Exhibit 99.1
SEPARATION AGREEMENT AND FULL AND FINAL RELEASE
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This Separation Agreement and Full and Final Release (the "Agreement") is
made and entered into by and between Charles E. Fioretti, an individual residing
in Collin County, Texas, and Mannatech, Incorporated (the "Company"), a Texas
corporation.
RECITALS
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WHEREAS, Fioretti currently is employed by the Company;
WHEREAS, Fioretti currently is a stockholder of the Company;
WHEREAS, the parties entered an Agreement pertaining to Fioretti's
employment with the Company on May 14, 1997 (the "1997 Employment Agreement");
WHEREAS, Fioretti and the Company entered into an Agreement on August 8,
2000 regarding the sale and purchase of certain of Fioretti's shares of Company
stock (the "2000 Stand-Still Agreement");
WHEREAS, Fioretti currently serves as Chairman of the Board of Directors
of the Company under an Employment Agreement entered into between the parties on
September 21, 2000 (the "2000 Employment Agreement");
WHEREAS, Fioretti and the Company mutually wish to terminate Fioretti's
employment relationship with the Company, subject to the terms and conditions of
this Agreement;
WHEREAS, Fioretti and the Company mutually wish to cancel the 1997
Employment Agreement and the 2000 Employment Agreement and all other agreements
between the parties, other than those matters expressly excepted herein, so that
any and all obligations under any of the cancelled agreements shall become null
and void;
WHEREAS, Fioretti desires to transfer certain shares of common shares of
Company stock to the Company and the Company desires to accept such shares from
Fioretti, subject to the terms and conditions of this Agreement;
NOW THEREFORE, in exchange for the valuable consideration paid or given
under this Agreement, the receipt, adequacy, and sufficiency of which is hereby
acknowledged, the parties knowingly and voluntarily agree to the following
terms:
TERMS
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1. Voluntary Resignation of Employment and Position as an Officer. In
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consideration of the parties' mutual undertakings set forth in this Agreement,
Fioretti hereby submits, and the Company hereby accepts, the voluntarily
resignation of Fioretti's employment with the Company effective as of the date
this Agreement is signed (the "Separation Date"). As of that time,
SEPARATION AGREEMENT AND FULL AND FINAL RELEASE - Page 1
the parties agree that Fioretti will be relieved of further duties in his
position as Chairman of the Board for the Company.
2. Sale of Stock and Cancellation of Prior Agreements. In consideration
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of the parties' mutual undertakings set forth in this Agreement, including but
not limited to the Company's payment to Fioretti of $1,200,000 in accordance
with the terms of the Special Separation Benefit described in paragraph 3 below,
the parties agree that Fioretti shall sell, transfer, and deliver to the
Company, and the Company shall accept from Fioretti, 50,000 shares of Company
common stock on a date that is on or before the fifth day from the Effective
Date of this Agreement (as defined below); provided, however, that in the event
such date is on a day that the United States securities markets are not open for
trading, the date shall be extended to the next succeeding trading day, as of
which Fioretti shall deliver to the Company a certificate or certificates
representing the 50,000 shares, together with a stock power, duly executed in
blank and shall take all such action as may be reasonably requested by the
Company to effect a valid transfer of the shares. In addition, the 1997
Employment Agreement, the 2000 Employment Agreement, and all other agreements
between the parties, other than the 2000 Stand-Still Agreement and the Renewal
and Extension Promissory Note dated February 17, 1999 made by Fioretti in the
principal amount of $199,896.10 (the "Agri-Tech Note"), shall be cancelled as of
the Effective Date of this Agreement (as defined below) and that, upon
cancellation, any and all obligations under any of the agreements just described
as cancelled shall become null and void, including but not limited to any and
all provisions under said cancelled agreements otherwise purported to survive
termination thereof. The transfer of shares of Company common stock pursuant to
this Paragraph 2 shall in no way modify the rights or obligations of the parties
pursuant to the 2000 Stand-Still Agreement.
Further in consideration of the parties' mutual undertakings set forth
in this Agreement, Fioretti and the Company hereby modify the payment terms of
the Agri-Tech Note by amending the second and third paragraphs of the Agri-Tech
Note to read in their entirety as follows:
"This Note shall bear interest at six percent (6%) per annum,
compounded annually on February 17 of each year.
