EXECUTIVE EMPLOYMENT AGREEMENT
BY AND BETWEEN
RTIN HOLDINGS, INC.
AND
XXXXXX XXXX XXXXXXX
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into to
commence and be effective as of the 1st day of January, 2001 ("Effective
Date") by and between RTIN HOLDINGS, INC., a Texas corporation, (the
"Company") and XXXXXX XXXX XXXXXXX, the undersigned individual
("Executive").
R E C I T A L
The Company and Executive desire to enter into this Agreement, setting
forth the terms and conditions of Executive's employment with the Company.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Company and Executive agree as follows:
1. Employment
----------
(a) Term
----
The Company hereby agrees to employ Executive and Executive agrees to work
for the Company as a full-time employee, for a period commencing on the
date first set forth above and ending on the fourth anniversary of such
date (the "Original Term"). The Original Term shall be extended
automatically for an additional one-year period, unless notice that this
Agreement will not be extended is given by either party to the other at
least thirty (30) day prior to the expiration of the Original Term.
(b) Title and Job Description
-------------------------
The Company hereby employs Executive as its President and Chief Operating
Officer ("COO") upon the terms and conditions set forth in this Agreement.
As COO, the Executive shall always be the most senior operations officer
and shall have the duties, responsibilities and authority that are
customarily associated with such position. Executive's duties and
responsibilities shall include authority for overall management of the
Company subject to Board policies and direction. Executive's duties and
responsibilities hereunder shall also include the provision of management
oversight services to Company's subsidiaries Pegasus Pharmacy, Inc., a
Louisiana corporation, ("Pegasus") and MedEx Systems, Inc. a Louisiana
corporation ("MedEx"). Executive shall report directly to the Board of
Directors of the Company. Executive shall perform his job in Longview,
Texas and shall not have to render services at another location, except on
a temporary basis.
2. Compensation
------------
(a) Base Salary
-----------
Executive shall be paid a base salary ("Base Salary") at the annual rate of
$185,000.00 for year one, $215,000 for year two, $235,000 for year three,
and $275,000 for year four, payable in bi-weekly installments consistent
with Company's payroll practices. The annual Base Salary shall be reviewed
on or before the fourth anniversary date of this Agreement by the
Compensation Committee of the Board of Directors of RTIN Holdings, Inc.,
Company's parent, ("RTIN") to determine if such Base Salary should be
increased for the following year in recognition of services to the Company.
In no event, however, will the Executive's Base Salary for any subsequent
year be reduced below the level of the previous year.
(b) Incentive Compensation
----------------------
In addition to the Base Salary, the Company shall pay to Executive as
incentive compensation ("Incentive Compensation") an amount equal to 1.5%
of the average Adjusted Net Profits, as hereinafter defined, of the Company
and Pegasus, beginning with the year ending December 31, 2002 and each
fiscal year thereafter during the term of this Agreement. "Adjusted Net
Profits" shall mean the net profits of the Company and the Company's
subsidiaries Pegasus Pharmacy, Inc. and MedEx Systems, Inc., respectively,
before federal and state income and franchise taxes, determined in
accordance with generally accepted accounting practices by the Company's
and Pegasus's independent accounting firm and adjusted to exclude:
(i) any Incentive Compensation payments paid pursuant to this
Agreement;
(ii) any contributions to pension and/or profit sharing plans;
(iii)any extraordinary gains or losses (including, without
limitation, gains or losses on disposition of assets);
(iv) any refund or deficiency of federal and state income or franchise
taxes paid in a prior year;
(v) any inter-company transactions; and
(vi) any provision for federal or state income or franchise taxes made
in prior years that is subsequently determined to be unnecessary.
The determination of the Adjusted Net Profits made by the independent accounting
firm employed by the Company and Pegasus shall be final and binding upon
Executive, Company and Pegasus. The Incentive Compensation shall be paid within
thirty (30) days after the independent accounting firm has concluded its audit.
If the final audit is not prepared within ninety (90) days after the end of the
fiscal year, then Company shall make a preliminary payment equal to fifty
percent (50%) of the amount due based upon the Adjusted Net Profits
preliminarily determined by the independent accounting firm, subject to payment
of the balance, if any, promptly following completion of the audit by the
independent accounting firm.
