EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into on the 16 day of December, 1994, by and
among Thomas L. Patterson, residing at 1013 Vista Circle, Birmingham,
Alabama (herein called the "Employee"), TXEN, INC. (herein called "TXEN")
with a principal place of business at 10 Inverness Center Parkway, Suite
140, Birmingham, Alabama 35242, and NICHOLS RESEARCH CORPORATION, with a
principal place of business located at 4040 Memorial Parkway South,
Huntsville, Alabama 35802 (herein called "NRC").
W I T N E S S E T H:
WHEREAS, TXEN Company is engaged in the business of managed care
administration and providing information systems and services to managed
care administrators;
WHEREAS, NRC, as purchaser, and TXEN, as seller, entered into and
consummated a Convertible Preferred Stock Purchase Agreement dated as of
the date hereof (the "Purchase Agreement") whereby NRC acquired one share
of Preferred Stock of TXEN, and the Employee's continued employment with
TXEN was a material inducement to NRC to enter into the Purchase Agreement;
WHEREAS, NRC has also entered into a Stock Purchase Option Agreement
of even date herewith giving NRC the option to purchase all of the capital
stock of TXEN owned by the Employee together with the capital stock owned
by the other shareholders of TXEN provided NRC converts the Preferred Stock
into Class B Common Stock; and
WHEREAS, TXEN and NRC desire to obtain the services of the Employee as
President of TXEN and the Employee is willing to render such services to
TXEN upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. DUTIES AND SALARY.
(a) TXEN agrees to employ the Employee and the Employee agrees to
accept employment by TXEN on a full-time basis as President of TXEN at a
base salary of $8,000 per month payable during the Term of Employment, as
hereinafter defined. Such salary shall be subject to increases from time
to time as authorized by the Board of Directors of TXEN (the "Board"),
provided any increase in compensation paid to the Employee shall require
the affirmative vote of the director or directors elected to the Board by
NRC so long as NRC owns any capital stock of TXEN.
(b) The Employee hereby agrees to undertake such travel as may be
required in the performance of his duties. The reasonable travel expenses
of the Employee shall be reimbursed in accordance with TXEN's reimbursement
policy, in effect from time to time.
(c) The Employee shall carry out his duties under the general
supervision of the Board or its designee.
(d) The Employee's duties shall include the duties and
responsibilities identified on Schedule I attached hereto. The Employee
shall perform such other tasks and duties as may be assigned by TXEN, from
time to time and TXEN reserves the right to change the office and/or
position of the Employee within TXEN, so long as such change is mutually
acceptable. The Employee shall devote his full time, attention, skill and
efforts to the tasks and duties assigned by TXEN. The Employee shall not
provide services, for compensation, to any other person or business entity
while employed by TXEN without approval of the Board and NRC.
(e) The Employee shall not be required to relocate beyond the
Birmingham, Alabama, metropolitan area without his consent.
2. TERM OF EMPLOYMENT. This Agreement shall commence as of the date
hereof and shall end four years from the date hereof (the "Term of
Employment"), unless terminated earlier or extended as provided herein.
Upon expiration of the initial Term of Employment unless earlier terminated
as provided herein, the Term of Employment shall continue automatically
month-to-month until terminated by either party with at least thirty (30)
days' prior written notice with or without cause. Notwithstanding the
foregoing, if NRC purchases all of the capital stock of TXEN pursuant to
the Stock Purchase Option Agreement, NRC may elect to (1) immediately
terminate the Employee's employment or (2) extend the Employee's employment
for one year after the purchase of all of the capital stock of TXEN by NRC
in which event the Term of Employment shall be extended by such additional
period, unless terminated earlier as provided herein.
