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EXHIBIT 10.18
RESIGNATION AND RELEASE AGREEMENT
THIS RESIGNATION AND RELEASE AGREEMENT ("Agreement") is
made and entered into by and between LEINER HEALTH PRODUCTS AND AFFILIATES
("Employer") and WILLIAM TOWNE ("Executive").
WHEREAS, the Employer and the Executive have determined that
it is in their best interests for Executive to resign his position with the
Employer;
WHEREAS, the Employer wishes to provide Executive with certain
benefits in consideration of Executive's promises and covenants as contained
herein, including the Executive's agreement to release all claims against the
Employer;
NOW THEREFORE, in consideration of and exchange for the
promises, covenants, and releases contained herein, the parties mutually agree
as follows:
1. RESIGNATION. Executive's resignation from all positions he
holds with the Employer shall be effective August 2, 1999.
("Resignation Date").
2. CONSIDERATION: Provided that Executive does not revoke this
Agreement as provided in Paragraph Three (3), the Employer
shall give the following consideration:
(a) Commencing on the first pay period following the
Effective Date of this Agreement (as defined in
paragraph three (3) below) and continuing for
Twenty-Four (24) months thereafter, pay Executive
Twenty-Two Thousand Nine Hundred Sixteen Dollars and
Sixty-Seven Cents ($22,916.67) per month, for a total
of Five Hundred Fifty Thousand Dollars and Eight
Cents ($550,000.08), less all required and customary
withholdings and deductions. Said payments shall be
made in accordance with Employer's regularly
scheduled payroll periods and shall be mailed to
Executive's residence.
(b) Continue Executive's benefits through and including
August 1, 2001, to the same extent to which he would
have been eligible to participate in said benefits
had he remained employed by Employer and pursuant to
the applicable plan documents (including the 401-k
plan and its matching contribution in accordance with
the applicable plan documents); and
(c) Employer shall provide Executive with executive out
placement assistance at the Employer's expense,
through an out placement assistance provider of the
Employer's choosing, at a total cost of no more than
Twenty Thousand Dollars and Zero Cents ($20,000.00).
(d) Pursuant to Article 2 of the PLI Investors, Inc.
Stock Option Plan (the "Plan"), and notwithstanding
any term of any stock agreement(s) ("Stock
Agreement") to the contrary, which may have been
executed between Executive and the Company, in
accordance with Section 2.1 of the Plan, the stock
options covered by such Stock Agreement (i) shall
become exercisable as to all shares of Common Stock
(as defined in the Plan) subject thereto and
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vested in full on the Resignation Date and (ii) may
be exercised in whole or in part at any time and from
time to time for a period of up to ten (10) years
from the date of the grant of the options, provided
however, notwithstanding the above, all options shall
terminate if Executive engages in any of the
following activities following the Resignation Date:
(a) Executive makes a public disparaging statement
regarding the Employer, including but not limited to
disparaging comments related to its officers,
policies, practices and procedures; (b) Executive
becomes employed by a competitor of the Employer
(such as Perrigo, Wieder, Rexall Sundown, Twin Labs,
Granutech, PFI, Pharmavite and GNC); or (c) Executive
attempts to hire or hires a current or former
employee (an individual who was previously employed
by Employer within one year of becoming employed by
Executive or his employer) without obtaining prior
written permission from either the Chief Executive
Officer of the Employer or the Vice President of
Human Resources. Employer will notify Executive of
the accelerated termination date in the event that
the options shall expire pursuant to the termination
provisions stipulated herein. Executive agrees that
he will discontinue any exercise of options upon
notice from Employer that an event or development
makes amendment or supplement of any Registration
Statement necessary, and will not resume such
exercise until Employer informs Executive he may do
so (provided that Employer shall not require such
discontinuance for more than Ninety (90) days in any
Three Hundred and Sixty (360) day period). All
provisions of the Stock Agreement not inconsistent
herewith shall remain effective.
(e) Executive shall be entitled to a bonus for
Fiscal Year 2000 totaling One Hundred Twenty Five
Thousand Dollars and No Cents ($125,000.00), payable
in accordance with Employer's regular bonus
disbursement schedule (on or about July 1, 2000), and
shall be mailed to Executive's residence.
(f) This Agreement shall not affect or diminish
Executive's ownership in the securities owned by
Executive at the time of the execution of this
Agreement, including (i) Four Thousand Eight Hundred
and Twelve (4,812) Delayed Delivery shares which
shall not be delivered until a liquidity event
occurs; (ii) Two Hundred and Fifty (250) shares of
common stock purchased by Executive; (iii) Seven
Hundred and Seventeen (717) Warrants issued on June
30, 1997; and (iv) Seven Thousand Two Hundred and
Seventeen (7,217) Options issued with a strike price
of One Hundred ($100.00) per option vesting on
termination.
