Exhibit 10.4
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT
, dated December 1, 2005, by
and between AMERICAN HYPERBARIC, INC. , a Florida
corporation (the “Company”) and John Capotorto
(the ”Executive”).
W I T N E S S E T
H
WHEREAS , the Company and the Executive desire to enter
into an employment agreement which will set forth in writing the
terms and conditions of their agreements and understandings with
respect to the Executive’s employment and compensation by the
Company.
NOW, THEREFORE
, in consideration of the foregoing
and the mutual covenants hereinafter set forth, the parties hereto
have agreed, and do hereby agree, as follows:
1.
EMPLOYMENT
The Company hereby employs the
Executive, and the Executive hereby accepts employment by the
Company, upon all of the terms and conditions of this
Agreement.
2. TERM
Subject to earlier termination as
provided for in Section 9 hereof, the term of this Agreement
shall be for five (5) years commencing on April 1, 2006 and ending
on April 1, 2011 (the “Employment
Term”).
3. EXECUTIVE’S
REPRESENTATIONS AND WARRANTIES
The Executive hereby represents that
neither the execution of this Agreement nor his performance
hereunder will (a) violate, conflict with or result in a
breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under the terms, conditions or provisions of any contract,
agreement or other instrument or obligation to which the Executive
is a party, or by which he may be bound, or (b) violate any
order, judgment, writ, injunction or decree applicable to the
Executive.
4. DUTIES AND EXTENT OF
SERVICES
The Executive shall be employed as
the Company’s Chairman and Medical Director and shall report
directly to the Chief Executive Officer of the Company. The
Executive shall be involved with all principal clinical activities
of the Company and other day to day activities as may be delegated
or assigned to the Executive from time to time, commensurate with
his title and position as described in this Section 4, by the
Company’s Board of Directors or Chief Executive Officer. The
Executive shall report directly to the Company’s Chief
Executive Officer. The Executive agrees to devote in good faith his
full business time, skill, attention and
energy exclusively to the Company, and shall use
his best efforts to be loyal and faithful at all times, and to
exercise his talents and capabilities toward the interests and
operations of the Company. It shall not be considered a violation
of the foregoing for the Executive to provide assistance and
services to charitable, industry or community organizations, boards
and committees, and manage the Executive’s personal
investments, so long as such activities do not materially conflict
or interfere with Executive’s performance of his duties under
this Agreement. The Executive’s office shall be located at 32
Elm Place Rye New York, 10580, or such other location as may be
mutually agreed upon in writing by the Company and the Executive,
provided that any such other location is not greater than fifteen
(15) miles from Rye, New York.
5.
COMPENSATION
During the first year of the
Employment Term, in consideration of the Executive’s
representations, warranties, covenants and agreements set forth in
this Agreement, the Company will compensate the Executive with a
salary at the annual rate of $300,000.00 (“Base Rate”),
payable in accordance with the Company’s normal payroll
procedures; provided, however, that the Executive shall be paid in
equal installments no less frequently than bi-weekly. For each year
of the Employment Term after the initial year of the Employment
Term, in consideration of the Executive’s representations,
warranties, covenants and agreements set forth in this Agreement,
the Executive’s compensation from the Company shall be the
Base Rate increased by a minimum of Ten Thousand Dollars ($10,000)
per year plus such other amount(s) as the Board of Directors of the
Company may determine. During the Employment Term, the
Executive’s Base Rate, as such may have been increased from
time to time in accordance herewith, may never be decreased. All
sums payable under this Section 5 shall be reduced by all
federal, state, local and other withholding and similar taxes and
payments required to be withheld by the Company by applicable law.
The Executive shall also be entitled to an annual performance bonus
as may be determined by the Company’s Board of
Directors.
6. FRINGE BENEFITS AND
EXPENSES
A. The Executive Plans . The
Executive shall be eligible (subject to the terms and conditions of
particular plans and programs) to participate in such medical,
hospitalization, group health, accident, disability and life
insurance programs and plans, such 401(k) plans, profit sharing,
stock option, incentive compensation and stock purchase plans and
such other employee benefit and welfare programs and plans to the
same extent such programs and plans are made available by the
Company to any of its other similarly-situated executive employees,
whether now or hereafter existing. Notwithstanding the above, the
Executive shall be entitled to family coverage at the
Company’s expense under a Company group PPO (as presently
covered, or any other group health insurance plan that the Company
may offer to its similarly-situated executive employees in the
future) or, at the Executive’s option, she shall be entitled
to family coverage under any health insurance plan of his own
choosing and the Company shall promptly reimburse the Executive for
the cost of such health insurance coverage as and when incurred.
