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EMPLOYMENT AGREEMENT
This agreement, effective as of September 1, 1999 (the "Agreement") is made
by and between MEDICAL TECHNOLOGY SYSTEMS, INC., a Delaware corporation (the
"Company") , and XXXX X. XXXXXX, a resident of the State of Florida (the
"Executive").
BACKGROUND
The Company desires to continue to obtain the benefit of services by the
Executive, and the Executive desires to continue to render services to the
Company.
The Compensation Committee of the Board of Directors of the Company (the
"Board") has determined that it is in the Company's best interest and that of
its stockholders to recognize the substantial contribution that the Executive
has made and is expected to make in the future to the Company's business and to
continue to retain his services in the future.
Accordingly, in consideration of the mutual covenants and representations
contained set forth below, the Company and the Executive agree as follows:
TERMS
1. Employment
a. The Executive agrees to accept employment with the Company or one
or more of the Company's subsidiary corporations to render the
services specified in this Agreement upon the terms and
conditions and for the compensation provided in this Agreement.
All compensation paid to the Executive by the Company or any
subsidiary of the Company, and all benefits and perquisites
received by the Executive from the Company or any of its
subsidiaries, will be aggregated in determining whether the
Executive has received the compensation and benefits provided for
herein.
b. Term. The term (the "Term") of this contract shall commence on
September 1, 1999, and shall continue without interruption until
August 31, 2004.
2. Duties.
a. General Duties. The Executive shall serve as President and Chief
Executive Officer of the Company and shall continue to serve in
those positions, with duties and responsibilities that are
customary for such executives including, without limitation,
ultimate responsibility for managing the Company, subject to the
authority of the Board.
b. Full Time Employment. During the term of this Agreement and
excluding any periods of vacation, family or sick leave or
holidays to which the Executive is entitled, the Executive shall
devote his full business time and energy to the business, affairs
and interests of the Company and its subsidiaries, and matters
related thereto, and shall use his reasonable commercial efforts
and ability to promote the interests of the Company and its
subsidiaries. The Executive will diligently endeavor to promote
the business, affairs and interests of the Company and its
subsidiaries and perform services contemplated by this Agreement
in accordance with the policies established by the Board from
time to time.
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c. Certain Permissible Activities. The Executive may serve as a
director or in any other capacity of any business enterprise,
including an enterprise whose activities may involve or relate to
the business of the Company or any of its subsidiaries but only
if such service is expressly approved by the Company in writing.
The Executive may (i) make and manage personal business
investments of his choice, (ii) teach at educational institutions
and deliver lectures, and (iii) serve in any capacity with any
civic, educational or charitable organization, or any
governmental entity or trade association, in each such case
without seeking or obtaining approval by the Company so long as
such activities and service do not materially interfere or
conflict with the performance of his duties hereunder. It is
agreed that to the extent that the Company shall have approved
any service of the Executive pursuant to the first sentence of
this Section 3(c) prior to a Change in Control Date (as defined
in Section 7 below), or to the extent that the Executive may have
engaged in activities pursuant to the second sentence of this
Section 3(c) prior to such Change in Control Date, the continued
conduct of such activities or the conduct of activities during
the thirty-six months subsequent to such Change in Control Date
shall be permissible and not in violation of any provisions of
this Agreement and such Company approval may not be revoked or
limited in any material respect during the thirty-six months
following such Change in Control Date.
3. Compensation and Expenses.
a. Base Salary. For the services of the Executive to be rendered
under this Agreement, the Company will pay the Executive an
annual base salary (the "Base Salary") as follows: [4% a year
increases]
(i) For the year September 1, 1999 through August 31, 2000, the
amount of $210,000;
(ii) For the year September 1, 2000 through August 31, 2001, the
amount of $218,400;
(iii)For the year September 1, 2001 through August 31, 2002, the
amount of $227,136;
(iv) For the year September 1, 2002 through August 31, 2003, the
amount of $236,221; and
(v) For the year September 1, 2003 through August 31, 2004, the
amount of $245,670;
Provided, however, that such Base Salary shall be pro rated
accordingly over the time period that the Executive performs
services under this Agreement in any calendar year during which
this Agreement shall terminate before August 31st of such year.
The Company shall pay the Executive his Base Salary in equal
installments no less than semi-monthly.
