SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"), dated
as of January 24, 2005, by and between Jarden Corporation, a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxxxx ("Executive").
W I T N E S S E T H:
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WHEREAS, the Company and the Executive are parties to an Amended and
Restated Employment Agreement entered into as of October 1, 2003 (the
"Employment Agreement"); and
WHEREAS, the Company desires to continue to employ Executive as Chairman
and Chief Executive Officer of the Company on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is willing to continue to be employed as Chairman and
Chief Executive Officer of the Company on such terms and conditions; and
WHEREAS, prior to the Company entering into that certain Stock Purchase
Agreement dated as of September 19, 2004 (the "AHI Purchase Agreement") with
American Household, Inc. ("AHI") and the Purchase Agreement ("Warburg Purchase
Agreement") dated as of September 19, 2004 with Warburg Pincus, the members of
the Compensation Committee considered potential future compensation for senior
executives provided that the AHI transaction closed and retained independent
consultants to assist with this review; whereupon, based on the results of its
review and conditioned on several factors including (i) full Board approval,
(ii) the closing of the acquisition of AHI, and (iii) the Compensation Committee
finalizing discussions on the proposals with its independent consultants, the
Compensation Committee thereafter concluded that it would recommend that the
Board adopt the compensation arrangements in this Amended and Restated Agreement
including the increase in salary and award of Restricted Stock (as defined
below) generally having vesting as follows: (i) 50% vesting when the Company's
stock price equals or exceeds 156.25% of the $32 stock price set for the Warburg
Pincus Series B Preferred Stock conversion price ("Preferred Conversion Price"),
and (ii) the remaining Restricted Stock vesting when the Company's stock price
equals or exceeds 200% of the Preferred Conversion Price. The Preferred
Conversion Price was agreed by the Board at its September 14, 2004 Board meeting
to be a slight premium to the average closing price of the Company's stock
during the prior thirteen days of September; and
WHEREAS, the Compensation Committee of the Company's Board of Directors and
the Company's Board of Directors, at meetings duly called and held, have each
authorized and approved the execution and delivery of this Agreement by the
Company; and
WHEREAS, the Company and Executive desire to enter into this Agreement
which shall be deemed to amend, restate and replace the Amended and Restated
Employment Agreement between the Company and Executive, dated as of October 1,
2003.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the Company and Executive hereby agree as follows:
1. Employment. Upon the terms and subject to the conditions of this
Agreement, the Company hereby continues to employ Executive as Chairman and
Chief Executive Officer of the Company through December 31, 2008, and Executive
hereby agrees to such employment, upon the terms and subject to the conditions
set forth in this Agreement. Notwithstanding the foregoing, it is understood and
agreed that the Executive from time to time may (a) be appointed to additional
offices or to different offices than those set forth above, (b) perform such
duties other than those set forth above, and/or (c) relinquish one or more of
such offices or other duties, in each instance as may be mutually agreed to by
and between the Company and the Executive and that no such action shall be
deemed or construed to otherwise amend or modify any of the remaining terms or
conditions of this Agreement. The period during which Executive is employed
pursuant to this Agreement shall be referred to as the "Employment Period."
2. Position, Duties and Location. During the Employment Period, Executive
shall, subject to the provisions of Section 1 above, serve as Chairman and Chief
Executive Officer of the Company and shall be nominated for election, and if so
elected shall continue to serve, as a member of the Board of Directors of the
Company and, unless the Company and Executive shall jointly determine otherwise,
Chairman of the Board of Directors of the Company (the "Board"). During the
Employment Period, Executive shall have the duties, responsibilities and
obligations (a) as are customarily assigned to individuals serving as the
Chairman and Chief Executive Officer of comparable companies and (b) as have
been assigned, exercised or assumed in accordance with past practice, together
with such other duties, responsibilities and obligations consistent with such
positions as the Board shall from time to time specify, provided that such
additional duties, responsibilities and obligations are fair and reasonable
under the circumstances, do not unreasonably increase the demands upon the
Executive's time or energies, and are not inconsistent with the Executive's
position as Chairman and Chief Executive Officer. During the Employment Period,
the Executive will be the most senior executive to report to the Board. The
Executive shall devote such time and energy to the business and affairs of the
Company as he deems reasonably necessary to perform the duties of these
positions and shall use his best efforts, skills and abilities to improve and
advance the business and interests of the Company and its subsidiaries. Without
limiting the generality of the foregoing, the Company hereby acknowledges that
the Executive has certain responsibilities to Xxxxxx Capital, M Capital and
related companies, and, provided that the Executive otherwise has performed his
duties on behalf of the Company hereunder, the Company agrees that nothing
contained in this Agreement shall interfere with such responsibilities. Nothing
contained in this Section 2 shall preclude Executive from (i) serving on the
board of directors of any business corporation, unless such service would be
contrary to applicable law, (ii) serving on the board of directors of, or
working for, any charitable or community organization or (iii) pursuing his
personal financial and legal affairs, so long as such activities, individually
or collectively, do not interfere with the performance of Executive's duties
hereunder or violate any of the provisions of Section 6 hereof. Executive's
place of employment shall be at the Company's principal executive office in Rye,
New York throughout the term of this Agreement.
