Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT by and between Xxxxxxx Medical Management Holdings Corporation, a
Delaware corporation (the "Company") and _____________ (the "Executive"), dated
as of the ___ day of ____, 1997. For all purposes of this Agreement, employment
with the Company shall include employment with any of its affiliated companies.
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall mean the first date during the
Change of Control Period (as defined in Section 1(b)) on which a Change of
Control (as defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive that
such termination of employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing
on the date hereof and ending on the second anniversary of the date hereof.
(c) A "Hostile Change in Control" shall mean a change of control that
results from an unsolicited proposal that is not approved by a majority of the
Continuing Directors (as defined below) prior to disclosure of such proposal for
a Change in Control or if such disclosure is made without the prior approval of
a majority of the disinterested directors. Any reference in this Agreement to a
Change in Control includes any Hostile Change in Control unless specifically
noted otherwise.
(d) A "Continuing Director" shall mean any member of the Board of
Directors of the Company (while such Person is a member of the Board) who (i) is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or
a representative of an Acquiring Person or of any such Affiliate or Associate,
and (ii) either (A) was a member of the Board of Directors prior to the time any
person became an Acquiring Person, or (B) became a member of the Board of
Directors subsequent to the time any person became an Acquiring Person, if such
person's nomination for
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election, or re-election, to the Board was recommended, or approved, by a
majority of the Continuing Directors then in office.
(e) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as defined below), as in effect as of the date hereof.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (an "Acquiring Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or (v) any
acquisition by FHP International Corporation ("FHP") as a result of the rights
offering to purchase the Company's Common Stock being made in connection with
PacifiCare Health Systems, Inc.'s acquisition of FHP and more fully described in
the Form S-1 Registration Statement filed with the Securities and Exchange
Commission on December 11, 1996, (the "Rights Offering"), or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of an Acquiring Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
70% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the
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election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on either (i) the third
anniversary of such date if such Effective Date is triggered by a Hostile Change
of Control or (ii) the second anniversary of such date if such Effective Date is
triggered by a Change in Control that is not hostile (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate
in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Company and, to the
extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for
the Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments,
so long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an employee of the
Company in accordance
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with this Agreement. To the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Executive's responsibilities to the Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the
highest monthly base salary paid or payable, including any base salary
which has been earned but deferred, to the Executive by the Company
and its affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs.
During the Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase awarded to the
Executive prior to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement, the
term "affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
(ii) OTHER BENEFITS. During the Employment Period, the
Executive shall be entitled to participate in all incentive, savings,
retirement, welfare benefit, vacation and sick leave plans, practices,
policies and programs applicable generally to other peer executives of
the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or
the Executive's legal representative.
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(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company or one
of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand
for substantial performance is delivered to the Executive by the Board
or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated by
the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 4(a) of this Agreement,
or any other action by the Company which results in material
diminution in such position, authority, duties or responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
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(iii) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(iv) any failure by the Company to comply with and satisfy
Section 10(c) of this Agreement.
For purposes of this Section 5(c), any controversy or claim arising out of or
relating to any determination of "Good Reason" made by the Executive shall be
settled by arbitration in Orange County, California, in accordance with the
following:
(v) Each party shall appoint its own arbitrator and the two
arbitrators shall choose a third, impartial arbitrator as umpire
before the date set for the hearing. If a party fails to appoint its
arbitrator within 30 days after have either received or given the
notice requesting arbitration, the other shall appoint the second
arbitrator. If the two arbitrators fail to appoint the umpire without
30 days after their appointments, either party may apply to the Orange
County Superior Court of the State of California to appoint an
impartial umpire. The umpire shall promptly notify all parties to the
arbitration of his selection.
(vi) The arbitration shall be conducted pursuant to the
provisions of the California Code of Civil Procedure, including the
rules pertaining to discovery.
(vii) Within a reasonable time after completion of the
arbitration, the arbitrators shall prepare a written opinion, a copy
of which shall be provided to each party.
