EXHIBIT 10.39
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement"), is effective as of the 28th day of
April, 1998, by and among ▇▇▇▇▇▇▇ ▇. DEUTSCH, M.D., residing at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (referred to herein as "Dr. Deutsch"),
CAREADVANTAGE, INC., a Delaware corporation with its principal place of business
at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(referred to herein as "CAI"), and CAREADVANTAGE HEALTH SYSTEMS, INC., a
Delaware corporation that is wholly-owned by CAI, with its principal place of
business at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇ ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (referred to herein as "CAHS").
WHEREAS, Dr. Deutsch is a duly licensed, highly credentialed, board
certified and respected orthopedic surgeon who enjoys an outstanding reputation
in the community for his ability to provide high quality medical care and his
outstanding management and leadership skills; and
WHEREAS, CAHS provides medical and surgical management and comprehensive
provider network services to insurers and health care organizations for the
purpose of assuring high quality, cost efficient medical care. CAHS currently
provides these services to organizations operating in various states; and
WHEREAS, CAHS and Dr. Deutsch desire to enter into this Employment
Agreement ("Agreement") for Dr. Deutsch's performance of his duties as Senior
Vice President and National Medical Director of CAHS.
In consideration of the mutual premises set forth herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, CAHS and Dr. Deutsch agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth below:
1.1 "Affiliate" shall mean a corporation which, directly or indirectly,
controls, is controlled by or is under common control with CAHS, and for
purposes hereof, "control" shall mean the ownership of 20% or more of the Voting
Stock of CAHS.
1.2 "Basic Salary" shall have the meaning assigned to it in Section 5 of
this Agreement.
1.3 "Board" shall mean the Board of Directors of CAHS as duly constituted
from time-to-time.
1.4 "The Business" shall mean the business to be conducted by CAHS or any
Subsidiary including, but not limited to, Care Management Business as defined in
Section 12.3.
1.5 "Cause" shall mean:
(a) Dr. Deutsch's license to practice medicine in the State of Rhode Island, or
any other state, his Board Certification or his federal DEA registration, is
suspended, revoked, restricted or otherwise limited or terminated as a result of
any disciplinary action, conviction of a crime or finding of incompetency;
(b) Dr. Deutsch is expelled, suspended or is subject to other disciplinary
action by a professional organization having jurisdiction over Dr. Deutsch on
grounds other than for non-payment of fees or resignation by Dr. Deutsch from
any such professional organization under threat of disciplinary action on such
grounds;
(c) Dr. Deutsch is adjudicated incompetent, dies, is unable to perform
substantially all of the duties set forth hereunder due to any physical or
mental illness, injury or impairment for one hundred eighty (180) continuous
days;
(d) The continuing failure of Dr. Deutsch to perform his duties to CAHS or a
Subsidiary (other than any such failure resulting from Dr. Deutsch's incapacity
due to physical or mental illness) after written notice thereof (specifying the
particulars thereof in reasonable detail) from CAHS and a reasonable opportunity
to be heard and to cure such failure are given to Dr. Deutsch by CAHS;
(e) The conviction of Dr. Deutsch of a felony or any serious crimes (including
any drug-related offenses) or the willful commission by Dr. Deutsch of any
intentional wrongdoing outside the scope of his duties under this Agreement;
(f) The commission by Dr. Deutsch of an act of fraud in the performance of his
duties;
(g) The order of a federal or state regulatory agency or a court of competent
jurisdiction requiring the termination of Dr. Deutsch's employment due to
intentional misfeasance or malfeasance by Dr. Deutsch;
(h) The failure of Dr. Deutsch to maintain the standards set forth in Section 11
of this Agreement; or
(i) Dr. Deutsch becomes ineligible for professional liability insurance pursuant
to Section 6.1 (xii).
For purposes of this subsection, no act, or failure to act, on Dr. Deutsch's
part shall be considered "willful" unless done, or omitted to be done, by him
not in good faith without reasonable belief that his action or omission was in
the best interests of CAHS or a Subsidiary.
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1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules, regulations and interpretations issued thereunder.
1.7 "Commencement Date" shall be the date first set forth on page one of this
Agreement.
