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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
this 30th day of September, 1997, by and between MEDAPHIS CORPORATION, a
Delaware corporation (the "Company"), and MARK COLONNESE, a resident of the
State of North Carolina (the "Employee").
Statement of Background Information
The Company renders to hospitals, physicians, and/or other healthcare
organizations and providers: (a) billing services, accounts receivable
management services, collection services, electronic claims services, financial
management services, and practice and facilities management services; (b)
eligibility verification and certification for Medicaid, Medicare and other
healthcare assistance programs; (c) filing and other medical claims
securitization services; (d) medical coverage information services; and (e)
medical and insurance claims monitoring and tracking services (collectively the
"Processing Business").
The Company also: (a) develops, markets and licenses to hospitals,
integrated healthcare delivery systems, and other healthcare providers and other
end users (collectively "Providers"), (i) strategic, operational and financial
information systems and services and decision support tools for healthcare
providers, (ii) software systems which provide claims and reimbursement services
and electronic claims processing, and (iii) software applications which assist
Providers with automated scheduling and resource management (the items discussed
in Sections (a)(i), (a)(ii) and (a)(iii) of this paragraph are referred to as
"Systems"), which Systems include, but are not limited to, nurse scheduling and
management information systems, operating room patient scheduling and surgery
information systems, enterprise wide patient scheduling and resource management
systems, enterprise-wide employee scheduling and management information systems
and related software interfaces to other information systems; and (b) provides
to Providers installation and support services related to the Company's Systems
(the "Systems Business").
The Company also renders professional services with respect to the
development of computer software, algorithms, design, documentation, and related
materials, and the development, design, deployment, and operation of local and
wide area computer networks, all in conjunction with the sale, design,
deployment, operation and maintenance of custom computer processing systems for
improvement of operational efficiency or functionality through the use of image
storage and processing, work flow technology,
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optical character recognition or other related technologies (the "System
Integration Business") (the Processing Business, the Systems Business, the
Systems Integration
Business and any other distinct business segment in which the Company engages
during Employee's employment are collectively referred to herein as the
"Business").
In consideration of the mutual covenants, promises and conditions set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts such employment upon the terms and conditions set forth in this
Agreement.
2. Duties of Employee. Employee's title will be Controller of Medaphis
Corporation and Employee will report directly to the Chief Financial
Officer of the Company. Employee agrees to perform and discharge such
other duties as may be assigned to Employee from time to time by the
Company to the reasonable satisfaction of the Company, and such duties
will be consistent with those duties regularly and customarily assigned
by the Company to the position of Controller of Medaphis Corporation.
Employee also agrees to comply with all of the Company's policies,
standards and regulations as promulgated by the officers of the
Company, and to follow the instructions and directives of Employee's
superiors within the Company. Employee will devote Employee's full
professional and business-related time, skills and best efforts to such
duties and will not, during the term of this Agreement, be engaged
(whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for
gain, profit or other pecuniary advantage, without the prior written
consent of the Chief Financial Officer of the Company, which consent
will not be unreasonably withheld. This Section will not be construed
to prevent Employee from (a) investing personal assets in businesses
which do not compete with the Company in such form or manner that will
not require any services on the part of Employee in the operation or
the affairs of the companies in which such investments are made and in
which Employee's participation is solely that of an investor; (b)
purchasing securities in any corporation whose securities are listed on
a national securities exchange or regularly traded in the
over-the-counter market, provided that Employee at no time owns,
directly or indirectly, in excess of one percent (1%) of the
outstanding stock of any class of any such corporation engaged in a
business competitive with that of the Company; or (c) participating in
conferences, preparing and publishing papers or books or teaching, so
long as the Chief Financial Officer of the Company
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approves such participation, preparation and publication or teaching
prior to Employee's engaging therein.
3. Term. The term of this Agreement will be for an eighteen (18) month
period of time, commencing as of September 30, 1997 and expiring on
March 31, a1999, subject to earlier termination as provided for in
Section 4 of this Agreement.
