SEPARATION AGREEMENT
Exhibit 10.4
THIS SEPARATION AGREEMENT (this “Agreement”) is made as of December 13, 2015, by and between Jarden Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Company”), and Xxxxxx X. Xxxxxxxx (“Executive”), collectively referred to as the “Parties”.
RECITALS:
WHEREAS, Executive is employed by the Company as the Executive Chairman of the Company pursuant to that certain Fifth Amended and Restated Employment Agreement, dated as of July 23, 2012, between the Company and Executive, as amended by that certain Equity Award, Lock-Up and Amendment Agreement, dated as of December 19, 2013, between the Company and Executive (as amended, the “Employment Agreement”);
WHEREAS, the Company is a party to that certain Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), by and among the Company, Xxxxxx Rubbermaid Inc., a Delaware corporation (“Parent”), and the other parties signatories thereto, pursuant to which, subject to the terms and conditions contained in the Merger Agreement, the Company will be merged with and into a wholly-owned subsidiary of Parent, immediately following which the Company will be merged with another wholly-owned subsidiary of Parent (“Successor Sub”) and the surviving entity thereof will become a wholly-owned subsidiary of Parent (the “Merger”);
WHEREAS, the Merger will constitute a “Change of Control of the Company” as such term is defined in the Employment Agreement;
WHEREAS, in connection with the transactions contemplated by the Merger Agreement, the Company will enter into this Agreement with Executive in accordance with the Merger Agreement for the protection of the business and goodwill of Parent and its subsidiaries after the Merger; Executive will receive substantial consideration in exchange for his shares and others equity interests in the Company (including accelerated equity interests as a result of the Change of Control); Parent and its subsidiaries shall succeed to all of the business, property, assets and goodwill of the Company and its subsidiaries; Executive will agree to the noncompetition, confidentiality and other restrictive covenants herein for the protection of the business, property, assets and goodwill of Parent and its subsidiaries after the Merger, including their legitimate business interests in trade secrets and other confidential information and valuable customer and employee relationships; and Executive and the Company mutually agree that Executive’s employment will terminate on the consummation of the Merger; and
WHEREAS, the Parties wish to settle their mutual rights and obligations arising from such separation from employment subject to the terms and conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and in the Merger Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties hereto, the Parties agree as follows:
1. Definitions. Capitalized terms used herein without definition shall have the respective meanings given such terms in the Employment Agreement.
2. Termination of Employment.
(a) Executive’s employment with the Company shall terminate on the date on which the Merger is consummated pursuant to the Merger Agreement (the “Separation Date”). As of the Separation Date, Executive shall resign from and no longer be an employee, officer, director and/or manager (or any equivalent position) of the Company or any subsidiaries or affiliates thereof, and Executive agrees he shall execute all documents reasonably necessary to effect such resignations. The Parties hereby agree that for purposes of the Employment Agreement and this Agreement Executive’s termination of employment will be treated as a “Termination Without Cause” in connection with a “Change of Control of the Company” (as such terms are defined in the Employment Agreement), and that any notice period that may be required to be provided under the Employment Agreement is hereby waived.
(b) The Parties agrees that until the Separation Date, Executive shall continue to serve as Executive Chairman of the Company, subject to the terms and conditions of the Employment Agreement.
(c) For the avoidance of doubt, the Employment Agreement shall remain in full force and effect through and following the Separation Date, subject to any amendments or modifications contained in this Agreement. If the Merger Agreement is terminated without the Merger having been consummated, this Agreement shall terminate and the Parties’ rights and obligations hereunder shall be null and void ab initio and the Employment Agreement shall continue to be in full force and effect in accordance with its terms without reference to this Agreement.
3. Separation Payments and Benefits. In addition to the substantial consideration Executive will receive in connection with the Merger pursuant to the Merger Agreement, upon the Separation Date, subject to the execution of a release of claims in favor of the Company in substantially similar form to that attached hereto as Exhibit A, the Company shall provide Executive with the following benefits:
(a) Earned Salary and Other Vested Benefits. In accordance with Section 5(b) of the Employment Agreement, the Company shall pay Executive all Base Salary earned, but unpaid, for services rendered to the Company on or prior to the Separation Date in a lump sum on the Separation Date and all other Vested Benefits in accordance with the terms of each applicable plan, program or policy.
(b) Annual Bonus. In satisfaction of the annual bonus award made by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) for calendar year 2015, a bonus in the amount of $4,355,518 shall be paid to Executive in a lump sum on the Separation Date, less any amount previously paid relating to calendar year 2015 performance bonuses.
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(c) Severance Payment. In accordance with Section 5(b) of the Employment Agreement, the Company shall pay Executive a severance payment in a total gross amount estimated to be $19,419,273, subject to adjustment as set forth in Section 3(l) of this Agreement, which amount will be paid to Executive in a lump sum on the Separation Date.
