HEALTH FITNESS CORPORATION AGREEMENT FOR SEPARATION FROM EMPLOYMENT
Exhibit 10.1
HEALTH FITNESS CORPORATION
AGREEMENT FOR SEPARATION FROM EMPLOYMENT
AGREEMENT FOR SEPARATION FROM EMPLOYMENT
This Agreement for Separation from Employment (“Agreement”) is entered into this 31st day of
January, 2008, between ▇▇▇▇▇ ▇. ▇▇▇▇▇ (“▇▇▇▇▇”) and Health Fitness Corporation (“HFC” or
“Company”).
I. RECITALS
▇. ▇▇▇▇▇ has been employed by HFC as its Vice Chairman.
B. In connection with his employment by HFC, ▇▇▇▇▇ executed an Employment Agreement dated
November 30, 2000,as amended from time to time (the “Employment Agreement”).
C. Also in connection with his employment by HFC, ▇▇▇▇▇ executed (i) a Restricted Stock
Agreement dated June 1, 2007 (the “Restricted Stock Agreement”) granted to ▇▇▇▇▇ pursuant to the
Company’s 2007 Equity Incentive Plan (the “Plan”) and (ii) numerous stock option agreements under
which a total of 484,000 options to acquire common stock of HFC remain outstanding and unexercised
as of the date hereof (the “Option Agreements”).
▇. ▇▇▇▇▇ and the Company have agreed that ▇▇▇▇▇ shall retire from his position as Vice
Chairman of the Company and the parties have agreed that ▇▇▇▇▇’▇ employment as Vice Chairman shall
be deemed to have been terminated effective January 31, 2008 (the “Termination Date”).
II. AGREEMENTS
For the consideration described below, the adequacy of which the parties acknowledge, the
parties agree as follows:
1. Retirement and Termination of Employment. ▇▇▇▇▇’▇ retirement from the Company and
his termination of employment as Vice-Chairman shall be deemed to have been effective as of the
close of business on the Termination Date.
2. Severance Payment. HFC will pay ▇▇▇▇▇ $275,000 within three (3) business days
following satisfaction of the conditions in Section 8, which sum is equal to ▇▇▇▇▇’▇ base salary
for 2007. The parties acknowledge that such payment represents mutually negotiated consideration
for ▇▇▇▇▇’▇ contributions to the Company and for his continued support and consulting activities
and that ▇▇▇▇▇ would not have been entitled to such severance under the Employment Agreement in the
case of voluntary, as opposed to mutually negotiated, retirement.
3. Vacation Pay. Within ten (10) days after the effective date of the Release (as
defined in Section 5 herein), HFC shall pay to ▇▇▇▇▇ a lump sum in the amount of $2,985.34 to
compensate him for his 22.58 days of accrued but unused paid PTO time through January 11, 2008,
together with the sum of $132.21 per hour for each additional hour of PTO time that accrues after
January 11, 2008, through the Effective Date.
4. Benefits After Termination Date. Except as provided in this Paragraph 4 and in
Paragraph 7 below, ▇▇▇▇▇’▇ rights and benefits under any and all of the Company’s employee benefits
plans and policies shall be deemed to terminate in their entirety after the Termination Date,
including without limitation any automobile expense allowances, club memberships and similar
perquisites.
(a) ▇▇▇▇▇’▇ rights pursuant to the Restricted Stock Agreement and Plan shall be revised as set
forth in Exhibit A hereto effective upon satisfaction of the conditions in Section 8, with the
intent that (i) ▇▇▇▇▇ shall receive a fully vested allocation of the appropriate number of shares
of Restricted Stock for achievement of the 2007 Performance Objectives (as defined in such
Agreement) as if he were still employed through December 31, 2009 (to the extent that such fully
vested allocations are made to other Plan participants for achievement of such 2007 Performance
Objectives), which shares shall be distributed to ▇▇▇▇▇ upon determination of the number of shares
to which he is entitled after completion of the 2007 audit and provided that the conditions in
Section 8 herein have been satisfied.
(b) The Company shall pay ▇▇▇▇▇ $15,000 under the 2007 Bonus Program applicable to ▇▇▇▇▇ three
(3) business days following satisfaction of the conditions in Section 8.
5. Consulting Agreement. Effective immediately following the Effective Date of the
Release, ▇▇▇▇▇ and HFC shall enter into a Consulting Agreement in the form attached as Exhibit B
hereto.
6. Release by ▇▇▇▇▇. At the same time that he executes this Separation Agreement,
▇▇▇▇▇ shall execute the release that is attached as Exhibit C (the “Release”).
7. Health Coverage. Subject to the conditions stated in Paragraph 11 below, if after
the Termination Date, ▇▇▇▇▇ elects to continue his group health coverage (including dental)
pursuant to COBRA, HFC shall pay the full cost (i.e., both the employer’s and employee’s portion of
the applicable premiums) for coverage for the applicable COBRA period at the premium levels paid
for such coverage in the case of employees electing similar coverage, until 18 months following the
Termination Date, or the date on which ▇▇▇▇▇ reaches age 65, whichever first occurs.
