<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
AMENDMENT NO. 1
TO
FORM 10-K/A
(Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year
ended December 31, 1998
[ ] Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 For the
transition period from ____________to________________
Commission File Number 0-21209
ADVANCED HEALTH CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-3893841
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION
OF INCORPORATION OR ORGANIZATION) NUMBER)
555 White Plains Road, Tarrytown, New York 10591
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(914) 524-4200
(REGISTRANTS' TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ ]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K: [X]
THE AGGREGATE MARKET VALUE OF THE SHARES OF COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT IS $42,644,126, BASED ON THE CLOSING PRICE OF
THE COMMON STOCK ON MARCH 12, 1999. AS OF MARCH 12, 1999, THERE WERE 10,431,129
SHARES OF COMMON STOCK OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
None
STATEMENTS MADE OR INCORPORATED INTO THIS ANNUAL REPORT
INCLUDE A NUMBER OF FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION,
STATEMENTS CONTAINING THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS,"
"FUTURE" AND WORDS OF SIMILAR IMPORT WHICH EXPRESS MANAGEMENT'S BELIEF,
EXPECTATIONS OR INTENT REGARDING THE COMPANY'S FUTURE PERFORMANCE. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE
<PAGE> 2
FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS AS
TO INDUSTRY TRENDS, FUTURE ECONOMIC PERFORMANCE, ANTICIPATED PROFITABILITY,
ANTICIPATED REVENUES AND EXPENSES, AND PRODUCTS OR SERVICE LINE GROWTH MAY BE
SIGNIFICANTLY IMPACTED BY CERTAIN RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT
LIMITED TO, FAILURE OF THE CLINICAL E-COMMERCE INDUSTRY TO DEVELOP AT
ANTICIPATED RATES, FAILURE OF THE COMPANY'S CLINICAL INFORMATION TECHNOLOGY
PRODUCTS AND SERVICES TO GAIN SIGNIFICANT MARKET ACCEPTANCE, FAILURE TO MEET
OPERATING OBJECTIVES OR TO EXECUTE THE OPERATING PLAN, FAILURE TO SUCCESSFULLY
RESTRUCTURE AHT'S BUSINESS UNITS, COMPETITION AND OTHER ECONOMIC FACTORS. NO
ASSURANCES CAN BE GIVEN AS TO THE OUTCOME OF ANY PENDING LAWSUITS AGAINST
ADVANCED HEALTH CORPORATION.
<PAGE> 3
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation of the Company's
Chief Executive Officer and each other executive officer of the Company who
earned in excess of $100,000 in annual salary and bonus during the Company's
fiscal year ended December 31, 1998 (collectively, the "Named Executive
Officers"), for services rendered in all capacities to the Company during the
Company's fiscal years ended December 31,1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards
<TABLE>
<CAPTION>
Securities Underlying
Options/SARs
Name and Principal Position Year ($)Salary (#)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jonathan Edelson, M.D, Chairman, 1998 298,589
Chief Executive Officer, and President 1997 269,079 150,000
1996 220,224
Robert J. Alger, Executive Vice President 1998 178,431 25,000
and Chief Information Officer 1997 169,261 60,000
1996 154,854
Jeffrey M. Sauerhoff 1998 172,902 50,731
Chief Financial Officer 1997 130,319 22,255
1996 112,671
Eddy W. Friedfeld, Senior Vice President- 1998 152,566 55,000
Business & Legal Affairs, General Counsel 1997 52,333 22,500
and Secretary
Alan B. Masarek, President and COO (1) 1998 238,576
1997 224,693 112,500
1996 200,198
</TABLE>
(1) Resigned Effective 3/31/99
<PAGE> 4
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of Common Stock as of May 1, 1999 with respect to (i) each person
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) each of the Company's directors, (iii) certain executive
officers of the Company and (iv) all directors and officers as a group. Unless
otherwise indicated, the address for each stockholder is c/o the Company, 555
White Plains Road, Tarrytown, New York 10591.
<TABLE>
<CAPTION>
SHARES OF
COMMON
NAME AND ADDRESS STOCK(1) PERCENT(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
David M. Knott
485 Underhill Blvd., Suite 205, Syosset, NY 11791-3419 859,500 8.1
Nationsbank Corp.
Nationsbank Plaza, Charlotte, NC 28255 785,600 7.4
Dimensional Fund Advisors
1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401 702,900 6.6
Tudor Investment Corporation
One Post Office Square, Boston, MA 02109 723,000 6.8
Jonathan Edelson, MD (2) 524,042 4.9
Robert J. Alger (3) 51,241 *
Jeffrey M. Sauerhoff (4) 26,178 *
Eddy W. Friedfeld (5) 8,750 *
James Carney (6) 15,000 *
Barry Kurokawa (7) 19,507 *
Alan B. Masarek (8) 150,136 1.4
Arthur M. Southam, MD * *
All directors and executive officers as a group (7 persons) (9) 794,854 7.5
</TABLE>
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally includes
voting or investment power with respect to securities and includes options
exercisable within 60 days of May 1, 1999. Except as indicated by footnote, and
subject to community property laws where applicable, the persons named in the
table above have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them. Percentage of beneficial
ownership is based on 10,644,244 shares of Common Stock outstanding as of May 1,
1999.
(2) Includes currently exercisable options to purchase 128,816 shares of Common
Stock.
(3) Includes currently exercisable options to purchase 51,241 shares of Common
Stock.
(4) Includes currently exercisable options to purchase 26,178 shares of Common
Stock.
(5) Includes currently exercisable options to purchase 8,750 shares of Common
Stock.
(6) Includes currently exercisable options to purchase 15,000 shares of Common
Stock.
(7) Includes currently exercisable options to purchase 17,507 shares of Common
Stock.
(8) Includes currently exercisable options to purchase 150,136 shares of Common
Stock
(9) See notes (2), (3), (4), (5), (6), and (7).
<PAGE> 5
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1996, 1997 and 1998, in accordance with the Company's Senior
Executive Loan Policy, which is administered by the Compensation Committee of
the Board of Directors, the Company made loans in the aggregate amounts of
$800,000 and $145,000 to each of Dr. Edelson, and Mr. Alger, respectively. These
loans are due three years from the loan date with interest payable monthly at a
rate of 6% per annum.