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b. Base Salary Adjustment. The Base Salary may not be decreased
hereunder during the term of this Agreement, but may be increased
upon review by and within the sole discretion of the Board.
c. Bonus. Executive shall be entitled to receive bonus compensation
in accordance with Exhibit A. Such bonuses may be paid in cash or
issued in shares of the Company's common stock on such terms as
recommended by the Compensation Committee and approved by the
Board.
d. Expenses. In addition to any compensation received pursuant to
Section 3, the Company will reimburse or advance funds to the
Executive for all reasonable, ordinary and necessary travel,
educational, seminar, trade shows, YPO, entertainment, and
miscellaneous expenses incurred in connection with the
performance of his duties under this Agreement, provided that the
Executive properly accounts for such expenses to the Company in
accordance with the Company's practices. Such reimbursement shall
include travel, lodging and food costs for Executive's immediate
family to the extent they accompany Executive on business related
travel.
e. Subsidiary and Affiliate Payments. In recognition of the fact
that in the course of the performance of his duties hereunder the
Executive may provide substantial benefits to the Company's
subsidiaries or affiliated companies, the Executive and the
Company may at any time and from time to time agree that all or
any portion of the compensation due the Executive under this
Agreement may be paid directly to the Executive by one or more of
the Company's subsidiaries or affiliated companies.
Additional Equity Based Incentive Compensation. Executive shall
be entitled to additional annual equity based incentive
compensation as set forth in Exhibit B.
4. Benefits.
a. Vacation. For each year during the Term during which the
Executive is employed, the Executive shall be entitled to 20
vacation days (which shall accrue and vest, except set forth
below on each September 1st) without loss of compensation or
other benefits to which he is entitled under this Agreement.
If the Executive is unable to take all of his vacation days
during a year for which he becomes vested, then the Executive, at
his sole option, may elect (a) to carry over any unused vacation
to the next calendar year to be used solely in that next year or
(b) to receive an appropriate pro rata portion of his Base Salary
corresponding to the year in which the vacation days vested.
The Executive shall take his vacation at such times as the
Executive may select and the affairs of the Company or any of its
subsidiaries or affiliates may permit.
b. Employee Benefit Programs. In addition to the compensation to
which the Executive is entitled pursuant to the provisions of
Section 3 of this Agreement, during the Term, the Executive will
be entitled to participate in any stock option plan, stock
purchase plan, pension or retirement plan, insurance or other
employee benefit plan that is maintained at that time by the
Company for its employees, including programs of life,
disability, basic medical and dental, supplemental medical and
dental insurance.
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Notwithstanding any provision of this Agreement to the contrary,
the Company shall not be obligated to provide the Executive with
any of the benefits contained in this Section 4 (b) if the
Executive, for any reason, is or becomes uninsurable with respect
to coverage relating to any such benefit(s).
c. Automobile Allowance. During the term of this Agreement, the
Company shall pay Executive an additional $750.00 per month as an
automobile allowance to be applied to any automobile expense
incurred by Executive.
d. Financial and Tax Planning. During the term of this Agreement,
and as additional consideration hereunder, Executive shall be
reimbursed for personal financial planning, tax preparation
services and accounting and legal fees related to such financial
and tax planning, up to a maximum of $3,000 per year.
5. Termination.
a. Termination for Cause. The Company may terminate the Executive's
employment pursuant to this Agreement at any time for cause upon
written notice. Such termination will become effective upon the
giving of such notice. Upon any such termination for cause, the
Executive shall have no right to compensation, bonus or
reimbursement under Section 3 or to participate in any employee
benefit programs or other benefits to which he may be entitled
under Section 4 for any period subsequent to the effective date
of termination. For purposes of this Agreement, the term "cause"
shall mean:
(i) the Executive's conviction of a felony and all appeals with
respect thereto have been extinguished or abandoned by the
Executive;
(ii) the Executive's conviction of misappropriating assets or
otherwise defrauding the Company or any of its subsidiaries
or affiliates;
(iii)a material breach by the Executive of any provision of this
Agreement, after thirty (30) days written notice, and thirty
days to materially cure such breach.
b. Death or Disability. This Agreement and the Company's obligations
under this Agreement will terminate upon the death or disability
of the Executive. For purposes of this Section 5(b), "disability"
shall mean that for a period of six months in any twelve-month
period the Executive is incapable of substantially fulfilling the
duties set forth in this Agreement because of physical, mental or
emotional incapacity resulting from injury, sickness or disease
as determined by an independent physician mutually acceptable to
the Company and the Executive. Upon any such termination upon
death or disability, the Company will pay the Executive or his
legal representative, as the case may be, his Base Salary (which
may include any accrued, but unused vacation time) at such time
pursuant to Section 3(a) through the date of such termination of
employment (or, if terminated as a result of a disability, until
the date upon which the disability policy maintained pursuant to
Section 4 (b) (ii) begins payment of benefits) plus any other
compensation that may be due and unpaid. In the event of death or
disability of the Executive, any obligations that the Executive
may owe the Company for repayment of loans or other amounts shall
be forgiven.
