EXHIBIT 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made effective the 1st day
of November, 1999 by and between Nutrition For Life International, Inc., a Texas
corporation (the "Company") and Xxxxx Xxxxxxxx ("Xxxxxxxx").
In consideration of the mutual covenants, promises and agreements herein
contained, the Company and Xxxxxxxx hereby covenant, promise and agree to and
with each other as follows:
1. Employment. The Company shall employ Xxxxxxxx and Xxxxxxxx shall be
employed by the Company upon the terms and conditions set forth in this
Agreement.
2. Positions and Duties of Employment. Xxxxxxxx shall be required to
devote his best efforts on a full-time basis to the furtherance of his
managerial duties with the Company as the Company's President. While serving in
these corporate capacities, Xxxxxxxx shall have the responsibilities, duties,
obligations, rights, benefits and requisite authority as is customary for his
positions and as may be determined by the Company's Board of Directors (the
"Board") and as set forth in the Bylaws of the Company.
Xxxxxxxx understands that his employment as President of the Company
involves a high degree of trust and confidence, that he is employed for the
purpose of furthering the Company's reputation and improving the Company's
operations and profitability, and that in executing this Agreement he undertakes
obligations set forth herein to accomplish such objectives. Xxxxxxxx agrees
that he shall serve the Company fully, diligently and competently, and to the
best of his ability. Xxxxxxxx certifies that he fully understands his right to
discuss this Agreement with his private attorney, that to the extent, if any, he
desires, he has availed herself of this right, that he has carefully read and
fully understands this entire Agreement, and that he is voluntarily entering
into this Agreement.
3. Term. Except as otherwise provided in this Agreement, the term of
this Agreement (the "Term") shall be for a period of one year commencing
November 1, 1999 and shall automatically renew for two successive periods of one
year each unless either party gives notice of the termination of the Agreement
to the other not fewer than 30 days prior to the expiration of the applicable
yearly period.
4. Compensation. Xxxxxxxx shall receive the following as compensation:
(a) Xxxxxxxx shall receive a monthly salary of $25,000 for each full
month of his employment by the Company pursuant to this Agreement, payable in
accordance with the Company's customary payroll practices.
(b) In addition to his salary, Xxxxxxxx shall be entitled to a bonus,
payable within 105 days of the end of each annual period of the Term, based upon
the Company meeting certain pre-tax income levels defined below (the "Bonus").
Pre-tax income shall be determined in accordance with generally accepted
accounting principles. Provided, that the operations of any companies acquired
by the Company after the commencement of the Term shall not be included in the
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calculation of pre-tax income. In the event of any dispute over the amount of
pre-tax income, a final determination shall be made by Xxxxx Xxxxxxxx LLP or
another independent certified public accounting firm selected by the Company.
No Bonus shall be payable unless the Company's annual pre-tax income is
$3,000,000 or more. The amount of the Bonus shall be 5% of the first annual
pre-tax income of the Company, which is between $3,000,000 and $5,000,000; 4% of
the annual pre-tax income of the Company which is between $5,000,000 and
$10,000,000; and 3% of the annual pre-tax income of the Company which is between
$10,000,000 and $20,000,000. No Bonus shall be payable for any annual pre-tax
income of the Company in excess of $20,000,000.
(c) The Company shall provide Xxxxxxxx with participation in any
group plans or agreements maintained by the Company relating to health insurance
or other related benefits in accordance with their respective terms.
(d) Xxxxxxxx shall be entitled to leaves for vacations for periods
reasonably determined by the Board. In addition, Xxxxxxxx shall be entitled to
reasonable absences for attendance at business seminars and conventions.
(e) Any payment which the Company shall make to Xxxxxxxx pursuant to
this Agreement shall be reduced by standard withholding and other authorized
deductions.
(f) During the term of his employment, Xxxxxxxx shall be reimbursed
for reasonable expenses incurred by his for the benefit of the Company. Any
direct payment or reimbursement of expenses shall be made only upon presentation
of an itemized accounting conforming in form and content to standards prescribed
by the Internal Revenue Service relative to the substantiation of the
deductibility of business expenses.
5. Life Insurance. The Company may, but shall not be obligated to, apply
for and procure as owner and for its own benefit or the benefit of any lender of
the Company, insurance on Xxxxxxxx'x life, in any amount and form or forms that
the Company may choose. Xxxxxxxx shall, at the Company's request, submit to all
medical examinations, supply all information and execute all documents required
by the insurance company or companies to whom the Company has applied for the
insurance.
