EXHIBIT 99.8
EMPLOYMENT AGREEMENT
This agreement is made effective as of the "Closing Date," among WC
Holdings, Inc., a Delaware corporation ("WCH"), Health Power, Inc., a Delaware
corporation ("HPI"), CompManagement, Inc., an Ohio corporation ("CMI"),
CompManagement Health Systems, Inc., an Ohio corporation ("CHS") and their
subsidiaries (HPI, CMI, CHS and subsidiaries are hereinafter referred to
collectively or individually, as the context may require, as the "Company"), and
Xxxxxx X. Xxxxxxx (the "Executive"). The term "Closing Date" means the date on
which the "Effective Time" (as defined in the Agreement and Plan of Merger among
Security Capital Corporation, a Delaware corporation, HP Acquisition Corp., a
Delaware corporation, and HPI dated June 8, 2000, as amended) occurs. The
parties hereby agree as follows:
Section 1. EMPLOYMENT. The terms and conditions of this Employment
Agreement (the "Agreement") shall supersede and replace in their entirety the
terms and conditions of the employment agreement between CMI and the Executive
dated as of December 31, 1999, as amended (the "Prior Employment Agreement").
The Company hereby renews and continues the Executive's employment, and the
Executive hereby accepts such employment renewal and continuation by the
Company, on the terms and subject to the conditions set forth in this Agreement.
Section 2. TERM OF EMPLOYMENT. The term of the Executive's employment by
the Company as renewed pursuant to this agreement shall begin on the effective
date of this Agreement and shall end, unless sooner terminated in accordance
with the provisions of Section 9, below, on December 31, 2005 (the "First
Term"). Unless terminated in accordance with the provisions of Section 9, below,
the Executive's employment under this Agreement shall automatically continue
after the expiration of the First Term upon the same terms and conditions
contained in this Agreement, or upon such other terms and conditions to which
the parties may mutually agree in writing, for successive two-year periods (each
a "Renewal Term"), commencing on the day following the termination date of the
First Term or the preceding Renewal Term, as the case may be, and ending, unless
sooner terminated in accordance with the provisions of Section 9, below, on the
second anniversary of the applicable termination date.
Section 3. SERVICES. The Executive shall serve as the President and Chief
Executive Officer of WCH and Chief Executive Officer of the Company. As such,
the Executive shall perform such services as may be reasonably assigned to him
by the Board of Directors of WCH (the "WCH Board") and the Board of Directors of
the Company in order to enable him to carry out the responsibilities and
authority granted to him under this Agreement. The Executive shall devote his
full business time, attention, energy, and skill to the Company's business,
provided that he shall be entitled to take vacations and sick leaves as may be
provided pursuant to this Agreement or the Company's established policies. The
Executive shall not engage in any business or investment activity (whether or
not competitive with the Company) which requires any substantial time on his
part.
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Section 4. RESPONSIBILITIES; AUTHORITY. As the President and Chief
Executive Officer of WCH and Chief Executive Officer of the Company, the
Executive shall be responsible for supervising and implementing the Company's
policies and operating programs, budgets, procedures, and directions established
or changed from time to time (collectively, the "Policies and Programs") by the
Chairman of the Board or the Board of Directors of the Company or the Chairman
of the Board or the Board of Directors of WCH. Such responsibilities shall
include, without limitation, the following: supervising the development of the
Company's and WCH's financial and operational goals and objectives and
implementing strategies to achieve such goals and objectives within budgeted
amounts; planning and developing the Company's and WCH's financial and
operational budgets and projections; supervising the development of financial
and operational goals and objectives for each business segment of the Company
and WCH and implementing strategies to achieve such goals and objectives within
each business segment's budgeted amounts; providing guidance in employment and
personnel matters; and performing all other activities related to the business
policies and financial planning of and for the Company and WCH. The Executive
shall report to the Chairman of WCC and shall consult with the Chairman of WCH,
from time to time, on all matters relating to the business policies and
financial planning of and for the Company and WCH.
The Executive shall have the authority on behalf of the Company to manage
and conduct the operations of the Company in the ordinary course of its business
pursuant to the Policies and Programs of the Company and the Policies and
Programs of WCH which are applicable to the Company, provided that the Executive
shall not take any of the following actions without the prior approval of the
Chairman of WCH:
(a) Incur capital expenditures or acquire assets having a price in
excess of $100,000 individually or any other in excess of the budget
amount or incur expenditures, debts, liabilities, or other financial
commitments in excess of $100,000, unless the incurrance of such
expenditures, debts, liabilities, or other financial commitments or the
acquisition of such assets are in accordance with budgets previously
approved by the Board of Directors of the Company or WCH;
(b) Grant any mortgage, security interest, or other encumbrance on
any assets of the Company;
(c) Employ, change the compensation, or terminate the employment of
the President or any Executive Vice President of the Company; or enter
into any employment agreement not terminable at the will of the Company;
or
(d) Enter into any transaction, agreement, or take any other action
that is outside the ordinary course of the Company's business or contrary
to the Policies and Programs of the Company or the Policies and Programs
of WCH applicable to the Company.
