<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1996
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION
PERIOD FROM ________ TO ________
COMMISSION FILE NUMBER 0-26362
-------
NUTRITION FOR LIFE INTERNATIONAL, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
TEXAS 76-0416176
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9101 JAMEEL
HOUSTON, TEXAS 77040
- - --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Issuer's telephone number, including area code: (713) 460-1976
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each Exchange
Title of each Class on Which Registered
NONE NONE
Securities Registered Pursuant to Section 12(g) of the Act:
$.01 par value common stock
---------------------------
(Title of Class)
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NUTRITION FOR LIFE INTERNATIONAL, INC.
(Registrant)
Date: January 27, 1997 By: /s/ Ronnie D. Meaux
---------------------------------------------
Ronnie D. Meaux, Vice-President and Treasurer
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David P. Bertrand 53 President, Director and Chairman of the Board of Directors
Jana Mitcham 48 Executive Vice President, Secretary and Director
Barry C. Loder 38 Vice-President and Chief Financial Officer
John R. Brown, Jr. 59 Vice-President-Finance
Ronnie D. Meaux 42 Vice President, Treasurer, and Assistant Secretary
F. Wayne Ballenger 48 Director
M. F. Florence 59 Director
Richard S. Kashenberg 41 Director
Gregory Pusey 44 Director
</TABLE>
DAVID P. BERTRAND has served as President and Chairman of the Board of
Directors of the Company and its predecessors since 1984. Mr. Bertrand received
a B.S. degree in education in 1966 and a Master of Education degree in
administration and supervision in 1969, both from McNeese State University in
Lake Charles, Louisiana. Mr. Bertrand is the brother-in-law of Jana Mitcham.
JANA MITCHAM has served as Executive Vice President, Secretary and
Director of the Company and its predecessors since 1984. Ms. Mitcham received a
B.A. degree in 1974 in special education from McNeese State University and
undertook graduate work in special education at the Korean Extension of the
University of Maryland. Ms. Mitcham is the sister-in-law of David P. Bertrand.
BARRY C. LODER became Vice President and Chief Financial Officer of the
Company in March 1995. From October 1993 until he joined the Company, Mr. Loder
was a financial consultant, performing corporate finance, merger and acquisition
and other financing activities. From January 1992 to October 1993, he was in
Corporate Development with Allwaste, Inc., a publicly held environmental
services company. From December 1989 to December 1991, he was the Senior Vice
President-Finance of Republic Waste Industries, Inc., a publicly held integrated
solid waste management company. Mr. Loder received a B.B.A. degree in
Accounting and Finance from Walsh College and an M.B.A. degree from Houston
Baptist University. He is a Certified Public Accountant and is currently
working towards a Chartered Financial Analyst designation.
JOHN R. BROWN, JR. became Vice President-Finance of the Company in
September, 1996. From April, 1989 until he joined the Company, Mr. Brown was a
management consultant performing merger and acquisition services, systems
analyses, financial reporting assistance, and other services for both publicly
and privately held companies. From June, 1987 to March, 1989 he was Vice
President-Finance & Administration for Environmental Protective Industries,
Inc., an environmental services organization. Mr. Brown is a Certified Public
Accountant and has over
2
<PAGE>
20 years experience in public accounting with both national and local firms.
Mr. Brown received a B.S. in Mechanical Engineering from Stanford University and
an M.B.A. from the University of Texas at Austin.
RONNIE D. MEAUX has served in various accounting and finance capacities for
the Company and its predecessors since 1985. He is currently Vice President and
Treasurer of the Company. Mr. Meaux received a B.S. degree in accounting in
1977 from McNeese State University.
F. WAYNE BALLENGER has served as President of First Commercial Capital
since 1995. He has also served as President of Puncture Guard L.L.C. since
December 1994. From March 1992 to December 1994, he served as director of sales
and marketing for Petrolon, Inc., a multi-level marketing organization.
Immediately prior thereto, he served as a vice president of Southwest Bank of
Texas with commercial lending responsibilities. Mr. Ballenger received a B.B.A.
degree from the University of the South in 1968.
M. F. FLORENCE has served as President of Sherfam Inc. since 1989. Sherfam
Inc. is a holding company, principally of pharmaceutical companies and is the
parent of Shermfin Corp., which is a principal shareholder of the Company. From
1958 to 1989, Mr. Florence was associated with the firm of Wm. Eisenberg & Co.,
a firm of chartered accountants in Canada. He served as a partner of the firm
from 1964 to 1989. Mr. Florence received a Bachelor of Commerce degree from the
University of Toronto. He is the recipient of a Chartered Accountant degree from
the Institute of Chartered Accountants of Ontario. Mr. Florence is also a
Director of Barr Laboratories, Inc., a publicly held corporation whose common
shares are listed on the American Stock Exchange. Mr. Florence has served as a
director of the Company since 1994.
RICHARD S. KASHENBERG served as President of NION Laboratories from 1982 to
1996. He presently serves as a consultant to NION. NION is a principal supplier
of products sold by the Company. Mr. Kashenberg served as President and Director
of NEC-Utah from 1991 until its merger with the Company in 1994. Mr. Kashenberg
has served as a director of the Company since 1994. Mr. Kashenberg received a
Bachelor's degree from Vanier College.
GREGORY PUSEY is primarily engaged in private investment activities. He has
served both as President of Livingston Capital, Ltd. and President of the
General Partner of Graystone Capital, Ltd., venture capital firms, since 1987.
He is also President and a director of Cambridge Holdings, Ltd., a publicly held
real estate firm, and a co-founder and director of USMX, Inc., a publicly held
mining company. From May 1989 until January 1990, Mr. Pusey also served as Chief
Financial Officer of USMX, Inc. Mr. Pusey received a B.S. degree in Finance from
Boston College in 1974. Mr. Pusey became a director of the Company in 1994.
The Company has entered into an agreement with Shermfin Corp. wherein it
has agreed that, for so long as Shermfin Corp. owns 10% or more of the
outstanding Common Stock of the Company, Shermfin Corp. will be entitled to
designate one person to serve as a member of the Company's Board of Directors.
The current designee is M. F. Florence who shall continue to serve in such
capacity until written notice otherwise is provided by Shermfin Corp. to the
Company. See Item 11.
The Company's Board of Directors has two standing committees, the Audit
Committee and the Compensation Committee. M.F. Florence and Gregory Pusey serve
as the two members of the Audit Committee. The primary functions of the Audit
Committee are to review the scope and results of audits by the Company's
independent auditors, internal accounting controls, non-audit services performed
by the independent accountants and the cost of accounting services. F. Wayne
Ballenger, M.F. Florence and Richard S. Kashenberg serve as the three members of
the Compensation Committee. The Compensation Committee reviews stock option and
other compensation policies and programs.
