EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
10.1
EXECUTION
COPY
This
Executive Employment Agreement (the “Agreement”) dated as of May 1, 2006 (the
“Effective Date”), by and between Express Scripts, Inc., a Delaware corporation
(the “Company”), and ________________ (“Executive”).
WHEREAS,
Executive is now and has been employed by the Company as pursuant to the terms
of that certain Executive Employment Agreement dated as of ___________________
(the “Prior Agreement”); and
WHEREAS,
the Company and Executive mutually desire to terminate the Employment Period
under the Prior Agreement, as defined therein, and to replace the Prior
Agreement with this Agreement to provide for the continued employment of
Executive on the terms and conditions set forth herein, all effective as of
the
Effective Date;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
As
used
herein, the following terms shall have the following meanings:
1.1 “Accrued
Rights”
has
the
meaning set forth in Section 4.1.
1.2 “Annual
Base Salary”
means
the base salary set forth in Section 3.1 hereof.
1.3 “Annual
Bonus”
means
Executive’s annual bonus granted pursuant to the Annual Bonus Plan, as described
in Section 3.2 hereof.
1.4 “Annual
Bonus Plan”
means
the annual bonus program established for senior executives by the Board of
Directors of the Company (the “Board”) or by the Committee, as adopted or
amended from time to time.
1.5 “Bonus
Potential”
means
the maximum bonus amount Executive could receive pursuant to Section 3.2 hereof
for achieving 100% of “base” or “targeted” performance goals established by the
Board or Committee under the Annual Bonus Plan with respect to the applicable
fiscal year; provided,
however,
in no
event shall Executive’s Bonus Potential for the year in which the Bonus
Potential is being determined (a) be less than ____% of Executive’s Annual Base
Salary as in effect on January 1 of such year or (b) take into account, or
include in any way, any increase in Executive’s bonus amount due to the Company
exceeding its “base” or “target” goals for such year (e.g., if Executive’s
“base” or “target” Bonus Potential is stated at $50,000, but Executive is
eligible to receive more than $50,000 if certain targets are exceeded then
Executive’s Bonus Potential for purposes of this definition is
$50,000).
1.6 “Cause”
means:
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(a)
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any
act or acts by Executive, whether or not in connection with his or
her
employment by the Company, constituting, or Executive’s conviction or plea
of guilty or nolo contendere (no contest) to, (i) a felony under
applicable law or (ii) a misdemeanor involving moral
turpitude;
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(b)
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any
act or acts of gross dishonesty or gross misconduct in the performance
of
Executive’s duties hereunder;
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(c)
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any
willful malfeasance or willful misconduct by Executive in connection
with
Executive’s duties hereunder or any act or omission which is materially
injurious to the financial condition or business reputation of the
Company
or its affiliates; or
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(d)
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any
breach by Executive of the provisions of Sections 5.1 through 5.3
of this
Agreement, or of the terms and provisions of the Nondisclosure and
Noncompetition Agreement (as defined in Section 1.18
hereof).
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Notwithstanding
the foregoing, the event(s) described in clause (c) of this Section 1.6 shall
not be deemed to constitute “Cause” if such event is (i) primarily the result of
bad judgment or negligence on the part of Executive not rising to the level
of
gross negligence; or (ii) primarily because of an act or omission believed
by
Executive in good faith to have been in, or not opposed to, the interests of
the
Company and its affiliates.
1.7 “Change
in Control”
means
a
Change in Control as that term is defined in the Incentive Plan (as defined
in
Section 1.16 hereof).
1.8 “Code”
means
the Internal Revenue Code of 1986, as amended.
1.9 “Committee”
means
the Compensation and Development Committee of the Board.
1.10 “Covered
Payments”
means
the amounts described in Section 6.12(a) hereof.
1.11 “Disability”
has
the
meaning ascribed to such term in the Incentive Plan.
1.12 “Effective
Date”
means
the date specified in the recitals to this Agreement.
1.13 “Employment
Period”
means
the Initial Employment Period (as defined in Section 1.17 hereof) plus any
additional Renewal Periods (as defined in Section 1.20 hereof).
1.14 “Excise
Tax”
means
the excise tax imposed by Section 4999 of the Code or any similar state or
local
tax that may be imposed.
