EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into on
September 28, 2000, effective as of the 1st day of January, 2000 (the "Effective
Date"), by X-XXXX.XXX, INC., a Delaware corporation with its principal executive
offices located at One Xxxxx Square, 000 X. 00xx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (the "Company"), and XXXXX X. XXXXXXXXX, an individual
residing at 0000 Xxxxxxx Xxxxx, Xxx. 000, Xxxxxxxx, Xxxxxxxx 00000
("Executive").
Executive and Member-Link Systems, Inc. ("Member-Link") are parties to
that certain Employment Agreement dated as of June 1, 1999 (such agreement, the
"Prior Agreement"). The Company succeeded to all of Member-Link's rights,
interests and obligations under the Prior Agreement effective as of December 30,
1999 pursuant to a merger between Member-Link and the Company, in which merger
the Company continued as the surviving entity.
The Company and Executive now want to terminate the Prior Agreement and
enter into this Agreement, pursuant to which the Company will employ Executive,
and Executive will be employed by the Company, effective as of the Effective
Date, on the terms set forth herein.
In consideration of the mutual covenants and premises contained herein,
and other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties agree as follows:
1. Term of Employment. The Company hereby agrees to employ Executive
and Executive hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on and as of the Effective
Date and ending on the date which is the third (3rd) anniversary of the
Effective Date (such period being called the "Original Term"), unless sooner
terminated in accordance with the provisions of Section 4 below. Upon the
expiration of the Original Term, the term of the Executive's employment shall
automatically extend for successive one-year periods (each such period, an
"Additional Term") unless on or before ninety (90) days prior to the end of the
then applicable Original Term or Additional Term the Company has notified
Executive in writing that Executive's employment under this Agreement will not
be extended beyond the then current term, or Executive has notified Company in
writing that his employment under this Agreement will not be extended beyond the
end of the then current term.
2. Title and Capacity. Executive shall serve as a Vice President and
Chief Technology Officer of the Company and shall perform the duties
commensurate with such position and such other duties as the Company's Chairman,
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Chief Executive Officer or the Board of Directors (the "Board") may determine.
Executive shall devote attention and energies on a full-time basis to the above
duties, and Executive shall not, during the term of this Agreement, actively
engage in any other for profit business activity.
3. Salary; Benefits.
3.1 Base Salary and Discretionary Compensation. Beginning as
of March 1, 2000 and for the balance of the Original Term, Executive shall
receive a base salary at the rate of One Hundred Twenty Five Thousand Dollars
($125,000) per annum and such discretionary bonuses and stock options, if any,
as the Compensation Committee of the Board (the "Compensation Committee") or the
Board, in each case in its sole discretion, may determine. The base salary for
any Additional Term, if any, shall be determined by mutual agreement of the
Executive and the Compensation Committee or the Board.
3.2 Payment in Installments. Executive's annual base salary
shall be paid in periodic installments in accordance with the Company's general
payroll practices, after withholding for all federal, state and local taxes and
required deductions. Any discretionary bonus or stock options shall be paid or
granted at such time or times as determined by the Compensation Committee or the
Board, in each case in its sole discretion.
3.3 Fringe Benefits. Executive shall be entitled during the
term of this Agreement to participate in and receive only the rights and
benefits available under any health, disability, life insurance, pension or
other benefit plans now or hereafter provided by the Company for its employees.
3.4 Vacation. Executive shall be entitled to fifteen (15) days
paid vacation per year to be taken at such times as may be approved by the
Company's Chief Operating Officer or his designee.
3.5 Reimbursement of Expenses. The Company shall reimburse
Executive in accordance with the Company's policies and procedures for all
reasonable travel, entertainment and other expenses incurred or paid by
Executive in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by
Executive of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request; provided, however, that the
amount available for such travel, entertainment and other expenses may be fixed
in advance by the Company's Chief Operating Officer.
4. Employment Termination. The employment of Executive by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
4.1 Expiration of Term. Expiration of the Original Term or, if
applicable, the Additional Term in accordance with Section 1.
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4.2 Cause. At the election of Company, for cause, immediately
upon written notice by the Company to Executive. For the purposes of this
Section 4.2, "cause" for termination shall be deemed to exist by reason of (a)
any action by Executive resulting in the conviction of Executive of, or the
entry of a plea of guilty or nolo contendere by Executive to, any crime
involving moral turpitude, any felony, or any misdemeanor involving misconduct
or fraud in business activities, (b) any breach of a fiduciary duty involving
personal profit, (c) the willful failure of Executive to perform his duties
hereunder, (d) Executive's willful misconduct, recklessness or gross negligence
in the performance of his duties hereunder, (e) any action by Executive that
violates Section 6 of this Agreement, (f) repeated refusals by Executive to
comply with the reasonable directives of the Board; provided, however, that
Company may terminate Executive's employment pursuant to Subsections 4.2(c),
(d), (e) or (f) only after the failure by Executive to correct or cure, or to
commence and continue to pursue the correction or curing of, such refusals
within ten (10) days after receipt by Executive of written notice of the Board
of each specific claim of any such refusal and to complete such correction or
cure within forty-five (45) days after receipt of such notice.
