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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 31st day of March, 1998 by and
between ▇▇▇▇▇ HEALTHPLAN SERVICES, INC., a Florida corporation (the "Company"),
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive").
W I T N E S S E T H :
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 and/or
its subsidiaries 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 acknowledge, 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 Officer of the Company at a senior officer level and
will retain his current position and title with Health International, Inc.
which will be a subsidiary 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 and 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.
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
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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.
(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
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 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
Confidential Information obtained by the Executive while in the employ of the
company.
(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
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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
for the Company's use, 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, 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 thereof;
(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 or becomes 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 willfully 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.
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(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 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.
(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 is convicted of a class one or
serious felony, as evidenced by a binding and final judgment, order or decree
of a court of competent jurisdiction; (ii) for the Executive's violation of
Section 5 of this Agreement;
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(iii) use of illegal drugs; (iv) insobriety by the Executive while performing
his or her duties hereunder; and (v) if the Executive is adjudicated by a
binding and final judgment, order or decree of a court of competent
jurisdiction to have committed any act of theft, dishonesty or falsification of
reports, records or information submitted by the Executive to the Company.
(d) Severance Payment. If the Executive is terminated by
the Company for Cause as defined in subparagraph (c) above or dies, the
Executive shall not be entitled to any further payments after the date of such
termination or death, including but not limited to any Severance Payment;
however, in the event of a termination pursuant to Section 6(c)(v), Executive
shall be paid his salary and benefits up to the date of the adjudication as set
forth therein. If the Executive (i) is terminated by the Company for any reason
other than Cause, (ii) becomes disabled and is still able to perform
Executive's duties, or (iii) terminates employment voluntarily, the Executive's
salary, bonus and benefits (other than in the case of death or disability the
right of Executive to any disability payments or death payments due under
policies in existence at the date of such termination) hereunder will terminate
as of the termination of employment; however, Executive shall be entitled to
receive the monthly Severance Payment specified on Exhibit A which shall be
payable for each month after such termination during which Executive is subject
to the Non-Compete provision specified in Section 5 hereof and Executive shall
be paid any bonus and salary earned as of the date of such termination. The
full amount of the Severance Payment shall initially be guaranteed by a letter
of credit (the "First Letter of Credit") issued in favor of the Executive by
NationsBank, N.A. with the amount thereof declining as payments are made
hereunder. The First Letter of Credit shall be non-cancelable for a period of
three (3) years. Within fifteen (15) days from the expiration date of the First
Letter of Credit, the Company shall cause a second letter of credit to be
issued in favor of the Executive to guarantee the remaining balance of the
Severance Payment due during the remaining term of this Agreement (the "Second
Letter of Credit"). The Second Letter of Credit shall be non-cancelable for a
period of two (2) years. The Executive shall be entitled to draw under the
First or Second Letter of Credit, as the case may be, upon any default in the
Company's obligation to make a Severance Payment and this Agreement shall be
deemed to be in default and the Executive shall be further entitled to draw
under the Letter of Credit if a notice of cancellation is issued thereunder and
the letter of credit is not replaced prior to fifteen (15) days before the
effective date of such cancellation.
7. RESOLUTION OF DISPUTES
(a) Arbitration. Any dispute, controversy or claim arising
out of or relating to this Employment Agreement shall be settled by binding
arbitration held in Denver, Colorado, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect,
except as specifically otherwise provided in this Section 7. Notwithstanding
the foregoing, the Company may, in its discretion, apply to a court of
competent jurisdiction for equitable relief from any violation or threatened
violation of the covenants of Executive under Section 5 (covenant not to
compete) of this Employment Agreement.
(b) Arbitrators. If the matter in controversy (exclusive
of attorney fees and
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expenses) shall not appear, as at the time of the demand for arbitration, to
exceed $100,000, then the panel to be appointed shall consist of one neutral
arbitrator to be mutually agreed upon by the parties; otherwise, the panel
shall be comprised of three neutral arbitrators of whom one shall be selected
by each party within twenty (20) days, and a third arbitrator shall be selected
by these two selected arbitrators. If one of the parties fails to timely select
an arbitrator, the arbitrator that was timely selected shall be the sole
arbitrator. If neither party timely selects an arbitrator, the first arbitrator
selected thereafter shall be the sole arbitrator, no others being appointed.
Where each of the parties timely selects an arbitrator, said arbitrators will
have ten (10) days from the end of the twenty (20) -day period to select the
third arbitrator. In the event the arbitrators are unable to timely agree on
the third arbitrator, either party may petition any official of the American
Arbitration Association for appointment of the third arbitrator and the parties
agree to accept any arbitrator appointed by such official subject to the
limitations hereof. Arbitrators must be reasonably independent of the parties
and their principals. Persons who are hereby expressly disqualified to serve as
arbitrators are principals of the parties, relatives of said principals,
employees of the parties or said principals, persons not residing within 100
miles of the site of the arbitration, attorneys, accountants, and other
business persons who have professional or business relationships with the
parties or said principals.
