SEPARATION AGREEMENT AND GENERAL RELEASE
EXHIBIT
10.1
SEPARATION
AGREEMENT AND GENERAL RELEASE
1. PARTIES. This
Separation Agreement and General Release (“Agreement and Release”), dated
this 1st day of August, 2008, is by and between PacificHealth
Laboratories, Inc. (“PacificHealth”), a Delaware corporation which has its
principal offices situated at 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxx Xxxxxx
00000 and Xx. Xxxxxx Xxxxxxx (“Portman”), a citizen of the State of New Jersey,
residing at 000 Xxxx Xxxxxx, in the Borough of Fair Haven, New
Jersey.
2. RECITALS.
WHEREAS, PacificHealth offered
Portman employment pursuant to an Employment Agreement dated January 1, 2007
(the “Employment Agreement”), a copy of which is attached hereto as Exhibit
A;
WHEREAS, among the terms set forth in the Employment Agreement are provisions
concerning compensation upon termination and non-competition;
WHEREAS, by executing the Employment Agreement, Portman acknowledged his
acceptance of, and agreement to, the terms set forth in the Employment
Agreement;
WHEREAS, Portman commenced employment with PacificHealth upon its inception in
April 1995 and currently serves as PacificHealth’s Chief Executive Officer,
Chief Scientific Officer, and Chairman of the Board of Directors;
WHEREAS, Portman and PacificHealth have mutually decided that because of a
contemplated change in duties, Portman’s employment service as Chief Executive
Officer and Chief Scientific Officer would be terminated, and Portman would
continue on the Board of Directors as a non-executive Chairman of the Board of
Directors;
WHEREAS, PacificHealth and Portman agree that an orderly transition is in the
best interest of PacificHealth and its stockholders;
WHEREAS, it is the intention of PacificHealth and Portman that the provisions of
this Agreement and Release will clarify the terms of the Employment Agreement as
to the termination of Portman’s employment with PacificHealth and his
obligations to PacificHealth during the one year following the date of his
termination of employment from PacificHealth.
NOW THEREFORE, PacificHealth and Portman, intending to be legally bound, and in
consideration of the mutual promises set forth herein, agree as
follows:
3. TERMS OF AGREEMENT AND
RELEASE.
3.1 TERMINATION OF
EMPLOYMENT. PacificHealth and Portman agree that Portman’s
employment with PacificHealth, including without limitation his role as Chief
Executive Officer and Chief Scientific Officer, will terminate, effective August
1, 2008 (hereinafter “Termination Date”). Immediately upon
termination, Portman will retain his position as the non-executive Chairman of
the Board of Directors. Portman hereby acknowledges and agrees that
his responsibilities as non-executive Chairman of the Board of Directors shall
be limited to presiding as Chairman at meetings of the Board of Directors of
PacificHealth and that the President and Chief Executive Officer of
PacificHealth shall report to the full Board of Directors. During his
term as a director, Portman will receive the compensation awarded to
other non-employee directors of PacificHealth for periods after the Termination
Date. For avoidance of doubt, it is agreed that Portman shall receive
two thirds of the compensation which other directors receive for the quarter
ending September 30, 2008.
3.2 COMPENSATION. In
consideration for Portman’s agreements set forth in this Agreement and Release,
in particular the non-compete restrictions set forth in Section 3.4 hereof,
PacificHealth agrees to pay Portman during the Restricted Period (as defined in
Section 3.4) for the non-compete restrictions, $295,000 for a period of one year
following the Termination Date (the “Non-Compete Payment”). The
Non-Compete Payment will be paid in 12 equal monthly payments of $24,583.33 to
Signal Nutrition, LLC, Portman’s limite liability company, payable on the
first business day of each month, with the first payment
upon execution of this Agreement, and reported on Form 1099 as payment to an
independent contractor. The Non-Compete Payment shall be in lieu of
any payments owed by PacificHealth to Portman pursuant to the terms of the
Employment Agreement, including without limitation, the payments set forth in
Sections 3 and 5 of the Employment Agreement.
