EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of April 23, 1998,
between GLOBAL HEALTH SCIENCES, INC., a Delaware corporation (the "Company"),
and Xxxxxx X. Xxxxx (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company is engaged in the business of manufacturing
dietary and nutritional supplements in the United States and throughout the
world (the "Business"); and
WHEREAS, the Company desires to retain the services of the Executive
in the capacity of Senior Vice President and Chief Financial Officer of the
Company, and the Executive desires to provide such services in such capacity to
the Company, on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and obligations hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Employment and Term.
(a) The Company hereby employs the Executive, and the Executive
hereby accepts employment by the Company, in the capacities and on the terms and
subject to the conditions set forth herein from April 20, 1998 until April 19,
2001 unless terminated earlier as provided herein (the "Term of Employment"). At
least
ninety (90) days prior to the expiration of the Term of Employment, the Company
shall notify the Executive if, and under what terms and conditions, the Company
will offer to extend the Term of Employment.
2. Duties. During the Term of Employment, the Executive shall serve
as the Company's Senior Vice President and Chief Financial Officer. The
Executive shall report to the Chief Executive Officer of the Company. In
addition, while it is understood that the right to elect directors of the
Company is by law vested in the shareholders of the Company, it is nevertheless
contemplated, subject to such right, that the Executive shall, at all times
during the Term of Employment, be a member of the Board of Directors of the
Company; provided that the failure of the Executive to be elected a director or
to retain a directorship of the Company shall not constitute a breach of this
Agreement by the Company. The Executive shall serve the Company faithfully and
to the best of his ability in such capacities and shall devote substantially all
of his business time, attention, knowledge, energy and skills to such
employment. If elected, the Executive also shall serve during any part of the
Term of Employment as any other officer of the Company or as an officer or
director of any of the Company's subsidiaries without any additional
compensation other than as specified in this Agreement.
3. Compensation and Benefits. As full and complete compensation to
the Executive for his execution and delivery of this Agreement and performance
of the services required hereunder, the Company shall pay, grant or provide the
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Executive, and the Executive agrees to accept, the following salary and other
compensation and benefits:
(a) an annual base salary, payable in accordance with the Company's
standard payroll practices for senior executive officers, of $225,000 per annum
("Base Salary");
(b) an annual bonus, payable with respect to each full fiscal year
of the Company during the Term of Employment, or pro rata portion thereof, in
each case based upon the performance of the Company for each applicable full
fiscal year of the Company and otherwise as determined by the Board of Directors
of the Company, in effect from time to time;
(c) reimbursement to the Executive for (i) his actual closing costs
for the sale of Executive's home in Atlanta, Georgia, including any fees and
commissions paid to real estate agents and attorneys in connection with such
sale, (ii) rental costs relating to temporary housing in California until the
earlier of (a) the purchase of a residence in California and (b) September 30,
1998 and (iii) travel to Atlanta, Georgia at reasonable intervals until the
earlier of (a) the relocation of Executive's family to California and (b)
September 30, 1998;
(d) a relocation allowance of $20,000 to cover reasonable
out-of-pocket expenses incurred in connection with moving household effects,
transportation costs in moving the Executive's family and a decorating allowance
for a new residence in California;
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(e) the right to participate in any medical, dental, disability,
retirement, insurance, savings, vacation, holiday, paid sick leave or other
plans as in effect from time to time for the benefit of the Company's senior
executive officers;
(f) an annual automobile allowance, payable in equal monthly
installments during the Term of Employment, of $850 per month;
(g) prompt reimbursement for all reasonable business-related
expenses incurred by the Executive, in accordance with the policies and
procedures of the Company as in effect from time to time for senior executive
officers; and
(h) paid vacation in accordance with the policies and procedures of
the Company as in effect from time to time for senior executive officers.
4. Termination.
(a) Disability. In the event of any physical or mental disability
during the Term of Employment which renders the Executive incapable of
performing the services required of him for any period or periods aggregating
three months during any twelve-month period, the Company shall have the right,
upon written notice to the Executive, to terminate the Executive's employment
hereunder, effective upon the giving of such notice (or such later date as shall
be specified in such notice). Upon such termination, the Company shall have no
further obligations hereunder, except to pay the Executive his Base Salary
prorated to the effective date of termination or provide the Executive any
benefits to which the Executive may
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otherwise have been entitled but for the Executive's disability prorated to the
effective date of termination.
(b) Death. In the event of the death of the Executive during the
Term of Employment, this Agreement shall automatically terminate and the Company
shall have no further obligations hereunder, except to pay the Executive's
beneficiary or legal representative the Base Salary prorated to the date of
death.
(c) Cause. The Company shall have the right, upon written notice to
the Executive, to terminate the Executive's employment under this Agreement for
Cause (as hereinafter defined), effective upon the giving of such notice (or
such later date as shall be specified in such notice), and the Company shall
have no further obligations hereunder, except to pay the Executive his Base
Salary prorated to the effective date of termination, and the Executive shall
continue to have the obligations provided for in Sections 6 and 7 hereof.
