Exhibit 10.26
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of the 2nd
day of January, 1997, by and between ENTERPRISE SYSTEMS, INC., an Illinois
corporation ("Corporation") and Xxxxxx X. Xxxx, Xx. ("Associate").
WITNESSETH:
WHEREAS, the Corporation is an Illinois corporation that specializes in the
design and development of computer software systems; and
WHEREAS, the Associate has extensive experience in the area of Human Resources
and Education; and
WHEREAS, the Corporation desires to retain the services of Associate and
Associate is willing to be employed by the Corporation;
NOW, THEREFORE, in consideration of the premises and the covenants herein
contained and other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged;
IT IS COVENANTED AND AGREED by and between the parties herein as follows:
SECTION 1. Establishment of Employment. The Corporation hereby employs Associate
and Associate hereby agrees to remain in the employ of the Corporation for the
duration of the term of his employment hereunder, as Executive Vice President of
the Corporation (or in such other positions, titles and duties assigned to him
that are consistent with an executive management role) and to perform such
duties and services as shall be assigned to him from time to time by the
Corporation's Chief Executive Officer. The Associate shall devote his best
efforts and entire working time to the interests of the Corporation and will
perform his executive duties faithfully and efficiently subject to the general
direction of the Chief Executive Officer; provided, that Associate shall be
entitled to devote time to personal investments and professional activities, to
the extent such activities do not unduly interfere with his duties hereunder.
SECTION 2. Term of Employment. The term of Associate's employment hereunder
shall be automatically extended from year to year, all subject however, to
termination by the Corporation pursuant to SECTION 11 of this Agreement.
Associate shall have the right to terminate upon 30 days written by Associate
to the Corporation.
SECTION 3. Compensation. For all services rendered by the Associate under this
Agreement, the Corporation shall pay the Associate a basic salary at the rate of
no less than $130,000 per annum payable in semi-monthly installments. The basic
salary shall be reviewed by the Chief Executive Officer of the Corporation a
minimum of once per year. The Associate also shall be eligible to participate in
any Associate stock ownership, profit sharing, pension, retirement or other plan
maintained from time to time by the Corporation for the benefit of all
Associates generally of the Corporation. The Corporation shall at all times
during the term hereof, at its expense, maintain and provide the Associate a
life insurance policy equal to two times the Associate's annual salary, to a
maximum of $300,000 payable in the event of death of the Associate to the
Associate's designated beneficiary. If the corporation owns the life insurance
policy providing the benefit set forth in this agreement, it agrees to transfer
the policy to Associate at termination of his employment.
SECTION 4. Bonuses. The Corporation shall pay a bonus equal to thirty-five
percent (35%) of salary earned for calendar year, 1997, within ninety (90) days
following the end of each year during the term hereof, beginning with calendar
1997, payable no later than March 31, 1998. Any bonus is contingent upon
attainment of the Corporation's objectives, as determined by the Board of
Directors at the beginning of such year. Additional amounts may be paid as a
bonus if the performance objectives are exceeded. The Corporation's Board of
Directors will set Corporation performance objectives prior to the end of
February 1997, and each February thereafter. Payment of twenty percent (20%) of
any bonus will be deferred and paid at the end of the second year following the
year in which it is earned; any unpaid portion to be forfeited if the Associate
voluntarily terminates employment with the Corporation or is terminated for
cause pursuant to Section 11 (a) (I) hereof prior to the due date of such
payment. The bonus plan will change periodically and, therefore, shall be based
upon the plan approved by the Board of Directors.
SECTION 5. Vacation. The Associate will be entitled to three (3) weeks paid
vacation during the initial term hereof. Thereafter, Associate shall be entitled
to vacation as set forth in the Corporation's general vacation policy for other
Associates, as amended from time to time, except that in no event shall
Associate be entitled to less than three (3) weeks vacation. Attendance at
professional meetings shall not be treated as vacation time. Additional vacation
time may be taken without pay.
