SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
OR
[ ] 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 0-26306
IMNET SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 39-1730068
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3015 Windward Plaza, Windward Fairways II,
Atlanta, Georgia 30005-7448
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (770) 521-5600
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
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 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. [X] Yes [ ] 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. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant was approximately $169,720,662 at October 23 1997 (8,344,182 shares).
The number of common shares outstanding at October 23, 1997 was 9,760,698
(exclusive of treasury shares).
<PAGE>
In filing the Annual Report on Form 10-K of IMNET Systems, Inc. (the
"Registrant"), the Registrant incorporated certain of the information required
by Part III by reference to the Registrant's Proxy Statement for the Annual
Meeting of Stockholders. The Registrant's Proxy Statement for the Annual Meeting
of Stockholders will not be filed within the 120 day period following the end of
the Registrant's fiscal year ended June 30, 1997. In addition, the consent of
the Registrant's auditors requires amendment to reflect two additional
Registration Statements on Form S-8. Accordingly, the undersigned registrant
hereby amends Parts III and IV of its Annual Report on Form 10-K as set forth
below:
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT
The Registrant's directors and their ages as of October 27, 1997 are as
follows:
<TABLE>
<CAPTION>
NAME OF NOMINEE SERVICE AS
AGE DIRECTOR POSITION
<S> <C> <C> <C>
Kenneth D. Rardin 47 Since 1992 Chairman of the Board and Chief Executive Officer
James A. Gilbert 49 Since 1996 President, Chief Operating Officer and Director
Daniel P. Howell 45(1) Since 1992 Director
James A. Gordon 48(1) Since 1992 Director
</TABLE>
1 Member of the Audit Committee and the Compensation Advisory
Committee.
Mr. Rardin has been Chairman of the Board and Chief Executive Officer
of the Registrant since October 1992, when the Registrant acquired certain
assets of IMGE, Inc. and certain of its subsidiaries (collectively, "IMGE"). He
was also President of the Registrant from October 1992 until the appointment of
Mr. Gilbert as President in September 1996. Mr. Rardin has over 25 years of
experience in the computer software field. Beginning in late 1990 until the
consummation of the 1992 IMGE acquisition (the "1992 Acquisition"), he was Chief
Executive Officer of IMGE. From 1989 to 1990, Mr. Rardin was a self-employed
consultant in the computer and data communications industries. From 1986 to
1989, Mr. Rardin served as President and Chief Executive Officer of GMD, Inc., a
provider of systems which integrated design and manufacturing automation with
business systems. From 1983 to 1986, Mr. Rardin was President and Chief
Executive Officer of FutureSoft Synergies, Inc., a venture capital investment
and management company. From 1977 to 1982, Mr. Rardin was Chief Operating
Officer of Software AG of North America. During such time, Software AG of North
America grew from a small private software company to one of the industry's
largest publicly-held international software companies.
Mr. Gilbert was appointed a Director, President and Chief Operating
Officer in September 1996. Prior to joining IMNET, Mr. Gilbert held several
positions over eight years at HBO & Company ("HBOC"). Since 1995, he was Senior
Vice President and General Counsel, with operational responsibility for several
product groups. From 1988 to 1995 he served as Vice President. Prior to his
eight-year tenure at HBOC, Mr. Gilbert was a partner with the Atlanta law firm
of Hansell and Post.
Mr. Howell has been a director of the Registrant since 1992. He is a
principal and the Executive Vice President of Mesirow Private Equity
Investments, Inc., and the Vice President of Mesirow Financial Services, Inc. in
Chicago. Mesirow Private Equity Investments, Inc. manages in excess of $200
million in equity capital. He joined Mesirow in 1986. He has an M.B.A. from the
University of Wisconsin-Madison and a B.A. from Lawrence University. Mr. Howell
serves as a director and a member of the compensation committee of Microware
Systems Corporation.
Mr. Gordon has been a director of the Registrant since 1992. He is the
principal of Gordon Management, Inc., which he founded in 1992 to serve as the
general partner of Edgewater Private Equity Fund, L.P., a $100 million private
equity and venture capital investment fund. From 1971 through 1992, he served as
the president and owner of Gordon's Wholesale, Inc. ("GWI"). In 1982, Mr. Gordon
engineered a leveraged buy-out of his personal and family interests in GWI and
sold GWI to a European multinational corporation in 1986. Mr. Gordon has been
active in the private equity markets since 1982 and has completed numerous
transactions since that time. He serves on the boards of directors of Advanced
Photonix, a public company; Pride Industries; Microware Systems Corporation;
Pangea, Inc. and DAC Vision, Inc. He also serves as Chairman of the Investment
Committee at Grinnell College and is an Advisory member of the National
Committee for the Performing Arts. Mr. Gordon is a graduate of Northwestern
University.
TERMS OF OFFICE.
Each of the Registrant's directors will hold office until the
Registrant's Annual Meeting of Stockholders or until his successor is duly
elected and qualified. All executive officers of the Registrant serve at the
discretion of the Board of Directors.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of forms received by it pursuant
to Section 16(a) of the Securities Exchange Act of 1934, as amended, or written
representations from certain reporting persons, the Registrant believes that
with respect to fiscal year 1997, all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners were complied with, except that the grants of 3760 shares to Messrs.
Howell and Gordon were inadvertently not reported on their respective Form 5
filings for the year ending June 30, 1997. Amended Forms 5 have been filed.
ITEM 11. EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
The Registrant pays directors who are not full-time employees of the
Registrant an annual fee of $5,000 for service on the Board of Directors and a
fee of $500 for each Board meeting attended. Directors are entitled to
reimbursement of their traveling costs and other out-of-pocket expenses incurred
in attending Board and Committee meetings. Additionally, directors who are not
members of the Compensation Advisory Committee are eligible to participate in
the Registrant's Employee Stock Option and Rights Plan (the "1993 Plan").
Pursuant to the terms of the 1995 Non-Employee Directors Stock Option Plan (the
"1995 Plan"), non-employee directors will receive options to acquire 3,760
shares of Common Stock on the first business day after the Annual Meeting of
Stockholders, at the closing price of the Registrant's Common Stock on the date
prior to the grant of the option. Pursuant to the 1995 Plan, Mr. Gordon and Mr.
Howell each received options to 3,760 shares of Common Stock on December 20,
1996 at a price of $22.50 per share. All options granted under the 1995 Plan
become exercisable one year after the date of grant, provided the director has
attended at least 75% of the sum of all meetings of the Board of Directors and
any committees on which that director serves, from the date of grant to such
anniversary date. No option granted pursuant to the Plan may be exercised later
than five years following the date of grant thereof.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Registrant to the Registrant's Chief Executive Officer, and the four other most
highly paid executive officers of the Registrant in 1997 (the "Named Executive
Officers"). The information presented is for the fiscal years ended June 30,
1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
FISCAL YEAR SECURITIES
ENDED ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION JUNE 30, COMPENSATION OPTIONS(#) COMPENSATION($)
SALARY($) BONUS($)
<S> <C> <C> <C> <C> <C>
Kenneth D. Rardin 1997 315,363 792,854(7) 105,000 12,508(1)
Chief 1996 324,118 248,955 193,984 11,763(2)
Executive Officer.............. 1995 281,265 --- 150,400 11,273(3)
James L. Gilbert 1997 184,225(4) 148,258(8) 400,000 ---
President and Chief 1996 ---- --- --- ---
Operating Officer........ 1995 ---- --- --- ---
Thomas D. Underwood 1997 155,545 51,519(9) 40,000 ---
Senior Vice President - 1996 139,692(5) 55,975 50,000 ---
Technical Operations..... 1995 --- --- --- ---
Raymond L. Brown 1997 145,649 48,498(10) 25,000 ---
Senior Vice President 1996 77,538(6) 40,113 50,000 ---
and Chief Financial 1995 --- --- --- ---
Officer.....
Gary D. Bowers 1997 134,510 45,864(11) 15,000 ---
Senior Vice President -Business 1996 145,192 38,438 23,647 ---
Development.......... 1995 113,161 31,997 18,800 ---
- --------------------------------
</TABLE>
(1) The amounts shown reflect the dollar value of disability ($7,309) and life
insurance ($5,199) premiums paid by the Registrant.
(2) The amounts shown reflect the dollar value of disability ($9,370) and life
insurance ($2,393) premiums paid by the Registrant.
(3) Reflects the dollar value of disability ($7,309) and life insurance
($3,964) premiums paid by the Registrant.
4) Mr. Gilbert joined the Registrant in September 1996.
(5) Mr. Underwood joined the Registrant in July 1995.
(6) Mr. Brown joined the Registrant in November 1995.
(7) Includes $500,916 deferred under the Registrant's Deferred Compensation
Plan. See "Deferred Compensation Plan."
(8) Includes $79,027 deferred under the Registrant's Deferred Compensation
Plan. See "Deferred Compensation Plan."
(9) Includes $17,809 deferred under the Registrant's Deferred Compensation
Plan. See "Deferred Compensation Plan."
(10) Includes $37,380 deferred under the Registrant's Deferred Compensation
Plan. See "Deferred Compensation Plan."
(11) Includes $17,702 deferred under the Registrant's Deferred Compensation
Plan. See "Deferred Compensation Plan."
OPTION GRANTS TABLE
The following table sets forth certain information regarding options
granted to the Named Executive Officers during the fiscal year ended June 30,
1997. No separate stock appreciation rights ("SARs") were granted during fiscal
1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
INDIVIDUAL GRANTS
INDIVIDUAL GRANTS
--------------------------------------------------------------------
Potential Realizable
Number of % of Total Value at Assumed Annual
Securities Options Rates of Stock Price
Underlying Granted to Exercise Appreciation for Option
Options Employees in Price Expiration Term(2)
Name Granted(#)(1) Fiscal Year ($/share) Date 5%($) 10%($)
- ---------------------- ------------------- ---------------- ------------ ------------ -------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth D. Rardin 105,000 14.1% $15.75 09/09/06 1,040,034 2,635,652
James A. Gilbert 250,000(3) 34.5% 15.75 09/09/06 2,476,273 6,275,361
150,000(4) 20.7% 21.25 09/09/06 660,764 2,940,217
Thomas D. Underwood 40,000 5.5% 15.75 09/09/06 396,204 1,004,058
Raymond L. Brown 25,000 3.4% 15.75 09/09/06 247,627 627,536
Gary D. Bowers 15,000 2% 15.75 09/09/06 148,576 376,522
- -----------------------
</TABLE>
(1) Except as noted in footnotes 3 and 4 below, the options will become
exercisable at the rate of 20% per year from the date of grant and have
10-year terms so long as the optionee's employment with the Registrant
continues. The exercise price of each option is equal to the fair market
value of the underlying Common Stock on the date of the grant, as
determined by the Compensation Advisory Committee of the Board of
Directors. The exercise price may be paid in cash or, at the option of the
Compensation Advisory Committee, in shares of Common Stock valued at fair
market value on the exercise date.
(2) Future value of current-year grants assuming appreciation in the market
value of the Common Stock of 5% and 10% per year over the 10-year option
period. The actual value realized may be greater than or less than the
potential realizable values set forth in the table.
(3) Exercisable in full as of the first anniversary of the date of grant.
(4) Exercisable at the rate of 25% per year commencing on the second
anniversary of the date of the grant.
OPTION EXERCISES AND YEAR-END VALUE TABLE
None of the Named Executive Officers has held or exercised separate
SARs. The following table sets forth certain information regarding options
exercised during the fiscal year ended June 30, 1997 by, and unexercised options
held at fiscal year end by, each of the Named Executive Officers.
<TABLE>
<CAPTION>
FISCAL 1997 YEAR-END OPTION VALUES
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ON VALUE OPTIONS AT 1997 FISCAL YEAR IN-THE-MONEY OPTIONS AT 1997
EXERCISE REALIZED END(#) FISCAL YEAR END($)(1)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------- ------------- ----------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Kenneth D. Rardin 0 0 120,743/383,749 2,350,724/6,070,818
James A. Gilbert 0 0 0/400,000 0/5,299,000
Thomas D. Underwood 0 0 10,000/80,000 148,050/1,204,600
Raymond L. Brown 0 0 10,000/65,000 98,100/775,150
Gary D. Bowers 0 0 17,502/48,698 353,582/767,936
- -----------------
</TABLE>
(1) Calculated based on the $31.06 estimated fair market value of the
underlying securities as of June 30, 1997.
EMPLOYMENT AGREEMENTS
The Registrant entered into an employment agreement with Mr. Rardin in
May 1992, which was amended in July 1995, and again in May 1996. It extends
through December 31, 1999. The employment agreement, as amended, establishes Mr.
Rardin's base salary at $303,132, subject to adjustment upward in accordance
with the Consumer Price Index (the "CPI"). Under the agreement, the Registrant
also has agreed to pay the premiums with respect to certain life and disability
insurance for Mr. Rardin. The agreement may be terminated by the Registrant with
or without cause or upon Mr. Rardin's death or his inability to perform his
duties on a substantially full-time basis on account of disability or incapacity
for a period of six or more months. The agreement also contains a one-year
non-competition provision. The agreement provides that Mr. Rardin is to be
nominated for election as a director of the Registrant for so long as he is
employed full time by the Registrant. Mr. Rardin is also entitled to receive
bonuses provided that the Registrant achieves certain earnings targets, and is
entitled to participate in insurance and other benefit, pension or health plans
provided by the Registrant to its key executive employees. Mr. Rardin is
entitled to severance through December 31, 1999 upon termination of his
employment prior to January 1, 1999 by reason of: (i) termination by the
Registrant other than for cause; or (ii) at the election of Mr. Rardin within
the six month period following a Severance Event. A Severance Event includes:
(a) the occurrence of material changes made without the written consent of Mr.
Rardin which diminish the position, title, authority, compensation or scope of
authority enjoyed by Mr. Rardin as of the date the employment agreement was
executed; (b) the occurrence of a transaction involving the Registrant whereby,
following the consummation thereof, (1) 51% of the Registrant's outstanding
voting shares will have been acquired by a third party or parties in a
transaction or series of transactions effected with the purpose or effect of
accomplishing a change in control of the Registrant or (2) the Registrant will
have disposed of to a third party substantially all of the assets or business or
entered into a substantially similar transaction; or (c) the occurrence of
certain bankruptcy or insolvency events involving the Registrant (a "Bankruptcy
Event"). In the event that Mr. Rardin's employment with the Registrant is
terminated on or after January 1, 1999 for any of the reasons set forth above,
Mr. Rardin is entitled to severance for a period of 12 months from the date of
termination of his employment. The severance to which Mr. Rardin is entitled
includes continued compensation payments at the base salary rate in effect at
the time of the termination of employment, continued ability to participate in
life or death benefit plans, continued life and disability insurance, and
continued ability to participate in employee fringe benefit and pension plans,
each as Mr. Rardin would have been entitled to receive during the term of his
employment. In the event that Mr. Rardin's employment with the Registrant
terminates by reason of: (A) termination by the Registrant other than for cause;
(B) disability; (C) death; or (D) the Severance Events described above, Mr.
Rardin is entitled to receive a pro rata portion of the bonus which he would
otherwise have been entitled to receive, prorated to reflect the actual number
of days worked by Mr. Rardin during such fiscal year.
Messrs. Gilbert, Underwood, Brown, and Bowers have entered into
employment agreements with the Registrant dated September 10, 1996, July 5,
1995, November 17, 1995, and May 22, 1992, respectively. The agreements are
terminable at any time upon three months' written notice by either party;
automatically in the event of the death of the employee; immediately upon
written notice if termination is for cause as defined therein and at any time
upon the mutual agreement of the Registrant and the employee. The agreements
established original base salary rates for Mr. Gilbert, Mr. Underwood, Mr.
Brown, and Mr. Bowers, each subject to annual adjustments tied to increases in
the Consumer Price Index (the "CPI"). As a result of subsequent increases in the
CPI and merit raises, Mr. Gilbert's annual salary is currently $250,000, Mr.
