Exhibit 10.36
SEPARATION AGREEMENT
BETWEEN
JOHNSONDIVERSEY, INC. AND EDWARD
J. KENNEDY
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Date:
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November 17, 2008
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From:
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Edward F.
Lonergan
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PERSONAL &
CONFIDENTIAL
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To:
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Edward J.
Kennedy
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The following sets forth our mutual
agreement (“Agreement”) regarding your separation from
JohnsonDiversey, Inc. (the “Company”):
1. Employment and
Resignation.
a. Resignation. You hereby submit
and the Company hereby accepts your irrevocable written resignation
as Senior Vice President and Regional President- APAC/Japan of the
Company effective December 26, 2008 or such earlier date which
is the first to occur of the following: (i) such date as the
Company shall select on prior written notice to you as provided in
Section 10.j, or (ii) the date you incur a
“separation from service” (as such phrase is defined in
Internal Revenue Code Section 409A and the regulations
promulgated thereunder) with the Company, its subsidiaries and
affiliates (such date of resignation being herein referred to as
the “Termination Date”).
b. Position and Duties. Effective as
of the date first written above (the “Effective Date”)
and continuing through the Termination Date (the “Transition
Period”), you will continue as Senior Vice President and
President-APAC/Japan of the Company and will perform such duties as
shall be assigned by the Chief Executive Officer
(“CEO”) of the Company.
c. Terms and Conditions .
During the Transition Period, your current base salary of $325,000
(“Base Salary”) and employee benefits, each as in
effect as of the Effective Date, shall continue in effect;
provided, however, any change in employee benefits effective during
the Transition Period that is applicable to employees of the
Company generally shall also be applicable to you.
2. Termination .
Notwithstanding Sections 1.a, 1.b and 1.c, or any other provision
of this Agreement, the termination of your employment hereunder
will be governed by the following provisions:
a. Death . If you die prior
to the end of the Transition Period, the Company will pay your
beneficiaries or estate, as appropriate, promptly after your death
but not later than December 31, 2008, the unpaid Base Salary
to which you are entitled, pursuant to Section 1.c, through
the date of your death, a bonus prorated at target level for the
fiscal year in which the death occurs, your accrued but unused
vacation, incurred but unreimbursed business expenses, plus
(without duplication) any amounts otherwise due under applicable
law or pursuant to any benefit plan or policy that is maintained by
the Company or its subsidiaries or affiliates in which you
participated, and your beneficiaries or estate will be entitled to
no other compensation
or benefits. The Company will also
pay your beneficiaries or estate, as appropriate, a Cash LTIP
payment for any open performance cycle based on actual performance
prorated to date of death, with payment to be made when awards for
such cycle are paid to the other participants.
b. Cause.
(i) The Company may terminate your
employment hereunder for Cause (as defined below) prior to the end
of the Transition Period by written notice as provided in
Section 10.j. If you are terminated for Cause, the Company
will promptly pay to you (or your representative) the unpaid Base
Salary to which you are entitled, pursuant to Section 1.c,
through the date you are terminated and you will be entitled to no
other compensation or benefits, except as otherwise due to you
under applicable law or pursuant to any benefit plan or policy that
is maintained by the Company or its subsidiaries or affiliates in
which you participated.
(ii) For purposes of this Agreement,
“Cause” means:
(A) Material breach of this
Agreement, including a material failure to perform within the
provisions of “This We Believe,” after having received
prior written notice of such material breach and you have not
corrected such material breach (if capable of correction) to the
reasonable satisfaction of the President and CEO within the thirty
(30) day period following your receipt of such written
notice.
(B) Willful misconduct, or willful
violation of the law in the performance of duties under this
Agreement.
(C) Willful failure or refusal to
follow reasonable, explicit, and lawful instructions or directions
from the President and CEO concerning the operation of Company
business.
(D) Conviction of a
felony.
(E) Theft or misappropriation of
funds or property of Company, or commission of any material act of
dishonesty involving Company, its employees, or
business.
(F) Appropriating any corporate
opportunity of Company, unless the transaction was approved in
writing by the President and CEO following full disclosure of all
pertinent details of the transaction.
(G) Breach of fiduciary duty owed to
Company as an executive of Company.
(H) Material breach of any duty or
obligation under the attached Confidentiality Agreement,
Non-Competition Agreement, and/or Trade Secret, Invention, and
Copyright Agreement, after having received prior written notice
of
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such material breach and you have
not corrected such material breach (if applicable of correction) to
the reasonable satisfaction of the President and CEO within the
thirty (30) day period following your receipt of such written
notice.
For purposes of this Section 2,
no act or failure to act on your part shall be considered
“willful” unless it is done, or omitted to be done, by
you in bad faith or without reasonable belief that your action or
omission was in the best interest of the Company.
