-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TIrzpyduLj45Jr+Crd0CcPt++oVBU3VevdgbAThS3OHl0k9Bct3KVFr9SJifz2V5 EtcS7vWXGavUiZE07/1xfQ== 0000950123-99-005562.txt : 19990615 0000950123-99-005562.hdr.sgml : 19990615 ACCESSION NUMBER: 0000950123-99-005562 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990610 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED HEALTH CORP CENTRAL INDEX KEY: 0001002628 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 133893841 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-21209 FILM NUMBER: 99644382 BUSINESS ADDRESS: STREET 1: 555 WHITE PLAINS RD STREET 2: 2ND FL CITY: TARRYTOWN STATE: NY ZIP: 10591 BUSINESS PHONE: 9145244705 MAIL ADDRESS: STREET 1: 560 WHITE PLAINS RD STREET 2: 2ND FLOOR CITY: TARRYTOWN STATE: NY ZIP: 10591 10-K/A 1 ADVANCED HEALTH CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ AMENDMENT NO. 1 TO FORM 10-K/A (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1998 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________to________________ Commission File Number 0-21209 ADVANCED HEALTH CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 13-3893841 (STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION OF INCORPORATION OR ORGANIZATION) NUMBER) 555 White Plains Road, Tarrytown, New York 10591 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (914) 524-4200 (REGISTRANTS' TELEPHONE NUMBER, INCLUDING AREA CODE) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ] INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K: [X] THE AGGREGATE MARKET VALUE OF THE SHARES OF COMMON STOCK HELD BY NON-AFFILIATES OF THE REGISTRANT IS $42,644,126, BASED ON THE CLOSING PRICE OF THE COMMON STOCK ON MARCH 12, 1999. AS OF MARCH 12, 1999, THERE WERE 10,431,129 SHARES OF COMMON STOCK OUTSTANDING. DOCUMENTS INCORPORATED BY REFERENCE None STATEMENTS MADE OR INCORPORATED INTO THIS ANNUAL REPORT INCLUDE A NUMBER OF FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, STATEMENTS CONTAINING THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS," "FUTURE" AND WORDS OF SIMILAR IMPORT WHICH EXPRESS MANAGEMENT'S BELIEF, EXPECTATIONS OR INTENT REGARDING THE COMPANY'S FUTURE PERFORMANCE. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE 2 FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS AS TO INDUSTRY TRENDS, FUTURE ECONOMIC PERFORMANCE, ANTICIPATED PROFITABILITY, ANTICIPATED REVENUES AND EXPENSES, AND PRODUCTS OR SERVICE LINE GROWTH MAY BE SIGNIFICANTLY IMPACTED BY CERTAIN RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, FAILURE OF THE CLINICAL E-COMMERCE INDUSTRY TO DEVELOP AT ANTICIPATED RATES, FAILURE OF THE COMPANY'S CLINICAL INFORMATION TECHNOLOGY PRODUCTS AND SERVICES TO GAIN SIGNIFICANT MARKET ACCEPTANCE, FAILURE TO MEET OPERATING OBJECTIVES OR TO EXECUTE THE OPERATING PLAN, FAILURE TO SUCCESSFULLY RESTRUCTURE AHT'S BUSINESS UNITS, COMPETITION AND OTHER ECONOMIC FACTORS. NO ASSURANCES CAN BE GIVEN AS TO THE OUTCOME OF ANY PENDING LAWSUITS AGAINST ADVANCED HEALTH CORPORATION. 3 ITEM 10. EXECUTIVE COMPENSATION The following table sets forth a summary of the compensation of the Company's Chief Executive Officer and each other executive officer of the Company who earned in excess of $100,000 in annual salary and bonus during the Company's fiscal year ended December 31, 1998 (collectively, the "Named Executive Officers"), for services rendered in all capacities to the Company during the Company's fiscal years ended December 31,1998, 1997, and 1996. SUMMARY COMPENSATION TABLE Long-Term Compensation Annual Compensation Awards
Securities Underlying Options/SARs Name and Principal Position Year ($)Salary (#) - -------------------------------------------------------------------------------------------------------- Jonathan Edelson, M.D, Chairman, 1998 298,589 Chief Executive Officer, and President 1997 269,079 150,000 1996 220,224 Robert J. Alger, Executive Vice President 1998 178,431 25,000 and Chief Information Officer 1997 169,261 60,000 1996 154,854 Jeffrey M. Sauerhoff 1998 172,902 50,731 Chief Financial Officer 1997 130,319 22,255 1996 112,671 Eddy W. Friedfeld, Senior Vice President- 1998 152,566 55,000 Business & Legal Affairs, General Counsel 1997 52,333 22,500 and Secretary Alan B. Masarek, President and COO (1) 1998 238,576 1997 224,693 112,500 1996 200,198
(1) Resigned Effective 3/31/99 4 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the ownership of Common Stock as of May 1, 1999 with respect to (i) each person known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock, (ii) each of the Company's directors, (iii) certain executive officers of the Company and (iv) all directors and officers as a group. Unless otherwise indicated, the address for each stockholder is c/o the Company, 555 White Plains Road, Tarrytown, New York 10591.
SHARES OF COMMON NAME AND ADDRESS STOCK(1) PERCENT(1) - ------------------------------------------------------------------------------------------------------- David M. Knott 485 Underhill Blvd., Suite 205, Syosset, NY 11791-3419 859,500 8.1 Nationsbank Corp. Nationsbank Plaza, Charlotte, NC 28255 785,600 7.4 Dimensional Fund Advisors 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401 702,900 6.6 Tudor Investment Corporation One Post Office Square, Boston, MA 02109 723,000 6.8 Jonathan Edelson, MD (2) 524,042 4.9 Robert J. Alger (3) 51,241 * Jeffrey M. Sauerhoff (4) 26,178 * Eddy W. Friedfeld (5) 8,750 * James Carney (6) 15,000 * Barry Kurokawa (7) 19,507 * Alan B. Masarek (8) 150,136 1.4 Arthur M. Southam, MD * * All directors and executive officers as a group (7 persons) (9) 794,854 7.5
* Represents less than 1% of the outstanding shares of Common Stock. (1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (the "Commission") and generally includes voting or investment power with respect to securities and includes options exercisable within 60 days of May 1, 1999. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. Percentage of beneficial ownership is based on 10,644,244 shares of Common Stock outstanding as of May 1, 1999. (2) Includes currently exercisable options to purchase 128,816 shares of Common Stock. (3) Includes currently exercisable options to purchase 51,241 shares of Common Stock. (4) Includes currently exercisable options to purchase 26,178 shares of Common Stock. (5) Includes currently exercisable options to purchase 8,750 shares of Common Stock. (6) Includes currently exercisable options to purchase 15,000 shares of Common Stock. (7) Includes currently exercisable options to purchase 17,507 shares of Common Stock. (8) Includes currently exercisable options to purchase 150,136 shares of Common Stock (9) See notes (2), (3), (4), (5), (6), and (7). 5 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In 1996, 1997 and 1998, in accordance with the Company's Senior Executive Loan Policy, which is administered by the Compensation Committee of the Board of Directors, the Company made loans in the aggregate amounts of $800,000 and $145,000 to each of Dr. Edelson, and Mr. Alger, respectively. These loans are due three years from the loan date with interest payable monthly at a rate of 6% per annum. The Company entered into a separation agreement in 1999 with Alan Masarek, the Company's former President and Chief Operating Officer, whose resignation was effective March 31, 1999, which provides for the following: (i) a one-year continuation of salary at $250,000 and benefits from April 1, 1999 to March 31, 2000, payable monthly; (ii) an additional $250,000 (less applicable withholding) payment in exchange for consulting forup to 24 business days in a form and manner reasonably requested by the Company's Board of Directors, which has already been paid; (iii) requirement of repayment of current outstanding loans, principal ($467,475) and interest (at the rate of 6% per annum), beginning May 1, 2000 at the rate of $15,000 per month with the balance due of all outstanding loans, including principal and interest on May 1, 2001; (iv) vesting of 150,136 options to acquire Company stock that will remain fully exercisable for up to five years; and (v) a success bonus for the sale of the management services division of the Company that occurred on May 14, 1999 ("the Sale"), equal to $40,000 plus 2.5% of the net proceeds of the Sale, which has already been paid. The Company believes that all of the transactions set forth above were made on terms no less favorable to the Company than could have been obtained from unaffiliated third parties. All transactions, including loans, between the Company and its officers, directors and principal stockholders and their affiliates are approved by a majority of the Board of Directors, including a majority of the independent and disinterested outside directors of the Board of Directors. 