Underwood's current annual salary is $158,307, Mr. Brown's current annual salary
is $148,235, and Mr. Bower's current annual salary is $139,455. Mr. Gilbert also
received a one-time bonus of $100,000 payable over twelve months. Each of the
employees is eligible to receive incentive bonuses under bonus plans to be
determined by the Chief Executive Officer of the Registrant for senior level
executives of the Registrant, with grants of any such bonuses being made in the
sole discretion of the Board of Directors. Each employee is entitled to receive
six months (or in the case of Mr. Gilbert twelve months) severance pay at the
monthly rate of their respective then-current base salaries upon termination of
his employment for any reason other than cause and, with respect to Mr. Bowers,
in the event Mr. Rardin's employment with the Registrant is terminated and such
employee elects to terminate his employment within 30 days thereafter, provided
such severance terminates upon acceptance by such employee of full-time
employment with a subsequent employer during the six month severance period. Mr.
Gilbert's, Mr. Underwood's, and Mr. Brown's agreement contains a one-year
non-competition provision, while Mr. Bowers' agreement contains a six month
non-competition provision.
Each of the Named Executive Officers has elected to defer a portion of
his bonus under the Registrant's Deferred Compensation Plan. See "Deferred
Compensation Plan."
DEFERRED COMPENSATION PLAN
The Registrant provides non-qualified deferred compensation
arrangements for certain executive officers, including Messrs. Rardin, Gilbert,
Underwood, Brown and Bowers, whereby the executive can elect to defer a portion
of the cash compensation he would otherwise be entitled to receive. The purpose
of these arrangements is to assist in the retention of these executives by
allowing a portion of their total compensation to be deferred. Each executive
officer negotiated the deferred compensation component of his compensation
package with the Registrant and elected to defer all or a portion of his bonus
compensation (deferrals of regular salary compensation are also permitted). The
amounts are deferred pursuant to the IMNET Systems, Inc. Amended and Restated
Nonqualified Deferred Compensation Plan (the "Deferred Compensation Plan") dated
as of June 30, 1997. For fiscal 1997, the amount of bonus compensation deferred
under the Deferred Compensation Plan was $500,916, $79,027, $17,809, $37,380 and
$17,702 for Mr. Rardin, Gilbert, Underwood , Brown and Bowers, respectively.
Under the Deferred Compensation Plan, participants in the plan
("Participants") choose from several investment options in which the amounts
deferred will be deemed invested. The amount of payments ultimately received by
the executive will depend on the amounts deferred and the investment performance
of these deemed investment options. The Registrant is not required to actually
invest any funds in accordance with the employee's investment choices. The
Deferred Compensation Plan is intended to be treated as an unfunded "top hat"
plan that is not subject to ERISA. Prior to termination of employment,
Participants must elect a payout schedule. Participants may elect a lump sum
within 60 days of termination of employment, or in installments over a 5-year,
10-year or 15-year period. Participants may also select an option which
accelerates payments in the event there is a change of control of the
Registrant. Messrs. Rardin, Gilbert, Underwood, Brown and Bowers each selected
the option accelerating payments in the event of a change in control.
The Deferred Compensation Plan is administered by a Committee
consisting of Messrs. Rardin, Gilbert, Brown, and Bowers. Since deferred
compensation is accrued and paid in accordance with provisions of the Deferred
Compensation Plan, no additional determinations with respect to this
compensation component are made by the Compensation Committee.
EXECUTIVE SPLIT DOLLAR LIFE INSURANCE PROGRAM
In October 1997, the Registrant implemented a split dollar life
insurance program for certain executives, including Messrs. Rardin, Gilbert,
Underwood, Brown, and Bowers. This program obligates the Registrant to obtain a
life insurance policy ("Policy") insuring the life of the executive which will
provide a minimum specified dollar amount in death benefits (called the "Minimum
Death Benefit"). The Registrant will pay all the insurance premiums required
under the Policies. Ownership of the Policy is "split" between the Registrant
and the Participants. The Registrant has the right of ownership of the net cash
value of the Policy and has the right to receive from any death benefit the
greater of (a) total premiums paid by the Registrant under the Policy, and (b)
net cash surrender value of the Policy on the date of death of the Participant.
The Participant has the right to designate the death benefit beneficiary for the
portion of the death benefit in excess of the Registrant's interest described
above. This portion of the death benefit must at all times equal or exceed the
Minimum Death Benefit. The Minimum Death Benefit under the program is $925,000,
$160,000, $90,000, $160,000 and $80,000 and for Mr. Rardin, Gilbert, Underwood,
Brown and Bowers, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, Messrs. Howell, and Gordon served as members of the
Compensation Advisory Committee. No member of the Committee is an employee,
officer, or former officer of the Registrant, although Mr. Howell served as
Secretary of the Registrant without compensation for such services until
November 6, 1996. John I. Jellinek also served on the Compensation Advisory
Committee until his resignation as a director on August 22, 1996.
The Registrant entered into a distribution agreement with SoftNet
Systems, Inc. ("SoftNet") in March 1993. SoftNet is a software and services
company for which Mr. John I. Jellinek served, at that time, as President and
Chief Executive Officer. Mr. John J. McDonough served, at that time, as Chairman
of the Board of Directors of SoftNet. Messrs. Jellinek and McDonough were
directors of the Registrant until August 22, 1996 and August 20, 1996,
respectively. According to SoftNet's SEC filings, effective as of November 1996,
SoftNet's Board of Directors serves as its compensation committee such that all
its directors are compensation committee members. Mr. Gordon served as a
director and compensation committee member of SoftNet until September 1996. The
Registrant and SoftNet entered into an amendment to the distribution partner
agreement in June 1995 pursuant to which SoftNet agreed to purchase certain
hardware and software from the Registrant at an aggregate purchase price of
approximately $2.0 million, payable in four equal installments due at the end of
each calendar quarter, the first of which was due January 1, 1996, and was paid
in February 1996. The Registrant recorded revenues and trade receivables of
$485,000 in fiscal 1995 pursuant to this arrangement. The remaining $1,515,000
was recognized in fiscal 1996.
On June 30, 1996, the Registrant entered into certain agreements with
SoftNet and an affiliated company which provided for the grant of exclusive
worldwide manufacturing rights and nonexclusive distribution rights with respect
to markets other than healthcare, as defined, for the IMNET MegaSAR Microfilm
Jukebox, the Registrant's proprietary microfilm storage device. The terms of the
agreements included an obligation by SoftNet to pay the Registrant nonrefundable
license fees of $1,000,000, representing the license fees. These nonrefundable
license fees were recognized as revenue by the Registrant in the year ended June
30, 1996. The terms of the agreements also provided for SoftNet to pay the
Registrant a fixed license fee per unit for all units manufactured, and a
provision for SoftNet to purchase, at carrying value, the Registrant's remaining
raw materials inventories on an as-needed basis.
Simultaneously with the execution of the manufacturing and distribution
rights agreements and the second amendment to the distribution agreement, the
Registrant converted all amounts due from SoftNet into a secured note receivable
from SoftNet bearing interest at the prime rate plus 2%, due upon the earlier of
(1) the sale of IMNET Common Stock owned by SoftNet, or (2) June 29, 1997. The
note receivable was fully secured at June 30, 1996 by 112,913 shares of IMNET
Common Stock owned by SoftNet and held as collateral by the Registrant. On
September 24, 1996, the Registrant received a $2.5 million cash payment on the
$2.9 million note receivable from SoftNet and released the collateral the
Registrant held under the note, and SoftNet sold its shares of IMNET Common
Stock.
In July, 1997, the Registrant and SoftNet amended the distributor
agreement referred to above. The Registrant agreed to a credit related to
disputed amounts of $177,000 and accepted property valued at $71,000 in partial
satisfaction of the remaining amount due, and SoftNet executed a new unsecured
note receivable for the remaining balance of $161,000, which bears interest at
the rate of 6.07% per annum, which has been included in prepaid expenses and
other current assets in the accompanying 1997 consolidated balance sheet. No
payments of principal or interest have been made as of the date of this Report.
In addition, SoftNet agreed to manufacture the MegaSAR based on an order from
the Registrant for which a certain portion of the payment for each MegaSAR
delivered to the Registrant will be applied against the balance of the note due
the Registrant. The largest aggregate balance amount of indebtedness under
SoftNet's notes receivable during fiscal 1997 was $2.9 million.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Registrant's Common Stock as of October 23, 1997 by:
(i) each person (or group of affiliated persons) known by the Registrant to be
the beneficial owner of more than 5% of the outstanding Common Stock; (ii) the
Named Executive Officers who beneficially own shares of the Registrant's Common
Stock; (iii) each director of the Registrant; and (iv) all of the Registrant's
executive officers and directors as a group. Except as otherwise indicated in
the footnotes to this table, the Registrant believes that the persons named in
this table have sole voting and investment power with respect to all the shares
of Common Stock indicated.
BENEFICIAL OWNERSHIP
BENEFICIAL OWNER AS OF OCTOBER 23, 1997
SHARES PERCENTAGE
Edgewater Private Equity Fund, L.P.(1)............. 644,396 6.6%
Mesirow Capital(2)................................. 644,396 6.6
Kenneth D. Rardin(3) .............................. 271,573 2.7
James A. Gilbert (4) .............................. 258,842 2.6
Gary D. Bowers(5).................................. 34,268 *
Thomas D. Underwood (6)............................ 23,400 *
Raymond L. Brown(7)................................ 15,649 *
James A. Gordon(1)(8).............................. 651,916 6.7
Daniel P. Howell(2)(8)............................. 651,916 6.7
All officers and directors as a group (9 persons)
(1) (2)(9)......................................... 1,931,293 18.8
Mellon Bank Corporation(10) 661,000 6.8
Waddell & Reed, Inc.(11) 567,000 5.8
- -----------------
* Represents beneficial ownership of less than 1%.
(1) The shares beneficially owned include 644,396 shares held by Edgewater
Private Equity Fund, L.P. ("Edgewater"). Gordon Management, Inc. serves as
general partner of Edgewater. Mr. Gordon is the President and a principal
of Gordon Management, Inc. Mr. Gordon may therefore be deemed to be the
beneficial owner of the shares held by Edgewater. The address of Edgewater
Private Equity Fund, L.P., is 666 Grand Avenue, Suite 200, Des Moines, Iowa
50309.
(2) The shares beneficially owned include 520,287 shares held by Mesirow V and
124,109 shares held by Mesirow VI. Mr. Howell is a principal and the
Executive Vice President of Mesirow Private Equity Investments, Inc., the
General Partner of Mesirow V and Mesirow VI. Mr. Howell may therefore be
deemed to be the beneficial owner of the shares held by Mesirow V and
Mesirow VI. The address of Mesirow Private Equity Investments is 350 North
Clark Street, Chicago, Illinois 60610.
(3) Includes 3,760 shares held by Mr. Rardin's daughter. Also includes options
to purchase 164,065 shares which are either currently exercisable or which
become exercisable within 60 days of the date of this Report. Does not
include 340,427 shares subject to outstanding options, which options are
not currently exercisable and will not become exercisable within 60 days of
the date of this Report.
(4) Includes options to purchase 250,000 shares which are either currently
exercisable or which become exercisable within 60 days of this Report. Does
not include 150,000 shares subject to outstanding options, which options
are not currently exercisable and will not become exercisable within 60
days of the date of this Report.
(5) Includes options to purchase 20,501 shares which are either currently
exercisable or which become exercisable within 60 days of the date of this
Report. Does not include 45,699 shares subject to outstanding options,
which options are not currently exercisable and will not become exercisable
within 60 days of the date of this Report.
(6) Includes options to purchase 23,400 shares which are either currently
exercisable or which become exercisable within 60 days of the date of this
Report. Does not include 66,600 shares subject to outstanding options,
which options are not currently exercisable and will not become exercisable
within 60 days of the date of this Report.
(7) Includes options to purchase 15,000 shares which are either currently
exercisable or which become exercisable within 60 days of the date of this
Report. Does not include 60,000 shares subject to outstanding options,
which options are not currently exercisable and will not become exercisable
within 60 days of the date of this Report.
(8) Includes options to purchase 7,520 shares which are either currently
exercisable or which become exercisable within 60 days of the date of this
Report.
(9) Includes options to purchase 541,017 shares which are currently exercisable
or which become exercisable within 60 days of the date of this Report. Does
not include 711,215 shares subject to outstanding options which options are
not currently exercisable and will not become exercisable within 60 days of
the date of this Report.
(10) Based upon information contained in a Schedule 13G filed with the
Securities and Exchange Commission. The address of Mellon Bank is c/o
Mellon Bank Corporation, One Mellon Bank Center, Pittsburgh, Pennsylvania
15258. Includes shares held by the following subsidiaries: Mellon Bank,
N.A. (645,000 shares) and the Dreyfuss Corporation (610,000 shares).
(11) Based upon information contained in a Schedule 13G filed with the
Securities and Exchange Commission. The address of Waddell & Reed, Inc. is
Post Office Box 29217, 6300 Lamar Avenue, Overland, Kansas 66202-4200.
Includes shares held be the following additional group members: Liberty
National Life insurance Company, Waddell & Reed Financial Services, Inc.,
Torchmark Corporation, and United Investors Management Company. The nature
of the group members' affiliations and shareholdings was not disclosed in
the Schedule 13G.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1992 and January 1994, the Registrant loaned $75,000 and
$30,000, respectively, to Mr. Rardin, the Chairman of the Board and Chief
Executive Officer of the Registrant. Such loans were evidenced by unsecured
promissory notes which are payable as follows: the $75,000 note accrued no
interest for two years from the date of issuance, and accrued interest
thereafter at a rate of 10% per annum. The $30,000 note accrued interest from
the date of issuance at a rate of 10% per annum and was initially due by January
31, 1996. The notes were amended to extend the due date for all payments of
principal and interest to September 30, 1997. Pursuant to the terms of such
notes, bonuses earned by Mr. Rardin pursuant to certain provisions of his
employment agreement were to be applied against amounts due under those notes.
No bonuses were earned pursuant to these provisions. The aggregate balance of
these loans as of June 30, 1997 and the largest aggregate amount of indebtedness
owed to the Registrant by Mr. Rardin during fiscal year 1997 was $105,000 plus
interest of $34,150. On June 30, 1997 the amount of $139,150, including accrued
interest, representing the largest aggregate amount due from the dates of the
loans through such date was offset from bonuses earned by Mr. Rardin in the
fiscal year ended June 30, 1997.
In September 1996, James A. Gilbert became President and Chief
Operating Officer and a director of the Registrant. Prior to September 1996, Mr.
Gilbert was an executive officer of HBOC. HBOC is the Registrant's largest
Healthcare Information Systems distribution partner. During fiscal 1997, HBOC
accounted for 31% of the Registrant's revenues ($31.5 million). As part of its
agreements with HBOC, the Registrant assumed certain customer support and
conversion obligations with respect to HBOC customers currently using HBOC's
First Perspective product line. The Registrant has accrued $3.0 million to
reflect its estimate of the cost of converting the First Perspective customers
to the Registrant's products. The HBOC alliance provided for a seven year term
and five equal payments to HBOC totaling $3.0 million, beginning upon execution
of the agreements through March 1997. Payments of $600,000 were made to HBOC by
the Registrant in September 1996, and a payment of $1.2 million in December
1996. In fiscal 1997, the Registrant recorded a non-recurring charge of $4.6
million to the Registrant's consolidated statement of operations and capitalized
the remaining $1.4 million as an intangible asset related to the Registrant's
valuation of the margin on the maintenance and support revenues expected from
the First Perspective customers. The Registrant has classified the remaining $
1.7 million in estimated conversion costs, net of conversion costs incurred
through June 30, 1997, in accrued expenses in its June 30, 1997 consolidated
balance sheet.
Mr. Gilbert's employment agreement, effective as of September 10, 1996,
provides that if he is required to pay an excise tax resulting from the
acceleration of his non-qualified stock option to acquire 400,000 shares of
Common Stock, then the Registrant will reimburse Mr. Gilbert an amount equal to
such excise tax, in cash or Registrant Common Stock, but not to exceed an amount
equal to the value of 50,000 shares of the Registrant's outstanding Common Stock
as of a specified date.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following are filed as part of this report:
(a) 1. Consolidated Financial Statements
The following consolidated financial statements are filed herewith:
Independent Auditors' Report.
Consolidated Balance Sheets at June 30, 1997 and 1996.
Consolidated Statements of Operations for each of the years in
the three-year period ended June 30, 1997.
