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Exhibit 10(y)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective as of January 1, 1997, between OMEGA HEALTH
SYSTEMS, INC., a DELAWARE corporation (the "Company"), and XXXXXX X. XXXXXXX
("Employee").
RECITALS
WHEREAS, Employee has been employed by Company as Chief Financial
Officer pursuant to an Employment Agreement effective September 1, 1992 (the
"Prior Agreement"), which Prior Agreement is hereby amended and replaced by
this Agreement, and Employee and the Company wish by this Agreement to set out
the terms and conditions under which Employee will continue to be employed by
the Company;
WHEREAS, the Company considers it essential to the best interests of
its stockholders to xxxxxx the continuous employment of key management
personnel;
WHEREAS, the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may exist
and that such possibility and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its stockholders;
WHEREAS, the Board of Directors of the Company has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of members of Company's management to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change of control of the Company, although no
such change is now contemplated and also to state the comprehensive rights and
duties of the parties hereto; and
WHEREAS, the Company and Employee agree that this Agreement supersedes
and replaces the Prior Agreement and any other agreements, practices, and
understandings related to his employment.
NOW THEREFORE, in consideration of the preceding and the agreements
hereinafter contained, Employee and the Company agree as follows:
1. EMPLOYMENT. For several years Employee has served as the
Senior Vice President and Chief Financial Officer of the Company, and the
employee's compensation has not been adjusted since January 1995. The Company
hereby continues the employment of Employee as the Executive Vice President and
Chief Financial Officer of the Company with such duties as may be assigned by
the Company's Board of Directors for a term beginning
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January 1, 1997 and ending December 31, 1997 ("Initial Term") and shall
automatically renew for four (4) successive one year periods ("Renewal
Term(s)"), said Renewal Terms ending December 31, 2001. After December 31,
1997, this Agreement may be terminated by either party upon one hundred twenty
(120) days' prior written notice. At any time this Agreement may be terminated
by the Company pursuant to Paragraph 8B hereof or by Employee pursuant to
Paragraph 8A hereof. Employee hereby accepts such employment.
2. BEST EFFORTS. Employee agrees to perform faithfully and
industriously all the duties which Company may require of him, and will devote
his full time and attention to the furtherance of Company's business. Employee
agrees that he will be subject to Company's instructions, direction and control
in business policies established by Company.
3. COMPENSATION.
A. Base Salary. Employee's annual base salary will be $115,000
per year ("Base Salary") for calendar year 1997, paid bi-weekly or more
frequently as Company may determine. The Compensation Committee of the Board
of Directors ("Compensation Committee") will annually determine whether, in
such Committee's sole discretion, Employee may be paid a bonus based upon the
Company's earnings, growth, and other relevant factors.
B. Salary Increases. Employee's Base Salary shall increase by
$15,000 ("Salary Increase") for calendar year 1998. Thereafter Salary
Increases, if any, shall be determined by the Compensation Committee, in its
sole discretion.
C. Options. Effective January 1, 1997, Employee is hereby
granted options to purchase 25,000 shares of the common stock of the Company at
an exercise price of $6.50 per share, which is the fair market value on the
date of grant. Such options shall expire December 31, 2002, and shall not vest
the first two years from the date of such grant, and shall vest 33.3% each year
beginning January 1, 1999, and such options are otherwise subject to the terms,
conditions and provisions of the Stock Option Agreement attached hereto and
incorporated herein by reference.
D. Other Employee Benefits. Employee shall be entitled to term
life insurance payable by Employer on Employee's life in the amount of Five
Hundred Thousand Dollars ($500,000.00), health insurance for Employee and his
family through a group health plan of Employer's selection and an allowance not
to exceed Three Thousand Dollars ($3,000.00) per year for premiums for
disability insurance on Employee. Employee shall also be eligible to
participate in all other employee benefit programs and plans established by
Company at any time for other employees, including but not limited to medical
and/or dental insurance plans, pension or other deferred compensation plans.
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The total amounts paid pursuant to preceding subsections A, B, C, and
D and Section 5 hereof are Employee's "Annual Compensation."
4. EXPENSES. Company shall promptly reimburse Employee for all
expenses reasonably incurred by him in connection with his duties hereunder.
