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EXHIBIT 10.20
October 1, 1996
Xx. Xxxxxxx Xxxxxxxx
00 Xxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Dear Xx. Xxxxxxxx:
This letter, when accepted by you in a manner hereinafter provided, will
supersede the prior Consulting Agreement dated March 11, 1996 between Xx.
Xxxxxxxx and Complete Wellness Centers, Inc., a Delaware corporation (the
"Company"), and will evidence the agreement among the Company and Xx. Xxxxxxxx
(the "Employee") for the provision of certain services to be rendered by
Employee to the Company (the "Agreement"), all under the following terms and
conditions to wit:
1. EMPLOYMENT DUTIES
The Company shall employ Employee as Vice President of Finance and Chief
Financial Officer. Employee shall report to the President and Chief Operating
Officer, subject in all events to the control and supervision of the Board of
Directors.
Employee shall devote his time and best efforts on a substantially full time
basis to the business and affairs of the Company.
2. EMPLOYMENT TERM
This Agreement shall commence on October 1, 1996, and shall end on September
30, 1999 (the "Employment Term") unless extended by the Company and Employee in
writing or unless sooner terminated in accordance with the provisions of this
Agreement.
3. COMPENSATION, EXPENSES, ETC.
In consideration of performance of the services and activities hereby, the
Company shall pay Employee compensation as follows:
A. An initial base salary of sixty thousand dollars ($60,000) per
annum, payable semi-monthly in arrears. At such time as the
initial public offering is closed, the base salary shall be
increased to ninety five thousand dollars ($95,000) per annum,
payable semi-monthly in arrears.
B. Employee shall receive an additional performance bonus (the
"Bonus") equal to ten percent (10%) of the Company's Bonus
Fund, in accordance with the Company's 1995
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Bonus Plan for Key Executives. For the purpose of this Section
3, the "Bonus Fund" shall be equal to at least ten percent
(10%) of the Company's pre-tax income. The maximum bonus fund
is $5 million.
C. At such time as the Company closes its initial public
offering, an automobile and parking allowance of five hundred
dollars ($500) per month.
D. Four (4) weeks of compensated vacation which shall vest
ratably throughout the year.
E The Company shall make available such health benefits and any
other benefits as it makes available to its executive
employees.
F. Upon termination of this Agreement pursuant to Section 5(i)
and 5(ii), Employee shall receive a severance payment equal to
six (6) times the Employee's monthly compensation pursuant to
Section 3(A) for the month prior to termination. Such
severance shall be payable in twelve (12) monthly
installments, beginning in the second calendar month following
the month in which termination occurs.
G. The Company shall provide Employee with an office and
secretarial services comparable to those of its other
executive employees.
The Company shall deduct the usual withholding taxes from
Employee's compensation consistent with standard practices and
applicable federal and state laws.
The Company shall reimburse Employee for any documented out of
pocket expenses incurred in connection with the duties and
responsibilities described herein, subject to the Company's
policies.
4. STOCK OPTIONS
The non-qualified stock options granted to Xx. Xxxxxxxx pursuant to the
Consulting Agreement shall be transferred to Xx. Xxxxxxxx pursuant to this
Agreement under the same terms and conditions. Under the Consulting Agreement,
Consultant received non-qualified option to purchase up to one hundred twenty
thousand (120,000) shares of the Company's common stock (the "Options") at an
exercise price of one cent ($.01) per share, under the Company's Stock Option
Plan which shall be evidenced by a stock option agreement. Sale of the shares
of common stock issued to Consultant upon the exercise of the Options may be
subject to limitations pursuant to Rule 144 under the Securities Act of 1933.
The Options shall vest with respect to 33 1/3% on October 1, 1996, 33 1/3% on
October 1, 1997, and 33 1/3% on September 30, 1998 and shall be exercisable for
a period of five (5) years from the date of this Agreement. However, in the
event this Agreement is terminated, the Options shall be exercisable for a
period of three (3) months from the date of termination.
5. TERMINATION
This Agreement may be terminated prior to the end of the Employment Term,
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(i) by the written agreement between Company and Employee;
(ii) by the death of Employee or his disability for a period of one
hundred and twenty (120) consecutive days or the adjudicated
mental incompetency of Employee; or
(iii) by the Company for cause, where "cause" shall mean for purpose
of this Agreement:
(a) a violation by Employee of any material
provision of this Agreement, a breach of
fiduciary duty, manifest incompetence, plan
dereliction or neglect of duty, or conduct;
involving moral turpitude, where such
violation, activity, or conduct is not
remedied by Employee within thirty, (30) days
of written notice from the Company
(b) employee's conviction of a felony.
6. COVENANT NOT TO COMPETE; NOT TO SOLICIT
A. During the Employment Term and for one (1) year thereafter,
the Employee will not without the prior written permission of
the Company in each instance directly or indirectly carry on
or participate in a business the same as or similar to or in
competition with that conducted or engaged in by the Company
or any of its subsidiaries or affiliates.
B. The term "carry on or participate in a business the same as or
similar to that conducted or engaged in by the Company or any
of its subsidiaries or affiliates" shall include the Employee,
directly or indirectly, doing any of the following listed
acts, other than carrying on or engaging in activities
expressly permitted under this Agreement:
(i) carrying on or engaging in any such business
as a principal, or solely or jointly with
others as a director, officer, agent,
employee, consultant or partner, or
stockholder or limited partner owning more
than five percent (5%) of the stock or equity
interests in or securities convertible into
more than five percent (5%) of the stock of
or equity interests in any corporation,
association or limited partnership; or
(ii) as agent or principal carrying on or engaging
in any activities or negotiations with
respect to the acquisition or disposition of
any such business; or
(iii) lending credit or money for the purpose of
establishing or operating any such business;
or
(iv) giving advice to any other person, firm,
association, corporation or other entity
engaging in any such business; or
(v) lending or allowing his name or reputation to
be used in any such business; or
C. In the event of a breach or threatened breach by the Employee
of the provisions of this Section 6, the Company shall be
entitled to injunctive relief against the Employee. Nothing
herein shall be construed as prohibiting the Company from
pursuing any other remedies available to the Employer for such
breach or threatened breach, including without limitation the
recovery of damages from the Employee.