1.8 "Confidential Information" shall include, without limitation by reason of
specification, any information, including, without limitation, trade secrets,
vendor and customer lists, pricing policies, operational methods, methods of
doing business, technical processes, formulae, designs and design projects,
inventions, research projects, strategic plans, product information, production
know-how and other business affairs of CAHS or its Affiliates, which (i) is or
are designed to be used in or are or may be useful in connection with the
business of CAHS, any Subsidiary or any Affiliate of any thereof, or which, in
the case of any of these entities, results from any of the research or
development activities of any such entity, and which (ii) is private or
confidential in that it is not generally known or available to the public,
except as the result of unauthorized disclosure by or information supplied by
Dr. Deutsch, and (iii) which gives CAHS or a Subsidiary or any Affiliate an
opportunity or the possibility of obtaining an advantage over competitors who
may not know or use such information or who are not lawfully permitted to use
the same.
1.9 "Date of Termination" shall have the meaning assigned to it in Section 7.6.
1.10 "Disability" shall mean the inability of Dr. Deutsch to perform his duties
of employment for CAHS, pursuant to the terms of this Agreement, because of the
occurrence of an event that results in the physical or mental disability, where
such disability shall have existed for a period of more than 90 consecutive days
or an aggregate of 120 days in any 365 day period. Dr. Deutsch shall be entitled
to receive long term disability payments under the long term disability plan of
CAHS or any Subsidiary which employs Dr. Deutsch. The fact of whether or not a
disability exists hereunder shall be determined by appropriate medical experts
selected by the Board and agreed to by Dr. Deutsch's physician. The existence of
a Disability means that, Dr. Deutsch's mental and/or physical condition
substantially interferes with Dr. Deutsch's performance of his duties for CAHS,
and/or its Subsidiaries as specified in this Agreement.
1.11 "Employment Year" shall mean each twelve-month period, or part thereof,
during which Employee is employed hereunder, commencing on the Commencement Date
and on the same day of any subsequent calendar year, the first such subsequent
Employment Year being the twelve-month period which will begin on the first
anniversary of the Commencement Date.
1.12 "Notice of Termination" shall have the meaning assigned to that term in
Section 7.5.
1.13 "Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether Federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
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1.14 "Retirement" shall mean that Dr. Deutsch shall have reached age 65 and
shall voluntarily retire under CAHS' or a Subsidiary's retirement plan (if any)
applicable to him or any earlier actual voluntary retirement by Dr. Deutsch from
his employment with CAHS and its Subsidiaries.
1.15 "Restricted Period" shall have the meaning assigned to that term in Section
12.2.
1.16 "Severance" shall have the meaning assigned to that term in Section 7.7.
1.17 "Subsidiary" shall mean a corporation of which more than 50% of the Voting
Stock is owned, directly or indirectly, by CAHS.
1.18 "Supplemental Salary shall have the meaning assigned to it in Section 5 of
this Agreement.
1.19 "Term" shall mean the term of employment of Dr. Deutsch under this
Agreement.
1.20 "Voting Stock" shall mean capital stock of a corporation which gives the
holder the right to vote in the election of directors for such corporation in
the ordinary course of business and not as the result of, or contingent upon,
the happening of any event.
Wherever from the context it appears appropriate, each word or phrase stated in
either the singular or the plural shall include the singular and the plural, and
each pronoun stated in the masculine, feminine or neuter gender shall include
the masculine, feminine and neuter.
2. EMPLOYMENT AND DUTIES OF EMPLOYEE
Employment; Title; Duties. CAHS hereby employs Dr. Deutsch, and Dr. Deutsch
hereby accepts appointment as Senior Vice President of CAHS and National Medical
Director of CAHS. The principle duties of Dr. Deutsch, as National Medical
Director, shall be to perform those services set forth on Exhibit A attached
hereto and incorporated herein, and, as Senior Vice President and as National
Medical Director, to render services as are necessary and desirable to protect
and advance the best interests of CAHS and its Subsidiaries, acting in all
instances, under the supervision of and in accordance with instructions,
directives, and guidelines established by the President or Executive Vice
President of CAHS. Without further compensation, Dr. Deutsch agrees to serve (if
requested to do so by the Board and if there is liability insurance in effect
satisfactory to Dr. Deutsch) as a director of CAHS and, to the extent it is
reasonably practicable to do so, as an officer and/or director of one or more
Subsidiaries. At all times during the term of this Agreement, Dr. Deutsch shall
retain the title of Senior Vice President of CAHS and the title of National
Medical Director of CAHS.
