Exhibit 99.1
TRANSITION
AGREEMENT
THIS TRANSITION AGREEMENT (this
“AGREEMENT”) is entered into as of the 27th day of
September, 2005 by and between Lawrence P. English (“MR.
ENGLISH”), and QUADRAMED CORPORATION, a Delaware corporation
(the “COMPANY”).
WHEREAS, Mr. English was employed by the
Company as its Chief Executive Officer pursuant to the terms and
conditions of that certain Employment Agreement, dated
June 12, 2000 between the Company and Mr. English, as
amended by that certain amendment to Employment Agreement dated as
of September 20, 2001 (the “EMPLOYMENT
AGREEMENT”), and in connection with such employment,
Mr. English has received and continues to hold options to
purchase a total of 2,035,000 shares of Common Stock of the Company
as set forth on Schedule 1 hereto pursuant to various option
agreements between Mr. English and the Company (collectively,
the “OPTIONS”) and (ii) 825,000 restricted shares
of Common Stock of the Company as set forth on Schedule 2
hereto pursuant to certain stock issuance agreements by and between
Mr. English and the Company (collectively, the
“RESTRICTED SHARES”) .
WHEREAS, the Board of Directors of the Company
and Mr. English have agreed that it is in the best interests
of the parties for Mr. English to terminate his employment
with the Company and transition to an ongoing role with the Company
in an advisory capacity as a member of the Board of
Directors.
WHEREAS, such termination of
Mr. English’s employment constitutes an
“INVOLUNTARY TERMINATION” as defined in the Employment
Agreement.
WHEREAS, Mr. English and the Company wish
to enter into an agreement concerning his transition from
employment with the Company.
NOW, THEREFORE, in consideration of the mutual
promises contained in this Agreement, Mr. English and the
Company acknowledge and agree as follows:
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1.
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TERMINATION OF
EMPLOYMENT AGREEMENT. The parties hereto agree that
Mr. English’s employment with the Company as its Chief
Executive Officer is terminated effective as of October 17,
2005; provided, however that Mr. English shall remain as an
employee of the Company in the capacity of executive Chairman of
the Board of Directors at his current rate of compensation,
including salary and bonus through and in respect of the year ended
December 31, 2005 (the “Termination Date”). In
exchange for the releases, payments, benefits, and other agreements
of the Company set forth in this Agreement, Mr. English hereby
agrees that the Employment Agreement is hereby terminated and
canceled effective as of the Termination
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Date with no compensation, benefits,
damages, obligations or other payments owing to Mr. English
thereafter (other than as specifically set forth in this
Agreement).
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2.
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CONSIDERATION
TO MR. ENGLISH. The Company shall make the following payments and
provide the following additional benefits and consideration to
Mr. English, subject to Section 5 hereof.
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a.
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SEVERANCE
BENEFIT. As payment in full of its obligations under the Employment
Agreement to pay severance benefits upon an Involuntary
Termination, the Company will pay to Mr. English, an aggregate
cash amount equal to $1,312,000 in a single lump sum payment on or
before the Termination Date. The Company will continue for a period
of 12 months after the Termination Date, all group life insurance
benefits to which Mr. English is currently entitled pursuant
to his Employment Agreement.
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b.
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RESTRICTED
SHARES. Schedule 2 attached hereto accurately reflects all
restricted shares of the Company’s capital stock owned by
Mr. English as of the date of this Agreement. All restrictions
on transfer in respect of the Restricted Shares which shall not
have already lapsed shall be deemed to have lapsed as of the
Termination Date. On the Termination Date, the Company shall
repurchase from Mr. English a total of 256,500 Restricted
Shares at a purchase price per share equal to the closing sale
price of the Company’s Common Stock on the trading day
immediately preceding the Termination Date, to enable
Mr. English to satisfy applicable income taxes associated with
the lapsing of such restrictions.
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c.
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OPTIONS.
