EMPLOYMENT AGREEMENT
This Agreement, effective as of October 13, 1999, is made by and between
William W. McGuire, M.D. ("Executive") and United HealthCare Corporation,
("UnitedHealth Group" or the "Company") for the purpose of setting forth the
terms and conditions of Executive's employment by UnitedHealth Group and to
protect UnitedHealth Group's knowledge, expertise, customer and provider
relationships, and the confidential information UnitedHealth Group has
developed about its customers, providers, products, operations, and services.
As of the Effective Date (as defined in Section 3(a)), this Agreement
supersedes that certain Employment Agreement, effective as of January 1,
1996, and any prior similar agreement or agreements between Executive and
UnitedHealth Group or any of UnitedHealth Group's subsidiaries or affiliates.
1. EMPLOYMENT. UnitedHealth Group hereby employs Executive to serve as its
Chief Executive Officer. Executive shall, during the term of his employment
hereunder and subject to the supervision and control of the Board of
Directors of UnitedHealth Group (the "Board of Directors"), perform such
duties, have such power, and exercise such supervision and control with
regard to the business of UnitedHealth Group as are commonly associated with
or appropriate to the office of Chief Executive Officer, including, but not
limited to, the day-to-day general management, supervision and control of all
businesses and operations of UnitedHealth Group and its subsidiaries. In
furtherance thereof, Executive shall report to the Board of Directors, and
all other senior executives of UnitedHealth Group and its subsidiaries shall
report to Executive or as Executive may direct. In addition, Executive shall
perform such other duties of a senior executive nature as the Board of
Directors and Executive from time to time determine to be mutually
acceptable. Executive accepts such employment on the terms and conditions set
forth in this Agreement and, except as specifically superseded by this
Agreement, subject to all of UnitedHealth Group's policies and procedures, as
changed from time-to-time, in regard to its employees generally. During the
period of his employment, the Board of Directors shall nominate Executive as
a director for election by the stockholders of UnitedHealth Group to the
Board of Directors and the Board of Directors shall elect Executive as
Chairman of the Board of Directors.
2. COMPENSATION.
(a) BASE SALARY. Executive shall initially be paid a minimum base
annual salary in the amount of $1,600,000 payable bi-weekly. From
time-to-time the Board of Directors shall review Executive's
performance and shall consider increasing Executive's
compensation. Effective on each succeeding January 1 during the
term of this Agreement, Executive's then-current minimum base
annual salary shall be increased by a minimum of $100,000.
(b) ANNUAL STOCK OPTIONS. Executive shall receive each calendar year
during the Initial Term of this Agreement (as defined in Section
3(a)) and each calendar year during any extension of the Initial
Term in accordance with this
Agreement, nonqualified options to purchase a minimum of 325,000
shares of UnitedHealth Group's Common Stock (the "Annual
Options"). The Annual Options shall be granted on such date or
dates as Executive requests by oral notification to the Chair of
the Compensation and Human Resources Committee (with such
notification confirmed promptly in writing). To the extent
Executive has not otherwise requested the issuance of Annual
Options representing the right to purchase 325,000 shares in any
year, Annual Options representing such amount shall be issued as
of the last business day of such year. The exercise price for the
Annual Options shall be the closing price for UnitedHealth Group
Common Stock on the date of issuance. Each Annual Option issued
pursuant to this Section 2(b) shall vest over a period of four
years at the rate of 25 percent per year on January 1 of each
year following the grant of such option, subject to earlier
vesting as otherwise provided in Section 3 of this Agreement.
Each Annual Option shall be subject to the terms and conditions
of UnitedHealth Group's Amended and Restated 1991 Stock and
Incentive Plan, or any substitute or similar successor plan
(the "Stock Plan"). Notwithstanding the foregoing provisions of
this Section 2(b), Executive shall be eligible to receive
additional awards of nonqualified options, as determined by the
Board of Directors, in accordance with the normal practices of
UnitedHealth Group for successful performance.
(c) SPECIAL STOCK OPTION GRANT. In addition to the Annual Options
contemplated by Section 2(b), Executive shall also receive an
option (the "Special Option") to purchase 1,000,000 shares of
UnitedHealth Group Common Stock. The Special Option shall be
substantially in the form of Exhibit 2(c) and shall be subject to
the terms and conditions of the Stock Plan. The exercise price of
the Special Option shall be $40.125 per share subject to
adjustment as provided in the Stock Plan. The Special Option will
expire on the tenth anniversary of its issuance. The Special
Option will become exercisable on the ninth anniversary of its
issuance, subject to acceleration upon the occurrence of certain
performance events as specified in the Special Option.
(d) BONUS AND STOCK PLANS. Executive shall be eligible to participate
in UnitedHealth Group's incentive bonus and other bonus plans and
shall be eligible to receive grants or awards pursuant to
UnitedHealth Group's stock option and incentive plans, all in
accordance with the terms and conditions of those plans and on a
basis consistent with that customarily provided for senior
officers at the highest level of UnitedHealth Group. For purposes
of the Company's Management Leadership Results Plan or any
substitute or similar successor plan, Executive's target incentive
awards shall be equal to 150% of Executive's then current base
annual salary.
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(e) SPECIAL BONUS. In recognition of Executive's strategic
accomplishments over the past several years, including Executive's
leadership in implementing the Company's realignment, in making
successful startup investments in the health care field, in
augmenting UnitedHealth Group's senior executive management and
creating leadership succession, Executive shall be entitled to
receive a special one-time bonus in the amount of $2,600,000 (the
"Special Bonus"). The Special Bonus shall be paid in cash or
UnitedHealth Group Common Stock, as Executive elects, upon
reasonable notice to the Company. If Executive elects to be paid
in Common Stock, the shares shall be valued at their closing price
on the date of payment. The Special Bonus shall be paid on January
4, 2000, subject only to Executive's continued employment as of
such date.
(f) EMPLOYEE BENEFITS. Executive shall be eligible to participate in
UnitedHealth Group's other employee benefit plans, including
without limitation, any life, health, dental, short-term and
long-term disability insurance coverage and any retirement or
savings plans, in accordance with the terms and conditions of
those plans and on a basis consistent with that customarily
provided for senior officers at the highest level of UnitedHealth
Group. Executive shall also receive other benefits consistent with
his office and position, which benefits shall include, without
limitation, an allowance to be determined periodically by the
Chair of the Compensation and Human Resources Committee, on behalf
of the Committee, and acceptable to Executive, for security
considerations (such as home and personal security) and for tax
and financial planning expenses. Executive may utilize any
UnitedHealth Group aircraft for Executive's personal business up
to such amount as represents an income tax benefit to the
Executive of not more than 10% of Executive's then current base
salary pursuant to Section 2(a). Executive shall be responsible
for the payment of all income taxes payable by Executive as a
result of the personal use of UnitedHealth Group aircraft.
