EXHIBIT 10.4
EMPLOYMENT AGREEMENT
between
WKI HOLDING COMPANY, INC.,
and
XXXXXXXXX X. XXX
EMPLOYMENT AGREEMENT
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Recitals
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WHEREAS, Xxxxxxxxx X. Xxx (the "Executive") entered into an employment
agreement (the "Employment Agreement") with a predecessor of WKI Holding
Company, Inc. (the "Company") on October 14, 1999; and
WHEREAS, the Employment Agreement was modified by a Modification Agreement
dated September 30, 2002, and an Amendment effective as of December 6, 2002, as
further amended in writings between the parties (collectively with the
Employment Agreement, the "Prior Agreement"); and
WHEREAS, the Company desires to continue to employ Executive, and Executive
agrees to continue to serve as, President of the OXO International Division of
World Kitchen (GHC), LLC, a wholly-owned subsidiary of the Company (the "OXO
International Division"), upon the terms and subject to the conditions set forth
in this AGREEMENT (the "Agreement") which shall be effective as of April 15,
2003 (the "Agreement Date"); and
WHEREAS, the Company and Executive further agree and acknowledge that the
terms of this Agreement supersede and completely replace the terms of the Prior
Agreement as of the Agreement Date and that the Prior Agreement is null and void
as of the Agreement Date.
NOW, THEREFORE, in consideration of the premises (which are deemed to be an
integral part of this Agreement) and the mutual covenants, representations,
warranties and agreements contained herein, the Company and Executive hereby
agree as follows:
Article I. DEFINITIONS
The terms set forth below have the following meanings (such meanings to be
applicable to both the singular and plural forms, except where otherwise
expressly indicated):
1.1 "Accrued Annual Bonus" means the amount of any Annual Bonus earned
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but not yet paid with respect to the Fiscal Year ended prior to the Date of
Termination.
1.2 "Accrued Base Salary" means the amount of Executive's Base Salary
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which is earned but not yet paid as of the Date of Termination.
1.3 "Agreement" is defined in the Recitals to this Agreement.
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1.4 "Agreement Date" is defined in the Recitals to this Agreement.
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1.5 "Anniversary Date" means any annual anniversary of the Agreement
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Date.
1.6 "Annual Bonus" is defined in Section 4.2(a).
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1.7 "Base Salary" is defined in Section 4.1.
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1.8 "Beneficiary" is defined in Section 8.9.
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1.9 "Cause" means any of the following:
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(a) Executive's commission of a misdemeanor involving fraud,
dishonesty, or moral turpitude, or of a felony,
(b) Executive's willful or intentional material breach of his
material obligations under this Agreement, provided that such
breach is not cured to the best of Executive's ability within ten
(10) business days after the delivery of notice to Executive of
such breach,
(c) willful or intentional material misconduct by Executive in the
performance of his duties under this Agreement,
(d) the willful or intentional failure by Executive to materially
comply (to the best of his ability) with a specific, written
direction of the Chief Executive Officer of the Company that is not
inconsistent with this Agreement and Executive's responsibilities
hereunder, provided that such refusal or failure (i) is not cured
to the best of Executive's ability within ten (10) business days
after the delivery of such direction to Executive and (ii) is not
based on Executive's good faith belief, as expressed by written
notice to the Chief Executive Officer of the Company given within
such ten (10) business day period, that the implementation of such
direction of the Chief Executive Officer of the Company would be
unlawful or unethical.
1.10 "Change of Control" means any one or more of the following events:
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(a) any person (as such term is used in Rule 13d-5 under the
Exchange Act) or group (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act), other than any Subsidiary or any
employee benefit plan (or any related trust) of the Company or any
of its Subsidiaries, becomes the beneficial owner in the aggregate
of more than thirty-five percent (35%) of the Voting Securities of
the Company or thirty-five percent (35%) of the Voting Securities
of World Kitchen (GHC), LLC;
(b) individuals who constitute the initial board of directors of
the Company as of January 31, 2003 (the "Reorganized Incumbent
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Board") cease for any reason to constitute more than sixty-six and
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two-thirds percent (66-2/3%) of the members of the board of
directors of the Company; provided that any individual who becomes a
director after January 31, 2003 whose election or nomination for
election by the Company shareholders, was approved by more than
sixty-six and two-thirds percent (66-2/3%) of the members of the
Reorganized Incumbent Board (other than an election or nomination of
an individual whose initial assumption of office is in connection
with an actual or threatened "election contest" relating to the
election of the directors of the Company (as such terms are used in
Rule 14a-11 under the Exchange Act), "tender offer" (as such term is
used in Section 14(d) of the Exchange Act) or a proposed Merger (as
defined below in clause (c) of this Section 1.11)) shall be deemed
to be members of the Reorganized Incumbent Board;
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(c) consummation of a merger, reorganization, consolidation, or
similar transaction (any of the foregoing, a "Merger") unless the
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Persons who were the beneficial owners of the Voting Securities of
either of the WKI Entities immediately before such Merger, are the
beneficial owners, immediately after such Merger, directly or
indirectly, in the aggregate, of more than sixty percent (60%) of
the common stock and any other voting securities of the entity
resulting from such Merger in substantially the same relative
proportions as they owned the Voting Securities of the respective
WKI Entities immediately before the Merger;
(d) consummation of a transfer or sale of all or substantially all
of the assets of either of the WKI Entities (a "Sale") unless the
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Persons who were the beneficial owners of the Voting Securities of
either of the WKI Entities immediately before such Sale, are the
beneficial owners, immediately after such Sale, directly or
indirectly, in the aggregate, of more than sixty percent (60%) of
the common stock and any other voting securities of the entity or
entities that own such assets immediately after the Sale;
(e) The board of directors of the Company or the shareholders of
the Company, as applicable, approve a plan of liquidation of either
of the WKI Entities or World Kitchen, Inc.; or
(f) The consummation of a sale of all or substantially all of the
assets used in the business conducted by the OXO International
Division.
