Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of the 1st day of
August, 2003 (the “Effective Date”), by and between Precis, Inc. (the
“Company”), an Oklahoma corporation, and Bobby Rhodes, an individual (the
“Executive”) (the Company and the Executive are collectively referred to as the
“parties” or are individually referred to as the “party”).

 

RECITALS

 

WHEREAS, the Company deems the services of the Executive to be of great and
unique value to the business of the Company and the Company desires to assure
both itself of continuity of management and the Executive of continued
employment; and

 

WHEREAS, the Executive is a key management employee of the Company and is
presently making and is expected to continue making substantial contributions to
the Company; and

 

WHEREAS, it is in the best interests of the Company and its shareholders to
induce the Executive to remain in the employ of the Company; and

 

WHEREAS, the Executive and the Company previously entered into that certain
Employment Agreement dated June 8, 2001(“Prior Agreement”); and

 

WHEREAS, this Agreement shall be considered as a complete amendment and
restatement of the Prior Agreement; and

 

WHEREAS, the Company desires to induce the Executive to remain in the employ of
the Company by providing to the Executive additional amounts of compensation and
severance benefits; and

 

WHEREAS, the Executive is willing to remain in the employ to the Company in
accordance with and subject to the terms and conditions set forth in this
Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Executive and the Company hereby agree as follows:

 

1.                                      Term.  The Company shall employ the
Executive for a period of three years commencing on the date hereof (the
“Initial Term”), unless such employment shall be terminated earlier as provided
in this Agreement.  The employment of the Executive shall continue after the
Initial Term for successive periods of one year duration on the same terms and
conditions contained herein, until terminated in accordance with the terms of
this Agreement (the Initial Term and the Extended Term are referred to as the
“Term”).

 

2.                                      Nature of Services; Employment; Duties;
Employment Evaluations.

 

2.1                               Executive Services.  The Company hereby
employs the Executive for the Term as the Executive Vice President of Provider
Relations, and the Executive shall perform reasonable services as may, from time
to time, be prescribed and directed by the Chief Executive Officer and President
of the Company.  The Executive hereby accepts employment and agrees to perform
such duties and undertake such responsibilities as are customarily performed by
others holding executive officer positions similar to that held by and assigned
to the Executive in similar businesses, subject to the general and customary
supervision of the Company’s Chief Executive Officer, President or Board of
Directors.  Notwithstanding anything contained herein to the contrary, the 
position and duties of the Executive shall be as from time to time designated by
the Company’s Chief Executive Officer, President or Board of Directors.

 

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2.2                               Compliance with Policies and Code of Conduct. 
During the Term, the Executive agrees to serve the Company fully, diligently and
competently, and to the best of the Executive’s ability, experience and talent,
in conformity with the policies and code of conduct of the Company, in effect
and as may be adopted, modified, expanded or contracted from time to time.

 

2.3                               Place of Performance; Support Facilities.  The
principal places of employment of the  Executive shall be at the Company’s
principal executive offices in Grand Prairie, Texas or within the Dallas/Ft.
Worth area and the principal executive offices of the Company.  In performing
the duties and fulfilling the responsibilities to be performed and fulfilled by
the Executive under this Agreement, the Executive shall be provided by the
Company with reasonable facilities, services, and support.

 

2.4                               Devotion of Full Time and Attention; Conflicts
of Interest.  The Executive agrees, during the Term, to devote the Executive’s
best efforts on a full-time basis to the performance of the duties and
responsibilities assigned to the Executive pursuant to this Agreement or
otherwise.  Executive acknowledges and agrees that Executive owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Company and its stockholders, and to do no act that would
injure the Company’s business, its interests, or its reputation.  It is agreed
that any direct or indirect interest in, connection with, or benefit from any
outside activities, particularly commercial activities, which interest might in
any way adversely affect the Company or any of its affiliates, involves a
possible conflict of interest.  In keeping with the Executive’s fiduciary duties
to the Company and its stockholders, Executive agrees that Executive will not
knowingly become involved in a conflict of interest with the Company or its
affiliates, or upon discovery thereof, allow such a conflict to continue. 
Moreover, Executive agrees that Executive shall disclose to or discuss with the
Company’s General Counsel any facts or circumstances that might involve such a
conflict of interest that has not been disclosed in writing to and approved by
the Company’s Board of Directors.  The Executive shall not, without the prior
written disclosure to and consent of the Company’s Board of Directors, directly
or indirectly, render services of a business, professional or commercial nature
to or for the Executive’s own account or any other person, firm or entity that
engages in any other business or activity, whether or not competitive with that
of the Company or any affiliate of the Company.

 

2.5                               Resolution of Conflicts of Interest.  The
Executive and the Company recognize that it is difficult and possibly impossible
to provide an exhaustive list of actions or interests that constitute a
‘conflict of interest.” Moreover, the Executive and the Company recognize that
there are many borderline situations.  In some instances, full disclosure of
facts by the Executive to the Company’s General Counsel may be all that is
necessary to enable Company or its affiliate to protect its interests.  In
others, if no improper motivation appears to exist and the interests of the
Company or its affiliate have not suffered, prompt elimination of the outside
interest causing the conflict of interest will suffice.  In still others, it may
be necessary for the Company to terminate the employment relationship.  The
Company and Executive agree that the Company’s Board of Director’s determination
of whether a conflict of interest exists will be conclusive.  The Company
reserves the right to take such action as, in its judgment, will end the
conflict.  The Company’s termination of the employment relationship solely
because the Executive violates this Section 2.5 shall be a Voluntary Termination
for purposes of this Agreement.

