AMENDED AND RESTATED
JOSEPH Y. CHANG
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of April 1, 2000, between
PHARMANEX, INC., a Delaware corporation ("Company"), and JOSEPH Y. CHANG
("Executive").
WHEREAS, the Company is a wholly owned subsidiary of Nu Skin Enterprises,
Inc. ("Parent");
WHEREAS, the Executive has been employed by the Company in a senior
management position pursuant to the terms of an Employment Agreement dated
October 5, 1998, as amended (the "Original Employment Agreement");
WHEREAS, the Company wishes to have Executive accept new responsibilities,
and Executive wishes to accept those new responsibilities;
WHEREAS, the Company and Executive wish to amend and restate the terms of
the Original Employment Agreement,
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EFFECTIVENESS OF AGREEMENT
1.1. General. This Agreement shall become effective as of the date
hereof and shall replace in its entirety the Original Employment Agreement,
recognizing the effectiveness of the Original Employment Agreement from the
date of its execution until the date hereof.
2. EMPLOYMENT AND DUTIES
2.1. General. The Company hereby employs the Executive, and the
Executive agrees to serve, as President of the Company, upon the terms and
conditions herein contained. In such capacity, Executive shall report
directly to the Chief Executive Officer of the Parent. The Executive shall
perform such other duties and services for the Company and the Parent as
may be reasonably designated from time to time by the Parent and as are
consistent with Executive's title. The Executive agrees to serve the
Company faithfully and to the best of his ability under the direction of
the Parent.
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2.2. Exclusive Services. Except as may otherwise be approved in
advance by the Board of Directors of the Company ("Board"), and except
during vacation periods and reasonable periods of absence due to sickness,
personal injury or other disability, the Executive shall devote his full
working time throughout the Employment Term (as defined below) to the
services required of him hereunder. The Executive shall render his services
exclusively to the Company during the Employment Term, and shall use his
best efforts, judgment and energy to improve and advance the business and
interests of the Company in a manner consistent with the duties of his
position. Executive may participate in charitable and philanthropic
activities so long as they don't interfere with his duties hereunder.
2.3. Term of Employment. The Executive's employment under this
Agreement shall commence as of the effective date hereof and shall
terminate on the earlier of (a) December 31, 2004, or (b) the termination
of the Executive's employment pursuant to this Agreement. The period
commencing as of the Effective Time and ending on December 31, 2004 or such
earlier date on which Executive's employment with the Company terminates,
is hereinafter referred to as the "Employment Term". Executive may
terminate his employment with the Company at any time and for any reason
upon twelve (12) months prior written notice to the Company.
2.4. Reimbursement of Expenses. The Company shall reimburse the
Executive for reasonable travel and other business expenses incurred by him
in the fulfillment of his duties hereunder upon presentation by the
Executive of an itemized account of such expenditures, in accordance with
the Parent's policies and procedures.
2.5. Termination of Prior Agreements. Executive agrees and
acknowledges that, upon the effective date hereof, all prior employment
agreements, compensation and incentive arrangements and rights to acquire
equity of the Company are cancelled in their entirety and are of no further
force or effect.
3. SALARY
3.1. Base Salary. From the date hereof, the Executive shall be
entitled to receive a base salary ("Base Salary") at a rate of $245,000 per
annum, payable twice monthly in arrears in equal installments in accordance
with the Parent's payroll practices. In the event Executive relocates his
household to either the San Francisco or the Provo areas, the Company will
augment Executive's Base Salary by $30,000 per annum.
3.2. Annual Review. The Executive's Base Salary shall be reviewed for
potential increase by the Parent, based upon the Executive's performance,
not less often than annually. Any positive adjustments in Base Salary
effected as a result of such review shall be made by the Parent in its sole
discretion; provided, however, that during the Employment Term only, the
Executive shall receive a minimum increase of ten percent (10%) per annum.
