EXHIBIT 10.4
SEPARATION AGREEMENT AND RELEASE
This Agreement ("Agreement") is entered into this 2nd day of March, 2004 (the
"Effective Date") by and between Rayovac Corporation ("Rayovac") and Xxxxxxx X.
Xxxxxxx ("Executive").
WHEREAS, Executive is currently employed by Rayovac as Executive Vice
President - Strategic Initiatives; and WHEREAS, Executive and Rayovac are
parties to an Amended and Restated Employment Agreement dated October 1, 2002
(the "Employment Agreement"); and
WHEREAS, Rayovac has previously granted Executive options to purchase
shares of the Company's common stock as set forth on SCHEDULE A attached hereto
and made a part hereof (the "Stock Options"); and
WHEREAS, Executive owns two sets of common stock of Rayovac with unlapsed
restrictions as to transfer (collectively, "Restricted Stock") as of the
Effective Date. The first set of Restricted Stock is restricted by virtue of a
Rayovac Corporation Restricted Stock Award Agreement dated October 1, 2002, and
such agreement provided for the grant of Twenty-Eight Thousand Four Hundred and
Fifteen (28,415) shares of Restricted Stock. The restrictions on such shares are
all scheduled to lapse on September 30, 2005 in accordance with the terms of
such agreement (the "First Set"). The second set of Restricted Stock is
restricted by virtue of a Rayovac Corporation Restricted Stock Award Agreement
dated October 1, 2003, and such agreement provided for the grant of Twenty-Two
Thousand Two Hundred Sixty (22,260) shares of Restricted Stock. The restrictions
on such shares are all scheduled to lapse over the three year period following
the grant date of such Restricted Stock in accordance with the terms of such
agreement (the "Second Set"); and
WHEREAS, Executive has executed two Full Recourse Promissory Notes with
Rayovac, the first dated May 1, 2002 in the amount of One Hundred Thirty
Thousand and Two Dollars ($130,002) and the second dated August 11, 2000 in the
amount of Two Hundred Thousand Dollars ($200,000) (the "Notes"); and
WHEREAS, Rayovac and Executive desire to resolve all outstanding issues or
future issues of any kind and reach a full and final settlement as to the
Employment Agreement, the Stock Options, the Restricted Stock, the Notes and all
other issues relating to Executive's employment with Rayovac.
NOW THEREFORE, for and in consideration of the foregoing and of the terms,
conditions and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Executive and Rayovac agree as follows:
I. REGULAR EMPLOYMENT. Effective January 1, 2004, Executive shall serve as
Executive Vice President - Strategic Initiatives, and shall report to the
Chief Executive Officer of Rayovac. Executive's last day at this
EVP-Strategic Initiatives position with Rayovac will be March 31,2004.
II. CONTINUING EMPLOYMENT ON SPECIAL ASSIGNMENT.
a. DURATION. Executive will remain on special assignment from April 1,
2004 until September 30, 2005 (the "Special Assignment Period"), which
shall be Executive's last day of employment with Rayovac, during which
time Executive will be paid at his current base salary of Three
Hundred Twenty-Five Thousand Dollars ($325,000) ("Base Salary") per
annum. Deductions relating to the benefits set forth in Paragraph
lI(c) below and applicable U.S. federal and state taxes and other
required with holdings will be withheld from his wages.
b. DUTIES. While on special assignment, Executive will not be expected to
be present at Rayovac's offices, but will remain available for
consultation if Rayovac encounters a situation requiring
access to Executive's specialized knowledge.
c. BENEFITS. During the Special Assignment Period, Executive will be
eligible to participate in the following benefits available to Rayovac
employees residing in the U.S.: Rayovac's Comprehensive Medical Plan,
Dental Insurance Plan, Business Travel Accident Plan, Profit Sharing &
Savings Plan (401 (k)) Executive Deferred Compensation and Life
Insurance programs. Executive understands that, at the end of the
Special Assignment Period, he is entitled to pursue his "COBRA" rights
with respect to the continuation of medical insurance coverage
pursuant to the applicable plan provisions and will have conversion
options for the life and disability plans. Executive further
understands that the benefits conferred by this Agreement will be
governed by their respective plan terms. In addition, Executive shall
receive income tax planning and preparation services for tax years
2004 and 2005, will retain all privileges under Rayovac's corporate
membership at Xxxxxx'x Bay Country Club during the Special Assignment
Period, and is eligible to receive one executive physical during the
Special Assignment Period.
d. SETTLEMENT. Salary and benefits set forth in this Section II shall be
paid in full satisfaction of Executive's severance benefits and
the other benefits after termination, if any, called for
by the Employment Agreement.
e. BONUS. Executive shall be paid a bonus for fiscal year 2004, provided
and to the extent Rayovac achieves applicable performance objectives
for such fiscal year as determined by the Board of Directors.
