AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), made and
entered into as of this 14th day of February, 2001 ("Effective Date"), by and
between Mid Atlantic Medical Services, Inc., a Delaware corporation with its
principal executive offices at 0 Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000
("Company"), and Xxxx X. Xxxxxx, M.D. ("Executive") supersedes and replaces all
previous employment agreements and amendments.
WHEREAS, the Company wishes to assure itself of the services of Executive
for the period provided in this Agreement, and Executive is willing to serve in
the employ of the Company on a full-time basis for said period;
WHEREAS, the Company and Executive desire to set forth the amounts payable
and benefits to be provided by the Company to Executive while in the employment
of the Company and in the event of a termination of Executive's employment with
the Company under the circumstances set forth herein;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto hereby agree as follows:
1. Employment. The Company agrees to continue Executive in its employ, and
Executive agrees to remain in the full time employ of the Company, for the
period stated in Section 3 hereof and upon the other terms and conditions herein
provided.
2. Position and Responsibilities. The Company employs Executive, and
Executive agrees to serve, as Chairman of the Board of the Company on the
conditions hereinafter set forth. Executive agrees to perform such services
consistent with his position as shall from time to time be assigned to him by
the Company's Board of Directors ("Board"). Such duties may include, in addition
to his duties as Chairman, the appointment of Executive as an officer and/or
director of any present or future subsidiary or affiliate of the Company without
any additional remuneration under this Agreement. Executive shall devote all of
his business time, attention, skill, and efforts to the faithful performance of
the duties hereunder.
3. Term. The period of Executive's employment under this Agreement with the
Company shall be deemed to have commenced as of January 1, 2001 and remain in
effect for three years unless terminated earlier as provided herein.
4. Compensation and Reimbursement of Expenses.
(a). General. For all services rendered by Executive as Chairman in
addition to any other capacity during employment under this Agreement
(including, without limitation, services as an executive, officer, or
director of the Company, or any subsidiary or affiliate of the Company, or
as a member of any committee of the Board of Directors of the Company or
any subsidiary or affiliate of the Company), the Company shall pay
Executive as compensation (i) an annual salary ("Base Salary"); (ii) such
bonuses if any, as may be awarded to Executive from time to time pursuant
to any Bonus Plan adopted by the Company for its senior management; (iii)
such other bonuses as may be awarded by the Board or by a committee
designated by the Board as described below ("Performance Bonus"); (iv) an
annual Chairman of the Board fee ("Chairman's Fee) of $100,000 to be paid
in equal bi-weekly payments; and (v) stock options as forth in Section
4(b).
(b). Stock Options.
(i). On January 15, 2001 and on each subsequent January 1 that
this Agreement is in effect, the Company will grant Executive options
to purchase no less than 150,000 shares of MAMSI common stock at the
stock price on the date of grant. The Compensation Committee of the
Board will annually consider and submit to the Board a recommendation
for option grants in excess of the minimum of 150,000. All of such
options will vest 50% on the date of grant and 50% based on
performance targets to be determined by the Stock Option Committee and
the Board at the first Board meeting in the year of the grant.
(ii). The number and kind of shares subject to outstanding
options, the purchase price or exercise price of such options, the
limit now set forth in Section 5.01 of the Company's stock option plan
(and any similar successor plan or provision) and the number and kind
of shares available for options subsequently granted shall be
appropriately adjusted to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other
change in capitalization with a similar substantive effect upon the
options granted. The Stock Option Committee shall have the power and
sole and absolute discretion to determine the nature and amount of the
adjustment to be made in each case.
(c). Base Salary. Base Salary shall be $760,000 for 2001. For 2002 and
each year thereafter, the Base Salary will increase by an amount equal to
50% of the percentage increase in the Company's prior year consolidated net
income as determined by the Company, and audited by the Company's
independent certified public accountant but any annual increase may not be
greater than 8 percent. There shall be no decreases in Executive's Base
Salary, as adjusted, during the term of this Agreement. This increase would
first apply to the year 2002 and would take effect retroactively to January
1 of the then current year. Items of a non-recurring nature may be excluded
in the calculations as mutually agreed to by the Company and the Executive.
(d). Bonuses.
(i). Executive shall be paid a bonus as may be determined under
the applicable Bonus Plan adopted by the Company for its senior
management.
