EXHIBIT 10.39
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of June 11, 1999, by
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and between CAREINSITE, INC., a Delaware corporation (the "Company"), and STEVEN
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ZATZ ("Executive").
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WHEREAS, the Company desires to employ Executive on a full-time basis
and Executive desires to be so employed by the Company;
NOW, THEREFORE, in consideration of the mutual covenants in this
Agreement, the parties agree as follows:
1. Effectiveness of Agreement and Employment of Executive.
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1.1. Effectiveness of Agreement. This Agreement shall become
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effective as of June 11, 1999 (the "Effective Date").
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1.2. Employment by the Company. The Company hereby employs Executive
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and Executive hereby accepts such employment with the Company. Executive shall
report to the Chief Executive Officer or Chairman of the Board of the Company,
or to any person that the Chief Executive Officer or Chairman of the Board of
the Company may designate. Executive's title shall initially be Senior Vice
President of the Company. Executive shall perform such duties and services for
the Company, its subsidiaries and affiliates (such subsidiaries and affiliates
collectively, "Affiliates"), and at such locations, as may be designated from
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time to time by the Company. Executive shall use his best and most diligent
efforts to promote the interests of the Company and the Affiliates, and shall
devote all of his business time and attention to his employment under this
Agreement.
1.3. Confidentiality. (a) Executive understands and acknowledges that
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in the course of his employment, he will have access to and will learn
information that is proprietary to, or confidential to the Company and its
Affiliates that concerns the operation, methodology and plans of the Company and
its Affiliates, including, without limitation, business strategy and plans,
financial information, protocols, proposals, manuals, clinical procedures and
guidelines, technical data, computer source codes, programs, software, know-how
and specifications, copyrights, trade secrets, market information, Developments
(as hereinafter defined), information regarding acquisition and other strategic
partner candidates, and customer information (collectively, "Proprietary
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Information"). Executive agrees that, at all times (including following
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termination of his employment with the Company), he will keep confidential and
will not disclose directly or indirectly any such Proprietary Information to any
third party, except as required to fulfill his duties hereunder, and will not
misuse, misappropriate or exploit such Proprietary Information in any way. The
restrictions contained herein shall not apply to any
information which Executive can demonstrate (i) was known by Executive prior to
the Effective Date, (ii) was already available to the public or the Company's
industry at the time of disclosure, or subsequently becomes available to the
public or the Company's industry, otherwise than by breach of this Agreement by
Executive, (iii) was the subject of a court order for Executive to disclose or
(iv) was learned by Executive from an unrelated third party to which the Company
had disclosed such information without any duty of confidentiality. Upon any
termination of Executive's employment, Executive shall immediately return to the
Company all copies of any Proprietary Information in his possession.
(b) Executive agrees that at no time during his employment by the
Company or thereafter, shall he make, or cause or assist any other person to
make, any statement or other communication to any third party which falsely
impugns or attacks, or is otherwise critical of, the reputation, business or
character of the Company, its Affiliates or any of their respective officers or
employees.
1.4. Restrictions on Solicitation. During the period beginning on the
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Effective Date and ending on the first anniversary of the date of cessation of
the employment of Executive for any reason whatsoever (or ending on the six
month anniversary of the date of cessation of the employment of Executive
pursuant to Section 4.4 or 4.6, subject to extension under Section 4.4 or 4.6)
(the "Restricted Period"), Executive shall not, directly or indirectly, without
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the prior written approval of the Company, solicit or contact any customer, or
any prospective customer, of the Company or any of the Affiliates for any
commercial pursuit which is in competition with the Company or any of the
Affiliates, or that is contemplated from time to time by the Business Plan (as
defined below) or take away or interfere or attempt to interfere with any
custom, trade, business or patronage of the Company or any of the Affiliates.
During the Restricted Period, Executive shall not, directly or indirectly,
without the prior written approval of the Company, solicit or induce, or attempt
to induce, any employees, agents or consultants of or to the Company or any of
the Affiliates to leave the employ of the Company or such Affiliate or do
anything from which Executive is restricted by reason of this Agreement nor
shall Executive, directly or indirectly, offer or aid others to offer employment
to or interfere or attempt to interfere with any employees, agents or
consultants of the Company or any of the Affiliates. For purposes of this
Agreement, "Business Plan" shall mean, at any point in time, the then current
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business plan of the Company or any of the Affiliates and any business plans of
the Company or any of the Affiliates in effect during the prior 18 months.
