[Letterhead of American NET Claims Inc.]
March 26, 1997
Xx. Xxxxx X. Xxx
Executive Vice President
American NET Claims Inc.
00000 X. Xxxxxxx Xxxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Subject: Employment Agreement of Sept. 17, 1996, Amendment.
Dear Xxxxx:
This letter will amend the subject agreement in paragraphs III 3.; III 5.;
III 8.A.; III 8.b.
The Company has granted you 50,000 shares of Common Stock. These shares
are subject to:
a) All other terms of the subject agreement except as noted above,
b) Being granted prior to the current Private Equity Placement,
c) Any dilution that occurs.
These shares are granted in lieu of any and all "equity compensation" in
the referenced paragraphs for the period beginning September 17, 1996 and ending
December 31, 1997.
Thank you for your contribution. I sincerely wish you continued success
with American NET Claims.
THE COMPANY: THE EMPLOYEE:
------------ -------------
American NET Claims Inc.
Xx X. Xxxxx, President/Chairman Xxxxx X. Xxx, Executive Vice President
/s/ Xx X. Xxxxx /s/ Xxxxx X. Xxx
----------------------------------- -----------------------------------
EMPLOYMENT AGREEMENT
This Agreement is made on 9/17/1996, between American NET Claims,
Inc., ("the Company") and Xxxxx X. Xxx ("the Employee").
I. TERM:
1. Company hereby employs the Employee to render full time
services to the Company at the direction of its officers for a
period of twenty-four (24) months, commencing on even date
with this Agreement and ending twenty-four (24) months from
today. Unless otherwise terminated in accordance with the
other provisions of this Agreement, this Agreement shall
automatically renew annually after the initial twenty-four
(24) month term, unless a thirty (30) day advance written
notice to the contrary is served by either party. Such notice
shall be delivered at least thirty days in advance of the
anniversary date of this Agreement.
II. DUTIES:
1. The Employee hereby accepts employment by the Company for the
term and upon the conditions set forth in this Agreement, and
shall during the term of this Agreement:
a. Perform his duties to the best of his ability, and in an
efficient, faithful and businesslike manner, and carry
out the policies and directives of the Company.
b. Devote his full time and attention to the performance of
such duties, and to the exclusion of any other active
business involvement unless approved, in advance and in
writing, by the President of the Company or any other
authorized officer of the Company.
c. Not become involved in any matters which may adversely
affect or reflect upon the Company.
d. Not become engaged, either directly or indirectly, in
any manner whatsoever or in any capacity, whether as
principal, agent, partner, officer, director, employee,
advisor, consultant, or otherwise, in any business or
activity in competition with the business of the
Company, or which may adversely effect the Company.
e. Refrain from disclosing to anyone outside the Company,
except as required in the normal course of business,
Company Proprietary Information which includes, but is
not limited to, the following:
EMPLOYMENT AGREEMENT PAGE - 1
customer lists, trade secrets, vendor lists, Company
financial statements and information, market plans,
product drawings, products designs, product
specifications, processes, techniques, inventions,
research projects, Company strategies and other
information concerning the Company obtained while in the
employ of the Company not generally known to the public
or to persons involved in the same business as the
Company.
III. BASE COMPENSATION AND BONUSES:
1. The Employee shall receive an annual salary of ONE HUNDRED
TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($125,000.00) payable
in accordance with the customary payroll practices of the
Company.
2. Notwithstanding the foregoing, in the event that the Employee
is terminated without cause or under numbered paragraph
VIII(1)(h), hereof, the Employee shall receive FORTY THOUSAND
AND NO/100 DOLLARS ($40,000.00) in consideration of the
termination of the Employee.
3. If the financial plan of the Company, approved by the Board of
Directors (as submitted to the Company's Bridge Financier,
BlueStone Capital, in August 1996, hereinafter referred to as
the Financial Plan") are achieved, then the Employee will
receive an annual bonus of $60,000, for a bonus period
prorated to the earlier to occur of December 31, 1997, or one
(1) week prior to any public offering of equity.
4. If the Financial Plan is changed by the Board of Directors,
and the change reduces the forecasted cash/liquidity, the
Employee's bonus remains unchanged. If action or lack thereof
by Employee, in the sole discretion of the board of directors
of the Company, results in a liquidity of less than 90 percent
of the cash/liquidity figure in the Financial Plan, the
Employee shall not be entitled to a bonus.
