EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
Mannatech Incorporated (the "Company"), and Xxxxxxx Xxxxx (the "Employee"). The
Company desires to employ the Employee, and the Employee desires to be employed
by the Company. Therefore, in consideration of the mutual promises and
agreements contained herein, the parties hereby agree as follows:
SECTION 1.
EMPLOYMENT
1.1 Employment. The Company hereby employs the Employee and the Employee
hereby accepts employment by the Company for the period and upon the terms and
conditions contained in this Agreement.
1.2 Office and Duties. The Employee shall serve the Company as Senior
Vice-President and General Counsel, with the authority, duties and
responsibilities customarily incident to such office. The Employee shall perform
such other services commensurate with her position as may from time to time be
assigned to the Employee by the Chief Executive Officer (the "CEO") of the
Company. Further, the Employee's actions shall at all times be subject to the
direction of the CEO of the Company.
1.3 Performance. During the term of employment under this Agreement, the
Employee shall devote on a full-time basis all of her time, energy, skill and
best efforts to the performance of her duties hereunder in a manner that will
faithfully and diligently further the business and interests of the Company. The
Employee shall comply with the employee policies or written manuals of the
Company, as they exist from time to time as applicable generally to the
Company's employees. The Employee shall not work either on a part-time or
independent contractor basis for any other business or enterprise during the
Term of employment under this Agreement.
1.4 Place of Work. The Employee shall perform services under this
Agreement at the Company's principal office in Coppell, Texas, and at such other
place or places as the Employee and the Company shall mutually agree. In
addition, the Employee understands and agrees that she may be required to travel
in connection with the performance of her duties.
1.5 Directors' and Officers' Liability Insurance. The Company will provide
the Employee with officers' and directors' liability insurance covering acts or
omissions by the Employee in the performance of her duties to the Company under
this Agreement as an officer and, if she serves as such, as a director of the
Company.
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SECTION 2.
TERM AND SEVERANCE
2.1 Term. Employment will commence on October 1, 2001. There is no
specific term of employment under this Agreement. The Employee is employed
at-will, which means that either the Company or the Employee can end the
employment relationship at any time, with or without reason or notice.
2.2 Severance. If the Company terminates the employment relationship
without cause, the Employee will be eligible to receive a severance payment of
at least three (3) months salary. In the event the current Chief Executive
Officer should terminate his employment with the Company for any reason
whatsoever, the severance amount due to Employee will automatically extend to a
minimum of six (6) months salary. Any severance amounts paid will be based upon
Employee's current salary at the time employment ends and will be paid in equal
installments and in accordance with the normal payroll policies of the Company,
less applicable taxes. For purposes of severance payments only, "cause" shall
mean the Employee's (1) conviction of, or a plea of no contest to, or deferred
adjudication for any felony or misdemeanor that causes harm or embarrassment to
the Company, in the reasonable judgment of the Board of Directors; (2) substance
abuse or use of illegal drugs that impairs that Employee's performance or that
causes harm or embarrassment to the Company; (3) habitual absenteeism, tardiness
or failure to meet performance standards set by the CEO or the Board of
Directors for job performance and results of operation; (4) commission of any
act of fraud, dishonesty, illegality or theft in the course of employment; (5)
any disciplinary action, pertaining to the Employee's law license, including but
not limited to reprimand, suspension, probation or disbarment according to the
rules of disciplinary conduct of the State Bar of Texas; or (6) breach of
Sections 4, 5, 6 or 8 of this Agreement or any fiduciary duty of an officer as a
fiduciary in respect of her duties for the Company as principal.
SECTION 3.
COMPENSATION FOR EMPLOYMENT
3.1 Base Salary. The base annual compensation of the Employee for all of
her employment services to the Company under this Agreement shall be $200,000,
which the Company shall pay to the Employee in equal installments and in
accordance with the normal payroll policies of the Company. The base annual
compensation may be increased at the sole discretion of the Board of Directors
of the Company. The Employee will not be eligible to participate in the Annual
Bonus Plan as defined in paragraph 3.2 for fiscal year 2001.
3.2 Annual Bonus. For each fiscal year after 2001, the Employee shall be
eligible to receive an annual bonus in accordance with the then approved
executive bonus plan as determined by the CEO of the Company in his sole
discretion and/or in accordance with any criteria established by the Board of
Directors, and subject to the approval and consent of its Compensation
Committee. The Employee acknowledges that any annual bonus is discretionary,
with the sole discretion whether
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to pay a bonus and, if so, in what amount, resting with the Board of Directors
of the Company, and subject to the approval of its Compensation Committee.