1.5. Restrictions on Competitive Employment. (a) During the
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Restricted Period, Executive shall not, anywhere in the United States, directly
or indirectly, without the prior written approval of the Company, own an
interest in or, as principal, agent, employee, consultant or otherwise, engage
in activities for or render services to, any firm or business (i) engaged in
direct or indirect competition with the Company or any of its Affiliates, (ii)
developing products or services competitive with those of the Company or any of
its Affiliates or (iii) conducting any business in which the Company or any of
its Affiliates is then engaged if Executive has engaged in activities for such
business of the Company or such Affiliates or obtained Proprietary Information
with respect thereto (all of the businesses in clauses (i), (ii) and (iii)
collectively, "Competitive Business"); provided, however, that in the
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event that this Agreement is assigned by the Company to an unrelated third party
pursuant to Section 7.4, the definition of "Competitive Business" for purposes
of this Section 1.5 shall not include any products or services of such third
party that are unrelated to the products or services produced or provided by the
Company or the Affiliates immediately prior to the date of such assignment,
except to the extent Executive becomes directly or indirectly involved in the
production or provision of such third party products or services or obtains
Proprietary Information with respect thereto. Notwithstanding the foregoing,
Executive may have an interest consisting of publicly traded securities
constituting less than 1 percent of any class of publicly traded securities in
any public company engaged in a Competitive Business so long as he is not
employed by and does not consult with, or become a director of or otherwise
engage in any activities for, such company.
(b) For purposes of the covenant not to compete set forth in paragraph
(a) above, Executive acknowledges that the Company and its Affiliates presently
conduct their businesses throughout the United States. Executive agrees that
the Restricted Period and the geographical areas encompassed by such covenant
are necessary and reasonable in order to protect the Company and its Affiliates
in the conduct of their businesses. The parties intend that the foregoing
covenant of Executive shall be construed as a series of separate covenants, one
for each geographic area specified. Except for geographic coverage, each such
separate covenant shall be deemed identical in terms to the covenant set forth
in paragraph (a) above. To the extent that the foregoing covenant or any
provision of this Section 1.5 shall be deemed illegal or unenforceable by a
court or other tribunal of competent jurisdiction with respect to (i) any
geographic area, (ii) any part of the time period covered by such covenant,
(iii) any activity or capacity covered by such covenant or (iv) any other term
or provision of such covenant, such determination shall not affect such covenant
with respect to any other geographic area, time period, activity or other term
or provision covered by or included in such covenant.
1.6. Assignment of Developments. All Developments that are at any
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time made, conceived or suggested by Executive, whether acting alone or in
conjunction with others, arising out of or as a result of Executive's employment
with the Company shall be the sole and absolute property of the Company and the
Affiliates, free of any reserved or other rights of any kind on Executive's
part. During Executive's employment and, if such Developments were made,
conceived or suggested by Executive during or as a result of Executive's
employment under this Agreement or any other employment with the Company or the
Affiliates, thereafter, Executive shall promptly make full disclosure of any
such Developments to the Company and, at the Company's cost and expense, do all
acts and things (including, among others, the execution and delivery under oath
of patent and copyright applications and instruments of assignment) deemed by
the Company to be necessary or desirable at any time in order to effect the full
assignment to the Company and the Affiliates of Executive's right and title, if
any, to such Developments. For purposes of this Agreement, the term
"Developments" shall mean all data, discoveries, findings, reports, designs,
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inventions, improvements, methods, practices, techniques, developments,
programs, concepts, and ideas, whether or not patentable, relating to the
present or planned activities, or future activities, or the products and
services of the Company or any of the Affiliates.
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1.7. Remedies. Executive acknowledges and agrees that damages for a
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breach or threatened breach of any of the covenants set forth in Sections 1.3
through 1.6 will be difficult to determine and will not afford a full and
adequate remedy, and therefore agrees that the Company, in addition to seeking
actual damages in connection therewith, may seek specific enforcement of any
such covenant in any court of competent jurisdiction, including, without
limitation, by the issuance of a temporary or permanent injunction.