Consolidated Statements of Stockholders' Equity for each of the
years in the three-year period ended June 30, 1997.
Consolidated Statements of Cash Flows for each of the years in
the three-year period ended June 30, 1997.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedule
Schedule II -- Valuation and Qualifying Accounts
All other financial statements and schedules not listed above are omitted,
as the required information is not applicable or the information is presented in
the consolidated financial statements or related notes.
3. A. Exhibits
The following exhibits are filed herewith or incorporated herein by
reference:
EXHIBIT
NUMBER DESCRIPTION
2.1(5) -- The Agreement and Plan of Merger dated as of October 27, 1995
among the Registrant, Evergreen Technologies, Inc., Jeffrey
Siegel and Karen Siegel is incorporated herein by reference to
the Exhibit with the same number filed with the Registrant's
Form 8-K for November 3, 1995, filed on November 20, 1995.
2.1.1(4)+++ -- Agreement and Plan of Merger dated
as of September 30, 1996 among the
Registrant, Hunter International, Inc.,
Larry C.
Hunter and Paul Sherman.
2.2(5) -- Agreement and Plan of Merger by and among the Registrant,
Quesix Software, Incorporated, IMNET
California Acquisition Corporation,
Leslie H. Wong and Martin Minjoe, dated
as of November 28, 1995.
3.2.2(1) -- Amended and Restated Certificate of Incorporation of Registrant.
3.3.1(2) -- Amended and Restated Bylaws dated September 10, 1996.
4(1) -- Form of Common Stock certificate.
10.3.1(5) -- Amended and Restated Registration Agreement by and among the
Registrant and certain stockholders of the Registrant, dated as
of May 22, 1992.
10.3.2(1) -- First Amendment to Amended and
Restated Registration Agreement by and
among the Registrant and certain
stockholders of the Registrant, dated as
of March 31, 1993.
10.3.3(1) -- Second Amendment to Amended and
Restated Registration Agreement by and
among the Registrant and certain
stockholders of the Registrant, dated as
of October 18, 1993.
10.3.4(1) -- Third Amendment to Amended and Restated Registration Agreement
by and among the Registrant and certain stockholders of the
Registrant, dated as of January 13, 1995
10.5(1) -- Employee Stock Option and Rights Plan.
10.5.1(6) -- Amendments to IMNET Systems, Inc. Employee Stock Option Rights
Plan, adopted September 9, 1996.
10.5.2(7) -- Forms of Key Employee Stock Options.
10.6(1) -- 1995 Non-Employee Directors Stock Option Plan.
10.6.1(8) -- IMNET Systems, Inc. Employee Discount Stock Purchase Plan.
10.7.1(1) Form of Incentive Stock Option Agreement used by Registrant in
1994 in connection with the Employee Stock Option Rights Plan.
10.7.2(1) -- Form of Incentive Stock Option
Agreement used by Registrant in 1995 in
connection with the Employee Stock
Option and Rights Plan.
10.7.3(5) -- Form of Incentive Stock Option
Agreement used by Registrant in 1996 in
connection with the Employee Stock
Option and Rights Plan.
10.8(1) Form of Indemnification Agreement.
10.9(1) Employment Agreement between the Registrant and Kenneth D.
Rardin, dated May 22, 1992, as amended pursuant to an addendum,
dated as of January 1, 1995.
10.9.1(2) Second Addendum to Employment Agreement between the Registrant
and Kenneth D. Rardin, dated as of September 15, 1996.
10.10.1(1) - Incentive Stock Option Agreement between the Registrant and
Kenneth D. Rardin, dated as of February 14, 1995.
10.10.2(1) - Incentive Stock Option Agreement between the Registrant and
Gary D. Bowers, dated February 14, 1995.
10.10.4(1) - Incentive Stock Option Agreement between the Registrant and
Paul Collins, dated April 19, 1995.
10.18(1) Distributor Agreement between the Registrant and JELCO Data
Services, Inc., dated March 29, 1993.
10.19(1) International Distribution Agreement between the Registrant and
SG2, dated September 20, 1993.
10.20(1) Value-Added Reseller Agreement between the Registrant and
Cerner Corporation, dated September 30, 1994.
10.21(1) Distribution Agreement between the Registrant and IDX Systems
Corporation, dated February 15, 1995.
10.22(1) Distribution Agreement between the Registrant and PHAMIS, Inc.,
dated November 16, 1994.
10.23(1) International Distributor Agreement between the Registrant and
Software AG Germany, dated April 10, 1993.
10.26(1) Amendment to Distributor Agreement between the Registrant and
SoftNet Systems, Inc., dated June 20, 1995.
10.28(5) Distribution Agreement between the Registrant and Datacom
Imaging Systems, Inc., dated as of March 29, 1995.
10.28.1* - Distribution Agreement between the Registrant and HealthVISION,
Inc., dated June 13, 1997.
10.30(5) End-user Equipment Purchase and Software License Terms and
Conditions between the Registrant and McLaren Health Care
Corporation, dated February 10, 1995, as amended.
10.32(5) Employment Agreement between the Registrant and Raymond L.
Brown, dated as of November 17, 1995.
10.33(5) Incentive Stock Option Agreement between Registrant and Raymond
L. Brown, dated as of December 1, 1995.
10.35(2)+ Manufacturing and Distribution License Agreement between
Registrant, SoftNet Systems, Inc. and Micrographic Technology
Corporation, dated as of June 30, 1996.
10.36(6) Employment Agreement between the Registrant and James A.
Gilbert, dated as of September 10, 1996.
10.37(9)+ Value Added Reseller Agreement between the Registrant and ISG
Technologies, Inc., dated March 18, 1997.
10.38(10)++ Stock Purchase Agreement dated as of June 25, 1997 among
Registrant, Advisoft, S.A. and Stockholder.
10.39 Amended and Restated Nonqualified Deferred Compensation Plan
10.40 Form of IMNET Systems, Inc. Endorsement Split-Dollar Life
Insurance Agreement with certain executives
11* Statement re: Computation of Per Share Earnings.
21* Subsidiaries of the Registrant.
23* Consent of KPMG Peat Marwick LLP.
27* Financial Data Schedule (for SEC use only).
- ----------
(1) Incorporated by reference to the Exhibit with the same number in the
Registrant's Registration Statement on Form S-1 (No. 33-92130).
(2) Incorporated by reference to the Exhibit with the same number in the
Registrant's Annual Report on Form 10-K for the year ended June 30,
1996.
(3) Incorporated by reference to the same Exhibit number in the Registrant's
Annual Report on Form 10-K for the year ended June 30, 1995.
(4) Incorporated by reference to the Exhibit 2.1 filed with the Company's
Form 8-K dated September 30, 1996, filed on October 15, 1996.
(5) Incorporated by reference to the same Exhibit number in the Registrant's
report on Form S-1 (No. 33-99846).
(6) Incorporated by reference to the Exhibit with the same number in the
Registrant's Form 10-Q dated December 31, 1996, filed on February 13,
1996.
(7) Incorporated by reference to the Exhibit with the same number in the
Registrant's Form S-8 (Reg. No. 333-19429).
(8) Incorporated by reference to the Exhibit with the same number in the
Registrant's Form S-8 (Reg. No. 333-19397).
(9) Incorporated by reference to the Exhibit with the same number filed with
the Company's Form 8-K dated March 18, 1997, filed on April 2, 1997.
(10) Incorporated by reference to the Exhibit with the same number filed with
the Company's Form 8-K dated June 25, 1997.
* Previously filed.
+ The Company has applied for confidential treatment of portions of this
Agreement. Accordingly, portions thereof have been omitted and filed
separately with the Securities and Exchange Commission.
++ In accordance with Item 601(b) (2) of Regulation S-K, the schedules have
been omitted and a list briefly describing the schedules is at the end of
the Exhibit. The Registrant will furnish supplementally a copy of any
omitted schedule to the Commission upon request.
3.B. Executive Compensation Plans and Arrangements.
1. Employee Stock Option and Rights Plan (Exhibit 10.5 hereof, and of the
Company's Registration Statement on Form S-1 (No. 33-92130)).
2. Amendments to IMNET Systems, Inc. Employee Stock Option Rights Plan,
adopted September 9, 1996 (Exhibit 10.5.1 hereof, and of the Company's
Form 10-Q dated December 31, 1996, filed on February 13, 1996).
3. Forms of Key Employee Stock Options (Exhibit 10.5.2 hereof, and of the
Company's Form S-8 (Reg. No. 333-19429)).
4. 1995 Non-Employee Directors Stock Option Plan (Exhibit 10.6 hereof, and
of the Company's Registration Statement on Form S-1 (No. 33-92130)).
5. IMNET Systems, Inc. Employee Discount Stock Purchase Plan (Exhibit
10.6.1 hereof, and of the Company's Form S-8 (Reg. No. 333-19397)).
6. Form of Incentive Stock Option Agreement used by Registrant in 1994 in
connection with the Employee Stock Option and Rights Plan (Exhibit
10.7.1 hereof, and of the Company's Registration Statement on Form S-1
(No. 33-92130)).
7. Form of Incentive Stock Option Agreement used by Registrant in 1995 in
connection with the Employee Stock Option and Rights Plan (Exhibit
10.7.2 hereof, and of the Company's Registration Statement on Form S-1
(No. 33-92130)).
8. Form of Incentive Stock Option Agreement used by Registrant in 1996 in
connection with the Employee Stock Option and Rights Plan (Exhibit
10.7.3 hereof, and of the Company's Form S-1 (No. 33-99846)).
9. Form of Indemnification Agreement (Exhibit 10.8 hereof, and of the
Company's Registration Statement on Form S-1 (No. 33-92130)).
10. Employment Agreement between the Registrant and Kenneth D. Rardin, dated
May 22, 1992, as amended pursuant to an Addendum, dated as of January 1,
1995 (Exhibit 10.9 hereof, and of the Company's Registration Statement
on Form S-1 (No. 33-92130)).
11. Second Addendum to Employment Agreement between the Registrant and
Kenneth D. Rardin, dated as of September 15, 1996 (Exhibit 10.9.1
hereof, and of the Company's Annual Report on Form 10-K for the year
ended June 30, 1996).
12. Incentive Stock Option Agreement between the Registrant and Kenneth D.
Rardin, dated as of February 14, 1995 (Exhibit 10.10.1 hereof, and of
the Company's Registration Statement on Form S-1 (No. 33-92130)).
13. Incentive Stock Option Agreement between the Registrant and Gary D.
Bowers, dated February 14, 1995 (Exhibit 10.10.2 hereof, and of the
Company's Registration Statement on Form S-1 (No. 33-92130)).
14. Incentive Stock Option Agreement between the Registrant and Paul
Collins, dated April 19, 1995 (Exhibit 10.10.4 hereof, and of the
Company's Registration Statement on Form S-1 (No. 33-92130)).
15. Employment Agreement between the Registrant and Raymond L. Brown, dated
as of November 17, 1995 (Exhibit 10.32 hereof, and of the Company's
report on Form S-1 (No. 33-99846)).
16. Incentive Stock Option Agreement between Registrant and Raymond L.
Brown, dated as of December 1, 1995 (Exhibit 10.33 hereof, and of the
Company's report on Form S-1 (No. 33-99846)).
17. Employment Agreement between the Registrant and James A. Gilbert, dated
as of September 10, 1996 (Exhibit 10.36 hereof, and of the Company's
Form 10-Q dated December 31, 1996, filed on February 13, 1996).
18. Amended and Restated Nonqualified Deferred Compensation Plan
19. Split-Dollar Life Insurance Program
(b) Reports on Form 8-K
The Registrant filed its Current Report on Form 8-K on April 2, 1997,
reporting its agreement with ISG Technologies, Inc., dated March 18,1997.
The Registrant filed its Current Report on Form 8-K on May 15, 1997
reporting its 1996 financial statements as restated for its acquisition of
Hunter International, Inc. in a transaction accounted for as a
pooling-of-interests.
The Registrant filed its Current Report on Form 8-K on July 10, 1997, as
amended by Amendment No. 1 on Form 8-K filed on September 9, 1997, reporting its
acquisition of Advisoft Consulting, S.A. on June 25, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
IMNET SYSTEMS, INC.
October 28, 1997 By: /s/ Raymond L. Brown
--------------------
Raymond L. Brown,
Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
2
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C> <C> <C>
EXHIBIT
NUMBER DESCRIPTION
2.1(5) -- The Agreement and Plan of Merger dated as of October 27, 1995
among the Registrant, Evergreen Technologies, Inc., Jeffrey Siegel
and Karen Siegel is incorporated herein by reference to the
Exhibit with the same number filed with the Registrant's Form 8-K
for November 3, 1995, filed on November 20, 1995.
2.1.1(4)+ ++ -- Agreement and Plan of Merger dated as of September 30, 1996 among
the Registrant, Hunter International, Inc., Larry C. Hunter and
Paul Sherman.
2.2(5) -- Agreement and Plan of Merger by and among the Registrant, Quesix
Software, Incorporated, IMNET California Acquisition Corporation,
Leslie H. Wong and Martin Minjoe, dated as of November 28, 1995.
3.2.2(1) -- Amended and Restated Certificate of Incorporation of Registrant.
3.3.1(2) -- Amended and Restated Bylaws dated September 10, 1996.
4(1) -- Form of Common Stock certificate.
10.3.1(5) -- Amended and Restated Registration
Agreement by and among the Registrant and
certain stockholders of the Registrant,
dated as of May 22, 1992.
10.3.2(1) -- First Amendment to Amended and Restated
Registration Agreement by and among the
Registrant and certain stockholders of the
Registrant, dated as of March 31, 1993.
10.3.3(1) -- Second Amendment to Amended and
Restated Registration Agreement by and
among the Registrant and certain
stockholders of the Registrant, dated as
of October 18, 1993.
10.3.4(1) -- Third Amendment to Amended and Restated
Registration Agreement by and among the
Registrant and certain stockholders of the
Registrant, dated as of January 13, 1995.
10.5(1) -- Employee Stock Option and Rights Plan.
10.5.1(6) -- Amendments to IMNET Systems, Inc. Employee Stock Option Rights
Plan, adopted September 9, 1996.
10.5.2(7) -- Forms of Key Employee Stock Options.
10.6(1) -- 1995 Non-Employee Directors Stock Option Plan.
10.6.1(8) -- IMNET Systems, Inc. Employee Discount Stock Purchase Plan.
10.7.1(1) -- Form of Incentive Stock Option Agreement used by Registrant in
1994 in connection with the Employee Stock Option Rights Plan.
10.7.2(1) -- Form of Incentive Stock Option
Agreement used by Registrant in 1995 in
connection with the Employee Stock Option
and Rights Plan.
10.7.3(5) -- Form of Incentive Stock Option
Agreement used by Registrant in 1996 in
connection with the Employee Stock Option
and Rights Plan.
10.8(1) -- Form of Indemnification Agreement.
10.9(1) -- Employment Agreement between the Registrant and Kenneth D. Rardin,
dated May 22, 1992, as amended pursuant to an addendum, dated as
of January 1, 1995
10.9.1(2) -- Second Addendum to Employment Agreement between the Registrant and
Kenneth D. Rardin, dated as of September 15, 1996.
10.10.1(1) -- Incentive Stock Option Agreement between the Registrant and
Kenneth D. Rardin, dated as of February 14, 1995.
10.10.2(1) -- Incentive Stock Option Agreement between the Registrant and Gary
D. Bowers, dated February 14, 1995.
10.10.4(1) -- Incentive Stock Option Agreement
between the Registrant and Paul Collins,
dated April 19, 1995.
10.18(1) -- Distributor Agreement between the Registrant and JELCO Data
Services, Inc., dated March 29, 1993.
10.19(1) -- International Distribution Agreement between the Registrant and
SG2, dated September 20, 1993.
10.20(1) -- Value-Added Reseller Agreement between the Registrant and Cerner
Corporation, dated September 30, 1994.
10.21(1) -- Distribution Agreement between the Registrant and IDX Systems
Corporation, dated February 15, 1995.
10.22(1) -- Distribution Agreement between the Registrant and PHAMIS, Inc.,
dated November 16, 1994.
10.23(1) International Distributor Agreement between the Registrant and
Software AG Germany, dated April 10, 1993.