1.15 “Good
Reason”
means
the occurrence of any one or more of the following:
(a) Any
material breach by the Company of any of the provisions of this Agreement or
any
material failure by the Company to carry out any of its obligations
hereunder;
(b) The
Company’s requiring Executive to be based at any office or location more than 50
miles from 00000 Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx (the “Current
Headquarters”), except for travel reasonably required in the performance of
Executive’s responsibilities to the extent substantially consistent with
Executive’s business travel obligations;
(c) Any
substantial and sustained diminution in Executive’s authority or
responsibilities from those described in Section 2.3 hereof; provided, however,
notwithstanding the foregoing, (i) in the event a Change in Control shall occur
which results in the Company becoming a subsidiary of another pharmacy benefit
management company (“PBM”), or which is in the form of a merger in which the
surviving corporation or entity is a PBM (x) so long as Executive is offered
a
position as an officer of the parent PBM (or surviving corporation or entity)
with duties and responsibilities which are not inconsistent in any material
adverse respect with his or her duties and responsibilities immediately prior
to
such Change in Control, and such position is based at an office or location
not
more than 50 miles from the Current Headquarters, such change in position shall
not constitute Good Reason, but (y) if Executive is not offered a position
as an
officer of the parent PBM or surviving corporation or entity as described in
(x), a substantial and sustained diminution in Executive’s authority or
responsibility shall be deemed to have occurred; or (ii) in the event a Change
in Control shall occur which results in the Company becoming a subsidiary of
a
non-PBM or is in the form of a merger in which the surviving corporation or
entity is not a PBM, failure to receive an offer to serve as an officer of
the
non-PBM parent or surviving corporation or entity shall not constitute Good
Reason provided Executive’s duties subsequent to the Change in Control are not
inconsistent in any material adverse respect with his or her duties immediately
prior to the Change in Control, and such position is based at an office or
location not more than 50 miles from the Current Headquarters;
(d) The
failure by the Company to continue to provide Executive with substantially
similar perquisites or benefits Executive enjoyed in the aggregate under the
Company’s benefit programs (other than long-term incentive compensation
programs), such as any of the Company’s pension, savings, vacation, life
insurance, medical, health and accident, or disability plans in which he or
she
was participating at the time of any such discontinuation (or, alternatively,
if
such plans are amended, modified or discontinued, substantially similar
equivalent benefits thereto in the aggregate), or the taking of any action
by
the Company which would directly or indirectly cause such benefits to be no
longer substantially equivalent in the aggregate to the benefits in effect
immediately prior to taking such action; provided,
that
any amendment, modification or discontinuation of any plans or benefits referred
to in this subsection (d) hereof that generally affect substantially all other
domestic salaried employees of the Company who were eligible to participate,
and
participated, in the affected Company benefit program(s) shall not be deemed
to
constitute Good Reason; and
(e) The
timely delivery by the Company to the Executive of notice under Section 2.2,
indicating that the Company does not desire to renew this Agreement for an
additional Renewal Period, unless the Employment Period during which such notice
is delivered is scheduled to end after the Executive has attained the age of
65;
provided
that the
events described in Section 1.15 (a), (b), (c) or (d) above shall only
constitute Good Reason if the Company fails to cure such event within 30 days
after receipt from Executive of written notice of the event which constitutes
Good Reason; and provided further that, “Good Reason” shall cease to exist for
an event on the 120th day following the later of its occurrence or Executive’s
knowledge thereof, unless Executive has given the Company written notice thereof
prior to such date.
1.16 “Incentive
Plan”
means
the Express Scripts, Inc. 2000 Long-Term Incentive Plan, as amended from time
to
time.
1.17 “Initial
Employment Period”
has
the
meaning set forth in Section 2.2 hereof.
1.18 “Nondisclosure
and Noncompetition Agreement”
means
the Form of Nondisclosure and Noncompetition Agreement entered into by and
between Executive and the Company dated as of ___________________.
1.19 “Payment
Cap”
means
the maximum amount described in Section 6.12(b) hereof.
1.20 “Renewal
Period”
has
the
meaning set forth in Section 2.2 hereof.
1.21 “Retirement”
means
the voluntary termination of employment by Executive on or after attaining
age
59 1/2.
1.22 “Severance
Benefit”
means
a
severance payment in an amount equal to:
(a) eighteen
(18) months of Executive’s Annual Base Salary as in effect immediately prior to
the Termination Date, plus
(b) an
amount
equal to one hundred fifty percent (150%) of the product of (i) Executive’s
Bonus Potential for the year in which the Termination Date occurs (the
“Termination Year”), multiplied by (ii) the average percentage of the Bonus
Potential earned by the Executive for the three (3) full years immediately
preceding the Termination Year, (or such shorter period if Executive was
employed by the Company for less than three (3) full years and received, or
was
eligible to receive, a bonus during such period), which product shall be
prorated for the portion of the Termination Year in which Executive was employed
by the Company. Notwithstanding anything to the contrary herein, neither the
three-year average percentage of Bonus Potential described in (ii) above, nor
the percentage for any single year used to compute such three-year average,
may
exceed 100%.
1.23 “Tax
Reimbursement Payment”
means
the payment described in Section 6.12(c) hereof.
1.24 “Termination
Date”
means
the effective date of termination of Executive’s employment as determined in
accordance with Section 4.5 hereof.
1.25 “Welfare
Benefit”
has
the
meaning set forth in Section 4.2.
ARTICLE
II
TERM/POSITION
2.1 Employment;
Effectiveness of Agreement.
Effective as of the Effective Date, the Company hereby employs Executive, and
Executive hereby accepts such employment, according to the terms and conditions
set forth in this Agreement.
2.2 Term.
Subject
to the provisions of Sections 4.1 through 4.5 of this Agreement, the term of
Executive’s employment hereunder shall commence on the Effective Date and
continue through March 31, 2007 (the “Initial Employment Period”). On April 1 of
each year, commencing with April 1, 2008, and on each subsequent April 1
thereafter (each, an “Anniversary Date”), this Agreement shall be extended
automatically at such time for an additional twelve (12) month period (each,
a
“Renewal Period”) unless either party hereto delivers written notice in
accordance with Section 6.2 hereof to the other party hereto at least 90 days
prior to such Anniversary Date of his, her or its desire not to renew this
Agreement for an additional Renewal Period. (e.g.
