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Exhibit 10.43
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is executed this 18th day
of June, 1999, by and between Windmere-Durable Holdings, Inc., a Florida
corporation with its principal place of business at 0000 Xxxxx Xxxxx Xxxxx,
Xxxxx Xxxxx, Xxxxxxx (the "Company"), and Xxxxx X. Xxxxxxxx, an individual
residing in the State of New York (the "Executive").
RECITALS:
A. The Executive is currently employed as the Chief Executive Officer
and President of the Company.
B. The Executive possesses intimate knowledge of the business and
affairs of the Company and its subsidiaries, their policies, methods and
personnel.
C. The Board of Directors of the Company (the "Board") recognizes that
the Executive has contributed to the growth and success of the Company and its
subsidiaries, and desires to assure the Company and its subsidiaries of the
Executive's continued employment and to compensate him therefor.
D. The Board has determined that this Agreement will reinforce and
encourage the Executive's continued attention an dedication to the Company and
its subsidiaries.
E. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT
Therefore, in consideration of the premises, mutual covenants and
agreements of the parties contained herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
Company and the Executive hereby agree as follows:
1. Employment. Commencing on the Closing Date, the Company shall
employ the Executive and the Executive shall accept employment by the Company,
upon the terms and conditions set forth in this Agreement.
2. Term. The term of employment (the "Term") of this Agreement shall
begin on the date hereof and shall terminate as provided herein. Except as
otherwise provided in Sections 7, 8, 9, 10, 11 and 12 below, the Term shall be
for a continuous five-year period commencing on this date and running for a
period such that on each "Anniversary Date" (as defined below) an additional
year automatically shall be added. On any Anniversary Date, either party may
provide written notice to the other party of that party's intention not to
extend the Term of this Agreement beyond the number of years then remaining in
the Term, which shall always be five. Such written notice shall be deemed the
notice to terminate this Agreement at the end of the five-year term then in
effect. The "Anniversary Date," as used herein, shall be the first day of the
second year of the Term and the first day of each subsequent year, including
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each year beyond the first five years of the Term. It is the intention of the
parties that the Term as of each Anniversary Date automatically shall be five
years, that five years' written notice shall be required to terminate this
Agreement, except as otherwise provided in Sections 7, 8, 9, 10, 11 and 12
below, and that said written notice to terminate may only be given on an
Anniversary Date.
3. Duties. The Executive will have such duties as are assigned or
delegated to the Executive by the Board and will initially serve as the Chief
Executive Officer of the Company. The Executive will have the primary
responsibility as the Chief Executive Officer of the Company to manage and
direct the day-to-day business of the Company, including the generation of
income and management of expenses. The Executive will devote his entire
business time, attention, skill, and energy exclusively to the business of the
Company and its subsidiaries, will use his best efforts to promote the success
of the Company and its subsidiaries, and will cooperate fully with the Board in
the advancement of the best interests of the Company and its subsidiaries.
4. Compensation. During the Term, the Company shall compensate
Executive as follows:
(a) Salary. The Company shall pay Executive an annual salary
of $1,000,000 (the "Annual Base Salary"), to be distributed in equal periodic
installments according to the Company's customary payroll practices. The Annual
Base Salary will increase progressively for each of the ensuing twelve month
periods ("Fiscal Year") during the Term by an amount at least equal to the
percentage increase in the United States Consumer Price Index for all urban
consumers (CPI-U), U.S. City Average - All Items, published by the Bureau of
Labor Statistics, United States Department of Labor (the "Index") for the
previous calendar year. If at any time required for the determination of the
Annual Base Salary adjustment as above described, the Index is no longer
published or issued, the parties shall use such other index as is then
generally recognized or accepted for similar determinations of purchasing
power. If the parties are unable to agree on the selection of an index which
would most accurately carry out the intent hereof, or if there is a dispute
with respect to any computations as called for herein, then the issue with
respect thereto shall be determined by arbitration according to the then
existing rules of the American Arbitration Association. Nothing contained
herein shall be construed to prevent the Company from increasing Executive's
Annual Base Salary more often than annually or by a higher amount than required
by the Index.
