RETIREMENT AGREEMENT AND GENERAL RELEASE
Exhibit
10.1
RETIREMENT
AGREEMENT AND GENERAL RELEASE
This
Retirement Agreement and General Release (the “Agreement”) is made as of
the 1st day of
October 2007, by and between The Hershey Company, a Delaware corporation (the
“Company”), and Xxxxxxxx X. Xxxxxx (“Employee”), and together with
the Company, (the “Parties”).
RECITALS
WHEREAS,
Employee is on the date hereof an employee of the Company holding the office
of
Senior Vice President, Chief People Officer; and
WHEREAS,
Employee was eligible to elect to retire with enhanced benefits under the
Company’s 2005 Early Retirement Program (“2005 ERP”); and
WHEREAS,
the Chair of the Compensation and Executive Organization Committee (“Committee”)
of the Company’s Board of Directors informed Employee in connection with her
consideration of retirement under the 2005 ERP that if she did not retire under
such program, the Committee would consider providing her additional benefits
upon her actual retirement to compensate her for foregone benefits under the
2005 ERP; and
WHEREAS,
Employee has informed the Company that she desires to retire from the Company
(“Retirement”) effective at the close of business on December 31, 2007,
whereupon Employee’s employment with the Company shall terminate;
and
WHEREAS,
Employee has informed the Company that she desires to resign as an officer
of
the Company (“Resignation”) effective on or before December 31, 2007 (the
effective date of her resignation as set forth in a written notice to the
Secretary of the Company is hereinafter referred to as her “Resignation
Date”); and
WHEREAS,
Employee will remain an active employee of the Company following the Resignation
Date through and including December 31, 2007 and will provide services relating
to the transition of her duties as Chief People Officer to her successor
(“Transition Services”) from the Resignation Date to and including
December 31, 2007 (such period hereinafter called the “Transition
Period”); and
WHEREAS,
as set forth on Annex A hereto, the value of certain benefits described thereon
to which Employee would have been entitled under the 2005 ERP exceeds the
estimated value of such benefits if employee retired effective December 31,
2007
by $983,121.00; and
WHEREAS,
in order to secure the services of Employee throughout the Transition Period
and
in consideration of her not having elected to retire under the 2005 ERP, Company
is willing to retain Employee during such period as an active employee of the
Company and to pay her $983,121.00 in addition to all other benefits and
payments to which she will be entitled upon her retirement; and
WHEREAS,
the Company and Employee desire voluntarily to enter into this Agreement in
order to set forth the definitive rights and obligations of the Parties during
the Transition Period and at Retirement; and
WHEREAS,
the Parties acknowledge that they have entered into this Agreement for their
mutual cooperation and benefit.
NOW,
THEREFORE, in consideration of the mutual covenants, commitments and agreements
set forth herein, and for other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
1. Acknowledgment
of Retirement Date. The Parties acknowledge and agree that the
Retirement shall be effective (the “Retirement Date”) as of the earliest
of (i) the close of business on December 31, 2007; (ii) in the event Employee
breaches any of her covenants, agreements or obligations hereunder, the date
the
Company provides notice of such breach to Employee; and (iii) Employee’s date of
death.
2. Resignation
from Company Offices. Effective on the Resignation Date, Employee hereby
voluntarily resigns from all of her positions and offices with the Company
and
its subsidiaries, including, without limitation, Senior Vice President, Chief
People Officer and each office she may occupy of any subsidiary of the
Company.
3. Employee’s
Acknowledgment of Consideration. Employee specifically
acknowledges and agrees that certain of the obligations created and payments
made to her by the Company under this Agreement are promises and payments to
which she is not otherwise entitled under any law, contract, or benefit plan
maintained by the Company.
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4.
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Transition
Period and Retirement.
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4.1
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Employee
shall remain an active employee of the Company during the Transition
Period and her employment with the Company shall continue during
the
Transition Period on the same basis and under the same terms as existed
immediately prior to the Resignation Date, except that (i) Employee
shall
have no assigned duties and shall perform no services for the Company
other than the Transition Services as reasonably requested by the
Company
from time to time, and (ii) Employee’s coverage under the Company’s
short-term disability plan, and the Company’s premium contributions under
the long-term disability plan shall cease as of the Resignation
Date.
