Exhibit 10.4
MANAGEMENT EMPLOYMENT AGREEMENT
(XXXXX X. XXXXXX)
THIS MANAGEMENT EMPLOYMENT AGREEMENT (this "Agreement") is made as of
August 6, 1999, by and between VantageMed Corporation, a Delaware corporation
(the "Company"), and Xxxxx X. Xxxxxx ("Employee").
WHEREAS, the Company desires to employ the Employee to perform the
duties of Chief Executive Officer of the Company.
WHEREAS, the Company has informed Employee that it maintains a cap on
the base salary compensation of employees, which cap is currently set at
$120,000 (the "Compensation Cap').
WHEREAS, Employee has expressed, to the Company, his willingness to
adhere to the Compensation Cap, subject to his entitlement to an increase in his
compensation commensurate with any increases in the Compensation Cap which are
authorized by the Company.
WHEREAS, the Employee desires to be employed by the Company to perform
such duties upon the terms and conditions herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the parties agree as follows:
1 . SALARY. The Company shall employ the Employee as its Chief
Executive Officer to perform the above described duties on a three-year basis
starting on the Effective Date as defined in Section 19 and ending August 1,
2002, at an annual base salary of $120,000 per annum payable in accordance with
the customary practices of the Company, plus such salary increases and bonuses
as are approved by the Board of Directors from time to time. The annual base
salary, which excludes all benefits, paid and/or reimbursed expenses and
incentive and/or bonus plan payments, as in effect from time to time, is
referred to herein as the "Base Salary". After such three-year period, this
Agreement will continue on a month-to-month basis until terminated as provided
herein. Employee agrees to accept the above amount and the benefits described in
Section 5 in full payment for the services to be rendered by him hereunder,
provided, however, that the Board of Directors Compensation Committee and
Employee will meet no later than six (6) months after the date of this
Agreement, and at each anniversary of this Agreement, and determine if an
increase in Base Salary is appropriate, and if appropriate agree upon the new
Base Salary, with the view to setting Employee's Base Salary to the base salary
that would be paid to a similarly skilled and experienced executive in similar
companies performing at comparable levels, taking into consideration the skills
and experience of Employee and the achievement of milestones, financial results,
performance, growth, and profits of the Company, as determined by the Board of
Directors (or its Compensation Committee) in its sole and absolute discretion,
and subject to the Company's Compensation Cap. At no time during the term of the
Agreement shall Employee receive a Base Salary of less than the greatest of (1)
$120,000 per annum; (2) the Company's Compensation Cap then in effect as
determined by the Board of Directors of the Company; or (3) the base salary of
the highest paid officer and/or employee of the Company at any given time.
2. DUTIES. The Employee shall during the term of his employment
hereunder:
A. devote his full normal working time, energies and
attention to the duties of his employment, as they may be reasonably established
from time to time by the Board of Directors consistent with the position and
office occupied by Employee, provided, however, that (1) Subject to disclosure
to and approval by the Board of Directors, which approval shall not be
unreasonably withheld, Employee shall have the right, in his discretion, to
accept and carry out the duties associated with his membership on the Board of
Directors of other companies as consistent with the terms of this Agreement, as
well as on industry standard committees and similar organizations; (2) Employee
shall be responsible for direction of the overall affairs of the Company
(subject to general direction from the Board of Directors); and (3) all officers
and/or employees of the Company shall either report to Employee or to another
officer who shall then report to Employee;
B. comply with all reasonable rules, regulations and
administrative directions now or hereafter established by the Board of Directors
of the Company;
C. be reimbursed by the Company from time to time (but
at least monthly) for all reasonable and necessary business expenses incurred by
him in the performance of his duties hereunder, provided that Employee shall
render to the Company such accounts and vouchers covering expenditures as the
Company reasonably requires and as are necessary for tax purposes, and shall
follow normal Company policy on expenses; and
D. not engage in any activity or employment which would
reasonably be expected to materially conflict with or have a material adverse
affect on, the present or prospective business of the Company.
3. TERMINATION.
A. MUTUAL AGREEMENT. This Agreement may be terminated at
any time by the mutual agreement of the Company and Employee, expressed in
writing.
