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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of March 1,
1999 (the "Effective Date"), by and between Advance Paradigm, Inc. (the
"Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive").
WHEREAS, the Company and Executive desire to enter into this Agreement
pursuant to which the Company will employ Executive in the capacity of Executive
Vice President, for the period and on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements herein contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT AND DUTIES. The Company hereby employs Executive, and
Executive hereby accepts such employment, in the capacity of Executive Vice
President of the Company to act in accordance with the terms and conditions
hereinafter set forth. During the term of this Agreement, Executive shall devote
his best efforts and all of his business time, attention and skills to the
successful continuation of the business of the Company and he shall perform such
duties, functions, responsibilities and authority in connection with the
foregoing as are from time to time delegated to Executive by the Chief Executive
Officer of the Company. During the term of this Agreement, the parties agrees
that Executive will be based at the Company's corporate headquarters in Irving,
Texas, and that Executive will spend, on average, three (3) days per week at the
Company's headquarters in order to perform duties under this Agreement.
2. TERM. The employment of Executive shall commence on the Effective
Date and shall end on the second anniversary thereof (the "Initial Term")
subject to automatic renewal for a period of one (1) year, unless either party
delivers written notice of its intent to terminate as of the second anniversary
of this Agreement at least 90 days prior to the date of such second anniversary,
or this Agreement is sooner terminated in accordance with the terms hereof.
3. COMPENSATION. In consideration of the services to be rendered by
Executive to the Company hereunder, the Company hereby agrees to pay or
otherwise provide Executive the following compensation and benefits, it being
understood that the Company shall have the right to deduct therefrom all taxes
which may be required to be deducted or withheld therefrom under any provision
of applicable law (including but not limited to Social Security payments, income
tax withholding and other required deductions now in effect or which may become
effective by law any time during the term of this Agreement):
(a) SALARY. Executive shall receive an annual salary of Two
Hundred Fifty Thousand Dollars ($250,000) with such increases thereto as may be
determined by the Company from time to time in its sole discretion ("Base
Salary"), to be paid in biweekly installments in
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accordance with the Company's salary payment practices in effect from time to
time for Executives of the Company.
(b) ADDITIONAL COMPENSATION. In addition to the Base Salary,
Executive shall be entitled to receive the compensation set forth in Exhibit A
attached hereto.
(c) BENEFIT PLANS. Executive shall be entitled to participate
in any health, accident, disability and life insurance programs, and any other
fringe benefit program (including a 401(k) savings plan), which the Company may
adopt and implement for the benefit of the Company's Executives.
(d) EXPENSES. Executive shall be entitled to receive
reimbursement for all reasonable expenses incurred by him in connection with the
fulfillment of his duties hereunder; provided, however, that Executive has
complied with all policies and procedures relating to the reimbursement of such
expenses as shall, from time to time, be established by the Company.
(e) VACATION AND SICK LEAVE. During the term of employment,
Executive shall be permitted to take vacations with such frequency and of such
duration as are consistent with the executive vacation policies of the Company
in effect on the date of this Agreement so long as the absence of Executive does
not interfere in any material respect with the performance by Executive of
Executive's duties hereunder. Executive shall also be entitled to sick leave
according to the sick leave policy which the Company may adopt from time to
time.
4. TERMINATION.
(a) DEATH OR DISABILITY. This Agreement shall terminate
automatically upon the Executive's death. If the Company determines in good
faith that the Disability of the Executive has occurred (pursuant to the
definition of "Disability" set forth below), it may give to the Executive
written notice of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" means Executive's
incapacity due to physical or mental illness which is determined, by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not to be
withheld unreasonably), to prevent Executive's substantial and continuous
performance of his obligations hereunder for a period of more than 12 weeks
after its commencement or for an aggregate of sixteen weeks in any 12-month
period.
(b) CAUSE. The Company may terminate the Executive's
employment for "Cause." For purposes of this Agreement, "Cause" means:
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(i) an act or acts of personal dishonesty taken by
the Executive at the expense of the Company,
(ii) a violation by the Executive of the Executive's
obligations under this Agreement,
(iii) the conviction of the Executive of (A) a
misdemeanor (other than traffic violations or similar misdemeanors)
that adversely affects the Company's business, reputation or standing
in the community, or (B) a felony,
(iv) failure to meet reasonable, written performance
criteria for the Executive's position as established by the Company
from time to time, or
(v) breach of Executive's representation set forth in
Section 11 of this Agreement.
