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Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of February 10, 2000 by and between QUALITY CARE SOLUTIONS, INC., a Nevada
corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx, an individual residing in
Arizona ("Employee").
RECITALS:
A. Employee is the President and Chief Executive Officer of the
Company and has served as an executive officer of the Company pursuant to an
Employment Agreement dated April 15, 1998, which is scheduled by its terms to
expire on April 15, 2001, and which is superseded in its entirety by this
Agreement;
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 "Change in Control". For purposes of this Agreement, a
"Change in Control" shall mean any of the following events:
(a) An acquisition (other than directly from the Company)
following the date hereof of any voting securities of the
Company (the "Voting Securities") by any "Person" (as the term
person is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of more than fifty percent (50%) of the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, in determining whether a Change
in Control has occurred, Voting Securities which are acquired
in a "Non-Control Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a part
thereof) maintained by (A) the Company or (B) any corporation
or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly
or indirectly, by the Company (for purposes of this
definition, a "Subsidiary") (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a
Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of the date this Agreement is
approved by the Board are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least
two-thirds of the members of the Board; provided, however,
that if the election, or nomination for election by the
Company's common stockholders, of any new director was
approved by a vote of the members of the Board designated to
grant such approval under Section 12 of the Company's Bylaws,
such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; provided,
however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy
Contest; or
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(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-Control
Transaction." A "Non-Control Transaction" shall mean
a merger, consolidation or reorganization of the
Company where:
(A) the stockholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately following
such merger, consolidation or
reorganization, at least seventy percent
(70%) [sixty percent (60%) after an IPO] of
the combined voting power of the outstanding
voting securities of the corporation
resulting from such merger or consolidation
or reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization;
(B) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the agreement providing for
such merger, consolidation or reorganization
constitute at least two-thirds (a majority
after an IPO) of the members of the board of
directors of the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the Voting
Securities of the Surviving Corporation; and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a part
thereof) maintained by the Company, the
Surviving Corporation, or any Subsidiary, or
(iv) any Person who, immediately prior to
the merger, consolidation or reorganization
had Beneficial Ownership of thirty percent
(30%) or more of the then outstanding Voting
Securities), has Beneficial Ownership of
thirty percent (30%) or more of the combined
voting power of the Surviving Corporation's
then outstanding voting securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other disposition
of all or substantially all of the assets of the
Company to any Person (other than a transfer to a
Subsidiary or a parent in a Non-Control Transaction).
(d) Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely: (i) because any Person (the
"Subject Person") acquired Beneficial Ownership of more than
the permitted amount of the then outstanding Voting Securities
as a result of the acquisition of Voting Securities by the
Company which, by reducing the number of Voting Securities
then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a
Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities
by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur; or (ii)
by virtue of an IPO.
1.3 "Company" means Quality Care Solutions, Inc. or any
successor entity.
1.4 "Compensation" means the total amount payable to Employee
pursuant to Section 4.1.
1.5 "Effective Date" means the date that the Company's Form
S-1 Registration Statement filed in connection with the public
offering of its common stock is declared effective by the
Securities and Exchange Commission.
1.6 "Final Average Annual Compensation" means the highest
annual 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 immediately preceding the calendar year during
which termination of employment occurs.
1.7 "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 as President
and Chief Executive Officer or to the Company's Board of
Directors;
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(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.
(f) Relocation of the Employee's place of employment more than
100 miles from Phoenix, Arizona.
(g) A voluntary termination by Employee delivered within the
ninety (90) day period following a Change of Control.
1.8 "Proprietary Information" means all information used by
the Company in the conduct of its business and includes any information
developed by Employee at the direction 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.
1.9 "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), a
violation of the Company's xxxxxxx xxxxxxx policies 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.
1.10 "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.
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2. Employment. The Company hereby retains and employs Employee to serve
in the capacity of President and Chief Executive Officer 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 or manage
personal investments so long as any such service does not cause any conflict of
interest with the Company.
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, 2000 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, 2000 and on December 31 of any subsequent year
during which this Agreement is in effect, the Employee or 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 or the Employee,
as applicable, shall give the other 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 One Hundred
Seventy-Five Thousand Dollars ($175,000) annually, 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 or, if
increased pursuant to the preceding sentence, from the amount to which
the base salary is increased. 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.
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.
4.4 Incentive Bonuses. The Company shall establish and
maintain an Incentive Bonus Plan throughout the term of this Agreement
providing for incentive compensation to Employee. Such plan shall
establish objective annual performance criteria and shall entitle
Employee to receive incentive compensation upon achievement thereof. In
addition, the Employee may be considered by the Board of Directors for
the award of discretionary bonuses, depending upon the Board's
evaluation of the Employee's performance.
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 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.
