EXHIBIT (C)(11)
[SEVERANCE AGREEMENT]
May 17, 1996
Xx. Xxxx Xxxxxxxxx
Senior Vice President of Sales and Service
MDL Information Systems, Inc.
00000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Xxxx:
The purpose of this letter agreement is to document the terms of the
severance package to which you will be entitled should your employment with MDL
Information Systems, Inc. or any successor entity (jointly and severally, the
"Company") terminate in connection with both certain changes in control of the
Company and certain events affecting your ability to remain lawfully employed in
the United States.
Part One specifies the terms and conditions upon which you may become
entitled to receive the severance benefits. Part Two sets forth certain
definitions to be in effect for purposes of determining your benefit
entitlement. Part Three concludes this agreement with a series of general terms
and conditions applicable to your severance benefits.
PART ONE - INVOLUNTARY TERMINATION UPON
CHANGE IN CONTROL BENEFITS
Upon your Involuntary Termination within twelve (12) months after a Change
in Control, you will become entitled to receive the special severance benefits
provided in this Part One. In all other cases, the terms and conditions of any
severance benefits which you may be entitled to receive from the Company will be
determined in accordance with the [MDL Information Systems, Inc. Executives and
Officers Separation Pay Plan].
1. SEVERANCE PAYMENTS. You will receive severance payments from the
Company following your Involuntary Termination in an amount equal to: (i) your
Salary paid for twelve (12) months in semi-monthly installments in accordance
with the Company's normal payroll practices or, at the Company's sole
discretion, in a lump-sum payment made as soon as administratively practicable
following the date of your Involuntary Termination, and (ii) one (1.0) times
your Bonus paid in a lump-sum as soon as administratively practicable following
the date of your Involuntary Termination. All such severance payments shall be
subject to all applicable withholding taxes.
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May 17, 1996
2. HEALTH COVERAGE. The Company will, at its expense, provide you and your
eligible dependents with employer-provided continued group health coverage under
the Company's medical/dental plan at your current level for a twelve (12) month
period following the effective date of your Involuntary Termination; provided,
however, that you and your dependents are eligible to receive, and elect,
continuation coverage pursuant to the terms of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), by reason of your termination
of employment.
3. OPTION ACCELERATION. Each of your outstanding Options will (to the
extent not then otherwise exercisable for vested shares) automatically
accelerate so that each such Option will become immediately exercisable for the
total number of shares of Common Stock at the time subject to that Option.
Following your Involuntary Termination, each Option and all your then-vested
options may be exercised for any or all vested shares in accordance with the
exercise provisions of the option agreement evidencing the Option. However, in
no event may any outstanding option be exercised after the specified expiration
date of the option term.
4. RESTRICTIVE COVENANTS. For the twelve (12) month period following your
Involuntary Termination:
(i) You will not directly or indirectly, whether for your own account
or as an employee, director, consultant or advisor, provide services to any
business enterprise which is at the time in competition with any of the
Company's then existing or formally planned product lines and which is located
geographically in an area where the Company maintains substantial business
activities, unless you obtain the prior written consent of the Board.
(ii) You will not directly or indirectly encourage or solicit any
individual to leave the Company's employ for any reason or interfere in any
other manner with the employment relationships at the time existing between
the Company and its current or prospective employees.
(iii) You will not induce or attempt to induce any customer, supplier,
distributor, licensee or other business relation of the Company to cease doing
business with the Company or in any way interfere with the existing business
relationship between any such customer, supplier, distributor, licensee or
other business relation and the Company.
Xx. Xxxx Xxxxxxxxx Page 3.
May 17, 1996
You acknowledge that monetary damages may not be sufficient to compensate
the Company for any economic loss which may be incurred by reason of your breach
of the foregoing restrictive covenants. Accordingly, in the event of any such
breach, the Company shall, in addition to the cessation of the severance
benefits provided you under this letter agreement and any remedies available to
the Company at law, be entitled to obtain equitable relief in the form of an
injunction precluding you from continuing to engage in such breach.
