Termination Settlement Agreement - Gillette Co. and Michael C. Hawley
TERMINATION SETTLEMENT AGREEMENT
AGREEMENT (the "Agreement"), dated as of October 19, 2000 (the
"Termination Date"), by and between The Gillette Company (the "Company"), and
Michael C. Hawley (the "Executive").
WHEREAS, the Executive has been employed as Chief Executive Officer of the
Company; and
WHEREAS, by mutual agreement between the parties hereto, the Executive has
resigned, effective as of the Termination Date, his positions as Chief Executive
Officer of the Company, as a member of the board of directors of the Company and
as an officer and director of any subsidiary or affiliate of the Company for
which he was serving in such positions.
NOW, THEREFORE, BE IT RESOLVED, that the Company and the Executive, in
consideration of the covenants herein set forth, hereby agree as follows:
1. Resignation of Executive and Board Positions
By mutual agreement with the Company, the Executive resigns, effective as
of the Termination Date, from his positions as Chief Executive Officer of the
Company and a member of the Board of Directors of the Company, and from all
other positions the Executive may currently hold as an officer or member of the
board of directors of any of the Company's subsidiaries or affiliates. The
Executive shall sign and deliver to the Company such other documents as may be
necessary to effect or reflect such resignations.
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2. Termination Settlement Payments, Benefits and Obligations
(a) The Company will pay to the Executive his base salary through December
31, 2000.
(b) In consideration of the Executive's agreement to comply with Sections
3, 5, 7 and 9 of this Agreement, and in lieu of and in satisfaction of any
severance or other payments due under any severance programs maintained by the
Company or any of its subsidiaries or affiliates (collectively, the "Company
Entities"), or any individual agreement previously entered into with the
Executive by any of the Company Entities, including without limitation the
Change in Control Employment Agreement, dated as of December 16, 1999 by and
between the Company and the Executive (the "Change in Control Employment
Agreement"), the Company shall pay the Executive termination settlement pay in
an aggregate amount of Eight Million Seven Hundred Thousand Dollars
($8,700,000), payable in monthly installments on or about the first day of each
month over a twenty-four month period commencing on January 1, 2001 (the
"Termination Settlement Period"). The monthly payment for each of the months of
January, February and March 2001 will be $625,000 and the monthly payment for
the remainder of the Termination Settlement Period will be $325,000. The
Executive shall remain an employee of the Company during the Termination
Settlement Period. The commencement of termination settlement payments shall be
subject to the expiration of the Revocation Period (as defined in Section 9(c))
without exercise by the Executive of his right to revoke the ADEA Release. In
the event of the death of the Executive before the expiration of the Termination
Settlement Period, all remaining amounts shall be paid to the Executive's estate
in the form of a lump sum payment.
(c) During the Termination Settlement Period the Company will provide the
Executive with office space, secretarial support, computer and telephone
support, and a parking space commensurate with his status as a former Chief
Executive Officer. The office provided
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Executive shall be a perimeter (windowed) office of no less than 300 square feet
with furnishings and other appointments, and located on one of the upper floors
of the Prudential Tower, and said parking space shall be in the Prudential Tower
as well. The Company shall have the right to relocate Executive to comparable
first class office and parking space in Downtown Boston/Back Bay provided the
Company maintains full secretarial, computer and telephone support.
(d) For a period of Five Years from the date of this Agreement the Company
will continue to pay for the maintenance of the home security system currently
in place at the Executive's residences.
(e) During the Termination Settlement Period, the Executive will continue
to participate in the Company's medical, dental, Employees' Savings.
Supplemental Savings and Executive Life Insurance and Estate Preservation
Programs. During the Termination Settlement Period, the Executive will not be
eligible to participate in the Company's Incentive Bonus, Salary Continuation.
Long Term Disability, Vacation and Holiday Accrual or Travel Accident Programs.
(f) During the Termination Settlement Period, the Executive will not be
eligible for any additional stock option award grants under the Company's Stock
Option Plan or any successor plans. All previously granted stock option awards
will vest and be exercisable in accordance with the vesting and exercise terms
applicable to employees under the Company's Stock Option Plan. These include the
Executive's Stock Option Grants of 12/2/99 and 6/15/00, which would vest on
12/2/00 and 6/15/01 respectively.
