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EXHIBIT 10.3
 
January 2, 2012
CONFIDENTIAL

Richard H. Neuwirth
c/o Twinlab Corporation
632 Broadway, Suite 201
New York, NY 10012

Dear Rich:

I am pleased to offer you continued employment as an executive of Twinlab
Corporation (hereinafter the “Company”), on the terms set forth in this letter
(“Agreement”).

You may choose to accept this offer by countersigning this Agreement in the
space provided below and returning the same to Linda Yost in the Company’s Utah
offices (address below) within five (5) business days following the date
above.  Upon your acceptance as provided above, this Agreement shall be
effective as of the date first stated above. Please note that if you accept this
offer of continued employment, you will accept the terms of this Agreement in
lieu of any previous employment agreements, commission agreements, fee
agreements, severance pay agreements or other commitments regarding employment
made to you by the Company, and you will waive any and all claims under such
agreements.
 
 
1. Terms of Employment. The terms of our employment relationship shall continue
to be at will and subject to termination by you or the Company at any time for
any reason or no reason, with or without cause. However, if the Company
terminates your employment at any time other than for “Cause” (defined in
Section 7(a) below) or if you terminate your employment with the Company at any
time for “Good Reason” (defined in Section 7(b) below), during the term of this
Agreement you will receive Severance Pay as provided for in Section 7.

2. Position, Duties, and Office Location. Your position should you accept this
offer of continued employment will continue to be Executive Vice-President,
Chief Legal Officer and General Counsel. You will report to the Company’s
President & CEO. The Company may, with your consent, transfer you to other
executive level positions, if consistent with your skills and experience, within
the Company or an affiliated company, and this Agreement may be assigned by the
Company to any of its affiliated companies.  This full-time position will be
based in the Company’s New York offices, currently located at 632 Broadway,
Suite 201, New York, New York.  The Company may transfer you to another office
location but only if such other office is located within 50 miles of your
initial office location in the Company’s New York office.  A transfer to an
office located more than 50 miles from your initial office location will be
deemed a material change in the geographic location at which you must perform
the services pursuant to this Agreement.

 
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Your duties will be executive level duties commensurate with your position. You
will be loyal to the Company during the employment and devote your full time
business efforts and attention to your employment, provided that you may engage
in civic and professional activities that do not interfere with your employment,
and you may accept positions on boards of directors of other entities with the
advance approval of the Company’s President & CEO.
 
 
3. Salary. Your base salary will be Two Hundred and Fifty Thousand Dollars
($250,000) per year, which shall be paid in accordance with the Company’s normal
payroll practices, currently bi‐weekly pay periods, and from which the Company
shall withhold taxes in accordance with applicable regulations.  Your salary
will be subject to annual review by the Company.  However, if your salary is
materially reduced from the rates set forth above, except as provided for in
Section 7(b)(i), you will have the right to resign for Good Reason pursuant to
and in accordance with the terms of Section 7(b) below.

4. Bonus. It is the Company’s intent to create an annual performance bonus
schedule that will provide you and other key executives with an annual bonus
opportunity based upon the Company’s profitability.  It is currently the intent
of the Company to present such a bonus program to the Company’s Board of
Directors for approval, with the intent that upon such approval the plan would
become effective for the calendar year commencing January 1, 2012.  For each
subsequent year, the Company retains the right to annually review and modify the
set(s) of metrics that determine how and the extent to which bonus opportunities
are achieved for such subsequent year.

To the degree you are entitled to a performance bonus pursuant to the applicable
bonus schedule for a given year, your performance bonus will be paid to you,
less any required taxes and withholding in accordance with applicable
regulations, by March 15 of the following year (or in the event that the Company
changes its fiscal year to be other than a calendar year, then within 45 days of
the close of the applicable fiscal year).
 
 
5. Fringe Benefits. As a full-time employee, you will continue to be entitled to
participate in the Company’s comprehensive benefits programs. The specific terms
of all benefit programs are as set out in applicable policy statements, program
documents, and insurance policies, and are subject to change at any time in the
Company’s sole discretion.  You will continue to accrue paid time off (PTO), in
accordance with the Company’s PTO policy, at the rate of twenty-five (25) days
per calendar year.

