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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 30th day of April 1998, by and between THE TRIZETTO GROUP, INC., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx, an individual (the
"Executive").
R E C I T A L
The Company desires to employ Executive, and Executive desires to enter
into the employ of the Company for the period and pursuant to the terms and
conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the Company and Executive, intending
to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive as the
President and Chief Executive Officer of the Company, reporting directly to the
Board of Directors, and Executive accepts such employment and agrees to devote
substantially all his business time and efforts and skills diligently and on
such basis as shall be assigned to him by the Company as provided herein in
performing his duties hereunder for the benefit of the Company.
2. TERM. The initial term of Executive's employment hereunder shall
be for a period of three (3) years, commencing on the date of this Agreement.
Executive's employment is subject to earlier termination as hereafter specified.
3. POSITION AND DUTIES.
3.1. SERVICE WITH THE COMPANY. During the term of this
Agreement, Executive agrees to perform such duties and on such basis as shall be
assigned to him from time to time by the Board of Directors; such duties,
however, to be commensurate with Executive's position as President and Chief
Executive Officer of the Company.
3.2. NO CONFLICTING DUTIES. During the term hereof, Executive
shall not serve as an officer, director, employee, consultant or advisor to any
other business, unless such other service is approved by the Board of Directors
of the Company. Executive hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement, and
agrees that during the term of this Agreement he will not render or perform
services, or enter into any contract to do so, for any other corporation, firm,
entity or person which are inconsistent with the provisions of this Agreement.
4. COMPENSATION.
4.1. BASE SALARY. As compensation for all services to be
rendered by Executive under this Agreement, the Company shall pay to Executive a
base annual salary of One Hundred Ninety-Two Thousand Dollars ($192,000) ("Base
Salary"), which shall be paid on a regular basis in accordance with the
Company's normal payroll procedures and policies. The amount of the Base Salary
shall be reviewed annually by the Board of Directors on each anniversary of this
Agreement.
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Executive's performance, the performance of the Company and such other factors
as the Board of Directors deem appropriate shall be considered in such review.
Executive shall also participate in a bonus plan as recommended by the
Compensation Committee and approved by the Board of Directors.
4.2. PARTICIPATION IN BENEFIT PLANS. Executive shall be
entitled to participate in all employee benefit plans or programs generally
available to employees of the Company, to the extent that his position, title,
tenure, salary, age, health and other qualifications make him eligible to
participate therein. The Executive's participation in any such plan or program
shall be subject to the provisions, rules and regulations thereof that are
generally applicable to all participants therein.
4.3. EXPENSES. In accordance with the Company's policies
established from time to time, the Company will pay or reimburse the Executive
for all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement.
4.4. LOAN. The Company has loaned to Executive One Hundred
Thousand Dollars ($100,000) pursuant to a Promissory Note, a copy of which is
attached as Exhibit A. Twenty-Five Thousand Dollars ($25,000) of the principal
amount of such Note shall be forgiven by the Company (along with any accrued but
unpaid interest on such forgiven amount) on each anniversary of the date of this
Agreement, so long as Executive is, on such anniversary date, an employee of the
Company. Executive acknowledges that any such forgiveness of the loan may result
in taxable income to Executive.
5. TERMINATION.
5.1. TERMINATION BY COMPANY WITHOUT CAUSE. The Company may
terminate Executive's employment pursuant to this Agreement without cause (as
defined below) by thirty (30) days written notice to Executive.
