Exhibit (10)
DEFERRED COMPENSATION AGREEMENT
AGREEMENT made this 1st day of January, 1977 by and between SHARED
MEDICAL SYSTEMS CORPORATION, a Delaware corporation ("SMS") and R. Xxxxx
Xxxxxxxx ("Employee").
WHEREAS, since the founding of SMS Employee has rendered valuable
services to SMS; and
WHEREAS, in further consideration for such services the parties
hereto wish to provide for certain deferred benefits for Employee
pursuant to an arrangement that also provides certain advantages to SMS;
NOW, THEREFORE, in consideration of Employee's past services and of
the mutual promises herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. SMS agrees to pay to Employee, subsequent to the termination of
Employee's employment with SMS for any reason (other than (a) for conduct
deemed by the Board of Directors of SMS to have been fraudulent against
SMS, or (b) for total and permanent disability as provided for in
paragraph 3 hereof) a sum of money on the first day of each month for a
period of months as indicated in Exhibit A. Should Employee die while he
is receiving such payments, and before the last payment to him by SMS
hereunder, the payments shall be continued in their entirety to
Employee's beneficiary, as designated as Exhibit B (the "Beneficiary").
(Employee shall have the right from time to time to change the
Beneficiary by appropriate written notice to SMS). Employee shall give
the SMS Board of Directors (the "Board") at least twelve months' prior
notice in writing of the termination of his employment, through normal
retirement or otherwise. Should Employee give SMS less than twelve
month's prior notice, Employee shall forfeit to SMS an
amount, from the first payments to be made hereunder, equal to one
month's payment times the difference between twelve months and the number
of full months' notice actually given. The first month's payment under
this paragraph shall be made on the first day of the month following the
month in which employment terminated; provided however that the first
payment shall not be payable prior to the later of January 1, 1989 or the
expiration of a twelve month period following the date of Employee's
notice of the termination of his employment.
2. Should Employee die (while employed by SMS or otherwise), prior
to the beginning of payments under paragraph 1, above, to which he would
otherwise have been entitled, then such monthly payments shall be made to
Employee's Beneficiary, starting on the first day of the month following
the month in which the Employee's death occurred.
3. Should Employee become totally and permanently disabled while
employed by SMS but prior to January 1, 1986, such that either
(a) pursuant to the terms of any insurance policy procured by
SMS pursuant to paragraph 7, such policy may, because of such dis-
ability, be maintained in force without payment of any premium
thereon or
(b) if there is no such insurance policy, the Board determines
in its absolute discretion on the basis of medical evidence that
employee is physically or mentally incapable of performing his
customary duties and that such incapacity is expected to continue
until January 1, 1987,
then SMS shall pay to Employee monthly the amounts listed in Exhibit C,
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starting on January 1 of the year in which the first premium which need
not be paid on such insurance policy would otherwise be due or, if there
is no such insurance policy, on the first January 1 which occurs after
the Board's determination of Employee's total disability (but only for so
long as the total and permanent disability, determined as provided above,
continues). Starting on the later of January 1, 1987 (assuming Employee,
while employed by SMS, has become totally and permanently disabled as
defined above) or the first day of the month following the month in which
Employee, while employed by SMS, has become totally and permanently
disabled as defined above, SMS shall pay to Employee monthly the amounts
listed in Exhibit A. Should Employee die after he has become totally and
permanently disabled as defined above but prior to January 1, 1987, the
monthly payments designated in Exhibit A shall be made to Employee's
Beneficiary, starting on the first day of the month following the month
in which Employee's death occurred. Should Employee die after he has
become totally and permanently disabled as defined above but on or after
January 1, 1987, the remaining payments listed in Exhibit A shall be
continued to Employee's Beneficiary. The Board shall have no obligation
to determine that Employee is disabled as contemplated above if Employee
declines to permit a physician selected by SMS to examine him or re-
examine him, or materially hinders any investigation ordered by SMS.
