EMPLOYMENT AGREEMENT
Exhibit
10.4
This
EMPLOYMENT AGREEMENT (this “Agreement”)
is
entered into as of February 28, 2008, by and between FLAGSHIP GLOBAL HEALTH,
INC., a Delaware corporation (along with its successors and assigns, the
“Company”),
and
Xxxx Xxxxxx (“Executive”).
WHEREAS,
the Company desires to employ Executive, and Executive desires to be employed
by
the Company, on the terms and conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the mutual promises contained herein and other
good and valuable consideration, the Company and Executive agree as follows:
1. Employment.
(a) Term.
Subject
to the terms hereof, Executive’s employment hereunder shall commence as of
February 28, 2008 (the
“Effective
Date”)
and
continue until the anniversary of the Effective Date, with automatic one (1)
year extensions thereafter, unless otherwise terminated pursuant to Section
3 of
the Agreement (such period, the “Employment
Period”).
(b) Position,
Place of Performance and Duties.
Executive will serve as the Company’s Senior Vice President, Marketing and
Sales, and Executive shall report directly to the Company’s Chief Executive
Officer (“CEO”). Executive will have the responsibilities, duties and authority
commensurate with the position of Senior Vice President, Marketing and Sales,
and Executive will perform such other services of an executive nature as may
be
prescribed from time to time by the CEO. Executive will generally perform his
services hereunder at the Company’s principal offices in New York, or such other
place as may be agreed to by Executive and the CEO. During the Employment
Period, Executive will be available to travel for business at such times and
to
such places as may be reasonably necessary in connection with the performance
of
his duties hereunder, including, but not limited to, anywhere in the United
States, the Middle East, Asia and Europe. Executive
shall devote his full business time and efforts to the performance of his duties
hereunder. For
the
duration of the Employment Period, Executive agrees not to actively engage
in
any other employment for any remuneration. Notwithstanding the foregoing
sentence, Executive may serve in any capacity with any civic, educational or
charitable organization, subject to Executive’s obligations under this Agreement
and any agreement contemplated under Section 5 of this Agreement; provided,
however, that Executive may not serve as an officer, director or trustee with
respect to more than two (2) such organizations.
2. Compensation.
(a) Base
Salary.
During
the Employment Period, the Company will pay Executive a base salary at the
annual rate of $225,000.00, which amount will be reviewed annually and subject
to adjustment at the good faith discretion of the Board (or the Compensation
Committee of the Board (the “Compensation
Committee”)),
including without limitation, discretionary cost of living adjustments (as
adjusted from time to time, the “Base
Salary”).
The
Base Salary will be payable in substantially equal installments in accordance
with the Company’s payroll practices as in effect from time to
time.
(b) Annual
Bonus.
During
the Employment Period, based on Executive’s performance relative to targets set
by the Board and/or the Compensation Committee in its sole discretion, and
subject to the overall performance of the Company, Executive will be eligible
to
receive annual bonuses, with a target bonus of up to 100% of Base Salary, in
accordance with the terms and conditions established by the Board and/or the
Compensation Committee from time to time.
(c) Equity
Compensation.
On
March 31, 2008, Executive will be granted an incentive stock option to purchase
an additional 50,000 shares of the Company's common stock at an exercise price
equal to the fair market value of the Company’s common stock on the date of
grant (the “Option”).
The
Option will vest 25% on the date of grant and the balance vesting ratably over
a
three-year period commencing on the first anniversary following
the date of grant.
The
Option will be subject to the terms, definitions and provisions of the 2006
Amended and Restated Stock Option Plan, and the accompanying stock option
agreement under which it is granted. In addition, Executive may further be
entitled to annual option grants as part of the annual review process at the
discretion of the Board and the Compensation Committee.
(d) Vacation.
During
the Employment Period, Executive will be entitled to (i) three (3) weeks paid
vacation in each calendar year (to be taken at such times and in such number
of
days as Executive and the Company shall mutually agree), (ii) paid sick days
as
needed due to illness or other incapacity, and (iii) paid Company holidays,
all
in accordance with the Company’s policies for its senior executives as in effect
from time to time. Any accrued unused vacation may be carried over from one
year
to the following year, provided that no more than two (2) weeks vacation may
be
carried over at any time.
