EXHIBIT 10.1
[IDX LOGO]
EMPLOYMENT, NONCOMPETITION AND NONDISCLOSURE AGREEMENT
THIS AGREEMENT is made by and between IDX SYSTEMS CORPORATION,
a Vermont corporation (the "Company") and the undersigned (the "Employee") as of
the date of acceptance hereof by the Company in its offices in Burlington,
Vermont, and it shall be effective on June 11, 2001. The Employee will begin
employment on June 18, 2001.
BACKGROUND
The Employee is employed by or desires to become
employed by the Company. The Company desires to employ the
Employee, and the Employee is willing to accept such
employment, upon the terms and conditions hereinafter set
forth.
The Employee acknowledges that in the course of
rendering services to the Company, he may have and will become
acquainted with information about the business and financial
affairs of the Company, and may have contributed or may in the
future contribute to such information. The Employee recognizes
that in order to protect the legitimate interests of the
Company it is necessary for the Company to protect all such
information by keeping it secret or confidential.
IN CONSIDERATION of the premises, the mutual covenants and
conditions set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT
1.1 Employment at Will. The Company hereby offers the
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Employee, and Employee hereby accepts, employment or continued employment upon
the terms and conditions hereinafter set forth. Employment by the Company is
terminable at any time, for any reason, at the will of either the Employee or
the Company. No statement of policy or procedure, whether written or oral, or
set forth in any manual or guide, shall be a promise by the Company to continue
employment for any definite term, nor shall any such statement, policy or
procedure require the Company to follow any special procedure, such as
progressive discipline, before terminating employment.
1.2 Location. The Employee will work at the
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Company's Integrated Solutions Division ("ISD"), whose offices are in Seattle,
Washington, unless otherwise mutually agreed upon.
1.3 Exclusive Employment. Upon the expiration of
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any required period of notice to McKesson HBOC, Inc., but in any event beginning
not later than June 30, 2001, the Employee shall devote his full-time efforts
exclusively for the benefit of the Company as required hereunder, and shall
perform no services for, and shall not become employed or engaged by any other
person, firm or entity while employed by the Company. The foregoing
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shall not prevent Employee from participating in activities in association with
professional associations as approved by the Company.
1.4 Duties. The Employee's duties shall be as
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assigned by the Company in its discretion, and at all times he shall be subject
to the direction and control of the officers and the Board of Directors of the
Company. The duties of the Employee as of the date of this Agreement shall be as
set forth on the official job description attached hereto as Exhibit I for the
position indicated below the Employee's signature line at the end of this
Agreement.
2. COMPENSATION
As the initial compensation for all of the
services to be provided by the Employee to the Company, the Company agrees to
pay, and the Employee agrees to and does accept, the following:
2.1 Salary. The Employee's initial and minimum
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base annual salary for the position indicated below the Employee's signature
line at the end of this Agreement shall be $330,000. Salary shall be paid
semi-monthly on the fifteenth (15th) and last days of each month, in arrears, or
on such other legal basis as the Company shall generally follow from time to
time, net of all taxes and other legally permissible withholdings. In this
regard, the Employee hereby authorizes the Company to withhold from salary
payments any amounts owed to the Company by Employee hereunder or any other
amounts as may be agreed to subsequently, including but not limited to over
payments, 401k contributions, and loan payments. Such salary shall be increased
annually, on or about each anniversary of this Agreement, by an amount to be
determined, but not less than any percentage increase in the Consumer Price
Index for All Urban Consumers for the preceding twelve-month period ending on
March 31.
2.2 Benefits. The Employee shall be entitled to the
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benefits, such as health, insurance, vacation, paid and unpaid leave as the
Company may from time to time offer to employees as a standard benefit. Benefits
are subject to change at any time with such notice to employees as may be
required by applicable employee benefit plans and laws governing them. No
special or different terms shall apply to Employee unless set forth in writing
and signed by an authorized executive officer of the Company. Notwithstanding
the foregoing, the Employee is entitled to a minimum of four weeks paid vacation
per calendar year. In addition, the Company hereby confirms to the Employee that
there will be no waiting period under the Company's health insurance plan for
coverage of pre-existing conditions.
2.3 Bonuses. The Employee shall be entitled to
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receive annual cash bonuses as set forth on Schedule A upon the attainment of
all of the conditions specified therein. Bonuses shall be paid for each calendar
year by February 28 of the following year regardless of whether the Employee is
employed by the Company at the time the bonus is paid.
2.4 Equity Awards. The Employee shall be (i) granted
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the numbers of options to purchase common stock as set forth on Schedule B
attached hereto, under and subject to all of the terms of the Company's 1995
Stock Option Plan or its successor (the "Plan"), Schedule B, and the Company's
form of Stock Option Agreement, and (ii) he shall be issued restricted shares in
the numbers and under and subject to all of the terms and conditions set forth
in the Restricted Stock Agreement attached hereto as Exhibit II. Such issuances
and grants will not be made unless the Employee is actually employed by the
Company, is in good standing, and is not on leave, on the date of grant or
issuance, as applicable.
2.5 Miscellaneous Items.
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2.5.1 Loan Repayment. The Employee is
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obligated to his previous employer in the amount of approximately $173,000 (the
"Loan") for purposes of purchasing shares of common stock of such employer (the
"Previous Employer Shares"). The Employee will, within 30 days after the date of
this Agreement, sell the Previous Employer Shares. The Employee shall provide
the Company with adequate documentation of the net proceeds from such sale. To
the extent that such proceeds are not sufficient to repay the Loan, the Company
shall pay the Employee (a) such amount as is necessary to enable the Employee to
repay the Loan in full, and (b) an additional amount to satisfy the Employee's
state and federal income tax liability with respect to the amount paid pursuant
to clause (a).
