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Exhibit 10.4
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EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
XXXXXX X. XXXXX
AS OF
June 12, 1995
SECTION PAGE
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1. Employment 1
2. Principal Location 1
3. Compensation 2
4. Reimbursement of Expenses 3
5. Term and Termination 3
6. Services Furnished 10
7. Additional Insurance at Group's Option 10
8. Gross-Up Payments 11
9. Confidentiality and Non-Competition 11
10. Definitions 14
11. Arbitration 19
12. General 20
EXHIBIT
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Example of Calculation of Severance Payment A
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EMPLOYMENT AGREEMENT
AGREEMENT made as of the 12th day of June, 1995, (the
"Effective Date") by and between Ekco Group, Inc., a Delaware
corporation ("Group") with its principal place of business in
Nashua, New Hampshire and Xxxxxx X. Xxxxx ("Executive"), of 0000
XXX Xxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxxx 00000.
WHEREAS, Executive desires to be employed by Group and Group
desires to employ Executive all on the terms and conditions
recited herein;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained, the parties covenant and agree as
follows:
1. EMPLOYMENT. Group hereby employs Executive and Executive
hereby accepts employment as an executive employee of Group
to perform such executive and managerial services as may be
assigned to him by or under the authority of the Board of
Directors (such term, and all other capitalized terms not
otherwise defined in this Agreement shall have the meaning
set forth in Section 10 of this Agreement), consistent with
such status as an executive employee. Executive agrees to
use his best efforts, skills and abilities faithfully to
promote the interests of Group and to perform such services
as may be required of him by Group from time to time
consistent with his status, to the reasonable satisfaction
of the Board of Directors. Without limiting the generality
of the foregoing, Executive agrees to serve as Vice
President, Strategic Planning & Business Development, of
Group (if and so long as he is elected to that office by the
Board of Directors) and to serve without additional
compensation as a director, executive officer or executive
employee of such Affiliates as Group may from time to time
reasonably request. Executive agrees to work exclusively
for Group and such Affiliates as his full-time employment
during the term of this Agreement, except as Group and
Executive may otherwise agree in writing from time to time.
2. PRINCIPAL LOCATION. Executive presently performs the
duties of his office generally in Nashua, New Hampshire and
shall be obligated to take such trips outside of the Nashua,
New Hampshire or metropolitan Boston, Massachusetts area as
shall be reasonably necessary in connection with his duties,
and Group will pay all reasonable costs of travel and living
expenses incurred in connection therewith. Executive
recognizes that his duties hereunder may require significant
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travel. Executive, subject to his rights under Section
5.3.4, agrees to relocate to any other location in the
United States of America at which Group or an Affiliate has
offices or operations, provided that Executive's job at such
new location involves compensation no less than his existing
compensation and comparable duties. In the event of any
such relocation, Group shall pay Executive all reasonable
expenses incurred by Executive in relocating to such new
area.
3. COMPENSATION.
3.1 Except as otherwise provided in this Agreement, for his
services and agreements hereunder Executive shall receive
from Group the following compensation:
3.1.1 Salary at the annual rate of One Hundred Seventy Five
Thousand Dollars ($175,000) (the "Base Salary"),
payable in equal installments in accordance with
Group's pay policy and in any event not less frequently
than monthly. The Base Salary shall be subject to
increase from time to time as determined by the Board
of Directors or the Compensation Committee in its sole
discretion pursuant to a review of Executive's
performance by the Board of Directors or the
Compensation Committee, which review shall be conducted
at such time as the Board of Directors or the
Compensation Committee shall determine, but in any
event at least once during each twelve (12) months of
the term of this Agreement. The Base Salary as from
time to time increased is referred to herein as the
"Adjusted Cash Salary."
3.1.2 Such other monetary compensation by way of bonus or
otherwise, if any, as may be determined from time to
time by the Board of Directors or the Compensation
Committee in its sole discretion;
3.1.3 Such fringe benefits (including, without limitation,
vacation time, group life, long term and short term
disability, medical, dental and other insurance,
retirement, including, pension, profit-sharing and
similar plans) as Group may provide from time to time
for its executive employees, whether or not the
category of such benefits is addressed in this
Agreement, it being understood that Executive shall be
entitled to the greater of each benefit addressed in
this Agreement and that provided by Group for its
executive employees generally. Group shall in any
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event, whether or not such coverage is provided for
other executive employees, provide Executive group life
or other life insurance at its expense with a death
benefit equal to at least four (4) times Executive's
Adjusted Salary, in addition to any other life
insurance payable to Executive or his beneficiaries
under Section 5.4.1.3 below or any life insurance for
which Executive pays premiums; and
3.1.4 Such other compensation pursuant to such executive
bonus plans, restricted stock purchase plans, stock
option plans or other stock plans, available to
executive employees of Group from time to time, as the
Board of Directors or the Compensation Committee may in
its sole discretion determine.
4. REIMBURSEMENT OF EXPENSES. Group shall reimburse Executive
for travel, entertainment and other business expenses
reasonably incurred by him in connection with the business
of Group and its Affiliates to the extent and in a manner
consistent with then Group policy.
