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EXHIBIT 10.12
STATE OF NORTH CAROLINA ) RESTATED AND AMENDED
) EMPLOYMENT AGREEMENT
COUNTY OF DURHAM )
THIS RESTATED AND AMENDED EMPLOYMENT AGREEMENT, made and
entered into effective the 15th day of January by and between
COASTAL PHYSICIAN GROUP, INC. (the "Employer" or "Coastal"), a
Delaware corporation with its principal place of business in
Durham, North Carolina and XXXXXX X. XXXXXXXX, XX. ("Xxxxxxxx"),
a resident of Durham, North Carolina:
W I T N E S S E T H:
WHEREAS, Dauchert is currently employed as the President and
Chief Executive Officer of Coastal Physician Networks, Inc.
("CPN") pursuant to an Employment Agreement with Coastal dated
September 1, 1996; and
WHEREAS, CPN is a subsidiary of the Employer; and
WHEREAS, certain conditions and reporting relationships
contemplated in the September 1, 1996 Employment Agreement have
changed and Dauchert and the Employer desire to restate and amend
the terms of the Employment Agreement in order to extend the term
of employment, redefine reporting relationships and reset certain
incentive bonuses in light of changes that have occurred;
WHEREAS, this Restated and Amended Employment Agreement (the
"Agreement") is intended to restate and amend and supersede and
replace any and all prior agreements, written or oral, related to
Employee's employment with Employer with the exception of the
Agreement Not to Compete dated September 1, 1994, a copy of which
is attached hereto as Exhibit A;
NOW, THEREFORE, in consideration of the terms and conditions
set forth in this Agreement, the parties agree as follows:
1. EMPLOYMENT AND TERM. The Employer hereby employs
Dauchert for a period of time (the "Term") commencing September
1, 1996 and terminating on April 30, 1997, unless sooner
terminated as hereinafter provided. After April 30, 1997, the
Term may be extended on a month to month basis by mutual
agreement of Dauchert and the Chief Executive Officer of
Employer, but neither party will be obligated to extend the Term
after April 30, 1997.
2. POSITION AND DUTIES. During the term of this
Agreement, Dauchert shall be employed as the President and Chief
Executive Officer of CPN and shall perform such duties as he
shall from time to time be directed by the Board of Directors of
CPN. The Board of Directors has designated the Chief Executive
Officer of Employer as the person to whom Dauchert shall report
on a day-to-day basis. Dauchert shall have overall
responsibility for the day to day operations of CPN subject to
the control and direction of the Chief Executive Officer of
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Employer and the Board of Directors of CPN. Dauchert hereby
accepts such employment and agrees to use his best efforts and
diligence and to devote his full time and energy to performing
the duties of his position. The Employer will provide, or will
cause CPN to provide, to Dauchert during the Term of this
Agreement an executive secretary, office space and other support
and working conditions as the same are approved by the Chief
Executive Officer of Employer.
3. COMPENSATION AND BENEFITS. Dauchert's base salary for
the Term shall be an amount equal to $13,334 per month ($160,000
per annum) for each month during the Term (prorated on a daily
basis for any partial month), payable in equal monthly
installments payable on the last day of each month during the
Term. During the Term, Dauchert shall be entitled to participate
in all standard benefit programs provided or offered to other
executives of CPN as such programs may exist from time to time.
It is understood that the Employer and CPN reserve the right to
amend, modify or terminate such programs in their sole
discretion.
4. TERMINATION. This Agreement may be terminated by
either Dauchert or the Employer as set forth below:
(a) This Agreement may be terminated at any time by
mutual agreement; provided, however, that such mutual agreement
will not be valid unless the same is in writing and signed by
both Dauchert and the Employer.
(b) This Agreement shall automatically terminate on
April 30, 1997 without the need for notice or any other action by
either Dauchert or Employer unless the Chief Executive Officer of
Employer and Dauchert have agreed to extend the Term on a month
to month basis, and then the Agreement shall automatically
terminate at the end of any month if the Chief Executive Officer
of Employer and Dauchert have not agreed to a further monthly
extension. Agreements to extend the Term on a month to month
basis need not be in writing, but Employer and Dauchert both
agree that, upon request of the other party, they will confirm
any agreed upon extensions in writing. Upon termination, the
Severance Benefit shall be paid to Dauchert in three (3) equal
monthly installments commencing within thirty (30) days of the
date of termination, and any earned Divestiture Bonus as of the
termination date shall be paid in accordance with the provisions
of Paragraph 8 of this Agreement.
