Employment Agreement - TLC Vision Corp. and James C. Wachtman
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made this 15th day of May, 2002 by and between TLC
Vision Corporation, a corporation incorporated under the laws of the Province of
New Brunswick, Canada with a principal place of business at 5280 Solar Drive,
Suite 300, Mississauga, Ontario L4W 5M8 (the "Company"), and James C. Wachtman,
an individual residing at 330 Oakwood Avenue, Webster Groves, Missouri 63119
("Employee").
WHEREAS the Company and Employee are desirous of setting forth in a
definitive employment Agreement their respective rights and obligations with
respect to Employee's employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Employee hereby agree as follows:
1. Employment. The Company hereby agrees to employ Employee, and
Employee hereby agrees to accept such employment upon the terms and conditions
hereinafter set forth. Employee represents and warrants to the Company that his
employment by the Company and the performance of his duties as contemplated by
this Agreement do not and will not violate the terms or conditions of any other
agreement or understanding by which Employee is bound or subject and that
Employee knows of no basis for any claim that he is so bound or subject.
2. Term. The term of this Agreement shall commence on May 15, 2002
("Effective Date"), and shall continue for a period of two (2) years following
such Effective Date unless otherwise terminated as provided in Section 8 hereof;
provided, however, that under certain circumstances, the provisions of Section 9
hereof shall survive termination. Commencing on the second anniversary of the
Effective Date and at the conclusion of each two-year period thereafter, the
term of this Agreement shall be automatically extended for an additional
two-year period unless Employee's employment is terminated pursuant to Section 8
hereof.
3. Duties. Employee shall be employed by the Company to serve as
President and Chief Operating Officer. As such, he shall be subject to the
direction of the Chairman of the Board of Directors, Chief Executive Officer and
President and perform such duties and tasks as are appropriate for a person in
such position. Employee shall perform his duties hereunder in the Greater St.
Louis metropolitan area or at such other location or locations as are mutually
agreed between Employee and the Company. Employee shall have a private office,
secretarial help, and such other facilities and services as are suitable to his
position and appropriate for the performance of his duties.
4. Extent of Service. Employee shall devote his full working time,
skills, knowledge and abilities to the business and affairs of the Company, its
subsidiaries and affiliates in promotion of their respective interests, and will
not engage in outside business activities which would interfere with the
performance of his duties hereunder. This provision shall not preclude Employee
from investing his assets in other business activities, provided that such
investment or
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investments do not significantly detract from Employee's responsibilities under
this Agreement and will not require his services in the operation of the affairs
of the companies in which such investments are made.
5. Compensation.
(a) Salary. As compensation for the services to be rendered by Employee
under this Agreement, the Company shall pay to Employee a minimum
annual salary of three hundred twenty five thousand dollars ($325,000)
(the "Base Salary"), less such deductions or amounts as may be required
to be withheld by applicable law or regulations, payable in accordance
with the payroll policy of the Company as from time to time may be in
effect. Employee's Base Salary may be adjusted upward from time to time
in the sole discretion of the Board of Directors of the Company, but in
any event, Employee's Base Salary shall be increased annually by a
percentage equal to the increase of the Consumer Price Index, all
commodities, as reported by the Department of Labor.
(b) Bonus. In addition to the Base Salary specified above, Employee shall
receive a Bonus. Such Bonus shall be paid annually pursuant to an
executive incentive bonus compensation plan determined and approved by
the Compensation Committee of the Board of Directors of the Company as
soon as practicable after the Effective Date. Such plan shall provide
reasonably attainable annual performance targets, consistent with past
practices, that, if attained, will provide Employee a bonus equal to
fifty percent (50%) of his Base Salary each year.
(c) Stock Options. As of the Effective Date, options held by Employee, if
any, to purchase shares of common stock of Laser Vision Centers, Inc.
("Laser Vision") shall be converted into options to purchase shares of
common stock of the Company in accordance with the terms of the
Agreement and Plan of Merger among Laser Vision, the Company, and TLC
Acquisition II Corp. dated as of August 25, 2001 (the "Merger
Agreement").
