EXHIBIT 10.10
SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of October 3, 2002, by and between PACIFICARE HEALTH SYSTEMS, INC., a
Delaware corporation (the "Company"), with its principal place of business
located at 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000 and A. XXXXX XXXXXXXX
("Executive"), residing at 0000 Xx. Xxxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000.
RECITALS
WHEREAS, the Company desires to employ Executive in the capacity of
Senior Vice President, Corporate Controller.
WHEREAS, the Company and Executive are entering into this Agreement to
establish the terms and conditions of the employment relationship.
NOW, THEREFORE, in consideration of the following covenants, conditions
and promises contained herein, and other good and valuable consideration, the
Company and Executive hereby agree as follows:
1. EMPLOYMENT
1.1 Executive's General Duties. The Company employs Executive and
Executive serves the Company in the capacity of Senior Vice President, Corporate
Controller, having such usual and customary duties and authority as an officer
of similar capacity in a corporation of comparable size, holdings, and business
as that of the Company.
Executive shall do and perform all services, acts, or things necessary
or advisable to manage and conduct the business of the Company and shall preside
over such other areas of corporate activity as specified from time to time by
the Board of Directors of the Company. During the term of this Agreement,
Executive shall perform such additional or different duties, and accept the
election or appointment to such other offices or positions as may be assigned.
1.2 Devotion of Executive. During the term of this Agreement, Executive
shall devote his entire productive time, ability, and attention to the business
of the Company. Executive shall use Executive's best efforts, skills, and
abilities to promote the general welfare and interests of the Company and to
preserve, maintain, and xxxxxx the Company's business and business relationships
with all persons and entities associated therewith, including, without
limitation, employer groups, medical service providers, shareholders,
affiliates, officers, employees, and banks and other financial institutions. The
Company shall give Executive a reasonable opportunity to perform Executive's
duties and shall neither expect Executive to
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devote more time, nor assign more duties or functions to Executive, than are
customary and reasonable for a person in Executive's position.
2. TERM AND TERMINATION
2.1 Term. The initial term of Executive's employment under this
Agreement shall be 24 months, commencing on the effective date of this
Agreement. The Company may extend this Agreement for successive one-year terms
by giving Executive written notice at least 60 days prior to the expiration of
the term. Notwithstanding the foregoing, if a Change-of-Control occurs, as
defined in Section 5.1(c) of this Agreement, then the term of the Agreement
shall be extended for a period of 24 months from the effective date of the
Change-of-Control. Except as provided by Section 2.2(f), if the Company offers
Executive a new employment agreement at the term of this Agreement, but
Executive does not accept the new employment agreement, then Executive's
continued employment with the Company will be without the benefit of a written
employment agreement, in which case Executive's entitlement to severance
benefits on termination shall be governed by then-existing Company policies and
practices.
2.2 Termination. This Agreement, and Executive's employment with the
Company, shall be terminated upon the occurrence of any one of the following
events:
a. The death of the Executive.
b. Executive becomes incapacitated or disabled, which
incapacity or disability prevents Executive from fully performing his
duties to the Company for a period in excess of 90 days and, after such
90-day period, the Company and a physician, duly licensed and qualified
in the specialty of Executive's incapacity, decide in their reasonable
judgments, that such incapacity will be of such continued duration as
to prevent Executive from resuming the rendition of services to the
Company for at least an additional six-month period. For purposes of
this Agreement, Executive shall be deemed permanently disabled, and
this Agreement terminated upon the date Executive receives written
notice from the Company that such determination has been made.
c. Executive habitually neglects his duties to the
Company or engages in gross misconduct during the term of this
Agreement. For the purposes of this Agreement, "gross misconduct" shall
mean Executive's misappropriation of funds; securities fraud; xxxxxxx
xxxxxxx; unauthorized possession of corporate property; the sale,
distribution, possession or use of a controlled substance; conviction
of any criminal offense (whether or not such criminal offense is
committed in connection with Executive's duties hereunder or in the
course of his employment with the Company) or engaging in unlawful
activity which places the Company at financial risk or which could
reasonably be expected to embarrass the Company or cause damage to the
Company's reputation. In such event, Executive's termination shall be
effective immediately upon receipt of written notice from the Company.