 
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6. Business Expenses. You will be reimbursed for business expenses that you
incur during your employment, including business related travel expenses, in
accordance with the Company’s business expense policy and subject to
documentation requirements as provided in that policy.

7. Severance Pay. You will be entitled to Severance Pay as described in this
Section if the Company terminates your employment other than for “Cause”, or if
you terminate your employment for “Good Reason”, both as defined below. Except
for such Severance Pay as may be available to you pursuant to and in accordance
with the terms of this Section, you will not be entitled to other compensation
or benefits from the Company after termination of employment except any vested
benefits accrued before the termination of employment under the terms of any
Company qualified retirement plan or written benefit plan applicable to you
(“Vested Rights”) and, to the degree provided for under applicable Company
policy, unpaid salary and accrued (in accordance with Company policy) but unused
Personal Time Off through the date of termination. Notwithstanding the
foregoing, you and your qualified beneficiaries shall continue to be entitled to
elect continuation coverage under the federal law known as COBRA, in accordance
with the terms of that law.

(a) “Cause” for termination without Severance Pay means termination due to your
death or for any of the following reasons:

(i)  
you are convicted of, or plead “guilty” or “no contest” to, any crime (whether
or not involving the Company) constituting a felony or involving moral turpitude
in the jurisdiction involved;

(ii)  
you are guilty of gross neglect or misconduct in the performance of your duties;

(iii)  
your willful failure or refusal to perform your duties;

(iv)  
your material violation of this Agreement or the Company’s policies;

(v)  
you engage in conduct which is materially injurious or materially damaging to
the Company or the reputation of the Company; or

(vi)  
you are unable to substantially perform your job duties for a continuous period
of 90 days or for 120 days in any 12 month period due to physical or mental
disability.

 
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In order for the Company to terminate your employment for “Cause”, the Company
must notify you in writing of the specific act or omission constituting
“Cause”.  If the “Cause” arises under Section 7(a)(ii), 7(a)(iii), 7(a)(iv), or
7(a)(v), the Company must give you thirty (30) days to correct the act or
omission constituting “Cause”. If you do not correct it, the Company may
terminate your employment for “Cause” by written notice delivered to you within
the following thirty days.  The foregoing notwithstanding, in the event that you
are terminated for “Cause” (pursuant to any provision of Section 7(a)) as the
result of your theft of Company property, your embezzlement or fraud relating to
the Company, an act of physical violence by you causing bodily harm to another
person on Company property or off Company property but in the performance of
your duties as a Company employee, or your coming to work under the influence of
alcohol or a controlled substance (except prescription drugs used as
prescribed), you shall not be entitled to a cure period or right to correct and
the Company may effect termination for “Cause” immediately upon written notice
to you.  In addition, the Company reserves the right to suspend your employment
with pay or to alter your duties during any cure period, if in the Company’s
sole discretion, the Company reasonably believes it is in the best interests of
the Company’s business to do so during said cure period, provided no such
suspension or alteration will materially interfere with your right to cure if
applicable.
 
 
If the Company becomes aware after termination of your employment other than for
Cause that you directly engaged in embezzlement or fraud relating to the Company
before the termination, the Company may re‐characterize your termination as
having been for Cause. If such a post‐termination finding of Cause occurs and
severance payments are discontinued, then any General Release signed by you
shall be considered null and void. If the Company recharacterizes the
termination as being for Cause as provided above, you may, within ten (10) days
of receiving notice of such termination, request in writing a meeting with the
Company’s President & CEO to appeal the finding of Cause as the basis of your
termination; such hearing to be held within a reasonable time following receipt
by the Company of your written request.
 
 
(b) “Good Reason” for you to terminate your employment with Severance Pay means
any of the following, except when done with your consent:
 
(i)  
A material diminution in your base compensation other than a proportional
reduction pursuant to a Company‐wide reduction of all executive salaries due to
economic conditions.

 
 
(ii)  
A material diminution in your authority, duties, or responsibilities.

 
 
(iii)  
A material change in the geographic location at which you must perform the
services.

