EXHIBIT "10.04"
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BY AND BETWEEN
PAINCARE, INC.
AND
▇▇▇ ▇▇▇▇▇, M.D.
THIS EMPLOYMENT AGREEMENT (the "Agreement") is effective as of October
1, 2001 (the "Commencement Date") by and between PainCare, Inc., a Nevada
corporation (the "Company"), and ▇▇▇ ▇▇▇▇▇, M.D. ("Employee").
WHEREAS, the Company and Employee desire to enter into this Agreement
to memorialize their oral understanding, to assure the Company of the services
of Employee for the benefit of the Company and to set forth the respective
rights and duties of the parties hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee agree
as follows:
ARTICLE I
Employment
1.1 Employment and Title. As of the Commencement Date, the Company
employs Employee, and Employee accepts such employment, as President of the
Company and president of PainCare Surgery Centers, Inc. ("PSC"), a wholly owned
subsidiary of the Company, all upon the terms and conditions set forth herein.
1.2 Duties. Subject to the power of the Board of Directors of Employer
----------
to elect and remove officers, Employee will serve as President of the Company
and PSC and will faithfully and diligently perform the services and functions
relating to such office or otherwise reasonable incident to such office,
provided that all such services and functions will be reasonable and within
Employee's area of expertise. Employee will during the term of this Agreement
(or any extension thereof), devote essentially his full business time, attention
and skills and reasonable best efforts to the promotion of the business of
Employer. The foregoing will not be construed as preventing Employee from
managing other businesses, making investments in other business or enterprises
provided that (a) Employee agrees not to become engaged in any other business
activity that interferes with his ability to discharge his duties and
responsibilities to Employer and (b) Employee does not violate any other
provision of this Agreement.
1
1.3 Location. The principal place of employment and the location of
Employee's principal office shall be in Tampa, Florida; provided, however,
Employee shall, when requested by the Board of Directors, or may, if he
determines it to be reasonably necessary, temporarily perform outside of Tampa,
Florida such services as are reasonably required for the proper execution of his
duties under this Agreement.
1.4 Representations. Each party represents and warrants to the other
that he/it has full power and authority to enter into and perform this Agreement
and that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which he/it is a party or under which he/it is bound. Each party represents that
no consent or approval of any third party is required for his/its execution,
delivery and performance of this Agreement or that all consents or approvals of
any third party required for his/its execution, delivery and performance of this
Agreement have been obtained.
ARTICLE II
Term
2.1 Term. The term of Employee's employment hereunder (the "Term")
shall commence as of the Commencement Date and shall continue through the Third
anniversary of the Commencement Date (the "Scheduled Termination Date") unless
renewed or earlier terminated pursuant to the provisions of this Agreement.
Assuming all conditions of this Agreement have been satisfied and there has been
no breach of the Agreement during its initial term, Employee may extend the term
for an additional three year term at Employee's election ("Extended Term").
ARTICLE III
Compensation
3.1 Salary. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base salary of not less than Sixty Thousand Dollars ($60,000.00) provided
there is available cash flow from PSC. Such salary will begin upon the opening
of the first PainCare Surgery Center. Salary shall accrue monthly (prorated for
periods less than a month) and shall be paid in equal bi-monthly installments,
in arrears or as the Employee and the Company otherwise agree. The base salary
will be reviewed annually, or, as appropriate, by the Board of Directors. At any
time the Salary may be increased for the remaining portion of the term if so
determined by the Board of Directors of Employer after a review of Employee's
performance of his duties. Salary to be increased by minimum of CPI plus
increases based on performance, increase in earnings and revenues approved by
the compensation committee.
3.2 Bonuses. The Company shall pay the Employee a quarterly cash bonus
(the "Bonus") equal to 5% of "Formula Profits" of PSC. Formula Profits shall
mean for these purposes the pre-tax earnings of PSC, as calculated utilizing
generally accepted accounting principles by the Company's independent certified
public accountants. Notwithstanding the
2
foregoing, for purposes of determining Formula Profits: (i) there shall not be
included any charge for corporate overhead of the Company or any of its other
subsidiaries or other administrative or similar charges that might otherwise be
impose upon PSC, except those charges for services provided directly to and for
the benefit of PSC, (ii) there shall not be included any non-recurring charges,
losses, profits, or gains not related to the ongoing operations of the business
of PSC, including, but not limited to discontinued operations or extraordinary
items or unusual or infrequent items as they are defined under generally
accepted accounting principles, and (iii) there shall not be included any charge
related to grants or exercises of options pursuant to this Employment Agreement.
