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EXHIBIT 10.26
Amended and Restated Employment Agreement dated June 18, 2000 among Medical
Manager Corporation, CareInsite, Inc. and Xxxxxx X. Xxxx
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
dated as of June 18, 2000, by and among MEDICAL MANAGER CORPORATION, a Delaware
corporation (the "Company"), CAREINSITE, INC., a Delaware corporation and a
majority-owned subsidiary of the Company ("CareInsite"), and XXXXXX X. XXXX
("Executive").
WHEREAS, Executive is employed by the Company and CareInsite
pursuant to an Employment Agreement dated as of January 4, 2000 (the "Prior
Agreement");
WHEREAS, the Company has entered into an Agreement and Plan of
Merger dated February 13, 2000 with Healtheon/WebMD Corporation, a Delaware
corporation ("Healtheon") as amended by Amendment No. 1 thereto, dated as of
June 18, 2000 (collectively, the "Medical Manager Agreement") pursuant to which
the Company will merge with and into Healtheon (the "Surviving Corporation"),
and Avicenna Systems Corporation, a Massachusetts corporation, and CareInsite,
have entered into an Agreement and Plan of Merger dated February 13, 2000 with
Healtheon as amended by Amendment No. 1 thereto, dated as of June 18, 2000
(together with the Medical Manager Agreement, the "Amended Merger Agreement");
and
WHEREAS, in connection with the Amended Merger Agreement, the
Company, CareInsite and Executive desire to amend and restate the Prior
Agreement in its entirety as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants in
this Agreement, the parties agree as follows:
1. Effectiveness of Agreement and Employment of
Executive.
1.1. Effectiveness of Agreement. This Agreement shall
become effective, and shall supersede the Prior Agreement, as of the date first
written above (the "Effective Date").
1.2 Employment by the Company and CareInsite. (a) The
Company hereby employs Executive as its President and CareInsite hereby employs
Executive as its Chief Executive Officer and Executive hereby accepts such
employment with each of the Company and CareInsite. Executive shall report to,
and perform such duties and services for the Company, CareInsite, and their
respective subsidiaries and affiliates (such subsidiaries and affiliates,
collectively, "Affiliates") commensurate with such positions as may be
designated from time to time by, the Chairman of the Board of Directors of the
Company (the "Board") and of the Board of Directors of CareInsite (the
"CareInsite Board"), as the case may be. During the Employment Period (as
defined in Section 3 below), each of the Company and CareInsite shall, subject
to its fiduciary duties, use its best efforts to include Executive in
management's nominees for election, and recommend the election of Executive, as
a member of the Board and of the CareInsite Board.
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In the event that the employment of Executive with the Company or CareInsite (or
both) is terminated for any reason, Executive agrees that he will promptly
resign from the Board or the CareInsite Board (or both), as the case may be.
(b) Executive shall perform his duties hereunder at the
Company's and CareInsite's headquarters at 000 Xxxxx Xxxxx, Xxxxxxx Xxxx, Xxx
Xxxxxx; provided, however, that Executive shall be required to travel on
business on a reasonable basis in connection with the performance of his duties
hereunder. Executive shall use his best and most diligent efforts to promote the
interests of the Company, CareInsite and the Affiliates, and shall devote all of
his business time and attention to his employment under this Agreement.
2. Compensation and Benefits.
2.1. Salary. The Company shall pay Executive for services
during his employment under this Agreement a base salary at the annual rate of
$250,000 (as it may be increased pursuant to this Section 2.1, the "Company Base
Salary"). In addition, CareInsite shall pay Executive for services during his
employment under this Agreement a base salary at the annual rate of $250,000 (as
it may be increased pursuant to this Section 2.1, the "CareInsite Base Salary").
Such Company Base Salary or CareInsite Base Salary may be increased (but not
decreased) from time to time in the sole discretion of (i) the Board or
Compensation Committee of the Board in the case of the Company Base Salary or
(ii) the CareInsite Board or Compensation Committee of the CareInsite Board in
the case of the CareInsite Base Salary. The Company Base Salary and CareInsite
Base Salary shall be payable in equal installments, no less frequently than
monthly, pursuant to the Company's or CareInsite's, as the case may be,
customary payroll policies in force at the time of payment, less any required or
authorized payroll deductions.
2.2. Benefits. During the Employment Period, Executive
shall be entitled to participate, on the same basis and at the same level as
other senior officers of the Company in any group insurance, hospitalization,
medical, health and accident, disability, fringe benefit and tax-qualified
retirement plans or programs of the Company now existing or hereafter
established to the extent that he is eligible under the general provisions
thereof.
2.3. Expenses. Pursuant to the Company's or CareInsite's
customary policies in force 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, CareInsite or their Affiliates in the performance of his duties
hereunder.
