EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("the Agreement") is entered into as of October
12, 1999 between Xxxxxx.xxx, Inc., having its principal place of business at 000
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000 (the "Company"), and Mr. Xxxxxxx
Xxxxxx ("Executive").
A. Executive has been employed by Adatom, Inc. as its President.
Concurrently with the execution of this Agreement, Adatom, Inc. is merging into
the Company, whose name immediately prior to said merger was HealthCore Medical
Solutions, Inc. The Company wishes to employ Executive as its Chairman of the
Board of Directors, President and Chief Executive Officer, and now enters into
this agreement to memorialize the terms of such employment.
B. The parties hereto therefore agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive to serve as Chairman of the Board of
Directors, President and Chief Executive Officer for the period commencing on
the date of this Agreement and ending December 31, 2002, unless such employment
is sooner terminated as provided in this Agreement (the "Employment Period");
provided, however, that on each annual anniversary of the date of this Agreement
the term of this Agreement shall be automatically extended for a period of one
additional year unless the Company or Executive gives the other party notice of
non-extension at least 30 days prior to the then relevant anniversary date.
Executive's responsibilities shall consist of those of President and CEO as set
forth by the Board of Directors of the Company ("the Board"). In the event
Executive continues in the full-time employment of the Company after the end of
the Employment Period, without a new employment agreement or an extension or
renewal of this Agreement, such continued employment shall be on a yearly basis
terminable at any time, for any reason or for no reason, without cause, by
Executive or the Company upon 60 days' written notice.
2. COMPENSATION.
2.1 BASE SALARY. Executive shall be paid a base salary at a yearly rate of
$200,000, payable in accordance with the Company's payroll policies for
executive officers. The base salary shall be reviewed on or before June 1 of
each year, starting in the year 2000, by the Board or the Compensation Committee
of the Board (the "Committee") to determine if such base salary should be
increased in recognition of Executive's services to the
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Company; provided, however, that the base salary shall not be decreased below
$200,000.
2.2 BONUS. Executive shall be eligible for a bonus of up to $100,000
annually, which bonus shall be paid upon attainment of certain goals as set
forth in the business plan of the Company approved by the Board.
2.3 REIMBURSEMENTS. Executive shall be entitled to reimbursement for
reasonable travel, entertainment and other business expenses incurred by him in
the performance of his duties under this Agreement, subject to reasonable
reporting and documentation requirements for such expenses.
2.4 WITHHOLDING. The Company shall withhold from any compensation
hereunder such amounts on account of payroll taxes, income taxes and other
similar matters as are required to be withheld by applicable law.
2.5 BENEFIT PLANS; VACATION. During the Employment Period, Executive may
participate in any profit-sharing, stock option, bonus, retirement, disability,
life or medical insurance plans or programs now or hereafter maintained by the
Company for its employees generally. Nothing in this Agreement shall preclude
the Company or any affiliate of the Company from terminating or amending any
plans or programs at any time, or from time to time. Executive shall be entitled
to four weeks of paid vacation (or a pro rata portion thereof) during each year
of the Employment Period.
2.6 AUTOMOBILE. The Company shall lease a luxury automobile for use by
Executive and shall pay the insurance thereon for Executive's own use thereof.
3. EXECUTIVE'S BUSINESS ACTIVITIES.
Executive shall devote his full professional time, attention and energy to
the business and affairs of the Company, as its business and affairs now exist
and as they hereafter may be changed, and shall not during the term of his
employment hereunder be engaged in any other business activity, whether or not
such business activity is pursued for gain or profit; provided, however, that
Executive may serve as a director or trustee of any business enterprise or any
nonprofit or governmental entity or trade association if in each case such
service is approved by the Board of Directors and does not in any material way
interfere with Executive's duties hereunder.
4. INTERFERENCE WITH THE COMPANY'S BUSINESS.
For a period of one year after termination of his employment hereunder for
any reason, Executive shall not, directly or indirectly, employ, solicit for
employment, or advise or recommend to any other person that such other person
employ or solicit for employment, any person employed (whether as a consultant,
employee, agent or otherwise) by the Company.
