Exhibit 10.118
EMPLOYMENT AGREEMENT
This AGREEMENT is made this 1st day of May, 1999 ("Effective Date") by
and between First Health Group Corp., a Delaware corporation
headquartered in Illinois ("Company"), and Xxxxx X. Xxxxxxxxx
("Employee").
BACKGROUND
A. Company desires to employ Employee, and Employee desires to be
employed by Company.
B. For and in consideration of the promises and of the mutual
covenants hereinafter set forth, it is hereby agreed by and between the
parties as follows:
AGREEMENT
1. Employment. Company hereby agrees to employ Employee to perform
the duties set forth in Section 3 hereof ("Employee Services").
Employee hereby accepts employment to perform Employee Services for
Employer under the terms and conditions of this Agreement.
2. Term. The Initial Term of this Agreement will be for three
years years beginning on the Effective Date and will automatically
renew, unless earlier terminated pursuant to Section 6 hereof.
3. Duties. Employee will serve as Executive Vice President,
Provider Networks, or such other position as otherwise agreed from time
to time by the parties, and perform all responsibilities and duties as
are assigned, or delegated to Employee. Performance by Employee in any
other position will be conclusive evidence of Employee's acceptance of
the position. Employee represents that Employee's employment by
Company and performance of the position will not violate or interfere
with any employment-related agreement Employee may have entered into
with any previous employer (a "Prior Employment Agreement").
4. Time Commitment. Employee will devote Employee's time,
attention and energies to the performance of Employee Services.
Employee may not be associated with, consult, advise, work for, be
employed by, contract with, or otherwise devote any of the Employee's
time to the pursuit of any other work or business activities which may
interfere with the performance of services hereunder.
5. Compensation and Benefits. Company will pay the following
compensation to Employee in full consideration for performance of
Employee Services hereunder in accordance with Company's then-current
payroll policies and procedures.
(a) Salary. Employee will receive an annual salary of
$255,000.00. This salary is payable in accordance with Company's then
- current payroll policies and procedures. The annual salary may be
subject to periodic increases as may be approved by Company.
(b) Expenses. Company will reimburse Employee for all reasonable
and necessary expenses incurred by Employee in connection with the
performance of Employee Services upon submission by Employee of expense
reports with substantiating vouchers, in accordance with the Company's
then-current expense reimbursement policy.
(c) Stock Options. Employee will be awarded the option to
purchase 200,000 shares of Company common stock, adjusted for any stock
splits, set by the Board of Directors of Company in accordance with the
Company Stock Option Plan (the "Stock Options"). The award of the
Stock Options is subject to (i) approval of the Board of Directors; and
(ii) execution by Employee of the then-current Stock Option Agreement.
(d) Benefits and Flexible Time Off. Employee shall be
entitled to participate in such group life insurance, major medical,
and other employee benefit plans (collectively "Benefit Plans") as
established by Company in accordance with the applicable terms and
conditions of such Benefit Plans, which Benefit Plans may be modified
or discontinued by Company at any time; provided, however that Employee
shall meet the requirements of the Benefit Plans for participation and
in no event, including breach or wrongful termination of this
Agreement, shall Employee be entitled to any amount of compensation in
lieu of participation, unless otherwise provided by the terms of the
Benefit Plan.
Employee shall also be entitled to paid time off in
accordance with Company's then-current Flexible Time Off (FTO) program.
Employee shall accrue such FTO at the rate specified in the FTO
program. Flexible Time Off shall be taken with due consideration for
the services required of Employee and to the requirements of Company.
(e) Incentive or Bonus Compensation. Employee may be
eligible to receive incentive or bonus compensation based on factors
established by Company in its sole discretion. Incentive or bonus
payments, if any, shall be made in accordance with the then-effective
applicable Company incentive or bonus plan as hereafter established in
Company's sole discretion (the "Incentive Plan"). Unless otherwise
specifically provided in the Incentive Plan, earned incentive
compensation will be paid only while Employee is actively employed by
Company; accordingly, if Employee ceases to be actively employed by
Company, Employee will only receive a prorated portion of the earned
incentive compensation for the period Employee was actively employed by
Company. In the event the incentive or bonus compensation is
calculated on an annual basis subsequent to Employee's termination,
Employee will not be eligible to receive payment.
