SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT
AGREEMENT, dated as of March 1, 1999, between I. XXXX XXXXXXXXXX
("Xxxxxxxxxx") and IVC INDUSTRIES, INC. ("IVC").
WHEREAS:
(1) Xxxxxxxxxx is employed by IVC pursuant to the terms of an Employment
Agreement (the "Employment Agreement"), dated as of April 28, 1995 and amended
as of February 1, 1998, between Xxxxxxxxxx and International Vitamin Corporation
(a predecessor corporation of IVC);
(2) Xxxxxxxxxx wishes to resign his employment with IVC and all its
subsidiaries, and IVC is willing to accept such resignation, all on the terms
set forth herein.
NOW, THEREFORE, it is hereby agreed as follows:
1. Xxxxxxxxxx hereby resigns his employment with IVC and all its
subsidiaries, effective as of March 1, 1999 (the "Effective Date"). Xxxxxxxxxx
hereby further resigns, effective as of the Effective Date, all officerships,
directorships and committee memberships with IVC and all of its subsidiaries.
Xxxxxxxxxx agrees that, subsequent to the date this Agreement is executed and
delivered, he shall not represent or hold himself out as an officer, director,
employee or member of any committee of IVC or any of its subsidiaries. In
consideration of
such resignations, IVC shall pay to Xxxxxxxxxx on a weekly basis for a period of
one year commencing on the second anniversary of the Effective Date the amount
of $90,000.
2. IVC hereby retains Xxxxxxxxxx as a consultant to IVC for a period (the
"Consulting Period") of three years commencing on the Effective Date. Xxxxxxxxxx
accepts such retention and agrees to consult in connection with the operation of
IVC's business in person and/or by telephone, facsimile or e-mail, from his home
or place of business or at the Company's principal offices with IVC's chief
executive, or at the chief executive's direction, with IVC's chief operating
and/or chief financial officer, for no more than ten hours in any month during
the Consulting Period, which services may be rendered from such locations and at
such times as Xxxxxxxxxx shall reasonably determine. IVC agrees that Xxxxxxxxxx
may assign his obligations to serve as a consultant under this Agreement to a
corporation wholly-owned by Xxxxxxxxxx or a member of his immediate family. In
consideration of such services, IVC shall pay to Xxxxxxxxxx on a weekly basis a
consulting fee (the "Consulting Payment") at the rate of: (i) $96,000 per annum
for the first and second year of the Consulting Period and (ii) $9,000 for the
third year of the Consulting Period. In the event of the death of Xxxxxxxxxx
during the Consulting Period, IVC shall pay to Xxxxxxxxxx'x executor,
administrator or other legal representative any Consulting Payments owed to
Xxxxxxxxxx at the time of his death and the Consulting Payments shall continue
to be made to Xxxxxxxxxx'x executor, administrator or other legal representative
during the remainder of the Consulting Period. IVC shall not be responsible for
the withholding and payment of Federal, state and local taxes associated with
the Consulting Payments, including but not limited to, income taxes, FICA or
FUTA, as those terms are defined in the Internal Revenue Code of 1986, as
amended.
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3. IVC agrees that the options granted to Xxxxxxxxxx under the 1995 Stock
Option Plan to purchase 50,000 shares of IVC's common stock shall remain
exercisable during the Consulting Period, provided that, in the event of the
death of Xxxxxxxxxx during the Consulting Period, Xxxxxxxxxx'x executor,
administrator or other legal representative shall be entitled to exercise such
options for a period of 90 days following his death, at which time such options
shall expire.
4. Xxxxxxxxxx hereby elects to waive his rights under COBRA continuation
medical coverage. IVC agrees to obtain and pay for a private insurance plan (the
"Private Plan") providing substantially the same benefits as presently provided
under IVC's Group Medical Insurance Plan (the "IVC Plan"). During the Consulting
Period, IVC shall reimburse Xxxxxxxxxx, on a semi-annual basis commencing six
months form the Effective Date and upon appropriate documentation, up to a
maximum of $6,000 per year for amounts (each, a "Make Whole Amount") paid by
Xxxxxxxxxx under the Private Plan that he would not have otherwise paid under
the then current IVC Plan. Following the termination of the Consulting Period,
Xxxxxxxxxx shall be solely responsible for any payments due under the Private
Plan. If during the Consulting Period, Xxxxxxxxxx independently obtains a
private insurance plan, IVC agrees to pay Xxxxxxxxxx on a monthly basis for the
remainder of the Consulting Period an amount equal to the monthly premium IVC
would have otherwise paid under the Private Plan, but IVC shall no longer be
obligated to pay any Make Whole Amount.
