EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
This Agreement, effective as of October 16, 1998 (the "Effective
Date"), is made by and between Xxxx X. Xxxx ("Executive") and United
HealthCare Services, Inc. ("United HealthCare") for the purpose of setting
forth the terms and conditions of Executive's employment by United
HealthCare, or an affiliate or subsidiary of 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. Unless the context otherwise
requires, when used in this Agreement "United HealthCare" includes any entity
affiliated with United HealthCare.
WHEREAS, as additional consideration for entering into this Agreement
Executive shall receive, upon execution of this Agreement, a nonqualified
stock option to purchase 40,000 shares of United HealthCare Corporation
("UHC") common stock with a grant date the same as the Effective Date
pursuant to the terms of the UHC Amended and Restated 1991 Stock and
Incentive Plan.
WHEREAS, Executive and United HealthCare desire to enter into this
Agreement, which shall supersede any and all other prior employment-related
agreements between Executive and United HealthCare.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained and intending to be legally bound hereby, the
parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES; TERMINATION OF PRIOR AGREEMENTS.
A. EMPLOYMENT. United HealthCare hereby employs Executive, either
directly or through an affiliate or subsidiary of United HealthCare, and
Executive hereby accepts such employment on the terms and conditions set
forth in this Agreement. Except as specifically superseded by this
Agreement, Executive's employment hereunder shall be subject to all of
United HealthCare's policies and procedures in regard to its employees.
Executive's employment hereunder shall begin on the Effective Date and
shall continue until terminated as set forth in Section 3 hereof.
B. DUTIES. Executive shall initially hold the executive level position
of CEO, Ovations and perform the duties associated therewith. Executive
shall perform such other executive level responsibilities as are
reasonably assigned Executive from time to time. Executive agrees to
devote substantially all of Executive's business time and energy to the
performance of Executive's duties in a diligent and proper manner.
C. TERMINATION OF PRIOR AGREEMENTS. As of the Effective Date all other
prior employment related agreements between Executive and United
HealthCare will terminate in their entirety and no longer be of any force
or effect.
2. COMPENSATION.
A. BASE SALARY. Executive shall initially be paid a base annual salary,
payable biweekly, less all applicable withholdings and deductions (the
"Initial Base Salary"). Executive shall receive a periodic performance
review and consideration for an increase in the Initial Base Salary.
B. BONUS AND STOCK PLANS. Executive shall be eligible to participate in
the incentive compensation plans and the stock option and grant plans
maintained by United HealthCare or an affiliate or subsidiary of United
HealthCare, in the sole discretion of United HealthCare and in accordance
with the terms and conditions of those plans and applicable laws and
regulations.
C. EMPLOYEE BENEFITS. Executive shall be eligible to participate in the
employee benefit plans maintained by either United HealthCare or an
affiliate or subsidiary of United HealthCare, including without
limitation, any life, health, dental, short-term and long-term disability
insurance coverages and any retirement plans, in the sole discretion of
United HealthCare and in accordance with the terms and conditions of
those plans and applicable laws and regulations.
D. VACATION; ILLNESS. Executive shall be eligible for paid vacation and
sick leave each year in accordance with the then-current policies of
either United HealthCare or an affiliate or subsidiary of United
HealthCare, in the sole discretion of United HealthCare and in accordance
with the terms and conditions of those plans and applicable laws and
regulations.
3. TERM AND TERMINATION.
A. TERM. The term of this Agreement shall begin on the Effective Date
and shall continue until terminated as set forth in Section 3B.
B. TERMINATION OF AGREEMENT.
1. BY MUTUAL AGREEMENT. This Agreement and Executive's employment
hereunder may be terminated at any time by the mutual written
agreement of the parties.
2. BY UNITED HEALTHCARE. United HealthCare may terminate this
Agreement and Executive's employment hereunder on 30 days' written
notice.
3. BY EXECUTIVE. Executive may terminate this Agreement and
Executive's employment hereunder on 30 days' written notice.
4. DEATH, DISABILITY, ETC. This Agreement and Executive's
employment by United HealthCare shall terminate immediately upon
Executive's death. This Agreement
and Executive's employment hereunder shall automatically terminate in the
event of a permanent and total disability which renders Executive incapable
of performing Executive's duties, with or without reasonable accommodation.
United HealthCare has the sole discretion to determine whether Executive is
permanently or totally disabled with the meaning of this Section 3B4, and
the effective date on which Executive was rendered so disabled.
C. EMPLOYEE BENEFITS. On the effective date of the termination of this
Agreement and Executive's employment by United HealthCare, Executive shall
cease to be eligible for all employee benefit plans maintained by United
HealthCare, except as required by federal or state continuation of coverage
laws ("COBRA Benefits"). If Executive elects COBRA Benefits, Executive shall
pay the entire cost of such benefits either through after-tax payroll
deductions from the cash component of any severance compensation Executive
receives or directly if Executive does not receive such severance
compensation or if such severance compensation ceases.
