EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this 15th day of July
1997, by and between Allscrips Pharmaceuticals, Inc., a corporation organized
and existing under the laws of the State of Illinois, with its principal place
of business at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000 ("Company") and
XXXXX X. XXXXXX ("Executive").
RECITALS
WHEREAS, the Company desires to employ Executive as its President and
Chief Financial Officer;
WHEREAS, Executive desires to be employed by Company in the aforesaid
capacities;
NOW, THEREFORE, in consideration of the foregoing premises, of the
mutual agreements and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
AGREEMENT
I. Employment
The Company hereby agrees to employ Executive, and Executive hereby accepts
employment as President and Chief Financial Officer of the Company,
pursuant to the terms of this Agreement. Executive shall report only to the
Company's Chief Executive Officer. Executive shall have the duties and
responsibilities of President and Chief Financial Officer, and such other
duties and responsibilities not inconsistent with the performance of his
duties as President and Chief Financial Officer as are reasonably assigned
by the Chief Executive Officer from time to time.
During the term of this Agreement, Executive shall carry out his
responsibilities hereunder to the best of his ability on a full-time basis,
provided however Executive shall be entitled to devote time to outside
boards of directors, personal investments, and professional activities,
such as Young Presidents Organization, to the extent such activities do not
unduly interfere with his duties hereunder.
II. Effective Date and Term
The initial term of Executive's employment by the Company under this
Agreement shall commence as of August 1, 1997 and shall continue until
December 31, 2000. On December 31, 2000, and on each December 31,
thereafter, this Agreement shall automatically renew for a one (1) year
term unless the Company or Executive elects not to renew this Agreement in
a written notice to the other party given at least thirty (30) days
preceding such December 31. The Executive's employment period hereunder
("Employment Period") shall begin on August 1, 1997 and end on the December
31 on which its term expires by reason of an election not to renew by the
Company or the Executive ("Expiration Date") except that if Executive's
employment is terminated pursuant to Section IV hereof the Employment
Period shall terminate on the Effective Termination Date (as defined in
Section IV).
III. Compensation and Benefits
In consideration for the services Executive shall render under this
Agreement, the Company shall provide or cause to be provided to Executive
the following compensation and benefits:
A. Base Salary
During the Employment Period, the Company shall pay or cause to be
paid to Executive an annual base salary at a rate of $225,000 for each
twelve month period ending July 31 ("Base Salary"), subject to all
appropriate federal and state withholding taxes and payable in
accordance with the Company's normal payroll procedures. Such sum
shall be reviewed prior to each July 31 during the Employment Period
by the Company's Board of Directors ("Board") or its Compensation
Committee for the purposes of determining appropriate merit increases
based on Executive's performance. The results of such review shall be
reported to Executive prior to each such July 31.
B. Benefits
During the Employment Period and as otherwise provided hereunder, the
Company shall provide or cause to be provided to Executive the
following:
1. Twenty (20) business days per year of paid vacation, such
vacation time not to be cumulative (i.e., vacation time not taken
in one year shall not be carried forward and used in any
subsequent year).
2. Health and/or dental insurance, including immediate coverage for
Executive and his eligible dependents as provided by the Company
in accordance with its group health insurance plan coverage
applicable to senior executive employees; and
3. To the extent that they do not duplicate benefits and perquisites
provided in this Agreement, such other benefits and perquisites
as are provided in accordance with the Company's plans,
practices, policies and programs for senior executive employees
of the Company.
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C. Performance Bonus
Executive shall be entitled to a cash bonus ("Performance Bonus") (i)
of $50,000 for the five-month period ending December 31, 1997, (ii) an
annual bonus for each whole calendar year falling within the
Employment Period, and (iii) to the extent provided in Section IV,
for the portion of the last calendar year falling within the
Employment Period if the Employment Period terminates on the Effective
Termination Date. The Performance Bonus for periods beginning on and
after January 1, 1998 shall be contingent upon the attainment of such
Company objectives and shall be in such amounts as are determined
annually by the Board or its Compensation Committee prior to January
1, 1998 and prior to each January 1 thereafter falling within the
Employment Period. The Performance Bonus, if any, shall be payable on
or before March 31 of the year immediately succeeding the calendar
year for which such Performance Bonus was earned, provided, however,
that if the applicable Company objectives are based on the Company's
annual audited financial statements and if on such March 31 such
financial statements have not yet been issued, the Performance Bonus,
if any, shall be payable promptly upon the issuance of such financial
statements.
