Exhibit 10.1
EXECUTIVE EMPLOYMENT AND
SEVERANCE AGREEMENT
This Executive
Employment and Severance Agreement (the “Agreement”) is
entered into between David
St. Clair (“Executive”), and
MEDecision, Inc. (the “Company”).
WHEREAS , the
Executive was previously employed by the Company in a key employee
capacity prior to the acquisition of MEDecision by Health Care
Service Corporation, a Mutual Legal Reserve Company (the
“Merger”); and
WHEREAS , the
Executive’s continued services to the Company are valuable to
the conduct of the Company’s business; and
WHEREAS , the
Company and Executive desire to specify the terms and conditions on
which Executive will continue employment on and after the date of
the Merger, and under which Executive will receive severance in the
event that Executive separates from service with the Company;
NOW, THEREFORE ,
for good and valuable consideration, the parties agree as
follows:
1. Effective Date; Term . This
Agreement shall become effective on the date of the Merger and
shall continue unless terminated by agreement of the parties or as
otherwise provided herein. In the event the Merger does not
close, this Agreement shall have no force or effect.
2. Definitions . For purposes of
this Agreement, the following terms shall have the meanings set
forth below:
(a)
“Accrued Benefits” shall mean the following
amounts, payable as described herein: (i) all base salary for
the time period ending with the Termination Date;
(ii) reimbursement for any and all monies advanced in
connection with the Executive’s employment for reasonable and
necessary expenses incurred by the Executive on behalf of the
Company for the time period ending with the Termination Date;
(iii) any and all other cash earned through the Termination
Date and deferred at the election of the Executive or pursuant to
any deferred compensation plan then in effect; and (iv) all
other payments and benefits to which the Executive (or in the event
of the Executive’s death, the Executive’s surviving
spouse or other beneficiary) is entitled on the Termination Date
under the terms of any benefit plan of the Company, excluding
severance payments under any Company severance policy, practice or
agreement in effect on the Termination Date. Payment of
Accrued Benefits shall be made promptly in accordance with the
Company’s prevailing practice with respect to clauses
(i) and (ii) or, with respect to clauses (iii) and
(iv), pursuant to the terms of the benefit plan or practice
establishing such benefits.
(b)
“ Base Salary ” shall mean the Executive’s
annual base salary with the Company as in effect from time to
time.
(c)
“ Board ” shall mean the Board of Directors of
the Company or a committee of such Board authorized to act on its
behalf in certain circumstances, including the Compensation
Committee of the Board.
(d)
“ Business ” shall mean the provision of
software, services and clinical content to health care payer
organizations to increase administrative efficiency and improve the
overall quality and affordability of health care.
(e)
“ Cause ” shall mean a good faith finding by the
Board that Executive has (i) neglected, or refused to perform
the lawful employment duties related to his position or as from
time to time assigned to him (other than due to Disability);
(ii) committed any willful, intentional, or grossly negligent
act having the effect of materially injuring the interest,
business, or reputation of the Company; (iii) violated or
failed to comply in any material respect with the Company’s
published rules, regulations, or policies, as in effect or amended
from time to time; (iv) committed an act constituting a felony
or misdemeanor involving moral turpitude, fraud, theft, or
dishonesty; (v) misappropriated or embezzled any property of
the Company (whether or not an act constituting a felony or
misdemeanor); or (vi) breached any material provision of this
Agreement or any other applicable confidentiality, non-compete,
non-solicit, general release, covenant not-to-sue, or other
agreement with the Company.
(f)
“ Change in Control ” shall mean the occurrence
of any of the following in a transaction or series of related
transactions:
(i)
any “person” (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becoming a “beneficial owner”
(as defined in Rule 13d-3 under said Act), directly or
indirectly, or securities of the Company representing more than
50% of the voting power of the Company’s then
outstanding securities;
(ii)
a consolidation, share exchange, reorganization or merger of the
Company resulting in the shareholders of the Company immediately
prior to such event not owning at least a majority of the voting
power of the resulting entity’s stock outstanding immediately
following such event;
(iii)
the sale or other disposition of all or substantially all the
assets of the Company, other than in connection with a state or
federal bankruptcy proceeding; or
(iv)
any similar event deemed by the Board to constitute a Change in
Control.
A transaction, or
series of related transactions, shall not constitute a Change in
Control if such transaction results in the Company, any successor
to the Company, or any successor to the Company’s business,
being controlled, directly or indirectly, by the same person or
persons who controlled the Company, directly or indirectly,
immediately before such transaction.
(g)
“COBRA” shall mean the provisions of Code
Section 4980B.
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(h)
“Code” shall mean the Internal Revenue Code of
1986, as amended, as interpreted by rules and regulations
issued pursuant thereto, all as amended and in effect from time to
time. Any reference to a specific provision of the Code shall
be deemed to include reference to any successor provision
thereto.
(i)
“ Competitive Business Activity ” shall mean any
business activity (other than the Business) in which the Company or
any affiliate of the Company is actively engaged at the time of
Executive’s Termination.
(j)
“ Disability ” shall mean, subject to applicable
law, any medically determinable physical or mental impairment that
(i) renders Executive unable to perform the duties of his
position with the Company and (ii) is expected to last for a
continuous period of not less than six months, all as certified by
a physician reasonably acceptable to the Company or its
Successor.
(k)
“ ERISA Affiliate ” means with respect to
Company each corporation or trade or business considered to be a
single employer with Company under Code Sections 414(b) or
414(c).
