EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Agreement is made this day of April
6, 2007 ,
by and
between SIERRA HEALTH SERVICES, Inc., a Nevada Corporation, of Las Vegas, Nevada
(hereinafter referred to as "Employer"), and Xxxx
X. Xxxxxx,
(hereinafter referred to as "Employee").
WITNESSETH
WHEREAS,
Employer is a publicly traded company engaged in the business of providing
managed health care services through subsidiary companies;
WHEREAS,
Employee has expertise and experience in providing managed health care services;
and,
WHEREAS,
Employee has made and is expected to continue to make a major contribution
to
the profitability, growth and financial strength of Employer;
NOW,
THEREFORE, in consideration of the mutual promises and agreements hereinafter
set forth, Employer and Employee agree as follows:
ARTICLE
I
EMPLOYMENT/DUTIES
AND POWERS
1. Employer
hereby employs, engages and hires Employee as Senior
Vice President, Chief Financial Officer and Treasurer ,
and
Employee hereby accepts and agrees to such hiring, engagement and employment,
subject to the general supervision and direction of Employer.
2. Employee
shall perform such duties as are assigned by the President of Employer or
his/her designee, and shall at all times faithfully and to the best of his/her
ability perform all the duties that may be required of Employee to the
reasonable satisfaction of Employer. Employee shall exercise only those powers
for signing contracts and conveyances in the ordinary course of business as
are
expressly authorized by Employer's President or the appropriate Board of
Directors. Employee further agrees to participate in and assist in the
development of quality improvement programs offered by Employer.
ARTICLE
II
TERM
OF EMPLOYMENT - TERM OF AGREEMENT
1. The
term
of employment governed by this Agreement shall be for approximately a
2
year, 9 month
period
starting April
6, 2007 and
terminating December
31, 2009 subject,
however, to prior termination as hereinafter provided in Article VII.
Unless
earlier terminated by the mutual agreement of the parties hereto, this Agreement
shall terminate at December
31, 2009 or,
if
Employee has become entitled to any benefit under Article VII due to termination
of employment on or before December
31, 2009,
at such
date as Employer has no further obligations to Employee under Article VII;
provided, however, that the provisions of Article V and Article VI (and this
clause of Article II) shall survive any termination of this
Agreement.
ARTICLE
III
COMPENSATION
AND REVIEW
1. Employer
shall pay Employee and Employee shall accept from Employer as payment for
Employee's services hereunder, compensation in the form of base salary in the
amount as set forth in Attachment A of this Agreement, payable at such times
as
are deemed appropriate by Employer, but not less than twice a month, and other
compensation payable under this Agreement.
2. (a) Employer
shall reimburse Employee for all necessary and reasonable business expenses
incurred by Employee while performing services pursuant to Employer's
direction.
|
(b) Employee agrees to maintain adequate records of expenses, in
such detail as Employer may reasonably
request.
|
3.
(a)
Employee
shall also be eligible for those Employee fringe benefit programs, bonus plans,
and stock option plans as are made available to other employees of Employer
at
the same organizational level, and as approved by the Board of
Directors.
(b) Except
for Employee’s vested benefits under the Supplemental Executive Retirement Plan
(“SERP”) and the benefits provided by paragraph 4 of Article VII, Employer may,
at any time and at its sole discretion, amend any fringe benefit programs,
bonus
programs, vacation, paid time off accruals, or stock option programs without
prior notice to Employee even though such an amendment may decrease the future
benefits available under said programs. Notwithstanding this subparagraph,
Employer shall have the right
to
retroactively amend Employer’s policies concerning vacation and paid time off
accruals.
4. Employee's
performance shall be reviewed at least annually based on established job duties,
goals and objectives and other reasonable standards as deemed necessary and
appropriate by Employer.