4. Employee agrees that he will not enter into competition with SMS
at any time from the date hereof through a period of two years after the
completion of the payments listed in Exhibit A. Employee shall be deemed
to be in competition if he directly or indirectly, whether as consultant,
agent, officer, director, holder of at least 1% of a class of
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equity security, employee or otherwise enters into an association with
another business enterprise which then is one of the competitors of SMS
respecting one or more of SMS' business activities. The parties agree
that one of the essential considerations for the deferred compensation
provided Employee hereunder is to protect and preserve the good will of
SMS and its respective enterprises, and that said good will would be
substantially diminished in value if Employee were to enter into
competition with SMS while this Agreement is in effect or for two years
thereafter. As SMS' business activities are national in scope, the
prohibition against competition relates to any competitor wherever it may
be located within the United States. In the event Employee is deemed to
be in competition contrary to the provisions of this paragraph, thereupon
he shall forfeit all rights to any unmade payments of deferred
compensation under this Agreement.
5. The benefits payable under this Agreement shall be independent
of, and in addition to, any other agreement relating to Employee's
employment that may exist from time to time between the parties hereto,
or any other compensation payable by SMS to Employee, whether salary,
bonus or otherwise. This Agreement shall not be deemed to constitute a
contract of employment between the parties hereto, nor shall any
provision hereof, except as expressly stated, restrict the right of SMS
to discharge Employee or restrict the right of Employee to terminate his
employment.
6. This Agreement shall be binding upon SMS, its successors and
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assigns. Employee may not assign this Agreement or any of his rights
hereunder, except that he may designate a beneficiary to receive payments
in the event of his death as provided herein.
7. SMS in its discretion may apply for and procure as owner and for
its own benefit insurance on the life of Employee, in such amounts and in
such forms as SMS may choose. Employee shall have no interest whatsoever
in any such policy or policies, but at the request of SMS he shall submit
to medical examinations and supply such information and execute such
documents as may be required by the insurance company or companies to
whom SMS has applied for insurance. The rights of Employee, or his
beneficiary, or estate, to benefits under this Agreement shall be solely
those of an unsecured creditor of SMS. Any insurance policy or other
assets acquired or held by SMS in connection with the liabilities assumed
by it pursuant to this Agreement shall not be deemed to be held under any
trust for the benefit of Employee, a beneficiary of his estate, or to be
security for the performance of the obligations of SMS. This Agreement
may be canceled by SMS if insurance procured by SMS under this paragraph
is canceled by the insurance company because of misrepresentation by
Employee.
8. This Agreement shall be governed by the laws of Pennsylvania.
/s/ Xxxx X. Xxxxxx /s/ R. Xxxxx Xxxxxxxx
---------------------------- ---------------------------
Witness Employee
/s/ Xxxxx X. Xxxxx
---------------------------
SMS Corporate Officer
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EXHIBIT A
---------
Year of
Termination of Monthly Number of Total Deferred
Employment Payments Monthly Payments Compensation
---------------- -------- ---------------- --------------
1977 $ 295 240 $ 70,800
1978 709 240 170,160
1979 1085 240 260,400
1980 1422 240 341,280
1981 1743 240 418,320
1982 2048 240 491,520
1983 2335 240 560,400
1984 2601 240 624,240
1985 2836 240 680,640
1986 and 3052 240 732,480
subsequent
(1) Employee may elect fewer than 240 payments but not less than 120
payments. If fewer than 240 payments are selected, the amount of each
monthly payment shall equal the Total Deferred Compensation
(determined by the year of Termination of Employment as shown on the
table above) divided by the number of months selected, with the
quotient thereof divided by (1.01) 20-n [Exponent],where n equals
one-twelfth of the number of months selected for payment rounded to the
nearest whole number plus the number of whole years subsequent to 1989, if
any, by which Employee has elected to delay the start of the deferred
compensation, provided, however, that n shall never exceed 20.
(2) The deferred payments shall not start before January 1, 1989.
