EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of October
1, 2004 by Michael J. Luebke ("Executive"), and Infocrossing Healthcare
Services, Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, the Company desires to employ Executive and to enter into this
Agreement embodying the terms of such employment; and
WHEREAS, Executive desires to enter into this Agreement and to accept
employment with the Company, subject to the terms and conditions of this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements set forth herein and for other good and valuable consideration,
the adequacy and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
1. Employment.
The Company hereby agrees to employ Executive, and Executive hereby agrees
to be employed by the Company, on an at-will basis on the terms and conditions
set forth in this Agreement.
2. Position and Duties.
(a) Position. During the term of his employment by the Company, Executive
shall serve as the President and report directly to the Board of Directors of
the Company.
(b) Duties. Executive shall have such duties and authority consistent with
the position of President as shall be assigned to him from time to time by the
Board of Directors. Executive shall devote his full business time, attention,
skill and best efforts to the performance of his duties under this Agreement and
shall not engage in any other business or occupation while employed by the
Company. Notwithstanding the foregoing, nothing herein shall preclude Executive
from: (i) engaging in charitable activities and community affairs and (ii)
managing his personal investments and affairs; PROVIDED, HOWEVER, that the
activities set out in clauses (i) and (ii) shall be limited by Executive so as
not to materially interfere, individually or in the aggregate, with the
performance of his duties and responsibilities hereunder.
3. Compensation.
(a) Base Salary. During the term of Executive's employment, the Company
shall pay Executive an annual base salary of $250,000 (the "Annual Base Salary")
payable in accordance with the Company's regular payroll practices. The Annual
Base Salary shall be reviewed at least annually by the Board of Directors and
may be adjusted in the sole discretion of the Board of Directors.
(b) Parent Options. Subject and pursuant to the terms and conditions of the
Parent's 2002 Stock Option and Stock Appreciation Rights Plan (the "Plan"), the
Company agrees to promptly cause to be granted to the Executive the right and
option (the "Parent Options") to purchase up to 50,000 shares of common stock of
the Parent, par value $.01 per share ("Common Stock"), to be issued as provided
in the Plan. All such Parent Options shall be Incentive Stock Options, as
defined in Section 422A of the Internal Revenue Code of 1986 (the "Code"), to
the extent permissible thereunder. Any Parent Options in excess of the limits of
Section 422A of the Code shall be non-qualified stock options having a term of
ten (10) years from the date of grant. All Parent Options shall be exercisable
at a price equal to the Fair Market Value (as defined in the Plan) on October 1,
2004, the date of grant. Parent Options to purchase 16,666 shares of Common
Stock shall vest on October 1, 2004; Parent Options to purchase 16,667 shares of
Common Stock shall vest on October 1, 2005; and Parent Options to acquire the
remaining 16,667 shares shall vest on October 1, 2006.
(c) Performance Bonus. The Company may provide a performance bonus with a
target amount of $100K payable at the close of each fiscal year other than the
fiscal year ending December 31, 2004. For the fiscal year ending December 31,
2004, The Company's Board of Directors may award Executive a performance bonus
in sole and absolute discretion. For subsequent fiscal years, the Board of
Directors in conjunction with the Compensation Committee of the Board of
Directors of Parent will establish criteria and conditions to be satisfied for
Executive to earn the target amount of the performance bonus. The Board of
Directors and the Compensation Committee of the Board of Directors of Parent
will determine such criteria and conditions in their sole and absolute
discretion. Such goals and conditions will be communicated to Executive during
the first quarter of the applicable fiscal year. Any performance bonus due to
Executive shall be paid to Executive not later than ninety (90) days following
the end of the applicable fiscal year. Notwithstanding performance, the
Company's Board of Directors may adjust the actual bonus as the Board of
Directors deems necessary, in their absolute discretion, in view of the
Company's overall financial condition.
(d) Additional Compensation. In addition to the Annual Base Salary and the
Parent Options, Executive shall receive such additional compensation, bonus pay
and additional grants of options to acquire Common Stock as the Board of
Directors may award Executive from time to time in the Board's sole and absolute
discretion.
