Exhibit 10.1
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of January 29, 1998 by and
between REXALL SUNDOWN, INC., a Florida corporation (the "Company"), and JOHN
PRIDDY (the "Employee").
R E C I T A L S
The Company desires to employ the Employee, and the Employee desires to
be employed by the Company, in accordance with the provisions contained in this
Employment Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of each of the Company and the Employee contained in
this Agreement, each of the Company and the Employee agrees as follows:
I. EMPLOYMENT
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1.1 The Company employs the Employee and the Employee accepts such
employment. Subject to the direction of the Board of Directors of the Company,
the Employee shall serve as the Vice President of the Company and President of
Richardson Labs, Inc. The Employee shall have such responsibilities, perform
such duties and exercise such power and authority as are inherent in, or
incident to, such offices. The Employee shall devote his full business time and
attention and his best efforts to the performance of his duties as an employee
of the Company. The foregoing however shall not preclude the Employee from
engaging in appropriate civil, religious or charitable activities or from
devoting a reasonable amount of time to private investments that do not
interfere or conflict with his responsibilities to the Company.
1.2 During the Term, the Employee, if elected, shall serve as a
Director of the Company and/or a Director or officer of any subsidiary of the
Company without any additional compensation for such services other than the
compensation provided for hereunder.
II. TERM
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2.1 Subject to the provisions of Article 5 hereof, the term of this
Agreement shall be for the period commencing on January 29, 1998, and
terminating on January 28, 2001 (the "Term"). The Term shall be a continuous
three (3) year period such that on each Anniversary Date (as hereinafter
defined), one (1) additional year shall automatically be added to the Term. Not
later than ninety (90) days prior to any Anniversary Date, either party may
provide written notice to the other of its intention not to extend the Term of
this Agreement beyond the number of years then remaining in the Term. Such
written notice shall be deemed proper notice to terminate this Agreement at the
end of the three (3) year Term then in effect. It is the intention of the
parties that the Term of each Anniversary Date automatically shall be three (3)
years, unless such notice shall have been properly given. The "Anniversary Date"
as used herein shall
be the first day of the second year of the Term and the anniversary of such date
in each subsequent year."
III. COMPENSATION
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3.1 Salary. In payment for the obligations to be performed by the
Employee during the Term, the Company shall pay to the Employee (subject to any
applicable payroll and/or taxes required to be withheld) annual compensation
("Annual Compensation") equal to (i) a salary of Two Hundred Fifty Thousand
Dollars ($250,000.00) in cash for the year commencing January 29, 1998; (ii) a
salary of Two Hundred Seventy Five Thousand Dollars ($275,000.00) in cash for
the term commencing January 29, 1999 and (iii) for each succeeding year during
the Term, a salary equal to that of the previous year increased by the greater
of (A) 5% or (B) the increase in the cost of living based upon the Revised
Consumer Price Index (1982-84=100) published by the Bureau of Labor Statistics
of the United States Department of Labor for Boise, Idaho utilizing April 1995
as the base month, or such other higher amount as the Company may determine from
time to time.
3.2 Payment of Salary. Payments of salary shall be made to the
Employee in installments from time to time on the same dates that payments of
salary are generally made to all senior management employees of the Company.
3.3 Incentive Compensation. The Company shall pay the Employee
an incentive compensation bonus in an amount up to forty-three and three
quarters percent (43.75%) of Employee's Annual Compensation for each of the
Company's fiscal years during the Term hereof pursuant to the Company's
Management Incentive Plan in force from time to time. Such incentive
compensation shall be paid within 60 days of each fiscal year end. Any
termination under Section 5.5(b) of this Agreement prior to any fiscal year end,
shall entitle Employee to a prorated amount of such incentive compensation
earned through the date of any such termination.