5. In addition to the cash bonus, the Employee is entitled to
"equity compensation" in the form of newly issued capital
stock of the Company, if the Company remains private. In the
alternative and in lieu of and not in addition to the "equity
compensation" in the form of newly issued capital stock of the
Company if the Company remains private, in the event that the
Company goes "public" the Employee is entitled to "equity
compensation" in the form stock, options and/or warrants (the
form being at the sole option of the board of directors of the
Company), if and when the Company goes public. The price of
any options granted shall be the market price of the Company's
capital stock at the time of the granting of the options. The
options must be accepted by the Employee, if at all, within
sixty (60) days of
EMPLOYMENT AGREEMENT PAGE - 2
their grant and must be exercised, if at all, within one
hundred twenty (120) days of their grant by the Employee
tendering all cash within such time period.
6. In either event of the Company remaining private or going
public, the bonuses, whether the bonus is in the form of a
cash bonus or equity compensation, are contingent upon the
Employee achieving the targets stated in the Financial Plan
and approved by the Board of Directors of the Company.
7. Notwithstanding anything in this Agreement to the contrary,
any capital stock, options and warrants to be issued may come
with restrictions that are common for Companies making an
initial public offering.
8. The bonus in the form of "equity compensation" shall be
calculated, delivered and subject to the following:
a. If the Company goes public:
The value of the stock, options and/or warrants to be
conveyed to the Employee if the Company goes public
shall be two times (2x) the annual total cash
compensation of the Employee plus the cash bonus to be
paid to the Employee during the year of this Agreement
in which the Company goes public. By way of example and
for illustration purposes only:
o The Employee has a base compensation per year of
$125,000 and is entitled to a performance bonus of
$50,000. Therefore, the total annual cash
compensation would then be equal $175,000.00.
o Given the above assumptions in the example, the
Employee would be entitled to receive a bonus in
the form of "equity compensation" valued at 2.0 x
$175,000 equaling $350,000.
o The $350,000 worth of "equity compensation" would
then be converted into common capital stock of the
Company as the common capital stock of the Company
was trading on the "valuation date".
o The "valuation date" for the purposes of
calculating the bonus in the form of "equity
compensation" until December 31, 1997, shall be
the earlier to occur of December 31, 1997, or one
(1) week prior to any public offering of equity.
For all years subsequent to 1997, the valuation
date shall be the last day of the calendar year of
each year for which a bonus in the
EMPLOYMENT AGREEMENT PAGE - 3
form of "equity compensation" shall be due.
Notwithstanding the foregoing, in the event the
public offering of equity occurs during 1997, the
Employee shall be entitled to be eligible to
receive two (2) bonuses (one for the portion of
the year the Company was privately held and one
for the portion of the year that the Company was
publicly held on a pro-rated basis). For example,
if the public offering of equity occurs on June
15, 1997, the Employee shall be eligible to earn a
bonus in the form of "equity compensation" for the
time period the Company was private through and
including June 7, 1997. The Employee shall also,
be eligible to earn a bonus in the form of "equity
compensation" for the time period when the Company
was public from and after June 8, 1997, to
December 31, 1997.
o The bonus in the form of "equity compensation" due
if the Company goes public, shall be delivered to
the Employee within 120 days after the end of any
period for which it relates.
b. If the Company remains private:
The stock, options and/or warrants, if any, to be
conveyed to the Employee if the Company remains private
shall be equal to and paid as follows:
o Five percent (5%) of the then existing common
capital stock of the Company for the first year of
this Agreement.
o The stock, options and/or warrants, if any, to be
conveyed to the Employee if the Company remains
private shall be equal to an additional four
percent (4%) of the then existing common capital
stock of the Company for the second year of this
Agreement.
o If the Company remains private, the bonus in the
form of "equity compensation", is due upon the
release of the Company's accounting records for
that year, by the Company's CPA, for the calendar
year ending December 31, 1997.
