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Exhibit 10.14
SECOND AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT made as of this
2nd day of October, 2000, by and between XXXXXXX X. XXXXXXXX (the "Employee")
and AMERIGROUP CORPORATION, a Delaware corporation with a principal place of
business at 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxx 00000
(the "Company").
RECITALS:
A. The Company and the Employee entered into an Employment Agreement dated
December 22, 1994 (the "Initial Agreement"), which was amended and restated in
its entirety by an Amended and Restated Employment Agreement dated October 28,
1999 (the "Restated Agreement").
B. The Company and the Employee desire to continue the employment
relationship established by the Initial Agreement and the Restated Agreement by
amending and restating the Restated Agreement in its entirety on the terms set
forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree that the
Restated Agreement is hereby amended and restated as follows:
1. Position and Responsibilities.
(A) Chairman, President and Chief Executive Officer. During the
term of this Agreement (described in Section 4 below), the Employee agrees to
serve as Chairman of the Board of Directors, President and Chief Executive
Officer of the Company. The Employee shall at all times report to, and his
activities shall at all times be subject to the direction and control of, the
Board of Directors of the Company, and the Employee shall exercise such powers
and comply with and perform, faithfully and to the best of his ability, such
directions and duties in relation to the business and affairs of the Company as
may from time to time be vested in or reasonably requested of him by the Board
of Directors. The Employee agrees to devote substantially all of his business
time, attention and services to the diligent, faithful and competent discharge
of such duties for the successful operation of the Company's business.
(B) Director Nomination. During the term of this Agreement and so
long as the Employee is employed by the Company, the Board of Directors of the
Company shall designate and nominate the Employee as a director of the Company
and, if elected by the stockholders of the Company, the Employee shall accept
such position and diligently perform the duties arising from such position. The
Board of Directors of the Company will use its best efforts to cause the
Employee to be elected as a director and Chairman of the Board of Directors
after such nomination in accordance with this Section 1(B).
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2. Compensation: Salary, Bonuses, Equity Participation and Other Benefits.
During the term of this Agreement, the Company shall pay the Employee the
following compensation, including the following salary, bonus and other fringe
benefits:
(A) Salary. In consideration of the services to be rendered by the
Employee to the Company, the Company will pay to the Employee an annual salary
of $425,000 (the Employee's "Base Salary"), as such Base Salary may be adjusted
from time to time. Such salary shall be payable in accordance with the Company's
customary practices for executive compensation as such practices shall be
established or modified from time to time. Salary payments shall be subject to
all applicable federal and state withholding, payroll and other taxes. The Base
Salary provided herein shall be effective as of July 10, 2000.
(B) Fringe Benefits. The Employee will be entitled to participate
on the same basis with all other management employees of the Company in the
Company's standard benefits package generally available for senior management,
as well as all other officers and employees of the Company. During his
employment, the Employee will be entitled to obtain reimbursement on an after
tax basis for (or have the Company directly pay) the amount necessary to pay the
premiums and taxes related thereto on a standard $1 million term life insurance
policy, payable at the Employee's death to his designated beneficiary. In the
event the Company pays the premium directly, the Company shall indemnify the
Employee on an after tax basis for all taxes incurred by the Employee on the
Company paid premiums.
(C) Performance Based Bonus. In addition to the amounts payable
under Section 2(A), above, the Employee shall be eligible to receive a bonus of
up to one hundred fifty percent (150%) of his Base Salary in effect at such
time, provided the Employee continues to be employed by the Company at such
time. The bonus plan shall be based on the Company's achievement of certain
goals and objectives which shall be mutually agreed upon in good faith by the
parties.
(D) Business Expenses. The Company shall reimburse the Employee
for reasonable and necessary out-of-pocket expenses incurred in connection with
his duties hereunder, including, without limitation, business entertainment,
community involvement, business development, travel on behalf of the Company,
including, without limitation, lodging and transportation expenses incurred in
connection with such business trips. The Employee agrees to provide accurate and
itemized expense records so that the Company may receive the benefit of any and
all applicable tax deductions with respect thereto, and the Company agrees to
provide reimbursement within a reasonable time after receipt of such
documentation.