The Company entered into a separation agreement in 1999 with Alan
Masarek, the Company's former President and Chief Operating Officer, whose
resignation was effective March 31, 1999, which provides for the following: (i)
a one-year continuation of salary at $250,000 and benefits from April 1, 1999 to
March 31, 2000, payable monthly; (ii) an additional $250,000 (less applicable
withholding) payment in exchange for consulting forup to 24 business days in a
form and manner reasonably requested by the Company's Board of Directors, which
has already been paid; (iii) requirement of repayment of current outstanding
loans, principal ($467,475) and interest (at the rate of 6% per annum),
beginning May 1, 2000 at the rate of $15,000 per month with the balance due of
all outstanding loans, including principal and interest on May 1, 2001; (iv)
vesting of 150,136 options to acquire Company stock that will remain fully
exercisable for up to five years; and (v) a success bonus for the sale of the
management services division of the Company that occurred on May 14, 1999 ("the
Sale"), equal to $40,000 plus 2.5% of the net proceeds of the Sale, which has
already been paid.
The Company believes that all of the transactions set forth above were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. All transactions, including loans, between the
Company and its officers, directors and principal stockholders and their
affiliates are approved by a majority of the Board of Directors, including a
majority of the independent and disinterested outside directors of the Board of
Directors.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANCED HEALTH CORPORATION
Date: June 10, 1999
By: /s/ Jeffrey M. Sauerhoff
Jeffrey M. Sauerhoff
Chief Financial Officer
<PAGE> 7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
**3.1 Restated Certificate of Incorporation of the Registrant
**3.2 By-laws of the Registrant
**10.7 Tarrytown, New York Office Lease Agreement dated November 30,
1995, between Tarrytown Corporate Center IV, L.P. and the
Registrant.
**10.8 First Amendment to Lease Agreement between Reckon Operating
Partnership, LP, as Owner, and the Registrant, as Tenant
**10.9 Chicago Office Lease Agreement dated December 8, 1995, between
Adams Family, LLC and the Registrant
**10.10 Fort Washington Lease Agreement dated November 13, 1997,
between Comdrive Associates, L.P. and Registrant as Tenant
**10.11 Hawthorne Lease Agreement dated January 8, 1998, between
United Parcel Service, Inc. and Registrant as Tenant
**10.12 Malvern Lease dated October 6, 1997
**10.13 Tarrytown Sublease
**10.14 Form of Director Indemnification Agreement
*10.15 Employment Agreement between the Registrant and Jonathan
Edelson, M.D.
*10.16 Employment Agreement between the Registrant and Robert Alger
**10.17 Employment Agreement between the Registrant and Jeffrey M.
Sauerhoff
**10.18 Employment Agreement between the Registrant and Eddy W.
Friedfeld
*10.19 Separation Agreement between the Registrant and Alan B.
Masarek
**10.20 Amended and Restated Advanced Health Corporation 1995 Stock
Option Plan
**10.21 Employee Stock Purchase Plan
**11.1 Earnings Per Common Share Computation
**21 List of Subsidiaries
**23.2 Consent of Arthur Andersen LLP
**27 Financial Data Schedule
* Filed herewith.
<PAGE> 8
** Filed as an exhibit to the Registrant's Registration Statement on Form
S-1, as amended Registration No. 333-06283), Registrant's Registration Statement
on Form S-1, as amended (Registration No. 333-35115), Registrant's Forms 10-K,
dated March 30, 1997, March 31, 1998, and April 2, 1999, incorporated herein by
reference.
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT dated as of
June 8, 1999, between ADVANCED HEALTH
CORPORATION, a Delaware corporation (the
"Company"), which is doing business as AHT
Corporation, and JONATHAN T. EDELSON,
M.D. (the "Employee").
The Company desires to formalize the employment arrangements between the
Company and the Employee and to continue to employ the Employee as the Chairman
and Chief Executive Officer of the Company and the Employee desires to accept
such continued employment by the Company, on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, upon the terms and subject to the
conditions hereinafter set forth.
2. Term. The employment of the Employee hereunder shall be for the
four-year period commencing on the date hereof and ending on June 8, 2003 (the
"Base Term"). The Base Term shall automatically renew for consecutive one-year
terms (each, a "Renewal Term" and together with the Base Term, collectively, the
"Employment Period") unless either the Company or the Employee gives the other
party hereto at least 90 days' prior written notice before the end of the
Employment Period of such party's intent not to renew this Agreement.
3. Duties. The Employee shall be employed as the Chairman and Chief
Executive Officer (and President, effective March 31, 1999) of the Company or in
such other position as the Company and the Employee shall agree in writing. The
Employee shall perform such duties and services as are appropriate and
commensurate with the Employee's position as Chairman and Chief Executive
Officer (and President, when appropriate) of the Company and would otherwise be
consistent in stature and prestige with the position of Chairman and Chief
Executive Officer (and President, when appropriate) of a corporation with
similar operations as the Company, as the same may be assigned to him from time
to time by the Board of Directors of the Company (the "Board").
4. Time to be Devoted to Employment; Place of Employment. (a) Except for
three weeks vacation per year (in addition to public holidays) and absences due
to temporary illness, during the Employment Period the Employee shall devote
substantially all of his business time, attention and energies to the business
and affairs of the Company.
(b) During the Employment Period, the Employee shall not be engaged in any
<PAGE> 2
other business activity which conflicts with the duties of the Employee
hereunder, whether or not such activity is pursued for gain, profit or other
pecuniary advantage.
(c) During the Employment Period, the Company shall maintain its primary
business location in the greater New York City metropolitan area and the
Employee shall not be required to relocate outside such area without his written
consent.
5. Compensation; Reimbursement. (a) During the Employment Period, the
Company (or at the Company's option, any subsidiary or affiliate thereof) shall
pay to the Employee an annual salary (the "Base Salary") of not less than
$300,000, payable in such installments as is the policy of the Company with
respect to its senior executive officers. Such Base Salary will be reviewed at
least annually and may be increased by the Board (or, if such authority shall be
delegated by the Board to the Compensation Committee thereof, then by such
Committee) in its sole discretion.
(b) From time to time the Employee may also receive cash bonuses at the
discretion of the Board or the Compensation Committee.
(c) The Employee shall maintain a suitable automobile for business use.
