1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this ________ day of _______, 1996, between
MEDICAL MANAGER CORPORATION, a Delaware corporation (the "Company"), and
Xxxxx Xxxxx (the "Executive").
WHEREAS, the Executive is currently the ____________________ and [sole][a]
shareholder of _____________________________; and
WHEREAS, as a result of the proposed business combination pursuant to that
certain Agreement and Plan of Reorganization among the Company, its acquisition
subsidiar[y][ies], the ___________ and the stockholders thereof (the "Business
Combination"), ______________________ will become a wholly-owned subsidiary of
the Company; and
WHEREAS, the parties hereto wish to enter into an employment agreement to
continue the employment of the Executive as the _____________________
of _________________________________ and to employ the Executive as the
[___________________________] of the Company following the Business
Combination, and to set forth certain additional agreements between the
Executive and the Company.
NOW, THEREFORE, in consideration of the mutual covenants and representations
contained herein, the parties hereto agree as follows:
1. TERM.
The Company will employ the Executive, and the Executive will serve the
Company, under the terms of this Agreement for an initial term of five (5)
years, commencing on the effective date of the Business Combination (which also
will be the closing date of the Company's initial public offering of Common
Stock). Effective as of the expiration of such initial three-year term and as
of each anniversary date thereof, the term of this Agreement shall be extended
for an additional 12-month period unless, not later than two months prior to
each such respective date, the Company shall have given notice to the Executive
that the term shall not be so extended. Notwithstanding the foregoing, the
Executive's employment hereunder may be earlier terminated, as provided in
Section 4 hereof. The term of this Agreement, as in effect from time to time
in accordance with the foregoing, shall be referred to herein as the "Term".
The period of time between the commencement and the termination of the
Executive's employment hereunder shall be referred to herein as the "Employment
Period".
2. EMPLOYMENT.
(a) POSITIONS AND REPORTING. The Company hereby employs the
Executive for the Employment Period as its [______________________] and as the
[__________] of ___________________ on the terms and conditions set forth in
this Agreement.
2
(b) AUTHORITY AND DUTIES. The Executive shall exercise such
authority, perform such executive duties and functions and discharge such
responsibilities as are reasonably associated with the Executive's position,
commensurate with the authority vested in the Executive's position, pursuant to
this Agreement and consistent with the By-Laws of the Company and ___________,
respectively. Without limiting the generality of the foregoing, the Executive
shall report directly and be responsible to the President of the Company.
During the Employment Period, the Executive shall devote his full business
time, skill and efforts to the business of the Company. Notwithstanding the
foregoing, the Executive may (i) make and manage passive personal business
investments of his choice (in the case of publicly held corporations not to
exceed 1% of the outstanding voting stock) and serve in any capacity with any
civic, educational or charitable organization, or any trade association,
without seeking or obtaining approval by the Board, provided such activities
and service do not materially interfere or conflict with the performance of his
duties hereunder and (ii) with the approval of the Board, serve on the boards
of directors of other corporations.
3. COMPENSATION AND BENEFITS.
(a) SALARY. During the Employment Period, the Company shall pay
to the Executive, as compensation for the performance of his duties and
obligations under this Agreement, a base salary at the rate of $150,000 per
annum, payable in arrears not less frequently than monthly in accordance with
the normal payroll practices of the Company. Such base salary shall be subject
to review each year for possible increase by the President, but shall in no
event be decreased from its then-existing level during the Employment Period.
(b) ANNUAL BONUS. During the Employment Period, the Executive
shall have the opportunity to earn an annual bonus in accordance with a Company
annual bonus program for senior executives. The payment of any annual bonus
under any such program shall be contingent upon the achievement of certain
corporate and/or individual performance goals established by the Board in its
discretion.
(c) EQUITY PARTICIPATION. Effective on the effective date of the
Business Combination, the Executive shall be granted a stock option to acquire
_______shares of the Common Stock of the Company, subject to the terms and
conditions of the stock option agreement between the Company and the Executive
dated as of the date hereof and the Company's 1996 Long-Term Incentive Plan.
In addition, the Executive shall be entitled to receive awards under any other
stock option or equity based incentive compensation plan or arrangement adopted
by the Company during the Employment Period for which senior executives are
eligible. The level of the executive's future participation in any such plan
or arrangement shall be in the sole discretion of the Board.