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5. CONFIDENTIALITY.
As used in this Agreement, the term "Confidential Information" means all
information, knowledge (whether oral or written and howsoever stored or
recorded), documents and other materials which Executive has had, now has or may
hereafter acquire concerning or in any way related to the Company or its
business, whether developed by Executive, any other employee of the Company, any
consultant to the Company or any other person or entity whatsoever; provided,
that the term "Confidential Information" shall not include any such information,
knowledge, document or other material which is or becomes known to the public
generally other than by means of any disclosure thereof by Executive or any
other person or entity under a confidentiality obligation to the Company.
Executive has not and never will (whether during the Employment Period or after
it), directly or indirectly, disclose, divulge, communicate or use to the
detriment of the Company or for Executive's own benefit or for the benefit of
any other person or entity, or misuse in any way, any Confidential Information.
Immediately upon termination of Executive's employment by the Company, Executive
shall deliver to the Company all documents and other materials then in
Executive's custody or control constituting, containing or reflecting in any way
any Confidential Information, without retaining any copies or summaries thereof.
6. NON-COMPETITION.
Without limiting the provisions of Section 1 or Section 3 of this
Agreement, during the Employment Period Executive will not engage in any
activity competitive with or similar to (whether or not competitive with) the
business of the Company, or participate or have any interest, directly or
indirectly, in any person, firm, corporation or business (either financially or
as a shareholder (other than an owner of less than 5% of the voting shares of
any public company), owner, creditor, employee, director, officer, partner,
consultant, or in any capacity which calls for the rendering of personal
services, advice or acts of management, operation or control) which carries on a
business competitive with or similar to (whether or not competitive with) the
business of the Company. The Company and Executive acknowledge and agree that
the foregoing non-competition provisions are necessary, inter alia, to protect
the Confidential Information.
7. EQUITABLE RELIEF.
Executive acknowledges and agrees that in the event of a breach by
Executive of any of the provisions of Sections 4, 5 and 6 of this Agreement, the
Company would not have an adequate remedy at law and the Company shall be
entitled to injunctive and other equitable relief in addition to any other
remedies which may be available.
8. TERMINATION.
This Agreement is subject to termination upon occurrence of any of the
events described in this Section 8. Upon termination in all cases, the parties'
respective obligations under this Agreement shall cease, except for Executive's
obligations under Sections 4 and 5, and except for obligations arising prior to
termination or arising pursuant to this Section 8.
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8.1 TERMINATION BY THE COMPANY.
8.1.1 DEATH. This Agreement shall automatically terminate on
the date of Executive's death. Upon such termination as provided in this Section
8.1.1, the Company shall have no further obligation to Executive.
8.1.2 DISABILITY. If Executive's physical or mental disability
prevents him from fully performing his duties under this Agreement for an
uninterrupted period of 150 days, the Company may terminate this Agreement by
giving Executive written notice thereof at any time after said period and prior
to two weeks following the end of the disability, specifying the date on which
this Agreement shall terminate. The decision of any qualified physician selected
in good faith by the Company as to Executive's ability fully to perform his
duties under this Agreement shall be final and binding on the parties for
purposes of this Section 8.1.2. Upon termination as provided in this Section
8.1.2, the Company shall have no further obligation to Executive except that the
Company shall continue to provide Executive with coverage under the insurance
described in Section 2.5 in accordance with its terms until the end of the
Employment Period, if permitted by such insurance at no added cost to the
Company.
8.1.3 CAUSE. The Company at any time may terminate this
Agreement for Cause. "Cause" as used herein shall mean:
(a) Executive's material breach of any of his agreements, covenants
or obligations under this Agreement;
(b) any act of insubordination, gross carelessness or misconduct, or
gross neglect of duty; or
(c) any act of fraud, dishonesty or moral turpitude or any other act
by Executive which brings him or the Company into disrepute in the community or
which materially and adversely affects the Company's business, affairs,
reputation or prospects.
Upon termination as provided in Section 8.1.3, the Company shall have no further
obligation to Executive.
