SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is made as of the 19th day of
January, 1998 by and between XXXXXXX X. XxXXXXXXXX ("Employee") and SWEETHEART
HOLDINGS INC., a Delaware corporation (together with Sweetheart Cup Company
Inc., its wholly owned subsidiary, the "Company").
WHEREAS, the Employee and the Company entered into an Employment Agreement dated
May 15, 1994, a copy of which is attached as Exhibit A (the "Employment
Agreement"), pursuant to which the Employee was hired by the Company, elected
its President and Chief Executive Officer, and granted certain benefits with
respect to such position;
WHEREAS, the Company and Employee have agreed over time to additional benefits
to be granted to the Employee in consideration for his continued employment and
in recognition of the various undertakings and achievements by the Employee on
behalf of the Company;
WHEREAS, the Company's owners have decided in their discretion to sell an equity
interest in the Company to a third party (the "Transaction");
WHEREAS, as a result of the Transaction, the Employee and Company (hereafter the
"Parties") have agreed to terminate the Employment Agreement and the employment
relationship between the Parties; and
WHEREAS, the Parties desire to specify in a single document their respective
rights and obligations relating to the employment of the Employee arising on and
after the termination of Employee's employment with the Company.
NOW, THEREFORE, in recognition of the contribution to the Company by the
Employee during his term as President and Chief Executive Officer and in
consideration of the covenants undertaken and the releases contained in this
Agreement, and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties agree as follows:
1. Severance Consideration. In full consideration and as material
inducement of executing the Agreement, subject to the closing of the
Transaction, unless this Agreement is revoked as provided below:
a. On the date of the closing of the Transaction (the "Closing Date"),
the Company will pay to the Employee the following amounts, less legally
required, or otherwise agreed to, withholding:
(i) A separation payment in the gross amount of Five Hundred
Thousand Dollars ($500,000), which payment shall be made in satisfaction of the
requirements of Section 6 of the offer letter from the Company dated April 11,
1994 attached as Exhibit 1 to the Employment Agreement (the "Offer Letter");
(ii) A payment in the gross amount of Forty Two Thousand Dollars
($42,000), as payment for unused vacation time;
(iii) A payment of Three Hundred Eighty Five Thousand One Hundred
Sixty Six Dollars and Thirty Cents ($385,166.30), which payment is in full
satisfaction of the Company's obligations under the Stock Option and Purchase
Plan in accordance with the provisions of letter agreement between the Parties
substantially in the form attached as Exhibit B;
(iv) A payment of Three Hundred Seventy Five Thousand Dollars
($375,000), pursuant to, and in full satisfaction of the Company's obligations
under, the Special Incentive Agreement entered into by the Parties on December
9, 1996, a copy of which is attached as Exhibit C, and
(v) A payment of Eighty Five Thousand ($85,000), which is the
grossed up tax liability expected to be incurred by Employee in the sale of the
Employee's Company stock as part of the Transaction.
b. On or about the Separation Date, the Employee will notify the trustee
of the Executive Retention Pay Trust of the withdrawal of funds payable to the
Executive pursuant to the Executive Retention Pay Agreement (the "Retention
Agreement"), a copy of which is attached as Exhibit D. The Company agrees not to
raise any objection to such payment by the trustee, and at the Employee's
request, to notify the trustee in writing of a waiver by the Company of its
right to notice of payment to the Executive as required by the Retention
Agreement.
c. On or after the Separation Date, as defined below, Employee may
exercise his rights as provided under and in accordance with the terms of the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") to continue his
health care coverage by making monthly payments for such coverage.
d. The Company will, without duplication of any benefits specified in
(a), (b) or (c), above, also provide Employee with such other benefits to which
Employee is entitled under the terms of any applicable Company employee benefit
plan, including any tax-qualified retirement plan and the Relocation Agreement
dated December 19, 1997 between the Parties, a copy of which is attached as
Exhibit E.
e. Effective as of the Separation Date, the Employment Agreement is
terminated and of no further force or effect in any respect.
2. Compliance with Law. The Employee hereby acknowledges and agrees that
this Agreement and the termination of his employment and all actions taken in
connection therewith are in compliance with the Age Discrimination in Employment
Act and the Older Workers' Benefits Protection Act and that the release set
forth in this Agreement shall apply, without limitation, to any claims brought
under those Acts. The Employee further expressly acknowledges and agrees that:
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a. The release given by the Employee in this Agreement is given
solely in exchange for the consideration set forth in this Agreement which is in
addition to anything of value to which he was already entitled to receive before
entering into this Agreement;
b. By entering into this Agreement, the Employee does not waive
rights or claims that may arise under this Agreement, or which involve issues
not covered by this Agreement and which arise after the date this Agreement is
executed provided that any such claims involving issues not covered by this
Agreement which arise after the date hereof but before the Separation Date and
which are known to the Employee shall be deemed waived unless the Company
receives notification from the Employee in writing of the existence of such
claim on or before the Separation Date;
c. The Employee is hereby advised in writing by this Agreement to
consult with an attorney before signing this Agreement;
d. The Employee was given a copy of this Agreement on its
effective date and has twenty-one (21) days within which to consider acceptance
of this Agreement by executing and returning a copy to the Corporate Secretary
of the Company;
e. The Employee also has seven (7) days following the execution
of this Agreement in which to revoke the Agreement. Any revocation of the
Agreement must be in writing and delivered to the Corporate Secretary of the
Company during the revocation period. This Agreement will become effective and
enforceable seven (7) days following execution by the Employee unless revoked as
provided herein.