(c) This Agreement may be terminated by the Employer
at any time for cause. For the purposes of this Agreement, cause
for termination by the Employer shall include, but shall not be
limited to, the following: fraud; dishonesty; failure to comply
with a material written policy of Employer; failure by Employee
to perform or meet objective and measurable standards; unlawful
activities for which Employee is indicted or convicted in a
jurisdiction of the United States; and material breach of this
Agreement. If this Agreement is terminated for cause, the
Employer shall have no obligation to provide further compensation
or benefits following the date of termination except as may be
required by COBRA or the terms of any applicable benefit plans.
It is specifically understood that in the event this Agreement is
terminated for cause, Dauchert will not be entitled to receive
the Severance Benefit or any unearned Divestiture Bonus, as
hereinafter defined. Any Divestiture Bonus earned prior to the
date of the termination for cause shall continue to be paid as
provided herein.
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(d) This Agreement may be terminated by the Employer
at any time without cause. In the event of termination of this
Agreement without cause, the Employer will pay to Dauchert any
unpaid base salary that would have been earned through the end of
the Term. In addition, the Employer will pay to Dauchert the
Severance Benefit, as hereinafter defined, together with any
earned portion of the Divestiture Bonus, as hereinafter defined.
The sum of the unpaid base salary, the Severance Benefit and the
earned portion of the Divestiture Bonus shall be paid to Dauchert
in three (3) equal monthly installments commencing within thirty
days of the date of termination. Further, for the period of
three (3) months following the date of the termination of this
Agreement without cause, Dauchert shall be entitled to continue
to participate in all benefit plans as if he were continuously
employed during such time; provided, however, in the event that
an employee on severance and not actively employed is not covered
by any insured benefit, it is understood that Dauchert shall not
participate in any such insured benefit.
(e) This Agreement may be terminated by the Employer
in the event that Dauchert shall be totally disabled from
performing his duties for the remaining portion of the Term. If
this Agreement is terminated due to Dauchert's disability, the
Employer shall have no obligation to provide compensation or
benefits beyond the date of termination except as required by
COBRA or the terms of any applicable benefit plans. If this
Agreement is terminated due to Dauchert's disability, it is
specifically understood that Dauchert shall not be entitled to
receive the Severance Benefit or any unearned Divestiture Bonus,
as hereinafter defined. Any Divestiture Bonus earned prior to
the date of termination due to disability shall continue to be
paid as provided herein.
(f) This Agreement shall automatically terminate in
the event of Dauchert's death during its term. In such event,
the Employer will pay to Dauchert's estate all compensation and
benefits due up to and including the date of death. If this
Agreement is terminated due to Dauchert's death, it is
specifically understood that Dauchert shall not be entitled to
receive the Severance Benefit or any unearned Divestiture Bonus,
as hereinafter defined. Any Divestiture Bonus earned prior to
the date of termination due to death shall continue to be paid as
provided herein. Any such payments of earned Divestiture Bonus
will be paid to Dauchert's estate.
(g) This Agreement shall be terminated if Dauchert
shall voluntarily resign. In such event, the Employer will pay
to Dauchert all compensation and benefits due up to and including
the date of resignation. If this Agreement is terminated due to
Dauchert's voluntary resignation, it is specifically understood
that Dauchert shall not be entitled to receive the Severance
Benefit or any unearned Divestiture Bonus, as hereinafter
defined. Any Divestiture Bonus earned prior to the date of
termination due to voluntary resignation shall continue to be
paid as provided herein.
5. PROPERTY OF EMPLOYER. Upon the termination of this
Agreement for whatever reason, it is understood and agreed that
all files and other information regarding the Employer or CPN and
their operations are the sole and exclusive property of the
Employer or CPN. Upon termination of this Agreement, Dauchert
shall only remove those personal effects and any property which
he has purchased without reimbursement by the Employer or CPN.
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6. AGREEMENT NOT TO COMPETE. The Agreement Not To Compete
executed by Dauchert and dated September 1, 1994 is incorporated
by reference herein and made a part of this Agreement.
7. SEVERANCE BENEFIT. The Severance Benefit for purposes
of this Agreement shall be equal to six months base salary less
withholding of all required federal and state taxes. In the
event that the Divestiture Bonus (or a portion thereof)
contemplated under Section 8 is not earned due to the expiration
of this Agreement or the termination of Dauchert's employment
without cause prior to the date the Divestiture Bonus (or a
portion thereof) is earned, then the Severance Benefit shall be
increased by the amount of the Divestiture Bonus that would have
been paid as a result of the divestiture of IPN/PSI/South Florida
(but not less than four (4) months base salary). It is
understood that the Divestiture Bonus to be paid as a result of
the divestiture of HealthNet has already been earned as of the
date of this Restated and Amended Agreement. It is understood
that the Severance Benefit is only payable in the event of the
termination of this Agreement without cause or upon termination
at the expiration of its Term.