2.4 Relocation. (a) Upon the presentation of invoices,
the Company shall reimburse, on an after tax basis, Executive's reasonable
out-of-pocket expenses related to the relocation of him and his family from New
Canaan, Connecticut to New York City. In addition, the Company shall reimburse
Executive for his rental payment for his temporary residence until such time as
he has purchased a new residence, but in no event for a period of more than six
months.
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(b) Following the Effective Time (as defined in the
Medical Manager Agreement), Executive agrees to relocate to an area convenient
to the corporate headquarters of the Surviving Corporation, provided that he
shall be reimbursed for such relocation in a manner substantially similar to
that set forth in clause (a) of this Section 2.4. In addition, the Company shall
reimburse, upon the presentation of invoices, Executive for reasonable temporary
living arrangements (either a temporary residence or hotel accommodations)
following the Effective Time for a period of up to 6 months.
(c) For purposes of this Agreement, any relocation by
Executive pursuant to this Section 2.4 shall not constitute Good Reason (as
defined below).
2.5 Vacation. Executive shall be entitled to vacation
time consistent with the Company's vacation policies. The date or dates of such
vacations shall be selected by Executive having reasonable regard to the
business needs of the Company and CareInsite.
2.6 Car Allowance. During the Employment Period, the
Company shall provide Executive with a car allowance in accordance with Company
policy.
2.7 Bonus. With respect to each 12 month period (the
"Performance Period") during the Employment Period (provided that the first such
Performance Period shall commence January 4, 2000, and each successive
Performance Period shall commence on the following January 1), Executive shall
be entitled to receive (i) a bonus (the "Company Bonus") of up to $250,000 in
the event that the Company has attained certain specified performance goals and
(ii) a bonus (the "CareInsite Bonus") of up to $250,000 in the event that
CareInsite has attained certain specified performance goals. The performance
goals shall be established by the Compensation Committee of the Board or the
Compensation Committee of the CareInsite Board, as applicable, and shall be
communicated to Executive prior to the commencement of each Performance Period.
The determination as to whether the performance goals have been attained shall
be made by the Compensation Committee of the Board or the Compensation Committee
of the CareInsite Board, as the case may be, (i) in its sole and absolute
discretion to the extent the performance goals are not quantifiable and (ii) on
the basis of a report prepared by the Chief Financial Officer of the Company or
CareInsite, as applicable, to the extent the performance goals are quantifiable.
Such report shall be presented to the applicable Compensation Committee within
30 days of the last day of the Performance Period. Payment of the Company Bonus
and the CareInsite Bonus, if any, shall be made as soon as practicable following
the presentation by the Chief Financial Officer, but in no event more than 30
days thereafter, provided that, except as set forth in Section 5 below,
Executive remains in the employ of the Company or CareInsite on the payment
date. In the event that the Company or CareInsite reasonably determines that the
Company Bonus or the CareInsite Bonus may be subject to the limitation on
deductible compensation set forth in Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), the Company or CareInsite may defer the
payment of the Company Bonus or CareInsite Bonus (or portion thereof) until the
limitation no longer applies to such payment (or portion thereof).
Notwithstanding the foregoing, but subject to Executive's remaining in the
employ of the Company and CareInsite (except as set forth in Sections 5.2, 5.3
and 5.5 below), the Company Bonus of $250,000 and the CareInsite Bonus of
$250,000 for the Performance Period ending on December 31, 2000 shall be paid in
full, within 30 days of the last day of such Performance Period without regard
to the attainment of any applicable performance goals.
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2.8 Loan. The Company and CareInsite has each previously
made a full recourse loan (the "Loan") to Executive in the principal amount of
$300,000, for an aggregate amount of $600,000. The Loan is evidenced by two
promissory notes executed by Executive in favor of each of the Company and
CareInsite and is secured by any options to purchase shares of the Company's or
CareInsite's common stock held by Executive. Notwithstanding the foregoing, the
Loan (and any interest accrued thereon) shall be forgiven in its entirety as of
the Effective Time.
3. Employment Period.
Executive's employment under this Agreement shall commence as
of the Effective Date, and shall terminate January 4, 2005, unless terminated
earlier pursuant to Section 5 (the "Employment Period"). Unless written notice
of either party's desire to terminate the Employment Period has been given to
the other party at least 30 days prior to the expiration of the 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. Stock Options.
