EXHIBIT 10.1
This Employment Agreement was
originally filed on March 7, 2006 with Eclipsys
Corporation’s annual report on Form 10-K for the year ended
December 31, 2005. Confidential treatment for this Employment
Agreement has expired; therefore, this Employment Agreement is
being re-filed in its entirety. This Employment Agreement was
subsequently amended on February 7, 2008. See Exhibit 10.3
filed on May 12, 2008 with Eclipsys Corporation’s quarterly
report on Form 10-Q for the three month period ended March 31,
2008.
EMPLOYMENT
AGREEMENT
This Employment Agreement (this
“ Agreement ”) is entered into by and between
Eclipsys Corporation , a Delaware corporation (the “
Company ”) and John E. Deady , an individual
(the “ Executive ”), effective immediately upon
the signatures of the parties below, with the Executive’s
employment commencing on January 9, 2006 (such commencement of
employment being the “ Effective Date
”).
WHEREAS, the Company desires to
employ the Executive, and the Executive desires to be employed by
the Company, on the terms set forth herein;
NOW THEREFORE, in consideration of
the mutual covenants and promises contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties to this Agreement,
the parties agree as follows:
Section 1
- Employment
.
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(a)
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The Company
shall employ Executive as of the Effective Date. Executive will
serve as the Company’s Executive Vice President –
Sales & Marketing, and in that capacity shall
(i) have the customary powers, responsibilities and
authorities of an executive officer of the Company and such other
powers, responsibilities and authorities as may be delegated to
Executive by the Company’s Chief Executive Officer (the
“ CEO ”) or the Company’s Board of
Directors (the “ Board ”) from time to time, and
(ii) report to, and be subject to review and control by, the
CEO. Executive shall devote his reasonable best efforts to the
performance of his duties and responsibilities
hereunder.
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(b)
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Nothing in this
Agreement shall preclude Executive from engaging in charitable and
community affairs; from managing any passive investment (
i.e. , an investment with respect to which Executive is in
no way involved with the management or operation of the entity in
which Executive has invested) made by him in publicly traded equity
securities or other property (provided that no such investment may
exceed five percent (5%) of the equity of any entity, without
the prior approval of the Board); or from serving as a member of
boards of directors or as a trustee of any other corporation,
association or entity, to the extent that any of the above
activities do not interfere with his ability to discharge his
duties hereunder and the subject entity does not directly compete
with the Company, and provided that Executive will not serve as a
director of any for-profit entity without approval of the
Board.
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Section 2
- Term of
Employment .
Executive’s employment is at-will, subject to the severance
benefits specified herein. The period from the Effective Date until
the date Executive’s employment terminates is referred to
herein as the “ Term of Employment ”.
Section 3
- Compensation
.
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(a)
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Salary . During the period from the Effective Date
through December 31, 2006 (the “ Initial Period
”), the Company shall pay the Executive at the annualized
rate of $450,000.00 (“ Base Salary ”) in
accordance with the ordinary payroll practices of the Company, and
subject to all applicable federal, state and local withholding and
reporting requirements. The Executive’s Base Salary shall not
be decreased during the Initial Period. During the Term of
Employment, the Board or the Compensation Committee of the Board
(the “ Compensation Committee ”) shall review,
and may, subject to the immediately preceding sentence and subject
to Executive’s right to terminate employment for Good Reason
pursuant to Section 6(a) as a result of any reduction
in Base Salary, adjust the Executive’s Base Salary annually,
in accordance with the Company’s customary procedures and
practices for reviewing compensation of senior executives. In the
event the Base Salary is so adjusted, the adjusted amount shall
become the Base Salary for purposes of this Agreement.
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(b)
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Bonus
Plan . Executive shall be
eligible to participate in the Company’s standard bonus plan
for executive officers, subject to all terms and conditions of such
plan. The executive bonus plan will be established and may be
modified from time to time by the CEO, the Board or the
Compensation Committee of the Board (the “ Compensation
Committee ”). Executive’s annual target bonus will
be $200,000 (the “ Target Bonus ”), but except
as set forth in the following sentence no bonus payments are
guaranteed and all bonus payments will be contingent upon
achievement of such Company and individual performance targets and
management objectives (including objectives specific to Executive,
objectives common to other executives as well, and Company
objectives) as may be established by the CEO, the Board or the
Committee. However, notwithstanding the foregoing, without regard
to Executive’s performance against any bonus plan, Executive
shall receive the Target Bonus for 2006, payable $50,000 by
April 15, 2006 if Executive is employed continuously as the
Company’s Executive Vice President from the Effective Date
until March 31, 2006, and $150,000 at the time 2006 bonuses
are paid to other executive officers and consistent with the
ordinary payroll practices of the Company, if Executive is employed
continuously as the Company’s Executive Vice President from
the Effective Date until December 31, 2006. The Board or
Compensation Committee may provide in any year’s bonus plan
that Executive may earn more than the Target Bonus upon achievement
of specified performance criteria, but in no event will
Executive’s cash bonus for any year exceed two times the
Target Bonus. Executive’s bonuses will be earned as of
December 31 of each year, if and to the extent that
performance criteria applicable to that year’s bonus plan are
met, and paid thereafter consistent with the timing of payment of
bonuses to other executives. All bonus payments shall be subject to
all applicable federal, state and local withholding and reporting
requirements.
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Section 4
- Employee
Benefits .
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(a)
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Employee Retirement Benefit
Programs, Welfare Benefit Programs, Plans and Practices
. The Company shall provide
Executive with coverage during the Term of Employment under any
retirement benefit programs, welfare benefit programs, and other
compensatory and benefit
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programs, plans and practices,
that the Company makes generally available to its senior
executives, including, but not limited to, its life and short- and
long-term disability insurance, hospitalization and major medical
insurance, the Company’s 401(k) Plan, Employee Stock Purchase
Plan, dental insurance, directors and officers liability insurance,
and any other nonqualified compensation program (including deferred
compensation or supplemental retirement programs) as in effect from
time to time.
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(b)
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Vacation . Executive shall be entitled to five weeks of
paid vacation each calendar year, which shall be taken at such
times as are consistent with the Executive’s responsibilities
hereunder; provided, however, subject to applicable law, that the
Executive shall not be entitled to carry over unused vacation from
year to year in an amount exceeding that which the Executive would
be entitled to carry over in accordance with the Company’s
standard vacation policy as applied to employees of the
Executive’s longevity with the Company.
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(c)
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Stock
Options and Restricted Stock Grants . As a material inducement to Executive’s
entering into employment with the Company, the Company is granting
to Executive as inducement grants under NASD Rule
4350(i)(1)(A)(iv), effective as of the Effective Date, (1) a
non-qualified stock option to purchase 400,000 shares of the
Company’s common stock at an exercise price equal to the
closing price of the common stock on Nasdaq on the trading day
immediately preceding the Effective Date, and (2) a restricted
stock grant of 100,000 shares of the Company’s common stock,
for which the Executive must pay an initial price of $.01 per share
(together, the “ Initial Grants ”). The terms of
these stock options are specified in a Notice of Grant being issued
to Executive and the Company’s 2005 Inducement Grant Stock
Incentive Plan, and the terms of these shares of restricted stock
are specified a Restricted Stock Agreement between the Company and
Executive, a Notice of Grant being issued to Executive, and in the
Company’s 2005 Inducement Grant Stock Incentive Plan
(collectively, the “ Equity Documents ”). The
forms of the Equity Documents are attached as Exhibits A-1
through A-4 to this Agreement. The Initial Grants are also
subject to certain provisions of this Agreement, and the Agreement
re Specified Acts being entered into between the Company and
Executive concurrently with this Agreement in the form of
Exhibit B to this Agreement (the “ Agreement re
Specified Acts ”). The Initial Grants are considered to
be multiple-year awards and thus regular additional annual equity
awards should not be anticipated even if other executives receive
annual equity awards.
