EXHIBIT 10.1
Amended and Restated
EMPLOYMENT AGREEMENT
between
WKI HOLDING COMPANY, INC.
and
XXXXXXX X. XXXXX
EMPLOYMENT AGREEMENT
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Recitals
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WHEREAS, Xxxxxxx X. Xxxxx ("Executive") entered into an Employment
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Agreement (the "Employment Agreement") with WKI Holding Company, Inc. (the
"Company") which was effective on January 31, 2003; and
WHEREAS, the Employment Agreement was amended by an amendment which was
effective as of May 31, 2003 and an amendment which was dated July 8, 2003 (the
amendments, collectively with the Employment Agreement being collectively
referred to herein as the "Prior Agreement"); and
WHEREAS the Company desires to continue to employ Executive to serve as
Vice President, General Counsel and Secretary upon the terms and subject to the
conditions set forth in this Agreement (the "Agreement") which shall be
effective on the date is executed (the "Agreement Date"); and
WHEREAS, the Company and Executive further agree and acknowledge that the
terms of this Agreement supersede and completely replace the terms of the Prior
Agreement as of the Agreement Date and the Prior Agreement is null and void as
of the Agreement Date.
NOW, THEREFORE, in consideration of the premises (which are deemed to be an
integral part of this Agreement) and the mutual covenants, representations,
warranties and agreements contained herein, the Company and Executive hereby
agree as follows:
Article I. DEFINITIONS
The terms set forth below have the following meanings (such meanings to be
applicable to both the singular and plural forms, except where otherwise
expressly indicated):
1.1 "Accrued Annual Bonus" means the amount of any Annual Bonus earned
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but not yet paid with respect to the Fiscal Year ended prior to the Date of
Termination.
1.2 "Accrued Base Salary" means the amount of Executive's Base Salary
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which is earned but not yet paid as of the Date of Termination.
1.3 "Agreement" is defined in the Recitals to this Agreement.
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1.4 "Agreement Date" is defined in the Recitals to this Agreement.
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1.5 "Anniversary Date" means any annual anniversary of the Agreement
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Date or the Employment Date, as applicable.
1.6 "Annual Bonus" is defined in Section 4.2(a).
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1.7 ""Base Salary" is defined in Section 4.1.
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1.8 "Beneficiary" is defined in Section 8.9.
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1.9 "Cause" means any of the following:
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(a) Executive's commission of a misdemeanor involving fraud,
dishonesty, or moral turpitude, or of a felony,
(b) Executive's willful or intentional material breach of his
material obligations under this Agreement; provided that such
misconduct is not cured to the best of Executive's ability within
ten (10) business days after the delivery of notice to Executive
of such misconduct,
(c) willful or intentional material misconduct by Executive in
the performance of his duties under this Agreement, or
(d) the willful or intentional failure by Executive to materially
comply (to the best of his ability) with a specific, written
direction of the Chief Executive Officer of the Company that is
not inconsistent with this Agreement and Executive's
responsibilities hereunder, provided that such refusal or failure
(i) is not cured to the best of Executive's ability within ten
(10) business days after the delivery of such direction to
Executive and (ii) is not based on Executive's good faith belief,
as expressed by written notice to the Chief Executive Officer of
the Company, given within such ten (10) business day period, that
the implementation of such direction of the Chief Executive
Officer of the Company would be unlawful or unethical.
1.10 "Change of Control" means any one or more of the following events:
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(a) any person (as such term is used in Rule 13d-5 under the
Exchange Act) or group (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the Exchange Act), other than any
Subsidiary or any employee benefit plan (or any related trust) of
the Company or any of its Subsidiaries, becomes the beneficial
owner in the aggregate of more than thirty-five percent (35%) of
the Voting Securities;
(b) individuals who constitute the initial board of directors of
the Company as of January 31, 2003 (the "Reorganized Incumbent
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Board") cease for any reason to constitute more than sixty-six
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and two-thirds percent (66-2/3%) of the members of the board of
directors of the Company; provided that any individual who
becomes a director after January 31, 2003 whose election or
nomination for election by the Company's shareholders, was
approved by more than sixty-six and two-thirds percent (66-2/3%)
of the members of the Reorganized 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 the Company
(as such terms are used in Rule 14a-11 under the Exchange Act),
"tender offer" (as such term is used in Section 14(d) of the
Exchange Act) or a proposed Merger (as defined below in clause
(iii) of this Section 1.10(c))) shall be deemed to be members of
the Reorganized Incumbent Board;
(c) consummation of a merger, reorganization, consolidation, or
similar transaction (any of the foregoing, a "Merger") unless the
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Persons who were the beneficial owners of the Voting Securities
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immediately before such Merger, are the beneficial owners,
immediately after such Merger, directly or indirectly, in the
aggregate, of more than sixty percent (60%) of the common stock
and any other voting securities of the entity resulting from such
Merger in substantially the same relative proportions as they
owned the Voting Securities immediately before the Merger;
(d) consummation of a transfer or sale of all or substantially
all of the assets of the Company or World Kitchen, Inc. (a
"Sale") unless the Persons who were the beneficial owners of the
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Voting Securities immediately before such Sale, are the
beneficial owners, immediately after such Sale, directly or
indirectly, in the aggregate, of more than sixty percent (60%) of
the common stock and any other voting securities of the entity or
entities that own such assets immediately after the Sale; or
(e) The board of directors of the Company or the shareholders of
the Company, as applicable, approve a plan of liquidation of the
Company or World Kitchen, Inc.
