FORM OF TERMINATION AGREEMENT
Exhibit 10.14
FORM OF TERMINATION AGREEMENT
This Termination Agreement (this “Agreement”) is entered into as of the Agreement Date by and among
Xxxxxxx-Xxxxxx Company, a Delaware corporation (the “Company”), Xxxxx Holdings, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company (“SHI”) and ___(the “Executive”)
and shall be deemed to be effective on the date the last party signs this Agreement (the “Agreement
Date”).
WHEREAS, the Company and the Executive have entered into the Severance Agreement dated as of
___(the “Severance Agreement”), pursuant to which the Executive would be entitled to
payments and benefits in the event that the Executive’s employment were terminated under the
circumstances set forth in the Severance Agreement following, among other things, the approval by
the stockholders of the Company of a transaction that constitutes a Change in Control (as defined
in the Severance Agreement);
WHEREAS, the Company and CDRS Acquisition LLC (the “Investor”), an affiliate of Xxxxxxx, Dubilier
and Rice, Inc., a Delaware corporation (“CD&R”), may enter into a transaction whereby, among other
things, (i) the Investor will acquire approximately 47.5% of the common stock (the “Equity
Investment”) of an entity (“New Xxxxx”) that will own the Xxxxx/BSG business of the Company, and
(ii) the Consumer Products and Xxxxx/BSG businesses of the Company will be split into two, separate
publicly traded companies (the “Separation” and, together with the Equity Investment and the other
transactions contemplated thereby, the “Transaction”);
WHEREAS, the Company intends to treat the Transaction as though it constitutes a Change in Control
for the purposes of, and as such term is defined under, the Employee Stock Option Plan of 2003,
Employee Stock Option Plan of 1988, 2003 Restricted Stock Plan and 1994 Restricted Stock Plan, and
accordingly accelerate the vesting of all options to purchase, and restricted shares of, common
stock of the Company issued under such plans, including those held by the Executive, and the
options to purchase shares of common stock of the Company held by the Executive shall, effective
upon the closing of the Transaction, be converted into options to purchase shares of common stock
of New Xxxxx;
WHEREAS, in respect of the Company’s Management Incentive Plan and the 1994 Shareholder Value
Incentive Plan, the Company intends to treat the Transaction as though it constitutes a Change in
Control (as such term is defined therein) for the participants in such plans, including the
Executive; and
WHEREAS, the Company, SHI and the Executive desire to enter into this Agreement pursuant to which
the Severance Agreement shall be terminated upon the terms and subject to the conditions contained
herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements contained
herein, the Company, SHI and the Executive hereby agree as follows:
1. Termination of Severance Agreement. The Company and the Executive acknowledge that at the
effective time of the Separation (the “Effective Time”), the Executive will cease to be an employee
of the Company or any of its subsidiaries. In order to resolve all issues that could arise with
respect to the Severance Agreement by reason of the Transaction, the Executive, on behalf of the
Executive and any person claiming through the Executive, and the Company hereby (a) agree that the
Transaction, however effected, including any actions taken in respect thereof or in connection
therewith, shall not be deemed to constitute a Change in Control for purposes of the Severance
Agreement and (b) terminate effective immediately prior to the Effective Time the Severance
Agreement and any and all rights the Executive may have to any payments or benefits pursuant to the
Severance Agreement.
2. Consideration for Termination.
(a) In consideration for the termination of the Severance Agreement, SHI and the Executive agree
that in the event of the termination of the Executive’s employment without Cause by SHI or by the
Executive for Good Reason on or after the Agreement Date and prior to the second anniversary of the
Effective Time, the Executive shall be entitled to the payments and benefits set forth in Schedule
I hereto.
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(b) As additional consideration for the termination of the Severance Agreement, SHI agrees that it
and New Xxxxx will enter into a new Severance Agreement substantially in the form attached hereto
as Exhibit A (the “New Severance Agreement”), which New Severance Agreement shall become effective
at the Effective Time.