5. TERM AND TERMINATION.
5.1. TERM. The term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue
until terminated as hereinafter set forth. For the purposes
of this Agreement, the date of termination shall be the
effective date of termination of Executive, rather than the
date of notice thereof.
5.2. TERMINATION BY EXECUTIVE.
5.2.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3)
months to Group, which time period may be waived, in
whole or in part, by Group in its discretion in which
event Executive's employment shall end on such earlier
date as agreed by Group and Executive.
5.2.2 Except as provided in Section 5.2.3, if Executive's
employment is terminated pursuant to Section 5.2.1,
Executive shall not be entitled as of the date of
termination to any further compensation under this
Agreement of any kind or nature, except for Accrued and
Unpaid Salary and Expenses.
5.2.3 However, if such notice is given after six (6) months
after but within twenty four (24) months after a Change
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of Control (a "Change of Control Notice"), unless such
Change of Control shall have been approved by a
resolution adopted by the Board of Directors with at
least two-thirds (2/3) of the then serving Group
directors who are Group directors as of the date hereof
voting in favor, then upon such termination by
Executive pursuant to Section 5.2.1, Group shall
provide and Executive (or his Estate) shall be entitled
to receive:
5.2.3.1 Within thirty (30) days of the date of such termination
a two (2) year Lump Sum Payment Amount;
5.2.3.2 A Gross-Up Payment as set forth in Section 8 of this
Agreement;
5.2.3.3 Continuation of all fringe benefits referred to in
Section 3.1.3, including, but not limited to, Medical,
Dental and Life Insurance Coverage Continuation for a
period of two (2) years from the date of termination;
5.2.3.4 Accrued and Unpaid Salary and Expenses;
5.2.3.5 Outplacement Benefits; and
5.2.3.6 In the event of termination as provided in this Section
5.2.3, Executive shall not be entitled to payments
under both this Section 5.2.3 and Section 5.3.4.2. Any
compensation payable under this Section 5.2.3 shall be
paid notwithstanding Executive's total and permanent
disability or death occurring after termination of his
employment hereunder. In the event Executive dies or
becomes totally and permanently disabled after the date
of any such notice but prior to the date of termination
of his employment under this Section 5.2.3, the
provisions of this Section 5.2.3 and not the provisions
of Section 5.4 or 5.5 shall apply, provided that in the
event of Executive's total and permanent disability
during such time, Executive shall also be entitled to
each benefit that Group then provides to its executive
employees upon and during the continuance of total and
permanent disability to the extent such benefit exceeds
those specified in this Section 5.2.3.
5.3. TERMINATION BY GROUP; CHANGE OF CONTROL; AND CONSTRUCTIVE
TERMINATION.
5.3.1 Executive's employment may be terminated at any time by
Group, with or without Good Cause, by written notice to
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Executive, effective immediately unless otherwise
stated in such notice.
5.3.2 TERMINATION BY GROUP WITH GOOD CAUSE. In the event
Group shall terminate Executive's employment for Good
Cause, then Executive shall not be entitled as of the
date of termination to any further compensation under
this Agreement of any kind or nature, except for
Accrued and Unpaid Salary and Expenses.
5.3.3 TERMINATION BY GROUP WITHOUT GOOD CAUSE PRIOR TO A
CHANGE OF CONTROL.
5.3.3.1 In the event Executive's employment hereunder is
terminated by Group without Good Cause prior to a
Change of Control, then subject to Section 5.3.3.2
Group shall provide and Executive (or his Estate) shall
be entitled to the following:
5.3.3.1.1 A one half (#) year Lump Sum Payment Amount if the
termination occurs on or prior to December 12, 1995 and
if the date of termination occurs thereafter a one (1)
year Lump Sum Payment Amount, each payable within
thirty (30) days of the date of termination;
5.3.3.1.2 On and after December 13, 1995 and thereafter during
the term of this Agreement Executive shall, immediately
upon termination, pursuant to this Section 5.3.3 have
the unconditional, unencumbered and free right, title
and interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive elects
to exercise unexercised rights, to his obligation to
pay the option exercise price or other purchase price
to the extent theretofore not paid) to Executive by
Group at any time prior to the date of termination as
if all restrictions imposed by Group had lapsed and all
events necessary to vest in Executive such rights,
including the lapsing of time, had occurred, and Group
shall take all such actions as may be necessary to
release any then existing restrictions imposed by Group
and waive any rights to repurchase such shares;
5.3.3.1.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of six (6) months from the
date of termination if the date of termination is on or
before December 12, 1995 and thereafter one (1) year
from the date of termination;
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5.3.3.1.4 On and after December 13, 1995 and thereafter during
the term of this Agreement, Accrued and Unpaid Salary
and Expenses;
5.3.3.1.5 On and after December 13, 1995 and thereafter during
the term of this Agreement, Outplacement Benefits; and
5.3.3.1.6 Gross-Up Payment
5.3.3.2 Any compensation payable under this Section 5.3.3 shall
be paid notwithstanding Executive's total and permanent
disability or death subsequent to Group's notice of
termination. In the case of termination of his
employment under this Section 5.3.3, Executive shall
not be entitled as of the date of termination to any
other compensation under this Agreement, except as
provided in this Section 5.3.3, provided that in the
event of Executive's total and permanent disability at
such time, Executive shall also be entitled to all of
the benefits Group then provides to its executive
employees upon and during the continuance of total and
permanent disability.
