**4. ****Compensation**. In consideration of the services to be rendered by the Executive,the Company agrees to compensate and to provide benefits to the Executive as follows:     a. Base Salary. As compensation for Executive’s performance of all of hisduties hereunder, Company shall pay to Executive an annual base salary of Three HundredThousand Dollars ($300,000) (“Annual Base Salary”), payable in installments at such times asthe Company shall pay its other senior level executive officers, less required deductionsfor state and federal withholding tax, social security and all other employment taxes andpayroll deductions. The Board of Directors of the Company (the “Board”) shall review theAnnual Base Salary at least annually for merit increases; provided, however, that anyincrease in Executive’s Annual Base Salary shall be at the Board’s sole discretion.     b. Bonus Opportunity. The Board may, in its sole and absolute discretion,award the Executive an annual cash bonus.     c. Benefits. Executive shall be eligible for participation in, and shallreceive all benefits under, the benefit plans, practices, policies and programs provided byCompany to the extent generally applicable to senior level executives of the Company,subject to the terms and conditions of the Company’s benefit plan documents, policies orprograms, as adopted from time to time. The Company reserves the right to change oreliminate the Company’s benefit plans, practices, policies or programs at any time.     d. Vacation. From and after the Effective Date, Executive shall be entitled tofour (4) weeks annual paid vacation per full calendar year worked in accordance with theplans, policies, and programs of the Company as in effect for senior level executives of theCompany. For 2008, vacation entitlement shall be prorated based on days worked in 2008 fromNovember 18, 2008.     e. Expenses. Executive shall be entitled to receive prompt reimbursement inaccordance with the Company’s reimbursement policies for all reasonable, out-of-pocketbusiness expenses incurred in the performance of his duties on behalf of Company (includingmobile telephone usage). To obtain reimbursement, expenses must be submitted promptly withappropriate supporting documentation in accordance with Company’s policies.     **5. ****Termination**. Notwithstanding any other provision of this Agreement, the Agreementand the Executive’s employment hereunder shall be terminated as follows:
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     a. Termination by the Company With Cause.     i. The Company may terminate this Agreement and the Executive’s employment forCause, as defined herein, upon written notice to the Executive setting forth inreasonable detail the facts and circumstances upon which the Board shall havedetermined, following reasonable inquiry, that Cause exists.     ii. As used herein, “Cause” shall mean (i) any willful, material violation ofany law or regulation applicable to the business of the Company or any affiliate ofthe Company; (ii) conviction for, or guilty plea to, a felony or a crime involvingmoral turpitude, or any willful perpetration of a common law fraud; (iii) commissionof any act of personal dishonesty which involves personal profit in connection withthe Company or any affiliate of the Company; (iv) any material breach of anyprovisions of any agreement or understanding between the Company or any affiliate ofthe Company and Executive regarding the terms of Executive’s service as an employee,officer, director or consultant to the Company or any affiliate of the Company,including, without limitation, the willful and continued failure or refusal toperform the material duties required of Executive as an employee, officer, directoror consultant of the Company or any affiliate of the Company (other than as a resultof Disability) or a breach of any applicable creative works assignment andconfidentiality agreement or similar agreement between the Company or any affiliateof the Company and Executive; (v) disregard of the policies of the Company or anyaffiliate of the Company, so as to cause material loss, damage or injury to theproperty, reputation or employees of the Company or any affiliate of the Company; or(vi) the Executive is in breach of the terms of Sections 6, 7 and/or 8 hereof;provided, however, for purposes of subclauses (iv), (v) and (vi), no such action foromission, separately or together, shall constitute an event of “Cause” unless theBoard gives written notice to the Executive specifying the act(s) or omission(s) theBoard believes to be Cause and gives the Executive an opportunity to cure or amendsuch contract to the reasonable satisfaction of the Board.     iii. If the Company terminates the Executive’s employment for Cause, then theExecutive shall be entitled only to the “Accrued Obligations.” For purposes of thisAgreement, the Accrued Obligations shall mean: (i) all accrued but unpaid AnnualBase Salary as of the date of termination; (ii) any unpaid or unreimbursed expensesincurred in accordance with Company policy, including amounts due under Section 4(c)and (e) hereof, to the extent incurred during the Employment Term; (iii) anybenefits provided under the Company’s employee benefit plans upon a termination ofemployment, in accordance with the terms therein, including vested stock options andrights to equity in the Company to the extent provided pursuant to the applicableplan or agreement; and (iv) rights to indemnification by virtue of the Executive’sposition as an officer or director of the Company or its subsidiaries and coverageunder any directors’ and officers’ liability insurance policy maintained by theCompany, in accordance with its terms thereof.
