1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of the 1st day of March, 1997 (the "Effective
Date") by and between HEALTHCARE BUSINESS RESOURCES, INC., a
North Carolina corporation ("Employer" or "HBR") and XXXXXX X.
XXXXX, XX. ("Employee").
WHEREAS, Employee is currently an Employee of Employer; and
WHEREAS, Employer and Employee desire to substantially and
materially modify the existing terms of employment of Employee in
order to, among other matters, provide for an extended term,
provide additional severance benefits, provide for performance
bonuses and provide for extended limitations on certain
competitive activities; and
WHEREAS, subject to the terms and conditions hereinafter
provided, Employer desires to restate and amend the existing
employment arrangement and to employ Employee, and Employee
desires to accept such employment, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the employment of
Employee and the compensation to be paid by Employer to Employee,
and the covenants set forth herein, Employee hereby accepts
employment hereunder subject to the terms and conditions stated
below, including the agreement of Employee not to enter into
certain competitive activities with the Employer, as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee
hereby accepts such employment, subject to the terms and
conditions stated herein. This Agreement shall amend, restate
and supersede the existing employment agreements and arrangements
applicable to Employee.
2. TERM. This Agreement shall commence effective as of March
1, 1997 (the "Effective Date") and shall continue through and
including February 29, 2000 (the "Initial Term"), unless this
Agreement is (a) otherwise terminated in accordance with the
provisions contained herein, or (b) extended by written consent
of Employer and Employee. After the Initial Term, this Agreement
shall renew on a year by year basis unless terminated by either
party in accordance with Section 12.
3. DUTIES. Employee shall perform the following duties
pursuant to this Agreement:
(a) Employee shall serve as the President and Chief
Executive Officer ("CEO") of Employer and shall serve on the
Board of Directors of Employer. Employee may be removed at
anytime from any officer position and/or board seat as
deemed appropriate by (i) the Board of Directors of Employer
or (ii) the shareholder of Employer.
(b) As President and CEO of Employer, Employee shall be
principally responsible for the operations of Employer. In
addition Employee shall be available to assist Employer
2
and its related entities in connection with the management
and operation of their respective businesses. Employee
shall perform all duties and responsibilities normally
associated with his officer and director positions and shall
carry out such other duties and responsibilities and as
otherwise may be reasonably assigned to Employee by the
Employer's Board of Directors or the Board of Directors of
Coastal.
(c) Employee shall at all times abide and observe
Employer's policies and procedures as are in effect from
time to time. Employee acknowledges that Employer is an
equal opportunity employer and that Employer's established
policy is not to discriminate on the basis of age, marital
status, race, color, sex, religion or national origin, or to
violate any federal or state anti-discrimination law.
Employee shall be responsible for carrying out and
implementing the foregoing policy throughout the operations
and activities of Employer.
4. COMPENSATION. For the services provided by Employee as an
employee of Employer, Employer shall pay Employee the annual base
salary (the "Base Salary") and other compensation identified on
EXHIBIT A.
5. ADDITIONAL BENEFITS. Commencing on or about the Effective
Date, and thereafter during the Initial Term of this Agreement,
Employee shall be entitled to and Employer shall provide to
Employee all employment benefits which are provided to senior
executive officers of Employer.
6. DEVOTION OF TIME. During the term of this Agreement,
Employee shall devote his full time and attention to the business
of Employer and its affiliates in a manner and to an extent
commensurate with the commitment of other executive officers of
Employer, to fulfill his duties and responsibilities under the
Agreement and to advance the business interests and good
reputation of Employer, its shareholder, Coastal Physician Group,
Inc. ("Coastal") and the direct and indirect subsidiaries of
Coastal.