During the Employment Period, the Company shall pay the Employee a $600 per
month car allowance towards the costs of leasing, using, insuring, repairing and
maintaining such automobile.
(d) Following the expiration or termination of this Agreement for any
reason, the Employee shall have the right to maintain any (i) health and life
insurance benefits provided by the Company to the extent provided under
applicable law and (ii) any life insurance benefits provided by the Company so
long as the Employee makes the premium payments relating to such life insurance.
(e) During the Employment Period and to the extent available to employees
of the Company, the Employee shall be entitled to participate in all of the
Company's benefit plans, pension and retirement plans, life insurance,
hospitalization and surgical and major medical coverages, sick leave, vacation
and holiday policies, long-term disability coverage and such other fringe
benefits enjoyed by other employees at substantially the same employment level
as the Employee. Notwithstanding anything to the contrary contained in this
Section 5(e), at no time during the Employment Period shall the long-term
disability coverage and life insurance benefits that the Company provides to the
Employee be reduced to a level below that being provided to the Employee as of
the date hereof.
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(f) The Company shall reimburse the Employee, in accordance with the
practice from time to time for other employees of the Company, for all
reasonable and necessary travelling expenses, disbursements and other reasonable
and necessary incidental expenses incurred by him for or on behalf of the
Company in the performance of his duties hereunder upon presentation by the
Employee to the Company of appropriate vouchers.
6. Involuntary Termination. (a) If the Employee is incapacitated or
disabled by accident, sickness or other cause so as to render him mentally or
physically incapable of performing the services required to be performed by him
under this Agreement for a period of 90 days or longer during any six-month
period (such condition being herein referred to as a "Disability"), prior to the
Employee resuming the performance of his duties as contemplated herein, the
Company may terminate the employment of the Employee under this Agreement (an
"Involuntary Termination"). Until the Company or the Employee shall have
terminated the Employee's employment hereunder, the Employee shall be entitled
to receive his compensation and other benefits as set forth in this Agreement
notwithstanding any such physical or mental disability.
(b) If the Employee dies during the Employment Period, his employment
hereunder shall be deemed to cease as of the date of his death, and the
termination of his employment occasioned thereby shall be deemed an Involuntary
Termination.
7. Termination for Cause. The Company may terminate the Employee's
employment hereunder for "Cause" (a "Termination for Cause"). For purposes of
this Agreement, "Cause" shall be limited to:
(i) the willful and continued failure by the Employee substantially to
perform the duties described in Section 3 (other than any failure resulting
from an illness or other similar incapacity or disability), for 30 days
after a written demand for performance is delivered to the Employee on
behalf of the Board that specifically identifies the manner in which it is
alleged that the Employee has not substantially performed his duties; or
(ii) the commission by the Employee of misappropriation of funds,
properties or assets of the Company, sexual harassment of employees of the
Company, chronic alcoholism or drug addiction, slander or libel concerning
the Company or a material tort relating to his office or employment with
the Company that has a material adverse effect on the Company.
8. Termination Without Cause. (a) The Company may terminate the employment
of the Employee hereunder at any time during the Employment Period without
"Cause" and (b) the Employee may terminate his employment hereunder at any time
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<PAGE> 4
during the Employment Period in the event of (i) the willful and continued
failure by the Company to perform its obligations hereunder for 30 days
hereunder for 30 days after a written demand for performance is delivered to the
Board on behalf of the Company by the Employee that specifically identifies the
manner in which it is alleged that the Company has not performed its
obligations; or (ii) the commission by the Company of slander or libel
concerning the Employee or a material tort relating to his office or employment
with the Company of slander or libel concerning the Employee or a material tort
relating to his office or employment with the Company that has a material
adverse effect on the Employee (each, a "Termination Without Cause"). It is
expressly acknowledged that non-renewal of this Agreement as contemplated by
Section 2 shall not constitute a Termination Without Cause.
9. Voluntary Termination. Any termination of the employment of the Employee
hereunder otherwise than as a result of an Involuntary Termination, a
Termination For Cause or a Termination Without Cause shall be deemed to be a
"Voluntary Termination." A Voluntary Termination shall be deemed to be effective
immediately upon written notice of such termination to the Company.
10. Change in Control. Anything contained in this Agreement to the contrary
notwithstanding, if, within 12 months of a Change in Control (as herein
defined), the employment of the Employee shall terminate for any reason, then
such termination shall be deemed to constitute a Termination Without Cause. In
addition, on a Change in Control, all options to purchase common stock of the
Company then held by the Employee shall immediately vest and shall be
exercisable for a period of five years from the date of the Change in Control.
For purposes of this Agreement, a "Change in Control" of the Company shall be
deemed to have occurred if (a) there shall be consummated (x) any consolidation
or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the common stock of the Company (the
"Common Stock") would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or (b) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; or (c) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company's
outstanding Common Stock; or (d) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board of
Directors shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company's stockholders, of each
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<PAGE> 5
new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
11. Effect of Termination of Employment. (a) Upon the termination of the
Employee's employment hereunder pursuant to a Voluntary Termination or a
Termination For Cause, neither the Employee nor his beneficiary or estate shall
have any further rights or claims against the Company under this Agreement
except to receive:
(i) any unpaid portion of the Base Salary provided for in Section
5(a), computed on a pro rata basis to the date of termination;
(ii) cash compensation equal to the product of (A) the number of days
of accrued vacation, if any, accumulated by the Employee to the effective
date of termination divided by the total number of work days per annum for
which the Employee receives a Base Salary multiplied by (B) the Base
Salary; and
(iii) reimbursement for any expenses for which the Employee shall not
have theretofore been reimbursed as provided in Section 5(e).
In addition, current arrangements concerning indemnification, including but not
limited to payment of expenses of officers, directors, and employees in
connection with litigation involving the Company shall remain in full force and
effect following termination.
(b) Upon the termination of the Employee's employment hereunder pursuant to
an Involuntary Termination, neither the Employee nor his beneficiary or estate
shall have any further rights or claims against the Company under this Agreement
except the right (i) to receive a termination payment equal to that provided for
in Section 11(a) hereof, plus (ii) to receive a cash severance payment in an
aggregate amount equal to the cash compensation received by the Employee during
the 3-month period immediately prior to the effective date of the Involuntary
Termination, payable in equal monthly installments, plus (iii) to be immediately
vested in all stock options granted to the Employee by the Company that would
have vested during the three-month period immediately following the effective
date of the Involuntary Termination. In addition, the Employee will have the
right and obligation to repay any outstanding loans to the Company, including
principal and interest, in equal monthly installments, over a period of 12
months commencing one year after the date of Termination. Current arrangements
concerning indemnification, including but not limited to payment of expenses of
officers, directors, and employees in connection with litigation involving the
Company shall remain in full force and effect following termination.