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     b. Termination by the Executive for Good Reason. The Executive may terminatethis Agreement and his employment for Good Reason, as defined herein; upon written notice tothe Board setting forth in reasonable detail the facts and circumstances upon which theExecutive shall have determined that Good Reason exists. For purposes herein, “Good Reason”shall mean the occurrence of any of the following without the Executive’s express, writtenconsent:     i. the assignment to the Executive of any duties or the reduction of theExecutive’s duties, either of which results in a significant diminution in theExecutive’s position or responsibilities with the Company in effect immediatelyprior to such assignment, or the removal of the Executive from such position andresponsibilities;     ii. in the event of a Change in Control (as defined below), the Executive isnot appointed as the Chief Financial Officer of the acquirer, unless the Executiverejects the offer of the position;     iii. a reduction by the Company in the Annual Base Salary of the Executive;     iv. the Company requires the Executive to have a principal office other thanwithin the Austin, Texas greater metropolitan area; or     v. a material breach by the Company of this Agreement, including, withoutlimitation, the failure of the Company to pay any material item of compensationsubstantially when due;provided, however, that for a termination of employment by the Executive to be for GoodReason, the Executive must notify the Company in writing of the event giving rise to GoodReason within sixty (60) days following the occurrence of the event (or if later theExecutive’s knowledge of occurrence of the event), the event must remain uncured after theexpiration of thirty (30) days following the delivery of written notice of such event to theCompany by the Executive, and the Executive must resign effective no later than thirty (30)days following the Company’s failure to cure the event. In the event that the Executive’semployment is terminated by the Executive for Good Reason, the Executive shall be entitledto the same payments and benefits described in Section 5(c).As used in clause (ii) above, “Change in Control” means the occurrence of either of thefollowing events:     (A) the acquisition by any one person, or more than one person acting as agroup (other than any person or more than one person acting as a group who isconsidered to own more than fifty percent (50%) of the total fair market value ortotal voting power of the stock of Company prior to such acquisition), of stock ofCompany, that, together with stock held by such person or group, constitutes morethan fifty percent (50%) of the total fair market value or total voting power of thestock of Company; or
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     (B) within any twelve-month period (beginning on or after the Effective Date)the acquisition by any one person, or more than one person acting as a group, of theassets of Company, that have a total gross fair market value of sixty-five percent(65%) or more of the total gross fair market value of all of the assets of Company,immediately before such acquisition or acquisitions;provided, however, that transfers to the following entities or person(s) shall not be deemedto result in a Change of Control:     (I) an entity as to which the shareholders of Company immediately before thetransfer continue to own, directly or indirectly, immediately after the transfer,more than fifty percent (50%) of the total fair market value or total voting powerof the stock, immediately after the transfer;     (II) an entity, more than fifty percent (50%) of the total fair market value ortotal voting power of the stock of which is owned, directly or indirectly, byCompany; or     (III) any employee benefit plan maintained by or contributed to by Company.For purposes of this definition of Change in Control, persons will be considered to beacting as a group if they are owners of a corporation that enters into a merger,consolidation, purchase or acquisition of stock, or similar business transaction withCompany. Notwithstanding the foregoing, no Change in Control shall be deemed to haveoccurred for purposes of this Agreement by reason of any actions or events in which theExecutive participates in a capacity other than in the Executive’s capacity as an employee.It is intended that this definition of Change in Control be consistent with the definitionof a “change in the ownership of a corporation” or a “change in a substantial portion of theassets of a corporation” within the meaning of Code Section 409A, and this definition shallbe construed consistent with such intent.     c. Termination by the Company Without Cause. The Company may terminate thisAgreement and the Executive’s employment without Cause at any time. In the event that theExecutive’s employment is terminated by the Company without Cause (other than due to theExecutive’s death or Disability), the Executive shall be entitled to:     i. the Accrued Obligations, which shall be paid when such amounts would havebeen paid if the Executive has remained employed following such termination by theCompany without Cause;     ii. an amount equal to twelve (12) months of Annual Base Salary which shall bepaid in accordance with the Company’s payroll practices; provided, however that ifsuch termination of employment occurs within twelve (12) months following a Changein Control, such total amount shall be paid in a single lump sum;