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3. Compensation.
(a) Base Salary. Commencing as of January 1, 2005 and continuing through
the Employment Period, the Company shall pay to the Executive and the Executive
shall accept from the Company, as compensation for the performance of services
under this Agreement and the Executive's observance and performance of all of
the provisions hereof, a salary of $1,840,000. The Board (or the appropriate
committee of the Board) shall annually review Executive's base salary and shall
be increased by a minimum of the Consumer Price Index. In addition, the Board
(or the appropriate committee of the Board) shall annually review Executive's
base salary in light of competitive practices, the base salaries paid to other
executive officers of the Company and the performance of Executive and the
Company, and may, in its discretion, increase such base salary by any additional
amount it determines to be appropriate; provided, however, that any such
increase shall not reduce or limit any other obligation of the Company
hereunder. Executive's base salary (as set forth herein or as may be increased
from time to time) shall not be reduced. Executive's base salary payable
hereunder, as it may be increased from time to time is referred to herein as
"Base Salary." The Company shall pay Executive his Base Salary in accordance
with the normal payroll practices of the Company for its executive officers, but
in no event less frequently than once per month.
(b) Annual Bonus. The Executive shall be eligible for a bonus package based
on performance. The decision as to whether to pay the Executive an additional
bonus based on operations, as well as the amounts and terms of any such bonus
package, shall be determined by the Compensation Committee of the Board of
Directors as part of its annual budget review process. In addition to any other
bonus(es), whether based on performance, operations or otherwise, that the
Compensation Committee may award to Executive, the Company's bonus program shall
(a) provide that Executive shall have the opportunity to earn 50% of Base
Compensation in each year of the Employment Period if the Company achieves the
Company's budgeted earnings per share target as approved by the Board of
Directors or, for each year of the Employment Period for which the Company
achieves 110% of the Company's earnings per share target, 100% of Base
Compensation, and (b) provide for the Executive to receive a discretionary bonus
of up to 100% of Base Compensation (the "Discretionary Bonus") for services
specifically performed relating to exceptional performance related to other
corporate activity undertaken by the Company in any year. Any Discretionary
Bonus shall be determined in the sole discretion of either the Board of
Directors or its Compensation Committee, but must be approved by the Warburg
Pincus designated director in the case of any award in respect of calendar 2005
and 2006.
(c) Restricted Stock. In addition to any restricted shares previously
issued under the Employment Agreement or evidenced by the restricted stock grant
agreement dated August 5, 2004, upon the AHI Acquisition Closing (as defined
below), Executive shall be entitled to receive a grant of 915,000 shares of
restricted stock (the "Restricted Stock") under the Company's 2003 Stock
Incentive Plan (the "Plan") or such other similar stock plan that the Company
may have in place. The Company shall use its commercially reasonable efforts to
obtain stockholder approval for a new equity compensation plan or an amendment
to the 2003 Plan to provide the Company with sufficient availability to grant
such Restricted Stock.
