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EXHIBIT 10.40
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is executed this 26th day
of June, 1998, by and between Household Products, Inc., a Delaware corporation
(with all of its direct and indirect subsidiaries, the "Company"), and Xxxxxxx
Xxxxxxxxx, an individual residing in the State of Connecticut (the "Employee").
RECITALS:
A. Windmere-Durable Holdings, Inc. ("Windmere") has entered into a
Transaction Agreement (the "Transaction Agreement") dated as of May 10, 1998 by
and between Windmere and The Black and Xxxxxx Corporation ("Black & Xxxxxx")
providing for the purchase by the Company of certain assets and the assumption
by Windmere of certain liabilities of the Household Products Division of Black &
Xxxxxx (the "HPG Business"). Capitalized terms used herein and not otherwise
defined shall have the meaning set forth in the Transaction Agreement.
B. The Employee possesses certain knowledge of the HPG Business, its
policies, methods and personnel.
C. The Board of Directors of the Company (the "Board") recognizes that
the Employee has contributed to the growth and success of the HPG Business, and
desires to assure the Company of the Employee's continued employment and to
compensate him therefor.
D. The Employee is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT
Therefore, in consideration of the premises, mutual covenants and
agreements of the parties contained herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Company and the Employee hereby agree as follows:
1. EMPLOYMENT. Commencing on the Closing Date, the Company shall employ
the Employee and the Employee shall accept employment by the Company, upon the
terms and conditions set forth in this Agreement.
2. TERM. The term of employment (the "Term") of this Agreement shall
begin on the Closing Date and, except as otherwise provided in Sections 7, 8, 9
and 10 below, shall end on June 30, 2000. The Term shall automatically renew for
successive one year terms, unless sooner terminated as provided herein or unless
either party gives notice at least 60 days prior to the end of the Term that
such party does not intend to renew the Term.
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3. DUTIES. The Employee will have such duties as are assigned or
delegated to the Employee by the Board and will initially serve as the Vice
President-Marketing and Sales of the Company, which shall continue the HPG
Business. The Employee will devote his entire business time, attention, skill,
and energy exclusively to the business of the Company, will use his best efforts
to promote the success of the Company, and will cooperate fully with the Board
in the advancement of the best interests of the Company.
4. COMPENSATION. During the Term, the Company shall compensate Employee
as follows:
(a) SALARY. The Company shall pay Employee an annual salary of
$220,000 (the "Annual Base Salary"), to be distributed in equal periodic
installments according to the Company's customary payroll practices. Nothing
contained herein shall be construed to prevent the Company from increasing
Employee's Annual Base Salary more often than annually or by a higher amount
than required by the Index (as defined below). The Annual Base Salary will
increase progressively for each of the ensuing twelve month periods ("Fiscal
Year") during the Term by an amount at least equal to the percentage increase in
the United States Consumer Price Index for all urban consumers (CPI-U), U.S.
City Average - All Items, published by the Bureau of Labor Statistics, United
States Department of Labor (the "Index") for the previous calendar year. If at
any time required for the determination of the Annual Base Salary adjustment as
above described, the Index is no longer published or issued, the parties shall
use such other index as is then generally recognized or accepted for similar
determinations of purchasing power.
(b) ANNUAL BONUS. The Employee shall be entitled to receive
incentive compensation (the "Incentive Compensation") for each year during the
Term as set forth below:
(i) PERFORMANCE BONUS. At the beginning of each
calendar year during the Term, the Board (or the Compensation Committee
thereof) shall establish target goals for (A) earnings before interest,
taxes, depreciation and amortization ("EBITDA") of the Company and (B)
the Employee's personal performance (collectively, the "Performance
Goals"). The Employee shall be entitled to an annual bonus (the
"Performance Bonus") based 50% on the achievement of the Performance
Goal set forth in (A) above and 50% on the achievement of the
Performance Goal set forth in (B) above. Such Performance Bonus shall
be equal to a percentage of his Annual Base Salary to be determined as
follows:
AGGREGATE PERCENTAGE OF BONUS AS PERCENTAGE
PERFORMANCE GOALS ACHIEVED OF ANNUAL BASE SALARY
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75% - 79% (Threshold Performance) 20%
80% - 84% 23%
85% - 89% 26%
90% - 94% 29%
95% - 99% 32%
100% - 104% (Target Performance) 35%
105% - 109% 38%
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110% - 114% 41%
115% - 119% 44%
120% - 124% 47%
125% and above (Maximum Performance) 50%
For the year ended December 31, 1998, the Employee shall be entitled to
a Performance Bonus equal to 35% of his Annual Base Salary, which shall be paid
during the first pay period of 1999.
