Employment Agreement - TLC The Laser Center Inc. and William Leonard
EMPLOYMENT AGREEMENT THIS AGREEMENT is made as of the 1st day of June, 2000 between TLC THE LASER CENTER INC., a corporation incorporated under the laws of the Province of Ontario (the "Corporation"), and WILLIAM LEONARD (the "Employee"). WHEREAS, the Corporation and the Employee wish to enter into this Agreement to set forth the rights and obligations of each of them with respect to the Employee's employment with the Corporation; NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Corporation and the Employee agree as follows: 1. Definitions 1.1. In this Agreement, 1.1.1."Affiliate" has the meaning attributed to such term in the Business Corporations Act (Ontario) as the same may be amended from time to time, and any successor legislation thereto; <PAGE> 1.1.2. "Agreement" means this agreement and all schedules attached to this agreement, in each case as they may be amended or supplemented from time to time, and the expressions "hereof," "herein," "hereto," "hereunder," "hereby" and similar expressions refer to this agreement and unless otherwise indicated, references to sections are to sections in this agreement; 1.1.3. "Salary" has the meaning attributed to such term in section 5.1; 1.1.4. "Benefits" has the meaning attributed to such term in section 5.3; 1.1.5. "Business Day" means any day, other than Saturday, Sunday or any holiday on which the employees of the Corporation are not required to report for work; 1.1.6. "Change of Control" for the purposes of this Agreement shall be deemed to have occurred when: 126.96.36.199. any Person acquires or becomes the beneficial owner of, or a combination of Persons acting jointly and in concert acquires or becomes the beneficial owner of, directly or indirectly, more than 40% of the voting securities of the Corporation, whether through the acquisition of previously issued and outstanding voting securities, or of voting securities that have not been previously issued, or any combination thereof, or any other transaction having a similar effect; 188.8.131.52. the Corporation amalgamates with one or more corporations other than a Subsidiary; 184.108.40.206. the Corporation sells, leases or otherwise disposes of all or substantially all of its assets, whether pursuant to one or more transactions; 2 <PAGE> 220.127.116.11. any Person not part of existing management of the Corporation or any Person not controlled by the Corporation or by any Affiliate enters into any arrangement to provide management services to the Corporation which results in either (i) the termination by the Corporation of the employment of any two of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and General Counsel for any reason other than Just Cause; or (ii) the termination by the Corporation for any reason other than Just Cause of the employment of all such senior executive personnel for any reason other than Just Cause within six months of the date that such arrangement is entered into; 18.104.22.168. the Corporation enters into any transaction or arrangement which would have the same or similar effect as the transactions referred to in 1.1 .6.1, 22.214.171.124, 126.96.36.199 or 188.8.131.52 above. 1.1.7. "Confidential Information" means all confidential or proprietary information, intellectual property (including trade secrets) and confidential facts relating to the business or affairs of the Corporation or any of its Subsidiaries which the Corporation treats as confidential or proprietary; 1.1.8. "Disability" means the mental or physical state of the Employee such that the Employee has been unable as a result of illness, disease, mental or physical disability or similar cause to fulfil his obligations under this Agreement either for any consecutive 6 month period (whether or not consecutive) in any consecutive 12 month period; 1.1.9. "Employment Period" has the meaning attributed to such term in section 4; 1.1.10 "Good Reason" means: 3 <PAGE> 184.108.40.206. without the consent of the Employee, any material change or series of material changes in the responsibilities or status of the Employee with the Corporation, such that immediately after such change or series of changes the responsibilities and status of the Employee are materially diminished in comparison to his responsibilities and status immediately prior to such change or series of changes, except in connection with the termination of the Employee's employment by the Corporation for Just Cause or in connection with the Employee's death, Disability or Retirement or a voluntary resignation by the Employee other than a resignation for Good Reason; 220.127.116.11. a reduction of more than ten percent by the Corporation in the Employee's Salary as in effect on the date hereof or as the same may be increased from time to time; 18.104.22.168. the taking of any action by the Corporation which would materially adversely affect the Employee's participation in, or materially reduce the Employee's Benefits and other similar plans in which the Employee is participating at the date hereof (or such other plans as may be implemented after the date hereof that provide the Employee with substantially similar benefits), or the taking of any action by the Corporation which would deprive the Employee of any material fringe benefit enjoyed by him at the date hereof; 22.214.171.124. without the Employee's consent, the requirement that the Employee be based anywhere other than the Corporation's principal executive offices except for required travel on the Corporation's business; 4 <PAGE> 1.1.11. "Just Cause" means the failure of the Employee to properly carry out his duties, or theft, fraud, dishonesty or misconduct