B. VOLUNTARY. Employee may terminate this Agreement
with or without the consent of the Company by giving written notice of his
intent to terminate with the effective date of termination at least one hundred
(100) days after the effective date of the notice of termination. Subject to the
Company's payment of all compensation (including Base Salary and accrued
benefits, bonuses, and incentives) due to Employee through the end of the one
hundred (100) day notice period, the Company may accelerate the effective date
of termination without being in breach hereof.
C. WITHOUT CAUSE. Subject to the conditions set forth
in Section 4 of this Agreement, the Company may terminate this Agreement at
any time without Cause upon twenty (20) days prior written notice or upon
Employee's death.
D. DISABILITY. The Company may terminate this
Agreement upon the disability of Employee. For purposes of this Agreement,
Employee shall be considered disabled if he is unable to perform his duties
under this Agreement as a result of injury, illness or other disability for a
period of one hundred eighty (180) consecutive days, or one hundred eighty
(180) days in a three hundred sixty-five (365) day period, and the Board of
Directors of the Company reasonably determines that Employee has been unable
to perform his duties for the one hundred eighty (180) day period as a result
of injury, illness or other disability.
E. FOR CAUSE BY THE COMPANY
The Company may terminate this Agreement for "Cause", as
defined below, immediately upon written notice to Employee. "Cause" shall mean:
(i) If Employee materially violates any term of
this Agreement or his Employee Proprietary Information and Inventions Agreement,
and such action or failure is not substantially remedied or reasonable steps to
effect such substantial remedy are not commenced within twenty (20) days of
written notice from the Company to Employee.
(ii) A conviction or a final, nonappealable
judgment by a court of competent jurisdiction involving a charge or claim of
dishonesty;
(iii) A conviction or a final, nonappealable
judgment by a court of competent jurisdiction involving a charge or claim of
willful misfeasance or nonfeasance of duty by Employee intended to injure or
having the effect of injuring in some material fashion the reputation, business
or business relationships of the Company or any of its subsidiaries or any of
their respective officers, directors or employees;
(iv) Conviction of Employee upon a felony charge.
(v) Willful or prolonged absence from work by
the Employee (other than by reason of disability due to physical or mental
illness) or failure, neglect or refusal by the Employee to perform his duties
and responsibilities without the same being corrected upon twenty (20) days
prior written notice.
F. FOR CAUSE BY THE EMPLOYEE. If the Company materially
violates any term of this Agreement and such failure is not remedied upon twenty
(20) days prior written notice, or if Employee is removed from the Company's
board of directors other than for Cause, Employee may terminate this Agreement
immediately upon a confirming written notice to the Company. Such termination is
a termination for Cause by Employee.
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4. PAYMENTS AT TERMINATION
A. Upon (i) termination of this Agreement by the
Company under Subsection 3.C. titled "Without Cause," (ii) termination of
this Agreement by Employee under Subsection 3.F. titled "For Cause by the
Employee," or (iii) termination of this Agreement by the Company or by the
Employee under Subsection 14 of this Agreement, Employee shall receive
monthly payments equal to his last Base Salary prior to termination
("Applicable Base Salary") through August 1, 2002, beginning in the month
next following such Employee termination. In addition, Employee shall receive
all accrued compensation, benefits, and unreimbursed expenses to the date of
termination as provided herein. The monthly payments provided for in this
Subsection shall be paid on a monthly basis on the first of each month and
shall not be reduced by compensation the Employee may receive from other
sources. In addition, in the event of such termination all unexercised stock
options granted hereunder or otherwise granted to Employee during the term of
this Agreement, as well as any non-qualified stock options assumed by the
Company in connection with the merger (the "Merger") of Mariner Systems, Inc.
with a subsidiary of the Company (the "Assumed Options"), shall vest and
become exercisable on the date of termination. For any Assumed Options, the
period for exercise of such options shall continue for the greater of the
maximum length of time the options are exercisable under the terms of the
original option grant(s), as though the employment of Employee had not
terminated, and two (2) years after the date of termination of Employee's
employment.