4.1 Executive has been granted (i) an option (the
"Company Class A Stock Option") to purchase 250,000 shares of the Company's
common stock pursuant to the Company's Amended and Restated 1989 Class A Stock
Option Plan (the "Class A Plan") and the terms of a stock option agreement
entered into between the Company and Executive (the "Company Class A Stock
Option Agreement") and (ii) an option (the "Company Class B Stock Option" and
collectively with the Company Class A Stock Option, the "Company Stock Options")
to purchase 200,000 shares of the Company's common stock pursuant to the
Company's Amended and Restated 1989 Class B Stock Option Plan (the "Class B
Plan") and the terms of a stock option agreement entered into between the
Company and Executive (the "Company Class B Stock Option Agreement" and together
with the Company Class A Stock Option Agreement, the "Company Stock Option
Agreements"). Subject to Executive's remaining in the employ of the Company or
CareInsite (except as set forth in Sections 5.2, 5.3 and 5.5 below), the Company
Stock Options shall be exercisable in accordance with the following schedule:
Anniversary of % of Stock
Date of Grant Options Exercisable
-------------- -------------------
1st 20%
2nd 40%
3rd 60%
4th 80%
5th 100%
Executive will be eligible to receive future grants of options to purchase
shares of the Company's common stock at the discretion of the Stock Option
Committee of the Board.
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4.2 Executive has also been granted an option (the
"CareInsite Stock Option", collectively with the Company Stock Options, the
"Stock Options") to purchase 450,000 shares of the common stock of CareInsite
pursuant to the terms of CareInsite's 1999 Officer Stock Option Plan (the
"CareInsite Plan") and a stock option agreement entered into between CareInsite
and Executive (the "CareInsite Stock Option Agreement" and, together with the
Company Stock Option Agreements, the "Stock Option Agreements"). Subject to
Executive's remaining in the employ of CareInsite or the Company (except as set
forth in Sections 5.2, 5.3 and 5.5 below), the CareInsite Stock Option shall be
exercisable in accordance with the following schedule:
Anniversary of % of
Date of Grant Stock Option Exercisable
------------- ------------------------
1st 20%
2nd 40%
3rd 60%
4th 80%
5th 100%
; provided, however, that, subject to Section 5.2, 5.3 and 5.5 below, no portion
of the CareInsite Stock Option shall become vested and exercisable prior to
December 15, 2001 (on such date, the portion of the CareInsite Stock Option
shall become vested and exercisable to the extent that such portion would have
become exercisable by virtue of the above vesting schedule). Executive will be
eligible to receive future grants of options to purchase shares of CareInsite's
common stock at the discretion of the Compensation Committee of the CareInsite
Board.
4.3 New Stock Option Grants. Executive has been granted
(i) an option (the "New Company Stock Option") to purchase 450,000 shares of the
Company's common stock at an exercise price equal to the fair market value of
the Company's common stock (as determined by the Stock Option Committee of the
Board) on the date of grant and (ii) an option (the "New CareInsite Stock
Option" and collectively with the New Company Stock Option, the "New Stock
Options") to purchase 450,000 shares of CareInsite's common stock at an exercise
price equal to the fair market value of CareInsite's common stock (as determined
by the Stock Option Committee of the CareInsite Board) on the date of grant. The
New Company Stock Option shall be evidenced by one or more stock option
agreements (the "New Company Stock Option Agreement") containing the terms
described in this Agreement and such additional terms and conditions that are
not any less favorable than those applicable to other executive officers of the
Company. The New CareInsite Stock Option shall be evidenced by a stock option
agreement (the "New CareInsite Stock Option Agreement" and collectively with the
New Company Stock Option Agreement, the "New Stock Option Agreements")
containing the terms described in this Agreement and such additional terms and
conditions that are not any less favorable than those applicable to other
executive officers of CareInsite. Subject to Executive's remaining in the employ
of the Company or CareInsite (except as set forth in Sections 5.2, 5.3 and 5.5
below), the New Stock Options shall be exercisable in accordance with the
following schedule:
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Anniversary of % of
Date of Grant New Stock Options Exercisable
-------------- -----------------------------
1st 25%
2nd 50%
3rd 75%
4th 100%
; provided, however, that effective as of the Effective Time, the New Stock
Options shall instead be exercisable in accordance with the following schedule:
Anniversary of % of
Date of Grant New Stock Options Exercisable
-------------- -----------------------------
1st 50%
2nd 75%
3rd 100%
4.4 Special Stock Option. Effective immediately prior to
the Effective Time, Executive shall be granted an option (the "Special Stock
Option" and together with the New Company Stock Option, the "New Company
Options", and together with the New Stock Options, the "New Options") to
purchase 300,000 shares of the Company's common stock at an exercise price of
$15 per share. The Special Stock Option shall be evidenced by a stock option
agreement (the "Special Stock Option Agreement") containing the terms described
in this Agreement and such additional terms and conditions that are not any less
favorable than those applicable to other executive officers of the Company.
Subject to Executive's remaining in the employ of the Company (except as set
forth in Sections 5.2, 5.3 and 5.5 below), the Special Stock Option shall be
exercisable in accordance with the following schedule:
Anniversary of % of
Effective Time Stock Option Exercisable
-------------- ------------------------
1st 50%
2nd 75%
3rd 100%
provided, however, that in the event that the Effective Time does not occur,
this Section 4.4, and any rights of Executive to receive the Special Stock
Option, shall be null and void.
