EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is executed as of the 31st
day of July, 1996, by and between Med-Search, Inc., a Delaware corporation
("Employer"), and Xxxxx X. Xxxxxx, M.D. ("Employee").
P R E A M B L E
A. Employer is a provider of management services to medical practices;
and
B. Employer desires to obtain the services of Employee as Chief
Executive Officer of Employer, and Employee desires to be employed by Employer,
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. TERMS AND CONDITIONS OF EMPLOYMENT
1.1 EMPLOYMENT. Employer hereby employs Employee and Employee hereby
accepts employment as Chief Executive Officer of Employer subject to the terms
and conditions hereinafter set forth.
1.2 FULL-TIME EMPLOYMENT. Employee agrees to devote his full time and
attention to the performance of his duties as Chief Executive Officer of
Employer. Employee's duties shall include, but not be limited to, the following:
(a) General supervision, direction, and control of the business
and the officers of Employer, subject to the control of the Board of Directors;
(b) Preside at all meetings of the shareholders and at all
meetings of the Board of Directors; and
(c) Such other powers and duties as may be prescribed by the Board
of Directors or the Bylaws of Employer.
2. COMPENSATION
2.1 SALARY. Employer shall reimburse Employee for any and all costs,
fees and expenses incurred by Employee in the course of his duties as Chief
Executive Officer. Employee acknowledges that, due to Employer's current
financial condition, Employer does not have sufficient funds to adequately
compensate Employee for his services. Employer and Employee agree to negotiate a
fair and equitable salary to compensate Employee for his services, in accordance
with the policies and procedures established by the Board of Directors, at such
time as Employer's financial condition improves. At that time, Employer shall
pay Employee in accordance with Employer's policies for the payment of exempt,
salaried employees in effect from
time to time. Salary payments are to be reduced by the cost of and subject to
all state and federal withholding taxes and any other applicable taxes
2.2 PERFORMANCE CRITERIA. Employer may determine from time to time to
pay Employee additional compensation/discretionary bonus(es). Any such
determination shall be made by the Compensation Committee, or similar
committee, if any, of the Board of Directors of Employer or, if there is no
such committee, by the Board of Directors of Employer.
2.3 BENEFITS. During the term of this Agreement, Employer shall
provide Employee and his or her beneficiaries with certain employment
benefits, including but not limited to health insurance benefits. However,
Employer's life insurance company and/or disability insurer may require
Employee to satisfactorily pass a physical examination in order to issue a
life insurance policy to Employee, and Employee shall comply with all such
reasonable requirements. In addition, Employer may elect to obtain key-man
life insurance coverage on Employee, and Employee agrees to submit to any
required examination therefor. Employee shall be entitled to participate in
Employer's retirement and other benefit plans as offered from time to time at
a level commensurate with the retirement benefits offered to Employer's other
employees at the Practice.
3. TERM AND TERMINATION OF AGREEMENT
3.1 CONTRACT TERM. The initial term of this Agreement shall commence on
the closing of the merger of Employer and Med-Search, Inc., a Delaware
corporation (the "Effective Date"), and shall continue for a period of three (3)
years, subject to earlier termination of this Agreement as provided herein.
3.2 TERMINATION WITHOUT CAUSE. No party may terminate this Agreement or
Employee's employment hereunder, without cause.
3.3 TERMINATION BY EMPLOYER. Employer may terminate Employee's
employment hereunder at any time for "cause" by giving written notice of
termination to the defaulting party (the "Termination Notice"). In the event
such breach is not cured within thirty (30) days after the giving of the
Termination Notice, this Agreement shall automatically terminate at the election
of the Employer thirty (30) days after the giving of the Termination Notice.
Cause includes the following:
(a) Upon material violation by Employee of any provision of this
Agreement.
(b) Upon total disability of Employee.
(c) Upon the use of alcohol or a controlled substance which
materially impairs the ability of Employee to effectively perform Employee's
duties and obligations under this Agreement.
3.4 TERMINATION BY EMPLOYEE Employee may terminate his or her
employment hereunder at any time for "cause." Cause is limited to Employer's
breach of its obligation to
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provide Employee with the Compensation and Benefits required pursuant to this
Agreement. In the event Employee terminates this Agreement for cause,
termination shall be effective immediately upon notification to Employer by
Employee.
3.5 EFFECT OF TERMINATION. Upon and after termination of this Agreement,
Employee will be provided full access to copy Employer patient medical records
in the event of a malpractice action or administrative investigation or
proceeding against Employee.