3. Annual Performance Review. On or about March 1st each year, while this
Agreement shall remain in effect, the Board of Directors and the Employee shall
in good faith review the performance by, and the compensation to, the Employee
for the prior year and the proposed performance by, and compensation to, the
Employee for the then forthcoming year. Any future agreements regarding salary,
bonus, equity participation, fringe benefits and other material benefits and
terms of this Agreement shall be subject to approval by the Board of Directors
and the agreement of the Employee.
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4. Term. This Agreement shall have an initial term of three (3) years,
commencing on October 28, 1999, and shall continue from year to year thereafter
unless terminated due to (i) the death, physical incapacity or mental
incompetence of the Employee, or (ii) the occurrence of any of the circumstances
described in Section 5 hereof. For the purposes of this Agreement, the Employee
shall be deemed to have suffered physical incapacity or mental incompetence if
the Employee is unable to perform his duties hereunder for any ninety (90) work
days out of any 365-day period.
5. Termination. The Employee's term of employment under this Agreement may
be terminated pursuant to clause (iii) of the first sentence of Section 4 as
follows:
(A) At the Employee's Option: The Employee may terminate his
employment, with or without cause, at any time upon at least thirty (30) days'
advance written notice to the Company. In the event of termination at the
Employee's option, the Employee shall not be entitled to any severance or other
termination benefits after the expiration of the said thirty (30) day period.
Subject to the Company's right to terminate the Employee
pursuant to Sections 5(B) and 5(C) below, the Employee may terminate his
employment hereunder upon the occurrence of "Changed Circumstances," as
hereinafter defined, upon written notice to the Company. For the purposes of
this Section 5, "Changed Circumstances" shall mean a significant reduction in
the nature or scope of the Employee's responsibilities, authority, powers,
functions or duties as Chairman of the Board of Directors, President and Chief
Executive Officer of the Company, including, without limitation, a change due to
the Board of Directors having hired another senior executive officer to whom the
Employee is requested by the Board of Directors to report. In the event that the
Employee terminates his employment because of Changed Circumstances pursuant to
this Section 5(A), the Employee shall be entitled to severance payments from the
Company as determined in accordance with Section 5(C) below.
(B) At the Election of the Company for Cause. The Company may,
immediately and unilaterally, terminate the Employee's employment hereunder "for
cause" at any time during the term of this Agreement upon thirty (30) days'
prior written notice to the Employee. Termination of the Employee's employment
by the Company shall constitute a termination "for cause" under this Section
5(B) if such termination is for one or more of the following causes, as
determined by the Board of Directors of the Company by a resolution duly adopted
by two-thirds (2/3) of its members (excluding the Employee):
(i) the substantial and continuing gross and willful failure
of the Employee to render services to the Company in accordance with his
obligations under this Agreement, which failure materially and adversely affects
or could materially and adversely affect the business, prospects, financial
condition, operations, property or affairs of the Company, after thirty (30)
days' notice from the Board of Directors of the Company, such notice setting
forth in reasonable detail the nature of such failure, if the Employee fails to
cure such failure within thirty (30) days notice from the Company, if such
failure is capable of cure;
(ii) dishonesty, gross negligence, or breach of fiduciary
duty by the Employee;
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(iii) the commission by the Employee of an act of fraud or
embezzlement, as found by a court of competent jurisdiction, which results in
material loss, damage or injury to the Company, whether directly or indirectly,
or the commission by the Employee of any other action with the intent to injure
materially the Company which could, in the reasonable opinion of the Board of
Directors, result in material harm to the Company;
(iv) the conviction by the Employee of a felony, either in
connection with the performance of his obligations hereunder or which may, in
the reasonable opinion of the Board of Directors, have a material adverse effect
on the Employee's ability to perform his obligations hereunder; or
(v) the material breach of the terms of this Agreement,
provided the Company provides the Employee with adequate notice of such breach
and the Employee fails to cure such breach, if the breach is reasonably curable,
within thirty (30) days after receipt of such notice.
