1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of September 1, 1996 (the
"Agreement"), by and between VISION 21, INC., a Florida corporation, (the
"Company"), and XXXXXXX X. XXXXX (the "Executive").
WHEREAS, the Company is presently engaged in the business of
providing physician practice management services and related services to
ophthalmologists, optometrists and other eye care providers;
WHEREAS, the Executive has experience in this business and is
currently the Chief Financial Officer of the Company;
WHEREAS, the Company wishes to assure itself of the continued
services of the Executive for the period provided in this Agreement and the
Executive is willing to serve in the employ of the Company for such period upon
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT
The Company hereby agrees to continue to employ the Executive
upon the terms and conditions herein contained, and the Executive hereby agrees
to accept such employment for the term described below. The Executive agrees
to serve as the Company's Chief Financial Officer and to perform the duties and
functions customarily performed by the Chief Financial Officer of a publicly
traded corporation during the term of this Agreement. In such capacity, the
Executive shall have such powers and responsibilities consistent with his
position as the Chief Executive Officer and which the Board of Directors may
assign to him.
Throughout the term of this Agreement, the Executive shall
devote his best efforts and substantially all of his business time and services
to the business and affairs of the Company.
2. TERM OF AGREEMENT
The two (2) year initial term of employment under this
Agreement shall commence as of September 1, 1996 (the "Effective Date"). After
the expiration of such two year initial employment period, the term of the
Executive's employment hereunder shall automatically be extended without
further action by the parties for successive one (1) year renewal terms,
provided that if either party gives the other party at least thirty (30) days
advance written notice of his or its intention to not renew this Agreement for
an additional term, the Agreement shall terminate upon the expiration of the
current term.
Notwithstanding the foregoing, the Company shall be entitled
to terminate this Agreement immediately, subject to a continuing obligation to
make any payments required under Section 5 below, if the Executive (i) becomes
disabled as described in Section 5(b), (ii) is terminated for Cause, as defined
in Section 5(c), or (iii) voluntarily terminates his employment before the
current term of this Agreement expires, as described in Section 5(d).
3. SALARY AND BONUS
The Executive shall receive a base salary during the term of
this Agreement at a rate of not less than $150,000 per annum, payable in
installments consistent with the Company's normal payroll schedule. The
Compensation Committee of the Board shall consult with the President and
review this base salary at
2
annual intervals, and may adjust the Executive's annual base salary from time
to time as the Committee deems to be appropriate.
The Executive shall also be eligible to receive an annual
incentive bonus from the Company for each fiscal year of the Company during the
term of this Agreement. If the Company has fully achieved such financial
performance targets as may be set for the fiscal year by the Compensation
Committee, the amount payable to the Executive shall be 50 percent of his
annual base salary in effect on the last day of the year. If the Company fails
to fully achieve its financial performance targets for the fiscal year, the
portion of such bonus which shall be paid to the Executive shall be such amount
as may be determined to be appropriate by the Compensation Committee of the
Company's Board, based on the Company's partial achievement of the performance
measures. If, for any fiscal year of the Company, the annual bonus anticipated
to be payable for such fiscal year, when added to the Executive's base salary
and other remuneration from the Company for such fiscal year, is expected to
cause the total remuneration to the Executive for such fiscal year to exceed
$1,000,000, the Company's Compensation Committee shall follow the following
procedures with respect to any bonus payable for such fiscal year:
(1) The performance goals for such bonus shall be
determined and approved by the Compensation Committee of the Board of
the Company, which for this purpose, shall be comprised solely of two
or more outside directors, during the first sixty (60) days of such
fiscal year;
(2) The material terms under which such annual bonus is
to be paid, including the performance goals, shall be disclosed to
shareholders and approved by a majority of the vote in a separate
shareholder vote before payment of such bonus is made;
(3) Before any payment of such annual bonus, the
Compensation Committee of the Board referred to above must certify
that the performance goals and any other material terms were in fact
satisfied.
The provisions of this paragraph are intended to comply with and shall be
interpreted in accordance with the requirements of Section 162(m) of the
Internal Revenue Code, and accordingly, if the Compensation Committee of the
Board follows the foregoing requirements and the annual bonus is disapproved
by the Compensation Committee of the Board or the shareholders in accordance
with said requirements, the Executive shall not be paid the performance-based
portion of the bonus for the fiscal year at issue.
4. ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional
compensation and welfare and fringe benefits:
(a) Stock Options. As of the Effective Date of this
Agreement, the Executive shall be granted nonstatutory stock options
with respect to 120,000 shares of common stock pursuant to the terms
of the Company's 1996 Stock Incentive Plan, with options to vest in a
series of four equal installments. During the remaining term of the
Agreement, any additional stock option or restricted stock awards
under the 1996 Stock Incentive Plan shall be at the discretion of the
Compensation Committee of the Company's Board.
(b) Medical Insurance. The Company shall provide the
Executive and his dependents with health insurance coverage no less
favorable than that from time to time made available to other key
employees.
(c) Vacation. The Executive shall be entitled to up to
four weeks of vacation during each year during the term of this
Agreement and any extensions thereof, prorated for partial years.
-2-
3
(d) Business Expenses. The Company shall reimburse the
Executive for all reasonable expenses he incurs in promoting the
Company's business, including expenses for travel, entertainment of
business associates and similar items, upon presentation by the
Executive from time to time of an itemized account of such
expenditures.
In addition to the benefits provided pursuant to the preceding
paragraphs of this Section 4, the Executive shall be eligible to participate in
such other executive compensation and retirement plans of the Company as are
applicable generally to other officers, and in such welfare benefit plans,
programs, practices and policies of the Company as are generally applicable to
other key employees.
5. PAYMENTS UPON TERMINATION
(a) Involuntary Termination. If the Executive's employment
is terminated by the Company during the term of this Agreement, the Executive
shall be entitled to receive his base salary accrued through the date of
termination. The Executive shall also receive any nonforfeitable benefits
already earned and payable to him under the terms of any deferred compensation,
incentive or other benefit plan maintained by the Company, payable in
accordance with the terms of the applicable plan.
If the termination is not for death, disability as described
in paragraph (b), for Cause as described in paragraph (c) or a voluntary
termination by the Executive as described in paragraph (d), the Company shall
also be obligated to make a series of monthly payments to the Executive for
each month during the remaining term of this Agreement, but not less than
twelve (12) months. Each monthly payment shall be equal to one-twelfth
(1/12th) of the Executive's annual base salary, as in effect on the date of
termination.
(b) Disability. The Company shall be entitled to
terminate this Agreement, if the Board determines that the Executive has been
unable to attend to his duties for at least ninety (90) days because of a
medically diagnosable physical or mental condition, and has received a written
opinion from a physician acceptable to the Board that such condition prevents
the Executive from resuming full performance of his duties and is likely to
continue for an indefinite period. Upon such termination, the Company shall
pay to Executive a monthly disability benefit equal to one- twenty-fourth
(1/24th) of his current annual base salary at the time he became permanently
disabled. Payment of such disability benefit shall commence on the last day of
the month following the date of the termination by reason of permanent
disability and cease with the earliest of (i) the month in which the Executive
returns to active employment, either with the Company or otherwise, (ii) the
end of the initial term of this Agreement, or the current renewal term, as the
case may be, or (iii) the twenty-fourth month after the date of the
termination. Any amounts payable under this Section 5(b) shall be reduced by
any amounts paid to the Executive under any long-term disability plan or other
disability program or insurance policies maintained or provided by the Company.
(c) Termination for Cause. If the Executive's employment
is terminated by the Company for Cause, the amount the Executive shall be
entitled to receive from the Company shall be limited to his base salary
accrued through the date of termination, and any nonforfeitable benefits
already earned and payable to the Executive under the terms of deferred
compensation or incentive plans maintained by the Company.
For purposes of this Agreement, the term "Cause" shall be
limited to (i) any action by the Executive involving willful disloyalty to the
Company, such as embezzlement, fraud, misappropriation of corporate assets or a
breach of the covenants set forth in Sections 9 and 10 below; or (ii) the
Executive being convicted of a felony; or (iii) the Executive being convicted
of any lesser crime or offense committed in connection with the performance of
his duties hereunder or involving moral turpitude; or (iv) the intentional and
willful failure by the Executive to substantially perform his duties hereunder
as directed by the Board (other than any such failure resulting from the
Executive's incapacity due to physical or mental disability).
