1
EXHIBIT 10.5
SEPARATION AGREEMENT AND MUTUAL RELEASE
This SEPARATION AGREEMENT AND MUTUAL RELEASE("Agreement
and Release") is made this 10th day of March, 1997 by and between
COASTAL PHYSICIAN SERVICES, INC., a North Carolina corporation
("CPS"), PERFORMANCE PARTNERS, INC., a Texas corporation ("PPI"),
and XXXX X. XXXX, an individual ("Ball").
RECITALS
WHEREAS, CPS, PPI, and Ball are parties to that certain
agreement dated May 20, 1996 ("Original Agreement");
WHEREAS, CPS, PPI, and Ball entered into an oral
agreement to amend the Original Agreement, which amended
agreement is memorialized in that certain unexecuted Independent
Contractor Agreement dated December 2, 1996 ("Superseding
Agreement"); and
WHEREAS, CPS, PPI, and Ball desire to terminate the
Superseding Agreement on the terms and conditions stated in this
Agreement and Release
Therefore, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and the
mutual covenants contained herein, the parties agree as follows:
1. CONFIDENTIALITY. The parties agree that the terms and
conditions of this Agreement and Release are to remain
confidential and shall not be disclosed or revealed to, or
discussed with, any person or entity not a party to this
Agreement and Release with the exceptions that (a) the parties
shall be entitled to disclose and discuss the terms of this
Agreement and Release with their respective attorneys or to
enforce this Agreement and Release (b) any party may disclose the
terms of this Agreement and Release if required to do so by a
court order, a subpoena, or the securities or tax laws of the
United States or any state, and (c) the parties shall jointly
agree on the content of an internal information release
announcing the termination of the services of Ball and PPI.
2. TERMINATION OF ORIGINAL AGREEMENT AND SUPERSEDING AGREEMENT
2.1. The parties agree that the Original Agreement was
terminated and superseded by the Superseding Agreement and that
the Superseding Agreement shall be deemd to have been executed
and now shall be voluntarily terminated, effective March 31, 1997
(the "Termination Effective Date"), except that Sections 8, 9,
10, and 12 shall survive termination of the Superseding Agreement
and except that Exhibit A to the Superseding Agreement shall
remain in effect pursuant to its terms, as amended by this
Agreement and Release. For the purpose of Sections 8, 9, 10, and
12 of the Superseding Agreement, the "Term of this Agreement"
shall end on the Termination Effective Date. After the
Termination Effective Date Ball and PPI shall no longer perform
or provide any further services for CPS or any Releasee, except
as provided in Section 5.2.
2
2.2. Ball and PPI agree that, other than the amounts and
other consideration set forth in paragraph 6 herein, they have
received all amounts, including compensation, bonuses, financial
incentives, stock appreciation rights, stock options, or any
other benefits or consideration, due them under the Original
Agreement and Superseding Agreement and that any further
obligations arising under those agreements shall be deemed
released as of the Termination Effective Date, except as provided
herein.
3. MUTUAL GENERAL RELEASE
3.1. Except for the obligations set forth in this Agreement
and Release, Ball and PPI hereby fully and forever releases and
discharges CPS, its subsidiaries and affiliates and their
respective present and former shareholders, directors, officers,
agents, assignees, attorneys, executors, administrators,
predecessors, successors and assigns (collectively referred to as
"Releasees"), of and from any and all claims, demands,
agreements, contracts, covenants, suits, actions, causes of
action, obligations, controversies, debts, costs, expenses,
accounts, damages, judgments, losses and liabilities, of whatever
kind or nature, in law, equity or otherwise, whether known or
unknown, concealed or hidden, which Ball and PPI has had, may
have had or now have, to and including April 15, 1997, against
any of the Releasees. This release includes, but is not limited
to, any claim arising under the Original Agreement or Superseding
Agreement or relating to the termination of those agreements; any
claims for wrongful termination, public policy violations,
defamation, fraud, deceit, emotional distress or other common law
or tort matters; any claim of harassment, discrimination or
retaliation arising under state or federal law; and any claims
for or relating to any other employment benefits, including
claims arising under the Employee Retirement Income Security Act.
3.2. Ball and PPI represent, as a material inducement to CPS
to enter into this Agreement and Release, that he shall not file
or otherwise initiate any legal action of any kind against CPS
with respect to any matter released and discharged under the
preceding section.
3.3. Except for the obligations set forth herein, CPS hereby
fully and forever releases and discharges Ball and PPI of and
from any and all claims, demands, agreements, contracts,
covenants, suits, actions, causes of action, obligations,
controversies, debts, costs, expenses, accounts, damages,
judgments, losses and liabilities, of whatever kind or nature, in
law, equity or otherwise, whether known or unknown, concealed or
hidden, which CPS has had, may have had or now has, to and
including April 15, 1997. This release includes, but is not
limited to, any claim arising under the Original Agreement or
Superseding Agreement or relating to the termination of those
agreements; any claims for wrongful termination, public policy
violations, defamation, fraud, and deceit.