 

At the end of each calendar year, the Executive must report to the Company’s
Board of Directors all of their and their spouse’s investment holdings.

 

2.6                               Annual Review.  On or about the first day of
January, 2004, and on or about the last day of each year thereafter during the
Term, the Compensation Committee of Company’s Board of Directors shall evaluate
the performance of the Executive under and consistent with this Agreement and,
in that connection, meet with and discuss any such performance evaluation and
the services of the Executive under this Agreement with the Executive.

 

2.7                               Affiliate Office and Director Positions. 
During the Term, the Executive may be nominated for election or appointed to
serve as a -director or officer of the Company’s subsidiaries as determined in
the sole discretion of the Company’s Board of Directors.

 

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3.                                      Compensation.  The Executive shall be
entitled to compensation for any and all services performed under this Agreement
except as may be otherwise agreed to in writing, by the parties, from the
Effective Date through the 31st day of July, 2006 of $112,000 per year inclusive
of any directors fees that the Executive may be entitled for services as a
director of the Company or any of its subsidiaries or affiliates), payable in
semi-monthly installments in arrears, in cash or cash equivalents in each month
that this Agreement is in effect (the “Base Salary”), less, in any case, any
deductions or withholdings required by law.  The Base Salary, in the event that
this Agreement shall not be terminated, shall be reviewed at least annually and
may be increased consistent with generally salary increases for the Company’s
executive employees or as appropriate in light of the performance of the Company
or the Executive.  At a minimum, annual Base Salary increases for the Executive
will not be less than 7.5% of the prior year’s Base Salary.

 

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4.                                      Other Benefits, Bonus and Incentive
Compensation.

 

4.1                               Annual Incentive and Bonus.  The Executive
shall be eligible for annual incentives and  bonuses.  Incentive and bonuses
distributed to an Officer or to an Executive of the Company shall be in the sole
discretion of the Compensation Committee of the Company’s Board of Directors and
in accordance with the benefits, bonus and incentive plan adopted by the
Compensation Committee of the Company’s Board of Directors.  Other incentives
and bonuses related to Executive’s responsibilities as Executive Vice President
of Provider Relations of the Company shall be awarded and paid at the sole
discretion of the Compensation Committee of the Company’s Board of Directors.

 

In the event that the Company makes acquisitions outside the ordinary course of
business of the Company, directly or indirectly, during the Term, the Bonus
shall be determined as if such acquisitions had not taken place or,
alternatively, the Company’s Compensation Committee in its sole discretion shall
adjust the bonus.

 

4.2                               Expense Reimbursement.  The Company shall
reimburse the Executive for all reasonable expenses incurred by the Executive in
the performance of the Executive’s duties under this Agreement; provided,
however, that the Executive must furnish to the Company an itemized account,
satisfactory to the Company, in substantiation of such expenditures.

 

4.3                               Fringe Benefits; Plan Participation.  The
Executive shall be entitled to such fringe benefits as may be provided from time
to time by the Company to other senior officers of the Company, including, but
not limited to, medical and insurance benefits and 401(k) and medical savings
account plans.  The Executive shall be eligible to participate, in accordance
with the terms of such plans as they may be adopted, amended and administered
from time-to-time, in incentive, bonus, benefit or similar plans, including
without limitation the Company’s 1999 Stock Option Plan, any other stock option,
bonus or other equity ownership plan in which employees are eligible to
participate, any incentive bonus plan and any other bonus, pension or profit
sharing plans established and maintained by the Company.  The Executive’s
participation in such plans shall be at such levels of participation as the
Compensation Committee may determine in its reasonable discretion based upon the
Executive’s responsibilities and performance and, when applicable, the Company’s
past compensation practices.  Compensation and other benefits granted under such
plans will be subject to the actual provisions and conditions applicable to such
plans.  The Company shall not by reason of this Agreement be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to employees eligible generally to participate
or receive benefits under the program or plan.

 

4.4                               Company Automobile.  During the Terms, the
Company shall provide an automobile for the Executive’s business and personal
use, or an automobile allowance of $650 per month as determined in the sole
discretion of the Executive.  Approval by the Company’s Board of Directors of
the automobile provided to the Executive is not required.  However, the
automobile purchase price must be considered reasonable in nature.  The
automobile, if provided, will be a new automobile and will be replaced after two
years of use.  The Executive reserves the right to purchase the automobile from
the Company at the end of the two year period at the then net book value as
defined under generally accepted accounting principles.  The Company will
provide without cost to the Executive insurance as required by applicable state
law on the automobile.

 

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In the event of a Change of Control, the Executive is entitled to purchase the
automobile at the then net book value as defined under generally accepted
accounting principles.

 

4.5                               Vacation and Leave; Holidays.  During the
Term, Executive shall be entitled to take (i) four weeks of vacation leave with
pay (at the Executive’s Base Salary at the time such vacation leave is taken)
during each 12-month period of the Term commensurate with Executive’s executive
office position or positions with the Company, and (ii) reasonable periods of
sick leave with pay (at the Executive’s Base Salary at the time such sick leave
is taken) commensurate with Executive’s executive officer position or positions
with the Company, in accordance with Company policy as established by the Board
of Directors.  Any annual vacation leave not taken by the Executive during a
12-month period shall not accumulate to following periods.  The Executive is not
entitled to elect vacation compensation for any unused vacation.

