EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AGREEMENT (hereinafter "this Agreement") is made effective as of
January 11, 2010 (the “Contract Date”), between Mediware Information Systems,
Inc., (hereinafter "the Company") and Xxxxxxx Xxxxxxx (hereinafter the
“Executive"). The Executive’s employment with the Company shall begin
on February 10, 2010 (the “Effective Date”).
WHEREAS,
the Company and the Executive desire that the Executive become the Company’s
Chief Financial Officer.
NOW,
THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements herein set forth, the Company and the Executive hereby agree as
follows:
1. Employment. The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve as the Company’s Chief Financial Officer, or in such other capacity as
the parties may mutually agree. The Executive agrees to perform such services
customary to such office as shall from time to time be assigned to him by the
Chief Executive Officer or his designee. The Executive further agrees
to use his best efforts to promote the interests of the Company and to devote
his full energies to the business and affairs of the Company.
2. Term of Employment.
The employment hereunder shall be for a term of thirty-six months commencing on
the Effective Date hereof and ending thirty-six months after the Effective Date
hereof (the "'Expiration Date"), unless terminated earlier pursuant to Paragraph
4 of this Agreement (the "Term of Employment"). This Agreement shall
automatically renew for successive terms of one (1) year (each a "Renewal Term")
commencing on the first day immediately following the Expiration Date, unless
such renewal is objected to by either the Company or the Executive by giving at
least 90 days prior written notice prior to the scheduled Expiration Date. In
the event of such renewal, the last day of each successive Renewal Term shall be
deemed the Expiration Date.
3. Compensation and Other
Related Matters.
(a) Salary. As
compensation for services rendered hereunder, the Executive shall receive an
Annual Base Salary of two hundred thousand dollars ($200,000), which salary
shall be paid in accordance with the Company's then prevailing payroll practices
for its executives and shall be subject to review annually by the Chief
Executive Officer of the Board of Directors.
(b) Bonus. For
the period from the Effective Date through June 30, 2010, the Executive shall be
eligible to receive an annual cash bonus of up to [$100,000*(N/366)] where N
equals the number of days from the Effective Date through June 30, 2010 (the
“First Annual Bonus”). For each fiscal year, thereafter, the
Executive shall be eligible to receive an Annual Bonus of up to 50% of
Executive’s Annual Base Salary. The bonus will be paid only if
Executive for achieves objectives established by the Company, subject
to the discretion of the Chief Executive Officer and the Board of
Directors. The bonus, if any, would be payable after the conclusion
of the annual audit. Executive shall only earn the bonus if he is an active
employee as of the date the bonus is to be paid.
(c) Stock Options.
Subject to the approval of the Company's Board of Directors, the Executive shall
be granted 30,000 non-qualified options
(the "Options") to purchase shares of the Company's Common Stock, par value $.10
per share (the "Stock"), under a Company stock option plan. The Options shall be
subject to the terms of the applicable Company stock option plan and the
Executive's Stock Option Agreement (the "Option Agreement"), attached hereto as
Exhibit "A". In addition to the terms set forth in the Option Agreement
(provided that this Agreement shall govern the Options in the event of any
conflict between this Agreement and the Option Agreement), the Company and the
Executive agree as follows:
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(i)
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Vesting.
Subject to continued employment of the Executive, the Options shall vest
and become exercisable as follows: Seven thousand five hundred (7,500)
Options shall become exercisable on each of the first, second, third and
fourth anniversary of the Effective
Date.
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(ii)
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Exercise. The
Options shall be exercisable at a price equal to Fair Market Value (as
defined in the Plan) on the Effective Date of this Agreement. The Options
shall be exercisable (after vesting) for five years from the Effective
Date.
