Exhibit 10.06
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), made as of the 31st day of
July, 1999 (the "Effective Date"), by and between REALMED CORPORATION, an
Indiana corporation (the "Company") and Xxxx X. Xxxxxxxxxx, an individual
resident of Indiana ("Executive").
WHEREAS, the Company desires to employ Executive as the Chief Financial
Officer and Executive desires to be so employed on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Executive and the Company
including, without limitation, the promises and covenants of the parties set
forth herein, the parties hereto, intending to be legally bound, hereby agree to
as follows:
ARTICLE I
EMPLOYMENT
Section 1.1 Term of Employment. The term of Executive's employment
under this Agreement shall commence on July 31, 1999 and continue for a period
of five years, unless earlier terminated as provided in this Agreement. At the
end of the initial five year term, this Agreement shall automatically renew for
consecutive two year terms unless either party hereto gives written notice to
the other of its intent to terminate this Agreement at least sixty days prior to
the end of the initial term or any renewal term (a "Section 1.1 Termination").
Notwithstanding the foregoing, the indemnification provisions of this Agreement
contained in Section 1.4 regarding an Excess Parachute Payment (as defined
below) on account of a Change in Control (as defined below in Section 1.4(b))
shall survive until the expiration of the statute of limitations for assessment
of any excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code").
Section 1.2 Duties and Responsibilities of Executive. Executive is
hereby employed as the Chief Financial Officer of the Company. In his capacity
as Chief Financial Officer of the Company, Executive shall report to the Chief
Executive Officer of the Company, and shall conduct and perform such additional
services and activities as may be determined from time to time by the Chief
Executive Officer and/or the Board of Directors of the Company. Executive's
authority from, and responsibility to, the Company shall at all times be subject
to the review and discretion of the Chief Executive Officer and Board of
Directors of the Company. Executive acknowledges that he has a duty of loyalty
to the Company and that Executive is committing to a full time executive
position. Executive shall not engage in, directly or indirectly, any other
business or activity that could materially and adversely affect the Company's
business or Executive's ability to perform his duties under this Agreement;
provided, however, that the Executive shall be free to participate in civic and
charitable activities so long as such activities do not materially interfere
with his duties and responsibilities hereunder.
Section 1.3 Compensation. For services to be rendered by
Executive under this Agreement, the Company shall pay Executive as follows:
(a) Base Salary. Executive shall be paid a minimum annual
gross salary of one hundred fifty thousand dollars
($150,000), payable biweekly. Executive's annual
gross salary may be upwardly adjusted from time to
time by the Board of Directors of the Company. At no
time during the term of this Agreement shall
Executive's base salary be decreased from the amount
of the base salary then in effect. Executive's base
salary shall be earned and accrued on a per diem
basis.
(b) Bonus. The Executive shall be eligible for an annual
bonus of $25,000 payable in the discretion of the
Chief Executive Officer. Such bonus shall be payable
by January 1 of the year following the service and
shall be prorated for any partial year.
(c) Bonus Advance. Within ten days of Executive's
request, the Company agrees to advance up to $34,000
of Executive's bonuses. Such loan shall be repaid by
Executive on or prior to the earlier of : (i)
Executive ceasing to be an employee of the Company;
or (ii) July 31, 2001. The loan shall be interest
free and evidenced by a Promissory Note in the form
attached hereto as Exhibit A and shall be subject to
the additional terms and conditions set forth
therein. If requested by the Company, such loan shall
be secured by a pledge of Participant's options or
stock and Participant agrees to execute such pledge
and other agreements as the Company may reasonably
request to effect such pledge.
.
Section 1.4 Tax Reimbursement Payment.
(a) Notwithstanding anything to the contrary contained
in this Agreement, or in any plan of the Company, or
in any other agreement or understanding, the Company
will pay to the Executive, at the times herein
specified, an amount (the "Additional Amount") equal
to the excise tax under Section 4999 of the Code, if
any, incurred or to be incurred by the Executive by
reason of the payments under this Agreement,
acceleration of vesting of stock options, stock
appreciation rights or restricted stock granted under
the Company's various stock option, stock
appreciation or other employee incentive plans, or
payments under any other plan, agreement or
understanding between the Executive and the Company,
constituting Excess Parachute Payments (as defined
below), plus all excise taxes and federal, state and
local income taxes incurred or to be incurred by the
Executive with respect to the receipt of the
Additional Amount. For purposes of this Agreement,
the term "Excess Parachute Payment" shall mean any
payment or any portion thereof which would be an
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"excess parachute payment" within the meaning of
Section 280G(b) of the Code, and which would result
in the imposition of an excise tax on the Executive
under Section 4999 of the Code.
