Exhibit 10.37
Confidential Materials omitted and filed
separately with the Securities and Exchange Commission.
Asterisks denote omissions.
EMPLOYMENT, NONCOMPETITION AND
NONDISCLOSURE AGREEMENT
THIS EMPLOYMENT AGREEMENT (this
“ Employment Agreement ”) is made by and between
IDX SYSTEMS CORPORATION, a Vermont corporation (the “
Company ”), and James H. Crook, Jr. (the “
Executive ”), as of the date of acceptance hereof by
the Company in its offices in South Burlington, Vermont, and it
shall take effect retroactively as of January 1, 2003 (the “
Effective Date ”).
BACKGROUND
The Executive is employed by the
Company. The Company desires to maintain the employment of the
Executive, and the Executive is willing to accept such continued
employment, upon the terms and conditions hereinafter set
forth.
On June 16, 2003, the Compensation
Committee of the Board of Directors of the Company granted the
Executive options to purchase common stock, $0.01 par value per
share, of the Company in the aggregate amount of seven hundred
thousand (700,000) shares. Such options were granted pursuant to
certain restrictions and rights set forth in the Minutes of Special
Meeting of the Compensation Committee of the Board of Directors for
a meeting beginning on June 15, 2003 and adjourned until June 16,
2003, and are in no way governed by this Employment
Agreement.
The Executive acknowledges that in
the course of rendering services to the Company, he may have and
will become acquainted with information about the business and
financial affairs of the Company, and may have contributed or may
in the future contribute to such information. The Executive
recognizes that in order to protect the legitimate interests of the
Company it is necessary for the Company to protect all such
information by keeping it secret or confidential.
IN CONSIDERATION of the premises,
the mutual covenants and conditions set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT
1.1 Employment at Will . The
Company hereby offers the Executive, and Executive hereby accepts,
employment or continued employment as President and Chief Executive
Officer of the Company upon the terms and conditions hereinafter
set forth. Employment by the Company is terminable at any time, for
any reason, at the will of either the Executive or the Company.
Executive understands and acknowledges that, as President and Chief
Executive Officer of the Company, he serves in such capacity(ies),
at the pleasure of the Board of Directors of the Company, and his
service may be terminated in the sole discretion of the Board of
Directors. No statement of policy or procedure, whether written or
oral, or set forth in any manual or guide, shall be a promise by
the Company to continue employment for any definite term, nor shall
any such statement, policy or procedure require the Company to
follow any special procedure, such as progressive discipline,
before terminating employment.
1.2 Location . The Executive
will work at the Company’s offices in South Burlington,
Vermont, and Executive’s position may require reasonable
travel to other offices of the Company and/or to the customer
locations serviced by such offices.
1.3 Exclusive Employment .
The Executive shall devote his full-time efforts during normal
business hours, and as otherwise reasonably required to fulfill
Executive’s employment responsibilities, exclusively for the
benefit of the Company as required hereunder, and shall perform no
services for, and shall not become employed or engaged by, any
other person, firm or entity while employed by the Company. The
foregoing shall not prevent Executive from (i) serving on
corporate, civic or charitable boards or committees; (ii)
delivering lectures or fulfilling speaking engagements; and/or
(iii) managing personal investments, so long as such activities do
not interfere with the performance of Executive’s
responsibilities under this Employment Agreement.
1.4 Duties . The
Executive’s duties and responsibilities shall be as assigned
by the Board of Directors of the Company in its discretion but
shall be consistent with Executive’s position as Chief
Executive Officer and President. At all times he shall be subject
to the direction and control of the Board of Directors of the
Company.
2. COMPENSATION
During the Term (as defined in
Section 14.1 hereof), as the compensation to the Executive
for all of the services to be provided by the Executive to the
Company as its Chief Executive Officer and President, the Company
agrees to pay, and the Executive agrees to and does accept, the
payments set forth below in this Section 2 , unless
otherwise agreed to by the Company and the Executive:
2.1 Salary . For so long as
the Executive shall remain employed by the Company in the capacity
of President and Chief Executive Officer during or after the Term,
he shall be entitled to receive an annual salary of five hundred
thousand dollars ($500,000) (“ Salary ”). Salary
shall be paid semi-monthly on the fifteenth (15th) and last day of
each month, in arrears, or on such other legal basis as the Company
shall generally follow from time to time, net of all taxes and
other legally required or mutually agreed withholdings. In this
regard, the Executive hereby authorizes the Company to withhold
from salary payments any amounts owed to the Company by Executive
hereunder or any other amounts as may be agreed to subsequently,
including, but not limited to, over payments and 401k
contributions.
