AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made
as of May 15, 1997 between Alliance Imaging, Inc., a Delaware corporation
(the "Company"), and the executive employee identified on the signature page
hereto (the "Executive") with reference to the following:
A. The Compensation Committee of the Board of Directors of the Company
has previously determined that the execution of employment agreements
(without finite term) with certain of the Company's key executives, including
Executive, that provide, among other things, for severance compensation
benefits under the circumstances described herein, will assist the Company in
attracting and retaining highly qualified individuals to serve as executive
employees of the Company. As a result, the Company and the Executive
previously entered into an Amended and Restated Employment Agreement dated as
of June 6, 1994 (the "Original Agreement").
B. The Compensation Committee of the Board of Directors of the Company
and Executive wish to amend the terms of the Original Agreement in certain
respects, and therefore wish to enter into this Agreement to evidence their
agreement, as so amended, on the terms and conditions of Executive's
employment by the Company.
C. Executive desires to continue to provide executive services to the
Company based in part on the agreements of the Company provided in this
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. For all purposes of this Agreement, the following
terms shall have the meanings set forth below:
1.1 "CHANGE OF CONTROL" means the occurrence of any of the
following events:
(i) directly or indirectly, a transfer, sale, lease or other
disposition of all or substantially all of the assets of the Company and its
subsidiaries taken as a whole to any "person" or "group" (as such terms are
used under Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not applicable), excluding any disposition to or among the Company
and/or one or more of its subsidiaries;
(ii) any "person" or "group" (as such terms are used under
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable) is
or becomes, whether by means of any issuance or direct or indirect transfer
of securities, merger, consolidation, liquidation, dissolution or otherwise,
the "beneficial owner" (as that term is used under Rules 13d-3 and 13d-5
under the Exchange Act, whether or not applicable, except that a "person" or
"group" shall be deemed to have "beneficial ownership" of all shares that he
or it has the right to acquire, whether such right is exercisable immediately
or only after the passage of time or otherwise), directly or indirectly
through one or more intermediaries, of 35% or more of the total voting power
represented by all of the voting stock of the Company; or
(iii) any "person" or "group" (as such terms are used under
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable)
otherwise obtains the right or power (through any arrangement, contract,
proxy or other means) to elect or designate a majority of the members of the
Board of Directors then in office, without regard to whether such right or
power is exercised or invoked and without taking into account the necessity
of a special or annual shareholders meeting or the taking of other procedural
actions to exercise or invoke such right or power.
1.2 "CONSTRUCTIVE DISCHARGE" means that Executive elects to
terminate his employment with the Company within 60 days after the occurrence
of any of the following events:
(i) the Company reduces by 10% or more Executive's base
salary and/or incentive compensation target from the higher of that in effect
on the date hereof or immediately prior to such change; or changes the
incentive compensation plan as in effect on the date hereof such that, in the
Executive's reasonable determination, it is significantly more difficult for
the Executive to achieve the incentive compensation target;
(ii) the Company, without Executive's consent, materially
reduces Executive's job authority or responsibility from his authority from
that in effect immediately prior to such change;
(iii) the Company, without Executive's consent, materially
increases, in terms of scope or quantity or required work time, Executive's
job authority or responsibility from that in effect immediately prior to such
change;
(iv) the Company requires Executive to change the location of
his principal office such that Executive will be required to travel more than 20
miles further than Executive is currently traveling to his principal offices
immediately prior to such change;
(v) the Company materially increases the amount of travel
necessitated for Executive to discharge his job authority and responsibility
from the amount of travel historically engaged in by Executive prior to such
change (or, in the case of newly hired employees, the initial six month period
following commencement of employment); or
(vi) the Company otherwise subjects Executive to abusive,
critical or adversarial conditions such that there is a material worsening of
the general quality of Executive's job conditions immediately prior to such
change.
