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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Employment Agreement (the "EMPLOYMENT AGREEMENT") is made this
_____ day of August, 1999, by and between Neoforma GAR, Inc., a Delaware
corporation, (the "COMPANY"), Neoforma, Inc., a Delaware corporation,
("NEOFORMA"), and Xxxx Xxxxx of Buffalo Grove, Illinois (the "EMPLOYEE").
RECITALS
The Company has acquired all of the issued and outstanding securities
(the "SECURITIES PURCHASE") of General Asset Recovery, LLC, ("GAR") pursuant to
the terms of a certain Securities Purchase Agreement dated July 16th, 1999,
which provided for the employment of the Employee by the Company.
The Company and the Employee acknowledge that the Employee's abilities
and services are essential to the prospects of the Company, the Company desires
to hire the Employee as its President, and the Employee desires to accept such
employment.
The parties hereto desire to enter into a comprehensive agreement to
set forth the terms and conditions pursuant to which the Employee shall be
employed by the Company.
NOW, THEREFORE, in consideration of Employee's employment by the
Company, the mutual covenants and agreements hereinafter set forth, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Employee, intending to be legally
bound, agree as follows:
1. Employment. The Company hereby agrees to employ the Employee, and
the Employee hereby accepts employment, all upon the terms, conditions and
covenants set forth in this Employment Agreement which the Company and Employee
agree are reasonable.
2. Duties. The Employee shall serve on a full-time basis as the
Company's President, with all powers and duties customarily associated with such
title and as are otherwise set forth herein, and shall:
(a) faithfully and diligently perform the duties of President of the
Company, and Vice President of Neoforma, the Company's parent company;
(b) comply with the overall reasonable business policies established
by the Chief Executive Officer (the "CHIEF EXECUTIVE OFFICER") of Neoforma, or
by the Board of Directors (the "BOARD OF DIRECTORS") of Neoforma; and
(c) do all things reasonably within his power to promote, develop,
operate and expand the "business of the Company" in a manner designed to meet
with the projections set forth on Schedule A hereto. For the purposes of setting
forth the duties of the Employee in
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this Section 2, the "business of the Company" shall include, (i) the business
operated as GAR prior to its acquisition by the Company, which the Employee
agrees to operate in substantially the same manner as it was operated by him
prior to such acquisition; (ii) a medical equipment auction business, which may
include Neoforma Trade, over which the Employee is given oversight, whether such
business is operated directly through the Company or otherwise; and (iii) the
asset management business operated by Neoforma prior to the acquisition of GAR
by the Company, whether operated through the Company or otherwise.
The Employee agrees to perform such other related duties as may be
delegated to the Employee from time to time by the Chief Executive Officer or by
the Board of Directors. The Employee shall devote his full time and reasonable
business efforts in the performance of his duties and shall not have any outside
employment while employed on a full-time basis by the Company. The Employee
shall report directly to the Chief Executive Officer or a similar level
executive officer of Neoforma appointed by the Board of Directors, and shall be
required to submit a monthly operations report to such Chief Executive Officer
or such other officer on or before the fifteenth day of each month with respect
to the Company's operations for the prior month. The Employee shall not be
required to relocate his base of employment outside of the State of Illinois.
3. Term. The term of this Employment Agreement shall begin on the date
hereof (the "EFFECTIVE DATE") and shall continue until the earlier of December
31, 2001 or the date of any termination hereunder (the "TERM").
4. Compensation. All compensation paid or payable hereunder shall be
deemed to be paid or payable by the Company in accordance with the Company's
general policy, as set forth in the Company's written manuals, unless this
Employment Agreement specifically states otherwise.
(a) Salary. During the Term of this Employment Agreement, the
Company shall pay to the Employee, in consideration for the services provided by
him hereunder, an annual base salary in the minimum of One Hundred Thousand
Dollars ($100,000) per year (the "ANNUAL SALARY"), which amount shall be payable
in accordance with Neoforma's customary payroll practices and shall be prorated
for any partial years of employment hereunder. The Board of Directors shall have
the right but not the obligation to increase the amount of the Annual Salary
based upon the performance of the Company and the Employee.
(b) Bonus. As further compensation, provided Employee remains
employed by the Company, Employee shall be entitled to receive an annual bonus
payable following the completion of each year during the Term, based on the
level of sales attained by the Company, which bonus shall be calculated in the
manner set forth on Schedule B attached hereto but which shall not be less than
Fifty Thousand Dollars ($50,000) per year.
