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EXHIBIT 10.09
NEOFORMA, INCORPORATED
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of July 1, 1999 (the
"Effective Date"), by and between Neoforma, Incorporated, a Delaware corporation
(the "Company"), and Xxxxxx X. Xxxxxxx (the "Executive").
WHEREAS, the Company desires to employ the Executive as of the Effective
Date and the Executive desires to accept employment with the Company an the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing recital and the
respective covenants and agreements of the parties contained in this document,
the Company and the Executive agree as follows:
1. Employment and Duties. During the Employment Period (as defined in
paragraph 2 below), the Executive will serve as President and Chief Executive
Officer of the Company. The duties and responsibilities of the Executive shall
include the duties and responsibilities for the Executive's corporate offices
and positions as set forth in the Company's bylaws from time to time in effect
and such other duties and responsibilities as the board of directors of the
Company (the "Board of Directors") may from time to time reasonably assign to
the Executive, in all cases to be consistent with the Executive's corporate
offices and positions. The Executive shall perform faithfully the executive
duties assigned to him to the best of his ability. At the next meeting of the
Board of Directors, the Executive will be nominated to serve as a Director, and
if so elected will be nominated as Chairman of the Board of Directors of the
Company, and, if elected, the Executive shall serve in such capacity without
additional compensation.
2. Employment Period.
(a) Basic Rule. The employment period shall begin July 1, 1999
and shall continue thereafter (the "Employment Period") unless terminated
pursuant to the provisions of this Agreement.
(b) Termination. The Company may terminate the Executive's
employment by giving the Executive notice in writing. If the Company terminates
the Executive's employment for any reason other than Cause or Disability, both
as defined below, or if the Executive terminates his employment for Good Reason,
as defined below, the provisions of paragraphs 13(a)(i), 13(b) and 13(c) shall
apply. The Executive may terminate his employment by giving the Company 30 days'
advance written notice. If the Executive terminates his employment other than
for Good Reason, the provisions of paragraph 13(b)(ii) shall apply. Upon
termination of the Executive's employment with the Company, the Executive's
rights under any applicable benefit plans shall be determined under the
provisions of those plans. Any waiver of notice shall be valid only if it is
made in writing and expressly refers to the applicable notice requirement of
this subparagraph 2(b).
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(c) Death. The Executive's employment shall terminate in the
event of his death. In that event, any portion of the Option (as defined in
paragraph 6(a) below) that was scheduled to vest within one (1) year of the
Executive's death shall become vested as of the date of death and the Company's
right of repurchase shall lapse as to those shares. The Company shall have no
obligation to pay or provide any other compensation or benefits under this
Agreement on account of the Executive's death, or for periods following the
Executive's death, provided that the Company's obligations under paragraphs
13(a)(i) and 13(c) shall not be interrupted as a result of the Executive's
death. The Executive's rights under the benefit plans of the Company in the
event of the Executive's death shall be determined under the provisions of those
plans.
(d) Cause. The Company may terminate the Executive's employment
for cause by giving the Executive notice in writing. For all purposes under this
Agreement, "Cause" shall mean (A) fraud, misappropriation embezzlement or
material misconduct on the part of the Executive, (B) the Executive's willful
failure to substantially perform his duties for the Company when, and to the
extent, requested by the Board, or its lawfully departed representative, to do
so and failure to correct same within five (5) business days after notice from
the Board or its lawfully designated representative requesting the Executive to
do so, or (C) the Executive's willful breach of any material provision of this
Agreement, or other agreements between the Executive and the Company and such
breach continues for a period of five (5) business days after notice from the
Board or its lawfully designated representative of such breach.
(e) Disability. The Company may terminate the Executive's
employment for Disability by giving the Executive notice in writing. For all
purposes under this Agreement, "Disability" shall mean that the Executive, at
the time notice is given, has been unable to substantially perform his duties
under this Agreement for a period of not less than six (6) consecutive months as
the result of his incapacity due to physical or mental illness. In that event,
any portion of the Option (as defined in paragraph 6(a) below) that was
scheduled to vest within one (1) year of the Executive's termination due to
Disability shall become vested as of the date of such termination and the
Company's right of repurchase shall lapse as to those shares. If the Executive
resumes the performance of substantially all of his duties hereunder before the
termination of his employment under this subparagraph (e) becomes effective, the
notice of termination and the accelerated Option vesting shall automatically be
deemed to have been revoked. No compensation or benefits will be paid or
provided to the Executive under this Agreement on account of termination for
Disability, or for periods following the date when such a termination of
employment is effective. The Executive's rights under the benefit plans of the
Company shall be determined under the provisions of those plans.
