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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of June 15,
1998, is entered by and between Better Image, Inc., a Georgia corporation (the
"Company"), and Xxxxxx X.
Xxxxxx ("Executive").
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Company and
the Executive hereby agree as follows:
SECTION 1. EMPLOYMENT. The Company hereby agrees to employ Executive,
and Executive hereby accepts employment by the Company, upon the terms and
subject to the conditions hereinafter set forth.
SECTION 2. DUTIES. Executive shall serve as the President and Chief
Executive Officer of the Company. Executive will perform the duties attendant to
his executive positions with the Company under the direction of the Board of
Directors of the Company. The Company shall use its reasonable best efforts to
cause Executive to be elected to serve as a member of the Board of Directors of
the Company effective immediately prior to an underwritten initial public
offering (the "IPO") of the Company's common stock. Executive agrees to devote
his reasonable best efforts to the performance of his duties to the Company.
Executive may maintain an office in Santa Barbara, California, and the Company's
principal offices shall be moved to the Santa Xxxxxxx area after the
Commencement Date (as hereinafter defined).
SECTION 3. TERM. The term of this Agreement shall be for five (5)
years, commencing on June 15, 1998 (the "Commencement Date"), and shall be
automatically renewed for successive one year terms unless either party gives to
the other written notice of termination pursuant to the provisions of Section 6
hereof, no fewer than ninety (90) days prior to the expiration of any such term
that it does not wish to extend this Agreement.
SECTION 4. COMPENSATION AND BENEFITS. In consideration for the services
of the Executive hereunder, the Company will compensate Executive as follows:
(a) Base Salary. Commencing on July 1, 1998, Executive shall be
entitled to receive a base salary of $200,000 per annum.
(b) Bonus. Executive shall be eligible to receive an annual cash bonus
in an amount equal to 30% of his base salary in the event that certain annual
financial performance targets established by the Board of Directors are
achieved.
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(c) Benefits. The Company shall grant to Executive on the Commencement
Date an option to purchase 60,000 shares of the Company's Common Stock at $5.00
per share, which option shall vest with respect to 100% of the shares on the
Commencement Date. The term of this option shall be five years from the
Commencement Date. Additionally, the Company shall grant to Executive
immediately prior to the IPO an option to purchase 300,000 shares of the
Company's Common Stock at an exercise price equal to the price to the public of
the Company's Common Stock in the IPO thereof, which grant shall vest with
respect to 20% of the shares on the effective date of the IPO and 20% on each of
the first through fourth anniversaries of the IPO. The term of this option shall
be five years from the anniversary of the IPO. Both option grants shall be
subject to the terms of Section 7 hereof. In addition, during the term of this
Agreement, Executive shall be entitled to participate in and receive benefits
under any and all executive benefit plans and programs which are from time to
time generally made available to the executives of the Company, subject to
approval and grant by the appropriate Company committee with respect to programs
calling for such approvals or grants.
SECTION 5. EXPENSES. It is acknowledged that Executive, in connection
with the services to be performed by him pursuant to the terms of this
Agreement, will be required to make payments for travel, entertainment of
business associates and similar expenses. The Company will reimburse Executive
for all reasonable expenses of types authorized by the Company and incurred by
Executive in the performance of his duties hereunder. Executive will comply with
such budget limitations and approval and reporting requirements with respect to
expenses as the Company may establish from time to time.
SECTION 6. TERMINATION. Executive's employment hereunder will commence
on the Commencement Date and continue until the end of the term specified in
Section 3 hereof and any renewals of such term, except that the employment of
Executive hereunder will terminate earlier in the following manner:
(a) Death or Disability. Immediately upon the death of Executive during
the term of his employment hereunder or, at the option of the Company, in the
event of Executive's disability, upon 30 days prior written notice to Executive.
Executive will be deemed disabled if, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have been unable to perform his
duties with the Company on a full-time basis for 120 consecutive business days.
Executive will be eligible for short and/or long-term disability benefits made
available to Company executives. Additionally, Executive will be entitled to
severance pay as defined herein, less any short and/or long term disability
benefits made available to the Executive.
(b) For Cause. For "Cause" immediately upon written notice by the
Company to Executive. For purposes of this Agreement, a termination will be for
Cause if (i) Executive willfully and continuously fails to perform his duties
with the Company (other than any such failure resulting from incapacity due to
physical or mental illness), (ii) Executive willfully engages in misconduct
materially and demonstrably injurious to the Company for personal profit and
upon receipt of written
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notice of termination for such misconduct is unable to cure the misconduct
within a reasonable period of time, or (iii) Executive has been convicted of a
felony or a crime involving theft or fraud.
(c) Failure of Financing. Automatically in the event that the IPO is
not consummated or other sources of adequate working capital are not secured on
or prior to June 30, 1999.
(d) Without "Cause." Without "Cause" by the Company upon 30 days prior
written notice to Executive.
