EMPLOYMENT AGREEMENT
Exhibit 10.10
EMPLOYMENT AGREEMENT (the “Agreement”) dated as of March 29, 2007 (the “Effective
Date”), by and between EMDEON BUSINESS SERVICES, LLC, a Delaware corporation (the
“Company”, which shall include its subsidiaries and affiliates), and XXXXXX XXXXXXX
(“Executive”).
WHEREAS, Executive is party to an Employment Agreement dated as of October 21, 2003, as
amended, as well as a Change of Control Letter Agreement dated as of February 10, 2006 (the
“Prior Agreements”); and
WHEREAS, the Company desires to employ Executive as its Chief Executive Officer and provide
for a new Agreement, which Agreement shall restate and supersede in its entirety the Prior
Agreements according to the terms set forth herein;
NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein
(including, without limitation, the Company’s employment of Executive and the advantages and
benefits thereby inuring to Executive) and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby
agree as follows:
1. Employment of Executive.
1.1. Employment by the Company. The Company hereby employs Executive as the Chief
Executive Officer of the Company and Executive hereby accepts such employment with the Company as
of March 29, 2007 (the “Employment Commencement Date”). Executive shall report to the
Board of Directors of EBS Master LLC (the “Board”), and perform such duties and services
for the Company as may be designated from time to time, by the Board. Executive shall use his best
and most diligent efforts to promote the interests of the Company and shall devote all of his
business time and attention to his employment under this Agreement; provided, however, that
Executive shall be permitted to manage his personal, financial and legal affairs that may from time
to time require insubstantial portions of his working time, but would not singularly or in the
aggregate interfere or be inconsistent with his duties and obligations under this Agreement.
Executive acknowledges that he will be required to travel in connection with the performance of his
duties.
2. Compensation and Benefits.
2.1. Salary. Commencing on the Employment Commencement Date, Executive shall be paid
for his services during the Employment Period (as defined below) a base salary at the annual rate
of $500,000. Any and all increases to Executive’s base salary (as it may be increased, the
“Base Salary”) shall be determined by the Board (or such committee as may be designated by
the Board) in its sole discretion. Such Base Salary shall be payable in equal installments, no
less frequently than monthly, pursuant to the Company’s customary payroll policies in force at the
time of payment, less any required or authorized payroll deductions.
2.2. Bonus. During the Employment Period, Executive shall be eligible to receive an
annual bonus, the target of which is 60% of Base Salary, which amount shall be determined in the
sole discretion of the Board (or such committee as may be designated by the Board). Such bonus, if
any, shall be payable at such time as executive officer bonuses are paid generally so long as
Executive remains in the employ of the Company on the payment date.
2.3. Profits Interest. Executive has been granted 1,000,000 “Class A Units”
(as such term is defined in the Limited Liability Company Agreement of EBS Executive Incentive Plan
LLC (“Company LLC Agreement”)) under the EBS Executive Incentive Plan (“Plan”),
which grant is subject to the terms and conditions as set forth in Executive’s Class A Unit Award
Agreement (“Award Agreement”), the Plan, the Company LLC Agreement and the LLC Agreement
for EBS Master LLC (all such documents governing Executive’s Class A Units, to the extent
applicable, being referred to herein as the “Plan Documents.”).
2.4. Benefits. During the Employment Period, Executive shall be entitled to
participate, on the same basis and at the same level as other similarly situated senior executives
of the Company, in any group insurance, hospitalization, medical, health and accident, disability,
fringe benefit and tax-qualified retirement plans or programs of the Company now existing or
hereafter established to the extent that he is eligible under the general provisions thereof.
Executive shall be entitled to vacation time consistent with the Company’s policies. The date or
dates of such vacations shall be selected by Executive having reasonable regard to the business
needs of the Company.
2.5. Expenses. Pursuant to the Company’s customary policies in force at the time of
payment, Executive shall be promptly reimbursed, against presentation of vouchers or receipts, for
all authorized expenses properly and reasonably incurred by him on behalf of the Company in the
performance of his duties hereunder.
