Exhibit 10.6
EMPLOYMENT AGREEMENT
This Agreement is entered into by Healthcare Computing Systems, Inc., a
West Virginia corporation, as Employer and Xxxxxx Xxxxx, as Employee.
1. EMPLOYMENT. Employer agrees to employ Employee and Employee agrees to
accept employment upon the terms and conditions set forth in this Agreement.
2. DUTIES AND SERVICES. (a) During the term of this Agreement,
Employee shall be employed in the business of the Employer as its Vice President
- Technical Support. In the performance of his duties, Employee shall report to
and be subject to the direction of the Employer's President and Chief Executive
Officer (the "CEO") or another senior officer designated by the CEO, and
Employee agrees to comply with the policies, standards and regulations of
Employer. Except as provided in Section 4.a.(i), Employee agrees to devote all
of his working time to the performance of his duties under this Agreement except
excused absences due to illness and paid time off.
3. TERM. The term of this Agreement shall commence on November 1, 1996
(the "Effective Date") and continue for thirty-six (36) months unless terminated
earlier or extended as herein provided (the "Term"). This Agreement shall be
automatically extended for an additional twenty-four (24) month term unless
Employer provides not less than ninety (90) days prior to the third anniversary
of the Effective Date written notice to Employee of its intention not to extend
this Agreement.
4. COMPENSATION. Employer agrees to pay Employee compensation as
follows:
(a) SALARY. (i) Between the Effective Date and not earlier than
the payment by X. X. Xxxxx Investment Banking Corp. under the "firm commitment"
to purchase the Units from the Company (the "Effective Date of the Registration
Statement"), as described in Sections 9 and 10 of Letter of Intent dated
September 4, 1996 between X. X. Xxxxx Investment Banking Corp. and Healthcare
Computing Systems, Inc. (the "Letter of Intent"), attached hereto as Exhibit A,
Employer will pay Employee a salary of $40,000 per year, and Employee will be
required to devote not more than 40% (forty per cent) of his working time to the
performance of his duties under this Agreement. (ii) Beginning not earlier
than the Effective Date of the Registration Statement, Employer will pay
Employee a salary of $100,000 per year. (iii) Employee will receive his annual
salary in equal semi-monthly or biweekly installments in accordance with the
executive payroll policies of the Employer; provided, however, Employee agrees
to be paid his salary earned between the Effective Date and the first closing of
a Bridge Loan, as described in Section 22 of the Letter of Intent, at the first
closing of a Bridge Loan. (iv) Employee's annual salary compensation may be
reviewed at any time but shall be reviewed no less frequently than annually
within thirty (30) days of each anniversary of the Effective
Date and shall not be increased in any event until thirteen (13) months after
the Effective Date of the Registration Statement. Based on such reviews,
Employee's salary may be adjusted to such higher amount if considered
appropriate by the Employer at its sole discretion after taking into account
general economic conditions, competitive conditions within the Employer's
industry, the financial condition, operations and prospects of Employer, and
Employee's prior and prospective performance of his duties. In no event shall
Employee's salary be reduced without Employee's express consent.
(b) PERFORMANCE BONUS. After the Closing, Employee shall
participate in any bonus or other short term incentive compensation plan(s) that
are approved by the Board of Directors of Employer (the "Board").
(c) OTHER COMPENSATION:
(i) STOCK OPTIONS. Employee shall be entitled to receive stock
option grants after the Effective Date of the Registration Statement at the sole
discretion of the Board under a stock option plan to be approved by the Board
prior to the Effective Date of the Registration Statement.
(ii) EMPLOYEE BENEFITS. Employee shall participate in all
benefit plans such as, but not limited to, medical, dental, disability and life
insurance, paid time off (vacation, sick, holidays, etc.), retirement plans,
professional education, etc. as are approved by the Board from time to time.
5. EXPENSES. (a) Employee shall be entitled to prompt reimbursement
for all reasonable travel and other out-of-pocket business expenses, including
relocation expenses, necessarily incurred in the performance of his duties
hereunder. Employee's claims for reimbursement and Employer's payments thereof
shall be in accordance with Employer's then current business expense and
relocation expense reimbursement policies and procedures.
(b) Travel and other reasonable out-of-pocket expenses incurred by
Employee between the Effective Date and the first closing of a Bridge Loan, as
described in Section 22 of the Letter of Intent, shall be promptly reimbursed
from the proceeds of the first closing of a Bridge Loan.