6 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ADVANCED HEALTH CORPORATION Date: June 10, 1999 By: /s/ Jeffrey M. Sauerhoff Jeffrey M. Sauerhoff Chief Financial Officer 7 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF EXHIBIT **3.1 Restated Certificate of Incorporation of the Registrant **3.2 By-laws of the Registrant **10.7 Tarrytown, New York Office Lease Agreement dated November 30, 1995, between Tarrytown Corporate Center IV, L.P. and the Registrant. **10.8 First Amendment to Lease Agreement between Reckon Operating Partnership, LP, as Owner, and the Registrant, as Tenant **10.9 Chicago Office Lease Agreement dated December 8, 1995, between Adams Family, LLC and the Registrant **10.10 Fort Washington Lease Agreement dated November 13, 1997, between Comdrive Associates, L.P. and Registrant as Tenant **10.11 Hawthorne Lease Agreement dated January 8, 1998, between United Parcel Service, Inc. and Registrant as Tenant **10.12 Malvern Lease dated October 6, 1997 **10.13 Tarrytown Sublease **10.14 Form of Director Indemnification Agreement *10.15 Employment Agreement between the Registrant and Jonathan Edelson, M.D. *10.16 Employment Agreement between the Registrant and Robert Alger **10.17 Employment Agreement between the Registrant and Jeffrey M. Sauerhoff **10.18 Employment Agreement between the Registrant and Eddy W. Friedfeld *10.19 Separation Agreement between the Registrant and Alan B. Masarek **10.20 Amended and Restated Advanced Health Corporation 1995 Stock Option Plan **10.21 Employee Stock Purchase Plan **11.1 Earnings Per Common Share Computation **21 List of Subsidiaries **23.2 Consent of Arthur Andersen LLP **27 Financial Data Schedule * Filed herewith. 8 ** Filed as an exhibit to the Registrant's Registration Statement on Form S-1, as amended Registration No. 333-06283), Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-35115), Registrant's Forms 10-K, dated March 30, 1997, March 31, 1998, and April 2, 1999, incorporated herein by reference. EX-10.15 2 EMPLOYMENT AGREEMENT RE JONATHAN EDELSON, MD 1 EXHIBIT 10.15 EMPLOYMENT AGREEMENT dated as of June 8, 1999, between ADVANCED HEALTH CORPORATION, a Delaware corporation (the "Company"), which is doing business as AHT Corporation, and JONATHAN T. EDELSON, M.D. (the "Employee"). The Company desires to formalize the employment arrangements between the Company and the Employee and to continue to employ the Employee as the Chairman and Chief Executive Officer of the Company and the Employee desires to accept such continued employment by the Company, on the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby agree as follows: 1. Employment. The Company hereby employs the Employee, and the Employee hereby accepts employment by the Company, upon the terms and subject to the conditions hereinafter set forth. 2. Term. The employment of the Employee hereunder shall be for the four-year period commencing on the date hereof and ending on June 8, 2003 (the "Base Term"). The Base Term shall automatically renew for consecutive one-year terms (each, a "Renewal Term" and together with the Base Term, collectively, the "Employment Period") unless either the Company or the Employee gives the other party hereto at least 90 days' prior written notice before the end of the Employment Period of such party's intent not to renew this Agreement. 3. Duties. The Employee shall be employed as the Chairman and Chief Executive Officer (and President, effective March 31, 1999) of the Company or in such other position as the Company and the Employee shall agree in writing. The Employee shall perform such duties and services as are appropriate and commensurate with the Employee's position as Chairman and Chief Executive Officer (and President, when appropriate) of the Company and would otherwise be consistent in stature and prestige with the position of Chairman and Chief Executive Officer (and President, when appropriate) of a corporation with similar operations as the Company, as the same may be assigned to him from time to time by the Board of Directors of the Company (the "Board"). 4. Time to be Devoted to Employment; Place of Employment. (a) Except for three weeks vacation per year (in addition to public holidays) and absences due to temporary illness, during the Employment Period the Employee shall devote substantially all of his business time, attention and energies to the business and affairs of the Company. (b) During the Employment Period, the Employee shall not be engaged in any 2 other business activity which conflicts with the duties of the Employee hereunder, whether or not such activity is pursued for gain, profit or other pecuniary advantage. (c) During the Employment Period, the Company shall maintain its primary business location in the greater New York City metropolitan area and the Employee shall not be required to relocate outside such area without his written consent. 5. Compensation; Reimbursement. (a) During the Employment Period, the Company (or at the Company's option, any subsidiary or affiliate thereof) shall pay to the Employee an annual salary (the "Base Salary") of not less than $300,000, payable in such installments as is the policy of the Company with respect to its senior executive officers. Such Base Salary will be reviewed at least annually and may be increased by the Board (or, if such authority shall be delegated by the Board to the Compensation Committee thereof, then by such Committee) in its sole discretion. (b) From time to time the Employee may also receive cash bonuses at the discretion of the Board or the Compensation Committee. (c) The Employee shall maintain a suitable automobile for business use. During the Employment Period, the Company shall pay the Employee a $600 per month car allowance towards the costs of leasing, using, insuring, repairing and maintaining such automobile. (d) Following the expiration or termination of this Agreement for any reason, the Employee shall have the right to maintain any (i) health and life insurance benefits provided by the Company to the extent provided under applicable law and (ii) any life insurance benefits provided by the Company so long as the Employee makes the premium payments relating to such life insurance. (e) During the Employment Period and to the extent available to employees of the Company, the Employee shall be entitled to participate in all of the Company's benefit plans, pension and retirement plans, life insurance, hospitalization and surgical and major medical coverages, sick leave, vacation and holiday policies, long-term disability coverage and such other fringe benefits enjoyed by other employees at substantially the same employment level as the Employee. Notwithstanding anything to the contrary contained in this Section 5(e), at no time during the Employment Period shall the long-term disability coverage and life insurance benefits that the Company provides to the Employee be reduced to a level below that being provided to the Employee as of the date hereof. 