Exhibit 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT dated July __, 1998 between HealthDrive Corporation, a Delaware
corporation with its principal executive offices located at 00 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000-0000 (the "Company"), and Xxxxxx X. Xxxxxxx, M.D.,
an individual residing at 00 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the
"Employee").
1. Employment. The Company agrees to employ the Employee as Chairman,
President and Chief Executive Officer of the Company, rendering the services and
performing the duties prescribed by the Company's Board of Directors. The
Employee shall during the term hereof serve as a member of the Company's Board
of Directors and shall be the Chairman thereof. The Employee agrees, while
employed hereunder, to perform his duties faithfully and to the best of his
ability. The Employee shall be employed at the Company's offices in Newton,
Massachusetts, and his principal duties shall be performed primarily in Boston,
Massachusetts, except for business trips reasonable in number and duration.
2. Term. The employment of the Employee hereunder shall begin on the date
hereof and shall continue through the earlier of (a) July 1, 2003 or (b) the
occurrence of a Termination Date, as defined in Section 5 (the "Term"),
provided, however, that the Term shall automatically be extended for an
additional five-year period (subject to the occurrence of a Termination Date)
after July 1, 2003 unless the Company or the Employee gives notice to the other
prior to July 1, 2002 of its or his intention not to renew the Term.
3. Compensation.
3.1. As compensation for the Employee's services during the Term, the
Company shall pay the Employee an annual base salary at the rate of
$250,000 per year, payable in accordance with the Company's standard
payroll procedures. Prior to the end of each year during the Term, the
Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") shall consider the performance of the Employee,
his contribution to the success of the Company, and such other factors as
its members shall deem appropriate and shall fix an annual base salary to
be paid to the Employee during the ensuing year.
3.2. Notwithstanding the foregoing, the Employee's annual base salary
for any year during the Term shall in no event be less than his annual base
salary for the prior year multiplied by 105% or, if greater, his annual
base salary for the prior year adjusted to reflect the increase in the cost
of living over such prior year.
3.3. The Employee shall be eligible for a cash bonus at the discretion
of the Compensation Committee, to be awarded upon the achievement of
reasonable performance goals established by the Compensation Committee,
after consultation with the Employee, at the beginning of each year during
the Term. At the time these
performance goals are established, the maximum and minimum target bonuses
for such year shall be established by the Compensation Committee. The
minimum bonus for the Employee for any year shall not be less than 15% of
the Employee's annual base salary for such year and shall be guaranteed,
regardless of whether or not the performance goals are achieved.
3.4. If the Employee is prevented by disability, for a period of six
consecutive months, from continuing fully to perform his obligations
hereunder, the Employee shall perform his obligations hereunder to the
extent he is able and, after the expiration of such six month period,
the Company may reduce his annual base salary during the continuation of
such disability to reflect the extent of the disability; provided that in
no event may such rate, when added to payments received by him under any
disability or qualified retirement or pension plan to which the Company
contributes or has contributed, be less than the annual base salary in
effect at the time that such disability commenced. If there should be a
dispute about the Employee's disability, disability shall be determined
by the Board of Directors of the Company based upon a report from a
physician who shall have examined the Employee. If the Employee claims
disability, the Employee agrees to submit to a physical examination at
any reasonable time or times by a qualified physician designated by the
Board of Directors and reasonably acceptable to the Employee.
4. Employee Benefits. The Employee shall be entitled to participate in all
"employee pension benefit plans," all "employee welfare benefit plans" (each as
defined in the Employee Retirement Income Security Act of 1974) and all pay
practices and other compensation arrangements maintained by the Company, on a
basis at least as advantageous to the Employee as the basis on which other
similarly situated executive employees of the Company are eligible to
participate and on a basis at least as advantageous to the Employee as the basis
on which he participates therein on the date hereof. Without limiting the
generality of the foregoing, the Employee shall be entitled to the following
employee benefits (collectively, with the benefits contemplated by this Section
4, the "Benefits"):
4.1. The Employee and the Employee's dependents shall be covered by
medical and dental insurance comparable in scope to the coverage afforded
on the date hereof, provided, that the Company shall pay the full amount of
any premiums to be paid with respect to such insurance. In addition, the
Company shall reimburse the Employee for all out-of-pocket medical and
dental expenses incurred by the Employee during the Term. If a Change in
Control of the Company, as defined in Section 5.2.2, shall have occurred,
the Company may not change the carriers providing medical insurance
immediately before the change without the consent of the Employee, which
consent will not unreasonably be withheld.
