EMPLOYMENT AGREEMENT, dated as of June 28, 1996, between
SYNERGISTIC SYSTEMS, INC., a California corporation ("SSI" or the "Company"),
and Jean M. Campbell ("Employee").
Physician Support Systems, Inc., a Delaware corporation
("PSS"), is acquiring all of the issued and outstanding capital stock of the
Company in a merger transaction involving PSS, a wholly-owned subsidiary of PSS,
and the Company (the "Merger").
Employee acknowledges and agrees that this Agreement is being
entered into in connection with the sale of all of her shares in the Company and
that the terms and validity of this Agreement, insofar as California law is
concerned, are therefore expressly governed by Section 16601 of the California
Business and Professions Code.
The Company desires to employ Employee, and Employee desires
to be employed by the Company, on the terms and subject to the conditions set
forth herein.
As a material inducement to PSS to consummate the Merger, PSS
and the Company desire that Employee enter into the covenants set forth in
Section 5 hereof, and Employee agrees to enter into such covenants. Employee's
execution of this Agreement is a condition to PSS's obligation to consummate the
Merger.
Based upon the mutual covenants and consideration set forth
herein, the sufficiency of which is hereby acknowledged, the parties agree as
follows:
Section 1. Term. The initial term of employment of Employee by
the Company hereunder shall commence upon the date of this Agreement (the
"Commencement Date") and end on the fifth anniversary of the Commencement Date,
unless extended on terms agreed upon between Employee and the Company (such term
being hereinafter referred to as the "Employment Period"). Notwithstanding the
foregoing, the Employment Period shall automatically be extended for two
succeeding one-year periods unless Employee or the Company gives notice to the
other at least 180 days prior to the expiration of the initial Employment Period
or the first one-year extension, as the case may be, of such party's intention
not to extend the Employment Period. If such notice is given by either party,
the Employment Period shall terminate at the end of the initial Employment
Period or at the end of the first one-year extension, as the case may be. The
Employment Period may be earlier terminated pursuant to the provisions of this
Agreement.
Section 2. Duties.
2.1. Scope. (a) During the Employment Period,
Employee shall perform senior management services requiring substantially the
same time commitment and encompassing substantially the same responsibilities as
Employee has, in good faith and in the ordinary course of business, performed
for the Company prior to the Merger, and shall include such other services as
Employee and the Company may, from time to time, agree (collectively, the
"Services"). During
the Employment Periods, the Employee shall hold the office of President and
Chief Executive Officer of Employer.
(b) Employee shall have the right to determine, in
her sole discretion (after consultation with the Company's Board of Directors),
the allocation of up to $60,000 in bonuses for calendar year 1996 to be paid by
SSI to key management employees of SSI in December 1996. Employee shall also
have the right to cause the Company to continue to maintain its group manager
compensation program and its non-management employee, longevity bonus program.
The programs shall be administered and maintained in accordance with the
Company's past practice and in consultation with the Company's Board of
Directors.
(c) In connection with the consummation of the
Merger, Employee shall have the right in her sole discretion (after consultation
with the Company's Board of Directors and consistent with the Company's general
compensation practice) to offer up to 10 key management employees of the Company
written employment agreements that, among other things, provide for an annual
salary of up to 110% of the annual salary received by such employees immediately
prior to the consummation of the Merger.
2.2. (a) Performance. During the Employment Period,
the Employee will render the Services to the Company in conformity with
professional standards and in a prudent manner. Employee agrees to comply with
all of the Company's policies, standards and regulations and to follow the
reasonable instructions and directions of the Board of Directors of the Company
and Employee's superiors within the Company. The Employee shall promote the
interests of the Company in carrying out Employee's duties and shall not
deliberately take any action which could, or fail to take any action which
failure could, reasonably be expected to have a material adverse effect upon the
business of the Company, PSS or their respective affiliates.
(b) The Services shall be rendered at SSI's
principal offices in Chatsworth, and/or such other place or places and at such
reasonable times as Employer shall in good faith require or as its interests,
needs, business and opportunities shall require or make advisable. However,
Employee shall not be required to relocate out of the Southern California area,
nor shall Employee be required to spend more than one-third of her time outside
of the State of California.
