EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of November
6, 1997, by and between SYNETIC, INC., a Delaware corporation (the "Company"),
and XXXXX X. XXXXXXXX ("Executive").
WHEREAS, the Company desires to employ the Executive on a
full-time basis, subject to the exception set forth below, and the Executive
desires to be so employed by the Company;
NOW, THEREFORE, in consideration of the mutual covenants in
this Agreement, the parties agree as follows:
1. Effectiveness of Agreement and Employment of Executive.
1.1. Effectiveness of Agreement. This Agreement shall
become effective as the date hereof (the "Effective Date").
1.2. Employment by the Company. The Company hereby
employs Executive as an Executive Vice President of the Company and Executive
hereby accepts such employment with the Company. Executive shall report to the
Chairman of the Board or Chief Executive Officer of the Company, and perform
such duties and services for the Company and its subsidiaries and affiliates
(such subsidiaries and affiliates collectively, "Affiliates"), as may be
designated from time to time, by the Chairman of the Board of Directors or the
Chief Executive Officer of the Company. Executive shall use his best and most
diligent efforts to promote the interests of the Company and the Affiliates, and
shall devote all of his business time and attention to his employment under this
Agreement, subject to his obligation to perform certain services to Merck-Medco
Managed Care ("Medco") under his agreement with Medco, a copy of which has been
furnished to Synetic and subject to such other business activities which will
not interfere with the performance of the Executive's duties hereunder and which
Executive has received prior written permission from the Company, which
permission shall not be unreasonably withheld.
1.3. Confidentiality. Executive understands and
acknowledges that in the course of his employment, he will have access to and
will learn information that is proprietary to, or confidential to the Company
and its Affiliates that concerns the operation and methodology of the Company
and its Affiliates, including, without limitation, business strategy and plans,
financial information, protocols, proposals, manuals, clinical procedures and
guidelines, technical data, computer source codes, programs, software, knowhow
and specifications, copyrights, trade secrets, market information, Developments
(as hereinafter defined), and customer information (collectively, "Proprietary
Information"). Executive
agrees that, at all times (including following termination of this Agreement),
he will keep confidential and will not disclose directly or indirectly any such
Proprietary Information to any third party, except as required to fulfill his
duties hereunder, and will not misuse, misappropriate or exploit such
Proprietary Information in any way. The restrictions contained herein shall not
apply to any information which Executive can demonstrate by written record (a)
was already available to the public at the time of disclosure, or subsequently
become available to the public, otherwise than by breach of this Agreement, (b)
was the subject of a court order for Executive to disclose, (c) information
which was in the possession of the Executive prior to his employment with the
Company or (d) information which is independently developed by the Executive and
which is outside of the scope of his employment or the business of the Company.
Upon any termination of this Agreement, Executive shall immediately return to
the Company all copies of any Proprietary Information in his possession.
1.4. Restrictions on Solicitation. During the period
beginning on the Effective Date and ending on the second anniversary of the date
of cessation of the employment of the Executive for any reason whatsoever (the
"Restricted Period"), Executive shall not, directly or indirectly, without the
prior written approval of the Company, solicit or contact any customer, or any
prospective customer (with whom the Executive has had contact during the last 12
months of the term of this Agreement), of the Company or any of the Affiliates
for any commercial pursuit which Executive knows, or should know, is in
competition with the Company or any of the Affiliates, or that is contemplated
from time to time by the Business Plan (as defined below) or take away or
interfere or attempt to interfere with any custom, trade, business or patronage
of the Company or any of the Affiliates, or induce, or attempt to induce, any
employees, agents or consultants of or to the Company or any of the Affiliates
to do anything from which Executive is restricted by reason of this Agreement
nor shall Executive, directly or indirectly, offer or aid others to offer
employment to or interfere or attempt to interfere with any employees, agents or
consultants of the Company or any of the Affiliates. For purposes of this
Agreement, "Business Plan" shall mean, at any point in time, the then current
business plan of the Company and any business plans of the Company in effect
during the prior 18 months.
