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EXHIBIT 10.47
March 17, 1997
Keith M. Roberts
Executive Vice President and General Counsel
QuadraMed Corporation
981 Dolores Street
San Francisco, CA 94110
Dear Mr. Roberts:
We are pleased to inform you that the Board of Directors (the "Board")
of QuadraMed Corporation (the "Company") has authorized an employment package
for you which will provide certain assurances concerning the terms and
conditions of your continued employment with the Company and will allow you to
participate in a program of severance benefit payments should your employment
terminate. The purpose of this letter agreement (the "Agreement") is to document
the terms of your employment package by providing you with a formal employment
contract.
The Company considers it essential to the continuing operation of the
Company and in the best interests of its stockholders to assure the continuous
dedication of key management personnel. It is recognized in the context of
public ownership that a termination of an employee's employment without cause
may be sought and that such circumstances could prove distracting to key
executives and detrimental to the ongoing management and administration of the
Company. Such distraction is not in the best interest of the stockholders of the
Company. Accordingly, the Board has determined to discourage the inevitable
distraction to you in the face of potentially disturbing circumstances inherent
in any uncertainty regarding your employment status. This Agreement is intended
to secure and encourage your ongoing retention by providing separation benefits
in the event that your employment is altered as hereinafter described. In order
to induce you to remain in the employ of the Company, and in consideration of
your agreement set forth in Sections 11, 12, 13 and 14 of Part Two hereof, the
Company agrees to pay the severance payments and benefits set forth in this
Agreement, under the circumstances described herein.
This Agreement supersedes any written or oral employment agreement
between you and the Company prior to the date hereof.
Part One of this Agreement sets forth certain definitional provisions to
be in effect for purposes of determining your benefit entitlements. Part Two
specifies the terms and conditions which will apply to your continued employment
with the Company, including the severance payments and benefits to which you
will become entitled in the event your employment should be terminated. Part Two
concludes this Agreement with a series of general terms and conditions
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applicable to your employment benefits.
PART ONE -- DEFINITIONS
DEFINITIONS. For purposes of this Agreement, including in particular the
severance payments and benefits to which you may become entitled under Part Two,
the following definitions will be in effect:
"CHANGE IN CONTROL" means:
(i) a merger or acquisition in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to change the
State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or substantially all
of the assets of the Company in liquidation or dissolution of the Company;
(iii) a transfer of all or substantially all of the Company's assets
pursuant to a partnership or joint venture agreement or similar arrangement
where the Company's resulting interest is less than fifty percent (50%);
(iv) any reverse merger in which the Company is the surviving entity but
in which fifty percent (50%) or more of the Company's outstanding voting stock
is transferred to holders different from those who held the stock immediately
prior to such merger;
(v) on or after the date hereof, a change in ownership of the Company
through an action or series of transactions, such that any person is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the securities of the combined
voting power of the Company's outstanding securities;
(vi) a majority of the members of the Board are replaced during any
twelve-month period by directors whose appointment or election is not endorsed
by a majority of the members of the Board prior to the date of such appointment
of election; or
(vii) the occurrence of any other event constituting a "change in
control" under Code Section 280G or the Treasury regulations promulgated
thereunder.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"EMPLOYEE" means Keith M. Roberts
"EMPLOYEE BENEFIT PLAN" shall have the meaning given the term under
Section 3 of ERISA.
"EMPLOYMENT PERIOD" means the period of your employment with the Company
governed by the terms and provisions of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect from time to time.
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"INVOLUNTARY TERMINATION" means the termination of your employment with
the Company:
(i) involuntarily upon your discharge, dismissal or the Company's
failure to renew this Agreement pursuant to Section 3 of Part Two, whether or
not in connection with a Change in Control; or
(ii) voluntarily or involuntarily, provided such termination occurs in
connection with (a) a change in your position with the Company which materially
reduces your level of responsibility or changes your title from Executive Vice
President and General Counsel, (b) a reduction in your level of compensation
(including base salary, fringe benefits and any non-discretionary bonuses or
other incentive payments earned pursuant to objective standards or criteria) or
(c) a relocation of your principal place of employment by more than forty-five
(45) miles and such change, reduction or relocation is effected without your
written concurrence.