Notwithstanding the foregoing, there shall not be a Change of Control if,
in advance of (or subsequent to) such event, Executive, in his sole
discretion, agrees in writing that such event shall not constitute a Change
of Control. For purposes of this definition of Change of Control, entry
into and performance of the Stockholders' Agreement entered into by and
among the Company and certain of its stockholders, dated as of January 31,
2003 (as the same may be amended from time to time), shall not constitute
any person as a member of a group with any other person.
1.11 "Code" means the Internal Revenue Code of 1986, as amended from
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time to time.
1.12 "Compensation Committee" means the compensation committee of the
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WKI Board, composed exclusively of non-employee directors.
1.13 "Date of Termination" means the effective date of a Termination of
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Employment for any reason, including death or Disability, whether by the
Company or by Executive.
1.14 "Disability" means a mental or physical condition which renders
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Executive unable or incompetent to carry out the material job
responsibilities which Executive held or the material duties to which
Executive was assigned at the time the disability was incurred, which has
existed for at least three (3) calendar months and which in the opinion of
a physician mutually agreed upon by the Company and Executive (provided
that the parties shall not unreasonably withhold such agreement) is
expected to be permanent or to last for an indefinite duration or a
duration in excess of six (6) calendar months.
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1.15 "Employment Period" is defined in Article III.
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1.16 "Equity Plan" means the WKI Holding Company, Inc. Stock Option
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Plan.
1.17 "Exchange Act" means the United States Securities Exchange Act of
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1934, as amended, or any federal statute or statutes which shall be enacted
to take its place, together with all rules and regulations promulgated
thereunder.
1.18 "Excise Tax" means the excise tax imposed by Section 4999 of the
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Code, together with any interest or penalties imposed with respect to such
excise tax.
1.19 "Executive" is defined in the Recitals to this Agreement.
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1.20 "Fiscal Year" means the calendar year period beginning each
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January 1 and ending each December 31.
1.21 "Good Reason" means the occurrence of any one of the following
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events:
(a) any material breach of the Agreement by either of the World
Kitchen Entities (or by World Kitchen, Inc. under Section 8.5
hereof) of any material obligations under this Agreement, including
any of the following occurrences which shall be deemed to
constitute a material breach of a material obligation:
(i) failure to pay Base Salary as required by Section 4.1 or
Annual Bonus as required by Section 4.2;
(ii) failure to pay or provide material benefits under
Articles V and VI of this Agreement, including without limitation
the failure to comply with the provisions of the Long-Term
Incentive Plan or any applicable Guidelines as are adopted by the
Committee relating thereto; or
(iii) any substantial adverse change in the position,
responsibilities, and duties of Executive as compared to
Executive's position, responsibilities and duties as set forth in
Section 2.1, including without limitation a change in Executive's
reporting requirements and position as the highest ranking officer
of the OXO International Division,
(iv) failure of Executive and the Company, as applicable, to
agree on appropriate equity compensation arrangements in accordance
with Article V hereof, by July 31, 2003,
(b) the failure of the Company to assign this Agreement to a
successor, as applicable, or the failure of such successor to
explicitly assume and agree to be bound by this Agreement, or
(c) the Company's requiring Executive to be principally based at
any office or location other than one located in New York, New
York.
Notwithstanding the foregoing, none of the foregoing events shall
constitute a "Good Reason" event if, in advance of (or subsequent to) such
event, Executive, in his sole discretion,
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agrees in writing that such event shall not constitute a "Good Reason" event
within the meaning of this Agreement.
1.22 "Gross-Up Payment" is defined in Section 6.4(a).
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1.23 "Guidelines" shall have the meaning set forth in the Long-Term
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Incentive Plan.
1.24 "including" means including without limitation.
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1.25 "Interest Rate" means the prime commercial lending rate announced
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by JPMorgan Chase Bank or its successor on the date an amount is to be
determined hereunder or, if no such rate shall be announced on such date,
the immediately prior date on which JPMorgan Chase Bank or its successor
announced such a rate; provided, however, that if the interest rate
determined in accordance with this Section 1.23 exceeds the highest legally
permissible interest rate, then the Interest Rate shall be the highest
legally-permissible interest rate.
1.26 "Long-Term Incentive Plan" means the WKI Holding Company, Inc.
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Long-Term Incentive Plan, effective as of May 29, 2003, as may be amended
from time to time in accordance with the provisions of the Long-Term
Incentive Plan.