8.1.4 OTHER TERMINATION. The Company may terminate this
Agreement at any time, without Cause, in its sole discretion for any reason it
deems sufficient. If the Company terminates this Agreement in a manner not
provided in Sections 8.1.1, 8.1.2 or 8.1.3, the Company shall (i) pay Executive
the base salary then in effect, on the terms provided in Section 2, for three
years after the date of termination, regardless of the time remaining in the
Employment Period, and (ii) continue to provide Executive with coverage under
the insurance described in Section 2.5 as long as Executive does not enter into
other employment and if permitted by such insurance at no added cost to the
Company, but shall have no further obligation to him. Executive acknowledges and
agrees that the payment of said base salary, and the furnishing of the insurance
coverage, as provided in this Section 8.1.4 shall be in lieu of severance pay or
any claim, cause of action or damages, in contract or in tort, he may otherwise
have, including without limitation any damages for breach of this Agreement, and
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shall extinguish any claim or cause of action he might otherwise have had
against the Company for termination for his employment.
8.2 TERMINATION BY EXECUTIVE.
8.2.1 THE COMPANY'S FAILURE TO PERFORM. Executive may
terminate this Agreement without any further liability to the Company for
failure by the Company to perform any of its obligations hereunder, which
failure continues for 30 days after written notice thereof to the Company by
Executive. Upon termination as provided in this Section 8.2.1, the Company shall
(i) pay Executive the base salary then in effect, on the terms provided in
Section 2, for three years after the date of termination, regardless of the time
remaining in the Employment Period, and (ii) continue to provide Executive with
the coverage under the insurance described in Section 2.5 as long as Executive
does not enter into other employment and if permitted by such insurance at no
added cost to the Company, but shall have no further obligation to him.
Executive acknowledges and agrees that the payment of said base salary, and the
furnishing of said insurance coverage, as provided in this Section 8.2.1 shall
be in lieu of severance pay or any claim, cause of action or damages, in
contract or in tort, he may otherwise have, including without limitation damages
for breach of this Agreement, and shall extinguish any claim or cause of action
he might otherwise have had against the Company for termination of his
employment.
8.2.2 TERMINATION AFTER CHANGE OF CONTROL. Executive may
terminate this Agreement, for Good Reason, at any time within two years after a
Change of Control. Upon termination as provided in this Section 8.2.2, the
Company shall (i) pay Executive the base salary then in effect, on the terms
provided in Section 2, for three years after the date of termination, regardless
of the time remaining in the Employment Period (less any amounts Executive earns
from other employment during such period), and (ii) continue to provide
Executive with coverage under the insurance described in Section 2.5 as long as
Executive does not enter into other employment and if permitted by such
insurance at no added cost to the Company. As used in this Section 8.2.2, the
terms "Change of Control" and "Good Reason" shall have the following meanings:
"Change of Control" means (i) any merger or
consolidation in which the Company is not the surviving
entity or sale of substantially all of the assets of the
Company; provided, however, if the Board of Directors and
officers remain in their positions for at least 12 months
following the transaction with the same authority and
control that existed prior to the transaction then this
provision shall not apply, (ii) a tender offer or exchange
offer for the outstanding shares of the Company as a
result of which the offeror acquires in excess of 50% of
the Company's outstanding shares, or (iii) a merger or
consolidation of the Company with another corporation or
entity that results in the former stockholders of the
Company, as they existed immediately prior to such merger
or consolidation, owning in the aggregate less than 50% of
the outstanding voting securities of the surviving or
resulting corporation or entity; provided, however, if the
Board of Directors and officers remain in their positions
for at least 12 months following the transaction with
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the same authority and control that existed prior to the
transaction then this provision shall not apply, or (iv)
any other transaction that, although different in form,
accomplishes substantially the same results as (i), (ii)
or (iii).