(ii) SYNERGY BONUS. At the beginning of each of the
calendar years beginning in 1999, the Board (or the Compensation
Committee thereof) shall establish target goals for the synergies to be
attained as a result of the integration of the HPG Business into
Windmere (the "Synergy Goals"). Not later than 90 days after the end of
each such year in which the portion of the Synergy Goals achieved are
at least equal to 75%, the Employee shall be paid a cash bonus (the
"Synergy Bonus") equal to a percentage of his Annual Base Salary to be
determined as follows:
AGGREGATE PERCENTAGE OF BONUS AS PERCENTAGE
SYNERGY GOALS ACHIEVED OF ANNUAL BASE SALARY
---------------------------- ---------------------
75% - 79% (Threshold Performance) 5%
80% - 84% 7%
85% - 89% 9%
90% - 94% 11%
95% - 99% 13%
100% - 104% (Target Performance) 15%
105% - 109% 17%
110% - 114% 19%
115% - 119% 21%
120% - 124% 23%
125% and above (Maximum Performance) 25%
(iii) CUMULATIVE SYNERGY BONUS. Upon the achievement
of the target goals set forth therein, the Employee shall be entitled
to receive a one-time cash bonus determined pursuant to the Synergy
Bonus Plan attached hereto as Exhibit A and made a part hereof.
5. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
(a) REIMBURSEMENT OF EXPENSES. During the term of Employee's
employment hereunder, the Company, upon the submission of proper substantiation,
including copies of all relevant invoices, receipts or other evidence reasonably
requested by the Company, by the Employee, shall reimburse the Employee for all
reasonable expenses actually paid or incurred by the Employee in the course of
and pursuant to the business of the Company.
(b) EMPLOYEE BENEFITS. Employee shall participate in the
Company's Group Health and Hospitalization Plan, Group Life Insurance Plan,
Group Disability Insurance Plan and
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all other insurances, or insurance plans (collectively, the "Welfare Benefits"),
and employee benefits and bonuses covering Company senior executive officers as
are now or may in the future be in effect, subject to applicable eligibility
requirements. Additionally, the Company shall provide the Employee with life
insurance in an amount equal to five times his Annual Base Salary. During the
Term, the Company shall pay for tax preparation for the Employee on an annual
basis up to a maximum of 1% of Annual Base Salary and for the Employee's annual
dues in a country club.
(c) STOCK OPTIONS. During the Term of this Agreement, the
Employee shall be eligible to be granted options to acquire shares of Windmere
Common Stock under (and therefore subject to all terms and conditions of ) the
Windmere stock option plan as then in effect, and all rules and regulations of
the Securities and Exchange Commission applicable to stock option plans. Such
options will contain such restrictions as required by the Board of Directors of
Windmere or the applicable committee of the Board charged with administration of
the stock option plan. The number of shares of Common Stock subject to the stock
options shall be adjusted for any subsequent stock splits, stock dividends or
similar recapitalizations of Windmere's Common Stock which result in an increase
or decrease of the number of shares of outstanding Common Stock of Windmere.
Except as set forth in Section 5(c)(i) and (ii) below, the number of options and
terms and conditions of options shall be determined in the sole discretion of
the Board, or applicable committee thereof, and shall be based on several
factors, including the performance of the Company.
