EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into by and between Park
City Group, Inc., a Delaware corporation (the "Company") and Xxxxxxx X. Xxxxxx
("Employee"), effective January 1, 2001.
Recitals:
A. Employee is the President and Chief Executive Officer of the
Company.
B. This Agreement is made to protect the Company's legitimate and
legally protectible property and business interests.
C. This Agreement is entered into as a term and condition of
Employee's employment with the Company.
Agreements:
Now, Therefore, in consideration of the mutual covenants and promises
contained in, and the mutual benefits to be derived from this Agreement, and for
other good and valuable consideration, the Company and Employee agree as
follows:
1. Employment.
The Company hereby employs Employee, and Employee hereby accepts
such employment, on the terms and conditions of this Agreement.
2. Term of the Employment.
The employment of Employee by the Company will commence as of
January 1, 2001 and end on the fifth anniversary of such date
(the "Initial Term"), unless sooner terminated pursuant to the
terms hereof or extended at the sole discretion of the Company's
Board of Directors. The Initial Term and any subsequent terms
will automatically renew for additional one year periods unless,
six months prior to the expiration of the then current term,
either party gives notice to the other that the Agreement will
not renew for an additional term. In the event of such written
notice being timely provided by the Company, Employee shall not
be required to perform any responsibilities or duties to the
Company during the final two months of the then-existing term. In
such event, the Company will remain obligated to Employee for all
compensation and other benefits set forth herein and in any
written modifications hereto.
3. Duties.
(a) General Duties. Employee shall be employed as President and
Chief Executive Officer of the Company, and shall have such
duties, responsibilities and obligations as are established
by the Bylaws of the Company or are generally required of
persons employed in similar positions. This shall include
full executive powers of these positions over all operating
and financial officers, the authority to hire and fire
officers and other employees, and to authorize expenditures
of money for corporate purposes, subject to the right of the
Board of Directors to impose reasonable restrictions and
requirements.
(b) Performance. To the best of his ability and experience,
Employee will at all times loyally and conscientiously
perform all duties, and discharge all responsibilities and
obligations, required of and from him pursuant to the
express and implicit terms hereof, and to the reasonable
satisfaction of the Company. Employee shall devote his full
time, energy, skill and attention to the business of the
Company, and the Company shall be entitled to all of the
benefits and profits arising from or incident to all such
work, services, and advice of Employee rendered to the
Company.
(c) Company Directorship. Employee shall be elected to the
position of director and shall serve on the Company's Board
of Directors during his term of employment as Chairman.
(d) Other Directorships and Businesses. During the term of his
Employment, Employee may serve on the boards of directors or
on advisory boards of other companies or engage in other
business relationships, so long as such service does not
interfere or conflict with the performance of Employee's
duties hereunder, and provided further that Employee will
not serve on the boards of directors or on advisory boards
of companies which are direct competitors of the Company.
(e) Outside Activities. Nothing in this Agreement shall prohibit
Employee from directing his personal investments or
accepting speaking or presentation engagements in exchange
for honoraria, or from rendering services to, or serving on
boards of, charitable organizations, so long as such
activities do not interfere or conflict with the performance
of Employee's duties hereunder.
4. Compensation and Benefits.
(a) Salary. The Company shall pay to Employee an annual base
salary of $350,000 ("Annual Base Salary"). The Annual Base
Salary, which shall be pro-rated for any partial employment
period, will be payable in equal bi-weekly installments or
at such other intervals as may be established for the
Company's customary payroll schedule, less all applicable
federal, state and local income and employment tax
withholdings required by law. The Annual Base Salary shall
be subject to a cost of living increase of 5% annually
commencing on January 1, 2002. In addition, the Annual Base
Salary shall be subject to annual review and adjustment by
the Board of Directors or any appropriate committee thereof
in its sole discretion, provided, however, that Employee's
Annual Salary may not be reduced below the amount in effect
at the inception of this Agreement, as adjusted by the
applicable cost of living increase.
(b) Company Vehicle. The Company shall provide the Employee with
a company vehicle. The cost of such vehicle shall not exceed
$1,000.00 per month plus applicable deposits if purchased on
a monthly installment contract or leased pursuant to a
operating lease. The Company shall also pay reasonable
operating costs of such vehicle to include insurance,
registration and taxes, maintenance, fuel and other related
costs.
