Exhibit 10a
EMPLOYMENT AGREEMENT
AGREEMENT, effective as of February 1, 1998 (the "Effective
Date"), and executed on February 20, 1998 (the "Execution Date"), by and between
XXXXXX X. XXXXXX (the "Executive") and SUNBEAM CORPORATION, a Delaware
corporation (the "Company").
WHEREAS, the Executive is a party to the Employment Agreement
with the Company dated as of July 18, 1996 (the "Prior Agreement"):
WHEREAS, the Board of Directors of the Company (the "Board")
desires to continue to employ the Executive and the Executive desires to
continue to furnish services to the Company on the terms and conditions
hereinafter set forth;
WHEREAS, the parties desire to enter into this Agreement
setting forth the terms and conditions of the employment relationship of the
Executive with the Company; and
WHEREAS, the parties desire to provide for the termination of
the Prior Agreement, effective upon the Effective Date;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth.
2. EMPLOYMENT PERIOD. The period of employment of the
Executive by the Company hereunder (the "Employment Period") shall commence as
of the Effective Date and shall end on January 31, 2001 (or the Date of
Termination (as defined in Section 6 below), if earlier). All options awards
granted pursuant to the Prior Agreement shall vest and become exercisable in
full as of the Execution Date. In addition, 40% of the restricted stock granted
pursuant to the Prior Agreement which is subject to restrictions immediately
prior
to the Execution Date shall be forfeited as of the Execution Date, and the
remaining shares of such restricted stock shall become vested in full as of the
Execution Date and the Company shall reimburse the Executive on a grossed up
basis for any federal income tax assessed upon him upon the vesting of such
restricted stock. Commencing on February 1, 2001, the Employment Period shall be
extended for successive one year periods (individually, a "Renewal Period"),
unless a notice not to extend this Agreement shall have been given by either
party hereto to the other not later than August 1 immediately preceding the
commencement of a Renewal Period or unless the Date of Termination shall have
previously occurred; provided, however, that the last such Renewal Period shall
be the Renewal Period ending on January 31, 2003. Unless the context suggests
otherwise, the Employment Period hereunder shall for all purposes of this
Agreement be deemed to include any Renewal Period.
3. POSITION AND DUTIES. The Executive shall serve as Chairman
of the Board and Chief Executive Officer and as a director of the Company and
shall report directly to the Board. During the Employment Period, subject to the
supervisory powers of the Board, the Executive shall have those powers and
duties consistent with his position as Chairman of the Board and Chief Executive
Officer, which powers shall in all cases include, without limitation, the power
of supervision and control over and responsibility for the general management
and operation of the Company. The Executive agrees to devote substantially all
his working time, attention and energies to the performance of his duties for
the Company. It shall not be a violation of this Agreement for the Executive to
(i) serve on corporate, civic or charitable boards or committees, (ii) give
speeches and make media appearances to discuss matters of public interest and
(iii) manage his personal investments, so long as such activities do not
unreasonably interfere with the performance of the Executive's responsibilities
as an officer of the Company in accordance with this Agreement. It is understood
that the Executive has made a commitment to appear in various cities in the
United States in connection with a book entitled Mean Business, of which he is a
co-author, and it shall not be a violation of this Agreement for the Executive
to make such appearances (the expenses relating to such appearances to be borne
by the Executive). The Company shall nominate the Executive as a director of the
Company and shall use its best efforts to have the Executive elected and
reelected to the Board for the duration of the Employment Period. The Company
shall also use its best efforts to cause three individuals, designated by the
Executive to be elected and reelected as directors of the Company for the
duration of the Employment Period. In the event that any of such individuals
fails to qualify or be elected (or, having been elected, resigns, is removed or
fails to be re-elected) during the Employment
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Period, the Executive shall designate a successor reasonably acceptable to the
Board and the Company shall nominate such person as a director and shall use its
best efforts to cause such person to be elected and reelected.
