Exhibit 10.3


 


FORM OF EMPLOYMENT AGREEMENT


 


 


This Employment Agreement (this “Agreement”)
is made and entered into this 20th day of August, 2004 by and among US
Oncology, Inc., a Delaware corporation (together with its present and future
subsidiaries, hereinafter referred to as the “Company”), US Oncology
Holdings, Inc., a Delaware corporation (“Parent”), and [           ] (hereinafter referred to as the “Employee”).  In consideration of the mutual terms,
conditions and covenants hereinafter set forth, the Company and the Employee
agree to the following:


 


1.             Term
and Renewal; Effectiveness.


 


Except as otherwise provided herein, the
Company hereby agrees to employ the Employee, and the Employee hereby agrees to
remain in the employ of the Company, for a three (3) year period commencing at
the Effective Time (the “Effective Time”), as such term is described in
that certain Agreement and Plan of Merger dated as of March 20, 2004 made
and entered into by and among  the
Company, Parent and US Oncology, Inc. (the “Merger Agreement”).  Provided that this Agreement has not already
been terminated, this Agreement shall automatically renew for successive
one-year terms, unless at least thirty (30) days prior to the expiration of the
initial or any renewal term the Company provides to the Employee written notice
that the Company is not renewing this Agreement.  This Agreement shall become effective as of the Effective
Time.  In the event that the Merger
Agreement is terminated, this Agreement shall terminate and be null and void ab initio.


 


2.             Position
and Duties.


 


The Employee,
at the discretion of the Company’s Board of Directors (the “Board”),
Chief Executive Officer of the Company or his designee, in accordance with the
Company’s policies, shall perform such duties and services as assigned.  The reporting relationship of the Employee
may from time to time be determined by the Board, Chief Executive Officer or
his designee and shall not be construed as a loss of responsibility or a change
of control.  The Employee shall not have
the authority to enter into any contracts, agreements, undertakings or other
arrangements on behalf of the Company except to the extent that he is
authorized to do so by the Board, Chief Executive Officer or his designee.


 


The Employee shall, at all times, devote his
full time and attention to the business and affairs of the Company, and shall
use his best efforts to perform faithfully and efficiently such
responsibilities.  The foregoing shall
not be construed as preventing the Employee from making passive investments in
other businesses or enterprises, provided, however, that:


 


(i)            Such
investments would not require services on the part of the Employee which would
in any way impair the performance of his duties under this Agreement;


 


(ii)           Such
investments are not in violation of any provision of Section 5 or Section 6
of this Agreement; and


 






















 


(iii)          Such
investments are not in violation of Company policies in effect from time to
time.


 


The Employee shall not be required by the
Company to relocate out of the Greater Houston metropolitan area.  Routine visits to the Company’s locations
and other business travel in the ordinary course of the Company’s business
shall not constitute relocation.


 


3.             Compensation
and Benefits.


 


The Company shall provide the following
compensation to the Employee for his services under this Agreement:


 


(a)           Base
Salary.  The Company shall pay the
Employee a base salary at an annual rate of $[             ] (including any greater amount as a result of future
increases provided for herein, the “Base Salary”).  The Base Salary shall be payable in equal
semi-monthly installments on the fifteenth and final days of each month during
the term of this Agreement or pursuant to the standard payroll cycle of the
Company in effect during this Agreement. 
The Base Salary may not be decreased, but may be reviewed and increased
by the Board or the compensation committee thereof, as circumstances dictate
and in the sole discretion of the Board or the compensation committee thereof.


 


(b)           Annual
Bonus.  The Employee shall be
eligible for a bonus as determined by the Board or the compensation committee
thereof.


 


(c)           Expense
Reimbursement.  The Company shall
reimburse the Employee for all business-related expenses incurred by the
Employee in conducting authorized business activities on behalf of the Company;
provided, however, that the Employee shall provide reasonably suitable receipts
and other records of the expenses to be reimbursed.


 


(d)           Welfare
Benefit Plans.  In accordance with,
and subject to, the terms of the applicable plan documents, the Employee shall
be eligible to participate in all welfare benefit plans of the Company as may
be in effect from time to time.  The
foregoing shall not, in any respect, require the Company to implement, continue
or amend any plan.


 


(e)           Vacation
Holidays.  The Employee shall be
eligible for annual paid vacation, sick leave and holidays as the Company may,
in its discretion, provide for the employees of the Company under the Company’s
policies and programs, it being agreed that the foregoing shall not in any
respect require the Company to continue or put into effect any plan, practice,
policy or program.  The Employee shall
have no right to receive pay in lieu of vacation, sick leave or holidays, and
upon termination of the Employee’s employment pursuant to this Agreement, all
unused vacation, sick leave or holidays shall be lost without any compensation
to the Employee.


 


(f)            Equity
Incentives.  Parent has adopted and
its stockholders have approved Parent’s 2004 Equity Incentive Plan (the “2004
Equity Plan”).  Immediately after
the Effective Time, Parent shall award the Employee [               ] shares of Restricted Stock pursuant to the 2004
Equity Plan.  The award of Restricted
Stock shall be in the form attached to this Agreement.  The term “Restricted Stock” shall
have the meaning given to it in the 2004 Equity


 


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Plan.  The Employee agrees to make an election under Section 83(b)
of the Internal Revenue Code of 1986, as amended (the “Code”), with
respect to the shares of Restricted Stock to be awarded to the Employee.  Unless otherwise mutually agreed, Parent and
the Employee agree that the value of the Restricted Stock (determined without
regard to any lapse restriction, as defined in Treasury Regulations
Section 1.83-3(i)) immediately after the Effective Time shall equal
$[      ] per share of Restricted Stock.


 


(g)           Long-Term
Cash Incentive.  Parent has adopted
and the stockholders have approved Parent’s 2004 Long-Term Cash Incentive Plan
(the “2004 Cash Plan”). 
Immediately after the Effective Time, Parent shall award the Employee
[          ] Units in the 2004 Cash
Plan.  The award of the Units shall be
in the form attached to this Agreement. 
The term “Units” shall have the meaning given to it in the 2004
Cash Plan.


 


(h)           Withholding.  All compensation paid pursuant to this
Agreement shall be subject to any and all applicable payroll and withholding
deductions required by the law of any jurisdiction, with taxing authority with
respect thereto.


 


4.             Termination.


 


(a)           Termination
Events.  This Agreement, and the
employment relationship between the Employee and the Company, shall terminate
upon the occurrence of any of the following:


 


(i)            the
death of the Employee;


 


(ii)           the
disability of the Employee, whether due to illness, injury, accident or other
condition of either a physical or psychological nature, which creates an
impairment (despite reasonable accommodation) that renders the Employee
mentally or physically incapable of performing the essential duties and
services required of the Employee hereunder for a period of at least 180 days
during any period of 365 days;


 


(iii)          the
Company provides the Employee with written notice that the Company is
terminating his employment other than for Cause (as defined below);


 


(iv)          the
expiration of the sixtieth (60th) day after the Employee provides
the Company with written notice that he is terminating his employment other
than for Good Reason (as defined below);


 


(v)           the
expiration of the stated term of this Agreement, as it may from time to time be
extended;


 


(vi)          the
Company’s written notice to the Employee of the Company’s termination of
Employee’s employment for Cause.  “Cause”
shall mean a written determination by the Board of the occurrence of any of the
following events:


 


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(A)          the
conviction of the Employee, whether or not appeal be taken, of any misdemeanor
or felony crime involving personal dishonesty, moral turpitude or willfully
violent conduct;


 


(B)           the
embezzlement or wrongful diversion of funds of the Company or any affiliate of
the Company, or other material dishonesty involving the Company or any
affiliate of the Company;


 


(C)           gross
business misconduct by the Employee;


 


(D)          gross
malfeasance by the Employee in the conduct of his duties;


 


(E)           breach
of Section 5 or Section 6 of this Agreement, provided
the Company has given the Employee written notice thereof and the Employee has
not ceased any continuing breach and cured, to the extent practicable, any such
breach within 5 days following receipt of the Company’s notice; or


 


(F)           any
other breach of this Agreement, provided the Company has given the Employee
written notice thereof and the Employee has not ceased any continuing breach
and cured, to the extent practicable, any such breach within 30 days following
receipt of the Company’s notice; or


 


(vii)         the
Employee’s written notice to the Company of the Employee’s termination of his
employment for Good Reason.  “Good
Reason” shall mean (i) the Company’s breach of any provision of this
Agreement, provided the Employee has given the Company written notice of such
breach and the Company has not ceased any continuing breach and cured, to the
extent practicable, any such breach within 30 days following receipt of the
Employee’s written notice of such breach, and (ii) at any time subsequent to a
Change of Control, the Company assigns to the Employee any duties materially
inconsistent with the Employee’s positions, duties, responsibilities and status
with the Company immediately prior to such Change of Control or the Company
changes the Employee’s reporting responsibilities, titles or offices as in
effect immediately prior to such Change of Control.  “Change of Control” has the meaning given to such term in
the 2004 Equity Incentive Plan.


 


(b)           Effect
of Termination; Termination Pay and Benefits.


 


(i)            If
this Agreement is terminated under Section 4(a)(i), Section 4(a)(ii),
Section 4(a)(iii), Section 4(a)(v) or Section 4(a)(vii):


 


(A)          in
addition to any termination pay, the Company shall pay to the Employee any
accrued and unpaid Base Salary through the date of termination of employment,
any earned but unpaid bonus, and a prorated bonus for the period beginning
immediately after the end


 


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of the last period for which the Employee has earned a bonus and ending
with the date of termination of his employment, basing such prorated bonus on
the bonus earned by the Employee for the full year prior to the year in which
the termination occurs; and


 


(B)           as
termination pay, the Company shall pay the Employee the Base Salary in effect
for the year in which the termination occurs, plus the bonus earned by the
Employee for the full year prior to the year in which the termination occurs,
for the longer of (i) twelve (12) months after the termination occurs or (ii)
the remaining term of this Agreement. 
The bonus shall be prorated for any period of less than one year.  Termination pay shall be payable to the
Employee in equal semi-monthly installments on the fifteenth and final days of
each month or pursuant to the standard payroll cycle of the Company; and


 


(C)           if
Employee is fifty (50) or more years of age at the time his employment
terminates and Employee has worked for the Company for five (5) or more years
prior to his termination, then the Employee and eligible dependents at the time
of the termination shall be permitted, in addition to any other benefits, to
participate in the Company’s group health plans at the Employee’s expense in an
amount not to exceed the applicable group rate payable by the Company or its
employees (“Group Rate”), until the Employee is eligible for Medicare;
provided, however, that if the Company ceases to maintain in effect any group
medical plan during the coverage period or if the Employee no longer qualifies
as a participant in the Company’s group medical plan the Company will make
available to the Employee an equivalent individual policy of comparable
coverage, the premiums of which shall be payable by the Employee in an amount
up to the Group Rate in effect at the time the Company ceases to maintain any
group medical plan or the Employee no longer qualifies as a participant in the
Company’s group medical plan, with the Company paying any premiums in excess of
the Group Rate.


 


(ii)           If
this Agreement is terminated under Section 4(a)(iv) or Section 4(a)(vi),
then the Company shall pay to the Employee any accrued and unpaid Base Salary
through the date of termination of employment and any earned but unpaid
bonus.  The Employee shall not be
entitled to any termination pay or other additional compensation.


 


(c)           Survival
of Provisions Following Termination. 
Notwithstanding any termination of this Agreement, Sections 3 through
10 of this Agreement, and the rights and obligations created therein, shall
survive without limitation.


 


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5.             Confidentiality.


 


(a)           Confidential
and Proprietary Information.  The
Company’s business profitability and good will are directly dependent upon the
confidential development, implementation and use of various marketing and
purchasing strategies, management and operating techniques, designs and systems
and other matters of a similar proprietary nature. Such activities necessarily
include, without limitation, reviewing financial data, presentation or sales
materials, materials regarding the Company’s affiliated physician groups,
materials regarding the Company’s products and lists or other compilations of
information concerning aspects of the Company’s business and existing and
prospective clients, and the business, operations and affairs of the Company’s
existing and prospective clients  All
such information is proprietary in nature, and the Company strives to keep such
information confidential (hereinafter collectively referred to as the Company’s
“Confidential and Proprietary Information”).


 


To enhance the Employee’s work performance
and abilities, the Company is providing Employee Confidential and Proprietary
Information contemporaneous with the execution of this Agreement and agrees to
continue to provide the Employee with access to, and the right to use, its
Confidential and Proprietary Information during the term of this Agreement.  The Employee acknowledges that such
information is, and must be treated as, confidential.  The Employee further acknowledges that access to, and knowledge
of, the Company’s Confidential and Proprietary Information will give him a
competitive advantage in any future endeavors.


 


(b)           Confidentiality
Maintained.  The Employee is or will
be employed in a position which is directly involved in the development and
conduct of the Company’s business, and in such capacity the Employee will be
provided access to and will gain knowledge of the Company’s Confidential and
Proprietary Information. The Employee shall both during and after his
employment by the Company preserve, protect and hold in strictest confidence
the Company’s Confidential and Proprietary Information.  The Employee will at all times, during and
after the term of this Agreement, strictly observe and comply with the terms of
any confidentiality or similar agreements between the Company and its clients.


 


(c)           No
Use of Information.  The Employee
shall not, either during or after his employment with the Company, use for
himself or disclose to or use for any other persons, directly or indirectly,
any of the Company’s Confidential and Proprietary Information, except in
carrying out his duties and responsibilities as a director, officer or employee
of the Company or as such disclosure or use is expressly authorized by the
Company in writing.


 


(d)           Non-Removal
of Records.  All Confidential and
Proprietary Information and all files, reports, computer discs, tapes, cards or
other computer records, materials, designs, records, documents, notes,
memoranda, specifications, equipment and other items, and any originals or
copies thereof, relating to the business of the Company which the Employee
either provided, prepares himself, uses, or otherwise acquires during his
employment with the Company, are and shall remain the sole and exclusive
property of the Company, and no such items (to the extent they exist or are
recorded in any tangible form) shall be removed from the Company’s premises
without the prior consent of the Company or in accordance with the Company’s
policies, and all such items shall be immediately returned to the Company upon
termination of the Employee’s employment with the Company.


 


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(e)           Exceptions.


 


(i)            The
restrictions contained in this Section 5 shall not apply to any
information that is or becomes generally available to and known by the public
(other than as a result of unpermitted disclosure directly or indirectly by the
Employee or his affiliates, advisors or representatives).


 


(ii)           It
shall not be a breach or violation of the Employee’s covenants under Section 5
if a disclosure is made pursuant to a court order, a valid administrative
subpoena or a lawful request for information 
by an administrative or regulatory agency. The Employee shall give the
Company prompt notice of any such court order, subpoena or request for
information.


 


6.             Non-Competition
and Non-Solicitation.


 


(a)           Consideration
Acknowledged.  The Employee
acknowledges that his employment with the Company has been, and will continue
to be, special, unique and of an extraordinary character and that, in
connection with such employment, he has acquired, acquires, and will continue
to acquire, special skills and training. 
The Employee further acknowledges that the covenants contained in this Section 6
are an essential part of his engagement by the Company and that, but for his
agreement to comply with such covenants, the Company would not have entered
into this Agreement.  Finally, the
Employee acknowledges that in consideration of the Company’s agreement to
provide him the Confidential and Proprietary Information contemporaneous with
the execution of this Agreement and during the term of this Agreement and to allow
Employee to use such Confidential and Proprietary Information in accordance
with the terms of this Agreement, Employee agrees to the covenants contained in
this Section 6 and that this Confidential and Proprietary
Information provides him a competitive advantage against the Company.


 


(b)           Employee
Covenants.  The Employee covenants,
and agrees, that he shall not, while employed by the Company and for a period
of one (1) year after the termination of his employment with the Company:


 


(i)            Directly
or indirectly, either as principal, agent, independent contractor, consultant,
director, officer, employee, employer, advisor, stockholder, partner or in any
other individual or representative capacity whatsoever, either for his own
benefit or for the benefit of any other person or entity either (a) hire,
attempt to hire, contact or solicit with respect to hiring any employee of the
Company or (b) induce or otherwise counsel, advise or encourage any employee of
the Company to leave the employment of the Company and with whom the Employee
had contact, directly or indirectly, or about whom the Employee had knowledge;
or


 


(ii)           Directly
or indirectly, either as principal, agent, independent contractor, consultant,
director, officer, employee, employer, advisor, stockholder, partner or in any
other individual or representative capacity whatsoever,


 


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either for his own benefit or for the benefit of any other person or
entity, solicit, divert or take away any existing or prospective customers,
clients, affiliated physician groups or affiliated physicians of the Company
who were such during his employment with the Company; or


 


(iii)          Act
or serve in a capacity similar to the Employee’s position with the Company,
directly or indirectly, as principal, agent, independent contractor,
consultant, director, officer, employee, employer or advisor or in any other
position or capacity with or for, or acquire a direct or indirect ownership
interest in or otherwise conduct (whether as stockholder, partner, investor,
joint venturer or as owner of any other type of interest) any business,
undertaking or entity that conducts a business similar to the Business (as
hereinafter defined) or provides or sells a service which is the same or substantially
similar to, or otherwise competitive with, the services provided by the
Business within the United States of America. 
“Business” shall mean (i) management and administration of the
non-medical aspects of oncology and diagnostic radiology practices, including,
without limitation, oncology pharmaceutical management, cancer research and
development services, and outpatient cancer center development and management,
(ii) operation and management of a clinical research or site management
organization focusing on oncology or diagnostic radiology, (iii) any Internet
or technology based applications focusing on oncology or diagnostic radiology
or (iv) any business or undertaking substantially similar to any of the
foregoing.


 


(c)           Anti-Disparagement.  The Employee shall not, either during or
after the termination of the Employee’s employment with the Company, make any
public or private remark or comments that are intended to be, or could
reasonably be construed as, disparaging of Parent or the Company, or their
respective directors, officers, products, business, or services.  Likewise, Parent and the Company shall not,
either during or after the termination of the Employee’s employment with the
Company, make any public or private remark or comments that are intended to be,
or could reasonably be construed as, disparaging of the Employee.


 


(d)           Limitation
on Scope.  Should any portion of
this Section 6 be deemed unenforceable because of the scope,
duration or territory encompassed by the undertakings of the Employee
hereunder, and only in such event, then the parties consent and agree to such
limitation of scope, duration or territory as may be finally adjudicated as
enforceable by a court of competent jurisdiction after the exhaustion of all
appeals.


 


7.             Remedies
and Dispute Resolution.


 


With respect to each and every breach or
violation or threatened breach or violation by the Employee of Section 5
or Section 6 of this Agreement, the Company may in addition to all
other remedies available to it, file a lawsuit or otherwise apply to any court
of competent jurisdiction for entry of an immediate order enjoining or
restraining the Employee from engaging in any such breach of violation or
threatened breach or violation by the Employee.


 


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With the exception of the Company’s right to
seek injunctive relief in a judicial forum for any breach or violation or
threatened breach or violation by the Employee of Section 5 or Section 6
of this Agreement, all disputes between the Employee and the Company that arise
out of concern, or are based, in whole or in part, upon any provision of this
Agreement shall be resolved through binding arbitration conducted under the
Employment Arbitration Procedures of the American Arbitration Association.  The parties shall bear their own costs in
any such arbitration proceeding; provided, however, that the Company shall
reimburse the Employee for the Employee’s legal costs, including attorneys’
fees, incurred in such arbitration proceeding if the Employee substantially
prevails in such arbitration proceeding.


 


8.             Severability.


 


The provisions of this Agreement are
severable, and any judicial determination that one or more of such provisions,
or any portion thereof, is invalid or unenforceable shall not affect the
validity or enforceability of any other provisions, or portion thereof, but
rather shall cause this Agreement to first be construed in all respects as if
such invalid or unenforceable provisions, or portions thereof, were modified to
terms which are valid and enforceable and provide the greatest protection to
the Company’s business and interests; provided, however, that if necessary to
render this Agreement enforceable, it shall be construed as if such invalid or
unenforceable provisions, or portions thereof, were omitted.


 


9.             No
Assignment.


 


(a)           Employee.  This Agreement is personal and without the
prior written consent of the Company shall not be assignable by the Employee.


 


(b)           Company
and Parent.  This Agreement is
personal and without the prior written consent of the Employee shall not be
assignable by the Company or Parent.


 


10.          Miscellaneous.


 


(a)           Governing
Law; Captions; Amendment.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, without reference to principles of conflict of laws.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.


 


(b)           Notices.  All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to a party or
by registered or certified mail, return receipt requested, postage prepaid, to
a party at the following address:


 


If to the Employee:


 


16825 Northchase Drive, Suite 1300


Houston, Texas 77060


 


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If to the Company or Parent:


 


16825 Northchase Drive, Suite 1300


Houston, Texas 77060


Attn: 
Chief Executive Officer


 


or to such other address as any party shall have furnished to the other
in writing in accordance herewith. 
Notice and communications shall be effective when actually delivered to
the addressee or when delivered to the address specified in accordance with the
terms of this Agreement.


 


(c)           Entire
Agreement.  This Agreement contains
the entire understanding of the Company, Parent and the Employee with respect
to the subject matter hereof and supersedes and completely replaces any earlier
agreement, written or oral, with regard thereto, including that certain
Employment Agreement dated [                     ] by and between US Oncology, Inc. (the “Previous
Employment Agreement”). 
Notwithstanding the preceding sentence, this Agreement incorporates and
supplements [Sections 5 and 6]  of the Previous Employment Agreement; provided,
however, to the extent this Agreement contradicts or conflicts with these
incorporated provisions, this Agreement will control.


 


(d)           Delinquent
Payments.  Any payment required to
be paid by the Company under this Agreement which is not paid within five days
of receipt by the Company of the Employee’s demand therefor shall thereafter be
deemed delinquent, and the Company shall pay to the Employee immediately upon
demand interest at the highest nonusurious rate per annum allowed by applicable
law from the date such payment becomes delinquent to the date of payment of
such delinquent sum.


 


[Signature Page Follows]


 


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IN WITNESS WHEREOF, the Employee has hereunto
set his hand and the Company has caused this Agreement to be executed in its
name and on its behalf, all as of the day and year first above written.


 


 


	
   

  	
  US ONCOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  [                   ]

  



 


 


	
   

  	
  US ONCOLOGY HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  [                   ]

  



 


 


	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                   ]

  



 


 


SIGNATURE PAGE TO EMPLOYMENT
AGREEMENT