EXHIBIT 10.179
GENERAL RELEASE AND SEVERANCE AGREEMENT
This GENERAL RELEASE AND SEVERANCE AGREEMENT (the "Agreement") is
entered into by and between Catalina Lighting, Inc., a Florida corporation (the
"Company") and Xxxxxxx X. Xxxxxxx ("Xxxxxxx"), an individual resident in
Florida.
WHEREAS, on October 1, 1989, the Company and Xxxxxxx entered into an
Employment Agreement (the "Employment Agreement"), governing the terms of
Xxxxxxx'x employment as Vice President of the Company;
WHEREAS, between October 1, 1989 and the date hereof, the Company and
Xxxxxxx entered into the following Amendments to the Employment Agreement: 1)
Amendment on August 27, 1990; 2) Amendment No. 2 on April 8, 1991; 3) Amendment
No. 3 on June 10, 1992; 4) Amendment No. 4 on October 1, 1993; 5) Amendment No.
5 on October 4, 1994; 6) Amendment No. 6 on June 4, 1999, and 7) Amendment No. 7
on October 1, 1999 (the Employment Agreement and all Amendments thereto referred
to as the "Amended Employment Agreement"), governing Xxxxxxx'x employment as
Vice President and Executive Vice President of the Company;
WHEREAS, on October 1, 1998, the Company provided Xxxxxxx notice,
pursuant to Article 2 of the Amended Employment Agreement, of its intention not
to extend the Term of the Amended Employment Agreement beyond the number of
years remaining in the term, which number was then three;
THEREFORE, in exchange for good and adequate consideration, the
adequacy of which is hereby specifically acknowledged, the Parties agree as
follows:
1. TERMINATION OF XXXXXXX X. XXXXXXX'X EMPLOYMENT. Xxxxxxx agrees to
tender his resignation as Executive Vice President of the Company and the
Company agrees to accept that resignation, effective 4:00 p.m. (E.S.T.) on
December 23, 1999 (the "Resignation Date"). Xxxxxxx further agrees that his
employment and service with the Company and all of its subsidiaries will be
terminated on the Effective Date (as defined in Section 2 hereof) of this
Agreement.
2. EFFECTIVE DATE. For purposes of all provisions set forth herein, the
Effective Date of this Agreement shall be the later to occur of: (a) the
Resignation Date or (b) the first day as of which the seven-day revocation
period described in paragraph 12 of this Agreement has expired.
3. PRESS RELEASE. Xxxxxxx acknowledges and agrees that he has been
given the opportunity to review the press release prior to its publication on
December 2, 1999. Xxxxxxx agrees not to issue any press release on his own or to
disavow the characteristics in the attached press release.
4. SEVERANCE. In full payment of its obligations under the Amended
Employment Agreement:
(a) The Company shall provide to Xxxxxxx x xxxxxxxxx payment in the
amount of Seven Hundred Sixty Six Thousand Dollars ($766,000), payable on
January 2, 2000;
(b) The Company shall pay to Xxxxxxx the remainder of his bonus for
the Company's fiscal year ended September 30, 1999, payable on or before
December 15, 1999;
2
(c) In consideration of prior services to the Company, and in lieu
of the contribution to be made by the Company on behalf of Xxxxxxx under the
Company's 401(k) plan for the Plan Year ending in 1999, the Company shall pay to
Xxxxxxx an additional amount equal to Sixteen Hundred Dollars ($1,600), payable
on January 2, 2000; and
(d) The benefits that have accrued on behalf of Xxxxxxx under the
Company's 401(k) plan shall be payable to Xxxxxxx at such times and in such
manner as provided in the 401(k) plan.
5. COMPANY PROPERTY/ACCOUNT BALANCE. The Company agrees that it will
allow Xxxxxxx to permanently retain his Company provided lap top computer, AT&T
cellular phones and the computer located in his home which has previously been
furnished for his use by the Company.
6. STOCK OPTIONS. Effective as of the Effective Date of this Agreement,
Xxxxxxx shall maintain all options received pursuant to existing agreements in
accordance with their terms. Exhibit A sets forth a schedule of all options held
by Xxxxxxx, their exercise prices and their expiration dates. Xxxxxxx shall have
90 days after the Effective Date in which to exercise such options and pay all
amounts due to the Company upon such exercise. After the expiration of such time
period such options shall terminate.
