EMPLOYMENT AGREEMENT
Parties: Health Fitness Corporation ("HFC")
3500 West 80th Street, Suite 130
Minneapolis, MN 55431
Loren S. Brink ("Brink")
9635 Bennett Place
Eden Prairie, MN 55347
Date: June 30, 1999
Recitals:
A. HFC and Brink are parties to an Executive Employment Agreement entered
into May 22, 1997 (the "1997 Agreement").
B. HFC and Brink wish to revise the terms of Brink's employment and to
replace the 1997 Agreement with this Agreement.
C. Brink is willing to incur an obligation not to compete with HFC in the
future in order to obtain an up front payment.
Agreements:
1. Termination of 1997 Agreement. The 1997 Agreement is hereby terminated
without further obligation by either party under the terms of such 1997
Agreement with the exception that confidential information which was
the subject of such 1997 Agreement shall be subject to the applicable
provisions of this Agreement. In connection with such termination,
Brink hereby resigns as President and Chief Executive Officer of HFC.
2. Employment. Upon the terms and conditions set forth in this Agreement,
HFC hereby employs Brink as President of its Consulting and Corporate
Development Division (the "Division"), and Brink accepts such
employment.
3. Duties. Brink shall devote his full-time and best efforts to HFC and
shall fulfill the duties of his position which shall be to promote the
sales and marketing of the Division and to perform such other functions
as may be assigned to him by the CEO of HFC or the CEO's designee.
4. Term. Subject to the provisions of Section11 hereof, Brink's employment
pursuant to this Agreement shall commence on the date hereof
("Employment Date") and continue through December 31, 2001, but shall
be automatically extended, unless otherwise terminated in accordance
herewith, for consecutive one year terms on each January 1 thereafter,
unless either party gives written notice to the other of termination in
accordance herewith.
5. Compensation.
(a) Base Salary. For the balance of calendar year 1999, HFC shall pay
Brink a base salary at an annual rate of $130,000, payable in
accordance with the existing payroll practices of HFC ("Base Salary").
In subsequent years, Brink's Base Salary shall be established through
negotiation with the CEO and the Compensation Committee of the Board of
Directors of HFC at an annual rate of not less than $130,000.
(b) Performance Bonus. Brink shall be paid a cash bonus equal to 10% of
the "profit margin" on all customer contracts closed by Brink during
the first year of the terms of such contracts. "Profit margin" for
purposes of this provision shall mean net sales minus center expenses
and division expenses and shall be equal to that which is known at HFC
as division contribution.
(c) Option Grants. Brink shall be eligible for grants of options at the
discretion of HFC's Board of Directors based upon the board's
evaluation of his performance. All options currently held by Brink
shall remain in full force and effect in accordance with their
respective terms.
(d) Fringe Benefits. In addition to the Base Salary and performance
bonus as provided above:
(i) Automobile. Brink shall be entitled to an automobile
allowance of $750 per month throughout the term of his active
employment pursuant to this Agreement or the lease of a
suitable automobile; from such allowance Brink shall pay all
costs associated with maintenance, operation and insurance of
the automobile and HFC shall not be responsible for paying any
mileage allowance or other amount.
(ii) Vacation. Brink shall be entitled to paid vacation each
calendar year in accordance with HFC's policies. All unused
paid vacation shall accumulate, provided that any unused
portion carried into a subsequent year shall not exceed an
aggregate of four calendar weeks.
(iii) Medical Exam. Brink, during the period of his
employment, shall receive an annual medical or personal health
examination or treatment at a facility of his choice at a cost
to HFC of up to $1,000 which HFC will pay to the provider if
the examination is not fully covered by Brink's health
insurance.
(iv) Life and Long-Term Disability Insurance. HFC shall
maintain life and long-term disability insurance on Brink in
amounts and on terms and conditions consistent with past
practice and with that provided to other employees of HFC of a
similar level of authority and compensation. All benefits
related to insured benefit programs shall be payable only by
the insurance carriers subject to terms and conditions of
applicable policies and HFC shall have no obligations to pay
any such benefits.
(v) Country Club Membership. Brink, during the term of his
employment pursuant to this Agreement, shall be entitled to
maintain a country club membership for use primarily in
entertaining customers, employees and vendors of HFC. HFC
shall be responsible for the payment of all dues relating to
such membership, as well as all ordinary and necessary
expenses related to the use of such membership for business
purposes.
(vi) Other Benefits. Brink shall be entitled during the term
of his employment to participate in all other benefit programs
offered by HFC to its full-time employees.
(vii) Financial Counseling. Brink shall be entitled to receive
a one-time payment of $1,000 in reimbursement of fees for
personal financial counseling.
