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EXHIBIT 3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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EXECUTIVE VICE PRESIDENT
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CHOICECARE CORPORATION (the "ChoiceCare Parent") and CHOICECARE HEALTH
PLANS, INC. (the "ChoiceCare Operating Company" and with the ChoiceCare Parent
and the ChoiceCare Operating Company being collectively referred to as the
"Employer"), and MICHAEL J. BARBER, M.D. ("Employee"), hereby agree as follows,
effective as of the 1st day of January, 1997 but subject to the execution of a
Definitive Agreement and Plan of Merger (the "Definitive Agreement") by and
among Humana Inc., Humana Acquisition Subsidiary, Inc., the ChoiceCare Parent
and The ChoiceCare Foundation:
1. RECITALS. Employer and Employee are currently parties to an
employment agreement, the original form of which was adopted on September 22,
1995 and the form of which was amended and/or restated certain times since then.
This Agreement amends and restates any prior employment agreement between
Employer and Employee in its entirety, and supersedes any prior employment
agreement between Employer and Employee, effective as of January 1, 1997.
Notwithstanding the foregoing or any other provision of this Agreement, the
effectiveness of this Agreement is conditioned on the Definitive Agreement being
executed by the parties thereto.
2. EMPLOYMENT. Employer agrees to employ Employee, and Employee accepts
such employment, upon the terms and conditions set forth herein.
3. EMPLOYEE'S RESPONSIBILITIES.
3.1 Employee shall serve as an executive vice president of both the
ChoiceCare Parent and the ChoiceCare Operating Company. In such position,
Employee shall be responsible for the management and supervision of Employer's
operations within his area of responsibility and perform such other duties and
responsibilities as shall be requested by the Chief Executive Officers or the
boards of directors of Employer, including serving as a senior executive and/or
board member of any affiliated company. For purposes of this Agreement, an
"affiliated company" means any corporation (other than the Employer) which, now
or at any later time, is part of an unbroken chain of corporations (i) that
includes the Employer and (ii) in which each corporation in such chain either
owns at least 50% of the total combined voting power of all classes of stock in
one of the other corporations in such chain or has at least 50% of the total
combined voting power of all classes of its stock owned by one of the other
corporations in such chain.
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3.2 Employee shall devote his full time and best efforts to his
employment with Employer and perform diligently such duties as are required by
Employer from time to time, which duties shall be consistent with Employee's
position with Employer.
3.3 Without the prior written consent of the ChoiceCare Parent,
which shall not be unreasonably withheld, during the term of this Agreement
Employee shall not, directly or indirectly, render services of a business,
professional or commercial nature to any other person or firm, for compensation
or otherwise, except in the ordinary course of the business of Employer or any
affiliated company. Notwithstanding the foregoing but subject to the following
provisions, Employee may serve as a director or trustee of any company, on
either a compensated or noncompensated basis, that is not a competitor of
Employer or any affiliated company. Employee may retain any director fees,
committee fees, stock options, restricted stock awards or other remuneration
paid or given to Employee by any such company for such services as a director or
trustee. Employee shall notify the ChoiceCare Parent of any appointment to a
board of directors or board of trustees, and, notwithstanding the foregoing,
Employee shall resign from any board upon the request of the ChoiceCare Parent,
provided that the request has a reasonable basis. Employee may also retain any
honoraria paid to him, provided that, if the honoraria to be paid for any one
appearance or presentation exceeds $2,000, the Chief Executive Officer of the
ChoiceCare Parent and the Chairman of the board of directors of the ChoiceCare
Parent shall determine, in their sole discretion, whether Employee is entitled
to retain the amount in excess of $2,000.
4. TERM.
4.1 The initial term of this Agreement shall begin January 1, 1997
and end December 31, 1999.
4.2 This Agreement shall automatically be renewed at the end of its
initial term (or at the end of any renewal term provided hereunder) for a
renewal term of three additional years, unless Employer gives Employee, or
unless Employee gives Employer, written notice by July 1 of the last contract
year of the initial term of this Agreement (or by July 1 of the last contract
year in which a renewal term of this Agreement is in effect) that this Agreement
shall terminate at the end of the then-current term. If this Agreement
terminates at the end of a then-current term by reason of Employer giving a
timely written notice to Employee that this Agreement shall terminate at the end
of the then-current term, then Employer shall be deemed to have terminated
Employee's employment for purposes of the other provisions of this Agreement. On
the other hand, if this Agreement terminates at the end of a then-current term
by reason of Employee giving a timely written notice to Employer that this
Agreement shall terminate at the end of the then-current term, then, except as
may otherwise be provided under subsection 14.1 below or any other provision of
this Agreement, Employee shall be deemed to have voluntarily resigned his
employment with Employer for purposes of the other provisions of this Agreement.