3.3 STOCK OPTIONS. As
further consideration for Portman’s execution of this Agreement and as set forth
in his Employment Agreement all Options issued to Portman (a list of which is
attached hereto as EXHIBIT
B) shall vest on the Termination Date. The Company agrees that
notwithstanding the provisions of paragraph 3c(iv) of Portman’s Employment
Agreement, to the extent not previously exercised, the Options shall terminate
upon the earlier of (A) their normal expiration in accordance with their terms
or (B) six (6) months following the termination of Portman’s service on the
Board of Directors.
3.4 OTHER
BENEFITS. As further consideration for Portman’s agreements
set forth in this Agreement and Release, and provided that Employee properly and
timely elects to continue medical and/or dental coverage under PacificHealth’s
plans in accordance with the continuation requirements of COBRA, PacificHealth
shall pay for the cost of the premium for such coverage beginning on the last
day of employment and continuing until the earlier of either (1) July 31, 2009
or (2) the date on which Portman is eligible to receive medical benefits from
another employer. If PacificHealth or Portman is able to arrange for
the COBRA invoices to be sent to PacificHealth, PacificHealth shall pay such
amounts directly. Otherwise, PacificHealth shall pay such amounts
directly, provided Portman forwards invoices to the Company, or shall reimburse
Portman provided he provides evidence of payment. Except as set forth
in Section 3.2 and 3.3 hereof, Portman shall not be entitled to receive any
other payment or benefit from PacificHealth, including without limitation, any
reimbursement for expenses associated with any Company-owned or leased
automobile for his use and any other expenses and other benefits set forth in
Section 4 of the Employment Agreement.
3.5 RESTRICTED
ACTIVITIES.
(a) Based on
Section 5b of the Employment Agreement, and by recounting the language therein,
and for the consideration referenced herein, for a period of one year following
the Termination Date (the "Restricted Period”), Portman shall not become
employed by, become an officer, director, partner, member, manager or agent of,
serve as an advisor or consultant to, or become an investor in, any business
engaged in the manufacture or sale of sports nutrition or diet/weight loss
products, or any other products which the Company (as defined in the Employment
Agreement) was manufacturing or selling at the effective date of his termination
that contribute greater than 5% of the business’ total revenues, or had planned
in writing to manufacture or sell, prior to the date of termination (all of the
foregoing collectively referred to as the “Restricted Activities”); provided
that (i) the Company pays to Portman the payments required by Section 3.2 of
this Agreement. Any failure by the Company to make the payments
required hereunder as and when due, or to honor and timely perform its other
monetary obligations to Portman under this Agreement, which continue for a
period of ten calendar days following notice from Portman to the Company, will
constitute a breach of this Agreement and Portman shall not be deemed to violate
the restrictions contained in this paragraph thereafter. In the event
of a breach of this Section 3.5(a) by Portman, if such breach is not cured
within ten calendar days after notice by PacificHealth to Portman, PacificHealth
may, in addition to all other remedies at law or in equity, cease payment of the
compensation provided for in Section 3.2 hereof as well as any other monetary
benefit provided by this Agreement. Moreover, in the event of a
breach of this Agreement, Portman may seek all legal and equitable
remedies available to him.. During the Restricted Period, and prior
to commencing service with a business organization
that engages in a Restricted Activity as well as activities which are not
Restricted Activities, Portman may seek approval from the Company by
providing the Company with the name and address of such organization, his
prospective title and a description of his prospective duties and
responsibilities, and a certification to the Company that he will not engage in, or render advice with respect
to, any Restricted Activity and that Portman will inform his superiors in the
new organization of his obligations under this Agreement and any confidentiality
or similar agreement between Company and Portman, and the Board of Directors of
the Company does not determine, in its good faith discretion, that Portman’s
duties and responsibilities with the new organization are Restricted
Activities.
(b) Nothing in
subparagraph (a) above or elsewhere in this Agreement shall prohibit Portman
from acquiring a passive equity stake representing less then five (5%) of any
class of an issuer’s outstanding securities.
(c) In the
event any dispute arising under this Section 3.5, each party shall bear its own
attorneys’ fees and expenses, except that, in the event that the dispute is
brought before a court or an arbitrator, the prevailing party in such
proceeding shall be awarded its or his reasonable attorneys’ fees and expenses
in prosecuting or defending such proceeding.