3. Employment Period. Executive’s employment under this Agreement shall commence as
of the Employment Commencement Date, and shall terminate when either party terminates this
Agreement by written notice to the other party pursuant to Section 4 (the “Employment
Period”).
4. Termination.
4.1. Termination by the Company for Cause. (a) Executive’s employment with the
Company may be terminated at any time by the Company for Cause. Upon such a termination, the
Company shall have no obligation to Executive other than the payment of Executive’s earned and
unpaid compensation, vested and accrued benefits under the Company’s ERISA-based plans and accrued
but unreimbursed expenses pursuant to Section 2.5 (collectively, the “Accrued
Obligations”), to the effective date of such termination.
(b) For purposes of this Agreement, the term “Cause” shall mean any of the following:
(i) Executive’s failure to comply with the employment policies of the Company or any
Affiliate, which failure is not cured to the reasonable satisfaction
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of the Board within fifteen days of written notice to Executive of such failure to
so comply;
(ii) Executive’s commission of any act of dishonesty or breach of trust in
connection with performance of employment-related duties as determined by the Board,
in its sole discretion; and
(iii) Executive’s conviction of, or pleading guilty or nolo contendere to, any
felony or crime of moral turpitude.
4.2. Permanent Disability; Death. If during the term of this Agreement, (i) Executive
shall become ill, mentally or physically disabled, or otherwise incapacitated so as to be unable
regularly to perform the duties of his position for a period in excess of 90 consecutive days or
more than 180 days in any consecutive 12 month period, or (ii) a qualified independent physician
determines that Executive is mentally or physically disabled so as to be unable to regularly
perform the duties of his position and such condition is expected to be of a permanent duration (a
“Permanent Disability”), then the Company shall have the right to terminate Executive’s
employment with the Company upon written notice to Executive. In the event the Company terminates
Executive’s employment as a result of his Permanent Disability or death, Executive or Executive’s
estate shall be entitled to the benefits that he would have been entitled to receive if Executive’s
employment had been terminated by the Company without Cause pursuant to Section 4.4 (subject to the
provisos and conditions set forth therein); provided, however, that the Company shall have
no other obligation to Executive or Executive’s estate pursuant to this Agreement in the event that
Executive’s employment with the Company is terminated by the Company pursuant to this Section 4.2.
4.3. Resignation by the Executive. Executive may voluntarily resign from his
employment with the Company, provided that Executive shall provide the Company with thirty
(30) days advance written notice (which notice requirement may be waived, in whole or in part, by
the Company in its sole discretion) of his intent to resign. If Executive so terminates his
employment with the Company, other than in accordance with Section 4.5, the Company shall have no
obligation other than the payment of the Accrued Obligations to the effective date of such
termination.
4.4. Termination by the Company Without Cause. Executive’s employment with the
Company may be terminated at any time by the Company without Cause. If the Company terminates
Executive’s employment without Cause, the Company shall have the following obligations to Executive
(but excluding any other obligation to Executive pursuant to this Agreement):
(a) payment of the Accrued Obligations;
(b) the continuation of his Base Salary, as severance, for a period of two years
(“Severance Period”), provided that the Base Salary for the first six months of the
Severance Period shall be paid to Executive in a lump sum at the end of such six-month period in
accordance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”); provided further that such delay in payment will not apply to the
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extent that guidance issued under Section 409A allows payment to be made when otherwise due
without subjecting Executive to additional taxes under Section 409A;
(c) if Executive timely elects to continue his health insurance pursuant to COBRA, the Company
shall pay that portion of the premium that it pays for active employees with similar coverage for a
period of 18 months or, if earlier, until such time as Executive is eligible for comparable
coverage with a subsequent employer (and Executive shall promptly notify the Company if he becomes
eligible for comparable coverage); provided that Executive shall pay the amount of the
employer portion of the applicable premiums for the first six months of the Severance Period, which
amount will be reimbursed to him in a lump sum at the end of such six-month period,
provided further that Executive shall not be required to pay the employer portion of the
premiums for the first six months of the Severance Period to the extent that guidance under Section
409A allows such premiums to be paid by the Company without subjecting Executive to additional
taxes under Section 409A; and
(d) Executive’s Profits Interest shall be treated as set forth in the Plan Documents;
provided, however, that the continuation of such salary and benefits and the continued
vesting of the Profits Interest shall cease on the occurrence of any circumstance or event that
would constitute Cause under Section 4.1 of this Agreement (including any breach of the restrictive
covenants contained in Section 5 below or any similar restrictive covenants to which Executive is
bound).