Executive shall be paid a bonus for fiscal year 2005 in the amount of
One Hundred Ninety 2
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Five Thousand Dollars ($195,000) on or before December 31, 2005.
Executive shall not be eligible for any other bonus payments,
including any bonus for fiscal year 2006.
f. VACATION. Vacation benefits will accrue through September 30, 2004.
Payment for any unused, accrued vacation days will be made on or
before October 30, 2004. Executive will not earn or accrue additional
vacation benefits after September 30, 2004.
g. STOCK OPTIONS / STOCK GRANTS. Executive's Stock Options scheduled to
vest in October 2004 and in October 2005 shall so vest at such time.
Executive must exercise all vested options on or before October 30,
2005 or the Stock Options will be forfeited. No new Stock Options or
awards of Restricted Stock will be granted after the Effective Date;
provided, that Executive shall receive a cash award in lieu of an
equity grant for fiscal year 2004. The target amount of this award
will equal $108,333.33; payment will be made at such time equity
awards are granted to other Executive Committee members by the
Compensation Committee of the Board of Directors of Rayovac.
h. RESTRICTED STOCK. Executive and Rayovac agree that all restrictions on
the First Set of Restricted Stock and the Second Set of Restricted
Stock shall lapse in accordance with the terms of the Restricted Stock
Award Agreement governing such grants; provided, however, that any
Restricted Stock granted under the Second Set of Restricted Stock
still bearing restrictions on October 2, 2005 shall be forfeited to
Rayovac on such date. As soon as reasonably practicable after the
Effective Date, Executive shall deliver all certificates in
Executive's possession or under Executive's control (if any) relating
to such forfeited Restricted Stock to the Legal Department at
Rayovac's World Headquarters for cancellation.
i. VEHICLE. Executive shall be entitled to use his Rayovac-owned/leased
vehicle until September, 2005 in accordance with the terms, and
subject to the conditions, of the Executive Leased Vehicle Policy. In
accordance with the terms of such policy, Executive shall be entitled
to purchase such vehicle at book value in September, 2005. Executive
will be responsible for taxes relating to the fair market value of the
vehicle at the time of purchase.
j. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. Rayovac will credit
Executive's Supplemental Executive Retirement Plan ("SERP") account
with a Rayovac contribution made in accordance with the terms and
conditions of the SERP on October 1, 2004. Executive's SERP account
will continue to vest and accrue interest during the Special
Assignment Period in accordance with the terms and conditions of the
SERP. No additional contributions will be made after October 1, 2004.
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k. NOTES. Executive shall remain bound by the terms and conditions of the
Notes, including, without limitation, the obligation to make payments
of principal and interest on or before applicable dates specified in
such Notes. Notwithstanding the above, in no event may any principal
or interest under such Notes remain outstanding after September 30,
2005.
m. USE OF RAYOVAC EQUIPMENT. Executive shall enjoy the use of a
Rayovacowned personal computer (and associated software and
peripherals) and cellular telephone during the Special Assignment
Period. Rayovac will discontinue access to Rayovac networks and the
support of Rayovac's information services department as of September
30, 2004. Costs and expenses of cellular telephone service after
September 30, 2004 will be the sole responsibility and obligation of
Executive.
III. ACKNOWLEDGEMENT AND CONSIDERATION. Executive agrees that the payments and
benefits described in Paragraph II above and his continued employment on special
assignment are being provided in consideration for his signing this Agreement,
giving a release and covenant not to xxx, and not revoking under Paragraph XV so
that this Agreement becomes effective. Executive understands that he is not
otherwise entitled to many of the benefits provided under this Agreement and
that he will not receive these benefits unless he signs this Agreement and it
becomes effective.