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d. Company may terminate this Agreement, with or without
cause, upon written notice to Executive. Except for the circumstances
described in Subsections (a), (b), (e) and (f) of this Section 2.2,
Executive's termination shall be effective upon receipt of such written
notice. Executive may terminate this Agreement upon 30 days written
notice to Company.
e. Upon the expiration of the term of this Agreement,
the Company neither extends the Agreement pursuant to Section 2.1 nor
offers Executive a new employment agreement.
f. Executive voluntarily terminates his employment, upon
written notice to the Company, to be effective at the end of the term
of this Agreement, after the Company offers Executive a new employment
agreement that either establishes duties materially inconsistent with
those described in Section 1.1 or reduces Executive's salary by more
than 10 percent below the salary in effect at the end of the term of
this Agreement.
3. COMPENSATION DURING THE TERM OF THIS AGREEMENT
3.1 Base Salary. As long as Executive satisfactorily performs all of
his obligations under this Agreement, the Company shall pay Executive an annual
base salary, payable in equal installments on the Company's regular payroll
dates. As of this date, Executive's annual base salary has been set at $250,000.
On an annual basis, the Company shall review Executive's salary, but shall be
under no obligation to increase Executive's salary. Executive authorizes the
Company to take such deductions and withholdings from his salary as are required
by law, directed by Executive, or as reasonably directed by the Company for its
employees, which deductions shall include, without limitation, withholding for
federal and state income taxes and social security.
3.2 Benefits. Executive shall be entitled to fully participate in all
of the employee benefit plans and programs available to other high-level
executives of the Company, including, without limitation, health, dental, and
life insurance benefits for Executive and Executive's dependents, pension and
profit sharing programs, and vacation and sick leave benefits, the Amended and
Restated PacifiCare Health Systems, Inc. Savings and profit-sharing Plan, and
the trust agreement implemented pursuant thereto, adopted as of July 1999, the
Company's Statutory Restoration Plan and the Company's Deferred Compensation
Plan. However, the terms of this Agreement shall not restrict the Company's
right to change, amend, modify, or terminate any existing benefit plan or
program, or to change any insurance company or modify any insurance policy
adopted incident to such existing benefit plan and program.
3.3 Automobile Allowance. The Company shall provide Executive with a
$750 (seven hundred fifty dollar) per month automobile allowance. The Company
shall furnish
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Executive with a cellular telephone. Executive shall provide and maintain
automobile insurance for Executive's car including collision, comprehensive
liability, personal and property damage, and uninsured and underinsured motorist
coverage in amounts customarily obtained to cover such contingencies in the
State of California. Executive shall provide proof of such coverage to the
Company upon the Company's request.
3.4 Reimbursement of Expenses. The Company shall pay for or reimburse
Executive for all reasonable travel, entertainment, and other business expenses
incurred or paid for by Executive in connection with the performance of his
services under this Agreement. The Company shall not be obligated to make any
such reimbursement unless Executive presents corresponding expense statements or
vouchers and such other supporting information as the Company may from time to
time reasonably request. The Company reserves the right to place subsequent
limitations or restrictions on business expenses to be incurred or reimbursed.
3.5 Annual Incentive Plan. Executive shall be entitled to participate
fully in the Company's 1996 Management Incentive Compensation Plan, as amended
(the "MICP"), and as may be further amended, modified, or replaced, from time to
time, in accordance with the terms and conditions set forth herein and therein.
3.6 Stock Option Plans. Executive shall be entitled to participate in
the applicable Stock Option Plans for Officers and Key Employees of PacifiCare
Health Systems, Inc., as amended, and as may be further amended modified or
replaced, from time to time, in accordance with the terms and conditions set
forth herein and therein.
