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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of July 11, 2000, between ADVANCE
PARADIGM, INC. (hereinafter "Company"), a Delaware corporation having its
principal place of business in Irving, Texas, and XXXXX X. XXXXXXX (hereinafter
"Employee"):
WITNESSETH:
WHEREAS, Employee desires to render faithful and efficient service to
the Company; and
WHEREAS, the Company desires to receive the benefit of Employee's
service; and
WHEREAS, Employee is willing to be employed by the Company; and
WHEREAS, both the Company and the Employee desire to formalize the
conditions of Employee's employment by written agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. Office. The Company hereby employs Employee as its Chairman of
the Board of Directors and Chief Executive Officer, and
Employee hereby agrees to serve the Company in such
capacities.
2. Term of Employment. Employee's employment shall be for the
"Employment Period" with the initial term commencing on the
date of closing of the purchase of PCS Health Systems, Inc. by
the Company, and extending therefrom for three years. The
initial term shall be automatically renewed and extended upon
the expiration thereof for successive periods of one year
until such time as the Employment Period shall terminate
pursuant to the terms of this Agreement, or until the Company
on the one hand, or Employee on the other hand, shall
terminate the Employment Period by giving written notice to
the other party on or before 60 days prior to the expiration
date of the initial or any renewal term. The renewal and
extension of this Agreement shall also be referred to as the
"Employment Period." The effective date of Employee's
termination of employment for whatever reason under this
Agreement shall be the "Termination Date."
3. Responsibilities. During the Employment Period, Employee shall
devote his business time and attention, except during
reasonable vacation periods, to, and exert his best efforts to
promote, the affairs of the Company, and shall render such
services to the Company as may be required by the Board of
Directors of the Company ("Board") consistent with his
employment as Chairman and Chief Executive Officer. Nothing
herein contained shall preclude service by Employee
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on a reasonable number of boards of directors, advisors or
trustees of other entities not engaged in any business
competitive with the business of the Company, provided such
services do not interfere with his service hereunder, or shall
preclude Employee's investment in any such entity.
4. Incapacity. If, during the Employment Period, Employee should
be prevented from performing his duties or fulfilling his
responsibilities by reason of any incapacity or disability for
a continuous period of 90 days, then the Company's Board of
Directors, in its sole and absolute discretion, may, based on
the opinion of a qualified physician, consider such incapacity
or disability to be total and may terminate the Employment
Period. Benefits and payments shall be made under this
Agreement following incapacity as if it were a termination
without Good Cause in accordance with Section 8(a). Such
termination shall not adversely affect Employee's rights under
any disability insurance policy that will be provided by the
Company to the Employee.
5. Death. The Employment Period shall automatically terminate
upon the death of Employee. In such instance all further
benefits and payments would cease, but all shares or options
previously awarded to Employee but not yet vested or
exercisable shall become fully vested as of the date of death
and shall be exercisable for one year commencing on that date.
6. Compensation. During the Employment Period, Employee shall
receive:
(a) an initial base salary (hereinafter "Annual Base
Salary") that shall be an annual amount of not less
than $1 million, payable in accordance with the
payroll practices of the Company;
(b) an annual performance bonus with a target of 100% of
Annual Base Salary payable in accordance with the
Company's Annual Incentive Performance Program.
(c) a reasonable automobile allowance to cover the cost
of leasing, maintaining and providing insurance on an
automobile to be selected by the Employee;
(d) a reasonable amount to cover, as applicable, the cost
of initiation and annual dues and fees of a social or
professional club in Dallas, Texas, Baltimore,
Maryland and Phoenix, Arizona, each to be determined
by the Employee;
(e) Reasonable reimbursement to cover the costs and
expenses of travel and Company-related entertainment;
and
(h) eligibility for, and compensation to cover the costs
of participation in, all benefit plans and programs,
including those for executive employees, that
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may be made available by the Company to its
employees, and also for the Employee a term life
insurance policy in an amount not less than $5
million, a disability insurance policy that would pay
at least 80% of the Employee's Annual Base Salary as
well as health and dental insurance benefits.
(i) reimbursement of $25,000 for Employee's legal costs
regarding this Agreement and the commencement of his
employment.
7. Equity.
(a) Initial Options. Upon the execution of this
Agreement, Employee shall receive options for 1
million shares of the Company's common stock
exercisable at a price of $20 per share. These
options shall vest over four years: the first
one-quarter of them vesting on the first anniversary
of this Agreement; and the remaining three quarters
vesting in turn on the subsequent three anniversaries
of this Agreement.
(b) Incentive Plan. Employee shall be eligible for
participation in any incentive stock plan approved by
the Board.
