EMPLOYMENT SEPARATION AGREEMENT
Exhibit 10.1
This EMPLOYMENT SEPARATION AGREEMENT (this “Agreement”) is made by and between Healthaxis,
Ltd., a Texas limited partnership (the “Company”) and an indirect wholly owned subsidiary of
HealthAxis Inc., a Pennsylvania corporation (the “Parent”), and Xxxxxxxx X. Xxxxxxxx (“Xxxxxxxx”),
as of the 10th day of March, 2008.
WHEREAS, Healthaxis and Xxxxxxxx are parties to that certain Employment Agreement dated as of
May 13, 2005, as amended by that Certain First Amendment to Employment Agreement dated as of April
20, 2007 (collectively, the “Employment Agreement”) which sets forth, among other things, the terms
and conditions pursuant to which Healthaxis or its successor will continue to employ Xxxxxxxx
and/or the amount of certain payments that would be made to Xxxxxxxx upon certain events;
WHEREAS, the Company and Xxxxxxxx have mutually agreed to terminate the Employment Agreement
and Xxxxxxxx’x employment with the Company on the terms provided in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, Healthaxis and Xxxxxxxx do hereby agree as follows:
1. Termination of Employment Agreement and Xxxxxxxx’x Employment. The Company and Xxxxxxxx
hereby agree that effective as of March 10, 2008, the Employment Agreement is terminated and shall
be of no further force or effect, and this Agreement shall hereafter govern the relative rights,
duties and obligations of the parties. In addition, effective as of March 15, 2008 (the
“Termination Date”), Xxxxxxxx’x employment with the Company is hereby terminated by mutual
agreement. Following the Termination Date, Xxxxxxxx will cooperate with the Company regarding
outstanding business opportunities or issues to the extent reasonably requested by the Company.
2. Severance and Other Post-Termination Payments and Rights. Xxxxxxxx will receive his
normal base salary through the Termination Date, and a maximum of 80 hours of accrued but unused
vacation pay per the standard vacation policy. In addition, Xxxxxxxx will be entitled to receive
the following additional post-termination payments and benefits:
(a) Severance Pay. Xxxxxxxx will be paid a total of $100,000 in severance payable
in twelve (12) equal semi-monthly installments of $8,333.33 beginning on March 31, 2008, and
continuing thereafter on the 15th and the last day of each month through the
final payment date on September 15, 2008. These severance payments will be subject to
normal tax withholding and for Xxxxxxxx’x portion of the medical/dental benefits to the
extent continued under Subsection 2(c) below. Upon Xxxxxxxx’x execution and delivery to
human resources of the appropriate election form, 401(k) plan deductions will no longer be
made;
EMPLOYMENT AGREEMENT — Page 1
(b) Final Commission Payment. On March 31, 2008, Xxxxxxxx will receive a final
commission payment of $9,375 (subject to normal tax withholding). This negotiated payment
amount shall be final, and is in lieu of any other post-termination commissions and/or
accrued but unpaid minimum guaranteed commission or bonus due or to become due under the
Employment Agreement and/or the Company’s sales compensation plan. Xxxxxxxx expressly
acknowledges and agrees that no other past or future bonuses or commissions are owed to him
or will be claimed by him on any basis.