(ii). In addition, for 2000 and each year thereafter, the
Executive shall be paid a Performance Bonus based on the percentage
increase in the Company's net income, as determined by the Company and
as audited by the Company's independent certified public accountant,
according to the following formula:
Percentage Increase in Company Performance Bonus Percentage
Net Income
0% - 8.00% -0-
8.01% -15.00% 50% of % increase in net income
15.01% - 25.00% 75% of % increase in net income
25.0% and up 100% of % increase in net income up
to 50% of Base Salary
The current year's Base Salary shall be multiplied times the Performance Bonus
percentage earned in the applicable year. The maximum Performance Bonus that may
be paid for any year is 50% of that year's Base Salary. For years 2001 and
after, the Performance Bonus will be subject to shareholder approval. If such
approval is not received, the Company agrees to provide Executive with similar
substitute compensation agreeable to the Company and Executive.
(iii). Items of a non-recurring nature may be excluded in the
calculations as mutually agreed to by the Company and the Executive.
(e). Reimbursements. The Company shall also reimburse Executive, in
accordance with such policies and procedures as the Board may establish
from time to time, for all reasonable travel and other expenses incurred by
Executive in the performance of his obligations under this Agreement.
Executive shall also be entitled to participate in all benefit plans
established by the Company for which Company executives are or shall become
eligible.
5. Termination of Employment. Executive's employment under this Agreement
may be terminated by the Company or Executive as follows:
(a). Disability.
(i) If Executive fails to perform any of his duties under this
Agreement on account of Disability (as hereinafter defined), the
Company may give notice to Executive to terminate this Agreement on a
date not less than one hundred and eighty (180) days thereafter
("Notice Period") and, if Executive has not resumed full performance
of his duties under this Agreement within such Notice Period, then
Executive's employment under this Agreement will terminate on the date
provided in the notice ("Disability Termination Date").
Notwithstanding the above, the Executive is specifically entitled to
receive all benefits in Section 5(a)(ii).
(ii). Executive shall be paid his Base Salary and Chairman's Fee
by the Company during the Notice Period. Within thirty (30) days after
the Disability Termination Date, the Company shall pay Executive's
Base Salary and Chairman's Fee as then in effect that has accrued to
the last day of the month in which the Disability Termination Date
occurs as well as any other payments or benefits that Executive is
entitled to as an employee of the Company. Executive shall also be
entitled to receive a fully vested retirement benefit and a fully
vested annuity and tax gross up retirement benefit pursuant to
Sections 5(d) and 5(h) and health insurance benefits pursuant to
Section 8 below.
(iii). Until the end of the last day of the month in which the
Disability Termination Date occurs, the Company shall maintain and pay
for health and other insurance benefits for Executive at least equal
to those he had at the commencement of such Disability.
(iv). As used in this Agreement, the term "Disability" shall mean
the inability of Executive to perform all of his duties under this
Agreement by reason of his medical, mental, or emotional disability,
as determined by an independent physician selected with the approval
of the Board and Executive.
(b). Death. If Executive dies while employed under this Agreement, his
employment under this Agreement will terminate as of the date of his death
("Date of Death"). Within thirty (30) days after the Date of Death, the
Company shall pay to Executive's legal representative Executive's Base
Salary and Chairman's Fee as then in effect that has accrued to the last
day of the month in which the Date of Death occurs as well as any other
payments or benefits that Executive is entitled to as an employee of the
Company. If the Executive dies while receiving payments pursuant to Section
5(c) below, said payment shall continue for the period remaining and shall
be paid to the estate or named beneficiary of the Executive. Executive
shall receive a fully vested retirement benefit and a fully vested annuity
and tax gross up retirement benefit pursuant to Sections 5(d) and 5(h) and
health insurance benefits pursuant to Section 8 below. On the Date of
Death, all granted stock options shall immediately vest and Executive's
heirs or estate shall be treated as if Executive remained an employee for
exercise purposes consistent with the terms of the applicable stock option
plan.
(c). Certain Other Events of Termination.
(i) In the event that (A) the Company terminates Executive's
employment for any reason (other than because of death, Disability, or
"just cause" (as defined below), (B) the term of this Agreement
expires and the Company does not offer to extend the Executive's
employment in a similar capacity, (C) Executive terminates his
employment with the Company because of the Company's material breach
of this Agreement, (D) Executive terminates his employment with the
Company because the Company requires Executive to be based anywhere
other than Executive's current location or within seventy-five miles
(75) round trip of the Company's current principal executive offices,
or (E) Executive terminates his employment with the Company because of
a substantial reduction of his duties and responsibilities, then the
Executive shall be entitled to the severance benefits described in
Section 5(c)(ii) below. The date of termination under this Section
5(c)(i) shall be referred to as the "Executive Termination Date" in
this Agreement.