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(d)
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Other
Benefits . Executive will
be entitled to reimbursement of reasonable expenses incurred by him
for an annual physical examination, to the extent such an
examination is not otherwise covered or provided by the health
insurance or health benefits provided by the Company to Executive
pursuant to Section 4(a) above; and reimbursement of up
to $25,000 in legal expenses incurred by Executive in negotiation
and preparation of his initial employment documents, together with
a gross-up if necessary so that net of any income taxes payable on
reimbursement of such legal fees, Executive’s expense for
these legal expenses is effectively covered.
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Section 5
- Expenses
. Subject to prevailing Company
policy or such guidelines as may be established by the CEO or the
Board or Compensation Committee from time to time, the Company
shall reimburse the Executive for all reasonable expenses incurred
by the Executive in carrying out his duties.
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Section 6
- Termination of
Employment .
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(a)
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Termination
Without Cause or Termination for Good Reason
. Subject to
Section 6(i) , if Executive’s employment is
terminated by the Company for any reason other than Cause (as
defined in Section 6(c) ), Executive’s Disability
(as defined in Section 6(e) ), or Executive’s
death, or if Executive’s employment is terminated by
Executive for Good Reason (as defined in
Section 6(a)(2) ), then the Company shall pay Executive
(x) the Accrued Amounts (as defined below) and
(y) subject to the limitations described in this Agreement,
the Severance Package. The payment of the Severance Package to
Executive under this Section 6(a) shall (i) be
contingent upon the execution by Executive of a general release in
favor of the Company in substantially the form attached hereto as
Exhibit C , provided that if changes or expansions of
relevant laws and regulations would result in Exhibit C in
the form thereof as of the date of this Agreement failing to
achieve the intent thereof as reflected by the form thereof as of
the date of this Agreement (the “ Initial Intent
”), and if it is possible to modify Exhibit C so as to
effect the Initial Intent notwithstanding such changes or
expansions of relevant laws or regulations, then Exhibit C
will be modified to the extent necessary to preserve the Initial
Intent (the “ Release ”); (ii) constitute
the sole remedy of Executive in the event of a termination of
Executive’s employment in the circumstances set forth in this
Section 6(a) ; and (iii) be subject to the
Agreement re Specified Acts. Except as expressly provided herein or
in the Agreement re Specified Acts or in another agreement between
the Company and Executive, the Severance Package shall not be
subject to any duty to mitigate damages by Executive, nor any set
off or reduction due to Executive’s post-termination
employment, provided such post-termination employment does not
contravene any agreement between the Company and Executive. The
Accrued Amounts shall be payable in a lump sum within ten
(10) days of termination of employment, or earlier if required
by applicable law.
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(1)
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For purposes of
this Agreement, the “ Accrued Amounts ” shall
mean Executive’s earned but unpaid Base Salary, any declared
but unpaid bonus, any accrued but unused vacation and any other
earned but unpaid amounts payable to him hereunder, in each case as
accrued through the last day of his actual employment by the
Company.
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(2)
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For purposes of
this Agreement, a termination of employment by Executive for
“ Good Reason ” shall be a termination by
Executive following the occurrence of any of the following events
unless the Company has cured as provided below:
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(A)
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Subject to
Section 6(d)(2) , removal from the position of
Executive Vice President of the Company or any material diminution
in Executive’s duties, responsibilities, authority, or
participation in management, except for Cause or following
Executive’s death or Disability, provided that a change in
Executive’s duties that is approved by the Board or
Compensation Committee and that is commensurate with his role as an
Executive Vice President of the Company will not constitute Good
Reason;
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(B)
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A reduction in
the Base Salary or Target Bonus then in effect or a material
reduction in the other benefits provided to Executive by the
Company;
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(C)
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Any material
breach by the Company of this Agreement or any other legal
obligation owed by the Company to Executive;
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(D)
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Failure of any
successor of the Company to assume this Agreement as required by
Section 11 ; or
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(E)
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A required
relocation of Executive’s primary residence other than as
described in Section 8(c) .
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Executive must notify the Company in
writing specifically identifying any event constituting Good Reason
within thirty (30) days after Executive becomes aware of such
event or such event shall not constitute Good Reason for purposes
of this Agreement; provided that the Company shall have thirty
(30) days from the date of such notice to cure the Good Reason
event. A termination by Executive following cure shall not be a
termination for Good Reason. A failure of Executive to notify the
Company after the first occurrence of an event constituting Good
Reason shall not preclude any subsequent occurrences of such event
(or similar event) from constituting Good Reason.
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(3)
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For purposes of
this Agreement, “ Severance Package ” shall
mean:
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(A)
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Base Salary
continuation for eighteen (18) months following the date of
termination at Executive’s annual Base Salary rate in effect
on the date of termination, subject to all applicable federal,
state and local withholding and reporting requirements. These
salary continuation payments shall be paid in accordance with usual
Company payroll practices.
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(B)
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A bonus equal
to one hundred fifty percent (150%) of Executive’s
Target Bonus in effect on the date of termination (but not less
than $200,000), payable in equal installments over the eighteen
(18) month period described in Section 6(a)(3)(A)
, subject to the same withholding and reporting requirements. In
addition, to the extent not included in the Accrued Amounts,
Executive shall receive a pro rata bonus for the bonus period
during which the date of termination occurs calculated at one
hundred percent (100%) of the Target Bonus then in effect,
multiplied by a fraction the numerator of which is the number of
days that Executive was employed during such bonus term and the
denominator of which is 365. Such prorated bonus shall be paid in
accordance with the Company’s customary practices for payment
of executive bonuses but with no additional performance
requirements or contingencies.
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(C)
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For the avoidance of confusion,
the parties acknowledge that in the event Executive terminates his
employment for Good Reason as a result of a
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decrease in his Base Salary or
Target Bonus as contemplated in clause (B) of
Section 6(a)(2) , then the Base Salary and Target Bonus
used for purposes of the calculation of the Severance Package shall
be the Base Salary and Target Bonus in effect immediately prior to
such reduction.
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(D)
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Executive shall
be entitled to twelve (12) months of vesting of all stock,
stock options and other equity-based awards granted to him,
including the Initial Grants, in addition to vesting that had
occurred at the date of termination ( i.e ., vesting as
would have occurred if Executive had remained employed until the
first anniversary of the date of termination of his employment),
provided (i) that if the Severance Package becomes payable as
a result of a termination of employment occurring before
June 1, 2006, then in lieu of the 12 months of vesting of
restricted stock included in the Initial Grants as described above,
Executive shall be entitled to vesting of 20% of the restricted
stock included in the Initial Grants, plus an additional 1.667% of
the restricted stock included in the Initial Grants for each
complete calendar month, if any, that elapses from the date of this
Agreement until the date of termination of employment, and
(ii) provided further that if the Severance Package becomes
payable as a result of a termination of employment occurring before
February 1, 2006, then in lieu of the 12 months of vesting of
the stock options included in the Initial Grants as described
above, Executive shall be entitled to vesting of 20.0% of the stock
options included in the Initial Grants.
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(E)
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Continuation of
benefits under any life, group health, and dental insurance
benefits substantially similar to those which Executive (and, if
applicable, his family) was receiving immediately prior to
termination of employment until the earlier of:
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(i)
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the end of the
eighteen (18) month period following the date of termination,
or
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(ii)
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the date on
which Executive becomes eligible to receive substantially similar
benefits under any plan or program of any other
employer.
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The continuing coverage provided
under this Section 6(a)(3)(E) is subject to the
availability of such continuation under the terms of the applicable
plan documents and all provisions of applicable law, including the
requirements of the federal “COBRA” law, 29 U.S.C.
§ 1161 et seq. with respect to group health and dental
insurance. If Executive is not eligible for such continued coverage
under one of the Company-provided benefit plans noted in this
paragraph (E) that he was participating in during his
employment, the Company shall pay the Executive the cash equivalent
of the cost of replacement insurance for the duration of the
applicable period, up to a maximum of the Company’s cost of
providing the coverage before the termination of employment, which
payments shall be made pro-rata in accordance with the
Company’s customary payroll practices.
