EXHIBIT A
EMPLOYMENT AGREEMENT
This Agreement is made by and between Xxxxx Xxxxx ("Employee") and United
HealthCare Services, Inc. ("UHS") (when used in this Agreement, UHS includes any
affiliated entity of UHS) for the purpose of setting forth certain terms and
conditions of Employee's employment by UHS and to protect UHS's knowledge,
expertise, customer relationships and the confidential information UHS has
developed about its customers, products, operations and services. As of the
Effective Date, this Agreement supersedes any prior employment-related agreement
or agreements between Employee and UHS or any subsidiary or affiliate of UHS but
does not supersede the Release Agreements that UHS and I execute.
1. EMPLOYMENT AND DUTIES.
A. EMPLOYMENT. UHS hereby directly or through its subsidiaries
employs Employee. Employee accepts such employment on the terms
and conditions set forth in this Agreement and, except as
specifically superseded by this Agreement, subject to all of
UHS's policies and procedures in regard to its employees.
B. DUTIES. Employee shall perform such duties as are commonly
associated with his/her position or as are reasonably assigned
to Employee by his/her supervisor from time-to-time. Employee
acknowledges that he will not be employed as Chief Financial
Officer effective July 1, 1998. After that date, Employee will
provide services to UHS regarding financial and other related
issues as requested by senior management on a flexible work
schedule to be mutually determined by Employee and the Senior
Executive Vice-President. Employee shall be generally available
to senior management during regular business hours and shall
remain classified as a full-time employee.
2. COMPENSATION.
A. BASE SALARY. Employee shall be paid a base annual salary in the
amount of $367,500 payable bi-weekly, less all applicable
withholdings and deductions.
B. VACATION; ILLNESS. Employee shall be entitled to paid vacation
and sick leave each year in accordance with UHS's then-current
policies.
C. MIP AND LTIP PAYMENTS. UHS also agrees to pay Employee pursuant
to the Long Term Incentive Plan ("LTIP") for the 1997-1998 cycle
according to the terms of the plan and continue Employee's
eligibility for the MIP for 1998 according to the terms of the
plan. This MIP payment will be made pursuant to the terms of
the Plan but no later than March, 1999. Employee's MIP payment
for 1998 will be at least one-half Employee's target under the
MIP.
D. STOCK OPTION VESTING. For the period December 1, 1998 through
September 30, 1999, UHS also agrees to vest Employee's United
HealthCare performance based stock option grants in the
following manner: (1) for grants made before July 1, 1996, UHS
agrees to vest the grants at a rate of 20% of the number of
shares covered by the option or grant on the anniversary date of
the option or grant; (2) for grants or options made after July
1, 1996, UHS agrees to vest the grant at a rate of 25% of the
number of shares covered by the grant on the anniversary date of
the option or grant.
E. OTHER BENEFITS. Employer shall continue provide Employee with
the same employee benefit coverages that it is currently
providing to Employee subject to his elections. Employer agrees
to provide Employee with use of UHS' voice-mail and computer
e-mail.
3. TERM AND TERMINATION.
A. TERM. The term of this Agreement shall begin on July 1, 1998
(the "Effective Date") and shall continue until the earlier of
the date of termination pursuant to Section 3B or September 30,
1999.
B. TERMINATION OF AGREEMENT AND/OR EMPLOYMENT.
i. This Agreement may be terminated at any time by the
mutual written agreement of the parties.
ii. UHS may terminate Employee's employment or terminate
this Agreement for Cause (as defined below) by giving
written notice of termination which is received by
Employee at least 30 days before the effective date of
termination of employment or of this Agreement, as the
case may be. UHS will specify the reasons for the
termination and provide Employee with the reasonable
opportunity to respond to the reasons stated. If
Employee has not adequately resolved the issue that gave
rise to the termination, the termination will become
effective on the date specified by UHS.
iii. Employee may terminate his/her employment by giving
written notice of termination of employment which is
received by UHS at least 30 days before the effective
date of termination of employment.
iv. This Agreement shall automatically terminate on the
effective date of the termination of Employee's
employment or on the date of Employee's death,
retirement or permanent and total disability which
renders Employee incapable of performing Employee's
duties; provided, however, notwithstanding such
termination, (i) in the event of Employee's death, UHS
shall continue to pay to Employee or his estate or
representative the base salary scheduled to be made in
accordance with Section 2A of this Agreement through
September 30, 1999; (ii) in the event of Employee's
permanent and total disability, UHS will continue to pay
Employee the difference between his base salary and any
disability payments that Employee receives through
September 30, 1999; and (iii) in the event of Employee's
death or permanent and total disability, UHS will vest
all of Employee's stock options, will provide the health
coverage to the extent applicable to Employee's family
members and pursuant to the terms of the post career
coverage program included in the attached second
release, and will allow Employee's estate, personal
representative or heirs to have the extended stock
option exercise date (September 30, 2002) included in
the attached second release. UHS has the sole right, in
its reasonable discretion, to determine whether Employee
is permanently or totally disabled within the meaning of
this Section 3B4.