4.2. The Employee shall be eligible each year during the Term to
receive stock options under a stock option plan maintained by the Company
for such numbers of shares and upon such terms and conditions as determined
by the Compensation Committee. If the Company no longer has a class of
stock publicly-traded by reason of a Change in Control of the Company, as
defined in Section 5.2.2, the Company's obligation under this
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Section 4.2 will be satisfied through options granted by the issuer with
public stock then in control of the Company.
4.3. The Company shall reimburse the Employee from time to time for
the reasonable expenses incurred by the Employee in connection with the
performance of his obligations hereunder.
4.4. The Employee shall be entitled to legal holidays and to annual
paid vacation in accordance with the Company's holiday and vacation policy
in effect on the date hereof.
4.5. The Employee shall be entitled to the personal use of a leased
automobile, and the reimbursement of all maintenance and related expenses
incurred by the Employee, during the Term under the practice in effect on
the date hereof.
Notwithstanding the foregoing, the Company may from time to time change or
substitute a plan or program under which one or more of the Benefits are
provided to the Employee, provided that the Company first obtains the written
consent of the Employee, which the Employee agrees not unreasonably to withhold,
taking into account his personal situation.
5. Termination Date; Consequences for Compensation and Benefits
5.1. Definition of Termination Date. The first to occur of the
following events shall be the "Termination Date":
5.1.1. The date on which the Employee becomes entitled to receive
long-term or short-term disability payments by reason of total and
permanent disability;
5.1.2. The Employee's death;
5.1.3. Voluntary resignation ("Resignation with Reason") after
one of the following events shall have occurred, which event shall be
specified to the Company by the Employee at the time of resignation:
(i) material reduction in the responsibility, authority, power or duty
of the Employee; (ii) a material breach by the Company of any
provision of this Agreement, which breach continues for 30 days
following notice by the Employee to the Company setting forth the
nature of the breach; (iii) the Company relocates its principal
executive offices more than 25 miles from Newton, Massachusetts; or
(iv) a Change of Control shall have occurred;
5.1.4. Voluntary resignation not accompanied by a notice of
reason described in Section 5.1.3 ("General Resignation");
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5.1.5. Discharge of the Employee by the Company ("Discharge for
Cause") after one of the following events shall have occurred, which
event shall be specified to the Employee by the Company at the time of
discharge: (i) conviction of the Employee of any felony involving
moral turpitude; or (ii) any material breach of any term of this
Agreement by the Employee which is not cured within 30 days after
written notice from the Board of Directors of the Company to the
Employee setting forth the nature of the breach; and
5.1.6. Discharge of the Employee by the Company not accompanied
by a notice of cause described in Section 5.1.5 ("General Discharge"),
provided, however, that the Company shall not be entitled to terminate
the Employee other than with respect to a Discharge for Cause unless
such action has been previously authorized by the affirmative vote of
two-thirds or more of the then-elected members of the Board of
Directors of the Company (other than the Employee).
5.2. Consequences for Compensation and Benefits. If the
Termination Date occurs by reason of disability, death, General
Resignation or Discharge for Cause, the Company shall pay compensation
to the Employee through the Termination Date and shall pay to the
Employee all Benefits accrued through the Termination Date, payable in
accordance with the respective terms of the plans, practices and
arrangements under which the Benefits were accrued. If the Termination
Date occurs by reason of General Discharge or Resignation with Reason,
(a) all stock options held by the Employee shall become immediately
exercisable and shall remain exercisable for 30 days after the
Termination Date, (b) the Company shall continue the health coverage
contemplated by Section 4.1 through the date that falls on the later of
July 1, 2003 or the six month anniversary of the Termination Date, (c)
the Company shall engage for the Employee, at the Company's expense,
outplacement services appropriate to the Employee's position, for up
to twelve months after the Termination Date, and (d) the Employee shall
be entitled to receive, within 60 days after the Termination Date, the
amount set forth in Section 5.2.1 or, if Section 5.2.2 is applicable
and yields an amount equal to more than 90% of the amount set forth in
Section 5.2.1 net after all applicable taxes, the amount set forth in
Section 5.2.2.
5.2.1. The present value, calculated using the Pension Benefit
Guaranty Corporation immediate discount rate for valuing benefits upon
plan termination, of the product of the sum of (i) the Employee's
annual base salary at the Termination Date plus (ii) the maximum
target bonus established by the Compensation Committee for the year in
which the Termination Date occurs multiplied by two.
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5.2.2. If a Change in Control of the Company shall have occurred
before the Termination Date, one dollar less than the amount which is
three times the Employee's "base amount" of compensation and benefits,
as defined in Section 280G of the Internal Revenue Code of 1986.
