Ex. 10.19
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of the
31st day of December, 1997, by and between Foundation Health Systems, Inc., a
Delaware corporation ("Parent") and Xxxxxx X. Xxxx (the "Executive").
WHEREAS, Parent and PHS have entered into an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of May 8, 1997, pursuant to which,
among other things, a wholly owned subsidiary of Parent will be merged with
and into Physicians Health Services, Inc. ("PHS") as of the "Effective Time,"
as defined in the Merger Agreement (such transaction, the "Merger");
WHEREAS, the Executive is currently serving as President and Co-Chief
Executive Officer of PHS and the Board of Directors of Parent (the "Board")
desires to secure the continued employment of the Executive in accordance
herewith;
WHEREAS, PHS is party with the Executive to an employment agreement,
effective as of October 29, 1996, and a conditional employment agreement,
effective as of March 13, 1995 (such agreements, collectively, the "Prior
Agreements");
WHEREAS, Parent desires to employ the Executive, and the Executive
desires to be employed by Parent, on the terms and conditions herein set
forth and in lieu of the terms and conditions of the Prior Agreements; and
WHEREAS, the parties desire to enter into this Agreement effective as of
the Effective Time, setting forth the terms and conditions for the employment
relationship of the Executive with Parent and PHS;
NOW, THEREFORE, in consideration of the mutual premises and the
respective covenants and agreements of the parties herein contained, the
parties hereto agree as follows:
1. OPERATION OF AGREEMENT; EMPLOYMENT AND TERM.
(a) This Agreement shall be effective and binding immediately upon its
execution by all parties hereto, but anything in this Agreement to the
contrary notwithstanding, this Agreement shall not be operative
unless and until the Effective Time occurs. Upon the occurrence of the
Effective Time, without further action, this Agreement shall become
immediately operative.
(b) EMPLOYMENT. Parent agrees to employ the Executive, and the
Executive agrees to be employed by Parent, in accordance with the terms and
provisions of this Agreement.
(c) TERM. The term of this Agreement (the "Term") shall commence on
the date (the "Effective Date") on which the Effective Time occurs and shall
continue until December 31, 2000 (such period, the "Initial Term"); PROVIDED,
HOWEVER, that, commencing on January 1, 2001 and each successive January 1
thereafter, the Initial Term shall automatically be extended for one (1)
additional year unless, not later than July 1 of the preceding year, either
party shall have given notice (i) of nonrenewal of the Term or (ii) that such
party wishes to renegotiate the terms of this Agreement.
2. DUTIES AND POWERS OF EXECUTIVE.
(a) POSITION AND DUTIES. For the period during which the Executive
provides services to Parent under this Agreement (the "Employment Period"),
the Executive shall be responsible for and manage the tri-state (New York,
Connecticut and New Jersey) operations of Parent. The Executive in this
capacity agrees to use his best efforts during the Employment Period to
protect, encourage and promote the interests of Parent and to perform such
other duties consistent with his position that may be reasonably assigned to
him by the President or Chief Executive Officer of Parent and/or by the
Board. During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive shall devote
substantially all of his attention and time during normal business hours to
the business and affairs of the Company and shall use his reasonable best
efforts to carry out his duties and responsibilities faithfully and
efficiently. It shall not be considered a violation of the foregoing for the
Executive to serve on corporate, industry, civic or charitable boards or
committees, as long as such activities do not materially interfere with the
performance of his duties and responsibilities with Parent in accordance with
this Agreement.
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(b) LOCATION. The Executive's services shall be performed primarily at
Xxx Xxx Xxxx Xxxxxxxx, Xxxxxxx, Xxxxxxxxxxx, 00000 (the "Principal Place of
Employment"), or in such other place as such offices are relocated.
Throughout the Employment Period, the Executive shall be provided with
appropriate office space and secretarial services commensurate with his title
and position.
3. COMPENSATION. The Executive shall receive the following compensation for
his services hereunder to the Company:
(a) SALARY. During the Employment Period, the Executive's annual base
salary ("Base Salary") shall be $320,000, payable in accordance with Parent's
general payroll practices as in effect from time to time.
(b) CASH-BASED INCENTIVE COMPENSATION.
(i) GENERAL. During the Employment Period, the Executive shall be
eligible to participate in Parent's short-term and long-term incentive
compensation plans, including equity-based compensation plans, on a basis no
less favorable than that of other similarly situated executives of Parent.
