EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Agreement is made this 1st day of , by and between SIERRA
HEALTH SERVICES, Inc., a Nevada Corporation, of Las Vegas, Nevada (hereinafter
referred to as "Employer"), AND XXXXXXXX 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, the Employee has
made and is expected to continue to make a major contribution
to the
profitability, growth and financial strength of the 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 VICE
PRESIDENT, HMO INSURANCE OPERATIONS FOR SIERRA HEALTH SERVICES; PRESIDENT OF
HEALTH PLAN OF NEVADA, INC.; PRESIDENT OF SIERRA HEALTH AND LIFE INSURANCE
COMPANY, INC.; PRESIDENT OF SIERRA HEALTHCARE OPTIONS, INC., 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 the 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 the Employer.
ARTICLE II TERM OF EMPLOYMENT 1. The term of this Agreement shall be for a
TWO (2) year period starting MAY 20, 1996 and terminating MAY 19, 1998 subject,
however, to prior termination as hereinafter provided in Article VII.
ARTICLE III COMPENSATION AND REVIEW 1. Employer shall pay Employee and
Employee shall accept from Employer as full payment for Employee's services
hereunder, compensation 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. 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) The Employee agrees to maintain
adequate records of expenses, in such detail as the 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 the corporation at the same organizational level, and as
approved by the Board of Directors. (b) It is expressly understood that Employer
may, at any time and at its sole discretion, amend any fringe benefit programs,
bonus programs, or stock option programs without prior notice to the Employee
even though such an amendment may decrease the benefits available under said
programs. 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 the 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
the 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 the 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 the Employer for review. All conflicts of
interest or any potential conflicts of interest which arise during the year must
be immediately reported to the Employer. All conflict of interest concerns must
be resolved to the reasonable satisfaction of the 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 the Employer or its subsidiaries.
2. If this Agreement is terminated by either party at any time
hereafter, then the Employee agrees to turn over to the Employer all papers,
documents, working papers, correspondence, memos and any and all other documents
in Employee's possession relating to or concerning any matter affecting or
relating to the business of the Employer or its subsidiaries.
ARTICLE VI
NONCOMPETITION AGREEMENT
1. The 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 the Employer or its subsidiaries in Nevada and other states. In all of
Employee's activities, the Employee, through the nature of Employee's work, will
have access to and will acquire confidential information related to the business
and operations of the 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 the Employer or its subsidiaries. The Employee
acknowledges that all such information is the property of the Employer or its
subsidiaries solely and constitutes confidential information of such parties;
that the disclosure thereof would cause substantial loss to the goodwill of the
Employer and its subsidiaries; that disclosure thereof to the 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 the Employer or its subsidiaries in a manner likely
to cause the Employer and its subsidiaries irreparable harm, and disclosure of
such matters would, likewise, cause such harm; and that the restrictions imposed
upon the Employee herein would not prohibit the Employee in earning a living.
2. It is understood and agreed by the Employee and the 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 the Employer or
its subsidiaries will remain the Employer's or its subsidiaries' members and
groups during the term of this Agreement and in the event of its termination for
any reason by either party. In consideration for the employment and continued
employment of the Employee by the Employer, and also for the amount received by
the Employee as compensation, the Employee hereby irrevocably warrants,
covenants, and agrees as follows:
(a) during the term of Employee's employment and after leaving
the employment of the Employer for any reason, whether involuntary or voluntary,
the Employee will not take any action whatsoever which may or might disturb any
existing business relationship of the Employer or its subsidiaries with any
doctors, groups, members, hospitals, pharmacies or other health care providers
in Nevada who contract with the Employer or its subsidiaries;
(b) for a period of one (1) year after leaving the employment
of the Employer, Employee will not solicit business from the members or groups
of the Employer or its subsidiaries in Nevada, or in any manner disrupt any
business relationship the Employer or its subsidiaries has with any contracted
health care provider in Nevada with whom Employee came in contact as an employee
of the Employer.
