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CONFIDENTIAL
April 1, 1998
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 1, 1998 (the "Effective Date"), by and
between OXFORD HEALTH PLANS, INC. (the "Corporation"), having a principal office
in Norwalk, Connecticut, and Xxxx Xxxxx, MD. ("the Employee").
WHEREAS, the Board of Directors of the Corporation (the "Board") has
approved and authorized the Corporation's entry into this Agreement with the
Employee; and
WHEREAS, the parties desire to enter into this Agreement setting
forth the terms and conditions for the continued employment relationship of the
Corporation and the Employee;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Corporation and the Employee agree as follows:
1. Employment. The Employee is employed as Executive Vice
President/Chief Medical Officer of the Corporation. As Executive Vice
President/Chief Medical Officer ( "CMO") the Employee shall render executive,
policy and other management services to the Corporation of the type customarily
performed by persons serving in a similar executive officer capacity, subject to
the powers by law vested in the Board and in the Corporation's stockholders. The
Employee shall report to President of the Corporation, and shall perform such
other related duties as the President reasonably direct or request. The Employee
shall be a full time employee of the Corporation.
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The Employee shall perform his duties and responsibilities under this
Agreement faithfully, diligently and to the best of the Employee's ability, and
in compliance with all applicable laws and the Corporation's Certificate of
Incorporation and Bylaws, as they may be amended from time to time.
2. Term. The initial term of employment under this Agreement shall be
for a period of two (2) years commencing on the Effective Date (the "Term").
This Agreement shall be extended automatically for two (2) additional years on
the second anniversary date of the Effective Date and on each second anniversary
of the Effective Date thereafter, unless either the Corporation or the Employee
gives contrary written notice to the other not less than three (3) months in
advance of such anniversary of the Effective Date. References herein to the Term
shall refer both to such initial term and such successive terms. Upon a "Change
in Control" (as defined in Section 7(a) of the Corporation, the Term shall be
extended to two (2) years from the date of such Change in Control, unless notice
to terminate the Term has been properly provided prior to the date of such
Change in Control, and such Change in Control date shall be treated as the
Effective Date for purposes of renewals of this Agreement. The Term shall end
upon the termination of the Employee's employment under this Agreement.
3. Compensation. (a) Base Salary. The Corporation agrees to pay the
Employee during the Term an annual base salary ("Base Salary") of $350,000. The
Base Salary shall be reviewed at least annually during the Term by the Board,
and the
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Employee shall receive such increases in Base Salary, if any, as the
Compensation Committee of the Board (the "Committee") in its absolute discretion
may determine, together with such performance or merit increases, if any, as the
Committee in its absolute discretion may determine. Participation with respect
to discretionary bonuses, retirement and other employee benefit plans and fringe
benefits shall not reduce the Base Salary payable to the Employee under this
Section 3. The Base Salary shall be payable to the Employee in equal
installments in conformity with the Corporation's normal payroll periods.
(b) Bonus. During the Term, the Employee shall be eligible to receive
an annual performance bonus in an amount at least equal to 50% of the Base
Salary for the year in which such performance is measured consistent with the
Corporation's management incentive program, as recommended by the Chief
Executive Officer, & President of the Corporation and approved by the Committee,
paid at such time the bonuses are paid to other executives at his level.
(c) Sign-on Bonus. Upon the execution and delivery of this Agreement,
and subject to the execution by the Employee of the Corporation's standard
non-disclosure and non-competition agreement, the Corporation shall pay the
Employee a sign-on bonus in the amount of $60,000.
(d) Options Upon the execution and delivery of this Agreement, the
Corporation shall grant the Employee options to acquire 100,000 shares of the
Corporation's common stock pursuant to the terms and conditions of the
Corporation's 1991 Stock Option Plan, such options to vest in four equal annual
installments over the four years from the date of grant.
