SEVERANCE AGREEMENT AND RELEASE, dated as of June 1, 1998, between
Xxxxxx X. Xxxxx ("Xxxxx") and IVC Industries, Inc. ("IVC").
1. Xxxxx and IVC agree that, effective June 1, 1998 (the "Effective
Date"), Xxxxx'x employment by IVC under the Employment Agreement, effective as
of January 1, 1993, between Xxxxx and IVC (the "Employment Agreement"),
including his tenure as President of IVC, has terminated as a result of his
resignation. Xxxxx agrees that, subsequent to the Effective Date, he shall not
be or hold himself out as an officer or employee of IVC or any of its
subsidiaries. IVC agrees that Xxxxx'x resignation shall be considered a
"retirement" under IVC's stock option plans.
2. Xxxxx hereby resigns as a director of Vitamin Specialties Corp.,
a wholly owned subsidiary of IVC.
3. Xxxxx and IVC agree that from the Effective Date through the
third anniversary of the Effective Date (the "Severance Period"), in
consideration of his past services as President of IVC, IVC shall pay Xxxxx x
xxxxxxxxx payment (the "Severance Payment") of $85,000 per annum in equal
bi-weekly installments. In the event of Xxxxx'x death during the Severance
Period, IVC shall pay the Severance Payment during the balance of the Severance
Period to Xxxxx'x wife.
4. During the Severance Period, Xxxxx may accept new employment
outside of IVC on a full-time or part-time basis or as a consultant. In
addition, so long as Xxxxx serves as a director of IVC, he shall receive the
standard compensation granted to non-employee directors of IVC.
5. During the Severance Period, Xxxxx shall be entitled to
participate and shall be included in IVC's Group Medical Insurance Plan, which
includes medical, dental, prescription drug and vision coverage, but only if
IVC's stop-loss insurance provider agrees that Xxxxx may be covered under IVC's
stop-loss insurance plan for no more than a nominal additional fee. If IVC's
stop-loss insurance provider does not so agree, and if Xxxxx elects COBRA
continuation coverage, IVC agrees to reimburse Xxxxx for any payments required
to be made by him during the Severance Period for said COBRA continuation
coverage.
6. From the Effective Date through the first anniversary of the
Effective Date, IVC shall reimburse Xxxxx for his expenses associated with his
use of a car and driver, in an amount not to exceed $1,200 per month.
7. If Xxxxx desires to sell all or a portion of his shares of IVC
Common Stock, IVC agrees to register the sale of such shares on Form S-3, at
IVC's expense, provided that Form S-3 may be used for the registration of such
shares.
8. Subject to the approval of IVC's lenders, IVC agrees to lend
Xxxxx $300,000 for the sole purpose of allowing Xxxxx to exercise his option to
purchase 200,000 shares of IVC Common Stock at an exercise price of $1.50 per
share (the "Option"), which Option was granted to Xxxxx on October 13, 1993, and
which Option expires on October 14, 1998. Said loan shall be represented by a
full-recourse note (the "Note"), in a form agreeable to IVC and its counsel,
which shall (a) bear interest at a rate equal to the interest rate of IVC's
loans with its principal bank, (b) be due and payable, with respect to both
principal and interest, 3 years from the date of the Note or upon Xxxxx'x sale
of the shares of IVC Common Stock purchased by Xxxxx with the proceeds of said
loan (the "Shares"), and (c) provide that the Shares be pledged to IVC to secure
the payment by Xxxxx to IVC of all amounts of principal and interest due and
owing under the Note. Xxxxx understands that he will recognize ordinary income
for income tax purposes on any gain he realizes upon exercise of the Option, and
IVC will be entitled to a corresponding deduction. Xxxxx agrees that, upon his
exercise of the Option, he will pay to IVC an amount equal to all amounts that
IVC is required by law to pay over to governmental taxing authorities, including
wage withholding, in respect of Xxxxx'x exercise of the Option. Xxxxx further
agrees that if for any reason payment is not made by him in accordance with the
preceding sentence, IVC shall be entitled to withhold from any amounts due
Xxxxx, including, without limitation, his Severance Payment, all amounts owed by
Xxxxx pursuant to the preceding sentence.
9. Xxxxx acknowledges that all the payments and benefits described
in Paragraphs 3 through 8 above are not required by IVC's policies and/or
procedures, but constitute special severance benefits and/or settlement of all
disputes.
