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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 31st day of December 1997 by and
between XXXXX HEALTHPLAN SERVICES, INC., a Florida corporation (the "Company"),
HEALTHPLAN SERVICES CORPORATION, a Delaware corporation ("HealthPlan Services")
only for purposes of Section 6(f) and the severance payment guarantee footnoted
on Exhibit A hereto, and XXXXX X. XXXXXX, III (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to assure itself of the Executive's
continued employment in an executive capacity; and
WHEREAS, the Executive desires to be employed by the Company on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company shall employ the Executive during the Term (as
hereinafter defined) as an Executive Officer and the Chief Financial Officer and
Treasurer of the Company and in such other management capacities as may be
assigned, from time to time, by the Company. The Executive accepts such
employment and agrees to devote his best efforts and entire business time,
skill, labor and attention to the performance of such duties. The Executive
agrees to provide promptly a description of any other commercial duties or
pursuits engaged in by the Executive to the Company's Board of Directors. If the
Board of Directors determines, in good faith, that such activities conflict with
the Executive's performance of his duties hereunder, the Executive shall
promptly cease such activities to the extent and as directed by the board of
Directors. It is acknowledged and agreed that such description shall be made
regarding any such activities in which the Executive owns more than 10% of the
ownership of the organization or which may be in violation of Section 5 hereof,
and that the failure of the Executive to provide any such description shall
enable the Company to terminate the Executive for Cause (as provided in Section
6(c) hereof). The Company agrees to hold any such information provided by the
Executive confidential and not disclose the same to any person other than a
person to whom disclosure is reasonably necessary or appropriate in light of the
circumstances. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such benefits
and additional compensation, if any, that is paid to executive officers of the
Company in connection with such service.
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2. TERM. Subject to the terms and conditions of this Agreement,
including but not limited to the provisions for termination set forth in Section
6 hereof, the employment of the Executive under this Agreement shall commence on
the date hereof and shall continue through and including the close of business
on the anniversary date hereof as set forth on Exhibit A attached hereto and
incorporated herein (such term shall herein be defined as the "Term").
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's
services under this Agreement, the Executive shall receive, and the Company
shall pay, a weekly base salary set forth on Exhibit A. Such base salary may be
increased, but not decreased, during the Term, in the Company's discretion,
based upon the Executive's performance and any other factors the Company deems
relevant. Such base salary shall be payable in accordance with the policy then
prevailing for the Company's executives. In addition to such base salary, the
Executive shall be entitled, during the Term, to a performance bonus as set
forth on Exhibit A and to participate in and receive payments from all other
bonus and other incentive compensation plans as may be adopted by the Company on
the same basis and terms as other executive officers of the Company.
(b) Payments. All amounts paid pursuant to this Agreement
shall be subject to withholding or deduction by reason of the Federal Insurance
Contribution Act, Federal income tax, state and local income tax, if any, and
comparable laws and regulations.
(c) Other Benefits. The Executive shall be reimbursed by the
Company for all reasonable and customary travel and other business expenses
incurred by the Executive in the performance of the Executive's duties hereunder
in accordance with the Company's standard policy regarding expense verification
practices. The Executive shall be entitled to that number of weeks paid vacation
per year that is available to other executive officers of the Company in
accordance with the Company's standard policy regarding vacations and such other
fringe benefits as are set forth on Exhibit A, and shall be eligible to
participate in such pension, life insurance, health insurance, disability
insurance and other employee benefits plans, if any, which the Company may from
time to time make available to its executive officers generally.
4. CONFIDENTIAL INFORMATION.
(a) The Executive has acquired and will acquire non-public
information and knowledge respecting the intimate and confidential affairs of
the Company, including without limitation confidential information with respect
to the Company's customer lists, business methodology, processes, production
methods and techniques, promotional materials and information, and other similar
matters treated by the Company as confidential (the "Confidential Information").
Accordingly, the Executive
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covenants and agrees that during the Executive's employment by the Company
(whether during the Term hereof or otherwise) and thereafter, the Executive
shall not, without the prior written consent of the Company, disclose to any
person, other than a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of the
Executive's duties hereunder, any non-public Confidential Information obtained
by the Executive while in the employ of the Company. Notwithstanding the
foregoing, Executive may disclose the Confidential Information pursuant to the
requirement or request of a governmental agency or pursuant to a court or
administrative subpoena, order or other such legal process or requirement of
law, or in defense of any claims or causes of action asserted against him;
provided, however, that Executive shall first notify the Company of such request
or requirement, or proposal for use in defense.