1.27 "Maximum Annual Bonus" is defined in Section 4.2(b).
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1.28 "Maximum Annual Goals" is defined in Section 4.2(b).
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1.29 "Maximum Percentage" is defined in Section 4.2(b).
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1.30 "Parachute Value" of a Payment shall mean the present value as of
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the date of a change of control for purposes of Section 280G of the Code of
the portion of such Payment that constitutes a "parachute payment" under
Section 280G(b)(2), as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such
Payment.
1.31 "Payment" shall mean any payment or distribution in the nature of
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compensation (within the meaning of Section 280G(b)(2) of the Code) to or
for the benefit of Executive, whether paid or payable pursuant to this
Agreement or otherwise.
1.32 "Person" means any individual, sole proprietorship, partnership,
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joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
instrumentality, division, agency, body or department.
1.33 "Prorata Annual Bonus" means (a) the product of the Target Annual
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Bonus for the Fiscal Year that includes the Date of Termination multiplied
by (b) a fraction, the numerator of which is the number of days which have
elapsed in the Fiscal Year through the Date of Termination and the
denominator of which is 365.
1.34 "Safe Harbor Amount" means 2.99 times Executive's "base amount,"
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within the meaning of Section 280G(b)(3) of the Code.
1.35 "Severance Period" means two (2) years from the Date of
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Termination.
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1.36 "Stock" means the shares of common stock, par value $0.01 per
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share, of the Company.
1.37 "Subsidiary" means, with respect to any Person, (a) any
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corporation of which more than fifty percent (50%) of the outstanding
capital stock having ordinary voting power to elect a majority of the board
of directors of such corporation (irrespective of whether, at the time,
stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by such Person, or (b) any partnership,
limited liability company or other entity in which such Person has a direct
or indirect interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%).
1.38 "Target Annual Bonus" is defined in Section 4.2(b).
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1.39 "Target Annual Goals" is defined in Section 4.2(b).
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1.40 "Target Percentage" is defined in Section 4.2(b).
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1.41 "Taxes" means the incremental United States federal, state and
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local income, excise and other taxes payable by Executive with respect to
any applicable item of income.
1.42 "Tax Gross-Up Payment" means an amount payable to Executive such
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that after payment of Taxes on such amount there remains a balance
sufficient to pay the Taxes being reimbursed.
1.43 "Termination for Cause" means a termination of the employment of
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the Executive by the Company for Cause during the Employment Period.
1.44 "Termination for Good Reason" means a Termination of Employment by
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Executive for a Good Reason during the Employment Period.
1.45 "Termination of Employment" means a termination by the Company or
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by Executive of Executive's employment by the Company.
1.46 "Termination Without Cause" means a termination of the employment
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of Executive by the Company for any reason other than Cause or Executive's
death or Disability during the Employment Period.
1.47 "Value" of a Payment shall mean the economic present value of a
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Payment as of the date of a change of control for purposes of Section 280G
of the Code, as determined by the Accounting Firm using the discount rate
required by Section 280G(d)(4) of the Code.
1.48 "Voting Securities" means any of the securities of either of the
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Company or World Kitchen (GHC), LLC (the "WKI Entities") entitled to vote
generally in the election of the directors of the Company or World Kitchen
(GHC), LLC, as the case may be.
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1.49 "WKI Board" means the board of directors of the Company.
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Article II. POSITION AND RESPONSIBILITIES
2.1 Duties. During the Employment Period and any Extension Period, the
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Company shall employ the Executive as the President of OXO International.
Executive shall be responsible for such functions and operations of the OXO
International Division as assigned to him from time to time by the Chief
Executive Officer of the Company. Executive shall report on all functions
and operations within the scope of his responsibilities directly to the
Chief Executive Officer of the Company. During the Employment Period and
any Extension Period, and excluding any periods of disability, vacation, or
sick leave to which Executive is entitled, Executive agrees to devote his
full attention and time to the business and affairs of the OXO
International Division.
2.2 Other Activities. Executive may serve on corporate, civic or
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charitable boards or committees, deliver lectures, fulfill speaking
engagements or teach at educational institutions, or manage personal
investments, provided that such activities do not individually or in the
aggregate materially interfere with the performance of Executive's duties
under this Agreement.
Article III. EMPLOYMENT PERIOD
3.1 Employment Period.
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(a) Subject to the termination provisions set forth in Section 7
below, the initial term of Executive's employment under this
Agreement (the "Employment Period") shall commence on the Agreement
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Date and end on the Anniversary Date which is three (3) years after
the Agreement Date (the "Initial Term"); provided, however, that
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the Employment Period will automatically be extended for an
additional two-year period from the Anniversary Date (the
"Extension Period"), unless one party has given written notice at
least ninety (90) days before the end of the Initial Term that such
extension shall not take place (a "Notice of Non-Extension").
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(b) Notwithstanding the foregoing, (i) if either party timely
delivers a written Notice of Non-Extension to the other in
accordance with the provisions of Subsection (a) hereof, this
Agreement and the Employment Period shall automatically terminate
at the end of the Initial Term and (ii) this Agreement and the
Employment Period shall automatically terminate at the end of the
Employment Period, subject to Executive's rights as set forth in
Section 7.