ARTICLE
IV
OTHER
EMPLOYMENT
Employee
shall devote all of his time, attention, knowledge, and skills solely to the
business and interest of Employer, unless otherwise authorized by Employer,
and
Employer shall be entitled to all of the income, benefits, or profits arising
from or incident to all work, work associations, services, or advice of
Employee, unless otherwise authorized in writing by Employer. Employee shall
not, during the term hereof, be interested in any manner, as partner, officer,
director, advisor, employee or in any other capacity in any other business
similar to Employer's business or any allied trade, or obtain any interest
adverse to Employer; provided, however, that Employee may provide advice and
consultation to other entities with the written approval of Employer, and
further provided, however, that nothing herein contained shall be deemed to
prevent or limit the right of Employee to invest any of his/her surplus funds
in
the capital stock or other securities of any corporation whose stock or
securities are publicly owned or are regularly traded on any public exchange,
nor shall anything herein contained be deemed to prevent Employee from investing
or limit Employee's right to invest his/her surplus funds in real estate.
Employee shall complete a
Conflict
of Interest form by February 15 of each calendar year and submit it to Employer
for review. All conflicts of interest or any potential conflicts of interest
which arise during the year must be immediately reported to Employer. All
conflict of interest concerns must be resolved to the reasonable satisfaction
of
Employer as a condition of continuation of employment.
ARTICLE
V
BUSINESS
SECRETS
1. Employee
shall not at any time or in any manner, either directly or indirectly, divulge,
disclose or communicate to any person, firm or corporation, in any manner
whatsoever, any proprietary or confidential information concerning any matter
affecting or relating to the business of Employer or its subsidiaries, including
without limiting the generality of the foregoing, any of their customers, the
prices they obtain from providers or have obtained from the sale of, or at
which
they sell or have sold, its services, or any other information concerning the
business of Employer or its subsidiaries, their manner of operation, or their
plans, if such a disclosure would be detrimental to the business interests
of
Employer or its subsidiaries.
2. If
Employee’s employment hereunder is terminated by either party at any time
hereafter, then Employee agrees to turn over to Employer all papers, documents,
working papers, correspondence, memos and any and all other documents in
Employee's possessionrelating
to or concerning any matter affecting or relating to the business of Employer
or
its subsidiaries.
ARTICLE
VI
NON-COMPETITION
AGREEMENT
1. Employee
acknowledges that in Employee's employment hereunder, Employee will have
continual contacts with the groups, members, and providers who are covered
by or
associated with the managed health care programs offered by Employer or its
subsidiaries in Nevada and other states. In all of Employee's activities,
Employee, through the nature of Employee's work, will have access to and will
acquire confidential information related to the business and operations of
Employer and its subsidiaries, including, without limiting the generality of
the
foregoing, member and group lists, and confidential information relating to
processes, plans, methods of doing business and special needs of doctors,
hospitals, members, groups, pharmacies, or other health care providers who
contract with Employer or its subsidiaries. Employee acknowledges that all
such
information is the property of Employer or its subsidiaries solely and
constitutes confidential information of such parties; that the disclosure
thereof would cause substantial loss to the goodwill of Employer and its
subsidiaries; that disclosure thereof to Employee is being made only because
of
the position of trust and confidence which Employee will occupy and because
of
Employee's agreement to the restrictions herein contained; that his knowledge
of
these matters would enable him, on termination of this Agreement, to compete
with Employer or its subsidiaries in a manner likely to cause Employer and
its
subsidiaries irreparable harm, and disclosure of such matters
would, likewise, cause such harm; and that the restrictions imposed upon
Employee herein would not prohibit Employee in earning a living.
2.
It
is
understood and agreed by Employee and Employer that the essence of this
Employment Agreement is the mutual covenants of the parties herein made, that
the present and future members and groups of Employer or its subsidiaries will
remain Employer's or its subsidiaries' members and groups during the term of
this Agreement and following its termination for any reason. In consideration
for the employment and continued employment of Employee by Employer, and also
for the amount received by Employee as compensation, Employee hereby irrevocably
warrants, covenants, and agrees as follows:
(a) during
the term of Employee's employment and after leaving the employment of Employer
for any reason, whether involuntary or voluntary, Employee will not take any
action whatsoever which may or might disturb any existing business relationship
of Employer or its subsidiaries with any doctors, groups, members, hospitals,
pharmacies or other health care providers in Nevada who contract with Employer
or its subsidiaries;
(b) for
a
period of twelve
(12) months
after
leaving the employment of Employer, Employee will not solicit business from
the
members or groups of Employer or its subsidiaries in Nevada, or in any manner
disrupt any business relationship Employer or its subsidiaries has with any
contracted health care provider in Nevada with whom Employee came in contact
as
an employee of Employer.
