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Exhibit 10.8
[MRC GROUP LETTERHEAD]
July 7, 1997
Xx. Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxx, XX 00000
Dear Xxxxxx:
1. EMPLOYMENT; TERM OF EMPLOYMENT. The purpose of this letter
is to set forth the terms and conditions wherein we agree to employ you and you
agree to accept such employment as an executive officer of Medifax, Inc., a
Missouri corporation currently doing business as The MRC Group, to commence
immediately. Unless the parties otherwise specify in writing, this letter
agreement shall extend and apply to any position you may hold with any company
then affiliated with The MRC Group, as a result of your being transferred,
assigned or leased to such affiliated company. The MRC Group currently consists
of three entities: Medifax, Inc., Medical Records Corp., and SecrePhone, Ltd.;
these companies will be referenced in this letter agreement, collectively, as
"The MRC Group" or the "Company". Because you will be considered an "at will"
employee at all times (subject to the obligations set forth in this letter),
this letter agreement (and correspondingly, your employment) has no fixed term.
2. SCOPE OF EMPLOYMENT. You agree to perform the duties of
Chief Operating Officer of the Company (and/or such other position(s) to which
you hereafter may be assigned), to exercise direct responsibility for its
branch operations, its sales and marketing functions, its systems, and its
technology; and otherwise to carry out the directives and policies of the
President and Chief Executive Officer of The MRC Group and its Board of
Directors, including, without limitation, related services throughout the
Company. You understand and acknowledge that the position requires
approximately two days per week spent in Cleveland, Ohio, at the Company's
principal offices and that the balance of the time will be spent on the road
meeting with clients, prospects, employees or working out of the Atlanta
office. You agree not directly or indirectly to act in a manner that is
intentionally, or reasonably known by you to be, inimical to the Company.
Nothing herein shall be deemed to prevent you from fulfilling your stated
obligations under your agreement with Medaphis Corporation dated September 26,
1996, nor shall your obligations to Medaphis under such agreement prevent or
materially interfere with your obligations to the Company under this letter
agreement. Likewise, nothing herein shall be deemed to prevent you from
engaging in personal investment activities, or other activities, provided they
are not inconsistent and do not interfere with your obligations under this
letter agreement.
3. DIRECT COMPENSATION. In consideration of your services, The
MRC Group agrees to pay you direct compensation consisting of: (a) a base salary
at the rate of $200,000 per year; and (b) participation in a performance-related
incentive compensation plan (or a combination of such plans), commencing with
the 1998 calendar year, which will contain terms reasonably providing for
payment of a bonus of up to an additional sixty percent (60%) of your
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base salary; and (c) for the 1997 calendar year only (until the establishment of
the applicable incentive compensation plan(s)), an individual bonus arrangement
covered your performance in 1997 which provides a bonus opportunity comparable
to that described in subparagraph (b) hereof but which otherwise is determined
by the Compensation Committee of the Board of Directors of Medifax, Inc. It is
anticipated that the bonus described in subparagraph (c) hereof shall be paid on
or before February 15, 1998. Any and all direct compensation paid to you or on
your behalf will be subject to all tax and other withholdings determined by the
Company to be required by law or regulation.
4. STOCK OPTIONS. You will receive an immediate grant of
non-qualified stock options, to purchase up to two hundred thousand (200,000)
common shares of Medifax, Inc., which such shares, if purchased, would represent
approximately one percent (1%) of the outstanding common shares of Medifax, Inc.
(determined as of the date of this letter agreement, but without taking into
consideration such shares as outstanding). Such options shall be granted under
the Medifax, Inc. 1992 Employee Stock Option Plan (the "1992 Option Plan") by
the Board of Directors of Medifax, Inc. at their next regular meeting. The terms
of such options shall be set forth in an individual option agreement, and shall
otherwise be subject to the terms of the 1992 Option Plan, but in any event
shall include the following terms and conditions: a term of ten (10) years from
date of grant; vesting of all options over a three (3)-year period, with 66,666
options vesting on July 7, 1998, 66,666 options vesting on July 7, 1999, and
66,667 options vesting on July 7, 2000; full and immediate vesting of all
options in the event of any Change in Control (as defined below); and an
exercise price for all options of $5.41 per common share (as adjusted for stock
dividends, stock splits, recapitalization, or similar events). In the event of
any involuntary termination of your Company employment (other than for Cause, as
further described in Paragraph 8 of this letter agreement), all then-vested
stock options shall continue in effect for the remainder of their term (subject
to any right under the 1992 Option Plan to cancel or otherwise discharge or
extinguish all option holders' rights).