X. XXXXXXXXX EVENTS AND BENEFITS. If a Severance Event, as hereinafter
defined, occurs, Executive shall receive the severance benefits set forth in
this Section 3D for a period of 12 months from the effective date of the
applicable Severance Event (the "Severance Period"). For purposes of this
Agreement a Severance Event shall occur if and when:
(i) United HealthCare (a) terminates this Agreement and Executive's
employment without Cause, as hereinafter defined, or (b) terminates
this Agreement without terminating Executive's employment and Executive
elects to treat such termination of this Agreement as a Change in
Employment, as hereinafter defined (collectively a "Termination
without Cause"), or
(ii) Within two years following a Change in Control, as hereinafter
defined, either (a) United HealthCare terminates this Agreement and
Executive's employment without Cause, or (b) a Change in Employment
occurs and Executive elects to treat such Change in Employment as a
termination of Executive's employment (collectively a "Termination
following a Change in Control").
1. SEVERANCE COMPENSATION. Executive shall receive the following
severance compensation (the "Severance Compensation"):
a) TERMINATION WITHOUT CAUSE. Subject to Section 3D(1)(b) below,
upon a Termination without Cause Executive shall receive biweekly
payments equal to 1/26 of the sum of (1) two times Executive's
annualized base salary as of the date of the Severance Event, less all
applicable withholdings or deductions required by law and Executive's
COBRA Benefit payments, if any, plus (2) one-half of the total of any
bonus or incentive compensation paid or payable to Executive for the
two most recent calendar years (excluding any special or one-time bonus
or incentive compensation payments), or if Executive has been eligible
for such bonus
or incentive compensation payments for less than two such periods, the
last such payment paid or payable to Executive (excluding any special
or one-time bonus or incentive compensation payments).
b) TERMINATION FOLLOWING A CHANGE IN CONTROL. Upon a Termination
following a Change in Control, Executive shall receive biweekly
payments equal to 1/26 of the sum of (1) three times Executive's
highest annualized base salary during the 2 year period immediately
preceding the Severance Event, less all applicable withholdings or
deductions required by law and Executive's COBRA Benefit payments, if
any, plus (2) the greater of (i) all bonuses that would be payable to
Executive under any incentive compensation plans in which Executive
then participates at Executive's then-current target level, or (ii)
one-half of the total of any bonus or incentive compensation paid or
payable to Executive for the two most recent calendar years (excluding
any special or one-time bonus or incentive compensation payments), or
if Executive has been eligible for such bonus or incentive compensation
payments for less than two such periods, the last such payment paid or
payable to Executive (excluding any special or one-time bonus or
incentive compensation payments.
2. CASH PAYMENT. Executive shall receive a one-time cash payment within
a reasonable time following commencement of the Severance Period in an
amount equal to the portion of the premiums that United HealthCare, or its
affiliate or subsidiary, as applicable, subsidizes for employee-only health,
dental and group term life benefit coverages (the "Cash Payment"). The Cash
Payment shall cover the Severance Period and shall be determined as of the
effective date of the applicable Severance Event.
3. JOB SEARCH FEES. For a period not to exceed the Severance Period,
United HealthCare shall pay to an outplacement firm selected by United
HealthCare an amount deemed reasonable by United HealthCare for
outplacement and job search services for Executive.
4. EXCISE TAX PAYMENT. If any portion of the Severance Compensation
payable upon a Termination following a Change in Control constitutes an
Excess Parachute Payment, as hereinafter defined, such that an Excise Tax,
as hereinafter defined, is due, Executive shall receive a one-time cash
payment in an amount sufficient to cover (a) the full cost of the Excise
Tax plus (b) Executive's federal, state and city income, employment and
Excise Tax on this one-time cash payment and on all such iterative payments
so that Executive is made entirely whole for the impact of the Excise Tax
(collectively the "Gross-Up Payment"). United HealthCare shall calculate
these amounts on a timely and accurate basis, and for this purpose Executive
shall be deemed to be in the highest marginal rate of federal, state and
city taxes. The Gross-Up Payment shall be made within 30 days following the
effective date of Executive's employment termination. For purposes of this
Agreement the term "Excess Parachute Payment" shall have the
meaning set forth in Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). For purposes of this Agreement the
term "Excise Tax" shall mean the tax imposed on an Excess Parachute
Payment pursuant to Sections 280G and 4999 of the Code.
This Section 3D shall be the sole liability of United HealthCare to Executive
upon the termination of this Agreement and Executive's employment hereunder,
and shall replace and be in lieu of any payments or benefits which otherwise
might be owed Executive under any other severance plan or program maintained
by United HealthCare. Such compensation and benefits shall be conditioned on
receipt by United HealthCare of a separation agreement and a release of
claims by Executive on terms and conditions acceptable to United HealthCare
in its sole discretion.
E. DEFINITIONS AND PROCEDURES.
1. CAUSE. For purposes of this Agreement "Cause" shall mean (a)
the refusal of Executive to follow the reasonable direction of the
Board of Directors of United HealthCare or Executive's supervisor
or to perform any duties reasonably required on material matters by
United HealthCare, (b) material violations of United HealthCare's
Code of Conduct or (c) the commission of any criminal act or act of
fraud or dishonesty by Executive in connection with Executive's
employment by United HealthCare. Prior to the termination of
Executive's employment under subsection (a) of this definition of
Cause, United HealthCare shall provide Executive with a 30 day
notice specifying 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, Executive's
employment hereunder shall not be terminated on that basis.
