EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and effective this 28th day of February, 1996, by
and between GREEN SPRING HEALTH SERVICES, INC., a Delaware corporation
(hereinafter "Employer") and Xxxxx X. Xxxxxx, M.D. (hereinafter "Employee").
WITNESSETH:
WHEREAS, Employee currently serves in the capacity of President and Chief
Executive Officer.
WHEREAS, Employee and Employer are parties to an Employment Agreement dated
March 18, 1993 (the "Previous Agreement");
WHEREAS, it is the intention of the parties hereto to terminate the
Previous Agreement effective with the date of this Agreement and to set out the
terms and conditions of the employment and the rights and duties of Employee in
fulfilling the capacity of President and Chief Executive Officer for Employer.
NOW, THEREFORE, in consideration of the mutual promises of the parties and
the mutual benefits they will gain by the performance thereof, all in accordance
with the provisions hereinafter set forth, it is agreed by and between the
parties hereto as follows:
1. (a) Effective as of the date hereof Employer confirms the
employment of Employee and Employee agrees to continue to be employed by
Employer and to continue to serve as the President and Chief Executive Officer
of Employer, pursuant to the terms of this Agreement.
(b) This Agreement shall not be construed as a break in service for
purposes of those benefit plans contemplated in paragraph 2(c) below and any
time of service accrued by Employee as of the date of this Agreement for
purposes of determining the level or extent of such benefits in accordance with
the terms of any such benefit plan shall be credited to Employee.
(c) The term of this employment shall commence on the date hereof and
shall terminate on the last day of the calendar month in which occurs the third
(3rd) anniversary of the date hereof ("Initial Term"). After the Initial Term,
this Agreement shall automatically renew for one year period and for subsequent
one year periods thereafter unless one party presents to the other party written
notice of intent to terminate the Agreement at lease ninety (90) calendar days
prior to the applicable expiration date of this Agreement.
2. (a) Subject to Paragraph 3(b) below, during the term of this
Agreement Employer shall pay Employee a base salary, the amount of which shall
be fixed from time to time by the Board of Directors of Green Spring Health
Services, provided in no event shall the base salary be less than the annual
base salary Employee was receiving on the effective date of this Agreement,
unless all Green Spring Health Services officers are required to accept similar
reductions.
(b) All payments of compensation shall be subject to all lawful
deductions such as Federal Withholding Taxes and FICA; and
(c) In addition to the compensation payable to Employee as
provided by subparagraph 2(a) above, Employee shall be entitled to fringe
benefits similar to those provided to all employees.
3. (a) During the term of this employment Employee shall:
(i) hold the title of President and Chief Executive
Officer; and
(ii) generally perform the duties on behalf of Employer that
he performs as of the date hereof and such other duties which may be required
commensurate with Employee's professional ability and qualifications.
(b) During the term of this employment, if Employer and Employee
mutually agree to a change in the duties and/or title of Employee, then and in
that event the parties shall to the extent necessary and appropriate modify the
terms of this Agreement, including, if such
modification requires, an adjustment to the salary and/or fringe benefits.
4. (a) Employee agrees:
(i) not to disclose any trade or secret data or any other
proprietary or confidential information acquired during employment by Employer
or its subsidiary, successor or affiliated companies, during employment or after
the termination of employment or retirement, except with the prior permission of
Employer, unless said information becomes generally available to the public or
becomes available to Employee on a non-confidential basis from a source other
than Employer;
(ii) not to interfere with the employment of any other
employee of Employer or its subsidiary, successor or affiliated companies, or
urge, induce or solicit other employees to leave Employer or its subsidiary,
successor or affiliated companies;
(iii) during the term of employment with Employer and
for a period of two (2) years following employment termination, not to solicit
the business of, contract with, or become employed by any entity (including any
subsidiary, successor or affiliated company of such entity) with which Employer
or its subsidiary, successor or affiliated companies has contracts or had
contracts with in the two (2) years period prior to termination, unless agreed
to in advance in writing by Employer; and
(iv) during the term of employment and for one (1) year
after the termination of employment, engage, directly or indirectly, or through
any corporations or associations in any business enterprise or employment which
is directly competitive (including but not limited to the following activities:
utilization management, network management or mental health and/or substance
abuse managed care) with Employer or its subsidiary, successor or affiliated
companies in any state or territory, including the District of Columbia, where
Employer or its subsidiary, successor or affiliated companies do business at the
time of Employee's termination of employment.
