EXHIBIT 10.22
AGREEMENT
This Agreement (the "Agreement") is made and entered into this 24th day of
October, 1997 by, between and among K.T. Corp. and Xxxxx Xxxxxxx (collectively,
"Xxxxxxx") and Nutrition For Life International, Inc., a Texas corporation
("NFLI").
RECITALS
A. NFLI is engaged in the sale of products designed primarily for health-
conscious consumers through a network marketing system (the "Business").
X. Xxxxxxx is a key and exclusive distributor of NFLI. Xxxxxxx and NFLI
desire Xxxxxxx to remain a key and exclusive distributor and to provide
additional incentive and recognition for Xxxxxxx.
X. Xxxxxxx'x position as a key and exclusive distributor with NFLI has
involved Xxxxxxx directly and personally in the goodwill of NFLI and its
Business, and has given Xxxxxxx special access to and familiarity with the
methods and confidential information of NFLI and its Business, including, but
not limited, sales and marketing technologies and development, distributor
organization and methods, technology, operating organization and methods,
suppliers, inventories and distributor relationships.
D. NFLI could be irreparably injured and the goodwill of the Business could
be irreparably damaged if Xxxxxxx were to enter into any business activity in
competition with the Business, or use in such activity, any confidential
information concerning NFLI
NOW, THEREFORE, in consideration of the Recitals, and in consideration of the
mutual covenants, representations and agreements set forth below, the parties
hereto agree as follows:
AGREEMENT
1. Definitions
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For purposes of this Agreement, the following terms shall have the
meanings indicated. All Articles and Section numbers used in this Agreement
refer to Articles and Sections of this Agreement unless otherwise specifically
described.
1.01 "Affiliate of NFLI" means any entity controlling or controlled
either directly or indirectly by or under common control with NFLI.
1.02 "Competing Business" means the offer for sale of products,
nutritional or otherwise, through a network or multilevel marketing system of
marketing other than through NFLI
or its Affiliates.
1.03 "Confidential Information" means all material non-public information
regarding NFLI, including but not limited to, marketing and other corporate
plans, trade secrets and distributor lists. Confidential Information does not
include information which is generally available to the public.
1.04 "Entity" means a person, firm, partnership, corporation, or other
business organization, entity or enterprise.
1.05 "Geographical Area" means all of the United States, Canada, United
Kingdom, Puerto Rico, Republic of Ireland, Philippines and any other country in
which NFLI is conducting Business, it being specifically understood that in the
event of any invalidity or unenforceability by reason of the Geographical Area,
the provisions of Section 5.01 of this Agreement shall apply. If at any time
NFLI and all Affiliates of NFLI, or any of their successors or assigns,
ultimately discontinue and have no plans to carry on the Business in any part of
the Geographical Area, then such part of the Geographical Area shall be deemed
deleted from the definition of the Geographical Area after such time.
1.06 "Non-Competition Period" means the Term of this Agreement and the
period of one year beginning on the date of termination of this Agreement,
irrespective of the reason for termination.
1.07 "Term" means the period commencing upon approval of this Agreement
by the Board of Directors of NFLI (which shall be acted upon no later than 15
days after execution of this Agreement by NFLI and Xxxxxxx) and terminating
eight years thereafter, unless earlier terminated as provided in Article 6
herein.
2. Status.
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2.01 Xxxxxxx will waive his right, upon becoming a Presidential Platinum
(which shall be based upon the current NFLI requirements), to any additional
Presidential Platinum bonuses, specifically the 1%, 1/4%, 1/4% bonus, as well
as the $3,500 car bonus, but will retain the right to receive all other
compensation to which he is due, as well as the right to receive the
Presidential Platinum pin and all other forms of recognition due to a
Presidential Platinum distributor.
3. Bonuses.
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3.01 During the Term of this Agreement, Xxxxxxx shall be entitled to
receive 1% of the bonus value of all NFLI sales (the "Royalty") on a monthly
basis, commencing with sales made in October, 1997, as well as a fee of $3,500
per month. These payments shall be made during the Term on the 20th day of each
month, commencing November 20, 1997, for the immediate
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preceding month, payable to K.T. Corp. at an address specified by K.T. Corp.
Upon termination of this Agreement, the waiver of compensation set forth in
Section 2.01 shall cease to be effective and if K.T. Corp. has otherwise
qualified to receive Presidential Platinum Bonuses (which shall be based upon
the then current NFLI requirements), K.T. Corp. will thereafter receive all
Presidential Platinum Bonuses as well as other remuneration from NFLI to which
it is entitled commencing with the date of termination.
