EXHIBIT 10.3
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is entered into
as of April 17, 2006, by and between Xxxxxxx X. Xxxxxx (the "Executive") and
Medical Nutrition USA, Inc (the "Company").
1. Employment. The Company hereby agrees to Executive's employment, and
Executive hereby accepts such employment and agrees to perform his
duties and responsibilities, in accordance with the terms and
conditions hereinafter set forth.
1.1. Employment Term. The term of Executive's employment under this
Agreement shall commence as of March 1, 2006 (the "Effective
Date") and shall be automatically renewed on each anniversary
of the Effective Date, unless earlier terminated in accordance
with Section 3 or Section 4 hereof. The period commencing as
of the Effective Date and ending on such later date to which
the term of Executive's employment under the Agreement shall
have been extended is hereinafter referred to as the
"Employment Term."
1.2. Duties and Responsibilities. Executive shall serve in the
position of Chief Executive Officer. During the Employment
Term, Executive shall perform all duties and accept all
responsibilities incident to such position or other
appropriate duties as may be assigned to him by the Company's
Board of Directors. Executive shall devote his best efforts to
the performing of his duties and responsibilities under this
Section 1.2. Such performance may be either in the Company's
Englewood, NJ office or the Executive's McLean, VA office.
1.3. No Conflicting Obligations. The Executive represents and
warrants to the Company that he is under no obligations or
commitments, whether contractual or otherwise, that are
inconsistent with his obligations under this Agreement. The
Executive represents and warrants that he will not use or
disclose, in connection with his Employment, any trade secrets
or other proprietary information or intellectual property in
which the Executive or any other person has any right, title
or interest and that his Employment will not infringe or
violate the rights of any other person. The Executive
represents and warrants to the Company that he has returned
all property and confidential information belonging to any
prior employer.
1.4. Base Salary. For all of the services rendered by Executive
hereunder the Company shall pay Executive an annual base
salary (his "Base Salary") of one hundred and eighty five
thousand five hundred Dollars ($185,500), payable in
installments at such times as the Company shall pay its other
senior level executives (but in any event no less often than
monthly). The base salary shall be reviewed by the Company
annually with an increase at the discretion of the
Compensation Committee and approved by the Board of Directors.
1.5. Bonus. In addition to the Base Salary, the Executive shall
receive an annual incentive bonus (the "Annual Bonus") in an
amount up to (i) 100% of his Base Salary if the Company
achieves agreed upon targets. The Board of Directors shall fix
the targets for each year during the Employment Term. These
targets may include any or all of: sales; gross profit;
EBITDA; and net income. The Annual Bonus may be awarded all in
cash or half in cash and half in stock at Executive's
discretion with the concurrence of the Compensation Committee.
1.6. Transportation Allowance. During the Employment Term,
Executive shall be entitled to receive a monthly
transportation allowance of $1,500, payable monthly in
advance.
1.7. Benefits. The Executive will be eligible to participate in
such employee benefit plans of the Company that may be in
effect from time to time and that are offered to the Company's
senior level executives as a group or to its employees
generally, as such plans or programs may be in effect from
time to time, including without limitation, medical insurance.
1.8. Reimbursement of Expenses; Vacation. During his Employment,
the Executive shall be authorized to incur necessary and
reasonable travel, entertainment and other business expenses
in connection with his duties hereunder. The Company shall
reimburse the Executive for such expenses upon presentation of
an itemized account and appropriate supporting documentation,
all in accordance with the Company's generally applicable
policies for senior level executives as a group. Executive
shall be entitled to four (4) weeks paid vacation per year and
paid holidays in accordance with the Company's normal
personnel policies.
1.9. Tax Withholding. The Company may withhold from any
compensation or other benefits payable under this Agreement
all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
2. Confidentiality and Non-Compete. The Executive has entered into a
Confidentiality and Non-Compete Agreement with the Company, which
includes a Non-Solicitation and Non-Disturbance section, which is
attached hereto as Exhibit A and incorporated herein by this reference.