The Bonus, if any, shall be payable within thirty (30) days after the end of the
most recent fiscal quarter to which the Bonus relates.
3.3 Nonqualified Stock Options. Upon the execution of this Agreement,
and subject to the provisions of this Agreement, the Employee shall be entitled
to such nonqualified options to acquire shares of the Company's common stock
(the "Option Shares") as follows:
(a) Grant of Option. Subject to the provisions of this Agreement
---------------
and the Company's Stock Plan (the "Plan") provisions, the Company agrees to
grant to the Employee during the term of this Agreement the right to purchase
from the Company 25,000 shares of its common stock (the "Option Shares"), at the
per share exercise price equal to the Market Price of the Company's common stock
(as defined below) upon the opening of each new Company surgery center. The
Option Shares are intended by the parties hereto to be, and shall be treated as
an incentive stock option (as such term is defined under Code Section 422).
(b) Exercise of Option.
------------------
1. No portion of the Option Shares may be exercised by the
Employee at any time after the fifth anniversary date of the grant date of the
Option Shares.
2. Except as otherwise set forth in this Agreement, portions
of the Option may be exercised in whole or in part only as set forth below and
in accordance with the Plan provisions and this Section by the Employee
tendering the Exercise Price as provided below (or a proportionate part thereof
if the Option is partially exercised) to the Company, together with a written
notice of intent to exercise in the form attached hereto as Exhibit "A" to the
Company specifying the number of Option Shares the Employee wishes to purchase
pursuant to the Option. All Option Shares may be exercised in whole or in part
beginning at any time and from time to time until the expiration of such
options.
3. The payment of the Exercise Price shall be made either
in:
(i) A Cash Exercise: by cash, bank or cashiers check or
wire transfer; or
(ii) A Cashless Exercise: by surrender of a copy of
this Agreement and Exhibit "A" at the principal office of the Company together
with notice of cashless election, in which event the Company shall issue
Employee a number of shares of Common Stock computed using the following
formula:
3
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to
Employee.
Y = the number of shares of Common Stock for which this Option is
being exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section, the "Market Price" shall be defined as the average
Closing Bid Price of the Common Stock of the Company for the five (5)
trading days prior to the Date of Exercise of this Option (the
"Average Closing Price"), as reported by the O.T.C. Bulletin Board,
National Association of Securities Dealers Automated Quotation System
("Nasdaq") Small Cap Market, or if the Common Stock is not traded on
the Nasdaq Small Cap Market, the Average Closing Price in any other
over-the-counter market; provided, however, that if the Common Stock
is listed on a stock exchange, the Market Price shall be the Average
Closing Price on such exchange for the five (5) trading days prior to
the date of exercise of the Option. If the Common Stock is/was not
traded during the five (5) trading days prior to the Date of Exercise,
then the closing price for the last publicly traded day shall be
deemed to be the closing price for any and all (if applicable) days
during such five (5) trading day period.
B = the Exercise Price.
For purposes hereof, the term "Closing Bid Price" shall mean the
closing bid price on the O.T.C. Bulletin Board, the National Market
System ("NMS"), the New York Stock Exchange, the Nasdaq Small Cap
Market, or if no longer traded on the O.T.C. Bulletin Board, the NMS,
the New York Stock Exchange, the Nasdaq Small Cap Market, the "Closing
Bid Price" shall equal the closing price on the principal national
securities exchange or the over-the-counter system on which the Common
Stock is so traded and, if not available, the mean of the high and low
prices on the principal national securities exchange on which the
Common Stock is so traded.
(c) Share Certificates. Upon receipt of the Exercise Price (or
------------------
the requisite portion thereof), the Company shall cause one or more stock
certificates evidencing the Employee's ownership of the Option Shares so
purchased by the Employee to be issued to the Employee subject, however, to the
Plan Provisions.
