EXHIBIT 10.11
Amendment No. 2 to Employment Agreement
Of
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
This amendment (the "Amendment") to that employment agreement dated
February 15, 2001 (the "Employment Agreement"), by and between iLinc
Communications, Inc. (formerly EDT Learning, Inc.), a Delaware corporation (the
"Company"), and ▇▇▇▇▇ ▇▇▇▇, Jr. ("Employee") with this amendment being effective
on June 1, 2004 (the "Effective Date").
Whereas, Employee wishes to modify the Employment Agreement to provide
for his continued employment with the Company, but provided for his ability to
relocate to Texas in the future should certain personal and family issues
require his presence outside the corporate headquarters in Phoenix, Arizona;
and,
Whereas, the Company wishes to retain the services of Employee and
continue to receive the benefit of his services, whether or not residing in
Arizona, and sharpen his focus in the future on acquisitions and business
development activities in furtherance of the Company's external growth plans;
Now Therefore, in exchange for the mutual promises contained in the
Employment Agreement and this Amendment, the Company and Employee agree as
follows:
1. The prior amendment to Employee's Agreement dated July 16, 2003
providing for a relocation option shall upon execution of this
Amendment be terminated and have no further effect.
2. The terms of his Employment Agreement shall be modified as follows:
a. The following shall be added to the end of Section 2 (Duties):
"Notwithstanding the foregoing, at any time after May 1, 2005
but before September 30, 2005 Employee may elect to work from
a remote office in Texas away from the Company's corporate
headquarters (the "Relocation Option"). Employee shall give
the Company no less than thirty (30) days prior written notice
of his intent to exercise his Relocation Option and the
Employee will specify in his notice the date upon which he
intends to relocate to Texas."
b. The following shall be added to the end of Subsection (c) of
Section 6 (Termination):
"Notwithstanding the foregoing, beginning anytime after the
date that is six (6) months from the first day Employee is not
a resident of Arizona pursuant to his exercise of the
Relocation Option, then the Company may, with thirty (30) days
prior written notice, terminate this Agreement, and upon such
termination will pay Employee severance in the amount
determined by multiplying Employee's monthly base salary at
the rate in effect immediately preceding the termination of
Employee's employment by three (3) months (the "Relocated
Severance Amount"). The Company will pay the Relocated
Severance Amount in a lump sum and within thirty (30) days of
the Employee's last day of employment. The Company therefore
will be responsible for payment of either the Severance
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Amount, if terminated while an Arizona resident, or the
Relocated Severance Amount, if terminated while a Texas
resident, but not both."
b. The following shall be added as Subsection (d) of Section 4
(Compensation):
"(d) COMMISSION. Beginning on the Effective Date and
continuing thereafter until this Agreement is terminated,
Employee shall receive a commission from his successful
efforts on behalf of the Company concerning acquisitions and
business development activities. The commission due to
Employee upon the consummation of an acquisition by the
Company of a target (a merger transaction) or the assets of a
target (an asset purchase transaction) will be equal to one
half of one percent (.5%) of the acquired target company's
trailing twelve month revenues measured at the closing of the
transaction (an "Acquisition Commission"). However, a
transaction with Glyphics Communications, Inc. shall not be
eligible for an Acquisition Commission. The commission due to
Employee upon the execution of an OEM/Private Branding license
agreement of the Company's software will be equal to four
percent (4%) of the license fees collected as revenue during
the twelve months after effective date of the licensing
contract (a "Licensing Commission"). For any potential OEM
licensing engagement, the President and Employee will
designate at the beginning of the undertaking that the
proposed license agreement qualifies for a Licensing
Commission to avoid confusion with the sales department's
efforts. However, a transaction with SkillSoft shall not be
eligible for an Licensing Commission. Any Licensing Commission
will be paid as the Company collects booked revenues from the
licensee, and any Acquisition Commission will be paid at
closing of the transaction. All Licensing Commissions and
Acquisition Commissions will be immediately payable if this
Agreement is terminated (other than "for cause"), and will be
paid within thirty (30) days of the termination date of this
Agreement. And, provided further that Employee will not be
entitled to participate in the Management Incentive
Compensation Plan."
c. The following sentence shall be added as Subsection (b) of
Section 10 (Withholding and Offset):
While this Agreement remains in effect and when Employee is a
resident of Texas, Employee shall work for any third party
(i.e., moonlighting is prohibited), and furthermore should
Employee work for a third party other than Company, then the
Company shall be entitled to offset any compensation due
hereunder by the amount of any compensation paid to Employee
from that third party employer.
3. All other provisions of the Employment Agreement of Employee shall
remain unchanged and in full force and effect.
iLinc Communications, Inc. Employee:
(formerly EDT Learning, Inc.)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. /s/ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------------- -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President
Page 2 of 22
This amendment to that Employment Agreement dated February 15, 2001
(the "Agreement"), by and between EDT Learning, Inc., a Delaware corporation
(the "Company"), and ▇▇▇▇▇ ▇▇▇▇, Jr. ("Employee") with the amendment being
effective on the date of its execution of July 16, 2003.