 

4.6                               Employment Termination.  In the event of
Termination (as defined below) of the Executive’s employment with the Company,
the Company shall pay or provide the following:

 

4.6.1                     Lump Sum Payment of Base Salary.  The Company shall
pay to the Executive in a lump sum an amount equal to the Base Salary payable in
accordance with and pursuant to Section 3 for the remaining Term or following 24
months, whichever shall be the longer, to which the Executive would have been
entitled if the Executive had remained in the employ of the Company for the
remainder of unexpired portion of the Term or the 24-month period.    The lump
sum payment pursuant to this Section 4.6.1 shall be paid to the Executive on or
before the 15th day following Termination.   For purposes of this agreement, all
lump sum payments of Base Salary are for Involuntary Terminations only.

 

The Executive, at the Executive’s sole discretion, shall have the right to elect
to receive the lump sum Termination payment on a bi-weekly basis over the
remaining Term, or up to a period of 24 months following Termination, whichever
shall be the longer, as if the Executive remained employed during the remaining
term, although the Executive’s employment shall have terminated on the date of
Termination.  The bi-weekly Termination payment represents the Executive’s Base
Salary immediately prior to the Termination , divided by the number of bi-weekly
payroll periods remaining in the Term

 

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immediately following the date of Termination, or 48 bi-weekly payroll periods,
whichever shall be the longer.

 

4.7                               Health, Medical, Dental, Disability and Life
Insurance.  The Company shall provide to the Executive (i) until the Executive
attains 65 years of age, health, medical, dental, and disability insurance
benefits (including coverage of the dependents of Executive) comparable to those
provided to the executive officers of the Company either as a group or
individually as of the date of Termination, and (ii) payment of the insurance
premiums on the Policy of Insurance required to be maintained by the Company in
accordance with and as provided by Section 4.6, during the remaining and
unexpired portion of the Term.

 

In the event of a Termination of the Executive’s employment as described in
4.6.1, the Company shall provide to the Executive and the Executive shall be
entitled to Health, Medical, Dental, Disability, and Life Insurance Benefits
during the remaining and unexpired portion of the Term or the 24 months
following the Termination, whichever shall be the longer.

 

5.                                      No Additional Compensation or Benefits;
Unsecured Benefits; Withholdings.  Except provided in Sections 3 and 4 or as
otherwise determined by the Compensation Committee of the Company’s Board of
Directors, the Executive shall not be entitled to any other or further
compensation or benefits (including any insurance benefits) from the Company as
a result of the services to be performed under and pursuant to this Agreement or
otherwise.  In the event of termination of this Agreement, all payments and
benefits under this Agreement shall cease effective upon Voluntary Termination
or Involuntary Termination of employment under this Agreement.  None of the
benefits or arrangements described in this Agreement shall be secured or funded
in any way, and each shall instead constitute an unfunded and unsecured promise
to pay money in the future exclusively from the general assets of the Company. 
The Company may withhold from any compensation, benefits, or amounts payable
under this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.

 

6.                                      Termination Prior to Expiration of Term
and Effects of such Termination.

 

6.1.                            Company’s Right of Termination.  Notwithstanding
any other provisions of this Agreement, the Company shall have the right to
terminate the Executive’s employment under this Agreement at any time prior to
the expiration of the Term following 30 days advance written notice for any of
the following reasons:

 

6.1.1                     For Cause Termination.  For “cause” upon the
determination by the Company’s Board of Directors that “cause” exists for the
termination of the employment relationship with the Executive.  As used in this
Section 6.1.1, the term “Cause” shall mean

 

(a) the Executive has been convicted of a felony (which, through lapse of time
or otherwise, is not subject to appeal); or

 

(b) the Executive has willfully refused without proper legal reason to perform
the duties and responsibilities required of the Executive under this Agreement
which remains uncorrected for 30 days following written notice to the Executive
by the Company of such breach; or

 

(c) the Executive has willfully engaged in conduct that the Executive knows or
should know is materially injurious to the Company or any of its subsidiaries.

 

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It is expressly acknowledged and agreed by the parties that the decision of
whether Cause exists for termination of the employment relationship with the
Executive by the Company is solely with the determination of the Company’s Board
of Directors.  If the Executive disagrees with the decision reached by the
Company’s Board of Directors, the dispute will be limited to whether the
Company’s Board of Directors reached its decision in good faith.

 

6.1.2                     Without Cause Termination.  For any other reason
whatsoever, with or without “cause,” in the sole discretion of the Company’s
Board of Directors.

 

6.1.3                     Death.  Upon the Executive’s death.

 

6.1.4                     Disability.  Upon the Executive becoming “disabled” so
as to entitle the Executive to benefits under the Company’s long-term disability
plan.  The term “Disabled” as used in this Agreement shall mean, in the event a
disability insurance policy is provided or paid for by the Company covering the
Executive at such time and is in full force and effect, the definition of
permanent disability set forth in such policy.  If no such disability policy is
so maintained at such time and is then in full force and effect, the term
“Disabled” shall mean the inability of the Executive, as reasonably determined
by the Company’s Board of Directors by reason of physical or mental disability
to perform the duties required of the Executive under this Agreement for a
period of 120 days in any one-year period.  Successive periods of disability,
illness or incapacity will be considered separate periods unless the later
period of disability, illness or incapacity is due to the same or related cause
and commences less than three months from the ending of the previous period of
disability.  Upon such determination, the Company may terminate the Executive’s
employment under this Agreement upon 10 days’ prior written notice.  If any
determination of the Company with respect to Permanent Disability is disputed by
the Executive, the parties hereto agree to abide by the decision of a panel of
three physicians.  The Executive and Company shall each appoint one member, and
the third member of the panel shall be appointed by the other two members.  The
Executive agrees to be available for and submit to examinations by such
physicians as may be directed by the Company.  Failure to submit to any such
examination may be treated by the Company as an admission by the Executive of
Permanent Disability.

