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:
1.1.6.1. 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;
1.1.6.2. the Corporation amalgamates with one or more
corporations other than a Subsidiary;
1.1.6.3. the Corporation sells, leases or otherwise disposes
of all or substantially all of its assets, whether pursuant to one
or more transactions;
2
<PAGE>
1.1.6.4. 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;
1.1.6.5. 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, 1.1.6.2, 1.1.6.3 or 1.1.6.4
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>
1.1.10.1. 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;
1.1.10.2. 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;
1.1.10.3. 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;
1.1.10.4. 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.