 

 
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(iv)  
Any other action or inaction that constitutes a material breach of this
Agreement by the Company.

 
In order for you to be entitled to resign for “Good Reason”, you must first
notify either the Company’s President & CEO or the Company’s Chief Legal Officer
in writing of the specific act or omission constituting “Good Reason” within a
period not to exceed ninety (90) days of the initial existence of the condition,
upon the notice of which the Company shall have thirty (30) days to remedy the
condition.  If the Company does not remedy or otherwise correct the condition
noticed within the thirty (30) day period, you may resign for “Good Reason” by
written notice delivered to either the Company’s President & CEO or the
Company’s Chief Legal Officer within the following thirty days.

(c)  "Change in Control" means (i) a corporate reorganization or other
transaction (or series of related transactions) involving the Company or Idea
Sphere Inc., a Michigan corporation and the parent corporation of the Company
(“Parent”), which results in either (A) the shareholders of Parent immediately
prior to such reorganization or other transaction owning less than 50% of the
combined voting power of the capital stock of the surviving company immediately
following such reorganization or other transaction or (B) Parent owning less
than 50% of the combined voting power or capital stock of Company immediately
following such reorganization or other transaction; or (ii) the sale of all or
substantially all of the assets of the Company or the Parent; or (iii) if
Continuing Directors at any time fail to constitute at least a majority of the
Board of Parent.  In addition, notwithstanding anything contained in this
Agreement to the contrary, if your employment is terminated prior to a Change of
Control and you reasonably demonstrate that such termination was at the request
of or in response to a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change of Control (a “Third Party”), and who
subsequently effectuates a Change of Control, then for all purposes of this
Agreement, the date of a Change of Control shall mean the date immediately prior
to the date of such termination of your employment.

(d)  “Continuing Directors” means the individuals who were either (i) first
elected or appointed as a director of Parent prior to the date of this
Agreement, or (ii) subsequently appointed as a director of Parent, if appointed
or nominated by at least a majority of the Continuing Directors in office at the
time of the nomination or appointment, but specifically excluding any individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the Board of
Directors of the Parent.

 
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(e) “Severance Pay” will consist of:

(i)  
Continuation of your salary for 26 weeks following the date on which your
employment terminates, in the event that both (A) you are either terminated by
the Company other than for Cause or resign from the Company for Good Reason, and
(B) the date on which your employment terminates is not within six (6) months
after the effective date of a Change of Control.

(ii)  
Continuation of your salary for fifty-two (52) weeks following the date on which
your employment terminates, in the event that both (A) you either are terminated
by the Company other than for Cause or resign from the Company for Good Reason,
and (B) the date on which your employment with the Company terminates is within
six (6) months after the effective date of a Change of Control.

(iii)  
In the event that salary continuation is available pursuant to either Section
7(e)(i) or 7(e)(ii), the Company will, at its sole discretion, provide one of
the following benefits:

A.  
Contribution by the Company toward your COBRA premiums (for you and your
qualified beneficiaries) at the same percentage rate of contribution as the
Company made towards your medical and dental coverage premiums during your
period of employment for the same time period as that for which you are entitled
to salary continuation pursuant to this Sub-section (subject at all times to (1)
your continued payment of the remaining COBRA premiums not covered by the
Company contribution referenced above and (2) your continued eligibility for
COBRA coverage).  To the extent required by law, or if the Company reasonably
deems it necessary to avoid taxation of benefits to you, the Company may treat
the contributions as taxable income, in which case they will be reported as W-2
compensation and subject to appropriate payroll tax withholding.

B.  
Reimbursement by the Company for a portion of your COBRA premiums (for you and
your qualified beneficiaries).  The reimbursement amount will be a percentage of
the COBRA premiums equal to the percentage rate of contribution as the Company
made towards your medical and dental coverage premiums during your period of
employment and will be paid for the same time period as that for which you are
entitled to salary continuation pursuant to this Sub-section (subject at all
times to (1) your continued payment of the COBRA premiums in full and (2) your
continued eligibility for COBRA coverage).  To the extent required by law, or if
the Company reasonably deems it necessary to avoid taxation of benefits to you,
the Company may treat the reimbursements as taxable income, in which case they
will be reported as W-2 compensation and subject to appropriate payroll tax
withholding.

