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EXHIBIT 10.19
EMPLOYMENT AND NONCOMPETITION AGREEMENT
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THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT ("Agreement") is made and
entered into this 25th day of June, 1996, by and between R. E. XXXXXXXXXX,
INC., a Delaware corporation (hereinafter called the "Employer"), and XXXXXX X.
XXXXXX (hereinafter called "Employee").
W I T N E S S E T H :
WHEREAS, the Employee is an employee of the Employer; and
WHEREAS, Xxxxxxxxxx Services Corporation ("Xxxxxxxxxx"), the parent
company of the Employer, is being merged (the "Merger") into HealthPlan
Services Corporation ("HPSC") and in connection with the Merger Employee is
selling 325,698.99 shares of his stock in Xxxxxxxxxx to HPSC pursuant to the
terms of the Merger and in connection therewith is receiving a portion of the
proceeds thereof; and
WHEREAS, as consideration for HPSC's consummation of the Merger and
the purchase of the Employee's stock by HPSC, HPSC has requested that,
effective as of the Closing Date of the Merger, Employee enter into an
Employment and Noncompetition Agreement with Employer in substantially the form
set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to
be legally bound thereby, agree as follows:
1. EMPLOYMENT. Employer hereby agrees to employ Employee, and
Employee hereby accepts employment with Employer upon the terms and conditions
hereinafter set forth.
2. TERM. Subject to the provisions of resignation and
termination as hereinafter provided, the term of this Agreement shall commence
on July 1, 1996 and shall terminate on June 30, 1999.
3. DUTIES. The Employee is engaged as the Employer's Chairman
and Chief Executive Officer and shall have such duties, responsibilities and
accommodations as may be assigned to him, from time to time, by the Board of
Directors of Employer. Nothing herein shall preclude the Board of Directors of
Employer from changing the duties of Employee if the Board concludes in its
reasonable judgment that such changes are in the Employer's best interests;
provided, however, that at all times during the term of this Agreement Employee
shall serve with the same functions, duties and status of the office of chief
executive officer of the Employer. Employer agrees that Employee shall not be
reassigned to any other office of the Employer without the prior written
consent of the Employee.
4. EXTENT OF SERVICE. Employee shall exclusively devote his
entire working time, energy and attention to his duties in connection with
Employer, provided that Employee may own passive investments.
5. COMPENSATION. During the term of this Agreement, Employer
shall pay to Employee the following compensation, which shall be payable in
accordance with Employer's normal payroll policies
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applicable to all of Employer's employees and shall be subject to all
authorized and required payroll deductions for taxes, social security and the
like, and contributions to benefit plans:
(a) During the period from July 1, 1996 through June
30, 1999 an annual salary of no less than $200,000.00 U.S. (the
"Annual Base Salary") provided that the Board of Directors in its sole
discretion may increase such Annual Base Salary at any time during the
term of this Agreement and upon such increase the increased salary
shall become the new Annual Base Salary from the effective date of
such increase forward;
(b) In addition to the Annual Base Salary, the Employee shall
be entitled to:
(i) Such bonus or bonuses as the Compensation
Committee of HPSC shall from time to time determine, it being
understood that the bonus plan of the Employer will be
patterned on and similar to the senior officer bonus plan of
HealthPlan Services, Inc.
(ii) A stock option grant of 25,000 shares of HPSC
common stock at a strike price equal to the closing price of
such stock on the New York Stock Exchange as of the date of
the execution of the Plan and Agreement of Merger for the
Merger or the Closing Date of the Merger, as selected by the
Employee, in accordance with the terms of the HealthPlan
Services Corporation 1995 Incentive Equity Plan, and such
additional stock options as the Board of Directors may from
time to time determine;
(iii) Participate in the employee benefit plans of
Employer in existence from time to time consistent with the
terms and conditions of the Plan and Agreement of Merger for
the Merger;
(iv) Severance benefits in accordance with the
provisions of Section 7 hereof.
6. TERMINATION. The foregoing notwithstanding, this Agreement is
not to be considered an agreement for a fixed term or as a guarantee of
continuing employment. Accordingly, subject to the provisions of Section 7
hereof, Employee's employment may be terminated by Employer with or without
Cause (as defined below) upon immediate written notice to Employee at any time
during the term of this Agreement. Additionally, Employee's employment shall
automatically terminate upon his death or upon a determination that he is
Permanently Disabled (as defined below). Employee may resign as an officer
and, if applicable, director and terminate his employment at any time upon 30
days written notice to Employer. In the event that such termination is by the
Employer for Cause or by the Employee other than as a result of a Constructive
Termination Event, death or Permanent Disability, Employee shall be paid the
bi- weekly portion of his Annual Base Salary then due through the date of such
termination and shall be entitled to no salary from that date forward and to
only those benefits which Employer is required by law to provide to Employee.
Upon any termination, Employee shall immediately return any and all property
and records belonging to Employer which are in Employee's possession and shall
vacate Employer's offices in a prompt and professional manner. In addition to
the foregoing, upon termination of Employee's employment with Employer for any
reason, Employee shall resign promptly as an officer and, if applicable,
director of Employer and any subsidiary or parent of Employer. In the event
such termination by the Employer is without cause, or is caused by the death or
Permanent Disability of Employee or in the event that the Employee terminates
his employment as a result of a Constructive Termination Event, Employee shall
be entitled solely to (y) the Severance Benefits provided in Section 7, and (z)
immediate vesting of all unvested options, rights and benefits under any stock
option plan in which
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Employee has an unvested interest. Notwithstanding anything contained in this
Agreement to the contrary, in the event of any termination of Employee's
employment by either Employee or Employer, whether or not for Cause, Employee
shall be entitled to receive all benefits which are accrued, vested and/or
earned up to the termination date under the terms of any existing benefit plan,
including but not limited to the vested balance of the Employee's account under
any retirement or deferred compensation plan, any benefits under a split dollar
insurance program existing for the benefit of Employee, and any benefits which
are legally required to be provided after termination such as COBRA benefits
(the "Legally Earned or Required Benefits").
7. SEVERANCE BENEFITS.
(a) If during the term of this Agreement, Employee's
employment is terminated (i) by the Employer other than for Cause, as
defined below, (ii) by the Employee as a result of the occurrence of a
Constructive Termination Event, as defined below, which has not been
cured by the Employer within 30 days of receipt of written notice from
the Employee that such event has occurred, or (iii) as a result of the
Employee's death or Permanent Disability, as defined below, then upon
the occurrence of such event Employer shall pay to the Employee (or
the Employee's estate in the event of death), as a severance benefit
and in complete satisfaction of any and all claims which Employee may
have against Employer or its affiliates, officers, directors or
employees as a result of this Agreement or his previous employment by
Employer, the greater of (i) Employee's Annual Base Salary remaining
to be paid through the term of the Agreement immediately before such
termination or (ii) an amount equal to Employee's Annual Base Salary
at the time of such termination; provided, however, Employer shall not
be obligated to pay any severance benefit until Employee (or
Employee's personal representative in the event of Employee's death or
legal guardian in the event of Permanent Disability which causes
Employee to be unable to do so) has delivered to Employer a complete
and unconditional release, in form reasonably satisfactory to
Employer, releasing Employer from any and all claims which Employee
may have against Employer as a result of any occurrence during
Employee's employment and including, but not limited to, any claim for
wrongful termination (the "Employee Release"). The foregoing
notwithstanding, the Employee Release shall not release the Employer
from any of its post termination obligations under this Agreement.
Such severance benefit shall be paid over the remaining term of the
Agreement following such termination or, if longer, over the one (1)
year period following such termination, in equal bi-weekly payments.
As used herein:
(A) the term "Cause" means (i) the Employee's
violation of his fiduciary duty to the Employer, (ii) gross or
wilful failure by the Employee to perform the duties of
Employee's position, (iii) the Employee's habitual unexcused
absence over an extended period, (iv) the Employee's
disloyalty or insubordination, or other similar misconduct
which is of the nature of disloyalty or insubordination, (v)
embezzlement or misappropriation of Employer funds by the
Employee, or (vi) the Employee's commission of an act
involving criminal activity of a felonious nature or sexual
harassment or similar serious breach of conduct involving
moral turpitude, provided that in the event of a termination
for Cause involving insubordination or disloyalty or other
similar conduct which is of the nature of disloyalty or
insubordination, the Employer shall give the Employee written
notice of the conduct constituting such Cause and the Employee
shall have thirty (30) days to correct such conduct and cure
any damage suffered by Employer as a result thereof. If
Employee fails to correct such conduct within such 30-day
period, such conduct will be deemed to be Cause;
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(B) the term "Permanent Disability" means the
permanent mental or physical inability of the Employee to
perform with reasonable accommodation the essential duties of
Employee's position as existing on the date of this Agreement
which condition causes the Employee to be unable to perform
the duties of his office for a period of six months in any
twelve-month period.
(C) the term "Constructive Termination Event" means
action by the Employer which is directed at the Employee
specifically and not at all employees generally and which has
the effect of significantly reducing the Employee's
compensation, employment responsibilities, authority, or the
accommodations in which the Employee performs his job, or the
nonpayment by Employer of compensation due and owing to the
Employee under this Agreement, which has not been cured by the
Employer within 30 days of receipt of written notice from the
Employee that such nonpayment has occurred.
(b) Following Employer's termination of Employee's
employment for any reason other than Cause or Employee's termination
of his employment as a result of a Constructive Termination Event
during the term of this Agreement, Employer shall maintain in full
force and effect, for the Employee's continued benefit until the
earlier of (i) 12 months after such termination of Employee's
employment or (ii) the Employee's commencement of full time employment
with a new employer, all life insurance, medical, dental, health and
accident, and disability plans, programs or arrangements of the
Employer in which the Employee participated on the date of
termination, provided that the Employee's continued participation is
possible under the general terms and provisions of such plans and
programs.
(c) After the expiration of the term of this Agreement if
Employee is terminated by Employer for any reason other than Cause,
Employee shall be entitled to receive the standard severance package
given to executive officers of HPSC as well as the Legally Earned or
Required Benefits.
8. NON-COMPETITION.
(a) For a period equal to the longer of the term of this
Agreement or two years after the Closing Date of the Merger, without
the written consent of the Employer, Employee shall not either
directly or indirectly engage (whether for his own account or as a
partner, joint venturer, employee, consultant, agent, contractor,
officer, director or shareholder or otherwise) in any business within
the United States which (i) delivers marketing, distribution,
administrative, or cost containment services on behalf of health care
payors, primarily to the small business marketplace, or (ii) engages
in the business of acting as a third party administrator for health,
accident, disability, workers compensation, or other employee benefit
plans whether insured or self-insured; provided, however, that the
foregoing shall not be deemed to prohibit Employee from purchasing and
owning securities of a company traded on a national securities
exchange or on the Nasdaq National Market with which Employee has no
relationship so long as such ownership does not exceed 2% of the
outstanding stock of such company. For purposes of the foregoing, the
small business marketplace shall be deemed to be the market for those
businesses which employ 100 or fewer employees; or
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(b) For a period of three years after termination of
Employee's employment for any reason Employee will not:
(i) solicit, contact or encourage (i) any person
who is an employee of the Employer or of any parent, division
or subsidiary of the Employer or (ii) any supplier, vendor,
agent or consultant to the Employer, to terminate its, his, or
her relationship with the Employer;
(ii) make any derogatory, defamatory or negative
statement about the Employer or HPSC or any of their officers,
directors, or employees to the press, to any part of the
investment community, to the public, or to any person
connected with, employed by or having a relationship to the
Employer, provided that nothing contained herein shall be
deemed to prohibit full and xxxxx discussions of the Employer,
HPSC and its subsidiaries and its affairs in any Board of
Directors meeting of the Employer or HPSC corporation and,
during such period as Employee may be a stockholder of HPSC,
at any stockholders' meeting thereof or from testifying
truthfully in any legal proceeding;
(iii) wilfully interfere with or disrupt the
operations of the Employer or HPSC; or
(iv) assist, advise or provide information or
support, whether financial or otherwise, to any person in
connection with any proxy contest, action by written consent
or vote of the Employer or HPSC, the purpose of which is to
elect a director or slate of directors who were not nominated
by the then sitting Board of Directors of the Employer or
HPSC, provided, however, that nothing contained herein shall
require the Employee to vote any shares held by him in any
particular manner.
(c) For a period of three years after termination of
Employee's employment for any reason other than Cause, Employer and
its directors, chief executive, financial and operating officers shall
refrain from making any negative, derogatory or defamatory statement
about Employee.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS.
While employed by Employer and after termination of such employment for the
Applicable Period as defined below, Employee shall not disclose, either
directly or indirectly, any Confidential Information or Trade Secrets to any
other person or otherwise use such Confidential Information or Trade Secrets
for any purpose except in connection with his employment with the Employer.
For purposes of the foregoing, the term Trade Secret shall mean information,
including a formula, pattern, compilation, program, device, method, technique,
or process that: (i) derives independent economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value from its
disclosure or use; and (ii) is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy, and Confidential Information means
any technical or nontechnical data, formula, pattern, compilation, program,
device, method, technique, drawing, process, know-how, financial data,
financial plan, marketing plan, expansion plan, cost analysis, list of
suppliers or employees, or other proprietary information which is proprietary,
secret and confidential and is not readily and legally available to the public
from sources other than the Employer or HPSC which is not classified as a Trade
Secret. The term "Applicable Period" shall mean two years with respect to
disclosure of Confidential Information or Trade Secrets.
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10. SPECIAL INTERPRETIVE AND ENFORCEMENT PROVISION. The prohibited
activities set forth in Sections 8 and 9 above are herein defined as
"Restricted Activities" and the covenants set forth therein are herein defined
as "Restrictive Covenants". If a court determines that any Restricted Activity
is not enforceable or is unreasonable, arbitrary or against public policy, the
Restricted Activity and the related Restrictive Covenant shall be considered
divisible both as to time and geographic area, if applicable, so that the
Employer shall be authorized to enforce such Restrictive Covenant for such
lesser time and if applicable lesser geographic area as the court determines to
be reasonable, non-arbitrary and not against public policy. In the event of a
breach or violation or threatened breach or violation by Employee of the
provisions of any of these Restrictive Covenants, Employer shall be entitled to
an injunction (without the provision of bond by Employer) restraining Employee
from directly or indirectly engaging in the Restricted Activities in breach or
violation of these Restrictive Covenants, and restraining Employee from
rendering any services to or participating with any person, firm, corporation,
association, partnership, venture or other entity which would constitute a
violation of a Restrictive Covenant. Nothing herein shall be construed as
prohibiting Employer from pursuing any other remedies available to it by law or
by this Agreement for breach, violation or threatened breach or violation of
the provisions of these Restrictive Covenants, including, by way of
illustration and not by way of limitation, the recovery of damages from
Employee or any other person, firm, corporation or entity. The provisions of
these Restrictive Covenants shall survive the termination of this Agreement for
the purpose of providing Employer with the protection of the covenants of
Employee provided herein. Should an action have to be brought by Employer
against Employee to enforce the Restrictive Covenants, the period of
restriction applicable to such covenant shall be deemed to begin running on the
date of entry of an order granting Employer preliminary injunctive relief and
shall continue uninterrupted for the original intended period of the applicable
Restrictive Covenant. Employee acknowledges and agrees that the intent and
purpose of the Restrictive Covenants is to preclude Employee from engaging in
the Restricted Activities for the full term of the applicable Restrictive
Covenant and that such purpose and effect would be frustrated by measuring the
period of restriction from the date the applicable Restrictive Covenant took
effect where Employee failed to honor these Restrictive Covenants until
directed to do so by court order.
11. CESSATION OF BENEFITS. In the event that (i) Employee
materially breaches Employee's agreements contained herein after a severance
benefit becomes payable hereunder and such breach is not cured to Employer's
satisfaction within ten (10) days of written notice thereof, (ii) Employee
asserts in any litigation that the Restrictive Covenants or the Employee
Release is unenforceable for any reason, or (iii) facts come to the attention
of the Employer which prove Employee, while employed by Employer, was guilty of
committing an act involving embezzlement, misappropriation, theft or fraud, in
addition to any other remedy which Employer may have as a result thereof,
Employer shall be entitled to stop paying any severance benefit then not paid
and recover from Employee the payment of any severance benefits already paid to
Employee hereunder.
12. RELEASE. Except for the Legally Earned or Required Benefits,
Employee hereby completely and unconditionally releases the Employer from any
and all claims which the Employee may have against the Employer as the result
of any occurrence during Employee's employment up to the date of this
Agreement. This release also binds the Employee's heirs, personal
representatives, spouse, beneficiaries, and assigns. This Release also
completely releases the Employer's parents, subsidiaries, predecessors,
successors, and affiliates, as well as its former, present, and future
officers, directors, employees, shareholders, employee benefits plans, and
counsel.
13. NOTICES. Any notices, consents, approvals or waivers which are
to be given to any party to this Agreement by any other party or parties to
this Agreement shall be in writing, shall be properly
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addressed to the party to whom such notice is directed, and shall be either
actually delivered to such party or sent by United States mail, return receipt
requested. Notices shall be addressed to the parties as follows:
If to Employer: 0000 Xxxx Xxxx
Xxxxxxxx, XX 00000
Attn: President
If to Employee: 0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
14. LITIGATION FORUM. The parties hereto agree that this Agreement
shall be deemed for all purposes to have been entered into in Ohio. The
parties hereto agree that all actions or proceedings, directly or indirectly,
arising out of or related to this Agreement or contesting the validity or
applicability of this Agreement shall be litigated exclusively in the Court of
Common Pleas in and for Franklin County, or the United States District Court
for the Southern District of Ohio.
15. EXPENSES OF ENFORCEMENT. In the event of any legal proceeding
arising directly or indirectly from this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees and costs from the non-prevailing
party (at both the trial and appellate court levels).
16. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement, including all
exhibits and schedules hereto as referenced herein, constitutes the
entire agreement between the parties hereto pertaining to the subject
matters hereof, and supersedes all negotiations, preliminary
agreements, and all prior and contemporaneous discussions and
understandings of the parties in connection with the subject matters
hereof. Except as otherwise herein provided, no covenant,
representation or condition not expressed in this Agreement, or in an
amendment hereto made and executed in accordance with the provisions
of subsection (b) of this Section, shall be binding upon the parties
hereto or shall affect or be effective to interpret, change or
restrict the provisions of this Agreement.
(b) AMENDMENTS AND WAIVERS. No change, modification,
waiver or termination of any of the terms, provisions, or conditions
of this Agreement shall be effective unless made in writing and signed
or initialed by all parties hereto. Any waiver of any breach of any
provision of this Agreement shall operate only as to the specific
breach waived and shall not be deemed a waiver of any other breach,
whether occurring before or after such waiver.
(c) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Ohio.
(d) SEPARABILITY. Except as provided in Section 10
hereof, if any section, subsection or provision of this Agreement or
the application of such section, subsection or provision is held
invalid, the remainder of this Agreement and the application of such
section, subsection or provision to persons or circumstances, other
than those with respect to which it is held invalid, shall not be
affected thereby.
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(e) HEADINGS AND CAPTIONS. The titles or captions of
sections and subsections contained in this Agreement are provided for
convenience of reference only, and shall not be considered a part
hereof for purposes of interpreting or applying this Agreement; and,
therefore, such titles or captions do not define, limit, extend,
explain, or describe the scope or extent of this Agreement or any of
its terms, provisions, representations, warranties, conditions, etc.,
in any manner or way whatsoever.
(f) GENDER AND NUMBER. All pronouns and variations
thereof shall be deemed to refer to the masculine, feminine or neuter
and to the singular or plural as the identity of the person or entity
or persons or entities may require.
(g) BINDING EFFECT ON SUCCESSORS AND ASSIGNS. This
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs and assigns,
provided that the rights and obligations of Employee hereunder are
personal to Employee and may not be assigned or transferred without
the consent of Employer except in the event of a transfer upon death
pursuant to a will or the laws of intestate succession.
(h) CONTINUANCE OF AGREEMENT. The rights,
responsibilities and duties of the parties hereto and the covenants
and agreements herein contained shall survive the execution hereof,
shall continue to bind the parties hereto, and shall continue in full
force and effect until each and every obligation of the parties
hereto, pursuant to this Agreement, shall have been fully performed.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above-written.
WITNESSES: R. E. XXXXXXXXXX, INC.
/s/ Xxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxx, III
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Xxxxx X. Xxxxxx, III,
/s/ Xxxx X. Xxxxxx Its: Duly Authorized Officer
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"EMPLOYER"
/s/ Xxxxxx Xxxxx /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, individually
/s/ Xxxxxx Wachaler
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"EMPLOYEE"
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