In the event of a termination "for cause" pursuant to the
provisions of clauses (i) through (v) above, inclusive, the Employee shall not
be entitled to severance or other termination benefits except as may be required
by law.
(C) At the Election of the Company for Reasons Other than for
Cause. The Company may, immediately and unilaterally, terminate the Employee's
employment hereunder at any time during the term of this Agreement without cause
by giving thirty (30) days' advance written notice to the Employee of the
Company's election to terminate. During such thirty-day period, the Employee
shall be available on a full-time basis for the benefit of the Company to assist
the Company in making the transition to a new, successor officer of the Company.
In the event the Employee terminates his employment with the Company because of
Changed Circumstances pursuant to Section 5(A) above or the Company exercises
its right to terminate the Employee under this Section 5(C), the Company agrees
to pay or provide, as applicable, the Employee with the following severance
benefits: (i) monthly severance payment(s) based upon the monthly amount of the
Employee's then-current Base Salary, which payment(s) shall be made for a period
of twenty-four (24) consecutive months commencing upon the date of the
Employee's termination, (ii) an additional amount equal to two (2) times the
average annual bonus paid to the Employee by the Company pursuant to Section
2(C) above (such average based upon the annual bonus paid to Employee in each of
the three (3) years immediately preceding such termination), which shall be
payable in one lump sum within thirty (30) days of such termination, and (iii)
medical and other health insurance benefits as provided for in Section 2(B)
above for a period of twenty-four (24) consecutive months commencing upon the
date of such termination, provided, however, that such twenty-four-month period
shall be counted against any COBRA continuation coverage period to which
Employee is otherwise entitled. The foregoing severance payments shall be
subject to all applicable federal and state withholding, payroll and other
taxes. In addition, for a period of six (6) months after the date of such
termination, the Company shall provide the Employee with access to an office,
telephone, facsimile, secretarial service and such other administrative
assistance and/or staff as the Employee may reasonably request. Except as
expressly set forth in this Section 5(C), the Company shall not have any further
obligations to the Employee in the event of the Employee's termination under
this Section 5(C), except such further obligations as may be imposed by law.
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(D) Because of Change of Control of the Company. Notwithstanding
the provisions of Section 5(C) above, if during the period beginning four (4)
months prior to and ending twelve (12) months after a Change of Control (defined
below), (i) the Employee's employment is terminated for reasons other than cause
(as defined above) or the Employee is not offered employment by the acquiring
corporation in a comparable position with a comparable salary and term, and an
office in the Hampton Roads area of Virginia, or (ii) the Employee terminates
his employment because of Changed Circumstances, the Company shall (x) pay to
the Employee, in lieu of the compensation specified in Section 5(C) above,
severance pay (subject to any applicable payroll or other taxes required to be
withheld) equal to (1) two times the amount of his then current gross annual
Base Salary plus (2) an amount equal to two times the average annual bonus paid
to the Employee by the Company pursuant to Section 2(C) above (such average
based upon the annual bonus paid to Employee in each of the three years
immediately preceding such termination), and (y) except as provided below,
provide the Employee with medical and other health insurance benefits as
provided for in Section 2(B). Notwithstanding the preceding sentence, the amount
payable under this Section 5(D) shall be reduced to the extent necessary, if
any, to avoid characterization of the severance pay (and of any other amounts
payable to the Employee which are contingent upon a change in control within the
meaning of Section 280G of the Internal Revenue Code of 1986 (the "Code")) as a
"parachute payment" within the meaning of Code Section 280G. Severance pay
pursuant to this Section 5(D) shall be paid by the Company in cash (except to
the extent that the Employee and the Company agree that it shall be paid in
other property) and shall be paid, at the election of the Employee, (i) in one
lump sum on or before the Employee's last day of employment, or (ii) in
consecutive equal monthly installments over not more than twenty-four (24)
months following the month in which termination occurs, payable on the first day
of each such month; provided, however, that the medical and other health
insurance benefits provided for under this Section 5(D) shall not be available
to Employee in the event the Employee elects to receive a lump sum severance
payment, and in any event such benefits shall be available only for the
twenty-four-month period of time that the Employee receives monthly severance
payments hereunder. The parties hereto intend that the severance pay described
in this Section 5(D) shall not exceed the limitations set forth in Section 280G
of the Code and the regulations thereunder, and that such severance pay will not
give rise to a "parachute payment" under that statute. Accordingly, the
provisions of this Section 5(D) are to be interpreted in a manner which does not
give rise to a parachute payment under Code Section 280G.