(c) Employee shall to the same extent as PSS's
directors and officers be indemnified from any and all liabilities (including
reasonable attorney's fees and costs) incurred by reason of the fact that: (i)
on and after the date hereof, Employee is an employee of SSI and (ii) Employee
is a member of PSS's Board of Directors (to the extent Employee serves as such a
director); provided that such indemnity shall be pursuant to PSS's certificate
of incorporation and bylaws. To the same extent as PSS's directors and officers,
Employee shall as a director of PSS (to the extent Employee serves as such a
director) and as a director and officer of SSI be covered by liability insurance
against liabilities as to which Employee is permitted to be indemnified
hereunder.
Section 3. Compensation.
3.1. Salary. As compensation for the Services, the
Company shall pay to the Employee an annual salary of $250,000 for each year of
the Employment Period (the "Salary"), payable in equal installments in
accordance with the Company's normal payroll practices. During the Employment
Period, the Company shall endeavor in good faith to ensure that the Salary is
maintained at a level that is no less than the amount of annual base
compensation paid to similarly situated senior management employees of PSS or
any of PSS's wholly-owned subsidiaries.
3.2. Transitional Services. For services provided in
connection with the transition of ownership and coordination and realignment of
SSI and PSS activities including, but not limited to, employee and customer
relations services, information systems transition services and new customer
marketing programs, the Company shall cause PSS to pay to Employee $100,000 for
these transitional services, payable in four equal monthly installments
beginning on July 1, 1996 and ending on October 1, 1996. Notwithstanding the
foregoing, PSS shall not be obligated to pay any such installment if, at the
time such installment is otherwise due, Employee has ceased to be an employee of
the Company. PSS shall not withhold any amounts from the transitional service
bonus for payment of federal, state and local taxes thereon. To the extent any
such taxes are due, such taxes shall be paid by Employee.
3.3. Incentive Compensation. As additional
compensation for the Services, the Company shall pay Employee deferred incentive
compensation determined as set forth in Annex A (the "Incentive Compensation").
3.4. Employee Stock Options. Employee shall be
entitled to participate in PSS's 1996 Stock Option Plan. Grants to Employee
pursuant to the 1996 Stock Option Plan shall be at the discretion of the
Compensation Committee of PSS's Board of Directors and shall be consistent with
the objectives of the plan and PSS's senior management compensation policies.
The Company shall cause any stock option agreement pursuant to which PSS stock
options are granted to Employee under the 1996 Stock Option Plan to provide that
all unvested stock options granted to Employee thereunder shall automatically
vest in the event the Employment Period is terminated or expires other than
pursuant to Section 6.2.
3.5. Reimbursement; Automobile Allowance. (a)
Pursuant to the Company's standard reimbursement policies, the Company shall
reimburse Employee for all reasonable out-of-pocket expenses incurred by
Employee directly related to the performance by Employee of the services
hereunder. Employee shall account for such expenses in accordance with the
Company's reasonable record-keeping requirements.
(b) Employee shall be entitled to an automobile
allowance in the amount of $500 per month, which shall cover all of Employee's
employment-related automobile expenses, other than per mile costs which shall be
reimbursable in accordance with Internal Revenue Service guidelines.
Section 4. Employee Benefits. During the Employment
Period, Employee shall be eligible for the employee benefits (including, without
limitation, medical coverage) generally provided by PSS to its senior management
employees. The Company reserves the right to expand, restrict, designate or
eliminate the benefits provided to Employee so long as such
expansion, restriction, designation or elimination applies generally to all of
PSS's senior management employees.
Section 5. Non-Competition; Non-Disclosure.
5.1. Clients. (a) Employee recognizes and
acknowledges that, after the Commencement Date, all clients and/or accounts
serviced by the Company, Employee or the Company's other employees during
Employee's employment with the Company, including all clients and/or accounts
acquired by Employee due to such Employee's efforts during the term of such
Employee's employment with the Company are the clients and accounts of the
Company (collectively, "Client Accounts").
(b) "Prospective Client Accounts" are businesses or
individuals who (i) provided referrals to Employee or the Company that have
resulted either in a proposal for work or in a service engagement or (ii) are
known to Employee through activities with close business advisors of Client
Accounts. For purposes of this Agreement, "Prospective Client Accounts" are
considered to be "Client Accounts".