2 3 (f) The Company shall reimburse the Employee, in accordance with the practice from time to time for other employees of the Company, for all reasonable and necessary travelling expenses, disbursements and other reasonable and necessary incidental expenses incurred by him for or on behalf of the Company in the performance of his duties hereunder upon presentation by the Employee to the Company of appropriate vouchers. 6. Involuntary Termination. (a) If the Employee is incapacitated or disabled by accident, sickness or other cause so as to render him mentally or physically incapable of performing the services required to be performed by him under this Agreement for a period of 90 days or longer during any six-month period (such condition being herein referred to as a "Disability"), prior to the Employee resuming the performance of his duties as contemplated herein, the Company may terminate the employment of the Employee under this Agreement (an "Involuntary Termination"). Until the Company or the Employee shall have terminated the Employee's employment hereunder, the Employee shall be entitled to receive his compensation and other benefits as set forth in this Agreement notwithstanding any such physical or mental disability. (b) If the Employee dies during the Employment Period, his employment hereunder shall be deemed to cease as of the date of his death, and the termination of his employment occasioned thereby shall be deemed an Involuntary Termination. 7. Termination for Cause. The Company may terminate the Employee's employment hereunder for "Cause" (a "Termination for Cause"). For purposes of this Agreement, "Cause" shall be limited to: (i) the willful and continued failure by the Employee substantially to perform the duties described in Section 3 (other than any failure resulting from an illness or other similar incapacity or disability), for 30 days after a written demand for performance is delivered to the Employee on behalf of the Board that specifically identifies the manner in which it is alleged that the Employee has not substantially performed his duties; or (ii) the commission by the Employee of misappropriation of funds, properties or assets of the Company, sexual harassment of employees of the Company, chronic alcoholism or drug addiction, slander or libel concerning the Company or a material tort relating to his office or employment with the Company that has a material adverse effect on the Company. 8. Termination Without Cause. (a) The Company may terminate the employment of the Employee hereunder at any time during the Employment Period without "Cause" and (b) the Employee may terminate his employment hereunder at any time 3 4 during the Employment Period in the event of (i) the willful and continued failure by the Company to perform its obligations hereunder for 30 days hereunder for 30 days after a written demand for performance is delivered to the Board on behalf of the Company by the Employee that specifically identifies the manner in which it is alleged that the Company has not performed its obligations; or (ii) the commission by the Company of slander or libel concerning the Employee or a material tort relating to his office or employment with the Company of slander or libel concerning the Employee or a material tort relating to his office or employment with the Company that has a material adverse effect on the Employee (each, a "Termination Without Cause"). It is expressly acknowledged that non-renewal of this Agreement as contemplated by Section 2 shall not constitute a Termination Without Cause. 9. Voluntary Termination. Any termination of the employment of the Employee hereunder otherwise than as a result of an Involuntary Termination, a Termination For Cause or a Termination Without Cause shall be deemed to be a "Voluntary Termination." A Voluntary Termination shall be deemed to be effective immediately upon written notice of such termination to the Company. 10. Change in Control. Anything contained in this Agreement to the contrary notwithstanding, if, within 12 months of a Change in Control (as herein defined), the employment of the Employee shall terminate for any reason, then such termination shall be deemed to constitute a Termination Without Cause. In addition, on a Change in Control, all options to purchase common stock of the Company then held by the Employee shall immediately vest and shall be exercisable for a period of five years from the date of the Change in Control. For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred if (a) there shall be consummated (x) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company (the "Common Stock") would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (y) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; or (b) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or (c) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company's outstanding Common Stock; or (d) during any period of two consecutive years, individuals who at the beginning of such period constitute the entire Board of Directors shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each 4 5 new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. 11. Effect of Termination of Employment. (a) Upon the termination of the Employee's employment hereunder pursuant to a Voluntary Termination or a Termination For Cause, neither the Employee nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement except to receive: (i) any unpaid portion of the Base Salary provided for in Section 5(a), computed on a pro rata basis to the date of termination; (ii) cash compensation equal to the product of (A) the number of days of accrued vacation, if any, accumulated by the Employee to the effective date of termination divided by the total number of work days per annum for which the Employee receives a Base Salary multiplied by (B) the Base Salary; and (iii) reimbursement for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 5(e). In addition, current arrangements concerning indemnification, including but not limited to payment of expenses of officers, directors, and employees in connection with litigation involving the Company shall remain in full force and effect following termination. (b) Upon the termination of the Employee's employment hereunder pursuant to an Involuntary Termination, neither the Employee nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement except the right (i) to receive a termination payment equal to that provided for in Section 11(a) hereof, plus (ii) to receive a cash severance payment in an aggregate amount equal to the cash compensation received by the Employee during the 3-month period immediately prior to the effective date of the Involuntary Termination, payable in equal monthly installments, plus (iii) to be immediately vested in all stock options granted to the Employee by the Company that would have vested during the three-month period immediately following the effective date of the Involuntary Termination. In addition, the Employee will have the right and obligation to repay any outstanding loans to the Company, including principal and interest, in equal monthly installments, over a period of 12 months commencing one year after the date of Termination. Current arrangements concerning indemnification, including but not limited to payment of expenses of officers, directors, and employees in connection with litigation involving the Company shall remain in full force and effect following termination. 