Article IV. COMPENSATION
4.1 Salary. Effective as of the Agreement Date, the Company shall pay
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to Executive in accordance with the normal payroll practices of the Company
an annual salary at a rate of $340,000 per year ("Base Salary"). Within ten
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(10) days after the execution of this Agreement by all parties, the Company
shall pay to Executive an amount equal to the difference between the salary
the Executive actually received during the period from the Agreement Date
through the payment date and the amount he Executive would have
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received had his new Base Salary actually been in effect since the
Agreement Date. During the Employment Period and any Extension Period, the
Base Salary shall be reviewed at least annually and may be increased (but
not decreased) from time to time as shall be determined by the WKI Board or
the Compensation Committee. Any increase in Base Salary shall not limit or
reduce any other obligation of the Company to Executive under this
Agreement. Each such increase in the Base Salary shall be treated for all
purposes under this Agreement as Executive's Base Salary. Base Salary shall
not be decreased at any time without the express written consent of
Executive.
4.2 Annual Bonus.
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(a) Executive shall be eligible to earn an annual cash bonus
("Annual Bonus") in accordance with the terms of this Subsection
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4.2 for each Fiscal Year which begins during the Employment Period
and during any Extension Period.
(b) The WKI Board or the Compensation Committee, as applicable,
(collectively, the "Board or Committee") shall establish written
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performance goals and a formula for calculating the Executive's
Annual Bonus for the 2003 Fiscal Year and each later Fiscal Year
that ends during the Employment Period and during any Extension
Period (the "Annual Bonus Criteria"). In the case of the 2003
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Fiscal Year, the Annual Bonus Criteria shall be set by the Board or
Committee as soon as practicable after the Agreement Date, after
consultation with the Executive. The Annual Bonus Criteria for each
later Fiscal Year shall be established annually by the Board or
Committee, after consultation with the Executive, within ninety
(90) calendar days after the first day of the applicable Fiscal
Year. For each Fiscal Year in which Executive achieves one-hundred
percent (100%) of the target level of the performance goals set
forth in the Annual Bonus Criteria (the "Target Annual Goals"),
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Executive shall receive an Annual Bonus for that Fiscal Year in an
amount equal to seventy-five percent (75%) (the "Target
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Percentage") of Executive's Base Salary (the "Target Annual
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Bonus"). If Executive achieves less than the Target Annual Goals
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established for a Fiscal Year, he shall be entitled to receive an
Annual Bonus in an amount determined in accordance with the Annual
Bonus Criteria or such other amount as may be determined by the
Committee in accordance with this Section 4.2. For each year in
which Executive achieves the maximum level of the performance goals
set forth in the Annual Bonus Criteria ("Maximum Annual Goals") his
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Annual Bonus for that Fiscal Year shall be one hundred and fifty
percent (150%) (the "Maximum Percentage") of Executive's Base
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Salary (the "Maximum Annual Bonus"). The Annual Bonus for any
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Fiscal Year may exceed the Maximum Annual Bonus at the discretion
of the Board or Committee. The Target Percentage and the Maximum
Percentage may be increased by the Board or Committee, from time to
time, but may not be decreased below the above-specified
percentages of Executive's Base Salary without the express written
consent of Executive. If Executive achieves a level of performance
which falls between the Target Annual Goals and the Maximum Annual
Goals, linear interpolation shall be applied to determine
Executive's Annual Bonus for such year.
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(c) Except as described in the following sentence, the Company
shall pay the entire Annual Bonus for a Fiscal Year in a lump sum
cash payment as soon as practicable after the Board or Committee
determines whether and the degree to which Maximum Annual Goals or
Target Annual Goals have been achieved following the close of such
Fiscal Year. Any such Annual Bonus shall in any event be determined
and paid to Executive within ninety (90) calendar days after the
end of each Fiscal Year.
Article V. PARTICIPATION IN EQUITY PLAN
5.1 Executive and the Company agree that Executive shall be a
participant in the WKI Holding Company, Inc. Stock Option Plan (the "Equity
Plan") on terms and conditions mutually agreeable to the Executive and the
Compensation Committee. Executive and the Company agree that the parties
shall negotiate in good faith to establish appropriate terms for the
reservation and authorization for the issuance of Stock under the Equity
Plan with respect to Executive. If Executive and the Company do not execute
a written agreement setting forth appropriate provisions pursuant to the
immediately preceding sentence by July 31, 2003, then Executive shall have
Good Reason to terminate his employment, without the requirement under this
Agreement to comply with the provisions of Section 7.3(c).
5.2 In the event of a conflict between this Agreement and the Equity
Plan, the provisions of the Equity Plan shall control, including without
limitation all provisions pertaining to Executive's rights under the Plan
in the event of a Change of Control or a Termination of Employment.
Article VI. BENEFITS AND PERQUISITES
6.1 Benefit Plans and Perquisites.
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(a) During the Employment Period and any Extension Period,
Executive shall be entitled to participate in the welfare benefit
plans and programs and perquisites of the Company on terms not less
favorable than those in effect for other senior executives of the
Company from time to time; provided, that Executive shall not be
covered by any severance plan, program or policy during the
Employment Period and any Extension Period.
