EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, entered into as of August 31, 1998,
between DISABILITY REINSURANCE MANAGEMENT SERVICES, INC., a Delaware
corporation (hereinafter called the "Company"), and Xxxxxxx X. Xxxxxxxx of
Cumberland, Maine (hereinafter called "Executive").
WHEREAS, CORE, INC., a Massachusetts corporation ("CORE"), is acquiring
all the capital stock of the Company pursuant to a Capital Stock Purchase
Agreement of even date herewith among CORE, the Company, Executive and other
former stockholders of the Company (the "Stock Purchase Agreement");
WHEREAS, in connection with the closing of said Stock Purchase Agreement
CORE, the Company and Executive desire the Company and Executive to enter
into an employment agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt of
which is acknowledged by both parties hereto, the Company and Executive agree
as follows:
1. EMPLOYMENT. The Company will employ Executive and Executive will
serve the Company as a member of the Company's Board of Directors, a Managing
Director and the Company's President, all upon the terms and conditions
provided herein. During the term of this Agreement, Executive shall not be
assigned to any position of lesser authority or responsibility than those
attending the office or offices described in this Section.
2. DUTIES. Executive shall report to the Chief Executive Officer of
CORE and the Board of Directors of the Company. The Executive (in conjunction
with the other Managing Directors of the Company) shall be responsible for
the day-to day business, operations and affairs of the Company.
Additionally, Executive (in conjunction with the other Managing Directors of
the Company) shall make recommendations to the CORE Board of Directors or
Compensation Committee concerning grants of incentive stock options of CORE
stock for Company employees (such recommendations to be consistent with stock
options awards for other employees of CORE and its subsidiaries which shall
be considered in good faith by the CORE Board of Directors and/or
Compensation Committee).
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The Executive recognizes the ultimate authority of CORE (the
stockholder of the Company) and CORE management for all material matters
involving the Company, including, without limitation, matters relating to
significant litigation, significant capital expenditures in excess of
$250,000, responses to other Managing Directors leaving the Company for any
reason, compliance with reasonable CORE policies and procedures (including
finance and accounting procedures as a subsidiary of a publicly reporting
company) and responses to disparities of at least 30% between projected EBIT
targets and actual operating results for any calendar year after 1998.
Executive's principal place of employment shall be located in the
Greater Portland area at least until the third anniversary of the date hereof.
3. TERM. The term of Executive's employment hereunder shall be for the
period beginning on the date hereof, and ending September 30, 2000 (the
"Term"). Executive may extend the Term of this Agreement through any
additional period through September 30, 2001 (the "Executive Extension") upon
written notice to the Company provided, during the Executive Extension
Executive shall provide Company with at least 90 days advance written notice
of termination. After the scheduled Term and any Executive Extension, the
employment of Executive hereunder shall continue until terminated by either
party upon giving to the other party 90 days advance prior notice of
termination. This Employment Agreement is subject to earlier termination as
set forth in Section 8 hereof.
4. COMMITMENT OF EXECUTIVE. During the term of this Agreement,
Executive shall be employed by the Company on a full-time basis, and shall
perform his duties during the normal business hours of the Company. During
the term of this Agreement, Executive shall not perform work for compensation
(except for reimbursement of reasonable expenses approved by the Company)
within the industry in which the Company, CORE or any of CORE's subsidiaries
are active for any person or entity other than the Company without first
obtaining the prior written consent of the Board of Directors of the Company.
5. COMPENSATION.
(a) SALARY. During the Term of this Agreement, the Company agrees
to compensate Executive at the rate of not less than $195,950.00 per annum.
Executive's salary shall not be reduced below this amount without his consent.
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(b) PAYROLL POLICIES. Executive's compensation shall be paid in
installments pursuant to the Company's personnel policies, as they may be
amended from time to time, less any applicable federal, state or local
payroll tax deductions incident on Executive.
(c) BONUSES. Executive shall be eligible to receive a bonus or
bonuses on the same merit basis as other CORE executives as determined by
the Board of Directors of CORE or the Compensation Committee of CORE, at its
sole discretion, based upon performance and other factors.