1.5. Restrictions on Competitive Employment. During the
Restricted Period, Executive shall not (as principal, agent, employee,
consultant or otherwise), anywhere in the United States, directly or indirectly,
without the prior written approval of the Company, (i) engage in direct or
indirect competition with the Company, (ii) conduct a business of the type and
character engaged in by the Company (or contemplated by the Business Plan), or
(iii) develop products or services competitive with those of the Company
(collectively, "Competitive Business"). Notwithstanding the foregoing, Executive
may have an interest consisting of publicly traded securities constituting less
than 5 percent of any class of publicly traded securities in any public company
engaged in a Competitive Business so long as he is not
2
employed by and does not consult with, or become a director of or otherwise
engage in any activities for, such company.
1.6. Extension of Restricted Period. The Restricted
Period shall be extended by the length of any period during which Executive is
in breach of the terms of this Section 1.
1.7. Assignment of Developments. All Developments that
are at any time made, conceived or suggested by Executive, whether acting alone
or in conjunction with others, arising out of or as a result of Executive's
employment with the Company shall be the sole and absolute property of the
Company and the Affiliates, free of any reserved or other rights of any kind on
Executive's part. During Executive's employment and, if such Developments were
made, conceived or suggested by Executive during or as a result of Executive's
employment under this Agreement or any prior employment with the Company or the
Affiliates, thereafter, Executive shall promptly make full disclosure of any
such Developments to the Company and, at the Company's cost and expense, do all
acts and things (including, among others, the execution and delivery under oath
of patent and copyright applications and instruments of assignment) deemed by
the Company to be necessary or desirable at any time in order to effect the full
assignment to the Company and the Affiliates of Executive's right and title, if
any, to such Developments. For purposes of this Agreement, the term
"Developments" shall mean all data, discoveries, findings, reports, designs,
inventions, improvements, methods, practices, techniques, developments,
programs, concepts, and ideas, whether or not patentable, relating to the
present or planned activities, or future activities of which Executive is aware,
or the products and services of the Company or any of the Affiliates.
1.8 Conflicts of Interest. The Executive, during the
term of this Agreement, is also being employed as a part-time employee of, or
consultant to, Medco. The Executive and the Company endeavor to eliminate
certain conflicts of interest which may arise in the performance of the
Executive's services hereunder. In furtherance of such objective, the Executive
and the Company have established the following:
a) The Executive and Company will work together to avoid any conflicts
relating to his employment with Medco.
b) The Company will not solicit, nor will the Executive provide to the
Company, any information confidential or proprietary to Medco and its
affiliates in the course of the Executive's employment hereunder.
c) The Company will allow the Executive sufficient business time to
satisfy his employment obligations to Medco.
3
1.9. Remedies. Executive acknowledges and agrees that
damages for a breach or threatened breach of any of the covenants set forth in
Sections 1.1 through 1.8 will be difficult to determine and will not afford a
full and adequate remedy, and therefore agrees that the Company, in addition to
seeking actual damages in connection therewith, may seek specific enforcement of
any such covenant in any court of competent jurisdiction, including, without
limitation, by the issuance of a temporary or permanent injunction.
2. Compensation and Benefits.
2.1. Salary. The Company shall pay Executive for services
during the term of this Agreement a base salary at the annual rate of
$175,000.00 ("Base Salary"). Any and all increases to Executive's Base Salary
shall be determined by the Board of Directors in its sole discretion, provided
however, that when revenues from healthcare communications business exceeds
$30,000,000, then the Board of Directors will increase Executive's compensation
to a level commensurate with his contribution as determined in their reasonable
judgment. Such Base Salary shall be payable in equal installments, no less
frequently than monthly, pursuant to the Company's customary payroll policies in
force at the time of payment, less any required or authorized payroll
deductions.
2.2. Upon the signing of this Agreement, the Executive
shall receive a one time payment equal to $225,000.
2.3. Benefits. During the term of this Agreement,
Executive shall be entitled to participate, on the same basis and at the same
level as other similarly situated senior executives of the Company, in any group
insurance, hospitalization, medical, health and accident, disability, fringe
benefit and tax-qualified retirement plans or programs or vacation leave of the
Company now existing or hereafter established to the extent that he is eligible
under the general provisions thereof.
