EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into this
the 1st day of January, 1998 (the "Effective Date") by and between COASTAL
PHYSICIAN SERVICES OF SOUTH FLORIDA, INC., (the "Employer" or "Coastal"), a
Florida corporation, and XXXXXXX XXXXXXXX, M.D. ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is currently employed by Coastal Physician Services of
South Florida, Inc. and Coastal Physician Services of the Southeast, Inc., which
are affiliates of Employer, pursuant to an Employment Agreement dated as of
April 2, 1997, which will be terminated in connection with the execution of this
Agreement;
WHEREAS, subject to the terms and conditions hereinafter provided, Employer
desires to employ Employee, and Employee desires to accept such employment, on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the employment of Employee and the
compensation to be paid by Employer to Employee, and the covenants set forth
herein, Employee hereby accepts employment hereunder subject to the terms and
conditions stated below, including the agreement of Employee not to enter into
certain competitive activities with the Employer, as follows:
1. Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment, subject to the terms and conditions stated herein. This
Agreement shall amend, restate and supersede any existing employment agreements
and arrangements applicable to Employee, including the agreement dated April 2,
1997 with affiliates of Employer.
2. Term. This Agreement shall commence effective as of January 1, 1998 (the
"Effective Date") and shall continue through and including December 31, 2000
(the "Initial Term"), unless this Agreement is (a) otherwise terminated in
accordance with the provisions contained herein, or (b) extended by mutual
agreement of Employer and Employee. After the Initial Term, this Agreement shall
automatically renew on a year-to-year basis until terminated in accordance with
Section 12 of this Agreement.
3. Duties. Employee shall perform the following duties pursuant to this
Agreement:
(a) Employee shall serve as President and Chief Executive Officer of
Employer. Employee is currently serving and will continue to serve on the Board
of Directors of Employer (the "Board of Directors"). Employee may be removed at
anytime from any board seat as deemed appropriate by the shareholders of
Employer, and such removal shall not be considered a breach by the Employer of
this Agreement. Removal of Employee from the office of President shall be
considered a material breach of the terms of this Agreement by Employer.
(b) As the President and Chief Executive Officer of Employer, Employee
shall be principally responsible for all operational affairs of Employer,
reporting to the Board of Directors. Employee shall perform all duties and
responsibilities normally associated with his officer and director positions and
shall carry out such other duties and responsibilities and as otherwise may be
reasonably assigned to Employee by the Board of Directors.
(c) Employee shall at all times abide and observe Employer's policies
and procedures as are in effect from time to time. Employee acknowledges that
Employer is an equal opportunity employer and that Employer's established policy
is not to discriminate on the basis of age, marital status, race, color, sex,
religion or national origin, or to violate any federal or state
anti-discrimination law. Employee shall be responsible for carrying out and
implementing the foregoing policy throughout the operations and activities of
Employer.
4. Compensation. For the services provided by Employee as an employee of
Employer, Employer shall pay Employee the annual base salary (the "Base Salary")
and other compensation identified on Exhibit A.
5. Additional Benefits. During the term of this Agreement, Employee shall
be entitled to and Employer shall provide to Employee, at no cost to Employee,
all employment benefits which are generally provided to senior executive
officers of Employer and its affiliates, including without limitation the
following:
(a) Comprehensive major medical, dental and other health insurance
covering Employee's medical expenses and the medical expenses of his spouse and
children;
(b) Disability insurance with no more than a ninety (90) day
elimination period providing for payment to age 65 in the event that Employee
becomes unable to perform his responsibilities hereunder. Employer agrees to pay
Employee's compensation in accordance with Employer's usual policy throughout
any elimination period;
(c) Term life insurance in the amount of Five Hundred Thousand Dollars
($500,000.00);
(d) Usual and customary sick leave benefits in accordance with
Employer's standard policy for senior level executives;
(e) A total of four (4) weeks per year vacation and two (2) weeks of
continuing medical education;
(f) Eligibility to participate in the 401(k) Plan maintained by
Coastal Physician Group, Inc. ("CPG") for the benefit of its employees as well
as in any other tax qualified or unqualified retirement program maintained by
Employer or CPG for the benefit of its employees on the same basis as the senior
executive officers of Employer are entitled to participate therein; and
2
(g) Five Thousand and no/100's Dollars ($5,000.00) per year allowance
for dues, licenses, professional associations and CME expenses.
