MedGrup Corporation
EMPLOYMENT AGREEMENT
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This Agreement is made to be effective as of the 1st day of June, 2001, by
and between MedGrup Corporation, a Colorado corporation (the "Company") and Xx.
Xxxxxx Xxxxxx ("Employee").
W I T N E S S E T H:
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WHEREAS, the Company wishes to engage Employee's services upon the terms
and conditions hereinafter set forth; and
WHEREAS, Employee wishes to be employed by the Company upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual promises set
forth herein, the sufficiency of which is hereby acknowledged, the parties agree
as follows:
1. Employment; Duties.
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The Company hereby agrees to employ Employee effective as of the Effective
Date as its Vice President, Support Services, and in any other capacity as the
Company shall determine is necessary or appropriate in connection with the
operation of the Company, and Employee hereby agrees to serve in such capacity.
Employee's principal area of responsibility, subject to modification by the
Company, shall be to serve as the managing officer of Information Technology,
Consulting, and Compliance for the Company. The Employee shall at all times
report to and take direction from, the Chief Executive Officer (CEO) and/or the
Board of Directors, and shall perform such additional duties not inconsistent
with his position as shall be designated from time to time by the Company.
2. Best Efforts.
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Employee agrees to use his best efforts to promote the interests of the
Company and shall, except for illness, reasonable vacation periods and leaves of
absence, devote his full business time and energies to the business and affairs
of the Company. Employee shall be permitted to perform outside business
endeavors only with the approval of the CEO or the Board of Directors, subject
to non-competition agreements with the Company and provided that such outside
activities do not interfere with the performance of Employee's duties. Employee
may also engage in work for charitable, benevolent, civic or educational
purposes so long as such endeavors do not interfere with Employee's duties
hereunder.
3. Term of Agreement.
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The term of this Agreement shall commence on the date first above written
(the "Effective Date") and such term and the employment hereunder shall
continue, unless earlier terminated in accordance with the terms of Paragraph 5,
for a period of one year (the "Original Term"). The Original Term shall be
extended automatically for additional one-year periods (each a "Renewal Term")
unless notice that this Agreement will not be extended is given by either party
to the other at least 90 days prior to the expiration of the Original Term or
any Renewal Term. The period of employment of Employee by the Company,
commencing with the Effective Date and continuing until termination of the
employment by notice hereunder, in accordance with Paragraph 5 or otherwise
shall be known as the "Term of Employment."
0000 Xxxxxxxx Xxxxx x Xxxxx 000 x Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000 o Facsimile: (000) 000-0000
o Toll Free: 0-000-000-0000 o Website: xxx.xxxxxxx.xxx
MedGrup Corporation
4. Compensation.
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4.1 Base Salary.
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As compensation for Employee's services rendered hereunder, the Company
shall pay to Employee a base salary at an annual rate equal to Eighty Thousand
dollars ($80,000) (the "Base Salary"). The Base Salary shall thereafter be
increased annually at the greater of (i) five percent (5%) or (ii) such other
increase as may be approved by the Board of Directors. The Base Salary shall be
payable to Employee on a bi-weekly basis, in accordance with the Company's
standard policies for management personnel.
4.2 Incentive Compensation.
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With respect to each calendar year, or portion thereof, beginning with
calendar year 2001, Employee shall be eligible to receive incentive compensation
or a bonus, payable solely at the discretion of the CEO or the Board of
Directors.
4.3 Benefits.
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Employee shall be entitled to participate in all benefit programs
established by the Company and generally applicable to the Company's
Vice-Presidents. Employee shall also be reimbursed for reasonable and necessary
business expenses incurred in the course of his employment with the Company
pursuant to Company policies as established from time to time.
4.4 Company Vehicle or Vehicle Allowance.
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Employee shall be entitled to a Company-provided vehicle, if one is
available, or, at the Company's discretion, a monthly allowance of Seven Hundred
Dollars ($700.00).
4.5 Legal Fees.
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Employee shall not be entitled to reimbursement of any legal fees
associated with the negotiating, drafting and execution of this Agreement.
5. Termination of Employment Relationship.
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5.1 Death or Incapacity.
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This Agreement shall terminate immediately upon the death or Total
Disability of Employee, and in such event, the Employee shall have no further
claim against the Company for compensation or benefits hereunder. The Board of
Directors shall make a determination of the Total Disability of the Employee
based upon the definition of disability and terms contained in the Company's
disability insurance policy, or if none, based upon the inability of the
Employee to perform the material functions of his job. Any such determination by
the Board shall be evidenced by its written opinion delivered to the Employee.
