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EXHIBIT 10.13
STATE OF NORTH CAROLINA RELEASE AND
SETTLEMENT
AGREEMENT
COUNTY OF DURHAM
This Release and Settlement Agreement is made and entered
into this 21st day of January, 1997, by and between Xxxxxx X.
Xxxxx, M.D. ("Xx. Xxxxx"), Xxxxxxx X. Xxxxx, M.D., M.B.A. ("Xx.
Xxxxx"), and Coastal Physician Group, Inc. ("Coastal") on the one
hand and Xxxxxx X. Xxxxxxx ("Piemont") on the other hand
(collectively the "Parties");
WHEREAS, the Parties are currently engaged in litigation in
the General Court of Justice, Superior Court Division, of Durham
County, North Carolina, in a case styled XXXXXX X. XXXXX, ET AL.
V. XXXXXX XXXXXXX XXXXXXX, XXXXXX X. XXXXXXX, XXXXXXX X. XXXXXX,
AND COASTAL PHYSICIAN GROUP, INC.; 96 CvS 2748 (the "Lawsuit");
and
WHEREAS, Piemont previously resigned his position as
President of Coastal and has made claims against Coastal with
regard to an Employment Agreement between himself and Coastal
dated June 1, 1996 (the "Contract") which claims have been
disputed by Coastal; and
WHEREAS, Piemont has filed Motion for Leave to File
Supplemental Pleading to Assert a Crossclaim Against Coastal
Physician Group, Inc. based upon the Contract in the Lawsuit; and
WHEREAS, Xx. Xxxxx and Xx. Xxxxx, on behalf of themselves
and in their capacities as representatives of Coastal, and
Coastal desire to compromise and settle the Lawsuit with Piemont,
and Piemont desires to compromise and settle the Lawsuit with Xx.
Xxxxx, Xx. Xxxxx and Coastal; and
WHEREAS, the Parties have agreed to enter into this
Agreement to accomplish their joint goal of settling and
resolving all claims
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against Piemont in the Lawsuit and any claims Piemont made by or
which could have been made by Piemont in the Lawsuit, including
but not limited to all claims with respect to the Contract.
NOW, THEREFORE, in consideration of the mutual covenants and
promises set forth herein, the adequacy and sufficiency of which
is hereby acknowledged, the undersigned parties hereto agree as
follows:
1. INITIAL PAYMENT: Coastal shall pay Piemont the sum of
One Hundred Fifty Thousand Dollars ($150,000.00) on January 15,
1997, if this Agreement has been approved by the Court presiding
over the Lawsuit by that date. Otherwise, this sum shall be paid
to Piemont within five (5) business days after approval by the
Court;
2. SUBSEQUENT PAYMENTS: As further consideration for the
execution of this Agreement, Piemont shall receive the sum of Two
Hundred Fifty Thousand Dollars ($250,000.00) to be paid by
Coastal in equal monthly installments of Twenty Thousand Dollars
($20,000.00) each for a period of twelve months beginning
(subject to prior Court approval) on February 15, 1997, and
ending on January 15, 1998, and a final payment of Ten Thousand
Dollars ($10,000.00) to be paid on February 15, 1998. This
obligation of Coastal to Piemont shall be evidenced by a non-
interest-bearing note in the form attached as Exhibit A and shall
be subject to approval by the Court by February 15, 1997.
Otherwise, the first monthly installment shall be paid by Coastal
on the fifteenth (15th) of the month after the approval by the
Court.
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3. STOCK APPRECIATION RIGHTS: Coastal furthermore shall
pay Piemont an amount determined in accordance with the following
provisions:
(a) PURPOSE. Subject to the terms hereof, including
the maximum amount in accordance with Section 3(d) below, Piemont
shall have the right to receive the appreciation occurring from
and after the Initial Date (hereinafter defined) in 50,000 shares
of Coastal's common stock (presently traded on the New York Stock
Exchange) and these provisions shall be interpreted with a view
to accomplishing such purpose.