(f) Good Reason. Employment with the Company may be regarded as
having been constructively terminated by the Company, and the Executive may
therefore terminate his employment for Good Reason and thereupon become entitled
to the benefits of paragraphs 13(a)(i), 13(b) and 13(c) below, if he resigns his
employment within six (6) months of the occurrence of any one or more of the
following events:
(i) without the Executive's express written consent, the
assignment to the Executive of any duties or the reduction of the Executive's
duties, either of which is substantially inconsistent with Executive's position
or responsibilities with the Company in effect immediately prior to such
assignment;
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(ii) a reduction by the Company in the Base Salary of the
Executive as in effect immediately prior to such reduction;
(iii) a material reduction by the Company in the kind of level of
employee benefits, including the Bonus to which the Executive is entitled
immediately prior to such reduction, with the result that the Executive's
overall benefits package is significantly reduced, unless similar reductions are
made to the overall benefits package of all other senior executives of the
Company;
(iv) the relocation of the Executive to a facility or a location
more than 50 miles from the Company's present location, without the Executive's
express written consent; or
(v) any material breach by the Company of any material provision
of this Agreement.
3. Place of Employment. The Executive's services shall be performed at
the Company's principal executive offices in Santa Clara, California. The
parties acknowledge, however, that the Executive may be required to travel in
connection with the performance of his duties hereunder.
4. Base Salary. For all services to be rendered by the Executive
pursuant to this Agreement, the Company agrees to pay the Executive during the
Employment Period a base salary (the "Base Salary") at an annual rate of not
less than $500,000. The Base Salary shall be paid in periodic installments in
accordance with the Company's regular payroll practices. The Company agrees to
review the Base Salary at least annually as of the payroll payment date nearest
each anniversary of the Effective Date (beginning in 2000) and to make such
increases therein as the Board of Directors may approve.
5. Bonus. The Executive shall be entitled to a guaranteed bonus payment
of $250,000 on December 31, 1999, provided that he is an employee of the Company
on such date. An additional guaranteed bonus payment of $250,000 will be paid to
the Executive on June 30, 2000, provided that he is an employee of the Company
on such date, and provided further that such bonus shall offset any bonus
otherwise earned during the Company's 2000 fiscal year as defined below.
Beginning with the Company's 2000 fiscal year and for each fiscal year
thereafter during the Employment Period, the Executive will be eligible to
receive an annual bonus (the "Bonus") of at least $500,000 for such fiscal year
based upon certain financial criteria to be specified by the Board of Directors
including revenue and profitability targets and/or other organizational
milestones. Any Bonus payable hereunder shall be payable annually in accordance
with the Company's normal practices and policies.
Furthermore, if the Executive, after making a good faith effort to
receive payment, is not paid the $338,000 bonus to which he is entitled by
Cardinal Health, Inc. by September 30, 1999, the Executive is entitled to be
reimbursed, by the Company, the amount he is not paid, will assign any legal
claim he may have to that payment and agrees to cooperate fully with the Company
should the Company pursue the legal claim.
6. Stock and Stock Option.
(a) Stock and Stock Option. As of the Effective Date, the Company
shall issue the Executive (with no right to repurchase) 1,601,029 shares of the
Company's common stock (the
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"Bonus Shares"), which represents 4% of the Company's fully diluted outstanding
common stock immediately following such stock grant (including common shares and
assumed conversion into common stock of all series of preferred shares,
warrants, options (including the option described in the following sentence) and
shares available for option grants). The Executive shall pay a per share price
for the Bonus Shares equal to $0.10 per share. Further, the Company shall grant
the Executive an option (the "Option") to purchase 3,602,315 shares of the
Company's common stock, which represents 9% of the Company's fully diluted
outstanding common stock immediately following the grant of the Option and of
the Bonus Shares (but including all other common shares and assumed conversion
into common stock of all series of preferred shares, warrants, options and
shares available for other option grants). The per share exercise price for the
shares subject to the Option (the "Option Shares") shall be $.10 per share. At
the Executive's election, the form of payment for both the Bonus Shares and the
Option Shares may be in separate promissory notes signed by the Executive. Any
such promissory note shall be secured by the Bonus Shares. Any such note and
associated security agreement shall be made in the form specified by the
Company, and shall bear interest at the then Applicable Federal Rate determined
under the Internal Revenue Code. The principal and interest on such notes shall
be fully due and payable upon the earlier of four (4) years from their effective
date, two (2) years after the initial public offering of the Company's common
stock, three (3) months after the Executive's termination of employment, or upon
the sale of the shares purchased with the note. The Option Shares shall vest as
described in paragraph 6(b) below and shall be subject to such other terms and
conditions as are described in paragraph 6(b) and (c) below. The issuance of the
Bonus Shares and Option Shares are each subject to the Executive's execution of
the Shareholder Agreement that exists by and among certain of the Company's
shareholders, as it may be amended from time to time.