2.5.2 Relocation Expenses. The Company
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will reimburse the Employee for the following expenses in connection with the
Employee's relocation from the Atlanta metropolitan area to the Seattle
metropolitan area: (a) all reasonable fees and commissions payable to real
estate brokers in connection with the sale of the Employee's Atlanta residence
(together with an additional
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amount to satisfy the Employee's state and federal income tax liability with
respect to such reimbursed fees and commissions); (b) reasonable moving expenses
(including packing costs) for household items, furniture and two automobiles;
(c) closing costs in connection with the purchase of a Seattle residence; (d)
reasonable expenses related to trips to Seattle for the primary purpose of
house-hunting; and (e) reasonable rental expenses (including costs of cleaning
services) for a furnished apartment in the Seattle area, for the time it takes
to sell the Employee's Atlanta residence. The Company will also reimburse the
Employee for reasonable expenses of the Employee's commute between Atlanta and
Seattle pending completion of the relocation, as well as all other reasonable
business expenses thereafter as incurred in the performance of the Employee's
duties on behalf of the Company.
2.5.3 Change of Control Matters. The
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Employee will be among the executives of the Company entitled to the benefit of
"change of control" agreements, if and when adopted by the Company.
2.6 Authorization to Deduct from Wages. If at
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separation of employment (a) the Company has advanced paid leave to the Employee
before the Employee has accrued such leave, (b) the Employee has failed to repay
any money the Company has loaned to the Employee during the course of
employment, or (c) the Employee is required pursuant to a written agreement to
reimburse the Company for relocation and moving costs, the Employee authorizes
the Company to deduct from the Employee's wages sufficient funds to repay such
advances, loans, or relocation/moving costs, subject to applicable federal and
state wage laws.
2.7 No Assurances. The Employee acknowledges that
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there can be no assurance that the performance of ISD and/or the Company will be
sufficient to achieve the conditions prerequisite to the payment of any of the
bonus compensation provided for above, nor can there be any assurance at any
time with respect to the value of any of the equity compensation provided for
above, including without limitation at the time of any lapse of restrictions on
restricted stock, sale or other disposition, or exercise of stock options.
3. DEFINITION OF PROPRIETARY INFORMATION
For purposes of this Agreement the term "Proprietary
Information" means all of the following materials and information in whatever
form or medium (even if not patentable, or not protectable or protected by
copyright laws) which the Employee receives access to, creates, authors or
develops, in whole or in part, in the course of and within the scope of his
employment with the Company or through the use of any of the Company's
facilities or resources:
3.1 Computer Software. Computer programs, in any
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form, and all elements thereof, including all source and object codes, flow
charts, algorithms, coding sheets, compilers, assemblers, programmer notes,
design documents, and routines.
3.2 Research. Discoveries, concepts and ideas,
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whether or not patentable or protectable by copyright, including, without
limitation, the nature and results of research and development activities,
technical information on product or program performance and reliability,
processes, formulas, techniques, and "know-how."
3.3 Marketing and Customer Information. Price
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lists, pricing policies, quoting procedures, financial information, customer and
prospect names and requirements, customer data, customer site information,
prospect and call lists, telephone directories and calendars.
3.4 Business Information. Production development
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processes, marketing techniques, mailing lists, purchasing information,
financial statements, management reports and business plans.
3.5 Other. Any other materials or information
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related to the business or activities of the Company which are not generally
known to others engaged in similar business or activities.
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Failure to xxxx any of the Proprietary Information
as confidential shall not affect its status as part of the Proprietary
Information under the terms of this Agreement.
4. DISCLOSURE OF INFORMATION, WORKS AND MATERIALS
The Employee recognizes that he will be exposed to
the Company's confidential information including without limitation the
Company's trade secrets, and confidential business information. The Employee is
hereby notified that such information includes all computer programs developed
by the Company and the documentation for them. Further, this includes business
information, such as price lists, customer lists and data bases, business plans,
sales projections and product development plans. The Employee further
acknowledges that any information and materials received by the Company from
third parties in confidence must be treated confidentially. This includes
patient information. Employee covenants and agrees that he shall not, except
with the prior written consent of the Company, or unless the Employee is acting
as an employee of the Company solely for the benefit of the Company in
connection with the Company's business and in accordance with the Company's
business practices and employee policies, at any time during or following the
term of his employment with the Company, directly or indirectly divulge, reveal,
report, publish, transfer or disclose, for any purpose whatsoever, any of such
confidential information which has been obtained by or disclosed to him as a
result of his employment with the Company, including, without limitation, any
Proprietary Information, as defined in Section 3 hereof.
5. OWNERSHIP OF INFORMATION, WORKS AND RIGHTS THEREIN
5.1 Title. The Employee hereby assigns and
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transfers to the Company and agrees that the Company shall be the owner of all
inventions, discoveries, work, computer software program or other
computer-related equipment or technology, conceived, developed, or made by the
Employee, either alone or with others, in whole or in part, during the
Employee's employment by the Company, which are useful in, or directly or
indirectly related to the Company's business or which relate to, or are
conceived, developed, or made in the course of, the Employee's employment or
which are developed or made from, or by reason of knowledge gained from, such
employment . If any one or more of the aforementioned are deemed to fall within
the definition of "work made for hire," within the meaning of the Copyright Act
of 1976, as amended, such work shall be considered "work made for hire," the
copyright of which shall be exclusively owned by and vested in the Company. If
any of the aforementioned are considered to be work not included in the
categories of work covered by the "work made for hire" definition contained in
the Copyright Act, such work shall be, and it hereby is, assigned or transferred
completely and exclusively to the Company. The Employee agrees to execute any
instruments and to do all other things reasonably requested by the Company (both
during and after the Employee's employment with the Company) in order to fully
vest and perfect in the Company all ownership rights in those items hereby
transferred by the Employee to the Company. The Employee further agrees to
disclose immediately to the Company all Proprietary Information conceived or
developed in whole or in part by him during the term of his employment with the
Company and to assign to the Company any right, title or interest he may have in
such Proprietary Information.
