<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For quarterly period ended OCTOBER 1, 1995
Commission File Number 1-7484
EKCO GROUP, INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2167167
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
98 SPIT BROOK ROAD, NASHUA, NEW HAMPSHIRE 03062
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(603) 888-1212
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of November 3, 1995, there were issued and outstanding 18,382,546
shares of common stock of the registrant.
<PAGE> 2
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
OCTOBER 1, JANUARY 1,
1995 1995
----------- ---------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 213 $ 129
Accounts receivable, net 58,236 46,030
Inventories 53,461 48,242
Prepaid expenses and other current assets 6,613 6,296
Deferred income taxes 7,439 7,330
Investment pledged as collateral - 3,600
-------- --------
Total current assets 125,962 111,627
Property and equipment, net 55,057 52,361
Property held for sale or lease, net 6,739 7,373
Other assets 5,100 5,440
Excess of cost over fair value of net assets
acquired, net 137,727 140,982
-------- --------
Total assets $330,585 $317,783
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable $ - $ 3,643
Current portion of long-term obligations 33 36
Accounts payable 17,427 15,652
Accrued expenses 26,587 27,843
Income taxes 5,593 3,944
-------- --------
Total current liabilities 49,640 51,118
-------- --------
Long-term obligations, less current portion 110,683 102,580
-------- --------
Other long-term liabilities 9,549 9,375
-------- --------
7% Convertible Subordinated Note 22,000 22,000
-------- --------
Series B ESOP Convertible Preferred Stock, net;
outstanding October 1, 1995, 1,519 shares;
outstanding January 1, 1995, 1,568 shares,
redeemable at $3.61 per share 3,510 3,096
-------- --------
Commitments and contingencies - -
Minority interest 498 498
-------- --------
Stockholders' equity
Common stock, $.01 par value; outstanding
October 1, 1995, 18,548 shares; outstanding
January 1, 1995, 18,069 shares 185 181
Capital in excess of par value 107,861 105,448
Cumulative translation adjustment 975 771
Retained earnings 31,563 27,172
Unearned compensation (4,391) (2,968)
Pension liability adjustment (1,488) (1,488)
-------- --------
134,705 129,116
-------- --------
Total liabilities and stockholders' equity $330,585 $317,783
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 1, 1995 AND OCTOBER 2, 1994
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $83,041 $78,623 $203,464 $192,176
------- ------- -------- --------
Costs and expenses
Cost of sales 56,935 51,511 140,889 127,776
Selling, general and administrative 12,954 14,507 38,637 39,675
Amortization of excess cost over
fair value 1,109 1,111 3,326 3,330
------- ------- -------- --------
70,998 67,129 182,852 170,781
------- ------- -------- --------
Income before interest and
income taxes 12,043 11,494 20,612 21,395
------- ------- -------- --------
Net interest expense
Interest expense 3,611 3,223 10,454 9,512
Investment income (10) (50) (85) (276)
------- ------- -------- --------
3,601 3,173 10,369 9,236
------- ------- -------- --------
Income before income taxes 8,442 8,321 10,243 12,159
Income taxes 3,795 3,845 4,651 5,671
------- ------- -------- --------
Net income $ 4,647 $ 4,476 $ 5,592 $ 6,488
======= ======= ======== ========
Net income per share $ .23 $ .22 $ .28 $ .32
======= ======= ======== ========
Weighted average number of shares used
in computation of per share data 20,404 20,139 20,312 20,107
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
<TABLE>
EKCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 1, 1995 AND OCTOBER 2, 1994
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 5,592 $ 6,488
Adjustments to reconcile net income to net cash
provided by (used in) operations
Depreciation 7,477 7,028
Amortization 7,976 6,018
Other 606 3,392
Change in certain assets and liabilities, affecting
cash provided by (used in) operations
Accounts receivable (11,961) (14,885)
Inventories (5,150) (9,669)
Other assets (3,995) 3,123
Accounts payable and accrued expenses 412 313
Income taxes payable 1,661 (2,362)
-------- --------
Net cash provided by (used in) operations 2,618 (554)
-------- --------
Cash flows from investing activities
Proceeds from sale of property, equipment and product line 245 5,219
Capital expenditures (9,591) (7,514)
-------- --------
Net cash used in investing activities (9,346) (2,295)
-------- --------
Cash flows from financing activities
Proceeds from issuance of long-term obligations 35,183 30,385
Proceeds from sale of investment held as collateral 3,600 -
Payment of dividends (1,201) -
Issuance of stock under stock option and purchase plans 596 414
Payment of note and long-term obligations (30,726) (27,582)
Other (623) (514)
-------- --------
Net cash provided by financing activities 6,829 2,703
-------- --------
Effect of exchange rate changes on cash (17) 57
-------- --------
Net increase (decrease) in cash and cash equivalents 84 (89)
Cash and cash equivalents at beginning of year 129 327
-------- --------
Cash and cash equivalents at end of period $ 213 $ 238
======== ========
Cash paid during the period for
Interest $ 7,084 $ 6,631
Income taxes 2,800 5,586
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION AND OTHER MATTERS
The consolidated condensed financial statements included herein have
been prepared by Ekco Group, Inc. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is believed,
however, that the disclosures are adequate to make the information presented
not misleading. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K. The consolidated
condensed financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. The condensed financial statements, in the opinion of management,
reflect all adjustments necessary to fairly state the Company's financial
position and the results of its operations. Such adjustments are of a normal
recurring nature.
A large part of the Company's business is seasonal. Historically,
revenues in the last half of the calendar year have been greater than revenues
in the first half of the year. Accordingly, the results for the entire year
may not necessarily be the product of annualizing results for any interim
period.
(2) ACCOUNTS RECEIVABLE, NET
<TABLE>
Accounts receivable consisted of the following:
<CAPTION>
OCTOBER 1, 1995 JANUARY 1, 1995
--------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accounts receivable $59,399 $47,769
Allowance for doubtful accounts (1,163) (1,739)
------- -------
$58,236 $46,030
======= =======
</TABLE>
(3) INVENTORIES
<TABLE>
The components of inventory were as follows:
<CAPTION>
OCTOBER 1,1995 JANUARY 1, 1995
-------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Raw materials $14,321 $15,229
Work in process 4,539 4,047
Finished goods 34,601 28,966
------- -------
$53,461 $48,242
======= =======
</TABLE>
5
<PAGE> 6
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 1, 1995 JANUARY 1, 1995
--------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment at cost
Land, buildings and improvements $21,983 $22,261
Equipment, factory and other 69,247 59,839
------ ------
91,230 82,100
Less accumulated depreciation 36,173 29,739
------ ------
$55,057 $52,361
====== ======
</TABLE>
(5) EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, NET
Excess of cost over fair value of net assets acquired is net of
accumulated amortization of $26,616 as of October 1, 1995 and $23,290 as of
January 1, 1995.
(6) INCOME TAXES
The Company's effective tax rate as reported in its latest annual
report on Form 10-K was 46% for the year ended January 1, 1995 ("Fiscal
1994"). The difference between the Company's effective tax rate of 45% for the
three and nine months ended October 1, 1995 and the Fiscal 1994 rate results
primarily from lower state income taxes.
(7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES
Long-term obligations consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 1, 1995 JANUARY 1, 1995
--------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Group Credit Facility $ 50,612 $ 42,424 (a)
12.70% Notes, due 1998 60,000 60,000
Other 104 192
-------- --------
110,716 102,616
Less current portion 33 36
-------- --------
$110,683 $102,580
======== ========
7% Convertible Subordinated Note,
due 2002 $ 22,000 $ 22,000
======== ========
</TABLE>
6
<PAGE> 7
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(7) LONG-TERM OBLIGATIONS AND OTHER LONG-TERM LIABILITIES (CONTINUED)
Other long-term liabilities consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 1, 1995 JANUARY 1, 1995
--------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Accrued pension cost $1,468 $1,408
Deferred income taxes 1,220 948
Other long-term liabilities 6,861 7,019
------ ------
$9,549 $9,375
====== ======
</TABLE>
(a) Borrowings which were refinanced under the Group Credit
Facility:
<TABLE>
<CAPTION>
JANUARY 1, 1995
---------------
(AMOUNTS IN THOUSANDS)
<S> <C>
Frem Credit Agreement $ 5,896
Housewares Credit Agreement 14,305
Group Credit Line 22,223
-------
$42,424
=======
</TABLE>
On April 11, 1995, the Company entered into a bank credit
agreement (the "Group Credit Facility") which provides lines of credit
aggregating $75 million for each of the Company ($30 million), Ekco Housewares,
Inc. ("Housewares") ($35 million) and Frem Corporation ("Frem") ($10 million).
The proceeds from the Group Credit Facility were used to retire loans under the
Housewares and Frem Credit Agreements and the Group Credit Line and,
consequently, all amounts due under these agreements were classified as
long-term. The facility matures on December 1, 1998.
Loans under the Group Credit Facility bear interest ranging
from the bank's prime rate to the prime rate plus 0.25% or the LIBOR rate plus
1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio of
total debt to cash flow (as defined). The Group Credit Facility provides for a
commitment fee of three-eighths of one percent on the unused portion of the
commitment amount and a $60,000 annual agency fee.
Borrowings under the Group Credit Facility are
collateralized by substantially all of the tangible assets of the Company. The
Group Credit Facility contains certain financial and operating covenants. The
most restrictive covenant requires the Company to maintain a minimum level of
cash flow.
(8) SERIES B ESOP CONVERTIBLE PREFERRED STOCK
Series B ESOP Convertible Preferred Stock, net, consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 1, 1995 JANUARY 1, 1995
--------------- ---------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Series B ESOP Convertible Preferred
Stock, par value $.01, redeemable at
$3.61 per share $ 5,482 $ 5,662
Unearned compensation (1,972) (2,566)
------- -------
$ 3,510 $ 3,096
======= =======
</TABLE>
7
<PAGE> 8
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(9) COMMON STOCK, $.01 PAR VALUE
Share information regarding common stock consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 1, 1995 JANUARY 1, 1995
--------------- ---------------
<S> <C> <C>
Authorized shares 60,000,000 60,000,000
========== ==========
Shares issued 27,785,562 27,292,641
Shares held in treasury 9,237,200 9,223,600
---------- ----------
18,548,362 18,069,041
========== ==========
</TABLE>
(10) NET INCOME PER COMMON SHARE
Primary earnings per common share are based upon the weighted
average of common stock and dilutive common stock equivalent shares outstanding
during each period. Fully diluted earnings per share have been omitted since
they are either the same as primary earnings per share or anti-dilutive. The
weighted average number of shares used in computation of earnings per share
consisted of the following for the periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
OCTOBER 1, OCTOBER 2, OCTOBER 1, OCTOBER 2,
---------- ---------- ---------- ----------
1995 1994 1995 1994
---- ---- ---- ----
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Weighted average shares of common
stock outstanding during the
period 18,432 18,000 18,326 17,925
Series B ESOP Convertible
Preferred Stock 1,533 1,602 1,545 1,627
Weighted average common equivalent
shares due to stock options 439 537 441 555
------ ------ ------ ------
20,404 20,139 20,312 20,107
====== ====== ====== ======
</TABLE>
(11) ENVIRONMENTAL MATTERS
From time to time, the Company has had claims asserted against it by
regulatory agencies or private parties for environmental matters relating to
the generation or handling of hazardous substances by the Company or its
predecessors and has incurred obligations for investigations or remedial
actions with respect to certain of such matters. While the Company does not
believe that any such claims asserted or obligations incurred to date will
result in a material adverse effect upon the Company's financial position,
results of operations or liquidity, the Company is aware that at its present or
past facilities in Massillon and Hamilton, Ohio; Chicago, Illinois;
Easthampton, Massachusetts; Hudson, New Hampshire and Lititz, Pennsylvania;
hazardous substances and oil have been detected and that additional
investigation will be, and remedial action will or may be, required.