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<PAGE> 6
(c) Upon the termination of the Employee's employment hereunder pursuant to
a Termination Without Cause, neither the Employee nor his beneficiary or estate
shall have any further rights or claims against the Company under this Agreement
except the right (i) to receive a termination payment equal to the amount
provided for in Section 11(a) hereof, plus (ii) to receive a cash severance
payment in an aggregate amount equal to twice your most recent base annual
salary payable in one lump sum within 10 days of such termination, plus (iii) to
receive a consulting agreement for a one year period commencing one year after
the date of termination of full-time employment with the Company. Such
consulting agreement will consist of a commitment by the Employee of up to 24
business days in a manner reasonably requested by the Board of Directors. The
Employee will receive one times his most recent annual base salary as
compensation for such consulting over a one year period in equally divided
portions at the normal payment intervals provided employees at the Company. For
a one year period following termination, at the Company's expense, the Company
will provide the Employee and his family health insurance ( as is provided
Company employees), provided the Employee and his family are not otherwise
provided coverage; life insurance, including payment by the Company of the
premiums related to the Employee's $250,000 whole life policy and the
supplemental disability policy with Massachusetts Casualty Company; a $600 per
month car allowance; reasonable cellular and phone and pager use; and inclusion
in the Company's 401K plan. In addition, on a Termination Without Cause, all
options to purchase common stock of the Company then held by the Employee shall
immediately vest and shall be exercisable for a period of five years from the
date of the Termination. The Employee will have the right and obligation to (i)
repay any outstanding loans to the Company, including principal and interest, in
equal monthly installments, over a period of 12 months commencing one year after
the date of Termination, or (ii) prepay any such loans and interest without any
penalties. In addition, current arrangements concerning indemnification,
including but not limited to payment of expenses of officers, directors, and
employees in connection with litigation involving the Company shall remain in
full force and effect following termination.
12. Non-Competition; Non-Disclosure of Information. (a) The Employee shall
not, for a period of one year following the termination of Employment , (i)
directly or indirectly engage in any Competitive Business (as defined below),
whether such engagement shall be as an employee, employer, owner, consultant,
partner or other participant in any Competitive business, (ii) assist others in
engaging in any Competitive Business in the manner described in the foregoing
clause (i), (iii) induce employees of the Company to terminate their employment
with the Company or engage in any Competitive Business or (iv) induce customers
or vendors of the Company to alter or terminate their business relationship with
the Company; provided, however, that the Employee may own directly or
indirectly, solely as a passive investment, securities of any Competitive
Business traded on any national securities exchange if the Employee is not a
controlling person of, nor a member of a group which controls such person and
does not, directly or indirectly, own 5% or more of any class of securities of
such person. As used herein, the term "Competitive Business" shall mean any
business which, directly or indirectly, competes with the Company in the
business of primarily providing physician practice management, physician network
management and/or clinical information technology to or for ambulatory
physicians; provided, however, that a business conducted directly by the
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<PAGE> 7
Employee which provides physician practice management, physician network
management and/or clinical information technology to or for physician groups
consisting of three or fewer physicians shall not be deemed to be a "Competitive
Business". Notwithstanding any other provision of this Agreement to the
contrary, the Employee's ownership interest in or any business activities
engaged in by the Employee on behalf of, or in connection with Employee's
employment by, or service as a director or consultant to, any subsidiary or
affiliate of the Company or Physicians' Online, a corporation engaged in the
business of providing on-line services to health care professionals and
consumers, shall not be deemed to violate the provisions of this Agreement.
(b) The Employee understands that the foregoing restrictions may limit his
ability to earn a livelihood in a Competitive Business, but he nevertheless
believes that he has received and will receive sufficient consideration and
other benefits in connection with his employment to clearly justify such
restrictions which, in any event, the Employee does not believe would prevent
him from earning a living. Nothing herein contained shall prohibit the Employee
from engaging in a business that is not a Competitive Business.
(c) The Employee agrees that he will not, at any time during or after the
Employment Period, disclose to any person, firm, corporation or other entity,
except as required by law, any secret or confidential information concerning the
business, clients or affairs of the Company or any subsidiary or affiliate
thereof for any reason or purpose whatsoever other than in furtherance of the
Employee's work for the Company nor shall the Employee make use of any of such
secret or confidential information for his own purpose or for the benefit of any
person, firm, corporation or other business entity except the Company or any
subsidiary or affiliate thereof.
13. Company Right to Inventions. The Employee shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and all
inventions, improvements, technical information, methods and suggestions (the
"Inventions") relating in any way to the business of providing physician
practice management, physician network management and/or clinical information
technology to or for ambulatory physicians, which he may develop or acquire
during the period of the Employee's employment with the Company prior to any
termination of employment (whether or not during usual working hours), together
with all patent applications, patents, copyrights and reissues thereof that may
at any time be granted for or upon any such Inventions, excluding those
Inventions directly relating to any business activities engaged in by the
Employee on behalf of or in connection with the Employee's employment by, or
service as a director or consultant to Physicians' Online. In connection
therewith:
(a) the Employee shall without charge, but at the expense of the
Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
reasonably necessary or proper in the reasonable opinion of the Company
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<PAGE> 8
to vest title to any such inventions, improvements, technical information,
methods, patent applications, patents, copyright applications, copyrights
or reissues of any thereof in the Company and to enable it to obtain and
maintain the entire right and title thereto throughout the world; and
(b) the Employee shall render to the Company at its expense (including
a reasonable payment for the time involved in case he is not then in its
employ) all such assistance as it may reasonably require in the prosecution
of applications for said patents, copyrights or reissues thereof, in the
prosecution or defense or interferences which may be declared involving any
said applications, patents or copyrights and in any litigation in which the
Company may be involved relating to any such patents, copyrights,
inventions, improvements, technical information or methods.
