CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Consulting Agreement"), is made and
entered into this 2 day of June, 1997, by and between PHYSICIAN CORPORATION OF
AMERICA, a Delaware corporation (the "Company") and Xxxxx Xxxxxxxxxx (the
"Consultant" or the "Employee").
WHEREAS, the Consultant currently serves as President and Chief Operating
Officer of the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") of even date herewith, among Humana Inc. (the "Purchaser"), HUMNOV,
Inc. ("Sub") and the Company, Sub will merge with and into the Company and the
Company will become a subsidiary of Purchaser (the "Merger");
WHEREAS, the Company seeks to engage the services of the Consultant
following the Merger; and
WHEREAS, the Consultant and the Company wish to establish their respective
rights and duties and the terms and conditions of this Consulting Agreement, as
set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
IT IS AGREED AS FOLLOWS:
1. CONTINGENT NATURE OF AGREEMENT: TERM OF AGREEMENT. This Consulting
Agreement is contingent upon, and shall only become effective upon, (i) the
occurrence of the Merger and (ii) the Consultant remaining a full-time employee
of the Company until the occurrence of the Merger. If these contingencies shall
not occur, this Agreement shall be void and of no effect. The term of this
Consulting Agreement shall commence on the Effective Date (as defined in the
Merger Agreement) and shall end on the first anniversary of such date. The term
of this Consulting Agreement shall cease in the event of a Performance Breach
(as defined in Section 3) or non-compliance by the Consultant with Sections 4 or
5 hereof or in the event that the Consultant shall terminate this Consulting
Agreement by giving written notice of such termination pursuant to Section 11 at
least 30 days before the effective date of such termination. In the event of
such cessation of the term of this Consulting Agreement, the Company and the
Consultant shall have no further obligation hereunder, except as provided in
Sections 2, 4 and 5.
1
2. COMPENSATION. In consideration of the services to be performed by the
Consultant pursuant to the terms of Section 3 of this Consulting Agreement, the
Consultant shall be paid a total of $652,117, payable in equal monthly
installments on the Effective Date and the same day on each of the eleven months
thereafter (or if there is no corresponding day in any such month, on the last
day of such month) (collectively, the "Additional Payments"). In the event of
early expiration of the term of this Consulting Agreement due to the death or
disability of the Consultant, and absent a Performance Breach or non-compliance
with Section 4 or 5 hereof, the Company shall remain obligated to pay the
Additional Payments. For purposes of this Consulting Agreement, "disability"
shall mean mental or physical impairment by a physician mutually acceptable to
the Company and the Consultant. In the event of early expiration of this
Consulting Agreement due to a Performance Breach or in the case of
non-compliance with Section 4 or 5 hereof, the Company shall not be obligated to
pay any of the remaining Additional Payments.
3. PERFORMANCE OF SERVICES OF THE CONSULTANT. The Consultant is retained
and shall consult with the Company on an as needed basis relating to the
transition resulting from the Merger and to the degree reasonably deemed
appropriate by the Company with respect to its business matters, concerns and
affairs.
The Consultant hereby agrees to perform his services in accordance with
applicable law, and to use reasonable efforts in the performance of services
hereunder. The Consultant shall have reasonable discretion to choose when such
services will be rendered.
The Company acknowledges that the requirement of the Consultant to perform
services under this Agreement will not prevent the Consultant from performing
full time services to a third party, subject to Section 5 of this Agreement. In
requesting services hereunder, the Company shall take into account the immediate
preceding sentence. To the extent reasonably practicable, the Consultant shall
be entitled to provide services hereunder by telephone or fax. Services to be
performed hereunder shall be rendered in the Miami, Florida area, to the extent
reasonably practicable. The Company shall reimburse the Consultant for
pre-approved out-of-pocket expenses incurred in connection with the rendering of
services hereunder.
In the event that the Consultant shall fail, in any material respect, to
perform his services hereunder in accordance with this Section 3, and the
Company shall have given at least 30 days' written notice of such nonperformance
and the Consultant shall have remained in breach of this Consulting Agreement at
the end of such 30 day period (a "Performance Breach"), then the Company may
terminate this Consulting Agreement without further notice.
