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Exhibit 10.10
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into between Health Fitness
Physical Therapy, Inc. ("Employer"), a Minnesota corporation, and Xxxxx X.
Xxxxx, ("Employee").
WHEREAS, the Employer is engaged in the development, marketing and
management of corporate and hospital-based fitness centers (collectively,
"Fitness Services") and desires to employ Employee for the provision of Fitness
Services and for management of certain of Employer's business on a regional
basis; and
WHEREAS, Employee has heretofore been a Regional Vice President of
Fitness Systems, Inc., a California corporation (the "Former Employer"); and
WHEREAS, the Employer has agreed to purchase all of the capital stock
of the Former Employer and has conditioned the consummation of that purchase on
the execution of this agreement; and
WHEREAS, the Employer desires to retain the services of Employee
subsequent to the purchase of stock, on the terms and subject to the conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
I. EMPLOYMENT
1.1. Employment Relationship. The Employer hereby agrees to employ
Employee, and Employee hereby agrees to engage in the business of providing
Fitness Services as an Employee of the Employer upon the terms and conditions
hereinafter set forth.
1.2. Term of Employment. Subject to the provisions of Article IV,
Employee's employment shall be for a period of five (5) years from and after the
effective date set forth at the end hereof. Unless terminated pursuant to
Article IV, the term of employment shall be renewed upon expiration
automatically for successive terms of one year each, upon the same terms and
conditions contained herein.
1.3. Duties, Governing Policies, and Standards. The parties agree that
the Employer is employing Employee to perform such professional and
administrative duties as are from time to time prescribed by the Employer, which
duties may include responsibility for corporate fitness sales, marketing,
quality assurance, staff training, administration, professional recruitment, and
participation in meetings and department meetings at the office facilities and
such other offices as the Employer may establish from time to time (the
"offices"). By entering into this Agreement, Employee agrees that Employee will,
to the best of Employee's ability, experience and talents, perform all of the
duties that may reasonably be required of Employee, pursuant to the express and
implicit terms hereof, subject generally to the supervision and direction of the
Employer as to all matters relating to the
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performance of the Employee's duties under this Agreement and as to the
operation and management of the business and affairs of the Employer, and
otherwise to the reasonable satisfaction of the Employer.
Employee agrees that all of the Employee's professional time,
attention, knowledge and skills shall be devoted to the business and interests
of the Employer and the Employer's customers; provided that it is the general
intention that Employee is normally expected to be available for approximately
forty (40) hours per week to provide Fitness Services and other services
hereunder, but that as with any professional services, additional hours during
evenings and weekends may from time to time be necessary. Employee acknowledges
that Employee will have primary responsibility for the ongoing profitable
operation of that region of the business acquired by Employer pursuant to the
Stock Purchase Agreement for which Employee had responsibility for Former
Employer. The Employer shall be entitled to all of the profits and benefits
arising from or incident to Employee's work, services, advice and professional
activities relating to fitness centers, including, without limitation, all fees
for services rendered, honoraria for teaching or speaking, research stipends,
royalties for inventions, publications, and other intellectual property
developed using Employer's resources or at Employer's expense, and all other
amounts paid or payable during the term hereof to, or with respect to the
activities of, Employee. Employee understands that the employment provided
hereunder is full-time as the term "full-time" is defined by Employer's policies
and procedures in effect from time to time. Employee shall not, during the term
hereof, be interested directly or indirectly as a partner, officer, director,
stockholder, except if ownership is less than 5%, lender employee, agent or
contractor in any other fitness or health care business or undertaking providing
any Fitness Services, except with the express prior written consent of the
Employer.
1.4. Accessibility. Employee shall, as required in accordance with the
Employer's policies, be generally available to attend to the needs of Employer's
customers and shall ensure that all Fitness Services provided to the Employer's
customers are provided promptly and in a manner that ensures continuity.
1.5 Records and Files. Subject to customer direction, all customer
records shall remain under the ownership and control of the Employer and shall
be held in the strictest of confidence. During Employee's employment, Employee
shall have access to data and records necessary to appropriate business practice
and to the maintenance of proper standards of service.
II. COMPENSATION AND BENEFITS
2.1. Base Salary. As base compensation for all services to be rendered
by the Employee under this Agreement during the term of this Agreement, the
Employer shall pay to Employee an annual salary of $74,650, or such greater
amount as the Board of Directors may authorize following Employee's annual
performance review, which salary shall be paid on a bi-weekly basis in
accordance with the Employer's normal payroll procedures and policies. Employer
agrees to develop an incentive compensation program to complement the base
salary within sixty (60) days of closing in accordance with Section 8E of the
Stock Purchase Agreement between Employee and Employer, among others.
