Exhibit 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is made by and
between R. Xxxxx Xxxxx ("Employee") and PICIS, INC., a Delaware corporation
("Picis" or the "Company"), on August 17, 2006 (the "Effective Date").
RECITALS
WHEREAS, the Company desires to continue to employ the Employee and the
Employee desires to continue employment with the Company, upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein, the Company and the Employee hereby agree as follows:
1. TERM OF EMPLOYMENT.
The Employee's term of employment starts on the Effective Date of this
Agreement and continues until terminated pursuant to Section 4 below.
2. TITLE AND DUTIES.
The Employee shall hold the position of Chief Financial Officer and
Executive Vice President of Finance and Administration. The Employee will
perform job duties that are usual and customary for this position, and will
perform additional services and duties that the Board of Directors of the
Company (the "Board") or the Chief Executive Officer of the Company (the "CEO")
may from time to time designate. In the discharge of these duties, the Employee
shall at all times report to, and his activities at all times shall be subject
to the direction and control of, the CEO. The Employee's office will be based in
Wakefield, Massachusetts; however, the Employee shall perform his duties from
time to time at other locations designated or required by the CEO. In the course
of his employment, the Employee will do all things necessary or advisable to
comply with the requirements of the Xxxxxxxx-Xxxxx Act and policies and
procedures adopted by the Company in furtherance thereof.
The Employee will devote his full working time and efforts to the business
and affairs of the Company. The Employee shall not, during the term employment,
engage in any other business activity for gain, profit or other pecuniary
advantage. The foregoing notwithstanding, the Employee may engage in religious,
charitable or civic positions which do not interfere with Employee's obligations
hereunder, and which do not compete, directly or indirectly, with the products
or services developed, marketed or sold by the Company.
The Employee warrants and represents that he is not subject to any
employment agreement or understanding which would in any manner impose a legal
or contractual restraint or prohibition upon the performance of the Employee's
duties under this Agreement.
Page 1 of 10
3. COMPENSATION AND BENEFITS.
For all services rendered by the Employee to Picis during the term of this
Agreement, the Company shall pay the Employee as follows:
(A) BASE SALARY. The Company shall pay the Employee a base salary at the
rate of Two Hundred Thirty Thousand Dollars ($230,000) per year, payable in
accordance with the Company's standard payroll practices. The Employee's base
salary shall be reviewed annually and may be adjusted by the Company's Board of
Directors or the Compensation Committee of the Board in its sole discretion;
provided, however, that under no circumstances shall such base salary be reduced
without the Employee's approval.
(B) PERFORMANCE BONUS. The Employee shall be eligible to participate in
all performance bonus plans made available to other executives of equal rank to
Employee. All such bonus payments shall be governed by the terms and conditions
set forth in the applicable annual bonus plan, which will be established at the
sole discretion of the Company. For 2006, Employee shall be eligible to receive
a performance-based bonus of up to $80,000, prorated based on the number of days
that the Employee is employed by the Company during the 2006 calendar year. This
bonus will be based on attainment of pre-established performance goals for 2006
that will be mutually agreed between the Executive and the CEO and will be paid
at the same time that other senior executives of the Company receive their
annual bonuses.
(C) STOCK OPTIONS. The Employee shall be eligible to receive grants of
options to purchase the Company's common stock as determined by the Board of
Directors or the Compensation Committee of the Board in its sole discretion.
(D) VACATION. During the term, the Employee shall be eligible to
participate in the Company's open eligibility vacation policy for senior
executives. Under the open eligibility policy, vacation time does not accrue and
is not carried forward to subsequent years, nor is the Employee entitled to a
payout for unused vacation time at year-end or at the time of termination. The
availability and use of vacation time are subject to the terms and conditions of
the Company's open eligibility policy. All vacations, including the timing and
amount of vacation, must be approved in advance by the CEO.