6. ETHICAL CONDUCT. Executive agrees to adhere to all recognized
professional ethics and customs, and to avoid all actions or conduct which
injures in any way, directly or indirectly, the professional standing and
reputation of the Company or any of the Company's affiliated corporations or
employees. Executive represents and warrants he is free to enter into this
Employment Agreement and that there are no employment contracts, restrictive
covenants or other obligations preventing full performance of his duties
hereunder.
7. FRINGE BENEFITS. The Company agrees to maintain employee benefits
set forth on SCHEDULE A attached hereto until at least the first anniversary
of the date hereof, and thereafter such benefits shall be modified upon the
approval of the Company's Board of Directors.
(a) VACATION. Executive shall be entitled to a vacation period
not to exceed five (5) weeks in any calendar year of his employment without
loss of compensation. In the event that Executive's employment is terminated
for any reason prior to the expiration of a full calendar year, the vacation
period to which he is entitled shall be prorated, and he shall receive
compensation on account of any unused vacation days in addition to his
regular compensation for the period prior to his termination. Vacation time
for a given calendar year is earned at a rate of 10% per month of work
completed from July of the prior calendar year through April of the current
year. Executive shall not be entitled to carry previously allowed vacation
time except as otherwise permitted by Company's policies as set forth on
SCHEDULE A attached hereto.
(b) HOLIDAYS AND SICK LEAVE. In addition to his vacation time,
Executive shall be entitled without loss of compensation to those holidays to
which employees of the Company are entitled under the personnel policies of
the Company. Sick leave shall be accumulated for Executive in accordance
with the personnel policies of the Company.
(c) HEALTH CARE BENEFITS. Executive shall be furnished with a
health care benefit
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package consistent with benefits available to other Company employees as now
in effect and set forth on SCHEDULE A attached hereto, and as modified
hereafter in accordance with requirements set forth in the first sentence of
this Section.
(d) DISABILITY BENEFITS. The Company agrees to continue
Executive's full salary and fringe benefits for a period of short-term
disability not to exceed one hundred eighty (180) days (or such longer period
as may be required to qualify for benefits under the long-term disability
policies sponsored by the Company and then in effect) during which Executive
is unable to work on account of illness or injury. The Company shall provide
Executive at the Company's expense a long-term disability benefit which shall
be substantially similar to long term disability benefits available to other
Company employees as now in effect and set forth on SCHEDULE A attached
hereto, and as modified hereafter in accordance with requirements set forth
in the first sentence of this Section.
(e) STOCK OPTIONS. Executive shall be eligible, on the same merit
basis as other CORE executives, to receive grants of options for the purchase
of CORE common stock pursuant to CORE INC.'s 1997 Stock Option Plan (and any
successor plan) as determined by the Board of Directors of CORE or the
Compensation Committee of CORE, at its sole discretion, based upon
performance and other factors.
(f) OTHER FRINGE BENEFITS. Executive shall be entitled to
additional fringe benefits as set forth on SCHEDULE A attached hereto and
consistent with the personnel policies of the Company as determined by the
Company's Board of Directors in accordance with the first sentence of this
Section.
8. TERMINATION OF AGREEMENT.
(a) CAUSE. Executive's employment hereunder may be terminated
immediately by the Company for "Cause". For the purpose of this Agreement,
"Cause" means:
(i) willful breach or habitual neglect of the duties
Executive is required to perform hereunder that is not cured within fifteen
days (15) days after written notice of the breach or neglect;
(ii) any illegal act by Executive injurious to the business
or reputation of the Company;
(iii) Executive's engagement in gross misconduct;
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(iv) Executive's conviction of any crime which constitutes a
felony in the jurisdiction committed (whether or not involving the Company);
(v) the failure of the Company to attain for any of the
calendar years 1999-2000 at least 50% of its annual projected EBIT as set
forth in SCHEDULE B attached hereto; or
(vi) a material breach by Executive of any material provision
of this Agreement.
If the Company desires to terminate Executive's employment hereunder
Cause, the Company shall give Executive written notice of the termination
date and shall specify in said notice the termination provision of the
Agreement and the factual basis upon which the termination action is based.
