EXHIBIT 10.32
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 8, 1999 ("Commencement Date") by and between
CareAdvantage, Inc. ("Company") and Xxxxx Xxxxx ("Executive").
1. Employment. Company agrees to employ Executive, and Executive agrees to be so
employed, in the capacity of Chief Executive Officer, and shall have the duties
customary to such office and such other duties as the Board of Directors
("Board") shall reasonably determine.
2. Time and Efforts. The Executive shall: (a) render services as the Chief
Executive Officer of the Company, (b) perform duties consistent with such title
and such other related duties, not inconsistent with such title, as the Board of
Directors of the Company shall reasonably request, (c) not engage in any other
business activity and (d) devote all the Executive's business time, attention,
skill and best efforts exclusively to the Company's duties hereunder and the
business and affairs of the Company, which duties shall include having the
Executive present in the Company's offices at Iselin, New Jersey for
approximately three (3) days per week. The Company shall have the power to
direct, control and supervise the duties to be performed hereunder, the means
and the manner of performing said duties, and the terms and time for performing
said duties.
3. Compensation.
3.1 Salary. Commencing upon the Commencement Date, the Company shall pay
Executive salary for his services at an annual rate of $300,000. This
amount shall be paid in accordance with the Company's normal payroll
practices. The Company shall deduct and withhold from any and all payments
required to be made to the Executive under this Agreement any and all
Federal, state, local and other taxes that the Company determines are
required to be withheld in accordance with the Internal Revenue Code of
1986, as amended from time to time (or any corresponding provisions of
succeeding law), together with the rules and regulations promulgated
thereunder, and any other applicable statutes and regulations from time to
time in effect (including, without limitation, applicable Federal and
state income taxes, unemployment taxes and FICA contributions) and shall
pay over such amounts to the Federal, state or local government, as
applicable.
3.2. Stock Options. The Company shall provide the Executive with stock
options in accordance with Attachment A.
3.3 Benefits. The Company shall provide the Executive with the benefits as
described in Attachment B.
3.4 Expense Reimbursement. The Company shall reimburse Executive for all
reasonable and customary out-of-pocket expenses incurred in carrying out
his duties under this Agreement, including, but not limited to, reasonable
out-of-pocket living expenses incurred
while Executive is residing in the Iselin, New Jersey area and costs for
commuting between his home in Redding, Connecticut (or such other location
as then constitutes Executive's permanent residence) and Iselin, New
Jersey. Executive shall present to the Company from time to time an
itemized account of such expenses in any form required by the Company.
3.5 Severance. In the event the Company terminates this Agreement in
accordance with Section 6 after a Change of Control as defined in Section
2.2 of Attachment A, then Executive shall receive salary in accordance
with Section 3.1 for six (6) months after the date of termination.
4. Term. Except as otherwise provided, including without limitation Section 6
hereof, this Agreement shall be for a one (1) year term and shall be renewed
thereafter for successive one-year terms upon the mutual agreement of the
Company and the Executive. For purposes of this Agreement, "Term" shall mean the
period commencing on the Commencement Date and ending on the date this Agreement
terminates.
5. Indemnification; Insurance; Litigation.
5.1 Indemnification. The Company will indemnify Executive to the fullest
extent permitted by law (or the certificate of incorporation or by-laws of
the Company, whichever affords the greatest protection to Executive)
against all costs, charges and expenses whatsoever incurred or sustained
by him or his legal representatives in connection with any action, suit or
proceeding to which he may be made a party by reason of his being or
having been at any time (before, during or after the Term) a director,
officer, employee or agent of the Company, or a consultant or advisor to
the Company, or by reason of any action at any time taken by him on behalf
of the Company.
5.2 Advancement of Expenses. Expenses and costs (including a reasonable
retainer and advance against disbursements) incurred by Executive in
connection with any matter with respect to which he is entitled to
indemnification shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of Executive to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Company as authorized by this Section 5.
