EXHIBIT 10.2
RETENTION AGREEMENT
This RETENTION AGREEMENT (the "Agreement") dated as of July 22,
1997, sets forth the mutual and binding understanding of the undersigned
regarding the special retention incentives intended to be afforded to
Xxxxxxx X. Xxxx (the "Executive") by Playtex Products, Inc. (Playtex and its
subsidiaries together called the "Company") in order to assure that the Company
will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a "Change of Control".
1. Definitions:
The terms "Cause", "Change of Control" and "Good Reason" are defined in
Exhibit I.
2. Severance Upon Termination Prior To A Change Of Control:
A. Termination By The Company Without Cause:
If the Executive's employment is terminated by the Company during the Term
without "Cause" but prior to the occurrence of a Change of Control, the
Executive shall be entitled to receive an amount equal to two years'
salary (as in effect at the time of the termination) plus two years'
bonus (equal to the highest annual bonus paid or payable to the
Executive in respect of the three most recent fiscal years of the
Company ended prior to the date of the Executive's termination of
employment (the "Highest Annual Bonus")), both payable in cash within
30 days of the date of Termination.
Such severance payments shall be in lieu of any severance payments
otherwise payable under the Company Severance Plan or any other plan or
arrangement of the Company concerning the Executive's termination of
employment, but without prejudice to the Executive's other rights, if any,
to other compensation under the Company's other plans and arrangements.
2
B. Termination By The Company For Cause, By The Executive Voluntarily,
Or By Reason Of Death Or Disability (As Defined In Company's Long
Term Disability Policy) Of Executive:
The Executive shall be entitled to the severance compensation set forth in
the Company's Severance Plan and any other arrangement to which the
Executive is party and which is applicable to such termination of
employment, if any, but shall not be entitled to any supplemental or
enhanced severance benefits hereunder.
3. Severance Upon Termination Following A Change Of Control:
For purposes of this Agreement, the Company's termination of the
Executive's employment without Cause within three months prior to the
occurrence of a Change of Control shall be treated as a termination within
three years following a Change of Control.
A. Termination Within Three Years Following a Change of Control (i) By
The Company Without Cause, Or (ii) By The Executive For "Good
Reason":
(i) The Company shall pay the Executive an amount (the "Special
Termination Amount") equal to the sum of (a) the Executive's annual base
salary at the time of the Change of Control or at the time of termination
(whichever is higher) and (b) the Highest Annual Bonus, payable within 30
days after the date of termination.
(ii) The Company shall pay to the Executive in a lump sum in cash
within 30 days after the date of termination an amount equal to the sum of
(a) the Executive's annual base salary through the date of termination to
the extent not theretofore paid, (b) a pro rata portion of the Highest
Annual Bonus based upon the percentage of the Company's fiscal year that
shall have elapsed through the date of termination, (c) a pro rata
contribution to the Company's Profit-Sharing and Deferred Benefit
Equalization Plan with respect to the Executive (with no duplication of
benefits) for the current fiscal year, and (d) any compensation previously
deferred by the Executive (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid.
(iii) For the twenty-four month period following the date of
termination, the Company shall (a) continue medical, welfare and fringe
benefits to the Executive and/or the Executive's family at least equal to
those which would have been provided to them in accordance with the plans,
programs,
3
practices and policies of the Company (as in at the time of the Change of
Control provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare and
fringe benefits under another employer provided plan, the medical and
other welfare and fringe benefits described herein shall be secondary to
those provided under such other plan during such applicable period of
eligibility, and (b) make equivalent payments to Executive equal to the
payments which would have been made under the Playtex Profit-Sharing Plan
and Deferred Benefits Equalization Plan with respect to the Executive,
payable when such payments are made under the respective Plans.
(iv) The Company will enter into the Consulting Agreement with
Executive set forth on Exhibit II, providing generally for the Executive
to render consulting services to the Company for a six month period
following termination of employment, with compensation equal to the sum of
(a) the Executive's annual salary at the time of the Change of Control or
at the time of termination (whichever is higher) plus (b) the Highest
Annual Bonus.
The severance payments and benefits provided hereunder shall be in lieu of
any severance payments otherwise payable under the Company's Severance
Plan or any other plan or arrangement of the Company in respect of the
Executive's termination of employment, but without prejudice to the
Executive's other rights, if any, to other compensation under the
Company's other plans and arrangements.
B. Termination (i) By The Company For Cause, (ii) By The Executive
Without Good Reason, (iii) Death Or Disability, Or (iv) For Any
Reason After The Third Anniversary Of A Change Of Control:
Executive shall be entitled to the severance compensation set forth in the
Company's Severance Plan or any other plan or arrangement to which the
Executive is a party and which is applicable to such termination of
employment, if any, but shall not be entitled to any supplemental or
enhanced severance benefits hereunder.
4
4. Special Payments Upon The Occurrence Of A Change of Control:
The Company shall pay the Executive a special bonus (the "Special Bonus")
in cash equal to the Highest Annual Bonus within 30 days following the
consummation of the Change of Control.