(i) CLOSING DATE GRANT. Prior to August 31, 1998,
Windmere shall grant to the Employee non-qualified options to purchase
25,000 shares of Windmere's Common Stock. The options shall become
exercisable in equal portions on the first, second and third
anniversary of the Closing Date if the Employee is then employed by
Company.
(ii) PERFORMANCE GRANT. Additionally, prior to August
31, 1998, Windmere shall grant to the Employee non-qualified options to
purchase 12,500 shares of Windmere's Common Stock (the "Performance
Options"). The Performance Options shall become exercisable in equal
portions on March 31, 2000, March 31, 2001 and March 31, 2002 only if
the target goal for Windmere's Earnings Per Share set by the Board of
Directors of Windmere (or the Compensation Committee thereof) (the
"Stock Option Goal") has been achieved for the 1999, 2000, and 2001
fiscal years. However, if at least 75% of the Stock Option Goal has
been met, 75% of the portion of the Performance Options for such year
shall become exercisable, and for each 5% increase in achievement of
the Stock Option Goal for such year, an additional 5% of the portion of
the Performance Options for such year shall become exercisable (i.e.,
if 85% of the Stock Option Goal is met in any one year, 85% of 4,166
Performance Options shall become exercisable). The remaining portion of
the Performance Options for such year shall not become exercisable and
shall terminate.
(d) AUTOMOBILE. During the Term, the Company shall provide
Employee with an automobile allowance of $975 monthly.
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(e) VACATION. During the Term, the Employee will be entitled
to three weeks' paid vacation for each year. The Employee will also be entitled
to the paid holidays and other paid leave set forth in Company's policies.
Vacation days and holidays during any fiscal year that are not used by the
Employee during such fiscal year may not be carried over and used in any
subsequent fiscal year.
6. RESTRICTIONS.
(a) NON-COMPETITION. During the Term and for a one year period
after the termination of the Term for any reason, the Employee shall not,
directly or indirectly, engage in or have any interest in any sole
proprietorship, partnership, corporation or business or any other person or
entity (whether as an employee, officer, director, partner, agent, security
holder, creditor, consultant or otherwise) that directly or indirectly (or
through any affiliated entity) engages in competition with the Company (for this
purpose, any business that engages in the manufacture or distribution of
products similar to those products manufactured or distributed by the Company at
the time of termination of the Agreement shall be deemed to be in competition
with the Company); provided that such provision shall not apply to the
Employee's ownership of Common Stock of Windmere or the acquisition by the
Employee, solely as an investment, of securities of any issuer that is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended, and that are listed or admitted for trading on any United States
national securities exchange or that are quoted on the National Association of
Securities Dealers Automated Quotations System, or any similar system or
automated dissemination of quotations of securities prices in common use, so
long as the Employee does not control, acquire a controlling interest in or
become a member of a group which exercises direct or indirect control or, more
than five percent of any class of capital stock of such corporation.
(b) NONDISCLOSURE. During the Term and for a one year period
after the termination of the Term for any reason, the Employee shall not at any
time divulge, communicate, use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information (as hereinafter defined) pertaining to the business of the Company.
Any Confidential Information or data now or hereafter acquired by the Employee
with respect to the business of the Company (which shall include, but not be
limited to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, sources of leads and methods of doing
business) shall be deemed a valuable, special and unique asset of the Company
that is received by the Employee in confidence and as a fiduciary, and Employee
shall remain a fiduciary to the Company with respect to all of such information.
For purposes of this Agreement, "Confidential Information" means information
disclosed to the Employee or known by the Employee as a consequence of or
through his employment by the Company (including information conceived,
originated, discovered or developed by the Employee) prior to or after the date
hereof, and not generally known, about the Company or its business.
Notwithstanding the foregoing, nothing herein shall be deemed to restrict the
Employee from disclosing Confidential Information to the extent required by law.
None of the foregoing obligations and restrictions apply to any Confidential
Information that the Employee demonstrates was or became generally available to
the public other than as a result of disclosure by the Employee.