Notwithstanding the foregoing, there shall not be a Change of Control if,
in advance of (or subsequent to) such event, Executive, in his sole
discretion, agrees in writing that such event shall not constitute a Change
of Control. For purposes of this definition of Change of Control, entry
into and performance of the Stockholders' Agreement entered into by and
among the Company and certain of its stockholders dated as of January 31,
2003 (as the same may be amended from time to time) shall not constitute
any Person as a member of a group with any other Person.
1.11 "Code" means the Internal Revenue Code of 1986, as amended from
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time to time.
1.12 "Compensation Committee" means the compensation committee of the
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WKI Board composed exclusively of non-employee directors.
1.13 "Date of Termination" means the effective date of a Termination of
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Employment for any reason, including death or Disability, whether by the
Company or by Executive.
1.14 "Company" is defined in the Recitals to this Agreement.
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1.15 "Disability" means a mental or physical condition which renders
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Executive unable or incompetent to carry out the material job
responsibilities which Executive held or the material duties to which
Executive was assigned at the time the disability was incurred, which has
existed for at least three (3) calendar months and which in the opinion of
a physician mutually agreed upon by the Company and Executive (provided
that the parties shall not unreasonably withhold such agreement) is
expected to be permanent or to last for an indefinite duration or a
duration in excess of six (6) calendar months.
1.16 "Employment Period" is defined in Article III.
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1.17 "Equity Plan" means the WKI Holding Company, Inc. Stock Option
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Plan.
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1.18 "Exchange Act" means the United States Securities Exchange Act of
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1934, as amended, or any federal statute or statutes which shall be enacted
to take its place, together with all rules and regulations promulgated
thereunder.
1.19 "Excise Tax" means the excise tax imposed by Section 4999 of the
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Code, together with any interest or penalties imposed with respect to such
excise tax.
1.20 "Executive" is defined in the Recitals to this Agreement.
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1.21 "Fiscal Year" means the calendar year period beginning each
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January 1 and ending each December 31.
1.22 "Good Reason" means the occurrence of any one of the following
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events:
(a) any material breach of the Agreement by the Company (or by
World Kitchen, Inc. under Section 8.5 hereof) of any material
obligation under this Agreement, including any of the following
occurrences which shall be deemed to constitute a material breach
of a material obligation:
(i) failure to pay Base Salary as required by Section 4.1 or
Annual Bonus as required by Section 4.2;
(ii) failure to pay or provide material benefits under
Articles V and VI of this Agreement, including, without
limitation, the failure to comply with the provisions of the
Long-Term Incentive Compensation Plan or any applicable
Guidelines as are adopted by the Committee relating thereto, or
(iii) any substantial adverse change in the position,
responsibilities, and duties of Executive as compared to
Executive's position, responsibilities and duties as set forth in
Section 2.1.
(b) the failure of the Company to assign this Agreement to a
successor, or the failure of such successor to explicitly assume
and agree to be bound by this Agreement, or
(c) the Company's requiring Executive to be principally based at
any office or location more than 25 miles away from Reston,
Virginia.
Notwithstanding the foregoing, none of the foregoing events shall
constitute a "Good Reason" event if, in advance of (or subsequent to) such
event, Executive, in his sole discretion, agrees in writing that such event
shall not constitute a "Good Reason" event within the meaning of this Agreement.
1.23 "Gross-Up Payment" is defined in Section 6.4(a).
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1.24 "Guidelines" shall have the meaning set forth in the Long-Term
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Incentive Plan.
1.25 "including" means including without limitation.
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1.26 "Interest Rate" means the prime commercial lending rate announced
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by JPMorgan Chase Bank or its successor on the date an amount is to be
determined hereunder or, if no such rate shall be announced on such date,
the immediately prior date on which JPMorgan Chase Bank or its successor
announced such a rate; provided, however, that if the interest rate
determined in accordance with this Section 1.29 exceeds the highest legally
permissible interest rate, then the Interest Rate shall be the highest
legally-permissible interest rate.