(g) SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN. UnitedHealth Group shall
provide Executive a supplemental retirement benefit (the
"Supplemental Employee Retirement Plan") in an amount equal to the
following percentages of his average Cash Compensation (as defined
in Section 5(a)) for the three calendar years immediately
preceding termination of employment hereunder:
AGE PERCENTAGE
--- ----------
52 47.5
53 50.0
54 52.5
55 55.0
56 56.0
57 57.0
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58 58.0
59 59.0
60 60.0
61 61.0
62 62.0
63 63.0
64 64.0
65 65.0
Executive will be 100 percent vested in such benefit as of January
1, 1999. The supplemental benefit shall be paid as a joint and
survivor annuity, and Executive's Spouse (as hereinafter defined)
shall be entitled to a benefit, at no cost to Executive, equal to
50 percent of the benefit payable to Executive upon termination of
this Agreement. Provided, however, if Executive dies while
actively employed, his Spouse shall receive a survivor annuity as
if Executive had terminated this Agreement the day before his
death. Executive shall have the option to convert such annuity to
a lump sum payment or such other actuarial equivalent optional
form of payment if Executive makes an irrevocable election at
least one year prior to termination of this Agreement or if less
than one year prior to termination of this Agreement if such
election is agreeable to UnitedHealth Group in its sole
discretion. The actuarial equivalent value of any optional form of
benefit shall be determined on the basis of an interest rate of 4%
per annum and such other actuarial assumptions as are reasonable
and agreeable to the Executive and UnitedHealth Group. The
supplemental benefit shall be payable in accordance with Section 3
or as the parties otherwise agree. For purposes of this section,
"Spouse" means the person to whom Executive was legally married on
the date of Executive's death. If the age difference between
Executive and Spouse exceeds five years, the benefit payable to
the Spouse shall be actuarially determined as if the age
difference between Executive and Spouse were five years.
(h) VACATION AND ILLNESS. Executive shall be entitled to paid vacation
and sick leave benefits each year in accordance with UnitedHealth
Group's then-current policies and on a basis consistent with that
customarily provided for senior officers at the highest level of
UnitedHealth Group.
(i) ADDITIONAL INSURANCE. In addition to any other insurance to which
Executive is entitled to under Section 2(f), UnitedHealth Group
shall provide and pay for, and Executive shall own, a term life
insurance policy on Executive in an amount equal to $5,500,000,
which policy shall include an option for Executive to purchase, at
Executive's expense, additional term life insurance on Executive
in an amount equal to $3,200,000, and an individual supplemental
long term "own occupation" disability insurance policy, which may
be self-
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insured by UnitedHealth Group, providing for monthly disability
income payments to Executive equal to his then-applicable monthly
pro rata annual base salary reduced by any monthly payments to
Executive under other individual or group disability income plans
or policies provided and paid for by UnitedHealth Group. The
monthly disability income payments to Executive shall begin at
such time as Executive becomes Permanently Disabled as defined
in Section 5(a) and shall continue until Executive ceases to be
disabled, until five years have elapsed, or until Executive
reaches age 65. UnitedHealth Group shall compensate Executive
on an after-tax basis for any additional income taxes payable by
Executive as a result of UnitedHealth Group's payment of
premiums with respect to the insurance policies described in this
subsection.
3. TERM AND TERMINATION.
(A) TERM. The term of this Agreement shall begin effective as of
October 13, 1999 (the "Effective Date") and shall continue in full
force and effect until the fifth anniversary of the Effective Date
(the "Initial Term"), unless and until terminated as set forth
below. The term of this Agreement shall be automatically extended
for an additional one-year period at the end of each year of the
Initial Term and of each year thereafter, unless and until
terminated as set forth below, unless either party shall have
delivered a written notice to the other party of its intention not
to renew this Agreement at least 120 days prior to October 13 of
any such year.
(B) TERMINATION OF AGREEMENT.
(i) This Agreement may be terminated at any time by the
mutual written agreement of the parties.
(ii) This Agreement and Executive's employment may be
terminated by UnitedHealth Group for any reason and
at any time upon 30 days' prior written notice to
Executive.
(iii) Executive may resign his employment and terminate
this Agreement without Good Reason (as defined in
Section 5(a)) by 30 days' prior written notice to
UnitedHealth Group.
(iv) This Agreement shall automatically terminate upon the
death or Permanent Disability (as defined in Section
5(a)) of Executive.
(v) This Agreement may be terminated by UnitedHealth
Group for Cause immediately upon written notice to
Executive.
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(vi) This Agreement and Executive's employment may be
terminated by Executive for Good Reason (as defined
in Section 5(a)) upon 30 days' prior written notice
from Executive to UnitedHealth Group, specifying such
Good Reason; provided that such notice is given
within 120 days after the initial occurrence of such
Good Reason, and provided further that the events
giving rise to Good Reason shall not have been
remedied as of the date of such notice.
(c) TERMINATION OF EMPLOYMENT BY UNITEDHEALTH GROUP FOR CAUSE. If
Executive's employment with UnitedHealth Group is terminated by
UnitedHealth Group under Section 3(b)(v) for Cause prior to the
end of the term of this Agreement then upon termination of the
Executive's employment:
(i) All cash compensation payable to Executive shall
cease as of the date of termination.
(ii) Executive shall be entitled to begin receiving
payments under the Supplemental Employee Retirement
Plan described in Section 2(g) as of the date of
termination.
(iii) Executive's participation in the health care
coverage, life insurance, or other employee benefit
plans of UnitedHealth Group shall terminate in
accordance with applicable law and those plans' terms
and conditions. Executive shall receive any benefits
payable under Section 2(f) of this Agreement within
sixty days of such termination.
(iv) Any stock options or grants awarded Executive under
any of UnitedHealth Group's stock option or grant or
similar stock plans shall expire and cease to be
exercisable at the end of ninety days from the
effective date of such termination.
(v) All accrued and unpaid vacation to the date of
termination shall be paid to the Executive.
