Executive Employment Agreement - Medix Resources Inc. and Darryl Cohen
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is entered into as of
September 25, 2002 (the "Effective Date"), by and between Medix Resources, Inc.,
a Colorado corporation (the "Company"), and Darryl Cohen ("Executive").
WHEREAS, Executive has been employed by the Company as President and Chief
Executive Office since September 25, 2002 and has served as a member of the
Board of Directors of the Company (the "Board") since October 8, 2002;
WHEREAS, the Company desires to employ Executive pursuant to this
Employment Agreement as of the Effective Date and Executive desires such
employment with the Company on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing recitals and the
respective covenants and agreements of the parties contained in this document,
the Company and Executive agree as follows:
1. Title; Duties, Authorities and Responsibilities. During the Employment
Period (as defined in Section 2 below), Executive will serve as President and
Chief Executive Officer of the Company. In addition, Executive shall serve as a
member of the Board. The duties, authority and responsibilities of Executive
shall be commensurate with the duties, authority and responsibilities
customarily accorded the chief executive officer of a publicly traded company,
and shall include such duties and responsibilities as the Board may from time to
time reasonably assign in good faith to Executive. Executive, to the best of his
ability, shall perform faithfully and competently such duties and
responsibilities. Executive shall report to the Board
1. Employment Period. The term of this Agreement and Executive's employment
hereunder shall begin on the Effective Date and shall continue thereafter until
the close of business on September 24, 2003, unless sooner terminated pursuant
to Section 9 below (the "Employment Period").
2. Base Salary. For services rendered by Executive pursuant to this
Agreement, Executive shall receive a base salary ("Base Salary") at an annual
rate of $175,000, less applicable deductions. Executive's Base Salary may be
increased, but in no event shall decrease, during the Employment Period.
Executive's Base Salary, less applicable deductions, shall be paid in periodic
installments in accordance with the Company's regular payroll practices. In
addition, to the extent that members of the Board are compensated for their
services on the Board, Executive shall receive compensation for his services as
a member of the Board.
4. Equity. In addition to all other compensation and benefits provided
hereunder: (i) effective as of the Effective Date, in consideration of Executive
performing certain transitional services prior to becoming the Company's
President and Chief Executive Officer, the Company hereby grants Executive an
incentive stock option to purchase 260,000 shares of the Company's common stock,
par value $0.001 per share ("Common Stock"), at an exercise price of $ 0.69 (the
"Transition Option"); (ii) effective as of the Effective Date, in consideration
of Executive's acceptance of the office of Chief Executive Officer of the
Company, the Company hereby grants Executive an incentive stock option to
purchase 260,000 shares of Common Stock at an exercise price of $0.69 (the
"Appointment Option"); (iii) effective as of October 8, 2002, in consideration
of Executive's agreement to serve on the Board, the Company hereby grants
Executive an incentive stock option to purchase 260,000 shares of Common Stock
(which option, together with the Transition Option and the Appointment Option,
are herein referred to as the "Options") in each case pursuant to the terms and
conditions of the Company's 1999 Stock Option Plan (the "Plan"); provided,
however, that notwithstanding anything to the contrary in the Plan or any other
agreement between Executive and the Company, all of the shares of Common Stock
subject to the Options shall fully vest and become exercisable on their
respective grant dates.
Furthermore, effective as of the Effective Date, the Company hereby grants
to Executive additional incentive stock options (the "Additional Options") to
purchase shares of Common Stock at an exercise price of $0.69, which options are
granted under and be subject to the terms and conditions of the Plan, and which
options shall vest and become fully exercisable upon Executive's attainment of
specific milestones as follows: (a) an option to acquire 240,000 shares of
Common Stock on March 25, 2003, (b) an option to acquire 240,000 shares of
Common Stock on September 25, 2003, (c) an option to acquire 480,000 shares of
Common Stock upon the first business day of the month immediately following the
month in which the Company first achieves monthly revenues of at least $500,000,
and (d) an option to acquire 480,000 shares of Common Stock on the date that the
Company completes private financings subsequent to the Effective Date
aggregating at least $5,000,000; provided, however, that notwithstanding
anything to the contrary in the Plan or any other agreement between Executive
and the Company, all of the shares of Common Stock subject to the Additional
Options shall fully vest and become exercisable on the respective dates
identified above. Executive shall be entitled to receive further options and/or
other grants of equity in the Company from time to time during the Employment
Period as reasonably determined by the Board.