3. TERMINATION BEFORE EXPIRATION OF TERM OF EMPLOYMENT. The termination
of the employment of the Employee during the Term of Employment may occur
in one of the following ways:
(a) BY TXEN, FOR CAUSE. Termination by TXEN shall be deemed to be
for cause only upon:
(i) Employee's conviction of or pleading guilty to a felony;
(ii) A good faith determination by the Board that the Employee
has breached either this Agreement, the Purchase Agreement
or the Stock Purchase Option Agreement;
(iii) Refusal or failure by the Employee, without reasonable
excuse or proper authorization, to carry out any reasonable
instructions of the Board consistent with Employee's rights
or duties as set forth in this Agreement;
(iv) Material breach of this Agreement or any material breach of
any agreement with NRC;
(v) The Employee's demonstration of negligence or willful
misconduct in the execution of his duties, including without
limitation breach of fiduciary duty or the duty of loyalty
owed TXEN.
If TXEN intends to terminate for cause, TXEN shall provide notice to
Employee of intent to terminate this Agreement, stating the termination
provision in this Agreement relied upon and setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination under the provisions so indicated, and shall provide Employee
with an opportunity to cure the alleged default or breach within thirty
(30) days of receipt of the notice, provided that if the matter is not
curable within such thirty (30) day period, the Employee shall not be
deemed in default if the Employee commences immediately to cure the matter
and proceeds diligently thereafter to complete the cure, further provided
that the alleged breach or default must be cured within ninety (90) days of
receipt of the notice. TXEN shall not be required to give more than one
notice with respect to the same matter. Notwithstanding the foregoing, no
notice and no cure right shall be required with respect to termination for
cause under 3(a)(i) or an act involving theft of information or property of
TXEN.
(b) BY TXEN, WITHOUT CAUSE. Any termination of Employee by TXEN for
reasons other than as set forth in subsections 3(a)(i) through 3(a)(v)
above shall be a termination without cause. TXEN may terminate the
employment of Employee without cause by thirty (30) days' prior written
notice at any time. If NRC purchases all of the capital stock of TXEN
pursuant to the Stock Purchase Option Agreement, NRC may cause TXEN to
terminate the employment of Employee without cause immediately after the
closing of such purchase and without giving 30 days' prior notice.
(c) BY THE EMPLOYEE. The Employee may by written notice terminate
his employment at any time during the Term of Employment:
(i) For any reason other than for Good Reason (as defined below)
upon thirty (30) days' prior written notice at any time.
(ii) For "Good Reason," defined as termination because of a
material breach by TXEN of this Agreement including, without
limitation, making a material change in the Employee's
duties, responsibilities or authority as set forth in this
Agreement, without his express written consent. In all
cases in which Employee intends to terminate for Good
Reason, the Employee shall provide TXEN with notice of
intent to terminate this Agreement, stating the facts and
circumstances giving rise to a breach of this Agreement
claimed to provide a basis for termination under the
provisions so indicated, and shall provide TXEN with an
opportunity to cure the alleged default or breach within
thirty (30) days of receipt of the notice, provided that if
the matter is not curable within such thirty (30) day
period, TXEN shall not be deemed in default if it commences
immediately to cure the matter and proceeds diligently
thereafter to complete the cure, further provided that the
alleged breach or default must be cured within ninety (90)
days of receipt of the notice. Employee shall not be
required to give more than one such notice with respect to
the same matter.
(d) DEATH OF THE EMPLOYEE.
(e) DISABILITY OF EMPLOYEE. If, during the Term of Employment, a
physician selected by TXEN determines that the Employee has
become physically or mentally disabled so as to be unable to
carry out the normal and usual duties of his employment for three
(3) continuous months, and reasonable accommodation cannot be
made to allow the Employee to continue to perform his duties
full-time, his employment hereunder may be terminated at the
election of TXEN or the Employee.
4. CONSEQUENCES OF TERMINATION. The termination of the employment of
Employee will cause the following results:
(a) If the termination is by TXEN for cause, or is by the Employee
for any reason other than for Good Reason, TXEN will pay the Employee
within five (5) days after the date of termination any unpaid salary, the
amount of any accrued annual vacation pay to which he may be entitled under
TXEN's vacation plan, and benefits. All such compensation and benefits (if
any) shall be paid only through the date termination occurs.
(b) If the termination is by TXEN without cause or because of death
or disability, TXEN shall pay to the Employee, in addition to the amounts
set forth in 4(a) above, an amount equal to fifty percent (50%) of the
Employee's monthly base salary then in effect in monthly installments over
a three-month period immediately following the termination.