3. Termination. The Employment Term shall terminate upon the occurrence of
any one of the following events:
3.1. Disability. The Company may terminate the Employment Term if
Executive is unable substantially to perform his duties and
responsibilities hereunder to the full extent required by the
Company by reason of illness, injury or incapacity for three
(3) consecutive months, or for more than six (6) months in the
aggregate during any period of twelve (12) calendar months. In
the event of such termination, the Company shall pay Executive
his Base Salary through the date of such termination. In
addition, Executive shall be entitled to the following: (i) a
pro rata Annual Bonus, if applicable, for the year of
termination; (ii) any other amounts earned, accrued or owing
but not yet paid under Section 1 above; (iii) continued
participation for the remaining Employment Term in those
benefits in which he was participating on the date of
termination which, by their terms, permit a former employee to
participate; and (iv) any other benefits in accordance with
applicable plans and programs of the Company. In such event,
the Company shall have no further liability or obligation to
Executive for compensation under this Agreement except as
otherwise specifically provided in this Agreement. Executive
agrees, in the event of a dispute under this Section 3.1, to
submit to a physical examination by a licensed physician
selected by the Company. The Company agrees that Executive
shall have the right to have his personal physician present at
any examination conducted by the physician selected by the
Company.
3.2. Cause. The Company may terminate the Employment Term, at any
time, for "Cause," in which event all payments under this
Agreement shall cease, except for Base Salary to the extent
already accrued. For purposes of this Agreement, "Cause" shall
mean:
(a) An unauthorized use or disclosure by the Executive of
the Company's confidential information or trade
secrets, which use or disclosure causes material harm
to the Company;
(b) A material breach by the Executive of any agreement
between the Executive and the Company;
(c) A material failure by the Executive to comply with
the Company's written policies or rules;
(d) The Executive's gross negligence or willful
misconduct; or
(e) A failure by the Executive to perform assigned duties
after receiving written notification of such failure
from the Board of Directors; or
(f) The conviction of a crime, which is classified as a
felony.
The foregoing shall not be deemed an exclusive list of all acts or
omissions that the Company may consider as grounds for the termination of the
Executive's Employment without Cause.
3.3. Termination by the Company Without Cause. The Company may
terminate the Employment Term, at any time, without Cause. In
the event Executive is terminated without Cause, Executive
shall be entitled to receive: (i) any amounts earned, accrued
or owing but not yet paid pursuant to Section 1 above; (ii) a
lump sum severance payment in an aggregate amount equal to the
sum of one (1) times Executive's then-current annual Base
Salary; (iii) a continuation of all benefits for which
Executive is eligible to participate as of the Termination
Date in a fashion which is similar to those which Executive is
receiving immediately prior to the Termination Date for a
period of one (1) year after such termination without cause;
and (iv) all unvested stock options or restricted stock held
by Executive shall become immediately 100% vested , and any
restrictions on restricted stock held by Executive shall
lapse. Amounts payable and benefits to be received pursuant to
subsections (i), (ii), (iii) and (iv) of the preceding
sentence will be collectively referred to herein as the
"Severance Package." Constructive Termination Without Cause.
(a) Constructive Termination Without Cause shall mean a
termination of the Executive's employment at his
initiative following the occurrence, without the
Executive's written consent, of one or more of the
following events:
(i) A material diminution in Executive's duties,
title, responsibilities, authority as Chief
Executive Officer or the assignment to
Executive of duties which are materially
inconsistent with his duties or which
materially impair the Executive's ability to
function in his then current position; and
In the event of a Constructive Termination Without Cause, Executive shall
be entitled to receive the Severance Package.
