EXHIBIT 10(c)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and
between Xxxxxxxx X. Xxxxxxx, Ph. D. an individual ("Officer"), and MAGELLAN
HEALTH SERVICES, INC., a Delaware corporation ("Employer").
WHEREAS, Employer desires to continue to obtain the services of Officer and
Officer desires to continue to render services to Employer; and
WHEREAS, Employer and Officer desire to set forth the terms and conditions
of Officer's continued employment with Employer under this Agreement and
terminate certain prior written agreements with Officer dated March 12, 1997 and
May 2, 1995;
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and agreements contained in this Agreement, the parties agree
as follows:
STATEMENT OF AGREEMENT
1. EMPLOYMENT. Employer and Officer agree that the earlier written
agreements dated March 12, 1997 and May 2, 1995 with Officer are terminated and
of no further force and effect as of the effective date of this Agreement.
Employer agrees to employ Officer, and Officer accepts such employment in
accordance with the terms of this Agreement, for an initial term of three years
commencing on January 1, 1999 and, unless terminated earlier in accordance with
the terms of this Agreement, ending on December 31, 2001. After the initial
three year term has expired, this Agreement will renew automatically on the
anniversary date of each year for a one year term. If either party desires not
to renew the Agreement, they must provide the other party with written notice of
their intent not to renew the Agreement at least sixty days prior to the next
anniversary date.
2. POSITION AND DUTIES OF OFFICER. Officer will serve as Executive Vice
President of Employer. Officer agrees to serve in such position, or in such
other positions of a similar status or level as Employer determines from time to
time, and to perform the commensurate duties that Employer may assign from time
to time to Officer until the expiration of the term or such time as Officer's
employment with Employer is terminated pursuant to this Agreement.
3. TIME DEVOTED AND LOCATION OF OFFICER.
(a) Officer will devote her full business time and energy to the
business affairs and interests of Employer, and will use her best efforts and
abilities to promote Employer's interests. Officer agrees that she will
diligently endeavor to perform services contemplated by this Agreement in a
manner consistent with her position and in accordance with the policies
established by the Employer and provided to Officer from time to time.
(b) Officer's primary business office and normal place of work will
be located in Columbia, Maryland.
4. COMPENSATION.
(a) BASE SALARY. Employer will pay Officer a base salary in the
amount of two hundred seventy thousand dollars per year, which amount will be
paid in semi-monthly intervals less appropriate withholdings for federal and
state taxes and other deductions authorized by Officer. Such salary will be
subject to review and adjustment by Employer from time to time. Any reduction in
Officer's base salary will be consistent with and the result of reductions made
generally regarding other officers or employees at her level including the
President and Chief Executive Officer of Employer.
(b) BENEFITS. Officer will continue to participate in Magellan's
Benefit Plans commensurate with her position. Officer will receive separate
information detailing the terms of the Benefit Plans and the terms of that plan
will control. Officer also will be eligible to participate in any annual
incentive plan and stock option plan applicable to Officer by its terms. Officer
will be entitled during the term of this Agreement to such other benefits of
employment with Employer as are now or may later be in effect for salaried
officers or employees of Employer, and also will be eligible to participate in
other benefits adopted for officers or employees at her level.
5. EXPENSES. During the term of this Agreement, Employer will reimburse
Officer promptly for all reasonable travel, entertainment, parking, business
meetings and similar expenditures in pursuance and furtherance of Employer's
business upon receipt of reasonably supporting documentation as required by
Employer's policies applicable to its officers and employees generally.
6. TERMINATION.
(a) TERMINATION DUE TO RESIGNATION AND TERMINATION WITH CAUSE. Except
as otherwise set forth in this Agreement, this Agreement, Officer's employment,
and Officer's rights to receive compensation and benefits from Employer, will
terminate upon the occurrence of any of the following events: (i) the effective
date of Officer's resignation without good reason, or (ii) termination for cause
at the discretion of Employer under the following circumstances: (a) Officer's
commission of an act of fraud or dishonesty involving her duties on behalf of
Employer; (b) Officer's willful failure or refusal to faithfully and diligently
perform duties assigned to Officer or other breach of any material term under
this Agreement; (c) Officer's willful failure or refusal to abide by Employer's
policies, rules, procedures or directives; or (d) Officer's conviction of a
felony or a misdemeanor involving moral turpitude. If Officer is terminated
pursuant to this Section 6(a), Employer's only remaining financial obligation to
Officer under this Agreement will be to pay any earned but unpaid base salary
through the date of Officer's termination.