IV. GENERAL RELEASE BY EXECUTIVE. Except as set forth in Paragraph V below,
Executive on his own behalf and for his spouse, heirs, successors, assigns,
executors and representatives of any kind, hereby releases and forever
discharges Rayovac, its subsidiaries and affiliates, and its and their
present and former employees, directors, officers, agents, shareholders, and
insurers, from any and all claims, demands, rights, liabilities, and causes
of action of any kind or nature, known or unknown, arising prior to, on or
after the execution date of this Agreement, including but not limited to any
claims, demands, rights, liabilities and causes of actions arising or having
arisen out of or in connection with his employment or his termination of
employment with Rayovac, except as provided in Paragraph V below or as
otherwise set forth in this Agreement. This release specifically includes,
but is not limited to, a release of any and all claims pursuant to the Age
Discrimination in Employment Act ("ADEA"), 29 U.S.C. Section 621 ET SEQ., the
Wisconsin Fair Employment Act, Wis. Stats., Sections 111.31-111.395, Title
VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e et seq., 42
U.S.C. Sections 1981-1986, the Civil Rights Act of 1991, the Americans with
Disabilities Act, all claims for defamation and wrongful discharge, and any
other claims whether based on contract or tort.
V. CLAIMS NOT WAIVED. Executive understands that this Agreement does not waive
any claims that he may have under (a) any worker's compensation law; (b) any
plan currently maintained by Rayovac that provides for retirement benefits; (c)
any law or any policy or plan currently maintained by Rayovac that provides
health insurance
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continuation or conversion rights; or (d) any claim that the Executive by law
may not waive.
VI. COVENANT NOT TO XXX. Executive understands and agrees that this Agreement
does prohibit Executive from initiating a lawsuit against Rayovac for any claim
released in Paragraph IV and does prohibit Executive from recovering any amounts
or obtaining any remedy for himself for any claim released under Paragraph IV
through an action or proceeding brought by others. Executive further understands
that if he violates any of the commitments he has made in this Agreement,
Rayovac may seek to recover or discontinue all of the payments, benefits and
other rights provided in exchange for acceptance of this Agreement. Executive
also agrees to pay Rayovac's costs, including attorneys' fees, incurred in
enforcing this Agreement, except as prohibited by law.
VII. CONFIDENTIALITY/NON-DISPARAGEMENT. Executive agrees to keep the terms of
this Agreement completely confidential, except that Executive may share
information concerning the terms of this Agreement with his family, and as
necessary for purposes of legal or tax advice, with his attorney and tax
advisor, subject to the understanding that his family, attorney and tax advisor
will also keep the terms of this Agreement completely confidential, and that any
breach by them will be considered a breach by Executive. Executive also agrees
not to make disparaging remarks to customers, suppliers or others about
Rayovac's business, products or employees.
VIII. NON-ADMISSION. This Agreement does not constitute an admission by either
party that any action it took prior to the date hereof with respect to the other
was wrongful, unlawful or in violation of any statute, law or regulation.
Instead, this Agreement is entered into solely for the purposes of compromise
and to clarify the parties' respective rights and obligations.
IX. BREACH OF AGREEMENTS BY EXECUTIVE. In the event that Executive breaches any
term or condition of this Agreement, or any other agreement in effect between
the parties, including those relating to treatment of confidential information
as set forth in confidentiality agreements previously executed by Executive,
Company shall have the right to immediately terminate the benefits which would
otherwise accrue to Executive under this Agreement.
X. PREVIOUS AGREEMENTS. The Employment Agreement between the parties dated
October 1, 2002, and all other agreements between the parties (excluding only
Stock Option Agreements, Restricted Stock Agreements and Notes specifically
referenced herein) are hereby terminated and all rights and obligations
thereunder are of no further force or effect. Executive understands and agrees
that this document contains the entire agreement between Executive and Rayovac
relating to his employment with Rayovac, that this agreement supersedes and
displaces any prior agreements and discussions between Executive and Rayovac
relating to such matters and that he may not rely on any such prior agreements
and discussions.
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XI. NON-COMPETE. Executive agrees as follows:
a. That during his employment with Rayovac through the end of the Special
Assignment Period, he will not, directly or indirectly, in any
capacity, either separately, jointly or in association with others, as
an officer, director, consultant, agent, employee, owner, principal,
partner or stockholder of any business, or in any other capacity,
engage or have a financial interest in any business which is involved
in the design, manufacturing, marketing or sale of batteries or
battery operated lighting devices (excepting only the ownership of not
more than 5% of the outstanding securities of any class of stock in a
company listed on a stock exchange) and conducts business in North
America.
b. Without limiting the generality of clause (a) above, Executive further
agrees that during his employment with Rayovac through the end of the
Special Assignment Period, he will not, directly or indirectly, in any
capacity, either separately, jointly or in association with others,
solicit or otherwise contact any of Rayovac's customers or prospects,
as shown by Rayovac's records, that were customers or prospects of
Rayovac at any time during the tenure of his employment with Rayovac
through the end of the Special Assignment Period if such solicitation
or contact is for the general purpose of selling products that satisfy
the same general needs as any products that Rayovac had available for
sale to its customers or prospects.