(b) All determinations required to be made regarding the
Additional Amount, including whether payment of any
Additional Amount is required and the amount of any
Additional Amount, shall be made by the independent
accounting firm which is advising the Company (the
"Accounting Firm"), which shall provide detailed
support calculations to the Company and the Executive
on or before the last day of the calendar year during
which occurs the Change in Control (the "Change in
Control Year"). In computing taxes, the Accounting
Firm shall use the highest marginal federal, state
and local income tax rates applicable to single
taxpayers for the year in which the Additional Amount
is to be paid (unless, within thirty (30) days after
the occurrence of the Change in Control the Executive
specifies in writing to the Company his marginal tax
rate) and shall assume the full deductibility of
state and local income taxes for purposes of
calculating federal income tax liability. For
purposes of Article I only, "Change of Control" shall
have the meaning set forth in the Code. The portion
of the Additional Amount based on the excise tax as
determined by the Accounting Firm to be due for the
Change in Control Year shall be paid to the Executive
no later than March 1 immediately following the end
of the Change in Control Year. The portion of the
Additional Amount based on the excise tax as
determined by the Accounting Firm to be due for each
calendar year following the Change in Control Year
shall be paid to the Executive on or before March 1
immediately following the end of each such
calendar year. If the Company determines that the
excise tax for any year will be different from the
amount originally calculated in the report of the
Accounting Firm delivered at the end of the Change in
Control Year, then the Company shall provide to
the Executive detailed support calculations by the
Accounting Firm specifying the basis for the change
in the Additional Amount.
(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial
determination by the Accounting Firm of an Additional
Amount under Section 1.4(b) hereof, it is possible
that an Additional Amount in excess of the amount
initially determined which will not have been made by
the Company should have been made (an
"Underpayment"). In the event that the Accounting
Firm, based upon controlling precedent, determines
that any Underpayment has occurred, such Underpayment
shall promptly be paid by the Company to or for the
benefit of the Executive, together with interest at
the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code.
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(d) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if
successful, would require the payment by the
Executive of any excise tax under Section 4999 of the
Code beyond any amount of such excise tax for which
an Additional Amount had theretofore been determined
by the Accounting Firm under Section 1.4(b) hereof.
Such notification shall be given as soon as
practicable but no later than ten business days after
the Executive is informed in writing of such claim
and shall apprise the Company of the nature of such
claim and the date on which such claim is requested
to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period
following the date on which he gives such notice to
the Company (or such shorter period ending on the
date that any payment of taxes with respect to such
claim is due). If the Company notifies the
Executive in writing prior to the expiration of such
period that it desires to contest such claim, the
Executive shall:
(i) give to the Company any information reasonably
requested by the Company relating to such
claim;
(ii) take such action, at the expense of the
Company, in connection with contesting such
claim as the Company shall reasonably
request in writing from time to time,
including, without limitation, accepting
legal representation with respect to such
claim by an attorney reasonably satisfactory
to the Executive;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and
pay directly all costs and expenses (including
additional interest and penalties) incurred in
connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis,
for any excise tax or federal, state and local income
tax (including interest and penalties with respect
thereto) imposed as a result of such representation
and payment of costs and expense. Without limitation
on the foregoing, the Company shall control all
proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and
conferences with the Internal Revenue Service or
other taxing authority in respect of such claim and
may, at its sole option, either direct the Executive
to pay the tax (including any penalties or interest)
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claimed and pursue a claim for a refund
administratively or by bringing a proceeding in
court, and the Executive agrees to prosecute such
contest to a determination before the Internal
Revenue Service or other taxing authority, in a court
of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to
pay such claim and seek a refund, the Company shall
advance the amount of such payment to the Executive,
on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis,
from any excise tax or federal, state and local
income tax (including interest and penalties with
respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to
such advance; and further provided that any extension
of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to
be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest
shall be limited to issues with respect to which an
Additional Amount would be payable hereunder and the
Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the
Internal Revenue Service or any other taxing
authority.