(b) Vesting. The Option Shares shall vest in equal monthly
installments on the last day of each month over the 48-month period that begins
July 1, 1999 and ends June 30, 2003, provided that the Executive remains an
employee of the Company on each such vesting date. In addition, in the event of
a Change in Control (as defined below), the unvested portion of the Option shall
immediately accelerate as to all shares so that the Company's right to
repurchase such shares shall lapse as of the Change of Control (as defined
below). If there is a Change of Control (as defined below) that results in
constructive termination of the Executive for Good Reason within twelve (12)
months of the Change of Control (as defined below), then the balance of the Loan
(as defined in paragraph 8) will be forgiven. For purposes of this Agreement the
term "Change of Control" shall mean the occurrence of any of the following
events subsequent to the equity financing described in paragraph 13(d) below:
(i) Any "Person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
is or becomes the "beneficial owner" (as defined in Rule l3d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
forty percent (40%) or more of the total voting power represented by the
Company's then outstanding voting securities; provided, however, that a Change
in Control shall be deemed to occur in the event any one individual becomes the
"beneficial owner" (as defined in Rule l3d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing thirty percent (30%) or
more of the voting power represented by the Company's then outstanding voting
securities; or
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(ii) A change in the composition of the Board of Directors of the
Company occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or
(iii) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least seventy percent (70%)
of the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
(c) Option Provisions. The Option shall be granted under the July
1, 1999 Stock Option Plan (the "Stock Plan") and, except as expressly provided
otherwise in this paragraph 6, shall be subject to the terms and conditions of
the Stock Plan and form of option agreement; provided, however, that the
Company's Board of Directors may, in its discretion, grant the Option and/or any
additional option(s), if any, outside of the Stock Plan, and any such Options
shall include such other terms as the Board of Directors may specify that are
not inconsistent with the terms hereof. The Option will expire on the first to
occur of: (i) in the event the Executive's employment terminates by reason of
the Executive's death or by the Company as a result of the Executive's
Disability, twelve (12) months from the date of such termination; (ii) in the
event the Executive terminates his employment for Good Reason, or in the event
the Company terminates the Executive's employment other than for Cause, twelve
(12) months from the date of such termination; (iii) in the event the Executive
resigns (other than for Good Reason) or is terminated by the Company for Cause,
ninety (90) days after the date of such resignation or termination; or (iv) ten
(10) years from the date of grant of each such Option.
7. Expenses. The Executive shall be entitled to prompt reimbursement by
the Company for all reasonable ordinary and necessary travel, entertainment, and
other expenses incurred by the Executive during the Employment Period (in
accordance with the policies and procedures established by the Company for its
senior executive officers) in the performance of his duties and responsibilities
under this Agreement; provided, that the Executive shall properly account for
such expenses in accordance with Company policies and procedures.
8. Real Estate Assistance. The Company will provide the Executive with a
moving assistance loan (the "Loan") of up to $2,500,000 to assist the Executive
in moving into a home similar in lifestyle to that in which he presently
resides. The Loan will be forgiven in equal monthly installments on the last day
of each month from the date of closing on such home through June 30, 2003,
provided that the Executive remains in his position through each such date. The
loan will be interest free. To the extent required by the Internal Revenue Code,
the Executive will have taxable
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income for imputed interest and the amount of any loan forgiveness. At the
Company's election, this Loan will be secured by stock and/or the real estate
itself, and is subject to the Executive executing a promissory note and security
agreement satisfactory to the Company.
9. Relocation Expenses. The Company will provide the Executive with a
full relocation package to cover all closing costs on the sale of his home plus
all acquisition costs on the purchase of his now home. The Company will also
provide packing and unpacking of household goods, relocation of household goods,
two house-hunting trips, plus temporary living expenses for up to three months.
The Company will also provide a gross-up on relocation expenses that are not
deductible for tax purposes. In the event the Executive prefers not to relocate,
the Company will provide an apartment or condominium plus a leased car for two
(2) years or until a permanent move is completed.
Additionally, the Company will provide up to $300,000 to the Executive
to compensate for any financial loss realized in the sale of his present home as
measured against the $1,200,000 cost of building that home. Furthermore, any
relocation expense reimbursement up to $100,000 owed by the Executive to
Cardinal Health, Incorporated and required to be repaid will be reimbursed to
the Executive by the Company.
10. Other Benefits. During the Employment Period, the Executive shall be
entitled to participate in employee benefit plans or programs of the Company, if
any, to the extent that his position, tenure, salary, age, health and other
qualifications make him eligible to participate, subject to the rules and
regulations applicable thereto.
11. Vacations and Holidays. The Executive shall be entitled to four (4)
weeks paid vacation and Company holidays in accordance with the Company's
policies in effect from time to time for its senior executive officers.
12. Other Activities. The Executive shall devote substantially all of
his working time and efforts during the Company's normal business hours to the
business and affairs of the Company and its subsidiaries and to the diligent and
faithful performance of the duties and responsibilities duly assigned to him
pursuant to this Agreement, except for vacations, holidays and sickness.
