EXHIBIT 10.01
EMPLOYMENT AGREEMENT
This AGREEMENT is made this 1st day of May, 1999 ("Effective Date") by and
between First Health Group Corp., a Delaware corporation headquartered in
Illinois ("Company"), and Xxxxxxx X. Xxxxx ("Employee").
BACKGROUND
A. Company desires to employ Employee, and Employee desires to be employed
by Company.
B. For and in consideration of the promises and of the mutual covenants
hereinafter set forth, it is hereby agreed by and between the parties as
follows:
AGREEMENT
1. Employment. Company hereby agrees to employ Employee to perform the
duties set forth in Section 3 hereof ("Employee Services"). Employee hereby
accepts employment to perform Employee Services for Employer under the terms
and conditions of this Agreement.
2. Term. The Initial Term of this Agreement will be for three years
beginning on the Effective Date and will automatically renew, unless earlier
terminated pursuant to Section 6 hereof.
3. Duties. Employee will serve as Executive Vice President, Sales, or
such other position as otherwise agreed from time to time by the parties,
and perform all responsibilities and duties as are assigned, or delegated to
Employee. Performance by Employee in any other position will be conclusive
evidence of Employee's acceptance of the position. Employee represents that
Employee's employment by Company and performance of the position will not
violate or interfere with any employment-related agreement Employee may have
entered into with any previous employer (a "Prior Employment Agreement").
4. Time Commitment. Employee will devote Employee's time, attention and
energies to the performance of Employee Services. Employee may not be
associated with, consult, advise, work for, be employed by, contract with,
or otherwise devote any of the Employee's time to the pursuit of any other
work or business activities which may interfere with the performance of
services hereunder.
5. Compensation and Benefits. Company will pay the following
compensation to Employee in full consideration for performance of Employee
Services hereunder in accordance with Company's then-current payroll
policies and procedures.
(a) Salary. Employee will receive an annual salary of $265,000.00.
This salary is payable in accordance with Company's then - current payroll
policies and procedures. The annual salary may be subject to periodic
increases as may be approved by Company.
(b) Expenses. Company will reimburse Employee for all reasonable and
necessary expenses incurred by Employee in connection with the performance
of Employee Services upon submission by Employee of expense reports with
substantiating vouchers, in accordance with the Company's then-current
expense reimbursement policy.
(c) Stock Options. Employee will be awarded the option to purchase
200,000 shares of Company common stock, adjusted for any stock splits, set
by the Board of Directors of Company in accordance with the Company Stock
Option Plan (the "Stock Options"). The award of the Stock Options is
subject to (i) approval of the Board of Directors; and (ii) execution by
Employee of the then-current Stock Option Agreement.
(d) Benefits and Flexible Time Off. Employee shall be entitled
to participate in such group life insurance, major medical, and other
employee benefit plans (collectively "Benefit Plans") as established by
Company in accordance with the applicable terms and conditions of such
Benefit Plans, which Benefit Plans may be modified or discontinued by
Company at any time; provided, however that Employee shall meet the
requirements of the Benefit Plans for participation and in no event,
including breach or wrongful termination of this Agreement, shall Employee
be entitled to any amount of compensation in lieu of participation, unless
otherwise provided by the terms of the Benefit Plan.
Employee shall also be entitled to paid time off in accordance
with Company's then-current Flexible Time Off (FTO) program. Employee shall
accrue such FTO at the rate specified in the FTO program. Flexible Time Off
shall be taken with due consideration for the services required of Employee
and to the requirements of Company.
(e) Incentive or Bonus Compensation. Employee may be eligible to
receive incentive or bonus compensation based on factors established by
Company in its sole discretion. Incentive or bonus payments, if any, shall
be made in accordance with the then-effective applicable Company incentive
or bonus plan as hereafter established in Company's sole discretion (the
"Incentive Plan"). Unless otherwise specifically provided in the Incentive
Plan, earned incentive compensation will be paid only while Employee is
actively employed by Company; accordingly, if Employee ceases to be actively
employed by Company, Employee will only receive a prorated portion of the
earned incentive compensation for the period Employee was actively employed
by Company. In the event the incentive or bonus compensation is calculated
on an annual basis subsequent to Employee's termination, Employee will not
be eligible to receive payment.
(f) Commissions. All insurance sales commissions, if any, earned
or received by Employee in connection with the employment of Employee
pursuant to this Agreement shall be the sole and exclusive property of
Company or its subsidiary companies, even if such commissions are earned or
received by Employee after termination of this agreement.