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Performance of Duties. Dr. Deutsch's primary working responsibility shall be the
performance of his duties as an executive of CAHS and the performance of such
other reasonable executive and medical duties as are assigned him from
time-to-time that are consistent with his position. During the Term and except
as otherwise provided herein, Dr. Deutsch shall not engage in or become
employed, directly or indirectly, in any business activities without the prior
written consent of CAHS, nor shall he act as a consultant to or provide any
services to, whether on a remunerative basis or otherwise, the commercial or
professional business of any other Person which competes with the Business of
CAHS and its Subsidiaries, without such prior written consent. Nothing contained
in this Section 2.2 shall restrict or prohibit Dr. Deutsch from practicing
medicine and/or participating in any meetings concerning Occupational Health and
Rehabilitation and Health Solutions (organizations with which Dr. Deutsch had
associations prior to the execution of this Employment Agreement) during the
Term hereof provided such practice or participation does not impede Dr.
Deutsch's fulfillment of his duties and responsibilities under this Employment
Agreement.
3. TERM OF EMPLOYMENT
The employment of Dr. Deutsch pursuant to this Agreement shall commence as of
the Commencement Date and end two years thereafter, unless sooner terminated
pursuant to Section 7 of this Agreement. On the second anniversary of the
Commencement Date, and on each anniversary thereafter, the term of this
Agreement shall be extended for an additional one (1) year period unless within
sixty (60) days prior to such anniversary date, either party may give written
notice to the other that the term shall not be so extended. The term of this
Agreement, including any extensions thereof, as provided herein, is hereinafter
referred to as the "Term".
4. COMPENSATION AND BENEFITS
CAHS and/or its Subsidiaries shall pay Dr. Deutsch as compensation for all of
the services to be rendered by him hereunder during the Term, and in
consideration of the various restrictions imposed upon Dr. Deutsch during the
Term, and otherwise under this Agreement, the Basic Salary and other benefits as
provided for and determined pursuant to Sections 5 and 6, inclusive, of this
Agreement.
5. BASIC SALARY/SUPPLEMENTAL SALARY/BONUS AWARDS
5.1 CAHS shall pay Dr. Deutsch a basic annual salary of $250,000 (the "Basic
Salary"). The Basic Salary shall be prorated for the month in which employment
by CAHS or a Subsidairy commences or terminates, and for any Employment Year
which is less than twelve (12) months in duration.
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5.2 CAHS shall pay Dr. Deutsch an annual supplemental salary of $50,000 (the
"Supplemental Salary") for his services as National Medical Director of CAHS.
The supplemental salary shall be prorated for the month in which employment with
CAHS or a Subsidiary commences or terminates, and for any Employment Year which
is less than twelve (12) months in duration.
5.3 During the term of this Agreement, Dr. Deutsch shall be entitled to
participate in such CAHS' Executive Annual Bonus Incentive Plan as may be
established by the Board, which provides employees with annual bonuses based
upon CAHS profitability.
5.4 The Basic Salary specified in Section 5.1 and the Supplemental Salary
specified in Section 5.2 shall be payable in bi-weekly installments in
accordance with CAHS' payroll practices, less such deductions or amounts as are
required to be deducted or withheld by applicable laws or regulations,
deductions for employee contributions to welfare and/or fringe benefits provided
by CAHS to Dr. Deutsch and less such other deductions or amounts, if any, as are
authorized by Dr. Deutsch.