 
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C.  
An increase in your salary continuation payments that, on a monthly basis, is
equal to the contribution amount that the Company made on a monthly basis
towards your medical and dental coverage premiums during your period of
employment, continuing for the same time period as that for which you are
entitled to salary continuation pursuant to this Sub-section but in no event any
longer than the period for which COBRA continuation coverage would be
available.  This amount is taxable income, and will be reported as W-2
compensation and subject to appropriate payroll tax withholding.

(iv)  
In the event that salary continuation is available pursuant to either Section
7(e)(i) or 7(e)(2), up to $5,000 of outplacement assistance from an outplacement
assistance firm selected by you and approved by the Company (whose approval will
not be unreasonably withheld); such assistance to be used within six (6) months
of the date of your termination of employment with the Company.  The Company
will contract directly with the approved outplacement assistance firm and will
make payment for services directly to such firm.

In the event of your death while receiving Severance Pay, your designated
beneficiary (or, if none, your estate) will receive the remaining Severance Pay.

(f) Conditions to Severance Pay. To be eligible for Severance Pay, you must meet
the following conditions:

(i)  
You must promptly sign and continue to honor a general release, in a form
acceptable to the Company, of any and all claims that you might otherwise have
relating to the termination of your employment, or relating to any other act,
omission or statement up to the date on which you execute the general release,
against the Company, the Company’s Affiliates (defined as other entities
controlling, controlled by, or under common control with the Company), and the
officers, directors, employees, owners, and agents of the Company and each
Affiliate, provided that the release will not waive your right to the Severance
Pay, your Vested Rights (as defined above), or any rights you may otherwise have
to indemnification under the Company’s Articles of Incorporation or Bylaws for
acts or omissions during your employment with the Company.

 
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(ii)  
You must resign (upon written request by Company) from all positions with or
representing the Company or any Affiliate, including but not limited to
membership on boards of directors.

(iii)  
You must provide the Company for a period of 90 days after the employment
termination date with consulting services regarding matters within the scope of
your former duties, upon request by the Company’s President & CEO, provided that
you will only be required to provide those services by telephone at your
reasonable convenience and without substantial interference with your other
activities or commitments.

(iv)  
To maintain continuing eligibility for Severance Pay, you must comply with the
Covenant Not to Compete and all other provisions of Section 9 below.

 
(g) Offsets to Severance Pay. Severance Pay for any week will be reduced by:

(i)  
any disability benefits to which you are entitled for that week under any
disability insurance policy or program (including but not limited to worker’s
disability compensation);

(ii)  
any severance pay payable to you by the Company under any other agreement or
Company policy;

(iii)  
any payment due to you under the Federal Worker Adjustment and Retraining
Notification Act or any comparable state statute or local ordinance; and

(iv)  
any amounts that you owe to the Company.

8. Withholding and Deductions. All pay and benefits will be subject to
withholding and deductions required by law or court order.

9. Other Matters.

(a) Loyalty and Confidentiality; Certain Property and Information.

 
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(i) Loyalty and Confidentiality. You will be loyal to the Company during your
employment and will forever hold in the strictest confidence, and not use or
disclose, any non‐public information about the Company or any Affiliate or their
businesses, including but not limited to information regarding techniques,
processes, developmental or experimental work, financial or ownership
information, trade secrets, customer or prospect names or information, current
or planned products, services, sales, vendors and employees, except as
disclosure or use may be required in connection with your work for the Company
or such Affiliate. Your commitment not to use or disclose information does not
apply to information that becomes publicly known without any breach of this
Agreement by you, or which was legally in your possession, without violation of
any person’s duty of confidentiality to the Company or any Affiliate, prior to
your employment with the Company or an Affiliate. In the event you are requested
or compelled by court order, decree, subpoena or other process or requirement of
law to disclose confidential information you shall to the extent permissible and
practicable under the circumstances provide reasonably prompt written notice
(unless such notice is prohibited by law) to the Company of any such requirement
so that the Company may, at its option and expense, seek a protective order or
other appropriate remedy. You agree to cooperate with the Company in any such
proceeding, at the expense of the Company, provided that the foregoing shall not
be construed to require you to undertake litigation or other legal proceedings
on its own behalf. In the event that such protective order or other remedy is
not obtained, you agree to furnish only that portion of the confidential
information which you are advised by your own counsel should be disclosed and,
at the Company’s expense, to use reasonable efforts to obtain assurance that
confidential treatment will be accorded the information. Your commitments in
this section will continue in effect after termination of the Employment.

