Exhibit 10.12
-------------
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, dated as of May 14, 2001, (the
"Agreement") by and between Medix Resources, Inc., a Colorado corporation
with its principal offices located at Suite 301, 7100 E. Belleview Ave,
Greenwood Village, Colorado. ("the Company") and Xxxxx X. Xxxxx (the
"Executive").
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ the Executive and the
Executive agrees to serve the Company as its Executive Vice President (EVP)
and Chief Technology Officer (CTO).
2. Responsibilities and Supervision. The Executive shall devote
all of his business time and attention to the affairs of the Company and
its affiliated companies. The Executive shall be responsible for the
overall development and production of software products, information
technology infrastructure and technology-related sales support activities,
in each case subject to the general direction, approval and supervision of
the Company's President & Chief Executive Officer and to the restrictions,
limitations and guidelines set forth by the Board of Directors in
resolutions adopted in the minutes of the Board of Directors meetings,
copies of which shall be provided to the Executive from time to time. In
the performance of his duties, the Executive shall maintain an office at
000 Xxxxx Xxxx, Xxxx Xxxxxxxxx, XX, 00000 and/or as the President & CEO
directs to optimize execution of the Executive's job responsibilities. The
terms "affiliate of" a company or "affiliated company" as used herein means
any company directly or indirectly controlling, controlled by or under
common control with the other company. A presumption of control shall
exist for any person owning or controlling 10% or more of the outstanding
voting securities of a company, and any officer, director or general
partner of a company.
3. Term of Employment. The period of the Executive's employment
underthis Agreement shall begin on May 14, 2001 and be for a 2-year period
ending May 14, 2003, subject to the termination provisions set forth in
Paragraphs 11, 12, and 13 hereunder.
4. 4. Duties. During the period of his employment hereunder
and except for illness, specified vacation periods and reasonable leaves of
absence, the Executive shall devote his best efforts and all his business
time, attention and skill to the business and affairs of the Company and
its affiliated companies, as such business and affairs now exist and as
they may be hereinafter changed or added to, provided, however, that, with
approval of the Board of Directors of the Company, the Executive may serve,
on the board of directors of, or hold any other offices or positions in,
companies or organizations which, in such Board's judgment, will not
present any conflict of interest with the Company or any of its
subsidiaries or affiliates or divisions, or materially affect the
performance of Executive's duties pursuant to this Agreement; and further
provided that the outside business is not a "Business Opportunity" of the
Company, as defined herein. A Business Opportunity of the Company shall be
a product, service, investment, venture or other opportunity, which is
either:
(a) Directly related to or within the scope of the existing business of
the Company; or
(b) Within the logical scope of the business of the Company, as such
scope may be expanded or altered from time-to-time
by the Board of Directors.
5. Compensation. The Company shall pay to the Executive as compensation
for his services, the base salary of $200,000 per year or such higher
salary as from time-to-time may be approved by the President & CEO and the
Board of Directors, payable bi-weekly in accordance with the Company's
normal payroll procedures. The Executive also is eligible to participate in
an executive-level bonus plan, the terms and provisions of which will be
authorized by the Board of Directors.
As additional compensation hereunder, upon the execution of
this Agreement, the Company will grant to the Executive 230,000 options to
purchase common stock of the Company under the Company's 1999 Stock Option
Plan, at an exercise price that is the closing price of the Company's stock
on the Executive's start date, May 14, 2001. Such options are intended to
be classified as incentive stock options for tax purposes, and shall vest
and expire and be subject to such other terms as provided on Exhibit A
attached hereto. Terms of the Stock Option grant are set forth in a Stock
Option Agreement in the form used pursuant to such Plan and attached to
this agreement.
6. Expense Reimbursement. The Company will reimburse the
Executive for all reasonable and necessary expenses incurred by him in
carrying out his duties under this Agreement, including entertainment,
travel and lodging costs. The Executive shall present an itemized account
of such expenses in such form as is required by the Company's accounting
policies to the Chief Executive Officer or his designate, each month. .
7. Medical Coverage and Other Employee Benefits. The Executive
will be eligible to participate in the Company's current standard benefits
package, which provides health insurance with limited Company payments,
long term disability, limited sick time accrual, paid holidays, 401(k) Plan
participation when eligible and term life insurance at Executive's cost, on
the same basis as other Executives of the Company. Where applicable, the
Executive will be a designated "key" employee.
8. Vacation Time. The Executive shall be entitled to take four (4)
weeks paid vacation per calendar year. Such vacation may not be taken in
any greater than consecutive two (2) week increments. Vacation not used by
the Executive during the calendar year will be forfeited. Compensation for
vacation time not taken by Executive shall be paid to the Executive at the
date of termination.