7. CONFIDENTIALITY AND NON-DISCLOSURE. Employee acknowledges
that, during this employment, he will gain access to, or
possession or knowledge of, numerous trade secrets, confidential
information, other valuable properties not generally available to
the public and proprietary information, including but not limited
to, hospital and healthcare facility client lists, client files
and records, lists of potential clients, prospects or targets,
and/or other market and marketing data and plans, price books,
promotional devices and methods, business methods, manuals and
plans, business and sales techniques, strategic plans, computer
programs, hospital and physician contracts, and research and
development (hereinafter referred to collectively as
"Confidential Information"). Employee acknowledges that such
Confidential Information is unique and a valuable asset which is
owned solely by Employer (or affiliates of Employer) and is to be
used only for Employer's or its affiliates' (other than any
natural persons) benefit. Employee shall not, during or after
the term of this Agreement, disclose, divulge, reveal, transfer,
reproduce, sell, capitalize upon or take advantage of such
Confidential Information and, in addition, Employee shall
exercise all reasonable efforts and precautions to protect
against such Confidential Information from misappropriation,
misuse, disclosure, breach of confidentiality, or other conduct
or action inconsistent with Employer's rights; PROVIDED, HOWEVER,
that Confidential Information may be disclosed to the extent (i)
required by law or court order or (ii) generally
3
available to the public other than by unauthorized disclosure.
Upon termination of this Agreement, Employee shall return
immediately to Employer all of Employer's (or its affiliates)
property (including, without limitation, Confidential
Information) in Employee's possession or control. Any materials,
manuals, documents or records developed, written, edited or
designed by Employee while employed by Employer are the exclusive
property of Employer.
8. COVENANT NOT TO COMPETE. Employee will, as a result of this
employment, be responsible for the executive management and
direction of substantial business resources and assets of
Employer and its affiliates and will develop additional contacts
and relationships with numerous individuals, executives,
companies, insurers, providers and health maintenance
organizations which are also involved in the managed healthcare
business. Such individuals and organizations will have business
and contractual relationships with Employer or its affiliates
that will be a valuable asset thereof. Employee therefore agrees
as follows:
(a) Employee agrees that for a period of twelve (12) months
after termination of this Agreement, Employee will not
become employed by, own, operate, manage, or provide
consulting services to any business that provides the same
type of services as Employer currently provides in the
states where Employer is providing services as of the date
of termination of this Agreement.
(b) Employee agrees for a period of twelve (12) months
after termination of this Agreement not to become employed
by or make, directly or indirectly, any proposal to acquire,
alone or with others, any business or entity, as to which
substantive discussions involving a potential acquisition,
joint venture or other similar or comparable business
arrangement was made by or on behalf of Employer, or any
affiliate of Employer during the six (6) month period
immediately preceding the termination of this Agreement.
(c) Employee agrees for a period of twelve (12) months
after termination of this Agreement, not to solicit any
hospital, clinic, healthcare facility or other client having
a contractual or business relationship with Employer or of
any subsidiary of Employer, or of any prospect or potential
client to which a marketing proposal or presentation was
made within six (6) months of termination, and of which
Employee was aware, involving the provision of billing
services, or other services in the healthcare area, which
solicitation would be for the purpose of providing
healthcare or healthcare related services or billing for
healthcare or healthcare related services.
(d) Employee further agrees to refrain for a period of
twelve (12) months following the termination of this
Agreement, from any activity of any nature intended or
reasonably calculated to result in the termination or
cancellation of any contractual or business arrangement
between the Employer or any subsidiary of Employer, and any
insurer, client, facility or other business or entity.
(e) Employee agrees to notify any entity or organization of
which he is a director, significant shareholder (or other
equity owner), manager, general partner, executive officer
or as to which he is otherwise a controlling party or over
whom he exerts significant influence (an "Affiliate") of the
provisions of Sections 7, 8 and 9 of this
4
Agreement, and Employee agrees that he will not cause or
permit such Affiliate to engage in any activity that would
be prohibited for Employee personally under this Agreement.
(f) Nothing in this Agreement shall prevent Employee from
making passive investments in third parties so long as such
investments do not require Employee to perform any services
in connection with any such investments in such third
parties.
9. SOLICITATION OF OTHER EMPLOYEES.
(a) Employee agrees that he shall not, for a period of
twelve (12) months after the termination of this Agreement,
solicit or seek to influence, either directly or indirectly,
any employee or any physician or healthcare provider under
contract with Employer at any time during Employee's
employment by Employer or any of its subsidiaries or
affiliates, to enter into any employment agreement,
independent contractor arrangement, or any other contractual
arrangement whereby such individual would perform services
for compensation, either directly or indirectly, for any
person, firm, corporation or other entity or business that
provides products or services in competition with Employer
or any of its subsidiaries or affiliates.
