SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.1
SECOND
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (hereinafter this “Agreement”) is made effective as of
August 2, 2007 (the “Effective Date”), between Mediware Information Systems,
Inc., (hereinafter the “Company”) and Xxxx Xxxxxxxx (hereinafter the
“Executive”).
WHEREAS,
the Executive is a current employee of the Company, and now the Company desires
to employ the Executive as the Senior Vice President and Chief Operating Officer
of the Company, or in such other capacity as the parties may agree, and the
Executive desires to be so employed by the Company, on the terms and conditions
hereinafter set forth;
NOW,
THEREFORE, in consideration of the foregoing and of the respective covenants
and
agreements herein set forth, the Company and the Executive hereby agree as
follows:
1.
Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve as the Senior Vice President and Chief
Operating Officer, or in such other capacity as the parties may mutually agree.
The Executive agrees to perform such services customary to such office as shall
from time to time be assigned to him by the Chief Executive Officer or his
designee. The Executive further agrees to use his best efforts to promote the
interests of the Company and to devote his full energies to the business and
affairs of the Company.
2.
Term of Employment. The employment hereunder shall be for a term of
thirty-six months commencing on the Effective Date hereof and ending thirty-six
months after the Effective Date hereof (the “Expiration Date”), unless
terminated earlier pursuant to Paragraph 4 of this Agreement (the “Term of
Employment”). This Agreement shall automatically renew for successive terms of
one (1) year (each a “Renewal Term”) commencing on the first day immediately
following the Expiration Date, unless such renewal is objected to by either
the
Company or the Executive by giving at least 90 days prior written notice prior
to the scheduled Expiration Date. In the event of such renewal, the last day
of
each successive Renewal Term shall be deemed the Expiration Date.
3.
Compensation and Other Related Matters.
(a)
Salary. As compensation for services rendered hereunder, the Executive
shall receive an annual base salary of two hundred twenty-five thousand dollars
($225,000), which salary shall be paid in accordance with the Company’s then
prevailing payroll practices for its executives and shall be subject to review
annually by the Chief Executive Officer and the Compensation Committee of the
Board of Directors, which may include annual increases (the “Annual Base
Salary”).
(b)
Bonus. During the term of this Agreement the Executive shall be eligible
to receive an annual bonus of up to fifty percent (50%) of Executive’s Annual
Base Salary for achieving objectives established by the Company, subject to
the
discretion of the Chief Executive Officer and the Compensation Committee of
the
Board of Directors (the “Annual Bonus”). The bonus, if any, would be
payable after the conclusion of the annual audit.
(c) Equity
Compensation.
Performance
Shares. The Executive is hereby granted forty-five thousand
(45,000) restricted shares of the Company’s common stock (the
“Performance Shares”) subject to the terms of the 2003 Equity Incentive Plan,
any applicable restricted stock agreement and the vesting requirements set
forth
on Attachment A.
Options. The
Executive is hereby granted thirty thousand (30,000) non-qualified stock options
to purchase the Company’s common stock (the “Stock Options”). Ten
thousand (10,000) Stock Options, subject to the terms of the 2003 Equity
Incentive Plan and any applicable stock option agreement, shall vest on each
of
the first, second, and third anniversary of the date of grant as provided on
Attachment A.
(d)
Other Benefits. The fringe benefits, perquisites and other benefits of
employment, including four (4) weeks vacation each year, to be provided to
the
Executive shall be equivalent to such benefits and perquisites as are provided
to other senior executives of the Company as amended from time to
time.
(e)
Reimbursement. Subject to policies established from time to time by the
Company, the Company shall reimburse Executive
for the reasonable expenses incurred by him in connection with the performance
of his duties hereunder, including but not limited to, travel expenses and
entertainment expenses, for which the Executive shall account to the Company
in
a manner sufficient to conform to Company policy and Internal Revenue Service
requirements. If the Company requires Executive to relocate, the
Company will pay Executive’s reasonable moving expenses.
4.
Termination.
(a)
Disability. If, as a result of the incapacity of the Executive due to
physical or mental illness, the Executive is unable to perform substantially
and
continuously the duties assigned to him hereunder for a period of three (3)
consecutive months or for a non-consecutive period of nine (9) months during
the
Term of Employment, the Company may terminate his employment for “Disability”
upon thirty (30) days prior written notice to the Executive.
(b)
Death. The Executive’s employment shall terminate immediately upon the
death of the Executive.
