EMPLOYMENT AGREEMENT, made as of this 14th day of February,
1996, by and between Physician Support Systems, Inc., a Delaware corporation
(the "Company"), and David S. Geller ("Executive").
The Company desires to employ Executive, and Executive desires
to be employed by the Company, pursuant to the terms and conditions set forth in
this Agreement.
Based upon, and in consideration of, the mutual covenants
contained in this Agreement, the parties hereto agree as follows:
1. Position and Responsibilities. During the Term Period
(defined below), Executive shall serve in an executive capacity as Vice
President-Finance of the Company (or such other position as Executive and the
Company shall agree upon). As Vice President- Finance, Executive shall be
responsible for performing such functions and undertaking such responsibilities
as may be delegated to him by the Executive Vice President or the Board of
Directors of the Company and as are customarily associated with Executive's
position. Executive shall carry out his duties in a manner consistent with the
obligations imposed on officers of corporations under applicable law. Executive
shall report to and be subject to the direction of the Executive Vice President
and the Board of Directors of the Company.
2. Term of Employment.
2.1. Subject to the terms of this Agreement, Executive agrees
to be employed by the Company pursuant to the terms of this Agreement for the
Term Period. The "Term Period" means a period commencing on the date of this
Agreement and continuing for a period of two years, subject to any termination
under Section 2.2 hereof or any extension under Section 8 hereof. Expiration of
the Term Period shall not, in and of itself, affect the employment status of the
Executive with the Company.
2.2. Notwithstanding the provisions of Sections 2.1 and 2.3
hereof, the Term Period shall terminate upon the death of Executive. Further,
the Company shall have the right, on written notice to Executive, to terminate
Executive's employment with Cause, such termination to be effective as of the
date on which notice is given or as of such later date specified in the notice.
For purposes of this Agreement, the term "Cause" shall mean: (a) Executive has,
after repeated warnings from the Executive Vice President or the Board of
Directors of the Company specifying the alleged dereliction, willfully or
repeatedly failed or ceased to perform his duties in any material respect as
provided in this Agreement (other than as a result of his incapacity due to
illness or injury); (b) any act of fraud, misrepresentation, misappropriation,
embezzlement or similar dishonest or wrongful act by Executive; (c) Executive's
abuse of alcohol or any substance which materially interferes with the
Executive's ability to perform services on behalf of the Company; or (d)
Executive's conviction for, or plea of guilty or no contest to, a felony
offense.
2.3. The Company and Executive agree that, following the
expiration of the Term Period, the employment of Executive by the Company may be
terminated provided that at least 90 days' prior written notice by the party
terminating such employment shall have been given to the other party.
3. Compensation.
3.1. The Company shall pay to Executive for the services to be
rendered by Executive hereunder a salary at the rate of $125,000 per annum,
payable in equal installments in accordance with the Company's normal payroll
practices. Such salary will increase to the rate of $150,000 per annum when the
Company consummates the acquisition of one or more target companies with
aggregate annual revenues of $15 million or more. Such calculation of $15
million shall be cumulative from February 15, 1996 and excludes the Acquired
Businesses (as defined in the Company's Registration Statement No. 33-80731 on
Form S-1 dated February 9, 1996 (the "Registration Statement")).
3.2. The Company shall pay to Executive additional
compensation in the following amounts and at the following times:
(a) On the date of this Agreement, the Company shall pay to
Executive $20,000 as reimbursement for certain expenses and foregone
compensation with Executive's previous employer;
(b) On the first anniversary of the date of this Agreement,
the Company, in its sole discretion, shall pay to Executive a bonus of
up to $35,000; and
(c) On the second anniversary of the date of this Agreement,
the Company, in its sole discretion, shall pay to Executive a bonus of
up to $50,000.
3.3. Executive shall be entitled to participate in and receive
health insurance and such other employee benefits which may be in effect at any
time during the Term Period and which shall be generally available to management
of the Company.
4. Stock Options. On the date of this Agreement, the Company
will grant Executive options to purchase 25,000 shares of common stock of the
Company pursuant to the Company's 1996 Stock Option Plan.
5. Reimbursement of Out-of-Pocket Expenses. The Company shall
reimburse Executive for reasonable out-of-pocket expenses incurred by Executive
directly related to the performance of his duties under this Agreement in
accordance with the Company's reasonable record-keeping requirements, including
expenses associated with travel to and from Executive's home in Norwalk,
Connecticut, and the Company's offices in Mt. Joy, Pennsylvania, or other
location beyond the New York metropolitan region and Executive's lodging while
working in
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the Company's offices in Mt. Joy, Pennsylvania or other location beyond the New
York metropolitan region.