8. Severance Payments.
(a) In the event that Employee's employment is terminated
by the Company while this Agreement is in effect
without Good Cause, as that term is defined in
Sections 8(c) hereof; or if the Employee leaves the
Company's employ for Good Reason, i.e., (i) because,
after good faith negotiations, the Company refuses to
renew this Agreement; (ii) if a Change of Control
takes place as that term is defined in Section 9
hereof; or (iii) if the Employee's duties and
responsibilities are materially changed as a result
of action by the Board:
(1) The Company shall pay to Employee an
aggregate amount of three times his combined
then annual salary and target bonus, which
payment shall be made within 90 calendar
days of the date of termination. The Company
shall continue to keep in full force and
effect all plans or policies of medical,
accident and life insurance benefits with
respect to Employee and his dependents with
the same level of coverage available to
employees under the terms of those employee
benefit plans for a period of 12 months,
upon the same terms, costs and otherwise to
the same extent as such plans are in effect
for employees of the Company who were
similarly situated to Employee as of the
Termination Date, provided such continuation
is permitted by law and such insurance
policies. There shall be no other payments
to the Employee.
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(2) Upon termination as set forth in Section
8(a) above, shares or options previously
awarded to Employee but not yet vested or
exercisable shall become fully vested as of
the Termination Date and all vested stock
options shall be exercisable for one year
commencing on the Termination Date.
(b) In the event that Employee's employment is terminated
by the Company for Good Cause as defined in Section
8(c):
(1) Any vested Shares or stock options
previously granted but unexercised shall be
exercisable within 90 days of the
termination date. Any Shares or stock
options unvested at the Termination Date
shall be forfeited.
(2) Employee shall be entitled to no other
compensation other than set forth in this
section 8(b) if he is terminated for Good
Cause.
(c) "Good Cause" shall mean: (i) the commission of a
proven act of fraud or dishonesty in the course of
employment; (ii) conviction of a crime constituting a
felony or in respect of any act of fraud, dishonesty
or moral turpitude; (iii) the commission of an act
which would make the Employee subject to being
enjoined, suspended, barred or otherwise disciplined
for violation of federal or state securities laws,
rules or regulations, including a "statutory
disqualification;" If the Employee unilaterally
terminates his Employment without "Good Reason" as
defined in Section 8(a), said termination will be
equivalent to a "Good Cause" termination under this
section.
(d) Following the Employment Period, and in addition to
that which is provided in paragraph 8(a)(1) above,
the Employee shall be eligible for continuation of
health and dental insurance coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act
(COBRA) for the 18 months following the Termination
Date.
9. "Change in Control" shall mean the following: (i) a merger or
consolidation of the Company in which the then current
shareholders of the Company hold less than 50% of the capital
stock of the surviving corporation; (ii) a sale of all or
substantially all of the assets of the Company; (iii) the sale
of a majority of the outstanding voting securities of the
Company; (iv) a liquidation and dissolution of the Company;
provided, that, without limitation such a change in control
shall be deemed to have occurred if (a) any "person" (as
defined in the Securities and Exchange Act of 1934) other than
the Company or any "person" who on the effective date of this
agreement is an officer or director of the Company, or any
employer of such "person" or any "affiliate" (as defined in
the Exchange Act), becomes the beneficial owner, directly or
indirectly, of securities of the Company
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representing 50% or more of the combined voting power of the
Company's outstanding securities, (b) individuals who
constitute the Board of Directors of the Company on any day
(the "Incumbent Board") cease for any reason other than their
deaths to constitute at least a majority of the Incumbent
Board on the following day (which day shall be the day on
which a "change in control" shall be deemed to have occurred),
provided that any individual becoming a director subsequent to
the date of this Agreement whose election or nomination for
election was approved by a vote of not less than two-thirds of
the Incumbent Board shall be considered, for purposes of this
section, as though such person were a member of the Incumbent
Board, and (c) material diminution or change of Employee's
duties hereunder.
10. Confidentiality.
(a) Confidential Information. The Employee acknowledges
that the information, observations and data obtained
by him while employed by the Company concerning the
business or affairs of the Company ("Confidential
Information") are the property of the Company.
Therefore, Employee agrees that, except in the
performance of duties for the Company, he shall not
disclose to any unauthorized person or use for his
own account any Confidential Information without
prior written consent of the Board, except (i) to the
extent that the aforementioned matters become
generally known to and available for use by the
public other than as a result of Employee's acts or
omissions to act, (ii) as necessary to comply with
compulsory legal process, provided that Employee
shall provide prior notice to the Company regarding
such disclosure and the Company, as applicable, shall
have the right to contest such disclosure, (iii) as
necessary to counsel and other professional advisors
retained by the Employee, subject to the
attorney/client privilege or a valid and binding
non-disclosure agreement between Employee and such
professional and (iv) disclosures of information
obtained from a third party free of restrictions or
disclosure of information in Employee's possession
prior to the date hereof which was obtained from a
source other than the Company or its predecessors.
Employee shall deliver to the Company at the
termination of the Employment Period, all memoranda,
notes, plans, records, reports, computer tapes and
software and other documents and data (and copies
thereof) relating to Confidential Information, Work
Product or the business of the Company which he may
then possess or have under his control.
