Exhibit 10.10
EMPLOYMENT AGREEMENT, dated as of December 31,
1996, between Revenue Production Management, Inc.,
an Illinois corporation (the "Company"), and
Xxxxxxx X. Xxxxxx (the "Employee").
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Physician Support Systems, Inc., a Delaware corporation ("PSS"), is
acquiring all of the issued and outstanding capital stock of the Company in a
merger transaction involving PSS, a wholly-owned subsidiary of PSS, and the
Company (the "Merger"), pursuant to the Agreement and Plan of Merger, dated as
of December 31, 1996 (the "Merger Agreement"), among PSS Revenue Production
Management, Inc., a wholly owned subsidiary of PSS, PSS and the Company.
Employee acknowledges and agrees that this Agreement is being entered into in
connection with the sale of all of his shares of capital of the Company.
The Company desires to employ Employee, and Employee desires to be
employed by the Company, on the terms and subject to the conditions set forth
herein.
As a material inducement to PSS to consummate the Merger, PSS and the
Company desire that Employee enter into the covenants set forth in Section 5
hereof, and Employee agrees to enter into such covenants. Employee's execution
of this Agreement is a condition to PSS's obligation to consummate the Merger.
Based upon the mutual covenants and consideration set forth herein,
the sufficiency of which is hereby acknowledged, the parties agree as follows:
Section 1. Term. The initial term of employment of Employee by the
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Company hereunder shall commence upon the date of this Agreement (the
"Commencement Date") and end on the third anniversary of the Commencement Date,
unless extended on terms agreed upon between Employee and the Company (such term
being hereinafter referred to as the "Employment Period"). Notwithstanding the
foregoing, the Employment Period shall automatically be extended for two
succeeding one-year periods unless Employee gives notice to the Company at least
180 days prior to the expiration of the initial Employment Period or the first
one-year extension, as the case may be, of such party's intention not to extend
the Employment Period. If such notice is given, the Employment Period shall
terminate at the end of the initial Employment Period or at the end of the first
one-year extension, as the case may be. The Employment Period may be earlier
terminated pursuant to the provisions of this Agreement.
Section 2. Duties.
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2.1. Scope. (a) During the Employment Period, Employee shall
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perform senior management services requiring substantially the same time
commitment and encompassing substantially the same responsibilities as Employee
has, in good faith and in the ordinary course of business, performed for the
Company prior to the Merger, shall, along with other management staff of PSS and
its affiliates, perform transition and integration services in connection with
the acquisition of the Company by PSS, and shall include such other services as
Employee and the Company may, from time to time, agree (collectively, the
"Services"). During the Employment Periods, the Employee shall hold the office
of President of the Company and report to the Board of Directors of the Company.
(b) Employee shall have the right to cause the Company to
continue to maintain its clients services and development bonus programs. The
programs shall be administered and maintained in accordance with the Company's
past practice and with the concurrence of the Company's Board of Directors.
2.2. Performance. (a) During the Employment Period,
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Employee will render the Services to the Company in conformity with professional
standards and in a prudent and workmanlike manner. Employee shall have complete
discretion in the performance of the Services, subject to the Company's
policies, standards and regulations, Employee's fiduciary duties to the Company
and the general authority and direction of the Boards of Directors of the
Company and PSS. Employee shall promote the interests of the Company in carrying
out Employee's duties and shall not deliberately take any action which could, or
deliberately fail to take any action which failure could, reasonably be expected
to have a material adverse effect upon the business of the Company, PSS or their
respective affiliates.
(b) The Services shall principally be rendered at the
Company's principal offices in Evanston, Illinois, or at a location within 50
miles of Evanston, with such travel as shall be reasonably required in the
performance of the Services; provided that Employee shall not be required to
relocate out of the Chicago metropolitan area, and that Employee shall not be
required to spend more than 25% of his time in the performance of the Services
outside the Chicago metropolitan area.
(c) The Company acknowledges and agrees that Employee may
from time to time during the period that Employee is employed by the Company
perform legal services as an attorney outside of Employee's employment with the
Company; provided that (i) such services could not reasonably be expected to
impair the relationship between the Company or its affiliates on the one hand
and a Client Account (defined below in Section 5.1) on the other, (ii) such
services do not interfere with Employee's performance of the Services, and (iii)
Employee is in compliance with his obligations under this Agreement.