2. CHANGE IN CONTROL. For purposes of this Agreement "Change in
Control" shall mean (a) the acquisition by any person, entity or
"group," within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act"), other than
United HealthCare or any employee benefit plan of United
HealthCare, of beneficial ownership (as defined in the Exchange
Act) of 20% or more of the common stock of UHC or the combined
voting power of UHC's then-outstanding voting securities in a
transaction or series of transactions not approved in advanced by a
vote of at least three-quarters of the directors of UHC; (b) a
change in 50% or more of the directors of UHC in any 12 month
period; (c) the approval by the shareholders of UHC of a
reorganization, merger, consolidation, liquidation or dissolution
of UHC or of the sale (in one transaction or a series of related
transactions) of all or substantially all of the assets of UHC
other than a reorganization, merger, consolidation, liquidation,
dissolution or sale approved in advance by a vote of at least
three-quarters of the directors; (d) the first purchase under any
tender offer or exchange offer (other than an offer by UHC)
pursuant to which shares of UHC common stock are purchased; or (e)
at least a majority of the directors of UHC determine in their sole
discretion that there has been a change of control of UHC.
3. CHANGE IN EMPLOYMENT. For purposes of this Agreement a "Change
in Employment" shall be deemed to have occurred (a) if (i)
Executive's duties are materially and adversely changed without
Executive's prior consent, (ii) Executive's salary or benefits are
reduced other than as a general reduction of salaries and benefits
by United HealthCare, (iii) without terminating Executive's
employment United HealthCare terminates this Agreement, or (iv) the
geographic location for the performance of Executive's duties
hereunder is moved more than 50 miles from the geographic location
at the Effective Date without Executive's prior consent, and (b) if
in each case under subsections (a) (i), (ii), (iii) and (iv), in
the period beginning 90 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. Notwithstanding the foregoing, an isolated, insubstantial
or inadvertent action by United HealthCare, which is remedied by
United HealthCare within 30 days after receipt of notice thereof by
Executive, shall not constitute a Change in Employment. Executive
may elect to treat a Change in Employment as a termination of this
Agreement and Executive's employment hereunder. To do so Executive
shall send written notice of such election to United HealthCare
within 90 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 90 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-DISPARAGEMENT, NON-SOLICIT AND
NON-COMPETE PROVISIONS.
A. UNITED HEALTHCARE'S PROPERTY.
1. ASSIGNMENT OF PROPERTY RIGHTS. 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 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 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. NO REMOVAL OF PROPERTY. 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. RETURN OF PROPERTY. 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
records, documents and information, including all Confidential
Information, as defined below.
B. CONFIDENTIAL INFORMATION. During the course of employment
Executive 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. This Section 4B
shall survive the termination of this Agreement.
C. NON-DISPARAGEMENT. Executive agrees that he will not criticize,
make any negative comments or otherwise disparage or put in disrepute
United HealthCare, or those associated with United HealthCare, in any
way, whether orally, in writing or otherwise, directly or by
implication in communication with any person, including but not limited
to customers or agents of United HealthCare. This Section 4C shall
survive the termination of this Agreement.
D. NON-SOLICITATION. During (i) the term of this Agreement, (ii) the
Severance Period or any period in which Executive receives severance
compensation pursuant to United HealthCare' election under Section 4E,
as applicable (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.
This Section 4D shall survive the termination of this Agreement.
E. NON-COMPETITION. During (i) the term of this Agreement, (ii) the
Severance Period or any period in which Executive receives severance
compensation pursuant to United HealthCare's election under this
Section 4E, as applicable, 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 more than a 20% equity interest) is engaged. If
Executive terminates this Agreement, and as of such termination or
within 90 days of such termination Executive also terminates
Executive's employment by United HealthCare, United HealthCare may elect
to have the provisions of this Section 4E be in effect for up to 24
months following the effective date of Executive's employment
termination if, during the period up to 24 months specified by United
HealthCare, United HealthCare pays Executive severance compensation
equal to biweekly payments of 1/26 of the Severance Compensation and the
Cash Payment. United HealthCare must send written notice of such
election within 10 days after it receives written notice of
Executive's termination of employment. This Section 4E shall survive
the termination of this Agreement.
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: General Counsel
Executive:
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.
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; 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
Executive 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
United HealthCare' Employment Arbitration Policy. The arbitrators shall
not ignore or vary the terms of this Agreement and shall be bound by and
apply controlling law. The parties acknowledge that Executive's failure
to comply with the Confidential Information, Non-Solicitation and
Non-Competition 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.
IN WITNESS WHEREOF, this Agreement has been signed by the parties
hereto as of the Effective Date set forth above.
United HealthCare Services, Inc. Executive
By /s/ Xxxxxx X. Xxxxxx /s/ Xxxx X. Xxxx
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Its SRVPHR
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