3. Separation Date, Resignation. The Employee acknowledges that his last
day of employment with the Company (the "Separation Date') will, unless
otherwise agreed to by the Parties, be the Closing Date. On or before and
effective as of the Separation Date, the Employee agrees to execute and deliver
to the Company a letter of resignation from all positions held with the Company
or any of its subsidiaries.
4. Reason for Separation. The Employee's employment records will show
that the Employee resigned from the Company by mutual agreement between the
Parties. For the purposes of the Severance Consideration of this Agreement the
Company shall be considered to have terminated the Employee's employment without
cause, as that term may be used in any agreement with the Employee.
5. Non-Admission. The Employee agrees and acknowledges that neither this
Agreement nor the Company's offer to enter into this Agreement should be
construed as an admission by the Company that it has acted wrongfully towards
the Employee or anyone else, and that the Company expressly denies any liability
to or having engaged in any wrongful acts or omissions against the Employee.
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6. Statements Regarding the Company or Employee.
a. Employee agrees not to make any statements in any form concerning the
Company, his employment with the Company, or the termination of his employment
with the Company to any person or entity if such statements are injurious or
inimical to the best interests of the Company.
b. The Company agrees not to make, and to use its best efforts to
prevent any party to the Transaction from making, any statements in any form
concerning the Employee, his employment with the Company, or the termination of
his employment with the Company to any person or entity if such statements are
injurious or inimical to the best interests of the Employee.
7. Confidentiality. Prior to any public disclosure required by law, the
Parties agree to keep the terms, conditions and fact of this Agreement
completely confidential and not to disclose any information concerning this
Agreement to any other person, except those employees of the Company who require
such information to perform their duties and the Employee's immediate family,
personal financial advisor, tax advisor and attorney.
8. Shareholder Rights and Obligations. The terms of this Agreement shall
not affect in any way any rights or obligations of the Parties with respect to
the Employee's status as a shareholder of the Company or any rights or
obligations arising out of the Transaction as a result of Employee's status as a
shareholder of the Company.
9. Mutual General Releases.
a. Except as provided above, the Employee, on behalf of himself and his
heirs, executors, administrators, successors and assigns, hereby covenants not
to xxx and hereby fully releases, dismisses, and forever discharges the Company
and its affiliated entities, as well as its and their trustees, directors,
officers, agents, employees, stockholders, attorneys, insurers, representatives,
predecessors, assigns, successors, transferees, and any parties to the
Transaction (hereinafter collectively referred to as the "Company Released
Parties") from any and all actions, causes of action, lawsuits, claims,
counterclaims, demands, debts, obligations, damages, judgments, orders, and
liabilities of whatever nature, whether known or unknown, which he now owns or
holds or has at any time owned or held or may in the future own or hold, arising
out of or in any way connected, directly or indirectly, with his employment
relationship with the Company or the termination thereof or any other
occurrences, acts, or omissions or any loss, damage, or injury whatsoever, known
or unknown, including, without limiting the generality of the foregoing, any
claim of breach of contract, wrongful discharge, torts of any kind, any common
law claims now or hereafter recognized, and any claims arising under federal,
state or local laws or ordinances, including but not limited to, Title VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967,
the Older Workers Benefits Protection Act, the Americans With Disabilities Act,
the Civil Rights Act of 1991, the Family and Medical Leave Act, the
Rehabilitation Act of 1973, the Employee Retirement Income Security Act of 1974,
the Consolidated Omnibus Budget Reconciliation Act, the Worker Adjustment and
Retraining Notification Act, the Occupational Safety and Health Act, and the
False Claims Act which the Employee may have against any of the Company Released
Parties.
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b. Except as provided above, the Company, on behalf of itself and its
successors and assigns, hereby covenants and agrees, and further agrees to use
its best efforts to induce any party to the Transaction, not to xxx and hereby
fully releases, dismisses, and forever discharges the Employee and his heirs,
executors, administrators, successors and assigns (hereinafter collectively
referred to as the "Employee Released Parties") from any and all actions, causes
of action, lawsuits, claims, counterclaims, demands, debts, obligations,
damages, judgments, orders, and liabilities of whatever nature, whether known or
unknown, which they at any time in the past had, or now or at any time may in
the future have, arising out of or in any way connected, directly or indirectly,
with the Employee's employment relationship with the Company or the termination
thereof or any other occurrences, acts, or omissions or any loss, damage, or
injury whatsoever, known or unknown, including, without limiting the generality
of the foregoing, any claim of breach of contract, wrongful discharge, torts of
any kind, any common law claims now or hereafter recognized, which the Company
or any party to the Transaction may have against any of the Employee Released
Parties, and hereby affirmatively approves and ratifies all actions taken by the
Employee as President and Chief Executive Officer of the Company and agrees to
defend and hold Employee harmless from any claim whatsoever involving any such
actions.
