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EXHIBIT 10.3
SALARY CONTINUATION AGREEMENT
SALARY CONTINUATION AGREEMENT, effective as of October 7, 2000, between
CHILDREN'S COMPREHENSIVE SERVICES, INC., a Tennessee corporation (hereinafter
the "Company"), and ______________________ (hereinafter "Employee").
R E C I T A L S
WHEREAS, the Company believes it is in the best interests of the
Company and the Company's shareholders to encourage its key employees to remain
employed with the Company and to devote their full time and attention to their
duties to the Company in the event of a potential or threatened change of
control of the Company through a tender offer or otherwise;
WHEREAS, the Company believes that key employees may be distracted from
the performance of their duties by a potential or threatened change of control
of the Company;
WHEREAS, the Board of Directors of the Company has determined that key
employees of the Company should be encouraged to continue to devote their full
time and attention to their duties to the Company in the event of a potential or
threatened change of control of the Company;
WHEREAS, Employee is a key employee of the Company;
WHEREAS, the Board of Directors believes that its ability and the
ability of the Company to rely on Employee to continue his duties to the Company
without distraction in the event of a potential or threatened change of control
is in the best interests of the Company and the Company's shareholders;
WHEREAS, the Board of Directors may call upon Employee for advice or
assistance in connection with its assessment of proposals involving a change in
control of the Company;
WHEREAS, to assure that the Company will have Employee's continued
undivided attention and services and the availability of his advice and counsel
notwithstanding a potential or threatened change of control, and to induce
Employee to remain in the employ of the Company, and for other good and valuable
consideration, the Company and Employee hereby agree as follows:
1. CONTINUED SERVICES. In the event of a third party tender or exchange
offer, proxy solicitation or other threatened Change in Control (as defined
herein), Employee agrees that he will not voluntarily terminate his employment
with the Company, and will continue to render his services to the Company
(including reviewing or providing advice to the Company or the Board of
Directors with respect to such potential Change in Control) until the third
party has abandoned or terminated its efforts to effect a Change in Control or
until such Change in Control has been effected. In the event that Employee
voluntarily terminates his employment with the Company or fails to render his
services to the Company, he shall cease to be entitled to the benefits of this
Agreement, and the Company's sole remedy against Employee shall be its denial of
the benefits set forth in this
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Agreement. Notwithstanding the foregoing, Employee agrees that this Agreement is
not an employment agreement with the Company and Employee has no claim to
continued employment by the Company by virtue of this Agreement.
2. NOTICE OF CHANGE IN CONTROL. The Company shall notify Employee
promptly if and when it becomes aware of a potential or threatened Change in
Control.
3. SEVERANCE PAYMENT. Upon termination without Cause (as hereinafter
defined) by the Company of Employee's employment with the Company or termination
by Employee of Employee's employment following a Constructive Termination (as
hereinafter defined), in either case within two (2) years of the effective date
of a Change in Control of the Company, Employee shall be entitled to a severance
payment ("Severance") equal to (i) his then current annual salary plus (ii) the
sum of his cash bonus received for each of the prior three (3) years divided by
three (3) (which calculation shall include zero (0) for any such year in which
he did not receive a bonus). Any Severance payable to Employee pursuant to this
Section 3 shall be paid as follows: (i) one-half of the Severance shall be paid
within fifteen (15) days of the effective date of termination of Employee's
employment and (ii) one-half of the Severance (the "Remaining Severance") shall
be paid in six equal monthly payments beginning on the first day of the sixth
month immediately following termination of Employee's employment. The six month
period during which such Severance shall be paid is herein referred to as the
"Remaining Severance Payment Period." Notwithstanding the foregoing, the
Remaining Severance shall be subject to offset as follows: (i) in the event that
Employee is employed during any part of the Remaining Severance Payment Period,
all gross compensation (which compensation shall include salary and any
pro-rated bonus or commissions) earned by Employee with respect to the Remaining
Severance Payment Period and reported on such Employee's Form W-2 shall be
offset against the Remaining Severance, and (ii) in the event that Employee
becomes self-employed during the Remaining Severance Payment Period, all
self-employment taxable income of Employee reported on Schedule ES to Form 1040
with respect to the Remaining Severance Payment Period shall be offset against
the Remaining Severance. Any offset against the Remaining Severance shall be
calculated on a dollar-for-dollar basis.
In no event shall any income or gains earned or received by Employee
from passive investments, including dividends, interest and capital gains, or
gains resulting from the exercise of any stock options held by Employee, be
offset against the Remaining Severance. In no event shall the Company be liable
to Employee for fringe benefits or amounts other than (i) Severance, and (ii)
accrued but unpaid salary and bonus, if any, upon Employee's termination of
employment.
Employee hereby agrees to notify the Company of any employment
(including self-employment) of Employee for a period of one year following
termination of Employee's employment with the Company, including the terms
thereof.