(ii) Certain Property and Information. Upon termination of your employment, you
will deliver to the Company any and all property of the Company or any Affiliate
and any and all materials and information (in whatever form) relating to the
business of the Company or any Affiliate, including without limitation all
customer lists and information, financial information, business notes, business
plans, documents, keys, credit cards and company provided computers, automobiles
or other equipment. All such property will be returned promptly and in good
condition except for normal wear.

 
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Your commitment to this Section 9(a) will continue in effect after termination
of your employment. The parties agree that any breach of your covenants in this
Section 9(a) would cause the Company irreparable harm, and that injunctive
relief would be appropriate.

(b) Ideas, Concepts, Inventions and Other Intellectual Property. All business
ideas and concepts and all inventions, improvements, developments and other
intellectual property made or conceived by you, either solely or in
collaboration with others, during your employment, whether or not during working
hours, and relating to the business or any aspect of the business of the Company
or any Affiliate or to any business or product the Company or any Affiliate is
actively planning to enter or develop, shall become and remain the exclusive
property of the Company, and the Company’s successors and assigns. You shall
disclose promptly in writing to the Company all such inventions, improvements,
developments and other intellectual property, and will cooperate in confirming,
protecting, and obtaining legal protection of the Company’s ownership rights.
Your commitments in this Section 9(b) will continue in effect after termination
of your employment as to ideas, concepts, inventions, improvements and
developments, and other intellectual property made or conceived in whole or in
part before the date your employment terminates. The parties agree that any
breach of your covenants in this Section 9(b) would cause the Company
irreparable harm, and that injunctive relief would be appropriate.

You represent and warrant that except as may be described on an Exhibit to this
Agreement signed separately by you and the Chief Legal Officer, there are no
ideas, concept, inventions, improvements, developments, or other intellectual
property that you invented or conceived before becoming employed by the Company
to which you, or any assignee of you, now claims title and are to be excluded
from this Agreement.

(c) Non‐Contravention. You represent and warrant that:

(i)  
No Restrictive Agreements. You are not party to or bound by any agreement that
purports to prohibit or restrict you from:

o  
engaging in your employment pursuant hereto; or

o  
using any information and expertise that you possess (other than information
constituting a trade secret of another person or firm under applicable law) for
the benefit of the Company.

 
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(ii)  
No Abuse of Trade Secrets. You will not use in the course of your employment, or
disclose to the Company or its personnel, any information belonging to any other
person that constitutes a trade secret of another person under applicable law.

Your representations and warranties in this Section 9(c) shall continue in
effect after termination of employment only as to any breach during your
employment.

(d) Covenant Not to Compete. During your employment and to maintain continued
eligibility for Severance Pay, if any, you agree as follows:

i. Non‐Compete. You will not (A) directly or indirectly compete with the
Company, or (B) be employed by, perform services for, advise or assist, own any
interest in or loan or otherwise provide funds to any other business that is
engaged (or seeking your services with a view to becoming engaged) in any
Competitive Business. “Competitive Business” means a business that is engaged
directly or indirectly in (X) the business of developing, manufacturing,
marketing (including catalogue and mail order marketing), selling and/or
distributing (including wholesale distributing) vitamins, minerals, nutrition
supplements (including, without limitation, amino acids and proteins), herbal
products, phytonutrients, herb teas, nutritional drinks, or food bars, and (Y)
any other business engaged in by the Company or any Affiliate or being actively
developed by management of the Company or such Affiliate.

ii. No Interference with Covered Relationships. You will not directly or
indirectly solicit, or provide assistance to anyone else seeking to solicit, any
person having or contemplating a Covered Relationship (“Covered Relationship”
means a customer, vendor, employment or any other contractual or independent
contractor relationship) with the Company or an Affiliate to refrain from
entering into or terminating the Covered Relationship, or entering into any
similar relationship with anyone else instead of the Company or such Affiliate.

iii. Exception. Nothing in this Section 9(d) prohibits you from owning not more
than 2% of any class of securities of publicly traded entity, provided that you
do not engage in other activity prohibited by this Section 9.