3.4 Benefits. Employee shall be entitled, during the Term hereof, to
the same medical, hospital, pension, profit sharing, dental and life insurance
coverage and benefits as are available to the Company's most senior executive
officers on the Commencement Date together with the following additional
benefits:
4
(a) The Company's normal vacation allowance for all employees who are executive
officers of the Company, but not less than four (4) weeks annually, with
the option to carry over unused vacation days. Employee shall have the
option to be paid for unused vacation days, either at the end of each year
hereunder or at the end of the Term hereof.
(b) The Employee will be entitled to participate in any benefit plan or program
of the Employer which may currently be in place or implemented in the
future.
(c) During the Term, Employee will be entitled to receive, in addition to and
not in lieu of base salary, bonus or other compensation, such as other
benefits as Employer may provide for its officers in the future.
3.5 Withholding. Any and all amounts payable under this Agreement,
including, without limitation, amounts payable under this Article III and
Article VII, which are subject to withholding for such federal, state and local
taxes as the Company, in its reasonable judgment, determines to be required
pursuant to any applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. Employee shall be furnished with
an office at the principal executive offices of the Company, or at such other
location as agreed to by Employee and the Company, and other working facilities
and secretarial and other assistance suitable to his position and reasonably
required for the performance of his duties hereunder. The Company shall
reimburse Employee for all of Employee's reasonable expenses incurred while
employed and performing his duties under and in accordance with the terms and
conditions of this Agreement, subject to Employee's full and appropriate
documentation, including, without limitation, receipts for all such expenses in
the manner required pursuant to Company's policies and procedures and the
Internal Revenue Code of 1986, as amended (the "Code") and applicable
regulations as are in effect from time to time.
4.2 Insurance. The Company may secure in its own name or otherwise,
and at its own expense, life, disability and other insurance covering Employee
or Employee and others, and Employee shall not have any right, title or interest
in or to such insurance other than as expressly provided herein. Employee agrees
to assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
ARTICLE V
5
Illness or Incapacity
5.1 Right to Terminate. If, during the Term of this Agreement,
Employee shall be unable to perform in all material respects his duties
hereunder for a period exceeding six (6) consecutive months by reason of illness
or incapacity, this Agreement may be terminated by the Company in its reasonable
discretion pursuant to Section 7.2 hereof.
5.2 Right to Replace. If Employee's illness or incapacity, whether by
physical or mental cause, renders him unable for a minimum period of sixty (60)
consecutive calendar days to carry out his duties and responsibilities as set
forth herein, the Company shall have the right to designate a person to replace
Employee temporarily in the capacity described in Article I hereof; provided,
however, that if Employee returns to work from such illness or incapacity within
the six (6) month period following his inability due to such illness or
incapacity, he shall be entitled to be reinstated in the capacity described in
Article I hereof with all rights, duties and privileges attendant thereto.
5.3 Rights Prior to Termination. Employee shall be entitled to his
full remuneration and benefits hereunder during such illness or incapacity
unless and until an election is made by the Company to terminate this Agreement
in accordance with the provisions of this Article.
5.4 Determination of Illness or Incapacity. For purposes of this
Article V, the term "illness or incapacity" shall mean Employee's inability to
perform his duties hereunder substantially on a full-time basis due to physical
or mental illness as determined by a physician selected by the Company and the
Employee.
ARTICLE VI
Confidentiality
6.1 Confidentiality. During the Term of this Agreement and thereafter,
Employee shall not divulge, communicate, use to the detriment of the Company, or
for the benefit of any other business, firm, person, partnership or corporation,
or otherwise misuse, any "Confidential Information", pertaining to the Company
including, without limitation, all (i) data or trade secrets, including secret
processes, formulas or other technical data; (ii) production methods; (iii)
customer lists; (iv) personnel lists; (v) proprietary information; (vi)
financial or corporate records; (vii) operational, sales, promotional and
marketing methods and techniques; (viii) development ideas, acquisition
strategies and plans; (ix) financial information and records; (x) "know-how" and
methods of doing business; and (xi) computer programs, including source codes
and/or object codes and other proprietary, competition-sensitive or technical
information or secrets developed with or without the help of Employee. Employee
acknowledges that any such information or data he may have acquired was received
in confidence and by reason of his relationship to the Company. Confidential
Information, data or trade secrets shall not include any information which: (a)
at the time of disclosure is within the public domain; (b) after disclosure
becomes a part of the public domain or generally known within the industry
through no fault, act or failure to act, error, effort or breach of this
Agreement by Employee; (c) is known to the recipient at the time of disclosure;
(d) is subsequently discovered by Employee independently of any disclosure
6
by the Company; (e) is required by order, statute or regulation, of any
governmental authority to be disclosed to any federal or state agency, court or
other body; or (f) is obtained from a third party who has acquired a legal right
to possess and disclose such information.
