Exhibit 10.1
SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") is made effective as of the
31st day of December, 2007 (the "Effective Date") between HC Innovations, Inc.,
a Delaware corporation (the "Company"), and Jeffrey L. Zwicker ("Zwicker").
RECITALS
A. Zwicker has been Chief Financial Officer of the Company from May
2005 until the Effective Date.
B. Zwicker is retiring from the Company and thereby ending his
employment relationship with the Company and is concurrently resigning as Chief
Financial Officer of the Company and from all officer and other positions he has
with the Company and its affiliates.
C. In recognition of the substantial past services of Zwicker to
the Company and Zwicker's willingness to provide the Company with the
non-competition and related covenants provided herein, the parties desire to
amicably conclude Zwicker's employment with the Company and its affiliates on
the terms set forth in this Agreement.
In consideration of the mutual promises contained in this Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged, the undersigned parties, intending to be legally bound, agree
as follows:
AGREEMENTS
1. RETIREMENT; RESIGNATION FROM OFFICER POSITIONS. Zwicker hereby
resigns as Chief Financial Officer of the Company and from all officer and other
positions he has with the Company and its affiliates, in each case as of the
Effective Date. Any employment relationship he has with the Company and its
affiliates is also concluded as of the Effective Date.
2. SEVERANCE PAYMENTS. Subject to Zwicker's continuing compliance
with all the terms of this Agreement, the Company shall pay Zwicker an aggregate
of $100,000, representing six (6) months of Zwicker's current salary of $200,000
(the "Severance"). The Severance shall be payable in twenty-six (26) equal
semi-monthly installments in accordance with the Company's customary payroll
practices and shall be reduced by all appropriate tax withholdings and other
customary payroll deductions.
3. MEDICAL INSURANCE. For a period of twelve (12) months from the
Effective Date, the Company shall either continue to provide Zwicker with
coverage under the Company's current medical and dental insurance plans
(collectively, "Medical Insurance") or, in the event Zwicker shall not be
eligible for such coverage, pay the cost of COBRA coverage for Zwicker, which
coverage shall be substantially equivalent to the Medical Insurance, for twelve
(12) months. Zwicker is responsible for complying with all terms and conditions
of any such insurance plan except for timely payments of the premium, which
shall be the sole responsibility of the Company.
4. CONDITIONS TO SEVERANCE AND MEDICAL INSURANCE.
(a) The Severance payment provided in Section 2, the Medical
Insurance or COBRA payments provided in Section 3 shall continue only until such
time as Zwicker shall perform any services for a "Competing Business" (as
defined in Section 5), without having received the prior written consent of the
President of the Company. The rendering of consulting or other services to any
Competing Business, without first having obtained prior written consent for such
activity from the President of the Company, shall entitle the Company to
terminate all remaining Severance payments, Medical Insurance or COBRA benefit
payments.
(b) The severance obligations of the Company set forth in Sections 2
and 3 herein shall constitute the total payment and severance obligations under
this Agreement. Zwicker understands and warrants that no monetary or other
benefit other than as set forth in Sections 2 and 3 is or shall be due or
claimed to be due from the Company.
5. RESTRICTIVE COVENANTS.
(a) Zwicker hereby covenants and agrees with the Company that, in
consideration for the payments and other valuable consideration to be provided
to Zwicker under this Agreement, for a period (the "Restricted Period") of
thirty-six (36) months from the Effective Date, Zwicker shall not, without the
prior written consent of the President of the Company (which consent shall not
be unreasonably withheld), either directly or indirectly, on his own account or
as an executive, consultant, agent, partner, joint venturer, owner, director or
shareholder of any other person, firm, corporation, partnership, limited
liability company or other entity:
(i) Perform services for any Competing Business, as
hereinafter defined, that are substantially similar in whole or in part
to those that he performed for the Company, including specifically, but
not limited to, participating in the financing or executive management
of a business providing specialty disease and care management focused on
caring for small populations of medically unstable and frail
individuals. For purposes of this Agreement, the term "Competing
Business" shall mean any entity engaged in the research, financing,
development, marketing or sale of products or services which are or
would be competitive with those products and services being marketed by
the Company at the Effective Date. This covenant shall apply only within
the "Territory" that is defined as the fifty states of the United
States. Zwicker recognizes and agrees that in his capacity as Chief
Financial Officer of the Company, his duties extended throughout the
entire service area of the Company, which includes, at a minimum, the
fifty states of the United States and that, because of the executive
nature of Zwicker's position with the Company, in order to afford the
Company protection from unfair competition by Zwicker following his
resignation, this covenant must extend throughout the stated Territory.
