EMPLOYEE RETENTION AGREEMENT
BETWEEN
INTEGRAMED AMERICA, INC.
AND
[EMPLOYEE]
EMPLOYEE RETENTION AGREEMENT, dated ______________, between INTEGRAMED
AMERICA, INC., a Delaware corporation, having its principal office at Xxx
Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000-0000 (the "Company"), and
___________________, residing at _______________________________("Employee").
W I T N E S S E T H:
WHEREAS, Employee is a key employee of the Company and an integral part
of its management; and WHEREAS, the Company recognizes that the possibility of a
change in control of the Company may result in the departure or distraction of
management to the detriment of the Company and its stockholders; and
WHEREAS, in order to retain Employee and to minimize any such potential
distraction, the Company wishes to assure Employee of fair severance as provided
herein should Employee's employment terminate in specified circumstances
following a change in control of the Company.
NOW, THEREFORE, in consideration of Employee's continued employment
with the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
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1. Definitions. The following terms as used in this Agreement
shall have the following meanings:
1.1 "Base Salary" shall mean Employee's annual base salary,
exclusive of any bonus or other benefits which Employee may receive, at the rate
in effect either immediately prior to the Termination Date or the date of the
Change in Control, whichever is higher.
1.2 "Bonus" shall mean the most recent annual cash bonus, if
any, paid by the Company to Employee either prior to the Termination Date or the
date of the Change in Control, whichever is higher.
1.3 "Change in Control" shall mean one or more changes in the
aggregate composition of the Company's Board of Directors as a result of which
individuals, who, as of the date hereof, constitute the Company's Board of
Directors (the "Incumbent Board"), subsequently cease for any reason to
constitute at least a majority of the Company's Board of Directors; provided,
however, that any individual becoming a director of the Company subsequent to
the date hereof, whose election, or nomination for election by the Company's
stockholders, shall have been approved by a vote of at least a majority of the
directors then constituting the Incumbent Board shall be considered as though
such individual is a member of the Incumbent Board, but excluding, as a member
of the Incumbent Board, any such individual whose initial assumption of office
is in connection with an actual or threatened election contest relating to the
election of the directors of the Company (as such terms are used in Rule 14a-11
of Regulation 14A under the Securities Exchange Act of 1934, as amended).
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1.4 "For Cause" termination during a Standstill Period shall
mean that the Company terminates Employee's employment for any one or more of
the following grounds in accordance with the notice requirements of Section
7.1(a) hereof:
(a) if Employee is indicted for committing a felony or a
decision or determination is rendered by any court or governmental authority
that Employee has committed any act involving fraud, dishonesty, breach of trust
or moral turpitude;
(b) if Employee willfully breaches Employee's duty of loyalty
to, or commits an act of fraud or dishonesty upon, the Company;
(c) if Employee demonstrates gross negligence or willful
misconduct; (d) if, in the reasonable, good faith opinion of
the Company's President, Employee
engages in personal misconduct of such a material nature as to render Employee's
presence as a key employee of the Company detrimental to the Company or its
reputation;
(e) if Employee commits a material breach of or default under
any of Employee's employment duties, and Employee fails to cure such breach or
default within ten (10) days after prior written notice thereof from the
Company; or
(f) if Employee commits a material breach of, or default
under, any non-disclosure, confidentiality, non-competition, non-enticement of
Executives (including any non-solicitation, non- employment, non-retention or
non-engagement of Executives) or similar agreement, obligation or covenant
heretofore or hereafter entered into with or for the benefit of the Company.
1.5 "Good Reason" shall have the meaning set forth in Section
5 below.
1.6 "Incumbent Board" shall have the meaning set forth above
under the definition of the term "Change in Control".
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1.7 "ISOs" shall mean any and all incentive stock options of
Employee to purchase shares of Common Stock of the Company pursuant to the Stock
Option Agreement and the Stock Option Plan.
1.8 "Permanent Disability" shall have the meaning set forth in
the long-term disability insurance policy or policies then maintained by the
Company for the benefit of its Executives, or if no such policy shall then be in
effect, or if more than one such policy shall then be in effect in which the
term "permanent disability" shall be assigned different definitions, then the
term "Permanent Disability" shall be defined for purposes hereof to mean any
physical or mental disability or incapacity which renders Employee incapable of
fully performing the services required of Employee in accordance with Employee's
obligations to the Company for a period of 90 consecutive days or for shorter
periods aggregating 90 days during any twelve-month period.
1.9 "Qualifying Termination" shall have the meaning set forth
in Section 2.1 hereof.
1.10 "Severance" shall have the meaning set forth in Section
2.1 below.
1.11 "Standstill Period" shall mean the eighteen (18) month
period commencing on the date of a Change in Control.