(f) Commissions. All insurance sales commissions, if any,
earned or received by Employee in connection with the employment of
Employee pursuant to this Agreement shall be the sole and exclusive
property of Company or its subsidiary companies, even if such
commissions are earned or received by Employee after termination of
this agreement.
6. Termination.
(a) Either party may terminate this Agreement at any time
following the Initial Term, without cause and without any liability to
Company, upon no less than one hundred and twenty (120) day's prior
written notice. In such event, Employee, if requested by Company, will
continue to render Employee Services and be paid Employee's regular
compensation up to the date of termination in accordance with Company's
then-current payroll policies and procedures.
(b) Either party may terminate this Agreement at anytime for
cause upon 14 days written notice. "Cause" includes, without
limitation, breach of any provision of this Agreement or Employee's
failure to adhere to the Company's policies and procedures, which
failure is subject to cure, e.g. dress or behavior requirements. If
the cause is not cured within the 14 day period, the Agreement may then
be terminated by written notice. An opportunity to cure is not
required if the party receiving notice of termination has previously
been given notice of termination and the opportunity to cure the same
or similar cause.
(c) Company may terminate this Agreement by written notice at
anytime (including during the Initial Term) immediately for the
following reasons: (i) Death or legal incapacity of Employee; (ii)
Employee's conviction of a felony; (iii) violation of the Company's
policies not subject to cure; (iv) willful violation of the Company's
policies or standards including without limitation, Corporate
Compliance standards, confidentiality and nondisclosure; (iv) theft or
dishonesty; or (v) the occurrence of any claim or threatened claim
against Employee and/or Company relating to any Prior Employment
Agreement.
(d) Company may terminate at any time (including during the
Initial Term) by written notice upon Employee's other incapacity or
inability to perform Employee Services for a period of at least 90
consecutive days because of impairment of Employee's physical, or
mental health making it impossible or impractical for Employee to
perform Employee Services.
(e) Notwithstanding any other provisions of this Employment
Agreement, employee may terminate employment from the Company at any
time, including during the Initial Term, with 30 days notice due solely
to a change in control of the Company and (i) his refusal to accept a
reduction in base salary compensation; (ii) a material dimunition in
job responsibilities; or (iii) a required relocation of the employee's
residence. Employee's right to terminate under this provision will
expire 60 days after it arises.
"change in control" for the purposes of this provision means
either
(1) the ownership (whether direct or indirect) of shares in
excess of 20 percent of the outstanding shares of common
stock of the Company by a person or group of persons, or
(2) the occurrence of any transaction relating to the
Company required to be described pursuant to the
requirements of item 14 of Schedule 14A of Regulation
14A of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, or
(3) any change in the composition of the Board of Directors
of the Company resulting in a majority of the present
directors of the Company not constituting a majority two
years hence provided, that in making such determination
directors who were elected by, or on the recommendation
of, such present majority, shall be excluded.
If Employee exercises his right to terminate under this
provision, Employee will receive as severence a cash payment equal to
two years of salary at the rate in effect on the date of termination.
Such payment will include all severance due to Employee under any
Company severance plan but is not inclusive of any other benefit or
right due or available to Employee under any other Company plan.
7. Confidentiality. Employee agrees not to directly or indirectly
use or disclose, for the benefit of any person, firm or entity other
than Company and its subsidiary companies, the Confidential Business
Information of Company. Confidential Business Information means
information or material which is not generally available to or used by
others or the utility or value of which is not generally known or
recognized as a standard practice, whether or not the underlying
details are in the public domain, including but not limited to its
computerized and manual systems, procedures, reports, client lists,
review criteria and methods, financial methods and practices, plans,
pricing and marketing techniques as well as information regarding
Company's past, present and prospective clients and their particular
needs and requirements, and their own confidential information.
