Exhibit 10.12
EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT
(this “ Agreement ”) is made on this 5th day of
January 2009 by and among HealthPort Technologies, LLC., a Georgia
limited liability company (the “ Company ”) and
William Matits (“ Executive ”).
NOW, THEREFORE, in consideration of
the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Employment .
The Company will employ Executive, and Executive accepts employment
with the Company, upon the terms and conditions set forth in this
Agreement, for the period beginning on the date hereof and ending
as provided in Section 6 (the “ Employment Period
”).
Section 2. Positions and
Duties. During the Employment Period, Executive will serve as
the Senior Vice President of Sales of Smart Holdings Corp., the
Company and its related Subsidiaries, provided that Executive will
not be obligated to become or remain an officer of any company
(i) whose organization documents do not provide
indemnification provisions reasonably satisfactory to Executive and
(ii) which is not covered by the directors’ and
officers’ liability policy referred to in Section 11(b)
hereof. Executive shall have such responsibilities, duties and
authority as are assigned to him by the Chief Executive Officer of
the Company and the Board of Directors of the Company (the “
Board ”); provided that all such services and
functions are consistent with the defined parameters of the
position of Senior Vice President of Sales and within
Executive’s area of expertise. Without limiting the
foregoing, Executive will render such managerial, analytical,
administrative, marketing, creative and other appropriate expertise
in connection with the management and affairs of Holdings, the
Company and their Subsidiaries, consistent with the direction of
Chief Executive Officer of the Company and the Board. Executive
agrees to devote substantially all of his business time and
attention (except for permitted vacation periods and reasonable
periods of illness or other incapacity) to the business and affairs
of Holdings, the Company and their Subsidiaries. Executive will
report directly to the Chief Executive Officer of the Company,
Michael Labedz.
Section 3. Location .
Executive’s duties hereunder will be performed in his home
state of New Jersey, subject to customary travel obligations
associated with the performance of his job. The Company at its own
expense, shall provide Executive with appropriate office space in
greater Morris County New Jersey area. Executive shall have
reasonable input into selection of office space and the furnishing
of same. The company shall also provide all equipment, supplies and
other items reasonably required for the performance of
Executive’s duties under this Agreement.
Section 4. Salary and
Benefits .
(a) Salary . During the
Employment Period, the Company will pay Executive a base salary in
the amount of $200,000 per year (as in effect from time to time,
the “Base Salary ”) as compensation for services
rendered. The Base Salary will be payable in regular installments
in accordance with the general payroll practices of the Company and
its Subsidiaries, but in no event less frequently than monthly.
Executive’s Base Salary will be reviewed on at least an
annual basis,
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beginning on the one year anniversary of the
date of this Agreement (such anniversary date, each anniversary
date thereafter, and any additional review dates as described in
the proviso hereto, a “ Date of Determination
”): provided that additional reviews shall be
conducted as soon as practical following the receipt of three full
months of financial statements of the Company subsequent to any add
on acquisition to the Company or any of its Subsidiaries. Such
reviews will be conducted by the Chief Executive Officer of the
Company and Executive shall be entitled to a written determination
immediately thereafter as to any change in his compensation and the
specific reasoning for or against any change. A primary purpose of
the aforementioned writing is to provide Executive with an updated
status report on his performance and the Company’s
satisfaction/dissatisfaction with Executives handling of those
responsibilities delegated to him.
(b) Benefits . Executive
shall be entitled to all of the same perquisites and benefits as
are made available to other senior executive employees of the
Company, as well as such other perquisites or benefits as may be
specified from time to time by the Board. During the Employment
Period, the Company will provide Executive with family health
insurance coverage and dental insurance coverage, life insurance
coverage, long-term disability insurance coverage and
Directors’ and Officers’ liability insurance under such
plans as the Board may establish or maintain from time to time for
senior executive officers of the Company and its Subsidiaries
(collectively, the “ Benefits ”).
(c) Vacation . Executive will
be entitled to four weeks of paid vacation each year.
(d) Reimbursement of Expenses
. During the Employment Period, the Company will reimburse
Executive for all reasonable out-of-pocket expenses incurred by
Executive in the course of performing Executive’s duties
under this Agreement which are consistent with the Company’s
policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the
Company’s requirements with respect to reporting and
documentation of such expenses.
(e) Automobile Allowance .
