EXHIBIT 10.86
EMPLOYMENT AGREEMENT
The Employment Agreement ("Agreement"), dated as of January
1, 1998, is made by and between Maxicare Health Plans, Inc., a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxx, an
individual ("Employee").
RECITALS
This Agreement is made in consideration of Employee's
desire to enter the employ or continue in the employ of the
Company, and the Company desires that employee be so employed.
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means, as used with respect to the involuntary
termination of Employee:
(i) Any breach by Employee of this Agreement;
(ii) The material or continuous failure of Employee
to perform his job duties to the Company's satisfaction, whether by
reason of his inability, refusal or otherwise;
(iii) Employee's willfully causing the Company,
whether by action or inaction, to violate any state or federal law,
rule or regulation;
(iv) The engaging by Employee in misconduct or
inaction detrimental to the Company's business or reputation and/or
which exposes the Company to liability based upon the inaction or
action(s) of Employee;
(v) The conviction of Employee for a felony or of a crime
involving moral turpitude;
(vi) Any act of dishonesty, misconduct,
disloyalty, fraud, insubordination or misappropriation of
confidential information in connection with Employee's employment
with the Company or the satisfaction of his obligations hereunder;
or
(vii) Any breach or violation of the Company's
Policies and Procedures Manual (the "Policies Manual") as in effect
from time to time which would warrant termination pursuant to the
terms of such Policies Manual.
(c) "Incapacity" means the absence of the Employee from
his employment or the inability of Employee to perform his
essential job duties with reasonable accommodations on a full-time
basis by reason of mental or physical illness, disability or
incapacity for a period of thirty (30) consecutive days.
2. Employment, Services and Duties. The Company hereby
employs Employee as Vice President-Administrative Services, or such
title designation as the Company, acting through the Company's
Chief Executive Officer (the "CEO") may from time to time direct.
Employee shall report to and be supervised by the CEO or such other
person as the CEO may designate (the "Supervisor") and shall have
such duties and responsibilities as the Supervisor may designate.
3. Acceptance of Employment. Employee hereby accepts
employment and agrees to devote his full time with the Company's
business and shall not be involved in any activities whatsoever
which interfere with Employee's: (1) employment with the Company;
(2) satisfaction of Employee's obligations on behalf of the Company
pursuant to the terms of this Agreement; or (3) activities on
behalf of the Company in the discharge of his duties during the
Company's business hours.
4. Obligation to Other Employers. Employee represents that
his employment with the Company does not conflict with any
obligations he may have with former employers or any other persons
or entities. Employee specifically represents that he has not
brought to the Company (and will not bring to the Company) any
materials or documents of a former employer, or any confidential
information or property of a former employer.
5. Compensation. As compensation for all services to be
rendered by Employee hereunder, the Company shall pay to Employee a
base salary at the rate of $150,000.00 per annum (the "Base
Salary"), with such increases and/or bonuses as may be determined
from time to time by the CEO in his sole discretion and, if
applicable, subject to the approval of the Board of Directors.
Said Base Salary shall be payable in bi-weekly installments or in
such other installments as the Company may from time to time pay
other similarly situated employees.
6. Benefits. In addition to the compensation provided for in
Section 5 of this Agreement, Employee shall have the right to
participate in any profit-sharing, pension, life, health and
accident insurance, or other employee benefits presently adopted or
which hereafter may be adopted by the Company in a manner
comparable to those offered or available to other employees of the
Company who are similarly situated where such plans or programs are
available to all such similarly situated employees pursuant to
their terms. Nothing contained herein, shall require that the
Company's Board of Directors designate the Employee as a
participant in any new plan or program where the Board, in its sole
discretion, chooses to designate participants or qualifications for
any new or additional program. Except as set forth above, the
Company reserves the right to add, terminate and/or amend any
existing plans, policies, programs and/or arrangements during the
term of this Agreement without any obligation to the Employee
hereunder.
Employee shall also be entitled to twenty (20) days annual
vacation time, during which time his compensation will be paid in
full. Unused vacation days at the end of any pay period(s)
may be carried over to subsequent pay period(s), provided that the
cumulative number of vacation days accruing from and after the date
of this Agreement carried over into any subsequent pay period shall
not exceed twenty (20) days. Employee shall not accrue additional
vacation days during any pay period once the total number of
accumulated vacation days equals twenty (20) days. Employee shall
under no circumstances be entitled to cash in lieu of vacations
days, except in the event of Employee's termination of employment
with the Company.
7. Expenses. The Company shall reimburse Employee for all
reasonable travel, hotel, entertainment and other expenses incurred
by Employee in the discharge of Employee's duties hereunder, in
accordance with Company policy regarding same, only after receipt
from Employee of vouchers, receipts or other reasonable
substantiation of such expenses acceptable to the Company.