For purposes of this Agreement, "Cause" means:
(i) fraud, embezzlement, gross insubordination on the part of
the Executive or any act of moral turpitude or misconduct by the Executive;
(ii) conviction of or the entry of a plea of nolo contendere
by the Executive for any felony; or
(iii) a material breach of, or the willful failure or refusal
by the Executive to perform and discharge, his duties, responsibilities or
obligations under this Agreement.
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(d) Without Cause. The Company shall have the right to terminate the
Executive's employment under this Agreement without Cause and upon written
notice, in which case the Executive's employment under this Agreement shall
terminate on the date specified in such notice (except that the Executive shall
continue to have the obligations provided for in Sections 6 and 7) and the
Company shall have no further obligations hereunder, except to pay the Executive
(i) his Base Salary prorated to the effective date of termination and (ii) one
year severance pay equal to his annual Base Salary at the time of termination.
(e) Change of Control. The Executive shall have the right to
terminate his employment under this Agreement upon a Change of Control (as
hereinafter defined) upon at least three months' prior written notice thereof to
the Company given within 30 days of the first occurrence of any event
constituting a Change of Control, in which case the Executive's employment under
this Agreement shall terminate on the date specified in such notice. In the
event of any termination of employment by the Executive upon a Change of
Control, the Executive shall have no further obligations under this Agreement
other than the obligations provided for in Sections 6 and 7 hereof. The failure
by the Executive to give such written notice in such 30-day period shall
preclude the Executive from terminating his employment upon a Change of Control
with respect to such occurrence. In the event of any termination of employment
by the Executive upon a Change of Control, the Company shall have no further
obligations hereunder, except to pay the Executive (i) his Base
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Salary prorated to the effective date of termination, (ii) one year severance
pay equal to his annual Base Salary at the time of termination and (iii) if such
termination occurs after Executive has received an annual bonus pursuant to the
terms hereof, an additional payment equal to his most recently received annual
bonus prorated to the effective date of termination. It is understood and agreed
that, during the three-month period following the Executive's delivery of notice
of termination to the Company upon a Change of Control, the Executive shall
cooperate fully with the Company to effect the orderly transfer of the
Executive's duties to another person or persons. Notwithstanding anything to the
contrary contained herein, upon receipt of the Executive's notice of termination
upon a Change of Control, the Company shall have the right to cause the
Executive's termination to become effective prior to the end of the three-month
period or the date specified in the notice therefor by giving at least two
business days' notice thereof to the Executive.
For purposes of this Agreement, a "Change of Control" means the
occurrence of any one of the following events: (a) a change in control of the
direction and administration of the Company's business of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof and any successor provision of
the regulations under the Exchange Act, (b) the approval by the Board of
Directors of a sale of all or substantially all of the assets of the Company to
any unrelated third party and the
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consummation of such transaction or (c) the consummation of any merger,
consolidation, or like business combination or reorganization of the Company,
approved by the Board of Directors of the Company, which would result in the
occurrence of an event described in clause (a) above or a change in the Board of
Directors so that during any period of two (2) consecutive years, the
individuals who at the beginning of such period constitute the Board of
Directors or any individuals who would be "Continuing Directors" (as hereinafter
defined) cease for any reason to constitute at least a majority thereof.
For purposes of this Agreement, "Continuing Directors" shall mean
the directors of the Company in office on the date hereof and any successor to
any such director and any additional director who, after the date hereof (i) was
nominated or selected by a majority of the Continuing Directors in office at the
time of his nomination or selection and (ii) is not an "affiliate" or
"associate" (as defined in Regulation 12B under the Exchange Act) at the time of
his nomination or selection of any person who is the beneficial owner, directly
or indirectly, of securities representing ten percent (10%) or more of the
combined voting power of the Company's outstanding securities then entitled
ordinarily to vote for the election of directors.
5. Resignation upon Termination. Upon the termination of the
Executive's employment hereunder for any reason the Executive agrees that he
shall immediately resign from all offices and directorships held by him in the
Company or
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any of its subsidiaries or affiliates and agrees to execute any and all
documents reasonably necessary to effect such resignations as requested by the
Company.
6. Confidentiality; Ownership of Developments.
(a) During the Term of Employment and for any time thereafter, the
Executive shall keep secret and retain in strictest confidence and not divulge,
disclose, discuss, copy or otherwise use or suffer to be used in any manner,
except in connection with the Business of the Company and of any of the
subsidiaries or affiliates of the Company, any trade secrets, confidential or
proprietary information and all other knowledge, know-how, information,
documents or materials owned, developed or possessed by the Company or any of
the subsidiaries or affiliates of the Company, whether in tangible or intangible
form, pertaining to the Business of the Company or any of the subsidiaries or
affiliates of the Company.