2.2 Benefits . The Executive
shall be entitled to the benefits, such as health, insurance,
vacation, paid and unpaid leave as the Company may from time to
time offer to employees as a standard benefit. Benefits are subject
to change at any time with such notice to employees as may be
required by applicable employee benefit plans and laws governing
them. No special or different terms shall apply to Executive unless
set forth in writing and signed by an authorized executive officer
of the Company. Notwithstanding the foregoing, the Executive is
entitled to a minimum of four weeks paid vacation per calendar
year.
2.3 Cash Bonuses . The
Executive shall be entitled to receive, for each year of employment
during the Term of this Employment Agreement, an annual cash bonus
payment based upon a target bonus amount (the “ Target
Bonus Amount ”) of two hundred fifty thousand dollars
($250,000) (the actual amount paid referred to herein as the
“ Annual Cash Bonus ”) upon attainment of all of
the conditions specified in a schedule in substantially the form of
Schedule A , to be furnished to the Executive by the
Compensation Committee concurrently with the execution hereof for
fiscal 2003, and thereafter not later than January 31 of each
subsequent fiscal year, or fourteen (14) days after the applicable
year’s budget has been finalized and approved by the Company,
whichever is later (each a “ Compensation Committee
Schedule ”). The Annual Cash Bonus may be less or more
than two hundred fifty thousand dollars ($250,000) determined in
accordance with the Compensation Committee Schedule.
Notwithstanding the foregoing, should the Company increase or
decrease its financial targets during the Company’s fiscal
year, the Compensation Committee may, in turn, raise or lower the
Target Earnings Per
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Share (as set forth and defined in the
Compensation Committee Schedule), as the case may be, and the
Compensation Committee shall promptly provide a revised
Compensation Committee Schedule to the Executive for such year.
Cash bonuses may otherwise be payable to the Executive within the
sole discretion of the Board of Directors or Compensation Committee
thereof. Each Annual Cash Bonus earned shall be paid as set forth
in the Compensation Committee Schedule.
2.4 Equity Awards . Subject
to the approval of the Board of Directors, or the Compensation
Committee, the Executive shall be entitled to receive options to
purchase common stock of the Company as set forth on Schedule
B (the “ Option Schedule ”), under and
subject to all of the terms of the Company’s 1995 Stock
Option Plan or its successor (the “ Plan ”),
Schedule B , and the Company’s form of Stock Option
Agreement not inconsistent herewith, but including its penalties
for improper acts, competition, and the like.
2.5 Stock Ownership .
Executive shall not be entitled to receive any Annual Cash Bonus,
as set forth in this Employment Agreement, unless Executive
possesses sole beneficial ownership of common stock of the Company,
as of the date of accrual to him of such Annual Cash Bonus, having
a value at such time equal to or greater than three (3) times the
sum of (i) annual Salary in effect at such time and (ii) potential
Annual Cash Bonus for such year. For the calendar years 2005 and
2006, respectively, such common stock ownership requirement shall
be four (4) times the total of the amounts described in clauses (i)
and (ii), and for years 2007 and thereafter, five (5) times such
total. If, as of any such date, the Executive has sole beneficial
ownership of at least one hundred fifty thousand (150,000) shares
of Common Stock, he shall be deemed to have satisfied each such
measurement.
2.6 Review of Salary and
Bonus . Salary and bonus shall be reviewed at least annually by
the Board of Directors of the Company, or the Compensation
Committee, and may be adjusted upward but shall not be decreased
below the amounts set forth herein or the amounts actually provided
in the previous year.
2.7 Miscellaneous Items
.
2.7.1 Change of Control
Matters . The Company’s Board of Directors has adopted,
but the Company has not executed, a “change of control”
benefit or plan, in the form of an Executive Retention Agreement,
for its executives. However, the Board of Directors is considering
the replacement of such plan with a revised plan. The Executive
shall be entitled to participate in any such “change of
control” benefit or plan adopted and executed by the Company,
with any provisions or carve-outs that the Company deems
appropriate for the Executive.