Based solely on the Company's review of copies of Section 16(a) reports
filed by officers, directors and greater than 10% shareholders with the
Securities and Exchange Commission, which have been received by the Company and
written representations from these persons that no other reports were required
for those persons, the Company believes that all filing requirements applicable
to those persons were complied with for the fiscal year ended September 30,
1996.
3
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EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company to the officers whose total annual compensation exceeded
$100,000 during the fiscal years ended September 30, 1995 and 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------------------- ----------------------------------------------
AWARDS PAYOUTS
------ -------
Other
Annual Restricted All Other
Name and Principal Salary compensa- Stock Options/ LTIP Compensa-
Position Year ($) Bonus tion Awards SARs Payouts tion(1)
================== ==== ======= ======= ====== ========== ======== ======= =========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David P. Bertrand 1995 162,006 143,829 5,250 -0- 80,400 -0- 12,885
Chief Executive Officer of the 1996 162,000 530,812 15,750 -0- -0- -0- 12,885
Company
Jana Mitcham 1995 157,316 143,829 5,250 -0- 75,600 -0- 9,013
Executive Vice President of the 1996 156,000 526,649 15,500 -0- -0- -0- 9,013
Company
Barry C. Loder 1995(2) 51,404 7,790 1,500 50,000 -0- -0- -0-
Vice President and Chief Financial 1996 121,184 57,500 11,208 -0- -0- -0- -0-
Officer of the Company
Ronnie D. Meaux 1995 81,350 10,000 6,900 -0- 36,000 -0- 6,392
Vice President and Assistant 1996 87,430 53,160 9,400 -0- -0- -0- 6,392
Secretary of the Company
</TABLE>
- - -------------------
(1) The Company has obtained insurance policies on the lives of Mr. Bertrand,
Ms. Mitcham and Mr. Meaux, of which benefit amounts of $1,060,000,
$660,000 and $467,000 on the lives of Mr. Bertrand, Ms. Mitcham and Mr.
Meaux, respectively, constitute "keyman" insurance and are payable to the
Company. Approximately 51% of the aggregate insurance benefits on the
lives of Mr. Bertrand, Ms. Mitcham and Mr. Meaux are payable to
beneficiaries designated by Mr. Bertrand, Ms. Mitcham and Mr. Meaux. In
addition, part of the cash value may be used as retirement benefits for
the executive officers. The premiums paid by the Company allocable to
these items are included in the table.
(2) Mr. Loder joined the Company in March 1995.
In 1995 the Company entered into employment agreements with Mr. Bertrand
and Ms. Mitcham which expired on September 30, 1996. The terms of the agreements
were essentially identical. Mr. Bertrand received an annual salary of $162,000
and Ms. Mitcham received an annual salary of $156,000. Each was also entitled to
5% of the first $2,000,000 of annual pre-tax income of the Company, 4% of the
amount in excess of $2,000,000 but less than $2,500,000, and 3% of the amount
over $2,500,000. Mr. Bertrand was also granted the right to create a special
bonus pool for key employees to receive up to 2% of the pre-tax income between
$2,000,001 and $2,500,000 and up to 4% of the pre-tax income greater than
$2,500,000.
Effective October 1, 1996, the Company entered into new employment
agreements with Mr. Bertrand and Ms. Mitcham. The terms of these agreements are
essentially identical, except that Mr. Bertrand's annual salary is $400,000 and
Ms. Mitcham's annual salary is $376,000. Mr. Bertrand and Ms. Mitcham are each
also entitled to a bonus if the Company has pre-tax annual income between $3
million and $20 million. Each is entitled to receive 5% of any annual pre-tax
income between $3 million and $5 million; four percent of the annual pre-tax
income between $5 million and $10 million; and three percent of the annual pre-
tax income between $10 million and $20 million. The term of each agreement is
three years. Each of the agreements may be earlier terminated upon mutual
agreement, death, disability or conviction of the officer, or a material breach
of the agreement by the officer.
4
<PAGE>
OPTION PLANS
In 1993 and 1995 the Company adopted stock option plans for the grant of
options to employees and consultants (the "Plans"). The provisions for each of
the Plans are similar. There are presently outstanding or reserved for issuance
options to acquire up to 518,850 shares of Common Stock. Under the Plans, the
Company may issue options to purchase up to an additional 440,906 shares of
Common Stock. Under the Plans, options may be granted in the form of "incentive
stock options" as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") and non-statutory stock options. The Board of Directors
has the authority to fix the terms and number of options to be granted and the
employees to receive the options. The exercise price of each stock option
granted under the Plans may not be less than 100% of the fair market value of
the Common Stock on the date of grant (110% in the case of incentive stock
options granted to employees owning more than 10% of the Common Stock). All of
the outstanding options were granted at exercise prices which were not less than
the fair market value on the respective grant dates. See Item 11 regarding
outstanding options to officers and directors of the Company.
The maximum term of options granted under the plans is 10 years. The
aggregate fair market value of the Common Stock with respect to which incentive
stock options are first exercisable in any calendar year may not exceed $100,000
per optionee. Options granted under the Plans are non-transferable and
generally expire 30 days after the termination of any optionee's service to the
Company. In general, if an optionee is permanently disabled or dies during his
or her service to the Company, such person's option may be exercised up to 90
days following such disability or death.
OPTION GRANTS IN FISCAL YEAR ENDED SEPTEMBER 30, 1996
No stock options were granted by the Company during the fiscal year ended
September 30, 1996 to any executive officer named in the Summary Compensation
Table.
OPTION EXERCISES AND YEAR-END VALUES
The following table shows option exercises by the named executive officers
during the fiscal year ended September 30, 1996. Also reported are the year-end
values for their unexercised "in-the-money" options, which represent the
positive spread between the exercise price of any such option and the market
price of the Common Stock on September 30, 1996.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Number of Options Options at
Shares Under- Value At Year End (#) Year End ($)
lying Options Realized Exercisable/ Exercisable/
Name Exercised (#) ($) Unexercisable Unexercisable
________ -------------- --------- --------------------- ----------------
<S> <C> <C> <C> <C>
David P. Bertrand -- -- 66,400/14,000 853,580/183,190
Jana Mitcham -- -- 61,600/14,000 792,680/183,190
Barry C. Loder -- -- 33,333/16,667 402,079/201,040
Ronnie D. Meaux -- -- 18,500/6,000 238,495/78,510
</TABLE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive $18,000 per year,
$400 for each Board meeting attended, and $200 for each committee meeting of the
Board attended. Directors who are also employees of the Company receive no
additional compensation for serving as Directors. The Company reimburses its
Directors for
5
<PAGE>
travel and out-of-pocket expenses in connection with their attendance at
meetings of the Board of Directors. The Company may also utilize the services of
its outside directors as consultants to the Company. During the fiscal year
ended September 30, 1995 the Company paid Mr. Pusey $40,000, Mr. Kashenberg $
12,000 and Mr. Florence $2,000 for consulting services. During the fiscal year
ended September 30, 1996, the Company paid Mr. Pusey $58,000, and $12,000 to
each of Mr. Kashenberg and Mr. Florence.