D. Stock Options
The Company shall, effective August 1, 1997, grant Executive stock
options to purchase an aggregate number of the Company's Common Shares
.01 per value, as equals 2.5% of the fully-diluted common equity of
the Company, subject to mutually agreed adjustments in respect of
"out-of-the-money" convertible securities of the Company. Such options
shall be divided into four series: Series A, Series B, Series C and
Series D. Each series shall consist of one-quarter of the total
options. All of the options in Series A and 60% of the options in
Series B, Series C and Series D shall be substantially in the form
attached as Exhibit A-1. Forty per cent of the options in Series B,
Series C and Series D shall substantially be in the form of Exhibit
A-2.
E. Expenses
The Company shall reimburse Executive for proper and necessary
expenses incurred by him in the performance of his duties under this
Agreement from time to time upon Executive's submission to the Company
of invoices for such expenses in reasonable detail.
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IV. Termination Prior to Expiration Date and Consequences Thereof
This Section IV sets forth the circumstances in which the Employment Period
shall terminate on a date ("Effective Termination Date") prior to the
Expiration Date (as defined in Section II hereof).
A. Death or Disability. The Employment Period shall terminate upon the
Executive's date of death or the date the Executive is given written
notice that he has been determined to be disabled by the Company. For
purposes of this Agreement, the Executive shall be deemed to be
"disabled" if the Executive, as a result of illness or incapacity, (1)
shall be unable to perform substantially his required duties for a
period of three (3) consecutive months or for any aggregate period of
three (3) months in any six (6) month period. In the event of a
dispute as to whether Executive is disabled, the Employer may refer
Executive to a licensed practicing physician of the Company's choice,
and Executive agrees to submit to such tests and examination as such
physician shall deem appropriate.
B. Termination by Company For Cause. The Employment Period shall
terminate on the date the Company provides the Executive with written
notice that he is being terminated for cause.
For the purposes of this Agreement, the term "Cause" shall mean:
(i) the willful or grossly negligent failure by Executive to
perform his duties and obligations hereunder in any material respect,
other than any such failure resulting from his disability;
(ii) Executive's conviction of a felony involving moral
turpitude; or
(iii) Executive's violation of the law in connection with his
employment which is materially injurious to the Company, monetarily or
otherwise.
Notwithstanding the foregoing, Cause shall not exist under clause (i)
above until notice of such failure has been given to Executive by the
Company and one week has lapsed following such notice without
Executive curing such failure; provided, however, that such notice and
lapse of time shall not be required with respect to any event or
circumstance which is the same or substantially the same as an event
or circumstance with respect to which notice and opportunity to cure
has been given within the previous six months.
C. Termination by Company Without Cause. The Employment Period shall
terminate on the date the Company provides the Executive with written
notice that the Company is exercising its rights under this section
IV(C) to terminate
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the Employment Period without Cause. If the Company elects not to
renew this Agreement for any renewal period pursuant to Section II
hereof, such election shall not constitute a termination of the
Employment Period without Cause.
D. Termination by Executive for Good Reason. The Employment Period shall
terminate thirty days following the date the Executive provides the
Company with written notice that the Executive is exercising his right
under this Section IV (D) to terminate the Employment Period for good
reason. For purpose of this Agreement "good reason" shall mean:
(i) an intentional, willful and material failure of the Company to
meet its obligations in any material respect under this
Agreement which remains uncured after the Executive has
provided written notice of such failure and one week has
elapsed following such notice without the Company curing such
failure; provided, however, that such notice and lapse of time
shall not be required with respect to any event or circumstance
which is the same or substantially the same as an event or
circumstance with respect to which notice and an opportunity to
cure has been given within the previous six months;
(ii) a substantial adverse alteration in the nature or status of the
Executive's responsibilities with the Company; or
(iii) a request of the Executive to relocate his residence greater
than 100 miles from his then current residence without his
consent; and an exercise by him of his right under this Section
IV(D) within sixty (60) days after such request;
E. Termination by Executive Without Good Reason. The Employment Period
shall end thirty (30) days following the date the Executive provides
the Company with written notice that Executive is exercising his right
under this Section IV(E) to terminate the Employment Period without
good reason. If the Executive elects not to renew this Agreement for
any renewal period pursuant to Section II hereof, such election shall
not constitute a termination of the Employment Period without good
reason.
