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Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of March 1, 1997 by and between QUALITY CARE SOLUTIONS, INC., a Nevada
corporation (the "Company"), and A. Xxxxx Xxxxxx, an individual residing in
Arizona ("Employee").
RECITALS:
A. Employee is the Sr. Vice President Sales & Marketing of the Company and
has served as an executive officer of the Company since January 1, 1995;
B. The Board of Directors of the Company considers a sound and vital
management to be essential to the Company and desires to have the continuing
benefit of Employee's knowledge, experience and service; and
C. The Company desires to retain the services of Employee in the
capacities herein set forth and the Employee desires to be employed by the
Company in such capacities.
AGREEMENT:
The parties hereto, in consideration of the premises and mutual covenants
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated:
1.1 "Board" means the Board of Directors of the Company or any
successor thereof.
1.2 "Company" means Quality Care Solutions, Inc. or any successor
entity.
1.3 "Compensation" means the total amount payable to Employee
pursuant to Section 4.1.
1.4 "Effective Date" means January 1, 1996.
1.5 "Final Average Annual Compensation" means the total amount
included in Employee's gross income for federal income tax purposes in
connection with employment hereunder for payments or benefits received under the
provisions of Section 4.1 (not including stock options received in lieu of
salary increases) hereof during the three calendar years
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immediately preceding the calendar year during which termination of employment
occurs, divided by three.
1.6 "Good Reason" means the occurrence of any of the following
events to which Employee has not expressly agreed to in writing:
(a) The assignment to Employee of duties inconsistent with
Employee's position, duties, responsibilities and status with the
Company on the Effective Date or the failure to re-elect or re-appoint
Employee to his present position;
(b) A material reduction in Employee's Compensation as in effect
on the Effective Date or on any renewal date of this Agreement,
whichever occurs later;
(c) Employee's relocation, without his consent, to any
metropolitan area other than the principal location at which Employee
performed Employee's duties on the Effective Date, except for required
travel by Employee on the Company's business;
(d) The failure of the Company to obtain the assumption of this
Agreement by any successor to substantially all of the assets or
business of the Company; or
(e) Any material breach by the Company of any provision of this
Agreement which is not corrected by the Company or, if the breach
cannot be corrected, as to which the Company fails to pay to Employee
reasonable compensation for such breach, within 60 days following
receipt by the Company of written notice from Employee specifying the
nature of such breach.
1.7 "Proprietary Information" means all information used by the
Company in the conduct of its business and includes any information developed by
Employee at the discretion of the Company, out of or as an extension of existing
Proprietary Information, or using resources, such as materials or tools,
existing technology, patents and licenses belonging to the Company. Proprietary
Information includes, but is not limited to, information relating to (a) the
products, inventories, discoveries, patents, formulae, know-how, designs, trade
secrets or other technical information of the Company, (b) the marketing
methods, names of vendors, names of customers, costs of materials, prices of
products or services, lists or records, profits and losses or any other
financial prices of products or services, lists or records, profits and losses
or any other financial information of the Company, (c) the present or future
plans, names and compensation of employees or any other business information of
the Company, or (d) any other information or data of a confidential nature
concerning the products, technology, operations, finances or business of the
Company.
1.8 "Termination For Cause" means the termination of employment
of Employee by the Board because of Employee's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, conviction of the violation of any material
law, rule or regulation resulting in the Company's detriment or reflecting upon
the Company's integrity (other than traffic infractions or similar minor
offenses)
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or a material breach by the Employee of the terms of this Agreement and failure
to cure such breach within 30 days after receipt of written notice from the
Company specifying the nature of such breach or to pay compensation to the
Company deemed reasonable by the Company if the breach cannot be cured.
1.9 "Total and Permanent Disability" means any condition affecting
Employee that prevents the performance of the essential job functions and which
is expected to be of a long, continued and indefinite duration which has caused
Employee's absence from service, after providing to Employee reasonable
accommodation to perform the requirements of the job if required by law, for not
less than 180 consecutive days during any 12 month period or for such shorter
periods aggregating 180 days during any 12 month period. In such instance, a
determination of the existence of the Employee's disability and of the duration
of the disability may be made by written agreement between the Company and the
Employee, or Employee's legally appointed guardian if the Employee then is
incompetent. If the parties do not agree, such determination shall be made, and
certified in writing, by a licensed physician who is a member of the Maricopa
County Medical Association and not an employee of the Company, and such
physician's determination, after the proper medical examination, shall be
binding and conclusive upon the parties to this Agreement. The examining
physician shall be selected by agreement of the Company and the Employee. If the
Company and the Employee cannot agree on a physician, then each party shall
select a physician and these two physicians shall select a third physician who
will act as the examining physician. The examining physician shall make the
determination as promptly as practicable after selection and examination of the
Employee. The services provided by the examining physician shall be paid for by
the Company. The Employee shall fully cooperate with the examining physician,
including submission to such medical examination as may be requested by the
examining physician for the purpose of determining whether the Employee is
totally disabled. If the Employee is found to be totally disabled, Employee
shall be deemed to remain disabled until found otherwise by the examining
physician. Should disability commence within six months after termination of a
prior period of disability, and should the later disability be related to the
same sickness or injury which results from any earlier disability, then the
later period of disability shall be considered to have consecutively followed
the earlier period of disability. Whether the later disability is related to the
same sickness or injury which resulted in the earlier disability shall be
determined in the same manner provided above for determining disability.