(i) For purposes of this Agreement, a "Change of Control" of
the Company shall be deemed to have occurred in the event of any of the
following:
(a) The acquisition by any "person" or "group" (as
defined in or pursuant to Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (other than the Company, any
subsidiary thereof or any employee benefit plan of the Company or a subsidiary),
directly or indirectly, as "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of securities of the Company representing twenty percent (20%)
or more of either the then outstanding shares or the combined voting power of
the then outstanding securities of the Company;
(b) Either a majority of the directors of the Company
elected at the
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Company's annual stockholders meeting shall have been nominated for election
other than by or at the direction of the "incumbent directors" of the Company,
or the "incumbent directors" shall cease to constitute a majority of the
directors of the Company. The term "incumbent director" shall mean any director
who was a director of the Company on the date hereof and any individual who
becomes a director of the Company subsequent to the date hereof and who is
elected or nominated by or at the direction of at least two-thirds (2/3) of the
then incumbent directors;
(c) The shareholders of the Company approve (x) a
merger, consolidation or other business combination of the Company with any
other "person" or "group" (as defined in or pursuant to Sections 13(d) and 14(d)
of the Exchange Act) or affiliate thereof, other than a merger or consolidation
that would result in the outstanding common stock of the Company immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into common stock of the surviving entity or a parent or
affiliate thereof) more than fifty percent (50%) of the outstanding common stock
of the Company or such surviving entity or a parent or affiliate thereof
outstanding immediately after such merger, consolidation or other business
combination, or (y) a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets; or
(d) Any other event or circumstance which is not covered
by the foregoing subsections but which the Board of Directors of the Company
determines to affect control of the Company and with respect to which the Board
of Directors adopts a resolution that the event or circumstance constitutes a
Change of Control for purposes of this Agreement.
(ii) The date of a Change of Control under Section 5(D)(i) above
is the date on which an event described in Sections 5(D)(i)(a), 5(D)(i)(b),
5(D)(i)(c) or 5(D)(i)(d) above occurs.
(iii) If, following a Change of Control and a dispute with the
Company regarding the terms of this Section 5(D) and any related provision of
this Agreement, the Employee collects any part or all of the severance pay
provided under this Section 5(D) by or through the assistance of legal counsel,
the Company will pay all costs of any such collection or enforcement, including
reasonable attorneys' fees and other out of pocket expenses incurred by the
Employee, up to that point when the Company offered to settle the dispute for an
amount equal to the amount that the Employee is entitled to recover.
(iv) The payments described in this Section 5(D) will be due the
Employee regardless of any subsequent employment obtained by the Employee.
(E) Benefits if Agreement Terminated Due to Death or Disability. In the
event this Agreement shall terminate pursuant to clause (i) of the first
sentence of Section 4 due to the death of the Employee, the Company shall not be
obligated to pay the estate of the Employee any salary or bonus other than
salary and bonus then in arrears. In the event this Agreement shall terminate
pursuant to clause (i) of the first sentence of Section 4 due to the Employee's
physical incapacity or mental incompetence (as defined in Section 4 above), the
Company shall pay and provide the Employee the severance benefits required under
Section 5(C) for a period of twenty-four (24) consecutive months commencing upon
the date of such termination, provided, however, the
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Company shall be entitled to reduce the cash payments so required by the amount
of any disability payments received by the Employee under any disability policy
maintained by the Company for Employee. The provisions of this Section 5(E)
shall survive the termination of this Agreement by reason of the death, physical
incapacity or mental incompetence of the Employee.
