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EXHIBIT 10.68
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
this 9th day of April, 1997, by and between MEDAPHIS CORPORATION, a Delaware
corporation (the "Company"), and Harvey Herscovitch, a resident of the State of
New Jersey (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 provides subrogation and related recovery services for
healthcare payors, including health maintenance organizations, indemnity
insurers, Blue Cross and Blue Shield organizations, third-party administrators,
self-funded employee health welfare benefit plans, and provider hospital
organizations (the "Subrogation 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, optical character recognition or
other related technologies (the "System Integration Business") (the Processing
Business, the Subrogation Business, the Systems
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Business, the Systems Integration Business and any other distinct business
segment in which the Company engages during Employee's employment are
collectively referred to 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.
2. Duties of Employee. Employee's title will be Senior Vice President,
Strategy and Organization. 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. 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 the
Chief Executive 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 Executive Officer of
the Company approves such participation, preparation and publication or
teaching prior to Employee's engaging therein.
3. Term. The term of this Agreement will be for a two (2) year period of
time, commencing as of February 10, 1997 and expiring on February 10,
1999, subject to earlier termination as provided for in Section 4 of
this Agreement.
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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 engages in dishonest or illegal activities or
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 obligations hereunder as
if Employee remained employed hereunder for the balance of the
term hereof, as provided in Section 3 above.
(c) Change in Control. In the event there is a change in control
of Medaphis Corporation, Employee will be provided thirty (30)
days in which to decide whether Employee desires to remain
employed by the Company under the terms of this Agreement. In
the event Employee elects to continue his employment with the
Company following such a change in control, this Agreement
will remain in effect according to all of its terms. In the
event Employee decides to resign from the
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Company following such a change in control, Employee will be
entitled to receive a severance payment equal to the greater
of (1) one year of salary continuation at Employee's then
current base salary, or (2) those payments due and owing to
Employee under the remaining term of this Agreement. For
purposes of this Agreement, a "change in control" of Medaphis
Corporation shall be deemed to occur upon any of the
following:
(i) a consolidation or merger of Medaphis Corporation with
or into any other corporation, or any other entity or person,
other than a wholly-owned subsidiary of Medaphis Corporation,
excluding any transaction in which stockholders of Medaphis
Corporation prior to the transaction will maintain voting
control or own at least 50% of the resulting entity after the
transaction;
(ii) any corporate reorganization, including an exchange
offer, in which Medaphis Corporation shall not be the
continuing or surviving entity resulting from such
reorganization, excluding any transaction in which
stockholders of the Medaphis Corporation prior to the
transaction will maintain voting control or own at least 50%
of the resulting entity after the transaction; or
(iii) the sale of a substantial portion of Medaphis
Corporation's assets, which shall be deemed to occur on the
date that any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such
person or persons) assets from Medaphis Corporation that (a)
have a total fair market value equal to more than 50% of the
total fair market value of all the assets of Medaphis
Corporation, immediately prior to such acquisition or
acquisitions, or (b) represents a majority of the common stock
of any (1) subsidiary of Medaphis Corporation, the revenues of
which, in the most recent fiscal year, represent more than 75%
of the consolidated gross revenues of Medaphis Corporation and
its subsidiaries. Notwithstanding the foregoing, a transfer of
assets or common stock in a subsidiary by Medaphis Corporation
will not be treated as a sale of a substantial portion of
Medaphis Corporation's assets if the assets are transferred to
an entity, 50% or more of the total value or voting power of
which is owned, directly or indirectly, by Medaphis
Corporation.
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 Forty Thousand Dollars
($140,000.00) 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.
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b) Incentive Compensation. Employee shall be eligible to participate in
the 1997 Medaphis Corporation and its Subsidiary Corporations Incentive
Compensation Plan at a participation category of 40% 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 Forty Thousand (40,000)
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, 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.
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g) Travel Expenses. Employee will be entitled to be reimbursed for
those expenses associated with Employee's returning to New Jersey from
Atlanta every other weekend during the first year of this Agreement.
h) Housing Allowance. Provided that Employee provides the Company with
adequate documentation, Employee will receive a housing allowance not
to exceed $2,600.00 per month during the duration of this Agreement.
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 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) 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
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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 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.
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
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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.
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
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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 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 Harvey Herscovitch
Suite 300 2700 Cumberland Parkway
Atlanta, GA 30339 Suite 300
Attn: General Counsel Atlanta, GA 30339
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
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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.
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. Surviving Terms. Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement
shall survive termination of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: EMPLOYEE:
MEDAPHIS CORPORATION
By: /s/ Daniel Connors /s/ Harvey Herscovitch
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Harvey Herscovitch
Title: SVP Personnel & Admin.
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EXHIBIT A
INVENTIONS
Employee represents that there are no Inventions.
/s/ H H
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Employee Initials
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