B. If the Company terminates this Agreement due to
disability, pursuant to Subsection 3.D., Employee shall receive the disability
payments provided for by the Company's disability insurance policy. The Company
shall maintain a disability insurance policy providing for payments at the rate
of sixty percent (60%) of his Applicable Base Salary or the maximum legal
amount, whichever is less, until the earlier of the end of disability,
Employee's death or the date Employee attains 65 years of age. If the Company
terminates this Agreement due to disability, pursuant to Subsection 3.D., the
Company shall also pay all accrued compensation and unreimbursed expenses to the
date of termination as provided herein. The monthly payments provided for in
this Subsection shall be paid at such times payments are made under the
disability policy provided for in this Subsection. Except as required by such
policy or applicable law, payments shall not be reduced by compensation the
Employee may receive from other sources.
C. If Employee terminates this Agreement without cause
under Subsection 3.B. titled "Voluntary", or if this Agreement is terminated
under Subsection 3.A., titled "Mutual Agreement," or if this Agreement is
terminated by the Company under Subsection 3.E. titled "For Cause by the
Company" or if this Agreement is terminated for any reason following August 1,
2002, Employee shall not be entitled to any further payments except unreimbursed
expenses to the date of termination as provided herein and any accrued benefits
(including vacation) and compensation, and the stock options granted by the
Company to Employee not fully vested will be canceled.
D. In each of the foregoing cases, termination is the
date of actual termination, not the date notice of termination is given. Other
than payments owing under a provision providing
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for payments at a different time, all payments for accrued unpaid monthly
compensation, including accrued benefits and vacation, and for unreimbursed
expenses, shall be made on the date of termination.
E. Unless specified otherwise in an applicable bonus
plan or bonus agreement with Employee, if termination occurs during a
specified bonus period pursuant to Subsection 3.C. titled "Without Cause" or
Subsection 3.F. titled "For Cause by the Employee," or Subsection 3.D. titled
"Disability," and based upon the results of the full bonus period for which
the bonus would have been earned, the payment of any bonus which would have
been earned shall be calculated based upon the number of calendar days in
such bonus period which have elapsed at the date of termination. Unless
specified otherwise in the bonus plan or bonus agreement, if Employee is
terminated "For Cause by the Company" (Subsection 3.E.), or Employee
terminates without Cause (Subsection 3.B.) or Employee after termination
violates a confidentiality, covenant not to compete, or "no hire" or "no
raid" agreement with the Company, its parent (if any) or a direct or indirect
Company subsidiary, then the Company shall have no obligation to pay any
earned or unearned bonus or the payments provided for in the first sentence
of Section 4.A. hereof.
F. If this Agreement is operating under the
month-to-month provision of Section 1, any payment for unpaid future
compensation shall in any case be limited to the remainder of the month in
which termination occurs, except as provided in Subsections 4.B. or 4.E.
G. The foregoing rights in this Section 4 are Employee's
exclusive rights to payment from the Company in the event of termination of this
Agreement except for amounts which the Company is required to pay under
applicable statute or regulation, payments under insurance policies, and
payments owing under other written agreement(s) (if any) between the Company and
Employee.
5. VACATION; BENEFITS; LOCATION.
A. Employee shall be entitled to accrual of vacation
time in accordance with the Company's vacation policy. For purposes of
determining accrual of benefits, Employee's beginning service date shall be
made retroactive to September 1, 1993.
B. In addition to the insurance provided for by
Subsection 4.B., Employee will receive insurance (to the extent not redundant
of the insurance provided for by Subsection 4.B.), benefits, perquisites, and
any other forms of compensation as are received by other officers of the
Company including, but not limited to, participation in stock option plans
(taking into account the aggregate of all options from time to time granted
to Employee and acknowledging the option grants to Employee on or about the
date hereof do not preclude future grants), and any cash and/or stock bonus
and/or incentive plans.
C. In connection with the execution of this Agreement,
the Company as of the Effective Date hereby grants 300,000 stock options to
Employee pursuant to the Company's Stock
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Option Plans (the "Option Plans"). Such stock options shall vest on a monthly
basis, as of the 1st day of each month, over a period of three years from the
date of this grant, in the amount of 8,333 options per month each month for
35 months and 8,345 for the 36th month, have a term of ten years, and be
exercisable for two years after the end of employment. The exercise price for
the stock options granted hereby is $3.70 per share. To the maximum extent
possible such options are incentive stock options with the balance being
non-qualified stock options.
