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EXHIBIT 10.11
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT (the "Agreement") is made as of
the 31st day of December, 1996, by and between COASTAL PHYSICIAN
GROUP, INC., a Delaware corporation (the "Company"), and XXXXXX
X. XXXXX, M.D. ("Xx. Xxxxx").
W I T N E S S E T H:
WHEREAS, on November 1, 1996, the Board of Directors of the
Company adopted resolutions authorizing the reimbursement of
expenses incurred by Xx. Xxxxx in the recent proxy contest
involving, among other issues presented to the Company's
shareholders, the election of directors of the Company;
WHEREAS, the resolutions of the Board of Directors provided
that in the event the Company could not make reimbursement in
cash without violating the loan covenants in its lending
relationships, the officers of the Company were directed and
authorized to enter into discussions with Xx. Xxxxx and to reach
an agreement with Xx. Xxxxx permitting reimbursement of expenses
in the form of promissory notes, stock options, securities or
other non-cash forms of compensation; and
WHEREAS, in the current financial situation of the Company,
the Company and Xx. Xxxxx have agreed that it is not in the best
interests of the Company to reimburse the proxy expenses
completely in cash and have instead reached an agreement to
satisfy the reimbursement obligations of the Company by a
combination of (i) cash, (ii) issuance of shares of the Company's
common stock to Xx. Xxxxx and (iii) issuance of shares of a new
series of preferred stock to Xx. Xxxxx having the terms set forth
in EXHIBIT A attached hereto, all in accordance with the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and Xx.
Xxxxx agree as follows:
1. PROXY EXPENSES. Xx. Xxxxx has submitted invoices to
the Company for proxy expenses in the total amount of
$1,654,550.12. The Company acknowledges that as of December 31,
1996 it was indebted to Xx. Xxxxx in such amount. Xx. Xxxxx
agrees to accept such amount as reimbursement in full of his
proxy expenses.
2. REIMBURSEMENT IN CASH, COMMON STOCK OR PREFERRED STOCK.
The Company agrees to reimburse Xx. Xxxxx for the proxy expenses
in a combination of (i) cash, (ii) shares of newly-issued common
stock of the Company ("Common Stock") valued at the closing price
of $3.00 per share on the New York Stock Exchange ("NYSE") on
December 30, 1996, and/or (iii) shares of newly issued
convertible preferred stock of the Company ("Preferred Stock")
valued at $30.00 per share and having the terms and conditions
set forth on EXHIBIT A attached hereto. The exact combination of
cash, Common Stock and Preferred Stock shall be determined by Xx.
Xxxxx.
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3. INITIAL ISSUANCE OF COMMON STOCK. On December 31,
1996, the Company issued 226,690 shares of Common Stock to Xx.
Xxxxx. The issuance of the 226,690 shares of Common Stock will
be deemed to satisfy $680,070 of the Company's reimbursement
obligation, leaving a balance of $974,480.12 to be reimbursed.
4. CONDITIONS TO ADDITIONAL ISSUANCE OF COMMON STOCK. In
the event Xx. Xxxxx elects to have an additional portion of the
reimbursement obligation of the Company paid in the form of
Common Stock, the Company shall undertake to issue additional
shares of Common Stock to satisfy such portion of the remaining
reimbursement obligation as is designated by Xx. Xxxxx. Such
shares of Common Stock shall be issued promptly upon satisfaction
of any conditions to the issuance of such shares of Common Stock
, including compliance with the applicable provisions of NYSE
rules that may require shareholder approval of the issuance. In
the event shareholder approval of the issuance of such shares of
Common Stock is required by the NYSE or otherwise, the Company
agrees, at its expense, to undertake to solicit shareholder
approval at its next annual meeting of shareholders or at any
earlier special meeting of shareholders.
5. PREFERRED STOCK. In the event Xx. Xxxxx elects to have
a portion of the reimbursement obligation of the Company paid in
the form of Preferred Stock, the Company will issue shares
Preferred Stock promptly upon written request of Xx. Xxxxx. In
the event shareholder approval of the conversion of the Preferred
Stock into Common Stock is required by the NYSE or otherwise, the
Company agrees, at its expense, to undertake to solicit
shareholder approval at its next annual meeting of shareholders
or at any earlier special meeting of shareholders.
6. FAILURE TO SATISFY CONDITIONS FOR ADDITIONAL ISSUANCE.
In the event Xx. Xxxxx elects to have the Company satisfy a
portion of the reimbursement obligations in Common Stock and the
Company is not able to satisfy preconditions for the issuance of
such shares, then Xx. Xxxxx may elect to have such amount paid in
either Preferred Stock or cash.
7. NO FRACTIONAL SHARES. The Company shall not issue
fractional shares of Common Stock or Preferred Stock in the event
that the reimbursement amount is not evenly divisible by the
price per share, but shall pay cash in lieu of any fractional
share.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
COASTAL PHYSICIAN GROUP, INC.
(CORPORATE SEAL)
By:/S/ XXXXX X. XXXXXX
Xxxxx. X. Xxxxxx, President
ATTEST:
/S/ XXX X. XXXXXXXX
Xxx X. Xxxxxxxx, Secretary
/S/ XXXXXX X. XXXXX, M.D.(SEAL)
XXXXXX X. XXXXX, M.D.