6.2 Records. All documents, papers, materials, notes, books,
correspondence, drawings and other written and graphic records relating to the
Business of the Company which Employee shall prepare or use, or come into
contact with, shall be and remain the sole property of the Company and,
effective immediately upon the termination of the Employee's employment with the
Company for any reason, shall not be removed from the Company's premises without
the Company's prior written consent and any such documents, papers, materials,
notes, books, correspondence, drawings and other written and graphic records
upon request shall be returned to the Company.
ARTICLE VII
Termination
7.1 Termination For Cause. This Agreement and the employment of
Employee may be terminated by the Company "For Cause" under any one of the
following circumstances:
(a) Employee has committed any material act of fraud, misappropriation
or theft against the Company.
(b) Employee's default breach of any material provision of this
Agreement; provided, that Employee shall not be in default hereunder unless
(i) he shall have failed to cure such default or breach within thirty (30)
days of written notice thereof by the Company to Employee or (ii) Employee
shall have duly received notice of at least three (3) prior instances of
such breach or default (whether or not cured by Employee).
(c) Employee engages in willful misconduct in the performance of his
duties hereunder; provided, that Employee shall not be in default hereunder
unless (i) he shall have failed to cure such default or breach within
fifteen (15) days of written notice thereof by the Company to Employee, or
(ii) Employee shall have duly received notice of at least three (3) prior
instances of such breach or default (whether or not cured by Employee).
(d) At the election of the Employee.
A termination For Cause under this Section 7.1 shall be effective upon
the date set forth in a written notice of termination delivered to Employee.
7.2 Termination Without Cause. This Agreement and the employment of
the Employee may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto.
7
(b) At the election of the Company by its giving not less than sixty
(60) days prior written notice to Employee in the event of an illness or
incapacity described in Article 5.1.
(c) Upon the removal of Employee from the office of President of the
Company or in the event the Company fails to afford Employee the power and
authority generally commensurate with the position of President.
(d) Upon Employee's death.
A termination Without Cause under Section 7.2(b) hereof shall be
effective upon the date set forth in a written notice of termination delivered
in accordance with the notice provisions of such sections. A termination Without
Cause under Sections 7.2(a) or (d) shall be automatically effective upon the
date of mutual agreement or the date of death of the Employee, as the case may
be. A termination Without Cause under Section 7.2(c) shall be automatically
effective upon the date such event takes place.
7.3 Effect of Termination For Cause. If Employee's employment is
terminated "For Cause":
(a) Employee shall be entitled to accrued base salary under Section
3.1 hereof through the date of termination.
(d) Employee shall be entitled to accrued bonuses under Section 3.2
hereof through the date of termination.
(e) Employee shall be entitled to reimbursement for expenses accrued
through the date of termination in accordance with the provisions of
Section 4.1 hereof.
(e) All unvested Option Shares granted to Employee shall be forfeited.
(f) Except as provided in Article XI, this Agreement shall thereupon
terminate and cease to be of any further force or effect.
7.4 Effect of Termination Without Cause. If Employee's employment is
terminated "Without Cause":
(a) Employee shall be entitled to the greater of (i) an amount equal
to the annual base salary for the remainder of the term, or (ii) one year's
base salary.
(b) Employee shall be entitled to reimbursement for expenses accrued
through the date of termination in accordance with the provisions of
Section 4.1 hereof.
(c) Employee shall be entitled to receive all amounts of additional
bonuses under Section 3.2 hereof through the expiration of the Term hereof,
which amounts shall be paid upon termination.
8
(d) Employee shall be entitled to receive all benefits as would have
been awarded under Section 3.7 hereof through the expiration of the Term
hereof, which benefits shall be awarded as and when the same would have
been awarded under the Agreement had it not been terminated.
(e) All unvested Option Shares granted to Employee shall immediately
vest in full.