(d) Voluntary Termination by the Executive. If the
Executive resigns or otherwise voluntarily terminates his employment before the
end of the current term of this Agreement, the amount the Executive shall be
entitled to receive from the Company shall be limited to his base salary
accrued through the
-3-
4
date of termination, and any nonforfeitable benefits already earned and payable
to the Executive under the terms of any deferred compensation or incentive
plans of the Company.
For purposes of this paragraph, a resignation by the Executive
shall not be deemed to be voluntary if the Executive resigns during the period
of three months after the date he is (1) assigned to a position of lesser rank
(other than for Cause, or by reason of permanent disability), (2) assigned
duties materially inconsistent with such position, or (3) directed to report to
anyone other than the Company's Chief Executive Officer or Board of Directors.
6. EFFECT OF CHANGE IN CORPORATE CONTROL
(a) In the event of a Change in Corporate Control, the
vesting of any stock options or other awards granted to the Executive under the
terms of the Company's 1996 Stock Incentive Plan shall become immediately
vested in full and, in the case of stock options, exercisable in full.
In addition, if, at any time during the period of twelve (12)
consecutive months following the occurrence of a Change in Corporate Control,
the Executive is involuntarily terminated (other than for Cause) by the
Company, the Executive shall be entitled to receive as severance pay in lieu of
the monthly payments described in Section 5(a) above, a series of twelve (12)
equal monthly payments, each equal to one-twelfth (1/12th) of the sum of (i)
the Executive's annual base salary in effect at the time of the Change in
Corporate Control plus (ii) the annual bonus paid to the Executive with respect
to the last fiscal year of the Company ending prior to the Change in Corporate
Control.
(b) For purposes of this Agreement, a "Change in Corporate
Control" shall include any of the following events:
(1) The acquisition in one or more transactions
of more than thirty percent of the Company's outstanding Common Stock
by any corporation, or other person or group (within the meaning of
Section 14(d)(3) of the Securities Exchange Act of 1934, as amended);
(2) Any merger or consolidation of the Company
into or with another corporation in which the Company is not the
surviving entity, or any transfer or sale of substantially all of the
assets of the Company or any merger or consolidation of the Company
into or with another corporation in which the Company is the surviving
entity and, in connection with such merger or consolidation, all or
part of the outstanding shares of Common Stock shall be changed into
or exchanged for other stock or securities of any other person, or
cash, or any other property.
(3) Any election of persons to the Board of
Directors which causes a majority of the Board of Directors to consist
of persons other than (i) persons who were members of the Board of
Directors on September 1, 1996, and (ii) persons who were nominated
for election as members of the Board by the Board of Directors (or a
Committee of the Board) at a time when the majority of the Board (or
of such Committee) consisted of persons who were members of the Board
of Directors on September 1, 1996; provided, that any person nominated
for election by the Board of Directors composed entirely of persons
described in (i) or (ii), or of persons who were themselves nominated
by such Board, shall for this purpose be deemed to have been nominated
by a Board composed of persons described in (i).
(4) Any person, or group of persons, announces a
tender offer for at least thirty percent (30%) of the Company's Common
Stock.
provided that, no acquisition of stock by any person in a public offering or
private placement of the Company's common stock or other transaction approved
by the Company's Board of Directors shall be considered a Change in Corporate
Control.
-4-
5
(c) Notwithstanding anything else in this Agreement, the
amount of severance compensation payable to the Executive as a result of a
Change in Corporate Control under this Section 6, or otherwise, shall be
limited to the maximum amount the Company would be entitled to deduct pursuant
to Section 280G of the Internal Revenue Code of 1986, as amended.
7. DEATH
If the Executive dies during the term of this Agreement, the
Company shall pay to the Executive's estate a lump sum payment equal to the sum
of the Executive's base salary accrued through the date of death plus the total
unpaid amount of any bonuses earned with respect to the fiscal year of the
Company most recently ended. In addition, the death benefits payable by reason
of the Executive's death under any retirement, deferred compensation or other
employee benefit plan maintained by the Company shall be paid to the
beneficiary designated by the Executive in accordance with the terms of the
applicable plan or plans.