Notwithstanding any provision to the contrary contained in any stock
option agreement, in the event of Employee's termination of employment
under Section 8(d) or Section 8(e), any outstanding options of the
Company held by Employee shall become fully vested and exercisable
immediately at the time of such termination of employment. In addition,
notwithstanding any provision to the contrary contained in any stock
option agreement, in the event of Employee's termination of employment
for any reason, any outstanding options of the Company held by Employee
that are or become exercisable at the time of such termination of
employment shall continue to be exercisable by Employee for their
entire term without regard to any provision contained in any such
agreement that restricts or terminates his exercise rights on account
of such termination of employment (including any provision that
accelerates the expiration of the term of such options or warrants).
Employee and the Company hereby acknowledge and agree that Employee's
options and warrants to purchase shares of common stock of the Company
shall be subject to the approval of The Toronto Stock Exchange and the
shareholders of the Company. In the
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event any such approval is not obtained, the Company shall indemnify
Employee on a mutually-acceptable basis (or if the parties so agree,
with a cash payment) for any losses resulting from such failure on an
after-tax basis.
(d) Reimbursements for Premiums for Extended Health Care Coverage. In the
event that Employee's employment terminates pursuant to Section 8 of
this Agreement, the Company shall provide health care coverage for a
period of two (2) consecutive years following the date of such
termination. Such health care coverage shall be no less generous than
that under the Company's health care plan (as such plan may exist from
time to time) for Employee, Employee's spouse (if any) and Employee's
dependents (if any). Employee shall pay the applicable COBRA premiums
which are charged to the Company's former employees from time to time;
provided however that the Company agrees to reimburse Employee for such
premiums plus any additional "gross-up" amounts equal to any taxes
(including, without limitation, any income taxes) on such amounts.
(e) Automobile Allowance. The Company shall pay to Employee an automobile
allowance ("Automobile Allowance") of seven hundred dollars ($700) per
month, less such deductions or amounts as may be required to be
withheld by applicable law or regulations, payable in accordance with
the payroll policy of the Company as from time to time may be in
effect. Employee's Automobile Allowance may be adjusted upward from
time to time in the sole discretion of the Board of Directors of the
Company, but in any event, Employee's Automobile Allowance shall be
increased annually by a percentage equal to the increase of the
Consumer Price Index, all commodities, as reported by the Department of
Labor.
6. Fringe Benefits. Employee shall be entitled to participate in any
employee benefit plan maintained by the Company for its employees as of the
Effective Date, including any accident or health insurance plan and any pension
or profit sharing plan subject to the same requirements and limitations as are
applicable to other employees of the Company holding positions comparable to
that held by Employee. At a minimum, the Company will provide, at the Company's
expense, a family medical and dental plan, a life insurance policy comparable to
the policy in effect with Laser Vision as of the Effective Date and a disability
plan to protect Employee's income. In addition, Employee shall be entitled to
four (4) weeks of vacation during each twelve (12) month period hereof. Employee
shall also be covered under the Company's liability insurance policy for
directors and officers under the same terms and conditions that apply to other
directors and officers of the Company.
In addition, Employee shall be entitled to all other fringe
benefits not enumerated specifically in this Agreement which are no less
favorable than those that are provided to management employees of Laser Vision
generally from time to time.
7. Reimbursement of Business Expenses. Subject to the provisions of
Section 5 of this Agreement with respect to automobile expenses, the Company
agrees to reimburse Employee for other reasonable out-of-pocket expenses
incurred in connection with Company business including, without limitation,
travel and accommodations for all authorized business
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trips, provided vouchers therefor, or other supporting information as the
Company may reasonably require, are presented to the Company. The Company agrees
to reimburse Employee for all such expenses within ten (10) days of
presentation.
8. Termination.
(a) Death. This Agreement shall automatically terminate in the event of
Employee's death. Upon such termination, the Company shall pay to
Employee's beneficiary, within thirty (30) days of such termination, an
amount equal to two (2) times Employee's Base Salary specified in
Section 5(a) (as in effect as of the date of such termination) plus an
additional amount equal to the greater of (i) two (2) times Employee's
Bonus for the previous year or (ii) the average of Employee's Bonus for
each of the two (2) years immediately preceding the date of such
termination.
Employee shall have the right to designate a beneficiary to receive the
amounts payable after his death as provided under this Section 8(a).
Such designation shall be in writing, signed by Employee, and delivered
to the Company while Employee is alive.