2.2 Auto Allowance. Employer shall continue the Former Employer's
existing monthly automobile allowance program for Employee and such program will
be evaluated within sixty (60) days of closing. All costs and expenses relating
to such motor vehicle shall be borne by Employee.
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2.3. Participation in Benefit Plans. During the term of this
agreement, Employee shall be entitled to receive such medical and
hospitalization insurance equal to that which was provided by Former Employer,
including spouse and dependent coverage, and other fringe benefits as are being
provided to the Employer's other employees from time to time to the extent that
Employee's age, position or other factors qualify him for such fringe benefits.
Employee shall be entitled to the same number of weeks vacation per year of this
Agreement as Employee received from Former Employer.
2.4. Stock Options. Employer agrees to grant to Employee a stock
option to purchase 5,000 shares of its common stock within 60 days of the
effective date of this Agreement. Such option shall have an exercise price equal
to the fair market value of such common stock on the date of grant, shall become
exercisable one year from the date of grant with respect to 25% of the shares
subject thereto, and with respect to an additional 25% of such shares in each
year thereafter, and shall expire five years from the date of grant, and shall
have other provisions generally included in stock option agreements of Employer.
Such stock options shall be governed by the terms of Employer's applicable stock
option plan(s) and a stock option agreement with Employee.
III. EMPLOYER OBLIGATIONS
During the term of this Agreement, the Employer shall make available
to Employee at the Offices, or at such other locations as may be designated by
Employer, space in which the Employee may perform his obligations hereunder, and
shall make available such supportive and administrative personnel and such
equipment, furniture, files, and supplies as are necessary and appropriate for
Employee's practice at the Employer. The Employer retains all rights of title,
possession and ownership in any equipment and supplies purchased or otherwise
acquired for use described herein.
With respect to the personnel, equipment, supplies, services, or
facilities to be furnished under this Agreement, the Employer shall never be
liable for failure to furnish or perform the same when prevented from doing so
by strike, lockout, breakdown, accident, order or regulation of or by any
governmental authority, or because of war or other emergency, or for any other
cause beyond the Employer's reasonable control.
IV. TERMINATION
4.1. Termination. This Agreement and Employee's employment hereunder
shall terminate under any of the following circumstances:
(a) By mutual written agreement of the parties.
(b) Upon death of Employee.
(c) Upon the date occurring six (6) months after Employee becomes
permanently and totally disabled or permanently and partially
disabled to the extent that he or she is unable (with reasonable
accommodation by Employer) to perform the duties required
hereunder. The determination of Employee's disability status will
be made by a physician mutually acceptable to Employer and
Employee.
(d) By either party for any reason, without cause, at the expiration
of the initial term of this Agreement or at any time during
subsequent renewal terms, in either case upon not less
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than sixty (60) days written notice to the other party.
(e) Immediately upon the occurrence of any one of the following
events, in the Employer's discretion, except in those cases in
which such events occur as a result of strike, lockout,
breakdown, accident, order or regulation of or by any
governmental authority, or because of war or other emergency, or
for any other cause beyond the Employee's reasonable control:
(1) The conviction of Employee of any crime punishable as a
felony or involving moral turpitude, or immoral conduct;
(2) The Employer's inability to procure, at reasonable rates,
adequate professional liability insurance covering both the
Employer and Employee with regard to the performance by
Employee of services hereunder;
(3) The failure or refusal by the Employee to faithfully or
diligently perform or comply with any provision of this
Agreement, or with the policies, standards and regulations
established by the Employer from time to time for all
Employer professional staff, or to perform the usual and
customary duties of employment, but such termination shall
only be effective upon fifteen (15) days prior written
notice from Employer to Employee specifying the default,
during which time (or such other time as to which Employer
and Employee mutually agree) Employee shall have the
opportunity to cure such default to the reasonable
satisfaction of Employer;
(4) For other just or reasonable cause, including, but not
limited to, conduct on the part of Employee that constitutes
unsatisfactory quality of service or service inconsistent
with prevailing ethical standards, or serious neglect of
duties, dishonesty in dealings with the Employer, or
disclosure of confidential Employer information to any
unauthorized person, as determined in accordance with
Employer's standards and procedures, as amended from time to
time, but such termination shall only be effective upon
fifteen (15) days prior written notice from Employer to
Employee specifying the default, during which time (or such
other time as to which Employer and Employee mutually agree)
Employee shall have the opportunity to cure such default to
the reasonable satisfaction of Employer.