4.5 Future Equity Grants. In the event that either the
Company or CareInsite effects a public offering of the securities of a
subsidiary thereof, Executive shall receive equity in such subsidiary on a basis
which is substantially similar to the equity participation of other senior
executive officers of the Company or CareInsite, as applicable (other than the
Chairman of the Board or of the CareInsite Board), as applicable.
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5. Termination.
5.1 Termination by the Company for Cause. (a) The
Employment Period may be terminated at any time by the Company or CareInsite for
Cause (as defined below). Upon such a termination, the Company and CareInsite
shall have no obligation to Executive other than (i) the payment of Executive's
earned and unpaid Company Base Salary and CareInsite Base Salary to the
effective date of such termination and (ii) Executive shall not be entitled to
any additional rights or vesting with respect to the Stock Options or the New
Options following the effective date of such termination.
(b) For purposes of this Agreement, the term "Cause"
shall mean any of the following:
1. A willful failure of Executive to perform
his duties hereunder in any material respect which failure is not cured
by Executive within 30 days following written notice from the Company
or CareInsite detailing such failure;
2. Any willful misconduct by Executive
relating, directly or indirectly, to the Company, CareInsite or any of
their Affiliates, which misconduct, if susceptible to cure, is not
cured by Executive within 30 days following written notice from the
Company or CareInsite detailing such misconduct;
3. Any material breach by Executive of this
Agreement, including, without limitation, Section 6 hereof, which
breach, if susceptible to cure, is not cured by Executive within 30
days following written notice from the Company or CareInsite detailing
such breach; or
4. Executive's commission of a common law fraud
against the Company, CareInsite or any of their Affiliates or
conviction of a felony.
5.2 Death and Disability.
(a) The Employment Period may be deemed terminated by the
Company and CareInsite upon the death of Executive or Executive becoming
Disabled (as defined below), and the Company and CareInsite shall have the
following obligations to Executive or Executive's estate (but no other
obligation to Executive or Executive's estate pursuant to this Agreement):
(i) a continuation of the Company Base Salary and
CareInsite Base Salary for a period (the "Applicable
Period") commencing on the date of termination and
ending on the fourth anniversary of the date of
termination, payable in accordance with the fourth
sentence of Section 2.1,
(ii) a continuation of the benefits to which Executive is
entitled pursuant to the Welfare Plans (as defined in
Section 5.3(a)(ii) below) for the Applicable Period,
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(iii) the Company Bonus and CareInsite Bonus that would
have been payable to Executive pursuant to Section
2.7 for each year (or portion thereof) during the
Applicable Period, payable at the time that such
bonuses are required to be paid pursuant to Section
2.7, such Company Bonus and CareInsite Bonus to be
equal (subject to the last sentence of Section 2.7,
if applicable) to the highest Company Bonus and
CareInsite Bonus paid to Executive for any of the
prior three years or, if shorter, during the
Employment Period, and
(iv) the Stock Options and the New Options shall remain
outstanding and continue to vest, and shall otherwise
be treated for purposes of the terms and conditions
thereof, as if Executive remained in the employ of
the Company or CareInsite during the Applicable
Period;
provided, however, that the continuation of such salary, welfare benefits and
the continuation of vesting and exercisability of the Stock Options and the New
Options shall cease on the occurrence of a material breach of the covenants
contained in Section 6 below; and provided further, however, that Executive's
eligibility to continue to participate in the Welfare Plans shall cease at such
time as Executive is offered comparable coverage with a subsequent employer. Any
payments that may be required to be made by the Company or CareInsite pursuant
to this Section 5.2 shall first be applied to the repayment of the principal
amount of and interest on the Loan (if any).
(b) For purposes of this Agreement, Executive shall be
"Disabled" if (i) Executive becomes incapacitated by bodily injury or disease
(including as a result of mental illness) so as to be unable to regularly
perform the duties of his position for a period in excess of 180 days in any
consecutive twelve-month period, (ii) a qualified independent physician mutually
acceptable to the Company, CareInsite and Executive 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 or (iii) he is deemed "disabled" for purposes of the long term
disability insurance policy maintained by the Company for Executive.
5.3 Termination by the Company or CareInsite Without
Cause.