(b) Executive shall be entitled to participate in the retirement
and savings benefit plans and programs of the Company on terms not
less favorable than those in effect for other senior executives of
the Company from time to time during the Employment Period and any
Extension Period.
(c) Without limiting the generality of the foregoing, during the
Employment Period, Executive shall receive a cash benefits
allowance of $35,000 per year, which amount shall be paid (in
arrears) no later than January 31 of the following year.
(d) Executive shall also be entitled to participate in the
Long-Term Incentive Plan or such other plan or program sponsored by
the Company providing deferred
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compensation or retirement benefits, as in effect from time to time
during the Employment Period and any Extension Period.
6.2 Expenses. During the Employment Period and any Extension Period,
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Executive shall be entitled to receive prompt reimbursement for all
reasonable employment-related expenses incurred by Executive upon the
receipt by the Company of an accounting for such expenses in accordance
with the practices, policies and procedures applicable to other senior
executives of the Company.
6.3 Office; Support Staff. During the Employment Period and any
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Extension Period, Executive shall be entitled to an office, and to
secretarial and other assistance, appropriate to his position and duties
under this Agreement.
6.4 Gross-Up Payment.
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(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that
any Payment would be subject to the Excise Tax, then Executive
shall be entitled to receive an additional payment (the "Gross-Up
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Payment") in an amount such that, after payment by Executive of all
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Taxes (and any interest or penalties imposed with respect to such
Taxes), including any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 6.4(a), if
it shall be determined that Executive is entitled to the Gross-Up
Payment, but that the Parachute Value of all Payments does not
exceed one hundred and ten percent (110%) of the Safe Harbor
Amount, then except as provided below, no Gross-Up Payment shall be
made to Executive and the amounts payable under this Agreement,
other than amounts or benefits provided under Article V of this
Agreement or pursuant to any other option or equity grants to
Executive (the "Subject Payments"), shall be reduced (but not below
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zero) so that the Parachute Value of all Payments, in the
aggregate, equals the Safe Harbor Amount. The reduction of the
amounts payable hereunder, if applicable, shall be made by first
reducing the payments under Section 7.3(a)(ii), unless an
alternative method of reduction is elected by Executive, and in any
event shall be made in such a manner as to maximize the Value of
all Payments actually made to Executive. For purposes of reducing
the Payments to the Safe Harbor Amount, only the Subject Payments
shall be reduced. If the reduction of the Subject Payments would
not result in a reduction of the Parachute Value of all Payments to
the Safe Harbor Amount, no amounts payable under the Agreement
shall be reduced pursuant to this Section 6.4(a), and the Gross-Up
Payment shall be made to Executive. The Company's obligation to
make Gross-Up Payments under this Section 6.4 shall not be
conditioned upon Executive's Termination of Employment.
(b) Subject to the provisions of Section 6.4(c), all determinations
required to be made under this Section 6.4, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be
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utilized in arriving at such determination, shall be made by Ernst
& Young, LLP, or such other nationally recognized certified public
accounting firm as may be designated by Executive (the "Accounting
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Firm"). The Accounting Firm shall provide detailed supporting
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calculations both to the Company and Executive within fifteen (15)
business days of the receipt of notice from Executive that there
has been a Payment or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting
the Change of Control, Executive may appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 6.4, shall be paid by the
Company to Executive within five (5) business days of the receipt
of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As
a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments that will not
have been made by the Company should have been made (the
"Underpayment"), consistent with the calculations required to be
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made hereunder. In the event the Company exhausts its remedies
pursuant to Section 6.4(c) and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for
the benefit of Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable, but no later
than ten (10) business days after Executive is informed in writing
of such claim. The Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested
to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30) calendar day period following the
date on which Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of Taxes with
respect to such claim is due). If the Company notifies Executive in
writing prior to the expiration of such period that the Company
desires to contest such claim, Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time
to time, including accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
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(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest, and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties) imposed as a
result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section
6.4(c), the Company shall control all proceedings taken in
connection with such contest, and, at its or their sole discretion,
may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its or their sole
discretion, either direct Executive to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner, and
Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that, if the Company directs
Executive to pay such claim and xxx for a refund, the Company shall
advance the amount of such payment to Executive, on an
interest-free basis, and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such
advance or with respect to any imputed income in connection with
such advance; and provided, further, that any extension of the
statute of limitations relating to payment of Taxes for the taxable
year of Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited
to issues with respect to which the Gross-Up Payment would be
payable hereunder, and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of a Gross-Up Payment or an
amount advanced by the Company pursuant to Section 6.4(c),
Executive becomes entitled to receive any refund with respect to
the Excise Tax to which such Gross-Up Payment relates or with
respect to such claim, Executive shall (subject to the Company's
complying with the requirements of Section 6.4(c), if applicable)
promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after Taxes applicable
thereto). If, after the receipt by Executive of an amount advanced
by the Company pursuant to Section 6.4(c), a determination is made
that Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify Executive in writing of
its or their intent to contest such denial of refund prior to the
expiration of thirty (30) calendar days after such determination,
then such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall be offset, to the
extent thereof, against the amount of Gross-Up Payment required to
be paid.