5 6 (c) Upon the termination of the Employee's employment hereunder pursuant to a Termination Without Cause, neither the Employee nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement except the right (i) to receive a termination payment equal to the amount provided for in Section 11(a) hereof, plus (ii) to receive a cash severance payment in an aggregate amount equal to twice your most recent base annual salary payable in one lump sum within 10 days of such termination, plus (iii) to receive a consulting agreement for a one year period commencing one year after the date of termination of full-time employment with the Company. Such consulting agreement will consist of a commitment by the Employee of up to 24 business days in a manner reasonably requested by the Board of Directors. The Employee will receive one times his most recent annual base salary as compensation for such consulting over a one year period in equally divided portions at the normal payment intervals provided employees at the Company. For a one year period following termination, at the Company's expense, the Company will provide the Employee and his family health insurance ( as is provided Company employees), provided the Employee and his family are not otherwise provided coverage; life insurance, including payment by the Company of the premiums related to the Employee's $250,000 whole life policy and the supplemental disability policy with Massachusetts Casualty Company; a $600 per month car allowance; reasonable cellular and phone and pager use; and inclusion in the Company's 401K plan. In addition, on a Termination Without Cause, all options to purchase common stock of the Company then held by the Employee shall immediately vest and shall be exercisable for a period of five years from the date of the Termination. The Employee will have the right and obligation to (i) repay any outstanding loans to the Company, including principal and interest, in equal monthly installments, over a period of 12 months commencing one year after the date of Termination, or (ii) prepay any such loans and interest without any penalties. In addition, current arrangements concerning indemnification, including but not limited to payment of expenses of officers, directors, and employees in connection with litigation involving the Company shall remain in full force and effect following termination. 12. Non-Competition; Non-Disclosure of Information. (a) The Employee shall not, for a period of one year following the termination of Employment , (i) directly or indirectly engage in any Competitive Business (as defined below), whether such engagement shall be as an employee, employer, owner, consultant, partner or other participant in any Competitive business, (ii) assist others in engaging in any Competitive Business in the manner described in the foregoing clause (i), (iii) induce employees of the Company to terminate their employment with the Company or engage in any Competitive Business or (iv) induce customers or vendors of the Company to alter or terminate their business relationship with the Company; provided, however, that the Employee may own directly or indirectly, solely as a passive investment, securities of any Competitive Business traded on any national securities exchange if the Employee is not a controlling person of, nor a member of a group which controls such person and does not, directly or indirectly, own 5% or more of any class of securities of such person. As used herein, the term "Competitive Business" shall mean any business which, directly or indirectly, competes with the Company in the business of primarily providing physician practice management, physician network management and/or clinical information technology to or for ambulatory physicians; provided, however, that a business conducted directly by the 6 7 Employee which provides physician practice management, physician network management and/or clinical information technology to or for physician groups consisting of three or fewer physicians shall not be deemed to be a "Competitive Business". Notwithstanding any other provision of this Agreement to the contrary, the Employee's ownership interest in or any business activities engaged in by the Employee on behalf of, or in connection with Employee's employment by, or service as a director or consultant to, any subsidiary or affiliate of the Company or Physicians' Online, a corporation engaged in the business of providing on-line services to health care professionals and consumers, shall not be deemed to violate the provisions of this Agreement. (b) The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a Competitive Business, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits in connection with his employment to clearly justify such restrictions which, in any event, the Employee does not believe would prevent him from earning a living. Nothing herein contained shall prohibit the Employee from engaging in a business that is not a Competitive Business. (c) The Employee agrees that he will not, at any time during or after the Employment Period, disclose to any person, firm, corporation or other entity, except as required by law, any secret or confidential information concerning the business, clients or affairs of the Company or any subsidiary or affiliate thereof for any reason or purpose whatsoever other than in furtherance of the Employee's work for the Company nor shall the Employee make use of any of such secret or confidential information for his own purpose or for the benefit of any person, firm, corporation or other business entity except the Company or any subsidiary or affiliate thereof. 13. Company Right to Inventions. The Employee shall promptly disclose, grant and assign to the Company for its sole use and benefit any and all inventions, improvements, technical information, methods and suggestions (the "Inventions") relating in any way to the business of providing physician practice management, physician network management and/or clinical information technology to or for ambulatory physicians, which he may develop or acquire during the period of the Employee's employment with the Company prior to any termination of employment (whether or not during usual working hours), together with all patent applications, patents, copyrights and reissues thereof that may at any time be granted for or upon any such Inventions, excluding those Inventions directly relating to any business activities engaged in by the Employee on behalf of or in connection with the Employee's employment by, or service as a director or consultant to Physicians' Online. In connection therewith: (a) the Employee shall without charge, but at the expense of the Company, promptly at all times hereafter execute and deliver such applications, assignments, descriptions and other instruments as may be reasonably necessary or proper in the reasonable opinion of the Company 7 8 to vest title to any such inventions, improvements, technical information, methods, patent applications, patents, copyright applications, copyrights or reissues of any thereof in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world; and (b) the Employee shall render to the Company at its expense (including a reasonable payment for the time involved in case he is not then in its employ) all such assistance as it may reasonably require in the prosecution of applications for said patents, copyrights or reissues thereof, in the prosecution or defense or interferences which may be declared involving any said applications, patents or copyrights and in any litigation in which the Company may be involved relating to any such patents, copyrights, inventions, improvements, technical information or methods. 