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c. Voluntary Termination. Prior to the termination of this
Agreement, the Executive may, on sixty days prior written notice
to the Company, at any time terminate his employment. Upon any
such termination, the Company shall pay the Executive his Base
Salary at such time pursuant to Section 3(a) through the date of
such termination of employment (which shall include any vested
and accrued, but unused vacation time).
d. Additional Severance Upon Triggering Event. Upon any event which
(a) causes Xxxxxx or his immediate family members to lose the
absolute right, whether exercisable directly or indirectly, to
elect and dismiss a majority of the board of directors of the
Company and (b) the Executive is terminated without cause (i.e.,
any reason other than death, disability or termination for
cause), ((a) and (b) referred to as a Triggering Event), the
following shall occur immediately and without further notice or
action by Executive:
(i) All of the Company's obligations under this Agreement to
Executive shall accelerate and become immediately
performable and due and payable except for salary for the
balance of the term of this agreement, which shall become
due and payable only to the extent set forth in Section
(d)(ii).
(ii) In addition to any and all other compensation to Executive
under this Agreement, the Company shall pay to Executive an
amount equal to 2.99 times the Executive's base salary in
the fiscal year of the Company next immediately preceding
the fiscal year in which the triggering event occurs;
(iii)At his option, notwithstanding the payment of the above
items, Executive may terminate his obligations to the
Company under this Agreement, including any loans payable to
the Company; and
(iv) The Company shall immediately assign to Executive any life
insurance policy insuring Executive's life. The Company
shall, prior to the assignment, satisfy the balance of all
premiums owed on the assigned policies and shall insure that
the designated beneficiary is not changed.
(v) If any of the above benefits are deemed to violate Internal
Revenue Code 280G and related regulations thereunder, as
amended, then any excess benefits will be paid during the
next tax year if permitted by applicable law.
6. Restrictive Covenants.
a. Competition with the Companies. The Executive covenants and
agrees that, during the Term of this Agreement, the Executive
will not, without the prior written consent of Company, directly
or indirectly (whether as a sole proprietor, partner,
stockholder, director, officer, employee or in any other capacity
as principal or agent) , compete with the Company.
Notwithstanding this restriction, Executive shall be entitled to
invest in stock of other competing public companies so long as
his ownership is less than 5% of such company's outstanding
shares.
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b. Disclosure of Confidential Information. The Executive
acknowledges that during his employment he will gain and have
access to confidential information regarding the Company and its
subsidiaries and affiliates. The Executive acknowledges that such
confidential information as acquired and used by the Company or
any of its subsidiaries or affiliates constitutes a special,
valuable and unique asset in which the Company or any of its
subsidiaries or affiliates, as the case may be, hold a legitimate
business interest. All records, files, materials and confidential
informant (the "Trade Secrets") obtained by the Executive in the
course of his employment with the Company shall be hereby deemed
confidential and proprietary and shall remain the exclusive
property of the Company or any of its subsidiaries or affiliates,
as the case may be. The Executive will not, except in connection
with and as required by his performance of his duties under this
Agreement, for any reason use for his own benefit or the benefit
of any person or entity with which he may be associated, disclose
any Trade Secrets to any person, firm, corporation, association
or other entity for any reason or purpose whatsoever without the
prior written consent of the Board of Directors of the Companies,
unless such information previously shall have become public
knowledge through no action by or omission of the Executive.
c. Subversion, Disruption or Interference. At no time during the
term hereof shall Executive, directly or indirectly, interfere,
induce, influence, combine or conspire with, or attempt to
induce, influence, combine or conspire with, any of the employees
or sponsors of, or consultants to, the Company to terminate their
relationship with or compete or ally against the Company or any
of its subsidiaries or affiliates of the Company in the business
in which the Company or any one of its subsidiaries or affiliates
is presently engaged.
d. Enforcement of Restrictions. The parties hereby agree that any
violation by Executive of the covenants contained in this Section
6 will cause irreparable damage to the Company or any of its
subsidiaries and affiliates and may, as a matter of course, be
restrained by process issued out of a court of competent
jurisdiction, in addition to any other remedies provided by law.