2. Compensation and Benefits.
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2.1. Salary. The Company shall pay Executive for services during his
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employment under this Agreement a base salary at the annual rate of $175,000
("Base Salary"). Any and all increases to Executive's Base Salary shall be
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determined by the Board of Directors of the Company, in its sole discretion.
Such Base Salary shall be payable in equal installments, no less frequently than
monthly, pursuant to the Company's customary payroll policies in force at the
time of payment, less any required or authorized payroll deductions.
2.2. Benefits. During his employment under this Agreement, Executive
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shall be entitled to participate, on the same basis and at the same level as
other similarly situated executives of the Company, in any group insurance,
hospitalization, medical, health and accident, disability, fringe benefit and
tax-qualified retirement plans or programs or vacation leave of the Company now
existing or hereafter established to the extent that he is eligible under the
general provisions thereof. In addition, the Company shall reimburse Executive
for any out-of-pocket expenses incurred by Executive to continue his group
health plan coverage with his previous employer pursuant to Section 4980B(f) of
the Internal Revenue Code of 1986, as amended, for a period commencing on the
Effective Date and ending on the earlier of (i) the relocation of Executive's
residence to the Elmwood Park, New Jersey area and (ii) the 18 month anniversary
of the Effective Date.
2.3. Expenses. Pursuant to the Company's customary policies in force
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at the time of payment, Executive shall be promptly reimbursed, against
presentation of vouchers or receipts therefor, for all authorized expenses
properly and reasonably incurred by him on behalf of the Company or its
Affiliates in the performance of his duties hereunder. Executive shall also be
reimbursed for any reasonable legal expenses incurred in connection with the
negotiation of this Agreement, in an amount not to exceed $5,000.
2.4. Travel and Living; Relocation. The Company and Executive
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understand that Executive currently maintains a residence in New Canaan,
Connecticut, but that Executive will be required initially to work at the
Company's headquarters in Elmwood Park, New Jersey. The Company agrees to
provide Executive with an allowance for temporary housing in the Elmwood Park,
New Jersey area for a period commencing on the Effective Date and ending on the
earlier of (i) the relocation of Executive's residence to the Elmwood Park, New
Jersey area and (ii) the 18 month anniversary of the Effective Date. The
Company agrees to pay any expenses related to the relocation of Executive and
his family to the Elmwood Park, New Jersey area, in an amount not to exceed
$50,000.
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3. Employment Period.
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Executive's employment under this Agreement shall commence as of the
Effective Date, and shall terminate on the fifth anniversary thereof (the
"Initial Employment Period"), unless terminated earlier pursuant to Section 4.
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Unless written notice of either party's desire to terminate this Agreement has
been given to the other party prior to the expiration of the Initial Employment
Period (or any one-month renewal thereof contemplated by this sentence), the
term of this Agreement shall be automatically renewed for successive one-month
periods.
4. Termination.
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4.1. Termination by the Company for Cause. (a) Executive's
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employment with the Company may be terminated at any time by the Company for
Cause. Upon such a termination, the Company shall have no obligation to
Executive other than the payment of Executive's earned and unpaid compensation
to the effective date of such termination.
(b) For purposes of this Agreement, the term "Cause" shall mean any of
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the following:
1. A willful failure of Executive to perform his duties in any
material respect which failure is not cured by Executive within 20 days
following written notice from the Company detailing such failure;
2. Any willful misconduct by Executive relating, directly or
indirectly, to the Company or any of its Affiliates, which breach, if
susceptible to cure, is not cured by Executive within 20 days following
written notice from the Company detailing such breach;
3. Any breach by Executive of any material provision contained
in this Agreement (including, without limitation, Sections 1.3 through
1.6), which breach, if susceptible to cure, is not cured by Executive
within 20 days following written notice from the Company detailing such
breach;
4. Any breach by Executive of a material Company policy known by
Executive, which breach, if susceptible to cure, is not cured by Executive
within 20 days following written notice from the Company detailing such
breach; or
5. Executive's conviction of a felony or crime involving moral
turpitude.
4.2. Permanent Disability. If during his employment with the Company,
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Executive shall become ill, mentally or physically disabled, or otherwise
incapacitated so as to be unable regularly to perform the duties of his position
for a period in excess of 90 consecutive days or more than 120 days in any
consecutive 12 month period, then the Company shall have the right to terminate
Executive's employment with the Company upon written notice to
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Executive. Upon such a termination, the Company shall have no obligation to
Executive other than the payment of Executive's earned and unpaid compensation
to the effective date of such termination.