6. Moving Expenses. The Company may require, or Executive may
decide, to relocate to Mt. Joy, Pennsylvania, or other location beyond the New
York metropolitan region in order to best fulfill his responsibilities under
this Agreement. In such case, the Company shall reimburse Executive for
reasonable moving expenses to relocate himself and his family to such location,
including, but not limited to, real estate broker's fees and other closing costs
related to the sale of Executive's home in Norwalk, Connecticut.
7. Payments in the Event of Termination. In the event the Term
Period shall terminate upon the death of Executive under Section 2.2 hereof,
Executive's spouse (or children, if spouse is deceased) shall be entitled to
participate in and receive benefits under Section 3.3 during the one-year period
after Executive's death; provided that Executive's spouse (or children, is
spouse is deceased) shall reimburse the Company for the Company's incremental
expenses incurred in providing such benefits.
8. Change of Control. (a) In the event that, at any time
during the Term Period and subsequent to the first anniversary of this
Agreement, a Change of Control occurs, this Agreement may not be terminated by
the Company for a period of one year following such Change of Control, and the
end of the Term Period shall be extended for a period of one year following such
Change of Control (subject to the provisions of Section 2.2 of this Agreement).
(b) During the Term Period and after a Change of Control, all
bonus amounts described in Section 3.2 of this Agreement that have not been paid
as of the date of the Change of Control will become fixed and payable as
follows:
(i) $35,000 on the first anniversary of the date of this
Agreement; and
(ii) $50,000 on the second anniversary of the date of this
Agreement.
(c) At any time during the Term Period following a Change of Control, (i)
Executive cannot be required to assume responsibilities under this Agreement
that are materially different from his responsibilities before the Change of
Control and (ii) Executive cannot be required, without his consent, to relocate.
(d) For purposes of this Agreement, "Change of Control" means (i) any
event or series of events by which any Person (as defined in paragraph 9.1) or
"group" (as such term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of Persons (other than any of the
stockholders of the Company identified under the caption "Principal
Stockholders" in the Registration Statement or their affiliates) becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 of the Exchange Act)
of more than 50% of the total voting power of the Company's outstanding capital
stock, (ii) a sale, lease, exchange or other transfer of all or substantially
all of the assets of the Company to any Person (other than
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a wholly owned subsidiary of the Company) or "group" of Persons in one
transaction or series of related transactions or (iii) a merger or consolidation
of the Company with another Person or Persons with the effect that any Person or
"group" of Persons (other than any of the stockholders of the Company identified
in the Registration Statement or their affiliates) holds more than 50% of the
total voting power of the outstanding capital stock of the surviving entity.
9. Disclosure of Information.
9.1. Except as provided in this Section 9, Executive shall not
disclose any confidential or proprietary information of the Company or of its
subsidiaries or affiliates to any person, firm, corporation, association or
other entity (a "Person"), other than the Company, its affiliates, subsidiaries,
officers or employees thereof, for any reason or purpose whatsoever, except in
the course of carrying out the responsibilities of his position, nor shall
Executive make use of any such confidential or proprietary information for his
own purpose or for the benefit of any Person except the Company of any of its
subsidiaries or affiliates. As used in this Agreement, the term "confidential or
proprietary information" means all information which is or becomes known to
Executive and relates to matters such as trade secrets, research and development
activities, business or financing plans, acquisition opportunities, computer
software, books and records, customer or potential customer lists, vendor lists,
suppliers, distribution channels, pricing information and private processes as
they may exist from time to time; provided that the term "confidential or
proprietary information" shall not include information that is or becomes
generally available to the public (other than as a result of a disclosure in
violation of this Agreement by Executive or a Person who received such
information from Executive).
9.2. If Executive is requested or required by law or judicial
order to disclose any confidential or proprietary information, Executive shall
provide the Company with prompt notice of any such request for such information
or requirement so that the Company may seek an appropriate protective order or
waiver of the Executive's compliance with the provisions of this clause.
Executive will not oppose action by, and will cooperate with, the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the confidential or proprietary
information.
9.3. Executive shall be bound by the terms of this Section 9
notwithstanding the termination or expiration of the Term Period.