by the Employee involving the property, business or affairs of the Corporation or its Subsidiaries or the carrying out of the Employee's duties; 1.1.12. "Person" means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted; 1.1.13 "Restricted Period" means, as the case may be, (i) the notice period provided for in section 8; or (ii) one year if the employment of the Employee is terminated pursuant to section 10.2 or 10.3; 1.1.14. "Retirement" means Retirement in accordance with the Corporation's retirement policy; 1.1.15 "Subsidiaries" has the meaning attributed to such term by the Business Corporations Act (Ontario) as the same may be amended from time to time and any successor legislation thereto; 1.1.16. "Year of Employment" means any 12 month period commencing on April 3, 1995 or on any anniversary of such date, provided that for the purposes of this Agreement, the "First Year of Employment" shall be deemed to commence on April 3, 1995 and to end on April 2, 1996. 2. Employment of the Employee 5 <PAGE> The Corporation shall employ the Employee, and the Employee shall serve the Corporation, in the position of Executive Vice President, Operations on the conditions and for the remuneration hereinafter set out. In such position, the Employee shall perform and fulfill such duties and responsibilities as the Corporation may designate from time to time. The Employee shall report to the Chief Operating Officer of the Corporation. 3. Performance of Duties During the Employment Period, the Employee shall faithfully, honestly and diligently serve the Corporation and its Subsidiaries as contemplated above. The Employee shall devote all of his working time and attention to his employment hereunder and shall use his best efforts to promote the interests of the Corporation. 4. Employment Period Subject to the terms and conditions hereinafter provided, the term of the Executive's employment shall commence on the date hereof (the "Effective Date"). Upon the Effective Date, the Executive's employment shall continue for a term of three years unless and until sooner terminated under the conditions of Section 8 (the "Employment Period"). Provided that the Agreement has not been terminated in accordance with the provisions of Section 8 on each anniversary after the initial three year term of the Effective Date, the Agreement shall automatically be extended for a period of 12 months unless either party gives the other party 3 months written notice prior to the end of such 12 month period that the term shall not be extended for a further period of 12 months. 6 <PAGE> 5. Remuneration 5.1. Salary. The Corporation shall pay the Employee a salary minus applicable deductions and withholdings, in respect of each Year of Employment in the Employment Period calculated at the rate of $150,000 per annum, plus a $7,500 annual Car Allowance and a 5% annual Retirement Allowance, payable in equal installments according to the Corporation's regular payroll practices.. The Salary shall, in the sole and absolute discretion of the board of directors of the Corporation, be subject to an increase on the basis of an annual review (September 1st). The Salary shall be prorated in respect of the First Year of Employment such that the Corporation shall be required to pay in respect of such year only the pro rata portion of the Salary that corresponds to the number of days worked by the Employee in the First Year of Employment. 5.2 Bonus Remuneration. The Executive shall, in respect of each Year of Employment during the Employment Period, receive such bonus remuneration, as outlined in Schedule 5.2. 5.3. Stock Options. In addition to the stock options granted to the Employee on the date hereof, the Employee shall, in respect of each Year of Employment during the Employment Period, receive such stock options, if any, as the board of directors of the Corporation, in its sole and absolute discretion may, pursuant to the terms of the Corporation's stock option plan, authorize. 5.4. Benefits. The Corporation shall provide to the Employee, in addition to Salary and stock options, if any, the benefits (the "Benefits"') described in the TLC Benefit Plan, such Benefits to be provided in accordance with and subject to the terms and conditions of the applicable plan relating thereto in effect from time to time. 7 <PAGE> 5.5. Pro-Rata Entitlement in the Event of Termination. If the Employee's employment is terminated pursuant to section 8 or section 10 or if the Employee dies during the Employment Period, the Employee shall be entitled to receive in respect of his entitlement to Salary, and the Corporation shall be required to pay in respect thereof, only that portion of the Salary in respect of the Year of Employment representing the number of days the Employee actually worked. 6. Expenses Subject to the terms of the Corporation's expense policy, the Corporation shall pay, or reimburse the Employee for, all authorized and appropriate travel and out-of-pocket expenses reasonably incurred or paid by the Employee in the performance of his duties and responsibilities, upon presentation of expense statements or receipts or such other supporting documentation as the Corporation may reasonably require. 