EXHIBIT 99.4
SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of March 1, 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 XXXXXXXX XXXXXX
("Executive").
RECITALS
WHEREAS, the Company desires to continue Executive's employment in the
capacity of President and Chief Executive Officer, Health Plans.
WHEREAS, the Company and Executive are entering into this Agreement to
establish new 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 President and Chief Executive
Officer, Health Plans, 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 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 devote more time, nor assign more
duties or functions to Executive, than are customary and reasonable for a person
in Executive's position.
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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 a successive term 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 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; 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 his
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 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.
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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 $600,000.96 (six
hundred thousand dollars and ninety-six cents). 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 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
$850.00 (eight 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.
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
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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 President and Chief Executive
Officer, Health Plans, of the Company or in any other capacity to which
Executive may be appointed or elected.
3.8 Premium Priced Options Cash Consideration. Upon a Change of Control
(as defined herein), the options (the "Premium Priced Options") granted under
the Amended 1997 Premium Priced Stock Option Plan, Executive will receive, if
the "Adjusted Change of Control Consideration" (as defined below) is equal to,
or in excess of the exercise price of any of the Premium Priced Options, an
amount in cash equal to the excess of the Adjusted Change of Control
Consideration, over the exercise price of each Premium Priced Option, adjusted
to reflect any excise taxation incurred by Executive resulting from such
payment. No additional compensation will be paid to Executive if the per share
consideration for a Change of Control transaction is equal to or greater than
$115.00. As used in this Section 3.8, the term "Adjusted Change of Control
Consideration" means and refers to the per share consideration to be received by
each holder of the Company's Common Stock upon consummation of a transaction
effecting a Change of Control times one hundred and ten percent (110%).
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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, in the amount of $1,125,000;
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 24 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:
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a. An amount equal to three times Executive's then current annual
salary under Section 3.1, which shall not be less than the amount of
base salary as of the date of this Agreement;
b. An amount equal to three 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 three times the average of the MICP bonus
paid to Executive for the prior year and the target for Executive for
the current year. Whenever the average MICP bonus is determined by
utilizing prior years' performance, it shall be based upon the current
year's weighting. 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. Continued vesting of his options under the Stock Option Plans
in accordance with their terms for a period of one year from the
effective date of such termination, and the ability to exercise any
vested and unexercised options under the Stock Option Plans in
accordance with their terms within two years of the effective date of
such termination;
d. Continuation of Executive's and his dependents' medical,
dental and vision benefits for a period of 36 months following the
effective date of such termination;
e. An amount equal to 36 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 36 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 36 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
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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 his employment status and if employed, the name and business of
his/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.
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 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
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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).
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
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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 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.
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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 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, 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;
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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; 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, business information,
marketing
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programs, plans, and strategies and financial information and strategies.
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 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.
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 at any time during employment and for one year
following termination of employment for any reason whatever. 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.
6.5 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.
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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 Xxxx Xxxxxx Xxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: President and
Chief Executive Officer
If to Executive: Xxxxxxxx Xxxxxx
0 Xxxxx 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.
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
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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.
8.7 Membership on Boards. Executive, with the permission and
knowledge of the Company's Chief Executive Officer, may serve on the Board of
Directors of other companies and institutions during the course of his Agreement
with the Company, as long as such service does not interrupt Executive in the
performance of his duties as the full-time President and Chief Executive
Officer, Health Plans of the Company or other then-current position with the
Company.
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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
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx
President and
Chief Executive Officer
Executive: /s/ Xxxxxxxx Xxxxxx
------------------------------------
Xxxxxxxx Xxxxxx
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