4. CONFIDENTIAL SERVICES. The Consultant acknowledges that he will have
access to confidential information about the Company and that he will have
access
2
to trade secrets and information acquired by the Company at the expense of the
Company for use in its business. The Consultant has substantial experience in
and possesses special, unique and extraordinary skills and knowledge in the
field of business of Company. The Consultant's services to the Company are
special, unique and extraordinary. The Consultant hereby agrees that, except in
the performance of services hereunder, he will not utilize any trade secrets or
any other information of a confidential or proprietary nature, attained in
conjunction with his past employment with the Company or through the services
contemplated under this Consulting Agreement, without the prior written consent
of the Chief Executive Officer of the Company, unless such knowledge or specific
information is clearly in the public domain or has been disclosed to the public
by the Company.
5. COVENANT NOT TO COMPETE. The Consultant has substantial experience in
the Company's industry, and possesses special, unique and extraordinary skills
and knowledge. The Consultant's advisory and operational services to the
Company are special, unique and extraordinary. Accordingly, by execution of
this Consulting Agreement:
a) DURATION OF COVENANT. The Consultant agrees that during the one
year term of this Consulting Agreement (without reference to any possible
earlier termination of this Consulting Agreement and without regard to actual
earlier termination of this Consulting Agreement), the Consultant shall not
violate the provisions of subparagraph (b) below.
b) PROHIBITED COMPETITIVE ACTIVITIES. During the time period
specified in subparagraph (a), the Consultant shall not:
(i) Directly or indirectly own, operate, manage, consult
with in a manner facilitating competition, control, participate in the
management or control of, be employed by, maintain or continue any interest
whatsoever in any HMO or similar managed care business in the Commonwealth of
Puerto Rico (other than an interest not exceeding 5% of the outstanding common
stock of any entity whose common stock is listed under Sections 12(b) or 12(g)
of the Securities Exchange Act of 1934, as amended);
(ii) Directly or indirectly induce or attempt to influence
any employee of the Company to terminate his employment with the Company or
accept employment by another person or entity; or
(iii) Directly or indirectly induce or attempt to influence
any customer or prospective customer of the Company to discontinue doing
business with the Company.
(c) NEED FOR LEGAL REMEDIES. The Consultant expresses, agrees and
acknowledges that this Covenant Not to Compete (herein so called) is necessary
for the Company's business and the Consultant's position with, and services for,
the Company. Further, the Consultant acknowledges that, in the event of his
breach of Covenant Not to
3
Compete, money damages will not sufficiently compensate the Company for its
injury caused thereby, and the Consultant accordingly agrees that in addition to
such money damages the Consultant may be restrained and enjoined from any
continuing breach of this Covenant Not to Compete. The Consultant acknowledges
that any breach of this Covenant Not to Compete would result in irreparable
damage to the Company.
(d) ACKNOWLEDGMENTS BY CONSULTANT. The Consultant expressly agrees
and acknowledges as follows:
(i) This Covenant Not to Compete is reasonable as to time
and geographical area and does not place any unreasonable burden upon him;
(ii) The general public will not be harmed as a result of
enforcement of this Covenant Not to Compete;
(iii) The Consultant has requested or has had the opportunity
to request that his personal legal counsel review this Covenant Not to Compete;
and
(iv) The Consultant understands and hereby agrees to each
and every term and condition of this Covenant Not to Compete.
6. ASSIGNMENT. The Company may assign (including by merger) this
Consulting Agreement and any rights and obligations hereunder to any affiliate
of Purchaser that is involved in the operation of the Company's business;
PROVIDED, HOWEVER, that such assignment shall not relieve the Company of its
obligations hereunder. The Consultant may not assign this Consulting Agreement
or any rights hereunder.
7. INDEPENDENT CONTRACTOR. In rendering his services, the Consultant
shall be acting as a private contractor and not as an employee of the Company.
The Company does not retain control of the manner in which the Consultant
performs his services under this Consulting Agreement. The Consultant shall not
be eligible to participate in any benefit plans, programs and compensation
practices of the Company and its affiliates by reason of this Consulting
Agreement or performance of the services contemplated hereunder, but nothing in
this Consulting Agreement shall be deemed to affect any entitlement to benefits
and compensation payable by reason of the Consultant's prior capacities as an
employee of the Company. The Consultant shall be responsible for all income and
other taxes on any compensation payable pursuant to this Consulting Agreement
and agrees to indemnify the Company and its affiliates on account of any claims
for any such taxes asserted against the Company or any of its affiliates.
