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EXHIBIT 10.18
ENVOY CORPORATION
EMPLOYMENT AGREEMENT
This Agreement, made by and between ENVOY Corporation, a Tennessee Corporation,
(hereinafter referred to as "ENVOY") and Richard P. Caliri, (hereinafter
referred to as "Executive"), is hereby entered into for the exchange of mutual
promises and for good and valuable consideration, the sufficiency of which is
hereby mutually acknowledged, whereby Executive requests employment and ENVOY
by its acceptance of this Agreement agrees to provide employment upon the terms
and conditions hereinafter set forth.
1. Acceptance - This Agreement shall become effective March 6, 1996.
2. Term - The term of this Agreement shall be for an initial
period of 22 months, ending on December 31, 1997, and shall thereafter
automatically be extended on a yearly basis, unless on or before
November 1, 1997, or November 1 of any subsequent year, either the
Executive or the Company gives the other party notice that the term of
this Agreement will not be so extended, in which case the term of this
Agreement will end on the end of the year designated in the notice.
3. Policy and Procedures Manual - ENVOY does herewith furnish and
loan to Executive a Policy and Procedures Manual (hereinafter referred
to as the "MANUAL"), receipt of which is hereby acknowledged by
Executive. Said MANUAL is incorporated herein by reference and
Executive agrees to comply with the requirements therein, including,
but not limited to, ENVOY policies, procedures and business practices.
a. Executive acknowledges that said MANUAL contains confidential
business information of ENVOY, and Executive agrees to neither
disclose the contents of said MANUAL to any person except to
other employees of ENVOY, nor to reprint nor reproduce said
MANUAL in whole or in part for any purpose other then prescribed
therein.
b. The MANUAL may be added to and otherwise modified by ENVOY from
time to time, if deemed necessary by ENVOY to improve the
standards of quality, clarity, consistency, or efficiency of any
policy, procedure, or business practice. The provisions of the
MANUAL, as modified from time to time, shall constitute
provisions of this Agreement as if they were fully set forth
herein, and shall apply consistently to all employees, except as
deviations from this requirement are necessitated by physical or
legal circumstances, except that provisions of the MANUAL shall
not supersede provisions of this Agreement.
4. Position and Duties - Subject to the power of the Board of Directors
of the Company to elect and remove officers and the Power of the
stockholders to remove directors, the Executive shall serve the
Company as Senior Vice President - Sales and Marketing; and shall
perform, faithfully and diligently, the services and functions
relating to such office or otherwise reasonably incident to such
office as may be designated from time to time by the Board of
Directors of the Company; provided that all such services and
functions shall be reasonable and within the Executive's area of
expertise; and provided further that the Executive shall be physically
capable of performing the same.
4.1 Place of Employment - During the term of this Agreement, the Company
shall maintain its principal executive offices in the Nashville,
Tennessee area, and the Executive's primary place of employment shall
be at such principal executive offices. During the term of this
Agreement, the Company will provide the Executive with a private
office, and customary staff support services, all as are commensurate
with the services and
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functions to be performed by him hereunder.
5. Salary and Other Benefits: Subject to the terms and conditions of
this Agreement:
5.1 Salary - As compensation for his services under and during the term
of his employment under this Agreement, the Executive shall be
paid an annual salary of not less than $160,000.00, payable in
accordance with then current payroll policies of the Company. Such
salary shall be subject to increase by the Board of Directors of the
Company (or the appropriate committee thereof) from time to time. The
annual salary payable by the Company to the Executive pursuant to
this paragraph 5.1 herein is sometimes referred to as his "Base
Salary."
For the period from the effective date of this Agreement until
Executive completes his relocation to the Nashville, Tennessee
area, Executive shall be paid a supplemental salary of $1250.00 per
week which will not, for the purposes of this Agreement, be included
in his Base Salary.