Employee may defer the start of the deferred payments to any date
subsequent to the termination of his employment. However, the total
amount of deferred compensation shall depend on the year of
termination of employment, as listed above, and as modified in
footnote (1), above.
EXHIBIT B
---------
I, R. Xxxxx Xxxxxxxx, hereby designate L. Xxxx Xxxxxxxx
----------------- ----------------
as my beneficiary for payments to be made subsequent to my death under
the Deferred Compensation Agreement dated January 1, 1977 between me and
Shared Medical Systems Corporation. I hereby revoke all prior beneficiary
designations made by me pursuant to such Deferred Compensation Agreement.
If my wife should not survive me, I designate my children as
beneficiaries in equal shares.
/s/ Xxxx X. Xxxxxx /s/ R. Xxxxx Xxxxxxxx
------------------------------ -----------------------------------
Witness Employee
Dated: 1/23/77
EXHIBIT C
---------
Monthly Payments /(1)/By Year (In Dollars)
-----------------------------
Year of
Designated
Disability 1978 1979 1980 1981 1982 1983 1984 1985 1986
---------- ------ ---- ---- ---- ---- ---- ---- ---- ----
1977 3424 3424 3424 3424 3424 3424 3424 3424 3424
1978 -- 5444 5444 5444 5444 5444 5444 5444 5444
1979 -- -- 5793 5793 5793 5793 5793 5793 5793
1980 -- -- -- 6153 6153 6153 6153 6153 6153
1981 -- -- -- -- 6176 6176 6176 6176 6176
1982 -- -- -- -- -- 6176 6176 6176 6176
1983 -- -- -- -- -- -- 6176 6176 6176
1984 -- -- -- -- -- -- -- 6176 6176
1985 -- -- -- -- -- -- -- -- 6176
(1) Payments start on the first day of January, following the year of
Employee's disability.
Exhibit (10)
SPLIT DOLLAR AGREEMENT
This split dollar agreement (the "Agreement") is entered into on the
dates set forth below, to be effective as of July 28, 1995, by and between
SHARED MEDICAL SYSTEMS CORPORATION (the "Corporation") and XXXXXXX X. XXXXXXXX,
XX. and XXXXXXX X. XXXXXXX, TRUSTEES under The LJM 95 Trust under deed of trust
of L. Xxxx Xxxxxxxx dated as of July 28, 1995 ("Trustees").
RECITALS:
A. R. Xxxxx Xxxxxxxx (the "Employee") is employed by the Corporation; and
B. The Trustees wish to acquire life insurance on the life of the
Employee to be owned by the Trustees; and
C. The Corporation wishes to provide this life insurance protection under
the policies which are described in Exhibit A to this Agreement (separately "the
Policy" and collectively "the Policies"); and
D. The Corporation is willing to pay a portion of the premiums due on the
Policies as an additional employment or retirement benefit to the Employee, on
the term and conditions hereinafter set forth; and
E. Trustees will be the owners of the Policies and, as such, will possess
all of the incidents of ownership in and to the Policies; and
F. The Corporation wishes to have the Policies collaterally assigned to
it by the Trustees, in order to secure the repayment of the amounts it will pay
towards the premiums on the Policies; and
G. The parties intend that by such collateral assignment, the
Corporation shall receive only the right to such repayment, with the Trustees
retaining all incidents of ownership and other rights in the Policies, as
specified herein.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, the parties agree as follows:
1: Purchase of the Policy
The parties agree that they will take all necessary actions to cause
the Policies to be issued to the Trustees and to cause the Policies to conform
to the terms of this Agreement. The parties agree that the Policies will be
subject to the terms and conditions of the Agreement and of the collateral
assignment filed with the insurance company issuing the Policy (the "Insurer")
relating to such Policy.