10. Non-Competition and Non-Solicitation. Executive hereby
acknowledges and recognizes (i) that, during the Term Period, Executive will
come to possess confidential or proprietary information of the Company and (ii)
the highly competitive nature of the business of the Company, and accordingly
agrees that Executive will not, from and after the date hereof, until (x) in the
case of clause (a) below, the expiration of the Term Period and (y) in the case
of clauses (b), (c) and (d) below, the date which is two years after the
expiration of the Term Period,
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(a) directly or indirectly engage in any of the
states of the United States east of the Mississippi River or
in any other area where the Company or any of its subsidiaries
or affiliates may be engaged or about to be engaged in
business, in any competitive business, whether such engagement
shall be as a Representative or otherwise,
(b) solicit or attempt to solicit any Customers on
Executive's own behalf or on behalf of any other Person,
(c) affiliate with (as a Representative or
otherwise) any Person that Does Business with a then existing
or former Customer; provided that the foregoing shall not
prohibit an affiliation or affiliations if, in the aggregate,
not more than five physician Customers do business with such
Person or Persons, or
(d) induce employees of the Company or any of its
subsidiaries or affiliates to terminate their employment with
the Company.
For purposes of this Section 10, (i) "Representative" means an
officer, director, owner, employee, partner or other agent or participant of or
in any other Person, (ii) "Does Business" means providing medical billing
services or accounting services to a Customer or otherwise engaging in a type of
business with a Customer which is substantially similar to the type of business
engaged in by the Company or any subsidiary or affiliate of the Company with
such Customer and (iii) "Customer" means any Person who was a customer of the
Company or of any subsidiary or affiliate of the Company at any time during the
Term Period.
11. Proprietary Rights. Executive agrees that he will promptly
and fully disclose to the Company (i) all inventions, ideas, trade secrets or
know-how (whether patentable or copyrightable or not) made or conceived by
Executive (either solely or jointly with others) during the Term Period and for
a period of six months thereafter and which shall in any way relate to the
business conducted or contemplated to be conducted by the Company or any of its
subsidiaries or affiliates; and (ii) all tangible work product (whether in the
nature of developed ideas, know-how, trade secrets and similar intellectual
property) and inventions (whether patentable or copyrightable or not) made or
conceived by Executive (either solely or jointly with others) during the Term
Period and for the period of six months thereafter which relates in any way to
the business conducted or contemplated to be conducted by the Company or any of
its subsidiaries or affiliates; and all such inventions, ideas, trade secrets
and know-how shall be and remain the sole and exclusive property of the Company.
At the request of the Company, Executive shall, during the Term Period and for a
period of six months thereafter, without charge to the Company, but at the
expense of the Company, assist the Company in any reasonable way to vest in it
title to all such inventions, ideas, trade secrets and know-how and to obtain
any patents, trademarks or copyrights thereon in all countries throughout the
world. In this regard, Executive shall execute and deliver any and all documents
that the Company may reasonably request, including applications for patents,
copyrights and assignments thereof.
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12. Specific Performance. In the event of a breach or
threatened breach by Executive of any of the provisions of Section 9, 10 or 11
hereof, the Company shall be entitled to an injunction restraining Executive
from such breach. Nothing contained in Section 9, 10 or 11 hereof or elsewhere
in this Agreement shall be construed as prohibiting the Company from pursuing
any other remedies available at law or equity for such breach or threatened
breach of Section 9, 10 or 11 hereof nor limiting the amount of damages
recoverable in the event of a breach or threatened breach by Executive of the
provisions of Section 9, 10 or 11 hereof this Agreement.
13. Assignment. This Agreement shall inure to the benefit of
and be binding on the Company, its successors and assigns. This Agreement shall
not be assignable by Executive.
14. No Third Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement.
15. Notices. All notices under this Agreement shall be in
writing and shall be deemed to have been given at the time when mailed by
registered or certified mail, addressed to the address below stated of the party
to which notice is given, or to such changed address as such party may have
fixed by notice:
To the Company:
Physician Support Systems, Inc.
Route 230 and Eby Chiques Road
Mt. Joy, PA 17552
Attention: Hamilton F. Potter III
To Executive: David S. Geller
7 Merrill Road
Norwalk, CT 06851
provided, however, that any notice of change of address shall be effective only
upon receipt.
16. Complete Agreement; Amendments. The foregoing is the
entire agreement of the parties with respect to the subject matter hereof and
may not be amended, supplemented, canceled or discharged except by written
instrument executed by both parties hereto.
17. Headings. The headings of the sections hereof are inserted
for convenience of reference only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof.
18. GOVERNING LAW. THIS AGREEMENT IS TO BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF PENNSYLVANIA, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PHYSICIAN SUPPORT SYSTEMS, INC.
By:_________________________________
Name: Hamilton F. Potter III
____________________________________
David S. Geller
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