EXHIBIT 10.17
Executive Employment Agreement and Addendum, dated September 8, 1999,
and Amendment dated November 8, 1999, between the Company
and Inverness Partners, Inc. Incorporated by Reference to
Exhibit 10.17 of the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1999.
[INVERNESS PARTNERS, INC. LETTERHEAD]
AGREEMENT
1. Parties: CUMETRIX DATA SYSTEMS CORP. ("CUMETRIX")
INVERNESS PARTNERS, INC. ("Inverness")
2. Effective Date: September 8, 1999
3. This Agreement provides for services requested by CUMETRIX and agreed by
Inverness in support of the business review, turnaround program, and Board-
approved management requirements at CUMETRIX. The scope of the engagement
consists of two phases, as outlined in the Addendum to this Agreement, which
is an integral part thereof.
4. Inverness shall receive a retainer equal to one month's fee upon execution
of this Agreement. Such retainer shall remain with Inverness during the
course of the engagement. Upon expiry of this Agreement and/or cancellation
of this Agreement by either party, the retainer shall be returned to
CUMETRIX after applying such retainer against any final amounts due
Inverness.
5. CUMETRIX shall retain Inverness at the following rates: Managing Partner
(Xxxx X. Xxxxxxxx), $6,250 per week based on 40-60 per hours per week. In
addition to the weekly fees, CUMETRIX will reimburse Inverness for
reasonable out-of-pocket expenses for travel and living between Portland and
Los Angeles, which shall not exceed a total of $750 per week.
In addition to the fee for services as above, Inverness shall receive a
Performance Incentive, as agreed with CUMETRIX and specified in the
Addendum. Such incentive to be received by Inverness only to the extent
that measurable success is achieved against business plan targets as
provided in the Addendum.
Within the scope of the engagement contemplated by this Agreement, Xxxx X.
Xxxxxxxx, at the level of Managing Partner, will direct the engagement and
serve in the interim management capacity as specified in the Addendum.
Other Inverness staff will be involved only upon written approval of
CUMETRIX's Board.
Travel time between Portland, Oregon and Los Angeles, California will not
be charged.
6. Inverness will provide detailed statements to CUMETRIX, at the end of each
week, accounting for all time and expenses charged. Payment will be due
promptly upon presentation of the statements, and the retainer balance shall
be maintained at all times during the engagement.
Agreement (September 8, 1999)
Page 2
7. CUMETRIX and Inverness shall not employ personnel of the other party during
the period of this Agreement, nor for a period of 12 months following
termination of the Agreement without the written agreement of the other
party.
8. CUMETRIX shall indemnify Inverness, its shareholders, directors, officers,
employees and agents from and against any and all claims, liabilities,
loss, costs, damages or expenses (including reasonable attorneys' fees)
asserted against, or incurred by Inverness or any such shareholder,
director, officer, employee or agent by reason of, or arising out of this
Agreement or performance of this Agreement. Excluded from this
indemnification are those claims, liabilities, loss, costs, damages or
expenses resulting from the willful misconduct, dishonesty, fraudulent act
or omission, or gross negligence of Inverness or any such shareholder,
director, officer, employee or agent.
9. Confidentiality
Both parties acknowledge the confidential nature of all non-publicly
obtainable information on the administrative and financial operations of
CUMETRIX. Accordingly, Inverness agrees not to disclose financial,
operations, or marketing documents or other information to any third party,
without the prior approval of CUMETRIX. Excepted are documents or
information requested under Court order.
10. This Agreement may be terminated by either CUMETRIX or Inverness at any
time subject to the provisions of the Addendum. Termination by CUMETRIX
will be accompanied by payment for all outstanding amounts due Inverness.
CUMETRIX DATA SYSTEMS CORP.
/s/ Max Toghraie
----------------------------------------
by: Max Toghraie, Board of Directors
INVERNESS PARTNERS, INC.
/s/ Xxxx X. Xxxxxxxx
----------------------------------------
Xxxx X. Xxxxxxxx, Managing Partner
Addendum to Agreement
dated September 8, 1999
Between CUMETRIX DATA SYSTEMS CORP.
and Inverness Partners, Inc.
