EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a
Florida corporation ("Company"), Royal Numico N.V., a company organized under
the laws of The Netherlands ("Parent") and Geary Cotton ("Executive").
WHEREAS, Executive is employed by Company or by a subsidiary of
Company, as Chief Financial Officer;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), an indirect subsidiary of Parent will
merge with and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company agrees, and Parent agrees to cause the
Company to agree, to employ Executive, and Executive agrees to serve in the
position set forth above for the period commencing on the date hereof and ending
December 31, 2003 (the "Employment Period"); PROVIDED, HOWEVER, that on January
1, 2004 and each January 1 thereafter, the Employment Period shall automatically
be extended for one additional year, unless not later than 90 days prior to the
date of such automatic extension, the Company or Executive shall have given
notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Company. Executive shall devote his full time and
attention to the performance of such duties, which shall remain similar in scope
and responsibility to the duties he is performing as of the date of this
Agreement. At no time during the Employment Period shall Executive take on
additional employment without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during
the Employment Period, Company shall initially pay Executive the base salary in
effect on the date hereof, subject to increase as of each January 1 during the
Employment Period (but not decrease) based on annual performance reviews
conducted by the Board of Directors of the Company and/or the Chief Executive
Officer or such other officer designated by the Board; provided, however, that
on January 1, 2001, 2002 and 2003, the base salary then in effect shall be
increased by an amount which is not less than the greater of (i) 5% or (ii) the
percentage increase in the cost of living based upon the Revised Consumer Price
Index (1982-84=100) published by the Bureau of Labor Statistics of the United
States Department of Labor for Boca Raton, Florida utilizing March 2000 as the
base month.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in the management stock purchase and
stock option plans described in the Benefits Letter referred to in the Merger
Agreement and such other annual bonus or incentive plans, stock option plans,
stock purchase plans and any other long-term compensation plans, programs or
arrangements which may be adopted by the Company and applicable to Executive.
(c) OTHER COMPENSATION. The Executive shall be entitled to
receive such benefits and participate in such benefit plans as are generally
provided from time to time by the Company to its employees, and Executive shall
be entitled to continue to receive such fringe benefits and such other senior
management benefits of the type provided to Executive on the date hereof, as
such benefits are generally provided from time to time by the Company to its
senior management employees; provided that nothing herein shall be construed to
obligate the Company to provide any specific benefits to its employees or senior
management employees generally. The Executive shall be entitled to such vacation
time on an annual basis in accordance with the policies as are from time to time
in force for Company employees.
(d) NON-COMPETE COVENANT; RETENTION PAYMENTS. In exchange for
the non-competition and non-solicitation covenants (the "Non-Compete Covenants")
set forth in Section 5 below and for Executive's agreement to continue his
employment under the terms of this Agreement, Company shall pay to Executive the
following amounts:
(i) $821,250, 30 days after the effective time of the
Merger contemplated by the Merger Agreement (the date of the Merger
hereinafter referred to as the "Effective Time") in consideration of
the Non-Compete Covenants set forth in Section 5 below;
(ii) $821,250, payable in three equal installments on
Executive's first regular payroll date following each of the first,
second and third anniversaries of the Effective Time, if Executive is
still in the Company's employ as of each such anniversary date. Should
Executive's employment be terminated due to death or disability (as
described in Section 5(a)) or involuntarily terminated by the Company
without Cause or terminated by resignation by Executive with Good
Reason (as defined in Section 5(b), Executive (or Executive's estate in
the event of death) shall be entitled to receive any unpaid anniversary
date payments within 30 days of such termination.
Should Executive resign without Good Reason or should his employment be
involuntarily terminated with Cause prior to any such anniversary date, he shall
not be eligible to receive any further amount on the subsequent anniversary
dates.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement and shall not
be taken into account in determining benefits under any other provision of this
Agreement or any employee benefit plan.
(e) All compensation paid or provided to Executive under this
Agreement shall be subject to any applicable income, payroll or other tax
withholding requirements.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall reimburse Executive for reasonable business expenses incurred in
connection with Executive's duties hereunder. Executive shall furnish Company
with periodic, itemized expense reports in accordance with Company policies.