4.5. Termination by Executive for Good Reason. Executive’s employment with the
Company may be terminated by Executive for Good Reason on thirty (30) days written notice to the
Company, which notice shall detail the specific basis for such termination. The Company shall be
given the opportunity to cure the basis for such termination within such thirty (30) day period.
For purpose of this Section 4.5, the term “Good Reason” means any of the following:
(a) a reduction in Executive’s Base Salary;
(b) a reduction in Executive’s title; or
(c) the relocation of more than 50 miles of Executive’s principal place of employment.
If Executive terminates his employment pursuant to this Section 4.5, Executive shall be entitled to
receive the same benefits as if his employment had been terminated by the Company without Cause
under Section 4.4 (subject to the provisions and conditions set forth herein).
4.6. Liquidated Damages. Executive acknowledges that the payments and benefits under
this Section 4 resulting from a termination of Executive’s employment with the Company are in lieu
of any and all claims that Executive may have against the Company (other than benefits under the
Company’s employee benefit plans that by their terms survive termination of employment and benefits
under the COBRA, and rights to indemnification under certain indemnification arrangements for
officers of the Company), and represent liquidated
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damages (and not a penalty). The Company may require that Executive execute and not revoke a
release of claims in a form provided by the Company as a condition to Executive’s receipt of such
payments and benefits.
5. Restrictive Covenants.
5.1. Confidentiality. Executive understands and acknowledges that, during the course
of his employment with the Company and as a result of his having executed this Agreement, Executive
shall be and has been granted access to valuable information relating to the Company’s business
that provides the Company with a competitive advantage (or that could be used to the Company’s
disadvantage by a Competitive Business (as defined herein), which is not generally known by, nor
easily learned or determined by, persons outside the Company (collectively “Trade Secret and
Proprietary Information”). The term Trade Secret and Proprietary Information shall include,
but shall not be limited to the Company’s: (a) specifications, manuals, software in various stages
of development; (b) customer and prospect lists, and details of agreements and communications with
customers and prospects; (c) sales plans and projections, product pricing information,
acquisition, expansion, marketing, financial and other business information and existing and future
products and business plans; (d) sales proposals, demonstrations systems, sales material; (e)
research and development; (f) computer programs; (g) sources of supply; (h) identity of specialized
consultants and contractors and Trade Secret and Proprietary Information developed by them for the
Company; (i) purchasing, operating and other cost data; (j) special customer needs, cost and
pricing data; and (k) employee information (including, but not limited to, personnel, payroll,
compensation and benefit data and plans), including all such information recorded in manuals,
memoranda, projections, reports, minutes, plans, drawings, sketches, designs, formula books, data,
specifications, software programs and records, whether or not legended or otherwise identified as
Trade Secret and Proprietary Information, as well as such information that is the subject of
meetings and discussions and not recorded. Trade Secret and Proprietary Information shall not
include such information that Executive can demonstrate: (x) is generally available to the public
(other than as a result of a disclosure by Executive; (y) was disclosed to Executive by a third
party under no obligation to keep such information confidential; or (z) was known by Executive
prior to, and not as a result of, Executive’s employment or anticipated employment with the
Company.
Executive agrees at all times, both during and after his employment with the Company, to hold
all of the Trade Secret and Proprietary Information in a fiduciary capacity for the benefit of the
Company and to safeguard all such Trade Secret and Proprietary Information. Executive also agrees
that he will not directly or indirectly disclose or use any such Trade Secret and Proprietary
Information to any third person or entity outside the Company, except as may be necessary in the
good faith performance of his duties for the Company. Executive further agrees that, in addition
to enforcing this restriction, the Company may have other rights and remedies under the common law
or applicable statutory laws relating to the protection of trade secrets. Notwithstanding anything
in this Agreement to the contrary, Executive understands that he may disclose the Trade Secret and
Proprietary Information to the extent required by applicable laws or governmental regulations or
judicial or regulatory process, provided that Executive gives the Company prompt notice of
any and all such requests for disclosure so that it has ample opportunity to take all necessary or
desired action, to avoid disclosure.