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Promptly after stockholder approval of such new plan or the amended 2003 Plan,
the Company shall grant Executive the Restricted Stock. In the event that the
Company does not have a stock incentive plan in place on or prior to December
31, 2005 with enough shares to be granted to the Executive, the Company shall
grant to the Executive such number of shares of Restricted Stock that are
available under the Company's stock incentive plans, and in lieu of any shares
of Restricted Stock not granted (the "Remaining Stock"), Executive shall receive
a mutually acceptable compensation package having a value equivalent to the
value of the shares of Remaining Stock not issued to the Executive as determined
in good faith by the Compensation Committee or Board of Directors, as the case
may be.
The restrictions on the award shall lapse as follows: (i) 50% on the date
that the stock price of the common stock of the Company equals or exceeds fifty
dollars ($50.00) for ten (10) consecutive trading days (measured on a VWAP
basis) prior to the third anniversary of the restricted stock grant, (ii) 100%
on the date that the stock price of the common stock of the Company equals or
exceeds sixty-four dollars ($64.00) for ten (10) consecutive trading days
(measured on a VWAP basis) prior to the fifth anniversary of the restricted
stock grant or (iv) the date there is a Change of Control (as defined in Section
5(d) hereof) of the Company and either (a) the Company's stock price is higher
than $32 per share at the time of the Change of Control or (b) the Board of
Directors approves, in its sole discretion, such vesting. If the Executive is
either fired by the Company or leaves voluntarily, Executive will surrender all
unvested Restricted Stock issuable pursuant to this paragraph. The number of
shares granted and the target share price shall be adjusted for changes in the
common stock as outlined in Section 18.1 of the Plan or as otherwise mutually
agreed in writing between the parties. The terms of the Restricted Stock granted
hereunder shall each be set forth in a Restricted Stock Award Agreement,
substantially similar to the form used for the 2003 restricted share grant to
Executive.
4. Benefits, Perquisites and Expenses.
(a) Benefits. During the Employment Period, Executive shall be eligible to
participate in (i) each welfare benefit plan sponsored or maintained by the
Company or currently made available to the Employee, including, without
limitation, each group life, hospitalization, medical, dental, health, accident
or disability insurance, cafeteria or similar plan or program of the Company,
(ii) each pension, retirement, deferred compensation or savings plan sponsored
or maintained by the Company, and (iii) to the extent of any awards made from
time to time by the Board committee administering the plan, each stock option,
restricted stock, stock bonus or similar equity-based compensation plan
sponsored or maintained by the Company, in each case, whether now existing or
established hereafter, to the extent that Executive is eligible to participate
in any such plan under the generally applicable provisions thereof. Nothing in
this Section 4(a) shall limit the Company's right to amend or terminate any such
plan in accordance with the procedures set forth therein.
(b) Perquisites. During the Employment Period, Executive shall be entitled
to four weeks of paid vacation annually, shall be entitled to observe, with pay,
all religious holidays historically observed by Executive and shall also be
entitled to receive such perquisites as are generally provided to other senior
executive officers of the Company in accordance with the then current policies
and practices of the Company. For security purposes, the Executive shall be
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required to use at Company expense private aircraft transportation for travel in
North America unless a private aircraft is not reasonably available. Outside
North America he shall be entitled to first class air travel for business
related travel. The Company shall bear expenses for the Executive's use of the
private aircraft that does not exceed 75 hours in any calendar year. In
addition, during the Employment Period, Executive shall receive, at the
Company's expense:
(i) the assistance of the Company's tax advisors in regard to personal
tax planning and preparing personal income tax returns; and
(ii) a split-dollar life insurance policy, or equivalent, on the
Executive in the amount of $10 million (including the $5 million policy
currently in place) payable to such beneficiaries as Executive shall select.
(c) Business Expenses. During the Employment Period, the Company shall pay
or reimburse Executive for all reasonable expenses incurred or paid by Executive
in the performance of Executive's duties hereunder upon presentation of expense
statements or vouchers and such other information as the Company may require and
in accordance with the generally applicable policies and procedures of the
Company. In addition, the Company shall provide the Executive with a
non-accountable supplemental benefit expense up to 5% of Executive's Base Salary
per year, to be used against any expenses incurred by Executive that may be
un-reimbursed pursuant to the sentence above or otherwise.
