FIRST CHOICE HEALTH NETWORK, INC.
EMPLOYMENT AGREEMENT
This agreement is made by and between First Choice Health Network, Inc.
(hereinafter referred to as "Employer"), and Xxxx X. Xxxx (hereinafter
referred to as "Xxxx"), this 1st day of March, 1994.
WHEREAS, Employer desires to secure the services of Xxxx for three (3)
years as an employee of First Choice Health Network, Inc., and whereas Xxxx
desires to accept such employment;
NOW, THEREFORE, in consideration of the material advantages accruing
to the parties herein and the mutual covenants contained herein, the
parties agree as follows:
1. CAPACITY OF EMPLOYMENT AND GENERAL DUTIES,
Xxxx will render full-time professional services to Employer in the
capacity of Vice President, Marketing of Employer's corporation for the
three (3) year term of this contract beginning March 1, 1994.
He will, at all times, faithfully, industriously, and to the best of his
ability, perform all duties that may be required of him by virtue of his
position as Vice President, Marketing and all duties set forth by Employer
and to the reasonable satisfaction of the President & CEO.
Xxxx is hereby vested with authority to act on behalf of First Choice in
keeping with corporate policies, as amended from time to time. In addition,
he shall perform in the same manner any special duties assigned or delegated
to him by the President & CEO.
2. COMPENSATION. In consideration for these services as Vice
President, Marketing, Employer agrees to pay Xxxx Eighty Thousand Dollars
($80,000) per annum as base salary (Payable in twenty-four (24)
equal installments) for the initial term under this contract.
Xxxx'x base compensation for the duration of this contract will be
increased annually, a minimum of 3% per year. Increases to base salary will
be effective on Xxxx'x adjusted anniversay date of employment (January 1).
Actual increase amount will be determined and authorized by the President.
In addition, Xxxx will be eligible for an incentive compensation bonus,
the terms and criteria of which will be determined by the President & CEO.
Potential bonus award will be structured to provide a maximum of 20% of
base pay according to performance achieved against pre-determined targets.
3. LEAVE DAYS, HOLIDAY AND OTHER BENEFITS.
(a) Xxxx shall be entitled to twenty-four (24) days of compensated
leave time (personal leave days) in each of the contract years. At the end
of the first calendar quarter of Xxxx'x tenth (10th) year of employment
(June 30, 1995) he will receive one additional leave day, giving Xxxx
twenty-five (25) vacation days per year. A maximum of fifteen (15) leave
days can be carried over from one year to the next; any additional days
must either be used in the current calendar year or lost.
(b) Xxxx shall be entitled to nine (9) paid holidays per year, which
include those holidays observed by other employees of Employer, and two (2)
floating holidays which must be used in the year in which they are received and
may not be carried over into the next calendar year.
(c) Xxxx will be permitted to be absent from Employer during working
days to attend professional meetings in the United States and to attend to
such outside professional duties in the health care and/or insurance fields
as have been mutually agreed upon between him and the President & CEO.
Attendance at such approved meetings and accomplishment of approved
professional duties shall be fully compensated service time and shall not
be considered vacation time.
(d) Employer shall reimburse Xxxx for all expenses incurred by him
incident to attendance at approved professional meetings, and reimburse him
for such business and entertainment expenses incurred by Xxxx in furtherance
of Employer's interests, provided, however, that such reimbursement is
consistent with policies of Employer and approved by the President & CEO.
(e) Pay Xxxx Four Hundred Sixteen Dollars and Sixty-Seven
Cents ($416.67) per month as an allowance for business use of a personal
automobile, reviewing for annual adjustment.
(f) Provide Xxxx with an employer-paid parking space in the office
building.
4. 401K RETIREMENT PLAN. Xxxx shall be entitled to participate in the
Employer-sponsored 401K tax-deferred retirement savings plan. The Employer-
matching provision will be effective immediately upon Xxxx'x enrollment in
the plan.
