EXHIBIT 10.32
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is
entered into by and between NATURADE, INC., a Delaware corporation ("Company"),
and XXXX X. XXXXXXX, an individual ("Xxxxxxx"), as of the date last set forth
below.
PRELIMINARY STATEMENT
Company wishes to maintain Xxxxxxx as its President, Chief Executive
Officer and Chairman of the Board, and Xxxxxxx wishes to accept such engagement,
in each case on the terms and conditions set forth below.
Company and Xxxxxxx are parties to an Employment Agreement dated as of
February 18, 1998 (the "Original Agreement."
In consideration of the mutual promises made herein, Company and
Xxxxxxx (collectively, the "Parties") hereby amend and restate the Original
Agreement in its entirety and agree as follows:
1. Specified Term. Beginning on the date of execution and delivery of
this Agreement (the "Effective Date") until the earlier of December 31, 2003 and
the date of the termination of this Agreement (the "Term"), in each case on the
terms and subject to the conditions set forth herein, Company hereby retains
Xxxxxxx, and Xxxxxxx hereby accepts retention with Company. Xxxxxxx shall
perform his offices hereunder principally at Company's headquarters in Orange
County, California throughout the Term of this Agreement.
2. Title and Description of Duties. Xxxxxxx shall serve as President,
Chief Executive Officer and Chairman of the Board of the Company's board of
directors (the "Board") and shall have such duties, rights, responsibilities,
and privileges normally associated with the positions he shall occupy. During
the Term Xxxxxxx shall report to the Board, comply with the directions and
resolutions of the Board and diligently devote substantially all of his time,
attention and energies to the business of Company.
3. Competitive Activities. During the Term, Xxxxxxx shall not, directly
or indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with any business of Company or the dietary
supplements and natural health and beauty care business. The parties hereto
intend the terms of this Section 3 to be reasonable and in compliance with
applicable law and, in that regard, anything to the contrary appearing in this
Agreement notwithstanding, if a court shall determine that this Section 3 shall
be unenforceable, such court is hereby authorized and empowered to restrict the
geographic area and the scope of activities to which this Section 3 pertains to
the minimum extent necessary so that this Section 3 as so restricted shall be
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rendered enforceable. Moreover, nothing in this Agreement shall prohibit Xxxxxxx
from owning up to five percent (5%) of the shares of any publicly held company.
4. Confidential Information. Xxxxxxx agrees that he shall not disclose
any confidential information concerning the Company or its operations (including
any information constituting a trade secret under applicable law), or use any
such confidential information in any way, either during the Term or at any other
time thereafter, except as he in good faith believes is required or appropriate
in the course of the discharge of his duties hereunder. Upon termination of this
Agreement, or when requested by the Board, Xxxxxxx shall return or cause to be
returned to Company all such confidential information in his possession or
disposal, without retaining any copies thereof.
5. Indemnification of Xxxxxxx. Company shall indemnify, defend and hold
harmless Xxxxxxx to the fullest extent permitted by applicable law in effect at
the time of the subject act or omission, and shall advance to Xxxxxxx reasonable
attorneys' fees and expenses as such fees and expenses are incurred (subject to
an undertaking from Xxxxxxx to repay such advances if it shall be finally
determined by a judicial decision which is not subject to further appeal that
Xxxxxxx was not entitled to the reimbursement of such fees and expenses), and
Xxxxxxx will be entitled to the protection of any insurance policies that
Company may elect to maintain generally for the benefit of its directors and
officers, against all costs, charges and expenses incurred or sustained by him
in connection with any action, suit or proceeding to which he may be made a
party by reason of his being or having been a director, officer or employee of
the Company or any of its subsidiaries, or his serving or having served any
other enterprise as a director, officer or employee at the request of the
Company (other than any dispute, claim or controversy arising under or relating
to this Agreement).
6. Salary. As compensation for the services to be rendered by Xxxxxxx
hereunder, during the Term Company shall pay Xxxxxxx an annual salary (the
"Salary") of $225,000. Salary shall be payable to Xxxxxxx at such times and in a
manner consistent with Company's then current payment practices.
