EXHIBIT 99.2
SEPARATION AGREEMENT
BY AND BETWEEN XXXXXXX X. XXX AND SALTON, INC.
This Separation Agreement (hereinafter the "Agreement") is dated as of
October 18, 2006 by and between XXXXXXX X. XXX (hereinafter the "Executive") and
SALTON, INC. (hereinafter the "Company").
WHEREAS, the Executive has been employed by the Company pursuant to the
terms of an Employment Agreement dated as of January 1, 2003 by and between the
Company and the Executive (the "Employment Agreement"); and
WHEREAS, the Company and the Executive have mutually agreed that the
Employment Agreement, and the Executive's employment with the Company and its
affiliates (as defined below), shall terminate on the date hereof; and
WHEREAS, the Company and the Executive now wish to set forth in this
Agreement all of their respective rights and obligations resulting from such
termination of employment and the termination of the Employment Agreement;
IT IS THEREFORE EXPRESSLY AGREED AS FOLLOWS:
1. RECITALS. The recitals set forth above are incorporated into and made a
part hereof.
2. RESIGNATION; TERMINATION OF EMPLOYMENT AGREEMENT; CONSULTING SERVICES.
(a) Effective the date hereof, the Executive hereby resigns from all
offices, titles and positions he holds with the Company and its affiliates
(including, without limitation, President and Chief Operating Officer and
director of the Company and its affiliates). For purposes of this Agreement,
"affiliates" shall have the meaning set forth in Rule 12b-2 promulgated under
the Securities Exchange Act of 1934, as amended.
(b) The Company and the Executive agree that the Employment Agreement
shall terminate and be of no further force and effect as of the date hereof.
(c) For a period of up to six (6) months following the execution of
this Agreement, the Executive agrees to advise the Company as a consultant
regarding its business operations as requested by the Chief Executive Officer of
the Company. The Company, acting through the Board of Directors, shall give the
Executive at least ten days written notice prior to terminating the Executive's
services as a consultant hereunder. The hours and schedule for the performance
of the Executive's obligations hereunder shall be mutually agreed in good faith
by the Executive and the Chief Executive Officer of the Company. During the
period in which the Executive renders consulting services hereunder, the Company
shall pay to the Executive in accordance with normal payroll practices of the
Company an amount equal to $25,000 per month, minus appropriate and customary
payroll deductions.
3. PAYMENT.
(a) Upon execution of this Agreement, the Company will pay to the
Executive the amount of $285,000.00, minus appropriate and customary payroll
deductions.
(b) The Company further agrees that on the earlier of (i) the date
that is six months after the date hereof and (ii) immediately prior to the
consummation of a Change of Control, the Company will issue to the Executive
144,928 shares of common stock of the Company. The Company agrees to use its
reasonable commercial efforts to deliver such shares as registered securities
under the Securities Act of 1933, as amended.
(c) The Company further agrees that if a Change of Control of the
Company is consummated within six months of the date hereof then, immediately
prior to the consummation of the Change of Control, the Company agrees to issue
to the Executive an additional number of shares of common stock of the Company
equal to (i) $600,000 divided by (ii) the fair market value (as determined by
the board of directors of the Company in good faith) of the consideration per
share of common stock received by holders of common stock in connection with the
Change of Control. The Company agrees to use its reasonable commercial efforts
to deliver such shares as registered securities under the Securities Act of
1933, as amended.
(d) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred upon any of the following events: (i) consummation of a
merger, reorganization or consolidation ("Merger") with respect to which the
individuals and entities who were the beneficial owners of common stock of the
Company immediately before such Merger do not, after such Merger, beneficially
own, directly or indirectly, more than fifty percent of the common stock of the
corporation resulting from such Merger; or (ii) consummation of a sale or other
disposition of all or substantially all of the assets of the Company (other than
upon a liquidation of the Company).
(e) Each of the Executive's stock options shall remain exercisable for
a period of 90 days after the date of this Agreement.
(f) The Executive acknowledges and agrees that other than (i) the
payments and benefits described in this Section 3, (ii) the medical and dental
insurance and other benefits pursuant to Section 4 and (iii) the right to
receive distributions under the Company's 401(k) plan and the Company's
Supplemental Executive Retirement Plan, no further compensation benefits or
other monies are owed to the Executive by the Company arising out of the
Employment Agreement or otherwise on account of his employment with, or service
a director of, the Company and its affiliates, or termination of such employment
or service with the Company and its affiliates.