(viii) The parties shall share equally the expenses of
arbitration, including the arbitrator's fee, provided, however, that
the arbitrators, in their discretion, may award costs to the
prevailing party.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(c) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
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(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination, and (iii) if the Executive's employment is
terminated by reason of Death or Disability, the Date of Termination shall be
the date of Death of the Executive or the Disability Effective Date, as the case
may be.
6. OBLIGATIONS OF THE COMPANY OR EXECUTIVE UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause, Death or Disability or the Executive shall
terminate employment for Good Reason, such termination, for purposes of this
Section 6(a), shall constitute separation from, and cessation of duties for, the
Company as of the Date of Termination. Under such circumstances, the Company
shall pay to the Executive the following payments and benefits:
(i) Bi-weekly salary continuation at the Executive's Annual Base
Salary as if the Executive had remained employed through the end of
the Employment Period; and
(ii) Medical and Dental Coverage continuation as if the Executive
had remained employed through the end of the Employment Period at the
Executive's benefit level as of the Date of Termination;
(iii) Life Insurance Coverage continuation through the end of the
Employment Period at the Executive's current benefit level as of the
Date of Termination;
(iv) Outplacement services consistent with the Company's
outplacement policy for a person at the Executive's job classification
and/or grade level;
(v) A payment on the last day of the Employment Period in an
amount equal to the sum of (A) the additional contributions that would
have been allocated to Executive's accounts under the Xxxxxxx Medical
Management Holdings Corporation Employee Stock Ownership Plan (the
"ESOP") and the Xxxxxxx Medical Management Holdings Corporation Money
Purchase Pension Plan if the Executive had remained employed through
the end of the Employment Period and deferred the maximum pretax
deferral allowed under the terms of the ESOP (after the application of
the limitations on deferrals set forth in the ESOP) and (B) the amount
of any benefits under the ESOP which were forfeited upon termination
of employment but which would have become vested if the Executive had
remained employed through the end of the Employment Period;
(vi) Payment within 30 days of the Date of Termination of all
accrued vacation, holiday and personal leave days as of the Date of
Termination; and
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(vii) Payment of any incentive compensation that Executive would
have earned if Executive had remained employed through the end of the
Employment Period under, and in accordance with the terms of, any
applicable incentive compensation plan.
The Company reserves the right to deduct from any applicable sum those
amounts required by law. Any monies owed to the Company by Executive may be
deducted from the Amounts payable pursuant to this Section 6(a). All accruals
of vacation, holiday and personal leave days shall end effective the Date of
Termination. The payments called for in this Section 6(a) shall be in lieu of
and discharge any obligations of Company to Executive for compensation, accrued
vacation, accrued personal leave days, accrued holidays, incentive compensation,
car allowances or any other expectations of remuneration or benefit on the part
of the Executive.
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of accrued obligations and the
timely payment or provision of other benefits under any plan, program, policy or
practice of the Company in accordance with the terms of such plan, program,
policy or practice (the "Other Benefits"). Accrued obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination.
(c) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of accrued obligations and the timely payment or provision of Other Benefits.
Accrued obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than for accrued
obligations and the timely payment or provision of Other Benefits. In such
case, all accrued obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination.
(e) ACCELERATION OF OPTIONS. The Board of Directors has determined
that the events described in Section 2 hereof will constitute a "Change of
Control of the Company" for purposes of Section 6.2(b) of the Incentive Plan (as
defined below). Therefore, if the Executive's employment is terminated other
than voluntarily or for Cause, Death or Disability prior to the end of the
Employment Period, then, subject to Section 11 of this Agreement, all of the
Executive's outstanding Options under, and as defined in, the Xxxxxxx Medical
Management Holdings Corporation 1996 Stock Incentive Plan
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(the "Incentive Plan") which have not otherwise become exercisable shall
become immediately exercisable in full on the Date of Termination, and
all substantial risks of forfeiture and restrictions on transfer
relating to any of the Executive's shares of Restricted Stock under, and
as defined in, the Incentive Plan shall be terminated on the Date of
Termination. For purposes of this provision, any termination of the
Executive's employment other than voluntarily or for Cause, Death or
Disability shall be deemed to be a termination for the convenience of
the Board; accordingly, any Option granted to the Executive which are or
become exercisable as of the Date of Termination shall terminate 90 days
after the Date of Termination.