Per Paragraph 3:
The scope of this engagement provides for a two-phase program to:
. Conduct a comprehensive review of the CUMETRIX business
segments and provide specific reporting and recommendations to
the Board with regard to turnaround steps to be incorporated
into the revised 1999/2000 Business Plan ("BUSINESS PLAN"), and
. Phase 2: Undertake direction of the CUMETRIX management team,
as President and Chief Executive Officer, responsible to the
Board, for a total period of one year, during which
implementation of the BUSINESS PLAN will be completed and the
Board will conduct a search for a permanent CEO to direct the
management team within the medium-and long-range objectives of
the BUSINESS PLAN.
Within the scope of this engagement, Inverness to perform the following
specific duties to achieve the objectives of each phase. Both phases are
to be undertaken within the provisions of the appointment by the Board of
Inverness/Davidson as President and CEO, subject to the terms noted under
"Compensation / Term" below.
Specific duties to include:
Phase 1:
(i) Direct the immediate financial and organizational steps
required to complete and maintain timely filing of SEC
reporting; Assume responsibilities for directing outside
accounting resources to complete the 1998/99 reporting
consistent with SEC reporting procedures
(ii) Outline current problem areas and develop prioritized
strategies for immediate turnaround steps for resolution to be
proposed for approval by the Board
(iii) Draft a preliminary outline of the 1999/2000 BUSINESS PLAN
objectives and steps, to be presented to the Board within 7
days of the effective date of this Agreement; to include:
. Mission Statement / Goals
. Objectives
. Management / Organization - Responsibilities &
Accountabilities
. Turnaround Program - 1999
. Marketing Program
. Product Development / CapEx Program and Introduction
Timetable
. P&L and Cashflow Forecast
. Evaluation of Results / Corrective Steps
. Strategic Planning
(iv) Review and complete revisions to the 1999/2000 BUSINESS PLAN,
for presentation to and recommendation of approval by the Board
within 30 days of the effective date of this Agreement
Addendum to Agreement
dated September 8, 1999
Between CUMETRIX DATA SYSTEMS CORP.
and Inverness Partners, Inc.
Page 2
(v) Develop standard internal reporting of operating and
financial results against BUSINESS PLAN targets
(vi) Direct key managers in the completion of the 1999/2000
operating budgets, by Department.
(vii) Develop / revise internal cash and budget controls and
Department authorities to insure compliance with CUMETRIX
Policies and Procedures with regard to expense, capital
expenditures and third party commitments
(viii) Review / revise financial reporting to insure ongoing
compliance with outside reporting requirements
(ix) Other tasks as directed by the Board
Phase 2 (to run concurrent with Phase 1):
2 - (i) Assume direct responsibilities as interim President and
Chief Executive Officer for all aspects of CUMETRIX
performance to meet or exceed BUSINESS PLAN targets
2 - (ii) Develop and complete timely, accurate and comprehensive
reporting to the Board and to outside agencies, to meet
standard regulatory and financial reporting requirements
2 - (iii) Direct the use of outside professional resources within
approved budget guidelines
2 - (iv) Direct the immediate implementation of Board-approved
turnaround steps developed under Phase 1 recommendations
2 - (v) Implement approved organization changes and develop
position description and individual manager
accountabilities; Perform and direct staff evaluations by
managers on a regular basis and within approved Policies &
Procedures
2 - (vi) Develop management and staff incentive programs based on
performance and results against approved BUSINESS PLAN
targets 2 - (vii) Develop Strategic Planning objectives
with the Board and outline capitalization alternatives to
meet objectives
2 - (viii) Other tasks as directed by the Board
Compensation/Term:
-----------------
As provided under Paragraph 5 of the Agreement, subject to the following
provisions:
(i) "Performance Incentive", as described in the Agreement to
include the following:
. Participation in the appreciation of CUMETRIX shares'
------------
market value through an options agreement to be
developed with and agreed between the Board and
Inverness by not later than September 30, 1999.
