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EXHIBIT 10.4
MODIFICATION, RESTATEMENT
AND
CONTINUATION OF
EMPLOYMENT AGREEMENT
THIS MODIFICATION, RESTATEMENT AND CONTINUATION OF EMPLOYMENT AGREEMENT
(THE "MODIFICATION") is made as of the 31st day of December, 1997 by and between
SYKES HEALTHPLAN SERVICES, INCORPORATED, a Florida corporation (the "Company"),
▇▇▇▇▇ ENTERPRISES, INCORPORATED, a Florida corporation ("Sykes"), and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Executive").
WITNESSETH:
WHEREAS, Sykes and Executive entered into an Employment Agreement (the
"Agreement") as of the 1st day of March, 1996; and
WHEREAS, Sykes is a fifty percent (50%) shareholder of Company and
deems it to be in the best interest of the shareholders of Sykes that Executive
continue his employment as an executive of Company on the modified terms set
forth in this Modification; and
WHEREAS, it is the intention of Sykes, Executive and Company that the
terms of this Modification will supersede and replace the terms of the Agreement
but, that, to the extent not specifically altered, the respective rights and
obligations of Company, Executive and Sykes under the Agreement and this
Modification will be continuous from the date of the Agreement to and through
the end of the Term as defined herein; and
WHEREAS, the Company desires to assure itself of the Executive's
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 Modification, the Company shall employ the Executive during the Term (as
hereinafter defined) as President of the Company in such 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 as
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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, including Sykes; 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.
2. TERM. Subject to the terms and conditions of this
Modification, including but not limited to the provisions for termination set
forth in Section 6 hereof, the employment of the Executive under the terms of
Modification shall commence on the date hereof and shall continue through and
including the close of business on the anniversary date of the Agreement as set
forth on Exhibit A attached hereto and incorporated herein (such term shall
herein be defined as the "Term"). The parties intend that Executive's employment
by Sykes pursuant to the Agreement will continue to the date of this
Modification and Executives employment will commence with the Company on the
date hereof, without interruption, to __________, 2000.
3. COMPENSATION.
(a) Base Salary and Bonus. As compensation for the Executive's
services under this Modification, the Executive shall receive, and the Company
shall pay, a weekly base salary set forth on Exhibit A. Such base salary may be
changed 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 of this Modification to a performance bonus as set
forth on Exhibit A and to participate in 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. However, from and after the date of
this Modification, Sykes' obligation will, in accordance with the terms hereof,
not to exceed $150,000 per year, as specifically set forth herein.
(b) Payments. All amounts paid pursuant to this Modification
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
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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 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
Sykes and the Company, including without limitation confidential information
with respect to Sykes and the Company's customer lists, business methodology,
processes, production methods and techniques, promotional materials and
information, and other similar matters treated by Sykes and the Company as
confidential (the "Confidential Information"). Accordingly, the Executive
covenants and agrees that during the Executive's employment by the Company and
his prior employment by Sykes (whether during the Term hereof or otherwise) and
thereafter, the Executive shall not, without the prior written consent of both
the Company and Sykes, 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 either Sykes or 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 Sykes or 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 either Sykes or the Company's property as appropriate under
the circumstances. 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 Sykes or the
Company's benefit as appropriate under the circumstances, 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 Sykes or the Company, as
appropriate under the circumstances, upon termination of the Executive's
employment, or at any other time at the Company's or ▇▇▇▇▇'▇ request.
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5. COVENANT NOT TO COMPETE.
(a) The Executive covenants and agrees that during the
Executive's employment by Sykes and the Company (whether during the Term hereof
or otherwise), and thereafter for a period of time set forth on Exhibit A
following the termination of the Executive's employment the Executive will not:
(i) directly or indirectly engage in, continue in or
carry on the business Sykes or 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;
(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 Sykes or the Company in any aspect of Sykes or the
Company's business during the Executive's employment with Sykes or the
Company, including, but not limited to: advertising or otherwise
endorsing the products of any such competitor; directly or indirectly
soliciting customers or employees of Company or Sykes 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 either Sykes 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 either Sykes
or the Company's customers conduct business at any time during the term of this
Modification. For purposes of this Modification, "customers" means any person or
entity to which either Sykes or 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 either Sykes or the
Company has pursued or communicated with for the purposes of obtaining business.