(d) Employee shall to the same extent as directors and
officers of PSS's other subsidiaries, be indemnified from any and all
liabilities (including reasonable attorney's fees and costs) incurred by reason
of the fact that: (i) on and after the date hereof, Employee is an employee of
the Company and (ii) Employee is a member of the Company's Board of Directors
(to the extent Employee serves as such a director); provided that such indemnity
shall be pursuant to PSS's or the Company's, as the case may be, certificate of
incorporation and bylaws. To the same extent as directors and officers of PSS's
other subsidiaries, Employee shall as a director and officer of the Company be
covered by liability insurance against liabilities as to which Employee is
permitted to be indemnified by PSS's or the Company's, as the case may be,
certificate of incorporation or bylaws.
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Section 3. Compensation.
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3.1. Salary. As compensation for the Services, the Company
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shall pay to the Employee an annual base salary of $200,000 (the "Salary"),
payable in equal installments in accordance with the Company's normal payroll
practices, which Salary, shall be adjusted annually, based upon the increase, if
any, in the Consumer Price Index, as published by the United States Department
of Commerce. As additional compensation for the Services, the Company shall pay
to Employee an annual bonus of $20,000 (the "Bonus"), payable in four equal
quarterly installments at the end of each quarter.
3.2 Transitional Services. For services provided in
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connection with the transition of ownership and coordination, realignment and
integration of the Company's and PSS's activities including, without limitation,
employee and customer relations services, information systems hardware and
software transition and integration services and new customer marketing
programs, and integration of the Company's business and operations with PSS's
other hospital billing businesses, the Company shall cause PSS to pay to
Employee $112,500 for these transitional services, payable in four equal monthly
installments beginning on January 15, 1997 and ending on April 15, 1997.
Notwithstanding the foregoing, PSS shall not be obligated to pay any such
installment if, at the time such installment is otherwise due, Employee has
ceased to be an employee of the Company, unless the Employment Period is
terminated by the Company other than pursuant to Section 6.1 or 6.2. PSS shall
not withhold any amounts from the transitional service bonus for payment of
federal, state and local taxes thereon. To the extent any such taxes are due,
such taxes shall be paid by Employee.
3.3. Employee Stock Options. As additional compensation for
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the Services, Employee shall be entitled to grants of stock options under PSS's
Amended and Restated 1996 Stock Option Plan (the "Stock Option Plan"), awarded
by PSS's Board of Directors or a committee thereof administering the Stock
Option Plan. The terms and amounts of such grants are set forth on Annex A
hereto. Employee shall also be eligible to receive additional stock option
grants under the Stock Option Plan based upon achievement of performance
objectives during the Employment Period for calendar years after 1997. Such
additional grants shall be at the discretion of the Compensation Committee of
PSS's board of directors and any such performance objectives shall be developed
by the Compensation Committee in consultation with Employee.
3.4. Reimbursement. Pursuant to the Company's standard
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reimbursement policies, the Company shall reimburse Employee for all reasonable
out-of-pocket expenses incurred by Employee directly related to the performance
by Employee of the services hereunder. Employee shall account for such expenses
in accordance with the Company's reasonable record-keeping requirements.
Section 4. Employee Benefits. During the Employment Period, Employee
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shall be eligible for the employee benefits (including, without limitation,
medical coverage) at least as favorable as those generally provided by PSS to
its senior management employees. The Company reserves the right to expand,
restrict, designate or eliminate the benefits provided to Employee so long as
such expansion, restriction, designation or elimination applies generally to all
of PSS's
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senior management employees. Employee shall be entitled to vacations consistent
with the Company's vacation policy for senior management employees.
Section 5. Non-Competition; Non-Disclosure.
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5.1. Clients. Employee recognizes and acknowledges that,
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after the Commencement Date, (a) all clients and/or accounts serviced by the
Company, any of its affiliates, Employee or the Company's or its affiliates'
other employees during Employee's employment with the Company, including all
clients and/or accounts acquired by Employee due to such Employee's efforts
during the term of such Employee's employment with the Company, are the clients
and accounts of the Company or its affiliates, as the case may be (collectively,
"Existing Accounts"), and (b) all businesses or individuals who (i) have been
contacted by Employee or the Company or any of its affiliates with a view toward
having such business or entity retain the Company or any of its affiliates to
provide services or (ii) are known to Employee as a result of his employment
with the Company are prospective clients and accounts of the Company or its
affiliates, as the case may be (collectively, "Prospective Accounts," and, with
Existing Accounts, "Client Accounts").
