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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of the ____ day of June, 1997, by and between HALIS, INC., a Georgia
corporation (the "Company"), and XXXXXX X. XXXXXXXX III (hereinafter
"Executive");
WHEREAS, the Company desires to employ Executive as hereinafter
provided; and
WHEREAS, Executive is willing to accept such employment with the
Company, in accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual premises and
covenants herein contained, the parties hereto agree as follows:
1. EMPLOYMENT. For the Term of Employment, as hereinafter
defined, the Company agrees to employ Executive and Executive agrees to accept
such employment and to perform such duties and functions as the Boards of
Directors of the Company may assign to Executive from time to time. Executive
agrees to devote his full time and energy to the business of the Company, and
shall perform his duties in a trustworthy and businesslike manner, all for the
purpose of advancing the interests of the Company. It is hereby expressly
agreed among the parties hereto that primary responsibility for the supervision
of Executive shall rest with the Board of Directors of the Company, which shall
review Executive's performance annually, make upward adjustments to Executive's
compensation and award such other bonuses and employee benefits as it shall
deem appropriate.
2. TITLE. Executive shall serve as Senior Vice President and
Chief Financial Officer of the Company.
3. TERM OF EMPLOYMENT. The "Term of Employment" referred to in
Section 1 hereof and hereinafter shall commence on the date hereof and expire
on the second anniversary of the date hereof, unless otherwise terminated prior
thereto in accordance with the terms of this Agreement.
4. COMPENSATION.
4.1 Base Salary. During the Term of Employment, Executive shall
be paid an annual base salary (hereinafter "Base Salary"), which shall be paid
in installments in accordance with the Company's normal pay practices, but not
less frequently than monthly. Executive's annual Base Salary for the initial
twelve (12) months of this Agreement shall be $150,000. The Board of Directors
of the Company shall review Executive's Base Salary at the end of the initial
12-month period and may increase, but not decrease, such Base Salary for the
remainder of the Term of Employment.
4.2 Incentive Compensation. During the Term of Employment, and in
addition
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to Executive's Base Salary, Executive shall be eligible to receive an annual
performance bonus determined and awarded in the sole discretion of the Board of
Directors of the Company.
4.3 Stock Options. As an inducement to Executive to enter into
this Agreement, simultaneously with the execution hereof by Executive the
Company shall grant to Executive options to purchase 250,000 shares of the
Company's common stock pursuant to an Incentive Stock Option Agreement
substantially in the form of Exhibit A hereto. In addition, as an incentive for
successful management of the financial functions of the Company by Executive,
the Board of Directors of the Company may, in its discretion, grant to
Executive the right to purchase shares of the common stock of the Company at a
price determined by the Board of Directors on the date of grant. Such options
shall be issued on such terms and conditions as are determined reasonable by
the Board of Directors of the Company.
4.4 Additional Benefits. During the Term of Employment, Executive
shall have the right to participate in any and all employee benefit programs
established and maintained by the Company or HALIS from time to time including,
without limitation, such medical or dental plans as may be established from
time to time by the Company or HALIS. Executive shall be entitled to
participate in any qualified or unqualified stock option, pension, profit
sharing or other employee benefit plan adopted by the Company or its affiliates
hereinafter and covering officers of the Company generally. Throughout the Term
of Employment, Executive shall also be entitled to reimbursement for reasonable
business expenses incurred by him in the performance of his duties hereunder.
In addition, the Company shall provide Executive an automobile allowance.
4.5 Vacation. Executive shall be entitled to four (4) weeks
annual vacation leave, with pay but with no accrual of vacation time from year
to year. Vacation shall be scheduled at reasonable times not in conflict with
Executive's duties hereunder.
5. ILLNESS, INCAPACITY OR DEATH DURING EMPLOYMENT.
(a) If by reason of illness or incapacity, Executive is
unable to perform his services or discharge his duties hereunder for sixty (60)
or more consecutive days or ninety (90) days in the aggregate during any twelve
(12) month period, Executive and the Company agree that Executive shall have
demonstrated an inability to perform an essential function of his job
responsibilities. Accordingly, upon ten (10) days' prior notice, the Company
may, in its sole discretion, either suspend Executive without pay of any kind,
salary or bonus, until Executive is able to perform his services and discharge
his duties hereunder or terminate the employment of Executive, and thereupon,
Executive shall be paid his base salary from the date of termination through the
10-day notice period.