(c) for
a
period of one (1) year after leaving the employment of Employer, Employee will
not, either directly or indirectly, work for any present or future competitors
of Employer operating in the state of Nevada who in any manner offer any managed
health care programs, insurance coverage, pharmacy benefit management services,
or administer health care claims for employers. Such competitors shall include,
but are not limited to, HMOs, PPOs, insurance companies, utilization management
companies, or third party administrators.
3.
The
one
(1) year period specified in this Article will be tolled during any period
of
breach of any of the terms of Article VI by Employee.
4.
Employee
agrees that in the event of a breach of any term of this Agreement, and more
particularly, in the event of a breach of any of the terms and provisions of
Article VI, Employer shall be entitled to secure an order in any suit brought
for that purpose to enjoin Employee from violating any of the provisions of
the
Agreement and that, pending the hearing and the decision on the application
for
such order, Employer shall be entitled to a temporary restraining order without
prejudice to any other remedy available to Employer, all at the expense of
Employee should Employer prevail in such action. Employee understands that
the
covenants of this Article are the essence of this Employment Agreement, and
without which no Employment Agreement with Employee would be entered into by
Employer.
5.
Employee
acknowledges, understands and agrees that Employer has the unconditional right
to assign all of its rights, entitlements, and obligations set forth in Article
VI
of
this Agreement. The covenants contained in Article VI inure to the benefit
of
and are enforceable by Employer’s successors or assigns. Employer has the right
to assign the covenants contained in Article VI, including, but not limited
to,
those outlined in subsections (a) through (c) of section “2” of Article VI to an
entity in the future that is unknown at this time.
6.
Employee
acknowledges the legal sufficiency of the consideration for this Article VI.
The
consideration, in the amount of $30,000.00,
was paid
to Employee on or about September 8, 2006. The consideration shall be sufficient
and adequate for the non-competition covenant set forth herein.
7.
The
provisions of Article VI shall in no event be construed to be an exclusive
remedy and such remedy shall be held and construed to be cumulative and not
exclusive of any rights or remedies, whether in law or equity, otherwise
available under the terms of this Agreement or under the laws of the United
States or the state of Nevada.
8.
The
covenants and agreements made by Employee in this Article VI shall be construed
as an agreement independent of any other provision in the Agreement and the
existence of any claim or cause of action by Employee against Employer, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the
enforcement by Employer, by injunctive relief or otherwise, of the provisions
of
Article VI. The invalidity of all or any part of any section or paragraph of
this Article VI shall not render invalid the remainder of this Article or any
section hereof.
9.
Employee
agrees that should a Court of competent jurisdiction find any of the covenants
set forth in Article VI of this Agreement to be unenforceable due to an
unreasonable geographic scope, temporal limitation, or otherwise, the Court
shall nevertheless enforce the covenants, but only to the extent the Court
determines would be deemed reasonable under the law.
10.
No
failure or failures on the part of Employer to enforce any violation by Employee
of this Non-Competition Agreement, shall constitute a waiver of Employer's
rights thereafter to enforce all of the terms, covenants, provisions and
agreements herein contained.
11.
Employee
understands and agrees that the provisions of this Article VI shall survive
any
termination of this Agreement.
ARTICLE
VII
TERMINATION
OF EMPLOYMENT
1.
Termination
of employment by either Employer or Employee shall follow established Sierra
Health Services Policies and Procedures including appropriate notice, except
as
otherwise specifically set forth in this Article.
2.
Employee
may terminate employment hereunder with sixty (60) days prior written notice.