(d) TERMINATION OF EMPLOYMENT BY UNITEDHEALTH GROUP WITHOUT CAUSE OR
BY EXECUTIVE FOR GOOD REASON. If Executive's employment with
UnitedHealth Group is terminated by UnitedHealth Group under
Section 3(b)(ii) without Cause prior to the end of the term of
this Agreement or Executive's employment with UnitedHealth Group
is terminated by Executive under Section 3(b)(vi) prior to the end
of the term of this Agreement then upon termination of the
Executive's employment:
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(i) For a period of thirty-six months following the
effective date of the termination of employment,
Executive shall receive biweekly payments equal to
1/26 of Executive's annualized Cash Compensation. In
the event of any anticipated tax law change during
the payment period that would increase Executive's
taxes on such income, Executive may elect to take and
receive his remaining compensation under this Section
3(d)(i), discounted at an interest rate of 4% per
annum to the present value thereof, in a single lump
sum payable within thirty days after written request
therefor setting forth such anticipated tax law
change.
(ii) The percentage of Cash Compensation paid pursuant to
the Supplemental Employee Retirement Plan
contemplated by Section 2(g) shall be determined as
of, and payments under such plan shall commence on,
the third anniversary of the termination date as if
Executive had been continuously employed by
UnitedHealth Group through such third anniversary.
(iii) Executive shall be entitled to continue participation
in the health care coverage as provided in Section
3(j) below and in all other life insurance or other
employee benefit plans of UnitedHealth Group
established under Section 2(f) of this Agreement.
UnitedHealth Group shall for a period of thirty-six
months following the effective date of the
termination (A) continue to pay disability coverage
premiums or provide disability coverage on a
self-funded basis for Executive and his dependents
with UnitedHealth Group and Executive sharing the
costs associated with such coverage as if Executive
were still actively employed by UnitedHealth Group,
and (B) maintain and pay the premiums with respect
to the additional insurance policies provided for in
Section 2(i). Executive shall continue to receive
health care coverage as provided in Section 3(j) of
this Agreement. If Executive cannot be covered under
any of UnitedHealth Group's group plans or policies,
UnitedHealth Group shall reimburse Executive for his
full cost of obtaining comparable alternative group
or individual coverage elsewhere, less any
contribution that Executive would have been required
to make under UnitedHealth Group's group plans or
policies. Executive shall receive any benefits
payable under Section 2(f) of this Agreement within
sixty days of such termination.
(iv) Any vesting requirements or other conditions that an
employee or participant complete a longer period of
service or employment as shall otherwise theretofore
pertain to any of Executive's rights or
7
benefits under outstanding options (excluding the
Special Option granted pursuant to Section 2(c) or
other similar option that specifies it will not vest
in this particular instance) or any bonus, incentive
compensation, deferred compensation, stock grant,
restricted stock, or similar plans, from time to time
implemented by UnitedHealth Group or its successor or
assign, shall automatically terminate and be of no
further force or effect. All such rights and benefits
shall continue to be deemed to be fully vested and,
as the case may be, subject to accrual, payment or
exercise in full, or transfer (unless expressly
non-transferrable) without regard to such
restrictions. Stock options or grants awarded
Executive under any of UnitedHealth Group's stock
option or grant or similar stock plans (including the
Special Option granted pursuant to Section 2(c)) to
the extent vested shall continue to be exercisable in
accordance with their terms for a period of up to
seventy-two months after termination of Executive's
employment subject to earlier termination upon
expiration of the option or grant in accordance with
the terms of such option or grant.
(v) UnitedHealth Group shall provide Executive with
office, secretarial, and administrative support
reasonably customary for executives comparable to
Executive for a period of thirty-six months following
termination of employment.
(vi) All accrued and unpaid vacation to the date of
termination shall be paid to the Executive.
(vii) In the event the payments, the acceleration of
vesting of stock options or the provision of any
other benefits under this Agreement are "parachute
payments" within the meaning of, and the regulations,
rulings and procedures under, Sections 280G and 4999
of the Internal Revenue Code of 1986, as the same
from time to time may be amended (the "Code"), or
other related or successor sections and provisions of
the Code at any time applicable thereto, and become
subject to excise taxes under Section 4999 of the
Code, UnitedHealth Group will pay Executive the
amount of such excise taxes plus all federal, state,
and local taxes applicable to UnitedHealth Group's
payment of such excise taxes, including any
additional excise taxes due under Section 4999 of the
Code with respect to payments made pursuant to this
Section 3(d)(vii). All determinations required by
this Section 3(d), upon termination of Executive's
employment and at UnitedHealth Group's sole expense,
shall forthwith be made by UnitedHealth Group's
regularly engaged
8
independent public accounting firm. In determining
the amount of excise tax which would be payable by
Executive pursuant to Section 4999 of the Code, such
accounting firm shall take into consideration and
apply all non-includible, excludable and exempt
amounts of compensation in accordance with Section
280G of the Code. The parties shall cooperate fully
by promptly providing such accounting firm all
information required to complete such
determinations. Such determinations shall be set
forth in a written statement and analysis thereof
issued by such accounting firm which shall be
promptly finished to and shall be binding upon the
parties. In the event Executive is subject to any
audit with respect to the amount of such excise
taxes, Executive and UnitedHealth Group will mutually
cooperate in contesting such audit; provided that
UnitedHealth Group will pay the cost of such contest
and will reimburse Executive on an after tax basis
for any additional excise taxes payable as a result
of such audit and for any income taxable to Executive
as a result of UnitedHealth Group paying the cost of
such audit and any additional excise taxes. In the
event any such audit results in a refund of excise
taxes paid, Executive will turn over the refund to
UnitedHealth Group less any income taxes incurred by
Executive in respect of the receipt of the refund.
(e) TERMINATION OF EMPLOYMENT BY EXECUTIVE FOLLOWING A CHANGE IN
CONTROL. If a Change in Control of UnitedHealth Group occurs and
either (y) within a period following such Change in Control of six
months (or such lesser period of time as is acceptable to the
Company or its successor) and twelve months Executive terminates
employment under Section 3(b), or (z) at anytime after a Change of
Control, Executive's employment with UnitedHealth Group is
terminated by UnitedHealth Group under Section 3(b)(ii) without
Cause prior to the end of the term of this Agreement or by
Executive for Good Reason under Section 3(b)(vi) prior to the end
of the term of this Agreement, then upon termination of
Executive's employment:
(i) For a period of thirty-six months following the
effective date of the termination of employment
Executive shall receive biweekly payments equal to
1/26 of Executive's annualized Cash Compensation. In
the event of any anticipated tax law change during
the payment period that would increase Executive's
taxes on such income, Executive may elect to take and
receive his remaining compensation under this Section
3(e)(i), discounted at an interest rate of 4% per
annum to the present value thereof, in a single lump
sum payable within thirty days after written request
therefor setting forth such anticipated tax law
change.