2. Employment. The Company hereby retains and employs Employee to serve in
the capacity of Sr. Vice President Sales & Marketing and Founder of the Company.
Employee accepts such employment on the terms and conditions set forth herein.
Employee shall serve in such other executive capacities and have such additional
titles and authorities with respect to the Company as the Board may from time to
time reasonably prescribe. During the term of this Agreement, Employee shall
devote substantially his entire work time, attention, and energies to the
business of the Company. Subject to the provisions of Section 6 hereof, Employee
may serve as a director or member of any other corporation or entity so long as
any such service does not cause any conflict of interest with the Company.
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3. Term. The term of this Agreement shall commence on the Effective Date
and shall end, unless previously terminated in accordance with the provisions of
Section 5 hereof or this Section 3, at the close of business on the day before
the third anniversary of the Effective Date hereof; provided, however, that on
December 31, 1999 and on December 31 of each subsequent year, the term of this
Agreement shall be automatically extended for an additional one-year period (the
"Extension Period" hereof). Notwithstanding the foregoing, 30 days prior to
December 31, 1999 and on December 31 of any subsequent year during which this
Agreement is in effect, the Board may determine to allow this Agreement to
terminate on the date of the end of the original term hereof or the end of the
last automatically effective Extension Period, whichever is applicable, and in
such event the Company shall give Employee prompt written notice of such
determination.
4. Compensation.
4.1 Base Salary. Subject to the further provisions of this
Agreement, the Company agrees to pay to Employee $95,000 (ninety-five thousand
dollars) annually, as the base salary in effect on June 1, 1996, payable no less
frequently than on a semi monthly basis, with such increases as shall be made
from time to time in accordance with the Company's regular salary administrative
practices as applied to Company officers. The base salary of Employee shall not
be decreased at any time during the term of this Agreement from the amount in
effect as of the Effective Date. Employee acknowledges that $1,000 of the annual
base salary is allocable to payment for entering into the covenants set forth in
Section 6.
4.2 Fringe Benefits. Employee shall be entitled to participate in
any fringe benefits which are now or may hereafter become applicable to the
Company's senior executives, and any other benefits which are commensurate with
the duties and responsibilities to be performed by the Employee under this
Agreement; including, but not limited to, automobile or other transportation
allowances; reimbursement for reasonable business expenses accounted for in
accordance with applicable governmental regulations; life, long-term disability
and accident insurance plans; employee saving and investment plans; stock option
or purchase plans; and medical, dental and hospitalization insurance plans; and
such other prerequisites as the Company may, from time to time and in its sole
discretion, make available generally to employees of similar rank without any
material reduction in such fringe benefits as in effect on the Effective Date
hereof. Employee shall be entitled to paid vacation days as set forth in the
Company's policy manual for employees of similar rank and longevity with the
Company.
4.3 Participation in Retirement and Benefit Plans. The Employee
shall be entitled to participate in any retirement, pension, thrift or other
retirement plan that the Company has adopted or may adopt for the benefit of its
senior executives.
5. Termination. Employee's employment under this Agreement shall terminate
upon the occurrence of any one of the following events:
5.1 Total and Permanent Disability. In the event Employee suffers
Total and Permanent Disability, the Company may terminate Employee's employment.
Upon termination by reason of Total and Permanent Disability the Company shall
pay to Employee such benefits
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as may be provided to officers of the Company under any Company provided
disability insurance or similar policy or under any Company adopted disability
plan and in the absence of any such policy or plan shall continue to pay to
Employee for a period of not less than six months the Compensation then in
effect as of the effective date of Employee's termination. Nothing contained
herein shall be construed to affect Employee's rights under any disability
insurance or similar policy, whether maintained by the Company, Employee or
another party.
5.2 Death. In the event of the death of Employee this Agreement
shall terminate and all obligations of the Company hereunder shall be
extinguished as of the date of Employee's death. Nothing contained herein shall
be construed to affect any rights of Employee's estate under any life insurance
or similar policy, whether owned by the Company, the Employee or any third
party.
5.3 Termination For Cause. The Company may effect a Termination
For Cause of Employee at any time with notice to the Employee. The Company shall
have no further obligation to pay Compensation hereunder after the date of
Termination For Cause.