However, the Executive may devote a reasonable amount of his time to civic,
community, or charitable activities and, with the prior written approval of the
Board of Directors, to serve as a director of other corporations and to other
types of business or public activities not expressly mentioned in this
paragraph. The Company agrees that the Executive may continue serving as a
director of Epitope, Incorporated and Act Medical, Incorporated consistent with
this provision.
13. Termination Benefits. In the event the Executive's employment
terminates prior to the end of the Employment Period, then the Executive shall
be entitled to receive severance and other benefits as follows:
(a) Severance.
(i) Involuntary Termination. If the Company terminates the
Executive's employment other than for Disability or Cause, or if the Executive
terminates his employment for Good Reason, then, in lieu of any severance
benefits to which the Executive may otherwise be entitled
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under any Company severance plan or program, the Executive shall be entitled to
payment equivalent to one (1) year of his Base Salary, Bonus and benefits to be
paid according to normal payroll practices. In addition, the Company's right to
repurchase as to all outstanding stock held by the Executive will lapse and the
forgiveness of the Loan will be treated as if the Executive had been employed
for twelve (12) additional months after the termination of employment.
(ii) Other Termination. In the event the Executive's employment
terminates for any reason other than as described in paragraph 13(a)(i) above,
including by reason of the Executive's death, Disability or resignation other
than for Good Reason, then the Executive shall be entitled to receive severance
and any other benefits only as may then be established under the Company's
existing severance and benefit plans and policies at the time of such
termination.
(iii) Limitation on Payments. In the event that the severance and
other benefits (including, without limitation, accelerated vesting of stock
options) provided for in this Agreement or otherwise payable to the Executive
(i) constitute "parachute payments" within the meaning of Section 280G of the
Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the
Code (the "Excise Tax"), then Executive's benefits under this Agreement shall be
reduced to the extent necessary in order to avoid such benefits being subject to
the Excise Tax.
Unless the Company and the Executive otherwise agree in writing, any
determination required under this Section shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon the Executive and the Company
for all purposes. For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and 4999 of the Code.
The Company and the Executive shall furnish to the Accountants such information
and documents as the Accounts may reasonably request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section.
(b) Options. In the event the Executive's employment is
terminated by the Company as described in paragraph 13(a)(i) above, then the
Executives unvested portion of the Option and any additional options granted to
the Executive will be accelerated and the Company's right to repurchase will
lapse as if the Executive had worked for one (1) additional year from the date
of such termination. If such termination occurs during the first year of this
Agreement, the Executive is entitled to accelerate the vesting of the first
twenty-four (24) months of the stock options granted to him under this
Agreement, that is, the Company's right to repurchase will lapse as if the
Executive had been employed for twenty-four (24) months from the Effective Date.
(c) Bonuses. In the event the Executive's employment is
terminated by the Company as described in paragraph 13(a)(i) above, then the
Executive shall be entitled to receive an amount equivalent to one (1) year's
Bonus as described in paragraph 5. In the event the Executive's employment
terminates for any other reason (other than Cause) during any fiscal year of the
Company ending during the Employment Period, then the Executive (or his estate)
shall be entitled to payment of a portion of the Bonus determined, after the end
of such fiscal year, by multiplying the amount of the Bonus which would have
become payable to the Executive had he remained employed until the
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end of such fiscal year, by a fraction, the numerator of which will be the
number of days in which he was employed by the Company (or any of its
subsidiaries) in such fiscal year, and the denominator of which shall be the
number of days in such fiscal year. To the extent all or any portion of the
Bonus is payable to the Executive pursuant to the preceding sentence, such
amount shall be paid in accordance with paragraph 5. In the event the Company
terminates the Executive's employment for Cause, then the Executive shall not be
entitled to any Bonus for the fiscal year in which such termination occurs.
14. Proprietary Information. During the Employment Period and
thereafter, the Executive shall not, without the prior written consent of the
Board of Directors, disclose or use for any purpose (except in the course of his
employment under this Agreement and in furtherance of the business of the
Company or any of its affiliates or subsidiaries) any confidential information
or proprietary data of the Company. As an express condition of the Executive's
employment with the Company, the Executive agrees to execute confidentiality
agreements as requested by the Company, including but not limited to the
Company's Employment, Confidential Information and Invention Assignment
Agreement which is attached hereto as Exhibit A and incorporated herein by
reference.
15. Non-Solicit. The Executive covenants and agrees with the Company
that during his employment with the Company and for a period expiring one (1)
year after the date of termination of such employment, he will not solicit any
of the Company's then-current employees to terminate their employment with the
Company or to become employed by any firm, company or other business enterprise
with which the Executive may then be connected.
16. Right to Advice of Counsel. The Executive acknowledges that he has
consulted with counsel and is fully aware of his rights and obligations under
this Agreement. Furthermore, the Company agrees to reimburse the Executive for
all reasonable costs for an attorney to review this Agreement.
17. Successors. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption agreement
prior to the effectiveness of any such succession shall entitle the Executive to
the benefits described in paragraphs 13(a)(i), 13(b) and 13(c) of this
Agreement, subject to the terms and conditions therein.