6. Corporate Data and Antisolicitation. Upon the termination of
Xxxxxxxx'x employment under this Agreement for any reason, Xxxxxxxx shall return
to the Company all data and information, whether written, computer, magnetic,
electronic or in any other physical or tangible form, relating to the business
of the Company or any of its affiliates that Xxxxxxxx obtained during the time
of his employment. During the term of this Agreement or for a period of one
year thereafter, Xxxxxxxx shall neither disclose to any other person or entity,
nor use for his own personal benefit, any information obtained during his
employment by the Company that is not otherwise publicly known, relating to the
financial affairs, distributor lists or the business operations of the Company
or any of its subsidiaries or affiliates. During the term of this Agreement or
for a period of one year thereafter, Xxxxxxxx will not influence or attempt to
influence distributors of the Company or any of its present or future
subsidiaries or affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or other entity then
in competition with the business of the Company or any subsidiary or affiliate
of the Company, nor
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will he solicit any of the Company's employees who earned annually $25,000 or
more as a Company employee during the last six months of his or his own
employment to work for any individual, partnership, firm, corporation or other
entity then in competition with the business of the Company or any subsidiary or
affiliate of the Company.
7. Termination.
(a) The Company shall have the right at any time to terminate
Xxxxxxxx'x employment under this Agreement without further liability or
obligation pursuant to this Agreement upon the occurrence of any of the
following events:
(i) By mutual written agreement, signed by both parties; or
(ii) The death of Xxxxxxxx; or
(iii) If the Company determines in good faith that the Disability
of Xxxxxxxx has occurred (pursuant to the definition of Disability set forth
below), it may give to Xxxxxxxx written notice in accordance with Section 13 of
its intention to terminate Xxxxxxxx'x employment. In such event, Xxxxxxxx'x
employment with the Company shall terminate effective upon receipt of such
notice by Xxxxxxxx, provided that, upon receipt, Xxxxxxxx shall not have
returned to full-time performance of his duties. For purposes of this Agreement,
"Disability" shall mean a physical or mental impairment which substantially
limits a major life activity of Xxxxxxxx which renders Xxxxxxxx unable to
perform the essential functions of his position, even with reasonable
accommodation which does not impose an undue hardship on the Company. The
Company reserves the right, in good faith, to make the determination of
Disability under this Agreement based upon information supplied by Xxxxxxxx
and/or his medical personnel as well as information from medical personnel (or
others) selected by the Company or its insurers; or
(iv) Xxxxxxxx is convicted of any crime constituting a felony
under the law of the United States or any State; or
(v) A "Material Breach" of this Agreement as determined by the
Board. The exercise of the right of the Company to terminate this Agreement
shall not abrogate the rights and remedies of the Company in respect of the
breach giving rise to such termination. For purposes of this subsection,
"Material Breach" shall mean that the Company, acting in good faith based upon
the information then known to the Company, determines that Xxxxxxxx has engaged
or committed: willful misconduct; gross negligence; theft, fraud or other
illegal conduct; refusal or unwillingness to perform his duties; sexual
harassment; violation of any fiduciary duties; violation of any duty of loyalty;
or a material breach of any term of this Agreement. The "Material Breach" shall
be specified in a notice of termination to be delivered by the Company no later
than the date as of which the termination is effective.
(b) If Xxxxxxxx'x employment is terminated by the Company for any
reason other than those set forth in sections 7(a)(i) through 7(a)(v) above,
then the Company shall pay "Termination Pay" to Xxxxxxxx in full settlement of
any and all claims of Xxxxxxxx arising out of or in connection with his
employment by the Company which shall be evidenced by a general release
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and waiver of claims against the Company and its affiliates in a form reasonably
acceptable to the Company executed by Xxxxxxxx. The "Termination Pay" shall
consist of (i) twelve months' salary, which shall be paid in six monthly
installments of $50,000 each, commencing on the first day of the month after the
month in which termination occurred and continuing on the first day of each
month thereafter until all six installments have been paid; and (ii) the product
of the Bonus to which Xxxxxxxx would be entitled, multiplied by a fraction
having a numerator equal to the number of days in the annual period preceding
the date of termination and a denominator equal to 365, which shall be paid to
Xxxxxxxx no later than 90 days after the end of the annual period in which
termination occurred. Such payments shall be made in accordance with the
Company's customary payroll practices and shall be subject to applicable
withholding and payroll deductions.