In November 1995, the Board of Directors of the Company adopted the 1995
Non-Discretionary Stock Option Plan for directors of the Company who are not
eligible to participate in the other Plans (the "Non-Discretionary Plan.")
The Non-Discretionary Plan provides that the Company grant options to purchase
5,000 shares of the Company's Common Stock to each eligible director on the date
of adoption of the Non-Discretionary Plan (November 28, 1995), to each person
who thereafter becomes a director of the Company and, as of December 1 of each
year (commencing in 1996), options to purchase an additional 5,000 shares of
Common Stock will be granted to each eligible director. The exercise price of
the options is the fair market value of the Common Stock on the date the options
are granted. The options are exercisable in full as of the date of grant. The
shares acquired upon exercise of these options cannot be sold for six months
following the date of grant. In November 1995, the Company granted options to
purchase 5,000 shares of Common Stock at a price of $19.75 per share to each of
F. Wayne Ballenger, M.F. Florence and Richard S. Kashenberg. In December 1996
the Company granted options to purchase 5,000 shares of Common Stock at a price
of $12.38 per share to each of F. Wayne Ballenger, M.F. Florence and Richard S.
Kashenberg. Each option granted pursuant to the Non-Discretionary Plan will
expire five years from the date of grant, except that an option will expire, if
not exercised, 30 days after the optionee ceases to be a director of the
Company.
Options granted pursuant to the Non-Discretionary Plan will not qualify for
the special tax benefits given to incentive stock options under Section 422 of
the Code. Accordingly, all of the stock options granted pursuant to the Non-
Discretionary Plan may be deemed to be non-statutory stock options. The options
are generally non-transferable.
6
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of January 23, 1997 by (i) each
shareholder who is known by the Company to own beneficially more than 5% of its
Common Stock, (ii) each director of the Company and (iii) all directors and
officers of the Company as a group.
Number of Percentage of
Beneficial Owner Shares Owned Ownership
- - ---------------- ------------ -------------
Shermfin Corp. 1,215,390(1) 21.8
150 Signet Dr.
Weston, Ontario, Canada
9ML 1T9
M. F. Florence 1,231,390(1)(2) 22.1
150 Signet Dr.
Weston, Ontario, Canada
M9L 1T9
Bernard Sherman 1,215,390(1) 21.8
150 Signet Dr.
Weston, Ontario, Canada
M9L 1T9
Jana Mitcham 377,304(3) 6.8
10618 Great Plains
Houston, Texas 77064
David P. Bertrand 328,692(4) 5.9
10622 Great Plains
Houston, TX 77064
Gregory Pusey 237,378(5) 4.3
1722 Buffehr Creek Road
Vail, Colorado 81657
Richard S. Kashenberg 60,372(6) 1.1
15501 First Street
Irwindale, CA 91706
F. Wayne Ballenger 10,000(7) .2
3134 Meadway Drive
Houston, Texas 77082
All Officers and Directors 2,366,352(8) 42.5
as a Group (9 Persons)
- - -------------------
(1) Messrs. Sherman and Florence may be deemed beneficial owners of the shares
held by Shermfin Corp. due to their affiliations with Shermfin Corp. In
July, 1994, Mr. Sherman and Shermfin Corp. consented to the issuance of an
Order of the Securities and Exchange Commission (the "Commission") that
they cease and desist from violations of certain reporting and anti-fraud
provisions of the Securities Exchange Act of 1934. Mr. Sherman and
Shermfin Corp. consented to this Order without admitting or denying the
findings of the Commission that they had failed to file reports of
beneficial ownership of the common stock of Kinesis, Inc. with the
Commission on Form 3 and Schedule 13G. The Company has no relationship
with Kinesis, Inc.
(2) Includes options to acquire (i) 6,000 shares of Common Stock at $1.665 per
share, of which options to acquire 2,000 shares become exercisable in
October 1997, (ii) options to acquire 5,000 shares of Common Stock at
$19.75 per share, and (iii) options to acquire 5,000 shares of Common
Stock at $12.38 per share.
7
<PAGE>
(3) Includes 5,000 warrants to purchase 5,000 shares of Common Stock at $3.75
per share and options to acquire (i) 42,000 shares of Common Stock at
$1.665 per share, of which options to acquire 14,000 shares become
exercisable in October 1997, (ii) 16,800 shares of Common Stock at $1.875
per share, and (iii) 16,800 shares of Common Stock at $2.25 per share.
Also includes 11,554 shares of Common Stock owned by her daughter, 4,000
shares of Common Stock owned by her husband, and options held by her
husband to acquire 4,800 shares of Common Stock at $1.665 per share. Does
not include options to purchase an aggregate of 45,000 shares of Common
Stock at $13.00 per share, which become exercisable in equal amounts over
a three-year period commencing November 20, 1997.
(4) Includes options to acquire (i) 42,000 shares of Common Stock at $1.665
per share, of which options to acquire 14,000 shares become exercisable in
October 1997, (ii) 19,200 shares of Common Stock at $1.875 per share, and
(iii) 19,200 shares of Common Stock at $2.25 per share. Also includes
40,000 shares owned by his two sons and options held by his wife to
acquire 4,800 shares of Common Stock at $1.665 per share. Does not
include options to purchase an aggregate of 47,400 shares of Common Stock
at $13.00 per share, which become exercisable in equal amounts over a
three-year period commencing November 20, 1997.
(5) Includes 19,000 warrants to purchase 19,000 shares of Common Stock at
$3.75 per share and options to acquire (i) 6,000 shares of Common Stock at
$1.665 per share of which options to acquire 2,000 shares become
exercisable in October 1997, (ii) 6,000 shares of Common Stock at $1.875
per share, and (iii) 6,000 shares of Common Stock at $2.25 per share.
Also includes 44,840 shares of Common Stock and 14,000 warrants to
purchase 14,000 shares of Common Stock at $3.75 per share held by entities
which are affiliates of Mr. Pusey, and 20,000 shares of Common Stock and
2,000 warrants to purchase 2,000 shares of Common Stock at $3.75 per share
held by his wife, individually, or as custodian for their minor children.
Does not include options to purchase an aggregate of 9,000 shares of
Common Stock at $13.00 per share, which become exercisable in equal
amounts over a three-year period commencing November 20, 1997.