(d) Indemnification. The Company shall indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising
from or out of Executive's performance as an officer, director or employee of
the Company or any of its subsidiaries or in any other capacity during the
Employment Period including, but not limited to, any fiduciary capacity in which
Executive serves at the request of the Company, in each instance to the maximum
extent permitted by applicable law and the Company's Amended and Restated
Certificate of Incorporation and By-Laws, each as existing on the date hereof
and as amended by amendments favorable to Executive.
(e) D & O Insurance. The Company agrees that for six (6) years and one (1)
business day after the expiration or earlier termination of the Employment
Period the Company shall obtain and provide at its expense directors' and
officers' liability insurance or directors' and officers' liability tail
insurance policies covering the Executive with respect to acts or omissions
occurring during Executive's employment with the Company with coverage and
amounts (including with respect to the payment of attorney's fees) equal to or
greater than those of the Company's policy in effect on the date hereof.
(f) Non-exclusivity of Rights. The rights of the Executive under Sections
4(d) and 4(e) shall be in addition to any rights he may have under the articles
of incorporation or bylaws of the Company, any agreement providing for
indemnification, or under the laws of the State of Delaware or any other
applicable laws.
(g) Medical Expense Allowance. Executive will be entitled to, if for any
reason Executive shall not be covered by a health insurance policy of the
Company, an annual
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medical, dental, vision care and other health care allowance of up to $30,000
for unreimbursed medical, dental, vision care and other health care expenses
incurred by Executive or any of his immediate family members submitted in
accordance with expense procedures.
5. Termination of Employment.
For purposes of Sections 5 and 6, the terms "Additional Termination
Benefits", "Change of Control", "Disability", "Earned Salary", "Severance
Benefits", "Termination for Cause", "Termination for Good Reason", "Termination
Not for Good Reason", "Termination Without Cause" and "Vested Benefits" shall
have the meanings ascribed to such terms in Section 5(d) hereof.
(a) Early Termination of the Employment Period. Notwithstanding any
provision of Section 1, the Employment Period shall end upon the earliest to
occur of (1) a termination of Executive's employment on account of Executive's
death, (2) a termination due to Executive's Disability, (3) a Termination for
Cause, (4) a Termination Without Cause, (5) a Termination for Good Reason or (6)
a Termination Not for Good Reason.
(b) Benefits Payable Upon Early Termination; Change of Control;
Non-Renewal. If (1) an early termination of the Employment Period occurs
pursuant to Section 5(a) hereof, (2) following a Change of Control of the
Company after which the Executive remains employed by the Company or its
successor under the terms of this Agreement, or (3) in the event this Agreement
is not renewed upon or prior to its expiration on equal or more favorable terms
(a "Non-Renewal"), Executive (or, in the event of his death, his surviving
spouse, if any, or his estate) shall be paid the type or types of compensation,
without duplication, determined to be payable in accordance with the following
table at the times established pursuant to Section 5(c):
Additional
Termination Severance
Earned Salary Vested Benefits Benefits Benefits
------------- --------------- -------- --------
Termination due to death Payable Payable Payable/ to be Payable
provided
Termination due to Disability Payable Payable Payable/ to be Not payable
provided
Termination for Cause Payable Payable Not available Not payable
Termination for Good Reason Payable Payable Payable/ to be Payable
provided
Termination Without Cause Payable Payable Payable/ to be Payable
provided
Termination Not for Good Payable Payable Not available Not payable
Reason
Change of Control of the Not payable Not payable Not available Not Payable
Company (without Termination)
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Additional
Termination Severance
Earned Salary Vested Benefits Benefits Benefits
------------- --------------- -------- --------
Non-Renewal (as defined above) Payable Payable Payable/ to be Not Payable
provided
(c) Timing of Payments. Earned Salary shall be paid in cash in a single
lump sum as soon as practicable following the end of the Employment Period, but
in no event more than 10 days thereafter; provided, that if Executive's
termination is in conjunction with a Change of Control, Executive shall be paid
his Earned Salary on the earlier to occur of (a) five (5) days after the
effective date of Executive's termination and (b) on the date of such Change of
Control. Vested Benefits shall be payable in accordance with the terms of the
plan, policy, practice, program, contract or agreement under which such benefits
have been awarded or accrued. Additional Termination Benefits shall be provided
or made available at the times specified below as to each such Additional
Termination Benefit. Unless otherwise specified, Severance Benefits shall be
paid in a single lump sum cash payment as soon as practicable, but in no event
later than 10 days after the Executive's termination; provided, that if
Executive's termination is in conjunction with a Change of Control, Executive
shall be paid his Severance Benefits on the earlier to occur of (a) five (5)
days after the effective date of Executive's termination and (b) on the date of
such Change of Control.
