Exhibit 10.9
E H EALTH I NSURANCE S ERVICES , I NC .
1390 Borregas
Avenue
Sunnyvale, California
94089
November 30,
1999
Mr. Gary Lauer
Dear Gary:
eHealthInsurance Services, Inc. (the
“Company”) is pleased to offer you employment on the
following terms. This offer, if not accepted, will expire at the
close of business on December 8, 1999. To accept this offer,
you must start employment with the Company by December 31,
1999.
1. Position.
You will serve in a full-time
position as President and Chief Executive Officer. You will report
to the Company’s Board of Directors (the
“Board”). By signing this letter, you confirm to the
Company that you are under no contractual or other legal
obligations that would prohibit you from performing your duties for
the Company.
2. Base Salary.
You will be paid a starting base
salary at the rate of $250,000 per year, payable in accordance with
the Company’s standard payroll schedule, and you will be
eligible for annual increases at the discretion of the
Board.
3. Bonus. You will be eligible to be considered for an
annual incentive bonus with a target amount equal to 50% of your
base salary. Such bonus (if any) shall be awarded based on
objective or subjective criteria reasonably established in advance
by the Board. The reasonable determinations of the Board with
respect to such bonus shall be final and binding.
4. Stock Options.
(a) Option Grant
. Subject to the approval
of the Company’s Board of Directors, you will be granted an
option to purchase 1,400,000 shares of the Company’s Common
Stock (the “Option Shares”) on the first date of your
employment with the Company. The exercise price per share will be
equal to the fair market value per share on the date the Option
Shares are granted. The Option Shares will be subject to the terms
and conditions applicable to options granted under the
Company’s 1998 Stock Plan (“Plan”), as described
in that Plan and the applicable stock option agreement, provided
that the terms and conditions of this letter agreement shall apply
to the extent they may be inconsistent with those documents. The
option will be immediately exercisable, but the purchased shares
will be subject to repurchase by the Company at the exercise price
in the event that your service terminates before you vest in the
shares. You will vest in 25% of the Option Shares after 12 months
of continuous service, and the
Gary Lauer
November 30, 1999
Page 2
balance will vest in monthly
installments over the next 36 months of continuous service, as
described in the applicable stock option agreement.
(b) Loan .
Upon the date that the Option Shares
are granted to you, the Company will loan you up to 100% of the
amount needed to purchase your Option Shares; however, under
Delaware law, you will have to pay the par value of the Option
Shares in cash, and the par value is equal to $0.0001/share.
Repayment of the principal amount and accrued interest under this
loan agreement is due upon the earliest of the date that is
(a) 30 days following a termination of employment for any
reason, (b) 12 months following an initial public offering of
the Company’s securities or (c) the third anniversary of
the loan origination date. The loan is full-recourse and will be
secured by the Option Shares that you purchase with the loan, as
evidenced in a Stock Pledge Agreement. The interest rate of the
loan will be equal to the lowest minimum rate necessary to avoid
imputed interest income. The terms of the loan will be evidenced by
a promissory note agreement in the form attached hereto as Exhibit
A.
(c) Change in Control
. In the event of a
Change in Control, you will become vested in an additional 50% of
all of your then unvested Option Shares. In the event your
employment is terminated without Cause by the Company or its
successor within thirteen (13) months following a Change in
Control, you will become fully vested in all of the Option Shares.
For the purposes of this agreement, “Change in Control”
shall mean (1) the consummation of a merger or consolidation
of the Company with or into another entity or any other corporate
transaction, if persons who were not shareholders of the Company
immediately prior to such merger, consolidation or other
transaction own immediately after such merger, consolidation or
other reorganization 50% or more of the voting power of the
outstanding securities of each of (A) the continuing or
surviving entity and (B) any direct or indirect parent
corporation of such continuing or surviving entity; or (2) the
sale, transfer or other disposition of all or substantially all of
the Company’s assets. A transaction shall not constitute a
Change in Control if its sole purpose is to change the state of the
Company’s incorporation or to create a holding company that
will be owned in substantially the same proportions by the persons
who held the Company’s securities immediately before such
transaction.
(d) Cause .
For all purposes under this
employment agreement, “Cause” shall mean the commission
of any act of fraud, embezzlement or dishonesty; conviction of a
felony under the laws of the United States or any state thereof;
continued failure to perform assigned duties for 30 days after
receiving written notification from the Board, any unauthorized use
or disclosure of confidential information or trade secrets of the
Company, or any other intentional misconduct provided that the act
in question adversely affects the business of the Company in a
material manner. The foregoing definition shall not be deemed to be
inclusive of all the acts or omissions which the Company may
consider as grounds for your dismissal or discharge from the
Company.
(e) Parachute Payments
. If any payment or
benefit you would receive pursuant to a Change in Control from the
Company o
