AGREEMENT
This Agreement (this "Agreement") is made and entered into as of October
13, 1999 by and between Veterinary Centers of America, Inc., a Delaware
Corporation (the "Company"), and Xxxxx Xxxxxx ("Officer").
RECITALS:
A. The Company considers it essential to the best interests of its stockholders
to xxxxxx the continuous employment of key management personnel. In connection
with this, the Company's Board of Directors (the "Board") recognizes the
possibility of a change in management personnel or a change in control of the
Company may exist and that such possibility, and that such uncertainty and
questions that it may raise among management, could result in the departure or
distraction of management personnel to the detriment of the Company and its
stockholders.
B. The Board has decided to reinforce and encourage the continued attention and
dedication of members of the Company's management to their assigned duties
without distraction arising from the possibility of a change in management or
control of the Company.
C. In order to induce Officer to remain in its employ, the Company has entered
into this Agreement with Officer.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Officer agree as
set forth below.
1. SEVERANCE PAYMENTS UPON CHANGE IN CONTROL.
1.1 SEVERANCE PAYMENT. Upon the occurrence of a Change in Control (as
defined in Section 1.4 below) of the Company, the employment of Officer
hereunder shall terminate and the Company shall pay to Officer in cash, on the
fifth day following the date on which the Change of Control occurs (which for
the purposes of this Section 1. shall be the Termination Date), the following:
1.1.1 All accrued and unpaid salary and other compensation payable to
Officer by the Company for services rendered by Officer to the Company through
the Termination Date;
1.1.2 All accrued and unused vacation and sick pay payable to Officer
by the Company with respect to services rendered by Officer to the Company
through the Termination Date;
1.1.3 Severance pay in an amount equal to (x) the Base Salary Officer
would have earned during the five years following the Termination Date, plus an
amount equal to five
times (y) (i) in the event no previous annual bonus has been paid or is payable
pursuant to this Amended Agreement, 20% of Officer's Base Salary, or (ii) in the
event at least one annual bonus has been paid or is payable to Officer, the
greater of (x) the last annual bonus paid or payable to Officer pursuant to this
Amended Agreement, or (y) the average of all annual bonuses that have been paid
or are payable to Officer pursuant to this Amended Agreement. It is hereby
agreed that, for purposes of computing the amount of any severance or
termination payment under this Agreement, any shares of restricted Common Stock
issued to Officer as a bonus in lieu of a cash bonus shall be valued at the per
share price paid or payable by the acquirer in the Change in Control
transaction.
1.2 VESTING OF OPTIONS. In addition to the foregoing, and notwithstanding
the provisions of any other agreement to the contrary, upon the occurrence of a
Change in Control, all options to purchase Common Stock of the Company which
have been granted to Officer by the Company shall become immediately exercisable
on the Termination Date and, notwithstanding any other agreement to the
contrary, shall remain exercisable for the full term of each such option.
1.3 PROVISION OF SERVICES FOLLOWING CHANGE IN CONTROL. At the request of
the Company, Officer shall continue to serve hereunder for a period of up to 180
days following the Termination Date. If the Company requests Officer to perform
such services, Officer shall be compensated from and after the Termination Date
for the period that Officer actually remains employed by the Company at his then
current base salary. Any such amounts payable to Officer shall be in addition to
and not in lieu of the amounts payable to Officer under Section 1.1 above.
1.4 CHANGE IN CONTROL. For purposes of this Section 1, "Change in
Control" of the Company shall be deemed to have occurred if (a) there shall be
consummated (x) any consolidation or merger of the Company into or with another
Person as such term is used in Sections 13(d)(3) and 14(d)(2) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), in which the Company
is not the continuing or surviving corporation or pursuant to which shares of
the Company's common stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (y) any sale, lease or other transfer (in one transaction
or a series of related transactions) of all or a significant portion of the
assets of the Company (for purposes of this definition, the sale of the stock or
assets of two or more of the Company's existing subsidiaries shall be deemed to
be a sale of a significant portion of the Company's assets), or (b) the
shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company, or (c) any Person who is not now the owner of 10% or
more of the Company's outstanding equity securities shall become the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more
of the Company's outstanding equity securities, or (d) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire board of directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors in the
beginning of the period.