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4. Withholding Obligation. The Corporation shall have the ability to
withhold from the compensation otherwise due to the Employee under this
Agreement any federal income tax, Federal Insurance Contribution Act tax,
Federal Unemployment Act tax, or other amounts required to be withheld from
compensation from time to time under the Internal Revenue Code of 1986, as
amended (the "Code"), or under any state or municipal laws or regulations.
5. Fringe Benefits.
(a) Vacations and Leave. During the Term, the Employee shall be
entitled to an annual paid vacation of four (4) weeks per year or such longer
period as the Committee may approve. The Employee shall schedule the timing of
paid vacations in a reasonable manner. The Employee shall also be entitled to
such other leave, with or without compensation, as shall be mutually agreed upon
by the Committee and the Employee.
(b) Participation in Retirement and Employee Benefit Plans. During
the Term, the Employee shall be entitled to participate in the Corporation's
1991 Stock Option Plan, annual incentive compensation plan, the Oxford Specialty
Holdings, Inc. 1996 Equity Incentive Compensation Plan and any other plan of the
Corporation or its subsidiaries relating to stock options, stock appreciation,
stock purchases, pension, thrift, deferred compensation, profit sharing, group
life insurance, medical coverage, education or other retirement or employee
benefits that the Corporation may have in
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effect for the benefit of its executive employees in similar positions with the
Corporation.
(c) Disability. If the Employee shall become disabled or
incapacitated during the Term to the extent that he is unable to perform his
duties and responsibilities hereunder, he shall be entitled to receive
disability benefits of the type currently provided to other executives in
similar positions in the Corporation.
(d) Death. If the Employee shall die during the Term, the Corporation
shall pay to such person as the Employee has designated in a notice filed with
the Corporation, or, if no such notice is filed, to his estate, in substantially
equal monthly installments, from the date of his death for a period of three (3)
months, an amount equal to the Employee's Base Salary as of his date of death.
In addition, the employee's estate shall have the right to exercise the stock
options referenced in paragraph 3 (b) to the extent they have vested and have
not been exercised , and to the extent that this does not conflict with the
terms of the stock option plan.
(e) Other Benefits. During the Term, the Employee shall be entitled
to participate in any other fringe benefits which are or may become applicable
to the Corporation's executive employees, including a $450.00 month car
allowance, a reasonable expense account, and or shall be entitled to
reimbursement of all necessary
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expenses incurred on behalf of the corporation, and the payment of reasonable
expenses for attending annual and periodic meetings of trade associations, and
any other benefits which are commensurate with the duties and responsibilities
to be performed by the Employee under this Agreement.
6. Termination of Employment. The Employee's employment hereunder may
be terminated under the circumstances set forth in paragraphs (a) through (e)
below:
(a) Death. The Employee's employment hereunder shall terminate upon
his death.
(b) Disability. If, as a result of the Employee's incapacity due to
physical or mental illness, the Employee shall have been absent from his duties
hereunder on a full-time basis for the entire period of six (6) consecutive
months, and within thirty (30) days after written Notice of Termination is given
(which may occur before or after the end of such six (6) month period) shall not
have returned to the performance of his duties hereunder on a full-time basis,
the Corporation may terminate the Employee's employment hereunder for
"Disability."
(c) Cause. The Corporation may terminate the Employee's employment
hereunder for Cause or without Cause. Except as provided in Section 7(b) hereof
following a Change in Control, termination for Cause shall mean termination
because the Employee (i) engages in the following conduct in connection with his
employment with the Corporation: personal dishonesty, willful misconduct, breach
of fiduciary duty
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involving personal profit, breach of a restrictive covenant against competition,
disclosure of confidential information of the Corporation, consistent
intentional failure to perform stated duties after notice, or (ii) willfully
violates any law, rule, or regulation (other than traffic violations or similar
offenses), which willful violation materially impacts the Employee's performance
of his duties to the Corporation.
(d) Good Reason. The Employee may terminate his employment
hereunder with or without Good Reason; provided, however, that the Employee
agrees not to terminate his employment hereunder (other than for Good Reason or
for Retirement) during the ninety-day period following a Change in Control.