3.7 Insurance. During the term of this Agreement, the Company shall
insure Executive under its general liability insurance for all conduct committed
in good faith while acting in the capacity of Senior Vice President, Corporate
Controller of the Company or in any other capacity to which Executive may be
appointed or elected.
3.9 Promotional Grant of Stock Options. Company will recommend to its
Compensation Committee a promotional stock option grant of 17,000 shares.
Issuance of the options is subject to approval of the Compensation Committee.
The grant date and exercise price will be determined as of the closing price of
shares of PacifiCare stock on the effective date of the Executive's promotion.
4. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT PURSUANT TO SECTION
2.2
4.1 Death. In the event that this Agreement is terminated by reason of
Executive's death, Executive's estate or legal representative shall be entitled
to receive the following:
a. Payment of benefits under the life insurance policy
purchased by the Company on Executive's behalf, if any;
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b. Payments of benefits under the MICP set forth in
Section 3.5 in accordance with the terms of the MICP plan document;
c. Executive's legal representative shall be permitted
to exercise any vested and unexercised options granted under the 1996
Stock Option Plan and any other existing stock option plans of the
Company (collectively, the "Stock Option Plans") in accordance with
their terms for a period of one year following Executive's death.
4.2 Disability. In the event that Executive is terminated because of
incapacity or disability, the Company shall provide Executive with the
following:
a. Payment of benefits under the disability insurance
policy maintained by the Company on Executive's behalf, if any;
b. Payment of benefits under the MICP set forth in
Section 3.5 in accordance with the terms of the MICP plan document;
c. The right to exercise any vested and unexercised
options under the Stock Option Plans in accordance with the terms
stated therein;
d. Payment of the automobile allowance as provided under
Section 3.3 for a period of 18 months following the effective date of
such termination.
4.3 Neglect, Misconduct or Voluntary Termination. In the event this
Agreement is terminated because of Executive's habitual neglect or gross
misconduct pursuant to Section 2.2(c) or because of Executive's voluntary
termination (except for resignation pursuant to Section 2.2(f)), the Company
shall be relieved from any and all further or future obligations to compensate
Executive; provided, however, that Executive shall be able to exercise any
vested and unexercised awards under the Stock Option Plans in accordance with
the terms set forth therein.
4.4 Discharge by Company Pursuant to Section 2.2(d) or 2.2(e). In the
event that the Company terminates Executive pursuant to Section 2.2(d) or 2.2(e)
under circumstances other than a Change-of-Control (as defined herein) and for
any reason other than Executive's incapacity or disability or neglect/misconduct
as described in Sections 2.2(b) and 2.2(c), respectively, then Executive shall
be entitled to the following compensation:
a. An amount equal to one and one half times Executive's
then current annual salary under Section 3.1;
b. An amount equal to one and one half times the average
of the last two MICP bonuses paid to Executive. If Executive has been
employed by the Company for more than one, but less than two years,
then the MICP bonus severance payment shall equal one and one half
times the average of the MICP bonus paid to Executive for the
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prior year and the target for Executive for the current year. If
Executive has been employed by the Company for less than one year,
Executive will not receive any bonus severance payment. For purposes of
this Section 4.4(b), the word "paid" shall include $0.00 for any year
in which Executive was eligible for, but was not paid, an MICP bonus;
c. The right to exercise any vested and unexercised
options under the Stock Option Plans in accordance with their terms
within one year of the effective date of such termination;
d. Continuation of Executive's and his dependents'
medical, dental and vision benefits, on the same terms as other
executives who remain employed with the Company, for a period of 18
months following the effective date of such termination;
e. An amount equal to 18 months of Executive's
automobile allowance;
f. The Company shall provide to Executive outplacement
services to assist Executive in securing a position comparable to the
one from which Executive was terminated. The Company shall be obligated
to provide those outplacement services which are customarily provided
by companies of similar size and holdings as those of the Company to
executives with comparable responsibility and longevity as Executive
