SECURED PROMISSORY NOTE
-----------------------
("NOTE")
----
$2,400,000 Dated as of December 21, 1999
FOR VALUE RECEIVED, the undersigned, XXXX X. XXXX, an individual
residing at the address set forth on the signature page hereof (the "Borrower"),
hereby promises to pay to MEDICAL MANAGER CORPORATION, a Delaware corporation
(the "Company"), or to the legal holder of this Note at the time of payment, the
principal sum of TWO MILLION, FOUR HUNDRED THOUSAND DOLLARS ($2,400,000) in
lawful money of the United States of America, payable as set forth below and to
pay simple interest (computed on the basis of a 365-day year) on the principal
amount hereof from and after the date of this Note until the entire principal
amount hereof has been paid in full, at a rate equal to the lowest rate
necessary to avoid characterization of this Note as a "below-market loan" within
the meaning of Section 7872 of the Internal Revenue Code of 1986, as amended.
Subject to Section 5 below, the principal amount of, and interest
on, this Note is due and payable on the earlier of (i) any demand by the Company
following 30 days after the termination of the Borrower's employment with the
Company and any of its affiliates for any reason, (ii) the expiration of the
Subject Options (as defined below) and (iii) the fourth anniversary of the date
hereof.
Payment of the principal of, and interest on, this Note is
secured pursuant to the terms of Section 4 of this Agreement, reference to which
is made for a description of the collateral provided thereby and the rights of
the holder of this Note in respect of such collateral. The Company shall have
full recourse to the Borrower or his estate in the event there is insufficient
collateral pledged to the Company under Section 4 of this Note to repay the
principal amount of and interest on this Note.
This Note is subject to the following further terms and
conditions:
1. Payment Generally. (a) All payments of principal of and interest on
this Note shall be made to the Company or its order, or to the legal holder of
this Note or such holder's order, in lawful money of the United States of
America at the principal offices of the Company (or at such other place as the
holder hereof shall notify the Borrower in writing). Upon final payment of
principal of and interest on this Note, it shall be cancelled.
(b) All payments under this Note shall be made by the Borrower
irrespective of, and without deduction for, any counterclaim, defense,
recoupment or set-off and shall be final and the
Borrower will not seek to recover from the Company (or holder) for any reason
any such payment once paid.
2. Mandatory Repayment. In the event that the Borrower receives any bonus
payment from the Company or any of its subsidiaries, the amount of such payment
(up to the amount then outstanding and accrued under this Note) shall be
immediately applied to the payment of accrued interest on and principal of this
Note. In addition, the proceeds (up to the amount then outstanding and accrued
under this Note) from any exercise of Subject Options and any sale, assignment,
transfer or other disposition of the Shares (as defined below) received upon
such exercise (net of the applicable exercise price) shall be immediately
applied to the payment of accrued interest on and principal of this Note.
3. Notation. Concurrently with any repayment of any portion of the
principal amount of this Note pursuant to Sections 1 and 2, the Company (or
other holder of this Note) shall make a notation of such payment hereon. If full
payment of the principal of and accrued interest on this Note is made, this Note
shall be cancelled.
4. Security. To the extent permitted by law and by the applicable
instrument, as security for the Borrower's repayment obligations hereunder, the
Borrower hereby pledges, assigns, hypothecates, and delivers to the Company a
first lien on, and security interest in, the shares or other securities (the
"Shares") covered by any options or other right to purchase common stock of the
Company or CareInsite, Inc. ("Subject Options"), and in all proceeds thereof,
and, if requested, will deliver appropriate undated stock powers coupled with an
interest and assignments duly executed in blank. In the event that the Borrower
defaults on his repayment obligations hereunder, or the Borrower's employment
with the Company or any of its affiliates terminates for any reason, the Company
may cause the Borrower to exercise the Subject Options (but only those that are
"in the money" and then only up to that number of options which need to be
exercised to satisfy the unpaid obligations hereunder) and/or sell, assign,
transfer or otherwise dispose of the Shares, the proceeds of which (such
proceeds being net of the applicable exercise price) shall be applied to the
payment of such obligations. Any amounts remaining thereafter shall be returned
to the Borrower. The Borrower shall take all steps necessary in the Company's
reasonable judgment, to consummate any such exercise of the Subject Options
and/or disposition of the Shares. Until the full payment of all such amounts due
the Company, the Borrower shall not, without the prior written consent of the
Company, (i) sell, assign, transfer or otherwise dispose of, the Subject Options
or the Shares unless the net proceeds from such sale, assignment, transfer or
disposition are applied in full to the payment of interest on and principal of
this Note or (ii) incur any lien on the Subject Options or the Shares, except as
provided hereunder. The Company shall be entitled to all rights available to it
under the Uniform Commercial Code. In addition, the Company shall have the right
to offset amounts owed by the Borrower pursuant to this Note against the
Company's obligation to pay severance under the Employment Agreement dated as of
May 16, 1999 between the Borrower and the Company (the "Employment Agreement").
