FORM OF EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered as of this ___ day of _______, 1998
("Effective Date"), by and between Mid Atlantic Medical Services, Inc., a
Delaware corporation with its principal executive offices at 0 Xxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 ("Company"), and ______________, an individual
residing at ______________________________________ ("Executive");
WHEREAS, the Company wishes to assure itself of the services of
Executive for the period provided in this Agreement, and Executive is willing to
serve in the employ of the Company on a full-time basis for said period;
WHEREAS, the Company and Executive desire to set forth the amounts
payable and benefits to be provided by the Company to Executive in the event of
a termination of Executive's employment with the Company under the circumstances
set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. Employment. The Company agrees to continue Executive in its employ, and
Executive agrees to remain in the full time employ of the Company, for the
period stated in Section 3 hereof and upon the other terms and conditions herein
provided.
2. Position and Responsibilities. The Company employs Executive, and
Executive agrees to serve, as a Senior Vice President of the Company on the
conditions hereinafter set forth. Executive agrees to perform such services
consistent with his or her position as shall from time to time be assigned to
him by the Company's Chief Executive Officer, the Company's Board of Directors
("Board"), or another executive designated by the Board. Such duties may include
the appointment of Executive as an officer and/or director of any present or
future subsidiary or affiliate of the Company without any additional
remuneration under this Agreement. Executive shall devote all of his or her
business time, attention, skill, and efforts to the faithful performance of the
duties hereunder.
3. Term. The period of Executive's employment under this Agreement with the
Company (i) shall commence for an initial period as of the Effective Date and
remain in effect for one year.
4. Compensation and Reimbursement of Expenses. For all services rendered by
Executive in any capacity during employment under this Agreement (including,
without limitation, services as an executive, officer, or director of the
Company, or any subsidiary or affiliate of the Company, or as a member of any
committee of the Board of Directors of the Company or any subsidiary or
affiliate of the Company), the Company shall pay Executive as compensation (A)
an annual salary ("Base Salary") and (B) such bonus for such period, if any, as
may be awarded to Executive from time to time pursuant to any Bonus Plan adopted
by the Company for its senior management or otherwise awarded by the Board or by
a committee designated by the Board. Unless and until adjusted in accordance
with regular Company compensation policies, Base Salary shall be not less the
rate at which Executive is compensated on the Effective Date. The Company shall
also reimburse Executive, in accordance with such policies and procedures as the
Board may establish from time to time, for all reasonable travel and other
expenses incurred by Executive in the performance of her or her obligations
under this Agreement. Executive shall also be entitled to participate in any
benefit plans established by the Company for which Company executives are or
shall become eligible.
5. Termination of Employment. Executive's employment under this Agreement
may be terminated by the Company or Executive as follows:
(a) Disability.
(i) If Executive fails to perform his or her duties under this
Agreement on account of Disability (as hereinafter defined), the
Company may give notice to Executive to terminate this Agreement on a
date not less than thirty (30) days thereafter ("Notice Period") and,
if Executive has not resumed full performance of his or her duties
under this Agreement within such Notice Period, then Executive's
employment under this Agreement will terminate on the date provided in
the notice ("Disability Termination Date").
(ii) During any period of Disability, the Company shall
maintain and pay for health and other insurance benefits for Executive
at least equal to those he had at the commencement of such Disability.
(iii) As used in this Agreement, the term "Disability" shall
mean the complete inability of Executive to perform his or her duties
under this Agreement by reason of his or her total and permanent
disability, as determined by an independent physician selected with the
approval of the Board and Executive.
(b) Death. If Executive dies while employed under this Agreement, his
or her employment under this Agreement will terminate as of the date of his
or her death ("Date of Death"). Within thirty (30) days after the Date of
Death, the Company shall pay to Executive's legal representative
Executive's Base Salary as then in effect that has accrued to the last day
of the month in which the Date of Death occurs. If the Executive dies while
receiving payments pursuant to Section 5(c) below, said payment shall
continue for the period remaining and shall be paid to the estate of the
Executive.
(c) Certain Other Events of Termination. In the event that (i) the
Company terminates Executive's employment for any reason (other than
because of death, Disability, or "just cause" (as hereinafter defined),
(ii) Executive terminates his or her employment with the Company because of
the Company's material breach of this Agreement, (iii) Executive terminates
his or her employment with the Company because Executive's Base Salary, is
reduced by an amount greater than 25% over the initial term of the contract
from the amount on the Effective Date, (iv) Executive terminates his or her
employment with the Company because the Company requires Executive to be
based anywhere other than Executive's current location or within
seventy-five (75) miles of the Company's principal executive offices
(except for required travel on the Company's business), or (v) Executive
terminates his or her employment with the Company because of a substantial
reassignment of duties and responsibilities, then the Company shall pay
Executive an amount equal to 12 months Base Salary paid in equal bi-weekly
payments over a period of one year commencing on the Executive Termination
Date and in accordance with the regular payroll practices of the Company.
Payment made pursuant to this paragraph shall be the exclusive remedy
provided to Executive and Executive shall not be entitled to any other
severance benefit that the Company may provide or adopt.