(6) Includes options to acquire (i) 6,000 shares of Common Stock at $1.665 per
share, of which options to acquire 2,000 shares become exercisable in
October 1997, (ii) options to acquire 5,000 shares of Common Stock at
$19.75 per share, and (iii) options to acquire 5,000 shares of Common
Stock at $12.38 per share.
(7) Includes options to acquire (i) 5,000 shares of Common Stock at $19.75 per
share; and (ii) options to acquire 5,000 shares of Common Stock at $12.38
per share.
(8) Includes the following warrants and options held by persons who are
officers, but not directors, of the Company: 9,000 warrants to purchase
9,000 shares of Common Stock at $3.75 per share and options to acquire (i)
15,500 shares of Common Stock at $1.665 per share, of which options to
acquire 6,000 shares become exercisable in October 1997, (ii) 4,500 shares
of Common Stock at $1.875 per share, (iii) 4,500 shares of Common Stock at
$2.25 per share, (iv) 50,000 shares of Common Stock at $2.6875 per share,
of which options to acquire 16,667 shares become exercisable in January
1997, and (v) 10,000 shares of Common Stock at $11.50 per share. Does not
include options to purchase an aggregate of 37,250 shares of Common Stock
at $13.00 per share, which become exercisable in equal amounts over a
three-year period commencing November 20, 1997.
8
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and its predecessors borrowed an aggregate of $650,000 from
Shermfin Corp. during the period from 1988 to 1991. The loans were evidenced by
promissory notes with interest at rates ranging from 9% to 11% per annum with
maturity dates from October 1995 to October 1996. The promissory notes were
convertible at the option of Shermfin Corp. into an aggregate of 966,834 shares
of Common Stock. In March 1995 the Company entered into an agreement with
Shermfin Corp. pursuant to which it was agreed that Shermfin Corp. would convert
$130,500 of debt from the note in the principal amount of $250,000 into 360,000
shares of the Company's Common Stock at the closing of the Company's public
offering of securities that year. It was further agreed that the remaining
principal balance of the promissory note in the principal amount of $250,000
($119,500), plus the entire principal balances of the other three notes (an
aggregate of $400,000) would be repaid to Shermfin Corp. at the closing of the
offering. The Company believes that the borrowing arrangements with Shermfin
Corp. were made on terms at least as favorable as could be obtained from third
parties.
In its March 1995 agreement with Shermfin Corp., the Company agreed to
register the 360,000 shares to be issued to Shermfin Corp. during the period
commencing one year after the date of commencement of the offering (July 10,
1995) and ending four years after the date of the offering (July 10, 1999). The
Company also agreed that, for so long as Shermfin Corp. owns 10% or more of the
outstanding Common Stock of the Company, Shermfin Corp. will be entitled to
designate one person to serve as a member of the Company's Board of Directors.
The current designee is M.F. Florence who shall continue to serve in such
capacity until written notice otherwise is provided by Shermfin Corp. to the
Company. See Item 9.
Prior to the Merger of the Company's predecessors, Nutrition Express
Corporation of Colorado, Inc., and Nutrition Express Corporation of Utah, Inc.
("NEC-Utah"), into the Company in 1994, Shermfin Corp. held, among other
securities, all of the outstanding shares of the Series A Preferred Stock of
NEC-Utah. In exchange for the agreement of Shermfin Corp. to convert the Series
A Preferred Stock into common stock of NEC-Utah, NEC-Utah agreed to reduce the
conversion rate. As a result, the Company recognized a conversion expense
against net income applicable to common stock of $181,243 in the fiscal year
ended September 30, 1994.
The largest supplier of products to the Company is NION Laboratories, a wholly
owned subsidiary of Shermfin Corp. NION Laboratories is a manufacturer of
pharmaceutical and consumer-related products. During the fiscal years ended
September 30, 1994 and 1995, the Company purchased approximately $1,706,000 and
$2,258,000 of goods, respectively, from NION Laboratories. During the year ended
September 30, 1996, the Company purchased $5,234,000 of goods from NION. In
addition, Richard S. Kashenberg, a director of the Company, served as the chief
executive officer of NION until December 1996. Mr. Kashenberg is currently a
consultant to NION. It is anticipated that this relationship will continue in
the future and the Company believes that the terms it has obtained from NION are
at least as favorable as could have been obtained from third parties.
In October 1995 the Company granted warrants to purchase 500,000 shares of
Common Stock at $12.50 to Kevin Trudeau. The warrants become exercisable on
April 15, 1996 and expire on October 14, 1998. The exercise price of the
warrants on the date of grant was not less than the market price of the
Company's Common Stock on that date. In April 1996 Mr. Trudeau agreed to the
cancellation of these warrants and they are no longer outstanding.
9
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 2.1 Agreement and Plan of Reorganization, filed as a Exhibit to the
Registration Statement on Form S-4 (file no. 33-70312), which
Exhibit is incorporated herein by this reference.
Exhibit 3.1 Articles of Incorporation, as amended*
Exhibit 3.2 Bylaws, filed as an Exhibit to the Registration Statement on
Form S-4 (file no. 33-70312), which Exhibit is incorporated
herein by this reference.
Exhibit 4.1 Specimen Certificate of Nutrition for Life International, Inc.'s
Common Stock*
Exhibit 4.2 Specimen Warrant*
Exhibit 4.3 Warrant Agreement with Corporate Stock Transfer, Inc.*
Exhibit 10.1 1993 Stock Option Plan, filed as an Exhibit to the Registration
Statement on Form S-4 (file no. 33-70312), which Exhibit is
incorporated herein by this reference*
Exhibit 10.2 1995 Stock Option Plan*
Exhibit 10.3 Second Amended and Restated Convertible Debenture in the
principal amount of $275,000, dated June 29, 1992 made by
Nutrition Express Corporation of Utah, Inc. in favor of Shermfin
Corp., filed as an Exhibit to the Registration Statement on Form
S-4 (file no. 33-70312), which Exhibit is incorporated herein by
this reference.
Exhibit 10.4 Agreement, dated August 12, 1991 between Nutrition Express
Corporation of Colorado, Inc. and Shermfin Corp., filed as an
Exhibit to the Registration Statement on Form S-4 (file no. 33-
70312), which Exhibit is incorporated herein by this reference.
Exhibit 10.5 Agreement, dated August 12, 1991 between Nutrition Express
Corporation of Utah, Inc. and Shermfin Corp., filed as an Exhibit
to the Registration Statement on Form S-4 (file no. 33-70312),
which Exhibit is incorporated herein by this reference.
Exhibit 10.6 Convertible Promissory Note, dated October 12, 1989, the
principal amount of $250,000 made by Nutrition Express
Corporation of Colorado, Inc. in favor of Shermfin Corp., filed
as an Exhibit to the Registration Statement on Form S-4 (file no.
33-70312), which Exhibit is incorporated herein by this
reference.
