This Employment Agreement (“
Agreement ”) is effective as of the 30
th day of June, 2008, by and between Jeffrey G.
Park (“ Executive ”) and SXC Health Solutions
Corporation and its subsidiary, SXC Health Solutions, Inc.
(collectively, the “ Company ”).
A. The Company desires to continue to
employ Executive under the terms and conditions set forth in this
Agreement and Executive desires to continue to be employed by the
Company under the terms and conditions set forth in this
Agreement.
B. Immediately prior to the effective date
of this Agreement, Executive was employed as the Company’s
Senior Vice President and Chief Financial Officer. Effective
June 30, 2008, Executive became the Company’s Executive
Vice President and Chief Financial Officer. This Agreement
memorializes certain terms and conditions of Executive’s
employment with the Company as its Executive Vice President and
Chief Financial Officer.
C. Executive acknowledges that as a member
of the Company’s senior management team (“ Senior
Executive Team ”), he is one of the persons charged with
responsibility for the implementation of the Company’s
business plans, and that Executive is one of only a few employees
who will have regular and complete access to various confidential
and/or proprietary information relating to the Company. Further,
Executive acknowledges that his covenants to the Company
hereinafter set forth, specifically including but not limited to
his covenant not to engage in competition with the Company, are
being made in partial consideration of the Company’s
willingness to continue to employ Executive under the terms and
conditions set forth in this Agreement. As a condition of that
employment, the Company requires that this Agreement be entered
into pursuant to which Executive furnishes the Company with, among
other things, certain covenants of Executive, including
Executive’s covenant not to compete with the businesses of
the Company for a reasonable period of time.
NOW, THEREFORE, in consideration of the
foregoing recitals, and the mutual agreements herein contained and
other good and valuable consideration, the receipt and sufficiency
of which are hereby mutually acknowledged, the parties hereby agree
as follows:
ARTICLE I
EMPLOYMENT RELATIONSHIP
1.1 Employment . Subject to the terms and
conditions of this Agreement, the Company hereby agrees to employ
Executive to serve as the Company’s Executive Vice President
and Chief Financial Officer, and Executive hereby accepts such
employment, and agrees to perform his duties and responsibilities
to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.
1.2 Duties . Executive shall be the
Company’s Executive Vice President and Chief Financial
Officer, and shall participate as a member of the Company’s
Senior Executive Team. Executive shall report to the
Company’s President and Chief Executive Officer.. Executive
shall perform his duties under this Agreement at the
Company’s facilities in Lisle, Illinois or any subsequent
location of the Company’s primary administrative
operations.
1.3 Exclusive Employment . While employed
by the Company hereunder, Executive covenants to the Company that
he will devote his entire business time, energy, attention and
skill to the Company (except for permitted vacation periods and
periods of illness or other incapacity), and use his good faith
best efforts to promote the interests of the Company. The foregoing
shall not be construed as prohibiting Executive from spending such
time as may be reasonably necessary to attend to his personal
affairs and investments so long as such activities do not conflict
or interfere with Executive’s obligations and/or timely
performance of his duties to the Company.
1.4 Executive Representations and Warranties
as to Employability . Executive hereby represents and warrants
to the Company that:
(a) The execution, delivery and performance
by Executive of this Agreement and any other agreements
contemplated hereby to which Executive is a party do not and shall
not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which
Executive is a party or by which he is bound;
(b) Executive is not a party to or bound by
any employment agreement, non-competition agreement or
confidentiality agreement with any other person or entity (or if a
party to such an agreement, Executive has disclosed the material
terms thereof to the Board prior to the execution hereof and
promptly after the date hereof shall deliver a copy of such
agreement to the Board);
(c) Upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and
binding obligation of Executive, enforceable in accordance with its
terms; and
(d) Executive hereby acknowledges and
represents that he has been given the opportunity to consult with
independent legal counsel regarding Executive’s rights and
obligations under this Agreement and that he fully understands the
terms and conditions contained herein.