5.2. Non-Disclosure. (a) Except as provided in this
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Section 5.2, Employee shall not, during or after the Employment Period, disclose
any confidential or proprietary information of the Company or of its affiliates
to any person, firm, corporation, association or other entity (other than the
Company, its affiliates, officers or employees thereof) for any reason or
purpose whatsoever (other than in the normal course of business on a need to
know basis after Employee has received assurances that the confidential or
proprietary information shall be kept confidential), nor shall Employee make use
of any such confidential or proprietary information for his own purpose or for
the benefit of any person, firm, corporation or other entity, except the
Company. As used herein, the term "confidential or proprietary information"
means all information which is or becomes known to Employee and relates to
matters such as trade secrets, research and development activities, business or
financing plans, acquisition opportunities, computer software, books and
records, customer or potential customer lists (including, without limitation,
any list of Client Accounts or any part thereof), vendor lists, suppliers,
distribution channels, pricing information and private processes as they may
exist from time to time; provided that the term "confidential or proprietary
information" shall not include information that is or becomes generally
available to the public (other than as a result of a disclosure in violation of
this Agreement by Employee or a person who received such information from
Employee).
(b) If Employee is requested or required by law or judicial order
to disclose any confidential or proprietary information, Employee shall provide
the Company with prompt notice of any such request for such information or
requirement so that the Company may seek an appropriate protective order or
waiver of Employee's compliance with the provisions of this clause. Employee
will not oppose action by, and will cooperate with, the Company to obtain an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded the confidential or proprietary information. During
the Employment Period, and for matters arising from events or circumstances
occurring during the Employment Period, the
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Company will provide for and control the defense of matters arising under this
provision at the Company's sole cost and expense and with counsel chosen by the
Company.
(c) Employee agrees that Employee will promptly and fully disclose
to the Company (i) all inventions, ideas, trade secrets or know-how (whether
patentable or copyrightable or not) made or conceived by Employee (either solely
or jointly with others) during the Employment Period and which shall in any way
relate to the business conducted or contemplated to be conducted by the Company
or any of its affiliates; and (ii) all tangible work product (whether in the
nature of developed ideas, know-how, trade secrets and similar intellectual
property) and inventions (whether patentable or copyrightable or not) made or
conceived by Employee (either solely or jointly with others) during the
Employment Period which relates in any way to the business conducted or
contemplated to be conducted by the Company or any of its affiliates; and all
such inventions, ideas, trade secrets and know-how shall be and remain the sole
and exclusive property of the Company. At the request of the Company, Employee
shall, during the Employment Period, without charge to the Company, but at the
expense of the Company, assist the Company in any reasonable way to vest in it
title to all such inventions, ideas, trade secrets and know-how and to obtain
any patents, trademarks or copyrights thereon in all countries throughout the
world. In this regard, Employee shall execute and deliver any and all documents
that the Company may reasonably request, including applications for patents,
copyrights and assignments thereof.
5.3. Restrictive Covenant. Employee hereby acknowledges and
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recognizes Employee's possession of confidential or proprietary information and
the highly competitive nature of the business of the Company and its affiliates
and accordingly agrees that, in consideration of PSS causing the Merger to be
consummated, the Company's entering into this Agreement, and the premises
contained herein, Employee will not, from and after the Commencement Date and
for the period ending on the later of (a) five years after the date of this
Agreement or (b) three years after the date of termination of the Employment
Period, either individually or as an officer, director, employee, partner, agent
or principal of another business firm (i) directly or indirectly engage in the
United States in any competitive business (including seeking or accepting
employment with a Client Account), (ii) assist others in engaging in any
competitive business in the manner described in the foregoing clause (i), (iii)
solicit, professionally contract or provide medical billing, accounts
receivable, accounting, financial or consulting services to any Client Account
or (iv) induce employees of the Company or any of its affiliates to terminate
their employment with the Company or such affiliates or hire any employees of
the Company or any of its affiliates to work with Employee or any business firm
affiliated with Employee. Notwithstanding the foregoing, after the termination
or expiration of the Employment Period, Employee may (i) work or consult for a
governmental agency, (ii) work or consult for not-for-profit healthcare industry
groups, (iii) teach at a public or private college, university or professional
or vocational training school, and (iv) work in a management, administrative or
legal counsel capacity in a healthcare business (other than entities which, as
the primary component of their business, provide medical billing, accounts
receivable management or practice management services to healthcare providers);
provided that (1) in no event shall Employee engage in any such activity if such
activity (x) is otherwise prohibited pursuant to clauses (i) or (ii) of the
immediately preceding sentence or (y) adversely affects, or conflicts with, the
business or operations of the Company, PSS or any of their respective affiliates
and (2) in the case of working or consulting for a governmental agency, Employee
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shall recuse himself from any decision-making role in matters affecting the
business or operations of PSS or its affiliates.
