Agreement Re Specified Acts
Exhibit
10.32
Certain
confidential portions of this Exhibit were omitted by means of blackout of
the
text and replaced with an asterisk (*) (the “Xxxx”). This exhibit has been filed
separately with the Securities and Exchange Commission without the Xxxx pursuant
to the Company’s Application Requesting Confidential Treatment under Rule 24b-2
of the Securities Exchange Act of 1934.
This
Agreement re Specified Acts is made effective as of January 6, 2006 by and
between Eclipsys Corporation, a Delaware corporation (hereinafter referred
to
collectively with any of its subsidiaries as the “Company”),
and
Xxxx X. Xxxxx (“Executive”).
The
Company and Executive are parties to that certain Employment Agreement of even
date herewith (the “Employment
Agreement”)
pursuant to which the Company employs Executive as its Executive Vice President.
Executive is receiving a grant of stock options to purchase up to 400,000 shares
of Common Stock of the Company and a grant of 100,000 shares of Common Stock
of
the Company that are subject to contractual restrictions, as described in the
Employment Agreement (the “Initial
Grants”),
and
Executive may become entitled to certain severance benefits described in the
Employment Agreement (the “Severance
Package”
or
the
“Change
in Control Benefits”).
In
addition, Executive may receive additional grants of stock options, restricted
stock, or other equity-based awards, and may become entitled to additional
severance benefits. It is a condition of Executive’s employment that Executive
enter into this Agreement with the Company. Accordingly, the Company and
Executive hereby agree as follows:
1.
Specified Acts.
(a) If,
at
any time during Executive’s employment with the Company or during the 730-day
period following the termination or cessation of Executive’s employment with the
Company for any reason, Executive commits any Specified Act (as defined below),
then notwithstanding any agreement or plan provision to the contrary, the
Company may in its discretion, at any time or from time to time during the
Evaluation Period related to that Specified Act (as defined below), (i) cancel
in whole or part the Initial Grants and/or any other award of stock options
or
restricted stock or any other award made at any time to Executive under any
equity incentive plan of the Company (each an “Award”),
whether or not vested, and/or (ii) rescind some or all of any vesting, exercise,
payment or delivery that occurred or occurs or is scheduled to occur pursuant
to
the Initial Grants or any other Award within 730 days before the earlier of
the
Specified Act or the termination of Executive’s employment, or at any time after
the Specified Act, and/or (iii) cease paying or providing any or all of the
Severance Package or the Change in Control, and/or (iv) demand that Executive
return to the Company any portion of the Severance Package or the Change in
Control Benefits previously paid, provided that cessation of payment pursuant
to
item (iii) and/or demand for return pursuant to item (iv) shall only apply
to
portions of the Severance Package or Change in Control Benefits in excess of
$150,000, which $150,000 shall be consideration for the release signed as
required by the Employment Agreement as a condition to payment of the Severance
Package or the Change in Control Benefits.
(b) The
Company shall notify Executive in writing of any exercise of any of its rights
under Section
1(a)
within
the Evaluation Period related to the Specified Act triggering the Company’s
rights.
(c) If
the
Company rescinds some or all of any vesting, exercise or delivery pursuant
to
Section
1(a)(ii),
then
within ten days after receiving from the Company the notice described in
Section
1(b),
Executive shall be obligated to pay to the Company the gross amount of any
gain
realized or payment received as a result of the cancelled Award or rescinded
vesting, exercise, payment or delivery. Such payment shall be made by returning
to the Company all shares of capital stock that Executive purchased or otherwise
received in connection with the cancelled Award or rescinded vesting, exercise,
payment or delivery, or if such shares or any interest therein have been
transferred by Executive, then by paying to the Company, by wire transfer of
immediately available funds, the fair market value of such shares at the time
of
the transfer. For this purpose, in the case of publicly traded shares, the
value
of shares will be measured by the price for which Executive sold the shares
in a
bona fide arm’s length transaction, or if the shares or interests therein were
transferred otherwise than by a bona fide arm’s length sale, then by the closing
price of the shares on the Nasdaq National Market or other primary market or
exchange upon which the shares trade on the trading day immediately preceding
the date of the transfer. Executive will cease to have any rights under any
Award, vesting, exercise, payment or delivery to the extent cancelled or
rescinded pursuant to this Agreement. Any payment of the exercise price for
stock options or purchase price for restricted stock previously made by
Executive to the Company in connection with an Award or vesting, exercise,
payment or delivery that is cancelled or rescinded pursuant to this Agreement
will be returned by the Company to Executive (without interest), at the time
Executive returns the shares or makes payment pursuant to Section
1(c),
including, at the Company's discretion, by offset against any amounts payable
by
Executive to the Company or any of the Company’s subsidiaries.
(d) If
the
Company demands return of previously paid portions of the Severance Package
or
the Change in Control Benefits pursuant to Section
1(a)(iv),
then
within ten days after receiving from the Company the notice described in
Section
1(b),
Executive shall pay to the Company, by wire transfer of immediately available
funds, an amount equal to the aggregate cost to the Company of any parts of
the
Severance Package or the Change in Control Benefits previously provided to
Executive by the Company that the Company demands be returned.
