November 6, 1998
Xx. Xxxxxxx X. Xxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx xxx Xxx, XX 00000
Dear Xx. Xxxx:
This letter confirms the following severance agreement with you in
connection with termination of your employment with Coastcast Corporation
("Coastcast"):
1. RESIGNATION. It is acknowledged that you have submitted your
resignation as an officer, director and employee of Coastcast effective November
6, 1998 (the "Termination Date").
2. SEVERANCE PAYMENTS AND BONUS.
(a) SEVERANCE PAYMENTS. Coastcast will make severance payments to
you in the total gross sum of $425,000, including a payment of $212,500 on
January 6, 1999 and a payment of $212,500 on January 5, 2000. The severance
payments will be paid in accordance with Coastcast's usual payroll practices.
(b) BONUS ELIGIBILITY. In the event that the Coastcast Board of
Directors authorizes payment of bonus compensation to any officers with respect
to their services for the 1998 fiscal year, the Board in its sole discretion may
award you a bonus, but shall be under no obligation to do so. The determination
of whether to make a bonus award to you and the amount thereof, if any, shall be
within the sole discretion of the Board of Directors.
3. RETIREMENT BENEFITS. In lieu of and in full satisfaction of any and
all obligations of Coastcast and any and all rights you may otherwise have under
or in respect of the Coastcast Supplemental Executive Retirement Plan (the
"SERP"), all of which are released by you pursuant to Paragraph 10 below,
Coastcast will provide retirement benefits to you in accordance with the
following:
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November 6, 1998
Page 2
(a) SINGLE LIFE ANNUITY. On the date that you attain the age of
65 and on the same day of each succeeding month thereafter during the
remainder of your life, Coastcast will pay to you the gross sum of $6,667
(the "Single Life Annuity"). Payments under the Single Life Annuity will
cease upon your death.
(b) EARLY RETIREMENT ANNUITY. You may elect to have the monthly
payments provided for in subparagraph (a) immediately preceding commence prior
to the date that you attain the age of 65 by giving Coastcast at least 13 months
written notice of such election prior to the date on which you elect to have
such monthly payments commence, in which case Coastcast will pay to you a
reduced monthly sum which is the actuarial equivalent of the Single Life Annuity
payments provided for in subparagraph (a) immediately preceding (the "Early
Retirement Annuity").
(c) JOINT AND SURVIVOR ANNUITY. You may elect to have the monthly
Single Life Annuity payments, including the Early Retirement Annuity payments,
paid for as long as the survivor of you and your wife shall live by giving
Coastcast at least 13 months written notice of such election prior to the date
on which such monthly payments are to commence, in which case Coastcast will pay
to you and the survivor of you and your wife following the death of the first of
you to die a reduced monthly sum which is the actuarial equivalent of the Single
Life Annuity payments (or, if applicable, the Early Retirement Annuity payments)
(the "Joint and Survivor Annuity").
(d) ACTUARIAL ADJUSTMENTS. The Early Retirement Annuity and the
Joint and Survivor Annuity will be based on the Single Life Annuity and
actuarially adjusted to be the equivalent actuarial value of the Single Life
Annuity based on the following actuarial assumptions: (i) a discount rate of
7.5%; and (ii) mortality factors based on eighty percent (80%) of the 1983 Group
Annuity Mortality (83GAM) tables for males.
4. WITHHOLDING AND PAYMENTS. There will, of course, be deductions and
withholdings from the gross amount of all payments made to you hereunder for
applicable federal, state and local income and employment taxes, FICA, etc.
Unless you make other arrangements with Coastcast, checks will be mailed to your
home or deposited in your bank if you so designate.
5. HEALTHCARE BENEFITS. You may elect to continue health benefit
coverage under Coastcast's group health plan for you, your spouse and/or
eligible dependents to the extent available under the terms of the plan pursuant
to the healthcare coverage continuation provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"), at the
Xx. Xxxxxxx X. Xxxx
November 6, 1998
Page 3
same coverage level provided immediately prior to the Termination Date.