5.2. Non-Disclosure. (a) Except as provided in this
Section 5.2, Employee shall not, during or after the Employment Period, disclose
any confidential or proprietary information of the Company or of its affiliates
to any person, firm, corporation, association or other entity (other than the
Company, its affiliates, subsidiaries, officers or employees thereof) for any
reason or purpose whatsoever (other than in the normal course of business on a
need to know basis after Employee has received assurances that the confidential
or proprietary information shall be kept confidential), nor shall Employee make
use of any such confidential or proprietary information for his own purpose or
for the benefit of any person, firm, corporation or other entity, except the
Company. As used herein, the term "confidential or proprietary information"
means all information which is or becomes known to Employee 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 (including, without limitation,
any list of Client Accounts or any part thereof), 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 Employee or a person who received such information from
Employee).
(b) If Employee is requested or required by law or
judicial order to disclose any confidential or proprietary information, Employee
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 Employee's compliance with the provisions of this
clause. Employee 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. During the Employment Period, and for matters arising from events
or circumstances occurring during the Employment Period, the Company will
provide for the defense of matters arising under this provision.
(c) Employee agrees that Employee 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
Employee (either solely or jointly with others) during
the Employment Period and which shall in any way relate to the business
conducted or contemplated to be conducted by the Company or any of its
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
Employee (either solely or jointly with others) during the Employment Period
which relates in any way to the business conducted or contemplated to be
conducted by the Company or any of its 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, Employee shall, during
the Employment Period, 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, Employee shall execute and deliver any and all documents that the
Company may reasonably request, including applications for patents, copyrights
and assignments thereof.
5.3. Restrictive Covenant. Employee hereby
acknowledges and recognizes Employee's possession of confidential or proprietary
information and the highly competitive nature of the business of the Company and
its affiliates and accordingly agrees that, in consideration of PSS causing the
Merger to be consummated, the Company's entering into this Agreement, and the
premises contained herein, Employee will not, from and after the Commencement
Date and for the period ending on the later of (a) five years after the date of
this Agreement and (b) two years after the date of termination of the Employment
Period, either individually or as an officer, director, employee, partner, agent
or principal of another business firm (i) directly or indirectly engage in the
United States, in any competitive business (including seeking or accepting
employment with a Client Account), (ii) assist others in engaging in any
competitive business in the manner described in the foregoing clause (i), (iii)
solicit, professionally contract or provide medical billing, accounts
receivable, accounting, financial or consulting services to any Client Account
or (iv) induce employees of the Company or any of its affiliates to terminate
their employment with the Company or such affiliates or hire any employees of
the Company or any of its affiliates to work with Employee or any business firm
affiliated with Employee. Notwithstanding the foregoing, after the termination
on expiration of the Employment Period, Employee may (i) work or consult for a
governmental agency, (ii) work or consult for not-for-profit healthcare industry
groups, (iii) teach at a public or private college, university or professional
or vocational training school, (iv) consult on formation, management and/or
operations of healthcare entities (other than entities which, as the primary
component of their business, provide medical billing, accounts receivable
management or practice management services to physicians or physicians groups)
and (v) work in a management or administrative capacity in a healthcare business
(other than entities which, as the primary component of their business, provide
medical billing, accounts receivable management or practice management services
to physicians or physicians groups); provided that in no event shall Employee
engage in any activity otherwise prohibited pursuant to clauses (i) or (ii) of
the immediately preceding sentence.
5.4. Remedies. Employee acknowledges that the
Company may elect to specifically enforce Section 5.3 (the "Restrictive
Covenant") by injunctive or other equitable remedies (as provided in Section
8.4) or, in the alternative, seek damages as a result of Employee's breach of
the Restrictive Covenant. Employee recognizes that the right to service each
Client Account is a valuable asset of the Company and that the precise value of
the loss of such asset may be difficult to measure in monetary sums.
Section 6. Termination.
