EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of January 1, 1999, between Recom Managed Systems, Inc., a Delaware
corporation (the "Company") and Xxxxx X. Xxxxx, an individual ("Executive"),
with reference to the following.
RECITALS
--------
A. The Company is in the business of providing Information
Technology Services.
B. Executive is experienced in managing Information Technology
Service efforts.
C. The Company desires to employ Executive as the Company's Vice
President and Chief Operating Officer and Executive desires to
accept such employment subject to the terms and conditions set
forth in this Agreement.
AGREEMENT
---------
NOW THEREFORE, in consideration of the foregoing premises, the
provisions set forth below, and other good and valuable consideration, the
parties agree as follows.
1. Employment. The Company hereby employs Executive as the
Company's Vice President and Chief Operating Officer and Executive hereby
accepts such employment, for the term and subject to the provisions set forth
below.
2. Term. Unless sooner terminated as set forth below, this
Agreement shall remain in force for a period of one (1) year (the "Term")
commencing on the date hereof and terminating on December 31, 1999. The
Agreement shall continue on a month-to-month basis thereafter unless terminated
by either party upon 60 day written notice. The actual period of time that
Executive remains in the employ of the Company pursuant to this Agreement is
referred to herein as the "Employment Period."
3. Duties. During the Employment Period, Executive shall be
employed as the Vice President and Chief Operating Officer of the Company and
shall hold such other offices or positions with the Company as may be reasonably
requested by the Company from time to time; provided, however, that Executive
shall not be required to accept any position subordinate to Vice President
without his written consent. Executive shall use his reasonable efforts to
manage the Company's business and affairs for the maximum benefit of the
Company. Executive may act as an officer or director of any other corporation
upon written consent of the Company. In addition to the normal duties associated
with the position of Vice President of companies of similar size, Executive
shall have the following specific duties, which he shall at all times
faithfully, industriously and to the best of his ability perform.
a. To hire and fire employees.
b. To solicit, develop and service business of the Company.
c. To employ such professionals, employees and consultants as are
necessary for the development and operation of the Company.
1
d. To take all actions necessary to successfully operate the
Company.
4. Authority. Executive shall have full and complete authority to
take all actions necessary to operate the Company, including without limitation,
the following.
a. Open bank accounts, write checks and deposit the Company
funds.
b. Hire and fire employees, consultants, professionals and
independent contractors.
c. To enter into all contracts in the name of the Company of any
kind or nature.
d. To retain attorneys and accountants to defend the Company or
Executive at the expense of the Company.
e. To borrow in the name of the Company.
f. To pledge as security for any loan or obligation of the
Company the assets of the Company.
g. To pay bonuses, dividends, fees, and other disbursements to
employees, consultants, professionals, or employees, including
himself.
5. Compensation.
a. Base Monthly Salary. The Company shall pay Executive a base
monthly salary (the "Base Salary") during the Employment Period, under the
following schedule, subject to adjustment from time to time by the Company and
Executive.
Employment Period Base Salary
----------------- -----------
Months 1-12 $9,167
Months 13+ TBD
b. Vacation. Executive shall be entitled to three weeks paid
vacation per year and one week personal leave per year in addition to all
holidays recognized by the Company. Executive shall be entitled to accrue
vacation or cause the Company to repurchase unused vacation days at the Base
Salary level then applicable.
c. Medical Expenses. The Company shall provide Executive and
Executive's spouse and children with medical coverage as follows:
1.) The Company will provide the Executive and his family with
company standard vision and dental insurance at no cost to
the Executive.
2.) The Executive elects to provide his own medical coverage,
therefore, the Company will reimburse the Executive for
the cost of such expenses up to a maximum of $350 per
month. Allowable medical expenses include the following:
insurance premiums, expenses not covered by insurance such
as co-pays and fees outside policy standard coverage
limits, dental and vision co-pays, orthodontia,
prescription cost not covered by insurance, home
improvements motivated by medical considerations, and
health club memberships.
2
d. Disability Insurance. During the Employment Term, the Company
shall maintain for the benefit of Executive a policy of disability insurance for
not less than 66 2/3% of Executive's Base Salary, at no cost to the Executive.
e. Other Expenses. Executive shall be entitled to reimbursement
during the Employment Period for travel and other out-of-pocket expenses
incurred in the performance of his duties hereunder, upon submission and
approval of written statements and bills in accordance with the then regular
procedures of the Company. Executive shall also receive a credit card from the
Company to be utilized for expenses incurred by Executive.
f. RESERVED
g. Other Benefits. Executive shall participate in all other
standard employee benefits including the 401 (k) plan.