(d) OTHER BENEFITS. During the Employment Period, the Executive
shall be entitled to participate in all of the employee benefit plans, programs
and arrangements of the Company in effect during the Employment Period which
are generally available to senior executives of the Company, subject to and on
a basis consistent with the terms, conditions and overall administration of
such
2
3
plans, programs and arrangements. In addition, during the Employment Period,
the Executive shall be entitled to fringe benefits and perquisites comparable
to those of other senior executives of the Company, including, but not limited
to, [_____] weeks of vacation pay per year.
(e) BUSINESS EXPENSES. During the Employment Period, the Company
shall reimburse the Executive for all documented reasonable business expenses
incurred by the Executive in the performance of his duties under this
Agreement, in accordance with the Company's policies.
(f) INDEMNIFICATION. During the Employment Period and thereafter,
the Company shall indemnify the Executive to the fullest extent permitted by
applicable law, and the Executive shall be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the benefit
of its directors and officers, with respect to all costs, charges and expenses
whatsoever incurred or sustained by the Executive in connection with any
action, suit or proceeding (other than any action, suit or proceeding brought
by the Company against the Executive) to which he may be made a party by reason
of being or having been a director, officer or employee of the Company or
______________ or his serving or having served any other enterprise as a
director, officer or employee at the request of the Company.
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment hereunder for cause. For purposes of this Agreement and
subject to the Executive's opportunity to cure as provided in Section 4 (c)
hereof, the Company shall have "cause" to terminate the Executive's employment
hereunder if such termination shall be the result of:
(i) willful fraud or dishonesty in connection with the
Executive's performance hereunder that results in material harm to the
Company;
(ii) the failure by the Executive to substantially perform
his duties hereunder that results in material harm to the Company; or
(iii) the conviction for, or plea or nolo contendere to, a
charge of commission of a felony.
(b) TERMINATION FOR GOOD REASON. The Executive shall have the
right at any time to terminate his employment with the Company at any time and
for any reason. For purposes of this Agreement and subject to the Company's
opportunity to cure as provided in Section 4 (c) hereof, the Executive shall
have "good reason" to terminate his employment hereunder if such termination
shall be the result of:
(i) a material diminution during the Employment Period in
the Executive's duties or responsibilities as set forth in Section 2
hereof;
3
4
(ii) a material breach by the Company of the compensation
and benefits provisions set forth in Section 3 hereof;
(iii) a notice of non-renewal of the Agreement by the
Company in accordance with Section 1 hereof;
(iv) a notice of termination by the Executive under
Section 4 (c) hereof within 12 months following the occurrence of a
Change in Control (as defined in Section 4 (e) hereof); or
(v) a material breach by the Company of any other term of
this Agreement.
(c) NOTICE AND OPPORTUNITY TO CURE. Notwithstanding the
foregoing, it shall be a condition precedent to the Company's right to
terminate the Executive's employment for "cause" and the Executive's right to
terminate his employment for "good reason" that (1) the party seeking the
termination shall first have given the other party written notice stating with
specificity the reason for the termination ("breach") and (2) if such breach is
susceptible of cure or remedy, a period of 30 days from and after the giving of
such notice shall have elapsed without the breaching party having effectively
cured or remedied such breach during such 30-day period, unless such breach
cannot be cured or remedied within 30 days, in which case the period for remedy
or cure shall be extended for a reasonable time (not to exceed an additional 30
days), provided the breaching party has made and continues to make a diligent
effort to effect such remedy or cure.
(d) TERMINATION UPON DEATH OR PERMANENT AND TOTAL DISABILITY. The
Employment Period shall be terminated by the death of the Executive. The
Employment Period may be terminated by the Company if the Executive shall be
rendered incapable of performing his duties to the Company by reason of any
medically determined physical or mental impairment that can be expected to
result in death or that can be expected to last for a period of six or more
consecutive months from the first date of the Executive's absence due to the
Disability (a "Disability"). If the Employment Period is terminated by reason
of a Disability of the Executive, the Company shall give 30 days' advance
written notice to that effect to the Executive.
