EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of April
8, 1997 between AMERICAN NET CLAIMS, INC., a Texas corporation with a principal
place of business at 00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000, and XX X. XXXXX ("Employee").
In consideration for the mutual covenants and conditions set forth
herein, the parties hereby agree as follows:
1. Employment. The Company hereby employs Employee in the capacity of
Chairman of the Board of Directors, President, and Chief Executive Officer.
Employee accepts such employment and agrees to perform such services as are
customary to such offices and shall from time to time be assigned to him by the
Board of Directors.
2. Term. Subject to earlier termination as provided in Section 5, the
employment hereunder shall be for a period of four years, commencing on January
1, 1998 or the Company's Initial Public Offering, whichever is later, (the
"Commencement Date") and ending on December 31, 2002. Employee's employment will
be on a full-time basis requiring the devotion of such amount of his productive
time as is necessary for the efficient operation of the business of the Company.
3. Compensation and Benefits.
3.1 Salary. For the performance of Employee's duties
hereunder, the Company shall pay Employee an annual salary of $250,000 (less
required withholdings), payable no less frequently than twice monthly.
3.2 Benefits. Employee shall be entitled to the use of a
Company-owned vehicle or shall receive an automobile allowance, not to exceed
$5,000 annually. Employee shall be entitled to such medical, disability, and
life insurance coverage and such vacation, sick leave, and holiday benefits, if
any, as are made available to the Company's top executive personnel, all in
accordance with the Company's benefits program in effect from time to time.
3.3 Reimbursement of Expenses. Employee shall be entitled to
reimbursement for all reasonable expenses for travel, meals, and entertainment,
incurred by Employee in connection with and reasonably related to the
furtherance of the Company's business.
3.4 Annual Review. On each anniversary of the Commencement
Date, the Board of Directors will review Employee's performance and compensation
hereunder (including salary, bonus, and stock options and/or other equity
incentives) and will approve an increase in such compensation of not less than
5% annually, but will not have authority, as the result of such review, to
decrease any portion of such compensation without the written consent of
Employee.
4. Change of Control. In the event of a Change in Control of the
Company (as
defined below), all options then granted to Employee which are unvested at the
date of the Change in Control will be immediately vested. In addition, in the
event of a termination of Employee's employment for any reason (other than as
set forth in Section 5.1(f)) following a Change of Control, the Company will
promptly pay Employee, in addition to the amounts required under Section 5.2(a),
a lump-sum severance amount payable immediately upon such termination of
employment, equal to one-half of his then current annual salary. This payout
shall be in lieu of any amount which may otherwise be due under Section 5.2(b).
As used herein, a "Change of Control" of the Company shall be deemed to
have occurred:
(a) Upon the consummation, in one transaction or a series of related
transactions, of the sale or other transfer of voting power (including voting
power exercisable on a contingent or deferred basis as immediately exercisable
voting power) representing effective control of the Company to a person or group
of related persons who, on the date of this Agreement, is not affiliated (within
the meaning of the Securities Act of 1933) with the Company, whether such sale
or transfer results from a tender offer or otherwise; or
(b) Upon the consummation of a merger or consolidation in which the
Company is a constituent corporation and in which the Company's stockholders
immediately prior thereto will beneficially own, immediately thereafter,
securities of the Company or any surviving or new corporation resulting
therefrom having less than a majority of the voting power of the Company or any
such surviving or new corporation; or
(c) Upon the consummation of a sale, lease, exchange, or other transfer
or disposition by the Company of all or substantially all its assets to any
person or group of related persons.
5. Termination.
5.1 Termination Events. The employment hereunder will
terminate upon the occurrence of any of the following events:
(a) Employee dies;
(b) The Company, by written notice to Employee or his personal
representative, discharges Employee due to the inability to perform the duties
assigned to him hereunder for a continuous period exceeding 90 days by reason of
injury, physical or mental illness, or other disability, which condition has
been certified by a physician; provided, however, that prior to discharging
Employee due to such disability, the Company shall give a written statement of
findings to Employee or his personal representative setting forth specifically
the nature of the disability and the resulting performance failures, and
Employee shall have a period of ten (10) days thereafter to respond in writing
to the Board of Director's findings;
(c) Employee is discharged by the Board of Directors of the
Company for cause. As used in this Agreement, the term "cause" shall mean:
(i) Employee's conviction of (or pleading guilty or
no lo contendere to a felony or misdemeanor involving dishonesty or moral
turpitude; or
(ii) (a) the willful and continued failure of
Employee to substantially perform his duties with the Company (other than any
such failure resulting from illness or disability) after a demand for
substantial performance is requested by the Company's Board of Directors, which
specifically identifies the manner in which it is claimed Employee has not
substantially performed his duties, or (b) Employee is willingly engaged in
misconduct which has a direct and material adverse monetary effect on the
Company. For purposes of this subpart (ii) no act or failure to act on
Employee's part shall be considered "willful" unless done, or omitted to be
done, by Employee not in good faith and without reasonable belief that
Employee's actions were in the best interest of the Company. No termination
shall be effected for cause pursuant to this subpart (ii) unless Employee has
been provided with specific information as to the acts or omissions which form
the basis of the allegation of cause, and Employee has had an opportunity to be
heard, with counsel if he so desires, before the Board of Directors and such
Board determines in good faith that Employee was guilty of conduct constituting
"cause" as herein defined, specifying the particulars thereof in detail;
(d) Employee is discharged by the Board of Directors of the
Company without cause, which the Company may do at any time upon notice to
Employee;
(e) Employee voluntarily terminates his employment due to
either (i) a default by the Company in the performance of any of its obligations
hereunder, or (ii) an Adverse Change in Duties (as defined below), which default
or Adverse Change in Duties remains unremedied by the Company for a period of
ten (10) days following its receipt of written notice thereof from Employee; or
(f) Employee voluntarily terminates his employment for any
reason other than the Company's default or an Adverse Change in Duties, which
Employee may do at any time with at least 30 days advance written notice.