18. Arbitration. As an express condition of the Executive's employment
with the Company, the Executive agrees to arbitrate any and all disputes or
controversies arising out of this Agreement pursuant to the Arbitration
Agreement, which is attached hereto as Exhibit B and incorporated herein by
reference.
19. Absence of Conflict. The Executive represents and warrants that his
employment by the Company as described herein shall not conflict with and will
not be constrained by any prior employment or consulting agreement or
relationship and that he is not aware of any claims, pending or threatened,
against him in relation to any such prior agreement or relationship.
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20. Assignment. This Agreement and all rights under this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees, successors and assigns.
This Agreement is personal in nature, and neither of the parties to this
Agreement shall, without the written consent of the other, assign or transfer
this Agreement or any right or obligation under this Agreement to any other
person or entity; except that the Company may assign this Agreement to any of
its affiliates or wholly-owned subsidiaries, provided, that such assignment will
not relieve the Company of its obligations hereunder. If the Executive should
die while any amounts are still payable to the Executive hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
21. Notices. For purposes of this Agreement, notices and other
communications provided for in this Agreement shall be in writing and shall be
delivered personally or sent by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
If to the Company: Neoforma, Incorporated
0000-0 Xxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attention: General Counsel
or to such other address or the attention of such other person as the recipient
party has previously furnished to the other party in writing in accordance with
this paragraph. Such notices or other communications shall be effective upon
delivery or, if earlier, three days after they have been mailed as provided
above.
22. Integration. This Agreement and the Exhibits hereto and any other
agreements referred to herein represent the entire agreement and understanding
between the parties as to the subject matter hereof and supersede all prior or
contemporaneous agreements whether written or oral. No waiver, alteration, or
modification of any of the provisions of this Agreement shall be binding unless
in writing and signed by duly authorized representatives of the parties hereto.
If there is any inconsistency between this Agreement and any other agreement
referred to herein, then the terms of this Agreement will govern.
23. Waiver. Failure or delay on the part of either party hereto to
enforce any right, power, or privilege hereunder shall not be deemed to
constitute a waiver thereof. Additionally, a waiver by either party or a breach
of any promise hereof by the other party shall not operate as or be construed to
constitute a waiver of any subsequent breach by such other party.
24. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
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jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
25. Taxes. All payments made pursuant to this Agreement shall be subject
to withholding of applicable income and employment taxes.
26. Indemnity. The Company will indemnify and provide a defense to the
Executive to the full extent permitted by law with respect to any claims arising
out of the performance of his duties under this Agreement. In addition, the
company will also indemnify and provide a defense to the Executive should
Cardinal Health, Incorporated or any of its affiliates bring any claim against
the Executive in connection with his acceptance of this Agreement or the
performance of his duties thereunder.
27. Headings. The headings of the paragraphs contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.
28. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of California.
29. Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signature of more then one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
NEOFORMA, INCORPORATED
/s/ XXXX XXXXX
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Xxxx Xxxxx, President and CEO
EXECUTIVE:
/s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
EXHIBIT A - Employment, Confidential Information and Invention
Assignment Agreement
EXHIBIT B - Arbitration Agreement
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EXHIBIT A
NEOFORMA, INCORPORATED
EMPLOYMENT, CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT
As a condition of my employment with Neoforma, Incorporated, its
subsidiaries, affiliates, successors or assigns (together the "Company"), and in
consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:
1. CONFIDENTIAL INFORMATION.
(a) COMPANY INFORMATION. I agree at all times during the term of
my employment and thereafter, to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secret or know-how, including, but not limited to, research, product
plans, products, services, customer lists and customers (including, but not
limited to, customers of the Company on whom I called or with whom I became
acquainted during the term of my employment), markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other business
information disclosed to me by the Company either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. I further
understand that Confidential Information does not include any of the foregoing
items which has been made publicly known and made generally available through no
wrongful act of mine or of others who were under confidentiality obligations as
to the item or items involved or improvements or new versions thereof.
(b) FORMER EMPLOYER INFORMATION. I agree that I will not, during
my employment with the Company, improperly use or disclose any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity and that I will not bring onto the premises of the Company any
unpublished document or proprietary information belonging to any such employer,
person or entity unless consented to in writing by such employer, person or
entity.
(c) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as
12
necessary in carrying out my work for the Company consistent with the Company's
agreement with such third party.
2. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto, as
Exhibit A(1), a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company (collectively referred to as "Prior Inventions"),
which belong to me, which relate to the Company's proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a Company product, process or machine a Prior Invention owned by me or in
which I have an interest, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such Prior Invention as part of or in connection
with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will promptly make
full written disclosure to the Company, will hold in trust for the sole right
and benefit of the Company, and hereby assign to the Company, or its designee,
all my right, title, and interest in and to any and all inventions, original
works of authorship, developments, concepts, improvements, designs, discoveries,
ideas, trademarks or trade secrets, whether or not patentable or registrable
under copyright or similar laws, which I may solely or jointly conceive or
develop or reduce to practice, or cause to be conceived or developed or reduced
to practice, during the period of time I am in the employ of the Company
(collectively referred to as "Inventions"), except as provided in Section 3(f)
below. I further acknowledge that all original works of authorship which are
made by me (solely or jointly with others) within the scope of and during the
period of my employment with the Company and which are protectible by copyright
are "works made for hire," as that term is defined in the United States
Copyright Act. I understand and agree that the decision whether or not to
commercialize or market any invention developed by me solely or jointly with
others is within the Company's sole discretion and for the Company's sole
benefit and that no royalty will be due to me as a result of the Company's
efforts to commercialize or market any such invention.
(c) INVENTIONS ASSIGNED TO THE UNITED STATES. I agree to assign
to the United States government all my right, title, and interest in and to any
and all Inventions whenever such full title is required to be in the United
States by a contract between the Company and the United States or any of its
agencies.
(d) MAINTENANCE OF RECORDS. I agree to keep and maintain adequate
and current written records of all Inventions made by me (solely or jointly with
others) during the term of my employment with the Company. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.
-2-
13
(e) PATENT AND COPYRIGHT REGISTRATIONS. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns, and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, to act for and in my behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by me.
(f) EXCEPTION TO ASSIGNMENTS. I understand that the provisions of
this Agreement requiring assignment of Inventions to the Company do not apply to
any invention which qualifies fully under the provisions of California Labor
Code Section 2870 (attached hereto as Exhibit A(2)). I will advise the Company
promptly in writing of any inventions that I believe meet the criteria in
California Labor Code Section 2870 and not otherwise disclosed on Exhibit A(1).
3. CONFLICTING EMPLOYMENT. I agree that, during the term of my
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment, nor will I engage in any other activities that conflict
with my obligations to the Company.
4. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my
possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any aforementioned items developed by me pursuant to my
employment with the Company or otherwise belonging to the Company, its
successors or assigns, including, without limitation, those records maintained
pursuant to paragraph 3(d). In the event of the termination of my employment, I
agree to sign and deliver the "Termination Certification" attached hereto as
Exhibit A(3).
-3-
14
5. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of
the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
6. SOLICITATION OF EMPLOYEES. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage or take away employees of the Company, either for
myself or for any other person or entity.
7. CONFLICT OF INTEREST GUIDELINES. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as Exhibit A(4) hereto.
8. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
9. GENERAL PROVISIONS.
(a) GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by the laws of the State of California. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.
(b) ENTIRE AGREEMENT. This Agreement and an Employment Agreement
and an Arbitration Agreement between the parties, both dated this date, set
forth the entire agreement and understanding between the Company and me relating
to the subject matter herein and supersedes all prior discussions between us. No
modification of or amendment to these Agreements, nor any waiver of any rights
under these agreements, will be effective unless in writing signed by the party
to be charged. Any subsequent change or changes in my duties, salary or
compensation will not affect the validity or scope of this Agreement.
(c) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.
(d) SUCCESSORS AND ASSIGNS. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.
-4-
15
10. I acknowledge and agree to each of the following items:
(a) I am executing this Agreement voluntarily and without any
duress or undue influence by the Company or anyone else; and
(b) I have carefully read this Agreement and the Rules. I have
asked any questions needed for me to understand the terms, consequences and
binding effect of this Agreement and fully understand them; and
(c) I sought the advice of an attorney of my choice if I wanted
to before signing this Agreement.
Date: 6/24/99 /s/ XXXXXX X. XXXXXXX
---------------------- ------------------------------------
Xxxxxx X. Xxxxxxx
[SIGNATURE ILLEGIBLE]
---------------------------
Witness
-5-
16
EXHIBIT A(1)
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
TITLE DATE IDENTIFYING NUMBER OR BRIEF DESCRIPTION
----- ---- ---------------------------------------
[ X ] No inventions or improvements
[ ] Additional Sheets Attached
Signature of Employee: /s/ XXXXXX X. XXXXXXX
----------------------------
Print Name of Employee: Xxxxxx X. Xxxxxxx
----------------------------
Date: 6/24/99
---------
-6-
17
EXHIBIT A(2)
CALIFORNIA LABOR CODE SECTION 2870
INVENTION ON OWN TIME - EXEMPTION FROM AGREEMENT
"(a) Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(1) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable."
-7-
18
EXHIBIT A(3)
NEOFORMA, INCORPORATED
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I
failed to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to Neoforma, Incorporated, its subsidiaries, affiliates,
successors or assigns (together, the "Company").
I further certify that I have complied with all the terms of the
Company's Employment, Confidential Information and Invention Assignment and the
Arbitration Agreement signed by me, including the reporting of any inventions
and original works of authorship (as defined therein), conceived or made by me
(solely or jointly with others) covered by that agreement.
