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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of January 20, 1999, is made and
entered into by and between COHR, Inc., a Delaware corporation ("Company"), and
Xxxxxx X. Xxxxx, an individual ("Executive").
RECITAL
Executive is a key executive of the Company and an integral part of its
management. This Agreement is being entered into in connection with the
Company's continued employment of Executive.
AGREEMENT
NOW, THEREFORE, Company and Executive agree as follows:
1. a. This Agreement shall initially be in effect from September 1,
1998 through August 31, 2001, unless renewed or terminated earlier as provided
herein (the "Initial Term"). At the expiration of the Initial Term and each
anniversary thereafter, the term of this agreement shall automatically be
extended for an additional year (the "Extension Term") unless a written notice
of non-renewal is given by either party on or before ninety (90) days prior to
the end of the Initial Term or the Extension Term, as the case may be, that it
does not desire to extend the term of this Agreement.
b. Executive is and will continue to be employed by the Company
in the position held by Executive as of the effective date of this Agreement and
pursuant to its terms. Executive's job description as of the effective date
hereof is attached as Exhibit A. During his employment hereunder, and subject to
the next sentence, Executive shall devote substantially all of his attention and
business during normal business hours to the performance of this Agreement and
shall, without the Company's prior written consent in each instance, refrain
from rendering services of any kind to others for compensation or services which
would materially interfere with the performance with his duties under this
Agreement.
2. During the term of employment, Company shall pay a base salary to
Executive. The base salary for the first year hereof shall be at a rate of Two
Hundred Seventy-Five Thousand Dollars ($275,000) per year. The amount of
Executive's base salary increase, if any, in future years shall be reviewed and
set annually by the Compensation Committee, but in no event shall such salary be
decreased. The base salary shall be paid in equal semimonthly installments.
3. In addition to his base salary, during the term of his employment
(but commencing
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with the fiscal year ended March 31, 2000), Executive shall be eligible to
receive an annual bonus for the period from April 1 through March 31 of each
year as shown in Exhibit B and as set forth below.
a. The amount of this bonus shall be up to forty percent (40%) of
Executive's base salary or a higher percentage at the discretion of the Board.
The amount of the bonus shall depend on the Company's achievement of quantified
goals, to include target corporate pretax earnings, as provided in Exhibit B,
with Executive receiving 40% of base salary if the targets are met and a pro
rata portion, in the discretion of the Board, if the target is not met. For
years after the year ended March 31, 2000, the targets shall be negotiated in
good faith by Executive and the Board.
b. The amount of the bonus shall be based on performance results
as of March 31 of each fiscal year and shall be effective as of that date
("Bonus Date"). Any bonus due shall be paid in two installments. The first
installment shall represent fifty percent (50%) of the total bonus due and, to
the extent not applied to prepay any outstanding loan, will be paid within
ninety (90) days of the Bonus Date. The second installment shall represent the
remaining fifty percent (50%) of the total bonus due and, to the extent not
applied to prepay any outstanding loan, shall be paid within ninety (90) days of
the first anniversary of the Bonus Date. Notwithstanding anything in this
Agreement to the contrary, the first installment shall be payable only if
Executive is still employed on the Bonus Date. The second installment shall be
payable unless Executive is no longer employed with the Company on the first
anniversary of the Bonus Date by reason of voluntary resignation, retirement, or
termination for cause.
c. The first installment of a bonus shall be paid in cash.
d. The second installment of a bonus shall be paid in cash,
stock, or stock options, at the discretion of the Company. For the bonus earned
effective as of March 31, 1999 or thereafter, the second installment (due on
March 31, 2000 or thereafter on each subsequent March 31), if paid in Company
Stock is subject to approval by the Company's stockholders. Executive shall be
entitled to receive Company common stock with a fair market value equal in value
to the remaining fifty percent of the such bonus, where the fair market value of
each share of stock shall be the average closing sales price of a share of
common stock on the composite tape for the NASDAQ exchange for the five (5)
business days prior to the Bonus Date (e.g. March 31, 2000 or each March 31
thereafter). The Company shall make reasonable efforts to cause such stock to be
registered under the Securities Act of 1933, as amended, or, in the event the
Company is unable to register such securities, the Company shall make reasonable
efforts to afford Executive access to customary piggyback registration rights.
