Consulting Agreement - TLC The Laser Center Inc. and Excimer Management Corp.
CONSULTING AGREEMENT
THIS AGREEMENT is made as of this 1st day of January, 1996,
B E T W E E N:
TLC THE LASER CENTER INC., a corporation
incorporated under the laws of the Province of
Ontario
(the "Corporation")
- and -
EXCIMER MANAGEMENT CORPORATION, a
corporation incorporated under the laws of the
Province of Ontario
("EMCO")
RECITALS:
A. The Corporation is the parent company of a group of companies
(collectively, the "TLC Group") involved in the business of providing
excimer laser eye surgery and other secondary eye care services.
B. EMCO has in its employ, Dr. Jeffrey J. Machat, a leading ophalmologist,
expert in excimer laser eye surgery.
C. The Corporation and EMCO wish to enter into this Agreement to set forth
the basis upon which EMCO will make the services of Dr. Machat available
to the Corporation.
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS CONTAINED
IN THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION (THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED), THE CORPORATION AND EMCO AGREE AS
FOLLOWS:
Definitions
1. In this Agreement,
"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;
"Business Day" means any day, other than Saturday, Sunday or any statutory
holiday in the Province of Ontario;
"Competitive Business" means a business carried on anywhere in North
America which includes the financing, development and/or operation of
laser eye surgery clinics or secondary eye care clinics in the market
areas where the Corporation carries on, or to the
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knowledge of EMCO at any time during the term of this Agreement or any
renewals thereof, intends to carry on its business;
"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 the TLC Group whether or not originated by the Executive including,
without limitation, work product resulting from or related to work or
projects performed or to be performed by the Corporation or the TLC Group,
internal personnel and financial information of the Corporation or the TLC
Group, purchasing and internal cost information, service and operational
manuals, the manner and method of conducting the business of the
Corporation or the TLC Group, marketing and development plans and
agreements, price and cost data, price and fee amounts, pricing and
billing policies, quoting procedures, marketing techniques, methods of
obtaining business, forecasts and forecast assumptions and volumes, future
plans and potential strategies of the Corporation or the TLC Group which
have been or are being discussed, ideas concerning proposed eye surgery
clinics, contracts and their contents, patient and affiliated doctor
services, data provided by patients and affiliated doctor services, and
the type, quantity and specifications of products and services, purchased,
leased, licensed, engaged, employed or received by the Corporation or the
TLC Group or by clients of the Corporation or the TLC Group, business
plans, patients, affiliated doctor and vendor lists, business deals with
any of these, financing, acquisition, development, licensing and
distribution agreements and budgets and investment opportunities and
structures;
"Contract Term" means the Term and renewals thereof;
"Contract Year" means any 12 month period commencing on January 1, and
ending on December 31;
"Disability" means the mental or physical state of Dr. Machat such that
Dr. Machat has been unable as a result of illness, disease, mental or
physical disability or similar cause, as determined by a legally qualified
medical practitioner selected by the Corporation, to fulfil EMCO's
obligations under this Agreement either for any consecutive 180 day period
or for any period of 180 days (whether or not consecutive) in any
consecutive 365 day period;
"Intellectual Property" means all legally recognized rights which result
or derive from Dr. Machat's services provided to the Corporation or the
TLC Group or with the knowledge, use or incorporation of Confidential
Information, and includes but is not limited to developments, inventions,
designs, works of authorship, improvements and ideas, whether or not
patentable or copyrightable, conceived or made by Dr. Machat (individually
or in collaboration with others) during the Contract Term or which result
from or derive from the Corporation's or the TLC Group's resources or
which are reasonably related to the business of the Corporation or the TLC
Group other than any of the foregoing in respect of which EMCO provides
written notice thereof to the Corporation prior to any material work being
undertaken by Dr. Machat, EMCO requests that all such rights which may
result or derive from such work be excluded from the definition of
"Intellectual Property" and the President of the Corporation provides
written notice to EMCO of its agreement with such request;
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"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;
"Term" has the meaning set out in section 3; and
"Termination Event" means: (i) the failure of EMCO, through Dr. Machat, to
carry out its obligations hereunder after notice by the Corporation of the
failure to do so and an opportunity for EMCO to correct the same within a
reasonable time from the date of receipt of such notice, (ii) theft,
fraud, dishonesty or misconduct by EMCO or its employees involving the
property, business or affairs of the Corporation or the carrying out of
EMCO's obligations; or (iii) any material breach or non-observance by EMCO
of any term of this Agreement.
2. Scope of Services
The Corporation hereby retains EMCO to provide the services of Dr.