Such written opinion shall specify with particularity the reasons supporting
such opinion and be manually signed by at least a majority of the Board.
5.2 Termination by the Company.
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The Company may terminate this agreement without Cause, for any reason, at
any time and, in such event, the term of employment shall terminate at the
termination date designated by the Company. The Company may also terminate this
Agreement for "Cause" and, in such event, the term of employment shall terminate
at the termination date designated by the Company. For the purpose of this
paragraph, "Termination for Cause" or "Cause" shall include the following:
(a) Breach of fiduciary duty or criminal conduct by the Employee
having the effect of materially adversely affecting the Company and/or its
reputation;
0000 Xxxxxxxx Xxxxx x Xxxxx 000 x Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000 o Facsimile: (000) 000-0000
o Toll Free: 0-000-000-0000 o Website: xxx.xxxxxxx.xxx
MedGrup Corporation
(b) Willful failure by the Employee to substantially perform his
duties hereunder;
(c) Engagement by the Employee in the use of narcotics or alcohol to
the extent that the performance of his duties is materially impaired;
(d) Material breach of the terms of this Agreement by the Employee or
failure to substantially comply with proper instructions of the CEO or the
Company's Board of Directors;
(e) Misconduct by the Employee which is materially injurious to the
Company; or
(f) Any act or omission on the part of the Employee not described
above, but which constitutes material and willful misfeasance, malfeasance,
or gross negligence in the performance of his duties to the Company.
Determination of any event or events and circumstances constituting "Cause"
shall be at the sole discretion of the CEO or the Board of Directors.
5.3 Termination by Employee.
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Employee may terminate this Agreement (resign from the Company) for any
reason at any time. However Employee's obligations under Paragraph 6 shall
survive any termination of this Agreement by Employee, by the Company or
otherwise.
Any termination by the CEO or the Board of Directors pursuant to Section
5.2 or by the Employee pursuant to section 5.3 shall be communicated by written
Notice of Termination to the other party hereto. Notice of Termination shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated.
5.4 Payment Upon Termination.
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(a) If this Agreement is terminated by the Company for Cause, or the
Employee resigns, prior to the completion of the Original Term or an ongoing
Renewal Term, Employee shall not be entitled to severance pay of any kind but
shall be entitled to all reasonable reimbursable business expenses incurred by
Employee and the Base Salary earned by Employee prior to the date of termination
or resignation, and all obligations of the Company under Paragraph 4 hereof
shall terminate upon the termination date designated by the Company, except to
the extent otherwise required by law.
(b) In the event that Employee is terminated without Cause, the Company
shall pay Employee three (3) month's Base Salary at the rate prevailing for
Employee immediately prior to such termination as severance pay, payable in
accordance with Company's normal payroll. Employee shall also be entitled to
receive health insurance benefits to which he was entitled immediately preceding
the date of termination for a period of three (3) months from date of
termination.
0000 Xxxxxxxx Xxxxx x Xxxxx 000 x Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000 o Facsimile: (000) 000-0000
o Toll Free: 0-000-000-0000 o Website: xxx.xxxxxxx.xxx
MedGrup Corporation
6. Non-Competition Agreement.
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6.1 Competition; Confidential Information.
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The Employee and the Company recognize that due to the nature of his
engagements hereunder, and the relationship of the Employee to the Company, the
Employee has had access to and has acquired, will have access to and will
acquire, and has assisted in and may assist in developing, confidential and
proprietary information relating to the business and operations of the Company
and its affiliates, including, without limiting the generality of the foregoing,
information with respect to their present and prospective products, systems,
customers, agents, processes, and sales and marketing methods. The Employee
acknowledges that such information has been and will continue to be of central
importance to the business of the Company and its affiliates and that disclosure
of it to or its use by others could cause substantial loss to the Company. The
Employee and the Company also recognize that an important part of the Employee's
duties will be to develop good will for the Company and its affiliates through
his personal contact with customers, agents and others having business
relationships with the Company and its affiliates, and that there is a danger
that this good will, a proprietary asset of the Company and its affiliates, may
follow the Employee if and when his relationship with the Company is terminated.