As used herein, "Adverse Change in Duties" means an action or series of
actions taken by the Company, without Employee's prior written consent, which
results in:
(1) A change in Employee's reporting responsibilities, titles,
job responsibilities, or offices, which, in Employee's reasonable judgment,
results in a diminution of his status, control, or authority;
(2) The assignment to Employee of any positions, duties, or
responsibilities which, in Employee's reasonable judgment, are inconsistent with
Employee's positions, duties, and responsibilities or status with the Company;
(3) A requirement by the Company that Employee be based or
perform his duties anywhere other than (i) at the Company's corporate office
location on the date of this Agreement, or (ii) if the Company's corporate
office location is moved after the date of this
Agreement, at a new location that is no more than 60 miles from such prior
location; or
(4) A failure by the Company (i) to continue in effect any
material benefit, whether or not qualified, or other compensation, bonus, or
incentive plan in effect on the date of this Agreement or subsequently adopted,
(ii) to continue Employee's participation in such benefits or plans at the same
level or to the same extent as on the Commencement Date or, with respect to
subsequently adopted benefits or plans, on the date of the initial
implementation thereof, or (iii) to provide for Employee's participation in any
newly adopted benefits or plans at a level commensurate, in Employee's
reasonable judgment, with that of other top executives of the Company.
5.2 Effects of Termination.
(a) Upon termination of Employee's employment hereunder for
any reason, the Company will promptly pay Employee all compensation owed to
Employee and unpaid through the date of termination (including, without
limitation, salary and employee expense reimbursements).
(b) In addition (except in a situation where severance is due
pursuant to Section 4), if Employee's employment is terminated under Sections
5.1(a), (b), (d), or (e), the Company shall also pay Employee, immediately upon
such termination of employment, a lump-sum severance amount equal to his then
current annual salary.
(c) Upon termination of Employee's employment hereunder for
any reason, Employee agrees that for the one year period following the
Termination Event:
(i) Employee will not directly or indirectly, whether
for his own account or as an individual, employee, director, consultant, or
advisor, or in any other capacity whatsoever, provide services to any other
person, firm, corporation, or other business enterprise which is involved in
claims processing or other healthcare related matters unless he obtains the
prior written consent of the Board of Directors.
(ii) Employee will not directly or indirectly
encourage or solicit, or attempt to encourage or solicit, any individual to
leave the Company's employ for any reason or interfere in any other manner with
the employment relationships at the time existing between the Company and its
current or prospective employees.
(iii) Employee will not induce or attempt to induce
any customer, supplier, distributor, licensee, or any other business relation of
the Company to cease doing business with the Company or in any way interfere
with the existing business relationship between any such customer, supplier,
distributor, licensee, or any other business relation and the Company.
Employee acknowledges that monetary damages may not be sufficient to
compensate the Company for any economic loss which may be incurred by reason of
breach of the foregoing
restrictive covenants. Accordingly, in the event of any such breach, the Company
shall, in addition to any remedies available to the Company at law, be entitled
to obtain equitable relief in the form of an injunction precluding Employee from
continuing to engage in such breach.
If any restriction set forth in this paragraph is held to be
unreasonable, then Employee and the Company agree, and hereby submit, to the
reduction and limitation of such prohibition to such area or period as shall be
deemed reasonable.
6. General Provisions.
6.1 Assignment. Neither party may assign or delegate any of
its rights or obligations under this Agreement without the prior written consent
of the other party, except that the Company may assign its rights and
obligations hereunder to a successor by merger or an assignee of all or
substantially all of the Company's assets.
6.2 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior agreements between the parties relating to such
subject matter.
6.3 Modifications. This Agreement may be changed or modified
only by an agreement in writing signed by both parties hereto.
6.4 Successor and Assigns. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its
successors and assigns and Employee and Employee's legal representatives, heirs,
legatees, distributees, assigns, and transferees by operation of law, whether or
not any such person shall have become a party to this Agreement and have agreed
in writing to join and be bound by the terms and conditions hereof.
6.5 Governing Law. This Agreement shall be governed by, and be
construed in accordance with, the laws of Texas.
6.6 Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect.
6.7 Further Assurances; Committees of Board. The parties will
execute such further instruments and take such further actions as may be
reasonably necessary to carry out the intent of this Agreement. The term "Board
of Directors" shall include any committee of the Board.
6.8 Notices. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed received by the
recipient when delivered personally or, if mailed, five (5) days after the date
of deposit in the United States mail, certified or registered, postage prepaid
and addressed, in the case of the Company, to 00000 Xxxxx Xxxxxxx Xxxxxxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx 00000, and in the case of Employee, to 4730 Xxxxxxx,
Xxxxxx, Xxxxx 00000, or to such other address as either party may later specify
by at least ten (10) days advance written notice delivered to the other party in
accordance herewith.
6.9 No Waiver. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver of that
provision, nor prevent that party from thereafter enforcing that provision or
any other provision of this Agreement.
6.10 Legal Fees and Expenses. In the event of any disputes
under this Agreement, each party shall be responsible for their own legal fees
and expenses which it may incur in resolving such dispute.
6.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Employee have executed
this Agreement effective as of the date first above written.
XXXXXXXXX.XXX INC.
By:
--------------------------------
Xxxxx X. Xxx
Executive Vice President of
Marketing and Technology
Employee