"OPTION" means any option granted to you under the Stock Option Plan
which is outstanding at the time of your Involuntary Termination.
"STOCK OPTION PLAN" means the Company's 1996 Stock Incentive Plan
(including the predecessor 1994 Stock Option Plan), as amended through the date
hereof.
"TERMINATION FOR CAUSE" will mean an Involuntary Termination of your
employment for (i) one or more alleged acts of fraud, embezzlement,
misappropriation of proprietary information, misappropriation of the Company's
trade secrets or other confidential information, a verifiable breach of your
fiduciary duties to the Company or any other verifiable misconduct adversely
affecting the business reputation of the Company in a material manner or (ii)
your failure to devote your full working time and effort to the performance of
your duties hereunder; provided, however, you will have the right to perform
incidental services as are necessary in connection with (a) your private passive
investments, (b) your charitable or community activities and (c) your
participation in trade or professional organizations, but only to the extent
such incidental services do not materially interfere with the performance of
your services hereunder.
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PART TWO -- TERMS AND CONDITIONS OF EMPLOYMENT
The following terms and conditions will govern your employment with the
Company throughout the Employment Period and will also, to the extent indicated
below, remain in effect following your termination date.
1. EMPLOYMENT AND DUTIES. The Company will continue to employ you as an
executive officer in the position of Executive Vice President and General
Counsel. You agree to continue in such employment for the duration of the
Employment Period and to perform in good faith and to the best of your ability
all services which may be required of you in your executive position and to be
available to render such services at all reasonable times and places in
accordance with reasonable directives and assignments issued by the Board.
During your Employment Period, you will devote your full time and effort to the
business and affairs of the Company within the scope of your executive office.
Your principal place of operations will be at the Company's corporate offices in
Larkspur, California.
2. TERM OF AGREEMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment by the Employer, upon the terms and
conditions set forth in this Agreement. Employee shall be an employee "at will",
terminable at any time by Employer for cause or without cause.
3. AUTOMATIC EXTENSION. The initial term of this Agreement shall be one
year from the effective date hereof. Commencing on the anniversary of the
effective date hereof, and on each succeeding anniversary of the date hereof,
the term of this Agreement shall automatically be extended for one (1)
additional year unless, not later than three (3) months preceding such
anniversary date, the Company shall have given written notice pursuant to
Section 7 of Part Three that it will not extend the term of this Agreement.
4. COMPENSATION.
A. For service in the 1997 calendar year, your base salary will be
paid at the annual rate of One Hundred Fifty Thousand Dollars ($150,000). Your
annual rate of base salary may be subject to adjustment each calendar year by
the Board.
B. Your base salary will be paid at periodic intervals in accordance
with the Company's payroll practices for salaried employees.
C. You will be entitled to such bonuses (if any) for service rendered
during the Employment Period as the Board may determine in its sole discretion
and based upon the recommendation of the Company's Compensation Committee and
such additional factors as the Board deems appropriate, including your
individual performance and the Company's financial results.
D. The Company will deduct and withhold, from the compensation
payable to you hereunder, any and all applicable federal, state and local income
and employment withholding taxes and any other amounts required to be deducted
or withheld by the Company under applicable statute or regulation.
5. EXPENSE REIMBURSEMENT. You will be entitled to reimbursement from the
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Company for all customary, ordinary and necessary business expenses incurred by
you in the performance of your duties hereunder, provided you furnish the
Company with vouchers, receipts and other substantiation of such expenses in
accordance with Company policies.
6. FRINGE BENEFITS. During the Employment Period, you will be eligible
to participate in any group life insurance plan, group medical and/or dental
insurance plan, accidental death and dismemberment plan, short-term disability
program and other employee benefit plans, including profit sharing plans,
cafeteria benefit programs and stock purchase and option plans, which are made
available to executives and for which you qualify.
7. VACATION. You will accrue four (4) weeks of paid vacation benefits
during each calendar year of the Employment Period in accordance with the
Company policy in effect for executive officers.