10.26(1) -- Amendment to Distributor Agreement
between the Registrant and SoftNet
Systems, Inc., dated June 20, 1995.
10.28(5) -- Distribution Agreement between the Registrant and Datacom Imaging
Systems, Inc., dated as of March 29, 1995.
10.28.1* -- Distribution Agreement between the Registrant and HealthVISION,
Inc., dated June 13, . 1997
10.30(5) -- End-user Equipment Purchase and Software License Terms and
Conditions between the Registrant and McLaren Health Care
Corporation, dated February 10, 1995, as amended.
10.32(5) -- Employment Agreement between the Registrant and Raymond L. Brown,
dated as of November 17, 1995.
10.33(5) -- Incentive Stock Option Agreement between Registrant and Raymond L.
Brown, dated as of December 1, 1995.
10.35(2)+ -- Manufacturing and Distribution License Agreement between
Registrant, SoftNet Systems, Inc. and Micrographic Technology
Corporation, dated as of June 30, 1996.
10.36(6) -- Employment Agreement between the Registrant and James A. Gilbert,
dated as of September 10, 1996.
10.37(9)+ -- Value Added Reseller Agreement between
the Registrant and ISG Technologies, Inc.,
dated March 18, 1997.
10.38(10)++ -- Stock Purchase Agreement dated as of June
25, 1997 among Registrant, Advisoft and
Stockholder.
10.39 -- Amended and Restated Non-Qualified Deferred Compensation Plan
10.40 -- Form of IMNET Systems, Inc. Endorsement Split-Dollar Life
Insurance Agreement with certain executives
11* -- Statement re: Computation of Per Share Earnings.
21* -- Subsidiaries of the Registrant.
23* -- Consent of KPMG Peat Marwick LLP.
27* -- Financial Data Schedule (for SEC use only).
</TABLE>
- ----------
(1) Incorporated by reference to the Exhibit with the same number in the
Registrant's Registration Statement on Form S-1 (No. 33-92130).
(2) Incorporated by reference to the Exhibit with the same number in the
Registrant's Annual Report on Form 10-K for the year ended June 30,
1996.
(3) Incorporated by reference to the same Exhibit number in the Registrant's
Annual Report on Form 10-K for the year ended June 30, 1995.
(4) Incorporated by reference to the Exhibit 2.1 filed with the Company's
Form 8-K dated September 30, 1996, filed on October 15, 1996.
(5) Incorporated by reference to the same Exhibit number in the Registrant's
report on Form S-1 (No. 33-99846).
(6) Incorporated by reference to the Exhibit with the same number in the
Registrant's Form 10-Q dated December 31, 1996, filed on February 13,
1996.
(7) Incorporated by reference to the Exhibit with the same number in the
Registrant's Form S-8 (Reg. No. 333-19429).
(8) Incorporated by reference to the Exhibit with the same number in the
Registrant's Form S-8 (Reg. No. 333-19397).
(9) Incorporated by reference to the Exhibit with the same number filed with
the Company's Form 8-K dated March 18, 1997, filed on April 2, 1997.
(10) Incorporated by reference to the Exhibit with the same number filed with
the Company's Form 8-K dated June 25, 1997.
* Previously filed.
+ The Company has applied for confidential treatment of portions of this
Agreement. Accordingly, portions thereof have been omitted and filed
separately with the Securities and Exchange Commission.
++ In accordance with Item 601(b)(2) of Regulation S-K, the schedules have
been omitted and a list briefly describing the schedules is at the end of
the Exhibit. The Registrant will furnish supplementally a copy of any
omitted schedule to the Commission upon request.
EXHIBIT 10.39
<PAGE>
AMENDED AND RESTATED
IMNET SYSTEMS, INC
NONQUALIFIED DEFERRED COMPENSATION PLAN
The Company originally established the Plan effective June 30, 1997.
The Company wishes to amend and restate the Plan in its entirety, effective the
20th day of October, 1997, the terms and provisions of which are contained
herein.
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to establish a deferred compensation
program for certain of its key management and highly-compensated employees of
the Company and any of its Subsidiaries and Affiliates permitting such employees
with the ability to defer the receipt of compensation from the Company.
2. DEFINITIONS.
As used in this Plan, the following capitalized terms shall have the
indicated meaning.
"Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or more than
50% of the ownership interests in such entity.
"Beneficiary" has the meaning set forth in Section 9 hereof.
"Board" means the Board of Directors of the Company.
"Bonus Compensation" means any cash compensation payable to a
Participant pursuant to the written incentive plan of the Company for any fiscal
year of the Company.
"Bonus Deferral Election" means an election to defer a portion
of a Participant's Bonus Compensation for any fiscal year of the Company
pursuant to the Plan in substantially the form set forth in Exhibit "B" attached
hereto or as may otherwise be specified by the Committee.
"Business Day" means any day on which the New York Stock
Exchange is open for trading.
"Change in Distribution Option" means the distribution option
which permits a Participant to change distribution options in accordance with
Section 8(a)(iii) hereof.
"Change of Control" means the occurrence of one or more of the
following events:
(a) Any "person", including a "syndication" or "group" as
those terms are used in Section 13(d)(3) of the Securities Act, becomes (on or
after the Effective Date) the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding Voting Securities;
(b) the Company is merged or consolidated with another
corporation and immediately after giving effect to the merger or consolidation
either (i) less than 80% of the outstanding Voting Securities of the surviving
or resulting entity are then beneficially owned in the aggregate by (x) the
stockholders of the Company immediately prior to the merger or consolidation, or
(y) if a record date has been set to determine the stockholders of the Company
entitled to vote on the merger or consolidation, the stockholders of the Company
as of that record date, or (ii) the board of directors, or similar governing
body, of the surviving or resulting entity does not have as a majority of its
members the persons specified in clause (c)(i) and (ii) below;
(c) If at any time the following do not constitute a majority
of the Board (or any successor entity referred to in clause (b) above):
(i) persons who are directors of the Company on the Effective
Date; and
(ii) persons who, prior to their election as a director of the
Company (or successor entity if applicable) were nominated, recommended or
endorsed by a formal resolution of the Board;
(d) If at any time during a calendar year a majority of the
directors of the Company are not persons who were directors at the beginning of
the calendar year; and
(e) the Company transfers substantially all of its assets to
another corporation which is a less than 80% owned subsidiary of the Company.
"Change of Control Distribution Option" means the distribution
option described in Section 8(c) hereof which accelerates payments following a
Change of Control.
"Claims Manager" means the Company or such person or persons
as may be designated from time to time by the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Committee referred to in Section 2 of
the Plan. If at any time no Committee shall be in office, then the functions of
the Committee specified in the Plan may be exercised by the Board, as set forth
in Section 2 hereof.
"Company" means IMNET Systems, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.
"Deferred Comp Account" means, with respect to each
Participant, the book-keeping record maintained by the Company for each
Participant in accordance with the terms of this Plan.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Effective Date" means October 20, 1997.
"Fair Market Value" means, with respect to any Investment, the
closing price on the date of reference, or if there were no sales on such date,
then the closing price on the nearest preceding day on which there were such
sales, and in the case of an unlisted security, the mean between the bid and
asked prices on the date of reference, or if no such prices are available for
such date, then the mean between the bid and asked prices on the nearest
preceding day for which such prices are available. With respect to any
Investment which reports "net asset values" or similar measures of the value of
an ownership interest in the Investment, Fair Market Value shall mean such
closing net asset value on the date of reference, or if no net asset value was
reported on such date, then the net asset value on the nearest preceding day on
which such net asset value was reported. For any Investment not described in the
preceding sentences, Fair Market Value shall mean the value of the Investment as
determined by the Committee in its reasonable judgment on a consistent basis,
based upon such available and relevant information as the Committee determines
to be appropriate.
"Installment Distribution Option" means the distribution
option described in Section 8(a)(i) hereof.
"Investment" means the options set forth in Exhibit "A"
attached hereto, as the same may be amended from time to time by the Company in
its sole and absolute discretion.
"Investment Offeror" means Pacific Life Insurance Company, its
successors and assigns.
"Lump Sum Distribution Option" means the distribution option
described in Section 8(a)(ii) hereof.
"Participant" means an employee of the Company or any
Subsidiary or Affiliate designated in Section 4 hereof, or otherwise designated
by the Committee for participation in the Plan who enters into a Participation
Agreement, or a person who was such at the time of his retirement, death, or
other termination of employment and who obtains, or whose beneficiary obtains,
benefits under this Plan in accordance with its terms.
"Participation Agreement" means an agreement between the
Company and an individual pursuant to which the individual becomes a Participant
in the form set forth in Exhibit "C" attached hereto or such other form as may
otherwise be specified by the Committee. Participation Agreements for each
Participant need not be the same and may contain such terms and conditions, not
inconsistent with the Plan, as the Committee may determine appropriate.
"Plan" means this IMNET Systems, Inc. Nonqualified Deferred
Compensation Plan, as it may be amended from time to time.
"Salary Compensation" means any base salary which is otherwise
payable to a Participant in cash by the Company in any calendar year, without
reduction for the amount of any contributions made by the Company on behalf of
Employee under any salary reduction or similar arrangement to a qualified
deferred compensation, pension or cafeteria plan, contributions toward a
simplified employee pension plan described in Section 408(k) of the Code,
contributions towards the purchase of an annuity contract described in Section
403(b) of the Code, and/or contributions of elective contributions pursuant to
an arrangement qualified under Section 401(k) of the Code; provided, however,
that in no event shall "Salary Compensation" include any severance payments or
other compensation which is paid to Employee as a result of his termination of
employment with the Company. Notwithstanding anything herein to the contrary, in
no event shall Salary Compensation include Bonus Compensation.
"Salary Deferral Election" means an election to defer a
portion of a Participant's Salary Compensation pursuant to the Plan in
substantially the form set forth in Exhibit "B" attached hereto or as may
otherwise be specified by the Committee.
"Trust" means the trust created pursuant to the Trust
Agreement.
"Trust Agreement" means that certain Trust Agreement by and
between the Company and the Trustee, entered into or to be entered into in
substantially the form attached hereto as Exhibit "D", as the same may be
amended from time to time in accordance with the terms hereof.
"Trustee" means the trustee of the Trust. The Trustee shall at
all times be a bank with trust powers. The initial Trustee shall be First Union
National Bank of Georgia.
"Unforeseeable Emergency" means with respect to any
Participant, an unanticipated emergency that is caused by an event beyond the
control of the Participant and that would result in severe financial hardship to
the Participant if an early payment of amounts pursuant to this Plan were not
permitted.
"Voting Securities" means any security which ordinarily
possesses the power to vote in the election of the Board without the happening
of any precondition or contingency.
3. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
person. The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan. All decisions made by the
Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons,
including the Company and Plan participants.
Without limiting the generality of the foregoing, the Committee shall
have the following powers and duties:
(a) To require any person to furnish such reasonable
information as may be requested for the purpose of the proper
administration of the Plan as a condition to receiving any benefits
under the Plan;
(b) To make and enforce such rules and regulations and
prescribe the use of such forms as it shall deem necessary for the efficient
administration of the Plan;
(c) To determine the amount of benefits that shall be payable
to any person in accordance with the provisions of the Plan, and to
provide a full and fair review to any Participant whose claim for
benefits has been denied in whole or in part;
(d) To employ at the expense of the Company other persons (who
may or may not be employed by the Company) to assist the Committee in carrying
out its duties under the terms of the Plan;
(e) To keep records of all acts and determinations, and to
keep all such records, books of account, data and other documents as
may be necessary for the proper administration of the Plan;
(f) To prepare and distribute to all Participants, and
Beneficiaries information concerning the Plan and their rights under the Plan;
(g) To exercise any powers reserved to the Company under the
Trust executed in connection with this Plan, including but not limited to the
power to provide investment guidelines to the trustee under the Trust; and
(h) To do all things necessary to operate and administer the
Plan in accordance with its provisions.
4. PARTICIPANTS.
The Committee shall select those management or other key employees of
the Company or any Affiliate or Subsidiary who are responsible for or contribute
to the management, growth and/or profitability of the business of the Company
and/or its Subsidiaries and Affiliates to participate in the Plan. No one shall
be treated as a Participant unless and until the person has entered into a
Participation Agreement.
5. DEFERRED COMPENSATION.
(a) Any Participant may elect to defer the receipt of a portion of the
Salary Compensation otherwise payable to him by the Company in any calendar
year, which portion shall be designated by him pursuant to Salary Deferral
Election. Unless otherwise approved by the Committee, Salary Deferral Elections
must be delivered to the Company prior to January 1 of the first calendar year
in which the Salary Compensation to be deferred is otherwise payable to the
Participant. Notwithstanding the foregoing, a Salary Deferral Election may be
made after January 1 of the calendar year in which the compensation to be
deferred is otherwise payable to the Participant in the following circumstances:
(i) With respect to Salary Deferral Elections for 1997, an
existing Participant may make an election to defer compensation if such election
is made within 30 days after the Effective Date and applies only to Salary
Compensation for services to be performed after the date of the election; and
(ii) With respect to the calendar year in which a Participant
first becomes eligible to participate in this Plan, the newly eligible
Participant may make an election to defer compensation if such election is made
within 30 days after the date the employee becomes eligible and applies only to
compensation for services to be performed subsequent to the election.
(b) Any Participant may elect to defer annually the receipt of a
portion of the Bonus Compensation otherwise payable to him by the Company in any
fiscal year, which portion shall be designated by him pursuant to Bonus Deferral
Election. Unless otherwise approved by the Committee, Bonus Deferral Elections
must be delivered to the Company prior to commencement of the fiscal year of the
Company with respect to which the Bonus Compensation is earned.
6. DEFERRED COMP ACCOUNTS.
(a) Any compensation deferred pursuant to Section 5 of this Plan shall
be credited to a Deferred Comp Account maintained in the name of the
Participant, which Deferred Comp Account shall be credited (i) with respect to
deferrals of Salary Compensation, on the last day of each month, with a dollar
amount equal to the total amount by which the Participant's cash compensation
for such month was reduced in accordance with the Participant's Salary Deferral
Election, and (ii) with respect to deferrals of Bonus Compensation, on the date
such bonus compensation would otherwise have been paid to the Participant in
accordance with the Company's normal practices.
(b) The credit balance of the Deferred Comp Account for each
Participant shall be deemed to have been invested and reinvested from time to
time in such Investments as shall be designated by the Participant in accordance
with the following.
(i) Upon commencement of participation in the Plan, each
Participant shall make a designation of up to five (5) Investments which the
Participant desires to have deemed to be purchased with the amounts credited to
the Participant's Deferred Comp Account in accordance with Section 6(a)(i) and
(ii) hereof. All such deemed purchases of Investments with respect to such
amounts shall be deemed to have occurred on the fifth Business Day following the
day on which the deferrals are credited to the Participant's Deferred Comp
Account.
(ii) Each Participant shall have the right, by giving at least
five (5) days notice before such date, to (A) change the existing Investments in
which the Participant's Deferred Comp Account is deemed to be invested by
deeming a portion of the existing Investments in the Participant's Account to
have been sold and the new Investments purchased; and (B) change the Investments
which are deemed to be purchased with future credits to the Participant's
Deferred Comp Account pursuant to Sections 6(a)(i) and (ii); provided, however,
that in no event shall the number of Investments for a Participant's entire
Deferred Comp Account after any such change ever exceed five (5); provided
further that in no event shall a Participant be permitted to make more than four
(4) such changes in the aggregate during any calendar year.
(iii) In the case of any deemed purchase, the Deferred Comp
Account shall be debited with a dollar amount equal to the quantity and kind of
the Investment deemed to have been purchased multiplied by the Fair Market Value
of such Investment on the date of reference and shall be credited with the
quantity and kind of Investment so deemed to have been purchased. In the case of
any deemed sale of an Investment, the Deferred Comp Account shall be debited
with the quantity and kind of Investment deemed to have been sold, and shall be
credited with a dollar amount equal to the quantity and kind of Investment
deemed to have been sold multiplied by the Fair Market Value of such Investment
on the date of reference.
(iv) In no event shall the Company be under any obligation, as
a result of any designation of Investments made by Participants, to acquire
assets (or to cause the Trust to acquire assets) which correspond with any such
Investments.