6. Business Expenses. HFC shall, in accordance with, and to the extent of,
its policies in effect from time to time, pay or reimburse Brink for
all customary business expenses (including country club expenses as
specified above) incurred by Brink in performing his duties as an
employee of HFC, provided that Brink incurs all such expenses in
accordance with the policies of HFC as revised from time to time and
that he promptly accounts for such expenses in the manner prescribed by
HFC.
7. Special Compensation Payments. In response to Brink's requests for
immediate additional cash and in consideration of Brink's covenant not
to compete with HFC contained in Section 10 of this Agreement, HFC
agrees to pay Brink the sum of $180,000, less all applicable income and
payroll tax withholdings. One-half of such amount shall be paid upon
execution of this Agreement and one-half shall be paid 30 days later.
8. Confidential Information.
(a) For purposes of this Section 8, the term "Confidential Information"
means information which is not generally known and which is proprietary
to HFC, including: (i) trade secret information about HFC and its
services; and (ii) information relating to the business of HFC as
conducted at any time within the previous five (5) years or anticipated
to be conducted by HFC, and to any of its past, current or anticipated
products, including, without limitation, information about HFC's
research, development, services, purchasing, accounting, engineering,
marketing, selling, leasing or servicing. All information which Brink
has a reasonable basis to consider Confidential Information or which is
treated by HFC as being Confidential Information shall be presumed to
be Confidential Information, whether originated by Brink, or by others,
and without regard to the manner in which Brink obtains access to such
information.
(b) Brink will not during the term of this Agreement and following the
expiration or termination of this Agreement, use or disclose any
Confidential Information to any person not employed by HFC without the
prior written authorization of HFC and will use reasonably prudent care
to safeguard, protect and to prevent the unauthorized disclosure of,
all such Confidential Information.
10. Non-Competition. Brink agrees that during the term of this Agreement
and for a period of twenty-four (24) months following termination of
his employment by HFC for any reason, he will not directly or
indirectly, alone or as a partner, officer, director, or shareholder or
holder of similar position of any other firm or entity, engage in any
commercial activity in the United States in competition with any part
of HFC's business.
11. Termination. Subject to the respective continuing obligations of the
parties pursuant to Sections 8, 9, 10, 11, 12, 13 and 14, this
Agreement may be terminated prior to the expiration of its then
remaining applicable term only as follows:
(a) By HFC. HFC may terminate this Agreement under the following
circumstances:
(i) For "Cause". HFC may terminate this Agreement on
thirty (30) days written notice to Brink for "cause",
including, fraud, misrepresentation, theft or
embezzlement of HFC assets, material intentional
violations of law of HFC policies, or a material
breach of the provisions of this Agreement, including
specifically the failure to perform his duties as
required by Section 2 hereof after written notice of
such failure from HFC, however, in the event of
termination related to Brink's failure to perform
duties, Brink's termination shall only be effective
upon the expiration of a sixty (60) day cure period
following a lack of corrective action having been
undertaken by Brink during said cure period.
(ii) Without "Cause". HFC may terminate this Agreement
upon thirty (30) days written notice without "cause".
Brink may also terminate this Agreement upon thirty
(30) days written notice to HFC for any reason.
(b) Death and Disability.
(i) Death. If Brink should die during the term of this
Agreement, this Agreement shall thereupon terminate;
provided, however, that HFC shall pay to Brink's
beneficiary or estate the compensation provided in
Section 12 below.
(ii) Permanent Disability. In the event brink should
become permanently disabled during the term of this
Agreement, this Agreement shall also terminate. For
the purposes hereof, a permanent disability shall
mean that disability resulting from injury, disease
or other cause, whether mental or physical, which
incapacitates Brink from performing his normal duties
as an employee, appears to be permanent in nature and
contemplates the continuous, necessary and
substantially complete loss of all management and
professional activities for a continuous period of
six (6) months.
(iii) Partial Disability. If Brink should become partially
disabled, he shall be entitled to his salary as
provided herein for a period of nine (9) months. At
the end of said period of time, if Brink remains
partially disabled, his salary shall be reduced
according to the amount of time he is able to devote
to HFC's business.
(iv) Temporary Disability. In the event Brink should
become disabled, but such disability is not
permanent, as defined above, he shall be entitled to
his salary for a period of nine (9) months. If such
temporary disability continues longer than said
period of time, then Brink shall be deemed to have
become permanently disabled for the purposes of this
Agreement at the end of said nine (9) month period.
12. Compensation Payable Following Early Termination of Employment.
(a) In the event of any termination pursuant to Section 11, Brink's
Base Salary shall be paid as follows:
(i) In the event of termination pursuant to Section 6 (a)
(i) (for "Cause"), Brink's Base Salary shall be
discontinued as of the effective date of termination.