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3.3. Cash Incentives. During his employment under this Agreement,
Executive shall be entitled to participate in the Company's standard cash
incentive plan ("Cash Incentive Plan") at the same level as other
Presidents of Parent's divisions. In addition, Executive shall participate
in a cash bonus program designed to incent the development of successful
products within the Parent's Pharmanex division (the "Product Development
Bonus Plan"). Provided Executive is continuously employed by the Company or
by Parent, the Company will pay a cash bonus of .5% of gross product
revenue to Executive and Dr. Michael Chang (in equal allocations) for (a)
any products not yet offered by the Company that generate at least $20
million of global, annual sales, and (b) any products not yet offered by
the Company but based largely on product ingredients that the Company has
already developed, such as the primary ingredients found in CordyMax,
Tegreen or Gingko, provided that such products generate global sales in
excess of $25 million, and (c) reformulated versions of LifePak, provided
that the bonus shall only be paid on LifePak sales in excess of $175
million per year. Payments under the Product Development Bonus Plan will be
calculated and paid within sixty (60) days of the end of each calendar year
and will be capped at no more than $1 million per year. Bonus payments paid
pursuant to the Product Development Bonus Plan will be subtracted from
bonuses otherwise payable pursuant to the Cash Incentive Plan.
4. LONG-TERM INCENTIVE COMPENSATION.
The Company will provide the Executive with the following long-term
incentive compensation arrangement in accordance with the terms of Parent's
1996 Incentive Stock Option Plan ("Stock Option Plan").
(a) As soon as practicable after the date hereof, Parent will grant
the Executive nonqualified stock options to acquire 150,000 shares of
Parent common stock ("Shares") with an exercise price equal to $8.00 per
share (the "Series A Options").
(b) Provided the Executive is continuously employed by the Company or
Parent after the date hereof and until the vesting date, the Series A
Options shall vest and become exercisable as follows: 33,333 of the Series
A Options will vest as of October 16, 1999, October 16, 2000 and October
16, 2001; 25,000 of the Series A Options will vest on October 16, 2002,
with the remaining 25,000 Series A Options vesting on October 16, 2004.
(c) In addition, Parent will grant the Executive nonqualified stock
options to acquire 25,000 Shares with an exercise price equal to $12.94 per
share (the "Series B Options"). Provided the Executive is continuously
employed by the Company or the Parent after the date hereof and until the
vesting date, the Series B Options will vest and become exercisable in four
equal installments of 6,250 Series B Options on August 31, 2000, 2001, 2002
and 2003.
(d) In addition, Executive will be entitled to participate in the
annual, standard employee and executive stock incentive plan at a rate of
no less than 25,000 options per
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year, on the same terms and conditions as other employees of Parent. In
addition, the options to acquire Shares that Executive received at the time
the Company was acquired by Parent, based on previously issued and
outstanding options issued by the Company or its parent prior to Parent's
acquisition of the Company shall be fully vested and exercisable as of the
date hereof.
(e) Notwithstanding the foregoing, upon the occurrence of a change of
control of the Parent (as defined in the Stock Option Plan) or in the event
Parent engages in a transaction that effectively works to eliminate the
possibility of trading publicly Parent's securities, all unvested Series A
and Series B Options, and any other options issued by Parent to Executive,
will become immediately vested and exercisable; provided the Executive is
employed by the Company or an affiliate on such date.
(f ) Unless the Company determines otherwise, the Executive shall
forfeit all outstanding stock options, whether or not vested, if the
Executive's employment with the Company or any of its affiliates is
terminated for Cause or, if following termination of the Executive's
employment with the Company or any of its affiliates for any other reason,
the Company determines that, during the period of the Executive's
employment, circumstances existed which would have entitled the Company or
any such affiliate to terminate the Executive's employment for Cause and
the Company notifies Executive of such determination in writing no later
than ninety (90) days after termination of Executive's employment with the
Company.