5. During the Consulting Period, IVC shall pay to Xxxxxxxxxx or his
designee an allowance of $700 per month for expenses associated with his use of
a car. Xxxxxxxxxx shall be responsible for paying all such expenses, including,
without limitation, finance charges, lease
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payments, insurance payments and repair expenses, but shall have no obligation
to account to IVC for such expenses.
6. Xxxxxxxxxx hereby acknowledges that as of January 31, 1999, Xxxxxxxxxx
owes to IVC the principal amount, together with accrued unpaid interest as of
January 31, 1999, of $136,912.28 (the "Unpaid Balance"). Beginning February 1,
1999, the Unpaid Balance shall accrue interest at the rate of 5.0% per annum,
compounded monthly. Xxxxxxxxxx and IVC agree that the Unpaid Balance, together
with all accrued interest thereon, shall be payable in three successive annual
installments commencing on the fourth anniversary of the Effective Date.
7. Xxxxxxxxxx hereby acknowledges that during his employment he has or may
have acquired proprietary, private and/or otherwise confidential information of
or concerning IVC or any of its subsidiaries or any persons or entities with
which IVC or any of its subsidiaries transacts or transacted business,
including, without limitation, any non-public financial information concerning,
or any information relating to, any aspect of the operation of the business of
IVC or any of its subsidiaries ("Confidential Information"). Xxxxxxxxxx hereby
represents and agrees that (a) he has returned to IVC or destroyed, and has not
retained any copies of, all documents, records or materials of any kind, whether
written or electronically created or stored, which contain, relate to or refer
to any Confidential Information ("Confidential Materials"), (b) he will not
disclose any Confidential Information or Confidential Materials to any person or
entity outside the scope of his employment without the express authorization of
the Chief Executive Officer of IVC, and (c) in consideration of IVC's entering
into this Agreement, he shall not disclose any Confidential Information or
Confidential Materials in any manner whatsoever, except as shall be required by
law or as directed by IVC or its chief executive.
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8. Xxxxxxxxxx hereby agrees that for the period from August 1, 1999 to the
expiration of the Consulting Period (the "Non-Compete Period"), he shall not,
directly or indirectly, engage or participate anywhere in the United States or
North America as an owner, partner, shareholder, member, employee, director,
consultant or otherwise in any business engaged in the manufacturing, packaging
and sale and distribution of store brand (private label) vitamins and
nutritional supplements, unless such store brand (private label) business
constitutes less than 50% of the revenue of such business. In the event of any
breach of this paragraph 8, the time period of the breached covenant shall be
extended for the period of such breach. Xxxxxxxxxx recognizes that the
territorial, time and scope limitations set forth in this paragraph 8 are
reasonable and are required for the protection of IVC, and in the event that any
such territorial, time or scope limitation is deemed to be unreasonable by a
court of competent jurisdiction, Xxxxxxxxxx and IVC agree to the reduction of
any of said territorial, time or scope limitations to such an area, period or
scope as said court shall deem reasonable under the circumstances. In
consideration of the foregoing covenant not to compete, IVC shall pay to
Xxxxxxxxxx on a weekly basis commencing on the Effective Date (i) $75,000 per
annum for the first and second year of the Consulting Period and (ii) $9,000 per
annum for the third year of the Consulting Period. Payments made by IVC to
Xxxxxxxxxx prior to beginning of the Non-Compete Period shall be deemed
prepayments of such covenant not to compete.
9. As a material inducement to IVC to enter into this Agreement, and in
consideration of IVC's obligations under this Agreement and for other good and
valuable consideration, the receipt of which is hereby acknowledged by
Xxxxxxxxxx, Xxxxxxxxxx hereby irrevocably, unconditionally and generally
releases IVC and all its subsidiaries and each of IVC's and its subsidiaries'
officers, directors, and employees, and the heirs, executors, administrators,
receivers, successors and assigns of all of the foregoing (collectively,
"Releasee"), from, and
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hereby waives and/or settles any and all, actions, causes of action, suits,
debts, sums of money, agreements, promises, damages, or any liability, claims or
demands, known or unknown and of any nature whatsoever (collectively, "Claims")
which Xxxxxxxxxx ever had, now has or hereafter can, shall or may have, for,
upon, or by reason of any matter, cause or thing whatsoever from the beginning
of the world to the date of this release, arising directly or indirectly
pursuant to or out of his employment with IVC, the performance of services for
IVC or any Releasee or the termination of such employment or services and,
specifically, without limitation, any rights and/or Claims (a) arising under or
pursuant to any contract, express or implied, written or oral, including,
without limitation, the Employment Agreement, (b) for wrongful dismissal or
termination of employment, (c) arising under any federal, state, local or other
statutes, orders, laws, ordinances, regulations or the like that relate to the
employment relationship and/or specifically that prohibit discrimination based
upon age, race, religion, sex, national origin, disability, sexual orientation
or any other unlawful bases, including, without limitation, the Age
Discrimination in Employment Act of 1967, as amended, the Equal Pay Act, the
Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as
amended, the Americans with Disabilities Act of 1990, as amended, and any
applicable rules and regulations promulgated pursuant to or concerning any of
the foregoing statutes, (d) for tort, tortious or harassing conduct, infliction
of mental or emotional distress, interference with contract, fraud, libel or
slander, and (e) for damages, including, without limitation, punitive or
compensatory damages or for attorneys' fees, expenses, costs, wages, injunctive
or equitable relief. This section shall not apply to any claim which Xxxxxxxxxx
may have for a breach of this Agreement.