7. Vacation The Employee shall be entitled during each Year of Employment, after the first year of Employment, during the Employment Period to vacation with pay of four weeks. Vacation shall be taken by the Employee at such time(s) as may be acceptable to the Corporation. Except with the prior written consent of the Chief Executive Officer (i) no more than two weeks of vacation shall be taken consecutively, and (ii) the vacation entitlement earned in a Year of Employment cannot be carried forward to a subsequent Year of Employment. Notwithstanding the foregoing, in the event that the Employee's employment is terminated pursuant to section 8 or section 10, the Employee shall not be entitled to receive any payment in lieu of any vacation to which he was entitled and which had not already been taken by him. 8 <PAGE> 8. Termination 8.1. Notice. The Employee's employment may, subject to section 10 and section 11 hereof, be terminated at any time: 8.1.1 by the Corporation without prior notice and without obligation to the Employee if (i) such termination takes place within the first three months of the date hereof; or (ii) for reasons of Just Cause; 8.1.2. by the Corporation for any reason other than Just Cause, including the occurrence of Disability; 8.1.3. or by the Employee on one month's notice to the Corporation. The Employee's employment shall be automatically terminated, without further obligation to the Employee, in the event of his death. 8.2. Effective Date. The effective date on which the Employee's employment shall be terminated shall be: 8.2.1. in the case of termination under section 8.1.1, the day the Employee is deemed, under section 17, to have received notice from the Corporation of such termination; 8.2.2. in the case of termination under section 8.1.2, on the date of the event giving rise to the termination; 8.2.3 in the case of termination under section 8.1.3, on the date one month after notice to the Corporation; and 8.2.4. in the event of the death of the Employee, on the date of his death. 9. Rights of Employee on Termination and Lump Sum-Payment 9 <PAGE> Where the Employee's employment under this Agreement has been terminated by the Corporation under section 8.1.2, the Employee shall be entitled, upon receipt by the Corporation of a release in a form acceptable to the Corporation, to receive from the Corporation, in addition to accrued but unpaid Salary, if any, a lump sum payment equal to twelve months plus one month for each full Year of Employment worked following the third anniversary Year of Employment to a maximum of six months, less any amounts payable to the Employee in lieu of notice where a Stop Work Notice has been given pursuant to section 8.2 and less any amounts owing by the Employee to the Corporation for any reason. Except as provided above in this section and subject to section 10 and section 11, where the Employee's employment has been terminated by the Employee or by the Corporation for any reason, the Employee shall not be entitled to receive any payment as severance pay, in lieu of notice, or as damages. 10. Change of Control 10.1. Termination of Employment by the Corporation for Just Cause. Following a Change of Control, the Corporation may terminate the Employee's employment at any time without notice or further obligations to the Employee under this Agreement for reasons of Just Cause. Following a Change of Control the Employee shall not be deemed to have been terminated for Just Cause unless and until there has been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the board of directors of the Corporation (excluding the Employee if the Employee is at the time a director of the Corporation) at a meeting of the board called and held for the purpose (after reasonable notice to the Employee), finding that in the good faith opinion of the Board the 10 <PAGE> Employee's conduct constituted Just Cause and specifying the particulars thereof. The date on which such resolution is given to the Employee shall be the effective date of any termination pursuant to this section 10.1. 10.2. Termination by the Employee Without Good Reason. Notwithstanding the provisions of section 8 hereof, if at any time within six months following a Change of Control the Employment of the Employee is voluntarily terminated by the Employee for any reason other than (i) Good Reason, Disability, death, or Retirement; or (ii) by the Corporation for Just Cause, the Employee shall be entitled to an amount equal to his annual Salary, less deductions and withholdings. 10.3. Termination of Employment Without Just Cause or for Good Reason. Notwithstanding the provisions of section 8 and section 10.2 hereof, if at any time within 24 months following a Change of Control, the Employee's employment is terminated, (i) by the Corporation other than for Just Cause; or (ii) by the Employee for Good Reason, the following provisions shall apply: 10.3.1. the Employee shall be entitled to receive, and the Corporation shall pay to the Employee immediately following termination, (i) a cash amount equal to two times Salary (less any applicable deductions and withholdings); and (ii) the Employee shall be entitled to receive a cash amount equal to ten percent of the Employee's Salary in lieu of continued benefit coverage. 10.3.2. if at the date of termination of the Employee's employment, the Employee holds options for the purchase of shares under a share option plan, all options so held shall, notwithstanding the terms of the Corporation's share option plan, (i) immediately vest to the extent they have not already vested at such date; and (ii) (A) continue to be held on the same terms and conditions as if the Employee continued to be employed by the Corporation or (B) if the Employee so elects in writing within 90 days after the date of termination, be purchased by the Corporation at a cash 11 <PAGE> purchase price equal to the amount by which the aggregate "fair market value" of the shares subject to such options exceeds the aggregate option price for such shares, provided that for this purpose, "fair market value" means the higher of (i) the average of the closing prices for the shares of the same class of the Corporation on the principal