SECTION 6. Disability. Associate will be provided with Short Term Disability as
specified by the policy maintained by the Corporation for the benefit of
Associates generally of the Corporation. In addition, Associate shall be
eligible for and the Corporation shall obtain on his behalf long term disability
insurance effective on the first day of the month following the date Associate
has worked full time for the Corporation for thirty (30) consecutive days. The
benefit under the long term disability insurance shall be sixty percent (60%) of
the Associate's basic monthly earnings up to a maximum benefit of $12,500 per
month.
2
SECTION 7. Prohibition Against Assignment. The Associate agrees on behalf of
himself or of his executors and administrators, heirs, legatees, distributees,
and any other person or persons claiming any benefit hereunder by virtue of this
Agreement, that this Agreement and the rights, interests and benefits hereunder
shall not be assigned, transferred, pledged or hypothecated in any way by
Associate or any executor, administrator, heir, legatee, distributee or other
person claiming under Associate by virtue of this Agreement and shall not be
subject to execution, attachment or similar process. Any attempt to assign,
transfer, pledge, hypothecate or otherwise dispose of this Agreement or of any
rights, interests and benefits contrary to the foregoing provisions, or the levy
of any attachment or similar process thereupon shall be null and void and
without effect.
SECTION 8. Notice. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be given in
writing to the other party, with the receiving party signing and returning a
written verification of receipt.
SECTION 9. Protective Covenants. The Associate acknowledges and agrees that
solely by virtue of his employment by, and relationship with, the Employer, he
will acquire "Confidential Information," as hereinafter defined, as well as
special knowledge of the Employer's relationships with its customers and
business brokers, and that, but for his association with the Employer, the
Associate will not have had access to said Confidential Information or knowledge
of said relationships. The Associate further acknowledges and agrees (i) that
the Employer has long term, near-permanent relationships with its customers and
business brokers, and that those relationships were developed at great expense
and difficulty to the Employer over several years of close and continuing
involvement; (ii) that the Employer's relationships with its customers and
business brokers are and will continue to be valuable, special and unique assets
of the Employer and that the identity of its customers and business brokers is
kept under tight security with the Employer and cannot be readily ascertained
from publicly available materials available to the Employer's competitors; and
(iii) that the Employer has the following protectable interests that are
critical to its competitive advantage in the industry and would be of
demonstrable value in the hands of a competitor: software designs, including but
not limited to designs relating to health care materials management, health care
operating room management, health care patient cost accounting, health care
capital asset management, and health care centralized patient scheduling; plans,
processes and protocols; formulae; and concepts, ideas and other matters not
known to the general public. In return for the consideration, the receipt and
sufficiency of which are hereby acknowledged, and as a condition precedent to
the Employer entering into this Agreement, and as an inducement to the Employer
to do so, the Associate hereby represents, warrants, and covenants as follows:
A. The Associate has executed and delivered this agreement as his free
voluntary act, after having determined that the provisions contained herein
are of material benefit to him, and that the duties and obligations imposed
on him hereunder are fair and reasonable and will not prevent him from
earning a comparable livelihood following the termination of his employment
with the Employer;
3
B. The Associate has read and fully understands the terms and conditions
set forth herein, has had time to reflect on and consider the benefits and
consequences of entering into this Agreement, and has had the opportunity
to review the terms hereof with an attorney or other representative, if he
so chooses;
C. The execution and delivery of this Agreement by the Associate does not
conflict with, or result in a breach of or constitute a default under, any
agreement or contract, whether oral or written, to which the Associate may
be bound;
D. The Associate agrees that, during the time of his employment and for a
period of one (1) year after termination of the Associate's employment
hereunder for any reason whatsoever or for no reason, whether voluntary or
involuntary, the Associate will not, except on behalf of Employer:
(1) directly or indirectly, contact, solicit or direct any person,
firm, or corporation to contact or solicit any of the Employer's
customers, prospective customers, or business brokers (as hereinafter
defined) for the purpose of selling or attempting to sell, any