Except as provided in Section 7(c) hereof following a Change in Control, for
purposes of this Agreement "Good Reason" shall mean any (i) removal of the
Employee from, or failure to re-appoint the Employee to, his position as
Executive Vice President/CMO, except in connection with termination of the
Employee for Cause, or (ii) failure by the Corporation to comply with Section 3
hereof in any material respect. For purposes of this Agreement, "Good Reason"
shall not exist until after Employee has given the Company notice of the
applicable event within 90 days of such event and which is not remedied within
30 days after receipt of written notice from Employee specifically delineating
such claimed event and setting forth Employee's intention to terminate
employment if not remedied; provided, that if the specified event cannot
reasonably be remedied within such 30-day period and the Company commences
reasonable steps within such 30-day period to remedy such event and diligently
continues such steps thereafter until a remedy is effected, such event shall not
constitute "Good Reason" provided that such event is remedied within 60 days
after receipt of such written notice.
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(e) Retirement. For purposes of this Agreement, "Retirement"
shall mean termination of the Employee's employment by either the Employee
(other than for Good Reason) or the Corporation (other than for Cause) on or
after the Employee's normal retirement age under the terms of the Corporation's
pension plan (or, any other tax-qualified plan, if no pension plan exists);
provided, that, following a Change in Control such normal retirement age may not
be reduced for purposes of this Agreement without the consent of the Employee.
(f) Date of Termination. For purposes of this Agreement, "Date
of Termination" means (1) the effective date on which the Employee's employment
by the Corporation terminates as specified in a Notice of Termination by the
Corporation or the Employee, as the case may be, or (2) if the Employee's
employment terminates by reason of death, the date of death of the Employee.
Notwithstanding the previous sentence, (i) if the Employee's employment is
terminated for Disability (as defined in Section 6(b)), then such Date of
Termination shall be no earlier than thirty (30) days following the date on
which a Notice of Termination is received, and (ii) if the Employee's employment
is terminated by the Corporation other than for Cause, then such Date of
Termination shall be no earlier than thirty (30) days following the date on
which a Notice of Termination is received.
(g) Payment Upon Termination. Upon any termination of employment
hereunder, the Corporation shall pay the Employee, within ten (10) days
following his Date of Termination, a lump sum cash amount equal to the sum of
(i) the Employee's
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unpaid Base Salary through the Date of Termination, (ii) any bonus payments
which have become payable (other than deferred amounts), to the extent not
theretofore paid, and (iii) any vacation pay owed with respect to accrued, but
unused, vacation. In addition, the employee shall have the right to exercise the
stock options referenced in paragraph 3(b) to the extent they have vested and
have not been exercised, and to the extent that this does not conflict with the
terms of the stock option plan.
(h) Termination Without Cause, For Good Reason or Upon Failure
to Renew. In addition to the payments set forth in Section 6(g) hereof, in the
event that the Employee's employment with the Corporation terminates either (1)
prior to a Change in Control or (2) following the two-year period immediately
subsequent to a Change in Control (including as a result of a notice of
non-renewal of the Term by the Corporation provided during such two-year
period), in each case as a result of (i) a termination by the Employee for Good
Reason, (ii) a termination by the Corporation without Cause (other than for
Retirement or Disability) or (iii) notice by the Corporation of non-renewal of
the Term (other than for Retirement), then the Corporation shall pay to the
Employee, in twelve (12) equal monthly installments in conformity with the
Corporation's normal payroll periods, an amount equal to (x) the sum of the Base
Salary earned by the Employee from the Corporation and its subsidiaries during
the twelve-month period immediately preceding the Employee's Date of
Termination, plus the annual bonus earned by the Employee from the Corporation
and its subsidiaries in respect of the fiscal year immediately preceding the
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Employee's Date of Termination, divided by (y) twelve (12). In addition, the
employee shall have the right to exercise stock options referenced in 3d
consistent with the terms of the 1991 stock option plan.