6. Devotion of Time. During the term of this Agreement, Employee shall
devote all necessary time and attention to the business of Employer and its
affiliates in a manner and to an extent commensurate with the commitment of
other executive officers of Employer, to fulfill his duties and responsibilities
under the Agreement and to advance the business interests and good reputation of
Employer and the direct and indirect subsidiaries of Employer. Employee may
provide medical consulting services consistent with those Employee is currently
providing to Xxxxx Medical Group, LLC, so long as (i) the provision of such
services do not interfere with the rendering of services under this Agreement,
and (ii) such services relate to the provision of clinic services and such
services are not in any way connected with the rendering of emergency department
staffing services.
7. Confidentiality and Non-Disclosure. Employee acknowledges that, during
this employment, he will gain access to, or possession or knowledge of, numerous
trade secrets, confidential information, other valuable properties not generally
available to the public and proprietary information, including but not limited
to, hospital and healthcare facility client lists, client files and records,
lists of potential clients, prospects or targets, and/or other market and
marketing data and plans, price books, promotional devices and methods, business
methods, manuals and plans, business and sales techniques, strategic plans,
computer programs, hospital and physician contracts, and research and
development (hereinafter referred to collectively as "Confidential
Information"). Employee acknowledges that such Confidential Information is
unique and a valuable asset which is owned solely by Employer (or affiliates of
Employer) and is to be used only for Employer's or its affiliates' (other than
any natural persons) benefit. Employee shall not, during or after the term of
this Agreement, disclose, divulge, reveal, transfer, reproduce, sell, capitalize
upon or take advantage of such Confidential Information and, in addition,
Employee shall exercise all reasonable efforts and precautions to protect
against such Confidential Information from misappropriation, misuse, disclosure,
breach of confidentiality, or other conduct or action inconsistent with
Employer's rights; provided, however, that Confidential Information may be
disclosed to the extent (i) required by law or court order or (ii) generally
available to the public other than by unauthorized disclosure. Upon termination
of this Agreement, Employee shall return immediately to Employer all of
Employer's (or its affiliates) property (including, without limitation,
Confidential Information) in Employee's possession or control. Any materials,
manuals, documents or records developed, written, edited or designed by Employee
while employed by Employer are the exclusive property of Employer.
8. Covenant Not To Compete. Employee will, as a result of this employment,
be responsible for the executive management and direction of substantial
business resources and assets of Employer and its affiliates and will develop
additional contacts and relationships with numerous individuals, executives,
companies, insurers, providers and health maintenance organizations which are
also involved in the managed healthcare business. Such individuals and
organizations will have business and contractual relationships with Employer or
its affiliates that will be a valuable asset thereof. Employee therefore agrees
as follows:
3
(a) Employee agrees that for a period of twelve (12) months after
termination of this Agreement, Employee will not become employed by, own,
operate, manage, or provide consulting services to any business that provides
the same type of physician management services as Employer currently provides to
emergency departments in the State of Florida.
(b) Employee agrees for a period of twelve (12) months after
termination of this Agreement, not to solicit any hospital, clinic, healthcare
facility or other client having a contractual or business relationship with
Employer or of any subsidiary of Employer, or of any prospect or potential
client to which a marketing proposal or presentation was made within six (6)
months of termination, and of which Employee was aware, involving the provision
of physician management services for emergency departments, which solicitation
would be for the purpose of providing physician management services for
emergency departments.
(c) Employee further agrees to refrain for a period of twelve (12)
months following the termination of this Agreement, from any activity of any
nature intended or reasonably calculated to result in the termination or
cancellation of any contractual or business arrangement between the Employer or
any subsidiary of Employer, and any insurer, client, facility or other business
or entity.
(d) Employee agrees to notify any entity or organization of which he
is a director, significant shareholder (or other equity owner), manager, general
partner, executive officer or as to which he is otherwise a controlling party or
over whom he exerts significant influence (an "Affiliate") of the provisions of
Sections 7, 8 and 9 of this Agreement, and Employee agrees that he will not
cause or permit such Affiliate to engage in any activity that would be
prohibited for Employee personally under this Agreement.
(e) Nothing in this Agreement shall prevent Employee, either during
the term hereof or after termination, from (i) making passive investments in
third parties so long as such investments do not require Employee to perform any
services in connection with any such investments in such third parties, (ii)
providing consulting services to Xxxxx Medical Group, LLC of the type and nature
that Employee currently provides to Xxxxx Medical Group, LLC so long as the
provision of such services is in accordance with the restrictions in Section 6,
or (iii) providing clinical medical services, including working as an emergency
department physician.