5.3.4 CHANGE OF CONTROL; CONSTRUCTIVE TERMINATION; SUBSEQUENT
TERMINATION BY GROUP WITHOUT GOOD CAUSE.
5.3.4.1 Immediately upon a Change of Control while Executive is
employed hereunder, and without regard to whether or
not Executive's employment is terminated, whether a
Constructive Termination occurs at such time or
thereafter or the manner of any subsequent termination
of Executive's employment, Executive shall immediately
have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group
which were granted, sold or optioned (subject, if
Executive elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the Change of
Control as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.3.4.2 If following a Change of Control there shall be either
an event of Constructive Termination or termination by
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Group of Executive's employment without Good Cause,
then Group shall provide and Executive (or his Estate)
shall be entitled to the following:
5.3.4.2.1 Within ten (10) days of such event a two (2) year Lump-Sum
Payment Amount. For the purposes of this Section 5.3.4, the
time when a Constructive Termination occurs shall be the day
any event occurs which is included in the definition of
Constructive Termination;
5.3.4.2.2 Executive shall immediately upon termination pursuant
to this Section 5.3.4 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.4.2.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of two (2) years from the
date of termination;
5.3.4.2.4 Accrued and Unpaid Salary and Expenses;
5.3.4.2.5 Outplacement Benefits; and
5.3.4.2.6 Gross-Up Payment.
5.4. TERMINATION UPON DEATH.
5.4.1 This Agreement, except for the provisions of Sections
8, 9, 11 and 12, shall terminate upon the death of
Executive, provided that Executive's Estate shall have
the right to receive, and Group shall be obligated to
pay or provide to Executive's Estate the following:
5.4.1.1 Executive's Estate shall immediately upon such
termination have the unconditional, unencumbered and
free right, title and interest in all shares of stock
of Group which were granted, sold or optioned (subject,
if Executive's Estate elects to exercise unexercised
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rights, to the obligation to pay the option exercise
price or other purchase price to the extent theretofore
not paid) to Executive by Group at any time prior to
his death as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares;
5.4.1.2 All of the benefits Group provides to its executive
employees as provided in Section 3.1.3 to the extent
such benefits are greater than those specified in this
Agreement;
5.4.1.3 A lump-sum payment equal to the Adjusted Salary in
effect at the date of death payable no later than sixty
(60) days after the date of death. To secure such
payment, Group may in its discretion maintain life
insurance on Executive's life payable to his Estate or
other beneficiary, which life insurance coverage shall
be in addition to the amount provided for pursuant to
the provisions of Section 3.1.3 above (or any life
insurance for which Executive pays premiums), and to
the extent benefits are paid pursuant to such insurance
coverage maintained by Group under this Section
5.4.1.3, Group's commitment under this Section 5.4.1.3
shall be satisfied; and
5.4.1.4 Accrued and Unpaid Salary and Expenses.
5.5. TERMINATION UPON DISABILITY.
5.5.1 This Agreement shall terminate if, by virtue of total
and permanent disability, Executive is unable to
perform his duties hereunder, provided that Executive's
(or his legal representative's) right to receive, and
Group's obligations to pay, amounts as a result of such
termination shall survive any such termination.
5.5.2 The determination that, by virtue of total and
permanent disability, Executive is unable to perform
his duties hereunder shall be made by a physician
chosen by Group and reasonably satisfactory to
Executive (or his legal representative). The cost of
such examination shall be borne by Group. Without
limiting the generality of the foregoing, unless
otherwise agreed, Executive shall be conclusively
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presumed to be totally and permanently disabled
hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such
duties for a period of one hundred and eighty (180)
consecutive calendar days or for any periods
aggregating one hundred and eighty (180) days or more
in any twelve (12) month period. For purposes of this
Section 5.5, the date of termination in the event of
such total and permanent disability shall be the
earlier of the date of such physician's examination
pursuant to which such determination is made or the
first business day after which such 180-day period has
expired.
5.5.3 In the event of such a termination as a result of
Executive's total and permanent disability, all
compensation hereunder shall terminate, Executive shall
immediately upon such termination have the
unconditional, unencumbered and free right, title and
interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive or his
Estate elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective
date of termination as if all restrictions had lapsed
and all events necessary to vest in Executive such
rights, including the lapsing of time, had occurred,
and Executive shall be entitled to and Group shall pay
to Executive the following:
5.5.3.1 Amounts at the rate of the Adjusted Cash Salary in
effect at the date of such termination, payable in the
manner specified in Section 3.1.1, for a period of
twelve (12) months following the date of such
termination at the rate of one-twelfth of such Adjusted
Cash Salary per month, LESS the amount of any
disability insurance proceeds actually paid to or for
the benefit of Executive (or his Estate) with respect
to such twelve (12) months following the date of
termination under any disability policy the premiums
for which have been paid by Group or any Affiliate.