2: Incidents of Ownership
The Trustees shall be the sole and absolute owner of each Policy, and
they alone may exercise all ownership rights and incidents of ownership granted
to the Policy's owner by the Insurer, except as may be expressly provided to the
contrary in its Agreement. It is the intention of the parties that the Trustees
retain all rights which the Policy grants to the owner thereof, except the
Corporation's right to be repaid the amounts that it pays, net of any
reimbursement received by the Corporation from the Employee or the Trustees,
towards the
2
premiums on the Policy (such net amounts referred to hereinafter as the
Corporation's "Policy Interest"). Specifically (but not limited thereto), the
Corporation may neither have nor exercise any right as collateral assignee of
the Policy that could in any way defeat or impair the Trustees' right to receive
the cash surrender value or the death proceeds of the Policy in excess of the
amount due the Corporation under this Agreement. All provisions of this
Agreement and of the collateral assignment shall be construed so as to carry out
such intention.
3: Dividends Or Other Payments
Before the death of the Insured, all dividends, excess interest
credits, or other amounts paid or declared with respect to any Policy shall be
applied to build the internal value of the Policy in the most efficient manner
set forth in the Policy until such time as such dividends, excess interest
credits or other amounts are sufficient to pay all future Policy charges to
maturity based on the Insurer's then current interest, mortality and expense
assumptions. At such time as future dividends, excess interest credits or other
amounts are projected to be sufficient to pay such future Policy charges to
maturity, such amounts shall be applied first to the payment of such premiums,
and any excess shall be applied further to increase Policy values.
3
4: Premium Payments
Except as otherwise provided in this Agreement, on or before the due
date of each Policy premium, or within the grace period provided in the Policy,
the Corporation shall pay to the Insurer the full amount of the premium. Within
30 days of being notified by the Company that it has made such payment, the
Trustees shall pay to the Company that portion of the premium listed on Exhibit
"A" of this Agreement, so that the net premium payment borne by the Corporation
shall be the amount shown in the column headed "Corporation" on Exhibit "A" (the
provisions of which are incorporated herein and made a part hereof).
5: Right of Repayment
5.1 Source. To secure the repayment to the Corporation of
------
the Corporation's Policy Interest, the Trustees have, contemporaneously
herewith, assigned each Policy to the Corporation as collateral, under a form
accepted by the Insurer for such assignments, which collateral assignment
specifically limits the Corporation's right thereunder to the repayment of its
Policy Interest. Such repayment shall be made from the Policy's cash surrender
value (as defined in the Policy) if this Agreement is terminated or if the
Trustees surrender or cancel the Policy, or from the Policy's death proceeds if
the insured should die while the Policy and this Agreement remain in force. In
no event shall the Corporation have any right to borrow against the Policy.
4
5.2 Timing. At such time after premiums are no longer required
------
to be paid in cash to an Insurer with respect to a Policy but before the
termination of this Agreement or the death of the insured, the Trustees shall
commence repayment of the Corporation's Policy Interest with respect to such
Policy in installments as set forth in Exhibit "A." Any payment made by the
Trustees pursuant to this paragraph shall reduce the remaining amount of the
Corporation's Policy Interest.
5.3 Termination of Assignment. Except as provided in Paragraph
-------------------------
8.2., the Policy's collateral assignment shall not be terminated, altered or
amended by the Trustees without the express written consent of the Corporation.
The parties hereto agree to take all actions necessary to cause such collateral
assignment to conform to the provisions of this Agreement.
6: Rights of Trustees in the Policy
6.1 Rights of the Corporation Protected. The Trustees shall take no
-----------------------------------
action with respect to any Policy that would in any way compromise or jeopardize
the Corporation's right to be repaid its Policy Interest.
6.2 Right to Borrow.
---------------
(a) The Trustees may pledge or assign any Policy, subject to the
terms and conditions of this Agreement, in order to secure a loan from the
Insurer or from a third party, in an amount which, except as provided in
subparagraph 6.2(b), shall not exceed the Policy's cash surrender value (as
defined in the Policy) as of the date on which the premiums have been paid, less
5
the amount of the Corporation's Policy Interest. Interest charges on such loan
shall be the responsibility of and shall be paid by the Trustees. For each
Policy year in which the Trustees borrow against the Policy, the Corporation
shall be correspondingly relieved of its obligation to pay any amounts towards
premiums for a Policy year.