4. PLACE OF PERFORMANCE. The principal place of employment of
the Executive shall be at the Company's principal executive offices in Palm
Beach County, Florida, or such other location as may be agreed to by the Board
and the Executive. In the event that the Company's principal executive offices
are moved from Palm Beach County, Florida, the Company shall promptly pay, or
reimburse the Executive for, all reasonable expenses incurred by the Executive
for a period of one year relating to any change of the Executive's residence
from Boca Raton, Florida, in connection with his employment hereunder,
including, without limitation, reasonable expenses for himself and his family of
travel, moving, storage and suitable lodging and maintenance, and the Company
shall reimburse the Executive on a grossed up basis in the event that any tax is
assessed upon him in relation to any such expenses. The Company shall pay or
reimburse the Executive for all reasonable costs and expenses of residential
relocation incurred by him for a period of one year in connection with each and
every additional change, if any, in the location of the principal executive
offices of the Company, and the Executive shall be reimbursed by the Company on
a grossed up basis in the event that any tax is assessed upon him in relation to
any such costs or expenses.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. As compensation for the performance
by the Executive of his duties hereunder, during the Employment Period the
Company shall pay the Executive a base salary at an annual rate of $2,000,000,
which rate shall be retroactive to the Effective Date (the base salary, at the
rate in effect from time to time, is hereinafter referred to as the "Base
Salary"). Except for the adjustment necessary to implement the retroactive
increase in Base Salary described in the immediately preceding sentence, the
Base Salary shall be payable in equal semi-monthly installments and may be
increased from time to time at the discretion of the Company's Compensation
Committee (or any successor thereof) and the Board. Base Salary shall not be
reduced after any increase thereof.
(b) EQUITY GRANTS.
(1) SHARES. Effective as of the Execution Date, the Executive
is hereby granted, without cost to the Executive, 300,000 shares (the "Shares")
of the
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Company's Common Stock, on the terms and conditions set forth herein. Such
shares shall be fully vested upon the Execution Date. All such Shares, shall be
the sole property of the Executive, shall be unrestricted and shall be freely
tradeable by the Executive, subject to applicable legal restrictions. Within six
(6) months after the Effective Date, the Company shall cause all such Shares to
be registered or qualified for resale under the Securities Act of 1933 and
applicable state laws. The Company shall reimburse the Executive on a grossed up
basis with respect to any tax assessed upon him upon the grant of the Shares.
(i) RIGHTS AS A STOCKHOLDER. The Executive shall have all the
rights of a stockholder with respect to the Shares, including the right
to receive dividends or other distributions and the right to vote such
Shares.
(ii) DELIVERY OF SHARE CERTIFICATES. Upon the grant of the
Shares, the certificates evidencing such Shares shall be delivered
promptly to the Executive. In the case of Executive's death, such
certificates will be delivered to the beneficiary designated in writing
by the Executive pursuant to a form of designation provided by the
Company, to the Executive's legatee or legatees, or to his personal
representatives or distributees, as the case may be. Unless and until
registered under the Securities Act of 1933, as amended, certificates
evidencing the Shares and shares acquired pursuant to the exercise of
the Option (as defined in Section 5(b)(2) below) shall bear the
following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL FOR THE COMPANY,
SUCH REGISTRATION IS NOT REQUIRED.
(2) STOCK OPTION. Effective as of the Effective Date, subject
to shareholder approval by Company's shareholders at the annual meeting to be
held on May 12, 1998 (or on such other date on which such meeting will be held)
(the "Annual Meeting"), the Executive is hereby granted a non-qualified stock
option (the "Option") to purchase 3,750,000 shares of Common Stock (the "Option
Award"). The Option Award is subject to the following conditions: (i) the
exercise price per share of Common Stock shall be $36.85 per share, which is the
average of the high and low selling price per share on the NYSE on January 30,
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1998, (ii) the Option Award shall vest and become exercisable with respect to
one-third (1/3) of the shares of Common Stock subject to such award on the
Effective Date and, an additional one-third (1/3) of the shares of Common Stock
subject to such award, on each of the first and second anniversaries of the
Effective Date (subject to earlier vesting provisions set forth in Section
5(b)(3) and earlier vesting and forfeiture provisions set forth in Section 7),
and (iii) the Option Award shall expire on the tenth anniversary of the
Effective Date, subject to earlier termination as provided herein. Within six
(6) months after the Effective Date, the Company shall cause all shares subject
to the Option to be registered or qualified for resale under the Securities Act
of 1933 and applicable state laws.