4. Termination.
(a) Termination by Company for Cause. Notwithstanding anything
contained in Section 3 to the contrary, the Company may terminate this
Agreement and all of its obligations hereunder immediately if any of
the following events occur:
(i) Employee materially breaches any of the terms or
conditions set forth in this Agreement and fails to cure such
breach within ten (10) days after Employee's receipt from the
Company of written notice of such breach (notwithstanding the
foregoing, no cure period shall be applicable to breaches by
Employee of Sections 6, 7 or 8 of this Agreement);
(ii) Employee commits any other act materially detrimental to
the business or reputation of the Company;
(iii) Employee commits or is convicted of any crime involving
fraud, deceit or moral turpitude; or
(iv) Employee dies or becomes mentally or physically
incapacitated or disabled so as to be unable to perform
Employee's duties under this Agreement. Without limiting the
generality of the foregoing, Employee's inability adequately
to perform services under this Agreement for a period of sixty
(60) consecutive days will be conclusive evidence of such
mental or physical incapacity or disability, unless such
inability adequately to perform services under this Agreement
is pursuant to a mental or physical incapacity or disability
covered by the Family Medical Leave Act, in which case such
sixty (60)-day period shall be extended to a one hundred and
twenty (120)-day period.
(b) Termination by Company Without Cause. Notwithstanding anything
contained in Section 3 to the contrary, the Company may terminate
Employee's employment pursuant to this Agreement without cause upon at
least thirty (30) days' prior written notice to Employee. In the event
Employee's employment with the Company is terminated by the Company
without cause, the Company shall remain subject to its
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obligations hereunder as if Employee remained employed hereunder for
the balance of the term hereof, as provided in Section 3 above.
5. Compensation and Benefits.
a) Annual Salary. During the term of this Agreement and for all
services rendered by Employee under this Agreement, the Company will
pay Employee a base salary of One Hundred Seventy Five Thousand Dollars
($175,000.00) per annum to be paid in accordance with the Company's
regular payroll practices, provided, however, that such payments shall
be made no less frequently than in equal monthly installments. Such
annual salary will be subject to adjustments by any increases given in
the normal course of business.
b) Incentive Compensation. Employee shall be eligible to participate in
the 1997 Medaphis Corporation and its Subsidiary Corporations Incentive
Compensation Plan (and any comparable future incentive compensation
plans during the term of this Agreement) at a participation category of
up to 50% of Employee's base salary, payable at the discretion of the
Board of Directors of the Company.
c) Stock Options. As soon as reasonably practicable after the signing
of this Agreement, and subject to the approval of the Compensation
Committee of the Board of Directors of Medaphis Corporation, the
Company will cause Medaphis to issue to Employee, effective as of the
date approved by the Compensation Committee of the Board of Directors
of Medaphis Corporation, options to purchase Fifty Thousand (50,000)
shares of Medaphis Common Stock pursuant to the terms and conditions of
the Amended and Restated Medaphis Corporation Non-Qualified Stock
Option Plan ("Stock Option Plan"), as amended. Such options will vest
at the rate of thirty-three and one-third percent (33.33%) per year for
a three-year period beginning on the starting date of this Agreement,
subject to the terms and conditions of the Stock Option Plan. Such
options shall vest in full immediately upon the occurrence of certain
change in control events outlined in the Stock Option Plan. Employee
shall be considered for additional grants of options to purchase shares
of Medaphis common stock in a manner which is consistent with other
senior officers of the Company. Except as expressly set forth herein,
nothing in this Agreement shall give rise to a contractual right to
Employee to receive grants of additional stock options of Medaphis.
Further, Medaphis has no obligation to Employee to create parity with
any other Medaphis executives with respect to any options granted to
such other executives.
d) Other Benefits. Employee will be entitled to such fringe benefits as
may be provided from time-to-time by the Company to its employees,
including, but not
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limited to, financial counseling services, group health insurance, life
and disability insurance, vacations and any other fringe benefits now
or hereafter provided by the Company to its employees, if and when
Employee meets the eligibility requirements for any such benefit. The
Company reserves the right to change or discontinue any employee
benefit plans or programs now being offered to its employees; provided,
however, that all benefits provided for employees of the same position
and status as Employee will be provided to Employee on an equal basis.
e) Business Expenses. Employee will be reimbursed for all reasonable
expenses incurred in the discharge of Employee's duties under this
Agreement pursuant to the Company's standard reimbursement
policies.
f) Withholding. The Company will deduct and withhold from the payments
made to Employee under this Agreement, state and federal income taxes,
FICA and other amounts normally withheld from compensation due
employees.