2.4. Expenses. Pursuant to the Company's customary
policies in force at the time of payment, Executive shall be promptly
reimbursed, against presentation of vouchers or receipts therefor, for all
authorized expenses properly and reasonably incurred by him on behalf of the
Company or its Affiliates in the performance of his duties hereunder.
3. Employment Period.
Executive's employment under this Agreement shall commence as
of the Effective Date, and shall terminate on the fifth anniversary thereof (the
"Initial Employment Period"), unless terminated earlier pursuant to Section 4.
Unless written notice of either party's desire to terminate this Agreement has
been given to the other party prior to the expiration of the
4
Initial Employment Period (or any one-month renewal thereof contemplated by this
sentence), the term of this Agreement shall be automatically renewed for
successive one-month periods.
4. Termination.
4.1. Termination by the Company for Cause. (a) This
Agreement and Executive's employment with the Company may be terminated at any
time by the Company for Cause. Upon such a termination, the Company shall have
no obligation to Executive other than the payment of Executive's earned and
unpaid compensation to the effective date of such termination.
(b) For purposes of this section of the Agreement, the term
"Cause" shall mean any of the following:
1. A willful failure of Executive to perform his duties in
any material respect which failure is not cured by Executive within 30
days following written notice from the Company detailing such failure;
2. Any willful misconduct by Executive relating, directly
or indirectly, to the Company or any of its Affiliates, which breach, if
susceptible to cure, is not cured by Executive within 30 days following
written notice from the Company detailing such breach;
3. Any breach by Executive of any material provision
contained in this Agreement, which breach, if susceptible to cure, is not
cured by Executive within 30 days following written notice from the
Company detailing such breach; or
4. Executive's conviction of a felony or crime involving
moral turpitude.
4.2. Permanent Disability. If during the term of this
Agreement, Executive shall become ill, mentally or physically disabled, or
otherwise incapacitated so as to be unable regularly to perform the duties of
his position for a period in excess of 90 consecutive days or more than 120 days
in any consecutive 12 month period, then the Company shall have the right to
terminate this Agreement and Executive's employment with the Company upon
written notice to Executive. Upon such a termination, the Company shall have no
obligation to Executive other than (i) the payment of Executive's earned and
unpaid compensation to the effective date of such termination and (ii) as
provided in Section 5 below.
5
4.3. Death. This Agreement shall be deemed terminated by
the Company upon the death of Executive and the Company shall have no obligation
to Executive or Executive's estate other than (i) the payment of Executive's
earned and unpaid compensation to the effective date of such termination and
(ii) as provided in Section 5 below.
4.4. Resignation by the Executive. If the Executive
terminates his employment with the Company for any reason, the Company shall
have no obligation to Executive other than the payment of Executive's earned and
unpaid compensation to the effective date of such termination.
4.5. Termination by the Company Without Cause. This
Agreement and Executive's employment with the Company may be terminated at any
time by the Company without Cause. If the Company terminates this Agreement and
Executive's employment without Cause (including upon notice of the Company
pursuant to Section 3 of its desire to not renew this Agreement), the Company
shall have no obligation to Executive other than (i) the payment of Executive's
earned and unpaid compensation to the effective date of such termination, (ii)
the payment of a monthly severance payment equal to one twelfth (1/12th) of his
then applicable Base Salary, less all required payroll deductions for a period
ending two (2) years from the date of such termination, or until the occurrence
of any circumstances or event that would constitute Cause under Section 4.1 of
this Agreement, if sooner, and (iii) as provided in Section 5 below.
