Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
July 1, 1998 by and between NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION, a
Nevada corporation ("the Company"), and XXXXX XXXXX, JR., a resident of the
State of Florida ("Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the provision of medical billing
services to the public; and
WHEREAS, Employee warrants that he is the owner and operator of a
medical billing business with its principal business office being located at
0000 X.X. 00xx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000 and desires to continue
to remain active in the medical billing business by rendering services to the
Company on the terms and conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises in this
Agreement and the payments to be made or received by each party, the Company and
Employee agree as follows:
ARTICLE I. DEFINITIONS
Capitalized terms used in the Agreement shall have their defined meaning
throughout the Agreement. The following terms shall have the meanings set forth
below, unless the context clearly requires otherwise.
1.1 Commencement Date means July 1, 1998.
1.2 Confidential Information means information that is proprietary
to the Company or proprietary to others and entrusted to the
Company, to the extent such information is a trade secret
under applicable law.
1.3 Full-Time means 5 days per week for 46 weeks per year.
1.4 DELETED
1.5 Territory means the geographical area with the boundaries of
the Counties of Dade, Broward, Monroe, Xxxxxxx and Palm Beach
in the State of Florida.
ARTICLE II. EMPLOYMENT, DUTIES AND TERM
2.1 Employment. Upon the terms and conditions set forth in this
Agreement, the
1
Company hereby employs Employee, and Employee
accepts such employment by the Company.
2.2 Services and Duties.
(a) During the term of his Agreement, and excluding any
periods of personal time to which Employee is entitled,
Employee agrees to devote his best efforts and attention
during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the
responsibilities assigned to Employee hereunder, to use
Employee's best efforts to perform faithfully and efficiently
such responsibilities, to abide by the policies And procedures
of the Company and to accept no other gainful employment
without the consent of the Company. Employee will work
full-time as a staff employee of the Company, the duties and
responsibilities of which are set forth in Exhibit "A"
attached hereto.
(b) All monies paid to or received by Employee for teaching,
research, honoraria, writing and the like, shall be income to
and the property of Employee;
(c) Employee shall perform the services required hereunder
principally at 0000 X.X. 00xx Xxxxxx, Xxxxx 000, Xxxxx,
Xxxxxxx and at such other locations as the Company shall
reasonably direct.
2.3 DELETED
2.4 Certain Proprietary Information. If Employee possesses any
proprietary information of another person or entity as a
result of. prior employment or relationship, Employee shall
honor any legal obligation that Employee has with that person
or entity with respect to such proprietary information.
2.5 Term. The employment pursuant to this Agreement shall begin on
the Commencement Date and shall end on the day immediately
prior to the fifth anniversary of the Commencement Date year,
unless sooner terminated as set forth in Article IV hereof.
At the expiration of the initial five-year term of this
Agreement, Employee shall have the option (the exercise of
which must be given in writing at least 180 days prior to
the end of the initial term) to renew this Agreement for
two (2) additional five-year period upon the same terms and
conditions as set forth in this Agreement.
In the event that Employee should remain employed with the
Company beyond the term of this Agreement and no new
employment agreement has been executed: (a) Employee shall be
deemed an employee at will, and his employment may then be
terminated upon ninety (90) days written notice by either
party, and (b) all
2
terms and conditions of this Agreement shall continue to
apply.
ARTICLE III. COMPENSATION, BENEFITS AND EXPENSES
3.1 Compensation. During the term of Employee's employment by the
Company, Employee shall -be entitled to compensation in
consideration of his services hereunder equal to: SIXTY
PERCENT (60%) of the "Net Income" (as hereinafter defined) of
the Company attributable to services rendered at 0000 X.X.
00xx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000 (the "Business"),
less any compensation paid by the Company to Xxxxx Xxxxx, Sr.
and Xxxxxxx Xxxxx, consistent with the example of the
compensation pool described in Exhibit "B" attached hereto.
The Company shall pay Employee an advance or draw against
anticipated compensation due hereunder, in the sum of $96,000
per annum, payable semi-monthly in accordance with the
Company' s customary payroll practices. This advance or draw
is not additional or guaranteed compensation, and shall be
reconciled on the first anniversary date of this Agreement and
thereafter on a quarterly basis against the actual
compensation due under this Agreement.
