THIS EMPLOYMENT AGREEMENT (as the same may be modified, amended,
supplemented and/or restated from time to time, this "Agreement"), dated as of
April 1, 1997 (the "As of Date"), is made and entered into by and between
Natural Health Trends Corp., a Florida corporation (the "Company"), and Robert
C. Bruce (the "Executive").
Background
The Company wishes to employ the Executive and the Executive wishes to
be employed by the Company, on the terms and conditions set forth below in this
Agreement.
Prior to the effective date of this Agreement (as specified in Section
2 below), the Executive had been employed by Global Health Alternatives, Inc., a
Delaware corporation ("GHA"). The terms and conditions such employment were
governed by that certain Employment Agreement, dated as of October 15, 1996 (the
"GHA Employment Agreement"), by and between GHA and the Executive.
The Company and GHA are entering into an Amended and Restated Agreement
and Plan of Reorganization, dated as of July 23, 1997 (the "Acquisition
Agreement"), among the Company, the stockholders of GHA and GHA, providing for
(among other things) the assignment and transfer by the stockholders of GHA of
all or substantially all of the common stock of GHA to the Company (the
"Acquisition Transaction"). This Agreement is being executed and delivered by
the Company in partial satisfaction of the condition set forth in Section
6.02(k) of the Acquisition Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
and the covenants and agreements herein contained, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1. Employment and Duties. (A) Subject to the terms hereof, the Company
hereby employs the Executive with the titles Senior Vice President, Chief
Financial Officer and Treasurer of the Company (and/or such other title(s) as
the Company and Executive shall mutually agree) and in such other capacities
with or for the Company and/or subsidiaries or affiliates of the Company
("Affiliated Companies") as the Company or its Board of Directors, Chairman or
President shall designate. The Executive hereby: (i) accepts such employment,
(ii) undertakes the responsibilities of such office(s), (iii) as such, agrees to
perform such duties and responsibilities with respect to the Company and other
Affiliated Companies as are set forth in Annex 1 attached hereto and made part
hereof (and/or such other duties and responsibilities consistent with the duties
set forth on Annex 1 as the Company or its Board of Directors, Chairman and or
President shall reasonably require of the Executive) (the "Assigned Duties"),
and (iv) agrees to devote substantially his entire professional time, attention
and energies to the performance of the Assigned Duties to the best of his
ability.
(B) The Executive shall work at offices of the Company located
in or near (from and after no later than October 31, 1997) Pompano Beach,
Florida and (prior thereto) Portland, Maine (as the case may be, the "Home
Area"). However, (i) during the period that the Home Area is Portland, Maine,
the Executive shall travel to and work at the offices of the Company located in
or near Pompano Beach, Florida on and as needed basis (but no less frequently
than monthly), and (ii) throughout the term of this Agreement, the Executive
shall also render services at such other place or places within or without the
United States as the Board of Directors may direct from time to time, subject to
Section 7; provided that the Company shall employ its reasonable efforts to
restrict
the time the Executive shall render such services away from the Home Area to not
more than 20 business days per calendar quarter.
2. Term. The effectiveness of this Agreement shall commence
automatically on July, 1997 (being the date of the consummation of the
Acquisition Transaction; hereinafter, the "Effective Date") and, unless earlier
terminated pursuant to Section 8, shall continue in effect until March 31, 2000
(being the date that is three years after the As of Date) (the "Term").
3. Compensation. During the Term of this Agreement, the Executive's
compensation under this Agreement shall be as follows:
(A) Base Salary. Executive shall be paid a base salary ("Base
Salary") at a rate of: (i) for the portion of the Term ending on March 31, 1998
(the "Initial Period"), $120,000 per annum; (ii) for the twelve-month period
ending on March 31, 1999 (the "Second Period"), $135,000 per annum; and (iii)
for the twelve-month period ending on March 31, 2000 (the "Third Period"),
$150,000 per annum. The Base Salary shall be paid by the Company in installments
in accordance with the Company's normal payment schedule for its senior
management, but no less frequently than monthly except that the Base Salary
payable for the period between the As Of Date and the Effective Date shall be
paid promptly by GHA after the Effective Date, in a single lump sum. All
payments hereunder shall be subject to the deduction of payroll taxes and
similar assessments as required by law.