(e) Constructive Termination. At Executive's option, upon written
notice by Executive to the Company within 120 days following a Constructive
Termination. As used herein, the term "Constructive Termination" means (i) a
change in Executive's title without Executive's consent, (ii) a material
reduction in Executive's duties and responsibilities without Executive's
consent, (iii) a material reduction in Executive's base compensation or maximum
eligible bonus from the immediately preceding year without Executive's consent
or (iv) the relocation of the Executive's office outside a 50 mile radius of
Santa Barbara, California without Executive's consent.
(f) Voluntary Termination. At Executive's option, upon 30 days prior
written notice by Executive to the Company. Upon Voluntary Termination,
Executive forfeits the right to (i) the vesting of any options to purchase the
Company's Common Stock that have not yet vested as defined in Section 4(c)
herein, (ii) eligibility to receive the annual cash bonus for the year of
termination as defined in Section 4(b) herein and (iii) any severance pay of the
Company as defined in Section 6 herein. If Executive has any vested but
unexercised options upon voluntary termination, such options shall remain
exercisable for the greater of 90 days or the time period specified in any
applicable option plan or option agreement.
Executive will not be entitled to any severance pay or other
compensation upon termination of his employment pursuant to Subsections 6(b),
(c), (f), or upon the death of the Executive, except for any portion of his base
salary accrued but unpaid from the last monthly payment date to the date of
termination and expense reimbursements under Section 5 hereof for expenses
incurred in the performance of his duties hereunder prior to termination. In the
event Executive's employment with the company is terminated as a result of
Executive's disability, Executive will be entitled to severance pay as defined
herein, less any short and/or long term disability benefits made available to
the Executive. In the event Executive's employment with the Company (i) is
terminated by the Company without Cause or (ii) is terminated by Executive
within 120 days following a Constructive Termination, or (iii) upon the
occurrence of a Change in Control (as hereafter defined) followed within ninety
(90) days by the termination of Executive's employment by Executive, the Company
will pay Executive on the date of termination (aa) severance pay in the amount
of Executive's monthly base salary at the rate in effect immediately preceding
the termination of Executive's employment multiplied by 24 months (the
"Separation Payment"), which Separation Payment will be paid by the Company in a
lump sum on the date of termination, (bb) the portion of his base salary accrued
but unpaid from the last monthly payment date to the date of termination, (cc)
expense reimbursements under Section 5 hereof for expenses incurred in the
performance of his duties
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hereunder prior to termination, (dd) a pro-rata portion of the annual maximum
bonus for the year in which the termination occurs, and (ee) an amount equal to
two times the amount of the bonus actually earned by Executive the prior
calendar year, provided if the termination occurs during the first year of
employment, Executive will receive an amount equal to two times the pro-rata
portion of the annual maximum bonus for the first year.
Change In Control. A Change In Control will be deemed to have occurred
for purposes hereof (i) when a change of stock ownership of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and any successor Item of a similar nature has occurred;
or (ii) upon the acquisition of beneficial ownership, directly or indirectly, by
any person (as such term is used in Section 14(d)(2) of the Exchange Act) of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; or (iii) a change during any
period of two consecutive years of a majority of the members of the Board of
Directors of the Company for any reason, unless the election, or the nomination
for election by the Company's shareholders, of each director was approved by a
vote of a majority of the directors then still in office who were directors at
the beginning of the period; or (iv) upon approval by the Company's shareholders
of a complete liquidation of the Company; or (v) upon an agreement for the sale
or disposition of Company or all or substantially all of its assets; or (vi)
upon approval by the Company's shareholders of a merger or consolidation of the
Company with any other corporation, except a merger or consolidation which would
result in the voting Common Stock of the Company outstanding immediately prior
thereto continuing to represent at least 51% of the combined voting power of the
surviving entity or a merger or consolidation effected to implement a
recapitalization of the Company in which no shareholder acquires more than 50%
of the voting power of the Company; provided that a Change In Control will not
be deemed to have occurred for purposes hereof with respect to any person
meeting the requirements of clauses (i) and (ii) of Rule 13d-1(b)(1) promulgated
under the Securities Exchange Act of 1934, as amended.
SECTION 7. EFFECT OF TERMINATION ON OPTIONS/COMMON STOCK. Any options
to purchase the Company's Common Stock held by the Executive that have not yet
vested will automatically expire if the Executive's employment with the Company
is terminated for Cause as defined in Section 6(b) or if the Executive
voluntarily leaves the employment of the Company in breach of this Agreement. If
Executive's employment with the Company ends for any reason other than
termination for Cause or voluntary departure in breach of this Agreement, such
Executive's options will remain exercisable and will vest and expire in
accordance with the terms of the applicable option agreements. If the Executive
dies while employed by the Company his vested options shall become fully
exercisable on the date of his death and shall expire twelve months thereafter.
If Executive has any vested but unexercised options upon any termination of
employment, such options shall remain exercisable for the greater of 90 days or
the time period specified in any applicable option plan or option agreement.