(ii). Upon the occurrence of an event described in Section
5(c)(i) above, the Executive shall be entitled to the following:
(A). The Company shall pay the Executive an amount equal to
two year's Base Salary as in effect on the Executive Termination
Date plus a two year Chairman's Fee with the total amount being
paid in equal bi-weekly payments over a period of two years
commencing on the Executive Termination Date and in accordance
with regular payroll practices of the Company;
(B). The Company shall also pay the Executive the sum of the
maximum bonus under the senior management Bonus Plan of the
Company and the maximum Performance Bonus that Executive could
have been entitled to had he been employed until the end of the
year of termination using the assumption that the parameters for
earning maximum bonuses were met for that year regardless of the
actual performance of the Company. Such bonus payments shall
occur when bonuses are normally paid by the Company but in no
event later than February 28 of the applicable year; and
(C). All stock options which Executive has been granted
shall immediately vest and become exercisable. For the purposes
of the time period available for exercising such stock options,
Executive shall be considered to be in the continuous employ of
the Company unless terminated pursuant to subsection (e) below.
(D). If the Executive becomes entitled to the benefits
provided in this Section 5(c)(ii), such benefits shall be in lieu
of any other severance benefit that the Company may provide or
adopt except that the Executive shall be entitled to any vested
retirement benefits including a fully vested annuity and tax
gross up retirement benefit provided under Sections 5(d) and 5(h)
whether or not the Executive is vested in those benefits as of
the Executive Termination Date and health insurance as set forth
in Section 8 below. Nothing in this section shall limit the
discretion of the Board to grant Executive additional benefits.
(d). Retirement.
(i). Retirement benefits shall be payable to Executive beginning
on the day Executive attains age sixty-two (62), (1) if he is at that
time still employed by the Company, and he elects to retire from
employment with the Company, or (2) he is not at the time employed by
the Company, and elects to begin receiving retirement benefits.
Notwithstanding the above provision, the Executive and the Company may
agree that the Executive may continue to be employed by the Company
and not to retire at age 62. In addition, the Executive may elect an
early retirement and may elect to receive payment of the retirement
benefit at anytime after attaining age 55 but before age 62 by
providing written notice to the Company. Such early retirement benefit
will be actuarially adjusted solely for actual retirement age as
described in Section 5(d)(ii) below. The date on which the Executive
retires shall be referred to as the "Retirement Termination Date".
(ii). If Executive retires on or after reaching age 62, Executive
will be entitled to receive from the Company a retirement benefit
which will provide an annual lifetime benefit in an amount equal to
three percent of the average annual Base Salary, Chairman's Fee and
all bonus compensation for the two years with the highest compensation
beginning on or after January 1, 1999 times the total number of months
of service with the Company, including all months prior to January 1,
1999, which shall be divided by 12 to a limit of 60% of Executive's
total compensation which is defined as the total amount of annual Base
Salary, annual total Chairman's Fee and maximum annual senior
management bonus and Performance Bonus (using the assumption that the
parameters for earning maximum bonus were met for that year regardless
of the actual performance of the Company) that Executive could have
earned in the calendar year of Executive's termination of employment
with the Company. For the purposes of determining the two years with
the highest compensation under this paragraph, compensation shall be
based on all wages, Chairman's Fees, salaries and bonus amounts earned
in an applicable year rather than paid in that year. In addition, in
the event of a Change in Control as defined in Section 5(g), the
Executive shall have been considered to have earned the total amount
of annual Base Salary, annual total Chairman's Fee and maximum annual
senior management bonus and Performance Bonus (using the assumption
that the parameters for earning maximum bonus were met for that year
regardless of the actual performance of the Company) that the
Executive could have earned in the calendar year of the Change in
Control and for the purposes of calculating the Executive's retirement
benefit, such year shall be considered in the determination of the
Executive's two years with highest compensation. However, in no event
will the lump sum payment provided in Section 5(g)(2) be considered as
compensation under the calculation of the retirement benefit under
this paragraph. In the event of a Change in Control, an additional
twenty-four (24) month period shall be added to the total months of
service for the purpose of calculating the Executive's retirement
benefit under this paragraph. If Executive elects early retirement and
retires after reaching age 55 but before age 62, the annual payment
shall be adjusted so that the total amount of retirement benefits to
be paid do not exceed the actuarial equivalent of the amount which
would then have been payable in retirement benefits had Executive
reached and retired at age 62. For the purposes of determining
actuarial equivalency, the retirement benefit will be reduced by .25%
(.0025) per month for each month that the actual retirement age is
below age 62. The retirement benefit shall be indexed for inflation.
