Exhibit 10.3
EMPLOYMENT AGREEMENT
This Agreement is entered into by Healthcare Computing Systems, Inc., a
West Virginia corporation, as Employer and V. "Juggy" Xxxxxxxxxxx, as Employee.
1. EMPLOYMENT. Employer agrees to employ Employee and Employee agrees to
accept employment upon the terms and conditions set forth in this Agreement.
2. DUTIES AND SERVICES. (a) During the term of this Agreement,
Employee shall be employed in the business of the Employer as its Senior Vice
President - Research and Development. In the performance of his duties,
Employee shall report to and be subject to the direction of the Employer's
President and Chief Executive Officer, and Employee agrees to comply with the
policies, standards and regulations of Employer. (b) Except as provided in
Section 4.a.(i), Employee agrees to devote no less than 80% (eighty percent) of
his aggregated annual working time to the performance of his duties under this
Agreement except excused absences due to illness and paid time off. (c) Upon
giving Employer 30 (thirty) days advance written notice, Employee may increase
his working time to the performance of his duties under this Agreement to more
than 80% (eighty percent), and up to 100% (one-hundred percent), provided
Employee furnishes Employer satisfactory documentation of Employee's ability to
increase his working time. Satisfactory documentation shall include one or more
of the following: (i) termination of his employment with West Virginia
University and any of its affiliated organizations ("WVU"); (ii) an extended
leave of absence from WVU; or (iii) a change to the terms of Employee's
contractual relationship with WVU.
3. TERM. The term of this Agreement shall commence on November 1, 1996
(the "Effective Date") and continue for thirty-six (36) months unless terminated
earlier or extended as herein provided (the "Term"). This Agreement shall be
automatically extended for an additional twenty-four (24) month term unless
Employer provides not less than ninety (90) days prior to the third anniversary
of the Effective Date written notice to Employee of its intention not to extend
this Agreement.
4. COMPENSATION. Employer agrees to pay Employee compensation as
follows:
(a) SALARY. (i) Between the Effective Date and the payment by X.
X. Xxxxx Investment Banking Corp. under the "firm commitment" to purchase the
Units from the Company (the "Effective Date of the Registration Statement"), as
described in Sections 9 and 10 of Letter of Intent dated September 4, 1996
between X. X. Xxxxx Investment Banking Corp. and Healthcare Computing Systems,
Inc. (the "Letter of Intent"), attached hereto as Exhibit A, Employer will pay
Employee a salary of $60,000 per year, and Employee will be required to devote
not more than 40% (forty per cent) of his working time to the performance of his
duties under this Agreement. (ii) Beginning on the Effective Date of the
Registration Statement, Employer will pay
Employee a salary of $150,000 per year, which shall be reduced by the amount
Employer may be required to reimburse West Virginia University for Employee's
working time with Employer at the WVU "off campus rate" and for Employee's
election to continue to participate in any WVU fringe benefit plans. (iv) In
the event Employee provides Employer with written documentation (as described in
2(c)) of his ability to devote 100% of his working time to the performance of
his duties under this Agreement, Employer will pay Employee a salary of $150,000
per year. (v) Employee will receive his annual salary in equal semi-monthly or
biweekly installments in accordance with the executive payroll policies of the
Employer; provided, however, Employee agrees to be paid his salary earned
between the Effective Date and the first closing of a Bridge Loan, as described
in Section 22 of the Letter of Intent, at the first closing of a Bridge Loan.
(vi) Employee's annual salary compensation may be reviewed at any time but
shall be reviewed no less frequently than annually within thirty (30) days of
each anniversary of the Effective Date and shall not be increased in any event
until thirteen (13) months after the closing of the offering as set forth in
Section 16 of the Letter of Intent (the "Closing"). Based on such reviews,
Employee's salary may be adjusted to such higher amount if considered
appropriate by the Employer at its sole discretion after taking into account
general economic conditions, competitive conditions within the Employer's
industry, the financial condition, operations and prospects of Employer, and
Employee's prior and prospective performance of his duties. In no event shall
Employee's salary be reduced without Employee's express consent.
(b) PERFORMANCE BONUS. After the Closing, Employee shall
participate in any bonus or other short term incentive compensation plan(s) that
are approved by the Board of Directors of Employer (the "Board").
(c) OTHER COMPENSATION:
(i) STOCK OPTIONS. Employee shall be entitled to receive stock
option grants after the Effective Date of the Registration Statement at the sole
discretion of the Board under a stock option plan to be approved by the Board
prior to the Effective Date of the Registration Statement.