The Executive's accounts under the Playtex Products Profit-Sharing
Retirement Plan and Deferred Benefit Equalization Plan shall become
fully vested as of immediately prior to the consummation of the Change
of Control.
The Executive's outstanding stock options granted under the 1994 Playtex
Stock Option Plan shall become fully vested as of immediately prior to the
consummation of the Change of Control, provided, however, that such stock
options shall not vest on an accelerated basis if such acceleration is the
only factor which would prevent use of the pooling method of accounting in
connection with the Change in Control in which event, the unvested options
must be exchanged for common stock of the acquiror of equal value.
5. Certain Restrictions On Payment Of Compensation And Benefits:
Notwithstanding any other provision of this Agreement to the contrary, if
the Company or the Executive determines (on the basis of advice from the
Company's independent public accountants) that part or all of the
consideration, compensation or benefits to be paid to Executive under this
Agreement or any other arrangement, plan or policy constitutes a
"parachute payment" under section 280G(b)(2) of the Internal Revenue Code
of 1986, as amended ("Code"), then the amounts constituting a "parachute
payment" which would otherwise be payable to or for the benefit of
Executive shall be reduced to the extent necessary so that the reduced
payments do not constitute a "parachute payment". If, due to the
uncertainty in the application of Section 4999, payments are made to the
Executive which should not have been paid, such amount shall be treated as
a loan to the Executive, who shall repay it with interest at the
applicable federal rate provided for in section 7872(f)(2) of the Code;
and if additional amounts could have been paid to the Executive, the
Company shall pay such amount together with such interest provided for in
section 7872(f)(2) of the Code.
6. No Mitigation Or Setoffs:
The Executive shall not be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive
under this
5
Agreement and, except as provided in Section 3(A)(iii)(a) (relating to
continuation of medical, welfare and fringe benefits), such amounts shall
not be reduced or subject to setoffs (whether or not the Executive obtains
other employment).
7. Confidential Information:
During the term of Executive's employment by the Company, Executive shall
keep secret and retain in strictest confidence, and shall not use for the
benefit of himself or others except in connection with the business and
affairs of the Company, all confidential matters of the Company and its
affiliates, including, without limitation, trade "know-how", secrets,
consultant contracts, customer lists, subscription lists, details of
consultant contracts, pricing policies, operational methods, marketing
plans or strategies, product development techniques or plans, business
acquisition plans, new personnel acquisition plans, methods of
manufacture, technical processes, designs and design projects, inventions
and research projects and other business affairs of the Company and its
affiliates learned by Executive heretofore or hereafter, and shall not
disclose them to anyone outside of the Company and its affiliates, either
during or after employment by the Company or any of its affiliates, except
(i) as required in the course of performing duties hereunder, (ii) with
the Company's express written consent, (iii) if such information is or
becomes generally known by the public other than as a result of a breach
hereof or (iv) as required by law or judicial or administrative process.
8. Miscellaneous:
A. Withholding:
The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
B. Governing Law/Amendment:
This Agreement shall be governed by and construed in accordance with the
laws of the State of Connecticut, without reference to the principles of
conflict of laws. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
6
C. Enforceability:
The Company agrees to pay all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the
outcome) by the Company or the Executive or others of the enforceability
of any provision of this Agreement, including the amount of any payment,
plus interest on any delayed payment.
D. Waiver:
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision.
The Executive's or the Company's failure to insist upon strict compliance
with any provision or the failure to assert any right shall not be deemed
to be a waiver of such provision or right.
E. Counterparts; Binding Effect:
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which taken together shall constitute
one and the same agreement. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
PLAYTEX PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Executive
Officer
/s/ Xxxxxxx X. Xxxx
-----------------------------
Xxxxxxx X. Xxxx
EXHIBIT I
CERTAIN DEFINED TERMS
"CAUSE" shall mean (i) repeated violations by the Executive of the
Executive's duties to the Company (other than as a result of incapacity due to
physical or mental illness) which are demonstrably willful and deliberate on the
Executive's part, which are committed in bad faith or without reasonable belief
that such violations are in the best interests of the Company and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company specifying such violations and (ii) the Executive's conviction of a
felony involving the assets or business of the Company or its affiliates.
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and 14
(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have beneficial ownership of all shares that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the voting stock
of the Company, (ii) the sale, lease, transfer, conveyance or other disposition,
in one or a series of related transactions, of all or substantially all of the
assets of the Company to any "person" or "group" (as such terms are used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than to any party or
parties to the Stock Purchase Agreement or their respective affiliates or (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (the "Board")
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of all the Directors or a majority of the Directors on either
the "Purchaser Nominating Committee" or the "Non-Purchaser Nominating Committee"
as such terms are defined by the Stock Purchase Agreement, in each case who were
either directors at the beginning of such period or were previously so elected
or nominated) cease for any reason to constitute a majority of the Board then in
office.
