EXHIBIT 10
EMPLOYMENT AGREEMENT, dated as of February 3, 1997, between Physician
Support Systems, Inc., a Delaware corporation (the "Company"), and Xxxxx
Xxxxxxxxx (the "Employee").
The Company is acquiring all of the issued and outstanding capital
stock of Physerv Solutions, Inc., a Michigan corporation ("PSI") in a purchase
transaction involving the Company, PSI Acquisition Corp., a Michigan corporation
and wholly-owned subsidiary of PSS, and the shareholders of PSI (the
"Purchase"). Employee acknowledges and agrees that this Agreement is being
entered into in connection with the sale of all of his shares of capital of PSI.
The Company desires to employ Employee, and Employee desires to be
employed by the Company, on the terms and subject to the conditions set forth
herein.
As a material inducement to the Company to consummate the Purchase,
the Company desires that Employee enter into the covenants set forth in Section
5 hereof, and Employee agrees to enter into such covenants. Employee's
execution of this Agreement is a condition to the Company's obligation to
consummate the Purchase.
Based upon the mutual covenants and consideration set forth herein,
the sufficiency of which is hereby acknowledged, the parties agree as follows:
Section 1. Duties.
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1.1. Scope. (a) During the Employment Period (defined below),
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Employee shall perform senior management services as Director of National
Anesthesia Services requiring substantially the same time commitment and
encompassing substantially the same responsibilities as Employee has, in good
faith and in the ordinary course of business, performed for PSI prior to the
Purchase, shall, along with other management staff of the Company and its
affiliates, perform transition and integration services in connection with the
acquisition of PSI by the Company, and shall perform such other services as
Employee and PSI may, from time to time, agree (collectively, the "PSI
Services"). During the Employment Period, Employee shall hold the office of
President and Chief Executive Officer of PSI, and in such capacity will have the
authority to make personnel decisions (including hiring and dismissal) with
respect to the employees of PSI. During the Employment Period, in the
performance of the PSI Services, Employee shall report to and be subject to the
authority of the Board of Directors of PSI (the "PSI Board").
(b) During the Employment Period, Employee shall also hold the office
of President and Chief Executive Officer of Spring Anesthesia Group, Inc., a
California corporation and subsidiary of the Company ("Spring"), shall perform
senior management services with respect to Spring, and shall perform such other
services as Employee and Spring may, from time to time, agree (collectively, the
"Spring Services" and, together with the PSI Services, the "Services"). In such
capacity, Employee will have the authority to make personnel decisions
(including hiring and dismissal) with respect to the employees of Spring.
During the Employment Period, in the performance of the Spring Services,
Employee shall report to and be subject to the authority of the Board of
Directors of Spring (the "Spring Board").
1.2. (a) Performance. During the Employment Period, Employee will
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render the Services in conformity with professional standards and in a prudent
and workmanlike manner. Employee shall promote the interests of the Company,
Spring and PSI in carrying out Employee's duties and shall not deliberately take
any action which could, or fail to take any action which failure could,
reasonably be expected to have a material adverse effect upon the business of
the Company, Spring, PSI or their respective affiliates.
(b) Employee shall, to the same extent as officers of the Company's
other subsidiaries, be indemnified from any and all liabilities (including
reasonable attorney's fees and costs) incurred by reason of the fact that on and
after the date hereof Employee is an employee of the Company; provided that such
indemnity shall be pursuant to the Company's certificate of incorporation and
bylaws. To the same extent as officers of the Company's other subsidiaries,
Employee shall as an officer of PSI and Spring be covered by liability insurance
against liabilities as to which Employee is permitted to be indemnified by the
Company's, Spring's or PSI's, as the case may be, certificate of incorporation
or bylaws.
Section 2. Term. The initial term of employment of Employee by the
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Company hereunder shall commence upon the date of this Agreement (the
"Commencement Date") and end on the fifth anniversary of the Commencement Date,
unless extended on terms agreed upon between Employee and the Company (such
term, as the same may be extended or terminated as set forth herein, being
hereinafter referred to as the "Employment Period"). The Employment Period
shall automatically be extended for succeeding one-year periods unless, at least
180 days prior to the expiration of the then current Employment Period, Employee
gives notice to either PSI or Spring, as the case may be, or the PSI Board or
Spring Board, as the case may be, gives notice to Employee, of such party's
intention not to extend the Employment Period. If such notice is given as to
either PSI or Spring, the Employment Period shall continue as to the other
company pursuant to the terms of this Agreement; if such notice is given as to
both PSI and Spring, the Employment Period shall terminate at the end of the
then current Employment Period. The Employment Period may be earlier terminated
pursuant to the provisions of this Agreement.