2
(c) Stock Options
-------------
Executive shall be entitled to options to acquire 125,000 shares of common
stock of RTIN pursuant to the terms of a Stock Option Plan to be adopted by
the Company and RTIN on or before the Effective Date, subject to the
following terms:
(i) The options will vest only as follows:
If still employed by Company on Options Vest for
------------------------------- -------------------------------
December 5, 2002 40,000 shares
------------------------------- --------------------------------
December 5, 2003 40,000 shares
------------------------------- --------------------------------
December 5, 2004 45,000 shares
------------------------------- --------------------------------
(ii) The exercise price per share for the options shall be the average
closing price of RTIN common stock, as quoted by the NASD OTC-BB, for
the five trading days preceding the Effective Date of this Agreement,
as appropriately adjusted for stock splits, stock dividends, and the
like.
(iii) The vested options shall be exercisable until the earlier of (A)
three (3) years after vesting or (B) ninety (90) days after
termination of Executive's employment or Continuation Period, as
hereinafter defined, with the Company with or without cause or with
good reason.
(iv) Issuance of the options shall be in accordance with all
applicable securities laws and the other terms and conditions of the
Company's Stock Option Plan and form of the Stock Option Agreement to
be adopted by RTIN and the Company.
(v) Upon the completion of year three the Compensation Committee of
the Board of Directors of the Company will evaluate the overall
performance of Executive and determine if an option to purchase and
additional fifty thousand (50,000) shares are warranted to be vested
on December 5, 2005.
3. Benefits
--------
(a) Holidays
--------
Executive will be entitled to at least eight (8) paid holidays each
calendar year and two (2) personal days. Company will notify Executive on
or about the beginning of each calendar year with respect to the holiday
schedule for the coming year. Personal holidays, if any, will be scheduled
in advance subject to requirements of Company.
(b) Vacation
--------
Executive shall be entitled to fourteen (14) paid vacation days per
calendar year.
(c) Sick Leave
----------
Executive shall be entitled to sick leave and emergency leave according to
the regular policies and procedures of the Company. Additional sick leave
or emergency leave over and above paid leave provided by the Company shall
be granted at the discretion of the Board of Directors.
(d) Medical, Disability and Group Life Insurance
--------------------------------------------
Company agrees to (i) include Executive in the group medical and hospital
plan of Company, (ii) provide short- and long-term disability insurance, at
no cost to Executive, and (iii) provide group life insurance for Executive,
at no cost to Executive, in the minimum amount of $1,000,000.00 during this
Agreement. Executive shall be responsible for payment of any federal or
state income tax imposed upon these benefits.
3
(e) Pension and Profit Sharing Plans
--------------------------------
Executive shall be entitled to participate in any pension, profit sharing
or other type of plan adopted by the Company for the benefit of its
officers and/or regular employees.
(f) Automobile
----------
Company shall provide Executive the use of an automobile of Executive's
choice at a monthly lease rate not to exceed $1,000.00. Company agrees to
replace the automobile with a new one at Executive's request no more often
than the earlier of once every two (2) years or 24,000 miles. Company will
pay all automobile operating expenses incurred by Executive in the
performance of Executive's professional duties. Company will procure and
maintain in force an automobile liability policy for the automobile with
coverage, including Executive, in the minimum amount of $1,000,000.00
combined single limit on bodily injury and property damage.
(g) Expenses
--------
Executive shall be entitled to reimbursement for all reasonable expenses,
including travel and entertainment, incurred by Executive in the
performance of Executive's duties. Executive will maintain records and
written receipts, as required by Company policy and reasonably requested by
the Board of Directors to substantiate such expenses.
(h) Health Club Benefits
--------------------
The Company shall provide Executive's family with full health club benefits
at a health club of Executive's choice in Longview, Texas.
4. Termination
-----------
(a) Termination With Cause
----------------------
The Company may terminate Executive's employment with Company for Cause by
a majority vote of the Board of Directors, provided that the triggering
event, as defined below, is not cured within thirty (30) days after written
notice of such Cause is delivered to Executive. If the event is not timely
cured, the Board of Directors shall provide Executive a final written
notice of termination. In such event, Executive will be entitled to receive
only accrued compensation and benefits. For purposes of this Agreement,
"Cause" shall mean the occurrence of any of the following events during the
term of this Agreement:
(i) serious misconduct, dishonesty or disloyalty, directly related to
the performance of duties for the Company, which results from a
willful act or omission or from gross negligence and which is
materially or potentially materially injurious to the operations,
financial condition or business reputation of the Company or any
significant affiliate thereof;
(ii) a conviction (or a plea bargain admitting criminal guilt) in any
criminal proceeding that may have a material adverse impact on the
Company's reputation and standing in the community or which is
punishable by imprisonment;
4
(iii) drug or alcohol abuse, but only to the extent that such abuse
has an obvious and material effect on the Company's reputation and/or
the performance of duties and responsibilities required under this
Agreement;
(iv) willful and continued failure to substantially perform duties
required under this Agreement; or
(v) any other material breach of this Agreement by Executive.