For the purposes of this Agreement, a "Change in Control" means the
happening of any of the following:
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(i) any person or entity, including a "group" as defined in
Section 13(d)(3) of the Exchange Act, other than the Company or a
wholly-owned subsidiary thereof or any employee benefit plan of the
Company or any of its subsidiaries, becomes the beneficial owner of the
Company's securities having 35% or more of the combined voting power of
the then outstanding securities of the Company that may be cast for the
election of directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary course
of business); or
(ii) as the result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, sales of
assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), less than a majority of the combined
voting power of the then outstanding securities of the Company or any
successor Company or entity entitled to vote generally in the election
of the directors of the Company or such other company or entity after
such Transaction are held in the aggregate by the holders of the
Company's securities entitled to vote generally in the election of
directors of the Company immediately prior to such Transaction; or
(iii) during any period of two consecutive years, as a result
of one or more elections of directors which elections were contested by
one or more shareholders, individuals who at the beginning of any such
period constitute the Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each director
of the Company first elected during such period was approved by a vote
of at least two-thirds of the directors of the Company then still in
office who were directors of the Company at the beginning of any such
period.
Notwithstanding the foregoing definition of "Change of Control," a
Change in Control shall not be deemed to have occurred by virtue of the
Company's issuance of securities to an underwriting syndicate in a public
offering approved by the Board of Directors.
For purposes of this Agreement, a "Constructive Termination" will be
deemed to have occurred if Employee's duties have been significantly altered
such that he is no longer entitled to perform the duties reasonably incident to
the office of ___________________ or, if the Company requires Employee to move
his principal place of employment more than thirty-five (35) miles away from the
Company's current offices, provided, however, that if the Company is involved in
a Transaction in which it becomes a subsidiary or division of the acquiring
company, a Constructive Termination shall not be deemed to have occurred if
Employee, following such Transaction, holds a similar position with or performs
comparable duties at a comparable salary for the acquiring company.
For purposes of this Agreement, termination for "Cause" shall be deemed
to have occurred if, during the term of this Agreement, Employee breaches or
fails to perform a material provision of this Agreement (including his duties
hereunder), engages in conduct harmful to the Company, or willfully disregards
the lawful instructions of his superiors (which breach, failure to perform,
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harmful conduct or willful disregard of lawful instructions is not cured by
Employee within 30 days following written notice thereof by the Company to
Employee), engages in fraudulent conduct, or is convicted of a crime or
misdemeanor involving moral turpitude or dishonesty, and this Agreement shall at
the election of the Company, terminate (i) immediately upon conviction, or (ii)
upon a reasonable determination by the Board of Directors that Employee has
failed to cure such breach, failure to perform a material provision of this
Agreement, conduct harmful to the Company or willful disregard of lawful
instructions, or has engaged in fraudulent conduct, and the Company shall have
no further obligations hereunder.
4. NOTICE OF TERMINATION. In the event Employee voluntarily terminates
his employment with the Company, Employee hereby agrees to provide notice
thereof to the Company as provided in Section 7 below. In the event of any
termination by the Company of Employee's employment, the Company hereby agrees
to provide notice thereof to Employee in accordance with Section 7 below.
5. NONASSIGNMENT. Neither party hereto may assign any rights or
obligations hereunder, except that upon the occurrence of a Change in Control,
this Agreement shall bind and inure to the benefit of both Employee and the
Company's successors and assigns, or the acquiring or surviving corporation, as
the case may be. In the event that the Company's successors and assigns or the
acquiring or surviving corporation fail to assume this Agreement, Employee shall
be entitled to immediately receive the benefits described in Section 3 as if
Employee had been terminated without Cause on the date of the Change in Control.
6. CONFIDENTIAL INFORMATION. In order to induce the Company to enter
into this Agreement, during the course of employment by the Company, Employee
agrees not to, directly or indirectly, without the Company's prior, express
written consent, use, or divulge business connections, customers, customer
lists, marketing techniques, procedures, operations and other aspects of the
Company's business that have been established and protected as confidential
information and trade secrets and are of great value to the Company and provide
it with a substantial competitive advantage in its business (the "Confidential
Information"); provided, however, that Confidential Information shall not be
deemed to include (i) any information that is or becomes generally available to
the public other than by disclosure by Employee, or (ii) becomes available to
Employee on a nonconfidential basis from a source other than the Company (or an
agent thereof), which source is not prohibited from disclosing such information
by a legal, contractual or fiduciary obligation. Employee also agrees to return
to the Company at the time of his termination all Company property and all
Confidential Information and summaries thereof in his possession, and Employee
agrees not to copy or otherwise record or retain such Confidential Information.
Employee recognizes that the Confidential Information is a valuable and
unique asset of the Company and accordingly, Employee agrees that the foregoing
restriction on the use and disclosure of Confidential Information shall continue
during his employment by the Company and after his employment ceases.
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7. NOTICES. Any notice or other communication under this Agreement
shall be in writing and shall be sent by certified or registered mail addressed
to the respective parties as follows:
If to the Company:
Children's Comprehensive Services, Inc.
0000 Xxxx Xxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Chief Financial Officer
If to Employee:
Any such notice or other communication shall be deemed to have been given when
deposited, postage paid, in the United States mail. Either of the above
addresses may be changed at any time on ten days' prior notice given in the
manner provided above.
8. GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Tennessee.
9. HEADINGS. The headings herein are for convenience for reference only
and shall not be deemed to be part of the substance of this Agreement.
10. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties with respect to the subject matter hereof and may be changed
or supplemented only by a written agreement signed by the Employee and the
Company.
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IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement as of the date first above written.
CHILDREN'S COMPREHENSIVE
SERVICES, INC.
By:
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Title:
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