If
Employee is terminated during such sixty (60) day notice period, Employee shall
be entitled to be paid his customary salary during the remainder of the notice
period. If Employee shall voluntarily terminate employment all eligible
separation compensation
and benefits as are routinely made available to other employees of Employer
at
the same organizational level, shall be paid or made available to
Employee.
3.
If
Employer shall terminate Employee’s employment hereunder, or subsequent to the
termination of this Agreement or any similar agreements, without cause, except
as otherwise set forth in Paragraphs 6 and 7 of this Article, Employee shall
be
entitled to six
(6) months
salary
and all other separation compensation and benefits as are routinely made
available to other employees of Employer at the same organizational level.
4.
In
the
event Employee’s employment hereunder terminates for any reason other than for
cause, as set forth in Paragraph 6 of this Article, Employee and his/her family
shall be eligible to remain covered under Employer’s health care, dental, vision
and life coverage program, at no expense, for a period of time equal to
Employee’s length of service or until Medicare eligible, whichever occurs first,
following termination of such employment.
5.
Notwithstanding
any other provision in this Agreement to the contrary, Employee hereby agrees
that any separation compensation due to Employee, other than accrued vacation,
shall be paid out 25% after the first 30 days, 37 1/2% after the first 60
days,
and the remaining 37 1/2% at the end of 180 days, except in the event of
a
change in control. Payment of such amounts shall fully release Employer from
any
and all liability of Employer relating to this Agreement or the employment
hereunder. Any payments or such amounts which would otherwise be payable
after a
change in control, or arising as a result of a change in control, shall be
made
in a lump sum within five (5) business days following the date of the change
in
control and shall, except as otherwise provided in any other benefit
program
or in this Agreement, fully release Employer from any and all liability of
Employer relating to this Agreement or the employment hereunder.
6.
If
Employer shall terminate Employee’s employment for Cause, which is defined as
(1) Employee’s conduct that is materially detrimental to Employer’s reputation
or business relationships, or (2) Employee’s misappropriation of Employer's
funds, Employee shall be eligible for four
(4) weeks
salary
and any other separation compensation and benefits as are routinely made
available to other employees of Employer at the same organizational level,
as
full and final payment under this Agreement. Payment of such amounts shall
fully
release Employer from any and all liability of Employer relating to this
Agreement or the employment hereunder.
7. (a) If
Employee is unable to perform Employee's duties hereunder, by reason of illness
or incapacity of any kind, for a period of more than six
(6) months
in
excess of accrued sick leave, Employee’s employment hereunder may be terminated
by Employer at its absolute discretion with one week of prior written
notice.
(b) If
Employee's illness or incapacity shall have ended, and Employee shall have
assumed Employee's duties hereunder, prior to the date specified in the notice
of termination, Employee shall be entitled to resume Employee's employment
hereunder as if such notice had not been given.
(c) In
the
event of the death of Employee during the term of this Agreement, Employer
shall
be required to pay Employee's personal representative or the executor or
administrator of Employee's estate, three
(3) months
of
Employee's total prior year's annual compensation
including both salary and bonus. Such payment shall be in addition to any other
payment to which Employee or their estate is otherwise eligible for under the
terms of this Agreement.
8.
In
the
event of a change in control of Employer, whereby any "person" (as such term
is
used in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934)
is
or becomes the beneficial owner, directly or indirectly, of securities of
Employer representing 51% or more of the combined voting power of the then
outstanding securities of Employer, and such change in control was not approved
by a majority of the Board of Directors of Employer, Employee, at his/her sole
option, shall be entitled to terminate his/her employment hereunder and, upon
such termination, will be entitled to a cash amount equal to (2.0)
times
Employee’s current salary and the target annual bonus for which Employee is
eligible in the year of termination, together with any other separation
compensation and benefits as are routinely made available to other employees
of
Employer at the same organizational level. Employee’s right to terminate under
this Paragraph 8 may be exercised at the time of the change in control or at
any
time within two years after the change in control, including upon receipt of
any
notice that Employer has elected to terminate Employee’s employment without
cause during such two-year period. Payment of such amounts shall be made in
a
lump sum within five (5) business days following the date such amounts become
payable hereunder and shall, except as otherwise provided in any other benefit
program or in this Agreement, fully release Employer from any and all liability
of Employer relating to this Agreement or the employment hereunder.
