EMPLOYMENT AGREEMENT
This Agreement is made by and between Xxxxxxx X. Xxxxx ("Executive") and
United HealthCare Corporation, ("United HealthCare") for the purpose of
setting forth certain terms and conditions of Executive's employment by
United HealthCare and to protect United HealthCare's knowledge, expertise,
customer relationships and the confidential information United HealthCare has
developed about its customers, products, operations and services. As of the
Effective Date, this Agreement supersedes any prior employment-related
agreement or agreements between Executive and United HealthCare or any
subsidiary or affiliate of United HealthCare.
1. EMPLOYMENT AND DUTIES.
A. EMPLOYMENT. United HealthCare hereby directly or through its
subsidiaries employs Executive. Executive accepts such employment on
the terms and conditions set forth in this Agreement and, except as
specifically superseded by this Agreement, subject to all of United
HealthCare's policies and procedures in regard to its employees.
B. DUTIES. Executive shall serve in a senior management capacity,
reporting directly to United HealthCare's Chief Executive Officer and
shall have such responsibilities as are appropriate for a company's most
senior executive officers and as are established by United HealthCare's
Chief Executive Officer. As part of his duties initially, Executive
shall serve as the head of the health plans division of United
HealthCare and, as such, shall perform such duties as are commonly
associated with such position or as are reasonably assigned to Executive
by the Chief Executive Officer from time to time. Executive's
responsibilities as head of the health plan division shall include
oversight of the health plan operations and leadership development.
Executive shall also participate in any Senior Executive Management
Committee that United HealthCare has from time to time. Executive
agrees to devote substantially all of his business time and energy to
the performance of his duties in a diligent and proper manner.
C. RESIDENCE. Notwithstanding Section 1B, United HealthCare
acknowledges that Executive has advised United HealthCare that
Executive is, and intends to remain, a resident of the State of
Florida. As such, Executive will work out of Florida, devoting
such time in Minnesota as his position reasonably necessitates.
United HealthCare agrees that such residence and arrangement, of
itself, is not inconsistent with Executive's performance of his
obligations under Section 1B.
2. COMPENSATION.
A. BASE SALARY. Executive shall initially be paid a base annual
salary in the amount of $525,000 payable bi-weekly, less all applicable
withholdings and deductions. Executive shall receive a periodic
performance review from his supervisor and consideration for an increase
of such base salary.
B. BONUS AND STOCK PLANS. Executive shall be eligible to participate in
United HealthCare's incentive compensation plans and its stock option and
grant plans, in accordance with the terms and conditions of those plans and
applicable laws and regulations.
C. EMPLOYEE BENEFITS. The Executive shall be eligible to participate in
United HealthCare's other employee benefit plans, including without
limitation, any life, health, dental, short-term and long-term disability
insurance coverages and any retirement plans, in accordance with the terms
and conditions of those plans and applicable laws and regulations.
D. VACATION; ILLNESS. Executive shall be entitled to paid vacation and
sick leave each year in accordance with United HealthCare's then-current
policies.
3. TERM AND TERMINATION.
A. TERM. The term of this Agreement shall begin on January 1, 1998 (the
"Effective Date") and shall continue until December 31, 1998 unless earlier
terminated as set forth in Section 3B. This Agreement shall automatically
renew for succeeding one-year periods, unless either Executive or United
HealthCare notifies the other of his or its intention not to renew this
Agreement at least thirty days prior to December 31, 1998 or any succeeding
December 31.
B. TERMINATION OF AGREEMENT AND/OR EMPLOYMENT.
1. This Agreement may be terminated at any time by the mutual
written agreement of the parties.
2. United HealthCare may terminate Executive's employment or
terminate this Agreement by giving written notice of termination which
is received by Executive at least 30 days before the effective date of
termination of employment or of this Agreement, as the case may be.
3. Executive may terminate his employment by giving written notice
of termination of employment which is received by United HealthCare at
least 30 days before the effective date of termination of employment.
