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EXHIBIT 10.36
September 10, 1996
Xx. Xxxxx X. Xxxxxxx
000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Re: Employment Agreement
Dear Xxx:
This letter is our agreement employing you as President and Chief Operating
Officer of IMNET Systems, Inc. (the "Company"), subject to the following terms
and conditions:
1. EFFECTIVE DATE. The effective date of this Agreement shall be
September 10, 1996. It is understood that you will join IMNET on a full-time
basis on or before September 20, 1996.
2. INITIAL TITLE AND DUTIES. Your initial title will be President and
Chief Operating Officer, and you will report directly to Xxxxxxx X. Xxxxxx, who
is the Chairman of the Board and Chief Executive Officer of the Company. As
such, you will be responsible for much of the day to day operations of the
Company, subject to Xx. Xxxxxx'x direction and oversight, and you will perform
such services not inconsistent with your position as are assigned to you from
time-to-time by Xx. Xxxxxx or the Board of Directors. You will be expected to
devote your best efforts, experience, ability, talent and entire time in normal
business hours, energy and attention to the business of the Company and the
performance of your duties.
3. COMPENSATION: TERM. You will receive an annual base salary of $250,000
(the "Base Salary") paid in accordance with standard Company payroll procedures,
with annual increases determined in accordance with Exhibit A hereto. The Base
Salary payable hereunder, as may be adjusted from time to time, shall be subject
to applicable withholding and payroll taxes, and such other deductions as may be
required under the Company's employee benefit plans. The term of your employment
under this Agreement will begin on the Effective Date and shall continue until
terminated in accordance with Paragraph 8 below. Your Base Salary will begin to
accrue on September 20, 1996.
4. BONUSES. Upon reporting for your duties on September 20, 1996, you
will become eligible for a signing bonus of $100,000 to be paid in equal monthly
installments over a twelve month period commencing October 31, 1996 in
accordance with the Company's standard payroll procedure, so long as you are
employed by the Company during that period. In addition, you will be eligible to
earn an additional bonus of up to $100,000 per year based upon attainment of
specific milestones to be agreed upon by you, Xxxxxxx X. Xxxxxx and the
Compensation Advisory Committee. Payment of this additional bonus is conditional
upon your employment by IMNET at the end of FY 1997, and will be prorated for
fiscal 1997.
5. SHARE OPTION. You have been issued options to acquire up to 400,000
shares of the
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Company's common stock. You agree that, absent a change in control of the
Company which causes your options to accelerate (a "Change in Control"), for a
period of five (5) years from the date of this agreement, you will not, by the
exercise of the options granted to you under your option agreement of September
10, 1996, cause IMNET to lose valuable tax deductions due to the applicability
of Section 162(m) of the Internal Revenue Code of 1986, as amended.
During such five-year period, you also agree that in the event of a Change in
Control, you will cooperate with reasonable requests of the acquiring company to
avoid the loss of valuable tax deductions due to the applicability of said
Section 162(m) to your exercise of options. This latter obligation to cooperate
does not require you to absorb unreasonable financial risk or to take other
actions disadvantageous to you.
If you are required to pay an excise tax pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended, with respect to compensation, if any,
provided by the Company under your option agreement of September 10, 1996 for
400,000 shares, then the Company will pay you an amount equal to such excise tax
which payment may in the discretion of the Board of Directors of the Company (or
its successor) be made in shares of the Company's Stock (or its successor) or
cash. To the extent you are paid in such shares, they shall be valued as of the
date of the consummation of the transaction which led to the imposition of the
excise tax (the "Valuation Date"). Furthermore, the Company's obligation to make
payments pursuant to this provision shall not exceed an amount equal to the
value of 50,000 shares of the Company's outstanding Common Stock (as adjusted
for stock splits, stock dividends, recapitalizations, and similar transactions)
at the Valuation Date.
6. EMPLOYEE BENEFITS. You will participate in all employee welfare
benefit plans of the Company applicable to senior level executives. In addition,
you shall be entitled to four (4) weeks' paid vacation per year.
7. LOAN. You are entitled to borrow up to $350,000 from the Company to
cover federal and state income taxes incurred by you in connection with your
exercise of options to acquire common stock of HBO & Company, your prior
employer. These funds will be advanced upon your certification, in writing, as
to the taxes you are or have been required to pay, and the amount thereof. The
terms of the loan and related security agreement shall be as set forth in the
promissory note and stock pledge and security agreement in the forms attached
hereto as Exhibits B and C, respectively.