4.3 Without Cause. At the election of Company, at any time,
upon thirty (30) days written notice for any reason whatsoever other than for
cause (as defined in Section 4.2 above).
4.4 Death or Disability. Upon the death of, or thirty (30)
days after the disability of, Executive. As used in this Agreement, the term
"disability" shall mean the inability of Executive, due to a physical or mental
disability, to perform the services contemplated under this Agreement for a
period of three (3) consecutive months or for a cumulative period of four (4)
months within any six (6) consecutive months. A determination of disability
shall be made by a physician satisfactory to both Executive and the Company,
provided that if Executive and the Company do not agree on a physician,
Executive and the Company shall each select a physician and these two together
shall select a third physician, whose determination as to disability shall be
binding on all parties.
4.5 Termination by Executive. Executive may terminate this
Agreement (a) at any time if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, as certified by a physician designated by
Executive and reasonably acceptable to the Company, (b) upon a material breach
of this Agreement by the Company after giving written notice of such breach, and
such breach remains uncured for a period of thirty (30) days, or (c) upon giving
ninety (90) days written notice of termination, which termination shall be
deemed a breach by Executive of his obligations under this Agreement.
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5. Effect of Termination.
5.1 Termination for Cause. In the event Executive's employment
is terminated for cause pursuant to Section 4.2 above, the Company shall pay to
Executive the base salary and benefits otherwise payable to him under Sections
3.1, 3.2 and 3.3 above, pro rata through the last day of his actual employment
by the Company.
5.2 Termination Without Cause. In the event Executive's
employment is terminated without cause pursuant to Section 4.3 above, the
Company shall pay to Executive the base salary and benefits otherwise payable to
him under Sections 3.1, 3.2 and 3.3 above, at such times and in such
installments as would be the case if there had been no termination of employment
pursuant to Section 4.3 above through the day which is the first (1st)
anniversary of Executive's last day of employment by the Company (such date, the
"Termination Anniversary Date"). Notwithstanding anything to the contrary set
forth in Section 6.1 below, in the event Executive's employment is terminated
for any reason whatsoever other than for cause pursuant to Section 4.3 above,
the Executive will be subject to the restrictive covenants set forth in Section
6.1 only through and including the Termination Anniversary Date. Executive
hereby acknowledged and agrees that if Executive's employment is terminated for
any reason whatsoever other than for cause pursuant to Section 4.3 above, then
the payment in full of compensation and the provisions of the other rights
described in this Section 5.2 shall represent the total obligation of the
Company to Executive under this Agreement.
5.3 Termination for Death or Disability. If Executive's
employment is terminated by death or because of disability pursuant to Section
4.4 above, the Company shall pay to the estate of Executive or to Executive, as
the case may be, the base salary and benefits otherwise payable to him under
Sections 3.1, 3.2 and 3.3 above through the end of the month in which the
termination of his employment because of death or disability occurs.
5.4 Termination by Executive. If Executive terminates this
Agreement pursuant to Section 4.5(a) above, the Company shall pay to Executive
the base salary and benefits otherwise payable to him under Sections 3.1, 3.2
and 3.3 above through the date of termination. If Executive terminates this
Agreement pursuant to Section 4.5(b) above, the Company shall pay to Executive
the base salary and benefits otherwise payable to him under Sections 3.1, 3.2
and 3.3 above through the date of termination, and Executive shall have the
right to assert a claim for damages against the Company arising from the
material breach by the Company of its obligations hereunder. If Executive
terminates this Agreement pursuant to Section 4.5(c) above, the Company shall
pay to Executive the base salary and benefits otherwise payable to him under
Sections 3.1, 3.2 and 3.3 above pro rata through the last day of his actual
employment by the Company, and the Company shall have the right to assert a
claim for damages caused to the Company by reason of Executive's termination in
breach of his obligations under this Agreement.
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6. Non-Compete; Confidentiality.