5.3 Indemnification Not Exclusive. The provisions of this Section 5 shall
not limit or restrict in any way the power of the Company to indemnify or
advance expenses and costs to Executive in any other way permitted by law
or be deemed exclusive of, or invalidate, any right to which Executive may
be entitled under any law, provisions of the Company's certificate of
incorporation or by-laws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in Executive's capacity as an
officer, director, consultant, advisor, employee or agent of the Company
and as to action in any other capacity while holding any such position.
5.4 Accrual of Claims; Successors. The indemnification provided or
permitted under this Section 5 shall apply in respect of any expense,
cost, judgment, fine, penalty or amount paid
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in settlement, whether or not the claim or cause of action in respect
thereof accrued or arose before or after the effective date of this
Section 5. Executive's indemnification under this Section 5 shall continue
after he shall have ceased to be a director, officer, consultant, advisor,
employee or agent and shall inure to the benefit of his heirs,
distributees, executors, administrators and other legal representatives.
5.5 Insurance. The Company shall maintain, during the Term and for six
years thereafter, directors' and officers' liability insurance covering
Executive with respect to acts and omissions occurring during the period
of time commencing on the Commencement Date and ending upon the conclusion
of the Term ("D&O Insurance"), on terms no less favorable to Executive
than the most favorable terms of such insurance (in terms of coverage)
maintained in effect by the Company at any time during the Term. The
amount of the D&O Insurance during the Term and for six years thereafter
shall be equal to (i) at least $3 million (the amount of coverage on the
date of this Agreement) or (ii) if the Company increases the amount of D&O
Insurance during the Term, the amount to which the D&O Insurance is so
increased. The Company shall use commercially reasonable efforts to
obtain, as soon as practicable after the date hereof, D&O Insurance with
increased limits of liability and lower deductibles than those in effect
on the date hereof.
5.6 Litigation. In the event of any litigation or other proceeding between
the Company and Executive with respect to the subject matter of, or the
enforcement of rights under, this Agreement, the Company shall reimburse
Executive for all costs and expenses related to such litigation or
proceeding, including reasonable attorneys' fees and expenses, provided
that the litigation or proceeding results in either a settlement requiring
the Company to make a payment to the Executive or a judgment in favor of
Executive.
6. Termination Without Cause. Either party may without cause terminate this
Agreement at any time by notifying the other not less than sixty (60) days prior
to the date such termination is to become effective. Upon the Company's notice
or receipt of the Executive's Termination Without Cause, the Company agrees to
pay the Executive his salary payable in accordance with Section 3.1 at his
residence set forth in Section 9.1 up until the date of the effectiveness of
such termination. The Executive agrees that he will, upon his notice of
termination, or receipt thereof, immediately vacate all offices of the Company
at Iselin, New Jersey and elsewhere.
7. Termination with Cause. The Company may, for cause, terminate this Agreement
immediately at any time by notifying the Executive of such termination and the
cause therefor. For this purpose, "cause" shall include each of the following:
(a) death or prolonged disability as defined by the Company's disability
insurance policy;
(b) the Executive's refusal or other failure to perform any of the
Executive's duties hereunder after written notice thereof from the Company and
the Executive's failure to cure such non-performance within ten (10) days of
receipt thereof;
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(c) the Executive's breach of this Agreement and failure to cure such
breach within ten (10) days of receipt of written notice thereof from the
Company;
(d) the Executive's commission of any act of dishonesty, fraud,
intentional material misrepresentation or moral turpitude in connection with
this employment, including, but not limited to, misappropriation or embezzlement
of any funds of the Company;
(e) the Executive's commission of any willful or intentional act having
the effect of injuring, in any material respect, the reputation, business or
business relationships of the Company;
(f) entering by the Executive of a plea of guilty or nolo contendere to,
or the conviction of the Executive for, a crime (other than a routine traffic
offense) which carries a potential penalty of imprisonment for more than ninety
(90) days and/or a fine in excess of Ten Thousand Dollars ($10,000);
(g) the Executive's habitual abuse of alcohol, prescription drugs, or
controlled substances;
(h) the Executive's commission of any material and repeated act of
misconduct or material act of insubordination in connection with his employment
(it being acknowledged that mere disagreement between the Company and the
Executive, without more, shall not constitute insubordination); or
(i) the repetition of any act or failure under subsections referenced
above, where such prior act or failure has previously been cured, it being
acknowledged and agreed by the Executive that upon the occurrence of any such
repetition, the Executive shall not have a right to further notice and shall not
have an opportunity to cure.