(d) Other Benefits. The Company shall pay Executive an amount estimated to be $944,346, subject to adjustment as set forth in Section 3(l) of this Agreement, in respect of historical benefits including: rights with respect to life and long-term disability policies; health insurance policies; HSA savings accounts; 401(k) plans and other financial benefits.
(e) Vesting of Stock Awards. In accordance with the intent of Section 5(b) of the Employment Agreement and in consideration for the increase in duration pursuant to Section 4 of this Agreement from two years to four years of the noncompetition, confidentiality and other covenants contained in Section 6 of the Employment Agreement, the balance of any unvested shares relating to the 1,800,000 restricted shares of common stock of the Company, par value $0.01 per share (“Common Stock”), granted to Executive and currently outstanding, but not yet vested, shall fully vest on the Separation Date and will thereafter be freely transferable (subject to any restrictions under applicable securities law or the Company’s xxxxxxx xxxxxxx policy for senior executives).
(f) Acceleration of Stock Awards. In accordance with the intent of Section 5(b) of the Employment Agreement and in consideration for the increase in duration pursuant to Section 4 of this Agreement from two years to four years of the noncompetition, confidentiality and other covenants contained in Section 6 of the Employment Agreement, immediately prior to the consummation of the Merger, the Company shall issue Executive 375,000 restricted shares of Common Stock representing the number of restricted shares of Common Stock that would have been issued to Executive in 2017 (the “2017 Accelerated Shares”) and an additional 368,421 restricted shares of Common Stock representing the number of restricted shares of Common Stock that would have been issued to Executive in 2018 (the “2018 Accelerated Shares” and together with the 2017 Accelerated Shares, the “Accelerated Shares”), in each case pursuant to Section 3(c) of and Schedule I to the Employment Agreement (as supplemented by the Compensation Committee in accordance with Section 3(c)). The Accelerated Shares shall fully vest on the Separation Date, but shall be subject to the restrictions on transfer set forth in Section 5 of this Agreement.
(g) Company Aircraft. In accordance with Section 5(b) of the Employment Agreement, the Parties hereto agree that, until the third anniversary of the Separation Date, Executive shall be entitled to continued personal use of the Company’s existing Falcon 7x aircraft (the “Aircraft”) (registered to JAH Aircraft Holding Trust (the “Trust”)) (in substantially the same manner consistent with past practice, with the Executive having priority access to and use of the Aircraft), at the Company’s sole cost and expense for the first 75 hours in any calendar year (such hour usage to be determined regardless of the number of passengers in the Aircraft during such usage); provided, that (i) during such three-year period the Company shall continue to own or lease the Aircraft and maintain the Aircraft in good working and flying condition, (ii) during the six-month period beginning on the Separation Date, Executive shall pay to Company an amount equal to the value of the use of the Aircraft during such period (determined in accordance with applicable regulations under the Internal Revenue Code) and the Company shall
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reimburse Executive for the aggregate amounts paid by Executive with respect to such use during such six-month period on the first day of the seventh month following the Separation Date. and (iii) during such three-year period, all such personal use will be subject to compliance with all applicable FAA regulations. For the avoidance of doubt, any travel by Executive on the Aircraft to or from meetings of the board of directors of Parent shall be deemed to be business use at the direction and sole expense of Parent and the Company and shall neither count towards the 75 hours per year allotment described herein nor be subject to reimbursement by Executive. The Parties hereby agree that (i) Executive may exercise his option to purchase (either directly or through a controlled affiliate) the Aircraft as set forth in Section 5(b) of the Employment Agreement at any time up to December 31, 2016, and (ii) pursuant to the Employment Agreement the purchase price for the Aircraft shall be equal to the Aircraft’s tax book value at the time of such exercise, which amount as of December 31, 2016 will be $10,169,763; provided, however, that the tax book value of the Aircraft shall be reduced on a pro rata basis in accordance with the time passed since the prior calculation of tax book value of the Aircraft with respect to an exercise taking place prior to December 31, 2016. If Executive exercises the option to purchase the aircraft by delivering written notice to the Company of such election no later than thirty (30) days before such date, the Company shall cause the Trust to enter into a purchase and sale agreement in substantially similar form to that attached hereto as Exhibit B to this Agreement (the “Aircraft Purchase Agreement”), guaranty all obligations of the Trust under the Aircraft Purchase Agreement and take all necessary actions to consummate the sale of the Aircraft and transfer title to the Aircraft to Executive in accordance with the terms of the Aircraft Purchase Agreement. If Executive exercises the option to purchase the Aircraft, Executive shall also have the right to solicit and hire any current or former pilots, crew or other personnel who service or have serviced the Aircraft. In connection with this Section 3(g), the Company agrees that it shall not terminate that certain Aircraft Time Sharing Agreement, dated as of August 14, 2015, between the Company and Executive prior to the earlier of the third anniversary of the Separation Date and the date on which Executive acquires the Aircraft pursuant to this Section 3(g).