If the Executive shall be entitled to any payments or benefits pursuant to the Severance Agreement
or the New Severance Agreement in connection with a Change in Control unrelated to the Transaction,
then the Executive shall not be entitled to any payments or benefits hereunder.
For purposes of this Section 2, the term “Cause” shall have the meaning assigned to it in the
Severance Agreement, provided that (i) the Agreement Date shall be substituted for the term “Change
in Control” each place such term appears in such definition, (ii) the term “Company” shall, to the
extent the context requires, be deemed to also refer to SHI and its affiliates. “Good Reason”
shall mean, without the Executive’s consent, the occurrence of any of the following circumstances
during the period beginning on the Agreement Date and ending on the second anniversary of the
Effective Time unless such circumstances are fully corrected prior to the expiration of the fifteen
(15) calendar day period following delivery to SHI and its parent corporation of the Executive’s
notice of intention to terminate his employment for Good Reason describing such circumstances in
reasonable detail: (i) a reduction in the Executive’s rate of annual base salary or (ii) a change
in location of the Executive’s principal office to a location more than 20 miles from its current
location.
3. Limitations on Payments to the Executive. Solely for the purposes of the computation of
benefits under this Agreement and notwithstanding any other provisions hereof, payments to the
Executive under this Agreement shall be reduced (but not below zero) so that the present value, as
determined in accordance with Section 280G(d)(4) of the Internal Revenue Code of 1986, as amended
(the “Code”), of such payments plus any other payments that must be taken into account for purposes
of any computation relating to the Executive under Section 280G(b)(2)(A)(ii) of the Code, shall
not, in the aggregate, exceed 2.99 times the Executive’s “base amount,” as such term is defined in
Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof, no reduction in
payments under the limitation contained in the immediately preceding sentence shall be applied to
payments hereunder which do not constitute “excess parachute payments” within the meaning of the
Code. Any payments in excess of the limitation of this Section 3 or otherwise determined to be
“excess parachute payments” made to the Executive hereunder shall be deemed to be overpayments
which shall constitute an amount owing from the Executive to SHI with interest from the date of
receipt by the Executive to the date of repayment (or offset) at the applicable federal rate under
Section 1274(d) of the Code, compounded semi-annually, which shall be payable upon demand;
provided, however, that no repayment shall be required under this sentence if in the written
opinion of tax counsel satisfactory to the Executive and delivered to the Executive and SHI such
repayment does not allow such overpayment to be excluded for federal income and excise tax purposes
from the Executive’s income for the year of receipt or afford the Executive a compensating federal
income tax deduction for the year of repayment.
4. Withholding Taxes. SHI may withhold from all payments due to the Executive (or the Executive’s
estate or beneficiaries) hereunder all taxes which, by applicable federal, state, local or other
law, are required to be withheld therefrom.
5. Agreement Date; Termination of Agreement. This Agreement shall be effective on the Agreement
Date. This Agreement shall terminate and be of no further force or effect, except in respect of
any benefits then accrued by the Executive hereunder, if and only if (a) the principal agreements
related to the Transaction are not signed by the Company and the Investor (or another affiliate of
CD&R) on or prior to October 31, 2006, or (b) such principal agreements are terminated prior to the
consummation of the Transaction.
6. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle the Executive to
continued employment with the Company or SHI.
7. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of and be enforceable by the Company and SHI and
their respective successors and assigns, and by the Executive and the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
If the Executive shall die after terminating employment pursuant to Section 2(a) while any amounts
would be payable to the Executive hereunder
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had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons appointed in writing
by the Executive to receive such amounts or, if no person is so appointed, to the Executive’s
estate.
(b) This Agreement shall not be terminated by any merger or consolidation of SHI whereby SHI is or
is not the surviving or resulting corporation or as a result of any transfer of all or
substantially all of the assets of SHI. In the event of any such merger, consolidation or transfer
of assets, the provisions of this Agreement shall be binding upon the surviving or resulting
corporation or the person or entity to which such assets are transferred.