10. Xxxxx agrees to cooperate fully with IVC after the Effective
Date in connection with any litigations, arbitrations and governmental or other
proceedings to which IVC is from time to time a party, all without any
additional compensation. IVC agrees to reimburse Xxxxx for any reasonable
expenses, including attorney's fees, actually incurred by Xxxxx in connection
with any such cooperation.
11. As a material inducement to IVC to enter into this Agreement and
in consideration for the benefits received hereunder and of IVC's agreement to
settle all outstanding disputes, Xxxxx, for himself, his heirs, executors,
administrators, successors and assigns, hereby fully releases, discharges and
acquits IVC, its affiliated and related entities, subsidiary corporations,
present and former officers and directors, employees, agents, attorneys,
representatives, shareholders, successors and assigns (collectively "IVC
Releasees"), from any and all claims, charges, demands, sums of money, actions,
rights, causes of action, obligations and liabilities of any kind or nature
whatsoever, at law or in equity, which Xxxxx may have, had, claim to have had,
now has, or claim to have, which are or may be based upon facts, acts, conduct,
representations, omissions, contracts, claims, events, causes, matters or things
of any conceivable kind or character, whether known or unknown, existing or
occurring at any time on or before the date of this Agreement based upon Xxxxx'x
employment with IVC, the terms of his employment by IVC and the termination of
his employment with IVC, except any rights or claims arising solely out of
Xxxxx'x status as a shareholder of IVC and any right to be indemnified by IVC
for his past service as an officer of IVC and his past and continuing service as
a director of IVC, including, without limitation, Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act, the Equal Pay Act, the Age
Discrimination in Employment Act of 1967, as amended, any claims arising under
any federal, state or other governmental statutes, ordinances or regulations,
any defamation, fraud, negligence or other tort or common law claims, claims
arising under any implied or express contracts or agreements, including without
limitation, the Employment Agreement, any claims for adjusted compensation,
bonus, severance or vacation pay or any other form of compensation or benefit
relating to his employment and the
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termination thereof, any claims for intentional torts, emotional distress and
pain and suffering and any claims for compensatory and punitive damages.
12. As a material inducement to Xxxxx to enter into this Agreement
and in consideration of Xxxxx'x agreement to settle all outstanding disputes,
IVC hereby fully releases and discharges Xxxxx from any and all claims, charges,
demands, sums of money, actions, rights, causes of action, obligations and
liabilities of any kind or nature whatsoever, at law or in equity, which IVC may
have, had, claim to have had, now has, or claim to have, which are or may be
based upon facts, acts, conduct, representations, omissions, contracts, claims,
events, causes, matters or things of any conceivable kind or character, whether
known or unknown, existing or occurring at any time on or before the date of
this Agreement based upon Xxxxx'x employment with IVC, the terms of his
employment by IVC and the termination of his employment with IVC.
13. Xxxxx, for himself, his heirs, executors, administrators,
successors and assigns, hereby represents and covenants that he has not
instituted, and will not institute, any complaints, claims, charges or lawsuits,
with any governmental agency or any court against IVC by reason of any claim,
present or future, known or unknown, arising from or related in any way to his
employment with IVC or the termination of such employment, or any relationship,
association, or transaction to date between the parties hereto or any of their
predecessors or their respective agents, employees or officers. This covenant
shall not apply to actions for breach by IVC of this Agreement or to any rights
or claims arising solely out of Xxxxx'x status as a shareholder of IVC or any
right to be indemnified by IVC for his past service as an officer of IVC or his
past and continuing service as a director of IVC.
14. This Agreement shall not in any way be construed as an admission
by IVC that it has acted wrongfully with respect to Xxxxx or any other person,
or that Xxxxx has any rights whatsoever against IVC, and IVC specifically
disclaims any liability to or wrongful acts against Xxxxx or any other person,
on the part of itself, its employees or its agents. This Agreement also shall
not in any way be construed as an admission by Xxxxx that he has acted
wrongfully with respect to IVC or any other person.
15. The provisions of this Agreement are severable, and if any part
of it is found to be unenforceable, the other portions shall remain fully valid
and enforceable. This Agreement shall survive the termination of any
arrangements contained herein.
16. Xxxxx has returned to IVC all Company Information and related
reports, files, memoranda and records, cardkey passes, door and file keys,
computer access codes, credit cards, software, new product information,
blueprints, drawings, sketches, notebooks, computer programs, formulas, data,
listings specifications and other physical or personal property which he
received or prepared in connection with his employment with IVC, and Xxxxx has
not retained and will not retain any copies, duplicates, reproductions or
excerpts thereof. The term "Company Information" as used in this Agreement
means, in addition to the items set forth in the first sentence of this
Paragraph 16, (a) confidential information received from third parties under
confidential conditions and (b) the technical, business and financial
information of IVC that IVC has treated as proprietary or confidential.