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(d) Performance
Options. Subject to the approval of the Company's Board of
Directors, the Executive shall be granted 25,000 non-qualified
performance options (the "Performance Options") to purchase shares of the
Company's Common Stock, par value $.10 per share (the "Stock"), under a Company
stock option plan. The Options shall be subject to the terms of the applicable
Company stock option plan and the Executive's Stock Option Agreement (the
"Option Agreement 2"), attached hereto as Exhibit "B". In addition to the terms
set forth in the Option Agreement 2 (provided that this Agreement shall govern
the Options in the event of any conflict between this Agreement and the Option
Agreement), the Company and the Executive agree as follows:
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(i)
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Vesting. Subject
to the continued employment of the Executive, the Performance Options
shall vest and become exercisable as
follows:
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a.
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Up
to 8,333 options (or a pro rata portion thereof) shall vest on the first
anniversary of the Effective Date if, but only if, the Executive achieves
performance objectives as established by the Chief Executive Officer and
the Board of Directors;
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b.
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Up
to 8,333 options (or a pro rata portion thereof) shall vest on the second
anniversary of Effective Date if, but only if, the Executive
achieves performance objectives as established by the Chief Executive
Officer and the Board of Directors;
and
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c.
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Up
to 8,334 options (or a pro rata portion thereof) shall vest on the third
anniversary of the Effective Date if, but only if, the Executive achieves
performance objectives as established by the Chief Executive Officer and
the Board of Directors.
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(ii)
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Exercise. The
Performance Options shall be exercisable at a price equal to Fair Market
Value (as defined in the Plan) on the Effective Date of this Agreement.
The Performance Options shall be exercisable (after vesting) for five
years from the Effective Date.
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(iii)
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Forfeiture. The
Performance Options that are to vest pursuant to the terms of this
Paragraph 3 shall vest upon approval by the Chief Executive and the Board
of Directors of the performance objectives. All Performance
Options that do not vest as provided in subsections (i) a., (i) b. and (i)
c above shall be forfeit.
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(e) Other Benefits. The
fringe benefits, perquisites and other benefits of employment, including four
(4) weeks vacation each year, to be provided to the Executive shall be
equivalent to such benefits and perquisites as are provided to other employees
of the Company as amended from time to time.
(f) Reimbursement.
Subject to policies established from time to time by the Company, the Company
shall reimburse Executive for the reasonable expenses incurred by him in
connection with the performance of his duties hereunder, including but not
limited to, travel expenses and entertainment expenses, for which the Executive
shall account to the Company in a manner sufficient to conform to Company policy
and Internal Revenue Service requirements.
4. Termination.
(a) Disability. If, as a
result of the incapacity of the Executive due to physical or mental illness, the
Executive is unable to perform substantially and continuously the duties
assigned to him hereunder for a period of three (3) consecutive months or for a
non-consecutive period of nine (9) months during the Term of Employment, the
Company may terminate his employment for "Disability" upon thirty (30) days
prior written notice to the Executive.
(b) Death. The
Executive's employment shall terminate immediately upon the death of the
Executive.
(c) Cause. The Company
shall be entitled to terminate the Executive's employment for "Cause."
Termination by the Company of the employment of the Executive for "Cause" shall
mean termination based upon (i) the willful failure by the Executive to follow
directions communicated to him by the Chief Executive Officer or his designee;
(ii) the willful engaging by the Executive in conduct which is materially
injurious to the Company, monetarily or otherwise; (iii) a conviction of, a plea
of nolo contendere, a
guilty plea or confession by the Executive to an act of fraud, misappropriation
or embezzlement or to a felony; (iv) the Executive's habitual drunkenness or use
of illegal substances; (v) a material breach by the Executive of this Agreement;
or (vi) an act of gross neglect or gross misconduct which the Company deems in
good faith to be good and sufficient cause. Executive hereby
represents and warrants that he has never been convicted of an act of fraud,
misappropriation, embezzlement or a felony, and Executive further warrants that
during the Term of this Agreement, he will give the Company immediate notice of
any charge against the Executive relating to any of the foregoing.