1.12 "Stock Option Agreement" shall mean all Stock Option
Agreement or Stock Option Agreements, as the case may be, between the Company
and Employee.
1.13 "Stock Option Plan" shall mean the Company's 1992
Incentive and Non- Incentive Stock Option Plan.
1.14 "Stub Bonus Period" shall have the meaning set forth in
Section 2.1(b).
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1.15 "Termination Date" shall mean the date during the
Standstill Period on which Employee's employment is terminated.
1.16 "Without Cause" termination during a Standstill Period
shall mean that the Company terminates Employee's employment other than For
Cause (and other than for death or Permanent Disability) in accordance with the
notice requirements of Section 7.1(b) hereof.
2. Qualifying Termination of Employment.
2.1 In the event that (i) there is a Change in Control, and
(ii) during the Standstill Period either (1) the Company terminates Employee's
employment Without Cause, or (2) Employee terminates such employment for Good
Reason, then, and only then, such events (i) and (ii), collectively, shall be
deemed for purposes of this Agreement to constitute a "Qualifying Termination",
which, in turn, shall entitle Employee to be paid by the Company (or otherwise
receive from the Company, as the case may be) the severance payments and
benefits (collectively, the "Severance") set forth in, and in accordance with
the provisions of, Section 3 hereof, together with:
(a) An amount, to be paid in one lump sum within thirty (30)
days of the Termination Date, equal to the accrued but unpaid portion of
Employee's Base Salary through the Termination Date; and
(b) An amount, to be paid within thirty (30) days
after the earliest date
following the Termination Date that the same may reasonably be calculated, equal
to the greater of: (x) the pro-rata portion of the amount Employee would have
earned (notwithstanding the termination of Employee's employment) as Employee's
cash bonus, if any, for the fiscal year of the Company during which the
Qualifying Termination occurs, calculated from the commencement of such fiscal
year through the Termination Date (the "Stub Bonus Period"); or (y) the amount
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calculated by multiplying Employee's Bonus by a quotient, the numerator of which
is the number of days contained in the Stub Bonus Period, and the denominator of
which is 365.
2.2 Notwithstanding anything herein to the contrary, it is
understood and agreed that there shall not be deemed to be a Qualifying
Termination for purposes of this Agreement, nor shall Employee be entitled to
any Severance or other benefits provided for herein, in the event:
(a) the Company shall have terminated Employee's employment
For Cause, or if Employee's employment with the Company shall terminate by
reason of Employee's death or Permanent Disability; or
(b) Employee shall terminate Employee's employment and, at the
time of such termination, the Company shall be entitled to terminate such
employment For Cause and the Company shall have sent, or shall send, Employee,
within 10 days of the Company's receipt of Employee's notice of termination, a
notice of termination by the Company specifying the "For Cause" termination.
3. Severance. Upon a Qualifying Termination of Employee's
employment, Employee shall be entitled to the following Severance:
3.1 An amount, to be paid in one-lump sum within thirty (30)
days of the Termination Date, equal to the sum of: (a) an amount equal to
Employee's Base Salary; and (b) an amount equal to Employee's Bonus.
3.2 Until the earlier to occur of (i) one year after the
Termination Date, or (ii) the date on which Employee becomes eligible to be
covered by or otherwise receives, substantially comparable benefits from a
subsequent employer, the Company shall maintain in full force and effect
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for the continued benefit of Employee all medical insurance, dental insurance,
life insurance and long-term disability insurance policies in which Employee was
entitled to participate immediately prior to the Termination Date (or
substantially similar policies), provided that Employee's continued
participation is permitted under the general terms and conditions of such
policies. In the event that Employee is ineligible to participate in such
policies, the Company reasonably shall arrange, upon comparable terms, to
provide Employee with benefits substantially similar to those which Employee is
entitled to receive under such policies, or if not reasonably available, the
Company shall pay to Employee (in equal monthly in arrears installments) an
amount equal to the most recent direct monthly cost to the Company of providing
such former benefits to Employee. In furtherance of the foregoing, Employee
hereby agrees to notify the Company promptly if and when Employee commences
employment with another employer and if and when Employee becomes eligible to
participate in any insurance or other benefit plans, programs, policies or
arrangements of another employer.
3.3 The Company agrees to pay or reimburse Employee following
a Qualifying Termination for outplacement services in an aggregate amount up to,
but not to exceed, Three Thousand Dollars ($3,000.00), such payment or
reimbursement to be made promptly following the submission by Employee to the
Company of appropriate receipts therefor, it being understood, however, that the
Company shall have no obligation to procure or arrange for such outplacement
services.
