EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of April 23, 1998,
between GLOBAL HEALTH SCIENCES, INC., a Delaware corporation (the "Company"),
and XXXXXXX X. XXXXXXX (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company is engaged in the business of manufacturing
dietary and nutritional supplements in the United States and throughout the
world (the "Business"); and
WHEREAS, the Company desires to retain the services of the Executive
in the capacity of Chairman of the Board of Directors and President of the
Company, and the Executive desires to provide such services in such capacity to
the Company, on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and obligations hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. Employment and Term.
(a) The Company hereby employs the Executive, and the Executive
hereby accepts employment by the Company, in the capacities and on the terms and
subject to the conditions set forth herein from April 23, 1998 until April 23,
2003 (the "Term of Employment"). At least ninety (90) days prior to the
expiration of the Term of Employment, the Company shall notify the Executive if,
and under what terms and conditions, the Company will offer to extend the Term
of Employment.
2. Duties. During the Term of Employment, the Executive shall serve
as the Company's Chairman of the Board of Directors and President. In addition,
while it is understood that the right to elect directors of the Company is by
law vested in the shareholders of the Company, it is nevertheless contemplated,
subject to such right, that the Executive shall, at all times during the Term of
Employment, be a member of the Board of Directors of the Company (and act as
Chairman thereof). The Executive shall serve the Company faithfully and to the
best of his ability in such capacities and shall devote substantially all of his
business time, attention, knowledge, energy and skills to such employment. If
elected, the Executive also shall serve during any part of the Term of
Employment as any other officer of the Company or as an officer or director of
any of the Company's subsidiaries without any additional compensation other than
as specified in this Agreement.
3. Compensation and Benefits. As full and complete compensation to
the Executive for his execution and delivery of this Agreement and performance
of the services required hereunder, the Company shall pay, grant or provide the
Executive, and the Executive agrees to accept, the following salary and other
compensation and benefits:
(a) an annual base salary, payable in accordance with the Company's
standard payroll practices for senior executive officers, of $2,000,000 per
annum ("Base Salary");
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(b) an annual bonus, determined by the Board of Directors of the
Company, payable with respect to each full fiscal year of the Company during the
Term of Employment in which the total EBITDA (i.e., net income before interest
income (expense), income taxes and depreciation and amortization) of the Company
(on a consolidated basis) exceeds $50,000,000, provided, however, that the
amount of such annual bonus shall not exceed 15% of the amount by which the
Company's EBITDA in such fiscal year exceeds $50,000,000;
(c) an annual automobile allowance to allow Executive to maintain an
automobile comparable to his present automobile during the Term of Employment;
(d) the right to participate in any savings and stock option plans
or programs and in any medical, dental, disability, retirement, insurance,
savings, vacation, holiday, paid sick leave or other plans as in effect from
time to time for the benefit of the Company's senior executive officers;
(e) the right to participate in any long-term incentive program as
in effect from time to time for the benefit of senior executive officers
implemented by the Company or any of its subsidiaries;
(f) prompt reimbursement for all reasonable business-related
expenses incurred by the Executive, in accordance with the policies and
procedures of the Company as in effect from time to time for senior executive
officers; and
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(g) paid vacation in accordance with the policies and procedures of
the Company as in effect from time to time for senior executive officers.
4. Termination.
(a) Death. In the event of the death of the Executive during the
Term of Employment, this Agreement shall automatically terminate and the Company
shall have no further obligations hereunder, except to pay the Executive's
beneficiary or legal representative the Base Salary prorated to the date of
death.
(b) Cause. The Company shall have the right, upon written notice to
the Executive, to terminate the Executive's employment under this Agreement for
Cause (as hereinafter defined), effective upon the giving of such notice (or
such later date as shall be specified in such notice), and the Company shall
have no further obligations hereunder, except to pay the Executive his Base
Salary prorated to the effective date of termination, and the Executive shall
continue to have the obligations provided for in Sections 6 and 7 hereof.
For purposes of this Agreement, "Cause" means:
(i) fraud, embezzlement, gross insubordination on the part of
the Executive or any act of moral turpitude or misconduct by the Executive;
(ii) conviction of or the entry of a plea of nolo contendere
by the Executive for any felony; or
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(iii) a material breach of, or the willful failure or refusal
by the Executive to perform and discharge, his duties, responsibilities or
obligations under this Agreement.