(c) Benefits Continuation. The following benefits will be continued until the first
to occur of either (x) six (6) months from the Termination Date, or (y) the date Xxxxxxxx
becomes eligible for a similar benefit offered through a subsequent employer:
(i) Health and Dental Insurance. To the extent permitted by the specific benefit
plan, Xxxxxxxx will continue to be covered under the Company’s health and dental
plans to the extent of coverage on the Termination Date, and subject to the normal
withholding for an amount equal to the standard “employee contribution amount” for
the benefit coverage selected. To the extent the benefit plan does not permit the
Company to continue the coverage by virtue of Xxxxxxxx no longer being an employee,
then Xxxxxxxx may elect to continue coverage under COBRA and the Company will
reimburse Xxxxxxxx for the amount of the COBRA premium that exceeds the standard
“employee contribution amount” for the benefit coverage selected; and
(ii) Life & AD&D Insurance. To the extent permitted by the specific benefit plan,
Xxxxxxxx will continue to be covered under the Company’s basic life insurance and
accidental death and dismemberment plans to the extent of coverage on the
Termination Date at the Company’s cost. Xxxxxxxx does not subscribe for any
supplemental life coverage. To the extent the benefit plan does not permit the
Company to continue the coverage by virtue of Xxxxxxxx no longer being an employee,
then the coverage will not be continued beyond the Termination Date.
All other benefits will terminate in accordance with standard policies and practices as of
the Termination Date. For example, Company matching contributions in the 401(k) plan will
not be made on final commission payment, severance or other post termination payments.
(d) Stock Options. Xxxxxxxx currently holds 50,000 stock options issued pursuant to
the Healthaxis Inc. 2000 Stock Option Plan with an exercise price of $1.80 per share. These
options have previously fully vested. Consistent with the original Employment Agreement and
the original option award, these options shall remain outstanding according to the original
terms and shall be exercisable for a period of thirty-six (36) months after the Termination
Date.
(e) Restricted Stock. Xxxxxxxx currently holds 41,000 shares of restricted stock
issued pursuant to the Healthaxis Inc. 2005 Stock Incentive Plan, of which 6,250 shares have
previously vested. Consistent with the original Employment Agreement and the original
restricted stock award, all of the remaining 34,750 shares of restricted stock will become
fully vested as of the Termination Date, and Xxxxxxxx shall make a tax election regarding
this vesting in accordance with the Company’s standard procedure.
EMPLOYMENT SEPARATION AGREEMENT — Page 2
(f) Final Expenses. Xxxxxxxx shall be entitled to reimbursement for all Company
business expenses incurred in the normal course prior to the Termination Date. In addition,
the Company will reimburse Xxxxxxxx for (x) his local apartment rent for the months of April
through June 2008, (y) his local auto lease for the months of April through May 2008, plus
ordinary and reasonable lease termination fees, and his local furniture lease for the months
of April through May 2008. The standard March 2008 living expense reimbursement will also
apply. Xxxxxxxx shall be solely responsible for giving adequate written notice of
termination of each of these leases, and the Company will not be responsible for rents,
lease payments, fees or expenses except as expressly provided above related to these leases
or any other personal contractual obligations of Xxxxxxxx. The Company will also reimburse
Xxxxxxxx’x airfare and reasonable living expenses incurred for up to two (2) additional
trips to Dallas from his home in California to wind up his local affairs after his regular
commute on March 14, 2008. All requests for reimbursement shall be submitted according to
the Company’s current expense reimbursement practices. To the extent any of these expense
reimbursements are taxable to Xxxxxxxx, then the standard tax gross up amount will also be
paid consistent with past practices.
(g) Cell Phone. Xxxxxxxx’x cell phone and existing number will be transferred into
a personal account in Xxxxxxxx’x name. The Company will cooperate with Xxxxxxxx in
attempting to transfer the account on or before April 15, 2008.
