AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of March 1, 2009, by and between HMS
HOLDINGS CORP. a New York corporation (the “Company”), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the “Employee”).
WITNESSETH :
WHEREAS the Company, as the successor to Health Management Systems, Inc., and the Employee
have entered into an Employment Agreement, dated as of January 1, 2003, as amended as of December
31, 2005 (as so amended, the “Prior Agreement”); and
WHEREAS the Company and the Employee desire to amend and restate the Prior Agreement in its
entirety; and
WHEREAS the Company desires to continue the employment of the Employee for the period provided
in this Agreement, and the Employee is willing to continue such employment with the Company, all in
accordance with the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and the mutual covenants
contained herein, the parties hereto hereby covenant and agree to amend and restate the Prior
Agreement as follows:
1. Employment.
(a) The Company hereby agrees to employ the Employee, and the Employee hereby agrees to accept
such employment with the Company, beginning on the date hereof and continuing for the period set
forth in Section 2 hereof, all upon the terms and conditions hereinafter set forth.
(b) The Employee affirms and represents that as of the commencement of his employment by the
Company on the date hereof he is under no obligation to any former employer or other party that is
in any way inconsistent with, or that imposes any restriction upon, the Employee’s acceptance of
employment hereunder with the Company, the employment of the Employee by the Company, or the
Employee’s undertakings under this Agreement.
2. Term of Employment.
(a) Unless earlier terminated as provided in this Agreement, the term of the Employee’s
employment under this Agreement shall be for a period beginning on the date hereof and
ending on February 28, 2011 (the “Term”).
(b) The period from the date hereof until February 28, 2011 or, in the event that the
Employee’s employment hereunder is earlier terminated as provided herein, such shorter
period, as the case may be, is hereinafter called the “Employment Term”.
3. Duties. The Employee shall be employed as the President and Chief Executive
Officer of the Company, shall faithfully and competently perform such duties as inhere in
such positions and as are specified in the By-laws of the Company and shall also perform and
discharge such other executive employment duties and responsibilities as the Board of
Directors of the Company (the “Board of Directors”) shall from time to time determine. The
Employee shall perform his duties principally at such offices of the Company and its
subsidiaries as their respective businesses shall require, from time to time, with such
travel to such other locations from time to time as the Board of Directors may reasonably
prescribe. Except as may otherwise be approved in advance by the Board of Directors, and
except during vacation periods and reasonable periods of absence due to sickness, personal
injury or other disability, the Employee shall devote his full business time throughout the
Employment Term to the services required of him hereunder. The Employee shall render his
business services exclusively to the Company and its subsidiaries during the Employment Term
and shall use his best efforts, judgment and energy to improve and advance the business and
interests of the Company and its subsidiaries in a manner consistent with the duties of his
positions. Nothing contained in this Section 3 shall preclude the Employee from performing
services for charitable or not-for-profit community organizations, provided that such
activities do not interfere with the Employee’s performance of his duties and
responsibilities under this Agreement.
4. Salary and Bonus.
(a) Salary. As compensation for the performance by the Employee of the
services to be performed by the Employee hereunder during the Employment Term, the Company
shall pay the Employee a base salary at the annual rate of Four Hundred Thousand Dollars
($400,000), ) (said amount, together with any increases thereto as may be determined from
time to time by the Board of Directors in its sole discretion, being hereinafter referred to
as “Salary”). Any Salary payable hereunder shall be paid in regular intervals in accordance
with the Company’s payroll practices from time to time in effect.
(b) Bonus. The Employee shall be eligible to receive bonus compensation from
the Company in respect of each fiscal year (or portion thereof) during the Employment Term,
in each case as may be determined by the Board of Directors in its sole discretion on the
basis of performance-based or such other criteria as may be established from time to time by
the Board of Directors in its sole discretion. The Employee’s target bonus shall be equal
to 65% of his Salary.