6. Performance-Based Bonus. As additional compensation, Executive
shall be entitled to receive an annual bonus (the "Bonus") based on the degree
to which the Company meets or exceeds performance goals submitted by Executive
and reasonably agreed to by the Board of Directors for each fiscal year. The
Bonus shall be a percentage of Executive's Base Salary, in accord with the
following scale:
Percentage of Goals Achieved Bonus (% of Base Salary)
---------------------------- ------------------------
90% 20%
100% 25%
110% and above 30%
The degree to which the Company meets or exceeds the financial goals
shall be determined on a fiscal year basis in accordance with the audited
financial records. Executive's Bonus shall be paid within thirty (30) days after
such accounting firm completes its certified audit for such fiscal year.
Executive's bonus shall be prorated on a monthly basis for any Employment Period
of less than one fiscal year.
7. Stock Option Plan. The Company shall adopt a Stock Option Plan
for the benefit of its executives including Executive. Executive shall receive
the option to purchase not less 33,333 shares per year during the term at a set
purchase price of $.25 per share. The Executive shall be entitled to receive
such additional options under the plan as may be determined by the Company's
Board of Directors.
8. Previously Granted Stock. As recognition for efforts to form
the Company, Executive has been granted a total of 59,000 shares of restricted
founders stock of the Company.
9. Termination. The Employment Period shall be immediately and
automatically terminated upon Executive's death. The Employment Period shall
also terminate under the following conditions.
3
a. Termination for Cause. Notwithstanding anything in this
Agreement to the contrary, the Company may terminate Executive's employment
hereunder at any time if Executive:
(i) Is convicted of, or pleads guilty or nolo
contendere to (i) any felony, or (ii) any misdemeanor involving moral turpitude;
(ii) Embezzles or misappropriates any of the
Company's funds or assets;
(iii) In the reasonable opinion of a licensed
physician or psychiatrist retained by the Company, is substantially unable by
reason of drug (including alcohol) abuse or addiction, to reasonably and
effectively carry out Executive's duties hereunder for any period of time in
excess of Executive's accrued vacation time and sick leave, if any;
(iiii)Fails or refuses to perform Executive's
reasonable and customary duties hereunder for a period of 30 days after written
notice describing the duty or duties which Executive has failed or refused to
perform is given to Executive by the Company;
(v) Is grossly negligent with respect other
discharge of Executive's duties hereunder; or,
(iv) Is in violation of any provisions of this
Agreement; provided, however, that if such violation can be cured in a manner
that will restore the Company to the position it would have enjoyed in the
absence of the violation, Executive shall have a period of 30 days after written
notice describing the violation is given to Executive by the Company to
completely cure such violation and, if completely cured, this Agreement shall
not be subject to termination for such violation.
b. By Permanent Disability. The Term of Employment shall
terminate, without liability except as provided in this Section 9b, upon the
"Permanent Disability" of Executive. "Permanent Disability" shall mean, with
respect to Executive, (i) the suffering of any mental or physical illness,
disability or incapacity to the extent that Executive shall be unable to perform
his duties or (ii) the absence of Executive from his employment by reason of any
mental or physical illness, disability or incapacity for a period of three
months during any six-month period; provided, however, in either case, that such
illness, disability or incapacity shall be determined to be of a permanent
nature by a licensed physician selected by the Board of Directors. The
termination date in the event of a clause (i) of the immediately preceding
sentence, shall be the date of determination by the physician, and in the case
of clause (ii) of the immediately preceding sentence, the last day of such
three-month period. In the case of Permanent Disability, the Company shall
promptly pay to Executive (or his representative) the sum of (A) the unpaid Base
Salary to which he is entitled pursuant to Section 5(a) through the termination
date and (B) the lump sum amount of any unpaid portion of the bonuses to be paid
pursuant to Section 6(b), and all benefits under Executive's Disability
Insurance Plan.
4
c. By The Company Without Cause. The Term may be terminated
by the Company without "Cause" provided the Company pays to Executive at the
time of termination the equivalent of six (6) months salary. The Company shall
also pay Executive the equivalent of any bonus he would have earned if he had
remained employed by the Company, payable at the time such bonus would be
earned. In addition, with respect to the Company's Incentive Stock Option plan,
the Executive shall be considered vested and entitled to exercise grants to the
extent of his entitlements as if employed at the end of an additional six (6)
months after the date of termination.
10. Affirmative Covenants. Executive promises and covenants to the
Company as follows.