4. CONFIDENTIALITY/TRADE SECRETS. Employee acknowledges that his position
with Employer will be one of the highest trust and confidence both by reason
of his position and by reason of his access to and contact with the trade
secrets and confidential and propriety business information of Employer and
all of its Affiliates (as defined below), during the term of this Agreement
and thereafter. Employee covenants and agrees as follows:
4.1 PROTECTION. That Employee shall use his best efforts and exercise
utmost diligence to protect and safeguard the trade secrets and confidential
and proprietary information of Employer and its "Affiliates" (which term as
used in this Agreement shall include any person, corporation, partnership,
general partner or other entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with Employer), including, without limitation, their trade secrets,
proprietary information, the identity of their customers and suppliers, their
arrangements with their customers and suppliers, and their technical data,
records, compilations of information, processes, computer software, and
specifications relating to their customers, suppliers, products and services
(collectively, "Confidential Information").
4.2 NON-DISCLOSURE. That Employee shall not disclose any Confidential
Information, except as may be required in the course of his employment or as may
be required by law.
4.3 NON-USAGE. That Employee shall not use, directly or indirectly, for
his own benefit or for the benefit of another, any Confidential Information.
The covenants contained in this Section 4 shall not be applicable to any
information which is in the public domain other than as a result of action by
Employee or which Employee can establish was obtained from sources other than
Employer or any of its Affiliates, who are not under a duty of nondisclosure.
All Confidential Information and all files, records, documents, drawings,
specifications, computer software, memoranda, notes, or other documents relating
thereto or otherwise relating to the business of Employer and its Affiliates,
whether prepared by Employee or otherwise coming into his possession, shall be
the exclusive property of Employer (and/or its Affiliates, as applicable) and
shall be delivered to Employer or its Affiliates as appropriate and not retained
by (nor any copies thereof retained by) Employee upon termination of his
employment for any reason whatsoever.
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5. NON-COMPETITION. Employee covenants and agrees that:
5.1 NON-COMPETITION. So long as Employee is receiving any compensation
from Employer pursuant to this Agreement, Employee shall not, without the
prior written consent of Employer, directly or indirectly, as an employee,
employer, agent, principal, proprietor, partner, shareholder, consultant,
director, or corporate officer, engage in any business or render any services
to any business that is in direct competition with the business of Employer
or any of its affiliates within a ten (10) mile radius area of 00000 Xxxxx
Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxxx.
5.2 MODIFICATION. If the scope of any restrictions contained in Section
5 hereof are too broad to permit enforcement of such restrictions to their full
extent, then such restrictions shall be enforced to the maximum extent permitted
by law, and Employee hereby consents and agrees that such scope may be modified
accordingly in any proceeding brought to enforce such restrictions.
6. REMEDIES FOR BREACH OF COVENANTS OF EMPLOYEE. The covenants set forth in
Sections 4 and 5 of this Agreement shall continue to be binding upon Employee
notwithstanding the termination of his employment with Employer for any reason
whatsoever. Such covenants shall be deemed and construed as separate agreements
independent of any other provision of this Agreement. The existence of any claim
or cause of action by Employee against Employer or any of its Affiliates,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Employer or any of its Affiliates of any or all of
such covenants. It is expressly agreed that the remedy at law for the breach of
any such covenant is inadequate and that temporary and permanent injunctive
relief shall be available to prevent the breach or any threatened breach
thereof, without the necessity of proof of actual damages and without the
necessity of posting a bond, cash or otherwise. In this connection, Employee
agrees not to assert any defense that monetary damages would be sufficient.
7. ARBITRATION The parties firmly desire to resolve all disputes arising
hereunder without resort to litigation in order to protect their respective
business reputations and the confidential nature of certain aspects of their
relationship. Accordingly, any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration as
set forth below.
(1) All disputes which in any manner arise out of or relate to this
Agreement or the subject matter thereof, shall be resolved exclusively by
arbitration in accordance with the provisions of this Section 7. Either party
may commence arbitration by sending a written demand for arbitration to the
other party, setting forth the nature of the controversy, the dollar amount
involved, if any, and the remedies sought, and attaching a copy of this Section
to the demand.
(2) There shall be one arbitrator. If the parties shall fail to select a
mutually acceptable arbitrator within ten (10) days after the demand for
arbitration is mailed, then the parties stipulate to arbitration before a single
arbitrator sitting on the Los Angeles, California Judicial Arbitration Mediation
Services (JAMS) panel, and selected in the sole discretion of the JAMS
administrator.