"Good Reason" means (i) the assignment to Executive
of any duties inconsistent with his duties and status with
the Company immediately prior to the Change of Control, or
a reduction in Executive's responsibilities, titles or
offices as in effect immediately prior to a Change of
Control, or any removal of Executive from or any failure
to re-elect Executive to any such positions, except in
connection with the involuntary termination of Executive's
employment for Cause, or as a result of Executive's death,
disability or retirement, or voluntary termination by
Executive for other than Good Reason; (ii) a reduction in
Executive's base salary as in effect immediately prior to
the Change of Control; (iii) the requirement that
Executive be based anywhere other than within a 50-mile
radius of the Company's location immediately prior to a
Change of Control, except for required travel on the
Company's business to an extent substantially consistent
with Executive's present business travel obligations; or
(iv) the failure by the Company to continue in effect, or
a change of Executive's participation or benefits under,
any bonus or incentive compensation plan, any employee
benefit plan qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended from time to
time (the "Code"), any stock ownership, stock purchase,
stock option or other equity incentive plan, any life,
health, accident, disability or similar plan providing
welfare benefits or any plan or program of fringe benefits
in which Executive is participating immediately prior to a
Change of Control, the effect of which would be to
materially reduce Executive's benefits under such plans as
such existed immediately prior to the Change of Control.
Notwithstanding the foregoing, if any payment to be made or benefit to be
provided to Executive pursuant to this Section 8.2.2, after taking into account
all other payments or benefits provided by the Company to Executive, would
constitute a "parachute payment" as defined in Section 280G of the Code, then
the payments to be made or benefits to be provided to Executive shall be reduced
so that the aggregate present value of all parachute payments does not exceed
299% of Executive's "annualized includible compensation for the base period" (as
such term is defined in Section 280G(d)(1) of the Code). The determination of
any reduction in the payments or benefits to be provided to Executive shall be
made by the Company and the Company's determination shall be conclusive and
binding on Executive.
8.2.3 OTHER TERMINATION. In addition to his rights under
Section 8.2.1 and 8.2.2 Executive may terminate this Agreement without cause,
for any reason, provided that he gives the Company at least 30 days' written
notice thereof. Upon termination as provided in this section 8.2.2, the Company
shall have no further obligation to Executive.
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9. ARBITRATION.
9.1 ARBITRATION OF DISPUTES. The parties agree that all
disputes, disagreements, controversies or claims of any kind, whether based on
wrongful discharge, tort, breach of contract, violation of statute (including
but not limited to claims of discrimination based on sex, age or race or sexual
harassment under federal or state law) or otherwise, arising out of or related
in any way to Executive's employment, or this Agreement, its interpretation, its
application or the question of whether it has been breached, shall be submitted
to final and binding arbitration in San Jose, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrators may be entered in any court
having jurisdiction. There shall be one arbitrator, and the parties shall split
the fee of the arbitrator as well as other costs of the arbitration.
9.2 WAIVER OF JURY TRIAL. EXECUTIVE ACKNOWLEDGES AND AGREES
THAT BY SIGNING THIS AGREEMENT HE IS WAIVING AND HEREBY DOES WAIVE ALL RIGHTS HE
MAY OTHERWISE HAVE TO BRING AN ACTION IN COURT OR HAVE A TRIAL BY JURY
CONCERNING HIS EMPLOYMENT, THE POSSIBLE TERMINATION OF IT, OR ANY OTHER SUCH
CLAIM, WHETHER BASED ON WRONGFUL DISCHARGE, UNLAWFUL DISCRIMINATION, TORT,
BREACH OF CONTRACT, VIOLATION OF STATUTE OR OTHERWISE, AND THAT HIS SOLE REMEDY
IS LIMITED TO ARBITRATION PURSUANT TO THIS SECTION 9.
10. ASSIGNMENT AND TRANSFER.
Executive's rights and obligations under this Agreement shall
not be transferable by assignment or otherwise, and any purported assignment,
transfer, or delegation thereof shall be void. This Agreement, shall inure to
the benefit of, and be enforceable by, any purchaser of substantially all of the
Company's assets, any corporate successor to the Company or any assignee
thereof.
11. MISCELLANEOUS.
11.1 ATTORNEYS' FEES. In any action or dispute covered by
Section 7 or Section 9 hereof or otherwise arising out of or relating in any way
to this Agreement, the party prevailing in such action or dispute shall be
entitled, in addition to such other relief as may be granted, to recover its
reasonable attorneys' fees and costs.