5.2 Employee's Works. The Employee hereby
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represents and warrants that the Employee has fully disclosed to the Company and
attached hereto a description of any computer program or other computer-related
technology not covered in Section 5.1 above which, prior to his employment with
the Company, the Employee conceived of or developed, wholly or in part, but
which has not been published or filed with the United States Patent or Copyright
Offices.
5.3 Works and Interests of Others. Employee hereby
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represents and warrants that employment by the Company will not violate any
agreement or promise of employee to any other person, and that Employee will not
use any property or confidential information of others in his work for the
Company.
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6. RECORDS AND TANGIBLE MATERIALS
All notes, data, tapes, reference materials,
sketches, drawings, memoranda and records in any way relating to any of the
information referred to in Section 3, 4 and 5 hereof (including, without
limitation, any Proprietary Information) or otherwise prepared by Employee in
the course of his employment, and all copies thereof, shall belong exclusively
to the Company, and the Employee agrees to deliver to the Company on request all
copies of such materials in his possession or then under his control. In the
absence of such a request, Employee shall deliver such items to the Company upon
the termination for any reason of the Employee's employment with the Company.
7. PROTECTION OF INFORMATION AND GOODWILL
7.1 Nature of Business. Employee and the Company
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recognize that Employee will acquire knowledge as a result of working for the
Company, and that such knowledge will include not only general knowledge of the
medical information systems business, but specific knowledge of the Company's
business, secrets, products and customers, including Confidential Information.
Employee and the Company recognize that upon termination of employment by the
Company, Employee could use such specific knowledge and information to the
detriment of the Company by disclosing it to competitors, customers and
prospects, and using it to obtain or win business. Employee and the Company
recognize that proof of such disclosure would be difficult, yet the harm caused
thereby could be significant to the Company. Therefore, Employee and the Company
are willing to agree that Confidential Information will be disclosed to
Employee, and, to protect Employer, its relationship with its customers, its
competitive position, and its goodwill, Employee will not engage in a
competitive venture for a one-year period after employment by the Company, as
specified below.
7.2 Competitive Ventures. The Company is engaged
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throughout the United States in the development and marketing of information
systems, including computer software and related services, for hospitals,
physician groups, laboratories, and clinics, and also for providers of
information services to such groups (such activities, products and services
being referred to herein as the "Medical Information Systems Business").
Employee recognizes that the Company's medical information systems work together
and are designed to share common files, architectures, a "look and feel," and
other elements. In the event of the resignation by the Employee or termination
of Employee's employment for Cause, the Employee agrees that for a period of
twelve (12) months from the date of such termination (the "Prohibition Period"),
he will not:
7.2.1 Engage directly for himself, or
jointly with or on behalf of any person, entity or venture involved in the
Medical Information Systems Business, or any other business in which the Company
was engaged at the time of such termination of employment, and
7.2.2 Work for or become employed by or
associated with any person, entity or venture engaged in the Medical Information
Systems Business, including, by way of example and without limitation, the
entities listed in Schedule A attached hereto and made a part hereof (which
entities together with their successors and assigns, are referred to herein as
the "Designated Entities"), where either (i) the Employee's duties will be
substantially similar to those he has performed for the Company hereunder, or
(ii) the Employee's duties would be likely to involve, or require, or would
involve or require, disclosure or use of Proprietary Information. For example,
and without limiting the generality of the foregoing, if Employee is employed by
the Company as a computer programmer working on medical information systems, he
shall not, during the Prohibition Period, work as a computer programmer on
medical information systems. As another example, if Employee is employed by the
Company as a salesperson selling medical instruments or Systems, he shall not
work during the Prohibition Period as a salesman or a marketer of medical
information systems.
7.3 Geographical Limitations. The Employee's
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obligations under this Section 7 shall extend to all geographical areas in which
the Company, or any of its related companies, is offering its products'
services, either directly or indirectly through licenses or otherwise, during
the Prohibition Period.
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7.4 Non-Solicitation. The Employee further agrees
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that for a period of twelve (12) months from the date of termination of his
employment, he will not, on behalf of himself or any person or entity of the
Company, (i) compete for, or engage in competitive solicitation of, any customer
of the Company, or any person or entity that he has, during the twelve (12)
months immediately preceding such termination, solicited or serviced on behalf
of the Company or that has been so solicited or serviced, during such period, by
any person under the Employee's supervision, or (ii) attempt to hire or engage
any individual who was an employee of the Company at any time during the twelve
(12) months immediately prior to such termination.
THE EMPLOYEE REPRESENTS AND WARRANTS THAT THE
KNOWLEDGE, SKILLS AND ABILITIES HE POSSESSES ARE SUFFICIENT TO PERMIT HIM, IN
THE EVENT OF TERMINATION OF HIS EMPLOYMENT HEREUNDER FOR ANY REASON, TO EARN A
LIVELIHOOD SATISFACTORY TO HIM WITHOUT VIOLATING ANY PROVISION OF SECTION 7
HEREOF.
8. INJUNCTIVE RELIEF
The Employee understands and agrees that the Company
will probably suffer irreparable harm if Proprietary Information is disclosed,
and that monetary damages will be inadequate to compensate the Company for such
breach. Accordingly, the Employee agrees that, in the event of a breach or
threatened breach by the Employee of any of the provisions of this Agreement,
the Company, in addition to and not in limitation of any other rights, remedies
or damages available to the Company at law or in equity, will be entitled to,
and Employee hereby consents to, a permanent injunction in order to prevent or
to restrain any such breach by the Employee, or by the Employee's partners,
agents, representatives, servants, employers, employees and/or any and all
persons directly or indirectly acting for or with him.
9. ACCOUNTING FOR PROFITS
The Employee covenants and agrees that, if he shall
violate any of his covenants or agreements under this Agreement, the Company
shall be entitled to an accounting and repayment of all profits, compensation,
commissions, enumerations or benefits which the Employee directly or indirectly
has realized and/or may realize as a result of, growing out of or in connection
with any such violation; such remedy shall be in addition to and not in
limitation of any injunctive relief or other rights or remedies to which the
Company is or may be entitled at law, in equity or under this Agreement.