Section 3. Compensation.
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3.1. Salary. As compensation for the Services, the Company shall pay
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to Employee an annual base salary of $250,000 during the first year of the
Employment Period and $375,000 during each of the remaining years of the
Employment Period, payable in equal installments in accordance with the
Company's normal payroll practices (the "Salary"). Each of the PSI Board and
Spring Board shall annually review Employee's, and PSI's and Spring's
performance, respectively, during the preceding year, and in their respective
sole discretion, may award Employee a bonus for such preceding year and/or
increase Employee's base salary for the then current year.
3.2. Employee Stock Options. Employee shall be eligible to
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participate in the Company's 1996 Stock Option Plan on a basis comparable to
senior executive officers of the Company. Grants to Employee pursuant to the
1996 Stock Option Plan shall be at the discretion of the administrator of the
1996 Stock Option Plan, and shall be consistent with the objectives of the plan
and the Company's senior management compensation policies.
3.3. Reimbursement. Pursuant to the Company's standard reimbursement
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policies, the Company shall reimburse Employee for all reasonable out-of-pocket
expenses including, without limitation, all automobile expenses including
cellular phone, insurance and
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maintenance, incurred by Employee directly related to the performance by
Employee of the Services. Employee shall account for such expenses in accordance
with the Company's reasonable record-keeping requirements.
Section 4. Employee Benefits. During the Employment Period,
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Employee shall be eligible for the employee benefits (including, without
limitation, medical coverage) generally provided by the Company to its senior
management employees. The Company reserves the right to expand, restrict,
designate or eliminate the benefits provided to Employee so long as such
expansion, restriction, designation or elimination applies generally to all of
the Company's senior management employees. Employee shall be entitled to
vacations consistent with the Company's vacation policy for senior management
employees.
Section 5. Non-Competition; Non-Disclosure.
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5.1. Clients. Employee recognizes and acknowledges that, after the
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Commencement Date, (a) all clients and/or accounts serviced by the Company, PSI,
Spring or any other affiliates of the Company (collectively, "affiliates"),
Employee or the Company's or its affiliates' other employees during Employee's
employment with the Company, including all clients and/or accounts acquired due
to Employee's efforts during the term of Employee's employment with the Company,
are the clients and accounts of the Company or its affiliates, as the case may
be (collectively, "Existing Accounts"), and (b) all businesses or individuals
who (i) have been contacted by Employee, the Company, or any of its affiliates
with a view toward having such business or entity retain the Company or any of
its affiliates, to provide services or (ii) are known to Employee as a result of
his employment with the Company are prospective clients and accounts of the
Company, or its affiliates, as the case may be (collectively, "Prospective
Accounts," and, with Existing Accounts, "Client Accounts").
5.2. Non-Disclosure. (a) Except as provided in this Section 5.2,
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Employee shall not, during or after the Employment Period, disclose any
confidential or proprietary information of the Company or any of its affiliates
to any person, firm, corporation, association or other entity for any reason or
purpose whatsoever (other than to the Company, its affiliates, or officers or
employees thereof and then only in the normal course of business on a need to
know basis after Employee has received assurances that the confidential or
proprietary information shall be kept confidential), nor shall Employee make use
of any such confidential or proprietary information for his own purpose or for
the benefit of any person, firm, corporation or other entity, except the
Company, or its affiliates. As used herein, the term "confidential or
proprietary information" means all information which is or becomes known to
Employee and relates to matters such as trade secrets, research and development
activities, business or financing plans, acquisition opportunities, computer
software, books and records, customer or potential customer lists (including,
without limitation, any list of Client Accounts or any part thereof), vendor
lists, suppliers, distribution channels, pricing information and private
processes as they may exist from time to time; provided that the term
"confidential or proprietary information" shall not include information that is
or becomes generally available to the public (other than as a result of a
disclosure in violation of this Agreement by Employee or a person who received
such information from Employee).
