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EXHIBIT 10.42
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
this 25th day of June 1999, by and between Medaphis Physician Services
Corporation., a Delaware corporation (the "Company") and a wholly-owned
subsidiary of Medaphis Corporation, a Delaware corporation ("Medaphis"), and
Xxxxxxx X. XxXxxxx, a resident of the State of Georgia (the "Employee").
Statement of Background Information
The Company renders to hospitals, physicians, and/or other healthcare
organizations and providers: (a) billing services, accounts receivable
management services, collection services, electronic claims services, financial
management services, and practice and facilities management services: (b)
eligibility verification and certification for Medicaid, Medicare and other
healthcare assistance programs; (c) filing and other medical claims
securitization services; (d) medical coverage information services; and (e)
medical and insurance claims monitoring and tracking services (collectively,
the "Processing Business") (the Processing Business and any other distinct
business segment in which the Company engages during Employee's employment are
collectively referred to herein as the "Business").
In consideration of the mutual covenants, promises and conditions set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts such employment upon the terms and conditions set forth in
this Agreement.
2. Duties of Employee. Employee's title will be Senior Vice President,
Process Improvement of the Company. Employee agrees to perform and
discharge such other duties as may be assigned to Employee from time
to time by the Company to the reasonable satisfaction of the Company,
and such duties will be consistent with those duties regularly and
customarily assigned by the Company to the position of Senior Vice
President, Process Improvement and by Medaphis to executives in
comparable positions with operating subsidiaries. Employee also agrees
to comply with all of Medaphis' and the Company's policies, standards
and regulations as promulgated and in effect from time to time, and to
follow the instructions and directives of Employee's superiors within
Medaphis. Employee will devote Employee's full professional and
business-related time, skills and best efforts to such duties and will
not, during the term of this Agreement, be engaged (whether or not
during normal business hours) in any other business or professional
activity, whether or not such activity is pursued for gain, profit or
other pecuniary advantage, without the prior written consent of the
Chief Executive Officer of Medaphis, which consent will not
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be unreasonably withheld; provided, however, that Employee's assisting
his daughter in the start-up and conduct of a photography and greeting
card business shall not violate this restriction. This Section will
not be construed to prevent Employee from (a) investing personal
assets in businesses which do not compete with the Company in such
form or manner that will not require any services on the part of
Employee in the operation or the affairs of the companies in which
such investments are made and in which Employee's participation is
solely that of an investor; (b) purchasing securities in any
corporation whose securities are listed on a national securities
exchange or regularly traded in the over-the-counter market, provided
that Employee at no time owns, directly or indirectly, in excess of
one percent (1%) of the outstanding stock of any class of any such
corporation engaged in a business competitive with that of the
Company; or (c) participating in conferences, preparing and publishing
papers or books or teaching, so long as the Chief Executive Officer of
Medaphis approves such participation, preparation and publication or
teaching prior to Employee's engaging therein.
3. Term. The term of this Agreement will be for a two (2) year period
of time, commencing as of June 1, 1999 and expiring on the second
anniversary thereof subject to earlier termination as provided for in
Section 4 of this Agreement. This Agreement shall be automatically
renewed for successive one (1) year periods at the end of the initial
term, unless either party gives notice to the other of its intent to
terminate this Agreement not less than sixty (60) days prior to the
commencement of any such one (1) year period. In the event such notice
is properly and timely given, this Agreement shall terminate at the
end of the initial term or one (1) year period in which such notice is
given without further payment by or obligation on the part of the
Company, subject to applicable Company standard severance guidelines.
