Exhibit 10.80
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 21, 1998, by and between PDK
LABS INC., a New York corporation with offices at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx,
XX 00000 (the "Corporation"), and Xxxxxxxx Xxxxxxxx, an individual residing at
00 Xxxxxxx Xxxx, Xxxx Xxxx, Xxx Xxxx 00000 (the "Executive").
W I T N E S S E T H
WHEREAS, as of October 6, 1995, the Executive and the Corporation
entered into a seven (7) year Executive Employment Agreement; and
WHEREAS, the Executive's leadership and services have constituted a
major factor in the growth and development of the Corporation; and
WHEREAS, the Corporation desires to continue to employ and retain the
unique experience, ability and services and to promote the Executive to its
principal executive officer from the effective date hereof and to prevent any
other competitive business from securing his services, in utilizing his
experience, background and know-how.
NOW, THEREFORE, the parties mutually agree as follows:
1. Employment. The Corporation employs the Executive and the Executive
hereby accepts continued employment in a principal executive capacity and
Chairman through August 20, 2005 (the "Executive Employment").
2. Duties. The Executive shall serve as the President and Chief
Executive Officer of the Corporation and shall properly perform such duties as
may be assigned to him from time to time by the Board of Directors of the
Corporation. If requested by the Corporation, the Executive shall serve on any
committee of the Corporation's Board of Directors without
1
additional compensation. There shall be no diminution or change in the
Executive's status or title without his express written consent. During the term
of this Agreement, the Executive shall devote substantially all of his business
time to the performance of his duties hereunder unless otherwise authorized by
the Board of Directors.
3. Compensation of the Executive.
3.1 Salary. During the period of Executive Employment, the
Corporation shall pay to the Executive a salary (the "Executive Salary") the
amount of which shall be fixed by the Board of Directors of the Corporation,
from time to time, during such period, provided that in no event shall the
Executive's Salary be at a rate less than three hundred fifty thousand
($350,000) dollars per year. Such compensation shall be paid to the Executive
with the same frequency as other executives of the Corporation are compensated.
In addition to all other remuneration provided for in the Agreement, the
Executive shall be entitled to a cost of living adjustment (as hereinafter set
forth) and other fringe benefits to which executives of the Corporation are
entitled.
As promptly as practical at the end of each year during the term of
this Executive Employment Agreement, the Corporation shall compute the increase,
if any, in the cost of living, using as the basis of such computation the
"Revised Consumers Price Index-Cities" hereinafter called the "Index," published
by the Bureau of Labor Statistics of the United States Department of Labor.
3.2 Bonus. In addition to the annual salary set forth in Section 3.1
above, the Executive shall be entitled to such bonus compensation (in cash,
capital stock or other property) as the Board of Directors of the Corporation
may determine from time to time in its sole discretion.
2
3.3 Expenses. In addition to those expenses expressly set forth
herein, the Corporation shall pay or reimburse the Executive for all reasonable
out-of-pocket expenses actually incurred or paid by the Executive in connection
with performing his duties hereunder as President and as Chief Executive Officer
of the Corporation, of which no more than $100,000 shall be non-accountable. The
Corporation shall, at the direction of the Executive, either reimburse the
Executive for, or directly pay the costs of, membership dues for any one (1)
social or recreational club or organization that the Executive chooses to join.
Additionally, the Corporation shall, at the direction of the Executive, either
reimburse the Executive for, or directly pay the costs of, membership dues for
any professional organizations that the Executive chooses to join. The
Corporation shall also reimburse the Executive for any disability insurance
premiums actually paid by the Executive during the Term hereof.
3.4 Automobile Allowance. With respect to Executive's use of an
automobile in connection with the performance of his duties hereunder,
Corporation shall, at the direction of Executive, either reimburse Executive
for, or directly pay the costs of, the use of an automobile during the Term of
this Agreement and all usual expenditures in connection therewith; i.e., fuel,
insurance, parking, customary maintenance and repairs, etc. The type of
automobile shall be selected by Executive.
3.5 Benefits. the Executive shall be entitled to participate in such
pension, profit sharing, group insurance, option plans, hospitalization, and
group health and benefit plans and all other benefits and plans as the
Corporation provides to its senior executives.