9. Notwithstanding anything in this Agreement to the contrary,
all compensation to the Employee shall cease upon the
Employee's no longer being employed by the Company, unless
otherwise agreed to, in writing, or except as provided
EMPLOYMENT AGREEMENT PAGE - 4
for in Article III(2) above or with respect to accrued annual
salary as provided for in Article III(1) above. Further, If
the Employee is not employed by the Company for any reason set
forth in Article VIII(1)(c) or (d) of this Agreement, the
Employee shall receive his cash bonus, if any, and "equity
compensation", if any, prorated to the last day of his
employment with the Company.
10. Notwithstanding anything in this Agreement to the contrary,
except for the last sentence in the immediately preceding
paragraph, the Employee shall be deemed to have no vested
rights or accrued rights in any bonus provided for hereunder,
whether in the form of cash or in the form of "equity
compensation", unless the Employee shall have been employed by
the Company on the last day of the period for which the bonus
in the form of cash or in the form of "equity compensation"
relates.
IV. COMPETITION:
1. In the event the Employee resigns from the Company or his
employment is terminated for any reason set forth in
Subparagraph a. through g. of numbered Paragraph VIII(1)
hereof, the Employee agrees that for a period of twelve (12)
months after the Employee's date of departure from the Company
he will not, in any manner whatsoever or in any capacity,
whether as principal, agent, partner, officer, director,
employee, advisor, consultant or otherwise, be employed by a
business that is competitive with the Company, or sell
products or services that meet the same specifications or are
substantially similar, to the same markets as the products
sold by the Company, or to the same customers, then existing,
of the Company. To be deemed to be a "same customer, then
existing, of the Company", the customer in question must have
done business with the Company sometime within the one (1)
year prior to the Employee's date of departure from the
Company.
2. In the event the Employee's employment is terminated for the
reason contained in Subparagraph h. of numbered Paragraph
VIII(1) hereof, the Employee agrees that for a period of six
(6) months after the Employee's date of departure from the
Company be will not, in any manner whatsoever or in any
capacity, whether as principal, agent, partner, officer,
director, employee, advisor, consultant or otherwise, be
employed by a business that is competitive with the Company,
or sell products or services that meet the same specifications
or are substantially similar, to the same markets as the
products sold by the Company, or to the same customers, then
existing, of the Company.
EMPLOYMENT AGREEMENT PAGE - 5
3. Regardless of the reason for the employee's termination of
employment, the Employee agrees that for the period when
competition is restricted, the Employee agrees not to:
a. Employ, or in any manner interfere with the employment
of any of the then existing employees, agents or
representatives of the Company.
b. Either directly or indirectly, induce, solicit, or
influence, or attempt to induce, solicit, or influence,
any client or customer of the Company to terminate or
materially change its relationship with the Company.
c. Either directly or indirectly, request or advise any
present or future merchandise resource, supply resource,
or service resource of the Company to withdraw, curtail,
or cancel the furnishing or sales of merchandise,
supplies, or services to the Company.
d. Either directly or indirectly, induce, solicit, or
influence, or attempt to induce, solicit, or influence,
any employee, representative or agent of the Company
(including sales persons or sales representatives
whether or not they are independent contractors) to
terminate their employment or to terminate their
relationship with the Company.
4. In the event a court holds that any of the above restrictions
are invalid or unenforceable, the parties hereby request that
the intent of such provisions be carried out by judicial
modification to make such restrictions reasonable and within
the law. The parties hereby request the trier(s) of fact in
any proceeding in which they are involved, to amend or delete
provisions of this Agreement in accordance with the spirit and
underlying intent of this Agreement as is deemed necessary by
such trier(s) of fact in order to make this Agreement comply
with law. Any such deletion or amendment shall apply only
where the Court rendering the same has jurisdiction. Further,
the employee hereby specifically acknowledges and agrees that
the time period restricting competition as provided for in
this Agreement shall be tolled during the time period of any
breach of this Agreement by the Employee.
5. CONSIDERATION FOR COVENANT NOT TO COMPETE AGREEMENT: The
Employee hereby acknowledges and agrees that but for the
Employee's agreements concerning not competing with the
Company as contained in numbered paragraph 4 of this
Agreement, the Company never would have hired the Employee.