(b) The Executive agrees that all memoranda, notes, records,
papers or other documents and all copies thereof relating to the Company's
operations or business, some of which may be prepared by the Executive, and all
objects associated therewith in any way obtained by the Executive shall be the
Company's property. This shall include, but is not limited to, documents and
objects concerning any customer lists, contracts, price lists, manuals, mailing
lists, advertising materials, and all other materials and records of any kind
that may be in the Executive's possession or under the Executive's control. The
Executive shall not, except on the Company's behalf, copy or duplicate any of
the aforementioned documents or objects, nor remove them from the Company's
facilities, nor use any information concerning them except for the Company's
benefit, either during the Executive's employment or thereafter. The Executive
covenants and agrees that the Executive will deliver all of the aforementioned
documents and objects, if any, that may be in the Executive's possession to the
Company upon termination of the Executive's employment, or at any other time at
the Company's request.
5. COVENANT NOT TO COMPETE.
(a) The Executive covenants and agrees that during the
Executive's employment by the Company (whether during the Term hereof or
otherwise), and thereafter for the period of time set forth on Exhibit A
following the termination of the Executive's employment with the Company, the
Executive will not:
(i) directly or indirectly engage in, continue in or carry
on the business of the Company, or any business substantially similar
thereto, including owning or controlling any financial interest in, any
corporation, partnership, firm or other form of business organization
which competes with or is engaged in or carries on any aspect of such
business or any business substantially similar thereto;
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(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation, partnership, firm or
other business organization which is now, becomes or may become a
competitor of the Company in any aspect of the Company's business
during the Executive's employment with the Company, including, but not
limited to: advertising or otherwise endorsing the products of any such
competitor; soliciting customers or employing employees of the Company
or otherwise serving as an intermediary for any such competitor; or
loaning money or rendering any other form of financial assistance to or
engaging in any form of business transaction whether or not on an arms'
length basis with any such competitor; or
(iii) engage in any practice the purpose of which is
to evade the provisions of this Agreement or to commit any act which is
detrimental to the successful continuation of, or which adversely
affects, the business or the Company;
provided, however, that the foregoing shall not preclude the Executive's
ownership of not more than 2% of the equity securities of a corporation which
has such securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended.
(b) The Executive agrees that the geographic scope of this
covenant not to compete shall extend to the geographic area where the Company's
customers conduct business at any time during the Term of this Agreement. For
purposes of this Agreement, "customers" means any person or entity to which the
Company provides or has provided within a period of one (1) year prior to the
Executive's termination of employment labor, materials or services for the
furtherance of such entity or person's business or any person or entity that
within such period of one (1) year the Company has pursued or communicated with
for the purposes of obtaining business for the Company.
(c) In the event of any breach of this covenant not to
compete, the Executive recognizes that the remedies at law will be inadequate
and that in addition to any relief at law which may be available to the Company
for such violation or breach and regardless of any other provision contained in
this Agreement, the Company shall be entitled to equitable remedies (including
an injunction) and such other relief as a court may grant after considering the
intent of this Section 5. It is further acknowledged and agreed that the
existence of any claim or cause of action on the part of the Executive against
the Company, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of this covenant not to compete, and the
duration of this covenant not to compete shall be extended in an amount which
equals the time period during which the Executive is or has been in violation of
this covenant not to compete. Further, the Executive acknowledges and agrees
that the Company shall be entitled to liquidated damages in the amount of $200
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per day for each day during which the Executive is in violation of this covenant
not to compete, and the Executive does specifically acknowledge and agree that
the liquidated damages in such amount are fair and reasonable, in that it may be
difficult for the Company to determine the extent of the damages actually
incurred in the event of the breach of this covenant not to compete by the
Executive.
(d) In the event a court of competent jurisdiction determines
that the provisions of this covenant not to compete are excessively broad as to
duration, geographic scope, prohibited activities or otherwise, the parties
agree that this covenant shall be reduced or curtailed to the extent necessary
to render it enforceable.