(c) If the termination is by the Employee for Good Reason, TXEN shall
pay to the Employee, in addition to the amounts set forth in 4(a) above, an
amount equal to fifty percent (50%) of the Employee's monthly base salary
then in effect in monthly installments over a three-month period
immediately following the termination.
(d) In the event of the Employee's death or disability, the following
provisions will apply:
(i) Upon his death, the Employee's estate will be entitled to
receive the amount set forth in Section 4(b) and the
benefits set forth in any plans of TXEN then in effect and
applicable under the circumstances. The Employee or his
estate shall be entitled to no other compensation or
benefits in the event of death.
(ii) Upon termination on account of disability, Employee will be
entitled to receive the amount set forth in Section 4(b) and
the benefits set forth in any plans of TXEN then in effect
and applicable under the circumstances. The Employee or his
personal representative shall be entitled to no other
compensation or benefits in the event of disability.
(e) The Employee shall not be required to mitigate the amount of
payment provided for in this Section 4 by seeking employment.
(f) The amounts set forth above in this Section 4 shall be paid and
received in complete discharge of any other obligation of TXEN (or NRC) to
Employee resulting from termination of his employment.
5. FRINGE BENEFITS.
The Employee shall participate in any group health insurance, vacation
and sick leave plans, and other benefit plans available to all employees of
TXEN in accordance with their terms and conditions which may be amended or
terminated by TXEN at any time.
6. NON-DISCLOSURE COVENANTS AND PROPRIETARY MATTERS.
(a) Unless authorized or instructed in writing by TXEN and NRC, the
Employee shall not, except as required in the conduct of TXEN's business,
during or at any time after the Term of Employment, disclose to others, or
use, any of NRC's or TXEN's inventions or discoveries or their respective
secret or confidential information or data (oral, written, or in machine
readable form) which the Employee may obtain during the course of or in
connection with the Employee's employment, including such inventions,
discoveries, information, know-how or data relating to machines, equipment,
products, systems, software, contracts, contract performance, research
and/or development, designs, compositions, formulae, processes,
manufacturing procedures or business methods, whether or not developed by
the Employee, by others in NRC or TXEN or obtained by NRC or TXEN from
third parties, and irrespective of whether or not such inventions,
discoveries, information, knowledge or data have been identified by NRC or
TXEN as secret or confidential, unless and until, and then to the extent
and only to the extent that, such inventions, discoveries, information,
knowledge or data become available to the public otherwise than by the
Employee's act or omission.
(b) The Employee shall not, except as required in the conduct of
TXEN's business, disclose to others, or use, any of the information (which,
if disclosed or used, could be harmful to NRC or TXEN) relating to present
and prospective customers of NRC or TXEN, business dealings with such
customers, prospective sales and advertising programs and agreements with
representatives or prospective representatives of NRC or TXEN, present or
prospective sources of supply or any other business arrangements of NRC or
TXEN, including but not limited to customers, customer lists, costs, prices
and earnings, whether or not such information is developed by the Employee,
by others in NRC or TXEN or obtained by NRC or TXEN from third parties, and
irrespective of whether or not such information has been identified by NRC
or TXEN as secret or confidential, unless and until, and then to the extent
and only to the extent that, such information becomes available to the
public otherwise than by the Employee's act or omission.