Whereas, Employee wishes to modify the Employment Agreement to provide
for his ability to work remotely in the future should certain personal and
family issues require his presence outside the corporate headquarters in
Phoenix, Arizona; and,
Whereas, Employer wishes to retain the services of Employee and
continue to receive the benefit of his services even if he is not residing in
Arizona;
Now Therefore, Employer and Employee agree that the terms of his
Employment Agreement shall be modified as follows:
1. The following sentences shall be added to the end of Section 2
(Duties): "Notwithstanding the foregoing, at any time after May 1, 2004
Employee may elect to work from a remote home office away from and
outside of Employer's corporate headquarters, including a home office
outside of Arizona (the "Relocation Option"). Employee shall give
Employer no less than thirty (30) days prior written notice of his
intent to exercise his Relocation Option. Upon exercise of the
Relocation Option, Employee shall serve as General Counsel."
2. The following sentences shall be added to the end of Section 3 (Term):
"Notwithstanding the foregoing, upon exercise of the Relocation Option,
the Term shall be changed so that the Agreement automatically
terminates on the date that is nine (9) months after first day Employee
is not a resident of Arizona (unless earlier terminated a provided
herein)."
3. The following sentences shall be added to the end of Subsection (a) of
Section 4 (Base Salary): "Notwithstanding the foregoing, upon exercise
of the Relocation Option, the Base Salary shall be $8,333 per month,
beginning with the first day Employee is not a resident of Arizona."
All other provisions not changed by this Amendment shall remain
unchanged and in full force and effect.
Employer: Employee:
EDT Learning, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. /s/ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------------- -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President
Page 3 of 22
EMPLOYMENT AGREEMENT
Employment Agreement (the "Agreement"), dated as hereinafter indicated
to be effective on February 15, 2001 (the "Effective Date"), by and between
▇-▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (the "Company"), and ▇▇▇▇▇ ▇▇▇▇, Jr.
("Employee").
WHEREAS, the parties hereto had entered into that certain Employment
Agreement, dated July 12, 1997 as amended on April 22, 1998, among the Company
and Employee (the "Prior Agreement"); and,
WHEREAS, the Company and Employee wish to continue the employment of
Employee on the terms and conditions described herein with this Agreement
superceding and wholly replacing the Prior Agreement including subsequent
Amendments in its entirety;
NOW THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:
Section 1. EMPLOYMENT. The Company hereby agrees to employ Employee,
and Employee hereby accepts employment by the Company, upon the terms and
subject to the conditions hereinafter set forth.
Section 2. DUTIES. Employee shall serve as the Senior Vice President,
General Counsel and Chief Development Officer of the Company (the "Position")
reporting to the Company's President. Employee's duties and powers shall be
those consistent with the office of the Position, with such additional duties or
titles as mutually determined necessary or appropriate from time to time by the
Company's President. Employee agrees to devote his full time and best efforts to
the Company in the performance of his duties. All of the Employee's powers and
authorities shall be subject to the reasonable direction and control of the
President. Employee acknowledges that the executive offices of the Company will
be located in Phoenix, Arizona and he shall perform his duties under this
Agreement from those executive offices.
Section 3. TERM. Except as otherwise provided in Section 6 hereof, the
term of this Agreement shall be for two (2) years ("Term"), beginning on the
Effective Date (also referred to as the "Commencement Date"). Unless and until
terminated as provided for in Section 6, this Agreement shall automatically
extend and renew on each annual anniversary of the Effective Date by adding one
(1) year to the Term from year to year until terminated.
Section 4. COMPENSATION AND BENEFITS. In consideration for the services
of the Employee hereunder, the Company will compensate Employee as follows:
(a) BASE SALARY. During the Term of this Agreement and until
terminated, Employee shall receive a monthly minimum base salary (the
"Base Salary") equal to the greater of: (i) twelve thousand five
hundred and 00/100 dollars ($12,500.00) per month; or (ii) such amount
as determined by the President in writing. Employee's Base Salary shall
be paid in accordance with Company's standard policy regarding payment
of compensation to employees but no less frequently than monthly.
Page 4 of 22
(b) BONUS. Commencing with the fiscal year beginning April 1,
2000 and continuing from year to year until this Agreement is
terminated, Employee shall be eligible to receive a cash bonus each
year during the term of this Agreement determined in accordance with
the Management Incentive Compensation Plan as amended from time to
time, a copy of which is attached as Exhibit "A". Such bonus shall be
payable by the Company to Employee as provided for in the Management
Incentive Compensation Plan.
