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Document Preview Change in Control Severance Agreement |
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Title: |
Change in Control Severance Agreement |
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Entities: |
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Date: |
2004 |
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Size: |
Preview shows 9KB of 41KB total |
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Price: |
$41 |
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ID: |
#344627 |
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-------------------------------------
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") dated as
of August 16, 2004 (the "Effective Date") is entered by and between
__________ ("Executive") and First Health Group Corp., a Delaware
corporation (the "Company").
RECITALS:
---------
A. It is expected that the Company from time to time will consider
the possibility of an acquisition by another company or other change of
control. The Board of Directors of the Company (the "Board") recognizes
that such consideration can be a distraction to the Executive and can cause
the Executive to consider alternative employment opportunities. The Board
has determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued dedication
and objectivity of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company.
B. The Board believes that it is in the best interests of the
Company and its shareholders to provide the Executive with an incentive to
continue his employment and to motivate the Executive to maximize the value
of the Company upon a Change of Control for the benefit of its shareholders.
C. The Board believes that it is imperative to provide the
Executive with severance benefits upon the Executive's termination of
employment following a Change of Control that provides the Executive with
enhanced financial security and provides incentive and encouragement to the
Executive to remain with the Company notwithstanding the possibility of a
Change of Control.
D. The Company desires to provide additional inducement for
Executive to continue to remain in the employ of the Company.
AGREEMENT
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The Company and Executive hereby agree as follows:
1. Certain Defined Terms. In addition to terms defined
elsewhere herein, the following terms have the following meanings when used
in this Agreement with initial capital letters:
(a) "Affiliate" shall mean a domestic or foreign business
entity controlled by, controlling, under common control with, or in a
joint venture with, the applicable person or entity.
(b) "Base Salary" shall mean the Executive's base salary,
exclusive of bonus at the relevant time; provided, however, if the
Executive is terminating employment because of a reduction in base
salary under clause (i) of the definition of Good Reason, then Base
Salary shall mean the Executive's base salary as in effect immediately
prior to such reduction.
(c) "Benefits" shall mean medical, dental, prescription
drug, vision and group term life plans as are established by the
Company and as in effect from time to time applicable to executives of
the Company.
(d) "Board" shall mean the Board of Directors of the
Company.
(e) "Cause" shall mean Executive's:
(i) Fraud, misappropriation, embezzlement, or other act
of material misconduct against the Company or any of its
Affiliates;
(ii) Substantial and willful failure to perform specific
and lawful directives of the Board, as reasonably determined by
the Board;
(iii) Willful and knowing violation of any rules or
regulations of any governmental or regulatory body, which is
materially injurious to the financial condition of the Company;
(iv) Willful violation of the Company's policies or
standards including without limitation, Corporate Compliance
standards, confidentiality and nondisclosure; or
(v) Conviction of or plea of guilty or nolo contendere
to a felony.
(f) "Change in Control" shall mean the occurrence of any of
the following events:
(i) The acquisition, directly or indirectly, by any
"person" or "group" (as those terms are defined in
Sections 3(a)(9), 13(d), and 14(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") and the rules thereunder) of
"beneficial ownership" (as determined pursuant to Rule 13d-3 under
the Exchange Act) of securities entitled to vote generally in the
election of directors ("voting securities") of the Company that
represent 50% or more of the combined voting power of the
Company's then outstanding voting securities, other than
(A) an acquisition by a trustee or other
fiduciary holding securities under any employee benefit
plan (or related trust) sponsored or maintained by the
Company or any person controlled by the Company or by
any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by
the Company, or
(B) an acquisition of voting securities by
the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of
the stock of the Company, or
(C) an acquisition of voting securities
pursuant to a transaction described in clause (ii) below
that would not be a Change in Control under clause (ii);
Notwithstanding the foregoing, neither of the following events
shall constitute an "acquisition" by any person or group for purposes of
this clause (i): an acquisition of the Company's securities by the Company
which causes the Company's voting securities beneficially owned by a person
or group to represent 50% or more of the combined voting power of the
Company's then outstanding voting securities; provided, however, that if a
person or group shall become the beneficial owner of 50% or more of the
combined voting power of the Company's then outstanding voting securities by
reason of share acquisitions by the Company as described above and shall,
after such share acquisitions by the Company, become the beneficial owner of
any additional voting securities of the Company, then such acquisition shall
constitute a Change in Control;
(ii) the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through
one or more intermediaries) of (x) a merger, consolidation,
reorganization, or business combination, (y) a sale or other
disposition of all or substantially all of the Company's assets or
(z) the acquisition of assets or stock of another entity, in each
case, other than a transaction
(A) which results in the Company's voting
securities outstanding immediately before the
transaction continuing to represent (either by remaining
outstanding or by being converted into voting securities
of the Company or the person that, as a result of the
transaction, controls, directly or indirectly, the
Company or owns, directly or indirectly, all or
substantially all of the Company's assets or otherwise
succeeds to the business of the Company (the Company or
such person, the "Successor Entity")) directly or
indirectly, at least 50% of the combined voting power of
the Successor Entity's outstanding voting securities
immediately after the transaction, and
(B) after which no person or group
beneficially owns voting securities representing 50% or
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