(b) DISABILITY. Executive's employment hereunder may also be
terminated at the election of the Company in the event that Executive is
disabled from performing his duties hereunder for a period of at least one
hundred eighty (180) days (or such longer period as may be required to
qualify for benefits under the long-term disability policies sponsored by the
Company and then in effect) during the Term. In the event Executive's
employment is terminated by the Company because of such a disability of
Executive, the Company shall give Executive notice of a termination date,
which shall not be less than thirty (30) days subsequent to the date of the
notice, and Executive's employment hereunder shall terminate on the
termination date as so established by the Company.
(c) DEATH. Executive's employment hereunder shall terminate
automatically upon the death of Executive.
(d) EFFECT OF TERMINATION FOR CAUSE, DISABILITY OR DEATH. If
Executive's employment terminates pursuant to Section 8(a), 8(b), or 8(c),
the Company shall pay Executive his full salary and other benefits (including
accrued and unused vacation and sick time for such year) through the date of
termination of Executive's employment at the rate then in effect, and the
Company shall have no further obligations to Executive under this Agreement,
except for salary continuation or disability benefits provided herein and for
continuation of benefits required by applicable law.
9. COVENANT NOT TO COMPETE; NON-SOLICITATION; CONFIDENTIAL INFORMATION.
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(a) In consideration of and as an inducement to the Company to
enter into this Employment Agreement, Executive shall not, for a period
commencing on the date hereof and ending on the later of (i) September 30,
2001 or (ii) one year after Executive's termination of employment with the
Company and its Affiliates (as defined in Section 9(h), below), for any
reason (the later of (i) or (ii) above being referred to as the "Covenant End
Date"), serve, directly or indirectly, as an operator, owner, partner,
consultant, officer, director, or employee of any firm, company, corporation
or entity (other than the Company or one of its Affiliates, or CORE or one of
CORE's wholly-owned subsidiaries) engaged within the geographical area of the
United States in competition with the business of the Company or its
Affiliates, or any business of CORE or its Affiliates.
(b) Executive agrees that for a period commencing with the date of
this Agreement and ending on the Covenant End Date:
(i) Executive will not directly or indirectly solicit, hire
or attempt to hire for any purpose whatsoever (whether as an employee,
consultant, advisor, independent contractor or otherwise) any employee or
consultant of the Company and its Affiliates or any person who was an
employee or consultant of any such corporations (and will not assist any
subsequent employer of Executive or related entity or person in taking any
such actions);
(ii) Executive will not induce or attempt to induce any
customer, client supplier, licensee or other business relation of the Company
and its Affiliates to cease doing business with the Company and its
Affiliates, or in any way interfere with the relationship or potential
relationship between any such customer, client, supplier, licensee or
business relation and the Company and its Affiliates; and
(iii) Executive shall not solicit or attempt to solicit, or
accept business from, any entity which at any time during the twelve month
period prior to the date of termination of Executive's employment with the
Company and its Affiliates, was a client or customer of the Company and its
Affiliates, for the purpose of doing business with such client or customer in
competition with the Company and its Affiliates. For the purpose of this
covenant, the clients and customers of the Company and its Affiliates shall
include those entities with which the Company and its Affiliates had held
discussions or negotiations concerning services of the Company and its
Affiliates which are in competition with Executive's solicited business.
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(c) PUBLICLY-HELD STOCK. Nothing herein contained shall prevent
Executive from holding or making an investment in:
(i) securities listed on a national securities exchange or
sold in the over-the-counter market, provided that such investments do not
exceed in the aggregate five percent (5%) of the issued and outstanding
capital stock of a corporation which is a competitor within the meaning of
this Section; or
(ii) interests in a mutual fund or other pooled investment
vehicle in which Executive has less than a one percent (1%) interest.