During such twelve (12) months following termination of
this Agreement as a result of Executive's permanent and
total disability, Group shall maintain at Group's sole
expense the life insurance policies referred to in the
second sentence of Section 3.1.3. and in Section
5.4.1.3 if then in force and, in the event of
Executive's death during the twelve (12) months
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following such termination, shall pay the death benefit
provided for in Section 5.4.1.3 notwithstanding the
prior termination of this Agreement as a result of
Executive's total and permanent disability, in addition
to the life insurance benefits payable to the
beneficiaries of the policies referred to in Section
3.1.3 which shall be payable in the event of
Executive's death during such period of twelve (12)
months;
5.5.3.2 Medical, Dental and Life Insurance Coverage
Continuation for a period of one (1) year from the date
of termination;
5.5.3.3 Accrued and Unpaid Salary and Expenses;
5.5.3.4 Continuation of each of the medical, dental and other
benefits which Group provides to its permanently
disabled executive employees in accordance with Group's
then existing policy to the extent each benefit is
greater than that specified in this Section 5.5; and
5.5.3.5 Outplacement Benefits.
6. SERVICES FURNISHED. Group shall furnish Executive with
office space, secretarial assistance, and such other
facilities and services at Group's facility to which
Executive may be assigned, as shall be suitable to the
Executive's position and adequate for the performance of his
duties as set forth herein.
7. ADDITIONAL INSURANCE AT GROUP'S OPTION. Group, in its sole
discretion, may apply for and procure in its own name
(whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as Group may
deem advisable, in addition to insurance policies
contemplated by Section 3.1.3 and Section 5.4.1.3.
Executive shall have no right, title, or interest in any
such policies of insurance, except to the extent his Estate
or other persons are specifically named as beneficiaries
thereof. Executive agrees to submit to any medical or other
examination and to execute and deliver any applications or
other instrument in writing, reasonably necessary to
effectuate such insurance.
8. "GROSS-UP" PAYMENTS. Executive shall be paid an additional
amount ("Gross Up Payment") if any payments ("Payment
Amounts") made to him (or his Estate) by Group or any of its
Affiliates, under this Agreement or otherwise, are subject
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to the excise tax imposed by Internal Revenue Code Section
4999 or any successor Internal Revenue Code Section (the
"Section 4999 Tax"). The Gross Up Payment shall be computed
so that Executive (or his Estate) retains a net amount equal
to the Payment Amounts after deduction of any Section 4999
Tax on the Payment Amounts and any Federal, state or local
tax (including any Section 4999 Tax) on the Gross Up
Payment.
For the purposes of determining the amount of the Gross Up
Payment, Executive shall be deemed to pay Federal, State and
local income taxes at the highest marginal rate of taxation
in the calendar year in which the Payment Amounts are
taxable to him under Code Section 4999. State and local
income taxes shall be calculated based upon the state and
locality of Executive's domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by
tax counsel selected and paid for by Group and approved by
Executive. The Gross Up Payment shall be paid within thirty
(30) days of such computation and in no event (without
written consent of Executive) later than the last day of the
calendar year with respect to which the Section 4999 Tax is
imposed.
If such determination is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel
(selected and paid for under the above procedure) shall
represent Executive in any such audit or appeal process
thereafter and compute appropriate adjustments and
additional Gross Up Payments as provided above, after which
Group shall pay Executive such adjustment, and Group shall
reimburse Executive for interest and other tax penalties, if
applicable.
9. CONFIDENTIALITY, INVENTIONS AND NON-COMPETITION.
9.1 Executive's agreements set forth in this Section 9 shall
survive the expiration or termination of this Agreement and
the termination of his employment with Group for any reason.
9.2 Executive acknowledges that irreparable injury would be
caused to Group by his breach of any of the provisions of
this Section 9, and agrees that in the event of any such
breach, Group and any of its Affiliates, in addition to such
other rights and remedies as may exist in its favor, may
apply to any court of law or equity having jurisdiction to
enforce the specific performance of the provisions of this
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Section 9 and may apply for injunctive relief against any
act which would violate any such provisions.
9.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how",
including, without limitation, techniques, formulae,
designs, developments, projects, technical information and
manufacturing process and distribution methods, relating to,
or concerned with the business of Group and its Affiliates
prior to the termination of this Agreement and their
respective suppliers, customers, stockholders, licensors,
licensees, and other persons or entities with which Group or
its Affiliates has, has had, or may in the future have any
commercial, scientific or technical relationship. During
the term of this Agreement and at all times following the
termination of Executive's employment for any reason,
Executive will not, directly or indirectly, divulge, furnish
or make accessible to anyone (other than as required in the
regular course of his employment by Group or with the
consent of the Board of Directors) such information. The
prohibitions contained in this Section 9.3 shall not apply
to information which is (a) within the domain of the general
public; (b) generally known within the industry or
industries in which Group or its Affiliates is involved; or
(c) independently developed by Executive without utilization
of confidential information gained while in the employ of
Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property
furnished to Executive by Group or any Affiliate of Group or
produced by Executive or others in connection with his
services to Group or any such Affiliate shall be and remain
the sole property of Group. Executive will return and
deliver such property to Group as and when requested by
Group. Copies of documents and records may be kept, but
shall be kept completely confidential to the same extent as
other confidential information of Group. Executive shall
return and deliver all such property upon termination of his
employment for any reason, and Executive will not take with
him any such property or any reproduction of such property
upon such termination.