This principal and interest shall be payable as follows:
On February 17, 2000, the Maker shall pay an installment of principal
and interest to the Payee in the amount of $47,507.70; on February 17,
2001, the Maker shall pay an installment of principal and interest to the
Payee in the amount of $47,507.70; and the Maker shall pay all remaining
principal, all accrued interest, and any and all amounts due and owing
under this Note to the Payee on the earlier of (i) the thirtieth day after
the "Divestiture Date" (as defined below) and (ii) February 17, 2011. The
"Divestiture Date" shall mean the first date on which Maker no longer owns
at least 100,000 shares of Payee common stock, subject to appropriate
adjustment of such number to reflect any stock splits or reverse stock
splits effected by Payee after June 1, 2001. For purposes of the preceding
sentence, Maker shall be
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deemed to own only those shares of Payee common stock of which he is both
the record and beneficial owner."
Until the Agri-Tech Note is paid in full, Fioretti shall notify the Company in
writing each time that he sells, assigns, contributes, transfers or otherwise
disposes of ("sells," and each such transaction a "sale") Company common stock
(other than sales to the Company) no later than 5 days following the date of
each sale. Such notice shall include the date of the transaction, a brief
description of the transaction, the number of shares sold, and the number of
shares owned by Fioretti after the transaction.
3. Special Separation Benefit. In consideration of Fioretti's undertakings
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set forth in this Agreement, the Company agrees to provide Fioretti a Special
Separation Benefit on the following terms:
(a) To pay Fioretti a total of $1,200,000 in two installments according to
the following schedule: one installment of $600,000 within five days
from the Effective Date of this Agreement (as defined below) and one
installment of $600,000 on the date that is one year from the Effective
Date of this Agreement (as defined below). Both installments shall be
wired on the payment date to the account of Fioretti identified in
Exhibit A to this Agreement unless written notice of a different
account is provided to the Company at least one business day prior to
the actual wire transfer.
(b) To reimburse Fioretti on a monthly basis for the excess of the actual
amount of the monthly COBRA continuation coverage premiums he pays for
continued medical and dental coverage, if any, under the Company's
medical plan and dental plans for himself and his dependents to the
extent of any dependents so covered as of the Effective Date for up to
18 months of said coverage (or for such time as he remains eligible for
said coverage) over and above the amount he otherwise would have paid
for said coverage had he remained employed by the Company during those
months; provided, however, that Fioretti elects COBRA continuation
coverage by completing and returning within the time allowed by
applicable law the COBRA election form that he will receive under
separate cover and keeps said coverage in effect by making timely
premium payments; and provided further that if Fioretti loses his right
to the continued medical and dental coverage under COBRA referred to
herein solely due to the Company's termination of the plan or plans
providing such coverage prior to the time such coverage would otherwise
have expired, the Company shall continue to reimburse Fioretti on a
monthly basis in the same monthly dollar amount until Fioretti's rights
to continued coverage under COBRA with respect to such plan or plans
would have expired but for the plan termination.
(c) To allow Fioretti to use the office assigned him during his employment
with the Company at the Company's facility at 600 South Royal Lane,
Suite, 200, Coppell, Texas 75019 through August 31, 2001 (or only for
as long as the Company continues to maintain said office space, if
earlier than August 31, 2001, in which case the
SEPARATION AGREEMENT AND FULL AND FINAL RELEASE - Page 3
Company agrees to give Fioretti, if possible, no less than seven days
advance notice of the date as of which the office space must be
vacated). During such period or until Fioretti gives notice to the
Company that the office has been vacated, if earlier, the Company
agrees that it will not change the telephone numbers of the telephones
currently in use in said office, disturb the contents of said office or
change the locks and will not give other personnel access to said
office except for purposes of normal maintenance and building
emergencies. For 90 days following the date as of which Fioretti
vacates the Company's office space, the Company agrees to forward to
Fioretti at such forwarding address as Fioretti may provide to the
Company all mail, faxes and other communications and deliveries
received by the Company for the attention of Fioretti. All such items
shall be sent to Fioretti on a weekly basis in a timely fashion.