Further, the Employee must remain employed by the Company at the time the bonus
is paid, in order to be eligible to receive the annual bonus.
3.3 Award of Options. Employee shall be awarded stock options under the
Company's 2000 Stock Option Plan of 50,000 at fair market value to be awarded as
of the first date of service of the Employee, subject to the approval of the
Option Committee of the Board of Directors.
3.4 Payment and Reimbursement of Expenses. During the Term, the Company
shall pay or reimburse the Employee for all reasonable travel and other expenses
incurred by the Employee in performing her obligations under this Agreement in
accordance with the policies and procedures of the Company, provided that the
Employee properly accounts for such expenses in accordance with the regular
policies of the Company.
3.5 Other Benefits. During the Term, the Employee shall be entitled to
participate in or receive benefits under any plan or arrangement made available
by the Company to its employees (including any medical, dental, short-term and
long-term disability, life insurance and 401(k) programs), subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements. Any such plan or arrangement shall be revocable and
subject to termination or amendment at any time. The Employee will also be
eligible to participate in the Executive vehicle program and will be provided a
vehicle under the lease program with a lease value (at a cost no greater than
$1,000.00 per month), auto liability insurance coverage (comprehensive,
collision and liability) paid by the Company and all routine and necessary
repairs paid for by the Company or reimbursed to Employee subject to approval by
the Chief Financial Officer. During the Employee's employment, the Company shall
also pay annual dues, as they are incurred for the maintenance of professional
licensure and/or membership in the American Bar Association, the Texas State Bar
and the Dallas Bar Association. The Company shall likewise pay for up to 30
hours of continuing legal education annually, subject to prior approval of the
CEO.
3.6 Vacation. During each year of the Term and in accordance with the
regular policies of the Company, the Employee shall be entitled to three (3)
weeks of vacation, during which her compensation hereunder shall be paid in
full. Such vacation shall be fully vested upon execution of this Agreement and
taken at times consistent with the effective discharge of the Employee's duties.
SECTION 4.
CONFIDENTIAL INFORMATION
4.1 Confidential Information. Employee specifically agrees that Employee
will not at any time, during or after Employee's employment by Company, in any
manner, either directly or indirectly, use, divulge, disclose, or communicate to
any person, firm, or corporation, any confidential information of any kind,
nature, or description concerning any matters affecting or
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relating to the business of Company (hereinafter referred to as "Confidential
Information").
4.2 Confidential Information includes but is not limited to: Company
genealogies (being the information held by Company related to its Associates,
including without limitation its relationship with each of its Associates, the
sponsoring of each Associate, the Associate's upline and downline, charts, data
reports and other materials, historical purchasing information for each
Associate), proprietary product information which may from time-to-time be made
known to Employee, the names, buying habits, or practices of any of Company's
customers or Associates; Company's marketing methods and related data; the names
of Company's vendors or suppliers; costs of materials; costs of its Products
generally, the prices Company obtains or has obtained or at which it sells or
has sold its Products or services; manufacturing and sales costs; lists or other
written records used in Company's business; compensation paid to it Associates
and Employees and other terms of employment thereof; manufacturing processes;
scientific studies or analyses other than those published for use by the Company
for the benefit of its Associates, details of training methods, new products or
new uses for old products, merchandising or sales techniques, contracts and
licenses, business systems, computer programs, or any other confidential
information of, about, or concerning the business of Company; its manner of
operation or other confidential data of any kind, nature or description.
4.3 Employee agrees that all equipment, notebooks, documents, memoranda,
reports, notes, files, sample books, correspondence, lists, other written and
graphic records, and the like, affecting or relating to the business of Company,
which Employee shall prepare, use, construct, possess, control or otherwise come
into the Employee's possession while employed by Company concerning any process,
apparatus or products manufactured, sold, used, developed, investigated or
considered by Company concerning the Confidential Information or concerning any
other business or activity of the Corporation shall remain at all times the
property of Company and shall be delivered to Company upon termination of
employment with Company for any reason or at any time upon request.
4.4 Employee agrees that, during the term of employment with Company or
upon termination thereof, and if requested by Company to do so, the Employee
will sign an appropriate list of any and all Confidential Information of Company
of which the Employee has knowledge or about which the Employee has acquired
information.