(g) The Executive will retire under the Company's Retirement Plans on
January 1,2003. All Termination Settlement Payments described in subparagraphs
(a) and (b)
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above (including any lump sum payment as described in sub-paragraph (b)) will be
included for the purpose of calculating his retirement benefits.
(h) This Agreement shall supersede the Change in Control Employment
Agreement and the Change in Control Employment Agreement shall be deemed
terminated from and after the date of this Agreement, without any remaining
obligation of any party under such agreement.
3. Disparaging Comments
The Executive will refrain from making statements, written or oral, which
denigrate, disparage or defame the goodwill or reputation of the Company
Entities and their officers, shareholders, partners, agents and former and
current employees and directors. The Company Entities will refrain from making
statements, written or oral, which denigrate, disparage or defame the
Executive's goodwill or reputation. There is excepted from this provision all
statements: 1) necessary to enforce this Agreement, 2) made to one's immediate
family, 3) made truthfully as a result of any question required to be answered
by law, or 4) made truthfully by one party to this Agreement in response to any
statement by the other party to this Agreement that is violative of this
paragraph.
4. Confidentiality of this Agreement
Except as required by law or regulation, or as necessary to enforce this
Agreement, none of the parties hereto will disclose the terms of this Agreement,
provided that the Executive may disclose such terms to his financial and legal
advisors and his spouse and the Company may disclose such terms to selected
employees, advisors and affiliates on a "need to know" basis, each of whom shall
be instructed by the Executive and thc Company, as the case may be, to maintain
the terms of this Agreement in strict confidence in accordance with the
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terms hereof. This provision shall not apply once the Company discloses the
terms thereof in any public filings required by the SEC or to the extent
disclosed in any proxy statement.
5. Restrictive Covenants
(a) The Executive has returned or will immediately return to the Company
all Company Information (as defined below), including client lists, files,
software, records, computer access codes and instruction manuals which he has in
his possession, and agrees not to keep any copies of Company Information. The
Executive affirms his obligation to keep all Company Information confidential
and not to disclose it to any third party in the future. The term "Company
Information" means: (i) confidential information, including information received
from third parties under confidential conditions, and (ii) other technical,
marketing, business or financial information, or information relating to
personnel or former personnel of the Company, the use or disclosure of which
might reasonably be construed to be contrary to the interest of the Company;
provided, however, that the term "Company Information" shall not include any
information that is or became or becomes generally known or available to the
public other than as a direct result of a breach of this paragraph by the
Executive or any action by the Executive prior to the Termination Date which
would have been a breach of the Executive's obligations to the Company in effect
at such time. The Executive shall have the right to remove from the offices of
the Company any of his personal files that do not contain Company Information.
(b) The Executive agrees that he will not engage in Competition with the
Company during the period commencing on the Termination Date and ending December
31, 2003. "Competition" for the purposes of this Agreement shall mean:
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(i) becoming directly or indirectly involved, as an owner, principal,
employee, officer, director, independent contractor, representative,
stockholder, agent, advisor, lender or in any other capacity, in any business
engaged, or seeking to become engaged, in the businesses (including operations
via the internet) conducted by the Company at any time during the period ending
December 31, 2000, in any geographical area in which the Company is at the time
engaging in or attempting to engage in such businesses; provided, however, that
in no event shall ownership of less than 3% of the outstanding capital stock of
any corporation, in and of itself, be deemed Competition if such capital stock
is listed on a national securities exchange or regularly traded in an
over-the-counter market; and provided, that Executive may become involved in any
business in which the Company, at the time of the inception of the Executive's
involvement in that business, is not engaged or attempting to become engaged,
and Executive may continue said involvement even if the Company at some later
date becomes engaged in said business; or
(ii) soliciting any person who is a customer of the businesses conducted
by the Company, on behalf of a business described in clause (i) of this Section
5(b), or inducing or attempting to persuade any employee of the Company or any
of its subsidiaries to terminate his or her employment relationship with the
Company to work for a business described in clause (i) this Section 5(b).