14. Enforcement. It is the desire and intent of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such amendment to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made; provided, however, that if any one or more of the provisions contained in this Agreement shall be adjudicated to be invalid or unenforceable because such provision is held to be excessively broad as to duration, geographical scope, activity or subject, such provision shall be deemed amended by limiting and reducing it so as to be valid and enforceable to the maximum extent compatible with the applicable laws of such jurisdiction, such amendment to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made. 15. Remedies; Survival. (a) The Employee acknowledges and understands that the provisions of this Agreement are of a special and unique nature, the loss of which cannot be accurately compensated for in damages by an action at law, and that the breach of the provisions of this Agreement would cause the Company irreparable harm. In the event of a breach by the Employee of the provisions of Section 12 or 13 hereof, the Company shall be entitled to an injunction restraining him from such breach. Nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedies available for any breach of this Agreement. (b) Notwithstanding anything contained in this Agreement to the contrary, the provisions of Sections 12, 13, 14 and this Section 15 shall survive the 8 9 expiration or other termination of this Agreement until, by their terms, such provisions are no longer operative. (c) It is understood and agreed that the provisions of Sections 12 and 13 of this Agreement are separate and distinct from any other agreement between the parties hereto. Accordingly, in the event of a breach of such provisions, the breaching party shall only be held responsible for damages arising under such provisions and not for any damages which may be claimed to arise under or with respect to any other agreement that is not separately breached. 16. Notices. Notices and other communications hereunder shall be in writing and shall be delivered personally or sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows: If to the Employee: Jonathan Edelson, M.D. 212 Mamaroneck Road Scarsdale, New York 10583 If to the Company: Advanced Health Corporation 555 White Plains Road Tarrytown, New York 10591 Attention: General Counsel with a copy to: O'Sullivan Graev & Karabell, LLP 30 Rockefeller Plaza New York, New York 10112 Attention: John J. Suydam, Esq. or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. All notices and other communications hereunder shall be deemed to have been given on the date of delivery if personally delivered; on the business day after the date when sent if sent by air courier; and on the third business day after the date when sent if sent by mail, in each case addressed to such party as provided in this Section 16. 17. Binding Agreement. This Agreement shall inure to the benefit of and be 9 10 enforceable by the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees and devisees. If the Employee should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the beneficiary designated by the Employee in a writing delivered to the Company, or if there be no such designated beneficiary, to his estate. 18. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed wholly therein. 19. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement by the other party must be in writing and shall not operate or be construed as a waiver of any subsequent breach by such other party. 20. Entire Agreement; Amendments; Execution. This Agreement, the Indemnification Agreement to be entered into between the Company and the Employee, the Stock Option Agreements and the other agreements referred to herein contain the entire agreement between the parties with respect to the subject matter contained herein and supersede all prior agreements or understandings among the parties with respect thereto. This Agreement may be amended only by an agreement in writing signed by the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original document but all of which shall constitute but one agreement. 21. Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 22. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 23. Assignment. With respect to the Employee, this Agreement is personal in its nature and the Employee shall not assign or transfer this Agreement or any rights or obligations hereunder. The Company may in its sole discretion assign or otherwise transfer this Agreement and the provisions hereof (including, without limitation, Sections 12, 13 and 14) shall inure to the benefit of, and be binding upon, each successor of the Company, whether by merger, 10 11 consolidation, transfer of all or substantially all assets, or otherwise. * * * IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. ADVANCED HEALTH CORPORATION By: /s/ Eddy Friedfeld ------------------------------------ Name: Eddy Friedfeld Title: Senior Vice President Business and Legal Affairs General Counsel /s/ Jonathan Edelson ------------------------------ Jonathan Edelson, M.D. 11 EX-10.16 3 EMPLOYMENT AGREEMENT RE ROBERT ALGR 1 EXHIBIT 10.16 EMPLOYMENT AGREEMENT dated as of November 1, 1998, between ADVANCED HEALTH CORPORATION, a Delaware corporation (the "Company"), and ROBERT J. ALGER (the "Employee"). The Company desires to formalize the employment arrangements between the Company and the Employee and to continue to employ the Employee as the Executive Vice President, Chief Information Officer of the Company, and as President of Advanced Health Technologies Corporation, a Delaware corporation and wholly-owned subsidiary of the Company and the Employee desires to accept such continued employment by the Company, on the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby agree as follows: 1. Employment. The Company hereby employs the Employee, and the Employee hereby accepts employment by the Company, upon the terms and subject to the conditions hereinafter set forth. 2. Term. The employment of the Employee hereunder shall be for the four-year period commencing on the date hereof and ending on November 1, 2002 (the "Base Term"). The Base Term shall automatically renew for consecutive one-year terms (each, a "Renewal Term" and together with the Base Term, collectively, the "Employment Period") unless either the Company or the Employee gives the other party hereto at least 90 days' prior written notice before the end of the Employment Period of such party's intent not to renew this Agreement. 3. Duties. The Employee shall be employed as Executive Vice President, Chief Information Officer of the Company, and as President of Advanced Health Technologies Corporation or in such other position as the Company and the Employee shall agree in writing. The Employee shall perform such duties and services as are appropriate and commensurate with the Employee's position with the Company and as would otherwise be consistent in stature and prestige with the position of Executive Vice President, Chief Information Officer and as President of a wholly owned subsidiary of a corporation with similar operations as the Company, as the same may be assigned to him from time to time by the Board of Directors of the Company (the "Board"). 4. Time to be Devoted to Employment; Place of Employment. (a) Except for three weeks vacation per year (in addition to public holidays), absences due to temporary illness, during the Employment Period the Employee shall devote substantially all of his business time, attention and energies to the business and affairs of the Company. (b) During the Employment Period, the Employee shall not be engaged in any other business activity which conflicts with the duties of the Employee hereunder, whether or not such activity is pursued for gain, profit or other pecuniary advantage. 