3.4. CPS represents, as a material inducement to Ball and
PPI to enter into this Agreement and Release, that CPS shall not
file or otherwise initiate any legal action of any kind against
Ball or PPI with respect to any matter released and discharged
under the preceding section.
3.5. CPS agrees to indemnify and hold harmless Ball and PPI
for and from any damages, losses, or expenses resulting from the
assertion or prosecution of any claims, demands,
3
agreements, contracts, covenants, suits, actions, causes of
action, obligations, controversies, debts, costs, expenses,
accounts, damages, judgments, losses and liabilities, of whatever
kind or nature, in law, equity or otherwise, whether known or
unknown, concealed or hidden, which the Releasees or any of them
may assert against Ball and/or PPI for services rendered by
either of them to CPS, excluding a breach of a term of this
Agreement and Release.
4. NO ASSIGNMENT OF CLAIMS. Ball and PPI represent that they
have not assigned any claim against a Releasee to any other
person, and acknowledge that CPS is relying upon that
representation in entering into this Agreement and Release and
performing its obligations and agreements hereunder. CPS
represents that it has not assigned any claim against Ball or PPI
to any other person, and acknowledge that Ball and PPI are
relying upon that representation in entering into this Agreement
and Release and performing their obligations and agreements
hereunder.
5. SERVICES UNDER SUPERSEDING AGREEMENT
5.1. In accordance with the Superseding Agreement and the
obligations of Ball and PPI to render services to CPS under that
agreement, (a) by the Termination Effective Date, Ball and PPI
shall complete a further downsizing of CPS consistent with the
attrition of CPS's hospital contracts, and Ball and PPI shall
report regularly under Section 2 of the Superseding Agreement
regarding these services, and (b) Ball and PPI shall provide all
assistance requested by CPS or its parent, Coastal Physician
Group, Inc. ("CPG"), regarding the efforts of CPG to sell CPS.
Ball and PPI shall not be entitled to any additional compensation
from CPS or CPG or any Realesee for any of the services rendered
under this Section other than the compensation provided for in
this Agreement and Release.
5.2. From the Termination Effective Date through April 15,
1997, PPI and Ball shall assist CPG and CPS upon the request of
either of them with respect to the efforts of CPG to sell CPS.
PPI and Ball shall not be entitled to any additional fee or other
compensation from CPS or CPG or any Releasee for any of the
services rendered under this Section other than the compensation
provided for in this Agreement and Release. CPS shall pay the
reasonable travel, lodging, and meal expenses of PPI and Ball in
rendering any services requested under this Section. CPS agrees
to hold harmless and indemnify Ball and PPI from and against any
claims, expenses, losses, or damages resulting from assertion
and/or prosecution of claims by third-parties against Ball or PPI
as a result of services rendered by Ball or PPI within the scope
of this Section 5.2 between April 1, 1997 and April 15, 1997 to
the same extent an officer of CPS and/or CPG would be entitled to
or receives indemnification for acts and omissions commited by
them during such period.
5.3. Neither Ball nor PPI shall have any liability for their
actions or omissions in rendering the services required by this
Agreement, unless such act or omission constitutes gross
negligence or willful misconduct.
6. PAYMENTS AND OTHER CONSIDERATION TO PPI.
6.1. On the Termination Effective Date:
4
6.1.1. CPS shall pay to PPI (by wire transfer) all fees
and expenses due to PPI under the Superseding Agreement for
services rendered by Ball and PPI through the Termination
Effective Date. CPS shall have no obligation to pay any fee for
any services rendered by Ball or PPI to CPS, CPG, or any Realesee
after the Termination Effective Date;
6.1.2. CPS shall pay to PPI (by wire transfer) the sum of
$50,000, representing the retention bonus agreed to be paid to
PPI under the Superseding Agreement; and
6.1.3. the Stock Appreciation Rights granted to PPI under
Exhibit A to the Superseding Agreement shall vest as of December
2, 1996 such that PPI shall have stock appreciation rights in
13,333 shares of CPG with an Initial Price (as defined in that
ExhibitA) of $3.75. Notwithstanding any contrary provision of
the Exhibit A to the Superseding Agreement, the "SAR Due Date,"
as that term is used in the Exhibit A, shall mean, with regard to
each exercise of SAR rights under that Exhibit A, the date that
is six months after CPG's receipt of notice of PPI's exercise of
those rights.
6.2. Ball and PPI acknowledge that the payments set forth in
this Section 6 are beyond any amount they would otherwise be
entitled to, that Ball and PPI are entering into this Agreement
and Release knowingly and voluntarily, and have not been coerced
or threatened, and have not been promised anything else in
exchange for signing this Agreement and Release, other than the
consideration and mutual promises set forth herein.