10. REASONABLENESS OF RESTRICTIONS
The Employee has carefully read and considered the
provisions of Sections 1 through 9 hereof and, having
done so, agrees that the restrictions set forth therein are fair and reasonable
and are reasonably required for the protection of the interests of the Company,
its officers, directors, stockholders and employees.
11. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be
binding upon the Employee, his legal representative or representatives and
testate or intestate distributees, and this Agreement shall inure to the benefit
of and be binding upon the Company, its successors and assigns. The term
"Company" as used herein shall include such successors and assigns and also
shall include any corporation which is at any time the parent or a subsidiary of
the Company, or any corporation or entity which is an affiliate of the Company
by virtue of common (although not identical) ownership, and for which the
Employee is providing services in any form during his employment with the
Company or any such other corporation or entity. The term successors and assigns
as used herein shall include a corporation or other entity acquiring all or
substantially all of the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
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12. NOTICES
Any notice required or permitted by this Agreement
shall be given by registered or certified mail, return receipt requested,
addressed to the Company at its then principal office, or to the Employee at his
then current address set forth in the payroll records of the Company, or to
either party hereto at such other address or addresses as he or it may from time
to time specify for the purpose in a notice similarly given.
13. ENFORCEABILITY AND SCOPE
If any provision of this Agreement is subsequently
determined by a court of competent jurisdiction to be void or
unenforceable for any reason, that provision shall be deemed stricken and
the remainder of the Agreement shall not be affected thereby and shall be
binding upon the parties hereto insofar as it remains a workable instrument
to accomplish the intent and purposes of the parties. The parties shall
negotiate the severed provision to bring the same within the applicable
legal requirements to the extent possible. Employee agrees to take any and
all actions, including without limitation, execution and delivery of any
and all instruments and documents necessary or advisable to complete,
perfect, evidence or otherwise confirm any of the matters set forth herein.
14. TERM AND OTHER CONDITIONS
14.1 Term. This Agreement shall remain in full
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force and effect until the Employee's employment by the Company terminates,
or until superseded by another written employment agreement based upon good and
proper consideration and executed by the Employee and the Company, whichever
first occurs. Notwithstanding the foregoing, in the event of the termination of
this Agreement by reason of the termination of the Employee's employment, those
provisions hereof which by their terms extend in accordance with such terms
shall survive. No amendment or modification of the terms and conditions hereof
shall be effective unless set forth in a written document signed by the Employee
and the Company. As used in the Agreement, words of the masculine shall, as the
context required, include the feminine.
14.2 Termination of Employment by the Company.
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14.2.1 Notwithstanding anything in this
Agreement to the contrary, in the event the Company terminates the
Employee's employment other than for Cause (as defined below):
(a) pursuant to the Restricted Stock
Agreement, all restrictions on restricted shares issued prior to
the date of termination shall lapse as of the date of such
termination, all restrictive legends on the certificates
representing such shares shall be removed, and such shares shall
be thereafter be freely tradeable by the Employee, subject only
to the Company's xxxxxxx xxxxxxx policy and any limitations
imposed under the rules and regulations of the Securities and
Exchange Commission (the "SEC") and applicable law;
(b) any outstanding but unexercisable
options granted prior to the date of termination that by their
terms would become exercisable within the twelve months following
to the date of termination shall become exercisable immediately
(and, with respect to all such options and previously exercisable
but unexercised options, the exercise period shall be extended to
the second anniversary of the date of termination); and
(c) the Company shall continue to pay the
Employee's base salary for twelve months following the date of
termination at the rate in effect on the date of termination and,
if the date of termination falls other than at the end of a
calendar year, pay the Employee an amount equal to the product of
the previous year's cash bonus, as determined in accordance with
Schedule A, and a fraction, the numerator of which is the number
of whole months worked by the Employee in the year of termination
and the denominator of which is twelve. Notwithstanding the
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foregoing, in no event shall the Employee receive less than 50%
of his Eligible Annual Bonus (as defined on Schedule A)
The Company further agrees that the following events shall also be deemed
to be terminations other than for Cause: (x) demotion from the position
indicated below the Employee's signature line at the end of this Agreement; (y)
relocation of the Employee from the Seattle area; or (z) the sale or disposal of
ISD or merger of ISD with another entity. If the Employee remains in the
employment of the Company following any such event, subsections (a) and (b)
above will take effect. If the Employee's employment terminates as a result of
any such event, subsections (a), (b) and (c) above will take effect.
14.2.2 The Employee acknowledges that the
foregoing payments shall satisfy any and all claims of any kind and nature,
including without limitation claims for compensation to which he may be
entitled, in the event the Company terminates the Employee's employment other
than for Cause, and agrees to execute and deliver a full and complete release of
claims simultaneously with the receipt of any such payments.
14.2.3 In the event the Company terminates
the Employee's employment for Cause prior to the fourth anniversary of the
date of this Agreement, all restricted shares issued prior to the date of
termination shall be forfeited, and all outstanding but unexercised or
unexercisable options granted prior to the date of termination shall expire in
accordance with the terms of their respective option agreements.
14.2.4 For purposes of this Agreement,
"Cause" shall mean and shall be strictly limited to (i) if Employee is
grossly negligent or engages in willful malfeasance and such conduct has a
material adverse effect upon the business and affairs of the Company or (ii)
Employee commits fraud or embezzlement against the Company or (iii) Employee is
convicted by a court of competent jurisdiction of a crime of moral turpitude
which results in a material adverse effect on the Company.