(c) Change of Control. The Executive shall have the right to
terminate his employment under this Agreement upon a Change of Control (as
hereinafter defined) upon at least three months' prior written notice thereof to
the Company given within 30 days of the first occurrence of any event
constituting a Change of Control, in which case the Executive's employment under
this Agreement shall terminate on the date specified in such notice. In the
event of any termination of employment by the Executive upon a Change of
Control, the Executive shall have no further obligations under this Agreement
other than the obligations provided for in Sections 6 and 7 hereof. The failure
by the Executive to give such written notice in such 30-day period shall
preclude the Executive from terminating his employment upon a Change of Control
with respect to such occurrence. In the event of any termination of employment
by the Executive upon a Change of Control, the Company shall have no further
obligations hereunder, except to pay the Executive (i) his Base Salary prorated
to the effective date of termination, (ii) one year severance pay equal to his
annual Base Salary and (iii) if such termination occurs after Executive has
received an annual bonus pursuant to the terms hereof, an additional payment
equal to his most recently received annual bonus prorated to the effective date
of termination. It is understood and agreed that, during the three-month period
following the
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Executive's delivery of notice of termination to the Company upon a Change of
Control, the Executive shall cooperate fully with the Company to effect the
orderly transfer of the Executive's duties to another person or persons.
Notwithstanding anything to the contrary contained herein, upon receipt of the
Executive's notice of termination upon a Change of Control, the Company shall
have the right to cause the Executive's termination to become effective prior to
the end of the three-month period or the date specified in the notice therefor
by giving at least two business days' notice thereof to the Executive.
For purposes of this Agreement, a "Change of Control" means the
occurrence of any one of the following events: (a) a change in control of the
direction and administration of the Company's business of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof and any successor provision of
the regulations under the Exchange Act, (b) the approval by the Board of
Directors of a sale of all or substantially all of the assets of the Company to
any unrelated third party and the consummation of such transaction or (c) the
consummation of any merger, consolidation, or like business combination or
reorganization of the Company, approved by the Board of Directors of the
Company, which would result in the occurrence of an event described in clause
(a) above or a change in the Board of Directors so that during any period of two
(2) consecutive years, the individuals who at the beginning of such
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period constitute the Board of Directors or any individuals who would be
"Continuing Directors" (as hereinafter defined) cease for any reason to
constitute at least a majority thereof.
For purposes of this Agreement, "Continuing Directors" shall mean
the directors of the Company in office on the date hereof and any successor to
any such director and any additional director who, after the date hereof (i) was
nominated or selected by a majority of the Continuing Directors in office at the
time of his nomination or selection and (ii) is not an "affiliate" or
"associate" (as defined in Regulation 12B under the Exchange Act) at the time of
his nomination or selection of any person who is the beneficial owner, directly
or indirectly, of securities representing ten percent (10%) or more of the
combined voting power of the Company's outstanding securities then entitled
ordinarily to vote for the election of directors.
5. Resignation upon Termination. Upon the termination of the
Executive's employment hereunder for any reason the Executive agrees that he
shall immediately resign from all offices and directorships held by him in the
Company or any of its subsidiaries or affiliates and agrees to execute any and
all documents reasonably necessary to effect such resignations as requested by
the Company.
6. Confidentiality; Ownership of Developments.
(a) During the Term of Employment and for any time thereafter, the
Executive shall keep secret and retain in strictest confidence and not divulge,
disclose,
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discuss, copy or otherwise use or suffer to be used in any manner, except in
connection with the Business of the Company and of any of the subsidiaries or
affiliates of the Company, any trade secrets, confidential or proprietary
information and all other knowledge, know-how, information, documents or
materials owned, developed or possessed by the Company or any of the
subsidiaries or affiliates of the Company, whether in tangible or intangible
form, pertaining to the Business of the Company or any of the subsidiaries or
affiliates of the Company, or authorize or assist in the taking of any such
actions by any third party.
(b) The Executive acknowledges that all developments, including,
without limitation, formulas, inventions (patentable or otherwise), discoveries,
improvements, patents, trade secrets, designs, reports, computer software, flow
charts and diagrams, procedures, data, documentation, ideas and writings and
applications thereof relating to the Business or planned business of the Company
or any of the subsidiaries or affiliates of the Company that, alone or jointly
with others, the Executive may conceive, create, make, develop, reduce to
practice or acquire during the Term of Employment (collectively, the
"Developments") are works made for hire and shall remain the sole and exclusive
property of the Company and the Executive hereby assigns to the Company all of
his right, title and interest in and to all such Developments.