7. CERTAIN REDUCTION OF PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or distribution by the Company
to or for the benefit of Xxxxxxx, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be nondeductible by the Company for Federal
3
income tax purposes because of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), then the aggregate present value of amounts
payable or distributable to or for the benefit of Xxxxxxx pursuant to this
Agreement (such payments or distributions pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be reduced to the Reduced
Amount. The "Reduced Amount" shall be an amount expressed in present value which
maximizes the aggregate present value of Agreement Payments without causing any
Payment to be nondeductible by the Company because of Section 280G of the Code.
For purposes of this Section 7, present value shall be determined in accordance
with Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this Section 7
shall be made by Deloitte & Touche LLP or, at the Company's option, any other
nationally recognized firm of independent public accountants selected by Xxxxxxx
and approved by the Company, which approval shall not be unreasonably withheld
or delayed (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and Xxxxxxx as of the date on which the
Acquisition of Control (as defined in the Amended Employment Agreement) occurs
or such other time as is requested by the Company. Any such determination by the
Accounting Firm shall be binding upon the Company and Xxxxxxx. Xxxxxxx shall
determine which and how much of the Payments shall be eliminated or reduced
consistent with the requirements of this Section 7, provided that, if Xxxxxxx
does not make such determination within ten business days of the receipt of the
calculations made by the Accounting Firm, the Company shall elect which and how
much of the Payments shall be eliminated or reduced and shall notify Xxxxxxx
promptly of such election. All fees and expenses of the Accounting Firm incurred
in connection with the determinations contemplated by this Section 7 shall be
borne by the Company.
4
8. TAXES. To the extent that any payments provided under of this
Agreement are subject to any applicable federal, state, foreign, and local
income, excise or other taxes, Xxxxxxx agrees to pay such taxes and not to seek
reimbursement or indemnification for such amounts from the Company. The Company
shall withhold any amounts required by law from such payment.
9. BENEFICIARIES. Any payment to which Xxxxxxx is entitled under this
Agreement shall, in the event of his death, be made to his surviving spouse or
such other persons as Xxxxxxx shall designate in writing to the Company from
time to time. If no such beneficiaries survive Xxxxxxx, such payments shall be
made to Xxxxxxx'x estate.
10. INTEGRATION OF EMPLOYMENT AGREEMENT. As of the Effective Date of
this Agreement, Xxxxxxx agrees that this Agreement shall supersede and replace
all benefits and rights under the Amended Employment Agreement, other than any
benefits and rights (i) under the stock options set forth on Exhibit A, (ii)
under the Company's 401(k) plan; (iii) expressly set forth and restated herein,
and (iv) pertaining to indemnification of Xxxxxxx as an officer or director
under Florida Statutes Chapter 607.
11. CONSULTING AND NON-COMPETITION AGREEMENT. Notwithstanding anything
to the contrary set forth herein, as a condition to this Agreement and the
payment of benefits by the Company to Xxxxxxx hereunder, the parties hereby
agree to enter into that certain Consulting and Noncompetition Agreement (the
"Consulting Agreement") attached hereto as Exhibit B.
12. SPLIT DOLLAR INSURANCE AGREEMENT. As of the Effective Date of this
Agreement, the Split Dollar Insurance Agreement, dated January 19, 1993, by and
between the Company and Xxxxxxx (the "Split Dollar Agreement") is hereby
terminated and shall no longer have any force or effect. In accordance with
subsection 4(a)(2) of the Split Dollar Agreement, Xxxxxxx hereby gives
5
notice to the Company of his intention to terminate the Split Dollar Agreement.