2.7.2 Supplemental Retirement
Plan . Executive will be eligible to participate in any
supplemental retirement plan, if adopted by the Company upon the
standard terms that may be offered to other executives of the
Company.
2.8 No Assurances . The
Executive acknowledges that there can be no assurance that the
performance of the Company will be sufficient to achieve the
conditions prerequisite to the payment of any of the bonus
compensation provided for above, nor can there be any assurance at
any time with respect to the value of any of the equity
compensation provided for above, including without limitation at
the time of any exercise of stock options.
3. DEFINITION OF PROPRIETARY
INFORMATION
For purposes of this Employment
Agreement the term “ Proprietary Information ”
means all of the following materials and information in whatever
form or medium (even if not patentable, or not protectable or
protected by copyright laws) which the Executive receives access
to, creates, authors or develops, in whole or in part, in the
course of and within the scope of his employment with the Company
or through the use of any of the Company’s facilities or
resources:
Page 3 of 12
3.1 Computer Software .
Computer programs, in any form, and all elements thereof, including
all source and object codes, flow charts, algorithms, coding
sheets, compilers, assemblers, programmer notes, design documents,
and routines.
3.2 Research . Discoveries,
concepts and ideas, whether or not patentable or protectable by
copyright, including, without limitation, the nature and results of
research and development activities, technical information on
product or program performance and reliability, processes,
formulas, techniques, and “know-how.”
3.3 Marketing and Customer
Information . Price lists, pricing policies, quoting
procedures, financial information, customer and prospect names and
requirements, customer data, customer site information, prospect
and call lists, telephone directories and calendars.
3.4 Business Information .
Production development processes, marketing techniques, mailing
lists, purchasing information, financial statements, management
reports and business plans.
3.5 Other . Any other
materials or information related to the business or activities of
the Company which are not generally known to others engaged in
similar business or activities.
Failure to mark any of the
Proprietary Information as confidential shall not affect its status
as part of the Proprietary Information under the terms of this
Employment Agreement.
4. DISCLOSURE OF INFORMATION,
WORKS AND MATERIALS
The Executive recognizes that he
will be exposed to the Company’s confidential information
including without limitation the Company’s trade secrets, and
Proprietary Information. The Executive is hereby notified that such
information includes all computer programs developed by the Company
and the documentation for them. Further, this includes business
information, such as price lists, customer lists and data bases,
business plans, sales projections and product development plans.
The Executive further acknowledges that any information and
materials received by the Company from third parties in confidence
must be treated confidentially. This includes patient information.
Executive covenants and agrees that he shall not, except with the
prior written consent of the Company, or unless the Executive is
acting as an employee of the Company solely for the benefit of the
Company in connection with the Company’s business and in
accordance with the Company’s business practices and employee
policies, at any time during or following the term of his
employment with the Company, directly or indirectly divulge,
reveal, report, publish, transfer or disclose, for any purpose
whatsoever, any of such confidential information which has been
obtained by or disclosed to him as a result of his employment with
the Company, including, without limitation, any Proprietary
Information, as defined in Section 3 hereof.
5. OWNERSHIP OF INFORMATION,
WORKS AND RIGHTS THEREIN
5.1 Title . The Executive
hereby assigns and transfers to the Company and agrees that the
Company shall be the owner of all inventions, discoveries, work,
computer software program or other computer-related equipment or
technology, conceived, developed, or made by the Executive, either
alone or with others, in whole or in part, during the
Executive’s employment by the Company, which are useful in,
or directly or indirectly related to the Company’s business
or which relate to, or are conceived, developed, or made in the
course of, the Executive’s employment or which are developed
or made from, or by reason of knowledge gained from, such
employment . If any one or more of the aforementioned are deemed to
fall within the definition of “work made for hire,”
within the meaning of the Copyright Act of 1976, as amended, such
work shall be considered “work made for hire,” the
copyright of which shall be exclusively owned by and vested in the
Company. If any of the aforementioned are considered to be work not
included in the categories of work covered by the
“work
Page 4 of 12
made for hire” definition contained in the
Copyright Act, such work shall be, and it hereby is, assigned or
transferred completely and exclusively to the Company. The
Executive agrees to execute any instruments and to do all other
things reasonably requested by the Company (both during and after
the Executive’s employment with the Company) in order to
fully vest and perfect in the Company all ownership rights in those
items hereby transferred by the Executive to the Company. The
Executive further agrees to disclose immediately to the Company all
Proprietary Information conceived or developed in whole or in part
by him during the term of his employment with the Company and to
assign to the Company any right, title or interest he may have in
such Proprietary Information.
