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EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of the ____ day of
__________, 1997 (the "Agreement"), by and between VISION TWENTY-ONE, INC., a
Florida corporation (the "Company"), and Xxxxxxx X. Block (the "Executive").
WHEREAS, the Company is presently engaged in the business of
providing managed eye care services and practice management services for
optometry, ophthalmology and related eye care practices.
WHEREAS, the Executive has many years of experience in the
optical industry as an executive officer and key employee of Block Vision, Inc.
("Block Vision").
WHEREAS, the Company has recently acquired Block Vision from
the Executive and its other owners effective as of October 31, 1997 and will
continue to operate Block Vision, Inc. as a separate subsidiary of the Company.
WHEREAS, the Company wishes to assure itself of the 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 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 President of Block Vision. In such capacity, the Executive shall be
responsible for the management of Block Vision, shall report only to the
Company's Chief Executive Officer and the Board of Directors of Block Vision
and shall have such other powers and responsibilities consistent with his
position as the Chief Executive Officer and 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. This shall include business travel
by the Executive at a level consistent with the reasonable business needs of
Block Vision and the Executive's business travel obligations in the past.
Neither the principal place of business of Block Vision nor the Executive will
be relocated outside of the Boca Raton metropolitan area without the
Executive's consent. The Executive will be permitted to fulfill his obligations
under this Agreement from any location other than the principal place of
business of the Company or Block Vision for up to one (1) month per year,
provided that such location has a telephone and a facsimile machine and,
provided, further, that the Executive will return promptly as practicable in
the event that the business of the Company or its subsidiaries will be
materially adversely affected by his absence. The above provisions hereof shall
be in addition to the vacation days specified in Section 4(d) hereof.
2. TERM OF AGREEMENT
The initial term of employment under this Agreement shall
commence as of _______________, 1997 (the "Effective Date") and shall end on
December 31, 1999. After the expiration of such initial employment term, the
term of the Executive's employment hereunder may be extended by mutual consent
of the parties. The parties shall each endeavor to give the other at least 90
days' advance written notice of their intentions regarding renewal of the
Agreement, but any such renewal shall be conditioned upon the execution and
delivery of an appropriate amendment to this Agreement.
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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 $250,000 per annum, payable in
installments consistent with the Company's normal payroll schedule, but in no
event less frequently than monthly. The Compensation Committee of the Company's
Board shall consult with the Chief Executive Officer of the Company and review
the Executive's base salary at intervals no less frequent than annually, and
may adjust the Executive's annual base salary for 1999 and future years as the
Committee deems to be appropriate.
The Executive shall also be eligible to receive an annual
Performance Bonus from the Company for each full fiscal year of the Company
during the term of this Agreement. The amount of the Performance Bonus earned
shall be based on the EBITDA of Block Vision for the fiscal year. If the EBITDA
of Block Vision for a fiscal year exceeds the Base EBITDA Target for the fiscal
year set forth below, the Executive shall earn a Performance Bonus for the
fiscal year equal to twelve and one-half percent (12.5%) of his annual base
salary (as in effect on the last day of the fiscal year). If Block Vision's
EBITDA for the fiscal year also exceeds the EBITDA Target for the year (after
taking into account payment of the Performance Bonus earned under the preceding
sentence), the Executive shall be paid an increased Performance Bonus equal to
an additional twelve and one-half percent (12.5%) of his annual base salary. If
Block Vision's EBITDA for the fiscal year also exceeds the Supplemental EBITDA
Target for the year set forth below (after taking into account payment of the
Performance Bonus earned under the preceding sentences), the Executive shall be
paid an increased Performance Bonus equal to an additional twenty-five percent
(25%) of his annual base salary. For this purpose, Block Vision's EBITDA shall
mean its earnings before interest, taxes, depreciation and amortization,
determined in accordance with generally accepted accounting principles, and
calculated in a manner consistent with the Company's audited financial
statements for the fiscal year, but adjusted to eliminate any allocation of
overhead from the Company or other intercompany revenue or expense items, and
also adjusted to disregard any managed care accounts assigned to Block Vision
by the Company. This calculation shall be prepared and certified by the
Company's independent public accountants, and the Company will maintain such
separate books and records for Block Vision as may be required to prepare this
calculation (taking into account only those operations which comprised Block
Vision at the Effective Date and any new lines added with the consent of the
Executive).