(iii). Pursuant to the terms of the Executive's prior employment
contract with the Company, all retirement benefits have fully vested.
(iv). At any time, Executive may elect a beneficiary to receive a
survivor benefit upon the Retirement Termination Date. If Executive
dies prior to retirement without naming a beneficiary, then
Executive's surviving spouse shall be deemed to be his named
beneficiary or if Executive has no surviving spouse, to his issue per
stirpes.
(v). If Executive is employed by the Company on the Retirement
Termination Date, the Company shall pay to Executive his Base Salary
and Chairman's Fee as then in effect that has accrued to the last day
of the month in which the Retirement Termination Date occurs, any
payment or benefit that Executive is entitled to as an employee of the
Company, and any non-reimbursed business expenses. The retirement
benefit payable under this Section 5(d) is in addition to, and shall
not be offset against, any other retirement benefits to which the
Executive may be entitled under any qualified or non-qualified
retirement or deferred compensation plan of the Company.
(e). Termination by the Company for Just Cause
(i). The Company may terminate Executive's employment for "Just
Cause" at any time by giving written notice thereof to Executive.
(Except as provided below, the date of such notice is the "Just Cause
Termination Date" unless otherwise provided in the notice). Within
thirty (30) days after the Just Cause Termination Date, the Company
shall pay to Executive his Base Salary and Chairman's Fee as then in
effect that has accrued to the Just Cause Termination Date, as well as
any payment or benefit that Executive is entitled to as an employee of
the Company, and any non-reimbursed business expenses. For the
purposes of this subparagraph, "Just Cause" shall mean termination
because of Executive's willful and intentional business or
professional misconduct, breach of fiduciary duty, intentional failure
to perform stated duties other than such failure due to his
disability, the conviction of Executive of a felony, or a material
breach of any provision of this Agreement. For the purposes of this
paragraph, no act, or failure to act, on Executive's part shall be
deemed "willful" unless done, or omitted to be done, by Executive not
in good faith and without reasonable belief that his action or
omission was in the best interests of the Company. Unless otherwise
determined by the Board, Executive shall have no right to receive
compensation or other benefits under this Agreement after a
termination for Just Cause except for vested retirement benefits and
any vested annuity and tax gross up retirement benefit as described in
Sections 5(d) and 5(h), any stock options that have vested up to and
including the Just Cause Termination Date and health insurance as set
forth in Section 8 below.
(ii). Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Just Cause unless and until the
occurrence of the following two events:
(A). The Executive is given a notice from the Board of
Directors of the Company that identifies with reasonable
specificity the grounds for the proposed termination of the
Executive's employment and notifies the Executive that he shall
have an opportunity to address the Board with his counsel present
and entitled to address the Board with respect to the alleged
grounds for termination at a meeting of the Board called and held
for the purpose of determining whether the Executive engaged in
conduct described in Section 5(e)(i). The notice shall, except as
is otherwise provided in the last sentence of the subsection (i),
provide the Executive with thirty (30) days from the day such
notice is given to cure the alleged grounds of termination
contained in this Agreement. The Board of Directors shall
determine, reasonably and in good faith, whether the Executive
has effectively cured the alleged grounds of termination. If, in
the reasonable good faith opinion of the Board, the grounds for
termination under Section 5(e)(i) may not reasonably be cured by
the Executive, then the notice required by this Section
5(e)(ii)(A) need not provide for any cure period; and
(B). The Executive is given a copy of certified resolutions,
duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Board (excluding the Executive,
if applicable) at a meeting of the Board called and held for the
purpose of finding that, in the reasonable good faith opinion of
a majority of the Board, the Executive was guilty of conduct set
forth in Section 5(e)(i), which specify in detail the grounds for
termination and indicate that the grounds for termination have
not been cured within the time limits, if any, specified in the
notice referred to in Section 5(e)(ii)(A).