(c) WITHOUT CAUSE. The Company may, at its option, terminate
Executive's employment without Cause at any time upon written notice to
Executive.
(d) GOOD REASON. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
means:
(i) The Company causes Executive's position,
authority, duties or responsibilities to be reduced from the position
described in Section 1 of this Agreement;
(ii) Any material failure by the Company to comply
with the provisions of Section 3 of this Agreement other than
immaterial or isolated failures that do not occur in bad faith and are
remedied by the Company promptly upon notice given by the Executive;
(iii) Any termination by the Company of the Executive
otherwise than as expressly permitted by this Agreement.
(e) NOTICE OF TERMINATION. Any termination by the Company
shall be communicated by Notice of Termination to the Executive hereto given in
accordance with Section 12 of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which
(i) indicates the specific termination provision in
this Agreement relied upon,
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(ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the
termination date.
(f) DATE OF TERMINATION. "Date of Termination" means the date
of receipt of the Notice of Termination or any later date specified therein, as
the case may be; provided, however, that
(i) if the Executive's employment is terminated by
the Company other than for Cause or Disability, the Date of Termination
shall be the date on which the Company notifies the Executive of such
termination, and
(ii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the
date of death of the Executive or the Disability Effective Date, as the
case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is terminated by
reason of the Executive's death, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement, other
than those obligations accrued or earned and vested (if applicable) by the
Executive as of the Date of Termination, including, for this purpose the
obligation to pay the Executive
(i) the Base Salary through the Date of Termination
at the rate in effect on the Date of Termination (the "Base Salary"),
(ii) the amount of any bonus earned by the Executive
through the Date of Termination, and
(iii) any compensation previously deferred by the
Executive (together with accrued interest, if any, thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (such amounts specified in clauses (i), (ii) and (iii) are
hereinafter referred to as "Accrued Obligations").
All such Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination.
(b) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability, this Agreement shall terminate without
further obligations to the
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Executive, other than those obligations accrued or earned and vested (if
applicable) by the Executive as of the Date of Termination, including for this
purpose, all Accrued Obligations. All such Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination.
Executive shall be entitled after the Disability Effective Date to receive
disability benefits provided by the Company to disabled Executives or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, in effect on the Disability Effective Date.
(c) CAUSE. If the Executive's employment shall be terminated
for Cause, the Company's obligations to the Executive shall terminate other than
the obligation to pay to the Executive the Base Salary through the Date of
Termination plus the amount of any compensation previously deferred by the
Executive, if any, consistent with Company policy.
(d) OTHER THAN FOR CAUSE, DISABILITY, OR DEATH. If the
Executive's employment terminates for any reason other than for Cause, death or
disability, the Company shall continue in accordance with the Company's normal
payroll procedures to pay Executive his Base Salary for a period of twelve (12)
months from the Date of Termination. Any amounts payable to Executive under this
Section 5(d) shall be reduced and offset by the amount of any compensation
received by Executive for other employment during the severance period. During
the severance period, Executive shall use his best efforts to find employment
consistent with the covenants of Executive in Section 6, 7 and 8 of this
Agreement.
(e) STOCK OPTIONS. Executive shall have three (3) months from
the Date of Termination to exercise any vested but unexercised options
previously granted to Executive to purchase shares of the Company's Common
Stock. Any such exercise will be in accordance with the terms and conditions of
the applicable stock option plan and stock option agreement.
6. CONFIDENTIALITY. Executive acknowledges that during the course of
his performance of services for the Company he will acquire knowledge with
respect to the Company's business operations, including, by way of illustration,
the Company's existing and contemplated services, products, trade secrets,
ideas, know how, research and development, formulas, models, compilations,
processes, computer code generated or developed, software or programs and
related documentation, business and financial methods or practices, plans,
pricing, operating margins, marketing, merchandising and selling techniques and
information, customer lists, details of customer agreements, sources of supply,
Executive compensation and benefit plans, patient records and data, and other
confidential information relating to the Company's policy, operating strategy,
expansion strategy or business strategy (all of such information herein referred
to as the "Confidential Information"); provided, that the term Confidential
Information shall not include information which is generally known to the public
or the industry other than as a result of Executive's breach. During the term of
his employment and for the one (1) year period thereafter, Executive shall not
use, in any way, or disclose any of the Confidential Information, directly or
indirectly, either during the term of his employment or at any time
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thereafter, except as required in the course of his employment. Executive
acknowledges that all computer code, programs, files, records, documents,
information, data and similar items and documentation relating to the business
of the Company (including all copies thereof), whether prepared by Executive or
otherwise, are the exclusive property of the Company and, upon termination of
Executive's employment with the Company (for whatever reason), Executive shall
not take with him, but shall leave with the Company, all such computer code,
programs, files, records, documents, information, data and similar items and
documentation relating to the business of the Company (including all copies
thereof). The obligations of this Section 6 are continuous and shall survive the
termination of Executive's employment with the Company. The Company acknowledges
that prior to the commencement of this Agreement, Executive has obtained
substantial experience and expertise in the health insurance and managed health
industry and use of that experience and expertise in other employment will not
be deemed a violation of this Agreement.