Employee acknowledges that his services to be rendered hereunder have a unique
value to the Company, for the loss of which the Company cannot be adequately
compensated by damages in an action at law. In view of the unique value to the
Company of the services of Employee, and because of the Confidential Information
to be obtained by or disclosed to Employee, and as a material inducement to the
Company to enter into this Employment Agreement and to pay to Employee the
compensation referred to in Paragraph 4 hereof, Employee covenants and agrees
that:
6.2 Non-Competition.
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(a) While Employee is employed by the Company, and for a period of one (1)
year thereafter, Employee will not, either personally, whether as an officer,
director, owner, manager, principal, partner, employee, agent, distributor,
representative, stockholder, consultant or otherwise, or with or through any
other person or entity operate or participate in the medical records coding
business or any other business which competes with the Company as of the date of
Employee's termination date (for purposes of Paragraph 6 hereof, the Company
shall be deemed to include all subsidiaries and joint ventures of the Company
whether now or hereafter affiliated with the Company) nor will Employee, while
Employee is employed by the Company, and for a period of one (1) year
thereafter, directly or indirectly solicit any person who has been an employee,
supplier or customer of the Company during the period of one (1) year prior to
the termination of employment. This non-competition clause shall apply in the
geographic territory comprised of the entire United States and any other
geographic area in which the Company is engaged in business. Employee
acknowledges that this non-competition/non-solicitation agreement is reasonable
in terms of its scope and duration.
(b) Nothing in this Section 6.2 shall be construed to prevent the Employee
from owning, as an investment, not more than 1% of a class of equity securities
issued by any competitor of the Company or its affiliates and publicly traded
and registered under Section 12 of the Securities Exchange Act of 1934.
6.3 Trade Secrets.
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The Employee will keep confidential any trade secrets or confidential or
proprietary information of the Company and its affiliates which are now known to
him or which hereafter may become known to him as a result of his employment or
association with the Company and shall not at any time directly or indirectly
disclose any such information to any person, firm or corporation, or use the
same in any way other than in connection with the business of the Company or its
affiliates during and at all times after the expiration of the Term of
0000 Xxxxxxxx Xxxxx x Xxxxx 000 x Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000 o Facsimile: (000) 000-0000
o Toll Free: 0-000-000-0000 o Website: xxx.xxxxxxx.xxx
MedGrup Corporation
Employment. For purposes of this Agreement, "trade secrets or confidential or
proprietary information" means information unique to the Company or any of its
affiliates which has a significant business purpose and is not known or
generally available from sources outside the Company or any of its affiliates or
typical of industry practice. Trade secrets or confidential or proprietary
information may include information with respect to the Company's personnel
records, present and prospective products, systems, customers, agents,
processes, and sales and marketing methods.
6.4 Patents.
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The Employee will assign permanently to the Company exclusive rights to any
patents awarded to him on the basis of ideas developed by the Employee for the
Company during or prior to the Term of Employment and its affiliates and ideas
developed by the Employee within one year following the termination of his
employment from the Company which are related to such employment and/or the
business of the Company.
6.5 It is agreed that Employee's services are unique, and that any breach
or threatened breach by Employee of any provisions of this Paragraph 6 may not
be remedied solely by damages. Accordingly, in the event of a breach or
threatened breach by Employee of any of the provisions of this Paragraph 6, the
Company shall be entitled to injunctive relief, restraining Employee and any
business, firm, partnership, individual, corporation, or entity participating in
such breach or attempted breach, from engaging in any activity which would
constitute a breach of this Paragraph 6. Nothing herein, however, shall be
construed as prohibiting the Company from pursuing any other remedies available
at law or in equity for such breach or threatened breach, including the recovery
of damages.
6.6 The provisions of this Paragraph 6 shall survive the termination of
this Agreement and the termination of Employee's employment.
7. Miscellaneous.
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7.1 Assignability.
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Employee may not assign his rights and obligations under this Agreement
without the prior written consent of the Company, which consent may be withheld
for any reason or for no reason.
7.2 Severability.
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In the event that any of the provisions of this Agreement shall be held to
be invalid or unenforceable, the remaining provisions shall nevertheless
continue to be valid and enforceable as though the invalid or unenforceable
parts had not been included therein. Without limiting the generality of the
foregoing, in the event that any provision of Paragraph 6 relating to time
period and/or areas of restriction shall be declared by a court of competent
jurisdiction to exceed the maximum time period or areas(s) such court deems
enforceable, said time period and/or area(s) of restriction shall be deemed to
become, and thereafter be, the maximum time period and/or area for which such
are enforceable.