10. Each Releasee hereby irrevocably, unconditionally and generally
releases Xxxxxxxxxx and his heirs, executors, administrators and assigns from,
and hereby waives and or
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settles any and all Claims which any Releasee ever had, now has or hereafter
can, shall or may have, for, upon, or by reason of any matter, cause or thing
whatsoever from the beginning of the world to the date of this release, arising
directly or indirectly pursuant to or out of Xxxxxxxxxx'x employment with IVC,
his performance of services for IVC or any of its subsidiaries or the
termination of such employment or services and, specifically, without
limitation, any rights and/or Claims (a) arising under or pursuant to any
contract, express or implied, written or oral, including, without limitation,
the Employment Agreement, (b) for tort, interference with contract, fraud, libel
or slander, and (c) for damages, including, without limitation, punitive or
compensatory damages or for attorneys' fees, expenses, costs, injunctive or
equitable relief. This section shall not apply to any claim which IVC may have
for a breach of this Agreement or IVC's rights under paragraph 6 above.
11. Xxxxxxxxxx represents and warrants that he has not filed, commenced or
participated in any way in any complaints, claims, actions or proceedings of any
kind against any Releasee with any federal, state or local court or any
administrative, regulatory or arbitration agency or body, and he agrees not to
file, assert or commence any complaint, claim, action or proceeding of any kind
against any Releasee with any federal, state or local court or any
administrative, regulatory or arbitration agency or body with respect to any
matter from the beginning of the world to the date hereof. This section shall
not apply to any claim which Xxxxxxxxxx may have for breach of this Agreement.
12. Each Releasee represents and warrants that it has not filed, commenced
or participated in any way in any complaints, claims, actions or proceedings of
any kind against Xxxxxxxxxx with any federal, state or local court or any
administrative, regulatory or arbitration agency or body, and each Releasee
agrees not to file, assert or commence any complaint, claim, action or
proceeding of any kind against Xxxxxxxxxx with any federal, state or local court
or any administrative, regulatory or arbitration
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agency or body with respect to any matter from the beginning of the world to the
date hereof. This section shall not apply to any claim which IVC may have for a
breach of this Agreement or IVC's rights under paragraph 6 above.
13. Xxxxxxxxxx hereby waives any right to, and agrees not to, seek
reinstatement of employment with IVC or any Releasee.
14. Xxxxxxxxxx acknowledges and agrees that any monetary or other benefits
which are, were or may have been claimed to be due to Xxxxxxxxxx and which he
may have earned or accrued, or to which he may have been entitled, have been
paid or such payments have been released, waived or settled by Xxxxxxxxxx
pursuant to this Agreement. This section shall not apply to any claim which
Xxxxxxxxxx may have for any bonus payments owed to Xxxxxxxxxx as of the date of
this Agreement or any payments under this Agreement.
15. IVC and each Releasee acknowledge and agree that any monetary or other
benefits which are, were or may have been claimed to be due to IVC or any
Releasee and which IVC or any Releasee may have earned or accrued, or to which
he may have been entitled, have been paid or such payments have been released,
waived or settled by Xxxxxxxxxx or any Releasee pursuant to this Agreement. This
section shall not apply to any claim which IVC may have for a breach of this
Agreement or IVC's rights under paragraph 6 above.
16. (a) By executing this Agreement, Xxxxxxxxxx acknowledges that (i) he
has been advised by IVC to consult with an attorney before executing this
Agreement and has
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consulted and been represented by Xxxx Xxxxx, Esq., of the firm of Greenbaum,
Rowe, Xxxxx, Xxxxx, Xxxxx & Xxxxxx LLP, in connection herewith, (ii) he has been
provided with at least a 21 day period to review and consider whether to sign
this Agreement and that by executing and delivering this Agreement to IVC, he is
waiving any remaining portion of such 21 day period, and (iii) he has been
advised that he has seven days following execution by both parties to this
Agreement to revoke this Agreement (the "Revocation Period").