(g) In connection with the grant of any options, the Company and the
Executive shall enter into an award document which shall set forth the term
of the options, the procedures for exercising the options and such other
terms as the Company may determine, in its reasonable discretion, are
necessary and appropriate; provided, however, that notwithstanding the
foregoing the options shall have the longest term permissible under the
Stock Option Plan.
5. EMPLOYEE BENEFITS
The Executive shall, during his employment under this Agreement, be
included to the extent eligible thereunder in all employee benefit plans,
programs or arrangements (including, without limitation, any plans,
programs or arrangements providing for retirement benefits, profit sharing,
disability benefits, health and life insurance, or vacation and paid
holidays) that shall be established or adopted by the Company or the Parent
for, or made available to, the Company's or the Parent's senior executives.
In addition, the Company shall furnish the Executive with the following
benefits during his employment under this Agreement:
(a) Executive shall continue to be entitled to receive relocation and
housing assistance on the terms previously agreed upon and set forth
in a letter agreement dated _________________, 2000; and
(b) Four (4) weeks vacation per annum.
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6. TERMINATION OF EMPLOYMENT
6.1. Termination Without Cause.
6.1.1. General. Subject to the provisions of Sections 6.1.3 and 6.1.4,
if, prior to the expiration of the Employment Term, the Executive's
employment is terminated by the Company without Cause (as defined below),
the Company shall continue to pay the Executive the Base Salary (at the
rate in effect on the date of such termination) for twelve (12) months
(such period being referred to hereinafter as the "Severance Period"), at
such intervals as the same would have been paid had the Executive remained
in the active service of the Company. The Executive shall have no further
right to receive any other compensation or benefits after such termination
or resignation of employment, except as determined in accordance with the
terms of the employee benefit plans or programs of the Company or as
provided in this Agreement. In addition, the Executive may, but only within
twelve (12) months after he ceases to be an employee, exercise his Options
to the extent they have vested. To the extent that the Executive is not
otherwise entitled to exercise the Options at the date of such termination,
or if he fails to exercise the Options within the time specified in the
preceding sentence, such Options will terminate.
6.1.2 To the extent that any of the Options would have vested at the
end of the fiscal year in which Executive is terminated under Section 4 of
this Agreement but for the termination of the Executive without Cause, then
notwithstanding Section 6.1.1 hereof, such Options shall vest when the
necessary calculations under Section 4 have been completed, and Executive
shall have twelve (12) months from such determination date to exercise the
Options. The Company shall notify Executive within ten days after the
necessary calculations under Section 4 have been completed (which
calculations shall be made no later than ninety (90) days after the fiscal
year in question) as to whether any of the Options have vested. This
provision shall survive termination of the Agreement.
6.1.3. Conditions Applicable to the Severance Period. If, during the
Severance Period, the Executive breaches any of his obligations under
Section 8, the Company may, upon written notice to the Executive, terminate
the Severance Period and cease to make any further payments or provide any
benefits described in Section 6.1.1.
6.1.4. Death During Severance Period. In the event of the Executive's
death during the Severance Period, payments of Base Salary under Section
6.1.1 shall continue to be made during the remainder of the Severance
Period to the beneficiary designated in writing for this purpose by the
Executive or, if no such beneficiary is specifically designated, to the
Executive's estate.
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6.1.5. Date of Termination. The date of termination of employment
without Cause shall be the date specified in a written notice of
termination to the Executive as the last day of the Executive's employment.
6.1.6. Constructive Termination. The term "Constructive Termination"
means:
(a) the continued assignment to Executive of any duties or the
continued material reduction in Executive's duties, either
of which is materially inconsistent with Executive's
position with the Company, for thirty (30) calendar days
after Executive's delivery of written notice to the Company
objecting to such assignment or reduction; or
(b) the relocation of the principal place for the rendering of
Executive's services hereunder to a location more than
thirty (30) miles from the Company's business offices in the
San Francisco Area; or
(c) a material reduction in compensation and benefits under this
Agreement, which remains in effect for thirty (30) calendar
days after Executive delivers written notice to the company
of such material reduction.