14.3 Resignation by the Employee. Notwithstanding
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anything in this Agreement to the contrary, in the event the Employee
resigns his employment prior to the fourth anniversary of the date of this
Agreement, all restricted shares issued prior to the date of termination shall
be forfeited and all outstanding but unexercised or unexercisable options
granted prior to the date of resignation shall expire in accordance with the
terms of their respective option agreements.
14.4 Company's Business Discretion. The Employee
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acknowledges that the Company has and shall have the flexibility to alter
its accounting or financial reporting practices and to reorganize, sell or
otherwise dispose of, or terminate ISD, but in the event such transaction
results in a Change of Control of ISD or the discontinuation of the business of
ISD that Employee shall be entitled to treat such transaction as a termination
of Employee's employment other than for Cause, and Employee shall be entitled to
the remedies provided in section 14.2 hereof.
For purposes of this Section 14.4, "Change of
Control" means any sale, lease, exchange or other transfer (in one
transaction or series of transactions not in the ordinary course of business) of
all or substantially all of the assets of ISD.
15. ARBITRATION
Any dispute between the Company and the Employee
arising out of or in any manner connected with employment or employment
practices, including but not limited to claims of discrimination of any kind and
wrongful discharge, under state, federal or local law, shall be submitted to
binding arbitration in accordance with the rules of the American Arbitration
Association, to be conducted in Seattle, Washington, except any dispute arising
under Sections 4, 5, 6 and 7 of the Agreement, which, at the Company's option,
may be litigated as set forth in Section 16 below.
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16. GOVERNING LAW AND FORUM; LEGAL FEES
Employee acknowledges that IDX has employees
located in various states, and that it is important to have consistent
policies and laws apply to them insofar as matters relating to employment are
concerned. Employee acknowledges that consistency in employment policy is
beneficial because results will be predictable and all employees will be treated
equally. Therefore, Employee and the Company agree that this Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Washington, and any legal proceeding regarding the interpretation or enforcement
of this Agreement shall be instituted in a court of competent jurisdiction
located within the State of Washington. In the event of any litigation to
enforce the terms of this Agreement, the non-prevailing party shall pay, as
additional damages, all reasonable attorney's fees of the prevailing party.
17. INDEMNIFICATION
17.1 Company acknowledges that Employee has
provided to Company a copy of Employee's current employment agreement with
McKesson HBOC, Inc. and Employee has advised Company of the nature of Employee's
current position with McKesson HBOC, Inc. and the nature of his duties and
responsibilities. Company has made an independent evaluation of any risks to the
Company which may be associated with the employment of Employee by reason of
such employment agreement and Employee's current employment by McKesson HBOC,
Inc. and is not relying on Employee as to any such evaluation.
17.2 The Company shall indemnify and hold harmless,
and shall advance expenses with respect to, any and all claims, debts,
obligations and other liabilities, monetary damages, losses and expenses
(including amounts paid in settlement and reasonable attorney's fees and
expenses, and other expenses of litigation) ("Damages") personally incurred or
suffered by Employee as a result of claims asserted by McKesson HBOC, Inc. or
any of its affiliates arising out of or connected with Company's employment of
Employee.
17.3 Employee shall give prompt written notification
to the Company of the commencement of any action, suit or proceeding
relating to a claim for which indemnification pursuant to Section 17.2 may be
sought. Any unreasonable delay on the part of Employee in notifying the Company
shall relieve the Company of any liability or obligation under Section 17.2.
Within 10 business days after receipt of such notification, the Company shall
assume control of the defense of such action, suit or proceeding.
18. THIS AGREEMENT TO CONTROL
NOTWITHSTANDING ANY OTHER PROVISIONS OF ANY OTHER AGREEMENT OR
DOCUMENT TO THE CONTRARY, IN THE EVENT OF ANY CONFLICT OR APPARENT CONFLICT
BETWEEN THIS EMPLOYMENT AGREEMENT AND THE TERMS AND CONDITIONS OF SUCH DOCUMENT
OR AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY DOCUMENTATION PERTAINING TO STOCK
OPTION OR RESTRICTED SHARE GRANTS TO EMPLOYEE, THE TERMS AND CONDITIONS OF THIS
EMPLOYMENT AGREEMENT SHALL CONTROL AND SUCH OTHER AGREEMENTS OR DOCUMENTS SHALL
NOT IMPOSE ANY GREATER LIMITATIONS UPON OR CONDITIONS UPON THE VESTING, RECEIPT
OR SALE OF SUCH EQUITY INTERESTS THAN ARE CONTAINED IN THIS EMPLOYMENT
AGREEMENT.
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19. ENTIRE AGREEMENT
This instrument contains the entire agreement of the
parties relating to the subject matter hereof, and it supersedes any prior
or contemporaneous oral or written understandings of any kind or nature.
Employee represents that he is not relying on any agreement, representation or
warranty pertaining to the subject matter hereof that is not expressly set forth
herein. The waiver or breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any subsequent breach of the same or any
other term or condition.
EXECUTED on the date(s) indicated below.
WITNESS/ATTEST: IDX SYSTEMS CORPORATION
/S/ XXXXXX XXXXXXX By: /S/ XXXXX X. XXXXX, XX.
--------------------------- -----------------------
(SEAL)
Date: June 8, 2001
/S/ E. XXXX XXXXXXXX /S/ XXXXX XXXXXXXX
--------------------------- -----------------------
[Employee's signature]
Xxxxx Xxxxxxxx
-----------------------
[Print employee's name]
Date: June 11, 2001
EMPLOYEE'S JOB TITLE: President, Integrated Solutions Division
Page 10 of 19
SCHEDULE A
ANNUAL CASH BONUS AWARDS
The Employee shall be entitled to receive, for each year of employment, the
Annual Eligible Bonus distributions specified below if the related performance
objective is met. The "Annual Eligible Bonus" payable in respect of any calendar
year just completed shall be 40% of Employee's base salary for such year. The
maximum earnable bonus payable in respect of any calendar year just completed
shall be 75% of Employee's base salary for such year.