(ii) EMPLOYEE BENEFITS. Employee shall be entitled to
participate in all benefit plans such as, but not limited to, medical, dental,
disability and life insurance, paid time off (vacation, sick, holidays, etc.),
retirement plans, professional education, etc. as are approved by the Board from
time to time, provided any such participation by Employee shall not be
duplicative of any WVU benefit plan or program in which Employee elects to
participate and for which participation Employer is obligated to reimburse WVU
pursuant to any WVU Agreements as set forth in Section 4.a.(ii) above.
5. EXPENSES. (a) Employee shall be entitled to prompt reimbursement
for all reasonable travel and other out-of-pocket business expenses, including
relocation expenses, necessarily incurred in the performance of his duties
hereunder.
Employee's claims for reimbursement and Employer's payments thereof shall be in
accordance with Employer's then current business expense and relocation expense
reimbursement policies and procedures.
(b) Travel and other reasonable out-of-pocket expenses incurred by
Employee between the Effective Date and the first closing of a Bridge Loan, as
described in Section 22 of the Letter of Intent, shall be promptly reimbursed
from the proceeds of the first closing of a Bridge Loan.
6. TERMINATION. Subject to the provisions of this Section 6, Employer
shall have the right to terminate Employee's employment, and Employee shall have
the right to resign from his employment with Employer, at any time within the
Term of this Agreement.
(a) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. (i) If,
prior to the expiration of the Term, Employee's employment is terminated by
Employer for Cause, as defined in Section 6(a)(ii) hereof, or if Employee
resigns from his employment hereunder other than for Good Reason, as defined in
Section 6(a)(iii) hereof, Employee shall be entitled to payment of the pro rata
portion of the Employee's salary under Section 4(a) hereof through and including
the date of termination or resignation. Except to the extent required by
applicable law, in the event of termination for Cause or resignation other than
for Good Reason, Employee shall have no right under this Agreement or otherwise
to receive any other compensation or otherwise participate in any other plan,
arrangement or benefit after the termination or resignation of employment with
respect to the year of such termination or resignation or later years, and
unvested stock options held by Employee shall be immediately and automatically
canceled and terminated.
(ii) Termination for "Cause" shall mean termination of Employee's
employment by the Employer because of (A) any act of omission which constitutes
a material breach by Employee of his obligations or agreements under this
Agreement after written notification by the Employer specifying and describing
each such breach and the actions required to cure them, and failure of Employee
to cure each such breach in the manner specified in the notice or in a manner
otherwise acceptable to the Employer within thirty (30) days of receipt thereof,
(B) the conviction of Employee of any felony or crime of moral turpitude, (C)
any act or omission by Employee which, in the good faith judgment of the
Employer, constitutes a breach of Employee's fiduciary duty to Employer, or (D)
the release of the underwriter, X. X. Xxxxx Investment Banking Corp., from the
"firm commitment" to purchase the Units from the Company as described in
Sections 9 and 10 of the Letter of Intent.
(iii) Resignation for "Good Reason" shall mean resignation of Employee
after an act or omission by the Employer which is a material breach of this
Agreement after Employee notifies Employer in writing specifying and describing
each such breach and the actions required to cure them and the Employer does not
cure
such breach in the manner set forth in the notice or in a manner otherwise
acceptable to the Employee within thirty (30) days of receipt thereof.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON. (i)
If, prior to the expiration of the Term, Employee's employment is terminated by
Employer Without Cause or Employee resigns from his employment hereunder for
Good Reason, (A) Employer shall continue to pay Employee an amount equal to
Employee's then current annual salary under Section 4(a) for twelve (12) months
from the date of such termination or resignation (the "Severance Period"), (B)
Employee shall continue to participate in all benefit plans of Employer during
the Severance Period, (C) Employee shall become fully vested in any retirement
plans or retirement savings plans of the Employer to the extent allowed by
applicable laws, and (D) all options to purchase Employer's stock held by
Employee which are subject to vesting at the end of the period during which the
termination Without Cause or resignation for Good Reason occurs shall
immediately vest, become immediately exercisable, and shall remain exercisable
for the Severance Period. Except to the extent provided herein and required by
applicable law, Employee shall have no right under this Section or otherwise to
receive any compensation or to participate in any other plan, arrangement or
benefit after such termination Without Cause or resignation for Good Reason with
respect to the year of such termination or resignation and later years.
(c) TERMINATION DUE TO DEATH OR DISABILITY. In the event of
Employee's death or Employee's permanent disability that prevents Employee from
carrying out his duties hereunder, Employer shall be entitled to terminate his
employment Without Cause and the applicable provisions of Section 6(b) shall be
followed for the benefit of the Employee, or the Employee's estate in the event
of his death.