Notwithstanding the preceding, the Company shall have the right to
refuse receipt of any item that it determines to be of a size or weight
or other characteristic that would make it burdensome, costly or
otherwise inappropriate to forward but shall instead, where reasonably
possible, provide the sender with the forwarding address provided to
the Company by Fioretti, or in the alternative the Company may accept
delivery and charge Fioretti the cost of shipping said item to
Fioretti's forwarding address.
(d) To allow Fioretti during his lifetime to purchase Company products at
the same costs charged to Company employees; provided, however, that
such purchases are limited to Fioretti's personal use and may not be
resold by him. All such purchases shall be made by Fioretti by
providing written notice (including email or fax) to the administrative
assistant to the Company's Chief Executive Officer as to the items
needed and the address for delivery and shall include a valid credit
card to which the payment shall be charged.
(e) To allow Fioretti during his lifetime to use the Company's fitness
center on the same basis and in the same manner as provided to Company
employees.
All amounts payable by the Company hereunder shall be subject to lawful
deductions not to exceed 20% of the gross amount payable. In the event of
Fioretti's death prior to receipt of any payments owed by the Company to
Fioretti hereunder, the Company will make such payments to Fioretti's estate.
If Fioretti exercises his limited right to revoke his release of his Age
Discrimination in Employment Act claims as provided in this Agreement and under
applicable law, he understands and agrees that he will be eligible to receive
the payments described above in subparagraph (a), but will not be eligible to
receive the payments and benefits of the Special Separation Benefit described in
subparagraphs (b), (c), (d), or (e) of this Paragraph 3.
By executing this Agreement, Fioretti acknowledges and agrees that neither
the Company nor any of the Released Parties (as defined below) have any legal
obligation to provide the Special Separation Benefit to him. Fioretti also
acknowledges and agrees that his acceptance of the Special
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Separation Benefit and attendant obligations as described in this Agreement are
in consideration of the Company's promises and undertakings set forth in this
Agreement.
4. Tax Matters and Indemnities. Fioretti agrees that he is solely
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responsible for the payment of any federal, state, or local tax, if any, on all
payments and benefits provided herein. If any claim is ever made upon the
Company and/or any of the other Released Parties (as defined below) for tax
liability on such amounts, except for the amount, if any, withheld for taxes by
the Company, Fioretti agrees to indemnify and hold harmless the Company and the
other Released Parties (as defined below) for such claims, including but not
limited to penalties, interest, costs, and attorney's fees. Fioretti further
agrees that should the characterization of any payments hereunder be found
improper or unwarranted by any taxing authority such that (i) a claim is made
against the Company or any of the other Released Parties (as defined below) for
taxes, penalties, or interest for which Fioretti would have been initially
responsible and which should have been deducted from the payment amounts, then
Fioretti shall indemnify and hold harmless the Company and the other Released
Parties (as defined below) for such claims, including but not limited to
penalties, interest, costs, and attorney's fees; or (ii) Fioretti is held
obligated to pay additional taxes, penalties, or interest, then he will not
assert, file, or make any claims against the Company or any of the other
Released Parties for any such taxes, penalties, or interest he may be compelled
to pay or for the costs or attorney's fees he may incur.
5. Agreement Not to Use or Disclose Confidential Information. Fioretti is
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notified that "Confidential Information" includes information disclosed to him
or known by him through his employment with the Company, not generally known in
the Company's industry, about Company's products, processes, and services,
including but not limited to information concerning inventions, research and
development, as well as all data or information concerning customers (including
Associates), customer lists (including downline reports and similar reports of
business activities and relevant information concerning persons who conduct the
same), prospect lists, mailing lists, sales leads, contracts, financial reports,
sales, purchasing, price lists, product costs, marketing programs, marketing
plans, business relationships, business methods, accounts payable, accounts
receivable, accounting procedures, control procedures, and training materials.
Moreover, Confidential Information also includes any "Trade Secrets" (as defined
by Texas law) of the Company or any other information protected from disclosure
by statute or common law. Confidential Information does not include (i)
information that is generally available to or known to the public or the
industry; (ii) information that becomes public or industry knowledge through no
fault of Fioretti; (iii) information that becomes available to Fioretti
legitimately and lawfully from a third party not under a confidentiality
obligation to the Company; (iv) information that is independently developed by
Fioretti without use of the Company's Confidential Information; (v) information
that was already in Fioretti's possession prior to his employment with the
Company; (vi) information that is disclosed in order to comply with a court
order or applicable law, provided that the Company is afforded a reasonable
opportunity to obtain a court order or other reliable assurance that
confidential treatment will be accorded to the disclosed information; or (vii)
information that is disclosed in order for Fioretti to defend himself against a
claim, provided that the Company is afforded a reasonable opportunity to
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obtain a court order or other reliable assurance that confidential treatment
will be accorded to the disclosed information.