8. Term of Employment. The term of this Agreement and
Employee's employment shall be for a period of two (2) year(s),
commencing as of the date of this Agreement and terminating on
December 31, 1999 (the "Expiration Date") unless otherwise extended
or sooner terminated as provided for in this Agreement. Employee's
employment with the Company pursuant to this Agreement shall
terminate prior to the Expiration Date upon the occurrence of any
of the following events:
(a) The death of Employee;
(b) Employee voluntarily leaves the employ of the Company;
(c) The Incapacity of Employee;
(d) The Company terminates this Agreement for Cause;
(e) The Company terminates this Agreement for any
reason other than set forth in Sections 8(a), 8(c) or 8(d) hereof;
or
(f) The appointment of a trustee for the Company for the
purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.
9. Compensation Upon Termination. In the event this
Agreement is terminated pursuant to Section 8, the Company shall
pay to Employee his then current Base Salary, prorated through the
Employee's last day of employment with the Company (the
"Termination Date") and solely those additional bonuses that had
been declared or fully earned by Employee prior to such termination
("Earned Bonuses"), but had not yet received Earned Bonuses, and
any acc rued vacation through the Termination Date pursuant to
Section 6 (the "Termination Pay"). Except as set forth below, all
employment compensation and benefits shall cease as of the
Termination Date. In addition to the foregoing:
(a) In the event that such termination arises under
Section 8(a), Employee's estate shall be entitled to receive
severance compensation equal to such amount of Employee's then
current Base Salary as would have been over an additional thirty
(30) day period;
(b) Employee recognizes that this Agreement and
Employee's employment with the Company may be terminated at any
time by the Company prior to the Expiration Date "without cause"
and nothing contained herein shall require that the Company
continue to employ the Employee until the Expiration Date;
notwithstanding the foregoing, if prior to the Expiration Date of
this Agreement or prior to its termination pursuant to Sections
8(a) - 8(d) or 8(f) hereof or this, this Agreement is terminated
pursuant to Section 8(e) above, the Employee shall: (y) receive the
greater of either: (i) his then current Base Salary through the
Expiration Date of the Agreement or (ii) six (6) months Base Salary
when such payments would have otherwise been paid had Employee's
employment with the Company continued (the "Severance Salary"); and
(z) be entitled to continue to receive through the Expiration Date
solely the health, dental, disability and life insurance benefits
that Employee was receiving or participating in pursuant to Section
6 immediately prior to such termination, as though such termination
had not occurred. If the Company is unable to continue such
benefits, the Company shall obtain or reimburse Employee for all
costs actually incurred by the Employee to obtain substantially
equivalent benefits (the "Severance Benefits"). The Severance
Benefits shall be provided to Employee as and when such amounts or
benefits would have been paid to Employee had such termination not
occurred until the first to occur of: (1) the Expiration Date, (2)
Employee's Death, or (3) until such time as Employee obtains other
employment which offers any of such benefits to its employees of
similar stature with the Employee. In the event any comparable
benefit obtained or available to the Employee in his new employment
is less than such Severance Benefits being provided pursuant to
this Section 9, the Company will provide for or pay the monetary
costs of obtaining such additional benefits necessary to provide
substantially similar overall benefits. The Severance Salary and
the Severance Benefits are hereinafter collectively referred to as
the "Severance Compensation".
THE SEVERANCE COMPENSATION IN THIS SUBSECTION 9(b) SHALL BE PAID OR
MADE AVAILABLE TO EMPLOYEE AS LIQUIDATED DAMAGES FOR ALL CLAIMS
EMPLOYEE WOULD HAVE WITH RESPECT TO: (i) THE TERMINATION OF THIS
AGREEMENT OR THE TERMINATION OF EMPLOYEE'S EMPLOYMENT UPON THE
EXPIRATION OF THIS AGREEMENT; (ii) ANY COMPENSATION OR BENEFITS DUE
EMPLOYEE FROM THE COMPANY PURSUANT TO THIS AGREEMENT AND (iii) THE
INJURY TO EMPLOYEE'S REPUTATION AS A RESULT OF ANY TERMINATION OF
THIS AGREEMENT OR TERMINATION OF EMPLOYMENT UPON THE EXPIRATION OF
THIS AGREEMENT. IN CONNECTION THEREWITH, THE PARTIES AGREE THAT IT
WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO FIX THE ACTUAL
AMOUNT OF SUCH DAMAGES AND CLAIMS DUE EMPLOYEE WITH RESPECT THERETO
AND THAT SUCH SEVERANCE COMPENSATION AND/OR TERMINATION PAY SHALL
CONSTITUTE A REALISTIC AND REASONABLE VALUATION OF THE DAMAGES WITH
RESPECT TO EMPLOYEE'S CLAIMS.