(E) OTHER BENEFITS. In addition to the compensation and benefits set forth
above, the Employee shall also be eligible during the term to receive such other
fringe benefits and to participate in such other benefit programs as the Company
may from time to time make available to its salaried employees generally,
including but not limited to, the Company's group health, dental, vision and
life insurance, short-term and long-term disability insurance, flexible spending
accounts, and any pension plan which may hereafter be adopted by the Company.
The Employee acknowledges that he shall have no vested rights under such benefit
programs except as expressly provided for by the terms of a specific program and
that such programs may be terminated or modified at any time without obligation
to the Employee.
Page 2 of 10
(F) EXPENSES. The Company will pay or reimburse the Employee for all
normal and reasonable expenses incurred by the Employee in connection with the
Employee's responsibilities to the Company upon submission of proper expense
reports in accordance with the Company's expense reimbursement policy.
4. TERMINATION.
(A) DEATH. The Employee's employment with the Company shall terminate upon
his death.
(B) DISABILITY. The Company may terminate the employment of the Employee
in the event the Employee becomes "Disabled" as defined herein. Due to the
importance of Employee's responsibilities and role within the organization, the
parties agree that the Employee shall be deemed Disabled if he is absent from
work, or is unable to perform the essential functions of the job with or without
reasonable accommodation on a full-time basis, for over ninety (90) consecutive
days or for over ninety (90) cumulative days within any twelve (12) month
period. Employee agrees and acknowledges that the termination of employment
pursuant to this Section 4(B) does not and will not violate the Americans With
Disabilities Act, or any state or local anti-discrimination or leave of absence
statutes.
(C) TERMINATION BY THE COMPANY.
(i) OTHER THAN FOR CAUSE. The Company may terminate Employee's
employment at any time other than for "Cause" (as defined in Section 4(C)(ii)
below) and without notice. If the Employee is terminated by the Company other
than for Cause, the Company shall pay the Employee the severance compensation
set forth in Section 5(C) below.
(ii) FOR CAUSE. The Company may, in its complete and absolute
discretion, terminate the Employee for "Cause" at any time during the term of
this Agreement. A termination shall constitute Cause, as determined in the
discretion of the CEO or the Board of Directors, for one or more of the
following reasons: (i) the Employee violates any provision of the
Non-Competition and Non-Disclosure Agreement referred to in Section 9 hereof;
(ii) the Employee breaches any other provision of this Agreement and fails to
cure such breach within thirty (30) days after written notice from the CEO or
the Board; (iii) uses alcohol in such a manner as to interfere with the
performance of his duties hereunder; (v) uses illegal drugs; (vi) commits a
felony or misdemeanor; (vii) performs his duties and responsibilities in a
demonstrably negligent and/or incompetent manner (other than by reason of
Disability) and fails to cure such negligence and/or incompetence within thirty
(30) days of notice thereof from the CEO or the Board, which notice shall
specify in reasonable detail the manner in which the Employee's performance has
been negligent and/or incompetent; (viii) the Employee is insubordinate; or (ix)
the Employee violates any state or federal securities law.
(D) TERMINATION BY THE EMPLOYEE. The Employee may terminate his employment
with the Company for any reason by providing the Company with thirty (30)
Page 3 of 10
days written notice as provided below in Section 12. Upon the Employee's
termination, all of the Company's obligations hereunder shall immediately cease
and, other than paying Employee his accrued compensation and benefits as of the
date of such termination, the Company shall have no further obligation to the
Employee whatsoever for compensation, benefits, bonus or otherwise (except that
the Employee shall be permitted to exercise the right to seek continuing health
benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, ("COBRA")).
5. COMPENSATION UPON TERMINATION.
If the Employee's employment is terminated pursuant to Section 4 above, the
Company shall have the obligations set forth below:
(A) DEATH OR DISABILITY. If the Employee's employment with the Company
terminates by reason of death or Disability, the Company will pay to the
Employee or the Employee's legal representative or beneficiary (i) in a lump sum
within thirty (30) days after the Employee's death or date of termination all
accrued but unpaid Base Salary and expenses for the period ending with the
Employee's death or termination; (ii) all benefits to which the Employee is
entitled under any benefit plans in accordance with the terms of such plans (all
of the foregoing in Section 5(A)(i)-(ii)hereinafter referred to as the "Accrued
Obligations"); and (iii) no later than the date on which the other senior
executives receive their bonus payments, if any, and after compliance with
Section 6 below, a prorated share of the bonus(es), if any, which the Employee
would have earned hereunder with respect to the calendar quarter or calendar
year in which death or the termination of employment occurs, based on the number
of days that the Employee was employed by the Company.