7. Change of Control.
a. For the purposes of this Agreement, a "Change of Control" shall
be deemed to have taken place if any person, other than the JADE
Partnership or the Xxxxxx Family Revocable Trust, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended, becomes the owner or beneficial owner of
the Company's securities, after the date of this Agreement,
having more than 50% of the combined voting power of the then
outstanding securities of the Company that may be cast for the
election of directors of the Company (other than as a result of
an issuance of securities specifically approved by Executive and
specifically excluded from the provisions of this Section 7 by
subsequent written agreement of the Executive); provided,
however, that a Change of Control shall not be deemed to have
occurred if the person who becomes the owner of more than 50% of
the combined voting power of the Company is Xxxx X. Xxxxxx or an
entity (or entities) controlled by Xxxx X. Xxxxxx.
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b. The Company and Executive agree that, if Executive is in the
employ of the Company on the date on which a Change of Control
occurs (the "Change of Control Date") , the Company will continue
to employ the Executive and the Executive will remain in the
employ of the Company for the period commencing on the Change of
Control Date and ending on the expiration of the Term, to
exercise such authority and perform such executive duties as are
commensurate with the authority being exercised and duties being
performed by the Executive immediately prior to the Change of
Control Date. If after a Change of Control, the Executive is
requested, and, in his sole and absolute discretion, consents to
change his principal business location outside of Pinellas or
Hillsborough Counties, Florida, the Company will reimburse the
Executive for his relocation expenses, including without
limitation, moving expenses, temporary living and travel expenses
for a time while arranging to move his residence to the changed
location, closing costs, if any, associated with the sale of his
existing residence and the purchase of a replacement residence at
the changed location, plus an additional amount representing a
gross-up of any state or federal taxes payable by Executive as a
result of any such reimbursements. If the Executive shall not
consent to change his business location, the Executive may
continue to provide the services required of him under this
Agreement in Pinellas County, Florida and the Company shall
continue to maintain an office for the Executive at that location
similar to the Company's office prior to the Change of Control
Date.
c. During the remaining Term after the Change of Control Date, the
Company will (i) continue to honor the terms of this Agreement,
including as to Base Salary and other compensation set forth in
Section 3, and (ii) continue employee benefits as set forth in
Section 4 at levels in effect on the Change of Control Date (but
subject to such reductions as may be required to maintain such
plans in compliance with applicable federal law regulating
employee benefits).
d. If during the remaining Term on or after the Change of Control
Date (i) the Executive's employment is terminated by the Company
other than for cause (as defined in Section 5), or (ii) there
shall have occurred a material reduction in Executive's
compensation or employment related benefits, or a material change
in Executive's status, working conditions or management
responsibilities, or a material change in the business objectives
or policies of the Company and the Executive voluntarily
terminates employment within sixty days of any such occurrence,
or the last in a series of occurrences, then the Executive shall
be entitled to receive, subject to the provisions of
subparagraphs (e) and (f) below, a lump-sum payment equal to 299%
of Executive's current Base Salary in addition to any other
compensation that may be due and owing to the Executive under
Section 3.
e. The amounts payable to the Executive under any other compensation
arrangement maintained by the Company which became payable, after
payment of the lump-sum provided for in paragraph (d), upon or as
a result of the exercise by Executive of rights which are
contingent on a Change of Control (and would be considered a
"parachute payment" under Internal Revenue Code 280G and
regulations thereunder), shall be reduced to the extent necessary
so that such amounts, when added to such lump-sum, do not exceed
299% of the Executive's Base Salary (as computed in accordance
with provisions of the Internal Revenue Code of 1986, as amended
and any regulations promulgated thereunder) for determining
whether the Executive has received an excess parachute payment.
Any such excess amount shall be deferred and paid in the next tax
year.
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f. In the event of a proposed Change in Control, the Company will
allow the Executive to participate in all meetings and related
negotiations related.
8. Assignability. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
rights and obligations under this Agreement may not be assigned or alienated and
any attempt to do so by the Executive will be void and constitute a material
breach hereunder.