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5.2. Company Property. Executive acknowledges that: (a) all Trade Secret and
Proprietary Information; (b) computers, and computer-related hardware and software, cell phones,
beepers and any other equipment provided to him by the Company; and (c) all documents Executive
creates or receives in connection with his employment with the Company, belongs to the Company, and
not to him personally (collectively, “Company Property”). Such documents include, without
limitation and by way of non-exhaustive example only: papers, files, memoranda, notes,
correspondence, lists, e-mails, reports, records, data, research, proposals, specifications,
models, flow charts, schematics, tapes, printouts, designs, graphics, drawings, photographs,
abstracts, summaries, charts, graphs, notebooks, investor lists, customer/client lists, and all
other compilations of information, regardless of how such information may be recorded and whether
in printed form or on a computer or magnetic disk or in any other medium. Executive agrees to
return all Company Property (including all copies) to the Company immediately upon any termination
of his employment, and further agrees that, during and after his employment with the Company, he
will not, under any circumstances, without the Company’s specific written authorization in each
instance, directly or indirectly disclose Company Property or any information contained in Company
Property to anyone outside the Company, or otherwise use Company Property for any purpose other
than the advancement of the Company’s interests.
5.3. Unfair Competition. Executive acknowledges that the Company has a compelling
business interest in preventing unfair competition stemming from the intentional or inadvertent use
or disclosure of the Trade Secret and Proprietary Information and Company Property.
5.4. Investors, Other Third-Parties, and Goodwill. Executive acknowledges that all
third-parties he services or proposes to service while employed by the Company are doing business
with the Company and not him personally, and that, in the course of dealing with such
third-parties, the Company establishes goodwill with respect to each such third-party that is
created and maintained at the Company’s expense (“Third-Party Goodwill”). Executive also
acknowledges that, by virtue of his employment with the Company, he has gained or will gain
knowledge of the business needs of, and other information concerning, third-parties, and that he
would inevitably have to draw on such information were he to solicit or service any of the
third-parties on his own behalf or on behalf of a Competitive Business.
5.5. Intellectual Property and Inventions. Executive acknowledges that all
developments, including, without limitation, the creation of new products, conferences,
training/seminars, publications, programs, methods of organizing information, inventions,
discoveries, concepts, ideas, improvements, patents, trademarks, trade names, copyrights, trade
secrets, designs, works, reports, computer software, flow charts, diagrams, procedures, data,
documentation, and writings and applications thereof relating to the past, present, or future
business of the Company that Executive, alone or jointly with others, may have discovered,
conceived, created, made, developed, reduced to practice, or acquired during his employment with
the Company (collectively, “Developments”) are works made for hire and shall remain the
sole and exclusive property of the Company, and Executive hereby assigns to the Company all of his
rights, titles, and interest in and to all such Developments, if any. Executive agrees to disclose
to the Company promptly and fully all future Developments and, at any time upon request and at the
expense of the Company, to execute, acknowledge, and deliver to the
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Company all instruments that the Company shall prepare, to give evidence, and to take any and
all other actions that are necessary or desirable in the reasonable opinion of the Company to
enable the Company to file and prosecute applications for, and to acquire, maintain, and enforce,
all letters patent, trademark registrations, or copyrights covering the Developments in all
countries in which the same are deemed necessary by the Company. All data, memoranda, notes,
lists, drawings, records, files, investor and client/customer lists, supplier lists, and other
documentation (and all copies thereof) made or compiled by Executive or made available to him
concerning the Developments or otherwise concerning the past, present, or planned business of the
Company are the property of the Company, and will be delivered to the Company immediately upon the
termination of his employment with the Company.