Exhibit 10.7 Employment Agreement dated May 10, 1995, between Nutrition for
Life International, Inc. and David P. Bertrand*
Exhibit 10.8 Employment Agreement dated May 10, 1995, between Nutrition for
Life International, Inc. and Jana Mitcham*
Exhibit 10.9 Consulting Agreement, dated February 22, 1995, between Nutrition
for Life International, Inc. and Cohig & Associates, Inc.*
Exhibit 10.10 Form of Consulting Agreement with Cohig & Associates, Inc.*
Exhibit 10.11 Agreement, dated March 3, 1995, between Nutrition for Life
International, Inc. and Shermfin Corp.*
Exhibit 10.13 Agreement, dated July 15, 1994 between Nutrition for Life
International, Inc. and Dr. David Santiago (N.F.P. Group, Inc.),
as amended by letter dated June 2, 1995*
10
<PAGE>
Exhibit 10.14 Warrant Agreement, dated October 15, 1995 with Kevin Trudeau,
filed as an Exhibit to the Report on Form 10-KSB for the fiscal
year ended September 30, 1995 of the Registrant, which Exhibit is
incorporated herein by this reference.
Exhibit 10.15 Lease Agreements for office and warehouse facilities with non-
affiliates, filed as an Exhibit to the Report on Form 10-KSB for
the fiscal year ended September 30, 1995 of the Registrant, which
Exhibit is incorporated herein by this reference.
Exhibit 10.16 1995 Non-Discretionary Stock Option Plan, filed as an Exhibit to
the Report on Form 10-KSB for the fiscal year ended September 30,
1995 of the Registrant, which Exhibit is incorporated herein by
this reference.
Exhibit 10.17 Assurance of Voluntary Compliance for the State of Illinois,
dated July 16, 1996, filed on July 31, 1996 as an Exhibit to the
Report on Form 8-K, which Exhibit is incorporated herein by this
reference.
Exhibit 10.18 Administrative and Consulting Services Agreement, dated July 29,
1996, between Distributor Services, L.L.C. and Nutrition For Life
International, Inc.*
Exhibit 10.19 Form of Distributor Agreement of Nutrition For Life
International, Inc.*
Exhibit 10.20 Employment Agreement, effective October 1, 1996, between
Nutrition For Life International, Inc. and David P. Bertrand.
Exhibit 10.21 Employment Agreement, effective October 1, 1996, between
Nutrition For Life International, Inc. and Jana Mitcham.
Exhibit 22 Subsidiaries of the Company.
Exhibit 23.1 Consent of KPMG Peat Marwick LLP
Exhibit 23.2 Consent of BDO Seidman LLP
___________________________________________________
* These exhibits were previously filed as exhibits to the Company's
Registration Statement on Form SB-2 (File No. 33-92274), and are
incorporated herein by reference.
11
<PAGE>
Exhibit 10.20
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is made effective the 1st
day of October, 1996 by and between Nutrition For Life International, Inc., a
Texas corporation (the "Company") and David P. Bertrand ("Bertrand").
In consideration of the mutual covenants, promises and agreements
herein contained, the Company and Bertrand hereby covenant, promise and agree to
and with each other as follows:
1. Employment. The Company shall employ Bertrand and Bertrand shall
----------
be employed by the Company upon the terms and conditions set forth in this
Agreement.
2. Positions and Duties of Employment. Bertrand shall be required to
----------------------------------
devote his best efforts on a full-time basis to the furtherance of his
managerial duties with the Company as the Company's President and Chief
Executive Officer. While serving in these corporate capacities, Bertrand shall
have the responsibilities, duties, obligations, rights, benefits and requisite
authority as is customary for his positions and as may be determined by the
Company's Board of Directors (the "Board") and as set forth in the Bylaws of the
Company.
Bertrand understands that his employment as President and Chief
Executive Officer of the Company involves a high degree of trust and confidence,
that he is employed for the purpose of furthering the Company's reputation and
improving the Company's operations and profitability, and that in executing this
Agreement he undertakes obligations set forth herein to accomplish such
objectives. Bertrand agrees that he shall serve the Company fully, diligently
and competently, and to the best of his ability. Bertrand certifies that he
fully understands his right to discuss this Agreement with his private attorney,
that to the extent, if any, he desires, he has availed himself of this right,
that he has carefully read and fully understands this entire Agreement, and that
he is voluntarily entering into this Agreement.
3. Term. Except as otherwise provided in this Agreement, the term of
----
this Agreement (the "Term") shall be for a period of three years commencing
October 1, 1996.
4. Compensation. Bertrand shall receive the following as
------------
compensation:
(a) Bertrand shall receive a monthly salary of $33,333.33 for each
full month of his employment by the Company pursuant to this Agreement, payable
in accordance with the Company's customary payroll practices.
(b) In addition to his salary, Bertrand shall be entitled to a
bonus, payable within 90 days of the end of each annual period of the Term,
based upon the Company meeting certain pre-tax income levels defined below (the
"Bonus"). Pre-tax income shall be determined in accordance with generally
accepted accounting principles. In the event of any dispute over the amount of
pre-tax income, a final determination shall be made by BDO Seidman LLP or
another independent certified public accounting firm selected by the Company. No
Bonus shall be
<PAGE>
payable unless the Company's annual pre-tax income is $3,000,000 or more. The
amount of the Bonus shall be 5% of the first annual pre-tax income of the
Company, which is between $3,000,000 and $5,000,000; 4% of the annual pre-tax
income of the Company which is between $5,000,000 and $10,000,000; and 3% of the
annual pre-tax income of the Company which is between $10,000,000 and
$20,000,000. No Bonus shall be payable for any annual pre-tax income of the
Company in excess of $20,000,000.
(c) The Company shall provide Bertrand with participation in any group
plans or agreements maintained by the Company relating to health insurance or
other related benefits in accordance with their respective terms.
(d) Bertrand shall be entitled to leaves for vacations for periods
reasonably determined by the Board. In addition, Bertrand shall be entitled to
reasonable absences for attendance at business seminars and conventions.
(e) Any payment which the Company shall make to Bertrand pursuant to
this Agreement shall be reduced by standard withholding and other authorized
deductions.
(f) During the term of his employment, Bertrand shall be reimbursed
for reasonable expenses incurred by him for the benefit of the Company. Any
direct payment or reimbursement of expenses shall be made only upon presentation
of an itemized accounting conforming in form and content to standards prescribed
by the Internal Revenue Service relative to the substantiation of the
deductibility of business expenses.
5. Life Insurance. The Company may, but shall not be obligated to,
--------------
apply for and procure as owner and for its own benefit or the benefit of any
lender of the Company, insurance on Bertrand's life, in any amount and form or
forms that the Company may choose. Bertrand shall, at the Company's request,
submit to all medical examinations, supply all information and execute all
documents required by the insurance company or companies to whom the Company has
applied for the insurance.