(d) Definitions. For purposes of Sections 5 and 6, capitalized terms have
the following meanings:
"Additional Termination Benefits" means, the benefits described below:
(i) All of the Executive's benefits accrued under the employee option,
pension, retirement, savings and deferred compensation plans of the Company
shall become vested in full (other than with respect to the Restricted Stock to
be granted hereunder, the terms of which are separately addressed in Section
3(c) hereof); provided, however, that to the extent such accelerated vesting of
benefits cannot be provided under one or more of such plans consistent with
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), such benefits shall be paid to the Executive in a lump sum within 10
days after termination of employment outside the applicable plan; and
(ii) Executive (and his dependents, if any) will be entitled to
continue participation in all of the Company's medical, dental and vision care
plans (the "Health Benefit Plans"), until the third anniversary of Executive's
termination of employment (second anniversary in the case of termination due to
death); provided that Executive's participation in the Company's Health Benefit
Plans shall cease on any earlier date that Executive (and his dependents, if
any) becomes eligible for comparable benefits from a subsequent employer.
Executive's participation in the Health Benefit Plans will be on the same terms
and conditions (including, without limitation, any contributions that would have
been required from Executive) that would have applied had Executive continued to
be employed by the Company. To the extent any such benefits cannot be provided
under the terms of the applicable plan, policy or
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program, the Company shall provide a comparable benefit under another plan or
from the Company's general assets.
"Change of Control of the Company" means and shall be deemed to have
occurred if:
(i) any person (within the meaning of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), other than the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of Voting Securities representing 50 percent or more of
the total voting power of all the then-outstanding Voting Securities; or
(ii) the individuals who, as of the date hereof, constitute the Board,
together with those who first become directors subsequent to such date and whose
recommendation, election or nomination for election to the Board was approved by
a vote of at least a majority of the directors then still in office who either
were directors as of the date hereof or whose recommendation, election or
nomination for election was previously so approved (the "Continuing Directors"),
cease for any reason to constitute a majority of the members of the Board; or
(iii) the stockholders of the Company approve a merger, consolidation,
recapitalization or reorganization of the Company or a subsidiary, reverse split
of any class of Voting Securities, or an acquisition of securities or assets by
the Company or a subsidiary, or consummation of any such transaction if
stockholder approval is not obtained, provided, that any such transaction in
which the holders of outstanding Voting Securities immediately prior to the
transaction receive (or, in the case of a transaction involving a subsidiary and
not the Company, retain), with respect to such Voting Securities, voting
securities of the surviving or transferee entity representing more than 60
percent of the total voting power outstanding immediately after such transaction
shall not be deemed a Change of Control if the voting power of each such
continuing holder relative to other such continuing holders not substantially
altered in such transaction; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
"Disability" means long-term disability within the meaning of the Company's
long-term disability plan under which Executive is covered at the time of
determination.
"Earned Salary" means any Base Salary earned, but unpaid, for services
rendered to the Company on or prior to the date on which the Employment Period
ends pursuant to Section 5(a) hereof.
"Severance Benefits" means an amount equal to (A) three times (two times in
the case of termination due to death) Executive's annualized Base Salary in
effect on the date of termination, plus (B) three times (two times in the case
of termination due to death) the average
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annual bonus paid to the Executive over the two immediately preceding fiscal
years, including any annual bonus paid pursuant to Section 3(b), plus (C),
except in the case of Non-Renewal, the Executive's accrued annual bonus through
the date of termination as determined in accordance with clause (B) above.
