EXHIBIT 10.22
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
January, 2002, by and between Xxxxx X. Xxxxx (the "Employee") and First
Health Group Corp., a Delaware corporation (the "Company").
IN CONSIDERATION of the mutual promises set forth below, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Employment. The Company hereby employs the Employee, and the
Employee hereby accepts employment with the Company, upon the terms and
subject to the conditions hereinafter set forth.
2. Duties. The Employee is hereby employed by the Company and shall
render his services at the principal business offices of the Company in
Downers Grove, Illinois, unless otherwise agreed by him and the Board of
Directors of the Company or the Chief Executive Officer. The Employee shall
have such authority and shall perform such duties as are customary for the
office to which he has been appointed, including director and Chairman of
the Board. Employee shall otherwise report to and receive direction from
the Chief Executive Officer or Board of Directors and Employee shall report
on his activities in the manner established between him and the Chief
Executive Officer. He shall not otherwise devote time to the active pursuit
of any other business enterprise, nor shall he have any interest in any
business enterprise which is competitive with or adverse to the Company,
whether as an employee, officer, director, consultant, creditor, security
holder or otherwise (except to the extent permitted in Paragraph 8 hereof).
The foregoing notwithstanding, the Employee shall be entitled to belong to
and participate in professional organizations and to engage in professional
activities in furtherance of the Company's business.
3. Term. The term of Employee's employment under this Agreement
shall commence on January 1, 2002 and shall terminate on December 31, 2004
unless otherwise terminated in accordance with the terms hereof.
4. Compensation. As compensation for the services rendered
hereunder, the Employee shall be entitled to receive the following:
a. Year 2002 Salary. Effective the date of this Agreement,
Employee shall receive an annual salary of $900,000.
b. Year 2003 Salary. Effective January 1, 2003, Employee shall
receive an annual salary of $700,000.
c. Year 2004 Salary. Effective January 1, 2004, Employee shall
receive an annual salary of $400,000. Salary will be payable in
installments at such times and in such manner as may from time to time
be in effect for executives of the Company, but not less often than
monthly.
5. Benefits During the Term of this Agreement. In addition to the
compensation to be paid to the Employee pursuant to Paragraph 4
hereof, the Employee shall be entitled to participate in all
employee benefit programs currently maintained by the Company as
such programs may be modified from time to time, including the
health benefit, 401(k) and stock purchase programs and each such
other program or policy established by the Company from time to
time during the term of this Agreement for its employees and
executives generally (to the extent that it is more favorable to
the Employee than an existing program covering the same benefit).
As part of Employees participation and subject to any necessary
approvals, the Company shall grant to the Employee options to
purchase shares of Common Stock of the Company, each such option
to be on the terms and subject to the conditions of the respective
stock option agreements to be entered into between the Company and
the Employee. Such grants of options shall recognize Employee's
responsibilities as Chairman of the Board.
6. Benefits After the Term of this Agreement. The Company hereby
confirms the existence of the grant of health benefits to Employee after the
term of this Agreement as first set forth in that certain Employment
Agreement, dated as of July 1, 1993 between Employee and the Company (the
"1993 Employment Agreement").
7. Reimbursement of Expenses. The Company, promptly upon receipt
from the Employee of appropriate documentation, shall reimburse the Employee
for all of his reasonable business expenses, including, without limitation,
travel expenses, necessarily and appropriately incurred in the performance
of his duties hereunder.
8. Confidentiality and Competition.
a. In consideration of the substantial benefits to be provided
hereunder to the Employee by the Company, and in recognition of the fact
that the Employee occupies a position of trust and confidence with the
Company, the Employee acknowledges that he has provided, created and
acquired and hereafter will provide, create and acquire valuable and
confidential information of a special and unique nature relating to such
matters as the Company's trade secrets, systems, procedures, manuals,
confidential reports, employee rosters, client lists, software systems,
products, business and financial methods and practices, plans, pricing,
selling techniques, special methods and processes involved in designing,
assembling and operating computer programs previously and currently used by
the Company and the application thereof to managed care programs and other
related electronic data processing information respecting the Company's
existing businesses and services and those developed during the term of this
Agreement, as well as credit and financial data relative to the Company and
its clients, and the particular business requirements of the Company's
clients, including the methods used and preferred by the Company's clients
and fees paid by such clients. In addition, the Employee has developed and
may further develop on behalf of the Company a personal acquaintance with
the Company's clients, which acquaintances may constitute the Company's only
contact with such clients. For purposes of this Paragraph 8, the term
"Company" shall mean First Health Group Corp. and each company which is a
subsidiary thereof and any partnership or joint venture in which the Company
or any such subsidiary owns an equity interest at any time during the term
of this Agreement. In view of the foregoing and in consideration of the
remuneration to be paid to the Employee hereunder, the Employee acknowledges
and agrees that it is reasonable and necessary for the protection of the
goodwill and business of the Company that he make the covenants contained
herein regarding his conduct during and subsequent to his employment by the
Company and that the Company will suffer irreparable injury if the Employee
were to engage in any conduct prohibited hereby. The Employee represents
that his experience and/or abilities are such that the observance of the
aforementioned covenants will not cause the Employee any undue hardship, nor
will it unreasonably interfere with the Employee's ability to earn a
livelihood. The Employee and the Company further agree that the covenants
contained in this Paragraph 8 shall each be construed as a separate
agreement independent of any other provisions of this Agreement, and that
the existence of any claim or cause of action by the Employee against the
Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of any of these
covenants. In the event a court of competent jurisdiction determines that
any provision of this Paragraph 8 is unreasonable as to duration,
substantive extent or geographic scope, the provision will nonetheless be
enforced to the fullest extent reasonable.