6. TERMINATION.
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, during the Term, the Executive becomes
physically or mentally disabled in accordance with the terms and conditions of
any disability insurance policy covering the Executive or, if due to such
physical or mental disability, the Executive becomes unable for a period of more
than six (6) consecutive months to perform his duties hereunder on substantially
a full-time basis as determined by the Company in its sole reasonable
discretion, the Company may, at its option, terminate the Executive's employment
hereunder upon not less than 30 days' written notice.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause effective immediately upon notice. For purposes
of this Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder: (i) if the Executive engages in conduct which has caused,
or is reasonably likely to cause, demonstrable and serious injury to Company;
(ii) if the Executive is convicted of a felony, as evidenced by a binding and
final judgment, order or decree of a court of competent jurisdiction; (iii) for
the Executive's neglect of his duties hereunder or the Executive's refusal to
perform his duties or responsibilities hereunder, as determined by the Company's
Board of Directors in good faith; (iv) for the Executive's violation of this
Agreement, including without limitation Section 5 hereof, (v) chronic
absenteeism; (vi) use of illegal drugs; (vii) insobriety by the Executive while
performing his or her duties hereunder; and (viii) any act of dishonesty or
falsification of reports, records or information submitted by the Executive to
the Company.
(d) Severance Payment. In the event of a termination of the
Executive's employment pursuant to this Section 6 or by the Executive, all
payments to the Executive hereunder shall immediately cease and terminate. In
the event of a termination by the Company of the Executive's employment with the
Company for any reason other than pursuant to Section 6 then the Company shall
have no further obligation to make payments under this Agreement except that the
Company shall pay
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the Executive severance pay (in equal installments in accordance with Company
policy immediately prior to such termination) in the amount set forth on Exhibit
A ("Severance Payment"). Such Severance Payment, however, shall not be required
to be paid by the Company if the Company elects, in its sole discretion, to
release the Executive from the covenant not to compete set forth in Section 5
hereof. However, if the Company elects not to enforce the covenant not to
compete, HealthPlan Services shall make the severance payments called for in the
Agreement to the extent set forth on Exhibit A. If the Company terminates the
Executive's employment pursuant to Section 6(a), (b) or (c), or the Executive
terminates such employment, the Executive shall not be entitled to the Severance
Payment and the covenant not to compete set forth in Section 5 hereof shall
remain in full force and effect. Notwithstanding anything to the contrary herein
contained, the Executive shall receive all compensation and other benefits to
which he was entitled under this Agreement or otherwise as an employee of the
Company through the termination date of his employment with the Company. Among
other things, this would include the pro rata share of any bonus earned through
the termination date.
(e) Transition Services. Upon a termination of employment by
the Executive or by the Company with Cause, the Executive shall cooperate with
the Company's reasonable requests to ensure an orderly and businesslike transfer
of the Executive's duties to other personnel designated by the Company.
Additionally, the Executive shall make himself available at reasonable times
upon reasonable notice to consult with the Company and assist the Company with
respect to: (i) any matters for which the Company requests such assistance for a
period of six (6) months after such termination, and (ii) any litigation or
governmental or quasi-governmental agency investigation which may be pending at
the time of termination or implemented after termination which relates to any
period during which the Executive was employed by the Company; provided that, in
either case, the Company shall reimburse the Executive for any reasonable
out-of-pocket expense incurred by the Executive at the Company's request in
connection with such consultation at times which will not interfere with any
subsequent employment which the Executive has obtained and such consultation
shall not require more than an average of two days per month without the
Executive's consent. A breach of the foregoing provisions by the Executive shall
be deemed to be a material breach of this Agreement.
(f) HealthPlan Services Options. (i) All of Executive's
options to purchase shares of HealthPlan Services common stock shall continue to
vest in accordance with the vesting schedule set forth in the Stock Option
Agreements pursuant to which such options were granted provided that Executive
remains an employee of the Company or any of its subsidiaries, successors or
assigns.
(ii) In the event of the Company's termination of Executive's
employment without Cause and where Executive does not then become an employee of
HealthPlan Services, all of the options for the purchase of shares of HealthPlan
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Services shall become fully vested on such termination date; and Company and
Executive hereby agree that such options shall no longer constitute incentive
stock options. The period for the exercise of the options granted thereunder
shall be extended until the first anniversary of such termination date.
