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 Gerald Holly ("Executive").
WHEREAS, Executive is employed by Company or by a subsidiary of Company, as
Senior Executive Vice President - Technical Division;
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) $675,000, 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) $675,000, 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.
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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
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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.
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"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
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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
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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/ Gerald T. Holly
---------------------- -------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-fact
--------------------- Gerald T. Holly
-------------------------
PRINT NAME
REXALL SUNDOWN, INC. ADDRESS
By: /s/ Damon DeSantis 1010 South Ocean Blvd.
---------------------- -------------------------
Its: CEO Delray Beach, FL 33483
--------------------- -------------------------
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