The Executive hereby acknowledges that the Compensation and Stock Option
Committee of the Board (the "Committee") has sole discretion to determine the
amount of annual cash bonus or other incentives that may be earned by the
Executive under Parent's Annual Management Bonus Plan (as adopted by the
Committee on June 6, 1997) or any other such plan in which the Executive may
participate during the Employment Period; however, Parent hereby agrees to
recommend to the Committee that the Executive's annual cash bonus for that
annual period of the Term commencing on January 1, 1998, will be targeted to
70% of his Base Salary if performance goals are met, and that such percentage
of Base Salary may be increased if and to the extent that performance goals
for such plan year are exceeded. If he is deemed to be one of Parent's five
highest-paid executive officers for any given year during the Employment
Period, the Executive shall participate in Parent's Performance-Based Annual
Bonus Plan as adopted by Parent's stockholders in 1997 (or any successor plan
thereto), in lieu of the Annual Management Bonus Plan (or any successor plan
thereto).
(ii) 1997 BONUS. Parent and the Executive hereby agree that the
Executive's bonus in respect
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of the period ending on December 31, 1997, shall be determined in accordance
with the terms of PHS's existing bonus plan, which amount shall be subject to
the attainment of the goals set forth in such plan and which amount must be
fully budgeted and accrued for in the financial statements of PHS presented
to Parent pursuant to the terms of the Merger Agreement.
(iii) SIGNING BONUS. As soon as practicable, but in no event later
than five (5) business days following the Effective Time, Parent shall pay to
the Executive a lump sum in cash equal to $46,500 (net of applicable
withholding tax).
(iv) RETENTION BONUS. Parent shall pay to the Executive an
aggregate amount in cash equal to $500,000 (such aggregate amount, the
"Retention Bonus"), as follows: $250,000 (less applicable withholding tax)
no later than five (5) days following the first anniversary of the Effective
Time; and $250,000 (less applicable withholding tax) no later than five (5)
days following the second anniversary of the Effective Time. The Retention
Bonus shall become payable to the Executive only if he is employed hereunder
upon such anniversary dates; PROVIDED, HOWEVER, that any portion of the
Retention Bonus not yet paid to the Executive shall become immediately due
and payable upon the Executive's Date of Termination (as defined herein) in
the event that such termination of employment occurs prior to the second
anniversary of the Effective Time and is (A) by Parent for other than "Cause"
or (B) by the Executive for "Good Reason" (as each such term is defined
herein).
(c) EQUITY-BASED INCENTIVE COMPENSATION.
(i) The Executive hereby acknowledges and agrees that he will not
be eligible for participation in any equity-based compensation or incentive
plans of Parent until after the third anniversary of the Effective Time, and
except as provided in this Section 3(c)(i), the Executive is not entitled
to be granted any equity-based awards during the three (3) year period
commencing upon the Effective Time and ending upon the third anniversary
thereof. In lieu of participation in Parent's equity-based compensation
plans until the third anniversary of the Effective Time, Parent shall grant
to the Executive, as of the Effective Time, a nonqualified option (the
"Special Option") under Parent's 1997 Stock Option Plan (the "Parent Option
Plan") to purchase an aggregate of
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150,000 shares of the common stock (the "Common Stock") of Parent on the
terms and conditions set forth in the Option Agreement attached hereto as
Exhibit A at an exercise price equal to the Fair Market Value (as defined in
the Parent Option Plan) of the Common Stock as of the Effective Time.
(ii) Beginning on the third anniversary of the Effective Time, for
the remainder of the Employment Period, the Executive will be eligible to
participate in Parent's equity-based compensation plans on terms, if any, to
be determined by the Committee.
(d) OTHER BENEFITS. During the Employment Period, the Executive shall
be eligible to participate in savings, retirement, supplemental retirement,
welfare (including without limitation medical, dental, hospitalization and
life insurance, and short-term and long-term disability) and fringe benefit
plans, practices, policies and programs of Parent on a basis no less
favorable to the Executive than in effect with respect to similarly situated
executives of Parent. Except as provided in the Merger Agreement, the
Executive shall also be entitled to carry-over all accrued benefits, such as
vacation and sick days, that he would have received from his former
employment but for the fact of the termination of the Prior Agreements.
