1
EXHIBIT 10.42
Xx. Xxxxx X. Xxxxxx
November 6, 1997
Page 7
November 6, 1997
Xx. Xxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Re: Employment Agreement
Dear Xxxxx:
This letter is our official offer to retain you as Senior Vice President and
Chief Financial Officer of IMNET Systems, Inc. (the "Company"). I have been
authorized to make this offer subject to the following terms and conditions:
1. EFFECTIVE DATE. The effective date of this Agreement shall be as of
November 6, 1997.
2. INITIAL TITLE AND DUTIES. Your initial title will be Senior Vice President
and Chief Financial Officer, and you will report directly to Xxxxxxx X.
Xxxxxx, who is the Chairman of the Board and Chief Executive Officer of the
Company. As such, you will be responsible for investor relations, legal,
all accounting and financial functions of the Company, administrative and
human resources functions, purchasing, materials and inventory control, and
to perform such services not inconsistent with your position as assigned
from time-to-time by Xxxxxxx X. Xxxxxx or the Board of Directors. You will
be expected to devote your best efforts, experience, ability, talent and
entire time in normal business hours, energy and attention to the business
of the Company and the performance of your duties.
3. COMPENSATION; TERM. You will receive an annual base salary of $160,000 (the
"Base Salary") paid in accordance with standard Company payroll procedures,
with annual increases determined in accordance with Exhibit A hereto. The
Base Salary payable hereunder, as may be adjusted from time-to-time, shall
be subject to applicable withholding and payroll taxes, and such other
deductions as may be required under the Company's employee benefit plans.
The term of your employment under this Agreement will begin on the
Effective Date and shall continue until terminated in accordance with
Paragraph 7 below.
4. BONUS. Upon reporting for your duties on November 6, 1997, you will become
eligible for a signing bonus of $50,120 to be paid in accordance with the
Company's standard payroll procedure, as of the next payroll processing
date. In addition, you will be eligible to earn a bonus of 35% of your
annual base salary, prorated to your hire date, based upon the Company's
attainment of a minimum of $0.39 earnings per share for fiscal year 1998 or
the analyst consensus at June 30, 1998. Payment of this additional bonus is
conditional upon your employment by IMNET at the end of FY 1998. The annual
bonus is to be paid after IMNET files its 10-K Annual Report.
2
Xx. Xxxxx X. Xxxxxx
November 6, 1997
Page 2
5. STOCK OPTION AWARD. This Agreement has been reached with the understanding
that you will be issued share options amounting to 100,000 shares in the
Company's common stock at the closing price on November 6, 1997, vested
over five (5) years at twenty percent (20%) per year.
6. EMPLOYEE BENEFITS. You will participate in all employee welfare benefit
plans of the Company applicable to senior level executives. In addition,
you shall be entitled to one (1) weeks' paid vacation in calendar year 1997
and four (4) weeks' paid vacation per year thereafter.
7. TERMINATION AND SEVERANCE.
(a) During the term of employment hereunder, your employment may be
terminated as follows:
(i) At any time upon three (3) months' written notice by either you
or the Company. The date set forth in the notice shall be
hereinafter defined as the Termination Date.
(ii) Automatically in the event of your death.
(iii) Immediately upon written notice if such termination is for Cause
(as defined below in subparagraph 7(d); or
(iv) At any time by mutual written agreement of you and the Company.
(v) Immediately, if the Company is in default hereunder and fails to
cure any such default within thirty (30) days after you send
written notice of such default to the Company.
(b) Upon termination of your employment hereunder for any reason, all
obligations of the Company shall cease upon such termination, except its
obligations to (i) pay the compensation set forth in paragraph 3 hereof
through the date of such termination, (ii) provide the benefits set forth
in paragraph 6 hereof through the date of such termination, and any unpaid
bonus earned under paragraph 4 and to comply with all state and federal
laws and regulations applying to such benefits and (iii) pay the severance
benefits, if applicable, to you pursuant to the terms and conditions set
forth in subparagraph 7(c) below.