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4.3 For all purposes of this Agreement, a "contract year" means a
calendar year, beginning January 1 and ending the following December 31, which
occurs during the term of this Agreement. Also, for all purposes of this
Agreement, a "contract term" means either the initial term of this Agreement or
any renewal term of this Agreement. In addition, also for all purposes of this
Agreement, any reference to the "then-current contract year" refers to the
contract year which is then in effect and any reference to the "then-current
term" refers to the contract term which is then in effect.
5. COMPENSATION AND BENEFITS: During the term of this Agreement:
5.1 Employee shall receive an initial base salary at the annual rate
of $234,000, payable in equal consecutive bi-weekly installments. Such base
salary shall be reviewed annually effective as of the first pay period beginning
on or after January 1 of each contract year after the initial contract year of
this Agreement, and shall be reviewed at other times if Employer substantially
changes the responsibilities of Employee, and shall be adjusted on a basis
consistent with the executive compensation philosophy of Employer. In no event
shall Employee's base salary be reduced for any contract year (whether or not
such contract year occurs in the initial term of this Agreement or in a renewal
term of this Agreement) below his base salary for the immediately preceding
contract year.
5.2 Employer may during the term of this Agreement, consistent with
its approach to the rest of its executive group:
(a) Award an annual incentive to Employee based on
Employer's overall success as a for-profit community
resource, Employer's accomplishment of strategic
imperatives, Employer's continuous improvements of
quality outcomes and Employee's performance of his
duties under this Agreement during the previous contract
year, in accordance with Employer's Executive Annual
Incentive Plan (the "Annual Incentive Plan"), as amended
from time to time by the boards of directors of
Employer. The amount of any incentive under the Annual
Incentive Plan shall be determined by Employer's boards
of directors in a manner consistent with the terms and
practices of the Annual Incentive Plan. However, in the
event of a change in control (as defined in subsection
7.3 below), the overall value of the annual incentive
under the Annual Incentive Plan, as may be reasonably
determined by the Employer's boards of directors (taking
into account the possibility of meeting the goals which
are used under such plan to determine if Employee is
entitled to the incentive as well as the potential
amount of the incentive), shall not be reduced for the
contract year in which the change in control occurs or
any subsequent contract year below the overall value of
the annual incentive
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under such plan which has been established by the
Employer prior to the change in control for the contract
year in which the change in control occurs (or, if no
annual incentive has been established for such contract
year by the time of the change in control, for the next
preceding contract year);
(b) Award an incentive to Employee pursuant to the
provisions of Employer's Executive Long-Term Incentive
Plan (the "Long-Term Plan"), as amended from time to
time by the boards of directors of Employer. The amount
of any incentive under the Long-Term Plan shall be
determined by Employer's boards of directors in a manner
consistent with the terms and practices of the Long-Term
Plan. However, in the event of a change in control (as
defined in subsection 7.3 below), in no event shall the
overall value of the incentive under the Long-Term Plan
which has been established by the Employer prior to the
change in control with respect to the contract year
which begins January 1, 1997, as may be reasonably
determined by the Employer's boards of directors, be
reduced; and
(c) Cause awards to be granted to Employee pursuant to the
provisions of Employer's 1996 Long Term Stock Incentive
Plan (the "Stock Incentive Plan"), as amended from time
to time by the boards of directors of Employer. The
amount of any award granted under the Stock Incentive
Plan shall be determined by Employer's boards of
directors in a manner consistent with the terms and
practices of the Stock Incentive Plan.
5.3 Employee shall be entitled during the term of this Agreement to:
(a) Paid vacation as established under Employer's paid time
off policy. Vacation use and carryover rules will be in
accordance with the rules established for other
executives of Employer. However, in the event of a
change in control (as defined in subsection 7.3 below),
the overall value of such vacation benefits, as may
reasonably be determined by the Employer's boards of
directors, shall not be less at any time on or after the
change in control and while this Agreement is in effect
than the value of the vacation benefits provided
Employee under this Agreement immediately prior to the
change in control.