6. TERMINATION. Subject to the provisions of this Section 6, Employer
shall have the right to terminate Employee's employment, and Employee shall have
the right to resign from his employment with Employer, at any time within the
Term of this Agreement.
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(a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. (i) If,
prior to the expiration of the Term, Employee's employment is terminated by
Employer for Cause, as defined in Section 6(a)(ii) hereof, or if Employee
resigns from his employment hereunder other than for Good Reason, as defined in
Section 6(a)(iii) hereof, Employee shall be entitled to payment of the pro rata
portion of the Employee's salary under Section 4(a) hereof through and including
the date of termination or resignation. Except to the extent required by
applicable law, in the event of termination for Cause or resignation other than
for Good Reason, Employee shall have no right under this Agreement or otherwise
to receive any other compensation or otherwise participate in any other plan,
arrangement or benefit after the termination or resignation of employment with
respect to the year of such termination or resignation or later years, and
unvested stock options held by Employee shall be immediately and automatically
canceled and terminated.
(ii) Termination for "Cause" shall mean termination of Employee's
employment by the Employer because of (A) any act of omission which constitutes
a material breach by Employee of his obligations or agreements under this
Agreement after written notification by the Employer specifying and describing
each such breach and the actions required to cure them, and failure of Employee
to cure each such breach in the manner specified in the notice or in a manner
otherwise acceptable to the Employer within thirty (30) days of receipt thereof,
(B) the conviction of Employee of any felony or crime of moral turpitude, (C)
any act or omission by Employee which, in the good faith judgment of the
Employer, constitutes a breach of Employee's fiduciary duty to Employer, or (D)
the release of the underwriter, X. X. Xxxxx Investment Banking Corp., from the
"firm commitment" to purchase the Units from the Company as described in
Sections 9 and 10 of the Letter of Intent.
(iii) Resignation for "Good Reason" shall mean resignation of Employee
after an act or omission by the Employer which is a material breach of this
Agreement after Employee notifies Employer in writing specifying and describing
each such breach and the actions required to cure them and the Employer does not
cure such breach in the manner set forth in the notice or in a manner otherwise
acceptable to the Employee within thirty (30) days of receipt thereof.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON. (i) If,
prior to the expiration of the Term, Employee's employment is terminated by
Employer Without Cause or Employee resigns from his employment hereunder for
Good Reason, (A) Employer shall continue to pay Employee an amount equal to
Employee's then current annual salary under Section 4(a) for twelve (12) months
from the date of such termination or resignation (the "Severance Period"), (B)
Employee
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shall continue to participate in all benefit plans of Employer during the
Severance Period, (C) Employee shall become fully vested in any retirement plans
or retirement savings plans of the Employer to the extent allowed by applicable
laws, and (D) all options to purchase Employer's stock held by Employee which
are subject to vesting at the end of the period during which the termination
Without Cause or resignation for Good Reason occurs shall immediately vest,
become immediately exercisable, and shall remain exercisable for the Severance
Period. Except to the extent provided herein and required by applicable law,
Employee shall have no right under this Section or otherwise to receive any
compensation or to participate in any other plan, arrangement or benefit after
such termination Without Cause or resignation for Good Reason with respect to
the year of such termination or resignation and later years.
(c) TERMINATION DUE TO DEATH OR DISABILITY. In the event of
Employee's death or Employee's permanent disability that prevents Employee from
carrying out his duties hereunder, Employer shall be entitled to terminate his
employment Without Cause and the applicable provisions of Section 6(b) shall be
followed for the benefit of the Employee, or the Employee's estate in the event
of his death.
(d) EXPIRATION OF TERM. Expiration of this Agreement, whether by
non- extension or non-renewal by the Employer, shall be regarded as Termination
Without Cause and shall be covered by the provisions of Section 6(b) hereof,
provided, however, that Employee shall have the obligation to mitigate
Employer's obligations hereunder.