(b) Annual Bonus. The Executive shall be entitled to receive
incentive compensation (the "Incentive Compensation") for each year during the
Term as set forth below:
(i) Performance Bonus. At the beginning of each
calendar year during the Term, the Board (or the Compensation
Committee thereof) shall establish target goals for (A) earnings
before interest, taxes, depreciation and amortization ("EBITDA") of
the Company on a consolidated basis and (B) the Executive's personal
performance (collectively, the "Performance Goals"). The Executive
shall be entitled to an annual bonus (the "Performance Bonus") based
50% on the achievement of the Performance Goal set forth in (A) above
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and 50% on the achievement of the Performance Goal set forth in (B)
above, it being understood that a pro rata Performance Bonus may be
earned by the Executive as set forth below in any year in which either
Performance Goal is met. Such Performance Bonus shall be equal to a
percentage of his Annual Base Salary to be determined as follows:
AGGREGATE PERCENTAGE OF BONUS AS PERCENTAGE
PERFORMANCE GOALS ACHIEVED OF ANNUAL BASE SALARY
----------------------------------------- ---------------------
75% - 79% (Threshold Performance) 85%
80% - 84% 88%
85% - 89% 91%
90% - 94% 94%
95% - 99% 97%
100% - 104% (Target Performance) 100%
105% - 109% 103%
110% - 114% 106%
115% - 119% 109%
120% - 124% 112%
125% and above (Maximum Performance) 115%
(ii) Synergy Bonus. At the beginning of each of the
calendar years 1999, 2000, 2001 and 2002, the Board (or the
Compensation Committee thereof) shall establish target goals for the
synergies to be attained as a result of the integration of the
business Household Products, Inc., a subsidiary of the Company (the
"HPG Group"), into the Company (the "Synergy Goals"). Not later than
90 days after the end of each such year in which the portion of the
Synergy Goals achieved are at least equal to 75%, the Executive shall
be paid a cash bonus (the "Synergy Bonus") equal to a percentage of
his Annual Base Salary to be determined as follows:
AGGREGATE PERCENTAGE OF BONUS AS PERCENTAGE
PERFORMANCE GOALS ACHIEVED OF ANNUAL BASE SALARY
----------------------------------------- ---------------------
75% - 79% (Threshold Performance) 20%
80% - 84% 22%
85% - 89% 24%
90% - 94% 26%
95% - 99% 28%
100% - 104% (Target Performance) 30%
105% - 109% 32%
110% - 114% 34%
115% - 119% 36%
120% - 124% 38%
125% and above (Maximum Performance) 40%
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(iii) Special Bonus. From time to time during the
Term, as determined by the Compensation Committee, the Executive shall
be entitled to additional bonuses to be paid in cash, stock or
otherwise.
5. Expense Reimbursement and Other Benefits.
(a) Reimbursement of Expenses. During the term of Executive's
employment hereunder, the Company, upon the submission of proper
substantiation, including copies of all relevant invoices, receipts or other
evidence reasonably requested by the Company, by the Executive, shall reimburse
the Executive for all reasonable expenses actually paid or incurred by the
Executive in the course of and pursuant to the business of the Company,
including first class or business class air travel.
(b) Executive Benefits. Executive shall participate in the
Company's Group Health and Hospitalization Plan, Group Life Insurance Plan,
Group Disability Insurance Plan and all other insurances, or insurance plans
(collectively, the "Welfare Benefits"), and Executive benefits and bonuses
covering the Company senior executive officers as are now or may in the future
be in effect, subject to applicable eligibility requirements. Additionally, the
Company shall provide the Executive with life insurance in an amount equal to
five times his Annual Base Salary. During the Term, the Company shall pay for
(i) the Executive's annual dues in a country club and (ii) tax preparation and
financial planning for the Executive on an annual basis up to a maximum of
$20,000. Notwithstanding anything to the contrary contained in this Agreement,
the Executive shall be entitled to all benefits, including bonuses, paid or
given by the Company to executive officers of the Company during the Term, and
nothing contained in this Agreement shall in any way be deemed to limit the
Executive's receipt of or participation in such benefits, bonuses or benefit
plans or to preclude the Company from making additional payments, in the form
of bonuses or otherwise, or conferring additional benefits upon the Executive.