For purposes of this Paragraph 4, a Change in Control will be
deemed to have occurred if and when: (a) any tender offer is made and
consummated for the ownership of thirty percent (30%) or more of the outstanding
voting securities of Medifax, Inc. or The MRC Group; (b) Medifax, Inc. (or
whichever other entity is then considered the parent organization within The MRC
Group) is merged or consolidated with another entity and, as a result of such
merger, reorganization or consolidation, less than thirty percent (30%) of the
outstanding voting interests of the surviving or resulting entity is owned in
the aggregate by Medifax or such other parent organization, or by the former
shareholders thereof, as determined immediately prior to such merger,
reorganization or consolidation; (c) Medifax, Inc. sells substantially all of
its assets to another entity (including one or more Affiliated Companies, if
applicable) which is not at least thirty percent (30%) owned by the Company; or
(d) a person, within the meaning of Section 3(a)(9) or of Section 13(d)(3) (as
in effect on the date hereof) of the Securities Exchange Act of 1934, acquires,
other than by reason of inheritance, thirty percent (30%) or more of the
outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record), or otherwise acquires the unrestricted right to
elect a majority of the members of the Medifax, Inc. Board of Directors; (e)
During any period of two consecutive years, individuals who at the beginning of
such period constitute the Board, cease for any reason to constitute at least a
majority thereof, unless the election of each new director was approved in
advance by a vote of at least a majority of the directors then still in office
who were directors at the beginning
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of the period. In making any such determination, the following events and
transactions shall not be taken into account: transfers made by a person to an
affiliate of such person (as determined by the Board of Directors of The MRC
Group prior to such transfer), whether by gift, devise or otherwise; and any
sale of Company securities effected pursuant to a general registration of such
securities under the Securities Act of 1933. For purposes of this Paragraph 4,
ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) as in
effect on the date hereof pursuant to the Securities Exchange Act.
5. EMPLOYEE BENEFITS; FRINGE BENEFITS. In addition to your
direct compensation and the stock options described, respectively, in Paragraphs
3 and 4 of this letter agreement, you will be eligible for, participate in, or
receive (as applicable) the following employee benefits:
(a) You will be entitled to two (2) weeks of paid vacation in the 1997
calendar year, and thirty four (4) weeks in each subsequent calendar
year, in each case as part of the Company's regular PTO policy and
without any carry-over of vacation days or any conversion rights.
(b) You will be eligible to participate in all other employee benefit
plans maintained by The MRC Group or Medifax, Inc. (or both) for which
regular, full-time employees of The MRC Group are eligible; you
likewise will be eligible to participate in any plans, programs or
policies maintained by the Company (or any member thereof) for
executive officers of the Company.
(c) You will not participate in the Company's relocation policy.
By signing this letter agreement, you acknowledge and accept that: (i) some of
the benefits, payments and rights described in this Paragraph 5 are to be
provided under the terms of one (1) or more of the Company's standing employee
benefit plans and written policies (e.g., PTO, relocation, etc.); (ii) any
benefits and/or payments that may (or may not) be made, and any rights that may
arise, under the Company's benefit plans and policies at all times remain
subject to the terms, conditions and limitations of those benefit plans and
policies, which control in such cases; (iii) your rights under this Paragraph 5
are a matter of individual agreement between you and the Company, do not
constitute an amendment or modification of any of the Company's benefit plans or
policies, and constitute a separate undertaking by the Company; (iv) you cannot
use the representations and promises contained in this Paragraph 5 to obtain a
double recovery (i.e., payment under this letter agreement AND a recovery under
the applicable benefit plan or policy).
6. OFFICES; EXPENSE REIMBURSEMENT. Appropriately furnished and
equipped offices will be maintained for you in both Atlanta, Georgia and
Cleveland, Ohio; both such offices will include an appropriate level of
administrative services and support. The Company will reimburse you for all
expenses incurred in connection with the discharge of your responsibilities for
the Company. You also will be reimbursed for all living expenses while staying
in Cleveland, Ohio, and travel expenses incurred by you when traveling between
the Company's Atlanta, Georgia and Cleveland, Ohio offices, including expenses
incurred by your
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spouse when occasionally accompanying you on such travels. All such expenses
will be reimbursed upon submission of a detailed Expense Account form.