Upon termination of employment under this Agreement, with or
without cause, Employee agrees to return to Company all policy and
procedure manuals, records, notes, data, memoranda, and reports of any
nature (including computerized and electronically stored information)
which are in Employee's possession and/or control which relate to (i)
the Confidential Business Information of Company, (ii) Employee's
employment with Company, or (iii) the business activities or facilities
of Company or its past, present, or prospective clients.
8. Restrictive Covenant. During the period of employment and for a
period of one year from the date of termination of employment under
this Agreement, with or without cause, Employee will not directly or
indirectly, within the United States or in any foreign market in which
Employee was engaged in activities on behalf of Company, own, engage in
or participate in, in any way, any business which is similar to or
competitive with any actual or planned business activity engaged in or
planned by Company at the time the employment under this Agreement was
terminated, if in the course of such ownership or employment, it could
reasonably be anticipated that Employee would be required to use or
disclose the Confidential Business Information of Company. However,
this Agreement shall not prohibit ownership of up to 2% of the shares
of stock of any such corporation whose stock is listed on a national
securities exchange or is traded in the over-the-counter market.
Employee further agrees that, for a period of one year after
termination of employment under this Agreement, with or without cause,
Employee will promptly notify Company of any business with whom
Employee is associated or in which has an ownership interest and
provide Company with a description of Employee's duties or interests.
For a period of one year after termination of employment under
this Agreement, with or without cause, Employee will not directly or
indirectly, for the purpose of selling services and/or products
provided or planned by Company at the time the employment under this
Agreement was terminated, call upon, solicit or divert any actual
customer or prospective customer of Company, unless employed by Company
to do so. An actual customer, for purposes of this Section, is any
customer to whom Company has provided services and/or products within
one year prior to Employee's termination of employment under this
Agreement. A prospective customer, for purposes of this Section, is
any prospective customer to whom Company sought to provide services
and/or products within one year prior to the date of Employee's
termination of employment under this Agreement and Employee has
knowledge of or was involved in such solicitation.
9. Non-Solicitation of Employees. Employee further agrees that for
a period of one year from the date of Employee's termination of
employment under this Agreement, with or without cause, Employee shall
not directly or indirectly solicit or hire any person who is currently
or was an employee of Company at any time during the twelve months
prior to Employee's termination of employment under this Agreement.
10. Remedies. In the event Employee breaches or threatens to breach
Sections 7, 8 or 9 of this Agreement, Company shall be entitled to
injunctive relief, enjoining or restraining such breach or threatened
breach. Employee acknowledges that Company's remedy at law is
inadequate and that Company will suffer irreparable injury if such
conduct is not prohibited.
Employee and Company agree that, because of the difficulty of
ascertaining the amount of damages in the event that Employee breaches
Section 9 of this Agreement, Company shall be entitled to recover, at
its option, as liquidated damages and not as a penalty, a sum equal to
one year's annual salary of the employee(s) solicited to leave
Company's employ. The parties further agree that the existence of this
remedy will not preclude employer from seeking or receiving injunctive
relief.
Employee further agrees that the covenants contained in Sections
7, 8 or 9 shall be construed as separate and independent of other
provisions of this Agreement and the existence of any claim by Employee
against Company shall not constitute a defense to the enforcement by
Company of either of these paragraphs.
11. Property Rights. All discoveries, designs, improvements, ideas,
inventions, creations, and works of art, whether or not patentable or
subject to copyright, relating to the business of Company or its
clients, conceived, developed or made by Employee during employment
under this Agreement, either solely or jointly with others (hereafter
"Developments") shall automatically become the sole property of
Company. Employee shall immediately disclose to Company all such
Developments and shall, without additional compensation, execute all
assignments, application or any other documents deemed necessary by
Company to perfect Company's rights therein. These obligations shall
continue for a period of one year beyond the termination of employment
under this Agreement with respect to Developments conceived, developed
or made by Employee during the period of employment under this
Agreement.