Therefore, the Employee hereby acknowledges and agrees that
there is separate and distinct, good and valuable
consideration given with respect to such agreement not to
compete with the Company. Further, as additional consideration
for the agreements of the Employee concerning not competing
with the Company, the Employee
EMPLOYMENT AGREEMENT PAGE - 6
acknowledges and agrees that five per cent (5%) of the
Employee's salary (or hourly wage as the case may be) is paid
to the Employee as further consideration for such agreements
of the Employee concerning not competing with the Company.
V. COMPANY PROPRIETARY INFORMATION:
1. Company Proprietary Information includes, but is not limited
to, the following: information relating to any formula,
pattern, device or compilation of information techniques,
pricing, forms, procedures, processes, mailing lists, sales
methods, models, drawings, memoranda and other material or
records of proprietary nature, technical data, records and
policy matters relating to research, finance, accounting,
sales, promotion, schematics, personnel, management and
operations, customer list, price lists, customer service
requirements, costs to providing services, names of suppliers
and customers, arrangements entered into with suppliers and
customers, including, but not limited to, marketing
strategies, and trade secrets of the Company and in general,
any process or device for continuous use in the operation of
the business of the Company obtained while in the employ of
the Company not generally known to the public or to persons
involved in the same business as the Company. The Employee
agrees that in the performance of his duties he has received
and will continue to receive both written and oral Company
Proprietary Information.
2. The Employee agrees that the use of Company Proprietary
Information is strictly limited to that which is necessary in
the Company's business and within the scope of his employment.
Except as required in the conduct of the Company's business
and within the scope of his employment, the Employee agrees to
maintain secret all Company Proprietary information and agrees
not to disclose such Company Proprietary information to any
other person, firm or corporation either during or after his
employment with the Company. The Employee further agrees not
to use any Company Proprietary Information for his own benefit
or the benefit of any other person, firm or corporation, in
any manner whatsoever or in any capacity, whether as
principal, agent, partner, officer, director, employee,
advisor, consultant or otherwise, either during or after his
employment with the Company.
3. The Employee agrees that all Company Proprietary information
in his possession from time to time (original and all copies
thereof) shall be and remain the Company's sole property, and
agrees to use all reasonable precautions to insure that such
Company Proprietary information shall be properly protected
and kept from unauthorized persons.
EMPLOYMENT AGREEMENT PAGE - 7
4. The Employee agrees that in the event of termination of his
employment for any reason, or upon request, he shall deliver
promptly to the Company all Company Proprietary Information.
VI. EMPLOYEE BENEFITS:
1. The Employee shall be entitled to participate in any health
insurance, life insurance, or any other benefit programs
established by the Company for its employees. Any bonuses
provided for herein or which may otherwise be given from time
to time, at the sole discretion of the Company, shall be
calculated by "certified public accountants" of the Company.
All bonus payments are in addition to compensation agreed to
and are not subject to question or dispute as long as the
"certified public accountants" of the Company calculate them
in accordance with this Agreement.
VII. ASSIGNMENT:
1. This Agreement is personal in nature, and the Employee shall
not assign or transfer any of his obligations under this
Agreement. The Company shall not assign the or transfer any of
the obligations of the Company under this Agreement. Any
attempt to assign the obligations under the terms and
conditions of this Agreement shall be null and void and shall
constitute a material breach of this Agreement.
VIII. GROUNDS FOR TERMINATION OF EMPLOYMENT:
1. The following shall be deemed grounds for termination of the
Employee:
a. Because of theft, misappropriation or embezzlement of
Company property, property of any officer, shareholder,
director or employee, or property of any customer of the
Company or supplier of the Company.
b. Because of dishonesty in the performance of his duties
for the Company or fraud against the Company, which
fraud shall consist of making false representations
known to be false (or concealing material facts) with
the intent to deceive the Company, or its officers,
directors or shareholders, for the purpose of obtaining
for himself something of value to which he is not
entitled under this Agreement, and which has the effect
of damaging the Company, either financially, legally or
in its relations with its suppliers or customers.
c. If he has become so disabled, either physically or
mentally, as to preclude him from performing his job
hereunder, where any or all such
EMPLOYMENT AGREEMENT PAGE - 8
periods of disablement total in excess of eight (8)
weeks during any one twelve (12) month period. The
Company reserves the right to verify the disability of
the Employee if any such disability exceeds five (5)
working days. Such verification shall be performed in a
timely manner consistent with the nature of the
disability by a licensed medical doctor of the Company's
choosing and at the Company's expense. In addition, the
Company shall pay any other reasonable and customary
expense the Employee may incur which are required to
accomplish such verification. The Employee's employment
may be terminated if he fails to consent to and
cooperate fully with such verification of disability. In
addition, the Employee's employment may be terminated if
the Employee's disability is not confirmed by such
verification. Notwithstanding the foregoing, the Company
shall always comply with any local, state or federal
law, rule or regulation regarding employment of the
disabled.