Additionally, if in the future the Company adopts a supplemental executive
retirement plan, a deferred compensation plan or similar arrangement, the
Executive shall be entitled to participate in such plan or arrangement on the
terms and conditions consistent with those applicable to senior executive
officers as determined by the Compensation Committee or the Board of Directors.
(c) Stock Options. During the Term of this Agreement, the
Executive shall be eligible to be granted options to acquire shares of the
Company Common Stock under (and therefore subject to all terms and conditions
of ) the Company stock option plans as then in effect, and all rules and
regulations of the Securities and Exchange Commission applicable to stock
option plans. Such options will contain such restrictions as required by the
Board or the applicable committee of the Board charged with administration of
the stock option plan. The number of shares of Common Stock subject to the
stock options shall be adjusted for any subsequent stock splits, stock
dividends or similar recapitalizations of the Company's Common Stock which
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results in an increase or decrease of the number of shares of outstanding
Common Stock of the Company. The number of options and terms and conditions of
options shall be determined in the sole discretion of the Board, or applicable
committee thereof, and shall be based on several factors, including the
performance of the Company on a consolidated basis.
(d) Automobile. During the Term, the Company shall provide
Executive with an automobile allowance of $2,000 monthly.
(e) Vacation. During the Term, the Executive will be entitled
to four weeks' paid vacation for each year. The Executive will also be entitled
to the paid holidays and other paid leave set forth in the Company's policies.
Vacation days and holidays during any fiscal year that are not used by the
Executive during such fiscal year may not be carried over and used in any
subsequent fiscal year.
(f) Tax Reimbursement. The Company shall reimburse the
Executive, on an after tax basis, for the net increase in the Executive's total
federal, state, and local income tax liability that results from the
compensation received pursuant to this Agreement being subject to any New York
state or local income taxes. The reimbursement amount shall be determined by
the Board or the Compensation Committee, upon the submission of proper
substantiation by the Executive or his accountants, and shall be paid as soon
as practicable after such determination is made.
6. Restrictions.
(a) Non-Competition. During the Term and for a one year
period after the termination of the Term for any reason, the Executive shall
not, directly or indirectly, engage in or have any interest in any sole
proprietorship, partnership, corporation or business or any other person or
entity (whether as an Executive, officer, director, partner, agent, security
holder, creditor, consultant or otherwise) that directly or indirectly (or
through any affiliated entity) engages in competition with the Company (for
this purpose, any business that engages in the manufacture or distribution of
products similar to those products manufactured or distributed by the Company
at the time of termination of the Agreement shall be deemed to be in
competition with the Company); provided that such provision shall not apply to
the Executive's ownership of Common Stock of the Company or the acquisition by
the Executive, solely as an investment, of securities of any issuer that is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended, and that are listed or admitted for trading on any United States
national securities exchange or that are quoted on the National Association of
Securities Dealers Automated Quotations System, or any similar system or
automated dissemination of quotations of securities prices in common use, so
long as the Executive does not control, acquire a controlling interest in or
become a member of a group which exercises direct or indirect control or, more
than five percent of any class of capital stock of such corporation.
(b) Nondisclosure. During the Term and for a one year period
after the termination of the Term for any reason, the Executive shall not at
any time divulge, communicate, use to the detriment of the Company or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information (as hereinafter defined) pertaining to the business of the Company.
Any Confidential Information or data now or hereafter acquired by the Executive
with respect to the business of the Company (which shall include, but not be
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limited to, information concerning the Company's financial condition,
prospects, technology, customers, suppliers, sources of leads and methods of
doing business) shall be deemed a valuable, special and unique asset of the
Company that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Company with respect to all of such
information. For purposes of this Agreement, "Confidential Information" means
information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof, and not generally known, about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict the Executive from disclosing Confidential Information to the extent
required by law. None of the foregoing obligations and restrictions apply to
any Confidential Information that the Executive demonstrates was or became
generally available to the public other than as a result of disclosure by the
Executive.