(e) Withholding. The Company shall deduct and withhold from any
compensation payments payable to Executive all social security and other
federal, state and local taxes and charges in the minimum amounts (or such
greater amounts as Executive may from time to time request) which currently are
or which hereafter may be required by law to be so deducted and withheld,
including withholding pursuant to bonus withholding rates, as applicable.
4. Benefits; Vacation and Expense Reimbursement.
(a) Benefits. During the term of Executive's employment, Executive shall be
entitled to participate in all fringe benefits (including without limitation,
group medical and dental insurance) and other benefit plans which are available
from time to time to executive employees of the Company subject in each case to
the generally applicable terms and conditions of the applicable plan or program.
The Company agrees to pay Executive the difference between his existing Verizon
health plan and the Company's health plan up to an amount equal to the Company's
health plan. In addition, the Company shall purchase a disability insurance
policy on behalf and for the benefit of Executive pursuant to which Executive
shall be eligible to receive annual payments in an amount equal to no less than
60% of the Annual Base Salary in effect at the time Executive is deemed to have
become disabled pursuant to Section 6(c) of this Agreement.
(b) Vacation; Holidays and Sick Leave. During the term of Executive's
employment, Executive shall be entitled to five (5) weeks of paid time off
("PTO") per year under the same terms and conditions as other employees of the
Company. In addition, Executive shall be entitled to all paid Company holidays
and other benefits as are generally provided to other executives of the Company
in accordance with the Company policies in effect from time to time.
(c) Expense Reimbursement. Executive shall be authorized to incur
reasonable expenses in carrying out his duties and responsibilities under this
Agreement and the Company shall reimburse him, in accordance with Company
policies and procedures, for all business expenses incurred in connection with
carrying out the business of the Company upon presentation of expense statements
or such other supporting information as the Company may customarily require of
its executives.
5. Confidentiality Agreement.
Concurrently with the execution of this Agreement, Executive shall execute
the Company's standard Employee Confidentiality and Invention Assignment
Agreement (the "Confidentiality Agreement").
6. Termination of Executive's Employment.
(a) Termination of Employment. Executive's employment may be terminated (i)
by the Company, at any time, for any reason or for no reason (including, without
limitation, due to the Disability (as defined below) of Executive) and (ii) by
Executive at any time with or without Good Reason (as defined below). In
addition, Executive's employment shall terminate upon the death of Executive.
(b) Definitions.
(i) Disability. For purposes of this Agreement, a "Disability" shall occur
in the event that there is a determination by the Company, upon the advice of an
independent qualified physician, reasonably acceptable to Executive, that
Executive has become physically or mentally incapable of performing his duties
under this Agreement and such disability has disabled Executive, or can
reasonably be anticipated to disable Executive, for a cumulative period of one
hundred eighty (180) days within a twelve (12) month period.
(ii) Good Reason. For purposes this Agreement, "Good Reason" shall mean:
(A) the occurrence of any material breach of this Agreement by the Company which
remains uncured for a period of more than thirty (30) days after written notice
of such breach and of Executive's intention to terminate his employment for
"Good Reason" if such breach is not remedied; (B) a failure to pay any amount
due hereunder within ten (10) business days following written demand for
payment, which demand shall state that Executive intends to resign for Good
Reason if such payment is not made within such ten (10) business day period; (C)
the assignment to Executive of duties or responsibilities materially
inconsistent with Executive's current position, duties or responsibilities
sufficient to constitute a substantial diminution of status within the Company
which duties or responsibilities are not reassigned within thirty (30) days
after written demand from Executive, which demand shall state that Executive
intends to resign for Good Reason if such duties and responsibilities are not
reassigned; or (D) a relocation of the office of the Company to which Executive
is required to report to a location outside of a fifty (50) mile radius of the
then existing location of such office or a requirement that Executive relocate
his residence from Tampa, Florida.
(iii) Change of Control. If there is a change of control, Executive will be
entitled to compensation under paragraph 7(a) below, as well as vest in all
stock options.