d. Conviction of a crime punishable as a felony, or
imprisonment for any crime whether felony or
misdemeanor, for a period of time in excess of five (5)
days.
e. Failure to comply with any of the terms and conditions
of this Agreement.
f. Direct insubordination or the failure to comply with any
reasonable directive or order of a superior.
g. In the conduct of the business of the Company, violation
of any state or federal law regarding discrimination
against individuals by reason of their age, race, sex or
religion, or the sexual harassment of any individual.
h. Any other reason which in the sole reasonable judgement
of the Company is in the best interests of the Company.
2. Notwithstanding anything in this Agreement to the contrary, no
notice written shall be required to terminate the employment
of the Employee under Subparagraph a. through g. of numbered
Paragraph VIII(1) hereof and oral notice shall suffice.
IX. MISCELLANEOUS:
1. SEVERABILITY: Should any provision hereof be deemed illegal or
unenforceable, the other provisions hereof shall be given
effect separately therefrom and shall not be affected thereby.
EMPLOYMENT AGREEMENT PAGE - 9
2. NOTICE: Any notice required or permitted to be given under
this Agreement shall be in writing, shall be effective five
(5) days after mailing and shall be sent by Certified Mail,
return receipt requested, to the last known address of the
party to whom such notice is addressed.
3. CHOICE OF LAW: It is the intention of the parties that the
laws of the State of Texas shall govern this Agreement.
4. PARAGRAPH HEADINGS: Paragraph and other headings contained in
this Agreement are for reference purposes only, and shall not
affect, in any way, the meaning or interpretation of this
Agreement.
5. PARTIES IN INTEREST: This Agreement shall inure to the benefit
of and be binding upon the respective heirs, successors and
assigns (where permitted) of the parties hereto.
6. ENTIRE AGREEMENT: This Agreement constitutes the entire
agreement between the parties hereto, and there are no
agreements or understandings relating to the subject matter
hereof between the parties other than those set forth herein
or herein provided for. This Agreement cannot be changed,
modified, or amended except in writing signed by the parties
thereto.
7. NEGOTIATION OF THE AGREEMENT: This Agreement was fully
reviewed and negotiated on behalf of each party by legal
counsel representing their interests and shall not be
construed against the interests of either party as the drafter
of this Agreement.
8. SETTLEMENT OF DISPUTES: The following agreements are made with
respect to the settlement of disputes arising under the terms
and conditions of this Agreement:
a. If a dispute arises out of or relates to this Agreement,
including to mean any of its Exhibits, or the breach or
default of this Agreement, the parties shall first, in
good faith, attempt to negotiate a settlement of that
dispute, breach or default.
b. If the dispute, breach or default cannot be settled
through negotiation, the parties agree and shall proceed
to binding arbitration through the American Arbitration
Association in accordance with its Commercial
Arbitration Rules, and judgment upon the award rendered
by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
c. Any provisional remedy (including injuctive relief)
which a party to this Agreement may want to elect, shall
be available notwithstanding
EMPLOYMENT AGREEMENT PAGE - 10
the provisions relating to arbitration of disputes. Any
party may seek such provisional remedy from the
appropriate court of law pending arbitration, and such
proceeding in which the provisional remedy was sought
will then be stayed pending the final award of the
arbitration.
d. The expenses of arbitration conducted pursuant to this
paragraph shall be born by the parties in such
proportions as the arbitrator(s) shall decide.
IN WITNESS WHEREOF, the parties have executed this Agreement on
9/17/1996.
THE COMPANY:
American NET Claims, Inc.
BY: /s/ Xx X. Xxxxx
-----------------------------------
Title: Pres.
--------------------------------
THE EMPLOYEE:
/s/ Xxxxx X. Xxx
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Xxxxx X. Xxx
EMPLOYMENT AGREEMENT PAGE - 11