Operations at these and other facilities currently or previously owned or
leased by the Company utilize, or in the past have utilized, hazardous
substances. There can be no assurance that activities at these or any other
facilities owned or operated by the Company or future facilities may not result
in additional environmental claims being asserted against the Company or
additional investigations or remedial actions being required.
8
<PAGE> 9
EKCO GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(11) ENVIRONMENTAL MATTERS (CONTINUED)
In connection with the acquisition of Kellogg Brush Manufacturing Co.
and subsidiaries ("Kellogg") by the Company in fiscal year 1993, the Company
engaged environmental engineering consultants ("Consultants") to review
potential environmental liabilities at all of Kellogg's properties. Such
additional investigation and testing resulted in the identification of likely
environmental remedial actions, operation, maintenance and ground water
monitoring and the estimated costs thereof. Based upon the cost estimates
provided by the Consultants, the Company believes remediation costs will be
approximately $1.6 million and the expense for the ongoing operation,
maintenance and ground water monitoring will be $181,000 for the first ten
years and $116,000 for 20 years thereafter. Management believes that the total
amount of these liabilities is approximately $6 million, including the effects
of inflation. Accordingly, the Company has recorded a liability of
approximately $3.6 million. This amount represents the undiscounted costs of
remediation and the net present value of future operation, maintenance and
ground water monitoring costs discounted at 6%. The Company expects to pay
approximately $225,000 of the remediation costs in the current year
("Fiscal 1995") with the balance being paid out in fiscal years 1996 and 1997.
During the first nine months of Fiscal 1995, the Company paid approximately
$170,000 of such costs. These estimates may subsequently change if additional
sites are identified or further remediation measures are required or undertaken
or the interpretation of current laws or regulations are modified. The Company
has not anticipated any insurance proceeds or third-party payments in arriving
at the above estimates.
9
<PAGE> 10
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion and analysis of the consolidated
results of operations for the thirteen week periods ended October 1, 1995 (the
"Third Quarter of 1995") and October 2, 1994 (the "Third Quarter of 1994") and
for the thirty nine week periods ended October 1, 1995 (the "First Nine Months
of 1995") and October 2, 1994 (the "First Nine Months of 1994") and the
financial condition at October 1, 1995 should be read in conjunction with the
Company's Consolidated Condensed Financial Statements and Notes thereto.
Because of the seasonality of the Company's revenues, which have historically
been concentrated in the second half of its fiscal year, the results of
operations for any interim period and the balance sheet as of the end of any
interim period are not indicative of either a full year's operations or the
financial condition of the Company at the end of any fiscal year.
NET REVENUES
Net revenues for the Third Quarter and First Nine Months of 1995
increased approximately $4.4 million (5.6%) and $11.3 million (5.9%),
respectively, from the comparable prior year periods. The increase in net
revenues for the Third Quarter and First Nine Months of 1995 was primarily the
result of price increases ($4.1 million and $7.7 million, respectively), the
introduction of new products ($4.1 million and $6.8 million, respectively,
principally plastic products; additionally, the Third Quarter of 1995 includes
$1.0 million in net revenues from B. Via International Housewares, Inc., a
start-up subsidiary, which is developing products for the upscale and specialty
markets), and increased sales of cleaning products ($2.0 million and $900,000,
respectively), which benefitted from increased distribution and the substantial
growth of several hardware/home-center customers. The above increases were
partially offset by the decline in net revenues from the Company's plastic
products (excluding new products), which the Company believes reflects
retailer and consumer resistance to price increases. The third quarter
increase was also partially offset by a decline in kitchenware sales in the
third quarter which were affected by a very weak retail environment and a
reduction in the Company's J-Hook program revenues.
GROSS PROFIT
The Company's gross profit margin declined from approximately 34% in the
1994 periods to approximately 31% for the 1995 periods. The principal factors
contributing to this decline were the significant year-over-year increase in
the prices of resin, corrugated boxes and packaging and wood, increases in
manufacturing and distribution costs and a shift in product mix, resulting from
the substantial growth of several hardware/home-center customers. These
factors were partially offset by price increases initiated in the beginning of
the year.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses for the Third Quarter and
First Nine Months of 1995 decreased approximately $1.6 million (10.7%) and $1.0
million (2.6%)from the comparable prior year periods. The improvement in
expenses for the Third Quarter of 1995 compared with the prior year period was
the result of management's efforts to reorganize and better control
expenditures and the collection of a previously written off receivable
($800,000) relating to a 1987 real estate transaction. For the First Nine
Month period comparison, the third quarter improvements were partially offset
by increases in selling, general and administrative expenses in the First Half
of 1995 from the First Half of 1994 due primarily to increased advertisement
and product placement costs in the first quarter of 1995, and costs associated
with B. Via International Housewares, Inc.
NET INTEREST EXPENSE
Net interest expense increased $428,000 from the Third Quarter of 1994
level of $3.2 million and $1.1 million from the First Nine Months of 1994 level
of $9.2 million. The higher year over year expense was attributable to higher
average borrowings and somewhat higher interest rates.
10
<PAGE> 11
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
RESTRUCTURING/REORGANIZATION AND EXCESS FACILITIES CHARGE
During Fiscal 1993, the Company recorded an $11 million
restructuring/reorganization and excess facilities charge ($6.6 million after
income taxes) resulting from management's analysis of the Company's operations
and future strategy. At January 1, 1995, the accrual relating to
restructuring/reorganization and excess facilities costs was $3.3 million.
In February 1995, the Company announced the second phase of its
restructuring which utilized the balance of the reserve. During this phase,
the Company combined its principal housewares business units into a single
operating division. The new division consolidates the management and
operations of Housewares, Frem and Kellogg. This new division also provides
certain administrative and distribution services to the Company's other
business units.
LIQUIDITY AND CAPITAL RESOURCES
During the First Nine Months of 1995, the Company generated
approximately $2.6 million in cash from operations. The Company used
approximately $4.4 million of increased borrowings along with proceeds of $3.6
million from investments previously pledged as collateral for capital
expenditures of approximately $9.6 million and dividend payments of
approximately $1.2 million.
The increase in the Company's accounts receivable balance relates to the
seasonality of the Company's revenues, which have historically been
concentrated in the second half of its fiscal year. The increase in inventory
reflects a planned increase in plastic products and bakeware products to better
balance manufacturing in anticipation of the "back-to-school" and holiday
baking seasons. The plastic products inventory level was adversely affected by
a softening in demand.
On April 11, 1995, the Company entered into a bank credit agreement (the
"Group Credit Facility") which provides lines of credit aggregating $75 million
for each of the Company ($30 million), Housewares ($35 million) and Frem ($10
million). Loans under the Group Credit Facility bear interest ranging from the
bank's prime rate to the bank's prime rate plus 0.25% or the LIBOR rate plus
1.25% to 1.75%, depending on the Company's borrowing strategy and the ratio of
total debt to cash flow (as defined). The Group Credit Facility provides for a
commitment fee of three-eighths of one percent on the unused portion of the
commitment amount and a $60,000 annual agency fee. The facility matures on
December 1, 1998.
At October 1, 1995, the Company and its operating subsidiaries had
unused credit facilities of $17.0 million (net of approximately $7.3 million in
outstanding letters of credit). The Company believes it has sufficient
borrowing capacity to finance its ongoing operations through the end of Fiscal
1995. The Company may require additional funds to finance any additional
acquisitions.
The Company's former computer printer manufacturing site in Hudson, New
Hampshire was sold on October 5, 1995 for $3.2 million in cash. Proceeds from
the sale were used to reduce the Company's bank debt. With this sale, the
Company's property held for sale is reduced to a former manufacturing facility
in Chicago, Illinois and a warehouse in Lititz, Pennsylvania. The aggregate
carrying values of such properties are periodically reviewed and are stated at
the lower of cost or market.
11
<PAGE> 12
EKCO GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company has provided a reserve of approximately $3.6 million for
environmental remediation and ongoing operation, maintenance and ground water
monitoring costs associated with Kellogg-owned or occupied facilities. The
Company believes the provision is adequate but will continue to monitor and
adjust the provision, as appropriate, should additional sites be identified or
further remediation measures be required or undertaken or if interpretation of
current laws or regulations are modified.
12
<PAGE> 13
EKCO GROUP, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS:
From time to time, the Company has had claims asserted against it
by regulatory agencies or private parties for environmental matters
relating to the generation or handling of hazardous substances by
the Company or its predecessors and has incurred obligations for
investigations or remedial actions with respect to certain of such
matters. While the Company does not believe that any such asserted
claims or obligations incurred to date will result in a material
adverse effect upon the Company's financial position, results of
operations or liquidity, the Company is aware that with respect to
its present or past operating facilities at Massillon and Hamilton,
Ohio; Chicago, Illinois; Easthampton, Massachusetts; Hudson, New
Hampshire and Lititz, Pennsylvania; hazardous substances or oil
have been detected and that additional investigation will be, and
remedial action will or may be, required. Operations at these and
other facilities currently or previously owned or leased by
the Company utilize, or in the past have utilized, hazardous
substances. There can be no assurance that activities at these or
any other facilities owned or operated by the Company or any future
facilities may not result in additional environmental claims being
asserted against the Company or additional investigations or
remedial actions being required.
Environmental Regulation and Claims]
------------------------------------
Prior to the Company's acquisition of Housewares ("Housewares")
in 1987, Housewares' Massillon, Ohio steel bakeware manufacturing
facility was the subject of administrative proceedings before the
United States Environmental Protection Agency by issuance of an
administrative complaint alleging violations of the Resource
Conservation and Recovery Act ("RCRA") resulting from operation of
a waste-water lagoon at the facility. American Home Products
Corporation ("AHP"), a former owner of Housewares, pursuant to an
indemnity agreement (the "Indemnity Agreement") with Housewares
relating to acts occurring prior to September 7, 1984, assumed the
costs of remediation measures in addition to the defense of the
administrative proceedings with federal and state environmental
protection agencies, as well as preparation of closure plans and
other plans called for as a result of these proceedings. While AHP
has acknowledged its full responsibility under the Indemnity
Agreement with respect to the wastewater lagoon, it has asserted
that Housewares should contribute to the cost of a remediation
study and certain remediation measures to the extent that
Housewares exacerbated contamination at the facility since
September 7, 1984. Housewares has denied that it has exacerbated
contamination at the facility since such date. AHP and Housewares
have agreed to allocate such costs in proportion to their
respective responsibilities based on the results of an engineering
study but in no event will Housewares' share with respect to the
wastewater-lagoon exceed the lesser of 25% of the total cost or
$750,000. The Company is unable to determine to what extent, if
any, it will be responsible to contribute to such costs but the
Company does not believe that any such contribution that it may be
required to make will have a material adverse effect on its
financial position, results of operations or liquidity.
In June 1992, the United States filed an action in the U.S.