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(c) NONSOLICITATION OF EMPLOYEES AND CLIENTS. During the Term
and for a one year period after the termination of the Term for any reason, the
Employee shall not, directly or indirectly, for himself or for any other person,
firm, corporation, partnership, association or other entity, other than in
connection with the performance of Employee's duties under this Agreement, (a)
employ or attempt to employ or enter into any contractual arrangement with any
employee or former employee of the Company, unless such employee or former
employee has not been employed by the Company for a period in excess of six
months, (b) call on or solicit any of the actual or targeted prospective clients
of the Company on behalf of any person or entity in connection with any business
competitive with the business of the Company, and/or (c) make known the names
and addresses of such clients or any information relating in any manner to the
Company's trade or business relationships with such customers (unless the
Employee can demonstrate that such information was or became generally available
to the public other than as a result of a disclosure by the Employee).
(d) OWNERSHIP OF DEVELOPMENTS. All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or
created by Employee during the course of performing work for the Company or its
customers (collectively, the "Work Product") shall belong exclusively to the
Company and shall, to the extent possible, be considered a work made by the
Employee for hire for the Company within the meaning of Title 17 of the United
States Code. To the extent the Work Product may not be considered work made by
the Employee for hire for the Company, the Employee agrees to assign, and
automatically assign at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the Employee
may have in such Work Product. Upon the request of the Company, the Employee
shall take such further actions, including execution and delivery of instruments
of conveyance, as may be appropriate to give full and proper effect to such
assignment.
(e) BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the customers of the Company, whether prepared by the
Employee or otherwise coming into the Employee's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of the Employee's employment hereunder or on the
Company's request at any time.
(f) DEFINITION OF COMPANY. Solely for purposes of this Section
6, the term "Company" also shall include, along with all current direct and
indirect subsidiaries, any existing or future subsidiaries of the Company that
are operating during the time periods described herein and any other entities
that directly or indirectly, through one or more intermediaries, control, are
controlled by or are under common control with the Company during the periods
described herein.
(g) ACKNOWLEDGMENT BY EMPLOYEE. The Employee acknowledges and
confirms that (a) the restrictive covenants contained in this Section 6 are
reasonably necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Section 6 (including without
limitation the length of the term of the provisions of this Section 6) are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion
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of any kind. The Employee further acknowledges and confirms that his full,
uninhibited and faithful observance of each of the covenants contained in this
Section 6 will not cause him any undue hardship, financial or otherwise, and
that enforcement of each of the covenants contained herein will not impair his
ability to obtain employment commensurate with his abilities and on terms fully
acceptable to him or otherwise to obtain income required for the comfortable
support of him and his family and the satisfaction of the needs of his
creditors. The Employee acknowledges and confirms that his special knowledge of
the business of the Company is such as would cause the Company serious injury or
loss if he were to use such ability and knowledge to the benefit of a competitor
or were to compete with the Company in violation of the terms of this Section 6.
The Employee further acknowledges that the restrictions contained in this
Section 6 are intended to be, and shall be, for the benefit of and shall be
enforceable by, the Company's successors and assigns.
(h) REFORMATION BY COURT. In the event that a court of
competent jurisdiction shall determine that any provision of this Section 6 is
invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of this Section 6 within the
jurisdiction of such court, such provision shall be interpreted and enforced as
if it provided for the maximum restriction permitted under such governing law.
(i) EXTENSION OF TIME. If the Employee shall be in violation
of any provision of this Section 6, then each time limitation set forth in this
Section 6 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks injunctive
relief from such violation in any court, then the covenants set forth in this
Section 6 shall be extended for a period of time equal to the pendency of such
proceeding including all appeals by the Employee.
(j) SURVIVAL. The provisions of this Section 6 shall survive
the termination of this Agreement, as applicable.
7. TERMINATION FOR CAUSE.
(a) The Company shall have the right to terminate the Term and
the Employee's employment hereunder for Cause (as defined below). Upon any
termination pursuant to this Section 7, the Company shall pay to the Employee
any unpaid Annual Base Salary through the effective date of termination
specified in such notice. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination, subject, however, to the provisions of Section 5(a)).