D. During the Employment Term and for one (1) year thereafter,
the Employee will not without the prior written permission of
the Company in each instance will not solicit, or attempt to
solicit and employ any employee of the Company or any of its
subsidiaries or affiliates, or commit an act the primary
purpose of which is to induce employee of the
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Company or any of its subsidiaries or affiliates to leave such
employment or significantly interfere with, disrupt or attempt
to disrupt any past, present or prospective relationship,
contractual or otherwise, relating to the business activities
between the Company or any of its subsidiaries or affiliates
and their respective prospects.
E. The parties hereto consider the restrictions contained in this
Section 9 to be reasonable. If, however, such restrictions
are found by any court having jurisdiction to be unreasonable
because they are (or any of them is) too broad, then such
restrictions shall nevertheless remain effective, but shall be
considered amended as to protection of business, time or
geographic area in whatever manner is considered reasonable by
that court and, as so amended, shall be enforced.
F. The provisions of this Section 6 shall survive the expiration
or termination, for any reason, or this Agreement and shall be
separately enforceable.
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. The Employee agrees that he will not, during the Employment
Term or thereafter, make use of, divulge or otherwise
disclose, directly or indirectly, any trade or business secret
(including, without limitation, any customer list, data,
records or financial information constituting a trade or
business secret) concerning the business or policies of the
Company or any of its subsidiaries or affiliates which he may
have learned as a result of his employment during the
Employment Term or prior thereto as shareholder, employee,
officer and/or director or the Company except to the extent
such use or disclosure is necessary to the performance of this
Agreement and in furtherance of the Company's best interest.
The provisions of this Section 7 shall survive the expiration
or termination, for any reason, of this Agreement.
B. The Employee shall not during the Employment Term or for one
(1) year thereafter make use of, divulge or otherwise
disclose, directly or indirectly, any confidential information
concerning the business or policies of the Company or any of
its subsidiaries or affiliates which he may have learned while
a shareholder, employee, officer and/or director of the
Company.
C. In the event of a breach or threatened breach by the Employee
of the provisions of this Section 7, the Company shall be
entitled to an injunction restraining the Employee from
disclosing, in whole or in part, any such trade or business
secret and/or any such confidential information, or from
rendering any services to any person, firm, corporation,
association, or other entity to whom any such trade or
business secret and/or any such confidential information, in
whole or in part, has been disclosed or is threatened to be
disclosed. Nothing herein shall be construed as prohibiting
the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including
without limitation the recovery of damages from the Employee.
D. The provisions of this Section 7 shall survive the expiration
or termination, for any reason,
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of this Agreement and shall be separately enforceable.
8. AMENDMENT
This Agreement may be amended only by the written agreement of the Company and
Employee.
9. SUCCESSORS AND ASSIGNS
The Company's rights and obligations under this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company; and
the Company may delegate all or any part of its rights and obligations
hereunder to any affiliate or subsidiary of the Company.
The Employee acknowledges and agrees that this Agreement is personal to him and
his rights and interests hereunder may not be assigned, nor may his obligations
and duties hereunder be delegated with exception of the voting rights assigned
to Employee's spouse by Employee.
10. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws
of the State of Maryland.
11. ENTIRE AGREEMENT
This Agreement supersedes any and all other agreements, either oral or written
heretofore made with respect to the subject matter hereof.
12. SEVERABILITY
Any provision of this Agreement which is found to be unenforceable in any
jurisdiction, shall, as to such jurisdiction only, be ineffective to the extent
of such unenforceability, without invalidating or otherwise affecting the
remaining provisions hereof. If any of the covenants against competition
contained in Section 5 are found by a court having jurisdiction to be
unreasonable in duration, geographical scope, or character of restriction, the
covenant shall not be rendered unenforceable thereby, but rather the duration,
geographical scope, or character of restriction of said covenant shall
respectively be reduced or modified to render the covenant reasonable and the
covenant shall be enforced as modified.
13. COUNTERPARTS
This Agreement may be executed simultaneously in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement shall be binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of the parties reflected hereon as signatories.
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14. NOTICES
All notices required or permitted under this Agreement shall be in writing and
shall be deemed effective upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail, postage prepaid, addressed
to:
(i) Employee at the address shown above, or at such other address
or addresses as Employee shall designate to the Company in
accordance with this Section, or
(ii) Company at the address set forth on the above letterhead, or
at such other address as the Company shall designate to
Employee in accordance with this section.
15. PRONOUNS
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms and the singular
form of nouns and pronouns shall include the plural and vice versa.
16. MISCELLANEOUS
A. No delay or omission by the Company or Employee in exercising
any right under this Agreement shall operate as a waiver of
that or any other right. A waiver or consent given by the
Company or Employee on any one occasion shall be effective
only in that instance and shall not be construed as a bar or
waiver of any right on any other occasion.
B. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or
affect the scope or substance of any of this Agreement.
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If the foregoing accurately sets out our agreement with regard to the above,
please indicate your acceptance by executing and returning two copies of this
letter to the undersigned.
Very truly yours,
COMPLETE WELLNESS CENTERS, INC.
By:
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E. Xxxxxx Xxxxxx
President and COO
Accepted and agreed to this ___ day of _________________, 1996.
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Xxxxxxx Xxxxxxxx
"Employee"
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