2
5. EMPLOYMENT COVENANTS.
(a) Executive agrees that from the date hereof through the
later of (i) the third anniversary of the Merger, or (ii) the period ending on
the second anniversary of Executive's termination of employment for any reason
(the "Non-Competition Period"), Executive shall not:
(A) engage in any way, directly or indirectly, in any
Competing Business (as defined below) in the Geographic Area (as
defined below); PROVIDED, HOWEVER, in no event shall this provision be
construed to prohibit Executive's employment with any business in which
less than 5% of its consolidated gross revenues for its most recent
fiscal year relates to a Competing Business if Executive's
responsibilities at such business do not directly relate to a Competing
Business. "Competing Business" shall mean any activity relating to the
development, manufacture, or the retail or wholesale sale or
distribution (including but not limited to sale or distribution through
retail, specialty retail, Internet, e-commerce, mail order, multi-level
marketing, mass market, or any other channel of distribution) of
vitamin and mineral supplements, sports nutrition products or herbs, or
any other product which competes with products being offered for sale
or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns,
leases or franchises locations, hosts web sites or otherwise conducts
business; or
(B) directly, or indirectly through any person or
entity, (1) induce or attempt to induce any employee of the Parent,
Company or any affiliate thereof (other than an employee who performs
purely ministerial functions) (a "Protected Employee") to leave the
employ of the Parent, Company or such Parent; (2) interfere in any way
with the relationship between the Parent Company or any subsidiary and
any Protected Employee; (3) hire any Protected Employee, or any person
who was a Protected Employee at any time during the Non-Competition
Period; (4) induce or attempt to induce any customer, distributor,
supplier, licensee, or other business relationship of the Parent,
Company or any affiliate which exists or existed at any time during the
Non-Competition Period, to cease doing business with the Parent Company
or such affiliate, or to interfere in any way with any such business
relationship.
(b) During the Employment Period and thereafter, Executive
shall not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any part
of the following valuable, special and unique assets of Parent's or Company's
business to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies.
(c) Executive acknowledges that the restrictions contained in
this Section 5 in view of the nature of the business in which Parent or Company
is engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek
3
from any court of competent jurisdiction preliminary and permanent injunctive
relief without proving actual damage or immediate or irreparable harm. Nothing
contained herein shall prohibit the Parent or Company from pursuing any other
remedies legally available to the Parent or Company for such breach or
threatened breach, including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(e) The provisions of this Section 5 shall survive the
expiration or termination of this Agreement.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period which prevents Executive from reasonably
discharging his or her duties and responsibilities for a period of one hundred
twenty (120) days, no additional payments, beyond those earned or vested prior
to the date of such termination or payable under Section 3(d)(ii) above shall be
payable hereunder.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON.
In the event Executive's employment is involuntarily terminated by Company
without Cause or by Executive's resignation with Good Reason during the
Employment Period, Company shall (i) pay the Executive the payment described in
Section 3(d)(ii), if any, (ii) continue to provide Executive the base salary
described in Section 3 hereof for a period of one year from the date of
termination and (iii) pay an annual bonus for the year in which the date of
termination occurs at the time bonuses for such year are paid to executives
generally, determined on the basis of performance factor one (or similar target
performance level). Executive will be deemed to have "Good Reason" to resign in
the event (A) a significant reduction in Executive's duties from those described
in Section 2 above occurs, other than by reason of the Company becoming an
affiliate of Parent and ceasing to be a public corporation as a result of the
transactions contemplated by the Merger Agreement, or (B) a material breach by
the Parent or Company of its obligations under Section 3 or 4 of this Agreement
occurs, and such reduction or breach continues after written notice thereof and
a reasonable opportunity to cure of not less than 30 days has been provided by
the Executive to the Parent and Company.