9.4 Any work or research or the results thereof, made or
developed by Executive, alone or in conjunction with others
during the term of his employment, including but without
limitation, any designs, patents, inventions, processes,
know-how or formulae created, invented or conceived during
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the period of his employment by Group, whether during or out
of the usual hours of work, which arise out of or are
related to the business, research, or development work or
field of operation of Group, or any of its Affiliates, shall
to the extent of Executive's interest therein be the sole
and exclusive property of Group, shall be disclosed in
writing to Group and to no other person, unless so directed
in writing by the Board of Directors, and Executive hereby
assigns to Group all and any rights which he has or may
acquire in the same. To this end, both during the period of
Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers,
instruments and documents properly required to effect such
assignment to Group or its nominee, to make application
through Group's patent attorney or general counsel at the
expense of Group, for such United States and foreign patents
as may be specified from time to time by Group on
inventions, processes, or formulae which are or become the
property of Group hereunder, and to execute assignments upon
Group's request, for Executive's entire interest in all such
applications to Group or to its nominee without compensation
(other than his usual compensation as an employee of Group)
and Executive agrees to give Group and its patent attorney
or general counsel all reasonable assistance in preparing
such applications, descriptions, and illustrations of each
such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications
or patents resulting therefrom; and further agrees to
execute all lawful papers considered necessary by Group and
do all that Group reasonably requests in order to protect
Group's rights in said inventions, processes, and formulae
or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is
further agreed that Executive's obligations specified
hereunder shall not expire with the termination of this
Agreement or his employment, but Group agrees to pay
Executive a reasonable amount for any time that Executive
spends in such work at Group's request after the termination
of this Agreement or his employment hereunder and agrees to
reimburse Executive for expenses reasonably or necessarily
incurred in connection with such work.
9.5 In consideration of his continued employment by Group, and
the other benefits accruing to him hereunder, and subject to
the fulfillment by Group of its obligations to Executive
hereunder, either directly or through draw-down under the
letter(s) of credit or other device established pursuant to
Section 6, Executive agrees that during the term hereof and
for a period of twelve (12) months following the date of
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termination of Executive's employment pursuant to Section 5
provided that Executive has received and is continuing to
receive all payments and benefits required to be paid and
provided to him pursuant to this Agreement (such period of
employment and twelve (12) month period being referred to in
this Agreement as the "Non-Competition Period"), he will not
engage or participate, directly or indirectly, within the
United States of America or Canada either as principal,
agent, employee, employer, consultant, stockholder, partner
or in any other individual or representative capacity
whatever, in the conduct or management of, or own any stock
or other proprietary interest in, or debt of, any business
which shall be competitive with any business which is or was
conducted by Group or any Affiliate of Group, while
Executive was an employee of Group, unless he shall have
obtained the prior written consent of the Board of
Directors, and which consent shall make express reference to
this Agreement. Notwithstanding any other provision in this
Section 9, Executive shall be free without such consent to
make investments, directly or indirectly, in the securities
of any publicly-owned entity if his ownership thereof is
limited to not more than three percent (3%) of the issued
and outstanding securities of any class of securities of
such entity. Executive acknowledges that his skills and
experience are such that he can anticipate finding
employment at an executive level in a wide variety of
industries and represents and agrees that the restrictions
imposed by this Section 9 on employment are necessary for
the protection of the legitimate interests and competitive
position of Group and do not impose undue hardships on
Executive.
9.6 During the Non-Competition Period, Executive shall not,
directly or indirectly, solicit any officer, director,
executive, employee or consultant of Group or any Affiliate
of Group to leave such employment or terminate such
position.
10. DEFINITIONS.
As used in this Agreement, the following terms shall have
the following meanings:
10.1 "Accrued and Unpaid Salary and Expenses" shall mean such
portion of Executive's Adjusted Cash Salary as has accrued
by virtue of Executive's employment during the period prior
to the date of termination and has not yet been paid,
together with any amounts for expense reimbursement,
vacation accruals and similar items which have been properly
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incurred or accrued in accordance with the provisions of
this Agreement prior to the date of termination and have not
yet been paid.
10.2 "Adjusted Salary" shall mean the Adjusted Cash Salary plus
an amount equal to the amount of any salary increase(s), if
any, provided in the form of restricted stock or stock
options less any sum attributable to the payment of salary
in lieu of automobile benefits (as of the date of this
Agreement that amount is Seven Thousand Dollars ($7,000)).
10.3 "Adjusted Cash Salary" shall have the meaning set forth in
Section 3.1.1.
10.4 "Affiliate" shall mean any corporation, joint venture, or
other business enterprise, whether incorporated or
unincorporated, which Group directly, or indirectly through
one or more intermediaries, controls or is controlled by, or
is under common control with.
10.5 "Agreement" shall mean this Employment Agreement.
10.6 "Base Salary" shall have the meaning set forth in Section
3.1.1.
10.7 "Board of Directors" shall mean the Board of Directors of
Group.