3.6 Equity Participation.
(a) Upon the execution hereof, the Corporation hereby issues to
Executive, Two Hundred and Eighty Thousand (280,000) shares of the Corporations
Common Stock, par
3
value $.01 per value, provided however, that commencing upon the date hereof
through ________ __, 2005 for each three (3) month period (or any part thereof)
that Executive is not employed by Corporation pursuant to the terms of this
Agreement for any reason whatsoever, unless otherwise agreed in writing by the
parties, Executive shall automatically forfeit Ten Thousand (10,000) shares of
Common Stock. Notwithstanding the foregoing, in the event that (i) Corporation
shall file a Registration Statement with the Securities and Exchange Commission
on Form S-1 (or any other appropriate form) during the Term hereof and (ii) the
underwriter with respect to the Registration Statement (or Corporation, if there
is not an underwriter) has agreed to register any or all shares of Common Stock
granted to Executive hereunder, then none of such shares which are so registered
will be subject to forfeiture thereafter and only those shares, if any, that
remain unregistered shall be subject to the provisions of forfeiture (on a
prorated basis) set forth in the immediately preceding sentence.
(b) Corporation expressly agrees to pay on Executive's behalf or
reimburse Executive for any federal, state and local taxes of any nature
whatsoever (including but not limited to any income or capital gains taxes) that
Executive actually incurs with respect to his receipt of any of the securities,
or the proceeds therefrom, granted to Executive pursuant to this Section 3.6.
3.7 Change of Control.
(a) In the event that there occurs a "Change of Control" (as defined
below) during the term of this Agreement and as a result thereof the Executive
resigns or this Agreement is terminated, the Corporation expressly agrees that
upon such resignation or termination, the Corporation shall pay to the Executive
a sum equal to two times the entire compensation that the
4
Executive would have been entitled to through ________ __, 2005. As used herein,
the term "Change of Control" shall mean, subject to Section 3.7(b) hereof,
either
(i) a sale of securities representing voting control of the Corporation
or a sale of all or substantially all of the assets of the
Corporation,
(ii) any merger, joint venture of other business combination where the
Corporation is either (x) not the surviving entity or, (y) becomes
the subsidiary of another entity, or
(iii) the acquisition of more than twenty percent (20%) of the outstanding
voting securities of the Corporation by any entity(ies) or person(s)
exclusive of the Executive or any holder of the Company's securities
on the date hereof who presently owns more than 20%, either acting
alone or as a "group," as that term is defined for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended.
(iv) the nomination of individuals for election to the board of directors
which elections will result in one-third of the directors of the
Company consisting of individuals who have not been directors of the
Company for at least two years.
(v) a tender offer for shares of the Corporation's common stock is made,
which tender is not approved by the Company's Board of Directors and
a majority of the Corporation's outstanding stock is tendered
thereunder.
(b) Notwithstanding anything set forth herein to the contrary, in
the event that the Executive, as a member of the Corporation's Board of
Directors, votes in favor of any of the transactions described in either Section
3.7(i) or 3.7(ii) above, then in such event, there shall not be deemed to have
occurred a "Change of Control" for the purposes of this Agreement.
5
(c) In the event that any payment (or portion thereof) to Executive
under this Section 3.7 is determined to constitute an "excess parachute
payment," under Sections 280G and 4999 of the Internal Revenue Code of 1986, as
amended, the following calculations shall be made:
(i) the after-tax value to Executive of the payments under this Section
3.7 without any reduction; and
(ii) the after-tax value to Executive of the payments under this Section
3.7 as reduced to the maximum amount (the "Maximum Amount") which
may be paid to Executive without any portion of the payments
constituting an "excess parachute payment".
If, after applying the agreed upon calculations set forth above, it
is determined that the after-tax value determined under clause (i)
above is greater than the after-tax value determined under clause
(ii) above, the payments to Executive under this Section 3.7 shall
be reduced to the Maximum Amount.
4. Disability.
4.1 Death and Total Disability. In the event of the death or total
disability, the Executive, during the period of his Executive Employment, his
Executive Salary shall continue to be paid to the Executive, or his Estate as
the case may be, at the same rate that it was on the date of such disability. If
the Executive shall receive any disability payments from any insurance policy
paid for by the Corporation, the payments to the Executive during any period of
disability shall be reduced by the amount of disability payments received by the
Executive under any such insurance policy or policies. For the purposes of this
Agreement, disability shall mean
6
mental or physical illness or condition rendering the Executive incapable of
performing his normal duties with the Corporation.
5. Vacations. the Executive shall be entitled to a vacation of four (4)
weeks per year, during which period his salary shall be paid in full. The
Executive shall take his vacation at such time or times as the Executive and the
Corporation shall determine is mutually convenient.