8. DEATH OR DISABILITY.
A. Upon your death or disability during the Employment Period, the
employment relationship created pursuant to this Agreement will immediately
terminate, and no further compensation will become payable to you pursuant to
Part Two, Section 4. In connection with such termination by reason of death, the
Company will only be required to pay you (or your estate) any unpaid
compensation earned under Part Two, Section 4 for services rendered through the
date of your death, together with a special termination payment equal to the
additional amount of base salary you would have earned hereunder had your
employment continued for an additional thirty (30) days. In connection with such
termination by reason of disability, the Company will be required to pay to you
any unpaid compensation earned under Part Two, Section 4 for services rendered
through the date of your disability, together with the severance benefits set
forth in Section 9 below.
B. You will be deemed disabled if you are so characterized pursuant
to the terms of the Company's disability insurance policies applicable to you
from time to time.
C. Upon death or disability the terms of the Stock Option Plan will
apply.
9. SEVERANCE BENEFITS. You will be entitled to receive the severance
benefits specified below in the event there should occur on the termination of
your employment by reason of disability or an Involuntary Termination of your
employment (other than a Termination for Cause).
A. SEVERANCE BENEFIT. The Company will make a severance payment to
you, in one lump sum within thirty (30) days of the date of your Involuntary
Termination, in an aggregate amount equal to the average annual rate of base
salary paid to you by the Company for service rendered in the two (2)
immediately preceding calendar years. In the event that you have been employed
by the Company for one year or less at the time of your Involuntary Termination,
then the Company will make a severance payment to you in an amount equal to your
then current annual base salary. You may elect, in your sole discretion, to have
the severance benefit payable pursuant to this Section 9.A in monthly
installments over a one year period following the date of your Involuntary
Termination.
B. WELFARE BENEFITS. For a period of twelve (12) months, Employee
(and his
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dependents, as applicable) shall be provided by the Company with the same life,
health and disability plan participation, benefits and other coverages to which
he was entitled as an employee immediately before the disability or the
Involuntary Termination. In the event that under applicable law or the terms of
the relevant Employee Benefit Plans such participation, benefits and/or coverage
cannot be provided to Employee following his Involuntary Termination, such
coverage and/or benefits shall be provided directly by the Company pursuant to
this Agreement on a comparable basis. In its sole discretion, the Company may
obtain such coverage and benefits for Employee through private insurance
acquired at the Company's expense. Amounts paid or payable to or on behalf of
Employee pursuant to any "employee welfare benefit plan," as defined in ERISA,
providing health and/or disability benefits, that is sponsored by the Company or
an affiliate of the Company, shall be credited against amounts due under this
Section 9.B. To the maximum extent permitted by applicable law, the benefits
provided under this Section 9.B shall be in discharge of any obligations of the
Company or any rights of Employee under the benefit continuation provisions
under Section 4980A of the Code and Part VI of Title I of ERISA ("COBRA") or any
other legislation of similar import.
C. OPTION ACCELERATION. In connection with the Involuntary
Termination of your employment (other than Termination for Cause), each of your
Options under the Stock Option Plan will (to the extent not then otherwise
exercisable) automatically accelerate so that each such Option will become
immediately exercisable for the total number of shares purchasable thereunder.
Each such accelerated Option, together with all of your other vested Options,
will remain exercisable for a period of three (3) years following your
Involuntary Termination and may be exercised for any or all of the accelerated
shares in accordance with the exercise provisions of the Option agreement
evidencing the grant.
10. OPTION ACCELERATION UPON A CHANGE IN CONTROL. Upon the occurrence of
a Change in Control, each of your Options under the Stock Option Plan will (to
the extent not then otherwise exercisable) automatically accelerate so that each
such Option will become immediately exercisable for the total number of shares
purchasable thereunder. Each such accelerated Option, together with all of your
other vested Options, will remain exercisable for a period of three (3) years
following a Change in Control and may be exercised for any or all of the
accelerated shares in accordance with the exercise provisions of the Option
agreement evidencing the grant.
11. RESTRICTIVE COVENANT. During the Employment Period, you will not
directly or indirectly, whether for your own account or as an employee,
consultant or advisor, provide services to any business enterprise other than
the Company, unless otherwise authorized by the Company in writing.