7. EFFECTIVE DATE OF AGREEMENT AND RELEASE
7.1. Ball acknowledges that he has been given up to twenty-
one days to consider the Agreement and Release, which time will
be sufficient. Ball and PPI acknowledge that they have been
advised to consult an attorney, if desired, before signing the
Agreement and Release and that this Agreement and Release has
been individually negotiated between the parties and is not part
of a group exit incentive or other termination program.
7.2. The parties agree that Ball may, at his election, sign
this Agreement and Release at any time prior to the expiration of
the twenty-one-day period. This Agreement and Release shall
become enforceable at the later of (a) seven days after it has
been signed by Ball or (b) the day on which it has been signed by
PPI. The Agreement and Release can be revoked at any time by
Ball prior to the expiration of the seven-day period following
the signing of the Agreement and Release by him.
8. MISCELLANEOUS
8.1. This Agreement and Release shall inure to the benefit
of, and shall be binding upon, the successors and assigns of the
parties hereto and each of them.
8.2. No representation, warranty or promise not expressly
set forth in this Agreement and Release has been made by any
party or agents of that party, and this
5
Agreement and Release has not been entered into on the basis of
any such representation, warranty or promise.
8.3. The descriptive headings and the paragraph numbers are
inserted for convenience only and shall not control or affect the
meaning or construction of any provisions of this Agreement and
Release.
8.4. Any and all notices, designations, consents, offers,
acceptances or any other communications provided for herein shall
be given in writing by registered or certified mail, return
receipt requested, or by recognized overnight service, which
shall be addressed in to the following addresses, or such other
address as the parties may designate by notice given in
accordance with this Section:
If to CPS:
Cosatal Physician Services, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
If to CPS:
Coastal Physician Group, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
If to PPI or Ball:
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
8.5. The waiver by any party of any breach of a provision of
this Agreement and Release shall not operate or become construed
as a waiver of any subsequent breach by the parties.
8.6. This Agreement and Release supersedes any and all other
understandings and agreements, either oral or in writing, between
the parties hereto with respect to the subject matter hereof and
constitutes the sole and only agreement between the parties with
respect to said subject matter. Each party to this Agreement and
Release acknowledges that no representations, inducements,
promises or agreements, oral or otherwise, have been made by any
party or by anyone acting on the behalf of any party, which are
not embodied herein, and that no agreement, statement or promise
not contained in this Agreement and Release shall be valid or
binding or in any way have any force or effect on the parties.
No change or modification of this Agreement and Release shall be
valid or binding upon the parties hereto unless such change or
modification is in writing and signed by the parties hereto.
8.7. In the event that any one or more of the provisions
contained in this Agreement and Release shall be held by a court
or arbitrator of competent jurisdiction to be
6
invalid, illegal or unenforceable in any respect for any reason,
(a) the invalid, illegal, or unenforceable provision shall be
construed in a manner matching as nearly as possible the parties'
intent with respect to that provision as evidenced by that
language of that provision, (b) that the invalidity, illegality
or unenforceability shall not affect any other provisions hereof,
and (c) that this Agreement and Release shall be construed as if
that invalid, illegal or unenforceable provision had never been
contained herein.
8.8. Any disputes arising from or related to this Agreement
and Release shall be resolved in an arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration
Association before a single arbitrator. All hearings and other
proceedings in the course of, or related to, the arbitration or
the arbitrability of any dispute shall occur in Durham, North
Carolina. PPI and Ball agree to venue and personal jurisdiction
in Durham, North Carolina. North Carolina law shall apply to and
govern this Agreement and Release.
8.9. The parties do not intend by this Agreement to create
in any other person or entity any right of any kind.
Executed in counterparts and effective on the
Termination Effective Date.
COASTAL PHYSICIAN SERVICES, INC. COASTAL PHYSICIAN GROUP, INC.
By: /S/ XXXX X. XXXXXXXXX By: /S/ XXXXXXX X. XXXXX
Name: Xxxx X. Xxxxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Chief Operations Officer Title: EVP & CFO
PERFORMANCE PARTNERS, INC. XXXX X. XXXX
By: /S/ XXXX X. XXXX By: /S/ XXXX X. XXXX
Name: Xxxx X. Xxxx
Title: President
7
SCHEDULE A
STATE OF NORTH CAROLINA
COUNTY OF DURHAM
INDEPENDENT CONTRACTOR AGREEMENT
THIS INDEPENDENT CONTRACTOR AGREEMENT (the
"Agreement") is made and entered into effective the 2nd day of
December, 1996, by and between COASTAL PHYSICIAN SERVICES, INC.,
a North Carolina corporation ("CPS"), PERFORMANCE PARTNERS, INC.,
a Texas corporation ("PPI"), and XXXX X. XXXX ("Ball").