1. A percentage of the Annual Eligible Bonus for each quarter in which ISD
achieves 90% to 100% of its revenue objectives, in accordance with the
table below.
% of Target % of Annual Eligible Bonus*
----------- ---------------------------
90 2.50
91 2.65
92 2.80
93 2.95
94 3.10
95 3.25
96 3.40
97 3.50
98 3.60
99 3.70
100 3.75
ISD's annual revenue objectives are as set forth below:
2001: $105,000,000
2002: $130,000,000
2003: $166,000,000
2004 and beyond: not more than 30% increase over prior year's
actual results
2. 2% of the Annual Eligible Bonus for each quarter in which ISD's accounts
receivable achieve targeted days sales outstanding ("DSO"). Year-to-year
DSO improvement shall be reasonably established by the President of the
Company.
3. A percentage of the Annual Eligible Bonus dependent upon ISD's annual
operating profit as a percentage of target, as follows:
% of Target % of Annual Eligible Bonus
----------- --------------------------
90 30.0
91 31.5
92 33.0
93 34.5
94 36.0
95 37.5
96 39.0
97 40.5
98 42.0
99 43.0
100 44.0
Page 11 of 19
4. 33% of the Annual Eligible Bonus from the IDX Corporate EXCELS Program
(see attachment to this Schedule A)
5. An additional annual bonus will be earned by Employee for annual profit
achieved by ISD in excess of the objectives shown below, and payable as
follows:
(a) If ISD's operating profit exceeds (or its operating loss is less than)
the annual objective by up to $1,000,000: 2% of such excess; or
(b) If ISD's operating profit exceeds (or its operating loss is less than)
the annual objective by between $1,000,001 and $2,000,000: the amount
payable pursuant to (a) plus 4% of the excess above $1,000,001; or
(c) If ISD's operating profit exceeds (or its operating loss is less than)
the annual objective by $2,000,001 or more: the amounts payable pursuant to
(a) and (b) plus 6% of the excess above $2,000,001.
ISD's annual operating profit objectives are as set forth below:
2001: ($2,000,000) loss
2002: $8,000,000 profit
2003: $16,000,000 profit
2004 and beyond: not more than 30% increase over prior year's
actual results
Page 12 of 19
SCHEDULE B
STOCK OPTION AWARDS
1. On June 18, 2001, options to purchase 147,000 shares of the Company's
common stock.
2. On or about the first business day of January 2002, options to purchase
30,000 shares of the Company's common stock.
3. Beginning in February 2002* and each February thereafter, options to
purchase a number of shares of the Company's common stock amount dependent
upon ISD's annual operating profit in the previous year as a percentage of
target in accordance with the table below:
% of Target # Options
----------- ---------
90 20,000
100 25,000
110 30,000
120 35,000
125 40,000
* The February 2002 grant will be pro-rated to reflect the portion of 2001
during which the Employee is employed by the Company.
In each case, the options shall have a per share exercise price equal to the
fair market value on the date of grant, as determined in accordance with the
Plan. All options shall vest pro-rata on the first, second, third and fourth
anniversaries of the date of grant. All shares acquired upon exercise of options
shall have been registered with the Securities and Exchange Commission on Form
S-8 (or any successor form) and shall be freely tradeable by the Employee,
subject only to the Company's xxxxxxx xxxxxxx policy and any limitations imposed
under the rules and regulations of the SEC.
Page 13 of 19
SCHEDULE C
NON-EXCLUSIVE LIST OF COMPETITORS
The following, though not all-inclusive, is a listing of
companies that are examples of competitors of IDX Systems Corporation:
ADVANTA
AIH
Ameritech Information Systems
CSC Health Care
Cerner Corporation
Compucare (including affiliate HSII)
Compuware
Cycare Systems, Inc.
Discorp
Eclipsys Corporation
Epic Systems Corporation
Xxxxx Management Consulting, Inc.
Health Data Sciences Corporation
McKesson HBOC, Inc. (including affiliates, such as Clinicom,
Advanced Laboratory, First Data)
Medic Computer Systems
MedicaLogic
Medical Manager
Meditech
RIMS
SDK
Siemens Medical Solutions Health Services Corporation
(formerly Shared Medical Systems Corporation)
3 Net Systems, Inc.
3M Health Information Systems
WebMD Corporation
Page 14 of 19
EXHIBIT I
JOB DESCRIPTION
President
Integrated Solutions Division (ISD)
The ISD unit of IDX is a major supplier of sophisticated, clinically-driven
integrated information systems to large and midsize hospitals and Integrated
Delivery Networks. ISD generates $100 million in annual revenue and employs
approximately 500 people. This position is responsible for all operational
aspects of this critical IDX business unit including systems design, program
development, quality assurance, testing, sales, implementation, and customer
support. ISD has several hundred hospitals as customers, all of which are large
integrated delivery networks. One of these is in Canada, and another is in the
United Kingdom. IDX is in the process of establishing a presence for ISD in the
United Kingdom to take advantage of the evolving opportunity within their
National Health System.
This individual reports directly to the President of IDX and, as such, is a
member of the corporate-wide operations committee. In this role, the executive
will need to work cooperatively with heads of other IDX units in order to
provide the best overall solution to the customer base. The successful candidate
should possess the ability to think creatively when working with the President
and CEO in formulating company-wide as well as business unit strategy. An
intimate knowledge of the operations of large healthcare organizations is
essential, as is the ability to relate (sell) to CEOs of such organizations.
Overall, the responsibilities of this position include insuring the success of
our customers, providing the environment for employee opportunity, and achieving
revenue and profitability objectives. Most importantly, the successful candidate
should possess a charismatic leadership style with instinctive motivational
skills.