(c) BENEFITS. The Company shall grant Employee options to
purchase shares of the Company's Common Stock in such amounts, with
such vesting and at such prices as determined by the President all in
accordance with the terms of a Stock Option Agreement, and in the
general form of option agreement attached as Exhibit "B". In addition,
during the term of this Agreement, Employee shall be allowed to
participate in, and be entitled to benefits, plans and programs,
including improvements or modifications of the same, which are now, or
may hereafter be, those available to officers or employees of a like
position ("Executives"). Employee shall be entitled to medical, dental
and retirement benefits which are generally made available to
Executives, provided further that Employer will pay the total premium
costs associated with the medical and dental insurance, not including
deductibles and/or co-payments, covering the health of Employee,
Employee's spouse and Employee's dependants. Medical, dental and
disability insurance already effective shall remain in force, or if not
shall become effective on the first day of the month following the
Commencement Date. During each year of his employment Employee shall be
entitled to three (3) weeks of vacation, and such other days of
compensated absences, (i.e. sick leave or personal days) in accordance
with the Company's policies and procedures as determined from time to
time by the President.
Section 5. EXPENSES. It is acknowledged by the parties that Employee,
in connection with the services to be performed by him pursuant to the terms of
this Agreement, will be required to make payments for travel, entertainment of
business associates, mobile telephone and similar expenses (the "Out of Pocket
Expenses"). The Company will reimburse Employee for all reasonable and necessary
Out of Pocket Expenses incurred by Employee in the performance of his duties.
Employee will comply with such budget limitations, approval and reporting
requirements with respect to such Out of Pocket Expenses as the Company may
establish from time to time. The Company Prior to execution of this Agreement
will obtain and maintain, for so long as Employee is employed by the Company and
provides legal services to the Company, legal malpractice insurance which will
indemnify and protect Employee and Employer from claims by persons that Employee
committed errors, omissions, or malpractice during the delivery of legal
services to the Company or any other person. The premiums associated with such
malpractice insurance shall be paid by the Company. The Company may select the
insurance carrier provided that the policy limits meet or exceed existing policy
terms and limits and the insurance covers claims which occur while Employee is
associated with the Company. Upon termination of this Agreement, Employee shall
be permitted to obtain tail coverage if available from the insurance carrier.
The Company agrees to provide notice to Employee if that malpractice insurance
is going to be canceled or lapse. In the event that the Company relocates its
corporate offices or Employee is asked to move to other corporate offices
outside of the Phoenix, Arizona area, then Employee shall be entitled to
reimbursement of the costs of relocation described on Exhibit "C".
Section 6. TERMINATION. Employee's employment hereunder will commence
on the Commencement Date and continue until the end of the Term including any
renewals thereof, except that the employment of Employee hereunder will
terminate upon the occurrence of the following events:
(a) Death or Disability. Employee's employment will terminate
immediately upon the death of Employee during the term of his
employment hereunder or, at the option of the Company, in the event of
Page 5 of 22
Employee's disability, upon 30 days notice to Employee. Employee will
be deemed "disabled" if, as a result of Employee's incapacity due to
physical or mental illness, Employee shall have been continuously
absent from his duties with the company on a full-time basis for 120
consecutive business days, and Employee shall not reasonably be
expected to be able to resume his duties within 60 days of the end of
such 120 day period. In the event of the termination of this Agreement
pursuant to this subsection 6(a), Employee will not be entitled to any
Severance Amount (as hereinafter defined) or other compensation except
for any portion of his base salary accrued but unpaid from the last
monthly payment date to the date of termination and expense
reimbursements under Section 5 hereof or for expenses incurred in the
performance of his duties hereunder prior to termination.
(b) For Cause. The Company may terminate the Employee's
employment for "Cause" immediately upon written notice by the Company
to Employee. For purposes of this Agreement, a termination will be for
Cause if: (i) Employee willfully and continuously fails to perform his
duties with the Company (other than any such failure resulting from
incapacity due to physical or mental illness); (ii) Employee willfully
engages in gross misconduct materially and demonstrably injurious to
the Company; or (iii) Employee has been convicted of a felony which the
President reasonably believes will result in injury to the Company or
which would disqualify employee for coverage by the Company's surety
bond. In the event of the termination of this Agreement pursuant to
this sub-section 6(b), Employee will not be entitled to any Severance
Amount (as hereinafter defined) or further consideration, except for
any portion of the base salary accrued but unpaid from the last monthly
payment date to the date of Termination and expense reimbursements
under Section 5 hereof for expenses incurred in the performance of his
duties hereunder prior to termination.