6. Termination.
(a) Either party may terminate this Agreement at any time following
the Initial Term, without cause and without any liability to Company, upon
no less than one hundred and twenty (120) day's prior written notice. In
such event, Employee, if requested by Company, will continue to render
Employee Services and be paid Employee's regular compensation up to the date
of termination in accordance with Company's then-current payroll policies
and procedures.
(b) Either party may terminate this Agreement at anytime for cause
upon 14 days written notice. "Cause" includes, without limitation, breach
of any provision of this Agreement or Employee's failure to adhere to the
Company's policies and procedures, which failure is subject to cure, e.g.
dress or behavior requirements. If the cause is not cured within the 14 day
period, the Agreement may then be terminated by written notice. An
opportunity to cure is not required if the party receiving notice of
termination has previously been given notice of termination and the
opportunity to cure the same or similar cause.
(c) Company may terminate this Agreement by written notice at anytime
(including during the Initial Term) immediately for the following reasons:
(i) Death or legal incapacity of Employee; (ii) Employee's conviction of a
felony; (iii) violation of the Company's policies not subject to cure; (iv)
willful violation of the Company's policies or standards including without
limitation, Corporate Compliance standards, confidentiality and
nondisclosure; (iv) theft or dishonesty; or (v) the occurrence of any claim
or threatened claim against Employee and/or Company relating to any Prior
Employment Agreement.
(d) Company may terminate at any time (including during the Initial
Term) by written notice upon Employee's other incapacity or inability to
perform Employee Services for a period of at least 90 consecutive days
because of impairment of Employee's physical, or mental health making it
impossible or impractical for Employee to perform Employee Services.
(e) Notwithstanding any other provisions of this Employment Agreement,
employee may terminate employment from the Company at any time, including
during the Initial Term, with 30 days notice due solely to a change in
control of the Company and (i) his refusal to accept a reduction in base
salary compensation; (ii) a material dimunition in job responsibilities; or
(iii) a required relocation of the employee's residence. Employee's right
to terminate under this provision will expire 60 days after it arises.
"change in control" for the purposes of this provision means
either
(1) the ownership (whether direct or indirect) of shares in
excess of 20 percent of the outstanding shares of common
stock of the Company by a person or group of persons, or
(2) the occurrence of any transaction relating to the Company
required to be described pursuant to the requirements of item
14 of Schedule 14A of Regulation 14A of the Securities and
Exchange Commission under the Securities Exchange Act of
1934, or
(3) any change in the composition of the Board of Directors of
the Company resulting in a majority of the present directors
of the Company not constituting a majority two years hence
provided, that in making such determination directors who
were elected by, or on the recommendation of, such present
majority, shall be excluded.
If Employee exercises his right to terminate under this provision,
Employee will receive as severence a cash payment equal to two years of
salary at the rate in effect on the date of termination. Such payment will
include all severance due to Employee under any Company severance plan but
is not inclusive of any other benefit or right due or available to Employee
under any other Company plan.
7. Confidentiality. Employee agrees not to directly or indirectly use
or disclose, for the benefit of any person, firm or entity other than
Company and its subsidiary companies, the Confidential Business Information
of Company. Confidential Business Information means information or material
which is not generally available to or used by others or the utility or
value of which is not generally known or recognized as a standard practice,
whether or not the underlying details are in the public domain, including
but not limited to its computerized and manual systems, procedures, reports,
client lists, review criteria and methods, financial methods and practices,
plans, pricing and marketing techniques as well as information regarding
Company's past, present and prospective clients and their particular needs
and requirements, and their own confidential information.
Upon termination of employment under this Agreement, with or without
cause, Employee agrees to return to Company all policy and procedure
manuals, records, notes, data, memoranda, and reports of any nature
(including computerized and electronically stored information) which are in
Employee's possession and/or control which relate to (i) the Confidential
Business Information of Company, (ii) Employee's employment with Company, or
(iii) the business activities or facilities of Company or its past, present,
or prospective clients.
8. Restrictive Covenant. During the period of employment and for a
period of one year from the date of termination of employment under this
Agreement, with or without cause, Employee will not directly or indirectly,
within the United States or in any foreign market in which Employee was
engaged in activities on behalf of Company, own, engage in or participate
in, in any way, any business which is similar to or competitive with any
actual or planned business activity engaged in or planned by Company at the
time the employment under this Agreement was terminated, if in the course of
such ownership or employment, it could reasonably be anticipated that
Employee would be required to use or disclose the Confidential Business
Information of Company. However, this Agreement shall not prohibit
ownership of up to 2% of the shares of stock of any such corporation whose
stock is listed on a national securities exchange or is traded in the over-
the-counter market.
Employee further agrees that, for a period of one year after
termination of employment under this Agreement, with or without cause,
Employee will promptly notify Company of any business with whom Employee is
associated or in which has an ownership interest and provide Company with a
description of Employee's duties or interests.
