Exhibit
10.18
EMPLOYMENT
AGREEMENT
This Employment
Agreement (“Agreement”) is dated as of July 29, 2005
(the “Effective Date”), by and between BPO Management
Services, Inc., a Delaware corporation (the “Company”),
and Patrick Dolan (the “Founder”).
RECITALS
WHEREAS, the
Company wishes to secure the ongoing services of the Founder
pursuant to the terms and conditions set forth herein, and
therefore the Founder and the Company intend hereby to enter into
an employment agreement as set forth herein;
NOW, THEREFORE,
in consideration of the premises and the mutual covenants set forth
below, the parties hereby agree as follows:
1. Employment. From and after the Effective Date,
the Company hereby agrees to employ the Founder as Chief Executive
Officer of the Company, and the Founder hereby accepts such
employment, on the terms and conditions set forth below.
2. Term. The Founder’s employment by the
Company hereunder shall begin on the Effective Date and shall end
2 1/2 years from the Effective Date (the
“Employment Period”), but subject to earlier
termination upon termination of the Founder’s employment. The
Employment Period may be extended by mutual agreement of the
Company and the Founder.
3. Position and Duties. During the Employment
Period, the Founder shall serve as Chief Executive Officer of the
Company with such duties, authority and responsibilities that are
customary for such position and such other related duties as
requested by the Board of Directors of the Company
(“Board”) from time to time. The Founder shall report
directly to the Board. Unless otherwise authorized by the Board,
the Founder shall devote substantially all of his working time,
attention and energies during normal business hours (other than
absences due to illness or vacation) to the performance of his
duties for the Company. Notwithstanding the above, the Founder
shall be permitted, to (i) serve on civic or charitable boards or
committees, (ii) serve on boards of other companies, and the
Founder shall be entitled to receive and retain all remuneration
received by him from the items listed in clauses (i) through (ii)
of this paragraph.
4. Place of Performance. During the Employment
Period, the locations of employment of the Founder shall be in
Orange County, California and the Founder shall not be required to
relocate his employment to any other location.
5. Compensation and Related Matters.
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(a)
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Base Salary.
Commencing on February 1, 2006 and thereafter during the Employment
Period, the Company shall pay the Founder a base salary at the rate
of not less than $225,000 per year (“Base Salary”). The
Base Salary shall be paid in approximately equal installments in
accordance with the Company’s customary payroll practices.
The Base Salary and the Annual Bonus as described below shall be
subject to annual review by the Board and may be increased in the
Board’s discretion. If the Base Salary is increased by the
Board, such increased Base Salary shall then constitute the Base
Salary for all purposes under this Agreement.
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(b)
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Annual Bonus.
For each full fiscal year of the Company that begins and ends
during the Employment Period, and for the portion of the fiscal
year of the Company that begins in 2008 (each a “Partial
Year”), the Founder shall be eligible to earn an annual cash
bonus (the “Annual Bonus”) in such amount as shall be
determined by the Board of Directors based on the achievement of
Company and individual performance goals as established by the
Board for each such fiscal year (or Partial Year), with such Annual
Bonus being prorated for any Partial Year; provided, however, that
with respect to the first Partial Year ending on December 31, 2005,
such bonus, if any , shall not be paid until on or after February
1, 2006. The Board shall establish objective criteria to be used to
determine the extent to which performance goals have been
satisfied.
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(c)
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Business,
Travel and Entertainment Expenses. The Company shall promptly
reimburse the Founder for all business, travel and entertainment
expenses incurred prior to, on or after the Effective Date hereof
including expenses incurred prior to the formation of the Company,
with respect to the business or prospective business of the
Company, and including expenses incurred in connection with the
formation of the Company and the acquisition of Adapsys Document
Management, Inc., a corporation incorporated under the laws of
Canada, and ADAPSYS TRANSACTION PROCESSING INC. ,
a corporation incorporated under the laws of Canada (expenses
relating to the formation of the Company and the acquisition of
such companies, collectively, the “ Acquisition
Expenses ”), and except for the Acquisition
Expenses, subject to the Company’s expense reimbursement
policies.
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(f)
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Vacation.
During the Employment Period, the Founder shall be entitled to
six weeks of vacation per year. Vacation not taken
during the applicable fiscal year (but not in excess of
four weeks) shall be carried over to the next
following fiscal year.
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(g)
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Welfare,
Pension and Incentive Benefit Plans. During the Employment Period,
the Founder (and his eligible spouse and dependents) shall be
entitled to participate in all welfare benefit plans and programs
maintained by the Company from time to time for the benefit of its
employees, including, without limitation, all medical,
hospitalization, dental, disability, accidental death and
dismemberment, travel accident and life insurance plans, programs
and arrangements. In addition, during the Employment Period, the
Founder shall be eligible to participate in all pension,
retirement, savings and other employee benefit plans and programs
maintained from time to time by the Company for the benefit if its
employees.
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(h)
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Telephone and
Internet Access; Car Allowance. During the Employment Period, the
Company shall pay or promptly reimburse the Founder for telephone,
cell phone, computer usage and internet access at his home for
business use. During the Employment Period, the Company shall pay
Founder a monthly car allowance of $750.00 per month.