(ii) In the event of termination of this Agreement by
reason of Brink's death, Brink's Base Salary shall
terminate as of the end of the six (6) months
following Brink's death;
(iii) In the event of termination of this Agreement by
reason of permanent disability, Brink's Base Salary
shall be paid until Brink becomes eligible for
benefits pursuant to disability insurance provided by
HFC becomes payable;
(iv) In the event of any termination by HFC pursuant to
Section 11(a)(ii) (without "Cause"), Brink's Base
Salary shall be paid through the date of termination
of this Agreement as in effect on the date
immediately preceding the date of such termination of
employment (e.g. if Brink's employment is terminated
by HFC without cause prior to December 31, 2001, he
shall be paid his Base Salary through such date and
if Brink's employment is terminated without cause in
January of 2002, he shall be paid his Base Salary
through December 31, 2002); and
(v) In the event of termination of employment by Brink
for any reason, Brink's Base Salary shall be paid
through the date of such termination of employment.
(b) In the event of termination by Brink for any reason, Brink's
Base Salary shall be paid through the date of such termination
of employment.
13. No Adequate Remedy. The parties declare that it is impossible to
measure in money the damages which will accrue to either party by
reason of a failure to perform any of the obligations under this
Agreement. Therefore, if either party shall institute any action or
proceeding to enforce the provisions hereof, such person against whom
such action or proceeding is brought hereby waives the claim or defense
that such party has an adequate remedy at law, and such person shall
not urge in any such action or proceeding the claim or defense that
such party has an adequate remedy at law.
14. Miscellaneous.
(a) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of all successors and assigns of HFC,
whether by way of merger, consolidation, operation of law,
assignment, purchase or other acquisition of substantially all
of the assets or business of HFC and shall only be assignable
under the foregoing circumstances and shall be deemed to be
materially breached by HFC if any such successor assign does
not absolutely and unconditionally assume all of HFC's
obligations to Brink hereunder. Any such successor or assign
shall be included in the term "HFC" as used in this Agreement.
(b) Notices. All notices, requests, and demands given to, or made,
pursuant hereto shall, except as otherwise specified herein,
be in writing and be delivered or mailed to any such party at
its address which:
(i) In the case of HFC shall be:
HEALTH FITNESS CORPORATION 3500 West 80th Street,
Suite 130 Minneapolis, Minnesota 55431
With copies to:
JAMES A. BERNARDS
7200 Metro Boulevard, Suite 200
Edina, MN 55439
and
TIMOTHY M. HEANEY
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, MN 55402-3397
(ii) In the case of the Executive shall be:
MR. LOREN S. BRINK
9635 Bennett Place
Eden Prairie, MN 55437
With a copy to:
PATRICIA A. BLOODGOOD
Lockridge Grundel Nauen & Holstein L.L.P.
100 Washington Avenue South, Suite 100
Minneapolis, MN 55401-2159
Either party may, by notice hereunder, designate a change of address.
Any notice, if mailed properly addressed, postage prepaid, registered
or certified mail, shall be deemed dispatched on the registered date or
that stamped on the certified mail receipt, and shall be deemed
received within the fifth business day thereafter, or when it is
actually received, whichever is sooner.
(c) Captions. The various headings or captions in this Agreement are
for convenience only and shall not affect the meaning or interpretation
of this Agreement.
(d) Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Minnesota and
any legal proceeding arising out of or in connection with this
Agreement shall be brought in the appropriate courts of the State of
Minnesota, with each of the parties hereto consenting to the exclusive
jurisdiction of said courts for this purpose.
(e) Construction. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(f) Waivers. No failure on the part of either party to exercise, and no
delay in exercising, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right
or remedy hereunder preclude any other or further exercise thereof or
the exercise of any right or remedy granted hereby or by any related
document or by law.
(g) Modification. This Agreement may not be, and shall not be, modified
or amended except by a written instrument signed by both parties
hereto.
(h) No Conflicting Business. Brink agrees that he will not, during the
term of this Agreement, transact business with HFC personally, directly
or indirectly, or as an agent, consultant, owner, partner, officer,
shareholder, director or holder of any similar position of any other
entity; provided, however, Brink may enter into any business
transaction that is, in the opinion of HFC's Board of Directors,
reasonable, prudent or beneficial to HFC, so long as any such business
transaction is at arms-length as though between independent and prudent
individuals and is ratified and approved by the designated members of
HFC's Board of Directors after receipt of written disclosure of the
full nature of Brink's interest in the business.
(i) Entire Agreement. This Agreement constitutes the entire Agreement
and understanding between the parties hereto in reference to all the
matters herein agreed upon.
(j) Counterparts. This Agreement shall be executed in at least two
counterparts, each of which shall constitute an original, but both of
which, when taken together, will constitute one in the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered the day and year first above written.
HEALTH FITNESS CORPORATION
By:
Its: Loren S. Brink