Company acknowledges and agrees that the provisions of this
section shall not apply to inventions for which no equipment, supplies,
facility or trade secret information of Company or its clients were
used by Employee and which were developed entirely on Employee's own
time unless (a) such inventions relate (i) to the business of Company
or (ii) to Company's actual or demonstrably anticipated research or
development or (b) such inventions result from any work performed by
Employee for Company.
12. Assignments. Neither party shall have the right or power to
assign any rights or duties under this Agreement without the written
consent of the other party, provided, however, that Company shall have
the right to assign this Agreement without consent pursuant to any
corporate reorganization, merger, or other transaction involving a
change of control of Company or any of its subsidiary companies. Any
attempted assignment in breach of this Section 12 shall be void.
If Employee performs services and duties for any subsidiary or
other affiliated entity of Company, then the provisions of Sections 7,
8, 9 and 11 shall apply to the confidential information and business
activities, property rights, clients, and employees of that subsidiary
or other entity.
13. Severability. Each section, paragraph, clause, sub-clause and
provision (collectively "Provisions") of this Agreement shall be
severable from each other, and if for any reason the paragraph, clause,
sub-clause or provision is invalid or unenforceable, such invalidity or
unenforceability shall not prejudice or in any way affect the validity
or enforceability of any other Provision hereof.
14. Miscellaneous.
(a) This Agreement, the schedules and any amendments hereto
contain the entire agreement of the parties with respect to the
employment of the Employee and supersedes all other understandings,
whether written or oral; provided, however, that Employee shall comply
with all policies, procedures and other requirements of Company as
established in the Colleague Handbook and Corporate Policy Manuals, not
inconsistent with this Agreement.
(b) Failure on the part of either party to insist upon strict
compliance by the other with respect to any of the terms, covenants and
conditions hereof, shall not be deemed a subsequent waiver of such
term, covenant or condition.
(c) The provisions of any paragraph containing a continuing
obligation after termination shall survive such termination whether
with or without cause and even if occasioned by Company's breach or
wrongful termination.
(d) This Agreement may not be modified except in writing as
signed by the parties; provided, however, that Company may amend or
terminate its Benefit Plans, Incentive Plan, Corporate Policies and/or
employees' rules and regulations in its sole discretion.
(e) In the event of litigation under this Agreement, the court
shall have discretion to award the prevailing party reasonable
attorney's fees.
15. Governing Law. It is the intention of the parties hereto
that all questions with respect to the construction, formation, and
performance of this Agreement and the rights and liabilities of the
parties hereto shall be determined in accordance with the laws of the
State of Illinois. The parties hereto submit to the jurisdiction and
venue of the courts of DuPage County Illinois in respect to any matter
or thing arising out of this agreement pursuant hereto.
16. Notices. Any notice required pursuant to this Agreement will
be in writing and will be deemed given upon the earlier of (i) delivery
thereof, if by hand, (ii) five business days after mailing if sent by
mail (registered or certified mail, postage prepaid, return receipt
requested), (iii) the next business day after deposit if sent by a
recognized overnight delivery service, or (iv) transmission if sent by
facsimile transmission or by electronic mail, with return notification
(provided that any notice sent by facsimile or electronic mail shall
also promptly be sent by one of the means described in clauses (i)
through (iii) of this Section 16. All notices will be addressed as
follows or to such other address as a party may identify in a notice to
the other party:
to Company: First Health Group Corp.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: President and Chief Executive Officer
cc: General Counsel
to Employee: Xxxxx X. Xxxxxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement in the State of Illinois as of the day and year
first above written.
The Company:
First Health Group Corp.
By:
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Its: President and
Chief Executive Officer
Employee:
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