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     iii. effective on the date of the termination of employment, all stock optionsgranted to Executive that are unvested shall become fully vested and exercisable asof the effective date of the Executive’s termination of employment; and     iv. continuation of the health benefits (only under the Company’s or itssuccessor’s medical and dental insurance plans, if any) in accordance with thisparagraph for the lesser of two (2) years or the period that the Executive isentitled to continuation of health coverage under the Consolidated Omnibus BudgetReconciliation Act of 1985 (“COBRA”); provided that the Executive must elect COBRAcoverage to be entitled to this benefit, and provided further that:     (A) if any such plan is fully insured, then the Executive shall berequired to pay as each COBRA premium an amount equal to the allocable shareof the cost of coverage for similarly situated active employees of theCompany under such plan; or     (B) if any such plan is not fully insured, the Executive shall berequired to pay the full COBRA premium and the Company will reimburse theExecutive for a portion of the COBRA premium charged to the Executive thatrepresents the Company’s allocable share of the cost of coverage forsimilarly situated active employees of the Company under such plan;provided, however, that as a condition of receiving the payments and benefits in clauses(ii), (iii), and (iv), the Executive shall execute, date and return to the Company on orwithin twenty-one (21) days after the delivery date (and not timely revoke during anyrevocation period provided therein) a comprehensive release, covenant not to sue, andnon-disparagement agreement from the Executive in favor of the Company, its executives,officers, directors, affiliates, and all related parties, in the form attached hereto asExhibit A; provided, however, that the release will not apply to the payment andbenefits described in clauses (i) through (iv).     d. Termination By Reason of Death or Disability.     i. This Agreement will terminate automatically upon the Executive’s death. TheCompany may terminate Executive’s employment at the expiration of the DisabilityPeriod (as defined below), such termination to be effective upon Executive’s receiptof written notice of such termination.     ii. In the event the Executive’s employment is terminated due to his death orat the expiration of the Disability Period (as defined below), the Company shall notbe obligated to provide the Executive any compensation or benefits (other than theAccrued Obligations) after the effective date of such termination except as requiredby law or regulation.     iii. For purposes of this Agreement, “Disability” shall mean any physical ormental disability or infirmity that prevents the performance of the
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Executive’s duties. Any question as to the existence, extent or potentialityof the Executive’s Disability upon which the Executive and the Company cannot agreeshall be determined by a qualified, independent physician selected by the Companyand approved by the Executive (or the Executive’s duly appointed representative),which approval shall not be unreasonably withheld. The determination of any suchphysician shall be final and conclusive for all purposes of this Agreement.     iv. For purposes of this Agreement, “Disability Period” means a period,beginning on the date the Company determines that the Executive is subject to aDisability and ending on the earlier of the date the Executive begins receivingincome replacement benefits under any long term disability plan or policy maintainedby the Company or the date that is six (6) months after such determination, duringwhich the Executive remains subject to a Disability     e. Effect of Termination. If the Company terminates this Agreement as providedherein, it shall not be obligated to provide the Executive any compensation or benefitsafter the effective date of such termination except as otherwise set forth in this Section 5and as required by law or regulation. The Executive’s entitlement to any amount ofseverance or other post-termination benefits under this Agreement shall be subject to thefollowing conditions:     i. All payments of severance and other post-termination benefits under thisAgreement shall accrue from the date of termination and shall be made or commence nolater than the sixtieth (60th) day following the Executive’s termination ofemployment, with any accrued but unpaid severance or benefits being paid or providedon the date of the first payment; provided, however, that if the Executive is a“specified employee” within the meaning of Code Section 409A, at the date of histermination of employment, then such portion of the payments or benefits underSection 5(b) or 5(c) that would result in a tax under Code Section 409A if paidduring the first six (6) months after termination of employment shall be withheld,starting with the payments latest in time during such six (6) month period, and paidto the Executive during the seventh month following the date of his termination ofemployment; and     ii. For purposes of Sections 5(b) and (c), the Executive will have experienceda termination of employment only if either (i) the Executive has ceased to performany services for the Company and all affiliated companies that, together with theCompany, constitute the “service recipient” within the meaning of Section 409A ofthe Internal Revenue Code of 1986, as amended, and the regulations thereunder(collectively, the “Service Recipient”) or (B) the Service Recipient and theExecutive reasonably anticipate that the level of bona fide services the Executivewill perform for the Service Recipient after a given date (whether as an employee oras an independent contractor) will permanently decrease (excluding a decrease as aresult of military leave, sick leave, or other bona fide leave of absence if theperiod of such leave does not exceed six months, or if longer, so long as theExecutive retains a right to reemployment with the