7. Tax Withholding. Company shall have the right to deduct or withhold
from the compensation due to Xxxxxxx hereunder any and all sums required for
federal income and Social Security taxes and all state or local taxes now
applicable or that may be enacted and become applicable in the future.
8. Bonus; Options.
(a) Bonus. Company and Xxxxxxx shall use their respective good faith
efforts to negotiate and agree to criteria respecting a bonus for Xxxxxxx with
respect to each calendar year ending after December 31, 2001 (the "Bonus") by
the end of the prior calendar year. It is the expectation of each of the Parties
hereto that such criteria to be negotiated will provide that the target amount
of each annual Bonus will be one-half of Xxxxxxx'x aggregate Salary for such
calendar year based on the Company achieving earnings and revenues objectives,
excluding the effects of acquisitions, subject to the limitations in the Credit
and Security Agreement between Company and Xxxxx Fargo Business Credit, Inc.
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dated January 27, 2000, as amended (or any agreement with a principal lender of
the Company that replaces Xxxxx Fargo Business Credit, Inc.). Such target Bonus
will not be limited, but shall contain provisions for higher bonus payments to
reward Xxxxxxx for exceeding such objectives. In addition, provision shall be
made on a case-by-case basis to address specifically earnings and revenues
contributed by acquisitions.
(b) Options.
(i) The Company has granted Xxxxxxx options ("Options") to
purchase 365,000 shares of the common stock of Company ("Common Stock"). 297,500
of such Options will have become vested on March 2, 2002, and all such Options
become fully vested in the event of any sale (including, without limitation,
pursuant to either a tender offer or a merger of Company which results in the
shareholders of the Company holding less than fifty per cent (50%) of the stock
of the surviving corporation) of Company. The price per share of Common Stock at
which such Options may be exercised ("Exercise Price") shall be changed on the
Effective Date to be $0.1477 per share (such price being the market price of the
Common Stock based on the price of equity securities sold to investors in a
third-party transaction concluded on or about the Effective Date; all such
Options shall immediately vest in full on the Effective Date; and,
notwithstanding any provision to the contrary in the Options or the stock option
plan under which they were issued, all such Options may be exercised at any time
on or before March 2, 2005, regardless of the termination of Xxxxxxx'x
employment by Company by reason of his death or otherwise. For purposes of this
Agreement, the Fair Market Price of one share of Common Stock as of a particular
date shall be determined as follows: (i) if traded on a securities exchange or
through the Nasdaq National Market or SmallCap System, the price shall be deemed
to be the average of the closing prices of the securities on such exchange over
the five (5) day period ending three (3) days prior to the date of
determination; (ii) if traded over-the-counter, the price shall be deemed to be
the average of the closing bid or sale prices (whichever is applicable) over
that same five (5) day period; and (iii) if there is no active public market for
the Common Stock, the value shall be the fair market value thereof, as
determined in good faith by the Board of Directors of the Company.
(ii) In lieu of exercising any Option as provided above, Xxxxxxx
may elect to receive, without the payment by him of any additional
consideration, shares of Common Stock equal to the value of such Option (or the
portion thereof being canceled) by surrender of the Option certificate at the
principal office of Company together with a subscription form indicating such
election, in which event the Company shall issue to Xxxxxxx a number of shares
of Common Stock computed using the following formula:
Y (A - B)
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X = A
Where: X = The number of shares of Common Stock
to be issued pursuant to this net exercise;
Y = The number of shares of Common Stock
that would be issued in a cash exercise of the options in respect of which the
net issue election is made;
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A = The Fair Market Price of one share
of Common Stock at the time the net issue election is made;
B = The Exercise Price (as adjusted to
the date of the net issuance).
(iii) Additional options to acquire shares of Common Stock will
become available to Xxxxxxx on an annual basis determined by the Board.
Additional options to acquire shares of Common Stock will be made available to
selected key employees nominated and awarded by Xxxxxxx (such shares to be used
as leverage for initial hire and annual award against performance), in each case
on a basis determined by the Board.
(c) Dilution.