Unless revised by the Compensation Committee, with the Executive's
consent, the Base EBITDA, EBITDA and Supplemental EBITDA Targets for each
fiscal year during the term of this Agreement shall be as follows:
===============================================================================
FISCAL YEAR ENDING BASE EBITDA EBITDA SUPPLEMENTAL EBITDA
TARGET TARGET TARGET
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December 31, 1998 $4,550,000 $4,800,000 $5,000,000
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December 31, 1999 $5,800,000 $6,000,000 $6,200,000
===============================================================================
If these EBITDA targets are not fully achieved for the fiscal
year, the portion of such bonus which shall be paid to the Executive shall be
such reduced amount as may be determined to be appropriate by the Compensation
Committee of the Company's Board, based on Block Vision's partial achievement
of the performance measures.
The Executive's Performance Bonus for a fiscal year shall be
paid within one hundred and twenty (120) days after the end of such fiscal year
unless deferred by the Executive pursuant to the terms of any deferred
compensation plan of the Company.
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4. ADDITIONAL COMPENSATION AND BENEFITS
The Executive shall receive the following additional compensation and
welfare and fringe benefits.
(a) Stock Options. Pursuant to a Stock Option Agreement of even date
herewith, the Executive is being granted stock options with respect to
40,000 shares of the Company's stock. During the term of this Agreement,
Executive shall be eligible for additional stock options under the
Company's Stock Incentive Plan to the extent that the Compensation
Committee of the Company's Board determines such awards to be appropriate.
(b) Medical Insurance. The Company shall provide the Executive and
his dependents at no cost to them with health, life and disability
insurance coverage on a basis substantially equivalent to that available to
key employees of Block Vision prior to its acquisition by the Company.
(c) Automobile. The Company shall continue provide the Executive
with the use of the same company automobile currently provided to him or a
comparable recent model vehicle, and shall pay for insurance at the level
provided by Block Vision on the Effective Date.
(d) Vacation. The Executive shall be entitled to at least four weeks
at paid vacation during such year during the term of this Agreement,
including any vacation for 1997 accrued but unused at the Effective Date.
Unused vacation of up to two (2) weeks per year may be carried over,
subject to the restrictions in the Company's policy on paid time off for
management employees.
(e) 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,
service and usage charges for business use of cellular phones, and similar
items, upon presentation by the Executive from time to time of an itemized
account of such expenditures. The Executive shall be entitled to the use
of Company credit cards for charging business expenses, in accordance with
the Company's policy for management employees.
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 indemnification or
liability insurance arrangements, welfare benefit plans, programs, practices
and policies of the Company, as are generally applicable to other key employees.
5. PAYMENT UPON TERMINATION
(a) Involuntary Termination. If the Executive's employment is
terminated by the Company during the term of this Agreement, other than 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 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 912) months. Each monthly payment shall be
equal to one-twelfth (1/12th) of the sum of (i) Executive's highest annual base
salary in effect during the twelve (12) months preceding such termination and
(ii) the Performance Bonus earned under Section 3 during the term of this
Agreement, if any, earned for the prior fiscal year, provided, however, that
such payments shall be reduced and offset by any amounts the Executive is
entitled to receive from any other employer as compensation for services
performed during such month (including services performed as a consultant,
independent contractor, or a partner). 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. Any
unvested Stock Options held by the Executive shall become vested and exercisable
for a period of sixty days following 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
perform a substantial portion of his duties for at least ninety (90)
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consecutive days because of a medically diagnosable physical or mental
condition, and has received a written opinion from an independent 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-twelfth (1/12th) of his current annual
base salary at the time he became permanently disabled during the first six
months following the dates of disability, and one-half of such amount
thereafter. 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 vested, 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) willful disloyalty to the Company, including embezzlement, fraud,
misappropriation of material 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 committed in
connection with the performance of his duties hereunder or involving moral
turpitude; or (iv) the willful, intentional and material failure by the
Executive to substantially satisfy his obligations under this Agreement as
directed by the Board (other than any such failure resulting from the
Executive's incapacity due to physical or mental disability). Notwithstanding
the foregoing, no termination pursuant to Subsection (iv) shall be treated as a
termination for Cause unless the Board has provided the Executive with at least
30 days prior written notice identifying the alleged breach of his obligations,
given the Executive a reason opportunity to meet with the Board of Directors
and argue that was no willful, intentional and material breach.
(d) Limited Payments Upon Breach by the Executive. If the Executive
breaches his obligations under this Agreement by resigning or otherwise
voluntarily terminating 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 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 (1) he is assigned to a position of lesser rank
(other than for Cause, or by reason of permanent disability), (2) he is
assigned duties materially inconsistent with his position as President of Block
Vision, (3) he is directed to report to anyone other than the Company's Chief
Executive Officer or the Board of Directors, or (4) if the Company has breached
any of its material obligations under this Agreement.