1.3 "JUST CAUSE" means that any of the following has occurred with
respect to Executive:
(i) Executive has committed a felony (other than a motor
vehicle moving violation);
(ii) Executive has stolen funds or property from the Company
or otherwise engaged in fraudulent conduct against the Company;
(iii) Executive has engaged in knowing and willful misconduct,
or has been reckless or grossly negligent, in his performance of duties owed
to the Company; or
(iv) Executive has deliberately failed or refused to comply
with a direction of the Board of Directors of the Company that is reasonably
consistent with Executive's current executive employee title, the failure
with which to comply could have a material adverse effect on the Company and
its subsidiaries taken as a whole;
PROVIDED, HOWEVER, that, for any termination of Executive's employment by the
Company for any action or omission described in clause (iii) or (iv) above to
constitute a "Just Cause" dismissal, the Company must have provided Executive
with at least 30 days' prior written notice specifying the actions or
omissions constituting such "Just Cause" and an opportunity to cure such
defects in his performance during such 30-day period.
2. EMPLOYMENT AND COMPENSATION.
2.1 TERM; POSITION. The Company hereby employs Executive as its
Executive Vice President and Chief Operating Officer, and Executive shall
have such powers and duties as may be reasonably consistent with that title
and that are reasonably consistent
with the powers and duties held and discharged by Executive prior to the date
hereof, in addition to such other powers and duties as may be prescribed by
the Board of Directors of the Company or the Bylaws of the Company from time
to time. The term of Executive's employment shall continue until such time
as the Company gives Executive written notice of its election to terminate
Executive's employment for any reason, or for no reason; and, in the event of
such written notice, Executive's employment shall terminate on the date
specified in such written notice, if any, or on the date of the giving of
such written notice if no effective date of termination is specified. Except
as otherwise provided in this Agreement, if Executive voluntarily terminates
his employment with the Company, he shall not be entitled to any of the
Severance Benefits provided for in Section 3.
2.2 EXECUTIVE'S DUTIES. Executive hereby accepts said employment and
agrees to devote his entire working time and attention and best talents and
abilities exclusively to the services of the Company as the Board may direct
during the term hereof; PROVIDED, HOWEVER, that Executive may engage in and
devote time to other non-competitive activities to the extent that such time
spent is immaterial and does not interfere with Executive's obligations
hereunder.
2.3 REPORTING. During the term hereof, Executive shall report to the
President of the Company.
2.4 COMPENSATION. For his services to the Company pursuant to this
Agreement, Executive shall continue to receive his salary as currently in
effect and shall continue to be entitled to participate in all incentive
compensation plan and other employee benefit plans and programs at levels and
pursuant to such terms as are substantially consistent with the levels and
terms of his current participation in such plans and programs, subject to
periodic review and possible increases as the Board of Directors or the
Compensation Committee thereof may deem appropriate.
3. SEVERANCE COMPENSATION.
3.1 TERMINATION NOT IN CONNECTION WITH A CHANGE OF CONTROL. In
the event (a) that the Company terminates Executive's employment without Just
Cause (excluding termination due to death or permanent disability (as defined
in Section 22(e) of the Internal Revenue Code of 1986, as amended)), or (b)
of a Constructive Discharge (any termination described in clause (a) or (b)
being referred to as a "Severance"), unless
such Severance occurs within one (1) year prior to a Change of Control (in
which event Section 3.2 below shall govern), then Executive shall be entitled
to the following (collectively, the "Severance Benefits"):
(i) a cash amount equal to fifteen (15) months of salary at
the rate of salary in effect immediately prior to the Severance (or, in the
case of a Constructive Discharge pursuant to clause (i) of the definition
thereof, immediately prior to the reduction in base salary described therein);
(ii) a cash amount equal to (a) Executive's annual incentive
compensation target under the Company's annual cash bonus program with
respect to the fiscal year in which Severance occurs, multiplied by (b) a
fraction the numerator of which is the number of months specified in clause
3.1(i) above (including any greater amount provided pursuant to Section 3.2
below) and the denominator of which is twelve (12);
(iii) Executive's car allowance and continued participation in
all Company-provided employee benefit plans, including, without limitation,
the Company's health insurance plan and 401(k) plan, for the same number of
months as specified in clause (i) of this Section 3.1 (including any greater
amount provided pursuant to Section 3.2 below) (the foregoing participation
to be in addition to Executive's right to elect continuation health coverage
under the "COBRA" provisions of the Internal Revenue code of 1986, as
amended); and
(iv) immediately prior to the time of Severance, Executive's
stock options granted under the 1991 Stock Option Plan shall become
immediately exercisable as to all of the shares covered thereby and Executive
shall be permitted a period of three (3) months (or such longer period as
Executive may have under the governing stock option agreement) in which to
exercise such options (the Company agreeing to take such steps, promptly
following the execution of this Agreement, as may be necessary to effectuate
the intent of this clause (iv), including by executing an amendment to the
stock option agreement or agreements governing Executive's currently
outstanding stock options).