2 5. Compensation; Reimbursement. (a) During the Employment Period, the Company (or at the Company's option, any subsidiary or affiliate thereof) shall pay to the Employee an annual salary (the "Base Salary") of not less than $190,000, payable in such installments as is the policy of the Company with respect to its senior executive officers. Such Base Salary will be reviewed at least annually and may be increased by the Board (or, if such authority shall be delegated by the Board to the Compensation Committee thereof, then by such Committee) in its sole discretion. (b) From time to time the Employee may also receive cash bonuses at the discretion of the Board or the Compensation Committee. (c) During the Employment Period and to the extent available to employees of the Company, the Employee shall be entitled to participate in all of the Company's benefit plans, pension and retirement plans, life insurance, hospitalization and surgical and major medical coverages, sick leave, vacation and holiday policies, disability coverage and such other fringe benefits enjoyed by other employees at substantially the same employment level as the Employee. (d) The Company shall reimburse the Employee, in accordance with the practice from time to time for other employees of the Company, for all reasonable and necessary traveling expenses, disbursements and other reasonable and necessary incidental expenses incurred by him for or on behalf of the Company in the performance of his duties hereunder upon presentation by the Employee to the Company of appropriate vouchers. (e) The Employee shall maintain a suitable automobile for business use. During the Employment Period, the Company shall pay the Employee a $400 per month car allowance towards the costs of leasing, using, insuring, repairing and maintaining such automobile. (f) Following the expiration or termination of this Agreement for any reason, the Employee shall have the right to maintain any (i) health and life insurance benefits provided by the Company to the extent provided under applicable law and (ii) any life insurance benefits provided by the Company so long as the Employee makes the premium payments relating to such life insurance. 6. Involuntary Termination. (a) If the Employee is incapacitated or disabled by accident, sickness or other cause so as to render him mentally or physically incapable of performing the services required to be performed by him under this Agreement for a period of 90 days or longer during any six-month period (such condition being herein referred to as a "Disability"), prior to the Employee resuming the performance of his duties as contemplated herein, the Company may terminate the employment of the Employee under this Agreement (an "Involuntary Termination"). Until the Company or the Employee shall have terminated the Employee's employment hereunder, the Employee shall be entitled to receive his compensation and other benefits as set forth in this Agreement notwithstanding any such physical or mental disability. (b) If the Employee dies during the Employment Period, his employment hereunder shall be deemed to cease as of the date of his death, and the termination of his employment occasioned thereby shall be deemed an Involuntary Termination. 2 3 7. Termination for Cause. The Company may terminate the Employee's employment hereunder for "Cause" (a "Termination for Cause"). For purposes of this Agreement, "Cause" shall be limited to: (i) the willful and continued failure by the Employee substantially to perform the duties described in Section 3 (other than any failure resulting from an illness or other similar incapacity or disability), for 30 days after a written demand for performance is delivered to the Employee on behalf of the Board that specifically identifies the manner in which it is alleged that the Employee has not substantially performed his duties; or (ii) the conviction by the Employee of misappropriation of funds, properties or assets of the Company, sexual harassment, chronic alcoholism or drug addiction, slander or libel concerning the Company or a material tort relating to his office or employment with the Company that has a material adverse effect on the business, affairs, conditions (financial or otherwise), operations, results of operations, assets, properties or rights, liabilities or obligations, customer or employee relationships or prospects of the Company. 8. Termination Without Cause. The Company may terminate the employment of the Employee hereunder at any time during the Employment Period without "Cause" (a "Termination Without Cause"). It is expressly acknowledged that if Employee shall not report to the CEO of the Company, such change in reporting structure shall constitute a Termination Without Cause. It is expressly acknowledged that non-renewal of this Agreement as contemplated by Section 2 shall not constitute a Termination Without Cause. Further, if Employee's Base Salary shall be reduced without Employee's consent, such action by Employer shall constitute a Termination Without Cause. 9. Voluntary Termination. Any termination of the employment of the Employee hereunder otherwise than as a result of an Involuntary Termination, a Termination for Cause or a Termination Without Cause shall be deemed to be a "Voluntary Termination." A Voluntary Termination shall be deemed to be effective immediately upon written notice of such termination to the Company. 10. Change in Control. On a Change of Control, all options to purchase common stock of the Company then held by the Employee shall immediately vest and shall be exercisable for a period of five years from the date of the Change in Control. For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred if (a) there shall be consummated (x) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company (the "Common Stock") would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (y) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company; or (b) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or 3 4 (c) any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the Company's outstanding Common Stock; or (d) during any period of two consecutive years, individuals who at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period. 11. Effect of Termination of Employment. (a) Upon the termination of the Employee's employment hereunder pursuant to a Voluntary Termination or a Termination for Cause, neither the Employee nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement except to receive: (i) any unpaid portion of the Base Salary provided for in Section 5(a), computed on a pro rata basis to the date of termination; (ii) cash compensation equal to the product of (A) the number of days of accrued vacation, if any, accumulated by the Employee to the effective date of termination divided by the total number of work days per annum for which the Employee receives a Base Salary multiplied by (B) the Base Salary; and (iii) reimbursement for any expenses for which the Employee shall not have theretofore been reimbursed as provided in Section 5(d). In addition, current arrangements concerning indemnification, including but not limited to payment of expenses of officers, directors, and employees in connection with litigation involving the Company shall remain in full force and effect following termination. (b) Upon the termination of the Employee's employment hereunder pursuant to an Involuntary Termination, neither the Employee nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement except the right (i) to receive a termination payment equal to that provided for in Section 11(a) hereof, plus (ii) to receive a cash severance payment in an aggregate amount equal to the cash compensation received by the Employee during the 3-month period immediately prior to the effective date of the Involuntary Termination, payable in equal monthly installments, plus (iii) to be immediately vested in all stock options granted to the Employee by the Company that would have vested during the three-month period immediately following the effective date of the Involuntary Termination. In addition, current arrangements concerning indemnification, including but not limited to payment of expenses of officers, directors, and employees in connection with litigation involving the Company shall