4.3. Death. Executive's employment with the Company shall be deemed
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terminated by the Company upon the death of Executive and the Company shall have
no obligation to Executive or Executive's estate other than the payment of
Executive's earned and unpaid compensation to the effective date of such
termination.
4.4. Termination by the Company Without Cause. Executive's employment
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with the Company may be terminated at any time by the Company without Cause. If
the Company terminates Executive's employment without Cause (not including by
notice of the Company pursuant to Section 3 of its desire to not renew this
Agreement), the Company shall have no obligation to Executive other than (i) the
payment of Executive's earned and unpaid compensation to the effective date of
such termination, (ii) as provided in Section 5 of this Agreement and the Stock
Option Agreement (as defined below) and (iii) a continuation of Executive's Base
Salary (at the rate in effect at the time of such termination) for a period (the
"Severance Period") commencing on the date of termination and ending on the six
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month anniversary of the date of termination; provided, however, that the
Severance Period may, at the election of the Company upon written notice
provided to Executive on or prior to the 30/th/ day following the commencement
of the Severance Period, be extended by a period of up to an additional six
months, in which case the Restricted Period for purposes of Sections 1.4 and 1.5
shall be extended by same amount of time.
4.5. Liquidated Damages. Executive acknowledges that any payments and
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benefits under Sections 4 and 5 resulting from a termination of his employment
with the Company are in lieu of any and all claims that Executive may have
against the Company (other than benefits under the Company's employee benefit
plans that by their terms survive termination of employment and benefits under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and
rights to indemnification under certain indemnification arrangements for
officers of the Company), and represent liquidated damages (and not a penalty).
The Company may request that Executive confirm such acknowledgment in writing
prior to the receipt of such benefits.
4.6. Termination by Executive for Good Reason. (a) Executive's
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employment with the Company may be terminated at any time by Executive for Good
Reason. If Executive terminates his employment for Good Reason, the Company
shall have the same obligations to Executive that it would have had under
Section 4.4 if Executive's employment with the Company were terminated by the
Company without Cause.
(b) For purposes of this Agreement, the term "Good Reason" shall mean
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any of the following conditions or events which condition(s) or event(s) remain
in effect 20 days after written notice is provided by Executive to the Company
detailing such condition or event:
1. A material reduction in Executive's title or responsibilities, as
set forth in Section 1.2;
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2. The relocation of Executive's principal place of work more than 30
miles from the Elmwood Park, New Jersey area or the New York City
metropolitan area; or
3. Any material breach by the Company of this Agreement (including,
without limitation, any reduction in Executive's Base Salary).
4.7. Termination by Executive Without Good Reason. Executive may
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resign from his employment with the Company at any time without Good Reason.
Upon such a termination, the Company shall have no obligation other than the
payment of Executive's earned but unpaid compensation to the effective date of
such termination.
5. Stock Option.
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Upon the initial public offering of the Company's common stock,
Executive shall be granted an option (the "Stock Option") to purchase 160,000
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shares of the Company's common stock (the "Shares") pursuant to the terms of a
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stock option agreement to be entered into between the Company and Executive,
which agreement shall be in substantially the same form provided by the Company
to its officers generally (the "Stock Option Agreement"). The Stock Option
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shall be exercisable in accordance with the following schedule:
Number of Months Elapsed % of Stock
from the Date of Grant Option Exercisable
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30 40%
42 60%
54 80%
66 100%
In the event that Executive's employment with the Company is terminated by the
Company without Cause under Section 4.4 or by Executive for Good Reason under
Section 4.6, 20% of the Stock Option (i.e., options to purchase 32,000 Shares)
(or, if such termination occurs more than 12 but less than 30 months from the
date of grant of the Stock Option, 40% of the Stock Option (i.e., options to
purchase 64,000 Shares)), if then unvested, shall remain outstanding and
continue to vest as if Executive remained in the employ of the Company through
the earlier of (i) the next vesting date of the Stock Option and (ii) any breach
by Executive of any provision of this Agreement (including, without limitation,
Section 1.3, 1.4, 1.5 or 1.6). Notwithstanding the foregoing, all of the terms
and conditions of the Stock Option shall be governed exclusively by the express
provisions of the Stock Option Agreement.
