EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into by and between
NATURADE, INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "Employee") as of February 1, 1999 (the "Effective Date").
1. Employment
The Company employs the Employee and the Employee accepts employment
(hereinafter, the "Employment") upon the terms and conditions of this Agreement.
2. Duties
Employee shall perform the duties of Chief Operating Officer, Chief
Financial Officer, Director of Administration and such other duties of a
responsible nature consistent with his position as may be prescribed from time
to time by the Board of Directors of the Company (the "Board"). Employee is to
devote all of his working time and efforts to the business and affairs of the
Company. During the Employment, Employee shall report to the Chief Executive
Officer of the Company and the Board.
3. Term
The term of this Agreement shall begin on (the Effective Date and, subject
to extension and termination as provided herein, shall expire on December 31,
1999 (the "Initial Termination Date"). The period commencing on the Effective
Date and expiring on the Initial Termination Date shall be referred to
hereinafter as the "Initial Term" and, together with any extension thereof, the
"Term." Notwithstanding the foregoing, this Agreement and the Employment shall
be automatically extended after the Initial Term for an indefinite period. The
effective date of any termination hereunder is referred to hereinafter as the
"Termination Date."
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4. Compensation
1. Base Salary
The Company shall pay the Employee for all services rendered a salary of
$150,000 per year, payable in such manner as the Company shall pay its
executives.
2. Incentive Compensation
Within thirty (30) days following each calendar year-end during the Term,
the Company shall pay to the Employee a bonus ("Incentive Bonus") up to a
maximum amount of 30% of Employee's Base Salary pursuant to an Incentive Bonus
Plan Description to be negotiated in good faith between the Company and the
Employee following the Effective Date.
3. Stock Options
Upon commencement of the Employment, the Board of Directors will grant the
Employee the option to purchase 100,000 shares of the Company's common stock
(the "Options") subject to the terms and conditions of the Company's Stock
Option Agreement to be executed by the Company and the Employee (the "Option
Agreement"). Such Options shall be granted at Fair Market Value (as defined in
the Option Agreement) and shall vest in accordance with the following vesting
schedule:
Number of Options Vesting Date
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25,000 First Anniversary of Effective Date
25,000 Second Anniversary of Effective Date
25,000 Third Anniversary of Effective Date
25,000 Fourth Anniversary of Effective Date
The Options shall terminate in accordance with the terms and conditions of
the Option Agreement.
4. Fringe Benefits
Employee and his dependents shall be eligible for all fringe benefits
provided to its employees. In addition, the Employee shall be entitled to
three (3) weeks paid vacation during each year of the Term.
5. Extent of Services
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During the Term, Employee shall not, without the prior written consent
of the Company, be engaged in any other business activity whether or not such
business activity is pursued for gain, profit or other pecuniary advantage.
This shall not be construed as preventing Employee from investing his assets
in such form or manner as will not require the performance of services of
Employee in the operation of the affairs of the enterprises or companies in
which said investments are made.
6. Competitive Activities
During the Term, Employee shall not, directly or indirectly, either as
an employee or employer, consultant, agent, principal, partner, stockholder
(of more than 5% of the outstanding stock on any entity), corporate officer,
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition with the business of the
Company. The parties agree that the terms of this paragraph are reasonable
and in compliance with applicable law and, in that regard, anything to the
contrary appearing in this Agreement notwithstanding, if a court shall
determine that the scope of this paragraph shall be unenforceable, such court
is hereby authorized and empowered to restrict the geographic area and the
scope of activities to which this paragraph pertains to the minimum extent
necessary so that this paragraph as so restricted shall be rendered
enforceable.
7. Non-Disclosure; Nonsolicitation; Nondisparagement
A. Employee shall not during the Term or at any time thereafter (i)
disclose to any person not employed by the Company or any person, firm or
corporation engaged to render services to Company except during the Term for
the benefit of Company, or (ii) use for the benefit of himself, or others,
any Confidential Information (as defined below) obtained by Employee prior to
the Effective Date, during the Term or any time thereafter, including,
without limitation, "know-how", trade secrets, details of the Company's
contracts with third parties, pricing policies, financial data, operational
methods, marketing and sales information or strategies, product development
techniques or plans or any strategies relating thereto, technical processes,
designs and design projects, and other proprietary information of Company
("Confidential Information"); PROVIDED, HOWEVER, that this provision shall
not preclude Employee from (x) upon advice of counsel and after reasonable
notice to Company, making any disclosure required by any applicable law or
(y) using or disclosing information known generally to the public (other than
information known generally to the public as a result of any violation of
this paragraph VII by or on behalf of Employee).