(e) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to the last sentence
of Section 1.4(d), the Executive receives any
refund of any amount paid with the amount advanced,
the Executive shall promptly pay to the Company the
amount of such refund (together with any interest
paid or credited thereon net of any federal, state,
or local income taxes of the Executive (determined
in the manner prescribed by Section 1.4(b) hereof)
with respect to such interest). If, after the receipt
by the Executive of any amount advanced by the
Company pursuant to the last sentence of Section
1.4(d), a final determination is made that the
Executive is not be entitled to any refund with
respect to such claim, then such advance shall be
forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the
extent thereof, the amount of any Underpayment
otherwise payable under Section 1.4(c).
Section 1.5 Benefits.
(a) Vacation. Executive shall be entitled to four weeks
paid vacation during each calendar year during the
term of this Agreement. Vacation not used during any
calendar year may be carried forward to the next
year; provided, however, that no more than four weeks
of unused vacation time may be carried forward from
one year to the next year.
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(b) Life, Disability and Retirement Programs. Executive
shall be entitled to participate in any life,
disability and retirement programs which may from
time to time be offered generally to all of the other
members of the senior management personnel of the
Company.
(c) Group Insurance. Executive shall be entitled to
participate in any group health, dental, and vision
insurance programs which may from time to time be
offered generally to all of the other members of the
senior management personnel of the Company.
Section 1.6 Stock Options. Executive shall be granted an option to
purchase 450,000 shares of the Company pursuant to that certain 1999 Stock
Option and Incentive Plan (the "Plan") and that certain Stock Option Agreement
dated as of July 31, 1999 ("Option Agreement") (such options and shares to be
drawn from the employee option pool and subject to such terms and conditions as
set forth in the Option Agreement). In addition, Executive shall be entitled to
participate in any other incentive and stock option plans which may from time to
time be offered generally to all of the other members of the senior management
personnel of the Company.
Section 1.7 Business Expenses. Executive shall be entitled to
reimbursement of all ordinary and necessary business expenses reasonably
incurred by him for business travel (including reasonable moving expenses),
communications, entertainment and meals in connection with the performance of
Executive's duties under this Agreement in accordance with the Company's
policies for reimbursement of business expenses in effect from time to time as
reasonably approved by the Board of Directors of the Company.
ARTICLE II
COVENANTS OF EXECUTIVE
Section 2.1 Confidential Information. Executive acknowledges that in
connection with his employment by the Company, Executive may be given access to,
generate, or otherwise come into contact with or become aware of certain
proprietary, secret and/or confidential information and materials which are the
property of or relate to (a) the Company, and/or (b) the Company's business of
electronic health-care industry claims resolution procedures, customers, clients
or suppliers (collectively, "Confidential Matters"). Confidential Matters shall
include, without limitation, all information and materials created or developed
by, provided to or otherwise disclosed to Executive in connection with
Executive's employment by the Company (excepting only information and materials
already known to the public), including, without limitation, all of the
following:
(a) trade secrets, know-how and all other business,
financial or technical information which gives or
could give the Company a competitive advantage;
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(b) software used by the Company (including source code
and object code) and associated layouts, templates,
processes, documentation, databases, designs and
techniques, and all modifications thereto
(collectively, "Confidential Software");
(c) the names and addresses of the Company's past,
present or prospective customers or clients and all
documents, information and materials which concern or
relate to such customers or clients, regardless of
whether such documents, information and materials
were supplied or produced by the Company or such
customers or clients;
(d) inventions, improvements, innovations, research and
development, software and all other discoveries or
work product created or used by the Company,
including those which are conceived or developed by
Executive alone or with others in connection with
Executive's employment by the Company, or which are
conceived or developed by Executive after termination
of such employment by using Confidential Matters; and
(e) information concerning the Company's products,
services, systems, methods, employees, technology,
suppliers, licensors, affiliates, financing sources,
profits, revenues, financial condition and affairs,
marketing plans or programs, and business strategies
and practices.