6. Noncompetition, Nondisclosure and Developments Agreement. In
connection with his employment by the Company, the Employee acknowledges having
executed a Noncompetition, Nondisclosure and Developments Agreement, the terms
and conditions of which are incorporated herein by reference; provided, however,
Section 1 of the Noncompete Agreement is hereby amended and restated in its
entirety as follows:
"During the period of my employment by the Company, I will
devote my full time and best efforts to the business of the
Company. Further, during the period of my employment by the
Company and for a period of twenty-four (24) months
thereafter, I agree that I will not, directly or indirectly,
alone or as a partner, officer, director, employee or
stockholder of any entity, or in any other manner (a) engage
in any business activity that within any of the Restricted
Markets (defined below) provides or offers products or
services related to Medicaid managed health care or (b)
solicit, interfere with, influence, or attempt to entice any
employee, independent contractor or customer of the Company,
or any organization that is considered a prospect of the
Company with respect to its Medicaid managed health care
products or services by virtue of having established contact
for the purposes of doing business with the Company." The
"Restricted Markets" shall be those geographic regions and
States within the United States in which the Company's
Medicaid managed health care products or services are offered,
marketed or sold (or to be launched) during my employment.
7. Indemnification of the Employee.
(A) Non-Exclusivity. The rights of the Employee hereunder shall be
in addition to any other rights the Employee may have under the Company's
Certificate of Incorporation or Bylaws or the Delaware General Corporation law
or otherwise. To the extent that a change in the Delaware General Corporation
Law (whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Certificate of
Incorporation or Bylaws or this Agreement, to the fullest extent permitted by
law it is the intent of the parties hereto that the Employee shall enjoy by this
Agreement the greater benefits so afforded by such change immediately upon the
occurrence of such change without further action by the Company or the Employee.
(B) Basic Indemnification Agreement.
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(i) In the event the Employee was, is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, a Claim (defined below) by reason of (or
arising in part out of) an Indemnifiable Event (defined below), the Company
shall indemnify the Employee to the fullest extent not prohibited by law, as
soon as practicable but in any event no later than thirty (30) days after
written demand is presented to the Company, against any and all Expenses
(defined below), judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Claim. Notwithstanding anything in this
Agreement to the contrary, prior to a Change in Control (as defined above) the
Employee shall not be entitled to indemnification pursuant to this Agreement in
connection with any Claim initiated by the Employee against the Company or any
director or officer of the Company unless the Company has joined in or consented
to the initiation of such Claim. If so requested by the Employee, the Company
shall advance to the Employee (within twenty (20) days of such request) any and
all Expenses (an "Expense Advance").
(ii) Notwithstanding the foregoing, (a) the obligations of the
Company under Section 7(B)(i) shall be subject to the condition that any
Reviewing Party (defined below) shall not have determined (in a written opinion,
in any case in which the Special Independent Counsel referred to in Section 7(C)
below is involved) that the Employee would not be permitted to be indemnified
under applicable law, and (b) the obligation of the Company to make an Expense
Advance pursuant to Section 7(B)(i) shall be subject to the condition that if,
when and to the extent that any Reviewing Party determines that the Employee
would not be permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by the Employee (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid; provided, however,
that if the Employee has commenced legal proceedings in a court of competent
jurisdiction to secure a determination that the Employee should be indemnified
under applicable law, any determination made by a Reviewing Party that the
Employee would not be permitted to be indemnified under applicable law shall not
be binding and the Employee shall not be required to reimburse the Company for
any Expense Advance until a final judicial determination is made with respect
thereto (as to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, a Reviewing Party shall be
selected by the Board of Directors, and if there has been such a Change in
Control, a Reviewing Party shall be the Special Independent Counsel referred to
in Section 7(C) below. If there has been no appointment or no determination by a
Reviewing Party or if a Reviewing Party determines that the Employee
substantively would not be permitted to be indemnified in whole or in part under
applicable law, the Employee shall have the right to commence litigation in any
court in the Commonwealth of Virginia having subject matter jurisdiction thereof
and in which venue is proper seeking an initial determination by the court or
challenging any such determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual basis therefor, and the Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the Reviewing Party
otherwise shall be conclusive and binding on the Company and the Employee.