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(i)
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Equity Awards.
The Board shall in its sole discretion, and with approval of the
Compensation Committee, if any, that is formed by the Board, and
without approval of the “ADM Parties” as defined in the
that certain Rights Agreement dated July 29, 2005 and entered into
among the Company, Founder, James Cortens, Brian Meyer, Donald
West, Ray Belisle and certain other parties related to the
preceding as provided for in such Rights Agreement (together with
all amendments thereto, the “ !Rights
Agreement ”) or any other persons or entities, may
make an annual grant of stock options to Founder. In addition to
the options that may be granted as provided for in the preceding
sentence, the Founder is hereby granted a stock option to purchase
750,000 shares of common stock of the Company at an exercise price
of two and one half cents ($0.025) per share and subject to the
following: (i) vesting at 25% per each 12 month fiscal period
commencing on the Effective Date; (ii) full 100% vesting upon the
earlier of a Change of Control Event as defined below, or 48 months
from the Effective Date, or termination of Founder’s
employment by the Company without cause by the Company; and (iii)
such other terms as provided for in that certain Grant of
Stock Option attached hereto .
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6. Termination. The Founder’s employment
hereunder may be terminated during the Employment Period under the
following circumstances:
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(a)
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Death. The
Founder’s employment hereunder shall terminate upon his
death.
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(b)
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Disability. If,
as a result of the Founder’s incapacity due to physical or
mental illness as determined by a physician selected by the
Founder, and reasonably acceptable to the Company, (i) the Founder
shall have been substantially unable to perform his duties
hereunder for 12 consecutive months, or for an aggregate of 270
days during any period of twelve consecutive months and (ii) within
thirty days after written Notice of Termination is given to the
Founder after such 12 month or 270 aggregate day period, the
Founder shall not have returned to the substantial performance of
his duties on a full-time basis, the Company shall have the right
to terminate the Founder’s employment hereunder for
“Disability.”
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(c)
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Cause. The
Company shall have the right to terminate the Founder’s
employment for “Cause.” For purposes of this Agreement,
the Company shall have “Cause” to terminate the
Founder’s employment only upon the
Founder’s:
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(i) willful gross misconduct or conviction of a
felony after the Effective Date that, in either case, results in
material and demonstrable damage to the business or reputation of
the Company; or
(ii) willful and continued failure to perform his
duties hereunder within twenty business days after the Company
delivers to his a written demand for performance that specifically
identifies the actions to be performed.
For purposes of
this Section 6 (c), no act or failure to act by the Founder shall
be considered “willful” if such act is done by the
Founder in the good faith belief that such act is or was to be
beneficial to the Company or one or more of its businesses, or such
failure to act is due to the Founder’s good faith belief that
such action would be materially harmful to the Company or one of
its affiliates or subsidiaries’ businesses. Cause shall not
exist unless and until the Company has delivered to the Founder a
copy of a resolution duly adopted by a majority of the Board
(excluding the Founder for purposes of determining such majority)
at a meeting of the Board called and held for such purpose after
reasonable (but in no event less than thirty days’) notice to
the Founder and an opportunity for the Founder, together with his
counsel, to be heard before the Board, finding that in the good
faith opinion of the Board that “Cause” exists, and
specifying the particulars thereof in detail. This Section 6 (c)
shall not prevent the Founder from challenging in any court of
competent jurisdiction the Board’s determination that Cause
exists or that the Founder has failed to cure any act (or failure
to act) that purportedly formed the basis for the Board’s
determination.
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(d)
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Without Cause.
The Company shall have the right to terminate the Founder’s
employment hereunder without Cause by providing the Founder with a
Notice of Termination.
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(e) Good Reason. The Founder may terminate his
employment for “Good Reason” after giving the Company
detailed written notice thereof, if the Company shall have failed
to cure the event or circumstance constituting “Good
Reason” within ten business days after receiving such notice
and provided such event or circumstance is capable of cure. Good
Reason shall mean the occurrence of any of the
following:
(i) the assignment to the Founder of duties
inconsistent with this Agreement or a change in his titles or
authority;
(ii) any failure by the Company to comply with
Section 5 hereof in any material way;
(iii) the requirement of the Founder to relocate to
locations other than those provided in Section 4 hereof;
(iv) the failure of the Company to comply with and
satisfy Section 12(a) of this Agreement; or
(v) any material breach of this Agreement
by the Company; or
(vi)
the acquisition of the Company by
another entity by means of any transaction or series of related
transactions (including, without limitation, any stock acquisition,
reorganization, merger or consolidation) other than a transaction
or series of transactions in which the holders of the voting
securities of the Company outstanding immediately prior to such
transaction continue to retain (either by such voting securities
remaining outstanding or by such voting securities being converted
into voting securities of the surviving entity), as a result of
shares in the Company held by such holders prior to such
transactions, at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such transaction or
series of transactions, or sale of 80% or more of the assets of the
Company (any of preceding, a “ Change of Control
Event”).
