Document:

Exhibit 10.3

	 

		 

	 	 
	 	                March 3, 2006

	 
	
Mr. Matthew Simoncini

[home address]

Dear Matt:

                Lear Corporation (the “Company”) considers it essential to its best interest and the best
interests of its stockholders to foster the continued employment of key management personnel.

                The Board of Directors of the Company (the “Board”) has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and dedication of members of the
Company’s management, including yourself, to their assigned duties. The Board recognizes that,
as is the case with many publicly-held companies, the possibility of a Change in Control (as that
term is hereafter defined) exists. The Company wishes to assure itself of both present and future
continuity of management in the event of any Change in Control. In order to induce you to remain
in the employ of the Company, and in consideration of your agreement to the termination of any existing
employment contract you may have with the Company or any predecessor, the Company agrees that you
shall receive, upon the terms and conditions set forth herein, the compensation and benefits set
forth in this letter agreement (“Agreement”) during the Term hereof.

                1.             Term of Agreement.  This Agreement shall commence as of February 24, 2006 (“Effective Date”). The initial
term of this Agreement shall be two (2) years from the Effective Date. The term of this Agreement
shall at all times be two (2) years, that is, the term of this Agreement shall be automatically extended
each day for an additional day such that this Agreement shall continually have an unexpired term
of two (2) years, until the date two (2) years after written notice is provided by either the Company
or the Executive that this Agreement is not to be further extended (a “Notice of Non-Renewal”),
the date set forth in a Notice of Termination provided pursuant to Section 4, the date of the Executive’s
death, or the date the Executive reaches his or her normal retirement date under the Lear Corporation
Pension Plan or its successor, whichever shall first occur (the initial term as so extended is referred
to herein as the “Term”).

	

	
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                2.             Terms of Employment.  During the Term, you agree to be a full-time employee of the Company serving initially in the
position of Vice President of Global Finance* of the Company. You agree to devote substantially all
of your working time and attention to the business and affairs of the Company, to discharge the responsibilities
associated with your position with the Company, and to use your best efforts to perform faithfully
and efficiently such responsibilities. In addition, you agree to serve in such other or different
capacities or offices to which you may be assigned, appointed or elected from time to time by the
Company. Nothing herein shall prohibit you from devoting your time to civic and community activities,
serving as a member of the Board of Directors of other corporations that do not compete with the
Company, or managing personal investments, as long as the foregoing do not interfere with the performance
of your duties hereunder or violate the terms of the Company’s Code of Business Ethics and Conduct,
the Company’s Corporate Governance Guidelines, or other policies applicable to the Company’s
executives generally, as those policies may be amended from time to time by the Company.

                3.             Compensation.

                (a)           As compensation for your services,
under this Agreement, you shall be entitled during the Term to receive an initial base salary the
annualized amount of which shall be $400,000.00**, to be paid in accordance with existing payroll
practices for executives of the Company. Increases in your base salary, if any, shall be as approved
by the Compensation Committee of the Board. In addition, you shall be eligible to receive an annual
incentive compensation bonus (“Bonus”) to be approved from time to time by the Compensation
Committee of the Board.

                (b)           During the Term, you shall be
eligible for participation in the welfare, retirement, perquisite and fringe benefit, and other benefit
plans, practices, policies and programs, as may be in effect from time to time, for senior executives
of the Company generally.

                (c)           During the Term, you shall be
eligible for prompt reimbursement for business expenses reasonably incurred by you in accordance
with the Company’s policies, as may be in effect from time to time, for its senior executives
generally.

                4.             Termination of Employment.   

                (a)           Notice. You or the Company may terminate the employment relationship by giving a Notice of Non-Renewal, as
described in Section 1. Alternatively, the employment relationship may be terminated by the Company
with or without Cause, by the Company for Incapacity, or by you with or without Good Reason, all
as defined below, by giving a Notice of Termination. For purposes of this Agreement, a “Notice
of Termination” shall mean a notice which shall indicate the specific termination provision
in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the provision so indicated. All
notices under this Section 4(a) shall be given in accordance with the requirements of Section 9.

	 
	

	* Senior Vice President
        and Chief Financial Officer as of October 1, 2007.

	** Current base salary
      was $500,000 as of October 1, 2007.

	

	
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                (b)           Incapacity.  If the Company reasonably determines that you are unable at any time to perform the duties of
your position because of a serious illness, injury, impairment, or physical or mental condition and
you are not eligible for or have exhausted all leave to which you may be entitled under the Family
and Medical Leave Act (“FMLA”) or, if more generous, other applicable state or local law,
the Company may terminate your employment for “Incapacity”. In addition, at any time that
you are on a leave of absence, the Company may temporarily reassign the duties of your position to
one or more other executives without creating a basis for your Good Reason resignation, provided
that the Company restores such duties to you upon your return to work. 

                (c)           Cause.  Termination of your employment for “Cause” shall mean termination upon: 

	 

	 	(i)            an act of fraud, embezzlement
or theft by you in connection with your duties or in the course of your employment with the Company;
		 
	 	(ii)           your material breach of any provision
of this Agreement, provided that in those instances in which your material breach is capable of being
cured, you have failed to cure within a thirty (30) day period after notice from the Company;
		 
	 	(iii)          an act or omission, which is (x) willful
or grossly negligent, (y) contrary to established policies or practices of the Company, and (z) materially
harmful to the business or reputation of the Company, or to the business of the Company’s customers
or suppliers as such relate to the Company; or
		 
	 	(iv)          a plea of nolo contendere to, or conviction for, a felony. 

	 
	
                (d)          Good Reason.  For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of
the following circumstances or events:

	 

	 	(i)            any reduction by the Company
in your base salary or adverse change in the manner of computing your Bonus, as in effect from time
to time, except for across-the-board salary reductions or changes to the manner of computing bonuses
similarly affecting all executive officers of the Company subject to Section 16(b) of the Securities
Exchange Act of 1934, as determined by the Board (“executive officers”);
		 
	 	(ii)           the failure by the Company to
pay or provide to you any amounts of base salary or Bonus or any benefits which are due, owing and
payable to you pursuant to the terms hereof, except pursuant to an across-the-board compensation
deferral similarly affecting all executive officers, or to pay to you any portion of an installment
of deferred compensation due under any deferred compensation program of the Company;
		 
	 	(iii)          except in the case of across-the-board
reductions, deferrals, eliminations, or plan modifications similarly affecting all executive officers,
the failure by the Company to continue to provide you with benefits substantially similar in
the aggregate to the Company’s life insurance, medical, dental, health, accident or disability
plans in which you are participating at the date of this Agreement; 

	

	
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	 	(iv)          without limiting the generality or
effect of the foregoing, any material breach of this Agreement by the Company.

	 
	
However, the language in Sections 4(d)(i) through (iii) concerning reductions, changes, deferrals,
eliminations, or plan modifications similarly affecting all executive officers of the Company shall
not be applicable to circumstances or events occurring in anticipation of, or within one year after,
a Change in Control, as defined in Section 4(e). In addition, upon a Change in Control, you shall
have the right to resign for Good Reason if your principal place of employment is transferred to
a location fifty (50) or more miles from its location immediately preceding the transfer. 

Notwithstanding anything else herein, Good Reason shall not exist if, with regard to the circumstances
or events relied upon in your Notice of Termination: (x) you failed to provide a Notice of Termination
to the Company within sixty (60) days of the date you knew or should have known of such circumstances
or events, (y) the circumstances or events are fully corrected by the Company prior to the Date of
Termination, or (z) you give your express written consent to the circumstances or events.

                (e)           Change in Control.  For purposes of this Agreement, a “Change in Control” of the Company shall be deemed
to have occurred as of the first day any one or more of the following paragraphs is satisfied:

	 

	 	(i)            any Person as that term
is used in Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange
Act”) (other than the Company or a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or a corporation owned directly or indirectly by the shareholders of
the Company in substantially the same proportions as their ownership of stock of the Company) becomes
the Beneficial Owner, as that term is defined in Rule 13d-3 of the General Rules and Regulations
under the Exchange Act, directly or indirectly, of securities of the Company, representing more than
twenty percent of the combined voting power of the Company’s then outstanding securities.
		 
	 	(ii)           during any period of twenty-six
(26) consecutive months beginning on or after the Effective Date, individuals who at the beginning
of the period constituted the Board cease for any reason (other than death, disability or voluntary
retirement) to constitute a majority of the Board. For this purpose, any new Director whose election
by the Board, or nomination for election by the Company’s shareholders, was approved by a vote
of at least two-thirds of the Directors then still in office, and who either were Directors at the
beginning of the period or whose election or nomination for election was so approved, will be deemed
to have been a Director at the beginning of any twenty-six month period under consideration.
		 
	 	(iii)          the shareholders of the Company approve: (A)
a plan of complete liquidation or dissolution of the Company; or (B) an agreement for the sale or
disposition of all or substantially all the Company’s assets; or (C) a merger, consolidation
or reorganization of 

	

	
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	 	the Company with or involving any other corporation, other than a merger, consolidation or reorganization
that would result in the voting securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) at least eighty percent of the combined voting power of the voting securities of
the Company (or such surviving entity) outstanding immediately after such merger, consolidation,
or reorganization.

	 
	
                (f)           Date of Termination.  “Date of Termination” shall mean

	 

	 	(i)            if your employment is terminated
by reason of your death, the date of your death;
		 
	 	(ii)           if your employment is terminated by
the Company for any reason other than because of your death, the date specified in the Notice of
Termination (which shall not be prior to the date of the notice);
		 
	 	(iii)          if your employment is terminated by you
for any reason, the Date of Termination shall be not less than thirty (30) nor more than sixty (60)
days from the date such Notice of Termination is given, or such earlier date after the date such
Notice of Termination is given as may be identified by the Company.

	 
	
Unless the Company instructs you not to do so, you shall continue to perform services as provided in
this Agreement through the Date of Termination.

                (g)           Employee Benefits.  A termination by the Company pursuant to Section 4(c) hereof or by you pursuant to Section 4(d)
hereof shall not affect any rights which you may have pursuant to any other agreement, policy, plan,
program or arrangement of the Company providing employee benefits, which rights shall be governed
by the terms thereof and by Section 5; provided, however, that if you shall have received or shall
be receiving benefits under Section 5(a), (c), or (d) hereof and, if applicable, Section 6 hereof,
you shall not be entitled to receive benefits under any other policy, plan, program or arrangement
of the Company providing severance compensation to which you would otherwise be entitled.

                5.             Compensation Upon Termination.  Upon your termination of employment, you shall receive:

                (a)           If your employment shall be terminated
by the Company for Incapacity, (i) for the period from the Date of Termination until the end of the
calendar year in which such termination occurs, you shall receive all compensation payable to you
under the Company’s disability and medical plans and programs, as in effect on the Date of Termination,
plus an additional payment from the Company (if necessary) such that the aggregate amount received
by you from all sources equals your base salary, at the rate in effect on the Date of Termination,
plus any Bonus and all other amounts to which you would have been entitled under any compensation
or benefit plans of the Company had your employment continued until the end of the calendar year,
(ii) for the period from the end of the calendar year in which such termination occurs until two
(2) years from the Date of Termination (the “Payment End Date”), you shall receive all
compensation payable to you

	

	
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under the Company’s disability and medical plans and programs, as in effect on the Date of Termination,
plus an additional payment from the Company (if necessary) such that the aggregate amount received
by you from all sources equals your base salary at the rate in effect on the Date of Termination,
and (iii) for purposes of outstanding awards and amounts owing or accrued as described in Section
5(d)(iii) of this Agreement, your employment shall be deemed to have been terminated due to your
Disability (as that term is defined in the plans, programs, or arrangements described in Section
5(d)(iii) of this Agreement). After the Payment End Date, your benefits shall be determined under
the Company’s retirement, insurance and other compensation programs then in effect in accordance
with the terms of such programs. The additional payments by the Company described in this Section
5(a) shall be conditioned upon the execution by you or a representative with legal authority to act
on your behalf of a general release relating to your employment in form and substance reasonably
acceptable to the Company.

                (b)           If your employment shall be terminated
(i) by the Company for Cause or by a Notice of Non-Renewal, or (ii) by you other than for Good Reason,
the Company shall pay you your base salary through the Date of Termination, at the rate in effect
at the time Notice of Termination is given, plus all other amounts to which you are fully vested
and irrevocably entitled under any compensation or benefit plans of the Company as of the Date of
Termination, and the Company shall have no further obligations in any respect whatsoever for payment
of compensation or benefits to you under this Agreement. Provided, however, that if your employment
is terminated by you other than for Good Reason, you shall be compensated under this Section 5(b)
only to the extent that you actively performed your assigned responsibilities through the Date of
Termination. In addition, you acknowledge that a termination of employment described in this Section
5(b) shall not be considered an End of Service Date for any and all outstanding stock options to
which you are a party, except to the extent it would otherwise qualify as a Retirement thereunder.

                (c)           If your employment shall be terminated
by reason of your death, the Company shall pay your estate or designated beneficiary (as designated
by you by written notice to the Company, which designation shall remain in effect for the remainder
of the Term and any extensions thereof until revoked or a new beneficiary is designated, in either
case by written notice to the Company) your base salary through the Date of Termination, plus a Bonus
prorated for the portion of the Bonus measurement period occurring prior to the date of your death,
plus all other amounts to which you are entitled under any compensation or benefit plans of the Company
at the date of your death, including, but not limited to, all life insurance proceeds payable on
your death to which your estate or beneficiaries are otherwise entitled in accordance with the terms
thereof, and the Company shall have no further obligation to you, your beneficiaries or your estate
under this Agreement.

                (d)           If your employment shall be terminated
(a) by the Company, except for a termination by the Company for Cause or Incapacity or by a Notice
of Non-Renewal (or due to your death), or (b) by you for Good Reason, then you shall be entitled
to the benefits provided below:

	

	
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	 	(i)            The Company shall pay you
your full base salary through the Date of Termination at the rate in effect at the time Notice of
Termination is given (or, if greater, at the rate in effect at any time within 90 days prior to the
time Notice of Termination is given), plus all other amounts to which you are entitled under any
compensation or benefit plans of the Company, including, without limitation, a Bonus prorated for
the portion of the Bonus measurement period occurring prior to the Date of Termination, at the time
such payments are due, except as otherwise provided below.
		 
	 	(ii)           Conditioned upon your execution
of a general release relating to your employment in form and substance reasonably acceptable to the
Company, the Company shall pay or cause to be paid to you, in lieu of any further payments to you
for the portion of the Term subsequent to the Termination Date an amount (the “Severance Payment”),
which shall be equal to the sum of:
		 

		(A)	      the aggregate base salary (at the highest rate
in effect at any time during the Term) which you would have received pursuant to this Agreement for
the Severance Period had your employment with the Company continued for such period, and
			 
		(B)	      the aggregate Bonus (based upon the highest
annual Bonus that you received with respect to any calendar year during the two years immediately
preceding the calendar year in which the Termination Date occurred, or, in the event that the Termination
Date occurs prior to the first anniversary of the Effective Date, then based upon the highest annual
Bonus that you received with respect to any calendar year during the three years immediately preceding
the calendar year in which the Termination Date occurred) which you would have received pursuant
to this Agreement for the Severance Period, had your employment with the Company continued for such period.
			 

	 	The Severance Payment shall be paid over a period of one (1) year (the “Severance Period”)
in the following manner: an amount equal to fifty percent (50%) of the value of the Severance Payment,
or, if the Severance Period is adjusted per Section 10(e), then an amount equal to twenty-five percent
(25%) of the value of the Severance Payment, paid in a lump sum as soon as administratively practicable
after your Termination Date; and an amount equal to the remaining fifty percent (50%) or seventy-five
percent (75%), as applicable, paid in equal semi-monthly installments, without interest, beginning
six (6) months after the Termination Date and continuing through the end of the Severance Period.
Notwithstanding the foregoing, in the event that the Termination Date occurs prior to the first anniversary
of the Effective Date, the Severance Period will be increased by one year. 
		 
	 	 (iii)          All outstanding awards, and all amounts owing or accrued, on the Date of Termination
under the Lear Corporation Long-Term Stock Incentive Plan (“LTSIP”), the Lear Corporation
Management Stock Purchase Plan (“MSPP”), the Lear Corporation Executive Supplemental Savings
Plan (“ESSP”) and the Lear Corporation Pension Equalization Program (“PEP”),
and any other compensation or equity-based plan, program

	

	
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	 	or arrangement of the Company in which you participated (including, following a Change in Control,
any additional accruals provided thereunder due to a Change in Control) will be paid to you under
the terms and conditions of such plans, programs and arrangements (and the award agreements and other
documents thereunder), as modified by this Section 5(d)(iii). Your awards and amounts owing or accrued
that vest based on the passage of time and/or continued service (and not based primarily upon the
satisfaction of performance measures, as described below) will vest as scheduled during the Severance
Period as if you had remained employed; to the extent such awards and amounts owing or accrued, other
than those stock options held by you on the Effective Date, have not vested by the end of your Severance
Period, they will become vested and nonforfeitable on a pro rata basis determined by multiplying
the unvested awards and amounts by a fraction, the numerator of which is the number of full months
that elapsed from the grant date to the end of your Severance Period, as adjusted by Section 10(e),
and the denominator of which is the number of full months in the total vesting period. Your vested
stock options shall be exercisable (A) prior to a Change in Control, for thirteen months following
your Date of Termination (but not later than the date on which the stock options would otherwise
expire if you remained employed by the Company), and (B) following a Change in Control, throughout
their entire term. In the case of those awards and amounts owing or accrued which would otherwise
have become vested and nonforfeitable primarily upon the satisfaction of performance measures set
forth in the relevant award agreement, plan, program or arrangement, you shall be paid in stock as
soon as administratively feasible after the end of the relevant performance period (or such earlier
period as the other participants in such award agreement, plan, program or arrangement are eligible
to be paid out), a pro rata amount (if and to the extent all relevant performance objectives are
actually achieved at target levels), based on a fraction, the numerator of which is the number of
full months that elapsed from the grant date to your Date of Termination and the denominator of which
is the number of full months in the relevant performance period. 
		 
	 	You and the Company acknowledge that references in this Section 5(d)(iii) to the PEP, the MSPP, the
ESSP, and the LTSIP, shall be deemed to be references to such plans as amended or restated from time
to time and to any similar plan of the Company that supplements or supersedes any such plans. In
addition, you and the Company acknowledge that references in this Section 5 to any Section of the
Code shall be deemed to be references to such Section as amended from time to time or to any successor
thereto.
		 
	 	(iv)          The Company shall arrange to provide
to you, your dependents, and beneficiaries, for the Severance Period, benefits provided under any
“welfare benefit plan” of the Company (as the term “welfare benefit plan” is
defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended) (“Welfare
Benefits”). If and to the extent that any such Welfare Benefits shall not or cannot be paid
or provided under any policy, plan, program or arrangement of the Company (A) solely due to the fact
that you are no longer an officer or employee of the Company or did not continue as an officer or
employee of the Company during the remainder of the Term or (B) as a result of the amendment or termination
of any plan providing for Welfare Benefits, the Company shall then itself pay or provide for the
payment of such Welfare Benefits to you, your dependents

	

	
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	 	and beneficiaries. Without otherwise limiting the purposes or effect of the no mitigation obligation
in Section 5(h) hereof, Welfare Benefits payable to you (including your dependents and beneficiaries)
pursuant to this Section 5(d)(iv) shall be reduced to the extent comparable welfare benefits are
actually received by you (including your dependents and beneficiaries) from another employer during
such period, and any such benefits actually received by you shall be reported by you to the Company.
		 
	 	(v)           Your right to acquire any shares
of the Company’s capital stock under any and all outstanding stock options, or other rights
previously granted to you under any equity-based plans of the Company shall be governed by the express
terms of such plans and the applicable agreements thereunder, except as provided in Section 5(a),
5(b), or 5(d)(iii) of this Agreement. 

	 
	
                (e)           Any Bonus that is payable to you
with respect to a period that is less than a full calendar year (a “partial calendar year”)
shall be prorated by multiplying (i) the Bonus that would have been payable to you with respect to
the entire calendar year had your employment with the Company continued until the end of such year
by (ii) a fraction, the numerator of which equals the number of days in the partial calendar year
and the denominator of which equals 365.

                (f)            Unless your Date of Termination
occurs within one year after a Change in Control, the Company, if permitted by law, may set-off or
counterclaim losses, fines or damages in respect of any claim, debt or obligation against any payment
to or benefit for you provided for in this Agreement.

                (g)           Without limiting your rights at
law or in equity, if the Company fails to make any payment or provide any benefit required to be
made or provided hereunder within thirty (30) days of the date it is due, the Company will pay interest
on the amount or value thereof at an annualized rate of interest equal to the “prime rate”
as quoted from time to time during the relevant period in The Wall Street Journal, plus three percent.
Such interest will be payable as it accrues on demand. Any change in such prime rate will be effective
on and as of the date of such change.

                (h)           The Company acknowledges that
its severance pay plans and policies applicable in general to its salaried employees do not provide
for mitigation, offset or reduction of any severance payment received thereunder. Accordingly, the
parties hereto expressly agree that the payment of the severance compensation by the Company to you
in accordance with the terms of this Agreement shall be liquidated damages and that you shall not
be required to mitigate the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on the part of you hereunder
or otherwise, except as expressly provided in this Section 5.

                6.             Certain Additional Payments by the Company.

                (a)           Anything in this Agreement to
the contrary notwithstanding, in the event that it shall be determined (as hereafter provided) that
any payment (or benefit provided) by the Company

	

	
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to or for your benefit, whether paid or payable pursuant to the terms of this Agreement or otherwise
(a “Payment”), would be subject to the excise tax imposed by Section 4999 (or any successor
thereto) of the Code, and any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereafter collectively referred to as the
“Excise Tax”), then you shall be entitled to receive an additional payment or payments
(collectively, a “Gross-Up Payment”), including without limitation any Gross-Up Payment
made with respect to the Excise Tax, if any, attributable to (i) any incentive stock option, as defined
by Section 422 of the Code (“ISO”), or (ii) any stock appreciation or similar right, whether
or not limited, granted in tandem with any ISO. The Gross-Up Payment shall be in an amount such that,
after payment by you of the Excise Tax, plus any additional taxes, penalties and interest, and
any further Excise Taxes imposed upon the Gross-Up Payment, you retain, after payment of all such
taxes and Excise Taxes, an amount of the Gross-Up Payment equal to the Payment that you would have
received if no Excise Taxes had been imposed upon the Payment and no additional taxes, penalties,
and interest or further Excise Taxes had been imposed upon the Gross-Up Payment.

                (b)           Subject to the provisions of Section
6(e) hereof, all determinations required to be made under this Section 6, including whether an Excise
Tax is payable by you and the amount of such Excise Tax and whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by a nationally recognized firm of certified
public accountants (the “Accounting Firm”) selected by you in your sole discretion, other
than the Company’s independent auditing firm, to the extent prohibited by applicable Public
Company Accounting Oversight Board rules. You shall direct the Accounting Firm to submit its determination
and detailed supporting calculations to both the Company and you within thirty (30) calendar days
after the Termination Date. If the Accounting Firm determines that any Excise Tax is payable by you,
the Company shall pay the required Gross-Up Payment to you within five (5) business days after receipt
of the aforesaid determination and calculations. If the Accounting Firm determines that no Excise
Tax is payable by you, it shall, at the same time as it makes such determination, furnish you with
an opinion that you do not owe any Excise Tax on your Federal income tax return. Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment to be paid by the Company within
such thirty (30) calendar day period shall be binding upon the Company and you. As a result of the
uncertainty in the application of Section 4999 (or any successor thereto) of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company exhausts
its remedies pursuant to Section 6(e) hereof and you thereafter are required to make a payment of
any Excise Tax, you shall direct the Accounting Firm to determine the amount of the Underpayment
that has occurred and to submit its determination and detailed supporting calculations to both the
Company and you as promptly as possible. Any such Underpayment shall be promptly paid by the Company
to or for your benefit within three calendar days after receipt of such determination and calculations.

                (c)           The Company and you shall each
cooperate with the Accounting Firm in connection with the preparation and issuance of the determination
provided for in Section 6(b) hereof. Such cooperation shall include without limitation providing
the Accounting Firm access to

	

	
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and copies of any books, records and documents in the possession of the Company or you, as the case
may be, that are reasonably requested by the Accounting Firm.

                (d)           The fees and expenses of the Accounting
Firm for its services in connection with the determinations and calculations provided for in Section
6(b) hereof shall initially be paid by you. The Company shall reimburse you for your payment of such
costs and expenses within five (5) business days after receipt from you of a statement therefor
and evidence of your payment thereof.

                (e)           You shall notify the Company in
writing, of any claim by the Internal Revenue Service (the “IRS”) that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten (10) business days after you receive notice of such
claim and shall apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. You shall not pay such claim prior to the earlier of (x) the expiration
of the thirty (30) calendar day period following the date on which you give such notice to the Company
or (y) the date that any payment of taxes with respect to such claim is due. If the Company notifies
you in writing prior to the expiration of such period that it desires to contest such claim, you shall: 

	 

	 	                (i)            give the Company any information
reasonably requested by the Company relating, to such claim;
		 
	 	                (ii)           take such action in connection
with contesting such claim as the Company shall reasonably request in writing, from time to time,
including without limitation accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;
		 
	 	                (iii)          cooperate with the Company in good
faith in order effectively to contest such claim; and 
		 
	 	                (iv)          permit the Company to participate in
any proceedings relating to such claim;

	 
	
provided, however, that the Company shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall indemnify and hold you
harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 6(e), the Company shall, provided
that such control does not have a material adverse affect on your individual income tax with respect
to matters unrelated to the contest of the Excise Tax, control all proceedings taken in connection
with such contest and, at its sole option, may, provided that such pursuit or foregoing does not
have a material adverse affect on your individual income tax with respect to matters unrelated to
the contest of the Excise Tax, pursue or forego any and all administrative appeals, proceedings,
hearings and conference with the IRS in respect of such claim (but, you may participate therein at
your own cost and expense) and may, at its sole option, provided that such payment, suit, contest
or prosecution does not have a material adverse affect on your individual

	

	
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income tax with respect to matters unrelated to the contest of the Excise Tax, either direct you to
pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and you
agree to prosecute such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs you to pay the tax claimed and sue for a refund, the Company
shall advance the amount of such payment to you on an interest-free basis and shall indemnify and
hold you harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for your taxable year with respect to which the contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control
of such contest shall be limited to issues with respect to which a Gross Up Payment would be payable
hereunder, and you shall be entitled to settle or contest, as the case may be, any other issue raised by the IRS.

                (f)            If, after the receipt by
you of an amount advanced by the Company pursuant to Section 6(e) hereof, you receive any refund
with respect to such claim, you shall (subject to the Company’s complying with the requirements
of Section 6(e) hereof) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If, after the receipt by you
of an amount advanced by the Company pursuant to Section 6(e) hereof, a determination is made that
you shall not be entitled to any refund with respect to such claim and the Company does not notify
you in writing of its intent to contest such denial or refund prior to the expiration of thirty (30)
calendar days after such determination, then such advance shall be forgiven and shall not be required
to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

                7.             Travel.  You shall be required to travel to the extent necessary for the performance of your responsibilities
under this Agreement.

                8.             Successors; Binding Agreement.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all the business and/or assets of the Company, to expressly
assume and agree to perform this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place, and will assign its rights
and obligations hereunder to such successor. Failure of the Company to make such an assignment and
to obtain such assumption and agreement prior to the effectiveness of any such succession, unless
you agree otherwise in writing with the Company or the successor, shall entitle you to compensation
from the Company in the same amount and on the same terms as you would be entitled to hereunder if
you terminate your employment for Good Reason and the date on which any such succession becomes effective
shall be deemed your Date of Termination. As used in this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or otherwise. This Agreement
shall inure to the benefit of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees. This Agreement is personal in nature
and neither of the parties hereto shall, without the consent of

	

	
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the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except
as expressly provided in this Section 8. Without limiting the generality of the foregoing, your right
to receive payments hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than by a transfer by your will or by the laws of descent
and distribution and, in the event of any attempted assignment or transfer contrary to this Section
8, the Company shall have no liability to pay to the purported assignee or transferee any amount
so attempted to be assigned or transferred. The Company and you recognize that each party will have
no adequate remedy at law for any material breach by the other of any of the agreements contained
herein and, in the event of any such breach, the Company and you hereby agree and consent that the
other shall be entitled to a decree of specific performance, mandamus or other appropriate remedy
to enforce performance of this Agreement.

                9.             Notices.  For the purpose of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing, and shall be deemed to have been duly given when delivered by hand,
or mailed by United States certified mail, return receipt requested, postage prepaid, or sent by
Federal Express or similar overnight courier service, addressed to the respective addresses set forth
on the first page of this Agreement, or sent by facsimile with confirmation of receipt to the respective
facsimile numbers set forth on the first page of this Agreement, provided that all notices to the
Company shall be directed to the attention of the Secretary of the Company (or, if you are the Secretary
at the time such notice is to be given, to the Chairman of the Company’s Board of Directors),
or to such other address or facsimile number as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address or facsimile number shall be effective
only upon receipt.

                10.           Noncompetition.

                (a)           Until the Date of Termination,
you agree not to engage in any Competitive Activity. For purposes of this Agreement, the term “Competitive
Activity” shall mean your participation as an employee or consultant, without the written consent
of the CEO or the Board or any authorized committee thereof, in the management of any business enterprise
anywhere in the world if such enterprise engages in competition with any product or service of the
Company (including without limitation any enterprise that is a supplier to an original equipment
automotive vehicle manufacturer) or is planning to engage in such competition. “Competitive
Activity” shall not include the mere ownership of, and exercise of rights appurtenant to, securities
of a publicly-traded company representing 5% or less of the total voting power and 5% or less of
the total value of such an enterprise. You agree that the Company is a global business and that it
is appropriate for this Section 10 to apply to Competitive Activity conducted anywhere in the world.

                (b)           You agree not to engage directly
or indirectly in any Competitive Activity (i) until one (1) year after the Date of Termination if
you are terminated by the Company for Cause, as a result of a Notice of Non-Renewal from the Company,
or you terminate your employment for other than Good Reason, or (ii) until two (2) years after the
Date of Termination in all other circumstances.

	

	
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                (c)           You shall not directly or indirectly,
either on your own account or with or for anyone else, solicit or attempt to solicit any of
the Company’s customers, solicit or attempt to solicit for any business endeavor or hire
or attempt to hire any employee of the Company, or otherwise divert or attempt to divert from the
Company any business whatsoever or interfere with any business relationship between the Company and
any other person, (i) until one (1) year after the Date of Termination if you are terminated by the
Company for Cause, as a result of a Notice of Non-Renewal from the Company, or you terminate your
employment for other than Good Reason, or (ii) until two (2) years after the Date of Termination
in all other circumstances.

                (d)           You acknowledge and agree that
damages in the event of a breach or threatened breach of the covenants in this Section 10 will be
difficult to determine and will not afford a full and adequate remedy, and therefore agree that the
Company, in addition to seeking actual damages pursuant to Section 10 hereof, may seek specific enforcement
of the covenant not to compete in any court of competent jurisdiction, including, without limitation,
by the issuance of a temporary or permanent injunction, without the necessity of a bond. You and
the Company agree that the provisions of this covenant not to compete are reasonable. However, should
any court or arbitrator determine that any provision of this covenant not to compete is unreasonable,
either in period of time, geographical area, or otherwise, the parties agree that this covenant not
to compete should be interpreted and enforced to the maximum extent which such court or arbitrator
deems reasonable.

                (e)           As
additional compensation for the covenants contained in Sections 10(b) and 10(c), and only if you
execute a general release in form and substance reasonably acceptable to the Company acknowledging,
among other things, your obligations under this Agreement, the Company shall increase the Severance
Period for purposes of Section 5(d) from one (1) year to two (2) years.

                11.           Confidentiality and Cooperation.

                (a)           You shall not knowingly use, disclose
or reveal to any unauthorized person, during or after the Term, any trade secret or other confidential
information relating to the Company or any of its affiliates, or any of their respective businesses
or principals, such as, without limitation, dealers’ or distributor’s lists, information
regarding personnel and manufacturing processes, marketing and sales plans, pricing or cost information,
and all other such information; and you confirm that such information is the exclusive property of
the Company and its affiliates. Upon termination of your employment, you agree to return to the Company
on demand by the Company all memoranda, books, papers, letters and other data, and all copies thereof
or therefrom, in any way relating to the business of the Company and its affiliates, whether made
by you or otherwise in your possession.

                (b)           Any design, engineering methods,
techniques, discoveries, inventions (whether patentable or not), formulae, formulations, technical
and product specifications, bill of materials, equipment descriptions, plans, layouts, drawings,
computer programs, assembly, quality control, installation and operating procedures, operating manuals,
strategic, technical or marketing information, designs, data, secret knowledge, know-how and all
other information of a confidential nature prepared or produced during the period of your employment
and which ideas, processes,

	

	
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and other materials or information relate to any of the businesses of the Company, shall be owned by
the Company and its affiliates whether or not you should in fact execute an assignment thereof or
other instrument or document which may be reasonably necessary to protect and secure such rights
to the Company.

                (c)           Following the termination of your
employment, you agree to make yourself reasonably available to the Company to respond to periodic
requests for information relating to the Company or your employment which may be within your knowledge.
You further agree to cooperate fully with the Company in connection with any and all existing or
future depositions, litigation, or investigations brought by or against the Company, any entity related
to the Company, or any of its (their) agents, officers, directors or employees, whether administrative,
civil or criminal in nature, in which and to the extent the Company deems your cooperation necessary.
In the event that you are subpoenaed in connection with any litigation or investigation, you will
immediately notify the Company. You shall not receive any additional compensation, other than reimbursement
for reasonable costs and expenses incurred by you, in complying with the terms of this Section 11(c).

                12.           Arbitration.

                (a)           Except as contemplated by Section
10(d) or Section 12(c) hereof, any dispute or controversy arising under or in connection with this
Agreement that cannot be mutually resolved by the parties to this Agreement and their respective
advisors and representatives shall be settled exclusively by arbitration in Southfield, Michigan,
before one arbitrator of exemplary qualifications and stature, who shall be selected jointly by an
individual to be designated by the Company and an individual to be selected by you, or if such two
individuals cannot agree on the selection of the arbitrator, who shall be selected pursuant to the
procedures of the American Arbitration Association.

                (b)           The parties agree to use their
best efforts to cause (i) the two individuals set forth in the preceding Section 12(a), or, if applicable,
the American Arbitration Association, to appoint the arbitrator within thirty (30) days of the date
that a party hereto notifies the other party that a dispute or controversy exists that necessitates
the appointment of an arbitrator, and (ii) any arbitration hearing to be held within thirty (30)
days of the date of selection of the arbitrator, and, as a condition to his or her selection, such
arbitrator must consent to be available for a hearing, at such time.

                (c)           Judgment may be entered on the
arbitrator’s award in any court having jurisdiction, provided that you shall be entitled to
seek specific performance of your right to be paid and to participate in benefit programs during
the pendency of any dispute or controversy arising under or in connection with this Agreement. The
Company and you hereby agree that the arbitrator shall be empowered to enter an equitable decree
mandating specific performance of the terms of this Agreement. If any dispute under this Section
12 shall be pending, you shall continue to receive at a minimum the base salary which you were receiving
immediately prior to the act or omission which forms the basis for the dispute. At the close of the
arbitration, such continued base salary payments may be offset against any damages awarded to you
or may be recovered from you if its

	

	
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determined that you were not entitled to the continued payment of base salary under the other provisions
of this Agreement.

                13.           Modifications.  No provision of this Agreement may be modified, amended, waived or discharged unless such modification,
amendment, waiver or discharge is agreed to in writing and signed by both you and such officer of
the Company as may be specifically designated by the Board.

                14.           No Implied Waivers.  Failure of either party at any time to require performance by the other party of any provision
hereof shall in no way affect the full right to require such performance at any time thereafter.
Waiver by either party of a breach of any obligation hereunder shall not constitute a waiver of any
succeeding breach of the same obligation. Failure of either party to exercise any of its rights provided
herein shall not constitute a waiver of such right.

                15.           Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Michigan without giving effect to any conflicts of laws rules.

                16.           Payments Net of Taxes.  Except as otherwise provided in Section 6 herein, any payments provided for herein which are
subject to Federal, State local or other governmental tax or other withholding requirements or obligations,
shall have such amounts withheld prior to payment, and the Company shall be considered to have fully
satisfied its obligation hereunder by making such payments to you net of and after deduction for
all applicable withholding obligations.

                17.           Capacity of Parties.  The parties hereto warrant that they have the capacity and authority to execute this Agreement.

                18.           Validity.  The invalidity or unenforceability of any provision of this Agreement shall not, at the option
of the party for whose benefit such provision was intended, affect the validity or enforceability
of any other provision of the Agreement, which shall remain in full force and effect.

                19.           Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be
an original but all of which together will constitute one and the same instrument.

                20.           Entire Agreement.  This Agreement and any attachments hereto, contain the entire agreement by the parties with
respect to the matters covered herein and supersede any prior agreement (including, but not limited
to, prior employment agreement(s)), condition, practice, custom, usage and obligation with respect
to such matters insofar as any such prior agreement, condition, practice, custom, usage or obligation
might have given rise to any enforceable right. No agreements, understandings or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.

	

	
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                21.           Legal Fees and Expenses.  It is the intent of the Company that you not be required to incur the expenses associated with
the enforcement of your rights under this Agreement by litigation or other legal action because the
cost and expense thereof would substantially detract from the benefits intended to be extended to
you hereunder. Accordingly, the Company shall pay or cause to be paid and be solely responsible for
any and all reasonable attorneys’ and related fees and expenses incurred by you (i) as a result
of the Company’s failure to perform this Agreement or any provision hereof or (ii) as a result
of the Company unreasonably or maliciously contesting the validity or enforceability of this Agreement
or any provision hereof as aforesaid. 

                22.           Code Section 409A. Notwithstanding any provision in this Agreement to the contrary, if your employment is terminated as
described in Section 5(d) and Section 409A(a)(2)(B)(i) of the Code applies to all or any portion
of your Severance Payment and you are a “specified employee” thereunder, then the Company
shall pay the portion of your Severance Payment that is subject to such Section of the Code no earlier
than six (6) months after your Termination Date or such other date as would be permissible under
the Code. If your employment is terminated as described in Section 5(d) and Section 409A(a)(2)(B)(i)
of the Code does not apply to any portion of your Severance Payment or you are not a “specified
employee” thereunder, then the Company shall pay your Severance Payment as described in Section 5(d).

[Signature Page Follows]

	

	
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                If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the
Company the enclosed copy of this letter which will then constitute our agreement on this subject,
effective on February 24, 2006 (“Effective Date”).

Sincerely,

LEAR CORPORATION 

	  
	 

	By:	/s/ Roger A. Jackson
	 	

	 	Roger A. Jackson 
	  
	 	 
	Agreed to this 4th day of March, 2006
	  
	 	 
	/s/ Matthew Simoncini
	

	Matthew SimonciniEXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (“Agreement”) is made effective as of October 19, 2007 (“Effective Date”), by and between XLNT Veterinary Care, Inc., a Delaware corporation (“Company”), and Steven T. Johnson (“Executive”).

R E C I T A L S

WHEREAS, the Company desires to employ the Executive and retain his services, experience and abilities; and

WHEREAS, the Executive desires to accept such employment upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, it is agreed as follows:

1.         Duties/Position/Board Seat.  The Company hereby employs the Executive and the Executive hereby accepts such employment under all of the terms and conditions of this Agreement.  The Executive’s principal place of business shall be within the Nashville, Tennessee greater metropolitan area, subject to required business travel.  The Executive shall be an officer of the Company, and shall hold the offices of President and Chief Operating Officer, reporting to the Company’s Board of Directors (the “Board”).  In addition:

a.         Upon the merger of Pet DRx Acquisition Corp., a wholly-owned subsidiary of Echo Healthcare Acquisition Corp. (“Echo”), into the Company (the “Merger”), if the Executive continues to be employed under this Agreement at such date, Echo will, without the need for further actions by any party, assume this Agreement, XLNT Veterinary Care, Inc. (“XLNT”) will cease to be a party to this Agreement, all references in this Agreement to the “Company” shall be deemed to be references to Echo except for in Sections 4(c)(i) and 6, and the Executive shall not be deemed to have terminated employment hereunder as a result of the foregoing.  Accordingly, if the Executive continues to be employed under this Agreement at such date, the Executive will be an officer of Echo upon the Merger and
shall hold the offices of President and Chief Operating Officer of Echo.  The Executive shall continue following the Merger to serve as an officer of XLNT, if so requested, and agrees to serve as such without additional compensation beyond what is specified in this Agreement.  The Executive’s removal or resignation as an officer of XLNT following the Merger shall not give rise to any compensation, severance or benefits under this Agreement.

b.         Upon the Merger, the directors of Echo shall nominate the Executive as a member of the board of directors if the Executive continues to be employed under this Agreement at such date.  If so elected, the Executive also shall serve as a member of the Board and/or a member of the board of directors of Echo, in either case, without additional compensation beyond what is specified in this Agreement.  Notwithstanding 

 

 

 

the foregoing, the Executive agrees to resign voluntarily from the Board at any time that the Board determines, in its sole discretion, that Executive’s resignation is necessary to ensure that no more than two (2) employee directors serve on the Board at any one time.  The Executive’s removal or resignation from the Board shall not give rise to any compensation, severance or benefits under this Agreement.

2.         Employment Term.  The term of Executive’s employment under this Agreement shall commence as of the Effective Date and shall continue until the date of termination of employment in accordance with Section 5 (the “Employment Term”).

3.         Executive’s Duties, Responsibilities, and Authority.

a.         The Executive shall have and perform diligently the duties of President and Chief Operating Officer and such other such duties as may be directed by the Board and commensurate with such position and in accordance with the Company’s By-laws.  

b.         During the Employment Term, Executive shall perform his duties consistent with his experience and abilities in furtherance of the Company’s interests and shall devote his entire business time, attention, skill and energy to his duties and the performance of the services, and the Company will be entitled to all of the benefits and profits arising from or incident to all such work and services.  

c.         The Executive will expend his best efforts on behalf of the Company, and will abide by all Company policies and procedures of which he has been given notice, as well as all applicable laws and regulations.

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 his duties hereunder, Company shall pay to Executive an annual base salary of Three Hundred Fifty Thousand Dollars ($350,000) (“Annual Base Salary”), payable in installments at such times as the Company shall pay its other senior level executive officers, less required deductions for state and federal withholding tax, social security and all other employment taxes and payroll deductions.  The Board shall review the Annual Base Salary at least annually for merit increases; provided, however, that any increase in Executive’s Annual Base Salary shall be at the Board’s sole discretion.  

b.         Bonus Opportunity.

i.          As a one-time signing bonus, the Executive shall receive $50,000 payable before the earlier of (i) the date ending two weeks following the Merger, and (ii) March 15, 2008.

ii.        For services performed by the Executive for the period commencing on July 9, 2007 and ending December 31, 2007, the Executive shall 

 

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receive a guaranteed bonus in the amount of One Hundred Twenty-Five Thousand Dollars ($125,000) payable in 2008 as soon as reasonably practicable following the completion of year-end financial statements that fairly represent the financial position of the Company, provided that the Executive remains employed on the payment date.  

iii.       For the year commencing on January 1, 2008 and each year thereafter, the Executive shall have an annual opportunity to earn a cash bonus in an amount equal to fifty percent (50%) of the Annual Base Salary (the “Annual Target Bonus”), subject to the satisfaction by the Company and the Executive of certain objectives and targets established by the Board with respect to such year, with an opportunity to earn up to an additional fifty percent 50% of his then Annual Base Salary based on stellar performance related to such objectives and targets, determined in the sole discretion of the Board.  The objectives and targets established will be established by the Board (or an appropriate committee of the Board) within the first ninety (90) days of the fiscal year for which the bonus opportunity to be is earned (the
“Annual Bonus”).  The Annual Bonus, if any, shall be paid in the year following the year with respect to which the objectives and targets relate as soon as reasonably practicable following the completion of year-end financial statements for that particular year that fairly represent the financial position of the Company, provided that the Executive remains employed on the payment date.

c.         Stock Options.  Executive shall be eligible to receive grants of stock options, restricted stock and other equity incentives pursuant to the XLNT Veterinary Care, Inc. 2004 Stock Option Plan (“Stock Plan”) in accordance with the terms of the Stock Plan.  Without limiting the generality of the foregoing:

i.          Within one (1) week following the Company’s receipt of a valuation report from an independent appraiser valuing the Company’s equity currently as of the date of the report, the Company shall grant Executive an option to purchase 700,000 shares of the Company’s common stock.  The exercise price per share shall be equal to the greater of $4.75 per share or an amount equal to the then current value per common share as reported in the valuation report, or in the event the report values the common stock per share in a range, the midpoint of the range; provided, however, if the valuation per common share is less than $4.75, then a portion of such option will have an exercise price per share at such lower valuation per share.  Such portion of the option will be for a number of shares equal to the
maximum number of shares at such lower valuation that the Company can issue without triggering anti-dilution rights in favor of the holders of Series B warrants of the Company (the “Maximum”) after taking into account any other issuances prior to the Effective Date of common stock or options to purchase common stock that count against the Maximum, multiplied by a fraction of 3/5.5.  Such option shall vest in three substantially equal annual increments on each of the first three anniversaries of July 9, 2007, provided the Executive remains employed through the applicable vesting date (except as provided in Section 5(c)(iii)).  In connection with the closing of the Merger, the option will be 

 

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converted into an option to purchase common stock of Echo under a formula that the parties intend will not be treated as the grant of a new stock right or a change in the form of payment under Section 409A of the Internal Revenue Code (“Code Section 409A”).  The option will be subject to any other terms and conditions approved by the Board or committee thereof, as set forth in the applicable stock option agreement.

ii.        Following the Merger, and within fifteen (15) days following the availability to Echo of final closing balance sheet information (including, without limitation, “Net Cash Amount” and “Excess Indebtedness” within the meaning of the Merger agreement) that will allow Echo to calculate the total number of issued and outstanding shares of Echo’s common stock resulting from the Merger, Echo hereby agrees to grant the Executive an option to purchase a number of shares of common stock of Echo equal to the difference between (i) the number of shares equal to 3% of the then issued and outstanding shares of Echo’s common stock (not calculated on a fully diluted basis) and (ii) the number of shares of Echo’s common stock that the Executive may acquire with options previously granted.  Such
additional option shall be granted in accordance with the terms of Echo’s stock option plan and at an exercise price per share determined by Echo’s board of directors (or a committee thereof) which shall be equal to the last trade price per share for the Company’s common stock on the principal exchange, trading market or quotation system on which such securities are traded or quoted, or if the last trade price is not reported for such security, then the closing bid price, and if neither the last trade price nor closing bid price is reported, then the average of the bid and ask prices on such date, in each case on the date of grant.  The option will be subject to any other terms and conditions approved by the board of directors of Echo or committee thereof, as set forth in the applicable stock option agreement.

d.         Benefits.  Executive shall be eligible for participation in, and shall receive all benefits under, the benefit plans, practices, policies and programs provided by Company 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 or programs, as adopted from time to time.  The Company reserves the right to change or eliminate the Company’s benefit plans, practices, policies or programs at any time.  

e.         Vacation.  From and after the Effective Date, Executive shall be entitled to three (3) weeks annual paid vacation per full calendar year worked in accordance with the plans, policies, and programs of the Company as in effect for senior level executives of the Company.  For 2007, vacation entitlement shall be prorated based on days worked in 2007 from July 9, 2007.  Any vacation for a calendar year that is not used by the last day of such calendar year shall not accrue for the following calendar year.  

f.         Expenses.  Executive shall be entitled to receive prompt reimbursement in accordance with the Company’s reimbursement policies for all reasonable, out-of-pocket business expenses incurred in the performance of his duties on behalf of Company (including mobile telephone usage).  To obtain reimbursement, expenses must be 

 

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submitted promptly with appropriate supporting documentation in accordance with Company’s policies.

5.         Termination.  Notwithstanding any other provision of this Agreement, the Agreement and the Executive’s employment hereunder shall be terminated as follows:

	
             
  	
            a.
 	
            Termination by the Company With Cause.
 

i.          The Company may terminate this Agreement and the Executive’s employment for Cause, as defined herein, upon written notice to the Executive setting forth in reasonable detail the facts and circumstances upon which the Board shall have determined, following reasonable inquiry, that Cause exists.

ii.        As used herein, “Cause” shall mean (i) any willful, material violation of any law or regulation applicable to the business of the Company or any affiliate of the Company; (ii) conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration of a common law fraud; (iii) commission of any act of personal dishonesty which involves personal profit in connection with the Company or any affiliate of the Company; (iv) any material breach of any provisions of any agreement or understanding between the Company or any affiliate of the 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 to
perform the material duties required of Executive as an employee, officer, director or consultant of the Company or any affiliate of the Company (other than as a result of Disability) or a breach of any applicable creative works assignment and confidentiality agreement or similar agreement between the Company or any affiliate of the Company and Executive; (v) disregard of the policies of the Company or any affiliate of the Company, so as to cause material loss, damage or injury to the property, reputation or employees of the Company or any affiliate of the Company; (vi) the Executive is in breach of the terms of Sections 6, 7 and/or 8 hereof; (vii) Executive fails to devote his entire business time to his duties pursuant to Section 3 of this Agreement; or (viii) any other misconduct by Executive which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any affiliate of the Company; provided, however, for
purposes of subclauses (iv), (v), (vi) and (vii), no such action for omission, separately or together, shall constitute an event of “Cause” unless the Board gives written notice to the Executive specifying the act(s) or omission(s) the Board believes to be Cause and gives the Executive an opportunity to cure or amend such contract to the reasonable satisfaction of the Board.

iii.       If the Company terminates the Executive’s employment for Cause, then the Executive shall be entitled only to the “Accrued Obligations.”  For purposes of this Agreement, the Accrued Obligations shall mean:  (i) all accrued but unpaid Annual Base Salary as of the date of termination; (ii) any unpaid or unreimbursed expenses incurred in accordance with Company policy, including 

 

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amounts due under Section 4(d) and (f) hereof, to the extent incurred during the Employment Term; (iii) any benefits provided under the Company’s employee benefit plans upon a termination of employment, in accordance with the terms therein, including rights to equity in the Company to the extent provided pursuant to the applicable plan or agreement; and (iv) rights to indemnification by virtue of the Executive’s position as an officer or director of the Company or its subsidiaries and coverage under any directors’ and officers’ liability insurance policy maintained by the Company, in accordance with its terms thereof.

b.         Termination by the Executive for Good Reason.  The Executive may terminate this Agreement and his employment for Good Reason, as defined herein; upon written notice to the Board setting forth in reasonable detail the facts and circumstances upon which the Executive 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, written consent:

i.          the assignment to the Executive of any duties or the reduction of the Executive’s duties, either of which results in a significant diminution in the Executive’s position or responsibilities with the Company in effect immediately prior to such assignment, or the removal of the Executive from such position and responsibilities; 

ii.        in the event that more than 50% of the value of the Company’s equity securities or sixty-five percent (65%) or more of the total gross fair market value of all of the assets of the Company is acquired by another company, the Executive is not appointed as the President and Chief Operating Officer or Chief Executive Officer of the acquirer, unless the Executive rejects the offer of the position;

iii.       a reduction by the Company in the Annual Base Salary and/or potential Annual Bonus opportunity of the Executive; 

iv.        the Company requires the Executive to have a principal office other than within the Nashville, Tennessee greater metropolitan area;

v.         a material breach by the Company of this Agreement, including, without limitation, the failure of the Company to pay any material item of compensation substantially when due; or

vi.        the Company replaces its Chief Executive Officer with an individual other than the Executive or Robert Wallace, unless the Executive rejects the offer of the position; 

provided, however, that for a termination of employment by the Executive to be for Good Reason, the Executive must notify the Company in writing of the event giving rise to Good Reason within sixty (60) days in the case of clauses (i) through (v), and three hundred (300) days in the case of clause (vi), following the occurrence of the event (or if later the Executive’s knowledge of occurrence of the event), the event must remain 

 

6

 

 

uncured after the expiration of thirty (30) days following the delivery of written notice of such event to the Company 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’s employment is terminated by the Executive for Good Reason, the Executive shall be entitled to the same payments and benefits described in Section 5(c).

c.         Termination by the Company Without Cause.  The Company may terminate this Agreement and the Executive’s employment without Cause at any time.  In the event that the Executive’s employment is terminated by the Company without Cause (other than due to the Executive’s death or Disability), the Executive shall be entitled to:

i.          the Accrued Obligations, which shall be paid when such amounts would have been paid if the Executive has remained employed following such termination by the Company without Cause;

ii.        an amount equal to the sum of: (i) twelve (12) months of Annual Base Salary; and (ii) an amount equal to the Annual Target Bonus as if all criteria and metrics had been met, with such total amount payable in twelve (12) monthly installments in accordance with the Company’s standard payroll practices; provided, however that if such termination of employment occurs while the Executive is employed by Echo (or a successor pursuant to Section 12(b)) and within twelve (12) months following a Change in Control (as defined below), such total amount shall be paid in a single lump sum; 

iii.       effective on the date of the termination of employment, the stock options described in Section 4(c)(i) and (ii), (the “Options”) that are unvested and would have vested at the next annual vesting date if the Executive had remained employed shall vest pro rata based on the number of months worked by the Executive since the last vesting date; provided however that if the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason, in either case, within twelve (12) months following a “change in control” (as defined in the applicable Option agreement) then all Options to the extent then unvested shall become fully vested and exercisable as of the effective date of the Executive’s termination of employment; and

iv.        continuation of the health benefits (only under the Company’s medical and dental insurance plans, if any) in accordance with this paragraph for the lesser of two (2) years or the period that the Executive is entitled to continuation of health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”); provided that the Executive must elect COBRA coverage to be entitled to this benefit, and provided further that:

(A)      if any such plan is fully insured, then the Executive shall be required to pay as each COBRA premium an amount equal to the allocable share of the cost of coverage for similarly situated active employees of the Company under such plan; or

 

7

 

 

(B)      if any such plan is not fully insured, the Executive shall be required to pay the full COBRA premium and the Company will reimburse the Executive for a portion of the COBRA premium charged to the Executive that represents the Company’s allocable share of the cost of coverage for similarly 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 must execute within such period of time following termination of employment as is permitted by the Company (and not timely revoke during any revocation period provided therein) a comprehensive release, covenant not to sue, and non-disparagement agreement from the Executive in favor of the Company, its executives, officers, directors, affiliates, and all related parties, in such form as may be provided by the Company; provided, however, that the release will not apply to the payment and benefits described in clauses (i) through (iv).

As used in clause (ii) above, “Change in Control” means the occurrence of either of the following events after the Executive is employed by Echo under this Agreement:

 (A)      the acquisition by any one person, or more than one person acting as a group (other than any person or more than one person acting as a group who is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of Echo prior to such acquisition), of stock of Echo, that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of Echo; or

 (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 the assets of Echo, 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 Echo, immediately before such acquisition or acquisitions; 

provided, however, that transfers to the following entities or person(s) shall not be deemed to result in a Change of Control:  

 (I)        an entity as to which the shareholders of Echo immediately before the transfer continue to own, directly or indirectly, immediately after the transfer, more than fifty percent (50%) of the total fair market value or total voting power of the stock, immediately after the transfer; 

 (II)      an entity, more than fifty percent (50%) of the total fair market value or total voting power of the stock of which is owned, directly or indirectly, by Echo; or

 (III)     any employee benefit plan maintained by or contributed to by Echo. 

 

8

 

 

For purposes of this definition of Change in Control, persons will be considered to be acting 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 with Echo.  Notwithstanding the foregoing, no Change in Control shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Executive 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 definition of a “change in the ownership of a corporation” or a “change in a substantial portion of the assets of a corporation” within the meaning of Code Section 409A, and this definition shall be construed consistent with such intent.

	
             
  	
            d.
 	
            Termination By Reason of Death or Disability.  
 

i.          This Agreement will terminate automatically upon the Executive’s death.  The Company may terminate Executive’s employment at the expiration of the Disability Period (as defined below), such termination to be effective upon Executive’s receipt of written notice of such termination.  

ii.        In the event the Executive’s employment is terminated due to his death or at the expiration of the Disability Period (as defined below), the Company shall not be obligated to provide the Executive any compensation or benefits (other than the Accrued Obligations) after the effective date of such termination except as required by law or regulation. 

iii.       For purposes of this Agreement, “Disability” shall mean any physical or mental disability or infirmity that prevents the performance of the Executive’s duties.  Any question as to the existence, extent or potentiality of the Executive’s Disability upon which the Executive and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company and approved by the Executive (or the Executive’s duly appointed representative), which approval shall not be unreasonably withheld.  The determination of any such physician 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 a Disability and ending on the earlier of the date the Executive begins receiving income replacement benefits under any long term disability plan or policy maintained by the Company or the date that is six (6) months after such determination, during which the Executive remains subject to a Disability

e.         Effect of Termination.  If the Company terminates this Agreement as provided herein, it shall not be obligated to provide the Executive any compensation or benefits after the effective date of such termination except as otherwise set forth in this Section 5 and as required by law or regulation.  The Executive’s entitlement to any amount of severance or other post-termination benefits under this Agreement shall be subject to the following conditions:  

 

9

 

 

i.          All payments of severance and other post-termination benefits under this Agreement shall accrue from the date of termination and shall be made or commence no later than the sixtieth (60th) day following the Executive’s termination of employment, with any accrued but unpaid severance or benefits being paid or provided on 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 his termination of employment, then such portion of the payments or benefits under Section 5(b) or 5(c) that would result in a tax under Code Section 409A if paid during 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 paid
to the Executive during the seventh month following the date of his termination of employment;

ii.        For purposes of Sections 5(b) and (c), the Executive will have experienced a termination of employment only if either (i) the Executive has ceased to perform any services for the Company and all affiliated companies that, together with the Company, constitute the “service recipient” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (collectively, the “Service Recipient”) or (B) the Service Recipient and the Executive reasonably anticipate that the level of bona fide services the Executive will perform for the Service Recipient after a given date (whether as an employee or as an independent contractor) will permanently decrease (excluding a decrease as a result of military leave, sick leave, or other bona fide leave of absence if the
period of such leave does not exceed six months, or if longer, so long as the Executive retains a right to reemployment with the Service Recipient under an applicable statute or by contract) to no more than twenty percent (20%) of the average level of bona fide services performed for the Service Recipient (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of service if the Executive has been providing services to the Service Recipient for less than 36 months); and

iii.       Upon the Executive’s termination of employment for any reason whatsoever, the Executive will offer his resignation from the Board and/or the board of directors of Echo if he is then serving on either or both of such boards of directors.

f.         Employment Status.  Executive’s continued employment with the Company is subject to the ongoing review and approval of the Company and its Board in their sole and absolute discretion.  Except as otherwise provided for herein, all terms and conditions of employment (such as hours of work, job duties and benefits, etc.) are subject to change by the Company at any time and for any reason.  Similarly, the Company has the same right to terminate the employment relationship at any time and for any reason, or for no reason, with or without Cause.  Executive further understands that he is an “at-will” employee of the Company, and that this “at-will” relationship cannot be modified except by written agreement between the Executive and the Company.
Nothing in this Section shall be construed to take away any rights that the Executive has during 

 

10

 

 

the Employment Term pursuant to this Agreement, including his rights pursuant to Sections 5(b) and 5(c) hereof.

6.         Confidentiality.  Concurrently herewith, Executive shall execute the Company’s standard form Confidentiality and Assignment of Creative Works Agreement (the “Confidentiality Agreement”), a copy of which is attached hereto as Exhibit A.  The Confidentiality Agreement shall remain in full force and effect in accordance with the terms thereof and shall survive the termination of this Agreement.  Upon the Merger, the Executive and Echo shall be required to execute a similar confidentiality agreement that will be governed by Delaware law.

	
             
  	
            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”), the Executive 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 defined below), either directly or indirectly, on his own behalf, or in the service of or on behalf of others, provide managerial services or management consulting services substantially similar to those Executive provides for the Company to any person, firm, corporation, joint venture, or other business that is engaged in the same or a substantially similar business as the business of the Company, other than the Company or an affiliate of the Company.  The
Executive 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) mile radius of the Company’s principal corporate offices in the State of Tennessee; any area within a twenty-five (25) mile radius of any location where the Company or an Affiliate conducting the business of the Company opens a veterinary clinic on or after the Effective Date and prior to the termination of the Executive’s employment hereunder; and any area within a fifty (50) mile radius of any location where the Company or an Affiliate conducting the business of the Company opens a specialty veterinary hospital on or after the Effective Date and prior to the termination of the Executive’s employment hereunder.

b.         The Executive agrees that during the Applicable Period, he will not, either directly or indirectly, on his own behalf or in the service of or on behalf of others, solicit any individual or entity which is an actual or, to his knowledge, actively sought prospective client of the Company or any of its Affiliates (determined as of date of termination of employment) with whom he had material contact during the last two (2) years of the Executive’s employment with the Company, for the purpose of offering services substantially similar to those offered by the Company.

c.         Executive understands and agrees that the Company’s employees and any information regarding the Company’s employees is confidential and constitutes trade secrets.  Accordingly, Executive agrees that during the Applicable Period, Executive will not, either directly or indirectly, separately or in association with others, interfere with, 

 

11

 

 

impair, disrupt or damage the Company’s business by soliciting or attempting to hire or hiring any of Company’s employees or causing others to solicit or encourage any of the Company’s employees to discontinue their employment with the Company; provided, however, that Executive being named as a referral on the resume of a Company employee and Executive responding 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 the covenants contained in this Section would cause irreparable injury to the Company and agrees that 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 damages or posting any bond or other security.  Executive also acknowledges that each of these covenants survives termination of this Agreement for any reason.

e.         In the event that this Section 7 is determined by a court which has jurisdiction to be unenforceable in part or in whole, the court shall be deemed to have the authority to strike any unenforceable provision, or any part thereof or to revise any provision to the minimum 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 employment hereunder and compliance with the terms and conditions hereof will not conflict with or result in the breach by him of any agreement to which he is a party or by which he may be bound;

b.         he has not, and in connection with his employment with the Company will not, violate any 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 confidential or proprietary information he may have obtained in connection with employment with any prior employer.

9.         Indemnification of the Executive.  The Company shall indemnify the Executive to the extent provided under the Company’s Articles of Incorporation or By-laws, and any separate indemnification agreement between the Company and the Executive, if any.

10.       Taxes.  Notwithstanding anything contained herein to the contrary, all payments made under this Agreement shall be subject to withholding for all applicable taxes, including, but not limited to, income, employment and social insurance taxes, as shall be required by law.  The Company and the Executive desire that the benefits and payments described in this Agreement be exempt from, or comply with, the requirements of Code Section 409A.  To that end, if the Executive suggests any amendments to this Agreement that the Executive believes will make 

 

12

 

 

certain benefits or  payments under this Agreement exempt from or compliant with Code Section 409A, the Company will use reasonable efforts to cooperate with the Executive in negotiating and implementing any such amendments, provided that such amendments do not, in the sole discretion of the Company, have a cost to the Company (apart from legal fees associated with negotiating, drafting and submitting any required regulatory filings), or adversely affect the Company in any manner.  Notwithstanding the foregoing, 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 Agreement are exempt from or compliant with Code Section 409A. Further, the Executive shall be responsible for his own taxes under this Agreement, including, if and to the extent applicable, taxes under Section 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 the State of Delaware without regard to its principles regarding choice of law.  Subject to Section 11(b), the parties hereto consent to venue in the courts of the State of Delaware or in the Federal courts sitting in the State of Delaware with respect to any dispute regarding the subject matter hereof.

b.         In the event of any dispute under the provisions of this Agreement other than a dispute pursuant to Section 6 or 7, the parties shall be required to have the dispute, controversy or claim settled by binding arbitration in the city in which the headquarters of the Company is located in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three 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.  Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be
specifically enforceable.  The fees of the American Arbitration Association and the arbitrators shared equally by the parties, subject to Section 11(c) hereof.

c.         The party that materially prevails in any dispute litigated or arbitrated pursuant to Section 11(a) or 11(b) hereof shall be entitled to reimbursement for all of such party’s fees and costs (including, without limitation, the fees of the American Arbitration Association and the arbitrators and reasonable attorneys’ fees and expenses) that are incurred during the Employment Term or thereafter during the Executive’s lifetime, and which shall be reimbursed promptly following submission of proof of the expenses but not later than March 15 of the year following the year in which the judgment on arbitration award becomes final.

Executive must initial here:          Company representative must initial here:          

	
             
  	
            12.
 	
            Miscellaneous.
 

 

13

 

 

a.         Notices.  All notices, requests, demands and other communications which are required or permitted hereunder shall be in writing and shall be deemed to have been duly  given (i) when delivered personally, (ii) one (1) business day after being deposited with a reputable, 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 prepaid and return receipt requested; in each case addressed to the relevant address below or to such address as either party may hereafter designate by written notice to the other party in accordance herewith.

 

	
            If to the Executive:
 	
            Steven T. Johnson

14395 E. Corrine Drive

Scottsdale, Arizona 85259

Tel. # (480) 656-3988

 
 
	
            If to the Company:
 	
            ATTN:  Chairman, Board of Directors

XLNT Veterinary Care, Inc.

c/o Galen Partners

680 Washington Blvd., 11th Floor

Stamford, Connecticut 06901

Tel.# 203-653-6400
 Fax # 203-653-6499

 
 
	
            With a Copy to:
 	
            General Counsel

XLNT Veterinary Care, Inc.

560 South Winchester Blvd. 

Suite 500

San Jose, California 95128

Tel. # (408) 236-7428

Fax # (408)
521-2168

 
 

b.         Entire Agreement; Assignment.  This Agreement supersedes all prior agreements and negotiations and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment approved by the Company and executed on its behalf by a duly authorized officer.  The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company, as applicable, including without limitation, a purchaser of all or substantially all the assets of the Company.  If the Agreement is assigned pursuant to the foregoing sentence, the assignment shall be by novation and the entity defined as the
“Company” herein prior to such assignment shall have no further liability hereunder, and the successor or assign, as applicable, shall become the “Company” hereunder.  Further, the Executive shall not be deemed to have incurred a termination of employment hereunder as a result of such assignment.  The Agreement is a personal contract and the rights and interests of the Executive may not be assigned by the Executive.  This Agreement shall inure to the benefit of and be enforceable by the 

 

14

 

 

Executive and the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

c.         Severability.  The invalidity, illegality or unenforceability of any provision of this Agreement shall not in any way affect, impair or render unenforceable any other provision of this Agreement, all of which shall remain in full force and effect.

d.         Survival.  Section 6 through 12 hereof shall survive the termination of this Agreement and shall not be extinguished thereby.

e.         Modification.  This Agreement may not be amended or modified except by a document signed by the Executive and an authorized representative of the Board which specifically states that it is amending this Agreement.

f.         Authority.  The signatories below on behalf of the Company have the full legal authority to bind the Company to all of the terms of this Agreement.

g.         Executed Counterparts. This Agreement may be executed in one or more counterparts, all of which when fully-executed and delivered by all parties hereto and taken together shall constitute a single agreement, binding against each of the parties.  To the maximum extent permitted by law or by any applicable governmental authority, any document may be signed and transmitted by facsimile with the same validity as if it were an ink-signed document.  Each signatory below represents and warrants by his signature that he is duly authorized (on behalf of the respective entity for which such signatory has acted) to execute and deliver this instrument and any other document related to this transaction, thereby fully binding each such respective entity. 

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

 

[Signatures begin on the following page.]

 

15

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

	
            Company:
 	
            XLNT VETERINARY CARE, INC.
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            By:    /s/ Zubeen Shroff       

Zubeen Shroff, Chairman of the Board
 
	
             
 	
             
 
	
            Executive:
 	
             

 

            
/s/ Steven T. Johnson     

Steven T. Johnson
 
	
             
 	
             
 
	
             
 	
            Solely as to Sections 1(a), 1(b) and Section 4(c)(ii):

ECHO HEALTHCARE ACQUISITION CORP.
 
	
             
 	
             
 
	
             
 	
             
 
	
             

 

 

 

 
 	
            By:      
/s/ Gene E. Burleson      

 

Name:      
Gene E. Burleson     

 

Title:      
Chief Executive Officer     
 

 

16

 

 

EXHIBIT A

CONFIDENTIALITY AGREEMENT

 

 

 

EXHIBIT A

EMPLOYEE CONFIDENTIALITY AND ASSIGNMENT

OF CREATIVE WORKS AGREEMENT

This Employee Confidentiality and Assignment of Creative Works Agreement is entered into as of the last date set forth on the signature page hereto, by and between XLNT Veterinary Care, Inc., a Delaware corporation (“Company”), and the individual and/or entity identified on the signature page hereto (“Employee”).  For purposes of this Agreement, the “Company” shall include any company which controls or is controlled by the Company, as well as all other affiliates of Company and/or its principals and each such company is an intended third-party beneficiary of this Agreement.

RECITALS

A.       Employee understands and acknowledges that Company has developed and used and will be developing and using Confidential Information (as defined below) in connection with its business.  This information was developed and will be developed by Company at great expense and constitutes, among other things, trade secrets of Company.  To safeguard this Confidential Information, Company has instituted policies and procedures to protect such information.  In connection with his or her employment by Company, Employee will come into contact with the Confidential Information and shall be under a duty to protect that information from unauthorized disclosure or use.

B.        “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, proprietary business plans, product plans, products, services, customer lists, software, developments, inventions, processes, technology, information pertaining to suppliers or customers of the Company and marketing, financial or other business information, which becomes known to Employee in writing, orally, electronically or through observation.  Confidential Information does not include any of the foregoing items which has become publicly known and made generally available through no wrongful act of Employee or of others who were under confidentiality obligations as to the item or items involved.

C.        During the term of his or her employment by Company, Employee may, either solely or in cooperation with others, create Creative Works.  All such Creative Works shall be the sole and exclusive property of Company.

D.        “Creative Works” include, but are not limited to, all original works of authorship, inventions (whether patentable or not), discoveries, designs, computer hardware and software, algorithms, programming, scripts, or other proprietary information and related improvements and devices, which are conceived, developed, or made by Employee, either alone or with others, in whole or in part, on or off Company’s premises:  (i) during Employee’s employment with Company, (ii) with the use of the time, materials, or facilities of Company, (iii) relating to any product, service, or activity of Company of which Employee has knowledge, and/or (iv) suggested by or resulting from any work performed by Employee for Company.

 

 

AGREEMENT

In consideration of the foregoing Recitals (which are incorporated herein by reference) and the promises and covenants set forth below, the parties agree as follows:

1.                     Confidentiality Obligations.  During and after his or her term of engagement, Employee shall:

(a)       Hold in trust, keep confidential, and not disclose to any third party or make any use whatsoever of Confidential Information except as expressly authorized in writing by Company;

(b)       Not cause the transmission, removal, or transport by any means, including electronic, of Confidential Information outside of Company;

(c)       Take all reasonable actions to assure proper precautions have been taken to prevent unauthorized access to, the disclosure of, or loss or destruction of Confidential Information;

(d)       Not use, or cause or permit others to use, any Confidential Information for any purpose except as expressly authorized in writing by Company in connection with his employment by the Company; and

(e)       Promptly deliver to Company, upon termination of Employee’s engagement or at any other time requested by Company, all Confidential Information in Employee’s possession or control, including, without limitation, any and all software, data, memoranda, notes, e-mail, records, and other documents, electronic or otherwise, including all copies thereof, constituting or relating to the Confidential Information in Employee’s possession or control.

2.                     Ownership of Confidential Information.  Employee acknowledges that all Confidential Information is and shall remain the property of Company and that the Company is the sole owner of all rights in connection therewith.  Employee hereby assigns and transfers to Company any and all right, title and/or interest he may have or acquire in all Confidential Information over the course of the employment relationship.

3.                     Disclosure of Creative Works.  Employee agrees to disclose promptly and fully to the Company all Creative Works, current or proposed.

	
             
 	
            4.
 	
            Ownership of Creative Works.
 

4.1.      Copyrights.  In addition to the rights granted by Employee to the Company elsewhere in this Agreement, the following interests in copyright shall vest in Company:

(a)       All Creative Works that are first created and prepared by Employee under this Agreement that are encompassed by the definition of a “work made for hire” under 17 U.S.C. § 101 of the U.S. Copyright Act of 1976 will be considered a “work made 

 

2

 

 

for hire,” and Company will be deemed the sole author and owner of all copyrights in any such works.

(b)       With respect to all Creative Works that are first created and prepared by Employee under this Agreement that are not covered by the definition of a “work made for hire” under 17 U.S.C. § 101 of the U.S. Copyright Act of 1976, such that Employee would be regarded as the copyright author and owner, Employee hereby assigns to Company Employee’s entire right, title, and interest in and to such works, including all copyrights therein.

4.2.      Other Proprietary Rights.  In addition to the rights granted by Employee to Company elsewhere in this Agreement, Employee agrees to and herby does, assign and transfer to Company, and agrees that Company shall be the sole owner of all Creative Works, including, but not limited to, all patent rights, know-how, trade secrets, confidential information, and any other intellectual property related thereto recognized in the United States, any foreign jurisdiction or any international treaty regime.  Company shall have the right to use all Creative Works, whether original or derivative, in any manner whatsoever.

4.3.      Effectuating Company’s Rights.  Employee agrees, during employment and at any time thereafter, to execute any written documents necessary to effectuate the assignment to Company of any and all Creative Works to which Company is entitled as provided in this Agreement, and to execute all papers and perform any other lawful acts requested by Company for the preparation, prosecution, procurement, and maintenance of any trademark, copyright, and/or patent rights in and for the Creative Works, and will execute all papers and perform any other lawful acts necessary to vest title in Company to the Creative Works, including, but not limited to, all trademarks, copyrights, and patents.  In the event Company is unable for any reason to secure Employee’s signature to any document Company requests Employee
to execute under this Section, Employee hereby irrevocably designates and appoints Company and Company’s duly designated authorized officers and agents as Employee’s agents and attorneys-in-fact to act for and in Employee’s behalf and instead of Employee to execute such document and to file such application and to do all other lawfully permitted acts with the same legal force and effect as if executed by Employee.  Employee agrees that he or she will not be entitled to any compensation in addition to the salary provided for his or her employment for providing any of the services in this Section 4, but Employee shall be reimbursed for actual expenses incurred in rendering the services.

4.4.      To the extent, if any, that any intellectual property rights in the Creative Works are not assignable or that, notwithstanding Section 4.3, Employee for any reason retains any right, title or interest in and to any Creative Works, Employee (a) unconditionally and irrevocably waives the enforcement of such rights, and all claims and causes of action of any kind against Company with respect to such rights; (b) agrees, at Company’s request and expense, to consent to and join in any action to enforce such rights; and (c) hereby grants to Company a perpetual, irrevocable, fully paid-up, royalty-free, transferable, sublicensable (through multiple levels of sublicensees), exclusive, worldwide right and license under such intellectual property rights to use, reproduce, distribute, display and perform (whether publicly or otherwise), prepare derivative
works of and otherwise modify, make, sell, offer to sell, import and otherwise use and exploit (and have others exercise such rights on behalf of Company) all or any portion of such Creative Works.  The license granted herein shall commence on creation of the Creative Works 

 

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and shall continue in perpetuity and without regard to the term of this Agreement or the term of Employee’s employment with the Company.  Employee hereby waives and quitclaims to Company any and all claims, of any nature whatsoever, which Employee now or may hereafter have for infringement of any rights in the Creative Works assigned hereunder to Company.

5.         Notice to Employ.  The assignment provided in Section 4 (Ownership of Creative Works) does not apply to an invention that Employee developed entirely on his or her own time without using Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either:  (a) relate at the time of conception or reduction to practice of the invention to Company’s business, or actual or demonstrably anticipated research or development of Company; or (b) result from any work performed by Employee for Company.

6.         Equitable Remedies.  The parties recognize that irreparable injury will result to Company if Employee breaches any provision of this Agreement, and Employee agrees that if it should engage, or directly cause any other person or entity to engage, in any act in violation of any provision of this Agreement, then Company shall be entitled, in addition to any other remedies, damages and relief as may be available under applicable law, to seek an injunction prohibiting the Employee from engaging in any such act or specifically enforcing this Agreement, as the case may be.  It is understood and agreed that no failure or delay by Company in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or privilege under this Agreement.

7.         Notice Regarding Compelled Disclosure.  In the event Employee is requested pursuant to, or required by, applicable law or regulation or by legal process to disclose any Confidential Information, Employee shall provide Company with prompt notice of such request(s) to enable Company to seek an appropriate protective order or pursue other authorized procedures to challenge the attempt to compel disclosure.  Employee shall cooperate with Company, at Company’s expense, in its efforts to challenge such compelled disclosure.

8.         Entire Agreement.  This Agreement contains the entire agreement of the parties hereto, supersedes all prior agreements, and understandings, whether oral or in writing, if any, relating to the subject matter hereof, and may be amended only by written agreement of the parties hereto.

9.         Severability.  If for any reason a court of competent jurisdiction finds any provision of this Agreement, or portion thereof, to be unenforceable, that provision shall be enforced to the maximum extent permissible so as to effect the intent of the parties and the remainder of this Agreement shall continue in full force and effect.  This Agreement is the result of negotiations between the parties, each of whom shall be deemed to have drawn this Agreement.  No negative interference or interpretation shall be made by a court against the draftsman of this Agreement.

10.       Effective Date.  This Agreement shall be effective on the earlier of the date of Employee’s signature as written below, or the first date any Confidential Information was or is first disclosed to Employee.

 

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11.       Attorney’s Fees.  In the event that any proceeding or action is brought by either party to enforce or interpret the terms of this Agreement, the prevailing party in such proceeding or action shall be entitled to recover its costs of suit, including reasonable attorney’s fees.

12.       Survival.  The provisions of Sections 1, 2, 4, 5, 6, 7, 8, 9 and 11 through 13 shall survive the termination of this Agreement and/or termination of Employee’s employment with the Company.

13.       Governing Law.  The terms of this Agreement shall in all respects be governed by, construed, and interpreted in accordance with the laws of the State of Delaware, without giving effect to its conflicts of laws, principles or rules and the Federal and State Courts in Delaware shall have sole and exclusive jurisdiction over any dispute relating to the Agreement.

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IN WITNESS WHEREOF, the parties have executed this Agreement to become effective as provided in Section 10.

	
            “Company”
 	
            XLNT VETERINARY CARE, INC.

A Delaware corporation
 

 

	
             
 	
            
By:  /s/ Robert Wallace                                         

       Robert Wallace, Chief Executive Officer
 	
             
 

 

	
             
 	
            Dated:  October 19, 2007                                
        
 	
             
 

 

	
            “Employee”
 	
             
/s/ Steven T. Johnson                                           

Steven T. Johnson, in his individual capacity
 	
             
 

 

	
             
 	
             Dated: October 19, 2007                                
        
 	
             
 

 

[Signature Page to Employee Confidentiality and Assignment of Creative Works Agreement]

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