7. Termination of Employment Following a Change in Control.
(a) Change in Control Defined. For purposes of this Agreement, a
"Change in Control" shall be deemed to have taken place if:
(i) any "person" (as defined below) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the "Exchange Act"), directly or indirectly, of securities of
the Corporation representing 30% or more of the total voting power
represented by the Corporation's then outstanding voting securities;
(ii) a change in the composition of the Board of Directors of the
Corporation occurs, as a result of which fewer than two-thirds (2/3) of
the incumbent directors are directors who either (A) had been directors of
the Corporation on the "look-back date" (as defined below) or (B) were
elected, or nominated for election, to the Board of Directors of the
Corporation with the affirmative votes of at least a majority of the
directors who had been directors of the Corporation on the "look-back
date" and who were still in office at the time of the election or
nomination;
(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than a
merger or consolidation
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which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 80% of the total voting power represented by the voting
securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation; or
(iv) the stockholders of the Corporation approve (A) a plan of
complete liquidation of the Corporation or (B) an agreement for the sale
or disposition by the Corporation of all or substantially all of the
Corporation's assets.For purposes of paragraph (a)(i), the term "person"
shall have the same meaning as when used in sections 13(d) and 14(d) of
the Exchange Act, but shall exclude (1) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or of
a parent or subsidiary of the Corporation or (2) a corporation owned
directly or indirectly by the stockholders of the Corporation in
substantially the same proportions as their ownership of the common stock
of the Corporation. For purposes of paragraph (a)(ii), the term "look-back
date" shall mean the later of (A) the date twenty-four (24) months prior
to the change in the composition of the Board and (B) the Effective Date.
Any other provision of this Section 7(a) notwithstanding, the term "Change
in Control" shall not include either of the following events, if
undertaken at the election of the Corporation:
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(x) a transaction, the sole purpose of which is to
change the state of the Corporation's
incorporation; or
(y) a transaction, the result of which is to sell all
or substantially all of the assets of the
Corporation to another corporation or entity (the
"surviving entity"); provided that the voting
power represented by the surviving entity's
securities (or other equity interests) is owned
directly or indirectly by the stockholders of the
Corporation immediately following such transaction
in substantially the same proportions as their
ownership of the voting power represented by the
Corporation's common stock immediately preceding
such transaction; and provided, further, that the
surviving entity expressly assumes this Agreement.
Notwithstanding anything in this Agreement to the contrary, if the
Employee's employment terminates prior to a Change in Control, and the Employee
reasonably demonstrates that such termination was at the request or suggestion
of a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control (a "Third Party"), then for all
purposes of this Agreement, the date of a Change in Control shall mean the date
immediately prior to the date of such termination of employment.
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(b) Cause. During the two-year period following a Change in
Control, "Cause" shall mean (i) the willful and continued failure of the
Employee to substantially perform his duties with the Corporation (other than
any such failure resulting from the Employee's incapacity due to physical or
mental illness or any such failure subsequent to the Employee being delivered a
notice of termination without Cause by the Corporation or delivering a notice of
termination for Good Reason to the Corporation) after a written demand for
substantial performance is delivered to the Employee by the Board which
specifically identifies the manner in which the Board believes that the Employee
has not substantially performed the Employee's duties, or (ii) the willful
engaging by the Employee in illegal conduct or gross misconduct which is
demonstrably and materially injurious to the Corporation or its subsidiaries.