Section 5. COMPENSATION. The Executive shall receive the following
compensation:
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(a) BASE SALARY. A base salary of $280,000.00 per annum, or such
greater base salary (the "Base Salary") as may be approved by the WCH
Board, at a minimum on an annual basis, payable in accordance with the
Company's and WCH's general policies for payment of compensation to its
salaried personnel including a base salary review at least once a year.
(b) SALES COMMISSIONS. Sales commissions as provided in Section 6,
below.
(c) PERFORMANCE-BASED INCENTIVE BONUS. An annual performance-based
cash incentive bonus in an amount up to 35% of the Base Salary (the
"Bonus"). The Bonus shall be earned and paid in accordance with the Health
Power, Inc. Performance-Based Incentive Compensation Plan (the "Incentive
Plan"). Under the Incentive Plan, beginning with the 2001 Calendar Year
(as defined in Section 6(e), below), and continuing for each Calendar Year
thereafter during the First Term or any Renewal Term, as the case may be
(each a "Performance Year"), the Board shall establish in writing and in
good faith objective performance criteria or goals to be achieved by the
Executive for that Performance Year (the "Performance Goals"). A copy of
the Performance Goals as established by the Board shall be provided to the
Executive. After the completion of each Performance Year, the Board shall
review the achievement of the Performance Goals by the Executive and make
a determination in good faith as to the amount of the Bonus earned by the
Executive based upon the Executive's achievement of such Performance
Goals. The Bonus shall be payable as provided in the Incentive Plan.
(d) STOCK OPTIONS. Incentive Stock Options shall be granted in
accordance with the Incentive Stock Option Plan attached as Exhibit A.
(e) AUTOMOBILE ALLOWANCE. $600 per month as an automobile allowance
plus the reimbursement of automobile expenses in accordance with the
Company's policies subject to the submission of appropriate reports to the
Company.
(f) CORPORATE GOLF MEMBERSHIP. Participation in a corporate
membership at the Heritage Golf Club.
Section 6. SALES COMMISSIONS. The Executive shall receive the following
sales commissions:
(a) CMI SALES COMMISSIONS. The Company shall pay to the Executive
sales commissions on the CMI Fees (as defined below) generated by the
sales efforts of the Executive (the "CMI Sales Commissions"). The CMI
Sales Commissions shall be in an amount up to (i) 25% of the amount
(subject to allocation as described in subsection (d), below) of the CMI
Fees for the first year of business from a CMI Employer (as defined
below), which CMI Fees were generated by the sales efforts of the
Executive, plus (ii) 25% of the amount (subject to allocation as described
in subsection (d), below) of the increase in CMI Fees from one Calendar
Year to the next Calendar Year from CMI Employers who are part of group
rating plans of CMI, which CMI Fees were generated by the sales efforts of
the Executive.
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CMI Sales Commissions shall be payable on CMI Fees applicable to CMI
Employers located in any state or jurisdiction in which CMI is authorized
and approved to conduct business. With respect to a business acquisition
by CMI (whether such acquisition is structured as an asset, stock, merger,
or other similar type of transaction), no CMI Sales Commissions shall be
payable with respect to any fees received by CMI from any employer who, at
the time of such acquisition, was a client or customer of the business
acquired by CMI, except to the extent payable pursuant to (ii) of this
subsection (a).
For purposes of this agreement: (A) "CMI Fees" shall mean fees
payable to CMI for its performance of third party administrative services
for workers' compensation and unemployment compensation claims on behalf
of CMI Employers; and (B) a "CMI Employer" shall mean any employer which
receives third party administrative services for workers' compensation or
unemployment compensation claims from CMI.
(b) CHS SALES COMMISSIONS. The Company shall pay to the Executive
sales commissions on the CHS Fees (as defined below) generated by the
sales efforts of the Executive (the "CHS Sales Commissions") in an amount
up to 25% of the amount (subject to allocation as described in subsection
(d), below) of the CHS Fees for the first year of business from a CHS
Employer, which CHS Fees were generated by the sales efforts of the
Executive.
CHS Sales Commissions shall be payable on CHS Fees applicable to CHS
Employers located in any state or jurisdiction in which CHS is authorized
and approved to conduct business. With respect to a business acquisition
by CHS (whether such acquisition is structured as an asset, stock, merger,
or other similar type of transaction), no CHS Sales Commissions shall be
payable with respect to any fees received by CHS from any employer who, at
the time of such acquisition, was a client or customer of the business
acquired by CHS.
For purposes of this agreement: (A) "CHS Fees" shall mean the fees
payable to CHS for its performance of managed care organization ("MCO")
services on behalf of CHS Employers; and (B) a "CHS Employer" is any
employer which receives MCO services from CHS.
