EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 1, 1997, by and among PMRi, a
Texas corporation with offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual having an address at ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ and retain the experience, ability
and exclusive services of Executive, and to prevent any other competitive
business from securing his services, in utilizing his experience, background and
know-how; and
WHEREAS, the Executive desires to be so employed by the Company upon the
terms and conditions herein below set forth.
NOW, THEREFORE, in consideration of the mutual premises herein set forth,
and for other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto mutually agree as follows:
1.1 Employment. The Company shall employ Executive on an exclusive basis, and
Executive hereby agrees to such exclusive employment for a period of three (3)
years, commencing on August 1, 1997, and ending on July 31, 2000 (the "Initial
Term"). This Agreement may be extended for successive one (1) year terms upon
the mutual agreement of the parties (the Initial Term, as same may be extended,
is hereinafter referred to as the "Term"). In the event the Company wishes to
renew this Agreement upon the expiration of the Term (or upon the expiration of
any subsequent one (1) year extension of this Agreement) the Company shall give
Executive written notice thereof (the "Extension Notice") no later than ninety
(90) days prior to the expiration of the Term. Thereafter, Executive shall
notify the Company in writing of his desire to continue to be employed by the
Company no later than thirty (30) days after Executive's receipt of the
Extension Notice.
1.2 Duties and Responsibilities of Executive. Executive shall serve in such
positions as may be designated by the Board of Directors, and shall properly
perform such duties as may be assigned to him from time to time by the Board of
Directors of the Company. Executive shall also serve on any committee to which
the Company's Board of Directors may appoint him. Executive shall devote all of
his business time to the performance of his duties hereunder unless otherwise
authorized by the Board of Directors.
2. Compensation of Executive.
2.1 Base Salary. Commencing upon the date hereof, the Company shall pay to
Executive a base salary of One Hundred Ninety Five Thousand ($195,000) per
annum, subject to adjustment as set forth in Sections 2.2 and 2.3 below (the
"Base Salary"). Such compensation shall be paid to Executive with the same
frequency as other executives of the Company are compensated.
Such Base Salary shall be subject to withholding for the prescribed federal
income tax, social security, Medicare, and other items as required by law, and
for other items consistent with the Company's policy with respect to health
insurance and other benefit plans for similarly situated employees.
2.2 Salary Adjustments. The Executive's Base Salary set forth in Section 2.1
above (and as same may have been previously adjusted in accordance with the
provisions hereof) will be increased twenty percent (20%) upon completion of
each one year period of the Initial Term.
2.3 Discretionary Bonus. In addition to Executive's Base Salary, Executive
shall be entitled to such bonus compensation as Executive may be awarded, from
time to time, by a majority vote of the disinterested members of the Board of
Directors (or appropriate committee) of the Company.
2.4 Expenses. In addition to those expenses expressly set forth herein, the
Company shall pay or reimburse Executive for all ordinary and necessary out-of-
pocket expenses actually incurred by Executive in connection with performing his
duties hereunder, consistent with the Company's policies then in effect.
2.5 Automobile. The Company will provide Executive with an automobile
allowance in an amount of seven hundred dollars ($700) per month, during the
Initial Term.
2.6 Benefits. Executive shall be entitled to participate in the Company's
pension, profit sharing, group insurance, option plans, hospitalization, and
group health and benefit plans and all other benefits and plans as the Company
provides to its senior executives to the extent such plans are established by
the Company and to the extent that Executive is eligible to participate in such
plans. Such benefits shall be subject to the terms of the applicable plan
documents, summary plan descriptions and/or employment policies and shall be
subject to modification, amendment or revocation in accordance with the terms of
such documents, policies and procedures.
2.7 Stock Options. Executive shall also be entitled to receive stock options
to purchase a total of shares of the Company pursuant to the Company's stock
option plan on such terms as shall be established by disinterested members of
the Board of Directors. The purchase price for the shares shall be the fair
market value thereof as established by the Board of Directors in its sole
discretion. Executive shall be required to enter into any shareholders
agreement that the Board of Directors approves as a condition to the issuance of
common stock.