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(4)
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To the extent
that this Employment Agreement is treated as a nonqualified
deferred compensation arrangement within the meaning of
Section 409A of the Internal Revenue Code (“ Section
409A ”), neither the Company nor Executive may accelerate
the timing of the payments under this Section 6(a) (for
example, no part of the Severance Package may be paid in a lump sum
at the time of termination) unless such acceleration does not
trigger the application of interest and penalty taxes under
Section 409A. In addition, to the extent that this Employment
Agreement is treated as a nonqualified deferred compensation
arrangement within the meaning of Section 409A and the
Treasury Regulations under Section 409A require a delay in the
commencement of any payments under the Severance Package due to
Executive’s status as a “specified employee”, the
Severance Package payments shall be delayed to the minimum extent
and in the minimum amount necessary so as to comply with the Code
and any regulations thereunder and avoid interest and penalties,
and otherwise paid on the schedule set forth in this
Section 6(a) .
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(b)
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Voluntary
Termination by Executive Without Good Reason
. If Executive terminates his
employment with the Company without Good Reason, then the Company
shall pay Executive only the Accrued Amounts in a lump sum within
ten (10) days of termination of employment, or earlier if
required by applicable law. Retirement shall be considered a
termination of employment by Executive without Good
Reason.
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(c)
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Termination
for Cause . If
Executive’s employment is terminated for Cause, the Company
shall pay Executive only the Accrued Amounts in a lump sum within
ten (10) days of termination of employment, or earlier if
required by applicable law. As used herein, the term “
Cause ” shall be limited to the following, and to the
causes described in Section 8(b) :
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(1)
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Executive’s conviction of or plea of
guilty or nolo contendere to a felony under the laws of the
United States or any state thereof or any other jurisdiction in
which the Company conducts business;
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(2)
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Executive’s willful misconduct or gross
negligence in the performance of his duties that causes material
harm to the Company;
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(3)
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Executive’s willful and continued failure
to follow the reasonable and lawful instructions of the
Board;
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(4)
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Executive’s willful and continued neglect
of duties (other than any such neglect resulting from incapacity of
Executive due to physical or mental illness); or
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(5)
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a material
breach of this Agreement by Executive;
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provided, however, that Cause shall
arise under items (2), (3), (4) or (5) only following
thirty (30) days written notice thereof from the Company which
specifically identifies such
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misconduct, failure, neglect or
breach and only if Executive continues to engage in or fails to
cure (if the misconduct, failure, neglect or breach can be cured)
such misconduct, failure, neglect or breach during such notice
period. During any such notice period, Executive shall have the
right to be heard by the Board and Cause shall not be deemed to
exist without a finding by a majority of the Board that Cause
exists and, if the misconduct, failure, neglect or breach can be
cured, has not been cured during the thirty (30) day cure
period. A termination by the Company after cure shall not be a
termination for Cause. A failure of the Company to notify Executive
after the first occurrence of an event constituting Cause shall not
preclude any subsequent occurrences of such event (or similar
event) from constituting Cause.
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(d)
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Certain Terminations Following
a Change in Control .
Subject to Section 6(i) , in the event
Executive’s employment with the Company or its successor
terminates by reason of a Qualifying Termination (as defined below)
within two (2) years after a Change in Control of the Company
(as defined below) that occurs during the Term of Employment, then
the Company shall pay to the Executive (x) the Accrued Amounts
in a lump sum within ten (10) days of termination of
employment, or earlier if required by applicable law, and
(y) in lieu of the Severance Package, and subject to the
limitations described in this Agreement, the Company shall provide
the Executive the Change in Control Benefits (as defined below).
The provision of the Change in Control Benefits to Executive under
this Section 6(d) shall (i) be contingent upon the
execution by Executive of the Release or a release in another form
reasonably acceptable to the Company and Executive;
(ii) constitute the sole remedy of Executive in the event of a
termination of Executive’s employment in the circumstances
set forth in this Section 6(d) ; and (iii) be
subject to the Agreement re Specified Acts. In addition, all
payments under this Section 6(d) are subject to the
timing rules, calculations and adjustments described in
Section 7 . Anything in this Agreement to the contrary
notwithstanding, if (q) a Change in Control occurs,
(r) Executive’s employment with the Company is
terminated by the Company without Cause or by Executive for Good
Reason within 180 days prior to the date on which the Change in
Control occurs, and (s) it is reasonably demonstrated by
Executive that such termination of employment or events
constituting Good Reason (u) was at the request of a third
party who has taken steps reasonably calculated to effect a Change
in Control or (v) otherwise arose in connection with or in
anticipation of a Change in Control, then for all purposes of this
Agreement such Change in Control shall be deemed to have occurred
during the Term of Employment and the termination shall be deemed
to have occurred after the Change in Control, so that Executive is
entitled to the Change in Control Benefits. It is recognized that
options and restricted stock not vested at the time of or as a
result of termination of employment may be cancelled, and further
that following such cancellation Executive may become entitled to
vesting of those cancelled stock options or shares of restricted
stock in connection with a subsequent Change in Control pursuant to
this section. In that case, the Company or its successor shall
deliver to Executive the consideration Executive would have
received in the Change in Control for (i) the shares of
restricted stock that were cancelled as if those shares had been
owned by and fully vested in Executive at the time of the Change in
Control, less an amount equal to the product of $.01 per share and
the number of such shares to represent the par value thereof; and
(ii) the stock options that were cancelled as though such
options had been vested at the time of the Change in Control, to
the extent that unexercised vested stock options were cashed out in
the Change in Control, and otherwise for a number of shares of the
Company’s
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common stock having a value at
the time of the Change in Control equal to the aggregate amount by
which those stock options were in-the-money at the time of the
Change in Control, using for purposes of this calculation the value
of a share of the Company’s common stock in the Change in
Control transaction.
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(1)
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“
Change of Control Benefits ” shall mean:
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(A)
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Base Salary
continuation for twenty four (24) months following the date of
termination at Executive’s annual Base Salary rate in effect
on the date of termination, subject to all applicable federal,
state and local withholding and reporting requirements. These
salary continuation payments shall be paid in accordance with usual
Company payroll practices;
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(B)
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A bonus equal
to two hundred percent (200%) of Executive’s Target
Bonus in effect on the date of termination, payable in equal
installments over the twenty four (24) month period described
in Section 6(d)(1)(A) , subject to the same withholding
and reporting requirements. In addition, to the extent not included
in the Accrued Amounts, Executive shall receive a pro rata bonus
for the bonus period during which the date of termination occurs
calculated at one hundred percent (100%) of the Target Bonus
then in effect, multiplied by a fraction the numerator of which is
the number of days that Executive was employed during such bonus
term and the denominator of which is 365. Such prorated bonus shall
be paid in accordance with the Company’s customary practices
for payment of executive bonuses but with no additional performance
requirements or contingencies;
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(C)
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Acceleration in
full of the vesting of all stock, stock options and other
equity-based awards granted to him, including the Initial Grants;
and
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(D)
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Continuation of
life, group health and dental insurance benefits substantially
similar to those which Executive (and, if applicable, his family)
was receiving immediately prior to the Qualifying Termination until
the earlier of:
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(i)
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the end of the
twenty four (24) month period following Executive’s
termination of employment, or
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(ii)
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the date on
which Executive becomes eligible to receive substantially similar
benefits under any plan or program of any other
employer.
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The continuing coverage provided
under this Section 6(d)(1)(D) is subject to the
availability of such continuation under the terms of the applicable
plan documents and all provisions of applicable law. If Executive
is not eligible for such continued coverage under one of the
Company-provided benefit plans noted in this paragraph
(D) that he was participating in during his
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employment, the Company shall pay
Executive the cash equivalent of the cost of replacement insurance
for the duration of the applicable period, up to a maximum of the
Company’s cost of providing the coverage before the
termination of employment, which payments shall be made pro-rata in
accordance with the Company’s customary payroll
practices.