(c) for a period of one (1) year after leaving the employment
of the 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, 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 VII by the Employee.
4. The 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 VII, the Employer shall be entitled to secure an
order in any suit brought for that purpose to enjoin the Employee from violating
any of the provisions of the Agreement and that, pending the hearing and the
decision on the application for such order, the Employer shall be entitled to a
temporary restraining order without prejudice to any other remedy available to
the Employer, all at the expense of the Employee should the Employer prevail in
such action. The Employee understands that the covenants of this Article are the
essence of this Employment Agreement, and without which no Employment Agreement
with the Employee would be entered into by the Employer.
5. The provisions of Article VII 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.
6. The covenants and agreements made by the Employee in this Article
VII 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 the Employee
against the Employer, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Employer, by injunctive
relief or otherwise, of the provisions of Article VII. The invalidity of all or
any part of any section or paragraph of this Article VII shall not render
invalid the remainder of this Article or any section hereof.
7. No failure or failures on the part of the Employer to enforce any
violation by the Employee of this Noncompetition agreement, shall constitute a
waiver of the Employer's rights thereafter to enforce all of the terms,
covenants, provisions and agreements herein contained.
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. The Employee may terminate this Agreement and employment hereunder
with sixty (60) days prior written notice. If Employee shall voluntarily
terminate the Agreement all eligible separation compensation and benefits as are
routinely made available to other employees of the Employer at the same
organizational level, shall be paid or made available to the Employee.
3. If Employer shall terminate this Agreement without cause, except as
otherwise set forth in Paragraph 7 of this Article, Employee shall be entitled
to SIX (6) MONTH'S salary and all other separation compensation and benefits as
are routinely made available to other employees of the Employer at the same
organizational level.
4. Notwithstanding any other provision in this Agreement to the
contrary, Employee hereby agrees that any separation compensation due to the
Employee, other than accrued vacation, shall be paid out 25% after the first 90
days, 37 1/2% after the first 180 days, and the remaining 37 1/2% at the end of
365 days. Payment of such amounts shall fully release the Employer from any and
all liability of the Employer relating to this Agreement or the employment
hereunder.
5. If Employer shall terminate the Agreement for Employee conduct that
is materially detrimental to the Company's reputation, business relationships,
or for 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 the Employer at the same
organizational level, as full and final payment under this Agreement. Payment of
such amounts shall fully release the Employer from any and all liability of the
Employer relating to this Agreement or the employment hereunder. 6. (a) If the
Employee is unable to perform Employee's duties hereunder, by reason of illness
or incapacity of any kind, for a period of more than THREE (3) MONTHS in excess
of accrued sick leave, this Agreement, and the employment hereunder may be
terminated by the Employer at its absolute discretion with one week of prior
written notice. (b) If the Employee's illness or incapacity shall have ended,
and the 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 the Employee during the term
of this Agreement, the Employer shall be required to pay the Employee's personal
representative or the executor or administrator of the Employee's estate, THREE
(3) MONTHS of the 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 the Employee or their estate is otherwise eligible for under the terms of
this Agreement.
7. In the event of a change in control of the 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 this Agreement
and will be entitled to TWELVE (12) MONTH'S salary and any other separation
compensation and benefits as are routinely made available to other employees of
the Employer at the same organizational level. Payment of such amounts shall
fully release the Employer from any and all liability of the Employer relating
to this Agreement or the employment hereunder.
8. In the event of a change in control of the 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 this Agreement
and will be entitled to one (l) year's salary and any other separation
compensation and benefits as are routinely made available to other employees of
the Employer at the same organizational level if, within one (l) year after the
effective date of the change in control the Employee's principal duties or
compensation, including salary and bonus, is materially changed. It is expressly
understood that a change in who the Employee reports to shall not constitute a
material change in duties. In addition, if the Employee's employment hereunder
is terminated for reasons other than those set forth in Paragraph 4 of this
Article within one year after the effective date of a change in control which
was approved by a majority of the Employer's Board of Directors, Employee shall
be entitled to TWELVE (12) MONTH'S salary and all other separation compensation
and benefits as are routinely made available to other employees of the Employer
at the same organizational level. Payment of such amounts shall fully release
the Employer from any and all liability of the Employer relating to this
Agreement or the employment hereunder.