During the Employment Period, Parent shall make available to the Executive,
at its cost and expense, (i) a leased automobile on terms substantially
similar to that in effect with respect to similarly situated executives of
Parent, which terms shall include reasonable insurance and maintenance costs
and (ii) membership at two (2) private clubs in New York City, which
memberships shall be used by the Executive for the purposes of business
entertainment on behalf of Parent.
4. EXPENSES. Parent shall reimburse the Executive for all reasonable
expenses, including expenses for first-class air travel, other travel and
entertainment and parking fees in New York City, properly incurred by him in
the performance of his duties hereunder in accordance with policies
established from time to time by the Board. Parent shall also pay all
reasonable legal expenses of the Executive, up to a maximum of $15,000, that
are incurred in connection with negotiating this Agreement.
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5. TERMINATION OF EMPLOYMENT.
(a) DEATH. The Employment Period shall be terminated automatically by
Parent upon the Executive's death during such period, in which case the
Executive shall be entitled to the payments and benefits set forth in Section
6(d) of this Agreement.
(b) BY PARENT FOR CAUSE. Parent may terminate the Executive's
employment hereunder for Cause, in which case the Executive shall be entitled
to the payments and benefits set forth in Section 6(d) of this Agreement.
For purposes of this Agreement, "Cause" includes, without limitation,
acts of dishonesty, insubordination, incompetence or moral turpitude,
conviction of a felony which is materially and demonstrably injurious to the
Company, habitual drunkenness, narcotic drug addiction, or other material
misconduct of any kind. Poor performance of the Company shall not, in and of
itself, be considered "Cause." In the event that the Executive receives a
Notice of Termination for Cause in accordance with Sections 5(f) and 10(b)
hereof which indicates that the Executive has acted (or failed to act) in a
manner constituting insubordination, incompetence or other material
misconduct, the Executive shall have the opportunity, during a fourteen (14)
day period beginning on the date of receipt of such Notice, to cure such act
or failure to act. Further, actions taken at the direction of the Board, or
actions based on the recommendations of Parent's legal counsel or qualified
outside advisors shall be presumed to be taken in good faith and for the best
interest of the Company.
(c) BY THE EXECUTIVE FOR GOOD REASON. The Executive may terminate his
employment hereunder for Good Reason, unless Parent shall have previously
delivered to the Executive written notice that Cause exists (except that such
notice shall not be required in the case of a termination resulting from the
Executive's conviction of the type of felony set forth in Section 5(b)
above), in which case the Executive shall be entitled to the payments and
benefits set forth in Section 6(a) or 6(b) of this Agreement, as applicable.
For purposes of this Agreement, "Good Reason" shall mean (i) a reduction in
the Executive's reporting duties, such that he no longer reports directly to
the President of Parent; (ii) a material reduction by Parent in the Execu-
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tive's annual base salary as in effect on the date hereof (except for
across-the-board salary reductions similarly affecting all senior executives
of Parent); (iii) the relocation of the Executive's Principal Place of
Employment to a location more than 50 miles from the Executive's Principal
Place of Employment (except for required travel on Parent's or PHS's
business); or (iv) the failure of Parent to pay to the Executive any portion
of the Executive's compensation (except pursuant to an across-the-board
compensation deferral similarly affecting all senior executives of Parent)
within five (5) business days of the date such compensation is due. In order
for any termination for Good Reason to be effective, the Executive shall have
delivered to Parent written notice of the act or failure to act giving rise
to such termination for Good Reason with thirty (30) days following the first
occurrence of such event or condition, and Parent shall have been given ten
(10) business days from the receipt of such written notice to cure such act
or failure to act.
(d) BY PARENT OTHER THAN FOR CAUSE OR DEATH. Notwithstanding any other
provision of this Agreement, Parent may terminate the Executive's employment
other than for Cause or death, in which case the Executive shall be entitled
to the payments and benefits set forth under Section 6(a) or (6)(b) of this
Agreement, as applicable.
(e) BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. Notwithstanding any
other provision of this Agreement, the Executive may terminate his employment
other than for Good Reason, in which case the Executive shall be entitled to
the payments and benefits set forth under Section 6(d) of the Agreement.
(f) NOTICE OF TERMINATION. Any termination by Parent or by the
Executive shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 10(b) of this Agreement. For purposes
of this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined in paragraph (g) of this Section 5) is other than the
date of receipt of such
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notice, specifies the termination date (which date shall be not more than
thirty (30) days after the giving of such notice).