4.2 Termination by Employee. This Agreement and Employee's employment hereunder
may be terminated by Employee under any of the following circumstances:
(i) The substantial substantive diminution of Employee's position,
authority, duties or responsibilities;
(ii) The failure by Employer to comply in a material respect with any of
the provisions of this Agreement to be performed by Employer; or
(iii) Upon one year's prior notice from Employee.
4.3 Termination Compensation. In the event that the Employer terminates
Employee's
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employment in accordance with Section 4.1(e), the Employer may, in its sole
discretion, elect to pay Employee salary in lieu of giving notice; provided that
the restrictions under Article V hereof shall nevertheless apply for the entire
period during which the notice would otherwise continue and the effective date
of termination of this Agreement will be deemed to be the last day of the notice
period. In the event that the Employer terminates Employee's employment in
accordance with Section 4.1 or 4.2, Employee shall be entitled to all
compensation earned but not yet paid prior to the date of termination.
4.4 Suspension. In the event that Employer determines in connection
with any notice of termination under Sections 4.1(e)(3) or 4.1(e)(4) that
Employee's continued employment would not be in the best interests of Employer's
customers or would be detrimental to Employer's business, as Employer determines
in its sole discretion, then Employer may suspend Employee with pay until the
end of the period allowed for curing such default pursuant to such sections.
Such suspension will continue pending the efforts of Employee to cure the
default to the reasonable satisfaction of Employer. Upon the imposition of any
such suspension, Employee may voluntarily terminate this Agreement upon written
notice to Employer. The fact that Employee may be, or has been, suspended will
not limit or affect Employer's discretion under this Article IV.
V. RESTRICTIONS FOLLOWING TERMINATION OF EMPLOYMENT
5.1. Understanding. Employee and the Employer acknowledge that the
Employer will expend time and effort to establish and develop good will and
relationships between Employee and Employer's customers, and that in the event
that Employee's employment terminates, the Employer will suffer hardship by
virtue of the need to attract and train other qualified professional staff to
provide Fitness Services for Employer's customers. The Employer will further
require time and the expenditure of effort to develop, establish and encourage
customer relationships between such new professional staff and Employer's
customers. Accordingly, Employee and the Employer agree that a covenant
reasonably limiting Employee's employment following termination from employment
is reasonably necessary to the Employer's operations, and will not unduly
restrict the Employee in securing other employment in the event of such
termination. It is further understood that this Article V shall be construed as
an agreement independent of any other provision of this Agreement and that the
existence of any claim or cause of action of Employee against Employer, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
enforcement hereof by Employer.
5.2. Restrictive Covenant. In light of the understandings of the
parties as set forth in Section 5.1, the parties agree that:
(a) upon termination of the employment of Employee for any reason,
and for two (2) years after such termination, Employee shall not
engage directly or indirectly in the business of providing
Fitness Services within the Service Area of Employer; and
(b) upon termination of the employment of Employee for any reason,
and for two (2) years thereafter, Employee shall not directly or
indirectly solicit or assist in the solicitation of any Employer
client, either on behalf of Employee personally, or on behalf of
any person, corporation, partnership or organization for whom
Employee is acting as an agent, employee, owner, independent
contractor or consultant.
(c) If any court or governmental agency with proper jurisdiction
determines that the foregoing restrictions are unreasonable as to
either geographic scope or duration, then
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the foregoing restrictions may be modified and shall be
enforceable to the extent that the court or governmental agency
determines to be reasonable.
(d) Employee agrees that, in the event that he is employed or engaged
as an independent contractor by any other person, partnership,
corporation, or other entity engaged in providing Fitness
Services following termination of this Agreement, then Employee
will fully inform such employer/contractor of the limitations set
forth in this Section 5.2.
(e) For the purposes of this Section 5.2, the "Service Area of
Employer" means the service area for which Employee is
responsible hereunder within the United States as of the date of
this Agreement.