4. Termination.
(a) Termination by Company for Cause. Notwithstanding anything
contained in Section 3 to the contrary, the Company may terminate this
Agreement and all of its obligations hereunder immediately if any of
the following events occur:
(i) Employee materially breaches any of the terms or
conditions set forth in this Agreement and fails to cure such
breach within ten (10) days after Employee's receipt from the
Company of written notice of such breach (notwithstanding the
foregoing, no cure period shall be applicable to breaches by
Employee of Sections 6, 7 or 8 of this Agreement);
(ii) Employee commits any other act materially detrimental
to the business or reputation of the Company;
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(iii) Employee commits or is convicted of any crime
involving fraud, deceit or moral turpitude; or
(iv) Employee dies or becomes mentally or physically
incapacitated or disabled so as to be unable to perform
Employee's duties under this Agreement. Without limiting the
generality of the foregoing, Employee's inability adequately
to perform services under this Agreement for a period of
sixty (60) consecutive days will be conclusive evidence of
such mental or physical incapacity or disability, unless such
inability adequately to perform services under this Agreement
is pursuant to a mental or physical incapacity or disability
covered by the Family Medical Leave Act, in which case such
sixty (60)-day period shall be extended to a one hundred and
twenty (120)-day period.
(b) Termination by Company Without Cause. Notwithstanding anything
contained in Section 3 to the contrary, the Company may terminate
Employee's employment pursuant to this Agreement without cause upon at
least thirty (30) days' prior written notice to Employee. In the event
Employee's employment with the Company is terminated by the Company
without cause or Employee elects to terminate voluntarily his
employment following the occurrence of events constituting "Good
Reason" for his voluntary termination of employment (in each case,
other than in connection with a Change in Control in which event the
provisions of subsection (c) of this section 4 will apply, it being
understood that the provisions of subsection (c) of this section and
this subsection (b) are mutually exclusive), the Company shall pay to
Employee an amount equal to his then current salary (not including the
right to receive any incentive bonus payments) multiplied by the
greater of (i) the number of months remaining in the initial or any
renewal term of this Agreement, as applicable or (ii) twelve (12).
Such amount shall be paid pursuant to the Company's normal payroll
practices over the period of such payments. For purposes of this
Agreement, "Good Reason" is defined as (w) a material reduction
(greater than 10%) in Employee's annual base salary; (x) a change in
Employee's work location to a work location more than 50 miles from
Employee's existing work location, except for required travel on the
Company's business to an extent consistent with Employee's then
present business travel obligations; (y) an assignment to any duties
inconsistent in any material adverse respect with Employee's current
position, duties or responsibilities, other than an insubstantial and
inadvertent act that is remedied by the Company promptly after receipt
of notice thereof given by Employee; or (z) the failure by the Company
to continue any material benefit or compensation plan in which
Employee is participating unless Employee is provided with comparable
benefits.
(c) Change in Control. In the event there is a Change in Control
(as defined herein) of the Company or Medaphis and if: (A) Employee's
employment is
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terminated by the Company without cause or by Employee for Good Reason
within one (1) year following any such Change in Control; (B) if
Employee's employment is terminated by the Company at the request of
or pursuant to an agreement with a third party who has taken steps
reasonably calculated to effect a Change in Control; or (C) if
Employee's employment is terminated by the Company or by Employee for
Good Reason in connection with or in anticipation of a Change in
Control, then Employee will be entitled to receive severance payments,
payable over a two year period, equal in the aggregate to two times
the sum of: (i) Employee's then current annual base salary; and (ii)
the most recent incentive bonus payment received by Employee prior to
the Change in Control. In addition, Employee shall be entitled to
receive monthly for a period of eighteen (18) months commencing on the
date of termination in connection with a Change in Control an amount
equal to the difference between the monthly cost to Employee of
healthcare coverage at the levels at which Employee is participating
on the date of such termination and the monthly cost of comparable
COBRA coverage actually incurred. All amounts payable pursuant to this
Section 4 (c) shall be paid in accordance with the Company's normal
payroll practices. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to occur upon any of the
following:
(i) a consolidation or merger of Medaphis or the Company
with or into any other corporation, or any other entity or
person, in the case of the Company, other than Medaphis or a
wholly-owned subsidiary of Medaphis, excluding any
transaction in which the shares of Medaphis common stock or
the Company's common stock, as applicable, outstanding
immediately prior to any such consolidation or merger
represent immediately thereafter more than 50% of the
combined voting power of the resulting entity after the
transaction;
(ii) any corporate reorganization, including an exchange
offer, in which Medaphis or the Company shall not be the
continuing or surviving entity resulting from such
reorganization, excluding any transaction in which the shares
of Medaphis common stock or the Company's common stock
outstanding immediately prior to any such reorganization
represent immediately thereafter more than 50% of the
combined voting power of the resulting entity after the
transaction; or
(iii) the failure for any reason of individuals who
constitute the Incumbent Board to continue to constitute at
least a majority of the Board. For purposes of this Section 4
(d), the term "Board" shall mean the Board of Directors of
Medaphis or the Company, as applicable, and the term
"Incumbent Board" shall mean the members of the Board as of
the date hereof and any person becoming a member of the Board
hereafter whose election or nomination is by a vote of at
least a majority of the directors then comprising the
Incumbent
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Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an
actual or threatened election contest relating to the
election of the directors of Medaphis or the Company, as
applicable, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended).