8. TERMINATION AND SEVERANCE.
(a) During the term of employment hereunder, your employment may be
terminated as follows:
(i) At any time upon three (3) months' written notice by
either you or the Company. The date set forth in the notice shall be hereinafter
defined as the Termination Date.
(ii) Automatically in the event of your death.
(iii) Immediately upon written notice if such termination
is for Cause (as defined below in subparagraph 8(d)); or
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(iv) At any time by mutual written agreement of you and
the Company.
(v) Immediately, if the Company is in default hereunder and
fails to cure any such default within thirty (30) days after you send written
notice of such default to the Company.
(b) Upon termination of your employment hereunder for any reason,
all obligations of the Company hereunder shall cease upon such termination,
except its obligations to (i) pay the compensation set forth in paragraph 3
hereof through the date of such termination, (ii) provide the benefits set forth
in paragraph 6 hereof through the date of such termination and any unpaid bonus
earned under paragraph 4 and to comply with all state and federal laws and
regulations applying to such benefits and (iii) pay the severance benefits, if
applicable, to you pursuant to the terms and conditions set forth in
subparagraph 8(c) below.
(c) In the event that your employment is terminated by the Company
for any reason other than Cause (as such term is defined below in subparagraph
8(d)), you will receive, commencing on the Termination Date, twelve (12) months'
severance pay at the monthly rate of your then current Base Salary (paid on a
bi-weekly basis over the twelve (12) month period in accordance with the
Company's standard payroll procedure). Notwithstanding the foregoing, the
obligations of the Company with respect to severance shall expire on the date
that you commence full-time employment with a subsequent employer, if such
commencement date occurs within twelve (12) months of the Termination Date. The
Company shall continue to be responsible for all severance pay obligations
accrued through the date such full-time employment commences. You agree to
notify the Company immediately upon your acceptance of an offer of full-time
employment, specifying the name of the business and your expected start date.
(d) For purposes hereof, the term "Cause" means the following: (i)
any defalcation or misappropriation of funds or property of the Company or any
affiliate by you or the commission of any dishonest or deceitful act in the
course of your employment with the Company; (ii) your conviction of a felony or
of any crime involving moral turpitude; (iii) the engaging by you in illegal
conduct which, in the reasonable judgment of the Company, places you and the
Company or any affiliate, by association with you, in disrepute; (iv) refusal to
perform your duties and responsibilities hereunder due to persistent neglect of
duty or chronic absenteeism; (v) any material breach by you of the terms and
conditions hereof, including, without limitation, those certain provisions
pertaining to inventions, confidentiality, noncompetition and related matters
set forth in paragraphs 9 through 16 hereof; or (vi) any attempt to obtain a
personal profit from any transaction in which you have an interest adverse to
the Company unless such adverse interest and the potential profit is disclosed
in writing to the Board of Directors in advance of the transaction. Any
disagreement concerning whether there has been "Cause" for termination will be
resolved by the Board of Directors in its sole discretion acting in good faith.
Notwithstanding the foregoing, in the event of a determination by the Company of
Cause pursuant to subparagraphs d(i), d(v) or d(vi) above, you will have a cure
period of five (5) days after you receive notice thereof from the Company. If
you fail to cure such default within the cure period, then the Company may
terminate you for Cause as set out above.
(e) You specifically agree not to voluntarily leave the employ of
the Company (your death or disability being "involuntary") for at least two
years from September 20, 1996. If you should leave in violation of this
agreement, you acknowledge and agree that the Company xxxx
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certainly suffer immediate damages. You agree to promptly reimburse the Company
for such actual damages up to $1.5 million, and you agree that the Company may
bring suit for monetary reimbursement only as to such damages.
(f) The provisions in Paragraphs 9 through 16 shall survive the
termination of the Agreement.
9. INVENTIONS. You shall treat as for the sole benefit of the Company and
promptly disclose and assign to the Company without additional compensation all
ideas, discoveries, inventions and improvements, patentable or not, which, while
you are so retained under this Agreement are made, conceived or reduced to
practice by you, alone or with others during or after usual work hours, either
on or off the job, and which are related to the products, processes, projects or
the business interests of the Company or which involve the use of the time,
material or facilities of the Company. You agree, at the expense of the Company,
at any time during or within a reasonable time after the termination of this
employment relationship, to sign all papers and do such other acts and things
you deem necessary or desirable and which may be reasonably required to protect
the rights of the Company to such ideas, discoveries, inventions and
improvements in any and all countries.
