall be held no later than thirty days after the close of discovery or thirty
days after the Pre-Hearing Conference if there is no discovery.
5.3. At the Hearing, and for all other purposes related to the
Proceeding, the Initiating Party shall be deemed the party seeking affirmative
relief, shall go first and shall bear the burdens of proof and of persuasion.
5.4. The Hearing shall be transcribed.
6. POST-HEARING PROCEDURES.
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6.1. The Panel may request Post-Hearing briefs and, if it does so,
shall establish a schedule for submission of such briefs at the close of
Hearing.
6.2. Within thirty days of the later of the close of the Hearing or its
receipt of Post-Hearing briefs, the Panel shall issue a written Decision and
Award which shall include findings of fact and explain the reasons for the
Decision.
7. CONFIDENTIALITY.
7.1. Unless otherwise agreed, the Proceeding and all information and
documents relating to it shall be kept confidential by the Parties, the Panel,
witnesses and all other persons involved with the Proceeding. Specifically, but
without limitation, the Confidential Information of the parties shall be
safeguarded and maintained as confidential by all participants in the
Proceeding.
8. COSTS.
8.1. The Neutral Arbitrator's fees and expenses, and all expenses of
the Pre-Hearing Conference, Hearing or any other aspect of the Proceeding not
directly attributable to either party, such as the cost of transcription of
Panel Hearings and rental of Hearing rooms, shall be borne equally by the
parties.
8.2. The Panel shall in its Decision and Award determine whether and to
what extent either party is a prevailing party and entitled to an award of its
costs, including attorneys' fees.
9. MISCELLANEOUS.
9.1. The parties may agree at any time to depart from these procedures,
including the time periods herein established. Although not favored, the Panel
may also permit departures from these procedures and time periods absent
agreement of the parties to prevent a miscarriage of justice.
9.2. Until the Neutral Arbitrator is appointed, any issue relating to
the Proceeding that is not provided for in these procedures shall be governed by
the Commercial Arbitration Rules of the American Arbitration Association. Once
the Neutral Arbitrator is appointed, the Panel is empowered to resolve all
issues not contemplated by these procedures and upon which the parties cannot
agree.
9.3. The Panel may grant any remedy or relief that it deems just and
equitable and within the scope of the agreement of the parties, including, but
not limited to, specific performance of a contract, injunctive relief or other
equitable relief.
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9.4. These procedures contemplate a two-party Proceeding. If there are
more than two parties to a Proceeding, and they are unable by unanimous
agreement to align themselves as two parties, each party shall be entitled to
all the rights of a party hereunder, including specifically but without
limitation the right to appoint a Party Designated Arbitrator, and the Neutral
Arbitrator shall have a number of votes as to all matters decided by the Panel
equal to the sum of (i) the votes of all Party Designated Arbitrators, and (ii)
one.
9.5. The Panel may, in its discretion, convene and act by conference
call for all purposes other than taking oral testimony.
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