EXHIBIT 10.23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the 1st day of November, 1998 (the "Effective Date") by and between COASTAL
PHYSICIAN GROUP, INC. (the "Employer" or "Coastal"), a Delaware corporation with
its principal place of business in Durham, North Carolina and W. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ("Employee"), a resident of Durham, North Carolina.
W I T N E S S E T H:
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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 provide for an
extended term of employment, revised compensation terms and other matters; 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 all existing employment agreements
and arrangements applicable to Employee, either written or oral.
2. Term. This Agreement shall commence effective as of November 1, 1998
(the "Effective Date") and shall continue through and including October 31, 1999
(the "Initial Term"), unless this Agreement is (a) otherwise terminated in
accordance with the provisions contained herein, or (b) extended by mutual
agreement of Employer and Employee. After the Initial Term, this Agreement may
be renewed or extended upon mutual agreement of the parties. If the parties do
not agree to an extension on other terms, then this Agreement shall
automatically renew on a month-to-month basis until either Employer or Employee
terminates this Agreement pursuant to Section 12 herein.
3. Duties. Employee shall perform the following duties pursuant to this
Agreement:
(a) Employee shall serve as an Executive Vice President and Chief
Financial Officer of Employer. During the term of this Agreement, Employee may
be elected to the Board of Directors of Employer. If so elected, Employee may be
removed at anytime from any board seat as deemed appropriate by the shareholders
of Employer, and such removal shall not be considered a breach by the Employer
of this Agreement. Removal of Employee from the office of Executive Vice
President and Chief Financial Officer shall be considered a material breach of
the terms of this Agreement by Employer.
(b) 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 and any renewals or
extensions thereof, Employee shall be entitled to and Employer shall provide to
Employee all employment benefits which are generally provided to senior
executive officers of Employer. In addition, Employer will provide Employee an
office and administrative support appropriate to Employee's position, and
Employer will pay the cost of continuing professional education required to
maintain the Certified Public Accountant license of Employee and provide
reimbursement of usual and customary dues and license fees consistent with other
senior management.
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 and the direct and indirect subsidiaries of Employer.
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.
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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 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) For a period of six (6) 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) For a period of twelve (12) months after termination of this
Agreement, Employee will not 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
healthcare services, which solicitation would be for the purpose of providing
healthcare or healthcare related services.
(c) For a period of twelve (12) months following the termination of
this Agreement, Employee will refrain 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.
(d) Employee shall 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 Agreement, and Employee will not cause or permit
such Affiliate to engage in any activity that would be prohibited for Employee
personally under this Agreement.
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(e) 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
that 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. 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.
(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. It is the
intention of parties to restrict the activities of Employee
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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) Either party may terminate this Agreement without cause at any
time upon thirty (30) days' prior written notice to the other party. This thirty
day period 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) Upon expiration of the Initial Term or any extended term
(including month to month extensions) of this Agreement without renewal or
extension or if this Agreement is terminated without cause by Employer at any
time during the term hereof, Employer shall pay Employee an amount equal to
one-half of the annual Base Salary then in effect (see Exhibit A), all to be
paid out in equal installments over the six (6) months following the date of
termination, beginning thirty (30) days from the date of termination; provided
that if Employee is terminated without cause at any time within one (1) year of
a merger or consolidation of Employer or other change of ownership of Employer
which in any case results in any person or group having the ability to elect or
appoint a majority of the Board of Directors of Employer (unless such person or
group currently has such power), then the amount to be paid out under this
subsection shall be equal to the annual Base Salary then in effect, to be paid
out in equal installments over the twelve (12) months following termination.
(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 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
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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) This Agreement may be terminated by Employee upon a material
breach of the terms of this Agreement by Employer, and if this Agreement is
terminated at any time during the term hereof by Employer under this subsection,
then Employer shall pay Employee an amount equal to one-half of the annual Base
Salary then in effect (see Exhibit A), all to be paid out in equal monthly
installments over the six (6) months following the date of termination,
beginning thirty (30) days from the date of termination.
(f) 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.