IV. CERTAIN FRINGE BENEFITS
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4.1 Generally. The Employee shall be entitled to reimbursement
for reasonable business expenses incurred in connection with his employment
including customer entertainment. The Company shall provide the Employee with an
automobile allowance or an automobile of the type currently provided to senior
executives of the Company at the Company's expense and the Company shall provide
at its expense insurance, gas and maintenance for such automobile. The Company
will also provide the Employee with a car or cellular telephone and a company
credit card for business travel and entertainment. The Employee shall further be
entitled to receive such benefits and to participate in such benefit plans as
are generally provided from time to time by the Company to its senior management
employees; provided, however, that nothing contained in this Section 4.1 shall
be construed to obligate the Company to provide any specific benefits to its
employees generally.
4.2 Vacations. The Employee shall be entitled to such vacation
time on an annual basis as is provided in accordance with the policies as are
from time to time in force for the Company's employees, but in no event shall
such vacation time be less than four (4) weeks per year. As provided in Article
5, upon termination of this Agreement, the Employee shall be paid for all
accrued vacation time received and not taken prior to his termination date up to
a maximum of the amount of vacation time accrued in the last year of employment.
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V. TERMINATION OF EMPLOYMENT
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5.1 Certain Definitions. The following terms shall have the
following respective meanings when utilized in this Agreement:
(a) "Acquisition of Control" shall mean:
(i) any person (including a Group), without
the approval of a majority of the Incumbent Directors, becoming the Beneficial
Owner of, or acquiring the power to direct the exercise of voting power with
respect to, directly or indirectly, securities which represent thirty percent
(30%) or more of the combined voting power of the Company's outstanding
securities thereafter, whether or not some portion of such securities was owned
by such person (or by any member of such Group) prior thereto; provided,
however, that this provision shall not apply to acquisitions by a director,
executive officer or their affiliates if such person had such status on January
29, 1998; or
(ii) the Incumbent Directors cease at any
time to constitute a majority of the Board of Directors, whether of (A) the
Company or (B) after any cash tender offer or exchange offer, merger,
consolidation or other business combination, recapitalization of the Company,
sale, liquidation or dissolution (or adoption of a plan for liquidation or
dissolution), or any combination of any or all of the foregoing transactions,
including but not limited to a series of such transactions, any successor to the
Company; provided, however, an Acquisition of Control shall not be deemed to
have occurred with respect to the Employee if the action of the Employee was
voluntary and would have been sufficient, without the action of others, to
constitute an Acquisition of Control.
(b) "Beneficial Owner" shall have the meaning
provided in Section 607.0901(1)(e) of the Florida Statutes.
(c) "Cause" shall mean any action by the Employee or
any inaction by the Employee which is reasonably believed by the Company to
constitute:
(i) fraud, embezzlement, misappropriation,
dishonesty or breach of trust;
(ii) a felony or moral turpitude;
(iii) material breach or violation of any or
all of the covenants, agreements and obligations of the Employee set forth in
this Agreement, other than as the result of the Employee's death or Disability;
(iv) a willful or knowing failure or refusal
by the Employee to perform any or all of his material duties and
responsibilities as an officer of the Company, other than as the result of the
Employee's death or Disability; or
(v) gross negligence by the Employee in the
performance of any or all of his material duties and responsibilities as an
officer of the Company, other than as the result of the Employee's death or
Disability; provided, however, that if the basis for any
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termination of the Employee's employment by the Company as set forth in the
Termination Notice delivered by the Company to the Employee is any or all of the
definitions of Cause set forth in Section 5.1(c)(iii), Section 5.1.(c)(iv) or
Section 5.1 (i)(v) of this Agreement, then, in such event, the Employee shall
have thirty (30) days from and after the date of his receipt of such Termination
Notice to cure the action or inaction specified therein to the reasonable
satisfaction of the Company.
(d) "Compensation" shall mean the cash
payment to which Employee is entitled under the provisions of Sections 3.1 and
3.3 hereof and the accrued vacation payment to which the Employee is entitled
under the provisions of Section 4.2 hereof.