8. Notices. (a) For purposes of this Agreement, all notices and other communications required or
permitted hereunder shall be in writing and shall be duly given upon receipt when delivered by
United States mail, certified and return receipt requested, postage prepaid, addressed (i) if to
the Executive, to the Executive’s most recent address as it appears in the records of the Company,
if to the Company, to Xxxxxxx-Xxxxxx Company, 0000 Xxxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxx, 00000,
attention of the President, with a copy to the General Counsel, and if to SHI, to Xxxxx Holdings,
Inc., 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxx, XX 00000, attention of the President, with a copy to the
General Counsel, or (ii) to such other address as any party may have furnished to the other parties
in writing in accordance herewith.
(b) A written notice of the Executive’s termination of employment by SHI, New Xxxxx or by the
Executive, as the case may be, shall (i) set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment and (ii) specify the
termination date (which date shall be not less than 15 days after the giving of such notice). The
failure by the Executive, SHI or New Xxxxx to set forth in such notice any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive,
SHI or New Xxxxx hereunder or preclude the Executive, SHI or New Xxxxx from asserting such fact or
circumstance in enforcing the rights of the Executive, SHI or New Xxxxx hereunder.
9. Employment with Subsidiaries. Employment with SHI for purposes of this Agreement shall include
(a) in the period prior to the Effective Time, employment with the Company, SHI or any corporation
or other entity in which the Company or SHI has a direct or indirect ownership interest of 50% or
more of the total combined voting power of the then outstanding securities of such corporation or
other entity entitled to vote generally in the election of directors and (b) in the period at or
after the Effective Time, employment with SHI, New Xxxxx or any corporation or other entity in
which New Xxxxx has a direct or indirect ownership interest of 50% or more of the total combined
voting power of the then outstanding securities of such corporation or other entity entitled to
vote generally in the election of directors.
10. Governing Law; Validity. The interpretation, construction and performance of this Agreement
shall be governed by and construed and enforced in accordance with the internal laws of the State
of Illinois without regard to the principle of conflicts of laws. 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 other provisions shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in two or more counterparts, all of which shall
be deemed to be an original and all of which together shall constitute one and the same instrument.
12. Miscellaneous. Capitalized terms not defined herein shall have the meanings assigned to them
in the Severance Agreement. No provision of this Agreement may be modified or waived unless such
modification or waiver is agreed to in writing and signed by the Executive and by a duly authorized
officer of each of the Company and SHI, provided that after the Effective Time, a modification or
waiver of this Agreement will not require the agreement of the Company. No waiver by any party
hereto at any time of any breach by any 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. Failure by
the Executive, the Company or SHI to insist upon strict compliance with any provision of this
Agreement or to assert any right the Executive, the Company or SHI may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good Reason, shall not
be deemed to be a waiver of such provision or right or any other provision or right under this
Agreement. The rights of, and benefits payable to, the Executive (or the Executive’s estate or
beneficiaries) pursuant to this Agreement are in addition to any rights of, or
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benefits payable to, the Executive (or the Executive’s estate or beneficiaries) under any other
employee benefit plan or compensation program of the Company, New Xxxxx or SHI.
13. Application of Section 409A. Notwithstanding the foregoing, if SHI or the Executive reasonably
and in good faith determines that payment of any amount pursuant to this Agreement at the time
provided for such payment would cause any amount so payable to be subject to Section 409A(a)(1) of
the Code, then such amount shall instead be paid at the earliest time at which it may be paid
without causing this Agreement to be subject to Section 409A(a)(1) and all of the provisions of
this Agreement shall be interpreted in a manner consistent with this Section 13. SHI shall have
the right to make such amendments, if any, to this Agreement as shall be necessary to avoid the
application of Section 409A(a)(1) of the Code to the payments of amounts pursuant to this
Agreement, and shall give prompt notice of any such amendment to the Executive. If SHI defers
payments to the Executive pursuant to this Section 13, then SHI shall provide Executive with prompt
written notice thereof, including reasonable explanation and the estimated date on which it has
determined it is permitted to make the payments deferred under this Section 13. In any event, the
payments will not take longer than 190 days from the Date of Termination, provided however that the
medical insurance coverage and executive outplacement services to be provided under Schedule I
shall extend beyond this period pursuant to the terms of Schedule I and provided further that to
the extent it is determined that Section 409A would apply to such benefits if provided immediately
after the Date of Termination, such benefit shall commence as soon as possible without being
subject to Section 409A.