(c) The Company shall, within the 45-day period following the close of
each quarter during each calendar year (March 31, June 30, September 30 and
December 31), furnish each Participant with an annual statement of his Deferred
Comp Account balance, showing all debits and credits thereto in accordance with
the terms of this Plan.
(d) A Participant's Deferred Comp Account shall be debited in an amount
equal to the amount of cash distributed to the Participant or the Participant's
Beneficiary pursuant to Section 8 hereof.
7. THE TRUST.
(a) The Company shall enter into the Trust Agreement creating
the Trust for the purposes specified therein and herein. The Trust is intended
to be a "grantor trust" with the result that the corpus and income of the trust
be treated as assets and income of the Company for federal income tax purposes
pursuant to Subpart E, Part I, Subchapter J, Chapter 1, Subtitle A of the Code.
The Trust and any assets held by the Trust will in all events conform to the
substantive terms of the "model trust" described in Revenue Procedure 92-64,
1992-2 C.B. 422, all as determined by the Company in its sole and absolute
discretion. All amounts contributed to the Trust shall remain the assets of the
Company subject to the terms and conditions of the Trust Agreement.
(b) The Company shall contribute an amount equal to the
credits to the Participant's Deferred Comp Account with respect to Salary
Deferral Elections and Bonus Deferral Elections at such times as such amounts
are credited to a Participants account in accordance with Section 5 hereof.
(c) The Company shall remain primarily liable to make payments
to Participants and their Beneficiaries pursuant to this Plan and the Company's
contribution of amounts to the Trust shall not satisfy the Company's obligation
to make payments to Participants and/or Beneficiaries pursuant to this Plan.
Distributions from the Trust to Participants or Beneficiaries will, however, be
applied in satisfaction of such obligation of the Company to make payments
pursuant to Section 8 hereof.
(d) The Company shall be responsible for and pay without any
debit to the Deferred Comp Account or reduction in the Trust, all amounts owed
the Trustee pursuant to the Trust Agreement (including, without limitation, any
amounts which are due pursuant to Section 9 of the Trust Agreement). In the
event that the Company does not pay any such amounts to the Trustee and the
Trustee charges such amount against, and pays it from, the Trust, the Company
shall immediately contribute an amount equal to such charge to the Trust.
8. DISTRIBUTIONS.
(a) Termination of Employment Other than Due To Death. In the
event of termination of a Participant's employment with the Company and all
Affiliates for any reason other than the Participant's death, the Participant
shall receive payments in accordance with the distribution options set forth
below in accordance with the distribution options selected by the Participant in
accordance with his/her Participation Agreement:
(i) Installment Distribution Option. If the Participant
selects the "Installment Distribution Option" in his Participation Agreement,
the Participant shall receive monthly payments commencing on the first day of
the month that is at least 30 days after the Participant's termination of
employment and continuing for 5, 10 or 15 years (as selected by the Participant
in his Participation Agreement). The amount of each monthly payment shall be
determined by dividing the (A) balance in the Participant's Deferred Comp
Account as of the first Business Day of the month immediately preceding the
month for which the payment is to be made, by (B) the number of payments that
remain to be made to the Participant based upon the payout period selected. For
example, if a Participants has selected a 10-year payout period and the first
monthly payment is to be made on March 1, the amount of the payment to be made
on March 1 would be the quotient obtained by dividing (w) the balance of the
Deferred Comp Account as of the first Business Day in February, by (x) 120; the
amount of the payment for April 1 would be the quotient obtained by dividing (y)
the balance of the Deferred Comp Account as of the first Business Day in March,
by (z) 119; and so forth. Notwithstanding the foregoing, the final payment under
the Installment Distribution Option shall equal the balance in the Participant's
Deferred Comp Account as of the Business Day that is 5 days prior to the date of
the final payment.
(ii) Lump Sum Distribution Option. If the Participant selects
the "Lump Sum Distribution Option" in his Participation Agreement, the
Participant shall be paid within thirty (30) days after the Participant's
termination of employment an amount equal to the balance of his Deferred Comp
Account as of the date that is 5 days prior to date that payment is made.
(iii) Change in Distribution Option. If a Participant selects
the "Change in Distribution Option" in his Participation Agreement, the
Participant shall be entitled to change payout options between those in (i) and
(ii) above by written notice to the Company delivered any time which is no less
than 180 days prior to the date of the Participant's termination of employment.
Any notice of change which is given less than 180 days prior to a Participant's
termination of employment shall be of no force and effect.
(b) Death of Participant.
(i) Upon the death of a Participant prior to the date of
termination of his employment with the Company, the credit balance in the
Participant's Deferred Comp Account as of the date of the Participant's death
shall be paid to the Participant's Beneficiary in a lump sum within ninety (90)
days of the date of death.
(ii) Upon the death of a Participant following termination of
employment but prior to payment to the Participant of all amounts to which the
Participant is entitled pursuant to Section 8(a) hereof, any remaining payments
shall be made to the Participant's Beneficiary on the same terms and conditions
as would have applied had the Participant not died.
(c) Change of Control Distribution Option. In the event that
the Participant selects the "Change of Control Distribution Option," then, in
the event of a Change of Control, the Participant shall not be entitled to
receive any distributions pursuant to Section 8(a) hereof (or, as applicable,
any further distributions pursuant to Section 8(a) hereof) and instead the
Participant shall be paid within thirty (30) days following such Change of
Control an amount equal to the balance of his Deferred Comp Account as of the
date that is 5 days prior to the date that payment is made.
(d) Hardship Distributions. Notwithstanding Section 8(a)
hereof, in the event that a Participant experiences an Unforeseeable Emergency,
upon application by a Participant, payments of the then credit balance in the
Participant's Deferred Comp Account may be made to the Participant in an amount
which the Committee determines to be reasonably necessary to meet such emergency
need. The Committee shall have exclusive authority to determine the
circumstances which will constitute an Unforeseeable Emergency. Notwithstanding
the foregoing in no event shall any distributions be made pursuant to this
Section 8(d) to the extent that the Committee determines that the financial
hardship related to the Unforeseeable Emergency is or may be relieved (i)
through reimbursement or compensation by insurance or otherwise, or (ii) by
liquidation of the Participant's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship. The provisions of this
Section 8(d) shall also apply following a Participant's death to any Beneficiary
that is entitled to receive distributions pursuant to Section 9 hereof. The
provisions of this Section 8(d) are intended to comply with the requirements of
Section 3.01(c) of Revenue Procedure 92-65, 1992-2 C.B. 428 and shall be
interpreted and applied in a manner consistent therewith.
(e) Withholding and Other Taxes. Any payments pursuant to this
Section 8 shall be subject to withholding of federal, state and local income
taxes and any other applicable withholding or employment taxes.
9. BENEFICIARIES.
Each Participant shall have the right to designate a beneficiary (a
"Beneficiary") who is to succeed to the Participant's right to receive payments
hereunder in the event of the Participant's death. In case of a failure of
designation or the death of a Beneficiary without the Participant designating a
successor Beneficiary, payments hereunder shall be made to the Participant's
estate. No designation of Beneficiary shall be valid unless in writing signed by
the Participant, dated, and delivered to the Company. Beneficiaries may be
changed by a Participant without the consent of any prior Beneficiaries.
10. RIGHTS UNSECURED; UNFUNDED PLAN; ERISA.
This Plan and the Company's obligations arising hereunder to pay
benefits to a Participant or his beneficiary constitutes a mere promise by the
Company to make payments in the future in accordance with the terms of this Plan
and all Participants and their respective beneficiaries have the status of a
general unsecured creditor of the Company. Neither a Participant nor his
beneficiary shall have any rights in or against any specific assets of the
Company, including, without limitation, the assets of the Trust or any assets of
the Company which correspond with the Investments in which Participants can deem
their Deferred Comp Accounts to be invested.
It is the intention of the Company that this Plan and the Company's
obligations hereunder be unfunded for income tax purposes and for purposes of
Title I of ERISA.
The Company shall treat this Plan as an unfunded plan maintained for a
select group of management employees exempt from Parts 2, 3 and 4 of Title I of
ERISA. The Company shall comply with the reporting and disclosure requirements
of Part 1 of Title I of ERISA in accordance with U.S. Department of Labor
Regulation ss.2520.104-23.
11. NAMED FIDUCIARY AND CLAIMS PROCEDURES
(a) The Company is hereby designated as the named fiduciary
under the Plan and shall have the authority to control and manage the operation
and administration of this Plan, and shall be responsible for establishing and
carrying out the terms of this Plan.
(b) (i) If for any reason a claim for benefits under this Plan
is denied by the Company, the Claims Manager shall deliver to the claimant a
written explanation setting forth the specific reasons for the denial, pertinent
references to the Section(s) of this Plan and any other applicable document on
which the denial is based, such other data as may be pertinent and information
on the procedures to be followed by the claimant in obtaining a review of his
claim, all written in a manner calculated to be understood by the claimant. For
this purpose:
(A) The claimant's claim shall be deemed
filed when presented in writing to the Claims Manager.
(B) The Claims Manager's explanation shall
be in writing delivered to the claimant within 90 days of the
date the claim is filed.
(ii) The claimant shall have 60 days following his receipt of
the denial of the claim to file with the Claims Manager a written request for
review of the denial. For such review, the claimant or his representative may
submit pertinent documents and written issues and comments.
(iii) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days of receipt of the claimant's
request for review of his claim. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner calculated
to be understood by the claimant, as well as specific references to the
pertinent Plan provisions on which the decision is based. If a copy of the
decision is not so furnished to the claimant within such 60 days, the claim
shall be deemed denied on review.
12. NONASSIGNABILITY.
The rights of a Participant or his beneficiaries to payments pursuant
to this Plan are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Participant or his beneficiaries.
13. AMENDMENT OF THE PLAN.
The Committee may amend this Plan at any time, without the consent of
the Participants or their beneficiaries, provided, however, that no amendment
shall divest any Participant or beneficiary of the credit balance of his
Deferred Comp Account except to the extent expressly provided otherwise in this
Plan.
The Committee may amend the terms of any Participation Agreement,
prospectively or retroactively, but, subject to Section 3 above, no such
amendment shall impair the rights of any Participant without the Participant's
consent.
Subject to the above provisions, the Committee shall have broad
authority to amend the Plan to take into account changes in applicable
securities and tax laws and accounting rules, as well as other developments.
14. TERMINATION OF THIS PLAN.
The Committee may terminate this Plan at any time. Upon termination of
this Plan, distribution of the credit balance of each Participant's Deferred
Comp Account shall be made in the manner and at the time heretofore prescribed,
it being the intent that no such termination shall accelerate the payment of any
amounts already credited to a Participant's Deferred Comp Account.
15. EXPENSES.
Costs of administration of this Plan will be paid by the Company.
16. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in this Plan shall confer upon any Participant any
right with respect to the continuation of his employment by the Company or
interfere in any way with the right of the Company, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the Participant from
the rate in existence from time to time.
17. NOTICES.
(a) In Writing; Address. All notices, demands, consents and other
communications provided for in this Plan shall be in writing, shall be given by
a method prescribed in Section 17(b) hereof, and shall be given to the party to
whom it is addressed at the address set forth below or at such other address as
such party hereto may hereafter specify by at least 15 days' prior written
notice:
If to the Company: IMNET Systems, Inc.
3015 Windward Plaza
Windward Fairways II
Alpharetta, Georgia 30005
Attention: Director of Human Resources
If to a Participant: To the address designated
by Participant to the Company in the
Participant's respective Participation
Agreement.
. Any notice, report or other communication shall be delivered by hand or
nationally recognized overnight courier which maintains evidence of receipt, or
mailed by United States certified mail, return receipt requested, postage
prepaid, deposited in a United States post office or a depository for the
receipt of mail regularly maintained by the Post Office. Any notices, demands,
consents or other communication shall be deemed given when received at the
address for which such party has given notice in accordance with the provisions
hereof. Refusal to accept delivery at the address specified for the giving of
such notice in accordance herewith shall constitute delivery.
18. MISCELLANEOUS.
(a) Headings. The headings of the sections of this Plan are
inserted solely for convenience and are not to be given controlling effect, or
used as an aid in the construction of any provision hereof.
(b) Pronouns. All pronouns and any variations thereof shall be
deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the person or persons may require.
(c) Exhibits. All Exhibits attached to this Plan are
incorporated herein and made a part hereof without need for any further
reference.
Adopted by the Company as of the 20th day of October, 1997.
IMNET SYSTEMS, INC.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
<PAGE>
EXHIBIT A
INVESTMENTS
The following Investments sponsored by the Investment Offeror are
available for Participants to designate for their Deferred Comp Accounts to be
deemed to be invested:
NAME OF FUND
Equity Index
Growth
Fixed Account
Equity Income
Multi-Strategy
International
Managed Bond
Government Securities
Money Market
High Yield Bond
Long Term Growth
Emerging Markets
Aggressive Equity
M Proprietary Funds -
Capital Appreciation
M Proprietary Funds - Overseas
M Proprietary Funds - Core Growth
M Proprietary Funds - Enhanced U.S. Equity
Fund
<PAGE>
EXHIBIT B
FORM OF SALARY AND BONUS DEFERRAL ELECTIONS
[ATTACHED]
<PAGE>
SALARY DEFERRAL ELECTION
IMNET SYSTEMS, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
This Salary Deferral Election is made by the individual whose name
appears below pursuant to the IMNET Systems, Inc. Nonqualified Deferred
Compensation Plan and any associated Participation Agreement (collectively, the
"Plan"), the provisions of which hereby are expressly incorporated herein for
all purposes. Capitalized terms used herein but not otherwise defined shall have
the meaning given them in the Plan.
I hereby elect to defer as Salary Deferrals under the Plan
effective as of calendar year beginning on
January 1, 199__ (the "Election Year"): [COMPLETE DESIRED OPTION]
(a) _____% (must be a whole percentage from 1% to 25%) of
the portion of each payment of my Base Salary. The
percentage deferral specified above will apply to any
and all increases in Base Salary while the Plan is in
effect.
(b) $_____________ per month, such amount to be withheld from
regular paychecks on a pro-rata basis.
(c) $_____________ per regular paycheck.
(d) $_____________ per year, such amount to be withheld from
regular paychecks on a pro rata basis.
(e) Other: ___________________________________________.
I understand that the election made by me hereunder will apply to my
Base Salary for the Election Year and all subsequent calendar years unless I
complete a new Salary Deferral Election Form and deliver it to the Plan
Administrator before January 1st of the calendar year for which I want the new
election to apply.
This Salary Deferral Election is intended to be part of the Plan, shall
be construed and interpreted as such, and shall provide no person with any right
or interest except as provided in the Plan. I acknowledge that I have received a
copy of the Plan, that I have read the Plan and accompanying descriptive
material, and that I understand the risks of deferring income pursuant to the
Plan.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
Executed the __ day of _____________, 199__.
PARTICIPANT
-----------------------------
Name:________________________
Acknowledged and received this __ day of ___________, 199__.
IMNET SYSTEMS, INC.
By:______________________________
Name:____________________________
Title:_____________________________
<PAGE>
BONUS DEFERRAL ELECTION
IMNET SYSTEMS, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
This Bonus Deferral Election is made by the individual whose name
appears below pursuant to the IMNET Systems, Inc. Nonqualified Deferred
Compensation Plan and any associated Participation Agreement (collectively, the
"Plan"), the provisions of which hereby are expressly incorporated herein for
all purposes. Capitalized terms used herein but not otherwise defined shall have
the meaning given them in the Plan.
A new Bonus Deferral Election must be completed each fiscal year with
respect to Bonus Deferrals.
With respect to any Bonus Compensation I may be awarded by
IMNET Systems, Inc. attributable to services rendered during the fiscal year
ending June 30, ________ , I hereby elect to defer as a Bonus Deferral under the
Plan a portion of my Bonus Compensation equal to: [COMPLETE DESIRED OPTION]
(a) ______% of the entire amount of such bonus
(must be a whole percentage from 1% to 100%)
(b) $__________________.
(c) Other: ________________________________________
-----------------------------------------------
-----------------------------------------------.
This Bonus Deferral Election is intended to be part of the Plan, shall
be construed and interpreted as such, and shall provide no person with any right
or interest except as provided in the Plan. I acknowledge that I have received a
copy of the Plan, that I have read the Plan and accompanying descriptive
material, and that I understand the risks of deferring income pursuant to the
Plan.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
Executed the __ day of _____________, 199__.