For purposes of this provision, no act or failure to act shall be considered
"willful" unless it is done, or omitted, in bad faith without reasonable belief
that the action or omission was in the best interest of the Company.
(b) Involuntary Termination Without Cause or Disability or Voluntary
----------------------------------------------------------------
Termination for Good Reason
---------------------------
In the event that, during the term of this Agreement, (i) the Company
terminates Executive's employment for any reason other than Cause, Death or
Disability, as hereinafter defined, or (ii) Executive terminates his
employment for Good Reason, as hereinafter defined, then Executive shall be
entitled to receive the following payments and benefits:
(1) Severance
---------
The Company shall pay to Executive following the date of the employment
termination and over the succeeding twenty-four (24) months, in accordance
with standard payroll procedures, an amount equal to the following:
(A) Two hundred percent (200%) of the Executive's Base Salary in
effect on the date of the employment termination; plus
(B) Two hundred percent (200%) of the Executive's Incentive
Compensation for the fiscal year in which the employment was
terminated.
(2) Continuation of Health, Disability and Life Insurance
-----------------------------------------------------
The coverage described in this Subsection (2) shall be provided for a
"Continuation Period" beginning on the date when the employment termination
is effective and ending on the earlier of twenty-four (24) months following
the date of the employment termination or Executive's death. During the
Continuation Period, the Executive (and, where applicable, Executive's
spouse and dependents) shall be entitled to continue participation in the
group medical and hospital plan, short-term and long-term disability plan
and group term life insurance plan maintained by Company as if Executive
were still an employee of the Company. The coverage provided under this
Subsection (2) shall run concurrently with and shall be offset against any
continuation coverage under Part 6 of Title I of the Employee Retirement
Income Security Act of 1974, as amended. Where applicable, Executive's
compensation for purposes of such plans shall be deemed to be equal to
Executive's compensation (as defined in such plans) in effect on the date
of the employment termination. To the extent that the Company finds it
undesirable to cover Executive under the Company's group plans, the Company
shall provide Executive (at Company's own expense) with the same level of
coverage under individual policies.
5
(3) Stock Option Plan
-----------------
Notwithstanding any provisions in the Stock Option Plan to the contrary,
the Continuation Period shall be counted as employment with the Company for
purposes of vesting, such that any options granted to Executive hereunder
or hereafter shall continue to vest during the Continuation Period, as if
the Executive was still employed by Company. The parties understand and
agree that the Continuation Period also counts as employment with the
Company for purposes of determining the expiration date for the exercise of
any stock options held by Executive, such that Executive shall be permitted
to exercise such vested options until ninety (90) days after the
termination of the Continuation Period.
(4) No Mitigation
-------------
Executive shall not be required to mitigate the amount of any payment or
benefit contemplated by this Subparagraph (b), nor shall any such payment
or benefit be reduced by any earnings or benefits that the Executive may
receive from any other source.
(5) Good Reason
-----------
For purposes of this Subparagraph (b), "Good Reason" shall mean that
Executive, without his consent, has either:
(A) incurred a material reduction in his title, status, authority or
responsibility at the Company; or
(B) incurred a reduction in Base Salary; or
(C) a change of control in the Company resulting in a displacement of
Executive; or
(D) been notified that his principal place of work will be relocated
to a distance of one hundred (100) miles or more.
(c) Termination for Disability
--------------------------
The Company may terminate this Agreement without liability if Executive
shall be permanently prevented from properly performing his essential
duties hereunder with reasonable accommodation by reason of illness or
other physical or mental incapacity for a period of more than one-hundred
and twenty (120) consecutive days. Upon such termination, Executive shall
be entitled only to all accrued but unpaid compensation and benefits.
(d) Death of Executive
------------------
In the event of the death of Executive during his employment under this
Agreement, the Company's obligations hereunder shall automatically cease
and terminate, provided, however, that within fifteen (15) days the Company
shall pay to Executive's heirs or personal representatives Executive's
accrued but unpaid compensation and benefits accrued to the date of death.