6. ADDITIONAL BENEFITS AND REIMBURSEMENT FOR EXPENSES
6.1 Additional Benefits. CAHS shall provide the following additional benefits to
Dr. Deutsch during the Term, except, however, that CAHS reserves the right to
alter or modify any of these benefits provided such alterations or modifications
do not unreasonably affect Dr. Deutsch's terms and conditions of employment:
(i) participation on an equitable basis in CAHS' health insurance
benefit plans established for senior management employees of CAHS;
(ii) vacation leave with pay in each Employment Year to accrue in
accordance with CAHS personnel policies;
(iii) personal leave with pay in each Employment Year to accrue in
accordance with CAHS personnel policies;
(iv) five (5) days education leave with pay in each Employment Year
to accrue at the rate of .42 days per month or part thereof;
(v) Dr. Deutsch shall also be entitled to all holiday privileges
approved by the Board during the Term;
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(vi) participation in the group life insurance available to all
employees of CAHS whereby CAHS will pay the annual premium attributable to
one times Dr. Deutsch's Basic Salary with Dr. Deutsch having the option to
purchase at his cost and expense additional insurance (with the benefit
payable to Dr. Deutsch's designee) if permissible under the terms of the
policy, and the option to purchase or continue the policy, at his sole
cost, upon termination of his employment hereunder if permissible under
the terms of the policy.
(vii) participation in the long-term disability plan of CAHS in
accordance with company policy;
(viii) participation in the short-term disability plan of CAHS in
force at the time of such disability.
(ix) participation by Dr. Deutsch in a CAI stock award and CAI stock
option plan for senior management of CAHS on a basis determined by CAHS on
a basis at least consistent for senior management of CAHS.
(x) participation by Dr. Deutsch in CAHS's 401(k) plan in accordance
with Company policy;
(xi) participation by Dr. Deutsch in other benefits, as established
from time to time by CAHS.
(xii) Dr. Deutsch will be covered by professional liability
insurance in force for senior management of the Company;
6.2 Reimbursement of Licensing Fees and Subscription Charges. CAHS shall
reimburse Dr. Deutsch for any out-of-pocket expenses (not paid directly by CAHS)
that are incurred by Dr. Deutsch in connection with the renewal of his medical
license in Rhode Island, subscription charges, professional membership fees and
costs incurred by Dr. Deutsch in connection with professional fees related to
medical licensure. Reimbursement under this Section 6.2 shall not exceed the
amount of $2500 per year.
6.3 Reimbursement of Continuing Medical Education. CAHS shall reimburse
Dr. Deutsch for any reasonable and necessary out-of-pocket expenses (not paid
directly by CAHS) that are incurred by Dr. Deutsch in connection with his annual
Continuing Medical Education requirements, if any, including program or tuition
costs, travel, lodging, meals and telephone. Reimbursement under this Section
6.3 shall not exceed the amount of $5,000 per year.
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6.4 Reimbursement of Expenses. CAHS shall reimburse Dr. Deutsch for any
reasonable and necessary out-of-pocket expenses (not paid directly by CAHS) that
are incurred by Dr. Deutsch in connection with the duties performed under this
Agreement, including travel, lodging, meals and telephone calls in connection
with the business of CAHS. Dr. Deutsch will submit appropriate documentation,
approved as to form, by CAHS, to CAHS on a monthly basis for the eligible
expenses specified hereunder that were incurred during that time period. Payment
will be made by CAHS to Dr. Deutsch no later than the thirtieth (30th) calendar
day following receipt of such bills.
6.5 CAHS agrees to provide Dr. Deutsch with appropriate computer hardware
and software as determined by CAHS and a pager/beeper to be used in connection
with his duties and responsibilities under this Employment Agreement.
6.6 Reimbursement of Malpractice Insurance Expense. CAHS shall reimburse
Dr. Deutsch up to $8,000 per year for the first year of this Agreement and up to
$6,500 per year for the second year of this Agreement for malpractice insurance
upon presentation of paid receipts by Dr. Deutsch.
7. TERMINATION OF EMPLOYMENT
7.1 Death. If Dr. Deutsch dies during the Term, on the date of his death
this Agreement shall terminate.
7.2 Disability. If, during the Term, Dr. Deutsch has a Disability, CAHS
may, at any time after Dr. Deutsch has a Disability, terminate Dr. Deutsch's
employment by written notice to him; provided, however, that CAHS shall maintain
in effect and continue to pay all premiums due under Dr. Deutsch's disability
insurance policy if the continued payments of such premium is a condition to the
continuation of Dr. Deutsch's disability payments.