None of the foregoing will constitute a Constructive Termination to
the extent mutually agreed upon in advance of the occurrence thereof by the
Executive and the Company. A Constructive Termination will be treated as a
termination of the Executive by the Company without Cause.
6.2. Termination for Cause; Resignation.
6.2.1. General. If, prior to the expiration of the Employment Term,
the Executive's employment is terminated by the Company for Cause, or the
Executive resigns from his employment hereunder, the Executive shall be
entitled only to payment of his Base Salary as then in effect through and
including the date of termination or resignation. In the event the
Executive resigns Executive may, but only within twelve (12) months after
he ceases to be an employee, exercise his Options to the extent they have
vested. The Executive shall have no further right to receive any other
compensation or benefits after such termination or resignation of
employment, except as determined in accordance with the terms of the
employee benefit plans or programs of the Company or as provided in this
Agreement.
6.2.2. Date of Termination. The date of termination for Cause shall be
the date specified in a written notice of termination to the Executive as
the last day of the Executive's employment. The date of resignation shall
be the date specified in the written notice of resignation from the
Executive to the Company as the last day of the Executive's employment, or
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if no date is specified therein, twelve (12) months after receipt by the
Company of written notice of resignation from the Executive.
6.3. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because of:
(a) any act or omission that constitutes a material breach by the
Executive of any of his obligations under this Agreement, which breach is
materially injurious to the Company;
(b) the willful and continued failure or refusal of the Executive to
substantially perform the duties required of him in his position with the
Company, which failure is not cured within twenty (20) days following
written notice of such failure;
(c) any willful violation by the Executive of any material law or
regulation applicable to the business of the Company or any of its
subsidiaries or affiliates, or the Executive's conviction of, or a plea of
nolo contendre to, a felony, or any willful perpetration by the Executive
of a common law fraud; or
(d) any other willful misconduct by the Executive that is materially
injurious to the financial condition or business reputation of, or is
otherwise materially injurious to, the Company or any of its subsidiaries
or affiliates.
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7. DEATH OR DISABILITY
In the event of termination of employment by reason of death or
Disability (as hereinafter defined), the Executive (or his estate, as
applicable) shall be entitled to Base Salary through the date of
termination. Other benefits shall be determined in accordance with the
terms of the benefit plans maintained by the Company, and the Company shall
have no further obligation hereunder. In addition, the Executive (or his
estate or the person or persons to whom the Options may have been
transferred by will or by the laws of decent and distribution, as
applicable) may, but only within twelve months after Executive ceases to be
an employee, exercise Executive's Options to the extent Executive was
entitled to exercise such Options on the date of his death or on the date
he is terminated by the Company by reason of Disability (all of which shall
be terminations without Cause). To the extent that the Executive was not
otherwise entitled to exercise the Options on such date, or if he (or his
estate or the person or persons to whom the Options may have been
transferred by will or by the laws of decent and distribution, as
applicable) fails to exercise the Options within the time specified in the
preceding sentence, such Options will terminate. For purposes of this
Agreement, "Disability" means a physical or mental disability or infirmity
of the Executive, as determined by a physician of recognized standing
selected by the Company, that prevents (or, in the opinion of such
physician, is reasonably expected to prevent) the normal performance of his
duties as an employee of the Company for any continuous period of 180 days,
or for 180 days during any one 12-month period.
8. CONFIDENTIALITY; NONCOMPETITION; NONSOLICITATION
8.1. Key-Employee Covenants. The Executive agrees to perform
his obligations and duties and to be bound by the terms of the Key-Employee
Covenants attached hereto as Appendix B which are incorporated by reference and
which shall be in force unless otherwise expressly modified by this Agreement.