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Service Recipient under an applicable statute or by contract) to no more thantwenty percent (20%) of the average level of bona fide services performed for theService Recipient (whether as an employee or an independent contractor) over theimmediately preceding 36-month period (or the full period of service if theExecutive has been providing services to the Service Recipient for less than 36months).     f. Employment Status. Executive’s continued employment with the Company issubject to the ongoing review and approval of the Company and its Board in their sole andabsolute discretion. Except as otherwise provided for herein, all terms and conditions ofemployment (such as hours of work, job duties and benefits, etc.) are subject to change bythe Company at any time and for any reason. Similarly, the Company has the same right toterminate the employment relationship at any time and for any reason, or for no reason, withor without Cause. Executive further understands that he is an “at-will” employee of theCompany, and that this “at-will” relationship cannot be modified except by written agreementbetween the Executive and the Company. Nothing in this Section shall be construed to takeaway any rights that the Executive has during the Employment Term pursuant to thisAgreement, including his rights pursuant to Sections 5(b) and 5(c) hereof.     **6. ****Confidentiality**. Concurrently herewith, Executive shall execute the Company’sstandard form Confidentiality and Assignment of Creative Works Agreement (the “ConfidentialityAgreement”), a copy of which is attached hereto as Exhibit B. The ConfidentialityAgreement shall remain in full force and effect in accordance with the terms thereof and shallsurvive the termination of this Agreement.     **7. ****Non-Competition; Non-Solicitation**.     a. The Executive agrees that, during his employment with the Company and for one (1)year following his termination of employment for any reason (the “Applicable Period”), theExecutive will not (except on behalf of or with the prior written consent of the Company,which consent may be withheld in Company’s sole discretion), within the Area (as definedbelow), either directly or indirectly, on his own behalf, or in the service of or on behalfof others, provide managerial services or management consulting services substantiallysimilar to those Executive provides for the Company to any person, firm, corporation, jointventure, or other business that is engaged in the same or a substantially similar businessas the business of the Company, other than the Company or an affiliate of the Company. TheExecutive acknowledges and agrees that the business of the Company is conducted in the Area.For purposes of this Section 7(a), the “Area” means any area within a fifty (50) mileradius of the Company’s principal corporate offices in the State of Tennessee; any areawithin a twenty-five (25) mile radius of any location where the Company or an Affiliateconducting the business of the Company opens a veterinary clinic on or after the EffectiveDate and prior to the termination of the Executive’s employment hereunder; and any areawithin a fifty (50) mile radius of any location where the Company or an Affiliate conductingthe business of the Company
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opens a specialty veterinary hospital on or after the Effective Date and prior to thetermination of the Executive’s employment hereunder.     b. The Executive agrees that during the Applicable Period, he will not, either directlyor indirectly, on his own behalf or in the service of or on behalf of others, solicit anyindividual or entity which is an actual or, to his knowledge, actively sought prospectiveclient of the Company or any of its Affiliates (determined as of date of termination ofemployment) with whom he had material contact during the last two (2) years of theExecutive’s employment with the Company, for the purpose of offering services substantiallysimilar to those offered by the Company.     c. Executive understands and agrees that the Company’s employees and any informationregarding the Company’s employees is confidential and constitutes trade secrets.Accordingly, Executive agrees that during the Applicable Period, Executive will not, eitherdirectly or indirectly, separately or in association with others, interfere with, impair,disrupt or damage the Company’s business by soliciting or attempting to hire or hiring anyof Company’s employees or causing others to solicit or encourage any of the Company’semployees to discontinue their employment with the Company; provided, however, thatExecutive being named as a referral on the resume of a Company employee and Executiveresponding to inquiries resulting therefrom shall not violate this Agreement.     d. Executive agrees that these covenants are reasonable with respect to their duration,geographical area and scope. Executive acknowledges that Executive’s breach of thecovenants contained in this Section would cause irreparable injury to the Company and agreesthat in the event of any such breach, the Company shall be entitled to seek temporary,preliminary and permanent injunctive relief without the necessity of proving actual damagesor posting any bond or other security. Executive also acknowledges that each of thesecovenants survives termination of this Agreement for any reason.     e. In the event that this Section 7 is determined by a court which has jurisdiction tobe unenforceable in part or in whole, the court shall be deemed to have the authority tostrike any unenforceable provision, or any part thereof or to revise any provision to theminimum extent necessary to be enforceable to the maximum extent permitted by law.     **8. ****Executive Representations**. The Executive represents that:     a. Executive is entering into this Agreement voluntarily and that his employmenthereunder and compliance with the terms and conditions hereof will not conflict with orresult in the breach by him of any agreement to which he is a party or by which he may bebound;