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(2)
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Qualifying
Termination . For
purposes of this Agreement, the term “ Qualifying
Termination ” means a termination by the Company or its
successor of Executive’s employment with the Company or its
successor for any reason other than Cause, Disability or death, or
a termination by Executive of Executive’s employment with
Good Reason. However, if following a Change in Control the Company
or its successor in the Change in Control offers to retain
Executive in a Comparable Position, then Executive shall not be
entitled to resign his employment for Good Reason pursuant to
Section 6(a)(2)(A) . For these purposes, “
Comparable Position ” means (i) Executive Vice
President of the successor organization or the portion of the
successor organization that succeeds to the business of the Company
(whether organized as a subsidiary, division, or otherwise) (in
either case, the “ Successor Business ”), or if
the Successor Business does not use that title, then a title within
the Successor Business’s organizational structure that is
comparable to Executive Vice President in the Company’s
organizational structure, with duties, responsibilities, authority
and participation in management commensurate with that role, if
(A) the Successor Business is the natural successor to the
business of the Company following the Change in Control and
continues in the same basic business as the Company; and
(B) Executive’s role with the Successor Business would
not result in a material diminution of the substantive operational
scope of Executive’s role from the substantive operational
scope of his role with the Company. In each case, it is recognized
that following a Change in Control, the evolution of the Company to
the Successor Business can result in various changes resulting from
integration, efforts to capture synergy opportunities or address
new markets, and changes in business strategy, and as a result
Executive’s duties, responsibilities, authority or
participation in management in a Comparable Position may not be
exactly the same as his duties, responsibilities, authority or
participation in management with the Company prior to the Change in
Control. However, whether a role with the successor offered to
Executive qualifies as a Comparable Position will be judged with a
view to the overall quality of the opportunity represented by that
role from a professional point of view, with the understanding that
the intention of this Agreement is that a Comparable Position, in
light of all relevant factors including the size and complexity of
the successor organization, would not represent a material
diminution to Executive in the overall quality of his professional
stature, experience and opportunity compared to the professional
stature, experience and opportunity represented by
Executive’s role with the Company.
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(3)
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Change of
Control Defined . For
purposes of this Agreement, a “ Change of Control
” shall have the meaning set forth in Exhibit D
.
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(4)
|
To the extent
that this Employment Agreement is treated as a nonqualified
deferred compensation arrangement within the meaning of
Section 409A, neither the Company nor Executive may accelerate
the timing of the payments under this Section 6(d) (for
example, no part of the Change in Control Benefits may be paid in a
lump sum at the time of termination) unless such acceleration does
not trigger the application of interest and penalties under
Section 409A. In addition, to the extent that this Agreement
is treated as a nonqualified deferred compensation arrangement
within the meaning of Section 409A and the Treasury
Regulations issued under Section 409A require a delay in the
commencement of any payments under the Change in Control Benefits
due to Executive’s status as a “specified
employee”, the Change in Control Benefit payments shall be
delayed to the minimum extent necessary so as to comply with the
code and any regulations thereunder and to avoid interest and
penalties, and otherwise paid on the schedule set forth in this
Section 6(d) .
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(e)
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Disability . In the event that Executive suffers a
Disability, the Company may, in its discretion, terminate
Executive’s employment hereunder. For purposes of this
Agreement, “ Disability ” shall be defined to
occur at such time as Executive becomes eligible to receive
benefits under the terms of the Company’s then applicable
long-term disability policy, or, in the absence of such policy,
shall be defined as a physical or mental disability that prevents
Executive from performing his duties under this Agreement for
ninety (90) consecutive days or more, or for an aggregate of
one hundred twenty (120) days in any period of twelve
(12) months. The Company may only terminate Executive on
account of Disability after giving due consideration to whether
reasonable accommodations can be made under which Executive is able
to fulfill his duties under this Agreement. The commencement date
and expected duration of any physical or mental condition that
prevents Executive from performing his duties hereunder shall be
determined by a medical doctor mutually acceptable to Executive and
the Company. In the event Executive’s employment is
terminated by the Company pursuant to this Section 6(e)
, then the Company shall pay Executive only the Accrued Amounts in
a lump sum within ten (10) days of termination of employment,
or earlier if required by applicable law.
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(f)
|
Death . In the event of Executive’s death during
the Term of Employment, all obligations of the Company to make any
further payments, including the obligation to pay the Accrued
Amounts, shall be paid to Executive’s estate, and in any
event all Accrued Amounts shall be paid in a lump sum within ten
(10) days of the Executive’s death, or earlier if
required by applicable law. In addition, to the extent not included
in the Accrued Amounts, Executive’s estate shall receive a
payment or payments reflecting a pro rata bonus for Executive for
the bonus period during which the date of termination pursuant to
this Section 6(f) occurs calculated at one hundred
percent (100%) of the Target Bonus then in effect, multiplied
by a fraction the numerator of which is the number of days that
Executive was employed during such bonus term and the denominator
of which is 365. Such prorated bonus shall be paid in accordance
with the Company’s customary practices for payment of
executive bonuses but with no additional performance requirements
or contingencies, provided, however, that to the extent that this
Agreement is treated as a nonqualified deferred compensation
arrangement within the meaning of Section 409A, the payment of
such bonus may not be accelerated by either the Company or
Executive unless such acceleration does not trigger the application
of interest and penalty taxes under Section 409A.
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11
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(g)
|
Payments as
Compensable Compensation . Any participation by Executive in, and any
terminating distributions and vested rights under,
Company-sponsored retirement or deferred compensation plans,
regardless of whether such plans are qualified or nonqualified for
tax purposes, shall be governed by the terms of those respective
plans.
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(h)
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Executive’s Duty to Provide
Materials . Upon the
termination of the Term of Employment for any reason, Executive or
his estate shall surrender to the Company all computer files and
electronic data and records, correspondence, letters, files,
contracts, mailing lists, customer lists, advertising material,
ledgers, supplies, equipment, checks, and all other materials and
records of any kind that are the property of the Company or any of
its subsidiaries or affiliates, that may be in Executive’s
possession or under his control, including all copies of any of the
foregoing.
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(i)
|
Certain
Contingencies and Limitations .
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(1)
|
Notwithstanding
anything herein to the contrary, Executive may lose his rights to
the Severance Package or the Change in Control Benefits pursuant to
the Agreement re Specified Acts.
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(2)
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As of the date of any termination
of employment as a result of which Executive would be entitled to
either (i) the Severance Package or (ii) the Change in
Control Benefits, the Company shall calculate the Total Equity
Value, and for each Dollar by which the Total Equity Value exceeds
$4.0 million, the amount of cash severance otherwise payable to
Executive as part of the Severance Package or Change in Control
Benefits will be reduced by one Dollar, with the total amount of
such reductions spread evenly over the term that such cash
severance would otherwise be payable. In addition, as of the date
of any termination of employment as a result of which Executive
would be entitled to the Severance Package (but not as a result of
which Executive would be entitled to Change in Control Benefits),
the Company shall calculate the Vested Equity Value, and for each
Dollar by which the Vested Equity Value exceeds $4.0 million, the
accelerated vesting of the Initial Grants or other stock options,
restricted stock or other equity-based awards that would otherwise
occur as a part of the Severance Package or pursuant to any plan or
agreement governing such awards will be reduced by one Dollar in
value, with such reductions coming first from stock options and
then from restricted stock and then from other awards, and with
such reductions measured by the gross spread on options that would
otherwise accelerate and the gross value of shares of restricted
stock or other awards that would otherwise accelerate. For these
purposes, “ Vested Equity Value ” means
(i) the value of vested restricted stock and other vested
awards (other than stock options) owned beneficially by Executive,
plus (ii) the spread on vested stock options owned
beneficially by Executive, plus (iii) the gross proceeds
received by Executive or his transferee from sales of restricted
stock and payment of other awards (other than stock options) in the
four-year period ending on the date of
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termination of employment, plus
(iv) the amount by which gross proceeds from sales by
Executive or his transferee, in the four-year period ending on the
date of termination of employment, of shares obtained upon exercise
of stock options exceeded the exercise price thereof, plus
(v) the amount by which the value of shares obtained upon
exercise of stock options and still beneficially owned by Executive
or his transferee exceeds the exercise price paid for those shares.