5. BENEFIT REDUCTION. Should any of your severance benefits under this
letter agreement be deemed to be parachute payments under Code Section 280G,
then the following limitations will become applicable: (i) first, the dollar
amount of your severance payment under Paragraph 1, and (ii) then, the
accelerated vesting of your options under Paragraph 3 will be reduced to the
extent (and only to the extent) necessary to provide you with the maximum after-
tax benefit available, after taking into account any parachute excise tax which
might otherwise be payable by you under Code Section 4999 and any analogous
State income tax provision.
PART TWO - DEFINITIONS
DEFINITIONS. For purposes of this letter agreement, including in particular
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the application of the special benefit limitations of Part One, the following
definitions will be in effect:
BOARD shall mean the Company's Board of Directors.
BONUS shall mean the bonus paid to you by the Company for the fiscal year
immediately preceding the fiscal year in which your Involuntary Termination is
effected. Any bonuses paid for a partial year of employment will be
annualized.
CHANGE IN CONTROL shall mean any of the following events:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose
of which is to change the State in which the Company is
incorporated;
(ii) the sale, transfer or other disposition of all or substantially
all of the assets of the Company other than in the ordinary
course of business;
Xx. Xxxx Xxxxxxxxx Page 4.
May 17, 1996
(iii) any reverse merger in which the Company ceases to exist as an
independent corporation and becomes the subsidiary of another
corporation;
(iv) the acquisition by any person (or related group of persons),
whether by tender or exchange offer made directly to the Company's
stockholders, private purchases from one or more of the Company's
stockholders, open market purchases or any other transaction, of
beneficial ownership of securities possessing more than twenty-
five percent (25%) of the total combined voting power of the
Company's outstanding securities;
(v) the acquisition by any person (or related group of persons),
whether by tender or exchange offer made directly to the Company's
stockholders, private purchases from one or more of the Company's
stockholders, open market purchases or any other transaction, of
additional securities of the Company which increase the total
holdings of such person (or group) to a level of securities
possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities; or
(vi) the acquisition by any person (or related group of persons),
whether by tender or exchange offer made directly to the Company's
stockholders, private purchases from one or more of the Company's
stockholders, open market purchases or any other transaction, of
securities of the Company possessing sufficient voting power in
the aggregate to elect an absolute majority of the members of the
Board (rounded up to the nearest whole number).
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMMON STOCK shall mean the Company's common stock.
HEALTH COVERAGE shall mean the continued health coverage to which you and
your eligible dependents may become entitled under this letter agreement and
pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA") upon your Involuntary Termination.
Xx. Xxxx Xxxxxxxxx Page 5.
May, 17, 1996
INVOLUNTARY TERMINATION shall mean the termination of your employment with
the Company which occurs within twelve (12) months of a Change in Control within
the termination of your losing your right to work in the United States due to no
fault of your own.
OPTION shall mean any option granted to you under the MDL Information
Systems, Inc. 1993 Stock Option and Restricted Stock Plan or any other equity
incentive plan or plans subsequently adopted by the Company, but only to the
extent the option is outstanding at the time of your Involuntary Termination.
SALARY shall mean the following measured as of your date of Involuntary
Termination:
(i) your predetermined base salary excluding bonuses, other
incentive-type payments, reimbursements or compensation
associated with stock options from the Company; and
(ii) your car allowance from the Company.
PART THREE - MISCELLANEOUS PROVISIONS
1. TERM OF AGREEMENT. The provisions of this letter agreement will
continue in effect until terminated by written agreement entered into between
you and the Company.
2. GENERAL CREDITOR STATUS. The benefits to which you may become
entitled under this letter agreement (except those attributable to your Options)
will be paid, when due, from the general assets of the Company. Your right (or
the right of the executors or administrators of your estate) to receive any such
payments will at all times be that of a general creditor of the Company and will
have no priority over the claims of other general creditors of the Company.
3. DEATH. Should you die before receipt of all benefits to which you
become entitled under this letter agreement, then the payment of such benefits
will be made, on the due date or dates hereunder had you survived, to the
executors or administrators of your estate. Should you die before you exercise
your outstanding vested options, then each such option may be exercised, during
the applicable exercise period in effect hereunder for those options at the time
of your death, by the executors or
Xx. Xxxx Xxxxxxxxx Page 6.
May 17, 1996
administrators of your estate or by person to whom the option is transferred
pursuant to your will or in accordance with the laws of inheritance.