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4.2
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Following
Employee’s Retirement Date and on or before January 31, 2008, the Company
shall pay to Employee as a lump sum bonus, the amount of $983,121.00,
subject to customary withholding:
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4.3
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Except
as provided for in Section 6 below, employee shall be free to seek
and
accept other employment after the Retirement
Date.
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5. COBRA
Rights and Retiree Medical Coverage.
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5.1.1
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Effective
as of the Retirement Date, as required by the continuation coverage
provisions of Section 4980B of the U. S. Internal Revenue Code of
1986, as
amended (“the Code”), Employee shall be offered the opportunity to
elect continuation coverage under the group medical plan of the
Company (“COBRA coverage”). The Company shall provide
Employee with the appropriate COBRA coverage notice and election
form for
this purpose. Employee shall notify the Company within two
weeks of any change in Employee’s circumstances that would warrant
discontinuation of Employee’s COBRA coverage and benefits (including but
not limited to Employee’s receipt of group medical and dental benefits
from any other employer). The existence and duration of
Employee's rights and/or the COBRA rights of any of Employee's eligible
dependents shall be determined in accordance with Section 4980B of
the
Code.
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5.1.2
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As
an alternative to COBRA coverage, Employee shall be offered the
opportunity to elect coverage under The Hershey Company Retiree Medical
and Life Insurance Plan, as amended, for so long as the Company shall
make
such plan available. It is the Parties’ intention that, should
Employee elect coverage under this Section 5.1.2, such coverage shall
be
deemed an alternative medical coverage which satisfies the continuation
of
coverage requirements of COBRA. As such, the period of time
which Employee receives coverage under the Retiree Medical and Life
Insurance Plan shall be credited towards Employee’s continuation of
coverage requirements under COBRA.
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6. Confidential,
Proprietary and Privileged Information; Non-Competition. The
parties agree the terms and conditions of that certain Long-Term Incentive
Program Participation Agreement and Mutual Agreement to Arbitrate Claims by
and
between the Company and Employee executed by Employee on May 5, 2005
(“Participation and Arbitration Agreement”), a copy of which is attached
hereto, are incorporated herein by reference and made a part hereof as if fully
set forth herein. Notwithstanding any provisions to the contrary in
the Participation and Arbitration Agreement, the terms and conditions thereof
shall remain in effect for three years after the Retirement Date regardless
of
whether Employee is eligible or not to receive benefits under the
SERP.
7. General
Release and Waiver by Employee.
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7.1
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Employee,
for and on behalf of herself and each of her heirs, executors,
administrators, personal representatives, successors and assigns,
hereby
acknowledges full and complete satisfaction of and fully and forever
releases, acquits and discharges the Company, together with its
subsidiaries and affiliates, and each of its and their past and present
direct and indirect stockholders, directors, members, partners, officers,
employees, agents, inside and outside counsel and representatives
and its
and their respective heirs, executors, administrators, personal
representatives, successors and assigns (collectively, the
“Releasees”), from any and all claims, demands, suits, causes of
action, liabilities, obligations, judgments, orders, debts, liens,
contracts, agreements, covenants and
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3
causes
of
action of every kind and nature, whether known or unknown, suspected or
unsuspected, concealed or hidden, vested or contingent, in law or equity,
existing by statute, common law, contract or otherwise, which have existed,
may
exist or do exist, through and including the execution and delivery by Employee
of this Agreement (but not including the Parties’ performance under this
Agreement), including, without limitation, any of the foregoing arising out
of
or in any way related to or based upon:
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7.1.1
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Employee's
application for and employment with the Company, her being an employee
of
the Company, her Resignation or her
Retirement;
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7.1.2
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any
and all claims in tort or contract, and any and all claims alleging
breach
of an express or implied, or oral or written, contract, policy manual
or
employee handbook;
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7.1.3
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any
alleged misrepresentation, coercion, duress, defamation, interference
with
contract, intentional or negligent infliction of emotional distress,
sexual harassment, negligence or wrongful discharge;
or
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7.1.4
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any
federal, state or local statute, ordinance or regulation, including
but
not limited to the Fair Labor Standards Act, the Equal Pay Act, Title
VII
of the Civil Rights Act of 1964, the Americans With Disabilities
Act, the
Family and Medical Leave Act, and the Pennsylvania Human Relations
Act.