5. Compensation and Benefits.
a) Annual Salary. During the term of this Agreement and for all
services rendered by Employee under this Agreement, the Company will
pay Employee a base salary of Two Hundred Fifteen Thousand and No/100
Dollars ($215,000.00) per annum to be paid in accordance with the
Company's regular payroll practices, provided, however, that such
payments shall be made no less frequently than in equal monthly
installments. Such annual salary will be subject to increases in the
normal course of business.
b) Incentive Compensation. Employee shall be eligible to
participate in the current Medaphis Incentive Compensation Plan (and
any comparable future incentive compensation plans during the term of
this Agreement) at a participation category of up to Seventy-five
Percent (75%) of Employee's base salary, payable at the discretion of
the Board of Directors of the Company.
c) Stock Options. As soon as reasonably practicable after the
signing of this Agreement, and subject to the approval of the
Compensation Committee of the Board of Directors of Medaphis
Corporation, the Company will cause Medaphis to issue to Employee,
effective as of the date approved by the Compensation Committee of the
Board of Directors of Medaphis Corporation, options to purchase Fifty
Thousand (50,000) shares of Medaphis Common Stock pursuant to the terms
and conditions of the Amended and Restated Medaphis Corporation
Non-Executive Employee Stock Option Plan ("Stock Option Plan"), as
amended. Such options will vest at the rate of thirty-three and
one-third percent (33.3%) per year for a three-year period beginning on
the starting date of this Agreement, subject to the terms and
conditions of the Stock Option Plan. Such Options shall vest in full
immediately upon the occurrence of certain change in control events
outlined in the Stock Option Plan. Employee shall be considered for
additional grants of options to purchase shares of Medaphis common
stock in a manner which is consistent with other senior officers of the
Company. Except as expressly set forth herein, nothing in this
Agreement shall give rise to a contractual right to Employee to receive
grants of additional stock options of Medaphis. Further, Medaphis has
no obligation to Employee to create parity with any other Medaphis
executives with respect to any options granted to such other
executives.
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d) Other Benefits. Employee will be entitled to such fringe
benefits as may be provided from time-to-time by the Company to its
Employees, including, but not limited to, group health insurance, life
and disability insurance, vacation and any other fringe benefits, in
each case as now or hereafter provided by the Company to its Employees,
if and when, and for so long as, Employee meets the eligibility
requirements for such benefits. The Company reserves the right to
change or discontinue any employee benefit plans or programs now being
offered to its employees; provided, however, that all benefits provided
for employees of the same position and status as Employee will be
provided to Employee on an equal basis.
e) Business Expenses. Employee will be reimbursed for all
reasonable expenses incurred in the discharge of Employee's duties
under this Agreement pursuant to the Company's standard reimbursement
policies.
f) Withholding. The Company will deduct and withhold from the
payments made to Employee under this Agreement, state and federal
income taxes, FICA and other amounts normally withheld from
compensation due employees.