For purpose of this paragraph (b), no act or failure to act by the Employee
shall be considered "willful" unless done or omitted to be done by the Employee
in bad faith and without reasonable belief that the Employee's action or
omission was in the best interests of the Corporation or its affiliates. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board, based upon the advice of counsel for the Corporation,
shall be conclusively presumed to be done, or omitted to be done, by the
Employee in good faith and in the best interests of the Corporation. Cause shall
not exist unless and until the Corporation has delivered to the Employee a copy
of a resolution duly adopted by two-thirds (2/3_) of the entire Board at a
meeting of the Board called and held for such purpose (after reasonable notice
to
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the Employee and an opportunity for the Employee, together with counsel, to
be heard before the Board), finding that in the good faith opinion of the Board
an event set forth in clause (i) or (ii) has occurred and specifying the
particulars thereof in detail. Following a Change in Control, the Corporation
must notify the Employee of any event constituting Cause within ninety (90) days
following the Corporation's knowledge of its existence or such event shall not
constitute Cause under this Agreement.
(c) Good Reason. During the two-year period following a Change
in Control, "Good Reason" shall mean, without the Employee's express written
consent, the occurrence of any of the following events:
(1) (i) the assignment to the Employee of any duties or
responsibilities (including reporting responsibilities) inconsistent in
any material and adverse respect with the Employee's duties and
responsibilities with the Corporation immediately prior to such Change
in Control (including any diminution of such duties or
responsibilities); provided, however, that Good Reason shall not be
deemed to occur upon a change in duties or responsibilities that is
solely and directly a result of the Corporation no longer being a
publicly traded entity, and does not involve any other event set forth
in this paragraph (c), or (ii) a material and adverse change in the
Employee's reporting responsibilities, titles or offices (other than
membership on the Board) with the Corporation as in effect immediately
prior to such Change in Control;
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(2) a reduction by the Corporation in the Employee's rate of
annual Base Salary or annual target bonus opportunity (including any
adverse change in the formula for such annual bonus target) as in
effect immediately prior to such Change in Control or as the same may
be increased from time to time thereafter;
(3) any requirement of the Corporation that the Employee (i)
be based anywhere more than thirty (30) miles from the office where the
Employee is located at the time of the Change in Control or (ii) travel
on the Corporation's business to an extent substantially greater than
the travel obligations of the Employee immediately prior to such Change
in Control;
(4) the failure of the Corporation to (i) continue in effect
any employee benefit plan, compensation plan, welfare benefit plan or
material fringe benefit plan in which the Employee is participating
immediately prior to such Change in Control, or the taking of any
action by the Corporation which would adversely affect the Employee's
participation in or reduce the Employee's benefits under any such plan,
unless the Employee is permitted to participate in other plans
providing the Employee with substantially equivalent aggregate benefits
(at substantially comparable cost with respect to welfare benefit
plans), or (ii) provide the Employee with paid vacation in accordance
with the most favorable plans, policies, programs and practices of the
Corporation and its affiliated companies as in effect for the Employee
immediately prior to such Change in Control; or
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(5) the failure of the Corporation to obtain the assumption
agreement from any successor as contemplated in Section 11(a) hereof.
Any event or condition described in Section 7(c)(1) through
(4) which occurs prior to a Change in Control, but with respect to which the
Employee is able to reasonably demonstrate was at the request or suggestion of a
Third Party, shall constitute Good Reason following a Change in Control for
purposes of this Agreement (as if a Change in Control had occurred immediately
prior to the occurrence of such event or condition) notwithstanding that it
occurred prior to the Change in Control. An isolated, insubstantial and
inadvertent action taken in good faith and which is remedied by the Corporation
promptly after receipt of notice thereof given by the Employee shall not
constitute Good Reason. The Employee's right to terminate employment for Good
Reason shall not be affected by the Employee's incapacity due to mental or
physical illness and the Employee's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any event or condition
constituting Good Reason. Following a Change in Control, the Employee must
provide notice of termination of employment within ninety (90) days of the
Employee's knowledge of an event constituting Good Reason or such event shall
not constitute Good Reason under this Agreement.