(c) By Company Without Cause. The Company may terminate this
Agreement during the Term at any time for any reason without cause. It
shall be deemed a termination without cause if Company changes the
Position of Employee without Employee's prior written consent. In the
event of the termination of this Agreement pursuant to this subsection,
the Company will pay Employee, as Employee's sole remedy in connection
with such termination, severance in the amount determined by
multiplying Employee's monthly base salary at the rate in effect
immediately preceding the termination of Employee's employment by
twelve (12) months (the "Severance Amount"). The Company will also pay
Employee the portion of his base salary accrued but unpaid from the
last monthly payment date to the date of termination and expense
reimbursements under Section 5 hereof for expenses incurred in the
performance of his duties hereunder prior to termination. The Company
will pay the Severance Amount in a lump sum and within thirty (30) days
of the Employee's last day of employment. The Company will not be
entitled to offset or mitigate the amount due under this subsection by
any other amounts payable to Employee, including amounts payable or
paid to Employee by third parties for Employee's services after the
date of termination, except as provided for otherwise in Section 10(b)
hereinafter.
(d) CHANGE OF CONTROL. Notwithstanding anything to the
contrary contained in this Section 6, in the event Employee's
employment with the Company terminates for any reason (other than death
or disability) within the twelve (12) month period following a Change
of Control (as defined hereafter), then the Company will pay Employee a
lump sum payment (the "Termination Payment") in cash equal to the
amount of the Severance Amount; plus, the amount of Employee's base
salary accrued but unpaid and any expense reimbursement for expenses
incurred in the performance of the duties described herein prior to the
termination date. A "Change of Control" shall be deemed to have
occurred: (i) when in a single transaction or a series of transactions
Page 6 of 22
a change of stock ownership of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and any successor item of a similar nature has
occurred; or (ii) upon the acquisition of beneficial ownership,
directly or indirectly, by any person (as such term is used in Section
13(d) and 14(d)(2) of the Exchange Act of securities of the Company) in
a single transaction or a series of transactions representing 33% or
more of the combined voting power of the Company's then outstanding
securities; or (iii) sale of substantially all of the assets of the
Company in a single transaction or a series of transactions; or (iv)
removal by the Company from the Position identified herein without
Employee's prior written consent ; provided that a Change in Control
will not be deemed to have occurred for purposes of clauses (i) and
(ii) hereof with respect to any person meeting the requirements of Rule
13d-1(b)(1) promulgated under the Securities Exchange Act of 1934, as
amended. The Company shall pay the Termination Payment to Employee upon
written notice by Employee. The Termination Payment due under this
Section will not be affected by the manner in which Employee's
employment is terminated and accordingly will be whether the Change of
Control occur after termination of this Agreement and whether
Employee's termination of employment is voluntary, involuntary, for
cause, or without cause.
Section 7. EFFECT OF TERMINATION ON OPTIONS. If Employee is terminated
"for cause" under Section 6(b) above, then the effect of the termination of the
Employee's employment on such options shall be determined by the terms of the
option plan under which the options are issued and the option agreement related
to such options, except that Employee shall retain those options which are
already vested and shall have ninety (90) days to exercise those vested options.
Notwithstanding anything to the contrary herein or in any option agreement, in
the event of: (a) a Change of Control, or (b) termination of this Agreement for
any reason (except if "for cause"), then the Options issued and outstanding to
Employee shall immediately vest (100%), and the Employee may exercise his
options at any time during the original term of the option agreement (as defined
therein), and such termination of this Agreement shall not cause termination or
expiration of the options.
Section 8. CONFIDENTIAL INFORMATION. Employee recognizes and
acknowledges that certain assets of the Company and its affiliates, including
without limitation information regarding customers, pricing policies, methods of
operation, proprietary computer programs, sales, products, profits, costs,
markets, key personnel, formulae, product applications, technical processes, and
trade secrets (herein called "Confidential Information") are valuable, special
and unique assets of the Company and its affiliates. Employee will not, during
or after the term of his employment, disclose any of the Confidential
Information to any person, firm, corporation, association, or any other entity
for any reason or purpose whatsoever, directly or indirectly, except as may be
required pursuant to his employment hereunder, unless and until such
Confidential Information becomes publicly available other than as a consequence
of the breach by Employee of his confidentiality obligations hereunder. In the
Event of the termination of his employment, whether voluntary or involuntary,
and whether by the Company or Employee, Employee will deliver to the Company all
documents and data pertaining to the Confidential Information and will not take
with him any documents or data of any kind or any reproductions (in whole or in
part) of any items relating to the Confidential Information.