(a) In addition, the Company shall pay Executive a bonus of up to
Sixty Thousand Dollars ($60,000) per year subject to
certain performance criteria as set forth by the Chairman and
President. There would be a $20,000 bonus at 100% of sales
quota, $20,000 bonus payable at 100% of gross sales profit
target, and $20,000 bonus based on ENVOY's achieving 100% of
its earning per share target. Bonuses of lower amounts may be
earned for performance near, but not at, 100% of goal levels.
Thirty-five Thousand Dollars ($35,000) would be guaranteed in
the first year of this agreement; thereafter, an annual bonus
of Twenty Thousand Dollars ($20,000) would be guaranteed.
(b) ENVOY grants to Executive stock options under the 1995 Stock
Incentive Plan as follows: effective March 6, 1996,
100,000 options vesting 1/3 (March 6, 1997) - 1/3 (March 6,
1998) - 1/3 (March 6, 1999) over a three (3) year period; and
an additional 100,000 options vesting five years from March 6,
1996. The option price per share shall be at the average bid
price on March 6, 1996, which was $20.75.
(c) The Executive shall have the right to participate in all group
benefit plans of the Company (including without
limitation, disability, accident, medical,life insurance,
hospitalization and pension), all in accordance with the
Company's regular practices with respect to its senior
officers.
(d) The Executive shall be entitled to reimbursement from the
Company for reasonable out-of-pocket expenses incurred
by him in the course of the performance of his duties
hereunder.
(e) The Executive shall be entitled to reimbursement from the
Company for reasonable expenses incurred by him in the
course of relocating to the Nashville, Tennessee area
including, but not limited, to: travel for Executive and spouse
for the purpose of purchasing a home and conducting such other
business as is required to complete that purchase; "points",
origination fees, home inspection fees and any other fees,
expenses and taxes usually necessary to complete the purchase
transaction; the cost of packing and moving Executive's
furniture and other possessions to Executive's new home in the
Nashville area; and costs incurred by Executive as a result of
his leaving his current leased residence prior to the
expiration of the current lease on that residence. Such expense
reimbursement will be increased to an amount sufficient to
offset taxes applied
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to the reimbursement, resulting in a "no gain/no loss" position
to Executive.
Notwithstanding the above, the Company's reimbursement to
Executive under this section shall not exceed $50,000.
(f) Executive shall be entitled to twenty (20) days of paid
vacation. Executive recognizes the essential nature of his
duties and hereby agrees the maximum amount of vacation time to
be taken shall not exceed twenty (20) consecutive days.
Executive may accumulate up to forty (40) days.
6. Termination and Resignation - The Company shall have the right to
terminate the Executive's employment hereunder at any time and for any
reason, and upon any such termination the Executive shall be
entitled to receive from the Company prompt payment of the amount
determined pursuant to the applicable subparagraph of Paragraph 7
below. The Executive shall have the right to terminate his employment
hereunder at any time by resignation, and he shall thereupon be
entitled to receive from the Company prompt payment of the amount
determined pursuant to the applicable subparagraph of Paragraph 7
below.
7. Payments Upon Termination and Resignation
7.1 Pro Rata Payments - If (a) the Company at any time terminates the
Executive's employment for cause (as defined below), or (b) prior to
the occurrence of a Change In Control (as defined below) of the
Company, the Executive voluntarily resigns for any reason other than
because of an uncured material breach by the Company of any term of
this Agreement, then in each case the Executive shall be entitled to
receive only his Base Salary on a pro rata basis to the date of
termination. If the Executive at any time dies or becomes disabled
(being the inability of the Executive to perform his normal employment
duties for the remainder of the term of this Agreement because of
either physical or mental incapacity), the Executive shall be entitled
to receive only his Base Salary plus Average Bonus (as defined below)
on a pro rata basis to the date of termination or resignation. For
purposes of this Paragraph 7.1, "pro rata" shall mean the product of
the Executive's annual Base Salary and Average Bonus that would have
been payable had the Executive's employment not terminated multiplied
by a fraction the denominator of which is 365 and the numerator of
which is the number of days during the calendar year that have passed
through the date of the termination of the Executive's employment.