10.8 "Change of Control" shall mean and shall be deemed to have
occurred (i) if any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended), other than Group or any employee stock
plan of Group, is or becomes the beneficial owner, directly
or indirectly, of securities of Group representing fifteen
percent (15%) or more of the outstanding Common Stock of
Group, or (ii) ten (10) days following the commencement of,
or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by any "person" of fifteen percent
(15%) or more of the outstanding Common Stock of Group,
provided, however, that at the conclusion of such ten (10)
day period such person has not discontinued or rescinded his
intention to make such a tender or exchange offer or (iii)
if during any consecutive twelve (12) month period beginning
on or after the date hereof individuals who at the beginning
of such period were directors of Group cease, for any
reason, to constitute at least a majority of the Board of
Directors of Group; or (iv) if a merger of, or consolidation
involving, Group in which Group's stock is converted into
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securities of another corporation or into cash shall be
consummated, or a plan of complete liquidation of Group
(whether or not in connection with a sale of all or
substantially all of Group's assets) shall be adopted and
consummated, or substantially all of Group's operating
assets are sold (whether or not a plan of liquidation shall
be adopted or a liquidation occurs), excluding in each case
a transaction solely for the purpose of reincorporating
Group in a different jurisdiction or recapitalizing Group's
stock.
10.9 "Change of Control Notice" shall have the meaning set
forth in Section 5.2.3.
10.10 "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors.
10.11 "Constructive Termination" shall be deemed to have
occurred if and when (i) Executive's Adjusted Salary is
decreased below the level in effect on the date of the last
amendment of this Agreement, or the aggregate Adjusted
Salary and incentive compensation or benefits available to
be earned by Executive is directly or indirectly reduced or
eliminated, or the bonus percentage applicable to
Executive's participation in any compensation or bonus plan
or arrangement is reduced, without Executive's consent,
provided, however, that nothing herein shall be construed to
guarantee Executive's bonus awards if performance is below
applicable targets, or (ii) the importance of Executive's
job responsibilities is reduced without Executive's consent,
or (iii) a proposal is made to relocate Executive to a
location other than Nashua, New Hampshire or the greater
Boston, Massachusetts metropolitan area without his consent.
10.12 "Effective Date" shall have the meaning set forth in the
first paragraph of this Agreement.
10.13 "ESOP" shall mean the Ekco Group, Inc. Employees' Stock
Ownership Plan.
10.14 "Estate" shall mean Executive's estate, legal
representative or beneficiaries as the context so requires.
10.15 "Executive" shall mean the individual defined as such in
the first paragraph of this Agreement, and shall include the
Estate of such individual where the context so requires.
10.16 "Good Cause" shall include, but not be limited to,
repeated or serious neglect of duty, dishonesty, conviction
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of a felony, breach of this Agreement or repeated or serious
violations of corporate rules or regulations. Notwithstanding the
foregoing, following a Change of Control, "Good Cause" shall not be
deemed to have occurred unless (a) the conduct which is the basis for
breach is material and is either willful or intentionally unlawful and
(b) Executive shall not have ceased such conduct and cured the effect
thereof, if curable, so that such breach shall no longer be material
within thirty (30) days after Executive shall have received written
notice from Group of Group's intention to terminate Executive's
employment for Good Cause, which notice shall specify in detail the
basis therefor.
10.17 "Gross-Up Payment" shall have the meaning set forth in
Section 8.
10.18 "Group" shall mean Ekco Group, Inc., and its
successors and permitted assigns.
10.19 "Lump Sum Payment Amount" shall mean a cash amount
payable in a lump sum equal to the sum of (a) the Adjusted Salary in
effect immediately prior to the date of such termination, plus (b) the
maximum amount payable to Executive including all cash and the value
of all equity based options and grants of stock except for equity
based options and grants of stock issued pursuant to Section 6.6 of
the 1995 Plan (as defined below) (the value of each stock option to be
determined as of the grant date thereof and the value of each grant of
restricted stock to be determined as of the date described hereinbelow
by applying the Black-Scholes model where applicable or another
recognized form of valuation if the Black-Scholes model is not
applicable, with the value ascribed by Group to each such stock option
and grant of restricted stock as of the aforementioned dates to be
conclusively presumed to be the value thereof) under all compensation
and bonus plans and arrangements identified in Sections 3.1.2, 3.1.3
and 3.1.4 for the fiscal year in which the date of the termination
occurs, plus (c) the value of the securities, cash or other property
which were allocated to Executive's account in the ESOP for the fiscal
year immediately preceding the fiscal year in which the date of
termination occurs (which shall be in addition to any distribution
from the ESOP to which he is entitled thereunder), which sum shall be
multiplied by the number of years specified in Sections 5.2.3.1,
5.2.4.1., 5.3.3.1.1 and 5.3.4.2.1, respectively. For purposes of
calculating the amount of clause (b), the maximum payable under any
plan shall generally be the maximum amount actually allocated to
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any, specifically targeted for Executive. However, for purposes of
calculating the maximum payable under the 1995 Restatement of
Incentive Compensation Plan for Executive Employees of Ekco Group,
Inc. and its Subsidiaries (the "1995 Plan") for purposes of clause
(b), (i) the annual bonus amount shall be the greatest of (x) the
target award for the current fiscal year, (y) the target award for the
prior fiscal year and (z) the amount of the award paid or payable with
respect to the prior fiscal year, and (ii) the number of shares of
restricted stock awarded as long-term incentive awards shall be equal
to the number of such shares most recently awarded to Executive as a
long-term grant pursuant to the 1995 Plan divided by the number of
blocks in such grant. Such shares shall be valued as of the date
utilized by Group to calculate the number of shares issued to
Executive, or if such date is not readily ascertainable, the date of
issuance of the shares. Attached hereto and incorporated herein as
Exhibit A is an example ("Example") detailing the calculation of the
Lump Sum Amount utilizing certain stated assumptions and including
other severance payments. The Example defines the manner and method
for this calculation and for other severance payments and shall be
followed in making severance payments hereunder.