Section 9. NONCOMPETITION. Until one year after termination of
Employee's employment with the Company for any reason, whether voluntary or
involuntary, Employee will not: (i) engage directly or indirectly, alone or as a
shareholder, partner, officer, director, employee or consultant of any other
business organization, in any business activities which are directly competitive
with the Company and which were either conducted by the Company at the time of
Employee's termination or "Proposed to be Conducted" (as defined herein) by the
Company at the time of such termination (the "Designated Industry"); (ii) divert
Page 7 of 22
to any competitor of the Company in the Designated Industry any customer of
Employee or, (iii) solicit or encourage any officer, employee, or consultant of
the Company to leave its employ for employment by or with any competitor of the
Company in the Designated Industry. The parties hereto acknowledge that
Employee's non-competition obligations hereunder will not preclude Employee from
(i) owning less than 5% of the common stock of any publicly traded corporation
conducting business activities in the Designated Industry or (ii) serving as an
officer, director, stockholder or employee of an entity engaged in the
healthcare industry whose business operations are not competitive with those of
the Company. "Proposed to be Conducted," as used herein, shall mean those
business activities which are the subject of a formal, written business plan
approved by the Board of Directors prior to termination of Employee's employment
and which the Company takes material action to implement within 12 months of the
termination of Employee's employment. Employee will continue to be bound by the
provisions of this Section 9 until their expiration and will not be entitled to
any compensation from the Company with respect thereto. If at any time the
provisions of this Section 9 are determined to be invalid or unenforceable, by
reason of being vague or unreasonable as to area, duration or scope of activity,
this Section 9 will be considered divisible and will become and be immediately
amended to only such area, duration, scope of activity as will be determined to
be reasonable and enforceable by the court or other body having jurisdiction
over the matter; and Employee agrees that this Section 9 as so amended will be
valid and binding as though any invalid or unenforceable provision had not been
included herein.
Section 10. GENERAL.
(a) NOTICES. All notices and other communications hereunder
will be in writing or by written telecommunication, and will be deemed
to have been duly given if delivered personally or if mailed by
certified mail, return receipt requested or by written
telecommunication, to the relevant address set forth below, or to such
other address as the recipient of such notice or communication will
have specified to the other party hereto in accordance with this
Section 10(a):
If to the Company, to: With a copy to:
▇-▇▇▇▇▇▇▇.▇▇▇, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: CHIEF EXECUTIVE OFFICER Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, III
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Employee, to:
▇▇▇▇▇ ▇▇▇▇ Jr.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) WITHHOLDING AND OFFSET. All payments required to be made
by the Company under this Agreement to Employee will be subject to the
withholding of such amounts, if any, relating to federal, state and
local taxes as may be required by law. No payment under this Agreement
will be subject to offset or reduction attributable to any amount
Employee may owe to the Company or any other person.
(c) EQUITABLE REMEDIES. Each of the parties hereto
acknowledges and agrees that upon any breach by Employee of his
obligations under any of the Sections 8 and 9 hereof, the Company ▇▇▇▇
▇▇▇▇ 8 of 22
have no adequate remedy at law, and accordingly will be entitled to
specific performance and other appropriate injunctive and equitable
relief.
(d) SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable, such provision will be fully
severable and this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision never comprised a part
hereof; and the remaining provisions hereof will remain in full force
and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there will be
added automatically as part of this Agreement a provision as similar in
its terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable. Any and all covenants and
obligations of either party hereto which by their terms or by
reasonable implication are to be performed, in whole or in part, after
the termination of this Agreement, shall survive such termination,
including specifically the obligations arising under Sections: 6, 7, 8
and 9.
(e) WAIVERS. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder will impair such
right, power or privilege, nor will any single or partial exercise of
any such right, power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege.
(f) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of
which together will constitute one and the same instrument.
(g) CAPTIONS. The captions in this Agreement are for
convenience of reference only and will not limit or otherwise affect
any of the terms or provisions hereof.
(h) REFERENCE TO AGREEMENT. Use of the words "herein,"
"hereof," "hereto " and the like in this Agreement refer to this
Agreement only as a whole and not to any particular subsection or
provision of this Agreement, unless otherwise noted.
(i) BINDING AGREEMENT. This Agreement will be binding upon and
inure to the benefit of the parties and will be enforceable by the
personal representatives and heirs of Employee and the successors of
the Company. If Employee dies while any amounts would still be payable
to him hereunder, such amounts will be paid to Employee's estate. This
Agreement is not otherwise assignable by Employee.
(j) ENTIRE AGREEMENT. Except as provided in the benefit plans
and programs referenced herein, this Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and may not be
amended except by a written instrument hereafter signed by each of the
parties hereto.
(k) GOVERNING LAW. This Agreement and the performance hereof
will be construed and governed in accordance with the laws of the State
of Arizona, without regard to its choice of law principles. Any
modification of this Agreement shall be effective only if it is in
writing and signed by the parties hereto.
(l) ATTORNEY'S FEES. If legal action is commenced by either
party to enforce or defend its rights under this Agreement, the
prevailing party in such action shall be entitled to recover its costs
and reasonable attorneys' fees in addition to any other relief granted.
Page 9 of 22
If either party commences legal action or arbitration to enforce or
defend its rights under this Agreement, the prevailing party in such
action shall be entitled to recover its costs, including travel,
lodging and meals for itself, counsel and witnesses, actual witness
fees paid and legal fees actually paid, including costs of associating
local counsel with regular counsel, if actually paid.