(b) Tax-qualified retirement plan benefits, disability
insurance benefits, group term life insurance benefits,
medical benefits, dental benefits and such other similar
employment privileges,
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perquisites and benefits as are afforded generally from
time to time to other members of the executive
management group of Employer. However, in the event of a
change in control (as defined in subsection 7.3 below),
the overall value of such benefits, considered in the
aggregate and as may be reasonably determined by the
Employer's boards of directors, shall not be less at any
time on or after the change in control and while this
Agreement is in effect than the value of the
tax-qualified retirement plan benefits, disability
insurance benefits, group term life insurance benefits,
medical benefits, dental benefits and such other similar
employment privileges, perquisites and benefits provided
Employee under this Agreement immediately prior to the
change in control.
(c) Participate in the Supplemental Executive Retirement
Plan ("SERP") attached hereto as Exhibit A, in
accordance with the terms of SERP. However, in event of
a change in control (as defined in subsection 7.3
below), the percent of Employee's compensation allocated
to the SERP shall not be reduced for any contract year
which ends after the change in control below the percent
of his compensation which is allocated to the SERP for
the immediately preceding contract year.
Employee (or, if applicable, any other recipient of any benefits
provided under this subsection 5.3) shall be solely responsible and liable for
payment of any taxes imposed on Employee (or, if applicable, such recipient)
resulting from the provision of any benefits under this subsection 5.3,
including but not limited to any life insurance benefits.
5.4 Employer shall reimburse Employee (or provide an expense allowance)
for travel, entertainment, continuing education and other expenses which are
reasonably incurred by Employee in the promotion of Employer's business,
provided Employee provides a proper accounting for such expenses.
6. TERMINATION; SEVERANCE BENEFITS.
6.1 Employer may terminate this Agreement and Employee's employment
hereunder at any time for Cause. If Employee's employment hereunder is
terminated for Cause, Employee shall not be entitled to any payments or benefits
hereunder except for (i) unpaid salary already earned and (ii) unpaid benefits
which are provided under subsection 5.3 above, have already become vested and
are payable upon such termination of employment under the terms and practices of
the plans or arrangements under which such benefits are provided. For all
purposes of this Agreement, "Cause" means:
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(a) Employee's fraud, dishonesty or willful misconduct in
the performance of his duties to Employer; or
(b) Employee's material breach of any material provision of
this Agreement; provided that a material breach shall
not be deemed to have occurred if Employee's breach
relates to the receipt of a payment of money and
Employee cures such breach within thirty (30) days of
receipt by Employee of a written notice of such breach.
6.2 If Employee's employment hereunder terminates because of his
voluntary resignation as an employee of Employer, then, except as may otherwise
be provided under subsection 6.7 below or any other provision of this Agreement,
Employee shall not be entitled to any payments or benefits hereunder except for
(i) salary already earned and (ii) unpaid benefits which are provided under
subsection 5.3 above, have already become vested and are payable upon such
termination of employment under the terms and practices of the plans or
arrangements under which such benefits are provided.
6.3 If Employee's employment hereunder terminates by reason of his
death, then, in addition to any other payment which may be provided under
subsection 8.2 below or any other provision of this Agreement, Employee's estate
(or, where applicable or the context requires, the surviving members of his
family or his beneficiaries) shall be entitled to (i) his unpaid salary which
has already been earned, (ii) an amount equal to the product obtained by
multiplying his targeted incentives with respect to the contract year in which
his termination occurs under the Annual Incentive Plan and the Long-Term Plan
(if any) by a fraction having a numerator equal to the number of days he was an
employee of Employer in such contract year and a denominator equal to the number
of days in such contract year, (iii) any incentives which have been earned for
prior contract years under the Long-Term Plan but have not yet been paid (since
an incentive earned for a contract year under such plan is not normally payable
until after a further period of continuous future employment), (iv) any benefits
due under any group term life insurance benefits in effect for him at the time
of his death under subsection 5.3(b) above and (v) any other unpaid benefits
which are provided under subsection 5.3 above, have already become vested (or
vest by reason of his death) and are payable upon such termination of employment
under the terms and practices of the plans or arrangements under which such
benefits are provided.
