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EXHIBIT 10.36
AGREEMENT AND RELEASE
This is an Agreement and Release made as of the 30th day of June,
1998, by and between Coventry Health Care, Inc., a Maryland corporation with its
principal place of business at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000 ("Employer") and Xxxxxxx X. Xxxxx ("Executive"), relating to
termination of Executive's employment with Employer.
WHEREAS, the parties hereto desire to mutually terminate as of June 30,
1998 Executive's employment on an amicable basis by entering into a full and
final settlement of all matters between them arising out of Executive's
employment and the termination thereof.
NOW, THEREFORE, in consideration of the terms, conditions, mutual
promises, and covenants herein contained, the sufficiency of which is
acknowledged by the signatures of the parties hereto, Executive and Employer
agree as follows:
1. TERMINATION
Effective June 30, 1998, Executive's employment with Employer in any
and all capacities shall automatically be terminated (the "Termination
Date") and Executive shall resign all positions held as an officer or
director of Employer or any of its subsidiaries or Affiliates as of the
Termination Date. Executive agrees to turn over to Employer all
property of Employer and any of its Affiliates or subsidiaries in
Executive's possession, including but not limited to all keys, business
cards, files, documents and records (and any copies thereof),
information, memberships, credit cards, computer hardware and software,
and automobile, if any, and any other equipment owned by Employer on
the Termination Date; provided, however, Executive may retain the
Employer's portable cell phone, pager, home computer equipment, which
includes hardware, software and facsimile machine currently set up in
Executive's home, and the use of voice mail for receiving personal
messages through December 31, 1998.
2. SEVERANCE COMPENSATION
Notwithstanding Executive's termination, Employer shall provide
Executive with certain severance compensation as follows:
(a) payment of Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000.00), subject to legal withholds and deductions,
payable in a lump sum on or before July 1, 1998.
(b) continued coverage through December 31, 1998 under Employer's
health plan in which Executive or his spouse or family were
participating immediately prior to the Termination Date. If,
however, Executive obtains employment with another employer during
the Severance Period, such coverage shall be provided until the
earlier of: (i) December 31, 1998 or (ii) the date on which the
Executive and his spouse and family can be covered under the plans
of a new employer without being excluded from full coverage
because of any actual pre-existing condition.
Executive's eligibility for, and the Employer match to, the 401(k) Plan
(the "401(k) Plan"), the Supplemental Executive Retirement Plan (the
"SERP") and/or any other retirement savings program in which the
Employee participates shall end at the Termination Date. Employee's
balances in the SERP shall be distributed to him as soon as
practicable, less tax withholdings, in accordance with the terms of the
SERP.
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3. STOCK OPTIONS
Notwithstanding anything to the contrary contained in any prior
agreements, either oral or written, between the parties or in any Stock
Option Plan of Employer, the parties hereby agree that Executive shall
become fully vested on April 1, 1999 in one-third of the stock options
granted to Executive on April 1, 1998 or one hundred thirty-three
thousand three hundred and thirty-three (133,333) shares of Common
Stock at an exercise price of $14.50 per share. Executive shall have
ninety (90) days from the date of vesting within which to exercise his
vested stock options. Upon exercise, Executive may sell the underlying
shares of Common Stock at any time thereafter so long as such sale is
in accordance with applicable laws and regulations.
4. RESTRICTIVE COVENANTS
In consideration of the severance compensation provided for in Section
2, above, Executive expressly agrees as follows:
(a) Confidential Information. At all times hereafter, Executive
will not, directly or indirectly, reveal, communicate or
divulge any information, knowledge, data, records or documents
to any person, firm, corporation or entity which relate to the
confidential business of Employer or its affiliates, including
but not limited to, any strategic plans, customer lists,
contract terms, financial information, pricing terms, sales
data or business opportunities, trade secrets, modes of
operation, product information, member and Employer subscriber
lists, names of firms or services, information regarding
prospective, existing and former member and Employer
subscribers, providers and Executives, and all business and
other records of Employer or its affiliates; provided,
however, that the foregoing shall not apply to information
which is generally known to the public or appears as a matter
of public record or matters as to which disclosure is required
by law or appropriate judicial or investigative proceeding.
(b) Non-Solicitation. For a period of one year following the
Termination Date, Executive will not:
(i) knowingly solicit business, directly or indirectly,
which could reasonably be expected to conflict with
the interests of Employer or any affiliate of
Employer from any entity, organization or person
which has contracted with the Employer or any
affiliate of Employer which has been doing business
with the Employer or any affiliate of Employer, from
which the Employer or any affiliate of Employer was
soliciting business at the time of the termination of
employment or from which Executive knew or had reason
to know that Employer or any affiliate of Employer
was going to solicit business at the time of
termination of employment; or
(ii) employ, solicit for employment, directly or
indirectly, or advise or recommend to any other
persons that they employ or solicit for employment,
any employee of Employer or any affiliate of
Employer.
(d) Consultation. Executive shall, at Employer's written request,
for a period of one year after termination of employment,
cooperate with Employer in concluding any matters in which
Executive was involved during the term of his employment and
will make himself available for consultation with Employer on
other matters otherwise of interest to Employer. Employer
agrees that such requests shall be reasonable in number and
will consider Executive's time required for other employment
and/or employment search. Executive shall be reimbursed for
ordinary and necessary expenses incurred by Executive on
behalf of Employer and its Affiliates, in providing
consultation, upon presentation of vouchers in accordance with
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the usual and customary procedures of Employer in relation to
such expense items, except that Employer may elect, at its
option, to pay such expense items directly rather than
reimburse Executive therefore.