8. WITHHOLDING
The Company shall, to the extent permitted by law, have the
right to withhold and deduct from any payment hereunder any federal, state or
local taxes of any kind required by law to be withheld with respect to any such
payment.
9. PROTECTION OF CONFIDENTIAL INFORMATION
The Executive agrees that he will keep all confidential and
proprietary information of the Company or relating to its business (including,
but not limited to, information regarding the Company's customers, pricing
policies, methods of operation, proprietary computer programs and trade
secrets) confidential, and that he will not (except with the Company's prior
written consent), while in the employ of the Company or thereafter, disclose
any such confidential information to any person, firm, corporation, association
or other entity, other than in furtherance of his duties hereunder, and then
only to those with a "need to know." The Executive shall not make use of any
such confidential information for his own purposes or for the benefit of any
person, firm, corporation, association or other entity (except the Company)
under any circumstances during or after the term of his employment. The
foregoing shall not apply to any information which is already in the public
domain, or is generally disclosed by the Company or is otherwise in the public
domain at the time of disclosure.
The Executive recognizes that because his work for the Company
will bring him into contact with confidential and proprietary information of
the Company, the restrictions of this Section 9 are required for the reasonable
protection of the Company and its investments and for the Company's reliance on
and confidence in the Executive.
10. COVENANT NOT TO COMPETE
The Executive hereby agrees that he will not, either during
the Employment Term or during the period of twelve (12) months from the time
the Executive's employment under this Agreement is terminated, engage in any
business activities on behalf of any enterprise which competes with the Company
in the business of managing ophthalmology or optometry practices or related eye
care or medical facilities. The Executive will be deemed to be engaged in such
competitive business activities if he participates in such a business
enterprise as an employee, officer, director, consultant, agent, partner,
proprietor, or other participant; provided that the ownership of no more than 2
percent of the stock of a publicly traded corporation engaged in a competitive
business shall not be deemed to be engaging in competitive business activities.
The Executive agrees that he shall not, for a period of one
year from the time his employment under this Agreement ceases (for whatever
reason), or, if later, during any period in which he is receiving monthly
severance payments under Section 5 or Section 6 of this Agreement,
-5-
6
(i) solicit any employee or full-time consultant of the Company for
the purposes of hiring or retaining such employee or consultant, or
(ii) contact any present or prospective client of the Company to
solicit such a person to enter into a management contract with any
organization other than the Company or a related entity.
For this purpose, the Executive shall be considered to be receiving monthly
severance payments under Section 5 of this Agreement during any period for
which he would be entitled to receive such severance payments.
11. INJUNCTIVE RELIEF
The Executive acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the breach
or threatened breach of the covenants set forth in Sections 9 and 10 of this
Agreement and accordingly agrees that the Company shall be entitled to
temporary and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce such provisions
in any action or proceeding instituted in the United States District Court for
the Western District of Florida or in any court in the State of Florida having
subject matter jurisdiction. This provision with respect to injunctive relief
shall not, however, diminish the Company's right to claim and recover damages.
It is expressly understood and agreed that although the
parties consider the restrictions contained in this Agreement to be reasonable,
if a court determines that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction on the activities
of the Executive, no such provision of this Agreement shall be rendered void
but shall be deemed amended to apply as to such maximum time and territory and
to such extent as such court may judicially determine or indicate to be
reasonable.
12. SEPARABILITY
If any provision of this Agreement shall be declared to be
invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
13. ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit
of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights hereunder
shall be assignable or otherwise subject to hypothecation by the Executive.
14. ENTIRE AGREEMENT
This Agreement represents the entire agreement of the parties
and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Executive. The Agreement may be
amended at any time by mutual written agreement of the parties hereto.
15. GOVERNING LAW
This Agreement shall be construed, interpreted, and governed
in accordance with the laws of the State of Florida, other than the conflict of
laws provisions of such laws.
-6-
7
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed, and the Executive has hereunto set his hand, as of the day
and year first above written.
Attest: VISION 21, INC.
/s/ By /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------ -----------------------------
Secretary Title: President
Witness: EXECUTIVE:
/s/ /s/ Xxxxxxx X. Xxxxx
------------------------------ --------------------------------
XXXXXXX X. XXXXX
-7-