9.
In
the
event of a change in control of Employer, whereby any "person" (as such term
is
used in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934)
is
or becomes the beneficial owner, directly or indirectly, of securities of
Employer representing 51% or more of the combined voting power of the then
outstanding securities of Employer, and such change in control is approved
by a
majority of the Board of Directors of Employer, Employee, at his/her sole
option, shall be entitled to terminate his/her employment hereunder and, upon
such termination, will be entitled to a cash amount equal to (2.0)
times
Employee’s current salary and the target annual bonus for which Employee is
eligible in the year of termination, together with any other separation
compensation and benefits as are routinely made available to other employees
of
Employer at the same organizational level, if, within two (2) years after the
effective date of the change in control any one of the following occurs: (a)
the
assignment to Employee of any duties inconsistent with Employee’s position
(including status, offices, titles, and reporting requirements), authority,
duties, or responsibilities or any other action by Employer that results in
a
material diminution in such position, authority, duties, or responsibilities,
excluding for this purpose an action not taken in bad faith and that is remedied
by Employer within 10 days after receipt of written notice by Employee; (b)
a
reduction in Employee’s annual base salary or target bonus; (c) the relocation
of Employer’s principle executive offices to a location more than 75 miles from
the current location of such offices or (d), in the event such change in control
occurs within the final two years prior to the calendar date stated as the
termination date of the Agreement in Article II, and if, prior to such stated
termination date and prior to termination of Employee’s employment, Employer has
not offered to enter into an extension of this employment agreement or a new
employment agreement providing benefits substantially equal to those under
this
agreement for a term to extend until at least two years after the date of such
change in control. In addition, if Employee's employment hereunder is terminated
for reasons other than those set forth in Paragraph 6 or 7 of this Article
within two (2) years after the effective date of a change in control which
was
approved by a majority of Employer's Board of Directors, Employee shall be
entitled to a cash amount equal to (2.0)
times
Employee’s current salary and the target annual bonus for which Employee is
eligible in the year of termination, together with all other separation
compensation and benefits as are routinely made available to other employees
of
Employer at the same organizational level. Payment of such amounts shall be
made
in a lump sum within five (5) business days following the date such amounts
become payable hereunder, and shall, except as otherwise provided in any other
benefit program or in this Agreement, fully release Employer from any and all
liability of Employer relating to this Agreement or the employment
hereunder.
10.
Anything
contained herein to the contrary notwithstanding in the event that Employer
shall discontinue operation of Employer other than as a result of a merger,
consolidation or acquisition, then this Agreement shall terminate and the
provisions of Article VI shall terminate as of the last day of the month in
which Employer ceases operation with the same force and effect as if such last
day of the month were originally set as the termination date
hereof.
11.
Any
amounts payable under this Article VII shall also be payable to Employee in
the
event Employee is terminated without cause during the 90-day period prior to
a
Change in Control.
12.
Whether
or not Employee becomes entitled to any payments under Paragraphs 1 through
11
of this Article VII, if any payments or benefits received, or to be received,
by
Employee (including the vesting of any option and other non-cash benefits and
property), whether pursuant to any provision of this Agreement or any other
plan, arrangement or agreement with Employer or any affiliated company,
excluding the Gross-Up Payment described herein (such payments and benefits
being the “Total Payments”), will be subject to any excise tax imposed under
section 4999 of the Internal Revenue Code of 1986, as amended (such excise
tax,
including penalties and interest thereon, being the “Excise Tax”), Employer
shall pay to Employee an additional amount (the “Gross-Up Payment”) such that
the net amount retained by Employee, after reduction for any Excise Tax on
the
Total Payments and any federal and Excise Tax on the Gross-Up Payment, shall
be
equal to the sum of (i) the Total Payments plus (ii) any deductions disallowed
for federal income tax purposes because of the inclusion of the Gross-Up Payment
in Executive’s adjusted gross income multiplied by the Executive’s highest
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made.
