INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT made and entered into this
26 day of August, 1998 by Toastmaster Inc. (the "Company"),
Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, and Xxxx X. Xxxxxxxx
(individually an "Employee" and, collectively, the "Employees");
WHEREAS, as part of the compensation for services rendered
to the Company, the Company has agreed to pay each of the
Employees certain amounts, and take certain other actions, in the
event of a Change in Control of the Company;
WHEREAS, in consideration of services rendered by the
Employees, the parties have provided benefit plans, supplemental
executive retirement plans ("SERP(s)"), and other compensation
plans or arrangements (such agreements, plans and arrangements
are collectively referred to hereinafter as "Compensation
Obligations") which require the payment of certain amounts of
monies, and the taking of certain other actions, in connection
with, or in the event of, a Change of Control;
WHEREAS, as additional consideration for the rights granted
under this Agreement, the Employees have expressed their
willingness to renew their employment agreements for a one-year
period upon their scheduled expiration, subject to their
respective rights stated in such employment agreement to
terminate such employment agreements.
WHEREAS, the parties are entering into this Agreement to
ensure the fulfillment of the intention of the parties that there
shall be no reduction in the amount of any payments the Employee
receives or is entitled to receive under the Compensation
Obligations or this Agreement as a result of any Excise Tax
thereon and/or any Gross-Up Payment with respect thereto;
NOW, THEREFORE, in consideration of the foregoing premises,
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. If, in connection with a merger in which the Company is
a constituent corporation or the occurrence of any other
transaction involving the Company, the Internal Revenue Service
asserts that any portion of any payment made to any of the
Employees pursuant to any Compensation Obligation or this
Agreement constitutes an Excess Parachute Payment and imposes an
Excise Tax thereon, then the Company agrees that it will
indemnify and hold harmless such Employee in an amount, payable
in U.S. dollars, equal to such Excise Tax. Such amount shall be
paid to the Employee immediately upon a final judicial
determination of, or settlement determining, such liability for
the Excise Tax.
2. In addition, the Company shall be required to pay a
Gross-Up Payment, payable in U.S. dollars, to each Employee at
the time the respective applicable tax triggering such Gross-Up
Payment is due. For purposes of determining the amount of the
Gross-Up Payment, the Employee will be deemed to (a) pay federal
income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is
made, and (b) state and local income taxes at the highest
marginal rates of taxation in the state and locality of his
residence in the calendar year in which the Gross-Up Payment is
made, net, in the case of clause (a), of the maximum reduction in
federal income taxes which could be obtained from deduction of
such state and local taxes.
3. The parties agree that the payments required to be made
under this Agreement are such that the payments that each
Employee receives, or is entitled to receive, under the
Compensation Obligations or this Agreement shall not be reduced
by any Excise Tax or Gross-Up Payment with respect thereto and
therefore the net amount retained by each Employee, after payment
of any Excise Tax, or any other federal, state or local income or
other tax that is imposed as a result of any of the payments
required to be made under this Agreement, shall be equal to the
same amount as if no such Excise Tax or other tax had been
imposed.
4. The Company agrees not to declare dividends or other
distributions of funds or assets, or incur any obligations, which
would result in the Company having insufficient assets to fulfill
its obligations under this Agreement.
5. Definitions.
The term "Change in Control" shall mean the term as
defined in the Employment Agreement entered into with each
Employee.
The term "Excess Parachute Payment" shall have the
meaning given such term by section 280G of the Internal Revenue
Code of 1986, as amended.
The term "Gross-Up Payment" shall mean a payment in an
amount equal to all federal, state and/or local income or other
tax that is imposed on the Employee as a result of any of the
payments required to be made hereunder.
The term "Excise Tax" referred to above shall be the
tax imposed by section 4999 of the Internal Revenue Code of 1986,
as amended.
IN WITNESS WHEREOF, the parties hereto have caused it
to be executed as of the date first above written.
TOASTMASTER INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