6.1. Death or Disability. If the Employee should die
during the Employment Period, the Employment Period shall terminate as of the
date of death. If the Employee becomes unable to perform the Services reasonably
satisfactorily for at least 180 consecutive days during the Employment Period
due to a physical or mental disability, the Company may elect to terminate the
Employment Period at any time thereafter, provided the Employee still suffers
from such disability; and the Employment Period shall terminate as of the date
of such election. All disabilities shall be certified by a physician reasonably
acceptable to Employee and to the Company. The Employee's failure to submit to
any physical examination by such physician after such physician has given
reasonable notice of the time and place of such examination shall be conclusive
evidence of the Employee's inability to perform his duties hereunder.
6.2. Cause. The Company, at its option, may
terminate the Employment Period and all of the obligations of the Company
hereunder for Cause. For the purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment hereunder in the event of (i) the
Employee's conviction of, or plea of guilty or nolo contendere to (A) a felony
or (B) a fraudulent or deliberately dishonest act which results in an adverse
effect on the Company, (ii) the Employee's material breach of this Agreement or
(iii) the Employee's gross negligence or bad faith in the performance of the
Services. Notwithstanding the foregoing, the Employment Period may not be deemed
to have been terminated for Cause pursuant to Section 6.2(ii) until 45 days
after Employee receives written notice from the Company that the Company is
terminating the Employment Period pursuant to such Section. During such 45-day
period, Employee has the right, together with Employee's counsel, to meet with
the Company's Board of Directors to discuss such termination by giving written
notice to the Company within 15 days after Employee receives such termination
notice. If such meeting is requested by Employee, such meeting shall take place
at the Company's principal place of business at a date and time to be mutually
agreed upon in good faith by the Company and Employee, which date shall not be
less than 10 days or more than 20 days after the Company's receipt of such
meeting request.
6.3. Payments in the Event of Termination. If the
Employment Period is terminated or expires pursuant to Section 1 or Section 6,
the Company shall pay the Employee any Salary and other monetary obligations
already earned to the date of such termination.
6.4. Termination Obligations. In the event of
termination of the Employment Period in accordance with this Section 6, all
obligations of the Company shall terminate, except as specifically set forth in
Section 6.3. In the event of termination by the Company of the Employment Period
other than pursuant to Section 1 or Section 6, Employee shall be entitled to
receive the full rights and benefits that Employee would otherwise have received
pursuant to Section 3 and Section 4 and Annex A hereto if the Employment Period
had not been so terminated and had continued until the earliest date on which it
could have terminated or expired pursuant to Section 1.
Section 7. Transition. In the event of termination of the
Employment Period, Employee shall use Employee's best efforts to assist the
Company in maintaining the Company's professional relationship with all Client
Accounts. To such end, Employee shall cooperate and assist the Company, at the
Company's direction and instruction, to retain and transition each Client
Account during the transition period between the receipt of notice of the
termination of employment and the final day of employment.
Section 8. Miscellaneous.
8.1. Assignment; Benefit. This Agreement is personal
in its nature and the parties shall not, without the prior written consent of
the other, assign or transfer this Agreement or any rights or obligations
hereunder; provided that the provisions hereof shall inure to the benefit of,
and be binding upon, each successor of the Company, whether by merger,
consolidation or transfer of all or substantially all of its assets.
8.2. Notices. All notices, requests and other
communications to any party hereunder shall be in writing and sufficient if
delivered personally or sent by telecopy (with confirmation of receipt) or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company, at:
Synergistic Systems, Inc.
c/o Physician Support Systems, Inc.
Route 230 and Eby-Chiques Road
P.O. Box 36
Mt. Joy, Pennsylvania 17552
Telecopy: 717-653-0567
Attention: Peter W. Gilson
Hamilton F. Potter III
David S. Geller
If to the Employee, at:
Jean M. Campbell
Synergistic Systems, Inc.
9131 Oakdale Avenue
Chatsworth, California 91311
Telecopy: 818-709-4750
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Each such
notice, request or communication shall be deemed to have been given when
received or, if given by mail, when delivered at the address specified in this
Section 8.2 or on the fifth business day following the date on which such
communication is posted, whichever occurs first.
8.3. Entire Agreement; Amendments and Waivers. This
Agreement represents the entire agreement between the parties with respect to
the subject matter hereof and supersedes all negotiations and prior agreements.
No amendment, alteration, modification, or waiver of any provision of, or
consent required by, this Agreement, nor any consent to any departure herefrom,
shall be effective unless it is in writing and signed by the parties hereto.