(c) The Executive acknowledges and agrees that the Company's remedy at law
for any breach of the Executive's obligations under this Section 5 would be
inadequate and agrees and consents that temporary and permanent injunctive
relief may be granted in any proceeding which may be brought to enforce any
provision of this Section without the necessity of proof of actual damage. With
respect to any provision of this Section 5 finally determined by a court of
competent jurisdiction to be unenforceable, the Executive and the Company hereby
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agree that such court shall have jurisdiction to reform this Agreement or any
provision hereof so that it is enforceable to the maximum extent permitted by
law, and the parties agree to abide by such court's determination.
6. Waiver of Other Payments and Benefits
(a) The compensation and benefits arrangements set forth in this Agreement
are in lieu of any rights or claims that the Executive may have with respect to
severance or other benefits, or any other form of remuneration from the Company
Entities, expenses or attorneys' fees. Notwithstanding the above, this waiver is
not intended to deprive the Executive of any benefits or payments he otherwise
is or would become entitled to wider the Company's tax qualified retirement
plans, 401K plan, supplemental Savings and Retirement plans, retiree medical,
retiree life insurance, estate preservation, stock option plans, other retiree
benefits or for amounts deferred under the Company's incentive plans.
7. Information Requests/Cooperation
The Executive agrees to make himself reasonably available to the Company
to respond to requests by the Company for information concerning matters
involving facts or events relating to the Company or any other Company Entity
that may be within the Executive's knowledge, and to assist the Company and the
Company Entities as reasonably requested with respect to pending and future
litigations, arbitrations or other dispute resolutions. The Company will
reimburse the Executive for his reasonable travel expenses and other costs
incurred as a result of his assistance under this Section 7.
8. No Admission of Wrongdoing
Nothing contained in this Agreement shall be construed in any way as an
admission by any of the parties of any act, practice or policy of discrimination
or breach of contract either in violation of applicable law or otherwise.
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9. Waiver and Release
(a) In consideration of the payments and benefits set forth in this
Agreement, the Executive, for himself, his heirs, administrators,
representatives, executors, successors and assigns (collectively "Releasors")
does hereby irrevocably and unconditionally release, acquit and forever
discharge the Company Entities and their former and current officers,
shareholders, partners, agents, and employees and directors, including without
limitation all persons acting by, through, under or in concert with any of them
all in their capacity as such (collectively, "Releasees"), from any and all
charges, complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, remedies, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses (including attorneys' fees and costs)
of any nature whatsoever, known or unknown, whether in law or equity and whether
arising under federal, state or local law, including but not limited to any
claim for discrimination based upon race, color, ethnicity, sex, age (including
the Age Discrimination in Employment Act of 1967) (the "ADEA Release"), national
origin, religion, disability, or any other protected or unlawful criterion or
circumstance, which the Releasors had, now have, or may have in the future,
against each or any of the Releasees through the date of the execution of this
Agreement. The Executive acknowledges and agrees that if he or any other
Releasor should hereafter make any claim or demand or commence or threaten to
commence any action, claim or proceeding against the Releasees with respect to
any cause, matter or thing which is the subject of this Section 9(a), this
Agreement may be raised as a complete bar to any such action, claim or
proceeding, and the applicable Releasee may recover from the Executive all costs
incurred in connection with such action, claim or proceeding, including
attorneys' fees.
(b) In consideration of the Executive's agreements and covenants set forth
in this Agreement, the Company and its subsidiaries (the "Company Releasors")
hereby irrevocably
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and unconditionally release, acquit and forever discharge the Executive from any
and all charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, remedies, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses (including attorneys' fees
and costs) of any nature whatsoever, known or unknown, whether in law or equity
and whether arising under federal, state or local law, which the Company
Releasors now have, or may have in the future, against the Executive with
respect to the Executive the through the date of the execution of this
Agreement, other than any claim based upon fraudulent or illegal activity that
was not discovered by the Company Releasors until subsequent to the date of
execution of this Agreement. The Company Releasors acknowledge and agree that if
they should hereafter make any claim or demand or commence or threaten to
commence any action, claim or proceeding against the Executive with respect to
any cause, matter or thing which is the subject of this Section 9(b), this
Agreement may be raised as a complete bar to any such action, claim or
proceeding, and the Executive may recover from the Company Releasors all costs
incurred in connection with such action, claim or proceeding, including
attorneys' fees.