Subject
to the terms hereof, assuming a June 1 Anniversary Date, and an employment
period (Initial or Renewal) of April 1, 2007 through March 31, 2008, if either
party gives proper notice at least 90 days prior to April 1, 2008 then the
Agreement shall terminate as of March 31, 2008, but if neither party gives
proper notice at least 90 days prior to April 1, 2008 then the Agreement shall
automatically renew for an additional Renewal Period of April 1, 2008 through
March 31, 2009.) The Initial Employment Period and any Renewal Periods, if
any,
shall constitute the “Employment Period” for purposes of this Agreement. If
there are no Renewal Periods, then the Employment Period shall have the same
meaning as Initial Employment Period. Except as set forth in Section 6.1 hereof,
upon termination of Executive’s employment with the Company in accordance with
the terms hereof or upon termination of the Initial Employment Period or the
Employment Period without extension thereof, this Agreement shall terminate
and
no longer be of any force or effect.
2.3 Position
and Duties.
Executive shall hold the position of _________________________ and shall report
to, and at all times be subject to the lawful direction of, the Chief Executive
Officer [or President] of the Company (as designated by the Chief Executive
Officer of the Company). Additionally, Executive shall serve as a member of
the
executive staff and participate in the strategic decision-making of the Company
from time to time. During the Employment Period, Executive shall devote his
or
her best efforts and his or her full business time and attention (except for
permitted vacation periods and reasonable periods of illness or other
incapacity) to the business affairs of the Company. Executive shall perform
his
or her duties and responsibilities to the best of his or her abilities in a
diligent, trustworthy, businesslike and efficient manner. Nothing herein shall
preclude Executive from, (a) subject to the prior written consent of the Board,
or an appropriate committee of the Board, serving on any for-profit corporate
or
governmental board of directors (b) serving on the board of, or working for,
any
charitable, not-for-profit or community organization, (c) pursuing his or her
personal, financial and legal affairs, or (d) pursuing any other activity;
provided
that
Executive shall not engage in any other business, profession, occupation or
other activity, for compensation or otherwise, which would violate the
provisions of Section 5.1 or would, in each case, and in the aggregate,
otherwise conflict or interfere with the performance of Executive’s duties and
responsibilities hereunder, either directly or indirectly, without the prior
written consent of the Board or an appropriate committee of the
Board.
ARTICLE
III
COMPENSATION
AND BENEFITS
3.1 Annual
Base Salary.
During
the Employment Period, the Company shall pay Executive a base salary (the
“Annual Base Salary”) at the annual rate of __________________________ Dollars
($________), which shall be payable in regular installments in accordance with
the Company’s usual payroll practices and shall be subject to deductions for
customary withholdings, including, without limitation, federal, state and local
withholding taxes, social security taxes and Medicare taxes. Executive shall
be
eligible for such merit-based increases in Executive’s Annual Base Salary, if
any, as may be determined from time to time in the sole discretion of the Board
or the Committee; provided
that any
such increase shall not serve to limit or reduce any other obligation to
Executive under this Agreement. The term “Annual Base Salary” as used in this
Agreement shall refer to the Annual Base Salary as in effect from time to time
during the Employment Period. Executive’s Annual Base Salary shall not be
reduced after any such increase without Executive’s express written
consent.
3.2 Annual
Incentive Compensation.
Executive shall be eligible to participate in the Company’s Annual Bonus Plan
established for senior executives by the Board or the Committee. The size of
Executive’s bonus opportunity, which for any calendar year shall be no less than
____% of Executive’s Annual Base Salary as in effect on January 1 of such year,
and the terms of Executive’s participation in the Annual Bonus Plan shall be
determined based on the terms and conditions of the Annual Bonus Plan, subject
to adjustment as described therein, and in accordance with any bonus award
agreement thereunder. Executive’s Annual Bonus shall be subject to deductions
for customary withholdings, including, without limitation, federal, state and
local withholding taxes, social security taxes and Medicare taxes
3.3 Participation
in Benefit Plans.
During
the Employment Period, Executive shall be entitled to participate in the
Company’s employee benefit plans (other than bonus and incentive plans) as in
effect from time to time, on the same basis as those benefits are generally
made
available to similarly situated senior executives of the Company.
3.4 Restricted
Stock, Stock Options and Other Equity Awards and Deferred
Compensation.
Executive may receive restricted stock, stock options and other equity awards
and deferred compensation, to the extent determined by the Company, Board or
Committee, as applicable, from time to time. The terms of any such award shall
be documented in a separate award notice or agreement.
3.5 Business
Expenses.
During
the Employment Period, Executive shall be reimbursed for all reasonable expenses
incurred by him or her in performing his or her duties hereunder provided that
such expenses are incurred and accounted for in accordance with the policies
and
procedures established by the Company.
3.6 Perquisites.
During
the Employment Period, Executive shall be entitled to receive such perquisites
and fringe benefits which similarly situated executives of the Company are
entitled to receive and such other perquisites which are suitable to the
character of Executive’s position with the Company and adequate for the
performance of Executive’s duties hereunder.
ARTICLE
IV
TERMINATION
OF EMPLOYMENT
4.1 Termination
by the Company for Cause; Termination by Executive Other Than for Good Reason
or
Retirement.