(g) Upon termination of Employee's employment for any reason, Employee
agrees to resign any position as a director of Employer then held by Employee.
In that regard, Employee agrees that if, during the term of this Agreement, he
is elected or appointed to be a director of Employer, Employee shall execute and
deliver to ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, PLLC, as escrow agent, an undated resignation
letter with respect to such director position, which escrow agent is authorized
to date and deliver to Employer upon receipt of notice from Employer that
Employee's employment has terminated.
13. Compliance With Securities Laws. Employee agrees to comply with all
applicable federal and state securities laws and with all applicable policies of
Employer concerning the buying and selling of stock of Employer 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 a writing
signed by both parties.
15. Severability. If any provision, term, condition, or clause of this
Agreement or the application thereof shall be found to be invalid or
unenforceable to any extent, then the offending portion shall be construed as
valid and enforceable only to the extent permitted by law and the remainder of
this Agreement shall not be affected thereby and shall remain in full force and
effect.
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. Dispute Resolution. All disputes under this Agreement shall be resolved
in accordance with the procedure set forth in Exhibit B.
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18. 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.
19. 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.
20. 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.
(signature page to follow)
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IN WITNESS WHEREOF, the parties sign and seal below, effective the date
first written in this Agreement.
EMPLOYEE:
_________________________________________(SEAL)
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
EMPLOYER:
COASTAL PHYSICIAN GROUP, INC.
By: ___________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and
Chief Executive Officer
ATTEST:
By: _____________________________
Assistant Secretary
[CORPORATE SEAL]
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EXHIBIT A
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COMPENSATION
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1. Base Salary. For services provided as an employee of Employer,
Employee shall receive, beginning on the Effective Date, a base
salary of $180,000 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 November
1 during the term of this Agreement (or such other times as may be
determined by Employer).
2. Incentive Bonus. Employee shall be eligible for an incentive or
performance bonus (the "Incentive Bonus") up to a maximum annual
amount equal to forty percent (40%) of Employee's Base Salary. The
Incentive Bonus shall be awarded pursuant to a bonus plan to be
implemented by Employer and shall be based upon such criteria as
Employer and Employee may mutually agree, which criteria shall
include, without limitation, the timely filing of all required
reports of Employer with the Securities and Exchange Commission.
During the Initial Term of this Agreement, Employer and Employee have
agreed that Employee shall be eligible for a bonus of up to $40,000
awarded as follows:
(i) $10,000 for timely filing of Employer's 10-Q's (for the
third quarter of 1998 and the first and second quarters of
1999).
(ii) $20,000 for the timely filing Employer's Form 10-K for 1998
with a "clean" audit opinion (i.e., with no "going concern"
caveat).
(iii) $10,000 in the discretion of the Chief Executive Officer.
Provided, that in the event Employer enters into a transaction or
series of transactions that render the filing of 10-Q's and 10-K
unnecessary or impossible, Employer and Employee will negotiate in
good faith to adopt alternative standards for (i) and (ii) above.
3. Stock Options or Awards. Employee shall be eligible for stock options
and awards available to other senior management of Employer 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 the
Board of Directors of Employer from time to time.
EXHIBIT B
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MEDIATION/ARBITRATION
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The parties hereto shall resolve any dispute or disagreement arising out of
this Agreement or the performance of Employee or Employer hereunder by
submitting such dispute first to mediation and second to arbitration pursuant to
the following procedures; provided that nothing herein shall prevent Employer
from obtaining injunctive relief under Section 10 for violations by Employee of
the provisions of Sections 7, 8 or 9.
(a) Mediation. The parties shall mediate any dispute or disagreement
upon the written demand of either party or both of the parties with the mediator
appointed by the Judicial Arbitration & Mediation Services, Inc. ("JAMS") or
another party upon mutual agreement of Employer and Employee, pursuant to the
following terms and conditions.
(1) Best Efforts. The parties agree to use their best efforts to
resolve their dispute by mediation before proceeding to binding
arbitration.