6. EFFECT OF CHANGE IN CORPORATE CONTROL
(a) In the event of a Change in Corporate Control, any stock options
granted to the Executive under the terms of the Company's Stock Incentive Plan
shall become immediately vested in full and exercisable in full.
(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);
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(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 of 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
November 1, 1997, 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
November 1, 1997; 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 person, 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 a
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.
(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 (i) the Executive's base salary accrued through the date of death plus (ii)
the total unpaid amount of any bonuses earned with respect to the fiscal year
of the Company most recently ended, plus (iii) an amount equal to six month's
base salary at the rate in effect on the date of death. 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 withhold and deduct from any payment
hereunder any federal, state or local taxes of any kind required by law to be
withheld or deducted 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 Block Vision 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, is generally
disclosed by the Company or is
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otherwise in the public domain at the time of disclosure or is information
rightfully in the possession of the Executive at the Effective Date of this
Agreement; provided that the provisions of this Section 9 shall not apply to
the Executive's know how to the extent utilized by him in any subsequent
employment that is not in violation of Section 10 of this Agreement.
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 thirty-six (36) months from the
time the Executive's employment under this Agreement is terminated, perform
services comprising Competitive Business Activities on behalf of any
corporation, health maintenance organization or other enterprise which is
engaged in such Competitive Business Activities at any location within thirty
(30) miles of an ophthalmology or optometry practice which has either entered
into a business management agreement with the Company or become a part of LADS
or other managed eye care network organized by the Company. For this purpose,
"Competitive Business Activities" shall mean (i) providing practice management
or similar business support services to ophthalmology, optometry practices or
related eye care facilities, (ii) organizing and operating managed eye care
networks, or (iii) any other line of business in which Block Vision, Inc. was
engaged during the term of this Agreement or the three-years preceding the
Effective Date. The Executive will be deemed to be engaged in such Competitive
Business Activities if he performs such Competitive Business Activities as an
employee, officer, director, consultant, agent, partner, proprietor, or other
participant. Notwithstanding the foregoing, the Executive will not be
considered to violate this convenant not to compete by reason of (i) employment
with a full-service health maintenance organization, (ii) employment with a
physician practice management firm that does not contract with ophthalmology
and/or optometry practices or only does so as an incidental part of a general
practice management business; or (iii) the ownership of no more than 5 percent
of the stock of a publicly traded corporation engaged in a Competitive Business
Activities.
The Executive also agrees that he shall not, at any time
during such period of thirty-six (36) months from the time his employment under
this Agreement ceases (for whatever reason).
(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 contract provider of the Company
or any health maintenance organization or other payor presently under
contract with the Company to solicit such a person to enter into a
practice management agreement or managed eye care contract with any
organization other than the Company.
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 convenants 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 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.
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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. NOTICE
For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or sent by certified mail, return
receipt requested, postage prepaid, or by expedited (overnight) courier with an
established national reputation, shipping prepaid or billed to sender, in either
case addressed to the following addresses:
To the Company:
Vision Twenty-One, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx, XX 00000
Attn: X. Xxxxxxxx
To the Executive:
Xxxxxxx X. Block
000 XX 00xx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000-0000
All notices and communication shall be deemed to have been received on the
date of delivery thereof, on the third business day after the mailing thereof,
or on the second day after deposit thereof with an expedited courier service,
except that notice of change of address shall be effective only upon receipt.
15. ARBITRATION
Subject to the Company's right to seek injunctive relief for
any violations of the convenants set forth in Sections 9 and 10 of this
Agreement, any controversy or claim arising out of or relating to this Agreement
or any transactions provided for herein, or the breach thereof, other than a
claim for injunctive relief shall be settled by arbitration in accordance with
the Rules of the American Arbitration Association (the "Rules") in effect at the
time demand for arbitration is made by any party. On arbitrator shall be named
by the Company, a second shall be named by Executive and the third arbitrator
shall be named by the two arbitrators so chosen. Arbitration shall occur in
Orlando, Florida or such other location as may be mutually agreed to by the
Company and Executive. The award made by all or a majority of the panel of
arbitrators shall be final and binding. The prevailing party shall be entitled
to an award of pre- and post-award interest as well as reasonable attorneys'
fees, costs and expenses incurred in connection with the arbitration and any
judicial proceedings related thereto.
16. 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
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amended at any time by mutual written agreement of the parties hereto.
17. 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.
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 TWENTY-ONE, INC.
By
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Title:
EXECUTIVE:
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Xxxxxxx X. Block
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