(b) In the event of Executive's death, all obligations
of the Company under this Agreement shall terminate other than the payment of
that portion of the base salary and incentive compensation, if any, earned by
Executive to the date of death.
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6. TERMINATION.
6.1 For Cause. This Agreement may be terminated by the Board of
Directors of the Company immediately and without further obligation than for
monies already paid, for any of the following reasons:
(a) failure of Executive (or any department or unit the
Company under the direct supervision of Executive) to meet any operational or
financial performance target or targets or other criteria established in good
faith from time to time by the Board of Directors of the Company and
communicated in writing to Executive;
(b) inattention to or substandard performance of the
services required of Executive hereunder;
(c) failure of Executive to follow reasonable written
instructions or policies of the Boards of Directors;
(d) gross negligence or willful misconduct of Executive
materially damaging to the business of the Company during the Term of
Employment, or at any time while he was employed by the Company prior to the
Term of Employment as defined herein, if not disclosed to the Company prior to
the commencement of the Term of Employment;
(e) conviction of Executive during the Term of
Employment of a crime involving breach of trust or moral turpitude; or
(f) engaging in any act or activity prohibited under the
terms of this Agreement.
In the event that the Company discharges Executive alleging "cause"
under this Section 6.1 and it is subsequently determined judicially that the
termination was "without cause," then such discharge shall be deemed a
discharge without cause subject to the provisions of Section 6.2 hereof. In the
event that the Company discharges Executive alleging "cause" under this Section
6.1, such notice of discharge shall be accompanied by a written and specific
description of the circumstances alleging such "cause."
6.2 Without Cause. The Company may, upon thirty (30) days'
written notice to Executive, terminate this Agreement without cause at any time
during the Term of Employment. In such event, the Company shall pay Executive,
as liquidated damages in lieu of all other claims, the greater of one year's
annual Base Salary of Executive on the date of termination or an amount equal
to the Base Salary which would otherwise be payable to Executive for the
remaining Term of Employment. Any such payment shall, at the option of the
Company, be made either in equal monthly installments over the lesser of twelve
months or the remaining Term of Employment or in a lump sum cash payment on the
date of termination at a discounted present value of 8% per year.
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6.3 Change in Control. In the event of a "change in control" of
the Company, Executive shall be entitled, for a period of one (1) year from the
date of closing of the transaction effecting such change in control and at his
election, to give written notice to the Company of termination of this
Agreement. For purposes of this Section 6.3, "change in control" of the Company
shall mean:
(i) any transaction, whether by merger, consolidation,
asset sale, tender offer, reverse stock split or otherwise, which
results in the acquisition or beneficial ownership (as such term is
defined under rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended) by any person or entity or any group
of persons or entities acting in concert, of 25% or more of the
outstanding shares of the common stock of the Company;
(ii) the sale of all or substantially all of the assets
of the Company; or
(iii) the liquidation of the Company, other than in
respect to a proceeding under federal bankruptcy or insolvency laws.
6.4 Executive's Obligations Upon Termination. Upon the
termination of his employment hereunder for whatever reason, Executive shall
forthwith tender his resignation from any office he may hold in the Company,
and Executive shall not at any time represent himself still to be connected or
to have any connection with the Company.
6.5 Effect of Termination. The provisions contained in this
Agreement shall survive the termination of this Agreement and the termination
of Executive's employment with the Company to the extent required to give full
effect to the covenants and agreements contained herein.