3.2 Net Income. "Net Income" shall be computed in accordance with
generally accepted principles using the accrual method of
accounting and shall be equal to net revenues for the period
in question, initially commencing on the Commencement Date,
less: (a) all direct operating expenses of the Company for the
period in question, including but not limited to, all
employees' salaries, compensation and benefits (other than to
the Employee, Xxxxx Xxxxx, Sr. and Xxxxxxx Xxxxx), rent,
office and supplies, payroll taxes, health insurance, general
liability insurance, telephones, computers, repairs and
maintenance, equipment rental and leases; (b) depreciation and
amortization over a 5-year period of leasehold improvements,
equipment, Other fixed assets and intangibles purchased after
the Commencement Date; (c) interest costs associated with the
acquisition of fixed assets and intangibles for the Business
after the Commencement Date; and (d) an allowance of four
percent (4%) of net revenues for corporate overhead/management
services. For purposes of this Agreement, the term "net
revenues" shall mean gross revenues, minus contractual
adjustments and uncollectible accounts, computed on an accrual
basis in accordance with generally accepted accounting
principles consistently applied.
3.3 Personal Time. Employee shall be entitled during the term of
this Agreement to absent himself voluntarily or due to actual
illness from the performance of his employment under this
Agreement, all such voluntary absences to count as personal
time, provided that:
3
(a) Such personal time shall not exceed six (6) work weeks (30
working days) during each calendar year (prorated for any
partial calendar year) during the period Employee is employed
Full-Time hereunder.
(b) The timing of personal time shall be scheduled in a
reasonable manner that is consistent with the best interest of
the Company.
(c) In addition to the aforesaid personal time, Employee shall
be entitled to. the following holidays: New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. In addition, Employee shall be entitled to
take as holidays any additional days that the Company is
closed for a holiday.
(d) Employee shall not be entitled to receive any additional
compensation from the Company (or to receive any additional
compensation upon termination or expiration of employment) on
account of his failure to take personal time. Unused personal
time during a calendar year may not be used in a subsequent
calendar year.
Vacation time, educational and sick leave (other than for
educational activities the cost of which is reimbursed under
Section 3.6 hereof) shall be deemed personal time, and shall
be subject to the provision of this Section 3.3.
Business-related travel away from the office, for which
expenses are reimbursed pursuant to Section 3.6 below, shall
not be treated as personal time.
3.4 Employee Benefits. During the term of the Employee's
employment under this Agreement, Employee shall be entitled to
participate in all of the employee benefit programs which are
available to the Company.
3.5 Office and Facilities. During the term of Employee's
employment under this Agreement, the Company shall provide
Employee the use of the Company's facilities and support
services.
3.6 Business Expenses. During the term of Employee's employment
under this Agreement, the Company shall bear all ordinary and
necessary business expenses incurred by Employee on behalf of
Company, in accordance with, and' to the extent of, its
uniform policies effect from time to time and subject to
Internal Revenue Service guidelines for business expense
reimbursement. Employee is responsible to promptly account for
such expenses to the Company in the manner prescribed from
time to time by the Company, including such records as are
required by the Internal Revenue Service.
Notwithstanding anything to the contrary in the preceding
paragraph, the Company
4
shall reimburse Employee up to $10,000 annually (which shall
accrue ratably on a monthly basis) for dues, continuing
education seminars and association meeting expenses (including
travel expenses related thereto), journals and books and fees,
automobile expenses, entertainment and any other expenses for
which Employee presents receipts as required by Internal
Revenue Service regulations (the "Expense Allowance"), such
expenses to be reimbursed to Employee within thirty (30) days
following delivery of such receipts to the Company.
Fifty percent (50%) of the difference between $10,000 and the
Expense Allowance during any calendar year shall be paid to
Employee in cash within forty-five (45) days following the end
of such calendar year. This amount shall be in addition to the
compensation due under Section 3.1 hereof.
ARTICLE IV. EARLY TERMINATION
4.1 Early Termination. Subject to the respective continuing
obligations of the parties elsewhere provided in this
Agreement, this Article IV sets forth the terms for early
termination of Employee's employment under this Agreement.
4.2 No Termination Without Cause. This Agreement may not be
terminated without cause.