Executive acknowledges and agrees that Confidential Matters are the
property of the Company and that Executive shall not acquire any ownership
rights in Confidential Matters. Executive shall:
(a) use Confidential Matters solely in connection with
Executive's employment by the Company; and
(b) hold Confidential Matters in trust and confidence,
and use all reasonable means to assure that they are
not directly or indirectly disclosed to or copied by
unauthorized persons or used in an unauthorized
manner, both during and after Executive's employment
by the Company.
Executive shall not load, install, copy, store or otherwise retain any
Confidential Software on any computer or other device which is not Company
property without first obtaining the Company's written consent.
To the extent that Executive creates or develops any Confidential
Matters, Executive shall:
(a) promptly disclose them to the Company; and
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(b) at the Company's request, assign them to the Company
and execute all documents and do all things necessary
to assist the Company in obtaining such patent,
copyright, trademark, trade secret and/or other
protection as the Company in its sole discretion
deems necessary or appropriate, with the Company to
pay all resulting expenses.
Upon termination of Executive's employment with the Company for any
reason, Executive shall delete all Confidential Matters from the memory of any
computer belonging to Executive and shall turn over to the Company (a) all
documents and other materials (including, without limitation, all tapes, floppy
disks and other forms of electronic storage media) which constitute, contain or
are derived from Confidential Matters; and (b) all other documents, notes, work
product and other materials connected with or arising out of Executive's
employment with the Company.
Section 2.2 Non-solicitation of Customers and Non-Competition. During
the term of his employment with the Company under this Agreement, and for a
period of two years (which shall be extended by the length of any period during
which Executive is in violation of this Section 2.2) after any termination of
the Executive's employment for any reason, Executive shall not (on Executive's
own behalf or that of any other person or entity) directly or indirectly sell or
otherwise provide or solicit the sale or provision of any product, license,
process or service which directly or indirectly competes with any product,
license, process or service of the Company to any person or entity which was, at
the time of termination of Executive's employment, a customer or client of the
Company.
During the term of Executive's employment with the Company under this
Agreement, and for a period of two years (which shall be extended by the length
of any period during which Executive is in violation of this Section 2.2) after
any termination of Executive's employment with the Company for any reason,
Executive shall not (on Executive's own behalf or that of any other person or
entity), without prior written consent of the Board of Directors of the Company,
which consent may be withheld at the sole discretion of the Board of Directors
of the Company, directly or indirectly own, manage, operate, control, invest in,
lend to, acquire an interest in, or otherwise engage or participate in, (whether
as an employee, independent contractor, consultant, partner, shareholder, joint
venturer, investor or any other type of participant), the management or conduct
of any electronic health-care industry claims resolution business or enterprise
that directly or indirectly competes in any Market Area (as defined below) with
any product, license, process or service which the Company sold or provided at
the time of Executive's termination of employment with the Company ("Competitive
Product"). For purposes of this Agreement, Market Area shall mean either (i) the
standard metropolitan statistical area as designated by the federal government
in which the Company sold or provided any Competitive Product or (ii) in all
other cases, the county in which the Company sold or provided any Competitive
Product. Provided, however, that nothing in this Section 2.2 shall prohibit
Executive from acquiring or holding, for investment purposes only, less than
five percent (5%) of the outstanding publicly traded securities of any
corporation which may compete directly or indirectly with the Company or from
engaging in the business of investment banking.
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Section 2.3 Non-Solicitation of Employees. During the term of
Executive's employment with the Company under this Agreement, and for a period
of two years (which shall be extended by the length of any period during which
Executive is in violation of this Section 2.3), after any termination of
Executive's employment with the Company for any reason (the "Non-solicitation
Period"), Executive shall not, directly or indirectly, through one or more
intermediaries or otherwise, hire, employ, induce, solicit for employment, or
assist others in hiring, employing, inducing or soliciting for employment any
individual who is at any time during the Non-solicitation Period an employee of
the Company.
Section 2.4 Injunctive Relief. Executive acknowledges that his actual
or threatened breach of any provision of Article II of this Agreement will cause
or threaten irreparable injury to the Company that cannot adequately be measured
in money damages, and that the Company shall be entitled to obtain injunctive
relief with respect to any such actual or threatened breach by Executive.
Injunctive relief shall be in addition to and not in lieu of any other available
remedies.