(f) DUTY TO COOPERATE. During the Employment Period and thereafter,
Executive agrees to cooperate with and assist the Company, upon reasonable
notice, in the defense of any litigation or governmental investigation arising
from events which occurred while Executive was employed by the Company. Such
cooperation and assistance shall include, but not be limited to, Executive's
full participation in locating, producing, collecting, analyzing and preparing
documents and other informational materials; in preparing for and participating
in depositions, hearings and trials; and in responding to document production
requests, interrogatories, and other discovery. If it becomes necessary for
Executive to testify in any judicial or administrative proceedings, the Company
shall reimburse Executive for any reasonable travel expenses (including
transportation, food and lodging) which are incurred (or are to be incurred) in
connection with such testimony (including preparation therefor). The Company
shall not be required to pay Executive any additional consideration, including,
but not limited to, consulting or witness fees, in connection with any
cooperation, assistance or testimony required of or provided by Executive
pursuant to this Agreement. In addition, from the Date of Termination to the
end of the Employment Period, the Executive shall devote a reasonable amount of
time cooperating with and assisting the Company in maintaining and improving its
relationships with its customers.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
12(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
8. FULL SETTLEMENT. Except as stated herein, the Company's obligation
to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced whether or not the Executive obtains other
employment.
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9. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it.
10. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.
(a) Notwithstanding anything to the contrary in Section 6 of this
Agreement or the Incentive Plan (as defined in Section 6(e) above), in no event
shall (1) Options and Stock Appreciation become immediately exercisable (2) the
risks of forfeiture and restrictions relating to Restricted Stock terminate or
(3) Performance Share Awards become payable under the Incentive Plan upon the
Executive's Date of Termination if such acceleration would (i) cause any payment
made to the Executive, whether pursuant to the terms of this Agreement or
otherwise (a "Payment") to constitute an "excess parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), or (ii) disqualify the transaction constituting the Change of Control
from being accounted for as a "pooling of interests" within the meaning of APB
No. 16, which would qualify for such accounting treatment in the absence of such
acceleration (the "Disqualification"). In the event acceleration of any Options
would cause any Payment to constitute an excess parachute payment, or would
cause a Disqualification, the Compensation Committee of the Company's Board of
Directors shall select the Options which shall remain unexercisable so that no
Payment shall constitute an excess parachute
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payment, or would cause a Disqualification, the Compensation Committee of
the Company's Board of Directors shall select the Options which shall remain
unexercisable so that no Payment shall constitute an excess parachute payment
and/or no Disqualification shall occur. Any Options which
remain unexercisable upon the Executive's Date of Termination by reason
of this Section 11(a) shall become exercisable as set forth in Section
11(c) below. Any shares of Restricted Stock or Performance Share Awards
which do not become vested by reason of this Section 11(a) shall be
forfeited upon the Executive's Date of Termination.
(b) All determinations required to be made under this Section 11 as
to whether a Payment or benefit would be deductible by the Company shall be made
by the Company's independent auditors (the "Accounting Firm") which shall
provide detailed supporting information both to the Company and the Executive
within 30 business days following the Date of Termination or such earlier time
as is requested by the Company. A determination as to whether a
Disqualification would occur shall be made by the Accounting Firm at least 10
days prior to a Change of Control. Any such determination by the Accounting
Firm shall be binding upon the Company and the Executive.