5.6. Covenant Not to Compete with the Company.
(a) Executive acknowledges that the business of the Company is national in scope, that its
products and services are marketed throughout the entire United States, that the Company competes
in nearly all of its business activities with other individuals or entities that are, or could be,
located in nearly any part of the United States and that the nature of Executive’s services,
position, and expertise are such that he is capable of competing with the Company from nearly any
location in the United States.
(b) Accordingly, in order to protect the Trade Secret and Proprietary Information and
Third-Party Goodwill, Executive acknowledges and agrees that during the term of his employment with
the Company and for a period of two years after the date his employment with the Company
is terminated for any reason (the “Restricted Period”), he will not, without the Company’s
express written permission, directly or indirectly (including through the Internet), own, control,
manage, operate, participate in, be employed by, or act for or on behalf of, any Competitive
Business located anywhere within the geographic boundaries of the United States (or outside of the
United States to the extent that such Competitive Business services persons located within the
United States).
(c) For purposes of this Agreement “Competitive Business” shall mean: (i) any
enterprise, including any payor (including, without limitation, insurance companies, HMO’s,
pharmacy benefits management companies, and/or self-insured employer groups) engaged in
establishing electronic linkages between individual healthcare providers, patients, and/or payors
for the purpose of facilitating or conducting financial, administrative and clinical communication
and/or transactions; (ii) any enterprise engaged in the printing or electronic communication of
patient statements or other invoices for services rendered; and (iii) any enterprise engaged in any
other type of business in which the Company is also engaged, or plans to be engaged, so long as
Executive is directly involved in such business or planned business on behalf of the Company.
5.7. Non-Solicitation of Employees, Customers. In order to protect the Trade Secret
and Proprietary Information and Third-Party Goodwill, during the Restricted Period, Executive will
not, without the Company’s express written permission, directly or indirectly:
(a) solicit, induce, hire, engage, or attempt to hire or engage any employee or independent
contractor of the Company, or in any other way interfere with the Company’s employment or
contractual relations with any of its employees or independent contractors, nor
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will Executive solicit, induce, hire, engage or attempt to hire or engage any individual who
was an employee of the Company at any time during the one (1) year period immediately prior to the
termination of Executive’s employment with the Company;
(b) contact, call upon or solicit, on behalf of a Competitive Business, any existing or
prospective client, or customer of the Company who Executive serviced, or otherwise developed a
relationship with, as a result of his employment with the Company, nor will Executive attempt to
divert or take away from the Company the business of any such client or customer.
5.8. Remedies. Executive acknowledges and agrees that the restrictions contained in
this Section 5 are reasonably necessary to protect the legitimate business interests of the
Company, and that any violation of any of the restrictions will result in immediate and irreparable
injury to the Company for which monetary damages will not be an adequate remedy. Executive further
acknowledges and agrees that if any such restriction is violated, the Company will be entitled to
immediate relief enjoining such violation (including, without limitation, temporary and permanent
injunctions, a decree for specific performance, and an equitable accounting of earnings, profits,
and other benefits arising from such violation) in any court having jurisdiction over such claim,
without the necessity of showing any actual damage or posting any bond or furnishing any other
security, and that the specific enforcement of the provisions of this Section 5 will not diminish
Executive’s ability to earn a livelihood or create or impose upon Executive any undue hardship.
Executive also agrees that any request for such relief by the Company shall be in addition to, and
without prejudice to, any claim for monetary damages that the Company may elect to assert.
5.9. Extension of Restricted Period. The Restricted Period shall be extended by the
length of any period during which Executive is in breach of the terms of this Section 5.
5.10. Nondisparagement. Executive agrees that at no time during his employment by the
Company or thereafter, shall he make, or cause or assist any other person to make, any statement or
other communication to any third party which impugns or attacks, or is otherwise critical of, the
reputation, business or character of the Company or any of its directors, officers or employees.
6. Notices. Any notice or communication given by either party hereto to the other
shall be in writing and personally delivered or mailed by registered or certified mail, return
receipt requested, postage prepaid, to the following addresses:
| (a) | if to the Company: Emdeon Business Services, LLC 00 Xxxxxxx Xxxx. Xxxxxxxxx, XX 00000 Attention: General Counsel |
||
| (b) | if to Executive: at the address specified in the personnel files of the Company. |
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Any notice shall be deemed given when actually delivered to such address, or two days after such
notice has been mailed or sent by Federal Express, whichever comes earliest. Any person entitled
to receive notice may designate in writing, by notice to the other, such other address to which
notices to such person shall thereafter be sent.