District Court for the Northern District of Ohio against Housewares
seeking penalties and injunctive relief and alleging violations as
a result of an alleged failure to provide certain closure and
post-closure financial assurances with respect to the Massillon,
Ohio site. Pursuant to the Indemnity Agreement and a confirmatory
letter from AHP to Housewares on December 19, 1988 (the "Indemnity
Documents"), AHP conducted and controlled all matters relating to
such
13
<PAGE> 14
financial assurances and the defense of the action filed in June
1992. In January 1994, the court entered judgment against
Housewares in the amount of $4.6 million in the lawsuit. AHP
filed a notice of appeal on behalf of Housewares. In March 1994,
AHP informed Housewares that, should it be unsuccessful in its
appeal, it would attempt to hold Housewares responsible for a
portion of the penalties (approximately $600,000, exclusive of
interest) arising from Housewares' alleged delay in furnishing
certain information to the Ohio Environmental Protection Agency.
In March 1994, Housewares notified AHP that Housewares denies all
liability and that AHP is liable for all liabilities, losses, costs
or damages arising from the lawsuit pursuant to the Indemnity
Documents.
In August 1995, the Appeals Court affirmed the Company's
liability, reversed the imposition of civil penalties for certain
periods of time and remanded the redetermination of such penalties
to the District Court. The District Court has not yet completed its
redetermination. The Company is unable to predict the result of
the redetermination or AHP's attempts to obtain contribution from
Housewares, but the Company does not believe that any such
liability will have a material adverse effect on its financial
position, results of operations or liquidity.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K:
a) Exhibits:
10.1 Amended and Restated Employment Agreement with
Robert Stein dated as of May 25, 1995.
10.2 Amended and Restated Employment Agreement with
Jeffrey A. Weinstein dated as of May 25, 1995.
10.3 Amended and Restated Employment Agreement with
Donato A. DeNovellis dated as of May 25, 1995.
10.4 Employment Agreement with Stuart W. Cohen dated as
of June 12, 1995.
10.5 Form of Employment Agreement with Brian R. McQuesten
and certain other Company employees dated as of
May 25, 1995.
27 Financial Data Schedule
b) Reports on Form 8-K: None.
14
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EKCO GROUP, INC.
-----------------------------------
(Registrant)
Date: November 13, 1995 By: /s/ DONATO A. DENOVELLIS
--------------------------- -----------------------------------
Donato A. DeNovellis
Executive Vice President,
Finance and Administration, and
Chief Financial Officer
15
<PAGE> 16
<TABLE>
INDEX TO EXHIBIT FILED WITH FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED OCTOBER 1, 1995
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.1 Amended and Restated Employment Agreement with Robert Stein
dated as of May 25, 1995.
10.2 Amended and Restated Employment Agreement with Jeffrey A. Weinstein
dated as of May 25, 1995.
10.3 Amended and Restated Employment Agreement with Donato A. DeNovellis
dated as of May 25, 1995.
10.4 Employment Agreement with Stuart W. Cohen dated as of June 12, 1995.
10.5 Form of Employment Agreement with Brian R. McQuesten and certain other
Company employees dated as of May 25, 1995.
27 Financial Data Schedule
</TABLE>
16
<PAGE> 1
Exhibit 10.1
------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
ROBERT STEIN
AS OF
May 25, 1995
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. Employment 1
2. Principal Location 1
3. Compensation 2
4. Reimbursement of Expenses, Medical
Examinations and Automobile Benefits 3
5. Term and Termination 4
6. Letter of Credit 11
7. Additional Insurance at Group's Option 12
8. Gross-Up Payments 12
9. Confidentiality and Non-Competition 13
10. Definitions 16
11. Arbitration 21
12. General 22
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
Letter of Credit A
Example of Calculation of Severance Payment B
</TABLE>
C:\EMARK\WORK\91395RSE.WPD
<PAGE> 2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the 25th day of
May, 1995, (the "Effective Date") by and between Ekco Group,
Inc., a Delaware corporation ("Group") with its principal place
of business in Nashua, New Hampshire and Robert Stein
("Executive"), of 30 Blood Road, Andover, Massachusetts 01810.
WHEREAS, Executive is currently employed by Group pursuant
to an Amended and Restated Employment Agreement dated as of April
18, 1994; and
WHEREAS, Group and Executive desire to amend and restate the
terms and conditions of Executive's employment by Group as set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained, the parties covenant and agree as
follows:
1. Employment. Group hereby employs Executive and Executive
hereby accepts employment as an executive employee of Group
to perform such executive and managerial services as may be
assigned to him by or under the authority of the Board of
Directors (such term, and all other capitalized terms not
otherwise defined in this Agreement shall have the meaning
set forth in Section 10 of this Agreement), consistent with
such status as an executive employee. Executive agrees to
use his best efforts, skills and abilities faithfully to
promote the interests of Group and to perform such services
as may be required of him by Group from time to time
consistent with his status, to the reasonable satisfaction
of the Board of Directors. Without limiting the generality
of the foregoing, Executive agrees to serve as President and
Chief Executive Officer of Group (if and so long as he is
elected to that office by the Board of Directors) and to
serve without additional compensation as a director,
executive officer or executive employee of such Affiliates
as Group may from time to time reasonably request.
Executive agrees to work exclusively for Group and such
Affiliates as his full-time employment during the term of
this Agreement, except as Group and Executive may otherwise
agree in writing from time to time.
2. Principal Location. Executive shall perform the duties of
his office generally in, and shall not be obligated to
maintain his office in any place other than, Nashua, New
Hampshire or within the metropolitan Boston, Massachusetts
1
<PAGE> 3
area, provided, however, that Executive shall be obligated
to take such trips outside of such area as shall be
reasonably necessary in connection with his duties and Group
shall pay all reasonable costs of travel and living expenses
incurred in connection therewith. Furthermore, if Group's
principal executive office is relocated to a location
outside Nashua, New Hampshire or the greater Boston
metropolitan area, Executive shall, subject to his rights
upon an event of Constructive Termination following a Change
of Control under Section 5.3.4, be obligated to perform his
duties at such relocated principal office and Group shall
pay Executive all reasonable expenses incurred by Executive
in relocating to such new area.
3. Compensation.
------------
3.1 Except as otherwise provided in this Agreement, for his
services and agreements hereunder Executive shall receive
from Group the following compensation:
3.1.1 Salary at the annual rate of Three Hundred Seventy
Thousand Dollars ($370,000) (the "Base Salary"),
payable in equal installments in accordance with
Group's pay policy and in any event not less frequently
than monthly. The Base Salary shall be subject to
increase from time to time as determined by the Board
of Directors or the Compensation Committee in its sole
discretion pursuant to a review of Executive's
performance by the Board of Directors or the
Compensation Committee, which review shall be conducted
at such time as the Board of Directors or the
Compensation Committee shall determine, but in any
event at least once during each twelve (12) months of
the term of this Agreement. The Base Salary as from
time to time increased is referred to herein as the
"Adjusted Cash Salary."
3.1.2 Such other monetary compensation by way of bonus or
otherwise, if any, as may be determined from time to
time by the Board of Directors or the Compensation
Committee in its sole discretion;
3.1.3 Such fringe benefits (including, without limitation,
vacation time, group life, split-dollar life, long term
and short term disability, medical, dental and other
insurance, retirement, including, but not limited to,
Group's Executive Supplemental Retirement Plan, pension,
profit-sharing and similar plans) as Group may provide
2
<PAGE> 4
from time to time for its executive employees, whether or
not the category of such benefits is addressed in this
Agreement, it being understood that Executive shall be
entitled to the greater of each benefit addressed in this
Agreement and that provided by Group for its executive
employees generally. Group shall in any event, whether
or not such coverage is provided for other executive
employees, provide Executive group life or other life
insurance at its expense with a death benefit equal to
at least four (4) times Executive's Adjusted Salary, in
addition to any other life insurance payable to
Executive or his beneficiaries under this Section
3.1.3, Section 5.4.1.3 below or any life insurance for
which Executive pays premiums; and
3.1.4 Such other compensation pursuant to such executive
bonus plans, restricted stock purchase plans, stock
option plans or other stock plans, available to
executive employees of Group from time to time, as the
Board of Directors or the Compensation Committee may in
its sole discretion determine.
4. Reimbursement of Expenses, Medical Examinations and
---------------------------------------------------
Automobile Benefits.
-------------------
4.1 Group shall reimburse Executive for travel, entertainment
and other business expenses reasonably incurred by him in
connection with the business of Group and its Affiliates to
the extent and in a manner consistent with then Group
policy.
4.2 Without limiting the generality of the foregoing Section
4.1, Group shall furnish Executive with an automobile owned
or leased by Group, comparable in value to the automobile
Executive is provided by Group as of the date hereof,
together with fuel and maintenance, for use by Executive
primarily in connection with the performance by Executive of
his duties under this Agreement and primarily for the
benefit of Group. Unless Executive otherwise agrees, such
automobile shall be exchanged by Group for a new automobile
no less frequently than once every three (3) years or once
the automobile's odometer reaches 50,000 miles or more,
whichever occurs first, during the term of employment of
Executive pursuant to this Agreement and any renewal hereof.
4.3 Group shall reimburse Executive for annual comprehensive
physical examinations, including the costs of any and all
tests, procedures and consultations as may be required by a
3
<PAGE> 5
medical doctor or doctors chosen by Executive for such purposes.
5. Term and Termination.
--------------------
5.1. TERM. The term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue
until terminated as hereinafter set forth. For the purposes
of this Agreement, the date of termination shall be the
effective date of termination of Executive, rather than the
date of notice thereof.
5.2. Termination by Executive.
------------------------
5.2.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3)
months to Group, which time period may be waived, in
whole or in part, by Group in its discretion in which
event Executive's employment shall end on such earlier
date as agreed by Group and Executive.
5.2.2 Except as provided in Section 5.2.3, if Executive's
employment is terminated pursuant to Section 5.2.1,
Executive shall not be entitled as of the date of
termination to any further compensation under this
Agreement of any kind or nature, except for Accrued and
Unpaid Salary and Expenses.
5.2.3 However, if such notice is given after six (6) months
after but within twenty four (24) months after a Change
of Control (a "Change of Control Notice"), unless such
Change of Control shall have been approved by a
resolution adopted by the Board of Directors with at
least two-thirds (2/3) of the then serving Group
directors who are Group directors as of the date hereof
voting in favor, then upon such termination by
Executive pursuant to Section 5.2.1, Group shall
provide and Executive (or his Estate) shall be entitled
to receive:
5.2.3.1 Within thirty (30) days of the date of such termination
a Three Year Lump Sum Payment Amount;
5.2.3.2 A Gross-Up Payment as set forth in Section 8 of this
Agreement;
5.2.3.3 Continuation of all fringe benefits referred to in
Section 3.1.3, including, but not limited to, Medical,
Dental and Life Insurance Coverage Continuation;
4
<PAGE> 6
5.2.3.4 Accrued and Unpaid Salary and Expenses;
5.2.3.5 Outplacement Benefits;
5.2.3.6 The automobile benefits set forth in Section 4.2 of
this Agreement, and the option, exercisable by
Executive at any time prior to the end of the period
set forth below in this Section 5.2.3.6, to purchase
the Group-provided automobile at a price equal to the
greater of (a) the depreciated value as carried on the
books of Group as of the date of purchase, or (b)
eighty percent (80%) of the wholesale value of the
automobile as of the date of purchase ("Automobile
Benefits"). The foregoing Automobile Benefits shall be
for a period of three (3) years from the date of
termination; and
5.2.3.7 In the event of termination as provided in this Section
5.2.3, Executive shall not be entitled to payments
under both this Section 5.2.3 and Section 5.3.4.2. Any
compensation payable under this Section 5.2.3 shall be
paid notwithstanding Executive's total and permanent
disability or death occurring after termination of his
employment hereunder. In the event Executive dies or
becomes totally and permanently disabled after the date
of any such notice but prior to the date of termination
of his employment under this Section 5.2.3, the
provisions of this Section 5.2.3 and not the provisions
of Section 5.4 or 5.5 shall apply, provided that in the
event of Executive's total and permanent disability
during such time, Executive shall also be entitled to
each benefit that Group then provides to its executive
employees upon and during the continuance of total and
permanent disability to the extent such benefit exceeds
those specified in this Section 5.2.3.