6. Corporate Data and Antisolicitation. Upon the termination of
-----------------------------------
Bertrand's employment under this Agreement for any reason, Bertrand shall return
to the Company all data and information, whether written, computer, magnetic,
electronic or in any other physical or tangible form, relating to the business
of the Company or any of its affiliates that Bertrand obtained during the time
of his employment. During the term of this Agreement or for a period of one
year thereafter, Bertrand shall neither disclose to any other person or entity,
nor use for his own personal benefit, any information obtained during his
employment by the Company that is not otherwise publicly known, relating to the
financial affairs, distributor lists or the business operations of the Company
or any of its subsidiaries or affiliates. During the term of this Agreement or
for a period of one year thereafter, Bertrand will not influence or attempt to
influence distributors of the Company or any of its present or future
subsidiaries or affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or other entity then
in competition with the business of the Company or any
<PAGE>
subsidiary or affiliate of the Company, nor will he solicit any of the Company's
employees who earned annually $25,000 or more as a Company employee during the
last six months of his or her own employment to work for any individual,
partnership, firm, corporation or other entity then in competition with the
business of the Company or any subsidiary or affiliate of the Company.
7. Termination.
-----------
(a) The Company shall have the right at any time to terminate
Bertrand's employment under this Agreement without further liability or
obligation pursuant to this Agreement upon the occurrence of any of the
following events:
(i) By mutual written agreement, signed by both parties; or
(ii) The death of Bertrand; or
(iii) If the Company determines in good faith that the
Disability of Bertrand has occurred (pursuant to the definition of
Disability set forth below), it may give to Bertrand written notice
in accordance with Section 13 of its intention to terminate
Bertrand's employment. In such event, Bertrand's employment with
the Company shall terminate effective upon receipt of such notice by
Bertrand, provided that, upon receipt, Bertrand shall not have
returned to full-time performance of his duties. For purposes of
this Agreement, "Disability" shall mean a physical or mental
impairment which substantially limits a major life activity of
Bertrand which renders Bertrand unable to perform the essential
functions of his position, even with reasonable accommodation which
does not impose an undue hardship on the Company. The Company
reserves the right, in good faith, to make the determination of
Disability under this Agreement based upon information supplied by
Bertrand and/or his medical personnel as well as information from
medical personnel (or others) selected by the Company or its
insurers; or
(iv) Bertrand is convicted of any crime constituting a felony
under the law of the United States or any State; or
(v) A "Material Breach" of this Agreement as determined by
the Board. The exercise of the right of the Company to terminate
this Agreement shall not abrogate the rights and remedies of the
Company in respect of the breach giving rise to such termination.
For purposes of this subsection, "Material Breach" shall mean that
the Company, acting in good faith based upon the information then
known to the Company, determines that Bertrand has engaged or
committed: willful misconduct; gross negligence; theft, fraud or
other illegal conduct; refusal or unwillingness to perform his
duties; sexual harassment; violation of any fiduciary duties;
violation of any duty of loyalty; or a material
3
<PAGE>
breach of any term of this Agreement. The "Material Breach" shall be
specified in a notice of termination to be delivered by the Company no
later than the date as of which the termination is effective.
(b) If Bertrand's employment is terminated by the Company for any
reason other than those set forth in sections 7(a)(i) through 7(a)(v) above,
then the Company shall pay "Termination Pay" to Bertrand in full settlement of
any and all claims of Bertrand arising out of or in connection with his
employment by the Company. The "Termination Pay" shall consist of (i) twelve
months' salary, which shall be paid in six monthly installments of $66,666.66
each, commencing on the first day of the month after the month in which
termination occurred and continuing on the first day of each month thereafter
until all six installments have been paid; and (ii) the product of the Bonus to
which Bertrand would be entitled, multiplied by a fraction having a numerator
equal to the number of days in the annual period preceding the date of
termination and a denominator equal to 365, which shall be paid to Bertrand no
later than 90 days after the end of the annual period in which termination
occurred.
(c) If during the term of this Agreement, the Company effects a merger
or acquisition in which it is not the surviving entity or is a party to a stock
exchange in which it becomes a wholly-owned subsidiary of another entity and
Bertrand's employment is thereafter terminated by the Company notwithstanding
that no "Material Breach" has occurred, then Bertrand shall be entitled to
"Termination Pay".
(d) For purposes of this Section 7, voluntary termination of
employment by Bertrand as a result of a material change by the Company in
Bertrand's job responsibilities shall be deemed to be termination by the Company
without a "Material Breach" and Bertrand shall be entitled to "Termination Pay".
(e) Bertrand shall have the right to terminate this Agreement in the
event of a default by the Company of any material provision of this Agreement
but only if Bertrand shall have first given written notice of the default to the
Company and if within thirty days after receipt of that notice the Company has
not cured that default. Upon termination neither Bertrand nor the Company shall
have any further obligations under any of the provisions of this Agreement
except that Bertrand shall be entitled to "Termination Pay".
(f) Bertrand agrees that the payments contemplated by this Agreement
shall constitute the exclusive and sole remedy for any termination of his
employment and Bertrand covenants not to assert or pursue any other remedies, at
law or in equity, with respect to any termination of employment.
8. Remedies. If there is a breach or threatened breach of the provisions
--------
of Section 2 or 6 of this Agreement, the Company shall be entitled to an
injunction restraining Bertrand from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
4
<PAGE>
9. Severability. It is the clear intention of the parties to this
------------
Agreement that no term, provision or clause of this Agreement shall be deemed to
be invalid, illegal or unenforceable in any respect, unless such term, provision
or clause cannot be otherwise construed, interpreted, or modified to give effect
to the intent of the parties and to be valid, legal or enforceable. In the event
that such a term, provision, or clause cannot be so construed, interpreted or
modified, the validity, legality and enforceability of the remaining provisions
contained herein and other application(s) thereof shall not in any way be
affected or impaired thereby and shall remain in full force and effect.
10. Waiver of Breach. The waiver by the Company or Bertrand of the breach
----------------
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by that party.
11. Entire Agreement. This document contains the entire agreement between
----------------
the parties, supersedes all prior oral agreements, if any, and may not be
changed orally, but only by agreement in writing signed by the parties.
12. Governing Law. This Agreement, its validity, interpretation and
-------------
enforcement, shall be governed by the laws of the State of Texas.
13. Notices. Any notice pursuant to this Agreement shall be validly given
-------
or served if that notice is made in writing and delivered personally or sent by
certified mail, return receipt requested, postage prepaid, to the following
addresses:
If to Company: Nutrition For Life International, Inc.
9101 Jameel
Houston, TX 77040
If to Bertrand: To the address for Bertrand set forth below his
signature.