3. Termination.
3.1 Termination Without Cause. Either the Company or Executive may terminate
this Agreement at any time, without Cause (as that term is defined below), by
giving the other thirty (30) days prior written notice of termination.
3.2 Death; Disability. This Agreement shall be automatically terminated on the
death of Executive or in the event of the permanent disability of Executive if
he is no longer able, with reasonable accommodation, to perform the essential
functions of his position. In the event of
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Executive's disability, this Agreement shall not terminate unless and until
Executive has been unable to perform the essential functions of his position for
a period of three (3) consecutive months as a result of his disability.
3.3 Termination for Cause or Resignation. In the event Executive is discharged
for Cause (as that term is defined below) or in the event Executive resigns,
then upon such occurrence, this Agreement shall be deemed terminated and the
Company shall be released from all obligations to Executive with respect to this
Agreement, including but not limited to compensation to Executive, except
obligations accrued prior to such date of termination or resignation.
3.4 Definition of Cause. As used herein, the term "Cause" shall mean
(a) the commission of any act of fraud on the part of Executive;
(b) misappropriation, embezzlement, theft or willful and material damage of or
to any asset of the Company or the use of the Company's funds or assets for any
illegal purpose;
(c) a good faith determination by the Board of Directors of the Company that
Executive has violated this Agreement or committed an act of gross negligence or
willful misconduct that has or is reasonably expected to have a material adverse
effect on the business or affairs of the Company; or
(d) the conviction of Executive of any felony, or the commission of any
criminal or illegal act on the part of Executive which materially and adversely,
whether directly or indirectly, affects the name or goodwill of the Company.
3.5 Severance Pay. In the event of termination, Executive shall be entitled to
compensation (the "Severance Pay") in accordance with the following:
(a) If this Agreement is terminated by the Company prior to the expiration of
the Initial Term of this Agreement or any renewal or extension hereof, and such
termination is not for Cause, Employee shall be entitled to Severance Pay of one
(1) year salary, payable in accordance with the Company's normal and customary
policies.
(b) If Executive's employment is terminated by reason of a disability,
Executive shall be entitled to Severance Pay as set forth in 3.5(a), payable in
accordance with the Company's normal and customary policies.
(c) If (i) Executive voluntarily terminates his employment, (ii) the Company
terminates this Agreement for Cause, or (iii) if Executive's employment is
terminated by reason of his death, Executive shall not be entitled to receive
any additional salary, bonus or benefits beyond those earned or accrued as of
the effective date of the termination of his employment.
3.6 Effect of Termination on Agreement. Any termination of Executive's
employment shall not release either the Company or Employee from their
respective obligations under this
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Agreement that are required to be performed subsequent to the date of such
termination, including but not limited to those obligations set forth under
Sections 3 and 6.
4. Flex Time Off. Executive shall be entitled to Flex Time Off ("FTO") of six
(6) weeks per year, during which period his Base Salary shall be paid in full.
Executive shall take his FTO at such times as Executive and the Company shall
determine is mutually convenient.
5. Confidentiality and Noncompetition.
5.1 Confidential Information. During the period of Executive's employment with
the Company, and after the termination thereof for any reason, Executive agrees
that, because of the valuable nature of the Confidential Information, Executive
shall use Executive's best efforts to maintain and protect the secrecy of the
Confidential Information. Without in any manner limiting the generality of the
foregoing obligation, Executive agrees that Executive shall not, directly or
indirectly, undertake or attempt to undertake any of the following activities:
(a) disclose any Confidential Information to any other person or entity;
(b) use any Confidential Information for Executive's own purposes;
(c) authorize or permit any other person or entity to use, copy, disclose,
publish or distribute any Confidential Information; or
(d) undertake or attempt to undertake any activity the Company is prohibited
from undertaking or attempting to undertake by any of its present or future
clients, customers, suppliers, vendors, consultants, agents or contractors.