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ARTICLE II
PERIOD OF EMPLOYMENT
2.1 Employment Period . Executive’s
employment hereunder shall commence on June 30
th , 2008, and shall continue hereunder until the
date fixed by the provisions of section 2.2 hereof, subject to the
early termination provisions of Article V hereof (the “
Employment Period ”).
2.2 Initial Term of Employment Period and
Extension Terms . The Employment Period shall initially
continue for a term commencing on the date set forth in section
2.1, above, and ending on June 29, 2011 (the “
Initial Term ”). The Employment Period shall be
automatically extended for successive one (1) year periods
following the expiration of the Initial Term (each period being
hereinafter referred to as an “ Extension Term
”) upon the same terms and conditions provided for herein
unless either party provides the other party with advance written
notice of its or Executive’s intention not to extend the
Employment Period; provided, however, that such notice must be
delivered by the non-extending party to the other party not later
than sixty (60) days prior to the expiration of the Initial
Term or any Extension Term, as the case may be. If the Employment
Period is not extended as a result of notice to Executive by the
Company, and Executive’s employment with the Company
terminates as a result thereof, then Executive’s termination
shall be a treated as a Termination by the Company without Cause
for purposes of section 5.2 hereof.
3.1 Annual Base Compensation . During the
Employment Period the Company shall pay to Executive an annual base
salary in the amount of Three Hundred Five Thousand and 00/100
Dollars ($305,000.00) (the “ Annual Base Compensation
”). The Annual Base Compensation shall be paid in regular
installments in accordance with the Company’s regular payroll
practices, and shall be subject to all required federal, state and
local withholding taxes. Executive’s Annual Base Compensation
shall be reviewed annually by the Compensation Committee of the
Company’s Board of Directors, which shall make a
recommendation for possible salary modifications subject to
approval by the Company’s Board of Directors, and any such
modified amount shall become the Annual Base Compensation
hereunder.
3.2 Executive Performance Bonus . In
respect of each calendar year falling within the Employment Period,
Executive shall be eligible to earn an incentive compensation
bonus, depending upon the achievement of the Company’s and
Executive’s performance objectives (the “ Incentive
Compensation Bonus ”). The amount of the Incentive
Compensation Bonus shall be targeted at eighty percent (80%) of
Executive’s Annual Base Compensation (“ Target
Incentive Compensation Bonus ”) and capped at one hundred
fifty percent (150%) of Executive’s Annual Base Compensation
with the specific percentage determined by the Company’s
Board of Directors after the close of the Company’s fiscal
year (December 31). The Incentive Compensation Bonus, if any,
shall be paid to Executive at the same time other members of the
Senior Executive Team are paid their respective incentive
compensation bonuses, which shall be in no event later than the
March 15 following the close of the Company’s fiscal
year. If Executive’s employment terminates as a result of a
Termination for Cause or a resignation, then no Incentive
Compensation Bonus shall be paid to Executive for the calendar year
in which the termination occurred. To the extent practicable, the
Company’s Board of Directors will notify Executive of
Executive’s performance objectives for the year in January of
that year.
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3.3 Expenses . During the Employment
Period, Executive shall be entitled to reimbursement of all
business expenses reasonably incurred in the performance of
Executive’s duties for the Company, including reasonable
travel-related expenses, upon submission of all receipts and
accounts with respect thereto, and approval by the Company thereof,
in accordance with the then current business expense reimbursement
policies of the Company.
3.4 Vacation . Executive shall be
entitled to accrue over the course of the calendar year paid
vacation time in accordance with the Company’s then current
vacation policy.
3.5 Insurance . The Company shall provide
Executive with the following insurance benefits during the
Employment Period:
a. Dental, vision and supplemental health
insurance in accordance with the terms and conditions of the
applicable plans and Company policies then in effect.
b. A term life insurance policy with a death
benefit in the amount of 2.5 times Executive’s Annual Base
Compensation in accordance with the applicable plans and Company
policies then in effect, subject to a maximum death benefit of
$500,000.00.
c. Additional Executive Group Life Insurance in
the amount of $500,000.00 (contingent upon insurance company
approval).
d. Accidental death and dismemberment insurance
in accordance with the applicable plans and Company policies then
in effect.
e. Short and long-term disability insurance in
accordance with the applicable plans and Company policies then in
effect.