W I T N E S S E T H
WHEREAS, CPS is a wholly-owned subsidiary of
Coastal Physician Group, Inc. ("Coastal");
WHEREAS, CPS owns and operates a business which
arranges and contracts to provide physician coverage for medical
services for hospital emergency rooms and other health care
facilities;
WHEREAS, Ball is the President and sole
shareholder of PPI, a corporation which provides consulting and
management services;
WHEREAS, CPS, Ball and PPI have entered into an
independent contractor agreement dated May 20, 1996 (the "May
1996 Agreement"); and
WHEREAS, CPS, Ball and PPI now desire to terminate
the May 1996 Agreement, and CPS desires to engage the services of
Ball as an independent contractor to serve as President and Chief
Executive Officer of CPS on the terms and conditions set forth
below.
NOW THEREFORE for and in consideration of the
mutual promises, covenants, obligations and rights hereinafter
specified, CPS, Ball and PPI mutually agree as follows:
1. TERMINATION OF MAY 1996 AGREEMENT. The May
1996 Agreement is hereby terminated effective December 2, 1996.
CPS agrees to pay PPI, upon the execution of this Agreement, the
severance payment of $13,750.00 called for in Section 5.b(i) of
the May 1996 Agreement.
8
2. SERVICE. Ball agrees to serve as full-time
President and Chief Executive Officer of CPS, and to perform such
duties and services usually vested in such office, subject to the
direction and control of the Chief Executive Officer (the "CEO")
of Coastal or his designee. In rendering such services, Ball
shall report directly to the CEO.
3. PPI. CPS recognizes and acknowledges that
Ball is an employee of PPI. Accordingly, CPS shall make all
payments of compensation for the services rendered under this
Agreement directly to PPI. PPI consents and agrees that Ball
shall provide such services as an independent contractor to CPS
and agrees to cause Ball to provide the services as described in
this Agreement.
4. COMPENSATION. For Ball's services, PPI shall
be entitled to receive the following (collectively, the
"Compensation"):
a. CPS will pay an PPI a base fee of
$300,000.00 per annum, prorated weekly during the Term (the
"Fee") and payable in equal weekly payments of $5,769.23;
b. If PPI and Ball are still engaged under
the terms of this Agreement on July 1, 1997, PPI will
receive a retention bonus of $50,000.00 (the "Retention
Bonus");
c. Stock Appreciation Rights. PPI shall
also receive Stock Appreciation Rights (SAR's) in the amount
and form as described in EXHIBIT A, attached hereto and made
a part hereof.
d. CPS will reimburse PPI, at the
discretion of the CEO, for all reasonable out-of-pocket
expenses of Ball incurred in performing his duties,
including travel to and from his office at PPI in Dallas,
living expenses of Ball in Durham during the Term and travel
expenses related to performing contractual duties. Such
reimbursement will be due within one week of presentation to
CPS by PPI of a request for reimbursement with appropriate
receipts consistent with Internal Revenue Service
requirements.
5. TERM. The Term of this Agreement shall be
for one (1) year, commencing on the 2nd day of December, 1996 and
ending on the 1st day of December, 1997; subject to the following
provisions (the "Term"):
a. Any party may terminate this Agreement, for any
reason, upon ninety (90) days written notice to the other
9
parties, if such notice is given prior to July 1, 1997. If
notice of termination is given on or after July 1, 1997,
then any party may terminate this Agreement upon thirty (30)
days written notice to the other parties. If this Agreement
is terminated by CPS pursuant to the provisions of this
Section 5.a prior to July 1, 1997, then the Retention Bonus
will be deemed earned by and payable to PPI and the SAR's
granted under Section 4.c will vest immediately upon the
date of termination.
b. In the event that Ball dies or becomes disabled
(such that the CEO has determined Ball cannot or will be
unable to perform his duties under this Agreement for a
period of four consecutive weeks, with or without
accommodation) during the Term of this Agreement; (i) this
Agreement shall terminate as of the date of death or
disability; (ii) CPS shall pay to PPI the Fee prorated
through the fourth week following the date of death or
disability, as an earned Fee; and (iii) the parties shall
have no further obligation to each other except to the
extent of matters subject to the indemnification clauses of
this Agreement.
c. The CEO may terminate this Agreement prior to the
expiration of its Term for just cause. "Just cause" is
defined as material and credible evidence of criminal or
fraudulent acts, moral turpitude, gross neglect, failure to
follow the reasonable directives of the CEO. For just
cause, the Agreement can be terminated within twenty-four
(24) hours, and in such event (i) the Fee Payment under
subsection 4.a. shall cease as of the date of termination;
(ii) PPI shall be entitled to receive and retain all Fees
prorated through termination, as an earned Fee; and (iii) if
such termination occurs prior to July 1, 1997, PPI and Ball
shall forfeit any interest in the Retention Bonus, and any
SAR's not yet vested shall be forfeited.
d. All Compensation is payable or deliverable to PPI
at its offices in Dallas, Texas on the day of the month or
occurrence of the event giving rise to CPS' obligation for
such Compensation. Time is of the essence with respect to
Compensation. If it becomes necessary for PPI to retain an
attorney to collect Compensation, CPS shall pay all
reasonable attorney's fees and court costs incurred by PPI
or Ball.