In the event that Employee does not designate a beneficiary to receive
amounts payable after his death as provided under this Section 8(a),
but Employee is married as of the date of his death, such amounts shall
be paid to his spouse; provided that if Employee is not married as of
the date of his death, such amounts shall be paid to Employee's estate.
(b) Disability. This Agreement may be terminated, at the option of the
Company, in the event Employee becomes permanently physically or
mentally disabled, subject to the terms and conditions below:
(i) Disability Defined. Employee shall be deemed permanently
disabled if (a) Employee is unable to provide the Company at
least thirty (30) hours per week of continuous service of the
work time which would be normally be given by him during a
continuous six (6) month period; and if (b) at the expiration
of said six (6) month period insofar as can be reasonably
foreseen Employee will thereafter be unable to give at least
thirty (30) hours per week of normal effective working time.
(ii) Disability Payments. Until the expiration of the six (6) month
period of disability, Employee shall be entitled to receive
his regularly established salary and bonus, less any monthly
disability income insurance payments.
(iii) Determination as to Disability. In the event the parties
hereto are unable to agree on the existence of a disability or
the date on which the aforesaid six (6) month period of
disability began, the Company and Employee shall each
designate a physician and the two physicians so designated
shall then select a third physician, which third physician
shall then determine whether permanent disability exists
within the meaning of this Agreement and when the disability
commenced if it
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does exist. The determination of the said third physician
shall bind the parties hereto. For convenience of determining
the rights of the parties under this provision, a permanent
disability shall be deemed to begin on the first day of the
month which immediately follows the date on which the
disability actually occurred, or is judged by the aforesaid
third physician to have occurred. If the said third physician
determines that Employee is not capable of performing the
services required of him hereunder, the Company shall have the
right to require Employee to submit to additional periodic
examinations (not to exceed one per month), at the Company's
expense, by that physician for so long as Employee purports to
be disabled.
(iv) Termination of Disability. The foregoing to the contrary
notwithstanding, in the event the Company terminates the
employment of Employee due to the disability of Employee and
if, after such termination and prior to the normal termination
date of this Agreement (or any extension or renewal hereof)
Employee is judged by the aforesaid third physician to be able
to return to his normal duties, then the Company shall hire
Employee as a consultant to the Company for the balance of the
term of this Agreement (or any extension or renewal hereof),
at Employee's salary as of the date of termination and subject
to all other terms and conditions of this Agreement.
(c) Termination by the Company for Cause. The Company may, upon written
notice to Employee, terminate Employee's employment for proper cause.
Employee shall have no right to receive any compensation or benefit
hereunder on or after the effective date of such termination, except
for compensation then due and payable (or accrued for Employee's
benefit) but remaining unpaid.
As used herein "proper cause" shall mean that Employee has been
convicted of any crime involving larceny, embezzlement, conversion or
any other act involving the misappropriation of Company funds in the
course of his employment.
For a period of one year following the Effective Date, the Employee
shall not be deemed to have been terminated for proper 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 80% of the entire
membership of the board of directors of the Company (excluding the
Employee if the Employee is at the time a director of the Company) 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 Employee's conduct constituted proper 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 8(c).
(d) Termination by the Company Without Cause. Employee's employment under
this Agreement may be terminated without cause by the Board of
Directors of the Company upon written notice to Employee. In the event
of such termination without cause or the expiration of the term of this
Agreement without renewal by the Company, the Company
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shall pay to Employee, within thirty (30) days of such termination, an
amount equal to two (2) times Employee's Base Salary specified in
Section 5(a) (as in effect as of the date of such termination) plus an
additional amount equal to the greater of (i) two (2) times Employee's
Bonus for the previous year or (ii) the average of Employee's Bonus for
each of the two (2) years immediately preceding the date of such
termination (collectively, the "Severance Entitlement"). In the event
of such termination without cause, the covenants of Employee contained
in Sections 9(a) and 9(b) hereof shall be null and void. Also, Employee
shall have no duty or any other legal obligation to find alternative
employment in order to mitigate the amounts that become due and payable
under this Section 8(d) of the Agreement. At the end of the initial
term, the provisions of this Section 8(d) are amended to provide (i)
that the Employee shall receive a severance payment equal to the
greater of (a) the Severance Entitlement or (b) the longest time period
for purposes of calculating severance that Elias Vamvakas, as Chief
Executive Officer, was entitled to receive at any time during the term;
and (ii) the Employee will be subject to the covenants contained in
Sections 9(a) and 9(b) for the period of time equal to the period of
time, and the same circumstances, that Elias Vamvakas is subject to
similar covenants.