9. Solicitation of Other Employees.
(a) Employee agrees that he shall not, for a period of twelve (12)
months after the termination of this Agreement, solicit or seek to influence,
either directly or indirectly, any employee or any physician or healthcare
provider under contract with Employer at any time during Employee's employment
by Employer or any of its subsidiaries or affiliates, to enter into any
employment agreement, independent contractor arrangement, or any other
contractual arrangement whereby such individual would perform services for
compensation, either directly or indirectly, for any person, firm, corporation
or other entity or business that provides products or services in competition
with Employer or any of its subsidiaries or affiliates.
4
(b) Employee further agrees that neither he nor any Affiliate shall,
for a period of twelve (12) months after the termination of this Agreement,
hire, employ, enter into any employment agreement, independent contractor
arrangement, or any other contractual arrangement whereby a "Coastal Employee"
(as defined below) would perform services for compensation for Employee or such
entity. For the purposes hereof, "Coastal Employee" shall mean any person who
has been employed by Coastal or any or its direct or indirect subsidiaries at
any time during the six (6) month period immediately preceding the termination
of this Agreement.
10. Breach and Remedies.
(a) Employee acknowledges that the breach or threatened breach of any
of the covenants set forth in Sections 7, 8 or 9 may result in immediate and
irreparable injury to Employer or its affiliates. Accordingly, Employee agrees
the provisions of Sections 7, 8 and 9 shall inure to the benefit of and may be
enforced by Employer or any if its affiliates. In addition to any rights or
remedies available to Employer for a breach by Employee of Sections 7, 8 or 9,
Employer and its affiliates shall be entitled to injunctive relief to enforce
the obligations of Employee contained in such Sections. Nothing herein shall be
construed as prohibiting Employer or its affiliates from pursuing any other
legal or equitable remedies that may be available to it for any such breach or
threatened breach, including the recovery of damages from Employee.
(b) The periods of time provided for in Sections 7, 8 or 9 shall be
extended by any period of violation or periods of time, not to exceed 45 days,
required to resolve by arbitration any dispute regarding the provisions thereof.
(c) Employee hereby acknowledges that the covenants set forth in
Sections 7, 8 and 9 are reasonable in all respects and are necessary to protect
the legitimate business interests of Employer and its affiliates. In the event
that any of the provisions of this Agreement are found to be unenforceable or
void (either in whole or in part), then the offending portion shall be construed
as valid and enforceable only to the extent permitted by law and the balance of
this Agreement will remain in full force and effect. It is the intention of
parties to restrict the activities of Employee only to the extent necessary to
protect the legitimate business interests of Employer, its subsidiaries and/or
affiliates, and not to deprive Employee of the right or ability to earn a
livelihood.
(d) The covenants and restrictions contained in Sections 8 and 9 shall
terminate in the event Employer or CPG files a voluntary petition in bankruptcy,
has an involuntary petition filed against it which is not dismissed within sixty
(60) days of filing, makes a general assignment for the benefit of creditors, or
consents to the appointment of a receiver for all or substantially all of its
assets.
11. Vacation and Sick Leave. All earned, accrued and unused vacation and
any unused sick pay, upon termination, will be governed by Employer's then
current policies.
5
12. Termination. This Agreement may be terminated as follows:
(a) Employer may terminate this Agreement without cause at any time
upon ninety (90) days' prior written notice to Employee, and Employee may
terminate this Agreement without cause at any time upon ninety (90) days' prior
written notice to Employer. This ninety day period is hereafter referred to as
the "Notice Period." In the event of such termination, Employee, if requested by
Employer, shall continue to perform his obligations and duties under this
Agreement and assist with the transition of duties to a new employee during the
Notice Period. Employer, at its option, may notify Employee at any time during
the Notice Period that no further services are to be performed. In the event
that this Agreement is terminated without cause by either party, the covenants
set forth in Sections 7, 8 and 9 shall continue in effect, and the applicable
start date for the periods of time in Sections 7, 8 or 9 shall be the later of
the date that notice of termination is given or the last date upon which
services are performed.