(i) Reorganizations. In the event the Common Stock is subject to a
stock split, stock dividend, or the like, or any consolidation of the
outstanding shares of Common Stock into a smaller number of shares is effected
(any such event being herein called a "Common Stock Reorganization"), then (i)
the Exercise Price shall be adjusted, effective immediately after the effective
date of such Common Stock Reorganization, to a price determined by multiplying
the Exercise Price in effect immediately prior to such effective date by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on such effective date before giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such Common Stock
Reorganization, and (ii) the number of shares of Common Stock subject to
purchase upon exercise of the Options shall be adjusted, effective at such time,
to a number determined by multiplying the number of shares of Common Stock
subject to purchase immediately before such Common Stock Reorganization by a
fraction, the numerator of which shall be the number of shares outstanding after
giving effect to such Common Stock Reorganization and the denominator of which
shall be the number of shares of Common Stock outstanding immediately before
giving effect to such Common Stock Reorganization. In the event of any merger in
which Company is not the surviving corporation, the Options shall become options
to purchase the kind and amount of shares of stock and other securities and
property which Xxxxxxx would have been entitled to receive pursuant to such
merger if the Options had been exercised immediately prior to the effective date
thereof, and the Exercise Price shall be adjusted accordingly. Any adjustment of
Exercise Price or of the number of shares of Common Stock purchasable upon
exercise of the Options under this Section 8 shall not be applicable to any
portion of the Options exercised prior to such adjustment.
(ii) Dilutive Issuances.
(1) Upon each issuance (or deemed issuance as provided below)
by the Company of any shares of Common Stock (the "Additional Stock") after the
date hereof, other than "Excluded Stock" (as defined below), for a consideration
per share less than the Exercise Price in effect immediately prior to the
issuance, the Exercise Price in effect immediately prior to each issuance shall
forthwith be adjusted to a price determined by multiplying the Exercise Price by
a fraction, (x) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such Additional Stock
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plus the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of shares of Additional Stock so
issued would purchase at the Exercise Price in effect immediately prior to such
issuance, and (y) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance of Additional Stock
plus the number of shares of such Additional Stock so issued. For the purpose of
the above calculation the number of shares of Common Stock outstanding
immediately prior to such issuance of Additional Stock shall be calculated on a
fully diluted basis, as if all convertible securities had been fully converted
into shares of Common Stock immediately prior to such issuance, at an Exercise
Price of $0.00, and any outstanding options, warrants or other rights for the
purchase of shares of stock or convertible securities had been fully exercised
immediately prior to such issuance (and the resulting securities fully converted
into shares of Common Stock if so convertible) as of such date, but not
including in such calculation any additional shares of Common Stock issuable
with respect to convertible securities, or outstanding options, warrants or
other rights for the purchase of shares of stock or convertible securities,
solely as a result of the adjustment of the respective conversion or exercise
prices (or other conversion ratios) resulting from the issuance of the
Additional Stock causing the adjustment in questions.
(2) The term "Excluded Stock" shall means:
(A) shares of Common Stock issued or issuable in a public
offering registered under the Securities Act of 1933, as amended;
(B) shares of Common Stock or related options exercisable
for such Common Stock issued to employees, officers, and directors of,
and consultants, customers, and vendors to, the Company, pursuant to an
arrangement approved by the Board of the Company;
(C) shares of Common Stock issued or issuable in
connection with the acquisition by the Company of all of the
outstanding voting stock or substantially all of the assets of another
entity; and
(D) shares of Common Stock issued, issuable or deemed
issued on the purchase of the Series B Convertible Preferred Stock and
Series B Convertible Preferred Stock Warrants, pursuant to the
Securities Purchase Agreement between the Company, Westgate Equity
Partners, L.P. and Health Holdings & Botanicals LLC dated as of
December [19], 2001, and on the exercise and/or conversion thereof.
(iii) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this Section 8(c),
Company, at its expense, shall compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to Xxxxxxx a
certificate setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is based.