If the
Employment Period and Executive’s employment under this Agreement is terminated
by the Company for Cause or by Executive other than for Good Reason or
Retirement, prior to the scheduled expiration of the Employment Period,
Executive shall be entitled to receive:
(a) The
Annual Base Salary through the Termination Date;
(b) Reimbursement
for any unreimbursed business expenses properly incurred by Executive in
accordance with Company policy prior to the Termination Date; and
(c) Such
employee benefits, if any, to which Executive may be entitled under the employee
benefit plans of the Company, including rights with respect to any restricted
stock, stock option and other equity awards or any deferred compensation,
subject to the terms and conditions of the applicable plan, award, agreement
or
notice, if relevant (the amounts described in clauses (a) through (c) hereof
being referred to as the “Accrued Rights”).
Following
such termination of Executive’s employment hereunder pursuant to this Section
4.1, Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
4.2 Termination
by the Company Other Than for Cause or Disability; Termination by Executive
for
Good Reason.
(a) If
the
Employment Period and Executive’s employment under this Agreement is terminated
by the Company prior to the scheduled expiration of the Employment Period other
than for Cause or Disability, or Executive terminates his or her employment
prior to the end of the Employment Period for Good Reason, Executive shall
be
entitled to receive:
(i) The
Accrued Rights;
(ii) Any
Annual Bonus earned for a previously completed fiscal year but unpaid as of
the
Termination Date, which Annual Bonus shall be payable to the extent the
corporate bonus pool is approved by the Committee; and
(iii)
A
Severance Benefit pursuant to the terms and conditions set forth in Section
4.2(b) below, and the Company will reimburse the Executive for Executive’s cost
of continuing medical insurance under COBRA (the “Welfare Benefit”) for eighteen
(18) months.
(b) The
Company shall pay the Severance Benefit, without interest thereon, in eighteen
(18) substantially equal monthly installments, which installments shall be
payable on the first day of each month, with the first installment payable
in
the first full month commencing fifteen (15) days after the Termination Date.
Notwithstanding the foregoing, in the event that Executive is determined to
be a
specified employee in accordance with Section 409A of the Code and the
regulations and other guidance issued thereunder for purposes of the Severance
Benefit, the Severance Benefit shall begin on the first payroll date which
is
more than six months following the date of his or her separation from service;
provided, that this sentence shall apply only to the extent required to avoid
Executive's incurrence of any additional tax or interest under Section 409A
of
the Code or any regulations or Treasury guidance promulgated thereunder. Payment
of the Severance Benefit is subject to deductions for customary withholdings,
including, without limitation, federal, state and local withholding taxes,
social security taxes and Medicare taxes. Executive shall not be under any
duty
to mitigate damages in order to be eligible to receive the Severance
Benefit.
(c) Notwithstanding
the foregoing, Executive agrees that payment of the Severance Benefit is
contingent upon the following:
(i) In
the
event of breach by Executive of Sections 5.1 through 5.3 hereof (or any breach
of any agreements in the release described in Section 4.2(c)(ii) below, or
in
the Nondisclosure and Noncompetition Agreement), Executive shall reimburse
the
Company for all compensation or other amounts previously paid, allocated,
accrued, delivered or provided by the Company to Executive pursuant to Section
4.2 (a)(ii) hereof and the Company shall be entitled to discontinue the future
payment, delivery, allocation, accrual or provision of the Severance Benefit,
the Welfare Benefit, and such other compensation, including any deferred or
equity compensation, as reflected in the terms of any plan, notice or agreement
evidencing such other compensation, except to the extent prohibited by
applicable law.
(ii) No
later
than thirty (30) days after the Termination Date, Executive must execute and
deliver a general release releasing all claims against the Company (other than
those specifically described in the below proviso) in such form and containing
such terms as the Company may reasonably prescribe; provided,
however,
that it
shall not be a condition to the Executive’s receipt of the Severance Benefit
that the Executive release the Company from any of the following:
(A)
the
obligations of the Company described in Article IV of the Agreement;
or
(B)
any
vested rights that the Executive may have with respect to any benefits, rights
or entitlements under the terms of any employee benefit programs of the Company
to which the Executive is or will be entitled by virtue of his or her employment
with the Company or any of its subsidiaries, and nothing in the release will
prohibit or be deemed to restrict the Executive from enforcing his or her rights
to any such benefits, rights or entitlements; or
(C)
the
Executive’s right to indemnification to the extent provided in the Company’s
Certificate of Incorporation and/or bylaws.
Following
such termination of Executive’s employment hereunder pursuant to this Section
4.2, Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
4.3 Termination
Due to Death, Disability or Retirement.
If the
Employment Period and Executive’s employment under this Agreement are terminated
due to Executive’s death, Disability or Retirement prior to the scheduled
expiration of the Employment Period, Executive or Executive’s estate, as
applicable, will receive the Accrued Rights plus any Annual Bonus earned for
a
previously completed fiscal year but unpaid as of the Termination Date which
Annual Bonus shall be payable to the extent the corporate bonus pool is approved
by the Committee; provided, however, that, in the event of Executive’s death,
the Company agrees to abide by previously received written instructions from
the
Executive directing the Company to pay the Accrued Rights and/or the accrued
but
unpaid Annual Bonus to a living trust or similar estate planning vehicle of
Executive, provided such trust or similar vehicle is still in existence at
the
time of Executive’s death, except to the extent prohibited by law, and except as
may otherwise be required or directed by any applicable employee benefit plan.
Following such termination of Executive’s employment hereunder pursuant to this
Section 4.3, Executive shall have no further rights to any compensation or
any
other benefits under this Agreement. Further, notwithstanding the specific
terms
of the Incentive Plan, with respect to any grants made to the Executive under
the Incentive Plan during the term of this Agreement, a proper Retirement by
Executive under this Agreement shall be deemed to be a Retirement under the
Incentive Plan.