9
(ii) The percentage of Cash Compensation paid pursuant to
the Supplemental Employee Retirement Plan
contemplated by Section 2(g) shall be determined as
of, and payments under such plan shall commence on,
the third anniversary of the termination date as if
Executive had been continuously employed by
UnitedHealth Group through such third anniversary.
(iii) Executive shall be entitled to continue participation
in the health care coverage as provided in Section
3(j) below and in all other life insurance or other
employee benefit plans of UnitedHealth Group
established under Section 2(f) of this Agreement to
the extent permitted by applicable law and the terms
and conditions of those plans. UnitedHealth Group
shall for a period of thirty-six months following the
effective date of the termination (A) continue to pay
disability coverage premiums or provide disability
coverage on a self-funded basis for Executive and his
dependents with UnitedHealth Group and Executive
sharing the costs associated with such coverage as if
Executive were still actively employed by
UnitedHealth Group, and (B) maintain and pay the
premiums with respect to the additional insurance
policies provided for in Section 2(i). Executive
shall continue to receive health care coverage as
provided in Section 3(j) of this Agreement. If
Executive cannot be covered under any of UnitedHealth
Group's group plans or policies, UnitedHealth Group
shall reimburse Executive for his full cost of
obtaining comparable alternative group or individual
coverage elsewhere, less any contribution that
Executive would have been required to make under
UnitedHealth Group's group plans or policies.
Executive shall receive any benefits payable under
Section 2(f) of this Agreement within sixty (60) days
of such termination.
(iv) Any vesting requirements or other conditions that an
employee or participant complete a longer period of
service or employment as shall otherwise theretofore
pertain to any of Executive's rights or benefits
under all outstanding options (excluding the Special
Option granted pursuant to Section 2(c) which shall
already have been fully vested and exercisable upon
the Change of Control in accordance with its terms)
shall automatically terminate and be of no further
force or effect. All such rights and benefits shall
continue to be deemed to be fully vested and, as the
case may be, subject to accrual, payment or exercise
in full, or transfer (unless expressly
non-transferable) without regard to such
restrictions. The options and any other grants
awarded Executive under any of UnitedHealth Group's
stock option
10
or grant or similar stock plans, including the
Special Option, shall continue to be exercisable
in accordance with their terms for a period of up
to seventy-two months after termination of
Executive's employment subject to earlier termination
upon expiration of the option or grant in accordance
with the terms of such option or grant.
(v) UnitedHealth Group shall pay a reasonable amount for
outplacement and job search services for Executive by
a firm selected by Executive and reasonably
acceptable to UnitedHealth Group.
(vi) UnitedHealth Group shall provide Executive with
office, secretarial, and administrative support
reasonably customary for executives comparable to
Executive and shall provide Executive with use of
Company aircraft for personal business to the same
extent Executive could so use such aircraft for
personal business prior to termination, all for a
period of thirty-six months following termination of
employment.
(vii) All accrued and unpaid vacation to the date of
termination shall be paid to Executive.
(viii) In the event the payments, the acceleration of
vesting of stock options or the provision of any
other benefits under this Agreement or the Special
Option are "parachute payments" within the meaning
of, and the regulations, rulings and procedures
under, Sections 280G and 4999 of the Code or other
related or successor sections and provisions of the
Code at any time applicable thereto, and become
subject to excise taxes under Section 4999 of the
Code, UnitedHealth Group will pay Executive the
amount of such excise taxes plus all federal, state,
and local taxes applicable to UnitedHealth Group's
payment of such excise taxes, including any
additional excise taxes due under Section 4999 of the
Code with respect to payments made pursuant to this
Section 3(e)(viii). All determinations required by
this Section 3(e), upon termination of Executive's
employment and at UnitedHealth Group's sole expense,
shall forthwith be made by UnitedHealth Group's
regularly engaged independent public accounting firm.
In determining the amount of excise tax which would
be payable by Executive pursuant to Section 4999 of
the Code, such accounting firm shall take into
consideration and apply all non-includible,
excludable and exempt amounts of compensation in
accordance with Section 280G of the Code. The parties
shall cooperate fully by promptly providing such
accounting firm all information required to complete
such determinations. Such
11
determinations shall be set forth in a written
statement and analysis thereof issued by such
accounting firm which shall be promptly furnished
to and shall be binding upon the parties. In the
event Executive is subject to any audit with respect
to the amount of such excise taxes, Executive and
UnitedHealth Group will mutually cooperate in
contesting such audit; provided that UnitedHealth
Group will pay the cost of such contest and will
reimburse Executive on an after tax basis for any
additional excise taxes payable as a result of such
audit and for any income taxable to Executive
as a result of UnitedHealth Group paying the cost of
such audit and any additional excise taxes. In the
event any such audit results in a refund of excise
taxes paid, Executive will turn over the refund to
UnitedHealth Group less any income taxes incurred by
Executive in respect of the receipt of the refund.
(f) TERMINATION OF EMPLOYMENT BY EXECUTIVE UPON RETIREMENT. If
Executive terminates employment under Section 3(b)(iii) without
Good Reason prior to the end of the term of this Agreement, and at
the time of termination the Board of Directors of UnitedHealth
Group or its Compensation and Human Resources Committee determines
that such termination by Executive constitutes a retirement in
good standing, then upon the termination of Executive's
employment:
(i) Unless the Board of Directors of UnitedHealth Group
or its Compensation and Human Resources Committee
otherwise determine, all cash compensation payable to
Executive shall cease as of the date of termination.
(ii) Unless the Board of Directors of UnitedHealth Group
or its Compensation and Human Resources Committee
otherwise determine, with consent of Executive to
continue vesting of the Supplemental Employee
Retirement Plan and to defer its payout, Executive
shall be entitled to begin receiving payments under
the Supplemental Employee Retirement Plan described
in Section 2(g) as of the date of retirement.
(iii) Executive shall be entitled to continue participation
in the health care coverage as provided in Section
3(j) below and all other life insurance or other
employee benefit plans of UnitedHealth Group
established under Section 2(f) of this Agreement to
the extent permitted by applicable law and the terms
and conditions of those plans. UnitedHealth group
shall for a period of thirty-six months following the
effective date of the termination (A) continue to pay
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disability coverage premiums or provide disability
coverage on a self-funded basis for Executive and his
dependents with UnitedHealth Group and Executive
sharing the costs associated with such coverage as if
Executive were still actively employed by
UnitedHealth Group, and (B) maintain and pay the
premiums with respect to the additional insurance
policies provided for in Section 2(i). Executive
shall continue to receive health care coverage as
provided in Section 3(j) of this Agreement. If
Executive cannot be covered under any of UnitedHealth
Group's group plans or policies, UnitedHealth Group
shall reimburse Executive for his full cost of
obtaining comparable alternative group or individual
coverage elsewhere, less any contribution that
Executive would have been required to make under
UnitedHealth Group's group plans or policies.