14. Enforcement. It is the desire and intent of the parties hereto that
the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction
in which enforcement is sought. Accordingly, if any particular provision of
this Agreement shall be adjudicated to be invalid or unenforceable, such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such amendment to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made; provided, however, that if any one or more of
the provisions contained in this Agreement shall be adjudicated to be invalid
or unenforceable because such provision is held to be excessively broad as to
duration, geographical scope, activity or subject, such provision shall be
deemed amended by limiting and reducing it so as to be valid and enforceable
to the maximum extent compatible with the applicable laws of such jurisdiction,
such amendment to apply only with respect to the operation of such provision
in the particular jurisdiction in which such adjudication is
made.
15. Remedies; Survival. (a) The Employee acknowledges and understands that
the provisions of this Agreement are of a special and unique nature, the loss of
which cannot be accurately compensated for in damages by an action at law, and
that the breach of the provisions of this Agreement would cause the Company
irreparable harm. In the event of a breach by the Employee of the provisions of
Section 12 or 13 hereof, the Company shall be entitled to an injunction
restraining him from such breach. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available for any
breach of this Agreement.
(b) Notwithstanding anything contained in this Agreement to the contrary,
the provisions of Sections 12, 13, 14 and this Section 15 shall survive the
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<PAGE> 9
expiration or other termination of this Agreement until, by their terms, such
provisions are no longer operative.
(c) It is understood and agreed that the provisions of Sections 12 and 13
of this Agreement are separate and distinct from any other agreement between the
parties hereto. Accordingly, in the event of a breach of such provisions, the
breaching party shall only be held responsible for damages arising under such
provisions and not for any damages which may be claimed to arise under or with
respect to any other agreement that is not separately breached.
16. Notices. Notices and other communications hereunder shall be in
writing and shall be delivered personally or sent by air courier or first class
certified or registered mail, return receipt requested and postage prepaid,
addressed as follows:
If to the Employee:
Jonathan Edelson, M.D.
212 Mamaroneck Road
Scarsdale, New York 10583
If to the Company:
Advanced Health Corporation
555 White Plains Road
Tarrytown, New York 10591
Attention: General Counsel
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: John J. Suydam, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All notices and
other communications hereunder shall be deemed to have been given on the date of
delivery if personally delivered; on the business day after the date when sent
if sent by air courier; and on the third business day after the date when sent
if sent by mail, in each case addressed to such party as provided in this
Section 16.
17. Binding Agreement. This Agreement shall inure to the benefit of and be
9
<PAGE> 10
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees and devisees. If the Employee
should die while any amount would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the beneficiary
designated by the Employee in a writing delivered to the Company, or if there be
no such designated beneficiary, to his estate.
18. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
contracts made and to be performed wholly therein.
19. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing and shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
20. Entire Agreement; Amendments; Execution. This Agreement, the
Indemnification Agreement to be entered into between the Company and the
Employee, the Stock Option Agreements and the other agreements referred to
herein contain the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior agreements or
understandings among the parties with respect thereto. This Agreement may be
amended only by an agreement in writing signed by the parties hereto. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original document but all of which shall constitute but one agreement.
21. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
23. Assignment. With respect to the Employee, this Agreement is personal in
its nature and the Employee shall not assign or transfer this Agreement or any
rights or obligations hereunder. The Company may in its sole discretion assign
or otherwise transfer this Agreement and the provisions hereof (including,
without limitation, Sections 12, 13 and 14) shall inure to the benefit of, and
be binding upon, each successor of the Company, whether by merger,
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<PAGE> 11
consolidation, transfer of all or substantially all assets, or otherwise.
* * *
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
ADVANCED HEALTH CORPORATION
By: /s/ Eddy Friedfeld
------------------------------------
Name: Eddy Friedfeld
Title: Senior Vice President
Business and Legal Affairs
General Counsel
/s/ Jonathan Edelson
------------------------------
Jonathan Edelson, M.D.
11
<PAGE> 1
EXHIBIT 10.16
EMPLOYMENT AGREEMENT dated as of
November 1, 1998, between ADVANCED
HEALTH CORPORATION, a Delaware
corporation (the "Company"), and
ROBERT J. ALGER (the "Employee").
The Company desires to formalize the employment arrangements between the
Company and the Employee and to continue to employ the Employee as the Executive
Vice President, Chief Information Officer of the Company, and as President of
Advanced Health Technologies Corporation, a Delaware corporation and
wholly-owned subsidiary of the Company and the Employee desires to accept such
continued employment by the Company, on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment. The Company hereby employs the Employee, and the Employee
hereby accepts employment by the Company, upon the terms and subject
to the conditions hereinafter set forth.
2. Term. The employment of the Employee hereunder shall be for the
four-year period commencing on the date hereof and ending on November
1, 2002 (the "Base Term"). The Base Term shall automatically renew for
consecutive one-year terms (each, a "Renewal Term" and together with
the Base Term, collectively, the "Employment Period") unless either
the Company or the Employee gives the other party hereto at least 90
days' prior written notice before the end of the Employment Period of
such party's intent not to renew this Agreement.
3. Duties. The Employee shall be employed as Executive Vice President,
Chief Information Officer of the Company, and as President of Advanced
Health Technologies Corporation or in such other position as the
Company and the Employee shall agree in writing. The Employee shall
perform such duties and services as are appropriate and commensurate
with the Employee's position with the Company and as would otherwise
be consistent in stature and prestige with the position of Executive
Vice President, Chief Information Officer and as President of a wholly
owned subsidiary of a corporation with similar operations as the
Company, as the same may be assigned to him from time to time by the
Board of Directors of the Company (the "Board").
4. Time to be Devoted to Employment; Place of Employment. (a) Except for
three weeks vacation per year (in addition to public holidays),
absences due to temporary illness, during the Employment Period the
Employee shall devote substantially all of his business time,
attention and energies to the business and affairs of the Company.
(b) During the Employment Period, the Employee shall not be engaged in
any other business activity which conflicts with the duties of the
Employee hereunder, whether or not such activity is pursued for gain,
profit or other pecuniary advantage.
<PAGE> 2
5. Compensation; Reimbursement. (a) During the Employment Period, the
Company (or at the Company's option, any subsidiary or affiliate
thereof) shall pay to the Employee an annual salary (the "Base
Salary") of not less than $190,000, payable in such installments as is
the policy of the Company with respect to its senior executive
officers. Such Base Salary will be reviewed at least annually and may
be increased by the Board (or, if such authority shall be delegated by
the Board to the Compensation Committee thereof, then by such
Committee) in its sole discretion.