(d) EXPIRATION OF TERM. Expiration of this Agreement, whether by
non- extension or non-renewal by the Employer, shall be regarded as Termination
Without Cause and shall be covered by the provisions of Section 6(b) hereof,
provided, however, that Employee shall have the obligation to mitigate
Employer's obligations hereunder.
7. MERGER, ETC. In the event (A) of a disposition of all or
substantially all of the assets and business of the Employer during the Term of
this Agreement, by merger, consolidation, sale of assets or otherwise or (B) if
the individuals who at the beginning of the Term constituted the entire Board
(the "Original Board") and any new directors whose election was approved by the
majority of the Original Board cease to constitute a majority of the Board (the
preceding clauses (A) and (B) to be each hereinafter defined as a "Change of
Control"), then:
(a) the Employer may elect:
(i) to assign this Agreement and all of its rights and
obligations hereunder to the acquiring or surviving entity; provided that the
entity shall assume in
writing all of the obligations of the Employer hereunder; and, provided further,
that the Employer (in the event and so long as it remains in existence) shall
remain liable for the performance of its obligations hereunder in the event of a
breach by the surviving entity of this Agreement; or
(ii) in addition to the other rights of termination, to terminate
this Agreement upon at least ninety (90) days written notice by paying Employee
in accordance with the provisions of Section 6(b).
(b) Upon a Change of Control as a result of which (i) there occurs a
material detrimental alteration in Employee's position or responsibilities with
the Company or a material reduction in Employee's compensation, (ii) Employee's
primary work location is relocated more than 75 miles from his primary
residence, or (iii) Employee is excluded in a material way from compensation
plans or fringe benefits enjoyed by other Company executives, the Employee may
elect to:
(i) accept Employer's election under subsections (i) or (ii)
immediately above; or
(ii) terminate this Agreement upon ninety (90) days written
notice after which the provisions of Section 6(b) shall apply.
8. CONFIDENTIAL INFORMATION. Employee acknowledges that during the
course of his employment hereunder Employee will become acquainted with
confidential information regarding Employer's business. During the Term of this
Agreement and for a period of two (2) years thereafter (the "Non-Competition
Period") Employee will not, without the prior written consent of the Employer,
disclose or make use of any such confidential information except as may be
required in the course of his employment hereunder.
9. NON-COMPETITION. Employee hereby represents, warrants and agrees
that, during the Non-Competition Period, Employee will not compete with the
business of the Employer within any of the 50 states of the United States or
within any foreign country in which the Company operates (the "Prohibited
Territory") as employee, consultant, principal, agent, trustee or through the
agency of any corporation, partnership, association, agent or agency, or other
enterprise, engaged in any business that during the Non-Competition Period is in
competition with the business of the Employer (the "Prohibited Activity").
10. NON-SOLICITATION. Employee covenants and agrees, during the Term of
this Agreement and the Non-Competition Period, that Employee will not canvass or
solicit any person or entity who is customer of Employer about whom Employee
obtained significant business information during the term of his employment, for
the purpose of directly or indirectly furnishing services competitive with
Employer and will not solicit for employment or employ any employee of Employer.
The parties agree
that the geographic scope of this non-solicitation covenant is not limited to
the Protected Territory.
11. REPRESENTATIONS AND WARRANTIES. (a) Employee represents and warrants
to Employer that (i) Employee is under no contractual or other restriction or
obligation which is inconsistent with his execution of this Agreement or
performance of his duties hereunder and (ii) Employee has no physical or mental
disability that would hinder his performance of his duties under this Agreement.
(b) Employer represents and warrants to Employee that this Agreement
and the performance of Employer of its obligations hereunder have been duly
authorized by formal action of its Board of Directors.
12. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be sent by certified mail or by personal
receipted delivery to the Employee at his residence or to the Employer at its
principal office.
13. WAIVER OF BREACH. The waiver of either the Employer or Employee of
a breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach by the Employer or Employee.
14. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of both Employer and Employee and their respective
successors, heirs or legal representatives, but neither this Agreement nor any
rights hereunder may be assigned by either Employer or Employee without the
written consent of the other party, subject to Section 9(a)(i) hereof.
15. ARBITRATION. This Agreement shall be governed by the laws of the
State of Maryland without regard to the principles of the conflict of laws. If
any controversy or claim arising out of this Agreement cannot be resolved by the
parties, such conflict or claim shall be resolved by arbitration in accordance
with the then current rules of the American Arbitration Association governing
commercial disputes. Such matters will be arbitrated in the Washington, D.C.
metropolitan area and, for purposes of this Agreement, each party consents to
arbitration in such place. Arbitration proceedings shall commence when either
party notifies the other that a dispute to arbitration exists and requests that
the dispute be arbitrated. If the parties to the dispute cannot within thirty
(30) days after the request for arbitration is made mutually agree upon an
arbitrator or arbitrators to settle the dispute, each party to the dispute shall
select an arbitrator. The two arbitrators shall, within fifteen (15) days after
the appointment of the last arbitrator, select a third arbitrator and the three
arbitrators shall determine the matter. Each arbitrator shall act impartially.