(c) The mutual releases of the parties contained in this section 9(a) and
(b) above shall not apply to, waive or release (i) claims by either party
arising out of this agreement or (ii) the respective rights and claims of the
parties pursuant to the officers and directors indemnification provisions
contained in the by-laws of the Company Entities. For purposes of clarity it is
understood that such indemnification provisions shall cover the actions of the
Executive as an officer, director or employee of the Company Entities. The
Executive affirms that prior to the execution of this Agreement and the waiver
and release in Section 9(a), the Executive was advised by the Company to consult
with an attorney of the Executive's choice concerning the terms and conditions
set forth herein and has done so, and that the Executive was
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given up to 21 days to consider executing this Agreement, including the ADEA
Release in Section 9(a). The Executive has 7 days following his execution of
this Agreement (the "Revocation Period") to revoke the ADEA Release. In the
event the Executive revokes the ADEA Release, the Company may cease making the
payments set forth in Section 2.
10. No Reliance
The Executive represents and acknowledges that, in executing this
Agreement, he has not relied upon any representation or statement made by the
Company and not set forth herein.
11. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, without regard to the principles of
conflicts of law thereof, to the extent not superseded by applicable federal
law.
12. Warranty
The parties hereto represent and warrant that there exists no impediment
or restraint, contractual or otherwise on their power, right or ability to enter
into this Agreement and to perform their duties and obligations hereunder or as
contemplated hereby.
13. Taxes
All payments made to the Executive under this Agreement will be reduced by
all income, employment and Medicare taxes required by law to be withheld on such
payments. The Company will pay its share of any taxes required by law to be paid
by Company as the Executive's employer.
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14. No Coercion
The parties hereto represent and acknowledge that they have decided to
enter into this Agreement voluntarily, knowingly and without coercion of any
kind.
15. Enforceability
The parties hereto affirmatively acknowledge that this Agreement, and each
of its provisions, is enforceable, and expressly agree not to challenge nor
raise any defense against the enforceability of this Agreement or any of its
provisions in the future. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. The Executive will be entitled to reimbursement of
his reasonable legal fees and related litigation expanses if needed to enforce
Executive's rights under this Agreement.
16. Notices
All notices, requests, demands and other communication which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered; when transmitted by
telecopy, electronic or digital transmission method upon receipt of telephonic
or electronic confirmation; that day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express) and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to the Executive, addressed to:
Michael C. Hawley
42 Chestnut Street
Boston, MA 02108
and
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Russell F. Conn., Esq.
Conn Kavanaugh Rosenthal Peisch & Ford, LLP
Ten Post Office Square
Boston, MA 02109
If to the Company, addressed to:
The Gillette Company,
4800 Prudential Tower Building,
Boston Massachusetts 02199
Attention: General Counsel
or to such other place and with such other copies as any party may
designate as to itself or himself by written notice to the others.
17. Amendments: Waivers
This Agreement may not be amended, modified or terminated, except by a
written instrument signed by the parties hereto. Any provision of this Agreement
may be waived by a written instrument signed by the party to be charged with
such waiver.
18. Successors
This Agreement shall be binding on the Executive, the Company, and their
respective heirs, successors and assigns, including without limitation any
corporation or other entity into which the Company may be merged, reorganized or
liquidated, or by which may be acquired. The obligations of the Company may be
assigned without limitation but in the event of such assignment, the Company
shall remain responsible for all of its obligation's under this Agreement,
including all payment and benefit obligations in paragraph 2. As the obligations
to be performed by the Executive hereunder are unique based upon his skills and
qualifications, the Executive's obligations under this Agreement may not be
assigned.
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19. Entire Agreement
Except as specified herein, this Agreement contains the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the parties with respect thereto.
20. Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute one
and the same Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement, as of the
date and year first written above,
THE GILLETTE COMPANY
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By:
/s/ Michael C. Hawley
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MICHAEL C. HAWLEY
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
THE GILLETTE COMPANY
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By:
/s/ Robert E. DiCenso
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Robert E. DiCenso
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MICHAEL C. HAWLEY
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