Exhibit 10.42
EMPLOYMENT AGREEMENT
FOR
XXXXXX XXXXXX
This AGREEMENT (the "Agreement') is dated as of August 13, 1999, by and
between OPTICARE EYE HEALTH SYSTEMS, INC., a Delaware corporation (the
"Employer"), and Xxxxxx Xxxxxx of Southbury, Connecticut (the "Employee").
WHEREAS, the Employer desires to continue to employ the Employee as its
President, Buying Group Services Division, and the Employee desires to continue
to render such services, each on the terms and conditions set forth below;
WHEREAS, Employee understood, before agreeing to be employed, that the
covenant not to compete was a condition of his employment;
WHEREAS, the Employer considers the establishment, maintenance and
continuity of qualified management to be essential to protecting and enhancing
its best interests and the best interests of its shareholders;
WHEREAS, the Employer has determined that it is in its best interest to
enter into employment agreements with key management and executive personnel to
enable the Employer to attract and retain qualified management;
WHEREAS, the Employer believes that when a change in control is
perceived as imminent, or is occurring, it should be able to receive and rely on
disinterested advice from management regarding the best interests of the
Employer without concern that members of management might be distracted or
concerned by the personal uncertainties and risks created by the perception of
an imminent or occurring change in control, and the Employer also recognizes
that the possibility of such a change in control could result in the departure
or distraction of key management personnel to the detriment of the Employer;
WHEREAS, the Employer has determined that it would be in its best
interest to reinforce and encourage the continued attention and dedication of
key members of the management of the Employer to their duties without financial
or employment concerns arising from the possibility of a change in control and
to enable such key employees to consider only the best interests of all
shareholders and employees in negotiating with respect to any such change in
control; and
WHEREAS, in furtherance of the above stated objectives, the parties
desire to enter into this Agreement to set forth the terms and conditions for
the employment relationships of the Employee with the Employer.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Employer hereby employs the Employee and the
Employee hereby accepts employment upon the terms and conditions set forth
below.
2. SCOPE OF EMPLOYMENT.
(a) The Employee is hereby employed as President, Buying Group
Services Division of the Employer as of the closing of the Contemplated
Transactions (as such term is defined in that certain Agreement and Plan of
Merger dated April 12, 1999, by and among Saratoga Resources, Inc., OptiCare
Shellco Merger Corporation, PrimeVision Shellco Merger Corporation, OptiCare Eye
Health Centers, Inc. and PrimeVision Health, Inc.) between PrimeVision Health,
Inc. and OptiCare Eye Health Centers, Inc. (the "Commencement Date") and which
shall continue through the term of this Agreement. In that capacity, the
Employee shall be responsible for the operations of the Employer's Buying Group
Services business unit and other management services to the Employer of the type
customarily performed by persons
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serving in such capacity or in another executive capacity. In addition, the
Employee shall work with the Employer's Retail Optical business operations in
Connecticut. The Employee shall also perform such other duties as the Chief
Executive Officer of the Employer may from time to time reasonably direct.
(b) The Employee shall maintain regular hours at the offices
of the Employer in Waterbury, Connecticut or such other office(s) as the
Employer shall from time to time designate. The Employee shall comply with all
reasonable rules, regulations and overall policies established by the Employer.
(c) During the term of employment hereunder, the Employee
shall devote his full professional time and his best efforts to the business and
affairs of the Employer and shall not engage in any outside business activities,
except as may otherwise be agreed to by the Chief Executive Officer of the
Employer.
3. COMPENSATION.
(a) Base Salary. The Employer shall pay the Employee, during
the term of this Agreement, a base salary at an annual rate of $125,000.00 (the
"Base Salary"). Participation in deferred compensation, discretionary bonus,
retirement, and other employee benefit plans and in fringe benefits (including
those described below) shall not reduce the Base Salary payable to the Employee.
The Base Salary shall be payable not less frequently than semimonthly.