5. PROFESSIONAL AFFILIATIONS. Employer agrees to pay dues to professional
associations and societies and to such service organizations and clubs of
which Xxxx is a member, approved by the President & CEO as being in the best
interests of the Employer.
6. INSURANCE BENEFITS AND MISCELLANEOUS BENEFITS.
Employer also agrees to:
(a) provide throughout the term of this contract, a group life insurance
policy for Xxxx in an amount equivalent to two times his annual salary,
payable to the beneficiary of his choice. This coverage shall be provided
through the carrier which provides group coverage for Employer.
(b) provide comprehensive health/major medical, long-term disability,
and dental insurance for Xxxx and his dependents through the same Employer
group coverage carrier as provided to other employees.
7. TERMINATION OF EMPLOYMENT. The President & CEO may, in its discretion,
terminate Hey's duties as Vice President, Marketing. After such termination,
all rights, duties, and obligations of both parties shall cease except that
Employer shall continue to pay Xxxx, as an agreed-upon termination payment,
his then monthly salary for the month in which his duties were terminated
and for six (6) consecutive months thereafter or until Xxxx secures other
employment, whichever occurs first.
No agreed-upon termination payment shall be made if Xxxx is terminated
for theft, dishonesty, conviction of a felony, illegal substance use,
alcohol addiction, gross neglect of duty, or conduct unbefitting a person
in this position.
After notification of termination and until Employer's obligations cease
under this agreement or Xxxx obtains other employment, whichever occurs
sooner, Xxxx shall not be required to perform any duties for Employer or
come to the offices of Employer. During the period in which termination
payments are being made, Employer agrees to keep Xxxx'x group life,
long-term disability, and medical insurance coverage paid up and in effect
so long as permitted under the applicable contracts of insurance.
In the event Employer terminates Xxxx on the basis of gross neglect of
duty or conduct unbefitting a person acting in the capacity of Vice President,
Marketing and the parties are in disagreement whether the conduct complained
of constitutes gross neglect or unbefitting conduct, the parties agree to
submit to binding arbitration the issue of whether or not the conduct
complained of constitutes gross neglect of duty or unbefitting conduct. The
arbitrator shall be a person familiar with health care management and related
issues. The parties shall first attempt to select a mutually acceptable
arbitrator; if the parties are unable to mutually agree upon an arbitrator,
each party shall select an arbitrator of their choice. The arbitrators
selected by each party shall, in turn, select a third arbitrator who shall
arbitrate this issue and this decision shall be binding upon the parties.
8. In the event Employer merges with, acquires, or is sold to another
entity or business and it can reasonably be found the Xxxx is no longer
substantially performing the duties of the Vice President, Marketing of
Employer, Xxxx shall have the right, in his complete discretion, to
terminate this contract by written notice delivered to the President.
After such termination, all rights, duties and obligations of both shall
cease except that Employer shall continue to pay Xxxx his then monthly
salary for the month in which his duties were terminated, and for six (6)
consecutive months thereafter or until Xxxx secures other employment,
whichever first occurs, as the agreed-upon termination payment.
During this period, Xxxx shall not be required to perform any duties for
Employer or come to the offices of Employer. During the period in which
such termination payments are being made, Employer agrees to keep Xxxx'x
group life, long-term disability, and medical insurance coverage paid up
and in effect, to the extent permitted under the applicable benefit plan
and contracts.
9. Should Xxxx in his discretion elect to terminate this contract for
any other reason than as stated in Paragraph 7 or 8, he shall give the
President & CEO thirty (30) days' written notice of his decision to
terminate. At the end of those thirty (30) days, all rights, duties, and
obligations of both parties of the contract shall cease.