remain in full force and effect following termination. (c) Upon the termination of the Employee's employment hereunder pursuant to a Termination Without Cause, neither the Employee nor his beneficiary or estate shall have any further rights or claims against the Company under this Agreement except the right (i) to receive a termination payment equal to the amount provided for in Section 11(a) hereof , (ii) to receive a cash severance payment in an aggregate amount equal to twice the base salary and bonus received by the Employee during the 12-month period immediately prior to the effective date of the Termination Without Cause, plus car allowance, health insurance and life insurance premium payments, professional licensing and membership fees and dues 4 5 for such one year period, payable in one lump sum within 10 days of such termination if such termination occurs within six months of a Change in Control, and otherwise in 24 equal monthly installments, (iii) reasonable cell phone and pager use, and inclusion in the Company's 401(k) plan for the 24-month period following such termination; plus (iv) all options to purchase common stock of the Company, which shall include any parent or affiliated entity shall fully vest and shall be exercisable for a period of five years following the date of such Termination. In addition, current arrangements concerning indemnification, including but not limited to payment of expenses of officers, directors, and employees in connection with litigation involving the Company shall remain in full force and effect following termination. 12. Non-Competition; Non-Disclosure of Information. (a) The Employee shall not during the Employment Period, and for a period of one year following the termination of the Employment Period, (i) directly or indirectly engage in any Competitive Business (as defined below), whether such engagement shall be as an employee, employer, owner, consultant, partner or other participant in any Competitive Business, (ii) assist others in engaging in any Competitive Business in the manner described in the foregoing clause (i), (iii) induce employees of the Company to terminate their employment with the Company or engage in any Competitive Business or (iv) induce customers or vendors of the Company to alter or terminate their business relationship with the Company; provided, however, that the Employee may (A) own directly or indirectly, solely as a passive investment, securities of any Competitive Business traded on any national securities exchange if the Employee is not a controlling person of, nor a member of a group which controls such person and does not, directly or indirectly, own 5% or more of any class of securities of such person, and (B) serve as the Chief Information Officer or information technology executive of a Blue Cross or Blue Shield Plan without violating this Section 12. As used herein, the term "Competitive Business" shall mean any business which, directly or indirectly, competes with the Company or any of its subsidiaries in the business of primarily providing physician practice management, physician network management and/or clinical information technology to or for physicians to the extent such businesses are conducted by the Company and its subsidiaries at the time of any termination of the Employment Period. (b) The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a Competitive Business, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits in connection with his employment to clearly justify such restrictions which, in any event, the Employee does not believe would prevent him from earning a living. Nothing herein contained shall prohibit the Employee from engaging in a business that is not a Competitive Business. (c) The Employee agrees that he will not, at any time during or after the Employment Period, disclose to any person, firm, corporation or other entity, except as required by law, any secret or confidential information concerning the business, clients or affairs of the Company or any subsidiary or affiliate thereof for any reason or purpose whatsoever other than in furtherance of the Employee's work for the Company nor shall the Employee make use of any of such secret or confidential information for his own purpose or for the benefit of any person, firm, corporation or other business entity except the Company or any subsidiary or affiliate thereof. 5 6 13. Company Right to Inventions. The Employee shall promptly disclose, grant and assign to the Company for its sole use and benefit any and all inventions, improvements, technical information, methods and suggestions (the "Inventions") relating in any way to the business of providing physician practice management, physician network management and/or clinical information technology to or for physicians, which he may develop or acquire during the period of the Employee's employment with the Company prior to any termination of employment (whether or not during usual working hours), together with all patent applications, patents, copyrights and reissues thereof that may at any time be granted for or upon any such Inventions. In connection therewith: (a) the Employee shall without charge, but at the expense of the Company, promptly at all times hereafter execute and deliver such applications, assignments, descriptions and other instruments as may be reasonably necessary or proper in the reasonable opinion of the Company to vest title to any such inventions, improvements, technical information, methods, patent applications, patents, copyright applications, copyrights or reissues of any thereof in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world; and (b) the Employee shall render to the Company at its expense (including a reasonable payment for the time involved in case he is not then in its employ) all such assistance as it may reasonably require in the prosecution of applications for said patents, copyrights or reissues thereof, in the prosecution or defense or interferences which may be declared involving any said applications, patents or copyrights and in any litigation in which the Company may be involved relating to any such patents, copyrights, inventions, improvements, technical information or methods. 14. Enforcement. It is the desire and intent of the parties hereto that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such amendment to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made; provided, however, that if any one or more of the provisions contained in this Agreement shall be adjudicated to be invalid or unenforceable because such provision is held to be excessively broad as to duration, geographical scope, activity or subject, such provision shall be deemed amended by limiting and reducing it so as to be valid and enforceable to the maximum extent compatible with the applicable laws of such jurisdiction, such amendment to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made. 15. Remedies; Survival. (a) The Employee acknowledges and understands that the provisions of this Agreement are of a special and unique nature, the loss of which cannot be accurately compensated for in damages by an action at law, and that the breach of the provisions of this Agreement would cause the Company irreparable harm. In the event of a breach by the Employee of the provisions of Section 12 or 13 hereof, the Company shall be entitled to an injunction restraining him from 6 7 such breach. Nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedies available for any breach of this Agreement. (b) Notwithstanding anything contained in this Agreement to the contrary, the provisions of Sections 12, 13, 14 and this Section 15 shall survive the expiration or other termination of this Agreement until, by their terms, such provisions are no longer operative. (c) It is understood and agreed that the provisions of Sections 12 and 13 of this Agreement are separate and distinct from any other agreement between the parties hereto. Accordingly, in the event of a breach of such provisions, the breaching party shall only be held responsible for damages arising under such provisions and not for any damages which may be claimed to arise under or with respect to any other agreement that is not separately breached. 