3. Non-Compete. In consideration of the Company’s obligations and payments to be made under
Section 2 above, Xxxxxxxx hereby agrees that during the period beginning on the Termination Date
and ending twelve (12) months thereafter (the “Covered Time”), Xxxxxxxx will not compete with the
business of the Company. For purposes hereof, “competition” shall mean any engaging, directly or
indirectly, in the “Covered Business” (as hereinafter defined) in any state of the United States of
America (the “Covered Area”). For purposes of this Agreement, “Covered Business” shall mean
providing health insurance administration and claims processing systems and front-end claim
scanning and data capture systems and services to the Healthcare payer market consisting of
insurance companies and third party administrators. For purposes of this Section 3, the phrase
“engaging, directly or indirectly” shall mean engaging directly or having an interest, directly or
indirectly, as owner, partner, shareholder, agent, representative, employee, officer, director,
independent contractor, capital investor, lender, renderer of consultation services or advice or
otherwise (other than as the holder of less than 2% of the outstanding stock of a publicly-traded
corporation), either alone or in association with others, in the operation of any aspect of any
type of business or enterprise engaged in the Covered Business. The Company acknowledges and
agrees that nothing contained in this Agreement shall be construed to prohibit Xxxxxxxx from
performing the following business, activities, functions, or services during the Covered Time
(a) As an independent consultant to third party administrators, technology vendors
or insurance payers in a manner substantially the same xx Xxxxxxxx engaged in
immediately prior to joining the Company on June 1, 2005;
(b) Owning, operating or employed by a third party administrator, insurance company,
stop loss company, insurance agency, consulting firm, or other insurance enterprise;
or
EMPLOYMENT SEPARATION AGREEMENT — Page 3
(c) Employment with any technology or services vendor that provides systems or
services that are ancillary to or used in combination with core claims,
administration and front end services.
Xxxxxxxx understands that the provisions of this Section 3 may limit his ability to earn a
livelihood in a business similar to the business of the Company but nevertheless agrees and hereby
acknowledges that the restrictions and limitations thereof are reasonable in scope, area, and
duration, are reasonably necessary to protect the goodwill and business interests of the Company,
and that the consideration provided under this Agreement is sufficient to justify the restrictions
contained in such provisions. Accordingly, in consideration thereof and in light of the Xxxxxxxx’x
education, skills and abilities, Xxxxxxxx agrees that he will not assert that, and it should not be
considered that, such provisions are either unreasonable in scope, area, or duration, or will
prevent him from earning a living, or otherwise are void, voidable, or unenforceable or should be
voided or held unenforceable.
4. Non-Solicitation. In consideration of the Company’s obligations and payments to be made
under Section 2 above, Xxxxxxxx hereby agrees that during the Covered Time, he shall not (i)
directly or indirectly solicit or attempt to solicit any of the employees, agents, independent
contractors, or representatives of the Company or its affiliates to leave any of such entities; or
(ii) directly or indirectly solicit or attempt to solicit any of the employees, agents, independent
contractors or representatives of the Company or its affiliates to become employees, agents,
representatives or independent contractors of any other person or entity.
5. Protection of Confidential Information; Non-Disparagement. Xxxxxxxx shall hold in a
fiduciary capacity for the benefit of the Company all confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective businesses, which
was obtained by Xxxxxxxx during the his employment by the Company. Xxxxxxxx agrees that he will
not, without the prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to anyone other than
the Company and those designated by it, or otherwise use or exploit such information on behalf of
himself or any third party. Xxxxxxxx and the Company agree that each will not make any public or
private statements, comments, or communications about each other, including the Company or its
officers, directors or employees, that could constitute disparagement or that may be considered to
be derogatory or detrimental to the good name or business reputation of Xxxxxxxx or the Company or
such officers, directors or employees.