PARTICIPANT
-----------------------------
Name:________________________
Acknowledged and received this __ day of ___________, 199__.
IMNET SYSTEMS, INC.
By:______________________________
Name:____________________________
Title:_____________________________
<PAGE>
EXHIBIT C
FORM OF PARTICIPATION AGREEMENT
[ATTACHED]
<PAGE>
AMENDED AND RESTATED PARTICIPATION AGREEMENT
IMNET SYSTEMS, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
THIS PARTICIPATION AGREEMENT (this "Agreement") made and entered into
as of the ____ day of October, 1997 by and between IMNET SYSTEMS, INC., a
Delaware corporation, with its principal office in Alpharetta, Georgia
(hereinafter referred to as the "Company") and _______________, a resident of
Georgia (hereinafter referred to as "Participant").
W I T N E S S E T H:
WHEREAS, effective June 30, 1997, the Company established the IMNET
Systems, Inc. Nonqualified Deferred Compensation Plan (the "Plan") to permit
certain select management and highly-compensated employees to defer bonus
compensation; and
WHEREAS, certain management employees elected to participate
in the Plan on June 30, 1997; and
WHEREAS, the Company amended and restated the Plan, in its
entirety, effective the 20th day of October, 1997; and
WHEREAS, the Company has selected Participant to participate in the
Plan, as amended, and Participant desires to participate in the Plan on the
terms and conditions hereinafter provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PARTICIPATION IN THE PLAN. Participant continues his
participation in the Plan.
2. THE PLAN. The Plan, as amended from time to time in accordance with
its terms, is hereby incorporated in this Agreement and to the extent that
anything in this Agreement is inconsistent with the Plan, the terms of the Plan
shall control. Participant acknowledges that a copy of the Plan is attached
hereto as Exhibit "A". Capitalized terms used herein shall have the meaning
given them in the Plan.
3. DISTRIBUTIONS. In accordance with Section 8 of the Plan,
the Participant selects the following distribution options:
<PAGE>
(a) INSTALLMENT OR LUMP SUM DISTRIBUTION OPTION. (SELECT
3(A)(I) OR (II) - DO NOT SELECT ---------------------------------------------
BOTH 3(A)(I) AND (II))
(i) INSTALLMENT DISTRIBUTION OPTION. By completing the balance
of this Section 3(a)(i), the Participant selects the Installment Distribution
Option described in Section 8(a)(i) of the Plan:
Check Here ______Participant's Initials Here:___________
Payout Period (Check One): 5 Years_____10 Years____15
Years_____ (ii) LUMP SUM DISTRIBUTION OPTION. By completing the balance of this
Section 3(a)(ii), the Participant selects the Lump Sum Distribution Option
described in Section 8(a)(ii) of the Plan.
Check Here ______Participant's Initials Here:_____
(b) CHANGE IN DISTRIBUTION OPTION. By completing the balance
of this Section 3(b), the Participant selects the Change in Distribution Option
and thereby retains the right, in accordance with Section 8(b) of the Plan, to
change the distribution option selected in Section 3(a) hereof. (COMPLETE THIS
SECTION 3(B) ONLY IF THE CHANGE IN DISTRIBUTION OPTION IS DESIRED).
Check Here ______Participant's Initials Here:___________
(c) CHANGE OF CONTROL DISTRIBUTION OPTION. By completing the
balance of this Section 3(c), the Participant selects the Change of Control
Distribution Option described in Section 8(c) of the Plan. (COMPLETE THIS
SECTION 3(C) ONLY IF THE CHANGE OF CONTROL DISTRIBUTION OPTION IS DESIRED).
Check Here ______Participant's Initials Here:___________
4. BENEFICIARY. Effective as of the date hereof, Participant
designates the following as his Beneficiary under the Plan:
---------------------------------------
5. INVESTMENTS. Participant's Deferred Comp Account balance as of the
date hereof is $_____________. Effective as of the date hereof, the Participant
has completed an Investment Designation in the form set forth in Exhibit "B"
attached hereto (the "Investment Designation Form"). The designation so made
shall remain in effect until changed as hereinafter provided. Changes in such
Investments shall be permitted to be made in accordance with Section 6(b) of the
Plan, no more than four (4) times during each calendar year, by delivery to the
Company of a completed Investment Designation Form at least five (5) Business
Days before the effective date of such change.
In making the designations provided herein, Participant understands and
agrees that the sole purpose for such designations of Investments is as set
forth in the Plan and that Company is under no obligation whatsoever to acquire
the designated Investments and the assets of the Trust are to be invested in
accordance with the terms thereof, which are not dependent upon any designation
made by the undersigned herein. The undersigned further understands and agrees
that (i) Participant and the Beneficiary have the status of an unsecured
creditor of the Company (as described in Section 6 below and in the Plan); (ii)
such designations do not change such status as an unsecured creditor in any
manner; and (iii) such designations do affect, however, the balance of the
Deferred Comp Account and the amount of compensation ultimately payable pursuant
to the terms of the Plan.
6. RIGHT'S UNSECURED; UNFUNDED PLAN; ERISA. The Company's obligations
arising under the Plan to pay benefits to Participant or his Beneficiary
constitute a mere promise by the Company to make payments in the future in
accordance with the terms of the Plan and Participant and his Beneficiary have
the status of a general unsecured creditor of Company. Neither Participant nor
his Beneficiary shall have any rights in or against any specific assets of
Company, including, without limitation, the assets of the Trust or any assets of
the Company which correspond with the Investments in which the Participant, in
accordance with the terms hereof, may from time to time deem the Participant's
Deferred Comp Account to be invested.
It is the intention of the Company and Participant that the Plan and
the Company's obligations thereunder be unfunded for income tax purposes and for
purposes of Title I of ERISA.
Participant acknowledges that the Company shall treat this Agreement as
maintained for a select group of management employees exempt from Parts 2, 3 and
4 of Title I of ERISA.
7. NONASSIGNABILITY. The rights of Participant or his
Beneficiary to payments pursuant to this Agreement are not subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of Employee or his Beneficiary.
8. NOTICES. All notices, requests, demands or any other
communications provided for herein and in the Plan to be made to Participant
shall be sent to the following:
=========================
-------------------------
of to such other address as Participant may hereafter specify to the Company in
accordance with the terms of the Plan.
All notices, requests, demands or any other communications provided for
herein and in the Plan to be made to the Company shall be sent to address set
forth in the Plan.
9. WAIVER. The failure of any party hereto at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party hereto of any condition or the
breach of any term or provision contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed or construed to be a
further or continuing waiver of any such condition or breach of a waiver of any
other condition or the breach of any other term or condition contained in this
Agreement.
10. SEVERABILITY. In the event that any court of competent jurisdiction
shall hold that any term or provision of this Agreement shall be invalid or
unenforceable, the remaining terms and provisions hereof shall continue in full
force and effect, and this Agreement shall be deemed to be amended automatically
to exclude the offending provision.
11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
12. GOVERNING LAW. This Agreement, and the rights of the
parties hereunder, shall be governed by and construed in accordance with ERISA,
and, to the extent not preempted by ERISA, the laws of the State of Georgia.
13. MODIFICATION. No change or modification of this Agreement
shall be valid unless it is in writing and signed by all of the parties.
14. SUCCESSORS. This Agreement shall be binding upon, and
inure to the benefit of, the successors,
assigns, heirs, executors and legal representatives of the
parties hereto.
15. HEADINGS. The headings of the sections of this Agreement
are inserted solely for convenience and are not to be given controlling effect,
or used as an aid in the construction of any provision hereof.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties hereto and no representation, inducement, promise or agreement
between the parties not embodied herein shall be of any force or effect, and no
party will be liable or bound in any manner for any promise, warranty,
representation, or covenant except as specifically set forth herein.
17. PRONOUNS. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
18. EXHIBITS. All exhibits attached hereto are incorporated
into and made a part of this Agreement without need for any further reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
IMNET SYSTEMS, INC.
By:
Name:
Title:
Name:______________________________
<PAGE>
- --------------------------------------------------------------------------------
446287.4
- --------------------------------------------------------------------------------
EXHIBIT A
IMNET SYSTEMS, INC.
NONQUALIFIED DEFERRED COMPENSATION
PLAN
[ATTACHED]
<PAGE>
EXHIBIT B
INVESTMENT DESIGNATION FORM
[ATTACHED]
<PAGE>
446287.4
INVESTMENT DESIGNATION FORM UNDER
<PAGE>
- -446287.4
IMNET SYSTEMS, INC. NONQUALIFIED DEFERRED COMPENSATION PLAN
_________ __, 199_
IMNET Systems, Inc.
3015 Windward Plaza
Windward Fairways II
Alpharetta, Georgia 30202
Attention: Director of Human Resources
Re: IMNET Systems, Inc. Nonqualified Deferred Compensation Plan
The undersigned is a participant in the IMNET Systems, Inc. Nonqualified
Deferred Compensation Plan (the "Plan"), and in furtherance thereof has entered
into a Participation Agreement with IMNET. Pursuant to Section 6 of the Plan and
Section 5 of the Participation Agreement, the undersigned hereby makes the
following Investment designations to be effective as of the date which is Five
(5) Business Days after the date hereof. This Investment Designation revokes all
prior Investment Designations.
1. EXISTING DEFERRED COMP ACCOUNT BALANCE. Pursuant to Section
6(b)(i) of the Plan, the Participant hereby designates that the balance of his
Deferred Comp Account be deemed to be invested as follows:
COMPLETE 1.A., AND COMPLETE 1.B. OR C. - DO NOT COMPLETE BOTH 1.B. AND 1.C.
<TABLE>
<CAPTION>
A. INVESTMENT (SELECT NO MORE B. PERCENTAGE OF DEFERRED COMP C. DOLLAR AMOUNT DESIGNATION
THAN 5) ACCOUNT DESIGNATION (MUST (MUST TOTAL 100% OF CURRENT
TOTAL 100%) DEFERRED COMP ACCOUNT
<S> <C> <C>
BALANCE)2/
(i) _______________ _____% $___________
(ii) _______________ _____% $___________
(iii) _______________ _____% $___________
(iv) _______________ _____% $___________
(v) _______________ _____% $___________
</TABLE>
1/To ensure 100% of the Deferred Comp Account is designated,
consider one of the designations being for the "Balance" of the Deferred Comp
Account.
2. FUTURE CREDITS TO DEFERRED COMP ACCOUNT FOR SALARY AND
BONUS DEFERRALS.
Pursuant to Section 6(b)(ii)(B) of the Plan, all future credits
to the Deferred Comp Account for deferrals of Salary and Bonus Compensation
shall be made in accordance with the following:
COMPLETE 2.B.
A. INVESTMENTS SELECTED IN 1. A. B. PERCENTAGE OF ALL FUTURE
ABOVE CREDITS (MUST TOTAL 100%)
Investment in 1.A.(i) _____%
Investment in 1.A.(ii) _____%
Investment in 1.A.(iii) _____%
Investment in 1.A.(iv) _____%
Investment in 1.A.(v) _____%
3. The designations made hereby shall remain in effect until changed in
accordance with Section 6(b) of the Plan and Section 5 of the Participation
Agreement.
---------------------------------
Name:____________________________
<PAGE>
481708.1
481708.1
Acknowledged and received this ______ day of _______________________,
199_____.
IMNET SYSTEMS, INC.
By: ___________________________________
Name: ___________________________________
Title: ____________________________________
<PAGE>
EXHIBIT D
FORM OF TRUST AGREEMENT
[ATTACHED]
<PAGE>
TRUST AGREEMENT
UNDER THE IMNET SYSTEMS, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
THIS TRUST AGREEMENT (this "Trust Agreement") made as of the ____ day
of _______, 1997 by and between IMNET SYSTEMS, INC., a Delaware corporation
("IMNET") and FIRST UNION NATIONAL BANK OF GEORGIA ("Trustee").
WHEREAS, IMNET expects to incur liability under the terms of
the IMNET Systems, Inc. Nonqualified Deferred Compensation Plan (the "Plan");
WHEREAS, IMNET desires to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of IMNET's creditors in the event of IMNET's Insolvency
(as herein defined) until paid to Plan participants and their beneficiaries in
such manner and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of any Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974
ERISA"), as amended; and
WHEREAS, it is the intention of IMNET to make contributions to the
Trust to provide itself with a source of funds to assist in the meeting of its
liabilities under the Plan.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust
(a) IMNET and the Trustee hereby agree to continue the Trust in
accordance with the terms hereof and to the Trustee continuing to hold,
administer and dispose of the assets of the Trust as provided in this Trust
Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which IMNET is the
grantor, within the meaning of Subpart E, Part I, Subchapter J, Chapter 1.
Subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and
shall be construed accordingly.
(d) The principal of the Trust and any earnings thereon shall be held
separate and apart from other funds of IMNET and shall be used exclusively for
the uses and purposes of Plan participants, their beneficiaries under the terms
of the Plan and other general creditors of IMNET, as herein set forth. As used
in this Trust Agreement, the term "Plan participant" shall include any
participant in the Plan. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan and this Trust Agreement shall be mere
unsecured contractual rights of Plan participants and their beneficiaries
against IMNET. Any assets held by the Trust will be subject to the claims of
IMNET's general creditors under federal and state law in the event of the
Insolvency of IMNET, as defined in Section 3(a) herein.
(e) At such times as are specified in each Plan, IMNET shall be
required to irrevocably deposit additional cash or other property to the Trust
in an amount sufficient to pay Plan participants and their beneficiaries the
benefits payable pursuant to the terms of each Plan as of the close of the Plan
year.
(f) The name of the Trust shall be the "IMNET Systems, Inc.
Rabbi Trust."
Section 2. Payments to Participants and Their Beneficiaries.
(a) IMNET shall deliver to Trustee, from time to time, a schedule (the
"Payment Schedule") that indicates the amounts payable in respect of each Plan
participant (and their beneficiaries), that provides instructions acceptable to
Trustee for determining the amounts so payable, the form in which such amount is
to be paid (as provided for or available under the Plan), and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
Trustee shall make payments to Plan participants and their beneficiaries in
accordance with such Payment Schedule. IMNET may from time to time modify such
Payment Schedule only to the extent payments are modified in accordance with the
terms of the Plan. The Trustee shall make provision for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the terms of the
Plan and shall pay amounts withheld to the appropriate taxing authorities or
determine that such amounts have been reported, withheld and paid by IMNET.
(b) The entitlement of a Plan participant or his beneficiaries to
benefits under the Plan shall be determined by IMNET, and any claim for such
benefits shall be considered and reviewed pursuant to the Plan.
(c) IMNET may make payment of benefits directly to Plan participants or
their beneficiaries as they become due under the terms of the Plan. IMNET shall
notify Trustee of its decision to make payment of benefits directly prior to the
time amounts are payable to Plan participants or their beneficiaries.
(d) Notwithstanding anything in this Section 2 to the contrary, when
amounts are otherwise payable to Plan participants and/or their beneficiaries in
accordance with the Payment Schedule, if the Company requests the Trustee to do
so, the Trustee shall, in lieu of making payments directly to such persons,
disburse to IMNET from the Trust an amount equal to the amount that is so
payable. Such disbursement with respect to any payment shall be made not less
than 3 nor more than 10 days prior to any payment date, and shall be accompanied
with a notification of the amounts involved, the participant/beneficiary
involved and the required payment date. All such disbursements shall be made as
follows:
"IMNET f/b/o [Name of Participant/Beneficiary]"
The description of said payment shall read "Payment of gross
amount of benefit due."
Upon receipt by IMNET from Trustee of any payment described in the
immediately preceding paragraph, IMNET shall (i) promptly deposit said payment
into IMNET's payroll account (ii) make payment to the Plan participant and/or
beneficiary of the amount due under the Plan; (iii) determine the amount of
federal, state and local taxes required to be withheld on such payment, (iv)
withhold and remit such taxes to the appropriate taxing authorities, and (v)
comply with federal and state tax reporting requirements applicable to payments
made under the Plan.
Section 3. Trustee Responsibility Regarding Payments to Trust
Beneficiary When IMNET Is Insolvent.