(c) In the event that your employment is terminated by the Company for any
reason other than Cause (as such term is defined below in subparagraph
7(d)), you will receive, commencing on the Termination Date, six (6)
months' severance pay at the monthly rate of your then current Base Salary
(paid on a bi-weekly basis over the six (6) month period in accordance with
the Company's standard payroll procedure). Notwithstanding the foregoing,
the obligations of the
3
Xx. Xxxxx X. Xxxxxx
November 6, 1997
Page 3
Company with respect to severance shall expire on the date that you
commence full-time employment with a subsequent employer, if such
commencement date occurs within six (6) months of the Termination Date
pursuant to this subparagraph 7(c). The Company shall continue to be
responsible for all severance pay obligations accrued through the date such
full-time employment commences.
(d) For purposes hereof, the term "Cause" means the following: (i) any
defalcation or misappropriation of funds or property of the Company or any
affiliate by you or the commission of any dishonest or deceitful act in the
course of your employment with the Company; (ii) your conviction of a
felony or of any crime involving moral turpitude; (iii) the engaging by you
in illegal conduct which, in the reasonable judgment of the Company, places
you and the Company or any affiliate, by association with you, in
disrepute; (iv) refusal to perform your duties and responsibilities
hereunder persistent neglect of duty or chronic absenteeism; (v) any
material breach by you of the terms and conditions hereof, including,
without limitation, those certain provisions pertaining to inventions,
confidentiality, noncompetition set forth in paragraphs 8, 9 and 10 hereof;
or (vi) any attempt to obtain a personal profit from any transaction in
which you have an interest adverse to the Company unless such adverse
interest and the potential profit is disclosed in writing to the Board of
Directors in advance of the transaction. Any disagreement concerning
whether there has been "Cause" for termination will be resolved by the
Board of Directors in its sole discretion acting in good faith.
Notwithstanding the foregoing, in the event of a determination by the
Company of Cause pursuant to subparagraphs d(i), d(iv), d(v) or d(vi)
above, you will have a cure period of five (5) days after you receive
notice thereof from the Company. If you fail to cure such default within
the cure period, then the Company may terminate you for Cause as set out
above.
(e) The provisions in Paragraphs 10 through 15 shall survive the
termination of the Agreement.
8. INVENTIONS. You shall treat as for the sole benefit of the Company and
promptly disclose and assign to the Company without additional compensation
all ideas, discoveries, inventions and improvements, patentable or not,
which, while you are so retained under this Agreement are made, conceived
or reduced to practice by you, alone or with others during or after usual
work hours, either on or off the job, and which are related to the
products, processes, projects or the business interests of the Company or
which involve the use of the time, material or facilities of the Company.
You agree, at the expense of the Company, at any time during or within a
reasonable time after the termination of this employment relationship, to
sign all papers and do such other acts and things you deem necessary or
desirable and which may be reasonably required to protect the rights of the
Company to such ideas, discoveries, inventions and improvements in any and
all countries.
4
Xx. Xxxxx X. Xxxxxx
November 6, 1997
Page 4
9. DEFINITIONS. For purpose of Paragraphs 10 through 15 hereof, the following
defined terms shall be applicable:
(a) "Business of the Company" as used herein means the manufacture, sale,
distribution, marketing and servicing of electronic information and
document management systems and related products and services produced or
promoted by the Company.
(b) "Confidential Information" as used herein means any and all
confidential information of the Company which is not generally known to or
by businesses which compete with the Company with respect to the Business
of the Company and which does not constitute a "Trade Secret" (as defined
in subparagraph (d) below). It includes, without limitation, information
relating to accounting, marketing, all information of the foregoing type
relating to any client or account of the Company, client account records,
training and operations material and memoranda, personnel records, pricing
information, and any other information related to the Business of the
Company and treated by the Company as being confidential, including items
labeled "Confidential," all of which are hereby agreed to be the property
of and confidential to the Company hereafter. "Confidential Information"
does not include any information which, after the date hereof, becomes part
of the public domain through no fault of yours.
(c) "Territory" as used herein means the United States, Canada, Mexico,
Europe and Japan.