(a) Executive agrees that the period of non-competition set forth in
Section 8 of the Key-Employee Covenants is lengthened from six months to
one year. The Company, or the Parent may extend the period of
non-competition set forth in Section 8 of the Key-Employee Covenants for up
to an additional two (2) years thereafter, provided that (i) where
Executive has either voluntarily resigned his employment with the Company
or his employment is terminated for Cause, within thirty (30) days of the
termination of the applicable non-competition period the Company or the
Parent notifies the Executive in writing that it wishes to so extend the
period of non-competition for an additional one-year period, (ii) where
Executive's employment with the Company is terminated without Cause or as a
result of the expiration of the term of this Agreement (where Executive
does not continue in the employ of the Company), the Company notifies the
Executive in writing within sixty (60) days of the termination of
Executive's employment hereunder, that it wishes to so extend the period of
non-competition and specifies therein whether such extension shall be for a
one (1) or two (2) year period, and
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(iii) the Company pays Executive for each year that it decides to extend
the period of non-competition an amount equal to fifty percent (50%) of
Executive's most recent Base Salary, which amount shall be payable by the
Company twice monthly over the period in question.
8.2. Certain Remedies. Without intending to limit the remedies
available to the Company, the Executive agrees that a breach of any of the
covenants contained in the Key-Employee Covenants may result in material
and irreparable injury to the Company or its subsidiaries or affiliates for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such
a breach or threat thereof, the Company shall be entitled to seek a
temporary restraining order or a preliminary or permanent injunction, or
both, without bond or other security, restraining the Executive from
engaging in activities prohibited by the Key-Employee Covenants or such
other relief as may be required specifically to enforce any of the
covenants in the Key-Employee Covenants. Such injunctive relief in any
court shall be available to the Company in lieu of, or prior to or pending
determination in, any arbitration proceeding.
9. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement that cannot be mutually resolved by the parties hereto shall be
settled exclusively by arbitration pursuant to the rules of the American
Arbitration Association in Salt Lake City, Utah before three arbitrators of
exemplary qualifications and stature. Each party hereto shall choose an
independent arbitrator meeting such qualifications within ten (10) business
days after demand for arbitration is made and such independent arbitrators
shall mutually agree as to the third arbitrator meeting such qualifications
within twenty (20) business days after demand for arbitration is made. If
such arbitrators cannot come to an agreement as to the third arbitrator by
such date, the American Arbitration Association shall appoint the third
arbitrator in accordance with its rules and the qualification requirements
set forth in this section. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. The parties hereby agree that the
arbitrators shall be empowered to enter an equitable decree mandating
specific enforcement of the terms of this Agreement. The party that
prevails in any arbitration hereunder shall be reimbursed by the other
party hereto for any reasonable legal fees and out-of-pocket expenses
directly attributable to such arbitration, and such other party shall bear
all expenses of the arbitrators. Upon the request of a party, the
arbitration award shall specify the factual and legal basis for the award.
10. MISCELLANEOUS
10.1. Communications. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of
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the date delivered or on the fifth business day
after mailed if delivered personally or mailed by registered or certified
mail (postage prepaid, return receipt requested) to the party at the
following addresses (or at such other address for a party as shall be
specified by like notice, except that notices of changes of address shall
be effective upon receipt):
(a) if to the Company:
c/o Nu Skin Enterprises, Inc.
75 West Center Street
Provo, Utah 84601
Tel: (801) 345-6100
Fax: (801) 345-3099
Attention: Truman Hunt, Esq.
with copies to:
Shearman & Sterling
555 California Street, Suite 2000
San Francisco, CA 94104
Attention: Kevin Kennedy, Esq.
Telephone: (415) 616-1100
Facsimile: (415) 616-1199
(b) if to the Executive:
2550 Sandycreek Drive
Westlake Village, CA 91361
Tel: (818) 991-4139
10.2. Waiver of Breach; Severability. (a) The waiver by the Executive
or the Company of a breach of any provision of this Agreement by the other
party hereto shall not operate or be construed as a waiver or any
subsequent breach by either party.