(b) DEFINITIONS. Terms used herein shall have the
following meanings: (i) the term "Initial Price" shall mean the
price per share for Coastal's common shares at the close of
business of the New York Stock Exchange (as reflected on the New
York Stock Exchange Composite Tape) on December 30, 1996, of
$3.00 per share (the "Initial Date"); (ii) the term "Sales Price"
shall mean the average price per share for Coastal's common
shares at the close of business of the New York Stock Exchange
(as reflected on the New York Stock Exchange Composite Tape, or
if those shares are not traded at that time on the New York Stock
Exchange, the comparable standard for the trading market on which
those shares are then traded) on the ten trading days next
preceding the date (the "Sales Date") on which delivery of notice
of exercise of the rights granted hereunder occurs.
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(c) EXERCISE. Piemont shall have the right to
exercise his right to payment under Section 3 at any time and
from time to time during the three-year period beginning on the
date hereof and ending at 12:00 p.m. E.S.T. on the third
anniversary of the date of execution of this Agreement. Such
rights shall be exercised by delivering written notice thereof
(which notice shall specify the number of shares with respect to
which such rights are being exercised) by facsimile (Fax 919-383-
0247) to Coastal's chief executive officer or its general counsel
with copy thereof being delivered promptly thereafter by
certified mail addressed to Coastal, X.X. Xxx 00000, Xxxxxx, X.X.
00000, to the attention of such officer or officers.
(d) AMOUNT. The amount payable to Piemont hereunder
shall be determined in accordance with the following provisions:
(i) the Initial Price shall be subtracted from the Sales Price to
determine the per share appreciation which has occurred,
provided, however, that the per share appreciation to which
Piemont shall be entitled shall not exceed Four Dollars ($4.00);
(ii) the per share appreciation, not to exceed Four Dollars
($4.00), shall then be multiplied by the number of shares with
respect to which Piemont is exercising his rights hereunder; and
(iii) the resulting sum shall be the amount payable to Piemont
under this Section 3. Further, such amount shall be paid to
Piemont within three business days after receipt of the notice
exercising such rights. To the extent not exercised, such rights
shall remain in full force and effect, and upon subsequent
exercise thereof by Piemont as hereinabove
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provided, the amount payable to Piemont shall again be determined
in accordance with the foregoing provisions. Any such rights not
exercised within three years of the date hereof shall lapse and
be of no further force and effect.
(e) ADJUSTMENT. In the event Coastal's outstanding
common shares shall be subdivided (split), combined (reverse
split), by reclassification or otherwise, or in the event of any
special dividend payable on such shares in shares of Coastal
stock, the Initial Price and the number of shares with respect to
which the rights granted hereunder exist shall be proportionately
adjusted to accomplish the purposes hereof.
(f) REORGANIZATIONS. If at any time during the three-
year term hereof there shall be a capital reorganization of
Coastal's common shares, then as part of such reorganization,
lawful provision shall be made so that Piemont's rights hereunder
shall be protected in a manner which will accomplish the purposes
hereof.
(g) MERGER, BUSINESS COMBINATION. If a merger,
consolidation, share exchange or business combination occurs
which results in Coastal's common shares being acquired by
another corporation (whether for cash, securities or other
consideration), or if substantially all of Coastal's assets and
properties are sold to another person, the following provisions
shall be controlling for purposes hereof: (i) Piemont shall be
deemed to have exercised his remaining rights on the closing date
of such transaction, (ii) the amount payable to Piemont, if any,
shall be determined and paid
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within three business days after such closing date and (iii)
Piemont shall not thereafter have any further right to receive
payments based upon appreciation in Coastal's common shares.
(h) INFORMATION. Upon the occurrence of each
adjustment or readjustment pursuant to the provisions contained
herein, Coastal at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms hereof
and furnish Piemont with information setting forth such
adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based.
4. RELEASE BY PIEMONT: Except as provided in this Release
and Settlement Agreement and as provided in the Promissory Note
to be delivered to Piemont as set forth in Section 2, Piemont
does hereby relinquish, remise, release and forever discharge Xx.