9. Indemnification. The Company and the Executive acknowledge that the
Executive's service as an officer of the Company exposes the Executive to risks
of personal liability arising from, and pertaining to, the Executive's
participation in the management of the Company. The Company shall defend,
indemnify and hold harmless the Executive from any actual cost, loss, damages,
attorneys fees, or liability suffered or incurred by the Executive arising out
of, or connected to, the Executive's service as an officer of the Company or any
of its current, former, or future subsidiaries to the fullest extent allowed by
law. The Company will not have any obligation to the Executive under this
section for any loss suffered if the Executive voluntarily pays, settles,
compromises, confesses judgment for, or admits liability with respect to without
the approval of the Company. Within thirty days after the Executive receives
notice of any claim or action which may give rise to the application of this
section, the Executive shall notify the Company in writing of the claim or
action. The Executive's failure to timely notify the Company of the claim or
action will relieve the Company from any obligation to the Executive under this
section.
10. Severability. If any provision of this Agreement otherwise is deemed to
be invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other. The remaining provisions of this Agreement
shall be valid and binding and of like effect as though such provision were not
included.
11. Prior Employment Agreements. The Executive represents that he has not
executed any agreement with any previous Company which may impose restrictions
on his employment with the Company.
12. Notice. Notices given pursuant to the provisions of this Agreement
shall be sent by certified mail, postage prepaid, or by overnight courier, or
telecopier to the following addresses:
If to the Company:
Medical Technology Systems, Inc.
00000-X Xxxxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
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If to the Executive:
Xxxx X. Xxxxxx
00000 Xxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Either party may, from time to time, designate any other address to which
any such notice to it or him shall be sent. Any such notice shall be deemed to
have been delivered upon the earlier of actual receipt or four days after
deposit in the mail, if by certified mail.
13. Miscellaneous.
a. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws Florida without giving
effect to the conflict of laws rules thereof.
b. Waiver/Amendment. The waiver by any party to this Agreement of a
breach of any provision hereof by any other party shall not be
construed as a waiver of any subsequent breach by any party. No
provision of this Agreement may be terminated, amended,
supplemented, waived or modified other than by an instrument in
writing signed by the party against whom the enforcement of the
termination, amendment, supplement, waiver or modification is
sought.
c. Attorney's Fees. In the event any action is commenced to enforce
any provision of this agreement, the prevailing party shall be
entitled to reasonable attorneys fees, costs and expenses.
d. Entire Agreement. This Agreement, and the attached Exhibits A and
B, comprise the entire agreement between the Executive and the
Company. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject
matter hereof and may not be modified or terminated orally. No
modification, termination, or attempted waiver shall be valid
unless it is in writing and is executed by each of the parties.
e. Counterparts. This Agreement may be executed in counterparts, all
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the day and year first above written.
WITNESSES: EXECUTIVE
_____________________________________ _____________________________________
XXXX X. XXXXXX
Print Name: _________________________
_____________________________________
Print Name: _________________________
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COMPANY
MEDICAL TECHNOLOGY SYSTEMS, INC.,
_____________________________________ a Delaware corporation
Print Name: _________________________ By: ___________________________________
_____________________________________ Print Name: ____________________________
Print Name: _________________________ As: ____________________________________
EXHIBIT A
BONUS PROGRAM
Executive shall be entitled to receive an annual performance bonus as
follows: 3% of the first $800,000 of the Company's net income after income taxes
plus 2.5% of the Company's net income after taxes in excess of $800,000, but
less than $1,600,000 plus 2% of the Company's net income after taxes in excess
of $1,600,000. Such bonuses may be paid in cash or issued in shares of the
Company's common stock subject to compliance with all applicable securities laws
including without limitation those laws governing xxxxxxx xxxxxxx. Such stock
shall be valued at sixty percent (60%) of the closing bid price of the Company's
common stock as quoted on an established exchange as of the date of Executive's
election. For the purposes of this Agreement, "net income after income taxes"
shall mean with respect to each fiscal year of the Company, the sum of (y), the
net income after income taxes, but without taking into account any unusual,
non-recurring gains or losses recognized during such year including tax benefits
associated with deferred tax assets; and (z) any amount of the performance bonus
payable under this Section 3(b) for such fiscal year which has been accrued as
an expense and included in the Company's payroll and related expenses for such
fiscal year in arriving at the amount of the Company's net income after income
taxes. For purposes of this Agreement, net income after income taxes for any
year shall be as reported on a consolidated basis in the Company's annual report
filed with the Securities and Exchange Commission for such fiscal year .