(e) Benefits.
During
the Employment Period, Executive (and his eligible dependents) will be entitled
to participate in the same manner as the Company’s other senior executives in
any employee benefit plans which the Company provides or may establish for
the
benefit of its senior executives generally; provided that the Company reserves
the right to cancel or change any of its employee benefit plans and programs
at
any time.
(f) Reimbursement
of Expenses.
During
the Employment Period, the Company will reimburse Executive for all
out-of-pocket business expenses that are incurred by him in furtherance of
the
Company’s business in accordance with the Company’s policies with respect
thereto as in effect from time to time. Without limiting the generality of
the
foregoing, the Company shall pay or reimburse Executive for charges relating
to
the use of his cellular phone and reasonable business travel
expenses.
3. Termination.
Executive’s employment
hereunder will terminate upon the first to occur of the following:
(a) Executive’s
death;
(b) by
the
Company in the event of Executive’s Disability (as defined below);
(c) by
the
Company for Cause (as defined below);
(d) by
the
Company without Cause; or
(e) by
Executive, with or without Good Reason (as defined below).
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For
purposes of this Agreement, the following terms shall have the following
meanings:
“Cause”
means:
(i) Executive’s conviction of, or plea of nolo
contendere
to, a
felony, or a crime involving dishonesty, disloyalty or moral
turpitude; (ii)
Executive’s willful disloyalty or deliberate dishonesty; (iii) the commission by
Executive of an act of fraud or embezzlement against the Company; (iv)
Executive’s failure to use his good faith efforts to perform in all material
respects such duties as are contemplated by this Agreement, or to follow any
lawful direction of the Board or any committee thereof; (v) Executive’s gross
negligence in the performance of his duties hereunder; or (vi) a material breach
by Executive of any provision of this Agreement or of any Company policy, which
breach is not cured within thirty (30) days after delivery by the Company to
Executive of written notice of such breach, provided that, if such breach is
not
capable of being cured within such 30-day period, Executive will have a
reasonable additional period to cure such breach. No act or omission on
Executive’s part will be considered “willful” unless done, or admitted to be
done, by Executive in bad faith or without his reasonable belief that such
act
or omission was in the best interests of the Company. Any determination of
“Cause” shall be made in good faith by a majority vote of the
Board.
“Disability”
means
Executive’s mental, physical or other disability, the condition of which renders
him incapable of performing his obligations under this Agreement for a period
of
ninety (90) consecutive days or an aggregate of one hundred twenty (120) days
(whether or not consecutive) in any twelve (12)-month period. Any determination
of “Disability” shall be made in good faith by a majority vote of the
Board.
“Good
Reason”
means
the occurrence of any of the following events, without the Executive’s written
consent, at any time during the Executive’s employment: (A) a material
diminution in the Executive’s annual base compensation; (B) a material
diminution in the Executive’s authority, duties or responsibilities; (C) a
material diminution in authority, duties or responsibilities of the supervisor
to whom the Executive reports, including a requirement to report to an officer
or other employee, rather than directly to the Board (or similar governing
body); (D) a material diminution in the budget over which the Executive retains
authority (if applicable); (E) a relocation of the Company’s principal office by
fifty (50) miles or more from its location on the date of this Agreement, or
(F)
any other action or inaction that constitutes a material breach under this
Agreement.
4. Termination
Procedures; Effect of Termination.
(a) Notice
of Termination.
Any
termination of Executive’s employment by the Company or Executive (other than
termination on account of Executive’s death) shall be communicated by written
notice (a “Notice
of Termination”)
to the
other party hereto in accordance with Section 7(a) below, which notice shall
indicate the specific termination provision in Section 3 of this Agreement
relied upon and, if the termination is by the Company for Cause or by Executive
for Good Reason, the specific reasons therefor.
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(b) Date
of Termination.