6.1 During the Original Term and any Additional Term
(regardless whether the Original Term or any Additional Term are terminated,
under Section 4, prior to the scheduled expiration [i.e., the date to which such
term would have continued if there had been no acceleration of the end of such
term] of the relevant period) and for a period of one (1) year after the
expiration thereof, Executive will not, directly or indirectly, including
through an "Affiliate" (as defined in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act of 1934, as amended), engage in the health
records information and technology and disease information management industry
and such other activities in which the Company is engaged in on the date hereof
(the "Business") in the United States. For purposes of this Section 6, each of
the following activities, without limitation, shall be deemed to constitute
conducting the Business: engaging in, working with, maintaining an interest in
(other than interests of less than 1% in companies with securities traded either
on the New York Stock Exchange, the American Stock Exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market or traded over-the-counter and quoted on the
Bulletin Board), advising for a fee or other consideration, managing, operating,
lending money to (other than loans by commercial banks), guaranteeing the debts
or obligations of, or permitting one's name or any part thereof to be used in
connection with an enterprise or endeavor, either individually, in partnership
or in conjunction with any individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture or any
other form of business organization, unincorporated organization or governmental
entity (or any department, agency or subdivision thereof) (each, a "Person"),
whether as principal, director, agent, shareholder, partner, employee,
consultant, independent contractor or in any other manner whatsoever, any Person
in the Business.
6.2 Executive also covenants and agrees that, during the
Original Term and any Additional Term (regardless whether the Original Term or
any Additional Term are terminated, under Section 4, prior to the scheduled
expiration of the relevant period) and for a period of one (1) year after the
expiration thereof, he will not, directly or indirectly, and no Person
(including an Affiliate) over which he exercises control (whether as an officer,
director, individual proprietor, holder of debt or equity securities,
consultant, partner, member or otherwise) (i) solicit or engage or employ or
otherwise enter into any agreement or understanding, written or oral, relating
to the services of any Person who is known or should be known by Executive to be
then employed or to have been employed within the preceding six (6) months by
the Company or its Affiliates, (ii) take any action which could be reasonably
expected to lead any Person to cease to deal with the Company or (iii) solicit
the business of, enter into any written or oral agreement with or otherwise deal
with any suppliers of goods, products, materials or services in competition with
the Company or solicit the business of customers of the Company who were such at
any time during the two (2) year period preceding the date hereof, except on
behalf of businesses in which such party would then be permitted to engage
directly without violating this Section 6.
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6.3 Executive also covenants and agrees that, during the
Original Term and any Additional Term (regardless whether the Original Term or
any Additional Term are terminated, under Section 4, prior to the scheduled
expiration of the relevant period) and for a period of five (5) years after the
expiration thereof, Executive shall treat as trade secrets all Confidential
Information (as hereinafter defined) known or acquired by him in the course of
any affiliation Executive shall have had with the Company and will not disclose
any Confidential Information to any Person not affiliated with the Company
except as authorized in writing by the Company. The term "Confidential
Information" shall mean: information relating to the relationship of the Company
to its customers (including, without limitation, the identity of any customer),
the research, design, development, manufacturing, marketing, pricing, costs,
capabilities, capacities and business plans related to the enterprise software
development activities of the Company, the financing arrangements of the
Company, or the financial condition or prospects of the Company; inventions,
products, processes, methods, techniques, formulas, compositions, compounds,
projects, developments, plans, research data, clinical data, financial data,
personnel data, computer programs, Software (as defined below) and customer and
supplier lists and any other confidential information relating to the assets,
condition or business of the Company. Notwithstanding the foregoing, Executive
shall have no obligation with respect to (i) information disclosed to Executive
by a Person who does not owe a duty of confidentiality to the Company or any
Affiliate thereof; or (ii) information which is in the public domain and is
readily available; or (iii) information where disclosure is required by law or
is necessary in connection with a claim, dispute or litigation to which
Executive is or becomes a party and the Company is given ten (10) business days
prior written notice of the intent to make disclosure. For purposes hereof,
"Software" shall mean all software owned, engineered, developed, licensed or
sold by the Company, including the following: (A) all modifications,
enhancements, fixes, updates, upgrades, bypasses and work-arounds, (B) the
source code and object code for any of the foregoing; and (C) all operating
systems, bridgeware, firmware, middleware or utilities.
6.4 The restrictions contained in this Section 6 are necessary
for the protection of the business and goodwill of the Company and are
considered by Executive to be reasonable for such purpose. Executive
acknowledges and agrees that a breach or threatened breach by Executive of the
covenants contained in this Section 6 would cause the Company irreparable harm
and that the extent of damages to the Company would be impossible to ascertain
and that there is and will be available to the Company no adequate monetary
damages or other remedy at law to compensate it in the event of any such breach.
Consequently, Executive agrees that, in the event of a breach of any such
covenant, in addition to any other relief to which the Company is or may be
entitled, the Company shall be entitled, as a matter of course, to an injunction
or other equitable relief, including the remedy of specific performance, to
enforce any or all of such covenants by Executive, his or her employer,
employees, partners, agents or any of them.