(a) Confidentiality; Trade Secrets. Executive acknowledges
that his position with the Company is one of the highest trust and confidence
both by reason of his position and by reason of his access to and contact with
the trade secrets and confidential and proprietary business information of the
Company. Executive agrees that during the Term and thereafter:
(i) Executive shall use his best efforts and
exercise utmost diligence to protect and safeguard the trade secrets and
confidential and proprietary information of the Company, including, its data,
record, compilations of information, processes, programs know-how, improvements,
discoveries, marketing plans, strategies, forecasts, unpublished financial
statements, budgets, projections, licenses, prices, costs, files, documents,
drawings, memoranda, notes or other documents, whether maintained electronically
or in any other manner, relating to the business of the Company or its
contractors; (all such information is hereinafter called the "Proprietary
Information") other than information known to him before, learned from third
parties not associated with the Company or in the public domain;
(ii) Executive shall not disclose any of such
Proprietary Information, except as may be required in the ordinary course of
performing his duties to the Company or any affiliated companies;
(iii) Executive shall not use the trade secrets and
confidential and proprietary information of Executive's previous or present
employer to carry out his duties and responsibilities under this Agreement or
bring on to the Company's premises or any other property owned by the Company
any proprietary information of any other entity, in violation of any prior or
present employment, or noncompetition or confidentiality agreement.
(b) Remedies for Breach of Affirmative Covenants of Executive.
Subject to the limitations provided by applicable law, the covenants set forth
in this Section 10 shall continue to be binding upon Executive in accordance
with their terms, notwithstanding the termination of his employment with Company
for any reason whatsoever. Such covenants shall be deemed and construed as
separate agreements independent of any other provisions of this Agreement and
any other agreement between the Company and Executive. The existence of any
claim or cause of action by Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of any or all of such covenants in accordance with their terms.
5
(c) Litigation. Executive agrees that during the Term and
thereafter as reasonably requested by the Company, Executive shall do all
things, including the giving of evidence in suits and other proceedings, which
the Company shall deem reasonably necessary or proper to obtain, maintain,
defend or assert rights accruing to the Company during the Term and in
connection with which Executive has knowledge, information and expertise.
(d) Future Cooperation. The parties hereto agree to cooperate
with each other without additional compensation from and after the date hereof,
to supply any information and to execute documents reasonably required for the
purpose of giving effect to this Agreement, or in connection with the
consummation of any actions contemplated hereby.
11. Representations and Warranties of Executive. Executive
represents and warrants to the Company that: (i) Executive is under no
contractual or other restriction or obligation that is inconsistent with the
execution of this Agreement, the performance of Executive's duties hereunder or
any of the rights of the Company hereunder; and (ii) Executive is under no
physical or mental disability that would impair the performance of Executive's
duties under this Agreement.
12. Key Person Insurance. The Company may at any time and from
time to time obtain such life and health insurance policies ensuring the life or
health of Executive in such amounts and with such insurers (collectively,
"Executive Insurance") as the Company, in its sole discretion, deems
appropriate. The Company shall have the right to all benefits payable pursuant
to any Executive Insurance obtained by the Company, including without
limitation, the sole right to designate the beneficiary of all such Insurance.
Executive agrees to cooperate with the Company if the Company elects to obtain
any Executive Insurance from time to time, including without limitation, timely
submitting to medical/physical examinations and assisting the Company with the
preparation of insurance applications.
13. Indemnification. The Company shall indemnify, defend and hold
Executive harmless for, from and against any and all liability of any kind or
nature resulting from or related to Executive's employment with the Company,
and/or any prior business deals entered into by Executive.
13. Notices. All notices, requests, demands or other communication
(collectively, "Notice") given to any party pursuant to this Agreement shall not
be effective unless given in writing and addressed to the parties at their
respective addresses as set forth below.
IF TO THE COMPANY: Recom Managed Systems, Inc.
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
6
IF TO EXECUTIVE: Xxxxx X. Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Notice shall be deemed duly given when delivered personally or by telegram,
telex or courier, or, if mailed, 48 hours after deposit in the United States
mail, certified mail, postage pre-paid. The addresses of the parties for the
purpose of providing Notice pursuant to this paragraph may be changed from time
to time by Notice to the other party duly given in the foregoing manner.
15. Governing Law; Disputes. This Agreement will be interpreted in
accordance with California law, including all matters of construction, validity,
performance and enforcement, without giving effect to any principles of conflict
of laws. Any dispute or proceeding concerning this Agreement will be resolved by
binding arbitration to be held in Placer County, California. Any party may
demand arbitration through written notice sent by certified mail to the other
(an "Arbitration Demand"). Within fifteen (15) days after the date that the
Arbitration Demand is first mailed, each of the parties will confer to select a
mutually acceptable arbitrator from the Judicial Arbitration and Mediation
Service ("JAMS"). If the arbitrator so selected is unavailable, the parties will
confer to select another arbitrator. If the parties cannot mutually agree to the
selection of an arbitrator, or if one party refuses to participate in the
selection process, JAMS will appoint an arbitrator. The arbitrator will be
governed by the provisions of this Agreement rather than the rules of JAMS.