7. Miscellaneous.
7.1. Representations and Covenants. In order to induce the Company to enter into this
Agreement, Executive makes the following representations and covenants to the Company and
acknowledges that the Company is relying upon such representations and covenants:
(a) No agreements or obligations exist to which Executive is a party or otherwise bound, in
writing or otherwise, that in any way interfere with, impede or preclude him from fulfilling all of
the terms and conditions of this Agreement.
(b) Executive, during his employment, shall use his best efforts to disclose to the Board and
the General Counsel of the Company in writing or by other effective method any bona fide
information known by him and not known to the Board and/or the General Counsel of the Company that
he reasonably believes would have any material negative impact on the Company.
7.2. Entire Agreement. This Agreement and the Plan Documents, the applicable terms of
which are hereby incorporated herein by reference) contain the entire understanding of the parties
in respect of their subject matter and supersede upon their effectiveness all other prior
agreements and understandings between the parties with respect to such subject matter (including
without limitation, the Prior Agreements).
7.3. Amendment; Waiver. This Agreement may not be amended, supplemented, canceled or
discharged, except by written instrument executed by the party against whom enforcement is sought.
No failure to exercise, and no delay in exercising, any right, power or privilege hereunder shall
operate as a waiver thereof. No waiver of any breach of any provision of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any other provision.
7.4. Binding Effect; Assignment. The rights and obligations of this Agreement shall
bind and inure to the benefit of any successor of the Company by reorganization, merger or
consolidation, or any assignee of all or substantially all of the Company’s business and
properties. The Company may assign its rights and obligations under this Agreement to any of its
subsidiaries or affiliates without the consent of Executive. Executive’s rights or obligations
under this Agreement may not be assigned by Executive, except that the rights specified in Section
4.2 shall pass upon Executive’s death to Executive’s executor or administrator.
7.5. Headings. The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
7.6. Governing Law; Interpretation. This Agreement shall be construed in accordance
with and governed for all purposes by the laws and public policy (other than conflict
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of laws principles) of the State of Tennessee applicable to contracts executed and to be
wholly performed within such State.
7.7. Further Assurances. Each of the parties agrees to execute, acknowledge, deliver
and perform, and cause to be executed, acknowledged, delivered and performed, at any time and from
time to time, as the case may be, all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary to carry out the
provisions or intent of this Agreement.
7.8. Severability. The parties have carefully reviewed the provisions of this
Agreement and agree that they are fair and equitable. However, in light of the possibility of
differing interpretations of law and changes in circumstances, the parties agree that if any one or
more of the provisions of this Agreement shall be determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the provisions of this Agreement shall, to
the extent permitted by law, remain in full force and effect and shall in no way be affected,
impaired or invalidated. Moreover, if any of the provisions contained in this Agreement is
determined by a court of competent jurisdiction to be excessively broad as to duration, activity,
geographic application or subject, it shall be construed, by limiting or reducing it to the extent
legally permitted, so as to be enforceable to the extent compatible with then applicable law.
7.9. Withholding Taxes. All payments hereunder shall be subject to any and all
applicable federal, state, local and foreign withholding taxes.
7.10. Section 409A. Any payments required to be paid to Executive pursuant to this
Agreement during the first six months following the termination of Executive’s employment shall be
paid to Executive in a lump sum at the end of such six-month period in accordance with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”), provided that such delay in payments will not apply to the extent
that guidance issued under Section 409A allow payments to be made when otherwise due without
subjecting the Executive to additional taxes under Section 409A.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| EMDEON BUSINESS SERVICES, LLC | ||||||
| By: | /s/ Xxxx Xxxxxxx | |||||
| Title: | ||||||
| EXECUTIVE | ||||||
| /s/ Xxxxxx Xxxxxxx | ||||||
| Xxxxxx Xxxxxxx | ||||||
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