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7.2
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Employee
acknowledges and agrees that other than to seek the Company’s performance
under this Agreement she is waiving all rights to xxx or obtain equitable,
remedial or punitive relief from any or all Releasees of any kind
whatsoever, including, without limitation, reinstatement, back pay,
front
pay, attorneys' fees and any form of injunctive
relief. Employee acknowledges and agrees that this waiver and
release is an essential and material term of this
Agreement. Employee further acknowledges and agrees that she
will not assert any breach of any agreement, plan, or right referred
to
herein based on any action or inaction of the Releasees prior to
the date
hereof.
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7.3
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Employee
understands and intends that this Section 7 constitutes a general
release,
and that no reference therein to a specific form of claim, statute
or type
of relief is intended to limit the scope of such general release
and
waiver; provided, however, notwithstanding any other provision of
this
Section 7, the provisions of this Section 7 shall not apply to any
rights
Employee may have under the Age Discrimination in Employment Act
of 1967,
as amended.
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7.4
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Employee
expressly waives all rights afforded by any statute which limits
the
effect of a release with respect to unknown claims. Employee
understands the significance of her release of unknown claims and
her
waiver of statutory protection against a release of unknown
claims.
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4
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7.5
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Employee
agrees that she will not be entitled to or accept any benefit from
any
claim or proceeding within the scope of this Section 7 general release
that is filed or instigated by her or on her behalf with any agency, court
or other government entity.
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8. Employee’s
Representations and Covenants Regarding Actions. Employee
represents, warrants and covenants to each of the Releasees that at no time
prior to or contemporaneous with her execution of this Agreement has she filed
or caused or knowingly permitted the filing or maintenance, in any state,
federal or foreign court, or before any local, state, federal or foreign
administrative agency or other tribunal, any charge, claim or action of any
kind, nature and character whatsoever (“Claim”), known or unknown,
suspected or unsuspected, which she may now have or has ever had against the
Releasees which is based in whole or in part on any matter referred to in
Section 7.1 (or Section 7.3, with the exception of the proviso thereto) above,
and, to the maximum extent permitted by law Employee is prohibited from filing
or maintaining, or causing or knowingly permitting the filing or maintaining,
of
any such Claim in any such forum. Employee hereby grants the Company
her perpetual and irrevocable limited power of attorney with full right, power
and authority to take all actions necessary to dismiss or discharge any such
Claim. Employee further covenants and agrees that she will not
encourage any person or entity, including but not limited to any current or
former employee, officer, director or stockholder of the Company, to institute
any Claim against the Releasees or any of them, and that except as expressly
permitted by law or administrative policy or as required by legally enforceable
order she will not aid or assist any such person or entity in prosecuting such
Claim.
9. No
Disparaging Remarks. Employee hereby covenants to each of the
Releasees and agrees that she shall not, directly or indirectly, within or
without the Company, make or solicit or encourage others to make or solicit
any
disparaging or negative remarks concerning the Releasees (as defined in Section
7 of this Agreement), or any of their products, services, businesses or
activities. Employee understands that her breach of this Section 9
and the Company’s delivery to her of notice of such breach shall subject her to
liability for any damages arising from such remarks and could cause her benefits
under the SERP to be suspended or terminated.
10. No
Conflict of Interest. Employee hereby covenants and agrees that
she shall not, directly or indirectly, incur any obligation or commitment,
or
enter into any contract, agreement or understanding, whether express or implied,
and whether written or oral, which would be in conflict with her obligations,
covenants or agreements hereunder or which could cause any of her
representations or warranties made herein to be untrue or
inaccurate.
