EXHIBIT 10.1
EMPLOYMENT AGREEMENT
Agreement dated as of the 21st day of August 2000, by and between
▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation having its principal place of business
at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Corporation") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, (the "Executive").
W I T N E S S E T H:
WHEREAS, the Corporation desires to employ Executive as an executive
officer, and Executive is willing to accept such employment, all subject to the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM. Subject to the terms and conditions
hereof, the Corporation hereby employs Executive, and
Executive hereby accepts employment by the Corporation, for a
period of three (3) years commencing on August 21, 2000, (the
"Commencement Date") and ending on the third anniversary of
the Commencement Date, unless terminated sooner pursuant to
the provisions hereof.
2. DUTIES. Executive shall serve the Corporation as its President
and Chief Executive Officer. Executive shall perform such
executive, administrative, management, marketing and other
services and duties as are incidental to the offices he holds
and as may, from time to time, be assigned to him by the Board
of Directors of the Corporation or a committee thereof.
Executive shall devote all of his business and professional
time to the performance of his duties hereunder. Executive
further agrees to serve as an officer or director of any
parent, subsidiary or affiliate of the Corporation upon the
Corporation's request, with no additional compensation beyond
that set forth in Paragraph 3 below. The Executive's principal
place of employment shall be the executive offices of the
Corporation in Deerfield Beach, Florida or any location less
than 50 miles from such location, although the Executive
understands and agrees that he may be required to travel from
time to time for business purposes.
3. COMPENSATION.
(a) As base compensation for the services to be rendered by
Executive hereunder, the Corporation agrees to pay to
Executive an annual base salary in the amount of Two Hundred
Fifty Thousand Dollars ($250,000), such salary to be paid in
equal biweekly installments for so long as Executive is
employed by the Corporation.
(b) The Executive shall receive an annual bonus for each full
calendar year as (i) determined by the Board of Director's
Compensation Committee based upon the Company's growth and
profitability plus (ii) any additional amount, if any, to be
determined by Corporation's Compensation Committee in
recognition of the Executive's contribution to the
Corporation.
(c) The Executive shall receive an initial grant of 500,000
employee stock options under the Corporation's Stock Option
Plan (the "Plan") with an exercise price equal to the fair
market value of the Corporation's common stock at the
Commencement Date. The options, which shall be exercisable for
a period of five (5) years from the date of grant, shall vest
over three (3) years in six (6) equal semi-annual
installments, with the first installment vesting six (6)
months after the Commencement Date. Additional future options
may be granted in the discretion of the Corporation's
Compensation Committee and as part of the Plan. Unexercised
options shall only terminate in the event that this Agreement
is terminated by the Corporation pursuant to Paragraph 5(a).
(d) Executive shall be entitled, on a basis consistent with
the Corporation's policy, to reimbursement for all normal and
reasonable travel, entertainment and other expenses
necessarily incurred by him in the performance of his
obligations hereunder. The Corporation shall reimburse
Executive for such expenses upon presentation to the
Corporation, within a reasonable time after such expenses are
incurred, of an itemized account of such expenses, together
with such vouchers or receipts for individual expense items as
the Corporation may from time to time require under its
established policies and procedures.
(e) Executive shall be entitled to participate in, or benefit
from, in accordance with the eligibility and other provisions
thereof, such medical insurance, pension, retirement, or other
fringe benefit plans or policies as the Corporation may make
available to, or have in effect for, its executive personnel
from time to time. Plans and benefits may be modified or
eliminated by the Corporation from time to time as it
determines in its sole discretion. Executive shall also be
entitled to four (4) weeks of vacation annually and other
similar benefits in accordance with the policies of the
Corporation from time to time in effect for executive
personnel.
(f) Except as hereinafter provided, the Corporation shall pay
Executive, for any period during the term of this Agreement
during which he is unable fully to perform his duties because
of physical or mental disability or incapacity, an amount
equal to the compensation
due him for such period in accordance with this Agreement,
less the aggregate amount of all income disability benefits
which for such period he may receive under or by reason of (i)
any applicable compulsory state disability law, (ii) the
Federal Social Security Act, (iii) any applicable workmen's
compensation law or similar law, and (iv) any plan towards
which the Corporation or any parent, subsidiary or affiliate
of the Corporation has contributed or for which it has made
payroll deductions, such as group accident, disability or
health policies.