7. CONFIDENTIALITY.
(a) Subject to Section 7(b) below, Executive agrees
that, both during the term of this Agreement and after the termination of this
Agreement, Executive will hold in a fiduciary capacity for the benefit of the
Company, and shall not directly or indirectly use or disclose, except as
authorized by the Company in connection with the performance of Executive's
duties, any Confidential Information, as defined hereinafter, that Executive
may have or acquire (whether or not developed or compiled by Executive and
whether or not Executive has been authorized to have access to such
Confidential Information) during the term of this Agreement. The term
"Confidential Information" as used in this Agreement shall mean and include any
information, data and know-how relating to the business of the Company or its
affiliates that is disclosed to Executive by the Company or its affiliates or
known by him as a result of his relationship with the Company and not generally
within the public domain (whether constituting a trade secret or not),
including without limitation, the following information:
(i) financial information, such as the Company's or its
affiliates' earnings, assets, debts, prices, fee structure, volumes of
purchases or sales or other
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financial data, whether relating to the Company or its affiliates
generally, or to particular products, services, geographic areas or
time periods;
(ii) supply and service information, such as information
concerning the goods and services utilized or purchased by the Company
or its affiliates, the names or addresses of suppliers, terms of
supply or service contracts, or of particular transactions, or related
information about potential suppliers, to the extent that such
information is not generally known to the public, and to the extent
that the combination of suppliers or use of a particular supplier,
though generally known or available, yields advantages to the Company
or its affiliates the details of which are not generally known;
(iii) marketing information, such as details about ongoing or
proposed marketing programs or agreements by or on behalf of the
Company or its affiliates, marketing forecasts or results of marketing
efforts or information about impending transactions;
(iv) personnel information relating to the Company or its
affiliates, such as employees' personal or medical histories,
compensation or other terms of employment, actual or proposed
promotions, hiring, resignations, disciplinary actions, terminations
or reasons therefor, training methods, performance or other employee
information;
(v) customer information relating to the Company or its
affiliates, such as any compilation of past, existing or prospective
customers, customer proposals or agreements between customers and the
Company or its affiliates, status of customer accounts or credit, or
related information about actual or prospective customers; and
(vi) information with respect to any corporate affairs that the
Company or its affiliates agreed to treat as confidential.
The term "Confidential Information" does not include information that has
become generally available to the public by the act of one who has the right to
disclose such information without violating any right of the Company or the
client to which such information pertains.
(b) The covenants contained in this Section 7 shall survive the
termination of Executive's employment with the Company for any reason for a
period of three (3) years; provided, however, that with respect to those items
of Confidential Information which constitute trade secrets under applicable
law, Executive's obligations of confidentiality and non-disclosure as set forth
in this Section 7 shall continue to survive after said three (3) year period to
the greatest extent permitted by applicable law. These rights of the Company
are in addition to those rights the Company has under the common law or
applicable statutes for the protection of trade secrets.
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8. NON-COMPETITION.
(a) Executive acknowledges that he will perform services
hereunder which directly affect the Company's business presently conducted
within the territory comprised of any area located within the continental
United States (the "Territory"). Accordingly, the parties hereto deem it
necessary to enter into the protective agreement set forth below, the terms and
conditions of which have been negotiated by and between the parties hereto.
(b) Executive agrees with the Company that for so long
as he is employed by the Company hereunder, and for a period of two (2) years
after the termination date of his employment hereunder (provided that the
reason for such termination is for cause, or by reason of Executive's
resignation or termination pursuant to Section 6.3, or because of the
expiration of this Agreement), Executive shall not, without the prior written
consent of the Company, within the geographical limits of the Territory, either
directly or indirectly engage in, or perform managerial or executive services
of the same type performed or to be performed by Executive pursuant to this
Agreement for, any business or organization that engages in the sale or
distribution of health care management and support services of the type offered
or provided by the Company if the Company or its affiliates or successors are
then engaged in the business of the sale or distribution of healthcare
management systems and support services in the Territory; provided, however,
that nothing contained in this Section 8(b) shall prohibit Executive following
the termination of this Agreement from performing sales functions or sales
responsibilities of a non-managerial or non-executive nature for a business or
organization that engages in the sale or distribution of health care management
and support services of the type offered or provided by the Company, so long as
Executive does not thereby breach his obligations under Section 8(c) of this
Agreement.