6. Non-Disclosure of Proprietary Information. Employee recognizes and
acknowledges that the Trade Secrets (as defined below) and Confidential
Information (as defined below) of the Company and its affiliates and
all physical embodiments thereof (as they may exist from time-to-time,
collectively, the "Proprietary Information") are valuable, special and
unique assets of the Company's and its affiliates' businesses. Employee
further acknowledges that access to such Proprietary Information is
essential to the performance of Employee's duties under this Agreement.
Therefore, in order to obtain access to such Proprietary Information,
Employee agrees that, except in connection with performing duties
assigned to him by the Company, Employee shall hold in confidence all
Proprietary Information and will not reproduce, use, distribute,
disclose, publish or otherwise disseminate any Proprietary Information,
in whole or in part, and will take no action causing, or fail to take
any action necessary to prevent causing, any Proprietary Information to
lose its character as Proprietary Information, nor will Employee make
use of any such information for Employee's own purposes or for the
benefit of any person, firm, corporation, association or other entity
(except the Company) under any circumstances.
For purposes of this Agreement, the term "Trade Secrets" means
information, without regard to form, including, but not limited to, any
technical or nontechnical data, formula, pattern, compilation, program,
device, method, technique, drawing, process, financial data, financial
plan, product plan, list of actual or potential customers or suppliers,
or other information similar to any of the foregoing, which is not
commonly known by or available to the public and (i) derives economic
value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can
derive economic value from
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its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. For
purposes of this Agreement, the term "Trade Secrets" does not include
information that Employee can show by competent proof (i) was known to
Employee and reduced to writing prior to disclosure by the Company (but
only if Employee promptly notifies the Company of Employee's prior
knowledge); (ii) was generally known to the public at the time the
Company disclosed the information to Employee; (iii) became generally
known to the public after disclosure by the Company through no act or
omission of Employee; or (iv) was disclosed to Employee by a third
party having a bona fide right both to possess the information and to
disclose the information to Employee. The term "Confidential
Information" means any data or information of the Company, other than
trade secrets, which is valuable to the Company and not generally known
to competitors of the Company. The provisions of this Section 6 will
apply to Trade Secrets for so long as such information remains a trade
secret and to Confidential Information during Employee's employment
with the Company and for a period of two (2) years following any
termination of Employee's employment with the Company for whatever
reason.
7.A. Non-Competition Covenant. During Employee's employment by the Company
Employee will be a member of the Company's executive management team.
Employee agrees that during his employment and for a period of two (2)
years following any termination of Employee's employment for whatever
reason, Employee will not, directly or indirectly, on Employee's own
behalf or in the service of or on behalf of any other individual or
entity, compete with the Company within the Geographical Area (as
hereinafter defined). The term "compete" means to engage in, have any
equity or profit interest in, make any loan to or for the benefit of,
or render services of any marketing, management, sales, administrative,
supervisory or consulting nature, directly or indirectly, on Employee's
own behalf or in the service of or on behalf of any other individual or
entity, either as a proprietor, employee, agent, independent
contractor, consultant, director, officer, partner or stockholder
(other than a stockholder of a corporation listed on a national
securities exchange or whose stock is regularly traded in the
over-the-counter market, provided that Employee at no time owns,
directly or indirectly, in excess of one percent (1%) of the
outstanding stock of any class of any such corporation) any business
which provides Business products or services, provided that nothing in
this Agreement will preclude Employee from rendering legal services in
the role of outside counsel on behalf of any entity, including those
entities that compete with the Company, following the termination of
his employment with the Company. For purposes of this Agreement, the
term "Geographical Area" means the territory located within a
seventy-five (75) mile radius of any Company facility for which
Employee exercised managerial control or provided legal services on
behalf of the Company.