4. Acceleration of Certain Stock Options.
4.1 In addition to the provisions of Section 3 above, upon a
Qualifying Termination of Employee's employment, any and all ISOs theretofore
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granted to Employee, but not yet exercisable, under and pursuant to the Stock
Option Agreement, shall accelerate and become exercisable as of the date of such
Qualifying Termination; provided , that in no event shall ISOs to purchase more
than the number of shares of the Company's Common Stock derived by dividing
$100,000 by the exercise price per share become exercisable in any one calendar
year. In the event the number of ISOs which would otherwise become accelerated
shall be limited by the foregoing, the exercise date of the ISO's affected by
such limitation shall be accelerated to the earliest date on which such ISO's
may be exercised under the Plan and so as to continue to qualify as "incentive
stock options" in conformity with Section 422 of the Tax Code and the rules and
regulations thereunder. 4.2 The provision of Section 4.1 shall be deemed an
amendment to the Stock Option Agreement, and in the event of any inconsistency
between the Stock Option Agreement and the provisions of Section 4.1, the
provisions of Section 4.1 shall be determinative and control. 5. Good Reason.
Termination by Employee for "Good Reason" shall mean the voluntary termination
by Employee of Employee's employment with the Company in accordance with the
notice requirements of Section 7.2 hereof which occurs both: (a) during a
Standstill Period; and (b) within sixty (60) days after the occurrence of any
one or more of the following events (any of which events itself must occur
during the Standstill Period) without Employee's prior written consent: 5.1 a
material reduction in Employee's duties or title, including, without limitation,
a reduction in Employee's management reporting responsibilities to a lower
reporting level (not arising from any disabling physical or mental disability
which Employee may sustain) which would be inconsistent with Employee's position
as a key employee of the Company;
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5.2 if Employee's total salary and cash bonus opportunities
for a fiscal year of the Company which includes any portion of a Standstill
Period are less than ninety percent (90%) of the total salary and cash bonus
compensation opportunities made available to Employee in the then most recently
completed fiscal year of the Company;
5.3 the failure of the Company to continue in effect any
material benefits or perquisites, or any pension, life insurance, medical
insurance, dental insurance or long-term disability insurance plan in which
Employee was participating immediately prior to a Standstill Period unless the
Company provides Employee with a plan or plans that provide(s) substantially
similar benefits, or the taking of any action by the Company that would
adversely affect Employee's participation in, or materially reduce Employee's
benefits under, any of such plans, or deprive Employee of any material fringe
benefit enjoyed by Employee immediately prior to a Standstill Period;
5.4 any material breach of or default by the Company under
this Agreement which is not cured by the Company within thirty (30) days after
its receipt of prior written notice thereof from Employee.
6. Expense Reimbursement. Nothing herein contained shall limit
the Company's obligations, if any, to reimburse Employee for any outstanding
ordinary, reasonable and documented business expenses incurred by Employee on
behalf of the Company during the period of Employee's employment with the
Company consistent with the Company's expense reporting policy (as such policy
may be modified from time to time).
7. Notice of Termination During a Standstill Period. During a
Standstill Period:
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7.1 any termination by the Company of Employee's employment
(other than by reason of Employee's Permanent Disability or death):
(a) if "For Cause", shall be made upon prior written notice to
Employee; or (b) if "Without Cause", shall be made upon
not less than 30 days'
prior written notice to Employee; any such notice from the Company to Employee
as described in Sections 7.1(a) and (b), shall mean "Company's Termination
Notice".
7.2 any permitted termination of Employee's employment by
Employee for Good Reason shall be made only upon ten (10) business days' prior
written notice to the Company.
8. Withholding. Anything herein to the contrary notwithstanding,
any and all payments required to be made hereunder by the Company to Employee
shall be subject to deductions and/or withholding for all FICA, federal, state,
local or other taxes which the Company determines are required or appropriate to
be deducted or withheld in accordance with applicable laws, statutes or
regulations from time to time in effect.
9. Mitigation; Setoff. Notwithstanding anything herein to the
contrary, and because Employee's Severance provided for hereunder shall be
considered severance pay in consideration of Employee's continued service from
the date of this Agreement:
9.1 Employee shall not have any obligation to the Company to
mitigate any Qualifying Termination of Employee's employment under such
provisions hereunder whereby Employee would be required by the Company promptly
to seek, procure or commence substitute employment; and
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9.2 In the event Employee does seek, procure or commence such
substitute employment, none of the income derived or to be derived by Employee
therefrom shall be setoff by the Company against the balance of any Severance,
if any, owing to Employee by the Company under this Agreement; provided,
however, that the foregoing shall not be construed to limit Employee's
obligations to the Company, or any of the Company's rights, under Section 3.2
(relating to medical insurance, dental insurance, life insurance and long-term
disability insurance policies).
10. Certain Legal Fees and Disbursements. The Company shall pay or
reimburse Employee for all reasonable legal fees and disbursements of counsel
incurred by Employee, if any, solely to the extent in successfully contesting
(a) that the termination of Employee's employment during a Standstill Period is
for the reasons provided in Section 2.1 of this Agreement, or (b) Employee's
right or entitlement to be paid or receive any material payment or benefit under
this Agreement.