(c) Executive agrees that he will not take any customer
lists of the Company after leaving his employ and that he will, for so long as
he is employed by the Company hereunder, and for a period of two (2) years
after the termination date of his employment hereunder (provided that the
reason for such termination is for cause, because of voluntary termination by
him or because of the expiration of this Agreement), refrain from soliciting or
attempting to solicit directly or indirectly or by assisting others, any
business from any of the Company's customers, including actively sought
prospective customers, with whom Executive had material contact during the last
24 months of his employment for purposes of providing products or services that
are similar to or competitive with those provided by the Company, namely health
care management and support services of the type offered or provided by the
Company.
(d) Executive agrees with the Company that for so long
as he is employed by the Company hereunder, and for a period of two (2) years
after the termination date of his employment hereunder (provided that the
reason for such termination is for cause, because of voluntary termination by
him or because of the expiration of this Agreement), refrain from recruiting or
hiring, or attempting to recruit or hire, directly or by assisting others, any
employee of the Company who is employed, or was employed at any time during the
previous 12 months, by the Company or any successor or affiliates of the
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Company if the Company or its successor or affiliates is then engaged in the
business of the sale and distribution of health care management and support
services of the type offered or provided by the Company.
(e) The covenants of Executive set forth in this Section
8 are separate and independent covenants for which valuable consideration has
been paid, the receipt, adequacy and sufficiency of which are acknowledged by
Executive, and have also been made by Executive to induce the Company to enter
into this Agreement. The aforesaid covenants may be availed of or relied upon
by the Company in any court of competent jurisdiction, and shall form the basis
of injunctive relief and damages including expenses of litigation (including
but not limited to reasonable attorney's fees) suffered by the Company arising
out of any breach of the aforesaid covenants by Executive. The covenants of
Executive set forth in this Section 8 are cumulative to all other covenants of
Executive in favor of the Company contained in this Agreement and shall survive
the termination of this Agreement for the purposes intended. Should any
covenant, term or condition contained in this Section 8 become or be declared
invalid or unenforceable by a court of competent jurisdiction, then the parties
request that such court judicially modify such unenforceable provision
consistent with the intent of Section 8 so that it shall be enforceable as
modified, and in any event the invalidity of any provision of Section 8 shall
not affect the validity of any other provision in Section 8 or elsewhere in
this Agreement.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto regarding employment of Executive.
10. ASSIGNMENT. Neither of the parties hereto may assign this
Agreement without the prior written consent of the other party hereto.
11. SEVERABILITY. Each section and subsection of this Agreement
constitutes a separate and distinct understanding, covenant and provision
hereof. In the event that any provision of this Agreement shall finally be
determined to be unlawful, such provision shall be deemed to be severed from
this Agreement, but every other provision of this Agreement shall remain in
full force and effect.
12. GOVERNING LAW. This Agreement shall in all respects be
interpreted, construed and governed by and in accordance with the laws of the
State of Georgia.
13. RIGHTS OF THIRD PARTIES. Nothing herein, expressed or
implied, is intended to or shall be construed to confer upon or give to any
person, firm or other entity, other than the parties hereto and their permitted
assigns, any rights or remedies under or by reason of this Agreement.
14. AMENDMENT. This Agreement may not be amended orally but only
by an instrument in writing duly executed by the parties hereto.
15. NOTICES. Any notice or other document or communication
permitted or required to be given to Executive pursuant to the terms hereof
shall be deemed given if
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personally delivered to Executive or sent to him, postage prepaid, by
registered or certified mail, at 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000,
or any such other address as Executive shall have notified the Company in
writing. Any notice or other document or other communication permitted or
required to be given to the Company pursuant to the terms hereof shall be
deemed given if personally delivered or sent to the Company, postage prepaid,
by registered or certified mail, at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000, or at such other address as the Company shall have notified
Executive in writing.
16. WAIVER. The waiver by either party hereto of a breach of any
provision of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach of the same or any other provision of this
Agreement by the breaching party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
HALIS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
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Title: Chief Executive Officer
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EXECUTIVE:
By: /s/ Xxxxxx X. Xxxxxxx, III
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Name: Xxxxxx X. Xxxxxxxx, III
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Title: (SEAL)
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XXXXXX X. XXXXXXXX III
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EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
