July 2, 2008 Michael A. Zeher Missoula, Montana 59808 Dear Mr. Zeher: This Letter Agreement (“Agreement”) sets forth the terms on which you are to be employed by Nutrition 21, Inc. (the “Company”).
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Xxxx
X. Xxxxxxxxx
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Chairman
of the Board
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July
2,
2008
Xxxxxxx
X. Xxxxx
Missoula,
Montana 59808
Dear
Xx.
Xxxxx:
This
Letter Agreement (“Agreement”) sets forth the terms on which you are to be
employed by Nutrition 21, Inc. (the “Company”).
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1)
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GENERAL
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a)
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Effective
July 14, 2008 and continuing thereafter during the Term (as hereinafter
defined), the Company shall employ you, and you shall be employed
by the
Company, as its President and Chief Executive Officer. You shall
report to
the Board of Directors (the “Board”).
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b)
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You
shall be elected as a director of the Company effective at the
commencement of the Term, and you shall thereafter be nominated by
the
Board for reelection as a director by the shareholders at their annual
meetings during the Term.
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c)
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Your
employment by the Company shall be full time and you shall engage
in no
other business or employment during the Term, except that you may
supervise your passive investments. You shall not serve on the board
of
any other for-profit company, except that you may serve as an outside
director of Matrixx Initiatives, Inc. and as an outside director
of any
other companies that are approved in writing by the Board. Charitable
organizations and similar type activities of a community service/volunteer
nature are not prohibited by this
paragraph.
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d)
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You
shall adhere to the Company’s Standards of Business
Conduct.
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2)
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PERIOD
OF EMPLOYMENT
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a)
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The
Term means the three-year period beginning on July 14, 2008 and ending
July 13, 2011. However, the Term may be extended for successive one-year
periods (each, a “Renewal Term”) unless at least 90 days prior to the end
of the Term or the then most recent Renewal Term, the Company shall
give
notice to you or you shall give notice to the Company that the Term
will
not be further extended. In the event that this agreement is not
renewed
by the Company in either the original or renewal Terms, you shall
be
entitled to the twelve-month severance as prescribed in section 6.
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b)
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Notwithstanding
the foregoing, your employment with the Company shall terminate on
the
earlier of your death or permanent disability, or upon termination
by the
Company or by you as provided in Section
6.
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3)
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COMPENSATION
Your base compensation will be at the annual rate of $325,000, and
will be
paid in ordinary payroll installments, subject to withholding and
similar
deductions. The Board will review your base compensation in July
2009, and
each July after that for the Term, and may increase your base compensation
in its sole discretion, provided however, that the base salary shall
be
increased annually in a minimum amount that reflects the cost of
living
increase effective for the New York and vicinity area as published
in the
United States Consumer Price Index for the most recent time period
preceding July 14 of the calendar year. This cost of living adjustment
shall be effective for the pay period next following July 14 of each
calendar year during the Term.
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1
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4)
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BONUS
AND STOCK OPTIONS
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a)
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You
will receive, in addition to your base pay set forth above, an annual
cash
bonus of up to 60% of your annualized base compensation based on
the
extent to which you meet specific Performance Objectives based on
cash
flow, profitability and sales growth (in that order of importance)
that
the Board will establish in its discretion. These Performance Objectives
for Fiscal Year 2009 are attached to this agreement as Exhibit A
and
incorporated herein by this reference. Each year of the Term, the
Performance Objectives for the following year will be determined
by the
Board and the addendum attached hereto shall be amended to reflect
the new
Performance Objectives.
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b)
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By
separate grant letter, the Company will on the date you become employed
grant to you stock options to purchase 1,000,000 shares of the Company
common stock (“Stock Options”) under the Company’s 2002 Inducement Stock
Option Plan (the “Plan”). The Stock Options will vest (i) one-third on
each anniversary of the commencement of the Term so long as on such
anniversary you continue to be employed by the Company, or (ii),
if
earlier, on your death or permanent disability. Whether or not vested,
the
Stock Options will expire on the earlier of 89 days after termination
of
your employment (for any reason or for no reason and whether or not
for
cause) or 10 years after the date of grant. The Stock Options shall
also
be subject to the terms of the Plan and the grant letter. A copy
of the
Plan and grant letter will be provided to you prior to the date you
sign
this agreement.
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Notwithstanding
any of the foregoing, in the event the Company or a controlling interest in
the
Company is sold, majority control in the Company changes for any reason, or
the
Company is liquidated or is subject to an assignment for the benefit of
creditors or files for protection under the United States Bankruptcy code,
all
of the Stock Options referred to above shall immediately vest to you without
regard to the length of time you may have been employed.
The
Board
will review you annually for additional stock options or grants based on
mutually agreed performance objectives and according to the above
terms.
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5)
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OTHER
BENEFITS
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a)
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The
Company will during the Term cover you under its group insurance
plans,
e.g., medical, dental, vision, life insurance, AD&D, Short and Long
Term Disability to the extent coverage is provided to similarly situated
executives. You will also be entitled to participate in the Company’s
sponsored savings plan. The Company shall maintain a policy of Director’s
and Officer’s insurance that will protect you in the event you are named
in any claim or suit, and shall provide you indemnity and a defense
to any
such claim. This policy, in the event of your termination or the
termination of the Company’s existence, shall continue to insure you for
all acts performed while you were employed under the terms of this
agreement or a successor agreement.