9. Obligations of Executive During and After Employment. (a) The
Executive agrees that during the terms of his employment under this
Agreement or while receiving compensation under this Agreement, he will
engage in no other business activities directly or indirectly, which are or
may be competitive with or which might place him in a competing position to
that of the Company, or any affiliated company.
(b) The Executive realizes that during the course of his
employment, Executive will have produced and/or have access to confidential
business plans, information, business opportunity records, notebooks, data,
formula, specifications, trade secrets, customer lists, account lists and
secret inventions and processes of the Company and its affiliated
companies. Therefore, during his employment by the Company or by an
affiliated company or while receiving compensation under this Agreement,
the Executive agrees to hold in confidence and not to directly or
indirectly disclose or use or copy or make lists of any such information,
except to the extent authorized by the Chief Executive Officer of the
Company in writing. All records, files, business plans, documents,
equipment and the like, or copies thereof, including copies on Company
computers, relating to Company's business, or the business of an affiliated
company, which Executive shall prepare, or use, or come into contact with,
shall remain the sole property of the Company, or of an affiliated company,
and shall not be removed from the Company's or the affiliated company's
premises without the written consent of the Chief Executive Officer, and
shall be promptly returned to the Company upon termination of employment
with the Company and its affiliated companies. All equipment, software and
other materials provided to the Executive by the Company will remain the
property of the Company and must be available to the Company at all times
for servicing, security checks, and any other purposes and the Executive
agrees to turn such items over to the Company, immediately upon request.
(c) Because of his employment by the Company, Executive will have access
to trade secrets and confidential information about the Company, its
business plan, its business opportunities, and its expansion plans into
other geographical areas and its methods of doing business. Executive
agrees that for a period of one (1) year after termination of his
employment, he will not, directly or indirectly compete with the Company in
a business that is a "Business Opportunity" of the Company or defined in
Section 4 above.
(d) The Executive further agrees that after the term of his employment,
he will not disclose or make use of any proprietary information owned by
the Company or necessary in the operation of the Company's products or
products under development.
(e) In the event a court of competent jurisdiction finds any provision of
this Section 9 to be so over broad as to be unenforceable, then such
provision shall be reduced in scope by the court, but only to the extent
deemed necessary by the court to render the provision reasonable and
enforceable, it being the Executive's intention to provide the Company with
the broadest protection possible against harmful competition.
(f) Irreparable harm should be presumed if any provision of this Section
9 is breached in any way. Damages would be difficult if not impossible to
ascertain, and the faithful observance of all terms of such Section is an
essential condition of employment with the Company. In light of these
considerations, Executive acknowledges that a court of competent
jurisdiction should immediately enjoin any breach of this Agreement by
Executive, upon the Company's request and the Company is released from the
requirement of posting any bond in connection with temporary or
interlocutory injunctive relief, to the extent permitted by law. Nothing
herein shall be construed as prohibiting the Company from pursuing any
other remedy available to the Company for such breach or threatened breach
including, but not limited to, the recovery of damages from the Executive.
10. Intellectual Property Statement (a) Executive acknowledges that
he has been an employee and officer of the Company and its predecessors
during the development of the software and intellectual property currently
owned by the Company, and Executive makes no claim to any right, all right,
title or interest (including patent rights, copyrights, trade secret
rights, trademark rights, sui generis database rights, and all other
intellectual property rights of any sort throughout the world) relating to
any and all inventions (whether or not patentable), works of authorship,
designations, designs, know-how, ideas and information made or conceived or
reduced to practice, in whole or in part, by Executive during such
employment by the Company and its predecessors that relate to such software
and intellectual property.
(b) Executive hereby assigns to the Company any right, title or interest
he may have (including patent rights, copyrights, trade secret rights,
trademark rights, sui generis database rights, and all other intellectual
property rights of any sort throughout the world) relating to any and all
inventions (whether or not patentable), works of authorship, designations,
designs, know-how, ideas and information made or conceived or reduced to
practice, in whole or in part, by Executive, (i) during the Term that
relate to the subject matter of, or arise out of, the Services, (ii) are
referred to in clause (a) above, or (iii) constitute any Proprietary
Information (as defined below) (collectively, "Inventions"). Executive
will promptly disclose and provide all Inventions to Company. Executive
shall further assist Company, at its request and expense, to further
evidence, record and perfect such assignments and to perfect, obtain,
maintain, enforce and defend any rights assigned. Executive hereby
irrevocably designates and appoints the Company as its agent and
attorney-in-fact to act for and in Executive's behalf to execute and file
any documents and to do all other lawfully permitted acts to further the
foregoing with the same legal force and effect as if executed by Consultant.