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4. This Agreement shall automatically terminate on the effective
date of the termination of Executive's employment or on the date of
Executive's death, retirement or permanent and total disability which
renders Executive incapable of performing Executive's duties. United
HealthCare has the sole discretion to determine whether Executive is
permanently or totally disabled with the meaning of this Section 3B4.
X. XXXXXXXXX EVENTS AND COMPENSATION. In the event (i) Executive's
employment with United HealthCare is terminated by United HealthCare
pursuant to Section 3B2 and without Cause, (ii) a Change in Employment
occurs which Executive elects to treat as a termination of Executive's
employment under Section 3B2, or (iii) this Agreement does not renew
(whether by notice from United HealthCare, Executive, or otherwise) ((i),
(ii), and (iii) are collectively referred to as the "Severance Events"),
then:
1. For 12 months following the effective date of the termination
of Executive's employment ("Severance Period"), Executive shall
receive biweekly payments equal to 1/26 of (a) the greater of
Executive's annualized base salary at the effective date of
termination or Executive's average annualized base salary during
the two years preceding the effective date of termination, less all
applicable withholdings or deductions required by law or
Executive's elections under any employee benefit plans which
Executive continues to participate in under Section 3C2, plus (b)
one-half of the total of any bonus or incentive compensation (but
not including any special or one-time bonus or incentive
compensation payments) paid or payable with respect to Executive's
performance for 1997 and 1998 or, if this Agreement is renewed
beyond December 31, 1998, paid or payable with respect to
Executive's performance for the two years most immediately
preceding the effective date of the termination ((a) and (b) are
collectively referred to as the "Severance Compensation").
2. Until the later of such time as Executive or Executive's
spouse becomes eligible for Medicare, United HealthCare shall make
health care coverage available to Executive at United HealthCare's
group rates. Executive shall be responsible for the premiums
payable with respect to such health care coverage.
3. Any unvested stock options or grants awarded Executive under any
of United HealthCare's stock option or grant plans shall continue to
vest for the Severance Period. Such options or grants shall vest (a)
for options or grants made before July 1, 1996, at a rate of at least
20% of the total number of shares covered by each such option or grant
on the anniversary date of the option or grant and (b) for options or
grants made after July 1, 1996, at a rate of at least 25% of the total
number of shares covered by each such option or grant on the
anniversary date of the option or grant.
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The payments and benefits to Executive under this Section 3C shall be
the sole liability of United HealthCare to Executive in the event of a
Severance Event and shall replace and be in lieu of any payments or
benefits which otherwise might be owed by United HealthCare under any
other severance plan or program and such payments and benefits may be
conditioned by United HealthCare upon receipt of a release of claims
from Executive. Solely for purposes of stock options and grants, the
date of termination of employment shall be the last day of the
Severance Period. Executive shall have three years from his last date
of employment to exercise then vested options and, in regard to options
which vest under Section 3C3, three years to exercise those options
after the date they vest.
D. DEFINITIONS AND PROCEDURE.
1. For purposes of this Agreement, "Cause" shall mean the (a) the
repeated material failure or refusal of Executive to follow the
reasonable directions of United HealthCare's Board of Directors or
Executive's supervisor or to perform any duties reasonably required
by United HealthCare, (b) a repeated material failure to adequately
meet reasonable performance expectations, (c) material violations
of United HealthCare's Code of Conduct or (d) the commission of any
criminal act or act of fraud or dishonesty by Executive in
connection with Executive's employment by United HealthCare. In
the event that United HealthCare terminates Executive's employment
under subsections (a) or (b) of this Cause definition, United
HealthCare shall specify in the notice of termination the basis for
Cause. If the Cause described in the notice is cured to United
HealthCare's reasonable satisfaction prior to the end of the 30 day
notice period, the notice of termination of employment shall be
withdrawn.