(b) Paragraph 4(a)(iii) and 4(a)(iv) shall not be binding on
Employee if Employee has completed the Initial Term or any renewal periods set
forth in Paragraph 1 and Employee is not offered continued employment with
Employer, or if Employee is offered continued employment upon renewal but with a
substantial reduction in Employee's duties or responsibilities, or if Employee's
employment is terminated pursuant to paragraph 8 earlier than the expiration of
the Initial Term or, if this Agreement is renewed, earlier than the expiration
of the renewal period.
5. In the event of the occurrence of any of the following,
Employee's employment shall terminate immediately and Employer's sole obligation
to Employee shall be the payment of any salary, bonus, and benefits accrued
through the date of such termination:
(a) the death of Employee; or
(b) the disability of Employee as defined by Paragraph 6
hereinbelow; or
(c) the default by Employee as defined by Paragraph 7
hereinbelow.
Notwithstanding the foregoing, any other written contractual agreement duly
signed by Employer and Employee which may be in effect at the time of a
termination pursuant to this paragraph 5 shall not be affected by such
termination unless and only to the extent the terms of such other agreement
expressly so state.
6. For purposes of this Agreement, the term disability means that
Employee is substantially unable to discharge his responsibilities to Employer
and its affiliates by reason of physical or mental illness or incapacity,
whether arising out of sickness, accident or otherwise, and shall be evidenced
by the written determination of a qualified medical doctor acceptable to
Employer, which determination shall specify the date and time when such
disability commenced and that it has continued uninterrupted for a period of at
least one hundred eighty (180) days.
7. For purposes of this Agreement, the term default means that
Employee has:
(a) by deliberate and intentional actions refused to perform his
duties for Employer as provided by paragraph 3 above. In the event that
Employer determines that Employee has deliberately or intentionally failed to
perform his duties for Employer as provided in paragraph 3, Employer shall
notify Employee in writing of the reasons for its determination and shall
provide Employee a reasonable period in which to either contest the
determination or to correct the defects in performance; or
(b) breached or otherwise failed to comply with the provisions
of paragraph 4 above; or
(c) committed an act of dishonesty, fraud, misrepresentation or
other acts of moral turpitude which in the reasonable opinion of the Board of
Directors of Employer causes it to conclude that the continuation of employment
is not in the best interests of Employer;
8. In the event Employer shall terminate for any reason other than
as set forth in paragraph 5 above the Employment of Employee earlier than the
expiration of the Initial Term or, in the event the parties agree to renew the
Agreement, earlier than the expiration of any renewal period, or Employer shall
change the location of Employee's primary base or employment from Columbia,
Maryland vicinity, such termination shall be deemed to be "without cause" and
Employee shall be entitled to all compensation set forth in paragraph 2(a), and
benefits under paragraph 2(c) to the extent allowable under the terms of such
benefit plans, for the remaining balance of the Initial Term or renewal period,
as the case may be, without any condition or restriction other than as expressly
set forth in this Agreement. This shall constitute Employer's sole obligation
to Employee in the event of a termination pursuant to this paragraph 8. This
provision shall not apply if the Employee's termination occurs as a result of
the expiration of the Initial Term or any renewal period without renewal by the
parties.
Notwithstanding the foregoing, any other written contractual agreement duly
signed by Employer and Employee which may be in effect at the time of a
termination pursuant to this paragraph 8 shall not be affected by such
termination unless and only to the extent the terms of such other agreement
expressly so state.
9. All notices required hereunder shall be in writing and either
delivered by hand delivery or by certified mail, postage prepaid, return receipt
requested. Notices to Employer shall be addressed as follows: Green Spring
Health Services, Inc., Xxxxx 000, 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000,
Attn: Chairman, with a copy to : General Counsel c/o Green Spring Health
Services, Inc., Xxxxx 000, 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000; and
notices to Employee shall be addressed to the then last known address of
Employee as reflected on the records of Employer.
10. This Agreement shall be binding upon Employee, and Employer and
its successors and assigns. Employee shall not assign any part of his rights
and/or duties under this Agreement, unless Employer agrees thereto in writing.
11. This instrument contains the entire Agreement of the parties. It
may not be changed orally but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
12. This Agreement has been executed in and shall be governed by the
laws of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the
day and year first above written.
EMPLOYEE: GREEN SPRING HEALTH SERVICES, INC.:
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
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Xxxxx X. Xxxxxx, M.D. Xxxxxx X. Xxxxx
Chair of the Board of Directors