Machat as follows:
(i) to provide consulting services to the Corporation in the
capacity of Chief Surgeon of the Windsor laser eye surgery
clinic owned by the Corporation (the "Windsor Clinic") and
Co-National Medical Director for the Corporation which shall
include advising the Corporation on doctor qualifications,
surgery methods, procedures and techniques, laser machines,
research results, patient profiles and other medical
professional matters relating to establishing and conducting
laser eye surgery clinics in North America;
(ii) on behalf of the Corporation, establishing and implementing
training procedures and education programs to be made
available by the Corporation to affiliated doctors throughout
North America; and
(iii) to provide such further advice and assistance to the
Corporation in connection with its laser eye surgery clinics
as the Corporation may reasonably request from time to time.
The Corporation will designate Dr. Machat as its Chief Surgeon of
the Windsor Clinic and Co-National Medical Director. EMCO hereby acknowledges
that the services to be rendered by it hereunder will be provided to the TLC
Group as a whole as well as the Corporation.
3. Contract Period
The term of this Agreement will, subject to section 9, be for a term
of three years ending on December 31, 1998 (the "Term"). Thereafter, the Term
shall be automatically extended for successive periods of one year unless either
party gives notice of termination within 60 days before or after the applicable
renewal date.
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4. Performance of Duties
During the Contract Period, EMCO shall cause Dr. Machat to
faithfully, honestly and diligently provide the services herein contracted for
to the Corporation and the TLC Group. EMCO will cause Dr. Machat (except in the
case of illness or accident) to devote sufficient time and effort to the
services herein contracted for so as to use his best efforts to promote the
interests of the Corporation. EMCO appreciates that the services herein
contracted for may involve significant travel, and agrees to cause Dr. Machat to
travel as reasonably required in order to fulfil EMCO's obligations hereunder.
5. Fees
The Corporation will pay EMCO for the services of Dr. Machat
hereunder an annual contract fee (the "Fee") throughout each year of the Term in
an amount equal to $200,000 (US). EMCO acknowledges that Dr. Machat is an
employee of EMCO and EMCO shall be solely responsible for deduction for income
taxes and other required deductions, such as Canada Pension Plan and
Unemployment Insurance contributions payable by or in respect of Dr. Machat
pursuant to his employment with EMCO and hereby indemnifies and saves the
Corporation harmless in respect thereof. Unless otherwise agreed in writing, the
Fee will be payable in equal installments monthly in arrears in each month
during each Contract Year, the first payment to be made on February 1, 1996.
6. Expenses
The Corporation will, upon presentation of expense statements or
receipts and such other supporting documentation as the Corporation may
reasonably require, pay or reimburse EMCO in accordance with the Corporation's
expense policies for all travel and out-of-pocket expenses reasonably incurred
or paid by EMCO in the performance by Dr. Machat of the services herein
contracted for.
7. Vacation
The Corporation acknowledges that during each Contract Year of this
Agreement EMCO will provide the services of Dr. Machat to the Corporation for a
maximum of 48 weeks. EMCO agrees to consult with the Corporation concerning the
proposed weeks when Dr. Machat will not be made available to ensure that such
time may be convenient to the Corporation having regard to those of its
operations in respect of which Dr. Machat is providing services hereunder.
8. Termination
(a) Notice. This Agreement may be terminated by the Corporation at any
time:
(i) without prior notice and without further obligations to EMCO
for Disability or if a Termination Event occurs. Termination
of this Agreement by the Corporation pursuant hereto may be
undertaken only under the authority of a resolution of the
board of directors of the Corporation approved by 80% of the
directors.
(ii) upon 90 days prior written notice, provided however that if
this Agreement is so terminated an amount equal to two times
the Fee shall be payable to EMCO within 30 days following
notice of such termination. Termination
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of this Agreement by the Corporation pursuant hereto may be
undertaken only under the authority of a resolution of the
board of directors of the Corporation approved by 80% of the
directors.
(b) This Agreement will be automatically terminated, without further
obligation on the part of the Corporation or the TLC Group (except
as to the pro-rata payments of amounts owing to such date) upon the
death of Dr. Machat.
(c) Effective Date. The effective date on which this Agreement will be
deemed to have been terminated will be:
(i) in the case of termination under section 8(a), 30 days
following delivery of notice of termination; and
(ii) in the case of termination pursuant to section 8(b), on the
date of death.
(d) No Other Obligations. Except for payment of all amounts owing
hereunder to the effective date of a termination or as otherwise
provided herein, neither EMCO nor Dr. Machat will be entitled to
receive any payment arising out of or relating to this Agreement.
EMCO on its own behalf and on behalf of its employees hereby waives
any claims against the Corporation for or in respect of termination
pay, severance pay, or on account of loss of office or employment or
notice in lieu thereof or damages in lieu thereof and EMCO hereby
indemnifies and saves the Corporation harmless in respect thereof.