 

6.1.5                     Change of Control. The occurrence of a “Change of
Control.”  For purposes of this Agreement, the phrase “Change of Control” shall
mean:

 

(i)  any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act but excluding any employee benefit plan of the Company) is or
becomes the “beneficial owner” (as defined in Rule 3d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company’s outstanding securities then entitled
ordinarily (and apart from rights accruing under special circumstances) to vote
for the election of directors of the Company; or

 

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(ii)  the Board of Directors shall approve a sale of all or substantially all of
the assets of the Company; or

 

(iii) the Board of Directors shall approve any merger, consolidation or like
business combination or reorganization of the Company, the consummation of which
would result in the occurrence of any event described in clause (i) or (ii) of
this Section 6.1.5.

 

The termination of the Executive’s employment by the Company prior to the
expiration of the Term shall constitute a “Termination for Cause” if made
pursuant to Section 6.1.1; the effect of such termination is specified in
Section 6.4.  The termination of the Executive’s employment by the Company prior
to the expiration of the Term shall constitute an “Involuntary Termination” if
made pursuant to Section 6.1.2 or Section 6.1.5; the effect of such termination
is specified in Section 6.5. The effect of the employment relationship being
terminated pursuant to Section 6.1.3 as a result of the Executive’s death is
specified in Section 6.6. The effect of the employment relationship being
terminated pursuant to Section 6.1.4 as a result of the Executive becoming
Disabled is specified in Section 6.7.

 

In the event of a Change of Control, the Executive is obligated to continue
employment with the Company for a term of 3 months, immediately following the
Change of Control.  The Involuntary Termination becomes effective immediately
following the 3-month continued employment term.

 

6.2.                            The Executive’s Right of Termination. 
Notwithstanding any other provisions of this Agreement, the Executive shall have
the right to terminate the employment relationship under this Agreement at any
time prior to the expiration of the Term following 30 days’ advance written
notice for any of the following reasons:

 

6.2.1                     Relocation.  The Executive is required by the Company
to be permanently relocated to a city more than 50 miles from the Grand Prairie,
Texas or is demoted from the position of Executive Vice President of Provider
Relations of The Company, within 60 days after such relocation or demotion the
Executive provides the Company with a written notice that such relocation or
demotion has occurred and that the Executive intends to terminate the employment
relationship under this Section 6.2.1, and thereafter such relocation or
demotion is not corrected by the Company within 30 days.

 

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6.2.2                     The Company’s Breach.  Any material breach by the
Company of any material provision of this Agreement that remains uncorrected for
30 days following receipt of written notice of such breach by the Executive to
the Company.

 

6.2.3                     The Executive’s Election to Terminate.  For any other
reason whatsoever other than pursuant to Section 6.2.1 or 6.2.2, in the sole
discretion of the Executive.

 

6.2.4                     Change of Control.  The occurrence of a Change of
Control.

 

The termination of the Executive’s employment by the Executive prior to the
expiration of the Term shall constitute an “Involuntary Termination” if made
pursuant to Sections 6.2.1, or 6.2.2 or 6.2.4; the effect of such termination is
specified in Section 6.5.  The termination of the Executive’s employment by the
Executive prior to the expiration of the Term shall constitute a “Voluntary
Termination” if made pursuant to Section 6.2.3; the effect of such termination
is specified in Section 6.3.

 

6.3.                            The Executive’s Voluntary Termination.  Upon a
“Voluntary Termination” of the employment relationship by the Executive prior to
expiration of the Term, all future compensation that the Executive is entitled
and all future benefits for which the Executive is eligible shall cease and
terminate as of the date of termination. The Executive shall be entitled to pro
rata salary through the date of such termination, but the Executive shall not be
entitled to any Bonus or other incentive compensation not yet paid at the date
of such termination.  The effect and consequences of the Executive’s Voluntary
Termination under this Agreement shall be independent of the Executive’s rights
under any stock option agreement or plan or employee benefit award agreement.

 

6.4                               Termination for Cause.  Upon a “Termination
for Cause” of the Executive’s employment relationship by the Company prior to
expiration of the Term, all future compensation to which the Executive is
entitled and all future benefits for which the Executive is eligible shall cease
and terminate as of the date of termination. The Executive shall be entitled to
pro rata salary through the date of such termination, but the Executive shall
not be entitled to any individual bonuses or individual incentive compensation
not yet paid at the date of such termination. Upon termination of the employment
relationship for Cause, all of the Executive’s interests under the any stock
option agreement or plan or employee benefit award agreement shall be canceled
effective as of the date of such termination of employment and the Executive
shall not be entitled to any compensation or benefits thereunder from and after
the date of such termination of employment.