4. Covenants of Xxxxxxx.
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4.01 Xxxxxxx shall comply fully with the terms and conditions of NFLI's
standard Distributor Agreement and Policies and Procedures and all other
standards for distributors and executives of NFLI, as they may be revised or
promulgated by NFLI, from time to time. Xxxxxxx shall use his best efforts to
ensure that all materials and program content used by him or at his direction,
whether oral or written, are consistent with NFLI's policies and practices.
4.02 Xxxxxxx shall comply fully with the provisions of the Assurance of
Voluntary Compliance entered into by NFLI with the Illinois Attorney General and
similar agreements entered into by NFLI with the states of Florida, Hawaii,
Idaho, Kansas, Kentucky, Michigan, Missouri, New Jersey and Pennsylvania, as
applicable. Xxxxxxx shall also comply fully with the agreements and decrees he
individually entered into with the United States Post Office, Illinois Attorney
General and Illinois Secretary of State and shall conduct his business
activities in a lawful manner, in accordance with the highest degrees of
integrity and professionalism and shall take no action or omit to take any
action which would cause NFLI or himself to be subject to legal action or in
jeopardy of legal action.
4.03 Xxxxxxx shall devote substantial effort to his position as a key
distributor of NFLI and in otherwise advancing the Business of NFLI, including
appearances at such events as reasonably requested by NFLI and the matters noted
in Exhibit A to this Agreement. It is acknowledged that Xxxxxxx does engage in
significant other business activities and that no restriction shall be placed
upon his other business activities, except as set forth in this Agreement.
4.04 Xxxxxxx recognizes and agrees that being a key distributor not only
entitles him to substantial, additional compensation, but that there is honor
and prestige accorded to this position in the Business of NFLI. Xxxxxxx shall
conduct himself in accord with this position, and shall act in a positive manner
on behalf of NFLI, shall not make any derogatory statements regarding NFLI or
its management or products, shall not act or omit to act in any manner which
would undermine or otherwise damage the marketing network of NFLI, or cause
embarrassment or humiliation to NFLI or its management.
4.05 During the Non-Competition Period, Xxxxxxx shall not anywhere in the
Geographical Area, without the express and specific prior written consent of
NFLI:
(a) directly or indirectly engage in, have an active interest in,
or control any Competing Business, or
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(b) enter the employment of, continue in the employment of, or act
as an agent or representative for or advisor or consultant to any Entity
under circumstances where such employment or action has a significant
connection with any Competing Business carried on (including, but not
limited to, planning or development) by such Entity.
except that the holding of a non-controlling stock interest of other competitive
companies, or rendering services to NFLI or an Affiliate of NFLI, shall not
constitute a violation of this Section.
4.06 Xxxxxxx shall not at any time, without the express and specific
prior written consent of NFLI, disclose any confidential information pertaining
to the Business to any competitor or potential competitor of NFLI or the
Business, and shall not divulge the distributor list of NFLI, or any portion
thereof, for his own personal interests or for any purpose unrelated to the
business of NFLI.
4.07 During the Non-Competition Period, Xxxxxxx shall not, without the
express and specific prior written consent of NFLI:
(a) request or advise any supplier or distributor of, or other
Entity having business dealings with, NFLI, to withdraw, curtail or cancel
such business or business dealings; or
(b) induce or attempt to influence any individual who is an
employee of NFLI at any time during the Non-Competition Period to
terminate his or her employment by NFLI, or any Affiliate of NFLI, but
nothing contained herein shall preclude Xxxxxxx from hiring people who are
no longer employed by NFLI at the time of their retention by Xxxxxxx; or
(c) join another multilevel marketing or network marketing company
or recruit others to join in another multilevel or network marketing
company; or
(d) promote any product through another multilevel marketing or
network marketing channel of distribution (although nothing contained
herein shall preclude Xxxxxxx from promoting any product through any other
channel of distribution, including direct mail or infomercials, including
products which are competitive with NFLI products). However, Xxxxxxx may,
with prior permission of NFLI, not to be unreasonably withheld, consult
with or speak for other network marketing companies if the purpose of such
consultation or speaking is to enhance the stature of NFLI or to benefit
NFLI and NFLI's recruiting efforts; or
(e) induce or attempt to influence any person who is a distributor
of NFLI at any time during the Non-Competition Period to terminate his or
her or its distributorship or become less active as a distributor with
NFLI, or any Affiliate of
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NFLI.