1.27 "Long-Term Incentive Plan" means the WKI Holding Company, Inc.
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Long-Term Incentive Plan effective as of May 29, 2003, as in effect from
time to time.
1.28 "Maximum Annual Bonus" is defined in Section 4.2(b).
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1.29 "Maximum Annual Goals" is defined in Section 4.2(b).
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1.30 "Maximum Percentage" is defined in Section 4.2(b).
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1.31 "Parachute Value" of a Payment shall mean the present value as of
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the date of a change of control for purposes of Section 280G of the Code of
the portion of such Payment that constitutes a "parachute payment" under
Section 280G(b)(2), as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such
Payment.
1.32 "Payment" shall mean any payment or distribution in the nature of
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compensation (within the meaning of Section 280G(b)(2) of the Code) to or
for the benefit of Executive, whether paid or payable pursuant to this
Agreement or otherwise.
1.33 "Person" means any individual, sole proprietorship, partnership,
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joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
instrumentality, division, agency, body or department.
1.34 "Prorata Annual Bonus" means (a) the product of the Target Annual
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Bonus for the Fiscal Year that includes the Date of Termination multiplied
by (b) a fraction, the numerator of which is the number of days which have
elapsed in the Fiscal Year through the Date of Termination and the
denominator of which is 365.
1.35 "Safe Harbor Amount" means 2.99 times Executive's "base amount,"
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within the meaning of Section 280G(b)(3) of the Code.
1.36 "Severance Period" means two (2) years from the Date of
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Termination.
1.37 "Stock" means the shares of common stock, par value $0.01 per
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share, of the Company.
1.38 "Subsidiary" means, with respect to any Person, (a) any
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corporation of which more than fifty percent (50%) of the outstanding
capital stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time,
stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by such Person, or (b) any partnership,
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limited liability company or other entity in which such Person has a direct
or indirect interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%).
1.39 "Target Annual Bonus" is defined in Section 4.2(b).
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1.40 "Target Annual Goals" is defined in Section 4.2(b).
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1.41 "Target Percentage" is defined in Section 4.2(b).
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1.42 "Taxes" means the incremental United States federal, state and
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local income, excise and other taxes payable by Executive with respect to
any applicable item of income.
1.43 "Tax Gross-Up Payment" means an amount payable to Executive such
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that after payment of Taxes on such amount there remains a balance
sufficient to pay the Taxes being reimbursed.
1.44 "Termination for Cause" means a termination of the employment of
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the Executive by the Company for Cause during the Employment Period.
1.45 "Termination for Good Reason" means a Termination of Employment by
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Executive for a Good Reason during the Employment Period.
1.46 "Termination of Employment" means a termination by the Company or
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by Executive of Executive's employment by the Company.
1.47 "Termination Without Cause" means a termination of Executive by
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the Company for any reason other than Cause or Executive's death or
Disability during the Employment Period.
1.48 "Value" of a Payment shall mean the economic present value of a
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Payment as of the date of a change of control for purposes of Section 280G
of the Code, as determined by the Accounting Firm using the discount rate
required by Section 280G(d)(4) of the Code.
1.49 "Voting Securities" means any of the securities of the Company
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entitled to vote generally in the election of the directors of the Company.
1.50 "WKI Board" means the board of directors of the Company.
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Article II. POSITION AND RESPONSIBILITIES
2.1 Duties. The Company shall employ, and the Company and World
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Kitchen, Inc. shall appoint Executive during the Employment Period as its
Vice President, General Counsel and Secretary. Executive shall be
responsible for such functions and operations as assigned to him from time
to time by the Chief Executive Officer of the Company. Executive shall
report on all functions and operations within the scope of his
responsibilities to the Chief Executive Officer of the Company. During the
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Employment Period, and excluding any periods of disability, vacation, or
sick leave to which Executive is entitled, Executive agrees to devote his
full attention and time to the business and affairs of the Company and the
Subsidiaries.
2.2 Other Activities. Executive may serve on corporate, civic or
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charitable boards or committees, deliver lectures, fulfill speaking
engagements or teach at educational institutions, or manage personal
investments, provided that such activities do not individually or in the
aggregate materially interfere with the performance of Executive's duties
under this Agreement.