ARTICLE III
TERMINATION OF EMPLOYMENT
Section 3.1 Termination by Company. In addition to termination pursuant
to Section 1.1, Executive's employment under this Agreement may be terminated by
the Company by giving notice to Executive during the term of this Agreement as
follows:
(a) upon Executive's death or, subject to any applicable
federal, state or local laws (including, but not
limited to, the Americans With Disabilities Act), any
disability which renders Executive incapable of
performing his duties hereunder for more than one
hundred twenty calendar days (termination under this
Section 3.1(a) shall be deemed termination "without
Cause");
(b) for any reason not constituting "for Cause" (as
defined below) following a determination by the Board
of Directors of the Company to terminate Executive's
employment (termination under this Section 3.1(b)
shall also be deemed termination "without Cause";
provided, however, that a Section 1.1 Termination
shall not constitute a termination "without Cause");
or
(c) "for Cause," which for purposes of this Agreement
shall mean that the Executive shall have:
(i) committed an act of fraud, embezzlement
or theft in connection with his duties
under this Agreement at any time subsequent
to the date of this Agreement;
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(ii) intentionally inflicted material damage to
any material asset of the Company;
(iii) breached any provision of Article II of
this Agreement;
(iv) engaged in the illegal use of drugs during
the term of this Agreement or been under the
influence of alcohol during the performance
of his duties under this Agreement, which
has or may have a material adverse effect
on the business or operations of the Company
or on the reputation of the Company or the
Executive provided, however, in the case of
any issues relating to the use of alcohol,
the Company has given Executive written
notice of any conduct and such conduct
thereafter continues;
(v) been convicted of any crime constituting
a felony under applicable law, other than a
felony related to the operation of a motor
vehicle;
(vi) intentionally committed any act of
dishonesty against the Company, which has or
may have a material adverse effect on the
business or operations of the Company or on
the reputation of the Company or the
Executive;
(vii) intentionally committed any intentional tort
against the Company or any employee of the
Company, which has or may have a material
adverse effect on the business or operations
of the Company or on the reputation of the
Company or the Executive; or
(viii) intentionally committed any act of gross
insubordination, which has or may have a
material adverse effect on the business or
operations of the Company or on the
reputation of the Company or the Executive.
Section 3.2 Termination by Executive. Executive's employment under this
Agreement may be terminated by Executive for "Good Reason" (as defined below) or
otherwise, by giving Company at least 30 days advanced written notice or
termination. For purposes of this Agreement, "Good Reason" shall mean, the
occurrence of any of the following events, unless such event has been consented
to by Executive in writing or such event is fully corrected as provided below:
(a) A material breach by the Company of any material
provision of this Agreement, including, but not
limited to, the assignment to Executive of any duties
materially inconsistent with Executive's position
in the Company or a material adverse alteration in
the nature or status of Executive's responsibilities;
provided, however, that in the event of this
subsection (a) being the sole basis for termination,
Executive shall furnish the Company in writing a
notice of proposed termination setting forth a
specific statement of the Good Cause for which
termination is sought. The Company shall then have a
period of ninety days after the giving of such notice
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of proposed termination by Executive in which to cure
the breach specified in such notice. If at the end of
such ninety day period no such cure has been
effected, the Executive's employment shall be
terminated at the end of such ninety day period.
(b) the occurrence of a "Change in Control" as defined
below.
For purposes of this Agreement a "Change in Control" shall mean an
event as a result of which: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 40% of the total voting power of the voting stock of
the Company; (ii) (A) the Company consolidates with, or merges with or into
another corporation, and (B) in connection with any such transaction, the
outstanding voting stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction where (x) the
outstanding voting stock of the Company is changed into or exchanged for voting
stock of the surviving, or transferee corporation, or for cash, securities
(whether or not including voting stock) or other property, and (y) the holders
of the voting stock of the Company immediately prior to such transaction own,
directly or indirectly, not less than 60% of the voting power of the voting
stock of the surviving corporation immediately after such transaction; or (iii)
the Company sells, assigns, conveys, transfers, leases or otherwise disposes of
substantially all of its assets, or (iv) individuals who at the date of this
Agreement constitute the Board of the Company (together with any new directors
whose election by such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of 66 2/3% of the directors
then still in office who are either directors at the date of this Agreement or
whose election or nomination for election was previously so approved) ceased for
any reason to constitute a majority of the Board of the Company then in office;
or (v) the Company is liquidated or dissolved or adopts a plan of liquidation;
provided, however that a Change in Control shall not be deemed to have occurred
if (aa) all of the shares of common stock of the Company owned (legally or
beneficially) by Executive were not voted against the transaction which would,
but for this proviso, constitute a Change in Control, or (bb) such Change in
Control relates to an IPO.
