Exhibit 10.74
Nutrition 21 Xxxx Xxxxxxxxxx
President & CEO
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
(914) 701-4500
September 12, 2002
Xxxxxx X. Xxxxxxxx
0 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Andy:
This Letter Agreement ("Agreement") documents the terms of your employment on
August 5, 2002 (the "Employment Date") by Nutrition 21, Inc. ("Nutrition 21" or
the "Company") as Chief Operating Officer of Nutrition 21, reporting to the
President and Chief Executive Officer, and is for the period commencing August
5, 2002 through August 31, 2005 (the "Contract Period"). September 1, 2002
through August 31, 2003 is called Year 1. For base compensation purposes,
September 1, 2003 through August 31, 2004 is called Year 2. September 1, 2004
through August 31, 2005 is called Year 3.
GENERAL
You agree that your employment by Nutrition 21 shall be full time and that you
shall engage in no other business or employment, other than supervising your
passive investments. You represent that you are under no restrictions or
obligations which would prevent you from serving as Chief Operating Officer. You
may serve as a non-executive director on Boards of other companies only with the
written permission of the President and Chief Executive Officer.
COMPENSATION
Your direct annualized base compensation will be $225,000 in Year 1; will be
$250,000 in Year 2; and will be $275,000 in Year 3, paid bi-weekly, as a
non-union, full-time employee. All compensation shall be subject to withholding
and similar deductions.
ANNUAL PERFORMANCE BONUS
You will be granted an annual performance bonus for each of Nutrition 21's 2003,
2004, and 2005 year-end fiscal accounting years based upon the attainment of
targets for gross revenues from operations (each, a "Target"), as more fully set
forth the following paragraphs.
The Target for fiscal year 2003 is gross revenues of $19 million. The Targets
for each of the fiscal years 2004 and 2005 will be established by agreement
between the Board of Directors and the President and Chief Executive Officer,
will be the same targets that are used for calculating
NUTRITION 21, INC.
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0 Xxxxxxxxxxxxxx Xxxx, Xxxxx 000 x Xxxxxxxx, Xxx Xxxx 00000-0000
o Phone 000 000-0000 o Fax 000 000-0000 o xxx.xxxxxxxxx00.xxx
the annual performance bonus of the President and Chief Executive Officer, and
will be set forth in a Fiscal Year Budget Plan for that year.
If the Company achieves less than 85% of a Target for any fiscal year, any
performance bonus for that fiscal year will be in the sole discretion of the
Board.
If Company achieves at least 85% but less than 100% of the Target for any fiscal
year, your performance bonus for that year will be 25% of your base
compensation.
If Company achieves at least 100% but less than 120% of the Target for any
fiscal year, your performance bonus for that year will be 50% of your base
compensation.
If Company achieves at least 120% of the Target for any fiscal year, your
performance bonus for that year will be 100% of your base compensation.
For purposes of the bonus calculation, Year 1 base compensation applies for the
2003 fiscal year, Year 2 base compensation applies for the 2004 fiscal year, and
Year 3 base compensation applies for the 2005 fiscal year.
STOCK OPTIONS
The Board granted to you Stock Options on your Employment Date to purchase
675,000 shares of Nutrition 21 common stock ("Common Stock") at $0.36 per share
(the closing price on your Employment Date) as an additional incentive to induce
you to accept employment with the Company. In addition to the terms set forth
below, additional terms that apply to these Stock Options are set forth in a
separate Stock Option Award Agreement.
Of these 675,000 Stock Options:
Stock Options to purchase 50,000 shares of Common Stock vested on your
Employment Date.
Stock Options to purchase 15,000 shares of Common Stock will vest 7,500
shares on each of the first and second anniversaries of your Employment
Date.
Stock Options to purchase 360,000 shares of Common Stock will vest
120,000 shares on each of the first and second and third anniversaries of
your Employment Date.
Stock Options to purchase 150,000 shares of Common Stock will vest 50,000
shares on each of the second and third and fourth anniversaries of your
Employment Date; and
Stock Options to purchase 100,000 shares of Common Stock will vest 33,333
shares on each of the third and fourth anniversaries of your Employment
Date, and 33,334 shares on the fifth anniversary of your Employment Date.
The Stock Options shall vest as aforesaid on these vesting dates only if you are
then employed by the Company or if there has theretofore occurred a change of
control event (as defined under Nutrition 21's Change of Control policy) while
you were employed by the Company. Stock
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Options shall be considered ISOs to the extent permitted by law. The Stock
Options will expire on the tenth anniversary of your Employment Date, and are
subject to the terms of the Stock Option Award Agreement.