3.6 Retirement Plan . Executive shall be
eligible to participate in the Company’s deferred
compensation plans, including its 401(k) plan.
3.7 Grant of Stock Options/Existing Stock
.
a. In addition to and not in lieu of any stock
options previously granted to Executive, on or around
August 10, 2008, following the black out period related to the
meeting of the Board of Directors scheduled around that date
(“ Board Meeting ”), Executive shall be granted
options (“ Options ”) to purchase 25,000 shares
of common stock of the Company. The Options are subject to the
Company’s Stock Option Plan then in operation at the time
they are granted as may be amended from time to time. The Options
shall be granted at an exercise price equal to the fair market
value of a share of Company common stock as defined by the plan
document. The options shall vest in one-fourth increments annually
on the anniversary of the grant date, becoming fully vested four
years after the grant date. Other than as discussed in
Section 5.2(f) of this Agreement, the options shall expire
five (5) years from the grant date.
b. Upon termination of Executive’s
employment due to a Termination by the Company without Cause,
Termination due to Death or Total Disability, or a Termination
Arising Out of a Change of Control, all unvested options shall
immediately vest. For clarification, no previously unvested Options
shall vest if Executive’s employment with the Company
terminates due to Resignation by Executive or Termination by the
Company for Cause.
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3.8 Stock Option Plan . Executive shall
be permitted to participate in the Company’s Stock Option
Plan in the same manner as the Company’s other Senior
Executive Team members, with future annual grants based on
Executive’s performance as determined by the Company’s
Board of Directors.
3.9 Other Fringe Benefits . During the
Employment Period, Executive shall be entitled to receive such of
the Company’s other fringe benefits as are being provided to
other Executives of the Company on the Senior Executive
Team.
3.10 Vehicle Allowance . Executive shall
receive a monthly payment of Five Hundred and 00/100 Dollars
($500.00) for Executive’s use of a personal automobile for
business use (“ Vehicle Allowance ”). The
Vehicle Allowance shall be subject to all required federal, state
and local withholding.
ARTICLE IV
COVENANTS OF EXECUTIVE
4.1 Covenants Regarding Developments .
Executive agrees as follows with regard to any developments that
relate to the Company’s business or Confidential and
Proprietary Information, or that Executive conceives, makes,
develops or acquires, including, but not limited to, any trade
secrets, discoveries, inventions, improvements, ideas, programs,
formulas, diagrams, designs, plans and drawings, whether or not
reduced to writing, patented, copyrighted or trademarked (“
Developments ”):
(a) Executive shall promptly and fully
disclose all Developments to the Company, and shall prepare,
maintain, and make available to the Company adequate and current
written records of such Developments and all modifications,
research, and studies made or undertaken by Executive with respect
thereto.
(b) All Developments and related records
shall become and remain the exclusive property of the Company and,
to the extent Executive has any rights thereto, Executive hereby
assigns all such rights, title, and interest to the
Company.
(c) Upon request by the Company, Executive,
at any time, whether during or after Executive’s employment
by the Company, shall execute, acknowledge and deliver to the
Company all assignments and other documents which the Company deems
necessary or desirable to: (i) vest the Company with full and
exclusive right, title, and interest to such Developments, and
(ii) enable the Company to file and prosecute an application
for, or acquire, maintain or enforce, all letters of patent,
trademark registrations, and copyrights covering such
Developments.
(d) The foregoing provisions regarding
assignments do not apply to any Developments for which no
equipment, supplies, facility or trade secret information of the
Company was used, and which were developed entirely on
Executive’s own time, unless the Developments: (i) relate to
the Company’s business or to its actual or demonstrably
anticipated research or development, or (ii) result from any
work performed by Executive for the Company.