“ Total Equity Value ” means Vested Equity Value
plus (i) the value of restricted stock and other awards (other
than stock options) that would vest as a part of Severance Package
or Change in Control Benefits, plus (ii) the spread on stock
options that would vest as a part of Severance Package or Change in
Control Benefits, calculated as the aggregate of the amount by
which the value of a share of stock issuable upon exercise of each
stock option vesting as part of the Severance Package or Change in
Control Benefits exceeds the exercise price payable therefor.
Measures of value of stock options, restricted stock and other
awards will be taken at fair market value on the date of
termination of employment.
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(3)
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If any Change
in Control occurs within 365 days following the date of this
Agreement, or a definitive agreement for a Change in Control is
signed within 365 days following the date of this Agreement and
pursuant to that definitive agreement a Change in Control is
subsequently consummated within 180 days following the execution
thereof, and in connection with that Change in Control a Qualifying
Termination occurs so that Executive would be entitled to the
Change in Control Benefits, then notwithstanding any other
provision of this Agreement or any other agreement between
Executive and the Company or any plan pursuant to which equity
awards are made to Executive, the Total Realization shall not
exceed the Special Limit. If the Total Realization would otherwise
exceed the Special Limit, then the Change in Control Benefits other
than continuation of insurance benefits shall be reduced to the
extent necessary to limit the Total Realization to the Special
Limit, first by reduction of the continuation of salary, then if
necessary by reduction of the continuation of bonus, then if
necessary by reduction of acceleration of vesting of stock options,
then if necessary by reduction of acceleration of vesting of
restricted stock, and finally if necessary by reduction of vesting
of any other awards. However, if the Total Realization exceeds the
Special limit without any Change in Control Benefits, the Executive
will not be required to make any payment to the Company in respect
of that excess. For these purposes, (i) “ Total
Realization ” means the sum of the Total Equity Value
plus all cash payable as part of the Change in Control Benefits
(but excluding the value of continuation of insurance benefits);
(ii) “ Special Limit ” means $5.0 million;
and (iii) the value of the Change in Control Benefits shall be
the gross amount of salary continuation and bonus continuation, the
gross spread on stock options that would vest as a part of the
Change in Control Benefits, and the gross value of restricted stock
and other awards (other than stock options) that would vest as a
part of the Change in Control Benefits. Measures of value of stock
options, restricted stock and other awards will be taken at fair
market value on the date of termination of employment.
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13
Section 7
- Gross-up Payments
.
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(a)
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If Executive
becomes obligated to pay any excise tax on excess parachute
payments under Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”) or any similar or
successor law or regulation, whether as a result of benefits
provided to Executive under this Agreement or another agreement by
or plan of the Company, the Company shall pay an additional amount
(the “ Gross-Up Payment ”) to Executive at the
time specified in the following paragraph. The Gross-Up Payment
shall be equal to the amount necessary so that the net amount
retained by Executive, after subtracting the parachute excise tax
imposed by Section 4999 of the Code or any successor statute
then in effect (the “ Excise Tax ”), and after
also subtracting all federal, state or local income tax, FICA tax
and Excise Tax on the Gross-Up Payment, shall be equal to the net
amount Executive would have retained if no Excise Tax had been
imposed and no Gross-Up Payment had been paid. The amount of the
Gross-Up Payment shall be determined in good faith by independent
accountants or tax counsel selected by the Company and acceptable
to Executive, who shall apply the following assumptions:
(i) Executive shall be treated as paying federal income taxes
at the highest marginal rate in the calendar year in which the
Gross-Up Payment is made, and (ii) Executive shall be treated
as paying state and local income taxes at the highest marginal
rate(s) in the calendar year in which the Gross-Up Payment is made
in the locality of Executive’s residence as of the effective
date of Executive’s termination or resignation, net of the
maximum reduction in federal income taxes that could be obtained
from deducting those state and local taxes.
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(b)
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The Gross-Up
Payment shall be made within thirty days after the event that
triggered the Company’s obligation to provide the benefits
upon which taxes as described in this Section 7 are
payable (the “ Triggering Event ”), provided
that if the Gross-Up Payment cannot be determined within that time,
the Company shall pay Executive within that time an estimate,
determined in good faith by the Company, of the minimum amount of
the Gross-Up Payment and shall pay the remainder (plus interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount can be determined but in no event later than the
60th day after the Triggering Event. If the estimated payment is
more than the amount later determined to have been due, the excess
(plus interest at the rate provided in Section 1274(b)(2)(B)
of the Code) shall be repaid by Executive within five business days
after written demand.
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(c)
|
If the actual
Excise Tax imposed is less than the amount that was taken into
account in determining the amount of the Gross-Up Payment,
Executive shall repay at the time that the amount of the reduced
Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to that reduction (plus the portion of the
Gross-Up Payment attributable to the Excise Tax, FICA tax and
federal, state and local income tax imposed on the portion of the
Gross-Up Payment being repaid by Executive, to the extent the
repayment results in a reduction in or refund of the Excise Tax,
FICA tax or federal, state or local income tax), plus interest on
the amount of the repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. If the actual Excise Tax
imposed is more than the amount that was taken into account in
determining the amount of the Gross-Up Payment, the Company shall
make an additional gross-up payment in respect of such excess (plus
interest at the rate provided in Section 1274(b)(2)(B) of the
Code) at the time that the amount of the excess is finally
determined.
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14
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(d)
|
Notwithstanding
anything to the contrary herein, the parties agree that if the
payments under this Section 7 are treated as
nonqualified deferred compensation under Section 409A of the
Code, the parties will negotiate this section in good faith to
avoid adverse tax consequences to Executive.
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Section 8 - Other
Agreements .
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(a)
|
Non-Solicitation; Non-Disclosure, etc
. In consideration for the
provisions of this Agreement, among other things, Executive is
separately entering into a Confidentiality, Non-Disclosure and
Developments Agreements in the form of Exhibit E (the
“ Confidentiality Agreement ”).