7. Compensation Upon Termination of Employment.
(a) Generally. Except as otherwise provided in Section 7(b) and Section
7(c), if the Company terminates Executive's employment for any reason
(including, without limitation, as a result of Executive's death or Disability)
or Executive terminates his employment for Good Reason, the Company shall:
(i) immediately upon such termination, pay to Executive (A) any unpaid
Annual Base Salary at the rate then in effect accrued through and including the
date of termination and (B) an amount equal to the value of Executive's
accumulated PTO;
(ii) subject to Section 8(a), pay to Executive a minimum severance of one
twelfth of the Annual Base Salary in effect as of the date of the termination of
Executive's employment each month after such termination (such monthly payments,
the "Monthly Severance Payments"), in accordance with the Company's regular
payroll practices and payroll schedule for a period of twelve (12) months (the
"Severance Period"); PROVIDED, HOWEVER, that, if Executive enters into an
employment or consulting relationship with any other party during the Severance
Period, the Monthly Severance Payments shall immediately be reduced by fifty
percent (50%) for the remainder of the Severance Period; PROVIDED FURTHER, that,
if Executive's employment is terminated as a result of Executive's Disability,
the Monthly Severance Payments shall be reduced by the amount, if any, paid to
Executive during the Severance Period under any disability insurance policy
purchased by the Company on behalf and for the benefit of Executive; Executive
will continue to accrue stock options during his entire severance period; and
(iii) subject to Section 8(a), make all payments necessary to provide
Executive with continuation coverage under the Company's group health plan until
the earlier to occur of (A) the expiration of the Severance Period or, (B) in
the event Executive enters into an employment or consulting relationship with
any other party during the Severance Period, the date on which Executive becomes
eligible to participate in the group health plan of such other party.
Executive's right to receive the severance benefits described in Section
7(a)(ii) and Section 7(a)(iii) shall be subject to (x) Executive's execution of
a full and complete release in favor of the Company and its officers, directors,
shareholders and affiliates (and the respective officers, directors and
shareholders of such affiliates), in form and substance reasonably acceptable to
the Company, releasing the Company and such other parties from any and all
claims of Executive in connection with his employment by the Company, and (y)
Executive's compliance with the provisions of Section 8 of this Agreement.
Except for the salary, PTO and severance payments described in this Section
7(a), the Company shall not be obligated to make any further payments to
Executive hereunder.
(b) Compensation Upon Termination by Company in Event of Misconduct. In the
event that the Company terminates Executive's employment as a result of
Misconduct (as defined below), the Company shall, immediately upon such
termination, pay to Executive (i) any unpaid Annual Base Salary at the rate then
in effect accrued through and including the date of termination and (ii) an
amount equal to the value of Executive's accumulated PTO. Upon the payment of
the amounts described in the previous sentence, the Company shall not be
obligated to make any further payments to Executive hereunder. For purposes of
this Section 7(b), "Misconduct" shall mean (1) any act of theft, fraud,
embezzlement, falsification of Company or customer documents, misappropriation
of funds or other assets of the Company, or other acts of dishonesty or
misconduct involving the property or affairs of the Company or the carrying out
of Executive's duties; (2) a conviction (by trial, upon a plea or otherwise) or
the admission of guilt of any felony or misdemeanor involving moral turpitude or
other act of dishonesty, fraud or deceit; or (3) the repeated material violation
of any written policy or procedure of the Company.
(c) Compensation Upon Termination by Executive Without Good Reason. If
Executive terminates his employment without Good Reason, the Company shall,
immediately upon such termination, pay to Executive (i) any unpaid Annual Base
Salary at the rate then in effect accrued through and including the date of
termination and (ii) an amount equal to the value of Executive's accumulated
PTO. Upon the payment of the amounts described in the previous sentence, the
Company shall not be obligated to make any further payments to Executive
hereunder.