(b) The parties hereto recognize that the laws and public policies of
various jurisdictions may differ as to the validity and enforceability of
covenants similar to those set forth herein. It is the intention of the
parties that the provisions hereof be enforced to the fullest extent
permissible under the laws and policies of each jurisdiction in which
enforcement may be sought, and that the unenforceability (or the
modification to conform to such laws or policies) of any provisions hereof
shall not render unenforceable, or impair, the remainder of the provisions
hereof. Accordingly, if at the time of enforcement of any provision hereof,
a court of competent jurisdiction holds that the restrictions stated herein
are unreasonable under circumstances then existing, the parties hereto
agree that the maximum period, scope, or
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geographic area reasonable under such circumstances will be substituted for
the stated period, scope or geographical area and that such court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and geographical area permitted by law.
10.3. Assignment; Successors. No right, benefit or interest hereunder
shall be assigned, encumbered, charged, pledged, hypothecated or be subject
to any setoff or recoupment by the Executive. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the
Company; provided, however that the Company may not assign this Agreement
without Executive's consent.
10.4. Entire Agreement. This Agreement and the Appendices attached
hereto, which are incorporated herein by this reference, contain the entire
agreement of the parties with respect to the subject matter hereof, and on
and after the Effective Time, and except as otherwise set forth herein,
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, whether
written or oral, with respect to the subject matter hereof.
10.5. Withholding. The payment of any amount pursuant to this
Agreement shall be subject to applicable withholding and payroll taxes, and
such other deductions as may be required under the Company's employee
benefit plans, if any.
10.6. Governing Law. This Agreement shall be governed by, and
construed with, the law of the State of Utah.
10.7. Headings. The headings in this Agreement are for convenience
only and shall not be used to interpret or construe any of its provisions.
10.8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed, the Parent has agreed and accepted terms hereof, and the
Executive has hereunto set his hand, as of the day and year first above written.
PHARMANEX, INC.
By:
Name:
Title:
------------------------------
[Executive]
Agreed and accepted as to its duties pursuant to this Agreement:
NU SKIN ENTERPRISES, INC.
By:
Name:
Title:
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APPENDIX A
KEY-EMPLOYEE COVENANTS
Nu Skin Enterprises, Inc. and its affiliated companies ("Company") operate in a
highly competitive direct sales multilevel marketplace competing for product
market share as well as recruitment and retention of independent distributors.
The success of Company depends on maintaining a competitive edge in this
industry through the introduction of innovative products and attracting and
retaining distributors. Accordingly, as a condition of and in consideration of
employment or continued employment with Company, the parties hereby acknowledge
and agree as follows:
1. Confidential Information: Employee acknowledges that during the term of
employment with Company he or she may develop, learn and be exposed to
information about Company and its business, including but not limited to
formulas, business plans, financial data, vendor lists, product and
marketing plans, distributor lists, and other trade secrets which
information is secret, confidential and vital to the continued success of
Company (" Confidential Information"). The term "Confidential Information"
shall not include, and the obligations set forth in this Section shall not
apply to, any information that (a) is publicly available, (b) becomes
publicly available without breach of this Agreement by Employee, (c)
Employee already possess without obligation of confidentiality, (d)
Employee develops independently, or (e) Employee rightfully receives
without obligation of confidentiality from a third party. Employee agrees
that he or she will not, without the express written consent of Company or
except as required by law or court order disclose, copy, retain, remove
from Company's premises or make any use of such Confidential Information
except as may be required in the course of his or her employment with
Company.
2. Conflict of Interest: During employment with Company, Employee shall not
engage in any transaction which involves a conflict of interest with the
Company without the Company's consent. Employee must discharge his or her
responsibility solely on the basis of what is in the best interest of
Company and independent of personal considerations or relationships.