(b) Employee further agrees that neither he nor any
Affiliate shall, for a period of twelve (12) months after
the termination of this Agreement, hire, employ, enter into
any employment agreement, independent contractor
arrangement, or any other contractual arrangement whereby a
"Coastal Employee" (as defined below) would perform services
for compensation for Employee or such entity. For the
purposes hereof, "Coastal Employee" shall mean any person
who has been employed by Coastal or any or its direct or
indirect subsidiaries at any time during the six (6) month
period immediately preceding the termination of this
Agreement.
10. BREACH AND REMEDIES.
(a) Employee acknowledges that the breach or threatened
breach of any of the covenants set forth in Sections 7, 8 or
9 may result in immediate and irreparable injury to Employer
or its affiliates. Accordingly, Employee agrees the
provisions of Sections 7, 8 and 9 shall inure to the benefit
of and may be enforced by Employer or any if its affiliates,
including Coastal. In addition to any rights or remedies
available to Employer for a breach by Employee of Sections
7, 8 or 9, Employer and its affiliates shall be entitled to
injunctive relief to enforce the obligations of Employee
contained in such Sections. Nothing herein shall be
construed as prohibiting Employer or its affiliates from
pursuing any other legal or equitable remedies that may be
available to it for any such breach or threatened breach,
including the recovery of damages from Employee.
(b) The periods of time provided for in Sections 7, 8 or 9
shall be extended by any period of violation or periods of
time required to resolve by arbitration, not to exceed 45
days, any dispute regarding the provisions thereof.
5
(c) Employee hereby acknowledges that the covenants set
forth in Sections 7, 8 and 9 are reasonable in all respects
and are necessary to protect the legitimate business
interests of Employer and its affiliates. In the event that
any of the provisions of this Agreement are found to be
unenforceable or void (either in whole or in part), then the
offending portion shall be construed as valid and
enforceable only to the extent permitted by law and the
balance of this Agreement will remain in full force and
effect. It is the intention of parties to restrict the
activities of Employee only to the extent necessary to
protect the legitimate business interests of Employer, its
subsidiaries and/or affiliates, and not to deprive Employee
of the right or ability to earn a livelihood.
11. VACATION AND SICK LEAVE. All earned, accrued and unused
vacation and any unused sick pay, upon termination, will be
governed by Employer's then current policies.
12. TERMINATION. This Agreement may be terminated as follows:
(a) Employer may terminate this Agreement without cause at
any time upon thirty (30) days' prior written notice to
Employee, and Employee may terminate this Agreement without
cause at any time upon sixty (60) days' prior written notice
to Employer. This thirty or sixty day period (as
applicable) is hereafter referred to as the "Notice Period."
In the event of such termination, Employee, if requested by
Employer, shall continue to perform his obligations and
duties under this Agreement and assist with the transition
of duties to a new employee during the Notice Period.
Employer, at its option, may notify Employee at any time
during the Notice Period that no further services are to be
performed. In the event that this Agreement is terminated
without cause by either party, the covenants set forth in
Sections 7, 8 and 9 shall continue in effect, and the
applicable start date for the periods of time in Sections 7,
8 or 9 shall be the later of the date that notice of
termination is given or the last date upon which services
are performed.
(b) If this Agreement is terminated without cause by
Employer at any time during the term hereof, Employer shall
pay Employee an amount equal to the annual Base Salary then
in effect (see EXHIBIT A) plus any earned and unpaid
Performance Bonus (see EXHIBIT A), all to be paid out in
equal installments over the twelve (12) months following the
date of termination, beginning thirty (30) days from the
date of termination. In addition, if this Agreement is
terminated without cause by Employer at any time during the
first twelve months of the Initial Term, Employer shall
additionally pay to Employee an amount equal to the annual
Base Salary that would have been paid over the remaining
twelve months of the Initial Term but for the termination.
Such additional amount (for termination in the initial
twelve months of the Initial Term) shall be divided by
twelve (12) and the quotient added to the twelve equal
installments paid under the first sentence of this
subsection.