5. Other Benefits. During the Employment Term, the Employee shall:
(a) be eligible to participate in employee fringe benefits and pension and/or profit
sharing plans that may be provided by the Company for its senior executive employees in
accordance with the provisions of any such plans, as the same may be in effect from time to
time;
(b) be eligible to participate in any medical and health plans or other employee
welfare benefit plans that may be provided by the Company for its senior
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executive employees in accordance with the provisions of any such plans, as the same
may be in effect from time to time;
(c) be entitled to the number of paid vacation days in each calendar year determined by
the Company from time to time for its senior executive officers, provided that such number
of paid vacation days in each calendar year shall not be less than twenty work days (four
calendar weeks); the Employee shall also be entitled to all paid holidays given by the
Company to its senior executive officers;
(d) be eligible for consideration by the Board of Directors for awards of stock options
under any stock option plan that may be established by the Company for its and its
subsidiaries’ key employees, the amount, if any, of shares for which options may be granted
to Employee to be in the sole discretion of the Board of Directors;
(e) be entitled to sick leave, sick pay and disability benefits in accordance with any
Company policy that may be applicable to senior executive employees from time to time; and
(f) be entitled to reimbursement for all reasonable and necessary out-of-pocket
business expenses incurred by the Employee in the performance of his duties hereunder in
accordance with the Company’s normal policies from time to time in effect.
6. Confidential Information. The Employee hereby covenants, agrees and
acknowledges as follows:
(a) The Employee has and will have access to and will participate in the development of
or be acquainted with confidential or proprietary information and trade secrets related to
the business of the Company and any present or future subsidiaries or affiliates of the
Company (collectively with the Company, the “Companies”), including but not limited to (i)
customer lists; claims histories, adjustments and settlements and related records and
compilations of information; the identity, lists or descriptions of any new customers,
referral sources or organizations; financial statements; cost reports or other financial
information; contract proposals or bidding information; business plans; training and
operations methods and manuals; personnel records; software programs; reports and
correspondence; and management systems, policies or procedures, including related forms and
manuals; (ii) information pertaining to future developments such as future marketing or
acquisition plans or ideas, and potential new business locations; (iii) confidential or
non-public information relating to business operations and strategic plans of third parties
with which the Companies have or may be assessing commercial arrangements (“Third Party
Information”) and (iv) all other tangible and intangible property, that are used in the
business and operations of the Companies but not made public. The information and trade
secrets relating to the business of the Companies described herein above (including Third
Party Information) in this paragraph (a) are hereinafter referred to collectively as the
“Confidential Information”, provided that the term Confidential Information shall not
include any information (x) that is or becomes generally publicly available (other than as a
result of violation of this Agreement by the Employee), (y) that the Employee receives on a
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nonconfidential basis from a source (other than the Companies or their representatives)
or, in the case of Third Party Information, from a source (other than the Companies, the
third parties to which such information relates or their respective representatives) that is
not known by him to be bound by an obligation of secrecy or confidentiality to any of the
Companies (or such third parties, in the case of Third Party Information) or (z) that was in
the possession of the Employee prior to disclosure by the Companies (or such third parties,
in the case of Third Party Information).
(b) The Employee shall not disclose, use or make known for his or another’s benefit any
Confidential Information or use such Confidential Information in any way except as is in the
best interests of the Companies in the performance of the Employee’s duties under this
Agreement. The Employee may disclose Confidential Information when required by a third party
and applicable law or judicial process, but only after providing immediate notice to the
Company at any third party’s request for such information, which notice shall include the
Employee’s intent with respect to such request.
(c) The Employee acknowledges and agrees that a remedy at law for any breach or
threatened breach of the provisions of this Section 6 would be inadequate and, therefore,
agrees that the Companies shall be entitled to injunctive relief in addition to any other
available rights and remedies in case of any such breach or threatened breach by the
Employee (and the Employee hereby waives any requirement that any of the Companies provide a
bond or other security in connection with the issuance of any such injunction); provided,
however, that nothing contained herein shall be construed as prohibiting the Companies from
pursuing any other rights and remedies available for any such breach or threatened breach.
(d) The Employee agrees that, upon termination of his employment with the Company for
any reason, the Employee shall forthwith return to the Company all Confidential Information
in whatever form maintained (including, without limitation, computer discs and other
electronic media).