6.4 If Employee's employment hereunder terminates by reason of his
permanent disability, then, in addition to any other payment which may be
provided under subsection 8.2 below or any other provision of this Agreement,
Employee shall be entitled to (i) his unpaid salary which has already been
earned, (ii) an amount equal to the product obtained by multiplying his targeted
incentives with respect to the contract year in which his termination occurs
under the Annual Incentive Plan and the Long-Term Plan (if any) by a fraction
having a numerator equal to the number of days he was an employee of Employer in
such contract year and a denominator equal to the number of days in such
contract year, (iii)
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any incentives which have been earned for prior contract years under the
Long-Term Plan but have not yet been paid (since an incentive earned for a
contract year under such plan is not normally payable until after a further
period of continuous future employment), (iv) any benefits due him under any
disability insurance applicable to him and in effect at the time he becomes
permanently disabled under subsection 5.3(b) above and (v) any other unpaid
benefits which are provided under subsection 5.3 above, have already become
vested (or vest by reason of his permanent disability) and are payable upon such
termination of employment under the terms and practices of the plans or
arrangements under which such benefits are provided. For all purposes of this
Agreement, Employee shall be deemed to be "permanently disabled" and to have
incurred a "permanent disability" if he, by reason of his physical or mental
injury, illness or condition, is determined to be disabled for a period which is
expected will exist until his death under the disability insurance which is then
in effect for him under subsection 5.3(b) above.
6.5 Employer shall have the right to terminate Employee's employment
hereunder without Cause at any time. In the event Employee's employment with
Employer terminates for any reason other than Cause, Employee's death or
permanent disability or his voluntary resignation, then, except as may otherwise
be provided under Sections 7 and 8 below or any other provision of this
Agreement, Employee shall be entitled to (i) his unpaid salary which has already
been earned prior to his termination of employment, (ii) an amount equal to the
product obtained by multiplying his targeted incentives with respect to the
contract year in which his termination occurs under the Annual Incentive Plan
and the Long-Term Plan (if any) by a fraction having a numerator equal to the
number of days he was an employee of Employer in such contract year and a
denominator equal to the number of days in such contract year, (iii) any
incentives which have been earned prior to his termination of employment for
prior contract years under the Long-Term Plan but have not yet been paid (since
an incentive earned for a contract year under such plan is not normally payable
until after a further period of continuous future employment) and (iv) any other
unpaid benefits which are provided under subsection 5.3 above, have already
become vested and are payable upon such termination of employment under the
terms and practices of the plans or arrangements under which such benefits are
provided. In addition, subject to the immediately following sentence and
provided Employee agrees not to file any administrative charge or lawsuit
relating to his prior employment with Employer and agrees to release Employer
and all of its then current and former directors, trustees, officers, employees,
agents, members and affiliated companies from any and all claims, in such form
as is determined by Employer and consistent with Employer's normal practices
concerning employee releases, Employer: (i) shall pay for executive outplacement
services for Employee, up to a maximum cost of $25,000 (adjusted annually in
accordance with the CPI), through a mutually agreeable outplacement consulting
firm; and (ii) shall make in this situation severance payments to Employee,
payable on a bi-weekly basis, equal to Employee's base rate of salary in effect
at the time of his termination of employment. The severance payments provided
under the immediately preceding sentence shall be made with respect to the
period following Employee's termination of employment until the end of the
twelve month period beginning on the date of Employee's termination of
employment with Employer.
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6.6 At any time that Employee is receiving compensation or payments
pursuant to subsection 6.5 above, Employee shall continue to participate in the
health, disability and life insurance plans of Employer applicable to executive
employees of Employer or be provided comparable benefits.
6.7 If Employee's employment with Employer terminates by reason of
his voluntary resignation after at least one year has expired following a change
in control (as defined in subsection 7.3 below) and prior to the end of the
contract term which is in effect one year after the change in control, then,
subject to the immediately following sentence and provided Employee agrees not
to file any administrative charge or lawsuit relating to his prior employment
with Employer and agrees to release Employer and all of its then current and
former directors, trustees, officers, employees, agents, members and affiliated
companies from any and all claims, in such form as is determined by Employer and
consistent with Employer's normal practices concerning employee releases,
Employer, in addition to any payments otherwise payable under subsection 6.2
above, shall make in this situation severance payments to Employee, payable on a
bi-weekly basis, equal to Employee's base rate of salary in effect at the time
of his termination of employment. The severance payments provided under the
immediately preceding sentence shall be made with respect to the period
following Employee's termination of employment until the end of the twelve month
period beginning on the date of Employee's termination of employment with
Employer.