(f). Termination by Executive Without Cause. Executive may terminate
this Agreement without cause upon the provision of twelve (12) weeks' prior
notice to the Company. The date of such termination shall be referred to as
the "Without Cause Termination Date" in this Agreement. Upon such a
termination, the Executive shall receive all the compensation including
bonuses set forth in Section 5(c)(ii) except that Executive shall receive
one year's Base Salary and Chairman's Fee instead of two year's Base Salary
and Chairman's Fee and Executive shall be entitled to receive the vested
retirement and the portion of the vested annuity and tax gross up
retirement benefit in accordance with Sections 5(d) and 5(h) of this
Agreement which have vested prior to the Executive's termination date and
any other non-reimbursed business expenses and health insurance as set
forth in Section 8 below. Executive must comply with Section 6 below. No
other payment shall be made to Executive under this Agreement other than
that provided in this paragraph.
(g). Change in Control. Notwithstanding any other provision to the
contrary, the following provisions will govern in the event of a Change in
Control as defined herein.
(1). Change in Control shall be deemed to have occurred upon the
occurrence of any one of the following events:
(A). The acquisition in one or more transactions by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) in excess of fifty
percent (50%) of the then-outstanding voting stock of the
Company; provided, however, that the term "Change in Control"
shall not include any such acquisition by any entity with respect
to which, following such acquisition, more than 50% of the
then-outstanding shares of common stock of such entity is then
beneficially owned, directly or indirectly by individuals and
entities who were beneficial owners of the then-outstanding
voting stock of the Company immediately prior to such acquisition
in substantially the same proportion as their ownership
immediately prior to such acquisition of the then-outstanding
voting stock of the Company; or
(B). The consummation of a merger, reorganization,
consolidation, share exchange, transfer of assets or other
transaction having similar effect involving the Company
("Merger"), unless, following such Merger, stock possessing at
least fifty percent (50%) of the total combined voting power of
the issued and outstanding shares of all classes of Company stock
of the corporation resulting from such Merger is beneficially
owned, directly or indirectly, by individuals and entities who
were beneficial owners of the then-outstanding voting stock of
the Company immediately prior to such Merger in substantially the
same proportion as their ownership immediately prior to such
Merger; or
(C). Consummation of a complete liquidation or dissolution
of the Company.
(2). In the event of a Change in Control as defined in Section
5(g)(1) above, the Executive shall be entitled to the following
benefits regardless of whether Executive remains employed by the
Company, terminates his employment with the Company, or is terminated
after the Change in Control:
(A). The Company shall pay the Executive in a single lump
sum cash payment at the time of Closing (i.e., the legal
consummation of the Change in Control) an amount equal to two
times the sum of (1) the Executive's Base Salary and Chairman's
Fee; and (2) the maximum Performance Bonus that Executive could
have earned for the year in which such Change in Control occurs
(50% times the then-current Base Salary as defined in Section 4
above); and (3) the maximum annual senior management bonus the
Executive could have earned using the assumption that the
parameters for earning maximum bonus were met for that year
regardless of the actual performance of the Company under the
applicable Bonus Plan for the year in which such Change in
Control occurs in lieu of payment under the Bonus Plan. Upon
payment of the lump sum provided under the subsection, the
obligation of the Company to employ Executive under this
Agreement shall cease;
(B). All stock options which Executive has been granted
shall immediately vest and become exercisable in accordance with
the applicable option plan and agreements;
(C). The Company shall pay to the Executive at the time of
Closing an amount equal to the sum of (x) any excise taxes
imposed on the Executive under Section 4999 of the Internal
Revenue Code and (y) income taxes due from the Executive with
respect to the payment of the amount in (x) above as well as the
payment for income taxes under this subsection 5(g)(2)(C). The
determination of whether an excise tax is due in respect of any
payment or benefit, the amount of the excise tax and the amount
of the gross-up payment shall be made by an independent
accountant jointly selected by the Company and the Executive and
paid by the Company. If the Executive and the Company cannot
agree on the firm to serve as the accountant, then the Executive
and the Company shall each select one nationally recognized
accounting firm and those two firms shall jointly select the
nationally recognized accounting firm to serve as the auditor;
and
(D). The Company shall purchase for the Executive an annuity
as set forth in Section 5(h) below based on the fully vested
retirement benefit provided in Section 5(d) above. For the
purposes of calculating the amount of such retirement benefits
under Section 5(d)(ii), an additional twenty-four (24) months
shall be added to the total number of months of service Executive
shall have worked for the Company and, in addition, the Executive
shall have been considered to have earned the total amount of
annual Base Salary, annual total Chairman's Fee and maximum
annual senior management bonus and Performance Bonus (using the
assumption that the parameters for earning maximum bonus were met
for that year regardless of the actual performance of the
Company) that the Executive could have earned in the calendar
year of the Change in Control and such year shall be considered
in the determination of the Executive's two years with highest
compensation under Section 5(d)(ii). However, in no event will
the lump sum payment provided in Section 5(g)(2) be considered as
compensation under the calculation of the retirement benefit
under this paragraph.