(c) Nonsolicitation of Executives and Clients. During the
Term and for a one year period after the termination of the Term for any
reason, the Executive shall not, directly or indirectly, for himself or for any
other person, firm, corporation, partnership, association or other entity,
other than in connection with the performance of Executive's duties under this
Agreement, (a) employ or attempt to employ or enter into any contractual
arrangement with any Executive or former Executive of the Company, unless such
Executive or former Executive has not been employed by the Company for a period
in excess of six months, (b) call on or solicit any of the actual or targeted
prospective clients of the Company on behalf of any person or entity in
connection with any business competitive with the business of the Company,
and/or (c) make known the names and addresses of such clients or any
information relating in any manner to the Company's trade or business
relationships with such customers (unless the Executive can demonstrate that
such information was or became generally available to the public other than as
a result of a disclosure by the Executive).
(d) Ownership of Developments. All copyrights, patents, trade
secrets, or other intellectual property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed
or created by Executive during the course of performing work for the Company or
its customers (collectively, the "Work Product") shall belong exclusively to
the Company and shall, to the extent possible, be considered a work made by the
Executive for hire for the Company within the meaning of Title 17 of the United
States Code. To the extent the Work Product may not be considered work made by
the Executive for hire for the Company, the Executive agrees to assign, and
automatically assign at the time of creation of the Work Product, without any
requirement of further consideration, any right, title, or interest the
Executive may have in such Work Product. Upon the request of the Company, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment.
(e) Books and Records. All books, records, and accounts
relating in any manner to the customers of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of the Executive's employment hereunder or on the
Company's request at any time.
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(f) Definition of Company. For purposes of this Section 6,
the term "Company" also shall include, along with all current direct and
indirect subsidiaries, any existing or future subsidiaries of the Company that
are operating during the time periods described herein and any other entities
that directly or indirectly, through one or more intermediaries, control, are
controlled by or are under common control with the Company during the periods
described herein.
(g) Acknowledgment by Executive. The Executive acknowledges
and confirms that (a) the restrictive covenants contained in this Section 6 are
reasonably necessary to protect the legitimate business interests of the
Company, and (b) the restrictions contained in this Section 6 (including
without limitation the length of the term of the provisions of this Section 6)
are not overbroad, overlong, or unfair and are not the result of overreaching,
duress or coercion of any kind. The Executive further acknowledges and confirms
that his full, uninhibited and faithful observance of each of the covenants
contained in this Section 6 will not cause him any undue hardship, financial or
otherwise, and that enforcement of each of the covenants contained herein will
not impair his ability to obtain employment commensurate with his abilities and
on terms fully acceptable to him or otherwise to obtain income required for the
comfortable support of him and his family and the satisfaction of the needs of
his creditors. The Executive acknowledges and confirms that his special
knowledge of the business of the Company is such as would cause the Company
serious injury or loss if he were to use such ability and knowledge to the
benefit of a competitor or were to compete with the Company in violation of the
terms of this Section 6. The Executive further acknowledges that the
restrictions contained in this Section 6 are intended to be, and shall be, for
the benefit of and shall be enforceable by, the Company's successors and
assigns.
(h) Reformation by Court. In the event that a court of
competent jurisdiction shall determine that any provision of this Section 6 is
invalid or more restrictive than permitted under the governing law of such
jurisdiction, then only as to enforcement of this Section 6 within the
jurisdiction of such court, such provision shall be interpreted and enforced as
if it provided for the maximum restriction permitted under such governing law.
(i) Extension of Time. If the Executive shall be in violation
of any provision of this Section 6, then each time limitation set forth in this
Section 6 shall be extended for a period of time equal to the period of time
during which such violation or violations occur. If the Company seeks
injunctive relief from such violation in any court, then the covenants set
forth in this Section 6 shall be extended for a period of time equal to the
pendency of such proceeding including all appeals by the Executive.
(j) Survival. The provisions of this Section 6 shall survive
the termination of this Agreement, as applicable.