(f) Except as provided in Article XI, this Agreement shall thereupon
terminate and cease to be of any further force or effect.
ARTICLE VIII
Non-Competition and Non-Interference
8.1 Non-Competition. Employee agrees that during the Term of this
Agreement and, in the case of a termination "Not For Cause", for a period of one
(1) year thereafter, (and in the case of a termination "For Cause", for a period
of Two (2) years thereafter Employee will not, directly, indirectly, or as an
agent on behalf of or in conjunction with any person, firm, partnership,
corporation or other entity, own, manage, control, join, or participate in the
ownership, management, operation, or control of, or be financially interested in
or advise, lend money to, or be employed by or provide consulting services to,
or be connected in any manner with any person engaged in Business within a 60
mile radius of any area within the United States of America which the Company is
engaging in its Business or has immediate plans to engage in its Business.
8.2 Non-Interference. Employee agrees that during the Term of this
Agreement and, in the case of a termination "Not For Cause", for a period of one
(1) year thereafter (and in the case of a termination "For Cause", for a period
of two (2) years thereafter), Employee will not, directly, indirectly or as an
agent on behalf of or in conjunction with any person, firm, partnership,
corporation or other entity, induce or entice any employee of the Company to
leave such employment or cause anyone else to do so.
8.3 Severability. If any covenant or provision contained in Article
VIII is determined to be void or unenforceable in whole or in part, it shall not
be deemed to affect or impair the validity of any other covenant or provision.
If, in any arbitral or judicial proceeding, a tribunal shall refuse to enforce
all of the separate covenants deemed included in this Article VIII, then such
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purpose of such proceedings to the extent necessary to permit the
remaining separate covenants to be enforced in such proceedings.
ARTICLE IX
Indemnification
9
9.2. Indemnification. The Employer shall to the full extent permitted
by law indemnify, defend and hold harmless Employee from and against any and all
claims, demands, liabilities, damages, losses and expenses (including reasonable
attorney's fees, court costs and disbursements) arising out of the performance
by him of his duties hereunder except in the case of his willful misconduct and
will carry directors and officers' insurance of $10,000,000 with $250,000
deductible.
ARTICLE X
Board of Directors
10.1 Election to Board. As a condition to Employee's obligations
hereunder, he will be elected to the Company's Board of Directors. The Company
will cause the Employee to be nominated to serve in such capacities.
ARTICLE XI
Miscellaneous
11.1 No Waivers. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
11.2 Notices. Any notice to be given to the Company and Employee under
the terms of this Agreement may be delivered personally, by telecopy, telex or
other form of written electronic transmission, or by registered or certified
mail, postage prepaid, and shall be addressed as follows:
If to the Company: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Employee: ▇▇▇ ▇▇▇▇▇, M.D.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
11.3 Severability. The provisions of this Agreement are severable and
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
10
11.4 Successors and Assigns. The rights and obligations of the Company
under this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, including the survivor upon any merger,
consolidation, share exchange or combination of the Company with any other
entity. Employee shall not have the right to assign, delegate or otherwise
transfer any duty or obligation to be performed by him hereunder to any person
or entity.
11.5 Entire Agreement. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom such modification, termination or waiver is sought to be
enforced. This Agreement was the subject of negotiation by the parties hereto
and their counsel. The parties agree that no prior drafts of this Agreement
shall be admissible as evidence (whether in any arbitration or court of law) in
any proceeding which involves the interpretation of any provisions of this
Agreement.
11.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida without reference
to the conflict of law principles thereof.
11.7 Section Headings. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
11.8 Further Assurances. Each party hereto shall cooperate and shall
take such further action and shall execute and deliver such further documents as
may be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement.
11.9 Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "he" or "his" or "it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be read and construed as though in the singular in all
cases where they would so apply.
11.10 Counterparts. This Agreement may be executed in counterparts,
all of which taken together shall be deemed one original.
ARTICLE XII
Survival
12.1 Survival. The provisions of Articles VI, VII, VIII, and X, of
this Agreement shall survive the termination of this Agreement.
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PainCare, Inc.,
a Nevada Corporation,
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: CEO
---
EMPLOYEE
/s/ ▇▇▇ ▇▇▇▇▇, M.D.
----------------------------------------
▇▇▇ ▇▇▇▇▇, M.D.
12