Schedule 1 attached hereto accurately reflects all options and
other rights to acquire shares of the Company’s capital stock
owned by Mr. English as of the date of this Agreement. All
Options which have not already vested shall, on the Termination
Date, immediately vest and become exercisable in full. All such
vested Options shall otherwise remain subject in all respects to
the terms of the option agreement or instrument applicable thereto;
provided, however, that, for purposes of clarification, any period
of exercisability which,under such agreements or instruments,
commences upon the cessation of Mr. English’s service to
the Company shall not be deemed to commence while Mr. English
serves as an employee, consultant or non-employee director of the
Company.
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d.
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INDEMNIFICATION; D&O INSURANCE.
Notwithstanding his termination of employment with the Company,
Mr. English (i) shall
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continue to be entitled to the
indemnification rights afforded under the Company’s Amended
and Restated Certificate of Incorporation and Bylaws, and
(ii) shall remain covered under the Company’s
Directors’ and Officers’ Insurance (“D&O
INSURANCE”) policy until December 31, 2011, on no less
favorable terms than are provided to any other executive officer of
the Company, with respect to acts occurring prior to termination of
Mr. English’s service as an officer of the Company, and
the Company agrees that such D&O Insurance policy shall have
policy limits at least as high as the Company’s existing
policy.
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3.
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NON-SOLICITATION AND NON-DISPARAGEMENT. For two
(2) years following the Termination Date, Mr. English
will not directly or indirectly (i) solicit any Company
employee, independent contractor or consultant to leave the
Company’s employ or otherwise terminate such person’s
relationship with the Company for any reason or interfere in any
other manner with the employment or other relationships at the time
existing between the Company and its current employees, independent
contractors or consultants, (ii) solicit any of the
Company’s customers for products or services substantially
similar to those offered by the Company, or (iii) disparage
the Company or any of its stockholders, directors, officers,
employees or agents.
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4.
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OWNERSHIP
RIGHTS. All materials, ideas, discoveries and inventions pertaining
to the Company’s business or clients, including (without
limitation) all patents and copyrights, patent applications, patent
renewals and extensions, trade secrets, software, and the names,
addresses and telephone numbers of customers and prospects, belong
solely to the Company. Mr. English shall, at all times whether
during or after the Termination Date, assist the Company, at the
Company’s sole expense, in obtaining, maintaining, defending
and enforcing all legal rights and remedies of the Company,
including, without limitation, patents, copyrights and other
proprietary rights of the Company. Such assistance will include
(without limitation) the execution of documents and assistance and
cooperation in legal proceedings.
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5.
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RELEASES. As a
condition to Mr. English’s entitlement to the
compensation, payments and benefits provided for in Section 2
hereof, Mr. English shall have executed and delivered to the
Company a release in the form attached hereto as Exhibit
“A” (the “RELEASE”), and such Release shall
have become irrevocable. If Mr. English exercises his right to
revoke the Release in accordance with the terms thereof, then this
Agreement shall become null and void ab initio. The Company shall
execute and deliver to Mr. English a release in the form
attached hereto as Exhibit “B” (the “COMPANY
RELEASE”).
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6.
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COOPERATION AND
ASSISTANCE; TRANSITION SERVICES
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a.
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Mr. English acknowledges that he may have
historical information or knowledge that may be useful to the
Company in connection with current or future legal, regulatory or
administrative proceedings. Mr. English will cooperate with
the Company in the defense or prosecution of any such claims that
relate to events or occurrences that transpired during
Mr. English’s employment with the Company.
Mr. English’s cooperation in connection with such claims
or actions shall include being reasonably available, subject to his
other business and personal commitments, to meet with counsel to
prepare for discovery or trial and to testify truthfully as a
witness when reasonably requested by the Company at reasonable
times and with reasonable advance notice to Mr. English. The
Company shall reimburse Mr. English for any reasonable
out-of-pocket expenses, including the reasonable fees of
Mr. English’s personal attorney, reasonably incurred by
Mr. English in connection with such cooperation.
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b.