14. Amendment. This Agreement cannot be amended except pursuant to a writing signed: (a) before
the Effective Time, by the Executive, SHI, the Company and, unless the Agreement has terminated
pursuant to Section 5, the Investor; provided that the Investor shall not unreasonably withhold its
written consent to any such amendment; and (b) on or after the Effective Time, by the Executive,
SHI and the Investor; provided that any amendment that adversely affects the Company in any manner
shall be subject to the written consent of the Company.
IN WITNESS WHEREOF, the Company and SHI have each caused this Agreement to be executed by its
duly authorized officer and the Executive has executed this Agreement as of the dates set forth
below.
| XXXXXXX-XXXXXX COMPANY |
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| By: | ||||
| Name: Its: Date:______________________ |
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| XXXXX HOLDINGS, INC. |
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| By: | ||||
| Name: Its: Date: ______________________ |
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| EXECUTIVE Date: __________________________ |
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SCHEDULE A
TO
Lump Sum Payment
Within 30 days following the date of termination of the Executive’s employment with the Company in
accordance with Section 2 of the Agreement (the “Date of Termination”), provided that SHI has
received a customary release (which release shall extend to all claims against the Company, SHI,
CD&R and their respective affiliates and agents) signed by the Executive, SHI shall pay to the
Executive a lump sum payment equal to [2][1.5][1] times the Executive’s annual base salary at the
Date of Termination from the Company and its affiliated companies or SHI and its affiliated
companies, as the case may be, if the Date of Termination is prior to the Effective Time and
[2.49][1.99][1.49] times if the Date of Termination is after the Effective Time, plus [2][1.5][1]
times the average of the dollar amount of the Executive’s actual or annualized (for any fiscal year
consisting of less than 12 full months or with respect to which the Executive has been employed by
the Company and its affiliated companies or SHI and its affiliated companies for less than 12 full
months) annual bonus, paid or payable, including by reason of any deferral, to the Executive by the
Company and its affiliated companies or SHI and its affiliated companies in respect of the five
fiscal years of the Company or SHI (or such portion thereof during which the Executive performed
services for the Company and its affiliated companies or SHI and its affiliated companies if the
Executive shall have been employed by the Company and its affiliated companies or SHI and its
affiliated companies for less than such five fiscal year period) immediately preceding the fiscal
year in which the Date of Termination occurs if the Date of Termination is prior to the Effective
Time and [2.49][1.99][1.49] times if the Date of Termination is after the Effective Time.
Benefits
Medical Insurance Continuation. For a period of 18 months commencing on the Date of Termination,
SHI shall continue to keep in full force and effect all policies of medical insurance with respect
to the Executive and his or her dependents with the same level of coverage, upon the same terms and
otherwise to the same extent as such policies shall have been in effect immediately prior to the
Date of Termination (such coverage, the “Date of Termination Coverage”) or, if more favorable to
the Executive, as provided generally with respect to other peer executives of SHI and its
affiliated companies and SHI and the Executive shall share the costs of the continuation of such
insurance coverage in the same proportion as such costs were shared immediately prior to the Date
of Termination, provided, however, that SHI’s obligation to continue to provide this benefit shall
terminate at such time that the Executive commences employment with another employer and becomes
eligible to receive medical insurance coverage under an employer-provided plan that is generally
comparable to the Date of Termination Coverage. The coverage provided hereunder shall be applied
toward the satisfaction of, and shall not supplement, the Executive’s right to continued coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or any similar state
law.
Executive Outplacement. SHI will pay for and provide to the Executive outplacement services with
an outplacement firm of Executive’s choosing, provided that SHI shall not be responsible to pay for
such services to the extent such services (i) exceed $12,000 or (ii) are provided more than one
year following the Date of Termination.
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