Executive shall receive any benefits payable under
Section 2(f) of this Agreement within sixty days of
such termination.
(iv) Any vesting requirements or other conditions that an
employee or participant complete a longer period of
service or employment as shall otherwise theretofore
pertain to any of Executive's rights or benefits
under all outstanding options (excluding the Special
Option granted pursuant to Section 2(c) unless at the
time of retirement the Board of Directors of
UnitedHealth Group or its Compensation and Human
Resources Committee determines it is appropriate in
its discretion to vest all or a portion of the
unvested Special Option Shares and excluding any
option that specifies it will not vest in this
particular instance) or any bonus, incentive
compensation, deferred compensation, stock grant,
restricted stock, or similar plans, from time to time
implemented by UnitedHealth Group or its successor or
assign, shall automatically terminate and be of no
further force or effect. All such rights and benefits
shall continue to be deemed to be fully vested and,
as the case may be, subject to accrual, payment or
exercise in full, or transfer (unless expressly
non-transferable) without regard to such
restrictions. Stock options or grants awarded
Executive under any of UnitedHealth Group's stock
option or grant or similar stock plans to the extent
vested shall continue to be exercisable in accordance
with their terms for a period of up to seventy-two
months after termination of Executive's employment
subject to earlier termination upon expiration of the
option or grant in accordance with the terms of such
option or grant.
(v) UnitedHealth Group shall provide Executive with
office, secretarial, and administrative support
reasonably customary for executives comparable to
Executive and shall provide Executive with use of
13
company aircraft for personal business to the same
extent Executive could so use such aircraft for
personal business prior to termination, all for a
period of thirty-six months following termination of
employment.
(vi) All accrued and unpaid vacation to the date of
termination shall be paid to Executive.
(vii) In the event the payments, the acceleration of
vesting of stock options or the provision of any
other benefits under this Agreement are "parachute
payments" within the meaning of, and the regulations,
rulings and procedures under, Sections 280G and 4999
of the Code or other related or successor sections
and provisions of the Code at any time applicable
thereto, and become subject to excise taxes under
Section 4999 of the Code, UnitedHealth Group will pay
Executive the amount of such excise taxes plus all
federal, state, and local taxes applicable to
UnitedHealth Group's payment of such excise taxes,
including any additional excise taxes due under
Section 4999 of the Code with respect to payments
made pursuant to this Section 3(d)(v). All
determinations required by this Section 3(f), upon
termination of Executive's employment and at
UnitedHealth Group's sole expense, shall forthwith be
made by UnitedHealth Group's regularly engaged
independent public accounting firm. In determining
the amount of excise tax which would be payable by
Executive pursuant to Section 4999 of the Code, such
accounting firm shall take into consideration and
apply all non-includible, excludable and exempt
amounts of compensation in accordance with Section
280G of the Code. The parties shall cooperate fully
by promptly providing such accounting firm all
information required to complete such determinations.
Such determinations shall be set forth in a written
statement and analysis thereof issued by such
accounting firm which shall be promptly furnished to
and shall be binding upon the parties. In the event
Executive is subject to any audit with respect to the
amount of such excise taxes, Executive and
UnitedHealth Group will mutually cooperate in
contesting such audit; provided that UnitedHealth
Group will pay the cost of such contest and will
reimburse Executive on an after tax basis for any
additional excise taxes payable as a result of such
audit and for any income taxable to Executive as a
result of UnitedHealth Group paying the cost of such
audit and any additional excise taxes. In the event
any such audit results in a refund of excise taxes
paid, Executive will turn over the refund to
14
UnitedHealth Group less any income taxes incurred by
Executive in respect of the receipt of the refund.
(g) TERMINATION OF EMPLOYMENT BY EXECUTIVE WITHOUT GOOD REASON. If
Executive's employment with UnitedHealth Group is terminated by
Executive under Section 3(b)(iii) without Good Reason prior to the
end of the term of this Agreement then upon the termination of
Executive's employment:
(i) For a period of twenty-four months following the
effective date of the termination of employment,
Executive shall receive bi-weekly payments equal to
1/26 of Executive's annualized Cash Compensation. In
the event of any anticipated tax law change during
the payment period that would increase Executive's
taxes on such income, Executive may elect to take and
receive his remaining compensation under this Section
3(g)(i), discounted at an interest rate of 4% per
annum to the present value thereof, in a single lump
sum payable within thirty days after written request
therefor setting forth such anticipated tax law
change.
(ii) The percentage of Cash Compensation paid pursuant to
the Supplemental Employee Retirement Plan
contemplated by Section 2(g) shall be determined as
of the date of termination. Payments under such plan
shall commence on the second anniversary of the
termination date.
(iii) Executive's participation in the life insurance or
other employee benefit plans of UnitedHealth Group
shall terminate in accordance with applicable law and
those plans' terms and conditions. Executive shall
continue to receive health care coverage as provided
in Section 3(j) of this Agreement. Executive shall
receive any benefits payable under Section 2(f) of
this Agreement, within sixty days of such
termination.
(iv) Any stock options or grants awarded Executive under
any of UnitedHealth Group's stock option or grant or
similar stock plans shall cease to vest following the
effective date of termination and, to the extent
vested, shall be exercisable for up to
thirty-six-months following the effective date of
termination subject to earlier termination of the
option or grant in accordance with the terms of such
option or grant.
(v) All accrued and unpaid vacation to the date of
termination shall be paid to Executive.
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(h) TERMINATION OF EMPLOYMENT IN THE EVENT OF DEATH. If Executive's
employment with UnitedHealth Group is terminated under Section
3(b)(iv) due to the death of Executive prior to the end of the
term of this Agreement then upon the termination of Executive's
employment:
(i) For a period of twenty-four months following
Executive's death, Executive's beneficiaries shall
receive bi-weekly payments equal to 1/26 of
Executive's annualized Cash Compensation. In the
event of any anticipated tax law change during the
payment period that would increase Executive's taxes
on such income, Executive's beneficiaries may elect
to take and receive his remaining compensation under
this Section 3(h)(i), discounted at an interest rate
of 4% per annum to the present value thereof, in a
single lump sum payable within thirty days after
written request therefor setting forth such
anticipated tax law change.
(ii) The Cash Compensation payable pursuant to the
Supplemental Employee Retirement Plan contemplated by
Section 2(f) shall commence.
(iii) Executive's beneficiaries shall be entitled to
receive all proceeds from the life insurance provided
in accordance with this Agreement and any benefit
payable under Section 2(f) of this Agreement.