4.4 Expiration
of the Employment Period.
(a) In
the
event either party elects not to extend the Employment Period pursuant to
Section 2.2, unless Executive’s employment is earlier terminated pursuant to
Sections 4.1 through 4.3, Executive’s term of employment hereunder (whether or
not Executive continues as an employee of the Company thereafter) shall be
deemed to close on the close of business on the day immediately preceding the
next scheduled Anniversary Date and Executive shall be entitled to receive
the
Accrued Rights, plus any Annual Bonus earned for a previously completed fiscal
year (including a fiscal year which ends on the on the Termination Date) but
unpaid as of the Termination Date, which Annual Bonus shall be payable to the
extent the corporate bonus pool is approved by the Committee.
(b) Unless
the parties otherwise agree in writing executed subsequent to the Effective
Date, continuation of Executive’s employment with the Company beyond the
expiration of the Employment Period shall be deemed an employment at-will and,
subject only to Section 6.1, shall not be deemed to extend any of the provisions
of this Agreement and Executive’s employment may thereafter be terminated at
will by either Executive or the Company.
Following
such termination of Executive’s employment hereunder pursuant to this Section
4.4, Executive shall have no further rights to any compensation or any other
benefits under this Agreement.
4.5 Notice
of Termination.
For
purposes of this Agreement, any purported termination of Executive’s employment
by the Company or by Executive, shall be communicated by written “Notice of
Termination” to the other party hereto in accordance with Section 6.2 hereof.
Any Notice of Termination shall set forth (a) the effective date of termination
(for purposes of determining Executive’s entitlement to benefits hereunder),
which, in the case of a termination by Executive pursuant to Section 4.1, a
termination by either party pursuant to Section 4.2, or a Termination by
Executive for Retirement pursuant to Section 4.3 shall not be less than fifteen
(15) days after the date the Notice of Termination is delivered; (b) the
specific provision in this Agreement relied upon; and (c) in reasonable detail,
the facts and circumstances claimed to provide a basis for such termination.
If
the Company terminates Executive’s employment pursuant to Section 4.1 or due to
Executive’s Disability pursuant to Section 4.3 hereof, the Termination Date
shall be the date upon which the Company notifies Executive of such termination.
If the Company terminates Executive’s employment pursuant to Section 4.2, or if
Executive terminates employment pursuant to Section 4.1, 4.2 or 4.3 hereof,
the
Termination Date shall be Executive’s last full day of work prior to the
effectiveness of such termination. If the Agreement is terminated pursuant
to
Section 4.4, the Termination Date shall be the last day of the Initial
Employment Period or the last Renewal Period, as applicable. Notwithstanding
the
foregoing, if within fifteen (15) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that
a
good faith dispute exists concerning the termination, the “Termination Date” for
purposes of determining the Executive’s entitlement to benefits under this
Agreement shall be the date on which the dispute is finally determined by an
independent arbitrator selected by the American Arbitration
Association.
4.6 Board/Committee
Resignation.
Upon
termination of Executive’s employment for any reason, Executive agrees to
resign, as of the Termination Date and to the extent applicable, from the Board
(and any committees thereof) and the Board of Directors (and any committees
thereof) of any of the Company’s affiliates.
ARTICLE
V
RESTRICTIVE
COVENANTS
For
the
purposes of this Article V, all references to the Company shall include the
Company and its affiliates.
5.1 Non-Solicitation
and Non-Competition.
(a) Executive
acknowledges and recognizes the highly competitive nature of the businesses
of
the Company and its affiliates and accordingly agrees as follows:
(i) During
the period of Executive’s employment with the Company and, for a period of two
(2) years after termination of Executive’s employment (the “Nonsolicit Period”),
Executive will not, whether on Executive’s own behalf or on behalf of or in
conjunction with any person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise whatsoever
(“Person”), directly or indirectly solicit or assist in soliciting in
competition with the Company, the business of any client or prospective
client:
(1) with
whom
Executive had personal contact or dealings on behalf of the Company during
the
one (1) year period preceding Executive’s termination of
employment;
(2) with
whom
employees reporting to Executive have had personal contact or dealings on behalf
of the Company during the one (1) year immediately preceding the Executive’s
termination of employment; or
(3) for
whom
Executive had direct or indirect responsibility during the one (1) year
immediately preceding Executive’s termination of employment.
(ii) During
the Nonsolicit Period, Executive will not, whether on Executive’s own behalf or
on behalf of or in conjunction with any Person, directly or
indirectly:
(1) solicit
or encourage any employee of the Company or its affiliates to leave the
employment of the Company or its affiliates; or
(2) hire
any
such employee who was employed by the Company or its affiliates as of the date
of Executive’s termination of employment with the Company or who left the
employment of the Company or its affiliates coincident with, or within one
year
prior to or after, the termination of Executive’s employment with the
Company.
(iii) During
the Nonsolicit Period, Executive will not, directly or indirectly, solicit,
or
encourage to cease to work with the Company or its affiliates, any consultant
then under contract with the Company or its affiliates.