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(c) The provisions of this Section 6 shall, without any limitation
as to time, survive the expiration or termination of the Executive's employment
hereunder, irrespective of the reason for any termination.
7. Covenant Not to Compete. The Executive agrees that during the
Term of Employment and for a period of one year commencing upon the expiration
or termination of the Executive's employment hereunder, the Executive shall not,
directly or indirectly, without the prior written consent of the Company:
(a) solicit, entice, persuade or induce any employee, consultant,
agent or independent contractor of the Company or of any of the subsidiaries or
affiliates of the Company to terminate his or her employment or engagement with
the Company or such subsidiary or affiliate, to become employed by any person,
firm or corporation other than the Company or such subsidiary or affiliate or
approach any such employee, consultant, agent or independent contractor for any
of the foregoing purposes; or
(b) directly or indirectly own, manage, control, invest or
participate in any way in, consult with, be employed by, or render services for
(whether as a director, consultant or otherwise) any person or entity (other
than the Company or any of the subsidiaries or affiliates of the Company)
engaged in the business of manufacturing or distributing dietary and nutritional
supplements; provided, however, that nothing in this Section 7(b) shall prevent
Executive from engaging in any such activity that exists as of the date hereof
with such person or entity or otherwise
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investing in, consulting with or rendering services for any person or entity in
the ordinary course of the Company's business.
8. Specific Performance. The Executive acknowledges that the
services to be rendered by the Executive are of a special, unique and
extraordinary character and, in connection with such services, the Executive
will have access to confidential information vital to the Company's Business and
the subsidiaries and affiliates of the Company. By reason of this, the Executive
consents and agrees that if the Executive violates any of the provisions of
Sections 6 or 7 hereof, the Company and the subsidiaries and affiliates of the
Company would sustain irreparable injury and that monetary damages will not
provide adequate remedy to the Company and that the Company shall be entitled to
have Sections 6 or 7 specifically enforced by any court having equity
jurisdiction. Nothing contained herein shall be construed as prohibiting the
Company or any of the subsidiaries or affiliates of the Company from pursuing
any other remedies available to it for such breach or threatened breach,
including the recovery of damages from the Executive.
9. Entire Agreement. This Agreement embodies the entire agreement of
the parties with respect to the Executive's employment and supersedes any other
prior oral or written agreements, arrangements or understandings between the
Executive and the Company. This Agreement may not be changed or terminated
orally but only by an agreement in writing signed by the parties hereto.
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10. Governing Law; Jurisdiction. (a) This Agreement shall be subject
to, and governed by, the laws of the State of California applicable to contracts
made and to be performed therein.
(b) Any action to enforce any of the provisions of this Agreement
shall be brought in a court of the State of California located in Los Angeles
County or in a Federal court located in Los Angeles, California. The parties
consent to the jurisdiction of such courts and to the service of process in any
manner provided by Ohio law. Each party irrevocably waives any objection which
it may now or hereafter have to the venue of any such suit, action or proceeding
brought in such court.
(c) The prevailing party in any action to enforce any of the
provisions of this Agreement shall be entitled to reimbursement from the other
party for its or his costs and expenses (including attorneys fees and expenses)
incurred in connection with such action.
11. Assignability. The obligations of the Executive may not be
delegated and the Executive may not, without the Company's written consent
thereto, assign, transfer, convey, pledge, encumber, hypothecate or otherwise
dispose of this Agreement or any interest herein. Any such attempted delegation
or disposition shall be null and void and without effect. The Company and the
Executive agree that this Agreement and all of the Company's rights and
obligations hereunder may be
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assigned or transferred by the Company to any subsidiary or successor to the
Company.
12. Severability. If any provision of this Agreement or any part
thereof, including, without limitation, Sections 6 and 7, as applied to either
party or to any circumstances shall be adjudged by a court of competent
jurisdiction to be void or unenforceable, the same shall in no way affect any
other provision of this Agreement or remaining part thereof, which shall be
given full effect without regard to the invalid or unenforceable part thereof,
or the validity or enforceability of this Agreement.
If any court construes any of the provisions of Section 6 or 7, or
any part thereof, to be unreasonable because of the duration of such provision
or the geographic scope thereof, such court may reduce the duration or restrict
or redefine the geographic scope of such provision and enforce such provision as
so reduced, restricted or redefined.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
GLOBAL HEALTH SCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
XXXXXXX X. XXXXXXX
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