(c) Stock Options. In consideration of his continued employment
hereunder, the Employee shall be granted options to purchase up to Five Hundred
Fifty
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Thousand (550,000) shares of the common stock, $0.001 par value, of Neoforma,
which options shall be exercisable at a price of $0.10 per share. The options
shall vest (i) at a rate of Thirty Three Thousand Three Hundred Thirty Three
(33,333) shares per month during each of months one through twelve following the
closing date of the Securities Purchase (the "CLOSING Date") (on the same date
of each month as the Closing Date), and (ii) at the rate of Four Thousand One
Hundred Sixty Seven (4,167) shares per month during each of months thirteen
through forty-seven, with the balance of the remaining options to vest in month
forty-eight, following the Closing Date (on the same day of each month as the
Closing Date). Notwithstanding the foregoing, in the event Employee ceases to be
employed by the Company during the term of this Employment Agreement, other than
if Employee is terminated by the Company without cause as defined in Section 9,
Employee shall forfeit the right to exercise any options which have not yet
vested. The options being issued hereunder shall be exercisable for a period of
seven years and shall be issued pursuant to Neoforma's 19__ Employee Stock
Option Plan.
5. Benefits. All benefits paid or payable hereunder shall be deemed to
be paid or payable by the Company in accordance with the Company's general
policy, as set forth in the Company's written manuals, unless this Employment
Agreement specifically states otherwise.
(a) Vacation, Paid Holidays. During the Term, the Employee shall be
entitled to take twenty-two (22) days of paid time off, unless otherwise agreed
upon by the Employee and the Company. The Employee shall also be entitled to
paid absence for all holidays provided by the Company to its other employees
plus any other holiday upon which the Company is closed for business. Nothing
herein shall prohibit the Company from changing the holidays which it observes
hereafter.
(b) Other Benefits. During the Term, the Employee shall be entitled
to participate (to the extent that he is eligible) in all other employee
benefits, if any, provided by the Company under the same terms and conditions as
provided for its other executive officers including but not limited to: (i)
health and disability insurance under such policies or plans as the Company may
adopt; (ii) participation in such 401(k) plan as the Company may establish; and
(iii) term life insurance coverage in such amounts and under such policies or
plans as the Company may adopt.
(c) Automobile Allowance. The Employee shall be entitled each month
to an automobile allowance in the amount of One Thousand Four Hundred Dollars
($1,400) which shall be used for automobile related expenses incurred by the
Employee in the performance of his duties hereunder.
6. Reimbursement for Expenses. Upon the submission of appropriate
invoices or vouchers, the Employee shall be entitled to reimbursement for all
reasonable expenses that he incurs in the performance of his duties under this
Employment Agreement in furthering the
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business and policies of the Company, such reimbursement to be paid in
accordance with Neoforma's customary expense reimbursement practices.
7. Key Person Life Insurance. The Company shall have the right but not
the obligation to maintain and pay for a key person life insurance policy on the
life of the Employee, as to which the Company shall be the sole beneficiary and
owner. The Employee agrees upon the execution of this Employment Agreement to
cooperate fully with the Company and to provide the Company with all necessary
documents in order for the Company to obtain such policy.
8. Withholding. The Company shall withhold or deduct from the
Employee's cash compensation any amounts required by law to be so withheld or
deducted.
9. Termination by The Company.
(a) This Employment Agreement may be terminated by the Company upon
the occurrence of any of the following:
(i) the Employee's death. If the Employee dies during the Term,
the Company's obligations under this Employment Agreement shall terminate
immediately and the Employee's estate shall be entitled to all arrearages of
salary and expenses but shall not be entitled to further compensation unless
otherwise specifically provided for under this Employment Agreement.
(ii) the action by the Board of Directors following the
Employee's "disability". For this purpose, "disability" means a physical or
mental illness or other incapacity which renders the Employee unable to perform
substantially all of his duties for a period of six (6) months. For purposes of
this Employment Agreement, disability shall be deemed a continuation of any
prior disability if the disability is related to the prior disability and
commences within twelve (12) months of the termination of the prior disability.
Disability, and any relation to any prior disability, shall be determined by a
physician acceptable to the Company and the Employee provided that if the
Company and the Employee fail to agree on a mutually acceptable physician, a
third physician shall be chosen by each party's physician and any determination
by such third physician shall be binding. If the Employee becomes disabled
during the Term, the Employee may pursue his rights under any disability plan
maintained by the Company.
(iii) the action of Neoforma's Board of Directors for Cause.