7.3 Retirement. The Agreement will be terminated by Dr. Deutsch's
Retirement at the date of such Retirement.
7.4 Termination for Cause. CAHS may terminate Dr. Deutsch's employment
hereunder for Cause at any time by written notice given to Dr. Deutsch by the
CEO.
7.5 Notice of Termination. Any purported termination of employment by CAHS
or a Subsidiary by reason of Dr. Deutsch's Disability or for Cause shall be
communicated by written Notice of Termination to Dr. Deutsch signed by the Chief
Executive Officer. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice given by CAHS which shall indicate the specific basis for
termination and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for determination of or termination under this
Agreement.
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7.6 Date of Termination. For purposes of this Agreement, "Date of
Termination" shall mean the date of Death, Retirement or the date of termination
of employment specified in the Notice of Termination.
7.7 Payments on Termination. Upon termination of Dr. Deutsch's employment
by CAHS other than by reason of Dr. Deutsch's Death, Disability, Retirement or
for Cause, CAHS will pay to Dr. Deutsch the following Severance (subject to any
applicable payroll or other taxes required to be withheld): in the event such
termination, one-twelfth (1/12) of Dr. Deutsch's Basic Salary and Supplemental
Salary shall be paid monthly for a period covering twelve months following such
termination.
7.8 Termination by CAHS for Cause. In the event of the termination of Dr.
Deutsch's employment by CAHS for Cause, Dr. Deutsch or his estate or
beneficiary, as the case may be, shall receive his Basic Salary to the Date of
Termination and no other amount except as required by law or by the terms of
employee welfare plans in which Dr. Deutsch was a participant.
7.9 Termination by Death, Retirement or Disability. In the event of the
termination of Dr. Deutsch's employment by Retirement, Death or Disability, Dr.
Deutsch or his estate or beneficiary, as the case may be, shall receive his
Basic Salary through the Date of Termination.
8. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION BY EMPLOYEE
8.1 Prior Medical Practice. Dr. Deutsch represents that he is not subject
to any restrictive covenant that would prevent his performance of the duties of
National Medical Director at CAHS as described above.
8.2 Pending Patient-Related Litigation. Dr. Deutsch hereby represents that
to the best of his knowledge and belief, he is not a party to any pending
professional liability or other patient-related litigation, that no such actions
have been threatened, that there are no proceedings threatened or pending
against Dr. Deutsch before any professional licensing board, and that Dr.
Deutsch is not aware of any state of facts which reasonably could be expected to
lead to any such litigation or proceeding.
8.3 Prior Acts Insurance Coverage. Dr. Deutsch has provided CAHS with a
certificate of insurance as evidence of adequate professional liability
insurance to insure against professional liability claims arising out of
occurrences prior to the Effective Date hereof and a copy of such certificate of
insurance is attached hereto.
8.4 Indemnification. ▇▇. ▇▇▇▇▇▇ hereby agrees to indemnify, defend and
hold harmless CAHS from and against any and all claims, losses, liabilities,
damages (including, without limitation, compensatory and/or punitive damages),
costs and expenses (including, without limitation, reasonable attorneys' fees
and expenses) incurred by CAHS as a result of any claim or action relating to
Dr. Deutsch's practice of medicine prior to the Effective Date.
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8.5 The foregoing representations, warranties and indemnification shall
remain in effect throughout the Term and for a period of two (2) years following
the termination or expiration of this Agreement.
9. CONFIDENTIAL INFORMATION AND PROPRIETARY INTERESTS
9.1 Acknowledgment of Confidentiality. Dr. Deutsch understands and
acknowledges that he may obtain Confidential Information during the course of
his employment by CAHS. Dr. Deutsch further acknowledges that the services to be
rendered by him are of a special, unique and extraordinary character and that,
in connection with such services, he will have access to Confidential
Information vital to CAHS's and Affiliates' business. Accordingly, Dr. Deutsch
agrees that he shall not, either during the Term or at any time within one year
after the Date of Termination, (i) use or disclose any such Confidential
Information outside CAHS and Affiliates' or (ii), except as required in the
proper performance of his services hereunder, remove or aid in the removal from
the premises of CAHS or any Affiliate, any Confidential Information or any
property or material relating thereto.