In addition, in accordance with subsection 4(b)(2) of the Split Dollar
Agreement, the Company hereby assigns its interest in the Policy (as defined in
the Split Dollar Agreement) to Xxxxxxx and shall execute any other documents
that may be necessary to effectuate such assignment, and, in exchange, Xxxxxxx
hereby agrees to pay to the Company Four Hundred Seventy One Dollars and Eighty
Eight Cents ($471.88) (the "Unearned Premium"), which represents the unearned
portion of the premium paid on the Policy by the Company for 1999 as of the date
of the assignment. The Company and Xxxxxxx each also hereby acknowledge and
agree that the Unearned Premium shall be satisfied in full by reducing the first
semi-annual installment payable to Xxxxxxx by the Company pursuant to Section
2.1 of the Consulting Agreement by the amount of the Unearned Premium.
13. LOAN/ADVANCES. The Company and Xxxxxxx each hereby acknowledge and
agree that (a) the principal and accrued interest owed by Xxxxxxx to the
Company, as of the Effective Date hereof, under that certain loan, dated January
5, 1999, by and between the Company and Xxxxxxx, and (b) the personal advances
made by the Company to Xxxxxxx which are outstanding as of the Effective Date
hereof (collectively referred to as the "Loans"), in the aggregate amount of
Sixty Four Thousand Ninety Five Dollars and Four Cents ($64,095.04), (the
"Loan"), shall be satisfied in full by Xxxxxxx in accordance with the provisions
of Section 2.4 of the Consulting Agreement.
14. MUTUAL RELEASE OF CLAIMS AND COVENANT NOT TO XXX. Except with
regard to obligations created by, arising out of, or described in this
Agreement, the stock options set forth on Exhibit A, the Consulting Agreement,
the Company's 401(k) plan and provisions related to indemnification, including
but not limited to, Florida Statutes Chapter 607, the Company and
6
Xxxxxxx agree for themselves and any present or future successors, assigns,
parents, subsidiaries, affiliates, directors, officers, general or limited
partners, employees, heirs, beneficiaries, devisees, executors, administrators,
attorneys, agents, and representatives, to release, discharge, and covenant not
to xxx each other for any claims, debts, demands, accounts, judgments, rights,
causes of action, claims for equitable relief, damages, costs, charges,
complaints, obligations, promises, agreements, controversies, suits, expenses,
compensation, responsibility and liability of every kind and character
whatsoever (including attorneys' fees and costs), whether in law or equity,
known or unknown, asserted or unasserted, suspected or unsuspected, which they
may now have against each other. Xxxxxxx understands that this includes, but is
not limited to, the release to any rights or claims Xxxxxxx may have under Title
VII of the Civil Rights Act of 1964 ("Title VII"), which prohibits
discrimination in employment based on race, national origin, religion or sex;
the Americans with Disabilities Act ("ADA"); and claims pursuant to any other
federal, state, or local law regarding discrimination based on age, race, sex,
pregnancy, religion, national origin, marital status or disability, or any other
unlawful basis, claims for alleged violation of any other local, state, or
federal law, regulation, ordinance, public policy, or common law duty having any
bearing whatsoever upon the terms and conditions of, and/or the cessation of
Xxxxxxx'x employment with the Company. Xxxxxxx understands that this also
includes a release by Xxxxxxx of claims for breach of express or implied
contract, wrongful discharge, constructive discharge, breach of an implied
covenant of good faith and fair dealing, negligent or intentional infliction of
emotional distress, and any claim under the Employee Retirement Income Security
Act of 1974 ("ERISA") (except for claims for benefits under pension benefit
plans, retiree welfare benefit plans and employee welfare benefit plans for
occurrences arising after the execution of this Agreement).
7
The Company understands that this includes any and all claims against Xxxxxxx
arising from or related to Xxxxxxx'x services and employment by the Company.
This release is intended to cover all claims in existence as of the date of this
Agreement, including claims about which the Company and Xxxxxxx know and claims
about which the Company and Xxxxxxx do not know. The Company, on the one hand,
and Xxxxxxx, on the other hand, further represent that it or he has not filed
any claims against one another, or any of the individuals covered by this
Agreement, with any governmental agency or any court.
15. RELEASE OF AGE DISCRIMINATION CLAIMS, PERIODS FOR REVIEW AND
RECONSIDERATION.