Although it is difficult to identify every activity that might give rise to
a conflict of interest, and not by way of making an all inclusive list,
some of the more common circumstances and practices that might result in
such conflicts are set forth below. Should Employee have any questions
regarding this matter, Employee should consult with and receive written
permission from his or her director or supervisor.
a. While employed by the Company, Employee shall maintain impartial
business relationships with vendors, suppliers and distributors.
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b. While employed by the Company, Employee shall not have a direct or
indirect ownership interest in vendors of Company nor any company
doing or seeking to do business with Company unless such ownership
interest is owned by Employee at the time his employment with the
Company commences or unless such ownership is in the form of (a)
securities in a company with publicly traded securities (provided that
the securities held by Employee represent less than 1% of the total
outstanding securities of the company) or (b) and interest in
investment vehicles, limited partnerships, hedge funds or stock funds
were Employee is a passive investor.
c. While employed by the Company, Employee shall not have a direct or
indirect ownership in any company which competes with company in any
product category or any multi-level marketing company, unless such
ownership interest is owned by Employee at the time his employment
with the Company commences or unless (a) such company's securities are
publicly traded and the Employee's ownership interest is less than 1%
of the total outstanding securities of such company, or (b) except for
any ownership interest held as of the date of this Agreement, or (c)
such company's securities are held by an investment vehicle, limited
partnership, hedge fund or stock fund where Employee is a passive
investor in such funds.
d. While employed by the Company, Employee shall not perform services of
any kind for any entity doing or seeking to do business with Company.
As to employment with or service to another company while employed by
the Company, Employee shall not allow any such activity to detract
from his or her job performance, use Company's time, resources, or
personnel, or require such long hours to affect his or her physical or
mental effectiveness.
e. While employed and except as permitted by paragraphs (b) or (c) above,
and for a period of three (3) months after termination of an
employment relationship with Company, Employee shall not directly or
indirectly own any interest in a Company distributorship or any other
direct sales on multi-level marketing distributorship. Additionally,
during the course of employment, neither the Employee's spouse nor an
immediate family member living in the same household shall own any
interest in a Company distributorship or any other multi-level
distributorship, unless Employee's interest would be permitted by
paragraphs (b) and (c) above. Employee's spouse or immediate family
member living in the same household will not,
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without prior written consent of the Company, own any interest in
another direct sales distributorship, unless Employee's interest would
be permitted by paragraphs (b) and (c) above. Any pre-existing
ownership interests covered in this paragraph must be disclosed to the
Company at the time of the execution of this Agreement.
f. Employee shall disclose to his/her immediate director or supervisor
any and all areas posing a potential or actual conflict of interests.
Said disclosure shall be made as promptly as possible after such
conflict arises.
3. Work Product: Company shall have the sole proprietary interest in the work
product of Employee during his or her employment with Company ("Work
Product"), and Employee expressly assigns to Company or its designee all
rights, title and interest in and to all copyrights, patents, trade
secrets, improvements, inventions, sketches, models and all documents
related thereto, manufacturing processes and innovations, special
calibration techniques, software, service code, systems designs and any
other Work Product developed by Employee, either solely or jointly with
others, where said Work Product relates to any business activity or
research and development activity in which Company is involved or plans to
be involved at the time of or prior to Employee's creating such Work
Product and where such Work Product is developed with the use of Company's
time, material, or facilities; and Employee further agrees to disclose any
and all such Work Product to Company without delay. This provision shall
relate to Work Product created prior to the date of Employee's execution of
this Agreement as well as Work Product developed after execution of this
agreement.
4. Ethical Standards: Employee agrees to maintain the highest business ethical
and legal standards in his or her conduct, to be scrupulously honest and
straight-forward in all of his or her business dealings and to use his best
efforts to avoid all situations which might project the appearance of being
unethical from a business standpoint or illegal.
5. Product Resale: As an employee of Company, Employee may receive Company
products and materials either at no charge or at discount as specified from
time to time by Company in its sole discretion. Employee agrees that the
products received from Company are strictly limited to Employee's personal
use and that of Employee's immediate family and may not be resold, given or
disposed of to any other person or entity in a manner inconsistent with the
personal use herein described.