7.3 Entire Agreement.
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This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof and supersedes all prior agreements or
understandings among the parties hereto with respect to the subject matter
hereof.
7.4 Amendments.
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This Agreement shall not be amended or modified except by a writing signed
by both parties hereto.
0000 Xxxxxxxx Xxxxx x Xxxxx 000 x Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000 o Facsimile: (000) 000-0000
o Toll Free: 0-000-000-0000 o Website: xxx.xxxxxxx.xxx
MedGrup Corporation
7.5 Waiver.
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The failure of either party at any time to require performance of the other
party of any provision of this Agreement shall in no way affect the right of
such party thereafter to enforce the same provision, nor shall the waiver by
either party of any breach of any provision hereof be taken or held to be a
waiver of any other or subsequent breach, or as a waiver of the provision
itself. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Colorado without regard to the conflict of laws of such
State. The benefits of this Agreement may not be assigned nor any duties under
this Agreement be delegated by Employee without the prior written consent of the
Company, except as contemplated in this Agreement. This Agreement and all of its
rights, privileges, and obligations will be binding upon the parties and all
successors and agreed to assigns thereof.
7.6 Binding Agreement.
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This Agreement shall be effective as of the date hereof and shall be
binding upon and inure to the benefit of the Employee, his heirs, personal and
legal representatives, guardians and permitted assigns. The rights and
obligations of the Company under this Agreement shall inure to the benefit of
and shall be binding upon any successor or assignee of the Company.
7.7 Headings.
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The headings or titles in this Agreement are for the purpose of reference
only and shall not in any way affect the interpretation or construction of this
Agreement.
7.8 Arbitration.
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Any dispute between the Company and the Employee with respect to this
Agreement shall be submitted to binding arbitration in El Paso County, Colorado
pursuant to the rules of the American Arbitration Association then in effect and
before an arbitrator fully licensed and authorized by any and all applicable
rules, statutes, regulations or the like to hear such cases in the State of
Colorado. The arbitrators shall have the power to award any legal or equitable
remedies that would be available in proceedings conducted before a state or
federal court of competent jurisdiction in Colorado. Judgment on the award of
the arbitrators may be entered in any court of competent jurisdiction. All
arbitration proceedings and the results thereof shall be confidential, except to
the extent that any party is required to make disclosure concerning such
proceedings under applicable law.
7.9 No Conflict.
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The Employee represents and warrants that he is not subject to any
agreement, order, judgment or decree of any kind that would prevent him from
entering into this Agreement or performing fully his obligations hereunder.
7.10 Survival.
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The rights and obligations of the parties shall survive the Term of
Employment to the extent that any performance is required under this Agreement
after the expiration or termination of such Term of Employment.
7.11 Counterparts.
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This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall together constitute one and
the same document.
7.12 Notices.
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Any notice to be given hereunder by either party to the other may be
effected in writing by personal delivery, or by mail, certified with postage
prepaid, or by overnight delivery service. Notices sent by mail or by an
overnight delivery service shall be addressed to the parties at the addresses
appearing following their signatures below, or upon the employment records of
the Company but either party may change its or his address by written notice in
accordance with this paragraph.
0000 Xxxxxxxx Xxxxx x Xxxxx 000 x Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000 o Facsimile: (000) 000-0000
o Toll Free: 0-000-000-0000 o Website: xxx.xxxxxxx.xxx
MedGrup Corporation
7.13 Opportunity to Consult Counsel.
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The Parties hereto represent and agree that, prior to executing this
Agreement, each has had the opportunity to consult with independent counsel
concerning the terms of this Agreement.
7.14 Attorney Fees.
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In the event of any dispute, arbitration, litigation between the Parties or
proceeding before any court of competent jurisdiction, the prevailing party
shall be entitled to reasonable attorney fee, costs and expenses.
IN WITNESS WHEREOF, the parties hereto have properly and duly executed this
Agreement as of the date first written above.
THE COMPANY:
MedGrup Corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman Of The Board, President and Chief Executive Officer
Monument, Colorado
EMPLOYEE:
By: /s/ Xxxxxx Xxxxxx
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Xx. Xxxxxx Xxxxxx
Colorado Springs, Colorado