5.2. TERMINATION BY THE COMPANY FOR CAUSE. Any of the
following acts or omissions shall constitute grounds for the Company to
terminate Executive's employment pursuant to this Agreement for "cause":
(a) The continued, unreasonable refusal or omission
by Executive to perform any material duties required of him by this Agreement or
as reasonably requested by the Board of Directors of the Company if consistent
with the terms of this Agreement;
(b) Any material act or omission by Executive
involving malfeasance or gross negligence in the performance of Executive's
duties to, or material deviation from any of the material policies or directives
of, the Company, in a manner that materially damages the Company;
(c) Conduct on the part of Executive which
constitutes the breach of any statutory or common law duty of loyalty to the
Company, in a manner that materially damages the Company; or
(d) Any illegal act by Executive which materially
and adversely affects the business of the Company or any felony (other than
traffic violations) committed by Executive, as evidenced by conviction thereof,
provided that the Company may suspend the Executive with pay while any
allegation of such illegal or felonious act is investigated; or
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Termination by the Company for cause shall be accomplished by written
notice to Executive and shall be preceded by a written notice providing a
reasonable opportunity for Executive to correct his conduct. Any such
termination shall be without prejudice to any other remedy to which the Company
may be entitled either at law, in equity, or under this Agreement.
5.3. TERMINATION FOR DEATH OR DISABILITY. Executive's
employment pursuant to this Agreement shall be immediately terminated without
notice by the Company (i) upon the death of the Executive or (ii) upon the
Executive becoming totally disabled. For purposes of this Agreement, the term
"totally disabled" means an inability of Executive, due to a physical or mental
illness, injury or impairment, to perform a substantial portion of his duties
for a period of one hundred eighty (180) or more consecutive days, as determined
by the Company's Board of Directors.
5.4. TERMINATION FOR GOOD REASON. Executive's employment
pursuant to this Agreement may be terminated by Executive for "good reason" if
Executive voluntarily terminates his employment as a result of any of the
following:
(a) Without Executive's prior written consent, a
reduction in his then current Base Salary;
(b) The taking of any action by the Company that
would substantially diminish the aggregate value of the benefits provided the
Executive under the Executive's medical, health, accident, disability insurance,
life insurance, thrift and retirement plans in which he was participating on the
date of this Agreement, other than any such reduction which is (i) required by
law, (ii) implemented in connection with a general concessionary arrangement
affecting all employees or affecting the group of employees (senior management)
of which the Executive is a member or (iii) generally applicable to all
beneficiaries of such plans;
(c) Without Executive's prior written consent, a
relocation of the Executive's place of employment outside of Orange County,
California;
(d) Resignation as a result of unlawful
discrimination, as evidenced by a final court order;
(e) A reduction in duties and responsibilities which
results in Executive no longer having duties customary for a President and Chief
Executive Officer; or
(f) The Company materially breaches any provision of
this Agreement.
5.5. PAYMENTS UPON TERMINATION. If during the term of this
Agreement, the Company terminates Executive's employment, except as provided in
Sections 5.2 or 5.3 hereof, or the Executive resigns for one of the reasons
stated in Section 5.4, Executive shall be entitled to the following
compensation: (i) the portion of his then current Base Salary which has accrued
through his date of termination, (ii) any vested incentive to which Executive is
entitled as of the date of termination pursuant to any bonus or incentive
compensation plan in which he is then participating, provided the payment
thereof is not contingent or conditional on Executive's continued employment
with the Company or the satisfaction of any other condition which has not been
satisfied, (iii) any payments for unused vacation and reimbursement expenses,
which are due, accrued or payable at the date of Executive's termination, and
(iv) a severance payment in an amount (the "Severance Amount") equal to his then
current Annual Base Salary. All payments required to be made by the Company to
the Executive pursuant to this Section 5.5 shall be paid on a regular basis in
accordance with the Company's normal
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payroll procedures and policies, including, without limitation, the Severance
Amount which shall be paid at such times and in such amounts consistent with the
Company's normal payroll procedures and policies over one year immediately
succeeding the date of termination. If the Company terminates the Executive's
employment pursuant to Sections 5.2 or 5.3, or if Executive voluntarily resigns
(except as provided in Section 5.4), then Executive shall be entitled to the
compensation set forth in items (i), (ii) and (iii) above. Amounts due under the
Promissory Note referenced in Section 4.4 may be set off against any payments
due under this Section 5.5.