(g) In case of the death of Executive, all Consideration
provided in this Agreement, except the consideration
provided in Paragraph Two (2) section (c), which
shall terminate, shall become and automatically
accrue to the surviving spouse of Executive, Margaret
V. Towne.
(h) Executive shall be entitled to all accrued vacation
pay through August 1, 1999, which shall be paid by
September 15, 1999.
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Executive acknowledges that he would not otherwise be entitled
to the consideration set forth in this paragraph were it not
for his covenants, promises, and releases set forth hereunder.
3. ACKNOWLEDGMENT OF RIGHTS AND WAIVER OF CLAIMS UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT ("ADEA"). Executive
acknowledges that he is knowingly and voluntarily waiving and
releasing any rights he may have under the Age Discrimination
in Employment Act of 1967 ("ADEA"). He also acknowledges that
the consideration given for the waiver and release in the
preceding paragraph thereof is in addition to anything of
value to which he was already entitled. Executive further
acknowledges that he has been advised by this writing, as
required by the Older Workers' Benefit Protection Act, that:
(a) his waiver and release does not apply to any rights or
claims that may arise after the Effective Date of this
Agreement; (b) he should consult with an attorney prior to
executing this Agreement; (c) he has at least twenty-one (21)
days to consider this Agreement (although he may by his own
choice execute this Agreement earlier); (d) he has seven (7)
days following the execution of the Agreement by the parties
to revoke the Agreement; and (e) this Agreement shall not be
effective until the date upon which the revocation period has
expired ("Effective Date"). Executive may revoke this Release
only by giving Employer formal, written notice of Executive's
revocation of this Release, to John M. Polson, Esq, Fisher &
Phillips, 4675 MacArthur Court, Suite 550, Newport Beach,
California 92660, to be received by the close of business on
the seventh (7th) day following Executive's execution of this
Release.
4. NO AMOUNTS OWING. Executive acknowledges that he has received
all wages and compensation due to him from Employer and that
Employer shall owe Executive nothing further once Executive
receives the consideration described in Paragraph Two (2).
5. RELEASE BY EXECUTIVE. In exchange for the consideration
provided by Employer, Executive agrees for Executive,
Executive's heirs, executors, administrators, successors and
assigns to forever release and discharge the Employer, Leiner
Health Products and Affiliates, and their subsidiaries,
related companies, parents, successors and assigns, officers,
directors, agents, executives and former executives from any
and all claims, debts, promises, agreements, demands, causes
of action, attorneys' fees, losses and expenses of every
nature whatsoever, known or unknown, suspected or unsuspected,
filed or unfiled, arising prior to the Effective Date of this
Agreement, or arising out of or in connection with Executive's
employment by and termination from the Employer or any
affiliate of the Employer. This total release includes, but is
not limited to, all claims arising directly or indirectly from
Executive's employment with the Employer and the termination
of that employment; claims or demands related to salary,
bonuses, commissions, stock, stock options, vacation pay,
fringe benefits and expense reimbursements pursuant to any
federal, state or local law or cause of action, including, but
not limited to, breach of contract, breach of the implied
covenant of good faith and fair dealing, infliction of
emotional harm, wrongful discharge, violation of public
policy, defamation and impairment of economic opportunity;
violation of the California Fair Employment and Housing Act,
the California Labor Code, the California Constitution; and
any claims for violation of the Civil Rights
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Acts of 1866, Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Older
Workers' Benefit Protection Act, the Family Medical Leave
Act, the California Family Rights Act, and the American With
Disabilities Act of 1990.
6. RELEASE BY EMPLOYER. Employer hereby irrevocably and
unconditionally releases, acquits and forever discharges
Employee from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies,
damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys' fees
and costs actually incurred) of any nature whatsoever, known
or unknown, suspected or unsuspected, which Employer now has,
owns or holds, or claims to have, own or hold, or which
Employer at any time heretofore had, owned or held, or claimed
to have, own or hold against Employee. Furthermore, this
Agreement shall not affect or diminish the Executive's right
to indemnification pursuant to Labor Code Section 2802 should
Executive be named in litigation arising from the course and
scope of his employment.
7. WAIVER OF SECTION 1542. Executive hereby states that it is
Executive's intention in executing this Agreement that the
same shall be effective as a bar to each and every claim,
demand, cause of action, obligation, damage, liability,
charge, attorneys fees and costs herein above released.
Executive hereby expressly waives and relinquishes all rights
and benefits, if any, arising under the provisions of Section
1542 of the Civil Code of the State of California which
provides:
"SECTION 1542. [CERTAIN CLAIMS NOT AFFECTED BY
GENERAL RELEASE.] A GENERAL RELEASE DOES NOT
EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
8. EMPLOYER DOCUMENTS. Executive hereby represents and warrants
that within sixty (60) days after the Effective Date, he will
return to the Employer all Employer documents in his
possession including, but not limited to, Employer files,
notes, records, and computer recorded information.