During the Employment Period, the Company will lease for Executive,
or reimburse Executive for the reasonable costs of leasing, an
automobile of Executive’s choice; provided that in no
event will the Company’s obligations under this
Section 4(e) exceed $500 per month.
(f) Professional Education .
Executive’s attendance at professional seminars will be
decided on an ad hoc basis by the Board and Executive. If
attendance is deemed appropriate, the Company shall pay for the
reasonable cost of the Executive’s attendance at
same.
Section 5. Commission .
In addition to Executive’s receipt of his Base Salary and
benefits as referenced above, for each month during the Employment
Period, Executive will be entitled to commission payments based on
Executive’s current Commission Plan. At the current time,
Executive’s current commission rate is 6.5% of second month
sales of reoccurring revenue (hereinafter referred to as
“Second Month Sales”), attributed to all individuals in
Executive’s sales organization, payable within thirty
(30) days of the last day of the month in which Second Month
Sales are realized by the Company. Second Month Sales are defined
as the first full month of revenue from a new site. As an example,
if a site started at any time during the month of October, any
revenue from the site during November constitutes Second Month
Sales.
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If the sales dollar volume based on
Fourth Month Sales exceeds the sales dollar volume based on actual
Second Month Sales, Executive will earn as additional commission of
6.5% of the increase. “Fourth Month Sales” are defined
as the average revenue of months two, three and four from a new
site.
If Fourth Month Sales are less than
the sales dollar volume based on actual Second Month Sales. 6.5% of
the decrease between the Second and Fourth Month sales dollar
volume will be deducted from future commission earnings.
Commissions based upon Fourth Month Sales (if any) shall be payable
to Executive within thirty (30) days of the last day of the
month in which such corresponding Fourth Month Sales are realized
by the Company.
In addition to the foregoing, for
each month during the Employment Term, Executive shall be eligible
for a separate commission payment if any individual in
Executive’s sales group (or Executive himself) generate at
least $1,000.00 of “Non-Reoccurring Revenue” based upon
the following formula:
This commission payment shall be
payable to Executive within thirty (30) days of the last day
of the month in which such revenue is realized by the Company. If,
during the Employment Term, the Company realizes an amount equal to
the Budget Amount for a particular fiscal quarter. Executive shall
also be entitled to a bonus for that quarter of $5,000.00, payable
within thirty (30) days after the last day of that quarter;
and
If, during the Employment Term, the
Company realizes an amount equal to the Quota Amount for a
particular fiscal quarter. Executive shall also be eligible for a
separate bonus for that quarter of $5,000.00, payable within thirty
(30) days after the last day of that quarter.
Section 6. Termination of
Employment . The Employment Period will commence on the date
hereof and will continue until the fifth (5
th ) year anniversary of the date hereof (the
“ Original Term ”), unless sooner terminated as
permitted in this agreement. The Employment Period shall be
renewable for successive one-year terms thereafter at the
discretion of the Company (each, as applicable, a “
Renewal Term ”). In the event the Company chooses not
to renew this Agreement at the conclusion of the Original Term
(expiration of the five year term referenced above), the Company
shall give Executive ninety (90) days advance written notice
of such intent before the anniversary date of the Agreement.
Failing such notice, this Agreement shall automatically renew for
an additional one-year period and shall thereafter automatically
renew annually on the anniversary date of this Agreement subject to
the Company’s right to provide ninety (90) days advance
written notice of its intention not to renew the Employment Period.
The termination provisions are as follows:
(a) By the Company, For Cause (as
that term is defined below), upon written notice to
Executive.
(b) Upon the death of
Executive.
(c) By Executive, up to 30 days
after written notice to the Company of resignation by Executive
(which time period will be in the sole discretion of the Company
but not to exceed 30 days from the date of notice from
Executive).
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(d) If Executive fails to perform
his duties under this Agreement on account of total Disability (as
hereinafter defined), the Company may give notice to Executive to
terminate this Agreement on a date not less than ninety 90 days
thereafter (“ Notice Period ”), and, if
Executive has not resumed full performance of Executive’s
duties under this Agreement within such Notice Period (which may be
extended by Executive’s unused vacation days), then
Executive’s employment under this Agreement will terminate on
the date provided in the notice with the expectation that
Executive’s salary continuation plan in effect (disability
policy) will immediately thereafter begin payment of benefits under
the policy to Executive. As used in this Agreement, the term
“Total Disability ” will mean the inability of
Executive to perform Executive’s duties under this Agreement
by reason of a physical or mental disability that, after the
expiration of more than 26 weeks after its commencement, is
determined to be total and permanent by a physician jointly
selected by the Company (or its insurers) and Executive or his
legal representatives (such agreement to acceptability not be
withheld unreasonably).