(e) The obligations of the Employee under this Section 6 shall, except as otherwise
provided herein, survive the termination of the Employment Term and the expiration or
termination of this Agreement.
(f) Without limiting the generality of Section 10 hereof, the Employee hereby expressly
agrees that the foregoing provisions of this Section 6 shall be binding upon the Employee’s
heirs, successors and legal representatives.
7. Termination.
(a) The Employee’s employment hereunder shall be terminated upon the occurrence of any
of the following:
(i) the death of the Employee;
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(ii) the Employee’s inability to perform his duties on account of disability
or incapacity for a period of one hundred eighty (180) or more days, whether
or not consecutive, within any period of twelve (12) consecutive months;
(iii) the Company giving written notice, at any time, to the Employee that
the Employee’s employment is being terminated “for cause” (as defined
below);
(iv) the Company giving written notice, at any time, to the Employee that
the Employee’s employment is being terminated other than pursuant to clause
(i), (ii) or (iii) above; or
(v) the Employee terminates his employment hereunder for any reason
whatsoever (whether by reason of retirement, resignation or otherwise).
The following actions, failures and events by or affecting the Employee shall
constitute “cause” for termination within the meaning of clause (iii) above: (A) a
conviction of the Employee of, or the entering of a plea of nolo contendere by the Employee
with respect to, a felony, (B) dependence on, or habitual abuse of, controlled substances or
alcohol (in the case of alcohol abuse, that has a material adverse affect on Employee’s
performance of his obligations under this Agreement) or acts of dishonesty by the Employee
that are materially detrimental to one or more of the Companies, (C) willful misconduct by
the Employee that materially damages the business of one or more of the Companies, (D) gross
negligence by the Employee in the performance of, or willful disregard by the Employee of,
his material obligations under this Agreement or otherwise relating to his employment, which
gross negligence or willful disregard continues unremedied for a period of fifteen (15) days
after written notice thereof to the Employee or (E) failure by the Employee to obey the
reasonable and lawful orders and policies of the Board of Directors that are material to and
consistent with the provisions of this Agreement (provided that, in the case of an
indictment described in clause (A) above, and in the case of clauses (B), (C) and (E) above,
the Employee shall have received written notice of such proposed termination (which notice
shall state the Sections of this Agreement pursuant to which such termination is being
effected and a description of the facts supporting such termination) and a reasonable
opportunity, together with the Employee’s counsel, to discuss the matter with the Board of
Directors, followed by a notice that the Board of Directors adheres to its position).
(b) In the event that (1) the Employee’s employment terminates pursuant to clause (i)
or (ii) of Section 7(a) above or is terminated by the Company pursuant to clause (iv) of
Section 7(a) above, or (2) the Employee terminates his employment within 45 days of a Change
of Control Transaction (as hereinafter defined), then (i) during the period beginning on the
date of such termination and ending on the last day of the Applicable Period (as defined in
Section 9(a)), the Company shall pay to the Employee, as severance pay or liquidated damages
or both, monthly payments equal to one-twelfth of the rate per annum of the sum of his
Salary at the time of such termination, plus his 65% target bonus, provided, however, that
no such payments shall be required to
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be made if the Employee fails to comply with his obligations under Section 9 below; and
(ii) the Company shall continue to provide the Employee with the health insurance benefits
provided to other employees of the Company (including employer contributions) from the date
of such termination until the earlier of (i) the last day of the Applicable Period or (ii)
the date upon which the Employee becomes eligible for coverage under the health insurance
plan of another employer. For avoidance of doubt, the Company and the Employee acknowledge
that the obligations of the Company under the preceding sentence do not apply in the event
the Employee’s employment is terminated pursuant to Section 7(a)(iii) for “cause” or
voluntarily by the Employee other than in connection with a Change of Control Transaction.