In the event that Employee uses his own automobile to conduct business of the
Company, Employee, at his expense, shall obtain and furnish to Company proof of
public liability insurance issued by an insurance company approved by Company
with minimum coverage of $100,000/$300,000 per occurrence.
5. VACATION. Company agrees that Employee will be entitled to
take four weeks paid vacation per year, provided that no more than two weeks
are taken per departure. Up to five days of unused vacation may be carried
over to the next year.
6. ANNUAL PHYSICAL EXAMINATION. Company will reimburse Employee
for the cost of an annual routine physical examination to a maximum of $400.
7. CHANGE OF CONTROL AND GOOD REASON FOR TERMINATION.
A. Change in Control of the Company. For purposes of this
Agreement, a change in control of the Company ("Change in Control") shall be
deemed to have occurred if (1) any "person" as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended ( the
"Exchange Act"), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly of securities of the Company representing 33% or more of the
combined voting power of the Company's then outstanding securities regardless
of whether the Board shall have approved such Change in Control; or (2) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board and any new director (other than a director
designated by a person who shall have entered into an agreement with the
Company to effect a transaction described in clause (A) (3) (i) and (ii) of
this section) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or (3)
stockholders of the Company approve (i) a merger or consolidation of the
Company with any other corporation regardless of which entity is the surviving
company, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 66 2/3% of the combined voting
power of the securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a plan
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of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets.
B. Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, that without Employee's express written consent, any of the
following circumstances occur, unless, in the case of following subsections
(1), (5), (6), (7), (8) or (9), such circumstances are fully corrected prior to
the date of termination specified in any notice of termination given in respect
thereof:
(1) assignment to Employee of any duties inconsistent with
his current status as an executive officer of the Company or a
substantial adverse alteration in the nature or status of Employee's
responsibilities from those in effect immediately following execution
of this Agreement;
(2) reduction by the Company in Employee's Base Salary in
effect on the date hereof or as the same may be increased from time to
time, except for across-the-board salary reductions similarly
affecting all Company executives and all executives of any person in
control of Company;
(3) relocation of Company's principal executive offices after
a Change in Control to a location more than 50 miles from the location
of such offices immediately prior to a Change in Control or Company's
requiring Employee to be based anywhere other than the location of
Company's principal executive office, except for travel on Company's
business to an extent substantially consistent with Employee's present
business travel obligations;
(4) failure by Company, without Employee's consent, to pay
Employee any portion of Employee's compensation, except pursuant to an
across-the-board compensation deferral similarly affecting all Company
executives and all executives of any person in control of the Company,
or to pay Employee any portion of an installment of deferred
compensation under any Company deferred compensation program, within
30 days of the date such compensation is due;
(5) failure by the Company to continue in effect any
compensation plan in which Employee is participating immediately prior
to a Change in Control which is material to Employee's total
compensation, unless an equitable arrangement has been made with
respect to such plan, or failure by the Company to continue Employee's
participation therein on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of
Employee's participation relative to other participants, as existed
immediately prior to a Change in Control;
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(6) failure by Company after a Change in Control to continue
to provide Employee with benefits substantially similar to those
enjoyed by Employee under any of Company's pension, savings and
retirement plan, life insurance, medical, health and accident, or
disability plans in which Employee was participating at the time of
the Change in Control, action by Company, which would materially
reduce directly or indirectly any of such benefits or deprive Employee
of any material fringe benefit enjoyed by Employee at the time of the
Change in Control, or failure by the Company to provide Employee with
the number of paid vacation days to which Employee is entitled
hereunder or if greater on the Company's normal vacation policy in
effect at the time of the Change in Control of the Company;
(7) failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement;
(8) any purported termination of Employee's employment by the
Company, not pursuant to a Notice of Termination, defined hereinafter,
satisfying the requirements of this Agreement; or
(9) Employee is not able to negotiate a new employment
agreement on terms as favorable to Employee as the terms of this
Agreement.
Employee's right to terminate his employment pursuant to this
Agreement for Good Reason shall not be affected by his incapacity due to
physical or mental illness.
