Exhibit 10.5
Employment and Severance Agreement
1. Recitals
(a) This Employment and Severance Agreement ("Agreement") is between
MedAire, Incorporated (the "Company") and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Executive") and is effective as of December 18, 2000.
(b) The address of the Company is ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The address of the Executive is 2449 F. Squawbush,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(c) The Executive is currently employed by the Company in the capacity
of President and Chief Executive Officer, and the Executive is one of the key
executives of the Company.
(d) In consideration of the mutual promises contained herein and other
good and valuable consideration, the Executive and the Company have entered into
this Agreement.
2. Term of Agreement
The Term of this Agreement shall commence on the date hereof and
continue until December 13, 2003; provided, however, that commencing on January
1, 2002 and each January 1st thereafter, the above-referenced date and the term
of this Agreement shall automatically be extended for one additional year unless
at least thirty (30) days prior to such January 1st date, the Company or the
Executive shall have given notice that it or she does not wish to extend this
Agreement. The phrase "Term of Agreement" shall refer to the period commencing
on the date hereof and ending on December 18, 2003 (or any extension thereof
pursuant to the preceding sentence).
3. Employment Terms Prior to Change in Control
Prior to a Change in Control:
(a) Executive shall be employed at a Base Salary of $190,000 per year and
shall be eligible for participation in the Company's Management
Incentive Compensation Plan which provides incentive bonus
opportunities contingent on the level of achievement of pre
established financial, strategic, and personal goals:
(b) Executive shall be eligible to participate in the following Company
benefit plans: Medical Plan. Dental and Vision Plan, Life Insurance,
Long Term Disability Insurance, 401 (k) Plan, and vacation clays
consistent with her status as an Executive Level Employee;
(c) Company agrees to reimburse all legitimate business expenses of
Executive, including travel and entertainment expenses, and phone
expenses in accordance with Company policy; and provide Executive with
an automobile consistent with the terms to be set by the Compensation
Committee of the Board of Directors.
(d) Executive's duties shall include responsibility for the operations,
strategic direction. and the overall management of Company
administrative functions, in accordance with the directives of the
Company's Board of Directors, and
(e) Notwithstanding any of the foregoing, Executive acknowledges that (i)
she is an at-will employee of the Company and that either she or the
Company may terminate her employment with or without cause at any time
and (ii) in the event of any such termination, she shall no longer be
entitled to receive any of the compensation or benefits described
above, provided that Executive and Company agree that in the event of
a
termination not for Cause prior to a Change in Control of the Company,
the Executive shall be entitled to receive two months continuation of
Base Salary plus two months continuation of the benefits specified in
paragraph (b), with the exception of continued participation in the
410 (k) Plan.
4. Change in Control
No benefit shall be payable under this Agreement pursuant to sections
6 through 20 unless a Change in Control of the Company shall have occurred and
the Executive's employment by the Company shall have been terminated within two
(2) years thereafter. For purposes of this Agreement, a "Change in Control of
the Company" shall be deemed to have occurred if:
(a) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and immediately after such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
voting stock of the Company immediately prior to such transaction;
(b) The Company sells all or substantially all of its assets to any
other corporation or other legal person, and less than a majority of the
combined voting power of the then-outstanding securities of such corporation or
person immediately after such sale are held in the aggregate by the holders of
voting stock of the Company immediately prior to such sale.
(c) The Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in response to
Form g-K or Schedule 14A (or any successor schedule, form or report or item
therein) that a Change in Control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing contract or
transaction; or
(d) If during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Directors of the Company cease
for any reason to constitute at least a majority thereof, provided, however,
that for purposes of this Section 3(e), each Director who is first elected, or
first nominated for election by the Company's stockholders, by a vote of at
least two thirds of the Directors of the Company (or a committee thereof) then
still in office who were Directors of the Company at the beginning of any such
period will be deemed to have been a Director of the Company at the beginning of
such period.
5. Notice of Termination; Date of Termination
(a) Any termination of the Executive's employment by the Company or
the Executive shall he communicated by written Notice of Termination to the
other party thereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of employment under
the provision so indicated.
(b) "Date of Termination" shall mean:
(i) If the Agreement is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of her
duties on a full-time basis during such thirty (30) day
period),
(ii) If the Executive's employment is terminated pursuant to
Section 10, the date specified in the Notice of Termination,
and
(iii) If the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given;
provided that if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be
the (late on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected).
6. Compensation After Change in Control
Immediately after any Change in Control of the Company, the Executive
shall be entitled to receive for the remainder of the Term of Agreement (as
extended) (until or unless her
employment is terminated) an annual base salary (the "Base Salary), payable in
equal bi-weekly installments, at an annual rate at least equal to the aggregate
annual base salary payable to the Executive as of the date hereof. The Base
Salary may be increased (but may not be decreased) at any time and from time to
time by action of the Board of Directors of the Company, any committee thereof,
or any individual having authority to take such action, in accordance with the
Company's regular practices. Any increase in the Base Salary shall not serve to
limit or reduce any other obligation of the Company hereunder.