 

6.5.                            Involuntary Termination.  Upon an Involuntary
Termination of the employment relationship by either the Company or the
Executive prior to expiration of the Term, the Executive shall be entitled, in
consideration of the Executive’s continuing obligations under this Agreement
after such termination (including, without limitation, the Executive’s
non-competition obligations), to receive the compensation and benefits pursuant
to and in accordance with Sections 3 and 4. The Executive shall not be under any
duty or obligation to seek or accept other employment following Involuntary
Termination and, subject to the Executive complying with the Executive’s
continuing obligations (including non-competition obligations), the amounts due
the Executive hereunder shall not be reduced or suspended if the Executive
accepts subsequent employment.  The Executive’s rights under this Section 6.5
are the Executive’s sole and exclusive rights against the Company or its
affiliates, and the Company’s sole and exclusive liability to the Executive
under this Agreement, in contract, tort, or otherwise, for any Involuntary
Termination of the employment relationship.  The Executive covenants not to sue
or lodge any claim, demand, or cause of action against the Company based on
Involuntary Termination for any compensation and benefit the Executive shall be
entitled to receive pursuant to this Section 6.5.  If the Executive breaches
this covenant, the Company shall be entitled to recover from the Executive all
sums expended by the Company (including costs and attorneys fees) in connection
with such suit, claim, demand, or cause of action.  Upon Involuntary Termination
of the employment relationship by either the Company or the Executive, the
entirety of the Executive’s unvested rights under any stock option agreement or
plan or employee benefit award agreement shall vest immediately upon such
termination of the employment relationship and the Company shall at that time.

 

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6.6.                            Termination Caused by Death.  Upon termination
of the employment relationship as a result of the Executive’s death, the
Executive’s heirs, administrators, or legatees shall be entitled to the
Executive’s pro rata salary through the date of such termination, but the
Executive’s heirs, administrators, or legatees shall not be entitled to any
individual bonuses or individual incentive compensation not yet paid to the
Executive at the date of such termination. Upon the Executive’s death, the
Executive’s heirs, administrators, or legatees shall be entitled only to the
compensation and benefits that the Executive under the terms and conditions of
any stock option agreement or plan or employee benefit award agreement that the
Executive has at the date of death or as a result of the Executive’s death.

 

6.7.                            Termination Caused by Disability.

 

The Disability of the Executive and termination of the Executive’s employment
termination, the Executive shall be entitled to receive the Base Salary plus any
bonus compensation earned but not yet paid, less any cash benefits received by
the Executive under any disability insurance paid for by the Company and the
Executive’s all other rights under this Agreement shall terminate.  Provided,
however, during any period from the date of the commencement of period that the
Executive is absent from work due to sickness, disability or incapacity and
until commencement of the Executive’s receipt of payments of the monthly
disability benefits under any disability policy maintained by the Company, the
Executive shall continue to be entitled to receive and the Company shall pay and
provide to compensation and benefits under and in accordance with Section 3 and
4 during the remaining and unexpired portion of the Term.

 

6.8.                            Offsets.  In all cases, the compensation and
benefits payable to the Executive under this Agreement upon termination of the
employment relationship shall be offset against any amounts to which the
Executive may otherwise be entitled under any and all severance plans and
policies of the Company or its affiliates.

 

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7.                                      Ownership and Protection of Information;
Copyrights.

 

7.1.                            Access to Proprietary Information.  The Company
shall disclose to the Executive, or place the Executive in a position to have
access to or develop, trade secrets or confidential information of the Company
or its affiliates; and/or shall entrust the Executive with business
opportunities of the Company or its affiliates; and/or shall place the Executive
in a position to develop business good will on behalf of the Company or its
affiliates.

 

7.2.                            Ownership of Information.  All information,
ideas, concepts, improvements, discoveries, and inventions, whether patentable
or not, which are conceived, made, developed or acquired by the Executive,
individually or in conjunction with others, during the Executive’s employment by
the Company (whether during business hours or otherwise and whether on the
Company’s premises or otherwise) that relate to the Company’s business, products
or services (including, without limitation, all such information relating to
corporate opportunities, research, financial and sales data, pricing and trading
terms, evaluations, opinions, interpretations, acquisition prospects, the
identity of customers or their requirements, the identity of key contacts within
the customer’s organizations or within the organization of acquisition
prospects, or marketing and merchandising techniques, prospective names, and
marks) shall be disclosed to the Company and are and shall be the sole and
exclusive property of the Company.  Moreover, all documents, drawings,
memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, e-mail, voice mail, electronic databases,
maps and all other writings or materials of any type embodying any of such
information, ideas, concepts, improvements, discoveries, and inventions are and
shall be the sole and exclusive property of the Company.

 

7.3.                            Intellectual Property Development.  If, during
the Executive’s employment by the Company, the Executive creates any original
work of authorship fixed in any tangible medium of expression which is the
subject matter of copyright (such as videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures, or the like) relating to the Executive’s business,
products, or services, whether such work is created solely by the Executive or
jointly with others (whether during business hours or otherwise and whether on
the Employer’s premises or otherwise), the Executive shall disclose such work to
the Company.  The Company shall be deemed the author of such work if the work is
prepared by the Executive in the scope of the Executive’s employment; or, if the
work is not prepared by the Executive within the scope of the Executive’s
employment but is specially ordered by the Company as a contribution to a
collective work, as a part of an audio-visual work, as a translation, as a
supplementary work, as a compilation, or as an instructional text, then the work
shall be considered to be work made for hire and the Company shall be the author
of the work.  If such work relating to the Company’s business is neither
prepared by the Executive within the scope of the Executive’s employment nor a
work specially ordered and is deemed to be a work made for hire, then the
Executive hereby agrees to assign, and by these presents does assign, to the
Company all of the Executive’s worldwide right, title, and interest in and to
such work and all rights of copyright therein.  If such work has no relation to
the Company’s business, then the title and rights of copyright related thereto
will belong to the Executive.

