EXHIBIT 10.40
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 XXXXXX
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XXXXXXXX ("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 the Chairman of the Board of the
Company, or to any person that the Chief Executive Officer or the Chairman of
the Board of the Company may designate. Executive's title shall initially be
Chief Operating Officer of the Company. Executive shall perform such duties and
services for the Company, its subsidiaries and affiliates (as such term is
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended) (such subsidiaries and affiliates collectively, "Affiliates"), and at
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such locations, as may be designated from 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 already available to the public at the time
of disclosure, or subsequently becomes available to the public, otherwise than
by breach of this Agreement by Executive or (ii) was the subject of a court
order for Executive to disclose. 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 second anniversary of the date of cessation of
the employment of Executive for any reason whatsoever (the "Restricted Period"),
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Executive shall not, directly or indirectly, without 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
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time, the then current 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
competition with the Company or any of its Affiliates, (ii) conducting a
business of the type and character engaged in by (or contemplated by the
Business Plan of) the Company or any of its Affiliates at the time of
termination, (iii) developing products or services competitive with those of the
Company or any of its Affiliates or (iv) 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), (iii) and (iv) collectively, "Competitive Business").
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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.
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(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.
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 $190,000
("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. At Executive's election, and in lieu of his
participation in the Company's medical and health plan (the "Health Plan"), the
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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 earliest of (i)
any relocation of Executive's residence to the Elmwood Park, New Jersey area or
the Cambridge, Massachusetts area, (ii) the 18 month anniversary of the
Effective Date and (iii) an election by Executive to commence coverage under the
Health Plan.
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.
2.4. Relocation. The Company and Executive understand that Executive
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currently maintains a residence in Kansas City, but that Executive may, at the
request of the Company, be required to promptly relocate to the Company's
headquarters in Elmwood Park, New Jersey or to another office of the Company
within the United States designated by the Chief Executive Officer or the
Chairman of the Board of the Company. The Company agrees to pay any reasonable
expenses, other than any expenses relating to the purchase or sale of
Executive's residence (except for any brokerage commissions incurred by
Executive in connection with the sale of his residence in Kansas City) related
to the relocation of Executive and his family in accordance with the preceding
sentence.
2.5. Loan. During the first two years following the Effective Date,
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the Executive may request that the Company provide a loan or loans to him (each,
a "Loan") in the aggregate principal amount of up to $380,000. Any such Loan
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shall be made pursuant to, and shall otherwise be subject to, the terms of a
Secured Promissory Note in the form attached as Annex A hereto.
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 crime involving moral turpitude
or a felony.
4.2. Permanent Disability. If during his employment with the Company,
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(i) 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, or (ii) a qualified independent physician
determines that Executive is mentally or physically disabled so as to be unable
to regularly perform the duties of his position and such condition is expected
to be of a permanent duration, then the Company shall have the right to
terminate Executive's employment with the
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Company upon written notice to 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 the Synetic 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 commencing on the date
of termination and ending on the first anniversary of the date of termination.
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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a material demotion of Executive's position, as set forth in Section 1.2, which
demotion remains in effect 20 days after written notice is provided by Executive
to the Company detailing such condition or event.
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.
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5. Stock Option.
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5.1. 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 pursuant to the terms of a 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 shall be exercisable
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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.
5.2. Executive shall also be granted, as promptly as practicable after
the date hereof, subject to the receipt of an opinion from each of Xxxxxx
Xxxxxxxx LLP and PricewaterhouseCoopers LLP that such grant will not disqualify
the Merger (as defined in the Agreement and Plan of Merger dated as of May 16,
1999 among Synetic, Inc., a Delaware corporation ("Synetic"), Xxxxxx Merger Sub,
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Inc., a Delaware corporation, and Medical Manager Corporation, a Delaware
corporation), from "pooling of interests" accounting treatment, an option (the
"Synetic Stock Option") to purchase 80,000 shares of the common stock of
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Synetic pursuant to the terms of a stock option agreement to be entered into
between Synetic and Executive, which agreement shall be in substantially the
same form provided by Synetic to its officers generally under the applicable
Synetic stock option plan (the "Synetic Stock Option
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Agreement"). The Synetic Stock Option shall be exercisable in accordance with
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the following schedule:
Anniversary of the % of
Date of Grant Stock Option Exercisable
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1/st/ 20%
2/nd/ 40%
3/rd/ 60%
4/th/ 80%
5/th/ 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 Synetic Stock Option (i.e., options to purchase 16,000
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 Synetic 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 Synetic Stock Option shall be governed exclusively by the
express provisions of the Synetic 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:
(a) if to the Company:
CareInsite, Inc.
River Drive Center 2
000 Xxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Telecopier No.: (000) 000-0000
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.
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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 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, the Stock Option Agreement and
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the Synetic Stock Option Agreement 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.
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 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 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.
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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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Xxxxxx Xxxxxxxx
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Xxxxxx
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Xxxx, Xxxxx, Zip Code
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