(a) The Employment Period may be terminated at any time
by the Company or CareInsite without Cause. If the Company or CareInsite (or
both) terminates the Employment Period without Cause, the Company or CareInsite,
as the case may be, shall have the following obligations to Executive (but
excluding any other obligation to Executive pursuant to this Agreement):
(i) a continuation of the Company Base Salary or
CareInsite Base Salary, as the case may be, for a
period (the "Severance Period") commencing on the
date of termination and ending on the third
anniversary of the date of termination, payable in
accordance with the fourth sentence of Section 2.1,
(ii) Executive shall be eligible to continue to
participate during the Severance Period on the same
terms and conditions that would have applied had he
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remained in the employ of the Company or CareInsite
during the Severance Period in all health, medical,
dental and other welfare plans provided to Executive
pursuant to Section 2.2 at the time of such
termination and which are provided by the Company or
CareInsite to its employees following the date of
termination ("Welfare Plans"),
(iii) the Company Bonus and CareInsite Bonus that would
have been payable to Executive pursuant to Section
2.7 for each year (or portion thereof) during the
Severance Period, payable at the time that such
bonuses are required to be paid pursuant to Section
2.7, such Company Bonus and CareInsite Bonus to be
equal (subject to the last sentence of Section 2.7,
if applicable) to the highest Company Bonus and
CareInsite Bonus paid to Executive for any of the
prior three years or, if shorter, during the
Employment Period, and
(iv) (x) the Company Stock Options and the New Company
Options or (y) the CareInsite Stock Option and the
New CareInsite Stock Option, as the case may be,
shall become fully vested and exercisable as of the
date of termination and remain exercisable until the
first anniversary of the date of termination;
provided, however, that the continuation of such
salary and welfare benefits and the exercisability of
such options shall cease on the occurrence of any
material breach of the covenants contained in Section
6 below; provided further, however, that Executive's
eligibility to participate in the Welfare Plans shall
cease at such time as Executive is offered comparable
coverage with a subsequent employer. If Executive is
precluded from participating in any Welfare Plan by
its terms or applicable law, the Company or
CareInsite shall provide Executive with benefits that
are reasonably equivalent in the aggregate to those
which Executive would have received under such plan
had he been eligible to participate therein. Anything
to the contrary herein notwithstanding in Section 5.2
or this Section 5.3, the Company shall have no
obligation to continue to maintain any Welfare Plan
solely as a result of the provisions of this
Agreement. Any payments that may be required to be
made by the Company or CareInsite pursuant to this
Section 5.3 shall first be applied to the repayment
of the principal amount of and interest on the Loan
(if any).
(b) Notwithstanding anything to the contrary in this
Agreement, in the event that the Company determines that it is in the best
interest of the Company and its stockholders to terminate Executive's employment
with the Company due to a corporate transaction or the potential for a conflict
of interest with CareInsite, such a termination shall not constitute a
termination without Cause so long as CareInsite assumes the Company's
obligations to pay the Company Base Salary and Company Bonus and to provide the
other benefits contemplated in Section 2 in accordance with its plans and
policies.
5.4 Liquidated Damages. Executive acknowledges that the
payment of all amounts and benefits due to him under Section 5.3 or Section 5.5
resulting from a termination of
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the Employment Period by the Company or CareInsite without Cause or by Executive
for Good Reason (as defined below) are in lieu of any and all claims that
Executive may have against the Company, CareInsite or any of their Affiliates
(other than benefits under the Company's or CareInsite's employee benefit plans
that by their terms survive termination of employment, 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.
5.5 Termination by Executive for Good Reason.
(a) Executive may terminate his employment with the
Company or CareInsite (and the Employment Period with respect to the Company or
CareInsite will be terminated) for Good Reason. If Executive terminates his
employment with the Company or CareInsite for Good Reason, Executive shall be
entitled to the same salary and welfare benefit continuation, bonus, and the
acceleration of vesting and continued exercisability of the Stock Options and
the New Options that he would have been entitled to receive under Section 5.3 if
the Employment Period were terminated by the Company or CareInsite without
Cause.
(b) For purposes of this Agreement, the term "Good
Reason" shall mean any of the following conditions or events which condition(s)
or event(s) remain in effect 30 days after written notice is provided by
Executive to the Company or CareInsite, as the case may be, detailing such
condition or event:
1. a material reduction in Executive's title or
responsibilities with CareInsite or the Company, or if he is required
to report to any person other than Xxxxxx X. Wygod (other than as a
result of the health of Mr. Wygod or his death) provided that Executive
shall not have Good Reason if the Company determines that as a result
of a corporate transaction or potential conflicts of interest with
CareInsite, it is not in the best interests of the Company and its
stockholders that Executive continue to serve as the President of the
Company or having the responsibilities associated with such position so
long as CareInsite assumes the Company's obligations to pay the Company
Base Salary and Company Bonus and to provide the other benefits
contemplated in Section 2 in accordance with its plans and policies;
2. any reduction in the Company Base Salary or
CareInsite Base Salary or material fringe benefits provided by the
Company;
3. any material breach by the Company or CareInsite of
this Agreement (which shall not include the circumstance described in
the proviso in clause 1 above);
4. a reduction in Executive's authority following the
Effective Time in certain targeted areas agreed to in writing by the
Company, CareInsite and the Executive;
5. the occurrence of a Change in Control (as defined
below); or
6. the failure of the Surviving Corporation to assume
the obligations of the Company hereunder and agree to be bound by the
terms hereof;
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provided, however, that Executive ceasing to be the Chief Executive Officer of
CareInsite in connection with or following any appointment of Executive as
President of the Surviving Corporation and Executive's reporting to the Co-Chief
Executive Officers of the Surviving Corporation, one of whom is Xxxxxx X. Wygod,
shall not constitute Good Reason. Notwithstanding the foregoing, following the
Effective Time, in the event that one of the foregoing conditions or events
occurs (and is not cured during the applicable cure period) during the first
year following the Effective Time (a "Good Reason Event"), Executive agrees that
he will remain employed by the Surviving Corporation and/or CareInsite for the
remainder of such one year period and that he may not terminate his employment
for any reason until the expiration of such one year period, except that at the
time of such Good Reason Event, but subject to the following sentence, the Stock
Options and New Options shall immediately become fully vested and exercisable
and, if the Executive terminates for Good Reason following the expiration of
such one-year period, he shall be entitled to receive the other benefits
described in Section 5.3. In the event that Executive resigns or is terminated
by the Surviving Corporation or CareInsite for Cause prior to the expiration of
such one-year period, (i) such resignation will not be treated as a termination
for Good Reason and (ii) Executive shall forfeit the Stock Options and New
Options and shall be required to disgorge to the Surviving Corporation any gains
realized on the exercise of such Stock Options or New Options (except to the
extent that such Stock Options or New Options were already vested prior to the
acceleration referred to in the preceding sentence).