4. TERMINATION ON DISABILITY OR DEATH.
(a) In the event that Executive, due to physical or mental
disability or incapacity, is unable to substantially perform
his duties hereunder for a period of three (3) successive
months, the Corporation or Executive shall then have the right
to terminate this Agreement and Executive's employment
hereunder upon thirty (30) days' prior written notice,
provided, however, that in the event that Executive shall
recommence rendering services and performing all of his duties
hereunder within such thirty (30) day notice period, such
notice shall be vitiated, and the Corporation and the
Executive shall no longer have the right to terminate based on
the disability event described in the notice. Executive's
employment shall terminate immediately upon his death.
(b) Upon termination of Executive's employment by reason of
his death or disability as aforesaid, Executive, or in the
case of Executive's death, Executive's personal
representatives, shall be entitled to receive base
compensation earned or accrued to the date of such termination
and not already paid, less any benefits paid to Executive by
reason of such disability. Such accrued base compensation
shall be paid to the Executive within 30 days following the
date of termination.
(c) In the event of the termination of this Agreement for any
reason other than death, Executive shall have the right to
purchase, and the Corporation shall assign to Executive, any
insurance policy maintained by the Company on the life of
Executive then in effect, for a price equal to the net cash
surrender value thereof at the time of such termination.
5. TERMINATION FOR CERTAIN CAUSES AND OTHER REASONS.
(a) In the event of the (i) willful material misconduct of
Executive in the performance of his duties hereunder, (ii)
material breach of any provisions of Paragraphs 7, 8 or 9, or
(iii) conviction of the Executive for any felony under federal
or state law, this Agreement and Executive's employment
hereunder may be terminated by the
Corporation without prior notice. This Agreement may also be
terminated by the Corporation in the event that there has been
a material failure of performance by Executive of his duties
hereunder and such failure has not been cured by Executive
within a period of sixty (60) days of his receipt from the
Corporation of a written notice of proposed termination
specifying the particular failure(s) of performance, upon
which the proposed termination willl be based, if not cured.
(b) The Corporation may also terminate this Agreement for any
reason other than the reasons set forth in Paragraph 5(a)
above. If the Corporation elects to terminate under this
Paragraph 5(b) or the Executive resigns for Good Reason (as
defined below) during the first six (6) months of this
Agreement, as a severance allowance, Executive will be
entitled to receive a lump sum payment of $150,000 and
immediate vesting of the first installment of his stock
options, totaling 83,333. If the Corporation elects to
terminate under this Paragraph 5(b) or the Executive resigns
for Good Reason during months seven (7) through eighteen (18)
of this Agreement, Executive shall receive a lump sum payment
of $200,000 and immediate vesting of the second, third and
fourth installment of options, totaling 250,000. If the
Corporation elects to terminate under this Paragraph 5(b) or
the Executive resigns for Good Reason after nineteen (19)
months of this Agreement, Executive shall receive a lump sum
payment of $250,000 and immediate vesting of the remaining
balance of options. Such lump sum payment shall be paid to the
Executive within 30 days following the date of termination.
For purposes of this Agreement, "Good Reason" shall mean (i)
an adverse and material change in the Executive's title,
nature of duties, employee benefits or working conditions
without his prior consent; (ii) any material failure by the
Corporation to comply with any of the provisions of this
Agreement that is not remedied by the Corporation promptly
after receipt of notice thereof given by the Executive or
(iii) the Corporation requiring the Executive to be based at
any office or location other than that described in Paragraph
2 hereof without the Executive's prior written consent. Good
Reason shall not include the occurrence of a Change of Control
as defined in Paragraph 6.
6. CHANGE OF CONTROL
In order to protect the Executive against the possible
consequences and uncertainties of a Change of Control of the
Corporation (as hereinafter defined) and thereby induce the
Executive to enter into the employ of the Corporation, the
Corporation agrees that:
(a) If, during the term of this Agreement, the Executive's
employment is terminated by the Corporation at any time
subsequent to a Change of Control other than for the causes
set forth in Paragraph 5(a), then in such event, the
Corporation shall pay the Executive within thirty (30) days
after such termination, (i) a lump sum payment in cash in an
amount equal to the balance of his base salary for the
remaining term of the Agreement, but not less than one year of
said base salary and (ii) all stock options granted to the
Executive but not yet vested will immediately vest.