(d) Termination Without
Cause. The Executive shall have the right to terminate the Executive's
employment without cause at any time upon one ninety days prior written
notice. The Company shall have the right to terminate the Executive’s
employment without cause at any time upon written notice. The giving
of notice by either party pursuant to Paragraph 2 to prevent the renewal of this
Agreement shall not be deemed a termination of Executive’s employment without
cause.
5. Compensation Upon
Termination or During Disability
(a) Disability. During
any period that the Executive fails to perform his full-time duties with the
Company for a three-month period as a result of incapacity due to physical or
mental illness (the "Disability Period"), the Executive shall continue to
receive his Annual Base Salary at the rate set forth in Paragraph 3(a) of this
Agreement, less any compensation payable to the Executive under the applicable
disability insurance plan of the Company during the Disability Period, until
this Agreement is terminated pursuant to Paragraph 4(a) hereof. Thereafter, or
in the event the Executive's employment shall be terminated by reason of his
death, the Executive's benefits shall be determined under the Company's
insurance and other compensation programs then in effect in accordance with the
terms of such programs and the Company shall have no further obligation to the
Executive under this Agreement.
(b) Death. In the event
of the Executive's death, the Executive's beneficiary shall be entitled to
receive the Executive's Annual Base Salary at the rate set forth in Paragraph
3(a) of this Agreement until the date of his death. Thereafter, the Company
shall have no further obligation to the Executive or the Executive's beneficiary
under this Agreement.
(c) Cause. If the
Executive's employment shall be terminated by the Company for "Cause" as defined
in Paragraph 4(c) of this Agreement, the Company shall continue to pay the
Executive his Annual Base Salary at the rate set forth in Paragraph 3(a) of this
Agreement through the date of termination of the Executive's employment.
Thereafter, the Company shall have no further obligation to the Executive under
this Agreement.
(d) Termination Without
Cause. If the Executive terminates his employment pursuant to Paragraph
4(d), the Executive shall be entitled to receive Executive’s Annual Base Salary
at the rate set forth in Paragraph 3(a) of this Agreement until the date
Executive’s employment ends. Thereafter the Company shall have no
obligation to Executive. If the Company voluntarily terminates the
Executive's employment with the Company pursuant to Paragraph 4(d) of this
Agreement, the Company shall until the earlier of the three month anniversary of
the termination of employment or the commencement of Executive’s employment at a
successor employer, pay the Executive an amount equal to three months of the
Executive's then current Annual Salary, payable in three equal monthly
installments. Additionally, until the earlier of the three month anniversary of
the termination of employment, or the commencement of the provision of health
benefits to the Executive by a successor employer, the Executive will continue
to receive the same coverage of health insurance as immediately before the date
of the termination, at the expense of the Company. Thereafter, the Executive
acknowledges that the Company shall have no further obligation to the Executive
under this Agreement. Notwithstanding the foregoing, the Company
shall only be obligated to make the payments set forth in this section after the
Executive delivers to the Company an executed Release and Severance Agreement,
which shall be substantially in the form of Employer’s standard Release and
Severance Agreement for all employees, with such changes therein or additions
thereto as needed under then applicable law to give effect to its intent and
purpose. After the Executive is no longer receiving benefits from
Mediware, the Executive shall be eligible for COBRA at Executive’s own expense
in accordance with applicable law.
(e) Acquisition or Sale
of Company. If a third
party described in Paragraph 5(f) of this Agreement terminates the Executive due
to "an acquisition or sale of the Company", as described in Paragraph 5(f)
below, the Company shall pay the Executive an amount equal to six months of
Executive's Annual Base Salary at the rate in effect at the date of termination
of the Executive's employment during the period of the Executive's employment,
payable in six equal monthly installments. Until the earlier of the six months
after the termination of employment, or the commencement of the provision of
health benefits to the Executive by a successor employer, the Executive will
continue to receive the same coverage of health insurance as immediately before
the date of the termination, at the expense of the Company. Thereafter, the
Executive acknowledges that the Company shall have no further obligation to the
Executive under this Agreement. Notwithstanding the foregoing, the
Company shall only be obligated to make the payments set forth in this section
after the Executive delivers to the Company an executed Release and Severance
Agreement, which shall be substantially in the form of Employer’s standard
Release and Severance Agreement for all employees, with such changes therein or
additions thereto as needed under then applicable law to give effect to its
intent and purpose; and after delivery to the Company of a resignation from all
offices, directorships and fiduciary positions with the Company, its affiliates
and employee benefit plans.