5.6 Change in Control. (a) For purposes of this
Agreement, the Stock Option Agreements, the New Stock Option Agreements and the
Special Stock Option Agreement, a "Change in Control" of the Company or
CareInsite, as the case may be, shall be deemed to have occurred, in the case of
any transaction that occurs prior to the Effective Time, if:
1. Both (i) any person, entity or group shall have
acquired, in one or more transactions, the beneficial ownership of at
least 50 percent of the voting power of the outstanding voting
securities of the Company, excluding Xxxxxx X. Wygod and his
affiliates, and (ii) following such acquisition of 50 percent voting
power, Xxxxxx X. Wygod shall no longer be the Chairman of the Board of
the Company or CareInsite or a senior executive officer of the
acquiring company of 50 percent voting power, in each case with duties
and responsibilities greater than or substantially equivalent to those
prior to such acquisition of 50 percent voting power; or
2. Only in the event that CareInsite has assumed all of
the obligations under this Agreement, both (i) any person, entity or
group shall have acquired, in one or more transactions, the beneficial
ownership of at least 50 percent of the voting power of the outstanding
voting securities of CareInsite, excluding Xxxxxx X. Wygod and his
affiliates, and (ii) following such acquisition of 50 percent voting
power, Xxxxxx X. Wygod shall no longer be the Chairman of the Board of
CareInsite or a senior executive officer of the acquiring company of 50
percent voting power, in each case with duties and responsibilities
greater than or substantially equivalent to those prior to such
acquisition of 50 percent voting power; or
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3. The sale of all or substantially all of the assets
of the Company or, if CareInsite assumes all of the obligations under
this Agreement, the sale of all or substantially all of the assets of
CareInsite (including, without limitation, by way of merger,
consolidation, lease or transfer) to a person, entity or group other
than Xxxxxx X. Wygod or his affiliates in a transaction (except for a
sale-leaseback transaction) (x) where the Company, CareInsite or the
holders of the common stock of the Company or CareInsite, as the case
may be, do not receive (i) voting securities representing a majority of
the voting power entitled to vote on a regular basis for the board of
directors of the acquiring entity or of an affiliate which controls the
acquiring entity, or (ii) securities representing a majority of the
equity interest in the acquiring entity or of an affiliate that
controls the acquiring entity, if other than a corporation and (y),
following such sale of assets, Xxxxxx X. Wygod shall no longer be the
Chairman of the Board of the Company or CareInsite or a senior
executive officer of the acquiring entity, in each case with duties and
responsibilities greater than or substantially equivalent to those
prior to such sale of assets; or
4. A complete liquidation or dissolution of the Company
or, if CareInsite assumes all of the obligations under this Agreement,
CareInsite shall have occurred.