5.4. Remedies. Employee acknowledges that the Company may
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elect to specifically enforce Section 5.1, 5.2 or 5.3 by injunctive or other
equitable remedies (as provided in Section 9.4) or, in the alternative, seek
damages as a result of Employee's breach of the agreements set forth in such
section. Employee recognizes that the right to service each Client Account is a
valuable asset of the Company or its affiliates and that the precise value of
the loss of such asset may be difficult to measure in monetary sums.
Section 6. Termination.
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6.1. Death or Disability. If the Employee should die during
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the Employment Period, the Employment Period shall terminate as of the date of
death. If the Employee becomes unable to perform the Services reasonably
satisfactorily for at least 180 consecutive days during the Employment Period
due to a physical or mental disability, the Company may elect to terminate the
Employment Period at any time thereafter, provided the Employee still suffers
from such disability; and the Employment Period shall terminate as of the date
of such election. All disabilities shall be certified by a physician reasonably
acceptable to Employee and to the Company. The Employee's failure to submit to
any physical examination by such physician after such physician has given
reasonable notice of the time and place of such examination shall be conclusive
evidence of the Employee's inability to perform his duties hereunder.
6.2. Cause. The Company, at its option, may terminate the
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Employment Period and all of the obligations of the Company hereunder for Cause.
For the purposes of this Agreement, the Company shall have "Cause" to terminate
the Employee's employment hereunder in the event of (i) the Employee's
conviction of, or plea of guilty or nolo contendere to (A) a felony or (B) a
fraudulent or deliberately dishonest act which results in a material adverse
effect on the Company, (ii) the Employee's material breach of this Agreement or
(iii) the Employee's gross negligence or bad faith in the performance of the
Services. Notwithstanding the foregoing, the Employment Period may not be deemed
to have been terminated for Cause pursuant to Section 6.2(ii) until 45 days
after Employee receives written notice from the Company that the Company is
terminating the Employment Period pursuant to such Section. During such 45-day
period, Employee has the right, together with Employee's counsel, to meet with
the Company's Board of Directors to discuss such termination by giving written
notice to the Company within 15 days after Employee receives such termination
notice. If such meeting is requested by Employee, such meeting shall take place
at the Company's principal place of business at a date and time to be mutually
agreed upon in good faith by the Company and Employee, which date shall not be
less than 10 days or more than 20 days after the Company's receipt of such
meeting request.
6.3. Payments in the Event of Termination. (a) If the
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Employment Period is terminated or expires pursuant to Section 1 or Section 6,
the Company shall pay the Employee any Salary, Bonus, accrued vacation and any
other remuneration earned to the date of such termination or expiration, as the
case may be.
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(b) Notwithstanding anything to the contrary set forth in Section
6.3(a), if the Employment Period is terminated pursuant to Section 6.1 prior to
the first anniversary of the Commencement Date, the Company shall pay the
Employee or his estate, as the case may be, an amount equal to the sum of any
unpaid Salary, Bonus, and any other remuneration to which Employee would
otherwise have been entitled during the first year of the Employment Period had
the Employment Period not been so terminated. At the Company's option and in
lieu of its obligations pursuant to the immediately preceding sentence, the
Company may purchase insurance on Employee's life with a death benefit at least
equal to the Company's obligations pursuant to the immediately preceding
sentence. Employee or his estate shall be the beneficiary of any such life
insurance.
(c) If the Employment Period is terminated by the Company (other
than pursuant to Section 6.1 or 6.2), the Company shall continue to (i) pay
Employee his Salary and Bonus through the remainder of the Employment Period
(assuming no early termination or expiration) and (ii) provide Employee with the
employee benefits that Employee would otherwise have been entitled pursuant to
Section 4 of this Agreement.
6.4. Termination Obligations. In the event of termination
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of the Employment Period in accordance with this Section 6, all obligations of
the Company pursuant to this Agreement shall terminate, except as specifically
set forth in Section 6.3.
Section 7. PSS Change in Control. In the event that, during the
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first eighteen months after the date hereof, (i) (x) PSS is acquired by, merges
with or into, or sells substantially all of its assets to, another entity and
(1) after the consummation of such transaction the former stockholders of PSS do
not own at least 50% of the voting equity of such other entity or (2) in
connection with such merger or sale, a majority of the PSS Board of Directors is
replaced or (y) as the result of a tender offer, proxy contest or other
transaction or series of transactions which result in a majority of the PSS
Board of Directors is replaced (in each case, a "PSS Change of Control") and
(ii) as a result of a PSS Change of Control, Xxxxx X. Xxxxxx terminates his
employment with PSS (or its affiliates) or such other entity, Employee shall
have the right to terminate the Employment Period by giving written notice to
the Company within 30 days of the date on which Xxxxx X. Xxxxxx terminates such
employment, such termination of the Employment Period to become effective 60
days after the date on which such notice is given. The Company shall have the
right to rescind such termination within 30 days of its receipt of Employee's
termination notice by notifying Employee in writing that the Company agrees to
pay Employee (i) a one-time bonus equal to Employee's Salary for the prior year,
and (ii) an annual salary for the remainder of the Employment Period equal to
two times Employee's Salary for the prior year.