5. Enforcement
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5.01 If the scope of any restriction contained in Article 4 of this
Agreement is too broad to permit enforcement of such restriction to its full
extent, then such restriction shall be enforced to the maximum extent permitted
at law and in equity, and in that event, Xxxxxxx hereby consents that such scope
may be judicially modified accordingly in any proceeding brought to enforce such
restriction.
5.02 Xxxxxxx hereby acknowledges and confirms that the Business extends
at least throughout the Geographical Area, and that any activity prohibited by
this Agreement by Xxxxxxx at any place in the Geographical Area could cause
irreparable injury to NFLI and/or any Affiliates of NFLI. Xxxxxxx also
acknowledges and confirms that the length of the Non-Competition Period is
reasonable and necessary to protect NFLI and the Affiliates of NFLI against
injurious effects from any violation of any provision of Article 4.
5.03 Xxxxxxx acknowledges that remedies at law of NFLI and any Affiliate
of NFLI for breach of any of Xxxxxxx'x obligations under Article 4 would be
inadequate, that damages would be difficult or impossible to ascertain, and
agrees that temporary and permanent injunctive relief may be granted in
accordance with equity in any such proceeding which may be brought to enforce
any provision of such Sections without the necessity of proof of actual damage.
Provided, also, Xxxxxxx acknowledges that (a) NFLI and any Affiliate of NFLI
have reserved and are to have the right to prove any damages which NFLI and any
Affiliate of NFLI are able to prove resulting from any breach of any of
Xxxxxxx'x obligations under Article 4, and (b) the value of any consideration
which Xxxxxxx is to receive under this Agreement is not to be considered as
equivalent to, or as evidence of, the amount or extent of any such damages.
6. Termination.
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6.01 NFLI may terminate this Agreement upon the occurrence of any of the
following events:
(a) Xxxxxxx materially breaches any obligation of this Agreement,
including without limitation, any of the provisions of Article 4.
Provided, that, if NFLI determines in its reasonable discretion that such
material breach is curable, NFLI may not terminate this Agreement unless
Xxxxxxx fails to cure the breach within 30 days of notice by NFLI; or
(b) Xxxxxxx dies, or becomes incapacitated, which shall mean that
Xxxxxxx is unable to perform his duties effectively for a period of 90 or
more days; or
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(c) Xxxxxxx has been convicted of, or pleads guilty or nolo
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contendre to, a felony crime; or
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(d) Xxxxxxx engages in fraudulent misconduct with respect to NFLI
or engages in theft of assets of NFLI; or
(e) Xxxxxxx develops a substance abuse problem which impairs his
ability to perform adequately on behalf of NFLI.
If any of these events occur, NFLI may, on notice to Xxxxxxx, terminate this
Agreement and may pursue any other rights or remedies available to it under
applicable law or in equity. Provided, that, if NFLI determines that either of
the events specified in Section 6.01(d) or 6.01(e) has occurred, NFLI will
include in the notice to Xxxxxxx: (1) the basis for its determination; (2) the
date, time and place for review of this determination at a meeting of the Board
of Directors of NFLI, which meeting shall be held no earlier than 10 days after
the notice; and (3) the right of Xxxxxxx and/or his counsel or other
representatives to submit a written response and/or make a presentation at the
meeting of the Board of Directors of NFLI. Under those circumstances, the
Agreement will be deemed terminated only after this notice has been provided to
Xxxxxxx and only if the Board of Directors of NFLI, in its reasonable
discretion, after consideration of Xxxxxxx'x response and/or presentation,
confirms the earlier determination of NFLI. If the Agreement is terminated,
Xxxxxxx may seek to prove damages for the Royalty he would have received if the
Agreement had not been terminated by NFLI.
6.02 If any person who is currently a distributor of NFLI at the
commencement of the Term enters into a written agreement with NFLI during the
Term for the purpose of limiting that person's network marketing services
exclusively to NFLI and not on behalf of any Competing Business and NFLI agrees
to pay a royalty in excess of the Royalty paid to Xxxxxxx as provided in Section
3.01, then Xxxxxxx may terminate this Agreement unless NFLI agrees to increase
the Royalty paid to Xxxxxxx to the same level as that promised to be paid by
NFLI to the other person. It is understood that this provision is not applicable
to payments or arrangements made by NFLI with any distributor in the ordinary
course of NFLI's network marketing system, which system and commission, bonus
and compensation arrangements may be changed from time to time by NFLI at NFLI's
discretion.