Zwicker further acknowledges that this covenant does not prohibit him
from engaging in his entire trade or business, but only a very limited
segment of the specialty disease care management industry. This covenant
also shall not prohibit Zwicker from owning up to five (5) percent of
the common stock of any publicly traded specialty disease care
2
management company for investment purposes, which investment shall not
be deemed, in and of itself, to be a violation of this Section 5(a)(i);
or
(ii) Solicit any current employee, supplier, customer, or
client of the Company with whom Zwicker dealt on behalf of the Company
within the year preceding the Effective Date, for the purpose of
researching, financing, developing or purchasing, selling or marketing
products or services which are or would be competitive with those
products or services marketed by the Company at the Effective Date.
(b) Zwicker acknowledges and agrees that breach by him of the
provisions of this Section 5 shall entitle the Company, at its option and in
addition to any other remedies available to it at law or in equity, to terminate
this Agreement, including, but not limited to, termination of the remaining
payments and benefits, if any, to be made to Zwicker under Sections 2 and 3
hereof. Said termination shall not negate or affect the release of claims made
by Zwicker under Section 6(a), which shall remain in full force and effect. If
the Company should elect to terminate the remaining payments and benefits to be
made to Zwicker in the event of Zwicker's breach of this Section 5, however, it
agrees that the restrictive covenants contained in this Section 5 shall, from
that point in time, no longer be in effect.
6. MUTUAL RELEASE OF CLAIMS.
(a) Zwicker, and anyone claiming through Zwicker or on Zwicker's
behalf, agree to release the Company and the other Released Parties (as defined
below) with respect to any and all claims, whether currently known or unknown,
that Zwicker now has, has ever had, or may ever have against the Company and any
of the other Released Parties arising from or related to any agreement, act,
omission, or thing occurring or existing at any time prior to the Effective
Date. Without limiting the foregoing, the claims released by Zwicker hereunder
include, but are not limited to:
(i) All claims for or related in any way to Zwicker's
employment, compensation, other terms and conditions of employment, or
termination from employment with the Company, including without
limitation all claims for salary, bonus, severance pay, vesting of
options or any other compensation or benefit whether under an employment
agreement, any other agreement, any Company policy, plan or program or
otherwise;
(ii) All claims that were or could have been asserted by
Zwicker or on Zwicker's behalf: (a) in any federal, state, or local
court, commission, or agency; (b) under any common law theory; or (c)
under any employment, contract, tort, federal, state, or local law,
regulation, ordinance, constitutional provision, or executive order; and
(iii) All claims that were or could have been asserted by
Zwicker or on Zwicker's behalf arising under any of the following laws,
as amended from time to time: the Age Discrimination in Employment Act,
Title VII of the Civil Rights Act of 1964, the Americans with
Disabilities Act, the Employee Retirement Income Security Act, the
Family and Medical Leave Act, the Worker Adjustment and Retraining
Notification Act, or any other related laws, rules and regulations
enacted in the State of Connecticut.
3
(b) The Company and the Released Parties agree to release Zwicker
and his heirs and assigns with respect to any and all claims, whether currently
known or unknown, that the Company and the Released Parties now have, have ever
had, or may ever have against Zwicker arising from or related to any agreement,
act, omission, or thing occurring or existing at any time prior to the Effective
Date. The only exception shall be that this release shall not prohibit the
Company with respect to any criminal or fraudulent acts or omissions by Zwicker
that are unknown by the Company as of the Effective Date.
(c) The term "Released Parties" as used in this Agreement includes:
(i) the Company and its past, present, and future parents, divisions,
subsidiaries, partnerships, affiliates, and other related entities (whether or
not they are wholly owned); and (ii) the past, present, and future owners,
trustees, fiduciaries, administrators, shareholders, directors, officers,
partners, agents, representatives, members, associates, employees, and attorneys
of each entity listed in subpart (i) above; and (iii) the predecessors,
successors, and assigns of each entity listed in subparts (i) and (ii) above.
(d) The parties acknowledge and agree that the releases provided in
this Section 6 shall not apply to (i) breaches of the terms of this Agreement
(ii) vested benefits under any employee welfare plan, including without
limitation, 401(k), health and welfare plans, (iii) any rights to
indemnification under applicable statutes, bylaws or contracts which existed
prior to the date of this Agreement or as the same may in the future be
expanded, and (iv) rights under COBRA, workmen's compensation plans and HIPPA
(Health Insurance Protection Portability Act).