In the event that Company's shareholders fail to approve the
grant of the Option at the Annual Meeting, the Company and the Executive shall
negotiate in good faith a mutually acceptable alternative compensation
arrangement; provided, however, that the Executive, in his sole discretion, may
elect to terminate this Agreement, in which event it shall be deemed to have
been terminated pursuant to Section 6(d) hereof and the Executive shall be
entitled to receive the compensation, rights and benefits provided in Section
7(e) hereof (other than in respect of stock options).
(3) SPECIAL VESTING OF EQUITY GRANTS. Anything herein to the
contrary notwithstanding, if a Change in Control occurs during the Employment
Period and the Executive has remained continually employed by the Company from
the Effective Date to the date of the Change in Control, the Option Award, to
the extent not theretofore vested and exercisable, shall become fully vested and
exercisable upon the occurrence of such Change in Control. For purposes of this
Agreement, a Change in Control shall mean the occurrence of any one of the
following events:
(A) any "person" as such term is used in Sections 3(a)(9)
and 13(d) of the Securities Exchange Act of 1934, as
amended, becomes a "beneficial owner," as such term
is used in Rule 3d-3 promulgated under that act, of
25% or more of the voting stock of the company (other
than a person that is currently the beneficial owner
of such percentage of the Company's voting stock);
(B) the majority of the Board consists of individuals
other than Incumbent Directors, which term means the
members of the Board on the date of this Agreement,
the Executive and the
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individuals designated as directors by the Executive
in accordance with Section 3 hereof; provided that
any person becoming a director subsequent to such
date whose election or nomination for election was
supported by two-thirds of the directors who then
comprised the Incumbent Directors shall be considered
to be an Incumbent Director;
(C) the Company, without the Executive's consent, adopts
any plan of liquidation providing for the
distribution of all or substantially all of its
assets; or
(D) all or substantially all of the assets or business of
the Company are disposed of pursuant to a merger,
consolidation or other transaction (unless the
shareholders of the Company immediately prior to such
merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
voting stock of the Company, all of the voting stock
or other ownership interests of the entity or
entities, if any, that succeed to the business of the
Company).
(c) EXPENSES. During the Employment Period, the
Company shall reimburse the Executive for all reasonable business expenses in
accordance with applicable policies and procedures then in force, including,
without limitation, first class travel, lodging and other expenses incurred by
him. In light of the fact that the Executive may be required to travel for
extended period of time, such expenses shall include all reasonable expenses of
the Executive's wife for travel with the Executive in the service of the
Company.
(d) VACATION AND OTHER ABSENCES. The Executive shall
be entitled to paid vacation and other paid absences, whether for holidays,
illness, personal time or any similar purposes, during the Employment Period in
accordance with policies applicable generally to senior executives of the
Company; provided, however, that the Executive shall always be entitled to at
least six weeks of paid vacation in each calendar year and pro rata for part of
a year and shall be compensated at the conclusion of each calendar year for any
unused vacation days.
(e) AUTOMOBILE. Within 90 days immediately following
the Effective Date, the Company shall replace with a comparable vehicle the
Mercedes automobile currently owned by the Company and provided to the
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Executive for his exclusive use, and shall provide to the Executive, every two
years thereafter, during the Employment Period, a new automobile, comparable in
type and style, for his exclusive use. The Company shall reimburse the Executive
for all reasonable expenses incurred in the use and maintenance of such
automobile, and will also provide the Executive with a driver on a full-time
basis for security and safety reasons. The Company shall reimburse the Executive
on a grossed up basis in the event that any tax is assessed upon him in relation
to such driver or expenses.
(f) CLUB MEMBERSHIP. During the Employment Period,
the Company shall pay any and all initiation fees, monthly membership dues, and
Company-related expenses in connection with the continuation of the Executive's
current country club membership and for comparable country club membership in
the event of a relocation of the Company's principal executive office. The
Company shall reimburse the Executive on a grossed up basis in the event that
any tax is assessed upon him in relation to such fees, dues and expenses.