(C) Change in Control. The Company agrees that if there is a Change in
Control, then with respect to all matters thereafter arising concerning the
rights of the Employee to indemnity
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payments and Expense Advances under this Agreement, the Company's Certificate of
Incorporation or Bylaws, or any other agreement now or hereafter in effect
relating to Claims for Indemnifiable Events, the Company shall seek legal advice
only from "Special Independent Counsel" selected by the Employee and approved by
the Company (which approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Company or the Employee within the last
five (5) years (other than in connection with such matters). Such Special
Independent Counsel, among other things, shall render its written opinion to the
Company and the Employee as to whether and to what extent the Employee would be
permitted to be indemnified under applicable law. The Company agrees to pay the
reasonable fees of the Special Independent Counsel referred to above and may
fully indemnify such Special Independent Counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.
(D) Establishment of Trust. In the event of a Potential Change in
Control or a Change in Control, the Company shall, upon written request by the
Employee, create a "Trust" for the benefit of the Employee and from time to time
upon written request of the Employee shall fund such Trust in an amount
sufficient to satisfy any and all Expenses reasonably anticipated at the time of
each such request to be incurred in connection with investigating, preparing for
and defending any Claim relating to an Indemnifiable Event, and any and all
judgments, fines, penalties and settlement amounts of any and all Claims
relating to an Indemnifiable Event from time to time actually paid or claimed,
reasonably anticipated or proposed to be paid. The amount or amounts to be
deposited in the Trust pursuant to the foregoing funding obligation shall be
determined by a Reviewing Party in any case in which the Special Independent
Counsel referred to above is involved. The terms of the Trust shall provide that
upon a Change in Control (i) the Trust shall not be revoked or the principal
thereof invaded without the written consent of the Employee, (ii) the Trustee
shall advance, within two (2) business days of a request by the Employee, any
and all Expenses to the Employee (and the Employee hereby agrees to reimburse
the Trust under the circumstances under which the Employee would be required to
reimburse the Company under Section 7(B)(ii) above), (iii) the Trust shall
continue to be funded by the Company in accordance with the funding obligation
set forth above, (iv) the Trustee shall promptly pay to the Employee all amounts
for which the Employee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in the Trust shall revert
to the Company upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that the Employee has been fully
indemnified under the terms of this Agreement. The Trustee shall be a bank or
trust company or other individual or entity chosen by the Employee and
acceptable to and approved of by the Company. Nothing in this Section 7(D) shall
relieve the Company of any of its obligations under this Agreement.
(E) Indemnification for Additional Expenses. To the fullest extent not
prohibited by law, the Company shall indemnify the Employee against any and all
Expenses and, if requested by the Employee, shall (within two (2) business days
of such request) advance to the Employee such Expenses as are incurred by the
Employee in connection with any Claim asserted against or action brought by the
Employee for (i) indemnification or an advance payment of Expenses by the
Company under this Agreement, the Company's Bylaws or Certificate of
Incorporation or any other agreement now or hereafter in effect relating to
Claims for Indemnifiable Events, and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the
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Company, regardless of whether the Employee ultimately is determined to be
entitled to such indemnification, advance payment of Expenses or insurance
recovery, as the case may be.