10.20 "Medical, Dental and Life Insurance Coverage Continuation"
shall mean the continuation of the medical, dental and life insurance
coverage which Executive (including his family) shall have been
receiving from Group as of the earlier of the date of Executive's
termination and the date of notice of termination by either Group or
Executive, from the date of termination until the earlier of (x)
Executive's full-time employment by a third party who offers Executive
at least comparable benefits in the particular benefit category or (y)
the number of years or months specified in Sections 5.2.3.3,
5.3.3.1.3, 5.3.4.2.3 and 5.5.3.2, respectively, following such date of
termination. If and to the extent Group is not able to continue the
applicable coverage of Executive under the terms of such group
policies or other policies providing coverage for Executive, Group
shall cooperate with Executive in any actions which may be necessary
to allow Executive, to the extent possible, either (i) to buy such
policy or (ii) to continue insurance coverage with the insurer writing
Group's applicable group policy outside of Group's group plan or a
substitute reasonably satisfactory to Executive, and in such event,
Group shall pay to Executive 140% of the cost of such insurance
coverage, but in no event more than twice the cost
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of such coverage allocable to Executive under the group or
other policy covering him prior to termination.
10.21 "Non-Competition Period" shall have the meaning set forth
in Section 9.5.
10.22 "Payment Amount shall have the meaning set forth in
Section 8.
10.23 "Outplacement Benefits" shall mean outplacement services
by a professional outplacement firm of Executive's choosing at the
expense of Group, who shall engage such firm directly on behalf of
Executive, provided, however, that Group's liability with respect to
providing such services will be limited to one-half of Executive's
Adjusted Salary.
11. ARBITRATION.
Except with respect to the provisions of Section 9, any
dispute or disagreement arising under or relating to the
provisions of this Agreement, or any breach thereof,
including, without limitation, relating to Section 1 hereof
or to whether a termination of Executive's employment was
with Good Cause, shall be resolved by binding arbitration in
accordance with the Commercial Rules of the American
Arbitration Association or its successor (except as set
forth herein), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. The decision of the arbitrators shall
be made by majority vote and be final and absolute. In any
such arbitration, one arbitrator shall be selected by Group
and one arbitrator shall be selected by Executive. Each
party shall have thirty (30) days from the receipt by one
party of a notice from the other party of submission to
arbitration to choose an arbitrator. A third arbitrator
shall be selected by the two (2) so chosen within ten (10)
days of the selection of the most recently selected of the
two arbitrators so chosen. Failing action within any of
such periods by any party or the arbitrators, any
unappointed arbitrator or arbitrators shall be appointed by
the American Arbitration Association (or its successor) upon
application of any party or arbitrator. The parties shall
promptly furnish to the arbitrators such information as the
arbitrators may reasonably request. The expenses of any
arbitration proceeding shall be paid by Group (including
Executive's attorney's fees and expenses) if Executive
recovers any amount or otherwise obtains relief in such
proceeding and by Executive (including Group's attorney's
fees and expenses) if Executive initiated arbitration and
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there is a specific finding that Executive's claim was
frivolous. In all other circumstances, the expenses of such
arbitration proceeding (not including attorney's fees and
expenses, each party to bear such party's own attorney's
fees and expenses) shall be divided equally. Arbitration
shall take place in Nashua, New Hampshire, or such other
place on which the parties shall agree. This Agreement and
any arbitration proceeding are subject to N.H.R.S.A. ch.
542.
12. GENERAL.
12.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
12.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group and Executive, his heirs, executors,
administrators, legal representatives, and permitted
assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group will be informed prior to such event of
the existence of this Agreement. Group shall require any
successor (whether direct or indirect, by purchase, merger,
operation of law, consolidation, assignment or otherwise of
a controlling interest in the business, stock or other
assets of Group) to assume expressly and agree to perform
this Agreement. Failure of Group to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle Executive to such compensation and benefits in the
same amount and on the same terms as he would be entitled
hereunder in the event of a termination without Good Cause
after a Change of Control, except that, for the purposes of
implementation hereof, the date on which any such succession
becomes effective shall be deemed to be the date on which
Executive becomes entitled to such compensation and benefits
from Group.
12.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by
a duly authorized court of competent jurisdiction, then the
remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not
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be affected thereby, and each portion and provision of this
Agreement shall be valid and be enforceable to the fullest
extent permitted by law; and (ii) if any provision, or any
part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby,
Group and Executive agree that the court making such
determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific
words and phrases ("blue-pencilling") and in its reduced or
blue-pencilled form such provision shall then be enforceable
and shall be enforced.