(e) By Executive, in the event the
Company is in breach of any of its obligations hereunder and such
breach is not cured within 30 days of written notice thereof from
Executive. A breach of the Company’s obligations under this
Agreement includes, without limitation, (i) a material change
in Executive’s reporting structure, responsibilities or
obligations under this Agreement without Executive’s prior
written consent; or (ii) Executive’s Base Salary,
Commission, Bonus, or Benefit Plans as in effect as of the date
hereof or as the same may be increased by the Board from time to
time thereafter, is reduced, unless such reduction is agreed to by
Executive in writing; or (iii) the Company requires Executive
to relocate to a place that is not in the greater Morris County, NJ
area.
(f) By the Company, other than as
described in clause (a), (b) or (d) above, including in
connection with a Sale of the Company.
For purposes of this Agreement,
“ For Cause ” will mean Executive’s
(i) conviction of, or plea of guilty or no contest with
respect to, either (A) a felony or (B) any crime that
causes Holdings, the Company and its Subsidiaries, taken as a
whole, a substantial and material financial detriment;
(ii) commission of a criminal act involving fraud or
embezzlement with respect to Holdings, the Company or any of its
Subsidiaries; (iii) substantial and repeated refusal (except
where due to illness, Disability or incapacity) to perform
Executive’s day to day responsibilities hereunder, which
actions are not cured within 90 days after written notice thereof
to Executive from the Company which notice will specifically set
forth the nature of such actions and the specific actions required
of the Executive to correct the same(which requirements shall not
be unreasonable: (iv) commission of any willful or intentional
bad act of Executive that has the intended effect of injuring the
reputation or business of Holdings or its Affiliates in any
material respect; or (v) continued or repeated absence from
the Company, unless such absence is (A) in compliance with
Company policy or approved or excused by the Board or (B) is
the result of Executive’s illness. Disability or incapacity;
provided , however , that the Company’s failure
to achieve certain results will not be deemed to constitute
“For Cause” so long as Executive uses Executive’s
reasonable best efforts to perform his duties under this
Agreement.
In the event the Employment Period
terminates by reason of Executive’s resignation under
Section 6(c), death 6(b) or Disability 6(d) or the Company
terminates the Employment Period For Cause 6(a), Executive, or his
estate will be entitled to receive his Salary and any fringe
benefits (except welfare benefits which Executive elects to
continue at his sole expense in accordance with any welfare plans),
as well as payment of all commission and bonus monies due Executive
for sales
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completed through the date of termination. In
the event the Employment Period is terminated by the Company
pursuant to Section 6(f) or by Executive pursuant to
Section 6(e), or in the event the Company elects not to renew
this Agreement pursuant to the first paragraph of this
Section 6, then so long as Executive continues to comply with
Sections 8 and 9, Executive, or his estate will be entitled to
receive (i) severance payments in an aggregate amount equal to
one year’s Salary based on the Salary in effect at the time
the Employment Period is terminated and (ii) Benefits at the
same level as they are provided from time to time to the
Company’s senior management employees, for a period equal to
one year from the date of such termination as well as payment of
all commission and bonus monies due Executive for sales completed
through the date of termination. Any such severance payments paid
to Executive by the Company will be paid over twelve months
according to the company’s normal payroll processing
commencing from the Termination Date; provided that
Executive, or his Estate will be required to sign a release, in the
form as set forth in Exhibit A attached hereto, as a
condition to receiving such payments and Benefits. In the event
that Executive’s employment is terminated because of his
Total Disability, upon commencement of Executive’s Salary
Continuation Plan (then current disability policy), the
Company’s obligation to continue to provide Executive with
his Base Salary and unused fringe benefits shall end.