Fioretti recognizes that the unauthorized use or disclosure of any of the
Company's Confidential Information or Trade Secrets obtained by him during his
employment with the Company constitutes unfair competition. Fioretti promises
not to engage in any unfair competition with the Company and understands that
engaging in unfair competition with the Company is a material breach of this
Agreement entitling the Company to receive injunctive relief to prevent further
use and disclosure in addition to other remedies available to it in law or in
equity for breach of this Agreement, and that Fioretti consents that no bond in
excess of $1,000 shall be necessary for obtaining such injunctive relief.
6. Agreement to Return Property. Fioretti must return to the Company any
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and all items of its property, including but not limited to lap-top computers,
keys, equipment, forms, files, manuals, correspondence, business records, price
lists, customer lists, computer tapes and diskettes, data processing reports,
and any and all other documents and property over which Fioretti had possession
or control while employed by the Company.
7. Unauthorized Access to Computer/Internet Systems. Fioretti agrees and
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understands that he is no longer authorized to log on to, access, or otherwise
use the Company's computer systems, network, or Internet domain, and that any
such log on or attempt to log on, accessing, or use is unauthorized. Fioretti
further agrees not to make, attempt, or assist (directly or indirectly) anyone
else with respect to any such unauthorized log ons, accessing, or use of the
Company's computer system, network, or Internet domain.
8. General Releases. In consideration of the Special Separation Benefit
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described in Paragraph 3 above, Fioretti and his family members, heirs,
successors, and assigns (collectively the "Releasing Parties") agree to release
and discharge the Released Parties (as defined below) from, and waive to the
maximum extent permitted by law, any and all claims, liabilities, demands, and
causes of action, whether known or unknown, fixed or contingent, vicarious,
derivative, or direct, that Fioretti has or claims against the Company or any of
the other Released Parties. This General Release includes but is not limited to
any and all claims that arise in any way (i) as a result of Fioretti's
employment or the termination of his employment relationship with the Company;
(ii) under any federal, state, or local law that applies or is asserted to
apply, directly or indirectly, to the formation, continuation, or termination of
Fioretti's employment with the Company, including the Age Discrimination in
Employment Act, or other claims growing out of any legal restrictions,
contractual or otherwise, on the right of the Company to terminate the
employment of its employees; (iii) under the 1997 Employment Agreement, the 2000
Employment Agreement, and all other agreements between Fioretti and the Company,
if any, other than the 2000 Stand-Still Agreement and the Agri-Tech Note; (iv)
from Fioretti's service as an officer of the Company; (v) from Fioretti's status
as a stockholder of the Company; and (vi) from any other act, conduct, or
omission by the Company or the Released Parties. The "Released Parties" are (i)
the Company; (ii) any corporation, partnership, or other entity affiliated with
the Company; and (iii) any
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officer, director, stockholder, partner, fiduciary, agent, employee,
representative, insurer, attorney, successor, and assign of the entities or
persons just described in (i) and (ii). This General Release does not have any
effect on any rights or claims that Fioretti may have against the Company or any
of the other Released Parties under the Age Discrimination in Employment Act
that may arise after the Effective Date of this Agreement (as defined below).
This General Release does not have any effect on any rights or claims that
Fioretti may have against the Company or any of the other Released Parties
arising from any public derogatory, defamatory, disparaging or slanderous
remarks made by the Company or any of the other Released Parties after the
Effective Date of this Agreement.
For a period of seven days after he executes this Agreement, Fioretti may,
as provided by applicable law, revoke his agreement to waive any and all claims,
if any, that arise in any way under the Age Discrimination in Employment Act, if
he wishes, by so notifying the Chief Executive Officer of the Company in
writing. If Fioretti revokes the release as to Age Discrimination in Employment
Act claims, he understands and agrees that (i) the General Release remains valid
as to all other claims released in this Paragraph 8; and (ii) the total Special
Separation Benefit payable to Fioretti by this Agreement shall be limited by the
terms of Paragraph 23 below.