(e) Termination by Employee for Good Reason.
(i) Employee, upon at least ninety (90) days' written notice to
the Company, may terminate his employment with the Company
upon the occurrence of any of the following events:
(A) The Company relocates Employee's principal office out
of the Greater St. Louis, Missouri area which shall
be defined as St. Louis, Jefferson, St. Charles and
Franklin counties in Missouri;
(B) There is a material, adverse change in Employee's job
responsibilities following a "change in control" (as
defined below) of the Company;
(C) There is a ten percent (10%) reduction or a series of
reductions, that in the aggregate, amount to a ten
percent (10%) reduction by the Company of the greater
of (i) Employee's Base Salary in effect as of the
Effective Date or (ii) the Base Salary as may be
increased by the Company from time to time under this
Agreement;
(D) There is (i) a substantial diminishment of Employee's
responsibilities, duties or authority or (ii) a
change in the Employee's responsibilities, duties or
authority which, in Employee's reasonable judgment,
substantially diminishes his responsibilities, duties
or authority;
(E) The current Chief Executive Officer (CEO), Elias
Vamvakas, is removed or voluntarily resigns as CEO;
or
(F) A material breach of this Agreement by the Company.
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(ii) Upon such termination, the Company shall pay to Employee,
within thirty (30) days of such termination, an amount equal
to two (2) times Employee's Base Salary specified in Section
5(a) (as in effect as of the date of such termination) plus an
additional amount equal to the greater of (i) two (2) times
Employee's Bonus for the previous year or (ii) the average of
Employee's Bonus for each of the two (2) years immediately
preceding the date of such termination.
(iii) For purposes of this Agreement, "change in control" shall
mean:
(A) Any sale of more than fifty percent (50%) of the
common stock of the Company by one or more
stockholders of the Company to a nonaffiliated
person, such percentage being determined on an
undiluted basis without regard to options and
warrants then outstanding and unexercised;
(B) Any sale, lease or other disposition (but not a
mortgage or pledge in a bona fide borrowing
transaction) of all or substantially all of the
assets of the Company to a nonaffiliated person;
(C) Any merger or consolidation of the Company with or
into any other nonaffiliated corporation, where more
than fifty percent (50%) of the equity securities of
the surviving or resulting corporation (by value or
voting power) are directly or indirectly controlled
by persons other than the stockholders of the Company
or their affiliates immediately prior to such merger
or consolidation; or
(D) Any merger or consolidation of the Company with or
into any other nonaffiliated corporation, even if
less than fifty percent (50%) of the equity
securities of the surviving or resulting corporation
(by value or voting power) are directly or indirectly
controlled by persons other than the stockholders of
the Company or their affiliates immediately prior to
such merger or consolidation, if the individuals who
constituted the Board of Directors of the Company
immediately before such merger or consolidation, and
any individual becoming a director subsequent to such
date whose election, or nomination for election by
the Company's stockholders, was approved by a vote of
at least three-quarters of the directors who
constituted the Board of Directors of the Company
immediately before such merger or consolidation, for
any reason no longer constitute at least one-half of
the members of the Board of Directors of the
surviving or resulting corporation at any time within
one year after such merger or consolidation.
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9. Non-Solicitation Agreement.
(a) Employee shall not, during the term of his employment by the Company
and for a period of one (1) year thereafter:
(i) directly or indirectly, either as an individual for Employee's
own account, or as a partner or joint venturer, or as an
advisor, consultant, representative, employee, officer,
director or shareholder of any corporation or other business
organization, or in any other capacity, engage in, enter into
or participate in any way in any business or enterprise that
diverts or attempts to divert or solicit the business of TLC
Vision Corporation from or for clients, customers, or accounts
of the Company. In connection with the foregoing, Employee
acknowledges that the market for the Company's services is
international in scope and that the foregoing covenant shall
extend to any business or enterprise which provides or intends
to provide competing services. It is expressly understood that
the foregoing covenant shall not prohibit Employee from owning
less than five (5%) percent of the equity of any publicly held
corporation;
(ii) directly or indirectly hire away or attempt to hire away or
otherwise engage any employee, key advisor, or consultant of
the Company; or
(iii) directly or indirectly interfere or attempt to interfere in
any way with the Company's relationships with any of its
suppliers, including, without limitation, inducing or
attempting to induce any supplier of the Company to terminate
or to change the terms of its dealings with the Company.