10. Xxxx acknowledges that he has been entrusted with confidential
information regarding Employer's operations, management, business strategy,
and marketing, including Employer's financial, operational and marketing
policies and procedures and Employer's Agreements and relationships with
shareholders and other service providers, insurers, claim administrators,
and brokers. Xxxx also acknowledges that Employer has developed specialized
techniques, procedures, and computer programs for assessing and assuring the
quality of its operation and service to its constituents and that such
techniques, procedures and programs, together with the information derived
thereby, constitute proprietary trade secrets.
Xxxx promises not to disclose or make any private use of such confidential
information and trade secrets during the term of this agreement or at any
time other managed care organization owned or operated in geographical
areas served by Employer, for a period of nine (9) months after voluntary
termination of this agreement by Xxxx.
If, at the expiration of the term of this contract, Employer offers a
new contract to Xxxx the terms of which are no less favorable than the
terms of this contract, and Xxxx does not accept such offer, then Xxxx
hereby agrees not to accept employment by or to be associated with any
other managed care organization owned and operated in geographical areas
served by Employer, for a period of twelve (12) months following the
expiration of this contract.
If, at the expiration of the term of this contract, Employer does not
offer Xxxx a new contract on terms not less favorable than this contract,
the non-competition provisions of the preceding paragraph shall not apply.
11. INDEMNIFICATION. Employer shall indemnify Xxxx against
expenses actually and necessarily incurred by him in connection with
defense or settlement of any action, suit, or proceeding in which he is
made a party by reason of being or having been Vice President, Marketing
of the corporation, except in relation to matters as to which Xxxx shall
be adjudged in any such action, suit, or proceeding liable for misconduct
in the performance of duty, all as provided in the Articles of Incorporation
and/or Bylaws of Employer. Employer shall purchase and maintain
comprehensive general, contingent, professional, and directors and officers
liability insurance subject to reasonable availiability on behalf of Xxxx
against any liabilities, or settlement based on asserted liability incurred
by Xxxx for reason of being or having been Vice President, Marketing of
Employer, whether or not Employer would have the power to indemnify Xxxx
against such liability or settlement under the provisions of this section.
12. EXTENSIONS AND RENEWALS. Negotiations for the extension of this
contract, or for agreement on the terms of a new contract, shall be
completed or the decision made not to negotiate a new contract made, not
later than the end of the eleventh (11th) month of the final contract year.
By mutual agreement of the parties, this contract and all its terms and
conditions may be extended from year to year or for a term beyound its
initial term by simple letter exchanged between the parties at any time
during the contract term.
13. ENTIRE AGREEMENT. This contract constitutes the entire agreement
between the parties and contains all the agreements between them with
respect to the subject matter hereof. It also supersedes any and all other
agreements and contracts, either oral or written, between the parties with
respect to the subject matter hereof.
14. MODIFICATION OF TERMS. Except as otherwise specifically provided,
the terms and conditions of this contract may be amended at any time by
mutual agreement of the parties, provided that before any amendment shall be
valid or effective, it shall have been reduced to writing and signed by the
President & CEO and Xxxx.
15. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this contract shall not affect its other provisions, and this
contract shall be construed in all respects as if such invalid or
unenforceable provision had been omitted.
16. BINDING EFFECT. This agreement shall be binding upon and inure
to the benefit of Employer, its successors and assigns, and shall be
binding upon Xxxx, his administrators, executors, legatees, heirs and assigns.
17. APPLICABLE LAW. This agreement shall be construed and enforced
under and in accordance with the laws of the State of Washington.
18. COSTS OF ENFORCEMENT. Should either party be required to take
action to enforce the terms of the agreement or the rights and oblications
hereunder, the prevailing party shall be entitled to recover its costs of
enforcement, including court costs, reasonable attorney's fees, and
arbitration fees.
DATED this ___1st______day of ___March, 1994__________________.
FIRST CHOICE HEALTH NETWORK, INC.
__/s/ Xxxxx X. Stumpfel_________
By Xxxxx X. Xxxxxxxx
President & CEO
/s/ Xxxx X. Heyl___
XXXX X. XXXX