Xxxxx, Xx. Xxxxx, and Coastal and their respective attorneys,
agents, heirs, assigns, servants, officers, directors,
shareholders, representatives, and any and all other persons,
parties or corporations that might be in privity with them,
whether named herein or not, of and from all liabilities, costs,
claims, expenses, attorney's fees, demands, damages, losses,
causes of action, suits and all incidental and consequential
damages of whatever kind, and however arising, which Piemont may
now have or claim to have, or might hereafter have or claim to
have, whether known or unknown, matured or unmatured, from the
beginning of time through the date of this Agreement, including,
but not limited to, matters arising out of or related to the
claims that were asserted
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or could have been asserted, in the Lawsuit, and any rights
whatsoever or claims for compensation or benefits arising out of
or related to the Contract or Piemont's employment with Coastal.
5. RELEASE BY XX. XXXXX AND XX. XXXXX: Xx. Xxxxx an Xx.
Xxxxx do hereby relinquish, remise, release and forever discharge
Piemont and his respective attorneys, agents, heirs, assigns,
servants, employees, representatives, and any and all other
persons or parties or corporations that might be in privity with
them, whether named herein or not, of and from all liabilities,
costs, claims, expenses, attorney's fees, demands, damages,
losses, causes of action, suits and all incidental and
consequential damages of whatever kind, and however arising which
Xx. Xxxxx and Xx. Xxxxx, may now have or claim to have, or might
hereafter have or claim to have, whether known or unknown,
matured or unmatured, from the beginning of time through the date
of this Agreement, including, but not limited to, matters arising
out of or related to the claims that were asserted, or could have
been asserted, in the Lawsuit and of any rights or claims arising
out of or related to the Contract or Piemont's employment with
Coastal.
6. RELEASE BY COASTAL: Coastal, acting on behalf of its
predecessors, successors and assigns, and its present and former
officers, directors, employees, representatives, and agents, does
hereby relinquish, remise, release and forever discharge Piemont
and his respective attorneys, agents, heirs, assigns, servants,
representatives, and any and all other persons, or parties that
might be in privity with them, whether named herein or not, of
and
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from all liabilities, costs, claims, expenses, attorney's fees,
demands, damages, losses, cause of action, suits and all incident
and consequential damages of whatever kind, and however arising,
which Coastal may now have or claim to have, or might hereafter
have or claim to have, whether known or unknown, matured or
unmatured, from the beginning of time through the date of this
Agreement, including, but not limited to, matters arising out of
or related to the claims that were asserted, or could have been
asserted, in the Lawsuit and of any rights or claims arising out
of or related to the Contract or Piemont's employment with
Coastal.
7. SHARES OWNED: Nothing herein shall in any way affect
any shares in Coastal owned by Piemont as of the date hereof.
Piemont hereby waives any options, vested or unvested, held by
him, including but not limited to those described in Section 5(i)
of the Contract.
8. INSURANCE: Coastal agrees to use its best efforts to
continue to provide coverage for Piemont under the executive
protection insurance policies for officers and directors
previously associated with Coastal so long as Coastal does not
incur additional premium cost therefor.
9. INDEMNITY: Coastal hereby indemnifies Piemont and
agrees to hold him harmless from and against all damages, claims,
losses, liabilities and expenses (including reasonable attorneys'
fees) arising from or in any way connected with Piemont's service
as an officer, director or employee of Coastal to the maximum
extent permitted under Section 145 of the General Corporation Law
of the
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State of Delaware and Article VIII of Coastal's by-laws (as
presently existing or as hereafter amended to broaden or increase
such indemnification), which indemnification shall continue in
full force and effect notwithstanding any resignation by Piemont
as an officer, director, employee, consultant, agent or
representative of Coastal. Further, if Piemont incurs expenses
(including reasonable attorneys' fees) in defending any civil,
criminal, administrative, or investigative action, suit or
proceeding relating to his service as an officer, director or
employee of Coastal, Coastal shall promptly and forthwith advance
Piemont funds to pay such expenses in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking from Piemont to repay such amount if it shall
ultimately be determined that he is not entitled to
indemnification by Coastal pursuant to Delaware law and pursuant
to Coastal's bylaws in effect at the time of the Contract.