(F) Partial Indemnity. If the Employee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion, but
not all, of any Expenses, judgments, fines, penalties or amounts paid in
settlement of a Claim, the Company shall nevertheless indemnify the Employee for
that portion thereof to which the Employee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent that the
Employee is or has been successful on the merits or otherwise in defense of any
and all Claims relating in whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including dismissal without prejudice,
the Employee shall be indemnified against all Expenses incurred in connection
therewith. In connection with any determination by the Reviewing Party or
otherwise as to whether the Employee is entitled to be indemnified hereunder,
the burden of proof shall be on the Company to establish that the Employee is
not so entitled.
(G) No Presumption. For purposes of this Agreement, to the fullest
extent permitted by law, the termination of any Claim, action, suit or
proceeding, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that the Employee did not meet any particular
standard of conduct or have any particular belief or that a court has determined
that indemnification is not permitted by applicable law.
(H) Liability Insurance. To the extent the Company shall maintain an
insurance policy or policies providing directors' and officers' liability
insurance, the Employee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any director or officer of the Company.
(I) Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company or any
affiliate of the Company against the Employee, the Employee's spouse, heirs,
executors or personal or legal representatives after the expiration of two (2)
years from the date of accrual of such cause of action, and any claim or cause
of action of the Company or its affiliates shall be extinguished and deemed
released unless asserted by the timely filing of a legal action within such two
(2) year period.
(J) Subrogation. In the event of payment by the Company under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Employee, who shall execute all papers required
and shall do everything that may be necessary to secure such rights, including
the execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
(K) Definitions. For the purposes of this Section 7, the following
terms shall have the meanings specified below:
(i) "Claim". Any threatened, pending or completed action, suit,
investigation or proceeding, and any appeal thereof, whether civil, criminal,
administrative or investigative and/or any inquiry or investigation, whether
conducted by the Company or any other party that
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the Employee in good faith believes might lead to the institution of any such
action.
(ii) "Expenses". Include attorneys' fees and all other costs,
expenses, and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.
(iii) "Indemnifiable Event". Any event, occurrence or circumstance
related to the fact that the Employee is or was a director or officer of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by the Employee in any such capacity.
(iv) "Potential Change in Control". Shall be deemed to have
occurred if (a) the Company enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a Change in Control; (b)
any person (including the Company) publicly announces an intention to take or to
contemplate taking actions which if consummated would constitute a Change in
Control; (c) any person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company acting in such capacity
or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), who is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing ten percent (10%) or more of the combined
voting power of the Company's then outstanding Voting Securities increases his
beneficial ownership of such securities by five percent (5%) or more over the
percentage so owned by such person on the date hereof; or (d) the Board of
Directors adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
(v) "Reviewing Party". Any appropriate person or body consisting
of a member or members of the Company's Board of Directors, including the
Special Independent Counsel referred to in Section 7(C) (or, to the fullest
extent permitted by law, any other person or body appointed by the Board of
Directors), who is not a party to the particular claim for which the Employee is
seeking indemnification.
(vi) "Voting Securities". Any securities of the Company which vote
generally in the election of directors.
8. Consent and Waiver by Third Parties. The Employee hereby represents
and warrants that he has obtained all waivers and/or consents from third parties
which are necessary for his employment with the Company on the terms and
conditions set forth herein and to execute and perform this Agreement without
being in conflict with any other agreement, obligation or understanding with any
such third party. The Employee represents that he is not bound by any agreement
or any other existing or pervious business relationship which conflicts with, or
may conflict with, the performance of his obligations hereunder or prevent the
full performance of his duties and obligations hereunder.
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9. Governing Law. This Agreement, the employment relationship
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Virginia, except for the rights,
privileges and obligations with respect to the indemnity provisions set forth in
Section 7 which shall be governed by and construed in accordance with the
internal laws of the State of Delaware.
10. Severability. In case any one or more of the provisions contained
in this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed and reformed to the maximum extent permitted by law.