3.6 NON-DISPARAGEMENT. Portman
and PacificHealth agree that neither Portman nor any of the officers and
directors of PacificHealth will make defamatory statements concerning the other
to third parties.
3.7 OTHER
ITEMS.
(a) The Company
agrees that Portman may keep the laptop computer presently used by
him.
(b) The Company
agrees to pay for moving Portman’s personal files and possessions from the
Company’s office to Portman’s home. Portman Agrees to vacate the
Company’s offices by August 22, 2008.
(c) Any press
releases relating to Portman’s separation will be submitted to Portman for his
approval prior to release to the media or to any other individual or entity,
provided that Portman shall not unreasonably withhold or delay his
approval. Any SEC Filing relating to Portman’s separation will be
provided to Portman for his review prior to filing, and the Company shall
consider his comments in good faith if timely provided. Once language
has been included in any SEC Filing, the same language may be included in
further SEC filings without Portman’s review.
3.8 GENERAL
RELEASE.
(a) In
consideration of the benefits received pursuant to this Agreement and Release,
Portman, intending to be legally bound, promises, agrees and generally releases
as follows:
Except as to such rights or claims as are created by this Agreement and Release,
Portman, on behalf of himself as well as his agents, heirs, executors, assigns
and successors in interest hereby unconditionally releases, remises, acquits and
forever discharges PacificHealth, its divisions, successors, assigns and any of
their current or former directors, partners, officers, employees, agents,
shareholders, plan administrators and any employee benefit plan sponsored by
them (all of whom are hereinafter collectively referred to as “PacificHealth
Released Parties”) from any and all actions, causes of action, suits, debts,
dues, covenants, contracts, bonuses, controversies, agreements, promises,
claims, charges, complaints and demands of any sort, in law or in equity, known
or unknown, which arose from the beginning of the world to the date he signs
this Agreement and Release, including, but not limited
to, any action arising out of or in any
way related to his employment, as well as the cessation of his employment, with
PacificHealth, including, but not limited to, those pertaining to severance pay,
sick pay, vacation pay, resignation pay, commissions, bonuses, nonpayment of
wages, as well as those alleging violations of any federal, state or city
statute, ordinance or regulation alleging discrimination on the basis of age,
gender, sexual harassment, race, religion, national origin, ancestry,
disability, sexual orientation, marital status, equal pay, including without
limitation claims arising under the Age Discrimination In Employment Act as
amended, 29 U.S.C. § 621 et seq. (“ADEA”), the
Americans With Disabilities Act of 1990 as amended, 42 U.S.C. § 12101 et seq., Title VII of
the Civil Rights Act of 1964 and 1991 as amended, 42 U.S.C. § et seq., the Civil Rights Act
of 1964 and 1991 as amended, 42 U.S.C. § 2000(e) et seq., the Civil Rights Act
of 1866 and 1870, 42 U.S.C. § 1981, et seq., the Fair Labor
Standards Act as amended, 29 U.S.C. § 201 et seq., the Equal Pay Act of
1963, 29 U.S.C. § 206(d), the Employee Retirement Income Security Act of 1974,
29 U.S.C. § 1001 et
seq., the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §
2101 et seq., the
Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., the
Consolidated Omnibus Budget Reconciliation Act of 1985, I.R.C. § 4980B, the New
Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (" NJLAD" ), the
Conscientious Employee Protection Act, N.J.S.A. 34:19-1 et seq. (" CEPA" ), the
New Jersey Family Leave Act, N.J.S.A. 34:11b-1 et seq. , the New Jersey Equal
Pay Act, N.J.S.A. 34:11-56.1 et seq. , the New Jersey Wage and Hour Law,
N.J.S.A. 34:1-56a et seq. , the New Jersey Wage Payment Act, N.J.S.A. 34:11-4.2
et seq. , the New Jersey Constitution, the common law of the State of New Jersey
including, but not limited to, " Xxxxxx claims," the New Jersey wage and hour
laws, , and/or any other federal, state or city human rights, civil rights,
wage-hour, wage-payment, pension or labor laws, rules and/or regulations,
constitutions, ordinances, public policies, claims in contract or tort, or any
claim arising under the common law, as well as federal, state and/or city
employment discrimination claims, wrongful discharge claims, other employment
related claims, all claims for personal injury, retaliation and emotional
distress, all claims for compensatory, punitive and other damages and all claims
for attorneys fees.