If JAMS is unable or unwilling to select an arbitrator, the Presiding
Judge of the Sacramento County Superior Court will select an arbitrator upon the
request of either party, and such selection will be binding on the parties. The
arbitrator so selected will schedule the arbitration hearing within sixty (60)
days after he or she is first selected. The parties will be permitted written
discovery and one deposition each. The arbitrator will have authority to enter a
binding judgment even if the parties do not appear at the arbitration and may
also grant any remedy or relief that the arbitrator reasonably believes to be
just or appropriate, provided that such remedy or relief is within the scope of
this Agreement.
All fees and expenses of the arbitration will be paid equally by the
parties participating in the arbitration. At the conclusion of the arbitration,
the arbitrator will award the prevailing party reasonable costs and Attorneys'
Fees, including all arbitration costs. If the arbitration award is made, the
prevailing party may convert the award into a judgment and execute upon that
judgment.
16. Attorneys' Fees. If any arbitration, litigation, action, suit
or other proceedings is instituted to remedy, prevent or obtain relief from a
breach of this Agreement, in relation to a breach of this Agreement or
pertaining to a declaration of rights under this Agreement, the prevailing party
will recover all such party's attorneys' fees incurred in each and every such
action, suit or other proceeding, including any and all appeals or petitioner
therefrom. As used in this Agreement, Attorneys' Fees will be deemed to be the
7
full and actual costs of any legal services actually performed in connection
with the matters involved, including those related to any appeal or the
enforcement of any judgment, calculated on the basis of the usual fee charged by
attorneys performing such services, and will not be limited to "reasonable
attorneys' fees" as defined in any statute or rule of court.
147. Amendments/Waivers. This Agreement may be amended,
supplemented, modified or rescinded only through an express written instrument
signed by all the parties or their respective successors and assigns. Either
party may specifically and expressly waive in writing any portion of this
Agreement or any breach hereof, but no such waiver shall constitute a further or
continuing waiver of any preceding or succeeding breach of the same or any other
provision. The consent by one party to any action for which such consent was
required shall not be deemed to imply consent or waiver of the necessity of
obtaining such consent for the same or similar acts in the future.
18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
19. Severability. Each provision of this Agreement is intended to
be severable and if any term or provision herein is determined invalid or
unenforceable for any reason, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement and, wherever possible, intent shall
be given to the invalid or unenforceable provision.
20. Entire Agreement. This Agreement contains the entire and
complete understanding between the parties concerning its subject matter and all
representations, agreements, arrangements and understandings between or among
the parties, whether oral or written, have been fully merged herein and are
superseded hereby.
21. Remedies. All rights, remedies, undertakings, obligations,
options, covenants, conditions and agreements contained in this Agreement shall
be cumulative and no one of them shall be exclusive of any other.
22. Assignment. Neither this Agreement, nor any interest herein,
shall be assignable (voluntarily, involuntarily, by judicial process or
otherwise) Executive to any person or entity without the prior written consent
of the Company. Any attempt to assign this Agreement without such consent shall
be void and, at the option of the Company, shall be an incurable breach of this
Agreement resulting in the termination of this Agreement.
23. Successors. Subject to the foregoing paragraph, this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective heirs, legatees, legal representatives, successors and permitted
assigns.
24. Interpretation. The language in all parts of this Agreement
shall be in all cases construed simply according to its fair meaning and not
strictly for or against any party. Whenever the context requires, all words used
8
in the singular will be construed to have been used in the plural, and vice
versa, and each gender will include any other gender. The captions of the
paragraphs of this Agreement are for convenience only and shall not affect the
construction or interpretation of any of the provisions herein.
25. Benefit of Agreement. This Agreement is for the sole and
exclusive benefit of the signators hereto and nothing in this Agreement shall be
construed to give any person or entity other than the parties hereto any legal
or equitable right, claim or remedy.
26. Limitation on Actions. Any claim, dispute, controversy or
action for breach relative to this Agreement must be brought and legal process
or arbitration, as the case may be, initiated within one year after the cause of
action for such claim first accrued or the breach first occurred, whichever is
sooner.
27. Miscellaneous. The recitals and all exhibits, attachments or
other documents referenced in this Agreement are fully incorporated into this
Agreement by reference. Unless expressly set forth otherwise herein, all
references herein to a "day," "month," or "year" shall be deemed to be a
reference to a calendar day, month or year, as the case may be. All
cross-references herein shall refer to provisions within this Agreement, and
shall not be deemed to be references to the overall transaction or to any other
agreement or document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
"THE COMPANY" "EXECUTIVE"
RECOM MANAGED SYSTEMS, INC., Xxxxx X. Xxxxx, an individual
a Delaware corporation
By: Xxxx X Xxxxxxxx, Xx.
President and Chairman
9