6. Non-Disclosure of Proprietary Information. Employee recognizes and
acknowledges that the Trade Secrets (as defined below) and
Confidential Information (as defined below) of the Company and its
affiliates and all physical embodiments thereof (as they may exist
from time-to-time, collectively, the "Proprietary Information") are
valuable, special and unique assets of the Company's and its
affiliates' businesses. Employee further acknowledges that access to
such Proprietary Information is essential to the performance of
Employee's duties under this Agreement. Therefore, in order to obtain
access to such Proprietary Information, Employee agrees that, except
in connection with performing duties assigned to him by the Company,
Employee shall hold in confidence all Proprietary Information and will
not reproduce, use, distribute, disclose, publish or otherwise
disseminate any Proprietary Information, in whole or in part, and will
take no action causing, or fail to take any action necessary to
prevent causing, any Proprietary Information to lose its character as
Proprietary Information, nor will Employee make use of any such
information for Employee's own purposes or for the benefit of any
person, firm, corporation, association or other entity (except the
Company) under any circumstances.
For purposes of this Agreement, the term "Trade Secrets" means
information, without regard to form, including, but not limited to,
any technical or non-technical data, formula, pattern, compilation,
program, device, method, technique, drawing, process, financial data,
financial plan, product plan, list of actual or potential customers or
suppliers, or other information similar to any of the foregoing, which
is not commonly known by or available to the public and (i) derives
economic value, actual or potential, from not being generally known
to, and not being readily
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ascertainable by proper means by, other persons who can derive
economic value from its disclosure or use, and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy. For purposes of this Agreement, the term "Trade Secrets" does
not include information that Employee can show by competent proof (i)
was known to Employee and reduced to writing prior to disclosure by
the Company (but only if Employee promptly notifies the Company of
Employee's prior knowledge); (ii) was generally known to the public at
the time the Company disclosed the information to Employee; (iii)
became generally known to the public after disclosure by the Company
through no act or omission of Employee; or (iv) was disclosed to
Employee by a third party having a bona fide right both to possess the
information and to disclose the information to Employee. The term
"Confidential Information" means any data or information of the
Company, other than trade secrets, which is valuable to the Company
and not generally known to competitors of the Company. The provisions
of this Section 6 will apply to Trade Secrets for so long as such
information remains a trade secret and to Confidential Information
during Employee's employment with the Company and for a period of two
(2) years following any termination of Employee's employment with the
Company for whatever reason.
7.A. Non-Competition Covenant. During Employee's employment by the Company
Employee will be a member of the Company's management team. Employee
agrees that during his employment and for a period of one (1) year
following any termination of Employee's employment for whatever reason,
Employee will not, directly or indirectly, on Employee's own behalf
or in the service of or on behalf of any other individual or entity,
compete with the Company within the Geographical Area (as hereinafter
defined). The term "compete" means to engage in, have any equity
or profit interest in, make any loan to or for the benefit of, or
render services of any marketing, management, sales, administrative,
supervisory or consulting nature, directly or indirectly, on Employee's
own behalf or in the service of or on behalf of any other individual or
entity, either as a proprietor, employee, agent, independent
contractor, consultant, director, officer, partner or stockholder
(other than a stockholder of a corporation listed on a national
securities exchange or whose stock is regularly traded in the
over-the-counter market, provided that Employee at no time owns,
directly or indirectly, in excess of one percent (1%) of the
outstanding stock of any class of any such corporation) any business
which provides Business products or services. For purposes of this
Agreement, the term "Geographical Area" means the territory located
within a seventy-five (75) mile radius of Company headquarters of any
Company facility for which Employee exercised managerial control.
B. Non-Solicitation of Clients Covenant. Employee agrees that during
Employee's employment by the Company and for a period of two (2) years
following the termination of Employee's employment for whatever
reason, Employee will not,
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directly or indirectly, on Employee's own behalf or in the service of
or on behalf of any other individual or entity, divert, solicit or
attempt to divert or solicit any individual or entity (i) who is a
client of the Company at any time during the six (6)-month period
prior to Employee's termination of employment with the Company
("Client"), or was actively sought by the Company as a prospective
client, and (ii) with whom Employee had material contact while
employed by the Company, to provide Business services or products to
such Clients or prospects.