5.3. Remedies. In the event of a breach or threatened breach of this
covenant by Employee, it is agreed that the Employer, in addition to such other
remedies as may be available to it pursuant to law, shall be entitled as a
matter of right to injunctive relief to enforce this covenant in any court of
competent jurisdiction, together with its reasonable attorneys' fees and costs
incurred in the securing of such relief. Notwithstanding Article VI hereof, in
the event of a dispute or complaint hereunder that is subject to arbitration,
Employer shall be entitled to seek injunctive relief to enforce this covenant
pending any arbitration of such dispute or complaint.
VI. ARBITRATION
6.1. Arbitration of Disputes. Except as provided in Section 5.3, any
dispute between the parties hereto or complaint by one of them arising from or
related to the performance, breach, termination, application, scope, or meaning
of this Agreement shall be resolved exclusively as follows: The complaining
party shall deliver a written notice describing the dispute or complaint to the
other party in person or by personal, receipted delivery, or by certified or
registered mail, return receipt requested, within sixty (60) days after the
later of the date that the events giving rise to the dispute or complaint
occurred or the date that information of such events is first known, or should
have been known upon the exercise of reasonable diligence, by the complaining
party. Within five (5) business days following actual receipt of the written
notice of the dispute or complaint, the parties shall meet and attempt to
resolve the dispute or complaint. If such dispute or complaint is not resolved
within five (5) business days after the meeting between the parties, then the
complaining party may demand that the complaining party may demand that the
dispute or complaint be submitted to arbitration. Demand for the arbitration of
any dispute or complaint hereunder must be made in writing within thirty (30)
business days after actual receipt of the written notice of the dispute or
complaint from the complaining party by the other party. The party demanding
arbitration must deliver written notice thereof to the other party in person or
by personal, receipted delivery, or by certified or registered mail, return
receipt requested, and simultaneously submit a request for arbitration to the
American Arbitration Association ("AAA"). If the party desiring arbitration
fails to demand arbitration in the manner and within the time set forth herein,
that party shall be deemed conclusively to have conceded its position as to the
dispute in question or waived its complaint, as the case may be. For the
purposes of this Article VI, "business days" means Monday through Friday,
excluding holidays recognized by the Employer. The time provisions contained in
this Article VI are deemed to be of the essence, subject only to waiver by
express written consent of the other party.
6.2. Conduct of Arbitration. The arbitration shall be conducted before
an arbitrator selected pursuant to the then current rules and procedures of the
AAA, and any such arbitration shall be
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conducted in accordance with those rules. Any such arbitration shall be
conducted in Hennepin County, Minnesota. Not less than ten (10) business days
before the arbitration hearing, each party shall disclose to the other a list of
witnesses and a description of exhibits that such party intends to introduce at
the hearing, and only those witnesses that are listed and exhibits that are
described may be introduced at the hearing. The costs associated with such
arbitration, including the service of the arbitrator and all other costs
relating thereto (excluding fees and expenses of counsel to any party) shall be
borne equally by the parties to the arbitration. The determination of the
arbitrator shall be final and binding upon the parties and a judgment upon the
determination of the arbitrator may be entered in any court having jurisdiction
thereof, pursuant to the Minnesota Uniform Arbitration Act. The arbitrator of
any dispute pursuant to this section shall have no power to add to, subtract
from, modify or amend any provision of this Agreement.
VII. GENERAL PROVISIONS
7.1. Confidentiality. During the term of this Agreement and
thereafter, Employee will not disclose to any non-employee of Employer, any
information relating to the Employer's customers, practices, or business
operations, without the prior written consent of the Employer. Upon termination
of the Agreement, Employee shall not remove, retain, disclose or use, without
the Employer's written consent, any lists, letters, files, or confidential
information of any type or description pertaining to the Employer.
7.2. Integration. This Agreement constitutes the entire agreement
between the parties and supersedes all prior oral and written agreements
relating to the same subject.
7.3. Amendment. This Agreement and any exhibits attached hereto may
not be amended or modified except by the written agreement of all parties
hereto.
7.4. Severability. In the event any provision of this Agreement is
declared invalid, the remainder of the Agreement shall remain in full force and
effect as if the invalid provision or provisions had never been a part of the
Agreement.
7.5. Assignment. Employee's rights, duties, and obligations hereunder
are personal to Employee and are not assignable in whole or in part without the
prior written approval of the Employer.
7.6. Succession. This Agreement shall be binding upon and inure to the
benefit of any successor entities to the Employer which continues providing
Fitness Services.