10. Assistance to the Company. Employee agrees that following the
Separation Date, except in the event of death or a permanent disability that
prevents Employee's cooperation, Employee shall, upon reasonable notice, furnish
such information and give such assistance to the Company in any matter involving
Employee's former position as President and Chief Executive Officer as may
reasonably be requested by the Company. The Company shall compensate Employee in
an amount mutually agreed upon for such services, and reimburse the Employee for
all reasonable expenses incurred while so assisting the Company. Employee is not
obligated to assist in any controversy or litigation between the Company and
Employee.
11. Re-employment. The Employee agrees not to apply for, seek, or
otherwise attempt to obtain employment with the Company or any of its affiliates
and that the Company or any of its affiliates or successors shall be under no
obligation to reemploy the Employee.
12. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or
mailed by certified or registered mail, return receipt requested and postage
prepaid, to the recipient. Such notices, demands and other communications shall
be sent to the Employee and to the Company at the addresses indicated below:
(a) If to the Employee:
Xx. Xxxxxxx X. XxXxxxxxxx
00000 Xxxxxxxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
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(b) If to the Company:
Sweetheart Holdings Inc.
00000 Xxxxxxxxxxxx Xx.
Xxxxxx Xxxxx, XX 00000
Attention: Corporate Secretary
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
13. Merger of Understanding. Except as otherwise specifically provided
herein, this Agreement constitutes and contains the entire agreement and
understanding concerning the Employee's employment, the termination thereof and
the other matters addressed herein between the parties, and supersedes and
replaces all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matter hereof. This Agreement
shall not be modified, altered, changed or amended in any respect unless in
writing and signed by the Parties.
14. Savings Clause. If any provision of this Agreement or the
application thereof is held invalid, the invalidity will not affect other
provisions or applications of this Agreement which can be given effect without
the invalid provisions or applications and to this end the provisions of this
Agreement are declared to be severable.
15. Governing Law, Arbitration.
a. This Agreement will be deemed to have been executed and
delivered within the State of Maryland, and the rights and obligations of the
parties hereunder will be construed and enforced in accordance with, and
governed by, the laws of the State of Maryland without regard to principles of
conflict of laws.
b. Any dispute arising under this Agreement shall be submitted to
binding arbitration initiated in accordance with the rules of the American
Arbitration Association in Baltimore, Maryland. The results of such proceedings
shall be conclusive and shall not be subject to judicial review. The Company
agrees to pay the entire cost of any arbitration or legal proceeding arising
from any dispute hereunder, including the legal fees of Employee or his
beneficiary, regardless of the outcome of any such proceeding, unless the
arbitrators or the court hearing such proceeding determines that the Employee's
or beneficiary's claim was submitted in bad faith, in which event the Company
shall not pay any legal fees and expenses of the Employee or beneficiary.
16. Execution in Counterparts. This Agreement may be executed in
counterparts, and each counterpart, when executed, will have the efficacy of a
signed original. Photographic copies of such signed counterparts may be used in
lieu of the originals for any purpose.
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17. Waiver. The failure of either party to enforce strictly any
provision of this Agreement shall not be construed as a waiver thereof or as
excusing the other party from future performance.
THE EMPLOYEE ACKNOWLEDGES AND REPRESENTS THAT HE HAS READ AND ACCEPTS
AND AGREES TO THE PROVISIONS OF THIS AGREEMENT AND HAS HAD SUFFICIENT TIME AND
OPPORTUNITY TO CONSULT WITH INDIVIDUALS OF THE EMPLOYEE'S OWN CHOICE, EXCEPT AS
LIMITED BY THE CONFIDENTIALITY PROVISIONS OF THIS AGREEMENT. THE EMPLOYEE
EXECUTES THIS AGREEMENT VOLUNTARILY WITH FULL UNDERSTANDING OF ITS CONSEQUENCES.
EMPLOYEE
/s/ Xxxxxxx X. XxXxxxxxxx
-------------------------
Xxxxxxx X. XxXxxxxxxx
SWEETHEART HOLDINGS INC.
ATTEST:
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
/s/ Xxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxx
--------------------
Xxxxxx X. Xxxxxx Its Chairman
Corporate Secretary
[CORPORATE SEAL]
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EXHIBITS OMITTED
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ACKNOWLEDGEMENT
I, Xxxxxxx X. XxXxxxxxxx, hereby acknowledge that I was given twenty-one (21)
days to consider the foregoing Agreement and voluntarily chose to sign the
Agreement prior to the expiration of the 21-day period. I further acknowledge
that the seven (7) day period for revocation of this Agreement commences on the
date set forth below.
Executed this 22nd day of January, 1998
EMPLOYEE
/s/ Xxxxxxx X. XxXxxxxxxx
-------------------------
Name: Xxxxxxx X. XxXxxxxxxx
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