5.3. Termination by Group; Change of Control; and Constructive
---------------------------------------------------------
Termination.
-----------
5.3.1 Executive's employment may be terminated at any time by
Group, with or without Good Cause, by written notice to
Executive, effective immediately unless otherwise
stated in such notice.
5.3.2 TERMINATION BY GROUP WITH GOOD CAUSE. In the event
Group shall terminate Executive's employment for Good
Cause, then Executive shall not be entitled as of the
date of termination to any further compensation under
5
<PAGE> 7
this Agreement of any kind or nature, except for
Accrued and Unpaid Salary and Expenses.
5.3.3 Termination by Group Without Good Cause Prior to a
--------------------------------------------------
Change of Control.
-----------------
5.3.3.1 In the event Executive's employment hereunder is
terminated by Group without Good Cause prior to a
Change of Control, then subject to Section 5.3.3.2
Group shall provide and Executive (or his Estate) shall
be entitled to the following:
5.3.3.1.1 A Three Year Lump Sum Payment Amount payable within
thirty (30) days of the date of termination;
5.3.3.1.2 Executive shall immediately upon termination pursuant
to this Section 5.3.3 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.3.1.3 Medical, Dental and Life Insurance Coverage
Continuation;
5.3.3.1.4 Accrued and Unpaid Salary and Expenses;
5.3.3.1.5 Outplacement Benefits;
5.3.3.1.6 Gross-Up Payment; and
5.3.3.1.7 Automobile Benefits for a period of three (3) years
from the date of termination.
5.3.3.2 Any compensation payable under this Section 5.3.3 shall
be paid notwithstanding Executive's total and permanent
disability or death subsequent to Group's notice of
termination. In the case of termination of his
employment under this Section 5.3.3, Executive shall
not be entitled as of the date of termination to any
6
<PAGE> 8
other compensation under this Agreement, except as
provided in this Section 5.3.3, provided that in the
event of Executive's total and permanent disability at
such time, Executive shall also be entitled to all of
the benefits Group then provides to its executive
employees upon and during the continuance of total and
permanent disability.
5.3.4 Change of Control; Constructive Termination; Subsequent
-------------------------------------------------------
Termination By Group Without Good Cause.
---------------------------------------
5.3.4.1 Immediately upon a Change of Control while Executive is
employed hereunder, and without regard to whether or
not Executive's employment is terminated, whether a
Constructive Termination occurs at such time or
thereafter or the manner of any subsequent termination
of Executive's employment, Executive shall immediately
have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group
which were granted, sold or optioned (subject, if
Executive elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the Change of
Control as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.3.4.2 If following a Change of Control there shall be either
an event of Constructive Termination or termination by
Group of Executive's employment without Good Cause,
then Group shall provide and Executive (or his Estate)
shall be entitled to the following:
5.3.4.2.1 Within ten (10) days of such event a Three Year Lump-Sum
Payment Amount. For the purposes of this Section 5.3.4, the
time when a Constructive Termination occurs shall be the day
any event occurs which is included in the definition of
Constructive Termination;
5.3.4.2.2 Executive shall immediately upon termination pursuant
to this Section 5.3.4 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
7
<PAGE> 9
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.4.2.3 Medical, Dental and Life Insurance Coverage
Continuation;
5.3.4.2.4 Accrued and Unpaid Salary and Expenses;
5.3.4.2.5 Outplacement Benefits;
5.3.4.2.6 Gross-Up Payment; and
5.3.4.2.7 Automobile Benefits for a period of three (3) years
from the date of termination.
5.4. Termination upon Death.
----------------------
5.4.1 This Agreement, except for the provisions of Sections
8, 9, 11 and 12, shall terminate upon the death of
Executive, provided that Executive's Estate shall have
the right to receive, and Group shall be obligated to
pay or provide to Executive's Estate the following:
5.4.1.1 Executive's Estate shall immediately upon such
termination have the unconditional, unencumbered and
free right, title and interest in all shares of stock
of Group which were granted, sold or optioned (subject,
if Executive's Estate elects to exercise unexercised
rights, to the obligation to pay the option exercise
price or other purchase price to the extent theretofore
not paid) to Executive by Group at any time prior to
his death as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.4.1.2 All of the benefits Group provides to its executive
employees as provided in Section 3.1.3 to the extent
8
<PAGE> 10
such benefits are greater than those specified in this
Agreement;
5.4.1.3 A lump-sum payment equal to the Adjusted Salary in
effect at the date of death payable no later than sixty
(60) days after the date of death. To secure such
payment, Group may in its discretion maintain life
insurance on Executive's life payable to his Estate or
other beneficiary, which life insurance coverage shall
be in addition to the amount provided for pursuant to
the provisions of Section 3.1.3 above (or any life
insurance for which Executive pays premiums), and to
the extent benefits are paid pursuant to such insurance
coverage maintained by Group under this Section
5.4.1.3, Group's commitment under this Section 5.4.1.3
shall be satisfied; and
5.4.1.4 Accrued and Unpaid Salary and Expenses.
5.5. Termination upon Disability.
---------------------------
5.5.1 This Agreement shall terminate if, by virtue of total
and permanent disability, Executive is unable to
perform his duties hereunder, provided that Executive's
(or his legal representative's) right to receive, and
Group's obligations to pay, amounts as a result of such
termination shall survive any such termination.
5.5.2 The determination that, by virtue of total and
permanent disability, Executive is unable to perform
his duties hereunder shall be made by a physician
chosen by Group and reasonably satisfactory to
Executive (or his legal representative). The cost of
such examination shall be borne by Group. Without
limiting the generality of the foregoing, unless
otherwise agreed, Executive shall be conclusively
presumed to be totally and permanently disabled
hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such
duties for a period of one hundred and eighty (180)
consecutive calendar days or for any periods
aggregating one hundred and eighty (180) days or more
in any twelve (12) month period. For purposes of this
Section 5.5, the date of termination in the event of
such total and permanent disability shall be the
earlier of the date of such physician's examination
pursuant to which such determination is made or the
first business day after which such 180-day period has
expired.
9
<PAGE> 11
5.5.3 In the event of such a termination as a result of
Executive's total and permanent disability, all
compensation hereunder shall terminate, Executive shall
immediately upon such termination have the
unconditional, unencumbered and free right, title and
interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive or his
Estate elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective
date of termination as if all restrictions had lapsed
and all events necessary to vest in Executive such
rights, including the lapsing of time, had occurred,
and Executive shall be entitled to and Group shall pay
to Executive the following:
5.5.3.1 Amounts at the rate of the Adjusted Cash Salary in
effect at the date of such termination, payable in the
manner specified in Section 3.1.1, for a period of
thirty-six (36) months following the date of such
termination at the rate of one-twelfth of such Adjusted
Cash Salary per month, less the amount of any
disability insurance proceeds actually paid to or for
the benefit of Executive (or his Estate) with respect
to such thirty-six (36) months following the date of
termination under any disability policy the premiums
for which have been paid by Group or any Affiliate.
During such thirty-six (36) months following
termination of this Agreement as a result of
Executive's permanent and total disability, Group shall
maintain at Group's sole expense the life insurance
policies referred to in the second sentence of Section
3.1.3. and in Section 5.4.1.3 if then in force and, in
the event of Executive's death during the thirty-six
(36) months following such termination, shall pay the
death benefit provided for in Section 5.4.1.3
notwithstanding the prior termination of this Agreement
as a result of Executive's total and permanent
disability, in addition to the life insurance benefits
payable to the beneficiaries of the policies referred
to in Section 3.1.3 which shall be payable in the event
of Executive's death during such period of thirty-six
(36) months;
5.5.3.2 Medical, Dental and Life Insurance Coverage
Continuation;
5.5.3.3 Accrued and Unpaid Salary and Expenses;
10
<PAGE> 12
5.5.3.4 Continuation of each of the medical, dental and other
benefits which Group provides to its permanently
disabled executive employees in accordance with Group's
then existing policy to the extent each benefit is
greater than that specified in this Section 5.5;
5.5.3.5 Outplacement Benefits; and
5.5.3.6 Automobile Benefits for a period of three (3) years
from the date of termination.
6. LETTER OF CREDIT. In order to assure Executive the prompt
payment of amounts due him under Section 5 of this
Agreement, Group agrees to continue to secure and to keep in
place one or more irrevocable letter(s) of credit from Fleet
Bank of Massachusetts, N.A. or another bank reasonably
acceptable to Executive in the initial amount of four (4)
times Executive's Adjusted Salary, in substantially the form
of Exhibit A, or upon other terms reasonably acceptable to
Executive, which shall allow Executive (or his legal
representative) to draw down amounts due him under Section 5
of this Agreement upon certification by Executive (or his
legal representative) that payments are due him pursuant to
this Agreement. The amount of the letter(s) of credit shall
be adjusted at least annually to reflect changes in
Executive's salary, so that it shall at all times be at
least four (4) times the Adjusted Salary. In addition, the
letter(s) of credit (or a separate letter of credit) shall
include an amount which Group, in its reasonable judgment,
determines is necessary to secure Group's obligations under
any stock appreciation right plan or other equity-linked
plan (other than the ESOP), provided, however, that such
amount need not include any amount with respect to stock
options, restricted stock subject to repurchase rights, or
any equity plan giving Executive ownership of shares. An
initial determination of the amount necessary to secure such
equity-linked obligations shall be made on the date of grant
to Executive of such equity-linked right, and the amount
shall subsequently be adjusted at least annually to reflect
the value on such date of such rights. A failure by Group
to keep such letter(s) of credit in effect, or to renew or
to make alternate arrangements to secure its obligations in
the amount required hereunder, by way of an escrow
agreement, trust, or other device, which arrangements shall
be reasonably satisfactory to Executive, at least thirty
(30) days prior to the expiration date of the letter(s) of
credit or any such alternate arrangement shall constitute an
event of default under this Agreement entitling Executive,
after written notice to Group and the passage of a ten (10)
11
<PAGE> 13
day cure period without such default being cured, to all of
the benefits accorded to him in the event of a termination
by Group without Good Cause pursuant to Section 5, without,
however, the requirement that Executive terminate his
employment hereunder. Group agrees to notify Executive
within three (3) business days of any failure or inability
to maintain or renew such letter(s) of credit or other
device adopted pursuant to this Section. Notwithstanding
the foregoing, at the election of the Board of Directors of
Group by resolution of such Board with at least two-thirds
(2/3) of the then-serving Group directors who are Group
directors as of the date hereof voting in favor, the
obligation to maintain letter(s) of credit shall be relieved
to the extent amounts are contributed to a trust or trusts
under the terms of which such amounts are specifically
earmarked as security for payment of obligations under this
Agreement and are at all times at least four (4) times the
Adjusted Salary. Such trust or trusts may contain a
provision that its funds will be returned to Group so as to
be available to its general creditors in the event of the
bankruptcy of Group. Group agrees that it will not take any
action to prevent, hinder or delay the exercise by Executive
of his rights to exercise the security provisions provided
in this Section 6 and, further, agrees to cooperate with
Executive as may be necessary to enable Executive to
exercise and obtain the benefits of such security
provisions, in the absence of fraudulent or unlawful conduct
on the part of Executive with respect to such exercise.