7. CONFIDENTIALITY; NON-COMPETITION; NON-SOLICITATION AND
NON-DISPARAGEMENT. Your acceptance of this letter agreement is contingent upon
your acceptance of the covenants detailed in paragraphs 7a-7e below since
consideration is being provided to you under this letter agreement partly in
exchange for binding yourself to those obligations.
7a. NONCOMPETITION. You agree to not directly or indirectly
compete with the Company in providing medical transcription services, and speech
recognition products, for Radiology and Emergency Medicine transcription, in any
county in any state within the continental United States in which The MRC Group
is providing those services so long as you remain an employee of The MRC Group,
and for a period of one (1) year following any termination of your employment
with the Company, regardless how it occurs.
7b. NONSOLICITATION. You agree to not directly or indirectly
solicit any of the Company's employees or agents, unless you first obtain The
MRC Group's written consent. We both agree that "solicitation" of a Company
employee means to solicit or induce any employee or agent of The MRC Group to
terminate their his/her employment or contractual relationship with The MRC
Group, regardless of the reason(s) for doing so.
You agree to abide by this commitment so long as you remain a
Company employee, and for a period of two (2) years immediately following any
termination of your Company employment, regardless how it occurs.
7c. NONDISPARAGEMENT. You agree to not publicly say or write
anything derogatory about The MRC Group, or any of its officers, directors,
employees, agents and affiliates, its products or practices, unless compelled by
a legal requirement, in connection with a legal proceeding, or a claim or suit.
You agree to abide by this commitment so long as you remain an employee, and for
a period of two (2) years immediately following any termination of your Company
employment, regardless how it occurs.
7d. NONDISCLOSURE. You agree to not directly or indirectly use
or disclose any of the Company's trade secrets or confidential information to
others except as needed in connection with performing your duties as a Company
employee, and to not directly or indirectly make use of any trade secret or
confidential information for yourself, without first obtaining the written
consent of The MRC Group. In connection with this commitment, you specifically
agree to not disclose any confidential information or trade secret which is a
"trade secret" (within the meaning of relevant state or federal law) until such
"trade secret" becomes generally known to the public through the acts of those
specifically authorized by The MRC Group to disclose that "trade secret."
We both agree that for this purpose, "disclose" includes any
oral or written publication by you of any trade secret or confidential
information to any individual, entity or other person. We also both agree that
this commitment on your part does not apply to any disclosure which you are
compelled to make by applicable statute or court order, so long as you notify
The MRC Group--in advance--that such a disclosure may be required or compelled
and
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The MRC Group has an adequate opportunity to contest the disclosure (with
your cooperation, if to a Company believes such cooperation is needed).
As part of this commitment, you acknowledge and agree to
immediately return to The MRC Group any and all trade secrets, confidential
information, or other Company property within your control, as soon as your
Company employment terminates. We both agree that Company property includes all
handbooks, training materials, reports, policy statements, programs, customer
lists, employee lists, referral lists, computer programs, products, designs,
formulae, and data bases, and any billing or pricing information, which you
receive or acquire while employed by The MRC Group.
You agree to abide by this commitment indefinitely--not only
while a Company employee, but also after you cease to be a Company employee,
(regardless of how that employment terminates).
7e. ENFORCEMENT. You acknowledge that the commitments you are
making in paragraphs 7a-7d above are reasonable and necessary to protect and
preserve The MRC Group's business and its relationship with its customers. It is
understood that in the event of any alleged violation of paragraphs 7a-7d, in
addition to seeking monetary damages for any damages, The MRC Group will have
the right to seek and obtain an injunction against you, to prevent you from
further violating this letter agreement, without posting any bond; The MRC Group
will not be considered to have waived its rights under this letter agreement if
it does not immediately act to enforce those rights against you, or against any
other parties coming within the scope of this letter agreement regardless of the
reason for not doing so.
