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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 25th day of November 1996 (the
"Effective Date") between MEDICAL MANAGER CORPORATION, a Delaware corporation
(the "Company"), and XXX X. XXXXXXX (the "Executive").
WHEREAS, the parties wish to enter into an employment agreement to employ the
Executive as a Vice President and, upon resignation of the current Chief
Financial Officer, its Chief Financial Officer 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. Effective as of the expiration of
such initial five (5) 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 60 days 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 "Term." The period of time between the
Effective Date 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 a Vice President and, upon the
resignation of the current Chief Financial Officer, its Chief Financial Officer
on the terms and conditions set forth in this Agreement.
(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 positions,
commensurate with the authority vested in the Executive's positions, pursuant
to this Agreement and consistent with the By-Laws of the Company. 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
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approval by the Board of Directors of the Company (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 One Hundred
Fifty Thousand ($150,000.00) Dollars 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 a 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 date of commencement
of the Company's initial public offering of Common Stock (but subject to the
Executive being an executive officer of the Company on the date of closing of
such initial public offering), the Executive shall be granted a stock option to
acquire One Hundred Thousand (100,000) shares, at the initial public offering
price 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 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 three (3) weeks of vacation pay per year.
(e) COBRA PAYMENTS. If the Executive elects to maintain continued
medical coverage under his current employer's group policy the Company shall
pay all monthly insurance premiums
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associated with such coverage. The Company's obligation to make such payments
shall begin in December 1996 and continue until such time as the Company
provides medical coverage for the Executive. In no event shall such payments
be made by the company for coverage beyond February 28, 1998.
(f) 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.
(g) DIRECT LIVING AND MOVING EXPENSES. The Company shall
reimburse the Executive up to Five Hundred ($500.00) Dollars per month to
defray direct living expenses incurred by the Executive during his transition
from Orlando, Florida to Tampa, Florida. The Company shall continue to
reimburse the Executive until the Executive and his family relocate to Tampa,
Florida or for six (6) months, whichever is earlier. Additionally, the Company
shall pay the direct and reasonable expenses related to moving the Executive's
household (including packing and unpacking) to Tampa, Florida.
(h) 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 to which he may be made a party by reason of being
or having been a director, officer or employee of the Company 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,
the Company shall have "cause" to terminate the Executive's employment
hereunder if such termination shall be the result of:
(i) willful material fraud or material dishonesty in
connection with the Executive's performance hereunder that results in
harm to the Company if the Executive has been provided an opportunity
to cure as provided in Section 4(c) of this Agreement;
(ii) the failure by the Executive to substantially perform
his material duties hereunder that results in harm to the Company if
the Executive has been provided an opportunity to cure as provided in
Section 4(c) of this Agreement;
(iii) the Executive's material breach of this Agreement if
the Executive has been provided an opportunity to cure as provided in
Section 4(c) of this Agreement;
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(iv) the appropriation of a material business opportunity
of the Company, including attempting to secure or securing any
personal profit in connection with any transaction entered into on
behalf of the Company;
(v) the misappropriation of any of the Company's funds or
property; or
(vi) the conviction of, or the entering of a guilty plea
or plea of no contest with respect to a felony or the equivalent
thereof.
(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;
(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);
(v) a material breach by the Company of any other term of
this Agreement; or
(vi) the involuntary relocation of the Executive to a
place of employment that is more than 50 miles from his current place
of employment, Tampa, Florida.
(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.
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(d) TERMINATION UPON DEATH OR PERMANENT AND TOTAL DISABILITY.
Except as specifically provided in this Agreement, the Employment Period, all
benefits and any other rights of the Executive 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
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 hereto 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.
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5. CONSEQUENCES OF TERMINATION
(a) TERMINATION WITHOUT CAUSE OR GOOD REASON. In the event of
termination of the Executive's employment hereunder by the Company without
"cause" (other then 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 payment 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 is able to obtain 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 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) FAILURE TO CONSUMMATE MERGER. Notwithstanding the provisions
of Section 5(a) hereof, the Executive and the Company shall each have the right
to terminate this Employment Agreement if the mergers contemplated by those
certain Agreements and Plans of Reorganization, dated as of the 30th day of
September 1996, between the Company and its acquisition subsidiary or
subsidiaries is not consummated within nine (9) months of the Effective Date of
this Agreement. In the event that the Executive's employment is terminated
pursuant to the provisions of this Section 5(b), then the Executive shall not
be entitled to the stock option rights contemplated by this Agreement but shall
be entitled to a continuation of the Executive's base salary as in effect
immediately prior to such termination and a continuation of his then existing
benefits for a period of six (6) months from the date of termination.
(c) OTHER TERMINATIONS. In the event of termination of the
Executive's employment hereunder for any reason other than those specified in
Section 5(a) and 5(b) 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.
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(d) 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 Employment Period
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.
The Executive further agrees that he will not remove from the Company's
premises (except to the extent such removal is for purposes of the performance
of the Executive's duties at home or while traveling, or except as otherwise
specifically authorized by the Company) Company property which includes but is
not limited to any document, record, notebook, plan, model, component, device,
or computer software or code, whether embodied in a disk or in any other form
(collectively, the "Proprietary Items"). The Executive recognizes that, as
between the Company and the Executive, all of the Proprietary Items, whether or
not developed by the Executive, are the exclusive property of the Company.
Upon termination of this Agreement by either party, or upon the request of the
Company during the Employment Period, the Executive will return to the Company
all of the Proprietary Items in the Executive's possession or subject to the
Executive's control, and the Executive shall not retain any copies, abstracts,
sketches, or other physical embodiment of any of the Proprietary Items.
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 the Company all right,
title and interest in such contributions and inventions made or conceived by
the Executive along 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
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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 for one
(1) year after the Employment Period or, if applicable, the Severance Period,
whichever is longer, 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 employee of a current or future subsidiary or affiliate
thereof to terminate his or her employment. The period of time applicable to
any covenant in this Section 8 will be extended by the duration of any
violation by the Executive of such covenant.
If any covenant in this Section 8 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as a court of competent jurisdiction may
determine may be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against the Executive.
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.
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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:
(a) If to the Company, to:
MEDICAL MANAGER CORPORATION
XXXXXXXX X. XXXXXXX
ASSOCIATE GENERAL COUNSEL
0000 XXXXX XXXXX XXXXX XXXXX XXXX
XXXXX 000
XXXXX, XX 00000
(b) If to the Executive, to:
XXX X. XXXXXXX
00000 XXXXXXXXX XXXXXXXXX
XXXXXXX, XXXXXXX 00000
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.
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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 insure to the benefit
of and be binding upon the heirs, assigns or designees of the 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 will be governed by the laws of the State of Florida without
regard to conflicts of laws principles.
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 written instrument executed by the Executive
and the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
November 25, 1996.
THE EXECUTIVE MEDICAL MANAGER CORPORATION
/s/ Xxx X. Xxxxxxx /s/ Xxxx Xxxx
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XXX X. XXXXXXX By: XXXX XXXX
Its: PRESIDENT
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