6. Enforcement. Xxxxxxxx agrees that the covenants and undertakings contained in Sections
3, 4 and 5 of this Agreement relate to matters which are of a special, unique and extraordinary
character and that the Company may not be reasonably or adequately compensated in damages in an
action at law in the event Xxxxxxxx breaches any of these covenants or undertakings. Therefore,
Xxxxxxxx agrees that the Company shall be entitled, as a matter of course, without the need to
prove irreparable injury, to an injunction, restraining order or other equitable relief from any
court of competent jurisdiction, restraining any violation or threatened violation of any of such
terms by Xxxxxxxx and such other persons as the court shall order. Xxxxxxxx agrees to pay costs
and legal fees incurred by the Company in obtaining such injunction. Rights and remedies provided
for in this Section 6 are cumulative and shall be in addition to rights and remedies otherwise
available to the parties under any other agreement or applicable law. In the event that any
provision of this Agreement shall to any extent be held
EMPLOYMENT SEPARATION AGREEMENT — Page 4
invalid, unreasonable or unenforceable in any circumstances, the parties hereto agree that the
remainder of this Agreement and the application of such provision of this Agreement to other
circumstances shall be valid and enforceable to the fullest extent permitted by law. If any
provision of this Agreement, or any part thereof, is held to be unenforceable because of the scope
or duration of or the area covered by such provision, the parties hereto agree that the court or
arbitrator making such determination shall reduce the scope, duration and/or area of such provision
(and shall substitute appropriate provisions for any such unenforceable provisions) in order to
make such provision enforceable to the fullest extent permitted by law, and/or shall delete
specific words and phrases, and such modified provision shall then be enforceable and shall be
enforced. The parties hereto recognize that if, in any judicial proceeding, a court shall refuse
to enforce any of the separate covenants contained in this Agreement, then that unenforceable
covenant contained in this Agreement shall be deemed eliminated from these provisions to the extent
necessary to permit the remaining separate covenants to be enforced. In the event that any court
or arbitrator determines that the time period or the area, or both, are unreasonable and that any
of the covenants is to that extent unenforceable, the parties hereto agree that such covenants will
remain in full force and effect, first, for the greatest time period, and second, in the greatest
geographical area that would not render them unenforceable.
7. Mutual Release. In consideration of the covenants and agreements contained herein,
including the Company’s obligations and payments to be made under Section 2 above, Xxxxxxxx on
behalf of himself, and his respective heirs, executors, administrators, affiliates, successors and
assigns, hereby releases, acquits, and forever releases and discharges the Company and the Parent
and each of their former and present agents, directors, officers, stockholders, employees,
servants, parent, affiliates, owners, subsidiaries, divisions, successors, predecessors and assigns
(all such entities and individuals hereinafter collectively referred to as the “Released Parties”)
of and from any and all claims, actions, causes of action, demands, rights, damages, debts,
compensation, costs, or other expenses, including without limitation attorneys’ fees, of any nature
whatsoever, whether known or unknown, which Xxxxxxxx ever had, now has, or which he, his heirs,
executors, administrators, successors and assigns hereafter can, shall or may have against the
Released Parties arising out of any matter, cause, acts, conduct, claims or events, including but
not limited to, each and every claim, demand or cause of action which Xxxxxxxx ever had or now has
arising out of the Employment Agreement or Xxxxxxxx’x association or employment with Released
Parties, as an employee, officer, independent contractor or consultant, or the cessation thereof,
and any written or oral representations made to Xxxxxxxx thereby, and any federal, state, or local
statute, rule, regulation or principle of common law, including, but not limited to, any claims
under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e et seq.; the Age
Discrimination in Employment Act (and Older Worker Benefits Protection Act), as amended, 29 U.S.C.
§§ 621 et seq.; the Americans with Disabilities Act, 42 U.S.C. §§ 12101 et seq.; the Employee
Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq.; or under any other
federal, state or local statute, rule or regulation or principle of employment or contract law.
Xxxxxxxx acknowledges and agrees that he has had an opportunity to participate in and review
all strategic discussions and activity of the Company and the Parent regarding their exploration of
strategic alternatives and that he has made the decision to proceed to enter into this Agreement at
this time without reliance on any representation or warranty by the Released Parties regarding the
status or likely outcome or timing of the ongoing strategic activities.
EMPLOYMENT SEPARATION AGREEMENT — Page 5
Xxxxxxxx also acknowledges and agrees that he has no right to participate in any executive
compensation plan or equity awards for 2008 that may be approved on or after the Termination Date.
