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EXHIBIT 10.2.3
EMPLOYEE SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of May , 1997 among
Acorn Products, Inc., a Delaware corporation ("Acorn"), UnionTools, Inc., a
Delaware corporation ("UnionTools" and together with Acorn, the "Company") and
Xxxxxxx X. Xxxxxxxxx (the "Executive").
R E C I T A L S
As an inducement to the Executive to remain in the employ of the
Company, the Company has agreed to provide certain severance benefits and, under
certain circumstances, to make certain bonus payments to the Executive as
specifically set forth herein.
Notwithstanding anything in this Agreement to the contrary, the
Executive shall remain an employee-at-will hereafter. Accordingly, the Executive
may be discharged or may resign for any or no reason, and the rights of the
Executive and the Company upon any such termination of the Executive's
employment shall be as set forth herein.
NOW THEREFORE, the parties hereby agree as follows:
1. Severance.
(a) Severance Events. The Executive shall be entitled to the Severance
Payment set forth in Section 1(c) upon the termination of the Executive's
employment with the Company by either the Executive or the Company in the
following circumstances:
(i) resignation by the Executive for Good Reason; or
(ii) termination of the Executive's employment by the Company
other than for Cause.
The date of the termination of the Executive's employment in such instances
shall be fifteen (15) business days after the date written notice of resignation
is tendered by the Executive to the Company or written notice of termination is
tendered by the Company to the Executive, as applicable. Any such notice shall
specify with reasonable particularity the basis for resignation or termination
hereunder.
(b) Cause; Good Reason. As used in this agreement, the following terms
shall have the meanings set forth below:
(i) "Cause" shall mean (x) the Executive's criminal conviction
for fraud, embezzlement, misappropriation of assets or any other felony
(excluding traffic violations) or (y) the continuance of willful and
repeated failures by the Executive to perform the duties assigned to
him as an employee of the Company, which failures have not been cured
by the Executive within thirty (30) days following receipt of written
notice from the Board
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of Directors of Acorn or UnionTools, as applicable, specifying such failure and
the action required by the Executive to cure such breach of his obligations.
(ii) "Good Reason" shall mean, without the written consent of
the Executive, (A) a material adverse change or diminution in the
Executive's duties or responsibilities, offices, reporting
responsibilities, facilities, staff assistance, fringe benefits or
other indicia of the Executive's position substantially as set forth on
Annex A hereto (as the same may from time to time be modified with the
written consent of the Company and the Executive) or (B) material
breach by the Company of its duties to the Executive, including timely
payment of compensation, provision of benefits and reimbursement of
expenses, in keeping with past practice. "Good Reason" shall not
include relocation of the Executive's personal residence or office
pursuant to the relocation of the Company's executive offices from
Columbus, Ohio.
(c) Severance Payments. If the Executive is entitled to a payment
pursuant to this Section 1, then the Company shall pay to the Executive as a
Severance Payment in a lump sum, on the fifth day following the date of
termination of the Executive's employment, an amount equal to the highest
aggregate annual compensation (including salary, bonuses and incentive payments)
includible in gross income paid to the Executive during any one of the three
taxable years preceding the date of the Executive's termination, such amount to
be subject to adjustment pursuant to Section 3(c).
2. Change of Control.
(a) Change of Control Events. If the Executive's employment with the
Company is terminated by either the Executive or the Company in accordance with
Section 1(a) of this Agreement within two years after a Change of Control, in
addition to the severance payment provided in Section 1(c), the Executive also
shall be entitled to the Change of Control Payment provided in Section 2(c).
(b) Change of Control. A "Change of Control" occurs upon any of the
following events: (i) the acquisition by any Person (as defined in Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) other
than TCW or Oaktree, of beneficial ownership (as defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except such Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time) of securities of Acorn (a) having 25% or more of the total voting power
of the then outstanding voting securities of Acorn and (b) having more voting
power than the securities of Acorn beneficially owned by Oaktree; (ii) during
any twelve month period, a change in the Board of Directors of Acorn occurs such
that Incumbent Members do not constitute a majority of the Board of Directors of
Acorn; (iii) a sale of all or substantially all of the assets of Acorn or
UnionTools; or (iv) the consummation of a merger or consolidation of Acorn with
any other Person, provided, however, that no Change of Control shall have
occurred pursuant to this clause (iv) if (A) after such merger or consolidation
the voting securities of Acorn prior to such merger or consolidation continue to
represent more than 50% of the combined voting power of such
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Person or (B) if such merger or consolidation does not result in a material
change in the beneficial ownership of Acorn's voting securities.
For purposes of this Section 2, the following terms shall have the
following meanings:
"Affiliate" of any specified Person (as defined in Section 13(d) of the
Exchange Act) shall mean (i) any other Person, directly or indirectly,
controlling or controlled by or under direct or indirect common control with
such specified Person or (ii) any Person who is a director or officer (a) of
such Person, (b) of any subsidiary of such Person or (c) of any Person described
in clause (i) above. For purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meaning correlative to the foregoing.