F. Consequence of Termination Under This Section IV.
The table at the end of this Section IV (F) sets out the consequences
of a termination of the Employment Period on the Effective Termination
Date, i.e., a date other than the Expiration Date as defined in
Section II. Such consequences are as follows:
(i) Termination Without Cause or for Good Reason. If the Company
exercises its right to terminate the Employment Period without
Cause or if Executive
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exercises his right to terminate the Employment Period for good
reason, the Company shall be obligated to pay Executive (a) any
salary that was accrued but not yet paid as of the Effective
Termination Date; (b) as severance pay, an amount, payable in
twelve equal monthly installments commencing on the Effective
Termination Date, equal to Executive's annual Base Salary in
effect immediately prior to the Effective Termination Date
(such amount to be payable regardless of whether (x) Executive
obtains other employment and is compensated therefor, (y) the
Effective Termination Date is less than twelve months prior to
the Expiration Date or (z) Executive dies prior to the first
anniversary of the Effective Termination Date, but only for so
long as Executive is not in violation of Section V hereof); (c)
the unpaid Performance Bonus, if any, with respect to the
calendar year preceding the Effective Termination Date (such
Performance Bonus, if any, to be determined in the manner it
would have been determined and payable at the time it would
have been payable under Section III C had there been no
termination of the Employment Period); and (d) any Performance
Bonus for the calendar year in which the Effective Termination
Date occurs that would have been payable under Section III.C.
had there been no termination of the Employment Period (such
Performance Bonus, if any, to be determined in the manner it
would have been determined and payable at the time it would
have been payable under Section III.C. had there been no
termination of the Employment Period).
(ii) Termination With Cause or Without Good Reason. If the Company
exercises its right to terminate the Employment Period with
Cause or if Executive exercises his right to terminate the
Employment Period without good reason, the Company shall be
obligated to pay Executive (a) any salary that was accrued but
not yet paid as of the Effective Termination Date; and (b) the
unpaid Performance Bonus, if any, with respect to the calendar
year preceding the Effective Termination Date (such Performance
Bonus, if any, to be determined in the manner it would have
been determined and payable at the time it would have been
payable under Section III C had there been no termination of
the Employment Period).
(iii) Termination Upon Death or Disability. If the Employment Period
is terminated because of the death or disability of Executive,
the Company shall be obligated to pay Executive or, if
applicable, Executive's estate (a) any salary that was accrued
but not yet paid as of the Effective Termination Date; (b) the
unpaid Performance Bonus, if any, with respect to the calendar
year preceding the Effective Termination Date (such Performance
Bonus, if any, to be determined in the manner it would have
been determined and payable at the time it would have been
payable under Section III C had there been no termination of
the Employment Period); and (c) a Pro Rata Share of any
Performance Bonus for the calendar year in which the Effective
Termination Date occurs that would
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have been payable under Section III.C. had there been no
termination of the Employment Period (such Performance Bonus,
if any, to be determined in the manner it would have been
determined and payable at the time it would have been payable
under Section III.C. had there been no termination of the
Employment Period). "Pro Rata Share" means a fraction the
numerator of which is the number of days prior to the Effective
Termination Date in the calendar year in which the Effective
Termination Date occurs and the denominator of which is 365.
Table Setting Out Consequences of a Termination of Employment
-------------------------------------------------------------
Period on the Effective Termination Date
----------------------------------------
Paragraph Salary Severance Cobra
Reference Ceases? Bonus? Paid ? Continuances?
--------- ------- ------ --------- -------------
(A) Death or Yes Prorated No No on death
Disability Bonus Yes on disability
(B) Company Yes No No Yes
terminates for Bonus
cause
(C) Company Yes Full Yes Yes
terminates no Bonus
cause
(D) Executive Yes Full Yes Yes
terminates for Bonus
good reason
(E) Executive Yes No No Yes
terminates Bonus
without good
reason
V. Noncompetition and Confidentiality
1. For purposes of this Agreement, the term "Direct Competitor" shall
mean any person or entity engaged in the business of marketing or
providing within the
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continental United States prescription products or services or
pharmacy benefit management products or services, including, without
limitation, prepackaged prescription products or services, point of
care pharmacy dispensing systems, mail service pharmacy products or
services, or pharmaceuticals or pharmaceutical delivery systems.
2. During the Employment Period and for a period of one year after the
termination, for any reason, of the Employment Period, Executive
shall not, (i) directly or indirectly act in concert or conspire with
any person employed by the Company in order to engage in or prepare to
engage in or to have a financial or other interest in any business
which is a Direct Competitor; or (ii) serve as an employee, agent,
partner, shareholder, director or consultant for, or in any other
capacity participate, engage or have a financial or other interest in
any business which is a Direct Competitor (provided, however that
notwithstanding anything to the contrary contained in this Agreement,
Executive may own up to 2% of the outstanding shares of the capital
stock of a company whose securities are registered under Section 12 of
the Securities Exchange Act of 1934).