Executive's spouse and children shall continue to
receive health care coverage as provided in Section
3(j) of this Agreement.
(iv) Any stock options or grants awarded Executive under
any of UnitedHealth Group's stock option or grant or
similar stock plans (excluding the Special Option
granted pursuant to Section 2(c) and any other option
that specifies it will not vest in this particular
instance) shall vest immediately upon Executive's
death and shall be exercisable by Executive's
beneficiaries for up to thirty-six-months following
the effective date of termination subject to earlier
termination of the option or grant in accordance with
the terms of such option or grant.
(v) All accrued and unpaid vacation to the date of
termination shall be paid to Executive's estate.
(i) TERMINATION OF EMPLOYMENT IN THE EVENT OF PERMANENT DISABILITY. If
Executive's employment with UnitedHealth Group is terminated under
Section 3(b)(iv) due
16
to the Permanent Disability of Executive prior to the end of the
term of this Agreement then:
(i) For a period of twenty-four months, Executive shall
receive bi-weekly payments equal to 1/26 of
Executive's annualized Cash Compensation. In the
event of any anticipated tax law change during the
payment period that would increase Executive's taxes
on such income, Executive may elect to take and
receive his remaining compensation under this Section
3(i)(i), discounted at an interest rate of 4% per
annum to the present value thereof, in a single lump
sum payable within thirty days after written request
therefor setting forth such anticipated tax law
change.
(ii) The Cash Compensation payable pursuant to the
Supplemental Employee Retirement Plan contemplated by
Section 2(f) shall be determined as of, and the
payments shall commence on, the second anniversary of
the termination date.
(iii) Executive shall be entitled to receive health care
coverage in accordance with Section 3(j) of this
Agreement and disability benefits provided under any
other employee benefit plans or compensation policies
of UnitedHealth Group to executive officers of
similar rank in accordance with applicable law and
those plans' terms and conditions. Executive shall
receive any benefits payable under Section 2(f) of
this Agreement within sixty days of such termination.
(iv) Any stock options or grants awarded Executive under
any of UnitedHealth Group's stock option or grant or
similar stock plans (excluding the special option
granted pursuant to Section 2(c) and any other option
that specifies it will not vest in this particular
instance) shall vest immediately and shall be
exercisable for up to thirty-six-months following the
effective date of termination subject to earlier
termination of such option or grant in accordance
with the terms and conditions of such option or
grant.
(v) All accrued and unpaid vacation to the date of
termination shall be paid to Executive.
(j) HEALTH CARE CONTINUATION COVERAGE. Notwithstanding any other
provision of this Agreement to the contrary, if Executive is
terminated other than for Cause pursuant to Section 3(b)(v),
UnitedHealth Group shall continue to provide, at no cost to
Executive, health care coverage for Executive and his wife for the
remainder of their lives and for his children until they attain
age 25,
17
substantially as in effect on the date of termination. If
Executive, his wife, or his children cannot be covered under any
of UnitedHealth Group's group plans or policies, UnitedHealth
Group shall reimburse Executive for his full cost of obtaining
comparable alternative group or individual coverage elsewhere,
less any contribution that Executive would have been required to
make under UnitedHealth Group's group health plans or policies.
4. PROPERTY RIGHTS, CONFIDENTIALITY, NON-SOLICIT AND NON-COMPETE
PROVISIONS.
(a) UNITEDHEALTH GROUP'S PROPERTY.
(i) Executive shall promptly disclose to UnitedHealth
Group in writing all inventions, discoveries, and
works of authorship, whether or not patentable or
copyrightable, which are conceived, made, discovered,
written, or created by Executive alone or jointly
with another person, group or entity, whether during
the normal hours of employment at UnitedHealth Group
or on Executive's own time, during the term of this
Agreement. Executive assigns all rights to all such
inventions and works of authorship to UnitedHealth
Group. Executive shall give UnitedHealth Group any of
the assistance it reasonably requires in order for
UnitedHealth Group to perfect, protect and use its
rights to inventions and works of authorship.
This provision shall not apply to an invention,
discovery, or work of authorship for which no
equipment, supplies, facility, or trade secret
information of UnitedHealth Group was used and which
was developed entirely on the Executive's own time
and which does not relate to the business of
UnitedHealth Group, to UnitedHealth Group's
anticipated research or development, or does not
result from any work performed by Executive for
UnitedHealth Group.
(ii) Executive shall not remove any records, documents, or
any other tangible items (excluding Executive's
personal property) from the premises of UnitedHealth
Group in either original or duplicate form, except as
is needed in the ordinary course of conducting
business for UnitedHealth Group.
(iii) Executive shall immediately deliver to UnitedHealth
Group, upon termination of employment with
UnitedHealth Group, or at any other time upon
UnitedHealth Group's request, any property, records,
documents, and other tangible items (excluding
Executive's personal property) in Executive's
possession or control, including data incorporated in
word processing, computer, and other data storage
18
media, and all copies of such records, documents, and
information, including all Confidential Information,
as defined below.
(b) CONFIDENTIAL INFORMATION. During the course of his employment
Executive will develop, become aware of, and accumulate expertise,
knowledge, and information regarding UnitedHealth Group's
organization, strategies, business, and operations and
UnitedHealth Group's past, current, or potential customers,
providers, and suppliers. UnitedHealth Group considers such
expertise, knowledge, and information to be valuable,
confidential, and proprietary. For purposes of this Agreement,
"Confidential Information" shall mean non-public information
concerning the financial data, business strategies, product
development (and proprietary product data), marketing plans, past,
current, or potential customers, providers, and suppliers, and
other proprietary information concerning UnitedHealth Group.
During this Agreement and at all times thereafter, Executive shall
not use such Confidential Information or disclose it to other
persons or entities except as is necessary for the performance of
Executive's duties for UnitedHealth Group or as has been expressly
permitted in writing by UnitedHealth Group. Provided, however,
that the foregoing covenant shall not apply to any information
possessed by Executive prior to his employment by UnitedHealth
Group, or to any information which is in or has entered the public
domain or has been disclosed within any industry segment in which
UnitedHealth Group or any subsidiary or affiliated company of
UnitedHealth Group operates by or pursuant to the authority of
UnitedHealth Group or any subsidiary or affiliated company of
UnitedHealth Group.