(c) PROVIDED that within 30 days after the Date of Termination (i)
the Executive shall have executed and delivered to the Company a Covenant Not to
Compete during the Employment Period in the form of EXHIBIT "A" hereto and (ii)
the Executive shall have executed and delivered to the Company a Settlement and
Release Agreement in the form of "EXHIBIT "B" hereto in the manner specified
therein, THEN: If the Executive's employment is terminated other than
voluntarily or for Cause, Death or Disability prior to the end of the Employment
Period, each of the Executive's outstanding Options which shall not otherwise
have become exercisable shall become exercisable in such manner and at such
times as the Options would have become exercisable if the Executive had not
terminated employment and shall remain exercisable until the earlier of the date
which is 90 days following the date on which the Options first becomes
exercisable or the original expiration date of the Options. Calculation of the
number of Options that become immediately exercisable under Section 11(a) shall
be made independently of this Section 11(c).
12. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
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IF TO THE EXECUTIVE:
IF TO THE COMPANY:
Xxxxxxx Medical Management Holdings Corporation
0000 Xxxxxx Xxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) As stated, the Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(iv) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement.
(g) From and after the Effective Date, this Agreement shall supersede
any other agreement between the parties with respect to the subject matter
hereof entered into prior to the date hereof.
(h) This Agreement shall be void and without further force and effect
unless approved or ratified by the Company's Board of Directors or Compensation
Committee thereof.
12
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.
XXXXXXX MEDICAL MANAGEMENT
HOLDINGS CORPORATION
------------------------------
By: Xxxx X. Xxxxxxxxx
Its: President and Chief Executive Officer
------------------------------
COVENANT NOT TO COMPETE
This COVENANT NOT TO COMPETE, is entered into as of
____________, 1997 (the "Agreement"), is made by and between Xxxxxxx
Medical Management Holdings Corporation, a Delaware corporation (the
"Company"), and _________ ("Executive") pursuant to the Employment
Agreement between them dated as of the ___ day of ___, 1997 (the
"Employment Agreement"). Defined terms not defined herein shall have
the meanings assigned to them in the Employment Agreement.
WHEREAS, the Company desires the benefits of the continued
services of the Executive, and the Executive is willing to render such
services, pursuant and subject to the terms and conditions of the
Employment Agreement; and
WHEREAS, Executive desires the benefits of Section 11(c) of the
Employment Agreement and in consideration thereof desires to execute
and deliver this Agreement in accordance therewith.
NOW, THEREFORE, in consideration of the promises and the
covenants and agreements contained herein, the parties hereto agree as
follows:
1. COVENANT NOT TO COMPETE. Until the earlier of the expiration of
the Employment Period or the expiration of 30 days following
Executive's Date of Termination without execution and delivery by
Executive of a Settlement and Release Agreement as provided in
Section 11(c) of the Employment Agreement, Executive shall not,
directly or indirectly, as principal, employee, agent,
independent contractor, proprietor, partner, or otherwise,
operate, own, manage, control, or participate in conducting the
same business in the same cities and counties as carried on by
the Company in the State of California at the Effective Date, if
in so doing Executive personally carries on activities
substantially the same in all material respects as the activities
carried on by Executive as an officer and employee of the Company
at the Effective Date.
2. REASONABLENESS OF COVENANT. Executive has carefully considered
the nature and extent of the restrictions upon Executive and the
rights and remedies conferred upon Company under this Agreement,
and hereby acknowledges and agrees that such covenants are
reasonable, are designed to prevent irreparable damage to
Company, are required to protect Company's legitimate interests,
and do not confer a benefit upon Company disproportionate to the
detriment of Executive.
3. NO WAIVER. No waiver of any of the provisions herein shall be
valid unless in writing signed by the party against whom such
claimed waiver is sought to be enforced, nor shall a failure to
enforce any right hereunder constitute a continuing waiver of the
notice or a waiver of any other right hereunder. The failure of
the Company at any time or from time
"EXHIBIT A"
to time to require performance of any of Executive's obligations
hereunder shall in no manner affect the Company's right to
enforce any provision of this Agreement at a subsequent time.