The release and waiver given by Fioretti herein are not intended to release
or excuse the Company's obligation to reimburse Fioretti for his reasonable
business expenses incurred on or before the Effective Date of this Agreement in
accordance with the Company's normal policies regarding such reimbursement, to
release or waive payment of claims pursuant to the Company's medical and dental
plans in accordance with the terms thereof, or to release or waive the
obligations of the Company under Paragraph 24 below.
In consideration of the promises and undertakings of Fioretti set out in
this Agreement, the Company agrees to release and discharge Fioretti and
Fioretti's family, heirs, successors, assigns, agents and attorneys from, and
agrees not to sue or join in any suit against such parties for, any and all
claims, liabilities, demands, and causes of action, whether known or unknown,
fixed or contingent, vicarious, derivative, or direct, that the Company has at
the time of execution of this Agreement, other than claims for breach of
Fioretti's fiduciary duties to the Company and its shareholders.
9. Confidentiality, Nonprosecution, and Nondisparagement. In consideration
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of the Special Separation Benefit described in Paragraph 3 above, the parties
hereto agree to the following:
(a) The terms of this Agreement shall be and remain confidential, and shall
not be disclosed by Fioretti to any persons other than the Releasing
Parties, and Fioretti's attorneys and accountant or tax return
preparer, if those persons have agreed to keep such information
confidential. The Company agrees to provide Fioretti for his review and
approval an advance copy of the final press release announcing his
official departure.
(b) Except as requested by the Company or as required or compelled by law
or judicial process, Fioretti will not assist, cooperate with, or
supply information of any kind to
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any individual or private-party litigant or their agents or attorneys
(i) in any proceeding, investigation, or inquiry raising issues under
any federal, state, or local law involving the formation, continuation,
or termination of Fioretti's employment relationship with the Company,
or the employment of other persons, by the Company or any of the other
Released Parties; or (ii) in any other litigation against the Company
or any of the other Released Parties. Except as requested by Fioretti
or as required or compelled by law or judicial process, the Company
will not assist, cooperate with, or supply information of any kind to
any individual or private-party litigant or their agents or attorneys
in any litigation against Fioretti.
(c) Fioretti will not make to any other parties any statement, oral or
written, that directly or indirectly impugns the quality or integrity
of the Company's or any of the other Released Parties' business or
employment practices, or any other disparaging or derogatory remarks
about the Company or any of the other Released Parties. The Company
agrees that it will not issue any official public statement that
contains any disparaging or derogatory remarks about Fioretti and will
take reasonable action designed to instruct its officers, employees and
agents to refrain from making any public statements on behalf of the
Company regarding or relating to Fioretti.
(d) Except as permitted by law, Fioretti will not initiate any
investigation or inquiry, or any other action of any kind, including an
administrative charge with any governmental agency, with respect to the
Company's facilities, employment practices, or business operations,
relating to the termination of Fioretti's employment relationship with
the Company as provided for in this Agreement.
10. Noncompetition. Fioretti acknowledges that the Company's goodwill
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generated by his founding of and association with the Company is a valuable,
special, and unique property of the Company and that the Company has a
legitimate interest in protecting and maintaining that goodwill. Fioretti
further acknowledges that his separation from the Company could have an adverse
impact on the Company's goodwill, especially if he were to directly or
indirectly compete against the Company.
Fioretti acknowledges that he has received during his employment, and will
continue to receive until the resignation of his employment, knowledge and
training from the Company, included in which is the Confidential Information
identified above. Fioretti further acknowledges that such knowledge, training,
and Confidential Information is valuable, special, and unique to the Company
and, therefore, the Company's investment in the training and protection and
maintenance of the Confidential Information constitutes a legitimate interest to
be protected by the Company.