(b) In the case of any transaction that occurs after the
Effective Time, the definition of "Change in Control" set forth in this
Section shall be as set forth below:
1. Any person, entity or group shall have
acquired, in one or more transactions, the beneficial
ownership of at least 50 percent of the voting power of the
outstanding voting securities of the Surviving Corporation; or
2. Only in the event that CareInsite has
assumed all of the obligations under this Agreement, any
person, entity or group shall have acquired, in one or more
transactions, the beneficial ownership of at least 50 percent
of the voting power of the outstanding voting securities of
CareInsite; or
3. The sale of all or substantially all of the
assets of the Surviving Corporation or, if CareInsite assumes
all of the obligations under this Agreement, the sale of all
or substantially all of the assets of CareInsite (including,
without limitation, by way of merger, consolidation, lease or
transfer) to a person, entity or group in a transaction
(except for a sale-leaseback transaction) where the Surviving
Corporation, CareInsite or the holders of the common stock of
the Surviving Corporation or CareInsite, as the case may be,
do not receive (i) voting securities representing a majority
of the voting power entitled to vote on a regular basis for
the board of directors of the acquiring entity or of an
affiliate which controls the acquiring entity, or (ii)
securities representing a majority of the equity interest in
the acquiring entity or of an affiliate that controls the
acquiring entity, if other than a corporation; or
4. A complete liquidation or dissolution of the
Surviving Corporation or, if CareInsite assumes all of the
obligations under this Agreement, CareInsite shall have
occurred.
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(c) The parties acknowledge and agree that the
transactions contemplated by the Amended Merger Agreement shall not
constitute a "Change in Control."
5.7 Inconsistent Plan Provisions. In the event of a
Change in Control of the Company, the Surviving Corporation or
CareInsite, notwithstanding anything to the contrary contained in the
Class A Plan , the Class B Plan or the CareInsite Plan, the Stock
Options and the New Stock Options shall be treated in the manner
described in Section 5.5, if applicable.
6. Covenants of Executive
6.1 Confidentiality.
(a) Executive understands and acknowledges that in the
course of his employment, he will have access to and will learn information that
is proprietary to, or confidential to the Company, CareInsite and their
Affiliates that concerns the operation, methodology and plans of the Company,
CareInsite and their 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 defined in Section 6.4 below), information
regarding acquisition and other strategic partner candidates, and customer
information (collectively, "Proprietary Information"). Executive agrees that,
(i) at all times (including following termination of his employment with the
Company or CareInsite) with respect to Proprietary Information that is not
financial information of the Company or CareInsite and (ii) during his
employment with the Company or CareInsite and for three years thereafter, with
respect to financial information of the Company and CareInsite, 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, (ii) was the
subject of a court order for Executive to disclose or (iii) was known by
Executive prior to January 4, 2000. Upon any termination of Executive's
employment, Executive shall immediately return to the Company or CareInsite, as
applicable, all copies of any Proprietary Information in his possession.
(b) Executive agrees that at no time during his
employment by the Company, CareInsite 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 falsely attacks, or is otherwise critical
of, the reputation, business or character of the Company, CareInsite or their
Affiliates or any of their respective officers or employees.
6.2. Restrictions on Solicitation. During the period
beginning on January 4, 2000 and ending on the second anniversary of the date of
cessation of the employment of Executive for any reason whatsoever (the
"Restricted Period"), Executive shall not, directly or
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indirectly, without the prior written approval of the Company, solicit or
contact any customer, or any prospective customer, of the Company, CareInsite or
any of their Affiliates for any commercial pursuit which is in competition with
the Company, CareInsite or any of their Affiliates, or that is contemplated by
the Business Plan (as defined below) at the time of termination or take away or
interfere or attempt to interfere with any custom, trade, business or patronage
of the Company, CareInsite or any of their 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, CareInsite or any of their
Affiliates to leave the employ of the Company, CareInsite 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, CareInsite or any of their Affiliates. For purposes
of this Agreement, "Business Plan" shall mean, at any point in time, the then
current business plan of the Company, CareInsite or any of their Affiliates and
any business plans of the Company, CareInsite or any of their Affiliates in
effect during the prior 18 months.
6.3. Restrictions on Competitive Employment.
(a) During the 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, CareInsite or any
of their Affiliates, (ii) conducting a business of the type and character
engaged in by (or contemplated by the Business Plan of) the Company, CareInsite
or any of their Affiliates at the time of termination, or (iii) developing
products or services competitive with those of the Company, CareInsite or any of
their Affiliates (all of the businesses in clauses (i), (ii) and (iii)
collectively, "Competitive Business"). 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.
(b) For purposes of the covenant not to compete set
forth in paragraph (a) above, Executive acknowledges that the Company,
CareInsite and their 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, CareInsite and their 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
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other geographic area, time period, activity or other term or provision covered
by or included in such covenant.
6.4. Assignment of Developments. All Developments that
are at any 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 or CareInsite shall be the sole and absolute
property of the Company, CareInsite 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, CareInsite or the Affiliates, thereafter, Executive shall
promptly make full disclosure of any such Developments to the Company or
CareInsite, as applicable, and, at the Company's or CareInsite'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 or CareInsite to be necessary or desirable at
any time in order to effect the full assignment to the Company, CareInsite 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, 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, CareInsite or any of
the Affiliates.
6.5. Remedies. Executive acknowledges and agrees that
damages for a breach or threatened breach of any of the covenants set forth in
this Section 6 will be difficult to determine and will not afford a full and
adequate remedy, and therefore agrees that the Company or CareInsite, in
addition to seeking actual damages in connection therewith and the termination
of the Company's or CareInsite's obligations in Sections 5.3 or 5.5, 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.