(h) D&O Insurance. The Company shall obtain and provide at its own expense the directors’ and officers’ liability insurance or directors’ and officers’ liability tail insurance policies covering Executive described in Section 4(e) of the Employment Agreement effective as of the Separation Date and shall maintain such insurance or tail policy in place for the period prescribed in Section 4(e) of the Employment Agreement.
(i) Aspen Office. The Company hereby grants Executive the option to acquire (either directly or through a controlled affiliate) from the Company (or the applicable subsidiary of the Company owning such property) the Aspen, Colorado, office space detailed on Exhibit C-1 attached hereto (the “Aspen Office”), pursuant to a purchase and sale agreement in substantially similar form to that attached hereto as Exhibit C-2 to this Agreement, which option must be exercised by Executive no later than the date of the consummation of the Merger. If Executive exercises the option to purchase the Aspen Office by delivering written notice to the Company of such election by such date, the purchase price shall be $2,900,000 and the parties shall enter into the purchase and sale agreement attached hereto as Exhibit C-2 (and to the extent the Aspen Office is owned by a subsidiary of the Company, the Company shall cause such subsidiary to enter into such agreement and consummate the sale). The purchase price for the Aspen Office shall be paid by having the Company reduce the net cash amounts payable to Executive under
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this Agreement by an amount equal to the purchase price for the Aspen Office, which amount, upon the closing of the sale of the Aspen Office, shall no longer be due and payable to Executive under this Agreement. Additionally, if Executive has timely exercised the right to purchase the Aspen Office pursuant to this Section 3(i), Executive shall be entitled to exclusive use and possession of the Aspen Office from the date of the option exercise through the closing of the transfer of title of the Aspen Office to Executive.
(j) Indemnification Rights. Executive shall maintain all of Executive’s rights to indemnification by the Company pursuant to Sections 4(d) and 4(f) of the Employment Agreement.
(k) Other Rights. Without duplication of any separation benefits described under Sections 3(a) through 3(j) of this Agreement, in accordance with Section 5(b) of the Employment Agreement, Executive shall receive all other Additional Termination Benefits to which Executive is entitled upon separation, including, but not limited to, vesting in full of benefits accrued under the employee retirement and savings plans of the Company and Executive’s (and his dependent’s) rights to continuing participation in Health Benefit Plans (collectively, “Other Additional Termination Benefits”); provided, however, that in no event shall the aggregate payments made (or value of benefits provided) in respect of Other Additional Termination Benefits under this Section 3(k) exceed an amount equal to $450,000 minus the aggregate amount of all adjustments made pursuant to Section 3(l) of this Agreement.
(l) Adjustments. The estimated severance payment of $19,419,273 and the other benefits payment of $944,346 set forth in Section 3(c) and Section 3(d) of this Agreement, respectively, are minimum estimates of such amounts due to Executive. The actual amounts payable to Executive shall be no less than such amounts, but may increase by up to an additional $450,000 in the aggregate after such payment amounts have been finally determined by the Company prior to the Separation Date.
4. Noncompetition, Confidentiality and Other Restrictive Covenants. Executive acknowledges and agrees that Executive shall continue to be bound by the noncompetition, confidentiality and other covenants contained in Section 6 of the Employment Agreement through the fourth anniversary of the Separation Date; provided, however, that for purposes of such covenants “principal product line” shall be limited to only “principal product lines” of the Company as of the Separation Date without giving effect to any product lines of Parent and its subsidiaries as of the Separation Date or any product lines established following the Separation Date.
5. Restrictions on Accelerated Shares.
(a) Executive agrees that, notwithstanding anything to the contrary in this Agreement, Executive will not, without the prior written consent of the Company, offer, sell, transfer, contract to sell, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by Executive or any person in privity with Executive), directly or indirectly, or establish or increase a put equivalent position
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or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, with respect to any Accelerated Shares, or publicly announce an intention to effect any such transaction, until this Section 5(a) lapses in accordance with Section 5(c), except to satisfy tax withholding or as otherwise permitted by Section 5(b), below. For purposes of this Section 5(a), “Accelerated Shares” shall be any shares of stock of Parent received by Executive in exchange for Executive’s Accelerated Shares as a result of the Merger.