8. SURVIVAL OF RIGHTS OR OBLIGATIONS. The expiration of this Consulting
Agreement shall not waive or release any rights or obligations of either party
that have accrued hereunder prior to such expiration.
4
9. AMENDMENT AND GOVERNING LAW. This Consulting Agreement contains the
entire agreement of the parties hereto, and it may only be amended by a writing
signed by the parties hereto and supersedes any agreement between the Company
and the Consultant relating to the rendering of consulting services (it being
understood that, to the extent that the Consultant is a party to any such
agreement with the Company that includes matters other than consulting
services, only the portions of such agreement relating to the rendering of
consulting services shall be superseded). This Consulting Agreement shall be
governed in all respects, whether as to validity, construction, capacity,
performance or otherwise, by the laws of the State of Delaware. Headings in
this Consulting Agreement are included solely for convenience and shall not
effect the interpretation of this Consulting Agreement.
10. GENERAL. This Consulting Agreement shall inure to the benefit of and
be binding upon the parties hereto, their executors, administrators, personal
representatives, heirs, successors and permitted assigns.
In the event that a court of competent jurisdiction determines any part of
this Consulting Agreement is in violation of any statute or public policy, then
only the portions of this Consulting Agreement which violate such statute or
public policy shall be stricken. All portions of this Consulting Agreement
which do not violate any statute or public policy shall continue in full force
and effect. Further, any court order striking any portion of this Consulting
Agreement shall modify the stricken terms as narrowly as possible to give as
much effect as possible to the intentions of the parties under this Consulting
Agreement.
Failure to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of such terms, covenant or
conditions, nor shall any waiver or relinquishment of, or failure to insist upon
strict compliance with, any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
11. NOTICE. Any notice or other communication required or permitted
pursuant to the terms of this Consulting Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
mail, first class, postage prepaid and registered with return receipt requested,
addressed to the intended recipient at his or its address set forth below and,
in the case of a notice or other communication to the Company, directed to the
attention of Xxxxxx X. Xxxxxxx, or to such other address as the intended
recipient may have theretofore furnished to the sender in writing in accordance
herewith, except that any notice of change of address is received, notices shall
be sent to the following addresses:
If to the Consultant:
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
5
If to the Company:
Physicians Corporation of America
c/o Humana Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
6
IN WITNESS WHEREFORE, the parties have executed this Consulting Agreement
on the day and year first written above.
PHYSICIAN CORPORATION OF AMERICA
By:
------------------------------------
---------------------------------------
Xxxxx Xxxxxxxxxx
7
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Consulting Agreement"), is made and
entered into this 2 day of June, 1997, by and between PHYSICIAN CORPORATION OF
AMERICA, a Delaware corporation (the "Company") and Xxxxxxxx X. Xxxxxxxx (the
"Consultant" or the "Employee").
WHEREAS, the Consultant currently serves as Senior Vice President and Chief
Financial Officer of the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") of even date herewith, among Humana Inc. (the "Purchaser"), HUMNOV,
Inc. ("Sub") and the Company, Sub will merge with and into the Company and the
Company will become a subsidiary of Purchaser (the "Merger");
WHEREAS, the Company seeks to engage the services of the Consultant
following the Merger; and
WHEREAS, the Consultant and the Company wish to establish their respective
rights and duties and the terms and conditions of this Consulting Agreement, as
set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
IT IS AGREED AS FOLLOWS:
1. CONTINGENT NATURE OF AGREEMENT: TERM OF AGREEMENT. This Consulting
Agreement is contingent upon, and shall only become effective upon, (i) the
occurrence of the Merger and (ii) the Consultant remaining a full-time employee
of the Company until the occurrence of the Merger. If these contingencies shall
not occur, this Agreement shall be void and of no effect. The term of this
Consulting Agreement shall commence on the Effective Date (as defined in the
Merger Agreement) and shall end on the first anniversary of such date. The term
of this Consulting Agreement shall cease in the event of a Performance Breach
(as defined in Section 3) or non-compliance by the Consultant with Sections 4 or
5 hereof or in the event that the Consultant shall terminate this Consulting
Agreement by giving written notice of such termination pursuant to Section 11 at
least 30 days before the effective date of such termination. In the event of
such cessation of the term of this Consulting Agreement, the Company and the
Consultant shall have no further obligation hereunder, except as provided in
Sections 2, 4 and 5.