6. Notices.
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Any notice or communication given by either party hereto to the other
shall be in writing and personally delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid, to the following
addresses:
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(a) if to the Company:
CareInsite, Inc.
River Drive Center 2
669 River Drive
Elmwood Park, New Jersey 07407-1361
Telecopier No.: (201) 703-3401
Attention: Legal Counsel
(b) if to Executive at the address set forth below.
Any notice shall be deemed given when actually delivered to such
address, or two days after such notice has been mailed or sent by Federal
Express, whichever comes earliest. Any person entitled to receive notice may
designate in writing, by notice to the other, such other address to which
notices to such person shall thereafter be sent.
7. Miscellaneous.
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7.1. Representations and Covenants. In order to induce the Company to
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enter into this Agreement, Executive makes the following representations and
covenants to the Company and acknowledges that the Company is relying upon such
representations and covenants:
(a) No agreements or obligations exist to which the Executive is a
party or otherwise bound, in writing or otherwise, that in any way
interfere with, impede or preclude him from fulfilling all of the terms and
conditions of this Agreement.
(b) Executive, during his employment, shall use his best efforts to
disclose to the Chairman of the Board or Chief Executive Officer of the
Company in writing or by other effective method any bona fide information
known by him and not known to the Chairman of the Board or Chief Executive
Officer of the Company that he reasonably believes would have any material
negative impact on the Company or an Affiliate.
7.2. Entire Agreement. This Agreement and the Stock Option Agreement
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contain the entire understanding of the parties in respect of their subject
matter and supersede upon their effectiveness all other prior agreements and
understandings between the parties with respect to such subject matter.
7.3. Amendment; Waiver. This Agreement may not be amended,
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supplemented, canceled or discharged, except by written instrument executed by
the party against whom enforcement is sought. No failure to exercise, and no
delay in exercising, any right, power or privilege hereunder shall operate as a
waiver thereof. No waiver of any breach of any provision of this Agreement
shall be deemed to be a waiver of any preceding or succeeding breach of the same
or any other provision.
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7.4. Binding Effect; Assignment. The rights and obligations of this
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Agreement shall bind and inure to the benefit of any successor of the Company by
reorganization, merger or consolidation, or any assignee of all or substantially
all of the Company's business and properties. The Company may assign its rights
and obligations under this Agreement to any of its Affiliates without the
consent of the Executive. Executive's rights or obligations under this
Agreement may not be assigned by Executive, except that the rights specified in
Section 4.3 shall pass upon the Executive's death to Executive's executor or
administrator.
7.5. Headings. The headings contained in this Agreement are for
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reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
7.6. Governing Law; Interpretation. This Agreement shall be construed
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in accordance with and governed for all purposes by the laws and public policy
(other than conflict of laws principles) of the State of New Jersey applicable
to contracts executed and to be wholly performed within such State.
7.7. Further Assurances. Each of the parties agrees to execute,
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acknowledge, deliver and perform, and cause to be executed, acknowledged,
delivered and performed, at any time and from time to time, as the case may be,
all such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be reasonably necessary to carry out the
provisions or intent of this Agreement.
7.8. Severability. The parties have carefully reviewed the provisions
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of this Agreement and agree that they are fair and equitable. However, in light
of the possibility of differing interpretations of law and changes in
circumstances, the parties agree that if any one or more of the provisions of
this Agreement shall be determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the provisions of this
Agreement shall, to the extent permitted by law, remain in full force and effect
and shall in no way be affected, impaired or invalidated. Moreover, if any of
the provisions contained in this Agreement are determined by a court of
competent jurisdiction to be excessively broad as to duration, activity,
geographic application or subject, it shall be construed, by limiting or
reducing it to the extent legally permitted, so as to be enforceable to the
extent compatible with then applicable law.
7.9. Withholding Taxes. All payments hereunder shall be subject to
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any and all applicable federal, state, local and foreign withholding taxes.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CAREINSITE, INC.
By:_______________________
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Name:
Title:
EXECUTIVE
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Steven Zatz
15 Mill Road Street
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Street
New Canaan, Connecticut 06840
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City, State, Zip Code
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