I further agree that, in compliance with the Employment, Confidential
Information and Invention Assignment, and the Arbitration Agreement, I will
preserve as confidential all trade secrets, confidential knowledge, data or
other proprietary information relating to products, processes, know-how,
designs, formulas, developmental or experimental work, computer programs, data
bases, other original works of authorship, customer lists, business plans,
financial information or other subject matter pertaining to any business of the
Company or any of its employees, clients, consultants or licensees.
I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
Date:
------------------ --------------------------------
Xxxxxx X. Xxxxxxx
-8-
19
EXHIBIT A(4)
NEOFORMA, INCORPORATED
CONFLICT OF INTEREST GUIDELINES
It is the policy of Neoforma, Incorporated to conduct its affairs in
strict compliance with the letter and spirit of the law and to adhere to the
highest principles of business ethics. Accordingly, all officers, employees and
independent contractors must avoid activities which are in conflict, or give the
appearance of being in conflict, with these principles and with the interests of
the Company. The following are potentially compromising situations which must be
avoided. Any exceptions must be reported to the President and written approval
for continuation must be obtained.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Employment, Confidential Information, and Invention
Assignment Agreement as well as the Arbitration Agreement elaborate on this
principle and are binding agreements.)
2. Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.
3. Participating in civic or professional organizations that might
involve divulging confidential information of the Company.
4. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or is
or appears to be a personal or social involvement.
5. Initiating or approving any form of personal or social harassment of
employees.
6. Investing or holding outside directorship in suppliers, customers, or
competing companies, including financial speculations, where such investment or
directorship might influence in any manner a decision or course of action of the
Company.
7. Borrowing from or lending to employees, customers or suppliers.
8. Acquiring real estate of interest to the Company.
9. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
-9-
20
10. Unlawfully discussing prices, costs, customers, sales or markets
with competing companies or their employees.
11. Making any unlawful agreement with distributors with respect to
prices.
12. Improperly using or authorizing the use of any inventions which are
the subject of patent claims of any other person or entity.
13. Engaging in any conduct which is not in the best interest of the
Company.
Each officer, employee and independent contractor must take every
necessary action to ensure compliance with these guidelines and to bring problem
areas to the attention of higher management for review. Violations of this
conflict of interest policy may result in discharge without warning.
-10-
21
EXHIBIT B
NEOFORMA, INCORPORATED
ARBITRATION AGREEMENT
Arbitration. In consideration of your employment with NEOFORMA,
INCORPORATED (the "Company"), its promise to arbitrate all employment-related
disputes and your receipt of the compensation, pay raises and other benefits
paid to you by the Company, at present and in the future, you agree that any and
all controversies, claims, or disputes with anyone (including the Company and
any employee, officer, director, shareholder or benefit plan of the Company in
their capacity as such or otherwise) arising out of, relating to, or resulting
from your employment with the Company or the termination of your employment with
the Company, including any breach of this Agreement, shall be subject to binding
arbitration under the Arbitration Rules set forth in California Code of Civil
Procedure Section 1280 through 1294.2, including section 1283.05 (the "Rules"),
the AAA's National Rules for the Resolution of Employment Disputes and pursuant
to California law. Disputes which you agree to arbitrate, and thereby agree to
waive any right to a trial by jury, include any statutory claims under state or
federal law, including, but not limited to, claims under Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection
Act, the California Fair Employment and Housing Act, the California Labor Code,
claims of harassment, discrimination or wrongful termination and any statutory
claims. You further understand that this Agreement to arbitrate also applies to
any disputes that the Company may have with you.
Procedure. You agree that any arbitration will be administered by the
American Arbitration Association ("AAA") and that the arbitrator will be
selected in a manner consistent with its National Rules for the Resolution of
Employment Disputes. You agree that the arbitrator shall have the power to
decide any motions brought by any party to the arbitration, including motions
for summary judgment and/or adjudication and motions to dismiss and demurrers,
prior to any arbitration hearing. You also agree that the arbitrator shall have
the power to award any remedies, including attorneys, fees and costs, available
under applicable law. You understand the Company will pay for any administrative
or hearing fees charged by the arbitrator or AAA except that you shall pay the
first $200.00 of any filing fees associated with any arbitration you initiate.
You agree that the arbitrator shall administer and conduct any arbitration in a
manner consistent with the Rules and that to the extent that the AAA's National
Rules for the Resolution of Employment Disputes conflict with the Rules, the
Rules shall take precedence.
Remedy. Except as provided by the Rules, arbitration shall be the sole,
exclusive and final remedy for any dispute between you and the Company.
Accordingly, except as provided for by the Rules, neither you nor the Company
will be permitted to pursue court action regarding claims that are subject to
arbitration. Notwithstanding the above, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or
22
require the Company to adopt a policy not otherwise required by law which the
Company has not adopted.