8. TERMINATION AND SEVERANCE PAYMENT.
X. Xxxxxxxxx Payment. In the event that (i) Company and Employee
do not extend or renew this Agreement or replace this Agreement with a new
employment agreement and this Agreement expires, or (ii) upon termination of
Employee's employment by Company at any time after December 31, 1997, other
than for Cause, Disability or Retirement, then Employee shall be paid by
Company Employee's Base Salary and all Welfare Benefits for four (4) months,
and any stock options that have vested by their normal terms as of the date of
termination may be exercised by Employee within six (6) months of such date of
termination. Upon termination of Employee's employment hereunder by Employee
for Good Reason, or by Employee during the two years following the occurrence
of a Change of Control during the term of this Agreement, then (i) not later
than ninety (90) days after such termination, the Company will pay the Employee
a cash severance payment ("Lump Sum Severance Payment") of one times the
Employee's Base Salary for the final year of employment under this Agreement,
and (ii) the Company will continue to pay for and provide to Employee all
Welfare Benefits, except pension and other similar compensation-based plans for
a period of up to one (1) year from the last date of employment if Employee
does not accept employment
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elsewhere, and (iii) the stock options previously granted to Employee as of
such date shall immediately vest in full.
B. Termination for Cause. Company may discharge Employee for
Cause immediately, at any time by a written notice specifying the effective
date of and reason for termination ("Notice of Termination"). In that event,
Employee shall not be eligible for either the Lump Sum Severance Payment, the
Continuing Base Salary Payments, immediate vesting of stock options, or, except
as required by law, the Welfare Benefits. "Cause" is not intended to include
disagreements over management philosophy or other such intangibles. As used
herein, "Cause" shall include, but not be limited to, the following:
(1) Material violation by Employee of any of the terms of
this Agreement; or
(2) Willful and continued failure or gross negligence of
Employee materially to perform his duties with the Company (other than
due to physical or mental illness), provided that Employee has
received a written notice of same from the Board of Directors
specifically identifying the manner in which the Board of Directors
believes Employee has engaged in such failure or misconduct, approved
by two-thirds of the Directors entitled to vote thereon, and the
Employee continues to engage in such conduct after ten (10) days
following receipt of such notice; or
(3) Conviction of or guilty plea by Employee to committing a
felony or an act of moral turpitude or any similar act; or
(4) Conversion or misappropriation by Employee of any monies
or other property of the Company as determined by the Board of
Directors; or
(5) Employee's habitual use of illegal drugs or Employee's
drug or alcohol addiction.
C. Voluntary Resignation. Employee shall be entitled to
terminate his employment by voluntary resignation given in writing at any time
(1) during the two years following the occurrence of a Change in Control of the
Company, or (2) for Good Reason. Such resignation shall not be deemed a breach
of any employment contract between Employee and the Company. Notice of such
resignation shall specify a date Employee's employment will terminate, not less
than 120 days in the future, and 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 Employee's employment under the provision so indicated.
D. Death. If Employee dies during his employment, Employee's
beneficiaries shall be paid:
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(1) the Base Salary which would otherwise have been
payable to Employee up to the end of the month in which death
occurred; and
(2) any employee benefit payment pro rata to the end
of the month in which death occurred, based on the percentage
of the fiscal year for which Employee was compensated at Base
Salary, payable on the date such benefits are normally paid.
E. Retirement. "Retirement" shall mean termination of employment
at age 65 (or later) with ten years of service or retirement in accordance with
any retirement contract between Company and Employee.
F. Disability. "Disability" shall mean an illness, injury or
physical or mental condition of the Employee which results in the Employee's
inability to substantially perform the material duties and responsibilities
required of his position under this Agreement for a period of one hundred
twenty (120) consecutive days or for any one hundred fifty (150) days during
any twelve-month period during the term of the Agreement.
9. PROTECTION OF COMPANY'S ASSETS.
A. Confidential Information. "Confidential Information" means
all information, data, knowledge and secrets whether developed or originated
by, disclosed to or acquired by Employee as a consequence of his employment by
the Company, relating to the Company, its affiliates and subsidiaries, not
generally known in the industry in which the Company is or may become engaged,
relating to the Company's trade secrets, software, financial information,
customers, products, techniques, processes and services, including information
relating to research, development, invention, manufacture, purchasing,
accounting, engineering, marketing, merchandising and selling.
B. Fiduciary Capacity. Employee shall hold in a fiduciary
capacity for the benefit of the Company all Confidential Information.