(c)
Cause. The Company shall be entitled to terminate the Executive’s
employment for “Cause.” Termination by the Company of the employment of the
Executive for “Cause” shall mean termination based upon (i) the willful failure
by the Executive to follow directions communicated to him by the Chief Executive
Officer or his designee; (ii) the willful engaging by the Executive in conduct
which is materially injurious to the Company, monetarily or otherwise; (iii)
a
conviction of, a plea of nolo contendere, a guilty plea or confession
by the Executive to an act of fraud, misappropriation or embezzlement or to
a
felony; (iv) the Executive’s habitual drunkenness or use of illegal substances;
(v) a material breach by the Executive of this Agreement; or (vi) an act of
gross neglect or gross misconduct which the Company deems in good faith to
be
good and sufficient cause. Executive hereby represents and warrants
that he has never been convicted of an act of fraud, misappropriation,
embezzlement or a felony, and Executive further warrants that during the term
of
this Agreement, he will give the Company immediate notice of any charge against
the Executive relating to any of the foregoing.
(d)
Termination Without Cause. The Executive shall have the right to
terminate the Executive’s employment without cause at any time upon three months
written notice. The Company shall have the right to terminate the
Executive’s employment without cause at any time upon written
notice. The giving of notice by either party pursuant to Section 2 to
prevent the renewal of this Agreement shall not be deemed a termination of
Executive’s employment without cause.
5.
Compensation Upon Termination or During Disability.
(a)
Disability. During any period that the Executive fails to perform his
full-time duties with the Company for a three-month period as a result of
incapacity due to physical or mental illness (the “Disability Period”), the
Executive shall continue to receive his Annual Base Salary at the rate set
forth
in Paragraph 3(a) of this Agreement, less any compensation payable to the
Executive under the applicable disability insurance plan of the Company during
the Disability Period, until this Agreement is terminated pursuant to Paragraph
4(a) hereof. Thereafter, or in the event the Executive’s employment shall be
terminated by reason of his death, the Executive’s benefits shall be determined
under the Company’s insurance and other compensation programs then in effect in
accordance with the terms of such programs and the Company shall have no further
obligation to the Executive under this Agreement.
(b)
Death. In the event of the Executive’s death, the Executive’s beneficiary
shall be entitled to receive the Executive’s Annual Base Salary at the rate set
forth in Paragraph 3(a) of this Agreement until the date of his death.
Thereafter, the Company shall have no further obligation to the Executive or
the
Executive’s beneficiary under this Agreement.
(c)
Cause. If the Executive’s employment shall be terminated by the Company
for “Cause” as defined in Paragraph 4(c) of this Agreement, the Company shall
continue to pay the Executive his Annual Base Salary at the rate set forth
in
Paragraph 3(a) of this Agreement through the date of termination of the
Executive’s employment. Thereafter, the Company shall have no further obligation
to the Executive under this Agreement.
(d)
Termination Without Cause. If the Executive terminates his employment
pursuant to Paragraph 4(d), the Executive shall be entitled to receive
Executive’s Annual Base Salary at the rate set forth in Paragraph 3(a) of this
Agreement until the date Executive’s employment ends. Thereafter the
Company shall have no obligation to Executive. If the Company
voluntarily terminates the Executive’s employment with the Company pursuant to
Paragraph 4(d) of this Agreement, the Company shall until the earlier of the
six
month anniversary of the termination of employment or the commencement of
Executive’s employment at a successor employer, pay the Executive an amount
equal to six months of the Executive’s Annual Salary at the highest rate in
effect during the period of the Executive’s employment, payable in six equal
monthly installments. Additionally, until the earlier of the six month
anniversary of the termination of employment, or the commencement of the
provision of health benefits to the Executive by a successor employer, the
Employer will pay for all COBRA health premiums to ensure that Executive
continues to receive the same coverage of health insurance as immediately before
the date of the termination. Thereafter, the Executive acknowledges that the
Company shall have no further obligation to the Executive under this
Agreement. Notwithstanding the foregoing, the Company shall only be
obligated to make the payments set forth in this section after the Executive
delivers to the Company an executed Release and Severance Agreement, which
shall
be substantially in the form of Employer’s standard Release and Severance
Agreement for all employees, with such changes therein or additions thereto
as
needed under then applicable law to give effect to its intent and
purpose. After the Executive is no longer receiving benefits from the
Company, the Executive shall be eligible for COBRA at Executive’s own expense in
accordance with applicable law.