12. NON-SOLICITATION AND NON-DISPARAGEMENT. During any period for which
you are receiving compensation payments pursuant to Part Two, Section 4 and one
(1) year thereafter, you will not directly or indirectly (i) solicit any Company
employee, independent contractor or consultant to leave the Company's employ or
otherwise terminate such person's relationship with the company for any reason
or interfere in any other manner with the employment or other relationships at
the time existing between the Company and its current employees, independent
contractors or consultants, (ii) solicit any of the Company's customers for
products or services substantially similar to those offered by the Company, or
(iii) disparage the Company or any of its shareholders, directors, officers,
employees or agents.
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13. CONFIDENTIALITY.
A. You hereby acknowledge that the Company may, from time to time
during the Employment Period, disclose to you confidential information
pertaining to the Company's business and affairs and client base, including
(without limitation) customer lists and accounts, other similar items indicating
the source of the Company's income and information pertaining to the salaries,
duties and performance levels of the Company's employees. You will not, at any
time during or after such Employment Period, disclose to any third party or
directly or indirectly make use of any such confidential information, including
(without limitation) the names, addresses and telephone numbers of the Company's
customers, other than in connection with, and in furtherance of, the Company's
business and affairs. Nothing contained in this paragraph shall be construed to
prevent Employee from disclosing the amount of his salary.
B. All documents and data (whether written, printed or otherwise
reproduced or recorded) containing or relating to any such proprietary
information of the Company which come into your possession during the Employment
Period will be returned by you to the Company immediately upon the termination
of the Employment Period or upon any earlier request by the Company, and you
will not retain any copies, notes or excerpts thereof. Notwithstanding the
foregoing, Employee shall be entitled to retain his file or Rolodex containing
names, addresses and telephone numbers and personal diaries and calendars;
provided, however, that Employee shall continue to be bound by the terms of
Section 13.A. above to the extent such retained materials constitute
confidential information.
C. Your obligations under this Section 13 will continue in effect
after the termination of your employment with the Company, whatever the reason
or reasons for such termination, and the Company will have the right to
communicate with any of your future or prospective employers concerning your
continuing obligations under this Section 13.
14. OWNERSHIP RIGHTS.
A. All materials, ideas, discoveries and inventions pertaining to
the Company's business or clients, including (without limitation) all patents
and copyrights, patent applications, patent renewals and extensions and the
names, addresses and telephone numbers of customers, will belong solely to the
Company.
B. All materials, ideas, discoveries and inventions which you may
devise, conceive, develop or reduce to practice (whether individually or jointly
with others) during the Employment Period will be the sole property of the
Company and are hereby assigned by you to the Company, except for any idea,
discovery or invention (i) for which no Company equipment, supplies, facility or
trade secret information is used, (ii) which is developed entirely on your own
time and (iii) which neither (a) relates at the time of conception or reduction
to practice, to the Company's business or any actual or demonstrably-anticipated
research or development program of the Company nor (b) results from any work
performed by you for the Company. The foregoing exception corresponds to the
assignment of inventions precluded by California Labor Code Section 2870,
attached as Exhibit A.
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C. You will, at all times whether during or after the Employment
Period, assist the Company, at the Company's sole expense, in obtaining,
maintaining, defending and enforcing all legal rights and remedies of the
Company, including, without limitation, patents, copyrights and other
proprietary rights of the Company. Such assistance will include (without
limitation) the execution of documents and assistance and cooperation in legal
proceedings.
D. You will continue to be bound by all the terms and provisions
of your existing Proprietary Information Agreement with the Company, and nothing
in this document will be deemed to modify or affect your duties and obligations
under those other agreements.
15. TERMINATION OF EMPLOYMENT.
A. The Company (or any successor entity resulting from a Change
in Control) may terminate your employment under this Agreement at any time for
any reason, with or without cause, by providing you with at least seven (7) days
prior written notice. However, such notice requirement will not apply in the
event there is a Termination for Cause under subparagraph D below.
B. In the event there is a termination of your employment by
reason of disability or is an Involuntary Termination of your employment with
the Company (other than Termination for Cause) during the Employment Period, you
will become entitled to the benefits specified in Part Two, Section 9 in
addition to any unpaid compensation earned by you under Part Two, Section 4 for
services rendered prior to such termination.