(e) "Disability" shall mean any mental or physical
illness, condition, disability or incapacity which prevents the Employee from
reasonably discharging his duties and responsibilities as an officer of the
Company. If any disagreement or dispute shall arise between the Company and the
Employee as to whether the Employee suffers from any Disability, then, in any
such event, the Employee shall submit to the physical or mental examination of a
physician licensed under the laws of the State of Florida, who shall be mutually
selected by the Company and the Employee, and such physician shall make the
determination of whether the Employee suffers from any Disability. In the
absence of fraud or bad faith, the determination of such physician shall be
final and binding upon each of the Company and the Employee. The entire cost of
any such examination shall be borne solely by the Employee.
(f) "Group" shall mean any combination of persons
knowingly participating in a joint activity or interdependent consciously
parallel action toward a common goal, whether or not pursuant to an express
contract; provided, however, that actions taken by a director of the Company
acting as such shall not alone constitute membership in a Group.
(g) "Incumbent Director" shall mean any director of
the Company serving at April 1, 1995 or one elected thereafter if nominated or
approved by at least two-thirds of the then Incumbent Directors.
(h) "Protracted Disability" shall mean any Disability
which prevents the Employee from reasonably discharging his duties and
responsibilities as an officer of the Company for a period of six (6)
consecutive months.
(i) "Termination Date" shall mean a specific date not
less than ten (10) nor more than thirty (30) days from and after the date of any
Termination Notice upon which the Employee's employment by the Company shall be
terminated in accordance with the provisions of this Agreement.
(j) "Termination Notice" shall mean a written notice
which (i) sets forth the specific provision of this Agreement relied upon to
terminate the Employee's employment by the Company, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide the basis for
the termination of the Employee's employment by the Company pursuant to the
specific provision of this Agreement relied upon therein and (iii) sets forth a
Termination Date.
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5.2 Termination of Employment.
(a) Notwithstanding the provisions of Article 2
hereof, this Agreement (i) shall be automatically terminated upon the death of
the Employee pursuant to the provisions of Section 5.3 hereof, (ii) may be
terminated at any time by the Company pursuant to the provisions of Section 5.4
or 5.5 hereof and (iii) may be terminated by the Employee pursuant to the
provisions of Section 5.6 hereof.
(b) If either the Company or the Employee shall
desire to terminate the Employee's employment by the Company pursuant to any of
the provisions of Sections 5.4, 5.5 or 5.6 hereof, then the party causing any
such termination shall give to the other party a Termination Notice.
(c) If this Agreement shall be terminated pursuant to
any of the provisions of this Article 5, the Company shall be discharged from
all of its obligations to the Employee hereunder upon its payment to the
Employee of the required amount set forth in the section of this Article 5
pursuant to which such termination shall occur.
5.3 Death of Employee. If at any time during the Term the
Employee shall die, then the employment of the Employee by the Company shall
automatically terminate on the date of the Employee's death. In such event, not
more than thirty (30) days from and after the date of the Employee's death, the
Company shall pay to the Employee's estate or heirs, as the case may be, an
amount in cash equal to the Employee's Compensation (subject to any applicable
payroll and/or other taxes required by law to be withheld) determined as of the
date of the Employee's death.
5.4 Disability of Employee.
(a) If at any time during the Term the Employee shall
suffer any Disability, then the Company shall be obligated to continue to pay in
the ordinary and normal course of its business to the Employee or his legal
representatives, as the case may be, the Employee's Compensation (subject to any
applicable payroll and/or other taxes required by law to be withheld) from the
date that the Employee shall first suffer any such Disability to the date that
the Employee's employment by the Company shall be terminated pursuant to any of
the provisions of this Agreement.