As used
herein, “Date
of Termination”
shall
mean: (i) if Executive’s employment is terminated as a result of Executive’s
death, the date of Executive’s death; (ii) if Executive’s employment is
terminated by reason of Executive’s Disability, on the date Notice of
Termination is given or such later date specified in the Notice of Termination
as the effective date of termination; (iii) if Executive’s employment is
terminated by the Company for Cause, on the date Notice of Termination is given
or such later date specified in the Notice of Termination as the effective
date
of termination; (iv) if Executive’s employment is terminated by the Company
without Cause, such date which is specified in the Notice of Termination as
the
effective date of termination, which date shall be at least thirty (30) days
following the date the Notice of Termination is given; and (v) if Executive’s
employment is terminated by Executive, with or without Good Reason, such date
which is specified in the Notice of Termination as the effective date of
termination, which date shall be at least thirty (30) days following the date
the Notice of Termination is given.
(c) Compensation
Upon Termination.
(i) Upon
any
termination of Executive’s employment, the Company will pay the Accrued
Obligations (as defined below) to Executive (or to his estate or legal
representative, if applicable) on or promptly following the Date of Termination.
For purposes of this Agreement, “Accrued
Obligations”
means
(A) the portion of Executive’s Base Salary as has accrued up through the Date of
Termination which the Executive has not yet been paid, (B) an amount equal
to
any unpaid bonus which has already been earned and awarded by the Board and/or
the Compensation Committee through the Date of Termination, (C) an amount equal
to the value of Executive’s accrued unused vacation days, and (D) the amount of
expenses incurred by Executive on behalf of the Company prior to the Date of
Termination and not yet reimbursed as of such date.
(ii) In
addition to the Accrued Obligations, if Executive’s employment is terminated by
the Company without Cause or by Executive for Good Reason (and other than due
to
Executive’s death or Disability), then in exchange for Executive’s execution and
delivery to the Company of a full general release (which Executive does not
later revoke in accordance with its terms), in a form acceptable to the Company,
releasing all claims, known or unknown, that Executive may have against the
Company, and any subsidiary or related entity, and their respective officers,
directors, employees and agents, the Company will (A) within thirty (30) days
following the Date of Termination, pay to Executive (or his estate or legal
representative if applicable) a lump-sum severance payment equal to the sum
of
(x) one year of his then current Base Salary and (y) the greater of Executive’s
annual bonus paid for the year prior to the Date of Termination or Executive’s
target annual bonus for the year in which the Date of Termination occurs, and
(B) upon proper election of continuation coverage under Title X of the
Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”)
under
the Company’s group health plans, continue to pay the group medical and dental
COBRA premiums for Executive and Executive’s eligible dependents until the
earliest of (x) the date Executive first becomes eligible for coverage under
a
subsequent employer’s applicable group health plan(s), (y) the date such
coverage terminates under applicable law, or (z) twelve (12) months after the
Date of Termination.
Notwithstanding
any other provision with respect to the timing of payments under this Section
4(c), if, at the time of Executive’s termination,
Executive is deemed to be a “specified employee” (within the meaning
of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”),
and
any
successor statute, regulation and guidance thereto)
of the
Company, then only to the extent necessary to comply with the requirements
of
Code Section 409A, any payments to which Executive may become entitled
under Section 4(c) which are subject to Code Section 409A (and not otherwise
exempt from its application) will be withheld until the first business day
of
the seventh month following the Date of Termination, at which time Executive
shall be paid an aggregate amount of any withheld payments otherwise
due under Section 4(c), as applicable.
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(d) Certain
Additional Payments by the Company
(i) In
the
event it shall be determined that any payment or distribution by the Company
to
or for the benefit of the Executive (whether paid or payable or distributed
or
distributable pursuant to the terms of this Agreement or otherwise) (a
“Payment”
and
collectively “Total
Payments”)
would
be subject to the excise tax imposed by Section 4999 of the Code (or would
be
within $1,000 of triggering such excise tax), then Total Payments shall be
reduced (but not below zero) so that the maximum amount of Total Payments (after
reduction) shall be $1,000 less than the amount that would cause the Total
Payments to be subject to the excise tax imposed by Section 4999 of the Code
(as
so reduced, the “280G
Limitation Amount”).
References to Section 4999 of the Code shall include any successor provision
or
any similar excise tax. The Executive shall not be entitled to an increased
payment from the Company for any excise, additional, or other tax, penalty,
or
interest as a result of this Agreement. Any payment reductions under this
subsection (a) shall be made first from cash payments.