and for reasonable cost as approved by the Company. The Company's
provision of such outplacement services shall not limit, restrict, or
reduce, in any manner, any and all other compensation to which
Executive is entitled hereunder;
g. Executive shall receive, or have paid, the amounts of
severance compensation provided in clauses (a), (b) and (e) above in
equal installments over a period of 18 months. Payments will be made
either in biweekly installments on the Company's regular paydays or as
currently being paid to Executive;
h. Notwithstanding the foregoing, in the event Executive
engages in employment, whether as an employee, consultant or contractor
with a competitor of the Company during the 18 month period in which
Executive's salary continues pursuant to this Section 4.4, the
severance compensation available to Executive under this Section 4.4
shall be reduced by the amount of any and all gross earnings Executive
earns while engaged in employment with any such competitor or
competitors. For the purposes of this Section 4.4, a "competitor of the
Company" shall include, without limitation, managed care organizations,
including a health maintenance organization, competitive medical plan,
preferred provider organization, provider sponsored organization
("PSO"), or health or life insurance company which owns a managed care
organization, plan or program. Executive agrees to provide immediate
notice to Company upon receipt of any gross earnings received by
Executive from a competitor of Company. Quarterly, Executive
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shall provide the Company a certificate certifying as to his employment
status and if employed, the name and business of his current employer;
i. If Executive is rehired by Company, payments of
severance compensation provided for in this Section 4.4 shall cease;
and
j. If Executive dies while receiving the salary
continuation benefit as provided in this Section 4.4, Executive's
estate will receive a lump sum payment of the remaining salary
continuation benefit.
4.5 Resignation by Executive Pursuant to Section 2.2(f). In the
event that Executive resigns pursuant to Section 2.2(f), then Executive shall be
entitled to the compensation provided by Section 4.4 of this Agreement.
5. COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT AS A RESULT OF A
CHANGE-OF-CONTROL
5.1 Termination of Employment or Resignation for Good Cause
a. Executive's Rights. In the event that, during the
term of this Agreement, the Company undergoes a Change-of-Control, (as
that term is defined below) and if within 24 months after the
consummation of such change either (1) Executive is involuntarily
terminated, except as provided in Section 5.1(b), or (2) Executive
voluntarily terminates his employment for "good cause" as defined in
Section 5.1(d), then Executive shall be entitled to the following
compensation:
1. A lump sum payment consisting of: (i) an amount
equal to two times Executive's then annual salary; (ii) an
amount equal to two times the average of the last two MICP
bonuses paid to Executive; or if Executive has been employed
by the Company for more than one, but less than two years,
then the MICP bonus severance payment shall equal two times
the average of the MICP bonus paid to Executive for the prior
year and the target for Executive for the current year. If
Executive has been employed by the Company for less than one
year, Executive shall receive an amount equal to two times
target bonus for the current year. For purposes of this
Section 5.1(a)(1), the word "paid" shall include $0.00 for any
year in which Executive was eligible for, but was not paid, an
MICP bonus; (iii) a prorated bonus based on target opportunity
for the year in which the Change-of-Control occurs; (iv) an
amount equal to the equivalent of the cost of 24 months of
COBRA benefits; and (v) an amount equal to 24 months of
Executive's automobile allowance;
2. The right to exercise any and all unexercised
stock options granted under the Stock Option Plans in
accordance with their terms, as if all such
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unexercised stock options were fully vested, within one year
of the effective date of such termination;
3. A payment to executive to compensate for any
excise penalty or other associated taxes resulting from
severance payments exceeding the cap imposed by Internal
Revenue Code Section 280(G);
4. The Company shall provide to Executive the
outplacement services described in Section 4.4(f).
b. Limitation of Benefits. In the event that Executive
is terminated within 24 months after a Change-of-Control of the
Company, and such termination results from either Executive's death,
incapacity or disability or habitual neglect or gross misconduct, then,
notwithstanding anything in this Article 5 to the contrary, Executive
shall receive only that compensation, if any, to which he is entitled
to under Sections 4.1, 4.2 and 4.3, respectively.