7.7. Waiver. The failure of any party to complain of any default by
the other party hereunder or to enforce any of such party's rights hereunder, no
matter how long such failure may continue, shall never constitute a waiver of
such party's rights hereunder, including, but not limited to, the right to seek
monetary damages for default or the rights of Employer to enforce Employee's
obligations under Article V.
7.8. Headings. Section headings are provided herein solely for the
convenience of the parties, and shall not affect the interpretation or
application of this Agreement.
7.9. Governing Law. This Agreement shall be construed under and
governed by the laws of the State of Minnesota.
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IN WITNESS WHEREOF, the Employer and Employee have executed this
Agreement, and this Agreement is deemed effective as of April 21, 1995 (the
"effective date").
EMPLOYEE HEALTH FITNESS PHYSICAL THERAPY, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx Its: Chief Executive Officer
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(print or type name)
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AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT to the Employment Agreement dated April 21, 1995 is made and
entered into effective October 19, 1999 between Health Fitness Corporation
(formerly Health Fitness Physical Therapy, Inc.) ("Employer") a Minnesota
corporation and Xxxxx X. Xxxxx ("Employee").
WHEREAS, Employer is exploring certain strategic alternatives for Employer
including a merger, partnership with another company, or the potential sale of
Employer; and
WHEREAS, Employer wishes to retain the services of Employee through the
exploration and conclusion of these strategic alternatives; and
WHEREAS, Employer wishes to promote Employee to the position of Vice President
of Operations for the Corporate Health and Fitness Division; and
WHEREAS, the term of the Employment Agreement (the "Agreement") expires April
21, 2000 and the Employer and Employee wish to automatically renew the term for
an additional one year, subject to certain amendments to the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree to amend the Agreement as follows:
1) Section 1.3, 2nd paragraph, 2nd sentence of the Agreement (which reads:
"Employee acknowledges that Employee will have primary responsibility for
the ongoing profitable operation of that region of the business acquired by
Employer pursuant to the Stock Purchase Agreement for which Employee had
responsibility for Former Employer") is deleted and replaced with the
following: "Employee acknowledges that Employee will have primary
responsibility for the ongoing operation of the division of Employer's
business known as the Corporate Health and Fitness division."
2) Section 2.1 of the Agreement is deleted in its entirety and replaced with
the following: "Base Salary. Effective retroactively to October 4, 1999, as
base compensation for all services to be rendered by the Employee under
this Agreement during the term of this Agreement, the Employer shall pay to
Employee an annual salary of $110,000, which salary shall be paid on a
bi-weekly basis in accordance with the Employer's normal payroll procedures
and policies. In addition to the base salary provided hereunder, the
Employee may be entitled to receive annual merit increases in salary in
amounts as shall be decided by the Chief Operating Officer of the Employer
in its sole discretion. In no event shall the failure to grant any such
increase (or the amount of such increase) give rise to a claim by the
Employee under this Agreement."
3) Section 2.2 of the Agreement is deleted in its entirety and replaced with
the following: "Bonus. If all or substantially all of the assets of the
Employer are sold to any entity or in the event that Employer is
consolidated or merged with any entity, then upon the effective date of
such sale, consolidation or merger, the Employee may be eligible to receive
a closing bonus of up to $16,500 if the Employee achieves the performance
criteria as defined on Exhibit A. Such bonus, if earned, will be payable to
Employee by the Employer within 30 days following the effective date of
such sale, consolidation or merger. The Employee must be in the active
employ of the
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Employer as of the effective date of such sale, consolidation or merger to
be eligible for any bonus payment." If the Employer gives written notice to
the Employee that the Board of Directors of the Employer has decided that
its strategic direction does not include a sale, consolidation or merger,
then Employee's eligibility for such bonus shall become null and void as of
the effective date of such notice.
4) Section 2.4 of the Agreement is deleted in its entirety and replaced with
the following:
"Stock Options: Employer acknowledges that it has granted to Employee,
effective October 19, 1999, an incentive stock option to purchase 60,000
shares of its common stock. Such option has an exercise price of $0.5312
cents per share, shall become exercisable immediately upon the merger,
partnership with another company, or the sale of Employer, shall expire one
year from the date of grant, and shall have other provisions generally
included in stock option agreements of Employer. Such stock option shall be
governed by the terms of Employer's 1995 Stock Option Plan and a Stock
Option Agreement with Employee."