8. DIVESTITURE BONUS. Dauchert will be entitled to
receive a Divestiture Bonus based upon sale or divestiture of the
following Coastal companies: HealthNet Medical Group division of
Physicians Planning Group, Inc. ("HealthNet"); Integrated
Provider Networks, Inc. ("IPN"); Practice Solutions, Inc.
("PSI"); and the Belle Glade Obstetrics, Inc. and Lehigh Medical
Associates, Inc. practices of Coastal Physician Group of Florida,
Inc. ("South Florida"). The Divestiture Bonus shall be the
product of the Net Proceeds, as hereinafter defined, and the
applicable percentage as shown below:
(a) HealthNet. The Divestiture Bonus shall be equal
to 0.375% of the Net Proceeds, which for purposes of this
paragraph are equal to $9,375,000. As of the date of this
Restated and Amended Employment Agreement, HealthNet has been
sold and the Divestiture Bonus of $35,156.25 has been earned by
Dauchert.
(b) IPN/PSI. The Divestiture Bonus shall be equal to
0.5% of the Net Proceeds for the companies or assets divested by
Advest, Inc. pursuant to the terms of the engagement letter
between Advest and Coastal dated November 22, 1996 (the "Advest
Letter"). For purposes of this paragraph, Net Proceeds shall
have the same meaning as the term "Transaction Consideration" as
set forth in the Advest Letter. The Divestiture Bonus shall be
earned upon Coastal's receipt of the sales proceeds from a sale
or divestiture.
(c) South Florida. The Divestiture Bonus shall be
equal to 1.0% of the Net Proceeds for the companies or assets
divested of IPN, PSI or South Florida which are sold or divested
without the assistance of Advest, Inc. (and without the
requirement that a fee be paid to Advest, Inc.). The Divestiture
Bonus shall be earned upon Coastal's receipt of the sales
proceeds from a sale or divestiture. For purposes of this
paragraph, Net Proceeds shall be defined as net cash received by
Coastal from the sale after payment of professional fees,
including investment bankers, accounting and attorneys' fees
(relating to the respective transactions) and all operating
expenses of the company sold accrued as of the date of sale which
are not assumed by the purchaser. Extraordinary expenses
incurred by Coastal and any other corporate expenses
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incurred by Coastal in connection with sales process (such as
travel expenses of Coastal employees assigned to a project) and
taxes will be excluded from the calculation. In the event that
all or some portion of the accounts receivable of the companies
are retained by Coastal and not transferred to the buyer(s), the
reasonable value as determined by Coastal will be included in the
Net Proceeds calculation as will any liabilities not transferred.
(d) Any Divestiture Bonus will be paid in two equal
monthly installments commencing within thirty (30) days of the
date of receipt of the Net Proceeds from the sale or divestiture.
(e) Payment of Divestiture Bonus. Payment of any
Divestiture Bonus will be made in two equal monthly installments
commencing within thirty days of the receipt of the Net Proceeds
by Coastal for the company for which the Divestiture Bonus is
earned.
9. VACATION AND SICK LEAVE. Upon termination of this
Agreement for any reason, Dauchert will be entitled to all
earned, accrued and unused vacation pay upon termination. Upon
termination of this Agreement for any reason, Dauchert will
forfeit any unused sick pay.
10. MANAGEMENT BUY OUT. In the event that (i) Dauchert is
a principal in the purchaser of all or part of the business of
Coastal as to which a Divestiture Bonus may be earned and (ii)
Dauchert accepts full-time employment with the purchaser, then
Dauchert will not be entitled to any Severance Benefit; however,
he shall be entitled to any earned Divestiture Bonus.
11. ATTORNEYS' FEES. Dauchert shall be reimbursed for his
reasonable attorneys' fees incurred in negotiating this Agreement
and the Employment Agreement which this Agreement restates and
amends.
12. GOVERNING LAW. The validity and interpretation and
effect of this Agreement shall be governed exclusively by the
laws of the State of North Carolina.
13. ENTIRE AGREEMENT. This Agreement restates and amends
in its entirety the Employment Agreement dated September 1, 1996
between the parties. This Agreement contains the entire
understanding of the parties. This Agreement may not be changed
orally, but only by agreement in writing signed by both parties
hereto.
14. BINDING EFFECT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their
heirs, personal representatives, successors and assigns.
15. PROVISIONS SEVERABLE. The provisions of this Agreement
shall be severable and should any court determine that any part
of this Agreement is invalid or unenforceable, such part or
portion shall be deemed severable and shall not effect
enforceability of any other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.
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COASTAL PHYSICIAN GROUP, INC.
By:/S/ XXXXX X. XXXXXX
Title:President & CEO
/S/ XXXXXX X. XXXXXXXX, XX.
XXXXXX X. XXXXXXXX, XX.