If for any reason an arbitrator is not appointed within the time provided or the
arbitrators appointed by the parties cannot agree upon a third arbitrator, then
an arbitrator shall be appointed by the District Court of the State of Maryland
in and for the County of Xxxxxxxxxx in accordance
with applicable state law. Unless the parties mutually agree otherwise, any
arbitrator selected will be familiar with employment disputes. The final
decision will be that of the sole arbitrator or of the majority of the
arbitrators, and shall be final and binding upon the parties, except as
otherwise provided by law. The sole arbitrator or the majority of arbitrators
shall also determine the allocation of costs of the arbitration among the
parties, and shall have the right to award to the prevailing party all cost of
the arbitration, including reasonable attorneys' fees.
16. ENTIRE CONTRACT; COUNTERPARTS. This instrument contains the entire
agreement of the parties. It may not be changed orally but only by an agreement
approved in writing by the Employer and approved in writing by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought. This Agreement may be executed in two or more counterparts, each of
which shall be considered one and the same instrument.
17. NO THIRD PARTY BENEFICIARIES. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement except as provided in Sections 8(c) and 9.
18. HEADINGS. The headings in this Agreement are solely for
convenience and shall not be given any effect in the construction or
interpretation of this Agreement.
Dated: 12/16, 1996
EMPLOYEE:
/s/ X. Xxxxxxxxxxx
----------------------------------------
V. "Juggy" Xxxxxxxxxxx
Healthcare Computing Systems, Inc., EMPLOYER
By: /s/ J. Xxxxxx Xxxxxx
-----------------------------------------
Its: President and Chief Executive Officer
----------------------------------------
Attest:
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Its: Secretary
----------------------------------------
ADDENDUM TO EMPLOYMENT AGREEMENT
This agreement is an addendum to Section 4, pages 1 and 2, of the
Employment Agreement dated December 16, 1996 between Healthcare Computing
Systems, Inc. a West Virginia corporation, as Employer, and V. "Juggy"
Xxxxxxxxxxx, as Employee>
1. Employer and Employee agree to insert the following language at the
beginning of Section 4(a) on page 1 of the Agreement as Section 4(a)(i):
(i) Between the Effective Date and the initial Closing of the Bridge Loan
(the "Initial Bridge Loan Closing"), as described in Section 22 of the
Letter of Intent dated September 4, 1996 between X. X. Xxxxx Investment
Banking Corp. and Healthcare Computing Systems, Inc. (the "Letter of
Intent"), attached hereto as Exhibit A, Employer will pay Employee a salary
of $30,000 per year, and Employee will be required to devote not more than
20% (twenty percent) of his working time to the performance of his duties
under this Agreement.
2. Employer and Employee further agree to renumber the remaining sections
of Section 4(a) on pages 1 and 2 of the Agreement whereby original 4(a)(i)
becomes (ii), (ii) becomes (iii), (iii) becomes (iv), and (iv) becomes (v).
1. Employer and Employee further agree to replace the language in Section
4(a)(ii) (as renumbered pursuant to 2 above) on page 1 of the Agreement with the
following language:
(ii) Between the Initial Bridge Loan Closing and the payment by X. X.
Xxxxx Investment Banking Corp. under the "firm commitment" to purchase the
Units from the Company (the "Effective Date of the Registration
Statement"), as described in Sections 9 and 10 of the Letter of Intent,
Employer will pay Employee a salary of $60,000 per year, and Employee will
be required to devote not more than 40% (forty percent) of his working time
to the performance of his duties under this Agreement; provided, further,
Employer shall reimburse WVU at it's "off-campus rate" for any time release
required by WVU to compensate WVU for Employee's working time with Employer
under this section.
Dated: January 8, 1997
--------------
EMPLOYEE:
/s/ X. Xxxxxxxxxxx
----------------------------------------
I. "Juggy" Xxxxxxxxxxx
Healthcare Computing Systems, Inc., EMPLOYER
/s/ J. Xxxxxx Xxxxxx
----------------------------------------
J. Xxxxxx Xxxxxx, President
Attest:
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx Xxxxx, Secretary
ADDENDUM NO. 2 TO EMPLOYMENT AGREEMENT
This agreement is an addendum to Sections 2 and 4, pages 1 and 2, of the
Employment Agreement dated December 16, 1996 and the Addendum dated January 8,
1997 between Healthcare Computing Systems, Inc., a West Virginia corporation
(now CareFlow|Net, Inc., a Delaware corporation), as Employer, and V. "Juggy"
Xxxxxxxxxxx, as Employee.