(c) The Employee agrees to disclose immediately to TXEN or any
persons designated by it and to assign to TXEN or its successors or
assigns, all inventions made, discovered, or first reduced to practice by
the Employee, solely or jointly with others, during the Term of Employment
or within a period of six months from the date of termination of such
employment (either during or outside of the Employee's working hours and
either on or off TXEN's premises), which inventions are made, discovered or
conceived either in the course of such employment, or with the use of
TXEN's time, material, facilities or funds, or which are directly related
to any investigations or obligations undertaken by TXEN; and the Employee
hereby grants and agrees to grant the right to TXEN and its nominees to
obtain, for its own benefit and in its own name (entirely at its expense)
patents and patent applications including original, continuation, reissue,
utility and design patents, and applications, patents of addition,
confirmation patents, registration patents, petty patents, utility models,
and all other types of patents and the like, and all renewals and
extensions of any of them for those inventions in any and all countries;
and the Employee shall assist TXEN, at TXEN's expense, without further
charge during the term of the Employee's employment, and after termination
of the Employee's employment at the same base salary rate (excluding any
bonuses, incentive or deferred compensation or other benefits and based
upon a forty hour work week) as during the last year of the Employee's
employment (determined on an hourly basis for this purpose), through
counsel designated by TXEN, to execute, acknowledge, and deliver all such
further papers, including assignments, applications for Letters Patent (of
the United States or of any foreign country), oaths, disclaimers or other
instruments and to perform such further acts, including giving testimony or
furnishing evidence in the prosecution or defense of appeals,
interferences, suits and controversies relating to any aforesaid inventions
as may reasonably be deemed necessary by TXEN or its nominees to effectuate
the vesting or perfecting in TXEN or its nominees of all right, title and
interest in and to said inventions, applications and patents.
Notwithstanding the foregoing, the Employee need not take any action called
for under this Section 6(c) which will cause undue personal hardship to the
Employee.
(d) The Employee agrees to disclose immediately to TXEN or any
persons designated by it and to assign to TXEN, at its option, or its
successors or assigns, all works of authorship, including all writings,
computer programs, software, and firmware, written or created by the
Employee solely or jointly with others, during the course of his employment
by TXEN (either during or outside of the Employee's working hours and
either on or off TXEN's premises), which works are made or conceived either
in the course of such employment, or with the use of TXEN's time, material,
facilities or funds, or which are directly related to any investigations or
obligations undertaken by TXEN; and the Employee hereby agrees that all
such works are works made for hire, of which TXEN is the author and the
beneficiary of all rights and protections afforded by the law of copyright
in any and all countries; and the Employee will assist TXEN at TXEN's
expense without further charges during the term of his employment, and
after termination of his employment at the same base salary rate (excluding
any bonuses, incentive or deferred compensation or other benefits) as
during the last year of his employment (determined on an hourly basis for
this purpose assuming a forty hour work week), through counsel designated
by TXEN, to execute, acknowledge, and deliver all such further papers,
including assignments, applications for copyright registration (in the
United States or in any foreign country), oaths, disclaimers or other
instruments, and to perform such further acts, including giving testimony
or furnishing evidence in the prosecution or defense of appeals,
interferences, suits and controversies relating to any aforesaid works, as
may be deemed necessary by TXEN or by its nominees to effectuate the
vesting or perfecting in TXEN or its nominees of all rights and interest in
and to said works and copies thereof, including the exclusive rights of
copying and distribution.
(e) The Employee shall keep complete, accurate and authentic
accounts, notes, data and records of all inventions made, discovered or
developed and all works of authorship written or created by the Employee as
aforesaid in the manner and form requested by TXEN.
(f) All computer or other hardware, computer software, computer
programs, source codes, object codes, magnetic tapes, printouts, samples,
notes, records, reports, documents, customer lists, photographs, catalogues
and other writings, whether copyrightable or not, relating to or dealing
with TXEN's or NRC's business and plans, and those of others entrusted to
TXEN or NRC, which are prepared or created by the Employee or which may
come into his possession during or as a result of his employment, are the
property of TXEN or NRC, as applicable, and upon termination of his
employment, the Employee agrees to return all such computer software,
computer programs, source codes, object codes, magnetic tapes, printouts,
samples, notes, records, reports, documents, customer lists, photographs,
catalogues and writings and all copies thereof to TXEN or NRC.
7. NON-SOLICITATION AND NON-COMPETITION. During the Restriction Period
(as hereinafter defined) within the United States of America, the Employee
shall not directly or indirectly:
(a) Solicit the business of TXEN from any customer of TXEN or any
entity controlled by TXEN or solicit any employees of TXEN to leave the
employ of TXEN.