Coastcast will pay the cost of COBRA continuation coverage for you, your wife
and daughter, Xxxxxx, for the first 60 days following the Termination Date.
Thereafter, you will be responsible for the applicable premium cost of any
COBRA continuation coverage available to you, your wife and dependents for
the remainder of the COBRA continuation coverage period, provided that
Coastcast will pay the applicable premium cost of any COBRA continuation
coverage available to your daughter, Xxxxxx, for a total period of up to 12
months following your Termination Date.
6. OUTPLACEMENT COSTS. Coastcast will reimburse you up to $35,000 for
the cost of outplacement services, office and communication expenses and other
costs incurred by you in obtaining employment, which amount shall be reimbursed
monthly within five (5) business days after receipt of an itemization of all
incurred expenses covered by this Paragraph 6. Reimbursement for outplacement
services will commence not earlier than the eighth day after the date hereof and
continue on the first business day of each month thereafter until the earlier of
such time as you obtain employment or receive the maximum reimbursement
specified herein.
7. SATISFACTION OF OBLIGATIONS. The payments and benefits provided for
you above shall be in lieu of and in full satisfaction of any and all
obligations of Coastcast and any and all other rights you may otherwise have to
compensation and benefits from Coastcast, including, without limitation, any and
all rights to compensation or benefits under or with respect to the SERP, the
bonus plan, the stock option plan, vacation, sick leave, and the like.
8. RETURN OF PROPERTY. Forthwith following execution and delivery of
this agreement, you will return and/or account for all Coastcast property in
your possession, including, without limitation, keys, credit cards, if any,
manuals, supplies, equipment, etc. The automobile which has been provided for
your use by Coastcast may be retained and used by you until December 1, 1998, at
which time it must be returned to Coastcast. You will be solely responsible for
any damage or necessary repairs to the vehicle between the time of execution of
this agreement and the return of the automobile to Coastcast.
9. EXPENSE REPORTS. You will submit to Coastcast, within a reasonable
period of time, all outstanding business expenses for reconciliation and
reimbursement. Coastcast will pay only for business expenses incurred prior to
the Termination Date and only according to its established expense reimbursement
policy.
10. RELEASE OF COASTCAST. Except as provided below in this Paragraph 10,
you hereby forever release and discharge Coastcast, all of its respective
subsidiaries, and all of their successors, affiliates, assigns, employees,
former employees, attorneys, agents, officers,
Xx. Xxxxxxx X. Xxxx
November 6, 1998
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directors, and shareholders from any and all causes of actions, judgments,
liens, indebtedness, damages, losses, claims, liabilities, and demands of
every kind and character, known or unknown, suspected, or unsuspected,
absolute or contingent, prior to the date of execution of this agreement
including but not limited to claims arising out of or in any manner relating
to (i) your employment with Coastcast and/or termination of such employment;
(ii) any restrictions on the right of Coastcast or any of the released
parties to terminate employees; (iii) any common law claims or actions; (iv)
any statements made by any of the released parties; or (v) any federal,
state, or governmental statute, regulation, or ordinance, including, without
limitation, Title VII of the Civil Rights Act of 1964 and the Civil Rights
Act of 1991, the Americans with Disabilities Act, the Employee Retirement
Income Security Act of 1974, the Age Discrimination in Employment Act, the
California Fair Employment and Housing Act, and claims with any division of
the California Department of Industrial Relations or Department of Fair
Employment and Housing. You hereby waive any and all rights you may have
under California Civil Code Section 1542 (or any analogous state law or
federal law or regulation) which provides:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
The foregoing release does not apply to any of the obligations of Coastcast
under this agreement, your employee stock option agreement(s), the Coastcast
retirement savings plan (which is not the SERP), any rights which you may have
under directors and officers liability insurance policies maintained by
Coastcast, or the indemnification agreement between you and Coastcast which was
executed in 1995 (the "Indemnification Agreement").