7. MUTUAL COVENANT NOT-TO-SUE.
(a) Zwicker covenants and agrees not to file or initiate a lawsuit
against any of the Released Parties in regard to any claims, demands, causes of
action, suits, damages, losses and expenses released herein, arising from acts
or omissions of the Company occurring on or before the Effective Date, and
Zwicker will ask no other person or entity to initiate such a lawsuit on his
behalf. If Zwicker breaches this covenant and agreement, the remaining payments
and benefits, if any, to be paid to Zwicker under Sections 2 and 3 shall
immediately terminate, and Zwicker shall indemnify and hold harmless the Company
and any of the Released Parties from any and all costs incurred by any and all
of them, including their reasonable attorneys' fees, in defending against such
lawsuit.
(b) The Company covenants and agrees not to file or initiate a
lawsuit against Zwicker in regard to any claims, demand, causes of action,
suits, damages losses and expenses released herein, arising from acts or
omissions of Zwicker occurring on or before the Effective Date, and the Company
will ask no other person or entity to initiate such a lawsuit on its behalf. The
only exception shall be that this covenant-not-to-sue shall not prohibit the
Company with respect to any criminal or fraudulent acts or omissions by Zwicker
that are unknown by the Company as of the Effective Date. If the Company
breaches this covenant and agreement, the Company shall indemnify and hold
harmless Zwicker from any and all costs incurred by him, including his
reasonable attorneys' fees, in defending against such lawsuit.
8. NO PROCEEDINGS INITIATED. Zwicker represents and warrants that
neither he nor anyone acting on his behalf has filed or initiated any charge or
claim against the Company in any
4
administrative or judicial proceeding. The Company represents and warrants that
neither it nor anyone acting on its behalf has filed or initiated any charge or
claim against Zwicker in any administrative or judicial proceeding.
9. COVENANTS OF THE PARTIES.
(a) Zwicker agrees that he shall not disparage the Company or its
officers, directors, employees, shareholders, agents or representatives or its
products or services or products or services in development, or otherwise seek
to reduce the good will of the Company or the reputation of the Company or its
officers, directors, employees, agents, or representatives. The Company, on
behalf of its directors and executive officers, agrees not to disparage Zwicker
or to act in any way to diminish Zwicker's reputation.
(b) Immediately after the Effective Date of this Agreement, Zwicker
shall deliver to the Company possession of any and all property owned or leased
by the Company which may then be in Zwicker's possession or under his control,
including, without limitation, any and all such keys, credit cards, equipment,
supplies, books, records, files, computer equipment (with the exception of the
Company's laptop computer S/N 01189 which will be transferred to Zwicker by the
Company), computer software and other such tangible and intangible property of
any description whatsoever. If, following the date of this Agreement, Zwicker
shall receive any mail, including, but not limited to, electronic mail,
addressed to the Company or to Zwicker as an officer of the Company, Zwicker
shall immediately deliver or forward such mail, unopened, and in its original
envelope or package, to the Company. If, following the date of this Agreement,
the Company shall receive any mail, including, but not limited to, electronic
mail, addressed to Zwicker individually and not in his former capacity as an
officer of the Company, the Company shall immediately deliver or forward such
mail, unopened, and in its original envelope or package, to Zwicker.
(c) The Company hereby agrees to indemnify and hold harmless to the
fullest extent provided therein, in accordance with Delaware law and the
Articles of Incorporation and By-Laws of the Company, Zwicker from and against
any and all actions, suits, proceedings, claims, demands, judgments, expenses
(including reasonable attorney fees), losses and damages arising or resulting
from Zwicker's performance of his duties as Chief Financial Officer.
10. NO VOLUNTARY ASSISTANCE. Zwicker hereby covenants and agrees
that, except under compulsion of law, he will not voluntarily assist, support,
or cooperate with, directly or indirectly, any entity or person alleging or
pursuing any claim, administrative charge, or cause of action against the
Company, including without limitation, by providing testimony or other
information, audio or video recordings, or documents. If compelled to testify,
nothing contained herein shall in any way inhibit or interfere with Zwicker
providing completely truthful testimony or producing documents. In addition, and
notwithstanding anything elsewhere appearing in this Agreement, nothing herein
shall prevent or hinder Zwicker's full cooperation with any investigation or
other proceeding by any federal, state or local governmental agency, including,
but not limited to, U.S. Securities and Exchange Commission.
11. NO ADMISSION OF LIABILITY. The parties agree and acknowledge
that this Agreement is a full and complete compromise of the matters released
herein between the parties
5
hereto; that neither the releases nor the negotiations for this Agreement and
the settlement embodied herein, including all statements or communications made
to date, shall be considered admissions by them.