7. ADDITIONAL INSURANCE AT GROUP'S OPTION. Group, in its sole
discretion, may apply for and procure in its own name
(whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as Group may
deem advisable, in addition to insurance policies
contemplated by Section 3.1.3 and Section 5.4.1.3.
Executive shall have no right, title, or interest in any
such policies of insurance, except to the extent his Estate
or other persons are specifically named as beneficiaries
thereof. Executive agrees to submit to any medical or other
examination and to execute and deliver any applications or
other instrument in writing, reasonably necessary to
effectuate such insurance.
8. "GROSS-UP" PAYMENTS. Executive shall be paid an additional
amount ("Gross Up Payment") if any payments ("Payment
Amounts") made to him (or his Estate) by Group or any of its
Affiliates, under this Agreement or otherwise, are subject
to the excise tax imposed by Internal Revenue Code Section
4999 or any successor Internal Revenue Code Section (the
12
<PAGE> 14
"Section 4999 Tax"). The Gross Up Payment shall be computed
so that Executive (or his Estate) retains a net amount equal
to the Payment Amounts after deduction of any Section 4999
Tax on the Payment Amounts and any Federal, state or local
tax (including any Section 4999 Tax) on the Gross Up
Payment.
For the purposes of determining the amount of the Gross Up
Payment, Executive shall be deemed to pay Federal, State and
local income taxes at the highest marginal rate of taxation
in the calendar year in which the Payment Amounts are
taxable to him under Code Section 4999. State and local
income taxes shall be calculated based upon the state and
locality of Executive's domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by
tax counsel selected and paid for by Group and approved by
Executive. The Gross Up Payment shall be paid within thirty
(30) days of such computation and in no event (without
written consent of Executive) later than the last day of the
calendar year with respect to which the Section 4999 Tax is
imposed.
If such determination is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel
(selected and paid for under the above procedure) shall
represent Executive in any such audit or appeal process
thereafter and compute appropriate adjustments and
additional Gross Up Payments as provided above, after which
Group shall pay Executive such adjustment, and Group shall
reimburse Executive for interest and other tax penalties, if
applicable.
9. Confidentiality, Inventions and Non-Competition.
-----------------------------------------------
9.1 Executive's agreements set forth in this Section 9 shall
survive the expiration or termination of this Agreement and
the termination of his employment with Group for any reason.
9.2 Executive acknowledges that irreparable injury would be
caused to Group by his breach of any of the provisions of
this Section 9, and agrees that in the event of any such
breach, Group and any of its Affiliates, in addition to such
other rights and remedies as may exist in its favor, may
apply to any court of law or equity having jurisdiction to
enforce the specific performance of the provisions of this
Section 9 and may apply for injunctive relief against any
act which would violate any such provisions.
13
<PAGE> 15
9.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how",
including, without limitation, techniques, formulae,
designs, developments, projects, technical information and
manufacturing process and distribution methods, relating to,
or concerned with the business of Group and its Affiliates
prior to the termination of this Agreement and their
respective suppliers, customers, stockholders, licensors,
licensees, and other persons or entities with which Group or
its Affiliates has, has had, or may in the future have any
commercial, scientific or technical relationship. During
the term of this Agreement and at all times following the
termination of Executive's employment for any reason,
Executive will not, directly or indirectly, divulge, furnish
or make accessible to anyone (other than as required in the
regular course of his employment by Group or with the
consent of the Board of Directors) such information. The
prohibitions contained in this Section 9.3 shall not apply
to information which is (a) within the domain of the general
public; (b) generally known within the industry or
industries in which Group or its Affiliates is involved; or
(c) independently developed by Executive without utilization
of confidential information gained while in the employ of
Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property
furnished to Executive by Group or any Affiliate of Group or
produced by Executive or others in connection with his
services to Group or any such Affiliate shall be and remain
the sole property of Group. Executive will return and
deliver such property to Group as and when requested by
Group. Copies of documents and records may be kept, but
shall be kept completely confidential to the same extent as
other confidential information of Group. Executive shall
return and deliver all such property upon termination of his
employment for any reason, and Executive will not take with
him any such property or any reproduction of such property
upon such termination.
9.4 Any work or research or the results thereof, made or
developed by Executive, alone or in conjunction with others
during the term of his employment, including but without
limitation, any designs, patents, inventions, processes,
know-how or formulae created, invented or conceived during
the period of his employment by Group, whether during or out
of the usual hours of work, which arise out of or are
related to the business, research, or development work or
14
<PAGE> 16
field of operation of Group, or any of its Affiliates, shall
to the extent of Executive's interest therein be the sole
and exclusive property of Group, shall be disclosed in
writing to Group and to no other person, unless so directed
in writing by the Board of Directors, and Executive hereby
assigns to Group all and any rights which he has or may
acquire in the same. To this end, both during the period of
Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers,
instruments and documents properly required to effect such
assignment to Group or its nominee, to make application
through Group's patent attorney or general counsel at the
expense of Group, for such United States and foreign patents
as may be specified from time to time by Group on
inventions, processes, or formulae which are or become the
property of Group hereunder, and to execute assignments upon
Group's request, for Executive's entire interest in all such
applications to Group or to its nominee without compensation
(other than his usual compensation as an employee of Group)
and Executive agrees to give Group and its patent attorney
or general counsel all reasonable assistance in preparing
such applications, descriptions, and illustrations of each
such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications
or patents resulting therefrom; and further agrees to
execute all lawful papers considered necessary by Group and
do all that Group reasonably requests in order to protect
Group's rights in said inventions, processes, and formulae
or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is
further agreed that Executive's obligations specified
hereunder shall not expire with the termination of this
Agreement or his employment, but Group agrees to pay
Executive a reasonable amount for any time that Executive
spends in such work at Group's request after the termination
of this Agreement or his employment hereunder and agrees to
reimburse Executive for expenses reasonably or necessarily
incurred in connection with such work.
9.5 In consideration of his continued employment by Group, and
the other benefits accruing to him hereunder, and subject to
the fulfillment by Group of its obligations to Executive
hereunder, either directly or through draw-down under the
letter(s) of credit or other device established pursuant to
Section 6, Executive agrees that during the term hereof and
for a period of thirty-six (36) months following the date of
termination of Executive's employment pursuant to Section 5
provided that Executive has received and is continuing to
receive all payments and benefits required to be paid and
15
<PAGE> 17
provided to him pursuant to this Agreement (such period of
employment and thirty-six (36) month period being referred
to in this Agreement as the "Non-Competition Period"), he
will not engage or participate, directly or indirectly,
within the United States of America or Canada either as
principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual or
representative capacity whatever, in the conduct or
management of, or own any stock or other proprietary
interest in, or debt of, any business which shall be
competitive with any business which is or was conducted by
Group or any Affiliate of Group, while Executive was an
employee of Group, unless he shall have obtained the prior
written consent of the Board of Directors, and which consent
shall make express reference to this Agreement.
Notwithstanding any other provision in this Section 9,
Executive shall be free without such consent to make
investments, directly or indirectly, in the securities of
any publicly-owned entity if his ownership thereof is
limited to not more than three percent (3%) of the issued
and outstanding securities of any class of securities of
such entity. Executive acknowledges that his skills and
experience are such that he can anticipate finding
employment at an executive level in a wide variety of
industries and represents and agrees that the restrictions
imposed by this Section 9 on employment are necessary for
the protection of the legitimate interests and competitive
position of Group and do not impose undue hardships on
Executive.
9.6 During the Non-Competition Period, Executive shall not,
directly or indirectly, solicit any officer, director,
executive, employee or consultant of Group or any Affiliate
of Group to leave such employment or terminate such
position.
10. Definitions.
-----------
As used in this Agreement, the following terms shall have
the following meanings:
10.1 "Accrued and Unpaid Salary and Expenses" shall mean such
portion of Executive's Adjusted Cash Salary as has accrued
by virtue of Executive's employment during the period prior
to the date of termination and has not yet been paid,
together with any amounts for expense reimbursement,
vacation accruals and similar items which have been properly
incurred or accrued in accordance with the provisions of
16
<PAGE> 18
this Agreement prior to the date of termination and have not
yet been paid.
10.2 "Adjusted Salary" shall mean the Adjusted Cash Salary plus
an amount equal to the amount of any salary increase(s)
provided in the form of restricted stock or stock options
beginning on January 1, 1995.
10.3 "Adjusted Cash Salary" shall have the meaning set forth in
Section 3.1.1.
10.4 "Affiliate" shall mean any corporation, joint venture, or
other business enterprise, whether incorporated or
unincorporated, which Group directly, or indirectly through
one or more intermediaries, controls or is controlled by, or
is under common control with.
10.5 "Agreement" shall mean this Amended and Restated
Employment Agreement.
10.6 "Automobile Benefits" shall have the meaning set forth in
Section 5.2.3.6 for the number of years specified in
Sections 5.2.3.6, 5.3.3.1.7, 5.3.4.2.7 and 5.5.3.6,
respectively.
10.7 "Base Salary" shall have the meaning set forth in Section
3.1.1.
10.8 "Board of Directors" shall mean the Board of Directors of
Group.
10.9 "Change of Control" shall mean and shall be deemed to have
occurred (i) if any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended), other than Group or any employee stock
plan of Group, is or becomes the beneficial owner, directly
or indirectly, of securities of Group representing fifteen
percent (15%) or more of the outstanding Common Stock of
Group, or (ii) ten (10) days following the commencement of,
or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by any "person" of fifteen percent
(15%) or more of the outstanding Common Stock of Group,
provided, however, that at the conclusion of such ten (10)
day period such person has not discontinued or rescinded his
intention to make such a tender or exchange offer or (iii)
if during any consecutive twelve (12) month period beginning
on or after the date hereof individuals who at the beginning
of such period were directors of Group cease, for any
17
<PAGE> 19
reason, to constitute at least a majority of the Board of
Directors of Group; or (iv) if a merger of, or consolidation
involving, Group in which Group's stock is converted into
securities of another corporation or into cash shall be
consummated, or a plan of complete liquidation of Group
(whether or not in connection with a sale of all or
substantially all of Group's assets) shall be adopted and
consummated, or substantially all of Group's operating
assets are sold (whether or not a plan of liquidation shall
be adopted or a liquidation occurs), excluding in each case
a transaction solely for the purpose of reincorporating
Group in a different jurisdiction or recapitalizing Group's
stock.
10.10 "Change of Control Notice" shall have the meaning set
forth in Section 5.2.3.
10.11 "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors.