Article III. EMPLOYMENT PERIOD
3.1 Employment Period.
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(a) Subject to the termination provisions hereinafter provided, the
initial term of Executive's employment under this Agreement (the
"Employment Period") shall commence on January 31, 2003 (the
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"Employment Date") and end on the Anniversary Date which is three
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(3) years after the Employment Date (the "Initial Term"); provided,
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however, that as of the date that is six (6) months before the end
of the Initial Term, the Employment Period will automatically be
extended through the Anniversary Date that is five years after the
Employment Date, unless one party has previously provided the other
with a notice that such extension shall not take place (a "Notice of
Non-Extension"). The period from the end of the Initial Term through
such fifth Anniversary Date is referred to as the "Extension
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Period". The Initial Term and the Extension Period shall
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collectively be referred to herein as the "Employment Period."
(b) Notwithstanding the foregoing, (i) if either party timely
delivers a written Notice of Non-Extension to the other in
accordance with the provisions of Subsection (a) hereof, this
Agreement and the Employment Period shall automatically terminate at
the end of the Initial Term and (ii) this Agreement and the
Employment Period shall automatically terminate at the end of the
Employment Period, subject to Executive's rights as set forth in
Section 7.
Article IV. COMPENSATION
4.1 Salary. The Company shall pay Executive in accordance with the
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normal payroll practices of the Company an annual salary at a rate of
$250,000 per year ("Base Salary"). During the Employment Period, the Base
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Salary shall be reviewed at least annually and may be increased (but not
decreased) from time to time as shall be determined by the WKI Board or the
Compensation Committee. Any increase in Base Salary shall not limit or
reduce any other obligation of the Company to Executive under this
Agreement. Each such increase in the Base Salary shall be treated for all
purposes of this Agreement as Executive's Base Salary. Base Salary shall
not be decreased at any time without the express written consent of
Executive.
4.2 Annual Bonus.
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(a) Executive shall be eligible to earn an annual cash bonus
("Annual Bonus") in accordance with the terms hereof for each Fiscal
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Year which begins during the Employment Period.
(b) The WKI Board or the Compensation Committee, as applicable,
(collectively, the "Board or Committee") shall establish written
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performance goals, the achievement of which will determine the
amount of the Executive's annual bonuses for all Fiscal Years that
end during the Employment Period. Performance goals for the Fiscal
Years shall be established annually by the Board or Committee, after
consultation wit the Executive, within ninety (90) calendar days
after the first day of the applicable Fiscal Year. If Executive
achieves the target level of such performance goals (the "Target
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Annual Goals"), as determined by the Board or Committee, his Annual
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Bonus for that Fiscal Year shall be equal to sixty percent (60%)
(the "Target Percentage") of Executive's Base Salary (the "Target
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Annual Bonus"). If Executive achieves the maximum level of such
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performance goals ("Maximum Annual Goals") for any such Fiscal Year,
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as determined by the Board or Committee, his Annual Bonus for that
Fiscal Year shall be one hundred and twenty percent (120%) (the
"Maximum Percentage") of Executive's Base Salary (the "Maximum
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Annual Bonus"). The Annual Bonus for any Fiscal Year may exceed the
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Maximum Annual Bonus at the discretion of the Board or Committee.
The Target Percentage and the Maximum Percentage may be increased by
the Board or Committee, from time to time, but may not be decreased
below the above specified percentages of Executive's Base Salary
without the express written consent of Executive. If Executive
achieves a level of performance which falls between the Target
Annual Goals and the Maximum Annual Goals, linear interpolation
shall be applied to determine Executive's Annual Bonus for such
year.
(c) Except as described in the following sentence, the Company shall
pay the entire Annual Bonus that is payable with respect to a Fiscal
Year in a lump sum cash payment as soon as practicable after the
Board or Committee determines whether and the degree to which
Maximum Annual Goals or Target Annual Goals have been achieved
following the close of such Fiscal Year. Any such Annual Bonus shall
in any event be determined and paid within ninety (90) calendar days
after the end of the Fiscal Year.
Article V. PARTICIPATION IN EQUITY PLAN
5.1 Executive and the Company entered into a stock option agreement
pursuant to which Executive was granted an option to purchase 30,000 shares
of Stock at a price of $18.25 per share under the terms of the Equity Plan.
Executive acknowledges and agrees that this stock option grant fully
satisfies any and all obligations of the Company under the Prior Agreement
with respect to Executive's participation in the Equity Plan.
5.2 In the event of a conflict between this Agreement and the Equity
Plan, the provisions of the Equity Plan shall control, including, without
limitation, all provisions pertaining to Executive's rights under the
Equity Plan in the event of a Change of Control or a Termination of
Employment.
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Article VI. BENEFITS AND PERQUISITES
6.1 Benefit Plans and Perquisites.
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(a) During the Employment Period, Executive shall be entitled to
participate in the welfare benefit plans and programs and
perquisites of the Company on terms not less favorable than those in
effect for other senior executives of the Company, from time to
time; provided, that Executive shall not be covered by any severance
plan, program or policy during the Employment Period.