8. Confidentiality, Invention and Non-Compete Agreement. Simultaneously with the
execution of this Agreement, the parties shall execute the agreement entitled
"Confidentiality, Invention and Non-Compete Agreement."
9. Notices. All notices required or permitted to be given under this Agreement
shall be given by certified mail, return receipt requested, to the parties at
the following addresses or to such other addresses as either may designate in
writing to the other party.
If to Company:
Chairman of the Board of Directors
CareAdvantage, Inc.
000-X Xxxxx 0 Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
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with a copy to:
Xxxxxxx, Xxxxxx & Green, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
If to Executive:
00 Xxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
10. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of the state of New Jersey.
11. Amendments. This Agreement may be amended only in writing, signed by both
parties.
12. Non-Waiver. A delay or failure by either party to exercise a right under
this Agreement, or a partial or single exercise of that right, shall not
constitute a waiver of that or any other right.
13. Binding Effect. The provisions of this Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns.
14. Counterparts. This Agreement may be executed in one or more counterparts
each of which shall be deemed an original for all purposes.
IN WITNESS WHEREOF, the Company has by its appropriate officers, signed
and affixed its seal and Executive has signed and sealed this Agreement as of
this 8th day of January, 1999.
CAREADVANTAGE, INC. XXXXX XXXXX
By: ___________________________ ________________________
Xxxxxxx X. Xxxxxx
Chairman of the Board of Directors
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ATTACHMENT A
STOCK OPTIONS
1. Generally. As of the Commencement Date, the Executive shall have the
option to purchase common stock in an amount equal to four (4%) of the Company's
capitalization on the Commencement Date, upon the terms and conditions set forth
herein. Options for half of such total shares (i.e., options to purchase common
stock in an amount equal to two (2%) of the Company's capitalization) shall
become exercisable in accordance with Section 2.1 of this Attachment
("Time-Based Options"), and options for the remaining half of such total shares
(i.e., options to purchase common stock in an amount equal to two (2%) of the
Company's capitalization) shall become exercisable in accordance with Section
2.2 of this Attachment ("Performance Options"). Such options shall be issued
from the Company's 1996 Incentive and Non-Incentive Stock Option Plan, as
amended ("Plan"). To the maximum extent permissible under the Internal Revenue
Code of 1986, as amended (the "Code"), the Time-Based Options shall constitute
Incentive Stock Options under the Code. To the extent that any provisions of
this Attachment are inconsistent with such Plan (except to the extent required
by the Code to permit the Time-Based Options to qualify as Incentive Stock
Options under the Code), the Company agrees to use its best efforts to amend
such Plan so as to make such Plan consistent with such provisions.
2. Vesting. The options shall become exercisable over three years as
follows:
2.1 Time-Based Options. Options to purchase common stock in an
amount equal to two (2%) of the Company's capitalization shall become
exercisable in accordance with the following schedule:
(a) options to purchase 1/3 of such shares shall become exercisable
on December 31, 1999; and
(b) options to purchase the remaining 2/3 of such shares shall
become exercisable in equal monthly amounts over the period January
1, 2000, to December 31, 2001.