(b) Bonuses. During the term of this Agreement, the Employee
shall be entitled to such bonuses as may be authorized, declared and paid by
Employer which such bonuses shall be targeted to provide an annual cash bonus of
40% of his base salary subject to the achievement of target goals which will be
provided in a plan established for each calendar year by the Board of Directors
or a designated subcommittee thereof. In addition, the Employee shall be
eligible to
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receive an additional cash bonus, which may, in the aggregate and when combined
with the 40% bonus described above, produce up to 100% of his base salary upon
achievement of specified additional goals, which will be provided in the plan
established by the Board of Directors as described above.
(c) Participation in Stock Incentive Plan. Employer will
recommend to the Employer's Board of Directors that it grant Employee twenty
five thousand (25,000) stock option shares of Employer's Common Stock, in
accordance with the Employer's 1999 Omnibus Plan, as amended from time to time.
Such options shall vest in the event the Employee's employment is terminated for
any reason other than for cause (as defined in paragraph 7(a)(2)), including
death, disability and termination by the Employer other than for cause.
4. BENEFITS, VACATIONS AND SEMINARS; SICK LEAVE.
(a) Benefit Programs and Expenses.
(1) The Employer shall provide the Employee with the
benefit of its health insurance plans and such other benefits as the Employer
may establish from time to time for the benefit of its full-time key management
personnel.
(2) The Employer shall reimburse the Employee for the
cost of pursuing post-graduate business or financial studies and/or acquiring
additional professional qualifications all as previously approved by the
Employer.
(3) The Employer shall pay the cost to the Employee
of attending professional meetings or conventions, etc., as previously approved
by the Employer.
(4) The Employer shall pay for the Employee's dues
for membership in any professional, social or civic organization approved by the
Employer.
(b) Vacations and Seminars.
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The Employee shall be entitled to a paid vacation of four (4)
work weeks per calendar year, or prorata for a portion of a calendar year. The
time of said vacation shall be determined by mutual consent of the parties
hereto.
(c) Sick Leave. In the event that the Employee shall be absent
due to illness or injury, his Base Salary shall continue for a period not
exceeding one (1) day for each month of active employment with the Employer
prior to the date of said illness or injury, up to an annual maximum of twelve
(12) days, plus any unused vacation time. Absences in excess of the number of
days so determined shall be without pay. Sick leave may not be carried over to a
succeeding year.
5. DISABILITY AND DISABILITY PAYMENTS.
(a) The Employer shall pay or reimburse (grossed up to account
for federal and state income taxes) the Employee for long-term disability
insurance covering total disability as defined in such long-term disability
policy or policies, providing a combined maximum benefit of up to 65% of the
Base Salary plus bonus earned as of the date of total disability, subject to a
ninety (90) day elimination period, an inflation or cost of living benefit
rider, and the longest available benefit period. In the event that the Employee
shall become partially or totally disabled (as defined in such long term
disability policy) for a period of not more than 90 days, then, during the
period of such partial or total disability, Employee shall be paid the
compensation set forth in Paragraph 3 for such 90 day period. If available, the
Employee may purchase additional coverage enhancements or riders at his own
expense.
(b) Notwithstanding the provisions of Paragraph 7, the
Employer may terminate the Employee's employment effective at a time after the
lapse of the ninety (90) day period referred to in Paragraph 5(a). If the
Employee's employment is terminated by reason
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of disability, the Employee shall receive the benefits, if any, payable under
any long-term disability plan maintained by the Employer and the Employee shall
be entitled to the accelerated vesting of any stock options granted to the
Employee as provided in Paragraph 3(d), but no additional compensation or other
benefits for any period after termination for disability.