(b) If Employee is requested or required by law or judicial order to
disclose any confidential or proprietary information, Employee shall provide the
Company with prompt notice of any such request for such information or
requirement so that the Company may seek an appropriate protective order or
waiver of Employee's compliance with the provisions of this
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clause. Employee will not oppose action by, and will cooperate with, the Company
to obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the confidential or proprietary
information. During the Employment Period, and for matters arising from events
or circumstances occurring during the Employment Period, the Company will
provide for the defense of matters arising under this provision.
(c) Employee agrees that Employee will promptly and fully disclose
to the Company (i) all inventions, ideas, trade secrets or know-how (whether
patentable or copyrightable or not) made or conceived by Employee (either solely
or jointly with others) during the Employment Period and which shall in any way
relate to the business conducted or contemplated to be conducted by the Company
or any of its affiliates; and (ii) all tangible work product (whether in the
nature of developed ideas, know-how, trade secrets and similar intellectual
property) and inventions (whether patentable or copyrightable or not) made or
conceived by Employee (either solely or jointly with others) during the
Employment Period which relates in any way to the business conducted or
contemplated to be conducted by the Company or any of its affiliates; and all
such inventions, ideas, trade secrets and know-how shall be and remain the sole
and exclusive property of the Company. At the request of the Company, Employee
shall, during the Employment Period, without charge to the Company, but at the
expense of the Company, assist the Company in any reasonable way to vest in it
title to all such inventions, ideas, trade secrets and know-how and to obtain
any patents, trademarks or copyrights thereon in all countries throughout the
world. In this regard, Employee shall execute and deliver any and all documents
that the Company may reasonably request, including applications for patents,
copyrights and assignments thereof.
5.3. Restrictive Covenant. Employee hereby acknowledges and
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recognizes Employee's possession of confidential or proprietary information and
the highly competitive nature of the business of the Company and its affiliates
and accordingly agrees that, in consideration of the Company causing the
Purchase to be consummated, the Company's entering into this Agreement, and the
premises contained herein, Employee will not, from and after the Commencement
Date and for the period ending on the later of (a) five years after the date of
this Agreement and (b) three years after the date of termination of the
Employment Period, either individually or as an officer, director, employee,
partner, agent or principal of another business firm (i) directly or indirectly
engage in the United States in any competitive business (including seeking or
accepting employment with a Client Account), (ii) assist others in engaging in
any competitive business in the manner described in the foregoing clause (i),
(iii) solicit, professionally contract or provide medical billing, accounts
receivable, accounting, financial or consulting services to any Client Account
or (iv) induce employees of the Company, or any of its affiliates to terminate
their employment with the Company or such affiliates or hire any employees of
the Company or any of its respective affiliates to work with Employee or any
business firm affiliated with Employee. After the termination of the Employment
Period, the determination of what businesses are competitive with the Company or
its affiliates shall be based upon the business of the Company and its
affiliates on the date of termination of the Employment Period.
5.4. Remedies. Employee acknowledges that the Company may elect to
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specifically enforce Section 5.1, 5.2 or 5.3 by injunctive or other equitable
remedies (as provided in Section 8.4) or, in the alternative, seek damages as a
result of Employee's breach of the agreements set forth in such section.
Employee recognizes that the right to service each Client Account is a valuable
asset of the Company and its affiliates and that the precise value of the loss
of such asset may be difficult to measure in monetary sums.
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Section 6. Termination.
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6.1. Death or Disability. If the Employee should die during the
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Employment Period, the Employment Period shall terminate as of the date of
death. If the Employee becomes unable to perform the Services reasonably
satisfactorily for at least 180 consecutive days during the Employment Period
due to a physical or mental disability, the Company may elect to terminate the
Employment Period at any time thereafter, provided the Employee still suffers
from such disability; and the Employment Period shall terminate as of the date
of such election. All disabilities shall be certified by a physician reasonably
acceptable to Employee and to the Company. The Employee's failure to submit to
any physical examination by such physician after such physician has given
reasonable notice of the time and place of such examination shall be conclusive
evidence of the Employee's inability to perform his duties hereunder.
6.2. Cause. The Company, at its option, may terminate the Employment
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Period and all of the obligations of the Company hereunder for Cause. For the
purposes of this Agreement, the Company shall have "Cause" to terminate the
Employee's employment hereunder in the event of (i) the Employee's conviction
of, or plea of guilty or nolo contendere to (A) a felony or (B) a fraudulent or
deliberately dishonest act which results in a material adverse effect on the
Company, (ii) the Employee's material breach of this Agreement or (iii) the
Employee's gross negligence or bad faith in the performance of the Services.