Such amendment, alteration, modification, waiver or consent shall be effective
only in the specific instance and for the purpose for which given.
8.4. Specific Performance. In the event of a breach
or threatened breach by Employee of the provisions of Section 5, the Company
shall be entitled to an injunction
restraining Employee from such breach. Nothing contained herein shall be
construed as prohibiting the Company from pursuing any other remedies available
at law or equity for such breach or threatened breach of this Agreement nor
limiting the amount of damages recoverable in the event of a breach or
threatened breach by Employee of the provisions of Section 5. Without limiting
the generality of the foregoing, Employee acknowledges that, in the event of a
breach or threatened breach by him of any of the provisions of Section 5, the
Company's damages may exceed the value of the consideration received by Employee
in the Merger.
8.5. Enforceability. It is the desire and intent of
the parties hereto that the provisions of this Agreement shall be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or unenforceable,
such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made.
8.6. Acknowledgment. Employee acknowledges that
Employee has read this Agreement and has been afforded the opportunity to
discuss and review this Agreement with the Company and/or an attorney of
Employee's choice. Employee understands that execution of this Agreement and
acceptance of its terms are conditions to PSS causing the Merger to be
consummated and to Employee's employment with the Company.
8.7. 1992 Employment Agreement. Effective as of the
date of this Agreement, the Employment Agreement effective as of January 1,
1992, by and between the Company and Employee shall be null and void and of no
further force or effect and the Company and Employee hereby release each other
from any and all liabilities thereunder, except that accrued wages, monies or
other benefits owed to Employee through June 28, 1996 will be paid to Employee.
8.8. Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
8.9. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart hereof shall be deemed to
be an original instrument, but all such counterparts together shall constitute
but one agreement.
8.10. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. ANY PROCEEDING
ARISING OUT OF THIS AGREEMENT SHALL BE BROUGHT IN LOS ANGELES COUNTY,
CALIFORNIA.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
SYNERGISTIC SYSTEMS, INC.
By: /s/ Robert S. Campbell
-------------------------
Name: Robert S. Campbell
Title: C.F.O.
/s/ Jean M. Campbell
-------------------------
Jean M. Campbell
Doc. #8511/1
ANNEX "A"
Incentive Compensation
In addition to the Salary and the other benefits Employee is
entitled to under this Employment Agreement, for each of the calendar years 1997
through 2001 (and any additional full calendar years during the Employment
Period), if the Company's earnings before interest and taxes ("EBIT") in any
such year is 12% or more higher than the highest EBIT of the Company for any
prior year, the Company shall pay Employee as incentive compensation an amount
as set forth in the table below under the heading entitled "Additional
Compensation." For calendar year 1996, Employee shall be paid as incentive
compensation an amount equal to (x) $50,000 if EBIT of the Company for 1996
equals or exceeds $1,876,000 but is less than $1,926,000 or (y) $100,000 if EBIT
of the Company for 1996 equals or exceeds $1,926,000. Payments, if any, for any
year shall be made by the Company to Employee within 120 days of the end of such
year. Calculations shall be based upon the Company's financial statements that
are included in PSS's audited consolidated financial statements and shall be
made in accordance with generally accepted accounting principles (except that
the calculation of EBIT of the Company for purposes of this Annex A shall not
take into consideration the expense or liability for any incentive compensation
payment due under this Annex A and shall not take into consideration any PSS
corporate overhead allocation or allocation of the capitalized cost of PSS
software unless Employee requests such software from PSS at additional cost to
PSS, but shall include any direct costs incurred relating to implementation of
PSS software at SSI and shall exclude any effects on EBIT resulting from
fluctuations in the Company's unbilled accounts receivable). The Company shall
not be obligated to pay incentive compensation for any year unless Employee is
an employee of the Company at the end of such year (except if the Employment
Period is terminated by the Company other than pursuant to Section 1 or Section
6 of this Employment Agreement).
Percentage of EBIT Growth over
Highest EBIT of any Prior Year(1) Additional Compensation
- ---------------------------------- -----------------------
12% $100,000
16% $150,000
20% $200,000
24% $250,000
- ----------
(1) Beginning in 1997, "highest EBIT" of any prior year shall be not less than
$1,826,000.
1