6. TERM. The initial term of employment under this Agreement shall
commence on the Commencement Date and shall continue for an initial period of
three (3) years from the Commencement Date. Thereafter, the term of employment
shall be extended automatically for subsequent two (2) year terms on the same
terms and conditions unless either party gives contrary written notice to the
other party on or before the "Applicable Notice Date". The "Applicable Notice
Date" shall be the date that is six (6) months prior to the next anniversary
date, in the event that the Employee does not desire to renew the term of this
Agreement or in the event that the Employer desires not to renew this Agreement.
References herein to the term of this Agreement shall refer to both such initial
term and any additional or extended terms.
7. TERMINATION OF EMPLOYMENT.
(a) Termination By the Employer for Cause.
(1) The Employer may at any time terminate the
Employee's employment with the Employer for cause. The Employee shall have no
right to receive compensation or other benefits for any period after termination
for cause.
(2) The term "termination for cause" shall mean
termination because of the Employee's dishonesty or willful misconduct in
respect of the Employee's duties under this Agreement, conviction of, or plea of
nolo contendere to, a felony or crime involving moral turpitude, or a breach of
fiduciary duty, whether or not involving personal profit, in connection with the
Employee's employment by the Employer.
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(3) In determining whether a "termination for cause"
has occurred, it shall be the Employer's burden to prove the alleged acts.
(b) Termination by the Employer Other Than For Cause. The
Employer may at any time terminate upon three (3) months' prior written notice
the Employee's employment other than for cause; provided, however, that in the
event of any such termination of employment other than for cause, the Employer
shall make the payments provided in Section 8(b).
(c) Termination by the Employee. The Employee may terminate
his employment for any reason upon six (6) months prior written notice to that
effect delivered to the Employer, unless a shorter notice period is approved by
the Chief Executive Officer of the Employer. The Employee agrees that if he
terminates his employment with the Employer under this subparagraph 7(c), he
shall devote his full professional time and best efforts to the business and
affairs of the Employer during such six (6) month period; and the Employer
agrees to continue to pay the Employee his Base Salary and any declared bonuses
until the close of such period; provided, however, that if the Employee fails to
devote his full professional time and best efforts to the business and affairs
of the Employer during such six (6) month period, the Employer shall not be
obligated to make any further payments under any provision of this Agreement
other than to make payments to the Employee of the Base Salary accrued prior to
the Employee's breach of his commitment under this subparagraph 7(c) and such
bonuses allocable to the annual period prior to the date of such breach, when
and in such amounts as are declared by the Board of Directors of the Employer.
In the event of such breach, the Employer shall have the right to pursue all
other remedies available at law or in equity. Notwithstanding anything to the
contrary in the foregoing, nothing in this subparagraph 7(c) is intended to
modify the Employee's obligations pursuant to paragraphs 10, 11, and 12 of this
Agreement.
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8. PAYMENTS IN THE EVENT OF OR SEPARATION FROM SERVICE PRIOR TO
CHANGE OF CONTROL.
(a) Death. Upon the death of the Employee, the Employee's
Base Salary, prorated to the date of his death, and such bonuses allocable to
the annual period prior to the date of death, when and in such amounts as
declared by the Board of Directors of the Employer, shall be paid to his named
beneficiary, or if there be none then living, to the Employee's estate. In
addition, the Employer shall, if it is commercially feasible, purchase insurance
on the life of the Employee in the amount of one (1) times the Employee's Base
Salary, with the proceeds payable to the Employee's estate. If the premium for
such life insurance is not commercially feasible, and such insurance is not
obtained, the Employee's estate shall be paid $125,000 as a death benefit.
(b) Compensation Benefits Upon Termination. In the event the
Employee's employment is terminated without cause by the Employer, the Employee
shall be paid, as severance pay, an amount equal to eighteen (18) months of Base
Salary as a lump sum and the benefits hereunder. In the event the Employee's
employment is terminated for cause or if the Employee terminates his employment
without cause or breaches Paragraph 10 or 11 hereunder or if the Employee is
receiving payment upon a change in control pursuant to Paragraph 14, no payments
under this Paragraph 8(b) shall be made following such termination or breach.