(a) Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if IMNET is Insolvent. IMNET shall be considered "Insolvent"
for purposes of this Trust Agreement if (i) IMNET is unable to pay its debts as
they become due, or (ii) IMNET is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, the principal
and income of the Trust shall be subject to claims of general creditors of IMNET
under federal and state law as set forth below:
(1) The Chairman of the Board of Directors and the Chief
Financial Officer of IMNET shall have the duty to inform the Trustee in writing
of IMNET's Insolvency. If a person claiming to be a creditor of IMNET alleges in
writing to Trustee that IMNET has become Insolvent, the Trustee shall determine
whether IMNET is Insolvent and, pending such determination, Trustee shall
discontinue payment of benefits to Plan participants or their beneficiaries.
(2) Unless the Trustee has actual knowledge of IMNET's
Insolvency, or has received notice from IMNET or a person claiming to be a
creditor alleging that IMNET is Insolvent, the Trustee shall have no duty to
inquire whether IMNET is Insolvent.
(3) The Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the assets of the Trust for
the benefit of IMNET's general creditors until it has determined that IMNET is
not Insolvent. In making such determination, the Trustee shall rely upon such
information and evidence as it, in its sole discretion, deems appropriate,
including financial information, whether or not certified, from the then
employed independent certified public accountants for IMNET. The determination
of the Trustee concerning whether or not IMNET is Insolvent shall, for all
purposes under this Agreement, be conclusive and binding upon IMNET, Plan
participants and their beneficiaries and all other parties. Nothing in this
Trust Agreement shall in any way diminish any rights of Plan participants or
their beneficiaries to pursue their rights as general creditors of IMNET with
respect to benefits due under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after Trustee has determined that IMNET is not Insolvent (or is
no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by IMNET in lieu of the payments provided
for hereunder during any such period of discontinuance.
Section 4. Payments to IMNET
Except as provided in Section 3 hereof, IMNET shall have no right or
power to direct Trustee to return to IMNET or to divert to others any of the
Trust assets before all payments of benefits have been made to Plan participants
and their beneficiaries pursuant to the terms of the Plan.
Section 5. Investment Authority and Directions The Trustee is
authorized and empowered in its sole discretion:
(a) to invest and reinvest the principal and income of the
Trust without distinction between principal and income, in such
Investments (as hereinafter defined) as the Trustee deems proper;
(b) to keep any cash from time to time held hereunder on
deposit in a banking institution as the Trustee elects, for a
reasonable period of time prior to its investment pursuant to the
provisions of Section 5;
(c) to sell, exchange or transfer any Trust property at public
or private sale for cash or
on credit; and
(d) to exercise, generally, any of the powers which an
individual owner might exercise in connection with property of the
Trust, and to do all other acts that the Trustee may deem necessary or
proper to carry out any of the powers set forth in this Section 5 of
this Trust Agreement or otherwise in the best interests of the Trust.
In no event may Trustee invest in securities (including stock or rights
to acquire stock) or obligations issued by IMNET, other than a deminimis amount
held in common investment vehicles in which Trustee invests. All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or rest with Plan
participants or their beneficiaries.
Notwithstanding the foregoing provisions of this Section 5, IMNET
shall be an "Advisor" with respect to any amounts held in the Trust, and except
to the extent that it relinquishes these powers in writing or appoints another
Advisor, the Trustee shall follow the Advisor's written directions with respect
to the sale and purchase of Investments (as hereinafter defined).
Notwithstanding anything herein to the contrary, the Trustee shall make no sale
or purchase of an Investment without the prior approval of the Advisor;
provided, however, that the Trustee may make a sale or purchase of an Investment
without the prior approval of the Advisor if the Trustee has not received
written disapproval from the Advisor of a proposed sale or purchase of an
Investment within ten (10) days after the mailing to the Advisor of the
recommendation. No Trustee shall be accountable for any loss sustained by
reasons of any action taken or omitted pursuant to the provisions of this
paragraph, and no person dealing with the Trustee need inquire whether or not
these provisions have been complied with. For purposes of this paragraph,
"Investment" means stocks, bonds, notes, debentures, money market funds, time
deposits, certificates of deposit, commercial paper, mutual funds, life
insurance policies, annuity contracts or any other investment that IMNET may
from time to time permit.
Section 6. Disposition of Income. During the term of this
Trust, all income received by the Trust, net of expenses and taxes, shall be
accumulated and reinvested.
Section 7. Accounting by Trustee. Trustee shall keep accurate and
detailed records of all investments, receipts, disbursements and all other
transactions required to be made, including such specific records as shall be
agreed upon in writing between IMNET and Trustee. Within 30 days following the
close of each month and within 30 days after the removal or resignation of
Trustee, Trustee shall deliver to IMNET a written account of its administration
of the Trust during such month or during the period from the close of the last
preceding month to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
Section 8. Responsibility of Trustee.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by IMNET which is contemplated by, and in
conformity with, the terms of the Plan or this Trust and is given in writing by
IMNET. In the event of a dispute between IMNET and any party, Trustee may apply
to a court of competent jurisdiction to resolve the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, IMNET agrees to indemnify Trustee against Trustee's
costs, expenses and liabilities (including, without limitation, reasonable
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If IMNET does not pay such costs, expenses and liabilities in a
reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel for
IMNET generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein;
provided, however, that if an insurance policy or annuity contract is held as an
asset of the Trust, Trustee shall have no power to name a beneficiary of the
policy or contract other than the Trust, to assign the policy or contract (as
distinct from conversion of the policy or contract to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy or contract.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Code.
Section 9. Compensation and Expenses of Trustee IMNET shall pay Trustee
such reasonable compensation for its services as may be agreed upon in writing
from time to time by IMNET and Trustee. IMNET shall also pay the reasonable
expenses incurred by Trustee in the performance of its duties under this Trust
Agreement, including without limitation fees of counsel engaged by Trustee
pursuant to Section 8 of this Trust Agreement. Such compensation and expenses
shall be charged against and paid from the Trust to the extent IMNET does not
pay such amounts.
Section 10. Resignation and Removal of Trustee.
(a) Trustee may resign at any time by written notice to IMNET, which
shall be effective 30 days after receipt of such notice unless IMNET and Trustee
agree otherwise.
(b) Trustee may be removed by IMNET on 30 days written notice
or upon shorter notice accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 45 days after receipt of notice
of resignation, removal or transfer, or, if longer, as promptly as
administratively feasible, unless IMNET extends the time limit.
(d) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this Section 10. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
Section 11. Appointment of Successor.
(a) If Trustee resigns (or is removed) in accordance with Section 10
hereof, IMNET may appoint any third party, such as bank trust department or
other party that may be granted corporate trustee powers under state law, as a
successor to replace Trustee upon resignation or removal. The appointment shall
be effective when accepted in writing by the new Trustee, who shall have all of
the rights and powers of the former Trustee, including ownership rights in the
Trust assets. The former Trustee shall execute any instrument necessary or
reasonably requested by IMNET or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any
prior trustee and may retain or dispose of existing Trust assets, subject to the
terms and conditions of this Trust Agreement. The successor Trustee shall not be
responsible for and IMNET shall indemnify and defend the successor Trustee from
any claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at the time it
becomes successor Trustee.
Section 12. Amendment or Termination.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and IMNET. Notwithstanding the foregoing, no such amendment
shall conflict with the terms of any Plan or shall make the Trust revocable.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan or upon the written approval of all Plan participants
or beneficiaries entitled to payment of benefits pursuant to the terms of the
Plan. Upon termination of the Trust any assets remaining in the Trust shall be
returned to IMNET.
Section 13. Notices. All notices, requests, demands or any other
communications provided for in this Trust Agreement shall be in writing and
shall be (i) delivered by hand, (ii) mailed by United States certified mail,
return receipt requested, postage prepaid, or (iii) sent by nationally
recognized overnight courier which maintains evidence of delivery and receipt.
Any notices, requests or demands shall be deemed given or made (iv) when
delivered by hand delivery, (v) 4 business days after mailing by United States
certified mail, return receipt requested, postage prepaid, or (vi) 1 business
day after consignment to an overnight courier services. All notices, requests or
demands shall be directed to the following addresses (or to such other addresses
as such parties may designate by notice to the other parties):
To IMNET: IMNET Systems, Inc. 3015 Windward Plaza Windward
Fairways II Alpharetta, Georgia 30005 Attention: Director of Human Resources
With a Copy To: Arnall Golden & Gregory 2800 One Atlantic Center 1201 West
Peachtree St. Atlanta, GA 30309 Attention: T. Clark Fitzgerald, III
To Trustee: First Union National Bank of Georgia
=================================
Attention:
Section 14. Miscellaneous.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the
State of Georgia.
(d) The failure of any party hereto at any time or times to require
performance of any provision hereof shall in no manner affect the right to
enforce the same. No waiver by any party hereto of any condition or the breach
of any term or provision contained in this Trust Agreement, whether by conduct
otherwise, in any one or more instances, shall be deemed or construed to be a
further or continuing waiver of any such condition or breach of a waiver of any
other condition or the breach of any other term or condition contained in this
Trust Agreement.
(e) In the event that any court of competent jurisdiction shall hold
that any term or provision of this Trust Agreement shall be invalid or
unenforceable, the remaining terms and provisions hereof shall continue in full
force and effect, and this Trust Agreement shall be deemed to be amended
automatically to exclude the offending provision.
(f) This Trust Agreement may be executed in multiple copies and each
such executed copy shall be an original of this Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Trust
Agreement as of the date first written above.
FIRST UNION NATIONAL BANK OF GEORGIA
By:
Name:
Title:
IMNET SYSTEMS, INC.
By:
Name:
Title: ____________________________________
EXHIBIT 10.40
<PAGE>
IMNET SYSTEMS, INC.
ENDORSEMENT SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
THIS IMNET SYSTEMS, INC. ENDORSEMENT SPLIT-DOLLAR LIFE
INSURANCE AGREEMENT made and entered into this day of October, 1997, by and
between IMNET SYSTEMS, INC., a Delaware corporation with its principal office in
Alpharetta, Georgia (hereinafter referred to as the "Company"), and KENNETH D.
RARDIN, a resident of the State of Georgia (hereinafter referred to as the
"Employee").
W I T N E S S E T H
WHEREAS, the Employee is employed by the Company; and
WHEREAS, the Employee wishes to obtain life insurance protection for
his designated beneficiaries in the event of his death and the Company is
willing to assist the Employee in obtaining such protection as an additional
employment benefit, all as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is agreed between
the parties as follows:
1. Definitions. The following capitalized terms have the
indicated meanings for purposes of this
Agreement:
"Agreement" means this IMNET Systems, Inc. Endorsement
Split-Dollar Agreement, as amended from time to time in accordance with the
terms hereof.
"Annual Insurance Cost" means, with respect to any calendar
year for which such amount is to be determined for purposes of this Agreement,
the cost (calculated by application of the lower of (i) the PS 58 rate set forth
in Rev. Rul. 55-747, 1955-2 C.B. 228 (or the corresponding applicable provision
of any future Revenue Ruling), or (ii) the Insurance Company's current published
premium rate for annually renewable term insurance for standard risks, or such
other amount as may be required or permitted pursuant to Revenue Ruling, 64-328,
1964-2 C.B.11 and subsequent interpretations or modifications thereof, all as
determined by the Company in its sole and absolute discretion) of the portion of
the death benefit which the Beneficiary would receive under the Policy and in
accordance with this Agreement if the Employee died during such year, all as
determined by the Company in its sole and absolute discretion.
"Beneficiary" means the beneficiary or beneficiaries
designated by the Employee in accordance with Section 6(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Claims Manager" means the Company or such person or persons
as may be designated from time to time by the Company.
"Company" means IMNET Systems, Inc., a Delaware corporation
and its successors and assigns.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Employee" means Kenneth D. Rardin and his/her successors and
assigns in accordance with this Agreement (as modified by Section 13(b) hereof).
"Insurance Company" means, with respect to the Policy, the
insurance company that issues the Policy, and its successors and assigns.
"Minimum Death Benefit" means $925,000.
"Net Cash Surrender Value" means, with respect to the Policy,
and as of any particular date, the excess of the cash surrender value of the
Policy over any outstanding indebtedness incurred by the Company and secured by
the Policy, including any interest due on such indebtedness.
"Policy" means any policy or policies insuring the life of the
Employee obtained by the Company in accordance with Section 2 hereof.
"Total Company Premium Payments" means the aggregate premium
payments made by the Company with respect to the Policy.
2. Life Insurance.
(a) Subject to the other terms and limitations set forth in
this Agreement (including, without limitation, Section 2(b) below), the Company
shall obtain such life insurance policy or policies (the "Policy") as the
Company shall determine in its sole and absolute discretion necessary to
provide, upon the Employee's death, a death benefit to the Beneficiary in
accordance with Section 8 hereof equal to the Minimum Death Benefit. The Policy
may be issued by such insurance company or companies as the Company shall select
in its sole and absolute discretion so long as any such insurance company has a
rating of "A+" or better from two of the following life insurance company rating
agencies: A.M. Best, Duff & Phelps, Moodys and Standard and Poors. The Policy
may have such additional terms and features as the Company shall in its sole and
absolute discretion determine appropriate. The Company shall identify the Policy
by delivering written notice to the Employee describing the Policy substantially
in the form as Exhibit "A" attached hereto. Notice of any replacement Policies
in accordance with Section 3(b) hereof shall be provided to the Employee in
substantially similar manner.
(b) Notwithstanding the foregoing, if through reasonably
diligent efforts, the Company is unable to obtain any insurance policy which
provides a death benefit which satisfies the requirements of Section 2(a)
hereof, the Company will be deemed to have been released, to the extent of the
amount of the death benefit for which such policy was sought, from its
obligation hereunder to provide a death benefit to the Beneficiary equal to the
Minimum Death Benefit.
3. Ownership of the Policy.
(a) Subject to the terms and conditions of this Agreement, the
Company shall be the sole owner of the Policy, shall not transfer, assign or
terminate the Policy and shall have the right to exercise all the rights of
ownership with respect to the Policy.
(b) Notwithstanding anything to the contrary in Section 3(a)
hereof, the Company shall be permitted to encumber and to transfer and assign
the Policy in any manner it shall determine necessary or appropriate, subject,
however, in all events to the terms of this Agreement and of the endorsement(s),
designations and settlement options to be filed with the Insurance Company in
accordance with Section 6 hereof. Furthermore the Company shall be permitted to
cancel and terminate any Policy so long as prior to or simultaneous with such
termination or cancellation, a replacement Policy is obtained which satisfies
the terms and conditions of this Agreement.
4. Payment of Premiums on Policy; Income Reporting by the Company. So
long as the Employee is an employee of the Company, this Section 4(a) shall
apply to the premiums due under the Policy until the Company's obligation with
respect to the Policy is terminated pursuant to Section 9 hereof.
(a) The Company shall pay the entire premium due on the
Policy, whether such premium is payable annually, semi-annually, quarterly,
monthly or on some other basis. Premiums due shall be billed to the Company
without notice to the Employee. In the event that any premiums or charges are
waived under the terms of the Policy, the Company shall not pay any part of the
premium or charges so waived.
(b) The portion of the annual payment of premiums by the
Company pursuant to Section 4(a) hereof equal to the Annual Insurance Cost for
each calendar year shall be treated by the Company and the Employee as income of
the Employee for each calendar year for income and employment tax purposes.
5. Dividends. Any dividends that may be received on the
Policy, or any part thereof, shall be applied to purchase additional paid up
insurance on the life of the Employee. In no event shall the Company be under
any obligation whatsoever, however, to acquire a Policy that pays dividends.
6. Split-Dollar Endorsements.
(a) Split-Dollar Endorsement for Policy. Contemporaneous with
the acquisition of the Policy or as soon as possible following acquisition of
the Policy, the Company and the Employee shall complete an endorsement for the
Policy in the form attached hereto as Exhibit "B" or such other form as may be
required by the Insurance Company to grant the Company the right to recover the
amount to which the Company is entitled pursuant to Section 8 hereof, to permit
the Employee to designate a beneficiary and settlement options with respect to
the amount to which the Employee is entitled pursuant to Section 8 hereof, and
such other matters not inconsistent with the terms hereof. Such endorsement
shall be filed with the Insurance Company as soon as possible following
completion by the Company and the Employee. Except to the extent permitted
otherwise in accordance with Section 3(b) hereof, such endorsement shall not be
terminated, altered or amended by the Company, without the express written
notice of the Employee.