C. Construction. The parties hereto agree that any judicial authority
construing all or any portion of this Section 7 or Section 8 below
may, if it chooses, sever any portion of the Geographical Area, client
base, prospective relationship or prospect list or any prohibited
business activity from the coverage of such Section and to apply the
provisions of such Section to the remaining portion of the
Geographical Area, the client base or the prospective relationship or
prospect list, or the remaining business activities not so severed by
such judicial authority. In addition, it is the intent of the parties
that the judicial authority may, if it chooses, replace each such
severed provision with a provision as similar in terms to such severed
provision as may be possible and be legal, valid and enforceable. It
is the intent of the parties that Sections 7 and 8 be enforced to the
maximum extent permitted by law. In the event that any provision of
either such Section is determined not to be specifically enforceable,
the Company shall nevertheless be entitled to bring an action to seek
to recover monetary damages as a result of the breach of such
provision by Employee.
8. Non-Solicitation of Employees Covenant. Employee further agrees and
represents that during Employee's employment by the Company and for a
period of two (2) years following any termination of Employee's
employment for whatever reason, Employee will not, directly or
indirectly, on Employee's own behalf or in the service of, or on
behalf of any other individual or entity, divert or solicit, or
attempt to divert or solicit, to or for any individual or entity which
is engaged in providing Business services or products, any person
employed by the Company, whether or not such employee is a full-time
employee or temporary employee of the Company, whether or not such
employee is employed pursuant to written agreement and whether or not
such employee is employed for a determined period or at-will.
9. Existing Restrictive Covenants. Employee represents and warrants that
Employee's employment with the Company does not and will not breach
any agreement which Employee has with any former employer to keep in
confidence confidential information or not to compete with any such
former employer. Employee will not disclose to the Company or use on
its behalf any confidential information of any other party required to
be kept confidential by Employee.
10. Return of Proprietary Information. Employee acknowledges that as a
result of Employee's employment with the Company, Employee may come
into the
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possession and control of Proprietary Information, such as proprietary
documents, drawings, specifications, manuals, notes, computer
programs, or other proprietary material. Employee acknowledges,
warrants and agrees that Employee will return to the Company all such
items and any copies or excerpts thereof, in any form or medium, and
any other properties, files or documents obtained as a result of
Employee's employment with the Company, immediately upon the
termination of Employee's employment with the Company.
11. Proprietary Rights. During the course of Employee's employment with
the Company, Employee may make, develop or conceive of useful
processes, machines, compositions of matter, computer software,
algorithms, works of authorship expressing such algorithm, or any
other discovery, idea, concept, document or improvement which relates
to or is useful to the Company's Business (the "Inventions"), whether
or not subject to copyright or patent protection, and which may or may
not be considered Proprietary Information. Employee acknowledges that
all such Inventions will be "works made for hire" under United States
copyright law and will remain the sole and exclusive property of the
Company. Employee also hereby assigns and agrees to assign to the
Company, in perpetuity, all right, title and interest Employee may
have in and to such Inventions, including without limitation, all
copyrights, and the right to apply for any form of patent, utility
model, industrial design or similar proprietary right recognized by
any state, country or jurisdiction. Employee further agrees, at the
Company's request and expense, to do all things and sign all documents
or instruments necessary, in the opinion of the Company, to eliminate
any ambiguity as to the ownership of, and rights of the Company to,
such Inventions, including filing copyright and patent registrations
and defending and enforcing in litigation or otherwise all such
rights.