Page 15 of 19
EXHIBIT II
RESTRICTED STOCK AGREEMENT
(each issuance to be made pursuant to a separate agreement in this form)
IDX Systems Corporation, a Vermont corporation (the "Company") hereby
issues Xxxxxxxx X. Xxxxxxxx (the "Employee"), shares of Restricted Stock on the
terms and conditions set forth herein. The date of this Agreement is July 3,
2001 (the "Issue Date"). Subject to the provisions of the attached Appendix, the
principal features of this grant are as follows:
Total Number of Shares of Restricted Stock:
75,000 shares of Restricted Stock within 10 business days of
commencement of Employment under the Employment, Noncompetition and
Nondisclosure Agreement
In February 2003, the Company will issue either
(a) 15,000 shares of Restricted Stock, if ISD achieves at least $117
million in revenue and $7.2 million in operating profit for calendar
2002, or (b) 20,000 shares of restricted stock, if ISD achieves at
least $130 million in revenue and $8 million in operating profit for
such year
In February 2004, the Company will issue either (a) 15,000
shares of Restricted Stock, if ISD achieves at least $149.4 million in
revenue and $14.4 million in operating profit for calendar 2003, or (b)
20,000 shares of restricted stock, if ISD achieves at least $166
million in revenue and $16 million in operating profit for such year
Scheduled Vesting Date: 4th anniversary of issuance date in each case
Purchase Price for Shares of Restricted Stock:
$.01 per share
Your signature below indicates your agreement and understanding that
this issuance is subject to all of the terms and conditions contained in
Appendix A. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE
SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT.
IDX SYSTEMS CORPORATION EMPLOYEE
By: /S/ XXXXXX X. XXXXX, XX. /S/ XXXXX XXXXXXXX
Title: V.P.
Date: July 11, 2001 Date: July 5, 2001
Page 16 of 19
APPENDIX A
TERMS AND CONDITIONS OF RESTRICTED STOCK
1. GRANT. The Company hereby issues to the Employee, as a separate incentive in
connection with his employment and not in lieu of any salary or other
compensation for his services, an award of [INSERT APPROPRIATE NUMBER FROM
PREVIOUS PAGE] shares of Restricted Stock on the date hereof, subject to all of
the terms and conditions in this Agreement. The shares of stock deliverable to
the Employee upon satisfaction of the conditions contained herein may be either
previously authorized but unissued shares or issued shares which have been
reacquired by the Company.
2. SHARES HELD IN ESCROW. Unless and until the shares of Restricted Stock shall
have vested in the manner set forth in paragraphs 3, 4 or 5, such shares shall
be issued in the name of the Employee and held by the Secretary of the Company
as escrow agent (the "Escrow Agent"), and shall not be sold, transferred or
otherwise disposed of, and shall not be pledged or otherwise hypothecated. The
Company shall instruct the transfer agent for its Common Stock to place the
following legend on the certificates representing the Restricted Stock: "THE
SHARES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND
UNTIL SUCH RESTRICTIONS HAVE TERMINATED" or otherwise note in its records the
restrictions on transfer set forth in this Agreement. The certificate or
certificates representing such shares shall not be delivered by the Escrow Agent
to the Employee unless and until the shares have vested and all other terms and
conditions in this Agreement have been satisfied.
3. VESTING SCHEDULE. All restrictions on shares of Restricted Stock awarded by
this Agreement shall lapse, as to 100% of such shares, and all restrictive
legends on the certificates representing such shares shall be removed, upon the
first to occur of the following: (a) the fourth anniversary of the date of the
Award, or (b) the event of termination of the Employee's employment without
Cause (as defined in the Employment, Noncompetition and Nondisclosure Agreement
(the "Employment Agreement"). Upon the first to occur of such events, all
restrictions on Restricted Shares issued prior to the date of termination shall
lapse, all restrictive legends on the certificates representing such shares
shall be removed as of the date of such termination, and such shares shall be
thereafter be freely tradeable by the Employee, subject only to the Company's
xxxxxxx xxxxxxx policy and any limitations imposed under the rules and
regulations of the SEC.
Restrictions on Shares of Restricted Stock shall not lapse in
accordance with any of the provisions of this Agreement unless the Employee
shall have been continuously employed by the Company or by one of its Affiliates
from the Grant Date until the date such vesting is deemed to have occurred. In
the case of termination of employment other than for Cause, such vesting shall
be deemed to occur immediately prior to the termination of Employee's employment
other than for Cause.
4. FORFEITURE. Notwithstanding any contrary provision of this Agreement, the
balance of the shares of Restricted Stock which have not vested (for which
restrictions have not laspsed) at the time of the Employee's Termination of
Employment shall thereupon be forfeited and automatically transferred to and
reacquired by the Company at no cost to the Company. The Employee hereby
appoints the Escrow Agent with full power of substitution, as the Employee's
true and lawful attorney-in-fact with irrevocable power and authority in the
name and on behalf of the Employee to take any action and execute all documents
and instruments, including, without limitation, stock powers which may be
necessary to transfer the certificate or certificates evidencing such unvested
shares to the Company upon such Termination of Employment.
5. WITHHOLDING OF TAXES. Notwithstanding any contrary provision of this
Agreement, no certificate representing Restricted Stock may be released from the
escrow established pursuant to paragraph 2 unless and until the Employee shall
have delivered to the Company or its designated Affiliate the full amount of any
federal, state or local income or other taxes which the Company or such
Affiliate may be required by law to withhold with respect to such shares. The
Employee may elect to satisfy any
Page 17 of 19
such income tax withholding requirement by having the Company withhold
shares of Common Stock otherwise deliverable to the Employee or by delivering to
the Company already-owned shares of Common Stock, subject to the absolute
discretion of the Committee to disallow satisfaction of such withholding by the
delivery or withholding of stock.
