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EXHIBIT 10.2
EMPLOYMENT AND SETTLEMENT AGREEMENT
This Employment and Settlement Agreement (this "Agreement") is made
and entered into this 1st day of April, 1997 (the "Effective Date") by and
among Electronic Transmission Corporation, and L. Xxxx Xxxxxx, an individual
resident in Dallas County, Texas ("Xx. Xxxxxx").
ETC has been developing a business of electronically editing and
transmitting medical and dental claims from health care providers to entities
that pay such claims. Xx. Xxxxxx has (i) devoted considerable time and effort
to assisting in developing this business since January 1994; (ii) contributed
approximately $1,000,000 to the development of this business; and (iii)
contributed computer equipment and software to this business; and ETC owes
compensation to Xx. Xxxxxx for these services and contributions. In addition,
ETC now desires to employ Xx. Xxxxxx as its President and Chief Executive
Officer, and Xx. Xxxxxx desires to accept such employment with ETC, all on the
following terms and subject to the following conditions.
NOW, THEREFORE, ETC and Xx. Xxxxxx hereby agree as follows.
1. Employment. ETC hereby employs Xx. Xxxxxx, and Xx. Xxxxxx
hereby accepts employment by ETC, for the term and compensation and subject to
the terms and conditions hereinafter set forth.
2. Duties of Xx. Xxxxxx. Xx. Xxxxxx shall serve in the capacity
of President and Chief Executive Officer of ETC, subject at all times to the
terms and conditions hereof and to the ultimate control and direction of the
Board of Directors of ETC. In that capacity, Xx. Xxxxxx shall have
responsibility for assisting in developing and administering the business of
ETC for the long term benefit of its stockholders, and in accordance with
industry standards. During the term of this Agreement, Xx. Xxxxxx shall devote
most of his entire business time and efforts to the performance of the duties
and responsibilities contained in this Agreement, though it is recognized that
Xx. Xxxxxx owns business interests unrelated to ETC.
3. Compensation. As compensation for his services rendered to ETC
in the capacities set forth above, ETC shall pay to Xx. Xxxxxx a base salary at
a rate not less than one hundred eighty thousand dollars ($180,000.00) per
year. This will be paid to him at the rate of eight thousand dollars ($8,000)
per month until ETC has two consecutive months of showing a profit. At that
time Xx. Xxxxxx may elect to receive fifteen thousand dollars ($15,000) per
month. Xx. Xxxxxx also has the option of receiving all or part of the balance
of back pay owed him under this agreement and under the previous employment
agreement, dated January 2, 1995, at the end of
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Employment and Settlement Agreement Between ETC and L. Xxxx Xxxxxx
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1997. It is contemplated that Xx. Xxxxxx will receive annual raises consistent
with performance and will receive an annual bonus in an amount equal to three
percent (3%) of the gross pretax net profits of ETC as well as yearly "cost of
living" adjustments. Xx. Xxxxxx shall have rights to stock options to purchase
ETC stock, such options being sufficient for him to obtain at least twenty
percent (20%) of all ETC stock options granted at any time.
ETC herein grants to Xx. Xxxxxx, as additional compensation, a
percentage of the gross revenues attributable to Electra-Net Business as
follows:
January 1, 1997 through December 31, 1998 10%
January 1, 1998 through December 31, 2000 7%
January 1, 2000 and in perpetuity thereafter 5%
This grant is not conditioned upon Xx. Xxxxxx'x continued employment with ETC.
If ETC should sell the Electra-Net Business or any part thereof, this
obligation to pay a percentage of the gross revenues will continue for the
purchaser and will specifically be part of the sale obligations.
4. Benefits. During the term hereof, Xx. Xxxxxx shall be entitled
to participate in all benefit plans, including stock option plans, provided by
ETC on the same basis as other ETC officers and will additionally receive free
medical insurance. ETC reserves the right unilaterally to modify, amend, or
terminate any such plans and programs at any time and from time to time during
the term of this Agreement. Xx. Xxxxxx shall be entitled to six weeks of paid
vacation time each year and will be provided with a company car of his choice.