(c) SALES COMMISSIONS ON OTHER SERVICES AND PRODUCTS. In addition to
the payment of sales commissions relating to third party administrative
services for workers' compensation and unemployment compensation claims
and MCO services, as described above, the Company shall pay to the
Executive sales commissions on fees payable to the Company with respect to
the Company's other services and/or products (collectively, the "Other
Services"), which fees were generated by the sales efforts of the
Executive. Such sales commissions shall be payable only on the first year
of fees payable by a customer of the Company for one or more of the Other
Services. The amount of sales commissions for Other Services shall vary
with respect to each service or product offered by the Company, with the
amount of sales commissions ranging from 10% to up to 25% of the
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fees for each Other Service. The amount of sales commissions for each
Other Service shall be determined by the Chief Executive Officer of the
Company and shall be subject to allocation as described in subsection (d),
below, and review and approval by the WCH Board.
With respect to a business acquisition by the Company (whether such
acquisition is structured as an asset, stock, merger, or other similar
type of transaction), no sales commissions on Other Services shall be
payable with respect to any fees received by the Company from any customer
who, at the time of such acquisition, was receiving such service or
product from the business acquired by the Company.
(d) ALLOCATION OF COMMISSIONS. The Executive acknowledges and agrees
that the sales commission amount described in subsections (a), (b), and
(c), above, represents the total amount of sales commissions which are
payable with respect to the service or product described in that
subsection, and that the sales commission amount may be allocated by the
Company among all of the salespersons participating in the sales effort to
that employer or customer. The Chief Executive Officer of the Company
shall have the authority to allocate the sales commission amount in any
manner such officer deems appropriate, in his reasonable discretion. In
the event of any dispute regarding the allocation by the Chief Executive
Officer of the sales commission amount, such dispute shall be referred to,
and resolved by, the WCH Board, whose determination shall be binding and
conclusive on all parties.
(e) MISCELLANEOUS. All sales commissions described in this Section 6
shall be determined on a Calendar Year basis. The payment of the CMI Sales
Commissions shall accrue upon the execution of a contract with the CMI
Employer. The payment of the CHS Sales Commissions shall accrue upon (i)
CHS receiving notification from the appropriate state agency that the CHS
Employer has selected CHS as its MCO, or (ii) the execution of a contract
with the CHS Employer. The payment of the sales commissions on Other
Services shall accrue upon the execution of a contract with the party
receiving the Other Services. In no event shall there exist any obligation
to pay any sales commissions under this Section 6 unless and until the
corresponding fees has been received from the employer or customer. For
purposes of this agreement, a "Calendar Year" shall mean the period from
January 1 through December 31 of the same year.
Section 7. FRINGE BENEFITS. The Executive shall be entitled to the
following fringe benefits:
(a) Such fringe benefits and perquisites as may be generally
provided by the Company to its salaried personnel pursuant to the
Company's established policies.
(b) Payment of the premiums by the Company with respect to the
Executive's existing death and disability insurance policies.
Section 8. SEVERANCE PAY. If the Executive's employment is terminated by
the Company for any reason other than "just cause" (as defined in Section 9,
below), then the Executive shall receive the following:
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(a) Payment of any Base Salary, CMI Sales Commissions, CHS Sales
Commissions, and vacation pay accrued through the date of
termination of employment.
(b) Severance pay in an amount equal to (i) an amount equal to two
times the Base Salary in effect at the time of termination of
employment, plus (ii) an amount equal to the aggregate amount
of CMI Sales Commissions, CHS Sales Commissions and Sales
Commissions on Other Service and Products earned by the
Executive pursuant to Section 6, above, for the Calendar Year
immediately prior to termination but only with respect to
those CMI Employers and CHS Employers who renew or maintain
their business with the Company during the one-year period
immediately after such termination, plus (iii) an amount equal
to the amount of bonus earned, on a pro-rata basis, from the
beginning of the Calendar Year through the date of termination
of employment.
(c) If the termination is in accordance with Sec.9(c), then the
severance pay shall be the same as Sec.8(a), above, and in
lieu of severance payments in 8(b) the Executive shall receive
an amount equal to (i) 6 (six) months of the Base Salary in
effect at the time of termination of employment, (ii) 50% of
an amount equal to the aggregate amount of CMI Sales
Commissions, CHS Sales Commissions and Sales Commissions on
Other Services and Products earned by the Executive pursuant
to Section 6, above, for the Calendar Year immediately prior
to termination but only with respect to those CMI Employers
and CHS Employers who renew or maintain their business with
the Company during the one-year period immediately after such
termination, plus (iii) the benefits described in Section 7.
(d) Benefits comparable to the fringe benefits described in
Section 7, above, until the earlier of two years (or six
months if under Sec.8(c)) from the date of termination or the
date any such benefit is provided to the Executive by another
employer.
If the severance compensation under this section would constitute a
"parachute payment," as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), such severance compensation shall be reduced to
the largest amount as will result in no portion of the severance compensation
payments under this section being subject to the excise tax imposed by Section
4999 of the Code or being disallowed as deductions to the Company under Section
280G of the Code.