7. RESTRICTIONS ON COMPETITIVE EMPLOYMENT. During the term of his
employment and for the one (1) year period following termination of Executive's
employment, Executive will not (as an individual, principal, agent, Executive,
consultant, or otherwise), directly or indirectly, in any territory in which the
Company and/or any of its affiliates does business and/or markets its products
and services, engage in activities competitive with, nor render services to any
firm or business engaged or about to become engaged in the Business of the
Company. The Business of the Company includes, but is not limited to, all those
products and services that are presently or hereafter marketed by the Company,
or that are in the development stage at the time of termination of Executive's
employment and are actually marketed by the Company and/or it affiliates
thereafter, as well as, the following businesses: (i) the third party
prescription drug claims processing business; (ii) the organization and
administration of retail pharmacy networks; (iii) the design, development or
marketing of or consulting as to, prescription drug benefit plans; (iv) the
provision of mail service pharmacy; (v) the collection, analysis and/or sale of
data relating to prescription drug utilization; (vi) formulary management and
rebate administration services; (vii) disease state management services; (viii)
conducting clinical trials, medical research, and contract research business;
(ix) conducting health benefit plan surveys, medical efficacy surveys, or NCQA
surveys or related surveys; and (x) any other business in which the Company
and/or any of its affiliates is then engaged as to which Executive has
involvement in the course of his employment hereunder and/or acquired or
received Confidential Information. The Company acknowledges that prior to the
commencement of this Agreement, Executive has obtained substantial experience
and expertise in the health insurance and managed health industry and use of
that experience and expertise in other employment will not be deemed a violation
of this Agreement.
8. NONINTERFERENCE. Executive agrees that during the term of his
employment and for the one (1) year period following the termination of
Executive's employment by the Company, Executive shall not, directly or
indirectly, whether as principal, agent, officer, Executive, investor,
consultant, stockholder, or otherwise, alone or in association with any other
person:
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(a) Induce or attempt to influence, directly or indirectly,
any Executive of the Company or any subsidiary to terminate his or her
employment with the Company or any subsidiary of the Company,
(b) Disparage the good name or reputation of the Company, the
Company's affiliates, or business of the Company or engage in any conduct that
brings the Company, the Company's affiliates, or the Company's business into
public ridicule or disrepute; or
(c) Solicit, induce or encourage any customer, prospective
customer, consultant, independent contractor or supplier of the Company for the
purpose of offering products or services that, directly or indirectly, compete
or interfere with the Business of the Company. For purposes of this section,
"prospective customer" shall mean any party who has had contact with Company or
its subsidiaries within the six-month period immediately preceding termination
of employment hereunder.
9. INVENTIONS AND PATENTS. Executive agrees that all inventions, ideas,
innovations, improvements or discoveries relating to the business of the Company
or the Company's method of conducting business (including new contributions,
improvements, ideas and discoveries, whether patentable or copyrightable or not)
conceived or made by him during his employment with the Company shall be, and
hereby are, assigned to the Company. Executive will promptly disclose such
inventions, ideas, innovations or improvements to his supervisor or Chief
Executive Officer of the Company and perform all actions reasonably requested by
his supervisor or Chief Executive Officer to establish and confirm such
ownership. The expense of securing any such patents shall be borne by the
Company.
10. NO OTHER BUSINESS. During the term of Executive's employment,
Executive agrees that he will not, directly or indirectly, except with the
express written consent of the Board of Directors or the Chief Executive Officer
of the Company, become engaged in, render services to, permit his name to be
used in connection with, own, manage, operate, control, be employed by,
participate in, consult with, or be connected in any manner, whether as an
officer, director, Executive, agent, consultant, stockholder (other than as the
holder of less than 2% of the aggregate outstanding shares of a class of equity
securities publicly traded on a national securities exchange or quotation
system) or other capacity with the ownership, management, operation or control
of, any business or enterprise other than the Business of the Company.