10
6. WORKING FACILITIES. CPS shall furnish Ball
with office space, materials and support services reasonably
necessary to perform his duties under this Agreement in a manner
consistent with provision of office space, materials and support
services to senior executives of CPS.
7. INDEPENDENT CONTRACTOR. The parties agree
that Ball shall perform his duties and services as an independent
contractor. Ball and/or PPI shall be responsible for payment of
all taxes, including without limitation, self-employed taxes, on
any and all Compensation and reimbursements Ball or PPI receives
as a result of this Agreement. Ball and PPI agree to indemnify
and hold harmless CPS, Coastal, any affiliate of Coastal and any
officers, employees, agents, directors, successors or assigns of
CPS, Coastal or any affiliate of Coastal from any liability due
to failure to pay any federal or state taxes. Further it is
agreed and understood that Ball is not covered by any of the
fringe benefit programs (including medical coverage) of CPS or
Coastal, nor is he covered by workers' compensation inasmuch as
he is not an employee of CPS.
8. COVENANT NOT TO COMPETE.
a. NONCOMPETITION. During the Term of this Agreement
and for a period of one (1) year thereafter, irrespective of
the time, manner or cause of termination thereof, neither
Ball nor PPI shall directly or indirectly, as employer,
independent contractor, owner, stockholder of greater than
5% of any public company or 35% of any private company,
agent, employee, or otherwise enter into or in any manner
participate in any business or other endeavor which would be
in direct competition with CPS or in any business in which
CPS has engaged during the period of the independent
contractor relationship within the territory consisting of
the states within which CPS provides services during the
Term of this Agreement without the prior written permission
of Coastal.
b. RESPECT FOR ECONOMIC RELATIONSHIPS. Neither PPI
nor Ball shall, during the Term of this Agreement and for a
period of one (1) year thereafter, irrespective of the time,
manner or cause of termination thereof, in any fashion,
form, or manner, either directly or indirectly, solicit,
interfere with, or endeavor to entice away from CPS or
Coastal any customer, person, firm, account, employee,
independent contractor or corporation regularly dealing with
CPS or Coastal or interfere with or entice away any other
11
independent contractor or employee of CPS or Coastal without
the prior written permission of Coastal. This section shall
not apply to the following: Xxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxxxxx, and Xxxxxxx Xxxxxxxxx.
c. CONFIDENTIALITY. PPI and Ball acknowledge and
agree that the information they may to acquire at CPS as a
result of their engagement is proprietary and confidential.
Neither PPI nor Ball shall, during the Term of this
Agreement, and for a period of one (1) year thereafter,
irrespective of the time, manner, or cause of the
independent contractor relationship termination, in any
fashion, form or manner, either directly or indirectly,
disclose or divulge any such confidential or proprietary
information concerning the business, strategies or methods
used by CPS or Coastal and acquired by PPI or Ball during
the Term of this independent contractor relationship with
the Corporation without the prior written permission of
Coastal, unless responding to the subpoena or order of a
court or governmental agency or body. At no time, either
during or after the Term of this Agreement, shall PPI or
Ball discuss any aspects of their involvement with CPS or
any information relating to CPS with Xxxxxx Xxxxx, Price
Waterhouse, or any representative thereof.
d. VALIDITY OF COVENANTS. PPI and Ball agree that
the covenants contained in this Section are reasonably
necessary to protect the legitimate interests of CPS and
Coastal and are reasonable with respect to time and
territory, and do not interfere with the interests of the
public. PPI and Ball further agree that the description of
the covenants contained in this Section is sufficiently
accurate and definite to inform them of the scope of the
covenants. The terms and conditions of this Section shall
survive the expiration and termination of this Agreement.
e. SPECIFIC PERFORMANCE. PPI and Ball agree that a
breach or violation of any of the covenants under this
Section will result in immediate and irreparable harm to CPS
and Coastal in an amount which will be impossible to
ascertain at the time of the breach or violation and that
the award of monetary damages will not be adequate relief to
CPS and Coastal. Therefore, the failure on the part of PPI
or Ball to perform all of the covenants established by this
Section shall give rise to a right to CPS or Coastal to
obtain enforcement of this Section in a court of equity by a
decree or specific performance or any other injunctive
relief
12
deemed necessary. This remedy, however, shall be cumulative
and in addition to any other remedy CPS or Coastal may have
against PPI and Ball.
9. INDEMNIFICATION. Ball is providing services
as an officer of CPS. CPS agrees to hold harmless and indemnify
Ball and PPI from and against any claims, losses or damages
asserted by third parties against Ball or PPI as a result of
services rendered by Ball or PPI within the scope of this
Agreement to the same extent any other officer of CPS and Coastal
would be entitled to or has received any indemnification by CPS
and Coastal for acts and omissions committed during the Term of
this Agreement. CPS and Coastal will maintain directors' and
officers' liability insurance coverage on Ball during the Term of
this Agreement in the same manner as all other officers and
directors of CPS and Coastal are insured during the Term.