(b) The limitation on the amount that the Trustees may borrow
against the Policy hereunder shall be not apply to the extent that the amount
borrowed is paid over to the Corporation to reduce its Policy Interest.
6.3 Right to Cancel. The Trustees shall have the sole right to
---------------
surrender or cancel the Policy and to receive the Policy's full cash surrender
value directly from the Insurer. Upon any surrendering or cancellation of the
Policy, the Corporation shall have the unqualified right to receive a portion of
the cash surrender value equal to its Policy Interest. Immediately upon receipt
of the cash value, the Trustees shall pay to the Corporation the portion of such
cash value to which it is entitled under this Agreement, and shall retain the
balance, if any.
7: Upon The Insured's Death
Upon the death of the Insured, the Corporation and the Trustees shall
promptly take all action necessary to obtain the death benefit provided under
the Policies. The Corporation shall have the unqualified right to receive a
portion of such death benefits from each Policy equal to its Policy Interest in
that
6
Policy. The balance of the death benefits provided under each Policy, if any,
shall be paid directly to the beneficiary designated by the Trustees in the
manner and in the amount provided in the Policy's beneficiary designation
provisions. In no event shall the amount payable to the Corporation on account
of payments made for each Policy under this Agreement exceed the Policy proceeds
payable at the death of the Employee. No amount shall be paid from the death
benefits of a specific Policy to the beneficiary designated by the Trustees
until the full amount due to the Corporation on account of such Policy has been
paid.
8: Termination and Release of Collateral Assignment
8.1 Notice of Termination. The Trustees may terminate this Agreement
---------------------
with regard to any or all of the Policies, by written notice to the Corporation,
effective on the date of such notice.
8.2 Release of Assignment. For sixty (60) days after the date this
---------------------
Agreement is terminated under this Section, the Trustees shall have the option
of obtaining the release of the collateral assignment of all or any of the
Policies to the Corporation. The Trustees may exercise this option by repaying
the Corporation the total amount of its Policy Interest with respect to such
Policy and upon receipt of such amount, the Corporation shall release the
Policy's collateral assignment by its execution and delivery of an appropriate
instrument of release. If the Trustees fail to exercise such option with regard
to any such Policy within the said sixty-day period, then at the Corporation's
written request, the Trustees shall execute
7
any document required by the Insurer to transfer the Trustees' interest in the
Policy to the Corporation. Alternatively, the Corporation may enforce its right
to be repaid the amount of its Policy Interest from the Policy's cash surrender
value under the Policy's collateral assignment, and if the cash surrender value
exceeds the amount of such premium payments, the excess will be paid to the
Trustees.
9: Source of Funds
The Corporation's obligations hereunder shall be satisfied from the general
assets of the Corporation. Any assets which may be set aside, earmarked or
identified by the Corporation as being intended for the payment of premiums
under this Agreement shall remain assets of the Corporation and shall be subject
to the claims of its general creditors. The Trustees shall be a general and
unsecured creditor of the Corporation and shall have no right, title or interest
in any specific asset that the Corporation may set aside, earmark, or identify
as for the payment of premiums under this Agreement. The Corporation's
obligations under this Agreement shall be merely that of an unfunded and
unsecured promise of the Corporation to pay money in the future.
10: Miscellaneous
10.1 Insurer Protected. Each Insurer shall be fully discharged from
-----------------
its obligations under the Policy by payment of the Policy's death benefit to the
beneficiary named in the
8
Policy, subject to the Policy's terms and conditions. In no event shall the
Insurer be considered a party to this Agreement. No provision of this Agreement
shall in any way be construed as enlarging, changing, varying, or in any other
way affecting the Insurer's obligations as expressly provided in the Policy,
except insofar as the provisions of this Agreement are made a part of the Policy
by the collateral assignment document executed by the Trustees and filed with
the Insurer in connection with this Agreement.