(g) The Executive's violation of any of the provisions of Section 5, 6
or 7 hereof shall, in addition to any other remedy, result in a cessation of any
payments pursuant to Section 3 or any benefits pursuant to Section 4 hereof.
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4. MEDICAL AND DENTAL INSURANCE; OTHER BENEFITS.
(a) From the date hereof until the six months after the date hereof,
the Executive, his spouse and any other members of his family who are currently
covered with respect to the Company's normal employee medical and dental
indemnity plans shall be entitled to continue their participation in such plans
if and to the extent that the Executive elects such continued coverage pursuant
to COBRA. The Company shall reimburse the Executive for his actual premium
expense with respect to maintaining COBRA coverage during the six month period
following the date hereof; provided, however, if the Executive becomes eligible
for coverage under the same or substantially similar medical and dental
coverage, he will immediately advise the Company's General Counsel, in writing,
of this fact, and the Company's reimbursement obligations pursuant to this
Section 4(a) shall terminate.
(b) Other than as specifically set forth above, all other benefits to
which the Executive was entitled as an officer and/or employee of the Company
immediately prior to the date hereof, shall no longer be applicable from and
after the date hereof.
(c) The parties acknowledge and agree that the Executive, as a former
officer of the Company and certain Company affiliates: (i) is and will remain
entitled to indemnification under the Company's By-Laws to the same extent and
upon the same conditions as active officers or employees of such entities are
entitled to indemnification as of the date hereof with respect to actions, suits
or proceedings of whatever nature brought or that may be brought against the
Executive by reason of the fact that he was an officer or employee of the
Company and certain Company affiliates; and (ii) shall be entitled to directors
and officers insurance coverage on the same terms and conditions as any current
or former officer of the Company.
5. RELEASE.
(a) Release by the Executive. The Executive acknowledges and agrees
that the payments pursuant to Section 3 above, and the provision of other
benefits, as set forth in Section 4 above, constitute sufficient consideration
for the release of the Company by the Executive provided below. For the
consideration detailed above, and except for (i) any criminal act or act of
willful misconduct by the Company with respect to the Executive, (ii) the
obligations of the Company in this Agreement and the benefits preserved and/or
provided to the Executive in this Agreement and (iii) any obligation which the
Company has under and in accordance with its By-Laws as currently in effect
(whether or not covered by insurance) to indemnify the Executive in his capacity
as an officer or employee or director of the Company or of any of its
subsidiaries or affiliates, the Executive, on behalf of himself and his heirs,
executors, administrators, attorneys and assigns, hereby waives, generally
releases and forever discharges the Company, its subsidiaries, divisions and
affiliates, whether direct or indirect (including its and their respective
directors, officers, employees, partners and agents, past, present, and future),
and each of its and their respective successors and assigns (hereinafter
collectively referred to as "Company Releasees"), from any and all known or
unknown actions, causes of action, claims, damages, suits, obligations,
agreements, attorneys' fees or any other liabilities of any kind whatsoever
which have or could be asserted against the Company Releasees arising out of or
related to: his service as an officer or employee or director of the Company
and/or any of the other Company Releasees, employment with and/or separation
from employment with the Company and or any of the other Company Releasees,
and/or any other
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occurrence up to and including the date of this Agreement, including but not
limited to claims, actions, causes of action or liabilities arising under Title
VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended ("ADEA"), the Employee Retirement Income Security Act
of 1974, as amended, the Rehabilitation Act of 1973, as amended, the Americans
with Disabilities Act, as amended, the Illinois Human Rights Act, as amended,
and/or any other federal, state, or municipal employment discrimination statutes
(including, but not limited to, claims based on age, sex attainment of benefit
plan rights, race, religion, national origin, marital status, sexual
orientation, ancestry, harassment, parental status, handicap, disability,
retaliation, and veteran status).
The Executive agrees that he will not commence any action or proceeding of
any nature whatsoever, and that he will not seek or be entitled to any award of
equitable or monetary relief in any action or proceeding brought on his behalf
that arises out of the matters released by the Executive under this Agreement.