10. EXPENSES OF LEGAL ACTION. Should PPI, its'
employees, agents, officers, and/or directors, be compelled to,
become party to, or be asked to assist in any legal action
arising out of their engagement under this Agreement, CPS shall
compensate PPI for the time spent by its employees, agents,
officers and directors in connection with depositions,
preparation of materials, court testimony, settlement
negotiations, preparation for testimony and other such time
related to the legal action at a billing rate of $200.00 per hour
(except for Ball's time during the Term of this Agreement).
There shall be no limitation as to the number of hours within any
week that PPI may xxxx for these activities. CPS shall provide
such funds and pay such invoices for counsel in the
representation of PPI, it's employees, agents, officers and
directors in such legal action. Counsel for PPI shall be
selected solely by PPI. PPI shall review the invoices of counsel
for correctness. Coastal shall pay such invoices submitted by
PPI upon receipt of same.
11. PROHIBITION AGAINST ASSIGNMENT. This
Agreement is for the personal services of Ball, and Ball and PPI
agree that this Agreement and the obligations of Ball hereunder
may not be assigned, delegated or performed by any party other
than Ball without the express written consent of the CEO, which
consent may be withheld in the sole discretion of the CEO. CPS
and Coastal can assign their rights and duties hereunder without
the consent of Ball and PPI.
12. PROPERTY OF CPS. Ball and PPI agree that
upon termination of this independent contractor relationship,
Ball and PPI will surrender to CPS all lists, books, records and
similar
13
items, and all copies thereof in their possession which contain
confidential information regarding the business of CPS or
Coastal, and will also turn over to CPS all of the property of
CPS or Coastal which has come into their possession while an
independent contractor of CPS.
13. NOTICES. Any and all notices, designations,
consents, offers, acceptances or any other communications
provided for herein shall be given in writing by registered or
certified mail, return receipt requested, or by recognized
overnight service, which shall be addressed in to the following
addresses, or such other address as the parties may designate by
notice given in accordance with this Section:
If to CPS:
Coastal Physician Services, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
If to Coastal:
Coastal Physician Group, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
If to PPI or Ball:
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
14. WAIVER OF BREACH. The waiver by any party of
any breach of a provision of this Agreement shall not operate or
become construed as a waiver of any subsequent breach by the
parties.
15. ENTIRE AGREEMENT. This Agreement supersedes
any and all other understandings and agreements, either oral or
in writing, between the parties hereto with respect to the
subject matter hereof and constitutes the sole and only agreement
between the parties with respect to said subject matter. Each
party to this Agreement acknowledges that no representations,
inducements, promises or agreements, oral or otherwise, have been
made by any party or by anyone acting on the behalf of any party,
which are not embodied herein, and that no agreement, statement
or promise not contained in this Agreement shall be valid or
binding or in any way have any force or effect on the parties. No
change or
14
modification of this Agreement shall be valid or binding upon the
parties hereto unless such change or modification is in writing
and signed by the parties hereto.
16. SEVERABILITY. In the event that any one or
more of the provisions contained in this Agreement shall be held
by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect for any reason, that invalidity,
illegality or unenforceability shall not affect any other
provisions hereof and this Agreement shall be construed as if
that invalid, illegal or unenforceable provision had never been
contained herein.
17. DISPUTES. Any disputes arising from or
related to this Agreement shall be resolved in a court of
competent jurisdiction in the State of North Carolina, and PPI
and Ball agree to venue and personal jurisdiction in such court.
North Carolina law shall apply to and govern this Agreement.
15
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above written.
CPS:
COASTAL PHYSICIAN SERVICES, INC.
By: _________________________________
___________ President
ATTEST:
______________________________
________ Secretary
[CORPORATE SEAL]
PPI:
PERFORMANCE PARTNERS, INC.
By: ______________________________
President
ATTEST:
______________________________
Secretary
[CORPORATE SEAL]
CONTRACTOR:
__________________________________ (SEAL)
Xxxx X. Xxxx
16
EXHIBIT A
STOCK APPRECIATION RIGHTS.
Unless forfeited under the termination provisions of
this Agreement, CPS shall pay PPI an amount determined in
accordance with the following provisions:
1. PURPOSE. Subject to the terms hereof, PPI
shall have the right to receive an amount equal to any
appreciation occurring from and after the Initial Date (hereafter
defined) in $50,000 worth of shares of Coastal's common stock
(the number of corresponding shares to be determined by the
closing price of such stock on the New York Stock Exchange on the
Initial Date), and these provisions shall be interpreted with a
view to accomplishing such purpose. Such right with regard to
each share is referred to herein as a "Stock Appreciation Right"
or "SAR".