2. For purposes of this Agreement a "Change in Employment" shall
be deemed to have occurred (a) if (i) Executive's duties are
materially adversely changed without Executive's prior consent or
(ii) Executive's salary or benefits are reduced other than as a
general reduction of salaries and benefits by United HealthCare or
(iii) the location of performance of most of Executive's duties is
moved from the general geographic location in which Executive
performed such duties prior to the move; (iv) Executive's reporting
relationship is changed to other than United HealthCare's Chief
Executive Officer or (v) without terminating Executive's employment
this Agreement is terminated by United HealthCare pursuant to
Section 3B2, and (b) if in each case under subsections (a) (i),
(ii), (iii), (iv) and (v) in the period beginning 60 days before
the time the Change in Employment occurs, Cause does not exist or
if Cause does exist United HealthCare has not given Executive
written notice that Cause exists. Executive may elect to treat a
Change in Employment as a termination of employment by United
HealthCare. To do so Executive shall send written notice of such
election
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to United HealthCare within 60 days after the date Executive
receives notice from United HealthCare or otherwise is definitively
informed of the events constituting the Change in Employment. No
Change in Employment shall be deemed to have occurred if Executive
fails to send the notice of election within the 60 day period.
Executive's failure to treat a particular Change in Employment as a
termination of employment shall not preclude Executive from treating
a subsequent Change in Employment as a termination of employment.
The effective date of a Change in Employment termination shall be
the date 30 days after United HealthCare receives the written notice
of election.
4. PROPERTY RIGHTS, CONFIDENTIALITY, NON-SOLICIT AND NON-COMPETE PROVISIONS.
A. UNITED HEALTHCARE'S PROPERTY.
1. Executive shall promptly disclose to United HealthCare in
writing all inventions, discoveries and works of authorship,
whether or not patentable or copyrightable, which are conceived,
made, discovered, written or created by Executive alone or jointly
with another person, group or entity, whether during the normal
hours of employment at United HealthCare or on Executive's own
time, during the term of this Agreement. Executive assigns all
rights to all such inventions and works of authorship to United
HealthCare. Executive shall give United HealthCare any the
assistance it reasonably requires in order for United HealthCare to
perfect, protect, and use its rights to inventions and works of
authorship.
This provision shall not apply to an invention for which no equipment,
supplies, facility or trade secret information of United HealthCare
was used and which was developed entirely on the Executive's own
time and which (1) does not relate to the business of United
HealthCare or to United HealthCare's anticipated research or
development, or (2) does not result from any work performed by the
Executive for United HealthCare.
2. Executive shall not remove any records, documents, or any other
tangible items (excluding Executive's personal property) from the
premises of United HealthCare in either original or duplicate form,
except as is needed in the ordinary course of conducting business for
United HealthCare.
3. Executive shall immediately deliver to United HealthCare, upon
termination of employment with United HealthCare, or at any other
time upon United HealthCare's request, any property, records,
documents, and other tangible items (excluding Executive's personal
property) in Executive's possession or control, including data
incorporated in word processing, computer and other data storage
media, and all copies of such
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records, documents and information, including all Confidential
Information, as defined below.
B. CONFIDENTIAL INFORMATION. During the course of his
employment Executive has and will develop, become aware of and
accumulate expertise, knowledge and information regarding United
HealthCare's organization, strategies, business and operations and
United HealthCare's past, current or potential customers and
suppliers. United HealthCare considers such expertise, knowledge
and information to be valuable, confidential and proprietary and it
shall be considered Confidential Information for purposes of this
Agreement. During this Agreement and at all times thereafter
Executive shall not use such Confidential Information or disclose
it to other persons or entities except as is necessary for the
performance of Executive's duties for United HealthCare or as has
been expressly permitted in writing by United HealthCare.
C. NON-SOLICITATION. During (i) the term of this Agreement, (ii)
any period for which Executive is receiving payments under Section
3C of this Agreement, (iii) any period following the termination or
expiration of this Agreement during which Executive remains
employed by United HealthCare and (iv) for a period of one year
after the last day of the latest of any period described in (i),
(ii) or (iii), Executive shall not (y) directly or indirectly
attempt to hire away any then-current employee of United HealthCare
or a subsidiary of United HealthCare or to persuade any such
employee to leave employment with United HealthCare, or (z)
directly or indirectly solicit, divert, or take away, or attempt to
solicit, divert, or take away, the business of any person,
partnership, company or corporation with whom United HealthCare
(including any subsidiary or affiliated company in which United
HealthCare has a more than 20% equity interest) has established or
is actively seeking to establish a business or customer
relationship.