9. 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 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.
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 the 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 the 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 the Employee with the Employer shall be brought in
the State of Nevada.
IN WITNESS WHEREOF, the parties have executed this Agreement at
Las Vegas, Nevada, on the day of , 19 .
SIERRA HEALTH SERVICES, INC.
By:
Chief Executive Officer
P. O. Xxx 00000
Xxx Xxxxx, XX 00000-0000
EMPLOYEE
By:
Xxxxxxxx X. Xxxxxx
ATTACHMENT A
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
This Amendment No. 1 (the "Amendment") to Employment Agreement is hereby
made and entered into as of this 1st day of May, 1997, by and between Sierra
Health Services, Inc., a Nevada corporation (hereinafter referred to as
"Employer") and XXXXXXXX X. XXXXXX (hereinafter referred to as "Employee").
WHEREAS, the Employer and Employee are parties to that certain Employment
Agreement dated as of JULY 1, 1996 ; and
WHEREAS, the parties hereto desire to amend certain terms thereof on the
terms and conditions hereinafter set forth; and
WHEREAS, the Compensation Committee of the Board of Directors of
Employer have reviewed and approved this Amendment.
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. SENTENCE 1 OF PARAGRAPH 7 OF ARTICLE VII, TERMINATION OF EMPLOYMENT, IS
HEREBY AMENDED TO READ AS FOLLOWS:
In the event of a change in control of the 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 this Agreement and will be
entitled to twelve (12) months salary, WHICH SHALL BE GROSSED
UP FOR TAXES IN AN AMOUNT NOT TO EXCEED FIFTY PERCENT (50%) OF
THE TWELVE (12) MONTHS SALARY, and any other separation
compensation and benefits as are routinely made available to
other employees of the Employer at the same organizational
level.
2. SENTENCE 1 OF PARAGRAPH 8 OF ARTICLE VII, TERMINATION OF EMPLOYMENT,
IS HEREBY AMENDED TO READ AS FOLLOWS:
In the event of a change in control of the 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 this Agreement and will be entitled
to twelve (12) months salary, WHICH SHALL BE GROSSED UP FOR
TAXES IN AN AMOUNT NOT TO EXCEED FIFTY PERCENT (50%) OF THE
TWELVE (12) MONTHS SALARY, and any other separation
compensation and benefits as are routinely made available to
other employees of the Employer at the same organizational
level if, within one (l) year after the effective date of the
change in control the Employee's principal duties or
compensation, including salary and bonus, is materially
changed.
3. SENTENCE 3 OF PARAGRAPH 8 OF ARTICLE VII, TERMINATION OF EMPLOYMENT, IS
HEREBY AMENDED TO READ
-------------------------------------------------------------------------------
AS FOLLOWS: ----------
In addition, if the Employee's employment hereunder is
terminated for reasons other than those set forth in Paragraph
4 of this Article within one year after the effective date of
a change in control which was approved by a majority of the
Employer's Board of Directors, Employee shall be entitled to
twelve (12) months salary, WHICH SHALL BE GROSSED UP FOR TAXES
IN AN AMOUNT NOT TO EXCEED FIFTY PERCENT (50%) OF THE TWELVE
(12) MONTHS SALARY, and all other separation compensation and
benefits as are routinely made available to other employees of
the Employer at the same organizational level.
4. EFFECTIVE DATE. This Amendment shall be effective as of May 1, 1997.
5. CONTINUED EFFECT. Except as otherwise modified hereby, the Agreement
shall continue in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
SIERRA HEALTH SERVICES, INC.
BY:________________________________
Xxxx X. XxxXxxxxx, President
EMPLOYEE
BY: /S/ XXXXXXXX X. XXXXXX