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(b)
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No Violation of Other
Agreements . Executive
hereby represents that he is not bound by the terms of any
agreement with any previous employer or other party to refrain from
using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company or to
refrain from competing, directly or indirectly, with the business
of such previous employer or any other party, except for any such
agreement that could not reasonably be expected to compromise
Executive’s ability to perform his duties to the Company as
contemplated by this Agreement. Executive further represents that,
to his knowledge and belief, he has not breached any agreement not
to compete or any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in
trust prior to his employment with the Company, and Executive
acknowledges the Company’s desire and direction that he not
breach any such agreement in the performance of his services
hereunder. Accordingly, the Company agrees that any failure or
refusal of the Executive to perform his duties to the Company as
contemplated by this Agreement shall not constitute
“Cause” to the extent such failure or refusal is
attributable to the Executive’s compliance with any agreement
to keep in confidence proprietary information, knowledge or data
acquired by him in confidence or in trust prior to his employment
with the Company. Without limiting the foregoing, Executive has
provided to Eclipsys an executed copy of an Agreement Respecting
Non-disclosure, Non-competition and Non-solicitation with his
immediately preceding employer. Executive represents that this
agreement is the only agreement he has entered into with his
immediately preceding employer and the only such restrictive
agreement in effect with any prior employer. Executive acknowledges
that under the terms of that agreement, he is required to maintain
certain confidential information, which covenant he shall honor in
his employment with the Company. In connection with any new duties
he undertakes for Eclipsys, Executive will use his best efforts to
maintain such confidentiality and notify Eclipsys when, in his
judgment, he believes that any assigned task might cause a breach
of such covenants. If Executive’s immediately preceding
employer brings a claim against him or attempts to enjoin him from
performing or continuing his duties to Eclipsys, in either case
based upon an assertion of, or protection of, confidential
information or trade secrets (any such claim or attempt referred to
in this paragraph as an “Action”), then the Company
will provide at its expense a good faith defense to Executive in
the Action, which the Company shall direct and control, provided
that Executive shall cooperate in such defense as reasonable and
appropriate in an effort to minimize expense and delay, and
provided further that the obligation of the Company to provide a
defense shall not extend beyond the earlier of June 1, 2007 or
the date that a court of competent jurisdiction
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15
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finds that Executive has violated
any legal or contractual obligation to any prior employer. The
Company will not seek to terminate Executive’s employment
with Cause solely as a result of an Action, nor shall Company deem
the commencement of an Action to be a breach by Executive of this
Agreement, and Company will not seek to recover from Executive any
damages to Company resulting from any Action, provided that this
will not limit the Company’s rights if Executive violates any
legal or contractual obligation to any prior employer. If as a
result of an Action a court of competent jurisdiction imposes a
temporary or permanent injunction that prevents Executive from
fulfilling his obligations under this Agreement, then the Company
will, as part of the defense it is obligated to provide pursuant to
this paragraph, undertake to have that injunction lifted, provided
that if such injunction remains in effect for more than 180 days,
then the Company may cease its defense of Executive and terminate
Executive’s employment for Cause and without any obligation
to pay any severance benefits, provided that if there has at the
time of termination of employment been no finding by a court of
competent jurisdiction that Executive has violated any legal or
contractual obligation to any prior employer, then the Company will
pay to Executive any portion of the first year guaranteed bonus
that may remain unpaid at the time of termination. If as a result
of an Action a court of competent jurisdiction does not enjoin
Executive from fulfilling his obligations under this Agreement but
imposes limitations on Executive’s work with the Company:
(i) if Executive can substantially fulfill his obligations
under this Agreement while complying with those limitations, then
such limitations will not constitute a basis for termination of
Executive’s employment by the Company with Cause or by
Executive with Good Reason and Executive and the Company will
cooperate in good faith to structure Executive’s role to
comply with those limitations; and (ii) if Executive cannot
substantially fulfill his obligations under this Agreement while
complying with those limitations, then the Company may cease its
defense of Executive and terminate Executive’s employment for
Cause and without any obligation to pay any severance benefits,
provided that if there has at the time of termination of employment
been no finding by a court of competent jurisdiction that Executive
has violated any legal or contractual obligation to any prior
employer, then the Company will pay to Executive any portion of the
first year guaranteed bonus that may remain unpaid at the time of
termination
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(c)
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Headquarters and Location and
Travel . Executive
currently resides in Atlanta, Georgia. The Company does not have a
conventional headquarters due to distribution of its executive
management. The Board and CEO will consider establishing a
conventional headquarters, and if the Company establishes a
conventional headquarters and the CEO or the Board determines that
Executive’s relocation to that headquarters would be in the
Company’s best interests, then Executive may be required to
relocate his residence to the area in which the headquarters is
located. If Executive is required to relocate, the Company shall
provide him with executive-level relocation benefits, consistent
with Company policies, designed to defray all reasonable
out-of-pocket costs of the relocation incurred by Executive,
provided that Executive will not be entitled to any adjustment to
his compensation to defray any increase in his cost of living
resulting from relocation. If Executive does not wish to relocate,
and consequently he resigns or the Company terminates his
employment, he will not be entitled to any severance benefits
(including without limitation the Severance Package or the Change
in Control Benefit, each as defined in Article 6 ), except
that if this occurs before his first-year guaranteed bonus is paid
in full then he will be entitled to any portions of his guaranteed
first
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16
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year bonus that have not been
paid. Whether or not Executive relocates his residence, Executive
must spend significant time traveling, as is consistent with his
role and necessary or appropriate to execute fully his
responsibilities.
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(d)
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Registration . Executive will use reasonable efforts to
utilize the safe harbor provided by Rule 144 under the Securities
Act of 1933 to exempt from registration sales by Executive of
shares derived from the Initial Grants. If and to the extent that
Executive cannot implement and execute a plan to achieve reasonable
liquidity from sales of shares derived from the Initial Grants
pursuant to Rule 144, the Company will use reasonable efforts to
provide an effective registration statement to cover sales by
Executive of such shares, provided that Executive and the Company
will cooperate to determine timing and duration for such
registration that is not adverse to the Company’s
interests.
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(e)
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Conduct . Executive will observe the Company’s
policies, conduct himself in a manner befitting an executive
officer of a public company, and provide reasonable cooperation
with legal authorities in any investigation or proceeding involving
the Company or his service to the Company, to the extent legally
required or reasonably directed by the Board.
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Section 9
- Notices
. All notices or communications
hereunder shall be in writing, addressed as follows, or otherwise
as directed in a written notice from the party wishing to make
changes hereto:
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To the
Company:
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Eclipsys
Corporation
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ATTN:
CEO
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Address,
Telephone and Facsimile numbers then listed in the Company’s
directory
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with a copy
to:
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the
Company’s General Counsel
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Address,
Telephone and Facsimile numbers then listed in the Company’s
directory
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To the Executive:
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To the address,
telephone number and facsimile number then reflected in the
Company’s payroll records
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With a copy
to:
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J. Morrow Otis,
Esq.
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Otis Canli & Duckworth, LLP
180 Montgomery St., Ste. 1240
San Francisco, CA 94104
Telephone (415) 362-4442
Facsimile (415) 362-7332
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Any such notice or
communication shall be delivered by hand or sent certified or
registered mail, return receipt requested, postage prepaid, or by
reputable overnight courier addressed as above (or to such other
address as such party may designate in a notice duly delivered as
described above), and the time of actual delivery, if delivered by
hand, the next business day, if sent by overnight courier, or the
third (3 rd ) business day after the
actual date of mailing, if sent by mail, shall constitute the time
at which notice was given.
17
Section 10
- Severability
. If any part of this Agreement as
applied to any party or to any circumstance is adjudged by a court
of competent jurisdiction to be invalid, illegal, void or
unenforceable for any reason, then (i) the invalidity of that
part shall in no way affect (to the maximum extent permissible by
law) the application of such part under circumstances different
from those adjudicated by the court, the application of any other
part of this Agreement, or the enforceability or invalidity of this
Agreement as a whole; and (ii) such part shall be deemed
amended to the extent necessary to conform to applicable law so as
to be valid, legal, effective and enforceable or, if such part
cannot be so amended without materially altering the intention of
the parties, then such part will be stricken and the remainder of
this Agreement shall continue in full force and effect.
Section 11
- Assignment and
Assumption . This
Agreement shall be binding upon and inure to the benefit of the
heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any
rights or obligations hereunder shall be assignable or otherwise
subject to hypothecation by Executive (except by will or by
operation of the laws of intestate succession) or by the Company,
except that the Company may assign this Agreement to any successor
(whether by merger, purchase or otherwise) to all or substantially
all of the stock, assets or business of the Company and shall cause
such successor to assume this Agreement, which assumption shall not
relieve the Company of its obligations to Executive hereunder
unless so agreed in writing by Executive. The Company’s
successor, or the Company’s assignee following such an
assignment, shall have all the rights of the Company hereunder, and
Executive’s obligations hereunder will be to the successor or
assignee thereafter.
Section 12
- Amendment
. This Agreement may only be
amended by written agreement of the parties hereto.
Section 13
- Survivorship . The
respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary
to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the
survivorship provisions of any other section of this
Agreement.
Section 14
- Governing Law; Venue and
Jurisdiction . This
Agreement shall be governed by and construed under and in
accordance with the laws of the State of Florida (without reference
to the conflicts of law provisions thereof). Subject to the
following sentence, if any judicial or administrative proceeding or
claim relating to or pertaining to this Agreement is initiated by
either party hereto, such proceeding or claim shall and must be
filed in a state or federal court located in Palm Beach County or
Miami-Dade County, Florida, and the Company and Executive each
consents to the jurisdiction of such a court. If Executive brings
any judicial or administrative proceeding or claim relating to or
pertaining to his right to receive payment or provision of
compensation (including without limitation salary, bonuses or
equity-based awards) or benefits from the Company, other than a
claim arising in connection with the Company’s enforcement of
its rights under the Agreement re Specified Acts, such proceeding
or claim may, in Executive’s discretion, be filed in a state
or federal court located in district in which Executive then
resides, and if so filed the Company and the Executive each
consents to the jurisdiction of such a court, which shall be the
exclusive jurisdiction therefor, and the Company shall not contest
such jurisdiction or seek to remove the matter to any other
jurisdiction.