(b) From time to time the Employee may also receive cash bonuses at
the discretion of the Board or the Compensation Committee.
(c) During the Employment Period and to the extent available to
employees of the Company, the Employee shall be entitled to
participate in all of the Company's benefit plans, pension and
retirement plans, life insurance, hospitalization and surgical and
major medical coverages, sick leave, vacation and holiday policies,
disability coverage and such other fringe benefits enjoyed by other
employees at substantially the same employment level as the Employee.
(d) The Company shall reimburse the Employee, in accordance with the
practice from time to time for other employees of the Company, for all
reasonable and necessary traveling expenses, disbursements and other
reasonable and necessary incidental expenses incurred by him for or on
behalf of the Company in the performance of his duties hereunder upon
presentation by the Employee to the Company of appropriate vouchers.
(e) The Employee shall maintain a suitable automobile for business
use. During the Employment Period, the Company shall pay the Employee
a $400 per month car allowance towards the costs of leasing, using,
insuring, repairing and maintaining such automobile.
(f) Following the expiration or termination of this Agreement for any
reason, the Employee shall have the right to maintain any (i) health
and life insurance benefits provided by the Company to the extent
provided under applicable law and (ii) any life insurance benefits
provided by the Company so long as the Employee makes the premium
payments relating to such life insurance.
6. Involuntary Termination. (a) If the Employee is incapacitated or
disabled by accident, sickness or other cause so as to render him
mentally or physically incapable of performing the services required
to be performed by him under this Agreement for a period of 90 days or
longer during any six-month period (such condition being herein
referred to as a "Disability"), prior to the Employee resuming the
performance of his duties as contemplated herein, the Company may
terminate the employment of the Employee under this Agreement (an
"Involuntary Termination"). Until the Company or the Employee shall
have terminated the Employee's employment hereunder, the Employee
shall be entitled to receive his compensation and other benefits as
set forth in this Agreement notwithstanding any such physical or
mental disability.
(b) If the Employee dies during the Employment Period, his employment
hereunder shall be deemed to cease as of the date of his death, and
the termination of his employment occasioned thereby shall be deemed
an Involuntary Termination.
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<PAGE> 3
7. Termination for Cause. The Company may terminate the Employee's
employment hereunder for "Cause" (a "Termination for Cause"). For
purposes of this Agreement, "Cause" shall be limited to:
(i) the willful and continued failure by the Employee substantially
to perform the duties described in Section 3 (other than any
failure resulting from an illness or other similar incapacity or
disability), for 30 days after a written demand for performance
is delivered to the Employee on behalf of the Board that
specifically identifies the manner in which it is alleged that
the Employee has not substantially performed his duties; or
(ii) the conviction by the Employee of misappropriation of funds,
properties or assets of the Company, sexual harassment, chronic
alcoholism or drug addiction, slander or libel concerning the
Company or a material tort relating to his office or employment
with the Company that has a material adverse effect on the
business, affairs, conditions (financial or otherwise),
operations, results of operations, assets, properties or rights,
liabilities or obligations, customer or employee relationships or
prospects of the Company.
8. Termination Without Cause. The Company may terminate the employment of
the Employee hereunder at any time during the Employment Period
without "Cause" (a "Termination Without Cause"). It is expressly
acknowledged that if Employee shall not report to the CEO of the
Company, such change in reporting structure shall constitute a
Termination Without Cause. It is expressly acknowledged that
non-renewal of this Agreement as contemplated by Section 2 shall not
constitute a Termination Without Cause. Further, if Employee's Base
Salary shall be reduced without Employee's consent, such action by
Employer shall constitute a Termination Without Cause.
9. Voluntary Termination. Any termination of the employment of the
Employee hereunder otherwise than as a result of an Involuntary
Termination, a Termination for Cause or a Termination Without Cause
shall be deemed to be a "Voluntary Termination." A Voluntary
Termination shall be deemed to be effective immediately upon written
notice of such termination to the Company.
10. Change in Control. On a Change of Control, all options to purchase
common stock of the Company then held by the Employee shall
immediately vest and shall be exercisable for a period of five years
from the date of the Change in Control. For purposes of this
Agreement, a "Change in Control" of the Company shall be deemed to
have occurred if (a) there shall be consummated (x) any consolidation
or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the common stock
of the Company (the "Common Stock") would be converted into cash,
securities or other property, other than a merger of the Company in
which the holders of the Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the
Company; or (b) the stockholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; or
3
<PAGE> 4
(c) any person (as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of 30% or more of the Company's
outstanding Common Stock; or (d) during any period of two consecutive
years, individuals who at the beginning of such period constitute the
entire Board shall cease for any reason to constitute a majority
thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
11. Effect of Termination of Employment. (a) Upon the termination of the
Employee's employment hereunder pursuant to a Voluntary Termination or
a Termination for Cause, neither the Employee nor his beneficiary or
estate shall have any further rights or claims against the Company
under this Agreement except to receive:
(i) any unpaid portion of the Base Salary provided for in Section
5(a), computed on a pro rata basis to the date of termination;
(ii) cash compensation equal to the product of (A) the number of days
of accrued vacation, if any, accumulated by the Employee to the
effective date of termination divided by the total number of
work days per annum for which the Employee receives a Base
Salary multiplied by (B) the Base Salary; and
(iii) reimbursement for any expenses for which the Employee shall not
have theretofore been reimbursed as provided in Section 5(d).
In addition, current arrangements concerning indemnification,
including but not limited to payment of expenses of officers,
directors, and employees in connection with litigation involving the
Company shall remain in full force and effect following termination.
(b) Upon the termination of the Employee's employment hereunder
pursuant to an Involuntary Termination, neither the Employee nor his
beneficiary or estate shall have any further rights or claims against
the Company under this Agreement except the right (i) to receive a
termination payment equal to that provided for in Section 11(a)
hereof, plus (ii) to receive a cash severance payment in an aggregate
amount equal to the cash compensation received by the Employee during
the 3-month period immediately prior to the effective date of the
Involuntary Termination, payable in equal monthly installments, plus
(iii) to be immediately vested in all stock options granted to the
Employee by the Company that would have vested during the three-month
period immediately following the effective date of the Involuntary
Termination. In addition, current arrangements concerning
indemnification, including but not limited to payment of expenses of
officers, directors, and employees in connection with litigation
involving the Company shall remain in full force and effect following
termination.
