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EXHIBIT 10.70
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
this 27th day of January, 1998, by and between MEDAPHIS CORPORATION, a Delaware
corporation (the "Company"), and Kevin P. Castle, a resident of the State of
Georgia (the "Employee").
Statement of Background Information
The Company (a) develops, markets and licenses to physicians,
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 Company also renders
professional services with respect to (a) designing and supporting
client/server infrastructure and applications, including (i) design,
integration and network management; (ii) strategic systems engineering; (iii)
computer security; (iv) database design, modeling, development and migration;
and (v) graphical user interface design, development and implementation, and
(b) the development of computer software, algorithms, designs, 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, optical character
recognition or other related technologies (collectively, the activities
described in this Paragraph are 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. For purposes of Sections 7 and 8 of this Agreement,
"employment" shall mean any period of time during which the Company is
paying the Employee salary, wages, or any other amounts, whether or
not the Employee is currently performing services for the Company at
the time of such payment.
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2. Duties of Employee. Employee's title will be Senior Vice President,
Human Resources of the Company's Per-Se Business Unit. Employee agrees
to perform and discharge such duties as may be assigned to Employee
from time to time by the Company to the reasonable satisfaction of the
Company. Employee also agrees to comply with all of the Company's
policies, standards and regulations and to follow the instructions and
directives of Employee's superiors within the Company, as promulgated
by the officers of 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 Carl James Schaper, or his designee, 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 Carl James Schaper, or his
designee, approves such participation, preparation and publication or
teaching prior to Employee's engaging therein, which approval will not
be unreasonably withheld.
3. Term. The term of this Agreement will be for a two (2) year period of
time, commencing as of February 1, 1998 and expiring on January 31,
2000, subject to earlier termination as provided for in Section 4 of
this Agreement. Following the initial two (2) year term of this
Agreement, the terms of this Agreement will continue to remain in
effect provided that either party may terminate this Agreement upon
thirty (30) days' written notice.
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);
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(ii) Employee engages in dishonest or illegal activities or
commits or is convicted of any crime involving fraud, deceit
or moral turpitude; or
(iii) 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 to adequately
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 to
adequately 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, Employee
will be entitled to receive salary continuation (at the salary
level set forth below in Paragraph 5.a) for the balance of the
term of this Agreement. If Employee is terminated without cause
under this Paragraph of the Agreement, Employee will not be
entitled to any other consideration or be considered an employee
of the Company for any other purposes, including the vesting of
stock options, beyond the termination date.
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 Two Hundred Thousand Dollars ($200,000.00) per annum in
equal bi-weekly 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 Medaphis Corporation and its Subsidiary Corporations Incentive
Compensation Plan at a participation category of fifty percent (50%) of
Employee's base salary, payable at the discretion of the Medaphis
Corporation Board of Directors.
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
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Corporation, options to purchase One Hundred Thousand (100,000) 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. However, 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 limited to, group health insurance, life and
disability insurance 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.
g) Signing Bonus. Upon execution of this Agreement, the Company will
pay Employee a signing bonus in the amount of Twenty-Five Thousand
Dollars ($25,000.00). Employee will be eligible to receive an
additional Twenty-Five Thousand Dollars ($25,000.00) following the
first anniversary date of Employee's commencement of employment with
the Company, payable at the discretion of Carl James Schaper.
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
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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
with respect to those 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 and its affiliates) under any circumstances.
For purposes of this Agreement, the term "Trade Secrets" means
information, 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 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 its disclosure or use. 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
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 any services of any
kind to, 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
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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) of any
business which provides Business products or services. For purposes of
this Agreement, the term "Geographical Area" means the territory
located within a seventy-five (75) mile radius of each facility for
which Employee has management responsibility during Employee's
employment with the Company.
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 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, solicit or hire
away, or attempt to divert, solicit or hire away, to or for any
individual or entity which is engaged in providing Business services
or products, any person employed by the Company for whom Employee had
supervisory responsibility or with whom Employee had material contact
while 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.
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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. 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, 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
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the Company, except that Employee is so obligated if such Invention
involves the utilization of Proprietary Information obtained while in
the employ of 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:
Medaphis Corporation
2700 Cumberland Parkway Kevin P. Castle
Suite 300
Atlanta, GA 30339
Attn: General Counsel
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.
16. Binding Effect. This Agreement will be binding upon the parties and
their respective heirs, representatives, successors, transferees and
permitted assigns.
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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 court located in the geographical area
comprised by the United States District Court for the Northern
District of Georgia 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. 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:
MEDAPHIS CORPORATION
By: /s/ Randolph L. M. Hutto /s/ Kevin P. Castle
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Kevin P. Castle
Title: EXECUTIVE VICE PRESIDENT
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THIS AGREEMENT IS NOT VALID AND BINDING UPON THE COMPANY UNTIL SIGNED BY DAVID
E. MCDOWELL OR RANDOLPH L. M. HUTTO, ESQ.
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EXHIBIT A
INVENTIONS
Employee represents that there are no Inventions.
/s/ KPC
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Employee Initials
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