 

7.4.                            Non-disclosure.  The Executive acknowledges that
the business of the Company and its affiliates is highly competitive and that
their strategies, methods, books, records, and documents, their technical
information concerning their products, equipment, services, and processes,
procurement procedures and pricing techniques, the names of and other
information (such as credit and financial data) concerning their customers and
business affiliates, all comprise confidential business information and trade
secrets which are valuable, special, and unique assets that the Company or its
affiliates use in their business to obtain a competitive advantage over their
competitors.  The Executive further acknowledges that protection of such
confidential business information and trade secrets against unauthorized
disclosure and use is of critical importance to the Company and its affiliates
in maintaining their competitive position. The Executive hereby agrees that the
Executive will not, at any time during or

 

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after his or her employment by the Company, make any unauthorized disclosure of
any confidential business information or trade secrets of the Company or its
affiliates, or make any use thereof, except in the carrying out of the
Executive’s employment responsibilities under this Agreement; provided, however,
that these restrictions shall not apply to (i) such portions of any information
treated as confidential information or trade secrets by the Company or its
affiliates that in fact become publicly available other than through the action
of the Executive, or (ii) such portions of information which, although it was
treated as confidential or a trade secret at the time of its creation, is no
longer confidential or a trade secret at the time of termination of the
Executive’s employment by the Company, and provided further that such
restrictions shall not apply to the portions of such information that is or
becomes part of the Executive’s general business knowledge or experience. The
Company’s affiliates shall be third party beneficiaries of the Executive’s
obligations under this Section 7.  As a result of the Executive’s employment by
the Company, the Executive may also from time to time have access to, or
knowledge of, confidential business information or trade secrets of third
parties, such as customers, suppliers, partners, joint venturers, and the like,
of the Company and its affiliates.  The Executive also agrees to preserve and
protect the confidentiality of such third party confidential information and
trade secrets to the same extent, and on the same basis, as the Company has
agreed to protect and preserve such third party confidential information and
trade secrets.  These obligations of confidence apply irrespective of whether
the information has been reduced to a tangible medium of expression (e.g., is
only maintained in the minds of Company’s employees) and, if it has been reduced
to a tangible medium, irrespective of the form or medium in which the
information is embodied (e.g., documents, drawings, memoranda, notes, records,
files, correspondence, manuals, models, specifications, computer programs,
e-mail, voice mail, electronic databases, maps and all other writings or
materials of any type).

 

7.5.                            Information Re-delivery Upon Termination.  Upon
termination of the Executive’s employment with the Company, for any reason, the
Executive promptly shall deliver to the Company all written materials, records,
videotape, computer programs, drawings, maps, architectural renditions, models,
manuals, brochures, and other documents made by, or coming into the possession
of, the Executive during the period of the Executive’s employment by the Company
that are owned by the Company or its affiliates or which contain or disclose
confidential business information or trade secrets of the Company or its
affiliates, and all copies thereof.

 

7.6.                            Assistance in Protection.  Both during the
period of the Executive’s employment by the Company and thereafter, the
Executive shall assist the Company and its nominee, at any time, at the
Company’s cost, in the protection of the Company’s worldwide right, title, and
interest in and to information, ideas, concepts, improvements, discoveries, and
inventions, and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by the Company or its
nominee and the execution of all lawful oaths and applications for applications
for patents and registration of copyright in the United States and foreign
countries.

 

7.7.                            Remedies.  The Executive acknowledges that money
damages would not be sufficient remedy for any breach of this Section 7 by the
Executive.  After provision of 15 days advance written notice specifying the
Company’s basis for belief that the Executive may have violated the provisions
of Section 7, and if the Executive fails to remedy such alleged breach within
such 15 period of time, the Company shall be entitled to enforce the provisions
of this Section 7 by terminating any payments then owing to the Executive under
this Agreement and/or to specific performance and injunctive relief as remedies
for such breach or any threatened breach.  Such remedies shall not be deemed the
exclusive remedies for a breach of this Section 7, but shall be in addition to
all remedies available at law or in equity to the Company, including the
recovery of damages from the Executive and the Executive’s agents involved in
such breach and remedies available to the Company pursuant to other agreements
with the Executive.

 

8.                                      Non-competition Obligations.

 

8.1.                            Access to Proprietary Information.  The Company
shall disclose to the Executive, or place the Executive in a position to have
access to or develop, trade secrets or confidential information of the Company
or its affiliates; and/or shall entrust the Executive with business
opportunities of the Company or its affiliates; and/or shall place the Executive
in a position to develop business good will on behalf of the Company or its
affiliates.