The foregoing confidentiality provisions shall cease to be applicable to
any Confidential Information which becomes generally available to the public
(except by reason of or as a consequence of a breach by Dr. Deutsch of his
obligations under this Section 9).
In the event Dr. Deutsch is required by law or a court order to disclose
any such Confidential Information, he shall, subject to the requirements of
applicable law, promptly notify CAHS of such requirement and provide CAHS with a
copy of any court order or of any law which in his opinion requires such
disclosure and, if CAHS so elects, and if he is legally able to do so, permit
CAHS an adequate opportunity, at its own expense, to contest such law or court
order.
9.2 Delivery of Material. Dr. Deutsch shall promptly, and without charge,
deliver to CAHS on the termination of his employment hereunder, or at any other
time CAHS may so request, all memoranda, notes, records, reports, manuals,
computer disks, videotapes, drawings, blueprints and other documents (and all
copies thereof) relating to the business of CAHS and the Affiliates, and all
property associated therewith, which he may possess or have under his control.
9.3 Extension of Section 12. All of the provisions of Section 12 shall be
deemed to be applicable to all Confidential Information to which Dr. Deutsch may
have obtained access or which he may have invented or developed during his
employment by CAHS or any Subsidiary.
10. DISPUTES AND REMEDIES
10.1 Waiver Of Jury Trial. Dr. Deutsch and CAHS hereby waive the right to
a trial by jury in the event of any dispute which arises under this Agreement.
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10.2 Injunctive Relief. If Dr. Deutsch commits a breach, or threatens to
commit a breach, of any of the provisions of Section 12, CAHS shall have the
following rights and remedies (each of which shall be independent of the other,
and shall be severally enforceable, and all of which shall be in addition to,
and not in lieu of, any other rights and remedies available to CAHS at law or in
equity):
(i) the right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged by Dr. Deutsch that any such breach or threatened breach will
or may cause irrespirable injury to CAHS and that money damages will or
may not provide an adequate remedy to CAHS; and
(ii) the right and remedy to require Dr. Deutsch to account for and
pay over to CAHS all compensation, profits, monies, increments, things of
value or other benefits, derived or received by Dr. Deutsch as the result
of any acts or transactions constituting a breach of any of the provisions
of Section 12 of this Agreement, and Dr. Deutsch hereby agrees to account
for and pay over all such compensation, profits, monies, increments,
things of value or other benefits to CAHS.
10.3 Partial Enforceability. If any provision contained in Section 12, or
any part thereof, is construed to be invalid or unenforceable, the same shall
not affect the remainder of Dr. Deutsch's agreements, covenants and
undertakings, or the other restrictions which he has accepted, in Section 12,
and the remaining such agreements, covenants, undertakings and restrictions
shall be given the fullest possible effect, without regard to the invalid parts.
10.4 Intention of Parties. It is expressly understood and agreed that the
confidentiality and proprietary rights provisions of this Agreement have been
accepted, and agreed to by Dr. Deutsch in contemplation of this Agreement. It is
therefore the specific intention of the parties, any general considerations of
public policy to the contrary nothwithstanding, that the provisions of Section
12 of this Agreement shall be enforced as written and to the fullest extent
possible.
11. GOOD STANDING
11.1 CAHS represents that it is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. CAHS
further represents that it has full power and authority to conduct its business
and to enter into this Agreement.
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11.2 Dr. Deutsch represents that he presently meets the following criteria
and that he will continue to maintain compliance with these criteria unless
waived by CAHS:
(i) Current license to practice medicine in the State of Rhode
Island;
(ii) Full compliance with all applicable federal, state and local
laws, regulations, and ethical standards governing the practice of
medicine generally; and
(iii) High ethical standards and in good professional standing in
the community.
12. RESTRICTIONS
12.1 Acknowledgement. Dr. Deutsch acknowledges that his services provided
to CAHS under this Agreement will provide him with exposure to insurance
companies and other third-party payers of health care services.
12.2 Restrictions. Accordingly, the parties hereby agree that during the
term of this Agreement and for a period of one (1) year from the date of
termination of this Agreement by either party (the "Restrictive Period"), Dr.