products and/or services that are the same as or similar to the
products and services provided by the Employer to its customers during
the term hereof. In addition, the Associate will not disclose the
identity of any such business brokers, customers, or prospective
customers, or any part thereof, to any person, firm, corporation,
association, or other entity for any reason or purpose whatsoever; and
(2) directly or indirectly, whether as an investor (excluding
investments representing less that five percent (5%) of the common
stock of a public company), lender, owner, stockholder, officer,
director, consultant, employee, agent, salesperson or in any other
capacity, whether part-time or full-time, become associated with any
business involved in the design, manufacture, marketing, or servicing
of products then constituting ten percent (10) or more of the annual
sales of the Employer; and
(3) solicit or accept if offered to him, with or without solicitation,
on his own behalf or on behalf of any other person, the services of
any person who is an associate of the Employer, nor solicit any of the
Employer's associates to terminate employment with the Employer; and
(4) act as a consultant, advisor, officer, manager, agent, director,
partner, independent contractor, owner, or employee for or on behalf
of any of the Employer's business brokers, customers, or prospective
customers (as hereinafter defined), with respect to or in any way with
regard to any aspect of the Employer's business and/or any other
business activities in which Employer engages during the term hereof;
E. The Associate acknowledges and agrees that the scope described above is
necessary and reasonable in order to protect the Employer in the conduct of
its business and that, if the Associate becomes employed by another
employer, he shall be required to disclose the existence of this Paragraph
9 to such employer;
F. For purposes of this Paragraph 9, "customer" shall be defined as any
person, firm, or entity that purchases any type of product and/or service
from Employer or is or was doing business with the Employer or the
Associate within the twelve (12) month period immediately preceding
termination of the Associate's employment. For purposes of this Paragraph
9, "prospective customer" shall be defined as any person, firm, or entity
contacted or solicited by the Employer or the Associate (whether directly
or indirectly) or who contacted the Employer or the Associate (whether
directly or indirectly) within the twelve (12) month period immediately
preceding termination of the Associate's employment for the purpose of
having such persons, firms, or entities become a customer of the Employer.
For purposes of this Paragraph 9, "business broker" shall be defined as any
person, firm, or entity who is or was doing business with the Employer or
the Associate or was contacted or solicited by the Employer or the
Associate (whether directly or indirectly) or who contacted or solicited
the Employer or the Associate (whether directly or indirectly) within the
twelve (12) month period immediately preceding termination of the
Associate's employment;
G. The Associate agrees that both during his employment and thereafter the
Associate will not, for any reason whatsoever, use for himself or disclose
to any person not employed by the Employer any "Confidential Information"
of the Employer acquired by the Associate during his relationship with the
Employer, both prior to and during the term of this Agreement. The
Associate further agrees to use Confidential Information solely for the
purpose of performing duties with the Employment and further agrees not to
use Confidential Information for his own private use or commercial purposes
or in any way detrimental to the Employer. The Associate agrees that
"Confidential Information" includes but is not limited to: (a) any
financial, business, planning, software, operations, services, potential
services, products, potential products, designs, technical information
and/or know-how, formulas, production, purchasing, marketing, sales,
personnel, customer, broker, supplier, or other information of the
Employer; (b) any papers, data, records, processes, methods, techniques,
systems, models, samples, devices, equipment, compilations, invoices,
customer lists, or documents of the Employer; (c) any confidential
information or trade secrets of any third party provided to the Employer in
confidence or subject to other use or disclosure restrictions or
limitations; and (d) any other information, written oral, or electronic,
whether existing now or at some time in the future, whether pertaining to
current or future developments, and whether previously accessed during the
Associate's tenure with the Employer or to be accessed during his future
employment with the Employer, which pertains to the Employer's affairs or
interests or with whom or how the Employer does business. The Employer
acknowledges and agrees that Confidential Information does not include (I)
information properly in the
5
public domain, or (ii) information in the Associate's possession prior to
the date of his original employment with the Employer.