12.4 All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same
in hand, by reputable overnight delivery service or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested,
postage prepaid, as follows:
If sent to Group: Ekco Group, Inc.
00 Xxxx Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attention: Executive Vice
President, Secretary and General Counsel
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other
by like notice.
12.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof. There are no promises, representations,
conditions, provisions or terms related thereto other than
those set forth in this Agreement. This Agreement
supersedes all previous understandings, agreements and
representations between Group and Executive regarding
Executive's employment by Group, written or oral.
12.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to
affect the meaning or construction of any provision hereof.
Any references in this Agreement to a section shall be
deemed to include all subsections of that section unless
specifically excluded.
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12.7 No failure of Group or Executive to exercise any power
reserved to it or him, respectively, by this Agreement, or
to insist upon strict compliance by Executive or Group,
respectively, with any obligation or condition hereunder,
and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver of Group's or
Executive's right, as the case may be, to demand exact
compliance with any of the terms hereof. Waiver by either
party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar or
different nature, nor shall any delay, forbearance or
omission of either party to exercise any power or right
arising out of any breach or default by the other party of
any of the terms, provisions or covenants hereof, affect or
impair its or his right to exercise the same, nor shall such
constitute a waiver by Group or Executive, as the case may
be, of any right hereunder, or the right to declare any
subsequent breach or default and to terminate this Agreement
prior to the expiration of its term.
12.8 This is a New Hampshire contract and shall be construed
under and be governed in all respects by the law of the
State of New Hampshire.
12.9 Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment
provided for herein be reduced by any compensation earned by
Executive as the result of employment by another employer or
by retirement benefits after the date of termination or
otherwise, except as specifically set forth herein.
12.10 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be
executed and delivered by its duly authorized officer and its
corporate seal to be hereunto affixed and Executive has hereunto
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set his hand and seal as of the day and year first written above
in duplicate originals.
EKCO GROUP, INC.
By /S/ XXXXXX XXXXX
------------------------------
/S/ XXXXXX X. XXXXX
---------------------------------
Executive
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XXXXXX XXXXX EXHIBIT A
--------------------------------------------------------------------------------
ASSUMPTIONS:
-----------
Termination on July 15, 1996. 1x or 2x severance benefit, as defined.
Current market value of common stock $15.000
-------
Adjusted cash salary $120,000
Less: car allowance ($7,000)
1995 salary increase 7,000
Adjusted Salary 120,000
--------
Bonus:
Current year target award $50,000
Target award for prior fiscal year 25,000
Amount paid or payable for prior year 5,000
Note: Executive elected to take 5% of bonus in cash, 50% in
Restricted Stock and the balance in stock options.
Relocation - Executive is partially relocated when terminated.
Other: Executive participates in the Supplemental Executive Retirement Plan.
Executive is granted stock options and is offered and purchases
Restricted Stock.
Executive participates in Employee Stock Purchase Plan, 401k and ESOP.
================================================================================
TERMINATION BY GROUP WITHOUT GOOD CAUSE
---------------------------------------
LUMP SUM PAYMENT AMOUNT: 1x 2x
-- --
ADJUSTED SALARY $120,000 $240,000
MAXIMUM PAYABLE UNDER 3.1.2
Greatest of this year's target, last year's
target or last year's actual award $50,000 50,000 100,000
Other-completion of relocation per
company policy 3,500 3,500
--------------------------------------------------------------------------------
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MAXIMUM PAYABLE UNDER 3.1.3
Supplemental Executive Retirement Plan:
MAXIMUM PAYABLE UNDER 3.1.4
Other compensation:
Other Executive bonus plans 0 0
Restricted stock purchase plans:
1995 grant 16,000
Number of years in cycle 5
Annualized grant 3,200
Market value on date of grant $7.500
------
Value of restricted stock 24,000 24,000 48,000
------
1996 grant 5,000
Number of years in cycle 5
Annualized grant 1,000
Market value on date of grant $8.000
------
Value of restricted stock 8,000 8,000 16,000
Stock option plans:
Grant this fiscal year 9,000
Black Scholes value at date of grant $3.50
-----
Value of option 31,500 31,500 63,000
Other-Employee Stock Purchase Plan:
# shares purchased this fiscal year 1,000
Current market value $15.000
-------
Value of stock 15,000
------
benefit (15% discount from market) 2,250 2,250 4,500
Value of securities allocated to ESOP
account in previous fiscal year
Common shares allocated 863
Preferred shares allocated 1,423
Allocation of unvested forfeited shares 14
--
Total shares allocated 2,300
Current market value $15.000
-------
Value of ESOP shares allocated 34,500
Dividends received not reflected
above 184
---
Total value of ESOP securities
allocated 34,684 34,684 69,368
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OTHER PAYMENTS:
Unpaid salary to date of termination 2,308 2,308
Accrued vacation-weeks 5
Weekly rate 2,308
-----
Total 11,538 11,538
Unreimbursed expenses (if applicable)
Gross up payment (if applicable)
Total payment $287,780 $558,214
======== ========
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