(ii) All
determinations required to be made under this Section 4(d), including
whether and when Total Payments should or should not be reduced and the
assumptions to be utilized in arriving at such determination, shall be made
by a
“Consulting
Firm,”
which
shall be a law firm, a certified public accounting firm, and/or a firm of
recognized executive compensation consultants selected by the Company. The
Consulting Firm shall provide detailed supporting calculations regarding such
determination both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. All fees and expenses
of
the Consulting Firm shall be borne solely by the Company. Any determination
by
the Consulting Firm shall be binding upon the Company and the Executive, and
no
later determination shall obligate the Company to make any payment or adjustment
to the Total Payments made to the Executive.
(e) Other
Provisions.
Upon
any termination of Executive’s employment, 100% of the Executive’s then
outstanding and unvested stock options shall immediately vest and become
exercisable as of such termination and remain exercisable for a period of one
year thereafter, but in no event later than the originally scheduled expiration
without regard to such termination. The amount of any benefit due to Executive
after the date of such termination pursuant to this Agreement will not be
reduced or offset by any payment or benefit that Executive may receive from
any
other source.
5. Restrictive
Covenants.
On the
Effective Date, Executive will enter into a confidentiality, non-competition,
non-solicitation, assignment of inventions and non-disparagement agreement
(the
“Non-Competition
Agreement”),
substantially in the form of the Company’s standard agreement used for such
purposes, and the non-competition and non-solicitation covenants shall last
for
one year following the Date of Termination. Notwithstanding anything to the
contrary herein, the Company’s obligation to make payments to the Executive
pursuant to Section 4(c)(ii) shall immediately cease upon the Executive’s
willful or intentional material breach of any of the Non-Competition
Agreement.
5
6. Indemnification.
The
Company shall, to the fullest extent permitted by law and by its Certificate
of
Incorporation and Bylaws, indemnify Executive and hold him harmless for any
acts
or decisions made by him in good faith while performing his duties to the
Company, and the Company shall at all times during Executive’s employment with
the Company, maintain directors’ and officers’ liability insurance, at and upon
commercially reasonable terms and limits.
7. General.
(a) Notices.
All
notices, requests, consents and other communications hereunder will be in
writing, will be addressed to the receiving party’s address set forth below or
to such other address as a party may designate by notice hereunder, and will
be
either (i) delivered by hand, (ii) sent by overnight courier, or
(iii) sent by registered or certified mail, return receipt requested,
postage prepaid. All notices, requests, consents and other communications
hereunder will be deemed to have been given either (A) if by hand, at the
time of the delivery thereof to the receiving party, (B) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (C) if sent by registered or certified
mail, on the third business day following the day such mailing is made. All
notices, requests, consents and other communications hereunder will be sent
as
follows:
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If
to the Company:
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000
Xxxx 00xx
Xxxxxx
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Xxx
Xxxx, XX 00000
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Attention:
Director of Human Resources
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If
to Executive:
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Xxxx
Xxxxxx
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000
Xxxxxxxx Xx.
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Xxxxxx,
XX 00000
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(b) Entire
Agreement.
This
Agreement (together with any other agreements referenced herein) embodies the
entire agreement and understanding between the parties hereto with respect
to
the subject matter hereof and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Agreement will affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
(c) Modifications
and Amendments.
The
terms and provisions of this Agreement may be modified or amended only by
written agreement executed by the parties hereto.
(d) Waivers
and Consents.
The
terms and provisions of this Agreement may be waived, or consent for the
departure therefrom granted, only by written document executed by the party
entitled to the benefits of such terms or provisions. No such waiver or consent
will be deemed to be or will constitute a waiver or consent with respect to
any
other terms or provisions of this Agreement, whether or not similar. Each such
waiver or consent will be effective only in the specific instance and for the
purpose for which it was given, and will not constitute a continuing waiver
or
consent.
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(e) Successors
and Assigns; Third Party Beneficiaries.