(b) During the Employment Period, Executive shall be entitled to
participate in the retirement and savings benefit plans and programs
of the Company on terms not less favorable than those in effect for
other senior executives of the Company from time to time.
(c) Without limiting the generality of the foregoing, during the
Employment Period, Executive shall receive a cash benefits allowance
of $25,000 per year, which amount shall be paid (in arrears) no
later than January 31 of the following year.
(d) During the Employment Period, Executive shall also be entitled
to participate in the Long-Term Incentive Plan or such other plan or
program sponsored by the Company providing deferred compensation or
retirement benefits, as in effect from time to time.
6.2 Expenses. During the Employment Period, Executive shall be
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entitled to receive prompt reimbursement for all reasonable
employment-related expenses incurred by Executive upon the receipt by the
Company of an accounting for such expenses in accordance with the
practices, policies and procedures applicable to other senior executives of
the Company.
6.3 Office; Support Staff. During the Employment Period, Executive
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shall be entitled to an office, and to secretarial and other assistance,
appropriate to his position and duties under this Agreement.
6.4 Gross-Up Payment.
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(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that
any Payment would be subject to the Excise Tax, then Executive shall
be entitled to receive an additional payment (the "Gross-Up
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Payment") in an amount such that, after payment by Executive of all
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Taxes (and any interest or penalties imposed with respect to such
Taxes), including any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 6.4(a), if
it shall be determined that Executive is entitled to the Gross-Up
Payment, but that the Parachute Value of all Payments does not
exceed one hundred and ten percent (110%) of the Safe Harbor Amount,
then except as provided below, no Gross-Up Payment shall be made to
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Executive and the amounts payable under this Agreement, other than
amounts or benefits provided under Article V of this Agreement or
pursuant to any other option or equity grants to Executive (the
"Subject Payments"), shall be reduced (but not below zero) so that
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the Parachute Value of all Payments, in the aggregate, equals the
Safe Harbor Amount. The reduction of the amounts payable hereunder,
if applicable, shall be made by first reducing the payments under
Section 7.3(a)(ii), unless an alternative method of reduction is
elected by Executive, and in any event shall be made in such a
manner as to maximize the Value of all Payments actually made to
Executive. For purposes of reducing the Payments to the Safe Harbor
Amount, only the Subject Payments shall be reduced. If the reduction
of the Subject Payments would not result in a reduction of the
Parachute Value of all Payments to the Safe Harbor Amount, no
amounts payable under the Agreement shall be reduced pursuant to
this Section 6.4(a), and the Gross-Up Payment shall be made to
Executive. The Company's obligation to make Gross-Up Payments under
this Section 6.4 shall not be conditioned upon Executive's
Termination of Employment.
(b) Subject to the provisions of Section 6.4(c), all determinations
required to be made under this Section 6.4, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Ernst & Young, LLP, or such other
nationally recognized certified public accounting firm as may be
designated by Executive (the "Accounting Firm"). The Accounting Firm
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shall provide detailed supporting calculations both to the Company
and Executive within fifteen (15) business days of the receipt of
notice from Executive 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,
Executive may 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 6.4, shall be paid by the Company to Executive within five
(5) business days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. 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 that will not have been made
by the Company should have been made (the "Underpayment"),
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consistent with the calculations required to be made hereunder. In
the event the Company exhausts its or their remedies pursuant to
Section 6.4(c) and Executive 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 Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such
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notification shall be given as soon as practicable, but no later
than ten (10) business days after Executive is informed in writing
of such claim. The Executive shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration
of the thirty (30) calendar day period following the date on which
Executive gives such notice to the Company (or such shorter period
ending on the date that any payment of Taxes with respect to such
claim is due). If the Company notifies Executive in writing prior to
the expiration of such period that the Company desires to contest
such claim, Executive shall:
(i) give the Company any information reasonably requested by
the Company 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 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 Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 6.4(c), the
Company shall control all proceedings taken in connection with such
contest, and, at its sole discretion, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences
with the applicable taxing authority in respect of such claim and
may, at its sole discretion, either direct Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that, if the Company
directs Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to Executive, on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such
advance or with respect to any imputed income in connection with
such advance; and provided, further, that any extension of the
statute of limitations relating to payment of Taxes for the taxable
year of Executive 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
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to issues with respect to which the Gross-Up Payment would be
payable hereunder, and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of a Gross-Up Payment or an
amount advanced by the Company pursuant to Section 6.4(c), Executive
becomes entitled to receive any refund with respect to the Excise
Tax to which such Gross-Up Payment relates or with respect to such
claim, Executive shall (subject to the Company's complying with the
requirements of Section 6.4(c), if applicable) 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 Executive of an amount advanced by the Company pursuant
to Section 6.4(c), a determination is made that Executive shall not
be entitled to any refund with respect to such claim and the Company
do or does not notify Executive in writing of its or their intent to
contest such denial of refund prior to the expiration of thirty (30)
calendar 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 be offset, to the extent thereof, against the
amount of Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section 6.4, the
Company may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority,
for the benefit of Executive, all or any portion of any Gross-Up
Payment, and Executive hereby consents to such withholding.