Deutsch shall not directly or indirectly:
(i) induce or attempt to influence any organization or entity that
has a contractual relationship with CAHS at any time during the
Restrictive Period to terminate such relationship or, to the extent such
relationship terminates for any reason, prevent or attempt to prevent the
reestablishment of such relationship(s).
(ii) solicit to provide medical management services, directly or
indirectly through association with any entity that so solicits, to any
insurance company or other third party payor of health care services with
which CAHS has any such contractual relationship(s) at the time of
termination of his employment hereunder and at any time during the
remainder of the Restrictive Period; or
(iii) for the purpose of conducting or providing services similar to
those provided hereunder, engage, hire, offer to engage or hire, or employ
or enter into business with any person or entity which served as an
employee or independent contractor of CAHS at the time of termination of
his employment hereunder and at any time during the remainder of the
Restrictive Period, whether as a joint venture, partnership, corporation,
or otherwise, without the prior written consent of CAHS.
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12.3 During the term of this Agreement and for a period of one (1) year
following the termination of Dr. Deutsch's Employment by either party, Dr.
Deutsch agrees that he will not in any way, directly or indirectly, manage,
operate, control or accept employment or a consulting position with or otherwise
be connected with, or own, or have any other interest in or right with respect
to (other than through ownership of not more than five (5%) percent of the
outstanding shares of a corporation's stock which is public traded or listed on
a national securities exchange) a Care Management Company (as hereinafter
defined) which competes (or is deemed to compete by fulfilling the conditions
stated in the following sentence) with CAHS or a subsidiary or affiliate of CAHS
in the Care Management Business (as hereinafter defined).
For purposes of this Agreement, (i) a "Care Management Business" means,
and is limited to, utilization review of inpatient and outpatient care and
managed care or disease management services for other entities such as insurance
companies and other payers; (ii) a "Care Management Company" means an entity
substantially all of the business of which consists of the Care Management
Business.
The foregoing restriction on competition shall be limited to competition
in any State, including the District of Columbia, in which CAHS or any of its
subsidiaries conducts its Care Management Business.
12.4 For purposes of Section 12.3, an enterprise shall be deemed to be
competing with CAHS' business nothwithstanding the fact that it does not within
the one (1) year period following the termination of the Employment actually
compete with CAHS if (i) within the one (1) year period following the
termination of the Employment the enterprise is actively developing the
capability to compete with CAHS; (ii) Dr. Deutsch has knowledge of such efforts
and (iii) within six (6) months of developing such capability but in no event
later than six (6) months following one (1) year from the date of termination of
the Employment the enterprise actively competes with CAHS.
Nothwithstanding any provision of this Agreement to the contrary, nothing
in this Agreement shall be interpreted to restrict Dr. Deutsch from treating
clinical patients and conducting the practice of medicine (directly or through
another person or entity) during or after the term of this Agreement, or after
the term of this Agreement (subject to Section 12.5) accepting employment with
an insurance company or other third party payer, hospital, health maintenance
organization, other facility providing care to patients or continuing or
renewing his relationship with Occupational Health and Rehabilitation and Health
Solutions.
12.5 During the term of this Agreement and for a period of one (1) year
following the termination of Dr. Deutsch's Employment by either party, Dr.
Deutsch agrees that he will not seek or accept employment, an affiliation, a
consultancy or any other arrangement with any company, entity, employer, health
plan or customer with which CAHS, at the time of termination of his employment
hereunder has or is negotiating a business relationship and about which he has
actual or contructive knowledge.
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12.6 Reasonableness of Restrictions. The parties hereby acknowledge that
the restrictions contained in Section 12.2 above are reasonable and necessary to
protect the legitimate interests of CAHS and that any violation of such
restrictions would result in irreparable injury to CAHS. CAHS and Dr. Deutsch
acknowledge that in the event of a violation of any such restriction which is
not corrected within thirty (30) days thereof, CAHS shall be entitled to
injunctive relief without having to prove actual damages or immediate or
irreparable harm or to post a bond. CAHS shall also be entitled to an equitable
accounting of all earnings, profits, and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which CAHS may be entitled at law or in equity. In the event of
any such violation, the Restrictive Period referred to in Section 12.2 shall be
extended by a period of time equal to that period beginning with the
commencement of any such violation and ending when such violation finally shall
have been terminated in good faith.