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4.2 Ownership and Covenant to Return
Documents, etc. Executive agrees that all Company work product
and all documents or other tangible materials (whether originals,
copies or abstracts), including without limitation, price lists,
quotation guides, outstanding quotations, books, records, manuals,
files, sales literature, training materials, customer records,
correspondence, computer disks or print-out documents, contracts,
orders, messages, phone and address lists, invoices and receipts,
and all objects associated therewith, which in any way relate to
the business or affairs of the Company either furnished to
Executive by the Company or are prepared, compiled or otherwise
acquired by Executive during the Employment Period, shall be the
sole and exclusive property of the Company. Executive shall not,
except for the use of the Company, use, copy or duplicate any of
the aforementioned documents or objects, nor remove them from the
facilities of the Company, nor use any information concerning them
except for the benefit of the Company, either during the Employment
Period or thereafter. Executive agrees that he will deliver all of
the aforementioned documents and objects that may be in his
possession to the Company on the termination of his employment with
the Company, or at any other time upon the Company’s
request.
4.3 Nondisclosure Covenant . Executive
recognizes that by virtue of Executive’s employment with the
Company, Executive will be granted otherwise prohibited access to
trade secrets and other confidential and proprietary information
that is not known to its competitors or within the industry
generally, that was developed by the Company over a long period of
time and/or at substantial expense, and which is confidential in
nature or otherwise of great competitive value to the Company. This
information (“ Confidential and Proprietary
Information ”) includes, but is not limited to, the
Company’s trade secrets; information relating to the
Company’s production practices and methods of doing business;
sales, marketing, and service strategies, programs, and procedures;
contract expiration dates, customers and prospective customers,
including, but not limited to, their particularized requirements
and preferences, and the identity, authority, and responsibilities
of their key contact persons; payment methods; service and product
costs; profit margins and minimally acceptable profit margins;
pricing structures and incentive plans; vendors; financial position
and business plans; marketing plans; computer programs and
databases; research projects; new product and service developments;
and any other information of the Company or any of its vendors or
customers that the Company informs Executive, or which Executive
should know by virtue of his position or the circumstances in which
he learned it, is to be kept confidential. Confidential and
Proprietary Information does not include information that is
(i) in the public domain (except as a result of a breach of
this Agreement or Executive’s obligations under a statutory
or common law obligation) or (ii) obtained by Executive from a
third party subsequent to the termination of Executive’s
employment with the Company (except where the third party obtains
the information in violation of a contractual obligation, a
statutory or common law obligation). Executive agrees that during
the Employment Period and at all times thereafter (a) Executive
will not disclose, use or permit others to use any Confidential and
Proprietary Information, or otherwise make use of any of it for his
own purposes or the purposes of another, except as required in the
course of his employment for the benefit of the Company or as
required by law, and (b) Executive will take all reasonable
measures, in accordance with the Company’s policies,
procedures, and instructions, to protect the Confidential and
Proprietary Information from any accidental or unauthorized
disclosure or use.
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4.4 Noninterference Covenant . Executive
agrees that during the Employment Period and for the twelve
(12) month period thereafter (“ Restricted Period
”), he will not, for any reason, directly or indirectly
solicit, hire, or otherwise do any act or thing which may induce
any other employee of the Company (who is employed by the Company
at the end of Executive’s employment with the Company) to
leave the employ of the Company.
4.5 Covenant of Nonsolicitation of
Customers . Executive acknowledges the Company’s
legitimate interest in protecting its customers for a reasonable
period of time following the termination of Executive’s
employment. Accordingly, Executive agrees that during the
Restricted Period, Executive will not: (a) directly or
indirectly, solicit or accept business from, or provide products or
services to, any Customer, where such business, products or
services would be competitive with the Company’s business,
products or services as described in Section 4.6, or (b) do
any act or thing which may interfere with or adversely affect the
relationship (contractual or otherwise) of the Company with any
Customer or vendor of the Company or induce any such Customer or
vendor to cease doing business with the Company. For purposes of
this paragraph, the term “ Customer ” means
(i) a customer of the Company to which Executive sold or
provided the Company’s products or services at any time
during the two (2) year period immediately preceding the
termination of Executive’s employment, (ii) any entity
for which Executive orchestrated, developed, supervised,
coordinated or participated in marketing strategy, marketing plans
and marketing campaigns on behalf of the Company at any time during
the two (2) year period immediately preceding the termination
of Executive’s employment, or (iii) any entity as to
which Executive acquired Confidential and Proprietary Information
at any time during Executive’s employment with the
Company.