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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 but
shall pay all accrued Compensation and benefits through such date.
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:
(a) 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 for a period of 18
months;
(b) During the period of time in which the Company is paying
Severance Pay pursuant to Section 5.5(a), the Company shall,
at its expense, continue on behalf of the Employee and his
dependents and beneficiaries the life insurance, disability,
medical, dental and hospitalization benefits provided to the
Employee immediately prior to the Notice of Termination. The
coverages and benefits (including deductibles and costs)
provided during such period shall be no less favorable to the
Employee and his dependents and beneficiaries than were
provided on the date immediately prior to the Termination. The
Company's obligations hereunder with respect to continuation
of benefits shall terminate in the event Employee obtains such
benefits (regardless of the level and scope of coverage)
pursuant to a subsequent employer's benefit plan;
(c) The restrictions on any outstanding stock options
(including restricted stock and granted performance shares or
units) granted to the Employee under any stock option plan or
any other incentive plan or arrangement shall lapse and such
incentive award shall become 100% vested, all stock options
and stock appreciation rights granted to the Employee shall
become immediately exerciseable and shall become 100% vested,
and all performance units granted to the Employee shall become
100% vested; and
(d) 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 18 months
thereafter, or if a court determines 18 months is not necessary to
protect the Company's legitimate interests, then for the period of one
year, 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 worldwide 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, provided that, if a
court determines that a worldwide scope is not necessary to protect the
Company's legitimate interests, the geographic scope shall be reduced
to the United States of America. Nothing in this Section 6.1 shall be
deemed to prohibit Employee from
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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. Employee and Company expressly
acknowledge that the Company and its customers conduct business on a
worldwide basis and that the covenant contained herein is reasonable
and necessary to protect the Company's interests notwithstanding the
absence of a geographic restriction.
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 Invention Rights. Employee hereby agrees to assign any and
all rights to any Proprietary Information, 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. 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.
6.5 Unauthorized Disclosure. During the period that the
Employee is actively employed by the Company and thereafter, the
Employee shall not make any Unauthorized Disclosure. For purposes of
this Agreement, "Unauthorized Disclosure" shall mean disclosure by the
Employee without the consent of the Board (other than pursuant to a
court order) to any person, other than an employee, consultant,
auditor, attorney or director of the Company or a person to whom
disclosure is reasonably necessary or appropriate in connection with
the performance by the Employee of his duties as an employee of the
Company or as may be legally required, in violation of any valid
standard nondisclosure agreement (or similar document) executed by the
Employee; provided, however, that such term shall not include the use
or disclosure by the Employee, without consent, of any information
known generally to the public (other than as a result of disclosure by
him in violation of this Section 12) or any information not otherwise
considered confidential and material by a reasonable person engaged in
the same business as that conducted by the Company.
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.
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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. This Agreement supersedes all prior employment
agreements between the parties.
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.
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. Change of Control. Notwithstanding any contrary provision of this
Agreement or in any stock option plan of the Company, or any stock option
agreement entered into by Employee pursuant to any such plan, upon a Change of
Control, the restrictions on any outstanding stock options (including restricted
stock and granted performance shares or units) granted to the Employee under any
stock option plan or any other incentive plan or arrangement shall lapse and
such incentive award shall become 100% vested, all stock options and stock
appreciation rights granted to the Employee shall become immediately
exerciseable and shall become 100% vested, and all performance units granted to
the Employee shall become 100% vested.
12. Excise Tax Payments.
12.1 In the event that the Company determines that a portion
of any payment or benefit to the Employee or for his benefit payable or
distributable pursuant to the terms of this Agreement will be deemed to
be an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code") (a "Payment" or "Payments"), then the Company shall have the
right to reduce the Payment by the amount of such excess.
12.2 An initial determination as to whether all or a portion
of a Payment represents an excess parachute payment and the amount
thereof shall be made at the Company's expense by its accounting firm
(the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation to the Company and the Employee within
ten (10) days of the Termination Date. Within ten days of the delivery
of the Determination to the Employee, the Employee shall have the right
to dispute the Determination.
13. Miscellaneous.
13.1 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.
13.2 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.
13.3 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.
13.4 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.
13.5 Notices. All notices required or permitted to be given
hereunder shall be deemed given if in writing and
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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: Xxxxxxx X. Xxxxxxxx
0000 Xxxx Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxx 00000
To the Company: Quality Care Solutions, Inc.
0000 X. Xxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
13.6 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.
13.7 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.
13.8 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.
13.9 Survivorship. The provisions of Sections 1, 5, 6, 7, 8, 9
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., an Nevada corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
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Its: Chief Financial Officer
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EMPLOYEE: /s/ Xxxxxxx X. Xxxxxxxx
---------------------
Xxxxxxx X. Xxxxxxxx