(b) If this Agreement is terminated without cause by Employer at any
time during the term hereof, Employer shall pay Employee regular compensation
during the Notice Period as provided in subsection (a), plus an amount (the
"Severance Benefit") equal to three fourths of the annual Base Salary then in
effect (see Exhibit A), all to be paid out in equal installments over the nine
(9) months following the date of expiration of the Notice Period, beginning
thirty (30) days from the date of expiration of the Notice Period (so that there
will be a total equal to the annual Base Salary paid during the three months of
the Notice Period as salary plus the nine months following the Notice Period).
(c) This Agreement may be terminated by Employer at any time for cause
upon written notice to Employee, which notice shall specify the reason for
termination. For purposes of this Subsection 12(c), cause shall consist of the
following: fraud; material and meaningful dishonesty; substantial and continuous
nonperformance of material assigned duties; failure to comply with a material
written policy of Employer; failure by Employee to perform or meet objective and
measurable standards agreed upon by Employer and Employee; unlawful activities
for which Employee is convicted in a jurisdiction of the United States; and
material and meaningful breach of this Agreement.
(d) This Agreement shall terminate upon the death or total and
permanent disability of Employee. In the event that this Agreement terminates
due to Employee's death or total and permanent disability, Employer shall pay
upon such termination to Employee, Employee's Base Salary accrued through the
date of Employee's death or the date he becomes totally and permanently
disabled, as the case may be. Permanent disability for purposes of this
Agreement shall mean the inability to perform the functions of Employee's
position for a continuous period of six (6) months.
(e) This Agreement may be terminated by Employee upon a material
breach of the terms of this Agreement by Employer, and if this Agreement is
terminated at any time during the term hereof by Employee under this subsection,
then Employer shall pay Employee an amount equal to the annual Base Salary then
in effect (see Exhibit A), all to be paid out in equal installments over the
twelve (12) months following the date of termination, beginning thirty (30) days
from the date of termination.
6
(f) Except as expressly set forth herein, all of Employer's
obligations for compensation or other benefits shall terminate upon the
effective date of the termination of this Agreement.
(g) Upon termination of employment, Employee agrees to resign as a
director of CPG and as an officer and director of Employer and any affiliates of
Employer and CPG. In that regard, Employee agrees to execute and deliver to
Xxxxx & Xxx Xxxxx, PLLC, as escrow agent, an undated resignation letter with
respect to CPG, which escrow agent is authorized to date and deliver to CPG upon
receipt of notice from Employer that Employee's employment has terminated.
13. Dispute Resolution. The parties shall attempt in good faith to settle
any dispute or controversy arising under, out of, or in connection with or in
relation to this Agreement, or any amendment hereof, or the breach hereof, by
negotiation and mutual agreement; provided that if the parties are not able to
agree within a reasonable period of time, then any such dispute or disagreement
shall be resolved by submitting such dispute first to mediation and second to
arbitration in Broward County or such other location within or outside the State
of Florida as may be agreed on by the parties. Either party may make written
demand for mediation, in which case the parties shall mediate the dispute or
disagreement with the mediator appointed by the Judicial Arbitration & Mediation
Services, Inc. ("JAMS") or another party upon mutual agreement of Employer and
Employee. Fees and costs of the mediation shall be borne equally by the parties
and each party shall pay its own professional fees and costs. If the dispute or
disagreement is not settled by mediation within a reasonable period of time,
then either party may demand arbitration, in which case the dispute or
disagreement shall be arbitrated in accordance with rules and procedures
established by JAMS. The arbitrator shall be allowed, in his or her discretion,
to require the losing party to pay the reasonable attorney's fees and costs of
the prevailing party. Any award rendered by the arbitrator shall be final and
binding upon each of the parties and judgment thereof may be entered in any
court having jurisdiction thereof. The costs of the arbitrator shall be borne
equally by both parties.
14. Compliance With Securities Laws. Employee agrees to comply with all
applicable federal and state securities laws and with all applicable policies of
Employer concerning the buying and selling of stock of Employer by employees to
the extent such policies do not restrict Employee's express rights under this
Agreement.
15. Entire Agreement. This Agreement contains the entire understanding
between the parties and supersedes and cancels any prior oral and written
understanding and/or agreements between them respecting the subject matter of
this Agreement. This Agreement may be amended or modified only in writing signed
by both parties.
16. Severability. If any provision, term, condition, or clause of this
Agreement or the application thereof shall be invalid or unenforceable to any
extent, the remainder of this Agreement shall not be affected thereby and shall
be enforced to the greatest extent permitted by law.