7. PAYMENT FOLLOWING A CHANGE IN CONTROL AND INVOLUNTARY TERMINATION.
7.1 Subject to the following provisions but notwithstanding any
other provision of this Agreement to the contrary, if a change in control (as is
defined below) occurs and Employee's employment with Employer terminates for any
reason, other than for Cause, Employee's death or permanent disability or his
voluntary resignation, during the period which begins six months prior to the
date of the change in control and ends two years after the date of the change in
control, Employee shall be entitled to a lump sum payment, which shall be made
within 60 days after the later of Employee's termination of employment or the
date on which all conditions have occurred to result in a change in control, in
an amount equal to two and one-half (2.5) times the sum of: (i) Employee's
then-current annual base rate of salary; (ii) the amount set forth by Employer
as the target for Employee's incentive for the then-current contract year under
the Annual Incentive Plan; and (iii) the total dollar amount of the allocations
for his account under the SERP (not including allocations that reflect interest
or earnings) and any perquisite allowance that, but for Employee's termination
of employment, would otherwise be paid, available or provided for him by the
Employer for the then-current contract year. Notwithstanding the foregoing, the
amount of any payment otherwise required by the immediately preceding sentence
shall be reduced (but not below zero dollars) by the amount of any retention
incentive payment that Employee has previously received (or is entitled to
receive within 60 days of his termination of employment) under subsection 8.1
below or subsection 8.2 below but, except as is otherwise set forth in
subsection 7.2 below, shall be in addition to any other payments or benefits
provided under the other provisions of
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this Agreement. Further, and notwithstanding the provisions of subsection 7.2
below, Employee shall also, if he is entitled to the payment described in the
foregoing sentences of this subsection 7.1, be paid an amount equal to the
product obtained by multiplying his targeted incentives with respect to the
contract year in which his termination occurs under the Annual Incentive Plan
and the Long-Term Plan (if any) by a fraction having a numerator equal to the
number of days he was an employee of Employer in such contract year and a
denominator equal to the number of days in such contract year, plus any
incentives which have been earned for prior contract years under the Long-Term
Plan but have not yet been paid (since an incentive earned for a contract year
under such plan is not normally payable until after a further period of
continuous future employment).
7.2 If a change in control payment described in subsection 7.1 above
is made, then, notwithstanding any other provision of this Agreement to the
contrary, Employee shall not be entitled to any payments under Section 6 above
that relate to any period which ends after his termination of employment and
that are based upon or calculated with respect to Employee's base salary,
then-current or otherwise, or the Annual Incentive Plan or Long-Term Plan.
7.3 For all purposes of this Agreement, a "change in control" means
and occurs on the date of: (i) the election of persons constituting at least 50%
of the whole number of directors of the ChoiceCare Parent, if such persons were
not nominated by the nominating committee of the ChoiceCare Parent or, if so
nominated, were not recommended by a majority of the directors in office prior
to being nominated by such nominating committee unless the person nominated is
nominated to take the place of an individual previously so recommended by the
directors who has died, become disabled or chose not to serve, in which event
that nominee shall be deemed to be recommended by the majority of the directors
in office if such majority recommends that nominee at the meeting of directors
next following the nomination of such person; (ii) any consolidation or merger
of the ChoiceCare Parent (subject to the condition that, within two years after
such consolidation or merger, individuals who were directors of the ChoiceCare
Parent immediately prior to such consolidation or merger cease to constitute at
least 66-2/3% of the board of directors of the ChoiceCare Parent or its
successor by consolidation or merger); (iii) any sale, lease, exchange or other
transfer, in one transaction or a series of related transactions (and other than
to a directly or indirectly majority-owned subsidiary of the ChoiceCare Parent)
of all, or substantially all, of the assets of the ChoiceCare Parent; (iv) the
sale, whether by outright purchase, merger, consolidation, reorganization or
other form of transaction (but not including a reorganization solely involving
affiliated companies), or the execution of a definitive agreement (subject only
to regulatory approvals or other similar conditions) for the sale, of at least
33-1/3% of the ownership and/or voting interests in any direct or indirect
subsidiary or subsidiaries of the ChoiceCare Parent if such subsidiary or
subsidiaries before such sale held assets that constituted all or substantially
all of the assets of the ChoiceCare Parent and its direct and indirect
subsidiaries on a consolidated basis (subject to the condition that, other than
for purposes of subsection 6.7 above and Section 8 below, the execution of a
definitive agreement for such a sale as opposed to the closing of the sale
contemplated by such executed definitive agreement shall not be considered
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a change in control unless there is a closing of the sale contemplated by such
definitive agreement within one year of the execution of such definitive
agreement); (v) the sale, whether by outright purchase, merger, consolidation,
reorganization or other form of transaction (but not including a reorganization
solely involving affiliated companies), or the execution of a definitive
agreement (subject only to regulatory approvals or other similar conditions) for
the sale, of at least 33-1/3% of the ownership and/or voting interests in the
ChoiceCare Parent to one purchaser, related purchasers or several purchasers
acting directly or indirectly in concert (subject to the condition that, other
than for purposes of subsection 6.7 above and Section 8 below, the execution of
a definitive agreement for such a sale as opposed to the closing of the sale
contemplated by such executed definitive agreement shall not be considered a
change in control unless there is a closing of the sale contemplated by such
definitive agreement within one year of the execution of such definitive
agreement); or (vi) the approval by the shareholders of the ChoiceCare Parent of
any plan or proposal for the liquidation of dissolution of the ChoiceCare
Parent.