(c) If during the term of this Agreement, the Company effects a
merger or acquisition in which it is not the surviving entity or is a party to a
stock exchange or other form of corporate reorganization in which it becomes a
wholly-owned subsidiary of another entity (unless such entity is a holding
company and the shareholders of the Company have approved the reorganization)
and Xxxxxxxx'x employment is thereafter terminated by the Company
notwithstanding that no "Material Breach" has occurred, then Xxxxxxxx shall be
entitled to "Termination Pay."
(d) For purposes of this Section 7, voluntary termination of
employment by Xxxxxxxx as a result of a material change by the Company in
Xxxxxxxx'x job responsibilities shall be deemed to be termination by the Company
without a "Material Breach" and Xxxxxxxx shall be entitled to "Termination Pay".
(e) If the Company provides notice of termination to Xxxxxxxx prior
to any renewal period specified in Section 3 for any reason other than those set
forth in Sections 7(a)(i) through 7(a)(v) above, then Xxxxxxxx shall be entitled
to "Termination Pay."
(f) Xxxxxxxx shall have the right to terminate this Agreement in the
event of a default by the Company of any material provision of this Agreement
but only if Xxxxxxxx shall have first given written notice of the default to the
Company and if within thirty days after receipt of that notice the Company has
not cured that default. Upon termination neither Xxxxxxxx nor the Company shall
have any further obligations under any of the provisions of this Agreement
except that Xxxxxxxx shall be entitled to "Termination Pay".
(g) Xxxxxxxx agrees that the payments contemplated by this Agreement
shall constitute the exclusive and sole remedy for any termination of his
employment and Xxxxxxxx covenants not to assert or pursue any other remedies, at
law or in equity, with respect to any termination of employment.
8. Remedies. If there is a breach or threatened breach of the provisions
of Section 2 or 6 of this Agreement, the Company shall be entitled to an
injunction restraining Xxxxxxxx from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
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9. Severability. It is the clear intention of the parties to this
Agreement that no term, provision or clause of this Agreement shall be deemed to
be invalid, illegal or unenforceable in any respect, unless such term, provision
or clause cannot be otherwise construed, interpreted, or modified to give effect
to the intent of the parties and to be valid, legal or enforceable. In the
event that such a term, provision, or clause cannot be so construed, interpreted
or modified, the validity, legality and enforceability of the remaining
provisions contained herein and other application(s) thereof shall not in any
way be affected or impaired thereby and shall remain in full force and effect.
10. Waiver of Breach. The waiver by the Company or Xxxxxxxx of the breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by that party.
11. Entire Agreement. This document contains the entire agreement between
the parties, supersedes all prior oral agreements, if any, and may not be
changed orally, but only by agreement in writing signed by the parties.
12. Governing Law. This Agreement, its validity, interpretation and
enforcement, shall be governed by the laws of the State of Texas.
13. Notices. Any notice pursuant to this Agreement shall be validly given
or served if that notice is made in writing and delivered personally or sent by
certified mail, return receipt requested, postage prepaid, to the following
addresses:
If to Company: Nutrition For Life International, Inc.
0000 Xxxxxx
Xxxxxxx, XX 00000
If to Xxxxxxxx: To the address for Xxxxxxxx set forth below his
signature.
All notices so given shall be deemed effective upon receipt. Either party, by
notice so given, may change the address to which his or its future notices shall
be sent.
14. Assignment and Binding Effect.
(a) This Agreement shall be binding upon Xxxxxxxx and the Company and
shall benefit the Company and its successors and assigns.
(b) This Agreement shall not be assignable by Xxxxxxxx.
15. Headings. The headings in this Agreement are for convenience only;
they form no part of this Agreement and shall not affect its interpretation.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first above written.
NUTRITION FOR LIFE INTERNATIONAL, INC.
By:_______________________________
Authorized Officer
__________________________________
Xxxxx Xxxxxxxx, Individually
Address for Notice:
10622 Great Plains
(Street Address)
Xxxxxxx, Xxxxx 00000
(City, State and Zip Code)
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