7.2 Base Salary and Average Bonus Payment - If prior to the occurrence of
an Initial Change in Control Event (as defined below), the Company
terminates the Executive's employment because of a Discharge Event (as
defined below), or if prior to the occurrence of a Change in Control
of the Company, the Executive resigns because of the uncured material
breach by the Company of any term of this Agrement, then in each case
the Executive shall be entitled to receive a lump sum payment equal to
his Base Salary and Average Bonus.
7.3 Change of Control Payment - If after the occurrence of an Initial
Change of Control Event of the Company, the Company terminates the
Executive's employment hereunder (a) because of a Discharge Event, or
(b) without Cause and without any Discharge Event, then in either case
the Company will pay to the Executive a lump sum termination payment
equal to his Base Salary and his Average Bonus (collectively, the
"Lump Sum Payment"). If after the occurrence of a Change in Control
of the Company, (a) the Company terminates the Executive's employment
hereunder for any reason other than for Cause (other than his death or
disability), or (b) the Executive voluntarily resigns his employment
hereunder for any reason (other than his death or disability), then in
each
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case the Company will pay to the Executive the Lump Sum Payment.
7.4 Contract Term Payment - If prior to the occurrence of an Initial
Change in Control Event of the Company, the Company terminates the
Executive's employment hereunder without Cause and without any
Discharge Event, then the Executive shall be entitled to receive his
Base Salary plus his Average Bonus, payable in the same amounts and at
the same times as if the Executive's employment had not terminated,
for 12 months from date of termination. If notice is given to the
Executive by the Company pursuant to Section 2 of this Agreement that
the term of this Agreement will not be extended, the Executive shall
be entitled to receive his Base Salary plus his Average Bonus, payable
in the same amounts and at the same times as if the Executive's
employment had not terminated, for 12 months from the date of
termination.
7.5 Certain Definitions
(a) "Average Bonus" shall mean that result obtained by dividing the
sum of the bonuses, if any, paid to the Executive pursuant to
Paragraph 5.1(a) above in respect of the two years next
preceding the year of Executive's termination or resignation by
the number of years during such two-year period in which the
Executive was entitled to receive a bonus pursuant to paragraph
5.1(a) above.
(b) Termination by the Company of the Executive's employment for
"Cause" shall mean termination upon the willful
misappropriation of funds or properties of the Company or the
willful contravention of the standards referred to in the last
sentence of Paragraph 10 below. For purposes of this
definition, no act, or failure to act, on the Executive's part
shall be considered "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best
interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board of Directors of the Company at a
meeting of the Board duly called and held (after reasonable
notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board)
finding that in the good faith opinion of the Board the
Executive was guilty of the conduct set forth above and
specifying the particulars thereof in detail.
(c) A "Change in Control" shall be conclusively deemed to have
occurred if (and only if) any of the following shall have taken
place: (i) a change in control is reported by the Company in
response to either Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), or Item 1 of Form 8-K promulgated
under the Exchange Act; (ii) any person (as such term is used
in Section 13(d) and 14(d)(2) of the Exchange Act) is or
becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act) directly or indirectly, of securities of the
Company representing fifty-one percent or more of the combined
voting power of the Company's then outstanding securities; or
(iii) following the election or removal of directors, a
majority of the Board consists of individuals who were not
members of the Board two years before such election or removal,
unless the election of each director who was not a director at
the beginning of such two-year period has been approved in
advance by directors representing at least a majority of the
directors then in office who were directors at the beginning of
the two-year period.
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(d) The "Code" shall refer to the Internal Revenue Code of 1986, as
amended.
(e) A "Discharge Event" shall have occurred if the Executive shall
have received a copy of a resolution duly adopted by
the affirmative vote of a majority of the members of the
Compensation Committee of the Board of Directors of the Company
finding that, upon the recommendation of and for the reasons
cited by the Chairman of the Company, the Executive is no
longer discharging his duties in a manner consistent with the
effective administration of the affairs of the Company and
hence the continued employment of the Executive is no longer in
the best interest of the Company.
