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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 31st day of March, 1998 by and between
XXXXX HEALTHPLAN SERVICES, INC., a Florida corporation (the "Company"), and
Xxxxxxx X. Xxxxx (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity; and
WHEREAS, the Executive desires to be employed by the Company and/or its
subsidiaries on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledge, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) as an Officer of the Company at a senior officer level and
will retain his current position and title with Health International, Inc. which
will be a subsidiary of the Company and in such other management capacities as
may be assigned, from time to time, by the Company. The Executive accepts such
employment and agrees to devote his best efforts and entire business time,
skill, labor and attention to the performance of such duties. The Executive
agrees to provide promptly a description of any other commercial duties or
pursuits engaged in by the Executive to the Company's Board of Directors. If the
Board of Directors determines, in good faith, that such activities conflict with
the Executive's performance of his duties hereunder, the Executive shall
promptly cease such activities to the extent and as directed by the Board of
Directors. It is acknowledged and agreed that such description shall be made
regarding any such activities in which the Executive owns more than 10% of the
ownership of the organization or which may be in violation of Section 5 hereof,
and that the failure of the Executive to provide any such description shall
enable the Company to terminate the Executive for Cause (as provided in Section
6(c) hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of the
circumstances. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director of the Company or and subsidiary or affiliate of the Company; provided,
however, that the Executive shall be entitled to receive such benefits and
additional compensation, if any, that is paid to executive officers of the
Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement, including
but not limited to the provisions for termination set forth in Section 6 hereof,
the employment of the
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Executive under this Agreement shall commence on the date hereof and shall
continue through and including the close of business on the anniversary date
hereof as set forth on Exhibit A attached hereto and incorporated herein (such
term shall herein be defined as the "Term").
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's
services under this Agreement, the Executive shall receive, and the Company
shall pay, a weekly base salary set forth on Exhibit A. Such base salary may be
increased, but not decreased, during the Term, in the Company's discretion,
based upon the Executive's performance and any other factors the Company deems
relevant. Such base salary shall be payable in accordance with the policy then
prevailing for the Company's executives.
(b) Payments. All amounts paid pursuant to this Agreement shall be
subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, federal income tax, state and local income tax, if any, and
comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by the Company
for all reasonable and customary travel and other business expenses incurred by
the Executive in the performance of the Executive's duties hereunder in
accordance with the Company's standard policy regarding expense verification
practices. The Executive shall be entitled to that number of weeks paid vacation
per year that is available to other executive officers of the Company in
accordance with the Company's standard policy regarding vacations and such other
fringe benefits as are set forth on Exhibit A, and shall be eligible to
participate in such pension, life insurance, health insurance, disability
insurance and other employee benefits plans, if any, which the Company may from
time to time make available to its executive officers generally.
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire information and
knowledge respecting the intimate and confidential affairs of the Company,
including without limitation confidential information with respect to the
Company's customer lists, business methodology, processes, production methods
and techniques, promotional materials and information, and other similar matters
treated by the Company as confidential (the "Confidential Information").
Accordingly, the Executive covenants and agrees that during the Executive's
employment by the Company (whether during the Term hereof or otherwise) and
thereafter, the Executive shall not, without the prior written consent of the
Company, disclose to any person, other than a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of the Executive's duties hereunder, any Confidential Information
obtained by the Executive while in the employ of the company.
(b) The Executive agrees that all memoranda, notes, records, papers or
other documents and all copies thereof relating to the Company's operations or
business, some of which
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may be prepared by the Executive, and all objects associated therewith in any
way obtained by the Executive shall be the Company's property. This shall
include, but is not limited to, documents and objects concerning any customer
lists, contracts, price lists, manuals, mailing lists, advertising materials,
and all other materials and records of any kind that may be in the Executive's
possession or under the Executive's control. The Executive shall not, except for
the Company's use, copy or duplicate any of the aforementioned documents or
objects, nor remove them from the Company's facilities, nor use any information
concerning them except for the Company's benefit, either during the Executive's
employment or thereafter. The Executive covenants and agrees that the Executive
will deliver all of the aforementioned documents and objects, if any, that may
be in the Executive's possession to the Company upon termination of the
Executive's employment, or at any other time at the Company's request.