10.12 "Constructive Termination" shall be deemed to have
occurred if and when (i) Executive's Adjusted Salary is
decreased below the level in effect on the date of the last
amendment of this Agreement, or the aggregate Adjusted
Salary and incentive compensation or benefits available to
be earned by Executive is directly or indirectly reduced or
eliminated, or the bonus percentage applicable to
Executive's participation in any compensation or bonus plan
or arrangement is reduced, without Executive's consent,
provided, however, that nothing herein shall be construed to
guarantee Executive's bonus awards if performance is below
applicable targets, or (ii) the importance of Executive's
job responsibilities is reduced without Executive's consent,
or (iii) a proposal is made to relocate Executive to a
location other than Nashua, New Hampshire or the greater
Boston, Massachusetts metropolitan area without his consent.
10.13 "Effective Date" shall have the meaning set forth in the
first paragraph of this Agreement.
10.14 "ESOP" shall mean the Ekco Group, Inc. Employees' Stock
Ownership Plan.
10.15 "Estate" shall mean Executive's estate, legal
representative or beneficiaries as the context so requires.
10.16 "Executive" shall mean the individual defined as such in
the first paragraph of this Agreement, and shall include the
Estate of such individual where the context so requires.
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<PAGE> 20
10.17 "Good Cause" shall mean and be limited to a material
breach of any of Executive's obligations under Section 1 or
9 hereof, or any action by Executive during the term of this
Agreement involving willful malfeasance or gross (but not
simple) negligence on the part of Executive in a material
respect. Notwithstanding the foregoing, following a Change
of Control, "Good Cause" shall not be deemed to have
occurred unless (a) the conduct which is the basis for such
material breach is either willful or intentionally unlawful
and (b) Executive shall not have ceased such conduct and
cured the effect thereof, if curable, so that such breach
shall no longer be material within thirty (30) days after
Executive shall have received written notice from Group of
Group's intention to terminate Executive's employment for
Good Cause, which notice shall specify in detail the basis
therefor.
10.18 "Gross-Up Payment" shall have the meaning set forth in
Section 8.
10.19 "Group" shall mean Ekco Group, Inc., and its
successors and permitted assigns.
10.20 "Medical, Dental and Life Insurance Coverage Continuation"
shall mean the continuation of the medical, dental and life
insurance coverage which Executive (including his family)
shall have been receiving from Group as of the earlier of
the date of Executive's termination and the date of notice
of termination by either Group or Executive, from the date
of termination until the earlier of (x) Executive's full-
time employment by a third party who offers Executive at
least comparable benefits in the particular benefit category
or (y) three (3) years following such date of termination.
If and to the extent Group is not able to continue the
applicable coverage of Executive under the terms of such
group policies or other policies providing coverage for
Executive, Group shall cooperate with Executive in any
actions which may be necessary to allow Executive, to the
extent possible, either (i) to buy such policy or (ii) to
continue insurance coverage with the insurer writing Group's
applicable group policy outside of Group's group plan or a
substitute reasonably satisfactory to Executive, and in such
event, Group shall pay to Executive 140% of the cost of such
insurance coverage, but in no event more than twice the cost
of such coverage allocable to Executive under the group or
other policy covering him prior to termination.
10.21 "Non-Competition Period" shall have the meaning set forth
in Section 9.5.
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<PAGE> 21
10.22 "Outplacement Benefits" shall mean outplacement services
by a professional outplacement firm of Executive's choosing
at the expense of Group, who shall engage such firm directly
on behalf of Executive, provided, however, that Group's
liability with respect to providing such services will be
limited to one-half of Executive's Adjusted Salary.
10.23 "Payment Amount" shall have the meaning set forth in
Section 8.
10.24 "Three Year Lump Sum Payment Amount" shall mean a cash
amount payable in a lump sum equal to three (3) times the
sum of (a) the Adjusted Salary in effect immediately prior
to the date of such termination, plus (b) the maximum amount
payable to Executive including all cash and the value of all
equity based options and grants of stock except for equity
based options and grants of stock issued pursuant to Section
6.6 of the 1995 Plan (as defined below) (the value of each
stock option to be determined as of the grant date thereof
and the value of each grant of restricted stock to be
determined as of the date described hereinbelow by applying
the Black-Scholes model where applicable or another
recognized form of valuation if the Black-Scholes model is
not applicable, with the value ascribed by Group to each
such stock option and grant of restricted stock as of the
aforementioned dates to be conclusively presumed to be the
value thereof) under all compensation and bonus plans and
arrangements identified in Sections 3.1.2, 3.1.3 and 3.1.4
for the fiscal year in which the date of the termination
occurs, plus (c) the value of the securities, cash or other
property which were allocated to Executive's account in the
ESOP for the fiscal year immediately preceding the fiscal
year in which the date of termination occurs (which shall be
in addition to any distribution from the ESOP to which he is
entitled thereunder). For purposes of calculating the
amount of clause (b), the maximum payable under any plan
shall generally be the maximum amount actually allocated to
Executive, or if no such allocation was made, the amount, if
any, specifically targeted for Executive. However, for
purposes of calculating the maximum payable under the 1995
Restatement of Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and its Subsidiaries (the
"1995 Plan") for purposes of clause (b), (i) the annual
bonus amount shall be the greatest of (x) the target award
for the current fiscal year, (y) the target award for the
prior fiscal year and (z) the amount of the award paid or
payable with respect to the prior fiscal year, and (ii) the
number of shares of restricted stock awarded as long-term
incentive awards shall be equal to the number of such shares
20
<PAGE> 22
most recently awarded to Executive as a long-term grant
pursuant to the 1995 Plan divided by the number of blocks
in such grant. Such shares shall be valued as of the date
utilized by Group to calculate the number of shares issued
to Executive, or if such date is not readily ascertainable,
the date of issuance of the shares. Attached hereto and
incorporated herein as Exhibit B is an example ("Example")
detailing the calculation of the Lump Sum Amount utilizing
certain stated assumptions and including other severance
payments. The Example defines the manner and method for
this calculation and for other severance payments and shall
be followed in making severance payments hereunder.
11. Arbitration.
-----------
Except with respect to the provisions of Section 9, any
dispute or disagreement arising under or relating to the
provisions of this Agreement, or any breach thereof,
including, without limitation, relating to Section 1 hereof
or to whether a termination of Executive's employment was
with Good Cause, shall be resolved by binding arbitration in
accordance with the Commercial Rules of the American
Arbitration Association or its successor (except as set
forth herein), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. The decision of the arbitrators shall
be made by majority vote and be final and absolute. In any
such arbitration, one arbitrator shall be selected by Group
and one arbitrator shall be selected by Executive. Each
party shall have thirty (30) days from the receipt by one
party of a notice from the other party of submission to
arbitration to choose an arbitrator. A third arbitrator
shall be selected by the two (2) so chosen within ten (10)
days of the selection of the most recently selected of the
two arbitrators so chosen. Failing action within any of
such periods by any party or the arbitrators, any
unappointed arbitrator or arbitrators shall be appointed by
the American Arbitration Association (or its successor) upon
application of any party or arbitrator. The parties shall
promptly furnish to the arbitrators such information as the
arbitrators may reasonably request. The expenses of any
arbitration proceeding shall be paid by Group (including
Executive's attorney's fees and expenses) if Executive
recovers any amount or otherwise obtains relief in such
proceeding and by Executive (including Group's attorney's
fees and expenses) if Executive initiated arbitration and
there is a specific finding that Executive's claim was
frivolous. In all other circumstances, the expenses of such
arbitration proceeding (not including attorney's fees and
21
<PAGE> 23
expenses, each party to bear such party's own attorney's
fees and expenses) shall be divided equally. Arbitration
shall take place in Nashua, New Hampshire, or such other
place on which the parties shall agree. This Agreement and
any arbitration proceeding are subject to N.H.R.S.A. ch.
542.
12. General.
-------
12.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
12.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group and Executive, his heirs, executors,
administrators, legal representatives, and permitted
assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group will be informed prior to such event of
the existence of this Agreement. Group shall require any
successor (whether direct or indirect, by purchase, merger,
operation of law, consolidation, assignment or otherwise of
a controlling interest in the business, stock or other
assets of Group) to assume expressly and agree to perform
this Agreement. Failure of Group to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle Executive to such compensation and benefits in the
same amount and on the same terms as he would be entitled
hereunder in the event of a termination without Good Cause,
except that, for the purposes of implementation hereof, the
date on which any such succession becomes effective shall be
deemed to be the date on which Executive becomes entitled to
such compensation and benefits from Group.
12.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by
a duly authorized court of competent jurisdiction, then the
remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not
be affected thereby, and each portion and provision of this
Agreement shall be valid and be enforceable to the fullest
extent permitted by law; and (ii) if any provision, or any
part thereof, is held to be unenforceable because of the
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<PAGE> 24
duration of such provision or the area covered thereby,
Group and Executive agree that the court making such
determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific
words and phrases ("blue-pencilling") and in its reduced or
blue-pencilled form such provision shall then be enforceable
and shall be enforced.
12.4 All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same
in hand, by reputable overnight delivery service or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested,
postage prepaid, as follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Executive Vice-
President, Secretary and
General Counsel
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other
by like notice.
12.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof. There are no promises, representations,
conditions, provisions or terms related thereto other than
those set forth in this Agreement. This Agreement
supersedes all previous understandings, agreements and
representations between Group and Executive regarding
Executive's employment by Group, written or oral. The
parties hereto acknowledge the existence of a certain
Restated Employment Agreement dated April 18, 1994, as
amended heretofore, between the parties hereto. Upon this
Agreement becoming effective, this Agreement shall replace,
supersede and be a substitute for the Restated Employment
Agreement as so amended.
12.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to
affect the meaning or construction of any provision hereof.
Any references in this Agreement to a section shall be
deemed to include all subsections of that section unless
23
<PAGE> 25
specifically excluded.
12.7 No failure of Group or Executive to exercise any power
reserved to it or him, respectively, by this Agreement, or
to insist upon strict compliance by Executive or Group,
respectively, with any obligation or condition hereunder,
and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver of Group's or
Executive's right, as the case may be, to demand exact
compliance with any of the terms hereof. Waiver by either
party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar or
different nature, nor shall any delay, forbearance or
omission of either party to exercise any power or right
arising out of any breach or default by the other party of
any of the terms, provisions or covenants hereof, affect or
impair its or his right to exercise the same, nor shall such
constitute a waiver by Group or Executive, as the case may
be, of any right hereunder, or the right to declare any
subsequent breach or default and to terminate this Agreement
prior to the expiration of its term.
12.8 This is a New Hampshire contract and shall be construed
under and be governed in all respects by the law of the
State of New Hampshire.
12.9 Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment
provided for herein be reduced by any compensation earned by
Executive as the result of employment by another employer or
by retirement benefits after the date of termination or
otherwise, except as specifically set forth herein.
12.10 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties
hereto. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be
deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be
executed and delivered by its duly authorized officer and its
corporate seal to be hereunto affixed and Executive has hereunto
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<PAGE> 26
set his hand and seal as of the day and year first written above
in duplicate originals.
EKCO GROUP, INC.
By /S/ JEFFREY A. WEINSTEIN
----------------------------
/S/ ROBERT STEIN
-------------------------------
Executive
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EXHIBIT A
DOCUMENTARY CREDIT NO.________
DATE OF ISSUE ________, 199__
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS, N.A. EKCO GROUP, INC.