(c) Executive agrees that all Inventions and all other business,
customer, marketing, technical and financial information (including,
without limitation, the identity of and information relating to the
Company's customers or employees) that Executive developed, learned or
obtained for or about the Company and its predecessors in the past, or that
Executive develops, learns or obtains during the Term that relate to the
Company or the business or that are received by or for the Company in
confidence, constitute "Proprietary Information," provided that Proprietary
Information shall not include information in the public domain through no
fault of Executive. Executive will hold in confidence and not disclose or,
except in performing the Services, use any Proprietary Information. Upon
termination of this Agreement, and as otherwise requested by Company,
Executive will promptly return to Company all items and copies containing
or embodying Proprietary Information, except that Executive may keep
personal copies of his compensation records and this Agreement.
(d) As additional protection for Proprietary Information, Executive
agrees that during the Term and for one year thereafter, Executive will not
encourage or solicit any employee or consultant of Company to leave Company
for any reason. As further protection, Executive will not engage in any
activity that is in any way competitive with the business of the Company,
and Executive will not assist any other person or organization in competing
or in preparing to compete with any business of Company.
(e) If any part of the Services or Inventions is based on, incorporates
or constitutes an improvement or derivative of, or cannot be reasonably and
fully made, used, reproduced, distributed and otherwise exploited without
using or violating technology or intellectual property rights owned or
licensed by Executive and not assigned hereunder, Executive hereby grants
the Company and its successors a perpetual, irrevocable, worldwide
royalty-free, non-exclusive, sub-licensable right and license to exploit
and exercise all such technology and intellectual property rights in the
conduct of its business.
11. Termination by the Company.
(a) Termination for Cause by the Company. During the first year of
the term of this Agreement, there can be no termination of the Executive by
the Company except for "Termination for Cause" as outlined below:
Notwithstanding anything herein to the contrary, the Company may, without
liability, terminate the Executive's employment hereunder for cause upon
five days written notice, and there after the Company's obligations
hereunder shall cease and terminate.
Grounds for termination "for cause" shall be one or more of the
following:
(1) A willful breach of duty by the Executive during the course of his
employment;
(2) The conviction of the Executive of a felony;
(3) Habitual neglect of duty by the Executive;
(4) The Executive's material failure to perform or meet objective and
measurable standards set by the President and Chief Executive Officer
and agreed upon by the Executive in advance.
(b) Termination Without Cause by the Company. After the completion
of the initial year of employment hereunder, the Company may terminate the
employment of the Executive upon thirty (30) days written notice without
cause. In the event of termination without cause, the Company will pay the
Executive six (6) months salary as compensation. In addition, at least
three months prior to the expiration of this contract, the Company will
either notify the Executive in writing that the contract will not be
renewed or will commence good faith negotiation to enter into a new or
modified contract. However, failure to renew the Executive's contract
shall not be deemed to be "termination without cause" hereunder.
12. Termination by the Executive. The Executive, with or without cause,
may terminate this Agreement upon 90 days' written notice to the Company.
In such event, the Executive shall be required to render the services
required under this Agreement during such 90-day period, unless otherwise
directed by the Board of Directors. Executive will be compensated only
through the final day of his employment.
13. Termination Upon Death of Executive. In addition to any other
provision relating to termination, this Agreement shall terminate upon the
Executive's death. Upon Executive's death, the Company shall pay in a lump
sum, within 45 days of the Executive's death, to such person as the
Executive shall have designated to the Company as his beneficiary, or, if
no such person is designated, to the Executive's estate, an amount equal to
all of the Executive's accrued but unpaid base salary, the value on the
Company's books of any vested but unused vacation time and accrued sick
time, and all unpaid expense reimbursements at the time of Executive's
death.
14. Triggering Event Lump Sum Compensation. In the event of the
occurrence of a "Triggering Event," which shall be defined to include (i)
change in ownership of 50% or more of the outstanding shares of the
Company, or (ii) the merger, consolidation, reorganization or liquidation
of the Company that results in a change in ownership of 50% or more in the
direct or indirect ownership of the Company before the merger,
consolidation, reorganization or liquidation, the Executive shall receive a
lump sum compensation equal to his annual salary and incentive or bonus
payments, if any, as would have been paid to the Executive during the
Company's then current fiscal year (as if the Executive had been employed
for the full fiscal year), within 30 days of the Triggering Event. All of
Executive's granted but unvested options shall immediately vest upon the
occurrence of a Triggering Event, and all of the shares underlying all the
options held by him shall be registered on a Form S-8 (or any successor
form) in a timely manner (no more than 45 days after such Triggering
Event), to be sold to his by the Company or its successor as unrestricted
and freely tradable shares. If Medix has been acquired by another publicly
traded company, Medix shall cause that company to agree to exchange its
options to acquire such company's shares for the Medix options, and to
cause such shares to be registered with the Securities and Exchange
Commission for sale in the public securities markets by the Executive.