2. COMPENSATION. In consideration of the services to be performed by the
Consultant pursuant to the terms of Section 3 of this Consulting Agreement, the
1
Consultant shall be paid a total of $415,655, payable in equal monthly
installments on the Effective Date and the same day on each of the eleven months
thereafter (or if there is no corresponding day in any such month, on the last
day of such month) (collectively, the "Additional Payments"). In the event of
early expiration of the term of this Consulting Agreement due to the death or
disability of the Consultant, and absent a Performance Breach or non-compliance
with Section 4 or 5 hereof, the Company shall remain obligated to pay the
Additional Payments. For purposes of this Consulting Agreement, "disability"
shall mean mental or physical impairment by a physician mutually acceptable to
the Company and the Consultant. In the event of early expiration of this
Consulting Agreement due to a Performance Breach or in the case of non-
compliance with Section 4 or 5 hereof, the Company shall not be obligated to pay
any of the remaining Additional Payments.
3. PERFORMANCE OF SERVICES OF THE CONSULTANT. The Consultant is retained
and shall consult with the Company on an as needed basis relating to the
transition resulting from the Merger and to the degree reasonably deemed
appropriate by the Company with respect to its business matters, concerns and
affairs.
The Consultant hereby agrees to perform his services in accordance with
applicable law, and to use reasonable efforts in the performance of services
hereunder. The Consultant shall have reasonable discretion to choose when such
services will be rendered.
The Company acknowledges that the requirement of the Consultant to perform
services under this Agreement will not prevent the Consultant from performing
full time services to a third party, subject to Section 5 of this Agreement. In
requesting services hereunder, the Company shall take into account the immediate
preceding sentence. To the extent reasonably practicable, the Consultant shall
be entitled to provide services hereunder by telephone or fax. Services to be
performed hereunder shall be rendered in the Miami, Florida area, to the extent
reasonably practicable. The Company shall reimburse the Consultant for
pre-approved out-of-pocket expenses incurred in connection with the rendering of
services hereunder.
In the event that the Consultant shall fail, in any material respect, to
perform his services hereunder in accordance with this Section 3, and the
Company shall have given at least 30 days' written notice of such nonperformance
and the Consultant shall have remained in breach of this Consulting Agreement at
the end of such 30 day period (a "Performance Breach"), then the Company may
terminate this Consulting Agreement without further notice.
4. CONFIDENTIAL SERVICES. The Consultant acknowledges that he will have
access to confidential information about the Company and that he will have
access to trade secrets and information acquired by the Company at the expense
of the Company for use in its business. The Consultant has substantial
experience in and possesses
2
special, unique and extraordinary skills and knowledge in the field of business
of Company. The Consultant's services to the Company are special, unique and
extraordinary. The Consultant hereby agrees that, except in the performance of
services hereunder, he will not utilize any trade secrets or any other
information of a confidential or proprietary nature, attained in conjunction
with his past employment with the Company or through the services contemplated
under this Consulting Agreement, without the prior written consent of the Chief
Executive Officer of the Company, unless such knowledge or specific information
is clearly in the public domain or has been disclosed to the public by the
Company.
5. COVENANT NOT TO COMPETE. The Consultant has substantial experience in
the Company's industry, and possesses special, unique and extraordinary skills
and knowledge. The Consultant's advisory and operational services to the
Company are special, unique and extraordinary. Accordingly, by execution of
this Consulting Agreement:
A. DURATION OF COVENANT. The Consultant agrees that during the one
year term of this Consulting Agreement (without reference to any possible
earlier termination of this Consulting Agreement and without regard to actual
earlier termination of this Consulting Agreement), the Consultant shall not
violate the provisions of subparagraph (b) below.