(c) Other Benefits. The Company acknowledges that the Employee
conducts a considerable amount of business activities from
Employee's personal residence. Accordingly, the Company
shall pay all costs, charges and fees related to the
installation and maintenance of a telephone line and system,
and a wide area network and/or a high speed internet
connection at the Employee's residence. In addition, the
Company shall also provide the Employee with a computer and
any other equipment deemed necessary for the Employee to
conduct necessary business activities from Employees
personal residence.
The Company also acknowledges that the Employee's business
assistant performs limited personal accounting and other
services for the Employee. The Company hereby authorizes
such activities so long as they do not materially interfere
with said assistant's other Company responsibilities. Should
Employee retain someone else to perform personal accounting
services, the Company shall bear the cost of such services.
(d) Benefit and Stock Option Plans. Employee shall be entitled
to participate, to the extent of Employee's eligibility, in
any employee benefit and stock option plans made available
by the Company to its employees during the term of this
Agreement. In addition, at no cost to Employee, Company will
provide Employee, and his immediate family members living
with him, coverage under a health and dental insurance plan
during the term of Employee's employment and any applicable
COBRA coverage period.
(e) Vacations, Holidays, etc. Employee shall have four (4) weeks
paid vacation and twelve (12) days personal/sick leave
during each year he is employed. Any of the Employee's
accrued and unused vacation and sick days at the end of a
calendar year (December 31) shall be paid to the Employee
within 30 days of the end of the calendar year. Any unpaid
accrued vacation and sick days outstanding as of December
31, 2000 that has not been paid as of the date of this
agreement shall be paid to the Employee no later than June
15, 2001.
(f) Indemnification; D&O Insurance. The Company shall indemnify
the Employee to the extent of and in accordance with the
Indemnity Agreement attached as Exhibit "A" hereto, and
shall provide director's and officer's insurance with such
coverages, in such amounts and from such insurers as
constitutes good practices by comparable companies in the
same business as the Company. Such insurance shall provide
defense and coverage obligations for any claim arising out
of Employee's acts or omissions committed during the Initial
Term or any subsequent term hereof, regardless of when such
claims are asserted.
(g) Incentive and Performance Bonuses. Upon execution of this
Agreement, the Company shall pay the Employee a bonus equal
to 5% of the consolidated and/or combined annual profits
before interest, income taxes, depreciation and amortization
but after deduction of all other expenses, determined in
accordance with GAAP, of the Company and its affiliated
and/or subsidiary entities commencing with the year ended
December 31, 2001. Such bonus shall be paid within 30 days
of the issuance of audited financial statements with respect
to the applicable year. In addition to the foregoing, in
recognition of Employee's responsibility to obtain suitable
acquisitions for the benefit of the Company and to provide a
substantial incentive to Employee to devote the substantial
time, energy, skill and attention required to locate and
close such acquisitions, the Company shall pay the Employee
an amount equal to 5% of the consideration paid for the
company or business acquired by the Company during the term
of this Agreement, regardless of the form of the
transaction, to be paid within 30 days of the closing of the
transaction. The payment to Employee shall be in a form
consistent with the consideration exchanged in the
acquisition transaction (e.g., cash, common stock, options,
etc.).
(h) Travel and Business Expense Reimbursement. The Company shall
promptly reimburse Employee for all of his reasonable
business expenses, including international first class air
travel, and auto mileage at the prevailing IRS rate,
including travel to and from Employee's residence.
(i) Life Insurance. The Company shall maintain a term life
insurance policy in the name of the Employee for at least
$10,000,000 with the beneficiary to be designated by the
Employee at his sole discretion.
5. Proprietary Information.
(a) Obligation. Employee shall not disclose, publish,
disseminate, reproduce, summarize, distribute, make
available or use any Proprietary Information, except in
pursuance of Employee's duties, responsibilities and
obligations under this Agreement and for the benefit of the
Company.
(b) Definition. As used in this Agreement, "Proprietary
Information" means information that is (i) designated as
"confidential," "proprietary" or both by the Company or
should have been known to be "confidential" or "proprietary"
to the Company from the nature of the information or the
circumstances of its disclosure, and (ii) has economic value
or affords commercial advantage to the Company because it is
not generally known or readily ascertainable by proper means
by other persons. By way of illustration, Proprietary
Information includes but is not limited to information
relating to the Company's products, services, business
operations, business plans and financial affairs, and
customers; any application, utility, algorithm, formula,
pattern, compilation, program, device, method, technique,
process, idea, concept, know-how, flow chart, drawing,
standard, specification, or invention; and any tangible
embodiment of Proprietary Information that may be provided
to or generated by Employee.