(B) TERMINATION BY THE COMPANY FOR CAUSE OR TERMINATION BY THE EMPLOYEE.
If the Employee's employment with the Company is terminated by the Company for
Cause, or if the Employee terminates his employment with the Company for any
reason whatsoever, the Company will pay the Employee all Accrued Obligations in
a lump sum amount within thirty (30) days after the termination date.
(C) TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE. If the Company
terminates the Employee's employment other than for Cause, the Company will pay
the Accrued Obligations to the Employee. The Company will also pay the following
severance benefits after the Employee executes a release in compliance with
Section 6 below and the lapse of any statutory revocation period: (i) a prorated
share of the bonus(es), if any, which the Employee would have earned hereunder
with respect to the calendar quarter or calendar year in which the termination
of employment occurs (payable in a manner consistent with the terms of the
applicable bonus plan); (ii) severance pay of twelve (12) months' salary at the
Employee's then current base salary rate payable in accordance with the
Company's payroll practices over the twelve (12) month severance period; and
(iii) payment of the full premium for Employee's continuing single or family
health insurance coverage (whichever was in effect immediately prior to the
termination date) in accordance with COBRA in the same amount as paid for senior
executives of the Company. In order to be eligible for the COBRA payments set
forth in
Page 4 of 10
Section 5(C)(iii), the Employee must elect to continue health insurance
coverage in a timely manner in compliance with the provisions of COBRA. The
Company shall pay the full COBRA premium payments until the EARLIEST of: (i) the
date the severance period expires; (ii) the date the Employee obtains other
employment; or (iii) the date COBRA continuation coverage would terminate in
accordance with the provisions of COBRA.
(D) NO FURTHER RIGHTS. The payments set out in Sections 5(A) through 5(C)
are the only payments the Employee shall be entitled to pursuant to this
Agreement; provided, that such payments will not adversely affect or alter the
Employee's rights under any qualified employee benefit plan of the Company in
which the Employee has a vested interest.
6. RELEASE OF CLAIMS.
Payment of the severance and benefits set forth in Section 5(A)(iii) and
5(C) (the "Severance Benefits"), and payment of the Change In Control benefit
set forth in Section 7, are contingent upon the Employee's (or his personal
representative in the case of death) execution of (i) a comprehensive release
and waiver of all claims against the Company, its predecessors, successors,
assigns and their respective shareholders, directors, officers, employees and
agents and (ii) an agreement not to disparage the Company. Notwithstanding the
foregoing, the Employee shall not be required to release or waive any rights to
accrued or vested benefits under any qualified employee benefits plan or rights
to indemnification for claims brought by third parties as provided under the
Articles of Incorporation or By-Laws of the Company or any insurance policy.
7. CHANGE IN CONTROL.
The Company considers it essential and in its best interests that its
management be encouraged to remain with the Company and to continue to devote
full attention to the Company's business in the event that there is a likelihood
of a change in control of the Company. In this connection, the Company
recognizes that the possibility of a change in control and the uncertainty and
questions which it raises may result in the Employee's departure or in a
distraction to the detriment of the Company. Accordingly, the Company has
determined that appropriate steps should be taken to reinforce and encourage the
Employee's continued attention and dedication to the Employee's assigned duties
without distraction in the face of the potentially disturbing circumstances
arising from the possibility of a change in control of the Company.