3.2 BENEFITS IN CONNECTION WITH A CHANGE OF CONTROL. In the event
(a) that a Severance occurs within one year prior to a Change of Control, or (b)
a Change of Control occurs, whether or not Executive elects to or is given the
opportunity to continue his employment with the Company, then Executive shall be
entitled to Severance Benefits identical to those provided in Section 3.1 above,
except that the number of months referred to in clauses (i), (ii) and (iii) of
Section 3.1 shall be thirty (30) instead of the figure used or referred to
therein. In the event that Severance Benefits are paid pursuant to clause (b)
of the preceding sentence, then no additional Severance Benefits on
account of a later Severance or otherwise) shall be payable to Executive
pursuant to Section 3.1 or this Section 3.2.
3.3 PAYMENT. The payment of the cash portion of Severance
Benefits shall be made by the Company to Executive in a lump sum within 30
days following Severance or immediately following such Change of Control, as
applicable. In addition, in the event that Executive initially receives
Severance Benefits under Section 3.1 above and thereafter a Change of Control
occurs within the period indicated in Section 3.2 above, the Company shall
make an additional lump sum payment to Executive pursuant to Section 3.2
immediately following such Change of Control.
4. DEFRA LIMITATION. Notwithstanding anything in this Agreement to
the contrary, in the event that the provisions of the Deficit Reduction Act
of 1984 ("DEFRA") relating to "excess parachute payments" shall be applicable
to the Severance Benefits or any other payment or benefit received or to be
received by Executive in connection with a termination of the Executive's
employment with the Company, then the total amount of the Severance Benefits
or other payments or benefits payable to Executive which are deemed to
constitute parachute payments shall be reduced to the largest amount such
that that provisions of DEFRA relating to "excess parachute payment" shall no
longer be applicable. Should such a reduction be required, the Executive
shall determine, in the exercise of his sole discretion, which payment or
benefit to reduce or eliminate. In the event of a disagreement between the
Company and Executive as to whether the provisions of DEFRA are applicable or
whether the Severance Benefits or any other payment or benefit constitutes a
"parachute payment", such determination shall be made by an accounting firm
mutually acceptable to Executive and the Company. All costs relating to such
determination shall be borne by the Company. Pending such determination, the
Company shall continue to make all other required payments to Executive at
the time and in the manner provided herein and shall pay the largest portion
of any parachute payments such that the provisions of DEFRA relating to
"excess parachute payments" shall no longer be applicable.
5. NO DUTY OF MITIGATION. The Company acknowledges that it would be
very difficult and generally impracticable to determine the ability of, or
extent to which, Executive could mitigate any lost wages or other damages he
may incur by reason of a Severance or Change of Control or other termination
of employment. The Company has taken this into account in entering into this
Agreement and, accordingly, the Company acknowledges and agrees that
Executive shall have no duty to mitigate any such damages and that Executive
shall be entitled to receive his entire Severance Benefits regardless of any
income which he may receive from other sources following his Severance.
6. WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes required
to be withheld by the Company.
7. OTHER BENEFITS. This Agreement is in lieu of and replaces, with
respect to Executive, any and all other severance plans or policies of the
Company. In particular, this Agreement supersedes and replaces in its
entirety the Original Agreement, effective as of the first date set forth
above. However, neither the provisions of this Agreement nor the Severance
Benefits provided for hereunder shall in any way diminish Executive's rights
as an employee of the Company, whether existing now or hereafter, under any
benefit, incentive, retirement, profit sharing, stock option, stock bonus,
stock purchase plan, or any other plan or arrangement not specifically
related to severance, all of which plans and programs, as provided in Section
2.4 hereof, to remain in place with respect to Executive substantially
consistent with Executive's participation therein as of the date hereof. Any
such other amounts or benefits payable shall be included, as necessary, for
making any of the calculations required under Section 4.