11. NO CONFLICTS. Executive represents to the Company that Executive
has neither entered into nor is bound by any agreement or obligation, whether
written or verbal, direct or indirect, that prohibits or impedes Executive's
ability to perform his obligations hereunder, including without limitation any
agreement not to compete or agreement to solicit health plan payors.
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12. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and deemed to have been given when
delivered in person or when dispatched by telegram or electronic facsimile
transfer (confirmed in writing by mail, registered or certified, return receipt
requested, postage prepaid, simultaneously dispatched) to the addressees at the
addresses specified below.
IF TO EXECUTIVE:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IF TO THE COMPANY: Advance Paradigm, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or fax number as either party may from time to time
designate in writing to the other.
13. SURVIVAL. No termination of Executive's employment (for whatever
reason) shall reduce or terminate Executive's covenants and agreements in
Sections 6, 7 and 8 hereof.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto relating to the subject matter hereof, and supersedes
all prior agreements and understandings, whether oral or written, with respect
to the same. No modification, alteration, amendment or recision of or supplement
to this Agreement shall be valid or effective unless the same is in writing and
signed by the parties hereto.
15. GOVERNING LAW. This Agreement and the rights and duties of the
parties hereunder shall be governed by, construed under and enforced in
accordance with the laws of the State of Texas.
16. ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. The rights, duties and
obligations under this Agreement are assignable by the Company to a successor of
all or substantially all of the business or assets of the Company. The rights,
duties and obligations of Executive under this Agreement shall not be
assignable.
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17. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision in any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein except that
any court having jurisdiction shall have the power to reduce the duration, area
or scope of such invalid, illegal or unenforceable provision and, in its reduced
form, it shall be enforceable. It is the intent of the parties hereto that the
provisions hereof be enforceable to the fullest extent permitted by applicable
law. This agreement may be enforced by the Company or any of its affiliates
engaged in the Business.
18. REMEDIES. The parties to this Agreement shall be entitled to
enforce his or its rights under this Agreement specifically, to recover damages
(including, without limitation, reasonable fees and expenses of counsel) by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in his or its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach or
threatened breach of the provisions of this Agreement and that any party may in
his or its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement. Such
injunction or decree shall be available without the posting of any bond or other
security.
19. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, with the same effect as if the parties had signed the
same document. All such counterparts shall be deemed an original, shall be
construed together and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ADVANCE PARADIGM, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
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EXECUTIVE
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT "A"
FRINGE BENEFITS
1. Stock Options. Executive shall be granted an incentive option (the
"Option") to purchase 60,000 shares of the Common Stock (the "Shares")
of the Company. The Option shall be subject to and granted under the
Company's Amended and Restated Incentive Stock Option Plan (the
"Plan"). The Option shall be vested and become exercisable as to 25% of
the total Shares on each of the first four anniversaries of the
Effective Date. The exercise price shall be the fair market value of
the Common Stock of the Company as of the Effective Date, as determined
by averaging the closing price of the Common Stock quoted on NASDAQ for
the five (5) trading days preceding the Effective Date. The Option
shall be immediately exercisable in full upon a Change of Control of
the Company.
2. Incentive Bonus. Executive will be entitled to participate in the
Company's incentive compensation plan for an annual bonus based on the
Company's audited financial performance for the fiscal year as well as
Executive's individual contribution to the Company. The performance
criteria used to calculate the Executive's Annual Bonus during the
Employment Period shall be determined by the Employer and will be
established with a targeted bonus of 70% of Executive's Salary per
annum. Any Annual Bonus payable with respect to a fiscal year shall be
subject to the approval of the Compensation Committee of the Board of
Directors and shall be paid in accordance with the Employer's normal
payroll practices.
3. Apartment Allowance. The Company shall make available for Executive's
use in connection with performance of his duties under this Agreement a
corporate apartment in the Dallas/Fort Worth metroplex for the term of
this Agreement.
4. Car Allowance. Executive shall be provided an $800.00 per month car
allowance to be used while Executive is performing services under this
Agreement in the Dallas/Fort Worth area. At year end, the value of this
benefit will be reported as required by the IRS regulations on
Executive's Form W-2.
5. Club Membership. Executive shall be provided a court or racquet club
membership to the Las Colinas Sports Club. Cost of such membership
shall be paid by the Company.
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