B. PROHIBITED COMPETITIVE ACTIVITIES. During the time period
specified in subparagraph (a), the Consultant shall not:
(i) Directly or indirectly own, operate, manage, consult
with in a manner facilitating competition, control, participate in the
management or control of, be employed by, maintain or continue any interest
whatsoever in any HMO or similar managed care business in the Commonwealth of
Puerto Rico (other than an interest not exceeding 5% of the outstanding common
stock of any entity whose common stock is listed under Sections 12(b) or 12(g)
of the Securities Exchange Act of 1934, as amended);
(ii) Directly or indirectly induce or attempt to influence
any employee of the Company to terminate his employment with the Company or
accept employment by another person or entity; or
(iii) Directly or indirectly induce or attempt to influence
any customer or prospective customer of the Company to discontinue doing
business with the Company.
(c) NEED FOR LEGAL REMEDIES. The Consultant expresses, agrees and
acknowledges that this Covenant Not to Compete (herein so called) is necessary
for the Company's business and the Consultant's position with, and services for,
the Company. Further, the Consultant acknowledges that, in the event of his
breach of Covenant Not to Compete, money damages will not sufficiently
compensate the Company for its injury caused thereby, and the Consultant
accordingly agrees that in addition to such money
3
damages the Consultant may be restrained and enjoined from any continuing breach
of this Covenant Not to Compete. The Consultant acknowledges that any breach of
this Covenant Not to Compete would result in irreparable damage to the Company.
(d) ACKNOWLEDGMENTS BY CONSULTANT. The Consultant expressly agrees
and acknowledges as follows:
(i) This Covenant Not to Compete is reasonable as to time
and geographical area and does not place any unreasonable burden upon him;
(ii) The general public will not be harmed as a result of
enforcement of this Covenant Not to Compete;
(iii) The Consultant has requested or has had the opportunity
to request that his personal legal counsel review this Covenant Not to Compete;
and
(iv) The Consultant understands and hereby agrees to each
and every term and condition of this Covenant Not to Compete.
6. ASSIGNMENT. The Company may assign (including by merger) this
Consulting Agreement and any rights and obligations hereunder to any affiliate
of Purchaser that is involved in the operation of the Company's business;
PROVIDED, HOWEVER, that such assignment shall not relieve the Company of its
obligations hereunder. The Consultant may not assign this Consulting Agreement
or any rights hereunder.
7. INDEPENDENT CONTRACTOR. In rendering his services, the Consultant
shall be acting as a private contractor and not as an employee of the Company.
The Company does not retain control of the manner in which the Consultant
performs his services under this Consulting Agreement. The Consultant shall not
be eligible to participate in any benefit plans, programs and compensation
practices of the Company and its affiliates by reason of this Consulting
Agreement or performance of the services contemplated hereunder, but nothing in
this Consulting Agreement shall be deemed to affect any entitlement to benefits
and compensation payable by reason of the Consultant's prior capacities as an
employee of the Company. The Consultant shall be responsible for all income and
other taxes on any compensation payable pursuant to this Consulting Agreement
and agrees to indemnify the Company and its affiliates on account of any claims
for any such taxes asserted against the Company or any of its affiliates.
8. SURVIVAL OF RIGHTS OR OBLIGATIONS. The expiration of this Consulting
Agreement shall not waive or release any rights or obligations of either party
that have accrued hereunder prior to such expiration.
9. AMENDMENT AND GOVERNING LAW. This Consulting Agreement contains the
entire agreement of the parties hereto, and it may only be amended by a writing
signed by the parties hereto and supersedes any agreement between the Company
4
and the Consultant relating to the rendering of consulting services (it being
understood that, to the extent that the Consultant is a party to any such
agreement with the Company that includes matters other than consulting
services, only the portions of such agreement relating to the rendering of
consulting services shall be superseded). This Consulting Agreement shall be
governed in all respects, whether as to validity, construction, capacity,
performance or otherwise, by the laws of the State of Delaware. Headings in
this Consulting Agreement are included solely for convenience and shall not
effect the interpretation of this Consulting Agreement.
10. GENERAL. This Consulting Agreement shall inure to the benefit of and
be binding upon the parties hereto, their executors, administrators, personal
representatives, heirs, successors and permitted assigns.