4. SEVERABILITY. In the event that any provision or portion of this
Agreement be found by a court of competent jurisdiction to be
invalid or unenforceable, this Agreement shall be deemed to be
amended so as to delete only the invalid or unenforceable
provision, or the invalid or unenforceable portion thereof, and
the remaining provisions hereof shall remain in full force and
effect.
5. SUCCESSORS. This Agreement shall inure to the benefit of, and be
binding upon the parties, their heirs, executors, administrators,
successors and assigns.
6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the law of the State of California, without
reference to principles of conflicts of laws.
7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but
all of which together will constitute but one instrument.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above mentioned.
XXXXXXX MEDICAL MANAGEMENT
HOLDINGS CORPORATION
---------------------------
By:
Xxxx X. Xxxxxxxxx
President and Chief Executive Officer
---------------------------
SETTLEMENT AGREEMENT AND RELEASE
This SETTLEMENT AGREEMENT AND RELEASE ("Agreement") is entered
into by and between ____________ ("Executive") and Xxxxxxx Medical
Management Holdings Corporation, a Delaware corporation (the
"Company"), pursuant to the EMPLOYMENT AGREEMENT between them dated as
of the ___ day of ___, 1997 (the "Employment Agreement").
WHEREAS, the employment of Executive by the Company terminated
__________________ (the "Termination Date"); and
WHEREAS, Executive desires the benefits of Section 11(c) of the
Employment Agreement and in consideration thereof desires to execute
and deliver this Agreement in accordance therewith.
NOW, THEREFORE, in consideration of the promises and the
covenants and agreements contained herein, the parties hereto agree as
follows:
1. RELEASE. In consideration of the above, the sufficiency of
which Executive hereby acknowledges, and subject to the proviso
hereinafter set forth, Executive hereby agrees not to xxx and fully,
finally, completely and generally releases, absolves and discharges
the Company, its predecessors, successors, subsidiaries, parents,
related companies and business concerns, affiliates, partners,
trustees, directors, officers, agents, attorneys, servants,
representatives and employees, past and present, and each of them
(hereinafter collectively referred to as "Releasees") from any and all
claims, demands, liens, agreements, contracts, covenants, actions,
suits, causes of action, grievances, arbitrations, unfair labor
practice charges, wages, vacation payments, severance payments,
obligations, commissions, overtime payments, Workers' Compensation
claims, debts, profit sharing or bonus claims, expenses, damages,
judgments, orders and/or liabilities of whatever kind or nature in
law, equity or otherwise, whether known or unknown to Executive, which
Executive now owns or holds or has at any time owned or held as
against Releasees, or any of them ("Claims"), including specifically
but not exclusively and without limiting the generality of the
foregoing, any and all Claims arising out of or in any way connected
to Executive's employment with or separation of employment from
Executive including any Claims based on contract, tort, wrongful
discharge, fraud, breach of fiduciary duty, attorneys' fees and costs,
discrimination in employment, any and all acts or omissions in
contravention of any federal or state laws or statutes (including but
not limited to federal or state securities laws and the Racketeer
Influenced and Corrupt Organizations Act), and any right to recovery
based on state or federal age, sex, pregnancy, race, color, national
origin, marital status, religion, veteran status, disability, sexual
orientation, medical condition, union affiliation or other
anti-discrimination laws, including, without limitation, Title VII,
the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the National Labor Relations Act, and the California
Fair Employment and Housing Act, all as amended, whether such claim be
based upon
"EXHIBIT B"
an action filed by Executive or by a governmental agency; PROVIDED, HOWEVER,
the foregoing release shall not affect or diminish any rights of Executive
under the Employment Agreement or in respect of vested employee benefits.