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b)
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The
Company will reimburse you for your reasonable documented out of
pocket
expenses incurred on behalf of the Company, but not for your home
office
expenses other than Company-related telephone expenses.
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c)
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You
will receive four weeks of annual paid vacation. Annual paid vacation
will
accrue in accordance with the Company's vacation policy and any vested
but
unused vacation time shall be paid upon any termination of your
employment.
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d)
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The
Company will reimburse you for moving and relocation expenses that
the
Compensation Committee has approved in advance for up to $62,000.00.
Should you resign without Good Reason (as hereinafter defined) before
July
14, 2009, you will on the date of your resignation refund to the
Company
the total actual reimbursement received by you, up to the $62,000
maximum.
In the event of your death or disability on or before July 14, 2009,
this
reimbursement shall be waived by the
Company.
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2
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e)
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On
or before December 31, 2008 you
will establish your principal residence within commuting distance
from the
Company’s principal office in Purchase, New York.
The Company will reimburse you for up to $8,000 of documented temporary
living and travel expenses that you incur after the date hereof and
prior
to moving into a new residence under this paragraph. These expenses
are
intended to offset costs incurred during the time that you have sold
one
residence and are unable to move into your new
residence.
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6)
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TERMINATION
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a)
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Termination
for Good Reason
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i)
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Your
employment will be considered to have been terminated by you for
“Good
Reason” if the Company has breached any provision of this Agreement, you
have given notice thereof to the Company and a demand that the breach
be
cured, and the Company has failed to cure the breach within 30 days
after
the Company has received your
notice.
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b)
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Termination
for Cause
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i)
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Your
employment will be considered terminated by the Company “For Cause” if the
Board notifies you that such termination is on account of:
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(1)
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your
failure to perform your duties for the Company other than any such
failure
resulting from your disability, after (A) a written demand for performance
was delivered to you by the Board which specifically identified the
manner
in which the Board believes that you have not performed your duties,
and
(B) your failure to reasonably comply with such demand within thirty
days
after notice to you,
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(2)
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your
engagement in conduct materially and demonstrably injurious to the
Company,
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(3)
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your
breach of any provision of this Agreement or of the Confidentiality
and
Non-Compete Agreement referred to in Section 7),
or
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(4)
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your
conviction of any felony.
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c)
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Your
Rights after Termination
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i)
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In
the event that you resign for Good Reason or the Company terminates
your
employment other than For Cause, and after such resignation or termination
you execute and deliver to the Company a general release in form
and
substance acceptable to the Company, then you will receive a continuation
of your base salary, in ordinary payroll installments and subject
to
withholding, for 12 months from
the date of your termination. In addition to the salary continuation
as
set forth above, you shall continue to receive employee benefits
at the
same level as you received prior to your termination, for a period
of 12
months following
the date of your termination.
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ii)
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In
the event that (i) you resign other than for Good Reason or (ii)
the
Company terminates your employment For Cause, then you shall be entitled
to receive your salary and benefits accrued to the date of termination,
and you shall not be entitled to any further salary or
benefits.
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d)
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No
Other Rights
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i)
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The
post-termination rights provided in this Section are exclusive of
any and
all other rights or benefits or
reimbursements.
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7)
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There
are incorporated herein each of the provisions of the Confidentiality
and
Non-Compete Agreement between the Company and you dated as of this
date.
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8)
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The
federal and state courts sitting in the State of New York shall have
exclusive jurisdiction with respect to this Agreement.
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9)
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Any
and all notices or other communications required or permitted to
be given
under any of the provisions of this Agreement shall be in writing
and
shall be deemed to have been duly given when personally delivered
or when
forwarded for priority delivery by Federal Express or other recognized
courier, addressed, if to the Company, to it at its then principal
offices, attn: Chairman of the Board with a copy to the General Counsel,
and, if to you, at the Company’s then principal offices (or at such other
address as any party may specify by notice to all other parties given
as
aforesaid).
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10)
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This
employment agreement supersedes all prior agreements and understandings
(whether in writing, oral in board resolutions or otherwise) with
respect
to the subject matter of this agreement. Without limiting the generality
of the foregoing, it sets forth all of your rights to compensation
and
other benefits both during your employment and thereafter. It may
not be
changed or terminated orally. All notices hereunder shall be in
writing.
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If
you
agree with the foregoing, would you please sign and return the original of
this
letter to The Company. Please retain the duplicate for your
records.
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/s/
Xxxx Xxxxxxxxx
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Xxxx
Xxxxxxxxx
Chairman
of the Board
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Nutrition
21, Inc.
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0
Xxxxxxxxxxxxxx Xxxx
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Purchase,
NY 10577
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Agreed
to
and accepted:
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/s/
Xxxxxxx X. Xxxxx
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Xxxxxxx
X. Xxxxx
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