4. SEVERANCE EVENTS AND COMPENSATION.
A. In the event Employee's employment with UHS is terminated by UHS
pursuant to Section 3B(ii) with Cause, then:
i. This Agreement shall also be terminated along with all
future payments, stock vesting and benefits described in
this Agreement. UHS will not execute the Second Release
attached to this Agreement.
ii. As of the effective date of termination of employment,
Employee shall cease to be eligible for all benefit
plans maintained by UHS, except as required by federal
or state continuation of coverage laws.
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B. In the event Employee's employment with UHS is terminated by
Employee pursuant to Section 3B(iii), then:
i. This Agreement shall also be terminated. However, UHS
shall continue to pay Employee his bi-weekly base
salary, less withholdings and deductions, through
September 30, 1999. As of the effective date of
termination, however, Employee shall not receive any
future stock vesting, LTIP or MIP Payments described in
this Agreement.
ii. UHS will execute the Second Release attached to this
Agreement within 21 days of Employee's termination of
employment.
C. Definitions and Procedure.
i. For purposes of this Agreement, "Cause" shall mean the
(a) the willful failure or refusal of Employee to follow
the reasonable directions of UHS's Board of Directors or
Employee's supervisor or to perform any duties
reasonably required by UHS, (b) a failure to adequately
meet reasonable performance expectations, (c) material
violations of UHS's Code of Conduct or (d) the
commission of any criminal act or act of fraud or
dishonesty by Employee in connection with Employee's
employment by UHS. In the event that UHS terminates
Employee's employment under subsections (a), (b) or (c)
of this Cause definition, UHS shall specify in the
notice of termination the basis for Cause. If the Cause
described in the notice is cured to UHS's reasonable
satisfaction prior to the end of the 30 day notice
period, the notice of termination of employment shall be
withdrawn.
5. PROPERTY RIGHTS, CONFIDENTIALITY, NON-SOLICIT AND NON-COMPETE
PROVISIONS.
A. UHS'S PROPERTY.
i. Except for inventions, discoveries or works referred to
in the next paragraph, Employee shall promptly disclose
to UHS in writing all inventions, discoveries and works
of authorship, whether or not patentable or
copyrightable, which are conceived, made, discovered,
written or created by Employee alone or jointly with
another person, group or entity, whether during the
normal hours of employment at UHS or on Employee's own
time, during the term of this Agreement. Employee
assigns all rights to all such inventions and works of
authorship to UHS. Employee shall give UHS any
assistance it reasonably requires in order for UHS to
perfect, protect, and use its rights to inventions and
works of authorship.
This provision shall not apply to an invention,
discovery or work for which no equipment, supplies,
facility or trade secret information of UHS was used and
which was developed entirely on the Employee's own time
and which (1) does not relate to the business of UHS or
to UHS's anticipated research or development, or (2)
does not result from any work performed by the Employee
for UHS.
ii. Employee shall not remove any records, documents, or any
other tangible items (excluding Employee's personal
property) from the premises of UHS in either original or
duplicate form, except as is needed in the ordinary
course of conducting business for UHS.
iii. Employee shall immediately deliver to UHS, upon
termination of employment with UHS, or at any other time
upon UHS's request, any property, records, documents,
and other tangible items (excluding Employee's personal
property) in Employee's possession or
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control, including data incorporated in word processing,
computer and other data storage media, and all copies of
such records, documents and information, including all
Confidential Information, as defined below. UHS agrees
that Employee can purchase his personal computer from
UHS at the depreciated value, according to the Company's
records.
B. CONFIDENTIAL INFORMATION. During the course of his employment
Employee will develop, become aware of and accumulate expertise,
knowledge and information regarding UHS's organization,
strategies, business and operations and UHS's past, current or
potential customers and suppliers. UHS considers such
expertise, knowledge and information to be valuable,
confidential and proprietary and it shall be considered
Confidential Information for purposes of this Agreement. During
this Agreement and at all times thereafter Employee shall not
use such Confidential Information or disclose it to other
persons or entities except as is necessary for the performance
of Employee's duties for UHS or as has been expressly permitted
in writing by UHS unless such information is available to the
public at the time of its disclosure by Employee in which case
such information is no longer Confidential Information.