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(e) Notwithstanding any other provision of this Section 6.4, the
Company may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority,
for the benefit of Executive, all or any portion of any Gross-Up
Payment, and Executive hereby consents to such withholding.
Article VII. TERMINATION BENEFITS
7.1 Termination for Cause, Other Than for Good Reason, Death or
-----------------------------------------------------------
Disability, or At or After End of Employment Term. If (i) the Company
-------------------------------------------------
terminates Executive's employment for Cause, (ii) Executive terminates his
employment other than for Good Reason, death or Disability, or (iii) the
Executive's employment is terminated at or after the end of the Employment
Period for any reason (whether by Executive or the Company), including,
without limitation, by virtue of the Company providing a Notice of
Non-Extension to the Executive, the Company shall pay to Executive as soon
as reasonably possible but in no event later than thirty (30) calendar days
after the Date of Termination an amount equal to the sum of Executive's
Accrued Base Salary and Accrued Annual Bonus. The respective provisions of
the Equity Plan, the Long-Term Incentive Plan and any other benefit plans
and perquisite programs in which the Executive is a participant as of the
Date of Termination shall govern whether Executive shall be entitled to any
benefits under each such plan or program in the event that his employment
is terminated under any of the foregoing circumstances. Notwithstanding the
foregoing, in the event that the Executive's employment is terminated after
the end of the Employment Period or any Extension Period under
circumstances which would entitle him to receive severance benefits under a
severance plan or policy of the Company in effect as of the Date of
Termination, the amount of the Executive's severance pay shall in no event
be less than one (1) year's Base Salary (as in effect at termination),
payable in a lump sum, in cash, within thirty (30) days of the Date of
Termination.
7.2 Termination for Death or Disability. If, before the end of the
-----------------------------------
Employment Period and any Extension Period, Executive's employment
terminates due to his death or Disability, the Company shall pay to
Executive or his Beneficiaries, as the case may be, as soon as reasonably
possible but in no event later than thirty (30) calendar days after the
Date of Termination, an amount which is equal to the sum of Executive's
Accrued Base Salary and Accrued Annual Bonus. Further, if the Date of
Termination occurs during the period commencing from July 1 through
December 31 of any Fiscal year, Executive or his Beneficiaries, as the case
may be, shall be paid a Prorata Annual Bonus as soon as reasonably possible
but in no event later than thirty (30) calendar days after the Date of
Termination. The respective provisions of the Equity Plan, Long-Term
Incentive Plan and any other benefit plans or perquisite programs in which
Executive is a participant as of the Date of Termination shall govern
whether Executive or his Beneficiaries, as applicable, shall be entitled to
any benefits under such plans or programs in the event of a termination of
Executive's employment for death or disability.
7.3 Termination Without Cause or for Good Reason.
--------------------------------------------
(a) In the event of a Termination Without Cause or a Termination
for Good Reason, Executive shall receive the following:
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(i) as soon as reasonably possible but in no event later than
thirty (30) calendar days after the Date of Termination, a lump sum
amount in immediately available funds equal to the sum of
Executive's Accrued Base Salary and Accrued Annual Bonus;
(ii) if the Date of Termination occurs during the period
commencing from July 1 through December 31 of any Fiscal Year, as
soon as reasonably possible but in no event later than thirty (30)
calendar days after the Date of Termination, a lump sum amount in
immediately available funds equal to the Prorata Annual Bonus;
(iii) as soon as reasonably possible but in no event later
than thirty (30) calendar days after the Date of Termination, a
lump sum amount in immediately available funds equal to 150% of
Executive's Base Salary;
(iv) notwithstanding anything to the contrary contained in
the Long-Term Incentive Plan, upon a Termination for Good Reason or
a Termination Without Cause, (A) the Executive shall be entitled to
receive, within thirty (30) calendar days after the Date of
Termination, a lump sum payment in immediately available funds
(paid under the Long-Term Incentive Plan) in an amount equal to the
sum of (1) $1,000 for each vested Award Unit (as defined in the
Long-Term Incentive Plan) which was granted to Executive under the
WKI Guidelines adopted under the Long-Term Incentive Plan and (2)
the amount specified in the OXO Guidelines adopted under the
Long-Term Incentive Plan for each vested Award Unit which was
granted to Executive under the OXO Guidelines and (B) the
forfeiture provisions of Section 6(a)(iii) of the Long-Term
Incentive Plan shall not apply to Executive;
(v) as soon as reasonably possible but in no event later than
thirty (30) calendar days after the Date of Termination, a lump sum
amount in immediately available funds equal to the total amount
Executive is entitled to receive under any other plan or program
sponsored by the Company providing deferred compensation or
retirement benefits. The respective provisions of each such plan or
program shall govern for purposes of calculating the amounts due to
Executive upon a Termination for Good Reason or Termination Without
Cause;
(vi) the respective provisions of the Equity Plan and any
other benefit plans or perquisite programs in which Executive is a
participant as of the Date of Termination shall govern whether
Executive shall be entitled to any benefits under such plans or
programs in the event of a Termination for Good Reason or a
Termination Without Cause;
(vii) the medical and dental benefits referred to in Section
6.1(a) to which Executive is entitled as of the Date of Termination
through the Severance Period; and
(viii) as soon as reasonably possible but in no event later
than thirty (30) calendar days after the Date of Termination, but
without duplication of the foregoing, a lump sum cash payment equal
to the present value (determined using
14
the Interest Rate) of the amounts payable under Section 6.1(c) for
the period from the Date of Termination through the Severance
Period.