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     b. he has not, and in connection with his employment with the Company will not, violateany non-solicitation or other similar covenant or agreement by which he is or may be bound;and     c. in connection with his employment with the Company he will not use any confidentialor proprietary information he may have obtained in connection with employment with any prioremployer.     **9. ****Indemnification of the Executive**. The Company shall indemnify the Executive to theextent provided under the Company’s Articles of Incorporation or By-laws, and any separateindemnification agreement between the Company and the Executive, if any.     **10. ****Taxes**. Notwithstanding anything contained herein to the contrary, all paymentsmade under this Agreement shall be subject to withholding for all applicable taxes, including, butnot limited to, income, employment and social insurance taxes, as shall be required by law. TheCompany and the Executive desire that the benefits and payments described in this Agreement beexempt from, or comply with, the requirements of Code Section 409A. To that end, if the Executivesuggests any amendments to this Agreement that the Executive believes will make certain benefits orpayments under this Agreement exempt from or compliant with Code Section 409A, the Company willuse reasonable efforts to cooperate with the Executive in negotiating and implementing any suchamendments, provided that such amendments do not, in the sole discretion of the Company, have acost to the Company (apart from legal fees associated with negotiating, drafting and submitting anyrequired regulatory filings), or adversely affect the Company in any manner. Notwithstanding theforegoing, the Company makes no guarantee as to any tax consequences relating to this Agreement,and the Company does not represent or warrant that any payments or benefits under this Agreementare exempt from or compliant with Code Section 409A. Further, the Executive shall be responsiblefor his own taxes under this Agreement, including, if and to the extent applicable, taxes underSection 409A and 4999 of the Internal Revenue Code.     **11. ****Governing Law; Arbitration; Expenses**.     a. This Agreement shall be governed and construed in accordance with the laws of theState of Delaware without regard to its principles regarding choice of law. Subject toSection 11(b), the parties hereto consent to venue in the courts of the State of Delaware orin the Federal courts sitting in the State of Delaware with respect to any dispute regardingthe subject matter hereof.     b. In the event of any dispute under the provisions of this Agreement other than adispute pursuant to Section 6 or 7, the parties shall be required to have the dispute,controversy or claim settled by binding arbitration in Austin, Texas in accordance with thecommercial arbitration rules then in effect of the American Arbitration Association, beforeeither one arbitrator jointly agreed to by the parties, or if they cannot agree, a panel ofthree arbitrators, one of whom shall each be selected by the Company and Executive,respectively, and the third of whom shall be selected by the other two arbitrators. Anyaward entered by the arbitrators shall be final, binding and nonappealable and judgment maybe entered thereon by either party in accordance with
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applicable law in any court of competent jurisdiction. This arbitration provision shallbe specifically enforceable. The fees of the American Arbitration Association and thearbitrators shared equally by the parties, subject to Section 11(c) hereof.     c. The party that materially prevails in any dispute litigated or arbitrated pursuantto Section 11(a) or 11(b) hereof shall be entitled to reimbursement for all of such party’sfees and costs (including, without limitation, the fees of the American ArbitrationAssociation and the arbitrators and reasonable attorneys’ fees and expenses) that areincurred during the Employment Term or thereafter during the Executive’s lifetime, and whichshall be reimbursed promptly following submission of proof of the expenses but not laterthan March 15 of the year following the year in which the judgment on arbitration awardbecomes final.         **Executive must initial here: ________     Company representative must initial here: ________**     **12. ****Miscellaneous**.     a. Notices. All notices, requests, demands and other communications which arerequired or permitted hereunder shall be in writing and shall be deemed to have been dulygiven (i) when delivered personally, (ii) one (1) business day after being deposited with areputable, nationally known overnight delivery service for service the next business day, or(iii) upon receipt after having been mailed by registered or certified mail, postage prepaidand return receipt requested; in each case addressed to the relevant address below or tosuch address as either party may hereafter designate by written notice to the other party inaccordance herewith.   If to the Executive: Mr. Harry L. Zimmerman