Xxxxxxxx agrees that the release contained in this Section 7 includes a full release of any and all
claims actions, causes of action, demands, rights, damages, compensation, or other benefits that
Xxxxxxxx may now or hereafter have or claim to have arising out of or based on the relative timing
of the entry into this Agreement with the timing of the consummation of a strategic transaction by
the Released Parties or the establishment or approval of any compensation plan or equity awards to
Company executives for 2008.
In consideration of the covenants and agreements contained herein, the Company on behalf of
itself and all its affiliates constituting the Released Parties, and their successors and assigns,
hereby releases, acquits, and forever releases and discharges Xxxxxxxx of and from any and all
claims, actions, causes of action, demands, rights, damages, debts, compensation, costs, or other
expenses, including without limitation attorneys’ fees, of any nature whatsoever, whether known or
unknown, which any such parties ever had, now has, or which they or their successors and assigns
hereafter can, shall or may have against Xxxxxxxx arising out of any matter, cause, acts, conduct,
claims or events, including but not limited to, each and every claim, demand or cause of action
which they ever had or now has arising out of the Employment Agreement or Xxxxxxxx’x association or
employment with Released Parties, as an employee, officer, independent contractor or consultant, or
the cessation thereof, and any written or oral representations made to them by Xxxxxxxx, and any
federal, state, or local statute, rule, regulation or principle of common law or regulation or
principle of employment or contract law.
Nothing contained in this Section 7 shall release, acquit, or discharge any claims, actions,
causes of action, demands, rights, damages, debts, compensation, costs, or other expenses,
including without limitation, attorneys’ fees, arising out of or relating to this Agreement.
8. Successors. This Agreement is personal to Xxxxxxxx and without the prior written
consent of the Company shall not be assignable by Xxxxxxxx otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be enforceable by
Xxxxxxxx’x legal representatives. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company and/or the Parent to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or otherwise.
EMPLOYMENT SEPARATION AGREEMENT — Page 6
9. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal representatives.
(b) Notices. All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Xxxxxxxx:
Xxxxxxxx X. Xxxxxxxx
0000 X Xxxxxx Xxxxxx
Xxxxxx XX 00000
0000 X Xxxxxx Xxxxxx
Xxxxxx XX 00000
With a copy to:
Xxxxx X. Xxxxx, Esq.
Stack Xxxxxxxxx Xxxxxxxx & Xxxxxx P.A.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Stack Xxxxxxxxx Xxxxxxxx & Xxxxxx P.A.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
If to the Company:
Healthaxis, Ltd.
0000 X. Xxxxx Xxxxxxx 000, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
0000 X. Xxxxx Xxxxxxx 000, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
With Copy to:
Healthaxis, Inc.
0000 X. Xxxxx Xxxxxxx 000, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
0000 X. Xxxxx Xxxxxxx 000, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in writing in
accordance herewith. Notice and communications shall be effective when actually received by
the addressee.
EMPLOYMENT SEPARATION AGREEMENT — Page 7
(c) Withholding. The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(d) Waiver. Xxxxxxxx’x or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right Xxxxxxxx or the Company may
have hereunder shall not be deemed to be a waiver of such provision or right under this
Agreement, unless such waiver is expressly made in writing signed by the party waiving its
right hereunder.
(e) Entire Agreement. Xxxxxxxx and the Company acknowledge that this Agreement constitutes
the entire agreement between them and shall supersede any other agreement between the
parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties are executing this Agreement to be effective as of the day and
year first above written.
| XXXXXXXX: |
||||
| /s/Xxxxxxxx X. Xxxxxxxx | ||||
| Xxxxxxxx X. Xxxxxxxx | ||||
| HEALTHAXIS: Healthaxis, Ltd. |
||||
| By: | /s/Xxxx X. Xxxxxxxxx | |||
| Xxxx X. Xxxxxxxxx | ||||
| Its: President & CEO | ||||
EMPLOYMENT SEPARATION AGREEMENT — Page 8