(B) Bonus. With respect to the Initial Period, the Executive
shall be entitled to a cash bonus of $20,000, payable within fifteen days of the
Executive's having completed the move of his residence from in or near Portland,
Maine to a commutable distance from Pompano Beach, Florida (the "Executive's
Move"); provided that this Agreement shall not have been terminated for Cause
(as defined in Section 8 hereof) or by the resignation of the Executive prior to
such move-date (or the following two-week period). In addition, if during the
Second Period or Third Period the performance criteria set forth in Annex 2
attached hereto are achieved, then the Executive shall be entitled to receive a
cash bonus in an amount equal to $25,000 (in respect of the Second Period) or
$30,000 (in respect of the Third Period within 30 days of the end of the
respective period; provided that this Agreement shall not have been terminated
for Cause or by the resignation of the Executive prior to the end-date of such
Second Period or Third Period (respectively). If this Agreement shall be
terminated by the Company without Cause or if the Executive terminates this
Agreement for Good Reason (as defined in Section 8 hereof) prior to: (i) the
Executive's Move or the payable date of the Executive's bonus hereunder with
respect to the Initial Period, the Executive shall nevertheless be entitled to
the full amount of such bonus, or (ii) the end-date of Second Period or Third
Period, then, subject to the subsequent achievement of the performance criteria
set forth in Annex 2 attached hereto, the Executive shall be entitled to a
portion of the bonus payable hereunder for such period, pro rated for the number
of full months that this Agreement was in force during the period with respect
to which such bonus is calculated.
(C) Executive's Move. As compensation for the expense of
and personal dislocation arising out of the Executive's Move, the Executive
shall be entitled to receive a cash
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payment of the greater of: (i) $10,000, and (ii) the lesser of (x) $15,000 and
(y) the actual expenses incurred by the Executive in connection with the
Executive's Move. Such payment shall be made promptly after the submission by
the Executive to the Company of the appropriate documentation establishing such
expenses of the Executive.
(D) Options. Concurrent with the execution hereof, the
Executive is entering into a Stock Option Agreement with the Company, pursuant
to which the Executive is being granted the right to purchase 300,000 shares of
the Company's Common Stock over 3 years.
4. Company Car. The Executive shall have the use of a suitable
executive company car (i) which either (x) will be owned or leased and paid for
by the Company or an Affiliated Company, or (y) for which the Executive will be
paid a sufficient car allowance and (ii) as to which the Company will reimburse
the Executive for insurance, maintenance, registration, excise taxes and
business-related gas consumption. The Executive shall keep a detailed mileage
log for his company car. Company agrees that Executive's current GHA company car
is a "suitable executive company car".
5. Executive Plans. The Executive (together with his spouse and minor
children) shall be covered at the Company's expense by any and all of the
Company's United States group health, dental, life and disability insurance
plans made available to senior executives of the Company in the United States
generally. The Executive shall also be eligible to participate, to the same
extent as other senior executives, in any and all of the Company's other
executive profit sharing or bonus plans available to senior executives of the
Company in the United States generally.
6. Vacation. The Executive shall be entitled to take four weeks
of paid vacation during each year of this Agreement. Accrued but unused vacation
shall be carried over only in accordance with the Company's standard policies.
7. Expense Reimbursement. In addition to the compensation and benefits
provided in Sections 3, 4, 5 and 6 hereof, the Company or an Affiliated Company
shall, upon receipt of appropriate documentation, reimburse Executive for his
reasonable travel, lodging, entertainment, professional promotion and other
ordinary and necessary business expenses incurred in the course of his duties on
behalf of the Company or any Affiliated Company.
8. Termination of Employment. (A) The Company may terminate the
Executive's employment by the Company (and any Affiliated Company) and this
Agreement: (i) by giving the Executive written notice of such termination at
least 30 days in advance, and (ii) at any time for Cause.
(B) The Executive's employment hereunder and this Agreement
shall terminate immediately upon his death or disability. For purposes of this
Section 8(B), Executive shall be deemed to be "disabled" if, on account of
illness or other incapacity, he has been unable to perform his duties for 90
consecutive days and, in the good faith judgment of the Company's Board of
Directors or its Chairman or President, he shall be unable to perform his duties
hereunder for a period of six consecutive months. The Company shall continue to
pay the Executive his Base Salary and other employment benefits hereunder prior
to the termination by the Board of Directors pursuant to this Section 8(B), even
though Executive is disabled during that 90 day period of time.