12. CONFIDENTIALITY.
(a) Zwicker acknowledges that the information, observations and data
that has been obtained by him during his involvement with the Company as an
employee concerning the business or affairs of the Company which has not been
released publicly by authorized representatives of the Company ("Confidential
Information") is the property of the Company. Accordingly, Zwicker agrees, on
behalf of himself and any affiliate, that he will not disclose to any person not
authorized by the Company to receive such Confidential Information, or use for
his own account, any of the Confidential Information previously obtained during
his employment or which is hereafter obtained during the term of his advisory
agreement as provided in Section 5 hereof without the prior written consent of
the Company, unless, and to the extent that, the aforementioned matters (i) are
or become generally known to and available for use by the public otherwise than
as a direct or indirect result of Zwicker's acts or omissions to act in the
protection of such Confidential Information (ii) are disclosed to Zwicker by a
third party who, to the best knowledge of Zwicker, is not thereby in breach of
any duty to the Company or any of its affiliates. Notwithstanding the foregoing,
Zwicker shall be entitled to disclose Confidential Information if required by
law, court order, or similar compulsory process; provided, that Zwicker shall
promptly notify the Company of any disclosure proposed to be made pursuant to
this sentence in order to afford the Company a reasonable opportunity to contest
such disclosure or obtain appropriate confidentiality assurances. For purposes
of this Agreement, the term "affiliate" means any person, partnership,
corporation or business entity controlling, controlled by or under common
control with the Company or Zwicker, as the case may be.
(b) Zwicker acknowledges that the Confidential Information is
proprietary and of value to the Company and, accordingly, Zwicker will follow
reasonable security practices with regard to the protection and non-disclosure
of the Confidential Information. If Zwicker is required to disclose any
Confidential Information in accordance with applicable law, Zwicker will,
whenever possible, first provide to the Company a copy of the proposed
disclosure so that the Company may have a sufficient opportunity to review and
comment thereon and Zwicker agrees to seek, at the Company's expense, such
maximum confidential treatment of such disclosure as the Company requests or may
be permitted by applicable law. Zwicker's obligations under this Article will
survive any termination of this Agreement.
(c) Zwicker acknowledges and agrees that breach by him of the
provisions of this Section 12 shall entitle the Company, at its option and in
addition to any other remedies available to it at law or in equity, to terminate
this Agreement, including, but not limited to, termination of the remaining
payments and benefits, if any, to be made to Zwicker under Sections 2 and 3
hereof. Said termination shall not negate or affect the release of claims made
by Zwicker under Section 6(a). If the Company should elect to terminate the
remaining payments and benefits to be made to Zwicker in the event of Zwicker's
breach of this Section 12, however, it agrees that the confidentiality provision
contained in this Section 12 shall, from that point in time, no longer be in
effect.
6
13. OTHER RIGHTS.
(a) Zwicker is advised to seek legal counsel regarding the terms of
this Agreement. Zwicker acknowledges that he has sought legal counsel regarding
the terms and effect of this Agreement.
(b) Zwicker acknowledges that this Agreement releases only those
claims which exist as of the Effective Date.
14. JURISDICTION/CHOICE OF FORUM. This Agreement, including its
interpretation or performance, or any controversy or dispute (including any
statutory claim) arising out of or otherwise related to this Agreement, shall be
governed by, and construed in accordance with, the laws of the State of
Connecticut without giving any force or effect to the provisions of any conflict
of law rule thereof. The parties further agree that any controversy or dispute
(including any statutory claim) arising out of or otherwise related to this
Agreement shall be tried exclusively in the state courts of Fairfield County,
Connecticut.
15. ADVICE OF ATTORNEYS. The parties acknowledge that they have
fully read, understood and unconditionally accepted this Agreement after
consulting with their attorneys or having the opportunity to consult with an
attorney, and acknowledge that this Agreement is mutual and binding upon all
parties hereto regardless of the extent of damages allegedly suffered by any of
the parties hereto.
16. COUNTERPARTS. This Agreement may be signed in counterpart
originals with the same force and effect as if signed in a single original
document.
17. COOPERATION OF THE PARTIES. The parties to this Agreement agree
to cooperate fully and to execute any and all supplementary documents and to
take all additional actions that may be necessary or appropriate to give full
force and effect to the basic terms and intent of this Agreement and the
settlement embodies herein. Zwicker further agrees to fully cooperate with the
Company in any and all pending or future investigations, inquiries or litigation
whether in any judicial, administrative, or public, quasi-public or private
forum, in which the Company is involved or may become involved, whether or not
Zwicker is a defendant in such investigations, inquiries, proceedings or
litigation. Zwicker shall provide truthful and accurate testimony, background
information, and other support and cooperation as the Company may reasonably
request. The Company will compensate Zwicker for all reasonable travel and other
out-of-pocket expenses incurred by him in assisting the Company under this
Section 17 upon submission of supporting documentation reasonably acceptable to
the Company.