(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 Sykes or the
Company for such violation or breach and regardless
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of any other provision contained in this Modification or the 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 either Sykes or the
Company, whether arising from this Modification or the 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 either Sykes or the Company, or both, as the case
may be, shall be entitled to liquidated damages in the amount of $200 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 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
Modification or the 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
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falsification of reports, records or information submitted by the Executive to
the Company or Sykes.
(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 this Section 6 then the Company
shall have no further obligation to make payments under this Agreement except
that the Company shall pay 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 Sykes elects to enforce the
covenant not to compete as it relates to Sykes, it shall have the right to do so
regardless of the Company's decision not to enforce the same and Sykes in that
event shall make the severance payments called for in the Agreement. 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 as to both Sykes and the
Company. Notwithstanding anything to the contrary herein contained, the
Executive shall receive all compensation and other benefits to which he was
entitled under this Modification 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.
7. NOTICE. For purposes of this Modification, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when
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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:
Sykes HealthPlan Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Sykes:
▇▇▇▇▇ Enterprises, Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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 Modification may be modified or
waived unless such waiver or modification is agreed to in a writing signed by
the parties hereto; provided, however, Exhibit A may be amended by the Company
in its discretion, except to the extent it affects in any manner Sykes, 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 Modification 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
Modification. Any prior agreement relating to the Executive's employment with
the Company is hereby superseded. This Modification shall be binding upon and
inure to the benefit of Sykes, the Company, their 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 Modification without the prior written consent
of all parties 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 Modification shall under any circumstances be deemed invalid
or inoperative, the Modification shall be construed with the invalid or
inoperative provision deleted and the rights and obligations of the parties
shall
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be construed and enforced accordingly. The validity, interpretation,
construction and performance of this Modification shall be governed by the
internal laws of the State of Florida. This Modification 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
Modification 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.
9. SEVERAL NOT JOINT OBLIGATIONS. It is the intention of the Parties
that Sykes will retain the liability for performing its obligations under the
Agreement to the extent they accrue prior to the date of this Modification and
that it will retain the right to enforce the obligations of Executive both under
the Agreement and to the extent specifically described as a right of Sykes,
under this Modification. Company shall have the obligation to perform its duties
from and after the date of this Modification and except as specifically
described in paragraph 10., Executive shall look solely to Company for such
performance or any damages or cause of action arising from this Modification.
10. SYKES ▇▇▇▇▇▇▇▇▇ OBLIGATION. To the extent that Executive is
entitled to receive severance payments either pursuant to ▇▇▇▇▇'▇ sole elections
set forth in paragraph 6 or pursuant to the rights to the same payable other
than pursuant to paragraph 6, then Sykes shall retain the obligation and
liability for the same as set forth in the Agreement to the maximum amount of
$150,000 per year.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
▇▇▇▇▇ ENTERPRISES, INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
Attest: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Secretary
"EXECUTIVE"
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SYKES HEALTHPLAN SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Attest: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
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EXHIBIT A
TERM: 3 additional years, from the date hereof.
BASE SALARY: $4,326.92 per week
DISCRETIONARY PERFORMANCE BONUS: up to $175,000:
The strategic objectives of the Company are:
a) to increase revenues within 12-15 months to $125,000,000 per year;
b) to maintain an operating margin of profit after interest
payments, depreciation and amortization of at least 15-18%; and
c) to maintain a ratio of return on invested capital (for this
purpose, including both equity and subordinated debt to the
stockholders) of at least 25%.
* This bonus is discretionary for the first fiscal year of Company's operations
and thereafter will be based upon achievement of the Company's strategic
objectives as set forth from time to time by its Board of Directors.
COVENANT NOT TO COMPETE: 36 months
SEVERANCE PAYMENT: $225,000* per year for each year of the Noncompete
-------------------------
*A severance payment for thirty-six (36) months at a level of $150,000
per year is guaranteed by Sykes regardless of termination of employment,
including termination for cause by the Company or termination by the Executive.
If not otherwise paid by the Company electing to enforce the noncompete, such
$150,000 per year will be paid by Sykes. In any circumstance, except a
termination by the Company for other than death, disability or cause, where
Company elects to enforce the noncompete, Sykes is to be released from this
obligation but retains its rights to enforce the noncompete.
IN WITNESS WHEREOF, the parties have executed this Exhibit A as of the
31st day of December, 1997.
SYKES HEALTHPLAN SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Attest:
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
"EXECUTIVE"
------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ENTERPRISES, INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
Attest: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Secretary
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