(c) Upon the termination of the Employee's employment hereunder
pursuant to a Termination Without Cause, neither the Employee nor his
beneficiary or estate shall have any further rights or claims against
the Company under this Agreement except the right (i) to receive a
termination payment equal to the amount provided for in Section 11(a)
hereof , (ii) to receive a cash severance payment in an aggregate
amount equal to twice the base salary and bonus received by the
Employee during the 12-month period immediately prior to the
effective date of the Termination Without Cause, plus car allowance,
health insurance and life insurance premium payments, professional
licensing and membership fees and dues
4
<PAGE> 5
for such one year period, payable in one lump sum within 10
days of such termination if such termination occurs within six months
of a Change in Control, and otherwise in 24 equal monthly
installments, (iii) reasonable cell phone and pager use, and
inclusion in the Company's 401(k) plan for the 24-month period
following such termination; plus (iv) all options to purchase common
stock of the Company, which shall include any parent or affiliated
entity shall fully vest and shall be exercisable for a period of five
years following the date of such Termination. In addition, current
arrangements concerning indemnification, including but not limited to
payment of expenses of officers, directors, and employees in
connection with litigation involving the Company shall remain in full
force and effect following termination.
12. Non-Competition; Non-Disclosure of Information. (a) The Employee shall
not during the Employment Period, and for a period of one year
following the termination of the Employment Period, (i) directly or
indirectly engage in any Competitive Business (as defined below),
whether such engagement shall be as an employee, employer, owner,
consultant, partner or other participant in any Competitive Business,
(ii) assist others in engaging in any Competitive Business in the
manner described in the foregoing clause (i), (iii) induce employees
of the Company to terminate their employment with the Company or
engage in any Competitive Business or (iv) induce customers or vendors
of the Company to alter or terminate their business relationship with
the Company; provided, however, that the Employee may (A) own directly
or indirectly, solely as a passive investment, securities of any
Competitive Business traded on any national securities exchange if the
Employee is not a controlling person of, nor a member of a group which
controls such person and does not, directly or indirectly, own 5% or
more of any class of securities of such person, and (B) serve as the
Chief Information Officer or information technology executive of a
Blue Cross or Blue Shield Plan without violating this Section 12. As
used herein, the term "Competitive Business" shall mean any business
which, directly or indirectly, competes with the Company or any of its
subsidiaries in the business of primarily providing physician practice
management, physician network management and/or clinical information
technology to or for physicians to the extent such businesses are
conducted by the Company and its subsidiaries at the time of any
termination of the Employment Period.
(b) The Employee understands that the foregoing restrictions may
limit his ability to earn a livelihood in a Competitive Business,
but he nevertheless believes that he has received and will
receive sufficient consideration and other benefits in connection
with his employment to clearly justify such restrictions which,
in any event, the Employee does not believe would prevent him
from earning a living. Nothing herein contained shall prohibit
the Employee from engaging in a business that is not a
Competitive Business.
(c) The Employee agrees that he will not, at any time during or after
the Employment Period, disclose to any person, firm, corporation
or other entity, except as required by law, any secret or
confidential information concerning the business, clients or
affairs of the Company or any subsidiary or affiliate thereof for
any reason or purpose whatsoever other than in furtherance of the
Employee's work for the Company nor shall the Employee make use
of any of such secret or confidential information for his own
purpose or for the benefit of any person, firm, corporation or
other business entity except the Company or any subsidiary or
affiliate thereof.
5
<PAGE> 6
13. Company Right to Inventions. The Employee shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and
all inventions, improvements, technical information, methods and
suggestions (the "Inventions") relating in any way to the business of
providing physician practice management, physician network management
and/or clinical information technology to or for physicians, which he
may develop or acquire during the period of the Employee's employment
with the Company prior to any termination of employment (whether or
not during usual working hours), together with all patent
applications, patents, copyrights and reissues thereof that may at any
time be granted for or upon any such Inventions. In connection
therewith:
(a) the Employee shall without charge, but at the expense of the
Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as
may be reasonably necessary or proper in the reasonable opinion
of the Company to vest title to any such inventions,
improvements, technical information, methods, patent
applications, patents, copyright applications, copyrights or
reissues of any thereof in the Company and to enable it to obtain
and maintain the entire right and title thereto throughout the
world; and
(b) the Employee shall render to the Company at its expense
(including a reasonable payment for the time involved in case he
is not then in its employ) all such assistance as it may
reasonably require in the prosecution of applications for said
patents, copyrights or reissues thereof, in the prosecution or
defense or interferences which may be declared involving any said
applications, patents or copyrights and in any litigation in
which the Company may be involved relating to any such patents,
copyrights, inventions, improvements, technical information or
methods.
14. Enforcement. It is the desire and intent of the parties hereto that
the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any
particular provision of this Agreement shall be adjudicated to be
invalid or unenforceable, such provision shall be deemed amended to
delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such amendment to apply only with respect to the
operation of such provision in the particular jurisdiction in which
such adjudication is made; provided, however, that if any one or more
of the provisions contained in this Agreement shall be adjudicated to
be invalid or unenforceable because such provision is held to be
excessively broad as to duration, geographical scope, activity or
subject, such provision shall be deemed amended by limiting and
reducing it so as to be valid and enforceable to the maximum extent
compatible with the applicable laws of such jurisdiction, such
amendment to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is
made.
15. Remedies; Survival. (a) The Employee acknowledges and understands that
the provisions of this Agreement are of a special and unique nature,
the loss of which cannot be accurately compensated for in damages by
an action at law, and that the breach of the provisions of this
Agreement would cause the Company irreparable harm. In the event of a
breach by the Employee of the provisions of Section 12 or 13 hereof,
the Company shall be entitled to an injunction restraining him from
6
<PAGE> 7
such breach. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available for
any breach of this Agreement.
(b) Notwithstanding anything contained in this Agreement to the
contrary, the provisions of Sections 12, 13, 14 and this Section
15 shall survive the expiration or other termination of this
Agreement until, by their terms, such provisions are no longer
operative.