(c) Executive provides the Board of Directors or Chief
Executive Officer a written notice that Executive has
been requested to undertake or support an illegal
activity and the Board or Chief Executive Officer
refuses to revoke or withdraw such request within
five days after the Board's or Chief Executive
Officer's receipt of such notice.
Section 3.3 Severance. For purposes of this Agreement,
Executive's entitlement to any severance payments upon termination of his
employment shall be as set forth below:
(a) If Executive is terminated by the Company "without
Cause" pursuant to Section 3.1(a) or Section 3.1(b)
or resigns for Good Reason (i) Executive shall
be entitled to severance pay of 1.5 times the sum of
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Executive's annual rate of base salary then in effect
plus Executive's bonus for the last full fiscal year,
payable in a lump sum on the date of such
termination; (ii) all of Executive's rights to
purchase common stock of the Company, pursuant to
the Option Agreement, or any rights to receive
restricted stock pursuant to any restricted stock
agreement shall vest, and (iii) at the option of
Executive, the Company shall either (A) loan
Executive an amount equal to all applicable federal
and state taxes recognized by Executive as a result
of the vesting of restricted stock pursuant to
subsection (ii) above (the "Recognized Taxes"),
including, without limitation, all federal and state
income and Medicare taxes, which loan shall bear
interest at the lowest rate at which interest
income shall not be imputed to Executive for federal
income tax purposes, interest and principal being
due and payable at the earlier of an IPO or 3 years
from the date of Severance, or (B) purchase from
Executive, at such price as Executive and Company may
agree upon, so many shares so vested as are necessary
to pay the Recognized Taxes;
(b) In the event of a Section 1.1 Termination, a
termination of Executive "for Cause," a termination
by Executive for any reason other than Good Reason,
or any other termination of or by Executive (other
than as set forth in Section 3.3(a)), then Executive
shall not receive any severance pay (and Executive
shall forfeit all unused vacation time and any stock
options or restricted stock which has not then
vested), unless, and to the extent that, some
severance pay is approved in writing by the Board of
Directors of the Company in its sole discretion. In
the event the Executive shall provide thirty days
prior written notice of his intent to resign, the
Company may accept such resignation effective as of
any date during such thirty day period as the Company
deems appropriate, provided that the Executive shall
receive from the Company the per diem portion of his
salary and be entitled to participate at the
Company's expense in any Company sponsored benefit
programs in which he was a participant as of the
effective date of his resignation for the duration
of such thirty day period. Notwithstanding the
foregoing, Executive shall receive the per diem
portion of such annual salary that is accrued
but unpaid up to the date of any termination for
Cause.
Section 3.4 Anticipated Increase in Compensation and Severance. The
Company anticipates that it will make an initial public offering of its stock
pursuant to an effective registration statement under the Securities Act of 1933
(the "IPO"). In conjunction with or shortly after the IPO, the Company will
retain an independent consulting firm to study its executive compensation
arrangements and to recommend to the Board of Directors such changes in base
salaries, annual bonuses, and lump sum severance payments, and such changes in
stock incentive arrangements, as will be needed to attract and retain top flight
senior management executives and to insure that the compensation and incentive
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opportunities provided to such executives will be equal to or better than, in
the aggregate, those provided by other similarly-situated public company
executives having the same title or performing the same duties. Subject to
approval by the Board, the Company and Executive anticipate that such
arrangements will result in an annual salary and bonus in the aggregate of
approximately $350,000.