(e)
Acquisition or Sale ofCompany. If a third party described in
Paragraph 5(f) of this Agreement terminates the Executive due to “an acquisition
or sale of the Company,” as described in Paragraph 5(f) below, the Company shall
pay the Executive an amount equal to three months of Executive’s Annual Base
Salary at the rate in effect at the date of termination of the Executive’s
employment during the period of the Executive’s employment, payable in three
equal monthly installments. Until the earlier of the three months after the
termination of employment, or the commencement of the provision of health
benefits to the Executive by a successor employer, the Executive will continue
to receive the same coverage of health insurance as immediately before the
date
of the termination, at the expense of the Company. Thereafter, the Executive
acknowledges that the Company shall have no further obligation to the Executive
under this Agreement. Notwithstanding the foregoing, the Company
shall only be obligated to make the payments set forth in this section after
the
Executive delivers to the Company an executed Release and Severance Agreement,
which shall be substantially in the form of Employer’s standard Release and
Severance Agreement for all employees, with such changes therein or additions
thereto as needed under then applicable law to give effect to its intent and
purpose; and after delivery to the Company of a resignation from all offices,
directorships and fiduciary positions with the Company, its affiliates and
employee benefit plans.
(f)
Definition. For purposes hereof, “an acquisition or sale of the Company”
to or by “a third party” shall mean the occurrence of any transaction or series
of transactions which within a six (6) month period result in (i) greater than
fifty percent (50%) of the then outstanding shares of Common Stock
of the Company (for cash, property including, without limitation, stock in
any
corporation or other third party legal entity, indebtedness or any combination
thereof) have been redeemed by the Company or purchased by a third party not
previously affiliated with the Company, or exchanged for shares in any other
corporation or other third party legal entity not previously affiliated with
the
Company, or any combination of such redemption, purchase or exchange, (ii)
greater than fifty percent (50%) in book value of the Company’s gross assets are
acquired by a third party not previously affiliated with the Company (for cash,
property including, without limitation, stock in any corporation whether or
not
unaffiliated with the Company, indebtedness of any person or any combination
thereof), or (iii) the Company is merged or consolidated with another private
or
public corporation or other third party legal entity and the former holders
of
shares of Common Stock of the Company own less than twenty-five percent (25%)
of
the voting power of the acquiring, resulting or surviving corporation or other
third party legal entity. For the purposes hereof a director or officer of
the
Company shall be considered “affiliated with the Company.”
6.
Confidentiality and Restrictive Covenants.
(a)
The
Executive acknowledges that:
(i)
the
business in which the Company is engaged is intensely competitive and his
employment by the Company will require that he have continual access to and
knowledge of confidential information of the Company, including, but not limited
to, the nature and scope of its products, the object and source code offered,
marketed or under development by the Company or under consideration by the
Company for development, acquisition, or marketing by the Company and the
documentation prepared or to be prepared for use by the Company (and the phrase
“by the Company” shall include other vendors, licensees or and resellers and
value-added resellers of the Company’s products or proposed product) and
the Company’s plans for creation, acquisition, improvement or
disposition of products or software, expansion plans, financial status and
plans, products, improvements, formulas, designs or styles, method of
distribution, lists of remarketing and value-added and other resellers customer
lists and contact lists, product development plans, rules and regulations,
personnel information and trade secrets of the Company, all of which are of
vital importance to the success of the Company’s business, provided that
Confidential Information will not include information which has become publicly
known otherwise than through a breach by Executive of the provisions of this
Agreement (collectively, “Confidential Information”);
(ii) the
direct or indirect disclosure of any Confidential Information would place the
Company at a serious competitive disadvantage and would do serious damage,
financial and otherwise, to the Company’s business;
(iii) by
his training, experience and expertise, the Executive’s services to the Company
will be special and unique; and
(iv) if
the Executive leaves the Company’s employ to work for a competitive business, in
any capacity, it would cause the Company irreparable harm.
(b) Covenant
Against Disclosure. The Executive therefore covenants and agrees that all
Confidential Information relating to the business products and services of
the
Company, any subsidiary, affiliate, seller or reseller, value-added vendor
or
customer shall be and remain the sole property and confidential business
information of the Company, free of any rights of the Executive. The Executive
further agrees not to make any use of the confidential information except in
the
performance of his duties hereunder and not to disclose the information to
third
parties, without the prior written consent of the Company. The obligations
of
the Executive under this Paragraph 6 shall survive any termination of this
Agreement. The Executive agrees that, upon any termination of his employment
with the Company, all Confidential Information in his possession, directly
or
indirectly, that is in written or other tangible or readable form (together
with
all duplicates thereof) will forthwith be returned to the Company and will
not
be retained by the Executive or furnished to any third party, either by sample,
facsimile, film, audio or video cassette, electronic data, verbal communication
or any other means of communication.