(f) An "Initial Change in Control Event" shall be conclusively
deemed to have occurred when any individual, group,
partnership, corporation, trust or other entity ("Person")
initiates a course of action or conduct that, in the good faith
judgement of the Board of Directors of the Company, might
reasonably be expected to lead to a Change in Control of the
Company. For example and without limiting the scope of the
foregoing, an Initial Change in Control Event would include the
public announcement or other disclosure by a Person of its
intention (i) to acquire by private or open market purchase,
tender offer, exchange offer, or otherwise forty percent or
more of the combined voting power of the Company's outstanding
securities, or (ii) to solicit proxies or consents for the
removal of at least three incumbent directors or the election
of at least persons to serve as directors of the Company in
opposition to nominees proposed by the Board of Directors of
the Company.
8. Acceleration of Options - Contemporaneously with the occurrence of a
Change in Control of the Company, the Board of Directors of the
Company (or the appropriate committee thereof) to the extent
allowable under the plan, will accelerate all outstanding operations
previously granted to the Executive under any then existing Company
stock option, stock appreciation or other employee incentive plan that
are not otherwise exercisable by the Executive at the time the Change
in Control of the Company occurs.
9. Title and Interests in Employee Inventions and Work Product -
Executive recognizes, acknowledges, and hereby agrees that all
work products, hardware or software, produced, designed or improved
while under the employ of ENVOY, whether patentable or not, become
and shall remain the exclusive property of ENVOY and thereby ENVOY
has the exclusive right to use, manufacture, license and/or sell all
inventions, design work, products and any tangible or intangible work
product produced, developed or improved while Executive is employed
by ENVOY. It is herby mutually agreed that upon termination of this
Agreement, for whatever reason, Executive shall have no ownership,
interest, license or claim with respect to any work product or
products covered hereunder or to the goodwill in any such work
product.
10. Confidentiality and Non-Disclosure of Information - Executive
recognizes, acknowledges and hereby agrees that all information
acquired by virtue of this Agreement or the relationship created by
this Agreement concerning ENVOY customer names, contracts, number of
retail establishments, dollar volumes of business, transaction
volumes, establishment discounts, and other customer data obtained
through confidentiality or service agreements constitute TRADE
SECRETS of ENVOY and will be treated by Executive as confidential and
proprietary and shall not be used or disclosed, in whole or in part,
to any person, firm, corporation, association, or other entity for
any reason or purpose whatsoever during the term of this Agreement.
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11. Restrictive Covenants
11.1 Non-Compete - During the term of this Agreement (including any renewal
periods as provided in paragraph 2) and for a period of 12 months
following the termination of Executive's employment with the Company
under section 7.1 of this Agreement, Executive covenants and agrees he
will not, without the express approval of the Board of Directors,
directly or indirectly anywhere in the continental United States
become interested in any person engaged in any business directly or
indirectly, as an individual, partner, shareholder, officer, director,
principal, agent, employee, trustee, consultant or in any other
relationship or capacity, if such business is competitive directly or
indirectly, to the Company's Business and substantially injurious to
the Company's financial interests; provided, however, that Executive
may own, directly or indirectly, solely as an investment, securities
of any entity if Executive (a) is not a controlling person with
respect to such entity and (b) does not, directly or indirectly, own
five percent or more of any class of the securities of such entity.
11.2 Additionally, Executive recognizes, acknowledges and hereby agrees
that all information made available by ENVOY or that becomes available
pursuant to this Agreement concerning ENVOY work products, hardware or
software, that involve written printouts, magnetic media copies of
software, diagrams, sketches, processes, formulas, algorithms, notes,
graphs, blueprints, copies of transcripts, schematics, logic diagrams,
circuit diagrams, components, material or material lists constitute
TRADE SECRETS of ENVOY and will be treated by Executive as
confidential and proprietary and shall not be used or disclosed, in
whole or in part, to any person, firm, corporation, association, or
other entity for any reason or purpose whatsoever, whether or not any
portion thereof is or may be validly copyrighted or patented.