Notwithstanding the above, if the Company's stockholders do not approve the
issuance of stock to Executive pursuant to this Agreement, or if at the time the
bonus is due the Company has no class of securities registered under the
Securities Exchange Act of 1934, as amended, then the Company shall pay the
second installment of the bonus in cash rather than stock.
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e. In the event the Company pays the second installment of the
bonus in stock that is not registered under the Securities Act of 1933, as
amended, by accepting such stock as part of his bonus, Executive represents that
the stock will be for Executive's purposes only and not with a view toward the
distribution of such shares. Executive understands that such stock will not have
been registered with any state or federal agency and that such shares cannot be
transferred by Executive unless the shares are registered under applicable
securities laws or unless an exemption from registration is available.
f. In determining whether the corporate pretax earnings targets
set forth in Exhibit B (or the targets agreed to with respect to any subsequent
years) are satisfied, the amount of any bonus to be paid Executive hereunder
shall be included in such determination.
4. a. In addition to the base compensation and bonus provided in
this Agreement, Executive shall throughout the term hereof be entitled to and
shall receive all other benefits no less favorable to Executive than the
benefits generally available to other executives of the Company of the same
status, level and length of service as Executive. Executive shall also be
entitled to reimbursement of reasonable and necessary business expenses
including, without limitation, travel and entertainment expenses, and
subscriptions and related professional expenses (not including primary
membership expenses, which are paid by Executive), in accordance with the
Company's then prevailing policy (which shall include appropriate itemization
and substantiation of expenses incurred).
b. Executive shall be entitled to a minimum of three weeks paid
vacation, or, if more, to such vacation and holidays in accordance with the
policy of the Company generally applicable to other executives of Company with
similar length of service.
c. Executive shall be entitled to the standard health, dental,
and pension benefits provided to other executives of the Company of the same
level and length of service as Executive. The Company shall pay the premiums on
Executive's current health and dental coverage for that period of time required
for Executive to become covered under the Company plans.
5. All compensation provided pursuant to Sections 2, 3, and 4 shall
be subject to customary income tax withholding and such other employee
deductions as are required by law with respect to compensation paid to an
employee.
6. Executive's employment may be terminated before end of the
Initial Term or any Extension Term in the event one of the following occurs
during such term of this Agreement or any extension thereof:
a. Executive is given 60 days written notice of the termination
of this Agreement and Executive's employment other than for cause (as defined
herein below), where such termination is other than a notice of non-renewal, as
provided in Section 1(a);
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b. Executive's responsibilities are materially reduced and
Executive resigns within three (3) months of such reduction;
c. The Agreement is assumed, as contemplated in Section 21, and
within eighteen months of such assumption Executive is terminated for reasons
other than cause;
d. Executive voluntarily resigns or retires from his
employment;
e. Executive is terminated for cause.
For purposes of this Section 6 and Section 8 herein below, a termination
"for cause" occurs if Executive is terminated for any of the following reasons:
(i) theft, dishonesty, or falsification of any employment or Company records;
(ii) knowing and improper disclosure of Company's confidential or proprietary
information; (iii) conduct by Executive of a criminal nature (commonly defined
as a "felony" in criminal statutes) which has a material adverse effect on
COHR's reputation or standing in the community or on its continuing
relationships with its customers or those who purchase and use its products;
(iv) habitual neglect of duties or wanton negligence by Executive in the
performance of duties; (v) violation of a material Company policy or procedure
or any material law or regulation, which breach is not cured within thirty (30)
days following receipt by Executive of written notice of such breach from
Company; or (vi) material wrongdoing or misconduct; or (vii) any material breach
of this Agreement, which breach is not cured within thirty (30) days following
receipt by Executive of written notice of such breach from Company.