"Termination for Cause" means a termination of Executive's employment by
the Company within 30 days after the occurrence of (i) Executive's conviction of
a felony or a crime involving moral turpitude, or (ii) Executive's willful and
continued failure to perform the material duties of his position (other than as
a result of Disability) if such failure continues for a period of 30 days after
Executive's receipt of written notice from the Company specifying the exact
details of such alleged failure and such alleged failure has had (or is expected
to have) a material adverse effect on the business of the Company or its
subsidiaries; provided, that if the details of a Termination for Cause were the
subject of two previous notices required hereunder, the Company may terminate
this Agreement as a Termination for Cause without the provision of any
additional notice and cure period.
"Termination for Good Reason" means a termination of Executive's employment
by Executive following (i) a diminution in Executive's positions, duties and
responsibilities from those described in Section 2 hereof, (ii) the removal of
Executive from his position as either Chairman of the Board or Chief Executive
Officer of the Company, or the failure to re-elect Executive as Chairman of the
Board of the Company, unless the Company and Executive shall mutually agree to
such removal or failure, as applicable, in writing prior to such action being
taken, (iii) a reduction in Executive's Base Salary, (iv) a material breach by
the Company of any other provision of this Agreement or (v) a Change in Control
of the Company (but in no event later than six months after such Change of
Control); provided, that for any termination pursuant to (i) and (iv) above,
Executive shall provide the Company's Board of Directors with 30 days prior
written notice of such good reason termination specifying the exact details of
such alleged diminution or material breach and the Company shall have 15 days
from the date of its receipt of such notice to cure such breach or reverse or
correct such diminution to the reasonable satisfaction of Executive; provided,
further, that if the details of a good reason termination under section (i) and
(iv) above was the subject of two previous notices hereunder, Executive may
terminate this Agreement as a Termination for Good Reason without the provision
of any additional notice and cure period.
"Termination Not For Good Reason" means any termination of Executive's
employment by Executive other than Termination for Good Reason or a termination
due to Executive's Disability or death.
"Termination Without Cause" means any termination of Executive's employment
by the Company other than a Termination for Cause or a termination due to
Executive's Disability.
"Vested Benefits" means amounts which are vested or which Executive is
otherwise entitled to receive under the terms of or in accordance with any plan,
policy, practice or program of, or any contract or agreement with, the Company
or any of its subsidiaries, at or
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subsequent to the date of his termination without regard to the performance by
Executive of further services or the resolution of a contingency.
"Voting Securities or Security" means any securities of the Company which
carry the right to vote in the election of, or participate in the appointment
of, the Company's directors.
(e) Full Discharge of Obligations. Except as expressly provided in the last
sentence of this Section 5(e), the amounts payable and obligations owed to
Executive pursuant to this Section 5 and Section 7(d) following termination of
his employment (including amounts payable with respect to Vested Benefits) shall
be in full and complete satisfaction of Executive's rights under this Agreement.
Except as otherwise set forth in Section 6, after the effective date of a
termination of employment for any reason, Executive shall have no further
obligations or liabilities to the Company. Nothing in this Section 5(e) shall be
construed to release the Company from its obligations described in Sections
3(c), 4(d) and 4(e).
(f) Excise Tax Gross-Up.
(i) Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment, distribution or benefit provided
(including, without limitation, the acceleration of any payment, distribution or
benefit and the acceleration of exercisability of any stock option) to Executive
or for his benefit (whether paid or payable or distributed or distributable)
pursuant to the terms of this Agreement or otherwise (a "Payment") would be
subject, in whole or in part, to the excise tax imposed by Section 4999 of the
Code (the "Excise Tax"), then the Executive shall be entitled to receive from
the Company an additional payment (the "Gross-Up Payment") in an amount such
that the net amount of the Payment and the Gross-Up Payment retained by
Executive after the calculation and deduction of all Excise Taxes (including any
interest or penalties imposed with respect to such taxes) on the Payment and all
federal, state and local income tax, employment tax and Excise Tax (including
any interest or penalties imposed with respect to such taxes) on the Gross-Up
Payment provided for in this Section 5(f) and taking into account any lost or
reduced tax deductions on account of the Gross-Up Payment, shall be equal to the
Payment.