Executive may exercise such options in accordance with the terms of the Stock
Option Agreements under which they were granted, as such Stock Option Agreements
are amended by this Agreement, at any time within a period ending at 5:00 p.m.,
Tampa time, on the day preceding the expiration of one year from the termination
date, to the full extent of the HealthPlan Services shares which are purchasable
thereunder.
7. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand-delivered, sent by telecopier, facsimile
transmission or other electronic means of transmitting written documents (as
long as receipt is acknowledged) or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive, to the address set forth on the signature page
If to the Company:
Xxxxx HealthPlan Services, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such waiver or modification is agreed to in writing signed by the
parties hereto; provided, however, Exhibit A may be amended by the Company in
its discretion without the Executive's consent to the extent provided therein;
provided, however, no amendment may be made which impairs or adversely affects
the rights of the Executive without the Executive's written consent. No waiver
by any party hereto of any breach by any other party hereto shall be deemed a
waiver of any similar or dissimilar term or condition at the same or at any
prior or subsequent time. This Agreement is the entire agreement between the
parties hereto with respect to the Executive's employment by the Company and
there are no agreements or representations, oral or otherwise, expressed or
implied, with respect to or related to the employment of the Executive which are
not set forth in this Agreement. Any prior agreement relating to the Executive's
employment with the Company is hereby superseded and void, and is
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no longer in effect. This Agreement shall be binding upon and inure to the
benefit of the Company, its respective successors and assigns, and the Executive
and his heirs, executors, administrators and legal representatives. Except as
expressly set forth herein, no party shall assign any of his or its rights under
this Agreement without the prior written consent of the other party and any
attempted assignment without such prior written consent shall be null and void
and without legal effect. The parties agree that if any provision of this
Agreement shall under any circumstances be deemed invalid or inoperative, the
Agreement shall be construed with the invalid or inoperative provision deleted
and the rights and obligations of the parties shall be construed and enforced
accordingly. The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal laws of the State of Florida. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute but one and
the same instrument. This Agreement has been jointly drafted by the respective
representatives of the parties and no party shall be considered as being
responsible for such drafting for the purpose of applying any rule constituting
ambiguities against the drafter or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
XXXXX HEALTHPLAN SERVICES, INC.
By:/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, President
HEALTHPLAN SERVICES CORPORATION, only for
purposes of Section 6(f) and the severance
payment guarantee footnoted on Exhibit A
hereto
By:/s/ X. Xxxxxxx
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Its: Vice Chairman
"EXECUTIVE"
/s/ X.X. Xxxxxx III
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XXXXX X. XXXXXX, III
Address:
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EXHIBIT A TO EMPLOYMENT AGREEMENT
TERM: 2 years
BASE SALARY: $3,173.00 per week
PERFORMANCE BONUS: up to 100% Base Salary if performance targets are met. The
performance targets are to be established annually by the Compensation Committee
of the Board of Directors.
FRINGE BENEFITS: Same as are provided to the other executives at the same level.
COVENANT NOT TO COMPETE: up to 24 months
SEVERANCE PAYMENT: $165,000* for each 12-month period.
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* Where a severance payment is called for by the Agreement, a severance payment
at a level of $13,750 per month for the first 12 months after the termination of
the Executive is guaranteed by HealthPlan Services. If not otherwise paid by the
Company electing to enforce the noncompete, such payment will be paid by
HealthPlan Services. In any circumstance where a severance payment is due to the
Executive and where the Company elects to enforce the noncompete, HealthPlan
Services is to be released from this obligation. The termination by Company of
Executive because of Executive's failure to relocate shall not be deemed to be a
termination for Cause.
IN WITNESS WHEREOF, the parties have executed this Exhibit A as of the
31st day of December, 1997.
XXXXX HEALTHPLAN SERVICES,
INC.
By:
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Xxxxx Xxxxxx, President
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HEALTHPLAN SERVICES
CORPORATION, only for purposes of
Section 6(f) and the severance payment
guarantee footnoted above
By:
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Its:
"EXECUTIVE"
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XXXXX X. XXXXXX, III
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