c. Change-of-Control. As used in this Article 5, the
term "Change-of-Control" means and refers to:
1. The acquisition by any Person (as hereinafter
defined) of Beneficial Ownership (as hereinafter defined) of
20% or more of either the then outstanding Stock (the
"Outstanding Company Stock") or the combined voting power of
the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the
"Outstanding Company Voting Securities"), provided that, for
purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (I) any acquisition
by the Company, (II) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company
or any Person that controls, is controlled by or is under
common control with, the Company or (III) any acquisition by
any Person pursuant to a transaction which complies with
clauses (I), (II) and (III) of subsection (3) of this
definition; or
2. Individuals who, as of the Effective Date,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board,
provided that, for purposes of this subsection (2), any
individual who becomes a director subsequent to the Effective
Date whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, excluding, however, any such individual
who initially assumes office as a result of an actual or
threatened election contest with respect to the election or
removal of directors or
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other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or
3. Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition of assets or stock of another corporation (a
"Business Combination"), in each case, unless, following such
Business Combination, (I) the Persons who had Beneficial
Ownership, respectively, of the Outstanding Company Stock and
Outstanding Company Voting Securities immediately prior to
such Business Combination have Beneficial Ownership
immediately following the consummation of such Business
Combination, directly or indirectly, of more than 50% of,
respectively, the then outstanding common shares and the
combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting or
surviving from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of
the Outstanding Company Stock and Outstanding Company Voting
Securities, as the case may be, (II) no Person (excluding any
entity resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or
such entity resulting from such Business Combination) has
Beneficially Ownership, directly or indirectly, of 20% or more
of, respectively, the then outstanding common shares of the
entity resulting from such Business Combination or the
combined voting power of the then outstanding voting
securities of such entity, except to the extent that such
ownership existed in respect of the Company prior to such
Business Combination and (III) at least a majority of the
members of the board of directors or similar body of the
entity resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board of Directors,
providing for such Business Combination; or
4. Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing provisions of this definition,
unless otherwise determined by the Board, no Change of Control shall be
deemed to have occurred if (I) Executive is a member of a group that
first announces a proposal which, if successful, would result in a
Change of Control and which proposal (including any modifications
thereof) is ultimately successful, or (II) Executive acquires a two
percent (2%) or more equity interest in the entity which ultimately
acquires the Company pursuant to the transaction described in clause
(I), above.
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For purposes of this definition, "Person" means an individual,
partnership, joint venture corporation, trust, unincorporated
organization, government (or agency or political subdivision thereof),
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) or any other entity, and "Beneficial Ownership" means
beneficial ownership within the meaning of Rule 13d-3 promulgated under
the Exchange Act.
d. Good Cause. As used in this Agreement "good cause"
for Executive to terminate his employment shall be deemed to exist if
Executive voluntarily terminates employment within 24 months of a
Change-of-Control for any of the following reasons:
1. Without Executive's express prior written consent,
Executive is assigned duties materially inconsistent with
Executive's position, duties, responsibilities, or status with
the Company which substantially varies from that which existed
immediately prior to such Change-of-Control;
2. Without Executive's express prior written consent,
Executive experiences a change in his reporting level, title,
or business location (of more than 50 miles from Executive's
current business location or residence whichever is closer to
the new business location) which substantially varies from
that which existed immediately prior to the Change-of-Control;
except that if Executive is not located at the Company's
corporate headquarters in California, a relocation to the
Company's corporate headquarters in California shall not be
deemed a substantial variation, unless Executive's reporting
level or title is also substantially varied;
3. Without Executive's express prior written consent,
Executive is removed from any position held immediately prior
to the Change-of-Control, or if Executive fails to obtain
reelection to any position held immediately prior to the
Change-of-Control, which removal or failure to reelect is not
directly related to Executive's incapacity or disability,
habitual neglect, gross misconduct or death;
4. Without Executive's express prior written consent,
Executive experiences a reduction in salary of more than 10
percent below that which existed immediately prior to the
Change-of-Control;
5. Without Executive's express prior written consent,
Executive experiences an elimination or reduction of any
employee benefit, business expense reimbursement or allotment,
incentive bonus program, or any other manner or form of
compensation available to Executive immediately prior to the
Change-of-Control and such change is not otherwise applied to
others in the Company with Executive's position or title;
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6. The Company fails to obtain from any successor,
before the succession takes place, a written commitment
obligating the successor to perform this Agreement in
accordance with all of its terms and conditions; or
7. The Company or any successor thereto purports to
terminate Executive pursuant to Section 4.4 without first
giving Executive prior written notice thereof that specifies
the facts and circumstances, in reasonable detail, serving as
the basis for Executive's termination.