(b) Directly or indirectly, hire any employees or former employees of
TXEN or any entity controlled by TXEN within one year of the date of
termination of his employment with TXEN or cause any entity with which the
Employee is affiliated to hire any such employees or former employees of
TXEN.
(c) Engage in, represent in any way or be connected with, as
consultant, officer, director, partner, employee, sales representative,
proprietor, stockholder or otherwise (except for the ownership of a less
than 1% stock interest in a publicly-traded corporation where Employee is
not in a management or control position), any business competing with the
business of TXEN as conducted by TXEN on the date hereof or during the
period of Employee's employment by TXEN.
(d) As used herein, the Restriction Period shall mean the period
while the Employee is employed by TXEN and the following periods:
(i) 36 months after the date the Employee ceases to be employed
by TXEN and/or
(ii) 60 months after NRC purchases all of the capital stock of
TXEN pursuant to the Stock Purchase Option Agreement.
The above periods in sections 7(d)(i) and 7(d)(ii) shall not be
mutually exclusive. For example, if NRC purchases the capital stock of
TXEN more than 36 months after the Employee ceases to be employed by TXEN,
the Restriction Period of 7(d)(ii) shall apply even though the Restriction
Period of 7(d)(i) also applied. Similarly, if the Employee ceases to be
employed by TXEN more than 60 months after NRC purchases the capital stock
of TXEN, the Restriction Period of section 7(d)(i) shall apply even though
the Restriction Period of 7(d)(ii) also applied.
8. NO CONFLICT. Employee represents and warrants that he is not a party
to or otherwise subject to or bound by the terms of any contract, agreement
or understanding which in any manner would limit or otherwise affect his
ability to perform his obligations hereunder, including without limitation
any contract, agreement or understanding containing terms and provisions
similar in any manner to those contained in Sections 6 and 7 hereof.
Employee covenants to indemnify and hold NRC, TXEN and any of their
affiliates harmless from any cost or damages (including attorneys' fees and
expenses) resulting from any breach of the provisions of this Agreement.
9. SURVIVAL OF COVENANTS, EFFECT.
(a) The covenants on the part of the Employee contained or referred
to in Sections 6 and 7 above shall survive termination of this Agreement,
and the existence of any claim or cause of action of the Employee against
TXEN or NRC, whether predicated on this Agreement or otherwise. The
Employee agrees that a remedy at law for any breach of the foregoing
covenants contained or referred to in Sections 6 and 7 would be inadequate,
that TXEN and NRC would suffer irreparable harm as a result and that NRC
and/or TXEN shall be entitled to a temporary and permanent injunction or an
order for specific performance of such covenants without the necessity of
proving actual damage to NRC or TXEN and without the posting of any bond or
other security. Any breach of this Agreement by TXEN or NRC shall not
release the Employee from his obligations under Sections 6 and 7 hereof.
(b) The Employee hereby represents and acknowledges that NRC and TXEN
are relying on the covenants in Sections 6 and 7 in entering into this
Agreement and the Purchase Agreement and other agreements related thereto
and that the restrictions in Sections 6 and 7 are fair and reasonable. The
Employee acknowledges that TXEN does business throughout the United States
and that the geographic scope of the covenants in Section 7 is therefore
reasonable and necessary to protect the interests of TXEN.
(c) It is the intent of the parties that the provisions of Sections 6
and 7 shall be enforced to the fullest extent permissible under the laws
and public policies of each jurisdiction in which enforcement is sought.
If any particular provision of Sections 6 and 7 shall be adjudicated to be
invalid or unenforceable, such provision(s) of Sections 6 and 7 shall be
deemed amended to provide restrictions to the fullest extent permissible
and consistent with applicable law and policies, and such amendment shall
apply only with respect to the particular jurisdiction in which such
adjudication is made. If such deemed amendment is not allowed by the
adjudicating body, the offending provision, only, shall be deleted and the
remainder of Sections 6 and 7 shall not be effected.
10. ASSIGNMENT.
The rights and obligations of TXEN under this Agreement may be
assigned by TXEN to NRC or to any other successors in interest of TXEN
and/or NRC of that part of the business of TXEN or NRC to which this
Agreement applies or to their respective affiliates. This Agreement may
not be assigned and any duties of the Employee may not be delegated by the
Employee, but any amounts owing to the Employee upon his death shall inure
to the benefit of his estate.