13. GENERAL
13.1 The headings of the Sections of this Agreement are for convenience
only and shall not affect the meanings or interpretations of the contents
thereof.
13.2 This Agreement is intended by the parties to replace the Employment
Agreement among them dated as of July 1, 1995 ("Prior Employment Agreement") as
of its Effective Date. Commencing the 28th day of April, 1998, the Prior
Employment Agreement shall be terminated and of no effect, except to the extent
of obligations thereunder that have accrued prior to such date and that have not
been satisfied as of such date. Notwithstanding anything in this Section to the
contrary, the parties intend that the "Addendum to Employment Agreement of
▇▇▇▇▇▇▇ ▇. Deutsch, M.D., dated July 1, 1995" shall continue to remain in full
force and effect, and that such Addendum shall be amended to substitute "April
28, 1998" for each reference therein to "July 1, 1995."
13.3 This Agreement represents the complete understanding between the
parties, and supersedes all prior negotiations, representation or agreements,
wheter written or oral, as to the matters described herein. It may be amended
only by a written instrument signed by the duly authorized representatives of
both parties. No requirement, obligation, remedy or provision of this Agreement
shall be deemed to have been waived, unless so waived expressly in writing, and
any waiver of any provision shall not be considered a waiver of any right to
enforce such provision thereafter.
13.4 All notices authorized or required herein shall be in writing and
shall be sent by certified mail, return receipt requested, to the parties at
their respective addresses as set forth above:
13.5 This Agreement shall be governed by the laws of the State of New
Jersey.
13.6 For all purposes, this Agreement shall be deemed to have been drafted
by both parties executing it. The representations, terms, covenants and
conditions contained herein shall be deemed to be material and to have been
relied upon by the party or parties to whom they have been made.
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13.7 Without the prior written consent of the other party hereto, neither
party may assign any of its rights or delegate any of its obligations hereunder.
Subject to the foregoing, this Agreement inures to the benefit of, and is
binding upon, the successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties by their duly authorized representatives have
executed this Agreement under their respective hands and seals as of the day and
year first written above.
WITNESS: ▇▇▇▇▇▇▇ ▇. DEUTSCH, M.D.
______________________________ _______________________________________
ATTEST: CAREADVANTAGE, INC.
______________________________ By: ______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D., Executive Vice
President
ATTEST: CAREADVANTAGE HEALTH SYSTEMS, INC.
______________________________ By: ______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D., Executive Vice
President
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EXHIBIT A
NATIONAL MEDICAL DIRECTOR DUTIES AND RESPONSIBILITIES
1. Synthesis of products into Model CareManagement Program. Primary
responsibility for development and continued enhancement of the
CareAdvantage Care Management Program, including assurance that Program
can meet accreditation criteria, either directly or under delegate status,
as appropriate for various CAI clients, of URAC, NCQA or JCAHO, and other
regulatory or accrediting agencies
2. National Recognition for CareAdvantage. Primary responsibility (a) for
establishment of and development of role of CareAdvantage National
Advisory Board, and (b) for maintenance of the CareAdvantage National
Specialty Physician Panel, and (c) development and maintenance of formal
relationships with appropriate national medical and professional
societies, such as the American College of Physicians, the Americal
College of Obstetricians and Gynecologists, etc., as well as liaison with
medical schools
3. Quality management. Primary responsibility (a) for development and
enhancement of career development opportunities for CareAdvantage medical
directors, including orientation and initial training and for continued
training on current and new products, and (b) for development and
application of quality indicators to assure consistency of application of
products and programs by CareAdvantage medical directors
4. Selection of combinations of products and product components for model
applications for specific market niches. Secondary responsibility, in
support of senior vice president for marketing and sales, for selecting
the components of the Care Management Program to develop optimal model
care management programs marketable to each market niche, including , but
not limited to, large insurers, HMOs, TPAs, re-insurers, integrated
delivery systems, and large PPMs/MSOs
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