5) A new Section 2.5 is added to the Agreement as follows:
"Expense Reimbursement. During the term of this Agreement, the
Employer shall reimburse the Employee for all reasonable and necessary
out-of-pocket expenses incurred by him in connection with the performance
of his duties hereunder, in accordance with the Employer's policies and
procedures and upon the presentation of proper accounts therefor. For
purposes hereof, a one-time, one-year membership in Northwest Airlines
World Club shall be considered a reasonable and necessary out-of-pocket
business expense."
6) A new Section 2.6 is added to the Agreement as follows:
"Training and Development. During the term of this Agreement, the
Employer shall reimburse the Employee for reasonable travel and course work
costs related to continuing education/training and development programs, up
to a maximum of $1,500. Such programs must be mutually agreed upon between
Employee and the Chief Operating Officer of Employer prior to Employee
attendance to be eligible for reimbursement."
7) Section 4.1 (d) of the Agreement is deleted in its entirety and replaced
with the following:
"(d) At the discretion of Employer for any reason, with or without
cause, upon not less than sixty (60) days written notice to Employee given
either (1) prior to the sale, consolidation or merger of Employer and after
the Board of Directors of the Employer gives written notice to its
employees that the Board of Directors has decided that its strategic
direction does not include a sale, consolidation or merger of Employer, or
(2) at least four (4) months after a sale, consolidation or merger of
Employer."
8) A new Section 4.1 (f) is added to the Agreement as follows:
"(f) At the discretion of the Employer in the event that all or
substantially all of the assets of the Employer are sold to any entity (the
"New Entity") or in the event that Employer is consolidated or merged with
any entity (the "New Entity"), in either case effective upon the effective
date of such sale, consolidation or merger."
9) Section 4.2 (iii) of the Agreement is changed to read in its entirety as
follows:
"(iii) Upon two months prior notice from Employee."
10) A new Section 4.5 is added to the Agreement as follows:
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"Termination Compensation Due To Sale, Consolidation or Merger. In the
event the Employer terminates Employee's employment in accordance with
Section 4.1 (f) and the Employee is not offered comparable employment in
the New Entity (or the Employee is offered comparable employment in the New
Entity but such offer of employment requires relocation outside of the
state of Minnesota and Employee turns down such employment because of the
relocation requirement), the Employee shall be entitled to the following
severance items: (i) to be paid the equivalent of six months base salary
payable in a lump sum, less applicable withholdings, upon the effective
date of such sale, consolidation, or merger; (ii) to be paid the difference
between the premiums the Employee was paying for the medical and dental
insurance coverage he was receiving under Employer's group plans as of his
date of termination and the then current cost of 6 months worth of COBRA
for such medical and dental insurance with such payment payable in a lump
sum, less applicable withholdings, upon the effective date of such sale,
consolidation, or merger; (iii) to have the Employer make payments on the
Employee's behalf for outplacement fees up to a maximum of $5,000 for the
services of an outplacement firm mutually agreed upon by Employee and
Employer with such fees payable to the outplacement firm upon the later of
30 days following the effective date of such sale, consolidation, or
merger, or receipt of invoice by outplacement firm; (iv) to receive a
letter of reference written by Employer and provided to Employee within 30
days following the effective date of such sale, consolidation or merger;
and (v) to have the two year restrictive covenant described in Section 5.2
(a) of the Agreement eliminated effective as of the date of such sale,
consolidation, or merger. In the event the Employer terminates Employee's
employment in accordance with Section 4.1 (f) and the Employee is offered
comparable employment in the New Entity and Employee turns down such offer
of employment, then Employee shall not be entitled to any of the severance
items described above and shall only be entitled to the compensation earned
but not yet paid prior to the date of termination." For purposes of this
Section 4.5 "comparable employment" shall be defined as an offer of
employment with annual base salary being at least $93,500.
11) Section 5.2 (e) of the Agreement is changed to read in its entirety as
follows: "For purposes of this Section 5.2, the "Service Area of Employer"
means the service area for which the Employee was responsible hereunder as
of April 21, 1995 which were the states of Georgia, Florida, North
Carolina, South Carolina, Tennessee, Arkansas, Texas, Alabama, Mississippi
and Louisiana.
12) Miscellaneous. Except as expressly amended by this Amendment, all of the
terms and provisions of the Agreement shall remain in full force and
effect. This Amendment may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become a
binding agreement when one or more counterparts have been signed by each
party and delivered to the other party.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to Employment Agreement to be duly executed on behalf of each as of the date
first above written.