5. COVENANT NOT TO COMPETE.
(a) The Executive covenants and agrees that during the Executive's
employment by the Company (whether during the Term hereof or otherwise), and
thereafter for the period of time set forth on Exhibit A following the
termination of the Executive's employment with the Company, the Executive will
not:
(i) directly or indirectly engage in, continue in or carry on
the business of the Company, including owning or controlling any
financial interest in, any corporation, partnership, firm or other form
of business organization which competes with or is engaged in or carries
on any aspect of such business or any business substantially similar
thereof;
(ii) consult with, advise or assist in any way, whether or not
for consideration, any corporation, partnership, firm or other business
organization which is now or becomes a competitor of the Company in any
aspect of the Company's business during the Executive's employment with
the Company, including, but not limited to: advertising or otherwise
endorsing the products of any such competitor; soliciting customers or
employing employees of the Company; or otherwise serving as an
intermediary for any such competitor; or loaning money or rendering any
other form of financial assistance to or engaging in any form of business
transaction whether or not on an arms' length basis with any such
competitor; or
(iii) engage in any practice the purpose of which is to evade the
provisions of this Agreement or willfully commit any act which is
detrimental to the successful continuation of, or which adversely
affects, the business or the Company;
provided, however, that the foregoing shall not preclude the Executive's
ownership of not more than 2% of the equity securities of a corporation which
has such securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended.
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(b) The Executive agrees that the geographic scope of this covenant
not to compete shall extend to the geographic area where the Company's customers
conduct business at any time during the Term of this Agreement. For purposes of
this Agreement, "customers" means any person or entity to which the Company
provides or has provided within a period of one (1) year prior to the
Executive's termination of employment labor, materials or services for the
furtherance of such entity or person's business or any person or entity that
within such period of one (1) year the Company has pursued for the purposes of
obtaining business for the Company.
(c) In the event of any breach of this covenant not to compete, the
Executive recognizes that the remedies at law will be inadequate and that in
addition to any relief at law which may be available to the Company for such
violation or breach and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable remedies (including an
injunction) and such other relief as a court may grant after considering the
intent of this Section 5. It is further acknowledged and agreed that the
existence of any claim or cause of action on the part of the Executive against
the Company, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of this covenant not to compete, and the
duration of this covenant not to compete shall be extended in an amount which
equals the time period during which the Executive is or has been in violation of
this covenant not to compete.
(d) In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to duration,
geographic scope, prohibited activities or otherwise, the parties agree that
this covenant shall be reduced or curtailed to the extent necessary to render it
enforceable.
6. TERMINATION.
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If, during the Term, the Executive becomes physically
or mentally disabled in accordance with the terms and conditions of any
disability insurance policy covering the Executive or, if due to such physical
or mental disability, the Executive becomes unable for a period of more than six
(6) consecutive months to perform his duties hereunder on substantially a
full-time basis as determined by the Company in its sole reasonable discretion,
the Company may, at its option, terminate the Executive's employment hereunder
upon not less than 30 days' written notice.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon notice. For purposes of this
Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder: (i) if the Executive is convicted of a class one or
serious felony, as evidenced by a binding and final judgment, order or decree of
a court of competent jurisdiction; (ii) for the Executive's violation of Section
5 of this Agreement;
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(iii) use of illegal drugs; (iv) insobriety by the Executive while performing
his or her duties hereunder; and (v) if the Executive is adjudicated by a
binding and final judgment, order or decree of a court of competent jurisdiction
to have committed any act of theft, dishonesty or falsification of reports,
records or information submitted by the Executive to the Company.
(d) Severance Payment. If the Executive is terminated by the Company
for Cause as defined in subparagraph (c) above or dies, the Executive shall not
be entitled to any further payments after the date of such termination or death,
including but not limited to any Severance Payment; however, in the event of a
termination pursuant to Section 6(c)(v), Executive shall be paid his salary and
benefits up to the date of the adjudication as set forth therein. If the
Executive (i) is terminated by the Company for any reason other than Cause, (ii)
becomes disabled and is still able to perform Executive's duties, or (iii)
terminates employment voluntarily, the Executive's salary, bonus and benefits
(other than in the case of death or disability the right of Executive to any
disability payments or death payments due under policies in existence at the
date of such termination) hereunder will terminate as of the termination of
employment; however, Executive shall be entitled to receive the monthly
Severance Payment specified on Exhibit A which shall be payable for each month
after such termination during which Executive is subject to the Non-Compete
provision specified in Section 5 hereof and Executive shall be paid any bonus
and salary earned as of the date of such termination. The full amount of the
Severance Payment shall initially be guaranteed by a letter of credit (the
"First Letter of Credit") issued in favor of the Executive by NationsBank, N.A.
with the amount thereof declining as payments are made hereunder. The First
Letter of Credit shall be non-cancelable for a period of three (3) years. Within
fifteen (15) days from the expiration date of the First Letter of Credit, the
Company shall cause a second letter of credit to be issued in favor of the
Executive to guarantee the remaining balance of the Severance Payment due during
the remaining term of this Agreement (the "Second Letter of Credit"). The Second
Letter of Credit shall be non-cancelable for a period of two (2) years. The
Executive shall be entitled to draw under the First or Second Letter of Credit,
as the case may be, upon any default in the Company's obligation to make a
Severance Payment and this Agreement shall be deemed to be in default and the
Executive shall be further entitled to draw under the Letter of Credit if a
notice of cancellation is issued thereunder and the letter of credit is not
replaced prior to fifteen (15) days before the effective date of such
cancellation.