7. General
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7.01 It is acknowledged that Xxxxxxx is not an employee, director or
officer of NFLI and Xxxxxxx shall not be involved in any way in the management
of NFLI.
7.02 Xxxxxxx will have the right to have independent certified public
accountants reasonably acceptable to NFLI audit the sales records of NFLI. All
audits will be undertaken upon at least 15 days notice to NFLI and with as
little disruption to NFLI's staff as reasonably practicable. All audits will be
in confidence and the auditors selected by Xxxxxxx will disclose to
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Xxxxxxx only the information necessary to verify the Royalty due to Xxxxxxx
hereunder.
7.03 This Agreement sets forth the entire agreement and understanding of
the parties concerning the subject matter of this Agreement and supersedes all
prior agreements, arrangements and understandings concerning such subject
matter. no representation, promise, inducement or statement of intention has
been made by or on behalf of any party hereto, or any related party, that is not
set forth in this Agreement or the documents referred to herein. This Agreement
may be amended, superseded or cancelled, or any of the terms or provisions
hereof may be waived or a departure from the terms or provisions hereof may be
consented to, only by a written instrument specifically stating that it amends,
supersedes or cancels this Agreement, or waives or consents to a departure from
the terms or provisions hereof, executed by Xxxxxxx and an authorized officer of
Xxxxxxx, or, in the case of a waiver or consent, by the party or an authorized
officer of the party to be bound thereby.
7.04 The terms and provisions of this Agreement shall inure to the
benefit of NFLI, the Affiliates of NFLI and their respective successors and
assigns. Xxxxxxx may not assign this Agreement or any portion thereof without
the prior written consent of NFLI, which may be withheld by NFLI in its
discretion. Provided, however, that K.T. Corp. may assign or sell any of its
rights to receive bonuses or other compensation from NFLI related to its
distributorship.
7.05 The failure of NFLI, or any Affiliate of NFLI at any time or from
time to time to require performance of any of Xxxxxxx'x obligations under this
Agreement shall in no manner affect Acquisition's or any Affiliate of NFLI right
to enforce any provision of this Agreement at a subsequent time, and the waiver
of any right arising out of any breach shall not be construed as a waiver of any
right arising out of any subsequent breach.
7.06 This Agreement shall be construed in accordance with and governed by
the laws of the State of Illinois.
7.07 Any notice required or permitted to be given under this Agreement
will be given in writing to the other party at the address set forth below their
respective signatures to this Agreement. Any such notice will be deemed given on
the earlier of the date when it is actually received, or five days after mailing
to the address of the receiving party or any new address that such party has
provided.
7.08 The Article headings contained in this Agreement are for convenient
reference only, and shall not in any way affect the meaning or interpretation of
this Agreement.
7.09 This Agreement shall be subject to the approval of the Board of
Directors of NFLI notwithstanding the execution thereof by an officer of NFLI
and shall not become effective or binding upon NFLI unless and until such
approval is obtained. Xxxxxxx shall keep the existence of this Agreement and
its terms confidential until he receives the consent of NFLI by notice.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
__________________________________________________
Xxxxx Xxxxxxx, individually and on behalf of K.T. Corp.
Address: 0000 Xxxxxxx Xxxx Xxxx #0000
Xxxxxxx, XX 00000
WITNESSES:
_____________________
_____________________
NUTRITION FOR LIFE INTERNATIONAL, INC.
By: ______________________________________________
Address: 0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
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EXHIBIT A
TO THE AGREEMENT
BETWEEN AND AMONG
KT CORP., XXXXX XXXXXXX
AND
NUTRITION FOR LIFE INTERNATIONAL, INC.
Unless otherwise requested by NFLI, Xxxxx Xxxxxxx, individually, during each
year of the Term, at his own expense and without any compensation in addition to
that provided in the Agreement, shall, at a minimum, do the following:
1. Produce six tapes for use by NFLI in NFLI's Master Developer Series, or
any same or similar program instituted by NFLI; and
2. Conduct six training seminars; and
3. Attend and speak at the Annual Convention of NFLI; and
4. Conduct six hotel open opportunity meetings, or same or similar programs
conducted by or for the benefit of NFLI; and
5. Consult with any corporate executive of NFLI or Affiliate of NFLI or the
Board of Directors of NFLI on six separate occasions, each for a period of
approximately two days; and
6. Sponsor personally at least five new executive distributors.
The timing of these services will generally be at the discretion of Xxxxxxx,
unless specific request is made by the President of NFLI, or by the Board of
Directors of NFLI, upon reasonable notice to Xxxxxxx.
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