(f) Definition. For
purposes hereof, "an acquisition or sale of the Company" to or by "a third
party" shall mean the occurrence of any transaction or series of transactions
which within a six (6) month period result in (i) greater than fifty percent
(50%) of the then
outstanding shares of Common Stock of the Company (for cash, property including,
without limitation, stock in any corporation or other third party legal entity,
indebtedness or any combination thereof) have been redeemed by the Company or
purchased by a third party not previously affiliated with the Company, or
exchanged for shares in any other corporation or other third party legal entity
not previously affiliated with the Company, or any combination of such
redemption, purchase or exchange, (ii) greater than fifty percent (50%) in book
value of the Company's gross assets are acquired by a third party not previously
affiliated with the Company (for cash, property including, without limitation,
stock in any corporation whether or not unaffiliated with the Company,
indebtedness of any person or any combination thereof), or (iii) the Company is
merged or consolidated with another private or public corporation or other third
party legal entity and the former holders of shares of Common Stock of the
Company own less than 25% of the voting power of the acquiring, resulting or
surviving corporation or other third party legal entity. For the purposes hereof
a director or officer of the Company shall be considered "affiliated with the
Company."
6. Confidentiality and
Restrictive Covenants.
(a) The
Executive acknowledges that:
(i) the business in which the Company
is engaged is intensely competitive and his employment by the Company will
require that he have continual access to and knowledge of confidential
information of the Company, including, but not limited to, the nature and scope
of its products, the object and source code offered, marketed or under
development by the Company or under consideration by the Company for
development, acquisition, or marketing by the Company and the documentation
prepared or to be prepared for use by the Company (and the phrase "by the
Company" shall include other vendors, licensees or and resellers and value-added
resellers of the Company's products or proposed product) and the Company's plans
for creation, acquisition, improvement or disposition of products or software,
expansion plans, financial status and plans, products, improvements, formulas,
designs or styles, method of distribution, lists of remarketing and value-added
and other resellers customer lists and contact lists, product development plans,
rules and regulations, personnel information and trade secrets of the Company,
all of which are of vital importance to the success of the Company's business,
provided that Confidential Information will not include information which has
become publicly known otherwise than through a breach by Executive of the
provisions of this Agreement (collectively, "Confidential
Information");
(ii) the direct or indirect
disclosure of any Confidential Information would place the Company at a serious
competitive disadvantage and would do serious damage, financial and otherwise,
to the Company's business;
(iii) by his training,
experience and expertise, the Executive's services to the Company will be
special and unique; and
(iv) if the Executive leaves
the Company's employ to work for a competitive business, in any capacity, it
would cause the Company irreparable harm.
(b) Covenant Against
Disclosure. The Executive therefore covenants and agrees that all
Confidential Information relating to the business products and services of the
Company, any subsidiary, affiliate, seller or reseller, value-added vendor or
customer shall be and remain the sole property and confidential business
information of the Company, free of any rights of the Executive. The Executive
further agrees not to make any use of the confidential information except in the
performance of his duties hereunder and not to disclose the information to third
parties, without the prior written consent of the Company. The obligations of
the Executive under this Paragraph 6 shall survive any termination of this
Agreement. The Executive agrees that, upon any termination of his employment
with the Company, all Confidential Information in his possession, directly or
indirectly, that is in written or other tangible or readable form (together with
all duplicates thereof) will forthwith be returned to the Company and will not
be retained by the Executive or furnished to any third party, either by sample,
facsimile, film, audio or video cassette, electronic data, verbal communication
or any other means of communication.