(g) FINANCIAL PLANNING, ETC. During the Employment
Period, the Company shall provide the Executive with financial consulting
services, including tax-related advice and services, without cost or expense to
him and shall reimburse the Executive on a grossed up basis in the event that
any tax is assessed upon him in relation to such services. The Company shall pay
the reasonable fees and disbursements of legal, accounting and tax advisors
incurred by the Executive in connection with the negotiation, preparation and
implementation of this Agreement and any additional instruments and agreements
related hereto, and any transactions contemplated hereby, and the Company shall
reimburse the Executive on a grossed up basis in the event that any tax is
assessed upon him in relation to any such fees and disbursements.
(h) OTHER BENEFITS. During the Employment Period, the
Executive shall be eligible to participate at no cost or expense to him in
welfare plans and programs (including any tax-deferred savings plan, group life
insurance plan, medical and dental insurance plan, and accident and disability
insurance plan) ("Benefit Plans") applicable generally to employees and/or
senior executives of the Company, but shall not be eligible to participate in
the Company's short-term or long-term incentive plans or in the Company's
employee defined benefit pension plans.
6. TERMINATION. The Executive's employment hereunder, as the
case may be, may be terminated as follows:
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(a) DEATH. The Executive's employment shall terminate
upon his death, and the date of his death shall be the Date of Termination.
(b) DISABILITY. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties hereunder on a full-time basis for one hundred and twenty
(120) consecutive days and, within thirty (30) days after written Notice of
Termination (as defined in Section 6(f) hereof) is given, shall not have
returned to the performance of his duties hereunder on a full-time basis
("Disability"), the Company may terminate the Executive's employment hereunder.
In this event, the Date of Termination shall be thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period).
(c) CAUSE. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment hereunder:
(i) upon the Executive's conviction for the
commission of a felony (or a plea of nolo contendere thereto); or
(ii) willful failure by the Executive
substantially to perform his duties hereunder (other than any such
failure resulting from the Executive's incapacity due to Disability).
For purposes hereof, no act or failure to act by the
Executive shall be considered "willful" unless done or omitted to be
done by him not in good faith or without reasonable belief that his
action or omission was in the best interests of the Company or contrary
to a formal resolution of the Board. Cause shall not exist unless and
until there shall have been delivered to the Executive a copy of a
resolution, duly adopted by the affirmative vote of not less than two
thirds of the entire membership of the Board at a meeting of the Board
held for the purpose (after ten (10) days' prior notice to the
Executive of such meeting and the purpose thereof and an opportunity
for him, together with his counsel, to be heard before the Board at
such meeting), finding that in the good faith opinion of the Board, the
Executive was guilty of conduct set forth above in clause (ii) of this
Section 6(c) and specifying the particulars thereof in detail. The Date
of Termination shall be the date specified in the Notice of
Termination; provided, however, that, in the case of a termination for
Cause under
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clause (ii) above, the Date of Termination shall not be earlier than 30
days after delivery of the Notice of Termination. Anything herein to
the contrary notwithstanding, if, following a termination of the
Executive's employment by the Company for Cause based upon the
conviction of the Executive for a felony, such conviction is overturned
in a final determination on appeal, the Executive shall be entitled to
the payments and the economic equivalent of the benefits the Executive
would have received if his employment had been terminated by the
Company without Cause.