Company shall, upon the written request at any time of Xxxxxxx, furnish or cause
to be furnished to Xxxxxxx a like certificate setting forth (a) such adjustment
and readjustment, (b) the current Exercise Price, and (c) the number of shares
of Common Stock and the amount, if any, of other property which at the time
would be received upon the exercise of the Options.
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9. Life Insurance. During the Term, Company agrees to provide and pay
for a twenty-year term life insurance policy for Xxxxxxx in the amount of
$250,000; provided, that Company shall be obligated to provide such insurance
only if it may be obtained by Company for Xxxxxxx on commercially reasonable
terms and for reasonable premiums not substantially greater than would be
payable for such coverage with respect to an average man of Xxxxxxx'x age (as
reasonably determined by Company) and subject to Xxxxxxx submitting to and
satisfying the health and physical examination criteria of the insurer. Xxxxxxx
agrees to cooperate in all reasonable respects with Company and the insurer to
provide the coverage described in this Section 9, including without limitation
by submitting to such physical examinations as shall be required by such
insurer. Company shall continue payment of premium through life of policy
regardless of employment status.
10. Group Medical Insurance. Company agrees to include Xxxxxxx and
Xxxxxxx'x spouse under Company's group medical insurance coverage, if any, which
Company provides to all employees.
11. Vacation. Xxxxxxx shall be allowed four weeks vacation per year.
12. Expenses.
(a) During the Term the Company shall reimburse Xxxxxxx for lease
of an automobile at the rate of $1,250 per month. Xxxxxxx'x gasoline charges
shall be payable under and pursuant to the Company's then-current travel and
entertainment policy. Xxxxxxx will pay for repairs, insurance and maintenance
costs relating to such automobile.
(b) Company shall reimburse Xxxxxxx for all out-of-pocket travel
expenses incurred by him in connection with Company's business and in compliance
with Company's reimbursement policies.
13. Termination for Cause. Company reserves the right to terminate this
Agreement if Xxxxxxx (1) willfully or habitually breaches or neglects the duties
which he is required to perform under the terms of this Agreement; (2) commits a
felony or act of dishonesty, fraud, misrepresentation, or other acts of moral
turpitude or (3) refuses to comply materially with reasonable directives of the
Board (each of the foregoing circumstances being "Cause"); provided, however, in
the case of items (1) and (3), Company has first given Xxxxxxx written notice of
such Cause and Xxxxxxx failed to correct such Cause within the 30 day period
following his receipt of such notice.
14. Termination Without Cause.
(a) This Agreement shall be terminated upon the death or
disability of Xxxxxxx such that he cannot fulfill his responsibilities under
this Agreement for a period in excess of 90 days.
(b) Termination under this Section 14 shall not be considered "for
Cause" for the purpose of this Agreement.
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15. Effect of Termination Upon Compensation.
(a) Termination for Cause or Upon Resignation. In the event that
this Agreement is terminated prior to December 31, 2003 "for Cause" by Company,
or by resignation by Xxxxxxx, Xxxxxxx shall be entitled to the compensation
earned by and vested in him prior to the date of termination as provided for in
this Agreement or Company's stock option plan, computed pro rata up to and
including that date, excluding Bonus. In such events, except as expressly
provided in Sections 5 and 9 and this Section 15(a) and by the terms of any
agreement between the parties pertaining to the grant of additional compensation
to Xxxxxxx, Company shall have no obligations under this Agreement, including,
without limitation, any obligation thereunder to pay Salary or additional
compensation or to provide other benefits, in each case except to the extent
otherwise provided by law.
(b) Termination Other than for Cause or Upon Resignation, Death or
Disability. In the event that this Agreement is terminated prior to December 31,
2003 other than "for Cause" by Company or by resignation, death or disability by
or of Xxxxxxx, Xxxxxxx shall be entitled to (i) the compensation earned by and
vested in him prior to the date of termination as provided for in this Agreement
(including Bonus) and Company's stock option plan, in each case computed pro
rata up to and including that date, and (ii) payment of his Salary, average
Bonus, and continuation of medical benefits and payment of automobile lease
under Section 12(a) above, in each case through the later of (a) 24 months
following the Effective Date or (b) 12 months following termination, at such
times and in such manner as such Salary or other amount was paid or provided
prior to such termination. In such events, except as expressly provided in
Sections 5 and 9 and this Section 15(b) and by the terms of any agreement
between the Parties pertaining to the grant of additional compensation to
Xxxxxxx, Company shall have no obligations under this Agreement, including,
without limitation, any obligation thereunder to pay Salary or additional
compensation or to provide other benefits, in each case except to the extent
otherwise provided by law.