(3). The payment of any benefits described in Section 5(g)(2) and
5(h) of this Agreement shall become the joint and several obligation
and responsibility of the Company and the successor company or
"person" noted in Section 5(g) above if applicable.
(4). If the Executive becomes entitled to the benefits provided
under Section 5(g)(2) above, such benefits shall be in lieu of any
other severance or similar benefits that would otherwise be payable
under any other agreement, plan, program or policy of the Company;
provided, however, that this section shall not apply to any retirement
benefit under Sections 5(d) and 5 (h) herein and shall not be offset
against any other retirement benefits to which the Executive may be
entitled under any qualified or non-qualified retirement or deferred
compensation plan of the Company.
(h). Annuities. Upon termination of the Executive's employment for any
reason under this Section 5, the Company shall purchase for his benefit an
annuity that guarantees the payment of the earned retirement benefits for
the life of Executive and the life of his beneficiary should he predecease
such beneficiary. The annuity must be issued by a Company with at least an
A+ rating from Best's or a AA rating from Standard & Poor's. For the
purposes of the purchase of such an annuity, the Executive may elect the
commencement date of the annuity payment. Such annuity must be purchased
within 90 days of termination except in the case of a Change in Control as
defined below in which case the annuity must be purchased by the successor
company prior to Closing unless an alternate date of purchase is mutually
agreed to in writing by the Company, the Executive and the successor
company. The parties recognize that the amount the Company or successor
company pays for the annuity will be taxable income to the Executive and
the Company or successor company agrees to reimburse the Executive for all
taxes, including taxes on the tax gross up, related to said purchase upon
the following vesting schedule: 50% vesting upon execution of this
Agreement; 100% vesting on 1/1/02 and 100% immediate vesting upon any
Change in Control, death or Disability. In the case of a Change in Control,
for the purposes of calculating any actuarial reduction in payments for
early retirement in the value of the annuity, the Executive shall be deemed
to be the greater of (1) age 55 or (2) Executive's actual age, plus 2 years
and the annuity will commence retirement payments when the Executive
attains the age of 55.
6. Covenant Not to Compete. Executive covenants and agrees that, in
consideration of the amounts to be paid Executive under this Agreement and other
good and valuable consideration, for a period of one (1) year beyond the Without
Cause Termination Date, Executive shall not be employed as an executive officer
of, or control, manage, or otherwise participate in the management of the
business of a "significant competitor" of the Company within the Company's
service area. The term "significant competitor" shall mean any company or
division of a company that, on the Executive Termination Date, directly or
indirectly, is materially (10% or more of its revenues) engaged in the operation
or management of a health maintenance organization or any other similar
provider, payer or insurer for medical services. The Company and Executive agree
that the terms and conditions of this Section 6 shall survive the termination of
this Agreement following the Without Cause Termination Date.
7. Business Automobile. The Company shall pay to Executive a car allowance
of not less than $450 per month during the term of this Agreement.
8. Health Insurance. Upon termination of this Agreement for any reason,
including but not limited to, retirement, death, Disability, Change of Control,
or termination of Executive with or without cause, both the Executive and the
spouse of the Executive and in the event of the Executive's death, the surviving
spouse of the Executive will receive or be provided health coverage from the
Company or its successor during the term of their respective lives. Such health
coverage shall be equivalent to that provided to the Executive on the date of
termination and shall be paid for by Executive or the spouse of the Executive
with the normal Company contribution for active employees in effect at the date
of termination.