(d) GOOD REASON. The Executive may terminate his
employment hereunder for Good Reason, provided that the Executive shall have
delivered a Notice of Termination (as defined in Section 6(f) hereof) within
ninety (90) days after the occurrence of the event of Good Reason giving rise to
such termination. For purposes of this Agreement, "Good Reason" shall mean the
occurrence of one or more of the following circumstances, without the
Executive's express written consent, which are not remedied by the Company
within thirty (30) days of receipt of the Executive's Notice of Termination:
(i) an assignment to the Executive of any
duties materially inconsistent with his positions, duties,
responsibilities and status with the Company or any material limitation
of the powers of the Executive not consistent with the powers of the
Executive contemplated by Section 3 hereof;
(ii) any removal of the Executive from, or
any failure to re-elect the Executive to, the positions specified in
Section 3 of this Agreement;
(iii) the change of the Executive's title as
specified by Section 3 of this Agreement;
(iv) the Company's requiring the Executive
without his consent to be based at any office or location other than as
described in Section 4 of this Agreement;
(v) a reduction in the Executive's Base
Salary as in effect from time to time;
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(vi) the failure of the Company to continue
in effect any Benefit Plan that was in effect on the date hereof or
provide the Execu tive with equivalent benefits;
(vii) the failure of the Company to continue
to maintain the Executive as a member of its Board of Directors at all
times for so long as he shall serve as Chief Executive Officer of the
Company;
(viii) the failure of the Company to cause
three individuals (or their successors) designated by the Executive to
be elected and reelected as directors of the Company in accordance with
Section 3 hereof;
(ix) any other material breach by the
Company of this Agreement; or
(x) a Change in Control.
In the event of a termination for Good Reason, the Date of
Termination shall be the date specified in the Notice of Termination, which
shall be no more than thirty (30) days after the Notice of Termination.
(e) OTHER TERMINATIONS. Notwithstanding the
foregoing, the Company may terminate the Executive's employment hereunder at any
time and the Executive may terminate his employment at any time, in each case
subject to the provisions of Sections 7(d) and (e) hereof. If the Executive's
employment is terminated hereunder for any reason other than as set forth in
Sections 6(a) through 6(d) hereof, the date on which a Notice of Termination is
given or any later date (within 30 days) set forth in such Notice of Termination
shall be the Date of Termination.
(f) NOTICE OF TERMINATION. Any termination of the
Executive's employment hereunder by the Company or by the Executive (other than
termination pursuant to Section 6(a) hereof) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 13
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. If any dispute concerning a Notice of Termination of
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the Executive's employment under Section 6(b), 6(c) or 6(d) hereof results in a
determination that a proper basis for such termination did not exist under such
section, the Executive's employment under this Agreement shall be treated, with
respect to a Notice of Termination pursuant to Section 6(b) or 6(c) hereof, as
having been terminated pursuant to Section 6(e) hereof or, with respect to a
Notice of Termination pursuant to Section 6(d) hereof, as having not been
terminated.
7. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY PERIOD. During any period during the
Employment Period that the Executive fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness ("Disability Period"),
the Executive shall continue to (i) receive his full Base Salary and (ii)
participate in the Benefit Plans. Such payments made to the Executive during the
Disability Period shall be reduced by the sum of the amounts, if any, payable to
the Executive at or prior to the time of any such payment under disability
benefit plans of the Company or under the Social Security disability insurance
program, and which amounts were not previously applied to reduce any such
payment.
(b) DEATH. If the Executive's employment hereunder is
terminated as a result of death, then:
(i) the Company shall pay the Executive's
estate or designated beneficiary, as soon as practicable after the Date
of Termination, any Base Salary installments due in the month of death
and any reimbursable expenses, accrued or owing the Executive hereunder
as of the Date of Termination;
(ii) the Options granted to the Executive
pursuant to the Option Award shall become vested and exercisable, as of
the Date of Termination, to the extent such Option Award would have
otherwise become vested on or before the first anniversary of the Date
of Termination, and all vested Options, as well as all stock options
granted pursuant to the Prior Agreement ("Prior Agreement Options"),
shall remain exercisable for a period of one year following such Date
of Termination and shall thereafter be completely forfeited and
cancelled; any Options that would not have become vested and
exercisable on or before the first anniversary of the Date of
Termination shall terminate and be forfeited as of the Date of
Termination.
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(c) DISABILITY. If the Executive's employment
hereunder is terminated as a result of Disability, then:
(i) the Company shall pay the Executive, as
soon as practicable after the Date of Termination, any Base Salary and
any reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination; and
(ii) the Options granted to the Executive
pursuant to the Option Award shall become vested and exercisable, as of
the Date of Termination, to the extent such Option Award would have
otherwise become vested on or before the first anniversary of the Date
of Termination, and all vested Options, as well as all Prior Agreement
Options, shall remain exercisable for a period of three years following
the Date of Termination, and shall thereafter be completely forfeited
and cancelled; any Options that would not have become vested and
exercisable on or before the first anniversary of the Date of
Termination shall terminate and be forfeited as of the Date of
Termination.