4.3 Termination by the Company for Cause. The Company may
terminate Employee's employment under this Agreement effective
immediately for cause. For purposes of this Agreement, "Cause"
means (a) an act or acts of personal dishonesty taken by
Employee resulting in personal enrichment of Employee at the
expense of the Company, (b) any material breach by Employee of
his duties and other obligations under this agreement, after
written notice and thirty (30) days in which to cure the same,
(c) if Employee is convicted of or pleads nolo contendre (or
equivalent) with respect to, a felony or a crime involving
moral turpitude,(d) if any representation of Employee to the
Company is materially untrue and Employee knew or should have
known the representation was untrue, (e) habitual absenteeism
(in excess of personal time permitted hereunder), alcoholism
or any form of drug abuse having an adverse effect on
Employee's performance of his duties or an adverse effect on
the Company, and (f) intentional conduct or activities
(excluding conduct or activities engaged in by Employee in
good faith exercise of his business judgment on behalf of the
Company) materially damaging to the Company.
4.4 Termination in the Event of Death. Employee's employment under
this Agreement shall terminate in the event of Employee's
death.
4.5 Notice of Termination; Date of Termination. The provisions of
this Section 4.5
5
shall apply in connection with any early termination of
Employee's employment under this Agreement pursuant to this
Article IV.
(a) For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate
the specific termination provisions in this Agreement
relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide the
basis for such termination.
(b) For purposes of the Agreement, "Date of Termination"
shall mean: (1) if Employee's employment is
terminated due to death, the day Employee's death
occurs; (2) if Employee's employment is terminated by
the Company for Cause, the date specified in the
Notice. of Termination; (3) if Employee's
employment is terminated by mutual agreement of the
parties, the date specified in such agreement; (4) if
this Agreement is terminated pursuant to Section 4.2
hereof, the date specified in the Notice of
Termination, which in no event shall be a date
earlier than one hundred and eighty (180)'calendar
days after the date on which a Notice of
Termination is given, unless an earlier date has been
expressly agreed to by Employee in writing either in
advance of, or after, receiving such Notice of
Termination; or (5) in any other instance not
referred to in clauses (1) through (4) above, the
last day of Employee's employment with the Company.
4.6 Compensation upon Termination of Employment. Upon termination
of Employee employment under this Agreement, the Company
shall, within thirty (30) days following the Date of
Termination, pay any amounts earned by Employee and reimburse
Employee amounts due for reimbursable business expenses
incurred by Employee through the Date of Termination and any
additional amounts due Employee in accordance with the terms
of any Plan. Upon termination of employment for any reason
whatsoever, Employee shall not be entitled to be paid for any
accumulated (but unused) personal time under Section 3.2.
4.7 Termination by Employee. In the event that (i)the Company is
determined to be guilty of criminal activity and has exhausted
its right to appeal such determination, or (ii) any payment
owed to Employee under Article III hereof is not made when due
and such default is not cured within thirty (30) days after
Employee gives the Company written notice of such default,
then Employee may, within ten (10) days thereafter, give
written Notice of Termination of this Agreement to the Company
and in such case the provisions of Section 6.2 and Section 6.3
hereof shall not apply. In the event Employee terminates this
Agreement under this Section 4.7, then Employee shall be
entitled to compensation paid or accrued (whichever is
greater) under Section 3.1 hereof through the Date of
Termination.
6
4.8 Termination by Exercise of Buy-Back Right. This Agreement is
subject to that certain Buy-Back Agreement dated as of the
even date hereof between the Company and Advanced Physician
Billing Inc., and this Agreement shall terminate in its
entirety in accordance with the terms of said Buy-Back
Agreement.
ARTICLE V. CONFIDENTIAL INFORMATION
Prohibitions Against Use. Employee will not during or
subsequent to the termination or expiration of Employee's
employment under this Agreement use or disclose, other than in
connection with Employee's employment with the Company, any
Confidential Information to any person not employed by the
Company or not authorized by the Company to receive such
Confidential Information, without the prior written consent of
the Company. Employee will use reasonable and prudent care to
safeguard and protect and prevent the unauthorized use and
disclosure of Confidential Information. The obligations
contained in this Section 5.1 will survive for as long as the
Company in its sole judgment considers the information to be
Confidential Information.