7. Subject to Section 8 hereof, and in lieu of payments under
Sections 2, 3 and 4, Executive shall receive the following compensation and
benefits if his employment terminates during the Initial Term or any Extension
Term pursuant to Section 6.a, b, or c above:
a. Executive shall be paid eighteen (18) months at the rate of
Two Hundred Seventy-Five Thousand Dollars ($275,000) per year, or the base pay
rate in effect at the time of termination. Executive shall also receive an
additional amount as a prorated bonus, which amount shall be calculated by
multiplying Executive's annual bonus, estimated in good faith by the Company,
times a fraction representing the fraction of the year (rounded to the nearest
whole number of months) Executive was employed by the Company during the year of
termination. These amounts shall be paid monthly in eighteen (18) equal payments
commencing on the first day of each month following the effective date of such
termination or resignation. Such payments shall be subject to Federal and State
Income Tax withholding, social security and SDI withholding, and such other
employee deductions as are required by federal, state or local law or authorized
in writing by the Executive. The amount of continued base salary or prorated
bonus provided for in this paragraph shall not be reduced, offset or subject to
recovery by reason of any compensation earned by Executive with a subsequent
employer or from self employment unless the subsequent employer agrees to assume
and be bound by all of the obligations under this Agreement, and Executive has
consented to such assumption, in accordance with the provisions of Section 21
herein below.
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b. During the same eighteen (18) month period, the Company will
also continue at its contributions to Executive's 401(k) plans, pension plans,
and medical/dental insurance coverage at the same coverage level that he would
have received if he had remained an employee during the eighteen month period.
Should Executive accept dental coverage or PPO or PPO-equivalent health coverage
by a subsequent employer, the dental coverage or medical insurance coverage
provided at the Company's expense (i.e., whichever is so provided by the
subsequent employer) shall be terminated.
c. Notwithstanding the foregoing, if (i) the Company exercises
its right to not renew the Initial Term or the Extension Term as set forth in
Section 1(a) hereof, the time period set forth above in Sections 7.a and 7.b
shall be twelve (12) months rather than eighteen (18) months so that Executive
shall be entitled to receive payments with respect to a period of twelve (12)
months rather than eighteen (18) months from the effective date of non-renewal
or termination, as the case may be, or (ii) Executive's employment terminates
during any Extension Term pursuant to Section 6.a, b or c, the time periods set
forth above in Sections 7.a and 7.b shall be twelve (12) months instead of
eighteen (18) months.
8. Neither Company nor its successor in interest shall be required
to make any payments under Section 7 above in the event Executive is terminated
for cause, retires, or voluntarily resigns. Payments under Section 7 shall be
made to Executive's estate in the event Executive dies or to Executive in the
event Executive becomes disabled, as disability is defined in the next sentence,
in lieu of payments under Sections 2, 3 and 4 hereof. For the purposes of this
Agreement, "disability" will mean if at the end of any calendar month, Executive
is and has, for three (3) full consecutive months out of any twelve (12) month
period continuously been unable due to mental or physical illness or injury to
perform his duties under this Agreement in his normal or regular manner.
9. Except as required for the purposes of proxy disclosure, NASDAQ
rules or applicable laws or regulations, the parties each represent and agree
that they will keep the terms, contents and existence of this Agreement
completely confidential, and will not hereafter disclose any information
concerning this Agreement, including any negotiations leading to this Agreement,
to anyone except as required by law or to individuals who reasonably must be
informed of its terms, and who will be advised of and bound by this
confidentiality clause. Notwithstanding the foregoing, either party may disclose
this Agreement or its terms or contents in any arbitration pursuant to Section
16 hereof. Any failure by any parties, their attorneys, agents or
representatives to maintain the confidentiality of the negotiations leading to
this Agreement, the fact of, or the terms of this Agreement shall constitute a
material breach of this Agreement.
10. Executive acknowledges that he is a fiduciary of the Company and
as such is subject to duties to the Company, its Board of Directors and
Stockholders, including but not limited to the obligation to discharge his
duties (a) in good faith, (b) with the care of an ordinarily prudent person in a
like position would exercise under similar circumstances, and (c) in a manner he
reasonably believes to be in the best interests of the Corporation.
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11. Executive and the Company agree that Executive's services for the
Company create a relationship of confidence and trust between the Company and
Executive with respect to any information (a) applicable to the business of the
Company or (b) applicable to the business of any client or customer of the
Company which may be made known to Executive by the Company or by any client of
the Company, or learned by Executive in such context during the period of
Executive's service. All such information has commercial value in the business
in which Company is engaged and is hereinafter referred to as "Proprietary
Information."
The Company acknowledges and agrees that prior to his engagement
Executive possessed, and continues to possess, a broad body of knowledge of
health care and information technology generally, and specific expertise in the
areas of health care information systems, electronic commerce within health care
and other industries, health care group purchasing organizations and inventory
management.