For a period of one year after termination of employment under this
Agreement, with or without cause, Employee will not directly or indirectly,
for the purpose of selling services and/or products provided or planned by
Company at the time the employment under this Agreement was terminated, call
upon, solicit or divert any actual customer or prospective customer of
Company, unless employed by Company to do so. An actual customer, for
purposes of this Section, is any customer to whom Company has provided
services and/or products within one year prior to Employee's termination of
employment under this Agreement. A prospective customer, for purposes of
this Section, is any prospective customer to whom Company sought to provide
services and/or products within one year prior to the date of Employee's
termination of employment under this Agreement and Employee has knowledge of
or was involved in such solicitation.
9. Non-Solicitation of Employees. Employee further agrees that for a
period of one year from the date of Employee's termination of employment
under this Agreement, with or without cause, Employee shall not directly or
indirectly solicit or hire any person who is currently or was an employee of
Company at any time during the twelve months prior to Employee's termination
of employment under this Agreement.
10. Remedies. In the event Employee breaches or threatens to breach
Sections 7, 8 or 9 of this Agreement, Company shall be entitled to
injunctive relief, enjoining or restraining such breach or threatened
breach. Employee acknowledges that Company's remedy at law is inadequate
and that Company will suffer irreparable injury if such conduct is not
prohibited.
Employee and Company agree that, because of the difficulty of
ascertaining the amount of damages in the event that Employee breaches
Section 9 of this Agreement, Company shall be entitled to recover, at its
option, as liquidated damages and not as a penalty, a sum equal to one
year's annual salary of the employee(s) solicited to leave Company's employ.
The parties further agree that the existence of this remedy will not
preclude employer from seeking or receiving injunctive relief.
Employee further agrees that the covenants contained in Sections 7, 8
or 9 shall be construed as separate and independent of other provisions of
this Agreement and the existence of any claim by Employee against Company
shall not constitute a defense to the enforcement by Company of either of
these paragraphs.
11. Property Rights. All discoveries, designs, improvements, ideas,
inventions, creations, and works of art, whether or not patentable or
subject to copyright, relating to the business of Company or its clients,
conceived, developed or made by Employee during employment under this
Agreement, either solely or jointly with others (hereafter "Developments")
shall automatically become the sole property of Company. Employee shall
immediately disclose to Company all such Developments and shall, without
additional compensation, execute all assignments, application or any other
documents deemed necessary by Company to perfect Company's rights therein.
These obligations shall continue for a period of one year beyond the
termination of employment under this Agreement with respect to Developments
conceived, developed or made by Employee during the period of employment
under this Agreement.
Company acknowledges and agrees that the provisions of this section
shall not apply to inventions for which no equipment, supplies, facility or
trade secret information of Company or its clients were used by Employee and
which were developed entirely on Employee's own time unless (a) such
inventions relate (i) to the business of Company or (ii) to Company's actual
or demonstrably anticipated research or development or (b) such inventions
result from any work performed by Employee for Company.
12. Assignments. Neither party shall have the right or power to assign
any rights or duties under this Agreement without the written consent of the
other party, provided, however, that Company shall have the right to assign
this Agreement without consent pursuant to any corporate reorganization,
merger, or other transaction involving a change of control of Company or any
of its subsidiary companies. Any attempted assignment in breach of this
Section 12 shall be void.
If Employee performs services and duties for any subsidiary or other
affiliated entity of Company, then the provisions of Sections 7, 8, 9 and 11
shall apply to the confidential information and business activities,
property rights, clients, and employees of that subsidiary or other entity.
13. Severability. Each section, paragraph, clause, sub-clause and
provision (collectively "Provisions") of this Agreement shall be severable
from each other, and if for any reason the paragraph, clause, sub-clause or
provision is invalid or unenforceable, such invalidity or unenforceability
shall not prejudice or in any way affect the validity or enforceability of
any other Provision hereof.
14. Miscellaneous.
(a) This Agreement, the schedules and any amendments hereto contain
the entire agreement of the parties with respect to the employment of the
Employee and supersedes all other understandings, whether written or oral;
provided, however, that Employee shall comply with all policies, procedures
and other requirements of Company as established in the Colleague Handbook
and Corporate Policy Manuals, not inconsistent with this Agreement.
(b) Failure on the part of either party to insist upon strict
compliance by the other with respect to any of the terms, covenants and
conditions hereof, shall not be deemed a subsequent waiver of such term,
covenant or condition.
(c) The provisions of any paragraph containing a continuing obligation
after termination shall survive such termination whether with or without
cause and even if occasioned by Company's breach or wrongful termination.