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B. Non-Solicitation of Clients Covenant. Employee agrees that during
Employee's employment by the Company and for a period of two (2) years
following the termination of Employee's employment for whatever reason,
Employee will not, directly or indirectly, on Employee's own behalf or
in the service of or on behalf of any other individual or entity,
divert, solicit or attempt to divert or solicit any individual or
entity (i) who is a client of the Company at any time during the six
(6)-month period prior to Employee's termination of employment with the
Company ("Client"), or was actively sought by the Company as a
prospective client, and (ii) with whom Employee had material contact
while employed by the Company, to provide Business services or products
to such Clients or prospects.
C. Construction. The parties hereto agree that any judicial authority
construing all or any portion of this Section 7 or Section 8 below may,
if it chooses, sever any portion of the Geographical Area, client base,
prospective relationship or prospect list or any prohibited business
activity from the coverage of such Section and to apply the provisions
of such Section to the remaining portion of the Geographical Area, the
client base or the prospective relationship or prospect list, or the
remaining business activities not so severed by such judicial
authority. In addition, it is the intent of the parties that the
judicial authority may, if it chooses, replace each such severed
provision with a provision as similar in terms to such severed
provision as may be possible and be legal, valid and enforceable. It is
the intent of the parties that Sections 7 and 8 be enforced to the
maximum extent permitted by law. In the event that any provision of
either such Section is determined not to be specifically enforceable,
the Company shall nevertheless be entitled to bring an action to seek
to recover monetary damages as a result of the breach of such provision
by Employee.
8. Non-Solicitation of Employees Covenant. Employee further agrees and
represents that during Employee's employment by the Company and for a
period of two (2) years following any termination of Employee's
employment for whatever reason, Employee will not, directly or
indirectly, on Employee's own behalf or in the service of, or on behalf
of any other individual or entity, divert or solicit, or attempt to
divert or solicit, to or for any individual or entity which is engaged
in providing Business services or products, any person employed by the
Company, whether or not such employee is a full-time employee or
temporary employee of the Company, whether or not such employee is
employed pursuant to written agreement and whether or not such employee
is employed for a determined period or at-will.
9. Existing Restrictive Covenants. Employee represents and warrants that
Employee's employment with the Company does not and will not breach any
agreement which Employee has with any former employer to keep in
confidence confidential information or not to compete with any such
former employer.
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Employee will not disclose to the Company or use on its behalf any
confidential information of any other party required to be kept
confidential by Employee.
10. Return of Proprietary Information. Employee acknowledges that as a
result of Employee's employment with the Company, Employee may come
into the possession and control of Proprietary Information, such as
proprietary documents, drawings, specifications, manuals, notes,
computer programs, or other proprietary material. Employee
acknowledges, warrants and agrees that Employee will return to the
Company all such items and any copies or excerpts thereof, in any form
or medium, and any other properties, files or documents obtained as a
result of Employee's employment with the Company, immediately upon the
termination of Employee's employment with the Company.
11. Proprietary Rights. During the course of Employee's employment with the
Company, Employee may make, develop or conceive of useful processes,
machines, compositions of matter, computer software, algorithms, works
of authorship expressing such algorithm, or any other discovery, idea,
concept, document or improvement which relates to or is useful to the
Company's Business (the "Inventions"), whether or not subject to
copyright or patent protection, and which may or may not be considered
Proprietary Information. Employee acknowledges that all such Inventions
will be "works made for hire" under United States copyright law and
will remain the sole and exclusive property of the Company. Employee
also hereby assigns and agrees to assign to the Company, in perpetuity,
all right, title and interest Employee may have in and to such
Inventions, including without limitation, all copyrights, and the right
to apply for any form of patent, utility model, industrial design or
similar proprietary right recognized by any state, country or
jurisdiction. Employee further agrees, at the Company's request and
expense, to do all things and sign all documents or instruments
necessary, in the opinion of the Company, to eliminate any ambiguity as
to the ownership of, and rights of the Company to, such Inventions,
including filing copyright and patent registrations and defending and
enforcing in litigation or otherwise all such rights.