As used in this Agreement, the term "Confidential Information" means any
knowledge, information or property relating to, or used or possessed by, the
Company, and includes, without limitation, the following: trade secrets;
patents, copyrights, software (including, without limitation, all programs,
specifications, applications, routines, subroutines, techniques and ideas for
formulae); concepts, data, drawings, designs and documents; names of clients,
customers, employees, agents, contractors, and suppliers; marketing information;
financial information and other business records; and all copies of any of the
foregoing, including notes, extracts, memoranda prepared or suffered or directed
to be prepared by Executive based on any Confidential Information. Executive
agrees that all information possessed by him, or disclosed to him, or to which
Executive obtains access during the course of Executive's employment with the
Company shall be presumed to be Confidential Information under the terms of this
Agreement, and the burden of proving otherwise shall rest with Executive.
5.2 Return of Confidential Information. Upon termination of Executive's
employment with the Company for any reason, Executive agrees not to retain or
remove from the Company's premises any records, files or other documents or
copies thereof or any other Confidential Information whatsoever, and Executive
agrees to surrender same to the Company, wherever it is located, immediately
upon termination of Executive's employment.
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5.3 Assignment of Intellectual Property. During the period of Executive's
employment with the Company, all processes, products, methods, improvements,
discoveries, inventions, ideas, creations, trade secrets, know-how, machines,
programs, designs, routines, subroutines, techniques, ideas for formulae,
writings, books and other works of authorship, business concepts, plans,
projections and other similar items, as well as all business opportunities,
conceived, designed, devised, developed, perfected or made by the Executive,
whether alone or in conjunction with others, and related in any manner to the
actual or anticipated business of the Company or to actual or anticipated areas
of research and development (collectively, the "Intellectual Property"), shall
be promptly disclosed to and become the property of the Company, and Executive
hereby assigns, transfers and conveys the Intellectual Property to the Company.
Executive further agrees to make and provide to the Company any documents,
instruments or other materials necessary or advisable to vest, secure, evidence
or maintain the Company's ownership of the Intellectual Property, and patents,
copyrights, trademarks and similar foreign and domestic property rights with
respect to the Intellectual Property. The term "Intellectual Property" shall be
given the broadest interpretation possible and shall include any Intellectual
Property conceived, designed, devised, developed, perfected, or made by the
Executive during off-duty hours and away from the Company's premises, as well as
to those conceived, designed, devised, developed, perfected, or made in the
regular course of Executive's performance.
5.4 Noncompetition Agreement. Executive acknowledges that the Company has
provided and may provide additional special training (including, without
limitation, training relating to programming, servicing or marketing of
sophisticated computer programs and services) to Executive to enable Executive
to perform Executive's duties as an employee of the Company. As a result,
Executive agrees that, during the term of Executive's employment and for a
period (the "Restricted Period") of twelve (12) months after the termination of
the Executive's employment with the Company (if such termination is with Cause,
or results from Executive's resignation or disability) Executive shall not, in
the United States (the "Geographic Area") (i) directly or indirectly engage in,
consult with, be employed by or be connected with any business or activity with
a third party which directly or indirectly competes with the Company's business
(a "Competing Business"), (ii) canvass any business from any of the Company's
current or former clients, (iii) assist others to open or operate any Competing
Business; or (iv) solicit, recommend or induce employees of the Company to
terminate their employment with the Company.
5.5 Nonsolicitation Agreement. During the Restricted Period, Executive will
not without the express prior written approval of the Board of Directors of the
Company (i) directly or indirectly, in one or a series of transactions, recruit,
solicit or otherwise induce or influence any proprietor, partner, stockholder,
lender, director, officer, employee, sales agent, joint venturer, investor,
lessor, supplier, customer, agent, representative or any other person which has
a business relationship with the Company to discontinue, reduce or modify such
employment, agency or business relationship with the Company, or (ii) employ or
seek to employ or cause any Competing Business to employ or seek to employ any
person or agent who is then (or was at any time within six (6) months prior to
the date the Executive or the Competing Business employs or seeks to employ such
person) employed or retained by the Company. Notwithstanding the
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foregoing, nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment opportunity.