11. Confidentiality. Employee
represents that she has not discussed, and agrees that she will not discuss,
this Agreement or the circumstances of her Resignation and/or Retirement, except
as approved by the Company, and that she will take affirmative steps to avoid
or
absent herself from any such discussion even if she is not an active participant
therein. EMPLOYEE ACKNOWLEDGES THE SIGNIFICANCE AND MATERIALITY OF
THIS PROVISION TO THIS AGREEMENT, AND HER UNDERSTANDING THEREOF.
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12. Return
of Corporate Property; Conveyance of Information. Employee hereby
covenants and agrees that upon her Resignation, or at such earlier date as
the
Company may request in writing, Employee shall immediately return all documents,
keys, ID cards, credit cards (without further use thereof), desktop and/or
laptop computer, cell phones, Blackberry devices, and all other items which
are
the property of the Company and/or which contain confidential information;
and,
in the case of documents, to return any and all materials of any kind and in
whatever medium evidenced, including, without limitation, all hard disk drive
data, diskettes, thumb drives, microfiche, photographs, negatives, blueprints,
printed materials, tape recordings and videotapes.
13. Remedies.
In the event that Employee has breached any of her covenants, agreements or
obligations under this Agreement, the Company shall notify Employee in writing
at her home address as shown in the Company’s records of the reason for such
determination. The notice shall be sent via hand delivery or
overnight courier. Employee hereby acknowledges and affirms that in
the event of any breach by Employee of any of her covenants, agreements and
obligations hereunder, Employee’s Retirement shall be effective as of the day
the Company provides notice thereof. Employee further hereby
acknowledges and affirms that in the event of such breach monetary damages
would
be inadequate to compensate the Releasees or any of
them. Accordingly, in addition to other remedies which may be
available to the Releasees hereunder or otherwise at law or in equity, any
Releasee shall be entitled to specifically enforce such covenants, obligations
and restrictions through injunctive and/or equitable relief, in each case
without the posting of any bond or other security with respect
thereto. Should any provision hereof be adjudged to any extent
invalid by any court or tribunal of competent jurisdiction, each provision
shall
be deemed modified to the minimum extent necessary to render it
enforceable.
14. Acknowledgment
of Voluntary Agreement. Employee hereby acknowledges and affirms
that she is entering into this Agreement knowingly and voluntarily, without
coercion or duress of any sort, in order to receive the payments and other
consideration from the Company as set forth herein. Employee
acknowledges and affirms that she has been given adequate opportunity to review
and consider this Agreement.
15. Complete
Agreement; Inconsistencies. This Agreement, Annex A hereto and
the Participation and Arbitration Agreement constitute the complete
and entire agreement between Employee and the Company with respect to
the subject matter hereof, and supersede in their entirety any and all prior
understandings, commitments, obligations and/or agreements, whether written
or
oral, with respect thereto; it being understood and agreed that this Agreement,
Annex A and the Participation and Arbitration Agreement, including the mutual
covenants, agreements, acknowledgments and affirmations contained herein and
therein, are intended to constitute a complete settlement and resolution of
all
matters set forth in Section 7 hereof.
16. No
Strict Construction. The language used in this Agreement shall be
deemed to be the language mutually chosen by the Parties to reflect their mutual
intent, and no doctrine of strict construction shall be applied against any
Party.
17. Third
Party Beneficiaries. The Releasees are intended third-party
beneficiaries of this Agreement, and this Agreement may be enforced by each
of
them in accordance with the terms hereof in respect of the rights granted to
such Releasees hereunder. Except and to the extent set
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forth
in
the preceding sentence, this Agreement is not intended for the benefit of any
person other than the Parties, and no such other person shall be deemed to
be a
third party beneficiary hereof. Without limiting the generality of
the foregoing, it is not the intention of the Company to establish any policy,
procedure, course of dealing or plan of general application for the benefit
of
or otherwise in respect of any other employee, officer, director or stockholder,
irrespective of any similarity between any contract, agreement, commitment
or
understanding between the Company and such other employee, officer, director
or
stockholder, on the one hand, and any contract, agreement, commitment or
understanding between the Company and Employee, on the other hand, and
irrespective of any similarity in facts or circumstances involving such other
employee, officer, director or stockholder, on the one hand, and the Employee,
on the other hand.