6
5. Specific Covenants of Executive
-------------------------------
(a) Confidentiality
---------------
The Executive will hold in confidence any Confidential Information (as
hereinafter defined) and will not disclose Confidential Information to any
person except as required by the conduct of the Company's business and then
only pursuant to a written agreement preventing further disclosure or use.
For the purposes of this Agreement, "Confidential Information" means any
and all trade secrets, methods, customer lists, computer software
(including source code and object code), databases, protocols,
specifications, designs, photographs, drawings, samples, business plans,
financial data and other information that is useful to the business of the
Company the value of which would be diminished if it were made generally
known to the public.
(b) Non-Competition
---------------
The Executive acknowledges that (i) the Company will provide to the
Executive certain information, opportunities and compensation that would
enable the Executive to have an unfair competitive advantage if the
Executive were to compete with the Company or be employed by or become an
owner of any person that competes with the Company at any time during the
Continuation Period, (ii) the Company is engaged in a development stage
business that may be conducted on a worldwide basis and (iii) the scope of
the Company's business is not presently ascertainable. During the term of
this Agreement and the Continuation Period, the Executive will not engage
in, invest in, own, manage, operate, finance, control or participate in the
ownership, management, operation, or control of, or be employed by or
provide services to any person that competes or intends to compete with the
Company or its affiliates anywhere within North America.
(c) Enforcement
-----------
The Executive acknowledges that (i) the provisions of this Section 5 are
reasonable and necessary for the protection of the Company's rights and
business, (ii) while damages for any breach may be available in an action
at law, such damages are not adequate to protect the Company's interest in
its rights and (iii) the scope and duration of the restrictions are
reasonable in both size and time. The Company shall have the right, in
addition to any other rights it may have, to obtain injunctive relief to
restrain any breach or threatened breach, or to require the performance of,
this Section 5.
6. General Provisions
------------------
(a) Indemnification
---------------
The Company shall indemnify, hold harmless and defend Executive against all
claims arising against Executive in connection with the performance of his
duties under this Agreement to the fullest extent permitted by law.
(b) Entire Agreement
-----------------
This Agreement contains the entire agreement and understanding between the
parties hereto and supersedes any prior written or oral agreements
respecting the subject matter hereof.
(c) Amendment
---------
This Agreement may be amended only by a writing signed by Executive and by
a duly authorized representative of the Company.
(d) Severability
------------
If any term, provision, covenant or condition of this Agreement shall be
held to be invalid, unenforceable or void, the remainder of this Agreement
shall remain in full force and effect.
7
(e) Construction
------------
The headings and captions of this Agreement are provided for convenience
only and are not intended to have effect in the construction or
interpretation of this Agreement. The language in all parts of this
Agreement shall in all cases be construed according to its fair meaning and
not strictly for or against the Company or Executive.
(f) Notices
-------
Any notice required under this Agreement or given in connection therewith
shall be in writing and given to the appropriate party by personal delivery
or by certified mail, postage prepaid or by recognized overnight delivery
service to Executive's residence (as noted in the Company's records) or to
the Company's principal office, as the case may be.
(g) Assignment
----------
This Agreement, or any interest therein, may not be assigned by either
party without the prior written consent of the other party.
(h) Governing Law
-------------
This Agreement shall be governed by and construed in accordance with Texas
law without regard to conflict of law principles.
(i) Rights Cumulative
-----------------
The rights and remedies provided by this Agreement are cumulative, and the
exercise of any right or remedy by either party hereto (or by his or its
successor), whether pursuant to this Agreement, to any other agreement, or
to law, shall not preclude or waive his or its right to exercise any or all
other rights and remedies.
(j) Nonwaiver
----------
No failure or neglect of either party hereto in any instance to exercise
any right, power or privilege hereunder or under law shall constitute a
waiver of any other right, power or privilege or of the same right, power
or privilege in any other instance. All waivers by either party hereto must
be in writing and signed by the party granting the waiver.
(k) Assistance in Litigation
------------------------
Executive shall, during and after termination of employment, upon
reasonable notice, furnish such information and proper assistance to the
Company as may reasonably be required by the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become a party, provided, however, that such assistance following
termination shall be furnished at mutually agreeable times and for mutually
agreeable compensation.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first set forth above.
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx
COMPANY:
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------
By: Xxxxxxx X. Xxxxxxx
Its: Chief Executive Officer