It
is expressly agreed and understood by Portman, that this Release is a GENERAL
RELEASE, and it pertains to claims arising under the ADEA.
(b) In
consideration of the benefits received pursuant to this Agreement and Release,
PacificHealth, intending to be legally bound, promises, agrees and generally
releases as follows:
Except as to such rights or claims as are created by this Agreement and Release,
PacificHealth, on behalf of itself and the other PacificHealth Released Parties
(for which PacificHealth is authorized to act) hereby unconditionally releases,
remises, acquits and forever discharges Portman as well as his agents, heirs,
executors, assigns and successors in interest (the “Portman Released Parties”)
of and from any and all rights, obligations, promises, agreements, debts,
losses, controversies, claims, causes of action, liabilities, damages, and
expenses, including without limitation attorneys’ fees and costs, of any nature
whatsoever, whether known or unknown, asserted or unasserted, which it or any of
its affiliates ever had, now has, or hereafter may have against Portman that
arose at any time before or upon Portman’s signing this Agreement and
Release. Notwithstanding the foregoing, the Portman Released Parties
shall not be released from any claims involving fraud, willful misconduct,
breach of fiduciary duty or criminal acts by Portman. For purposes of
the release and exceptions contained herein, The PacificHealth Released Parties
shall not claim that any actions of Portman in connection with his termination
from employment or the negotiation of this Agreement constitute a breach of
fiduciary duty by Portman.
3.9 EXCLUSIONS. Portman
is not waiving any rights or claims to vested benefits under the PacificHealth
1995 Incentive Stock Plan and the 2000 Incentive Stock Option Plan or to any
claims which cannot legally be waived by this Agreement and Release, including
without limitation, unemployment compensation claims, worker’s compensation
claims or the ability to file certain administrative claims. Subject
to the foregoing, this Agreement and Release shall operate as a general release
of any and all claims to the fullest extent of applicable law.
3.10 WAIVER
OF ADMINISTRATIVE RECOVERIES. With the
exception of unemployment and worker’s compensation claims, Portman waives any
right to any individual monetary or economic recovery or equitable relief
against the PacificHealth Released Parties in any administrative proceeding or
in any action, lawsuit, hearing or other proceeding instituted by any agency,
person or entity.
3.11 COVENANTS REGARDING
COMPENSATION. Portman covenants that he has been paid in
full for his services up to the Termination Date and the payments set forth in
this Agreement constitute the only payments owed to him pursuant to the
Employment Agreement or this Agreement,
4. OWBPA RIGHT. Portman acknowledges
that (i) he understands his rights pursuant to the federal Older Worker Benefit
Protection Act (“OWBPA”); (ii) he has been given the opportunity to take
twenty-one (21) days to consider the terms of this Agreement and Release; (iii)
has consulted with counsel of his choice, as to the terms and conditions of this
Agreement and Release; and (iv) understands that he has seven (7) days following
the execution of this Agreement and Release to revoke it so that it has no
continuing or past legal effect, and that if not so revoked, the Effective Date
shall be the 8th day
after the signature of Portman hereto (“Effective Date”).
5. NOTICES. All notices and other
communications required herein shall be in writing and shall be delivered by
hand or overnight express delivery service or mailed by registered or certified
mail, return receipt requested, to the addresses set forth in the preamble
hereof with a copy of such correspondence as follows:
| If to Portman: | |||
| Xxxxx X. Xxxxxx | |||
|
|
|
Xxxxxx Xxxxxx LLC | |
| 00 Xxxxxxxx Xxxxxx, Xxxxx 0X | |||
| Xxxxxx Xxxxxx, XX 00000 | |||
| If to PacificHealth: | Xxxx X. Xxxxxx | ||
|
|
|
Xxxxxx Xxxxxxx Xxxxxx & | |
| Two Liberty Place – 22nd Floor | |||
| 00 Xxxxx 00xx Xxxxxx | |||
| Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 | |||
or to
such other names or addresses as Portman or PacificHealth, as the case may be,
shall designate by notice to the other party hereto, in the manner specified
herein. Any such notice shall be deemed delivered and effective when
received, if delivered by hand or overnight express delivery service, and three
(3) calendar days after deposit in the United States first class mail, postage
prepaid, if sent by United States mail.