Notwithstanding anything contained herein to the contrary or any
health insurance premium payment agreement that the Company
currently has or may have in the future with its other
similarly-situated executive employees, the Company shall pay any
and all of the premiums for any such health insurance for the
Executive, including, but not limited to, any premiums which the
Company may otherwise require similarly-situated executive
employees to pay.
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B. Other Expenses . The
Company shall promptly pay or reimburse the Executive for his
out-of-pocket costs and expenses incurred in connection with the
performance of his duties and responsibilities hereunder to the
earlier of the expiration of the Employment Term or the termination
of employment of the Executive under Section 9 hereof, subject
to the submission by the Executive of appropriate invoices,
receipts and other supporting documentation.
C. Automobile Expenses . The
Company shall lease or purchase an automobile selected by the
Executive for the Executive at the Company’s expense. The
Company shall not be required to expend more than Twenty-Five
Thousand Dollars ($25,000) per annum on such lease or automobile
loan.
7.
VACATIONS
The Executive shall be entitled to
eight (8) weeks of paid vacation per year of the Employment
Term. The Executive shall not be entitled to be compensated for any
unused vacation during any year of the Employment Term or upon
termination of this Employment Agreement. The periods during which
the Executive will be absent from work shall be determined by the
Executive taking into account the needs of the Company’s
business.
8.
DISABILITY
In accordance with the provisions of
Section 9 subparagraph C hereof, the Company may
terminate the Executive’s employment in the event of his
Disability (as such term is defined in Section 9
subparagraph C hereof). Until such time as the
Executive’s employment is terminated by the Company due to
his Disability in accordance with the terms hereof, if ever, the
Executive shall receive all compensation due to him under
Sections 5 and 6 hereof.
9. TERMINATION OF EMPLOYMENT;
CHANGE OF CONTROL
Notwithstanding any provisions of
this Agreement to the contrary, the Executive’s employment
hereunder shall automatically terminate upon his death and may be
terminated earlier in accordance with the provisions of
subparagraphs A, B, C and D of this Section 9.
A. The Executive’s employment
may be terminated by the Company upon fifteen (15) days’
prior written notice to the Executive “for cause.” For
the purposes of this Employment Agreement, “for cause”
means: (i) conviction of the Executive of fraud or a felony;
(ii) embezzlement from the Company; (iii) willful and
continued material failure by the Executive to perform the duties
and services required under this Agreement for a continuous period
of forty-five (45) days following written notice thereof from
the Company; or (iv) the Executive voluntarily leaving the
employ of the Company, other than as provided in
subparagraph D below, prior to the expiration of the
Employment Term. Except with respect to
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the for cause events specified in clauses
(i) and (iv) above, the Company may not terminate the
Executive for cause unless such for cause event, instance,
happening, behavior, etc. continues uncured for a period of thirty
(30) consecutive days following the date of receipt by the
Executive specifying the nature of such for cause event, instance,
happening, behavior, etc.
B. The Executive’s employment
may be terminated by the Company, without cause, on thirty
(30) days’ prior written notice to the
Executive.
C. The Executive’s employment
may be terminated by the Company after having established the
Executive’s “Disability” (as defined below), by
giving the Executive written notice of its intention to terminate
the Executive’s employment due to such Disability. For
purposes of this Agreement, “Disability” means the
Executive’s inability to perform substantially his duties and
responsibilities to the Company by reason of a physical or mental
incapacity or infirmity (i) for a continuous period of one
hundred eighty (180) days, not including any permitted annual
leave days or holidays; or (ii) for a cumulative period of one
hundred eighty (180) days in any twelve (12) month
period, not including permitted annual leave days or holidays; or
(iii) at such earlier time as the Executive submits medical
evidence satisfactory to the Company that the Executive has a
physical or mental disability or infirmity that will likely prevent
the Executive from substantially performing his duties and
responsibilities for one hundred and eighty (180) days or
longer. In the event of any disagreement between the Executive and
the Company as to whether the Executive is physically or mentally
incapacitated so as to constitute a “Disability”
hereunder, the question of such incapacity shall be submitted to an
impartial and reputable physician selected by mutual agreement of
the Company and the Executive, or failing such agreement, such
impartial and reputable physician shall be selected by two
physicians (one of whom shall have been selected by the Company,
and the other by the Executive), and the determination of the
question of such incapacity by such physician shall be final and
binding upon the Company and the Executive. The Company shall pay
the fees and expenses of such physician, and the Executive shall
submit to any medical examinations reasonably necessary to enable
such physician to make a determination as to whether the
Executive’s incapacity constitutes a Disability
hereunder.