4.5 The Employee agrees to only use the Confidential Information for
Company business and shall return copies of any such information to Company
forthwith upon termination of employment for whatever reason.
4.6 From time-to-time during the term of this Agreement, additional
Confidential Information may be developed, obtained and otherwise made known to
Employee. Employee specifically agrees that all such additional Confidential
Information shall be embraced within the terms of this Agreement.
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4.7 The Parties agree that, as between them, all Confidential Information
is important, material, trade secret, highly sensitive and valuable to Company's
business and its goodwill and is transmitted to the Employee in strictest
confidence. Company's legitimate business interests require the non-disclosure
thereof to (among other things) Company's competitors. The Confidential
Information would not be delivered or made available to Employee absent these
provisions of Section 4 of this Agreement.
4.8 The Parties agree that Company shall suffer irreparable harm in the
event its Confidential Information is disseminated in a manner in contravention
of its interests. Company therefore reserves the right to seek injunctive relief
or any other remedy available at law to protect its Confidential Information.
4.9 The Employee shall not during the term of the Agreement or for a
period of three (3) years thereafter take or encourage any action the purpose or
effect of which would be to circumvent, breach, interfere with or diminish the
value or benefit of Company's Confidential Information and, without prejudice to
the generality of the foregoing, the Employee shall not directly or indirectly
contract, solicit, entice, sponsor or accept any of Company's Associates into,
or in any way promote to any such Associates opportunities in marketing programs
of any direct sales company other than Company.
4.10 If any Confidential Information or other matter described in this
Agreement is sought by legal process, Employee will promptly notify Company and
will cooperate with Company in preserving its confidentiality.
SECTION 5.
OWNERSHIP OF INFORMATION, INVENTIONS AND ORIGINAL WORK
5.1 Ownership Of Information, Inventions And Original Work. Employee
agrees that any creative works, discoveries, designs, software, computer
programs, inventions, improvements, modifications, enhancements, know-how,
formulation, concept or idea which is conceived, created or developed by
Employee, either alone or with others (collectively referred to as "Work
Product") is the exclusive property of the Company if either:
a. it was conceived or developed in any part on Company time;
b. any equipment, facilities, materials or Confidential
Information of the Company was used in its conception or
development; or
c. it either: (i) relates, at the time of conception or reduction
to practice, to the Company's business or to an actual or
demonstrably anticipated research or development project of
the Company, or (ii) results from any work performed by
Employee for the Company.
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With respect to any such Work Product, Employee agrees as follows:
a. Employee shall promptly disclose the Work Product to the
Company;
b. Employee agrees to assign, and hereby does assign, all
proprietary rights to such Work Product to the Company without
further compensation;
c. Employee agrees not to file any patent or copyright
applications related to such Work Product except with the
written consent of the Board;
d. Employee agrees to assist the Company in obtaining any patent
or copyright on such Work Product, and to provide such
documentation and assistance as is necessary to the Company to
obtain such patent or copyright; and
e. Employee shall maintain adequate written records of such Work
Product, in such a format as may be specified by the Company.
Such records will be available to and remain the sole property
of the Company at all times.
Any Work Product disclosed by Employee within one (1) year following the
termination of employment from the Company shall be deemed to be owned by the
Company under the terms of this Agreement, unless proved by the Employee to have
been conceived after such termination.
SECTION 6.
RESTRICTIVE COVENANTS
6.1 Restrictive Covenants. Employee acknowledges that in order to
effectuate the promise to hold Confidential Information in trust for the
Company, it is necessary to enter into the following restrictive covenants.
Without the prior written consent of the Company, Employee shall not, during
employment at the Company or for a period of one (1) year following the
termination of employment:
a. Solicit, induce or attempt to solicit or induce, on behalf of
herself or any other person or entity, any employee of the
Company to terminate their employment with the Company;
b. Solicit business from, attempt to do business with, or do
business with any person or entity that was a customer/client
of the Company during Employee's employment with the Company,
if such business is in the scope of services or products
provided by the Company. The geographic area for
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purposes of this restriction is the area where the
customer/client is located and/or does business.