Further, these indemnification provisions shall remain in full
force and effect notwithstanding any insurance coverage afforded
to Piemont with respect to such matters. For purposes of this
agreement reasonable attorneys' fees shall be determined with
reference to regular hourly billing rates for time spent by the
attorney on the matters for which attorneys' fees may be paid or
reimbursed.
10. DEFAULT BY COASTAL: If Coastal fails to make any
payment required to be made by this Agreement, Piemont shall give
notice of default to Coastal which may, within ten (10) days
following the giving of such notice, cure any default. If
Coastal fails to cure
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any default as provided herein, the payment for which Coastal is
in default shall accrue interest at the rate of eighteen percent
(18%) per annum, simple interest, from the tenth day following
the giving of the default notice until paid. If Coastal fails to
make any payment required as specified in the Promissory Note to
be delivered to Piemont as set forth in Section 2, Piemont shall
also have the rights and remedies, including acceleration of the
outstanding balance, as specified therein. Upon commencement of
litigation related to a default, the prevailing party in any such
litigation shall be entitled to recover its costs and expenses,
including reasonable attorneys' fees from the party not
prevailing in the litigation. For the purposes of this
paragraph, the term "prevailing party" means that party who has a
final, non-appealable judgment entered in its favor by a court of
competent jurisdiction.
11. DISMISSAL. Upon final approval of this Agreement by
the Court, Xx. Xxxxx and Xx. Xxxxx, individually and on behalf of
Coastal, shall file a voluntary dismissal with prejudice as to
all direct and derivative claims asserted against Piemont in the
Lawsuit and Piemont shall withdraw his Motion for Leave to File
Supplemental Pleading.
12. RETURN OF MONIES ADVANCED TO PIEMONT FOR LITIGATION
EXPENSES: Piemont shall refund to Coastal monies paid by Coastal
to or on behalf of Piemont for legal fees and expenses incurred
in the Lawsuit to the extent such advanced monies exceed payment
for fees and expenses actually incurred by attorneys retained by
or on behalf of Piemont in connection with this Lawsuit.
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13. NO ADMISSION OF LIABILITY: The Parties hereto
understand and agree that this Agreement constitutes a compromise
of disputed claims, and that the payments and agreements
contained hereon are not to be construed in any way to constitute
an admission of liability of the Parties.
14. FINAL APPROVAL BY COURT: It is expressly agreed and
understood that the effectiveness of this Agreement is expressly
conditioned on the final approval of this Agreement by the Court
and shall have no force or effect, nor be binding upon any Party
hereto until such time as final approval by the Court is given.
The Parties agree that, as soon as practicable following
execution of this Agreement (and not later than five business
days in any event), they will jointly move the Court to
preliminarily approve the Agreement, to authorize the giving of
notice of the Settlement to shareholders (if deemed necessary by
the Court), to set a hearing for the final approval of the
Agreement, and to grant final approval of the Agreement.
In the event the Court does not grant final approval of
the Agreement prior to March 31, 1997, this Agreement shall be
void and of no effect and the parties shall revert to the status
quo ante as of the date of the Agreement.
15. ENTIRE CONSIDERATION AND AGREEMENT. This document sets
forth the entire consideration for this Agreement, which
consideration is contractual and not a mere recital. All
agreements and understandings between the parties are embodied
and expressed herein.
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16. NO OTHER PROMISES OR INDUCEMENT: The undersigned
parties expressly warrant that no promise or inducement has been
offered except as set forth herein. This Agreement is executed
without reliance upon any statement or representation of any
person or party, or their representatives. Acceptance of the
consideration set forth herein is in full accord and satisfaction
of each of the causes of action which are disputed or could have
been disputed herein.
17. VOLUNTARY EXECUTION. The Parties enter into this
Agreement voluntarily, upon advice of counsel and of their own
accord and represent and warrant that they are under no duress
and coercion in entering said agreement. The Parties further
represent and warrant that they have reviewed the Agreement and
agree in all respects to its terms.
18. BENEFIT OF AGREEMENT: This Agreement shall inure to
the benefit of and shall be binding upon the undersigned parties
and their respective heirs, executors, administrators, trustees,
successors and/or assigns.