(c) Non-competition.
The Executive agrees that, during the Term of Employment and for a period of
one
(1) year following the date of termination of the Executive’s employment with
the Company (or six months following the date of termination of the Executive’s
employment with the Company if the Company terminates the Executive’s employment
without cause pursuant to Section 4(d)), the Executive will not own, manage,
or
be connected as an officer, employee or director with, or aid or
assist anyone else in the conduct of, any entity or business which competes
with
any business conducted by the Company (which currently includes the licensing
and sale of medical software and services in the Medication
Management, Blood Banking and Operating Room fields) or any of its subsidiaries
or affiliates, in the United States, Canada and the UK and any other area where
such business is being conducted on the date the Executive’s employment is
terminated hereunder. Notwithstanding the foregoing the Executive’s ownership of
securities of a public company engaged in competition with the Company not
in
excess of five (5%) percent of any class of such securities shall not be
considered a breach of the covenants set forth in this Paragraph 6.
(d) Further
Covenant. Until the date which is one (1) year after the date of the
termination of the Executive’s employment hereunder for any reason, the
Executive will not, directly or indirectly, take any of the following actions,
and, to the extent the Executive owns, manages, operates, controls, is employed
by or participates in the ownership, management, operation or control of, or
is
connected in any manner with, any business of the type and character engaged
in
and competitive with that conducted by the Company or any of its subsidiaries
or
affiliates during the period of the Executive’s employment, the Executive
will not encourage or participate in any of the following actions on
behalf of such business:
(i)
persuade or attempt to persuade any customer of the Company or any
seller,reseller or value-added vendor of the Company or of its products to
cease
doing business with the Company or any of its subsidiaries or affiliates, or
to
reduce the amount of business it does with the Company or any of its
subsidiaries or affiliates;
(ii)
solicit for himself or any entity the business of (A) any customer of the
Company or any of its subsidiaries or affiliates, or (B) any seller, reseller
or-value-added vendor of the Company, or of its products, or (C) solicit any
business from a customer which was a customer of the Company or any of its
subsidiaries or affiliates within six months prior to the termination of the
Executive’s employment; and
(iii)
persuade or attempt to persuade any employee of the Company or any of
itssubsidiaries or affiliates or any individual who was an employee of the
Company or any of its subsidiaries or affiliates, at any time during the
six-month period prior to the Executive’s termination of employment, to leave
the employ of the Company or any of its subsidiaries or affiliates.
7.
Intellectual Property. The Executive hereby agrees that any and all (i)
software, object code, source code, and documentation, (ii) any improvements,
inventions, discoveries, formulae, processes, methods, know-how, confidential
data, patents, trade secrets, (iii) Food and Drug Administrative (“FDA”)
applications seeking approval by the FDA, information contained in the Forms
510-k of the FDA and approvals from the FDA, and (iv) other proprietary
information made, developed or created by the Executive (whether at the request
or suggestion of the Company or otherwise, whether alone or in conjunction
with
others, and whether during regular working hours of work or otherwise) during
the period of his employment with the Company, which may be directly or
indirectly useful in, or relate to, the business being carried out by the
Company or any of its subsidiaries or affiliates, shall be promptly and fully
disclosed by the Executive to the Board of Directors and shall be the Company’s
exclusive property as against the Executive, and the Executive shall promptly
deliver to the Board of Directors of the Company all papers, drawings, models,
data and other material relating to any invention made, developed or created
by
him as aforesaid.
The
Executive shall, upon the Company’s request and without any payment therefor,
execute any documents necessary or advisable in the opinion of the Company’s
counsel to direct issuance of patents, copyrights and FDA applications or
approvals of the Company with respect to such inventions or work product or
improvements or enhancements as are to be the Company’s exclusive property as
against the Executive under this Paragraph 7 or to vest in the Company title
to
such inventions as against the Executive, the expense of securing any such
patent or copyright, to be borne by the Company.
8.