(e) Termination by EMCO. Following the expiration of the Term, this
Agreement may be terminated by EMCO at any time on 120 days prior
written notice.
9. Return of Materials Uoon Termination
Upon termination of this Agreement, EMCO shall cause its employees
to promptly deliver to the Corporation all property of or belonging to or
administered by the Corporation or the TLC Group, including without limitation
all documents, manuals, customer, patient, affiliated doctor, supplier, product
and other proprietary lists, data, records, computer programs, codes, materials,
prototypes, products, samples, analyses, reports, marketing materials,
equipment, tools and devices relating or pertaining to any Intellectual Property
or Confidential Information, including all copies or reproductions of the same
10. Non-Competition Agreement
EMCO acknowledges the competitive and proprietary nature of the
business carried on by the Corporation and the TLC Group and the interests of
the Corporation and the TLC Group in limiting, on a reasonable basis, the
availability of those primary consultants providing services to Competitive
Businesses.
Accordingly, EMCO agrees that neither it nor any of its employees
will, either during the Term or any renewal thereof or for a period of 24 months
thereafter, 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, consultant, adviser,
director or shareholder
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(a) be engaged in any undertaking;
(b) 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
(c) advise, lend money to, guarantee the debts or obligations of
or permit the use of the Executive's name or any part thereof
by any Person which carries on a business;
anywhere in North America, if the undertaking or the business, as the case may
be, is a Competitive Business.
Nothing in this section 10 will operate to prevent (i) EMCO or Dr.
Machat from owning, on a passive investment basis, up to 5% of the issued shares
of a Competitive Business, the shares of which are traded on a recognized stock
exchange or traded in the over-the-counter market in Canada or elsewhere, or
(ii) following the termination of this Agreement, Dr. Machat from performing
excimer laser surgery as a sole practitioner at a single location in Canada
provided such practice has no professional or business relationship, directly or
indirectly, with a Competitive Business and is not within a 100 mile radius of
any TLC eye care facility.
11. No-Solicitation of Employees or Consultants
EMCO acknowledges the importance to the business carried on by the
TLC Group of the human resources engaged and developed by the TLC Group and the
unique access that EMCO's employees with the TLC Group offers to interfere with
these resources. Accordingly, EMCO covenants that neither it nor any of its
employees will, during the Contract Period and for the period of 24 months
thereafter, directly or indirectly, employ, be employed by, enter into a
partnership or other association with or retain as an independent contractor or
be retained as an independent contractor by any employee of or consultant to the
Corporation or the TLC Group or induce or solicit, or attempt to induce, any
such person to leave that person's employment or engagement.
12. Confidentiality
Neither EMCO nor any of its employees will, during the Contract
Period and at any time thereafter, directly or indirectly, other than as
required pursuant hereto use or disclose to any Person any Confidential
Information unless;
(a) 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 any similar agreement between the Corporation
and others; or;
(b) disclosure of the Confidential Information is required to be made by
any law, regulation, governmental authority or court, provided that
before disclosure is made, notice of the requirement is provided to
the Corporation, and (to the extent possible in the circumstances)
the Corporation is afforded an opportunity to dispute the
requirements for disclosure.
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EMCO's and its employees obligations under this section 12 are to remain in
effect in perpetuity and will exist and continue in full force and effect
notwithstanding any breach or repudiation or any alleged breach or repudiation
of this Agreement by the Corporation.
13. Copyright
During the Contract Period, EMCO agrees that it and its employees
will disclose to the Corporation all Intellectual Property developed by Dr.
Machat, either individually or in collaboration with others, which relates
directly or indirectly to the business of the Corporation or the TLC Group. EMCO
acknowledges and agrees that all right, title and interest of any kind
whatsoever in and to the Intellectual Property, including the foregoing and any
copyrights, is and will be the exclusive property of the Corporation and the
Corporation will have absolute discretion to determine how such Intellectual
Property is used. All work done during the Contract Period by Dr. Machat or EMCO
for the Corporation or a member of the TLC Group is a work in respect of which
the Corporation or the member of the TLC Group, as the case may be, shall be
deemed to be the first author for copyright purposes. Copyright will vest in the
Corporation or the relevant member of the TLC Group, as the case may be. EMCO on
its own behalf and on behalf of Dr. Machat hereby waives all moral rights that
either may have in the Intellectual Property and agrees that this waiver may be
invoked by the Corporation, and by any of its authorized agents or assignees, to
use any of the Intellectual Property. EMCO agrees that to execute all such
instruments and do all such things as may be reasonably necessary or desirable
to give full effect to the foregoing and will cooperate and assist the
Corporation and the TLC Group in enforcing their rights under this paragraph.