(Address of Bank) 98 SPIT BROOK ROAD
- ------------------------ SUITE 102
- -------------------- NASHUA, NH 03062
- -------------------- ATTN:
----------
ADVISING BANK: BENEFICIARY:
(Name & Address of Executive)
----------------------------
---------------
---------------
ACCOUNTING/CURRENCY:
UP TO USD__________
UP TO ___________
US DOLLARS
DATE AND PLACE OF EXPIRY:
______, 199_ AT THE
ISSUING BANK
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $ ________________(________________( US DOLLARS) available by your
draft(s) at SIGHT on Fleet Bank of Massachusetts, N.A._________, , Massachusetts
effective _________, 199_ and expiring at _________, Massachusetts on ____ ,
199_ .
Drafts must be accompanied by:
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<PAGE> 28
1. The original Letter of Credit and any amendments thereto, if any.
2. Your signed statement as follows: "I certify that the amount of my draft
represents funds due me under Section ____ (insert section number) of a
certain Amended and Restated Employment Agreement dated as of , 199 ,
between myself and Ekco Group, Inc., as such agreement may hereafter be amended
and/or restated, demand for payment has been made, and payment has not been
received by me from Ekco Group, Inc. or any other source."
Each draft must bear upon its face the clause: "Drawn under Letter of Credit
No.__________, dated ________ of Fleet Bank of Massachusetts, N.A."
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to Fleet Bank
Massachusetts, N.A. ____________________ , on or before (expiration date)
_________, 199__.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A.,_____________, Massachusetts _____________, Attention:_____________, or
if by courier to Fleet Bank of Massachusetts, N.A.,_______________ ,
Massachusetts _________________, Attention ________________, specifically
referring to the number of this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
________________________ _________________________
Authorized Signature Authorized Signature
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ROBERT STEIN EXHIBIT B
<TABLE>
<CAPTION>
ASSUMPTIONS:
- -----------
<S> <C>
Termination on July 15, 1996. 3x severance benefit
Current market value of common stock $15.000
-------
Adjusted cash salary $120,000
1995 salary increase 6,000
1996 salary increase 7,000
-----
Adjusted Salary 133,000
-------
Bonus:
Current year target award $100,000
Target award for prior fiscal year 50,000
Amount paid or payable for prior year 5,000
</TABLE>
Note: Executive elected to take 5% of bonus in cash, 50% in
Restricted Stock and the balance in stock options.
Relocation - Executive is partially relocated when terminated.
Other: Executive participates in the Supplemental Executive Retirement Plan.
Executive is granted stock options and is offered and purchases
Restricted Stock.
Executive participates in Employee Stock Purchase Plan, 401k and ESOP.
<TABLE>
<CAPTION>
TERMINATION BY GROUP WITHOUT GOOD CAUSE
- ---------------------------------------
<S> <C> <C>
LUMP SUM PAYMENT AMOUNT:
ADJUSTED SALARY $399,000
MAXIMUM PAYABLE UNDER 3.1.2
Greatest of this year's target, last year's
target or last year's actual award 100,000 x3 300,000
Other-completion of relocation per
company policy 3,500
</TABLE>
28
<PAGE> 30
<TABLE>
<CAPTION>
MAXIMUM PAYABLE UNDER 3.1.3
<S> <C> <C>
Increase in SERP value during severance period 21,300
MAXIMUM PAYABLE UNDER 3.1.4
Other compensation:
Other Executive bonus plans 0
Restricted stock purchase plans:
1995 grant 16,000
Number of years in cycle 5
Annualized grant 3,200
Market value on date of grant $7.500
------
Value of restricted stock 24,000 72,000
------
1996 grant 5,000
Number of years in cycle 5
Annualized grant 1,000
Market value on date of grant $8.000
------
Value of restricted stock 8,000 24,000
-----
Stock option plans:
Grant this fiscal year 9,000
Black Scholes value on date of grant 3.50
----
Value of option 31,500 94,500
------
Other-Employee Stock Purchase Plan:
# shares purchased this fiscal year 1,000
Current market value $15.000
-------
Value of stock 15,000
------
benefit (15% discount from market) 2,250 6,750
Value of securities allocated to ESOP
account
Common shares allocated 863
Preferred shares allocated 1,423
Allocation of unvested forfeited shares 14
--
Total shares allocated 2,300
Current market value 15.000
------
Value of ESOP shares allocated 34,500
Dividends received not reflected
above 184
---
Total value of ESOP securities
allocated 34,684 104,052
</TABLE>
29
<PAGE> 31
<TABLE>
<S> <C> <C>
OTHER PAYMENTS:
Unpaid salary to date of termination 2,308
Accrued vacation-weeks 5
Weekly rate 2,308
-----
Total 11,538
Unreimbursed expenses (if applicable)
Gross up payment (if applicable) 250,000
-------
Total payment $1,288,948
==========
</TABLE>
30
<PAGE> 1
Exhibit 10.2
------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
JEFFREY A. WEINSTEIN
AS OF
May 25, 1995
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. Employment 1
2. Principal Location 1
3. Compensation 2
4. Reimbursement of Expenses, Medical
Examinations and Automobile Benefits 3
5. Term and Termination 4
6. Letter of Credit 12
7. Additional Insurance at Group's Option 13
8. Gross-Up Payments 14
9. Confidentiality and Non-Competition 14
10. Definitions 17
11. Arbitration 22
12. General 23
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
Letter of Credit A
Example of Calculation of Severance Payment B
</TABLE>
C:\EMARK\WORK\91395JWE.WPD
<PAGE> 2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the 25th day of
May, 1995, (the "Effective Date") by and between Ekco Group,
Inc., a Delaware corporation ("Group") with its principal place
of business in Nashua, New Hampshire and Jeffrey A. Weinstein
("Executive"), of 22 Nathan Lord Road, Amherst, New Hampshire
03031.
WHEREAS, Executive is currently employed by Group pursuant
to a Restated Employment Agreement dated as of April 18, 1994;
and
WHEREAS, Group and Executive desire to amend and restate the
terms and conditions of Executive's employment by Group as set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained, the parties covenant and agree as
follows:
1. EMPLOYMENT. Group hereby employs Executive and Executive
hereby accepts employment as an executive employee of Group
to perform such executive and managerial services as may be
assigned to him by or under the authority of the Board of
Directors (such term, and all other capitalized terms not
otherwise defined in this Agreement shall have the meaning
set forth in Section 10 of this Agreement), consistent with
such status as an executive employee. Executive agrees to
use his best efforts, skills and abilities faithfully to
promote the interests of Group and to perform such services
as may be required of him by Group from time to time
consistent with his status, to the reasonable satisfaction
of the Board of Directors. Without limiting the generality
of the foregoing, Executive agrees to serve as Executive
Vice President, Secretary and General Counsel of Group (if
and so long as he is elected to that office by the Board of
Directors) and to serve without additional compensation as a
director, executive officer or executive employee of such
Affiliates as Group may from time to time reasonably
request. Executive agrees to work exclusively for Group and
such Affiliates as his full-time employment during the term
of this Agreement, except as Group and Executive may
otherwise agree in writing from time to time.
2. PRINCIPAL LOCATION. Executive shall perform the duties of
his office generally in, and shall not be obligated to
maintain his office in any place other than, Nashua, New
1
<PAGE> 3
Hampshire or within the metropolitan Boston, Massachusetts
area, provided, however, that Executive shall be obligated
to take such trips outside of such area as shall be
reasonably necessary in connection with his duties and Group
shall pay all reasonable costs of travel and living expenses
incurred in connection therewith. Furthermore, if Group's
principal executive office is relocated to a location
outside Nashua, New Hampshire or the greater Boston
metropolitan area, Executive shall, subject to his rights
upon receipt by Executive of a Relocation Notice (as
defined) under Section 5.2.4 or an event of Constructive
Termination following a Change of Control under Section
5.3.4, be obligated to perform his duties at such relocated
principal office and Group shall pay Executive all
reasonable expenses incurred by Executive in relocating to
such new area.
3. Compensation.
------------
3.1 Except as otherwise provided in this Agreement, for his
services and agreements hereunder Executive shall receive
from Group the following compensation:
3.1.1 Salary at the annual rate of Two Hundred Nineteen
Thousand Six Hundred Dollars ($219,600)(the "Base
Salary"), payable in equal installments in accordance
with Group's pay policy and in any event not less
frequently than monthly. The Base Salary shall be
subject to increase from time to time as determined by
the Board of Directors or the Compensation Committee in
its sole discretion pursuant to a review of Executive's
performance by the Board of Directors or the
Compensation Committee, which review shall be conducted
at such time as the Board of Directors or the
Compensation Committee shall determine, but in any
event at least once during each twelve (12) months of
the term of this Agreement. The Base Salary as from
time to time increased is referred to herein as the
"Adjusted Cash Salary."
3.1.2 Such other monetary compensation by way of bonus or
otherwise, if any, as may be determined from time to
time by the Board of Directors or the Compensation
Committee in its sole discretion;
3.1.3 Such fringe benefits (including, without limitation,
vacation time, group life, split-dollar life, long term
and short term disability, medical, dental and other
insurance, retirement, including, but not limited to,
2
<PAGE> 4
Group's Executive Supplemental Retirement Plan,
pension, profit-sharing and similar plans) as Group may
provide from time to time for its executive employees,
whether or not the category of such benefits is
addressed in this Agreement, it being understood that
Executive shall be entitled to the greater of each
benefit addressed in this Agreement and that provided
by Group for its executive employees generally. Group
shall in any event, whether or not such coverage is
provided for other executive employees, provide
Executive group life or other life insurance at its
expense with a death benefit equal to at least four (4)
times Executive's Adjusted Salary, in addition to any
other life insurance payable to Executive or his
beneficiaries under this Section 3.1.3, Section 5.4.1.3
below or any life insurance for which Executive pays
premiums; and
3.1.4 Such other compensation pursuant to such executive
bonus plans, restricted stock purchase plans, stock
option plans or other stock plans, available to
executive employees of Group from time to time, as the
Board of Directors or the Compensation Committee may in
its sole discretion determine.
4. Reimbursement of Expenses, Medical Examinations and
---------------------------------------------------
Automobile Benefits.
-------------------
4.1 Group shall reimburse Executive for travel, entertainment
and other business expenses reasonably incurred by him in
connection with the business of Group and its Affiliates to
the extent and in a manner consistent with then Group
policy.
4.2 Without limiting the generality of the foregoing Section
4.1, Group shall furnish Executive with an automobile owned
or leased by Group, comparable in value to the automobile
Executive is provided by Group as of the date hereof,
together with fuel and maintenance, for use by Executive
primarily in connection with the performance by Executive of
his duties under this Agreement and primarily for the
benefit of Group. Unless Executive otherwise agrees, such
automobile shall be exchanged by Group for a new automobile
no less frequently than once every three (3) years or once
the automobile's odometer reaches 50,000 miles or more,
whichever occurs first, during the term of employment of
Executive pursuant to this Agreement and any renewal hereof.
3
<PAGE> 5
4.3 Group shall reimburse Executive for annual comprehensive
physical examinations, including the costs of any and all
tests, procedures and consultations as may be required by a
medical doctor or doctors chosen by Executive for such
purposes.