All
statements, representations, warranties, covenants and agreements in this
Agreement will be binding on the parties hereto and will inure to the benefit
of
the respective successors, heirs, executors and permitted assigns of each party
hereto. Any such successor of the Company will be deemed substituted for the
Company under the terms of this Agreement for all purposes. For this purpose,
“successor” means any person, firm, corporation or other business entity which
at any time, whether by purchase, merger or otherwise, directly or indirectly
acquires all or substantially all of the assets or business of the Company.
Executive may not assign any of Executive’s rights to compensation or other
benefits under this Agreement, except by will or the laws of descent and
distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive’s right to compensation or other benefits will be null
and void. Nothing in this Agreement will be construed to create any rights
or
obligations except among the parties hereto, and (except for Executive’s estate
or other legal representative) no person or entity will be regarded as a
third-party beneficiary of this Agreement.
(f) Governing
Law.
This
Agreement and the rights and obligations of the parties hereunder will be
construed in accordance with and governed by the law of the State of New York,
without giving effect to the conflict of law principles thereof.
(g) Dispute
Resolution.
Any
disputes, claims or controversies arising under the Agreement between Company
and Executive shall be settled by final and binding arbitration before the
American Arbitration Association in New York, NY.
(h) Severability.
The
parties intend this Agreement to be enforced as written. However, if
any
court of competent jurisdiction determines any provision, or any portion
thereof, of this Agreement to be unenforceable or invalid, then such provision
shall be deemed limited to the extent that such court deems it valid or
enforceable and the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.
(i) Headings
and Captions.
The
headings and captions of the various subdivisions of this Agreement are for
convenience of reference only and will in no way modify or affect the meaning
or
construction of any of the terms or provisions hereof.
(j) No
Waiver of Rights, Powers and Remedies.
No
failure or delay by a party hereto in exercising any right, power or remedy
under this Agreement, and no course of dealing between the parties hereto,
will
operate as a waiver of any such right, power or remedy of the party. No single
or partial exercise of any right, power or remedy under this Agreement by a
party hereto, nor any abandonment or discontinuance of steps to enforce any
such
right, power or remedy, will preclude such party from any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The election of any remedy by a party hereto will not constitute a waiver of
the
right of such party to pursue other available remedies. No notice to or demand
on a party not expressly required under this Agreement will entitle the party
receiving such notice or demand to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
party
giving such notice or demand to any other or further action in any circumstances
without such notice or demand.
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(k) Expenses.
Each
party shall bear its own fees and expenses incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement. The
prevailing party in any legal proceeding to enforce this Agreement shall be
entitled to legal fees and costs reasonably incurred.
(l) Withholdings.
The
Company will deduct from each payment to be made to Executive under this
Agreement such amounts, if any, required to be deducted or withheld under
applicable law.
(m) Tax
Consequences.
Executive hereby acknowledges and agrees that the Company makes no
representations or warranties regarding the tax treatment or tax consequences
of
any compensation, benefits or other payments under the Agreement, including,
without limitation, by operation of Code Section 409A, or any successor statute,
regulation or guidance thereto.
(n) Counterparts.
This
Agreement may be executed in two or more counterparts, and by different parties
hereto on separate counterparts, each of which will be deemed an original,
but
all of which together will constitute one and the same instrument. This
Agreement may be delivered by facsimile, and facsimile signatures shall be
treated as original signatures for all applicable purposes.
(o) Opportunity
to Review.
Executive hereby acknowledges that Executive has had adequate opportunity to
review these terms and conditions and to reflect upon and consider the terms
and
conditions of this Agreement, and that Executive has had the opportunity to
consult with counsel of Executive’s
own
choosing regarding such terms. Executive
further acknowledges that Executive fully understands the terms of this
Agreement and has voluntarily executed this Agreement.
[Remainder
of page left intentionally blank. Signature page(s) to follow.]
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IN
WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
as
of the date and year first above written.
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/s/
Xxxxx Xxxxxxxx
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By:
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Xxxxx
Xxxxxxxx
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Chairman,
Compensation Committee
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Flagship
Global Health, Inc. Board of Directors
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EXECUTIVE
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/s/
Xxxx Xxxxxx
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Xxxx
Xxxxxx
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SVP,
Sales and Marketing
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