14. Certain Warranties, Covenants and Remedies
(a) EMCO agrees that its obligations as set forth in sections 9, 10, 11,
12 and 13 will be deemed to have commenced as of the date on which
services are or have been provided by EMCO to the Corporation before
or after the date hereof
(b) EMCO acknowledges that a material breach or threatened material
breach of any of sections 9, 10, 11, 12 and 13 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, EMCO agrees that the Corporation will be entitled to
interim and permanent injunctive relief; specific performance and
other equitable remedies, in addition to any other relief to which
the Corporation may become entitled.
(c) EMCO's obligations under each of sections 9, 10, 11, 12 and 13 are
to remain in effect in accordance with their terms and will exist
and continue in full force and effect notwithstanding any breach or
repudiation, or alleged breach or repudiation, of this Agreement by
the Corporation.
(d) EMCO represents, warrants and covenants that (i) it will at all
times during this Agreement employ Dr. Machat; (ii) it will not
provide the services of any of its employees to a Competitive
Business during the term hereof; (iii) it will at all times while
Dr. Machat is its employee maintain disability insurance for the
benefit of Dr. Machat in amounts not less than and on terms no less
favourable than those formerly maintained by the Corporation; and
(iv) no employee of EMCO will consult, lecture, take part in
education or training seminars or speaking
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engagements, in the eye care field, without the prior written
consent of the Corporation, which consent may be unreasonably
withheld.
15. Co-operation
EMCO will co-operate and will cause Dr. Machat to co-operate in all
respects with the Corporation if a question arises as to whether Dr. Machat has
a Disability. Without limitation, Dr. Machat will authorize his medical doctor
or other health care specialist to discuss any medical condition with the
Corporation and will as reasonably requested by the Corporation submit to
examination by a medical doctor or other health care specialist selected by the
Corporation.
16. Residence
EMCO represents and warrants that it is not a non-resident of Canada
for purposes of the Income Tax Act (Canada).
17. Notices
Any notice or other communication required or permitted to be given
hereunder must be in writing, delivered by facsimile or by hand-delivery as
hereinafter provided. Any such notice or other communication, if sent by
facsimile, will be deemed to have been received on the Business Day following
the sending, or if delivered by hand to the Executive will be deemed to have
been received at the time it is delivered to him or, if delivered to the
Executive or the Corporation at applicable address noted below, when it is
delivered either to the individual designated below or to an individual at such
address having apparent authority to accept deliveries on behalf of the
addressee. Notice of change of address will also be governed by this section.
Notices and other communications must be addressed as follows:
(a) if to EMCO.
(b) if to the Corporation:
206 Laird Drive
Suite 100
Toronto, Ontario
M4G 3W4
Attention: President
Telecopier number: (416) 467-6882
18. Headings
The inclusion of headings in this Agreement is for convenience of
reference only and is not to affect the construction or interpretation hereof
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19. Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any provision
by a court of competent jurisdiction will 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
subject matter hereof. 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. No reliance
is placed on any representations, opinion, advice or assertion of fact made by
the Corporation the TLC Group or its directors, officers and agents to EMCO,
except to the extent that the same has been reduced to writing and included as a
term of this Agreement. Accordingly, there will be no liability, either in tort
or in contract, assessed in relation to any such representation, opinion, advice
or assertion of fact, except to the extent aforesaid.
21. Waiver, Amendment
Except as expressly provided in this Agreement, no amendment or
waiver of this Agreement will be binding unless executed in writing by the party
to be bound thereby. No waiver of any provision of this Agreement will
constitute a waiver of any other provision nor will any waiver of any provision
of this Agreement constitute a continuing waiver unless otherwise expressly
provided. Neither this Agreement nor any part thereof may be assigned without
the prior written consent of the other party hereto.
22. Surgery Agreement
The parties hereto acknowledge that Dr. Machat and one or more
members of the TLC Group may enter into a Surgery Agreement pursuant to which
Dr. Machat performs laser eye surgery at one or more TLC clinics. Any such
agreement shall be completely separate from and independent of this agreement
and shall be deemed not to be a breach of any obligations hereunder.
23. Governing Law
This Agreement will be governed by and construed in accordance with
the laws of the Province of Ontario.
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24. Counterparts
This Agreement may be signed in counterparts. Each counterpart will
constitute an original document and all counterparts, taken together, will
constitute one and the same instrument. Executed counterparts may be delivered
by telecopier.
IN WITNESS WHEREOF THE PARTIES HAVE EXECUTED THIS AGREEMENT.
EXCIMER MANAGEMENT
CORPORATION
By /s/ Dr Jeffery J. Machat
---------------------------------- c/s
Dr Jeffery J. Machat
TLC THE LASER CENTER INC.
By /s/ Elias Vamvakas
---------------------------------- c/s
Elias Vamvakas