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(3) The parties shall share all costs of arbitration. The prevailing
party shall be entitled to reimbursement by the other party of such party's
attorneys' fees and costs and any arbitration fees and expenses incurred in
connection with the arbitration hereunder.
(4) The substantive law and the Evidence Code of the State of
California shall be applied by the arbitrator, except that the arbitrator's
authority in awarding damages shall be interpreted under New York Law. THE
PARTIES AGREE THAT THE ARBITRATOR SHALL HAVE NO AUTHORITY TO AWARD PUNITIVE
DAMAGES, AND THE PARTIES HAVE BEEN ADVISED TO SEEK COUNSEL CONCERNING THE
POSSIBLE WAIVER BY THE PARTIES OF CERTAIN RIGHTS OTHERWISE AVAILABLE AS A
CONSEQUENCE OF SUCH AGREEMENT.
(5) Arbitration shall take place in Los Angeles, California unless the
parties otherwise agree. As soon as reasonably practicable, a hearing with
respect to the dispute or matter to be resolved shall be conducted by the
arbitrator. As soon as reasonably practicable thereafter, the arbitrator shall
arrive at a final decision, which shall be reduced to writing, signed by the
arbitrator and mailed to each of the parties and their legal counsel.
(6) All decisions of the arbitrator shall be final, binding and
conclusive on the parties and shall constitute the only method of resolving
disputes or matters subject to arbitration pursuant to this Agreement. The
arbitrator or a court of appropriate jurisdiction may issue a writ of execution
to enforce the arbitrator's judgment. Judgment may be entered upon such a
decision in accordance with applicable law in any court having jurisdiction
thereof.
(7) Notwithstanding the foregoing, because time is of the essence of
this Agreement, the parties specifically reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other similar short term
equitable relief, and grant the arbitrator the right to make a final
determination of the parties' rights, including whether to make permanent or
dissolve such court order.
(8) The decision and award of the arbitrator shall be kept confidential
by the parties to the greatest extent possible. No disclosure of such decision
or award shall be made by the parties except as required by law or as necessary
or appropriate to effect the enforcement thereof.
8. MISCELLANEOUS.
8.1 NOTICES. Any notice, demand, or communication required, permitted
or desired to be given hereunder shall be deemed effectively given when
personally delivered or mailed by prepaid certified mail, return receipt
requested, addressed as follows:
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Employee: Xxxxx X. Xxxxxx, M. D.
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Employer: Prospect Medical Systems, Inc.
00000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
8.2 GOVERNING LAW. This Agreement has been executed and delivered and
shall be interpreted, construed, and enforced in accordance with the laws of the
State of California.
8.3 ENFORCEMENT. In the event that either party shall be required to
enforce the terms of this Agreement, whether with or without arbitration, the
prevailing party shall be entitled to recover the costs of such action,
including reasonable attorneys' fees.
8.4 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement of the parties with respect to the subject matter hereof and may not
be amended except in writing signed by both of the parties hereto. No oral
statements or prior written materials not specifically incorporated herein shall
be of any force or effect.
8.5 SEVERABILITY. In the event any provision of this Agreement is held
to be unenforceable or void for any reason, the remainder of the Agreement shall
be unaffected and shall remain in full force and effect in accordance with its
terms, unless such unenforceability or voidness defeats an essential business
term hereof.
8.6 ASSIGNMENT. Neither this Agreement nor any of the rights of
obligations of the parties hereunder shall be assignable by either party,
whether voluntarily or by operation of law. Any attempted assignment, transfer,
pledge or hypothecation or other disposition of this Agreement or of any such
rights, interests and benefits shall be null and void and without effect.
8.7 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and permitted assigns.
8.8 HEADINGS. The headings used herein are for convenience only and do
not limit the contents of this Agreement.
8.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which will be deemed to be an original, but all of which together will
constitute one and the same agreement.
8.10 COMPLIANCE WITH LAW. The parties recognize that this Agreement at
all times is to be subject to applicable state, local and federal law.
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8.11 WAIVERS. The waiver of any of the provisions hereof shall not be
effective unless in writing and signed by the party intending to be bound
thereby. The waiver by either party of any act to be performed hereunder will
not constitute a waiver of any other act or identical act required to be
performed at a later time.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the day and year first above written.
MED-SEARCH, INC. XXXXX X. XXXXXX, M.D.
By: /s/ Xxxxx XxXxxxxx /s/ Xxxxx X. Xxxxxx, M.D.
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Its: President
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