Notwithstanding anything herein to the contrary, if Executive's employment
with the Company has been terminated for any reason (other than gross negligence
or willful misconduct which in either case results in serious and irreparable
economic or reputation harm to the Company) and such termination occurs within
30 days of any of the events enumerated in subsections (a) through (d) of the
second paragraph of this Section, then Executive shall receive the Additional
Options that he would have been entitled to had he been employed thirty days
after his termination date and said Additional Options shall be fully vested and
exercisable on the date that such options would first have been exercisable had
Executive's employment with the Company not been terminated. Moreover,
notwithstanding anything herein to the contrary, upon a change in control of the
Company, all of the Options and Additional Options described in this Section 4
shall be deemed fully vested and exercisable upon the effective date of the
change in control. For the purpose of this Agreement, a "change in control"
means: (A) the direct or indirect acquisition, whether in one or a series of
transactions by any person (as such term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), or related persons (such person or persons, an "Acquirer") constituting
a group (as such term is used in Rule 13d-5 under the Exchange Act), of (1)
beneficial ownership (as defined in the Exchange Act) of issued and outstanding
shares of stock of the Company, the result of which acquisition is that such
person or such group possesses in excess of 50% of the combined voting power of
all then-issued and outstanding stock of the Company, or (2) the power to elect,
appoint, or cause the election or appointment of at least a majority of the
members of the Board (or such other governing body in the event the Company or
any successor entity is not a corporation); (B) a merger or consolidation of the
Company with a person or a direct or indirect subsidiary of such person,
provided that the result of such merger or consolidation, whether in one or a
series of related transactions, is that the holders of the outstanding voting
stock of the Company immediately prior to the consummation of such transaction
do not possess, whether directly or indirectly, immediately after the
consummation of such merger or consolidation, in excess of 50% of the combined
voting power of all then-issued and outstanding stock of the merged or
consolidated person, its direct or indirect parent, or the surviving person of
such merger or consolidation; (C) the stockholders of the Company approve a plan
of complete liquidation of the Company; or (D) a sale or disposition, whether in
one or a series of transactions, of all or substantially all of the Company's
assets.
5. Indemnification. As an employee, officer and director of the Company,
Executive shall be fully indemnified by the Company to the fullest extent
permitted by law. To implement this provision, during the Employment Period the
Company shall maintain directors and officers liability insurance providing at
least the same level of coverage as was maintained by the Company on the
Effective Date, and shall name Executive as an insured under all such policies.
The Company also shall execute and deliver to Executive an indemnification
agreement for officers and directors in the form attached hereto as Exhibit A,
and Executive shall thereafter be entitled to the benefits of any subsequent
amendments thereto made for any executives.
6. Indemnification. As an employee, officer and director of the Company,
Executive shall be fully indemnified by the Company to the fullest extent
permitted by law. To implement this provision, during the Employment Period the
Company shall maintain directors and officers liability insurance providing at
least the same level of coverage as was maintained by the Company on the
Effective Date, and shall name Executive as an insured under all such policies.
The Company also shall execute and deliver to Executive an indemnification
agreement for officers and directors in the form attached hereto as Exhibit A,
and Executive shall thereafter be entitled to the benefits of any subsequent
amendments thereto made for any executives.
7. Other Benefits. During the Employment Period, Executive shall receive
from the Company an allowance of $5,000 per annum to cover dental, visions and
health insurance costs for Executive and his family. In addition, during the
Employment Period, Executive shall be entitled to participate in and have the
benefits of all present and future life, accident and disability plans, pension,
profit-sharing and savings plans and all other plans and benefits which the
Company now or in the future from time to time makes available to any of its
senior executives. In addition, the Company shall obtain, and during the
Employment Period maintain, a $3,000,000 term life insurance policy for
Executive, payable to Executive's wife as his beneficiary in the event of his
death.
8. Vacations and Holidays. Executive shall be entitled to such annual
vacation and holiday time off with full pay as the Company may provide in its
standard policies and practices for other senior executives; provided, however,
that in no event shall Executive be entitled to less than four (4) weeks annual
paid vacation time.
9. Termination. Notwithstanding Section 2 hereof, the Employment Period may
be terminated at any time, for any reason, by either the Company or Executive
upon 60 days written notice.
10. Other Activities. Executive shall devote substantially all of his
working time and efforts to the business and affairs of the Company, and to the
diligent and faithful performance of the duties and responsibilities duly
assigned to him pursuant to this Agreement, except for vacations, holidays and
sickness. However, Executive may devote a reasonable amount of time to (i) the
management of his investments, (ii) civic, community, and/or charitable
activities, and (iii) with the prior written consent of the Board, which shall
not be unreasonably withheld, to serve as a director of other companies.
11. Confidential and Proprietary Information. During the Employment Period
and thereafter, Executive shall not, without the prior written consent of the
Board, disclose or use for any purpose (except in the course of his employment
under this Agreement and in furtherance of the business of the Company) any
confidential information, trade secrets or proprietary data ("Confidential
Information") of the Company. Executive agrees to execute the Company's standard
confidential information agreement, a true and correct copy of which is attached
hereto as Exhibit B.
