1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 4th day of February, 1997, between
MEDICAL MANAGER CORPORATION, a Delaware corporation (the "Company"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (the "Executive").
WHEREAS, the Executive is currently the President and sole shareholder of
Personalized Programming, Inc. ("PPI"); and
WHEREAS, as a result of the proposed business combination pursuant to that
certain Agreement and Plan of Reorganization among the Company, its acquisition
subsidiary, PPI and the Executive (the "Business Combination"). PPI will become
a wholly-owned subsidiary of the Company; and
WHEREAS, the parties hereto wish to enter into an employment agreement to
continue the employment of the Executive as the President of PPI and to employ
the Executive as the Chief Executive Officer and Chairman of the Board of the
Company following the Business Combination, and to set forth certain additional
agreements between the Executive and the Company.
NOW, THEREFORE, in consideration of the mutual covenants and representations
contained herein, the parties hereto agree as follows:
1. TERM.
The Company will employ the Executive, and the Executive will serve the Company,
under the terms of this Agreement for an initial term of five (5) years,
commencing on the effective date of the Business Combination (which also will be
the closing date of the Company's initial public offering of Common Stock).
Effective as of the expiration of such initial five-year term and as of each
anniversary date thereof, the term of this Agreement shall be extended for an
additional 12- month period unless, not later than two months prior to each such
respective date, the Company shall have given notice to the Executive that the
term shall not be so extended. Notwithstanding the foregoing, the Executive's
employment hereunder may be earlier terminated, as provided in Section 4 hereof.
The term of this Agreement, as in effect from time to time in accordance with
the foregoing, shall be referred to herein as the "Term". The period of time
between the commencement and the termination of the Executive's employment
hereunder shall be referred to herein as the "Employment Period".
2. EMPLOYMENT.
(a) POSITIONS AND REPORTING. The Company hereby employs the
Executive for the Employment Period as its Chief Executive Officer and Chairman
of the Board and as the President of PPI on the terms and
2
use its best efforts to cause the Executive to be nominated and re-nominated for
election as Chairman of the Board of Directors of the Company (the "Board") for
each term of such office commencing during the Employment Period. During the
Employment Period, the Executive shall report directly to the Board and the
Board of Directors of PPI in his respective capacities with each such company.
(b) AUTHORITY AND DUTIES. The Executive shall exercise such
authority, perform such executive duties and functions and discharge such
responsibilities as are reasonably associated with the Executive's position,
commensurate with the authority vested in the Executive's position, pursuant to
this Agreement and consistent with the By-Laws of the Company and PPI,
respectively. Without limiting the generality of the foregoing, the Executive
shall report directly and be solely responsible to the Board with respect to the
research and development functions of the Company and its subsidiaries. During
the Employment Period, the Executive shall devote his full business time, skill
and efforts to the business of the Company. Notwithstanding the foregoing, the
Executive may (i) make and manage passive personal business investments of his
choice and serve in any capacity with any civic, educational or charitable
organization, or any trade association, without seeking or obtaining approval by
the Board, provided such activities and service do not materially interfere or
conflict with the performance of his duties hereunder and (ii) with the approval
of the Board, serve on the boards of directors of other corporations.
3. COMPENSATION AND BENEFITS.
(a) SALARY. During the Employment Period, the Company shall pay
to the Executive, as compensation for the performance of his duties and
obligations under this Agreement, a base salary at the rate of $ 150,000
per annum, payable in arrears not less frequently than monthly in accordance
with the normal payroll practices of the Company. Such base salary shall be
subject to review each year for possible increase by the Board in its sole
discretion, but shall in no event be decreased from its then-existing level
during the Employment Period.
(b) ANNUAL BONUS. During the Employment Period, the Executive
shall have the opportunity to earn an annual bonus in accordance with a Company
annual bonus program for senior executives. The payment of any annual bonus
under any such program shall be contingent upon the achievement of certain
corporate and/or individual performance goals established by the Board in its
discretion.
(c) EQUITY PARTICIPATION. The Executive shall be eligible to be
granted stock options to acquire shares of the Common Stock of the Company under
the Company's 1996 Long-Term Incentive Plan. In addition, the Executive shall be
entitled to receive awards under any other stock option or equity based
incentive compensation plan or arrangement adopted by the Company during the
Employment Period for which senior executives are eligible. The level of the
executive's future participation in any such plan or arrangement shall be in the
sole discretion of the Board.