(d) In addition to the payments set forth in Section 6(g)
above, in the event the Employee's employment with the Corporation terminates
within two (2) years following a Change in Control either (i) by the Corporation
without Cause (other than
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for Retirement or Disability) or (ii) by the Employee for Good Reason, then the
Corporation shall (1) pay to the Employee, within ten (10) days following the
Employee's Date of Termination, a lump sum cash amount equal to two (2) times
the sum of (i) the highest annual rate of Base Salary of the Employee during the
3-year period immediately preceding the Employee's Date of Termination and (ii)
the highest annual bonus earned by Employee in respect of the three (3) fiscal
years of the Corporation immediately preceding the year in which the Employee's
Date of Termination occurs (provided, that if the Employee has not been employed
by the Corporation for such three-fiscal-year period, the greater of (x) the
target annual bonus (without regard to any reduction that would give rise to
Good Reason) for the year in which the Employee's Date of Termination occurs and
(y) the amount otherwise determined under this clause (ii) without regard to
this parenthetical) and (2) continue to provide, for a period of two (2) years
following the Date of Termination, the Employee (and the Employee's dependents
if applicable) with the same level of medical, dental, accident, disability and
life insurance benefits upon substantially the same terms and conditions
(including cost of coverage to the Employee) as existed immediately prior to the
Employee's Date of Termination (or, if more favorable to the Employee, as such
benefits and terms and conditions existed immediately prior to the Change in
Control); provided, that, if the Employee cannot continue to participate in the
Corporation plans providing such benefits, the Corporation shall otherwise
provide such benefits on the same after-tax basis as if continued participation
had been
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permitted. Notwithstanding the foregoing, in the event the Employee becomes
reemployed with another employer and becomes eligible to receive welfare
benefits from such employer, the welfare benefits described herein shall be
secondary to such benefits during the period of the Employee's eligibility, but
only to the extent that the Corporation reimburses the Employee for any
increased cost and provides any additional benefits necessary to give the
Employee the benefits hereunder.
(e)(i) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution, or any acceleration of vesting of any benefit or award, by the
Corporation or its affiliated companies to or for the benefit of the Employee
(whether paid or payable, distributed or distributable or accelerated or subject
to acceleration pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
7(e)) (a "Payment") would be subject to the excise tax imposed by Section 4999
of the Code, or any interest or penalties are incurred by the Employee with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Employee of all taxes
imposed upon the Gross-Up Payment and any interest or penalties imposed with
respect to such taxes, the Employee retains an amount of the Gross-Up Payment
equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the
product of any deductions
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disallowed because of the inclusion of the Gross-Up Payment in the Employee's
adjusted gross income and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made. For
purposes of determining the amount of the Gross-Up Payment, the Employee shall
be deemed to (A) pay federal income taxes at the highest marginal rates of
federal income taxation for the calendar year in which the Gross-Up Payment is
to be made, (B) pay applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes and (C) have otherwise
allowable deductions for federal income tax purposes at least equal to those
which could be disallowed because of the inclusion of the Gross-Up Payment in
the Employee's adjusted gross income. The payment of a Gross-Up Payment under
this Section 7(e) shall in no event be conditioned upon the Employee's
termination of employment or the receipt of severance benefits under this
Agreement.
(ii) Subject to the provisions of Section 7(e)(i), all
determinations required to be made under this Section 7(e), including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by the public accounting firm that is retained by the Corporation as of the
date immediately prior to the Change in Control (the "Accounting Firm") which
shall provide detailed supporting
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calculations both to the Corporation and the Employee within fifteen (15)
business days of the receipt of notice from the Corporation or the Employee that
there has been a Payment, or such earlier time as is requested by the
Corporation (collectively, the "Determination"). In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, the Employee may appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Corporation and the Corporation shall enter into any agreement
requested by the Accounting Firm in connection with the performance of its
services hereunder. The Gross-Up Payment under this Section 7(e) with respect to
any Payment shall be made no later than thirty (30) days following such Payment.