(b) The restrictions on transfer of Accelerated Shares in Section 5(a) above shall not apply to the transfer of any Accelerated Shares either during Executive’s lifetime or on death, by gift, will or intestate succession, to an immediate family member of Executive or to transfers to a trust the beneficiaries of which are exclusively Executive and/or a member or members of Executive’s immediate family; provided, however, that in any transfer pursuant to this Section 5(b) it shall be a condition to such transfer that the transferee executes and delivers to the Company an agreement in form satisfactory to the Company in its sole discretion stating that the transferee is receiving and holding the Accelerated Shares subject to the provisions of this Agreement, and there shall be no further transfer of such Accelerated Shares except in accordance with this Agreement.
(c) The restrictions on transfer of Accelerated Shares set forth in this Section 5 shall lapse on March 31, 2017 with respect to the 2017 Accelerated Shares and on March 31, 2018 with respect to the 2018 Accelerated Shares.
6. Miscellaneous.
(a) Section 409A Compliance. Section 7(p) of the Employment Agreement is hereby incorporated into this Agreement in its entirety; provided that references to the “Agreement” in such Section 7(p) shall be deemed to refer to both the Employment Agreement and this Agreement for purposes of this Section 6(a).
(b) Withholding. All payments and benefits payable pursuant to this Agreement shall be subject to reduction by all applicable withholdings, offsets, social security and other federal, state and local taxes and deductions.
(c) Arbitration. Except in the event of the need for immediate equitable relief from a court of competent jurisdiction to prevent irreparable harm pending arbitration relief, and except for enforcement of a party’s remedies to the extent such enforcement must be pursuant to court authorization or order under applicable law, any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. This arbitration shall be held in Florida and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be selected by the Company and Executive; provided, that if within fifteen (15) business days of the date of request for arbitration, the Parties have not been able to make such selection the dispute shall be held by a panel of three arbitrators one appointed by each of the Parties and the third appointed by the other two arbitrators.
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(d) Notices. Any notice required or desired to be delivered under this Agreement shall be in writing and shall be delivered personally, by courier service, by certified mail, return receipt requested, or by telecopy and shall be effective upon actual receipt by the party to which such notice shall be directed, and shall be addressed as follows (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof):
If to the Company:
Jarden Corporation
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
If to Executive: To the address listed as Executive’s principal residence in the Company’s human resources records and to his principal place of employment with the Company.
(e) Assignment. Except as provided under Section 6(g) hereof, neither this Agreement nor any of the rights or obligations hereunder shall be assigned or delegated by any party hereto without the prior written consent of the other party.
(f) Binding Effect. This Agreement shall be binding on, and shall inure to the benefit of, the Company and any person or entity that succeeds to the interest of the Company (regardless of whether such succession does or does not occur by operation of law) by reason of the sale of all or a portion of the Company’s stock, a merger, consolidation or reorganization involving the Company or, unless the Company otherwise elects in writing, a sale of the assets of the business of the Company (or portion thereof) in which Executive performs a majority of his services. Without limiting the generality of the foregoing, this Agreement shall be binding on, and shall inure to the benefit of, Successor Sub if Successor Sub is the surviving entity in the Merger. Additionally, if the Company or any of its successors or assigns (including, but not limited to Successor Sub) (i) shall consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then, and in each such case, proper provisions shall be made so that the successors and assigns of the Company shall assume all of the rights and obligations set forth in this Agreement. This Agreement shall also inure to the benefit of Executive’s heirs, executors, administrators and legal representatives.
(g) Construction. In the event of any conflict between the provisions of this Agreement and the provisions of the Employment Agreement, the provisions of this Agreement shall control.
(h) Governing Law. This Agreement is made and executed and shall be governed by the laws of the State of Delaware, without regard to the conflicts of law principles thereof.
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(i) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
(j) Headings. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.
(k) Entire Agreement. This Agreement and the Employment Agreement constitute the entire agreement between the Parties hereto with respect to the matters referred to herein and therein. No other agreement relating to the matters referred to herein and therein shall be binding between the Parties. There are no promises, representations, inducements or statements between the Parties other than those that are expressly contained in this Agreement and the Employment Agreement. Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences and has been advised to consult with an attorney before executing this Agreement.
(l) Amendments. This Agreement may not be altered, modified or amended except by a written instrument signed by each of the Parties hereto.
(m) Severability. In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
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IN WITNESS WHEREOF, the Parties have signed this Separation Agreement as of the date first above written.
| Company: | ||
| JARDEN CORPORATION | ||
| /s/ Xxxx X. Xxxxx | ||
| Name: | Xxxx X. Xxxxx | |
| Title: | Executive Vice President—Administration, General Counsel and Secretary | |
| Executive: | ||
| /s/ Xxxxxx X. Xxxxxxxx | ||
| Xxxxxx X. Xxxxxxxx | ||
[Signature Page to Separation Agreement]