(b) The Executive acknowledges that all developments, including,
without limitation, formulas, inventions (patentable or otherwise), discoveries,
improvements, patents, trade secrets, designs, reports, computer software, flow
charts and diagrams, procedures, data, documentation, ideas and writings and
applications thereof relating to the Business or planned business of the Company
or any of the subsidiaries or affiliates of the Company that, alone or jointly
with others, the Executive may conceive, create, make, develop, reduce to
practice or acquire during the Term of Employment (collectively, the
"Developments") are works made for hire and shall remain the sole and exclusive
property of the Company and the Executive
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hereby assigns to the Company all of his right, title and interest in and to all
such Developments.
(c) The provisions of this Section 6 shall, without any limitation
as to time, survive the expiration or termination of the Executive's employment
hereunder, irrespective of the reason for any termination.
7. Covenant Not to Compete. The Executive agrees that during the
Term of Employment and for a period of one year commencing upon the expiration
or termination of the Executive's employment hereunder, the Executive shall not,
directly or indirectly, without the prior written consent of the Company:
(a) solicit, entice, persuade or induce any employee, consultant,
agent or independent contractor of the Company or of any of the subsidiaries or
affiliates of the Company to terminate his or her employment or engagement with
the Company or such subsidiary or affiliate, to become employed by any person,
firm or corporation other than the Company or such subsidiary or affiliate or
approach any such employee, consultant, agent or independent contractor for any
of the foregoing purposes, or authorize or assist in the taking of any such
actions by any third party; or
(b) directly or indirectly own, manage, control, invest or
participate in any way in, consult with, be employed by, or render services for
(whether as a director, consultant or otherwise) any person or entity (other
than the Company or
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any of the subsidiaries or affiliates of the Company) engaged in the business of
manufacturing or distributing dietary and nutritional supplements.
8. Specific Performance. The Executive acknowledges that the
services to be rendered by the Executive are of a special, unique and
extraordinary character and, in connection with such services, the Executive
will have access to confidential information vital to the Company's Business and
the subsidiaries and affiliates of the Company. By reason of this, the Executive
consents and agrees that if the Executive violates any of the provisions of
Sections 6 or 7 hereof, the Company and the subsidiaries and affiliates of the
Company would sustain irreparable injury and that monetary damages will not
provide adequate remedy to the Company and that the Company shall be entitled to
have Sections 6 or 7 specifically enforced by any court having equity
jurisdiction. Nothing contained herein shall be construed as prohibiting the
Company or any of the subsidiaries or affiliates of the Company from pursuing
any other remedies available to it for such breach or threatened breach,
including the recovery of damages from the Executive.
9. Entire Agreement. This Agreement embodies the entire agreement of
the parties with respect to the Executive's employment and supersedes any other
prior oral or written agreements, arrangements or understandings between the
Executive and the Company. This Agreement may not be changed or terminated
orally but only by an agreement in writing signed by the parties hereto.
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10. Governing Law; Jurisdiction. (a) This Agreement shall be subject
to, and governed by, the laws of the State of California applicable to contracts
made and to be performed therein.
(b) Any action to enforce any of the provisions of this Agreement
shall be brought in a court of the State of California located in Los Angeles
County or in a Federal court located in Los Angeles, California. The parties
consent to the jurisdiction of such courts and to the service of process in any
manner provided by Ohio law. Each party irrevocably waives any objection which
it may now or hereafter have to the venue of any such suit, action or proceeding
brought in such court.
(c) The prevailing party in any action to enforce any of the
provisions of this Agreement shall be entitled to reimbursement from the other
party for its or his costs and expenses (including attorneys fees and expenses)
incurred in connection with such action.
11. Assignability. The obligations of the Executive may not be
delegated and the Executive may not, without the Company's written consent
thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise
dispose of this Agreement or any interest herein. Any such attempted delegation
or disposition shall be null and void and without effect. The Company and the
Executive agree that this Agreement and all of the Company's rights and
obligations hereunder may be
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assigned or transferred by the Company to any subsidiary or successor to the
Company.
12. Severability. If any provision of this Agreement or any part
thereof, including, without limitation, Sections 6 and 7, as applied to either
party or to any circumstances shall be adjudged by a court of competent
jurisdiction to be void or unenforceable, the same shall in no way affect any
other provision of this Agreement or remaining part thereof, which shall be
given full effect without regard to the invalid or unenforceable part thereof,
or the validity or enforceability of this Agreement.
If any court construes any of the provisions of Section 6 or 7, or
any part thereof, to be unreasonable because of the duration of such provision
or the geographic scope thereof, such court may reduce the duration or restrict
or redefine the geographic scope of such provision and enforce such provision as
so reduced, restricted or redefined.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
GLOBAL HEALTH SCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx
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