5.2 Resignation for Other Than Good Cause After a Change-of-Control. In
the event that the Company undergoes a Change-of-Control and Executive remains
with the Company for 12 months following the effective date of the
Change-of-Control, Executive will be given a 30-day "window period" in which to
elect to voluntarily terminate Executive's employment for reasons other than
good cause. Should Executive choose to terminate Executive's employment within
the 30-day "window period," then Executive shall be entitled to the following
compensation:
a. One-half the lump sum payment referred to in Section
5.1(a)(1);
b. The right to exercise all vested and unexercised
stock options granted under the Stock Option Plans in accordance with
their terms within one year of the effective date of such termination;
c. Outplacement services as defined in Section 4.4(f).
6. CONFIDENTIALITY AND OWNERSHIP OF PROPRIETARY INFORMATION
6.1 Confidential Information. Executive acknowledges that, during
the course of Executive's employment with the Company or with any subsidiary or
affiliate of the Company, Executive will have access to certain confidential
information in the form of know-how, trade secrets, or proprietary information
of the Company or its subsidiaries or affiliates ("Confidential Information")
and that such Confidential Information will be acquired in confidence and as a
fiduciary of the Company or its subsidiaries or affiliates. For the purposes of
this Agreement, Confidential Information shall include, without limitation,
member health data and medical records and any other protected healthcare
information, any and all cost and expense data, marketing and customer data,
sales manuals, underwriting guidelines, case management policies and procedures,
utilization review and quality assurance policies and procedures, provider
manuals, individual and group subscriber information (including, the name,
address, telephone number, or contact person for an individual or group
subscriber), subscriber group manuals, processes, designs, devices, compilations
of information, operational techniques operating manuals, symbols, service
marks, logos, customer and vendor lists (including, without limitation, lists of
subscribers, subscriber groups, clients, brokers, and providers contracting with
the Company or any subsidiary or affiliate of the Company),
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business information, marketing programs, plans, and strategies, research and
development plans, contracts and licenses, licensing techniques and practices,
advertising and promotional materials, financial information and strategies,
computer software and other computer-related materials, copyrightable material,
security controls, including computer system passwords, and other legally
protected information owned by or used in the respective businesses of the
Company or its subsidiaries or affiliates which are confidential or proprietary
in nature and may include confidential or proprietary information received from
third parties. In addition to the foregoing, Confidential Information also
includes any information which is not generally known to the public, or within
the market or trade in which the Company competes, and the physical embodiments
of such information in any tangible form, whether written or machine-readable in
nature, or any information which is marked or designated as "Confidential" or
"Proprietary."