4. Payments Upon a Change in Control.
4.1. Definitions. For all purposes of this Section 4, the following
terms shall have the meanings specified in this Section 4.1
unless the context clearly otherwise requires:
(a) "Change in Control" means:
(i) A merger or acquisition in which the Company
is not the surviving entity, except for a
transaction the principal purpose of which
is to change the State of the Company's
incorporation;
(ii) A stockholder approved sale, transfer or
other disposition of all or substantially
all of the assets of the Company;
(iii) A transfer of all or substantially all of
the Company's assets pursuant to a
partnership or joint venture agreement or
similar arrangement where the Company's
resulting interest is less than fifty
percent (50%);
(iv) Any reverse merger in which the Company is
the surviving entity but in which fifty
percent (50%) or more of the Company's
outstanding voting stock is transferred to
holders different from those who held the
stock immediately prior to such merger;
(v) On or after the date hereof, a change in
ownership of the Company through an action
or series of transactions, such that any
person is or becomes the beneficial owner,
directly or indirectly, of securities of the
Company representing fifty percent (50%) or
more of the securities of the combined
voting power of the Company's outstanding
securities; or
(vi) A majority of the members of the Board are
replaced during any twelve-month period by
directors whose appointment or election is
not endorsed by a majority of the members of
the Board prior to the date of such
appointment of election.
(b) "Termination Date" shall mean the date of receipt of
a Notice of Termination of this Agreement or any
later date specified therein.
(c) "Termination of Employment" shall mean the
termination of Executive's actual employment
relationship with the Company.
(d) "Termination Upon a Change in Control" shall mean a
Termination of Employment upon or within one (1) year
after a Change in Control initiated by the Company
for any reason permitted under this Agreement other
than (x) the Executive's disability, as described in
Section 3.1 hereof, (y) death, or (z) for "Cause," as
described in Section 3.3 hereof.
4.2. Notice of Termination. Any Termination upon a Change in
Control shall be communicated by a Notice of Termination to
the other party hereto given in accordance with Section 11
hereof. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon,
(ii) briefly summarizes the facts and circumstances deemed to
provide a basis for a Termination of Employment and the
applicable provision hereof, and (iii) if the Termination Date
is other than the date of receipt of such notice, specifies
the Termination Date (which date shall not be more than
fifteen (15) days after the giving of such notice).
4.3. Severance Compensation upon Termination. In the event of
Executive's Termination upon a Change in Control, Executive
shall be entitled to receive the Severance Package. In such
event, the Company shall have no further liability or
obligation to Executive for compensation under this Agreement
except as otherwise specifically provided in this Agreement.
5. Acceleration of Equity Incentives. As of the occurrence of the
termination of Executive's employment by the Company without Cause, by
Executive in the event of a Constructive Termination Without Cause, or
a termination upon a Change in Control, notwithstanding any provision
in the Medical Nutrition USA, Inc. 2003 Omnibus Equity Incentive Plan
(or any agreement entered into thereunder or any successor stock
compensation plan or agreement thereunder) to the contrary, any stock
option then held by Executive shall be exercisable and any restriction
on any restricted stock then held by Executive shall lapse or be deemed
fully satisfied, as applicable.
6. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the
Company or any affiliate and for which Executive may qualify; provided,
however, that if Executive becomes entitled to and receives all of the
payments provided for in this Agreement, Executive hereby waives his
right to receive payments under any severance plan or similar program
applicable to all employees of the Company.
7. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of the Executive's employment
to the extent necessary to the intended preservation of such rights and
obligations.
8. Release. Receipt of the Severance Package pursuant to Sections 3.4, 3.5
or 4.3 shall be in lieu of all other amounts payable by the Company to
Executive and in settlement and complete release of all claims
Executive may have against the Company other than those arising
pursuant to payment of the Severance Package. Executive acknowledges
and agrees that execution of a general release of claims in favor of
the Company setting forth the terms of this Section 8 and otherwise
reasonably acceptable to the Company and Executive shall be a condition
precedent to the Company's obligation to pay the Severance Package to
Executive. The cash portion of the Severance Package shall be due and
payable by the Company within thirty (30) days after applicable
termination of the Employment Period.
9. Arbitration; Expenses.
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(a) In the event of any dispute under the provisions of
this Agreement other than a dispute in which the sole
relief sought is an equitable remedy such as an
injunction, the parties shall be required to have the
dispute, controversy or claim settled by arbitration
in the City of Englewood, New Jersey in accordance
with the commercial arbitration rules then in effect
of the American Arbitration Association, before a
panel of three arbitrators, two of whom shall be
selected by the Company and Executive, respectively,
and the third of whom shall be selected by the other
two arbitrators. Any award entered by the arbitrators
shall be final, binding and nonappealable and
judgment may be entered thereon by either party in
accordance with applicable law in any court of
competent jurisdiction. This arbitration provision
shall be specifically enforceable. The fees of the
American Arbitration Association and the arbitrators
and any expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and
expenses) shall be paid as determined by the
arbitrators.