(e) Upon
and
as a condition to vesting, exercise, payment or delivery of shares or cash
pursuant to any Award, a Recipient shall, if required by the Administrator,
certify on a form acceptable to the Company that he has not committed any
Specified Act. For purposes of this Agreement, the Company will be deemed to
have been aware of Specified Act only after the completion of any investigation
or inquiry and only when the Company has clear and convincing evidence thereof.
For this purpose, suspicion is not awareness.
(f) For
these
purposes:
(i) “Evaluation
Period”
related
to a Specified Act means the period beginning with that Specified Act and ending
not later than the later of 365 days after such Specified Act, or, if later,
180
days after the Company became aware of such Specified Act.
(ii) “Specified
Act”
means
Employee (A) has a Specified Relationship with a Designated Company (as those
terms are defined below), or (B) violates in any material respect any material
contractual obligation or legal duty to the Company and, if such violation
of
contractual obligation or legal duty is susceptible of cure fails to cure such
violation within 30 days of written demand by the Company for cure, provided
that the final determination that such a violation of contractual obligation
or
legal duty has occurred and not been cured within such 30-day notice period
must
be made by the Company’s board of directors after giving Executive an
opportunity to be heard.
(iii) “Specified
Relationship”
with
a
Designated Company means acting as an owner, partner, officer, director, or
employee of, or consultant or advisor (paid or unpaid) or lender to, or investor
in, that Designated Company, except that ownership of not more than 1% of the
outstanding stock of a Designated Company, in and of itself, will not be a
Specified Relationship.
(iv)
“Designated
Company”
means
at any time of determination any of the entities listed on the Current Version
of Schedule
A
to this
Agreement and any Affiliate of any of such entities regardless of when formed.
At no time may there be more than ten Designated Companies listed on
Schedule
A,
and if
any version of Schedule
A
lists
more than ten companies, then only the first ten listed on Schedule
A,
reading
left to right, top to bottom, will be Designated Companies pursuant to that
schedule, but Affiliates of the listed entities will be Designated Companies
but
will not be counted for purposes of this ten-entity limit. In addition, each
of
the following shall be a Designated Company, in addition to the Designated
Companies listed on Schedule
A
and not
subject to the ten-entity limit: (i) any entity that is a successor to or
transferee of any significant part of the business or assets of an entity listed
on the Current Version; and (ii) any entity that first engages in competitive
activity following the date of the Current Version. For this purpose, an entity
first engages in competitive activity when it openly begins to provide or pursue
any goods or services or line of business that is competitive in any material
way with any goods or services or line of business provided or being pursued,
or
for which plans were being made, during Executive’s tenure with the Company. The
“Current
Version”
of
Schedule
A
is the
version attached to this Agreement at the date of its execution unless and
until
Schedule
A
is
modified as set forth in paragraph 1(f)(iv)(A) or 1(f)(iv)(B) below. The Current
Version need not be the same as the list of competitors specified by the Company
for any agreement entered into by the Company or any of its affiliates with
any
other employee that is similar to this Agreement.
(A)
At
any
time and from time to time from the date hereof until the date seven days
following the termination of Executive’s employment for any reason, but not more
than once in any period of 180 days, the Company may, in its discretion, by
written notice to Executive, modify the Current Version to include any company
or companies that the Company in its discretion deems to be engaged in or
planning any activity that is competitive with the Company’s business as
conducted or planned, subject to the overall limit of ten, and that modified
version of the schedule will then be the Current Version unless and until
further modified pursuant to this paragraph 1(f)(iv)(A) or paragraph
1(f)(iv)(B).
(B)
Not
more
than once in any period of 180 days, Executive may by written demand require
the
Company to provide an updated Current Version. In response, within seven days
of
receipt of Executive’s demand, the Company must deliver to Executive an updated
Current Version or ratify in writing the then-existing Current Version. Any
such
updated Current Version may include, in the Company’s discretion, any company or
companies that the Company in its discretion deems to be engaged in or planning
any activity that is competitive with the Company’s business as conducted or
planned, subject to the overall limit of ten. The Company may elect to deliver
an updated Current Version in response to Executive’s demand even if the Company
has modified the schedule in its own discretion within the preceding 180 days,
but in any case the Current Version provided by the Company in response to
Executive’s demand (whether updated or ratified) will trigger a new 180-day
waiting period before the Company may again modify the schedule in its
discretion pursuant to paragraph 1(f)(iv)(A). Any Current Version resulting
from
the process described in this paragraph 1(f)(iv)(B) will be the Current Version
unless and until further modified pursuant to this paragraph 1(f)(iv)(B) or
paragraph 1(f)(iv)(A).
(v) “Affiliate”
of
an
entity means any controlling, controlled by or under common control with such
entity.