8. RETENTION INCENTIVE. If a change in control (as defined in
subsection 7.3 above) or a strategic investor purchase (as is defined below)
occurs while this Agreement is in effect, then Employee will be eligible for a
retention incentive (in addition to any other payments or benefits provided
under the other provisions of this Agreement, including but not limited to the
provisions of Sections 5, 6 and 7 above) in accordance with the following
provisions:
8.1 If Employee is continuously employed by Employer to the
end of the retention incentive period (as is defined below), then Employee shall
be entitled to a retention incentive under this Section 8 which is payable in a
lump sum within 60 days after the end of such retention incentive period and
which is equal to the lesser of (i) an amount equal to one and one-quarter
(1.25) times his annual base rate of salary in effect on the date of the change
in control or strategic investor purchase, as applicable and whichever is
earlier, or (ii) $375,000.
8.2 If, after the earlier of a change in control or a
strategic investor purchase but prior to the end of the retention incentive
period, Employee's employment with Employer is terminated for any reason other
than Cause or his voluntary resignation, then Employee shall be entitled to a
retention incentive under this Section 8 which is payable in a lump sum within
60 days after Employee's termination of employment and which is equal to the
retention incentive that would be paid Employee under subsection 8.1 above by
reason of the change in control or, if applicable, an earlier strategic investor
purchase if Employee had been continuously employed by Employer to the end of
the retention incentive period.
8.3 Notwithstanding any other provision of this Section 8 to
the contrary, no more than one retention incentive may be paid under this
Section 8, and thus the payment of any retention incentive under any subsection
of this Section 8 shall terminate and nullify any right of Employee to any
additional incentive which may otherwise arise under another subsection of this
Section 8.
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8.4 For purposes of this Agreement, a "strategic investor
purchase" means, and occurs on the date of, the purchase or obtaining by any
person, corporation, partnership or other organization of stock possessing less
than 33-1/3% of the total combined voting power of all classes of stock of the
ChoiceCare Parent together with the option or right to purchase in the future
additional stock of the ChoiceCare Parent which would permit such person,
corporation, partnership or other organization to own stock possessing 33-1/3%
or more of the total combined voting power of all classes of stock of the
ChoiceCare Parent. In addition, for purposes of this Agreement, the "retention
incentive period" means the period which begins on the date immediately
following the earlier of a change in control or a strategic investor purchase
(such date referred to herein as the "beginning date") and which ends on the
date which is 21 months after the beginning date.
9. NON-COMPETE COVENANTS AND CONFIDENTIAL INFORMATION.
9.1 Employee agrees that during the term of this Agreement and
for a period of one year after his termination of employment with Employer for
any reason whatsoever (or, if Employee either is entitled to a retention
incentive under Section 8 above after such termination of employment or has been
paid a retention incentive under Section 8 above prior to such termination of
employment, for a period of two years after such termination of employment),
Employee shall not, without the express written consent of Employer, anywhere in
the United States where the Employer was doing business or actively planning to
do business during Employee's term of employment: (i) compete with Employer in
the managed health care business; or (ii) interfere with, disrupt or attempt to
interfere with or disrupt the relationship between Employer and any person or
business that was a customer, supplier, lessor, contractor or employee of
Employer during Employee's term of employment with Employer. Notwithstanding the
above, Employee may, without breaching the provisions of this subsection 9.1,
work for an employer in the managed health care business or an employer that
interferes, disrupts or attempts to interfere with or disrupt the relationship
between Employer and any person or business that was a customer, supplier,
lessor, contractor or employee of Employer during Employee's term of employment
with Employer, provided that: (i) no more than ten percent (10%) of such new
employer's business is conducted in areas where Employer is conducting business
as of the date of termination of the employment of Employee with Employer; (ii)
such new employer does not provide either health insurance or managed care
services to ten percent (10%) or more of the population in the areas where
Employer is conducting business as of the termination of employment of Employee
with Employer; or (iii) the markets in which Employer is conducting, or actively
planning to conduct, business as of the date of termination of Employee's
termination with Employer and for which Employee will have certain duties or
responsibilities with the new employer, as measured by revenues or enrollment
within such areas, do not exceed ten percent (10%) of all markets for which
Employee will have certain duties or responsibilities with the new employer, as
measured by revenues or enrollment within all such markets (provided that this
clause (iii) shall not apply if Employee has voluntarily resigned his employment
with Employer other than by a voluntary resignation which still results in an
amount being payable under subsection 6.7 above). For
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purposes of this subsection 9.1, if Employee, at the time of Employee's
termination of employment with Employer, only has duties and responsibilities
with Employer as to certain specified, and not all, areas or markets in which
Employer then does business, then any reference to "Employer" in this subsection
9.1 shall be deemed to refer only to the part of the Employer which involves the
areas and markets in which Employee has duties and responsibilities at the time
of his termination of employment with Employer.