(d) Retirement. Executive shall be entitled to terminate his or her
employment with the Company on, or at any date after, a date on which he is
at least sixty-five (65) years old. Any date on which Executive elects to
retire shall be referred to as the "Retirement Termination Date." The
Company shall pay to Executive his or her Base Salary as then in effect
that has accrued to the last day of the month in which the Retirement
Termination Date occurs.
(e) Termination by the Company for Just Cause.
(i) The Company may terminate Executive's employment for
"just cause" at any time by giving written notice thereof to
Executive. (Except as provided below, the date of such notice is
the "Just Cause Termination Date" unless otherwise provided in
the notice). Within thirty (30) days after the Just Cause
Termination Date, the Company shall pay to Executive his or her
Base Salary as then in effect that has accrued to the Just Cause
Termination Date. For the purposes of this subparagraph, "just
cause" shall mean termination because of Executive's personal
dishonesty, willful misconduct, breach of fiduciary duty,
intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or
similar offenses), or material breach of any provision of this
Agreement. Unless otherwise determined by the Board, Executive
shall have no right to receive compensation or other benefits
under this Agreement after a termination for just cause.
(ii) Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for just cause pursuant to this
Section 6(e) unless and until he shall have received a copy of a
resolution duly adopted by the affirmative vote of a majority of
the Board, at a meeting held for that purpose, declaring that in
the good faith opinion of the Board one or more of the conditions
set forth in clause (i) of this Section 6(e) has occurred and
specifying the particulars thereof
6. Confidential Information. Executive shall fully comply with and abide by
the provisions of the Company's Employee Manual and other announced policies in
effect from time to time, including those provisions relating to the protection
of the Company's confidential information. The Company and Executive agree that
the foregoing provision shall survive the termination of this Agreement for any
reason whatsoever.
7. Covenant Not To Compete. Executive covenants and agrees that, in
consideration of the amounts to be paid Executive hereunder and other good and
valuable consideration, for a period of one (1) year beyond the Executive
Termination Date, Executive shall not be employed as an executive officer of,
control, manage, or otherwise participate in the management of the business of a
"significant competitor" of the Company. The term "significant competitor" shall
mean any company or division of a company that, on Effective Date, directly or
indirectly, is materially (10% or more of its revenues) engaged in the operation
or management of a health maintenance organization or any other similar
provider, payer or insurer for medical services. The Company and Executive agree
that the terms and conditions of this Section 7 shall survive the termination of
this Agreement following the Termination Date.
8. Indemnification. Employee shall be entitled to indemnification to the
full extent allowed by the Company's Certificate of Incorporation and Bylaws for
third party claims and to advances for expenses in defending against such
claims.
9. General Provisions.
(a) Entire Agreement. This Agreement contains the entire understanding
between the parties hereto and supersedes any prior employment agreement between
the Company and Executive.
(b) No Duty to Mitigate. Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any amounts received from other employment or
otherwise by Executive offset in any manner the obligations of the Company
hereunder.
(c) Nonassignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof is assignable by
Executive, his or her beneficiaries, or legal representatives without the
Company's prior written consent; provided, however, that nothing in this Section
11(d) shall preclude (i) Executive from designating a beneficiary to receive any
benefit payable hereunder upon his or her death, or (ii) the executors,
administrators, or other legal representatives of Executive or his or her estate
from assigning any rights hereunder to the person or persons entitled thereto.
(d) Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by certified mail, return
receipt requested, first-class postage prepaid, to the parties to this Agreement
at the following addresses:
(i) if to the Company at:
Mid Atlantic Medical Service, Inc.
0 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
and
(ii) if to Executive at the address set forth on the signature
page. or to such other address as either party to this Agreement shall have last
designated by notice to the other party. All such notices and communications
shall be deemed to have been received on the earlier of the date of receipt or
the third business day after the date of mailing thereof.
(e) Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended or shall be construed to give any person, other than the parties to
this Agreement or their respective successors or permitted assigns, any legal or
equitable right, remedy, or claim under or in respect of any agreement or any
provision contained herein.
(f) Waiver. No provision of this Agreement may be amended, waived,
discharged, or terminated except by an instrument in writing and executed by
each party. Any waiver of enforcement of any provision of this Agreement shall
not operate or be construed as a continuing waiver or a waiver of any other
provisions unless expressly stated in such instrument.
(g) Amendment. This Agreement may be terminated, amended, modified, or
supplemented only by a written instrument executed by Executive and the Company.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware, regardless of the law that
might be applied under principles of conflict of laws.
(i) Severability. If, for any reason, any provision of this Agreement
is held invalid, such invalidity shall not affect any other provision of this
Agreement not held so invalid, and each such other provision shall, to the full
extent consistent with law, continue in full force and effect. If any provision
of this Agreement shall be held invalid in part, such invalidity shall in no way
affect the rest of such provision not held so invalid, and the rest of such
provision, together with all other provisions of this Agreement, shall to the
full extent consistent with law continue in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and Executive has signed this Agreement, all as of the Effective
Date.
ATTEST: MID ATLANTIC MEDICAL SERVICES, INC.
By:
(Corporate Seal) Name:
Title:
WITNESS EXECUTIVE:
Address: __________________________