18. Tax
Withholdings. Notwithstanding any other provision herein, the
Company shall be entitled to withhold from any amounts otherwise payable
hereunder to Employee any amounts required to be withheld in respect of federal,
state or local taxes.
19. Governing
Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by,
and construed in accordance with, the laws of the Commonwealth of Pennsylvania,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the Commonwealth of Pennsylvania or any other
jurisdiction) that would cause the application hereto of the laws of any
jurisdiction other than the Commonwealth of Pennsylvania. In
furtherance of the foregoing, the internal law of the Commonwealth of
Pennsylvania shall control the interpretation and construction of this
Agreement, even though under any other jurisdiction's choice of law or conflict
of law analysis the substantive law of some other jurisdiction may ordinarily
apply.
20. Severability. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall otherwise remain in full force and effect.
21. Counterparts. This
Agreement may be executed in separate counterparts, each of which shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
22. Successors
and Assigns. The Parties’ obligations hereunder shall be binding
upon their heirs, personal representatives, successors and
assigns. The Parties’ rights and the rights of the other Releasees
shall inure to the benefit of, and be enforceable by, any of the Parties’ and
Releasees’ respective heirs, personal representatives, successors and
assigns.
23. Amendments
and Waivers. No amendment or waiver shall be binding upon any
party hereto unless consented to in writing by such party.
24. Headings. The
headings of the Sections and subsections hereof are for purposes of convenience
only, and shall not be deemed to amend, modify, expand, limit or in any way
affect the meaning of any of the provisions hereof.
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25. Waiver
of Jury Trial. Each of the Parties hereby waives its rights to a
jury trial of any claim or cause of action based upon or arising out of this
Agreement or any dealings between the Parties relating to the subject matter
hereof to the extent the resolution of such matter is not governed by the
Participation and Arbitration Agreement. Each of the Parties also
waives any bond or surety or security upon such bond which might, but for this
waiver, be required of the other party. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in
any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims, breach of duty claims, and
all
other common law and statutory claims. EACH OF THE PARTIES
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS
AGREEMENT, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED
FUTURE DEALINGS. Each of the Parties further represents and warrants
that she or it knowingly and voluntarily waives her or its jury trial
rights. This waiver may not be modified orally, but only in writing,
and the waiver shall apply to any subsequent amendments, renewals, supplements
or modifications to this Agreement. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the
court.
* * * * *
IN
WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
date of the first signature affixed below or as otherwise provided in this
Agreement.
READ
CAREFULLY BEFORE SIGNING
I
have
read this Agreement. I understand that by executing this Agreement I
will relinquish any right or demand, other than those created by or otherwise
set forth in this Agreement, I may have against the Releasees or any of
them.
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DATED: November
11, 2007
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/s/
Xxxxxxxx X. Xxxxxx
Xxxxxxxx
X. Xxxxxx
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THE
HERSHEY COMPANY
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DATED:
October 11, 2007
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/s/
Xxxxxx X. Xxxxxx
Xxxxxx
X. Xxxxxx
Senior
Vice President, General Counsel
and
Secretary
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8
Annex
A
Xxxxxxxx
X. Xxxxxx
ERP
Make-Up Value
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ERP
Make-up is sum of difference in minimum benefit provided by ERP less
estimated benefit as 12/31/07 plus additional vesting of 1,000 RSUs
as
provided by ERP
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Retirement
values
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2005
ERP
Value
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Est.
Benefit
as
of
12/31/2007
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Difference
between
ERP
and Est.
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HRA
Qualified Pension
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$818,907
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$557,959
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$260,948
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DB
SERP
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$4,106,982
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1
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$3,430,429
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2 |
$676,553
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$4,925,889
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$3,988,388
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$937,501
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RSU
value3
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1,000
Units @ $45.62
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$45,620
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ERP
Make-up
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$983,121
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1
Minimum
provided by ERP
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2
Current
SERP benefit estimated as of 12/31/07 based on rolling 30-year Treasury
rate (9 months actual and 3 months at current rate)
4.91%
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3
Average
closing price Hershey common stock, Sept 1 - Sept 14, 2007
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