(e) Continuing Obligation. Notwithstanding any provision to the
contrary or otherwise contained in this Agreement, the
agreement and covenants contained in this Section 4 shall not
terminate upon Executive's termination of his employment with
Employer or upon the termination of this Agreement under any
other provision of this Agreement.
It is understood and agreed that in the event of a breach of the terms
and provisions contained in this Section 4, no adequate legal remedy
exists and Employer shall be entitled to injunctive relief and/or
specific performance and damages, as well as to any and all other legal
or equitable remedies to which Employer may be entitled.
5. NON-COMPETITION
Executive shall be fully released from the non-competition restrictions
set forth in Section 14(b) of the Employment Agreement.
6. RELEASES
In further consideration of the severance compensation provided for in
Section 2, above, Executive hereby agrees, on behalf of himself and his
administrators, heirs, assigns and anyone claiming through him, to
completely release and forever discharge Employer and its officers,
directors, subsidiaries, Affiliates, agents, servants, representatives,
underwriters, successors, heirs and assigns, and Employer on its behalf
and behalf of its subsidiaries agrees to completely release and
discharge Executive, from any and all claims, demands, obligations, or
causes of action of any nature whatsoever, whether known or unknown,
which either of them ever had, or in the future may have, arising out
of or in any way connected with the Executive's employment with
Employer and the termination thereof provided for hereunder, including,
but not limited to, any claim relating to violation of any federal or
state statute or regulation, any claim for wrongful discharge or breach
of contract, or any claim relating to the state or federal employment
laws (including, but not limited to, the Fair Labor Standards Act,
Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act of 1967, the Americans with
Disabilities Act, the Executive Retirement Income Security Act, the
Older Workers' Benefit Protection Act, and the Rehabilitation Act);
provided, however, that nothing herein shall be construed as a release
of any of either party's obligations hereunder.
Executive expressly acknowledges that he was advised to consult with an
attorney prior to signing this Agreement and acknowledges that he has
been given a period of at least forty-five (45) days in which to
consider this Agreement, which period by his signature hereto he
expressly waives.
Executive understands and agrees that if he breaches this release or
files any claim, charge or lawsuit seeking payment of any money or
benefits in excess of the payments provided under this Agreement or
seeking any equitable relief, Employer may discontinue the payment of
any amount payable hereunder and be entitled to recover any amount
already paid hereunder.
7. REVOCATION PERIOD
The parties herein expressly agree that for a period of seven (7) days
following the date of Executive's execution of this Agreement,
Executive may revoke this Agreement. The Agreement shall not become
effective or enforceable until such revocation period has expired.
Should Executive elect to revoke this Agreement pursuant to this
paragraph, written notice of such revocation must be received at
Employer's corporate offices no later than the close of business on the
final day of the revocation period.
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8. THIRD PARTY COMMUNICATIONS
In consideration of the mutual promises and covenants contained herein,
each of the parties expressly agrees that they will not make statements
to or initiate or participate in discussions with any other person
which are derogatory, disparaging or injurious to the reputation of
Executive or of Employer or any of its Affiliates or which in any way
characterize Executive or Employer or any of its Affiliates in an
unfavorable light. This provision shall in no way be construed to
prohibit either party from responding truthfully to any question or
interrogatory which such party is required to answer in connection with
any court or other legal proceeding.
9. MISCELLANEOUS
(a) Effect of this Agreement: This Agreement supersedes any other
agreement, express or implied, between the parties as to the
matters herein. To the extent any inconsistencies exist
between this Agreement and any earlier employment agreements
executed by Executive and Employer, including the Employment
Agreement, the terms and conditions of this Agreement will
supersede and control.
(b) Binding Nature of Agreement: This Agreement shall be binding
upon and inure to the benefit of the parties and their
respective heirs, trustees, administrators, successors and
assigns.
(c) Severability: If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible
and such provision shall be deemed inoperative to the extent
it is unenforceable, and in all other respects this Agreement
shall remain in full force and effect; provided, however, that
if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited
and shall be enforceable to the maximum extent permitted by
applicable law.
(d) Entire Agreement: This Agreement represents the entire and
final Agreement between the parties regarding the subject
matter of Executive's employment with Employer and the
termination thereof. All prior negotiations, understandings,
conversations, and communications, if any, are merged into
this Agreement and have no force and effect other than as
expressed in the body hereof.
(e) Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the state of
Maryland.
(f) Amendments: This Agreement may not be modified, amended, or
waived without the express prior written consent of all
parties hereto.
(g) Free Acts: The parties have relied solely upon their own
judgment and the advice of their own counsel in making this
Agreement. Executive acknowledges that he has read and fully
understands the Agreement and has executed the same under his
own free act and will.
(h) Captions: The captions appearing in this Agreement are
inserted only as a matter of convenience and in no way define,
limit, construe, or describe the scope or intent of such
paragraphs.
(i) Defined Terms: All capitalized terms used herein and not
defined shall have the meanings ascribed to them in the
Employment Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement and
Release as of the day and year first above written.
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
COVENTRY HEALTH CARE, INC.
By /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
President and Chief Executive Officer
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