EXHIBIT 10.2
SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of July 22, 2002, by and between PACIFICARE HEALTH SYSTEMS, INC., a Delaware
corporation (the "Company"), with its principal place of business located at
0000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxxxx 00000, and XXXXXX XXXXXXXX
("Executive"), residing at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, 00000.
RECITALS
WHEREAS, the Company desires to employ Executive in the capacity of
Executive Vice President, Pharmaceutical Services.
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 will employ Executive
and Executive will serve the Company in the capacity of Executive Vice
President, Pharmaceutical Services, 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 are mutually
agreed upon by Executive and the Company.
1.2 Devotion of Executive. During the term of this Agreement,
Executive shall devote her 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 devote more time,
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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 36 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 her
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 her 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; or 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 her employment with the Company). In such event, Executive's
termination shall be effective immediately upon receipt of written
notice from the Company.
d. Either party hereto may terminate this Agreement, with
or without cause, upon 45 days prior written notice to the other party.
Except for the circumstances described
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in Subsections (a), (b), (c), (e) and (f) of this Section 2.2,
Executive's termination shall be effective 45 days after receipt of such
written notice.
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 her 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
her 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 $450,000.
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 her 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 coverage 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. The Company shall have the 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
an $750.00 (seven hundred fifty-dollar) per month automobile allowance. The
Company shall furnish 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.
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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
her 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, or any replacement plan (the "MICP"), and as may be further amended,
modified, or terminated, 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 Executive Vice President and Chief
Financial Officer of the Company or in any other capacity to which Executive may
be appointed or elected.
3.8 Initial Grant of Stock Options. Company shall grant Executive
options to purchase 100,000 shares of the Company's common stock, subject to the
approval of the Compensation Committee of the Company's Board of Directors. The
options shall be priced at the closing price on Executive's first day of
employment under this Agreement. The options shall have a ten-year (10-year)
term, and vesting shall be 25% per year, commencing on the first anniversary of
the grant date.
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;
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
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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 two times Executive's then current
annual salary under Section 3.1;
b. An amount equal to two 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 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 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;
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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 her dependents' medical,
dental and vision benefits for a period of 24 months following the
effective date of such termination;
e. An amount equal to 24 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 24 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 24 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 shall provide the Company a
certificate certifying as to her employment status and if employed, the
name and business of her 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.
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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 her
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 three times Executive's then annual salary; (ii) an
amount equal to three times the average of the last two MICP
bonuses paid to Executive; (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 36
months of COBRA benefits; and (v) an amount equal to 36 months
of Executive's automobile allowance. If Executive has been
employed for more than one, but less than two years, then the
amount attributable to the MICP bonus portion set forth in
clause (ii) above shall equal three 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 for less than one year, Executive shall receive an
amount equal to three 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.
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 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).
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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 she is entitled
to under Sections 4.1, 4.2 and 4.3, respectively.
c. Change-of-Control. As used in this Section 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 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
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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.
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 her 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.
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2. Without Executive's express prior written
consent, Executive experiences a change in her reporting level,
titles, 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.
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.
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).
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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), 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
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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 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 person, partnership,
firm, corporation or other entity.
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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.
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 Xxxx Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: President and
Chief Executive Officer
If to Executive: Xxxxxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxxx, 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.
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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 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.
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8.7 Outside Positions. Executive, with the knowledge and written
consent of the Company's Chief Executive Officer, may serve on the Board of
Directors of other companies and institutions, and may serve in other outside
positions requiring minimal time commitments during the course of her Agreement
with the Company, as long as such service does not interrupt Executive in the
performance of her duties as the full-time Executive Vice President,
Pharmaceutical Services of the Company or other then-current position with the
Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
The Company: PACIFICARE HEALTH SYSTEMS, INC.,
Date: August 15, 2002 a Delaware corporation
By: /s/ XXXXXX X. XXXXXXXXX
--------------------------------
Xxxxxx X. Xxxxxxxxx
President and
Chief Executive Officer
Executive: /s/ XXXXXXXXXX XXXXXXXX
Date: August 16, 2002 -----------------------------------
Xxxxxxxxxx Xxxxxxxx
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