The failure by the Executive or Parent to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing the
Executive's rights hereunder.
(g) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Executive for Good Reason, the
date of receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment hereunder is
terminated by Parent other than on account of death, or by the Executive
other than for Good Reason, the date on which Notice of Termination is
delivered and (iii) if the Executive's employment is terminated by reason of
death, the date of death.
6. OBLIGATIONS OF PARENT UPON TERMINATION.
(a) TERMINATION DURING FIRST TWO YEARS OF TERM BY THE EXECUTIVE FOR GOOD
REASON OR BY PARENT OTHER THAN FOR CAUSE. If, during the first two (2) years
of the Term, the Executive shall terminate his employment for Good Reason or
Parent shall terminate the Executive's employment for any reason other than
Cause or death, the Executive shall be entitled to the following benefits:
(i) Parent shall pay to the Executive all vested benefits to which
the Executive is entitled under the terms of the employee benefit plans in
which the Executive is a participant as of the Date of Termination and a lump
sum amount in cash equal to the sum of (A) the Executive's Base Salary through
the Date of Termination to the extent not theretofore paid, (B) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay and (C) any other
amounts due the Executive as of the Date of Termination, in each case to the
extent not theretofore paid (hereinafter referred to as the "Accrued
Obligation"). The amounts specified in this Section 6(a)(i) shall be paid
within thirty (30) days after the Date of Termination; and
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(ii) in lieu of any severance benefit otherwise payable to the
Executive,
(A) Parent shall pay to the Executive, within
five (5) days following the Date of Termination, a lump sum amount in
cash equal to the product of (x) the Executive's Base Salary as in
effect as of the Date of Termination and (y) (I) if such termination is
by the Executive under Section 5(c)(i) hereof, the number two (2) or
(II) if such termination is by the Executive under clause (ii), (iii)
or (iv) of paragraph 5(c) hereof (or by Parent other than for Cause or
death), the number 2.99; and
(B) for a period of one (1) year following the
Date of Termination, Parent shall continue to provide the Executive and
his dependents with medical (including hospital, surgical, and major
medical) insurance coverage as in effect as of the Date of Termination;
PROVIDED, HOWEVER, that Parent's obligation to provide benefits under
this Section 5(a)(ii)(B) shall be reduced to the extent similar
benefits are provided by a subsequent employer.
(b) TERMINATION DURING REMAINDER OF TERM BY THE EXECUTIVE FOR GOOD
REASON OR BY PARENT OTHER THAN FOR CAUSE OR DEATH. During the period
commencing on the second anniversary of the Effective Time and continuing
until the end of the Term (as such Term may be extended), if the Executive
shall terminate his employment for Good Reason or Parent shall terminate the
Executive's employment for any reason other than Cause or death, the
Executive shall be entitled to the following benefits:
(i) Parent shall pay to the Executive a lump sum amount in
cash equal to the Accrued Obligation; and
(ii) in lieu of any severance benefit otherwise payable to the
Executive.
(A) Parent shall pay the Executive a lump sum
amount in cash, within five (5) days following the Date of Termination,
equal to the product of (x) the Executive's Base Salary as in
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effect as of the Date of Termination and (y) the number one and one-half
(1.5); and
(B) for a period of one (1) year following the
Date of Termination, Parent shall continue to provide the Executive and
his dependents with medical (including hospital, surgical, and major
medical) insurance coverage as in effect as of the Date of Termination;
PROVIDED, HOWEVER, that Parent's obligation to provide benefits under
this Section 5(b)(ii)(B) shall be reduced to the extent similar benefits
are provided by a subsequent employer.
(c) NON-RENEWAL OF TERM. In the event that either party gives
notice that it will not renew or extend the Term (as such Term may be
extended), Parent shall, within five (5) business days following the
expiration of the Term, pay the Executive a lump sum amount in cash equal to
(i) the Accrued Obligation and (ii) the product of (A) the Executive's Base
Salary as in effect as of the date of the expiration of the Term and (B) the
number one and one-half (1.5).
(d) TERMINATION FOR OTHER REASON. If the Executive's employment
shall be terminated by Parent for Cause or death, or by the Executive other
than for Good Reason, Parent shall have no further obligations to the
Executive under this Agreement other than the obligation to pay the Executive
the Accrued Obligation.