Xx. Xxxxxx may perform all of his duties while living in Dallas, Texas and may
not be relocated against his will. Should Xx. Xxxxxx die during the term of
this agreement, ETC must offer his heirs the option of selling Xx. Xxxxxx'x
stock to ETC at the highest price that has ever been paid for such stock sold
in an "arms length" transaction.
5. Reimbursement of Expenses. ETC shall reimburse Xx. Xxxxxx for
all expenses actually incurred by him in connection with ETC business, provided
that such expenses are reasonable and are in accordance with ETC policies. Such
reimbursement shall be made to Xx. Xxxxxx upon appropriate documentation of
such expenditures in accordance with ETC policies.
6. Term. The term of this Agreement shall be for the period
commencing on April 1, 1997, and ending on December 31, 2010, subject to
earlier termination as provided in Section 7. The term of this Agreement may be
extended beyond December 31, 2010, by mutual consent of ETC and Xx. Xxxxxx. Xx.
Xxxxxx may terminate this Agreement at any time without penalty.
7. Termination. This Agreement and Xx. Xxxxxx'x employment
hereunder shall terminate in the event of Xx. Xxxxxx'x death. If Xx. Xxxxxx
becomes permanently disabled (as determined by the ETC Board of Directors) for
two consecutive years, ETC may terminate this Agreement as Xx. Xxxxxx'x early
retirement by paying one year's salary as severance pay, plus providing health
insurance to Xx. Xxxxxx for life, and allowing him to participate in any
existing retirement program in place at the time. ETC must also offer to buy
Xx. Xxxxxx'x stock at the highest price
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Employment and Settlement Agreement Between ETC and L. Xxxx Xxxxxx
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that has ever been paid for such stock sold in an "arms length" transaction.
This Agreement and Xx. Xxxxxx'x employment hereunder may be terminated by ETC
"for cause" at any time the ETC Board of Directors determines, in the exercise
of its good faith judgment, that Xx. Xxxxxx has engaged in gross malfeasance or
willful misconduct in performing his duties hereunder and that his continued
employment by ETC no longer is in the best interests of ETC.
8. Noncompetition for Existing Clients After Term. Xx. Xxxxxx
agrees, for a period of two years after the expiration of the term hereof, not
to solicit, on his own behalf or on behalf of any future employer or other
entity, any business from any entity with which ETC did business, during the
term hereof The parties recognize that this covenant not to compete for
specified customers for a limited time period is an integral part of this
Agreement and that ETC would not enter into this Agreement, or would do so only
on the basis of decreased compensation to Xx. Xxxxxx, without this covenant.
9. Nondisclosure of Information and Trade Secrets. During his
employment hereunder and thereafter, Xx. Xxxxxx will not disclose to any
person or entity not directly connected with ETC, or use for his own benefit,
any of the trade secrets, financial information, systems, records, or business
methods of ETC or its affiliates, or any of the business relationships between
ETC or its affiliates and any of their business partners or customers, unless
such disclosure shall be in direct connection with or a part of Xx. Xxxxxx'x
performance of his duties hereunder. The provisions of this section shall
survive any termination of this Agreement.
10. ETC Stock for Services. As additional compensation for his
services, Xx. Xxxxxx shall be offered the option to purchase a block of 100,000
shares of ETC stock for one hundred dollars ($100.00) per block. This option
shall be open for five years from the date given and shall be issued to Xx.
Xxxxxx on the date given below if he then remains in the employment of ETC
hereunder.
Date Number of Shares of Stock
---- -------------------------
January 1, 1998 100,000
ETC herein acknowledges that Xx. Xxxxxx has two options to purchase ETC stock
under his previous employment contract which have vested in him and may be
exercised at any time.