Employee will not be obligated to assign to the Company any Invention
made by Employee while in the Company's employ which does not relate to
any business or activity in which the Company is or may reasonably be
expected to become engaged, except that Employee is so obligated if the
same relates to or is based on Proprietary Information to which
Employee will have had access during and by virtue of Employee's
employment or which arises out of work assigned to Employee by the
Company. Employee will not be obligated to assign any Invention which
may be wholly conceived by Employee after Employee leaves the employ of
the Company, except that Employee is so obligated if such Invention
involves the utilization of Proprietary Information obtained while in
the employ of
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the Company. Employee is not obligated to assign any Invention which
relates to or would be useful in any business or activities in which
the Company is engaged if such Invention was conceived and reduced to
practice by Employee prior to Employee's employment with the Company.
12. Remedies. Employee agrees and acknowledges that the violation of any of
the covenants or agreements contained in Sections 6, 7, 8, 9, 10 and 11
of this Agreement would cause irreparable injury to the Company, that
the remedy at law for any such violation or threatened violation
thereof would be inadequate, and that the Company will be entitled, in
addition to any other remedy, to temporary and permanent injunctive or
other equitable relief without the necessity of proving actual damages
or posting a bond.
13. Notices. Any notice or communication under this Agreement will be in
writing and sent by registered or certified mail addressed to the
respective parties as follows:
If to the Company: If to Employee:
2700 Cumberland Parkway Mark Colonnese
Suite 300 1307 Woodfield Court
Atlanta, GA 30339 Wilmington, NC 28409
Attn: Chief Executive Officer
or to such other address or agent as may be hereafter designated in
writing by either party hereto. All such notices shall be deemed given
on the date personally delivered or mailed.
14. Severability. Subject to the application of Section 7(C) to the
interpretation of Sections 7 and 8, in case one or more of the
provisions contained in this Agreement is for any reason held to be
invalid, illegal or unenforceable in any respect, the parties agree
that it is their intent that the same will not affect any other
provision in this Agreement, and this Agreement will be construed as if
such invalid or illegal or unenforceable provision had never been
contained herein. It is the intent of the parties that this Agreement
be enforced to the maximum extent permitted by law.
15. Entire Agreement. This Agreement embodies the entire agreement of the
parties relating to the subject matter of this Agreement and supersedes
all prior agreements, oral or written, regarding the subject matter
hereof. No amendment or modification of this Agreement will be valid or
binding upon the parties unless made in writing and signed by the
parties.
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16. Binding Effect. This Agreement will be binding upon the parties and
their respective heirs, representatives, successors, transferees and
permitted assigns.
17. Assignment. This Agreement is one for personal services and will not be
assigned by Employee. The Company may assign this Agreement to its
parent company or to any of its subsidiaries or affiliated companies;
provided that the parent or any subsidiary or affiliate fulfills the
obligations of the Company under this Agreement.
18. Governing Law. This Agreement is entered into and will be interpreted
and enforced pursuant to the laws of the State of Georgia. The parties
hereto hereby agree that the appropriate forum and venue for any
disputes between any of the parties hereto arising out of this
Agreement shall be any federal court in the state where the Company has
its principal place of business and each of the parties hereto hereby
submits to the personal jurisdiction of any such court. The foregoing
shall not limit the rights of any party to obtain execution of judgment
in any other jurisdiction. The parties further agree, to the extent
permitted by law, that a final and unappealable judgment against either
of them in any action or proceeding contemplated above shall be
conclusive and may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified
exemplified copy of which shall be conclusive evidence of the fact and
amount of such judgment.
19. Indemnification. Employee shall be entitled to the indemnification and
exculpation offered through and set forth in the Company's Charter and
By-laws.
20. Surviving Terms. Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement
shall survive termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: EMPLOYEE:
By: /s/ Jerome H. Baglien /s/ Mark Colonnese
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Mark Colonnese
Title: CFO
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EXHIBIT A
INVENTIONS
Employee represents that there are no Inventions.
/s/ MPC
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Employee Initials
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