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


 


11

















 


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


 


14

















 


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

  	
   

  	
   

  	
   

  
						



 


15

















 


	
   

  	
   

  	
   

  	
  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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