1. Employer and Employee agree to replace the entire section 2 of the
Employment Agreement with the following language:
2. DUTIES AND SERVICES. (a) During the term of this Agreement, Employee
shall be employed in the business of the Employer as its Senior Vice President -
Research and Development and Chief Technical Officer, and as a member of the
Board of Directors of Employer (the "Board") and, at Employee's option, as a
member of the boards of directors of any subsidiary corporations or other
entities of the employer. In the performance of his duties, Employee shall
report to and be subject to the direction of the Employer's President and Chief
Executive Officer, and Employee agrees to comply with the policies, standards
and regulations of Employer. Employee's election to the Board will be effective
no later than 10 (ten) days following the Initial Bridge Loan Closing. (b)
Except as provided in Section 4.a.(i), Employee agrees to devote no less than
60% (sixty percent) of his aggregated annual working time to the performance of
his duties under this Agreement except excused absences due to illness and paid
time off. (c) Upon giving Employer 30 (thirty) days advance written notice,
Employee may increase his working time to the performance of his duties under
this Agreement to more than 60% (sixty percent), and up to 100% (one-hundred
percent), provided Employee furnishes Employer satisfactory documentation of
Employee's ability to increase his working time. Satisfactory documentation
shall include one or more of the following: (i) termination of his employment
with West Virginia University and any of its affiliated organizations ("WVU");
(ii) an extended leave of absence from WVU; or (iii) a change to the terms of
Employee's contractual relationship with WVU.
2. Employer and Employee further agree to replace the entire section 4(a)
of the Employment Agreement, as modified by the Addendum dated January 8, 1997,
with the following language:
4. COMPENSATION. Employer agrees to pay employee compensation as
follows:
SALARY. (i) Between the Effective Date and the Initial Closing of the
Bridge Loan (the "Initial Bridge Loan Closing"), as described in Section 22 of
the Letter of Intent dated September 4, 1996 between X. X. Xxxxx Investment
Banking Corp. and Employer (the "Letter of Intent"), attached hereto as Exhibit
A, Employer will pay Employee a salary of $60,000 per year, and, in addition,
will reimburse WVU for 20% of Employee's time at the WVU standard off-campus
rates, and Employee will be required to devote not more than 40% (forty per
cent) of his working time to the performance of his duties under this Agreement.
(ii) Beginning on the Initial Bridge Loan Closing, Employer will pay Employee a
salary of $90,000 per year and Employee will be required to devote not more than
60% (sixty percent) of his working time to the performance of his duties under
this Agreement; provided, further, Employer shall reimburse WVU at it's
"off-campus rate" for 40% (forty percent) of Employees time to compensate WVU
for Employee's working time with Employer under this section. (iii) In the
event Employee provides Employer with written documentation (as described in
2(c)) of his ability to devote 100% of his working time to the performance of
his duties under this Agreement, Employer will pay Employee a salary of $150,000
per year. (iv) Employee will receive his annual salary in equal semi-monthly or
biweekly installments in accordance with the executive payroll policies of the
Employer; provided, however, Employee agrees to be paid his salary earned
between the Effective Date and the Initial Bridge Loan Closing within 15
(fifteen) days following the Initial Bridge Loan Closing. (v) Employee's annual
salary compensation may be reviewed at any time but shall be reviewed no less
frequently than annually within thirty (30) days of each anniversary of each
anniversary of the Effective Date and shall not be increased in any event until
thirteen (13) months after the closing of the offering as set forth in Section
16 of the Letter of Intent (the "Closing"). Based on such reviews, Employee's
salary may be adjusted to such higher amount if considered appropriate by the
Employer at its sole discretion after taking into account general economic
conditions, competitive conditions within the Employer's industry, the financial
condition, operations and prospects of Employer, and Employee's prior and
prospective performance of his duties. In no event shall Employee's salary be
reduced without Employee's express consent.
Dated: August 20, , 1997
------------------
EMPLOYEE:
/s/ X. Xxxxxxxxxxx
----------------------------------------
V. "Juggy" Xxxxxxxxxxx
CareFlow|Net, Inc., EMPLOYER
/s/ J. Xxxxxx Xxxxxx
----------------------------------------
Its: President and Chief Executive Officer
Attest:
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Its: Asst. Secretary