Xx. Xxxxxx represents and warrants that:
(a) he has received and carefully read this Agreement and
the materials prepared by ETC regarding its respective businesses and statuses,
is familiar with and understands them, has based his investment decision on the
information contained therein, and has not asked any questions or requested any
materials of ETC which have not been answered or supplied; and
(b) he (i) is acquiring the Stock for his own account for
investment and not with a view to distribution or resale thereof, (ii) meets
the suitability standards for an investment in the Stock as set forth in the
Securities Act of 1933, all applicable U.S. state and Canadian and provincial
securities laws, and all applicable regulations under any of the foregoing
(collectively
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the "Securities Laws and Regulations"), (iii) understands that the Stock, and
the issuance thereof, have not been registered under the Securities Laws and
Regulations and are not expected to be so registered, (iv) will not sell or
otherwise transfer the Stock except in compliance with the Securities Laws and
Regulations, and (v) resides at his address as set forth in section 11 below.
11. Unauthorized Termination. If ETC shall terminate Xx. Xxxxxx'x
employment hereunder prior to the expiration of the term hereof, other than
"for cause" as set forth above, and recognizing that there is no right so to
terminate such employment, then ETC shall promptly pay to Xx. Xxxxxx as
liquidated damages in immediately available funds all compensation for the
remainder of the term hereof under section 3 above, all shares of Stock not
theretofore issued to Xx. Xxxxxx under section 10 above shall promptly be
issued to him, and ETC must purchase all his ETC stock at the highest price
that has ever been paid for such stock in an "arms length" transaction. Xx.
Xxxxxx shall also receive an amount each year until the end of this contract
term equal to what his yearly raises and bonuses would have been had he
remained employed by ETC, and ETC must purchase the company car provided to Xx.
Xxxxxx and transfer the title to him. If ETC shall remove Xx. Xxxxxx from the
offices set forth in section 2 above, or significantly change his duties as set
forth therein, without his consent, then Xx. Xxxxxx at his option may treat
such actions as an unauthorized termination under this section 11. As further
liquidated damages, Xx. Xxxxxx will be treated as an early retiree and ETC must
provide free medical insurance coverage to Xx. Xxxxxx for the rest of his life,
and Xx. Xxxxxx shall have the option to participate in all pension and profit
sharing programs as other ETC directors and employees.
12. Notices. All notices hereunder shall be in writing and
delivered personally or sent by U.S. Mail or recognized courier service,
addressed as follows or to such other address for itself as any party may
specify hereunder:
If to ETC: Electronic Transmission Corporation
0000 Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Mr. L. Xxxx Xxxxxx,
Chief Executive Officer
If to Xx. Xxxxxx: Mr. L. Xxxx Xxxxxx
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
13. Mandatory Arbitration. Any controversy or claim arising out of
or relating to this contract, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
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14. Entire Agreement, Counterparts, Governing Law. This Agreement
expresses the complete understanding of the parties with respect to the subject
matter hereof, superseding all prior or contemporaneous understandings,
arrangements, or agreements of the parties, and may be amended, supplemented,
or waived in whole or in part only by an instrument in writing executed by the
parties hereto. However, this Agreement and the provisions hereof are subject
to amendment or modification to comply with any requirements of duly appointed
regulatory bodies. No party may assign this Agreement or its rights or
obligations hereunder without the written consent of all other parties hereto.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, administrators,
successors, and assigns. The headings herein are for convenience of reference
only and shall not affect the meaning or interpretation of this Agreement. This
Agreement may be executed in multiple counterparts, and by the parties in
separate counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed and delivered by its duly authorized representatives, on and
effective as of the Effective Date.
ELECTRONIC TRANSMISSION CORPORATION
By: /s/ L. XXXX XXXXXX
L. Xxxx Xxxxxx
Chairman and Chief Executive Officer
XX. XXXXXX
/s/ L. XXXX XXXXXX
L. Xxxx Xxxxxx
