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Exhibit 10(x)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective as of August 1, 1996, between OMEGA HEALTH
SYSTEMS, INC., a DELAWARE corporation (the "Company"), and XXXXXX X. XXXXX
("Employee").
RECITALS
WHEREAS, Employee and the Company wish 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 supercedes
and replaces that certain Employment Agreement by and between Company and
Employee dated May 7, 1993 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 President
and Chief Executive Officer of the Company, and the employee's compensation has
not been adjusted since 1993. The Company hereby continues the employment of
Employee as the President and Chief Executive Officer of the Company with such
duties as may be assigned by the Company's Board of Directors for a term
beginning August 1, 1996 and ending December 31, 1997 ("Initial Term") and
shall automatically renew for successive one year periods ("Renewal Term(s)").
After December 31, 1997, this Agreement may be terminated
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by either party upon one hundred eighty (180) days' prior written notice or 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 $150,000 per
year ("Base Salary"), 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 $50,000
("Salary Increase") if and when the net earnings of the Company on a fully
diluted basis reach $0.30 per share in any twelve (12) month period ("First
Triggering Event"). Employee shall notify in writing the Compensation Committee
of said First Triggering Event. Upon receipt of such notice and confirmation of
said First Triggering Event, the Compensation Committee shall authorize the
Salary Increase, to be effective the pay period immediately following the First
Triggering Event.
C. Options. As of August 1, 1996, Employee is hereby granted options
to purchase 100,000 shares of the common stock of the Company at an exercise
price of $5.75 per share, which is the fair market vaue on the date of grant.
Such options shall not vest the first two years from the date of such grant and
shall vest 33.3% each year beginning August 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. Contingent Options. Employee shall be granted options to purchase
100,000 shares of the common stock of the Company at an exercise price equal to
the fair market value on the date of grant when and if the net earnings of the
Company on a fully diluted basis reach $0.80 per share in any consecutive
twelve (12) month period ("Second Triggering Event"). Such options shall vest
33.3% each year beginning on the first anniversary date of the Second
Trigggering Event, and such options are otherwise subject to the terms,
conditions and provisions of the Stock Option Agreement attached hereto and
incorporated herein by reference.
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E. Other Employee Benefits. 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.
Employee shall be entitled to a $3,000 annual reimbursement allowance for
disability insurance premiums, and Company shall maintain for the benefit of
Employee's estate a $1,000,000 term life insurance policy (collectively
"Welfare Benefits").
The total amounts paid pursuant to preceding subsections A, B, C, D,
and E 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
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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 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
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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;
(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 six (6) 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 (3) 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
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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 two years from the last date of
employment if Employee does not accept employment 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 180 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
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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:
(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
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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 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 year following the date of termination of
employment with the Company except, however, said period shall extend to two
years upon the occurrence of the First Triggering Event:
(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.
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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.
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.
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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.
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. XXXXXX, CHAIRMAN
XXXXXX X. XXXXX
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