(b) For purposes of this Paragraph 6, in the event, following
a Change of Control, the Executive shall resign from his
employment with the Corporation within thirty (30) calendar
days after he has obtained actual knowledge of any adverse and
material change or proposed change in his title, nature of
duties, employee benefits or working conditions, in each
instance without his prior consent, such resignation shall be
deemed to be a termination of employment by the Corporation
other than for the causes set forth in Paragraph 5(a) and
Paragraph 6(a) shall therefore govern the corporate obligation
to the Executive.
(c) As used in this Paragraph 6, a "Change of Control" shall
be deemed to have occurred if after the Commencement Date (i)
any "person" or "group of persons" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the 1934
Act), directly or indirectly, of securities of the Corporation
representing more than thirty-five percent (35%) of the
Corporation's then outstanding securities having the right to
vote on the election of directors; (ii) if directors
constituting a majority of the Board of Directors are elected
to the Board of Directors without the recommendation or
approval of the incumbent Board of Directors, except only by
vote of the current majority stockholder, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇; or
(iii) approval by the stockholders of the Corporation (or any
parent corporation, if any) of a reorganization, merger,
statutory share exchange, consolidation or similar business
combination, in each case with respect to which all or
substantially all of the individuals and entities who were the
beneficial owners of the outstanding securities having the
right to vote on the election of directors immediately prior
to such reorganization, merger, statutory share exchange,
consolidation or other similar business combination do not
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly more than 50%,
respectively, of the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such reorganization, merger, statutory share exchange,
consolidation or
similar business combination in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger, statutory share exchange,
consolidation or similar business combination of the
Corporation's outstanding securities having the right to vote
on the election of directors; or (iv) approval by the
stockholders of the Corporation (or any parent corporation, if
any) of [a] a complete liquidation or dissolution of the
Corporation (or any parent corporation) or [b] the sale or
other disposition of all or substantially all of the assets of
the Corporation (or any parent corporation), other than to a
corporation, with respect to which following such sale or
other disposition, more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of
the Corporation's outstanding securities having the right to
vote on the election of directors immediately prior to such
sale or other disposition in substantially the same proportion
as their ownership, immediately prior to such sale or other
disposition, of the Corporation's outstanding securities
having the right to vote on the election of directors.
7. DISCLOSURE AND ASSIGNMENT OF DISCOVERIES.
(a) Executive hereby covenants and agrees to disclose promptly
and fully, in writing, whenever possible, to the Corporation
and its attorneys and designated representatives, without
additional compensation, all ideas, formulae, programs,
systems, devices, inventions, processes, business concepts,
discoveries, improvements, developments, works of authorship,
product marks and designations, technical information and
know-how, whether or not patentable, copyrightable or
otherwise protectable relating to personalized diet and
nutrition programs (together, the "Developments"), which he
may conceive, develop, reduce to practice, acquire or make,
alone or jointly with others:
(i) during the term of his employment with the
Corporation, whether during or outside of the usual
hours of work;
(ii) within a period of two (2) years after
termination of his employment with the Corporation;
and
Executive hereby agrees that all of his right, title
and interest in and to such Developments shall be
deemed as held by him in a fiduciary capacity solely
for the benefit of
the Corporation, shall be the sole and exclusive
property of the Corporation and shall be subject to
the confidentiality provisions of Section 8 as
confidential information of the Corporation.
(b) Executive, when required to do so, either during or after
the term of his employment with the Corporation, shall:
(i) assign and convey to the Corporation his entire
right, title and interest in and to the Developments to the
extent not owned by the Corporation as a matter of law from
the time of their creation and execute, acknowledge and
deliver all such further instruments and documents, in form
and substance satisfactory to the Corporation, as it shall
deem reasonably necessary or advisable to evidence the vesting
in the Corporation of all right, title and interest of
Executive in and to the Developments;
(ii) assist the Corporation and its agents in
preparing patent applications, domestic and foreign, covering
the Developments;
(iii) sign and deliver all such applications and
assignments of the same to the Corporation; and
(iv) generally give all information and testimony,
sign all papers and do all things which may be needed or
requested by the Corporation to the end that the Corporation
may obtain, extend, reissue, maintain and enforce United
states and foreign patents covering the Developments.