(b) If the Employee shall suffer any Protracted
Disability during the Term, then the Company may terminate this Agreement. In
such event, in addition to any other benefits which may have been provided by
the Company to the Employee or his legal representatives, as the case may be,
pursuant to the provisions of Section 5.4(a) hereof, not later than thirty (30)
days after the Termination Date specified in the Termination Notice, the Company
shall pay to the Employee or his legal representatives, as the case may be, an
amount in cash equal to the Employee's Compensation (subject to any applicable
payroll and/or other taxes required by law to be withheld) determined as of the
Termination Date. Subsequent to such Termination Date, the Employee or his legal
representatives, as the case may be, shall also be entitled to receive any
benefits which may be payable under any disability insurance policy or
disability plan provided by the Company.
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5.5 Termination of Employment by Company.
(a) The Company may terminate this Agreement at any
time with Cause and Employee may terminate this Agreement at any time for any
reason. In such event, the Company shall be obligated to continue to pay in the
ordinary and normal course of its business to the Employee his Compensation
(subject to any applicable payroll and/or other taxes required by law to be
withheld) until the Termination Date.
(b) The Company may terminate this Agreement at any
time without Cause. If the Company shall terminate the employment of the
Employee by the Company without Cause, and not pursuant to any other provision
of this Agreement, the Company shall continue to pay to the Employee the
Employee's Compensation (subject to any applicable payroll and/or other taxes
required by law to be withheld) for the balance of the Term as provided for in
Section 3.2 hereof if the balance of the Term is greater than one (1) year, and
if the balance of the Term is less than one (1) year, such Compensation shall be
paid for one (1) year from the Termination Date as provided above. If the
Employee is terminated without cause, the provisions of Section 6.1(b) hereof
shall be of no further force and effect. The Company shall be deemed to have
terminated the Agreement without cause if it (i) materially reduces the salary
and benefits of Employee; (ii) materially changes Employee's responsibilities or
(iv) requires Employee to relocate.
5.6 Change in Control. Notwithstanding any other provisions of
Sections 5.1 through 5.5 hereof, if (i) there is an Acquisition of Control and,
(ii) at any time within three (3) months prior to such Acquisition of Control or
at any time within one (1) year thereafter, either (A) the Employee for any
reason terminates his employment with the Company, or (B) the Employee's
employment is terminated without Cause, then the Employee shall have the option,
but not the obligation, of being paid in cash an amount equal to three (3) times
his Compensation for the then current fiscal year of the Company (amounts due
under this Section 5.6 are referred to as the "Payment"). If the Employee opts
to receive the Payment under this Section 5.6, whether his employment is
terminated by the Company or by himself, the provisions of Section 6.1(b) hereof
shall be of no further force or effect. Subject to the provisions of Section 5.7
hereof, the Payment shall be made not later than three (3) months after the
Employee gives notice to the Company in the form of a Termination Notice of his
election under this Section 5.6.
5.7 Payments. Notwithstanding anything in the foregoing to the
contrary, if any of the payments provided for in this Agreement, together with
any other payments which the Employee has the right to receive from the Company,
would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the
Internal Revenue Code), the payments pursuant to this Agreement shall be reduced
to the largest amount as will result in no portion of such payments being
subject to the excise tax imposed in Section 4999 of the Internal Revenue Code;
provided, however, that the Employee shall have the absolute discretion to
direct the Company to pay any amount which shall be payable to him pursuant to
Section 5.6 hereof in such equal annual installments as the Employee may direct,
with the first such installment payable when such amount would otherwise have
been payable; and further provided that the Employee shall have the absolute
discretion to allocate any reductions required by this Section 5.7 from amounts
due him under Section 5.6 hereof. The Company shall be obligated to comply with
any directions given to it by the Employee pursuant to the preceding sentence.
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5.8 No Mitigation. The Employees shall not be required to
mitigate the amount of any payment or benefit contemplated by this Section 5 nor
shall any payment or benefit be reduced by any earnings or benefits the Employee
may receive from any other source.