Employee will not be obligated to assign to the Company any Invention
made by Employee while in the Company's employ which does not relate
to any business or activity in which the Company is or may reasonably
be expected to become engaged, except that Employee is so obligated if
the same relates to or is based on Proprietary Information to which
Employee will have had access during and by virtue of Employee's
employment or which arises out of work assigned to Employee by the
Company. Employee will not be obligated to assign any Invention which
may be wholly conceived by Employee after Employee leaves the employ
of the Company, except that Employee is so obligated if such Invention
involves the utilization of Proprietary Information obtained while in
the employ of the Company. Employee is not obligated to assign any
Invention which relates to or would be useful in any business or
activities in which the Company is engaged if such Invention was
conceived and reduced to practice by Employee prior to Employee's
employment with the Company.
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12. Remedies. Employee agrees and acknowledges that the violation of any
of the covenants or agreements contained in Sections 6, 7, 8, 9, 10
and 11 of this Agreement would cause irreparable injury to the
Company, that the remedy at law for any such violation or threatened
violation thereof would be inadequate, and that the Company will be
entitled, in addition to any other remedy, to temporary and permanent
injunctive or other equitable relief without the necessity of proving
actual damages or posting a bond.
13. Notices. Any notice or communication under this Agreement will be in
writing and sent by registered or certified mail addressed to the
respective parties as follows:
If to the Company: If to Employee:
Medaphis Corporation Xxxxxxx X. XxXxxxx
2840 Mt. Xxxxxxxxx Parkway 0000 Xx. Xxxxxxxxx Xxxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: General Counsel
or to such other address or agent as may be hereafter designated in
writing by either party hereto. All such notices shall be deemed given
on the date personally delivered or mailed.
14. Severability. Subject to the application of Section 7(C) to the
interpretation of Sections 7 and 8, in case one or more of the
provisions contained in this Agreement is for any reason held to be
invalid, illegal or unenforceable in any respect, the parties agree
that it is their intent that the same will not affect any other
provision in this Agreement, and this Agreement will be construed as
if such invalid or illegal or unenforceable provision had never been
contained herein. It is the intent of the parties that this Agreement
be enforced to the maximum extent permitted by law.
15. Entire Agreement. This Agreement embodies the entire agreement of the
parties relating to the subject matter of this Agreement and
supersedes all prior agreements, oral or written, regarding the
subject matter hereof, including, but not limited to, any prior
restrictive covenants of the Employee in favor of the Company. No
amendment or modification of this Agreement will be valid or binding
upon the parties unless made in writing and signed by the parties.
16. Binding Effect. This Agreement will be binding upon the parties and
their respective heirs, representatives, successors, transferees and
permitted assigns.
17. Assignment. This Agreement is one for personal services and will not
be assigned by Employee. The Company may assign this Agreement to its
parent company or
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to any of its subsidiaries or affiliated companies; provided that the
parent or any subsidiary or affiliate fulfills the obligations of the
Company under this Agreement.
18. Governing Law. This Agreement is entered into and will be interpreted
and enforced pursuant to the laws of the State of Georgia. The parties
hereto hereby agree that the appropriate forum and venue for any
disputes between any of the parties hereto arising out of this
Agreement shall be any federal court in the state or state court in
the event diversity is not present, where the Company has its
principal place of business and each of the parties hereto hereby
submits to the personal jurisdiction of any such court. The foregoing
shall not limit the rights of any party to obtain execution of
judgment in any other jurisdiction. The parties further agree, to the
extent permitted by law, that a final and unappealable judgment
against either of them in any action or proceeding contemplated above
shall be conclusive and may be enforced in any other jurisdiction
within or outside the United States by suit on the judgment, a
certified exemplified copy of which shall be conclusive evidence of
the fact and amount of such judgment.
19. Indemnification. Employee shall be entitled to the indemnification and
exculpation offered through and set forth in the Company's Charter and
By-laws.
20. Surviving Terms. Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement
shall survive termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
COMPANY: EMPLOYEE:
By: /s/ XXXXXXXX X. X. XXXXX /s/ XXXXXXX X. XXXXXXX
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Xxxxxxxx X.X. Xxxxx Xxxxxxx X. XxXxxxx
Title: Executive Vice President
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EXHIBIT A
INVENTIONS
Employee represents that there are no Inventions.
/s/ WJD
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Employee's Initials
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