 

8.2.                            Non-disclosure.  As part of the consideration
for the compensation and benefits to be paid to the Executive hereunder; to
protect the trade secrets and confidential information of the Company or its

 

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affiliates that will be disclosed or entrusted to the Executive, the business
goodwill of the Company or its affiliates that will be developed in the
Executive, or the business opportunities that will be disclosed or entrusted to
the Executive by the Company or its affiliates; and as an additional incentive
for the Executive to enter into this Agreement, the Company and the Executive
agree to the non-competition provisions of this Section 8.  The Executive agrees
that during the period of the Executive’s non-competition obligations hereunder,
the Executive will not, directly or indirectly for the Executive or for others,
in any geographic area or market where the Company or any of its affiliated
companies are conducting any business as of the date of termination of the
employment relationship or have during the previous 12 months conducted any
business: (i) engage in any business competitive with the business conducted by
the Company; (ii) render advice or services to, or otherwise assist, any other
person, association, or entity who is engaged, directly or indirectly, in any
business competitive with the business conducted by the Company; (iii) induce
any employee of the Company or any of its affiliates to terminate his or her
employment with the Company or its affiliates, or hire or assist in the hiring
of any such employee by any person, association, or entity not affiliated with
the Company.  A competitive business is defined as any business that sells or
produces a healthcare membership savings card or that distributes its product
and/or services through a network marketing strategy.  These non-competition
obligations shall extend for so long as the Executive is employed by the Company
or, if the employment relationship terminates prior to the expiration of the
Term, for a period of three years following termination of the Executive’s
employment relationship.

 

8.3.                            Remedies.  The Executive understands that the
foregoing restrictions may limit the Executive’s ability to engage in certain
businesses anywhere in the world during the period provided for above, but
acknowledges that the Executive will receive sufficiently high remuneration and
other benefits (e.g., the right to receive compensation under this Agreement for
the remainder of the Term upon Termination) under this Agreement to justify such
restriction.  The Executive acknowledges that money damages would not be
sufficient remedy for any breach of this Section 8 by the Executive, and the
Company shall be entitled to enforce the provisions of this Section 8 by
terminating any payments then owing to the Executive under this Agreement and/or
to specific performance and injunctive relief as remedies for such breach or any
threatened breach. Such remedies shall not be deemed the exclusive remedies for
a breach of this Section 8, but shall be in addition to all remedies available
at law or in equity to the Company, including, without limitation, the recovery
of damages from the Executive involved in such breach and remedies available to
the Company pursuant to other agreements with the Executive.

 

8.4.                            Judicial Modification.  It is expressly
understood and agreed that the Company and the Executive consider the
restrictions contained in this Section 8 to be reasonable and necessary to
protect the proprietary information of the Company. Nevertheless, if any of the
aforesaid restrictions are found by a court having jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.

 

9.                                      Submission to Mediation and
Arbitration.  Any “Dispute” that cannot be resolved by the parties shall be
submitted to mediation before a mediator selected by the parties.  The parties
shall bear their own costs for mediation and the costs of the mediator shall be
borne equally.  If the parties are unable to select a mediator within 15 days or
if the Dispute is not resolved as a result of the mediation within 60 days (or
such other period as may be agreed by the parties), either party may submit the
matter to arbitration for final, binding and exclusive settlement by three
arbitrators in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date of such controversy or claim.  Any
such arbitration shall take place in Dallas, Texas and shall be conducted before
three arbitrators.  The parties hereby submit to the jurisdiction of the courts
(federal and state) in Dallas, Texas. The arbitrators shall have all the powers
of an Texas court of law and equity, including the power to order specific
performance of this agreement and the production of relevant and unprivileged
documents by one party for any inspection and duplication by the other party
prior to any hearing.  Any arbitration decision pursuant to this Section 9 shall
be final and binding upon the parties and judgment thereon may be entered in any
court of competent jurisdiction.  Costs incurred by the parties in carrying on
any arbitration proceeding hereunder (including reasonable attorneys’ fees and
arbitration fees) shall be determined by the arbitrators by reference to fault. 
Nothing in this Agreement shall limit the right of the parties, before and
during such arbitration, to have recourse to such judicial remedies, including
preliminary injunction and attachment, as would be available in the absence of
this Section 9.  For purposes of this Agreement, the term “Dispute” means any
dispute or difference which arises

 

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between the parties in connection with or arising out of this Agreement
(including, without limitation, any dispute as to the termination or invalidity
of this Agreement or any provision of it).

 

10.                               Miscellaneous.

 

10.1                        Maintenance of Privacy Rights.  The Executive shall
refrain, both during the employment relationship and after the employment
relationship terminates, from publishing any oral or written statements about
the Company, any of its subsidiaries or affiliates, or any of such entities’
officers, employees, agents or representatives that are slanderous, libelous, or
defamatory; or that disclose private or confidential information about the
Company, any of its subsidiaries or affiliates, or any of such entities’
business affairs, officers, employees, agents, or representatives; or that
constitute an intrusion into the seclusion or private lives of the Company, any
of its subsidiaries or affiliates, or any of such entities’ officers, employees,
agents, or representatives; or that give rise to unreasonable publicity about
the private lives of the Company, any of its subsidiaries or affiliates, or any
of such entities’ officers, employees, agents, or representatives; or that place
the Company, any of its subsidiaries or affiliates, or any of such entities’
officers, employees, agents, or representatives in a false light before the
public; or that constitute a misappropriation of the name or likeness of the
Company, any of its subsidiaries or affiliates, or any of such entities’
officers, employees, agents, or representatives.  A violation or threatened
violation of this prohibition may be enjoined by court of competent
jurisdiction.  The rights afforded the Company and its affiliates under this
Section 10.1 are in addition to any and all rights and remedies otherwise
afforded by law.

 

10.2                        Notices.  For purposes of this Agreement, notices
and all other communications provided for herein shall be in writing and shall
be deemed to have been duly given when personally delivered or when mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

 

If the Company, to:

 

Precis, Inc.