(c) This Agreement may be terminated by Employer at any
time for cause upon written notice to Employee, which notice
shall specify the reason for termination. For purposes of
this Subsection 12(c), cause shall include, but shall not be
limited to, the following: fraud; dishonesty; substantial
and continuous nonperformance of assigned duties; failure to
comply with a material written policy of Employer; failure
by Employee
6
to perform or meet objective and measurable standards;
unlawful activities for which Employee is indicted or
convicted in a jurisdiction of the United States; and
material breach of this Agreement.
(d) This Agreement shall terminate upon the death or total
and permanent disability of Employee. In the event that
this Agreement terminates due to Employee's death or total
and permanent disability, Employer shall pay upon such
termination to Employee, Employee's Base Salary accrued
through the date of Employee's death or the date he becomes
totally and permanently disabled, as the case may be.
Permanent disability for purposes of this Agreement shall
mean the inability to perform the functions of Employee's
position for a continuous period of six (6) months.
(e) Except as expressly set forth herein, all of Employer's
obligations for compensation or other benefits shall
terminate upon the effective date of the termination of this
Agreement.
13. COMPLIANCE WITH SECURITIES LAWS. Employee agrees to comply
with all applicable federal and state securities laws and with
all applicable policies of Coastal and Employer concerning the
buying and selling of stock of Coastal by employees to the extent
such policies do not restrict Employee's express rights under
this Agreement.
14. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties and supersedes and cancels any
prior oral and written understanding and/or agreements between
them respecting the subject matter of this Agreement. This
Agreement may be amended or modified only in writing signed by
both parties.
15. SEVERABILITY. If any provision, term, condition, or clause
of this Agreement or the application thereof shall be invalid or
unenforceable to any extent, the remainder of this Agreement
shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
16. GOVERNING LAW. This Agreement is made and entered into in
the State of North Carolina and is to be construed in accordance
with and take effect under the laws of the State of North
Carolina without regard to principles of conflicts of laws.
17. ASSIGNMENT. No party shall have any right to assign,
mortgage, pledge, hypothecate or encumber this Agreement in whole
or in part, or any benefit or any right accruing hereunder,
without in any such case first obtaining the prior written
consent of the other party hereto, except that Employer may
assign this Agreement to one of its affiliates or wholly-owned
subsidiaries, provided that in the event of such an assignment,
Employer shall remain primarily responsible for its obligations
hereunder. All rights hereunder are personal to the Employee and
shall cease upon the termination of this Agreement unless
otherwise stated herein; PROVIDED, HOWEVER, that the provisions
hereof shall inure to the benefit of the personal
representatives, heirs and legatees of Employee.
7
18. NOTICE. Any notice, or other written communication to be
given pursuant to this Agreement for whatever reason shall be
deemed duly given and received (a) if delivered personally, from
the date of delivery, or (b) by certified mail, postage pre-paid,
return receipt requested, three (3) days after the date of
mailing, addressed: in the case of Employer, to its principal
office and marked "Attention: President," and in the case of
Employee, to his last known permanent address according to the
books and records of Employer.
19. MISCELLANEOUS. Any protection, benefits, rights or other
provisions given to Employer in this Agreement shall also be
deemed to apply to, protect and inure to the benefit of
Employer's affiliates and subsidiaries. All rights of Employer
expressed in this Agreement are in addition to any rights
available under the common law or other legal principles.
Section or paragraph titles or captions contained in this
Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any provision hereof.
All pronouns and any variation thereof shall be deemed to refer
to the masculine, feminine, neuter, singular or plural as the
identity of person or persons, firm or firms, corporation or
corporations, and as context may require.
IN WITNESS WHEREOF, the parties sign and seal below,
effective the date first written in this Agreement.
EMPLOYEE:
/S/ XXXXXX X. XXXXX, XX. (SEAL)
Xxxxxx X. Xxxxx, Xx.
EMPLOYER:
HEALTHCARE BUSINESS RESOURCES, INC.
By:/S/ XXXXXX R> XXXXXX, III
Name:Xxxxxx X. Xxxxxx, III
Title:Senior Vice President, General
Counsel and Secretary
ATTEST:
By:/S/ XXXXXX X. XXXXXXXX
Assistant Secretary
[CORPORATE SEAL]
8
EXHIBIT A
COMPENSATION
1. BASE SALARY. For all services provided as an employee of
Employer, Employee shall receive, beginning on the Effective
Date, a base salary of $220,000 per annum (the "Base Salary")
payable in accordance with Employer's current payroll practices.