(d) "Trade Secret" as used herein means information including, but not
limited to, technical or nontechnical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a
process, financial data, financial plans, product plans, or a list of
actual or potential customers or suppliers which:
(i) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its
disclosure or use; and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
10. CONFIDENTIAL INFORMATION. You covenant and agree that you will treat as
confidential and will not use (other than in the performance of your
designated duties for the Company), or disclose any Confidential
Information either during the term of your employment by the Company or for
a period of two years thereafter.
11. TRADE SECRETS. You covenant and agree that you will treat as confidential
and will not use (other than in the performance of your designated duties
for the Company) or disclose any Trade Secrets either during or after the
term of your employment by the Company.
5
Xx. Xxxxx X. Xxxxxx
November 6, 1997
Page 5
12. RECORDS. All records, notes, files, memoranda, reports, price lists, client
lists, catalogues, prospect lists, drawings, plans, sketches, documents,
equipment, apparatus, physical manifestations of programs and like items,
and all copies thereof, relating to the Business of the Company,
Confidential Information or Trade Secrets, which were prepared by you or
which have been disclosed to or which have come into your possession, shall
be and remain the sole and exclusive property of the Company. You agree
that upon the termination of your employment by the Company, or at any
other time upon reasonable request from the Company, you will promptly (and
in the event of your termination of employment, no later than ten (10) days
after such termination) deliver to the Company the originals and all copies
of any of the foregoing that are in your possession, custody or control,
and any other property belonging to the Company.
13. AGREEMENT NOT TO COMPETE. You covenant and agree that during your
employment by the Company and for a period of one year after termination of
such employment for any reason, you will not, without the prior written
consent of the Company, directly or indirectly within the Territory for
yourself or an officer, director, shareholder, owner, partner, joint
venturer, employee, promoter, consultant, manager, independent contractor,
agent or in some similar capacity, compete with the Business of the Company
by engaging in any business in which you provide services which are the
same or substantially similar to your duties and responsibilities as herein
described; provided, however, that the foregoing covenant shall not be
deemed to prohibit you from acquiring as an investment not more than 2% of
the capital stock of a business that competes with the Business of the
Company whose stock is traded on a national securities exchange or
over-the-counter.
14. AGREEMENT NOT TO SOLICIT CUSTOMERS. You covenant and agree that during the
term of your employment by the Company and for a period of one year
thereafter, you will not, either directly or indirectly, on your own behalf
or in the service or on behalf of others, solicit or attempt to solicit,
divert or appropriate away from the Company, with a view to the sale or
providing of any product or service competitive or potentially competitive
with the Company's products or services, any persons and/or entities
located within the Territory who are customers of the Company with whom you
had contact within the last year of your employment.
15. AGREEMENT NOT TO SOLICIT EMPLOYEES. You covenant and agree that during the
term of your employment by the Company and for a period of one year
thereafter, you will not either directly or indirectly, on your own behalf
or in the service or on behalf of others, solicit or attempt to solicit,
divert or hire away to any business competing with the Business of the
Company, within the Territory, any person currently employed by the
Company, or hired by the Company during the term of this Agreement, for the
purpose of such employee providing services similar to those provided by
such employee to the Company.
16. REMEDIES. You acknowledge and agree that, by virtue of the duties and
responsibilities attendant to your employment by the Company and the
special knowledge of the Company's
6
Xx. Xxxxx X. Xxxxxx
November 6, 1997
Page 6
affairs, business, clients, sales techniques and operations that you will
have as a consequence of such employment, irreparable loss and damage will
be suffered by the Company if you should breach or violate any of the
covenants and agreements contained in Paragraphs 8 through 13; and you
further acknowledge and agree that each of such covenants are reasonably
necessary to protect and preserve the Business of the Company so that the
Company will receive the benefits of its bargain with you. You, therefore,
agree and consent that the remedy at law for any breach of any of your
obligations hereunder would be inadequate, and, therefore, you further
agree and consent that, in addition to any other available remedy,
temporary and permanent injunctive relief may be granted in any proceeding
which may be brought to enforce any provision of this Agreement without the
necessity of proof that any other remedy at law is adequate. You further
acknowledge and agree that the provisions of the Georgia Trade Secrets Act
shall apply to any breach by you of the covenant set forth in Paragraph 9
hereof. During the period of your employment by the Company and for a
period of one year thereafter, you shall notify the Company prior to
engaging in any business or professional activity involving or in any way
relating to the Business of the Company within the Territory, which notice
shall describe the proposed activity with reasonable specificity.