(c) Constructive Termination. Any of the following events shall be
deemed a termination other than for Cause, for purposes of Section 15(b):
(i) the assignment to Xxxxxxx of duties inconsistent with and
adverse to Xxxxxxx'x position, duties, responsibilities and status with the
Company immediately prior to the Effective Date, or an adverse change in
Xxxxxxx'x titles or offices as in effect immediately prior to the Effective
Date, or a reduction of Xxxxxxx'x duties or responsibilities as in effect
immediately prior to the Effective Date, or any removal of Xxxxxxx from or any
failure to reelect Xxxxxxx to any of such positions, except in connection with
termination of Xxxxxxx'x employment for Disability, Retirement or Cause or as a
result of Xxxxxxx'x death or by Xxxxxxx;
(ii) A reduction in Xxxxxxx'x base salary and bonus
compensation unless such reduction is part of a uniformly applied program of
reductions reasonably adopted due to the Company's then business condition;
(iii) A failure of the Company to continue in effect any
benefit or incentive plan or arrangement in which Xxxxxxx is participating on
the Effective Date, or the taking of any action by the Company which would
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adversely affect Xxxxxxx'x participation in or materially reduce Xxxxxxx'x
benefits under any such plan or arrangement or deprive Xxxxxxx of any material
fringe benefit enjoyed by Xxxxxxx on the Effective Date, unless such failure
results from a uniformly applied program of reductions reasonably adopted due to
the Company's then business condition;
(iv) Xxxxxxx is transferred to a principal work location which
will require him to travel more than fifty (50) miles from his or her then
principal residence to his or her new principal work location; or
(v) any material breach by the Company or any provision of
this Agreement.
16. Notices. Any and all notices or other communications required or
permitted to be given by either party to the other shall be in writing and may
be transmitted either by personal delivery or by mail, registered or certified
postage prepaid, with return receipt requested. Notices shall be deemed duly
served and given when personally delivered to the party to whom directed or any
of its officers or, in lieu of such personal service when deposited in the
United States mail, first class postage prepaid, addressed as follows:
To Company: Naturade, Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chairman of the Board
Telephone: (000) 000-0000
To Xxxxxxx: Xxxx X. Xxxxxxx
28551 Xxxxxxx Xx Xxxxxx
Xxx Xxxx Xxxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
17. Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the Parties hereto with respect
to the retention of Xxxxxxx by Company, and contains all of the covenants and
agreements between the Parties with respect to that retention in any manner
whatsoever. Each party acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not embodied herein, and that no
other agreement, statement, or promise not contained in this Agreement shall be
valid or binding. Without limitation to the foregoing, this Agreement shall
supersede and replace all provisions of any prior agreement pertaining to
retention by Company of Xxxxxxx.
18. Modifications. Any modification of this Agreement will be effective
only if it is in writing signed by the party against whom enforcement is sought.
19. Effect or Waiver. The failure of either Party to insist on strict
compliance with any of the terms, covenants, or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenants or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
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20. Partial Invalidity. In any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
21. Law Governing Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
22. Sums Due Deceased Xxxxxxx. If Xxxxxxx dies during the Term, any
sums that may be due him from Company under this Agreement as of the date of
death shall be paid to Xxxxxxx'x executors, administrators, heirs, personal
representatives, successors and assigns.
Executed effective January 2, 2001, at Irvine, California.
COMPANY
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NATURADE, INC.
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxx
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Title: Secretary and Chief Financial Officer
XXXXXXX
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/s/ Xxxx X. Xxxxxxx
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XXXX X. XXXXXXX
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