HEALTH FITNESS CORPORATION
By: /s/ Xxxxxx Xxxx
----------------------------------------
Its: Chief Operating Officer
/s/ Xxxxx X. Xxxxx
-------------------------------------------
Xxxxx X. Xxxxx
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EXHIBIT A
Closing Bonus Performance Criteria
Performance Criteria
If the Closing Division Contribution dollars (as calculated below) equal or
exceed the Current Division Contribution dollars (as calculated below) of
Employer's Corporate Health & Fitness Division through the effective date of a
sale, consolidation or merger of Employer (the "Closing"), then Employee shall
be eligible to be paid $16,500 bonus.
"Current" Division Contribution dollars include Corporate Health & Fitness
division sites as of January 1, 2000.
"Closing" Division Contribution dollars include new sites opened during 2000.
Bonus is earned only if target is achieved. No bonus proration for any
underachievement. However, the Chief Operating Officer of the Employer, in his
sole discretion, may pay bonus or partial bonus for underachievement based on
extenuating circumstances.
Calculation of Current Division Contribution
o Actual Divisional Contribution dollars for the year 1999 using 2000
rollups.
o Remove from 1999 Divisional Contribution dollars closed sites as of 1/1/00.
o Add to 1999 Divisional Contribution dollars annualization for sites with
less than 12 months in 1999.
o Remove from 1999 Division Contribution dollars large,
uncontrollable/extraordinary expenses (e.g. writeoffs for Lifecheck or
clean up from bad debt). Chief Operating Officer of Employer, in his sole
discretion, will authorize which, if any, large,
uncontrollable/extraordinary expenses will be removed from 1999 Division
Contribution.
o Divide by 12 months for Monthly Division Contribution dollars.
o Monthly Division Contribution dollars multiplied by the full number of
months from January 1, 2000 to Closing equals Current Division Contribution
dollars.
Calculation of Closing Division Contribution
o Actual 2000 Division Contribution dollars beginning on January 1, 2000 to
Closing (rounded backwards to full calendar months).
o Less large, uncontrollable/extraordinary expenses that occurred in 2000.
Chief Operating Officer of Employer, in his sole discretion, will authorize
which, if any, large, uncontrollable/extraordinary expenses will be removed
from 2000 Division Contribution.
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AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT to the Employment Agreement dated April 21, 1995 is made
and entered into effective November 2, 2000 between Health Fitness Corporation
(formerly Health Fitness Physical Therapy, Inc.) ("Employer") a Minnesota
corporation and Xxxxx X. Xxxxx ("Employee").
WHEREAS, effective October 19, 1999 there was an Amendment to the Employment
Agreement ("First Amendment") and;
WHEREAS, this Second Amendment supercedes any and all other written agreements
relating to Employee's employment other than the Employment Agreement, the First
Amendment and this Second Amendment, and the parties acknowledge that any such
other written agreements shall be rescinded, void ab initio, and of no legal
force or effect;
WHEREAS, the term "Agreement" in this document refers to the Employment
Agreement as amended by the First Amendment and this Second Amendment, and;
WHEREAS, Employer wishes to retain the services of Employee and wishes to
enhance the compensation and benefits of the Employee as incentive to retain
those services; and
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree to amend the Agreement as follows:
1) A sixth sentence is added to Section 1.3, 2nd paragraph of the
Agreement as follows:
"Upon the execution of this Amendment by the Employee and the
Employer, the Employee's position title shall change from Vice
President of Operations for the Corporate Health and Fitness Division
to Corporate Vice President of Operations for the Corporate Health and
Fitness Division."
2) Certain words in Section 2.1 of the Agreement are deleted and replaced
as follows:
"October 4, 1999" is replaced with "October 16, 2000" "$110,000" is
replaced with "115,000"
3) Any previous bonus program is null and void and Section 2.2 of the
Agreement is deleted in its entirety and replaced with the following:
"(a) Pay to Stay Bonus. Upon execution of this Amendment by the
Employee and the Employer, the Employer will pay to the Employee on the
next available payroll date a $20,000 cash bonus (less appropriate
withholdings). The employee shall be eligible for an additional $30,000
cash bonus (less appropriate withholdings) on the next available
payroll date following April 9, 2001 if the Employee remains an active,
full-time employee of the Employer continuously from the date of
execution of this Amendment through April 9, 2001.