Notwithstanding anything to the
contrary contained herein, if at the time of Executive’s
termination of employment pursuant to either Section 6(f) or
6(e), the Company is “readily tradeable” as defined in
Section 409A of the Internal Revenue Code of 1986, as amended
(the “ Code ”) and Executive is a Specified
Employee as of such date, if the sum of the installments to be
received by Executive for the six (6) month period immediately
following the Termination Date exceed the Safe Harbor Amount as
defined by the federal tax code at the time, then the amount in
excess of the Safe Harbor Amount shall be paid to Executive with
the first installment payable immediately following the end of such
six (6) month period, and any amounts deferred as a result of
the application of this paragraph shall accrue interest at the
prime rate and shall be paid with the first installment payable
immediately following the end of the six month period.
Section 7. Resignation as
Officer or Director . Upon the termination of the Employment
Period, Executive will be deemed to have resigned from each
position (if any) that Executive then holds as an officer or
director of Holdings or any of its Subsidiaries (including his
membership on the Board and the board of directors of any
Subsidiary of Holdings), and Executive will take any reasonable
action that Holdings or any of its Subsidiaries may request in
order to confirm or evidence such resignation.
Section 8. Confidential
Information . Executive acknowledges that the information,
documentation and data that have been or may be obtained by
Executive during Executive’s employment relationship with, or
through Executive’s involvement as a member or stockholder
of, Holdings or any Subsidiary or predecessor thereof (each of
Holdings, any Subsidiary or Affiliate or any such affiliate
predecessor being a “ Related Company ”), prior
to and after the date of this Agreement concerning the business or
affairs of the Related Companies (collectively, “
Confidential Information ”) are and will be the
property of the Related Companies. Therefore, Executive agrees that
he will not disclose to any unauthorized Person or use for the
account of Executive or any other person any Confidential
Information without the prior written consent of Holdings (by the
action of the Board), unless and to the extent that such
Confidential Information has become generally known to and
available for use by the public other than as a result of
Executive’s improper acts or omissions to act, or is required
to be disclosed by law. Executive will deliver or cause to be
delivered to the Company at the termination of Executive’s
employment with the Company or its Subsidiary, or at any other time
Holdings or any of its Subsidiaries may reasonably
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request, all memoranda, notes, plans, records,
reports, computer tapes and software and other documents and data
(and copies thereof) containing or relating to Confidential
Information or the business of any Related Company which Executive
may then possess or have under Executive’s control.
Notwithstanding the foregoing, the provisions of this Section will
not apply to information required to be disclosed by Executive in
the ordinary course of his duties hereunder.
Section 9. Non-Compete,
Non-Solicitation .
(a) Non-Compete . Executive
acknowledges that during Executive’s employment relationship
with, or through Executive’s involvement as a member or
stockholder of any Related Company, Executive has and will become
familiar with trade secrets and other Confidential Information
concerning such Related Companies, and with investment
opportunities relating to their respective businesses, and that
Executive’s services have been and will be of special, unique
and extraordinary value to the foregoing entities. Therefore, so
long as the Company honors all of its financial obligations to
Executive under the terms of this Agreement, Executive agrees that,
during the Employment Period and for a period of one year
thereafter (the “ Noncompete Period ”).
Executive will not directly or indirectly own, manage, control,
participate in, consult with, render services for. or in any other
manner engage in any business, or as an investor in or lender to
any business (in each case including on Executive’s own
behalf or on behalf of another Person) which constitutes or is
competitive with all or part of the business of Holdings or its
Subsidiaries (as and where the same is conducted or proposed to be
conducted by the Related Companies during the Employment Period, or
as of the end of the Employment Period if the Employment Period has
then ended). Nothing in this Section 9 will prohibit Executive
from being a passive owner of less than 5% of the outstanding stock
of a corporation of any class which is publicly traded, so long as
Executive has no direct or indirect participation in the business
of such corporation. Executive acknowledges that Executive has read
carefully and had the opportunity to consult with legal counsel
regarding the provisions of this Section 9(a).
(b) Non-Solicitation . During
the Noncompete Period, so long as the Company honors all of its
financial obligations to Executive under the terms of this
Agreement, Executive will not directly or indirectly
(i) induce or attempt to induce any employee or independent
contractor of any Related Company to leave the employ or
contracting relationship with such entity, or in any way interfere
with the relationship between any such entity and any employee or
full-time independent contractor thereof, or (ii) induce or
attempt to induce any customer, supplier or other business relation
of any Related Company to cease doing business wi