 

 

 

2040 North Highway 360

 

 

 

Grand Prairie, Texas 75050

 

 

 

Attention:

Dino Eliopoulos, Chief Financial Officer

 

 

 

 

 

 

If the Executive, to:

 

[                                     ]

 

 

 

[                                     ]

 

 

 

[                 ], Texas [               ]

 

Either party may furnish a change of address to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

 

10.3                        Applicable Law.  This Agreement shall be governed in
all respects by the laws of the State of Texas, excluding any conflict-of- law
rule or principle that might refer the construction of the Agreement to the laws
of another State or country.

 

10.4                        Waiver.  No failure by either party hereto at any
time to give notice of any breach by the other party of, or to require
compliance with, any condition or provision of this Agreement shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. Any term or provision of this Agreement may be waived
in writing at any time by a party, if the party is entitled to the benefits
thereof.  No such waiver shall, unless explicitly stated, be a continuing
waiver.  No failure to exercise or delay in exercising any right hereunder shall
constitute a waiver thereof.  The failure or delay of any party at any time to
require performance by another party of any provision of this Agreement, even if
known, shall not affect the right of such party to require performance of that
provision or to exercise any right, power or remedy under this Agreement.  Any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of any continuing or succeeding breach of such right, power
or remedy under this Agreement.  No notice to or demand on any party in any case
shall, of itself, entitle such party to any other or further notice or demand in
similar or other circumstances.

 

10.5                        Effect of Invalid Provisions.  It is a desire and
intent of the parties that the terms, provisions, covenants, and remedies
contained in this Agreement shall be enforceable to the fullest extent

 

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permitted by law.  If any such term, provision, covenant, or remedy of this
Agreement or the application thereof to any person, association, or entity or
circumstances shall, to any extent, be construed to be invalid or unenforceable
in whole or in part, then such term, provision, covenant, or remedy shall be
construed in a manner so as to permit its enforceability under the applicable
law to the fullest extent permitted by law.  In any case, the remaining
provisions of this Agreement or the application thereof to any person,
association, or entity or circumstances other than those to which they have been
held invalid or unenforceable, shall remain in full force and effect. In the
event any provision of this Agreement may be construed in two or more ways, one
of which would render the provision invalid or otherwise voidable or
unenforceable and another of which would render the provision valid and
enforceable, such provision shall have the meaning which renders it valid and
enforceable.

 

10.6.                     Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Company and any other person, association, or entity
which may hereafter acquire or succeed to all or substantially all of the
business or assets of the Company by any means whether direct or indirect, by
purchase, merger, consolidation, or otherwise. The Executive’s rights and
obligations under Agreement are personal and such rights, benefits, and
obligations of the Executive shall not be voluntarily or involuntarily assigned,
alienated, or transferred, whether by operation of law or otherwise, without the
prior written consent of the Company.

 

10.7.                     Entire Agreement.  Except as provided in (1) written
company policies promulgated by the Company dealing with issues such as
securities trading, business ethics, governmental affairs and political
contributions, consulting fees, commissions or other payments, compliance with
law, investments and outside business interests as officers and employees,
reporting responsibilities, administrative compliance, and the like, or (2) any
signed written agreements contemporaneously or hereafter executed by the Company
and the Executive, this Agreement constitutes the entire agreement of the
parties with regard to such subject matters, and contains all of the covenants,
promises, representations, warranties, and agreements between the parties with
respect to the Executive’s employment relationship with the Company and the term
and termination of such relationship, and replaces and merges previous
agreements and discussions pertaining to the employment relationship between the
Company and the Executive. Specifically, but not by way of limitation, the
Employment Agreement dated June 8, 2001 between the Company, The Capella  Group,
Inc. and the Executive is hereby canceled and the Executive hereby irrevocably
waives and renounces all of the Executive’s rights and claims under such June 8,
2001 Employment Agreement.  Any modification of this Agreement will be effective
only if it is in writing and signed by each party whose rights hereunder are
affected thereby.

 

10.8                        Counterparts.  This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be a single agreement.

 

10.9                        Headings and Captions; Interpretation.  In this
Agreement, unless the context otherwise requires, (i) references to Sections are
to Sections of this Agreement; (ii) use of any gender includes the other
genders; (iii) any reference to a “day” (including within the phrase “Business
Day) shall mean a period of 24 hours running from midnight to midnight; (iv) a
reference to any other document referred to in this Agreement is a reference to
that other document as amended, varied, modified or supplemented at any time;
(v) where a word or phrase is given a particular meaning, other parts of speech
and grammatical forms of that word or phrase shall have corresponding meanings;
(vi) reference to an “authorization” includes any authorization, consent, order,
approval, resolution, licence, exemption, permission, notarization, recording,
filing and registration; (vii) a reference to this “Agreement” or any other
agreement or document shall be construed as a reference to it as amended, or
modified from time to time; and a reference to “affiliate” or “affiliated” 
means an entity that directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the Company.  The
headings in this Agreement are inserted for convenience only and shall not be
taken into consideration in the interpretation or construction of this
Agreement.

 

IN WITNESS WHEREOF, parties have duly executed this Agreement in multiple
originals to be effective on the date first stated above.

 

“Company”

PRECIS, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ JUDITH H. HENKELS

 

 

 

 

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Judith H. Henkels

 

 

 

Chief Executive Officer

 

 

Date:

August 1, 2003

 

 

 

 

 

 

 

 

“Executive”

 

 

 

By:  /s/ BOBBY RHODES

 

 

 

 

 

 

Bobby Rhodes

 

 

 

Executive Vice President of Provider Relations

 

 

Date:

August 1, 2003

 

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