10.2 Binding Agreement. This Agreement is binding on and enforceable
-----------------
by and against the parties, their successors, legal representatives, and
assigns.
10.3 Governing Law. This Agreement will be governed by
-------------
and construed according to the laws of Pennsylvania.
10.4 Severability. No part of this Agreement will be affected
------------
if any other part of it is held invalid or unenforceable.
10.5 Notices. All notices required or permitted to be given under
-------
this Agreement must be given in writing, and will be deemed given when
personally delivered or, if earlier, when received after mailing by registered
or certified United States mail, postage prepaid, with return receipt requested.
Notice to the Trustees is valid if sent to them at their address as it appears
in the Corporation's records.
9
10.6 "Days" Defined. Any reference in this Agreement to "days" means
--------------
all calendar days, whether or not such days are legal holidays under the laws of
the United States or any state.
10.7 Waiver. Any party's failure to insist on compliance or
------
enforcement of any provision of this Agreement shall not affect its validity or
enforceability or constitute a waiver of future enforcement of that provision or
of any other provision of this Agreement.
10.8 Copies. More than one (1) copy of this Agreement may be
------
executed and all parties agree and acknowledge that each executed copy shall be
a duplicate original.
10.9 Gender and Number. Whenever the context of this Agreement
-----------------
requires, the masculine gender includes the feminine and neuter, and the
singular number includes the plural and vice versa.
10.10 Facility of Payment. Either party shall have the right
-------------------
to advance funds due on behalf of the other.
Agreed to by each of the undersigned effective as of July 28, 1995.
Dated: 12/12/95 /s/ Xxxxxxx X. Xxxxxxx
------------------ -----------------------------------
TRUSTEE
Dated: 12/14/95 /s/ Xxxxxxx X. Xxxxxxxx [SEAL APPEARS
------------------ ---------------------------- HERE]
TRUSTEE
SHARED MEDICAL SYSTEMS CORPORATION
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Dated: 12/22/95 By:/s/ Xxxxxx X. Xxxxxxx [SEAL APPEARS
------------------ ------------------------ HERE]
President
Attest: Xxxxxx X. Xxxxxx [SEAL APPEARS
-------------------- HERE]
Secretary
11
EXHIBIT "A"
TO SPLIT DOLLAR AGREEMENT
ALLOCATION OF PAYMENTS WITH RESPECT TO THE POLICIES
---------------------------------------------------
PREMIUM YEAR TRUSTEES CORPORATION
------------ -------- -----------
1 $62,787 $371,997
2 64,719 369,151
3 67,218 366,652
4 70,003 363,867
5 73,387 360,483
6 76,616 357,254
7 80,194 353,676
8 84,141 349,729
9 88,381 345,489
10 60,187 178,853
11* 67,898* *
12 82,537
13 99,227
14 117,978
15 139,465
16 157,916
17 179,030
18 201,625
19 262,725
20 289,479
21 333,532
22 382,968
23 441,198
24 375,772
25 285,801
* The parties recognize that the actual amount of the premiums
payable after Policy Year 9 may vary from that set out above and that
adjustments to the Schedule may be necessary in light of the actual performance
of the Policy. If additional amounts are required to be paid in cash to the
Insurers, such amounts shall be paid by the Corporation, and the Trustees'
obligation to repay the Corporation shall be extended beyond Year 25 (if the
Insured has not died before then) until the Corporation has been repaid its
entire Policy Interest.
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Exhibit (10)
This AMENDED AND RESTATED DEFERRED COMPENSATION AGREEMENT is made as of the
1st day of November, 1995 by and between SHARED MEDICAL SYSTEMS CORPORATION, a
Delaware corporation ("SMS") and XXXXX X. XXXXX ("Employee").
BACKGROUND
SMS and Employee have entered into a Deferred Compensation Agreement dated
March 8, 1991 (the "Original Agreement"). SMS and Employee desire to amend and
restate the Original Agreement.