B. As requested by the Company from time to time and upon the
termination of the Employment for any reason, Employee will
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promptly deliver to the Company all copies and embodiments, in whatever form,
of all Confidential Information in Employee's possession or within Employee's
control (including, but not limited to, written records, notes, photographs,
manuals, notebooks, documentation, program listings, flow charts, magnetic
media, disks, diskettes, tapes and all other materials containing any such
Confidential Information) regardless of the location or form of such material
and, if requested by the Company, will provide the Company with written
confirmation that all such materials have been delivered to the Company.
C. The Employee shall not, either directly or indirectly, call on,
solicit or take away or assist to be called on, solicited or taken away, any
of the customers, employees or independent contractors of the Company on whom
the Employee called or with whom the Employee became acquainted during the
Employee's employment with or hiring by the Company, either for the
Employee's own benefit, or for the benefit of any other person, firm or
corporation. The Employee shall not disclose the name of any employee,
customer, sales representative or other employee of the Company to any third
party, unless the disclosure occurs during the Employee's employment with the
Company and is reasonably required by the Employee's position with the
Company. The Employee shall not now or in the future disrupt, damage, impair
or interfere with the business of the Company in any manner, including,
without limitation, inducing an employee to leave the employ of the Company
or inducing an employee, a consultant, a sales representative or an
independent contractor to sever that person's relationship with the Company
either by interfering with or raiding the Company's employees or sales
representatives, disrupting its relationships with customers, agents,
independent contractors, representatives or vendors, or otherwise.
In the event of a breach or threatened breach by Employee of the
provisions of paragraph VI above or this paragraph VII, the Company will be
entitled to injunctive or other equitable relief restraining Employee from
any breach or threatened breach of paragraph VI above or this paragraph VII.
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 the recovery of damages from Employee.
8. Expenses
The Employee may incur reasonable expenses, in accordance with Company
policies for such expenses, for promoting the Company's business, including
expenses for entertainment, travel and similar items. The Company will
reimburse the Employee for all such expenses upon the Employee's presentation
of an itemized account of such expenditures and supporting documentation, in
accordance with Company policy.
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9. Termination by the Company for Cause
This Agreement may be terminated by the Company under any of the following
circumstances:
1. Upon the death of Employee; or
2. Upon the inability of Employee to perform all of his duties
hereunder by reason of illness, physical, mental or emotional disability or
other incapacity, which inability shall continue for more than three (3)
successive months or six (6) months in the aggregate during any period of
twelve (12) consecutive months, or
3. For cause, defined as:
(i) the willful failure of Employee (other than for the reasons
described in subparagraph IX(B) above) to (a) substantially perform his
duties hereunder, or (b) comply materially with reasonable directives of the
Company, in either case which remains uncured following ten (10) days after
written notice thereof has been provided to the Employee by the Company. No
act, or failure to act, on Employee's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company;
(ii) conviction of a crime involving a felony, fraud embezzlement
or the like,
(iii) the engaging by Employee in conduct, or the taking by
Employee of any action, which is materially injurious to the Company and
remains uncured following ten (10) days after written notice thereof has been
provided to the Employee by the Company,
(iv) habitual insobriety or habitual abuse of a controlled
substance,
(v) misappropriation of the Company's funds, or
(vi) the failure of Employee to comply with the provisions of
Paragraphs V, VI or VII above.
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10. Termination by Employee for Good Reason
This Agreement may be terminated by Employee under any of the following
circumstances ("Good Reason"):
1. The failure of the Company to observe or comply with any of the
material terms or provisions of this Agreement after written notice from
Employee to Company specifying the grounds for termination and the Company
fails within ten (10) days after receipt of such notice to cure such failure;
2. A "Change of Control" (as defined in Exhibit A hereto) pursuant to
which the Employee is not retained by the Company (or other surviving or
successor entity following such Change of Control ) on substantially the same
terms as provided herein.
11. Termination Without Cause
This Agreement may be terminated by either party without cause upon
thirty (30) days' prior written notice to the other party.
12. Severance
In the event this Agreement is terminated by the Company without cause
pursuant to paragraph XI, or in the event this Agreement is terminated by the
Employee for Good Reason as provided in paragraph X, the Company shall
continue to pay the Employee his then current Base Salary and provide the
benefits set forth in paragraph IV above during the period commencing on the
Termination Date and ending six (6) months thereafter. In the event of
termination prior to year-end, the Employee shall not be entitled to (i)
payment of Incentive Bonus payable for such year (unless such termination was
without cause or for Good Reason, in which event the Employee shall be
entitled to the Incentive Bonus pro-rated through the Termination Date and
payable at the time set forth in paragraph IV(B) above), or (ii) stock
options which have not vested as of the Termination Date; PROVIDED that if
such termination occurs as a result of a Change of Control as provided in
paragraph X(B), all Options which have not then vested shall immediately vest
prior to the effectiveness of any such termination.