(g) Executive
understands and agrees that (i) his entering into this Agreement is a material
inducement to the Company to employ him on the terms described in the Employment
Agreement; (ii) the Initial Grants and any other equity that the Company may
grant to Executive, the Severance Package and the Change in Control Benefits
(other than the first $200,000 thereof) are intended not only to motivate and
reward Executive’s performance, but also to compensate Executive for not
engaging in any specified Act; (iii) Executive is not restricted by this
Agreement from engaging in any Specified Act, and Executive is willing to accept
the potential economic consequences under this Agreement of engaging in any
Specified Act; (iv) Executive’s livelihood does not depend upon his ability to
engage in any Specified Act; and (v) Executive shall not bring or participate
in
any action challenging the, validity, legality, effectiveness or enforceability
of any part of this Agreement.
2. General
Provisions.
(a) No
Contract of Employment.
This
Agreement does not constitute a contract of employment, either express or
implied, and does not imply that the Company will continue the Executive’s
employment for any period of time. This Agreement shall in no way alter the
Company’s policy of employment at will, under which both Executive and the
Company remain free to terminate the employment relationship, with or without
cause, at any time, with or without notice. Any change or changes in Executive’s
duties, salary or compensation after the signing of this Agreement shall not
affect the validity or scope of this Agreement.
(b) Entire
Agreement.
This
Agreement sets forth the entire understanding of Executive and the Company
regarding the subject matter hereof, and supersedes all prior agreements,
written or oral, between the Executive and the Company relating to the subject
matter hereof. However, it does not replace or supersede the Employment
Agreement, any agreements documenting equity awards to Executive, any policies
of the Company or agreements entered into by Executive providing for
confidentiality, non-disclosure or assignment of developments, all of which
remain in full force and effect. This Agreement may not be modified, changed
or
discharged in whole or in part, except by an agreement in writing signed by
the
Executive and the Company.
(c) Interpretation.
If any
provision of this Agreement is found by any court of competent jurisdiction
to
be unenforceable, it shall be interpreted to apply only to the extent that
it is
enforceable.
(d) Severability.
If any
part of this Agreement as applied to any party or to any circumstance is
adjudged by a court of competent jurisdiction to be invalid, illegal, void
or
unenforceable for any reason, then (i) the invalidity of that part shall in
no
way affect (to the maximum extent permissible by law) the application of such
part under circumstances different from those adjudicated by the court, the
application of any other part of this Agreement, or the enforceability or
invalidity of this Agreement as a whole; and (ii) such part shall be deemed
amended to the extent necessary to conform to applicable law so as to be valid,
legal, effective and enforceable or, if such part cannot be so amended without
materially altering the intention of the parties, then such part will be
stricken and the remainder of this Agreement shall continue in full force and
effect.
(e) Waiver.
No
delay or omission by the Company in exercising any right under this Agreement
will operate as a waiver of that or any other right. A waiver or consent given
by the Company on any one occasion is effective only in that instance and will
not be construed as a bar to or waiver of any right on any other
occasion.
(f) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of both parties and
their respective successors and assigns, including any corporation or entity
with which or into which the Company may be merged or which may succeed to
its
assets or business.
(g) Subsidiaries
and Affiliates.
Executive expressly consents to be bound by the provisions of this Agreement
for
the benefit of the Company or any subsidiary or affiliate thereof to whose
employ the Executive may be transferred without the necessity that this
Agreement be re-signed at the time of such transfer.
(h) Remedies
not Limited.
This
Agreement and the Company’s enforcement hereof are not intended to be exclusive
remedies and will not limit any other remedies that may be available to the
Company at law or in equity as a result of or in connection with any violation
by Executive of any contractual obligation or legal duty to the Company or
any
subsidiary or affiliate thereof.
(i) Governing
Law, Forum and Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Florida (without reference to its conflicts of law provisions). If
any
judicial or administrative proceeding or claim relating to or pertaining to
this
Agreement is initiated by either party hereto, such proceeding or claim shall
and must be filed in a state or federal court located in Palm Beach County
or
Miami-Dade County, Florida, and the Company and Executive each consents to
the
jurisdiction of such a court.
(j) Attorneys’
Fees.
In
the
event that either party brings a legal action against
the other in connection with this Agreement,
the
party, if either, that is judicially determined to be the prevailing party
in
such action shall be entitled to recover his or its reasonable attorney’s fees
and legal costs incurred in connection with such action.
(k) Captions.
The
captions of the sections of this Agreement are for convenience of reference
only
and in no way define, limit or affect the scope or substance of any section
of
this Agreement.
In
witness whereof, the Company and Executive have entered into this Agreement
as
of the date above set forth.
|
ECLIPSYS
CORPORATION
By:
/s/ Xxxxx X. Xxxxxx
Name:
Xxxxx X. Xxxxxx
Title:
Secretary
|
/s/
Xxxx X. Xxxxx
Xxxx
X. Xxxxx
|
Schedule
A To Agreement Re Specified Acts
Designated
Companies
[
* ]
*
Confidential Treatment Requested