(d) CONFIDENTIAL INFORMATION. Executive acknowledges that the
Confidential Information (as defined below) relating to the business of the
Company and its Affiliates which Executive has obtained or will obtain during
the course of his association with the Company is the property of the Company
and its Affiliates. Executive agrees that he will not disclose or use at any
time, either during or after his employment with the Company, any
Confidential Information without the written consent of the Board of
Directors of the Company (the "Board") unless such use or disclosure: (A) is
undertaken in the course of performing Executive's duties for the Company and
is reasonably expected to be in the best interests of the Company; (B)
relates to federal or state tax matters for periods ending on or prior to
August 31, 1998 and is disclosed in connection with the preparation or audit
of tax returns for such period or is otherwise necessary for determination of
Executive's proper tax liability; and (C) in connection with confirmation or
determination of the amount of Additional Consideration payable under the
Stock Purchase Agreement. Executive agrees to deliver to the Company upon
termination of his employment with the Company, or at any other time the
Company may request, all memoranda, notes, plans, records, documentation and
other materials (and copies thereof) containing Confidential Information
relating to the business of the Company and its Affiliates no matter where
such material is located and no matter what form the material may be in,
which Executive may then possess or have under his control. If requested by
the Company, Executive shall provide the Company with written confirmation
that all such materials have been delivered to the Company. Executive shall
take all appropriate steps to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss and theft.
Without limiting or reducing Executive's obligations under Sections 9(a)
or (b) hereof,
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nothing in this subsection (d) or in the definition of Confidential
Information shall be construed as depriving Executive from earning a
livelihood from the exercise of personal professional skills and expertise
developed before, during or after his employment with the Company.
(e) DEFINITION OF "CONFIDENTIAL INFORMATION". "Confidential
Information" shall mean:
(i) All proprietary systems, methods, designs, programs, and
procedures that are unique to the operations and practices of the Company
(whether instituted or commenced prior or subsequent to the date of this
Agreement); and
(ii) All plans, books, records, documents, notes, customer
and prospective customer lists and other recorded information concerning the
operations, business activities, strategies, practices, analyses and
personnel of the Company, as they may exist from time to time, which the
Company keeps or has taken reasonable efforts to keep confidential and which
is not or has not become publicly known (other than as a result of
Executive's breach of any confidentiality obligation to the Company).
Confidential Information shall not include any information which (A) is
publicly disclosed by law or in response to an order of a court or
governmental agency, (B) becomes publicly available through no fault of
Executive, or (C) has been published in a form generally available to the
public prior to the date upon which Executive proposes to disclose such
information. Information shall not be deemed to have been published merely
because individual portions of the information have been separately
published, but only if all the material features comprising such information
have been published in combination.
(f) INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company and its Affiliates, Executive acknowledges that a
breach of any of the covenants contained in this Agreement could result in
material irreparable injury to the Company and its Affiliates for which there
might be no adequate remedy at law, and that, in the event of such a breach
or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary and permanent injunction restraining
Executive from engaging in any activities prohibited by this Agreement or
such other equitable relief as may be required to enforce specifically any of
the covenants of this Agreement.
If Executive is requested or required to disclose Confidential
Information
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pursuant to a subpoena or an order of a court or governmental agency,
Executive shall:
(i) Promptly notify the Company of the existence, terms and
circumstances surrounding the request or requirement;
(ii) Consult with the Company on the advisability of taking
steps to resist or narrow the request;
(iii) If disclosure of any information is required, furnish
only that portion of such information as Executive is advised by counsel
which is legally required to be disclosed; and
(iv) Cooperate with the Company in its efforts to obtain an
order or other reliable assurance that Confidential Information treatment
will be accorded to that portion of the Confidential Information that is
required to be disclosed.
(g) REASONABLENESS OF RESTRICTIONS. The parties are of the view
that the restrictions placed on Executive herein, in the light of all the
circumstances (including, without limitation the closing of the Stock
Purchase Agreement (defined in Section 16, below)), are reasonable as to
scope, period of time and geographical area. Nevertheless, it is the intent
of the parties that this Agreement be enforceable and restrict Executive's
activities only to the extent permitted by law. Accordingly, in the event
that any provisions in this Agreement shall be determined by arbitrators or
by any court of competent jurisdiction to be unenforceable by reason of its
extending for too great a period of time over too large a geographic area or
range of activities, it shall be interpreted to extend only over the maximum
period of time, geographic area or range of activities as to which it may be
enforceable.