18. MODIFICATION IN WRITING ONLY. Neither this Agreement nor any
provision of this Agreement may be modified or waived in any way except by an
agreement in writing signed by each of the parties hereto consenting to such
modification or waiver.
19. CONSTRUCTION OF THIS AGREEMENT. The parties agree that they each
have participated in the drafting of this Agreement, and that, as a result, this
Agreement shall not be construed in favor of or against any party hereto.
7
20. HEADINGS AND CAPTIONS. The headings and captions used in the
Agreement are for convenience of reference only, and shall in no way define,
limit, expand, or otherwise affect the meaning or construction of any provision
of this Agreement.
21. REMEDIES. Zwicker agrees that money damages cannot adequately
compensate the Company in case of a breach or threatened breach of the covenants
contained in Sections 5 or 12 and that, accordingly, the Company would be
entitled to injunctive relief upon such breach. Zwicker understands that it is
the Company's intent to have the covenants contained in Sections 5 and 12
enforced to their fullest extent. Accordingly, Zwicker and the Company agree
that, if any portion of the restrictions contained in Sections 5 or 12 are
deemed unenforceable, the court shall construe and enforce these covenants to
the fullest extent permitted by law.
22. NOTICES. Any and all notices necessary or desirable to be served
hereunder shall be in writing and shall be
(a) personally delivered, or
(b) sent by certified mail, postage prepaid, return receipt
requested, or guaranteed overnight delivery by a nationally recognized express
delivery company, in each case addressed to the intended recipient at the
address set forth below.
(c) For notices sent to the Company:
HC Innovations, Inc.
10 Progress Drive, Suite 200
Shelton, CT 06484
Attention: President
(d) For notices sent to Zwicker:
To the address on file with the Company
Either party hereto may amend the addresses for notices to such party hereunder
by delivery of a written notice thereof served upon the other party hereto as
provided herein. Any notice sent by certified mail as provided above shall be
deemed delivered on the third (3rd) business day next following the postmark
date which it bears.
23. BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, jointly and severally, and the past,
present and future heirs, executors, administrators, agents, executors,
servants, attorneys, affiliated persons and entities, predecessors and
successors in interest and assigns, regardless of form, trustees in bankruptcy
or otherwise, and any other representative or entity acting on behalf of,
pursuant to, or by virtue of the rights of each.
24. NON-ASSIGNABILITY: ASSIGNMENT IN THE EVENT OF ACQUISITION OR
MERGER. This Agreement, and the benefits hereunder are not assignable or
transferable by Zwicker, and the rights and obligations of the Company under
this Agreement will automatically be deemed to be assigned by the Company to any
corporation or entity acquiring all or substantially all of the
8
assets or stock of the Company or of any corporation or entity with or into
which the Company may be merged or consolidated; provided, however, that in the
event of Zwicker's death, the Company shall make such payments as may then be
due and owing to Zwicker, if any, to Zwicker's estate.
25. ENTIRE AGREEMENT. This Agreement contains the entire agreement
of the parties concerning the subject matter hereof, and is intended and shall
be construed as an integrated agreement. Each party understands, acknowledges
and hereby represents and warrants that this Agreement supersedes any and all
prior or contemporaneous understandings, agreements, representations and/or
promises, whether oral or written, which are not expressly set forth herein or
expressly referred to in this Agreement, and no understanding, agreement,
representation, warranty, promise or inducement has been made concerning the
subject matter of this Agreement other than as set forth in this Agreement, and
that each party enters into this Agreement without any reliance whatsoever upon
any understanding, agreement, representation, warranty or promise not set forth
herein.
26. SEVERABILITY. Should any provision of this Agreement be
determined to be illegal or unenforceable, such determination shall not affect
the validity or enforceability of any other provision of this Agreement.
27. COUNSEL FEES. The Company shall promptly reimburse Zwicker for
the fees and expenses of his legal counsel with respect to the review of this
Agreement, in an amount not to exceed $2,000.
[signature page follows]
9
IN WITNESS WHEREOF, the undersigned have executed this Separation
Agreement as of the Effective Date set forth above.
/s/ Jeffrey L. Zwicker
----------------------
Jeffrey L. Zwicker
Date: December 20, 2007
HC Innovations, INC.
By: /s/ David Chess, MD
-------------------
Name: David Chess, MD
Title: Chief Executive Officer
Date: December 20, 2007