Therefore, to protect the Company's interest in its goodwill and
Confidential Information, and in consideration of the Special Separation Benefit
described in Paragraph 3, Fioretti agrees that for a period of two years
following the Separation Date, he shall not engage in any business which is in
competition with the Company and is located within a 50-mile radius of the
Company's operations in the State of Texas, including through the business of
any person, company, firm, corporation,
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partnership, association, agency, or business, and particularly through a party
known to Fioretti to be an independent contract sales associate and/or customer
of the Company or with whom Fioretti had contact during, or by reason of, his
employment by the Company; provided, however, that Fioretti shall not be deemed
in violation of this provision in the event that any company, firm, corporation,
partnership, association, agency, or business that employs Fioretti that is not
in competition with the Company within the 50-mile radius described above merges
with, is acquired by or is otherwise combined with a company, firm, corporation,
partnership, association, agency, or business that is in competition with the
Company within said 50-mile radius if Fioretti does not perform services for and
is in no way involved in the portion of the business that is in competition with
the Company.
11. Nonsolicitation. Further to protect the Company's goodwill and
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Confidential Information, and in consideration of the Special Separation Benefit
described in Paragraph 3 above, Fioretti agrees that for a period of two years
following the Separation Date, he shall not, directly or indirectly, for his own
account or for the benefit of any other person:
(a) hire, attempt to hire, employ, solicit for employment, or recruit any
person who is then or was within the previous six months employed by
the Company or in an independent contractor relationship with the
Company, or entice, persuade, encourage, induce, advise, or recommend
to any such person that he or she terminate or abandon his or her
employment or terminate or abandon his or her business relationship
with the Company;
(b) solicit or induce, or in any manner attempt to solicit or induce, any
customer or prospective customer of the Company (i) to cease being or
not to become a customer of the Company or (ii) to divert any business
of such customer from the Company; or
(c) otherwise interfere with, disrupt, or attempt to interfere with or
disrupt the relationship, contractual or otherwise, between the Company
and any of its respective customers, clients, investors, suppliers,
consultants, independent contractor sales associates, or employees.
12. Reasonableness of Restrictions. Fioretti agrees that the restrictions
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contained in Paragraphs 5, 10, and 11 are reasonable in scope, duration, and
geographic territory, and are designed to provide the Company with limited,
legitimate, and reasonable protection against subsequent diminution of the value
of the Company's business and goodwill attributable to any actions by Fioretti
contrary to such restrictions. Fioretti represents to the Company that the
enforcement of the restrictions contained in Paragraphs 5, 10, and 11 would not
be unduly burdensome to Fioretti and that he is able to pursue his business
interests and earn a living by means not prohibited by Paragraphs 5, 10, or 11.
13. Effect of Agreement on Common-Law Duties. Fioretti acknowledges that
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his undertakings in this Agreement supplement rather than supplant his common-
law duties as a current or former employee, officer, and director of the
Company.
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14. Agreement Not to Seek Reemployment. In consideration of the Special
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Separation Benefit described in Paragraph 3 above, Fioretti agrees that the
Company and the other Released Parties have no obligation to employ, hire, or
rehire him, to consider him for hire, or to deal with him in any respect at any
location, office, or place of business with regard to future employment or
potential employment. Accordingly, Fioretti agrees that (i) he will not ever
apply for or otherwise seek employment by the Company at any time in the future,
at any location, office, or place of business, and (ii) his forbearance to seek
future employment as just described is purely contractual and is in no way
involuntary, discriminatory, or retaliatory.
15. Nonadmission of Liability or Wrongdoing. Nothing contained in this
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Agreement will be deemed or construed as an admission of wrongdoing or liability
on the part of the Company, any of the other Released Parties or Fioretti and,
except to the extent necessary to enforce this Agreement, neither this Agreement
nor any part of it may be construed as, used, or admitted into evidence in any
judicial, administrative, or arbitral proceeding, as an admission of any kind by
any party hereto.
16. Agreement Regarding Cooperation. In consideration of the Special
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Separation Benefit described in Paragraph 3 above, Fioretti agrees to cooperate
fully and completely with the Company or any of the other Released Parties, at
their request, in all pending and future litigation, actual or threatened,
involving the Company or any of the other Released Parties, in which the Company
believes that Fioretti may have relevant knowledge or information, and in which
Fioretti is not a party; provided that the Company reasonably reimburses
Fioretti for his out-of-pocket expenses, and any loss of wages directly arising
from his absence at work for which he is paid on an hourly or daily basis,
incurred at the Company's request in connection with such cooperation. This
obligation includes: (i) promptly meeting with counsel for the Company or the
other Released Parties at reasonable times upon request; (ii) providing
testimony in court or by deposition that is truthful, accurate, and complete,
according to information known to Fioretti; and (iii) providing to the Company
or the other Released Parties, or their counsel, truthful, accurate, and
complete information known to Fioretti, in connection with the prosecution or
defense of the Company or any of the other Released Parties in such litigation.