D. NON-COMPETITION. During (i) the term of this Agreement, (ii) any
period for which Executive is receiving payments under Section 3C
of this Agreement, and (iii) any period following the termination
or expiration of this Agreement during which Executive remains
employed by United HealthCare, Executive shall not, without United
HealthCare's prior written consent, engage or participate, either
individually or as an employee, consultant or principal, partner,
agent, trustee, officer or director of a corporation, partnership
or other business entity, in any business in which United
HealthCare (including any subsidiary or affiliated company in which
United HealthCare has a more than 20% equity interest) is engaged.
In the event that Executive elects to terminate Executive's
employment pursuant to Section 3B3, United HealthCare may elect to
have the provisions of this Section 4D be in effect for one year
following the effective date of such resignation if during that one
year period United HealthCare pays Executive biweekly payments
equal to 1/26 of the Severance Compensation and if United
HealthCare agrees to continue to vest Executive's Uunvested stock
options in accordance with Section 3C3 hereof. United
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HealthCare must send written notice of such election within 10 days
after it receives written notice of the termination of employment.
5. MISCELLANEOUS.
A. ASSIGNMENT. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their successors and assigns, but may not be
assigned by either party without the prior written consent of the other
party, except that United HealthCare in its sole discretion may assign this
Agreement to an entity controlled by United HealthCare at the time of the
assignment. If United HealthCare subsequently loses or gives up control of
the entity to which this Agreement is assigned, such entity shall become
United HealthCare for all purposes under this Agreement, beginning on the
date on which United HealthCare loses or gives up control of the entity.
Any successor to United HealthCare shall be deemed to be United HealthCare
for all purposes of this Agreement.
B. NOTICES. All notices under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered by hand or mailed
by registered or certified mail, return receipt requested, postage
prepaid, to the party to receive the same at the address set forth below
or at such other address as may have been furnished by proper notice.
United HealthCare: 300 Opus Center
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Vice President Human Resources
Executive: Xxxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
C. ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to its subject matter and may be amended or
modified only by a subsequent written amendment executed by the parties.
This Agreement replaces and supersedes any and all prior employment or
employment related agreements and understandings, including any letters
or memos which may have been construed as agreements, between the
Executive and United HealthCare or any of its subsidiaries and
affiliated companies.
D. CHOICE OF LAW. This Agreement shall be construed and interpreted
under the applicable laws and decisions of the State of Minnesota.
E. WAIVERS. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy under this Agreement shall operate
as a waiver;
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nor shall any single or partial exercise of any right or remedy preclude
any other or further exercise of any right or remedy.
F. ADEQUACY OF CONSIDERATION. Executive acknowledges and agrees that
he/she has received adequate consideration from United HealthCare to enter
into this Agreement.
G. DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between the
parties relating to this Agreement or to Executive's employment by
United HealthCare shall be resolved by binding arbitration pursuant to
the Rules of the American Arbitration Association. In no event may the
arbitration be initiated more than one year after the date one party
first gave written notice of the dispute to the other party. The
arbitrators shall not ignore or vary the terms of this Agreement and
shall be bound by and apply controlling law, but may not in any case
award any punitive or exemplary damages. The parties acknowledge that
Executive's failure to comply with the Confidentiality, Non-Solicit and
Non-Compete provisions of this Agreement will cause immediate and
irreparable injury to United HealthCare and that therefore the
arbitrators, or a court of competent jurisdiction if an arbitration
panel cannot be immediately convened, will be empowered to provide
injunctive relief, including temporary or preliminary relief, to
restrain any such failure to comply.
H. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer or be
deemed or construed to confer any rights or benefits upon any person other
than the parties.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE
ENFORCED BY THE PARTIES.
UNITED HEALTHCARE CORPORATION
By /s/ Xxxxxxx X. XxXxxxx /s/ Xxxxxxx X. Xxxxx
------------------------- --------------------------
Executive
Date December 18, 1997 Date /s/ December 18, 1997
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