Article VII. TERMINATION BENEFITS
7.1 Termination for Cause, Other Than for Good Reason, Death or
-----------------------------------------------------------
Disability, or At or After End of Employment Term. If (i) the Company
-------------------------------------------------
terminate Executive's employment for Cause, (ii) Executive terminates his
employment other than for Good Reason, death or Disability, or (iii) the
Executive's employment is terminated at or after the end of the Employment
Period for any reason (whether by Executive or the Company), including,
without limitation, by virtue of the Company providing a Notice of
Non-Extension to the Executive, the Company shall pay to Executive as soon
as reasonably possible but in no event later than thirty (30) calendar days
after the Date of Termination an amount equal to the sum of Executive's
Accrued Base Salary and Accrued Annual Bonus. The respective provisions of
the Equity Plan, the Long-Term Incentive Plan and any other benefit plans
and perquisite programs in which Executive participates shall govern
whether Executive shall be entitled to any benefits thereunder in the event
his employment is terminated under the foregoing circumstances.
Notwithstanding the foregoing, in the event that the Executive's employment
is terminated after the end of the Employment Period under circumstances
which would entitle him to receive severance benefits under a severance
plan or policy of the Company in effect as such time, the amount of the
Executive's severance pay shall in no event be less than one (1) year's
Base Salary (as in effect at termination), payable in a lump sum in cash
within thirty (30) days of the Date of Termination.
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7.2 Termination for Death or Disability. If, before the end of the
-----------------------------------
Employment Period, Executive's employment terminates due to his death or
Disability, the Company shall pay to Executive or his Beneficiaries, as the
case may be, as soon as reasonably possible but in no event later than
thirty (30) calendar days after the Date of Termination, an amount which is
equal to the sum of Executive's Accrued Base Salary and Accrued Annual
Bonus. Further, if the Date of Termination occurs during the period
commencing from July 1 through December 31 of any Fiscal Year, Executive or
his Beneficiaries, as the case may be, shall be paid a Prorata Annual Bonus
as soon as reasonably possible but in no event later than thirty (30)
calendar days after the Date of Termination. The respective provisions of
the Equity Plan, the Long-Term Incentive Plan and any other benefit plans
or perquisite programs in which Executive participates shall govern whether
Executive or his Beneficiaries, as applicable, shall be entitled to any
benefits under such plans or programs in the event of a termination of
Executive's employment for death or Disability.
7.3 Termination Without Cause or for Good Reason.
--------------------------------------------
(a) In the event of a Termination Without Cause or a Termination for
Good Reason during the Employment Period, Executive shall receive
the following:
(i) as soon as reasonably possible but in no event later than
thirty (30) calendar days after the Date of Termination, a lump sum
amount in immediately available funds equal to the sum of
Executive's Accrued Base Salary and Accrued Annual Bonus;
(ii) as soon as reasonably possible but in no event later than
thirty (30) calendar days after the Date of Termination, a lump sum
amount in immediately available funds equal to 120% of Executive's
Base Salary;
(iii) if the Date of Termination occurs during the period
commencing from July 1 through December 31 of any Fiscal Year, as
soon as reasonably possible but in no event later than thirty (30)
calendar days after the Date of Termination, a lump sum amount in
immediately available funds equal to the Prorata Annual Bonus;
(iv) as soon as reasonably possible but in no event later than
thirty (30) calendar days after the Date of Termination, a lump sum
amount in immediately available funds equal to the total amount (if
any) of Executive's unvested benefits under any plan or program
sponsored by the Company providing deferred compensation or
retirement benefits, that are forfeited on account of the
Termination of Employment, and that would have vested, had
Executive's employment continued through the end of the Severance
Period;
(v) the provisions of the Equity Plan, the Long-Term Incentive
Plan and any other benefit plans or perquisite programs in which
Executive is a participant as of the Date of Termination shall
govern whether Executive shall be entitled to any benefits under
such plans or programs in the event of a Termination for Good Reason
or a Termination Without Cause;
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(vi) the medical and dental benefits referred to in Section
6.1(a) to which Executive is entitled as of the Date of Termination
through the Severance Period; and
(vii) as soon as reasonably possible but in no event later
than thirty (30) calendar days after the Date of Termination, but
without duplication of the foregoing, a lump sum cash payment equal
to the present value (determined using the Interest Rate) of the
amounts payable under Section 6.1(c) for the period from the Date of
Termination through the Severance Period.