2. VESTING. So long as the engagement of PPI
has not terminated under Section 4(b) or 4(c) of this Agreement,
SAR's shall vest as follows:
DATE AMOUNT OF SAR'S
VESTING
1/2/97 $10,000
2/2/97 $10,000
3/2/97 $10,000
4/2/97 $10,000
5/2/97 $10,000
TOTAL $50,000
3. DEFINITIONS. Terms used herein shall have
the following meanings: (a) the term "Initial Price" shall mean
the price per share for Coastal's common shares at the close of
business of the New York Stock Exchange (as reflected on the New
York Stock Exchange Composite Tape) on December 2, 1996 (the
"Initial Date"); (b) the term "Sales Price" shall mean either:
(i) if there is a public market for such shares on the Sales
Date, the average price per share for Coastal's common shares at
the close of business of the New York Stock Exchange (as
reflected on the New York Stock Exchange Composite Tape, or if
those shares are not traded at that time on the New York Stock
Exchange, the comparable standard for the trading market on which
those shares are then traded) on the ten trading days next
preceding the date (the "Sales Date") on which delivery of notice
of exercise of the rights granted hereunder occurs; or (ii) if
there is no public market for such shares on the Sales Date, the
17
fair market value per share for Coastal's common shares at the
close of business on the Sales Date, determined by agreement of
Coastal and PPI or, in the absence of agreement, by an
independent professional appraisal firm. The appraisal firm
shall be selected by agreement of the parties or, in the absence
of such agreement, by an arbitrator appointed by the American
Arbitration Association, by and through its offices in Atlanta,
Georgia or Durham, North Carolina. Coastal shall pay all costs
and expenses arising out of or relating to determination of the
Sales Price, including without limitation all of Coastal's and
PPI's arbitration fees, costs, and expenses, and all appraisal
fees, and all attorneys' fees and expenses that PPI may incur in
connection with selection of an appraisal firm and determination
of fair market value as herein set forth.
4. EXERCISE. PPI shall have the right to
exercise the SAR's granted hereunder which have vested at any
time and from time to time during the two-year period beginning
on July 1, 1997 and ending at 12:00 p.m. Eastern Standard Time on
June 30, 1999. Such rights may be exercised by delivering
written notice thereof (which notice shall specify the number of
shares with respect to which such rights are being exercised) by
facsimile (919-383-0247) to Coastal's CEO or its general counsel
with copies thereof being mailed promptly thereafter by certified
mail addressed to Coastal, P. O. Xxx 00000, Xxxxxx, Xxxxx
Xxxxxxxx 00000, to the attention of such officer or officers and
with copies thereof also being given promptly to Coastal in the
manner prescribed for notices in Section 13 of this Agreement.
5. AMOUNT. The amount payable to PPI hereunder
shall be determined in accordance with the following provisions:
(a) The Initial Price shall be subtracted from the Sales Price to
determine the per share appreciation which has occurred; (b) the
per share appreciation shall then be multiplied by the number of
shares with respect to which PPI has exercised his rights
hereunder; and (c) the resulting sum shall be the amount payable
to PPI hereunder. Such amount shall be paid to PPI on the SAR
Due Date (as defined herein), provided, that if the Sales Price
is determined by agreement or appraisal, such amount shall be
paid within three days after conclusion of such agreement or
appraisal, together with interest (the rate of which shall be the
applicable federal rate established pursuant to Section 7872 of
the Internal Revenue Code of 1986, as amended) on the amount thus
determined, payable for the period beginning on the SAR Due Date
and ending on the date of payment. The "SAR Due Date" shall
mean, with regard to each exercise of SAR rights hereunder, such
date which is the later of July 1, 1997 or three (3) days after
18
receipt of notice exercising such rights. To the extent not
exercised, such rights shall remain in full force and effect, and
upon subsequent exercise by PPI as hereinabove provided, the
amount payable to PPI shall again be determined in accordance
with the foregoing provisions.
6. ADJUSTMENT. In the event Coastal's
outstanding common shares shall be subdivided (split) or combined
(reverse split), by reclassification or otherwise, or in the
event of any special dividend payable on such shares in shares of
Coastal's stock, the Initial Price and the number of shares with
respect to which the rights granted hereunder exist shall be
proportionately adjusted to accomplish the purposes hereof.
7. REORGANIZATIONS. If at any time during the
three year term hereof there shall be a capital reorganization of
Coastal's common shares, then as part of such reorganization,
lawful provision shall be made so that PPI's rights hereunder
shall be protected in a manner which will accomplish the purposes
hereof.
8. MERGER, BUSINESS COMBINATION. If a merger,
consolidation, share exchange or business combination occurs
which results in Coastal's common shares being acquired by
another entity or entities (whether for cash, securities, or
other consideration), or if substantially all of Coastal's assets
and properties are sold to another entity or entities, the
following provisions shall be controlling of purposes hereof:
(a) PPI shall be deemed to have exercised its remaining rights on
the closing date of such transaction; (b) the amount payable to
PPI shall be determined and paid within three days after such
closing date; and (c) PPI shall not thereafter have any further
right to receive payments based upon appreciation in Coastal's
common shares.