13. Waiver of Breach
The waiver by either party of a breach of any provision of this
Agreement by the other shall not operate or be construed as a waiver of any
subsequent breach.
14. Arbitration
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Any dispute arising out of or relating to this Agreement or the
transactions contemplated hereby shall be finally resolved and determined by
mandatory, binding arbitration before a single arbitrator in Irvine,
California, in accordance with the then-prevailing commercial arbitration
rules of the American Arbitration Association; PROVIDED, HOWEVER, that no
claim for specific performance or injunctive relief shall be required to be
submitted to arbitration; PROVIDED, FURTHER, that the arbitrator shall apply
the internal laws of the State of California. Each of the parties hereto
submits to the jurisdiction of the arbitrator appointed in accordance with
such rules and (without limiting the effect of the foregoing arbitration
clause) to the jurisdiction of any state or federal court sitting in Orange
County, California, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each of the
parties hereto waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.
Nothing in this paragraph XIV, however, shall affect the right of any party
to bring any action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby in any other court or to
serve legal process in any other manner permitted by law or at equity, for
the purposes of compelling arbitration, enforcing any award in arbitration,
or seeking specific performance or injunctive relief. Any party hereto may
make service on any other party by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided
for the giving of notices in paragraph XVII hereof. Each party hereto agrees
that a final award in any such arbitration or final judgment in any such
action or proceeding so brought shall be conclusive and may be enforced by
entry of such award in any court of competent jurisdiction, suit on the award
or judgment, or in any other manner provided by law or at equity. In the
event of legal action or arbitration to construe or enforce this Agreement,
the prevailing party (as determined by the court or arbitrator, as
applicable) shall be entitled to recover its reasonable attorneys' fees and
costs.
15. Assignment
The rights and obligations of the Company under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns
of the Company, but the rights and obligations of Employee are personal and
may not be assigned or delegated without the Company's prior written consent.
16. Entire Agreement
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This Agreement and all Exhibits attached hereto contain the entire
agreement of the parties and may not be changed orally, but only by an
agreement in writing executed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
17. Law Applicable
This Agreement shall be governed in all respects, whether as to
validity, construction, capacity, performance or otherwise, by the internal
laws of the State of California. In the event any provision of this
Agreement shall be held invalid by a court with jurisdiction over the parties
to this Agreement, such provision shall be deleted from the Agreement, which
shall then be construed to give effect to the remaining provisions thereof.
18. Notices
Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally or sent by facsimile
transmission and shall be deemed given when so delivered personally or sent
by facsimile transmission, if to the Company addressed to the Chief Executive
Officer of the Company at its then principal place of business and if to the
Employee at his home address then shown in the Company's records. For the
purpose of determining compliance with any time limit in this Agreement, a
notice shall be deemed to have been duly given (a) on the date of service or
delivery, if served personally on the party to whom notice is to be given or
sent by facsimile, or (b) on the second business day after mailing, if mailed
to the party to whom the notice is to be given in the manner provided in this
paragraph.
IN WITNESS WHEREOF, the parties intending to be legally bound, have
executed this Agreement as of the day and year first above stated.
NATURADE, INC. EMPLOYEE
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Officer
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EXHIBIT A
As used in this Agreement, the phrase "Change in Control" shall mean:
(a) Except as provided by subparagraph (b) hereof, the acquisition by
any person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of the combined voting power of the
then outstanding securities entitled to vote generally in the election of
directors of the Company; or
(b) Approval by the Board of a reorganization, merger or consolidation
of the Company with any other person, entity or corporation, other than:
(i) a merger or consolidation which would result in the voting
securities of the Company immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of another entity) more than 50% of the combined voting power of the
securities entitled to vote generally in the election of directors of the
Company or such other entity outstanding immediately after such merger or
consolidation; or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company or similar transaction in which no person,
entity or group acquires beneficial ownership of 50% or more of the combined
voting power of the securities entitled to vote generally in the election of
directors of the Company outstanding immediately after such merger or
consolidation; or
(iii) Approval by the Board of a plan of complete liquidation of
the Company or an agreement for the sale or other disposition by the Company
of all or substantially all of the Company's assets (other than a liquidation
or sale pursuant to which all or substantially all of the Company's assets
continue to be owned by an affiliate of the Company).
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