3. Severance Pay and Benefits
. Unless your employment has been terminated by reason of death or
Cause as provided in Section 2 and subject to the terms of
this Agreement, the Company will pay or provide to you:
a. Salary Continuation . The
Company will pay you an amount equal to two times the sum of your
annual Base Salary ($325,000) and your Annual Incentive Plan
(“AIP”) bonus opportunity at your 2008 target rate
($162,500) as salary continuation which will be paid over 24 months
following the Termination Date. Payments of this salary
continuation amount of $975,000 will be paid in equal installments
at the times and in the manner consistent with Company payroll
practices for executive employees, and each installment payment
shall be considered a separate payment and not one of a series of
payments for purposes of Section 409A of the Code; provided,
however, that notwithstanding the foregoing, installments
(beginning with the first installment to be made and continuing
with subsequent installments in order of time) with an aggregate
value of $550,000 shall be paid in a lump sum on or before
December 31, 2008 and the remaining aggregate installments
($425,000) shall continue to be paid at the times they would have
been paid had such lump sum payment not been made. Payments made on
or before June 30, 2009 will have the current U.S.
hypothetical tax rate deducted. Payments made after June 30,
2009 will have all federal taxes deducted, as applicable; provided,
however, if you return to the U.S. after June 30, 2009, any
state and local taxes may also be deducted.
b. Health Benefits . The
medical, dental and vision coverage you elected under the
JohnsonDiversey Choice Benefits Program will cease on your
Termination Date. At your option, you may continue your coverage
for a period of 24 months, inclusive of 18 months of COBRA. Please
contact the JDI Service Center at (866) 391-0760 for more
detailed information. If you elect any such continued coverage, the
Company will subsidize the medical, vision and dental rates for the
24 months of continuation coverage following your Termination Date
so that for the same coverage you will pay the same amount of
contribution as if you were an active employee; provided, however,
that following the end of your 18 months of COBRA continuation
coverage and continuing through the end of the 24 month period,
with respect to any such medical, dental and vision benefits
provided under a self-insured medical reimbursement plan (within
the meaning of Section 105(h) of the Internal Revenue Code),
(a “Self-Insured Medical Plan”), for which you have
elected coverage, the reimbursement of an eligible medical expense
must be made on or before the last day of the calendar year
following the calendar year in which the expense was
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incurred and (B) you must pay
to the Company the cost, on an after-tax basis, for the premium
payments (both the employee and employer portion) required for such
continued coverage under any Self-Insured Medical Plan. On or about
January 31, 2012, the Company will make a payment in cash to
you equal , on an after-tax basis, to (i) the amount,
if any, you paid in premium payments during the immediately
preceding calendar year for such continued coverage under any
Self-Insured Medical Plan for the period following the end of the
18-months of COBRA continuation coverage through the end of the
24-month period, exceeds (ii) the amount you would have paid
if you had remained in employment during such period.
c. Choice Benefits . As with
the health benefits, the coverage you elected will cease on your
Termination Date.
d. (i) 2008 AIP . You will
receive a 2008 AIP bonus payment at your 2008 target rate
($162,500). This payment will be made after the end of 2008 at the
time the Company pays 2008 awards under the terms of the AIP but in
no event will the payment be payable later than March 15, 2009
and will be subject to the current U.S. hypothetical tax
deductions.
(ii) 2006-2008 Cash LTIP .
You will receive Cash LTIP payment for the 2006-2008 performance
cycle based on actual performance. This payment will be made after
the end of the 2006-08 performance cycle at the time the Company
pays awards under the terms of the LTIP for the 2006-08 performance
cycle to other participants and will be subject to all federal,
state, and local taxes, as applicable.
e. 2007-09 Cash LTIP . You
will receive a prorated Cash LTIP payment for the 2007-09
performance cycle based on actual performance, with your prorated
entitlement to be determined by multiplying the otherwise earned
benefit by a fraction, the numerator of which is the number of
complete months during the performance cycle to your Termination
Date and the denominator of which is 36. This payment will be made
after the end of the 2007-09 performance cycle at the time the
Company pays awards under the terms of the LTIP for the 2007-09
performance cycle to other participants and will be subject to all
federal, state, and local taxes, as applicable.
f. 2008-10 Cash LTIP . You
will receive a prorated Cash LTIP payment for the 2008-10
performance cycle based on actual performance, with your prorated
entitlement to be determined by multiplying the otherwise earned
benefit by a fraction, the numerator of which is the number of
complete months during the performance cycle to your Termination
Date and the denominator is 36. This payment will be made after the
end of the 2008-10 performance cycle at the time the Company pays
awards under the terms of the LTIP for the 2008-10 performance
cycle to other participants and will be subject to all federal,
state, and local taxes, as applicable.
g. JohnsonDiversey Retirement
Plan/Non-qualified Retirement Plan . Your vested benefits under
these plans at your Termination Date will be available to you
pursuant to their terms. You will receive more detailed information
within two weeks of your Termination Date.