(b) Executive's Termination of Employment shall not be considered to
be for Good Reason unless:
(i) not more than ninety (90) calendar days after the
occurrence (or if later, not more than ninety (90) calendar days
after the Executive becomes aware) of the event or events alleged to
constitute Good Reason, Executive provides the Company with written
notice (the "Notice of Good Reason") of his intent to consider the
---------------------
Termination for Good Reason, including a detailed description of the
specific reasons which form the basis for such consideration, and
demanding that such event or events be cured not later than ten (10)
business days after the Company receives the Notice of Good Reason
(the "Cure Period");
(ii) the Company shall have failed to cure such event or
events during the Cure Period; and
(iii) not more than ninety (90) calendar days following the
expiration of the Cure Period, Executive shall have given the
Company a second notice (a "Notice of Termination for Good Reason")
-------------------------------------
stating that such cure has not occurred and that as a result,
Executive is terminating his employment for Good Reason on the date
(after the end of the Cure Period) specified in the Notice of
Termination for Good Reason. A Notice of Termination for Good Reason
shall not be based upon any reason or reasons other than one or more
reasons set forth in the Notice of Good Reason.
Article VIII. MISCELLANEOUS
8.1 Public Announcement. Executive shall be given a reasonable
-------------------
opportunity to review and comment on any public announcement by the Company
or any of its Subsidiaries relating to this Agreement or Executive's
employment by the Company.
8.2 Approvals. The Company represents and warrants to Executive that
---------
it has taken all corporate action necessary to authorize and enter into
this Agreement.
8.3 No Offset. The obligations of the Company (and World Kitchen, Inc.
---------
solely for purposes of Section 8.5) to make the payments provided for in
this Agreement and otherwise to perform their obligations hereunder shall
not be affected by any circumstances, including set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company or
World Kitchen, Inc., as applicable, may have against Executive or others.
Any claim which the Company or World Kitchen, Inc., as applicable, may have
14
against Executive, whether for a breach of this Agreement or otherwise,
shall be brought in a separate action or proceeding and not as part of any
action or proceeding brought by Executive to enforce any rights against the
Company or World Kitchen, Inc., as applicable, under this Agreement.
8.4 No Mitigation. In no event shall Executive be obligated to seek
-------------
other employment or to take any other action to mitigate the amounts
payable to Executive under any of the provisions of this Agreement, nor
shall the amount of any payment hereunder be reduced by any compensation
earned as a result of Executive's employment by another employer, except
that any continued welfare benefits provided for by Section 7.3(a)(vi)
shall not duplicate any benefits that are provided to Executive and his
family by such other employer and shall be secondary to any coverage
provided by such other employer.
8.5 Guarantee. World Kitchen, Inc. agrees to guarantee the payment of
---------
all liabilities under this Agreement except the payment of amounts which
are due and owing under the Long-Term Incentive Plan or the Equity Plan,
which payments shall remain the sole obligation of the Company. World
Kitchen, Inc. represents and warrants to Executive that it has taken all
corporate action necessary to authorize and make the foregoing guarantee of
payment
8.6 Liability Insurance and Indemnification. The Company shall
---------------------------------------
maintain directors' and officers' liability insurance for Executive while
employed, and for a six (6) year period following Termination of Employment
at a level equivalent to the most favorable and protective coverage for any
active officer or director of the Company. The Company agrees to indemnify
Executive for any job-related liability to the fullest extent permitted
under all applicable laws, its by-laws, and all other applicable
indemnification agreements of the Company and any of its Subsidiaries.
8.7 Non-Solicitation. In consideration of the benefits provided under
----------------
this Agreement, Executive hereby agrees to be bound by the provisions of
this Section. During the Employment Period and for a period of one (1) year
after termination of employment for any reason, Executive shall not in any
manner, directly or indirectly, induce or attempt to induce any employee of
the Company or any Subsidiary or affiliate to quit or abandon his or her
employment, or any customer, independent contractor, consultant, supplier
or vendor of the Company Business to quit or abandon its relationship for
any purpose whatsoever. For purposes of this Section, "Company Business"
means the development, manufacture or purchase from third parties and
marketing of consumer bakeware, dinnerware, kitchen and household tools,
rangetop cookware and cutlery products.