(b) In addition to the amounts payable under Subsection 7.3(a)
above, in the event that Executive's employment is terminated
during the Extension Period on account of a Termination Without
Cause or a Termination for Good Reason, Executive shall also be
entitled to receive no later than thirty (30) days after the Date
of Termination a lump sum cash payment in immediately available
funds equal to (A) minus (B); where:
(A) = the difference between (1) the sum of 300% of
Executive's Base Salary plus 300% of Executive's Annual
Bonus for the year prior to the Date of Termination and
(2) the amounts paid to the Executive under the
Long-Term Incentive Plan (or which become payable as a
result of his Termination of Employment); and
(B) = the amounts payable under Section 7.3(a)(iii)
hereof.
(c) Executive's Termination of Employment shall not be considered
to be for Good Reason unless:
(i) not more than ninety (90) calendar days after the
occurrence (or if later, not more than ninety (90) calendar days
after the Executive becomes aware) of the event or events alleged
to constitute Good Reason, Executive provides the Company with
written notice (the "Notice of Good Reason") of his intent to
---------------------
consider the Termination for Good Reason, including a detailed
description of the specific reasons which form the basis for such
consideration, and demanding that such event or events be cured not
later than ten (10) business days after the Company receives the
Notice of Good Reason (the "Cure Period");
-----------
(ii) the Company shall have failed to cure such event or
events during the Cure Period; and
(iii) not more than ninety (90) calendar days following the
expiration of the Cure Period, Executive shall have given the
Company a second notice (a "Notice of Termination for Good Reason")
-------------------------------------
stating that such cure has not occurred and that as a result,
Executive is terminating his employment for Good Reason on the date
(after the end of the Cure Period) specified in the Notice of
Termination for Good Reason. A Notice of Termination for Good
Reason shall not be based upon any reason or reasons other than one
or more reasons set forth in the Notice of Good Reason.
Article VIII. MISCELLANEOUS
8.1 Public Announcement. Executive shall be given a reasonable
-------------------
opportunity to review and comment on any public announcement by the Company
or any of its Subsidiaries relating to this Agreement or Executive's
employment by the Company.
15
8.2 Approvals. The Company represents and warrants to Executive that
---------
it has taken all corporate action necessary to authorize and to enter into
this Agreement.
8.3 No Offset. The obligations of the Company (and World Kitchen, Inc,
---------
solely for purposes of Section 8.5) to make the payments provided for in
this Agreement and otherwise to perform their obligations hereunder shall
not be affected by any circumstances, including set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may
have against Executive or others. Any claim which either the Company or
World Kitchen, Inc. may have against Executive, whether for a breach of
this Agreement or otherwise, shall be brought in a separate action or
proceeding and not as part of any action or proceeding brought by Executive
to enforce any rights against the Company or World Kitchen, Inc. (as
applicable) under this Agreement.
8.4 No Mitigation. In no event shall Executive be obligated to seek
-------------
other employment or to take any other action to mitigate the amounts
payable to Executive under any of the provisions of this Agreement, nor
shall the amount of any payment hereunder be reduced by any compensation
earned as a result of Executive's employment by another employer, except
that any continued welfare benefits provided for by Section 7.3(a)(vi)
shall not duplicate any benefits that are provided to Executive and his
family by such other employer and shall be secondary to any coverage
provided by such other employer.
8.5 Guarantee. World Kitchen, Inc. agrees to guarantee the payment of
---------
all liabilities under this Agreement, except the payment of amounts which
are due and owing under the Long-Term Incentive Plan or the Equity Plan,
which payments shall remain the sole obligations of the Company. World
Kitchen, Inc. represents and warrants to Executive that it has taken all
corporate action necessary to authorize and to make the foregoing guarantee
of payment.
8.6 Liability Insurance and Indemnification. The Company shall
---------------------------------------
maintain directors' and officers' liability insurance for Executive while
employed, and for a six (6) year period following Termination of Employment
at a level equivalent to the most favorable and protective coverage for any
active officer or director of the Company. The Company agrees to indemnify
Executive for any job-related liability to the fullest extent permitted
under all applicable laws, its by-laws, and all other applicable
indemnification agreements of the Company and any of its Subsidiaries.
8.7 Non-Solicitation. In consideration of the benefits provided under
----------------
this Agreement, Executive hereby agrees to be bound by the provisions of
this Section 8.7. During the Employment Period and for a period of one (1)
year after the Date of Termination for any reason, Executive shall not in
any manner, directly or indirectly, induce or attempt to induce any
employee of the Company or any Subsidiary or affiliate to quit or abandon
his or her employment, or any customer, independent contractor, consultant,
supplier or vendor of the Company Business to quit or abandon its
relationship for any purpose whatsoever. For purposes of this Section,
"Company Business" means the development, manufacture or purchase from
third parties and marketing of consumer bakeware, dinnerware, kitchen and
household tools, rangetop cookware and cutlery products.