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17. Xxxxx acknowledges that in the course of his employment with IVC
he has acquired Company Information. Xxxxx understands and agrees that such
Company Information has been disclosed to him in confidence and for use by him
in connection with his work for IVC. Xxxxx understands and agrees that he (a)
will keep such Company Information confidential at all times after his
employment with IVC, (b) will not disclose or communicate Company Information to
any third party, and (c) will not make use of Company Information on his own
behalf or on behalf of any third party. When Company Information becomes
generally available to the public other than by Xxxxx'x acts or omissions, it
shall no longer be subject to the restrictions of this Paragraph 17; provided,
however, that Company Information shall not be deemed to come under this
exception merely because it is embraced by more general information which is or
becomes generally available to the public. The undertaking set forth in this
paragraph shall survive the termination of this Agreement and other arrangements
contained in this Agreement.
18. Xxxxx acknowledges that he was advised by IVC to consult with an
attorney of Xxxxx'x own choosing concerning the waivers contained in this
Agreement, that Xxxxx has done so and that the waivers Xxxxx has made herein are
knowing, conscious and with full appreciation that Xxxxx is forever foreclosed
from pursuing any of the rights so waived.
19. Xxxxx agrees not to disparage IVC, its reputation, its business,
and its officers, directors and employees to any person. IVC similarly agrees
not to disparage Xxxxx, his reputation, his business expertise and his job
performance at IVC to any person. For the purposes of this Paragraph 19, the
term "disparage" shall mean the making of any false statement, or the rendering
of any subjective opinion, whether written or oral, that belittles another
person in rank or esteem. Upon a party's first violation of this Paragraph 19,
the other party shall provide written notice to the violating party of such
violation, which the violating party shall use its best efforts to cure. Any
subsequent violation by such violating party shall be considered a breach of
this Agreement. The prohibitions of this Paragraph 19 shall not apply to any
statements made during a meeting of the Board of Directors of IVC.
20. No waiver or modification of this Agreement or any term hereof
shall be binding unless it is in writing and signed by the parties hereto or
their expressly authorized representatives. No failure to insist upon compliance
with any term, provision or condition to this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
waiver of any such term, provision or condition, or as a waiver of any other
term, provision or condition of this Agreement. This Agreement shall be
construed in accordance with the laws of the State of New Jersey without regard
to the choice-of-law principles thereof.
21. It is agreed and understood that the general rule that
ambiguities are to be construed against the drafter shall not apply to this
Agreement. In the event that any language in this Agreement is found or claimed
to be ambiguous, each party shall have the same opportunity to present evidence
as to the actual intent of the parties with respect to any such ambiguous
language without any inference or presumption being drawn against the drafter.
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22. The parties agree not to disclose to anyone the existence of
this Agreement, the circumstances surrounding it, its terms, conditions, or
negotiations, including the dollar amounts set forth, except as required by law.
23. Xxxxx represents and acknowledges that in executing this
Agreement, Xxxxx does not rely and has not relied upon any representation or
statement not set forth herein.
24. This Agreement sets forth the entire agreement between the
parties hereto, and fully supersedes any and all prior agreements or
understandings between the parties hereto pertaining to the subject matter
hereof, including the Employment Agreement, which prior agreements and
understandings shall be of no further force or effect.
25. Xxxxx has a period of 21 days from the date on which a copy of
this Agreement has been delivered to Xxxxx to consider whether to sign it. In
addition, in the event that Xxxxx elects to sign and return to IVC a copy of
this Agreement, Xxxxx has a period of seven days (the "Revocation Period")
following the date of such return to IVC of a signed copy, to revoke this
Agreement, which revocation must be in writing and delivered to IVC within the
Revocation Period. This Agreement will not be effective or enforceable until the
expiration of the Revocation Period.
26. Xxxxx hereby acknowledges that he has read and that he
understands the foregoing agreement and that he has affixed his signature hereto
voluntarily and without coercion.
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PLEASE READ CAREFULLY. THIS SEVERANCE AGREEMENT AND RELEASE INCLUDES
A RELEASE OF CERTAIN KNOWN AND UNKNOWN CLAIMS.
Executed September __, 1998
-------------------------------
Xxxxxx X. Xxxxx
Executed September 2, 1998
IVC INDUSTRIES, INC.
By: /s/ E. Xxxxxx Xxxxx
---------------------------
Name:
Title:
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