C. Should your employment with the Company terminate by reason of
your death during the Employment Period, no severance benefits will be payable
to you under Part Two, Section 9, and only the limited death benefits provided
under Part Two, Section 8 will be payable.
D. The Company may at any time, upon written notice, terminate
your employment hereunder for any act qualifying as a Termination for Cause.
Such termination will be effective immediately upon such notice.
E. Upon such Termination for Cause, the Company will only be
required to pay you any unpaid compensation earned by you pursuant to Part Two,
Section 4 for services rendered through the date of such termination, and no
termination or severance benefits will be payable to you under Part Two, Section
9.
PART THREE -- MISCELLANEOUS PROVISIONS
1. MITIGATION. Employee shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise. The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any
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amounts otherwise payable, or in any way diminish Employee's existing rights
which would accrue solely as a result of the passage of time, under any Company
Employee Benefit Plan, "Payroll practice" (as defined in ERISA), compensation
arrangement, incentive plan, stock option or other stock-related plan.
2. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company, including, without
limitation, any corporation or corporations acquiring directly or indirectly all
or substantially all of the stock, business or assets of the Company whether by
merger, consolidation, division, sale or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Agreement). The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by agreement in form and substance satisfactory to
Employee, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement entitling Employee to the benefits hereunder, as
though Employee was subject to Involuntary Termination. This Agreement shall be
binding upon and inure to the benefit of Employee, his successors, assigns,
executors, administrators or beneficiaries.
3. DEATH. Should you die before receipt of all the separation payments
to which you may become entitled under Part Two, Section 8, then such payment or
payments will be made, on the due date or dates hereunder had you survived, to
the executors or administrators of your estate. Should you die before you
exercise your outstanding vested options, then each such option may be
exercised, within twelve (12) months after your death, by the executors or
administrators of your estate or by person to whom the option is transferred
pursuant to your will or in accordance with the laws of inheritance. In no
event, however, may any such vested option be exercised after the specified
expiration date of the option term.
4. INDEMNIFICATION. The indemnification provisions for officers and
directors under the Company's Bylaws will (to the maximum extent permitted by
law) be extended to you, during the period following your Involuntary
Termination, with respect to any and all matters, events or transactions
occurring or effected during your Employment Period.
5. MISCELLANEOUS. The provisions of this Agreement will be construed and
interpreted under the laws of the State of California. This Agreement
incorporates the entire Agreement between you and the Company relating to the
terms of your employment and the subject of severance benefits and supersedes
all prior agreements and understandings with respect to such subject matter.
This Agreement may only be amended by written instrument signed by you and an
authorized officer of the Company.
6. ARBITRATION. Any controversy which may arise between you and the
Company with respect to the construction, interpretation or application of any
of the terms, provisions, covenants or conditions of this Agreement or any claim
arising from or relating to this Agreement will be submitted to final and
binding arbitration in San Francisco, California in accordance with the rules of
the American Arbitration Association then in effect.
7. NOTICES. Any notice required to be given under this Agreement shall
be deemed
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sufficient, if in writing, and sent by certified mail, return receipt requested,
via overnight courier, or hand delivered to the Company at 80 East Sir Francis
Drake Boulevard, Suite 2A, Larkspur, California 94939, and to Employee at his
most recent address reflected in the permanent Company records. Copies of each
such notice delivered by either the Company or Employee shall be provided to
each current member of the Board at each such director's current address as
listed in the Company's records.
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Please indicate your acceptance of the foregoing provisions of this
Agreement by signing the enclosed copy of this Agreement and returning it to the
Company.
Very truly yours,
QUADRAMED CORPORATION
By:/s/ James D. Durham
Title:Chairman of the Board, President
and Chief Executive Officer
ACCEPTED BY AND AGREED TO:
/s/ Keith M. Roberts
Dated:March 17,1998
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EXHIBIT A
Section 2870. APPLICATION OF PROVISION PROVIDING THAT EMPLOYEE WILL
ASSIGN OR OFFER TO ASSIGN RIGHTS IN INVENTION TO EMPLOYER.
(a) Any provision in an employment agreement which provides that an
employee will assign, or offer to assign, any of his or her rights in an
invention to his or her employer will not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for his employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.