"Cause" is defined as the occurrence of any of the following events: (A) fraud,
misappropriation, embezzlement or intentional misconduct on the part of the
Employee, (B) the Employee's willful failure to substantially perform his duties
for the Company when, and to the extent, requested by the Board of Directors, or
its lawfully designated representative, to do so and failure to correct same
within five (5) business days after notice from the Board of Directors or its
lawfully designated representative requesting the Employee to do so, which has a
materially
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adverse effect upon the Company, or (C) the Employee's willful breach of any
material provision of this Employment Agreement and such breach continues for a
period of five (5) business days after notice from the Board of Directors or its
lawfully designated representative of such breach. Termination by the Company
for cause will be effective immediately upon receipt by the Employee of notice
of such termination.
(b) Termination of Benefits. In the event of any termination by the
Company for "cause" pursuant to Section 9 (a) hereof, or any voluntary
termination by the Employee, in addition to the termination of the various
benefits and compensation payable to the Employee hereunder generally, the
benefits provided for pursuant to Section 4 of this Employment Agreement shall,
to the extent not yet accrued or vested, automatically cease and terminate, and
any and all unvested stock options held by Employee in Neoforma shall
automatically expire.
(c) Survival. Notwithstanding anything else in this Employment
Agreement, the provisions of Section 10 (Confidentiality), Section 11
(Non-Competition and Non-Solicitation), Section 12 (Developments), Section 13
(Representations and Warranties) and Section 23 (Equitable Remedies) shall
survive the termination of the Employee's employment with the Company, if by the
Company, for "cause" or by the Employee. In the event the Employee's employment
hereunder is terminated by the Company without cause, or due to the bankruptcy
or insolvency of the Company, or due to any material breach of this Employment
Agreement by the Company, the only provision of this Employment Agreement which
shall survive shall be Section 10 (Confidentiality) to the extent that it deals
with Confidential Information of the Company which existed prior to the date of
this Employment Agreement.
10. Confidentiality. During the Term of this Employment Agreement and
thereafter, the Employee hereby covenants and agrees that he shall not other
than for the benefit of the Company publish, disclose to any third party or in
any way use for his own benefit any confidential information ("Confidential
Information"), including without limitation, any balance sheet or income
statement information (including but not limited to the value, amount or
condition of capital assets and/or inventory, sales figures, profitability,
etc.), or any other financial data, banking information, credit information,
trade secrets, financial statements or related data, customer lists or
information pertaining to customers or any unique distribution, manufacturing,
marketing and research methods of the Company or its parent or affiliates (or
formerly of General Asset Recovery, LLC), and any other Confidential Information
concerning the Company's or its parent or affiliate's, business, structure or
affairs, (or the business, structure or affairs formerly of General Asset
Recovery, LLC). All Confidential Information and copies thereof are the sole
property of the Company and Employee shall deliver promptly to the Company at
the termination of his employment or at any time as the Board of Directors may
request, without retaining copies, any Confidential Information made, compiled,
delivered, made available or otherwise obtained by Employee. Employee shall also
use his best efforts and exercise utmost diligence to protect and safeguard the
Confidential Information of the Company's customers, contractors and others with
whom
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the Company has a business relationship, whether learned or acquired by Employee
during the course of his employment by the Company.
The nondisclosure obligations of this Section 10 shall not apply to:
(a) information that may be disclosed generally or is in the public domain
through no fault of the Employee; (b) information received from a third party
outside the Company that was disclosed without a breach of any confidentiality
obligation; (c) information approved for release by written authorization of the
Company; or (d) information that may be required by law or an order of any
court, agency or proceeding to be disclosed. This Section 10 shall remain in
effect notwithstanding any termination of this Employment Agreement.
11. Non-Competition and Non-Solicitation.
(a) During the time Employee is employed by the Company, Employee
shall devote his full time and efforts to the business of the Company and shall
not participate, directly or indirectly, in any capacity, in any business or
activity that is in competition with the Company. For a period of eighteen (18)
months after the termination of employment with the Company for any reason: (i)
Employee shall not hire or attempt to hire any employee of the Company, or
assist in such hiring by anyone else, or encourage any employee to terminate his
or her employment with the Company; (ii) Employee shall not participate,
directly or indirectly, in any capacity, in any business or activity that is in
competition with the Company in the medical equipment re-sale industry, medical
facility planning industry or in any other business in which the Company is
engaged, in any state in which the Company does business; and (iii) Employee
shall not cause or assist to cause any of the customers of the Company with whom
Employee communicated, dealt with or became acquainted during his term of
employment with the Company to enter into contractual arrangements with himself
or any other person, firm, partnership, corporation or other company in any
business or activity that is in competition with the Company.