(c) Non-competition. The
Executive agrees that, during the Term of Employment and for a period of one (1)
year following the date of termination of the Executive's employment with the
Company, the Executive will not own, manage, or be connected as an officer, employee or
director with, or aid or assist anyone else in the conduct of, any entity or
business which competes with any business conducted by the Company or any of its
subsidiaries or affiliates, in the United States, Canada and the UK and any
other area where such business is being conducted on the date the Executive's
employment is terminated hereunder. Notwithstanding the foregoing the
Executive's ownership of securities of a public company engaged in competition
with the Company not in excess of five (5%) percent of any class of such
securities shall not be considered a breach of the covenants set forth in this
Paragraph 6.
(d) Further Covenant.
Until the date which is one (1) year after the date of the termination of the
Executive's employment hereunder for any reason, the Executive will not,
directly or indirectly, take any of the following actions, and, to the extent
the Executive owns, manages, operates, controls, is employed by or participates
in the ownership, management, operation or control of, or is connected in any
manner with, any business of the type and character engaged in and competitive
with that conducted by the Company or any of its subsidiaries or affiliates
during the period of the Executive's employment, the Executive
will not encourage or participate in any of the following actions on
behalf of such business:
(i) persuade or attempt to persuade any
customer of the Company or any seller, reseller or value-added vendor of the
Company or of its products to cease doing business with the Company or any of
its subsidiaries or affiliates, or to reduce the amount of business it does with
the Company or any of its subsidiaries or affiliates;
(ii) solicit for himself or any entity
the business of (A) any customer of the Company or any of its subsidiaries or
affiliates, or (B) any seller, reseller or-value-added vendor of the Company, or
of its products, or (C) solicit any business from a customer which was a
customer of the Company or any of its subsidiaries or affiliates within six
months prior to the termination of the Executive's employment; and
(iii) persuade or attempt to persuade
any employee of the Company or any of its subsidiaries or affiliates or any
individual who was an employee of the Company or any of its subsidiaries or
affiliates, at any time during the six-month period prior to the Executive's
termination of employment , to leave the employ of the Company or any of its
subsidiaries or affiliates.
7. Intellectual
Property. The Executive hereby agrees that any and all (i) software,
object code, source code, and documentation, (ii) any improvements, inventions,
discoveries, formulae, processes, methods, know-how, confidential data, patents,
trade secrets, (iii) Food and Drug Administrative ("FDA") applications seeking
approval by the FDA, information contained in the Forms 510-k of the FDA and
approvals from FDA, and (iv) other proprietary information made, developed or
created by the Executive (whether at the request or suggestion of the Company or
otherwise, whether alone or in conjunction with others, and whether during
regular working hours of work or otherwise) during the period of his employment
with the Company, which may be directly or indirectly useful in, or relate to,
the business being carried out by the Company or any of its subsidiaries or
affiliates, shall be promptly and fully disclosed by the Executive to the Board
of Directors and shall be the Company's exclusive property as against the
Executive, and the Executive shall promptly deliver to the Board of Directors of
the Company all papers, drawings, models, data and other material relating to
any invention made, developed or created by him as aforesaid.
The
Executive shall, upon the Company's request and without any payment therefor,
execute any documents necessary or advisable in the opinion of the Company's
counsel to direct issuance of patents, copyrights and FDA applications or
approvals of the Company with respect to such inventions or work product or
improvements or enhancements as are to be the Company's exclusive property as
against the Executive under this Paragraph 7 or to vest in the Company title to
such inventions as against the Executive, the expense of securing any such
patent or copyright, to be borne by the Company.
8. Breach by Employee.
Both parties recognize that the services to be rendered under this Agreement by
the Executive are special, unique and extraordinary in character, and that in
the event of a breach by Employee of the terms and conditions of the Agreement
to be performed by him, then the Company shall be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to enforce the specific performance thereof by the
Executive. Without limiting the generality of the foregoing, the parties
acknowledge that a breach by the Executive of his obligations under Paragraphs 6
or 7 would cause the Company irreparable harm, that no adequate remedy at law
would be available in respect thereof and that therefore the Company would be
entitled to seek injunctive relief with respect thereto.