7. MERGER, ETC. In the event (A) of a disposition of all or
substantially all of the assets and business of the Employer during the Term of
this Agreement, by merger, consolidation, sale of assets or otherwise or (B) if
the individuals who at the beginning of the Term constituted the entire Board
(the "Original Board") and any new directors whose election was approved by the
majority of the Original Board cease to constitute a majority of the Board (the
preceding clauses (A) and (B) to be each hereinafter defined as a "Change of
Control"), then:
(a) the Employer may elect:
(i) to assign this Agreement and all of its rights and
obligations hereunder to the acquiring or surviving entity; provided that the
entity shall assume in writing all of the obligations of the Employer hereunder;
and, provided further, that the Employer (in the event and so long as it remains
in existence) shall remain liable for the performance of its obligations
hereunder in the event of a breach by the surviving entity of this Agreement; or
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(ii) in addition to the other rights of termination, to terminate
this Agreement upon at least ninety (90) days written notice by paying Employee
in accordance with the provisions of Section 6(b).
(b) Upon a Change of Control as a result of which (i) there occurs a
material detrimental alteration in Employee's position or responsibilities with
the Company or a material reduction in Employee's compensation, (ii) Employee's
primary work location is relocated more than 75 miles from his primary
residence, or (iii) Employee is excluded in a material way from compensation
plans or fringe benefits enjoyed by other Company executives, the Employee may
elect to:
(i) accept Employer's election under subsections (i) or (ii)
immediately above; or
(ii) terminate this Agreement upon ninety (90) days written
notice after which the provisions of Section 6(b) shall apply.
8. CONFIDENTIAL INFORMATION. Employee acknowledges that during the
course of his employment hereunder Employee will become acquainted with
confidential information regarding Employer's business. During the Term of this
Agreement and for a period of two (2) years thereafter (the "Non-Competition
Period") Employee will not, without the prior written consent of the Employer,
disclose or make use of any such confidential information except as may be
required in the course of his employment hereunder.
9. NON-COMPETITION. Employee hereby represents, warrants and agrees
that, during the Non-Competition Period, Employee will not compete with the
business of the Employer within any of the 50 states of the United States or
within any foreign country in which the Company operates (the "Prohibited
Territory") as employee, consultant, principal, agent, trustee or through the
agency of any corporation, partnership, association, agent or agency, or other
enterprise, engaged in any business that during the Non-Competition Period is in
competition with the business of the Employer (the "Prohibited Activity").
10. NON-SOLICITATION. Employee covenants and agrees, during the Term of
this Agreement and the Non-Competition Period, that Employee will not canvass or
solicit any person or entity who is customer of Employer about whom Employee
obtained significant business information during the term of his employment, for
the purpose of directly or indirectly furnishing services competitive with
Employer and will not solicit for employment or employ any employee of Employer.
The parties agree that the geographic scope of this non-solicitation covenant is
not limited to the Protected Territory.
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11. REPRESENTATIONS AND WARRANTIES. (a) Employee represents and warrants
to Employer that (i) Employee is under no contractual or other restriction or
obligation which is inconsistent with his execution of this Agreement or
performance of his duties hereunder and (ii) Employee has no physical or mental
disability that would hinder his performance of his duties under this Agreement.
(b) Employer represents and warrants to Employee that this Agreement
and the performance of Employer of its obligations hereunder have been duly
authorized by formal action of its Board of Directors.
12. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be sent by certified mail or by personal
receipted delivery to the Employee at his residence or to the Employer at its
principal office.
13. WAIVER OF BREACH. The waiver of either the Employer or Employee of
a breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach by the Employer or Employee.
14. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of both Employer and Employee and their respective
successors, heirs or legal representatives, but neither this Agreement nor any
rights hereunder may be assigned by either Employer or Employee without the
written consent of the other party, subject to Section 9(a)(i) hereof.
15. ARBITRATION. This Agreement shall be governed by the laws of the
State of Maryland without regard to the principles of the conflict of laws. If
any controversy or claim arising out of this Agreement cannot be resolved by the
parties, such conflict or claim shall be resolved by arbitration in accordance
with the then current rules of the American Arbitration Association governing
commercial disputes. Such matters will be arbitrated in the Washington, D.C.
metropolitan area and, for purposes of this Agreement, each party consents to
arbitration in such place. Arbitration proceedings shall commence when either
party notifies the other that a dispute to arbitration exists and requests that
the dispute be arbitrated. If the parties to the dispute cannot within thirty
(30) days after the request for arbitration is made mutually agree upon an
arbitrator or arbitrators to settle the dispute, each party to the dispute shall
select an arbitrator. The two arbitrators shall, within fifteen (15) days after
the appointment of the last arbitrator, select a third arbitrator and the three
arbitrators shall determine the matter. Each arbitrator shall act impartially.