9.2 Employee agrees that, during the term of this Agreement or
at any time thereafter, Employee will not, directly or indirectly, disclose,
divulge, discuss, copy or otherwise use or suffer to be used in any manner, in
competition with or contrary to the interests of Employer or any affiliated
companies, the customer lists, proprietary organizational methods or other trade
secrets of Employer or any affiliated companies, it being acknowledged by
Employee that all such information regarding the business of Employer and
affiliated companies compiled or obtained by, or furnished to, Employee while
Employee shall have been employed by or associated with Employer is confidential
information and Employer's exclusive property.
9.3 Employee expressly agrees and understands that the remedy
at law for any breach by him of this Section 9 will be inadequate and that the
damages flowing from such breach are not readily susceptible to being measured
in monetary terms. Accordingly, it is acknowledged that, upon adequate proof of
Employee's violation of any legally enforceable provision of this Section 9,
Employer shall be entitled to immediate injunctive relief and may obtain a
temporary order and permanent injunction restraining any threatened or further
breach. However, nothing in this Section 9 shall be deemed to limit Employer's
remedies at law or in equity for any breach by Employee of any of the provisions
of this Section 9 which may be pursued or availed of by Employer.
9.4 Employee has carefully considered the nature and extent of
the restrictions upon him and the rights and remedies conferred upon Employer
under the provisions of this Section 9, and hereby acknowledges and agrees that
the same are reasonable in time and territory, are designed to eliminate
competition which otherwise would be unfair to Employer, do not stifle the
inherent skill and experience of Employee, would not operate as a bar to
Employee's sole means of support, are fully required to protect the legitimate
interests of Employer and do not confer a benefit upon Employer disproportionate
to the detriment to Employee which is caused by the provisions of this Section
9.
10. SEVERABLE PROVISION. The provisions of this Agreement are
severable, and, if any one or more provisions are determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions of this
Agreement and any partially unenforceable provision of this Agreement, to the
extent enforceable in any jurisdiction, shall nevertheless be binding and
enforceable hereunder.
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11. ASSIGNMENTS AND BINDING AGREEMENT. This Agreement may not be
assigned by one party hereto without the consent of the other, except that this
Agreement may be assigned by Employer to any affiliated company. Notwithstanding
the foregoing general restriction on voluntary assignments, the rights and
obligations of the parties under this Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective successors,
assigns, heirs, personal representatives and estates, which successors and
assigns in the case of Employer shall include (i) any affiliated company to
which this Agreement is assigned by Employer, (ii) any successor of the
ChoiceCare Parent or the ChoiceCare Operating Company by merger, combination or
reorganization in any manner, whether such successor is a corporation, limited
liability company, partnership (either general or limited), business trust or
other organization or person, and whether or not such successor is a successor
by operation of law, (iii) any recipient of materially all the assets and/or
business of Employer in liquidation or distribution or by way of contribution of
capital, (iv) any successor to materially all the assets and/or business of
Employer by purchase or exchange, either singly or in combination, or (v) any
combination of the foregoing. Employer covenants that it will make no
distribution or contribution of assets and/or business as described in clause
(iii) of the immediately preceding sentence nor enter into any agreement of sale
or exchange of assets and/or business as described in clause (iv) of the
immediately preceding sentence without requiring the recipient(s) of such assets
or business to assume the obligations of Employer in this Agreement as a
co-obligor.
12. NOTICES. Any notice to be given under this Agreement to any party
hereto shall be deemed duly given if it is personally delivered in writing or it
is posted in the United States mails, postage prepaid, registered or certified,
return receipt requested. Further, if mailed to Employer, such a notice shall be
addressed to the ChoiceCare Parent at its principal place of business. If mailed
to Employee, such a notice shall be addressed to him at his home address last
shown on the records of Employer (or at such other address or addresses as
Employee may hereafter designate in writing to Employer).