For purposes of this Agreement, a “Change of Control Transaction” means the sale or
transfer of all or substantially all of the assets of the Company or any merger,
consolidation or other transaction that would result in the transfer, directly or
indirectly, of more than 50% of the then outstanding capital stock of the Company to holders
who were not holders of its capital stock immediately prior to such merger. It is understood
by the Company and the Employee that “a sale of substantially all” the Company’s assets may
occur, for purposes of the New York Business Corporation Law, but that such an event will
not constitute a “Change of Control Transaction” for purposes of this Agreement unless the
Company has sold all its significant lines of business and intends to limit its future
activities to the distribution of the proceeds of such transaction.
(c) Notwithstanding anything to the contrary expressed or implied herein, except as
required by applicable law and except as set forth in Section 7 (b) above, the Company (and
its affiliates) shall not be obligated to make any payments to the Employee or on his behalf
of whatever kind or nature by reason of the Employee’s cessation of employment (including,
without limitation, by reason of termination of the Employee’s employment by the Company for
“cause”), other than (i) such amounts, if any, of his Salary as shall have accrued and
remained unpaid as of the date of said cessation and (ii) such other amounts, if any, that
may be then otherwise payable to the Employee pursuant to the terms of the Company’s
benefits plans.
(d) No interest shall accrue on or be paid with respect to any portion of any payments
hereunder.
8. Non-Assignability.
(a) Neither this Agreement nor any right or interest hereunder shall be assignable by
the Employee or his beneficiaries or legal representatives without the Company’s prior
written consent; provided, however, that nothing in this Section 8 (a) shall preclude the
Employee from designating a beneficiary to receive any benefit payable hereunder upon his
death or incapacity.
(b) Except as required by law, no right to receive payments under this Agreement shall
be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge or hypothecation or to exclusion, attachment, levy or
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similar process or to assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no effect.
9. Restrictive Covenants.
(a) Competition. During the Employment Term and during the Applicable Period
(as defined below), the Employee shall not directly or indirectly (as a director, officer,
executive employee, manager, consultant, independent contractor, advisor or otherwise)
engage in competition with, or own any interest in, perform any services for, participate in
or be connected with any business or organization that engages in competition with the
Company or any of its subsidiaries within the meaning of Section 9 (d), provided, however,
that the provisions of this Section 9 (a) shall not be deemed to prohibit the Employee’s
ownership of not more than two percent (2%) of the total outstanding shares of common stock
of any publicly held company, or ownership, whether through direct or indirect stock
holdings or otherwise, of one percent (1%) or more of the equity of any other business. For
purposes of this Agreement, the “Applicable Period” shall mean the twenty four (24) month
period following the termination of the Employee’s employment hereunder for any reason
whatsoever.
(b) Non-Solicitation. During the Employment Term and during the Applicable
Period, the Employee shall not directly or indirectly induce or attempt to induce any
employee of the Company or any of its subsidiaries to leave the employ of the Company or
such subsidiary, or in any way interfere with the relationship between the Company or any of
its subsidiaries and any employee thereof.
(c) Non-Interference. During the Employment Term and during the Applicable
Period, the Employee will not directly or indirectly hire, engage, send any work to, place
orders with, or in any manner be associated with any supplier, contractor, subcontractor or
other business relation of the Company or any of its subsidiaries if such action would be
known by him to have a material adverse effect on the business, assets or financial
condition of the Company or any of its subsidiaries or materially interfere with the
relationship between any such person or entity and the Company or any of its subsidiaries.
(d) Certain Definitions. For purposes of this Section 9, a person or entity
(including, without limitation, the Employee) shall be deemed to be a competitor of the
Company or any of its subsidiaries, or a person or entity (including, without limitation,
the Employee) shall be deemed to be engaging in competition with the Company or any of its
subsidiaries, if such person or entity engages in any business engaged in by the Company or
such subsidiary at the time of termination of the Employee’s employment with the Company, in
either case in the geographic region encompassing the service areas in which the Company or
any of its subsidiaries conduct, or had an established plan to begin conducting, their
businesses at the time of termination of the Employee’s employment with the Company.