9. CONSENT TO INSURANCE PROCEDURES. The Employee agrees that the
Employer may from time to time apply for and take out in its own name and at its
own expense such life, health, accident or other insurance upon the Employee as
the Employer may deem necessary or advisable to protect its interests hereunder.
The Employee agrees to submit to any medical or other examination necessary for
such purpose and to assist and cooperate with the
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Employer in procuring such insurance. The Employee agrees that the Employee
shall have no right, title or interest in and to such insurance whether
presently existing or hereafter procured.
10. NONDISCLOSURE. The Employee shall not, during the term of this
Agreement, or thereafter, without the express written permission of the
Employer: (a) disclose to any person, or permit any person to have access to,
any information or knowledge whatsoever relating to the Employer, or to any
successor entity thereto or its affiliates, business or affairs, obtained by the
Employee while in the employ of the Employer, whether prepared by the Employee
or others, to the extent such information or knowledge constitutes Confidential
Information as defined below, (b) use any such Confidential Information except
for the Employer's benefit, or (c) copy any papers, charts, documents or other
records or remove them from the Employer's property, except as may be necessary
in the performance of the Employee's duties hereunder. For purposes of this
Agreement, the term "Confidential Information" shall include all patient
information and charts, information regarding referring physicians and
optometrists, hospital arrangements, suppliers and supplies, vendors, and other
companies and individuals with whom the Employer has business relationships, any
financial or budgetary records, and all other information and knowledge, rules,
regulations and policies of the Employer, unless such information (1) was
already known to the Employee at the time of the Employee's receipt thereof and
the Employee can demonstrate such knowledge by the Employee's written records;
(2) is or becomes publicly known through no act of the Employee; (3) is approved
for release by written authorization of the Employer; or (4) is compelled by
compulsory court process to disclose, provided that the Employee immediately
notifies the Employer of such process and tenders the defense of such process to
the Employer.
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11. COVENANT NOT TO COMPETE. In consideration of Employee being granted
certain stock options and for other valuable consideration, during the term of
Employee's employment by the Employer and for a period of eighteen (18) months
immediately following the termination of such employment (such period to be
extended to include any period of violation or period of time required for
litigation to enforce this covenant) (the "Non-Competition Period"), the
Employee shall not, without the prior written consent of the Employer, render
services directly or indirectly to any Conflicting Organization, except that
employment may be accepted with a Conflicting Organization whose business is
diversified and which, as to part of its business, is not a Conflicting
Organization; provided, that the Employer, prior to the acceptance of such
employment, shall receive from such Conflicting Organization and from the
Employee written reasonable assurances satisfactory to the Employer that the
Employee will not render services directly or indirectly in connection with any
Conflicting Product. The term "Conflicting Organization," as used herein, means
any individual or organization who or which is engaged in: (a) researching,
developing, marketing or selling a Conflicting Product; (b) and/or managing the
business practice of ophthalmologists, optometrists or opticians in the same or
similar specialties that are managed by the Employer or a subsidiary of the
Employer at the time of termination of employment. The term "Conflicting
Product," as used herein, means any eye wear or eye care product, process or
service of any individual or organization which competes, or would compete, with
a product, process or service of the Employer, a subsidiary or an affiliate of
Employer, OptiCare, P.C., a Connecticut professional services corporation, or
OECC, P.A., a North Carolina professional association. An affiliate of the
Employer, OptiCare, P.C. or OECC, P.A. shall mean a joint venture or another
entity in which any of the Employer, the P.C. or the P.A. has an interest or an
equity or profit interest.