(c) Executive hereby irrevocably nominates and appoints the
Corporation his attorney-in-fact to sign and deliver all such
papers, and perform all such acts mentioned in subparagraph
7(b), in the event of Executive's absence, unavailability, or
death, such nomination and appointment hereby being granted
with full authority in the premises, and such authority to be
deemed coupled with an interest vested in the Corporation.
(d) The Corporation agrees to bear all expenses which it
causes to be incurred in obtaining, extending, issuing,
maintaining and enforcing such patents and in investing and
perfecting title thereto in the Corporation, and agrees
further to pay Executive for any time which it may require
of him therefor, and for any services that may be required of
him pursuant to subparagraph 7(b), subsequent to the
termination of his employment with the Corporation, such
payment to be at an hourly rate equivalent to that at which
Executive is paid at the time of the termination of his
employment by the Corporation.
(e) In the event of the unenforceability of all or part of the
foregoing provisions of this Paragraph 7, as determined by a
court of competent jurisdiction, Executive hereby transfers
and assigns to the Corporation such lesser interests in the
Developments, including, without limitations, any and all
United States and foreign patent rights therein and renewals
thereof, as may be determined by such a court to be a
reasonable grant of interests under the circumstances, but, in
any event, and without limitation, Executive shall be deemed
to have granted to the Corporation not less than an
irrevocable, non-exclusive license, with the right to
sublicense others, to manufacture, use, lease and sell the
Developments which have not been assigned to the Corporation
under the provisions of subparagraph 7(b), without payment of
any royalty.
8. CONFIDENTIALITY
(a) Executive understands and hereby acknowledges that as a
result of his employment with the Corporation, he will
necessarily become informed of, and have access to, certain
valuable and confidential information of the Corporation and
any of its subsidiaries, joint ventures and affiliates,
including, without limitation, inventions, trade secrets,
technical information, know-how, plans, specifications,
identity of customers and suppliers, and that such
information, even though it may be developed or otherwise
acquired by Executive, is the exclusive property of the
Corporation to be held by Executive in trust and solely for
the Corporation's benefit. Accordingly, Executive hereby
agrees that he shall not, at any time, either during or
subsequent to his employment hereunder, use, reveal, report,
publish, transfer or otherwise disclose to any person,
corporation or other entity, any of the Corporation's
confidential information without the prior written consent of
the Corporation, except to responsible officers and employees
of the Corporation and other responsible persons who are in a
contractual or fiduciary relationship with the Corporation or
who have a need for such information for purposes in the
interest of the Corporation, and except for such information
which legally and legitimately is or becomes of
general public knowledge from authorized sources other than
Executive.
(b) Upon the termination of his employment with the
Corporation for any reason whatsoever, Executive shall
promptly deliver to the Corporation all drawings, manuals,
letters, notes, notebooks, reports and copies thereof, and all
other materials, including, without limitation, those of a
secret and confidential nature, relating to the Corporation's
business which are in Executive's possession or control.
9. NON-COMPETITION. Executive agrees that, during the term of
this Agreement and for a period of two (2) years after the
expiration or termination for any cause of his employment with
the Corporation, he shall not, anywhere in the United States
of America or elsewhere in the world (or in such smaller area
or for such lesser period as may be determined by a court of
competent jurisdiction to be a reasonable limitation on the
competitive activity of Executive), directly or indirectly:
(i) engage in a directly competitive line of business to
the business carried on by the Corporation to be
defined as any diet and fitness business, both on-
and offline, either for his own account or with or
for anyone else;
(ii) solicit or attempt to solicit business of any
customers of the Corporation for products or services
the same or similar to those offered, sold, produced
or under development by the Corporation;
(iii) otherwise divert or attempt to divert from the
Corporation any business whatsoever;
(iv) solicit or attempt to solicit for any business
endeavor any employee of the Corporation;
(v) interfere with any business relationship between the
Corporation and any other person; or
(vi) render any services as an officer, director,
employee, partner, consultant or otherwise to, or
have any interest as a stockholder, partner, lender
or otherwise in, any person which is so engaged.
Notwithstanding anything to the contrary contained in
this Paragraph 9, the provisions hereof shall not
prevent the Executive from (i) purchasing or owning
up to three percent (3%) of the voting
securities of any corporation, the stock of which is
publicly traded or (ii) being employed by any person
in which services performed by the Executive are not
in furtherance of such person's competition with the
Corporation.