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7. Death. The Term shall terminate upon the death of Executive and be
of no further force or effect. Upon such termination, the Company will pay the
Executive's estate a lump sum equal to the sum of (A) the Annual Base Salary at
the date of termination multiplied by the number of years remaining in the
Term, and (B) the product of the sum of the Performance Bonus for the prior
year multiplied by the number of years remaining in the Term.
8. Disability. If during the Term Executive is unable to perform his
services, by reason of illness or incapacity, for a period of 180 consecutive
days or more, the Company may, at its option, upon written notice to Executive,
terminate the Term and his employment hereunder. If the Term is terminated as a
result of the Executive's disability, the Company will pay the Executive (A)
his Annual Base Salary at the date of termination for the period remaining in
the Term to be distributed in periodic installments according to the Company's
customary payroll practices, and (B) a lump sum equal to the product of the sum
of the Performance Bonus for the prior year multiplied by the number of years
remaining in the Term, to be paid at the time of such termination. The Company
shall also continue to pay the premiums for the same or substantially similar
Welfare Benefits for the remainder of the Term. Such termination shall not
affect any rights of Executive to insurance payments due to Executive as a
result of the insurance coverage provided for in Section 5(b) above.
Notwithstanding the foregoing, if the Executive shall find other employment
during the period he is receiving payments pursuant to this Section 8, then the
Executive shall promptly notify the Company in writing of the date and terms of
such employment and the Company shall be entitled to reduce the amount payable
to the Executive pursuant to this Section 8 during the period from the
commencement of such other employment by the cash compensation received and to
be received by the Executive for services rendered in connection with such
other employment.
9. Termination for Cause.
(a) The Company shall have the right to terminate the Term
and the Executive's employment hereunder for Cause (as defined below). Upon any
termination pursuant to this Section 9, the Company shall pay to the Executive
any unpaid Annual Base Salary through the effective date of termination
specified in such notice. The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior
to the date of termination, subject, however, to the provisions of Section
5(a)).
(b) For purposes hereof, the term "Cause" shall mean: (A) the
willful and continued failure by the Executive to substantially perform his
duties with the Company, other than any such failure resulting from his
incapacity due to physical or mental illness or any such actual or anticipated
failure after the issuance by the Executive of a notice of termination for Good
Reason (as defined in section 11 hereof), after a written demand for
substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties, or (B) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For purposes of
this section, no act or failure to act on the part of the Executive shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause unless and until there
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shall have been delivered to the Executive a copy of the resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth above in clauses (A) or (B) above.
10. Termination Without Cause. At any time the Company shall have the
right to terminate the Term and the Executive's employment hereunder by written
notice to the Executive. Upon any termination pursuant to this Section 10 (that
is not a termination under any of Sections 7, 8, 11 or 12), the Company shall
pay to the Executive a lump sum equal to the sum of (A) the Annual Base Salary
at the date of termination multiplied by the number of years remaining in the
Term, and (B) the product of the sum of the Performance Bonus for the prior
year multiplied by the number of years remaining in the Term. The Company shall
also continue to pay the premiums for the same or substantially similar Welfare
Benefits and the Executive shall be entitled to the other benefits set forth in
Section 5(b), (d) and (e) for the remainder of the Term. Further, any Company
stock option granted to Executive shall be exercisable immediately and the
Company stock acquired pursuant to such exercise may be sold by Executive
subject to no restrictions by the Company whatsoever (other than those imposed
by federal and state securities laws). The Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 5(a)). The Executive shall be entitled to receive all
severance payments and benefits hereunder regardless of any future employment
undertaken by the Executive as long as he is in full compliance with the terms
of this Agreement.
11. Termination by Executive.
(a) The Executive shall at all times have the right, upon 60
days written notice to the Company, to terminate the Term and his employment
hereunder.
(b) Upon any termination pursuant to this Section 11 by the
Executive without Good Reason (as defined below), the Company shall pay to the
Executive any unpaid Annual Base Salary through the effective date of
termination specified in such notice. The Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 5(a)). The Executive shall be entitled to receive all
severance payments and benefits hereunder regardless of any future employment
undertaken by the Executive as long as he is in full compliance with the terms
of this Agreement.