(e) DEFINITION OF CHANGE IN CONTROL. A "Change in Control" shall
be deemed to have taken place if:
(i) there shall be consummated any consolidation or
merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's
capital stock are converted into cash, securities or other property
other than a consolidation or merger of the Company in which the
holders of the Company's voting stock immediately prior to the
consolidation or merger shall, upon consummation of the consolidation
or merger, own at least 50% of the voting stock of the surviving
4
5
corporation, or any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by
any party as a single plan) of all or substantially all of the assets
of the Company; or
(ii) any person (as such term is used in Sections 13(d)
and 14 (d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") ), shall after the date hereof become the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35%
or more of the voting power of all then outstanding securities of the
Company having the right under ordinary circumstances to vote in an
election of the Board (including, without limitation, any securities
of the Company that any such person has the right to acquire pursuant
to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed beneficially owned by
such person); or
(iii) individuals who at the date hereof constitute the
entire Board and any new directors whose election by the Board, or
whose nomination for election by the Company's stockholders, shall
have been approved by a vote of at least a majority of the directors
then in office who either were directors at the date hereof or whose
election or nomination for election shall have been so approved (the
"Continuing Directors") shall cease for any reason to constitute a
majority of the members of the Board; or
(iv) the sale by the Company of the majority of the
capital stock of _______ or all or substantially all of the assets of
___________, or the liquidation on dissolution of ________.
5. CONSEQUENCES OF TERMINATION.
(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event of
termination of the Executive's employment hereunder by the Company without
"cause" (other than upon death or Disability) or by the Executive for "good
reason" (each as defined in Section 4 hereof), the Executive shall be entitled
to the following severance pay and benefits:
(I) SEVERANCE PAY - severance payments in the form of
continuation of the Executive's base salary as in effect immediately
prior to such termination over the longer of; (A) the then-remaining
Term hereof; or (B) 24 months (the "Severance Period").
(ii) BENEFITS CONTINUATION - continuation for the
Severance Period of coverage under the group medical care, disability
and life insurance benefit plans or arrangements in which the
Executive is participating at the time of termination; provided,
however, that the Company's obligation to provide such coverages shall
be terminated if the Executive obtains comparable substitute coverage
from another employer at any time during the Severance Period. The
Executive shall be entitled, at the expiration of the Severance
Period, to elect continued medical coverage in accordance with section
4980B of the Internal Revenue Code
5
6
of 1986, as amended (or any successor provision thereto); and
(iii) STOCK OPTIONS - all options to purchase shares of the
Company's Common Stock held by the Executive immediately prior to
termination of employment shall become immediately vested and
exercisable and, subject to the terms of the Company's 1996 Long-Term
Incentive Plan, shall remain exercisable for the duration of the
Severance Period.
(b) OTHER TERMINATIONS. In the event of termination of the
Executive's employment hereunder for any reason other than those specified in
Section 5(a) hereof, the Executive shall not be entitled to any severance pay,
benefits continuation or stock option rights contemplated by the foregoing,
except as may otherwise be provided under the applicable benefit plans or award
agreements relating to the Executive.
(c) ACCRUED RIGHTS. Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of the Executive's employment
hereunder for any reason, the Executive shall be entitled to payment of any
unpaid portion of his base salary through the effective date of termination,
and payment of any accrued but unpaid rights solely in accordance with the
terms of any incentive bonus, stock option or employee benefit plan or program
of the Company.
6. CONFIDENTIALITY.
The Executive agrees that he will not at any time during the Term hereof or at
any time thereafter for any reason, in any fashion, form or manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation or other business entity, in any manner whatsoever, any
confidential information or trade secrets concerning the business of the
Company, including, without limiting the generality of the foregoing, the
techniques, methods or systems of its operation or management, any information
regarding its financial matters, or any other material information concerning
the business of the Company, its manner of operation, its plans or other
material data. The provisions of this Section 6 shall not apply to (i)
information that is public knowledge other than as a result of disclosure by
the Executive in breach of this Section 6; (ii) information disseminated by the
Company to third parties in the ordinary course of business; (iii) information
lawfully received by the Executive from a third party who, based upon inquiry
by the Executive, is not bound by a confidential relationship to the Company;
or (iv) information disclosed under a requirement of law or as directed by
applicable legal authority having jurisdiction over the Executive.