2.2 Performance Options. Options to purchase common stock in an
amount equal to two (2%) of the Company's capitalization shall become
exercisable in accordance with the following schedule at each Trigger
Point if the Vesting Conditions for that Trigger Point have been
satisfied:
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Vesting Amount Trigger Point Vesting Conditions
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options to purchase 1/3 January 8, 2000 Average price of the
of such shares Company's common stock
for 20 days prior to first
Trigger Point is at least
50% higher than price of
the common stock on the
Commencement Date
--------------------------------------------------------------------------------
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options to purchase 1/3 January 8, 2001 Average price of the
of such shares Company's common stock
for 20 days prior to
second Trigger Point is at
least 50% higher than
price of the common stock
on the first Trigger Point
--------------------------------------------------------------------------------
options to purchase 1/3 January 8, 2002 Average price of the
of such shares Company's common stock for
20 days prior to third
Trigger Point is at least
50% higher than price of
the common stock on the
second Trigger Point
--------------------------------------------------------------------------------
Notwithstanding the foregoing schedule, options to purchase 100% of
such shares shall become fully exercisable (a) if the average price
of the Company's common stock for 20 days prior to third Trigger
Point is at least 300% higher than the average sales price of the
Company's common stock during the thirty (30) days prior to the
Commencement Date, as reported by Bloomberg Business Services; or
(b) if either of the Company's two largest shareholders, Horizon
Blue Cross Blue Shield of New Jersey ("Horizon") and CW Ventures II,
L.P. ("CW"), sells or transfers its shares to a non-affiliated party
("Change of Control") for a price at least 300% higher than the
average sales price of the Company's common stock, during the thirty
(30) days prior to the Commencement Date, as reported by Bloomberg
Business Services. For this purpose, Horizon and CW shall not be
considered affiliated with each other.
3. Exercise Price. The exercise price for the portion of the Time-Based
Options that constitutes Incentive Stock Options under the Code shall be the
fair market value of the Company's common stock as of the Commencement Date; the
exercise price of the remaining options shall be the average sales price of the
Company's common stock during the thirty (30) days prior to the Commencement
Date, as reported by Bloomberg Business Services; provided, however, if with
respect to the Time-Based Options not constituting Incentive Stock Options under
the Code the Company's independent public accountants determine in good faith
that a charge to earnings would result on account of the use of such exercise
price, then the exercise price for such Time-Based Options shall also be the
fair market value of the Company's common stock as of the Commencement Date.
4. Duration. The options shall expire January 7, 2009.
5. Effect of Termination of Agreement. Upon the termination of this
Agreement (regardless of whether on account of Executive's death or disability),
as of the effective date of such termination the Executive shall have no further
rights in those options or portions thereof, if any which are not exercisable as
of such date; provided, however, that notwithstanding any provision in the Plan
to the contrary, the termination of this Agreement shall have no effect and
shall in no way accelerate the termination of the those options or portions
thereof, if any, that have become exercisable as of such date.
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6. Partial Exercise. Any number of shares which Executive is entitled to
purchase pursuant to Section 2 of this Attachment but which are not then
purchased may be purchased at any time thereafter prior to the termination of
the option.
7. Stockholder Approval of Plan; Registration. No later than six months
from the Commencement Date, the Company will have submitted the Plan, as amended
to conform with this Attachment, to the Company's shareholders for their
approval; and no later than one year from the Commencement Date will have caused
the shares underlying the options to be registered under the appropriate federal
and state securities laws.
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ATTACHMENT B
FRINGE BENEFITS
The Executive shall be entitled to the following fringe benefits:
1. vacation leave in the amount of 30 days per year, accruing at the rate
of 2.5 days per month;
2. other leave (sick leave, personal time, and holidays) in the amount and
on the same terms and conditions as provided to the senior management of the
Company;
3. medical insurance, life insurance, and participation in the Company's
401(k) plan on the same terms and conditions as these benefits are provided to
the senior management of the Company; and
4. disability insurance (long- and short-term) on the same terms and
conditions as provided to senior management of the Company; and
5. such other benefits as may be made available generally to the senior
management of the Company.
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