(c) Cooperation; Limitation on Changes. The parties hereto
agree to take all action necessary to cause the beneficiary designation and
settlement election provisions of the Policy to conform to the terms hereof.
Except to the extent otherwise provided in Section 3(b) hereof, the Company
shall not terminate, alter or amend beneficiary designation, settlement options
or endorsements provided for herein without the express written consent of the
Employee.
7. The Company's Right to Make Policy Loans. The Company shall have the
right to obtain loans secured by the Policy. These loans may be obtained either
from the Insurance Company or from others. The Company shall have the right to
assign the Policy as security for the repayment of such loans. All interest
charges with respect to any such loans shall be paid by the Company or shall be
paid from the death proceeds of the Policy in accordance with Section 8 hereof.
8. Death Proceeds.
(a) Upon the Employee's death, the Company will cooperate with
the Beneficiary to take whatever action is reasonably necessary to collect the
death benefit provided under the Policy.
(b) Upon the Employee's death, the Company shall have the
unqualified right to receive a portion of the death benefits provided under the
Policy equal to the greater of (i) the Total Company Premium Payments, or (ii)
the Net Cash Surrender Value of the Policy as of the date of the Employee's
death. The balance of the death benefit provided under the Policy, if any, shall
be paid directly to the Beneficiary. No amount shall be paid from such death
benefit to the Beneficiary until the full amount due the Company hereunder has
been paid.
(c) Notwithstanding any provision hereof to the contrary, in
the event that no death benefit is payable under the Policy upon the death of
the Employee pursuant to the Insurance Company's right to contest the death
benefit thereunder, and in lieu thereof the Insurance Company refunds all or any
part of the premiums paid for the Policy, the Company shall have the unqualified
right to receive all such premium refunds, together with any interest thereon,
and the Beneficiary shall be entitled to nothing hereunder.
9. Termination of the Company's Obligation to Make Premium Payments.
The Company's obligation to make premium payments with respect to any Policy
pursuant to this Agreement shall terminate during the Employee's lifetime,
without notice, upon the occurrence of the first of the following events:
(a) The cessation by the Company of the Company's business
through a liquidation or dissolution of the Company (as opposed to the
continuation of the Company's business by a successor to the Company in a merger
or other acquisition transaction);
(b) Termination of the Employee's employment with the Company
for any reason; or
(c) The bankruptcy, receivership or liquidation of the
Company.
10. Disposition of the Policy on Termination of the Company's
Obligation to Make Premium Payments. In the event of termination of the
Company's obligation to make premium payments for any reason, then the Company
may surrender or cancel the Policy for its Net Cash Surrender Value, or it may
change the beneficiary designation provisions of the Policy, naming itself or
any other person or entity as revocable beneficiary thereof, or exercise any
other ownership rights in and to the Policy, without regard to the provisions
hereof. In any event, no person other than the Company and its assignees shall
thereafter have an interest in and to the Policy, either under the terms thereof
or under this Agreement, without regard to the net Cash Surrender Value of the
Policy.
11. Insurance Company Not a Party. The Insurance Company:
(a) shall not be deemed to be a party to this Agreement for
any purpose nor in any way responsible for its validity;
(b) shall not be obligated to inquire as to the distribution
of any monies payable or paid by it under the Policy pursuant to the terms of
this Agreement; and
(c) shall be fully discharged from any and all liability under
the terms of the Policy upon repayment or other performance of its obligations
in accordance with the terms of the Policy.
12. ERISA. The following provisions are part of this Agreement
and are intended to address the application of ERISA to this Agreement:
(a) The Company is hereby designated as the named fiduciary
under this Agreement and shall have the authority to control and manage the
operation and administration of this Agreement, and shall be responsible for
establishing and carrying out a funding policy and method consistent with the
terms of this Agreement. The funding policy under this Agreement is that all
premiums on the Policy be remitted to the Insurance Company when due. Direct
payment by the Insurance Company is the basis of payment of benefits under this
Agreement, with those benefits in turn being based on the payment of premiums as
provided in this Agreement.
(b) (i) If for any reason a claim for benefits under this
Agreement is denied by the Company, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific reasons for the
denial, pertinent references to the Section(s) of this Agreement on which the
denial is based, such other data as may be pertinent and information on the
procedures to be followed by the claimant in obtaining a review of his claim,
all written in a manner calculated to be understood by the claimant. For this
purpose:
(A) The claimant's claim shall be deemed
filed when presented in writing to the Claims Manager.
(B) The Claims Manager's explanation shall
be in writing delivered to the claimant within 90 days of the
date the claim is filed.
(ii) The claimant shall have 60 days following his receipt of
the denial of the
claim to file with the Claims Manager a written request for review of the
denial. For such review, the claimant or his representative may submit pertinent
documents and written issues and comments.
(iii) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days of receipt of the claimant's
request for review of his claim. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner calculated
to be understood by the claimant, as well as specific references to the
pertinent Plan provisions on which the decision is based. If a copy of the
decision is not so furnished to the claimant within such 60 days, the claim
shall be deemed denied on review.
(c) It is the intention and agreement of the Company and the
Employee that this Agreement is (i) maintained for a select group of management
or highly compensated employees and thereby exempt from Parts 2, 3, and 4 of
Title I of ERISA, and (ii) described in U.S. Department of Labor Regulation
ss.2520.104-24.
13. Assignability By Employee.
(a) Except as otherwise provided in Section 13(b) hereof, the
Employee's rights under this Agreement are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of Employee.
(b) Notwithstanding any provision hereof to the contrary, the
Employee shall have the right to assign irrevocably by gift all of the
Employee's right, title and interest in and to this Agreement and the Policy to
an assignee. This right shall be exercisable by the execution and delivery to
the Company of a written assignment, in substantially the form attached hereto
as Exhibit "B." Upon receipt of such written assignment executed by the Employee
and duly accepted by the assignee thereof, the Company shall consent thereto in
writing, and shall thereafter treat the Employee's assignee as the sole owner of
all of the Employee's right, title and interest in and to this Agreement and in
and to the Policy. Thereafter, the Employee shall have no right, title, or
interest in and to this Agreement or the Policy, all such rights being vested in
and exercisable only by such assignee and any reference herein to the "Employee"
shall be deemed to mean such assignee; provided, however, that any reference
herein to termination of employment of the Employee shall continue to mean the
Employee.
14. No Special Employment Rights. Nothing contained in this
Agreement shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment of Employee for the period of time.
15. Withholding and Employment Taxes. The Company's obligation to make
Policy premium payments in accordance with this Agreement shall be subject to
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements in a manner and form satisfactory to the Company,
which obligations may apply to the Employee whether or not an assignment has
been made pursuant to Section 13(b) hereof.
16. Amendment. This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto, or their
respective successors or assigns, and may not be otherwise terminated except as
provided herein.
17. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Company and its successors and assigns, and Employee,
his respective successors, assigns, heirs, executors, administrators and
beneficiaries.
18. Notices
(a) In Writing; Address. All notices, demands, consents and
other communications provided for in this Agreement shall be in writing, shall
be given by a method prescribed in Section 18(b) hereof, and shall be given to
the party to whom it is addressed at the address set forth below or at such
other address as such party hereto may hereafter specify by at least 15 days'
prior written notice:
If to the Company: IMNET Systems, Inc.
3015 Windward Plaza
Windward Fairways II
Alpharetta, Georgia 30202
Attention: Director of Human Resources
If to Employee: Kenneth D. Rardin
c/o IMNET Systems, Inc.
3015 Windward Plaza
Windward Fairways II
Alpharetta, Georgia 30005
(b) Method. Any notice, report or other communication shall be
delivered by hand or nationally recognized overnight courier which maintains
evidence of receipt, or mailed by United States certified mail, return receipt
requested, postage prepaid, deposited in a United States post office or a
depository for the receipt of mail regularly maintained by the Post Office. Any
notices, demands, consents or other communication shall be deemed given when
received at the address for which such party has given notice in accordance with
the provisions hereof. Refusal to accept delivery at the address specified for
the giving of such notice in accordance herewith shall constitute delivery.
19. Governing Law. This Agreement, and the rights of the
parties hereunder, shall be governed by and construed in accordance with ERISA,
and, to the extent not preempted by ERISA, the laws of the State of Georgia.
20. Headings. The headings of the sections of this Agreement
are inserted solely for convenience and are not to be given controlling effect,
or used as an aid in the construction of any provision hereof.
21. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
22. No Waiver. The waiver of any breach of any term, covenant
or condition of this Agreement by any of the parties hereto shall not constitute
a continuing waiver or waiver of any subsequent breach, either of the same or of
any other additional or different term, covenant or condition of this Agreement.
23. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be valid under applicable law, but
if any such provision is invalid or prohibited under said applicable law, such
provision shall be ineffective only to the extent of such invalidity or
prohibition without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
24. Exhibits. All exhibits attached hereto are incorporated
into and made a part of this Agreement without need for any further reference.
25. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of date set forth above.
IMNET SYSTEMS, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
-----------------------------------
Kenneth D. Rardin
<PAGE>
1708.1
EXHIBIT A
FORM OF NOTICE TO EMPLOYEE OF POLICY
[ATTACHED]
<PAGE>
[Date]
[Name and
Address of Employee]
Re: Split-Dollar Insurance Agreement
Dear ___________:
In accordance with Section 2(a) of that certain IMNET Systems, Inc.
Endorsement Split-Dollar Life Insurance Agreement dated as of ___________ __,
1997 by and between IMNET Systems, Inc. (the "Company") and the undersigned (the
"Agreement") , you are hereby notified that the following life insurance policy
has been obtained by the Company as the "Policy" subject to the Agreement.
Insurance Company -____________________________
Policy Number -
Face Amount - $
Date of (Anticipated) Issue - , ____
------------------------
Please complete the enclosed Split-Dollar Endorsement with respect to
the Policy and return it the undersigned.
IMNET SYSTEMS, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Acknowledged and received this _______ day of ____________________, 199___.
----------------------------------
Name: __________________________________
<PAGE>
481708.1
481708.1
EXHIBIT B
FORM OF SPLIT-DOLLAR ENDORSEMENT
[ATTACHED]
<PAGE>
SPLIT-DOLLAR ENDORSEMENT
REQUEST TO: o CONSENT TO INSURANCE - #1 (Multilife Cases - only)
[Check appropriate o ENDORSEMENT/AMENDMENT TO APPLICATION - #2
Boxes] o BENEFICIARY DESIGNATION - #3
o SMOKER/NONSMOKER CONFIRMATION #4
Employer - IMNET Systems, Inc. Insurance Company -____________________________
PROPOSED INSURED APPLICATION OR POLICY NUMBER
1. CONSENT TO INSURANCE AND CERTIFICATION OF CURRENT EMPLOYMENT:
I consent to my Employer purchasing a life insurance policy on my life
inasmuch as the Policy is issued in connection with a Split-Dollar Life
Insurance Agreement entered into by my Employer and me for my benefit and under
which there exists an insurable interest between my Employer and me. Further, I
certify that I am currently engaged in active full-time work (i.e., working at
least 30 hours per week in a normal capacity and, in particular, not
hospitalized or absent from work due to illness or accident more than a total of
three days in the preceding three month period).
2. SPLIT-DOLLAR POLICY ENDORSEMENT: The following changes and
additional statements are made to the application for insurance on the life
shown above: In the event of the maturity of this Policy by the death of the
Insured, anything herein to the contrary notwithstanding, there shall first be
paid from the Policy proceeds to the Employer, its successor or assigns, an
amount equal to the amount claimed by the Employer to equal the GREATER of the
(i) net cash surrender value of the Policy as of the date of death, or (ii) the
total premiums paid under the Policy, not to exceed in any event the amount
payable under the Policy. Payment by the Insurance Company of a portion or all
of such death proceeds to the Employer, its successors or assigns, in reliance
upon the affidavit of any officer of the Employer as to the amount of such death
proceeds which are due the Employer shall be a full discharge of the Insurance
Company for the amount thereof and shall be binding on all parties having or
claiming any interest under this Policy. I or my assignees shall have the right
to designate the beneficiary or elect an income settlement option with respect
to any portion of the death benefit of the Policy which is in excess if any, of
the amount payable to the Employer, its successors or assigns. The parties to
this document desire this document to constitute the split dollar endorsement to
the Policy. This endorsement and application amendment are not effective until
received and accepted by the Home Office of the Insurance Company, as Evidenced
by Home Office's written confirmation. It is agreed by the undersigned that
these changes and statements shall be incorporated in the application referred
to above as fully and completely as if they had been originally set forth
therein, and shall be subject in all respect to the agreement contained in the
application. This endorsement shall not affect or limit in any way the rights of
the Employer with respect to the Policy upon cancellation or other termination
of the Policy, it being intended to only apply to death benefits.
3. BENEFICIARY DESIGNATION:
I revoke all previous beneficiary designations. Reserving the right to
change the beneficiary, I direct that the death benefit which is not payable to
the Employer, its successors or assigns, be paid in one sum to:
Name: __________________________________
Address: _________________________
-------------------------
Relationship to Insured: _______________________
4. SMOKER/NONSMOKER CONFIRMATION:
Have you smoked any cigarettes within the last 12 months?
Yes No
-------------
Signed at ________________________________ this ____day of
________________________, 199__.
City/State
Applicant and Employer: IMNET SYSTEMS, INC. Employee/Insured:_____________
By: _____________________ Name: ______________
Name:____________________
Title:_____________________
<PAGE>
EXHIBIT C
FORM OF IRREVOCABLE ASSIGNMENT
[ATTACHED]
<PAGE>
375356.6
IRREVOCABLE ASSIGNMENT OF SPLIT-DOLLAR AGREEMENT
THIS ASSIGNMENT, dated this __ day of __________, 19__.
W I T N E S S E T H
WHEREAS, the undersigned (the "Assignor") is the "Employee" pursuant to
that certain IMNET Systems, Inc. Endorsement Split-Dollar Life Insurance
Agreement (the "Agreement") dated as of _________ __, 1997, by and between the
Assignor and IMNET Systems, Inc., a Delaware corporation (the "Company"), which
Agreement confers upon the undersigned certain rights and benefits with regard
to a policy of insurance (the "Policy") insuring the Assignor's life; and
WHEREAS, pursuant to Section 13(b) of the Agreement, the Assignor
retained the right, exercisable by the execution and delivery to the Company of
a written form of assignment, to absolutely and irrevocably assign all of the
Assignor's right, title and interest in and to said Agreement and Policy to an
assignee; and
WHEREAS, the Assignor desires to exercise such right as hereinafter
provided.
NOW, THEREFORE, the Assignor, without consideration and intending to
make a gift, hereby absolutely and irrevocably assigns, gives, grants and
transfers to __________________________________________________ (the "Assignee")
all of the Assignor's right, title and interest in and to the Agreement and the
Policy, intending that, from and after this date, the Agreement be solely
between the Company and the Assignee and that hereafter the Assignor shall
neither have nor retain any right, title or interest therein or in the Policy.
--------------------------------
--------------------------------
ACCEPTANCE OF ASSIGNMENT
The undersigned Assignee hereby accepts the above assignment of all
right, title and interest of the Assignor therein in and to the Agreement and
the Policy and the undersigned hereby agrees to be bound by all of the terms and
conditions of the Agreement, as if the original "Employee" party thereto.
Dated ___________ __, 19__.
================================
[Company Consent to Assignment on Next Page]
<PAGE>
CONSENT TO ASSIGNMENT
The undersigned Company hereby consents to the foregoing assignment of
all of the right, title and interest of the Assignor in and to the Agreement and
the Policy to the Assignee designated therein. The undersigned hereby agrees
that, from and after the date hereof, the undersigned Company shall look solely
to such Assignee for the performance of all obligations under said Agreement
which were heretofore the responsibility of the Assignor, shall allow all rights
and benefits provided therein to the Assignor to be exercised only by said
Assignee, and shall hereafter treat Assignee in all respects as if the original
"Employee" party thereto.
Dated ___________ __, 19__.
IMNET SYSTEMS, INC.
By:
Name:___________________________________
Title:
