EXHIBIT 2.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
31st day of December, 1998, by and between PROXYMED, INC., a Florida
corporation. ("Company"), and XXXX X. XXXXXXXXX residing at 0000 Xxxxxx Xxxx
Xxxx, Xxxxxxxxxxx, Xxxxxxx 00000-0000 ("Employee").
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company desires to employ the Employee at its wholly owned
subsidiary Key Communications Service, Inc. ("KEY"), and Employee is willing to
accept such employment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Employee
agree as follows:
1. TERM. The term of this Agreement shall commence on January 1, 1999 (the
"Effective Date"), and shall continue for three (3) years (hereafter, the
"Term").
2. POSITION; DUTIES; LOYALTY.
a) POSITION. Employee will be employed by KEY with the title of
President and Chief Executive Officer and shall render service to KEY as its
employee pursuant to the terms, provisions and conditions hereinafter set forth.
b) DUTIES. Employee shall be employed by KEY on a full-time, exclusive
basis and shall not be required to relocate as a condition of continued
employment. Employee shall perform such duties and have such authority and
responsibilities customarily accompanying such position and as reasonably
directed by his supervisor consistent with Employee's position.
c) LOYALTY. Subject to Section 2.b), Employee shall devote the full
working time required for his position and shall give his best efforts to the
business of the Company and KEY and to the performance of the duties and
obligations described in this Agreement. Employee shall not, directly or
indirectly, alone, or as a partner, officer, director or shareholder of any
other institution, be engaged in any other commercial activities whatsoever, or
continue or assume any other corporate affiliations without the prior written
consent of the Company, which consent maybe unreasonably withheld, except for
(a) passive investments; and (b) minimal time utilized for business activities
that do not compete with the business of the Company or its subsidiaries.
3. COMPENSATION AND EXPENSES.
a) SALARY. In consideration for the services rendered by the Employee
under this Agreement, Company shall pay the Employee a monthly base salary of
$16,666.67 ("Base Salary") in accordance with the Company's customary payroll
practices, plus a $500.00 per month car allowance, subject to federal and state
taxes, if any.
b) ADDITIONAL BONUS OPPORTUNITY. As a further incentive and inducement
to the Employee to devote his best efforts to the business and affairs of the
Company and Key, Employee shall be entitled to an annual bonus up to $40,000
that may be awarded from time to
time at the discretion of the Chief Executive Officer, subject to approval of
either the Compensation Committee or the Board of Directors of the Company.
c) EXPENSES. Company shall promptly pay or reimburse the Employee for
all reasonable business expenses, including professional fees and dues, actually
incurred or paid by the Employee in the performance of his services hereunder in
accordance with the policies and procedures of the Company for the reimbursement
of business expenses, provided that Employee properly accounts therefor in
accordance with the Company's policy.
d) TAX WITHHOLDING. The Company shall have the right to deduct or
withhold from the compensation due Employee hereunder any and all sums required
for Federal income and social security taxes and all state or local taxes now
applicable or that may be enacted and become applicable in the future.
4. BENEFITS.
a) VACATION. Employee shall be entitled to three (3) weeks of vacation
with pay in the first year of his employment, and thereafter, according to the
Company's then current policies. Vacation not taken during a calendar year does
not accrue unless approved in writing by the Company. Employee shall not be
entitled to receive any additional compensation from the Company on account of
his failure to take a vacation.
b) PARTICIPATION IN BENEFIT PLANS. Employee shall be entitled to
participate in whatever benefit plans, including health insurance, that are
extended to all executives of the Company, on the same terms that such benefits
are so extended. Employee shall be entitled to health insurance coverage,
including family coverage at the Company's expense, beginning the first of the
month following ninety (90) days from the commencement of employment, with the
Company's insurance carrier (currently Prudential HMO). If Employee elects the
Prudential Point-Of-Service option, any additional premium will be payable by
Employee. The Company shall not be obligated to maintain any special or
additional plans for Employee's benefit. Employee shall also be entitled to
participate in benefit plans extended to other employees of the Company.
5. TERMINATION.
a) TERMINATION WITHOUT CAUSE; DEATH; DISABILITY. In the event of
Employee's Disability (as defined herein), this Agreement may be terminated at
the election of the Company. Upon termination for death or Disability, Employee
or his/her beneficiary or estate or legal representative shall be entitled to
receive the amounts payable under Section 5.c). For purposes of this Agreement,
"Disability" is defined to mean the inability of Employee due to illness or
physical or mental infirmity (as determined by a physician selected by Employee
and acceptable to the Company) to perform his duties hereunder on a full-time
basis for six consecutive months with reasonable accommodation by the Company.
Employee shall, upon request of the Company, furnish information and assistance
to the Company, and, in addition, upon reasonable request of the Company's Board
of Directors or its designees, shall make himself available to undertake
reasonable assignments consistent with the dignity, importance and scope of his
position and his physical and mental health.
2
b) TERMINATION FOR CAUSE. The Company may terminate Employee's
employment hereunder for "cause", effective immediately upon giving written
notice thereof. For purposes of this Agreement, the term "cause" shall be
limited to (i) non-appealable conviction of a felony or of any crime involving
fraud or misrepresentation that adversely affects the Company's reputation; (ii)
the continued willful failure by Employee to substantially perform his duties to
the Company after receipt of written notice from the Company specifying any
action or inaction by Employee which is reasonably deemed by the Company to
constitute a failure to perform his duties hereunder with suggestions, where
feasible, as to how Employee may remedy such failure, and Employee has failed to
correct the unsatisfactory performance within thirty (30) days of such notice;
(iii) Employee's gross negligence or willful misconduct which is materially
injurious to the Company, monetarily or otherwise; (iv) excessive use of alcohol
or illegal drugs interfering with the performance of Employee's duties and the
continuance thereof after written warning; and (v) any material breach by
Employee of a material obligation under this Agreement with written notice
thereof and an appropriate period to cure such breach if such breach is curable.
For purposes of this section, no act or failure to act on Employee's part shall
be considered "willful" unless done, or omitted to be done, by Employee not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company. Notwithstanding any term or provision of this
Agreement to the contrary, termination shall not be considered for cause if the
termination resulted from bad judgment or mere negligence on the part of
Employee or an act or omission which Employee believed in good faith to have
been in the interests of the Company or not opposed to such interests. If at any
time the Company shall determine that Employee has engaged in one or more
activities constituting "cause" for termination hereunder, Employee's employment
may be terminated for cause. Company shall pay Employee his full Base Salary and
benefits through the date of termination at the then current rate (including any
applicable bonus and accrued vacation pay). Company shall then have no further
obligations to Employee. Employee may give a written request to the Company
within thirty (30) days after such termination requesting an opportunity to be
heard by the Board of Directors of the Company. If Employee timely so requests
such an opportunity to be heard, such opportunity shall be made available to
Employee within thirty (30) days after such written request. If the Board of
Directors determines in its reasonable judgment that there was not sufficient
basis to terminate Employee for cause, Employee shall be reinstated with all
back pay and benefits restored.
c) PAYMENT UPON TERMINATION WITHOUT CAUSE. In the event of termination
by the Company without cause, Employee shall execute a full and complete release
of any and all claims relating to his employment and termination thereof against
the Company in a form satisfactory to the Company, in which event Employee (or
his estate) shall be entitled to separation pay equal to Employee's Base Salary
payable in accordance with the Company's customary payroll practices. Employee
(or his estate) shall be entitled to severance pay of (i) an amount equal to
Employee's Base Salary on the date of termination for the remainder of the first
eighteen (18) months or the term, if any, plus an additional period of nine (9)
months commencing on the date of termination payable in accordance with the
Company's customary payroll practices plus (ii) a pro rata portion of any bonus
compensation which would have been paid to Employee under any bonus plan which
is adopted by the Company's Compensation Committee or Board of Directors in such
year if the Company and Employee had met the targeted goals to the date of
termination, plus (iii) the continuation of all benefits including, without
limitation, all insurance plans for the remainder of the first eighteen (18)
months or the term, if any, plus an additional period of nine (9) months. A
termination pursuant to Section 1 above wherein this Agreement shall expire
without being renewed shall not be deemed to be a
3
termination without cause under this Section or a termination for Good Reason
under Section 5.e) or a termination without cause under this Section 5.c).
d) RETURN OF COMPANY PROPERTY. Upon notice of termination by the
Company or resignation by Employee, Employee shall immediately return to the
Company all property of the Company in Employee's possession, including
Confidential Information (as defined below). Employee acknowledges that the
Company may withhold any compensation and benefits owed to Employee hereunder
until all such property is returned.
e) EMPLOYEE TERMINATION FOR GOOD REASON. Employee may terminate this
Agreement for Good Reason by giving Company ninety (90) days' prior written
notice. Good Reason means: a) the assignment of any duties inconsistent in any
respect with Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities hereunder, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose as isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of written notice from Employee;
b) any reduction of Employee's Base Salary or the failure by the Company to
provide Employee with an incentive compensation program and health and the
benefits hereunder no less favorable than the benefits Employee was entitled to
hereunder; c) if Company's principal office is relocated in the future more than
fifty (50) miles from New Albany, Indiana; d) a material breach of this
Agreement by the Company; and e) failure on the part of any successor of the
Company to assume the Company's obligations under this Agreement. In such event,
Employee's termination shall be treated as a termination without cause and he
shall be entitled to the payments enumerated in Section 5.c) above.
f) MITIGATION. If Employee becomes entitled to compensation pursuant to
Section 5.c) or 5.e) above, and during that time period Employee accepts another
position, the amount of any cash compensation paid or payable from any such
employment shall be reported to the Company on a monthly basis and such amount
shall be credited against amounts otherwise payable by the Company to Employee
under Sections 5.c) or 5.e) above. Other than as provided in this Section 5.f),
Employee shall have no duty to mitigate the amount of any payment provided for
in this Agreement.
g) ACCELERATION. If the Company defaults in the payment of any amounts
owed hereunder to Employee following written notice by Employee and fails to
cure such default within ten days from the date of such notice, Employee shall
be entitled to accelerate the entire amount due hereunder. The Company shall
have the opportunity to cure a monetary default one time after which time, if
another default occurs, Employee shall be entitled to accelerate the entire
amount due hereunder upon written notice by Employee without affording the
Company an opportunity to cure.
6. COVENANTS OF EMPLOYEE.
a) Employee agrees that during the Term and for five (5) years
following a termination of employment for any reason, he will not, directly or
indirectly, engage, assist or participate in, whether as a director, officer,
executive, agent, manager, consultant to vendors/sellers (but may consult to end
users/purchasers), partner, owner or independent contractor or other
participant, in any line of business which is the same as the Company or any
4
of its subsidiaries are engaged in as of the termination of this Agreement
without the written consent of the Company, which consent shall not be
unreasonably withheld. Employee and Company agree that this clause is to protect
the interests of the Company while at the same time allowing the Employee to
pursue gainful employment with any other company Employee so chooses, so long as
such Employee does not, within the relevant time period herein, engage in any
line of business that directly competes with any line of business engaged in by
the Company or any of its subsidiaries as of the date Employee terminates his
employment with Company. Nothing contained herein shall prevent Employee from
acquiring less than 1% of any class of securities of any company that competes
with the Company that has any of its securities listed on a national securities
exchange or traded in the over-the-counter market, provided Employee remains a
passive investor.
b) Employee agrees that during the Term and for five (5) years after
the termination of employment for any reason, he will not, directly or
indirectly, without the prior written consent of the Company, induce or solicit
within the States of Indiana and Kentucky any person employed or hereafter
employed by the Company or any of its subsidiaries to leave the employ of the
Company or any of its subsidiaries or solicit, recruit, hire or attempt to
solicit, recruit or hire any person employed by the Company. Further, Employee
agrees that for a period of five (5) years after the termination of this
Agreement, he will not, directly or indirectly, without the prior written
consent of the Company, solicit for any business similar to that of the Company,
divert away, take away, or attempt to take away any customer of the Company who
was a customer which Employee had, alone or in conjunction with others, served
during his employment with the Company.
c) Employee agrees and acknowledges that he will disclose promptly to
the Company every discovery, improvement and invention made, conceived or
developed by Employee during the entire period of employment (whether or not
during working hours) which discoveries, improvements or inventions are capable
of use in any way in connection with the business of the Company. To the fullest
extent permitted by law, all such discoveries, inventions and improvements will
be deemed works made for hire. Employee grants and agrees to convey to Company
or its nominee the entire right, title and interest, domestic and foreign, which
he may have in such discoveries, improvements or inventions, or a lesser
interest therein, at the option of Company. Employee further agrees to promptly,
upon request, sign all applications for patents, copyrights, assignments and
other appropriate documents, and to perform all acts and to do all things
necessary and appropriate to carry out the intent of this section, whether or
not Employee is still an employee of the Company at the time of such requests.
d) Employee agrees and acknowledges that the Confidential Information
of the Company and its subsidiaries (as hereinafter defined) is valuable,
special and unique to its business, that such business depends on such
Confidential Information, and that the Company wishes to protect such
Confidential Information by keeping it confidential for the use and benefit of
the Company. Based on the foregoing, Employee agrees to undertake the following
obligations with respect to such Confidential Information:
i) Employee agrees to keep any and all Confidential
Information in trust for the use and benefit of the Company;
5
ii) Employee agrees that, except as required by Employee's
duties or authorized in writing by the Company and its subsidiaries, he will not
at any time during and for a period of ten (10) years after the termination of
his employment with the Company and its subsidiaries, disclose, directly or
indirectly, any Confidential Information of the Company or any of its
subsidiaries. except as maybe required by applicable law or court order, in
which case Employee shall promptly notify Company so as to allow it to seek a
protective order if it so elects;
iii) Employee agrees to take all reasonable steps necessary,
or reasonably requested by the Company or its subsidiaries, to ensure that all
Confidential Information of the Company is kept confidential for the use and
benefit of the Company and its subsidiaries; and
iv) Employee agrees that, upon termination of his employment
by the Company or any of its subsidiaries or at any other time the Company may
in writing so request, he will promptly deliver to the Company all materials
constituting Confidential Information (including all copies thereof) that are in
the possession of or under the control of Employee. Employee further agrees
that, if requested by the Company to return any Confidential Information
pursuant to this Subsection (iv), he will not make or retain any copy or extract
from such materials.
For the purposes of this Section 6.d), "Confidential
Information" means any and all information developed by or for the Company or
any of its subsidiaries of which Employee gained knowledge by reason of his
employment by the Company or any of its subsidiaries prior to the date hereof or
during his employment that is not generally known in any industry in which the
Company or its subsidiaries is or may become engaged, but does not apply to
information which is generally known to the public or the trade, unless such
knowledge results from an unauthorized disclosure by Employee. Confidential
Information includes, but is not limited to, any and all information developed
by or for the Company concerning plans, marketing and sales methods, materials,
processes, business forms, procedures, devices used by the Company, its
subsidiaries, suppliers and customers with which the Company had dealt with
prior to Employee's termination of employment with the Company and its
subsidiaries, plans for development of new products, services and expansion into
new areas or markets, internal operations, and any trade secrets, proprietary
information of any type owned by the Company and its subsidiaries, together with
all written, graphic and other materials relating to all or any part of the
same. The Company will receive all materials, including, software programs,
source code, object code, specifications, documents, abstracts and summaries
developed in connection with Employee's employment. Employee acknowledges that
the programs and documentation developed in connection with Employee's
employment with the Company shall be the exclusive property of the Company, and
that the Company shall retain all right, title and interest in such materials,
including without limitation patent and copyright interests. Nothing herein
shall be construed as a license from the Company to make, use, sell or copy any
inventions, ideas, trade secrets, trademarks, copyrightable works or other
intellectual property of the Company during the term of this Agreement or
subsequent to its termination.
Employee acknowledges that there is no general geographical
restriction contained in this Section 6.d) because the Company's business is not
confined to one geographical area and is national in scope. Notwithstanding the
foregoing, if a court of competent jurisdiction were to determine that any of
the foregoing covenants would be held to
6
be unreasonable in time or distance or scope, the time or distance or scope may
be reduced by appropriate order of the court to that deemed reasonable.
e) INJUNCTIVE RELIEF.
i) Employee acknowledges and agrees that the covenants and
obligations contained in this Section 6 relate to special, unique and
extraordinary matters and that a violation of any of the terms of this Section
will cause the Company irreparable injury for which adequate remedies at law are
not available. Therefore, Employee agrees that the Company shall be entitled
(without having to post a bond or other surety) to an injunction, restraining
order, or other equitable relief from any court of competent jurisdiction,
restraining the Employee from committing any violation of the covenants and
obligations set forth in this Section 6.
ii) The Company's rights and remedies under this Section 6 are
cumulative and are in addition to any other rights and remedies the Company may
have pursuant to the specific provisions of this Agreement and at law or in
equity.
7. MISCELLANEOUS.
a) ATTORNEY'S FEES. In the event a proceeding is brought to enforce or
interpret any part of this Agreement or the rights or obligations of any party
to this Agreement, each party shall pay their own fees and expenses, including
reasonable attorney's fees.
b) SUCCESSORS AND ASSIGNS. This Agreement and the benefits hereunder
are personal to the Company and are not assignable or transferable by the
Employee without the written consent of the Company. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the Company and
the Employee and the Employee's heirs and legal representatives, and the
Company's successors and assigns.
c) GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the law of the State of Florida, without regard to the
application of principles of conflict of laws.
d) NOTICES. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement addressed to the
Company at its then principal office, as notified to Employee, or to the
Employee at his address specified on page 1 of this Agreement, or to either
party hereto at such other address or addresses as he or it may from time to
time specify for such purposes in a notice similarly given. All notices and
communications shall be deemed to have been received on the date of delivery.
e) MODIFICATION; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by a duly authorized officer of the Company and is agreed to in a
writing signed by the Employee and such officer. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
7
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
f) COMPLETE UNDERSTANDING. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.
h) VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
i) SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and if any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall be declared invalid, this Agreement
shall be construed as if such invalid word or words, phrase or phrases, sentence
or sentences, clause or clauses, or section or sections had not been inserted.
j) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument
k) Section 6 shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
PROXYMED, INC. EMPLOYEE:
By: /s/ XXXXXXX XXXXX By: /s/ XXXX X. XXXXXXXXX
-------------------------- ------------------------
SIGNATURE - Co-President XXXX X. XXXXXXXXX
Print Name: XXXXXXX XXXXX
8