In the event that a court of competent jurisdiction determines any part of
this Consulting Agreement is in violation of any statute or public policy, then
only the portions of this Consulting Agreement which violate such statute or
public policy shall be stricken. All portions of this Consulting Agreement
which do not violate any statute or public policy shall continue in full force
and effect. Further, any court order striking any portion of this Consulting
Agreement shall modify the stricken terms as narrowly as possible to give as
much effect as possible to the intentions of the parties under this Consulting
Agreement.
Failure to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of such terms, covenant or
conditions, nor shall any waiver or relinquishment of, or failure to insist upon
strict compliance with, any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
11. NOTICE. Any notice or other communication required or permitted
pursuant to the terms of this Consulting Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
mail, first class, postage prepaid and registered with return receipt requested,
addressed to the intended recipient at his or its address set forth below and,
in the case of a notice or other communication to the Company, directed to the
attention of Xxxxxx X. Xxxxxxx, or to such other address as the intended
recipient may have theretofore furnished to the sender in writing in accordance
herewith, except that any notice of change of address is received, notices shall
be sent to the following addresses:
If to the Consultant:
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
If to the Company:
Physicians Corporation of America
5
c/o Humana Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
6
IN WITNESS WHEREFORE, the parties have executed this Consulting Agreement
on the day and year first written above.
PHYSICIAN CORPORATION OF AMERICA
By:
------------------------------------
---------------------------------------
Xxxxxxxx X. Xxxxxxxx
7
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Consulting Agreement"), is made and
entered into this 2 day of June, 1997, by and between PHYSICIAN CORPORATION OF
AMERICA, a Delaware corporation (the "Company") and E. Xxxxxxx Xxxxxxxxx, M.D.
(the "Consultant" or the "Employee").
WHEREAS, the Consultant currently serves as Chairman of the Board and Chief
Executive Officer of the Company;
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the "Merger
Agreement") of even date herewith, among Humana Inc. (the "Purchaser"), HUMNOV,
Inc. ("Sub") and the Company, Sub will merge with and into the Company and the
Company will become a subsidiary of Purchaser (the "Merger");
WHEREAS, the Company seeks to engage the services of the Consultant
following the Merger; and
WHEREAS, the Consultant and the Company wish to establish their respective
rights and duties and the terms and conditions of this Consulting Agreement, as
set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
IT IS AGREED AS FOLLOWS:
1. CONTINGENT NATURE OF AGREEMENT: TERM OF AGREEMENT. This Consulting
Agreement is contingent upon, and shall only become effective upon, (i) the
occurrence of the Merger and (ii) the Consultant remaining a full-time employee
of the Company until the occurrence of the Merger. If these contingencies shall
not occur, this Agreement shall be void and of no effect. The term of this
Consulting Agreement shall commence on the Effective Date (as defined in the
Merger Agreement) and shall end on the first anniversary of such date. The term
of this Consulting Agreement shall cease in the event of a Performance Breach
(as defined in Section 3) or non-compliance by the Consultant with Sections 4 or
5 hereof or in the event that the Consultant shall terminate this Consulting
Agreement by giving written notice of such termination pursuant to Section 11 at
least 30 days before the effective date of such termination. In the event of
such cessation of the term of this Consulting Agreement, the Company and the
Consultant shall have no further obligation hereunder, except as provided in
Sections 2, 4 and 5.
2. COMPENSATION. In consideration of the services to be performed by the
Consultant pursuant to the terms of Section 3 of this Consulting Agreement, the
1
Consultant shall be paid a total of $682,228, payable in equal monthly
installments on the Effective Date and the same day on each of the eleven months
thereafter (or if there is no corresponding day in any such month, on the last
day of such month) (collectively, the "Additional Payments"). In the event of
early expiration of the term of this Consulting Agreement due to the death or
disability of the Consultant, and absent a Performance Breach or non-compliance
with Section 4 or 5 hereof, the Company shall remain obligated to pay the
Additional Payments. For purposes of this Consulting Agreement, "disability"
shall mean mental or physical impairment by a physician mutually acceptable to
the Company and the Consultant. In the event of early expiration of this
Consulting Agreement due to a Performance Breach or in the case of
non-compliance with Section 4 or 5 hereof, the Company shall not be obligated to
pay any of the remaining Additional Payments.