4. MISCELLANEOUS. The provisions of this letter agreement will be
construed and interpreted under the laws of the State of California. This
agreement incorporates the entire agreement between you and the Company relating
to the subject of severance benefits and supersedes any and all prior agreements
and understandings with respect to such subject matter. This agreement may only
be amended by written instrument signed by you and a member of the Board of
Directors of the Company. If any provision of this letter agreement as applied
to any party or to any circumstance should be adjudged by a court of competent
jurisdiction to be void or unenforceable for any reason, the invalidity of that
provision shall in no way affect (to the maximum extent permissible by law) the
application of such provision under circumstances different from those
adjudicated by the court, the application of any other provision of this letter
agreement, or the enforceability or invalidity of this letter agreement as a
whole. Should any provision of this letter agreement become or be deemed
invalid, illegal or unenforceable in any jurisdiction by reason of the scope,
extent or duration of its coverage, then such provision shall be deemed amended
to the extent necessary to conform to applicable law so as to be valid and
enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision shall be stricken and
the remainder of this letter agreement shall continue in full force and effect.
5. REMEDIES. All rights and remedies provided pursuant to this letter
agreement or by law will be cumulative, and no such right or remedy will be
exclusive of any other. A party may pursue any one or more rights or remedies
hereunder or may seek damages or specific performance in the event of another
party's breach hereunder or may pursue any other remedy by law or equity,
whether or not stated in this letter agreement.
6. ARBITRATION. Any controversy which may arise between you and the
Company with respect to the construction, interpretation or application of any
of the terms, provisions or conditions of this agreement or any monetary claim
arising from or relating to this agreement will be submitted to final and
binding arbitration in Alameda County, California in accordance with the rules
of the American Arbitration Association then in effect.
7. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this agreement shall
confer upon you any right to continue in the employment of the Company for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the
Xx. Xxxx Xxxxxxxxx Page 7.
May 17, 1996
Company or you, which rights are hereby expressly reserved by each, to terminate
your employment at any time for any reason whatsoever, with or without cause.
8. PROPRIETARY INFORMATION. You hereby acknowledge that the Company may,
from time to time during your employment with the Company, disclose to you
confidential information pertaining to the Company's business and affairs. All
information and data, whether or not in writing, of a private or confidential
nature concerning the business or financial affairs of the Company
(collectively, "Proprietary Information") is and will remain the sole and
exclusive property of the Company. In connection with such Proprietary
Information, you agree as follows:
(i) You will not, during your employment with the Company or at any
time thereafter, disclose to any third party or directly or
indirectly make use of any such Proprietary Information other
than in connection with, and in furtherance of, the Company's
business and affairs.
(ii) You agree that you will use all files, letters, memoranda,
reports, records, data or other written, reproduced or other
tangible manifestations of the Proprietary Information, whether
created by you or others, to which you have access during your
employment with the Company, only in the performance of your
duties with the Company. You will return all such materials
(whether written, printed or otherwise reproduced or recorded)
to the Company immediately upon the termination of your
employment with the Company or upon any earlier request by the
Company, without retaining any copies, notes or excerpts
thereof.
(iii) Your obligations under this Paragraph 9 will continue in effect
after the termination of your employment with the Company,
whatever the reason or reasons for such termination, and the
Company will have the right to communicate with any future or
prospective employer concerning your continuing obligations
under this Paragraph 9.
9. ATTORNEY FEES. Should any legal action or arbitration proceedings be
instituted by a party to this Agreement to enforce any of the terms and
provisions contained herein or to obtain relief for any breach hereof, the
prevailing party in such action or
Xx. Xxxx Xxxxxxxxx Page 8.
May 17, 1996
proceeding shall be entitled to reasonable attorney fees, costs and expenses
incurred in such action or proceeding, in addition to any other relief to which
such party may be entitled.
Please indicate your acceptance of the foregoing provisions of this
severance agreement by signing the enclosed copy of this letter agreement and
returning it to the Company.
Very truly yours,
MDL INFORMATION SYSTEMS, INC.
By: Xxx Xxxxxxx
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Title: Vice President
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ACCEPTED BY AND AGREED TO
Signature: /s/ Xxxx Xxxxxxxxx
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Dated: 6/27 , 1996
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