(l)
“ General Release ” shall mean a release of all
claims that Executive, and anyone who may succeed to any claims of
Executive, has or may have against the Company, its board of
directors, any of its subsidiaries, affiliates or parent, or any of
their employees, directors, officers, employees, agents, plan
sponsors, administrators, successors (including the Successor),
fiduciaries, or attorneys, including but not limited to claims
arising out of Executive’s employment with, and termination
of employment from, the Company, but excluding claims for
(i) severance payments and benefits due pursuant to this
Agreement and (ii) any salary, bonus, equity, accrued
vacation, expense reimbursement and other ordinary payments or
benefits earned or otherwise due with respect to the period prior
to the date of any Termination.
(m)
“ Good Reason ” shall mean the occurrence of any
of the following without the consent of Executive: (i) a
material diminution in the Executive’s Base Salary;
(ii) a material diminution in the Executive’s authority,
duties or responsibilities; (iii) a material diminution in the
authority, duties or responsibilities of the supervisor to whom the
Executive is required to report; (iv) a material change in the
geographic location at which the Executive must perform services;
or (v) a material breach by the Company of any provisions of
this Agreement.
(n)
“ Termination ” means a termination of
Executive’s employment with Company and all its ERISA
Affiliates for any reason, provided that such termination of
employment qualifies as a separation from service for purposes of
Code Section 409A and the default rules of Treas.
Reg. §l.409A-1(h).
(o)
“ Severance Payment ” shall mean one
(1) year of the Executive’s Base Salary at the time of
the Termination Date; provided, that if Executive’s
Termination Date occurs within eighteen (18) months following a
Change in Control (not including the Merger for this purpose), the
Severance Payment shall mean two (2) years of the
Executive’s Base Salary
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and any
reduction in Executive’s Base Salary since the date of the
Change in Control shall be ignored.
(p)
“ Successor ” shall mean the person to which
this Agreement is assigned upon a Sale of Business within the
meaning of Section 10.
(q)
“ Termination Date ” shall mean the date on
which Executive incurs a Termination, as further described in
Section 4.
3. Employment of Executive
(a)
Position .
(i)
Executive shall serve in the position of Chairman and Chief
Executive Officer in a full-time capacity. In such
position, Executive shall have such duties and authority as is
customarily associated with such position and shall have such other
titles and duties , consistent with Executive’s
position, as may be assigned from time to time by the Board and/or
Executive’s direct supervisor.
(ii)
Executive will devote Executive’s full business time and best
efforts to the performance of Executive’s duties hereunder
and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict or interfere
with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided
that nothing herein shall preclude Executive, subject to the prior
approval of the Board, from accepting appointment to or continue to
serve on any board of directors or trustees of any business
corporation or any charitable organization; further provided
in each case, and in the aggregate, that such activities do not
conflict or interfere with the performance of Executive’s
duties hereunder or conflict with Section 7.
(b)
Base Salary. The Company shall pay Executive a Base
Salary at the annual rate of $420,000 , payable in regular
installments in accordance with the Company’s usual payroll
practices. Executive shall be entitled to such increases in
Executive’s base salary, if any, as may be determined from
time to time by the Board.
(c)
Cash and Incentive Plans . Executive shall be entitled
to participate in such annual and/or long-term cash incentive plans
and programs adopted by the Company as are generally provided to
the senior executives of the Company from time to time. The
amounts, timing, and the terms and conditions of such awards shall
be subject to the terms of the plan under which such award is
made.
(d)
Employee Benefits . Executive shall be entitled to
participate in the Company’s employee benefit plans (other
than annual and/or long-term cash incentive programs, which are
addressed in subsection (c)) as in effect from time to time on the
same basis as those benefits are generally made available to other
senior executives of the Company.
(e)
Business Expenses . The reasonable business expenses
incurred by Executive in the performance of Executive’s
duties hereunder shall be reimbursed by the Company in accordance
with Company policies.
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(f)
Automobile . The Company will continue to provide
Executive with the use of an automobile (comparable to the
automobile provided to him immediately prior to the Merger) and
will continue to pay all fuel, insurance, maintenance and other
reasonable expenses incurred in connection with his use of that
automobile.
(g)
Paid Time Off
. Executive will be entitled to thirty (30) days
vacation time each year. Accruals and limitations of accruals
shall be consistent with the published policies of the
Company. Executive will also be entitled to other personal
time, holiday time, etc., in accordance with published policies of
the Company.
(h)
Other Perquisites . Executive shall be entitled to
receive other benefits and perquisites as are generally provided to
the senior executives of the Company from time to time.
4. Termination of Employment .
Executive’s employment with the Company will terminate during
the term of the Agreement, and this Agreement will terminate on the
date of such termination, as follows:
(a)
Executive’s employment will terminate upon Executive’s
death.
(b)
Executive’s employment will terminate, at the Company’s
election, upon the occurrence of the Executive’s Disability,
unless otherwise prohibited by law.
(c)
The Company may terminate Executive’s employment with or
without Cause (other than as a result of Disability as described
above) by providing written notice to Executive that indicates in
reasonable detail the facts and circumstances alleged to provide a
basis for such termination.
(d)
Executive may terminate his employment for or without Good Reason
by providing written notice of termination to the Company that
indicates in reasonable detail the facts and circumstances alleged
to provide a basis for such termination. If Executive is
alleging a termination for Good Reason, Executive must provide
written notice to the Company of the existence of the condition
constituting Good Reason
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