2
3
(d) OTHER BENEFITS. During the Employment Period, the Executive
shall be entitled to participate in all of the employee benefit plans, programs
and arrangements of the Company in effect during the Employment Period which are
generally available to senior executives of the Company, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans, programs and arrangements. In addition, during the Employment Period, the
Executive shall be entitled to fringe benefits and perquisites comparable to
those of other senior executives of the Company, including, but not limited to,
four weeks of vacation pay per year.
(e) BUSINESS EXPENSES. During the Employment Period, the Company
shall reimburse the Executive for all documented reasonable business expenses
incurred by the Executive in the performance of his duties under this Agreement,
in accordance with the Company's policies.
(f) INDEMNIFICATION. During the Employment Period and thereafter,
the Company shall indemnify the Executive to the fullest extent permitted by
applicable law, and the Executive shall be entitled to the protection of any
insurance policies the Company may elect to maintain generally for the benefit
of its directors and officers, with respect to all costs, charges and expenses
whatsoever incurred or sustained by the Executive in connection with any action,
suit or proceeding (other than any action, suit or proceeding brought by the
Company against the Executive) to which he may be made a party by reason of
being or having been a director, officer or employee of the Company or PPI or
his serving or having served any other enterprise as a director, officer or
employee at the request of the Company.
(g) TRAVEL. During the Executive's employment with the Company,
any travel by the Executive will be at the Executive's discretion.
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment hereunder for cause. For purposes of this Agreement and
subject to the Executive's opportunity to cure as provided in Section 4 (c)
hereof, the Company shall have "cause" to terminate the Executive's employment
hereunder if such termination shall be the result of:
(i) willful fraud or dishonesty in connection with the
Executive's performance hereunder that results in material harm
to the Company;
(ii) the failure by the Executive to substantially perform
his duties hereunder that results in material harm to the
Company; or
(iii) the conviction for, or plea or nolo contender to, a
charge of commission of a felony.
(b) TERMINATION FOR GOOD REASON. The Executive shall have the
right at any time to terminate his employment with the Company at any time and
for any reason. For purposes of this Agreement and subject to the Company's
opportunity to cure as provided in Section 4 ( c) hereof, the Executive shall
have "good reason" to terminate his employment hereunder if such termination
shall be the result of:
3
4
(i) a material diminution during the Employment Period in
the Executive's duties or responsibilities as set forth in
Section 2 hereof;
(ii) a failure of the Board to have the Executive elected or
re-elected to the office of the Chairman of the Board;
(iii) a material breach by the Company of the compensation
and benefits provisions set forth in Section 3 hereof;
(iv) a notice of non-renewal of the Agreement by the Company
in accordance with Section 1 hereof;
(v) a notice of termination by the Executive under Section 4
( c) hereof within 12 months following the occurrence of a Change
in Control (as defined in Section 4 (e) hereof); or
(vi) a material breach by the Company of any other term of
this Agreement.
( c) NOTICE AND OPPORTUNITY TO CURE. Notwithstanding the
foregoing, it shall be a condition precedent to the Company's right to terminate
the Executive's employment for "cause" and the Executive's right to terminate
his employment for "good reason" that (1) the party seeking the termination
shall first have given the other party written notice stating with specificity
the reason for the termination ("breach") and (2) if such breach is susceptible
of cure or remedy, a period of 30 days from and after the giving of such notice
shall have elapsed without the breaching party having effectively cured or
remedied such breach during such 30-day period, unless such breach cannot be
cured or remedied within 30 days, in which case the period for remedy or cure
shall be extended for a reasonable time (not to exceed an additional 30 days),
provided the breaching party has made and continues to make a diligent effort to
effect such remedy or cure.
(d) TERMINATION UPON DEATH OR PERMANENT AND TOTAL DISABILITY. The
Employment Period shall be terminated by the death of the Executive. The
Employment Period may be terminated by the Company if the Executive shall be
rendered incapable of performing his duties to the Company by reason of any
medically determined physical or mental impairment that can be expected to
result in death or that can be expected to last for a period of six or more
consecutive months from the first date of the Executive's absence due to the
Disability (a "Disability"). If the Employment Period is terminated by reason of
a disability of the Executive, the Company shall give 30 days' advance written
notice to that effect to the Executive.