7. INVENTIONS.
The Executive is hereby retained in a capacity such that the Executive's
responsibilities include the making of technical and managerial contributions
of value to Company. The Executive hereby assigns to Company all right, title
and interest in such contributions and inventions made or
6
7
conceived by the Executive alone or jointly with others during the Employment
Period which relate to the business or of the Company. This assignment shall
include (a) the right to file and prosecute patent applications on such
inventions in any and all countries, (b) the patent applications filed and
patents issuing thereon, and (c) the right to obtain copyright, trademark
or trade name protection for any such work product. The Executive shall
promptly and fully disclose all such contributions and inventions to Company
and assist the Company in obtaining and protecting the rights therein
(including patents thereon), in any and all countries; provided, however, that
said contributions and inventions will be the property of Company, whether or
not patented or registered for copyright, trademark or trade name protection,
as the case may be. Inventions conceived by the Executive which are not
related to the business of the Company, will remain the property of the
Executive.
8. NON-COMPETITION.
The Executive agrees that he shall not during the Employment Period and, if
applicable, the Severance Period, without the approval of the Board, directly
or indirectly, alone or as partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor or stockholder (other than
as provided below) of any company or business, engage in any "Competitive
Business" within the United States. For purposes of the foregoing, the term
"Competitive Business" shall mean any business involved in development,
marketing, sale or support of health care information systems. Notwithstanding
the foregoing, the Executive shall not be prohibited during the non-competition
period applicable above from acting as a passive investor where he owns not more
than one percent (1%) of the issued and outstanding capital stock of any
publicly-held company. During the period that the above non-competition
restriction applies, the Executive shall not, without the written consent of the
Company, solicit any employee of the Company or any current or future subsidiary
or affiliate thereof to terminate his or her employment.
9. BREACH OF RESTRICTIVE COVENANTS.
The parties agree that a breach or violation of Section 6, 7 or 8 hereof will
result in immediate and irreparable injury and harm to the innocent party, who
shall have, in addition to any and all remedies of law and other consequences
under this Agreement, the right to an injunction, specific performance or other
equitable relief to prevent the violation of the obligation hereunder.
10. NOTICE.
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
7
8
(a) If to the Company, to:
THE MEDICAL MANAGER CORPORATION
0000 XXXXX XXXXX XXXXX XXXXX XXXX
XXXXX 000
XXXXX, XX 00000
(b) If to the Executive, to:
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
11. ARBITRATION: LEGAL FEES.
Except as provided in Section 9 hereof, any dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Florida in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. The Company shall reimburse the Executive
for all reasonable legal fees and costs and other fees and expenses which the
Executive may incur in respect of any dispute or controversy arising against
the Company under or in connection with this Agreement; provided, however, that
the Company shall not reimburse any such fees, costs and expenses if the fact
finder determines that the action brought by the Executive was substantially
without merit.
12. WAIVER OF BREACH.
Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part either of the
Executive or of the Company.
13. NON-ASSIGNMENT: SUCCESSORS.
Neither party hereto may assign his or its rights or delegate his or its duties
under this Agreement without the prior written consent of the other party;
provided, however, that (i) this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company upon any sale of all or
substantially all of the Company's assets, or upon any merger, consolidation or
reorganization of the Company with or into any other corporation, all as though
such successors and assigns of the Company and their respective successors and
assigns were the Company; and (ii) this Agreement shall inure to the benefit of
and be binding upon the heirs, assigns or designees of the
8
9
Executive to the extent of any payments due to them hereunder. As used in this
Agreement, the term "Company" shall be deemed to refer to any such successor or
assign or the Company referred to in the preceding sentence.
14. WITHHOLDING OF TAXES.
All payments required to be made by the Company to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any, relating
to tax, and other payroll deductions as the Company may reasonable determine it
should withhold pursuant to any applicable law or regulation.
15. SEVERABILITY.
To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
16. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.
17. GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in accordance with
the laws of the State of Florida, without giving effect to the conflict of law
principles thereof.
18. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement by the Company and the
Executive with respect to the subject matter hereof and supersedes any and all
prior agreements or understandings between the Executive and the Company with
respect to the subject matter hereof, whether written or oral. This Agreement
may be amended or modified only by a written instrument executed by the
Executive and the Company.
9
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of
____________, 1996.
MEDICAL MANAGER CORPORATION
By:
-------------------------------------
THE EXECUTIVE
-----------------------------------------
10