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Section 8. Transition. In the event of termination of the Employment
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Period, Employee shall for a reasonable period of time use Employee's best
efforts to assist the Company in maintaining the Company's professional
relationship with all Client Accounts. To such end, Employee shall cooperate
and assist the Company, at the Company's reasonable direction and instruction,
to retain and transition each Client Account during the transition period
between the receipt of notice of the termination of employment and the final day
of employment.
Section 9. Miscellaneous.
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9.1. Assignment; Benefit. This Agreement is personal in its
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nature and the parties shall not, without the prior written consent of the
other, assign or transfer this Agreement or any rights or obligations hereunder;
provided that the provisions hereof shall inure to the benefit of, and be
binding upon, each successor of the Company, whether by merger, consolidation or
transfer of all or substantially all of its assets.
9.2. Notices. All notices, requests and other communications
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to any party hereunder shall be in writing and sufficient if delivered
personally or sent by telecopy (with confirmation of receipt) or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company, at:
Revenue Production Management, Inc.
c/o Physician Support Systems, Inc.
Xxxxx 000 xxx Xxx-Xxxxxxx Xxxx
X.X. Xxx 00
Xx. Xxx, Xxxxxxxxxxxx 00000
Telecopy: 717-653-0567
Attention: Xxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx III
If to the Employee, at:
00000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Each such
notice, request or communication shall be deemed to have been given when
received or, if given by mail, when delivered at the address specified in this
Section 9.2 or on the fifth business day following the date on which such
communication is posted, whichever occurs first.
9.3. Entire Agreement; Amendments and Waivers. This Agreement
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represents the entire agreement between the parties with respect to the subject
matter hereof and supersedes all negotiations and prior agreements. No
amendment, alteration, modification, or waiver of any provision of, or consent
required by, this Agreement, nor any consent to any
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departure herefrom, shall be effective unless it is in writing and signed by the
parties hereto. Such amendment, alteration, modification, waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
9.4. Specific Performance. In the event of a breach or threatened
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breach by Employee of the provisions of Section 5, the Company shall be entitled
to an injunction restraining Employee from such breach. Nothing contained
herein shall be construed as prohibiting the Company from pursuing any other
remedies available at law or equity for such breach or threatened breach of this
Agreement nor limiting the amount of damages recoverable in the event of a
breach or threatened breach by Employee of the provisions of Section 5. Without
limiting the generality of the foregoing, Employee acknowledges that, in the
event of a breach or threatened breach by him of any of the provisions of
Section 5, the Company's damages may exceed the value of the consideration
received by Employee in the Merger.
9.5. Enforceability. It is the desire and intent of the parties
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hereto that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
9.6. Acknowledgments. Employee acknowledges that Employee has read
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this Agreement and has been afforded the opportunity to discuss and review this
Agreement with the Company and/or an attorney of Employee's choice. Employee
understands that execution of this Agreement and acceptance of its terms are
conditions to PSS causing the Merger to be consummated and to Employee's
employment with the Company. Employee agrees and acknowledges that he has been
paid in full for all services rendered to the Company prior to the date hereof
and has no outstanding claims against the Company for any amounts arising
because of such employment. Solely for purposes of the immediately preceding
sentence, the stockholder notes listed in Section 3.1(f) of the Disclosure
Schedule (defined in the Merger Agreement) are not claims against the Company
for amounts arising because of such employment.
9.7. Headings. Descriptive headings are for convenience only and
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shall not control or affect the meaning or construction of any provision of this
Agreement.
9.8. Counterparts. This Agreement may be executed in any number of
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counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
9.9. GOVERNING LAW; JURISDICTION. THIS AGREEMENT WILL BE GOVERNED
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BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. ANY PROCEEDING ARISING
OUT OF THIS AGREEMENT SHALL BE BROUGHT IN XXXX COUNTY, ILLINOIS. IN CONNECTION
WITH ANY SUCH PROCEEDING, THE PREVAILING PARTY SHALL
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BE ENTITLED TO RECOVER FROM THE OTHER PARTY HIS OR ITS REASONABLE ATTORNEY'S
FEES AND EXPENSES.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
REVENUE PRODUCTION MANAGEMENT, INC.
By:
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Name:
Title:
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Xxxxxxx X. Xxxxxx
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