7
17. Governing Law. This Agreement is made and entered into in the State of
Florida and is to be construed in accordance with and take effect under the laws
of the State of Florida without regard to principles of conflicts of laws.
18. Assignment. No party shall have any right to assign, mortgage, pledge,
hypothecate or encumber this Agreement in whole or in part, or any benefit or
any right accruing hereunder, without in any such case first obtaining the prior
written consent of the other party hereto, except that Employer may assign this
Agreement to one of its affiliates or wholly-owned subsidiaries, provided that
in the event of such an assignment, Employer shall remain primarily responsible
for its obligations hereunder and the obligations of Employer shall be binding
upon any successor-in-interest. Employee acknowledges that Employer and its
affiliates which are direct or indirect wholly-owned subsidiaries of Coastal
Physician Group, Inc. may restructure their corporate structure in South
Florida, and as a result, Employer may be merged into or with one or more such
affiliates, and Employer and Employee agree that this Agreement shall be binding
upon and inure to the benefit of any successor entity. All rights hereunder are
personal to the Employee and shall cease upon the termination of this Agreement
unless otherwise stated herein; provided, however, that the provisions hereof
shall inure to the benefit of the personal representatives, heirs and legatees
of Employee.
19. Notice. Any notice, or other written communication to be given pursuant
to this Agreement for whatever reason shall be deemed duly given and received
(a) if delivered personally, from the date of delivery, or (b) by certified
mail, postage pre-paid, return receipt requested, three (3) days after the date
of mailing, addressed: in the case of Employer, to 0000 Xxxxxxxxxx Xxxxx,
Xxxxxx, Xxxxx Xxxxxxxx 00000 and marked "Attention: Xxxxxx X. Xxxxx, M.D.," and
in the case of Employee, to his last known permanent address according to the
books and records of Employer.
20. Miscellaneous. Any protection, benefits, rights or other provisions
given to Employer in this Agreement shall also be deemed to apply to, protect
and inure to the benefit of Employer's affiliates and subsidiaries. All rights
of Employer expressed in this Agreement are in addition to any rights available
under the common law or other legal principles. Section or paragraph titles or
captions contained in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof. All pronouns
and any variation thereof shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of person or persons, firm or firms,
corporation or corporations, and as context may require.
8
IN WITNESS WHEREOF, the parties sign and seal below, effective the date
first written in this Agreement.
EMPLOYEE:
(SEAL)
--------------------------------------
Xxxxxxx Xxxxxxxx, M.D.
EMPLOYER:
COASTAL PHYSICIAN SERVICES OF
SOUTH FLORIDA, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
ATTEST:
By:
-------------------------
Assistant Secretary
[CORPORATE SEAL]
9
EXHIBIT A
---------
COMPENSATION
------------
1. Base Salary. For services provided as an employee of Employer, Employee
shall receive, beginning on the Effective Date, a base salary of $240,000 per
annum (the "Base Salary") payable in accordance with Employer's current payroll
practices. The Base Salary shall be subject to annual review and adjustment as
of each January 1 during the term of this Agreement (or such other times as may
be determined by Employer). Upon any annual review and adjustment, the minimum
increase in the Base Salary shall be equal to the Base Salary in effect for the
previous year multiplied by one-half of the percentage increase (if any) in the
Consumer Price Index (the "Index") for All Items, All Groups published by the
United States Department of Labor, Bureau of labor Statistics for the one year
period ending on the last day of November preceding the adjustment date. If
publication of the Index is discontinued or computation of the Index materially
altered, Employer and Employee shall use a comparable index computed and
published by an agency of the United States or a responsible financial
periodical of recognized authority.
2. Incentive Bonus. Employee shall be eligible for bonuses to be determined
from time to time, which shall include but not be limited to bonuses under the
1997-1998 Cash Improvement Incentive Program outlined in the memorandum of
September 10, 1997 from Xxxxxx X. Xxxxx, M.D. and Xxxxxx Xxxxxx, a copy of which
is attached as Exhibit B; provided that the target quotas shall be established
by the President of Coastal Physician Services, Inc.
3. Stock Options or Awards. Employee shall be eligible for stock options
and awards available to other senior management of Employer and its affiliates
from time to time. This subsection shall not be a guarantee of any awards or
options, and Employee recognizes that the awarding of such compensation is
governed by plans adopted by the Board of Directors of Employer from time to
time.