Breach by Employee. Both parties recognize that the services to be
rendered under this Agreement by the Executive are special, unique and
extraordinary in character, and that in the event of a breach by Employee of
the
terms and conditions of the Agreement to be performed by him, then the Company
shall be entitled, if it so elects, to institute and prosecute proceedings
in
any court of competent jurisdiction, either in law or in equity, to enforce
the
specific performance thereof by the Executive. Without limiting the generality
of the foregoing, the parties acknowledge that a breach by the Executive of
his
obligations under Paragraph 6 or 7 would cause the Company irreparable harm,
that no adequate remedy at law would be available in respect thereof and that
therefore the Company would be entitled to seek injunctive relief with respect
thereto.
9.
Arbitration. Without precluding acting to obtain specific performance
and/or injunctive relief pursuant to Paragraph 8 above, in the event of any
dispute between the parties hereto arising out of or relating to this Agreement
or the employment relationship, including, without limitation, any statutory
claims of discrimination, between the Company and the Executive (except any
dispute with respect to Paragraphs 6 and 7 hereof), such dispute shall be
settled by arbitration in Nassau County or New York County, State of New York,
or in Wyandotte County or the City of Kansas City, State of Kansas, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association. The parties hereto
agree
that the arbitral panel shall also be empowered to grant injunctive relief
to a
party, which may be included in any award. Judgment upon the award rendered,
including injunctive relief, may be entered in any court having jurisdiction
thereof. Notwithstanding anything herein to the contrary, if any dispute arises
between the parties under Paragraphs 6 or 7, neither the Executive nor the
Company shall be required to arbitrate such dispute or claim, but each party
shall have the right to institute judicial proceedings in any court of competent
jurisdiction with respect to such dispute or claim. If such judicial proceedings
are instituted, the parties agree that such proceedings shall not be stayed
or
delayed pending the outcome of any arbitration proceeding
hereunder.
10.
Miscellaneous.
(a)
Successors; Binding Agreement. This Agreement and the obligations of the
Company hereunder and all rights of the Executive hereunder shall inure to
the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns, provided, however, that the duties
of
the Executive hereunder are personal to the Executive and may not be delegated
or assigned by him. By entering into this Agreement, the Executive’s
prior employment agreement with the company is hereby terminated.
(b)
Notice. All notices of termination and other communications provided for
in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered by hand, delivered by an express delivery (one day
service), delivered by telefax and confirmed by express mail or one day express
delivery service, or mailed by United States registered mail, return receipt
requested, addressed as follows:
|
If
to the Company:
|
|
Mediware
Information Systems, Inc.
|
|
00000
Xxxx 00xx
Xxxxxx
|
|
Xxxxxx,
XX 00000
|
|
If
to the Executive:
|
|
Xxxx
Xxxxxxxx
|
or
to
such other address as either party may designate by notice to the other, which
notice shall be deemed to have been given upon receipt.
(c)
Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas without regard to the conflict
of law rules thereof.
(d)
Waivers. The waiver of either party hereto of any right hereunder or of
any failure to perform or breach by the other party hereto shall not be deemed
a
waiver of any other right hereunder or of any other failure or breach by the
other party hereto, whether of the same or a similar nature or otherwise. No
waiver shall be deemed to have occurred unless set forth in writing executed
by
or on behalf of the waiving party. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver
shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
(e)
Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall otherwise remain in full force and effect.
Moreover, if any one or more of the provisions contained in this Agreement
is
held to be excessively broad as to duration, scope or activity, such provisions
shall be construed by limiting and reducing them so as to be enforceable to
the
maximum extent compatible with applicable law.
(f)
Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which shall constitute
one
and the same instrument.
(g)
Entire Agreement. This Agreement (including the applicable restricted
stock agreements) sets forth the entire agreement and understanding of the
parties in respect of the subject matter contained herein, and supersedes all
prior agreements (including the prior employment agreement), promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of either party
in
respect of said subject matter.
(i)
Headings Descriptive. The headings of the several paragraphs of this
Agreement are inserted for convenience only and shall not in any way affect
the
meaning or construction of any of this Agreement.
(j)
Capacity. The Executive represents and warrants that he is not a party to
any agreement that would prohibit him from entering into this Agreement or
performing fully his obligations hereunder.
IN
WITNESS WHEREOF, the Company and the Executive have executed this Agreement
as
of the date first written above.
|
EXECUTIVE:
|
MEDIWARE
INFORMATION SYSTEMS, INC:
|
||
|
|
By:
|
/s/
Xxxxx Xxxxxxx
|
|
|
Xxxx
Xxxxxxxx
|
Name
Xxxxx Xxxxxxx
|
||
|
Title:President
& Chief Executive Officer
|
|||