(e) DEFINITION OF CHANGE IN CONTROL. A "Change in Control" shall
be deemed to have taken place if:
( i) there shall be consummated any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which
4
5
shares of the Company's capital stock are converted into cash,
securities or other property other than a consolidation or merger
of the Company in which the holders of the Company's voting stock
immediately prior to the consolidation or merger shall, upon
consummation of the consolidation or merger, own at least 50% of
the voting stock of the surviving corporation, or any sale,
lease, exchange or other transfer (in one transaction or a series
of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company;
or
(ii) any person (as such term is used in Sections
13(d) and 14 (d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") ), shall after the date hereof
become the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of securities of
the Company representing 35% or more of the voting power of all
then outstanding securities of the Company having the right under
ordinary circumstances to vote in an election of the Board
(including, without limitation, any securities of the Company
that any such person has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed beneficially owned
by such person); or
(iii) individuals who at the date hereof constitute
the entire Board and any new directors whose election by the
Board, or whose nomination for election by the Company's
stockholders, shall have been approved by a vote of at least a
majority of the directors then in office who either were
directors at the date hereof or whose election or nomination for
election shall have been so approved (the "Continuing Directors")
shall cease for any reason to constitute a majority of the
members of the Board; or
(iv) the sale by the Company of the majority of the
capital stock of PPI or all or substantially all of the assets of
PPI, or the liquidation on dissolution of PPI.
5. CONSEQUENCES OF TERMINATION.
(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. In the event of
termination of the Executive's employment hereunder by the Company without
"cause" (other than upon death or Disability) or by the Executive for "good
reason" (each as defined in Section 4 hereof), the Executive shall be entitled
to the following severance pay and benefits:
(i) SEVERANCE PAY - severance payments in the form
of continuation of the Executive's base salary as in effect
immediately prior to such termination over the longer of; (A) the
then-remaining Term hereof; or (B) 24 months (the "Severance
Period").
(ii) BENEFITS CONTINUATION - continuation for the
Severance Period of coverage under the group medical care,
disability and life insurance benefit plans or arrangements in
which the Executive is participating at the time of termination;
provided, however, that the Company's obligation to provide such
coverages shall be terminated if the Executive obtains
5
6
comparable substitute coverage from another employer at any time
during the Severance Period. The Executive shall be entitled, at
the expiration of the Severance Period, to elect continued
medical coverage in accordance with section 4980B of the Internal
Revenue Code of 1986, as amended (or any successor provision
thereto); and
(iii) STOCK OPTIONS - all options to purchase
shares of the Company's Common Stock held by the Executive
immediately prior to termination of employment shall become
immediately vested and exercisable and, subject to the terms of
the Company's 1996 Long- Term Incentive Plan, shall remain
exercisable for the duration of the Severance Period.
(b) OTHER TERMINATIONS. In the event of termination of the
Executive's employment hereunder for any reason other than those specified in
Section 5(a) hereof, the Executive shall not be entitled to any severance pay,
benefits continuation or stock option rights contemplated by the foregoing,
except as may otherwise be provided under the applicable benefit plans or award
agreements relating to the Executive.
( c) ACCRUED RIGHTS. Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of the Executive's employment
hereunder for any reason, the Executive shall be entitled to payment of any
unpaid portion of his base salary through the effective date of termination, and
payment of any accrued but unpaid rights solely in accordance with the terms of
any incentive bonus, stock option or employee benefit plan or program of the
Company.
6. CONFIDENTIALITY.
The Executive agrees that he will not at any time during the Term hereof or at
any time thereafter for any reason, in any fashion, form or manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation or other business entity, in any manner whatsoever, any confidential
information or trade secrets concerning the business of the Company, including,
without limiting the generality of the foregoing, the techniques, methods or
systems of its operation or management, any information regarding its financial
matters, or any other material information concerning the business of the
Company, its manner of operation, its plans or other material data. The
provisions of this Section 6 shall not apply to (i) information that is public
knowledge other than as a result of disclosure by the Executive in breach of
this Section 6; (ii) information disseminated by the Company to third parties in
the ordinary course of business; (iii) information lawfully received by the
Executive from a third party who, based upon inquiry by the Executive, is not
bound by a confidential relationship to the Company; or (iv) information
disclosed under a requirement of law or as directed by applicable legal
authority having jurisdiction over the Executive.