9. CONFIDENTIALITY. Executive agrees that he will keep the terms,
amount and fact of this Agreement completely confidential, and
that he will not hereafter disclose any information concerning
this Agreement to anyone; provided, however, that Executive
may make such disclosure to his immediate family, and to his
professional representatives (e.g., attorney, accountants,
auditors, tax preparers), all of whom will be informed of and
agree to be bound by this confidentiality clause, or other
such disclosures required by law.
10. CONFIDENTIAL INFORMATION AND TRADE SECRETS. Executive shall
not publish, disclose, or utilize any "trade secret" as
defined herein or other confidential information concerning
any matter related to the Employer's business that Executive
may have acquired by reason of his employment by the Employer.
Executive acknowledges and
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agrees that the term "trade secrets," as used in this
Agreement, includes, but is not limited to, the definition of
trade secrets in California Civil Code Section 3426.1, which
the parties acknowledge to include information concerning the
Employer's methods and processes used in the formulation and
manufacturing of products, ingredients, designs, formulas,
testing procedures and data, product specifications,
vendor/supplier lists, work orders, customer lists, executive
lists, identities of customers or vendors/suppliers, business
plans, and information pertaining to the marketing, selling,
pricing, advertising, and distribution of the Employer's
products. In the event that Executive has executed prior
agreements providing for the protection of confidential
information and trade secrets, the agreement that provides the
broadest protection to the Employer's confidential information
and trade secrets shall apply.
11. ARBITRATION. The parties agree that any controversy or claim
arising out of or relating to this Agreement, or any dispute
arising out of the interpretation or application of this
Agreement, shall be resolved by binding arbitration before a
retired Superior Court Judge and shall be conducted in
accordance with the provisions of the California Arbitration
Act and the California Code of Civil Procedure.
Notwithstanding the foregoing, Employer shall have the right
to obtain a temporary restraining order or preliminary
injunction in order to enforce its rights under Paragraphs
Seven (7), Eight (8), and Nine (9) of the Agreement in order
to protect its rights until such time as an arbitrator makes a
final decision.
12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
of all the parties hereto who have executed it and supersedes
any and all other agreements, understandings, negotiations, or
discussions, either oral or in writing, express or implied,
between the parties to this Agreement. The parties to this
Agreement each acknowledge that no representations,
inducements, promises, agreements or warranties, oral or
otherwise, have been made by them, or anyone acting on their
behalf, which are not embodied in this Agreement; that they
have not executed this Agreement in reliance on any
representation, inducement, promise, agreements, warranty,
fact or circumstances, not expressly set forth in this
Agreement; and that no representation, inducement, promise,
agreement or warranty not contained in this Agreement
including, but not limited to, any purported settlements,
modifications, waivers or terminations of this Agreement,
shall be valid or binding, unless executed in writing by all
of the parties to this Agreement. This Agreement may be
amended, and any provision herein waived, but only in writing,
signed by the party against whom such an amendment or waiver
is sought to be enforced.
13. BINDING NATURE. This Agreement, and all terms and provisions
contained herein, shall bind the heirs, personal
representatives, successors and assigns of each party, and
inure to the benefit of each party, its agents, directors,
officers, executives, servants, successors, and assigns.
14. CONSTRUCTION. This Agreement shall not be construed in favor
of one party or against the other.
15. PARTIAL INVALIDITY. Should any portion, word, clause, phrase,
sentence or paragraph of this Agreement be declared void or
unenforceable, such portion shall be considered
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independent and severable from the remainder, the validity of
which shall remain unaffected.
16. COMPLIANCE WITH TERMS. The failure to insist upon compliance
with any term, covenant or condition contained in this
Agreement shall not be deemed a waiver of that term, covenant
or condition, nor shall any waiver or relinquishment of any
right or power contained in this Agreement at any one time or
more times be deemed a waiver or relinquishment of any right
or power at any other time or times.
17. ENFORCEMENT COSTS. Executive agrees that in the event
Executive breaches any provision of this Agreement, Executive
shall pay all costs and attorney's fees incurred in
conjunction with enforcement of this Agreement (to the extent
permitted by law).
18. GOVERNING LAW AND JURISDICTION. This Agreement shall be
interpreted under the law of the State of California, both as
to interpretation and performance.
19. SECTION HEADINGS. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
20. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, all
of which together shall constitute one and the same
instrument.
21. NO ADMISSIONS. It is understood and agreed by the parties that
this Agreement represents a compromise and settlement for
various matters and that the promises and payments and
consideration of this Agreement shall not be construed to be
an admission of any liability or obligation by either party to
the other party or any other person.
22. Voluntary and Knowing. This Agreement is executed voluntarily
and without any duress or undue influence on the part or
behalf of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the respective dates set forth below.
Dated: 8/26/99 LEINER HEALTH PRODUCTS AND AFFILIATES
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By: /s/ JOHN L. KELLY
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Senior Vice President-Human Resources
Name: /s/JOHN L. KELLY
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Dated: 8/26/99
----------------------- WILLIAM TOWNE
/s/WILLIAM B. TOWNE
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(Signature)