Section 11. BINDING ARBITRATION. Any controversy or claim
arising out of or relating to this Agreement, or breach thereof, shall
be settled exclusively by arbitration in Phoenix, Arizona, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. A sole arbitrator shall conduct
Arbitration and he or she shall render his or her award within forty
five (45) days of appointment. Judgment upon the award rendered by the
arbitrator may be entered in, and enforced by, any court having
jurisdiction thereof. The award of the arbitrator may grant any relief
available to the parties in law or in equity; and the award may contain
a provision for payment of costs and attorney's fees to the prevailing
party, if any.
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EXECUTED as of the date and year first written above.
▇-▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------------
Its: President
----------------------------------
EMPLOYEE:
/s/ ▇▇▇▇▇ ▇▇▇▇, Jr.
---------------------------------------
▇▇▇▇▇ ▇▇▇▇, Jr.
Date: February 16, 2001
----------------------------------
Page 11 of 22
Exhibit "A"
Current Form of Management Incentive Compensation Plan
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▇-▇▇▇▇▇▇▇.▇▇▇, INC.
MANAGEMENT INCENTIVE COMPENSATION PLAN
The ▇-▇▇▇▇▇▇▇.▇▇▇, Inc. ("e-dentist") Management Incentive Compensation Plan
(the "Plan") is designed to offer incentive compensation to key employees
("Associates") by rewarding the achievement of corporate goals, specifically
measured individual goals that are consistent with and support the overall
corporate goals. The Management Incentive Compensation Plan will create an
environment which will focus key Associates on the achievement of objectives.
Since cooperation between departments and Associates will be required to achieve
corporate objectives which will represent a significant portion of the
Compensation Plan, the Plan should help ▇▇▇▇▇▇ improved teamwork and a more
cohesive management team. The Company reserves the right to revise or
discontinue the Plan at any time. Key Associates (as hereinafter defined) who
may be eligible to participate in the plan shall be selected at the sole
discretion of the Company.
PURPOSE OF THE PLAN
The E-dentist Management Incentive Compensation Plan (the "Plan") is designed
to:
o Provide an incentive program to achieve overall corporate
objectives and to enhance shareholder value
o Reward those individuals who significantly impact corporate
results
o Encourage increased teamwork among all disciplines within the
Company
o Incorporate an incentive program in E-dentist's overall
compensation program to help attract and retain key Associates
PLAN GOVERNANCE
The Plan will be governed by the Compensation Committee of the Board of
Directors. The President and CEO will be responsible for administration of the
Plan. The Compensation Committee will be responsible for approving any incentive
awards to the President and CEO.
CORPORATE AND INDIVIDUAL PERFORMANCE
Prior to the beginning of the Plan year, the President and CEO will present to
the Board a list of overall corporate objectives for the coming year, which are
subject to approval by the Board. All participants in the Plan will then develop
a list of key individual objectives which will be approved by the responsible
Vice President and by the President and CEO.
The Plan will call for incentive awards based on the achievement of annual
corporate and individual objectives that have been approved as indicated above.
The relative weight between corporate and individual performance factors will
vary based on levels within the organization. The weighing will be reviewed
annually and be adjusted as necessary or appropriate. The weighing for the year
2000 will be as follows:
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CORPORATE INDIVIDUAL
--------- ----------
President and CEO 100%
Senior Vice Presidents/Officers 75% 25%
Vice Presidents/Directors &
Corporate Controller 50% 50%
Practice Administrators/Managers/
Practice Advisors/Practice
Consultants (employed) 50% 50%
TARGET AWARDS MULTIPLIER
Incentive awards will be determined by applying an "achievement multiplier" to
the base salary of Associates in the Plan. The following target award
multipliers will be used in implementing the Plan:
POSITION TARGET AWARD MULTIPLIER
-------- -----------------------
President and CEO 35%
Senior Vice Presidents/Officers 25%
Vice Presidents/Directors &
Corporate Controller 15%
Practice Administrators/Managers/
Practice Advisors/Practice
Consultants (employed) 10%
The target award multiplier will be used to establish the target cash award at
the beginning of each year. The target award multiplier will be equal to the
actual award multiplier used at year-end in situations where corporate and
individual objectives have been met for the year.
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PERFORMANCE MEASUREMENT
The following scale will be used to determine the actual award multiplier based
upon measurement of corporate and individual performance versus objectives.
Separate payment multipliers will be established for both the individual and the
corporate components of each award. The same payment multiplier for the
corporate component of each participant's annual award shall be used for all
Plan participants in any given year.
Performance Category Award Multiplier
-------------------- ----------------
1. Performance for the year met or exceeded objectives or
was excellent in view of prevailing conditions 100%
2. Performance generally met the year's objectives or was
very acceptable in view of prevailing conditions 75%
3. Performance for the year met some but not all objectives 25%
4. Performance for the year was not acceptable in view of
prevailing conditions 0%
CALCULATION OF AWARD
Example I shows a sample cash award calculation under the Plan. First, a total
target award is calculated by multiplying the Associates base salary by the
target award multiplier. This dollar figure is then divided between its
corporate component and its individual component based on the performance factor
mix for that specific position. This calculation establishes specific dollar
target awards for the performance period for both the individual and corporate
components of the award.
