Exhibit 10.4
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 Xxxxxxx X. Xxxxxx, an
individual residing at 00 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the
"EMPLOYEE").
1. EMPLOYMENT. The Company agrees to employ the Employee as Chief
Financial Officer and Vice President of Finance, rendering the services and
performing the duties prescribed by the Company's Board of Directors. 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, 2001 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 successive
additional three-year periods (subject to the occurrence of a Termination Date)
after July 1, 2001 unless the Company or the Employee gives notice to the other
at least one year prior to the scheduled termination 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
$130,000 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.
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 80% of the annual base salary
of the Employee 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 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.
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, the Company's obligation under this 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.
-2-
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 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.
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");
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 or the entry of
a plea of guilty or nolo contendere by 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 Chief Executive Officer of the Company to the
Employee setting forth the nature of the breach; and
-3-
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").
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, 2001 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 equal to 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.
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.
-4-
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 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
-5-
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.
[Remainder of page intentionally left blank]
-6-
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:
--------------------------
Its: Chief Executive Officer
By:
--------------------------
Xxxxxxx X. Xxxxxx
-7-