The
Founder’s right to terminate his employment hereunder for
Good Reason shall not be affected by his incapacity due to physical
or mental illness. The Founder’s continued employment shall
not constitute consent to, or a waiver of rights with respect to,
any act or failure to act constituting Good Reason
hereunder.
7. Termination Procedure.
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(a)
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Notice of
Termination. Any termination of the Founder’s employment by
the Company or by the Founder during the Employment Period (other
than pursuant to Section 6(a)) shall be communicated by written
Notice of Termination to the other party. For purposes of this
Agreement, a “Notice of Termination” shall mean a
notice indicating the specific termination provision in this
Agreement relied upon and setting forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of the Founder’s employment under that provision.
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(b)
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Date of
Termination. “Date of Termination” shall
mean
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(i) if the Founder’s employment is terminated
by his death, the date of his death,
(ii) if the Founder’s employment is
terminated pursuant to Section 6(b), thirty (30) days after the
date of receipt of the Notice of Termination (provided that the
Founder does not return to the substantial performance of his
duties on a full-time basis during such thirty (30) day period),
and
(iii) if the Founder’s employment is
terminated for any other reason, the date on which a Notice of
Termination is given or any later date (within thirty (30) days
after the giving of such notice) set forth in such Notice of
Termination.
8. Compensation upon Termination or During
Disability. In the event the Founder is disabled or his employment
terminates during the Employment Period, the Company shall provide
the Founder with the payments and benefits set forth below. The
Founder acknowledges and agrees that the payments set forth in this
Section 8 constitute liquidated damages for termination of his
employment during the Employment Period
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(a)
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Termination by
Company or by Founder for Good Reason. If a Change of Control Event
occurs, or if the Founder’s employment is terminated by the
Company without Cause (other than Disability) or by the Founder for
Good Reason:
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(i) the Company shall pay to the Founder, on or
before the Date of Termination, a lump sum payment equal to the sum
of (A) all accrued and unpaid Base Salary and accrued unpaid
vacation pay through the Date of Termination, (B) provided no
Change of Control Event has occurred, Base Salary for the remainder
of the Employment Period; and (c) provided no Change of Control
Event has occurred, two times the highest Annual Bonus paid with
respect to any fiscal year beginning during the Employment Period,
and if no Annual Bonus has been paid, then two times the minimum
Annual Bonus;
(ii) the Company shall continue to provide the
Founder and his eligible spouse and dependents for a period equal
to the remainder of the Employment Period, the medical,
hospitalization, dental and life insurance programs provided for in
Section 5(g), as if he had remained employed; provided, that if the
Founder, his spouse or his eligible dependents cannot continue to
participate in the Company programs providing such benefits, the
Company shall arrange to provide the Founder and his spouse and
dependents with the economic equivalent of the benefits they
otherwise would have been entitled to receive under such plans and
programs;
(iii) the Company shall, consistent with past
practice, reimburse the Founder pursuant to Section 5(e) for
business expenses incurred but not paid prior to such termination
of employment;
(iv) the Founder’s unvested stock options
previously granted to him shall all become immediately 100% vested;
and
(v) the Founder shall be entitled to any other
rights, compensation and/or benefits as may be due to the Founder
in accordance with the terms and provisions of any agreements,
plans or programs of the Company.
The payments
and benefits provided for as subclause (A) of clause (i) above and
in clause (iii) above are hereinafter referred to as the
“Accrued Obligations.”
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(b)
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Cause or by
Founder without Good Reason. If the Founder’s employment is
terminated by the Company for Cause or by the Founder other than
for Good Reason, then the Company shall provide the Founder with
his Accrued Obligations and shall have no further obligation to the
Founder hereunder except for the benefits provided under any stock
option grants and any other agreements, plans or programs of the
Company.
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(c)
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Disability.
During any period that the Founder fails to perform his duties
hereunder as a result of incapacity due to physical or mental
illness (“Disability Period”), the Founder shall
continue to receive his full Base Salary set forth in Section 5(a)
until his employment is terminated pursuant to Section 6(b). In the
event the Founder’s employment is terminated for Disability
pursuant to Section 6(b), the Company shall have no further
obligations to the Founder hereunder except to the extent of
disability benefits or other employee benefit plans and stock
option grants otherwise available to Founder.
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(d)
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Death. If the
Founder’s employment is terminated by his death, the Company
shall have no further obligations hereunder except for any benefits
such as life insurance and any other benefits otherwise available
to Founder or his family under insurance, stock option grants or
other employee benefit plans..
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(e)
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Offset. Amounts
owed to the Founder under this Agreement shall not be offset by any
claims the Company may have against the Founder, and the
Company’s obligation to make the payments provided for in
this Agreement, and otherwise to perform its obligations hereunder,
shall not be affected by any other circumstances, including,
without limitation, any counterclaim, recoupment, defense or other
right which the Company may have against the Founder or
others.
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(f) Stock Options. Founder’s rights under
any stock option grants issued to Founder shall not be reduced or
adversely affected by any term in this Agreement and such rights to
the extent as expressly provided for under any stock option grants
issued by the Company shall survive Founder’s termination of
employment for any reason.
9.
Confidential
Information.
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(a)
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Confidential
Information. Except as may be required or appropriate in connection
with his c
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