19. WARRANTY OF OWNERSHIP OF CLAIMS. All Parties warrant
and represent that they are the sole holder and owner of each and
every claim, cause of action, right or chose in action relating
to the matters that are asserted or could have been asserted by
the Parties in the Lawsuit and that no assignment, in whole or in
part, of these claims, causes or rights has been made to any
other party.
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20. CONFIDENTIALITY: It is expressly agreed that the terms
and conditions of the Agreement, are, and shall remain,
confidential, and shall not be revealed or disclosed by any party
hereto except (1) with the express written consent of all Parties
hereto, (2) upon the order of a court of competent jurisdiction,
(3) as may be necessary to enforce the terms of this Agreement,
(4) as may be required by law, or (5) as may be required by any
regulatory agencies exercising oversight over any of the parties.
21. NORTH CAROLINA LAW: This Agreement shall be construed
under and governed by the laws of the State of North Carolina.
All Parties consent to the jurisdiction of the General Court of
Justice of Durham County, North Carolina, for the enforcement of
this Agreement.
22. INTEGRATION AND MERGER: This Agreement embodies,
merges and integrates all prior and current agreements and
understandings of the parties with regard to the settlement of
the claims asserted or which could have been asserted by either
Party in the above-styled and numbered cause and may not be
clarified, modified, changed or amended, except in writing,
signed by each of the signatories hereto. The terms of the
Protective Order shall survive this Agreement.
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The parties hereto have set their hands and seals this the 21st
day of January, 1997.
/S/ XXXXXX X. XXXXX, M.D.
XXXXXX X. XXXXX, M.D.
/S/ XXXXXXX X. XXXXX
XXXXXXX X. XXXXX, M.D., M.B.A.
COASTAL PHYSICIAN GROUP, INC.
By:/S/ XXXXX X. XXXXXX
Its:President
/S/ XXXXXX X. XXXXXXX
XXXXXX X. XXXXXXX
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STATE OF NORTH CAROLINA
COUNTY OF WAKE
I, Xxxxxxxx X. Xxxxxx, a Notary Public of the County and
State aforesaid, certify that XXXXXX X. XXXXX M.D. personally
appeared before me this day and acknowledged the execution of the
foregoing instrument.
WITNESS my hand and official stamp or seal, this 21st day of
January, 1997.
/S/ XXXXXXXX X. XXXXXX
Notary Public
My Commission Expires:
11/12/2000
00
XXXXX XX XXXXX XXXXXXXX
XXXXXX XX XXXX
X, Xxxxxxxx X. Xxxxxx, a Notary Public of the County and
State aforesaid, certify that XXXXXXX X. XXXXX, M.D., M.B.A.,
personally appeared before me this day and acknowledged the
execution of the foregoing instrument.
WITNESS my hand and official stamp or seal, this 21st day of
January, 1997.
/S/ XXXXXXXX X. XXXXXX
Notary Public
My Commission Expires:
11/12/2000
00
XXXXX XX XXXXX XXXXXXXX
XXXXXX XX XXXX
X, Xxxxxxxx X. Xxxxxx, a Notary Public of the County and
State aforesaid, certify that Xxxxx X. Xxxxxx personally appeared
before me this day and acknowledged that he is President of
COASTAL PHYSICIAN GROUP, INC., a Delaware corporation, and that,
by authority duly given and as the act of the corporation, the
foregoing instrument was signed in its name by himself as
President.
WITNESS my hand and official stamp or seal, this 21st day of
January, 1997.
/S/ XXXXXXXX X. XXXXXX
Notary Public
My Commission Expires:
11/12/2000
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STATE OF NORTH CAROLINA
COUNTY OF CHATHAM
I, Tlynthia X. Xxxxxx, a Notary Public of the County and
State aforesaid, certify that XXXXXX X. XXXXXXX personally
appeared before me this day and acknowledged the execution of the
foregoing instrument.
WITNESS my hand and official stamp or seal, this 23rd day of
January, 1997.
/S/ TLYNTHIA X. XXXXXX
Notary Public
My Commission Expires:
1122-98