(e) GROSS-UP IN CONNECTION WITH THE MERGER. If any of the payments
or benefits received or to be received by the Executive in connection with
the Merger (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with PHS or Parent (such payments or benefits,
excluding the Gross-Up Payment (as defined below), being hereinafter referred
to as the "PHS Total Payments") will be subject to the excise tax (the
"Excise Tax") imposed pursuant to section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), Parent shall pay to the Executive an
additional amount, in cash (the "Gross-Up Payment"), such that the net amount
retained by the Executive, after deduction of any Excise tax on the PHS Total
Payments and any federal, state and local income and employment taxes and
Excise Tax upon any Gross-Up Payment, shall be equal to the Total Payments.
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For purposes of determining whether any of any PHS Total Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (i) all of
the PHS Total Payments shall be treated as "parachute payments" (within the
meaning of section 280G(b)(2) of the Code unless, in the opinion of tax
counsel ("Tax Counsel") reasonably acceptable to the Executive, paid for by
Parent and selected by the accounting firm which is Parent's independent
auditor (the "Auditor"), such payments or benefits (in whole or in part) do
not constitute parachute payments, including by reason of section
280G(b)(4)(A) of the Code, (ii) all "excess parachute payments" within the
meaning of section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of Tax Counsel, such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered (within the meaning of section 280G(b)(4)(B) of the Code)
in excess of the "Base Amount," as defined in section 280G(b)(3) of the Code,
allocable to such reasonable compensation, or are otherwise not subject to
the Excise Tax, and (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed
to pay federal income tax at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the Date of Termination
(or if there is no Date of Termination, then the date on which the Gross-Up
Payment is calculated for purposes of this Section 6(e)), net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such state and local taxes.
In the event that the Excise Tax is finally determined to be less than
the amount taken into account hereunder in calculating the Gross-Up Payment,
the Executive shall repay to Parent, within five (5) business days following
the time that the amount of such reduction in the Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income and employment taxes imposed
on the Gross-Up Payment being repaid by the Executive), plus
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interest on the amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), Parent shall make
an additional Gross-Up Payment in cash in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect to
such excess) within five (5) business days following the time that the amount
of such excess is finally determined. The Executive and Parent shall each
reasonably cooperate with the other in connection with any administrative or
judicial proceedings concerning the existence or amount of liability for
Excise Tax with respect to the PHS Total Payments.
7. FULL SETTLEMENT; NO MITIGATION. Except as provided in Sections
6(a)(ii)(B) and 6(b)(ii)(B) hereof, Parent's obligation to make the payments
provided for in this Agreement and otherwise to perform their obligations
hereunder shall not be subject to any set-off, counterclaim, recoupment,
defense or other claim, right or action which Parent may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
(including amounts for damages for breach) payable to the Executive under any
of the provisions of this Agreement.
8. CONFIDENTIAL INFORMATION; NON-COMPETITION.
(a) During the Employment Period and at all times thereafter, the
Executive shall not, without the prior written consent of the Board, disclose
or use for any purpose (except in the course of his employment under this
Agreement and in furtherance of the business of the Company) confidential
information, proprietary data and customer lists of Parent of PHS, except as
required by applicable law or legal process; provided, however, that
"confidential information, proprietary data and customer lists" shall not
include any information known generally to the public or ascertainable from
public or published information (other than as a result of unauthorized
disclosure by the Employee) or any information of a type not otherwise
considered confidential by persons engaged in the same business or a business
similar to that conducted by Parent. The Executive
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agrees to deliver to Parent at the termination of his employment all memoranda,
notes, plans, records, lists, reports and other documents (and copies
thereof) relating to the business of Parent and PHS which he may then possess
or have under his control.
(b) (i) During the Employment Period, the Executive shall not
engage in "Competition" with Parent. For purposes of this Agreement,
Competition by the Executive shall mean the Executive's engaging in, or
otherwise directly or indirectly being employed by or acting as a consultant
or lender to, or being a director, officer, employee, principal, agent,
stockholder, member, owner or partner of, or permitting his name to be used
in connection with the activities of any other business or organization
anywhere in the United States which competes, directly or indirectly, with
the business of Parent as the same shall be constituted at any time during or
following the Term (and any extensions thereof).