(d) This Agreement may not be modified except in writing as signed by
the parties; provided, however, that Company may amend or terminate its
Benefit Plans, Incentive Plan, Corporate Policies and/or employees' rules
and regulations in its sole discretion.
(e) In the event of litigation under this Agreement, the court shall
have discretion to award the prevailing party reasonable attorney's fees.
15. Governing Law. It is the intention of the parties hereto that all
questions with respect to the construction, formation, and performance of
this Agreement and the rights and liabilities of the parties hereto shall be
determined in accordance with the laws of the State of Illinois. The
parties hereto submit to the jurisdiction and venue of the courts of DuPage
County Illinois in respect to any matter or thing arising out of this
agreement pursuant hereto.
16. Notices. Any notice required pursuant to this Agreement will be
in writing and will be deemed given upon the earlier of (i) delivery
thereof, if by hand, (ii) five business days after mailing if sent by mail
(registered or certified mail, postage prepaid, return receipt requested),
(iii) the next business day after deposit if sent by a recognized overnight
delivery service, or (iv) transmission if sent by facsimile transmission or
by electronic mail, with return notification (provided that any notice sent
by facsimile or electronic mail shall also promptly be sent by one of the
means described in clauses (i) through (iii) of this Section 16. All
notices will be addressed as follows or to such other address as a party may
identify in a notice to the other party:
to Company: First Health Group Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: President and Chief Executive Officer
cc:General Counsel
to Employee: Xxxxxxx X. Xxxxx
[ deleted for confidentiality ]
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement in the State of Illinois as of the day and year first above
written.
The Company:
First Health Group Corp.
By: ________________________
Its: President and
Chief Executive Officer
Employee:
____________________________
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
DATED MAY 1, 1999, BETWEEN
FIRST HEALTH GROUP CORP. AND
XXXXXXX X. XXXXX
THIS AMENDMENT is entered into this 1st day of February, 2000 ("Amendment
Effective Date") by and between First Health Group Corp. ("Company") and
Xxxxxxx X. Xxxxx ("Employee").
WHEREAS, Company and Employee have previously entered into a certain
Employment Agreement, dated May 1, 1999 ("Agreement"); and
WHEREAS, Company and Employee desire to amend the Agreement with respect to
term and , compensation.
NOW, THEREFORE, in consideration of the initial covenants and agreements
set forth herein and in the Agreement, the parties agree as follows:
1. Section 2 Term is deleted and replaced with the following: Term.
Beginning on the Effective Date of the Agreement, the Initial Term of this
Agreement will be through March 31, 2002,and will automatically renew,
unless earlier terminated pursuant to Section 6 hereof.
2. Effective on the Amendment Effective Date, Section 5(a) Salary is
deleted and replaced with the following: Salary and Bonus. Employee will
receive an annual base salary of $400,000. This salary is payable in
accordance with Company's then-current payroll policies and procedures.
The annual salary may be subject to periodic increases as may be approved
by Company.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to
the Employment Agreement, in the State of Illinois, as of the date and year
first above written.
The Company:
First Health Group Corp.
By: ________________________
Its: President and
Chief Executive Officer
Employee:
____________________________
Xxxxxxx X. Xxxxx
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
DATED MAY 1, 1999, BETWEEN
FIRST HEALTH GROUP CORP. AND
XXXXXXX X. XXXXX
THIS AMENDMENT is entered into this 10th day of January 2002 ("Amendment
Effective Date") by and between First Health Group Corp. ("Company") and
Xxxxxxx X. Xxxxx ("Employee").
WHEREAS, Company and Employee have previously entered into a certain
Employment Agreement, dated May 1, 1999 ("Agreement"), amended February 1,
2000; and
WHEREAS, Company and Employee desire to amend the Agreement with respect to
term and time commitment.
NOW, THEREFORE, in consideration of the initial covenants and agreements set
forth herein and in the Agreement, the parties agree as follows:
1. Section 2 Term is deleted and replaced with the following: Term.
Beginning on the Effective Date of the Agreement, the Initial Term of this
Agreement will be through December 31, 2003, and will automatically renew,
unless earlier terminated pursuant to Section 6 hereof.
2. Section 4 Time Commitment is amended by the addition of the following
phrase to the second sentence of the Section: "; provided, however, that
after March 31, 2003, Employee may request a reduction in his time
commitment with an appropriate adjustment to compensation, which request
will be given reasonable consideration by Company."
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
to the Employment Agreement, in the State of Illinois, as of the date and
year first above written.
The Company:
First Health Group Corp.
By: _______________________
Its: President and
Chief Executive Officer
Employee:
____________________________
Xxxxxxx X. Xxxxx