(c) NON-SOLICITATION. During (i) the term of this Agreement, (ii) any
period for which Executive is receiving payments under Sections
3(d), 3(e), 3(f), or 3(g) of this Agreement, notwithstanding any
lump-sum payment that Executive might receive under any such
Section, (iii) any period following the termination of this
Agreement in which Executive remains employed by UnitedHealth
Group, and (iv) for a period of one year after the last day of the
latest of any period described in (i), (ii) or (iii), Executive
shall not directly or indirectly attempt to hire away any
then-current employee of UnitedHealth Group or a subsidiary of
UnitedHealth Group or to persuade any such employee to leave
employment with UnitedHealth Group.
(d) NON-COMPETITION.
(i) During the term of this Agreement and ending one year
after the later of (A) any period for which Executive
is receiving payments under Section 3(d), 3(e), 3(f),
or 3(g) of this Agreement, notwithstanding any
lump-sum payment that Executive might receive
19
under any such Section or (B) the last day in which
Executive remains employed by UnitedHealth Group
following termination of this Agreement (the
"Restriction Period"), Executive shall not directly
or indirectly solicit, divert, or take away from
UnitedHealth Group, or attempt to solicit, divert, or
take away from UnitedHealth Group, the business of
any person, partnership, company, or corporation with
which UnitedHealth Group, or any subsidiary or
affiliated company thereof in which UnitedHealth
Group has a more than 20% equity interest (the
"UnitedHealth Group Companies"), has established a
business or customer relationship; PROVIDED, HOWEVER,
that this Section 4(d)(i) shall apply only to the
business(es) in which UnitedHealth Group or any of
the UnitedHealth Group Companies were engaged prior
to or planned to be engaged in within six months
after the termination of this Agreement.
(ii) During the Restriction Period, without UnitedHealth
Group's prior written consent, Executive shall not
engage or participate, either individually or as an
employee, consultant or principal, partner, agent,
trustee, officer or director of a corporation,
partnership, or other business entity, in any
business in which UnitedHealth Group or any of the
UnitedHealth Group Companies is engaged; PROVIDED,
HOWEVER, that this Section 4(d)(ii) shall apply only
to businesses whose primary business is in
competition with a material business of UnitedHealth
Group as of the date of termination of this
Agreement.
(iii) Except as otherwise set forth below in Section
4(d)(iv), Executive's obligations under this Section
4(d) shall remain in effect only so long as
UnitedHealth Group continues to make the payments and
provide the benefits specified in Section 3(d), 3(e),
3(f), or 3(g) notwithstanding any lump sum payment
that Executive might receive under any such Section
(though UnitedHealth Group shall have no option to
discontinue such payments on its own).
(iv) The provisions of this Section 4(d) shall terminate
one year after the date of termination of this
Agreement if Executive (A) elects not to receive any
further payments and benefits specified in Section
3(d), 3(e), 3(f), or 3(g), (B) pays to UnitedHealth
Group an amount equal to (1) any profits realized by
Executive upon the exercise of UnitedHealth Group
stock options (with profits equaling the spread
between the exercise price and the fair market value
at the close of business on the respective date of
exercise) that are accelerated pursuant to any such
Section, but only to the extent such options would
not otherwise have vested prior to exercise had
Executive
20
remained an employee of UnitedHealth Group,
multiplied by (2) the percentage of the period of
time pursuant to any such Section 3(d) for which this
Section shall no longer remain in effect, and (C)
reimburses UnitedHealth Group for that portion of any
single lump sum payment Executive received pursuant
to any such Section which represents the period of
time for which this Section shall no longer remain in
effect.
5. MISCELLANEOUS.
(a) DEFINITIONS. For purposes of this Agreement:
(i) "Cash Compensation" means the sum of Executive's base
annual compensation together with Executive's
incentive compensation as hereinafter determined. In
determining base annual compensation, the greater of
$1,600,000 or the Executive's highest annualized base
salary shall be used. Executive's incentive
compensation shall equal the average incentive
compensation actually earned by Executive for the two
years preceding the date of determination for which
an incentive determination has been made.
Notwithstanding the foregoing, if Executive's
severance compensation is paid pursuant to Sections
3(e) or 3(f), then Executive's incentive compensation
will equal the greater of the amount determined in
accordance with this paragraph or an amount Executive
would have been paid at Executive's then target
level. In any event, incentive compensation shall
include the cash equivalent value at the time earned
of any incentive compensation earned and paid or
payable in Company Common Stock or other form of
consideration. The Special Bonus paid pursuant to
Section 2(e) shall be treated as if it were incentive
compensation received equally for 1997 and 1998.
(ii) "Cause" means (A) the willful and continued failure
by Executive substantially to perform his duties
hereunder (other than any such failure resulting from
his disability or from termination by Executive for
Good Reason), after a written demand for substantial
performance is delivered to Executive that
specifically identifies the manner in which Executive
has not remedied such failure within a reasonable
time after receipt of such written notice; (B) a
violation of United's Code of Conduct that is
materially detrimental to UnitedHealth Group and that
Executive has not remedied within a reasonable time
after receipt of a written notice from UnitedHealth
Group that specifically identifies such violation;
(C) the conviction of Executive of a felony; or (D)
any other willful and material breach of
21
this Agreement by Executive that Executive has not
remedied within a reasonable time after receipt of a
written notice from UnitedHealth Group that
specifically identifies such breach. For purposes of
this paragraph, no act, or failure to act, on
Executive's part will be deemed "willful" unless
done, or omitted to be done, by Executive not in good
faith and without reasonable belief that his action
or omission was in the best interest of UnitedHealth
Group.
(iii) "Change in Control" means (A) the acquisition by an
individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50%
or more of the then outstanding shares of common
stock of UnitedHealth Group (the "Outstanding Common
Stock"); (B) individuals who, as of the date hereof,
constitute UnitedHealth Group's Board of Directors
(the "Incumbent Board") cease for any reason to
constitute at least a majority of the UnitedHealth
Group Board of Directors, provided, however, that any
individual becoming a director subsequent to the date
hereof whose election, or nomination for election by
UnitedHealth Group's shareholders, was approved by a
vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs
as a result of either an actual or threatened
election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened
solicitation of proxies or consents; (C) the approval
by the stockholders of UnitedHealth Group of a
reorganization, merger or consolidation, in each
case, with respect to which the beneficial owners of
the Outstanding Common Stock immediately prior to
such reorganization, merger or consolidation,
beneficially own, directly or indirectly, less than
two-thirds of the then outstanding shares of common
stock and the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors of the
corporation resulting from such reorganization,
merger or consolidation in substantially the same
proportions as their ownership, immediately prior to
such reorganization, merger or consolidation; or (D)
the approval by the stockholders of UnitedHealth
Group of (i) a complete liquidation or dissolution of
UnitedHealth Group or (ii) the sale or other
disposition of all or substantially all of the assets
of UnitedHealth Group.