H. During and after the term of employment hereunder, the Associate will
not remove from the Employer's premises any documents, records, files,
notebooks, correspondence, computer printouts, computer programs, computer
software, price lists, microfilm, or other similar documents containing
Confidential Information, including copies thereof, whether prepared by him
or others, except as his duty shall require, and in such cases, will
promptly return such items to the Employer. Upon termination of his
employment with the Employer, all such items including summaries or copies
thereof, then in the Associate's possession, shall be returned to the
Employer immediately. The Associate agrees to return of such items, which
shall be a requirement in order for the Associate to receive, at the time
of such termination, or any time thereafter, any compensation due him
pursuant to any paragraphs hereunder or otherwise.
I. The Associate recognizes and agrees that all ideas, inventions,
enhancements, plans, writings, and other developments or improvements (the
"Inventions") conceived by the Associate, alone or with others, during the
term of his employment, whether or not during working hours, that are
within the scope of the Employer's business operations or that relate to
any of the Employer's work or projects, are the sole and exclusive property
of the Employer. The Associate further agrees that (a) he will promptly
disclose all Inventions to the Employer and hereby assigns to the Employer
all present and future rights he has or may have in those Inventions,
including without limitation those relating to patent, copyright, trademark
or trade secrets; and (b) all of the Inventions eligible under the
copyright laws are "work made for hire." At the request of and without
charge to the Employer, the Associate will so all things deemed by the
Employer to be reasonably necessary to perfect title to the Inventions in
the Employer and to assist in obtaining for the Employer such patents,
copyrights or other protection as may be provided under law and desired by
the Employer, including but not limited to executing and signing any and
all relevant applications, assignments or other instruments.
Notwithstanding the foregoing, pursuant to the Employee Patent Act,
Illinois Public Act 83-493, the Employer hereby notifies the Associate that
the provisions of this Paragraph 9 shall not apply to any Inventions for
which no equipment, supplies, facility or trade secret information of the
Employer was used and which were developed entirely on the Associate's own
time, unless (a) the Invention relates (I) to the business of the Employer,
or (ii) to actual or demonstrably anticipated research or development of
the Employer, or (b) the Invention result from any work performed by the
Associate for the Employer;
J. The Associate acknowledges and agrees that all customer lists, supplier
lists, and customer and supplier information, including, without
limitation, addresses and telephone numbers, are and shall remain the
exclusive property of the Employer, regardless of whether such information
was developed, purchased, acquired, or otherwise obtained by the Employer
or the Associate. the Associate agrees to furnish
6
to the Employer on demand at any time during the term of this Agreement,
and upon termination of this Agreement, his complete list of the correct
names and places of business and telephone numbers of all of its customers
served by him and located within any and or all of the territories to which
he has been assigned, including all copies thereof wherever located. The
Associate further agrees to immediately notify the Employer of the name and
address of any new customer, and report all changes of a location of old
customers, so that upon the termination of this Agreement, the Employer
will have a complete list of the correct names and addresses of all of its
customers with which the Associate has had dealings. The Associate also
agrees to furnish to the Employer on demand at any time during the term of
this Agreement, and upon the termination of this Agreement, any other
records, notes, computer printouts, computer programs, computer software,
price lists, microfilm, or any other documents related to the Employer's
business, including originals and copies thereof; and
K. It is agreed that any breach or anticipated or threatened breach of any
of the Associate's covenants contained in this Paragraph 9 will result in
irreparable harm and continuing damages to the Employer and its business
and that the Employer's remedy at law for any such breach or anticipated or
threatened breach will be inadequate and, accordingly, in addition to any
and all other remedies that may be available to the Employer at law or in
equity in such event, any court of competent jurisdiction may issue a
decree of specific performance or issue a temporary and permanent
injunction, without proving special damages or irreparable injury,
enjoining and restricting the breach, or threatened breach, of any such
covenant, including, but not limited to, any injunction restraining the
Associate from disclosing, in whole or part, any Confidential Information.