(b) For purposes hereof, the term "Cause" shall mean: (i) the
Employee's failure to perform his duties hereunder; (ii) the Employee's failure
to adhere to any written policy of the Company if such failure to adhere has or
is likely to have an adverse effect on the business, operations or prospects the
Company; (iii) the appropriation (or attempted appropriation) of a business
opportunity of the Company, including attempting to secure or securing any
personal profit in connection with any transaction entered into on behalf the
Company; (iv) the misappropriation (or attempted misappropriation) of any of the
Company's
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funds or property; (v) the conviction of, the indictment for (or its procedural
equivalent), or the entering of a guilty plea or plea of no contest with respect
to, a felony, the equivalent thereof, or any other crime with respect to which
imprisonment is a possible punishment; (vi) the commission by the Employee of
any act which shocks, insults and offends the community and ridicules public
morals and decency, or (vii) any gross or willful improper conduct of the
Employee resulting in loss to the Company, damage to the Company's reputation or
theft from the Company.
8. TERMINATION WITHOUT CAUSE. At any time the Company shall have the
right to terminate the Term and the Employee's employment hereunder by written
notice to the Employee. Upon any termination pursuant to this Section 8 (that is
not a termination under any of Sections 7, 9, or 10), the Company shall pay to
the Employee a lump sum equal to the sum of (A) the Annual Base Salary at the
date of termination multiplied by 1.5, and (B) the product of the sum of the
Performance Bonus for the prior year multiplied by 1.5. The Company shall also
continue to pay the premiums for the same or substantially similar Welfare
Benefits for 18 months. Further, any Windmere stock option granted to Employee
shall be exercisable immediately and the Windmere stock acquired pursuant to
such exercise may be sold by Employee subject to no restrictions by the Company
whatsoever (other than those imposed by federal and state securities laws). The
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 5(a)).
9. TERMINATION BY EMPLOYEE.
(a) The Employee shall at all times have the right, upon 60
days written notice to the Company, to terminate the Term and his employment
hereunder.
(b) Upon any termination pursuant to this Section 9 by the
Employee without Good Reason (as defined below), the Company shall pay to the
Employee any unpaid Annual Base Salary through the effective date of termination
specified in such notice. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination, subject, however, to the provisions of Section 5(a)).
(c) Upon any termination pursuant to this Section 9 by the
Employee for Good Reason, the Company shall pay to the Employee the same amounts
that would have been payable by the Company to the Employee under Section 8 of
this Agreement if the Employee's employment had been terminated by the Company
without Cause. The Company shall have no further liability hereunder (other than
for reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 5(a)).
(d) For purposes of this Agreement, "Good Reason" shall mean
any failure by the Company to comply with any of the material provisions of
Section 4 of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Employee.
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10. CHANGE IN CONTROL.
(a) In the event that (i) a Change in Control (as defined in
paragraph (b) of this Section 10) in Windmere shall occur during the Term, and
(ii) prior to the earlier of the expiration of the Term and one year after the
date of the Change in Control, the Term and Employee's employment with the
Company is terminated by the Company without Cause, as defined in Section 7(b)
or the Employee terminates the Term and his employment for Good Reason, as
defined in Section 9(d), the Company shall (1) pay to the Employee any unpaid
Annual Base Salary through the effective date of termination, (2) pay to the
Employee the Incentive Compensation, if any, not yet paid to the Employee for
any year prior to such termination, at such time as the Incentive Compensation
otherwise would have been payable to the Employee, (3) at the time of such
termination, pay to the Employee a lump sum equal to the sum of (A) the Annual
Base Salary at the date of termination multiplied by 1.5, and (B) the product of
the sum of the Performance Bonus for the prior year multiplied by 1.5. The
Company shall also continue to pay the premiums for the same or substantially
similar Welfare Benefits for 18 months. Further, any Windmere stock option
granted to Employee shall be exercisable immediately and the Windmere stock
acquired pursuant to such exercise may be sold by Employee subject to no
restrictions by Windmere whatsoever (other than those imposed by federal and
state securities laws). The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior to
the date of termination, subject, however, to the provisions of Section 5(a)).