(c) Upon any termination pursuant to this Section 11 by the
Executive for Good Reason, the Company shall pay to the Executive the same
amounts that would have been payable by the Company to the Executive under
Section 10 of this Agreement if the Executive's employment had been terminated
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by the Company without Cause. The Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however, to the provisions
of Section 5(a)).
(d) For purposes of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties inconsistent in any material
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 3 of this Agreement, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive; (ii) the
relocation of the Executive to another location more than 50 miles from his
current location without his consent, or (iii) any failure by the Company to
comply with any of the material provisions of Section 4 of this Agreement,
other than an isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive.
12. Change in Control.
(a) In the event that (i) a Change in Control (as defined in
paragraph (b) of this Section 12) in the Company shall occur during the Term,
and (ii) prior to the earlier of the expiration of the Term and one year after
the date of the Change in Control, the Term and Executive's employment with the
Company is terminated by the Company without Cause, as defined in Section 9(b)
(and other than pursuant to Section 7 by reason of the Executive's death or
Section 8 by reason of the Executive's disability) or the Executive terminates
the Term and his employment for Good Reason, as defined in Section 11(d), the
Company shall (1) pay to the Executive any unpaid Annual Base Salary through
the effective date of termination, (2) pay to the Executive the Incentive
Compensation, if any, not yet paid to the Executive for any year prior to such
termination, at such time as the Incentive Compensation otherwise would have
been payable to the Executive, (3) at the time of such termination, pay to the
Executive a lump sum equal to the sum of (A) the Annual Base Salary at the date
of termination multiplied by the number of years remaining in the Term, and (B)
the product of the sum of the Performance Bonus for the prior year multiplied
by the number of years remaining in the Term. The Company shall also continue
to pay the premiums for the same or substantially similar Welfare Benefits for
the number of years remaining in the Term. Further, any Company stock option
granted to Executive shall be exercisable immediately and the Company stock
acquired pursuant to such exercise may be sold by Executive subject to no
restrictions by the Company whatsoever (other than those imposed by federal and
state securities laws). The Company shall have no further liability hereunder
(other than for reimbursement for reasonable business expenses incurred prior
to the date of termination, subject, however, to the provisions of Section
5(a)).
(b) For purposes of this Agreement, the term "Change in
Control" shall mean:
(i) Approval by the shareholders of the Company of
(x) a reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of the Company immediately
prior to such reorganization, merger or consolidation or other
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transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or (y) a liquidation or dissolution of
the Company or (z) the sale of all or substantially all of the assets
of the Company (unless such reorganization, merger, consolidation or
other corporate transaction, liquidation, dissolution or sale is
subsequently abandoned); or
(ii) Individuals who, as of the date hereof,
constitute the Board (as of the date hereof the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election
or nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest relating
to the election of the Directors of the Company, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Securities
Exchange Act) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board; or
(iii) The acquisition (other than from the Company)
by any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act (excluding, for
this purpose, the Company or its subsidiaries, or any Executive
benefit plan of the Company or its subsidiaries) which acquires
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act), of 20% or more of either the then
outstanding shares of the Company's Common Stock or the combined
voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors.
(c) The payments made pursuant to paragraph (a) above shall
be in lieu of any and all compensation due to Executive for the years that
would otherwise be remaining in the Term. Upon receipt of said lump sum
payment, this Agreement and all rights and duties of the parties shall be
terminated, except as follows. In consideration for such lump sum payment and
for the right to terminate under the conditions set forth above, Executive
agrees to consult with the Company (or its successors), and its officers if
requested to do so for a period of at least two years from the date of such
termination. However, Executive shall be required to devote only such part of
his time to such services as Executive believes reasonable in Executive's sole
discretion, and the time and date such services are offered shall be determined
by Executive so long as that time and date is within a reasonable period of
time after the request. It is expressly agreed that the Company's rights to
avail itself of the advice and consultation services of Executive shall at all
times be exercised in a reasonable manner, that adequate notice shall be given
to Executive in such events, and that non-compliance with any such request by
Executive for good reason, including, but not limited to, ill health or prior
commitments, shall not constitute a breach or violation of this Agreement.