D. The company acknowledges and agrees that Employee
shall continue to reside in Boulder, Colorado. The Company shall maintain for
Employee an office in Boulder commensurate with normal Company business
practices and befitting Employee's executive position. All expenses for such
office shall be paid by Company and shall be considered business expenses of
Company. It is anticipated that Employee may travel to and from and spend
extended periods of time at various Company offices, customer sites and investor
sites and may travel for other business purposes and, therefore, will incur
costs such as travel, lodging, food, rental car and other miscellaneous expenses
("Travel Expenses"), The Company will either pay for directly, or reimburse
Employee for, all Travel Expenses that Employee shall incur and shall consider
these as normal business expenses to Company in accordance with the Company's
expense reimbursement policies and procedures. Under no circumstances shall such
Travel Expenses be recorded as compensation to Employee; however, should any of
these expenses be deemed as taxable to Employee, the Company will gross up the
reimbursement to Employee for the taxes incurred.
E. Should the need arise for Employee to relocate
outside of Boulder, Colorado, and provided that such relocation is mutually
agreeable between the parties, Employee will negotiate in good faith for such a
relocation. Company agrees that such a relocation would be for the convenience
of Company and accordingly, Company would agree to negotiate with Employee for
payment of all expenses related to the relocation and personal income taxes
incurred by Employee in such a relocation. Should the parties not be able to
agree to the amount of the reimbursement, Employee would be under no requirement
to relocate.
6. NON-COMPETITION. Employee acknowledges that he has gained and
will gain extensive and valuable experience and knowledge in the business
conducted by the Company and will have extensive contacts with customers of the
Company. Accordingly, Employee covenants and agrees with the Company that, (a)
during the term of this Agreement and (b) in any event for the period ending on
the earlier of (i) one (1) year after the termination or expiration of his
employment with the Company or (ii) three years after the date of this
Agreement, he shall not compete, directly or indirectly, with the Company in
such business of the Company as Employee is actively involved in (the
"Business"). For the purposes of Sections 6 and 7, the term "the Company" shall
be deemed to include subsidiaries and parents of the Company. Competing directly
or indirectly with the Company shall mean having a material interest, directly
or indirectly, as a shareholder, member, partner, officer, director, or
employee, either alone or in association with others, in the operation of any
individual or entity engaged in the Business within the continental United
States. Competing directly or indirectly with the Company, as used in this
Agreement, shall be deemed not to include an ownership interest as an inactive
investor, which for purposes of this Agreement shall mean the
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beneficial ownership of less than five (5) percent of the outstanding shares of
any series or class of securities of any direct competitor of the Company, which
shares are publicly traded in the securities markets. This Section 6 shall no
longer apply if both (A) (i) Employee has terminated this Agreement for Cause
pursuant to Section 3.F, or if the Company has terminated this Agreement without
Cause pursuant to Section 3.C. and (ii) the Company has obligations to make
post-termination payments under this Agreement and (B) after twenty (20) days
prior written notice by Employee to the Company that the Company has failed to
make such post-termination payments as provided for in this Agreement the
Company has not cured such failure to make payments.
7. NON-RAID. Employee acknowledges that he has had and will have
extensive contacts with employees and/or customers of the Company. Accordingly,
Employee covenants and agrees that, during the term of this Agreement and for
one year thereafter, he will not (1) solicit or encourage any employee of the
Company to leave the Company, (if) interfere in the relationship of the Company
with any employee, or (iii) personally target or solicit, or assist another to
target or solicit, customers of the Company, for purposes which would compete
with the Business of the Company.
8. BLUE PENCIL PROVISION. Employee acknowledges that the periods,
scope and geographic area of restriction imposed by Section 6 and Section 7 are
fair and reasonable and are reasonably required for the protection of the
Company. If any part or parts of Section 6 or Section 7 shall be held to be
unenforceable or invalid, the remaining parts thereof shall nevertheless
continue to be valid and enforceable as though the invalid portion or portions
were not a part hereof. If any of the provisions of Section 6 or Section 7
relating to the scope, periods of time or geographic area of restriction shall
be deemed to exceed the maximum scope, periods of time or geographic area which
a court of competent jurisdiction would deem enforceable, the scope, times and
geographic area shall, for the purposes of Section 6 and Section 7, be deemed to
be the maximum scope, time periods and geographic area which a court of
competent jurisdiction would deem valid and enforceable in any state in which
such court of competent jurisdiction shall be convened. The invalidity or
unenforceability of any provision of Section 6 or 7 in one jurisdiction shall
not affect its validity or enforceability in another jurisdiction.