(ii) All determinations required to be made under this Section 5(f),
including whether and when the Gross-Up Payment is required and the amount of
such Gross-Up Payment, and the assumptions to be used in arriving at such
determinations shall be made by the Accountants (as defined below) which shall
provide Executive and the Company with detailed supporting calculations with
respect to such Gross-Up Payment within ten (10) days after termination of
Executive's employment or such other event which results in a Payment which
could necessitate a Gross-Up Payment. For purposes of this Agreement, the
"Accountants" shall mean Ernst & Young LLP or another accounting firm mutually
acceptable to the Company and Employee. For purposes of determining the amount
of the Gross-Up Payment, Executive shall be deemed to pay Federal income taxes
at the applicable marginal rate of federal income taxation for the calendar year
in which the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the applicable marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the reduction in
federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined
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with regard to limitations on deductions based upon the amount of Executive's
adjusted gross income). To the extent practicable, any Gross-Up Payment with
respect to any Payment shall be paid by the Company at the time Executive is
entitled to receive the Payment and in no event shall any Gross-Up Payment be
paid later than 10 days after the receipt by Executive of the Accountants'
determination. Any determination by the Accountants shall be binding upon the
Company and Executive, including for purposes of withholding on amounts payable
under this Agreement. As a result of uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accountants
hereunder, it is possible that the Gross-Up Payment made will have been an
amount that is greater or less than the Company should have paid pursuant to
this Section 5(f) (an "Overpayment" or "Underpayment," respectively). In the
event that the Gross-Up Payment is determined by the Accountants or pursuant to
any proceeding or negotiations with the Internal Revenue Service to be less than
the amount initially determined by the Accountants, Executive shall promptly
repay the Overpayment to the Company; provided, however, that in the event any
portion of the Gross-Up Payment to be repaid to the Company has been paid to any
Federal, state or local tax authority, repayment thereof shall not be required
until actual refund or credit of such portion has been made to Executive. In the
event that the Company exhausts its remedies pursuant to Section 5(f)(iii) and
Executive is required to make a payment of any Excise Tax, the Company shall
promptly pay the Underpayment to or for Executive's benefit.
(iii) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable after Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes, interest and/or penalties with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
(a) give the Company any information reasonably requested by the
Company relating to such claim;
(b) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;
(c) cooperate with the Company in good faith in order to
effectively contest such claim; and
(d) permit the Company to participate in any proceedings relating
to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall
11
indemnify Executive for and hold Executive harmless from, on an after-tax basis,
any Excise Tax, income tax or employment tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment of
all related costs and expenses. Without limiting the foregoing provisions of
this Section 5(f), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Executive to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine. The Company's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
6. Non-competition and Confidentiality. In consideration of the salary and
benefits to be provided by the Company hereunder, including particularly the
severance arrangements set forth herein, Executive agrees to the following
provisions of this Section.
(a) Non-competition. During the Employment Period and during the greater of
(i) three years following any termination of Executive's employment, or (ii) any
period thereafter during which Executive continues to receive benefits under
this Agreement, other than a Termination Without Cause, a Termination for Good
Reason or Non-Renewal, Executive shall not directly or indirectly own, manage,
operate, control, be employed by, participate in or, provide services or
financial assistance to any business which directly competes with the Company or
any of its subsidiaries; provided, however, that notwithstanding any provision
of this section 6(a), Executive (i) may own for investment purposes up to 5% of
the equity interests of any such company and (ii) may manage, operate, be
employed by, participate in, or provide services to a company that engages in
such restricted activities if Executive does not personally participate or
advise as to such restricted activities and Executive's involvement within such
company is limited to business units that do not engage in such activities.
(b) Confidentiality. Executive agrees that, during the Employment Period
and thereafter, he shall hold and keep confidential any trade secrets, customer
lists and pricing or other confidential information, or any inventions,
discoveries, improvements, products, whether patentable practices, methods or
not, directly or indirectly useful in or relating to the business of the Company
or its subsidiaries as conducted by it from time to time, as to which Executive
shall at any time during the Employment Period become informed, and he shall not
directly or indirectly disclose any such information to any person, firm or
corporation or use the same except in connection with the business and affairs
of the Company or its subsidiaries. The foregoing prohibition shall not apply to
the extent such information, knowledge or data (a) was publicly known at the
time of disclosure to Executive, (b) becomes publicly known or available
thereafter other than by any means in violation of this Agreement, or (c) is
required to be disclosed by Executive as a matter of law or pursuant to any
court or regulatory order.