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Executive agrees that, except for reimbursement of all reasonable expenses
incurred by him with respect to such consultation and advisory services,
payable as such consultation and advisory services are rendered, he shall not
be entitled to any further compensation. It is understood that in furnishing
any advisory and consulting services provided herein, Executive shall not be an
Executive of the Company but shall act in the capacity of independent
contractor.
13. Waivers. It is understood that either party may waive the strict
performance of any covenant or agreement made herein; however, any waiver made
by a party hereto must be duly made in writing in order to be considered a
waiver, and the waiver of one covenant or agreement shall not be considered a
waiver of any other covenant or agreement unless specifically in writing as
aforementioned.
14. Savings Provisions. The invalidity, in whole or in part, of any
covenant or restriction, or any section, subsection, sentence, clause, phrase
or word, or other provisions of this Agreement, as the same may be amended from
time to time shall not affect the validity of the remaining portions thereof.
15. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Florida without giving effect to
its choice of law provision.
16. Notices. If either party desires to give notice to the other in
connection with any of the terms and provisions of this Agreement, said notice
must be in writing and shall be deemed given when (a) delivered by hand (with
written confirmation of receipt), (b) sent by facsimile (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case addressed to the party for whom it is intended as follows (or such other
addresses as either party may designated by notice to the other party):
If to the Company: Windmere-Durable Holdings, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxx, Xxxxx, Xxxxxxx 00000
Attn: Chairman, Compensation Committee
If to Executive: At the most recent home address of
Executive on the official records
of the Company
17. Default. In the event either party defaults in the performance of
its obligations under this Agreement, the non-defaulting party may, after
giving 30 days notice to the defaulting party to provide a reasonable
opportunity to cure such default, proceed to protect its rights by suit in
equity, action at law, or, where specifically provided for herein, by
arbitration, to enforce performance under this Agreement or to recover damages
for breach thereof, including all costs and attorneys' fees, whether settled
out of court, arbitrated, or tried (at both trial and appellate levels).
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18. Section 162(m) Limits.
Notwithstanding any other provision of this Agreement, if and to the
extent that any remuneration payable by the Company to the Executive for any
year would exceed the maximum amount of such remuneration that the Company may
deduct for that year by reason of Section 162(m) of the Code, payment of the
portion of the remuneration for that year that would not be so deductible under
Section 162(m) shall, in the sole discretion of the Board, be deferred so that
it shall become payable at such time or times as the Board reasonably
determines that it would be deductible by the Company under Section 162(m),
with interest at the "short-term applicable federal rate" as such term is
defined in Section 1274(d) of the Code.
19. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution or other action by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, determined with regard to any
additional payments required under this Section 19) (a "Payment") would be
subject to an excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any interest or penalties are incurred by
the Executive with respect to any such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), the Company shall make a payment to the Executive (a
"Gross-Up Payment") in an amount equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of paragraph (c) of this
Section 19, all determinations required to be made under this Section 19,
including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Xxxxx Xxxxxxxx LLP, or such other independent
public accounting firm regularly engaged by the Company from time to time (the
"Accounting Firm"), which shall provide detailed supporting calculations both
to the Company and the Executive within 20 business days of the receipt of
notice from the 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, the Company shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 19, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a written opinion
that failure to report the Excise Tax on the Executive's applicable federal and
state income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
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application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 19 and the 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 the 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 notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and 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
30-day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the 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, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 19(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the 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 the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and
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hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the 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 to issues with respect to which a Gross-Up Payment
would be payable hereunder and the 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 the Executive of an amount
advanced by the Company pursuant to Section 19(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 19(c))
promptly, after receipt by Executive of such refund, pay to the Company the
amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 19(c), a determination is
made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
20. No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
21. Waiver of Jury Trial. ALL PARTIES KNOWINGLY WAIVE THEIR RIGHTS TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION IN ANY COURT OF LAW, TRIBUNAL OR
LEGAL PROCEEDING INVOLVING THE PARTIES HERETO OR ANY DISPUTES ARISING OUT OF OR
RELATED TO THIS AGREEMENT.