(2) Hearings, Scheduling and Parties Present. After the mediator
has been appointed, the parties shall promptly agree upon a date and
time for the initial conference with the mediator, but no later than
thirty (30) days after the date the mediator was selected. The
location of the mediation shall be Durham, North Carolina. The parties
understand and agree that, besides counsel, a representative from each
side with full settlement authority shall be present at all mediation
conferences unless excused by the mediator. Each party may have other
representatives, agents or witnesses present at the mediation to
respond to questions, contribute information and participate in the
mediation. The number of additional parties may be agreed upon in
advance with the assistance and advice of the mediator.
(3) Discovery. In the event that a party has a substantial need
for information in the possession of another party to prepare for the
mediation conference, the parties shall use their best efforts to
agree upon the procedure for expeditious exchange of information and,
if required, the mediator shall assist in such efforts.
(4) Position Papers. Each party shall deliver to the mediator and
each party to the mediation a concise written summary of its position
together with any appropriate documents supporting such position no
later than seven (7) days before the scheduled mediation session,
including a proposed solution to the matters in controversy.
(5) Mediator's Role. Once familiar with the issues involved in
the mediation, the mediator shall, if requested by both of the
parties, give an opinion
of the probable outcome of the case and a range of settlement value
and trial value if the case were litigated. The mediator shall, in the
absence of instructions from the parties to the contrary, give
recommendations regarding the possible settlement terms and
conditions. The opinions and recommendations of the mediator are not
binding on the parties.
(6) Fees and Costs. The fees and costs of the mediation shall
conform to the then current fee schedule of JAMS. Fees and costs of
the mediation shall be borne equally by the parties and each party
shall pay its own professional fees and costs.
(7) Confidentiality of Proceedings. The mediation shall be
considered settlement negotiations for the purpose of all state and
federal rules and laws protecting disclosures made during such
conferences from later discovery or use in evidence. The mediation
shall be confidential and no stenographic or other written records
shall be made except the memorialized settlement record. All conduct,
promises, offers, views, opinions or statements, whether oral or
written, by any party, the party's agent, employee, or representative
are confidential and, where appropriate, considered work product and
privileged and the same shall not be subject to discovery or voluntary
disclosure or admissible for any purpose, including impeachment in
litigation between the Parties, provided, however, that evidence
otherwise subject to discovery or admissible is not excluded from
discovery or admission in evidence as a result of the same being used
in connection with the mediation.
(8) Termination of the Mediation. The mediation shall continue
until the matter is resolved or the mediator makes a good faith
finding that all settlement possibilities have been exhausted and
there is no reasonable likelihood of resolution through mediation.
(b) Binding Arbitration. After attempting to resolve the dispute in
good faith through mediation, the parties shall, upon written request of either
or both parties, submit any dispute or disagreement to binding arbitration by
JAMS in accordance with the foregoing rules and procedures regarding mediation
specified above in paragraph (a), with the following exceptions:
(1) Selection of the Arbitrator. The arbitrator shall be selected
by JAMS and a single arbitrator shall conduct the arbitration.
(2) Position Papers. Each party shall be entitled to submit a
reply to the other party's position paper to the arbitrator.
(3) Arbitrator's Role. The decision of the arbitrator shall be
final and binding on the parties, shall be enforceable under North
Carolina's Uniform Arbitration Act and the terms of that Act shall
apply.
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(4) Fees and Costs. The arbitrator shall be allowed, in his or
her discretion, to require the losing party to pay the reasonable
attorney's fees and costs of the prevailing party provided the
arbitrator finds that the assessment of such fees and costs serves
substantial justice; such fees and costs shall not otherwise be
awardable in any mediation between the parties The award of the
arbitrator, including the assessment of reasonable attorney's fees and
costs, if any, shall bear interest at the legal rate until the date
when the awarded fees and costs, if any, are paid in full. The
decision of the arbitrator may be entered as a judgment in any court
of the State of North Carolina or elsewhere.
(c) Except where specifically modified above, all other terms and
procedures specified for the mediation in paragraph (a) shall apply in the
arbitration. Article 45A of Chapter 1 of the General Statutes of North Carolina
shall apply to such arbitration.
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