7. Benefit Plans
Immediately after a Change in Control of the Company,
(a) The Company agrees to continue in effect any perquisite, benefit
or compensation plan including any pension plan, dental plan, life insurance
plan, health and accident plan or disability plan in which the Executive is
currently participating (collectively referred to as the "Benefit Plans"); or to
maintain plans providing substantially similar benefits;
(b) The Company agrees not to take any action that would adversely
affect the Executive's participation in, or materially reduce the benefits
under, any of the Benefit Plans or deprive the Executive of any material fringe
benefit currently enjoyed; and
(c) The Company agrees to provide the Executive with the number of
paid vacation days to which she is entitled on the basis of years of service
with the Company in accordance with the Company's normal vacation policy in
effect on the date hereof
8. Termination for Cause
(a) The Company may terminate the Executive's employment for Cause.
For the purposes of this Agreement, the Company shall have "Cause" to terminate
employment hereunder only (i) if termination shall have been the result of an
act or acts of dishonesty by the Executive constituting a felony and resulting
or intended to result directly or indirectly in substantial gain or personal
enrichment at the expense of the Company; or (ii) upon the willful and continued
failure by the Executive substantially to perform her duties with the Company
(other than any such failure resulting from incapacity due to mental or physical
illness) after a demand in writing for substantial performance is delivered by
the Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed her duties, and such
failure results in demonstrably material injury to the Company. The Executive's
employment shall in no event be considered to have been terminated by the
Company for Cause if such termination took place as the result of (i) bad
judgment or (ii) any act or omission without intent of gaining therefrom
directly or indirectly a profit to which the Executive was not legally entitled,
or (iii) any act or omission believed in good faith to have been in or not
opposed to the interest of the Company, or (iv) any act or omission in respect
of which a determination be made that the Executive met the applicable standard
of conduct prescribed for indemnification or reimbursement or payment of
expenses under the Bylaws of the Company or the laws of the State of Arizona, in
each case as in effect at the time of such act or omission. The Executive shall
not he deemed to have been terminated for Cause unless and until there shall
have been delivered to her a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for her, together with her
counsel, to be heard before the Board). Finding that in the good faith opinion
of the Board the Executive was guilty of conduct set forth above in clauses (i)
or (ii) of the first sentence of this paragraph and specifying the particulars
thereof in detail.
(b) If the Executive's employment shall be terminated for Cause, the
Company shall pay the Executive her full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
the Company shall have no further obligations to the Executive under this
Agreement.
9. Termination for Death or Disability
(a) The Company may terminate this Agreement on account of the
Executive's death, or for "Disability" if the Executive is "Disabled." For
purposes of this Agreement, the Executive shall be considered Disabled only if,
as a result of her incapacity due to physical or mental illness, she shall have
been absent from her duties with the Company on a full-time basis for a period
of one year and a physician selected by her (which physician must he acceptable
to the Company and familiar with the Company's Long Term Disability Plan) is of
the opinion that (i) she is suffering from "Total Disability" as defined in the
Company's Long Term Disability Plan, or any successor plan or program and (ii)
she will qualify for Social Security Disability Payment and (iii) within thirty
(30) days after written notice of termination is given, she shall not have
returned to the full-time performance of her duties.
(b) If the Company terminates this Agreement on account of the
Executive's death or because the Executive is disabled, the Company shall pay to
the Executive (or her successors) the amounts, and provide to the Executive the
benefits, specified in Sections 5 and 6 of this Agreement for the remainder of
the Term of Agreement.
10. Termination Following Retirement
(a) This Agreement will terminate upon the Executive's Retirement. For
purposes of this Agreement, "Retirement" shall mean termination of the
Executive's employment with her consent in accordance with the Company's
retirement policy (including early retirement) generally applicable to its
salaried employees or in accordance with any retirement arrangement established
with the Executive's consent with respect to her.
(b) In the event this Agreement terminates following the Executive's
Retirement, the Company shall pay to the Executive her full Base Salary through
her retirement date and the Company shall have no further obligations to the
Executive under this Agreement.
11. Termination of Employment by the Executive for Good Reason
(a) The Executive may terminate her employment for Good Reason. For
purposes of this Agreement, Good Reason will exist if any one or more of the
following occur:
(i) Failure by the Company to honor any of its obligations under
Sections 6, 7, or 13; or
(ii) Any purported termination by the Company of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 5 above
and, for purposes of the Agreement, no such purported
termination shall be effective; or
(iii) Failure to elect or reelect or otherwise to maintain the
Executive to the office or the position (or a substantially
equivalent office or position) in the Company that the
Executive held immediately prior to a Change in Control, or
the removal of the Executive as a Director of the Company
(or any successor thereto) if the Executive shall have been
a Director of the Company immediately prior to the Change in
Control; or
(iv) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties
attached to the position with the Company which the
Executive held immediately prior to the Change in Control,
without the prior written consent of the Executive, which is
not remedied within 10 calendar days after receipt by the
Company of written notice from the Executive of such change;
or
(v) A determination by the Executive made in good faith that as
a result of a Change in Control and a change in
circumstances thereafter significantly affecting her
position, including without limitation a change in the scope
of the business or other activities for which lie was
responsible immediately prior to a Change in Control, she
has been rendered substantially unable to carry out, has
been substantially hindered in the performance of, or has
suffered a substantial reduction in, any of the authorities,
powers, functions, responsibilities or duties attached to
the position held by the Executive immediately prior to the
Change in Control, which situation is not remedied within 10
calendar days after written notice to the Company from the
Executive of such determination; or
(vi) The Company shall relocate its principal executive offices,
or require the Executive to have her principal location of
work changed, to any location which is in excess of 100
miles from the location thereof immediately prior to the
Change in Control or to travel away from her office in the
course of discharging her responsibilities or duties
hereunder significantly more (in tents of either consecutive
days or aggregate days in any calendar year) than was
required of her prior to the Change in Control without, in
either case, her prior written consent.