b. The Employee, while in the employ of the Company or at any
time thereafter, will not directly or indirectly communicate or divulge, or
use for the benefit of himself or of any other person, firm, association or
corporation, any of the Company's trade secrets or other confidential
information, including, without limitation, the information described in
Paragraph 8a, which trade secrets and confidential information were or will
be communicated to or otherwise learned or acquired by the Employee in the
course of his employment with the Company, except that the Employee may
disclose such matters to the extent that the disclosure thereof is required:
(i) in the course of his employment with the Company, provided such
disclosure is made exclusively for the benefit of the Company, or (ii) by a
court, governmental agency of competent jurisdiction or grand jury.
c. During the term of his employment with the Company and for a
period of three years thereafter, the Employee will not contact, directly or
indirectly, with a view towards selling any product or service competitive
with any product or service sold (or proposed to be sold) by the Company
during the Employee's employment, any person, firm association or
corporation (i) to which the Company has provided its services, or (ii)
which the Employee or, to his knowledge, any other employee or
representative of the Company has solicited, contacted or otherwise dealt
with on behalf of the Company, nor will he directly or indirectly make any
such contact, for the benefit or on behalf of any other person, firm,
association or corporation or in any manner assist any person, firm,
association or corporation to make any such contact.
d. During the term of his employment by the Company and for a
period of three years thereafter, the Employee will not directly or
indirectly acquire any interest in any corporation, firm or business (other
than the Company) which is engaged in any business in the United States the
same as, similar to or competitive with the business of the Company as
conducted at any time during the Employee's employment, whether as an
employee, sole proprietor, director, officer, consultant, equity security
holder or otherwise (except that he may own up to 2% of the outstanding
shares of capital stock of any corporation whose stock is listed on a
national securities exchange or is traded in the over-the-counter market),
nor will the Employee directly or indirectly have any interest in any
corporation, firm or business which is engaged in a business adverse to the
Company's business (except that he may own up to 2% of the outstanding
shares of capital stock of any corporation whose stock is listed on a
national securities exchange or is traded in the over-the-counter market).
e. During the term of his employment by the Company and for a
period of three years thereafter, neither the Employee nor any entity by
which the Employee is employed or otherwise associated with will directly or
indirectly employ, retain the services of or induce or attempt to induce, in
any manner whatsoever, any present or future employee of the Company to
leave the employ of the Company and/or to seek or accept employment with the
Employee or any other person, firm, association or corporation.
f. In the event of a breach or threatened or intended breach of
this Agreement and the foregoing covenants by the Employee, the Employee
acknowledges that the Company will suffer irreparable injury and that
determination of the exact amount of the Company's damages will be
difficult, if not impossible, and agrees that the Company shall be entitled,
in addition to remedies otherwise available to it at law or in equity, to
injunctions, both preliminary and permanent and without bond therefor,
enjoining or restraining such breach or threatened or intended breach, and
the Employee hereby consents to the issuance thereof forthwith by any court
of competent jurisdiction.
9. Termination of Employment.
a. Incapacity. If, during the term of this Agreement, the
Employee should be prevented from performing his duties by reason of illness
or physical or mental disability (hereinafter referred to collectively as
"Incapacity") for a continuous period of between 90 and 180 days, the
Employee shall receive one-half his per diem Base Salary for each day during
such time period that he fails, due to his Incapacity, to render the
services contemplated hereunder. If during the term of this Agreement, the
Employee should be prevented from performing his duties by reason of
Incapacity for a continuous period greater than 180 days, the Company may
terminate the Employee's employment hereunder by giving written notice
thereof to the Employee, effective on the date set forth in the notice
(which date shall be not less than 15 business days after the notice is
given).