(b) "Blue Pencil" Rule. The Employee and the Company desire that
the provisions of this Section 11 be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. If a court of competent jurisdiction, however, determines
that any restrictions imposed on the Employee in this Section are unreasonable
or unenforceable because of duration, area of restriction, or otherwise, the
Employee and the Company agree and intend that the court shall enforce this
Section 11 to whatever extent the court deems reasonable to effect the intent of
this Section 11.
(c) Legitimate Purpose. The Employee has read carefully all of the
terms and conditions of this Section 11 and agrees that the restraints set forth
herein (i) are reasonable and necessary to support the legitimate business
interests and goodwill of the Company, and (ii) will not preclude the Employee
from earning a livelihood during the life of this Section 11.
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12. Developments. All Confidential Information and all other
discoveries, inventions, processes, methods, and improvements conceived,
developed, or otherwise made by Employee at any time, alone or with others, and
in any way relating to the Company's present or future business or products,
whether or not patentable or subject to copyright protection and whether or not
reduced to tangible form or reduced to practice, during the Term of employment
("DEVELOPMENTS"), shall be the sole property of the Company. Employee agrees to
and hereby does assign to the Company all right, title, and interest throughout
the world in and to all Developments and agrees to promptly disclose such
Developments to the Company and take all such actions reasonably requested by
the Company to establish and confirm the Company's ownership of such
Developments. Employee agrees that all such Developments shall constitute works
made for hire under the copyright laws of the United States and hereby assigns
to the Company all copyrights, patents, trademarks and other proprietary rights
the Employee may have in such Developments.
13. Representations and Warranties. Prior to the execution and delivery
of this Employment Agreement, the Employee represents and warrants that he has
terminated all of his obligations under any other employment agreement or other
similar agreement, whether written or oral, with any other party. The Employee
has delivered copies of all such employment or other agreements and evidence
satisfactory to the Company of the termination of such agreements. The Employee
represents and warrants that the execution of this Employment Agreement will not
result in a breach of any written agreement to which the Employee is a party or
by which the Employee is bound. The Employee covenants and agrees to defend,
indemnify and hold harmless the Company, its affiliates and its successors and
assigns against any and all claims, damages, liabilities, suits, actions, costs,
charges and expenses, including, without limitation, attorneys' fees, resulting
from a breach of this Section 13.
14. Notice. All necessary notices, payments, demands and requests shall
be in writing and shall be deemed duly given three (3) days after being mailed
by certified mail, postage prepaid, return receipt requested, or when actually
received if sent by facsimile, overnight delivery or other means, and addressed
as follows:
Company: c/o Neoforma, Inc.
0000-0 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Wm. Xxxxxx Xxxxxx, Controller
Facsimile: (000) 000-0000
With a Copy to: Xxxx X. Xxxxxxxxxxx, Esq.
Pepe & Hazard, LLP
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
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Employee: Xxxx Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx X. Xxxxx, Esq.
Marks, Marks and Xxxxxx, Ltd.
000 Xxxxx Xx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Each addressee may change its address or facsimile number for notice by
giving notice of change of address or facsimile number in the manner set forth
above.
15. Assignment. This Employment Agreement shall be freely assignable by
the Company to, and shall inure to the benefit of and be binding upon, any other
entity which shall succeed to the business presently being operated by the
Company, but, being a contract for personal services, neither this Employment
Agreement nor any rights hereunder shall be assignable by the Employee.
16. Further Execution. The parties agree to execute all documents
necessary to further effectuate the terms of this Employment Agreement.
17. Litigation. In the event of any dispute respecting this agreement,
such dispute shall be resolved in a court of competent jurisdiction in the State
of Illinois, and the parties hereto consent to such venue and jurisdiction. Each
party shall bear the cost of its own fees and expenses.
18. Authority. Each party represents that its undersigned
representative or corporate officer has all requisite power and authority to
enter into this Employment Agreement and to execute any and all instruments and
documents on its behalf necessary to and in performance of their respective
obligations hereunder.
19. Counterparts. This Employment Agreement may be executed in separate
counterparts, each of which shall be deemed original and all of which together
shall constitute one and the same instrument.
20. Waivers. No waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Employment Agreement, nor any waiver on the part of any party of any provisions
or conditions of this Employment Agreement, shall be valid unless made in
writing and signed by the party to be charged therewith, and shall be effective
only to the extent specifically set forth in such writing. No delay or omission
to exercise any right,
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power or remedy inuring to any party, upon any breach or default of any party
under this Employment Agreement, shall impair any such right, power or remedy of
such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. All remedies either under this Employment Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative.