OTHER BENEFITS
Nutrition 21 shall furnish and/or reimburse you for all reasonable and customary
business requirements including a car allowance or equivalent. Coverage for
group insurance, i.e. medical, dental, life insurance, AD&D, Short and Long Term
Disability, Business Travel Insurance, etc. as well as the Nutrition 21
sponsored pension plan and savings plan will be provided in accordance with the
terms and conditions of each plan.
VACATION
Annual paid vacation and holidays will accrue in accordance with Nutrition 21's
vacation policy and shall be paid upon any change in your employment status as
Chief Operating Officer.
PERIOD OF EMPLOYMENT
Your employment with Nutrition 21 shall be for a three-year term, but Nutrition
21 may terminate your employment earlier for cause or without cause as
determined by written notice from the Board of Directors. If Nutrition 21 fails
to perform and/or mitigate within a reasonable period of time any term or
condition herein, you can terminate your employment upon written notice to the
Board of Directors.
For purposes of this Agreement, "cause" shall be defined as follows: (1) your
conviction (including a plea of guilty to nolo contendere) of a felony or any
crime of theft, dishonesty or moral turpitude or (2) your gross omission or
gross dereliction of any statutory or common law duty to the Company or (3) your
gross violation of the Company's written policies and guidelines.
TERMINATION
In the event that Nutrition 21's Board of Directors terminates your employment
without cause, you will receive: 1) a continuation of your salary, in ordinary
payroll installments and subject to withholding, for a period equal to the sum
of 12 months, 2) immediate vesting of your Options, and 3) a continuation of
your other benefits as defined herein for 12 months (but only to the maximum
extent permitted under law or by agreement with third parties), or, if earlier,
until you obtain other employment. Should the parties seek mutual general
releases after any such termination, the terms thereof, and any additional
consideration to be afforded to either party, shall be as they may determine by
mutual written agreement.
In the event you resign for any other reason or if your employment is terminated
with cause, you shall be entitled to no salary or benefit continuation, and your
Options will be vested only to the extent vested prior to termination.
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OTHER MATTERS
Notwithstanding anything to the contrary herein, all vested Options shall be
exercisable for one year after termination of employment if the Company
terminated your employment without cause, and for 90 days after termination of
employment for all other terminations. The Options shall thereafter expire.
You agree that during and after termination of your employment and for a one (1)
year period following termination, you will not directly or indirectly compete
with Nutrition 21 or engage in or participate in any business (in whatever
capacity, whether as owner, consultant, adviser, employee or otherwise), which
competes with the business of Nutrition 21. This paragraph may be enforced by
injunction (without posting bond or other security), as well as by other
remedies. The preceding sentence does not prohibit you from passively owning up
to 2% of the voting securities of any entity that files public reports under the
Securities Exchange Act of 1934. Both during and after your employment, you will
maintain the confidentiality of the Company's confidential information, and you
will not disclose or use such information other than for the benefit of the
Company during your employment. If you are entitled to payments under the first
paragraph under "Termination," the period of the non-competition undertaking set
forth in this paragraph shall be extended by one month for each year of your
service to or employment by Nutrition 21.
Any controversy or claim arising out of or relating to this Agreement, or any
breach or default under this Agreement, shall, with respect to all actions at
law pertaining to such controversy, claim, breach, or default (excepting
herefrom any action for equitable relief with respect thereto), be settled by
arbitration in the city and state where Nutrition 21's principal place of
business is then located, before a single arbitrator in accordance with the
then-prevailing Rules of Commercial Arbitration of the American Arbitration
Association. The arbitrator shall not contravene or vary in any respect any of
the terms or provisions of this Agreement. The award of the arbitrator shall be
final and binding upon the parties hereto, and judgment upon such award may be
entered in any court having jurisdiction thereof.
You certify that you have not been debarred by the U.S. Food and Drug
Administration under 231. U.S.C. 335a (Federal Food, Drug and Cosmetic Act 306).
This employment Agreement is the only employment Agreement in effect between
Nutrition 21 and you, and it supersedes all prior agreements with respect to the
same subject matter.
If you accept this offer of continued employment and the conditions outlined
above, would you please sign the original of this letter and initial each page.
Please retain the duplicate for your records.
Yours sincerely,
/s/ Xxxx Xxxxxxxxxx
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Xxxx Xxxxxxxxxx
President and Chief Executive Officer
This letter accurately documents the terms of my employment.
Signed:/s/ XXXXXX XXXXXXXX
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Date: September 12, 2002
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