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For the events described in Sections 6(a)(ii)(b) and (c), Employer will
give Officer written notice of such event and a reasonable opportunity to cure
such situation, but in no event less than thirty days.
(b) TERMINATION WITHOUT CAUSE. Officer may terminate her employment
without cause at any time by giving thirty days written notice of resignation to
Employer. Employer may terminate this Agreement without cause at any time by
giving thirty days prior written notice to Officer. If Employer terminates this
Agreement without cause, Employer may direct Officer to immediately cease
providing services. If Employer terminates this Agreement without cause,
Employer shall continue to pay Officer the compensation provided for in Section
4(a) of this Agreement for a period of time equal to the greater of (i) the
remaining term of this Agreement or (ii) two years. In addition, Employer will
pay Officer, as additional severance, a prorated amount of the Annual Bonus
provided for in Section 4(b) based on the number of months from the anniversary
date of this Agreement and the date of termination. No other benefits or
compensation will be paid to Officer if she is terminated pursuant to this
Section 6(b), unless otherwise provided for in the terms of the applicable plan
or benefit. Non-renewal of this Agreement by Employer will constitute a
termination without cause pursuant to this Section.
(c) TERMINATION BY OFFICER FOR GOOD REASON. Officer may terminate
this Agreement, and her employment with Employer, for "good reason" upon the
occurrence of any of the following:
(i) a requirement by Employer that Officer relocate her primary
business office in order to fulfill Officer's duties under this Agreement;
(ii) the failure of Employer to comply with Section 4; or
(iii) any material breach of this Agreement by Employer; or
(iv) the assignment to Officer of any duties inconsistent with
Officer's status as an Executive Vice President.
Prior to terminating this Agreement pursuant to this Section,
Officer shall give to Employer written notice of her "good reason" for
terminating this Agreement and provide Employer with a reasonable period in
which to contest or correct the "good reason", but in no event less than thirty
days. In the event of a termination for "good reason" pursuant to this Section,
Officer will be entitled to receive all compensation and benefits provided for
in this Agreement for a termination by Employer without cause.
(d) AUTOMATIC TERMINATION. This Agreement will terminate
automatically upon the death or permanent disability of Officer. Officer will be
deemed to be "Disabled" or to suffer from a "Disability" within the meaning of
this Agreement if, because of a physical or mental impairment, Officer has been
unable to perform the essential functions of her position for a period of 180
consecutive days, or if Officer can reasonably be expected to be unable to
perform the essential functions of her position for such period. The term
"essential duties" is defined as the ability to consistently perform her
assigned duties, including travel requirements.
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Subject to continuing coverage under applicable benefit plans, if Officer is
terminated pursuant to this Section 6(d), Employer's only remaining financial
obligation to Officer under this Agreement will be to pay any earned but unpaid
base salary through the date of Officer's termination.
(e) EFFECT OF TERMINATION. Except as otherwise provided for in this
Section 6, upon termination of this Agreement, all rights and obligations under
this Agreement will cease except for the rights and obligations under Sections 4
and 5 to the extent Officer has not been compensated or reimbursed for services
performed prior to termination (the amount of compensation to be prorated for
the portion of the pay period prior to termination); the rights and obligations
under Sections 7, 8 and 9; and all procedural and remedial provisions of this
Agreement. A termination of this Agreement will constitute a termination of
Officer's employment with Employer.