6. TAX MATTERS. The Company believes that the grant of the restricted stock will
qualify as a transfer of property subject to a substantial risk of forfeiture as
defined in Section 83 of the Internal Revenue Code of 1986 (the "Code"). The
Employee should consult a qualified tax advisor regarding an election under
Section 83(b) of the Code to include the value of the restricted stock in income
as of the date of grant (the "Section 83(b) Election"). A Section 83(b) Election
must be made within 30 days of the date of grant, and the Company will provide
the Employee with a form of election at his request. If the Employee makes the
Section 83(b) Election he must notify the Company within 30 days of the date of
grant, and the Company will make all necessary withholdings for federal, state
and local taxes in accordance with Section 5. The Employee acknowledges that
unless he makes a timely Section 83(b) Election, he will recognize ordinary
income at the time the restrictions lapse pursuant to Section 3 above in an
amount equal to [INSERT APPROPRIATE NUMBER] multiplied by the fair market value
of IDX Common Stock on the date such restrictions lapse.
7. RIGHTS AS STOCKHOLDER. Neither the Employee nor any person claiming under or
through the Employee shall have any of the rights or privileges of a stockholder
of the Company in respect of any shares deliverable hereunder unless and until
certificates representing such shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Employee or the Escrow Agent. Except as provided in paragraph 11, after such
issuance, recordation and delivery, the Employee shall have all the rights of a
stockholder of the Company with respect to voting such shares and receipt of
dividends and distributions on such shares.
8. CHANGES IN STOCK. In the event that as a result of a stock dividend, stock
split, reclassification, recapitalization, combination of shares or the
adjustment in capital stock of the Company or otherwise, or as a result of a
merger, consolidation, spin-off or other reorganization, the Company's Common
Stock shall be increased, reduced or otherwise changed, and by virtue of any
such change the Employee shall in his or her capacity as owner of unvested
shares of Restricted Stock which have been awarded to him or her (the "Prior
Shares") be entitled to new or additional or different shares of stock or
securities (other than rights or warrants to purchase securities) pro rata to
provide value equal to that existing immediately prior to the time of such
change; such new or additional or different shares or securities shall thereupon
be considered to be unvested Restricted Stock and shall be subject to all of the
conditions and restrictions which were applicable to the Prior Shares pursuant
to this Agreement. If the Employee receives rights or warrants with respect to
any Prior Shares, such rights or warrants may be held or exercised by the
Employee, provided that until such exercise any such rights or warrants and
after such exercise any shares or other securities acquired by the exercise of
such rights or warrants shall be considered to be unvested Restricted Stock and
shall be subject to all of the conditions and restrictions which were applicable
to the Prior Shares pursuant to this Agreement. The Committee in its absolute
discretion at any time may accelerate the vesting of all or any portion of such
new or additional shares of stock or securities, rights or warrants to purchase
securities or shares or other securities acquired by the exercise of such rights
or warrants.
9. ADDRESS FOR NOTICES. Any notice to be given to the Company under the terms of
this Agreement shall be addressed to the Company, in care of its Secretary, at
its principal executive offices, or at such other address as the Company may
hereafter designate in writing.
10. GRANT NOT TRANSFERABLE. This grant and the rights and privileges conferred
hereby shall not be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to sale
under execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this grant, or of any right
or privilege conferred hereby, or upon any attempted sale under any execution,
attachment or similar process, this grant and the rights and privileges
conferred hereby immediately shall become null and void.
Page 18 of 19
11. BINDING AGREEMENT. Subject to the limitation on the transferability of this
grant contained herein, this Agreement shall be binding upon and inure to the
benefit of the heirs, legatees, legal representatives, successors and assigns of
the parties hereto.
12. CONDITIONS FOR ISSUANCE OF CERTIFICATES FOR STOCK. The Company shall not be
required to issue any certificate or certificates for shares of stock hereunder
prior to fulfillment of all the following conditions, any of which may be waived
by the Company in its sole discretion:
(a) the admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
(b) the completion of any registration or other qualification of
such shares under any State or Federal law or under the
rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body, which
the Committee shall, in its absolute discretion, deem
necessary or advisable, and such shares are freely tradeable
by the Employee, subject only to the Company's xxxxxxx xxxxxxx
policy and any limitations imposed under the rules and
regulations of the SEC;
(c) the obtaining of any approval or other clearance from any
State or Federal governmental agency, which the Committee
shall, in its absolute discretion, determine to be necessary
or advisable; and
(d) the lapse of such reasonable period of time following the date
of grant of the Restricted Stock as the Committee may
establish from time to time for reasons of administrative
convenience.
Nothing contained in this section shall by implication or otherwise be deemed to
relieve the Company from or limit the Company's obligation that all such shares
shall be freely tradeable by the Employee upon the lapse of all restrictions
(when vested), subject only to the Company's xxxxxxx xxxxxxx policy and any
limitations imposed under the rules and regulations of the SEC and applicable
law.
If the restrictions on the shares of shares of stock to be issued pursuant to
paragraph 2.4 shall lapse as to an award of Restricted Stock within twelve (12)
months of the date of issuance thereof, the Company shall register such shares
on Form S-8, if then available, or shall lend to Employee, on an interest free
basis, an amount equal to the federal and state income taxes assessable to
Employee as a result of such lapse, and such loan shall be evidenced by a
written promissory note due and payable in full upon the earlier of (i) twelve
(12) months from the date of issuance, or (ii) the date the Employee sells the
shares. Such loan shall be secured by a pledge of one half of such shares, which
shall be released and delivered to Employee simultaneously with payment of such
note.
13. COMMITTEE AUTHORITY. The Compensation Committee of the Board of Directors or
a duly appointed subcommittee of such committee (in either case, the
"Committee") of the Company shall have the power to interpret this Agreement.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Agreement. In its absolute discretion, the Board of
Directors may at any time and from time to time exercise any and all rights and
duties of the Committee under this Agreement.
14. CAPTIONS. Captions provided herein are for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
15. AGREEMENT SEVERABLE. In the event that any provision in this Agreement shall
be held invalid or unenforceable, such provision shall be severable from, and
such invalidity or unenforceability shall not be construed to have any effect
on, the remaining provisions of this Agreement.
Page 19 of 19