(c) Procedures; No Appeal. The arbitrator(s) shall allow
such discovery as the arbitrator(s) determine appropriate under the
circumstances, provided that any party shall be entitled to reasonable
production of documents and not less than (i) 16 hours of deposition
examination and 20 written interrogatories if the matter in controversy
(exclusive of attorneys' fees and costs) is $500,000 or less; and (ii) 24 hours
of deposition examination and 40 written interrogatories if the matter in
controversy (exclusive of attorneys' fees and costs) exceeds $500,000. The
arbitrators shall resolve the dispute as expeditiously as practicable, and if
reasonably practicable, within one hundred twenty (120) days after the
selection of the arbitrator(s). The arbitrator(s) shall give the parties
written notice of the decision, with the reasons therefor set out, and shall
have thirty (30) days thereafter to reconsider and modify such decision if any
party so requests within ten (10) days after the decision. Thereafter, the
decision of the arbitrator(s) shall be final, binding, and nonappealable with
respect to all persons, including (without limitation) persons who have failed
or refused to participate in the arbitration process. The privileges,
including, without limitation, the attorney-client privilege, shall apply in
arbitration.
(d) Authority. The arbitrator(s) shall have authority to
award relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys' fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
(e) Entry of Judgment. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having in personam and subject
matter jurisdiction. Each party hereby submits to the in personam jurisdiction
of the Federal and State courts in Hillsborough County, Florida for the purpose
of confirming such award and entering judgment thereon.
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(f) Confidentiality. All proceedings under this Article 13
and all evidence given or discovered pursuant hereto, shall be maintained in
confidence by all parties.
(g) Continued Performance. The fact that the dispute
resolution procedures specified in this Section 7 shall have been or may be
invoked shall not excuse any party from performing its obligations under this
Agreement and during the pendency of any such procedure all parties shall
continue to perform their respective obligations in good faith, subject to any
rights to terminate this Agreement that may be available to any party.
(h) Tolling. All applicable statutes of limitation shall
be tolled while the procedures specified in this Section 7 are pending. The
parties will take such action, if any, required to effectuate such tolling.
(i) Expenses of Arbitration. Except as otherwise may be
provided in this Agreement, the expenses of arbitration will be borne equally
the parties, provided that each party will bear the cost of its own experts,
evidence and attorneys' fees, except that, in the discretion of the
arbitrators, any award in arbitration may include attorneys' fees if the
arbitrators expressly determine that the party against whom such an award is
entered has caused the dispute to be submitted to arbitration in bad faith or
as a dilatory tactic. No arbitration will be commenced after the date when
institution of legal or equitable proceedings based upon the same subject
matter would be barred by the applicable statute of limitations.
8. INDEMNIFICATION AND LIABILITY COVERAGE. For the period of
Executive's employment and for five years after the termination of Executive's
employment, the Executive shall be entitled to be covered by, and after
termination of employment shall remain covered by the indemnification rights
and the liability insurance coverage in effect from time to time during
Executive's employment or in effect at the time of Executive's termination, as
the case may be. The Company will use its best efforts to insure that such
indemnification and liability coverage shall at all times be as favorable to
Executive in terms of coverage amounts and coverage terms as the coverage which
exists at Health International, Inc. on the date that the Company was acquired
by the Company, provided that if such insurance coverage is not available at
rates reasonably correspondent to the rates charged at the time of the
acquisition (adjusted for inflation), the Company shall be obligated only to
buy such coverage as is available for such rates and can be commercially
obtained.
9. 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
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If the Company:
▇▇▇▇▇ HealthPlan Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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.
10. 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. 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 no longer in effect. This Agreement shall be
binding upon and inure to the benefit of the Company, its respective successors
and assigns, whether by merger, sale of assets or otherwise, 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 Arizona. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
▇▇▇▇▇ HEALTHPLAN SERVICES, INC.
By:
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▇▇▇▇▇ ▇▇▇▇▇▇, President
"EXECUTIVE"
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
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AMENDED AND RESTATED EXHIBIT A TO EMPLOYMENT AGREEMENT
Term: 5 years
Base Salary: $3,846.15 per week
Additional Consideration: The Company shall pay additional annual consideration
in the amount of $175,000 to Executive payable in
annual installments on April 24th of each year during
the Term.
Fringe Benefits: Same as are provided to the other executives at the
same level
Covenant Not to Compete: The Covenant Not to Compete shall be in force during
the term of the Employment Agreement and for a period
equal to the greater of the unexpired term of the
Employment Agreement at the time of termination of
Executive's Employment (the "Unexpired Employment
Term") or twenty-four (24) months, provided that, to
the extent the term of noncompetition extends beyond
the Unexpired Employment Term, Employer in its sole
discretion may elect to shorten the term of
non-competition to any lesser period it chooses after
the expiration of the Unexpired Employment term.
Severance Payment: $21,875 for each month during which Covenant Not to
Compete is in force. This agreement and restatement
of Exhibit A shall not have any effect on the First
Letter of Credit or Second Letter of Credit described
in Section 6(d) of the Employment Agreement.
Stock Options: Executive and the Company entered into a Stock Option
Agreement dated as of January 22, 1998, pursuant to
which Executive was granted nonqualified options to
purchase 50,000 shares of the Company's common stock
with an exercise price of $3.40 per share which vest
and become exercisable nine years after the date of
grant and will vest and become immediately
exercisable upon the completion of an initial public
offering of the Company's common stock pursuant to an
effective Registration Statement filed under the
Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Exhibit A on the 23rd day of April, 1998.
▇▇▇▇▇ HEALTHPLAN SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇, President
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▇▇▇▇▇ ▇▇▇▇▇▇, President
"EXECUTIVE"
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