(c) Return upon Termination. Upon the termination of this
Agreement for any reason, and at any time prior thereto upon
request by the Company, Employee shall return to the Company
all tangible embodiments of any Proprietary Information in
Employee's possession, including but not limited to,
originals, copies, reproductions, notes, memoranda,
abstracts, and summaries.
(d) Ownership. Any Proprietary Information developed or
conceived by Employee during the term of this Agreement
shall be and remain the sole property of the Company.
Employee agrees promptly to communicate and disclose all
such Proprietary Information to the Company and to execute
and deliver to the Company any instruments deemed necessary
by the Company to perfect the Company's rights in such
Proprietary Information.
6. Termination of Employment.
(a) Additional Definitions. For purposes of this Agreement, the
following terms shall have the meanings assigned below:
(i) "Cause" means (A) conviction of a crime involving moral
turpitude, or (B) a determination by the Board of Directors ofthe
Company in good faith that Employee [1] has failed to
substantially perform his duties in his then current position,[2]
has engaged in grossly negligent, dishonest or unethical
activity, or [3] has breached a fiduciary duty or a covenant
hereunder, including without limitation the unauthorized
disclosure of Company trade secrets or confidential information,
resulting in material loss or damage to the Company.
(ii) "Change in Control of the Company" means a change in control
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A (or any successor or
replacement provision) promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"), if the Company were subject to
such reporting requirements; provided that, without limitation,
such a change in control shall be deemed to have occurred if any
"person" (as such term is used in paragraph 13(d) and 14(d) of
the Exchange Act) who on the date hereof is not a director or
officer of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3, as amended or replaced, under the Exchange
Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the
Company's then outstanding securities.
(iii) "Determination Date" means (A) if Employee's employment is
terminated by his death, the date of his death, (B) if Employee's
employment is terminated by reason of Disability, thirty (30)
days after Notice of Termination is given, provided that Employee
shall not have returned to the performance of his duties during
such thirty (30) day period, (C) if Employee's employment is
terminated by reason of a Change in Control of the Company, the
date specified in the Notice of Termination, (D) if Employee's
employment is terminated for Cause by reason of conviction of a
crime involving moral turpitude, the date on which a Notice of
Termination is given, or (E) if Employee's employment is
terminated for Cause for a reason other than specified in (D),
thirty (30) days after Notice of Termination is given, provided
that Employee shall not have cured the reason for such Cause
during such thirty (30) day period.
(iv) "Disability" means (A) Employee's inability, by reason of
physical or mental illness or other cause, to perform Employee's
duties hereunder on a full-time basis for a period of twenty-six
(26) consecutive weeks, or (B) in the discretion of the Board of
Directors, as such term is defined in any disability insurance
policy in effect at the Company during the time in question.
(v) "Good Reason" means a failure by the Company to comply with
any material provision of this Agreement which has not been cured
within ten (10) days after notice of such noncompliance has been
given by Employee to the Company.
(vi) "Notice of Termination" means a notice which shall indicate
the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under
the provision so indicated. Any termination of Employee's
employment by the Company or by Employee (other than termination
pursuant to subsection 6(b) hereof) shall be communicated by
written Notice of Termination to the other party hereto.
(b) Termination on Employee's Death. Employee's employment
hereunder shall terminate upon Employee's death. Upon such
termination, Employee's representative or estate shall be
entitled to receive only the compensation, benefits and
reimbursement earned or accrued by Employee under the terms
of his employment prior to the Determination Date, but shall
not be entitled to any further compensation, benefits, or
reimbursement subsequent to such date.
(c) Termination By The Company for Employee's Disability.
Employee's employment hereunder may be terminated without
breach of this Agreement upon Employee's Disability, upon
written Notice of Termination from the Company to Employee
and Employee's failure to return to the performance of his
duties as provided in Section 6(a)(iii)(B) hereof. Employee
shall receive full compensation, benefits, and reimbursement
of expenses pursuant to the terms of his employment from the
date Disability begins until the Determination Date
specified in the Notice of Termination given under this
section, or until Employee begins to receive disability
benefits pursuant to a Company disability insurance policy,
whichever occurs first.