(d) CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD REASON.
If the Executive's employment hereunder is terminated by the Company for Cause
or by the Executive (other than for Good Reason), then:
(i) the Company shall pay the Executive, as
soon as practicable after the Date of Termination, any Base Salary and
any reimbursable expenses accrued or owing the Executive hereunder for
services as of the Date of Termination; and
(ii) in the event of termination by the
Company for Cause, the Executive shall have the right to exercise the
vested unexercised portion of the Option Award, as well as all Prior
Agreement Options, for a period of ninety (90) days after the Date of
Termination, and any options not so exercised shall be forfeited
thereafter. In the event of termination by the Executive other than for
Good Reason, the Executive shall have the right to exercise the vested
unexercised portion of the Option Award, as well as all Prior Agreement
Options, for a period of one year following the Date of Termination and
any options not so exercised shall be forfeited thereafter.
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(e) TERMINATION BY COMPANY WITHOUT CAUSE OR BY THE
EXECUTIVE WITH GOOD REASON. If the Executive's employment hereunder is
terminated by the Company (other than for Cause or Disability) or by the
Executive for Good Reason, then:
(i) the Company shall pay the Executive, as
soon as practicable after the Date of Termination, any Base Salary and
any reimbursable expenses, accrued or owing the Executive hereunder for
services as of the Date of Termination;
(ii) the Company shall immediately pay to
the Executive as liquidated damages and not as a penalty a lump sum
amount equal to the total Base Salary that would have otherwise been
payable to the Executive with respect to the period commencing
immediately following the Date of Termination and ending on January 31,
2001, or, if applicable, the expiration of the Renewal Period (the
"Salary Continuation Period") at the annualized rate in effect at the
time Notice of Termination is given;
(iii) the Options granted to the Executive
pursuant to the Option Award shall become fully vested and exercisable
as of the Date of Termination. The Option Award, as well as each Prior
Agreement Option, shall remain exercisable for the balance of its
original 10-year term; and
(iv) for a period of three years immediately
following the Date of Termination, the Executive shall continue to
participate in all employee benefit plans and programs in which the
Executive was entitled to participate immediately prior to the Date of
Termination in accordance with the terms of such plans and programs as
in effect from time to time; provided that the Executive's continued
participation is permitted under the general terms and provisions of
such plans and programs. In the event that the Executive's
participation in any such plan or program is barred, the Company shall
arrange to provide the Executive and his dependents with benefits
substantially the same as those which the Executive and his dependents
would otherwise have been entitled to receive under such plans and
programs from which their continued participation is barred or provide
their economic equivalent.
8. GROSS-UP FOR EXCISE TAX. In the event that the Executive
receives any payment or benefit (including but not limited to the payments or
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benefits pursuant to Section 7 of this Agreement) (a "Payment") that is subject
to the excise tax (the "Excise Tax") under Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), the Company shall pay to the Executive,
as soon thereafter as practicable, an additional amount (a "Gross-Up Payment")
such that the net amount retained by the Executive, after deduction of any
Excise Tax imposed upon the Payment and any federal, state and local income tax
and Excise Tax imposed upon the Gross-Up Payment shall be equal to the Payment.
The determination of whether an Excise Tax is due in respect of any payment or
benefit, the amount of the Excise Tax and the amount of the Gross-Up Payment
shall be made by an independent auditor (the "Auditor") jointly selected by the
Company and the Executive and paid by the Company. If the Executive and the
Company cannot agree on the firm to serve as the Auditor, then the Executive and
the Company shall each select one nationally recognized accounting firm and
those two firms shall jointly select the nationally recognized accounting firm
to serve as the Auditor. Notwithstanding the foregoing, for purposes of
determining the Gross-Up Payment in respect of any Payment, (i) any other
payments or benefits received or to be received by the Executive in connection
with a Change in Control or the Executive's termination of employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person) shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of Section 280G of
the Code shall be treated as subject to the Excise Tax, unless in the opinion of
tax counsel selected by the Auditor, such other payments or benefits (in whole
or in part) do not constitute parachute payments, or are otherwise not subject
to the Excise Tax, and (ii) the Executive shall be deemed to pay federal income
tax at the highest marginal rate applicable in the calendar year in which the
Gross-Up Payment is made, and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on the Date of Termination, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. In the
event the actual Excise Tax or such income tax is more or less than the amount
used to calculate the Gross-Up Payment, the Executive or the Company, as the
case may be, shall pay to the other an amount reflecting the actual Excise Tax
or such income tax, plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code.