3. The Company has advised Executive and Executive acknowledges that it
is the policy of the Company to maintain as secret and confidential
all Protected Information (as defined below), and that Protected
Information has been and will be developed at substantial cost and
effort to the Company. Executive shall not at any time, directly or
indirectly, divulge, furnish or make accessible to any person, firm,
corporation, association or other entity (otherwise than as may be
required in the regular course of Executive's employment), nor use in
any manner, either during the Employment Period or after the
termination, for any reason, of the Employment Period, any Protected
Information, or cause any such information of the Company to enter the
public domain. "Protected Information" means trade secrets,
confidential and proprietary business information of the Company, and
any other information of the Company, including but not limited to,
customer lists (including potential customers), sources of supply,
processes, plans, materials, pricing information, internal memoranda,
marketing plans, internal policies, and products and services which
may be developed from time to time by the Company and its agents or
employees, including Executive; provided, however, that information
that is in the public domain (other than as a result of a breach of
this Agreement), approved for release by the Company or lawfully
obtained from third parties who are not bound by a confidentiality
agreement with the Company, is not Protected Information.
4. Executive acknowledges and agrees that the restrictions imposed upon
him by this Section V and the purpose for such restrictions are
reasonable and are designed to protect the trade secrets, confidential
and proprietary business information and the continued success of the
Company without unduly
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restricting Executive's future employment by others. Furthermore,
Executive acknowledges that in view of the confidential information of
the Company which he has or will acquire or has or will have access to
and the necessity of the restrictions contained in this Section V, any
violation of the provisions of this Section V would cause irreparable
injury to the Company and its successors in interest with respect to
the resulting disruption in their operations. By reason of the
foregoing, Executive consents and agrees that if he violates any of
the provisions of this Section V, the Company and its successors in
interest as the case may be, shall be entitled, in addition to any
other remedies that they may have, including monetary damages, to an
injunction to be issued by a court of competent jurisdiction,
restraining Executive from committing or continuing any violation of
this Section V.
V1 Miscellaneous
A. Valid Obligation
This Agreement has been duly authorized, executed and delivered by the
Company and has been duly executed and delivered by Executive and is a
legal, valid and binding obligation of the Company and of Executive,
enforceable in accordance with its terms.
B. No Conflicts
Executive represents and warrants that the performance by him of his
duties hereunder will not violate, conflict with or result in a breach
of any provision of, any agreement to which he is a party.
C. Applicable Law
This Agreement shall be construed in accordance with the laws of the
State of Illinois, without reference to Illinois' choice of law
statutes or decisions.
D. Severability
The provisions of this Agreement shall be deemed severable, and the
invalidity or unenforceability of any one or more of the provisions
hereof shall not affect the validity or enforceability of any other
provision. In the event any clause of this Agreement is deemed to be
invalid, the parties shall endeavor to modify that clause in a manner
which carries out the intent of the parties in executing this
Agreement.
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E. No Waiver
The waiver of a breach of any provision of this Agreement by any party
shall not be deemed or held to be a continuing waiver of such breach
or a waiver of any subsequent breach of any provision of this
Agreement or as nullifying the effectiveness of such provision, unless
agreed to in writing by the parties.
F. Notices
All notices hereunder shall be in writing and shall be sent by hand
delivery, overnight courier, or by certified mail, return receipt
requested, to the parties at the addresses set forth below:
To the Company: Allscrips Pharmaceuticals, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
with a copy to: Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
to Executive: Xxxxx X. Xxxxxx
000 Xxxxx Xxxx
Xxxx Xxxxxx, XX 00000
with a copy to: Xxxxxxxxxx & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
F. Assignment of Agreement
This Agreement shall inure to the benefit of Executive and Company,
their respective successors and assignees and Executive's heirs and
personal representatives. Neither party may assign any rights or
obligations hereunder to any person or entity without the prior
written consent of the other party. This Agreement shall be personal
to Executive for all purposes.
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G. Entire Agreement
Except as otherwise provided herein, this Agreement contains the
entire understanding between the parties, and there are no other
agreements or understandings between the parties with respect to
Executive's employment by the Company and his obligations. Executive
acknowledges that he is not relying upon any representations or
warranties concerning his employment by the Company except as
expressly set forth herein. No alteration or modification hereof shall
be valid except by a subsequent written instrument executed by the
parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
ALLSCRIPS PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
/s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
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