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(C) The Executive may terminate the Executive's employment by
the Company (and any Affiliated Company) and this Agreement for Good Reason,
after giving the Company written notice of the basis for such termination and
the Company's failure to cure such condition after 30 days opportunity to do so.
(D) This Agreement may be terminated with the mutual consent
of the parties hereto, and shall terminate at the end of the Term.
(E) If the Executive's employment hereunder is terminated by
the Company without Cause pursuant to the foregoing Section 8(A)(i) or by the
Executive for Good Reason as provided in the foregoing Section 8(C), the Company
shall, within 30 days after the effective date of such termination make a cash
payment equal to the Executive's Base Salary for a period of time equal to the
lesser of (x) the remaining Term of this Agreement and (y) one year, but in no
event less than six (6) months.
(F) If the Executive's employment hereunder and/or this
Agreement is terminated for any reason, then all rights and obligations of the
parties hereunder shall terminate automatically thereupon, except (i) as to any
right which the Executive's estate or dependents may have under "COBRA" or any
other federal or state law, (ii) as to any Base Salary or other compensation
earned by him prior to such termination, or (iii) to the extent otherwise
specifically set forth herein (including under the foregoing Section 8(E)).
(G) For purposes of this Agreement, the terms:
"Cause" means, when used in connection with the
termination of the Executive's employment with the Company and/or this
Agreement (or the right to effect such termination): (i) the Executive's
continuing inattention to, or neglect of, his Assigned Duties, which
inattention or neglect is not the result of illness or accident, (ii) any other
material breach by the Executive of this Agreement uncured for five (5)
business days, (iii) any willful disloyalty to, misappropriation from or
embezzlement of, the Company or any Affiliated Company on the part of the
Executive, (iv) the commission by the Executive of any crime involving moral
turpitude or any felony (whether or not involving moral turpitude), (v) any
habitual drug, alcohol or other substance abuse on the part of the Executive,
and/or (vi) the participation by the Executive in any fraud (whether or not
directed at the Company or any Affiliated Company).
"Good Reason" means, when used in connection with the
termination of the Executive's employment with the Company and/or this
Agreement (or the right to effect such termination) any of the following events
occurring (x) within six months prior to such termination and (y) without the
prior written consent of Executive: (i) the assignment to the Executive
of any duties materially inconsistent with his position as an officer of the
Company or with the Assigned Duties, except in connection with the termination
of the Executive's employment by the Company for Cause; (ii) any reduction by
the Company of the Executive's Base Salary or a material reduction in other
benefits provided for hereunder taken as a whole (except to the extent such
benefits are no longer generally available to members of management of the
Company), except in connection with the termination of such Executive's
employment by the Company for Cause (it being understood that failure to
receive bonus or other incentive payments at the same level as in prior years
or periods due
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to the failure to achieve in such later year or period specified performance
criteria shall not be deemed to be a reduction in benefits hereunder), or (iii)
any other material breach by the Company of this Agreement. It is hereby
expressly acknowledged that the foregoing definition of "Good Reason" shall be
effective solely for purposes of this Agreement and shall not be applicable to
any other agreement or understanding between Executive and the Company. "Good
Reason" shall not include a change in the title of the office or offices held by
Executive as long as the Assigned Duties associated with such office(s) are not
materially altered.
9. Covenant Not to Compete. (A) The Executive agrees that for
a period commencing on the date hereof and ending two years after the
termination of this Agreement and/or his employment by the Company and any
Affiliated Company, he will not, directly or indirectly: (i) unless such
termination was without Cause or Good Reason, engage in, or be employed or
retained by, give advice to, be a proprietor, principal, agent, representative,
officer, director, partner or significant shareholder of, or otherwise be
associated with or render assistance to, any business or enterprise that engages
in any business at the time of such termination being engaged in by the Company
or any Affiliated Company (the "Restricted Business"); (ii) interfere with or
disrupt any actual or imminent business relationship between the Company or any
Affiliated Company, on the one hand, and any of their respective (including
prospective) customers or suppliers, on the other; or (iii) solicit for
employment, attempt to employ or assist any other person or entity in employing
or soliciting for employment, any employee or executive who is at the time
employed by the Company or any Affiliated Company.