If the Accounting Firm determines that no Excise Tax is payable by the Employee,
it shall furnish the Employee with a written opinion to such effect, and to the
effect that failure to report the Excise Tax, if any, on the Employee's
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty. The Determination by the Accounting Firm shall be
binding upon the Corporation and the Employee. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the Determination, it
is possible that Gross-Up Payments which will not have been made by the
Corporation should have been made ("Underpayment") or Gross-Up Payments are made
by the Corporation which should not have been made ("Overpayment"),
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consistent with the calculations required to be made hereunder. In the event
that the Employee thereafter is required to make payment of any additional
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the
Corporation to or for the benefit of the Employee. In the event the amount of
the Gross-Up Payment exceeds the amount necessary to reimburse the Employee for
his Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid
by the Employee to or for the benefit of the Corporation. The Employee shall
cooperate, to the extent his expenses are reimbursed by the Corporation, with
any reasonable requests by the Corporation in connection with any contests or
disputes with the Internal Revenue Service in connection with the Excise Tax.
8. Covenants Not to Compete; Confidentiality.
(a) The Employee covenants that if he voluntarily terminates
his employment with the Corporation prior to the end of the term of this
Agreement, unless such termination either is approved by the Board or is within
the two-year period following a Change in Control, he shall not, for a period of
one (1) year following such Date of Termination:
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(1) engage or be interested, whether alone or together with or
on behalf or through any other person, firm, association, trust,
venture, or corporation, whether as sole proprietor, partner,
shareholder, agent, officer, director, employee, adviser, consultant,
trustee, beneficiary or otherwise, in any business principally and
directly engaged in the operation of health maintenance organizations
or the health insurance business or in the management of specialty
medical care through case rate contracting; which business operates in
a geographic area in which, at the time of such termination of
employment, the Corporation is conducting business or plans to conduct
business (a "competing business");
(2) assist others in conducting any competing business;
(3) directly or indirectly recruit or induce or hire any
person who is an employee of the Corporation or any of its
subsidiaries, or solicit any of the Corporation's customers, clients or
providers; or
(4) own any capital stock or any other securities of, or have
any other direct or indirect interest in, any entity which owns or
operates a competing business, other than the ownership of (i) less
than five percent (5%) of any such entity whose stock is listed on a
national securities exchange or traded in the over-the-counter market
and which is not controlled by the Employee or any affiliate of the
Employee or (ii) any limited partnership interest in such an entity.
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Nothing contained in this section, however, shall prohibit the
Employee from taking any of the actions set forth in clause (1), (2), (3) or (4)
above if (i) the Employee's employment has been terminated other than for Cause,
or (ii) the Employee has terminated employment for Good Reason.
(b) In the event that the Employee breaches or threatens to
breach any of the terms of this Section 8, the Employee acknowledges that the
Corporation's remedy at law would be inadequate and that the Corporation shall
be entitled to an injunction restraining the Employee from committing or
continuing such breach.
9. Payment Obligation Absolute. Except with respect to
continued welfare benefits under Section 7(d), the Corporation's obligation to
pay the Employee the compensation and other benefits provided herein shall be
absolute and unconditional and shall not be affected by an circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Corporation may have against the Employee. All amounts
payable by the Corporation hereunder shall be paid without notice or demand.
10. Notice.
(a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five (5) days after deposit in
the United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:
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If to the Employee:
Xx. Xxxx Xxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
If to the Corporation:
Oxford Health Plans, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
(b) A written notice (a "Notice of Termination") of the
Employee's Date of Termination by the Corporation or the Employee, as the
case may be, to the other, shall (i) indicate the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provision so
indicated and (iii) specify the Date of Termination. The failure by the
Employee or the Corporation to set forth in such notice any particular fact
or circumstance which contributes to a showing of Good Reason or Cause shall
not waive any right of the Employee or the Corporation hereunder or preclude
the Employee or the Corporation from asserting such fact or circumstance in
enforcing the Employee's or the Corporation's rights hereunder.
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11. General Provisions.