4.6. Change of Control. In the event of a Change of
Control, the Executive may terminate his employment and this Agreement upon 30
days' written notice to the Company at any time after a 12 month period
following the occurrence of the Change of Control (or such shorter period to the
extent the acquiring company does not request the services of the Executive for
such 12 month period). In the event of such a termination by Executive, all
Existing Stock Options held by the Executive shall continue to vest and be
exercisable as provided in Section 5 below. For the purposes of this Agreement,
a "Change of Control" shall be deemed to have occurred if:
(a) both (i) any person, entity or group shall have acquired at least
50% of the voting power of the outstanding voting securities of the
company, excluding Xxxxxx X. Wygod and his affiliates, and (ii)
following such acquisition of 50% Voting Power, Xxxxxx X. Wygod
shall cease to hold one or more of the following positions: Chairman
of the Board or Chief Executive Officer of the Company or a senior
executive office of the acquirer of 50% Voting Power, in each case
with duties and responsibilities greater than or substantially
equivalent to those prior to such acquisition of 50% Voting Power;
or
(b) both (i) a reorganization, merger or consolidation or sale of other
disposition of all or substantially all of the assets of the Company
("Business Combination") shall
6
have occurred and (ii) following such Business Combination, Xxxxxx
X. Wygod shall cease to be Chairman of the Board or Chief Executive
Officer of, or to hold a senior executive position in, the
corporation resulting from such Business Combination, with duties
and responsibilities greater than or substantially equivalent to
those prior to such Business Combination; or
(c) a complete liquidation or dissolution of the Company shall have
occurred.
4.7 Termination by the Executive For Cause. This
Agreement and Executive's employment with the Company may be terminated by the
Executive for Cause on 30 days written notice to the Company, which notice shall
detail the specific basis for such termination. The Company shall be given the
opportunity to cure the basis for such termination within such 30 days period.
For the purpose of this Section of this Agreement, the term "Cause" means any of
the following: (1) a material breach by the Company of its obligations to the
Executive under this Employment Agreement, which, if susceptible to cure,
remains uncured, (2) a material demotion of his position with the Company, and
(3) if Executive is required by the Company to relocate from his present
residence or is required to commute, on a regular basis, to the Company's
headquarters and such headquarters is outside of the New York City metropolitan
area. If the Executive terminates this Agreement and his employment under this
Section, the Executive shall receive (i) the payment of the Executive's earned
and unpaid compensation to the effective date of such termination, (ii) payments
of a monthly severance payment equal to one twelfth (1/12th) of his then
applicable Base Salary, less all required payroll deductions, for a period two
(2) years from the date of such termination, or until the occurrence of any
circumstance or events that would constitute Cause under Section 4.1 of this
Agreement, if sooner, and (iii) as provided in Section 5 below.
4.8 Termination by the Executive if Second Option Grant
not Approved. In the event (1) that the option grant described in paragraph B.
of Schedule A (the "Second Option Grant") is not approved by the Company's
shareholders at their next annual meeting (2) any alternative option grant made
by the Company to Executive in lieu of the Second Option Grant is not reasonably
satisfactory to Executive, this Agreement and Executive's employment with the
Company may be terminated by the Executive within the 30 day period following
the date of such alternative option grant on 30 days written notice to the
Company. If the Executive terminates this Agreement and his employment under
this Section, (i) Executive shall receive the payment of Executive's earned and
unpaid compensation to the effective date of such termination and (ii) the
two-year Restricted Period shall be reduced to equal six months for purposes of
Sections 1.4 and 1.5, provided that Section 1.6 shall remain in full force and
effect.
4.9 Liquidated Damages. Executive acknowledges that any
payments and benefits under Sections 4 and 5 resulting from a termination of
this Agreement and Executive's
7
employment with the Company by the Company without Cause are in lieu of any and
all claims that the Executive may have against the Company (other than benefits
under the Company's employee benefit plans that by their terms survive
termination of employment and benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended and rights to indemnification under
certain indemnification arrangements for officers of the Company), and represent
liquidated damages (and not a penalty). The Company may request that the
Executive confirm such acknowledgment in writing prior to the receipt of such
benefits.