8. Non-Competition and Non-Solicitation.
(a) Non-Competition. Executive acknowledges that the nature of the
Company's business is such that if the Executive were to become employed by, or
substantially involved in, the business of a competitor of the Company following
the termination of the Executive's employment with the Company, it would be very
difficult for Executive not to rely on or use the Company's trade secrets and
confidential information. Thus, to avoid the inevitable disclosure of the
Company's trade secrets and confidential information, Executive agrees and
acknowledges that Executive's right to receive the severance benefits described
in Section 7(a)ii and Section 7(a)iii shall be conditioned upon Executive not
directly or indirectly engaging in (whether as an employee, consultant, agent,
proprietor, principal, partner, major stockholder, corporate officer, director
or otherwise), management or control of, any person, firm, corporation or
business that competes with the Company's business at the time of termination
for a period equal to Executive's severance period. Notwithstanding the
foregoing, Executive shall not be prohibited from owning shares of a business
that competes with the Company's business if the shares are listed on a national
or regional securities exchange or have been registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended, and the investment in such
shares does not exceed two percent (2%) of the outstanding shares of such class
of shares.
(b) Non-Solicitation. Executive agrees and acknowledges that, for a period
of twelve (12) months after the termination of Executive's employment with the
Company for any reason, Executive shall not, either directly or indirectly,
personally, or on behalf of or in conjunction with any person or firm, divert or
take away any client or customer of the Company or solicit, induce, facilitate,
recruit, encourage or cause any employee, consultant, contractor, agent or
representative of the Company, to leave their employment or engagement with the
Company for any reason.
(c) Understanding of Covenants. Executive hereby represents that he: (i) is
familiar with the foregoing covenants not to compete and not to solicit; (ii) is
fully aware of and agrees specifically to his obligations thereunder, including,
without limitation, the reasonableness of the length of time and scope of these
covenants: (iii) acknowledges that the remedies set forth herein for violation
of such covenants are in addition to any remedies that the Company may have in
law or in equity; and (iv) understands that he will also be executing
simultaneously with this Agreement, the Confidentiality Agreement and that the
obligations set forth in that Agreement are in addition to those set forth in
this Section.
9. Remedies.
The parties hereto agree that the Company would suffer irreparable harm
from a breach by Executive of any of the covenants or agreements contained in
Section 8 of this Agreement. Therefore, in the event of the actual or threatened
breach by Executive of any of the provisions of Section 8 of this Agreement, the
Company may, in addition and supplementary to other rights and remedies existing
in its favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violation of the provisions thereof.
10. Representation of Executive.
Executive hereby warrants and represents that he is not bound by any other
agreement or subject to any other restriction which would either prevent him
from entering into this Agreement or from performing his duties as contemplated
hereunder.
11. Indemnification.
The Company shall, to the maximum extent permitted by the General
Corporation Law of the State of California, indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising
from or out of Executive's performance as an officer or employee of the Company
or in any other capacity, including serving as a fiduciary, in which Executive
serves at the request of the Company, except for acts or omissions not in good
faith or which involve gross negligence, intentional misconduct or a knowing
violation of law, for any breach of Executive's duty of loyalty or any other
fiduciary duty to the Company, or for any transaction from which Executive
derived an improper personal benefit. If any claim is asserted against Executive
for which Executive reasonably believes in good faith he is entitled to be
indemnified hereunder, the Company shall, at its option, (i) assume the defense
thereof; or (ii) pay Executive's reasonable legal expenses (or cause such
expenses to be paid), if the Company does not so assume the defense; PROVIDED,
HOWEVER that Executive shall reimburse the Company for such amounts if Executive
shall be found by a final, non appealable order of a court of competent
jurisdiction or any arbitrator or mediator (whose judgment Executive has agreed
to be bound by) not to be entitled to indemnification.
12. Arbitration and Equitable Relief.
(a) Executive and the Company each agree that any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof shall be settled by arbitration to be held in Orange County, California,
in accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator shall be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's decision
in any court having jurisdiction.
(b) The arbitrator shall apply California law to the merits of any dispute
or claim, without reference to rules of conflict of law. The arbitration
proceedings shall be governed by California arbitration law and by the Rules.
(c) The Company shall pay the costs and expenses of such arbitration, and
each party shall separately pay his or its attorneys' fees and expenses.