8.8 Enforcement.
-----------
(a) If Executive incurs legal, accounting, expert witness or other
fees and expenses in an effort to establish, in connection with any
dispute with the Company, Executive's entitlement to compensation
and benefits under this Agreement, the Company shall, to the extent
Executive is successful in, or enters into a settlement with the
Company in which the Company agrees to resolve, such dispute,
reimburse Executive for such fees and expenses, to the extent the
incurrence and amount thereof are reasonable, and shall pay
Executive a Tax
15
Gross-Up Payment in respect of the Taxes incurred by Executive with
respect to such reimbursement of fees and expenses. The Company
shall reimburse Executive for such fees and expenses on a monthly
basis upon Executive's request for reimbursement accompanied by
evidence that the fees and expenses were incurred.
(b) If the Company fails to pay any amount provided under this
Agreement when due, the Company shall pay interest on such amount at
a rate equal to the Interest Rate.
8.9 Beneficiary. If Executive dies prior to receiving all of the
-----------
amounts payable to him in accordance with the terms and conditions of this
Agreement, such amounts shall be paid to the beneficiary ("Beneficiary")
-----------
designated by Executive in writing to the Company during his lifetime, or
if no such Beneficiary is designated, to Executive's estate. Such payments
shall be made in a lump sum to the extent so payable and, to the extent not
payable in a lump sum, in accordance with the terms of this Agreement.
Executive, without the consent of any prior Beneficiary, may change his
designation of Beneficiary or Beneficiaries at any time or from time to
time by submitting to the Company a new designation in writing.
8.10 Assignment; Successors. Neither the Company nor World Kitchen,
----------------------
Inc. may assign its rights or obligations under this Agreement without the
prior written consent of Executive except to any surviving entity following
a Change of Control that has assumed in writing all of the obligations
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of Executive, his estate and Beneficiaries, the Company, World
Kitchen, Inc. and the successors and permitted assigns of the Company and
World Kitchen, Inc. Any assignment or attempted assignment in violation of
this Section 8.10 shall constitute a Good Reason event of termination.
8.11 Nonalienation. Except as otherwise expressly provided herein,
-------------
benefits payable under this Agreement shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution or levy of any kind, either voluntary or
involuntary, prior to actually being received by Executive, and any such
attempt to dispose of any right to benefits payable hereunder shall be
void.
8.12 Severability. If all or any part of this Agreement is declared by
------------
any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of
this Agreement not declared to be unlawful or invalid. Any provision so
declared to be unlawful or invalid shall, if possible, be construed in a
manner which will give effect to the terms of such provision to the fullest
extent possible while remaining lawful and valid.
8.13 Amendment; Waiver. This Agreement shall not be amended or
-----------------
modified except by written instrument executed by the Company, World
Kitchen, Inc. and Executive. A waiver of any term, covenant or condition
contained in this Agreement shall not be deemed a waiver of any other term,
covenant or condition, and any waiver of any default in any such term,
covenant or condition shall not be deemed a waiver of any later default
thereof or of any other term, covenant or condition.
16
8.14 Notices. All notices hereunder shall be in writing and delivered
-------
by hand, by nationally-recognized delivery service that guarantees
overnight delivery, or by first-class, registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Company, to:
00000 Xxxxxxx Xxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
If to Executive, to:
Xxxxxxx X. Xxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, X.X. 00000
The parties may from time to time designate a new address by notice given
in accordance with this Section 8.14. Notice shall be considered to have
been given when actually received by the addressee.
8.15 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
8.16 Entire Agreement. This Agreement and each of the plans, benefit
----------------
programs and policies in effect from time to time during the Employment
Period forms the entire agreement between the parties hereto with respect
to the subject matter contained in the Agreement and in the respective
plans, benefit programs and policies and shall supersede all prior
agreements, promises and representations regarding employment,
compensation, severance or other payments or any other obligation of the
Company or any of its Subsidiaries upon Termination of Employment, whether
in writing or otherwise.
8.17 Applicable Law. This Agreement shall be interpreted and construed
--------------
in accordance with the laws of the State of Delaware, without regard to its
choice of law principles.
8.18 Survival of Executive's Rights. Each of the provisions of this
------------------------------
Agreement which by their terms are to be performed after, or which
expressly survive, the termination of this Agreement or the Date of
Termination shall survive the termination of Executive's employment, the
termination of this Agreement, or both.
17
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the last date on which it is executed below (the Agreement
Date).
WKI HOLDING COMPANY, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------
Its:
-----------------------------
Date: July 31, 2003
----------------------------
WORLD KITCHEN, INC.
By:
-------------------------------
Its:
------------------------------
Date:
-----------------------------
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
July 31, 2003
---------------------------------
Date
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