11. NOTICES.
All notices or other communications which may be or are required to be
given, served or sent by either party to the other party pursuant to this
Agreement shall be in writing, addressed to its/his residence or place of
business as set forth above, and shall be mailed by first-class certified
mail, return receipt requested, postage prepaid, next-day air delivery, or
transmitted by facsimiles or hand delivery. Such notice or other
communication shall be deemed sufficiently given, served, sent or received
for all purposes at such time as it is delivered to the addressee or at
such time as delivery is refused by the addressee upon presentation. Each
party may designate by notice in writing an address to which any notice or
communication may thereafter be so given, served or sent. Any notice or
other communication sent by Employee to TXEN shall also be sent, at the
same time, to NRC. Notices hand delivered to TXEN or NRC must be delivered
to an officer of TXEN and NRC and all other notices shall be sent to the
attention of the Board, in the case of TXEN, or to the President, in the
case of NRC.
12. APPLICABLE LAW JURISDICTION.
This Agreement has been negotiated and executed in the State of
Alabama, and it shall be governed by, construed and enforced in accordance
with the internal substantive laws and not the choice of law rules of the
State of Alabama.
13. EFFECTIVENESS/INTERPRETATION.
The parties acknowledge and agree that this Agreement has been
negotiated at arm's length between parties equally sophisticated and
knowledgeable in the matters dealt with herein. Each party has been
represented by counsel of its or his own choosing. Accordingly, any rule
of law or legal decision that would require interpretation of any
ambiguities in the Agreement against the party that drafted it is not
applicable and is waived.
14. THIRD PARTY BENEFICIARY.
NRC is a third party beneficiary to this entire Agreement but shall
have no liability to pay the compensation due Employee and to perform the
other obligations of TXEN hereunder. NRC is not a guarantor of any of the
TXEN obligations hereunder.
15. SEVERABILITY.
If any of the articles, sections, paragraphs, clauses or provisions of
this Agreement shall be held by a court of last resort to be invalid, the
remainder of this Agreement shall not be affected thereby.
16. ENTIRE AGREEMENT.
The foregoing contains the entire agreement between the parties
relating to the subject matter of this Agreement, and may not be altered or
amended except by an instrument in writing approved by TXEN and NRC and
signed by the parties hereto, and this Agreement supersedes all prior
understandings and agreements relating to employment of the Employee by
TXEN. The parties acknowledge that any prior oral or written agreements
between NRC and the Employee, if any, are hereby terminated. The parties
acknowledge that the Employee and NRC have also entered into the Purchase
Agreement and Stock Purchase Option Agreement which shall be in addition to
and not in lieu of the provisions of this Agreement.
IN WITNESS WHEREOF, TXEN and NRC have caused this Agreement to be
executed by their duly authorized officers and the Employee has hereunto
set his hand as of the date first above written.
TXEN, INC.
Thomas L. Patterson
By:_________________________________
Thomas L. Patterson, President
NICHOLS RESEARCH CORPORATION
Louis Rachmeler
By:________________________________
Its Vice President Acquisitions
Thomas L. Patterson
___________________________________
Thomas L. Patterson, Employee
SCHEDULE I
Duties of Employee
Thomas L. Patterson, President
(i) to promote the growth of and manage the business and day to day
operations of TXEN;
(ii) to perform the duties normally associated with the Office of
President or such other office to which Employee may be nominated
and appointed by the Board, subject to control and direction of
the Board;
(iii) to train and supervise TXEN's employees and to perform or cause
to be performed quality control for projects and contracts
performed by TXEN;
(iv) to manage and/or actually assist in the bidding and performance
of major or material projects and contracts undertaken by TXEN;
(v) to direct and supervise the sale and marketing of TXEN's
contracts, services and products and, if requested, the
contracts, services and products of NRC;
(vi) to perform such other and/or different duties as may be
determined or delegated by the Board, consistent with the duties
of the President.