13. WAIVER. The failure of any party hereto to this Agreement to
enforce any provision or provisions of this Agreement shall not in any way be
construed as a waiver of such provision or provisions as to any future
violations thereof nor prevent that party thereafter from enforcing each and
every other provision of this Agreement. The rights granted the parties herein
are cumulative and the waiver of any single remedy shall not constitute a waiver
of such party's right to assert all other legal remedies available to him or it
under the circumstances.
14. MISCELLANEOUS.
14.1 For all purposes of this Agreement, Employee's resignation
from his employment with Employer shall be deemed not to constitute a voluntary
resignation, and
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instead to be treated as a termination of his employment by Employer, if: (i)
such resignation occurs at least 120 days after, and no more than 180 days
after, Employer either (a) changes the principal party to which Employee reports
and which has the responsibility to evaluate Employee's performance to a party
which is not either the Chief Executive Officer of the ChoiceCare Operating
Company, the Chief Executive Officer of the ChoiceCare Parent or the Chief
Executive Officer of any corporation which owns at least 80% of the ChoiceCare
Parent or (b) reduces or changes Employee's duties to those which are not
consistent with an employment status which, if held in comparable health care
organizations in the U.S., would provide a level of salary and benefits which is
at least 90% of the level of total compensation and benefits provided Employee
under this Agreement (as determined under reasonable employment surveys
typically used by Employer in determining salary and benefit levels for its
executive group); or (ii) such resignation occurs after Employer requires
Employee to change his principal work location by at least 50 miles and Employee
refuses to make such move. In the event Employee's resignation from his
employment with Employer is treated as a termination of his employment by
Employer by reason of the provisions of clause (i) of the immediately preceding
sentence, then, for purposes of determining Employee's rights to any severance
payment described in Section 6 above, any change in control payment described in
subsection 7.1 above or any retention incentive payment under Section 8 above,
Employee shall be deemed to have had his employment with Employer terminated by
Employer on the date that Employer took the action described in clause (i) of
the immediately preceding sentence which is applicable to Employee's
resignation.
14.2 The captions set forth in this Agreement are for
convenience and reference only and shall not be deemed to construe or interpret
any term or provision set forth in this Agreement. This Agreement supersedes all
prior agreements and understandings between the parties and may not be modified
or terminated orally. No modification, termination or attempted waiver of this
Agreement shall be valid unless in writing and signed by the party against whom
the same is sought to be enforced. This Agreement shall be governed by and
construed according to the laws of the State of Ohio.
14.3 If the firm of independent outside auditors then used by
Employer (the "Auditors") determine that any payment or distribution by Employer
to or for the benefit of Employee, whether paid or payable (or distributed or
distributable) pursuant to the terms of this Agreement or otherwise, would be
subject to tax as an excess parachute payment pursuant to the provisions of
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
then, notwithstanding any other provision of this Agreement to the contrary,
Employer shall "gross up" such payment or distribution so that the net amount of
such payment or distribution, after taking into consideration the payment of the
tax imposed on Employee under Section 4999 of the Code, is the same as the
amount that such payment or distribution would be if no such tax applied.
15. ARBITRATION. Any dispute or disagreement among the parties hereto
shall be submitted to mandatory and binding arbitration at the election of any
party hereto. The
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arbitration shall be pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration shall be held in Cincinnati,
Ohio. The ChoiceCare Parent and the ChoiceCare Operating Company shall together
select one arbitrator, Employee shall select one arbitrator and the two selected
arbitrators shall select a third arbitrator. The decision of the arbitrators,
and any award rendered therein, shall be final, conclusive and binding upon the
parties hereto and any judgment thereon may be entered and enforced in any court
of competent jurisdiction. Employer shall bear 50% of all fees, costs and
expenses of the arbitration, Employee shall bear 50% of all fees, costs and
expenses of the arbitration and each party will bear all the fees, costs and
expenses of his or its own attorneys, experts and witnesses.
Signed at Cincinnati, Ohio on the 4th day of June, 1997.
EMPLOYER:
ChoiceCare Corporation
By: /s/ Daniel A. Gregorie
----------------------
ChoiceCare Health Plans, Inc.
By: /s/ Daniel A. Gregorie
----------------------
EMPLOYEE:
/s/ Michael Barber M.D.
--------------------------
Michael J. Barber, M.D.
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