8. Conditions. HFC need not make the payments or provide the benefits described in
Paragraphs 2, 4, or 7 above unless and until both of the following conditions have been satisfied:
(a) ▇▇▇▇▇ executes the Release and delivers it to HFC within the time specified in the
Release.
(b) The applicable rescission period for the Release expires without ▇▇▇▇▇’▇ rescission
thereof.
9. Exclusive Payments. ▇▇▇▇▇ shall not be entitled to any compensation or other
payments from HFC except as provided in this Agreement.
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10. Protection of Trade Secrets and Confidential Business Data. ▇▇▇▇▇ agrees that his
obligations set forth in Article IV of the Employment Agreement shall continue in full force and
effect as to all Confidential Information (as defined therein) known to ▇▇▇▇▇ as of the
Termination Date or learned by ▇▇▇▇▇ at any time thereafter.
11. Restrictive Covenants. ▇▇▇▇▇ agrees that provisions of Sections 5.01 and 5.02 of
the Employment Agreement shall continue in effect for a period of one year following the
later of the Termination Date of this Agreement, or the date on which ▇▇▇▇▇ ceases to serve
on the Board of Directors of the Company, or the date on which the Consulting Agreement terminates;
provided that Section 5.01 of the Employment Agreement shall be modified to replace the words
“25-mile radius of any HFC site as of the date of termination’ with the words “United States”. The
provisions of Sections 5.04, 5.05, 5.06, 5.08, and all the provisions of Article VI, of the
Employment Agreement, shall continue in full force and effect indefinitely.
12. Acknowledgement and Remedies. ▇▇▇▇▇ hereby acknowledges that the provisions of
Paragraphs 10 and 11 above are reasonable and necessary to protect the legitimate interests of HFC
and that any violation of Paragraphs 10 or 11 by ▇▇▇▇▇ would cause substantial and irreparable harm
to HFC to such an extent that monetary damages alone would be an inadequate remedy. In the event
that ▇▇▇▇▇ violates any provision of Paragraphs 10 or 11 above, HFC shall be entitled to an
injunction, in addition to all other remedies it may have, including without limitation (i) in the
case of violations that are or reasonably may be expected to be material to the Company,
prospective termination of any and all payments and benefits provided by this Agreement, and (ii)
restraining ▇▇▇▇▇ from violating or continuing to violate such provision.
13. Right to Consult with an Attorney. ▇▇▇▇▇ understands and acknowledges that he is
hereby being advised by HFC to consult with an attorney prior to signing this Agreement and the
Release.
14. Consideration and Rescission. The periods described in the Release during which
▇▇▇▇▇ may consider whether to sign or may rescind the Release and the procedures stated in the
Release for accepting or rescinding the Release also apply to this Agreement. The Release and this
Agreement must be accepted or rescinded together. Rescission of one of these documents will be
deemed a rescission of both of them.
15. Entire Agreement. This Separation Agreement and the Release supersede all prior
oral and written agreements, representations, and promises between the parties except that the
Restricted Stock Agreement and Option Agreements shall continue in full force and effect according
to its terms. This Agreement, the Release, the Restricted Stock Agreement, and such other benefit
plans as continue in force hereunder constitute the entire agreement between the parties with
respect to ▇▇▇▇▇’▇ employment with HFC and the termination of that employment. ▇▇▇▇▇ acknowledges
that there were no inducements or representations leading to the execution of this Agreement or the
Release, except as stated in this Agreement.
16. Voluntary and Knowing Action. The parties acknowledge that they understand the
terms of this Agreement and that they are voluntarily entering into this Agreement. The
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parties intend to be legally bound. ▇▇▇▇▇ represents that he is legally able and entitled to enter
into this Agreement and the Release and to receive the payments described in above.
17. Governing Law. All matters relating to the interpretation, construction,
application, validity and enforcement of this Agreement shall be governed by the laws of the State
of Minnesota without giving effect to any choice or conflict of law provision or rule, whether of
the State of Minnesota or any other jurisdiction, that would cause the application of laws of any
jurisdiction other than the State of Minnesota.
18. Jurisdiction and Venue. ▇▇▇▇▇ and HFC consent to the jurisdiction of the courts
of the State of Minnesota and the United States District Court for the District of Minnesota for
the purpose of resolving all issues of law, equity, or fact, arising out of or in connection with
this Agreement. Any action involving claims of a breach of this Agreement shall be brought in such
courts. Each party consents to personal jurisdiction over such party and venue in the state and
federal courts identified above.
19. Tax Matters.
(a) HFC may withhold from any payments due to ▇▇▇▇▇ pursuant to this Agreement required taxes
and other deductions.
(b) ▇▇▇▇▇ acknowledges and agrees that neither HFC nor anyone acting on its behalf has
made any representations to him concerning the tax consequences of entering into this Agreement and
receiving the consideration specified in it and that he has not relied on any tax advice from HFC
or anyone acting on its behalf.
| HEALTH FITNESS CORPORATION | ||||||||
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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By | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
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| Its | President and CEO | |||||||
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