(b) For purposes of this Agreement, the term "Change in
Control" shall mean:
(i) Approval by the shareholders of Windmere of (x) a
reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of Windmere immediately prior
to such reorganization, merger or consolidation or other transaction do
not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding voting
securities, or (y) a liquidation or dissolution of Windmere or (z) the
sale of all or substantially all of the assets of Windmere (unless such
reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned); or
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of Windmere (as of the date hereof
the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by Windmere's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of Windmere,
as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of the
Incumbent Board; or
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(iii) The acquisition (other than from Windmere) by
any person, entity or "group", within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act (excluding, for this
purpose, Windmere or its Subsidiaries, or any employee benefit plan of
Windmere or its Subsidiaries) which acquires beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act), of 20% or more of either the then outstanding shares of
Windmere's Common Stock or the combined voting power of Windmere's then
outstanding voting securities entitled to vote generally in the
election of directors.
(c) The payments made pursuant to paragraph (a) above shall be
in lieu of any and all compensation due to Employee for the years that would
otherwise be remaining in the Term. Upon receipt of said lump sum payment, this
Agreement and all rights and duties of the parties shall be terminated, except
as follows. In consideration for such lump sum payment and for the right to
terminate under the conditions set forth above, Employee agrees to consult with
the Company (or its successors), and its officers if requested to do so for a
period of at least two years from the date of such termination. However,
Employee shall be required to devote only such part of his time to such services
as Employee believes reasonable in Employee's sole discretion, and the time and
date such services are offered shall be determined by Employee so long as that
time and date is within a reasonable period of time after the request. It is
expressly agreed that the Company's rights to avail itself of the advice and
consultation services of Employee shall at all times be exercised in a
reasonable manner, that adequate notice shall be given to Employee in such
events, and that non-compliance with any such request by Employee for good
reason, including, but not limited to, ill health or prior commitments, shall
not constitute a breach or violation of this Agreement. Employee agrees that,
except for reimbursement of all reasonable expenses incurred by him with respect
to such consultation and advisory services, payable as such consultation and
advisory services are rendered, he shall not be entitled to any further
compensation. It is understood that in furnishing any advisory and consulting
services provided herein, Employee shall not be an employee of the Company but
shall act in the capacity of independent contractor.
11. WAIVERS. It is understood that either party may waive the strict
performance of any covenant or agreement made herein; however, any waiver made
by a party hereto must be duly made in writing in order to be considered a
waiver, and the waiver of one covenant or agreement shall not be considered a
waiver of any other covenant or agreement unless specifically in writing as
aforementioned.
12. SAVINGS PROVISIONS. The invalidity, in whole or in part, of any
covenant or restriction, or any section, subsection, sentence, clause, phrase or
word, or other provisions of this Agreement, as the same may be amended from
time to time shall not affect the validity of the remaining portions thereof.
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13. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of Florida without giving effect to its
choice of law provision.
14. NOTICES. If either party desires to give notice to the other in
connection with any of the terms and provisions of this Agreement, said notice
must be in writing and shall be deemed given when (a) delivered by hand (with
written confirmation of receipt), (b) sent by facsimile (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case addressed to the party for whom it is intended as follows (or such other
addresses as either party may designated by notice to the other party):
If to the Company: Household Products, Inc.
0 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, President
If to Employee: At the most recent home address
of Employee on the official
records of the Company
15. DEFAULT. In the event either party defaults in the performance of
its obligations under this Agreement, the non-defaulting party may, after giving
30 days notice to the defaulting party to provide a reasonable opportunity to
cure such default, proceed to protect its rights by suit in equity, action at
law, or, where specifically provided for herein, by arbitration, to enforce
performance under this Agreement or to recover damages for breach thereof,
including all costs and attorneys' fees, whether settled out of court,
arbitrated, or tried (at both trial and appellate levels).