8. EMPLOYMENT STATUS. This Agreement does not impose on the Company
any obligation to retain Executive as an employee, to change the status of
Executive's employment as an employee at will, or to change the Company's
policies regarding termination of employment.
9. SUCCESSORS TO COMPANY. The Company shall require any successor or
assignee, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of the Company,
expressly and unconditionally to assume and agree to perform the Company's
obligations under this Agreement, in the same manner and to the same extent
that the Company would be required to perform if no such succession or
assignment had taken place. In such event, the term "Company", as used in
this Agreement, shall mean the Company as hereinbefore defined and any
successor or assignee to the business or assets which by reason hereof
becomes bound by the terms and provisions of this Agreement.
10. ATTORNEY'S FEES. The Company shall pay all legal fees, costs of
litigation, and other expenses incurred in good faith by Executive as a
result of the Company's refusal to provide the Severance Benefits to which
the Executive becomes entitled under this Agreement, or as a result of the
Company's contesting the validity, enforceability or interpretation of this
Agreement; PROVIDED, HOWEVER, that if the Company is the revailing party, it
shall be obligated to pay only its own attorneys' fees and costs, witness
expenses and court costs.
11. RELEASE. In connection with the performance of its obligations
under this Agreement (and conditioned upon its full performance thereof), the
Company may
require Executive to execute a full release of claims against the Company and
its officers, directors, agents and affiliates covering such matters and in
such form as the Company shall prescribe.
12. TABLE OF CONTENTS; HEADINGS. The headings of the Sections of this
Agreement have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any
of the terms or provisions hereof.
13. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California but without giving
effect to applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby.
14. CONFIDENTIALITY. In view of the fact that Executive's work as an
executive of the Company will bring Executive into close contact with many
confidential affairs of the Company, including matters of a business nature,
such as information about customers (including pricing information), costs,
profits, markets, sales strategic plans for future development and any other
information not readily available to the public, Executive hereby agrees:
14.1 To keep secret all confidential matters of the Company
(including without limitation such matters which the Company notifies
Executive are confidential) learned prior to the date of this Agreement and
in the course of Executive's employment hereunder, and not to disclose them
to anyone outside of the Company, either during or after Executive's
employment with the Company, or both, until such time as the Company gives
its written consent to such disclosure; and
14.2 To deliver promptly to the Company on termination of
Executive's employment by the Company or at any other time the Company may so
request, all memoranda, notes, records, reports and other documents (and all
copies thereof) relating to the Company's business which Executive may then
possess or have under Executive's control.
14.3 That as a means reasonably designed to protect certain
confidential information of the Company which would otherwise inherently be
utilized in the following proscribed activities, he will not: (a) for a
period of twelve (12) months following termination of services to the Company
(the date of termination being the "Termination Date"), solicit or make any
other contact with, directly or indirectly, any customer of the Company as of
the Termination Date with respect to the provision of any service to any such
customer that is the same or substantially similar to any service provided to
such customer by the Company on the Termination Date; or (b) for a period
of six months following the Termination Date, solicit or make any other
contact with, directly or indirectly, any employee of the Company on the
Termination Date (or any person who was employed by the Company at any time
during the three-month period prior to the Termination Date) with respect to
any employment, services or other relationship in connection with any service
that is the same or substantially similar to any service provided by the
Company as of the Termination Date.
14.4 That violation of this Section 14 would cause the Company
irreparable damage for which the Company cannot be reasonably compensated in
damages in an action at law, and therefore in the event of any breach or
threatened breach by Executive of this Section 14, the Company shall be
entitled to make application to a court of competent jurisdiction for
equitable relief by way of injunction or otherwise (without being required to
post a bond). This provision shall not, however, be construed as a waiver of
any of the rights which the Company may have for damages under this Agreement
or otherwise, and all of the Company's rights and remedies shall be
unrestricted and cumulative.
IN WITNESS WHEREOF, this Agreement has been executed as of the first day
set forth above.
ALLIANCE IMAGING, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxx
Its: Chairman, President and Chief Executive Officer
Executive's
Signature:
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Name of
Executive: Xxxxxxx X. Xxxx
Title of
Executive: Executive Vice President & Chief Operating Officer
