EX-10.51
WILLIAM MCGLASHAN, JR.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
dated as of October 5, 1998, between PHARMANEX,
INC., a Delaware corporation ("Company"), and WILLIAM MCGLASHAN, JR.
("Executive").
WHEREAS, the Company
is a wholly owned subsidiary of Generation Health
Holdings, Inc.;
WHEREAS, in
connection
with the transactions contemplated by that
certain Agreement
and Plan of Merger
and Reorganization between Generation
Health Acquisitions,
Corp., Nu Skin Enterprises, Inc. ("Parent") and Generation
Health Holdings,
Inc., dated as of
October 5, 1998 ("Merger Agreement"), the
Company will become an indirect wholly owned subsidiary of the
Parent;
WHEREAS,
following the
transactions
contemplated
by the Merger
Agreement, the Company wishes to have the Executive continue to
provide services
for the period provided in this Agreement and Executive
wishes to remain in
the
employ of the Company for such period; and
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
Effective Time (as defined in the Merger Agreement).
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.
<PAGE>
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 Time and shall terminate
on the earlier of (a) December 31, 2001, 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,
2001 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 Time, all prior employment
agreement,
compensation and
incentive arrangements and rights to
acquire equity of the Company (except as provided expressly herein and
except for options
expressly assumed by Parent in the Merger Agreement
and except for the Indemnity Agreement between Executive and
Generation
Health Holdings, Inc.
(unless Executive and the Company enter
into a
replacement
Indemnification
Agreement in
form
and substance
satisfactory to
Executive)) are cancelled in their entirety and are of
no further force or effect.
3. SALARY
3.1. Base Salary. From the Effective Time, the Executive shall
be entitled
to receive a base
salary ("Base Salary") at a rate of
$230,000 per
annum, payable twice monthly in arrears in equal
installments in accordance with the Parent's payroll practices.
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 three year period of the Employment Term only, the
Executive
shall receive a minimum increase of ten percent (10%) per
annum.
<PAGE>
3.3. Bonus. During his
employment under this
Agreement, the
Executive shall be
entitled to
participate in Parent's Cash Incentive
Plan ("Bonus Plan"),
under which the
Executive shall be entitled to
participate as a
"Large Country
Manager" (as such term
is defined in
the Bonus Plan) and to
receive an annual bonus of up to 130% of his
Base Salary,
based on his
level of achievement of the applicable
performance criteria. Any bonus will be paid in cash in accordance
with
of the terms and conditions of the Bonus Plan. If Executive
would have
been entitled
to a bonus
under this Section for any bonus period
(January 1 to June 30, and July 1 to December 31) but for the fact
that
he is no longer
employed by the Company on a bonus payment date (March
15 or September 15), as opposed to during a bonus period, other
than as
a result of a termination for Cause or Executive's
resignation,
then
Executive shall
nonetheless be
entitled to and be paid the applicable
bonus.
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 Effective Time,
Parent will grant the
Executive nonqualified
stock options
("Options") to acquire
450,000 shares of
Parent common stock
("Shares"); 120,000 of the Options will be designated Series A
Options ("Series A
Options"), 150,000 of
the Options will be
designated Series B
Options ("Series B
Options") and 180,000
of the Options will be designated Series C Options ("Series C
Options"), in each case with an exercise price equal to $17.00
per share.
(b) For each of the three fiscal years of the Company
beginning with
fiscal year 1999 ("Performance Period"),
one-third of each of
the Series
A, Series B and Series C
Options will vest (and become exercisable) at the end of
each
fiscal year if the following conditions are satisfied: (i) the
Pharmanex/IDN Gross Profit objectives for such fiscal year for
such series
and set forth on Appendix A (which may be
equitably
adjusted from
time
to time, in the sole
determination of Parent's Board of Directors acting reasonably
and in good faith, to reflect significant changes and
developments in
the Company's operations resulting from
acquisitions or
dispositions of other
companies or business)
("Gross Profit")
are met or exceeded, (ii) the Parent=s
Consolidated Revenue
objectives for such fiscal year for such
series and set forth in Appendix B (which may be equitably
adjusted from time to time, in the sole determination of the
Parent's Board of
Directors acting reasonably and in good
faith, to reflect
significant
changes and
developments
in
Company and Parent
operations resulting
from acquisitions or
dispositions of other companies or businesses) ("Consolidated
Revenue") are met or
exceeded, and (iii) the Executive is
<PAGE>
employed by the Company or an affiliate continuously until the
last day of such fiscal year. For purposes of this Agreement,
Gross Profit of the
Company and
Consolidated Revenue
of the
Parent shall
be calculated by the Parent=s independent
certified public
accountants
in accordance
with generally
accepted accounting
principles.
In the event that
Parent's
Board of Directors
determines
that an increase in
the Gross
Profit or Consolidated
Revenue objectives is warranted in
accordance with
the foregoing, such objectives shall be
adjusted upward by an
amount equal to the
annualized
gross
profit (for the Gross Profit objectives) or revenue (for the
Consolidated Revenue
objectives)
results for the acquired
company in the year of acquisition, plus the lesser of (i) 10%
ten percent per annum to reflect a modest anticipated growth
rate, or (ii) the
average historical growth rate in gross
profit (for the Gross Profit objectives) or revenue (for the
Consolidated Revenue
objectives)
of the acquired company
during the acquired company's prior three fiscal years.
Moreover, if any
one-third installment of such Options have not become
exercisable in accordance with the immediately preceding paragraph,
such Options
shall become
vested and
exercisable
at the earlier to
occur, if any, of
the
following dates or events:
(i) the end of any subsequent fiscal year in the
Performance Period if
the cumulative Gross Profit objectives
and the cumulative
Consolidated
Revenue objectives for the
period ending with the end of such fiscal year as set forth on
Appendix A and Appendix B are met or exceeded; provided that
the Executive is
employed by the Company continuously until
the last day of such fiscal year; or
(ii) the date which is seven years after the
Effective Time;
provided the Executive is employed by the
Company continuously until such date.
Notwithstanding the
foregoing,
upon the occurrence of a change of
control of the Parent
(as defined in the Stock Option Plan), all unvested
Options will become immediately vested and exercisable;
provided the
Executive
is employed by the Company or an affiliate on such date.
(c ) Unless the
Company determines
otherwise,
the
Executive shall forfeit all 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.
<PAGE>
(d ) In connection with the grant of the 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) at the Company's
expense, maintain an
executive
quality apartment or
condomin