16. SECTION 162(m) LIMITS.
Notwithstanding any other provision of this Agreement, if and to the
extent that any remuneration payable by the Company or Windmere to the Employee
for any year would exceed the maximum amount of such remuneration that Windmere
or the Company may deduct for that year by reason of Section 162(m) of the Code,
payment of the portion of the remuneration for that year that would not be so
deductible under Section 162(m) shall, in the sole discretion of the Board, be
deferred so that it shall become payable at such time or times as the Board
reasonably determines that it would be deductible by Windmere or the Company
under Section 162(m), with interest at the "short-term applicable federal rate"
as such term is defined in Section 1274(d) of the Code.
17. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution or other action by the Company to or for the benefit of the
Employee (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments
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required under this Section 19) (a "Payment") would be subject to an excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or any interest or penalties are incurred by the Employee with respect
to any such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), the
Company shall make a payment to the Employee (a "Gross-Up Payment") in an amount
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph (c) of this Section
19, all determinations required to be made under this Section 19, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by Xxxxx Xxxxxxxx LLP, or such other independent public accounting
firm regularly engaged by Windmere from time to time (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the Company and the
Employee within 20 business days of the receipt of notice from the Employee that
there has been a Payment, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change of Control, Windmere shall
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 19, shall be paid by the Company to the Employee within five days
of the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it shall furnish the
Employee with a written opinion that failure to report the Excise Tax on the
Employee's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that Windmere exhausts its remedies pursuant to Section
19 and the Employee thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Employee.
(c) The Employee 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 the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than five business days after the Employee
is informed in writing of such claim and shall apprise Windmere of the nature of
such claim and the date on which such claim is requested to be paid. The
Employee shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Employee in writing prior to the expiration
of such period that it desires to contest such claim, the Employee shall:
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(i) give the Company any information reasonably
requested by Windmere relating to such claim,
(ii) 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 ,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
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 indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 19(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego 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 the Employee to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Employee 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 Windmere shall
determine; provided, however, that if the Company directs the Employee to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Employee, on an interest-free basis and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Employee with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, 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
the Employee 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.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 19(c), the Employee becomes entitled
to receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 19(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 19(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such
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claim and the Company does not notify the Employee in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
18. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person,
other than Windmere, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
19. WAIVER OF JURY TRIAL. ALL PARTIES KNOWINGLY WAIVE THEIR RIGHTS TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION IN ANY COURT OF LAW, TRIBUNAL OR LEGAL
PROCEEDING INVOLVING THE PARTIES HERETO OR ANY DISPUTES ARISING OUT OF OR
RELATED TO THIS AGREEMENT.
IN WITNESS WHEREOF, the Company, by its appropriate officer, signed
this Agreement and Employee has signed this Agreement, as of the day and year
first above written.
HOUSEHOLD PRODUCTS, INC.
By:
----------------------------------
EMPLOYEE
-------------------------------------
Xxxxxxx Xxxxxxxxx
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EXHIBIT A
Cumulative Synergy Bonus Plan (the "Plan")
Prior to December 31, 1998, the Board of Directors of Windmere (or the
Compensation Committee thereof) shall establish a strategic plan for the
attainment of certain cumulative synergies as a result of the integration of the
HPG Business into Windmere (the "Cumulative Synergy Goals"). If the Cumulative
Synergy Goals are achieved prior to the time frame set forth in the strategic
plan, the Board (or the Compensation Committee) shall establish a bonus pool in
an amount equal to 30% of the aggregate Annual Base Salary of all participants
in the Plan (each a "Participant").
Upon the achievement of the Cumulative Synergy Goals, each Participant
shall be entitled to receive a one-time cash bonus (the "Cumulative Synergy
Bonus") to be paid in the first quarter of 2002, if such Participant is employed
with the Company. The amount of the Cumulative Synergy Bonus shall be determined
in the sole discretion of the Board (or the Compensation Committee).
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