(f) TERMINATION UPON A CHANGE OF CONTROL. Officer will be entitled to
terminate this Agreement upon a change of control and will be entitled to all of
the salary, benefits and other rights provided in this Agreement as though the
termination had been initiated by Employer without cause. For purposes of this
Agreement, a change of control will take place upon the occurrence of any of the
following events: (a) the acquisition after the beginning of the term in one or
more transactions of beneficial ownership (within the meaning of Rule
13d-3(a)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) by any person or entity (other than Officer or the Chief Executive
Officer) or any group of persons or entities (other than Officer or Chief
Executive Officer) who constitute a group (within the meaning of Rule 13d-5 of
the Exchange Act) of any securities of Employer such that as a result of such
acquisition such person or entity or group beneficially owns (within the meaning
of Rule 13d-3(a)(1) under the Exchange Act) more than 50% of Employer's then
outstanding voting securities entitled to vote on a regular basis for a majority
of the Board of Directors of Employer; or (b) the sale of all or substantially
all of the assets of Employer (including, without limitation, by way of merger,
consolidation, lease or transfer) in a transaction where Employer or the holders
of common stock of Employer do not receive (i) voting securities representing a
majority of the voting power entitled to vote on a regular basis for the Board
of Directors of the acquiring entity or of an affiliate which controls the
acquiring entity, or (ii) securities representing a majority of the equity
interest in the acquiring entity or of an affiliate that controls the acquiring
entity, if other than a corporation; PROVIDED, that if Officer becomes entitled
to any payments (whether hereunder or otherwise) by reason of an event described
in Internal Revenue Code Section 280G (a "Parachute Event") that would
constitute "excess parachute payments" (as defined in Internal Revenue Code
Section 280G) if paid, then Officer's entitlement to such payments will be
reduced by such amount as will cause none of such payments to constitute excess
parachute payments, if, and only if, the net amount received by Officer by
reason of the Parachute Event, after imposition of all applicable taxes
(including taxes under Internal Revenue Code Section 4099), would be greater
after such reduction than if such reduction were not made.
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7. PROTECTION OF CONFIDENTIAL INFORMATION/NON-COMPETITION/NON-
SOLICITATION.
Officer covenants and agrees as follows:
(a) During Employer's employment of Officer and for a period of two
years following the termination of Officer's employment for any reason, Officer
will not use or disclose, directly or indirectly, for any reason whatsoever or
in any way, other than at the direction of Employer during the course of
Officer's employment or after receipt of the prior written consent of Employer,
any confidential information or trade secrets of Employer or its controlled
subsidiaries or affiliates, including, but not limited to, the following: lists
of past, current or potential customers of Employer and its controlled
subsidiaries and affiliates; all systems, manuals, materials, processes and
other intellectual property of any type used by Employer or its controlled
subsidiaries and affiliates in connection with their respective business
operations; financial statements, cost reports and other financial information;
contract proposals and bidding information; rate and fee structures; policies
and procedures developed as part of a confidential business plan; and management
systems and procedures, including manuals and supplements (collectively, the
"Confidential Information"). The obligation not to use or disclose any
Confidential Information will not apply to: (i) any Confidential Information
known by Officer before commencing employment with Employer, (ii) Confidential
Information which Officer obtains from a third party, provided Officer has no
actual or constructive knowledge that the third party obtained the Confidential
Information by wrongful or inappropriate means, (iii) following the termination
of the employment of Officer with Employer, to any information that is or
becomes public knowledge through no fault of Officer, and that may be utilized
by the public without any direct or indirect obligation to Employer, but the
termination of the obligation for non-use or nondisclosure by reason of such
information becoming public will extend only from the date such information
becomes public knowledge, or (iv) disclosure compelled by legal process. The
above will be without prejudice to any rights or remedies of Employer under any
state or federal law protecting trade secrets or other information.
(b) Officer covenants and agrees that during the term of her
employment with Employer and for a period of two years immediately following the
termination of said employment for any reason, she will not, directly or
indirectly, seek, obtain or accept a "Competitive Position" in the "Restricted
Territory" with a "Competitor" of Employer. Provided, however, in the event of
Officer's resignation, this Section 7(b) shall only apply for a period of one
year.
The following definitions shall apply to this Section:
- "Competitor" means any business, individual, partnership, joint venture,
association, firm, corporation or other entity engaged, wholly or in part, in
the provision or sale of behavioral or other specialty managed care services.