7. RESOLUTION OF DISPUTES
(a) Arbitration. Any dispute, controversy or claim arising out of or
relating to this Employment Agreement shall be settled by binding arbitration
held in Denver, Colorado, in accordance with the Commercial Arbitration Rules of
the American Arbitration Association then in effect, except as specifically
otherwise provided in this Section 7. Notwithstanding the foregoing, the Company
may, in its discretion, apply to a court of competent jurisdiction for equitable
relief from any violation or threatened violation of the covenants of Executive
under Section 5 (covenant not to compete) of this Employment Agreement.
(b) Arbitrators. If the matter in controversy (exclusive of attorney
fees and
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expenses) shall not appear, as at the time of the demand for arbitration, to
exceed $100,000, then the panel to be appointed shall consist of one neutral
arbitrator to be mutually agreed upon by the parties; otherwise, the panel shall
be comprised of three neutral arbitrators of whom one shall be selected by each
party within twenty (20) days, and a third arbitrator shall be selected by these
two selected arbitrators. If one of the parties fails to timely select an
arbitrator, the arbitrator that was timely selected shall be the sole
arbitrator. If neither party timely selects an arbitrator, the first arbitrator
selected thereafter shall be the sole arbitrator, no others being appointed.
Where each of the parties timely selects an arbitrator, said arbitrators will
have ten (10) days from the end of the twenty (20) -day period to select the
third arbitrator. In the event the arbitrators are unable to timely agree on the
third arbitrator, either party may petition any official of the American
Arbitration Association for appointment of the third arbitrator and the parties
agree to accept any arbitrator appointed by such official subject to the
limitations hereof. Arbitrators must be reasonably independent of the parties
and their principals. Persons who are hereby expressly disqualified to serve as
arbitrators are principals of the parties, relatives of said principals,
employees of the parties or said principals, persons not residing within 100
miles of the site of the arbitration, attorneys, accountants, and other business
persons who have professional or business relationships with the parties or said
principals.
(c) Procedures; No Appeal. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the circumstances,
provided that any party shall be entitled to reasonable production of documents
and not less than (i) 16 hours of deposition examination and 20 written
interrogatories if the matter in controversy (exclusive of attorneys' fees and
costs) is $500,000 or less; and (ii) 24 hours of deposition examination and 40
written interrogatories if the matter in controversy (exclusive of attorneys'
fees and costs) exceeds $500,000. The arbitrators shall resolve the dispute as
expeditiously as practicable, and if reasonably practicable, within one hundred
twenty (120) days after the selection of the arbitrator(s). The arbitrator(s)
shall give the parties written notice of the decision, with the reasons therefor
set out, and shall have thirty (30) days thereafter to reconsider and modify
such decision if any party so requests within ten (10) days after the decision.
Thereafter, the decision of the arbitrator(s) shall be final, binding, and
nonappealable with respect to all persons, including (without limitation)
persons who have failed or refused to participate in the arbitration process.
The privileges, including, without limitation, the attorney-client privilege,
shall apply in arbitration.
(d) Authority. The arbitrator(s) shall have authority to award relief
under legal or equitable principles, including interim or preliminary relief,
and to allocate responsibility for the costs of the arbitration and to award
recovery of attorneys' fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
(e) Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. Each party hereby submits to the in personam jurisdiction of the
Federal and State courts in Hillsborough County, Florida for the purpose of
confirming such award and entering judgment thereon.
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(f) Confidentiality. All proceedings under this Article 13 and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all parties.
(g) Continued Performance. The fact that the dispute resolution
procedures specified in this Section 7 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party.
(h) Tolling. All applicable statutes of limitation shall be tolled
while the procedures specified in this Section 7 are pending. The parties will
take such action, if any, required to effectuate such tolling.