9. MITIGATION. The Executive shall not be required to mitigate
amounts payable pursuant to Section 7 hereof by seeking other employment or
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otherwise, nor shall there be any offset against such payments on account of (a)
any remuneration attributable to any subsequent employment that he may obtain or
(b) any claims the Company may have against the Executive.
10. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS,
NON-COMPETITION.
(a) CONFIDENTIAL INFORMATION. The Executive shall
hold in a fiduciary capacity for the benefit of the Company and its subsidiaries
(the "Sunbeam Entities") all trade secrets, confidential information, and
knowledge or data relating to the Sunbeam Entities and the businesses and
investments of the Sunbeam Entities, which shall have been obtained by the
Executive during the Executive's employment by the Company, including such
information with respect to any products, improvements, formulas, designs or
styles, processes, services, customers, suppliers, marketing techniques,
methods, future plans or operating practices ("Confidential Information");
PROVIDED, HOWEVER, that Confidential Information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive) or any specific information or type of
information generally not considered confidential by persons engaged in the same
business as the Company, or information disclosed by the Company or any officer
thereof to a third party without restrictions on the disclosure of such
information. Except as may be required or appropriate in connection with his
carrying out his duties under this Agreement, the Executive shall not, without
the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such Confidential Information to
anyone other than the Company and those designated by the Company.
(b) REMOVAL OF DOCUMENTS. All records, files,
drawings, documents, models, and the like relating to the business of the
Sunbeam Entities, which the Executive prepares, uses or comes into contact with
and which contain Confidential Information shall not be removed by the Executive
from the premises of any Sunbeam Entity (without the written consent of the
Company) during or after the Employment Period unless such removal shall be
required or appropriate in connection with his carrying out his duties under
this Agreement, and, if so removed by the Executive, shall be returned to such
Sunbeam Entity immediately upon termination of the Executive's employment
hereunder.
(c) NON-COMPETITION. During (i) the Executive's
employment with the Company and (ii) the two (2) year period immediately
following
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the Executive's Date of Termination, the Executive (A) shall not engage,
anywhere within the geographical areas in which any Sunbeam Entity is then
conducting its business operations, directly or indirectly, alone, in
association with or as a shareholder, principal, agent, partner, officer,
director, employee or consultant of any other organization, in any business (a
"Competitive Business") which competes with any business then being conducted by
such Sunbeam Entity; (B) shall not solicit or encourage any officer, employee or
consultant of any of the Sunbeam Entities to leave the employ of any of the
Sunbeam Entities for employment by or with any Competitive Business; and (C)
shall not solicit, divert or take away, or attempt to divert or to take away,
the business or patronage of any of the customers or accounts, or prospective
customers or accounts, of any Sunbeam Entity, which were contacted, solicited or
served by the Executive while employed by the Company; provided, however, that
nothing herein shall prohibit the Executive from owning a maximum of two percent
(2%) of the outstanding stock of any publicly traded corporation. Following the
Date of Termination, ownership by the Executive of not more than five percent
(5%) of any publicly traded corporation shall not constitute a violation hereof.
If, at any time, the provisions of this Section 10(c) shall be determined to be
invalid or unenforceable, by reason of being vague or unreasonable as to area,
duration or scope of activity, this Section 10(c) shall be considered divisible
and shall become and be immediately amended to only such area, duration and
scope of activity as shall be determined to be reasonable and enforceable by the
court or other body having jurisdiction over the matter; and the Executive
agrees that this Section 10(c) as so amended shall be valid and binding as
though any invalid or unenforceable provision had not been included herein. For
purposes of this Section 10(c), the design, manufacture and marketing of outdoor
barbecue grills and small kitchen appliances shall be construed to be a
Competitive Business; provided, however, that the gross revenues derived from
sales of such products by such competitor are greater than the lesser of (i) 10%
of its total revenues and (ii) $500,000,000.