9. INFORMATION. Upon the occurrence of each adjustment or
readjustment pursuant to the provisions contained herein, Coastal
at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish PPI
with information setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or
readjustment is based.
19
SCHEDULE B
AMENDMENT TO
INDEPENDENT CONTRACTOR AGREEMENT
THIS AMENDMENT TO INDEPENDENT CONTRACTOR AGREEMENT
(the "Amendment) is made and entered into effective the ___ day
of February, 1997, by and between COASTAL PHYSICIAN SERVICES,
INC., a North Carolina corporation ("CPS"), PERFORMANCE PARTNERS,
INC., a Texas corporation, and XXXX X. XXXX ("Ball").
W I T N E S S E T H
WHEREAS, CPS, PPI and Ball have previously entered into an
independent contractor agreement dated December 2, 1996 (the
"Agreement"); and
WHEREAS, the CPS, PPI and Ball now wish to amend the
Agreement to provide for new termination provisions.
NOW, THEREFORE, in consideration of the terms and conditions
set forth in this Amendment, the parties hereby agree that the
Agreement is hereby modified as follows:
1. Section 1 of the Agreement ("Termination of May 1996
Agreement") is amended to refer to section 4.b of the May 1996
Agreement, rather than Section 5.b(i).
2. Section 5 is deleted and replaced in its entirety as
follows:
Section 5. TERM. The Term of this Agreement shall be
for one (1) year, commencing on the 2nd day of December,
1996 and ending on the 1st day of December, 1997; subject to
the following provisions (the "Term"):
a. Any party may terminate this Agreement, for
any reason, upon thirty (30) days written notice to the
other parties. If this Agreement is terminated by CPS
pursuant to the provisions of this Section 5.a prior to July
1, 1997, then the Retention Bonus will be deemed earned by
and payable to PPI and the SAR's granted under Section 4.c
will vest immediately upon the date of termination.
b. If this Agreement is terminated as a result
of an acquisition, merger, buyout or other business
combination
20
between CPS and a party prior to July 1, 1997, then the
Retention Bonus shall be deemed earned and payable to PPI
and the SAR's granted under Section 4.c shall vest
immediately upon the date of termination.
c. In the event the President/CEO of Coastal is
replaced by an individual not deemed acceptable to the bank
group that holds the bank debt of Coastal, or if the duties
and responsibilities of the President/CEO of Coastal are
substantially changed or modified, PPI may, in its sole
discretion, terminate this Agreement immediately. Further,
any and all fees and expenses unpaid through the date of
termination shall be paid upon the receipt of a final
invoice. Further, if this occurs prior to July 1, 1997,
then the Retention Bonus shall be deemed earned and payable
to PPI and the SAR's granted under Section 4.c shall vest
immediately upon the date of termination.
d. In the event that Ball dies or becomes
disabled (such that the CEO has determined Ball cannot or
will be unable to perform his duties under this Agreement
for a period of four consecutive weeks, with or without
accommodation) during the Term of this Agreement; (i) this
Agreement shall terminate as of the date of death or
disability; (ii) CPS shall pay to PPI the Fee prorated
through the fourth week following the date of death or
disability, as an earned Fee; and (iii) the parties shall
have no further obligation to each other except to the
extent of matters subject to the indemnification clauses of
this Agreement.
e. The CEO may terminate this Agreement prior to
the expiration of its Term for just cause. "Just cause" is
defined as material and credible evidence of criminal or
fraudulent acts, moral turpitude, gross neglect, failure to
follow the reasonable directives of the CEO. For just
cause, the Agreement can be terminated within twenty-four
(24) hours, and in such event (i) the Fee Payment under
subsection 4.a. shall cease as of the date of termination;
(ii) PPI shall be entitled to receive and retain all Fees
prorated through termination, as an earned Fee; and (iii) if
such termination occurs prior to July 1, 1997, PPI and Ball
shall forfeit any interest in the Retention Bonus, and any
SAR's not yet vested shall be forfeited.
21
f. All Compensation is payable or deliverable to
PPI at its offices in Dallas, Texas on the day of the month
or occurrence of the event giving rise to CPS' obligation
for such Compensation. Time is of the essence with respect
to Compensation. If it becomes necessary for PPI to retain
an attorney to collect Compensation, CPS shall pay all
reasonable attorney's fees and court costs incurred by PPI
or Ball.
IN WITNESS WHEREOF, the parties hereto have
executed this Amendment as of the date first above written.
22
CPS:
COASTAL PHYSICIAN SERVICES, INC.
By: _________________________________
President
ATTEST:
______________________________
Secretary
[CORPORATE SEAL]
PPI:
PERFORMANCE PARTNERS, INC.
By: _________________________________
President
ATTEST:
______________________________
Secretary
[CORPORATE SEAL]
CONTRACTOR:
__________________________________ (SEAL)
Xxxx X. Xxxx