12. Compensation Upon Certain Terminations
If the Company shall terminate the Executive's employment other than
pursuant to Sections 8, 9, or 10 hereof or if the Executive shall terminate her
employment for Good Reason pursuant to Section 11 hereof, then the Company shall
I pay to the Executive in a lump sum on the fifth business day following the
Date of Termination, the following amounts:
(i) The Executive's Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is
given;
(ii) In lieu of any further salary payments for periods
subsequent to the Date of Termination, an amount equal to
one hundred fifty percent (150%) of the Executive's Base
Salary (at the rate in effect at the time Notice of
Termination is given);
(iii) An amount equal to the fair market value of the benefits
the Executive would have received had the Benefit Plans
continued (and the Executive's employment continued) for a
period of eighteen months subsequent to the Date of
Termination;
(iv) An amount equal to one hundred fifty percent (150%) of the
greater of (x) the most recent annual bonus received by the
Executive from the Company or (y) the average of the annual
bonuses received by the Executive from the Company for the
three years ending prior to the Date of Termination: and
(v) All legal fees and expenses incurred as a result of such
termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination, in
seeking to obtain or enforce any right or benefit provided
by this Agreement, or in interpreting this Agreement), if
such termination is determined, by arbitration, to be other
than for "Cause" or for "Good Reason".
For purposes of this Section 12, no purported reduction of the
Executive's Base Salary shall he effective absent the written consent of the
Executive.
13. Successors Binding Agreement
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall he a breach of this Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terns as
would apply if the Executive terminated her employment for Good Reason, except
that for purposes of implementing the foregoing. the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid that executes and delivers
the agreement provided for in this section or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributors, devisees and legatees. If the Executive should die while any
amount would still be payable hereunder had the Executive continued to live, all
such amounts, unless otherwise provided herein, shall he paid in accordance with
the terms of this Agreement to her devisee, legatee, or other designee or, if
there be no such designee, to her estate.
14. Notice
Notices and all other communications provided for in this Agreement
shall he in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first page of
this Agreement, provided that all notices to the Company shall be directed to
the attention of the Secretary of the Company, or to such other address as
either party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
15. Miscellaneous
No provisions of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing signed by
The Executive and such officer as may be specifically designated by the Board of
Directors of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of or compliance with, any condition or
provision of this Agreement to he performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreement or representations. oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Arizona.
16. Validity
The invalidity or unenforceability of any one or more provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
17. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
18. Arbitration
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Phoenix; Arizona in
accordance with the rules of the American Arbitration Association then in
effect: provided that all arbitration expenses shall be home by the Company.
Notwithstanding the pendency of any dispute or controversy concerning
termination or the effects thereof, the Company will continue to pay the
Executive her full compensation in effect immediately be ore any Notice of
Termination giving rise to the dispute was given and continue her as a
participant in all compensation, benefit and insurance plans in which she was
then participating, until the dispute is finally resolved. Amounts paid under
this paragraph are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement. Judgment may he entered on the arbitrators' award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of her right to be paid until the Date of Termination
during the tendency of any dispute or controversy arising under or in connection
with this Agreement.
19. Withholding of Taxes
The Company may withhold from any amounts payable under this Agreement
all federal, state, city or other taxes as shall be required pursuant to any law
or government regulation or ruling.
20. Legal Fees and Expense
(a) It is the intent of the Company that the Executive not be required
to incur the legal expenses associated with (i) the interpretation of any
provision in, or obtaining of any right or benefit under, this Agreement or (ii)
the enforcement of her tights under this Agreement by litigation or other legal
action, because the cost and expense thereof would substantially detract from
the benefits intended to he extended to the Executive hereunder. Accordingly,
the Company irrevocably authorizes the Executive from time to time to retain
counsel of her choice, at the expense of the Company as hereafter provided, to
represent the Executive in connection with the interpretation or enforcement of
this Agreement, including the initiation or defense of any litigation or other
legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. The Company shall pay or
cause to he paid and shall be solely responsible for any and all attorneys' and
related fees and expenses incurred by the Executive under this Section 20.
21. Entire Agreement Amendments and Waivers
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understanding, negotiations and discussions, whether oral or written, between
the parties. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by both parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.
MEDAIRE, INCORPORATED
BY: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (Executive)