6. CONFIDENTIAL INFORMATION, PROPRIETARY RIGHTS. Executive
acknowledges that in the course of employment at the Company, Executive will
have access to a variety of confidential information that the Company considers
its legally protected trade secrets. This includes files, records, lists and
other documents identifying current and potential customers of the Company and
their needs and preferences, as well as information about the Company's business
plans, sales and marketing strategies, costs, prices, finances, methods of
operation, and other know-how ("Trade Secrets"). Executive agrees to keep the
Trade Secrets absolutely confidential, and not to use or disclose them except in
the proper performance of his duties while employed by the Company. Executive
shall execute any other employee confidentiality and/or proprietary rights or
invention assignment agreements reasonably requested by the Company.
Executive also acknowledges that it would be virtually
impossible to avoid exploiting the Trade Secrets if he were to accept employment
with a competitor of the Company. In order to protect the Trade Secrets, as well
as the investment that the Company has made and will continue to make in its
Trade Secrets, and as consideration for the benefits of this Agreement, during
the term of this Agreement, and (i) for one (1) year after termination in the
event of a termination pursuant to Section 5.1 or Section 5.4, or (ii) for two
(2) years after termination in the event of a resignation by Executive (other
than pursuant to Section 5.4) or a termination pursuant to Section 5.2 or
Section 5.3(ii), Executive will not compete with the business of the Company in
the United States, either directly or indirectly, as an employee, consultant,
shareholder, owner, or otherwise, for himself or on behalf of any other entity.
Executive shall not, during the term of his employment for two
(2) years thereafter, solicit (i) any employee or consultant of the Company to
leave the Company for any reason, or (ii) any customer of, or vender to, the
company to cease or reduce its business with the Company, or (iii) any customer
of the Company not to utilize the services or products of the Company.
7. ASSIGNMENT. This Agreement shall not be assignable, in whole or
in part, by either party without the written consent of the other party, except
that the Company may, without the consent of Executive, assign its rights and
obligations under this Agreement to an affiliate or to any corporation, firm or
other business entity (i) with or into which the Company may merge or
consolidate, or (ii) to which the Company may sell or transfer all or
substantially all of its assets. After any such assignment by the Company, the
Company shall be discharged from all further liability hereunder and such
assignee shall thereafter be deemed to be the Company for the purposes of all
provisions of this Agreement including this Section 7.
8. SUCCESSORS. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
9. INJUNCTIVE RELIEF. Executive agrees that it would be difficult
to compensate the Company fully for damages for any violation of the provisions
of this Agreement. Accordingly, Executive specifically agrees that the Company
shall be entitled to temporary and permanent injunctive
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relief to enforce the provisions of this Agreement, to the extent that such
relief is provided by law for such violation. This provision with respect to
injunctive relief shall not, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief.
10. MISCELLANEOUS.
10.1. GOVERNING LAW. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
California.
10.2. ARBITRATION/GOVERNING LAW. To the fullest extent
permitted by law, any dispute, claim or controversy of any kind (including but
not limited to tort, contract and statute) arising under, in connection with, or
relating to this Agreement or Employee's employment, shall be resolved
exclusively by binding arbitration in Orange County, California in accordance
with the commercial rules of the American Arbitration Association then in
effect. The Company and Executive agree to waive any objection to personal
jurisdiction or venue in any forum located in Orange County, California. No
claim, lawsuit or action of any kind may be filed by either party to this
Agreement; arbitration is the exclusive dispute resolution mechanism between the
parties hereto. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. The validity, interpretation, effect and enforcement of
this Agreement shall be governed by the laws of the State of California.
10.3. PRIOR AGREEMENTS. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understanding with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.
10.4. WITHHOLDING TAXES. The Company may withhold from any
salary and benefits payable under this Agreement all federal, state, city or
other taxes or amounts as shall be required to be withheld pursuant to any law
or governmental regulation or ruling.
10.5. AMENDMENTS. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.
10.6. NO WAIVER. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
10.7. SEVERABILITY. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect.
10.8. COUNTERPART EXECUTION. This Agreement may be executed by
facsimile and in counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year set forth above.
"Company"
THE TRIZETTO GROUP, INC.,
a Delaware corporation
By: /s/ [Signature Illegible]
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Secretary/Treasurer/CFO
"Executive"
/s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx
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