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12. ASSIGNMENT OF INVENTIONS. The Employee hereby assigns, and will
promptly disclose and assign, to the Employer exclusively, all inventions,
discoveries, improvements, devices, tools, machines, apparatuses, appliances,
designs, practices, processes, methods, formulae, products, trade secrets and
the like (hereinafter collectively called "inventions"), whether or not
patentable, which are directly or indirectly useful in or related to either the
Employer's business or to that of any of its affiliated or managing entities,
which the Employee shall make, originate, conceive or reduce to practice, either
solely or jointly with others, during the term of the Employee's employment by
the Employer or any of its affiliated or managing entities. The Employee further
agrees that during and after the term of this Agreement, without charge to the
Employer, the Employee will execute, acknowledge and deliver any and all papers
and take any other reasonable actions necessary or helpful for the Employer to
obtain patents for its own benefit on said inventions in any and all countries
or to otherwise protect and secure the Employer's interests in said inventions;
said patents, applications for patents and inventions to remain the property of
the Employer whether patented or not.
13. REMEDIES FOR BREACH. In the event of the Employee's breach or
threatened breach of any provision of Paragraph 10, 11, or 12 hereof, the
Employer shall be entitled, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either in law or in equity,
to obtain damages for breach of said paragraphs, or to enforce the specific
covenants therein, or to obtain an injunction restraining the Employee from the
continuation of such breach. Nothing herein shall be construed as prohibiting
the Employer from pursuing any other remedies available to it, including the
recovery of damages from the Employee.
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14. PAYMENTS UPON CHANGE IN CONTROL.
(a)(i) If following a Change in Control of the Employer (as
defined in subparagraph 14(b) below), the Employee terminates his employment
with the Employer in accordance with Paragraph 7(c);
(ii) Then in the event of the termination set forth in
subparagraph 14(a)(i), the Employee shall be entitled to receive from the
Employer, as a severance payment for services previously rendered to the
Employer, a lump sum cash payment as provided for in subparagraph 14(a) (iii)
below (subject to subparagraph 14(c) below) (the "Severance Payment").
(iii) Subject to subparagraph 14(c) below, the amount of the
Severance Payment provided shall equal eighteen (18) months of the Base Salary.
The Severance Payment shall not be reduced by any compensation which the
Employee may receive from other employment with another employer after
termination of the Employee's employment with the Employer.
(b) A "Change in Control of the Employer," for purposes of
this Agreement, shall be deemed to have taken place, if:
(i) any person becomes the beneficial owner of
fifty-one percent (51%) or more of the total number of voting shares of the
Employer; or
(ii) any person has commenced a tender or exchange
offer to acquire beneficial ownership of fifty-one percent (51%) or more of the
total number of voting shares of the Employer; or
(iii) less than two-thirds of the total membership of
the Board of Directors of the Employer shall be Continuing Directors. For
purposes of this Section 14(b), a Continuing Director shall mean any member of
the Board of Directors of the Employer who was a member of a Board as of the
date hereof, and any successor of a Continuing Director while such
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successor is a member of the Board who is not a person described in Section
14(b)(i) or (ii) or an Affiliate or Associate of such a person or of any such
Affiliate or Associate and is recommended or elected to succeed the Continuing
Director by a majority of the Continuing Directors. As used herein, "Affiliate"
and Associates" shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as in effect of the date hereof (the "Exchange Act"). For purposes
of this Section 14(b), a "person" includes an individual, corporation,
partnership, trust or group acting in concert. A person for these purposes shall
be deemed to be a beneficial owner as that term is used in Rule 13d-3 under the
Exchange Act.
(c) Notwithstanding any other provision of this Agreement or
of any other agreement, contract, or understanding heretofore or hereafter
entered into between the Employee and the Employer, except an agreement,
contract, or understanding hereafter entered into that expressly modifies or
excludes application of this Section 14(c) (the "Other Agreements"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Employer for the direct or indirect provision of
compensation to the Employee (including groups or classes of Participants or
beneficiaries of which the Employee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any other Agreement,
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code (a "Parachute Payment"). In the event that the
receipt of any
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such payment or benefit under this Agreement, any Other Agreement, or any
Benefit Plan would cause the Employee to be considered to have received a
Parachute Payment under this Agreement, then the Employee shall have the right,
in the Employee's sole discretion, to designate those payments or benefits under
this Agreement, any other Agreements, and/or any Benefit Plans, which should be
reduced or eliminated so as to avoid having the payment to the Employee under
this Agreement to be deemed to be a Parachute Payment.