Specifics to include rights to purchase CUMETRIX shares
at a price to be determined based on average trading
value during the six month period prior to the
effective date of the Agreement.
. In the event that no appreciation in the shares' value,
as quoted, occurs then no Performance Incentive is due
Inverness
. CUMETRIX performance at or above targets set by the
approved BUSINESS PLAN to be considered in the
determination of the performance Incentive
Addendum to Agreement
dated September 8, 1999
Between CUMETRIX DATA SYSTEMS CORP.
and Inverness Partners, Inc.
Page 3
Phase 1 provision:
. At the end of the Phase 1 "period" (30 days from the effective date
of the Agreement), CUMETRIX and Inverness shall have the right to
terminate the Agreement without penalty or Performance Incentive
and with payment of fees through the 30-day period only.
. Assuming that CUMETRIX and Inverness agree not to terminate the
Agreement at the end of the 30-day period, then the Agreement shall
continue as specified above for the balance of the 12 month
contract period ("Agreement Period") and CUMETRIX shall be
responsible for compensation to Inverness under Paragraph 5. In the
event that termination by CUMETRIX occurs for any reason after the
Phase 1 period, then Inverness shall receive the lesser of: fees
per Paragraph 5 through the end of the Agreement Period, or for a
period of three months.
. In the event that termination by CUMETRIX occurs within the
Agreement Period, then Inverness to receive the Performance
Incentive benefit, if earned within the 12 month period following
termination, in addition to its weekly fees above.
CUMETRIX DATA SYSTEMS CORP. INVERNESS PARTNERS, INC.
/s/ Max Toghraie /s/ Xxxx X. Xxxxxxxx
------------------------------------ -----------------------------------
by: Max Toghraie, Board of Directors Xxxx X. Xxxxxxxx, Managing Partner
November 8, 1999
Xx. Xxxx X. Xxxxxxxx
Managing Partner
Inverness Partners, Inc.
X.X. Xxx 000
Xxxx Xxxxxx, XX 00000
Dear Xxxx:
Pursuant to the Agreement (the "Agreement") effective September 8, 1999,
between Cumetrix Data Systems Corp. ("Company") and Inverness Partners, Inc.
("Inverness"), either party has the right to terminate the agreement without
penalty or payment of Performance Incentive at the end of the Phase 1 Period.
Capitalized terms used in this letter without definition have the meanings
ascribed in the Agreement. This will confirm that the parties have agreed to
modify the Agreement as follows:
1. Cumetrix may terminate the Agreement without penalty or payment of
Performance Incentive on November 8, 1999, if Inverness fails to meet
any of the following milestones:
(a) filing of the Company's 1999 10-K and first quarter 10-Q for
Fiscal 2000 with the Securities and Exchange Commission on or before
November 8, 1999;
(b) delivery to the Board of Directors of a proposed Cumetrix
Business Plan (Fiscal Year 2000/2001) on or before November 8, 1999;
and
(c) engagement of a suitable executive search firm, on or before
November 8, 1999, to search for a permanent chief executive officer
for the Company.
2. The Performance Incentive to be agreed upon between Inverness and the
Board of Directors will include rights to purchase Cumetrix shares at
a
Xx. Xxxx X. Xxxxxxxx
November 8, 1999
Page 2
price tied to the average trading price of Cumetrix stock for the week
following July 15, 1999.
3. The Company authorizes Inverness to lease an apartment at the
approximate rent of $1,300 per month for a term not to exceed six
months from October 23, 1999. These payments will be part of the
expenses contemplated by paragraph 5 of the Agreement. Cumetrix shall
be liable for the lease payment, regardless of whether the Agreement
is terminated by Cumetrix pursuant to paragraph 1 of this letter.
If the foregoing meets your approval, please sign the enclosed copy at the
place provided.
Very truly yours,
CUMETRIX DATA SYSTEMS CORP.
By: /s/ Max Toghraie
--------------------------------------
Board of Directors
APPROVED BY:
INVERNESS PARTNERS, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------
Xxxx X. Xxxxxxxx
Managing Partner