If for any reason an arbitrator is not appointed within the time provided or the
arbitrators appointed by the parties cannot agree upon a third arbitrator, then
an arbitrator shall be appointed by the District
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Court of the State of Maryland in and for the County of Xxxxxxxxxx in accordance
with applicable state law. Unless the parties mutually agree otherwise, any
arbitrator selected will be familiar with employment disputes. The final
decision will be that of the sole arbitrator or of the majority of the
arbitrators, and shall be final and binding upon the parties, except as
otherwise provided by law. The sole arbitrator or the majority of arbitrators
shall also determine the allocation of costs of the arbitration among the
parties, and shall have the right to award to the prevailing party all cost of
the arbitration, including reasonable attorneys' fees.
16. ENTIRE CONTRACT; COUNTERPARTS. This instrument contains the entire
agreement of the parties. It may not be changed orally but only by an agreement
approved in writing by the Employer and approved in writing by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought. This Agreement may be executed in two or more counterparts, each of
which shall be considered one and the same instrument.
17. NO THIRD PARTY BENEFICIARIES. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement except as provided in Sections 8(c) and 9.
18. HEADINGS. The headings in this Agreement are solely for
convenience and shall not be given any effect in the construction or
interpretation of this Agreement.
Dated: December 16 , 1996
-----------------------
EMPLOYEE:
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx Xxxxx
Healthcare Computing Systems, Inc., EMPLOYER
By: /s/ J. Xxxxxx Xxxxxx
-------------------------------
Its: President and Chief Executive Officer
Attest:
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Its: Secretary
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ADDENDUM TO EMPLOYMENT AGREEMENT
This agreement is an addendum to section 4(a) of the Employment Agreement
dated December 16, 1996 between Healthcare Computing Systems, Inc., a West
Virginia corporation (now CareFlow|Net, Inc., a Delaware corporation), as
Employer, and Xxxxxx X. Xxxxx, as Employee.
Employer and Employee agree to replace the entire section 4(a) of the
Employment Agreement with the following language:
4. COMPENSATION. Employer agrees to pay Employee compensation as
follows:
(a) SALARY. (i) Between the Effective Date and the earlier of
October 1, 1997 or the initial closing of the bridge loan (the "Initial Bridge
Loan Closing") as described in Section 22 of Letter of Intent dated September 4,
1996 between X. X. Xxxxx Investment Banking Corp. and the Employer (the "Letter
of Intent"), attached hereto as Exhibit A, Employer will pay Employee a salary
of $40,000 per year, and Employee will be required to devote not more than 40%
(forty per cent) of his working time to the performance of his duties under this
Agreement. (ii) Beginning on the earlier of October 1, 1997 or the Initial
Bridge Loan Closing, Employer will pay Employee a salary of $60,000 per year,
and Employee will be required to devote not more than 60% (sixty per cent) of
his working time to the performance of his duties under this Agreement. (iii)
Following (ii) above and upon giving Employer 30 (thirty) days advance written
notice, Employee may permanently increase his working time to the performance of
his duties under this Agreement to 100% (one-hundred per cent), at which time
Employer will pay Employee a salary of $100,000 per year. (iv) Employee will
receive his annual salary in equal semi-monthly or biweekly installments in
accordance with the executive payroll policies of the Employer; provided,
however, Employee agrees to be paid his salary earned between the Effective Date
and the Initial Bridge Loan Closing, as described in Section 22 of the Letter of
Intent, within fifteen (fifteen) days following the Initial Bridge Loan Closing.
(iv) Employee's annual salary compensation may be reviewed at any time but
shall be reviewed no less frequently than annually within thirty (30) days of
each anniversary of the Effective Date and shall not be increased in any event
until thirteen (13) months after the Effective Date of the Registration
Statement. Based on such reviews, Employee's salary may be adjusted to such
higher amount if considered appropriate by the Employer at its sole discretion
after taking into account general economic conditions, competitive conditions
within the Employer's industry, the financial condition, operations and
prospects of Employer,
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and Employee's prior and prospective performance of his duties. In no event
shall Employee's salary be reduced without Employee's express consent.
Dated: August 29 , 1997
------------------------
EMPLOYEE:
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
CareFlow|Net, Inc., EMPLOYER:
/s/ J. Xxxxxx Xxxxxx
-----------------------------------
Its: President and Chief Executive Officer
Attest:
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Its: Assistant Secretary
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