Alternatively, if Medix has been acquired by a private company, Medix shall
cause such company to offer to purchase the Executive's options granted by
Medix upon the same terms as are offered to the Medix shareholders in
connection with such company's acquisition of control of Medix. If the
total amount of the change of control compensation were to exceed three
times the Executive's base salary (the average annual taxable compensation
of the Executive for the five years preceding the year in which the change
of control occurs), the Company and the Executive may agree to reduce the
lump sum compensation to be received by Executive in order to avoid the
imposition of the golden parachute tax as provided in the Tax Reform Act of
1984, as amended by the Tax Reform Act of 1986.
In the event the Executive is required to hire counsel to
negotiate on his behalf in connection with his termination or resignation
from the Company upon the occurrence of a Triggering Event, or in order to
enforce his rights and the obligations of the Company as provided in this
Paragraph, the Company shall reimburse to the Executive all reasonable
attorney's fees which may be expended by the Executive in seeking to
enforce the terms hereof. Such reimbursement shall be paid every 30 days
after the Executive provides copies of invoices from the Executive's
counsel to the Company.
15. Indemnification. The Company shall indemnify and hold harmless
Executive to the fullest extent and in the manner permitted by the
provisions of the Colorado Business Corporation Act, as it may be amended
from time to time. To the extent that any of the Company's officers or
directors are covered by or benefit from one or more director's and
officer's liability insurance policies, the Executive shall also be covered
by or benefit from such policy or policies.
16. Arbitration. Any controversy, dispute or claim arising out of, or
relating to this Agreement and/or its interpretation shall, unless resolved
by agreement of the parties, be settled by binding arbitration in Denver,
Colorado in accordance with the Rules of the American Arbitration
Association for employment disputes then existing. This Agreement to
arbitrate shall be specifically enforceable under the prevailing
arbitration laws of the State of Colorado. The award rendered by the
arbitrators shall be final and judgment may be entered upon the award in
any court of the State of Colorado having jurisdiction of the matter. If
any legal proceeding and/or arbitration is brought to enforce or interpret
the terms of this Agreement, each party shall bear its own attorney's fees,
costs, and necessary disbursements in such legal proceeding and/or
arbitration except as otherwise provided herein.
17. General Provisions.
(a) The Executive's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise, nor shall Executive's
rights be subject to encumbrance or to the claims of the Company's
creditors. Nothing in this Agreement shall prevent the consolidation of
the Company, with or its merger into, any other corporation, or the sale by
the Company of all or substantially all of its property or assets.
However, the rights of the Executive hereunder shall be enforceable against
any successor to the Company, and the rights of the Company hereunder shall
benefit any successor to the Company.
(b) This Agreement and the rights of Executive with respect
to the obligations and benefits of employment recited in this Agreement,
constitute the entire Agreement between the parties hereto in respect of
the employment of the Executive by the Company and supersede any and all
other agreements either oral or in writing between the parties hereto with
respect to the employment of the Executive.
(c) The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part there of are declared
invalid or unenforceable by a court of competent jurisdiction, the validity
and enforceability of the remainder of such provisions or parts there of
and the applicability there of shall not be affected there by.
(d) This Agreement may not be amended or modified except by a
written instrument executed by Company and Executive.
(e) This Agreement and the rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the State
of Colorado, excluding however, the provisions governing conflicts of laws.
18. Construction. Throughout this Agreement, the singular shall include
the plural, and the plural shall include the singular, and the masculine
and neuter shall include the feminine, wherever the context so requires.
19. Text to Control. The headings of paragraphs and sections are
included solely for convenience of reference. If any conflict between any
heading and the text of this Agreement exists, the text shall control.
20. Authority. The officer executing this Agreement on behalf of the
Company has been empowered and directed to do so by the Board of Directors
of the Company.
IN WITNESS WHEREOF, the Company and the Executive hereby execute this
Agreement, as of the date first above written, with the full intention to
be mutually bound by the terms hereof.
FOR THE COMPANY:
MEDIX RESOURCES, INC.
By: /s/Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
President and Chief Executive Officer
THE EXECUTIVE:
By: /s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
EXHIBIT A
VESTING SCHEDULE FOR OPTIONS
Options covering 230,000 shares of the Company common stock shall be
granted to Executive upon the execution of this Employment Agreement, which
shall vest as follows: options covering 28,750 shares will vest immediately
(May 14, 2001) and options covering 28,750 shares shall vest on the same
date of each third month from the prior vesting date, until all options
have vested (which date shall be 21 months from the date of this
Agreement), so long as Executive is still employed by the Company on each
of those vesting dates. However, in order to qualify for the exemption
provided by Rule 16b-3, in no case shall Executive transfer or dispose of
any option (other than by exercise) or the underlying common stock granted
hereunder for a period of six months plus one day from the date of this
Agreement. The expiration date of all of the options granted hereunder
shall be the earlier of five years from the date of this Agreement or 90
days after the Executive leaves the employment of the Company.