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h. 401(k) Plan . You will
continue to participate in the 401(k) Plan based on your base
salary up to your Termination Date. Your Plan account will be based
on the date of distribution of your account to you. To access your
401(k) account, please call Fidelity at
(800) 890-4015.
i. Relocation/Expatriate
Assignment Provisions . You will be entitled to a relocation
benefit to relocate back to the U.S. according to the terms of the
Company’s relocation policy as in effect as of the Effective
Date (to be exercised on or before June 30, 2009); provided,
however, that the expenses to be reimbursed must be incurred prior
to the end of 2010, and provided further, that the Company shall
pay all reimbursement for such expenses so incurred by the end of
2011. In addition, the Company will continue to provide you a
housing and education allowance thru June 30, 2009 pursuant to
the terms of your Expatriate Assignment Letter between us dated
September 23, 2005 (the “Expatriate Assignment
Letter”) as detailed in Exhibit “B” attached
hereto.
j. Flexible Spending Account/Car
Allowance . You will be entitled to reimbursement of expenses
from your Flexible Spending Account for 2008 and 2009. Payment will
be made within 90 days following the date you submit evidence that
you incurred eligible expenses, and in all events prior to the last
day of the calendar year following the calendar year in which you
incur the expense. In no event will the amount of such expenses
paid in one year affect the amount of expenses eligible for
payment, or in-kind benefits to be provided, in any other taxable
year.
k. Outplacement Assistance/All
Other Benefits . You will receive a senior executive level
outplacement program by an outplacement firm selected by you and
paid for by the Company up to $30,000, provided that such payment
shall be completed not later than June 30, 2009. All other
benefits not specifically mentioned above cease as of your
Termination Date, and you will not be entitled to any awards under
our annual or long-term bonus or incentive plans (including
performance bonus objective, AIP, and Cash/Equity LTIP incentive
awards) for 2009 or later years. You will be paid for unused 2008
vacation days in accordance with Company policy and the
requirements of Wisconsin law.
l. Release . Payment of the
Cash LTIP payments described in Section 3.e and 3.f, and the
relocation payment described in 3.i are conditioned upon your
executing and delivering to the Company within 21 days after the
Termination Date and not revoking a Release of Claims Agreement in
the form attached as Exhibit “A”. If you do not execute
the Release of Claims Agreement and deliver it to the Company
within such period or if you execute and deliver the Release of
Claims Agreement to the Company but revoke it before it becomes
effective as provided therein, you will not be entitled to the
payments referenced above in this Section 3.l and the
aforementioned provisions of this Section 3 of the Agreement
providing for such payments will be null and void and without
effect.
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4. Corporate Credit Card .
You agree to file all expense reports on your Mastercard Corporate
Credit Card on or before your Termination Date. If any amount
remains outstanding, you agree that the Company will withhold said
amount from any monies due you under this Agreement that are not
subject to Section 409A of the Internal Revenue Code or will
otherwise promptly reimburse the Company on request.
5. Return of Company Property
. Not later than the date of termination of the separate consulting
services agreement between you and the Company, you shall return
all Company-owned property in your possession, including but not
limited to all keys to buildings or property, credit cards, files,
equipment, software and computers, documents and papers (including
but not limited to reports, Rolodexes, sales data, product lists,
business plans, financial information, corporate governance
materials, notebook entries, and files), telephone cards, cellular
telephone(s), and all other Company property in accordance with
Company guidelines and the Non-Compete (as defined below in
Section 6).
6. Non-Compete . As a
material term of this Agreement, you agree to comply in all
respects with the terms of the Non-Competition Agreement with the
Company, (ii) the Trade Secret, Invention, and Copyright
Agreement with the Company and (iii) the Confidentiality
Agreement with the Company (collectively, the
“Non-Compete”), in each case that you signed and is
dated
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You acknowledge and agree that the Non-Compete remains in full
force and effect notwithstanding the termination of your employment
with the Company. The terms of the Non-Compete are hereby
incorporated by reference. You reaffirm the terms of the
Non-Compete and agree that (a) by executing this Agreement you
are agreeing to all of the terms of the Non-Compete as if you
signed that documents anew, and (b) the payments you are
receiving and/or are to receive under this Agreement is
consideration for the obligations you have under the
Non-Compete.
7. Confidentiality . The
Parties agree that neither party, nor anyone acting i