(B) Although the Executive acknowledges that the restrictions
contained in Section 9(A) are fair and reasonable under the circumstances, it is
recognized that restrictions of the nature contained in such Section may fail
for technical reasons, and, accordingly, if any of such restrictions shall be
adjudged to be void or unenforceable for whatever reason, but would be valid if
part of the wording thereof were deleted, or the period thereof reduced or the
area dealt with thereby reduced in scope, the restrictions contained in Section
9(A) shall apply, at the election of the Company, with such modifications as may
be necessary to make them valid, effective and enforceable in the particular
jurisdiction in which such restrictions are adjudged to be void or
unenforceable.
10. Confidentiality. Without the specific prior written consent of the
Company, the Executive shall not, directly or indirectly, at any time after the
date hereof (including after the termination of this Agreement and/or his
employment by the Company and any Affiliated Company), divulge to any person or
entity, or use for his own direct or indirect benefit, any information
confidential and/or proprietary to the Company or any Affiliated Company
concerning their respective business, affairs, products, services, assets,
services, liabilities, revenues, condition (financial or otherwise), or
prospects, customers or suppliers, including, without limitation, any data or
statistical information of or with respect to the Company or any Affiliated
Company, whether created or developed by the Company or any Affiliated Company
or on its or his behalf, or with respect to which the Executive may have
knowledge or access, it being the intent of the parties hereto to restrict the
Executive from disseminating or using any such information of or with respect to
the Company or any Affiliated Company which is at the time of such use or
dissemination unpublished and not readily available or generally known to the
public or in the Company's or any Affiliated Company's trade; provided that
nothing in this Section 10 shall prohibit such disclosure within the scope of
the Executive's employment or in the best interest of the Company.
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11. Amendment and Waivers. This Agreement may be amended, and
compliance with any of the terms and provisions hereof may be waived, only by a
written document signed by both parties hereto. No waiver of any condition,
obligation or term hereof shall constitute a waiver of any other or a waiver of
a subsequent right to demand strict compliance with all conditions, obligations
and terms hereof.
12. Governing Law; Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (other than the
choice of law principles thereof). Any claim, action, suit or other proceeding
initiated by either party hereto under or in connection with this Agreement
shall (to the exclusion of other forums) be asserted, brought, prosecuted and
maintained in an arbitration proceeding held in the City of Pompano Beach,
Florida in accordance with the rules of the American Arbitration Association,
and both of the parties hereto hereby irrevocably (a) submit to the jurisdiction
of any arbitration tribunal established in accordance with the foregoing, (b)
waive any and all rights to object to the laying of venue before such tribunal
in such location, (c) waive any and all rights to claim that any such tribunal
in such location may be an inconvenient forum, and (d) agree that service of
process on them in any such arbitration proceeding may be effected by the means
by which notices may be given to it under this Agreement. The parties hereto
hereby further agree that an arbitration tribunal established in accordance with
the foregoing shall have the power to issue an injunction or mandatory relief
order, and the parties will be bound by any resulting arbitration ruling or
order.
13. Attorneys' Fees. In the event any party finds it necessary to bring
an action at law or other proceedings against the other party to enforce any of
the terms hereof, the party prevailing in any such action or other proceeding
shall be paid by the other party its reasonable attorneys' fees as well as court
costs.
14. Severability. Should any provision hereof be deemed, for any
reason whatsoever, to be invalid or inoperative, that provision shall be deemed
severable and shall not affect the force and validity of all other provisions of
this Agreement.
15. Survival. All provisions which may reasonably be interpreted or
construed to survive the expiration or termination of this Agreement shall
survive the expiration or termination of this Agreement. Without limiting the
generality of the foregoing, Sections 9 and 10 shall survive the termination of
the Executive's employment by the Company and any Affiliated Company and this
Agreement, in accordance with their terms.
16. Notices. All notices, offers, acceptances, requests and other
communications under or pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered, one
day after being sent by recognized overnight courier or three days after being
sent by United States mail, certified or registered mail, with postage prepaid,
to the other party at such party's address set forth below:
If to Executive: Robert C. Bruce
58 Kenwood Street
Portland, ME 04102
Office: (207) 774-0150
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If to the Company: Natural Health Trends Corp.
2001 West Sample Road
Pompano Beach, Florida 33064
Attention: Chairman
Fax: (954) 969-9747
Tel: (954) 969-9771
Any party may change his or its address set forth in this Section, by written
notification to the other party hereto. Promptly after the Executive's Move, the
Executive shall, by written notification to the Company, advise the Company of
his new address for notices, offers, acceptances, requests and other
communications under or pursuant to the terms of this Agreement.