Payment of the amounts described in subsection (a) and (c), above, shall
be made within 30 days after the termination of employment and payment of the
amounts described in subsection
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(b), above, shall be made over a two-year period commencing with the termination
of employment, in the same manner as the Base Salary is paid during employment.
In the event of termination of the Executive's employment by the Company
for just cause, the Executive shall be entitled to accrued compensation as
provided in subsection (a), above, and to no further compensation.
If the Executive receives severance pay in accordance with subsection (b)
and (c), above, the Executive shall not be obligated to seek other employment by
way of mitigation of the amounts payable to the Executive under such subsection,
however shall the Executive accept other employment, the Company's obligation to
make the severance payments required under subsection (b), above shall be
reduced by the amount of such base compensation (including assured bonus
compensation) that the Executive receives in connection with such other
employment.
Section 9. TERMINATION OF EMPLOYMENT. The Executive's employment under
this agreement may be terminated:
(a) By the Company upon the occurrence of any event which
constitutes "just cause", as defined below, or at any time
thereafter.
(b) By the Company for any reason other than just cause upon the
giving of 90 days written notice to the Executive. If the
Executive's employment is terminated pursuant to this
subsection (b), then Executive shall be entitled to receive
the severance pay and benefits described in Section 8(a), (b)
and (d), above.
(c) By the Company if the Company experiences a severe erosion of
operating profits (as defined in Sec.9(c)(i), below). If the
Executive's employment is terminated pursuant to this
subsection (c), then the Executive shall be entitled to
receive the severance pay and benefits described in Section 8
(c) and (d).
(i) Severe erosion of operating profits shall mean (i) a
reduction in EBITDA (earnings before interest, taxes,
depreciation and amortization) (adjusted for any
allocation of corporate overhead) below $8,000,000.on an
annual basis and (ii) the occurrence of a significant
event, which would otherwise cause the Company to be
indefinitely, impaired (i.e. the Ohio Worker's
Compensation system is converted to private carriers, or
the loss of a contract, which will materially affect the
operating results of the business.)
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(d) By the Executive upon giving at least 30 days' advance written
notice to the Company and the Company will pay the Executive
the earned but unpaid portion of the Executive's Base Salary
through the termination date. If the Executive gives notice of
termination hereunder, the Company shall have the right to
relieve the Executive, in whole or in part, of his duties
under this Agreement and to advance the termination date from
the date set by the Executive's notice to a date not less than
14 days from the receipt of the Executive's notice of
termination. If the Executive's employment is terminated
pursuant to this subsection (d), the Executive shall be
entitled to accrued compensation in Section 8(a) and to no
further compensation.
(e) If a Change in Control, as defined in Sec.9(e)(v), shall have
occurred and within one year following such Change in Control
the Company terminates the employment of the Executive for
other than "just cause"; the Executive terminates his
employment within six months after a Change of Control occurs;
or the Executive terminates his employment after six months
and within one year following a Change of Control for Good
Reason, as defined in Sec.9(e)(vii), the Executive shall be
entitled to the following Termination Benefits:
(i) the unpaid portion of his Base Salary plus credit for
any vacation accrued but not taken and the amount of any
earned but unpaid portion of any bonus incentive
compensation, commission or any other benefit to which
he is entitled under this Agreement through the date of
the termination as a result of a Change in Control, plus
one times the Executives "Current Annual Compensation",
which is defined as the total of the Executives Base
Salary in effect at the termination date, plus any
performance or incentive bonuses and commissions
received in the prior twelve months, and shall not
include the value of any stock options granted or
exercised, contributions to 401(k) or other qualified
plans, medical, dental, or other insurance benefits, or
other fringe benefits. The amount shall be paid in the
ordinary course of business for the twelve month period
beginning on the first day of the month after
termination of employment following a Change of Control.
(ii) all outstanding stock options issued to the Executive
shall become 100% vested and thereafter exercisable in
accordance with such governing stock option agreements
and plan.
(iii) the Company shall maintain for the Executive's benefit
until the earlier of (y) 12 months after termination of
employment following a Change of Control, or (z) the
Executive's
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commencement of full-time employment with a new
employer, all life insurance, medical, health and
accident, and disability plans or programs in which the
Executive shall have been entitled to participate prior
to termination of employment following a Change of
Control, provided the Executive's continued
participation is permitted under the general terms of
such plans and programs after the Change in Control. In
the event the Executive's participation in any such plan
or program is not permitted, the Company will provide
directly the benefits to which the Executive would be
entitled under such plans and programs.
(iv) the Company shall reimburse expenses incurred by the
Executive during the benefit period for outplacement
services or job search expenses, up to a maximum amount
of $5,000.
(v) the Termination Benefits shall be payable to the
Executive as severance pay in consideration of his past
service and of his continued services from the date
hereof. Executive shall have no duty to mitigate his
damages by seeking other employment, and the Company
shall not be entitled to set off against amounts payable
hereunder any compensation which the Executive may
receive from future employment.