3. PERFORMANCE OF SERVICES OF THE CONSULTANT. The Consultant is retained
and shall consult with the Company on an as needed basis relating to the
transition resulting from the Merger and to the degree reasonably deemed
appropriate by the Company with respect to its business matters, concerns and
affairs.
The Consultant hereby agrees to perform his services in accordance with
applicable law, and to use reasonable efforts in the performance of services
hereunder. The Consultant shall have reasonable discretion to choose when such
services will be rendered.
The Company acknowledges that the requirement of the Consultant to perform
services under this Agreement will not prevent the Consultant from performing
full time services to a third party, subject to Section 5 of this Agreement. In
requesting services hereunder, the Company shall take into account the immediate
preceding sentence. To the extent reasonably practicable, the Consultant shall
be entitled to provide services hereunder by telephone or fax. Services to be
performed hereunder shall be rendered in the Miami, Florida area, to the extent
reasonably practicable. The Company shall reimburse the Consultant for
pre-approved out-of-pocket expenses incurred in connection with the rendering of
services hereunder.
In the event that the Consultant shall fail, in any material respect, to
perform his services hereunder in accordance with this Section 3, and the
Company shall have given at least 30 days' written notice of such nonperformance
and the Consultant shall have remained in breach of this Consulting Agreement at
the end of such 30 day period (a "Performance Breach"), then the Company may
terminate this Consulting Agreement without further notice.
4. CONFIDENTIAL SERVICES. The Consultant acknowledges that he will have
access to confidential information about the Company and that he will have
access to trade secrets and information acquired by the Company at the expense
of the Company for use in its business. The Consultant has substantial
experience in and possesses
2
special, unique and extraordinary skills and knowledge in the field of business
of Company. The Consultant's services to the Company are special, unique and
extraordinary. The Consultant hereby agrees that, except in the performance of
services hereunder, he will not utilize any trade secrets or any other
information of a confidential or proprietary nature, attained in conjunction
with his past employment with the Company or through the services contemplated
under this Consulting Agreement, without the prior written consent of the Chief
Executive Officer of the Company, unless such knowledge or specific information
is clearly in the public domain or has been disclosed to the public by the
Company.
5. COVENANT NOT TO COMPETE. The Consultant has substantial experience in
the Company's industry, and possesses special, unique and extraordinary skills
and knowledge. The Consultant's advisory and operational services to the
Company are special, unique and extraordinary. Accordingly, by execution of
this Consulting Agreement:
A. DURATION OF COVENANT. The Consultant agrees that during the one
year term of this Consulting Agreement (without reference to any possible
earlier termination of this Consulting Agreement and without regard to actual
earlier termination of this Consulting Agreement), the Consultant shall not
violate the provisions of subparagraph (b) below.
B. PROHIBITED COMPETITIVE ACTIVITIES. During the time period
specified in subparagraph (a), the Consultant shall not:
(i) Directly or indirectly own, operate, manage, consult
with in a manner facilitating competition, control, participate in the
management or control of, be employed by, maintain or continue any interest
whatsoever in any HMO or similar managed care business in the Commonwealth of
Puerto Rico (other than an interest not exceeding 5% of the outstanding common
stock of any entity whose common stock is listed under Sections 12(b) or 12(g)
of the Securities Exchange Act of 1934, as amended);
(ii) Directly or indirectly induce or attempt to influence
any employee of the Company to terminate his employment with the Company or
accept employment by another person or entity; or
(iii) Directly or indirectly induce or attempt to influence
any customer or prospective customer of the Company to discontinue doing
business with the Company.
(c) NEED FOR LEGAL REMEDIES. The Consultant expresses, agrees and
acknowledges that this Covenant Not to Compete (herein so called) is necessary
for the Company's business and the Consultant's position with, and services for,
the Company. Further, the Consultant acknowledges that, in the event of his
breach of Covenant Not to Compete, money damages will not sufficiently
compensate the Company for its injury caused thereby, and the Consultant
accordingly agrees that in addition to such money
3
damages the Consultant may be restrained and enjoined from any continuing breach
of this Covenant Not to Compete. The Consultant acknowledges that any breach of
this Covenant Not to Compete would result in irreparable damage to the Company.