(b) In the event of an arbitration or lawsuit by either
party to enforce the provisions of this Agreement
following a Change in Control, the party that
prevails on any material issue which is the subject
of such arbitration or lawsuit, shall be entitled to
recover from the other party the reasonable costs,
expenses and attorneys' fees the party has incurred
attributable to such issue.
10. Notices. Any notice required to be given hereunder shall be delivered
personally, shall be sent by first class mail, postage prepaid, return
receipt requested, by overnight courier, or by facsimile, to the
respective parties at the addresses given below, which addresses may be
changed by the parties by notice conforming to the requirements of this
Agreement.
If to the Company, to: Medical Nutrition USA, Inc.
Attn: Xxxx Xxxx
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
If to Executive, to: Xxxxxxx X. Xxxxxx
0000 Xxxxx Xxxx
XxXxxx, XX 00000
Facsimile: 000-000-0000
Cc: Board of Directors
Compensation Committee Chairman
Audit Committee Chairman
Any such notice deposited in the mail shall be conclusively deemed delivered to
and received by the addressee four (4) days after deposit in the mail, if all of
the foregoing conditions of notice shall have been satisfied. All facsimile
communications shall be deemed delivered and received on the date of the
facsimile, if (a) the transmittal form showing a successful transmittal is
retained by the sender, and (b) the facsimile communication is followed by
mailing a copy thereof to the addressee of the facsimile in accordance with this
paragraph. Any communication sent by overnight courier shall be deemed delivered
on the earlier of proof of actual receipt or the first day upon which the
overnight courier will guarantee delivery.
11. Contents of Agreement; Amendment and Assignment.
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(a) This Agreement supersedes all prior agreements and
sets forth the entire understanding between the
parties hereto with respect to the subject matter
hereof and cannot be changed, modified, extended or
terminated except upon written amendment approved by
the Company and executed on its behalf by a duly
authorized officer.
(b) All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and
be enforceable by the respective heirs, executors,
administrators, legal representatives, successors and
assigns of the parties hereto, except that the duties
and responsibilities of Executive hereunder are of a
personal nature and shall not be assignable or
delegable in whole or in part by Executive.
12. Severability. If any provision of this Agreement or application thereof
to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect any other provision or application of this Agreement
which can be given effect without the invalid or unenforceable
provision or application and shall not invalidate or render
unenforceable such provision or application in any other jurisdiction.
If any provision is held void, invalid or unenforceable with respect to
particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
13. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition
to any other remedy given hereunder or now or hereafter existing at law
or in equity. No delay or omission by a party in exercising any right,
remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may
be exercised by such party from time to time and as often as may be
deemed expedient or necessary by such party in its sole discretion.
14. Beneficiaries; References. Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary
or beneficiaries to receive any compensation or benefit payable
hereunder following Executive's death by giving the Company written
notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
15. Captions. All section headings and captions used in this Agreement are
for convenience only and shall in no way define, limit, extend or
interpret the scope of this Agreement or any particular section hereof
16. Executed Counterparts. This Agreement may be executed in one or more
counterparts, all of which when fully-executed and delivered by all
parties hereto and taken together shall constitute a single agreement,
binding against each of the parties. To the maximum extent permitted by
law or by any applicable governmental authority, any document may be
signed and transmitted by facsimile with the same validity as if it
were an ink-signed document. Each signatory below represents and
warrants by his signature that he is duly authorized (on behalf of the
respective entity for which such signatory has acted) to execute and
deliver this instrument and any other document related to this
transaction, thereby fully binding each such respective entity.
17. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of New Jersey without giving effect to any
conflict of laws provisions.
[Remainder of Page Left Intentionally Blank]
IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.
"Company" Medical Nutrition USA, Inc.
a Delaware Corporation
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"Executive" /s/ XXXXXXX X. XXXXXX
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[Signature Page to Employment]