__________ ____________
(c) Except as otherwise provided in Section 9(a) or (b)
above, all other compensation and benefits enjoyed by or due to
Employee as part of Employee's employment with Employer shall cease
as of the Termination Date; including but not limited to any rights
to office or parking space, vacation or sick pay, use of
telephones, Xeroxing or Facsimile equipment, secretarial
assistance, any unpaid b onus (other than Earned Bonuses), all
benefits and/or rights pursuant to Section 6 above and the right to
receive grants of any stock options which have not previously been
granted to employee or, except as expressly provided in any
applicable stock option agreement or plan, vesting in any stock
options previously granted to Employee which have not vested as of
the Termination Date.
(d) In the event Employee does not receive, on or before
the Expiration Date, an offer for a new employment agreement but
nevertheless continues as an employee of the Company after the
Expiration Date, Employee shall be thereafter deemed to be an "at
will employee" who may be terminated by the Company at any time.
In the event Employee's employment with the Company is terminated
while Employee is an "at will employee", Employee shall be entitled
to only those severance benefits, if any, which are in accordance
with the Company's then existing Policies Manual or other written
personnel policies. Employee acknowledges and understands that in
such event, Employee will no longer be entitled to the Severance
Compensation set forth herein.
(e) All payments of Severance Compensation shall be made
when such payments would have been made had this Agreement not been
terminated and all Severance Benefits, Severance Salary and
Termination Pay shall be paid or provided subject to the usual
withholdings, including state and federal taxes.
10. Covenant Not to Compete.
(a) Employee covenants and agrees that, during
Employee's employment with the Company pursuant to this Agreement,
Employee will not, directly or indirectly, own, manage, operate,
join, control or become employed by, or render any services of any
advisory nature or otherwise, or participate in the ownership,
management, operation or control of, any business which competes
with the business of the Company or any of its affiliates.
(b) Notwithstanding the foregoing, Employee shall not be
prevented from investing his assets in such form or manner as will
not require any services on the part of Employee in the operation
of the affairs of a company in which investments are made, provided
such company is not engaged in a business competitive to the
Company, or if it is in competition with the Company, provided its
stock is publicly traded and Employee owns less than one percent
(1%) of the outstanding stock of that company.
11. Confidentiality. Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data of a
proprietary nature relating to the business of the Company or any
of its affiliates which is not or has not become generally known or
public. Employee shall hold, in a fiduciary capacity, for the
benefit of the Company, all information, knowledge or data of a
proprietary nature, relating to or concerned with, the operations,
customers, developments, sales, business and affairs of the Company
and its affiliates which is not generally known to the public and
which is or was obtained by the Employee during his employment by
the Company. Employee recognizes and acknowledges that all such
information, knowledge or data is a valuable and unique asset of
the Company, and accordingly he will not discuss or divulge any
such information, knowledge or data to any person, firm,
partnership, corporation or organization other than to the Company,
its affiliates, designees, assignees or successors or except as may
otherwise be required by the law, as ordered by a court or other
governmental body of competent jurisdiction, or in connection with
the business and affairs of the Company.
12. Equitable Remedies. In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 10 and 11 of this Agreement, Employee acknowledges that
the Company may not have an adequate remed y at law and therefore
it is mutually agreed between Employee and the Company that, in
addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a court
of law and/or equity a temporary and/or permanent injunction
restraining Employee from any continuing violation or breach of
this Agreement.
13. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. Except as
set forth in Section 8(f) above, this Agreement shall not be
terminated by the voluntary or involuntary dissolution of the
Company or by any merger, reorganization or other transaction in
which the Company is not the surviving or resulting corporation or
upon any transfer of all or substantially all of the assets of the
Company in the event of any such merger, or transfer of assets.
The provisions of this Agreement shall be binding upon and shall
inure to the benefit of the surviving business entity or the
business entity to which such assets shall be transferred in the
same manner and to the same extent that the Company would be
required to perform it if no such transaction had taken place.
Neither this Agreement nor any rights arising hereunder may
be assigned or pledged by Employee.