"Incumbent Members" shall mean the members of the Board of Directors of
Acorn on the date immediately preceding the commencement of a twelve-month
period, provided that any person becoming a Director during such twelve-month
period whose election or nomination for election was approved by a majority of
the Directors who, on the date of such election or nomination for election,
comprised the Incumbent Members shall be considered one of the Incumbent Members
in respect of such twelve-month period.
"Oaktree" shall mean Oaktree Capital Management, LLC and its
Affiliates, including any partnerships, separate accounts or other entities
managed by Oaktree.
"TCW" shall mean: TCW Special Credits Plus Fund; TCW Special Credits
Fund III; TCW Special Credits Fund IIIb; TCW Special Credits Fund IV; TCW
Special Credits Trust; TCW Special Credits Trust IIIb; TCW Special Credits Trust
IV; TCW Special Credits Trust IVa; TCW Special Credits, as investment manager of
Delaware State Employees' Retirement Fund, Weyerhaeuser Company Pension Trust
and The Common Fund for Bond Investments; and any of their respective
Affiliates.
(c) Change of Control Payment. If the Executive is entitled to a
payment pursuant to this Section 2, then the Company shall pay to the Executive
as a Change of Control Payment in a lump sum, on the fifth day following the
date of termination of the Executive's employment, an amount equal to two times
the highest aggregate annual compensation (including salary, bonuses and
incentive payments) includible in gross income paid to the Executive during any
one of the three taxable years preceding the date of the Executive's
termination, such amount to be subject to adjustment pursuant to Subsection
3(c).
3. Additional Payment Terms.
(a) No Reduction. The Executive shall not be required to mitigate
damages or the amount of any payment provided for under Section 1(c) or Section
2(c) by seeking other employment or otherwise, nor shall the amount of any
payment provided for under Section 1(c) or Section 2(c) be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the date of termination or otherwise.
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(b) Indemnification. The Company shall indemnify the Executive for all
costs, including reasonable attorneys' fees, incurred by the Executive in
connection with any successful action by the Executive to enforce or otherwise
determine or ensure compliance by the Company with the terms of this Agreement.
(c) Certain Additional Payments by the Company. Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement (a "Payment"), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, collectively, the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (the "Excise Tax
Payment") in an amount equal to the Excise Tax imposed upon the Payment and any
additional payments made pursuant to this Section 3(c).
4. Miscellaneous.
(a) Assignability; Binding Nature.
(i) This Agreement shall inure to the benefit of the Company
and the Executive and their respective successors, heirs (in the case
of the Executive) and assigns. For purposes of this Agreement, the term
"successor" of the Company shall include any person or entity, whether
direct or indirect, whether by purchase, merger, consolidation,
operation of law, assignment or otherwise who acquires or controls all
or substantially all of the assets of Acorn or UnionTools.
(ii) The Company shall require any successor of the Company,
by an agreement in form and substance reasonably satisfactory to the
Executive, to expressly assume and agree to be bound by the terms of
this Agreement in the same manner and to the same extent that the
Company would be required to perform if no succession had occurred. The
Company shall be in material breach of this Agreement if any such
successor fails to expressly assume or otherwise agree to guaranty
performance of this Agreement to the extent the Company was obligated
prior to any succession.
(iii) Except as expressly stated in Section 4(a) above, this
Agreement shall be non-assignable by either the Company or the
Executive without the prior written consent of all parties hereto.
(b) Notices. Any notice hereunder shall be properly given if by
personal delivery or registered or certified mail, return receipt requested, as
follows:
If to the Executive, at his address as it appears on the payroll
records of the Company.
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If to the Company, to:
Acorn Products, Inc.
000 Xxxxxx Xxx.
Xxxxxxxx, Xxxx 00000-0000
Attention: President
or to such other addresses as the parties may designate in writing.
(c) Integration; Modification. This Agreement shall supersede all
previous negotiations, commitments and writings with respect to the employment
of the Executive. This Agreement may not be released, discharged, abandoned,
changed or modified in any manner, except by an instrument in writing signed on
behalf of each of the parties hereto. The failure of either party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provisions, nor in any way to affect the
validity of this Agreement or the right of either party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to be a waiver of any other or subsequent breach.
(d) Severability. If any term or provision of this Agreement is
declared invalid by a court of competent jurisdiction, the remaining terms and
provisions of this Agreement shall remain unimpaired.
(e) Captions. The captions appearing in this Agreement are inserted
only as a matter of convenience and as a reference and in no way define, limit
or describe the scope or intent of this Agreement or any of other provisions
hereof.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of New York without
giving effect to any choice or conflict of laws provision or rule that would
cause the application of the domestic substantive laws of any other
jurisdiction.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first above written.
EXECUTIVE
________________________________________
Name: Xxxxxxx X. Xxxxxxxxx
ACORN PRODUCTS, INC.
By: ___________________________________
Name:
Title:
UNIONTOOLS, INC.
By: ___________________________________
Name:
Title:
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