ARTICLE VI. NON-COMPETITION
6.1 Acknowledgements. Employee agrees and acknowledges that: (i)
he shall be in a position of confidence and trust with the
Company and he shall have access to Confidential Information;
(ii) the nature and periods of restrictions imposed by the
covenants set forth in this Article VI are fair, reasonable
and necessary to protect and preserve for the Company the
benefits of this Agreement and that such restrictions shall
not prevent this Employee from earning a livelihood; (iii) the
Company would sustain irreparable loss and damage if Employee
were to breach any of such covenants; (iv) the Territory is
reasonably sized inasmuch as the business of the Company is
conducted over a wide geographical area and is based on
serving customers in the entire Territory to be successful;
and (vi) the covenants herein set forth are made as an
inducement to and have been relied upon by the Company in
entering this Agreement. Employee represents and warrants that
Employee has not, prior to the date hereof, disclosed to any
person or used or otherwise exploited for Employee's own
benefit or for the benefit of any other person any
Confidential Information.
6.2 Non-Competition by Employee. Employee agrees that, during the
term of his employment by the Company and for i a period of
two (2) years following the termination or expiration of
Employee's employment with the Company for any reason,
Employee will not directly or indirectly, alone or as a
partner, officer, director, shareholder or employee of any
other firm, engage in any commercial activity in competition
with any part of the Company's business as conducted
7
during the term of the Agreement or as of the date of such
termination or expiration of employment or with any part of
the Company's contemplated business with respect to which
Employee has Confidential Information as governed by
Article VI, within the Territory.
6.3 Solicitation of Customers. Employee will not solicit any
person or entity who is or was a customer of the Company, for
a period of two (2) years after the termination or expiration
of Employee's employment with the Company for any reason.
6.4 Covenant Not to Recruit. Employee recognizes that the Company
workforce represents a substantial financial and educational
investment and constitutes an important and vital aspect of
its business. Employee agrees that, during the term of his
employment by the Company and for a period of two (2) years
following the termination or expiration of Employee's
employment with the Company for any reason whatsoever, he
shall not solicit, or assist anyone else in the solicitation
of, any of the Company's then current employees to terminate
their employment with the Company and to become employed by
any business enterprise with which Employee may then be
associated, affiliated or connected.
6.5 Severability. If any of the provisions of this Article VI
should in whole or part be held invalid in a final judgment by
a court of competent jurisdiction, such invalidity shall not
affect the validity of the rest of this Article VI, the
parties intending that such provision be severable.
6.6 Injunctive Relief. The parties hereto recognize and hereby
acknowledge that it is impossible to measure in money the
damages which would result to the Company or its successors or
assigns by reason of a failure by Employee to perform any of
the obligations imposed upon him under Article VI of this
Agreement. Therefore, the Company or its successors or assigns
shall be entitled to injunctive and other equitable relief to
enforce the terms of Article VI of this Agreement If the
Company or its successors or assigns should institute an
action or proceeding to enforce the provisions of Article VI
hereof, Employee hereby waives the claim or defense that any
such party has an adequate remedy at law, and Employee shall
not urge in any action or proceeding the claim or defense that
such a remedy at law exists. At the discretion of the court or
arbitrator before which an injunctive proceeding is brought,
the running of the covenants herein may be tolled and extended
for a period of time equal to the time period Employee shall
be in violation of any such covenant.
ARTICLE VII. GENERAL PROVISIONS
7.1 DELETED
8
7.2 DELETED
7.3 Physical and Mental Condition. Employee represents that he is
in good physical and mental health, has no chronic illness nor
any prior physical or mental problems, the recurrence of which
would impair his ability to function under all the terms and
conditions of this Agreement.
7.4 Assignment. The Agreement is not assignable by Employee. This
Agreement may be assigned by the Company.
7.5 Offsets. Any amount payable to Employee pursuant to this
Agreement may be reduced for purposes of offsetting, either
directly or indirectly, any indebtedness or liability of
Employee to the Company.
7.6 Withholding. To the extent required by any applicable law,
including without limitation, any federal or state income tax
or excise tax law or laws, the Federal Insurance Contributions
Act, the Federal Unemployment Tax Act or any comparable
federal, state or local laws, the Company retains the right to
withhold such portion of any amount or amounts payable to
Employee under this Agreement as the Company deems necessary.