(b) Except as otherwise provided by law or elsewhere
herein, in the event of an act of force majeure, as hereinafter
defined, during the term hereof which event continues for a period
of no less than fifteen (15) days, the Company shall be entitled to
suspend this Agreement for the duration of such event of force
majeure. In such event, during the duration of the event of force
majeure the Company shall be relieved of its obligations to the
Employee pursuant to Sections 5 and 6; except for the continuation
of any health, life or disability insurance coverage. For the
purposes hereof, "force majeure" shall be defined as the occurrence
of one or more of the following events:
(i) any act commonly understood to be of force majeure
which materially and adversely affects the Company's
business and operations, including but not limited to, the Company
having sustained a material loss, whether or not insured, by reason
of fire, earthquake, flood, epidemic, explosion, accident, calamity
or other act of God;
(ii) any strike or labor dispute or court or
government action, order or decree;
(iii) a banking moratorium having been declared by
federal or state authorities;
(iv) an outbreak of major armed conflict, blockade,
embargo, or other international hostilities or restraints or orders
of civic, civil defense, or military authorities or other national
or international calamity having occurred;
(v) any act of public enemy, riot or civil
disturbance or threat thereof; or
(vi) a pending or threatened legal or
governmental proceeding or action relating generally to the
Company's business, or a notification having been received by the
Company of the threat of any such proceeding or action, which could
materially adversely affect the Company.
(c) Except as expressly provided herein, this
Agreement contains the entire understanding between the parties
with respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by the
parties hereto. This Agreement supersedes all prior agreements of
the parties with respect to the subject matter hereof.
(d) This Agreement shall be construed in accordance with
the laws of the State of California applicable to agreements wholly
made and to be performed entirely within such state and without
regard to the conflict of law principles thereof.
(e) Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any
act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If any
provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full force
and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall, nevertheless, remain
in full force and effect in all other circumstances.
(f) With the exception of the Company's right to enforce
the provisions found in Sections 10 or 11 of this Agreement
pursuant to Section 12 hereof, any and all disputes arising from
Employee's employment with or termination from the Company
including but not limited to any claim for unlawful retaliation,
wrongful termination of employment, violation of public policy or
unlawful discrimination or harassment because of race, color, sex,
national origin, religion, age, physical or mental disability or
condition, marital status, sexual orientation or other legally
protected characteristic shall be resolved by final and binding
arbitration before a single arbitrator. EXCEPT AS OTHERWISE
PROVIDED IN THIS SECTION, THE PARTIES AGREE THAT IF A DISPUTE OR
CLAIM OF ANY KIND ARISES BETWEEN THEM, THEY AGREE TO WAIVE ANY
RIGHTS EACH MAY HAVE TO A JURY OR COURT TRIAL.
Any party hereto electing to commence an action shall give
written notice to the other parties hereto of such election. The
arbitrator shall be limited to an award of monetary damages and
shall conduct the arbitration in accordance with the California
Rules of Evidence. The dispute shall be settled by arbitration to
take place in Los Angeles County, California, in accordance with
the then rules of the American Arbitration Association or its
successor. The award of such arbitrator may be confirmed or
enforced in any court of competent jurisdiction. The costs and
expenses of the arbitrator including the attorney's fees and costs
of each of the parties, shall be apportioned between the parties by
such arbitrator based upon such arbitrator's determination of the
merits of their respective positions. Nothing contained in this
Section shall in any way be construed to modify, expand or
otherwise alter the rights and obligations of the Company and
Employee contained elsewhere in this Agreement.
(g) Any notice to the Company required or permitted
hereunder shall be given in writing to the Company, either
personally, by messenger, courier or otherwise, telex, telecopier
or, if by mail, by registered or certified mail, return receipt
requested, postage prepaid, duly addressed to the Secretary of the
Company at its then principal place of business. Any such notice to
Employee shall be given to the Employee in a like manner, and if
mailed shall be addressed to Employee at Employee's home address
then shown in the files of the Company. For the purpose of
determining compliance with any time limit herein, a notice shall
be deemed given on the fifth day following the postmarked date, if
mailed, or the date of delivery if delivered personally, by telex
or telecopier.
(h) Employee acknowledges that: (i) he has been advised by
the Company that this Agreement affects his legal rights and to
seek the advice of his legal counsel prior to executing it and (ii)
has had the opportunity to consult with his own legal counsel in
connection with the negotiations of the terms of this Agreement,
his rights with respect hereto and the execution hereof.
(i) A waiver by either party of any term or condition of
this Agreement or any breach thereof, in any one instance, shall
not be deemed or construed to be a waiver of such term or condition
or of any subsequent breach thereof.
(j) The section and subsection headings contained in this
Agreement are solely for convenience and shall not be considered in
its interpretation.
(k) This Agreement may be execut ed in one or more
counterparts, each of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
COMPANY:
MAXICARE HEALTH PLANS, INC.
a Delaware corporation
By: __________________________
Xxxxx X. Xxxxxxx
Chairman, President and
Chief Executive Officer
By: __________________________
Xxxx X. Xxxxx, Secretary
EMPLOYEE:
By: __________________________
Xxxxxxx X. Xxxxx