6
7
7. INVENTIONS.
The Executive is hereby retained in a capacity such that the Executive's
responsibilities include the making of technical and managerial contributions of
value to Company. The Executive hereby assigns to Company all right, title and
interest in such contributions and inventions made or conceived by the Executive
alone or jointly with others during the Employment Period which relate to the
business of the Company. This assignment shall include (a) the right to file and
prosecute patent applications on such inventions in any and all countries, (b)
the patent applications filed and patents issuing thereon, and (c) the right to
obtain copyright, trademark or trade name protection for any such work product.
The Executive shall promptly and fully disclose all such contributions and
inventions to Company and assist the Company in obtaining and protecting the
rights therein (including patents thereon), in any and all countries; provided,
however, that said contributions and inventions will be the property of Company,
whether or not patented or registered for copyright, trademark or trade name
protection, as the case may be. Inventions conceived by the Executive which are
not related to the business of the Company, will remain the property of the
Executive.
8. NON-COMPETITION.
(a) Prohibited Activities. The Executive will not, for a period
of five years from the effectiveness of the Business Combination, for any
reason whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, company partnership, corporation or business
of whatever nature:
(i) engage, as an officer, director, shareholder,
owner, partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor, consultant or
advisor, or as a sales representative, in any business selling
any products or services in direct competition with the
Company or any of the subsidiaries thereof, within 100 miles of
where PPI or any of the other for businesses which are part of
the Business Combination (the "Other Foundry Companies
conducted business prior to the effectiveness of the Merger (the
"Territory");
(ii) solicit any person who is at that time within the
Territory, an employee of the Company (including the
subsidiaries thereof) in a sales representative or managerial
capacity for the purpose or with the intent of enticing such
employee away from or out of the Company (including the
subsidiaries thereof);
(iii) solicit any person or entity which is, at that
time, or which has been within one (1) year prior to the
consummation of the Business Combination, a customer of the
Company (including the subsidiaries thereof), of PPI or of any
of the Other Founding companies within the Territory for the
purpose of soliciting or selling products or services in
direct competition with the Company within the Territory;
(iv) solicit any prospective acquisition candidate, on
the Executive's own behalf or on behalf of any competitor in
the medical software development or distribution business,
which candidate was either called upon by the Company
(including the subsidiaries thereof) or for which the Company
(or any subsidiary thereof) made an acquisition analysis which
was known (or should have been known) to the Executive, for the
purpose of acquiring such entity; or
(v) disclose customers, whether in existence or
proposed, of PPI to any person, firm, partnership, corporation
or business for any reason or purpose whatsoever except to the
extent that PPI has in the past disclosed such information to
the public for valid business reasons.
Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit the Executive from acquiring as an investment not more than
three percent (3%) of the capital stock of a competitive business whose stock
is traded on a national securities exchange or over-the-counter.
In addition to the foregoing, in the event the Executive is
not actively employed during the initial five-year term and is not receiving
any severance pay and provided the Company pays the Executive, in equal monthly
installments, an amount equal to $25,000 per annum, as a condition of the
Executive shall be bound by the non-competition provisions set forth above for
the Severance.
(b) Reasonable Restraint. It is agreed by the parties hereto
that the foregoing covenants in this Section 8 impose a reasonable restraint on
the Executive in light of the activities and business of the Company (including
the subsidiaries thereof) on the date of the execution of this Agreement and
the current plans of the Company; but it is also the intent of the Company and
the Executive that such covenant be construed and enforced in accordance with
the changing activities and business of the Company (including the subsidiaries
thereof) throughout the term of this covenant so long as such activities and
business are reasonably related to the activities of the Company immediately
upon consummation of the Company Plan of Organization.
(c) Severability; Reformation. The covenants in this Section 8
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and this Agreement shall thereby be reformed.
(d) Independent Covenant. all of the Covenants in this Section
8 shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of the Executive
against the Company (including the subsidiaries thereof), whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by Company of such covenants. The covenants contained in Section 8 shall not be
affect by any breach of any other provision hereof by any party hereto and
shall have no effect if the transactions contemplated by this Agreement are not
consummated.