22. Advisory Period.
(a) Duration. Upon the expiration of the Term (other than as
a result of a Change in Control), the Executive shall be retained by the
Company as an advisor and consultant to the Company (the "Advisory Period").
The Advisory Period shall commence on the first day following the last day of
the Term (the "Advisory Term") and shall continue for a minimum of five
consecutive years thereafter. Unless either party provides written notice to
the other party on each Anniversary Date of its intention not to extend the
Advisory Term beyond the number of years then remaining in the Advisory Period,
which number shall always be four, then the Advisory Term shall automatically
be extended by one additional year. The "Anniversary Date," as used herein,
shall be the first day of the second year of the Advisory Period, and the first
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day of each subsequent year, including each year beyond the first five years of
the Advisory Period. It is the intention of the parties that, unless written
notice to terminate is given, the term of the Advisory Period as of each
Anniversary Date shall be five years, that four year's written notice shall be
required to terminate the Advisory Period, and that said written notice to
terminate may only be given on an Anniversary Date.
(b) Duties. During the Advisory Period, the Executive will
attend all regular and annual meetings of the Board of Directors and all
Special Meetings to which he is invited, all with adequate notice. The
Executive further agrees to consult with the Company and its officers and to
act in an advisory capacity at such reasonable time or times as required to do
so. However, the Executive shall not be required to devote a major or
substantial part of his time to such services. It is expressly agreed that the
Company's rights to avail itself of the advice and consultation services of the
Executive shall at all times be exercised in a reasonable manner; that adequate
notice shall be given to the Executive in such events; and that non-compliance
with any such request by the Executive for good cause, including, but not
limited to, ill health or absence from Miami-Dade County, Florida, shall not
constitute a breach or violation of this Agreement. The Executive agrees that
except for reimbursement of all reasonable expenses incurred by him with
respect to such consultation and advisory services, he shall not be entitled to
any further compensation except as provided to be paid to him in subsection (c)
below. It is understood that in furnishing any advisory and consulting services
provided herein, the Executive shall not be an employee of the Company, but
shall act in the capacity of an independent contractor.
(c) Compensation. During the Advisory Period, the Company
shall pay the Executive annual compensation equal to 60% of the average of the
Executive's Annual Base Salary and Incentive Compensation (as set forth in
Section 4(b) hereof) for the three years ending prior to the Advisory Term, to
be distributed in equal periodic installments according to the Company's
customary payroll practices. Additionally, the Executive shall continue his
participation in the Company's Welfare Benefits, as provided in Section 5(b)
above (or the Company shall provide comparable coverage, if available), and the
Executive shall continue to receive the tax reimbursement payment, as provided
in Section 5(f) above. The Company shall reimburse the Executive for all
reasonable expenses incurred by him in the performance of his duties hereunder
(collectively, the "Advisory Compensation"). If the Executive's physical or
mental condition shall prevent him from performing his duties hereunder, the
Advisory Compensation shall nevertheless be paid to the Executive during the
entire Advisory Period.
(d) Change in Control. The Notwithstanding anything to the
contrary contained herein, if at any time during the Advisory Period there
shall be a Change in Control (as defined in Section 12 hereof) and if such
change in control did not occur due to the Executive's bulk sale of common
shares of the Company owned by him, then the Executive shall have the option,
at any time, of terminating the Advisory Period upon five days' notice, and, in
such event, the Company shall pay to the Executive, upon such termination, a
lump sum equal to the sum of the Advisory Compensation to be paid to the
Executive during the remainder of the Advisory Period, discounted by a factor
of 10% for each year by which such payments are accelerated, so that the
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amounts payable during the then current calendar year of the Advisory Period
shall be valued at 100%; those due during the immediately following calendar
year shall be valued at 90%; and so forth, decreasing by 10% for each remaining
calendar year of the Advisory Period.
IN WITNESS WHEREOF, the Company, by its appropriate officer, signed
this Agreement and Executive have signed this Agreement, as of the day and year
first above written.
WINDMERE-DURABLE HOLDINGS, INC.
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
Chief Operating Officer
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxx
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