(b) Release by the Company. Except for (i) any criminal act or act of
willful misconduct by the Executive and (ii) the obligations of the Executive in
this Agreement, the Company, on behalf of itself, its affiliates and each of its
and their respective attorneys and assigns, hereby waives, generally releases
and forever discharges the Executive and his successors and assigns (hereinafter
collectively referred to as "the Executive Releasees"), from any and all known
or unknown actions, causes of action, claims, damages, suits, obligations,
agreements, attorneys' fees or any other liabilities of any kind whatsoever
which have or could be asserted against the Executive Releasees arising out of
or related to: the Executive's service as an officer or employee or director of
the Company and/or any of the other Company Releasees, employment with and/or
separation from employment with the Company and or any of the other Company
Releasees, and/or any other occurrence up to and including the date of this
Agreement. The Company agrees that it will not commence any action or proceeding
of any nature whatsoever, and that it will not seek or be entitled to any award
of equitable or monetary relief in any action or proceeding brought on its
behalf that arises out of the matters released by the Company under this
Agreement.
6. COVENANTS.
(a) Nondisclosure. At all times hereafter, the Executive will maintain
the confidentiality of all information in whatever form concerning the Company
or any of its affiliates or subsidiaries relating to its or their businesses,
customer relationships, finances, strategic or other plans, marketing,
employees, trade practices, trade secrets, know-how or other matters (other than
information which is generally known outside the Company or which becomes
generally known other than as a result of any improper act or omission by the
Executive), and the Executive will not, directly or indirectly, make any
disclosure thereof to anyone, or make any use thereof, on his own behalf or on
behalf of any third party, unless specifically requested by or agreed to in
writing by an executive officer of the Company or as may be required by the
lawful order of a court or agency of competent jurisdiction. The Executive has
returned or will return on or prior to October 15, 2006 to the Company all
reports, files, memoranda, records and software, credit cards, cardkey passes,
door and file keys, computer access codes or disks and instructional manuals,
lap top computer and other physical or personal property which he received or
prepared or helped prepare in connection with his employment with the Company,
its subsidiaries and affiliates; provided that the Executive may
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retain all computer, electronic and phone equipment he used as an executive of
the Company. The Executive has not retained and will not retain any copies,
duplicates, reproductions or excerpts thereof. The Executive may continue to use
the leased vehicle currently used by the Executive; provided that the Executive
shall be responsible for all payments thereunder. The Executive agrees to take
all necessary actions, if required by and at the cost of the Company, to vest
such property rights in the Company.
(b) Non-Interference; etc. From the date hereof until eighteen months
after the date hereof, the Executive agrees that he will not directly or
indirectly interfere with the Company's relationship with, or endeavor to entice
away from the Company, any person, firm, corporation, or other business
organization who as of the date hereof was a customer, officer, employee or
supplier of, or maintained a business or contractual relationship with, the
Company or any of its affiliates. The Executive further agrees that from the
date hereof until eighteen months after the date hereof, he will not, directly
or indirectly, (i) solicit or induce any officer or employee of the Company or
any of its subsidiaries to leave the employment of the Company or any of its
subsidiaries, or (ii) take any action which would interfere with contractual or
other relationships of the Company or any of its affiliates with customers,
suppliers, employees, governmental agencies, regulators, or others, or any
action which disparages or diminishes the reputation of the Company or any of
its affiliates.
(c) Cooperation. From the date hereof until eighteen months after the
date hereof, the Executive agrees that at the request of an executive officer of
the Company and upon reasonable notice he shall provide thorough and accurate
information and testimony voluntarily to or on behalf of the Company or any of
its subsidiaries or affiliates, regarding any claim, action, proceeding or
investigation ("Proceeding") by or against the Company or any of its
subsidiaries or affiliates by any third party or by any governmental agency, but
he agrees not to disclose or to discuss with anyone who is not directing or
assisting in any Proceeding, other than his attorney, the fact of or the subject
matter of any Proceeding, except as required by law. The parties agree that any
information and testimony provided by the Executive in accordance with this
Section 6(c) in good faith and based on his honest belief that such information
or testimony is materially accurate shall not be deemed to violate any provision
of this Agreement. The Company will reimburse the Executive for reasonable
out-of-pocket expenses (including, without limitation, travel, telephone and
facsimile, courier expenses and reasonable fees and expenses of counsel)
reasonably incurred in complying with this Section 6(c).