18
Section 15
- Prior Agreement;
Coordination of Benefits . This Agreement including the exhibits hereto,
and the indemnity provisions of the Company’s charter to the
extent applicable, contain the entire understanding between the
parties hereto regarding terms of Executive’s employment
(other than any agreements that may be entered into after the date
hereof between the Company and Executive) and supersedes in all
respects any prior or other employment agreement or understanding,
both written and oral. In the event of a conflict between this
Agreement and any policy or plan that applies generally to
employees or executives of the Company regarding compensation,
employee benefits, performance bonuses, healthcare, retirement,
severance, change in control, relocation, or equity programs such
as Restricted Stock or Option awards, this Agreement shall control
unless the generally applicable plan or program would provide a
greater benefit or award to Executive, in which case the terms of
such plan or program shall control over this Agreement.
Section 16
- Withholding
. The Company shall be entitled to
withhold from payment any amount of withholding required by
law.
Section 17
- Section Headings and
Construction . The
headings of sections in this Agreement are provided for convenience
only and will not effect its construction or interpretation. All
references to “Sections” or “Exhibits”
refer to the corresponding section or exhibit of this Agreement
unless otherwise specified. All words used in this Agreement will
be construed to be of such gender or number as circumstances
require.
Section 18
- Counterparts
. This Agreement may be executed in
one (1) or more counterparts, each of which will be deemed to
be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same
Agreement.
Section 19
-
Acknowledgement .
Executive states and represents that he has had an opportunity to
fully discuss and review the terms of this Agreement including its
exhibits with an attorney. Executive further states and represents
that he has carefully read this Agreement including its exhibits,
understands the contents herein, freely and voluntarily assents to
all of the terms and conditions hereof, and signs his name of his
own free act.
Section 20
- Attorneys’
Fees . In the event
that either party brings a legal action against the other in
connection with the employment relationship between them, including
without limitation an action to enforce this Agreement or any of
the exhibits hereto, the party, if either, that is judicially
determined to be the prevailing party in such action shall be
entitled to recover his or its reasonable attorney’s fees and
legal costs incurred in connection with such action.
19
Intending to be immediately legally
bound hereby, the parties have executed this Agreement on the date
beside their respective signatures.
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Date:
December 22, 2005
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Date:
December 22, 2005
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ECLIPSYS
CORPORATION
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By:
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Name:
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Brian W.
Copple
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John E.
Deady
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Title:
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Secretary
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20
EXHIBIT A-1 TO EMPLOYMENT
AGREEMENT
Notice of Grant of Stock
Option
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Notice of Grant of Stock
Option
Employee
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Eclipsys Corporation
ID: 65-0632092
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John E. Deady
“StreetAddress“
“CityStateZip“
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Option Number:
“Option Number“
Plan: 2005 Inducement Grant
Stock Incentive Plan
Employee ID:
“IDNumber“
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Effective January
, 2006 (the “ Grant
Date ”), you have been granted a non-statutory option to
buy 400,000 shares of common stock of Eclipsys Corporation (the
“ Company ”) at an exercise price of $
per share.
This option will vest and become exercisable with respect to 20% of
the underlying shares on February 1, 2007 (the “
First Vesting Date ”); and (ii) with respect to
the remaining 80% of the underlying shares in 48 equal consecutive
monthly installments on the first day of each calendar month
following the First Vesting Date, provided that vesting will not
occur if you are not employed with the Company (as defined in the
Plan) (or serving as a member of the Company’s Board of
Directors) on the scheduled vesting date.
The option is granted under and
governed by the terms and conditions of this Notice, the
Company’s 2005 Inducement Grant Stock Incentive Plan (the
“ Plan ”), the Employment Agreement between you
and the Company dated January ,
2006 (the “ Employment Agreement ”), the
Agreement re Specified Acts between you and the Company dated
January , 2006 (the “
Agreement re Specified Acts ”), and any other
applicable written agreement between you and the Company. The
agreements referenced in this paragraph are referred to in this
Notice as the “ Applicable Agreements .” By your
acceptance of this option, and also by its exercise, you agree to
such terms and conditions and confirm that your receipt and
exercise of this option is voluntary.
Unless otherwise provided in the
Plan or the Applicable Agreements , (i) no vesting will occur
before the First Vesting Date; (ii) vesting will occur only on
scheduled vesting dates, without any ratable vesting for periods of
time between vesting dates; (iii) notwithstanding the
foregoing, vesting will be suspended during the portion of any
leave of absence (LOA) you have in excess of 60 days, and if you
return to work following such a LOA, any scheduled vesting dates
that passed during the suspension of vesting will be added to the
end of the original vesting schedule, with vesting on each such
additional vesting date in the amount of shares not vested on the
corresponding vesting date during the period of the suspension ;
(iv) the Company may in its discretion cancel this option in
whole or part, whether or not vested, and whether or not your
employment is continuing, if you breach in any material respect any
material contractual obligation or legal duty to the Company and
fail to cure that breach within 30 days of receipt of written
notice thereof from the Company, provided that a final
determination that such a breach has occurred and not been cured
within the 30 day notice period must be made by the Company’s
Board of Directors after giving you an opportunity to be heard by
the Board, and provided further than a failure of the Company to
assert any breach shall not waive any subsequent breach; and
(v) this option and the underlying shares are subject to the
Agreement re Specified Acts, which may result in loss of some of
all of the benefit of this grant.
Except as otherwise provided in the
Plan or the Applicable Agreements, any termination of your
employment for any reason or no reason will result in cessation of
vesting and lapse of the option to the extent not yet vested at the
time of termination (unless you are then or are becoming a member
of the Board of Directors of the Company), and vested options may
be exercised only for a period of 90 days following termination of
your employment (or Board service if you are a member of the
Company’s Board of Directors at the time of termination of
your employment) (or 365 days following termination if your
employment ends as a result of death).
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Unless otherwise permitted by the
Company’s Board of Directors, you must pay the exercise price
and meet any tax obligations in cash. The option expires on the
tenth anniversary of the Grant Date or such earlier date as the
Plan provides.
For purposes of this option, the
definition of “Good Reason” under the Plan shall be the
same as the definition of Good Reason in the Employment Agreement,
notwithstanding any Plan provision to the contrary.
The Plan, the Company’s Annual
Report on Form 10-K, and other filings made by the Company with the
Securities and Exchange Commission are available for your review on
the Company’s internal employee web site. You may also obtain
paper copies of these documents upon request to the Company’s
HR department.
No representations or promises are
made regarding the duration of your employment or service, vesting
of the option, the value of the Company’s stock or this
option, or the Company’s prospects. The Company provides no
advice regarding tax consequences or your handling of this option;
you agree to rely only upon your own personal advisors.
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ECLIPSYS
CORPORATION
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By:
Name
Title
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EXHIBIT A-2 TO EMPLOYMENT
AGREEMENT
Notice of Grant of Restricted
Stock
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Notice of Grant of Restricted
Stock
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Eclipsys Corporation
ID: 65-0632092
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Employee
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John E. Deady
[address of
recipient]
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Grant Number:
_________________
Plan:
2005 Inducement Grant Stock Incentive
Plan
Employee ID:
______________________
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Effective January
, 2006 (the “ Grant
Date ”), you have been granted the right to purchase, at
a price of $0.01 per share, 100,000 shares (the “
Shares ” ) of common stock of Eclipsys Corporation
(the “ Company ”). You must pay the aggregate
purchase price for the Shares to the Company by cash, check or
other method acceptable to the Company within 30 days of the date
of this Notice or the Company may cancel the grant.