11.2 GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of California.
11.3 ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding between the parties and supersedes any prior or
contemporaneous written or oral agreements between them regarding the subject
matter of this Agreement.
11.4 AMENDMENT. This Agreement may be amended or modified only
by a writing signed by Executive and by a duly authorized representative of the
Company.
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11.5 SEVERABILITY. If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable as to
a particular application, then such provision shall be deemed modified to
exclude such application, and such provision in all other applications, and all
other provisions of this Agreement, shall continue in full force and effect
without being modified, impaired or invalidated in any way.
11.6 CONSTRUCTION. The headings and captions of this Agreement
are provided for convenience only and are intended to have no effect in
construing or interpreting this Agreement. The language in all parts of this
Agreement shall be in all cases construed according to its fair meaning and not
strictly for or against the Company or Executive.
11.7 RIGHTS CUMULATIVE. The rights and remedies provided by
this Agreement are cumulative, and the exercise of any right or remedy by either
party hereto shall not preclude or waive its right to exercise any or all other
rights and remedies hereunder. Without limiting the foregoing, the provisions of
Section 9 shall not in any way limit the rights of the Company to equitable
relief under Section 7 hereof.
11.8 NONWAIVER. No failure or neglect of either party hereto
in any instance to exercise any right, power or privilege hereunder or under law
shall constitute a waiver of any other right, power or privilege or of the same
right, power or privilege in any other instance. All waivers by either party
hereto must be contained in a written instrument signed by the party to be
charged and, in the case of the Company, by an officer of the Company (other
than Executive) or other person duly authorized by the Company.
11.9 NOTICES. Any notice, request, consent, or approval
required or permitted to be given under this Agreement or pursuant to law shall
be sufficient if in writing, and if and when sent by certified or registered
mail, with postage prepaid, (i) with respect to Executive, to Executive's
residence (as noted in the Company's records), or (ii) with respect to the
Company, to the Company's principal office.
IN WITNESS WHEREOF, the undersigned have executed this
Employment Agreement as of the date first set forth above.
Executive:
_____________________________________________________________
Xxxxxxx Xxxxxx
Xxxxxx.xxx, Inc.
By: __________________________________________________________
Title: _______________________________________________________
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TABLE OF CONTENTS
1. Employment.................................................53
2. Compensation...............................................53
2.1 Base Salary................................................53
2.2 Bonus......................................................54
2.3 Reimbursements.............................................54
2.4 Withholding................................................54
2.5 Benefit Plans; Vacation....................................54
2.6 Automobile.................................................54
3. Executive's Business Activities............................54
4. Interference with the Company's Business...................54
5. Confidentiality............................................55
6. Non-Competition............................................55
7. Equitable Relief...........................................55
8. Termination................................................55
8.1 Termination by the Company.................................56
8.1.1 Death..............................................56
8.1.2 Disability.........................................56
8.1.3 Cause..............................................56
8.1.4 Other Termination..................................56
8.2 Termination by Executive...................................57
8.2.1 The Company's Failure to Perform...................57
8.2.2 Termination After Change of Control................57
8.2.3 Other Termination..................................58
9. Arbitration................................................59
9.1 Arbitration of Disputes....................................59
9.2 WAIVER OF JURY TRIAL.......................................59
10. Assignment and Transfer....................................59
11. Miscellaneous..............................................59
11.1 Attorneys'Fees.............................................59
11.2 Governing Law..............................................59
11.3 Entire Agreement...........................................59
11.4 Amendment..................................................59
11.5 Severability...............................................60
11.6 Construction...............................................60
11.7 Rights Cumulative..........................................60
11.8 Nonwaiver..................................................60
11.9 Notices....................................................60
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(No. 333-68557) of HealthCore Medical Solutions, Inc. (the "Company") on Form
S-3 of our report dated November 19, 1999 with respect to the financial
statements of the Company this Annual Report on Form 10-KSB for the year ended
September 30, 1999.
/s/ Xxxxxxx X. Xxxxxx & Company, LLP
------------------------------------
Xxxxxxx X. Xxxxxx & Company, LLP
Florham Park, New Jersey
December 23, 1999