(b) Non-Compete, Non-Solicitation.
(1) Employee acknowledges that in the course of
his employment with the Company, he will
become familiar with the Company's trade
secrets and with other confidential
information concerning the Company and that
his services will be of special, unique and
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extraordinary value to the Company.
Therefore, Employee agrees that, during the
Employment Period, and for two years after
such termination (the "Non-Compete Period"),
he shall not directly or indirectly, own,
manage, control, participate in, consult
with, render services for, or in any manner
engage in any business competing within the
continental United States with the
businesses of the Company as such businesses
exist or are in process on the date of the
termination of Employee's employment.
Notwithstanding the foregoing, nothing
herein shall prohibit Employee from (i)
continuing his ownership, management and/or
control of any business in which and to the
extent which he held such interests prior to
the Non-Compete Period, or (ii) being a
passive owner of not more than 5% of the
outstanding stock of any class of a company
which is publicly traded, so long as
Employee has no active participation in the
management or the business of such company.
(2) During the Employment Period and for one
year thereafter, Employee shall not,
directly or indirectly, through another
entity (i) solicit, encourage, interview,
entice, discuss with or induce or attempt to
induce any employee of the Company (with the
exception of Xxxxx X. Xxxxxxxx and Xxxxxxxxx
Xxxxxx) to leave the employ of the Company,
or in any way interfere with the
relationship between the Company and any
employee thereof, or (ii) hire any person
(with the exception of Xxxxx X. Xxxxxxxx and
Xxxxxxxxx Xxxxxx) who was an employee of the
Company at any time during the Employment
Period.
(d) Enforcement. If, at the time of enforcement of
section 10 of this Agreement, a court holds that the
restrictions stated herein are unreasonable under
circumstances then existing, the parities hereto
agree that the maximum period, scope or geographical
area reasonable under such circumstances shall be
substituted for the stated period, scope and area.
11. Effect of Termination of the Employment Period. Upon the
termination of the Employment Period, this Agreement shall
terminate, and all of the parties' obligations hereunder shall
forthwith terminate, except that rights and remedies accruing
prior to such termination or arising out of this Agreement
shall survive, and except for the obligations set forth in
section 10 above.
12. Notice. Any notice required to be given by the Company
hereunder to Employee shall be in proper form and signed by an
officer or Director of the Board of the Company. Until one
party shall advise the other in writing to the contrary,
notices shall be deemed delivered:
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(a) To the Company if delivered to the Chairman of the
Compensation Committee of the Board of Directors of
the Company, or if mailed, certified or registered
mail postage prepaid: to Advance Paradigm, 000 X.
Xxxx Xxxxxxxxx Xxxxxxx, Xxxxxx, Xxxxx 00000.
(b) To employee if delivered to Employee, or if mailed to
him by certified or registered mail, postage prepaid
to: Xxxxx X. Xxxxxxx, 0000 Xxxxx Xxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxx 00000.
13. Benefit. This Agreement shall bind and inure to the benefit of
the Company and the Employee, their respective heirs,
successors and assigns.
14. Severability. If a judicial determination is made that any of
the provisions of this Employment Agreement are unreasonable
or otherwise unenforceable, the remainder of its provisions is
severable and shall be given full force and effect.
15. Choice of law. This Agreement shall be governed by the law of
Texas.
16. Arbitration. The parties agree that any and all disputes,
claims or controversies arising out of or relating to this
agreement that are not resolved by their mutual agreement
shall be submitted to final and binding arbitration before JO
AO MO S/ENDISPUTE, or its successor, pursuant to the United
States Arbitration Act, 9 U.S.C. Sec. 1, et seq. Either party
may commence the arbitration process called for in this
agreement by filing a written demand for arbitration with JO
AO MO S/ENDISPUTE, with a copy to the other party. The
arbitration will be conducted in accordance with the
provisions of JO AO MO S/ENDISPUTE's Streamlined Arbitration
Rules and Procedures in effect at the time of filing of the
demand for arbitration. The parties will cooperate with JO AO
MO S/ENDISPUTE and with one another in selecting an arbitrator
from Jo Ao Mo S/ENDISPUTE's panel of neutrals, and in
scheduling the arbitration proceedings. The parties covenant
that they will participate in the arbitration in good faith,
and that they will share equally in its costs. The provisions
of this Paragraph may be enforced by any Court of competent
jurisdiction, and the party seeking enforcement shall be
entitled to an award of all costs, fees and expenses,
including attorneys fees, to be paid by the party against whom
enforcement is ordered.
17. Counterparts. This Agreement may be executed in counterparts,
each of which may be considered a duplicate original.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement this ____ day of ____, 2000.
ATTEST: ADVANCE PARADIGM, INC.
By: By:
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Corporate Secretary Chairman of the Compensation
Committee
WITNESS: "EMPLOYEE"
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Xxxxx X. Xxxxxxx
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