D. The Executive’s employment
may be terminated by the Executive, upon prior written notice to
the Company, “for good reason.” For the purposes of
this Employment Agreement, “for good reason” means:
(i) a material adverse change in the Employee’s title,
responsibilities or the assignment of duties to the Executive
inconsistent with and/or adverse to the Executive’s current
duties; (ii) any failure by the Company to comply with
Sections 5, 6, 7 and/or 8 of this Agreement; (iii) any
requirement by the Company that the Executive’s office
location be located more than fifteen (15) miles from 32 Elm
Pl. Rye, New York 10580; (iv) any requirement that the
Executive travel in connection with his duties under this Agreement
to any location located more than fifteen (15) miles from 32
Elm Pl., New York; or (v) thirty (30) days following a
material breach by the Company of its obligations under this
Agreement that is not cured within fifteen (15) days following
receipt of written notice from the Executive specifying such
breach.
E. Upon termination of employment of
the Executive due to the death of the Executive or under
subparagraph C above, the Company shall be required to pay the
Executive
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or his estate, as the case may be, in the same
manner as set forth in Section 5 hereof, the compensation
including, without limitation, any increases contemplated by
Section 5 hereof, the Executive would have been entitled to
until (i) the expiration of the Employment Term pursuant to
Section 5 hereof or (ii) the expiration of the two
(2) year period commencing the date of such
termination.
F. Upon termination of employment of
the Executive under subparagraph B or D above, the Company shall be
required to pay the Executive, in the same manner as set forth in
Section 5 above, the amount of the compensation including,
without limitation, any increases contemplated by Section 5
hereof, the Executive would have been entitled to until the
expiration of the Employment Term pursuant to Section 5
hereof.
G. Upon the termination of
employment of the Executive under subparagraph A above, the
Company shall only be required to pay the Executive, on the date of
such termination, any pro-rata amounts due to the Executive under
Section 5 hereof as of the date of such
termination.
H. Upon termination of employment of
the Executive for any reason, the Executive’s rights under
the Company’s benefit plans shall be determined under the
provisions of those plans. Further, in all occurrences of any
termination of employment of the Executive, all expenses as
provided for in Section 6 subparagraph B hereunder shall
promptly be paid to the Executive by the Company.
I. Notwithstanding the provisions of
this Section 9, in order to protect the Executive against the
possible consequences and uncertainties of a Change of Control of
the Company (as hereinafter defined) and thereby induce the
Executive to remain in the employ of the Company, the Company
agrees that:
(1) If, during the Employment Term,
either (i) the Employee’s employment is terminated by
the Company at any time subsequent to a Change of Control other
than for “cause” or (ii) the Employee voluntarily
terminates such employment within one hundred eighty
(180) days subsequent to a Change of Control (the
“Evaluation Period”), then in either such event, in
addition to any other amounts the Company may be obligated to pay
the Executive under this Section 9 in connection with such
termination of employment, the Company shall pay to the Employee
within ten (10) days after such termination a lump sum payment
in cash in an amount equal to two and ninety-nine one hundredths
(2.99) times the Employee’s “base amount”,
as such term is defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the “Code”);
provided, however, that, at the option of the Employee, exercisable
upon written notice to the Company within ten (10) days of
such termination of employment, such payment may be paid in equal
monthly installments over a three (3) year period commencing
on the first day of the month immediately following that in which
the Employee’s employment was terminated.
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(2) The Company shall pay or
reimburse the Employee for all fees and disbursements of counsel,
if any, incurred by the Employee as a result of the termination of
his employment by the Company following a Change of Control or his
voluntary termination of such employment during the Evaluation
Period (including, without limitation, those which may be incurred
by the Employee in seeking t