(iv) During
the period of Executive’s employment with the Company and, for a period of (18)
months after termination of Executive’s employment for any reason (the
“Noncompete Period”), Executive will not directly or indirectly:
(1) engage
in
any business that is, or will be, engaged wholly or primarily in the business
of
manufacturing, purchasing, selling or supplying in the United States any product
or service manufactured, purchased, sold, supplied or provided by the Company
or
its affiliates, and which is or will be directly in competition with the
business of the Company or its affiliates (including, without limitation,
businesses which the Company or its affiliates have specific plans to conduct
in
the future and as to which Executive is aware of such planning) in the United
States (a “Competitive Business”);
(2) enter
the
employ of, or render any services to, any Person (or any division or controlled
or controlling affiliate of any Person) who or which engages in a Competitive
Business;
(3) acquire
a
financial interest in, or otherwise become actively involved with, any
Competitive Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant;
or
(4) interfere
with, or attempt to interfere with, business relationships (whether formed
before, on or after the date of this Agreement) between the Company or any
of
its affiliates and customers, clients, suppliers, partners, members or investors
of the Company or its affiliates.
(v) Notwithstanding
anything to the contrary herein, Executive may, directly or indirectly own,
solely as an investment, securities of any Person engaged in the business of
the
Company or its affiliates which are publicly traded on a national or regional
stock exchange or on the over-the-counter market if Executive (i) is not a
controlling person of, or a member of a group which controls, such Person and
(ii) does not, directly or indirectly, own 5% or more of any class of
securities of such Person.
5.2 Confidentiality.
(a) Executive
acknowledges that the identity of the clients and customers of the Company,
the
prices, terms and conditions at, or upon which, the Company sells its products
or provides its services and other non-public, proprietary or confidential
information relating to the business, financial and other affairs of the Company
(including, without limitation, any idea, product, trade secret, know-how,
research and development, software, databases, inventions, processes, formulae,
technology, designs and other intellectual property; creative or conceptual
business or marketing plan, strategy or other material developed for the Company
by Executive; or information concerning finances, investments, profits, pricing,
costs, products, services, vendors, customers, clients, partners, investors,
personnel, compensation, recruiting, training, advertising, sales, marketing,
promotions, government and regulatory activities and approvals -- concerning
the
past, current or future business, activities and operations of the Company
or
its affiliates and/or any third party that has disclosed or provided any of
same
to the Company on a confidential basis) (hereinafter collectively referred
to as
“Confidential Information”) are valuable, special unique assets of the Company
and that such Confidential Information, if disclosed to others, may result
in
loss of business or other irreparable and consequential damage to the
Company.
(b) Executive
shall hold in fiduciary capacity, for the benefit of the Company, all
Confidential Information and shall not, at any time during the Employment Period
or thereafter (i) retain or use for the benefit, purposes or account of
Executive of any other Person, or (ii) disclose, divulge, reveal, communicate,
share, transfer or provide access to any Person outside the Company (other
than
its professional advisers who are bound by confidentiality obligations), any
Confidential Information, without the prior written authorization of the
Company.
(c) Notwithstanding
the foregoing, the term Confidential Information shall not include information
(i) generally known to the public or the trade other than as a result of
Executive’s breach of this covenant or any breach of other confidentiality
obligations by third parties, (ii) made legitimately available to Executive
by a
third party without breach of any confidentiality obligation, (iii) the release
of which is deemed by the Board to be in the best interest of the Company,
or
(iv) the disclosure of which is required by applicable law; provided
that
Executive shall give prompt written notice to the Company of such legal
requirement, disclose no more information than is so required, and cooperate
with any attempts by the Company to obtain a protective order or similar
treatment.
(d) Notwithstanding
anything herein to the contrary, any party to this Agreement (and any employee,
representative, or other agent of any party to this Agreement) may disclose
to
any and all persons, without limitation of any kind, the tax treatment and
tax
structure of the transactions contemplated by this Agreement and all materials
of any kind (including opinions or other tax analyses) that are provided to
it
relating to such tax treatment and tax structure. However, any such information
relating to the tax treatment or tax structure is required to be kept
confidential to the extent necessary to comply with any applicable federal
or
state securities laws.
(e) Upon
termination of Executive’s employment with the Company for any reason, Executive
shall (i) cease and not thereafter commence use of any Confidential Information
or intellectual property (including without limitation, any patent, invention,
copyright, trade secret, trademark, trade name, logo, domain name or other
source indicator) owned or used by the Company or its affiliates, (ii)
immediately destroy, delete, or return to the Company, at the Company’s option,
all originals and copies in any form or medium (including memoranda, books,
papers, plans, computer files, letters and other data) in Executive’s possession
or control (including any of the foregoing stored or located in Executive’s
office, home, laptop or other computer, whether or not Company property) that
contain Confidential Information or otherwise relate to the business of the
Company or its affiliates, except that Executive may retain only those portions
of any personal notes, notebooks and diaries that do not contain any
Confidential Information, and (iii) notify and fully cooperate with the Company
regarding the delivery or destruction of any other Confidential Information
of
which Executive is or becomes aware.
5.3 Non-Disparagement.
Executive agrees that Executive will not disparage the Company or its
affiliates, or its or their current or former officers, directors, and employees
in any way; further, Executive will not make or solicit any comments,
statements, or the like to the media or to others that would be considered
derogatory or detrimental to the good name or business reputation of any of
the
aforementioned entities or individuals; provided, that this Section does not
prohibit statements which Executive is required to make under oath or which
are
otherwise required by law, provided that such statements are truthful and made
in a professional manner; further provided that this Section does not prohibit
Executive from making statements which would otherwise be in violation of this
Section, provided such statements are made by Executive in response to public
statements made by the Company, or its authorized representatives, which are
derogatory or detrimental to the good name or business reputation of the
Executive.