15. AMENDMENTS OR ADDITIONS; ACTION BY BOARD. No amendments or
additions to this Agreement shall be binding unless in writing and signed by all
of the parties hereto. The prior approval by the Employer's Chief Executive
Officer shall be required to authorize any amendments or additions to this
Agreement, to give any consents or waivers of provisions of this Agreement, or
to take any other action under this Agreement including any termination of
employment with or without cause.
16. CONTINUED ENFORCEABILITY AFTER CHANGE IN OWNERSHIP; ENFORCEABILITY
AGAINST SUCCESSORS AND TRANSFEREES. The parties intend that this Agreement shall
continue to be a legally valid, binding agreement, enforceable in accordance
with its terms, notwithstanding a change in the ownership of the Employer,
including, without limitation, a sale of substantially all of the Employer's
assets, merger or consolidation of the Employer, whether or not the Employer is
the surviving entity, and a sale of voting control of the Employer; and may be
assigned by the Employer. The parties agree that any transferee of all or
substantially all of the assets of the Employer or surviving or resulting
entity, as the case may be, shall be subject to the obligations of the Employer
hereunder, whether such transfer occurs by merger, operation of law, or
otherwise. The Employer agrees that before the consummation of any such transfer
(other than a transfer whereby such obligations are
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assumed by operation of law) it will obtain the agreement of the transferee,
enforceable by the Employee, to assume such obligations. No such transfer shall
release the Employer of its obligations hereunder without the prior written
consent of the Employee.
17. SECTION HEADINGS. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
18. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein. If, moreover, any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
excessively broad as to time, duration, geographical scope, activity or subject,
it shall be construed, by limiting and reducing it, so as to be enforceable to
the fullest extent compatible with the applicable law as it shall then appear.
19. GOVERNING LAW. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
Connecticut, excluding the choice of law rules thereof.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, and together shall
constitute one and the same instrument.
21. PRIOR AGREEMENTS SUPERSEDED. Any prior agreement between the
parties relating to the employment by the Employer of the Employee, whether
written or oral, is
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hereby replaced and superseded by this Agreement and shall be of no further
force or effect after the date hereof.
22. ATTORNEY'S FEES. In the event either of the parties hereto shall
institute any action or proceeding against the other party relating to this
Agreement, the unsuccessful party in such action or proceeding shall reimburse
the successful party for its reasonable disbursements incurred in connection
therewith, and for its reasonable attorneys fees incurred in connection
therewith.
23. WAIVER; CONSENTS. No consent or waiver, express or implied, by
either party hereto to or of any breach or default by the other party in the
performance by the other of its obligation hereunder shall be valid unless in
writing, and no such consent or waiver shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other party of the same or any other obligation of such party hereunder.
Failure on the part of either party to complain of any act or failure to act of
the other party or to declare the other party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such party of its
rights hereunder. The granting of any consent or approval in any other instance
by or on behalf of either party shall not be construed to waive or limit the
need for such consent in any other or subsequent instance.
24. NOTICES. All notices, requests, and communications required or
permitted hereunder shall be in writing and shall be sufficiently given and
deemed to have been received upon personal delivery or, if mailed, upon the
first to occur of actual receipt and seventy-two (72) hours after being placed
in the United States mail, postage prepaid, registered or certified mail, return
receipt requested, addressed to the above parties as follows:
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Employer OptiCare Eye Health Systems, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Employee: Xxxxxx Xxxxxx
[Address]
Employer:
OPTICARE EYE HEALTH SYSTEMS, INC.
ATTEST: By:
-----------------------
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Employee
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