In the event of a "Change in Control" of the Company, as defined in the
Company's 2005 Equity Incentive Plan, and subject to the Employee's execution of
a release of claims in compliance with Section 6 above and the lapse of the
statutory revocation period, the following shall apply:
(A) COMPENSATION IN THE EVENT OF A CHANGE IN CONTROL. If the Employee's
employment with the Company or any successor to the Company (hereafter jointly
referred to as the "Company") is terminated by the Company other than for Cause
or by the Employee for "Good Reason," as defined below, six (6) months prior to
or within
Page 5 of 10
twenty-four (24) months after a Change in Control, the Employee shall be
entitled to the following:
(i) payment of all Accrued Obligations in a lump sum within ten
(10) days after the date of termination;
(ii) payment of the severance benefits set forth in Section
5(C)(i)-(iii), except that the bonus for the applicable period shall not be
prorated;
(iii) all options to acquire shares of common stock of the Company
shall become fully and immediately exercisable; and
(iv) all deferred stock granted to such Employee shall become fully
and immediately vested if such vesting has not already been provided for by the
terms of the Deferred Stock Award Agreement for such deferred stock.
(B) DEFINITION OF "GOOD REASON". For purposes of this Section, "Good
Reason" means the occurrence of one or more of the following six (6) months
before or twenty-four (24) months after a Change in Control: (i) a material
diminution in the Employee's duties, responsibilities or compensation with the
Company; (ii) a change in the Employee's position within the Company which
constitutes a demotion; (iii) a change in the principal workplace of the
Employee to a location outside of a 00-xxxx xxxxxx xxxx Xxxxxxxxx,
Xxxxxxxxxxxxx; or (iv) a material breach by the Company of any of its
obligations to the Employee under this Agreement. The Employee's continued
employment or failure to give notice of an event constituting Good Reason shall
not constitute consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder. Any good faith determination
of Good Reason made by the Employee shall be conclusive.
8. ADDITIONAL PROVISIONS RELATING TO PAYMENT OF SEVERANCE.
(A) Payments to be made to the Employee under the Agreement will be
treated as ordinary income and will be reduced by any applicable income,
employment or excise taxes which are required to be withheld under applicable
law, and all amounts are stated before any such deduction. The obligations of
the Company to pay severance or Change in Control payments to Employee is
contingent upon the Employee's resignation (in a form and substance satisfactory
to the Company) from any and all Board seats and any other office held with the
Company or with the Company's subsidiaries or affiliates.
(B) Notwithstanding anything herein to the contrary, if at the time of the
Employee's termination of employment with the Company, the Employee is a
"specified employee" within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended (the "Code") and the regulations promulgated
thereunder, and the Company notifies the Employee that, based on the advice of
counsel, the deferral of the commencement of any severance benefits set forth in
Section 5(C)(i)-(ii) is necessary in order to comply with Section 409A of the
Code, then the Company shall defer the commencement of the severance benefits
(without any reduction) by a period of at least
Page 6 of 10
six months after the Employee's termination of employment and any payments so
deferred shall earn interest calculated at the prime rate of interest reported
by THE WALL STREET JOURNAL as of the date of termination. Any severance benefits
that would have been paid during such six-month period but for the provisions of
the preceding sentence shall be paid in a lump sum to the Employee six (6)
months and one (1) day after the Employee's termination of employment. The
provisions of this Section 8(B) shall apply only to the extent required to avoid
the Employee's incurrence of any accelerated or additional tax under Section
409A of the Code.
(C) If (i) the severance benefits payable under this Agreement together
with any payment or benefit received or to be received by the Employee pursuant
to any other plan, arrangement or agreement (collectively, the "Total Payments")
would constitute (in whole or in part) an "excess parachute payment" within the
meaning of Section 280G(b) of the Code and the regulations promulgated
thereunder, and (ii) the Employee would retain more of the Total Payment (after
payment of all applicable tax liability imposed on the Total Payments) in the
event that the Cap (as defined below) is imposed, then the amount of the Total
Payments shall be reduced until the aggregate "present value" (as that term is
defined in Section 280G(d)(4) of the Code and the regulations promulgated
thereunder) of the Total Payments is such that no part of the Total Payments
constitutes an "excess parachute payment" within the meaning of Section 280G(b)
of the Code and the regulations promulgated thereunder (the "Cap").