11.3 Executive agrees not to alter, duplicate, represent, imitate, or
reverse engineer any work product, hardware or software, covered
hereunder, in a manner so as to cause any third party to regard any
ENVOY work products as those belonging to Executive and in so doing,
to purchase same and thereby deny revenue to ENVOY. Provisions of
this article shall apply to copied or imitated products, hardware or
software, possessing either functional or nonfunctional similarity of
features.
11.4 In the event of a breach or threatened breach by Executive of the
provisions of Article 11.2, or any part thereof, ENVOY shall be
entitled to immediate injunctive relief, without bonds, restraining
Executive from disclosing, in whole or in part, the TRADE SECRETS of
ENVOY, or from rendering any services to any person, firm,
corporation, association, or other entity to whom such list, in whole
or in part, has been disclosed. Nothing herein shall be construed as
prohibiting ENVOY from pursuing any other remedies available to ENVOY
for such breach or threatened breach.
12. Governing Law - This Agreement shall be interpreted and governed
exclusively in accordance with the laws of the State of Tennessee,
USA.
13. Severability - Should any part of this Agreement for any reason be
declared invalid, whether by court or legislative action, such
decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in full force and effect as if this
Agreement had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties
hereto that they would have executed the remaining portion of the
Agreement without any such part, parts, or portions which may, for any
reason, be hereafter declared invalid.
14. No obligation to Mitigate - The Executive shall not be required to
mitigate the amount of
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any payment provided for in Paragraph 7 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in
Paragraph 7 be reduced by any compensation earned by the Executive as
a result of employment by another employer or otherwise.
15. Notices - It is mutually agreed that all notices required or permitted
under this Agreement shall be in writing and be given by personal
service or by depositing a copy thereof in United States Postal
Service certified or registered mail, with postage thereon fully
prepaid, in a sealed envelope, to the following addresses or to such
other addresses as may be designated by notice in writing. Any
notices given hereunder shall be deemed to be given when served
personally or three (3) days after deposited with the United States
Postal Service as aforesaid.
TO ENVOY: ENVOY CORPORATION
Two Lakeview Place
15 Century Boulevard, Suite 600
Nashville, Tennessee 37214
TO Executive: Mr. Richard P. Caliri
88 E. 64th Street, Apt. 2801
New York, NY 10021
16. Waiver of Breach - The waiver of a breach of any provision of this
Agreement by ENVOY shall not operate or be construed as a waiver of
any subsequent breach by Executive.
17. Construction - All references herein in the singular shall be
construed to include the plural where applicable, and the
masculine is to include the feminine and neuter genders and all
agreements, obligations and covenants herein assumed by Executive
shall be by the individual named herein as Executive.
18. Entire Agreement - EXECUTIVE AND ENVOY ACKNOWLEDGE THAT THEY HAVE READ
THIS AGREEMENT, UNDERSTAND IT, AND AGREE THAT THIS AGREEMENT
CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SHALL SUPERSEDE ALL PREVIOUS
PROPOSALS, NEGOTIATIONS, COMMITMENTS, AND COMMUNICATIONS. IT MAY NOT
BE RELEASED, DISCHARGED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT
IN WRITING, DULY EXECUTED BY EACH OF THE PARTIES HERETO.
IN WITNESS WHEREOF, the below named parties have accepted and executed the
above Agreement on the date written below.
Accepted by:
ENVOY CORPORATION EMPLOYEE
/s/ Fred C. Goad Jr. /s/ Richard P. Caliri
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Authorized Signature Employee Signature
Fred C. Goad Jr. Richard P. Caliri
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Name (Typed or Printed) Name (Typed or Printed)
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