5.4 Acknowledgment
of Reasonable Covenants.
It is
expressly understood and agreed that Executive and the Company consider the
restrictions and covenants contained herein to be reasonable and enforceable,
because, among other things, (a) Executive will be receiving compensation under
this Agreement or otherwise, (b) there are many other areas in which, and
companies for which, Executive could work in view of Executive’s background, (c)
the restrictions and covenants set forth herein do not impose any undue hardship
on Executive, (d) the Company would not have entered into this Agreement but
for
the restrictions and covenants of Executive contained herein, and (e) the
restrictions and covenants contained herein have been made in order to induce
the Company to enter into this Agreement.
5.5 Modification
of the Restrictive Covenants.
If, at
the time of enforcement of the restrictive covenants set forth herein, a final
judicial determination is made by a court or arbiter of competent jurisdiction
that the time or territory or any other restriction contained in this Agreement
is an unenforceable restriction against Executive, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as
to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
ARTICLE
VI
MISCELLANEOUS
6.1 Survival.
Sections 4.1 through 4.6 inclusive (as applicable to the relevant circumstance
of termination only), 5.1 through 5.5 inclusive and 6.1 through 6.14 inclusive
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of Executive’s employment hereunder or
termination of the Initial Employment Period or the Employment
Period.
6.2 Notices.
All
notices, demands or other communications to be given or delivered under or
by
reason of the provisions of this Agreement shall be in writing and shall be
deemed to have been given when delivered personally, mailed by certified or
registered mail, return receipt requested and postage prepaid, or sent via
a
nationally recognized overnight courier, or sent via facsimile to the recipient.
Such notices, demands and other communications shall be sent to the address
indicated below:
To
the
Company:
Express
Scripts, Inc.
00000
Xxxxxxxxx Xxxxx
Xxxxxxxx
Xxxxxxx, XX 00000
Attention:
Chief Executive Officer
To
Executive:
___________________
___________________
___________________
or
such
other address or to the attention of such other person as the recipient party
shall have specified by prior written notice to the sending party.
6.3 Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or any
other
jurisdiction, but this Agreement shall be reformed, construed and enforced
in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
6.4 Complete
Agreement.
This
Agreement constitutes the complete agreement and understanding between the
parties regarding the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by and between the parties,
written or oral, including, without limitation, the Prior Agreement, which
shall
automatically terminate upon the effectiveness of this Agreement; provided,
however,
that
this Agreement shall not supersede or modify the terms of the Nondisclosure
and
Noncompetition Agreement, and any restricted stock, stock options or other
equity awards or deferred compensation shall be subject to the terms of the
applicable notices or agreements; and provided
further,
however
that
this Agreement shall not supersede or modify the terms of any equity awards
or
special bonus awards (i.e. bonuses other than the Annual Bonus) specifically
granted under the Prior Agreement. The applicable provisions of this Agreement
amend the terms and provisions of the Incentive Plan to the extent addressed
by
this Agreement, as the same may have been amended prior to the date hereof,
with
respect to awards covered by this Agreement and made to Executive
hereunder.
6.5 Counterparts.
This
Agreement may be executed in separate counterparts, each of which is deemed
to
be an original and all of which taken together constitute one and the same
agreement.
6.6 Successors
and Assigns.
Except
as otherwise provided herein, all covenants and agreements contained in this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its respective successors and assigns. Except as otherwise
specifically provided herein, this Agreement, including the obligations and
benefits hereunder, may not be assigned to any party by Executive.
6.7 No
Strict Construction.
The
language used in this Agreement shall be deemed to be the language chosen by
the
parties hereto to express their mutual intent, and no rule of strict
construction shall be applied to this Agreement.
6.8 Descriptive
Headings.
The
descriptive headings of this Agreement are inserted for convenience only and
do
not constitute a part of this Agreement.
6.9 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Missouri, without regard to conflicts of laws principles thereof;
provided,
however,
that
issues related to the Incentive Plan or any grants thereunder shall be resolved
in accordance with the laws of the State of Delaware.
6.10 Specific
Performance.
The
Company shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorneys’
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The Executive agrees and acknowledges
that money damages are an inadequate remedy for any breach of the provisions
of
this Agreement, including, without limitation, Sections 5.1 through 5.3 hereof,
and that the Company shall be entitled to apply to any court of law or equity
of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement. Further, Executive acknowledges
that the forfeiture provision set forth in the termination provisions hereof
shall not be construed to limit or otherwise affect the Company’s right to seek
legal or equitable remedies it may otherwise have, or the amount of damages
for
which it may seek recovery, resulting from breach of this
Agreement.
6.11 Amendment
and Waiver.
The
provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and Executive.
6.12 Tax
Matters.
(a) Notwithstanding
anything to the contrary herein (or any other agreement entered into by and
between Executive and the Company or any incentive arrangement or plan offered
by the Company), in the event that any amount or benefit paid or distributed
to
Executive pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to Executive by the Company or any of
its
subsidiaries (collectively, the “Covered Payments”), would constitute an “excess
parachute payment” as defined in Section 280G of the Code, and would thereby
subject Executive to an Excise Tax, the provisions of this Section 6.12 shall
apply.