6. Disclosure of Confidential Information. The Executive recognizes
that he has had and will continue to have access to secret and confidential
information regarding the Corporation, including but not limited to its customer
list, products, know-how, and business plans. The Executive acknowledges that
such information is of great value to the Corporation, is the sole property of
the Corporation, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Corporation herein, the
Executive will not, at any time, during or after his employment hereunder,
reveal, divulge or make known to any person, any information acquired by the
Executive during the course of his employment, which is treated as confidential
by the Corporation, including but not limited to its customer list, and not
otherwise in the public domain the provisions of this Section 6 shall survive
the Executive's employment hereunder.
7. Covenant Not To Compete.
(a) Executive recognizes that the services to be performed by him
hereunder are special, unique and extraordinary. The parties confirm that it is
reasonably necessary for the protection of the Corporation that the Executive
agree, and accordingly, the Executive does hereby agree, that he shall not,
directly or indirectly, at any time during the "Restricted Period" within the
"Restricted Area" (as those terms are defined in Section 8(e) below):
7
(i) except as provided in Subsection (c) below, engage in the business
of retail or mail order sale of vitamins either on his own behalf or
as an officer, director, stockholder, partner, consultant,
associate, employee, owner, agent, creditor, independent contractor,
or co-venturer of any third party; or
(ii) employ or engage, or cause or authorize, directly or indirectly, to
be employed or engaged, for or on behalf of himself or any third
party, any employee or agent of the Corporation.
(b) Executive hereby agrees that he will not, directly or
indirectly, for or on behalf of himself or any third party, at any time during
the Term and during the Restricted Period solicit any customers of the
Corporation.
(c) If any of the restrictions contained in this Section shall be
deemed to be unenforceable by reason of the extent, duration or geographical
scope thereof, or otherwise, then the court making such determination shall have
the right to reduce such extent, duration, geographical scope, or other
provisions hereof, and in its reduced form this Section shall then be
enforceable in the manner contemplated hereby.
(d) This Section 7 shall not be construed to prevent the Executive
from owning, directly and indirectly, in the aggregate, an amount not exceeding
five percent (5%) of the issued and outstanding voting securities of any class
of any corporation whose voting capital stock is traded on a national securities
exchange or in the over-the-counter market.
(e) The term "Restricted Period," as used in this Section 7, shall
mean the period of the Executive's actual employment hereunder plus: (i) twelve
(12) months after the date the Executive is actually no longer employed by the
Corporation in the event this Agreement expires or the Executive's termination
For Cause; (ii) twelve (12) months after the date the
8
Executive is actually no longer employed by the Corporation in the event that
this Agreement is terminated by the Corporation for any reason whatsoever except
For Cause, or if the Executive resigns for any reason during the Term, except
for his resignation pursuant to Section 3.8 hereof; and, (iii) twenty-four (24)
months after the date the Executive is actually no longer employed by the
Corporation in the event that the Executive resigns pursuant to Section 3.8
hereof. The term "Restricted Area" as used in this Section 7 shall mean the
seventy-five (75) mile radius from the Corporation's principal executive
offices.
(f) The provisions of this Section 7 shall survive the termination
of the Executive's employment hereunder and until the end of the Restricted
Period as provided in Section 7(e) hereof.
8. Miscellaneous.
8.1 Assignments. Neither the Executive nor the Corporation may
assign or delegate any of their rights or duties under this Agreement without
the express written consent of the other.
8.2 Entire Agreement. This Agreement constitutes and embodies the
full and complete understanding and agreement of the parties with respect to the
Executive's employment by the Corporation, supersedes all prior understandings
and agreements, whether oral or written, between the Executive and the
Corporation, including, but not limited to, the Prior Employment Agreement, and
shall not be amended, modified or changed except by an instrument in writing
executed by the party to be charged. The invalidity or partial invalidity of one
or more provisions of this Agreement shall not invalidate any other provision of
this Agreement. No waiver by either party of any provision or condition to be
performed shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same time or any prior or subsequent time.
9
8.3 Binding Effect. This Agreement shall inure to the benefit of, be
binding upon and enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted assigns.
8.4 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.5 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by registered or
certified mail, return receipt requested, postage prepaid, or by private
overnight mail service (e.g. Federal Express) to the party at the address set
forth above or to such other address as either party may hereafter give notice
of in accordance with the provisions hereof. Notices shall be deemed given on
the sooner of the date actually received or the third business day after
sending.
8.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
such State's conflicts of laws provisions and each of the parties hereto
irrevocably consents to the jurisdiction and venue of the federal and state
courts located in the State of New York, County of Suffolk.
10
8.7 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one of the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
PDK LABS INC.
By:__________________________
_____________________________
Xxxxxxxx Xxxxxxxx