(c) It is understood and agreed that the provisions of Sections 12
and 13 of this Agreement are separate and distinct from any other
agreement between the parties hereto. Accordingly, in the event
of a breach of such provisions, the breaching party shall only be
held responsible for damages arising under such provisions and
not for any damages which may be claimed to arise under or with
respect to any other agreement that is not separately breached.
16. Notices. Notices and other communications hereunder shall be in
writing and shall be delivered personally or sent by air courier or
first class certified or registered mail, return receipt requested and
postage prepaid, addressed as follows:
If to the Employee:
Robert J. Alger
126 Fuller
Winnetka, Illinois 60093
If to the Company:
Advanced Health Corporation
555 White Plains Road, Second Floor
Tarrytown, New York 10591
Attention: Chairman and CEO
Or to such other address as the party to whom notice is to be given
may have furnished to the other party in writing in accordance
herewith. All notices and other communications hereunder shall be
deemed to have been given on the date of delivery if personally
delivered; on the business day after the date when sent if sent by air
courier; and on the third business day after the date when sent if
sent by mail, in each case addressed to such party as provided in this
Section 16.
17. Binding Agreement. This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and
devisees. If the Employee should die while any amount would still be
payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the beneficiary designated by the
Employee in writing delivered to the Company, or if there be no such
designated beneficiary, to his estate.
18. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York
applicable to contracts made and to be performed wholly therein.
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<PAGE> 8
19. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing and
shall not operate or be construed as a waiver of any subsequent breach
by such other party.
20. Entire Agreement; Amendments; Execution. This Agreement contains the
entire agreement between the parties with respect to the subject
matter contained herein and supersedes all prior agreements or
understandings among the parties with respect thereto. This Agreement
may be amended only by an agreement in writing signed by the parties
hereto. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original document but all of which
shall constitute but one agreement.
21. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. Severability. Any provisions of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
23. Assignment. With respect to the Employee, this Agreement is personal
in its nature and the Employee shall not assign or transfer this
Agreement or any rights or obligations hereunder. The Company may in
its sole discretion assign or otherwise transfer this Agreement and
the provisions hereof (including, without limitation, Sections 12, 13
and 14) shall inure to the benefit of, and be binding upon, each
successor of the Company, whether by merger, consolidation, transfer
of all or substantially all assets, or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
ADVANCED HEALTH CORPORATION
/s/ Jonathan T. Edelson, MD
---------------------------
Name: Jonathan T. Edelson, MD
Title: Chairman and CEO
/s/ Robert J. Alger
-------------------
Robert J. Alger
8
<PAGE> 1
EXHIBIT 10.19
EXECUTION COPY
May 27, 1999
Mr. Alan B. Masarek
79 Cavalry Road
Weston, Connecticut 06883
Dear Alan:
The following are the terms and conditions we have agreed to in connection
with your resignation from Advanced Health Corporation d/b/a AHT Corporation
(the "Company") and your severance package. These provisions supercede any
existing employment contracts between the Company and you.
1. Your resignation as President and Chief Operating Officer of the Company is
effective as of March 31, 1999.
2. Severance: You will receive a one-year continuation of salary at your
current annual salary rate of $250,000 ("Severance Payments"), plus
benefits as described in Paragraph 5 below, as severance, from April 1,
1999 to March 31, 2000 (the "Severance Period"). Such Severance Payments
will be paid on the normal payment intervals provided employees of the
Company. You will be paid an additional one year continuation of salary at
your current annual salary rate of $250,000 (the "Additional $250,000
Payment") in exchange for consulting for up to 24 business days in a form
and manner reasonably requested by the Company's Board of Directors. Such
consulting services will be provided during the period from April 1, 2000
to March 31, 2001 (the "Consulting Period"). The Company will pay you this
Additional $250,000 Payment less applicable withholdings in one lump sum
upon execution of this agreement.
3. You agree to repay your current outstanding loans, principal ($467,475) and
interest (at the rate of 6% per annum), beginning May 1, 2000 at the rate
of $15,000 per month with the balance due of all outstanding loans,
including principal and interest on May 1, 2001.
4. You will be entitled to receive your current health benefits during the
Severance Period, (which may be adjusted depending upon a change in health
carrier, but in no event diminishing the benefits you would have received
had you still been employed by the Company); life insurance, including
continued payment by the Company of the premiums related to your $250,000
whole-life policy and the supplemental disability policy with Massachusetts
Casualty Company; a $600 per month car allowance; reasonable cellular phone
and pager use; membership dues with the Young President's Organization not
to exceed $5,000; and inclusion in the Company's 401-k plan. If at the end
of such Severance Period, you are not employed, then an extension of such
benefits will be considered by the Board of Directors.
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5. You have been vested in 150,136 options to acquire Company stock that will
remain fully exercisable for up to five years from the commencement of the
Severance Period.
6. Your resignation from the Board of Directors of the Company is effective
March 31, 1999.
7. You are entitled to receive a success bonus for the sale of the Management
Services Division of the Company that occurred on May 14, 1999 ("the
Sale"), equal to $40,000 plus 2.5% of the net proceeds of the Sale.
Contingent consideration from the Sale received after June 30, 1999 will be
considered part of the proceeds of the Sale. Any such payments shall be
made to you within 14 days of receipt by the Company of the proceeds
related to the Sale.
8. The terms of your current employment contract related to confidentiality,
inventions and non-competition shall remain in full force and effect. It is
expressly understood that the period of any non-competition commences on
March 31, 1999.
9. Current arrangements concerning indemnification, including but not limited
to payment of expenses of officers, directors and employees in connection
with litigation involving the Company shall remain in full force and effect
following termination.
10. This Agreement contains the entire agreement between the parties with
respect to the subject matter contained herein and supersedes all prior
agreements or understandings among the parties with respect thereto, other
than your employment contract and the Company's Senior Executive Loan
Policy. This Agreement may be amended only by an agreement in writing
signed by the parties hereto. This Agreement may be executed in
counterparts, each of which shall be deemed an original document but
together shall constitute but one agreement.
11. Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
Please confirm your agreement with the foregoing by countersigning this
letter agreement in the space provided below.
Very truly yours,
/s/ Jonathan T. Edelson, MD
---------------------------
Jonathan T. Edelson, MD
Chairman and CEO
AGREED TO AND ACCEPTED:
/s/ Alan B. Masarek
- -------------------
Alan B. Masarek
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