7. Notices.
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:
Medical Manager Corporation
River Drive Center 2
000 Xxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: General Counsel
with a copy to CareInsite at the address in
subparagraph (b) below.
(b) if to CareInsite:
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CareInsite, Inc.
River Drive Center 2
000 Xxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: General Counsel
with a copy to the Company at the address in
subparagraph (a) above.
(c) if to Executive at the address set forth on the
signature page of this Agreement.
Any notice shall be deemed given when actually delivered to
such address, or three 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.
8. Certain Additional Payments By The Company
8.1 Gross-Up Payment. Anything in this Agreement to the
contrary or any termination of this Agreement notwithstanding, in the event it
shall be determined that any payment or distribution or benefit received or to
be received by Executive pursuant to the terms of this Agreement or any other
payment or distribution or benefit made or provided by the Company, CareInsite,
or any of their Affiliates, to or for the benefit of Executive (whether pursuant
to this Agreement or otherwise and determined without regard to any additional
payments required under this Section 8) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, is hereinafter collectively referred to as
the "Excise Tax"), then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income and employment taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the sum of (x) the Excise Tax imposed upon the Payments and (y) the product
of any deductions actually disallowed under Section 68 of the Code solely as a
direct result of the inclusion of the Gross-Up Payment in the Executive's
adjusted gross income and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to (i) pay federal income taxes at the highest marginal rates of
federal income taxation for the calendar year in which the Gross-Up Payment is
to be made and (ii) pay applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
8.2 Gross-Up Payment Calculation. Subject to the
provisions of Sections 8.1 and 8.3, all determinations required to be made under
this Section 8, including whether and
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when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Company's certified public accounting firm (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and Executive
within 15 business days of the receipt of notice from Executive or the Company
that there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 8.3 and Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
8.3 Claim by the IRS. Executive shall notify the Company
in writing of any claim by the U.S. Internal Revenue Service (the "IRS") that,
if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten
business days after Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company; and
(iii) cooperate with the Company in good faith in order
effectively to contest such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income and employment tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 8.3, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals,
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proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and
Executive shall agree to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs Executive to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to Executive, on an interest-free basis
and shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income and employment tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and provided further, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which such contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Executive shall be entitled to
settle or contest, as the case may be, any other issue raised by the IRS or any
other taxing authority.
8.4 Entitlement to Refund. If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 8.3,
Executive becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company's complying with the requirements of
Section 8.3) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company pursuant to
Section 8.3, a determination is made that Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
9. Miscellaneous.
9.1. Representations and Covenants. In order to induce the
Company to enter into this Agreement, Executive makes the following
representations and covenants to the Company and CareInsite and acknowledges
that the Company and CareInsite are 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 of the Company or CareInsite in
writing or by other effective method any bona fide information known by him and
not known to the Chairman of the Board of the Company or CareInsite that he
reasonably believes would have any material negative impact on the Company,
CareInsite or any of their Affiliates.
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9.2. Entire Agreement. This Agreement, the Stock Option
Agreements, the New Stock Option Agreements and the Special 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.
9.3 Amendment; Waiver. This Agreement may not be amended,
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.
9.4. Binding Effect; Assignment. The rights and
obligations of this Agreement shall bind and inure to the benefit of any
successor of the Company or CareInsite by reorganization, merger or
consolidation, or any assignee of all or substantially all of the Company's or
CareInsite's business and properties. At the Effective Time, each reference in
this Agreement to the Company shall automatically be deemed to refer to the
Surviving Corporation. The Company or CareInsite may assign its rights and
obligations under this Agreement to any of its Affiliates without the consent of
Executive so long as the Company or CareInsite remains responsible for the
payment of the obligations hereunder; provided that after the Effective Time,
the Surviving Corporation may not assign its obligations hereunder to CareInsite
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 5.2 shall pass upon Executive's death to Executive's executor or
administrator.
9.5. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.6. Governing Law; Interpretation. This Agreement shall
be construed 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.
9.7. Further Assurances. Each of the parties agrees to
execute, 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.
9.8. Severability. The parties have carefully reviewed the
provisions 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
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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.
9.9. Withholding Taxes. All payments hereunder shall be
subject to 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.
MEDICAL MANAGER CORPORATION
By: /s/ Xxxxx X. Love
-----------------------------------------
Name: Xxxxx X. Love
Title: EVP- Finance & Admin., CFO
CAREINSITE, INC.
By: /s/ Xxxxx X. Love
-----------------------------------------
Name: /s/ Xxxxx X. Love
Title: EVP- Finance & Admin., CFO
EXECUTIVE
/s/ Xxxxxx X. Xxxx
--------------------------------------------
Xxxxxx X. Xxxx
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