11. RELEASE OF YOU. Except as provided below in this Paragraph 11,
Coastcast hereby forever releases and discharges you and your heirs, successors
and assigns from any and all causes of actions, judgments, liens, indebtedness,
damages, losses, claims, liabilities, and demands of every kind and character,
known or unknown, suspected, or unsuspected, absolute or contingent, prior to
the date of execution of this agreement including but not limited to claims
arising out of or in any manner relating to (i) your employment with Coastcast;
or (ii) your position as a director of Coastcast (collectively, "Coastcast
Claims"). Coastcast hereby waives any and all rights it may have under
California Civil Code Section 1542 (or any analogous state law or federal law or
regulation) which provides as set forth in Paragraph 10 above.
Xx. Xxxxxxx X. Xxxx
November 6, 1998
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The foregoing release does not apply to any of your obligations under this
agreement or the Indemnification Agreement or any Coastcast Claims arising out
of or resulting from misappropriation of funds or property, fraud, gross
negligence or willful misconduct by you.
12. ENTIRE AGREEMENT. It is understood and agreed that this agreement is
fully integrated, represents the entire understanding of the parties, and there
are no other agreements, representations, promises, or negotiations which have
not been expressly set forth herein, any outstanding stock option agreements,
and any other employee benefit plans sponsored by Coastcast in which you are
participating as of the Termination Date. Nothing contained herein shall
constitute or imply any admission of liability or wrongdoing by any party. This
agreement can be amended, modified, or terminated only by an instrument in
writing executed by you and the chief executive officer of Coastcast.
13. COOPERATION. You further agree and understand that you are prohibited
for a period of two years from employing or attempting to employ any of
Coastcast's employees. You further agree that you will not in any way disparage
Coastcast or any of its employees or directors, or engage in any conduct adverse
to Coastcast's interests, including but not limited to the disclosure to
competitors or diversion or attempted diversion by solicitation or any other
means of any of Coastcast's business opportunities existing, identified or for
which discussions were initiated prior to the Termination Date, confidential
information, technology or proprietary rights. You shall also cooperate with
Coastcast in its defense of the pending counterclaim against Coastcast by
Xxxxxxxx Xxxxxxx in the suit pending in the federal court in Los Angeles,
California and in any litigation or administrative proceedings involving any
matters with which you were involved during your employment with Coastcast,
provided that Coastcast reimburses you for out-of-pocket expenses incurred by
you at Coastcast's request, which expenses must be authorized and approved in
advance by Coastcast. Should you violate this or any other provision of this
agreement, you understand and agree that you will forfeit any and all remaining
payments under this agreement. Coastcast will also not disparage you.
Provisions of this Paragraph 13 precluding you from disparaging Coastcast and
Coastcast from disparaging you shall not limit in any manner claims or
allegations by you or Coastcast in connection with litigation or threatened
litigation.
14. DISPUTE RESOLUTION. It is understood and agreed that:
(a) ARBITRATION. In the event of any dispute, controversy, or claim
concerning this agreement, its validity, interpretation, enforcement, or breach,
the prevailing party, in addition to all other legal or equitable remedies
possessed, shall recover his or its
Xx. Xxxxxxx X. Xxxx
November 6, 1998
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reasonable attorneys fees and costs in connection with any such dispute,
controversy, or claim. Any such dispute, controversy, or claim shall be
resolved by arbitration in the County of Los Angeles, State of California, in
accordance with the then-existing commercial arbitration rules of the
American Arbitration Association, and judgment upon any award rendered by the
arbitrator(s) may be entered by any state or federal court having
jurisdiction thereof. The arbitrator shall have the authority only to
enforce the legal and contractual rights of the parties and shall not add to,
modify, disregard or refuse to enforce any contractual provision. The
arbitrator shall have no right, power or jurisdiction to award a party any
punitive or exemplary damages of any kind. The parties acknowledge and agree
that by entering into this Agreement they are agreeing to this arbitration
provision and are waiving all rights to a trial by jury. The provisions of
California Code of Civil Procedure Sections 1281, et seq. govern this
arbitration provision. The parties intend that this agreement to arbitrate
shall be valid, enforceable, and irrevocable.