12. Absence of Conflict. Executive represents and warrants that his
employment by the Company, and his performance of his obligations as described
herein, shall not conflict with, and will not be constrained by, any prior
employment or consulting agreement or relationship, and that any limitations on
Executive's ability to perform as provided hereunder and as contemplated by the
parties have been disclosed in writing to the Company.
13. Assignment. This Agreement, and all rights and obligations under this
Agreement, shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective heirs, successors, executors,
administrators and assigns.
14. Notices. For purposes of this Agreement, notices and other
communications provided for herein (each a "Notice"), shall be in writing and
shall be delivered personally or sent by United States certified mail, return
receipt requested, postage prepaid, addressed to each party's last known
address, or to such other address, or to the attention of such other persons, as
the recipient party has previously furnished to the other party in writing in
accordance with this paragraph. Such Notice shall be effective upon delivery, or
three days after it has been mailed as provided above, whichever occurs first.
15. Integration. This Agreement and its Exhibit A and Exhibit B represent
the entire agreement and understanding between the parties as to the subject
matter hereof, and supersede all prior or contemporaneous agreements, whether
written or oral. No waiver, alteration, or modification of any of the provisions
of this Agreement or its Exhibit A and/or Exhibit B shall be binding unless in
writing and signed by Executive and by the Chairman of the Board.
16. Waiver. Failure or delay on the part of either party hereto to enforce
any right, power or privilege hereunder shall not be deemed to constitute a
waiver thereof. Additionally, a waiver by either party of a breach of any
promise herein by the other party shall not operate as, or be construed to
constitute, a waiver of any subsequent breach by such other party.
17. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law.
However, if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision, but this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
18 Attorneys' Fees. Subject to Section 22 hereof, in the event of any
dispute, claim, case or controversy arising under or relating to this Agreement
(including enforcing judgments and appeals), the prevailing party shall be
entitled to reimbursement of its reasonable attorneys' fees and costs of suit,
in addition to such other relief as may be granted by the court.
19. Headings. The headings of the paragraphs contained in this Agreement
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.
20. Negotiation Fees. Promptly following the written request of Executive
for reimbursement, the Company shall reimburse Executive for all of his legal
and other professional services fees and expenses related to the negotiation of
this Agreement; provided, however, that the Company's reimbursement obligation
under this Section 20 shall be limited to $10,000.
21. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of New York.
22. Dispute Resolution.
(a) Except as otherwise expressly provided herein, Executive and the
Company agree that any and all disputes between the Company and Executive
and between Executive and the Company and anyone connected with it, which
relate to, arise out of or pertain to Executive's employment, separation
from employment or the construction or interpretation of this Agreement
shall be submitted to and resolved by final and binding arbitration. The
arbitration shall be instead of any civil litigation; this means that
Executive and the Company are each waiving any rights to a jury trial.
Executive and the Company expressly understand and agree that consistent
with the foregoing, no party to this Agreement shall institute a proceeding
in any court or administrative agency to resolve a dispute arising under or
in connection with this Agreement.
(b) Executive and the Company expressly understand and agree that
there will be no court or jury trial of disputes between them arising out
of or in connection with this Agreement, Executive's employment or
separation from employment including, but not limited to, claims under
federal, state or local laws prohibiting employment discrimination.
Nevertheless, claims for unemployment insurance benefits, for workers'
compensation insurance benefits, and for benefits under any ERISA-governed
employee benefit plan(s), shall be resolved pursuant to the claims
procedures under such benefit plans.
( c) All disputes between the parties which are covered by this
Section 22 and which cannot be resolved within two weeks after a demand for
direct negotiation between the parties shall be settled exclusively by
binding arbitration in New York City, New York under the National Rules for
the Resolution of Employment Disputes of the American Arbitration
Association (the "AAA Rules") before a panel of three (3) neutral
arbitrators selected in accordance with the applicable rules. The
arbitrators shall award the prevailing party its attorneys fees,
arbitration costs, expert fees, and all other costs and expenses incurred
in connection with the arbitration, including any fees and costs incurred
in confirming and enforcing the award. Executive and the Company expressly
understand and agree that any limitations in the AAA Rules excluding
statutory discrimination from the scope of this Section 22 shall not apply
and that it is the parties' desire to include statutory discrimination
claims within the scope of arbitration. Executive and the Company knowingly
and voluntarily agree to the arbitration provisions set forth in this
Section 22. A decision in arbitration shall be final and binding.
(d) Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The arbitration filing fee expenses shall be borne
according to the AAA Rules; provided that if and only if the arbitration
involves statutory discrimination claims, the Company shall pay all types
of costs that are unique to arbitration, such as the arbitrator's fees.
23. Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
Medix Resources, Inc.
By: ___________________________ _______________________________
Patrick Jeffries Darryl Cohen
Chairman of the Board of Directors Executive