12
(c) Company Property. Except as expressly provided herein, Executive shall
return to the Company all property of the Company and its subsidiaries promptly
following Executive's termination of employment.
(d) Injunctive Relief and Other Remedies with Respect to Covenants.
Executive acknowledges and agrees that the covenants and obligations of
Executive with respect to non-competition, confidentiality and Company property,
relate to special, unique and extraordinary matters and that a violation of any
of the terms of such covenants and obligations may cause the Company irreparable
injury for which adequate remedies are not available at law. Therefore,
Executive agrees that the Company shall be entitled to seek an injunction,
restraining order or such other equitable relief (without the requirement to
post bond) restraining Executive from committing any violation of the covenants
and obligations contained in this Section 6. This remedy is in addition to any
other rights and remedies the Company may have at law or in equity.
7. Miscellaneous.
(a) Survival. Sections 4 (relating to indemnification), 5 (relating to
early termination, change of control and non-renewal), 6 (relating to
non-competition and confidentiality), 7(b) (relating to arbitration), 7(c)
(relating to binding effect), 7(d) (relating to full-settlement and legal
expenses) and 7(n) (relating to governing law) shall survive the termination
hereof.
(b) 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 New York City 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.
(c) 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. This Agreement shall also inure to the benefit of
Executive's heirs, executors, administrators and legal representatives.
13
(d) Full-Settlement; Legal Expenses. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement. The Company agrees
to pay, upon written demand therefor by Executive, all legal fees and expenses
which Executive may reasonably incur as a result of any dispute or contest by or
with the Company or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement (including as a result of any
contest by Executive about the amount of any payment hereunder) if Executive
substantially prevails in the dispute or contest or the dispute or contest is
settled, plus in each case interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Code. In any such action or arbitration brought by
the Executive for damages or to enforce any provisions of this Agreement, the
Executive shall be entitled to seek both legal and equitable relief and
remedies, including, without limitation, specific performance of the Company's
obligations hereunder, in his sole discretion.
(e) Assignment. Except as provided under Section 7(c), 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) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein. No
other agreement (other than awards made in accordance with the terms of one of
the Company's applicable compensatory plans, programs or arrangements) relating
to the terms of Executive's employment by the Company, oral or otherwise, shall
be binding between the parties. There are no promises, representations,
inducements or statements between the parties other than those that are
expressly contained herein. 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.
(g) Severability; Reformation. 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. In the event that any
of the provisions of any of Section 6 is not enforceable in accordance with its
terms, Executive and the Company agree that such Section shall be reformed to
make such Section enforceable in a manner which provides the Company the maximum
rights permitted at law.
(h) Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement may occur except
in a written instrument signed by the waiving party, and no waiver shall be
implied from any course of dealing between the parties hereto or
14
from any failure by either party hereto to assert its or his rights hereunder on
any occasion or series of occasions.
(i) 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):
To the Company: Xxxxxx Xxxxxxxxxxx
Xxxxx X-000
000 Xxxxxxxx Xxxxx Avenue
Rye, New York 10580
Attention: Chief Financial Officer
With a Copy to: Xxxx Xxxxxxx, P.C.
1350 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
To the Executive: Xx. Xxxxxx X. Xxxxxxxx
00 Xxx Xxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
(j) Amendments. This Agreement may not be altered, modified or amended
except by a written instrument signed by each of the parties hereto.
(k) Headings. Headings to paragraphs in this Agreement are for the
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
(l) 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.
(m) Withholding. Any payments provided for herein shall be reduced by any
amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income tax laws or similar statutes then in
effect.
(n) Governing Law. This Agreement is made and executed and shall be
governed by the laws of the State of New York, without regard to the conflicts
of law principles thereof.
15
(o) Effectiveness. This Agreement shall become effective and in full force
and effect upon the closing of the Company's acquisition of the capital stock of
AHI pursuant to the terms of the AHI Purchase Agreement.
[SIGNATURE PAGE FOLLOWS]
16
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date set forth above.
JARDEN CORPORATION
By: /s/ Ian X.X. Xxxxxx
-----------------------------------------
Name: Ian X.X. Xxxxxx
Title: Vice Chairman and
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxx
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