(b) Employee shall not, during the term of his employment hereunder and for
the duration of any unexpired term of this Agreement:
(i) divulge, or cause to be divulged, communicate or cause to be
communicated, publish or cause to be published, or otherwise
disclose or cause to be disclosed to any person, firm,
corporation, association, or entity, any of the Company's
systems, designs, procedures, pricing and marketing
strategies, concepts, technical information, trade secrets,
know-how, customer lists, customer contacts, customer
prospects, fee schedules, business and financial records and
such other information regarded by the Company as confidential
and of a proprietary nature (the "Proprietary Information").
For purposes hereof, the term Proprietary Information shall
not include information which (x) at the time of disclosure to
or by Employee was generally known to the relevant trade so as
to no longer be a protectable trade secret, or (y) was
lawfully received by Employee from a third
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party who independently, without prompting or assistance by
Employee, developed or acquired such Proprietary Information
and was under no obligation, express or implied, to the
Company with respect thereto or (z) at the time of disclosure
was already properly in Employee's possession or otherwise
known by Employee.
(c) Employee hereby acknowledges that the Company's remedy at law for
breach or threat of breach of the provisions of this Section 9 is
inadequate and that the Company shall have the right to seek injunctive
relief in the event of any such breach or threatened breach, in
addition to any other remedy available. If any provision of this
Section 9 shall be invalid or unenforceable to any extent or in any
application, then the remainder of this Section and of such term and
condition, except to such extent or in such application shall not be
affected thereby, and each and every term and condition of this Section
shall be valid and enforced to the fullest extent, and in the broadest
application provided by law. If the invalidity or unenforceability is
due to the unreasonableness of the time or scope or geographic extent
of any covenant and restriction, said covenant and restriction shall
nevertheless be effective for such a period of time or within such
scope or geographical area as may be determined to be reasonable by a
court of competent jurisdiction.
10. Waiver of Breach. The failure of any party at any time or times to
require the performance of any provision hereof shall in no manner affect the
party's right at a later time to enforce the same. No waiver by any party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the breach
of any other term or covenant contained in this Agreement.
11. Assignment. This Agreement and Employee's rights and obligations
hereunder may not be assigned by Employee. This may not be assigned by the
Company without Employee's written consent. This Agreement shall be binding upon
and inure to the benefit of the Company and its successors and assigns and shall
be binding upon Employee, his heirs, executors and administrators.
12. Entire Agreement; Amendment. This Agreement constitutes the entire
Agreement among the parties with respect to the subject matter hereof and,
unless otherwise provided herein, supersedes all prior agreements or
understandings written or oral in respect thereof. This Agreement may be
amended, modified, superseded, cancelled, renewed, or extended, and the terms or
covenants hereof may be waived only by a written instrument signed by all the
parties hereto, or in the case of a waiver, by the party waiving compliance.
13. Severability. If any provision of this Agreement shall be invalid
or unenforceable to any extent or in any application, then the remainder of this
Agreement and of such term and condition, except to such extent or in such
application, shall not be affected thereby and each and every term and condition
of this Agreement shall be valid and enforced to the fullest extent and in the
broadest application permitted by law.
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14. Construction and Interpretation. This Agreement, and all questions
arising in connection therewith, shall be governed by and construed in
accordance with the laws of the State of Missouri. In the event that Employee or
the Company commence litigation against the other party to enforce any provision
of this Agreement, venue shall at all times lie in the Circuit Court of St.
Louis County, St. Louis, Missouri. For any and all disputes between Employee and
the Company arising under this Agreement, each party shall be responsible for
its own legal fees and expenses, and neither party shall be entitled to recover
its legal fees and expenses from the other party.
15. Headings. The section headings contained herein are for convenience
and reference only, and shall be given no effect in the interpretation of any
term or condition of this Agreement.
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IN WITNESS WHEREOF the parties have executed this Agreement the day and
year first above written.
"COMPANY" "EMPLOYEE"
TLC VISION CORPORATION
By:
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Name: James C. Wachtman
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Title:
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