NOW THEREFORE, intending to be legally bound, the parties hereto agree that
the Original Agreement shall be amended and restated to read as follows:
1. Pre-Retirement Payments. SMS shall pay to Employee $3,000 per month on
-----------------------
the first day of each month during the period beginning on October 1, 1995 and
ending on the earlier of (i) Employee's Retirement (as defined below), or (ii)
June 1, 2014.
2. Deferral Account. SMS shall establish on its books a deferral account
----------------
for Employee, which will be credited with $3,000 as of the date of each payment
made to Employee under Section 1. Interest shall be credited to the Employee's
deferral account at a rate of 7% per annum, compounded monthly as of the end of
each month. Any amounts credited to the Employee's deferral account shall be
merely book entries and no assets shall be held in such account.
3. Post-Retirement Payments; Distribution of Deferral Account.
----------------------------------------------------------
(a) SMS shall pay to Employee or his beneficiary $6,000 per month on the
first day of each month during the period beginning on the first day of the
first full calendar month following Employee's Retirement and ending on June 1,
2014 (the "Post-Retirement Period").
(b) The amount credited to Employee's deferral account shall be paid to
him or his beneficiary in substantially equal monthly installments over the
Post-Retirement Period (or if Employee's Retirement has not occurred prior to
June 1, 2014, in a single lump sum distribution on such date). Such monthly
installment payments shall be in addition to, and made on the same dates as, the
$6,000 monthly payments referred to in subparagraph (a). Amounts credited to
Employee's deferral account shall continue to bear interest as specified in
Section 2 during the installment payout period.
4. Retirement. As used herein the term "Retirement" shall mean (i) the
----------
termination of Employee's employment with SMS, whether part-time or full-time,
for any reason, including death or disability, or (ii) a "Change-in-Control" (as
defined below). As used herein, the term "Change in Control" shall mean the
acquisition by any person (other than SMS or any affiliate or associate of SMS),
as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the combined
voting power of SMS' then outstanding securities, or the approval by the
stockholders of SMS of (aa) any merger or consolidation where stockholders of
SMS immediately prior to the merger or consolidation do not immediately
thereafter hold more than 50% of the combined voting power of the surviving
company's then outstanding securities, (bb) a liquidation or dissolution of SMS,
or (cc) a sale of all or substantially all of SMS' assets.
5. Death of Employee. Upon Employee's death, the payments required to be
-----------------
made under Section 3 shall be made to a beneficiary designated by Employee to
SMS (the current beneficiary is Employee's wife, Xxx X. Xxxxx).
6. Forfeiture of Benefits. Notwithstanding the foregoing, if Employee
----------------------
violates the Non-Competition Agreement between Employee and SMS dated April 2,
1990, Employee shall thereupon forfeit all rights to receive to any unmade
payments under this Agreement.
7. Agreement Unfunded. The obligation of SMS to pay any benefits under
------------------
this Agreement shall be unfunded and unsecured and any payment under this
Agreement shall be made from the general assets of SMS.
8. No Contract of Employment. The benefits payable under this Agreement
-------------------------
shall be independent of, and in addition to, any other agreement relating to
Employee's employment that may exist from time to time between the parties
hereto, or any other compensation payable by SMS to Employee, whether salary,
bonus or otherwise. This Agreement shall not be deemed to constitute a contract
of employment between the parties hereto, nor shall any provision hereof
restrict the right of SMS to discharge Employee or restrict the right of
Employee to terminate his employment.
9. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Pennsylvania.
10. Agreement Binding. This Agreement shall be binding upon and inure to
-----------------
the benefit of SMS, its successors and assigns, and Employee and his heirs,
executors, administrators and legal representatives. Employee may not assign
this Agreement or any of his rights hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
SHARED MEDICAL SYSTEMS CORPORATION
By: /s/ Xxxxxxxx X. Xxxx
--------------------------
Name:
Title:
/s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx
