CONSULTING AGREEMENT I
THIS CONSULTING AGREEMENT (the "Agreement") is effective as of April
1st, 1997, between Health Fitness Corporation (the "Company"), located at 0000
Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000 and Xxxxxxx X. Xxxxxxx
(the "Consultant"), residing at 000 Xxxxxxxxxx Xxxx, Xxxxx, Xxxxxxxxx 00000.
RECITALS:
WHEREAS, the Company wishes to provide for the services of Consultant
to assist it in certain matters relating to the raising of capital for the
Company during the term of this Agreement and on the conditions here set
forth; and
WHEREAS, Consultant desires to receive certain compensation from the
Company for Consultant's services during the term which shall be contingent on
raising a minimum amount of capital for the Company and,
WHEREAS, Company desires protection of Company's confidential
business and technical information which has been developed by the Company in
recent years at substantial expense.
NOW, THEREFORE, in consideration of the mutual promises here
contained, the Company and Consultant each intend to be legally bound,
covenant and agree as follows:
1. Consulting Agreement. Upon the terms and conditions set forth in this
Agreement. Company engages Consultant, and Consultant accepts the consulting
relationship. Consultant shall be an independent contractor and shall not be the
employee, servant, agent, partner, or joint venturer of the Company, or any of
its officers, directors, or employees. The Consultant shall not have the right
to or be entitled to any of the employee benefits of the Company or its
subsidiaries. The Consultant agrees to arrange for the Consultant's own
liability, disability, health, and workers' compensation insurance, and that of
the Consultant's employees, if any. The Consultant further agrees to be
responsible for the Consultant's own tax obligations accruing as a result of
payments for services rendered under this Agreement, as well as for the tax
withholding obligations with respect to the Consultant's employees, if any.
2. Duties. Consultant shall devote the time to the Company as set forth in this
agreement and shall use his best efforts to raise a minimum of $2,000,000 of
capital for the Company.
3. Term. Consultant's relationship shall commence on the above date and continue
to the earlier of: (a) thirty days after the date either party gives written
notice to the other party of its intent to terminate this Agreement or (b) the
effective date of a written agreement between the parties to terminate this
Agreement.
4. Fees.
(a) Fees. For services rendered under this Agreement, Company shall pay
Consultant fees at a monthly rate of $17,250. During the term of this
Agreement, Consultant shall be expected to perform services for the
Company as mutually agreed by the parties. Provided, however that the
fees provided for in this paragraph shall be accrued and not paid to
Consultant until the Company raises a minimum of $2,000,000 of capital
during the period beginning on April 1, 1997. If the Company raises
$2,000,000 of capital within one year after the termination of this
Agreement, the Consultant shall receive the fees set forth in this
paragraph for the period of time from April 1, 1997 to the date of
termination.
(b) Stock Option Grant. Subject to the Company raising at least
$2,000,000 of capital within one year, the Company shall grant to
Consultant a nonqualified stock option to acquire up to 75,000 shares
of the Company's Common Stock, in substantially the form set forth on
the Stock Option attached as Exhibit A. Such Stock Option shall have an
exercise price of $2.25. Such option shall be exercisable only in
accordance with the following schedule:
Earliest Number of
Date of Exercise Shares Exercisable
Immediately 18,750
July 1, 1998 18,750
July 1, 1999 18,750
July 1, 2000 18,750
The Consultant's stock options shall be governed by the terms of this
Agreement and the Company's Stock Option Agreement with the Consultant attached
and incorporated by reference. Provided, however, that the Consultant shall be
entitled to immediately exercise all his Stock Options if: (a) this Agreement is
terminated before July 1, 2000 or (b) there is a Change of Control of the
Company before July 1, 2000. Change of Control is defined as (a) the sale of
substantially all the assets of the Company; or (b) one entity (including its
affiliates) owning 25% or more of the outstanding stock of the Company; or (c)
more than 50% of the members of the Board of Directors of the Company changing
within a one year period. Consultant shall have five years after each of the
above Dates to exercise each option.
5. Business Expenses. The Consultant shall xxxx the Company and the Company
shall pay to Consultant all customary business expenses incurred by the
Consultant in performing his duties for the Company. For purposes of business
travel expenses, Consultant's office in Xxxxx, Minnesota shall be considered
Consultant's office and Consultant shall be paid mileage for trips between Xxxxx
and Company's office in Bloomington, Minnesota.
6. Termination. Subject to the respective continuing obligations of the parties
pursuant to Sections 7, 8, 9 and 10, this Agreement may be terminated prior to
the expiration of its then remaining applicable term by either the Consultant or
the Company giving the other party 30 days written notice.
7. Confidential Information.
(a) For purposes of this Section, the term "Confidential Information"
means information which is not generally known and which is proprietary
to the Company, including: (i) trade secret information about Company
and its services; and (ii) information relating to the business of
Company as conducted at any time within the previous two years or
anticipated to be conducted by Company, and to any of its past, current
or anticipated products, including, without limitation, information
about Company's research, development, services, purchasing,
accounting, engineering, marketing, selling, leasing or servicing. All
information which Consultant has a reasonable basis to consider
Confidential Information or which is treated by Company as being
Confidential Information shall be presumed to be Confidential
Information, whether originated by Consultant, or by others, and
without regard to the manner in which Consultant obtains access to such
information.