5.4 Termination by Employee With or Without Good Reason. Employee
may terminate his employment hereunder at any time without Good Reason upon 30
days written notice to the Company. Employee may also terminate his employment
hereunder at any time without notice within 180 days following the occurrence of
an event constituting Good Reason.
5.5 Benefits on Termination by Employee for Good Reason or by the
Company Without Cause. If Employee elects to terminate his employment during the
term of this Agreement within 180 days following the occurrence of an event
constituting Good Reason hereunder, or if, in violation of the terms of this
Agreement, the Company terminates Employee's employment other than as provided
in Sections 5.1, 5.2 or 5.3 hereof, Employee shall be entitled to receive
severance pay commencing 30 days following the date Employee terminates his
employment in an amount equal to one-twelfth of 100% of Employee's Final Average
Annual Compensation per month payable monthly, during the remainder of the
Extension Period of this Agreement or for a period of 12 months, whichever is
greater. For the purposes of this Section 5.5, a decision by the Company not to
allow an automatic extension of the term of this Agreement, as permitted under
the provisions of Section 3 hereof, shall not constitute a termination of
Employee's employment in violation of the terms of this Agreement.
5.6 Benefits Not Exclusive. Any amounts paid to Employee under
the provisions of this Section 5 shall not affect Employee's right to payments,
including payments on an accelerated basis, under any deferred compensation plan
maintained by the Company. Any amendment to any such plan that would diminish
Employee's rights or deprive Employee of an immediate payment on termination of
employment as defined in such plan, shall be ineffective with respect to
Employee, unless Employee specifically consents, in writing, to such amendment.
6. Restrictive Covenants.
6.1 Covenant Not to Compete. Employee agrees that during the term
of his employment hereunder, and for a period of two years thereafter, or if a
court determines two
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years are not necessary to protect the Company's legitimate interests, then for
the period so determined necessary to protect Company's legitimate interests,
Employee shall not perform services anywhere worldwide (or if a court determines
that this restriction is not necessary to protect the Company's legitimate
interests, then such geographical area that is determined necessary to protect
Company's legitimate interests) in any business which sells or otherwise deals
with products similar to or competitive with those developed by or in the
process of development by the Company during the term of employment hereunder.
This non-competition covenant shall include all forms of competition, direct or
indirect, including competition as an employee, proprietor, shareholder, member,
officer, director, consultant, trustee, independent contractor or in any other
capacity. The parties acknowledge that the geographic area of this covenant is
reasonable in view of the highly specialized and narrow scope of the present and
proposed business of the Company and the consequent ability of the Employee to
work in non-competitive areas. Nothing in this Section 6.1 shall be deemed to
prohibit Employee from purchasing less than five percent of the outstanding
shares of any company whose shares are traded on a national exchange and which,
at the time of purchase, is not engaged in competition with the Company or any
of its affiliates or subsidiaries.
6.2 Confidential Information. Employee agrees that all
Proprietary Information is the sole and exclusive property of the Company and
that Employee will not, during the term of employment or any time after
termination of employment, disclose any Proprietary Information to any third
party or use any Proprietary Information in any way to compete with or to act in
any way adverse to the Company, except with the prior written consent of the
Company. Employee acknowledges that Employee has and will have access to
Proprietary Information of the Company and Proprietary Information of the
Company's subsidiaries, divisions and affiliated companies, now or hereafter
existing (collectively referred to hereinafter as the "Affiliates") throughout
the term of this Agreement and that part of Employee's work assignment may
involve the development of Proprietary Information. Any such Proprietary
Information, regardless of whether Employee alone or with others developed any
such Proprietary Information, shall be and shall remain the property of the
Company or of the Company's Affiliates. During the term of this Agreement and
after termination of employment, Employee shall not, either voluntarily or
involuntarily, on either his own account, as a member of a firm, or on behalf of
another employer or otherwise, directly or indirectly, use or reveal to any
person, partnership, corporation or association any trade secret or confidential
information of the Company or of the Affiliates. Such trade secrets shall
include, but shall not be limited to, software formulas, programs, patterns,
codes, algorithms, devices, secret inventions, processes, business plans,
marketing plans or programs, any non-public financial information, including but
not limited to financial information, forecasts and statistics, contracts,
customer lists, compensation arrangements and business opportunities. Employee
will not make available to any person, partnership, corporation or association,
or retain after termination of employment, any Company or Affiliates policy
manuals, printed materials, programs, formulas, algorithms, files, records,
drawings or computer disc containing information related to the Company or
Affiliates.