The Base Salary shall be subject to annual review and adjustment
as of each March 1 during the term of this Agreement.
2. SIGNING BONUS. As an initial signing bonus (the "Signing
Bonus"), upon execution of this Agreement Employer shall forgive
and forever waive any claim to the outstanding indebtedness of
approximately $16,000 evidenced by that promissory note in the
original face amount of $25,000 made by Employee dated October
30, 1988 and amended on November 30, 1993.
3. PERFORMANCE BONUS. Employer intends to establish,
beginning in 1997, an annual bonus program (or participate in the
annual bonus program developed by Coastal) applicable to Employee
(the "Bonus Program"). The Bonus Program may be part of a larger
bonus program or may be specifically tailored for Employee or
such other limited group as Coastal or Employer may determine.
Under the Bonus Program, Employee will have the ability to earn a
quarterly (based on calendar quarters) performance bonus of up to
$20,000 (the "Performance Bonus"), based upon the financial
performance of HBR and other factors, which may include the
discretion of Employer or Coastal. In the event of termination
of this Agreement during any quarter, the Bonus Program may, but
shall not be required to, provide for proration of the
Performance Bonus over a partial quarter. Measurements of
financial performance and other factors may include the
following, and other relevant, factors:
Budget (actual performance versus projected performance)
Free cash flow from operations (actual performance versus
projected performance)
EBITDA (earnings before interest, taxes, depreciation and
amortization)
Revenue Growth
Overall profit or loss of Coastal
DSO
Average collections per patient visit
Patient satisfaction
Employee turnover
No Performance Bonus (other than the minimum provided for
in the following paragraph) will be earned or paid unless by the
end of each of the following calendar years, the Board of
Directors of Employer determines in its reasonable judgment that
Employer is performing at the following minimum percentages
(using fourth quarter run rates) of the industry averages for
growth, revenues, profitability and other commonly used
measurements for companies providing healthcare billing and
collection services:
9
1997 70%
1998 80%
1999 90%
In any event, the minimum aggregate Performance Bonus for a
calendar year shall be equal to the Base Salary in effect for the
year multiplied by one-half of the percentage increase (if any)
in the Consumer Price Index (the "Index") for All Items, All
Groups published by the United States Department of Labor, Bureau
of labor Statistics from the first day of the month of December
of the previous calendar year through the last day of November of
the calendar year as to which the Performance Bonus is paid. If
publication of the Index is discontinued or computation of the
Index materially altered, Employer and Employee shall use a
comparable index computed and published by an agency of the
United States or a responsible financial periodical of recognized
authority.
4. STAY BONUS. Employee shall receive a stay bonus comparable
to those received by other senior executive officers of HBR (the
"Stay Bonus"). If Employee is still employed by Employer on
September 1, 1997, he shall receive a Stay Bonus equivalent to
twelve weeks of Employee's Base Salary.
5. SALE OF EMPLOYER. If Employer is sold, merged into a
company unrelated to Coastal or substantially all of the assets
of Employer are sold within the first twelve months of the
Initial Term, then Employee may terminate this Agreement
effective as of the closing by notifying Employer in writing of
such election prior to closing, and such termination shall be
treated as a termination without cause by Employer; provided that
the entire amount of severance due shall be paid as follows: 50%
at closing with the remainder placed in escrow and disbursed 25%
at the end of the sixth month following closing and 25% at the
end of the ninth month following closing. An early termination
of this Agreement in connection with a sale or otherwise shall
not release or waive the provisions of Sections 7, 8, 9 or 10 and
the non-competition and non-solicitation provisions of this
Agreement shall continue for the 12 month period following
termination.
6. STOCK OPTIONS OR AWARDS. Employee shall be eligible for
stock options and awards available to other senior management of
Coastal and its affiliates from time to time. This subsection
shall not be a guarantee of any awards or options, and Employee
recognizes that the awarding of such compensation is governed by
plans adopted by Coastal from time to time.