7. CONFIDENTIALITY. The Company shall issue a press release regarding the
Executive's resignation in the form attached hereto as Exhibit A. Except as
required by applicable law, this Agreement and all of the terms, conditions and
provisions hereof shall be kept strictly confidential by the Company and the
Executive, except that: (i) the Executive may disclose the terms, conditions and
provisions of this Agreement to his spouse, his personal legal counsel and
financial and tax advisors and appropriate taxing authorities; and (ii) the
Company may (a) file this Agreement with the Securities and Exchange Commission
(the "SEC"), and (b) disclose or describe the existence and terms of this
Agreement in any document filed with the SEC or in the Company's annual or
quarterly reports to shareholders. The Company agrees that it shall not make any
disparaging or negative comment to any other person or entity regarding the
Executive or the circumstances surrounding the Executive's resignation from the
Company or any of its affiliates. The Executive agrees not to make any
disparaging or negative comment to any other person or entity regarding (a) the
Company or any of its affiliates, (b) any of the
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owners, directors, officers, stockholders, members, employees, attorneys or
agents of the Company or any of its affiliates, (c) the working conditions at
the Company or any of its affiliates, or (d) the circumstances surrounding the
Executive's resignation from the Company or any of its affiliates.
8. VOLUNTARY AGREEMENT, LEGAL CONSULTATION, REVOCATION, ETC. The Executive
agrees and acknowledges: (a) that his waiver of rights under this Agreement is
knowing and voluntary; (b) this Agreement complies in full with all of the
requirements of the Older Workers Benefits Protection Act; (c) that he
understands the terms of this Agreement, including that the release in Section 5
is a general release; (d) that the payments listed in Section 3 and the other
considerations set forth in Section 4 exceed the amount and benefits that would
normally be received by an employee or officer who resigns or is terminated by
the Company; and (e) that he has been advised by the Company to consult with an
attorney prior to executing this Agreement and has done so. The Executive shall
have twenty-one (21) days to consider the waiver of his rights under the ADEA
and if he has signed this Agreement within such 21-day period, the Executive
shall have seven (7) days from the date of execution to revoke his consent to
the waiver of his rights under the ADEA. If no such revocation occurs, the
Executive's waiver of rights under the ADEA shall become effective seven (7)
days from the date of execution by the parties. In the event that the Executive
revokes his waiver of rights under the ADEA, the Company shall not be obligated
to make the payments set forth in Section 3 or to pay or provide the other
benefits set forth in this Agreement, and all provisions of this Agreement shall
immediately become void and of no effect and any benefits previously paid to the
Executive pursuant to this Agreement prior to the date of such revocation shall
be immediately repaid to the Company.
9. NO ADMISSION OF FAULT. All parties to this Agreement agree and
acknowledge that the considerations exchanged herein do not constitute and shall
not be interpreted as any admission of fault on the part of any party.
10. ENTIRE AGREEMENT; COUNTERPARTS. Other than as stated herein, the
Executive warrants that no promises or inducements have been offered for this
Agreement other than as set forth herein and that this Agreement is executed
without reliance upon any other promises or representations. This Agreement
contains the entire understanding of the parties and shall not be modified
except in writing signed by the parties hereto. This Agreement supersedes all
prior agreements and understandings concerning the subject matter hereof
including, but not limited to, the Employment Agreement, which shall have no
further force or effect. The parties may execute this Agreement in counterparts.
11. SEVERABILITY. If any phrase, clause or provision of this Agreement is
declared invalid or unenforceable by a court of competent jurisdiction, such
phrase, clause or provision shall be deemed severed from this Agreement, but
will not affect any other provisions of this Agreement, which shall otherwise
remain in full force and effect. If any restriction or limitation in this
Agreement is deemed to be unreasonable, onerous and unduly restrictive by a
court of competent jurisdiction, it shall not be stricken in its entirety and
held totally void and unenforceable, but shall remain effective to the maximum
extent permissible within reasonable bounds.