All notices so given shall be deemed effective upon receipt. Either party, by
notice so given, may change the address to which his or its future notices shall
be sent.
14. Assignment and Binding Effect.
-----------------------------
(a) This Agreement shall be binding upon Bertrand and the Company and
shall benefit the Company and its successors and assigns.
(b) This Agreement shall not be assignable by Bertrand.
15. Headings. The headings in this Agreement are for convenience only;
--------
they form no part of this Agreement and shall not affect its interpretation.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first above written.
NUTRITION FOR LIFE INTERNATIONAL, INC.
By:_______________________________
Authorized Officer
_______________________________
David P. Bertrand, Individually
Address for Notice:
10622 Great Plains
-------------------------------
(Street Address)
Houston, Texas 77064
-------------------------------
(City, State and Zip Code)
6
<PAGE>
Exhibit 10.21
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is made effective the 1st
day of October, 1996 by and between Nutrition For Life International, Inc., a
Texas corporation (the "Company") and Jana Mitcham ("Mitcham").
In consideration of the mutual covenants, promises and agreements
herein contained, the Company and Mitcham hereby covenant, promise and agree to
and with each other as follows:
1. Employment. The Company shall employ Mitcham and Mitcham shall be
----------
employed by the Company upon the terms and conditions set forth in this
Agreement.
2. Positions and Duties of Employment. Mitcham shall be required to
----------------------------------
devote her best efforts on a full-time basis to the furtherance of her
managerial duties with the Company as the Company's Executive Vice President.
While serving in these corporate capacities, Mitcham shall have the
responsibilities, duties, obligations, rights, benefits and requisite authority
as is customary for her positions and as may be determined by the Company's
Board of Directors (the "Board") and as set forth in the Bylaws of the Company.
Mitcham understands that her employment as Executive Vice
President of the Company involves a high degree of trust and confidence, that
she is employed for the purpose of furthering the Company's reputation and
improving the Company's operations and profitability, and that in executing this
Agreement she undertakes obligations set forth herein to accomplish such
objectives. Mitcham agrees that she shall serve the Company fully, diligently
and competently, and to the best of her ability. Mitcham certifies that she
fully understands her right to discuss this Agreement with her private attorney,
that to the extent, if any, she desires, she has availed herself of this right,
that she has carefully read and fully understands this entire Agreement, and
that she is voluntarily entering into this Agreement.
3. Term. Except as otherwise provided in this Agreement, the term of
----
this Agreement (the "Term") shall be for a period of three years commencing
October 1, 1996.
4. Compensation. Mitcham shall receive the following as
------------
compensation:
(a) Mitcham shall receive a monthly salary of $31,333.33 for each
full month of her employment by the Company pursuant to this Agreement, payable
in accordance with the Company's customary payroll practices.
(b) In addition to her salary, Mitcham shall be entitled to a
bonus, payable within 90 days of the end of each annual period of the Term,
based upon the Company meeting certain pre-tax income levels defined below (the
"Bonus"). Pre-tax income shall be determined in accordance with generally
accepted accounting principles. In the event of any dispute over the amount of
pre-tax income, a final determination shall be made by BDO Seidman LLP or
another independent certified public accounting firm selected by the Company. No
Bonus shall be
<PAGE>
payable unless the Company's annual pre-tax income is $3,000,000 or more. The
amount of the Bonus shall be 5% of the first annual pre-tax income of the
Company, which is between $3,000,000 and $5,000,000; 4% of the annual pre-tax
income of the Company which is between $5,000,000 and $10,000,000; and 3% of the
annual pre-tax income of the Company which is between $10,000,000 and
$20,000,000. No Bonus shall be payable for any annual pre-tax income of the
Company in excess of $20,000,000.
(c) The Company shall provide Mitcham with participation in any
group plans or agreements maintained by the Company relating to health insurance
or other related benefits in accordance with their respective terms.
(d) Mitcham shall be entitled to leaves for vacations for periods
reasonably determined by the Board. In addition, Mitcham shall be entitled to
reasonable absences for attendance at business seminars and conventions.
(e) Any payment which the Company shall make to Mitcham pursuant
to this Agreement shall be reduced by standard withholding and other authorized
deductions.
(f) During the term of her employment, Mitcham shall be
reimbursed for reasonable expenses incurred by her for the benefit of the
Company. Any direct payment or reimbursement of expenses shall be made only upon
presentation of an itemized accounting conforming in form and content to
standards prescribed by the Internal Revenue Service relative to the
substantiation of the deductibility of business expenses.
5. Life Insurance. The Company may, but shall not be obligated to,
--------------
apply for and procure as owner and for its own benefit or the benefit of any
lender of the Company, insurance on Mitcham's life, in any amount and form or
forms that the Company may choose. Mitcham shall, at the Company's request,
submit to all medical examinations, supply all information and execute all
documents required by the insurance company or companies to whom the Company has
applied for the insurance.
6. Corporate Data and Antisolicitation. Upon the termination of
-----------------------------------
Mitcham's employment under this Agreement for any reason, Mitcham shall return
to the Company all data and information, whether written, computer, magnetic,
electronic or in any other physical or tangible form, relating to the business
of the Company or any of its affiliates that Mitcham obtained during the time of
her employment. During the term of this Agreement or for a period of one year
thereafter, Mitcham shall neither disclose to any other person or entity, nor
use for her own personal benefit, any information obtained during her employment
by the Company that is not otherwise publicly known, relating to the financial
affairs, distributor lists or the business operations of the Company or any of
its subsidiaries or affiliates. During the term of this Agreement or for a
period of one year thereafter, Mitcham will not influence or attempt to
influence distributors of the Company or any of its present or future
subsidiaries or affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or other entity then
in competition with the business of the Company or any
<PAGE>
subsidiary or affiliate of the Company, nor will she solicit any of the
Company's employees who earned annually $25,000 or more as a Company employee
during the last six months of her or her own employment to work for any
individual, partnership, firm, corporation or other entity then in competition
with the business of the Company or any subsidiary or affiliate of the Company.
7. Termination.
-----------
(a) The Company shall have the right at any time to terminate
Mitcham's employment under this Agreement without further liability or
obligation pursuant to this Agreement upon the occurrence of any of the
following events:
(i) By mutual written agreement, signed by both parties; or
(ii) The death of Mitcham; or
(iii) If the Company determines in good faith that the
Disability of Mitcham has occurred (pursuant to the definition of
Disability set forth below), it may give to Mitcham written notice
in accordance with Section 13 of its intention to terminate
Mitcham's employment. In such event, Mitcham's employment with the
Company shall terminate effective upon receipt of such notice by
Mitcham, provided that, upon receipt, Mitcham shall not have
returned to full-time performance of her duties. For purposes of
this Agreement, "Disability" shall mean a physical or mental
impairment which substantially limits a major life activity of
Mitcham which renders Mitcham unable to perform the essential
functions of her position, even with reasonable accommodation
which does not impose an undue hardship on the Company. The
Company reserves the right, in good faith, to make the
determination of Disability under this Agreement based upon
information supplied by Mitcham and/or her medical personnel as
well as information from medical personnel (or others) selected by
the Company or its insurers; or
(iv) Mitcham is convicted of any crime constituting a felony
under the law of the United States or any State; or
(v) A "Material Breach" of this Agreement as determined by
the Board. The exercise of the right of the Company to terminate
this Agreement shall not abrogate the rights and remedies of the
Company in respect of the breach giving rise to such termination.