Executive and the Company agree that all Proprietary Information
is the sole property of the Company, its assigns and its customers, and the
Company, its assigns and its customers shall be the sole owner of all patents,
copyrights, trade secrets and other rights in connection therewith. Executive
hereby assigns to the Company any rights he may have or acquire in such
Proprietary Information. At all times, both during Executive's services for the
Company and for a period of eighteen (18) months after its termination,
Executive will keep in confidence and trust all Proprietary Information or
anything directly relating to it without the written consent of the Company,
except as may be necessary in the ordinary course of performing Executive's
duties hereunder.
Notwithstanding the foregoing, Proprietary Information shall not
be deemed to include, and Executive shall not be under any of the aforementioned
obligations with respect to, information that Executive can document (a) was in
the public domain at the time it was communicated to Executive, (b) entered the
public domain subsequent to the time it was communicated to Executive through no
fault of Executive, (c) was in Executive's possession free of any obligation of
confidence at the time it was communicated to Executive, (d) is part of
Executive's own skill, knowledge, know-how and experience or (e) was disclosed
in response to a valid order by a court or other governmental body, and
Executive provided the Company with prior written notice of such disclosure in
order to permit the Company to seek confidential treatment of such information.
12. Executive acknowledges that as an executive of the Company he has
been and will be instrumental in the business of the Company and its success.
Accordingly, Executive agrees that during the term of this Agreement, he will
not, directly or indirectly, within any location in the United States where the
Company is transacting business during the term of this Agreement, if earlier,
or at the time of the termination of Executive's services hereunder, as the case
may be, engage or participate or make financial investments in or become
employed by or render advisory or other services to or for any person, firm or
corporation directly or indirectly engaged in the business of, and deriving
substantially all of its revenues from, owning and operating medical
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group purchasing organizations and/or the sale, lease and/or servicing of
medical equipment (the "Restricted Business") directly or indirectly in
competition with the Company. Nothing herein contained, however, shall restrict
Executive from making any investment in any company whose stock is listed on the
National Securities Exchange or actively traded in the over-the-counter market,
so long as such investment does not give him the right to control or influence
the policy decisions of any such business or enterprise which is engaged in and
derives substantially all of its revenues from the Restricted Business, nor
shall Executive be precluded from investing in entities engaged in the
Restricted Business and being able to nominate and elect a representative to
serve on the Board of Directors of any such companies.
13. For a period of eighteen (18) months from and after the effective
date of termination or expiration of Executive's employment with Company,
whether pursuant to the terms of this Agreement or otherwise, Executive shall
not:
a. Directly or indirectly solicit any executive or managerial
employee of the Company to discontinue working for or representing the Company
for the purpose of working for or representing any subsequent employer of
Executive which is a competitor of Company; or
b. Authorize or knowingly approve the taking of such actions as
those described above by other persons (on behalf of any such competitor) or
assist any such person, firm or corporation in taking such action.
14. In the event that Executive becomes involved in any claim, action
or legal proceeding brought by or against any person, including stockholders of
the Company, in connection with or as a result of the rendering of services
under this Agreement, the Company will pay Executive's legal and other expenses
(including the cost of any investigation or preparation) in connection therewith
as incurred, except to the extent that Executive has engaged in bad faith or
willful misconduct. The Company will also indemnify and hold the Executive
harmless against any and all losses, liabilities, suits, claims, costs, damages
or expenses (including reasonable attorneys' fees) to Executive in connection
with or as a result of the rendering of services under this Agreement, except to
the extent that any such loss, liability, suit, claim, cost, damage, or expense
results from the bad faith or willful misconduct of Executive in performing the
services that are the subject of this Agreement.
15. Executive acknowledges that he has been advised to seek an
attorney for advice regarding the effect of this Agreement prior to signing it.
