EXHIBIT 10.13
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 1, 2003, by and between HEALTH
MANAGEMENT SYSTEMS, INC., a New York corporation (the "Company"), and WILLIAM C.
LUCIA (the "Employee").
W I T N E S S E T H:
WHEREAS the Company and the Employee desire to enter into an Employment Contract
for the period provided in this Agreement, and the Employee is willing to accept
continued employment with the Company on a full-time basis, in accordance with
the terms and conditions set forth below:
NOW, THEREFORE, for and in consideration of the promises hereof and the mutual
covenants contained herein, the parties hereby covenant and agree as follows:
1. 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 the third
anniversary of the date hereof (the "Initial Term").
(b) The term of the Employee's employment under this Agreement
will be renewed for additional one-year terms (each a "Renewal Term")
upon the expiration of the Initial Term or any Renewal Term unless the
Company or the Employee delivers to the other, at least 90 days prior
to the expiration of the Initial Term or the then current Renewal Term,
as the case may be, a written notice specifying that the term of the
Employee's employment will not be renewed at the end of the Initial
Term or such Renewal Term, as the case may be.
2. Duties. The Employee shall be employed as the President of
the Health Management System's TPL business unit and shall faithfully
and competently perform such duties as inhere in such position 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 Chief Executive Officer, the Chief Operating Officer or the
Board of Directors of the Company 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 Chief Executive Officer, the Chief Operating
Officer or the Board of Directors of the Company may reasonably
prescribe. Except as may otherwise be approved in advance by the Board
of Directors of the Company, 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 position. Nothing contained in this Section
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.
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3. 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 Two Hundred Twenty Five Thousand Dollars
($225,000), said amount, together with any increases thereto as may be
determined by the Board of Directors of the Company, in its sole
discretion. 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 during the
Employment Term in an amount of 50% of Salary, in each case as may be
determined by the Board of Directors of the Company in its sole
discretion on the basis of meeting TPL business objectives established
from time to time by the Board of Directors.
4. 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 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 of
the Company 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 of the Company;
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(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.
5. 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 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).
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(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 5
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 5
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 9 hereof, the
Employee hereby expressly agrees that the foregoing provisions of this
Section 5 shall be binding upon the Employee's heirs, successors and
legal representatives.
6. Termination.
(a) The Employee's employment hereunder shall be terminated
upon the occurrence of any of the following:
(i) the death of the Employee;
(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);
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(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).
(b) Termination for "Cause": 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 Chief
Executive Officer or the Chief Operating Officer or the Board of
Directors of the Company 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 of the Company, followed
by a notice that the Board of Directors adheres to its position).
(c) Termination Pay: In the event that the Employee's
employment is terminated by the Company pursuant to clause (iv) (a)
above, the employee shall receive 12 months severance pay payable on
the employee's normal payroll cycle, provided, however, that no such
payments shall be required to be made if the Employee fails to comply
with his obligations under Section 8 below or if the Employee shall be
entitled to receive payments pursuant to 6 (c) above; and 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 to
occur of the last day of the Applicable Period and the date upon which
the Employee becomes eligible for coverage under the health insurance
plan of another employer.
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(d) Notwithstanding anything to the contrary expressed or
implied herein, except as required by applicable law and except as set
forth in Section 6 (c) 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.
(e) No interest shall accrue on or be paid with respect to any
portion of any payments hereunder.
7. 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 4 (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 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.
8. 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 8 (d), provided, however, that the
provisions of this Section 8 (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.
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(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 8, 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 term-nation of the
Employee's employment with the Company.
(e) Certain Representations of the Employee. In connection
with the foregoing provisions of this Section 8, the Employee
represents that his experience, 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 8 (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 8 (and in Section 5 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 8 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.
9. 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.
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10. 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.
11. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
12. Severability. The Employee agrees that in the event that
any court of competent jurisdiction shall finally hold that any
provision of Section 5 or 8 hereof is void or constitutes an
unreasonable restriction against the Employee, the provisions of such
Section 5 or 8 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 5 or 8 is held by a court of competent
jurisdiction to be invalid-id, illegible 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 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.
13. 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.
14. Arbitration. With the exception of any dispute regarding
the Employee's compliance with the provisions of Sections 5 and 8
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.
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15. 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.
16. 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: HEALTH MANAGEMENT SYSTEMS
/s/ William C. Lucia /s/ William F. Miller, III
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William C Lucia William F. Miller
January 17, 2003 January 17, 2003
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Date Date
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