For purposes hereof, a continuous period of Incapacity shall not
be deemed interrupted until the Employee returns to substantially full time
work for a period of at least 30 days.
b. Death. In the event of the Employee's death during the term
of this Agreement, the Employee's employment hereunder shall be deemed
terminated as of the date of the Employee's death.
c. Cause. This Agreement and the Employee's employment
hereunder may be terminated at any time by the Company for cause. As used
herein "cause" shall mean (i) theft, embezzlement or fraud by the Employee
or the Employee's involvement in any other scheme or conspiracy pursuant to
which the Company has lost or could reasonably be expected to lose assets to
the Employee or to others calculated by the Employee to receive such assets,
(ii) incapacity on the job by reason of the use or abuse of alcohol or
drugs, (iii) commission of a felony or a crime involving moral turpitude,
(iv) gross insubordination, (v) unexplained and continuous absences from
work, (vi) material breach of the Employee of any of the provisions of this
Agreement which is not cured within 30 business days after the Company gives
written notice thereof to the Employee specifying the nature of such breach,
(vii) refusal to act in accordance with a lawful and duly adopted resolution
of the Board of Directors, (viii) intentional, knowing, or grossly negligent
violation of the Federal Securities laws, Delaware law or any other law or
regulation applicable to the Company or the Board of Directors.
d. Termination of Employment by the Company. The Company may
terminate the Employee's employment for any reason deemed sufficient by the
Company.
As used in this Paragraph 9, unless otherwise specified, the term
"days" refers to calendar days.
10. Effect of Termination of Employment.
a. Incapacity. If termination of employment results or occurs
due to Incapacity under Paragraph 9a, the Company shall pay or cause to be
paid in a lump sum (i) such amounts, if any, as the Employee shall be
entitled to under the Company's disability policy and program applicable to
the Employee, (ii) subject to the limitations set forth in the last sentence
of Paragraph 6a hereof, payment in respect of all unused Flexible Time Off
(FTO), to the extent the Employee has not prior thereto received
compensation in lieu thereof, (iii) the Employee's interest in all Company
retirement and investment plans, to the extent such plans permit such
interest to be distributed and (iv) payment in respect of all compensation
earned to date but not theretofore paid.
b. Death. If termination of employment occurs as a result of
the Employee's death, the Company shall pay to the Employee's estate a lump
sum payment equal to (i) such amounts as the Employee's estate shall be
entitled to receive under the terms of retirement and investment plans of
the Company, to the extent such plans permit such amounts to be paid, (ii)
subject to the limitation set forth in the last sentence of Paragraph 6a
hereof, payment in respect of all unused FTO, to the extent the Employee has
not prior thereto received compensation in lieu thereof, and (iii) payment
in respect of all compensation earned to date but not theretofore paid.
c. Cause. If the Employee's employment is terminated by the
Company for cause, Employee shall be entitled to all earned but unpaid
compensation, provided, however, the Company shall be entitled to offset
therefrom any amounts lost by the Company as a result of Employee's action
giving rise to such cause.
d. Voluntary Termination. If the Employee shall voluntarily
terminate his employment hereunder, the Company shall be obligated to pay or
cause to be paid in a lump sum (i) payment in respect of the Employee's
interest in all Company retirement and investment plans, to the extent such
plans permit such payment to be made, (ii) subject to the limitations set
forth in the last sentence of Paragraph 6a hereof, payment in respect of all
unused paid vacation time, to the extent the Employee has not prior thereto
received compensation in lieu thereof.
e. Termination of Employment Pursuant to Paragraphs 9d. In the
event that this Agreement is terminated by the Company pursuant to Paragraph
9d hereof, the Company shall be obligated to pay or cause to be paid to the
Employee (i) the balance of the Salary payments required to be paid during
the remaining term of this Agreement, which payments shall be made at
regular intervals in accordance with the Company's regular pay periods, (ii)
payment in respect of the Employee's interest in all Company retirement and
investment plans, to the extent that such plans permit such payment to be
made, and (iii) subject to the limitations set forth in the last sentence of
Paragraph 6a hereof, payment in respect of all unused FTO, to the extent
Employee has not prior thereto received compensation in lieu thereof.
Payments pursuant to subsections (ii) and (iii) shall be paid in a lump sum.
f. Effect of Termination of Employment: Survival. In the event
that the Employee's employment with the Company terminates, this Agreement
shall be deemed terminated, provided, however, that the terms and conditions
of Paragraphs 6 (to the extent provided therein), 8, 9 and 10 shall survive
such termination and be fully binding and enforceable.