16
8.8 Enforcement.
-----------
(a) If Executive incurs legal, accounting, expert witness or other
fees and expenses in an effort to establish, in connection with any
dispute with the Company, Executive's entitlement to compensation
and benefits under this Agreement, the Company shall, to the extent
Executive is successful in, or enters into a settlement with the
Company in which the Company agrees to resolve, such dispute,
reimburse Executive for such fees and expenses, to the extent the
incurrence and amount thereof are reasonable, and shall pay
Executive a Tax Gross-Up Payment in respect of the Taxes incurred
by Executive with respect to such reimbursement of fees and
expenses. The Company shall reimburse Executive for such fees and
expenses on a monthly basis upon Executive's request for
reimbursement accompanied by evidence that the fees and expenses
were incurred.
(b) If the Company fails to pay any amount provided under this
Agreement when due, the Company shall pay interest on such amount
at a rate equal to the Interest Rate.
8.9 Beneficiary. If Executive dies prior to receiving all of the
-----------
amounts payable to him in accordance with the terms and conditions of this
Agreement, such amounts shall be paid to the beneficiary ("Beneficiary")
-----------
designated by Executive in writing to the Company during his lifetime, or
if no such Beneficiary is designated, to Executive's estate. Such payments
shall be made in a lump sum to the extent so payable and, to the extent not
payable in a lump sum, in accordance with the terms of this Agreement.
Executive, without the consent of any prior Beneficiary, may change his
designation of Beneficiary or Beneficiaries at any time or from time to
time by submitting to the Company a new designation in writing.
8.10 Assignment; Successors. Neither of the WKI Entities nor World
----------------------
Kitchen, Inc. may assign its rights or obligations under this Agreement
without the prior written consent of Executive except to any surviving
entity following a Change of Control that has assumed in writing all
obligations under this Agreement. This Agreement shall be binding upon and
inure to the benefit of Executive, his estate and Beneficiaries, the
Company, and the successors and permitted assigns of the Company. Any
assignment or attempted assignment in violation of this Section 8.10 shall
constitute a Good Reason event of termination.
8.11 Nonalienation. Except as otherwise expressly provided herein,
-------------
benefits payable under this Agreement shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution or levy of any kind, either voluntary or
involuntary, prior to actually being received by Executive, and any such
attempt to dispose of any right to benefits payable hereunder shall be
void.
8.12 Severability. If all or any part of this Agreement is declared by
------------
any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of
this Agreement not declared to be unlawful or invalid. Any provision so
declared to be unlawful or invalid shall, if possible, be
17
construed in a manner which will give effect to the terms of such provision
to the fullest extent possible while remaining lawful and valid.
8.13 Amendment; Waiver. This Agreement shall not be amended or
-----------------
modified except by written instrument executed by the Company, World
Kitchen, Inc. and Executive. A waiver of any term, covenant or condition
contained in this Agreement shall not be deemed a waiver of any other term,
covenant or condition, and any waiver of any default in any such term,
covenant or condition shall not be deemed a waiver of any later default
thereof or of any other term, covenant or condition.
8.14 Notices. All notices hereunder shall be in writing and delivered
-------
by hand, by nationally-recognized delivery service that guarantees
overnight delivery, or by first-class, registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Company, to:
00000 Xxxxxxx Xxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
If to Executive, to:
Xxxxxxxxx X. Xxx
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
With a copy to:
Xxxxxx Xxxxxxx Bart, Esq.
McGuireWoods LLP
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
The parties may from time to time designate a new address by notice given
in accordance with this Section 8.14. Notice shall be considered to have
been given when actually received by the addressee.
8.15 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
8.16 Entire Agreement. This Agreement and each of the plans, benefit
----------------
programs and policies in effect from time to time during the Employment
Period and any Extension
18
Period forms the entire agreement between the parties hereto with respect
to the subject matter contained in the Agreement and in the respective
plans, benefit programs and policies and shall supersede all prior
agreements, promises and representations regarding employment,
compensation, severance or other payments or any other obligation of the
Company or any of its Subsidiaries upon Termination of Employment, whether
in writing or otherwise.
8.17 Applicable Law. This Agreement shall be interpreted and construed
--------------
in accordance with the laws of the State of Delaware, without regard to its
choice of law principles.
8.18 Survival of Executive's Rights. Each of the provisions of this
------------------------------
Agreement which by their terms are to be performed after, or which
expressly survive, the termination of this Agreement or the Date of
Termination, shall survive the termination of Executive's employment, the
termination of this Agreement, or both.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Agreement Date.
WKI HOLDING COMPANY, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------
Its:
-----------------------
Date: July 31, 2003
----------------------
WORLD KITCHEN, INC.
By:
------------------------
Its:
-----------------------
Date:
----------------------
EXECUTIVE:
/s/ Xxxxxxxxx X. Xxx
---------------------------
Xxxxxxxxx X. Xxx
July 31, 2003
---------------------------
Date
19