(c) RESIGNATION. In the event Executive's employment is
terminated during the Employment Period by reason of Executive's resignation
without Good Reason, no additional payments, beyond those earned or vested prior
to the date of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment
is involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
4
"Cause" shall mean any action by the Executive or any inaction by the
Employee which is reasonably believed by the Company to constitute:
(i) fraud, embezzlement, misappropriation,
dishonesty or breach of trust;
(ii) a felony of moral turpitude;
(iii) material breach or violation of any or all of
the covenants, agreements and obligations of the Executive set forth in
this Agreement, other than as the result of the Employee's death or
disability;
(iv) a willful or knowing failure or refusal by the
Executive to perform any or all of Executive's material duties and
responsibilities as an officer of the Company, other than as the result
of the Employee's death or disability; or
(v) gross negligence by the Executive in the
performance of any or all of his material duties and responsibilities
as an officer of the Company, other than as the result of the
Executive's death or disability;
provided, however, that if the basis for any termination of the Executive's
employment by the Company as set forth in a termination notice delivered by the
Company to the Executive is any or all of the definitions of Cause set forth in
clause (iii) or (iv) above, then, in such event, the Employee shall have thirty
(30) days from and after the date of her receipt of such Termination Notice to
cure the action or inaction specified therein to the reasonable satisfaction of
the Company.
7. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices to
Executive shall be sent to Executive's residence. Notices to Parent and Company
shall be sent to Company's home office.
8. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
9. PREVAILING PARTY. If any litigation shall arise between the Parent
and/or Company and the Executive based, in whole or in part, upon this Agreement
or any or all of the provisions contained herein, the prevailing party in any
such litigation shall be entitled to recover from non-prevailing party, and
shall be awarded by a court of competent jurisdiction, any and all reasonable
fees and disbursements of trial and appellate counsel paid, incurred or suffered
by such prevailing party as the result of, arising from, or in connection with,
any such litigation shall be entitled to recover from the non-prevailing party,
and shall be awarded by a court of competent jurisdiction, any and all
reasonable fees and disbursements of trial and appellate counsel paid, incurred
or suffered by such prevailing party as the result of, arising from, or in
connection with, any such litigation.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without application of any
conflicts of laws principles. The Executive waives any plea of jurisdiction as
not being a resident of, or being located or conducting business in, Palm Beach
County, Florida and agrees that any litigation or action directly or indirectly
connected with this Agreement, shall, at the Parent's and/or Company's
5
election, be subject to binding arbitration administered by the American
Arbitration Association in West Palm Beach, Florida.
11. ENTIRE AGREEMENT. Effective as of the date hereof, this Agreement
supersedes and replaces any and all prior employment agreements, both written
and oral, between the Executive and the Company and/or an affiliate thereof, and
neither the Company nor any subsidiary shall have any further liability under
any such agreements, other than for compensation earned but not paid as of the
date hereof. This Agreement contains the entire understanding between parties
and can only be amended or supplemented by a written agreement signed by the
parties. Notwithstanding the foregoing, this Agreement does not supersede the
Confidentiality and Secrecy Agreement between Executive and the Company and/or
an affiliate, which agreement shall remain in full force and effect. In the
event neither the closing of the Offer nor the Merger contemplated by the Merger
Agreement shall occur, then this Agreement shall be of no force or effect and
any employment agreement referred to in the first sentence of this Section 11 in
effect on the date hereof shall be deemed to have remained in full force and
effect notwithstanding the provisions of this Section 11.
12. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and shall be binding upon, Parent, the Company and the Executive and their
respective heirs, personal representatives, legal representatives, successors
and assigns.
... SIGNATURE PAGE FOLLOWS
6
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
ROYAL NUMICO N.V.
By: /s/ Julitte van der Ven /s/ Geary Cotton
----------------------------------- ---------------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-fact Geary Cotton
---------------------------------- ---------------------------------
PRINT NAME
REXALL SUNDOWN, INC. ADDRESS
By: Damon DeSantis 615 Idlewyld Dr.
----------------------------------- ---------------------------------
Its: CEO Ft. Laud, FL 33301
---------------------------------- ---------------------------------
7