6. Gratuities: Employee shall neither seek nor retain gifts, gratuities,
entertainment or other forms of compensation, benefit, or persuasion from
suppliers, distributors, vendors or their representatives without the
consent of a Company Vice President with the exception of meals provided in
the ordinary course of business on an infrequent basis.
7. Non-Solicitation: The Employee shall not in any way, directly or
indirectly, at any time
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during employment or within two (2) years after either a voluntary or
involuntary employment termination: (a) solicit, divert, or take away
Company's distributors: (b) solicit in any manner Company's employees or
(c) assist any other person in any manner or persons in an attempt to do
any of the foregoing.
8. Non-Competition: During Employee's employment with Company, and for a
period commencing with the date of termination of Employee's employment and
continuing for a period of six (6) months thereafter, and except for
Employee's ownership of securities in a Company with publicly traded
securities (provided the securities held by Employee represent less than 1%
of the total outstanding securities of the Company) and except for
Employee's interest in investment vehicles, limited partnerships, hedge
funds or stock funds where Employee is a passive investor) Employee agrees
that he/she shall not accept employment with, engage in or participate,
directly or indirectly, individually or as an officer, director, employee,
shareholder, consultant, partner, joint venturer, agent, equity owner or in
any other capacity whatsoever, with any multi-level marketing venture which
competes with the business of Company whether for market share of products
or for independent distributors in any territory in which Company is doing
business. It is further recognized and agreed that the covenants set forth
herein are for the purpose of restricting Employee's activities to the
extent necessary for the protection of the legitimate business interests of
Company and that Employee agrees that said covenants do and will not
preclude him from engaging in activities sufficient for the purposes of
earning a living.
9. Acknowledgment: Employee acknowledges that his or her position and work
activities with the Company are "key" and vital to the on-going success of
Company's operation in each product category and in each geographic
location in which Company operates. In addition, Employee acknowledges that
his or her employment or involvement with any other multi-level marketing
company would create the impression that Employee has left Company for a
"better opportunity," which could damage Company by this perception in the
minds of Company's employees or independent distributors. Therefore,
Employee acknowledges that his or her confidentiality, non-solicitation and
non-competition covenants hereunder are fair and reasonable and should be
construed to apply to the fullest extent possible by applicable laws.
Employee has carefully read this Agreement, has consulted with independent
legal counsel to the extent Employee deems appropriate, and has given
careful consideration to the restraints imposed by the Agreement. Employee
acknowledges that the terms of his Agreement are enforceable regardless of
the manner in which Employee's employment is terminated, whether voluntary
or involuntary.
10. Attorney's Fees: In the event of any dispute between the parties regarding
this Agreement, then the prevailing party (whether at arbitration, trial or
on appeal) shall be entitled, in addition to such other relief as may be
granted, to be reimbursed by the losing party for all costs and expenses
incurred, including, but not limited to, reasonable
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attorneys' fees and costs for services rendered to prevailing party.
11. Court's Right to Modify Restriction: The parties agree that, if the scope
or enforceability of the restrictive covenants contained in this Agreement
are in any way disputed at any time, a court or other trier of fact may
modify and enforce the covenants to the extent that it believes to be
reasonable and enforceable under the circumstances existing at that time.
12. Severability: If any provision, paragraph, or subparagraph of this
Agreement is adjudged by any court or administrative agency to be void or
unenforceable in whole or in part, this adjudication shall not affect that
validity of the remainder of the Agreement, including any other provision,
paragraph, or subparagraph. Each provision, paragraph, and subparagraph of
this Agreement is severable from every other provision, paragraph, and
subparagraph and constitutes a separate and distinct covenant.
THESE COVENANTS HAVE BEEN READ, UNDERSTOOD AND FREELY ACCEPTED BY:
-----------------------
"Employee"
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