6.2 Ownership of Inventions. Executive agrees to assign and does
hereby assign to the Company any and all ideas, designs, know-how, programs,
improvements, inventions, discoveries and literary creations (collectively
referred to as "Inventions") which Executive alone or with others may conceive
or make, and which (a) are made wholly or partially with the Company's assets or
confidential or trade secret information; or (b) are developed wholly or
partially on the Company's time; or (c) relate at the time of conception or
reduction to practice to the Company's business, including actual or
demonstrably anticipated research or development of the Company; or (d) result
from Executive's work for the Company. Such Inventions are and shall be the
property of the Company and shall be deemed to be part of the Company's
business, whether or not any applications for patents, trademarks or copyrights
are filed thereon. Further, all such Inventions shall constitute Confidential
Information. Executive shall not claim to own any Inventions relating to the
business of the Company. Executive agrees that, upon request of the Company,
Executive shall execute any and all papers and do all other lawful acts that may
be required by the Company in order to make applications for Letters Patent, of
the United States and of any and all other countries, on such Inventions, or
that may be required to vest ownership of such applications, patents and
copyrights in the Company, or that may be required to prosecute or obtain such
patents, or to maintain, preserve or enforce the rights of the Company in such
Inventions, patents and copyrights. Except as otherwise prohibited by law
(including but not limited to California Labor Code section 2870), and except
for Inventions made prior to commencement of Executive's employment with the
Company, in addition to the above assignment of Inventions to the Company,
without further consideration, Executive hereby fully, forever, and irrevocably
assigns, transfers, and conveys to the Company: (i) all patents, patent
applications, copyrights, mask works, trade secrets, and other intellectual
property rights in any Invention; and (ii) any and all "Moral Rights" (as
defined below) which Executive may have in, to, or with respect to any
Invention. For purposes of this Agreement, "Moral Rights" shall mean any rights
to claim authorship of an Invention, to object to or prevent the modification of
any Invention, or to withdraw from circulation or control the publication or
distribution of any Invention, and any similar right, existing under judicial or
statutory law of any country in the world, or under any treaty, regardless of
whether or not such right is
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denominated or generally referred to as a "moral right." Executive will promptly
disclose any Inventions to the Company whether developed or created alone or
jointly with others.
6.3 Confidentiality Covenant. Executive acknowledges and agrees
that maintaining the confidentiality of all of the Confidential Information is
integral to the value of the Company and is vital to the successful operations
of the Company and its subsidiaries and affiliates. In view of the foregoing,
Executive agrees to maintain the confidentiality of all Confidential Information
and to not disclose, divulge, exploit, or use, in any manner whatsoever, the
Confidential Information for Executive's own benefit or the benefit of another
person. Executive will additionally take all reasonable precautions to prevent
the inadvertent or accidental exposure of the Confidential Information.
Executive shall not remove any Confidential Information from the Company's
premises or make copies of any of such information except for the benefit of the
Company and in furtherance of Executive's duties as an employee of the Company.
Upon Executive's termination of employment with the Company, Executive shall not
remove from the Company's premises any materials containing any Confidential
Information, and will promptly return to the Company any material which contain
Confidential Information which are in Executive's possession or control.
6.4 No Solicitation. Executive acknowledges and agrees that
Executive will not solicit or participate in or assist in any way in the
solicitation of any employees of Company. For purposes of this provision,
"solicitation" means directly or indirectly influencing or attempting to
influence employees of Company to become employed with any other person,
partnership, firm, or entity.
6.5 Equitable Relief. Executive acknowledges and agrees that it
would be difficult to measure the damage to the Company (or any subsidiary or
affiliate, as the case may be) from any breach of Executive's obligations under
this Article 6, that injury to the Company (or to any subsidiary or affiliate,
as the case may be) from any such breach would be impossible to calculate, and
that money damages would therefore be an inadequate remedy for any such breach.
Therefore, Executive acknowledges and agrees that the Company, in addition to
any of its other rights or remedies, shall be entitled to seek injunctive or
other equitable relief without bond or other security in the event of an actual
or threatened breach of this Agreement. The obligations of Executive and the
rights and remedies of the Company under this Agreement are cumulative and in
addition to, and not in lieu of, any obligations, rights, or remedies created by
applicable patent, copyright, or other laws, including the statutory and common
laws governing unfair competition, misappropriation or theft of trade secrets,
proprietary rights, or confidential information generally.