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Through
December 2006 (or such later date as may be agreed upon by the
Company and Mr. English), Mr. English shall render such
assistance to the Company’s Chief Executive Officer as shall
be reasonably requested by the Chief Executive Officer or the Board
of Directors, including assistance in maintaining relationships
with the Company’s customers. Mr. English shall receive
no separate compensation for providing any such
assistance.
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7.
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RETURN OF
PROPERTY; ADMINISTRATIVE SUPPORT.
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a.
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Except as
otherwise agreed to by the Company in writing, Mr. English
expressly agrees that, promptly after the Termination Date, he will
return to the Company all Company property, including, but not
limited to, any and all files, computers, computer equipment and
software and diskettes, documents, papers, records, accords, notes,
agenda, memoranda, plans, calendars and other books and records of
any kind and nature whatsoever containing information concerning
the Company or its customers or operations. Notwithstanding the
foregoing, Mr. English shall not be required to return his
rolodexes, personal diaries or correspondence.
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b.
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During such
time as Mr. English provides transition assistance to the
Company as contemplated by section 6 b. above, the Company shall
provide, or reimburse Mr. English the reasonable costs of, an
office and administrative support necessary to provide such
services.
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8.
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NON-DISCLOSURE.
Under Mr. English’s Employee Confidentiality, Inventions
and Non-Competition Agreement with the Company, executed on
October 28, 2002, a copy of which is attached to this
Agreement as Exhibit “C,” and under applicable trade
secret law, Mr. English is obliged to keep in confidence all
trade secrets and proprietary and confidential information of the
Company, whether patentable or not which he learned or of which he
became aware or informed during his employment by the Company
(except to the extent disclosure is or may be required by a
statute, by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof)
with apparent jurisdiction to order him to divulge, disclose or
make accessible such information), and not to directly or
indirectly publish, disclose, market or use, or authorize, advise,
hire, counsel or otherwise procure any other person or entity,
directly or indirectly, to publish, disclose, market or use, any
such information. Both under such Employee Confidentiality,
Inventions and Non-Competition Agreement and under applicable law,
such obligations continue after cessation of
Mr. English’s employment. In amplification and not in
limitation of the foregoing, Mr. English acknowledges that
during his employment with the Company, he has or may have acquired
proprietary and confidential knowledge and information of the
Company, including, but not limited to, software, products,
“know-how” and other technical data belonging to or
relating to the Company, and the identity of customers and
suppliers of the Company and the quantities of products ordered by
or from and the prices paid by or to those customers and suppliers.
In addition, Mr. English has also acquired similar
confidential knowledge and information belonging to customers of
the Company and provided to the Company in confidence under written
and oral secrecy agreements. Mr. English agrees to abide by
the terms and conditions of the Employee Confidentiality,
Inventions and Non-Competition Agreement and of this
Section 8. Anything to the contrary notwithstanding, this
Section 8 shall not apply to any knowledge or information that
has become generally known in the industry or by the public (other
than through a breach of this Agreement or the Employee
Confidentiality, Inventions and NonCompetition Agreement by
Mr. English).
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9.
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NON-COMPETITION. For a period of two
(2) years following the Termination Date, Mr. English
agrees that he will not work for or have an interest in a company
that competes with the Company, directly or indirectly, in
healthcare software products or services in any of the territories
in which the Company conducts business.
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10.
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NO ADMISSION.
Nothing in this Agreement shall be deemed to constitute an
admission or evidence of any wrongdoing or liability on the part of
the Company or Mr. English and the parties agree that neither
this Agreement
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nor any of the terms or conditions
contained herein may be used in any future dispute or proceeding
except one to enforce the terms of this Agreement.
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11.
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TAX AND
WITHHOLDING. Any federal, state and/or local income, personal
property, franchise, excise or other taxes owed by Mr. English
as a result of the payments or benefits provided under the terms of
this Agreement shall be the sole responsibility and obligation of
Mr. English. The parties hereto agree and acknowledge that the
Company shall have the right to withhold from any payments
made
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