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Each party hereto acknowledges and agree that the other party will or would
suffer irreparable injury in the event of a breach or violation or threatened
breach or violation of the provisions set forth in Sections 6 and 7 herein and
each party agrees that, in the event of an actual or threatened breach or
violation of such provisions by such party, the other party shall be awarded
injunctive relief in a court of appropriate jurisdiction to prohibit or remedy
any such violation or breach or threatened violation or breach, without the
necessity of posting any bond or security, and such right to injunctive relief
shall be in addition to any other right or remedy available to such other party.
12. WAIVER. The waiver by the Company or the Executive of any breach of any
term or condition of this Agreement shall not be deemed to constitute the waiver
of any other breach of the same or any other term or condition hereof.
13. GOVERNING LAW. This Agreement and the enforcement thereof shall be
governed and controlled in all respects by the laws of the State of Illinois,
without giving effect to its conflicts of law provisions.
14. NOTICE. Any notice to be given hereunder shall be in writing and shall
be deemed given when mailed by certified mail, return receipt requested,
addressed as follows:
To the Executive at:
Xxxxxxx X. Xxx
______________________________
______________________________
with a copy to:
Xxxxxxxx X. Xxxxxxxxx, Esq.
Xxxx, Xxxxxx & Xxxxxxxxx LLP
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
To the Company at:
Salton, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
with a copy to:
Xxxx Xxxxxxxxxx, Esq.
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-00000
15. NEUTRAL CONSTRUCTION. The parties have negotiated this Agreement and
all of the terms and conditions contained in this Agreement in good faith and at
arm's length, and
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each party has been represented by counsel during such negotiations. No term,
condition, or provision contained in this Agreement will be construed against
any party or in favor of any party (i) because such party or such party's
counsel drafted, revised, commented upon, or did not comment upon, such term,
condition, or provision; or (ii) because of any presumption as to any inequality
of bargaining power between or among the parties. Furthermore, all terms,
conditions, and provisions contained in this Agreement will be construed and
interpreted in a manner which is consistent with all other terms, conditions,
and provisions contained in this Agreement.
16. ATTORNEYS' FEES. If the Executive incurs legal or other fees and
expenses in an effort to establish entitlement to payments and benefits under
this Agreement, the Company shall reimburse the Executive for such fees and
expenses if the Executive prevails in such effort.
17. BINDING NATURE. This Agreement shall be binding upon the heirs,
representatives, transferees, successors and assigns of the parties, including
any entity with which the Company may merge or consolidate or to which it may
transfer all or substantially all of its assets.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
XXXXXXX X. XXX SALTON, INC.
By:
------------------------------------- ------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
SALTON ANNOUNCES RESIGNATION OF XXXXXXX X. XXX AS PRESIDENT AND CHIEF OPERATING
OFFICER AND DIRECTOR
LAKE FOREST, Ill.--October 16, 2006--Salton, Inc. (NYSE:SFP) announced today
that Xxxxxxx X. Xxx has decided to retire from his positions as President and
Chief Operating Officer and Director of the Company, effective immediately. Xx.
Xxx will continue as consultant to the Company for a transition period assisting
the Company in its business operations. Xxxxxxxx Xxxxxxxx, Chief Executive
Officer, and other officers of the Company, including Xxxxxxx Xxxx, Chief
Financial Officer, will assume the responsibilities of Xx. Xxx.
Xx. Xxxxxxxx Xxxxxxxx commented: "On behalf of the Board of Directors and
employees of Salton, we would like to express our appreciation to Xxxx Xxx for
his dedication, commitment and significant contributions on behalf of the
Company over the past 20 years. At the request of the Board, Xxxx has agreed to
consult with us concerning our business operations for a transition period."
ABOUT SALTON, INC.
Salton, Inc. is a leading designer, marketer and distributor of branded,
high-quality small appliances, electronics, home decor and personal care
products. Its product mix includes a broad range of small kitchen and home
appliances, electronics for the home, tabletop products, time products, lighting
products, picture frames and personal care and wellness products. The Company
sells its products under a portfolio of well recognized brand names such as
Salton(R), Xxxxxx Xxxxxxx(R), Westinghouse (TM), Toastmaster(R), Melitta(R),
Xxxxxxx Xxxxx(R), Farberware(R), Xxxxxxxx(R) and Stiffel(R). It believes its
strong market position results from its well-known brand names, high-quality and
innovative products, strong relationships with its customer base and its focused
outsourcing strategy.