6.5 In the event it shall be determined by any arbitrator,
court or governmental agency or authority that any provision of Section 6 is
invalid by reason of the length of any period of time or the size of any area
during or in which such provision is effective, such period of time or area
shall be considered to be reduced to the extent required to cure such
invalidity.
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6.6 In the event that there should be a violation of the
restrictions contained in Section 6.1, the duration of such restriction shall be
extended for a period of time equal to the period of time during which such
breach or breaches shall occur.
6.7 The existence of any claim or cause of action by Executive
against Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the restrictions
contained in this Section 6, but shall be litigated separately including,
without limitation, any claim by Executive that Executive has not been
terminated for cause pursuant to Section 4.2, unless the claim and defense arise
out of the same event and joinder would be required.
7. Inventions, Patents and Intellectual Property.
7.1 Executive agrees that all inventions, discoveries,
computer programs, data, Software, technology, designs, innovations and
improvements (whether or not patentable and whether or not copyrightable)
(individually, an "Invention," and collectively, "Inventions") related to the
business of the Company which are made, conceived, reduced to practice, created,
written, designed or developed by Executive, solely or jointly with others and
whether during normal business hours or otherwise, during the Original Term, any
Additional Term or thereafter if resulting or directly derived from Confidential
Information, shall be the sole property of the Company. Executive hereby assigns
to the Company all Inventions and any and all related patents, copyrights,
trademarks, trade names, and other industrial and intellectual property rights
and applications therefor, in the United States and elsewhere and appoints any
officer of the Company as his duly authorized attorney to execute, file,
prosecute and protect the same before any government agency, court or authority.
Upon the request of the Company and at the Company's expense, the Executive
shall execute such further assignments, documents and other instruments as may
be necessary or desirable to fully and completely assign all Inventions to the
Company and to assist the Company in applying for, obtaining and enforcing
patents or copyrights or other rights in the United States and in any foreign
country with respect to any Invention.
7.2 Executive shall promptly disclose to the Company all
Inventions and will maintain adequate and current written records (in the form
of notes, sketches, drawings and as may be specified by the Company) to document
the conception and/or first actual reduction to practice of any Invention. Such
written records shall be available to and remain the sole property of the
Company at all times.
8. Return of Confidential Information. Executive agrees that all files,
letters, memoranda, reports, records, data, sketches, drawings, laboratory
notebooks, program listings or other written, photographic or other tangible
material, in each event, containing Confidential Information, whether created by
Executive or others, which shall come into his custody or possession, shall be
and are the exclusive property of the Company to be used by Executive only in
the performance of his duties for the Company.
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9. Cooperation. At any time during the term of this Agreement or
thereafter, Executive shall reasonably cooperate with the Company in any
litigation or administrative proceedings involving any matters with which
Executive was involved during his employment by the Company. The Company shall
reimburse Executive for reasonable expenses, if any, incurred in providing such
assistance.
10. Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing, and may be given
by a party hereto by (a) personal service (effective upon delivery), (b) mailed
by registered or certified mail, return receipt requested, postage prepaid
(effective five business days after dispatch), (c) reputable overnight delivery
service, charges prepaid (effective the next business day) or (d) telecopy or
other means of electronic transmission (effective upon receipt of the telecopy
or other electronic transmission in complete, readable form), if confirmed
promptly by any of the methods specified in clauses subparagraphs (a)-(c) of
this Section 10, to the other party at the address shown above, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 10.
11. Non-Disparagement. During the term of Executives's employment
hereunder and for five (5) years thereafter, Executive shall not disparage,
deprecate, or make any negative comment with respect to the Company or its
Affiliates or their respective businesses, operations, or properties.
12. Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural and
vice versa.
13. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement,
including, without limitation, the Prior Agreement.
14. Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and Executive.
15. Governing Law; Consent to Jurisdiction.
15.1 This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding any contrary application of conflicts of laws principles.
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15.2 Each party hereto consents to the jurisdiction of all
Federal and State courts located in the Commonwealth of Pennsylvania which have
jurisdiction over any disputes arising under this Agreement and agrees that
service of process in any action or proceeding commenced in a court located in
the Commonwealth of Pennsylvania may be made by written notice as provided in
Section 10 hereof.
16. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to its assets or business; provided, however, that
the obligations of Executive are personal and shall not be assigned by him.
17. Miscellaneous.
17.1 No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver or any right
on any other occasion.
17.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
17.3 In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the day and year set forth above.
COMPANY:
X-XXXX.XXX, INC.
By:
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Name:
Title:
Attest:
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Name:
Title:
EXECUTIVE:
Witness:
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