(b) This Agreement will not be effective or enforceable until the
Revocation Period has expired, and the Consulting Payment will not be payable
nor will the deferment of the loan referred to in paragraph 6 of this Agreement
be effective until after the expiration of the Revocation Period. Such
revocation shall only be effective if an originally executed written notice
thereof is delivered to IVC on or before 5:00 p.m. on the seventh day after
execution of this Agreement. If so revoked, this Agreement shall be deemed to be
void ab initio and of no further force and effect.
17. Xxxxxxxxxx agrees that, unless otherwise required by law, neither he,
nor anyone acting on his behalf, shall hereafter (i) make any derogatory,
disparaging or critical statement about IVC or any of its subsidiaries or the
business of IVC or any of its subsidiaries or any of IVC's and its subsidiaries'
current officers, directors or employees or any persons who were officers,
directors or employees of IVC or any of its subsidiaries or (ii) communicate,
directly or indirectly, with the press or other media concerning the past or
present employees or business of IVC or any of its subsidiaries.
18. Each Releasee agrees that neither it, nor anyone acting on each
Releasee's behalf, shall hereafter (i) make any derogatory, disparaging or
critical statement about Xxxxxxxxxx, his
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reputation, business expertise and job performance or (ii) communicate, directly
or indirectly, with the press or other media concerning Xxxxxxxxxx in any
manner.
19. IVC and Xxxxxxxxxx agree that, unless otherwise required by law, the
form and substance of the press release appended hereto as Exhibit A shall be
the only announcement made to the press or other media concerning the
resignation of Xxxxxxxxxx.
20. If not revoked in accordance with paragraph 16 (b), the covenants,
representations and acknowledgments contained herein shall survive the execution
and delivery of this Agreement.
21. This Agreement (a) constitutes the sole and complete understanding and
agreement between the parties hereto with respect to the matters set forth
herein and there are no other agreements or understandings, whether written or
oral and whether made contemporaneously or otherwise, that are binding upon the
parties hereto, (b) fully supersedes the Employment Agreement, (c) may not be
amended unless in a writing signed by the parties hereto, (d) shall be subject
to, governed by and construed and enforced in accordance with the internal laws
of the State of New Jersey and (e) shall inure to the benefit of and be binding
upon the heirs, devisees, legatees, executors, administrators, successors,
assigns, officers, directors, and affiliates of each of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Severance,
Consulting and Non-Competition Agreement on the date set forth opposite their
respective signatures.
Dated: March 29, 1999 /s/ I. Xxxx Xxxxxxxxxx
----------------------------------------
I. XXXX XXXXXXXXXX
Dated: March 29, 1999 IVC INDUSTRIES, INC.
By:/s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary and Chief Financial
Officer
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EXHIBIT A
IVC INDUSTRIES, INC.
Appoints Xxxxxxx X. Xxxxxx, Chief Financial Officer
Freehold, NJ, March xx, 1999- IVC Industries, Inc. (NASDAQ: IVCO) announced
today the appointment of Xxxxxxx X. Xxxxxx (xx) as Chief Financial Officer.
Xx. Xxxxxx had served as Vice President Finance and Controller since he
joined the Company in 1998. He succeeds Xxxx Xxxxxxxxxx who resigned his
position as Executive Vice President, Chief Financial Officer and his seat on
the Board of Directors. Xx. Xxxxxxxxxx will continue to serve as a consultant to
IVC.
Prior to joining IVC, Xx. Xxxxxx was Vice President and Chief Financial
Officer of RF Power Products, Inc. Previously, he held financial management
positions with Silo, Inc., Radnor Financial Corporation and MG Industries, Inc.
He began his career with Coopers & Xxxxxxx, Philadelphia. Xx. Xxxxxx holds a
B.S. degree in accounting and a masters in taxation from Villanova University.
In announcing the appointment, E. Xxxxxx Xxxxx, Chairman and Chief
Executive Officer, said, "Since joining IVC, Xxx Xxxxxx has been instrumental in
helping the Company initiate its restructuring program. He is an important
member of our new management team and we are pleased to appoint him to this very
strategic position. His financial and management background will add
significantly to our strategic goals."
IVC Industries, Inc. is engaged in the manufacturing, packaging and
worldwide sales and distribution of vitamins, nutritional supplements and
over-the-counter (non-prescription) pharmaceutical products through drug stores,
supermarkets and mass merchandising chains, as well as health food stores,
independent drug stores and the company-owned retail stores and mail order
operation. Its products are distributed under the "Fields of Nature,"
"LiquaFil," "Pine Bros.," "Rybutol," "Nature's Wonder," "Synergy Plus" and
"Vitamin Specialties" brands, as well as under the private brands (store brands)
of its retail chain store customers.