11. Return of Documents. Upon termination of this Agreement for any
reason, the Employee shall deliver to the Company any property then in his
possession belonging to the Company. For purposes of this Agreement, the
parties hereto do hereby agree that any original or copies of any books,
papers, customer lists, files, books of accounts, summaries, notes and other
documents and data or other writings, tapes or records, relating to the
company or prepared in connection with the Employee's performance of his
duties hereunder, are owned by and are the property of the Company.
12. Best Efforts. The Company and the Employee each agree to use its
or his best efforts to operate the business of the Company in a manner
designed to maximize the revenues and net income of the Company and to
preserve and enhance its goodwill and other assets.
13. Termination of Prior Employment Agreement. All prior employment
agreements between Company and Employee are hereby terminated.
14. Notices. Any notices to be given hereunder by either party to the
other may be effected either by personal delivery in writing or by mail,
registered or certified, postage prepaid, with return receipt requested.
Mailed notices shall be addressed to the respective addresses shown below.
Either party may change its address for notice by giving written notice in
accordance with the terms of this Paragraph 14.
a. If to the Employee:
Xxxxx X. Xxxxx
First Health Group Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
b. If to the Company:
Xxxxx X. Xxxxx
General Counsel
First Health Group Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
with a copy to:
Chairman of the Compensation Committee
of the First Health Group Corp. Board of Directors
15. Acknowledgment of Reading. The Employee acknowledges, represents
and warrants to the Company that he has received a copy of this Agreement,
that he has read and understands this Agreement, that he has had the
opportunity to seek the advice of legal counsel before signing this
Agreement and that he has either sought such counsel or has voluntarily
decided not to do so.
16. General Provisions.
a. Governing Law. This Agreement shall be governed and
construed in accordance with the law of the State of Illinois.
b. Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term hereof, such provisions shall be fully severable
and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provisions had never comprised a part hereof; and
the remaining provisions hereof shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provisions or
by its severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision as similar in terms to the illegal, invalid or
unenforceable provision as may be possible and still be legal, valid or
enforceable.
c. Entire Agreement. This Agreement and the Option Agreements
set forth the entire understanding of the parties with respect to the
matters specified herein. No other terms, conditions or warranties, and no
amendments or modifications hereto, shall be binding unless made in writing
and signed by the parties hereto.
d. Binding Effect: Assignment and Assumption of Agreement.
This Agreement shall be binding upon the parties hereto and inure to the
benefit of such parties, their respective heirs, representatives, successors
and permitted assigns. This Agreement may not be assigned by the Employee
nor may it be assigned by the Company without the Employee's consent.
e. Waiver. The waiver by either party hereto of any breach of
any term or condition of this Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or condition
hereof.
f. Titles. Title of the paragraphs herein are used for
convenience only and shall not be used for interpretation or construction of
any word, clause, paragraph, or provision of this Agreement.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but which together
shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the date and year first written above.
COMPANY:
FIRST HEALTH GROUP CORP.
By:
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Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
EMPLOYEE:
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XXXXX X. XXXXX
FIRST AMENDMENT TO THE
EMPLOYMENT AGREEMENT
DATED AS OF JANUARY 1, 2002, BETWEEN
FIRST HEALTH GROUP CORP. AND XXXXX X. XXXXX
THIS AMENDMENT is effective as of the 17th day of September, 2002, by and
between First Health Group Corp. ("First Health") and Xxxxx X. Xxxxx (the
"Employee").
WHEREAS, First Health and Employee have previously entered into a certain
EMPLOYMENT AGREEMENT, dated as of January 1, 2002, under which First Health
will employ Employee (the "Agreement"); and
WHEREAS, First Health and Employee desire to amend the Agreement to
memorialize the parties' agreement to extend the term of the Agreement from
December 31, 2004 until December 31, 2007 at the annual salary of $500,000
for the additional three year period.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and in the Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Paragraph 3 of the Agreement will be deleted and replace in its
entirety by the following:
The term of Employee's employment under this Agreement shall commence
on January 1, 2002 and shall terminate on December 31, 2007 unless
otherwise terminated in accordance with the terms hereof.
2. Paragraph 4 of the Agreement will have the following, additional sub-
paragraph:
d. Years 2005 through 2007 Salary. Effective January 1, 2005,
Employee shall receive an annual salary of $500,000. Salary will
be payable in installments at such times and in such manner as may
from time to time be in effect for executives of the Company, but
less often than monthly.
3. The parties ratify and affirm the Agreement and agree that it is
valid as amended herein. This Amendment will prevail over any conflict
with the Agreement.
IN WITNESS WHEREOF the duly authorized representatives of the parties have
executed this Amendment effective on the day and year first written above.
Employee: First Health Group Corp.
_________________________________ By: _____________________________
Name: Xxxxx X. Xxxxx Chief Executive Officer and
President
Date: ___________________________ Date: _____________________________