At the end of the performance period, corporate and individual award multipliers
will be established using the criteria described above. The corporate award
multiplier, which is based on overall corporate performance, is used to
calculate actual corporate performance awards for all Plan participants. This is
done by multiplying the target corporate award established for each individual
at the beginning of the performance period by the actual award multiplier. The
individual award multiplier, which is based on an individual's performance
against objectives, is used in the same way to calculate the actual individual
performance award.
EXAMPLE 1: CASH AWARD CALCULATION
Position Vice President
Base salary $100,000
Year 2000 target award multiplier 15%
Year 2000 target award $15,000
Target award components (based on performance factor mix)
Target award based on Corporate performance (50%) 7,500
Target award based on Individual performance (50%) 7,500
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Actual Year 2000 Cash Award Calculation:
----------------------------------------
Assumed payment multipliers based on assessment of Corporate and Individual
performance:
Corporate multiplier 75% - performance generally met year's
objectives
Individual multiplier 100% - performance generally exceeded
objectives
Year 2000 Cash Award:
Corporate component $5,625 ($7,500 X 75%)
Individual component $7,500 ($7,500 X 100%)
Total 2000 Cash Award $13,125
PAYMENT OF THE AWARD
Annual performance reviews will be completed by May 15th and payment of Awards
will be made after receipt of the Company's audited financial statements and
after review and approval by the President and CEO and the Compensation
Committee of the Board of Directors.
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Exhibit "B"
Form of Stock Option Agreement
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▇-▇▇▇▇▇▇▇.▇▇▇, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (the "Agreement") is entered into
between ▇-▇▇▇▇▇▇▇.▇▇▇, Inc. ("e-dentist"), a Delaware corporation (the
"Company"), and __________________________(the "Optionee") as of
______________________ (the "Effective Date"). In consideration of the mutual
promises and covenants made herein, the parties hereby agree as follows:
1. GRANT OF OPTION. Under the terms and conditions of the Company's
1997 Stock Compensation Plan, as amended (the "Plan"), the terms of which are
incorporated herein by reference, the Company grants to the Optionee an option
(the "Option") to purchase from the Company all or any part of a total of
____________ (________) shares of the Company's Common Stock, par value $.001
per share, at an exercise price of _______________ ($________) per share (the
"Purchase Price"). The Option is granted as of _________________________ (the
"Date of Grant").
2. CHARACTER OF OPTION. [The Option is an "incentive stock option"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").] [Delete Prior and Insert Language for Non-Qualified
Option: This Option is a non-qualified stock option and is therefore not an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").]
3. TERM. The Option will expire on the day prior to the tenth
anniversary of the Date of Grant, or such earlier date as may be provided in (i)
Section 1.16 of the Plan regarding Employee (as defined in the Plan) termination
or (ii) Section 11 below.
4. VESTING. Subject to the provisions of Section 1.12 and Section 1.16
of the Plan, the Option may be exercised according to the following schedule:
[Example Only: Beginning on _____________, _____ percent (_____%) shall
vest on the first day of each month, from month to month, until fully
vested.]
The unexercised portion of the Option from one period may be carried
over to a subsequent period or periods, and the right of the Optionee to
exercise the Option as to such unexercised portion shall continue for the entire
term. Upon exercise the actual number of shares purchased shall be rounded to
the nearest whole share.
5. PROCEDURE FOR EXERCISE. Exercise of the Option or a portion thereof
shall be effected by the giving of written notice to the Company by the Optionee
in accordance with Section 1.13 of the Plan and payment of the Purchase Price
for the shares to be acquired pursuant to the exercise.
6. PAYMENT OF PURCHASE PRICE. Payment of the Purchase Price for any
shares purchased pursuant to the Option shall be in accordance with the
provisions of Section 1.11(b) of the Plan.
7. TRANSFER OF OPTIONS. This option is not assignable or transferable
by the Optionee otherwise than by will or the laws of descent and distribution
and during the lifetime of the Optionee may only by exercised by the Optionee or
his legally authorized representative.
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8. ACCEPTANCE OF THE PLAN. The Option is granted subject to all of the
applicable terms and provisions of the Plan, and such terms and provisions are
incorporated by reference herein. The Optionee hereby accepts and agrees to be
bound by all the terms and conditions of the Plan.
9. AMENDMENT. This Agreement may be amended by an instrument in writing
signed by both the Company and the Optionee.
10. MISCELLANEOUS. This Agreement will be construed and enforced in
accordance with the laws of the State of Arizona and will be binding upon and
inure to the benefit of any successor or assign of the Company and any executor,
administrator, trustee, guarantor or other legal representative of the Optionee.