SECTION 8. CONFIDENTIAL INFORMATION. Executive recognizes and
acknowledges that certain assets of Employer and its affiliates, including
without limitation
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information regarding customers, pricing policies, methods of operation,
proprietary computer programs, sales, products, profits, costs, markets, key
personnel, formulae, product applications, technical processes, and trade
secrets as defined in California Civil Code Section 3426 (hereinafter called
"Confidential Information") are valuable, special and unique assets of Employer
and its affiliates. Executive will not, during or after his term of employment,
disclose any of the Confidential Information to any person, firm, corporation,
association, or any other entity for any reason or purpose whatsoever, directly
or indirectly, except as may be required pursuant to his employment hereunder,
unless and until such Confidential Information becomes publicly available other
than as a consequence of the breach by Executive of his confidentiality
obligations hereunder. In the event of the termination of his employment,
whether voluntary or involuntary and whether by the Company or Executive,
Executive will deliver to the Company all documents and data pertaining to the
Confidential Information and will not take with him any documents or data of any
kind or any reproductions (in whole or in part) of any items relating to the
Confidential Information.
SECTION 9. NONCOMPETITION; NONSOLICITATION. Until two years after
termination of Executive's employment hereunder, Executive will not (i) engage
directly or indirectly, alone or as a shareholder, partner, officer, director,
Executive or consultant of any other business organization, in any business
activities which (A) relate to the acquisition, consolidation or management of
surgical or physician practices (the "Designated Industry") and (B) were either
conducted by the Company prior to Executive's termination or proposed to be
conducted by the Company at the time of such termination, (ii) divert to any
competitor of the Company in the Designated Industry any customer of the
Company, or (iii) solicit or encourage any officer, executive, employee or
consultant of the Company to leave his employ for employment by or with any
competitor of the Company in the Designated Industry. The parties acknowledge
that Executive's noncompetition and nonsolicitation obligations hereunder will
not preclude Executive from owning less than 5% of the common stock of any
publicly traded corporation conducting business activities in the Designated
Industry. Executive will continue to be bound by the provisions of this Section
9 until their expiration and will not be entitled to any additional compensation
from the Company with respect thereto. If Executive's termination is a result of
a Change of Control as defined in Section 6 herein, the provisions of this
Section 9 will expire immediately upon such termination. The provisions of
Section 9 shall remain in effect only during such time as the Executive is
entitled to receive severance pay from the Company, as defined in Section 6
herein, and only during such time as the Executive actually receives such
severance pay from the Company. If at any time the provisions of this Section 9
are determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 9 will be
considered divisible and will become and be immediately amended to only such
area, duration and scope of activity as will be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
Executive agrees that this Section 9 as so amended will be valid and binding as
though any invalid or unenforceable provision had not been included herein.
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SECTION 10. GENERAL.
(a) Notices. All notices and other communications hereunder shall be in
writing, and will be deemed to have been duly given (i) upon receipt if
delivered personally, (ii) three days after mailing, if mailed by certified
mail, return receipt requested, (iii) on the next business day if sent by
overnight delivery service, or (iv) upon confirmation of transmission if by
telecopier, to the relevant address set forth below, or to such other address as
the recipient of such notice or communication will have specified to the other
party hereto in accordance with this Section 10(a):
IF TO EMPLOYER, TO:
Better Image, Inc.
Two Midtown Plaza
Suite 1220
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
IF TO EXECUTIVE, TO:
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(b) Withholding. All payments required to be made by Employer under
this Agreement to Executive will be subject to the withholding of such amounts,
if any, relating to federal, state and local taxes as may be required by law.
(c) Equitable Remedies. Each of the parties hereto acknowledges and
agrees that upon any breach by Executive of his obligations under any of
Sections 8, and 9 hereof, the Company will have no adequate remedy at law, and
accordingly will be entitled to specific performance and other appropriate
injunctive and equitable relief.
(d) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision will be fully severable and
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof will remain in full force and effect and will not be affected
by the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
will be added automatically as part of this
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Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
(e) Waivers. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder will impair such right, power or
privilege, nor will any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.
(f) Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
(g) Captions. The captions in this Agreement are for convenience of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
(h) Reference to Agreement. Use of the words "herein," "hereof,"
"hereto" and the like in this Agreement refer to this Agreement only as a whole
and not to any particular subsection or provision of this Agreement, unless
otherwise noted.
(i) Binding Agreement. This Agreement will be binding upon and inure to
the benefit of the parties and will be enforceable by the personal
representatives and heirs of Executive and the successors of Employer. If
Executive dies while any amounts would still be payable to him hereunder, such
amounts will be paid to Executive's estate. This Agreement is not otherwise
assignable by Executive.
(j) Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof and may not be amended except by a written instrument
hereafter signed by each of the parties hereto.
(k) Governing Law. This Agreement and the performance hereof will be
construed and governed in accordance with the laws of the State of California,
without regard to its choice of law principles. In the event that any action is
instituted to enforce or interpret this Agreement, or arising out of this
Agreement, such action shall be brought and maintained solely and exclusively in
the appropriate state court of the State of California and in the County of
Santa Xxxxxxx. Each of the parties hereby consents to the jurisdiction of such
court and agrees not to assert any objection to such jurisdiction. In the event
of any such action, the party prevailing in such action shall be entitled to
recover its reasonable attorney's fees and costs.
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This Agreement was executed as of the date first above written.
BETTER IMAGE, INC.:
By:
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Xxxxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
EXECUTIVE:
By:
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Xxxxxx X. Xxxxxx
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