21. Severability. If any provisions of this Employment Agreement shall
be held to be invalid or unenforceable to any extent or in any application, then
the remainder of this Employment Agreement and such terms and conditions, except
to such extent or in such application, shall not be affected thereby, and each
and every term and condition of this Employment Agreement shall be valid and
enforced to the fullest extent and in the broadest application permitted by law.
22. Headings. The paragraph headings contained herein are for
convenience and reference only, and shall be given no effect in the
interpretation of any term or condition of this Employment Agreement.
23. Equitable Remedies. Each party hereto hereby confirms that damages
at law may be an inadequate remedy for the breach or threatened breach of this
Employment Agreement and agrees that, in the event of a breach or threatened
breach by a party of any provision hereof, the other party's rights and
obligations hereunder shall be enforceable by specific performance, injunction,
or other equitable remedy, in addition to and not in lieu of any rights to
damages at law or other rights provided by statute or otherwise for a breach or
threatened breach of any provision hereof. Accordingly, each party hereto hereby
waives and agrees not to assert any objection to such equitable relief based
upon the purported existence of an adequate remedy at law, notwithstanding that
another party may also assert claims for damages at law or other claims as an
alternative to, or in addition to, such equitable relief.
24. Miscellaneous. This Employment Agreement is entered into and shall
be construed under the laws of the State of Illinois applicable to contracts
made and to be entirely performed within that State. This Employment Agreement
shall be amended, modified or terminated only by an instrument in writing,
signed by the party or parties to be charged. This Employment Agreement is the
entire agreement of the parties relating to the employment of the Employee by
the Company and supersedes all previous written or oral agreements.
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IN WITNESS WHEREOF the parties have executed or caused to be executed
this Employment Agreement under seal as of the day and year first above written.
NEOFORMA GAR, INC. NEOFORMA, INC.
By:_______________________________ By:_______________________________
Xxxxx XxXxxxxx, President Xxxxxx X. Xxxxxxx, President and
Chief Executive Officer
EMPLOYEE:
__________________________________
Xxxx Xxxxx
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SCHEDULE A
TO
EMPLOYMENT AGREEMENT
BETWEEN NEOFORMA GAR, INC. AND XXXX XXXXX
PERFORMANCE STANDARDS
PURSUANT TO SECTION 2(C) OF THE EMPLOYMENT AGREEMENT
The measurement of Employee's performance of his duties as the President
of Neoforma GAR, Inc. ("the Company"), and Vice President of Neoforma, Inc., is
to do all things reasonably within his power to promote, develop, operate and
expand the business of the Company to meet, at a minimum, Net Sales of
$2,000,000 for the year ending December 31, 2000, and $2,500,000 for the year
ending December 31, 2001. Net Sales is defined as the total amount of sales
received by the Company including without limitation any Buyer's Premium, less
payments made to the Consignees.
Failure to achieve the aforestated minimums will constitute a wilful
failure to substantially perform Employee's duties for the Company pursuant to
Section 9(a)(iii)(B) of Employee's Employment Agreement to which this Schedule
A is attached and incorporated, and the Company will have the option, at its
sole discretion, to terminate Employee.
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SCHEDULE B
TO
EMPLOYMENT AGREEMENT
BETWEEN NEOFORMA GAR, INC. AND XXXX XXXXX
BONUS CALCULATIONS
PURSUANT TO SECTION 4(B) OF THE EMPLOYMENT AGREEMENT
Employee shall be paid a bonus based upon the total Net Sales achieved by
the Company. Net Sales is defined as the total amount of sales received by
Neoforma GAR, Inc. including without limitation any Buyer's Premium, less the
payments made to the Consignees.
Notwithstanding anything else contained in the Employment Agreement of Xxxx
Xxxxx to which this Schedule B is attached and incorporated, bonus to Employee
shall be paid at the end of each quarter during each calendar year based upon
the total Net Sales the Company has received by the end of the each said
quarter.
Employee's bonus shall be based upon the following schedule of achieved
total Net Sales:
Year 1999 Bonus - Employee shall be paid, at a minimum, his prorata
share of the guaranteed bonus of $50,000.
Year 2000 Bonus - 1.3% of $0.00 to $15,000,000 with a minimum bonus
paid of $50,000.
2% of $15,000,001 to $20,000,000
3% of Net Sales in excess of $20,000,000
Year 2001 Bonus - 1.33% of $0.00 to $18,000,000 with a minimum bonus
paid of $50,000
2% of $18,000,001 to $24,000,000
3% of Net Sales in excess of $24,000,000
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