9. RIGHT TO INJUNCTIVE RELIEF. Employee agrees and acknowledges
that a violation of the covenants contained in Sections 6 and 7 of this
Agreement will cause irreparable damage to the Company, and that it is and may
be impossible to estimate or determine the damage that will be suffered by the
Company in the event of a breach by Employee of any such covenant. Therefore,
Employee further agrees that in the event of any violation or threatened
violation of such covenants, the Company shall be entitled as a matter of course
to an injunction out of any court of competent jurisdiction restraining such
violation or threatened violation by Employee, such right to an injunction to be
cumulative and in addition to whatever other remedies the Company may have.
10. EXCEPTIONS. Employee may continue his current activities as a
shareholder, officer, director and/or member of certain companies and
industry-related organizations, and, subject to disclosure to and approval by
the Board of Directors of the Company, which approval shall not be unreasonably
withheld, may invest and/or serve as an officer, director and/or member of any
other
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company or industry-related organization, provided that such activities do
not materially interfere with Employee's duties and responsibilities
hereunder and such activities do not otherwise violate this Agreement.
11. DELIVERY OF FILES. At or immediately after termination hereof
Employee will deliver all files, records, disks, and other media with Company
information, to the Company.
12. INTEGRATION. This agreement shall constitute the entire
Agreement relating to the employment of Employee. This Agreement shall be
governed by the laws of California, excluding laws on choice of law.
13. UNENFORCEABILITY. If any paragraph or subparagraph of this
Agreement or any part thereof shall be unenforceable under any applicable laws,
notwithstanding such unenforceability the remainder of this Agreement shall
remain in full force and effect.
14. BINDING. This Agreement shall inure to the benefit of, and be
binding upon, the Company. It may be terminated by the Employee upon any merger,
consolidation, sale of 50% or more of the outstanding voting capital stock of
the Company to one other person and its affiliates, or a sale of 80% or more, by
fair market value, of the assets of the Company, and such termination shall be
considered to be a termination by the Company without Cause; provided, however,
that this Agreement shall not terminate upon a merger or consolidation, sale of
assets, sale of shares, or share exchange (i) pursuant to which shareholders of
the Company receive or hold in respect of their Company voting capital stock,
50% or more of the voting capital stock of the combined entities or purchaser,
and (ii) Employee assumes the position of CEO in the acquiring parent
organization.
15. NON-BINDING ARBITRATION. In the event a dispute arises in
connection with this Agreement, the parties hereto agree to submit the matter
for resolution to non-binding arbitration or mediation before the American
Arbitration Association offices in San Francisco, California. In the event
either party is dissatisfied with the decision reached by the arbitrators or
mediators, such party may pursue adjudication of the dispute in a court of law.
Each party shall be responsible for his or its own attorneys' fees and costs,
and the fees and costs of the arbitrator or mediator shall be paid equally by
each party.
16. ATTORNEYS' FEES. In the event of any legal or arbitration
action or proceeding to enforce or interpret the provisions hereof, each party
shall be responsible for his or its own attorneys' fees and costs.
17. SURVIVAL. Terms which by their terms or sense are to survive
termination hereof shall so survive.
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18. NOTICE. Notices hereunder shall be in writing and sent to the
residence address of the Employee last provided to the Company, and to the then
current business address of the Company. Notices may be sent by first class U.S.
mail and shall be effective three (3) days after deposit. Notices sent by other
means shall be effective when actually delivered to the above-described address.
19. EFFECTIVE DATE. This Agreement and the grant of options
contemplated herein is conditioned upon the effectiveness of the Merger, the
date of such effectiveness being the "Effective Date."
IN WITNESS WHEREOF, the parties have executed this Management
Employment Agreement as of the date in 1999 first above written.
VantageMed Corporation
By: /s/ Xxxx Xxxxxx
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Title:
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EMPLOYEE
/s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
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