VI. CERTAIN RESTRICTIONS ON THE EMPLOYEE
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6.1 Certain Restrictions. The Employee covenants and agrees
with the Company as follows:
(a) He shall not during the term of this Agreement,
and for a period equal to three (3) years from and after the date of termination
of this Agreement if such termination occurs within five (5) years of the date
hereof, and for a period of two (2) years from and after the date of termination
of this Agreement if such Termination occurs after five (5) years from the date
hereof, directly and indirectly, for himself or any other person, firm,
corporation, partnership, association or other entity which competes in any
manner with the Company or any of its subsidiaries or affiliates in the United
States of America or its territories or possessions (collectively, the
"Territory"), attempt to employ, employ or enter into any contractual
arrangement for employment with, any employee or former employee of the Company
or any of its subsidiaries or affiliates, unless such former employee shall not
have been employed by the Company or any of its subsidiaries or affiliates for a
period of at least one year.
(b) He shall not, during the term of this Agreement,
and for a period equal to three (3) years from and after the date of termination
of this Agreement if such termination occurs within five (5) years of the date
hereof, and for a period of two (2) years from and after the date of termination
of this Agreement if such Termination occurs after five (5) years from the date
hereof, (i) acquire or own in any manner any interest in, or loan any amount to,
any person, firm, partnership, corporation, association or other entity which
competes in any manner with the Company or any of its subsidiaries or affiliates
in the Territory, (ii) be employed by or serve as an employee, agent, officer,
director of, or as a consultant to, any person, firm, partnership, corporation,
association or other entity, other than the Company and its subsidiaries and
affiliates, which competes in any manner with any of the Company or its
subsidiaries or affiliates in the Territory, or (iii) compete in any manner with
the Company or its subsidiaries or affiliates in the Territory. The foregoing
provisions of this Section 6.1(b) shall not prevent the Employee from acquiring
or owning not more than five percent (5%) of the equity securities of any entity
whose securities are listed for trading on a national securities exchange or are
regularly traded in the over-the-counter securities market.
(c) He shall not (except as appropriate in the
performance of his duties hereunder), at any time disclose, directly or
indirectly, to any person, firm, corporation, partnership, association or other
entity, any confidential information relating to the Company or any of its
subsidiaries or affiliates, including, without limitation, any information
concerning the financial condition, assets, personnel, procedures, techniques,
products, customers, sources of leads and methods of obtaining new business or
the methods generally of doing and operating the respective businesses of the
Company and its subsidiaries and affiliates, trade secrets, product ideas,
processes, techniques, formulas, know-how, marketing plans and strategies,
except to the extent that such information is a matter of public knowledge, is
required to be disclosed by law or judicial or administrative process, or is
required to be disclosed.
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(d) He shall return all Company documents to the
Company at upon the termination of his employment by the Company.
(e) For purposes of Sections 6.1(a) and (b) hereof
"competes in any manner with the Company or any of its subsidiaries or
affiliates" shall relate to (i) all of the Company's businesses as conducted on
the date hereof and (ii) all of Richardson Labs, Inc. or its successor's
businesses on the date hereof and all of its businesses as conducted after the
date hereof through the date of the termination of the Employee's employment
hereunder.
6.2 Injunction. It is recognized and acknowledged by each of
the Company and the Employee that a breach or violation by the Employee of any
or all of his covenants and agreements contained in Section 6.1 hereof will
cause irreparable harm and damage to the Company and its subsidiaries and
affiliates in a monetary amount which would be virtually impossible to
ascertain. As a result, the Employee recognizes and acknowledges that the
Company and its subsidiaries and affiliates shall be entitled to a temporary
restraining order and/or injunction from any court of competent jurisdiction
enjoining and restraining any breach or violation by the Employee and/or his
affiliates, employees, associates, partners or agents, either directly or
indirectly, of any or all of the Employee's covenants and agreements contained
in Section 6.1 hereof. Such right to a temporary restraining order and/or
injunction shall be cumulative and in addition to whatever other rights or
remedies the Company and its subsidiaries and affiliates may possess hereunder,
at law or in equity. Nothing contained in this Agreement shall be construed to
prevent the Company and its subsidiaries and affiliates from seeking and
recovering from the Employee damages suffered by any or all of them as a result
of any breach or violation by the Employee and/or his affiliates, employees,
associates, partners or agents of any or all of the Employee's covenants and
agreements contained in this Agreement.