(a) Xxxxxxx understands and agrees that Section 14 of this Agreement
includes a release of claims arising under the Age Discrimination in Employment
Act ("ADEA") and that this provision, does not waive rights or claims that may
arise after the date this Agreement is executed. Xxxxxxx understands and
warrants that he has been given a period of twenty-one (21) days to review and
consider this Agreement. Xxxxxxx is hereby advised to consult with an attorney
prior to executing the Agreement. Xxxxxxx acknowledges that he received this
Agreement on December 6, 1999. Xxxxxxx further warrants that he understands that
he may use as much of or all of this 21-day period as he wishes before signing,
and warrants that he has done so.
(b) Xxxxxxx further warrants that he understands that he has seven
(7) days after signing this Agreement to revoke the Agreement by notice in
writing to Xxxxxx Xxxxx, Chairman, President and Chief Executive Officer of the
Company. This agreement shall be binding, effective, and enforceable upon the
expiration of this seven-day revocation period with Xxxxxx Xxxxx having received
no such revocation, but not before such time.
8
16. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Florida without application of any
conflicts of laws principles. Xxxxxxx waives any plea of jurisdiction as not
being resident of, or being located in or conducting business in, Miami-Dade
County, Florida, and agrees that any litigation or action directly or indirectly
connected with this Agreement, shall take place and be litigated in, assuming
jurisdictional requirements are met, in the United States District Court for the
Southern District of Florida. In the event that federal jurisdictional
requirements are not met, any litigation shall take place and be litigated in
the Circuit Court of Miami-Dade County, Florida.
17. PROVISION DEEMED INVALID. Should any of the provisions herein be
determined to be invalid by a court of competent jurisdiction, it is agreed that
this shall not affect the enforceability of the other provisions herein and the
parties shall negotiate the invalidated provision or provisions in good faith to
effectuate its or their purpose and to conform it or them to law.
18. WAIVER. The waiver by any party of a breach of any provision herein
shall not operate or be construed as a waiver of any subsequent breach of any
party.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Company and Xxxxxxx with respect to the subject matter hereof and
supersedes all prior negotiations, agreements, understandings and arrangements,
both oral and written, between the Company and Xxxxxxx with respect to such
subject matter. This Agreement may not be modified in any way, except by a
written instrument executed by each of the Company and Xxxxxxx.
20. ATTORNEYS' FEES. In the event that any litigation shall arise
between the Company and Xxxxxxx based, in whole in or in part, upon this
Agreement or any or all of the provisions
9
contained herein, the prevailing party in 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 and costs
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.
21. UNDERSTANDING AND AUTHORITY. The parties hereto understand and
agree that all terms of this Agreement are contractual and are not a mere
recital, and represent and warrant that they are competent to covenant and agree
as herein provided.
The parties have carefully read this Agreement in its entirety; fully
understand and agree to its terms and provisions; and intend to agree that it is
final and binding on all parties.
10
IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed the foregoing on the date shown below.
CATALINA LIGHTING, INC.
Date: December 6, 1999 By: /s/ Xxxxx Xxxxxxx
---------------- --------------------------------------
Xxxxx Xxxxxxx, Chief Financial Officer
WITNESS:
/s/ Xxxx Del Xxxx
--------------------------------------
STATE OF FLORIDA
COUNTY OF MIAMI-DADE
The foregoing instrument was acknowledged before me this 6th day of
December, 1999 by Xxxxx Xxxxxxx, Chief Financial Officer of Catalina Lighting,
Inc., a Florida corporation, on behalf of the Corporation. He is personally
known to me.
/s/ Xxxxx Xxxxxx Xxxxxxx
--------------------------------------
Notary Public
Date: December 6, 1999 /s/ Xxxxxxx X. Xxxxxxx
---------------- --------------------------------------
Xxxxxxx X. Xxxxxxx, individually
WITNESS:
/s/ Xxxx Del Mazo
--------------------------------------
STATE OF FLORIDA
COUNTY OF MIAMI-DADE
The foregoing instrument was acknowledged before me this 6th day of
December, 1999 by Xxxxxxx X. Xxxxxxx, who is personally known to me.
/s/ Xxxxx Xxxxxx Xxxxxxx
--------------------------------------
Notary Public
11