11. Waivers and Modifications. This Agreement may be modified, and the
rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 11. No waiver by either party of
any breach by the other or any provision hereof shall be deemed to be a waiver
of any later or other breach thereof or as a waiver of any other provision of
this Agreement. This Agreement sets forth all of the terms of the understanding
between the parties with reference to the subject matter set forth herein and
may not be waived, changed, discharged or terminated orally or by any course of
dealing between the parties, but only by an instrument in writing signed by the
party against whom any waiver, change, discharge or termination is sought. No
modification or waiver by the Company shall be effective without the consent of
at least two-thirds (2/3) of the members of the Board of Directors then in
office at the time of such modification or waiver.
12. Assignment. The Employee acknowledges that the services to be
rendered by him hereunder are unique and personal in nature. Accordingly, the
Employee may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company.
13. Acknowledgments. The Employee hereby acknowledges and recognizes
that the enforcement of any of the provisions in this Agreement and the
Noncompetition, Nondisclosure and Developments Agreement may potentially
interfere with the Employee's pursuit of livelihood. The Employee recognizes and
agrees that the enforcement of the Noncompetition, Nondisclosure and
Developments Agreement is necessary to ensure the preservation, protection and
continuity of the business, trade secrets and goodwill of the Company. The
Employee agrees that, due to the proprietary nature of the Company's business,
the restrictions set forth in the Noncompetition, Nondisclosure and Developments
Agreement, as amended hereby, are reasonable as to time and scope.
14. Entire Agreement. This Agreement constitutes the entire
understanding of the parties relating to the subject matter hereof and
supersedes and cancels all agreements, written or oral, made prior to the date
hereof between the Employee and the Company relating to employment, salary,
bonus, or other compensation of any description, equity participation, pension,
post-retirement benefits, severance or other remuneration.
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15. Notices. All notices hereunder shall be in writing and shall
be delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company, to: AMERIGROUP Corporation
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
If to the Employee, to: Xxxxxxx X. XxXxxxxx
AMERIGROUP Corporation
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
with a copy to: Xxxxxxx X. XxXxxxxx
0000 Xxxx Xxxx
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
17. Section Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.
18. Arbitration. The parties shall submit any dispute relating to this
Agreement to arbitration by notifying the other party hereto, in writing, of
such dispute. Within ten (10) days after receipt of such notice, the parties
shall designate in writing one arbitrator to resolve the dispute; provided, that
if the parties cannot agree on an arbitrator within such 10-day period, the
arbitrator shall be selected by the American Arbitration Association. The
arbitrator so designated shall not be an employee, consultant, officer, director
or stockholder of any party hereto or any affiliate of any party to this
Agreement. The arbitration shall be governed by the rules of the American
Arbitration Association; provided, that the arbitrator shall have sole
discretion with regard to the admissibility of evidence. The arbitrator shall
rule on each disputed issue. All rulings of the arbitrator shall be in writing
and shall be delivered to the parties hereto. Any arbitration pursuant to this
Section 18 shall be conducted in Virginia Beach, Virginia. Any arbitration award
may be entered in and enforced by any court having jurisdiction thereover and
the parties hereby consent and commit themselves to the jurisdiction of the
courts of the Commonwealth of Virginia for purposes of the enforcement of any
arbitration award. The arbitrator may proceed to an award notwithstanding the
failure of the other party to participate in the proceedings. The prevailing
party shall be entitled to an award of reasonable attorneys' fees incurred in
connection with the arbitration in such amount as may be determined by the
arbitrators. The award of the arbitrator shall be the sole and exclusive remedy
of the parties and shall be enforceable in any court of competent jurisdiction.
Notwithstanding the foregoing, the parties shall be entitled to seek injunctive
relief or other equitable remedies from any court of competent jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.
AMERIGROUP CORPORATION EMPLOYEE:
By:
X. Xxxx Xxxxxx, Xxxxxxx X. XxXxxxxx
Chairman of the Compensation Committee
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