Notwithstanding the forgoing, should the Employer terminate Employee's
employment prior to April 9, 2001 pursuant to: (i) Section 4.1 (f) of
the Agreement and the Employee
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is not offered comparable employment in the New Entity or the Employee
is offered employment in the New Entity but such offer of employment
requires relocation outside of the state of Minnesota and Employee
turns down such employment because of the relocation requirement; or
(ii) for reasons other than those described in Section 4.1 (a), (b),
(c), or (e) of the Agreement, then Employer will pay Employee the
$30,000 cash bonus on the next available payroll date following
Employee's date of termination."
"(b) Performance Bonus. Employee may be eligible to receive an
annual calendar year bonus of up to 15% of his annual base salary if
the Employee achieves certain performance criteria. Such performance
criteria will be determined annually (during the first quarter of each
calendar year) by the Employer as approved by the Board of Directors of
the Employer. The initial calendar year bonus period shall be January
1, 2001 through December 31, 2001. Employee's achievement of the
performance criteria will be determined after the annual audit of the
Employer's financial statements, and the bonus, if earned, will be
payable to the Employee no later than April 30th of the following year.
The Employee must be in the active employ of the Employer at the time
the bonus is paid to be eligible for any portion of the bonus.
Notwithstanding the foregoing, for the initial calendar year bonus
period only, should the Employer terminate the Employee's employment
after July 1, 2001 pursuant to Section 4.1(f) of the Agreement and the
Employee is not offered comparable employment in the New Entity or the
Employee is offered employment in the New Entity but such offer of
employment requires relocation outside of the state of Minnesota and
the Employee turns down such employment because of the relocation
requirement, then the Employee will be eligible for a prorated portion
of the bonus. Proration will be based on full calendar quarters of
Employee's employment completed prior to his date of termination.
Achievement of the performance criteria will be based on full calendar
quarters completed and publicly released financial statements."
4) Section 2.4 of the Agreement is deleted in its entirety and replaced
with the following:
"Stock Options: The Incentive Stock Option granted to
Employee on October 19, 1999 will expire as scheduled on October 19,
2000. Effective upon the execution of the Amendment by the Employee and
the Employer, Employee will be granted a five year incentive stock
option to purchase 60,000 shares of Employer's common stock at an
exercise price of fair market value of the Employer's common stock on
the date of grant. The date of grant being the date the Amendment is
executed by the Employee and Employer. Such option shall vest 100% on
April 9, 2001, with accelerated vesting of the option on the date of
Employee's termination if Employee is terminated before April 9, 2001
for any reason other than voluntary resignation or termination for
cause pursuant to Section 4.1 (e) of the Agreement. If termination of
Employee's employment is due to reasons other than death or disability
or retirement, options vested as of Employee's date of termination will
continue to be exercisable after termination of employment until the
option expiration date; with the option being treated as a
non-qualified stock option after 90 days from Employee's date of
termination. Such option shall have other provisions generally included
in stock option agreements of Employer. Such option shall be governed
by the terms of Employer's 1995 Stock Option Plan and a Stock Option
Agreement with Employee."
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5) Section 2.5 2nd sentence of the Agreement (which reads: "For purposes
hereof, a one-time, one-year membership in Northwest Airlines World
Club shall be considered a reasonable and necessary out-of-pocket
business expense.") is deleted and replaced with the following: "For
purposes hereof, an annual one-year membership in Northwest Airlines
World Club shall be considered a reasonable and necessary out-of-pocket
business expense."
6) A new Section 2.8 is added to the Agreement as follows:
"Computer. Upon termination of Employee's employment, Employer
shall gift to the Employee the laptop computer, key board, mouse and
desk top monitor which Employee currently uses in the Employer's
office, provided that the Employee gives the Employer appropriate
access to the computer so that the Employer can review any and all
documents and files on the computer and delete any and all Employer
documents and files prior to the gifting. The Employer in its sole
discretion will establish a fair market value cost for this gift and
Employee will be subject to all appropriate withholding taxes on the
fair market value cost. If the laptop or monitor is significantly
upgraded or replaced by the Employer prior to the Employee's
termination, then the upgraded or replaced laptop or monitor will not
be eligible to be gifted."
7) Miscellaneous. Except as expressly amended by this Amendment, all of
the terms and provisions of the Agreement shall remain in full force
and effect. This Amendment may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall
become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other party.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Employment Agreement to be duly executed on behalf of each as of the date first
above written.
HEALTH FITNESS CORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Its: Acting Chief Executive Officer
/s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
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