(d) ACKNOWLEDGMENTS BY CONSULTANT. The Consultant expressly agrees
and acknowledges as follows:
(i) This Covenant Not to Compete is reasonable as to time
and geographical area and does not place any unreasonable burden upon him;
(ii) The general public will not be harmed as a result of
enforcement of this Covenant Not to Compete;
(iii) The Consultant has requested or has had the opportunity
to request that his personal legal counsel review this Covenant Not to Compete;
and
(iv) The Consultant understands and hereby agrees to each
and every term and condition of this Covenant Not to Compete.
6. ASSIGNMENT. The Company may assign (including by merger) this
Consulting Agreement and any rights and obligations hereunder to any affiliate
of Purchaser that is involved in the operation of the Company's business;
PROVIDED, HOWEVER, that such assignment shall not relieve the Company of its
obligations hereunder. The Consultant may not assign this Consulting Agreement
or any rights hereunder.
7. INDEPENDENT CONTRACTOR. In rendering his services, the Consultant
shall be acting as a private contractor and not as an employee of the Company.
The Company does not retain control of the manner in which the Consultant
performs his services under this Consulting Agreement. The Consultant shall not
be eligible to participate in any benefit plans, programs and compensation
practices of the Company and its affiliates by reason of this Consulting
Agreement or performance of the services contemplated hereunder, but nothing in
this Consulting Agreement shall be deemed to affect any entitlement to benefits
and compensation payable by reason of the Consultant's prior capacities as an
employee of the Company. The Consultant shall be responsible for all income and
other taxes on any compensation payable pursuant to this Consulting Agreement
and agrees to indemnify the Company and its affiliates on account of any claims
for any such taxes asserted against the Company or any of its affiliates.
8. SURVIVAL OF RIGHTS OR OBLIGATIONS. The expiration of this Consulting
Agreement shall not waive or release any rights or obligations of either party
that have accrued hereunder prior to such expiration.
9. AMENDMENT AND GOVERNING LAW. This Consulting Agreement contains the
entire agreement of the parties hereto, and it may only be amended by a writing
signed by the parties hereto and supersedes any agreement between the Company
4
and the Consultant relating to the rendering of consulting services (it being
understood that, to the extent that the Consultant is a party to any such
agreement with the Company that includes matters other than consulting
services, only the portions of such agreement relating to the rendering of
consulting services shall be superseded). This Consulting Agreement shall be
governed in all respects, whether as to validity, construction, capacity,
performance or otherwise, by the laws of the State of Delaware. Headings in
this Consulting Agreement are included solely for convenience and shall not
effect the interpretation of this Consulting Agreement.
10. GENERAL. This Consulting Agreement shall inure to the benefit of and
be binding upon the parties hereto, their executors, administrators, personal
representatives, heirs, successors and permitted assigns.
In the event that a court of competent jurisdiction determines any part of
this Consulting Agreement is in violation of any statute or public policy, then
only the portions of this Consulting Agreement which violate such statute or
public policy shall be stricken. All portions of this Consulting Agreement
which do not violate any statute or public policy shall continue in full force
and effect. Further, any court order striking any portion of this Consulting
Agreement shall modify the stricken terms as narrowly as possible to give as
much effect as possible to the intentions of the parties under this Consulting
Agreement.
Failure to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of such terms, covenant or
conditions, nor shall any waiver or relinquishment of, or failure to insist upon
strict compliance with, any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
11. NOTICE. Any notice or other communication required or permitted
pursuant to the terms of this Consulting Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
mail, first class, postage prepaid and registered with return receipt requested,
addressed to the intended recipient at his or its address set forth below and,
in the case of a notice or other communication to the Company, directed to the
attention of Xxxxxx X. Xxxxxxx, or to such other address as the intended
recipient may have theretofore furnished to the sender in writing in accordance
herewith, except that any notice of change of address is received, notices shall
be sent to the following addresses:
If to the Consultant:
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
If to the Company:
Physicians Corporation of America
5
c/o Humana Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
6
IN WITNESS WHEREFORE, the parties have executed this Consulting Agreement
on the day and year first written above.
PHYSICIAN CORPORATION OF AMERICA
By:
------------------------------------
---------------------------------------
E. Xxxxxxx Xxxxxxxxx, M.D.
7