 
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Your commitments in this Section 9(d) will continue in effect after termination
of employment and so long as you are receiving any Severance Pay. It is agreed
that the Company shall not seek to prevent you from gaining employment with a
Competitive Business, but that acceptance by you of such employment will
automatically terminate your right to any continued Severance Pay to which you
may otherwise be entitled under Section 7.

(e) Conflicts of Interest. During your employment, you will not acquire any
financial interest in, accept gifts or favors from, or establish any
relationship other than on behalf of the Company with, any customer, supplier,
distributor, or other person who does or seeks to do business with the Company,
unless you have disclosed the financial interest, gift, favor, or relationship
to the Company’s Chief Legal Officer in writing and have received written
approval for that activity or transaction; provided, however, that this
restriction does not apply to casual and normal social/business relationships
that do not involve exchange of money, gifts or favors other than normal
business expenditures such as lunches or event attendance without significant
cost.

If any member of your family engages or proposes to engage in any relationship
or activity that would be covered by the preceding sentence if engaged in by
you, you will immediately disclose that proposed or actual relationship or
activity as provided above.

10.  Section 409A. This Agreement is intended to be exempt from Section 409A of
the Internal Revenue Code as an involuntary separation pay plan as that term is
understood under Treasury Regulation § 1.409A-1(b)(9) and shall be interpreted
and operated consistently with those intentions.

11. Entire Agreement, Waiver of Claims. You agree that this Agreement contains
all commitments and obligations of the Company to you, and all your commitments
and obligations to the Company, and that any and all prior agreements,
commitments, or obligations, including but not limited to any commission or
commission override agreements, are hereby superseded and cancelled.

12. Amendments and Waivers. This Agreement cannot be amended, and the
obligations under this Agreement cannot be waived, unless the amendment or
waiver is agreed to in writing by you and Company’s President & CEO. No failure
to pursue any breach or non‐performance of this Agreement shall be deemed a
waiver of any prior or subsequent breach or non‐performance.

 
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13. Arbitration. Any dispute or controversy between the parties hereto, whether
during the employment term or thereafter, including without limitation, any and
all matters relating to this Agreement, your employment with the Company and the
cessation thereof, and all matters arising under any federal, state, or local
statute, rule or regulation, or principle of contract law or common law,
including but not limited to any medical leave statutes, wage payment statutes,
employment discrimination statutes, employee benefit statutes, and any other
equivalent federal, state, or local statute, will be settled by arbitration
administered by the American Arbitration Association (“AAA”) in New York, New
York. The arbitration will be conducted pursuant to AAA’s National Rules for
Resolution of Employment Disputes (or their equivalent), which arbitration will
be confidential, final, and binding to the fullest extent permitted by law.
There shall be one (1) arbitrator, selected jointly by the parties hereto, or if
the parties cannot so agree on a single arbitrator, selected in accordance with
AAA’s procedures. Each party hereto will be responsible for paying its
attorney’s fees and costs incurred under this Section 13, except as may
otherwise be provided by the arbitrator in order to comply with applicable
substantive law. Further, the parties hereto will equally share any costs levied
by the AAA, including the cost of the arbitrator and use of a hearing room,
provided that you will not be obliged to pay for any portion of such costs
beyond the maximum amount permitted in order that this arbitration provision be
legally enforceable.

14. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to its
conflict of laws principles.

To accept employment on the terms of this Agreement, please sign below.
 
 
Very truly,

/S/ Thomas A. Tolworthy            

Thomas A. Tolworthy
President & CEO

By signing below I accept continued employment with Twinlab Corporation on the
terms of this Agreement.

/S/Richard Neuwirth               
Richard H. Neuwirth
 
 

 
 
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