(e) Certain Representations of the Employee. In connection with the foregoing
provisions of this Section 9, the Employee represents that his experience,
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capabilities and circumstances are such that such provisions will not prevent him from
earning a livelihood. The Employee further agrees that the limitations set forth in this
Section 9 (including, without limitation, time and territorial limitations) are reasonable
and properly required for the adequate protection of the current and future businesses of
the Company and its subsidiaries. It is understood and agreed that the covenants made by the
Employee in this Section 9 (and in Section 6 hereof) shall survive the expiration or
termination of this Agreement.
(f) Injunctive Relief. The Employee acknowledges and agrees that a remedy at
law for any breach or threatened breach of the provisions of Section 9 hereof would be
inadequate and, therefore, agrees that the Company and any of its subsidiaries shall be
entitled to injunctive relief in addition to any other available rights and remedies in
cases of any such breach or threatened breach (and the Employee hereby waives any
requirement that the Company or any such subsidiary provide a bond or other security in
connection with the issuance of any such injunction); provided, however, that nothing
contained herein shall be construed as prohibiting the Company or any of its subsidiaries
from pursuing any other rights and remedies available for any such breach or threatened
breach.
10. Binding Effect. Without limiting or diminishing the effect of the
provisions affecting assignment of this Agreement, this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
11. Notices. All notices that are required or may be given pursuant to the
terms of this Agreement shall be in writing and shall be sufficient in all respects if given
in writing and (i) delivered personally, (ii) mailed by certified or registered mail, return
receipt requested and postage prepaid, (iii) sent via a nationally recognized overnight
courier or (iv) sent via facsimile confirmed in writing to the recipient, if to the Company
at the Company’s principal place of business, and if to the Employee, at his home address
most recently filed with the Company, or to such other address or addresses as either party
shall have designated in writing to the other party hereto, provided, however, that any
notice sent by certified or registered mail shall be deemed delivered on the date of
delivery as evidenced by the return receipt.
12. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
13. Severability. The Employee agrees that in the event that any court of
competent jurisdiction shall finally hold that any provision of Section 6 or 9 hereof is
void or constitutes an unreasonable restriction against the Employee, the provisions of such
Section 6 or 9 shall not be rendered void but shall apply with respect to such extent as
such court may judicially determine constitutes a reasonable restriction under the
circumstances. If any part of this Agreement other than Section 6 or 9 is held by a court of
competent jurisdiction to be invalid or incapable of being enforced in whole or in part by
reason of any rule of law or public policy, such part shall be deemed to be severed from the
remainder of this Agreement for the purpose only of the particular legal
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proceedings in question and all other covenants and provisions of this Agreement shall
in every other respect continue in full force and effect and no covenant or provision shall
be deemed dependent upon any other covenant or provision.
14. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term, covenant or
condition, nor shall any waiver or relinquishment of any right or power hereunder at any one
or more times be deemed a waiver or relinquishment of such right or power at any other time
or times.
15. Arbitration. With the exception of any dispute regarding the Employee’s
compliance with the provisions of Sections 6 and 9 above, any dispute relating to or arising
out of the provisions of this Agreement shall be decided by arbitration in New York, New
York, in accordance with the Expedited Arbitration Rules of the American Arbitration
Association then obtaining, unless the parties mutually agree otherwise in a writing signed
by both parties. This undertaking to arbitrate shall be specifically enforceable. The
decision rendered by the arbitrator will be final and judgment may be entered upon it in
accordance with appropriate laws in any court having jurisdiction thereof. Each of the
parties shall pay his or its own legal fees associated with such arbitration.
16. Entire Agreement; Modifications. This Agreement constitutes the entire and
final expression of the agreement of the parties with respect to the subject matter hereof
and supersedes all prior agreements, oral and written, between the parties hereto with
respect to the subject matter hereof. This Agreement may be modified or amended only by an
instrument in writing signed by both parties hereto.
17. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have duly executed and delivered this
Agreement as of the day and year first above written.
AGREED AND ACCEPTED TO:
|
HMS HOLDINGS CORP. | |
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
|
/s/ ▇▇▇▇▇▇ ▇. Holster | |
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
|
By: ▇▇▇▇▇▇ ▇. Holster | |
| Title: Chairman |
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