7.7 Governing Law; Arbitration. The validity and construction of
this Agreement shall be governed by the laws of the State of
Florida. The parties (meaning Employee on one hand and the
Company on the other hand) agree that all disputes concerning
this Agreement shall be submitted to binding arbitration in
accordance with the commercial arbitration rules of the
American Arbitration Association and the provisions contained
herein. The arbitration shall be conducted in Tampa, Florida,
by one arbitrator. The party initiating arbitration shall give
the other party notice of the matter in dispute and, if such
party is the obligor, shall deposit any disputed amount in
escrow during the pendency of the arbitration. If the parties
fail to agree upon an arbitrator within ten days after notice
of initiation of the arbitration is given, then the American
Arbitration Association shall select the arbitrator. All
determinations and the final decision of the arbitrator shall
be made in writing. The fees and expenses of the arbitrator
shall be awarded by the arbitrator in his discretion as part
of the award. The arbitrator's award shall be binding on the
parties hereto and may be entered in any court of competent
jurisdiction. The parties reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other
similar short term equitable relief prior to the appointment
of the arbitrator. The arbitrator will have the right to make
a final determination of the parties' rights including,
without limitation, whether to make permanent, modify or
dissolve the judicial order.
7.8 Rules of Construction. No provision of this Agreement shall be
construed against
9
or interpreted to the disadvantage of a party by reason of
such party having or being deemed to have drafted,
structured or dictated such provisions.
7.9 Waivers. No failure on the part of either party to exercise,
and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other
right or remedy granted hereby or by any related document or
by law.
7.10 Modification. This Agreement may not be modified or amended
except by written instrument signed by the parties hereto and,
if on behalf of the Company, only by its President.
7.11 Notices. All notices, demands and other communications
hereunder shall be written and shall be deemed to have been
duly given if delivered in person or mailed by certified mail,
postage prepaid, to the address set forth below:
To the Company: National Medical Financial
Services Corporation
0000 Xxxx Xx., Xxxxx 000
Xxxxxx, XX 00000
with a copy to: Xxxxx X. Xxxxxxx & Associates, P.C.
X.X. 000
Xxxxxxx, XX 00000-0000
To Employee: Xxxxx Xxxxx, Xx.
0000 X.X. 87th Ave., Suite 200
Miami, FL 3133
with a copy to: Xxxxxxxxxxx X. Xxxxx, Esq.
000 X. Xxxxxxx Xxx., Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
or to such other address as either party may designate by
written notice to the other. Notices delivered in person shall
be deemed delivered on the date of delivery and notices
mailed, as aforesaid, shall be deemed delivered forty-eight
(48) hours after the date mailed. Rejection or other refusal
to accept or inability to deliver because of a changed address
of which no notice was given shall be deemed to be a receipt
of the notice, request or other communication. Any notice,
request or other communication required or permitted to be
given by any party may be given by such party's legal counsel.
10
7.12 No Restrictive Covenants. Employee represents and warrants
that he is not subject to any restrictive covenant which would
prohibit or limit any of the services that Employee must
perform as contemplated by this Agreement.
7.13 Sole Employer; No Guarantor. The Company shall be the sole
employer of Employee hereunder, and no officer, director,
employee or shareholder of the Company shall be a guarantor of
this Agreement.
7.14 Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto in
reference to the subject matter hereof all the matters herein
agreed upon. This Agreement replaces in full all prior
employment agreements or understandings of the parties hereto,
and any and all such prior agreements or understandings are
hereby rescinded by mutual agreement.
7.15 Non-arbitral Attorneys Fees. In the event that a suit, action,
or other proceeding of any nature whatsoever (other than
arbitration), including, without limitation, any proceeding
under the U.S. Bankruptcy Code and involving issues peculiar
to federal bankruptcy law, any action seeking a declaration of
rights or any action for rescission, is instituted to
interpret or enforce this Agreement or any provision of this
Agreement, the prevailing party shall be entitled to recover
from the losing party the prevailing party's reasonable
attorneys', paralegals', accountants',and other experts'
professional fees and all other fees, costs, and expenses
actually incurred and reasonably necessary in connection
therewith, as determined by the judge at trial or other
proceeding, or on any appeal or review in addition to all
other amounts provided by law.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
EMPLOYEE: COMPANY:
/s/ Xxxxx Xxxxx, Jr. NATIONAL MEDICAL FINANCIAL
---------------------- SERVIVES CORPORATION
XXXXX XXXXX, Jr.
By: /s/ Xxxxxxx X. Xxxxxxx, M.D.
---------------------------------
CEO
Address: Address:
0000 X.X. 00xx Xxx., Xxxxx 000 0000 Xxxx Xxxxxx, Xxxxx 000
------------------------------ Sparks, NV 89431
Xxxxx, XX 00000
------------------------------
12