(i) Expenses of Arbitration. Except as otherwise may be provided in
this Agreement, the expenses of arbitration will be borne equally the parties,
provided that each party will bear the cost of its own experts, evidence and
attorneys' fees, except that, in the discretion of the arbitrators, any award in
arbitration may include attorneys' fees if the arbitrators expressly determine
that the party against whom such an award is entered has caused the dispute to
be submitted to arbitration in bad faith or as a dilatory tactic. No arbitration
will be commenced after the date when institution of legal or equitable
proceedings based upon the same subject matter would be barred by the applicable
statute of limitations.
8. INDEMNIFICATION AND LIABILITY COVERAGE. For the period of Executive's
employment and for five years after the termination of Executive's employment,
the Executive shall be entitled to be covered by, and after termination of
employment shall remain covered by the indemnification rights and the liability
insurance coverage in effect from time to time during Executive's employment or
in effect at the time of Executive's termination, as the case may be. The
Company will use its best efforts to insure that such indemnification and
liability coverage shall at all times be as favorable to Executive in terms of
coverage amounts and coverage terms as the coverage which exists at Health
International, Inc. on the date that the Company was acquired by the Company,
provided that if such insurance coverage is not available at rates reasonably
correspondent to the rates charged at the time of the acquisition (adjusted for
inflation), the Company shall be obligated only to buy such coverage as is
available for such rates and can be commercially obtained.
9. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature page
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If the Company:
Xxxxx HealthPlan Services, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
10. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto. No waiver by any party hereto of any breach by any other party
hereto shall be deemed a waiver of any similar or dissimilar term or condition
at the same or at any prior or subsequent time. This Agreement is the entire
agreement between the parties hereto with respect to the Executive's employment
by the Company and there are no agreements or representations, oral or
otherwise, expressed or implied, with respect to or related to the employment of
the Executive which are not set forth in this Agreement. Any prior agreement
relating to the Executive's employment with the Company is hereby superseded and
void, and is no longer in effect. This Agreement shall be binding upon and inure
to the benefit of the Company, its respective successors and assigns, whether by
merger, sale of assets or otherwise, and the Executive and his heirs, executors,
administrators and legal representatives. Except as expressly set forth herein,
no party shall assign any of his or its rights under this Agreement without the
prior written consent of the other party and any attempted assignment without
such prior written consent shall be null and void and without legal effect. The
parties agree that if any provision of this Agreement shall under any
circumstances be deemed invalid or inoperative, the Agreement shall be construed
with the invalid or inoperative provision deleted and the rights and obligations
of the parties shall be construed and enforced accordingly. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the internal laws of the State of Arizona. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original but
all of which together will constitute but one and the same instrument. This
Agreement has been jointly drafted by the respective representatives of the
parties and no party shall be considered as being responsible for such drafting
for the purpose of applying any rule constituting ambiguities against the
drafter or otherwise.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
XXXXX HEALTHPLAN SERVICES, INC.
By:
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Xxxxx Xxxxxx, President
"EXECUTIVE"
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Xxxxxxx X. Xxxxx
Address:
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AMENDED AND RESTATED EXHIBIT A TO EMPLOYMENT AGREEMENT
Term: 5 years
Base Salary: $3,846.15 per week
Additional Consideration: The Company shall pay additional annual consideration
in the amount of $175,000 to Executive payable in
annual installments on April 24th of year during the
Term.
Fringe Benefits: Same as are provided to the other executives at the
same level
Covenant Not to Compete: The Covenant Not to Compete shall be in force during
the term of the Employment Agreement and for a period
equal to the greater of the unexpired term of the
Employment Agreement at the time of termination of
Executive's Employment (the "Unexpired Employment
Term") or twenty-four (24) months, provided that, to
the extent the term of noncompetition extends beyond
the Unexpired Employment Term, Employer in its sole
discretion may elect to shorten the term of
non-competition to any lesser period it chooses after
the expiration of the Unexpired Employment term.
Severance Payment: $21,875 for each month during which Covenant Not to
Compete is in force. This agreement and restatement
of Exhibit A shall not have any effect on the First
Letter of Credit or Second Letter of Credit described
in Section 6(d) of the Employment Agreement.
Stock Options: Executive and the Company entered into a Stock Option
Agreement dated as of January 22, 1998, pursuant to
which Executive was granted nonqualified options to
purchase 50,000 shares of the Company's common stock
with an exercise price of $3.40 per share which vest
and become exercisable nine years after the date of
grant and will vest and become immediately
exercisable upon the completion of an initial public
offering of the Company's common stock pursuant to an
effective Registration Statement filed under the
Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Exhibit A on the 23rd day of April, 1998.
XXXXX HEALTHPLAN SERVICES, INC.
By: /s/ Xxxxx Xxxxxx, President
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Xxxxx Xxxxxx, President
"EXECUTIVE"
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