The parties believe that the payments pursuant to this Section 1 hereof do
not constitute "Excess Parachute Payments" under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"). Notwithstanding such belief, if
any benefit under these sections constitutes an "Excess Parachute Payment" the
Company shall pay to Officer an additional amount ("Tax Payment") such that (x)
the excess of all Excess Parachute Payments (including payments under this
sentence) over the sum of excise tax thereon under Section 4999 of the Code and
income tax thereon under Subtitle A of the Code and under applicable state law
is equal to (y) the excess of all Excess Parachute Payments (excluding payments
under this sentence) over income tax thereon under Subtitle A of the Code and
under applicable state law. Such Tax Payment shall be paid to Officer
concurrently with the severance payment referred to in Section 1.1 above.
2. GENERAL PROVISIONS.
2.1 NOTICES. All notices, requirements, requests, demands, claims or other
communications hereunder shall be in writing. Any notice, requirement, request,
demand, claim or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two (2) business days
after having been set by registered or certified mail, return-receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telecopier, once such notice or other communication is
transmitted to the telecopier number specified below, and the appropriate
telephonic confirmation is received, provided that such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (ii) above or (iv) if sent through an overnight delivery service under
circumstances by which such service guarantees next day delivery, the date
following the date so sent:
If to the Company, to: Veterinary Centers of America, Inc.
00000 Xxxx Xxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
If to Executive to: Xxxxx Xxxxxx
00000 Xxxx Xxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Any party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
2.2 ASSIGNMENT. This Agreement and the benefits hereunder are personal to
the Company and are not assignable or transferable, nor may be the services to
be performed hereunder be assigned by the Company to any person, firm or
company; provided however, that this Agreement and the benefits hereunder may be
assigned by the Company to any corporation into which the Company may be merged
or consolidated, and this Agreement and the benefits hereunder will
automatically be deemed assigned to any such Corporation.
2.3 COMPLETE AGREEMENT. This Agreement contains the entire agreement among
the parties hereto with respect to the subject matter hereof and supersedes and
cancels any and all
previous written or oral negotiations, commitments, understandings, agreements
and any other writings or communications in respect of such subject matter.
2.4 AMENDMENTS. This Agreement may be modified, amended, superseded or
terminated only by a writing duly signed by both parties.
2.5 SEVERABILITY. Any provision of this Agreement which is invalid, illegal
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
2.6 NO WAIVER. Any waiver by either party of a breach of any provisions of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of either party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall be considered a waiver or
to deprive such party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
2.7 BINDING EFFECT. This Agreement shall be binding on, and shall inure to
the benefit of, the parties hereto and their permitted assigns, successors and
legal representatives.
2.8 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
document.
2.9 GOVERNING LAW. This Agreement has been negotiated and entered into in
the State of California and shall be construed in accordance with the laws of
the State of California.
2.10 ARBITRATION. The parties hereby expressly agree that any controversy
or claim relating to this Agreement, including the construction, enforcement or
application of the terms hereof, shall be submitted to arbitration in Los
Angeles, California by the American Arbitration Association in accordance with
the Commercial Arbitration Rules of such association. The arbitrator shall be a
retired judge of the Los Angeles Superior Court or other party acceptable to the
parties and the rules of evidence shall apply; the costs of the arbitrator shall
be borne equally. Each party shall be responsible for its own attorneys' fees
and costs. However, the arbitrator shall have the right to award costs and
expenses (including actual attorneys' fees) to the prevailing party as well as
equitable relief. The award of the arbitrator shall be final and binding and
shall be enforceable in any court of competent jurisdiction. Nothing in this
paragraph shall preclude the parties from seeking an injunction or other
equitable relief from a court of competent jurisdiction under appropriate
circumstances.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf by its duly authorized officer and Executive has executed the same as
of the day and year first above written.
THE COMPANY
VETERINARY CENTERS OF AMERICA, INC.
By: /S/ XXXXXX XXXXX
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Name: Xxxxxx Xxxxx
Its: Chief Executive Officer
OFFICER
/S/ XXXXX XXXXXX
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Xxxxx Xxxxxx