6.3 InventionRights. Employee hereby agrees to assign any and all
rights to any Proprietary Information, discovery, idea, computer program,
invention or inventive
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improvement (whether patentable or not), design, drawing, sketch, specification,
or other things conceived of or reduced to practice during employment with the
Company which relate to the Company's business, or which are conceived of or
reduced to practice after termination of employment which make use of any of the
foregoing. Employee further agrees to execute (without further consideration)
any documents in furtherance of perfecting the Company's rights in the
foregoing, including documents transferring patent, copyright, trademark, trade
secret or other rights. In instances where any doubt exists in Employee's mind
as to whether anything developed by Employee falls within the foregoing
categories, Employee agrees to request a written statement from the Company
regarding the same.
6.4 Disclosure of Information. Employee agrees to promptly
disclose in writing to the Company any discovery, idea, computer program,
invention or inventive improvement (whether patentable or not), design, drawing,
sketch, specification, or other things conceived of or reduced to practice
during employment with the Company which relate to the Company's business, or
which are conceived of or reduced, to practice after termination of employment
which make use of any of the foregoing. In instances where any doubt exists in
Employee's mind as to whether anything developed by Employee falls within the
foregoing categories, Employee agrees to request a written statement from the
Company regarding the same. Employee agrees to safeguard all the foregoing
information from public disclosure, including taking any such measures as the
Company may require to prevent divulgence to third parties.
7. Injunctive Relief. Employee acknowledges that the restrictions
contained in Section 6 are a reasonable and necessary protection of the
immediate interests of the Company and that any violation of these restrictions
would cause substantial injury to the Company. In the event of a breach or
threatened breach by Employee of these restrictions, the Company shall be
entitled to apply to any court of competent jurisdiction for an injunction
restraining Employee from such breach or threatened breach; provided, however,
that the right to apply for an injunction shall not be construed as prohibiting
the Company from pursuing any other available remedies for such breach or
threatened breach.
8. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Employee, the Company and their respective heirs,
executors, administrators, successors and assigns; provided, however, that
Employee may not assign Employee's rights or delegate Employee's duties
hereunder without the prior written consent of the Company. The Company may
assign its rights or delegate its duties hereunder to any of its subsidiaries or
affiliated corporations or to any successor to substantially all of the assets
or business of the Company.
9. Modification, Waiver or Amendment. The provisions of this Agreement may
not be modified, amended or waived except by a written instrument executed by
the Company and Employee. The waiver of any provision of this Agreement by
either party shall not constitute a waiver of any subsequent occurrences or
transactions unless the waiver, by its terms, constitutes a continuing waiver.
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10. No Mitigation. Any compensation earned by Employee from another
employer or from employment not in violation of the provisions of Section 2 or
Section 6 hereof shall not reduce any payment to which Employee is entitled
under the terms of this Agreement.
11. Miscellaneous.
11.1 Entire Agreement. This Agreement including the documents and
instruments referred to herein, rescinds and supersedes any other agreement and
contains the entire agreement and understanding between the parties relative to
the employment of Employee, there being no terms, conditions, warranties, or
representations other than those contained or referred to herein, and no
amendment hereto shall be valid unless made in writing and signed by both of the
parties hereto.
11.2 Governing Law. This Agreement shall be governed by,
enforced, interpreted and construed in accordance with the internal substantive
laws of the State of Arizona as applied to residents of Arizona without regard
to conflicts or choice of law principles.
11.3 Legal Modification and Severability. In the event that any
provisions herein shall be legally unenforceable, the provisions shall be
modified to the least extent possible to be enforceable and the remaining
provisions nevertheless shall be carried into effect.
11.4 Attorneys' Fees. In the event of any litigation between the
parties hereto arising out of the terms, conditions and obligations expressed in
this agreement, the prevailing party in such litigation shall be entitled to
recover reasonable attorneys' fees incurred in connection therewith.
11.5 Notices. All notices required or permitted to be given
hereunder shall be deemed given if in writing and delivered personally or sent
by facsimile, telex, telegram, telecopy, or forwarded by prepaid registered or
certified mail (return receipt requested) to the party or parties at the
following addresses (are at such other addresses as shall be specified by like
notices), and any notice, however given, shall be effective when received:
To Employee: A. Xxxxx Xxxxxx
0000 X. Xxxxxx Xxxx Xxxx, #000
Xxxxx, XX 00000
To the Company: Quality Care Solutions, Inc.
0000 X. Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
11.6 Waiver. The waiver by any party of a breach of any provision
of this Agreement by the other shall not operate or be construed as a waiver of
any subsequent breach of the same provision or any other provision of this
Agreement.
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11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Headings. The subject headings to the sections in this
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
11.9 Survivorship. The provisions of Sections 5, 6, 7 and 10
shall continue and shall survive the termination of the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first hereinabove written.
COMPANY:
QUALITY CARE SOLUTIONS, INC.,
a Nevada corporation
By: /s/
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Its:
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EMPLOYEE: /s/ Xxxxx Xxxxxx
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A. Xxxxx Xxxxxx
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