This notice is a “ Grant
Notice ” as described in the Restricted Stock Agreement
between you and the Company dated January
, 2006 (the “ Restricted
Stock Agreement ” ). This grant is made under, and this
grant and the Shares are subject to and governed by the terms and
conditions of, this Notice, the Restricted Stock Agreement
including the restrictions on transfer set forth therein, the
Company’s 2005 Inducement Grant Stock Incentive Plan (the
“ Plan ” ), the Employment Agreement between you
and the Company dated January ,
2006 (the “ Employment Agreement ”), the
Agreement re Specified Acts between you and the Company dated
January , 2006 (the “
Agreement re Specified Acts ” ), and any other
applicable written agreement between you and the Company. The
agreements referenced in this paragraph are referred to in this
Notice as the “ Applicable Agreements .” By your
acceptance and payment for the Shares, you agree to such terms and
conditions and confirm that your receipt of and payment for the
Shares is voluntary.
For purposes of this Notice, “
Vesting Date ” means each June 1 and
December 1. Subject to the Applicable Agreements, 26.666% of
the total number of Shares shall vest on June 1, 2007 (the
“ First Vesting Date ”), and an additional 10%
of the total number of Shares shall vest on each of the seven
Vesting Dates next succeeding the First Vesting Date, and the final
3.334% of the total number of Shares shall vest on June 1,
2011.
Unless otherwise provided in the
Plan or the Applicable Agreements, (i) no Shares will vest
before the First Vesting Date; (ii) vesting of Shares will
occur only on Vesting Dates, without any ratable vesting for
periods of time between Vesting Dates; (iii) notwithstanding
the foregoing, vesting will be suspended during the portion of any
leave of absence (LOA) you have in excess of 60 days, and if you
return to work following such a LOA, any Vesting Dates that passed
during the suspension of vesting will be added to the end of the
original vesting schedule, with vesting on each such additional
Vesting Date in the amount of shares not vested on the
corresponding Vesting Date during the period of the suspension,
contingent upon your continued employment; (iv) the Company
may in its discretion cancel this grant in whole or part, whether
or not vested, and whether or not your employment is continuing,
and repurchase the cancelled Shares you own on the date of the
breach (whether or not vested) at the purchase price you paid, if
you breach in any material respect any material contractual
obligation or legal duty to the Company and fail to cure that
breach within 30 days of receipt of written notice thereof from the
Company, provided that a final determination that such a breach has
occurred and not been cured within the 30 day notice period must be
made by the Company’s
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Board of Directors after giving you an
opportunity to be heard by the Board, and provided further that a
failure of the Company to assert any breach shall not waive any
subsequent breach; and (v) the Shares are subject to the
Agreement re Specified Acts, which may result in loss of some of
all of the benefit of this grant.
Except as otherwise provided in the
Plan or the Applicable Agreements, any termination of your
employment for any reason or no reason will result in cessation of
vesting, cancellation of this grant, and forfeiture to the Company
of any Shares not vested at the time your employment terminates
(unless you are then or are becoming a member of the Board of
Directors of the Company).
For purposes of this grant and the
Shares, the definition of Good Reason under the Plan shall be the
same as the definition of Good Reason in the Employment Agreement,
notwithstanding any Plan provision to the contrary.
The Plan, the Company’s Annual
Report on Form 10-K, and other filings made by the Company with the
Securities and Exchange Commission are available for your review on
the Company’s internal employee web site. You may also obtain
paper copies of these documents upon request to the Company’s
HR department.
No representations or promises are
made regarding the duration of your employment or service, vesting
of the Shares, the value of the Company’s stock or this
grant, or the Company’s prospects. The Company provides no
advice regarding tax consequences or your handling of the Shares;
you agree to rely only upon your own personal advisors.
ECLIPSYS
CORPORATION
By:
Name & Title
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EXHIBIT A-3 TO EMPLOYMENT
AGREEMENT
Restricted Stock
Agreement
RESTRICTED STOCK
AGREEMENT
This Restricted Stock Agreement
(this “Agreement ”) is made as of January
, 2006 by Eclipsys Corporation, a
Delaware corporation (“ Eclipsys ”) and John E.
Deady (“ Recipient ”) to govern awards of
restricted stock by Eclipsys to Recipient made from time to time
pursuant to Grant Notices (as defined below) that reference this
Agreement as governing the awards reflected therein.
1. Grants of Restricted
Stock. From time to time
in its discretion, Eclipsys may grant and issue to Recipient shares
of Eclipsys’s common stock that are subject to the
restrictions described in, and other provisions of, this Agreement
(the “ Restricted Stock ”). No grants of
Restricted Stock are promised by this Agreement. Each grant of
Restricted Stock will be documented by a written notice delivered
by Eclipsys to Recipient (a “Grant Notice” )
stating: (i) that the Restricted Stock described therein is
subject to this Agreement, (ii) the number of shares of
Restricted Stock subject to the grant, (iii) the schedule and
any other conditions for vesting of the Restricted Stock, and
(iv) such other terms and conditions applicable to the
Restricted Stock as Eclipsys may determine. As a condition to each
grant of Restricted Stock, Recipient is required to pay to Eclipsys
$.01 by cash or check for each share of Restricted Stock (the
“ Acquisition Consideration ”).
2. Governing Plan.
The Restricted Stock shall be
granted pursuant to and (except as specifically set forth herein or
in another written agreement between Eclipsys and Recipient)
subject in all respects to the applicable provisions of the
Eclipsys Corporation 2005 Stock Incentive Plan (or, for inducement
grants made in connection with commencement of Recipient’s
employment, the Eclipsys Corporation 2005 Inducement Grant Stock
Incentive Plan) or its successor plan (the “ Plan
”), which are incorporated herein by reference. Terms not
otherwise defined in this Agreement have the meanings ascribed to
them in the Plan.
3. Restrictions on the Restricted
Stock.
(a) Limitation on Transfer .
No share of Restricted Stock (including any shares received by
Recipient with respect to shares of Restricted Stock as a result of
stock dividends, stock splits or any other form of recapitalization
or a similar transaction affecting Eclipsys’s securities
without receipt of consideration) may be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of,
alienated or encumbered unless and until the conditions to vesting
of that share set forth in the Grant Notice are met and any
additional requirements or restrictions contained in this
Agreement, the Grant Notice or the Plan have been satisfied,
terminated or expressly waived by Eclipsys in writing. However,
this will not prohibit nominal transfers of Restricted Stock for
estate planning purposes that do not effect a change in beneficial
ownership, if the transferee agrees in writing to the terms of this
Agreement. Satisfaction of the conditions to vesting set forth in
the Grant Notice and any additional requirements or restrictions
contained in this Agreement, and the resulting removal of the
restrictions imposed hereunder from particular shares of Restricted
Stock, is also referred to as “vesting” of those shares
and shares from which the restrictions have been removed are
referred to as “vested.”
(b) Cancellation of Restricted
Stock . Notwithstanding Section 3(a) , but subject
to the Plan, any applicable Grant Notice, and any other separate
written agreement between Eclipsys and Recipient, if any
Cancellation Event occurs, then (i) vesting of any shares of
Restricted Stock originally scheduled to vest after the time that
Cancellation Event occurred will cease; (ii) any grant insofar
as it relates to Restricted Stock that has not yet vested will be
cancelled; (iii) unvested Restricted Stock will be forfeited
to Eclipsys and all rights of Recipient as a stockholder of such
shares will cease; (iv) Eclipsys shall be obligated to pay to
Recipient, by cash or equivalent or by cancellation of amounts owed
by Recipient to Eclipsys or any Affiliate, the Acquisition
Consideration per share
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previously received from Recipient in respect of
all shares of Restricted Stock that are forfeited to Eclipsys; and
(v) Recipient shall have no rights to or in respect of shares
of Restricted Stock that are forfeited to Eclipsys except the right
to receive the Acquisition Consideration in respect thereof. In
case of a Cancellation Event, any partially vested share will be
rounded up to the nearest whole share for purpo
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