4.6 Covenant Not to Compete . Executive
expressly acknowledges that (i) the Company is and will be
engaged in the business of providing pharmacy benefit management
services and healthcare transaction processing services and
information technology solutions to the pharmaceutical industry,
including without limitation: (x) pharmacy benefits services
and analytics software and related ASP services, including claims
processing, pharmacy networks, data warehousing and information
analysis, rebate contracting and formulary management, clinical
initiatives, mail order pharmacy services, specialty pharmacy
services, and consumer web services; (y) pharmacy practice
management and point of sale (POS) systems for retail pharmacy
(independents and chains), institutional/nursing home pharmacy, and
high-volume mail order pharmacy; and (z) specialty pharmacy
products and services; (ii) Executive is one of a limited
number of persons who has extensive knowledge and expertise
relevant to the businesses of the Company;
(iii) Executive’s performance of his services for the
Company hereunder will afford Executive full and complete access to
and cause Executive to become highly knowledgeable about the
Company’s Confidential and Proprietary
Information;
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(iv) the
agreements and covenants contained in this section 4.6 are
essential to protect the business and goodwill of the Company,
because, if Executive enters into any activities competitive with
the businesses of the Company, Executive will cause substantial
harm to the Company; (v) Executive will be exposed to the
Company’s largest customers; (vi) the business territory
of the Company at the time this Agreement was entered into
constitutes the United States and Canada (“ Business
Territory ”); and (vii) Executive’s covenants
to the Company set forth in this section 4.6 are being made in
consideration of the Company’s willingness to employ him.
Accordingly, Executive hereby agrees that during the Restricted
Period, Executive shall not, within the Business Territory,
directly or indirectly own any interest in, invest in, lend to,
borrow from, manage, control, participate in, consult with, become
employed by, render services to, or in any other manner whatsoever
engage in, any business which is competitive with any business
actively being engaged in by the Company or actively (and
demonstrably) being considered by the Company for entry into on the
date of the termination of Executive’s employment with the
Company. The preceding to the contrary notwithstanding, Executive
shall be free to make investments in the publicly traded securities
of any corporation, provided that such investments do not amount to
more than 1% of the outstanding securities of any class of such
corporation.
4.7 Remedies for Breach . Executive
recognizes that the rights and privileges granted to Executive by
this Agreement, and Executive’s corresponding covenants to
the Company, are of a special, unique, and extraordinary character,
the loss of which cannot reasonably or adequately be compensated
for in damages in any action at law or through the offset or
withholding of any monies to which Executive might be entitled from
the Company. Accordingly, Executive understands and agrees that the
Company shall be entitled to equitable relief, including a
temporary restraining order and preliminary and permanent
injunctive relief, to prevent or enjoin a breach of this Agreement.
Executive also understands and agrees that any such equitable
relief shall be in addition to, and not in substitution for, any
other relief to which the Company may be entitled.
5.1 Termination and Triggering Events .
Notwithstanding anything to the contrary elsewhere contained in
this Agreement, the Employment Period shall terminate at the
expiration of the Initial Term or any Extension Term upon notice as
provided in section 2.2, or prior to the expiration of the Initial
Term or any Extension Term upon the occurrence of any of the
following events (hereinafter referred to as “ Triggering
Events ”): (a) Executive’s death;
(b) Executive’s Total Disability;
(c) Executive’s Resignation; (d) Termination by the
Company for Cause; (e) Termination by the Company without Cause; or
(f) Termination Arising Out of a Change of Control.
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