5.6 Reasonableness of Covenants. Executive has carefully read this Section 6
and agrees and acknowledges that the limitations as to time, geographical area
and scope of activity to be restrained are reasonable and do not impose a
greater restraint than is necessary to protect the goodwill and business
interests of the Company. Executive has agreed to the foregoing covenants
because (a) Executive recognizes that the Company has a legitimate interest in
protecting the confidentiality of its business secrets (including the
Confidential Information), (b) Executive agrees that such noncompetition
agreement is not oppressive to him nor injurious to the public, (c) the Company
has provided specialized and valuable training and information to Executive, and
(d) the Company would not have entered into this Agreement without Executive's
agreement the covenants set forth in this Section 6. Executive further
understands and agrees that, if at some later date, a court of. competent
jurisdiction determines the scope, duration or geographic area of any covenant
set forth in this Section 6 to be over broad or unenforceable for any reason,
these covenants shall be reformed by the court, pursuant to Tex. Bus. & Co. Code
▇▇▇. Section 15.50(2) (or any successor provision) and enforced to the maximum
extent permissible under Texas law.
6. Miscellaneous.
6.1 Assignment. Executive shall not have the right to assign this Agreement.
The Company shall have the right to assign this Agreement to any party that
purchases all or substantially all of the assets of the Company.
6.2 Injunctive Relief. Executive acknowledges that the services to be rendered
under the provisions of this Agreement are of a special, unique and
extraordinary character and that it would be difficult or impossible to replace
such services. Accordingly, Executive agrees that any breach or threatened
breach by him of the covenants contained in Section 6 of this Agreement may
cause irreparable harm to the Company for which monetary damages may not be
adequate and accordingly, any such breach or threatened breach of Section 6 of
this Agreement shall entitle Company, in addition to all other legal remedies
available to it at law or in equity, to seek a temporary or permanent injunction
to enjoin such breach or threatened breach. Such injunction shall be available
without the posting of any bond or other security, and the Executive hereby
consents to the issuance of such injunction.
6.3 Binding Effect. This Agreement shall inure to the benefit of, be binding
upon and enforceable against, the parties hereto and their permitted, respective
successor, heirs, beneficiaries and permitted assigns.
6.4 Headings. The headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
6.5 Notices. All notices, requests, demands and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given when personally delivered, sent by registered or certified
mail, return receipt requested, postage
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prepaid, or by private overnight mail service (e.g. Federal Express) to the
party at the address set forth above or to such other address as either party or
the Company may hereafter give notice of in accordance with the provisions
hereof. Notices shall be deemed given on the sooner of the date actually
received or the third business day after sending.
6.6 Waiver. The waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a continuing waiver of any
subsequent breach by either party. No waiver by either party of any provision
or condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time. No
waiver by either party of any provisions or condition to be performed shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
time or any prior or subsequent time.
6.7 Governing Law; Jurisdiction and Venue. Regardless of the place of
performance, this Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without giving effect to such State's
conflicts of laws provisions.
6.8 Severability. If, for any reason, any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement
not held so invalid, and each such other provision shall to the full extent
consistent with law continue in full force and effect. If any provision of this
Agreement shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision not held so invalid, and the rest of such provision,
together with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.
6.9 Counterparts. This Agreement maybe executed simultaneously in one or more
original or facsimile counterparts, each of, which shall be deemed an original,
but all of which together shall constitute one of the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
COMPANY: Personal Medical Records, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇▇
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Title: CEO and President
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EXECUTIVE: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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8/1/97
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