16. If any claim (including those arising under state or federal
statutes) is brought under this Agreement, or any dispute of any nature
whatsoever arises regarding the termination of this Agreement or the termination
of Executive's employment (except alleged violations of Executive's obligations
under Sections 10, 11, 12, 13 and 14; which may be enforced by the Company
through a temporary restraining order, preliminary injunction and/or injunction
in a judicial forum), the Company and Executive agree that such claim shall be
resolved in an arbitration
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proceeding before a single arbitrator, conducted under the auspices of the
American Arbitration Association, Los Angeles, California and in accordance with
its Employment Dispute Resolution rules. Executive understands, acknowledges and
agrees that he is waiving any right to a jury to decide any claim (including
statutory claims), subject to this Section. The arbitrator agreed to under such
rules shall be empowered to resolve the dispute through consideration of the
facts, the terms of this Agreement, and any statute, law, regulation or defense
asserted by either party. The arbitrator shall be experienced in employment law
and his/her decision shall be in writing and contain findings of fact and
conclusions of law. If so authorized by the arbitrator, the prevailing party
shall be entitled to recover from the non-prevailing party such damages as the
arbitrator determines appropriate based upon the legal theories asserted by
either party in such arbitration and reasonable expenses, including without
limitation reasonable attorneys' fees. The arbitration decision shall be final
and binding and may be confirmed in any court of competent jurisdiction.
17. If any of the above provisions is found null, void, or
inoperative, for any reason, the remaining provisions will remain in full force
and effect.
18. This Agreement may be executed by facsimile and in identical
counterparts. The Agreement will be binding on the parties once it has been
fully executed. Thereafter, the parties will exchange hard copies and all the
counterparts together shall constitute a single agreement, and it shall not be
necessary to introduce more than one fully executed counterpart to enforce this
Agreement.
19. Any notice to the Company required or permitted hereunder shall
be given in writing to the secretary of Company either by personal service or by
registered mail postage prepaid addressed to Company at its then principal place
of business. Any such notice to Executive shall be given in like manner and mail
shall be addressed to the Executive at his home address then shown in the files
of Company. Notice by mail will be deemed received three (3) business days after
the notice is deposited in the United Sates mail, postage prepaid.
20. This Agreement may be extended for an additional period and
subject to additional or different terms by written agreement of the parties.
21. This Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns, heirs
and legal representatives, including any entity with which the Company may merge
or consolidate (in which the Company is not the surviving entity) or to which
all or substantially all of its assets may be transferred; provided, however,
that the assignee agrees to assume and be bound by the terms by the terms and
conditions of this Agreement and Executive consents to such assignment and
assumption. When Executive consents to the assignment and the Agreement is
assumed by the assignee, Executive shall not be entitled to any payments and
benefits set forth in paragraph 7 hereof until an event under Section 7(a),(b),
or (c) other than such assignment and assumption occurs.
22. This Agreement supersedes all prior agreements, oral or written,
between the
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parties with respect to Executive's employment (other than Executive's stock
option agreements with the Company) and constitutes a complete and exhaustive
statement of the terms of the agreement between the parties with respect to its
subject matter. Specifically, this Agreement amends and restates in its entirety
the Employment Agreement between Executive and Company dated March 1, 1998. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
23. This Agreement shall be governed by California law.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date above written.
"Company" "Executive"
COHR, INC. /S/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
By: /S/ XXXX XXXXXXXX
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Its: CHAIRMAN
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EXHIBIT A
EXECUTIVE JOB DESCRIPTION
OFFICER OF COHR, INC.
Chief Financial Officer
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EXHIBIT B
COHR INC. FINANCIAL TARGETS
($M)
Full Year
Q1, FY00 Q2, FY00 Q3, FY00 Q4, FY00 FY2000
Fcst. Fcst. Fcst. Fcst. Fcst.
REVENUES
Master Plan $15,045 $15,775 $17,005 $18,625 $66,450
GPO 4,167 3,688 3,798 3,870 15,523
Security/Insurance 825 825 845 845 3,340
Corporate 45 45 45 45 180
$20,082 $20,333 $21,693 $23,385 $85,493
OPERATING
PROFIT/(LOSS)
Master Plan $ 1 $ 1,057 $ 1,577 $ 1,867 $ 4,502
GPO 2,205 1,955 2,013 2,051 8,224
Security/Insurance 74 74 76 76 300
PHSG @ 40% 30 30 30 30 120
Ownership
Corporate (2,928) (2,776) (2,676) (2,676) (11,056)
TOTAL $ (618) $ 340 $ 1,020 $ 1,348 $ 2,090
Interest Income-Net 137 137 138 138 550
Pretax $ (481) $ 477 $ 1,158 $ 1,486 $ 2,640
Income/(Loss)
EPS (6,433M $ 0.41
Shares)
B-1