6.3. Payments in the Event of Termination. If the Employment Period
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is terminated or expires pursuant to Section 1 or Section 6, the Company shall
pay the Employee any Salary earned to the date of such termination or
expiration, as the case may be.
6.4. Termination Obligations. Upon a termination of the Employment
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Period, all obligations of the Company with respect thereto shall terminate,
except as specifically set forth in Section 6.3.
Section 7. Transition. In the event of termination of the
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Employment Period, Employee shall use Employee's best efforts to assist the
Company in maintaining the Company's and its affiliates' professional
relationship with all Client Accounts. To such end, Employee shall cooperate
and assist the Company, at the Company's direction and instruction, to retain
and transition each Client Account during the transition period between the
receipt of notice of the termination of employment and the final day of
employment.
Section 8. Miscellaneous.
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8.1. Assignment; Benefit. This Agreement is personal in its nature
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and the parties shall not, without the prior written consent of the other,
assign or transfer this Agreement or any rights or obligations hereunder;
provided that the provisions hereof shall inure to the benefit of, and be
binding upon, each successor of the Company, whether by merger, consolidation or
transfer of all or substantially all of its assets. PSI and Spring shall be
third party beneficiaries of this Agreement with respect to Employee's provision
of the PSI Services and the Spring Services, respectively.
8.2. Notices. All notices, requests and other communications to any
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party hereunder shall be in writing and sufficient if delivered personally or
sent by telecopy (with confirmation of receipt) or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
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If to the Company, at:
Physician Support Systems, Inc.
Xxxxx 000 xxx Xxx-Xxxxxxx Xxxx
X.X. Xxx 00
Xx. Xxx, Xxxxxxxxxxxx 00000
Telecopy: 717-653-0567
Attention: Xxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx III
If to the Employee, at:
Xxxxx Xxxxxxxxx
000 X. Xxxxx Xx. #000
Xxx Xxxxx, XX 00000
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Each such
notice, request or communication shall be deemed to have been given when
received or, if given by mail, when delivered at the address specified in this
Section 8.2 or on the fifth business day following the date on which such
communication is posted, whichever occurs first.
8.3. Entire Agreement; Amendments and Waivers. This Agreement
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represents the entire agreement between the parties with respect to the subject
matter hereof and supersedes all negotiations and prior agreements. No
amendment, alteration, modification, or waiver of any provision of, or consent
required by, this Agreement, nor any consent to any departure herefrom, shall be
effective unless it is in writing and signed by the parties hereto. Such
amendment, alteration, modification, waiver or consent shall be effective only
in the specific instance and for the purpose for which given.
8.4. Specific Performance. In the event of a breach or threatened
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breach by Employee of the provisions of Section 5, the Company shall be entitled
to an injunction restraining Employee from such breach. Nothing contained
herein shall be construed as prohibiting the Company from pursuing any other
remedies available at law or equity for such breach or threatened breach of this
Agreement nor limiting the amount of damages recoverable in the event of a
breach or threatened breach by Employee of the provisions of Section 5. Without
limiting the generality of the foregoing, Employee acknowledges that, in the
event of a breach or threatened breach by him of any of the provisions of
Section 5, the Company's damages may exceed the value of the consideration
received by Employee in the Purchase.
8.5. Enforceability. It is the desire and intent of the parties
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hereto that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
8.6. Acknowledgment. Employee acknowledges that Employee has read
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this Agreement and has been afforded the opportunity to discuss and review this
Agreement
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with the Company and/or an attorney of Employee's choice. Employee understands
that execution of this Agreement and acceptance of its terms are conditions to
the Company causing the Purchase to be consummated and to Employee's employment
with the Company.
8.7. Headings. Descriptive headings are for convenience only and
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shall not control or affect the meaning or construction of any provision of this
Agreement.
8.8. Counterparts. This Agreement may be executed in any number of
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counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.9. Previous Agreement Terminated. The Employment Agreement,
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dated January 1, 1992, between Medical Billing Corporation of America, Inc., a
predecessor of PSI, and Employee has terminated and is no longer of any force or
effect.
8.10. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, AND
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CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
PHYSICIAN SUPPORT SYSTEMS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx III
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Name: Xxxxxxxx X. Xxxxxx III
Title: Executive Vice President
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
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