6.6. Survival of Obligations. Executive's obligations under this
Article 6 shall survive the termination of Executive's employment regardless of
the manner of such termination and shall be binding upon Executive's heirs,
executors, administrators and legal representatives. The remedies to which the
Company is entitled under this Article 6 shall survive the termination of
Executive's employment with the Company.
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7. NOTICES
All notices or other communications required or permitted to be made
hereunder shall be given in writing and sent by either personal delivery,
overnight delivery, or United States registered or certified mail, return
receipt requested, all of which shall be properly addressed with postal or
delivery charges prepaid, to the parties at their respective addresses set forth
below, or to such other addresses as either party may designate to the other in
accordance with this Article 7:
If to the Company: PacifiCare Health Systems, Inc.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President and
Chief Executive Officer
If to Executive: A. Xxxxx Xxxxxxxx
0000 Xx. Xxxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
All notices sent by personal delivery shall be deemed given when actually
received. All notices sent by overnight delivery shall be deemed received on the
next business day. All other notices sent via United States mail shall be deemed
received no later than two business days after mailing. Any notice given by any
method not expressly authorized herein, shall nevertheless be effective if
actually received, and shall be deemed given upon actual receipt.
8. GENERAL PROVISIONS
8.1 Severance Agreement. Any payments of compensation made
pursuant to Articles 4 and 5 are contingent on Executive executing the Company's
standard severance agreement, including a general release of the Company, its
owners, partners, stockholders, directors, officers, employees, independent
contractors, agents, attorneys, representatives, predecessors, successors and
assigns, parents, subsidiaries, affiliated entities and related entities.
Executive must execute the standard severance agreement and release within 45
days of being provided with the document to sign or the severance agreement
offer will expire.
8.2 Assignability. This Agreement shall inure to the benefit of,
and shall be binding upon the heirs, executors, administrators, successors, and
legal representatives of Executive and shall inure to the benefit of, and be
binding upon the Company and its successors and assigns. Executive shall not
assign, delegate, subdelegate, transfer, pledge, encumber, hypothecate, or
otherwise dispose of this Agreement, or any rights, obligations, or duties
hereunder, and any such
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attempted delegation or disposition shall be null and void and without any force
or effect; provided, however, that nothing contained herein shall prevent
Executive from designating beneficiaries for insurance, death or retirement
benefits.
8.3 Entire Agreement. This Agreement is a fully integrated
document and contains any and all promises, covenants, and agreements between
the parties hereto with respect to Executive's employment. This Agreement
supersedes any and all other, prior or contemporaneous, discussions,
negotiations, representations, warranties, covenants, conditions, and
agreements, whether written or oral, between the parties hereto. Except as
expressed herein, the parties have not exchanged any other representations,
warranties, inducements, promises, or agreements respecting Executive's
employment with the Company.
8.4 Severability. In the event any one or more of the provisions
of this Agreement shall be rendered by a court of competent jurisdiction to be
invalid, illegal, or unenforceable, in any respect, such invalidity, illegality,
or unenforceability shall not affect or impair the remainder of this Agreement
which shall remain in full force and effect and enforced accordingly, unless a
party demonstrates by a preponderance of the evidence that the invalidated
provision was an essential economic term of this Agreement.
8.5 Amendment. This Agreement shall not be changed, amended, or
modified, nor shall any performance or condition hereunder be waived, in whole
or in part, except by written instrument signed by the party against whom
enforcement or waiver is sought. The waiver of any breach of any term or
condition of this Agreement shall not be deemed to constitute the waiver of any
other or subsequent breach of the same or any other term or condition of this
Agreement.
8.6 Governing Law. This Agreement shall be governed by, enforced
under, and construed in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
The Company: PACIFICARE HEALTH SYSTEMS, INC.,
a Delaware corporation
Date: __/__/__
By:
--------------------------------------
Xxxxxxx Xxxxx
Executive Vice President & CFO
Executive:
------------------------------------------
Date: __/__/__ A. Xxxxx Xxxxxxxx
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