6. ENTIRE
AGREEMENT. The parties understand
and agree that the terms and conditions of this Agreement and Release constitute
the full and complete understandings, agreements, and promises of the parties
regarding Portman resigning his employment with PacificHealth and his
obligations to PacificHealth during the one year following the date of his
resignation from PacificHealth, and there are no oral or written understandings,
agreements, promises, or inducements made or offered pertaining to same other
than those expressly set forth in writing in this Agreement and
Release.
7. PATENTS
ARRANGEMENTS. Portman represents that
he has assigned to PacificHealth all approved patents and completed patent
applications on the date hereof relating to the sports nutrition or diet/weight
loss products. Portman aggress to assign any pending patents to
PacificHealth. Portman agrees to execute such further documents and
instruments as shall be reasonably necessary to confirm and perfect
PacificHealth’s rights in pending patent applications or approved
patents. Portman agrees that any novel, proprietary developments
relating to the products of the Company developed prior to the termination date
shall be the property of PacificHealth.
8. INTERPRETATION. The terms of this
Agreement and Release shall be governed by, and construed in accordance with,
the laws of the State of New Jersey.
9. REMEDIES. The
parties recognize that money damages alone may not adequately compensate them in
the event of a breach of their Agreement and Release and therefore, they agree
that in addition to all other remedies available to them at law, in equity or
otherwise, they may be entitled to injunctive relief for the enforcement
hereof. (For purposes of clarification, the parties’ consent to
injunctive relief is subject to the moving party first proving a material breach
of the Agreement and Release.) All rights and remedies hereunder are
cumulative and are in addition to, and not exclusive of, any other rights and
remedies available at law, in equity, by agreement or otherwise.
10. POTENTIAL UNENFORCEABILITY
OF ANY PROVISION. If any provision of this
Agreement and Release or application thereof to anyone or under any circumstance
is adjudicated to be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect any other provision or
application of this Agreement and Release which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate or
render unenforceable such provision or application in any other
jurisdiction.
11. CAPTIONS. The captions in this
Agreement and Release are included for convenience only and shall not in any way
affect the interpretation or construction of any of the provisions
hereof.
12. COUNTERPARTS. This Agreement and
Release may be executed in several counterparts, each of which is an
original. It shall not be necessary in making proof of this Agreement
and Release or any counterpart hereof to produce or account for any of the other
counterparts.
13. WAIVER OR
BREACH. Failure of either party
to demand strict compliance with any of the terms, covenants or conditions of
this Agreement and Release shall not be deemed a waiver of such terms,
conditions or covenants, nor shall any waiver or relinquishment by either party
of any right or power hereunder at any one time or more times be deemed a waiver
or relinquishment of such right or power at any other time or
times.
14. INFORMED
PARTIES. Portman affirms that he
has read this Agreement and Release carefully, understands it fully, intends to
be legally bound by its terms, and after having consulted with counsel of his
choice, he knowingly and voluntarily has agreed to sign this Agreement and
Release.
IN WITNESS WHEREOF, the parties hereto,
intending to be legally bound, have duly executed and delivered this Agreement
and Release on the date written below.
| /s/ Xx. Xxxxxx Xxxxxxx | |||
| XX. XXXXXX XXXXXXX | |||
|
|
|
||
|
Dated:
|
August 7, 2008 | ||
| PACIFICHEALTH LABORATORIES,INC. | |||
|
By:
|
/s/ Xxxxxxx Xxxxxx | ||
|
Title:
|
Xxxxxxx Xxxxxx, V.P. & CFO | ||
|
Dated:
|
August 7, 2008 |