9. Arbitration. Without
precluding acting to obtain specific performance and/or injunctive relief
pursuant to Paragraph 9 above, in the event of any dispute between the parties
hereto arising out of or relating to this Agreement or the employment
relationship, including, without limitation, any statutory claims of
discrimination, between the Company and the Executive (except any dispute with
respect to Paragraphs 6 and 7 hereof), such dispute shall be settled by
arbitration in the City of Kansas City, State of Kansas, in accordance with the
National Rules for the Resolution of Employment Disputes then in effect of the
American Arbitration Association. The parties hereto agree that the arbitral
panel shall also be empowered to grant injunctive relief to a party, which may
be included in any award. Judgment upon the award rendered, including injunctive
relief, may be entered in any court having jurisdiction thereof. Notwithstanding
anything herein to the contrary, if any dispute arises between the parties under
Paragraphs 6 or 7, neither the Executive nor the Company shall be required to
arbitrate such dispute or claim, but each party shall have the right to
institute judicial proceedings the courts located in the City of Kansas City and
the state of Kansas. If such judicial proceedings are instituted, the parties
agree that such proceedings shall not be stayed or delayed pending the outcome
of any arbitration proceeding hereunder.
10. Miscellaneous.
(a) Successors; Binding
Agreement. This Agreement and the obligations of the Company hereunder
and all rights of the Executive hereunder shall inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns, provided, however, that the duties of the Executive hereunder are
personal to the Executive and may not be delegated or assigned by
him. By entering into this Agreement, the Executive’s prior
employment agreement with the company is hereby terminated.
(b) Notice. All notices
of termination and other communications provided for in this Agreement shall be
in writing and shall be deemed to have been duly given when delivered by hand,
delivered by an express delivery (one day service), delivered by telefax and
confirmed by express mail or one day express delivery service, or mailed by
United States registered mail, return receipt requested, addressed as
follows:
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If
to the Company:
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Mediware
Information Systems, Inc.
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00000
Xxxx 00xx
Xxxxxx
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Xxxxxx,
XX 00000
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If
to the Executive:
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Xxxxxxx
Xxxxxxx
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or to
such other address as either party may designate by notice to the other, which
notice shall be deemed to have been given upon receipt.
(c) Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Kansas without regard to the conflict of law rules
thereof.
(d) Waivers. The waiver
of either party hereto of any right hereunder or of any failure to perform or
breach by the other party hereto shall not be deemed a waiver of any other right
hereunder or of any other failure or breach by the other party hereto, whether
of the same or a similar nature or otherwise. No waiver shall be deemed to have
occurred unless set forth in writing executed by or on behalf of the waiving
party. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any act other than that specifically
waived.
(e) Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall otherwise remain in full force and effect. Moreover, if any one or
more of the provisions contained in this Agreement is held to be excessively
broad as to duration, scope or activity, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.
(f) Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same
instrument.
(g) Entire Agreement.
This Agreement (including the applicable restricted stock agreements) sets forth
the entire agreement and understanding of the parties in respect of the subject
matter contained herein, and supersedes all prior agreements (including the
prior employment agreements), promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of either party in respect of said subject
matter.
(i) Headings Descriptive.
The headings of the several paragraphs of this Agreement are inserted for
convenience only and shall not in any way affect the meaning or construction of
any of this Agreement.
(j) Capacity. The
Executive represents and warrants that he is not a party to any agreement that
would prohibit him from entering into this Agreement or performing fully his
obligations hereunder.
IN
WITNESS WHEREOF, the Company and the Executive have executed this Agreement as
of the date first written above.
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EXECUTIVE:
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MEDIWARE INFORMATION SYSTEMS, INC: | |||
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By:
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Xxxxxxx
Xxxxxxx
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Name:
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T.
Xxxxx Xxxx
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Title:
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President
& Chief Executive Officer
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