22
(iii) "Confidential Information" shall have the meaning set
forth in Section 4(b).
(iv) "Permanent Disability" means Executive's inability by
reason of accident, illness, or injury to perform any
of the principal duties, responsibilities, or
functions of Executive's employment for a period of
180 days or such shorter period as provided in the
policy for the Supplemental Long-Term Disability
Benefit.
(v) "Good Reason" means (A) the assignment to Executive
of any duties inconsistent in any respect with
Executive's position (including status, offices,
titles and reporting relationships), authority,
duties or responsibilities as contemplated by Section
1 or any other action by UnitedHealth Group which
results in a diminution in such position, authority,
duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied
by UnitedHealth Group promptly after receipt of
notice thereof given by Executive; (B) the failure by
UnitedHealth Group to elect Executive to the position
of the Chairman and Chief Executive Officer and as a
member of the Board of Directors or any other action
by UnitedHealth Group which results in the diminution
of Executive's position, authority, duties, or
responsibilities, excluding an isolated,
insubstantial and inadvertent action not taken in bad
faith and which is remedied by UnitedHealth Group
promptly after receipt of notice thereof given by
Executive; (C) any failure of UnitedHealth Group to
pay base salary or incentive compensation or to grant
Annual Options in accordance with Section 2(a), (b)
and (d) or any failure by UnitedHealth Group to
maintain or provide the plans, programs, policies and
practices, or benefits described in Section 4(f),
(g), (h) and (i) on the most favorable basis such
plans programs, policies and practices were
maintained and benefits are provided to Executive on
the Effective Date; (D) UnitedHealth Group's
requiring Executive to be based at any office or
location other than its principal executive offices
at its current location in Minnetonka, Minnesota or
within twenty-five miles of such current location,
except for travel reasonably required in the
performance of the Executive's responsibilities; (E)
any purported termination by UnitedHealth Group of
Executive's employment otherwise than as expressly
permitted by this Agreement; (F) any other material
breach of this Agreement by UnitedHealth Group that
is not remedied within a reasonable time after
written notice from Executive to UnitedHealth Group
that specifically identifies such breach; or (G) any
failure by UnitedHealth Group to comply with and
satisfy Section 5(b) of this
23
Agreement. For purposes of the definition of "Good
Reason," any good faith determination of "Good
Reason" made by the Executive on or after the Change
of Control Date shall be conclusive.
(vi) "Spouse" shall have the meaning set forth in Section
2(g).
(b) ASSIGNMENT. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective legal and
personal representatives, heirs, successors, and assigns, but may
not be assigned by either party (except by operation of law upon
death or disability of Executive) without the prior written
consent of the other party, provided that any assignment by
UnitedHealth Group shall not relieve UnitedHealth Group of its
obligations under this Agreement. UnitedHealth Group will require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its
business and/or assets to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that
UnitedHealth Group is required to perform under this Agreement if
no such succession had taken place. As used in this Agreement,
"UnitedHealth Group" shall mean each as hereinbefore defined and
any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(c) NOTICES. All notices under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered by hand or
mailed by registered or certified mail, return receipt requested,
postage prepaid, to the party to receive the same at the address
set forth below or at such other address as may have been
furnished by proper notice.
UnitedHealth Group: 300 Opus Center
9900 Bren Road East
Minnetonka, MN 55343
Attn: General Counsel
Executive:
(d) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to its subject matter and may be
amended or modified only by a subsequent written amendment
executed by the parties. This Agreement replaces and supersedes
any and all prior employment or employment related agreements and
understandings, including any letters or memos which may
24
have been construed as agreements, between Executive and
UnitedHealth Group or any of its subsidiaries and affiliated
companies.
(e) CHOICE OF LAW. This Agreement shall be construed and interpreted
under the applicable laws and decisions of the State of Minnesota.
(f) WAIVERS. No failure on the part of either party to exercise, and
no delay in exercising, any right or remedy under this Agreement
shall operate as a waiver; nor shall any single or partial
exercise of any right or remedy preclude any other or further
exercise of any right or remedy.
(g) ADEQUACY OF CONSIDERATION. Executive acknowledges and agrees that
he has received, prior to or contemporaneously with the Effective
Date, adequate consideration from UnitedHealth Group to enter into
this Agreement.
(h) DISPUTE RESOLUTION AND REMEDIES. Any dispute arising between the
parties relating to this Agreement or to Executive's employment by
UnitedHealth Group shall be resolved by binding arbitration held
in the City of Minneapolis pursuant to the Rules of the American
Arbitration Association, except as hereinafter expressly modified.
If the disputing and responding parties are unable to agree upon a
resolution within forty-five business days after the responding
party's receipt of written notice from the disputing party setting
forth the nature of the dispute, within the following ten business
days the disputing and responding parties shall select a mutually
acceptable single arbitrator to resolve the dispute or, if the
parties fail or are unable to do so, each shall within the
following ten business days select a single arbitrator, and the
two so selected shall select a third arbitrator within the
following ten business days. Such single arbitrator or, as the
case may be, panel of three arbitrators acting by majority
decision, shall resolve the dispute within sixty days after the
date such arbitrator, or the last of them so selected, is
selected, or as soon thereafter as practicable. If either party
refuses or fails to select an arbitrator within the time therefor,
the other party may do so on such refusing or failing party's
behalf. The arbitrators shall have no power to award any punitive
or exemplary damages or may construe or interpret but shall not
ignore or vary the terms of this Agreement and shall be bound by
controlling law. The parties acknowledge that Executive's failure
to comply with the Confidentiality, Non-Solicit and Non-Compete
provisions of this Agreement will cause immediate and irreparable
injury to UnitedHealth Group and that therefore the arbitrators,
or a court of competent jurisdiction if an arbitration panel
cannot be immediately convened, will be empowered to provide
injunctive relief, including temporary or preliminary relief, to
restrain any such failure to comply. The party not prevailing in
the proceeding shall bear the costs and expenses thereof,
including without limitation, the reasonable attorneys' fees of
the prevailing
25
party. The arbitration award or other resolution may be entered
as a judgment at the request of the prevailing party by any court
of competent jurisdiction in Minnesota or elsewhere.
(i) SURVIVAL. The provisions of Sections 2(f), 2(i), 3(c)-3(j), 4 and
5 shall survive any termination of this Agreement pursuant to
Section 3(b).
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE ENFORCED BY
THE PARTIES.
UNITEDHEALTH GROUP WILLIAM W. MCGUIRE, M.D.
By______________________________ _________________________________
Date____________________________ Date_____________________________
26