1
Exhibit 10.9
July 2, 1996
Mr. Xxxxxx Xxxx
0000 Xxxxxxxxx Xxx
Xxxxx Xxxx, Xxxxxxxxxxxx 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
commencing on or about July 8, 1996 and you agree to accept such employment as
an executive officer of Medifax, Inc. (Medifax or Company), a Missouri
corporation, 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 Medifax, as a result of your being
transferred, assigned or leased to such affiliated 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 devote your full working
time (except normal vacation periods and illness) and to exert your best
efforts, knowledge and skill to the performance of the duties of Senior Vice
President Finance and Chief Financial Officer of the Company (and/or such other
position(s) to which you hereafter may be assigned.). In this capacity, you
shall perform such duties as are customarily associated with, and incidental to,
such position which shall include direct responsibility for all aspects of the
Company's financial operations, financial projections, budgeting and related
systems and technology; and otherwise to carry out the directives and policies
of the President and Chief Executive Officer, and the Company's Board of
Directors, including, without limitation, related services throughout the
Company. 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,
Medifax agrees to pay you direct compensation consisting of: (a) a base salary
at the rate of $150,000 per year; and (b) a bonus at a rate of not less than
$15,000 per year to be paid quarterly ($3,750/quarter) commencing third quarter
1996. 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 seventy thousand (70,000) common
shares of Medifax, Inc. 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.
2
Mr. Xxxxxx Xxxx
July 2, 1996
Page 2
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 five (5)-year period, with
14,000 options vesting on each anniversary date of the date of the Option
Agreement; fifty percent accelerated vesting of all options in the event of any
Change in Control (as defined below); and an exercise price for all options of
the lower of $4.29 or fair market value per common share (as adjusted for stock
dividends, stock splits, recapitalization, or similar events).
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 fifty-one percent (51%) or more of the
outstanding voting securities of Medifax, Inc. (b) Medifax, Inc. is merged or
consolidated with another entity and, as a result of such merger, reorganization
or consolidation, less than fifty-one percent (51%) 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 fifty-one percent (51%) 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, fifty-one percent (51%) 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. 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 Medifax 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 ten days of vacation time off in the 1996
calendar year, and a minimum of fifteen days (but not less than other
same level executives of the Company) in each subsequent calendar year,
in each case as part of the Company's regular vacation policy and
without any carry-over of vacation days or any conversion rights. You
will also be entitled to time off for Company recognized holidays as
well as sick days.
3
Mr. Xxxxxx Xxxx
July 2, 1996
Page 3
(b) You will be eligible to participate in all other employee benefit
plans maintained by Medifax, Inc. for which regular, full-time
employees of the Company 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 be reimbursed for moving costs and real estate transaction
costs for your relocation to Cleveland, Ohio of up to $35,000 upon
submission of documentation regarding moving-related expenses and
costs.
(d) You will be reimbursed for reasonable house hunting costs including
travel and lodging for spouse.
(e) You will be reimbursed for the cost of professional dues and
continuing education.
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., vacation, 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. An appropriately furnished
and equipped office will be maintained for you in Cleveland, Ohio; with 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, including reimbursement for the normal costs
of commuting between your residence and a required working location. 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
products, and/or other such services and products, developed, provided, sold
and/or marketed by the Company during the term of your employment, in any county
in any state within the continental United States in which the
4
Mr. Xxxxxx Xxxx
July 2, 1996
Page 4
Company is providing those services and products so long as you remain an
employee of the Company, and for a period of two (2) 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 customers or any of its employees or agents, unless
you first obtain the Company's written consent. We both agree that
"solicitation" of a Company customer means any attempt on your part (or by
others, acting at your direction) (a) to solicit, sell, provide, or offer to
sell or provide, to any customer or prospective customer of the Company any
medical transcription products or services, or any products or services, which
the Company develops, sells or provides during the term of your employment by
Medifax within the same territories covered by the noncompetition commitment, or
(b) to solicit or induce any employee or agent of Medifax to terminate their
his/her employment or contractual relationship with Medifax, 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 Company, or any of its officers, directors,
employees, agents and affiliates, its products or practices. You agree to abide
by this commitment so long as you remain 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 Company. 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 Company 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 Company--in advance--that such a disclosure may be required or compelled and
the Company has an adequate opportunity to contest the disclosure (with your
cooperation, if to a Company believes such cooperation is needed).
5
Mr. Xxxxxx Xxxx
July 2, 1996
Page 5
As part of this commitment, you acknowledge and agree to
immediately return to the Company 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 Medifax.
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 Company'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 Company 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 Company 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. For purposes of this letter agreement, "Cause" means:
(ii) Your indictment for any felony, or any crime
involving fraud, deceit, or moral turpitude;
(iii) Fraud, embezzlement, or knowing or intentional
dishonesty relating to the operations of the Company.
(iv) 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
(v) 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
6
Mr. Xxxxxx Xxxx
July 2, 1996
Page 6
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 Executive
Officer or Board of Directors.
(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 Medifax 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
plus minimum bonus 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.
(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
(ii) You refuse to execute a release of the Company and its
officers of any and all liability arising out of your
employment or separation from employment other than those
obligations arising under this Agreement.
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.
7
Mr. Xxxxxx Xxxx
July 2, 1996
Page 7
(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
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.
8
Mr. Xxxxxx Xxxx
July 2, 1996
Page 8
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
----------------------------------
Xxxxxx X. Xxxxx, President & CEO
ACCEPTED AND AGREED:
By: /s/ Xxxxxx Xxxx
-----------------------------
Xxxxxx Xxxx
6/4/98
-----------------------------
Date