C. NON-SOLICITATION. During (i) the term of this Agreement, (ii)
any period for which Employee is receiving payments under
Section 4B of this Agreement, (iii) any period following the
termination or expiration of this Agreement during which
Employee remains employed by UHS and (iv) for a period of one
year after the last day of the latest of any period described in
(i), (ii) or (iii), Employee shall not (y) directly or
indirectly attempt to hire away any then-current employee of UHS
or a subsidiary of UHS or to persuade any such employee to leave
employment with UHS, or (z) directly or indirectly solicit,
divert, or take away, or attempt to solicit, divert, or take
away, the business of any person, partnership, company or
corporation with whom UHS (including any subsidiary or
affiliated company in which UHS has a more than 20% equity
interest) has established or is actively seeking to establish a
business or customer relationship, in each case, on the date
hereof.
D. NON-COMPETITION. During (i) the term of this Agreement, (ii)
any period for which Employee is receiving payments under
Section 4B of this Agreement, and (iii) any period following the
termination or expiration of this Agreement during which
Employee remains employed by UHS, Employee shall not, without
UHS's prior written consent, engage or participate, either
individually or as an employee, consultant or principal,
partner, agent, trustee, officer or director of a corporation,
partnership or other business entity, in any business in which
UHS (including any subsidiary or affiliated company in which UHS
currently has a more than 20% equity interest) is engaged on the
date hereof. Notwithstanding anything contained in this Section
4D, after (i), (ii), and (iii) above, Employee may become
employed by or consult with (i) any hospital, physician or other
medical group excluding for these purposes any HMO, PPO,
physician practice management type company, or similar entity
controlled by such hospital, physician, or medical group, (ii)
any medical device or supply company, (iii) any securities or
venture capital firm, money management entity, or (iv)
consulting firm even if the firm provides consulting services in
the health care area (provided that employee does not provide
any services in the health care or health care management area),
or (v) to any pharmaceutical company or pharmacy benefits
company.
6. MISCELLANEOUS.
A. ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their successors and
assigns, but may not be assigned by either party without the
prior written consent of the other party, except that UHS in its
sole discretion may assign this Agreement to an entity
controlled by UHS at the time of the assignment. If UHS
subsequently loses or gives up control of the entity to which
this Agreement is assigned, such entity shall become UHS for all
purposes under this Agreement, beginning on the date on which
UHS loses or gives up control of the entity. Any successor to
UHS shall be deemed to be UHS for all purposes of this
Agreement.
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B. NOTICES. All notices under this Agreement shall be in writing
and shall be deemed to have been duly given if delivered by hand
or mailed by registered or certified mail, return receipt
requested, postage prepaid, to the party to receive the same at
the address set forth below or at such other address as may have
been furnished by proper notice.
UHS: 300 Opus Center
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Senior Vice President Human
Resources
Employee:
C. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to its subject matter
and may be amended or modified only by a subsequent written
amendment executed by the parties. This Agreement replaces and
supersedes any and all prior employment or employment related
agreements and understandings, including any letters or memos
which may have been construed as agreements, between the
Employee and UHS or any of its subsidiaries and affiliated
companies.
D. CHOICE OF LAW. This Agreement shall be construed and
interpreted under the applicable laws and decisions of the State
of Minnesota.
E. WAIVERS. No failure on the part of either party to exercise,
and no delay in exercising, any right or remedy under this
Agreement shall operate as a waiver; nor shall any single or
partial exercise of any right or remedy preclude any other or
further exercise of any right or remedy.
F. ADEQUACY OF CONSIDERATION. Employee acknowledges and agrees
that he has received adequate consideration from UHS to enter
into this Agreement.
G. DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between
the parties relating to this Agreement or to Employee's
employment by UHS shall be resolved by binding arbitration
pursuant to UHS's Employment Arbitration Policy. In no event
may the arbitration be initiated more than one year after the
date one party first gave written notice of the dispute to the
other party. The parties acknowledge that Employee's failure to
comply with the Confidentiality, Non-Solicit and Non-Compete
provisions of this Agreement will cause immediate and
irreparable injury to UHS and that therefore the arbitrators, or
a court of competent jurisdiction if an arbitration panel cannot
be immediately convened, will be empowered to provide injunctive
relief, including temporary or preliminary relief, to restrain
any such failure to comply.
H. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
or be deemed or construed to confer any rights or benefits upon
any person other than the parties.
I. SECOND RELEASE. UHS and Employee agree to execute the second
release within 21 days of employee's termination from employment
unless Employee is terminated of employment for Cause, as
defined in Section 4C of this Agreement.
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THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.
UNITED HEALTHCARE SERVICES, INC.
By /s/ Xxxxxx X. Xxxxxx /s/ Xxxxx Xxxxx
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Employee
Date 6/30/98 Date 6/30/98
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