6.3 Reduction in Scope. In the event that any of the covenants
and agreements of the Employee contained in Section 6.1 hereof shall be held
invalid or unenforceable by a court of competent jurisdiction because of its
duration or geographic area, then, in any such event, such covenant or agreement
shall be reduced by such court in duration or geographical area or both to such
extent as to make it valid and enforceable in the jurisdiction where such court
is located, and in all other respects it shall remain in full force and effect.
VII. ATTORNEYS' FEES
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7.1 Prevailing Party. If any litigation shall arise between
the Company and the Employee based, in whole or in part, upon this Agreement or
any or all of the provisions contained herein, the prevailing party in any such
litigation shall be entitled to recover from the non-prevailing party, and shall
be awarded by a court of competent jurisdiction, any and all reasonable fees and
disbursements of trial and appellate counsel paid, incurred or suffered by such
prevailing party as the result of, arising from, or in connection with, any such
litigation.
VIII. MISCELLANEOUS
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8.1 No Set-Off. The Company shall have no rights whatsoever to
set-off, off set or make any deductions from any amount payable to Employee
under this Agreement.
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8.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without
application of any conflicts of laws principles. The Employee agrees that any
litigation or action directly or indirectly connected with this Agreement,
shall, be subject to binding arbitration administered by the American
Arbitration Association.
8.3 Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Employee with respect to the subject
matter hereof and supersedes all prior negotiations, agreements, understandings
and arrangements, both oral and written, between the Company and the Employee
with respect to such subject matter other than agreements relating to option
plans or indemnification agreements. This Agreement may not be modified in any
way, except by a written instrument executed by each of the Company and the
Employee.
8.4 Notices. Any and all notices required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given when delivered by hand, sent by a recognized overnight carrier such
as Federal Express or when deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, as follows:
If to the Company: Rexall Sundown, Inc.
851 Broken Sound Parkway, N.W.
Boca Raton, FL 33487
Attn: Richard Werber
If to the Employee: John Priddy
Richardson Labs, Inc.
3475 Commercial Court
Meridian, ID 83642
or to such other address as either party may from time to time give written
notice of to the other.
8.5 Benefits; Binding Effect. This Agreement shall be for the
benefit of, and shall be binding upon, each of the Company and the Employee and
their respective heirs, personal representatives, legal representatives,
successors and assigns.
8.6 Severability. The invalidity of any one or more of the
words, phrases, sentences, clauses or sections contained in this Agreement shall
not affect the enforceability of the remaining portions of this Agreement or any
part hereof, all of which are inserted conditionally on their being valid in
law. Except as is otherwise provided in Section 6.3 hereof, if any one or more
of the words, phrases, sentences, clauses or sections contained in this
Agreement shall be declared invalid by a court of competent jurisdiction, then,
in any such event, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, clause or clauses, or section
or sections had not been inserted.
8.7 Waivers. The waiver by either party of a breach or
violation of any term or provision of this Agreement by the other party shall
not operate nor be construed as a waiver of any subsequent breach or violation
of any provision of this Agreement nor of any other right or remedy.
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8.8 Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of any or all of the provisions of this Agreement.
8.9 Counterparts. This Agreement may be executed in any number
of counterparts and by the separate parties hereto in separate counterparts,
each of which shall be deemed to constitute an original and all of which shall
be deemed to be the one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed and
delivered this Agreement as of January 29, 1998.
REXALL SUNDOWN, INC.
By: /s/ Carl DeSantis
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Carl DeSantis, Chairman of the Board
/s/ John Priddy
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JOHN PRIDDY
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