10. REMEDIES. Because the Corporation does not have an adequate
remedy at law to protect its business from Executive's
competition or to protect its interests in its trade secrets,
privileged, proprietary or confidential information and
similar commercial assets, the Corporation shall be entitled
to injunctive relief, in addition to such other remedies and
relief that would, in the event of a breach of the provisions
of Paragraphs 7, 8 and 9, be available to the Corporation. In
the event of such a breach, in addition to any other remedies,
the Corporation shall be entitled to receive from Executive
payment of, or reimbursement for, its reasonable attorneys
fees and disbursements incurred in successfully enforcing any
such provision.
11. ATTORNEY'S FEES. In any litigation arising out of this
Agreement, including appeals, the prevailing party shall be
entitled to recover all costs incurred, including reasonable
attorney's fees.
12. INDEMNIFICATION. The Corporation will, to the fullest extent
permitted by law, indemnify and hold the Executive harmless
from any and all liability arising from the Executive's
service as an employee, officer or director of the Corporation
and its affiliated companies in accordance with the terms of
the Corporation's standard Indemnification Agreement.
13. SURVIVAL. The provisions of Paragraphs 7, 8 and 9 shall
survive termination of this Agreement for any reason.
14. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties and merges and supersedes any
prior or contemporaneous agreements between the parties
pertaining to the subject matter hereof. This Agreement may
not be changed or terminated orally, and no change,
termination or attempted waiver of any of the provisions
hereof shall be binding unless in writing and signed by the
party against whom the same is sought to be enforced;
PROVIDED, HOWEVER, that Executive's compensation may be
increased at any time by the Corporation without in any way
affecting any of the other terms and conditions of this
Agreement, which in all other respects shall remain in full
force and effect. Failure of a party to enforce one or more of
the
provisions of this Agreement or to require at any time
performance of any of the obligations hereof shall not be
construed to be a waiver of such provisions by such party nor
to in any way affect the validity of this Agreement of such
party's right thereafter to enforce any provision of this
Agreement, nor to preclude such party from taking any other
action at any time which it would legally be entitled to take.
15. SUCCESSORS AND ASSIGNS. Neither party shall have the right to
assign this personal Agreement, or any rights or obligations
hereunder, without the consent of the other party; PROVIDED,
HOWEVER, that upon the sale of all or substantially all of the
assets, business and goodwill of the Corporation to another
corporation, or upon the merger or consolidation of the
Corporation with another corporation, this Agreement shall
inure to the benefit of, and be binding upon, both Executive
and the corporation purchasing such assets, business and
goodwill, or surviving such merger or consolidation, as the
case may be, in the same manner and to the same extent as
though such other corporation were the Corporation. Subject to
the foregoing, this Agreement shall inure to the benefit of,
and bind, the parties hereto and their legal representatives,
heirs, successors and assigns.
16. ADDITIONAL ACTS. Executive and the Corporation each agrees
that he or it shall, as often as requested to do so, execute,
acknowledge and deliver and file, or cause to be executed,
acknowledged and delivered and filed, any and all further
instruments, agreements or documents as may be necessary or
expedient in order to consummate the transactions provided for
in this Agreement and do any and all further acts and things
as may be necessary or expedient in order to carry out the
purpose and intent of this Agreement.
17. COMMUNICATIONS. All notices, requests, demands and other
communications under this Agreement shall be in writing and
shall be deemed to have been given at the time when mailed in
any United States post office enclosed in a registered or
certified postage prepaid envelope and addressed to the
addresses set forth at the beginning of this Agreement, or to
such other address as any party may specify by notice to the
other party; PROVIDED, HOWEVER, that any notice of change of
address shall be effective only upon receipt.
18. CONSTRUCTION. The headings of the Paragraphs of this Agreement
have been inserted for convenience of reference only and shall
in no way restrict or otherwise affect the construction of
the terms or provisions hereof. References in this Agreement
to Sections are to the sections of this Agreement.
19. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the
same instrument.
20. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable by a court or tribunal of competent
jurisdiction, such invalidity or unenforceability shall not
affect the validity and enforceability of the other provisions
of this Agreement and the provision held to be invalid or
unenforceable shall be carried out as nearly as possible
according to its original terms and intent to eliminate such
invalidity or unenforceability.
21. GOVERNING LAW. This Agreement is made and executed and shall
be governed by the laws of the State of Florida.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
CORPORATION: ▇▇▇▇▇▇.▇▇▇, INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
EXECUTIVE:
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