9. Confidential Information. Executive shall fully comply with and abide by
the provisions of the Company's Employee Manual and other announced policies in
effect from time to time, including those provisions relating to the protection
of the Company's confidential information. The Company and Executive agree that
the foregoing provision shall survive the termination of this Agreement for any
reason whatsoever.
10. Indemnification. Executive shall be entitled to indemnification to the
full extent provided for or allowed by applicable law, including indemnification
for administrative and criminal matters, irrespective of insurance, and to
advances for expenses in defending against such claims. The Company and
Executive agree that the foregoing provision shall survive the termination of
this Agreement for any reason whatsoever. Notwithstanding the above, the Board
shall have the discretion not to reimburse or indemnify the Executive for any
expenses related to a just cause termination as defined in Section 5(e) wherein
such action or omission was done, or omitted to be done, by Executive not in
good faith and without reasonable belief that his action or omission was in the
best interests of the Company.
11. Anti-Disparagement. Upon termination of this Agreement for any reason,
both parties agree not to make disparaging or disrespectful comments about each
other orally or in writing or through any other medium to any individual or
entity, professional or trade association, regulator, competitor or media.
12. Nonsolicitation. For a period ending one year after any termination of
this Agreement, the Executive shall not, directly or indirectly, induce any
person in the employment of the Company or any subsidiary or affiliate of the
Company away from the Company or any subsidiary or affiliate of the Company to
accept employment or enter into any consulting arrangement with the Executive or
any entity with which Executive is associated.
13. General Provisions.
(a) Entire Agreement. This Agreement contains the entire understanding
between the parties hereto and supersedes any prior employment agreement
between the Company and Executive.
(b) No Duty to Mitigate. Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any amounts received from other
employment or otherwise by Executive offset in any manner the obligations
of the Company hereunder.
(c) Nonassignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof is assignable
by Executive, his beneficiaries, or legal representatives without the
Company's prior written consent; provided, however, that nothing in this
Section 11(c) shall preclude (i) Executive from designating a beneficiary
to receive any benefit payable hereunder upon his death, or (ii) the
executors, administrators, or other legal representatives of Executive or
his estate from assigning any rights hereunder to the person or persons
entitled thereto.
(d) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by certified
mail, return receipt requested, first-class postage prepaid, to the parties
to this Agreement at the following addresses:
(i) if to the Company at:
Mid Atlantic Medical Service, Inc.
0 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
and
(ii) if to Executive at the address set forth on the signature
page or to such other address as either party to this Agreement shall
have last designated by notice to the other party.
All such notices and communications shall be deemed to have been
received on the earlier of the date of receipt or the third business day after
the date of mailing thereof.
(e) Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person, other than
the parties to this Agreement or their respective successors or permitted
assigns, any legal or equitable right, remedy, or claim under or in respect
of any agreement or any provision contained herein.
(f) Waiver. No provision of this Agreement may be amended, waived,
discharged, or terminated except by an instrument in writing and executed
by each party. Any waiver of enforcement of any provision of this Agreement
shall not operate or be construed as a continuing waiver or a waiver of any
other provisions unless expressly stated in such instrument.
(g) Amendment. This Agreement may be terminated, amended, modified, or
supplemented only by a written instrument executed by Executive and the
Company.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Delaware, regardless of the law
that might be applied under principles of conflict of laws.
(i) Severability. If, for any reason, any provision of this Agreement
is held invalid, such invalidity shall not affect any other provision of
this Agreement not held so invalid, and each such other provision shall, to
the full extent consistent with law, continue in full force and effect. If
any provision of this Agreement shall be held invalid in part, such
invalidity shall in no way affect the rest of such provision not held so
invalid, and the rest of such provision, together with all other provisions
of this Agreement, shall to the full extent consistent with law continue in
full force and effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its seal to be affixed hereunto by its officers thereunto duly authorized,
and Executive has signed this Agreement, all as of the Effective Date.
ATTEST: MID ATLANTIC MEDICAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxx
(Corporate Seal) Title: Chief Executive Officer
APPROVED BY: EXECUTIVE: Xxxx X. Xxxxxx, M.D.
Compensation Committee By: /s/ Xxxx X. Xxxxxx
By: /s/ Xxxx X. Xxxxxx, M.D. Address: 4 Xxxx Court
Name: Xxxx X. Xxxxxx, M.D. Xxxxxxxxx, XX 00000
Title: Chairman