Fioretti further agrees to execute documents or take any other action reasonably
required by the Company or any of the other Released Parties relating to matters
occurring during Fioretti's employment with the Company or about which Fioretti
has personal knowledge or information. Nothing in this Paragraph 16 is intended
to waive any legal privilege that Fioretti may have the right to assert. The
Company agrees that it will cooperate with Fioretti in the event he requests
copies of documents or information in the Company's possession that are not
otherwise confidential or privileged and that are reasonably requested by
Fioretti and relevant to a matter involving Fioretti's employment with the
Company.
17. Authority to Execute. Fioretti represents and warrants that he has the
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authority to execute this Agreement on behalf of all the Releasing Parties.
Fioretti further agrees to indemnify fully and hold harmless the Company and any
of the other Released Parties from any and all claims brought by the Releasing
Parties or derivative of his own, including the amount of any such claims
SEPARATION AGREEMENT AND FULL AND FINAL RELEASE - Page 10
the Company or any of the other Released Parties are compelled to pay, and the
costs and attorney's fees incurred in defending against all such claims.
18. Governing Law and Interpretation. This Agreement and the rights and
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duties of the parties under it shall be governed by and construed in accordance
with the laws of the State of Texas. If any provision of this Agreement is held
to be unenforceable, such provision shall be considered separate, distinct, and
severable from the other remaining provisions of this Agreement, and shall not
affect the validity or enforceability of such other remaining provisions, and
that, in all other respects, this Agreement shall remain in full force and
effect. If any provision of this Agreement is held to be unenforceable as
written, but may be made to be enforceable by limitation thereof, then such
provision shall be enforceable to the maximum extent permitted by applicable
law. The language of all parts of this Agreement shall in all cases be construed
as a whole, according to its fair meaning, and not strictly for or against any
of the parties.
19. Expiration of Offer. The Company's offer of the Special Separation
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Benefit will expire at 12:01 a.m. on the twenty-second day following the date on
which Fioretti receives this Agreement for consideration, i.e., on June 13,
2001. Fioretti may accept this offer at any time before expiration by signing
this Agreement in the space provided below, and returning it to the Company.
Fioretti and the Company agree that the modifications that have been made to
this Agreement since Fioretti first received it for consideration do not re-
start or extend the time period during which the offer remains open.
20. Limited Revocation Rights and Effective Date. For a period of seven
--------------------------------------------
days after Fioretti executes this Agreement, he may, as provided by applicable
law, revoke his agreement to waive any and all claims, if any, that arise in any
way under the Age Discrimination in Employment Act, if he wishes, by so
notifying the Chief Executive Officer of the Company in writing. This Agreement
will become fully effective and enforceable after the parties execute it (the
"Effective Date"); provided, however, that Fioretti's agreement to waive any and
all claims, if any, that arise in any way under the Age Discrimination in
Employment Act, will not become fully effective and enforceable until seven days
after Fioretti executes this Agreement; and provided further that Fioretti has
not exercised his limited revocation rights as provided under this Agreement and
applicable law. If Fioretti revokes the release as to Age Discrimination in
Employment Act claims, he understands and agrees that (i) the General Release in
Paragraph 8 remains valid as to all other claims released in that Paragraph; and
(ii) the total Special Separation Benefit payable to Fioretti by this Agreement
shall be limited by the terms of Paragraph 23 below.
21. Knowing and Voluntary Agreement. Fioretti acknowledges that this
-------------------------------
Agreement does not waive any rights or claims against the Company or any of the
other Released Parties that may arise under the Age Discrimination in Employment
Act after the Effective Date of this Agreement, and that the consideration
provided to him for execution of this Agreement is in addition to anything of
value to which he already is or may have been entitled. Fioretti further
acknowledges that he has been given a period of at least 21 days within which to
consider this Agreement; that he has been advised in writing to consult with his
attorney prior to executing this Agreement; that this Agreement has been read
and explained to him by his attorney; that he fully understands the meaning
SEPARATION AGREEMENT AND FULL AND FINAL RELEASE - Page 11
and effect of his action in executing this Agreement; and that his execution of
this Agreement is knowing and voluntary. Finally, Fioretti acknowledges that in
executing this Agreement he is not relying on any promise, representation, or
warranty whatever, express, implied, or statutory, not contained in this
Agreement concerning the Agreement's subject matter, but instead is relying on
his own judgment in consultation with his attorney.