(d) Termination By The Company For Cause. Employee's employment
hereunder may be terminated without breach of this Agreement
for Cause, upon written Notice of Termination from the
Company to Employee and Employee's failure to cure such
Cause as provided in Section 6(a)(iii)(E) hereof. If
Employee's employment is terminated for Cause, the Company
shall pay Employee his full Annual Base Salary accrued
through the Determination Date, and the Company shall have
no further obligation to Employee under this Agreement for
other compensation or benefits accrued but unpaid prior to
the Determination Date.
(e) Termination On Change of Control of the Company. Employee's
employment hereunder may be terminated without breach of
this Agreement at any time within twelve months following a
Change in Control of the Company at the election of the
Employee. If the Employee's employment pursuant to this
Section 6(e) is terminated, Employee shall be entitled to
receive the compensation, benefits and reimbursement earned
or accrued by Employee under the terms of his employment
prior to the Determination Date, including any incentive
bonus. In addition, Employee shall receive as a severance
payment the balance of Employee's compensation through the
end of the then current term of this Agreement at the rate
that would have been in effect in the fifth year of this
Agreement as if it were the current rate of compensation.
Also, upon Employee's termination in connection with this
Section 6(e), Employee shall be entitled to an annual bonus
for the remaining period of this contract equal to the bonus
due to Employee for the immediately preceding year.
Employee's employment hereunder may not be terminated by the
Company following a Change in Control of the Company without
it being a breach of this Agreement.
(f) Termination by Employee. Employee may terminate his
employment hereunder for Good Reason or if his health should
become impaired to an extent that makes his continued
performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that
Employee shall have furnished the Company with a written
statement from a qualified doctor to such effect and,
provided further, that, at the Company's request, Employee
shall submit to an examination by a doctor selected by the
Company and such doctor shall have concurred in the
conclusion of Employee's doctor. If Employee shall terminate
his employment pursuant to this Section 6(f), Employee shall
be entitled to receive the following:
(i) the compensation, benefits and reimbursement earned or
accrued by Employee under the terms of his employment prior to
the Determination Date, including any incentive bonus,
(ii) if Employee shall terminate his employment for Good Reason
consisting of the Company's material breach of this Agreement,
severance, including bonuses, as defined in Section 6 (e) shall
be due and payable to Employee.
7. Miscellaneous.
(a) Severability. If any provision of this Agreement is found to
be unenforceable by a court of competent jurisdiction, the
remaining provisions shall nevertheless remain in full force
and effect.
(b) Notices. Any notice required or permitted hereunder to be
given by either party shall be in writing and shall be
delivered personally or sent by certified or registered
mail, postage prepaid, or by private courier, or by
facsimile or telegram to the party to the address the party
may designate from time to time. A notice delivered
personally shall be effective upon receipt. A notice sent by
facsimile or telegram shall be effective 24 hours after the
dispatch thereof. A notice delivered by mail or by private
courier shall be effective on the 3rd day after the day of
mailing. A copy of notices given hereunder will be delivered
or sent to the following persons and addresses (or such
other address as designated from time to time):
(c) Attorney's Fees. In the event of any action at law or equity
to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys'
fees and court costs in addition to any other relief to
which such party may be entitled.
(d) Governing Law. This Agreement shall be interpreted,
construed, governed and enforced according to the laws of
the State of Utah. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable,
then such provision will be enforced to the maximum extent
possible and the other provisions will remain in full force
and effect.
(e) Successors and Assigns. The rights and obligations of the
Company under this Agreement shall inure to the benefit of
and shall be binding upon the successors and assigns of the
Company. This Agreement is for the unique personal services
of Employee, and Employee shall not be entitled to assign
any of his rights or obligations hereunder.
(f) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the employment
of Employee. This Agreement can be amended or modified only
in a writing signed by Employee and an authorized
representative of the Company.
(g) Signature by Facsimile and Counterpart. This Agreement may
be executed in counterpart, and facsimile signatures are
acceptable and binding on the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and signed as of the day and year
first above written.
"Company" Park City Group, Inc.,
a Delaware corporation
"Employee" /s/ Xxxxxxx X. Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx Address:
X. Xxxxxx Title: President Address:
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
EXHIBIT A
INDEMNIFICATION AGREEMENT
(See Attached Form of Agreement)