(a) No Assignments. This Agreement is personal to each of the
parties hereto. Neither party may assign or delegate any of his or its rights or
obligations hereunder without first obtaining the written consent of the other
party; provided, however, that the Corporation agrees that concurrently with any
merger or sale of assets which would constitute a Change in Control hereunder,
it will cause any successor or transferee unconditionally to assume, by written
instrument delivered to the Employee (or his beneficiary or estate), all of the
obligations of the Corporation hereunder. Failure of the Corporation to obtain
such assumption prior to the effectiveness of any such merger or sale of assets,
shall be a breach of this Agreement and shall constitute Good Reason hereunder
and shall entitle the Employee to compensation and other benefits from the
Corporation in the same amount and on the same terms as the Employee would be
entitled hereunder if the Employee's employment were terminated following a
Change in Control under Section 7(d) hereof. For purposes of implementing the
foregoing, the date on which any such merger or sale of assets becomes effective
shall be deemed the date Good Reason occurs, and shall be the Date of
Termination if requested by the Employee. Notwithstanding the foregoing, this
Agreement shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee shall die while any amounts
would be payable to
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the Employee hereunder had the Employee continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to such person or persons appointed in writing by the Employee to
receive such amounts or, if no person is so appointed, to the Employee's estate.
(b) Indemnification of Employee. In the event the employment
of the Employee is terminated by the Corporation without Cause or by the
Employee for Good Reason hereof and the Corporation fails to make timely payment
of the amounts then owed to the Employee under this Agreement, the Employee
shall be entitled to indemnification for all reasonable costs (as such costs are
incurred), including attorneys' fees and disbursements, incurred by the Employee
in taking action to collect such amounts or otherwise to enforce this Agreement,
plus interest on all such amounts at the annual rate of one percent above the
prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by the Wall Street Journal), compounded
monthly, for the period from the time payment is due until payment is made to
the Employee. The Employee shall also be entitled to interest (at the rate
described in the immediately preceding sentence) on such reasonable costs
incurred from the date the Employee delivers a receipt to the Corporation for
such costs until the date they are reimbursed to the Employee. Such
indemnification and interest shall be in addition to all rights to which the
Employee is otherwise entitled under this Agreement.
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(c) Entire Agreement; Amendments or Additions; Action by
Board. This Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereby and supersedes all prior
oral and written agreements, memoranda, understandings and undertakings between
the parties hereto relating to the subject matter hereof. No amendments or
additions to this Agreement shall be binding unless in writing and signed by
both parties. The prior approval by a two-thirds (_2/3) affirmative vote of the
full Board shall be required in order for the Corporation to authorize any
amendments or additions to this Agreement, to give any consents or waivers of
provisions of this Agreement, or to take any other action under this Agreement
including any termination of the employment of the Employee with or without
Cause. For purposes of Board approval with respect hereto, if the Employee is
also a director of the Corporation, he shall abstain from acting on matters
pertaining to this Agreement and shall not be counted as a Board member for
purposes of the two-thirds (2/3_) requirement.
(d) Governing Law. This Agreement shall be governed by the
laws of the State of Connecticut as to all matters, including, but not limited
to, matters of validity, construction, effect and practice.
(e) Arbitration. Except with respect to injunctive relief
under Section 8(b) hereof, any dispute or controversy under this Agreement shall
be settled exclusively by arbitration in Norwalk, Connecticut by three (3)
arbitrators in accordance with the rules of the American Arbitration Association
then in effect.
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Judgment may be entered on the arbitration award in any court having
jurisdiction. The Corporation shall bear all costs and expenses arising in
connection with any arbitration proceeding pursuant to this Section 11(e).
(f) Employment with Subsidiaries. Employment with the
Corporation for purposes of this Agreement shall include employment with any
subsidiary of the Corporation.
(g) Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
(h) Section Headings. The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.
(i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
OXFORD HEALTH PLANS, INC.
By: ___________________________
Dated: ________________ ___________________________
[Employee' name]
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