10. DEFINITIONS. For purpose of Paragraphs 11 through 16 hereof, the
following defined terms shall be applicable:
(a) "Business of the Company" as used herein means the design,
manufacture, sale, distribution, marketing and servicing of electronic
information and document management systems and related products and services
produced or promoted by the Company.
(b) "Confidential Information" as used herein means any and all
confidential information of the Company which is not generally known to or by
businesses which compete with the Company with respect to the Business of the
Company and which does not constitute a "Trade Secret" (as defined in
subparagraph (d) below). It includes, without limitation, information relating
to accounting, marketing, all information of the foregoing type relating to any
client or account of the Company, client account records, training and
operations material and memoranda, personnel, records, pricing information, and
any other information related to the Business of the Company and treated by the
Company as being confidential, including items labeled "Confidential," all of
which are hereby agreed to be the property of and confidential to the Company
hereafter. "Confidential Information" does not include any information which,
after the date hereof, becomes part of the public domain through no fault of
yours.
(c) "Territory" as used herein means the United States, Canada,
Mexico, Europe and Japan.
(d) "Trade Secret" as used herein means information including, but
not limited to, technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list of actual or potential
customers or suppliers which:
(i) derives economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic
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value from its disclosure or use; and
(ii) is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.
11. CONFIDENTIAL INFORMATION. You covenant and agree that you will treat
as confidential and will not use (other than in the performance of your
designated duties for the Company), or disclose any Confidential Information
either during the term of your employment by the Company or for a period of two
years thereafter.
12. TRADE SECRETS. You covenant and agree that you will treat as
confidential and will not use (other than in the performance of your designated
duties for the Company) or disclose any Trade Secrets either during or after the
term of your employment by the Company.
13. RECORDS. All records, notes, files, memoranda, reports, price lists,
client lists, catalogues, prospect lists, drawings, plans, sketches, documents,
equipment, apparatus, physical manifestations of programs and like items, and
all copies thereof, relating to the Business of the Company, Confidential
Information or Trade Secrets, which were prepared by you or which have been
disclosed to or which have come into your possession, shall be and remain the
sole and exclusive property of the Company. You agree that upon the termination
of your employment by the Company, or at any other time upon reasonable request
from the Company, you will promptly (and in the event of your termination of
employment, no later than ten (10) days after such termination) deliver to the
Company the originals and all copies of any of the foregoing that are in your
possession, custody or control, and any other property belonging to the Company.
14. AGREEMENT NOT TO COMPETE. You covenant and agree that during your
employment by the Company and for a period of one year thereafter, you will not,
without the prior written consent of the Company, within the Territory for
yourself or as an officer, director, shareholder, owner, partner, joint
venturer, employee, promoter, consultant, manager, independent contractor, agent
or in some similar capacity, compete with the Business of the Company by
engaging in any business in which you provide services which are the same or
substantially similar to your duties and responsibilities as herein described;
provided, however, that the foregoing covenant shall not be deemed to prohibit
you from acquiring as an investment not more than 2% of the capital stock of a
business that competes with the Business of the Company whose stock is traded on
a national securities exchange or over-the-counter.
15. AGREEMENT NOT TO SOLICIT CUSTOMERS. You covenant and agree that
during the term of your employment by the Company and for a period of one year
thereafter, you will not, either on your own behalf or in the service or on
behalf of others, solicit or attempt to solicit, divert or appropriate away from
the Company, with a view to the sale or providing of any product or service
competitive or potentially competitive with the Company's products or services,
any persons and/or entities located within the Territory who are customers of
the Company with whom you had contact within the last year of your employment.
16. AGREEMENT NOT TO SOLICIT EMPLOYEES. You covenant and agree that
during the term of your employment by the Company and for a period of one year
thereafter, you will not either on your own behalf or in the service or on
behalf of others, solicit or attempt to solicit, divert or hire away to any
business competing with the Business of the Company, within the Territory, any
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person currently employed by the Company, or hired by the Company during the
term of this Agreement, for the purpose of such employee providing services
similar to those provided by such employee to the Company.