(d) REMEDIES. In the event of a breach or threatened
breach of this Section 10, the Executive agrees that the Company shall be
entitled to apply for injunctive relief in a court of appropriate jurisdiction
to remedy any such breach or threatened breach, the Executive acknowledging that
damages would be inadequate and insufficient.
(e) CONTINUING OPERATION. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 10.
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11. INDEMNIFICATION. The Company shall indemnify the Executive
to the full extent permitted by law and the By-laws of the Company for all
expenses, costs, liabilities and legal fees which the Executive may incur in the
discharge of all his duties hereunder, including, without limitation, the right
to be paid in advance by the Company for his expenses in defending a civil or
criminal action, proceeding or investigation prior to the final disposition
thereof. The Executive shall be insured under the Company's Directors' and
Officers' Liability Insurance Policy as in effect from time to time.
Notwithstanding any other provision of this Agreement to the contrary, any
termination of the Executive's employment or of this Agreement shall have no
effect on the continuing operation of this Section 11.
12. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of
the Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the business and/or
assets of the Company, provided that the assignee or transferee is the successor
to all or substan tially all of the business and/or assets of the Company and
such assignee or transferee assumes the liabilities, obligations and duties of
the Company, as contained in this Agreement, either contractually or as a matter
of law. The Company will require any such successor to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. As used in this Agreement (except in the definition of Change in
Control), "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement or by operation of law.
(b) EXECUTIVE'S SUCCESSORS. This Agreement shall not
be assignable by the Executive. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Upon the Executive's death, all amounts to
which he is entitled hereunder, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
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13. NOTICE. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
If to the Company:
Sunbeam Corporation
0000 X. Xxxxxxxx Xxx.
Xxxxxx Xxxxx, Xxxxxxx 00000
Attn: Chairman of the Compensation Committee
(With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.)
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
14. MISCELLANEOUS. No provisions of this Agreement may be
modified unless such modification is agreed to in writing signed by the
Executive and an authorized officer of the Company. Any waiver or discharge must
be in writing and signed by the Executive or such an authorized officer of the
Company, as the case may be. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior
18
or subsequent time. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Delaware without
regard to its conflicts of law principles.
15. WITHHOLDING. Any payments provided for in this Agreement
shall be paid net of any applicable withholding of taxes required under federal,
state or local law.
16. ARBITRATION. Except as otherwise provided herein, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled under the rules of the American Arbitration Association then in
effect in the State of Florida, as the sole and exclusive remedy of either
party, and judgment upon such award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction. The costs of the arbitration shall be
borne as determined by the arbitrators PROVIDED, HOWEVER, that if the Company's
position is not substantially upheld, as determined by the arbitrators, the
expenses of the Executive (including, without limitation, fees and expenses
payable to the AAA and the arbitrators, fees and expenses payable to witnesses,
including expert witnesses, fees and expenses payable to attorneys and other
professionals, expenses of the Executive in attending the hearings, costs in
connection with obtaining and presenting evidence and costs of transcription of
the proceedings), as determined by the arbitrators, shall be reimbursed to him
by the Company.
17. VALIDITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.
18. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
19. ENTIRE AGREEMENT. This Agreement between the Company and
the Executive sets forth the entire agreement of the parties hereto in respect
of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by the parties hereto in respect of the
subject matter contained herein; and any prior agreement of the parties hereto
in respect of the subject matter contained herein (including the Prior
Agreement) is hereby terminated and cancelled.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on February 20, 1998, to be effective as of the Effective Date.
SUNBEAM CORPORATION
By: /s/ XXXXX X. XXXXXXXXX
--------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chairman, Compensation Committee
/s/ XXXXXX X. XXXXXX
--------------------------------------
Xxxxxx X. Xxxxxx
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