(b) If
the
aggregate present value (as determined for purposes of Section 280G of the
Code)
of the Covered Payments exceeds the amount which can be paid to Executive
without Executive incurring an Excise Tax, but is less than 125% of such amount,
then the amounts payable to Executive under this Agreement (or any other
agreement by and between Executive and the Company or pursuant to any incentive
arrangement or plan offered by the Company) may, in the discretion of the
Company, be reduced (but not below zero) to the maximum amount which may be
paid
hereunder without Executive becoming subject to the Excise Tax (such reduced
payments to be referred to as the “Payment Cap”). In the event Executive
receives reduced payments and benefits as a result of application of this
Section 6.12, Executive shall have the right to designate which of the payments
and benefits otherwise set forth herein (or any other agreement between
Executive and the Company or any incentive arrangement or plan offered by the
Company) will be received in connection with the application of the Payment
Cap.
(c) If
the
aggregate present value of all Covered Payments is equal to or exceeds 125%
of
the amount which can be paid to Executive without Executive incurring an Excise
Tax, Executive shall be entitled to receive an additional amount (the “Tax
Reimbursement Payment”) such that the net amount retained by Executive with
respect to such Covered Payments, after deduction of any Excise Tax on the
Covered Payments and any federal, state and local income tax and Excise Tax
on
the Tax Reimbursement Payment provided for by this Section 6.12, but before
deduction for any federal, state or local income or employment tax withholding
on such Covered Payments, shall be equal to the amount of the Covered Payments.
Such additional amount may be paid by the Company directly to the applicable
taxing authority. The Tax Reimbursement Payment shall be paid in the calendar
year following the date of the Change in Control.
(d) Immediately
upon a Change in Control, the Company shall notify Executive of any modification
or reduction as a result of the application of this Section 6.12. In the event
Executive and the Company disagree as to the application of this Section 6.12,
the Company shall select a law firm or accounting firm from among those
regularly consulted (during the twelve-month period immediately prior to the
Change in Control that resulted in the characterization of the Covered Payments
as parachute payments) by the Company, and such law firm or accounting firm
shall determine, at the Company’s expense, the amount to which Executive shall
be entitled hereunder (and pursuant to any other agreements, incentive
arrangements or plans), taking into consideration the application of this
Section 6.12, and such determination shall be final and binding upon Executive
and the Company.
6.13 Executive
Representation.
Executive hereby represents to the Company that the execution and delivery
of
this Agreement by Executive and the Company and the performance by Executive
of
Executive’s duties hereunder shall not constitute a breach of, or otherwise
contravene, the terms of any employment agreement or other agreement or policy
to which Executive is a party or otherwise bound.
6.14 Cooperation.
Each
party shall provide reasonable cooperation in connection with any action or
proceeding (or any appeal from any action or proceeding) which relates to events
occurring during Executive’s employment hereunder.
6.15 Section
409A of the Code.
Notwithstanding anything to the contrary in this Agreement, the parties mutually
desire to avoid adverse tax consequences associated with the application of
Section 409A of the Code to this Agreement and agree to cooperate fully and
take
appropriate reasonable actions to avoid any such consequences under Section
409A
of the Code, including delaying payments and reforming the form of the Agreement
if such action would reduce or eliminate taxes and/or interest payable as a
result of Section 409A of the Code.
6.16 Arbitration.
Executive and the Company agree that any and all disputes between the parties
hereto arising from or relating to this Agreement, and/or any release executed
by Executive pursuant to the terms of this Agreement, shall be submitted and
decided by binding arbitration before a single arbitrator in accordance with
the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”)
then in effect. Venue for the arbitration shall be in St. Louis County, Missouri
and the laws of the State of Missouri will apply. Any demand for arbitration
shall be made within a reasonable time after the claim, dispute, or other matter
in question has arisen, and in no event shall any such demand be made after
the
date when institution of legal of equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statute
of
limitations. Under no circumstances will either party be subject to punitive
damages. Each party hereto shall bear its costs of the arbitration proceeding.
However, the prevailing party in the arbitration, as designated by the
arbitrator, shall be entitled to recover its reasonable cost of the arbitration,
including, without limitation, its reasonable attorneys’ fees, from the other
party as determined by the arbitrator.
*
* * *
*
115973~v1
IN
WITNESS WHEREOF, the parties hereto have executed this Executive Employment
Agreement as of the date first above written.
THIS
CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE
PARTIES.
EXPRESS
SCRIPTS, INC.
By:
_____________________________
Name:
Xxxxxx Xxx
Title:
President and Chief Executive Officer
EXECUTIVE
Name:
___________________________
Schedule
to Exhibit 10.1
The
preceding Form of Employment Agreement was entered into between the Company
and the following persons as of May 1, 2006:
|
Executive
|
Position
|
Initial
Annual Base Salary
|
Guaranteed
Minimum Annual Bonus Target (1)
|
|
Xxxxxx
Xxxxxxxx
|
Senior
Vice President and General Counsel
|
$411,000
|
65%
|
|
Xxxxx
Xxxxxxxxx
|
Chief
Operating Officer
|
$482,000
|
75%
|
|
Xxxxxxx
XxXxxxx
|
Senior
Vice President and Chief Information Officer
|
$339,000
|
62%
|
|
Xxxxxx
Xxxxxxx
|
Senior
Vice President and Chief Financial Officer
|
$409,000
|
75%
|
(1)
Expressed as a percentage of the executive’s annual base salary.