For purposes of this subsection, "Material Breach" shall mean that
the Company, acting in good faith based upon the information then
known to the Company, determines that Mitcham has engaged or
committed: willful misconduct; gross negligence; theft, fraud or
other illegal conduct; refusal or unwillingness to perform her
duties; sexual harassment; violation of any fiduciary duties;
violation of any duty of loyalty; or a material
3
<PAGE>
breach of any term of this Agreement. The "Material Breach" shall
be specified in a notice of termination to be delivered by the
Company no later than the date as of which the termination is
effective.
(b) If Mitcham's employment is terminated by the Company for
any reason other than those set forth in sections 7(a)(i) through 7(a)(v) above,
then the Company shall pay "Termination Pay" to Mitcham in full settlement of
any and all claims of Mitcham arising out of or in connection with her
employment by the Company. The "Termination Pay" shall consist of (i) twelve
months' salary, which shall be paid in six monthly installments of $62,666.66
each, commencing on the first day of the month after the month in which
termination occurred and continuing on the first day of each month thereafter
until all six installments have been paid; and (ii) the product of the Bonus to
which Mitcham would be entitled, multiplied by a fraction having a numerator
equal to the number of days in the annual period preceding the date of
termination and a denominator equal to 365, which shall be paid to Mitcham no
later than 90 days after the end of the annual period in which termination
occurred.
(c) If during the term of this Agreement, the Company effects a
merger or acquisition in which it is not the surviving entity or is a party to a
stock exchange in which it becomes a wholly-owned subsidiary of another entity
and Mitcham's employment is thereafter terminated by the Company notwithstanding
that no "Material Breach" has occurred, then Mitcham shall be entitled to
"Termination Pay".
(d) For purposes of this Section 7, voluntary termination of
employment by Mitcham as a result of a material change by the Company in
Mitcham's job responsibilities shall be deemed to be termination by the Company
without a "Material Breach" and Mitcham shall be entitled to "Termination Pay".
(e) Mitcham shall have the right to terminate this Agreement in
the event of a default by the Company of any material provision of this
Agreement but only if Mitcham shall have first given written notice of the
default to the Company and if within thirty days after receipt of that notice
the Company has not cured that default. Upon termination neither Mitcham nor the
Company shall have any further obligations under any of the provisions of this
Agreement except that Mitcham shall be entitled to "Termination Pay".
(f) Mitcham agrees that the payments contemplated by this
Agreement shall constitute the exclusive and sole remedy for any termination of
her employment and Mitcham covenants not to assert or pursue any other remedies,
at law or in equity, with respect to any termination of employment.
8. Remedies. If there is a breach or threatened breach of the
--------
provisions of Section 2 or 6 of this Agreement, the Company shall be entitled to
an injunction restraining Mitcham from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
4
<PAGE>
9. Severability. It is the clear intention of the parties to this
------------
Agreement that no term, provision or clause of this Agreement shall be deemed to
be invalid, illegal or unenforceable in any respect, unless such term, provision
or clause cannot be otherwise construed, interpreted, or modified to give effect
to the intent of the parties and to be valid, legal or enforceable. In the event
that such a term, provision, or clause cannot be so construed, interpreted or
modified, the validity, legality and enforceability of the remaining provisions
contained herein and other application(s) thereof shall not in any way be
affected or impaired thereby and shall remain in full force and effect.
10. Waiver of Breach. The waiver by the Company or Mitcham of the
----------------
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by that party.
11. Entire Agreement. This document contains the entire agreement
----------------
between the parties, supersedes all prior oral agreements, if any, and may not
be changed orally, but only by agreement in writing signed by the parties.
12. Governing Law. This Agreement, its validity, interpretation and
-------------
enforcement, shall be governed by the laws of the State of Texas.
13. Notices. Any notice pursuant to this Agreement shall be validly
-------
given or served if that notice is made in writing and delivered personally or
sent by certified mail, return receipt requested, postage prepaid, to the
following addresses:
If to Company: Nutrition For Life International, Inc.
9101 Jameel
Houston, TX 77040
If to Mitcham: To the address for Mitcham set forth below her
signature.
All notices so given shall be deemed effective upon receipt. Either party, by
notice so given, may change the address to which her or its future notices shall
be sent.
14. Assignment and Binding Effect.
-----------------------------
(a) This Agreement shall be binding upon Mitcham and the Company and
shall benefit the Company and its successors and assigns.
(b) This Agreement shall not be assignable by Mitcham.
15. Headings. The headings in this Agreement are for convenience
--------
only; they form no part of this Agreement and shall not affect its
interpretation.
5
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first above written.
NUTRITION FOR LIFE INTERNATIONAL, INC.
By:_____________________________________
Authorized Officer
_______________________________
Jana Mitcham, Individually
Address for Notice:
10618 Great Plains
-------------------------------
(Street Address)
Houston, Texas 77064
-------------------------------
(City, State and Zip Code)
6
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
-------------------------------
To the Board of Directors and Shareholders of Nutrition For Life International,
Inc.:
We consent to incorporation by reference in the registration statement on
Form S-8 of Nutrition For Life International, Inc. (No. 33-99366) of our report
dated November 2, 1995, except as to Note 2, which is as of December 8, 1995,
relating to the balance sheet of Nutrition For Life International, Inc. as of
September 30, 1995, and the related statements of operations, stockholders'
equity and cash flows for each of the years in the two-year period ended
September 30, 1995, which report appears in the September 30, 1996 Annual Report
on Form 10-KSB of Nutrition For Life International, Inc.
KPMG Peat Marwick LLP
Houston, Texas
January 28, 1997
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Nutrition for Life International, Inc.
Houston, Texas
We hereby consent to the incorporation by reference in the Registration
Statement Form S-8 of our report dated November 1, 1996, except Notes 7 and 8,
which are dated December 4, 1996, relating to the consolidated financial
statements and schedules of Nutrition for Life International, Inc. appearing in
the Company's Annual Report on Form 10-KSB for the year ended September 30,
1996.
BDO Seidman, LLP
Houston, Texas
January 28, 1997