5.2 Executive’s Works .
The Executive hereby represents and warrants that the Executive has
fully disclosed to the Company and attached hereto a description of
any computer program or other computer-related technology not
covered in Section 5.1 above which, prior to his employment
with the Company, the Executive conceived of or developed, wholly
or in part, but which has not been published or filed with the
United States Patent or Copyright Offices.
5.3 Works and Interests of
Others . Executive hereby represents and warrants that
employment by the Company will not violate any agreement or promise
of employee to any other person, and that Executive will not use
any property or confidential information of others in his work for
the Company.
6. RECORDS AND TANGIBLE
MATERIALS
All notes, data, tapes, reference
materials, sketches, drawings, memoranda and records in any way
relating to any of the information referred to in Section 3
, 4 , and 5 hereof (including, without limitation,
any Proprietary Information) or otherwise prepared by Executive in
the course of his employment, and all copies thereof, shall belong
exclusively to the Company, and the Executive agrees to deliver to
the Company on request all copies of such materials in his
possession or then under his control. In the absence of such a
request, Executive shall deliver such items to the Company upon the
termination for any reason of the Executive’s employment with
the Company.
7. PROTECTION OF INFORMATION AND
GOODWILL
7.1 Nature of Business .
Executive and the Company recognize that Executive will acquire
knowledge as a result of working for the Company, especially in his
capacity as President and Chief Executive Officer, and that such
knowledge will include not only general knowledge of the medical
information systems business, but specific knowledge of the
Company’s business, secrets, products and customers,
including Confidential Information. Executive and the Company
recognize that upon termination of employment by the Company,
Executive could use such specific knowledge and information to the
detriment of the Company by disclosing it to competitors, customers
and prospects, and using it to obtain or win business. Executive
and the Company recognize that proof of such disclosure would be
difficult, yet the harm caused thereby could be significant to the
Company. Therefore, Executive and the Company are willing to agree
that Confidential Information will be disclosed to Executive, and,
to protect Employer, its relationship with its customers, its
competitive position, and its goodwill, Executive will not engage
in a competitive venture for a twenty-four (24) month period after
employment by the Company, as specified below.
7.2 Competitive Ventures .
The Company is engaged throughout the United States, United Kingdom
and Canada in the development and marketing of information systems,
including computer software and related services, for hospitals,
physician groups, laboratories, and clinics, and also for providers
of information services to such groups (such activities, products
and services being referred to herein as the “ Medical
Information Systems Business ”). Executive recognizes
that the Company’s medical information systems work together
and are designed to share common files, architectures, a
“look and feel,” and other elements. In the event of
the resignation by the Executive or termination of
Executive’s employment for Cause, the Executive agrees that
for a period of twenty-four (24) months from the date of such
termination (the “ Prohibition Period ”), he
will not:
Page 5 of 12
7.2.1 Engage directly for himself,
or jointly with or on behalf of any person, entity or venture
involved in the Medical Information Systems Business,
and
7.2.2 Work for or become employed by
or associated with any person, entity or venture engaged in the
Medical Information Systems Business, including, by way of example
and without limitation, the entities listed in Schedule C
attached hereto and made a part hereof (which entities together
with their successors and assigns, are referred to herein as the
“ Designated Entities ”), where either (i) the
Executive’s duties will be substantially similar to those he
has performed for the Company hereunder, or (ii) the
Executive’s duties would be likely to involve, or require, or
would involve or require, disclosure or use of Proprietary
Information. For example, and without limiting the generality of
the foregoing, if Executive is employed by the Company as a
computer programmer working on medical information systems, he
shall not, during the Prohibition Period, work as a computer
programm