For a period of ninety (90) days following termination of
employment, Employee shall not:
c. Engage in or performed services for a competing business. For
purposes of this Agreement, "Competing Business" is one whose
primary business is the sale of nutritional supplements or
which provides the same or substantially similar products and
services as those provided by the Company during Employee's
employment, including but not limited to providers of
nutritional supplements. The geographic area for purposes of
this restriction is the area(s) within a 50 mile radius of any
Company office in existence during Employee's employment with
the Company; or
d. Have any indirect or direct financial interest in a competing
business; provided, however, that the ownership by Employee of
any stock listed on any national securities exchange of any
corporation conducting a competing business shall not be
deemed a violation of this Agreement if the aggregate amount
of such stock owned by Employee does not exceed one percent
(1%) of the total outstanding stock of such corporation.
6.2 The foregoing covenants not to compete shall not be held invalid or
unenforceable because of the scope or the territory or actions subject thereto
or restricted thereby, or the period of time within which such Agreement is
operative; but award or decree in arbitration or any judgment of a court of
competent jurisdiction, as the case may be, may define the maximum territory and
actions subject thereto and restricted by this Article 6 and the period of time
during which the Agreement is enforceable. Any alleged breach of other
provisions of this Agreement asserted by the Employee shall not be a defense for
the Employee to claims arising from Company's enforcement of the provisions of
this paragraph. Should the Employee violate the non-competition covenants of
this Article 6, then the period of time for these covenants shall automatically
be extended for the period of time from which the Employee began such violation
until the Employee permanently ceases such violation.
SECTION 7.
REMEDIES
7.1 Remedies. In the event of a breach of this Agreement by Employee, the
Company shall be entitled to all appropriate equitable and legal relief,
including, but not limited to: (a) injunction to enforce this Agreement or
prevent conduct in violation of this Agreement; (b) damages incurred by the
Company as a result of the breach; and (c) attorneys' fees and costs incurred by
the Company in enforcing the terms of this Agreement. Additionally, any period
or periods of breach of
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paragraph 6 of this Agreement shall not count toward the one (1) year
restriction, but shall instead be added to the one (1) year restrictive period.
SECTION 8.
REPRESENTATION BY EMPLOYEE
8.1 Representation by Employee. Employee hereby represents and warrants to
the Company that the execution of this Agreement by Employee and Employee's
performance of her duties hereunder will not conflict with, cause a default
under, or give any party a right to damages under any other agreement to which
Employee is a party or is bound.
SECTION 9.
GENERAL
9.1 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Texas or, at the Company's sole option, by the laws of
the state or states where this Agreement may be at issue in any litigation
involving the Company. Venue of any litigation arising from this Agreement shall
be in a court of competent jurisdiction in Dallas County, Texas.
9.2 Binding Effect. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit and be enforceable by the
respective heirs, representatives, successors (including any successor as a
result of a merger or similar reorganization) and assigns of the parties hereto,
except that the duties and responsibilities of the Employee hereunder are of a
personal nature and shall not be assignable in whole or in part by the Employee,
and the Company may not assign its rights, duties, or responsibilities without
the consent of the Employee. This Agreement is subject to the approval of the
Company's Board of Directors and its Compensation and Option Committees,
respectively.
9.3 Notices. All notices required to be given under this Agreement shall
be in writing and shall be deemed to have been given and received when
personally delivered, or when mailed by registered or certified mail, postage
prepaid, return receipt requested, or when sent by overnight delivery service,
addressed as follows:
If to the Employee: Xxxxxxx Xxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
If to the Employer: Xxxxxx X. Xxxxx
Chief Executive Officer
Mannatech Incorporated
000 X. Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
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Such addresses may be changed from time to time by written notice to the other
party.
9.4 Entire Agreement; Modification. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all other agreements (oral or written) with respect to the subject
matter hereof. This Agreement may not be modified or amended in any way except
in writing by the parties hereto.
9.5 Duration. Notwithstanding the termination of Employee's employment by
the Company, this Agreement shall continue to bind the parties for so long as
any obligations remain under the terms of this Agreement.
9.6 Waiver. No waiver of any breach of this Agreement shall be construed
to be a waiver as to succeeding breaches.
9.7 Severability. In the event any court of competent jurisdiction holds
any provision of this Agreement to be invalid, the remaining provisions shall
not be affected or invalidated and shall remain in full force and effect.
9.8 Subsidiaries. Wherever the term Company is referred to in this
Agreement, it shall include all subsidiaries of the Company even where the term
"subsidiaries" is not explicitly stated in connection with such reference, as
such subsidiaries may exist from time to time.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed this Agreement as of the day and year first written above.
EMPLOYEE:
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Date: September 14, 2001
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MANNATECH, INCORPORATED
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
Date: September 14, 2001
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