17. ACKNOWLEDGMENT. You acknowledge that the restrictions contained in Sections
8 through 14 hereof may limit your ability to earn a livelihood in a
competing business. By signing below to acknowledge your acceptance of the
terms and conditions of this Agreement, you acknowledge that you believe
you will receive sufficient consideration and other benefits as an employee
of the Company and as otherwise provided hereunder to clearly justify such
restrictions which, in any event (given your education, skills and ability
and the limited scope of the prohibited business activity in Sections 8
through 13) you do not believe would prevent you from earning a living. By
signing below, you acknowledge that the unique nature of the Business of
the Company and the fact that significant sales have occurred and are under
negotiation in the geographical areas specified in Section 9(c) clearly
justify the scope of the restriction in Section 13.
18. BINDING EFFECT. Upon the Effective Date, the terms hereof shall be binding
upon and shall inure to the benefit of you and the Company, the successors
and assigns of the Company, and the heirs, executors, administrators, legal
representatives and assigns of you, provided that your rights and
obligations hereunder may not be delegated or assigned.
19. ENTIRE AGREEMENT. Upon the Effective Date, this Agreement shall supersede
any former oral agreement and any formal written agreement heretofore
executed relating generally to your employment with the Company, and this
Agreement can only be amended by an agreement in writing signed by you and
the Company.
20. APPLICABLE LAW; SEVERABILITY. This Agreement shall be construed and
enforced under the laws of the State of Georgia without giving effect to
the principles of conflicts of laws thereof. If any provision of this
Agreement is held invalid or unenforceable by operation of law or
7
Xx. Xxxxx X. Xxxxxx
November 6, 1997
Page 7
otherwise, such circumstances shall not have the effect of rendering any of
the other provisions of this Agreement invalid or unenforceable.
21. NOTICES. Any notice of other communication required or permitted to be
given hereunder shall be in writing and shall be deemed duly given or
served when delivered personally to the party intended, or sent by
registered or certified mail, postage prepaid, effective as of the date
received, addressed to the Company at its principal office and to you at
your address then appearing on the books of the Company.
22. ATTORNEY'S FEES. In case any one or more of the covenants and agreements
set forth in this Agreement shall be breached by any party hereto, the
non-breaching party may proceed to enforce its rights by arbitration or by
suit in equity and/or by action at law, including but not limited to, an
action for damages or specific performance. In such event, the prevailing
party shall be entitled to also receive reasonable attorneys' fees and
other expenses incurred in enforcing its rights hereunder.
By signing below, the Company agrees to all of the terms and conditions of this
letter. Please indicate your acceptance of these terms and conditions by signing
each enclosed copy of this letter where indicated below, and return an
originally executed copy of the letter to me.
Sincerely,
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx
Chairman and
Chief Executive Officer
ACCEPTED AND AGREED
as of this 6th day of November, 1997.
Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
8
EXHIBIT "A"
CPI Increases
The amount of Base Salary shall increase each January 1 by the amount, if any,
calculated as of January 1, in each year commencing with January 1, 1998, equal
to $160,000 multiplied by the Annual Increase (as defined below). The "Annual
Increase" shall not be a negative number and shall mean (i) the Consumer Price
Index (as defined below) for the month of December of the year preceding the
year in which the Annual Increase is to be determined, less (ii) the Consumer
Price Index for the month next following the month during which the Effective
Date falls (the "Base CPI"), divided by (iii) the Base CPI. For purposes hereof,
the "Consumer Price Index" shall mean the All-Items portion of the Consumer
Price Index for All Urban Consumers (CPI-U) published by the Bureau of Labor
Statistics of the United States Department of Labor.