ARTICLE
VIII
EFFECT
OF WAIVER
The
waiver by either party of a breach of any provision of this agreement shall
not
operate or be construed as a waiver of any subsequent breach
thereof.
ARTICLE
IX
ACTUAL
ATTORNEY'S FEES EXPENDED
Employer
and Employee agree that all attorneys fees expended by either party in any
dispute, arbitration or litigation concerning this Agreement will be paid by
the
losing party in that dispute, arbitration or litigation.
ARTICLE
X
NOTICE
Any
and
all notices referred to herein shall be sufficient if furnished in writing,
sent
by registered mail to the representative parties at the addresses subscribed
below their signatures to this Agreement.
ARTICLE
XI
ASSIGNMENT
The
rights, benefits and obligations of Employee under this Agreement shall be
assignable, and all covenants and agreements hereunder shall inure to the
benefit of and be enforceable by or against Employer's successors or
assigns.
ARTICLE
XII
ENTIRE
AGREEMENT
This
Agreement contains the entire Agreement between the parties, and the parties
hereby agree that no other oral representations or agreements have been entered
into in connection with this transaction.
ARTICLE
XIII
AMENDMENT
No
amendment or modification of this Agreement shall be deemed effective, unless
or
until, it is executed in writing by the parties hereto.
ARTICLE
XIV
VALIDITY
This
Agreement, having been executed and delivered in the State of Nevada, its
validity, interpretation, performance and enforcement will be governed by the
laws of that state.
ARTICLE
XV
SEVERABILITY
It
is
mutually agreed that all of the terms, covenants, provisions, and agreements
contained herein are severable and that, in the event any of them shall be
held
to be invalid by any competent court, this Agreement shall be interpreted as
if
such invalid term, covenant, provision, or agreement were not contained
herein.
ARTICLE
XVI
FORUM
The
parties hereto consent and agree that any action to enforce this Agreement
or
any provision therein or any rights hereunder or any action relating to the
employment of Employee with Employer shall be brought in the State of
Nevada.
ARTICLE
XVII
INDEMNIFICATION
Employer
shall indemnify Employee whether or not then in office, to the fullest extent
provided for in Employer’s Articles of Incorporation or Bylaws, as in effect, or
as may thereafter be amended, modified or revised from time to time
(collectively, “Employer’s Articles”), or permitted under the law of Nevada or
such other state in which Employer may hereafter be domiciled, against any
and
all costs, claims, judgments, fines, settlements, liabilities, and fees or
expenses (including, without limitation, reasonable attorneys’ fees) incurred in
connection with any proceedings (including without limitation, threatened
actions, suits or investigations) arising out of, or relating to, Employee’s
actions or in actions as a director, officer or employee of Employer at any
point during his employment by or service to Employer, whether under this
Agreement, any prior employment agreements or otherwise. The indemnification
contemplated under this Section shall be provided to Employee unless, at the
time indemnification is sought, such indemnification would be prohibited under
the law of Nevada or of the state in which Employer may then be domiciled;
Employer may rely on the advice of its counsel in determining whether
indemnification is so prohibited.
IN
WITNESS WHEREOF, the parties have executed this Agreement at Las Vegas,
Nevada, on the 6th
day
of April,
2007 .
SIERRA
HEALTH SERVICES, INC.
By: /s/
Xxxxxxxx X. Xxxxxx
Xxxxxxxx
X.
Xxxxxx
President
and
Chief Operating Officer
P.
O. Xxx
00000
Xxx
Xxxxx, XX
00000-0000
EMPLOYEE
By: /s/
Xxxx X. Xxxxxx
Xxxx
X.
Xxxxxx
000
Xxxxxxx
Xxx
Xxxxxxxxx,
XX
00000