(vi) a Change of Control shall be deemed to have occurred if
and when, after the date hereof, (i) in one or more
transactions 50% or more of the assets of Security
Capital Corporation and subsidiaries, is acquired by or
combined with a person, partnership, corporation, trust
or other entity ("Person") and less than a majority of
the outstanding voting shares of the Person surviving
such transaction (or the ultimate parent of the
surviving Person) after such acquisition or combination
is owned, immediately after the acquisition or
combination, by the owners of the voting shares of
Security Capital Corporation outstanding immediately
prior to such acquisition or combination; or (ii) in one
or more transactions 50% or more of the assets of Health
Power, Inc and subsidiaries, is acquired by or combined
with a person, partnership, corporation, trust or other
entity ("Person") and less than a majority of the
outstanding voting shares of the Person surviving such
transaction (or the ultimate parent of the surviving
Person) after such acquisition or combination is owned,
immediately after the acquisition or combination, by the
owners of the voting shares of Health Power Inc
outstanding immediately prior to such acquisition or
combination; or (iii) during the period of two
consecutive years during the term of this Agreement,
individuals who at the beginning of such period
constitute the Boards of Directors of Security Capital
Corporation and Health Power, Inc
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cease for any reason to constitute at least 60% thereof,
unless the election of each director who was not a
director at the beginning of such period has been
approved in advance by directors of Security Capital
Corporation or Health Power, Inc, respectively,
representing 60% of the directors then in office who
were directors at the beginning of the period.
(vii) If the severance compensation under this section would
constitute a "parachute payment," as defined in Section
280G of the Internal Revenue Code of 1986, as amended
(the "Code"), such severance compensation shall be
reduced to the largest amount as will result in no
portion of the severance compensation payments under
this section being subject to the excise tax imposed by
Section 4999 of the Code or being disallowed as
deductions to the Company under Section 280G of the
Code.
(viii)As used in this Agreement, the term "Good Reason"
means, without the Executive's written consent,
(a) a change in status, position or responsibilities
which, in the Executive's reasonable judgement,
does not represent a promotion from existing
status, position or responsibilities as in effect
immediately prior to the Change in Control; the
assignment of any duties or responsibilities
which, in the Executive's reasonable judgement,
are not consistent with such status, position or
responsibilities; or any removal from or failure
to reappoint or reelect the Executive to any of
such positions, except in connection with the
termination of employment for total and permanent
disability, death or Good Cause or by the
Executive other than for Good Reason;
(b) a reduction by the Company in the Executive's base
salary as in effect on the date hereof or as the
same may be increased from time to time during the
term of this Agreement or the Company's failure to
increase the Executive's base salary (within
twelve months of the Executive's last increase in
base salary) after a Change in Control in an
amount which at least equals, on a percentage
basis, the average percentage increase in base
salary for all executive and senior officers of
the Company effected in the preceding twelve
months.
(c) the relocation of the Company's principal
executive offices to a location outside the
Columbus metropolitan area or the relocation of
the Executive by the Company to any place other
than the location at which the Executive performed
duties prior to a Change in Control, except for
required travel on the Company's business to an
extent substantially consistent with business
travel obligations at the time of a Change in
Control;
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(d) the failure of the Company to continue in effect
any incentive, bonus, or other compensation plan
in which the Executive participates, including but
not limited to the Company's stock option plans,
unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan), evidenced
by the Executive's written consent, has been made
with respect to such plan in connection with the
Change in Control, or the failure by the Company
to continue the Executive's participation therein,
or any action by the Company which would directly
or indirectly materially reduce the Executive's
participation therein;
(e) the failure by the Company to continue to provide
the Executive with benefits substantially similar
to those enjoyed or entitled under any of the
Company's pension, profit sharing, life insurance,
medical, dental, health and accident, or
disability plans at the time of a Change in
Control, the taking of any action by the Company
which would directly or indirectly materially
reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed
or entitled to at the time of the Change in
Control, or the failure by the Company to provide
the number of paid vacation and sick leave days to
which the Executive in entitled on the basis of
years of service with the Company in accordance
with the Company's normal vacation policy in
effect on the date hereof;
(f) the failure of the Company to obtain a
satisfactory agreement from any successor or
assign of the Company to assume and agree to
perform this Agreement; or
(g) any request by the Company that the Executive
participate in an unlawful act or take any action
constituting a breach of the Executive's
professional standard of conduct. Notwithstanding
anything in this Section to the contrary, the
Executive's right to terminate the employment
pursuant to this Section shall not be affected by
incapacity due to physical or mental illness.
(ix) Upon termination or expiration of this Agreement or any
cessation of the Executive's employment hereunder, the
Company shall have no further obligations under this
Agreement and no further payments shall be payable by
the Company to the Executive, except as provided herein
and except as otherwise may be required under any
benefit plans or arrangements maintained by the Company
and applicable to the Executive at the time of such
termination, expiration or cessation of the Executive's
employment, including, without limitation thereto,
salary, incentive compensation, sick leave, and vacation
pay.