(e) Materiality, PPI and the Executive each hereby agree that
this covenant is a material and substantial part of this transaction.
(f) Additional Restrictions. The Executive agrees that he
shall not during the Employment Period and, if applicable, the Severance Period,
without the approval of the Board, directly or indirectly, alone or as partner,
joint venturer, officer, director, employee, consultant, agent, independent
contractor or stockholder (other than as provided below) of any company or
business, engage in any "Competitive Business" within the United States. For
purposes of the foregoing, the term "Competitive Business" shall mean any
business involved in the development, sale or support of health care
information systems. Notwithstanding the foregoing, the Executive shall not be
prohibited during the non-competition period applicable above from acting as
a passive investor where he owns not more than five percent (5%) of the issued
and outstanding capital stock of a publicly-held company. During the period
that the above non-competition restriction applies, the Executive shall not,
without the written consent of the Company, solicit any employee of the Company
or any current or future subsidiary or affiliate thereof to terminate his or
her employment. Notwithstanding the foregoing this provision only applies
after the initial five-year term hereof is completed; provisions 8(a)-8(e)
hereof shall govern during such initial five-year term.
9. BREACH OF RESTRICTIVE COVENANTS.
The parties agree that a breach or violation of Section 6, 7 or 8 hereof will
result in immediate and irreparable injury and harm to the innocent party, who
shall have, in addition to any and all remedies of law and other consequences
under this Agreement, the right to an injunction, specific performance or other
equitable relief to prevent the violation of the obligation hereunder.
10. NOTICE.
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered
7
8
or (unless otherwise specified) mailed by United States certified or registered
mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to the Company, to:
MEDICAL MANAGER CORPORATION
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to the Executive, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PERSONALIZED PROGRAMMING, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other respective addresses as the parties hereto shall designate to
the other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.
11. ARBITRATION: LEGAL FEES.
Except as provided in Section 9 hereof, any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in Florida in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction. The Company shall reimburse the Executive for all
reasonable legal fees and costs and other fees and expenses which the Executive
may incur in respect of any dispute or controversy against the Company arising
under or in connection with this Agreement; provided, however, that the Company
shall not reimburse any such fees, costs and expenses if the fact finder
determines that the action brought by the Executive was substantially without
merit.
12. WAIVER OF BREACH.
Any waiver of any breach of the Agreement shall not be construed to be a
continuing waiver or consent to any subsequent breach on the part either of the
Executive or of the Company.
13. NON-ASSIGNMENT: SUCCESSORS.
Neither party hereto may assign his or its rights or delegate his or its duties
under this Agreement without the prior written consent of the other party;
provided, however, that (i) this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company upon any sale
8
9
of all or substantially all of the Company's assets, or upon any merger,
consolidation or reorganization of the Company with or into any other
corporation, all as though such successors and assigns of the Company and their
respective successors and assigns were the Company; and (ii) this Agreement
shall inure to the benefit of and be binding upon the heirs, assigns or
designees of the Executive to the extent of any payments due to them hereunder.
As used in this Agreement, the term "Company" shall be deemed to refer to any
such successor or assign or the Company referred to in the preceding sentence.
14. WITHHOLDING OF TAXES.
All payments required to be made by the Company to the Executive under this
Agreement shall be subject to the withholding of such amounts, if any, relating
to tax, and other payroll deductions as the Company may reasonable determine it
should withhold pursuant to any applicable law or regulation.
15. SEVERABILITY.
To the extent any provision of this Agreement or portion thereof shall be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
16. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.
17. GOVERNING LAW.
This Agreement shall be construed, interpreted and enforced in accordance with
the laws of the State of Florida, without giving effect to the conflict of law
principles thereof.
18. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement by the Company and the Executive
with respect to the subject matter hereof and supersedes any and all prior
agreements or understandings between the Executive and the Company with respect
to the subject matter hereof, whether written or oral. This Agreement may be
amended or modified only by a written instrument executed by the Executive and
the Company.
9
10
IN WITNESS WHEREOF, the parties have executed this Agreement as
of February 4, 1997.
MEDICAL MANAGER CORPORATION
/s/ ▇▇▇▇ ▇▇▇▇
--------------------------------
By: ▇▇▇▇ ▇▇▇▇
THE EXECUTIVE
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
10