(b) Consultant will not during the term of this Agreement and following
expiration or termination of this Agreement, use or disclose any
Confidential Information to any person not employed by Company without
the prior authorization of Company and will use reasonably prudent care
to safeguard, protect and to prevent the unauthorized disclosure of,
all of such Confidential Information.
8. Inventions.
(a) For purposes of this Section, the term "Inventions" means
discoveries, improvements and ideas (whether or not in writing or
reduced to practice) and works of authorship, whether or not patentable
or copyrightable: (1) which relate directly to the business of Company,
or to Company's actual or demonstrably anticipated research or
development; (2) which result from any work performed by Consultant for
Company; (3) for which equipment, supplies, facilities or trade secret
information of Company is utilized; or (4) which were conceived or
developed during the time Consultant was obligated to perform the
duties described in Section 2.
(b) Consultant agrees that all Inventions made, authored or conceived
by Consultant, either solely or jointly with others, during the term of
this Agreement, shall be the sole and exclusive property of Company.
Upon termination of this Agreement, Consultant shall turn over to a
designated representative of Company all property in Consultant's
possession and custody belonging to Company. Consultant shall not
retain any copies or reproductions of correspondence, memoranda,
reports, notebooks, drawings, photographs or other documents relating
in any way to the affairs of Company which came into Consultant's
possession at any time during the term of this Agreement.
(c) Consultant will promptly upon request by Company fully disclose to
Company in writing any Inventions. Consultant will assign (and by this
Agreement, hereby assigns) to Company all of Consultant's rights to
Inventions, and to applications for patents or copyrights in all
countries and to patents and copyrights granted in all countries. Upon
the request of Company, Consultant will apply for such United States or
foreign patents or copyrights as Company may deem desirable, and
Consultant will do any and all acts necessary in connection with such
applications for patents or copyrights, or assignments, in order to
establish in Company the entire right, title and interest in and to
such patents or copyrights. If Consultant renders assistance to Company
under this Section after termination of this Agreement, Company shall
pay a reasonable fee as determined by Company for Consultant's time and
expenses.
9. No Adequate Remedy. The parties declare that is impossible to measure in
money the damages which will accrue to either party by reason of a failure to
perform any of the obligations under this Agreement. Therefore, if either party
shall institute any action or proceeding to enforce the provisions hereof, such
person against whom such action or proceeding is brought hereby waives the claim
or defense that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that such party
has an adequate remedy at law.
10. Indemnification Company shall indemnify Consultant for all expenses incurred
by Consultant, including any judgments, or claims, and including reasonable
attorney expenses and other expenses, for any matter arising out of or related
to Consultant's actions or failure to act on behalf of the Company, to the
extent permitted by Minn. Stat. Section 302A.559.
11. Miscellaneous.
(a) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of all successors and assigns of the Company,
whether by way of merger, consolidation, operation of law, assignment,
purchase or other acquisition of substantially all of the assets or
business of Company and shall only be assignable under the foregoing
circumstances and shall be deemed to be materially breached by Company
if any such successor or assign does not absolutely and unconditionally
assume all of Company's obligations to Consultant hereunder. Any such
successor or assign shall be included in the term "Company" as used in
this Agreement.
(b) Notices. All notices, requests and demands shall be in writing and
be delivered or mailed to any such party at its address which:
(i) In the case of Company shall be:
HEALTH FITNESS CORPORATION
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
(ii) In the case of the Consultant shall be:
XX. XXXXXXX X. XXXXXXX
000 Xxxxxxxxxx Xxxx
Xxxxx, Xxxxxxxxx 00000
Either party may by notice designate a change of address. Any notice,
if mailed properly addressed, postage prepaid, registered or certified
mail, shall be deemed dispatched on the registered date or that stamped
on the certified mail receipt, and shall be deemed received within the
fifth business day thereafter, or when it is actually received,
whichever is sooner.
(c) Captions. The various headings or captions in this Agreement are
for convenience only and shall not affect the meaning or interpretation
of this Agreement.
(d) Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Minnesota and
any legal proceeding arising out of or in connection with this
Agreement shall be brought in the appropriate courts of the State of
Minnesota, with each of the parties consenting to the exclusive
jurisdiction of said courts for this purpose.
(e) Construction. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(f) Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right
or remedy hereunder preclude any other or further exercise thereof or
the exercise of any right or remedy granted hereby or by any related
document or by law.
(g) Modification. This Agreement may not be, and shall not be, modified
or amended except by a written instrument signed by both parties
hereto.
(h) No Conflict in a Business. Consultant agrees that he will not,
during the term of this Agreement, transact business with the Company
personally, or as an agent, owner, partner, shareholder of any other
entity; provided, however, Consultant may enter into any business
transaction that is, in the opinion of the Company's Board of
Directors, reasonable, prudent or beneficial to the Company, so long as
any such business transaction is at arms-length as though between
independent and prudent individuals and is ratified and approved by the
designated members of the Company's Board of Directors.
(i) Entire Agreement. This Agreement constitutes the entire Agreement
and understanding between the parties hereto in reference to all the
matters herein agreed upon; provided, however, that this Agreement
shall not deprive Consultant of any other rights Consultant may have
now, or in the future, pursuant to law or the provisions of Company
benefit plans.
(j) Counterparts. This Agreement shall be executed in at least two
counterparts, each of which shall constitute an original, but both of
which, when taken together, will constitute one in the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered this ______ day of June, 1998, to be effective the
day and year first above written.
HEALTH FITNESS CORPORATION
By: /s/ Xxxxx X. Xxxxx
Its: President
CONSULTANT
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