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- "Competitive Position" means any position or employment with a "Competitor"
of Employer in which Officer is engaged in a position of providing or overseeing
clinical and operational services.
- "Restricted Territory" is the geographic area set forth in Exhibit A to
this Agreement. The parties agree to review the geographic area included within
the Restricted Territory from time to time at either party's request and the
Restricted Territory will thereafter be modified so that its coverage extends
to, but only to, the geographic area necessary to protect the interest of the
Employer and its controlled subsidiaries and affiliates engaged in the provision
or sale of behavioral or other specialty managed care services. No such
reformation will be valid unless it is evidenced by written amendment to this
Agreement and signed by both parties.
(c) To protect the goodwill of Employer and its controlled
subsidiaries and affiliates, or the customers of Employer and its controlled
subsidiaries and affiliates, Officer agrees that, for a period of one year
immediately following the termination of her employment with Employer, she will
not, without the prior written permission of Employer, directly or indirectly,
for himself or herself or on behalf of any other person or entity, solicit,
divert away, take away or attempt to solicit or take away any Customer of
Employer for purposes of providing or selling or providing behavioral or other
specialty managed care services if Employer, or the particular controlled
subsidiary or affiliate of Employer, is then still engaged in the sale or
provision of such services at the time of the solicitation. For purposes of this
Section 7(c), "Customer" means any individual or entity to whom Employer or its
controlled subsidiaries or affiliates has provided, or contracted to provide,
behavioral or other specialty managed care services, and with whom Officer had,
alone or in conjunction with others, Material Contact during the twelve months
prior to the termination of her employment. For purposes of this Section 7(c),
Officer had "Material Contact" with a customer if (i) Officer had business
dealings with the customer on behalf of Employer or its controlled subsidiaries
or affiliates; (ii) Officer was responsible for supervising or coordinating the
dealings between the customer and Employer or its controlled subsidiaries or
affiliates; or (iii) Officer obtained trade secrets or confidential information
about the customer as a result of Officer's association with Employer or its
controlled subsidiaries or affiliates.
(d) During Employer's employment of Officer and for a period of one
year following the termination of Officer's employment with Employer for any
reason, Officer will not solicit for employment, directly or indirectly, any
employee of Employer or any of its controlled subsidiaries or affiliates who was
employed with Employer or its controlled subsidiaries or affiliates within the
one year period immediately prior to Officer's termination.
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8. WORK MADE FOR HIRE. Officer agrees that any written program materials,
protocols, research papers and all other writings (the "Work"), which Officer
develops for Employer's use, or for use by Employer's controlled subsidiaries or
affiliates, during the term of this Agreement, will be considered "work made for
hire" within the meaning of the United States Copyright Act, Title 17, United
States Code, which vests all copyright interest in and to the Work in the
Employer. In the event, however, that any court of competent jurisdiction
finally declares that the Work is not or was not a work made for hire as agreed,
Officer agrees to assign, convey, and transfer to the Employer all right, title
and interest Officer may presently have or may have or be deemed to have in and
to any such Work and in the copyright of such work, including but not limited
to, all rights of reproduction, distribution, publication, public performance,
public display and preparation of derivative works, and all rights of ownership
and possession of the original fixation of the Work and any and all copies.
Additionally, Officer agrees to execute any documents necessary for Employer to
record and/or perfect its ownership of the Work and the applicable copyright.
The foregoing will not apply to any writings Officer develops which are not for
Employer's use or are in each instance specifically excluded in advance of
publication from the coverage of the foregoing by Employer's Board of Directors.
9. PROPERTY OF EMPLOYER. Officer agrees that, upon the termination
of Officer's employment with Employer, Officer will immediately surrender to
Employer all property, equipment, funds, lists, books, records and other
materials of Employer or its controlled subsidiaries or affiliates in the
possession of or provided to Officer. Provided, however, Officer shall be
entitled to retain individualized bound volumes of transaction documents in
which Officer provided services.
10. GOVERNING LAW. This Agreement and all issues relating to the
validity, interpretation and performance will be governed by and interpreted
under the laws of the State of Maryland.