(b) INJUNCTIVE RELIEF. This Paragraph 14 shall only operate to
require arbitration of claims for money damages. Should a party wish to seek
injunctive or other non-monetary relief, those claims shall be brought in a
court of competent jurisdiction.
15. REVOCATION OF AGREEMENT. It is understood, acknowledged, and agreed
that:
(a) AGE DISCRIMINATION. IN CONSIDERATION OF THE ADDITIONAL
SEPARATION PAYMENTS PROVIDED HEREUNDER, WHICH PAYMENTS AND BENEFITS ARE BEYOND
THOSE PROVIDED BY COASTCAST POLICY OR BY LAW, YOU ARE KNOWINGLY AND VOLUNTARILY
WAIVING VARIOUS RIGHTS AND CLAIMS, INCLUDING ANY POSSIBLE CLAIMS FOR AGE
DISCRIMINATION UNDER THE FEDERAL LAW KNOWN AS THE AGE DISCRIMINATION AND
EMPLOYMENT ACT OF 1967, AS AMENDED. YOU UNDERSTAND THAT THIS WAIVER DOES NOT
EXTEND TO RIGHTS OR CLAIMS THAT MAY ARISE AFTER THE DATE THIS AGREEMENT IS
EXECUTED.
(b) CONSULTATION WITH ATTORNEY. YOU HAVE BEEN GIVEN AN OPPORTUNITY
TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING THIS AGREEMENT. YOU HAVE BEEN
GIVEN A PERIOD OF AT LEAST 21 DAYS WITHIN WHICH TO CONSIDER THIS AGREEMENT AND
HAVE WAIVED THIS RIGHT AFTER CONSULTING WITH AN ATTORNEY.
(c) REVOCATION OF AGREEMENT. YOU UNDERSTAND THAT YOU MAY REVOKE THIS
AGREEMENT WITHIN SEVEN (7) DAYS FOLLOWING ITS EXECUTION, AND THAT THIS AGREEMENT
SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THIS SEVEN-DAY REVOCATION PERIOD
HAS EXPIRED. YOU MAY REVOKE THIS AGREEMENT ONLY BY GIVING WRITTEN NOTICE TO
COASTCAST WITHIN THE SEVEN (7) DAY PERIOD. IF YOU REVOKE THIS AGREEMENT, THIS
AGREEMENT BECOMES NULL AND VOID.
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November 6, 1998
Page 7
(d) APPROVAL BY COASTCAST BOARD OF DIRECTORS. YOU UNDERSTAND THAT
THE EFFECTIVENESS OF THIS AGREEMENT IS SUBJECT TO THE APPROVAL OF THE BOARD OF
DIRECTORS OF COASTCAST WITHIN THE SEVEN (7) DAY REVOCATION PERIOD DESCRIBED IN
SUBPARAGRAPH 15(c), ABOVE. IN THE EVENT THIS AGREEMENT IS NOT APPROVED BY THE
BOARD OF DIRECTORS, COASTCAST MAY REVOKE THIS AGREEMENT WITHIN SEVEN (7) DAYS
FOLLOWING ITS EXECUTION, AND THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR
ENFORCEABLE UNTIL THIS SEVEN-DAY REVOCATION PERIOD HAS EXPIRED. COASTCAST MAY
REVOKE THIS AGREEMENT ONLY BY GIVING WRITTEN NOTICE TO YOU WITHIN THE SEVEN (7)
DAY PERIOD. IF COASTCAST REVOKES THIS AGREEMENT, THIS AGREEMENT BECOMES NULL
AND VOID.
16. ENFORCEMENT OF AGREEMENT. Should any portion, word, clause,
phrase, sentence or paragraph of this Agreement be declared void or
unenforceable, such portion shall be considered independent and severable from
the Agreement, the validity of which shall remain unaffected.
Please confirm your agreement to the foregoing by dating and signing this
Agreement where indicated below and returning a signed copy to Coastcast.
Sincerely,
COASTCAST CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
Agreed this 6th day of November 1998.
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx Xxxx