11. This Agreement Not an Employment Agreement. The parties
understand and agree that this Agreement does not constitute, and shall not be
deemed to imply, create or constitute, an employment agreement between the
parties, but rather is intended to set forth certain circumstances under which
Employee may be entitled to receive certain compensation and benefits in the
event of a Change in Control of the Company and a related termination of
Employee's employment.
12. Ratification by Executive of Certain Obligations and
Covenants. Employee hereby reconfirms and ratifies any and all non-disclosure,
confidentiality, non-competition, non-enticement of Executives (including any
non-solicitation, non-employment, non-retention or non-engagement of Executives)
and similar agreements, obligations and covenants heretofore or hereafter
entered into with or for the benefit of the Company, any and all of which shall
remain in full force and effect and not be deemed amended, modified, terminated
or expired by virtue of or in connection with the execution, delivery or
performance of this Agreement.
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13. Miscellaneous.
13.1 Notices. All notices under this Agreement shall be in
writing and shall be deemed to have been given at the time when delivered, and
shall be delivered in person, or sent by prepaid receipted overnight courier
service (such as Federal Express) or by registered or certified mail, return
receipt requested, postage prepaid, addressed to the party to whom or to which
notice is given, at the address of such party set forth at the beginning of this
Agreement or to such changed address as such party may have fixed by notice in
accordance herewith.
13.2 Entireties. This Agreement contains the entire agreement
and understanding between the parties relating to the subject matter hereof and
supersedes any and all prior understandings, agreements and representations,
written or oral, expressed or implied, with respect thereto. Notwithstanding any
other agreement or understanding between the parties, if any, whether written or
oral, in the event that there is a Change in Control and a Qualifying
Termination of or by Employee occurs pursuant to this Agreement, the only
severance, compensation, payments or other benefits to be paid or provided by
the Company to Employee shall be as provided in this Agreement (i.e., to the
exclusion, if otherwise applicable, of any amounts or benefits which otherwise
would or might have been payable to or for the benefit of Employee under any one
or more of any such other agreements or understandings).
13.3 Amendment. This Agreement may not be amended, modified,
altered or terminated except by an instrument in writing signed by both of the
parties hereto.
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13.4 Waiver. Any and all waivers of any one or more of a
party's rights hereunder shall be in a writing signed by such party. If either
party should waive any breach of any provision of this Agreement, such party
shall not thereby be deemed to have waived any prior or subsequent breach of the
same or any other provision of this Agreement.
13.5 Binding Effect. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors,
executors, administrators, legal representatives, heirs, distributees and
permitted assigns.
13.6 Assignment. Neither this Agreement nor any of the rights
or obligations of the parties hereunder may be assigned or delegated by either
party hereto without the prior written consent of the other party hereto, and
any attempted assignment or delegation in violation of the foregoing shall be
null and void and without effect
13.7 No Third Party Beneficiaries of Agreement. Except as
otherwise expressly provided in Section 13.5 hereof, this Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement.
13.8 Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not limit, define or affect
in any way the meaning or interpretation of this Agreement or any portion or
portions hereof.
13.9 Severability. In case any one or more of the provisions
of this Agreement shall be determined to be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected thereby.
13.10 Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New York
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applicable to contracts made and to be performed entirely therein (without
giving effect to the conflict of law rules thereof). Any and all claims,
disputes, or controversies arising under, out of, or in connection with this
Agreement or any breach thereof, except for equitable relief, shall be
determined by binding arbitration in the State of New York, City of White Plains
(hereinafter "Arbitration"). The party seeking determination shall subject any
such dispute, claim or controversy to either (i) JAMS/Endispute or (ii) the
American Arbitration Association, and the rules of commercial arbitration of the
selected entity shall govern. The Arbitration shall be conducted and decided by
three (3) arbitrators, unless the parties mutually agree, in writing at the time
of the Arbitration, to fewer arbitrators. In reaching a decision, the
arbitrators shall have no authority to change or modify any provision of this
Agreement. Each party shall bear its own expenses and one-half the expenses and
costs of the arbitrators. Any application to compel Arbitration, confirm or
vacate an arbitral award or otherwise enforce this Paragraph shall be brought in
the Courts of the State of New York.
13.11 Effectiveness. Notwithstanding anything herein to the
contrary, the effectiveness of this Agreement is contingent upon the mutual
execution and delivery of this Agreement by each of the Company and Employee.
13.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Employee Retention Agreement as of the date first above written.
INTEGRAMED AMERICA, INC.
By:/S/Xxxxxxx Xxxxx
---------------------------
Xxxxxxx Xxxxx, President
Employee:
-----------------------------------
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