22. Entire Agreement. Except as provided in paragraph 2 hereof, this
----------------
Agreement supersedes and cancels any previous negotiations, agreements,
commitments, and writings between the parties regarding the Agreement's subject
matter. It also contains and constitutes the entire understanding and agreement
between the parties and may be modified only by a writing of contemporaneous or
subsequent date executed by both Fioretti and an authorized official of the
Company.
23. Breach of Agreement and Remedies. Fioretti acknowledges and agrees that
--------------------------------
should he fail to comply with any of his obligations set forth in this Agreement
prior to receiving the payments and benefits of the Special Separation Benefit
described in Paragraph 3 above, the Company, in addition to any other legal or
equitable remedy available, will have no obligation to pay Fioretti the Special
Separation Benefit, except as provided below; but that all other provisions of
this Agreement shall remain in full force and effect. In addition, if Fioretti
exercises his limited right to revoke his release of his Age Discrimination in
Employment Act claims as provided in this Agreement, he understands and agrees
that he will be eligible to receive the payments and benefits of the Special
Separation Benefit described in subparagraph (a) of Paragraph 3, but will not be
eligible to receive the payments and benefits of the Special Separation Benefit
described in subparagraphs (b),(c), (d), or (e) of Paragraph 3. Fioretti further
understands and agrees that in the event of such a revocation, all other
provisions of this Agreement shall remain in full force and effect. In the event
that Fioretti shall obtain any money judgment or otherwise prevail with respect
to any litigation brought by Fioretti to enforce any provision contained herein,
the Company shall reimburse Fioretti for his reasonable attorneys' fees, expert
witness fees and disbursements incurred in such litigation.
24. Indemnification; Continuation of Insurance. The Bylaws of the Company
------------------------------------------
provide for the indemnification of its officers and directors in their capacity
as such. The Company agrees that it will continue to include Fioretti within the
provisions for indemnification of officers and directors of the Company in its
Bylaws on and after the Effective Date of this Agreement with respect to his
services as such on the same basis as provided for its officers and directors
generally. The Company further agrees to continue to include Fioretti on and
after the Effective Date of this Agreement in the directors and officers
liability insurance policy covering other directors and officers of the Company
generally in place from time to time. In no event shall Fioretti be entitled to
indemnification under this paragraph with respect to any proceeding, or matter
therein, brought or made by Fioretti against the Company.
25. Mitigation. Fioretti shall not be required to mitigate the amount of
----------
any payment provided for under this Agreement.
SEPARATION AGREEMENT AND FULL AND FINAL RELEASE - Page 12
26. No Other Agreements. Fioretti acknowledges that neither the Company
-------------------
nor any agent or attorney for the Company has made any promise, representation,
or warranty whatever, express, implied, or statutory, not contained in this
Agreement concerning the Agreement's subject matter to induce Fioretti to
execute this Agreement, and Fioretti acknowledges that he has not executed this
Agreement in reliance on any such promise, representation, or warranty not
contained herein. Fioretti represents and warrants that he has not assigned or
transferred, or purported to assign or transfer, to any person or entity not a
party any claim, debt, covenant, agreement, contract, liability, demand,
obligation, account, expense, action, cause of action, or suit being released
under this Agreement.
Fioretti further agrees to indemnify and hold harmless the Company and the
other Released Parties against any claim, debt, loss, covenant, agreement,
contract, liability, demand, obligation, account, expense, action, cause of
action, or suit (including the payment of attorney's fees and costs reasonably
incurred, whether or not litigation is commenced) by any person or entity that
is not a party to this Agreement, which is inconsistent with any of the
warranties, representations, or covenants made by Fioretti in this Agreement.
Signed on the dates shown below.
Dated: June 4, 2001 /s/ Charles F. Fioretti
------------------------------ --------------------------------
CHARLES F. FIORETTI
MANNATECH, INCORPORATED
Dated: June 4, 2001 By: /s/ Robert M. Henry
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Robert M. Henry
Chief Executive Officer
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