The Associate acknowledges the truthfulness of all factual statements in
this Agreement and agrees that he is estopped from and will not make any
part thereof. The Associate further agrees to pay all of the Employer's
costs and expenses, including reasonable attorneys' and accountants' fees,
incurred in enforcing such covenants.
SECTION 11. Termination. The Corporation shall have the right to discharge
Associate at any time. Unless otherwise stated under SECTION 2 of this
Agreement, or as defined hereafter:
a) The Corporation shall have the right to discharge Associate and to
cancel its obligations under this Agreement at any time upon written notice
to Associate if any of the following shall occur:
i) Associate commits significant fraud or gross misconduct which
arises in any manner out of his duties and responsibilities as an
officer or Associate of the Corporation.
b) In the event that Associate dies during the term of this Agreement, the
date of death shall constitute the date of termination.
7
c) In the event the Associate becomes disabled during the period of this
Agreement, the date of disability shall constitute the date of termination.
For the purposes of this Agreement, disability shall be defined as
occurring at the time at which the Associates has been unable to be
actively employed at work for any twelve (12) week period within a six (6)
month period and qualifies for the Corporation's long term disability
insurance. Actively at work means Associate is able to perform all material
and substantial duties of regular work while working the usual number of
hours at the normal place of business, or other places of business as
directed by the Corporation.
If Associate's service with the Corporation shall be terminated for any reason
other than as set forth in Subsections 11 a), b) or c) above, including without
limitation any termination without cause, Associate shall continue to be paid
and provided the basic salary and insurance (as described in Section 3 hereof),
as in effect on the date of termination, in accordance with the following terms:
Twelve (12) months of severance pay will be given.
SECTION 12. Governing Law. This Agreement shall be subject to and governed by
the laws of the state of Illinois, irrespective of the fact that Associate may
become a resident of a different state.
SECTION 13. Binding Effect. This agreement shall be binding upon and inure to
the benefit of the Corporation and Associate and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
SECTION 14. Entire Agreement. This Agreement, and the stock option agreement
between you and the Corporation, collectively constitute the entire agreement
between the parties and contains all of the agreements between the parties with
respect to the subject matter hereof, and supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the subject matter hereof. No change or modification of this Agreement shall
be valid unless the same be in writing and signed by the Associate and the
Corporation. No waiver of any provision of this Agreement shall be valid unless
in writing and signed by the person or party to be charged.
SECTION 15. Severability. If any portion or portions of this Agreement shall
be for any reason invalid or unenforceable, the remaining portion or portions
shall nevertheless be valid, enforceable and carried into effect, unless to do
so would clearly violate the present legal and valid intention of the parties
hereto.
SECTION 16. Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered in construction of the provision
hereof.
SECTION 17. Change of Control. In addition to benefits provided pursuant to
Section 11 of the Agreement, if employment of the Associate is terminated by the
Company within twelve months of a change of control, the Associate will be
entitled to the following additional benefits: (i) any options to purchase
Common Stock which would otherwise be nonvested, will immediately vest, (ii)
100% of the bonus to which he would have otherwise been entitled had he been
employed on the last day of the calendar year, and then been terminated, and
(iii) payment of his health insurance premiums for the duration of the COBRA
continuation period.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
and sealed the day and year first above written.
CORPORATION ASSOCIATE
ENTERPRISE SYSTEMS, INC.
By: Xxxx X. Xxxxxxx By: Xxxxxx X. Xxxx, Xx.
------------------------------ -------------------------------
Xxxx X. Xxxxxxx Xxxxxx X. Xxxx, Xx.
Chief Executive Officer Executive Vice President
Date: 10/13/96 Date: 10/13/96
---------------------------- -----------------------------
9
