This Separation
Agreement is made and entered into by and between Carl J. Johnson
(“ Executive ”) and Matrixx Initiatives, Inc.,
and all of its affiliated companies and divisions (collectively
referred to as the “ Company ”). All initially
capitalized terms not otherwise defined herein will have the
meaning ascribed to them in the Amended and Restated Employment
Agreement, dated as of October 18, 2006, by and between the
Company and Executive (the “ Employment Agreement
”).
A. Executive
retired as President and Chief Executive Officer of the Company,
effective October 31, 2008 (the “ Transition Date
”) but remains an at-will employee on a part-time basis
pursuant to that certain letter agreement, dated October 30,
2008, between Executive and Company (the “ Letter
Agreement ”); and
B. Executive
and Company are entering into a Settlement Agreement and General
Release, dated as of the date hereof (the “ Release
Agreement ”).
C. In
connection with and in consideration for Executive signing the
Release Agreement and not revoking the same, which constitutes good
and valuable consideration, the parties agree as
follows:
1.
Effectiveness . It is expressly understood by the parties
that, except for Section 3 , which is effective on the
date hereof, this Separation Agreement will not be effective and
the Company will not provide the Additional Benefits, as defined
below, until Executive executes the Release Agreement and does not
revoke his signature within the allowed seven (7) days. If
this Separation Agreement becomes effective, the Company agrees to
provide Executive with the severance benefits specified in
Section 2 below (the “ Severance Benefits
”) and the additional benefits specified in
Section 5 below (the “ Additional Benefits
”). The parties acknowledge and agree that (a) the
Severance Benefits provided to Executive as set forth in this
Separation Agreement are provided consistent with the benefits or
types of benefits specified in Section 4.3 of the
Employment Agreement and (b) Executive’s
responsibilities and authority as the Company’s President and
Chief Executive Officer terminated on October 21,
2008.
2.
Severance Benefits . The Company agrees to make, or has
made, the following payments to Executive pursuant to the
Employment Agreement and this Separation Agreement and Executive
acknowledges that upon receipt of the above, he is not owed any
further
compensation by
the Company, except for any salary he is entitled to receive
pursuant to Section 4(a) herein and any litigation
support service fee he is entitled to receive pursuant to the
Release Agreement (Section references in the title of the each of
the following subsections refer to Sections in the Employment
Agreement):
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a.
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Accrued Base Salary
(Section 4.3(a)) : Executive acknowledges receipt of
his Base Salary through the Transition Date.
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b.
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Accrued Vacation Payment
(Section 4.3(b)) : As of October 31, 2008,
Executive has 12 days of unused accrued vacation days (the
“ Accrued Vacation Days ”). The Company will
reimburse Executive for the Accrued Vacation Days in an amount
equal to $525,000 multiplied by a fraction the numerator of which
is the Accrued Vacation Days and the denominator of which is 260.
On or promptly following the effectiveness of this Separation
Agreement, the Company will pay Executive $24,231, less all
applicable taxes, for these Accrued Vacation Days.
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c.
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Accrued Reimbursable Expenses
(Section 4.3(c)) : The Company will, in accordance
with its standard policies, reimburse Executive for all reasonable
travel and other business expenses incurred by Executive in his
capacity as President and Chief Executive Officer prior to the
Transition Date and submitted for reimbursement on or before
December 12, 2008.
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d.
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Accrued Benefits
(Section 4.3(d)) : The Company will provide to
Executive (or Executive’s estate or beneficiaries) any
accrued and vested benefits required to be provided by the terms of
any Company-sponsored benefit plans or programs or under applicable
law.
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e.
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Accrued Annual Incentive Bonus
(Section 4.3(e)) : Executive acknowledges that there
is no Accrued Annual Incentive Bonus.
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f.
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Severance Payment
(Section 4.3(f)) : The Company will pay Executive
$525,000, less all lawfully required withholdings, payable
bi-weekly over the course of 12 months; provided ,
however , that no payments will be made until the end of the
six-month period following the Transition Date, or May 1, 2009.
Amounts that would have been paid during the six-month period will,
instead, be paid in one lump sum on May 1, 2009, plus interest
accruing at the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, N.A., as its prime rate in
effect at its principal office in New York City. The bi-weekly
payments of the remaining severance payment will commence on
May 1, 2009. If Executive dies before the end of the 12-month
period described in this Agreement, the Company will pay to
Executive’s beneficiary in one lump sum payment within
30 days following Executive’s death the amount of any
severance payment to which Executive is entitled under this
Section 2(f) that has not been paid to Executive as of
the date of his death.
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