5. Options.
Executive has previously been granted options (together with
any options to purchase the Company's common stock which the Company grants to
Executive during the term of this Agreement, the "Existing Company Options") to
purchase shares of the Company's common stock, par value $.01 per share, set
forth on Schedule A. Notwithstanding anything to the contrary contained in the
Company Option Plan or any applicable stock option agreement, (A) in the event
that this Agreement and Executive's employment with the Company is terminated
(i) by the Company without Cause (including upon notice of the Company pursuant
to Section 3 of its desire to not renew this Agreement) or (ii) by the Executive
for Cause pursuant to Section 4.7, any Existing Company Options shall remain
outstanding and continue to vest, and shall otherwise be treated for purposes of
the terms and conditions thereof, as if Executive remained in the employ of the
Company through the earlier of (i) the second anniversary of the date of
termination and (ii) the occurrence of any circumstance or event that would
constitute Cause under Section 4.1 of this Agreement and (B) in the event that
this Agreement and Executive's employment with the Company is terminated (i) by
the Executive after a Change of Control as provided in Section 4.7, (ii) due to
his permanent disability pursuant to Section 4.2 or (iii) due to his death
pursuant to Section 4.3, any Existing Company Options shall remain outstanding
and continue to vest, and shall otherwise be treated for the purposes of the
terms and conditions thereof, as if the Executive remained in the employment of
the Company through the earlier of (x) the later of November 6, 2002 and the
last actual vesting date with respect to any such options and (y) the occurrence
of any circumstances or events that would constitute Cause under such Section
4.1. For purposes of clarification, the "last actual vesting date" shall be,
with respect any grant of Existing Company Options, the last date on which such
options actually vest, not the last date on which all Existing Company Options
have actually vested.
6. Notices. Any notice or communication given by either party
hereto to the other shall be in writing and personally delivered or mailed by
registered or certified mail, return receipt requested, postage prepaid, to the
following addresses:
8
(a) if to the Company:
Synetic, Inc.
River Drive Center 2
000 Xxxxx Xxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: General Counsel
(b) if to the Executive at the address set forth below.
Any notice shall be deemed given when actually delivered to such address, or two
days after such notice has been mailed or sent by Federal Express, whichever
comes earliest. Any person entitled to receive notice may designate in writing,
by notice to the other, such other address to which notices to such person shall
thereafter be sent.
7. Miscellaneous.
7.1. Entire Agreement. This Agreement and the agreements
relating to the Existing Company Options contain the entire understanding of the
parties in respect of their subject matter and supersede upon their
effectiveness all other prior agreements and understandings between the parties
with respect to such subject matter.
7.2. Amendment; Waiver. This Agreement may not be
amended, supplemented, canceled or discharged, except by written instrument
executed by the party against whom enforcement is sought. No failure to
exercise, and no delay in exercising, any right, power or privilege hereunder
shall operate as a waiver thereof. No waiver of any breach of any provision of
this Agreement shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision.
7.3. Binding Effect; Assignment. The rights and
obligations of this Agreement shall bind and inure to the benefit of any
successor of the Company by reorganization, merger or consolidation, or any
assignee of all or substantially all of the Company's business and properties.
The Company may assign its rights and obligations under this Agreement to any of
its Affiliates without the consent of the Executive. Executive's rights or
obligations under this Agreement may not be assigned by Executive, except that
the rights specified in Section 4.3 shall pass upon the Executive's death to
Executive's executor or administrator.
9
7.4. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
7.5. Governing Law; Interpretation. This Agreement shall
be construed in accordance with and governed for all purposes by the laws and
public policy (other than conflict of laws principles) of the State of New
Jersey applicable to contracts executed and to be wholly performed within such
State.
7.6. Further Assurances. Each of the parties agrees to
execute, acknowledge, deliver and perform, and cause to be executed,
acknowledged, delivered and performed, at any time and from time to time, as the
case may be, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may be reasonably necessary to carry out
the provisions or intent of this Agreement.
7.7. Severability. The parties have carefully reviewed
the provisions of this Agreement and agree that they are fair and equitable.
However, in light of the possibility of differing interpretations of law and
changes in circumstances, the parties agree that if any one or more of the
provisions of this Agreement shall be determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
provisions of this Agreement shall, to the extent permitted by law, remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Moreover, if any of the provisions contained in this Agreement is determined by
a court of competent jurisdiction to be excessively broad as to duration,
activity, geographic application or subject, it shall be construed, by limiting
or reducing it to the extent legally permitted, so as to be enforceable to the
extent compatible with then applicable law.
10
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SYNETIC, INC.
By:
--------------------------
Name:
Title:
EXECUTIVE
-----------------------------
Xxxxx X. Xxxxxxxx
-----------------------------
Street
-----------------------------
City, State, Zip Code
-----------------------------
Telecopier No.
11