(x) The Company is aware that upon the occurrence of a
Change in Control,
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the Board of Directors or a shareholder of the Company
may then cause or attempt to cause the Company to refuse
to comply with its obligations under this Agreement, or
may cause or attempt to cause the Company to institute,
or may institute litigation seeking to have this
Agreement declared unenforceable, or may take or attempt
to take other action to deny the Executive the benefits
intended under this Agreement. In these circumstances,
the purpose of this Agreement could be frustrated. It is
the intent of the Company that the Executive not be
required to incur the expenses associated with the
enforcement of any rights under this Agreement by
litigation or other legal action, nor be bound to
negotiate any settlement of any rights hereunder,
because the cost and expense of such legal action or
settlement would substantially detract from the benefits
intended to be extended to the Executive hereunder.
Accordingly, if following a Change in Control it should
appear to the Executive that the Company has failed to
comply with any of its obligations under this Agreement
or in the event that the Company or any other person
takes any action to declare this Agreement void or
enforceable, or institutes any litigation or other legal
action designed to deny, diminish or to recover from the
Executive the benefits entitled to be provided to the
Executive hereunder, and that the Executive has complied
with all obligations under this Agreement, the Company
irrevocably authorizes the Executive from time to time
to retain counsel of the Executive's choice, at the
expense of the Company as provided in this Section, to
represent the Executive in connection with the
initiation or defense of any litigation or other legal
action, whether such action is by or against the Company
or any Director, officer, shareholder, or other person
affiliated with the Company, in any jurisdiction. The
reasonable fees and expenses of counsel selected from
time to time by the Executive as hereinabove provided
shall be paid or reimbursed to the Executive by the
Company on a regular, periodic basis upon presentation
by the Executive of a statement or statements prepared
by such counsel in accordance with its customary
practices, up to a maximum aggregate amount equal to 25%
of the total severance benefits payable to the Executive
under Sections 8 or 9(e) of this Agreement. Any legal
expenses incurred by the Company by reason of any
dispute between the parties as to enforceability of or
the terms contained in this Agreement, notwithstanding
the outcome of any such dispute, shall be the sole
responsibility of the Company, and the Company shall not
take any action to seek reimbursement from the Executive
for such expenses.
Notwithstanding the foregoing, the Company shall have no
obligation to pay the expenses of the Executive's legal
counsel regarding a "good faith" dispute between the
parties concerning the following: (a) the Executive's
involuntary termination of employment for just cause or
for a disability; (b) the Executive's voluntary
termination of employment for Good Reason; or (c) the
occurrence of a Change in Control.
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For purposes of this Agreement, "just cause" shall mean the termination of
the Executive for: (i) any act of habitual drunkenness; (ii) controlled
substance abuse; (iii) dishonesty; (iv) criminal conduct (excluding minor
traffic offenses); (v) acts of violence or willful destruction of Company
property; (vi) falsification of any Company records or withholding of any
relevant information; (vii) unethical or immoral behavior; (viii) being
intoxicated or using intoxicants (drugs) not prescribed by a physician during
working hours; (ix) theft, including unauthorized possession of Company
property; (x) failure after written warning to perform the Executive's
responsibilities and duties in accordance with the Policies and Programs of the
Company or the Policies and Programs of WCC applicable to the Company, other
than any such Policies or Programs that would require the Executive to engage in
any unethical, immoral, or criminal behavior, and failure to correct such
failure within ten days after notice from the Company (specifying the corrective
actions required) to do so or, if it is impossible to correct such failure
within such ten days, failure to commence all possible actions to correct such
failure within such ten days and thereafter to continue to pursue such actions
until correction of such failure, or having corrected any such failure, fails to
so perform appropriately at any time in the future (without the requirement of
any additional notice from the Company); (xi) failure to fully perform and
observe all obligations and conditions to be performed and observed by the
Executive under this agreement, or under any other agreement between the
Executive and the Company, and failure by the Executive to correct such failure
within ten days after notice from the Company (specifying the corrective actions
required) to do so or, if it is impossible to correct such failure within such
ten days, failure to commence all possible actions to correct such failure
within such ten days and thereafter to continue to pursue such actions until
correction of such failure, or having corrected any such failure, fails to
perform and observe all such obligations and conditions at any time in the
future (without the requirement of any additional notice from the Company);
(xii) failure to perform and observe all obligations and conditions to be
performed and observed by the Executive which relate to obligations and
conditions to be performed and observed by the Company under any material lease,
agreement, note, or other document to which the Company is a party, and failure
of the Executive to correct such failure within ten days after notice from the
Company (specifying the corrective actions required) to do so or, if it is
impossible to correct such failure within such ten days, failure to commence all
possible actions to correct such failure within such ten days and thereafter to
continue to pursue such actions until correction of such failure, or having so
corrected any such failure, fails to perform and observe all such obligations
and conditions at any time in the future (without the requirement of any
additional notice from the Company); or (xiii) death or long-term disability.
For purposes of this agreement, a long-term disability shall mean that:
(A)(1) because of physical or mental incapacity, it is probable, in the opinion
of a licensed physician selected by the Company and acceptable to the Executive
(or his personal representative or guardian if the Executive is incapacitated),
that the Executive will not be able to engage actively in full-time employment
by the Company for a period of 180 days or longer, or (2) the Executive is
disabled under the definition of the disability policy or policies maintained by
the Company for the benefit of the Executive; or (B) the Company selects such a
licensed physician and the Executive fails within a reasonable time to submit to
any examinations reasonably requested by that licensed physician.
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Section 10. NONCOMPETITION AND CONFIDENTIALITY. In consideration for
providing the severance pay in Sec.8, the Executive agrees as follows:
(a) The Executive shall not at any time, either during the term of
his employment with the Company or after the termination of such
employment for whatever reason,
(i) Disclose to anyone (except to the extent necessary as a
benefit to the Company in the performance of his duties and with
prior written authorization by the Company) any trade secrets or
confidential information, or
(ii) Solicit or seek to employ any employee of the Company
to leave the employ of such Company, or
(iii) Solicit, recruit, or otherwise attempt to persuade the
members or providers of the Company to leave such Company and do
business with competing organizations.
For purposes of (ii) and (iii) of this subsection, publication of an
advertisement or notice in a publication of general solicitation shall not
constitute solicitation or recruitment.
(b) During the term of such employment, whatever it may be, and for
a period of two years following termination of such employment under
Sec.9(b) or for a period of six months following a termination of
employment under Sec.9(c) (the "Non-Competition Period"), the Executive
agrees that he shall not, directly or indirectly, on his own behalf, or as
a member of any partnership, or as an officer, director, shareholder,
agent, consultant, or employee of any other corporation or entity, compete
with the Company or be engaged in, loan money or credit to, own any
interest in, be employed by or otherwise participate in any other business
which competes with the Company in (i) Ohio or (ii) any other geographic
location (A) where the Company conducted business during the term of the
Executive's employment by the Company or (B) where the Company, with the
Executive's knowledge, had taken documented steps toward expanding into
during the term of the Executive's employment by the Company. The
foregoing shall not be construed to prohibit the Executive from owning,
directly or indirectly, less than 5% of the securities of any class of any
company listed on a national securities exchange or traded in the
over-the-counter securities market which is not in direct competition with
the Company.
(i) If the Executive's employment with the company ceases
under Section 9(a) or Section 9(d), then the Executive agrees that,
for a period of two years following the leaving of the Company, he
will not solicit any customer of the Company or any employee of the
Company. The parties agree that the Executive will sign the
Company's normal non-solicitation agreement.
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(c) The Executive understands that this section is an essential
element of this agreement and that the Company would not have entered into
this agreement without this section being included in it. The Executive
has consulted with his legal counsel and has been fully advised concerning
the reasonableness and propriety of this section in the specific context
of the operations and business of the Company, and the Executive
acknowledges that this section is reasonable and appropriate in all
respects. In the event of any violation or attempted violation of this
section, the Executive specifically acknowledges and agrees that the
Company's remedy at law will be inadequate, that the Company, its business
and business relationships will suffer irreparable injury and, therefore,
the Company shall be entitled to injunctive relief upon such breach in
addition to any other remedy to which it may be entitled, either in law or
in equity, without the necessity of proof of actual damage.
(d) As used in this agreement, the terms "trade secrets" and
"confidential information" shall mean any information acquired by the
Executive in the course of his employment which is not generally known to
the public and which, if revealed to unauthorized persons, would be
detrimental to the reputation or business interests of the Company and
includes, but is not limited to, any information relating to the Company's
and its affiliates and subsidiaries' business operations and structure,
sales methods, practices and techniques, technical know-how, advertising,
or marketing methods and practices, its provider relationship and
membership lists (including customer names and addresses), and the
Company's and its affiliates or subsidiaries' relationships with
suppliers, providers, and potential providers, Executives, members and
potential members or other persons or entities doing business with the
Company.
(e) The Non-Competition Period shall be tolled during the period of
any violation or attempted violation of this section by the Executive, and
during such period the Company shall have no obligation to make any
severance payment or provide any benefits to the Executive pursuant to
Section 8(b) or (c) and (d)and Section 9, above. The Company shall provide
notice to the Executive of any tolling of the Non-Competition Period.
(f) If any payment under Section 8 0r Section 9, above, is not paid
when due and remains unpaid ten days after notice is given to the Company
by the Executive, a payment default shall exist. In the event of a payment
default by the Company, the Executive shall have the option to either (i)
give notice to the Company that the Executive elects not to abide by the
noncompetition provisions described in subsection (b), above, in which
case the Executive shall be automatically released from all further
obligations under subsection (b), above, and the Company shall be
automatically released from all further obligations under Section 8(b) or
(c) and (d), above, other than the Company's obligation to pay the
Executive all accrued but unpaid severance payments to the date that such
notice of election was received by the Company, or (ii) remain obligated
under the noncompetition provisions described in subsection (b) and
enforce the Company's obligations under Section 8(b) or (c) and (d),
above. Notwithstanding the foregoing, a default shall not exist under
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this section if the non-payment is due to the Company exercising its
rights under subsection (e) during the period of any violation or
attempted violation of subsection (b) by the Executive.
