EXHIBIT 10.4
MANAGEMENT EMPLOYMENT AGREEMENT
(XXXXX X. XXXXXX)
This MANAGEMENT EMPLOYMENT AGREEMENT (this "Agreement") is made as of
July _____, 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 18 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
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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:
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(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 by Employee for Cause.
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
13 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
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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 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,
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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 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 (3) 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 beneficial ownership of less than five (5) percent
of the
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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 (i) solicit or encourage any employee of the
Company to leave the Company, (ii) 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 in and/or serve as an officer, director and/or member of
any other 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.
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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.
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."
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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
-------------------------
Title: President
-------------------------
EMPLOYEE
/S/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
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