(ii) For the twelve (12) month period following the
Employment Period, the Executive shall not engage in Competition (as defined
above and modified herein for purposes of this subsection (b)(ii) only), with
Parent in (a) any locality or region of the United States, and (b) any
substantive area, for which the Executive had responsibility during the
Employment Period; PROVIDED, that it shall not be a violation of this
sub-paragraph for the Executive to become the registered or beneficial owner
of up to two percent (2%) of any class of the capital stock of a competing
corporation registered under the Securities Exchange Act of 1934, as amended,
provided that the Executive does not actively participate in the business of
such corporation until such time as this covenant expires.
(iii) For the twelve (12) month period following the
termination of this Agreement for any reason, the Executive agrees that he
will not, directly or indirectly, for his benefit or for the benefit of any
other person, firm or entity, do any of the following:
(A) solicit from any customer doing business
with Parent as of such termination, business of the same or of a similar
nature to the business of Parent with such customer;
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(B) solicit from any known potential customer
of Parent business of the same or of a similar nature to that which has
been the subject of a known written or oral bid, offer or proposal by
Parent, or of substantial preparation with a view to making such a bid,
proposal or offer, within six (6) months prior to such termination;
(C) solicit the employment or services of, or
hire, any person who was known to be employed by or was a known
consultant to Parent upon the termination of this Agreement, or within
six (6) months prior thereto; or
(D) otherwise knowingly interfere with the
business or accounts of Parent.
9. SUCCESSORS.
(a) ASSIGNMENT BY EXECUTIVE. This Agreement is personal to the
Executive and, without the prior written consent of Parent, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon Parent, and their respective successors and
assigns.
(c) ASSUMPTION. Parent shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets thereof to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that Parent, as the case may be, would be required to perform this Agreement
if no such succession had taken place. As used in this Agreement, Parent
shall mean Parent, as hereinbefore defined and any successor to its
businesses and/or assets as aforesaid that assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of
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New York, without reference to its principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended, modified,
repealed, waived, extended or discharged except by an agreement in writing
signed by the party against whom enforcement of such amendment, modification,
repeal, waiver, extension or discharge is sought.
(b) NOTICES. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return-receipt requested, postage prepaid,
addressed, in the case of Parent, to Parent's headquarters and, in the case
of the Executive, to the address on the signature page of this Agreement or,
in either case, to such other address as any party shall have subsequently
furnished to the other parties in writing. Notice and communications shall be
effective when actually received by the addressee.
(c) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration.
The parties shall utilize the services of the American Arbitration
Association ("AAA"). Pursuant to its standard procedures, the AAA shall
appoint one neutral arbitrator from its panel of arbitrators, unless the
parties mutually agree that a panel of three (3) arbitrators be appointed,
which will make decisions by a majority vote. The arbitrator or arbitrators
shall have the power to award all appropriate relief as if the claims heard
in this proceeding had been brought in a state court of general jurisdiction
over the specific claim in question. The arbitration hearing shall be
conducted in New York, New York or another location agreed to by the parties
in accordance with the rules of the AAA then in effect. A Judgment may be
entered on the arbitrator's or arbitrators' award in any court having
jurisdiction.
(d) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
(e) TAXES. Parent may withhold from any amounts due and payable
under this Agreement such federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
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(f) NO WAIVER. Any party's failure to insist upon strict
compliance with any provision hereof or the failure to assert any right such
party may have hereunder shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
(g) ENTIRE AGREEMENT; SURVIVAL. This Agreement entered into as of
the date hereof among Parent and the Executive and contains the entire
agreement of the Executive and Parent or their respective predecessors or
subsidiaries with respect to the subject matter of the Agreement, and all
promises, representations, understandings, arrangements and prior agreements,
including without limitation the Prior Agreements, are superseded by this
Agreement. Any provision hereof which by its terms applies in whole or part
after a termination of the Executive's employment hereunder shall survive
such termination.
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IN WITNESS WHEREOF, the Executive has executed this Agreement and,
pursuant to due authorization from its Board, the Company has caused this
Agreement to be executed, as of the day and year first above written.
FOUNDATION HEALTH SYSTEMS, INC.
By /s/ Xxx X. Xxxxxxx
----------------------------
Name:
Title:
XXXXXX X. XXXX
/s/ Xxxxxx X. Xxxx
------------------------------
Address: 00 XXXXXXXX XXXX
XXXXXX, XX 00000
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