Availability of Injunctive Relief. In addition to the right under the
Rules to petition the court for provisional relief, you agree that any party may
also petition the court for injunctive relief where either party alleges or
claims a violation of the Employment, Confidential Information, Invention
Assignment Agreement between you and the Company or any other agreement
regarding trade secrets, confidential information, nonsolicitation or Labor Code
Section 2870. In the event either party seeks injunctive relief, the prevailing
party shall be entitled to recover reasonable costs and attorneys fees.
Administrative Relief. You understand that this Agreement does not
prohibit you from pursuing an administrative claim with a local, state or
federal administrative body such as the Department of Fair Employment and
Housing, the Equal Employment Opportunity Commission or the workers'
compensation board. This Agreement does, however, preclude you from pursuing
court action regarding any such claim.
Voluntary Nature of Agreement. You acknowledge and agree that you are
executing this Agreement voluntarily and without any duress or undue influence
by the Company or anyone else. You further acknowledge and agree that you have
carefully read this Agreement and that you have asked any questions needed for
you to understand the terms, consequences and binding effect of this Agreement
and fully understand it, including that you are waiving your right to a jury
trial. Finally, you agree that you have been provided an opportunity to seek the
advice of an attorney of your choice before signing this Agreement.
/s/ XXXXXX X. XXXXXXX
-----------------------------------
Xxxxxx X. Xxxxxxx
6/24/99
-----------------------------------
Date
2
23
FIRST AMENDMENT TO
NEOFORMA, INCORPORATED EMPLOYMENT AGREEMENT
OF XXXXXX X. XXXXXXX
This First Amendment (the "AMENDMENT") to the Neoforma, Incorporated
Employment Agreement by and between Neoforma, Inc. and Xxxxxx X. Xxxxxxx dated
July 1, 1999 (the "AGREEMENT") is made and entered into as of December ___, 1999
by and among Xxxxxxxx.xxx, Inc., a Delaware corporation (the "COMPANY"),
formerly known as Neoforma, Inc., and Xxxxxx X. Xxxxxxx (the "EXECUTIVE")
(collectively, the Company and the Executive, the "PARTIES"). Each capitalized
term herein not otherwise defined shall have the meaning ascribed to it in the
Agreement.
W I T N E S S E T H:
WHEREAS, the Parties have determined that certain provisions of the
Agreement should be amended to precisely reflect the original agreement of
Parties; and
WHEREAS, the Parties have agreed that certain provisions of the Agreement
should be amended to reflect certain recent approvals and/or amended policies
adopted by the board of directors of the Company:
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. The number of Bonus Shares, "1,601,029 shares" in the first sentence
of Section 6(a) of the Agreement is deleted and is replaced by "1,637,160
shares".
2. The sixth (6th) sentence of Section 6(a) of the Agreement is deleted
in its entirety and is replaced with the following:
Any such promissory note for the purchase of the Bonus Shares shall be
secured by the Bonus Shares, and any such promissory note for the
purchase of the Option Shares shall be secured by the Option Shares.
3. The last sentence of Section 6(a) of the Agreement is deleted in its
entirety and is replaced with the following:
The issuance of the Bonus Shares and Option Shares are each subject to
the Executive's execution of the Amended and Restated Right of First
Refusal and Co-Sale Agreement dated February 19, 1999 by and among
certain of the Company's shareholders, as it may be amended from time
to time.
4. The first (1st) sentence of Section 6(b) of the Agreement is deleted
in its entirety and is replaced with the following:
(b) Vesting. One fourth (1/4) of the Option Shares shall vest
upon the one (1) year anniversary of July 1, 1999 and one forty-eighth
(1/48) of the Option Shares shall vest at the end of each full month
following such anniversary, provided that the Executive remains an
employee of the Company on each such vesting date.
24
5. The part of the fourth sentence of Section 6(b) of the Agreement that
precedes Section 6(b)(i) is deleted in its entirety and is replaced with the
following:
For purposes of this Agreement, "Change of Control" shall mean the
occurrence of any of the following events:
6. Survival. Except as modified hereby, all other provisions of the
Agreement shall remain in full force and effect and without amendment.
7. Governing Law; Severability. This Amendment will be governed by and
construed in accordance with the internal laws of the State of California,
excluding that body of law relating to conflicts of law. Should one or more of
the provisions of this Amendment be determined by a court of law to be illegal
or unenforceable, the other provisions nevertheless will remain effective and
will be enforceable.
8. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same amendment.
[The remainder of this page has intentionally been left blank]
25
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
COMPANY: EXECUTIVE:
XXXXXXXX.XXX, INC.
(f.k.a. Neoforma, Inc.)
By:
------------------------------------- -------------------------------------
Xxxx X. Xxxxxxxxxx Xxxxxx X. Xxxxxxx
Its: Chief Financial Officer
and Secretary
[SIGNATURE PAGE TO FIRST AMENDMENT TO NEOFORMA,
INCORPORATED EMPLOYMENT AGREEMENT OF XXXXXX X. XXXXXXX]