17. REMEDIES. You acknowledge and agree that, by virtue of the duties and
responsibilities attendant to your employment by the Company and the special
knowledge of the Company's affairs, business, clients, sales techniques and
operations that you will have as a consequence of such employment, irreparable
loss and damage will be suffered by the Company if you should breach or violate
any of the covenants and agreements contained in Paragraphs 9 through 16; and
you further acknowledge and agree that each of such covenants is reasonably
necessary to protect and preserve the Business of the Company so that the
Company will receive the benefits of its bargain with you. You, therefore, agree
and consent that the remedy at law for any breach of any of your obligations
hereunder would be inadequate, and, therefore, you further agree and consent
that, in addition to any other available remedy, temporary and permanent
injunctive relief may be granted in any proceeding which may be brought to
enforce any provision of this Agreement without the necessity of proof that any
other remedy at law is adequate. You further acknowledge and agree that the
provisions of the Georgia Trade Secrets Act shall apply to any breach by you of
the covenant set forth in Paragraph 12 hereof. During the period of your
employment by the Company and for a period of one year thereafter, you shall
notify the Company prior to engaging in any business or professional activity
involving or in any way relating to the Business of the Company within the
Territory which notice shall describe the proposed activity with reasonable
specificity.
18. ACKNOWLEDGMENT. You acknowledge the restrictions contained in
Sections 9 through 16 hereof may limit your ability to earn a livelihood in a
competing business. By signing below to acknowledge your acceptance of the terms
and conditions of this Agreement, you acknowledge that you believe you will
receive sufficient consideration and other benefits as an employee of the
Company and as otherwise provided hereunder to clearly justify such restrictions
which, in any event (given your education, skills and ability and the limited
scope of the prohibited business activity in Sections 9 through 16) you do not
believe would prevent you from earning a living. By signing below, you
acknowledge that the unique nature of the Business of the Company and the fact
that significant sales have occurred and are under negotiation in the
geographical areas specified in Section 10(c) clearly justify the scope of the
restriction in Section 14.
19. BINDING EFFECT. Upon the Effective Date, the terms hereof shall be
binding upon and shall inure to the benefit of you and the Company, the
successors and assigns of the Company, and the heirs, executors, administrators,
legal representatives and assigns of you, provided that your rights and
obligations hereunder may not be delegated or assigned.
20. ENTIRE AGREEMENT. Upon the Effective Date, this Agreement shall
supersede any former oral agreement and any formal written agreement heretofore
executed relating generally to your employment with the Company, and this
Agreement can only be amended by an agreement in writing signed by you and the
Company.
21. APPLICABLE LAW: SEVERABILITY. This Agreement shall be construed and
enforced under the laws of the State of Georgia without giving effect to the
principles of conflicts of laws thereof. If any provision of this Agreement is
held invalid or unenforceable by operation of law or otherwise, such
circumstances shall not have the effect of rendering any of the other provisions
of
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this Agreement invalid or unenforceable.
22. NOTICES. Any notice of other communication required or permitted to
be given hereunder shall be in writing and shall be deemed duly given or served
when delivered personally to the party intended, or sent by registered or
certified mail, postage prepaid, effective as of the date received, addressed to
the Company at its principal office and to you at your address then appearing on
the books of the Company.
23. ATTORNEY'S FEES. In case any one or more of the covenants and
agreements set forth in this Agreement shall be breached by any party hereto,
the non-breaching party may proceed to enforce its rights by arbitration or by
suit in equity and/or by action at law, including but not limited to, an action
for damages or specific performance. In such event, the prevailing party shall
be entitled to also receive reasonable attorney's fees and other expenses
incurred in enforcing its rights hereunder.
This Agreement supersedes our letter agreement of August 14, 1996, and the
Addendum thereto. By signing below, the Company agrees to all of the
terms and conditions of this Agreement. Please indicate your acceptance of
these terms and conditions by signing each enclosed copy of this letter where
indicated below, and return an originally executed copy of the letter to me.
Sincerely,
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx
President and
Chief Executive Officer
ACCEPTED AND AGREED
as of the 10th day of September
1996.
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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EXHIBIT "A"
The amount of Base Salary shall increase each January 1 by the amount, if any,
calculated as of January 1, in each year commencing with January 1, 1997, equal
to $250,000 multiplied by the Annual Increase (as defined below). The "Annual
Increase" shall not be a negative number and shall mean (i) the Consumer Price
Index (as defined below) for the month of December of the year preceding the
year in which the Annual Increase is to be determined, less (ii) the Consumer
Price Index for the month next following the month during which the Effective
Date falls (the "Base CPI"), divided by (iii) the Base CPI. For purposes hereof,
the "Consumer Price Index" shall mean the All-Items portion of the Consumer
Price Index for All Urban Consumers (CPI-U) published by the Bureau of Labor
Statistics of the United States Department of Labor.
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