"Vested employee benefits" means any and all rights of Executive under or in
respect of (i) any employee benefit plan of the Company or any corporation or
other entity which controlling, controlled by or under common control with
the Company or that is a Releasee ("Affiliated Company"), (ii) any option or
other agreement relating to any right or interest of Executive in any stock
or other securities of the Company or any Affiliated Company, (iii) salary or
wages payable for services rendered before the Termination Date, (iv)
reimbursement for business expenses or other amounts for which Executive is
entitled to reimbursement by the Company immediately before the Termination
Date, or (v) indemnification as an agent.
(a) Executive acknowledges and agrees that neither anything
in this Agreement or the offer, execution, delivery, or acceptance
thereof shall be construed as an admission of any kind by the Company,
and this Agreement shall not be admissible as evidence in any
proceeding except to enforce this Agreement.
(b) It is the intention of Executive in executing this
instrument that it shall be effective as a bar to each and every
claim, demand, grievance and cause of action hereinabove specified as
being released. In furtherance of this intention, Executive hereby
expressly consents that this Agreement shall be given full force and
effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected claims, demands
and causes of action, if any, as well as those relating to any other
claims, demand and causes of action hereinabove specified, and elects
to assume all risks for claims that now exist in Executive's favor,
known or unknown, that are released under this Agreement. Executive
acknowledges that Executive may hereafter discover facts different
from, or in addition to, those Executive now knows or believes to be
true with respect to the claims, demands, liens, agreements,
contracts, covenants, actions, suits, causes of action, wages,
obligations, debts, expenses, damages, judgments, orders and
liabilities herein released, and agrees the release herein shall be
and remain in effect in all respects as a complete and general release
as to all matters released herein, notwithstanding any such different
or additional facts.
(c) If any provision of this Agreement or application
thereof is held invalid, the invalidity shall not affect other
provisions or applications of the Agreement which can be given effect
without the invalid provision or application. To this end, the
provisions of this Agreement are severable.
(d) Executive represents and warrants that Executive has
not heretofore assigned or transferred or purported to assign or
transfer to any person, firm or corporation any claim, demand, right,
damage, liability, debt, account, action, cause of action, or any
other matter herein released.
(e) NOTICE TO EXECUTIVE: The law requires that Executive
be advised and the Company hereby advises Executive to consult with an
attorney and discuss this Agreement before executing it. Executive
acknowledges that the Company has provided to Executive at least 21
days within which to review and consider this Agreement before signing
it. If Executive decides not to use the full 21 days, then Executive
knowingly and voluntarily waives any claims that Executive was not in
fact given that period of time or did not use the entire 21
days to consult an attorney and/or consider this Agreement. Executive
acknowledges that Executive may revoke this Agreement for up to seven
calendar days following Executive's execution of this Agreement and that it
shall not become effective or enforceable until the revocation period has
expired. Executive further acknowledges and agrees that such revocation must
be in writing addressed to the Company as follows: Xxxxxxx Medical
Management Holdings Corporation, 0000 Xxxxxx Xxx, Xxxxx Xxxx, Xxxxxxxxxx
00000-0000, Attn: President, and received by the Company as so addressed not
later than midnight on the seventh day following execution of this Agreement
by Executive. If Executive so revokes this Agreement, the Agreement shall
not be effective or enforceable and Executive will not receive the benefits
described above. If Executive does not revoke this Agreement in the time
frame specified above, the Agreement shall become effective at 12:00:01 on
the eighth day after it is signed by Executive.
(f) Executive represents that Executive has read and
understood the foregoing Agreement, has been advised to and has had
the opportunity to discuss it with anyone he or she desires, including
an attorney of his or her own choice, and Executive accepts and agrees
to the terms of this Agreement, acknowledges receipt of a copy of the
same and the sufficiency of the benefits described above, and hereby
executes this Agreement voluntarily and with full understanding of its
consequences.
PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A GENERAL
RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
Date: __________________, 199__ Executive:
Date: __________________, 199__ Xxxxxxx Medical Management
Holdings Corporation
By: ______________________
Its: _____________________