9. INSURANCE AND INDEMNIFICATION.
The Company shall maintain directors and officers liability insurance
during the term of this Agreement in an amount not less than the liability limit
in effect on the date of this Agreement. The Company shall indemnify the
Employee for actions taken in the Employee's capacity as an officer of the
Company to the fullest extent permitted by applicable law.
10. CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION.
The Employee agrees that [he will execute the Company's Non-Competition and
Non-Disclosure Agreement in conjunction with the execution of this Agreement.
Failure to execute the Non-Competition and Non-Disclosure Agreement shall
constitute a material breach of this Agreement.
11. PARTIES BENEFITED; ASSIGNMENTS.
This Agreement shall be binding up on the Employee, his heirs and personal
representative or representatives. Employee acknowledges that he may not assign
any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Company under this Agreement shall
inure to the benefit of, and shall be binding upon, the successors and assigns
of the Company.
Page 7 of 10
12. NOTICES.
Any notice provided for in this Agreement shall be in writing and shall be
given by registered or certified mail, return receipt requested, postage
prepaid, addressed to the address of the respective parties stated below or to
such changed address as such parties may have fixed by notice and shall be
deemed to have been given when mailed:
(a) To the Company: 000 Xxxxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxxx
(fax) 000-000-0000
With a copy to: "General Counsel" at same address
(b) To the Employee: R. Xxxxx Xxxxx
0000 Xxxxxxx Xxxxx, XX
Xxxxxxxxxx Xxxxxx, XX 00000
13. GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the
substantive and procedural laws of the Commonwealth of Massachusetts without
regard to the rules of conflicts of laws or any rules or principles that would
result in the application of any law other than the internal laws of the
Commonwealth of Massachusetts.
14. MISCELLANEOUS.
This Agreement together with Exhibit A contains the entire agreement of the
parties relating to the subject matter hereof. This Agreement supersedes any
prior written or oral agreements or understandings between the parties relating
to the subject matter hereof. No modification or amendment of this Agreement
shall be valid unless in writing and signed by or on behalf of the parties
hereto. A waiver of the breach of any term or condition of this Agreement shall
not be deemed to constitute a waiver of any subsequent breach of the same or any
other term or condition. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be held invalid or unenforceable, such invalidity and
unenforceability shall not affect the remaining provisions hereof or the
application of such provisions to other persons or circumstances, all of which
shall be enforced to the greatest extent permitted by law. Any amounts payable
under this Agreement to the Employee after the death of the Employee shall be
paid to the Employee's estate or legal representative. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.
Page 8 of 10
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of August 17, 2006.
PICIS, INC.
By: XXxx X. Xxxxxxx
----------------------------------
Signature: /s/ Xxxx X. Xxxxxxx
---------------------------
EMPLOYEE
/s/ R. Xxxxx Xxxxx
------------------------------
R. Xxxxx Xxxxx
Page 9 of 10
EXHIBIT A
The following benefits provided to Employee under previous agreements shall be
continued under this Agreement:
1. EDUCATION EXPENSE. The Company will reimburse the Employee for 75% of the
tuition related to the completion of a Masters of Business Administration
provided that the Employee can transfer existing course credit to the new
enrollment. If the employee, for whatever reason or with or without Cause leaves
or terminates employment with Picis, the Employee will reimburse Picis for such
expenses on the following basis: 100% of reimbursed tuition fees if employment
terminations within one year after reimbursement occurs and from thereon this
amount will be reduced by 25% for each ensuing three month period.
2. ALTERNATIVE LOCATION OF WORK - TRAVEL EXPENSES. To the extent agreed to by
the Chief Executive Officer of the Company, Employee may render his services to
the Company from Seattle, Washington for so long as the Employee remains
relocated there. For so long as the Employee remains relocated in Seattle,
Washington, Employee will be reimbursed for reasonable travel and temporary
living expenses incurred in Boston, Massachusetts, in accordance with Company
policy.
Page 10 of 10