(d) Executive has read and understands this Section 12. Executive
understands that by signing this Agreement, Executive agrees to submit any
future claims arising out of, relating to, or in connection with this Agreement,
or the interpretation, validity, construction, performance, breach, or
termination thereof to binding arbitration, and that this arbitration clause
constitutes a waiver of Executive's right to a jury trial and relates to the
resolution of all disputes relating to all aspects of the employer/executive
relationship, including but not limited to, the following claims:
(i) employment; breach of contract, both express and implied; breach of the
covenant of good faith and fair dealing, both express and implied; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; and defamation;
(ii) any and all claims for violation of any federal state or municipal
law, regulation, statute or ordinance, including, but not limited to, Title VII
of the Civil Rights act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, the Americans with Disabilities act of
1990, the Fair Labor Standards Act, the California Fair Employment and Housing
Act, and the California Labor Code Section 201, ET SEQ; and
(iii) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination.
(e) By signing this Agreement, the Company agrees to submit any future
claims arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach or termination
thereof to binding arbitration, and further agrees that this arbitration clause
constitutes a waiver of the Company's right to a jury trial and relates to the
resolution of all disputes relating to all aspects of the relationship between
the Company and Executive.
(f) Adherence to this Section regarding Arbitration shall not limit the
right of the parties hereto to obtain any provisional remedy including, without
limitation, injunctive or similar relief, from any court of competent
jurisdiction as may be necessary to protect their respective rights and
interests pending arbitration, particularly if necessary to avoid irreparable
harm.
13. Successors and Assigns.
This Agreement may not be assigned by Executive; PROVIDED, HOWEVER, that
Executive's rights to payments hereunder shall, upon his death, inure to the
benefit of Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. This Agreement shall
inure to the benefit of and be binding on the successors and assigns of the
Company.
14. Modification or Waiver.
No provision of this Agreement may be modified, waived, or discharged
unless agreed to in writing by both parties hereto. The failure of a party to
insist upon strict adherence to any term, condition or other provision of this
Agreement shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term,
condition or other provision of this Agreement.
15. Notices.
All notices or other communications required or permitted hereunder shall
be made in writing and shall be deemed to have been duly given if delivered by
hand or delivered by a recognized delivery service or mailed, postage prepaid,
by express, certified or registered mail, return receipt requested, and
addressed to the Company or Executive, as applicable, at the address set forth
below (or to such other address as shall have been previously provided in
accordance with this Paragraph 14):
If to the Company: Infocrossing Healthcare Services, Inc.
c/o Infocrossing, Inc.
2 Christie Heights Street
Leonia, NJ 07605
Attention: General Counsel
Fax: (201) 840-7126
If to Executive: Michael J. Leubke
17926 Cachet Isle Drive
Tampa, FL 33647
Fax: 813-982-2020 (voice & fax)
16. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with the laws of the State of Florida without regard to its conflict
of laws provisions.
17. Severability.
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision or term of this Agreement shall be held to be prohibited by
or invalid under such applicable law, then such provision or term shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provisions or term or the remaining provisions or terms of this Agreement.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
19. Entire Agreement.
This Agreement and the Confidentiality Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.
20. Acknowledgement of Executive.
EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY TO CONSULT TAX AND
LEGAL COUNSEL IN REGARD TO THIS AGREEMENT, THAT HE HAS READ AND UNDERSTANDS THIS
AGREEMENT, THAT HE IS FULLY AWARE OF ITS LEGAL EFFECT, AND THAT HE HAS ENTERED
INTO IT FREELY AND VOLUNTARILY AND BASED ON HIS OWN JUDGMENT AND NOT ON ANY
REPRESENTATIONS, UNDERSTANDINGS, OR PROMISES OTHER THAN THOSE CONTAINED IN THIS
AGREEMENT.
[Remainder of Page Intentionally Left Blank]
[Signature Page to Employment Agreement]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
EXECUTIVE INFOCROSSING HEALTHCARE
SERVICES, INC.
/s/ MICHAEL J. LUEBKE By: /s/ ROBERT B. WALLACH
- ------------------------------- ----------------------------------
Michael J. Luebke Name: Robert B. Wallach
Title: Vice Chairman