16. Notices. Notices and other communications hereunder shall be in writing and shall be delivered personally or sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows: If to the Employee: Robert J. Alger 126 Fuller Winnetka, Illinois 60093 If to the Company: Advanced Health Corporation 555 White Plains Road, Second Floor Tarrytown, New York 10591 Attention: Chairman and CEO Or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. All notices and other communications hereunder shall be deemed to have been given on the date of delivery if personally delivered; on the business day after the date when sent if sent by air courier; and on the third business day after the date when sent if sent by mail, in each case addressed to such party as provided in this Section 16. 17. Binding Agreement. This Agreement shall inure to the benefit of and be enforceable by the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees and devisees. If the Employee should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the beneficiary designated by the Employee in writing delivered to the Company, or if there be no such designated beneficiary, to his estate. 18. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed wholly therein. 7 8 19. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement by the other party must be in writing and shall not operate or be construed as a waiver of any subsequent breach by such other party. 20. Entire Agreement; Amendments; Execution. This Agreement contains the entire agreement between the parties with respect to the subject matter contained herein and supersedes all prior agreements or understandings among the parties with respect thereto. This Agreement may be amended only by an agreement in writing signed by the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original document but all of which shall constitute but one agreement. 21. Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 22. Severability. Any provisions of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 23. Assignment. With respect to the Employee, this Agreement is personal in its nature and the Employee shall not assign or transfer this Agreement or any rights or obligations hereunder. The Company may in its sole discretion assign or otherwise transfer this Agreement and the provisions hereof (including, without limitation, Sections 12, 13 and 14) shall inure to the benefit of, and be binding upon, each successor of the Company, whether by merger, consolidation, transfer of all or substantially all assets, or otherwise. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. ADVANCED HEALTH CORPORATION /s/ Jonathan T. Edelson, MD --------------------------- Name: Jonathan T. Edelson, MD Title: Chairman and CEO /s/ Robert J. Alger ------------------- Robert J. Alger 8 EX-10.19 4 SEPARATION AGREEMENT RE ALAN B. MASAREK 1 EXHIBIT 10.19 EXECUTION COPY May 27, 1999 Mr. Alan B. Masarek 79 Cavalry Road Weston, Connecticut 06883 Dear Alan: The following are the terms and conditions we have agreed to in connection with your resignation from Advanced Health Corporation d/b/a AHT Corporation (the "Company") and your severance package. These provisions supercede any existing employment contracts between the Company and you. 1. Your resignation as President and Chief Operating Officer of the Company is effective as of March 31, 1999. 2. Severance: You will receive a one-year continuation of salary at your current annual salary rate of $250,000 ("Severance Payments"), plus benefits as described in Paragraph 5 below, as severance, from April 1, 1999 to March 31, 2000 (the "Severance Period"). Such Severance Payments will be paid on the normal payment intervals provided employees of the Company. You will be paid an additional one year continuation of salary at your current annual salary rate of $250,000 (the "Additional $250,000 Payment") in exchange for consulting for up to 24 business days in a form and manner reasonably requested by the Company's Board of Directors. Such consulting services will be provided during the period from April 1, 2000 to March 31, 2001 (the "Consulting Period"). The Company will pay you this Additional $250,000 Payment less applicable withholdings in one lump sum upon execution of this agreement. 3. You agree to repay your current outstanding loans, principal ($467,475) and interest (at the rate of 6% per annum), beginning May 1, 2000 at the rate of $15,000 per month with the balance due of all outstanding loans, including principal and interest on May 1, 2001. 4. You will be entitled to receive your current health benefits during the Severance Period, (which may be adjusted depending upon a change in health carrier, but in no event diminishing the benefits you would have received had you still been employed by the Company); life insurance, including continued payment by the Company of the premiums related to your $250,000 whole-life policy and the supplemental disability policy with Massachusetts Casualty Company; a $600 per month car allowance; reasonable cellular phone and pager use; membership dues with the Young President's Organization not to exceed $5,000; and inclusion in the Company's 401-k plan. If at the end of such Severance Period, you are not employed, then an extension of such benefits will be considered by the Board of Directors. 1 2 5. You have been vested in 150,136 options to acquire Company stock that will remain fully exercisable for up to five years from the commencement of the Severance Period. 6. Your resignation from the Board of Directors of the Company is effective March 31, 1999. 7. You are entitled to receive a success bonus for the sale of the Management Services Division of the Company that occurred on May 14, 1999 ("the Sale"), equal to $40,000 plus 2.5% of the net proceeds of the Sale. Contingent consideration from the Sale received after June 30, 1999 will be considered part of the proceeds of the Sale. Any such payments shall be made to you within 14 days of receipt by the Company of the proceeds related to the Sale. 8. The terms of your current employment contract related to confidentiality, inventions and non-competition shall remain in full force and effect. It is expressly understood that the period of any non-competition commences on March 31, 1999. 9. Current arrangements concerning indemnification, including but not limited to payment of expenses of officers, directors and employees in connection with litigation involving the Company shall remain in full force and effect following termination. 10. This Agreement contains the entire agreement between the parties with respect to the subject matter contained herein and supersedes all prior agreements or understandings among the parties with respect thereto, other than your employment contract and the Company's Senior Executive Loan Policy. This Agreement may be amended only by an agreement in writing signed by the parties hereto. This Agreement may be executed in counterparts, each of which shall be deemed an original document but together shall constitute but one agreement. 11. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Please confirm your agreement with the foregoing by countersigning this letter agreement in the space provided below. Very truly yours, /s/ Jonathan T. Edelson, MD --------------------------- Jonathan T. Edelson, MD Chairman and CEO AGREED TO AND ACCEPTED: /s/ Alan B. Masarek - ------------------- Alan B. Masarek 2 -----END PRIVACY-ENHANCED MESSAGE-----