EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of this 3rd day of September,
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 Xxxx ("Executive").
RECITALS
WHEREAS, the Company desires to employ Executive as its Executive Vice
President responsible for Sales and Marketing;
WHEREAS, Executive desires to be employed by Company in the aforesaid
capacity;
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 Executive Vice President, Sales and Marketing of the
Company, pursuant to the terms of this Agreement. Executive shall report
directly to the Chief Executive Officer. Executive shall have the duties and
responsibilities of Sales and Marketing, and such other duties and
responsibilities not inconsistent with the performance of his duties as
Executive Vice President, Sales and Marketing as are reasonably assigned.
During the term of this Agreement, Executive shall carry out his
responsibilities hereunder to the best of his ability on a full-time basis.
II. Effective Date and Term
The initial term of Executive's employment by the Company under this
Agreement shall commence as of September 2, 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
September 2, 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 $215,000 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 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.
C. Performance Bonus
Executive shall be entitled to a cash bonus ("Performance Bonus") (i)
of $25,000 for the 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 Chief Executive Officer in consultation with 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.
2
D. Stock Options
The Company shall, effective September 2, 1997, grant Executive stock
options to purchase an aggregate number of the Company's Common Shares .01
par value, as equals 1.85% 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 percent 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.
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
Company 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
3
(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 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
4
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 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
5
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 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? Continues?
--------- ------- ------ ----- ----------
(A) Death or Disability Yes Prorated Bonus No No on death
Yes on
disability
(B) Company terminates Yes No Bonus No Yes
for cause
(C) Company terminates Yes Full Bonus Yes Yes
no cause
(D) Executive terminates Yes Full Bonus Yes Yes
for good reason
(E) Executive terminates Yes No Bonus No Yes
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 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
6
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 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.
7
VI. 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.
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: Chief Executive Officer
with a copy to: Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X Xxxxxxxxx
8
to Executive: Xxxxx Xxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to: ____________________________
____________________________
____________________________
Attention:__________________
G. Assignment of Agreement
This Agreement shall inure to the benefit of Executive and the
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.
H. 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/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
--------------------------
Title: CEO
-------------------------
/s/ ???????????????????
-------------------------------
[Name of Executive]
9