11. REMEDIES. Employer and Officer agree that an actual or threatened
violation by Officer of the covenants and obligations set forth in Sections 7, 8
and 9 will cause irreparable harm to Employer or its controlled subsidiaries or
affiliates and that the remedy at law for any such violation will be inadequate.
Officer agrees, therefore, that Employer or its controlled subsidiaries or
affiliates will be entitled to appropriate equitable relief, including, but not
limited to, a temporary restraining order and a preliminary injunction, without
the necessity of posting a bond. The provisions of Sections 7, 8 and 9 will
survive the termination of this Agreement in accordance with the terms set forth
in each Section.
12. ARBITRATION. Except for an action for injunctive relief as
described in Section 11, any disputes or controversies arising under this
Agreement will be settled by arbitration in Columbia, Maryland in accordance
with the rules of the American Arbitration Association relating to the
arbitration of employment disputes. The determination and findings of such
arbitrators will be final and binding on all parties and may be enforced, if
necessary, in any court of competent jurisdiction.
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Officer's
Initials
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13. NOTICES. Any notice or request required or permitted to be given
to any party will be given in writing and, excepting personal delivery, will be
given at the address set forth below or at such other address as such party may
designate by written notice to the other party to this Agreement:
To Officer: Xxxxxxxx X. Xxxxxxx, Ph. D.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
To Employer: Magellan Health Services, Inc.
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: President and Chief Executive Officer
Facsimile: 000-000-0000
With a copy to: Magellan Health Services, Inc.
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
Each notice given in accordance with this Section will be deemed to have been
given, if personally delivered, on the date personally delivered; if delivered
by facsimile transmission, when sent and confirmation of receipt is received;
or, if mailed, on the third day following the day on which it is deposited in
the United States mail, certified or registered mail, return receipt requested,
with postage prepaid, to the address last given in accordance with this Section.
14. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and should not be construed or
interpreted to restrict or modify any of the terms or provisions of this
Agreement.
15. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Agreement, such provision will be fully severable and this
Agreement and each separate provision will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. In addition, in
lieu of such illegal, invalid or unenforceable provision, there will be added
automatically, as a part of this Agreement, a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable, if such reformation is allowable under applicable
law.
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16. BINDING EFFECT. This Agreement will be binding upon and shall
inure to the benefit of each party and each party's respective successors, heirs
and legal representatives. This Agreement may not be assigned by Officer to any
other person or entity but may be assigned by Employer to any wholly-owned
subsidiary or affiliate of Employer or to any successor to or transferee of all,
or any part, of the stock or assets of Employer.
17. EMPLOYER POLICIES, REGULATIONS AND GUIDELINES FOR OFFICERS.
Employer may issue policies, rules, regulations, guidelines, procedures or other
material, whether in the form of handbooks, memoranda, or otherwise, relating to
its officers. These materials are general guidelines for Officer's information
and will not be construed to alter, modify or amend this Agreement for any
purpose whatsoever.
18. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties with respect to its subject matter and
supersedes all prior agreements and understandings, whether written or oral,
relating to its subject matter, unless expressly provided otherwise within this
Agreement. No amendment or modification of this Agreement, will be valid unless
made in writing and signed by each of the parties. No representations,
inducements or agreements have been made to induce either Officer or Employer to
enter into this Agreement which are not expressly set forth within this
Agreement. Officer and Employer acknowledge and agree that Employer's
wholly-owned subsidiaries and affiliates are express third party beneficiaries
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the _____ day of ________________, 1998.
MAGELLAN HEALTH SERVICES, INC.
"Officer" "Employer"
Xxxxxxxx X. Xxxxxxx, Ph. D.
_______________________________ By: ________________________________
Name: ______________________________
Title: _______________________________
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EXHIBIT A
RESTRICTED TERRITORY
The Restricted Territory is any location within a radius of fifty miles of any
existing operation of Employer, or its affiliates or controlled subsidiaries,
engaged in the delivery of behavioral managed care services. For purposes of
this Section "existing operation" shall not include staff model provider clinics
of Employer.
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