2
5. Events of Default. Upon the occurrence of any of the following events
("Events of Default"):
(a) Failure to pay the principal of or accrued interest on this Note
when due, which failure to pay remains uncured after 5 days written notice of
such failure from the holder of this Note;
(b) Failure to comply with any of the Borrower's obligations under
this Note, which failure remains uncured after 5 days written notice of such
failure from the holder of this Note; or
(c) The termination of the Borrower's employment with the Company as
a result of any event that would constitute "Cause" as defined in the Employment
Agreement; then the holder of this Note may declare, by notice of default given
to the Borrower, the entire principal amount of this Note to be forthwith due
and payable, whereupon the entire principal amount of this Note outstanding and
any accrued and unpaid interest hereunder shall become due and payable without
presentment, demand, protest, notice of dishonor and all other demands and
notices of any kind, all of which are hereby expressly waived. Upon the
occurrence of an Event of Default, the accrued and unpaid interest hereunder
shall thereafter bear the same rate of interest as the principal hereunder, but
in no event shall such interest be charged which would violate any applicable
law. If an Event of Default shall occur hereunder, the Borrower shall pay costs
of collection, including reasonable attorneys' fees, incurred by the holder in
the enforcement hereof.
No delay or failure by the holder of this Note in the exercise of any
right or remedy shall constitute a waiver thereof, and no single or partial
exercise by the holder hereof of any right or remedy shall preclude any other or
future exercise thereof or the exercise of any other right or remedy.
6. Indemnity. The Borrower will upon demand pay to the Company (or the
then holder of this Note) the amount of any and all reasonable expenses,
including the reasonable fees and expenses of counsel and of any experts and
agents, that the Company (or such holder) may incur in connection with the
collection of the indebtedness of this Note, including, without limitation, (i)
the sale of, collection from or other realization upon, any of the collateral
pledged to the Company under Section 4 of this Note, (ii) the exercise or
enforcement of any of the rights of the Company (or holder) hereunder or (iii)
the failure by the Borrower to perform or observe any of the provisions hereof.
7. Further Assurances. The Borrower agrees that from time to time the
Borrower will promptly execute and deliver all further instruments and
documents, and take all further action that may be necessary or desirable, or
that the Company may reasonably request, in order to perfect and protect any
pledge, assignment or security interest granted or purported to be granted
hereby or to enable the Company (or holder) to exercise and enforce its rights
and remedies
3
hereunder with respect to the collateral pledged to the Company pursuant to
Section 4 of this Note.
8. Miscellaneous. (a) The provisions of this Note shall be governed by and
construed in accordance with the laws of the State of New York.
(b) All notices and other communications provided for hereunder shall
be in writing and personally delivered or mailed by overnight courier service or
registered or certified mail, return receipt requested, postage prepaid, if to
the Borrower, at his address as set forth on the signature page hereof; and if
to the Company, at 000 Xxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx 00000, Attention:
Chief Financial Officer; or, as to each party at such other address and to such
other individual as shall be designated by such party in a written notice to the
other party. All such notices and communications 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.
(c) The headings contained in this Note are for reference purposes
only and shall not affect in any way the meaning or interpretation of the
provisions hereof.
IN WITNESS WHEREOF, this Note has been duly executed and
delivered by the Borrower on the date first above written.
------------------------------
XXXX X. XXXX
Address:
Witness
Name:
4