securities exchange (in terms of volume of trading) on which such shares are listed at the time of termination for each of the last 10 days prior to such time on which such shares traded on such securities exchange, and (ii) if the Change of Control involved the purchase and sale of such shares, the average value of the cash consideration paid to the shareholders of the Corporation in connection with the transactions resulting in the Change of Control. For purposes of this Agreement, the Employee's employment shall be deemed to have been terminated following a Change of Control by the Corporation without Just Cause or by the Executive with Good Reason, if (i) the Employee's employment is terminated by the Corporation without Just Cause prior to a Change of Control and such termination was at the request or direction of a Person who has entered into an agreement with the Corporation or any shareholder of the Corporation, the consummation of which would constitute a Change of Control; (ii) the Employee terminates his employment with Good Reason prior to a Change of Control and the circumstance or event which constitutes Good Reason occurs at the request or direction of a Person who has entered into an agreement with the Corporation or any shareholder of the Corporation, the consummation of which would constitute a Change of Control; or (iii) the Employee's employment is terminated by the Corporation without Just Cause prior to a Change of Control and the Employee reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change of Control which actually occurs. 12 <PAGE> For greater certainty, this section 10(3) does not apply in the event of the termination of the employment of the Employee as a result of death, Disability or Retirement or by the Corporation for Just Cause or, subject to section 10.2, by the Employee without Good Reason. 10.4 Limitation on Payments Following a Change in Control Notwithstanding any other provision of this Agreement, if any payment to or for the benefit of the Employee under this Agreement either alone or together with other payments to or for the benefit of the Employee would constitute a "parachute payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")), the payments under this Agreement shall be reduced to the largest amount that will eliminate both the imposition of the excise tax imposed by Section 4999 of the Code and the disallowance of deductions to the Company under Section 280G of the Code for any such payments. The amount and method of any reduction in the payments under this Agreement pursuant to this Section 10.4 shall be as reasonably determined by the Compensation Committee of the Board of Directors of the Company. 11. No Obligation to Mitigate The Employee shall not be required to mitigate the amount of any payment or Benefits provided for in this Agreement by seeking other employment or otherwise, nor (except as specifically provided herein), shall the amount of any payment provided for in this Agreement be reduced by any compensation earned by the Employee as a result of employment by another employer after termination or otherwise. 12. Non-Competition 13 <PAGE> The Employee shall not, either during the Employment Period or the Restricted Period and for a period of 1 year following the Restricted Period, directly or indirectly, in any manner whatsoever including, without limitation, either individually, or in partnership, jointly or in conjunction with any other Person, or as employee, principal, agent, director or shareholder: 12.1. be engaged in any undertaking; 12.2. have any financial or other interest (including an interest by way of royalty or other compensation arrangements) in or in respect of the business of any Person which carries on a business; or 12.3. advise, lend money to, guarantee the debts or obligations of or permit the use of the Employee's name or any parts thereof by any Person engaged in the refractive laser corrective surgery business or which competes or competed directly or indirectly with the Corporation or any of its Subsidiaries, during the Employment Period or at the end thereof, as the case may be. Notwithstanding the foregoing, nothing herein shall prevent the Employee from owning not more than 5% of the issued shares of a corporation, the shares of which are listed on a recognized stock exchange or traded in the over the counter market in Canada or the United States, which carries on a business which is the same as or substantially similar to or which competes with or would compete with the business of the Corporation or any of its Subsidiaries. 13. No Solicitation of Patients The Employee shall not, either during the Employment Period or the Restricted Period and for a period of 1 year following the Restricted Period, directly or indirectly, contact or solicit any patients of the Corporation or any of its Subsidiaries for the purpose of selling to those 14 <PAGE> patients any products or services which are the same as or substantially similar to, or in any way competitive with, the refractive laser corrective surgery products or services sold by the Corporation or any of its Subsidiaries during the Employment Period or at the end thereof, as the case may be. For the purpose of this section, a designated patient means a Person who was a patient of the Corporation or of any of its Subsidiaries during some part of the Employment Period. 14. No Solicitation of Employees The Employee shall not, either during the Employment Period or the Restricted Period and for a period of 1 year following the Restricted Period, directly or indirectly, employ or retain as an independent contractor any employee of the Corporation or any of its Subsidiaries or induce or solicit, or attempt to induce, any such person to leave his/her employment. 