"GOOD REASON" shall mean any substantial diminution in the
Executive's title, duties, status, reporting relationship, authority, or
responsibilities, a reduction in the aggregate compensation and benefits
provided to the Executive by the Company and its affiliates from those earned by
the Executive at the time of the Change of Control, or a requirement that the
Executive's principal place of employment be relocated more than 35 miles from
his principal place of employment prior to the occurrence of a Change of
Control, which diminution, reduction or relocation is not remedied in a
reasonable period of time after receipt of written notice from the Executive
specifying such events.
EXHIBIT II
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of the _____ day of _______, _____, by and
between Playtex Products, Inc., a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxx ("Consultant").
WITNESSETH:
WHEREAS, Consultant was the Executive Vice President and Chief Financial
Officer of the Company, is familiar with the Company's markets, operations,
finances and business, his services to the Company are of a special and unique
character, and it is of importance to the Company to retain the services of
Consultant for a period of time;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto covenant and
agree as follows:
1. EFFECTIVE DATE. This Agreement shall become effective the day the
Consultant's present employment by the Company is ended in accordance with
Section 3(A) of the Retention Agreement dated July 22, 1997 with the Company.
2. CONSULTING SERVICES.
(i) The Company hereby agrees to engage Consultant and Consultant hereby
agrees to accept the engagement with the Company, to provide consulting services
to the Company, as an independent contractor, as Company shall reasonably
request, which services shall include general financial and business advice,
assistance with Company-related litigation, meeting and consulting with the
Board of Directors, and similar advisory services at such times and places as
Consultant is reasonably notified by Company for a period (the "Consulting
Period") beginning upon the Effective Date and ending six months thereafter.
(ii) Consultant shall be paid $_________ for his consulting services
("Consulting Fee"), payable in six monthly installments during the Consulting
Period. Consultant shall be reimbursed for ordinary and necessary business
expenses incurred in connection with the performance of such services and which
are authorized by the Company. Consultant shall not be required to travel in
performing services hereunder.
(iii) It is understood that such consulting services shall be incidental
to, and shall not interfere with, the other business activities and commitments
of Consultant. The full Consulting Fee shall be paid to Consultant regardless
of the amount and frequency of consulting services actually requested of him.
3. CONFIDENTIAL INFORMATION. During the Consulting Period and for a
period of two years after the termination of the Consulting Period, Consultant
shall not disclose or make accessible to anyone, or make use of any confidential
information which he shall have obtained from the Company while employed by the
Company or during the period of the Consulting Agreement, with respect to
confidential or secret processes, formulae, inventions, machinery, plans,
customers, trade secrets, business procedures and methods, devices or matters of
any kind relating to or with respect to any confidential research, engineering
or developmental work, programs or projects of the Company. Upon termination of
the Consulting Period, Consultant shall, at the request of Company,
promptly deliver to the Company all documents in whatever form (including all
copies thereof) containing confidential information of the Company that
Consultant then possesses or has under his control.
4. INJUNCTIVE RELIEF. In the event of breach by Consultant of Section
3, the Company shall be entitled to institute legal proceedings to obtain
damages for any such breach, to enforce the specific performance of such terms
by Consultant and to enjoin Consultant from any further violation of such terms,
and to exercise such remedies cumulatively or in conjunction with all other
rights and remedies provided by law. Consultant acknowledges, however, that the
remedies at law for any breach may be inadequate and that the Company shall be
entitled to injunctive relief in the event of any such breach.
5. TAXES. It is intended that the fees paid hereunder shall constitute
revenues to Consultant. To the extent consistent with applicable law, the
Company will not withhold any amounts therefrom as federal income tax
withholding from wages or as employee contributions under the Federal Insurance
Contributions Act or any other state or federal laws. Consultant shall be
solely responsible for the withholding and/or payment of any federal, state or
local income or payroll taxes and shall hold the Company, its officers,
directors and employees harmless from any liability arising from the failure to
withhold such amounts.
6. MODIFICATION; WAIVER; DISCHARGE. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by each of the parties hereto. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
7. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company.
8. STRICT PERFORMANCE. Either party's failure to demand strict
performance and compliance with any part of this Agreement during the term of
this Agreement shall not be deemed to be a waiver of any of such party's rights
under this Agreement or by operation of law.
9. ASSIGNMENT. This Agreement and all rights hereunder are personal to
the Consultant and may not, unless otherwise specifically permitted herein, be
assigned by him. The Company may assign this Agreement to and all rights
hereunder shall inure to the benefit of any person, firm or corporation
succeeding to all or substantially all of the business or assets of the Company
whether by purchase, merger or consolidation.
10. COMPLETE AGREEMENT. Except for the Retention Agreement, the Company
and Consultant acknowledge that this Agreement is the only agreement by and
among the parties with respect to the subject matter contained herein and that
there are no oral or implied agreements or other modifications not specifically
set forth herein or therein.
11. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Connecticut without regard to its conflicts of law principles.
IN WITNESS WHEREOF, the Company and Consultant have each executed and delivered
this Agreement the day and year first above written.
PLAYTEX PRODUCTS, INC.
By:______________________
-----------------------------------
Xxxxxxx X. Xxxx