Section 3.5 Delay of IPO. In the event that the IPO is not closed on or
before July 31, 2001, Company and Executive agree that the Company will either:
(a) retain an independent consulting firm to study its executive compensation
arrangements and to recommend to the Board of Directors such changes in base
salaries, annual bonuses, and lump sum severance payments, and such changes in
stock incentive arrangements, as will be needed to attract and retain top flight
senior management executives and to insure that the compensation and incentive
opportunities provided to such executives will be equal to or better than, in
the aggregate, those provided to executives of public companies which are
similarly situated to the Company; or (b) agree with Executive on a mutually
agreeable revised compensation plan. In the event that on or prior to September
31, 2001, the Board does not either: (i) reach an agreement with Executive
regarding a new compensation plan; or (ii) adopt the recommendations of the
independent consultant, Executive shall give the Board thirty (30) days written
notice of Executive's conclusion that the requirements of this Section 3.5 have
not been satisfied. In the event that the Board does not cure such breach within
thirty (30) days of its receipt of such notice, then Executive may resign and
shall be entitled to a one-time payment equal to 75% of the sum of Executive's
annual rate of base salary then in effect plus Executive's bonus for the last
full fiscal year.
ARTICLE IV
GENERAL PROVISIONS
Section 4.1 Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes and
withholding as shall be required pursuant to any applicable law, rule or
regulation.
Section 4.2 Attorneys' Fees. If either party shall institute litigation
or arbitration to enforce any of its rights under this Agreement, the prevailing
party shall be entitled to recover from the other party the prevailing party's
reasonable attorneys' fees and costs incurred in any such litigation or
arbitration.
Section 4.3 Notice. For purposes of this Agreement, all communications
including, without limitation, notices, consents, requests or approvals,
provided for herein shall be in writing and shall be deemed to have been duly
given when personally delivered or five (5) business days after having been
mailed by United States registered mail or certified mail, return receipt
requested, postage prepaid, addressed to the Company (to the attention of the
Secretary of the Company) at its principal executive office or to Executive at
his principal residence, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except the notices
of change of address shall be effective only on receipt.
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Section 4.4 Governing Law. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Indiana, without giving effect to the principles of conflict of
laws of such State. Any and all actions concerning any dispute arising under
this Agreement shall be filed and maintained only in a state or federal court
sitting in the State of Indiana, and each party hereby consents and submits to
the jurisdiction of such state or federal court.
Section 4.5 Validity. It is not the intent of any party hereto to
violate any public policy of any jurisdiction in which this Agreement may be
enforced. If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstances shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent (and only to the extent) necessary to make it valid,
enforceable and legal; provided, however, if the provision so held to be
invalid, unenforceable or otherwise illegal constituted a material inducement to
a party's execution and delivery of this Agreement, such provision shall not be
reformed unless prior to any reformation that party agrees to be bound by the
reformation.
Section 4.6 Entire Agreement. This Agreement supersedes any other
agreements, oral or written, between the parties with respect to the subject
matter hereof, and contains all of the agreements and understandings between the
parties with respect to the employment of the Executive by the Company. Any
waiver or modification of any term of this Agreement shall be effective only if
it is set forth in a writing signed by all parties hereto.
Section 4.7 Successors and Binding Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any Successor of or to the
Company, but shall not otherwise be assignable or
delegable by the Company. "Successor" shall mean any
successor in interest, including, without limitation,
any entity, individual or group of persons acquiring,
directly or indirectly all or substantially all of
the business or assets of the Company, as the case
may be, whether by sale, merger, consolidation,
reorganization or otherwise.
(b) The Company shall require any Successor to agree at
the time of becoming a Successor to perform this
Agreement to the same extent as the original parties
would be required if no succession had occurred.
(c) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal
representatives, executors, administrators, heirs,
distributes and legatees.
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(d) This Agreement is personal in nature and neither of
the parties shall, without the consent of the other,
assign, transfer or delegate this Agreement or any
rights or obligations hereunder except as expressly
provided in this Section 4.7.
Section 4.8 Captions. The captions in this Agreement are solely
for convenience of reference and shall not be given any effect in the
construction or interpretation of this Agreement.
Section 4.9 Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by Executive and the Company. No waiver by a party
hereto at any time of any breach by another party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provision or conditions at the
same or at any prior or subsequent time.
Section 4.10 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
"Company" "Executive"
RealMed Corporation
/s/ Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx
By: /s/ Xxxxxx X. Xxxxx
Print Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