11. RIGHTS OF OPTIONEE UPON TERMINATION OF EMPLOYMENT. In the event an
Optionee ceases to serve as an Employee by reason of death, retirement,
permanent disability, termination for cause, or resignation by the Optionee (as
hereinafter defined), then the Options may be exercised as follows:
(a) DEATH. If the Optionee dies while serving as an Employee
or within three (3) months after ceasing to become an Employee, the
Option shall become fully vested and exercisable during the period
beginning with the date of the Employee's death and ending twelve (12)
months thereafter, unless by its terms it expires sooner. During such
period, the Option may be fully exercised, to the extent that it
remains unexercised on the date of death, by the Optionee's personal
representative or by the distributees to whom the Optionee's rights
under the Option shall pass by will or by the laws of descent and
distribution.
(b) RETIREMENT. If the Optionee ceases to serve as an Employee
as a result of retirement, then (i) the Company's Compensation
Committee shall have the ability to accelerate the vesting of the
Option, in its sole discretion, or (ii) the Option shall be exercisable
(to the extent exercisable and vested on the effective date of such
Retirement or, if the vesting of such Option has been accelerated, to
the extent exercisable following such acceleration) at any time during
the period beginning with the effective date of the retirement and
ending three (3) months thereafter, unless by its terms it expires
sooner.
(c) DISABILITY. If the Optionee ceases to serve as an Employee
as a result of permanent disability (as defined in the Plan or the
Employee's employment agreement), the Option shall become fully vested
and exercisable during the period beginning with the date Employee is
determined to be permanently disabled and ending twelve (12) months
thereafter, unless by its terms it expires sooner.
(d) CAUSE. If the Optionee ceases to be employed by the
Company because the Optionee's relationship with the Company is
terminated by the Company for cause (as defined in the employment
agreement), the Option shall be exercisable (to the extent exercisable
and vested on the effective date of such termination) during the period
beginning with the date of such termination and ending three (3) months
thereafter, unless by its term the Option expires earlier. If any facts
that would constitute Cause for termination of an Optionee are
discovered after the Optionee's relationship with the Company has
ended, the Options may be immediately terminated by the Company's
Compensation Committee. Notwithstanding the foregoing, if an Optionee
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is employed pursuant to a written employment agreement with the
Company, the Optionee's relationship with the Company shall be deemed
terminated for Cause for the purposes of this Agreement only if the
Optionee is considered under the circumstances to have been terminated
"for cause" for purposes of such written agreement or the Optionee
voluntarily ceases to be an employee in breach of such Optionee's
employment agreement with the Company.
(e) VOLUNTARY BREACH. If the Optionee ceases to be an Employee
voluntarily by resignation or in breach of the Optionee's employment
agreement, the Options shall automatically expire on the date of such
termination of the employment relationship.
(f) WITHOUT CAUSE. If the Optionee is terminated as an
Employee Without Cause, the Option shall be exercisable (to the extent
exercisable and vested on the effective date of such termination) at
any time within three (3) months after the effective date of such
termination, unless by its term the Option expires earlier. Without
Cause shall be defined as termination for any reason other than for
Cause.
[Signatures on following page.]
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Executed as of the ________ day of _________________, 2001.
▇-▇▇▇▇▇▇▇.▇▇▇, INC.
By:
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
ACKNOWLEDGED AND AGREED:
THE OPTIONEE:
---------------------------------------
[First_Name] [Last_Name]
---------------------------------------
Optionee's Social Security Number
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Exhibit "C"
RELOCATION EXPENSES
Upon relocation to offices outside of the Phoenix, Arizona area,
Employee shall be entitled to receive reimbursement of all reasonable moving and
relocation expenses associated with Employee's relocation outside of Phoenix,
Arizona. The term "reasonable moving and relocation expenses" shall mean the
following:
1. Expenses in the form of closing costs incurred by Employee in
connection with the purchase by Employee of a new principal residence in the new
location;
2. Expenses incurred by Employee for the packing and moving of personal
property and automobiles of Employee located in the present principal residence
to the Employee's new residence;
3. Expenses incurred by Employee for a period of up to three (3)
months, as housing reimbursement, if necessary, to provide temporary housing
while Employee locates and obtains permanent housing;
4. Expenses incurred by Employee for up to two (2) trips to the
relocation area for Employee and Employee's spouse in connection with Employee's
efforts to locate a new residence (with those expenses to be consistent with
reasonable travel and expenses related to Executive business travel);
5. Expenses incurred in the re-registration and re-licensing of
Employee's automobiles in the new jurisdiction; and,
6. Payments of subparagraphs (1) - (5) above shall be paid net of
withholding for taxes and grossed up in an amount calculated to negate the
adverse income tax consequences to Employee of the reimbursement of the
relocation expenses.
Provided however that the total expenses to be reimbursed by Company to Employee
as set forth in this exhibit shall not exceed the total sum of $40,000.
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