c. That during the tenure of his employment with Rayovac through the end
of the Special Assignment Period, he shall not, other than in
connection with employment for Rayovac, solicit the employment or
services of any employee of Rayovac who is or was an employee of
Rayovac at any time during the tenure of his employment with Rayovac
through the end of the Special Assignment Period. During the period
between the date hereof and the end of the Special Assignment Period,
the Executive shall not hire any employee of Rayovac for any other
business.
d. If a court determines that the foregoing restrictions are too broad or
otherwise unreasonable under applicable law, including with respect to
time or space, the court is hereby requested and authorized by the
parties hereto to revise the foregoing restrictions to include the
maximum restrictions allowed under the applicable law. For purposes of
this Paragraph XI and Paragraph XII, "Rayovac" refers to Rayovac and
any incorporated or unincorporated affiliates of Rayovac.
XII. CONFIDENTIAL INFORMATION
a. The Executive agrees to hold in strict confidence and, except as
Rayovac may authorize or direct, not disclose to any person or use
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any confidential information or materials received by the Executive
from Rayovac and any confidential information or materials of other
parties received by the Executive in connection with his employment
with Rayovac. For purposes of this Paragraph XII, confidential
information or materials shall include existing and potential customer
information, existing and potential supplier information, product
information, design and construction information, pricing and
profitability information, financial information, sales and marketing
strategies and techniques and business ideas or practices. The
restriction on the Executive's use or disclosure of the confidential
information or materials shall remain in force until the earlier of
(i) such information is of general knowledge in the industry through
no fault of the Executive or any agent of the Executive and (ii) the
date five (5) years from the end of the Special Assignment Period. The
Executive also agrees to return to Rayovac promptly upon its request
any Rayovac information or materials in the Executive's possession or
under the Executive's control.
b. For a period of five (5) years from the end of the Special Assignment
Period, the Executive will not disclose to any other person, firm or
entity any inventions, discoveries, improvements, trade secrets,
formulas, techniques, processes, know-how and similar matters, whether
or not patentable and whether or not reduced to practice, which are
conceived or learned by the Executive during the period of the
Executive's employment with Rayovac, either alone or with others,
which relate to or result from the actual or anticipated business or
research of Rayovac or which result, to any extent, from the
Executive's use of Rayovac's premises or property; provided, however,
that this Paragraph XII(b) shall be subject to any applicable law
relating to the disclosure of trade secrets.
c. Upon the request of Rayovac, Executive shall promptly deliver to
Rayovac all documents, data, records, notes, drawings, manuals and all
other tangible information in whatever form which pertains to Rayovac,
and the Executive will not retain any such information or any
reproduction or excerpt thereof.
XIII. GOVERNING LAW/DISPUTES/WAIVER OF JURY TRIAL. This Agreement shall be
construed under and governed by the laws of the State of Wisconsin, without
reference to its conflicts of law principles. Any disputes arising out of this
Agreement shall be brought in federal district court in Madison, Wisconsin. THE
PARTIES AGREE TO WAIVE ANY AND ALL RIGHTS THAT THEY MAY HAVE TO A JURY TRIAL
WITH RESPECT TO DISPUTES ARISING OUT OF THIS AGREEMENT.
XIV. VOLUNTARY AGREEMENT. Executive acknowledges and states that he has read and
understands this Agreement and has entered into it knowingly and voluntarily.
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XV. CONSIDERATION AND REVOCATION PERIOD. Executive hereby acknowledges that he
was given a copy of this Agreement and was given twenty-one (21) days to review
it and consider whether to sign it, and that he was encouraged by Rayovac to
consult an attorney during said twenty-one (21) day period about this Agreement.
He further understands that for a period of seven (7) days following his
execution of this Agreement, he may revoke the Agreement by doing so in writing
and that the Agreement will not become enforceable or effective until the
revocation period has expired without revocation. Any revocation must be
delivered to the Human Resources Department at Rayovac's World Headquarters.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
written below.
Rayovac Corporation Xxxxxxx X. Xxxxxxx
By: /S/ XXXXX X. XXXXX /S/ XXXXXXX X. XXXXXXX
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Name & Title: Xxxxx X. Xxxxx, CEO
Date: 3/2/04 Date: 3/2/04
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