17. Successors. This Agreement, including the documents and
instruments referred to herein, shall inure to the benefit of and be binding
upon and enforceable against the respective heirs, legal representatives,
successors, and permitted assigns of the parties hereto.
18. Delegation of Duties. The Executive may not delegate or assign any
of his duties or obligations hereunder. With the exception of an assignment to
any acquiror in connection with (i) a merger or consolidation of the Company, or
(ii) a sale or exchange of all or substantially all of the property or assets of
the Company, the Company shall have no right to assign this Agreement without
the Executive's prior written consent (which consent shall not be unreasonably
withheld or delayed).
19. Remedies. (A) The remedies of each of the parties hereunder shall
be cumulative and not exclusive. However, no party shall be obligated to the
other for punitive or other forms of speculative or expectancy damages. In
addition to any and all such other remedies, the provisions of this Agreement
requiring the performance of an affirmative act by a party or requiring a party
to refrain from the performance of specific act, shall be enforceable by
injunctive proceeding or by a suit for specific performance.
(B) Without limiting the generality of the foregoing Section
19(A), the Executive acknowledges that any violation or threatened violation of
Section 9 or 10 hereof will cause irreparable injury to the Company and that the
remedy at law for any such violation or threatened violation will be inadequate.
The Executive therefore agrees that the Company shall be entitled to temporary
and permanent injunctive relief for any such violation or threatened violation
without the necessity of proving (i) that the Company will be irreparably
injured thereby, (ii) that the remedy at law for such violation or threatened
violation is inadequate or (iii) actual damages.
20. Effectiveness. Notwithstanding anything to the contrary set forth
herein, this Agreement has force and effect only from and after the Effective
Date. The Company and Executive hereby acknowledge and agree that this Agreement
is intended to supersede and replace the GHA Employment Agreement, and therefore
from and after the Effective Date, the GHA Employment Agreement is and shall be
terminated and no longer of any force and effect. The foregoing provisions of
this Section 20 are for the benefit of, and may be enforced by GHA (in addition
to the Company and the Executive).
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21. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior arrangements or understandings with respect thereto between
the parties hereto, which arrangements or understandings are merged herein.
[(The remainder of this page is intentionally left blank)]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
The Company:
NATURAL HEALTH TRENDS CORP.
By:
Name:
Title:
The Executive:
By:
Name: Robert C. Bruce
Title:
Acknowledged and Agreed
as to Section 3A:
GLOBAL HEALTH ALTERNATIVES, INC.
By:
Sir Brian Wolfson
President
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Annex 1
(to Employment Agreement)
Assigned Duties
o Senior Vice President, Chief Financial Officer and Treasurer of the
Company reporting directly to the President, CEO and Chairman (whether
such offices are held by the same or different persons).
o Serve as member of the Company's senior management team, including
development of strategic plans and financing strategies (Company-wide,
and for the individual Global Health and non-Global Health business
segments).
o Responsible for all corporate fiscal planning (Company-wide, and for
the individual Global Health and non-Global Health business segments).
o Oversee all financial accounting and reporting functions for Company
financial statements. Assure financial control and accountability.
Monitor and maintain sound internal control structure.
o Lead financial performance and budget compliance processes. Assure
timely and accurate financial reporting and budgetary analysis to
management, the Directors and outside parties.
o Responsible for supervision of accounting personnel and the
development and monitoring of all required training.
o With assistance of Company's tax, legal and audit advisors, insure
compliance with IRS regulations and all domestic and international tax
filings.
o Oversee the financial position and performance of any subsidiaries or
other operations and provide oversight of the subsidiaries' and other
operations' or accounting functions.
o Evaluate potential acquisition targets, and participate as a key
member of the Company's acquisition team.
o Analyze existing business operations (for the Global Health and
non-Global Health business segments) and identify potential improvement
strategies.
o Undertake such special projects reasonably consistent with the duties
enumerated above for the Company or any of its Affiliated Companies.
Annex 2
(to Employment Agreement)
Performance Criteria
Satisfactory accomplishment of the Executive's Assigned Duties during the
employment period in question, as determined in the sole discretion of the Board
of Directors of the Company or the Compensation Committee thereof (which
discretion may be delegated to the Chairman of the Company.