8. TERMINATION OF EMPLOYMENT.
(a) If you quit or resign from your Company
employment, or the Company terminates your employment for Cause (as defined
below), the Company's obligations to you shall immediately cease and be
extinguished, except for (i) payment of your base salary, prorated through the
date of termination, and (ii) reimbursement of any expenses you have properly
incurred to that date in accordance with Company policy or this letter
agreement, and (iii) obligations relating to stock options in accordance with
this agreement. For purposes of this letter agreement, "Cause" means:
(i) Your indictment for any felony, or any crime
involving fraud, deceit, or moral turpitude;
(ii) Your chemical dependency (determined by majority
vote of a committee of three physicians, one appointed by the
Executive, one appointed by the Company, and one appointed by
the other two physicians); or
(iii) Your failure or refusal to either obey the
reasonable and lawful orders of the Chief Executive Officer of
Medifax, Inc. or its Board of Directors or perform all of the
duties material to your responsibilities as an executive
officer of the Company, if such failure or refusal is not
corrected within thirty (30) days following your receipt of
written notice of such failure or refusal from said Chief
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Executive Officer or Board of Directors, provided that you may
have the opportunity, if requested by you in writing during
that thirty (30) day period, to explain such failure or
refusal at a meeting of the Board of Directors called for that
purpose.
(b) In the event your Company employment
involuntarily terminates, other than for Cause (including, without limitation,
your death or your disability, or a Company-initiated discharge) you (or your
estate, as applicable) will be paid severance and related benefits in
accordance with the terms specified in paragraph 9 below.
9. SEVERANCE.
(a) If your employment with The MRC Group
involuntarily terminates other than for
Cause (including, without limitation, death, disability, or Company-initiated
discharge), you shall be paid or provided, subject to the other provisions,
limitations and offsets set forth in this Agreement:
(i) Severance pay, equal in amount to your monthly base salary
in effect on the date your Company employment terminates, less
applicable deductions required by law, and paid in
semi-monthly installments, for a period of twelve (12)
consecutive months; and
(ii) Continuation of all Company-paid health insurance
benefits then being provided to you and your then-covered
dependents, so long as severance pay continues to be paid in
accordance with Subparagraph (a)(i) hereof.
(iii) Continuation of vested stock options in accordance with
the stock option agreement contained in Paragraph 4 of this
Agreement.
(b) All benefits payable under this Agreement shall
immediately cease and terminate, and all Company and Company-sponsored plan
obligations to you and your dependents hereunder shall cease and be
extinguished, if:
(i) You breach, renounce or violate paragraphs 7a-7d of this
Agreement; or
However, in the event the Company ceases and terminates the benefits payable
hereunder on account of its determination that you violated the provisions of
paragraphs 7a-7d hereof, all severance pay otherwise due and payable to you
shall be held in abeyance by the Company and all severance previously paid to
you shall be subject to recovery by the Company, pending a judicial
determination of such allegations. If the court renders a finding that you did
not violate such provisions, the Company shall thereupon make such severance
payments to you and waive all right to recoup payments previously made.
(c) The amounts and benefits payable under this Agreement are
in lieu of, and not supplemental to, any and all other severance, supplemental
unemployment, and group health, accident and sickness, and life and disability
benefits for which you may qualify under any and all other severance pay, group
health, accident and sickness, and life and disability plans maintained by the
Company for its current and former employees. To the extent you qualify for
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benefits under any other employee welfare benefit plan, fund, program or policy
maintained by the Company, the benefits described in this Agreement will be
correspondingly reduced (but not below zero).
10. SUCCESSORS BOUND; ASSIGNMENT PROHIBITED. This letter
agreement is binding on both you and the Company, and our respective successors,
heirs, executors, legal representatives and administrators. This letter
agreement is not assignable by you, and any attempt by you to assign this letter
agreement in contravention of this Paragraph will be considered null and void.
11. ENTIRE AGREEMENT; MODIFICATIONS; OTHER MATTERS. This
letter agreement, together supersede all prior agreements and understandings
between us and may not be modified except in writing signed by you and the Chief
Executive Officer of the Company. In the event any provision hereof shall be
determined to be unenforceable, such determination shall not be deemed to affect
the enforceability of any other provision. All notices to be given hereunder
shall be in writing and delivered by hand or by mail by registered or certified
mail, return receipt requested, and addressed to the parties at the addresses
set forth for such parties above or to such other addresses as either party may
designate by similar notice, and such notice shall be deemed to have been given
as of the date of delivery by hand two (2) business days after the date of
mailing. This letter agreement is to be governed and construed in accordance
with the laws of the State of Ohio applicable to agreements made and performed
solely with that State. If signed in multiple copies, each copy will be
considered an original.
Your signature at the end of this letter agreement will make
this a binding and fully enforceable agreement between us. By signing this
letter agreement, you acknowledge that you fully considered whether to retain or
consult with legal counsel, and either did so or freely chose not to do so.
Sincerely,
MEDIFAX, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, President & CEO
ACCEPTED AND AGREED:
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By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
6/17/98
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Date