C. Return of Property Upon Termination. Upon termination of
employment for any reason, Employee shall return to the Company all property of
the Company, including but not limited to customer lists, records, software,
documents, notes, tapes and other repositories of Confidential Information in
the possession of Employee; whether prepared by Employee or by others,
including copies thereof. Employee shall be responsible for any property loss
or damage suffered by the Company due to delay in the return of such property.
Employee represents and warrants that he shall not use any of the aforesaid
items in any future business with which he shall become involved as an employee
or otherwise.
D. Covenants Against Competition. In consideration of his
employment hereunder, Employee hereby expressly covenants and agrees that,
unless otherwise approved in advance
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in writing by the Company's Board of Directors, he will not for any reason,
including expiration of this Agreement, either directly or indirectly, by or
for himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or other entity in the United States of America,
including the District of Columbia and the territories for a period of one (1)
year following the date of termination of employment with the Company except:
(1) Call upon, solicit or attempt to contact any
customer or customers of the Company for direct gain or to aid
a competitor of the Company in damaging the relationship
between the Company and its customers, or in competing with
the Company;
(2) Own, manage, operate, control, be employed by,
participate in or be connected in any manner with the
ownership, management, operation or control of any business
which is similar to the types of businesses conducted by the
Company or which has products or services similar to those
handled or being developed by the Company at the time of
termination of this Agreement, and which has or will call on
firms which are customers of the Company including without
limitation integrated eyecare services, ophthalmology or
optometric practice management, managed eyecare programs, eye
surgical facilities, excimer laser refractive surgery programs
or ophthalmic or optometric specialty supplies and equipment
distribution;
(3) Take with him, disclose, or furnish to anyone
other than the Company or its agents any of the Company's
Confidential Information; or
(4) Solicit any then current Company employee to leave
his or her employment with the Company for any reason.
E. Remedies. Employee acknowledges and agrees that a breach of
any of the preceding covenants of this Section 9 would cause Company
irreparable harm for which a remedy at law would be inadequate and that,
Company shall be entitled to an injunction restraining Employee from the
actions constituting such breach and that Company also may pursue any other
remedies against Employee, including the recovery of damages.
10. WAIVER. A waiver or indulgence by Company of a breach of any
provision of this Agreement of Employee shall not operate or be construed as a
waiver of any subsequent breach by Employee.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall in no way affect the validity or
enforceability of any other provision.
12. MODIFICATION. This Agreement may be modified or amended only by
an instrument in writing signed by both Company and Employee.
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13. CHOICE OF LAW. The validity, interpretation and construction of
this Agreement shall be governed by the laws of the State of Tennessee without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Tennessee or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Tennessee.
14. ARBITRATION. Except as noted hereafter, any controversy or claim
arising out of or relating to this Agreement, or its breach, shall be settled
by arbitration in Memphis, Tennessee, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction; provided, however, that Employee shall be entitled to seek
specific performance of Employee's right to be paid until the date of
termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
Within thirty (30) days after submission of a demand for arbitration,
Employee and the Company shall select one arbitrator, agreeable to all parties.
This arbitrator will be selected from lists prepared by the American
Arbitration Association. From the American Arbitration Association list, the
parties will submit to the American Arbitration Association a ranked list of
acceptable arbitrators. The highest ranking acceptable candidate will be
selected by the American Arbitration Association. If no arbitrators from the
list composed by the American Arbitration Association are acceptable by either
of the parties, the American Arbitration Association will compile a second
list. This procedure will be followed until the parties have selected an
arbitrator. The results of the arbitrator's finding will be binding on the
parties.
The arbitration provisions in this Agreement shall not apply to a suit
instituted by the Company to enforce Section 9 of this Agreement.
15. SURVIVAL AND BINDING EFFECT.
A. The rights and obligations of the parties hereto shall inure to
the benefit of and shall be binding upon their heirs, executors,
administrators, successors, and permitted assigns.
B. The covenants contained in Sections 8, 9, 13 and 14 of this
Agreement shall be construed as independent of any other agreements between the
parties and shall survive termination of employment.
C. The existence of any claim or action of Employee against Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Company of such covenants. Further, the
existence of any claim or cause of action of Company against Employee, whether
predicated on this Agreement or otherwise, shall not constitute justification
of non-payment of the benefits provided hereby.
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IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement as of the day and year above first written.
OMEGA HEALTH SYSTEMS, INC.
BY:
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XXXXXX X. XXXXX, PRESIDENT
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XXXXXX X. XXXXXXX
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