A Change in Control of the Company shall be deemed to have occurred for
purposes of this Agreement upon the first to occur of the date when (a)
persons who were Directors of the Company on July 1, 1998 no longer
constitute a majority of the Board of Directors of the Company or (b) a
person "beneficially owns" (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) in the aggregate 50% or more of the
outstanding shares of capital stock entitled to vote generally in the
election of the Directors of the Company. If the payments made pursuant to
this Section 5.2 give rise to an excise tax under Section 4999 of the
Internal Revenue Code of 1986, the Company shall also pay to the Employee
or directly to the Internal Revenue Service in a timely fashion an amount
sufficient, after federal and state income taxes, to pay the excise tax so
payable and all directly related interest and penalties (whether reported
initially or subsequently assessed). In the event of a dispute between the
Company and the Employee with respect to the amount contemplated by the
preceding sentence, the matter shall be determined (at the Company's
expense) by an independent nationally-recognized accounting firm reasonably
acceptable to both parties; provided, however, that the Employee shall
cooperate with the Company in his tax reporting position and any defense
thereof (which the Company shall control) in order to minimize the amount
of such payments to the extent the Company has a reasonable legal basis
therefor.
5.3. Liquidated Damages; No Duty to Mitigate Damages. The amounts
payable pursuant to Section 5.2 shall be deemed liquidated damages for the
early termination of this Agreement and shall be paid to the Employee
regardless of any income the Employee may receive from any other employer,
and the Employee shall have no duty of any kind to seek employment from any
other employer during the balance of the Term.
6. Indemnification. The Company shall indemnify the Employee against all
loss, cost, liability and expense arising from the Employee's service to the
Company or any affiliate, whether as officer, director, employee, fiduciary of
any employee benefit plan or otherwise, upon terms at least as favorable to the
Employee as those provided by the Amended and Restated Certificate of
Incorporation and By-laws of the Company in effect on the date hereof.
7. Confidential Information. Unless the Employee shall first secure consent
of the Company, the Employee shall not disclose or use, either during or after
the Term, any secret or confidential information of the Company or any
affiliate, whether or not developed by the Employee, except as required by his
duties to the Company or the affiliate.
8. Arbitration. In the event that any party hereto has any claim hereunder,
the party shall promptly notify each other party of such claim. If within 30
days of the receipt of such
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notice of claim, the parties cannot agree on a resolution of such claim, the
parties agree to submit such dispute to binding arbitration to be held in
Boston, Massachusetts under the rules of the American Arbitration Association.
Any such arbitration shall be conducted by three arbitrators, one of whom shall
be selected by the Employee, one of whom shall be selected by the Company and
one of whom shall be selected by the arbitrators so selected. The expenses of
any such arbitration shall be paid by the non-prevailing party, as determined by
the final order of the arbitrators.
9. Notices. Whenever under this Agreement any notice is to be given by the
Company to the Employee, it shall be delivered to the Employee at the address
set forth in the first paragraph hereof, or at such other address as the
Employee shall specify to the Company in writing prior to the delivery of such
notice. Whenever under this Agreement any notice is to be given by the Employee
to the Company, it shall be delivered to the Company at the address set forth in
the first paragraph hereof, or at such other address as the Company shall
specify to the Employee in writing prior to the delivery of such notice.
10. Governing Law. This Agreement shall be deemed a contract made and
performed in the Commonwealth of Massachusetts, and shall be governed by the
laws of the Commonwealth of Massachusetts.
11. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement of the parties, supersedes all prior agreements between the Company
and the Employee with respect to his employment by the Company and the
consequences of a termination of such employment, and may be altered or amended
or any provision hereof waived only by an agreement in writing signed by the
party against whom enforcement of any alteration, amendment, or waiver is
sought. No waiver by any party of any breach of this Agreement shall be
considered as a waiver of any subsequent breach.
12. Binding Obligations. This Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns and the Employee and
his personal representatives.
13. Assignability. Neither this Agreement nor any benefits payable to the
Employee hereunder shall be assigned, pledged, anticipated, or otherwise
alienated by the Employee, or subject to attachment or other legal process by
any creditor of the Employee, and notwithstanding any attempted assignment,
pledge, anticipation, alienation, attachment, or other legal process, any
benefit payable to the Employee hereunder shall be paid only to the Employee or
his estate.
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IN WITNESS WHEREOF, the Company, by its officer hereunto duly authorized,
and the Employee have signed and sealed this Agreement as of the date first
written above.
HEALTHDRIVE CORPORATION
By:
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Its: Chief Financial Officer and
Vice President of Finance
By:
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Xxxxxx X. Xxxxxxx, M.D.
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