15. Confidentiality The Employee shall not, either during the Employment Period or at any time thereafter, directly or indirectly, use or disclose to any Person any Confidential Information; provided, however, that nothing in this section shall preclude the Employee from disclosing or using Confidential Information if: 15.1. the Confidential Information is available to the public or in the public domain at the time of such disclosure or use, without breach of this Agreement; or 15.2. disclosure of the Confidential Information is required to be made by any law, regulation, governmental body, or authority or by court order. 15 <PAGE> The Employee acknowledges and agrees that the obligations under this section are to remain in effect in perpetuity and shall exist and continue in full force and effect notwithstanding any breach or repudiation, or alleged breach or repudiation, by the Corporation of this Agreement. 16. Remedies The Employee acknowledges that a breach or threatened breach by the Employee of the provisions of any of sections 12 to 15 inclusive will result in the Corporation and its shareholders suffering irreparable harm which is not capable of being calculated and which cannot be fully or adequately compensated by the recovery of damages alone. Accordingly, the Employee agrees that the Corporation shall be entitled to temporary and permanent injunctive relief, specific performance and other equitable remedies, in addition to any other relief to which the Corporation may become entitled. 17. Notices Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given by prepaid first-class mail, by facsimile or other means of electronic communication or by hand-delivery as hereinafter provided, except that any notice of termination by the Corporation under section 8 or section 10 shall be hand-delivered or given by registered mail. Any such notice or other communication, if mailed by prepaid first-class mail, shall be deemed to have been received on the fourth Business Day after the post-marked date thereof, or if mailed by registered mail, shall be deemed to have been received on the day such mail is delivered by the post office, or if sent by facsimile or other means of electronic communication, shall be deemed to have been received on the Business Day following the sending, or if delivered by hand shall be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an 16 <PAGE> individual at such address having apparent authority to accept deliveries on behalf of the addressee. Notice of change of address shall also be governed by this section. Notices and other communications shall be addressed as follows: a) if to the Employee: b) if to the Corporation: TLC The Laser Center Inc. 5600 Explorer Drive Suite 301 Mississauga, Ontario L4W 4Y2 Attention: Chief Executive Officer Telecopier number: (905) 602-2025 18. Headings The inclusion of headings in this Agreement is for convenience of reference only and shall not affect the construction or interpretation hereof. 19. Invalidity of Provisons 17 <PAGE> Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. 20. Entire Agreement This Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement. This Agreement supersedes and replaces all prior agreements, if any, written or oral, with respect to the Employee's employment by the Corporation and any rights which the Employee may have by reason of any such prior agreement or by reason of the Employee's prior employment, if any, by the Corporation. There are no warranties, representations or agreements between the parties in connection with the subject matter of this Agreement except as specifically set forth or referred to in this Agreement. 21. Waiver, Amendment Except as expressly provided in this Agreement, no amendment or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided. 22. Currency Except as expressly provided in this Agreement, all amounts in this Agreement are stated and shall be paid in U.S. currency. 23. Governing Law 18 <PAGE> This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to its conflict of laws rules, which are deemed inapplicable herein. The parties hereto each consent to the personal jurisdiction of the federal and state courts of the State of Maryland. 24. Counterparts This Agreement may be signed in counterparts, and each of such counterparts shall constitute an original document, and such counterparts, taken together, shall constitute one and the same instrument. IN WITNESS WHEREOF the parties have executed this Agreement. /s/ William Leonard ------------------------------------ Sworn to before me this 27 day of WILLIAM LEONARD June, 2000 Kim Forwell ------------------------------ Notary Public TLC THE LASER CENTER INC. By: /s/ Elias Vamvakas -------------------------------- Elias Vamvakas Chief Executive Officer 19 <PAGE> SCHEDULE 5.2 Bonus Remuneration Bill Leonard will be eligible to be paid up to 20% of base salary to be paid annually, on or about September 1st, once fiscal year-end financials have been finalized, broken down as follows: o 10% paid based on the achievement of pre-determined, agreed upon individual annual goals. If these goals are not met, this part of the bonus will not be payable. o 10% paid based on the achievement of pre-determined corporate (TLC) annual goals. If these goals are not met, this part of the bonus will not be payable. In special circumstances, where Bill Leonard did not meet his personal objectives, or the corporation (TLC) did not meet its overall objectives, Bill Leonard may still be entitled to be paid either the personal or the corporate component of this bonus plan, at the discretion of the Chief Executive Officer.