Section 11. RETURN OF RECORDS. Upon termination of employment, the
Executive will deliver to the Company all records, reports, data, memoranda,
notes, models, and equipment of any nature that are in the Executive's
possession or under the Executive's control prepared or acquired in the course
of the Executive's employment relationship with the Company. The Executive
further agrees not to take any such information or data, or reproductions of
such information or data, that relate to the business activities of the Company
or to parties in a contract relationship with the Company.
Section 12. EXECUTIVE'S CAPACITY. The Executive represents and warrants to
the Company that he has the capacity and right to enter into this agreement and
perform all his services under this agreement without any restriction whatsoever
by any other agreement, other document, or otherwise.
Section 13. COMPLETE AGREEMENT. This Agreement contains the entire
agreement between the parties concerning the subject matter hereof and
supersedes any prior discussions, negotiations, representations, or agreements
between them relating to the employment of the Executive; provided, however,
that no provisions of this agreement shall supersede or replace any
noncompetition and/or confidentiality provisions contained in the Prior
Employment Agreement, which noncompetition and confidentiality provisions are
restated in, and continued pursuant to, this agreement. No additions or other
changes to this agreement shall be made or be binding on either party unless
made in writing and signed by each party to this agreement.
Section 14. NOTICES. All notices and other communications required or
permitted to be given under this agreement to any party shall be in writing and
shall be deemed given when delivered personally, telecopied (which is confirmed)
to that party at the telecopy number for that party set forth below, mailed by
certified mail (return receipt requested) to the address for that party set
forth below, or delivered to Federal Express, UPS, or any similar express
delivery service for delivery to that party at the address set forth below (or
to such other address or telecopy number as any party may have furnished in
writing to the other party in the manner provided above):
(a) If to the Company:
WC Holdings, Inc.
c/o Capital Partners, Inc.
Xxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx. 00000
Attention: Chairman
Telecopy No.: (000) 000-0000
16
(b) If to the Executive
Xxxxxx X. Xxxxxxx
c/o CompManagement, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxx, Xxxx 00000
Telecopy No.: (000) 000-0000
Section 15. GOVERNING LAW. All questions concerning the validity,
intention, or meaning of this agreement or relating to the rights and
obligations of the parties with respect to performance hereunder shall be
construed and resolved under the laws of Ohio.
Section 16. SEVERABILITY. The intention of the parties to this agreement
is to comply fully with all laws and public policies, and this agreement shall
be construed consistently with all laws and public policies to the extent
possible. If and to the extent that any court of competent jurisdictions
determines that it is impossible or violative of any legal prohibition to
construe any provision of this agreement consistently with any law, legal
prohibition, or public policy and consequently holds that provision to be
invalid or prohibited, that shall in no way affect the validity of the other
provisions of this agreement which shall remain in full force and effect.
Section 17. NONWAIVER. No failure by any party to insist upon strict
compliance with any term of this agreement, to exercise any option, enforce any
right, or seek any remedy upon any default of any other party shall affect, or
constitute a waiver of, the first party's right to insist upon such strict
compliance, exercise that option, enforce that right, or seek that remedy with
respect to that default or any prior, contemporaneous, or subsequent default;
nor shall any custom or practice of the parties at variance with any provision
of this agreement affect or constitute a waiver of, any party's right to demand
strict compliance with all provisions of this agreement.
Section 18. CAPTIONS. The captions of the various sections of this
agreement are not part of the context of this agreement, but are only labels to
assist in locating those sections, and shall be ignored in construing this
agreement.
Section 19. SUCCESSORS. This agreement shall be personal to the Executive
and no rights or obligations of the Executive under this agreement may be
assigned by him. Except as described in the preceding sentence, this agreement
shall be binding upon, inure to the benefit of, and be enforceable by and
against the respective heirs, legal representatives, successors, and assigns of
each party to this agreement. The Company shall require any successor to all or
substantially all of the business and/or assets of the Company, whether direct
or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this agreement in the same manner and
to the same extent as the Company would be required to perform if no such
succession had taken place. WCH, as the principal shareholder of the Company,
has executed this agreement to evidence its agreement to be bound by the
provisions of this Section 19 and to be subject to the obligations under Section
8 of this agreement resulting from a breach of this Section 19.
17
WC Holdings, Inc. Health Power, Inc.
By /s/ XXXXX X. XXXXXXXXXX By /s/ XXXXXX X. XXXXXXX
Xxxxx X. Xxxxxxxxxx, Chairman Xxxxxx X. Xxxxxxx, Chairman
The Executive CompManagement, Inc.
By /s/ XXXXXX X. XXXXXXX By /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx, Chairman
CompManagement Health Systems, Inc.
By /s/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx, Chairman
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