(h) DEFINITION OF "COMPANY AND ITS AFFILIATES". For the purposes
of Sections 9 and 10, "Company and its Affiliates" shall mean the Company,
CORE, INC., and all direct and indirect subsidiaries of CORE, INC. and the
Company.
10. AVAILABILITY OF RECORDS. During the term of this Agreement and
continuing until March 31, 2003, the Company agrees to make available to
Executive, his executors, administrators or heirs, for inspection on the
premises of the Company during normal working hours, copies of any records
relating to activities while employed by the Company and which relate to any
rights or benefits to which Executive was entitled at the time of his
termination of employment. However, upon the termination of this Agreement,
Executive shall not be
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entitled to retain any records or charts of the Company in his possession.
11. ALTERNATIVE DISPUTE RESOLUTION.
(a) With the exception of actions under Section 9 of this
Agreement or termination for Cause under clauses (iv) or (vi) of the
definition thereof (which shall be submitted to arbitration pursuant to
subsection (b) without mediation under this subsection), any controversy,
dispute or questions arising out of, in connection with, or in relation to
this Agreement or its interpretation, performance or non-performance or any
breach thereof shall be resolved through mediation.
(b) Any controversy or claim arising under or relating to this
Agreement, or breach thereof, that is not resolved, or is not required to be
resolved, by mediation under subsection (a), shall be settled by arbitration
in Portland, Maine in accordance with the rules of the American Arbitration
Association as in effect from time to time. Judgment upon the award rendered
may be entered in any court having jurisdiction thereof.
Anything contained in this Section 11 notwithstanding, Executive agrees
that, in the event of any actual or threatened breach by Executive of his
undertakings in Section 9, the Company shall be entitled to immediate
temporary injunctive and other equitable relief awarded in or in aid of
arbitration as provided herein.
12. ASSIGNABILITY. This Agreement shall inure to the benefit of the
successors and assigns of the Company. However, this Agreement is personal
to Executive, and he may not assign any of his rights or obligations
hereunder.
13. AMENDMENTS. No amendment of or variation in the terms of this
Agreement shall be valid unless made in writing and signed by Executive and a
duly authorized representative of the Company.
14. NOTICES. Any notice required or permitted under this Agreement
shall be sufficient if in writing and if sent by certified or registered
mail, return receipt requested, to the parties at the following addresses:
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To the Company at:
Xxxxxx X. Xxxxxxxxx XX
Disability Reinsurance Management Services, Inc.
c/o CORE, INC.
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
with a copy to:
Xxxxxxx X. Xxxx, Esq.
Rich, May, Xxxxxxxx & Xxxxxxxx, P.C.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
To Executive at:
Xxxxxxx X. Xxxxxxxx
0 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
15. RULES OF CONSTRUCTION; HEADINGS AND VALIDITY. This Agreement shall
be construed in accordance with the laws of Maine.
The headings contained in this Agreement are for reference only and
shall not limit or otherwise affect the meaning of any provision of this
Agreement.
If any provision of this Agreement or portion of such provision, or the
application thereof under any circumstances, is held invalid, the remainder
of this Agreement (or the remainder of such provision) and the application
thereof under other circumstances shall not be affected by such partial
invalidity.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as are specifically set
forth herein. This Agreement has been entered into simultaneously with the
closing of the Stock Purchase Agreement and shall be construed in a manner
that is consistent with the provisions and intent of the Stock Purchase
Agreement. Except as otherwise provided by this Agreement, no supplement,
modification,
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waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
IN WITNESS WHEREOF, the parties to this Agreement have caused the same
to be executed as of the 31st day of August, 1998.
DISABILITY REINSURANCE MANAGEMENT
SERVICES, INC.
("Company")
By: /s/ [ILLEGIBLE]
------------------------------
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx
("Executive")
ATTACHMENTS
Schedule A- Fringe Benefits
Schedule B- EBIT Targets
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