5. Term and Termination.
--------------------
5.1. TERM. The term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue
until terminated as hereinafter set forth. For the purposes
of this Agreement, the date of termination shall be the
effective date of termination of Executive, rather than the
date of notice thereof.
5.2. Termination by Executive.
------------------------
5.2.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3)
months to Group, which time period may be waived, in
whole or in part, by Group in its discretion in which
event Executive's employment shall end on such earlier
date as agreed by Group and Executive.
5.2.2 Except as provided in Section 5.2.3, if Executive's
employment is terminated pursuant to Section 5.2.1,
Executive shall not be entitled as of the date of
termination to any further compensation under this
Agreement of any kind or nature, except for Accrued and
Unpaid Salary and Expenses.
5.2.3 However, if such notice is given after six (6) months
after but within twenty four (24) months after a Change
of Control (a "Change of Control Notice"), unless such
Change of Control shall have been approved by a
resolution adopted by the Board of Directors with at
least two-thirds (2/3) of the then serving Group
directors who are Group directors as of the date hereof
voting in favor, then upon such termination by
Executive pursuant to Section 5.2.1, Group shall
provide and Executive (or his Estate) shall be entitled
to receive:
5.2.3.1 Within thirty (30) days of the date of such termination
a three (3) year Lump Sum Payment Amount;
5.2.3.2 A Gross-Up Payment as set forth in Section 8 of this
Agreement;
4
<PAGE> 6
5.2.3.3 Continuation of all fringe benefits referred to in
Section 3.1.3, including, but not limited to, Medical,
Dental and Life Insurance Coverage Continuation for a
period of three (3) years from the date of termination;
5.2.3.4 Accrued and Unpaid Salary and Expenses;
5.2.3.5 Outplacement Benefits; and
5.2.3.6 The automobile benefits set forth in Section 4.2 of
this Agreement, and the option, exercisable by
Executive at any time prior to the end of the period
set forth below in this Section 5.2.3.6, to purchase
the Group-provided automobile at a price equal to the
greater of (a) the depreciated value as carried on the
books of Group as of the date of purchase, or (b)
eighty percent (80%) of the wholesale value of the
automobile as of the date of purchase ("Automobile
Benefits"). The foregoing Automobile Benefits shall be
for a period of three (3) years from the date of
termination; and
5.2.3.7 In the event of termination as provided in this Section
5.2.3, Executive shall not be entitled to payments
under both this Section 5.2.3 and Section 5.3.4.2. Any
compensation payable under this Section 5.2.3 shall be
paid notwithstanding Executive's total and permanent
disability or death occurring after termination of his
employment hereunder. In the event Executive dies or
becomes totally and permanently disabled after the date
of any such notice but prior to the date of termination
of his employment under this Section 5.2.3, the
provisions of this Section 5.2.3 and not the provisions
of Section 5.4 or 5.5 shall apply, provided that in the
event of Executive's total and permanent disability
during such time, Executive shall also be entitled to
each benefit that Group then provides to its executive
employees upon and during the continuance of total and
permanent disability to the extent such benefit exceeds
those specified in this Section 5.2.3.
5.2.4 However, if such notice is given within ninety (90)
days after a proposal by Group to geographically
relocate Executive without Executive's consent to an
office (whether or not the principal office of Group)
outside Nashua, New Hampshire or the metropolitan
Boston, Massachusetts area (a "Relocation Notice"),
then upon such termination by Executive pursuant to
5
<PAGE> 7
this Section 5.2.4, Group shall provide and Executive
(or his Estate) shall be entitled to receive:
5.2.4.1 Within thirty (30) days of the date of such
termination, a two year Lump Sum Payment Amount;
5.2.4.2 A Gross-Up Payment as set forth in Section 8 of this
Agreement;
5.2.4.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of two years from the date of
termination;
5.2.4.4 Accrued and Unpaid Salary and Expenses;
5.2.4.5 Outplacement Benefits;
5.2.4.6 Automobile Benefits for a period of two (2) years from
the date of termination; and
5.2.4.7 In the event of termination as provided in this Section
5.2.4, Executive shall not be entitled to payments
under both this Section 5.2.4 and Section 5.3.4.2. Any
compensation payable under this Section 5.2.4 shall be
paid notwithstanding Executive's total and permanent
disability or death occurring after termination of his
employment hereunder. In the event Executive dies or
becomes totally and permanently disabled after the date
of any such notice but prior to the date of termination
of his employment under this Section 5.2.4, the
provisions of this Section 5.2.4 and not the provisions
of Section 5.5 shall apply, provided that in the event
of Executive's total and permanent disability during
such time, Executive shall also be entitled to each
benefit that Group then provides to its executive
employees upon and during the continuance of total and
permanent disability to the extent such benefit exceeds
those specified in this Section 5.2.4.
5.3. Termination by Group; Change of Control; and Constructive
---------------------------------------------------------
Termination.
-----------
5.3.1 Executive's employment may be terminated at any time by
Group, with or without Good Cause, by written notice to
Executive, effective immediately unless otherwise
stated in such notice.
5.3.2 TERMINATION BY GROUP WITH GOOD CAUSE. In the event
Group shall terminate Executive's employment for Good
6
<PAGE> 8
Cause, then Executive shall not be entitled as of the
date of termination to any further compensation under
this Agreement of any kind or nature, except for
Accrued and Unpaid Salary and Expenses.
5.3.3 Termination by Group Without Good Cause Prior to a
--------------------------------------------------
Change of Control.
-----------------
5.3.3.1 In the event Executive's employment hereunder is
terminated by Group without Good Cause prior to a
Change of Control, then subject to Section 5.3.3.2
Group shall provide and Executive (or his Estate) shall
be entitled to the following:
5.3.3.1.1 A two (2) year Lump Sum Payment Amount payable within
thirty (30) days of the date of termination;
5.3.3.1.2 Executive shall immediately upon termination pursuant
to this Section 5.3.3 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.3.1.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of two (2) years from the
date of termination;
5.3.3.1.4 Accrued and Unpaid Salary and Expenses;
5.3.3.1.5 Outplacement Benefits;
5.3.3.1.6 Gross-Up Payment; and
5.3.3.1.7 Automobile Benefits for a period of two (2) years from
the date of termination.
5.3.3.2 Any compensation payable under this Section 5.3.3 shall
be paid notwithstanding Executive's total and permanent
disability or death subsequent to Group's notice of
7
<PAGE> 9
termination. In the case of termination of his
employment under this Section 5.3.3, Executive shall
not be entitled as of the date of termination to any
other compensation under this Agreement, except as
provided in this Section 5.3.3, provided that in the
event of Executive's total and permanent disability at
such time, Executive shall also be entitled to all of
the benefits Group then provides to its executive
employees upon and during the continuance of total and
permanent disability.
5.3.4 Change of Control; Constructive Termination; Subsequent
-------------------------------------------------------
Termination By Group Without Good Cause.
---------------------------------------
5.3.4.1 Immediately upon a Change of Control while Executive is
employed hereunder, and without regard to whether or
not Executive's employment is terminated, whether a
Constructive Termination occurs at such time or
thereafter or the manner of any subsequent termination
of Executive's employment, Executive shall immediately
have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group
which were granted, sold or optioned (subject, if
Executive elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the Change of
Control as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.3.4.2 If following a Change of Control there shall be either
an event of Constructive Termination or termination by
Group of Executive's employment without Good Cause,
then Group shall provide and Executive (or his Estate)
shall be entitled to the following:
5.3.4.2.1 Within ten (10) days of such event a three (3) year
Lump-Sum Payment Amount. For the purposes of this
Section 5.3.4, the time when a Constructive Termination
occurs shall be the day any event occurs which is
included in the definition of Constructive Termination;
5.3.4.2.2 Executive shall immediately upon termination pursuant
to this Section 5.3.4 have the unconditional,
8
<PAGE> 10
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.4.2.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of three (3) years from the
date of termination;
5.3.4.2.4 Accrued and Unpaid Salary and Expenses;
5.3.4.2.5 Outplacement Benefits;
5.3.4.2.6 Gross-Up Payment; and
5.3.4.2.7 Automobile Benefits for a period of three (3) years
from the date of termination.
5.4. Termination upon Death.
----------------------
5.4.1 This Agreement, except for the provisions of Sections
8, 9, 11 and 12, shall terminate upon the death of
Executive, provided that Executive's Estate shall have
the right to receive, and Group shall be obligated to
pay or provide to Executive's Estate the following:
5.4.1.1 Executive's Estate shall immediately upon such
termination have the unconditional, unencumbered and
free right, title and interest in all shares of stock
of Group which were granted, sold or optioned (subject,
if Executive's Estate elects to exercise unexercised
rights, to the obligation to pay the option exercise
price or other purchase price to the extent theretofore
not paid) to Executive by Group at any time prior to
his death as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
9
<PAGE> 11
imposed by Group and waive any rights to repurchase
such shares.
5.4.1.2 All of the benefits Group provides to its executive
employees as provided in Section 3.1.3 to the extent
such benefits are greater than those specified in this
Agreement;
5.4.1.3 A lump-sum payment equal to the Adjusted Salary in
effect at the date of death payable no later than sixty
(60) days after the date of death. To secure such
payment, Group may in its discretion maintain life
insurance on Executive's life payable to his Estate or
other beneficiary, which life insurance coverage shall
be in addition to the amount provided for pursuant to
the provisions of Section 3.1.3 above (or any life
insurance for which Executive pays premiums), and to
the extent benefits are paid pursuant to such insurance
coverage maintained by Group under this Section
5.4.1.3, Group's commitment under this Section 5.4.1.3
shall be satisfied; and
5.4.1.4 Accrued and Unpaid Salary and Expenses.
5.5. Termination upon Disability.
---------------------------
5.5.1 This Agreement shall terminate if, by virtue of total
and permanent disability, Executive is unable to
perform his duties hereunder, provided that Executive's
(or his legal representative's) right to receive, and
Group's obligations to pay, amounts as a result of such
termination shall survive any such termination.
5.5.2 The determination that, by virtue of total and
permanent disability, Executive is unable to perform
his duties hereunder shall be made by a physician
chosen by Group and reasonably satisfactory to
Executive (or his legal representative). The cost of
such examination shall be borne by Group. Without
limiting the generality of the foregoing, unless
otherwise agreed, Executive shall be conclusively
presumed to be totally and permanently disabled
hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such
duties for a period of one hundred and eighty (180)
consecutive calendar days or for any periods
aggregating one hundred and eighty (180) days or more
in any twelve (12) month period. For purposes of this
Section 5.5, the date of termination in the event of
10
<PAGE> 12
such total and permanent disability shall be the
earlier of the date of such physician's examination
pursuant to which such determination is made or the
first business day after which such 180-day period has
expired.
5.5.3 In the event of such a termination as a result of
Executive's total and permanent disability, all
compensation hereunder shall terminate, Executive shall
immediately upon such termination have the
unconditional, unencumbered and free right, title and
interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive or his
Estate elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective
date of termination as if all restrictions had lapsed
and all events necessary to vest in Executive such
rights, including the lapsing of time, had occurred,
and Executive shall be entitled to and Group shall pay
to Executive the following:
5.5.3.1 Amounts at the rate of the Adjusted Cash Salary in
effect at the date of such termination, payable in the
manner specified in Section 3.1.1, for a period of
thirty-six (36) months following the date of such
termination at the rate of one-twelfth of such Adjusted
Cash Salary per month, LESS the amount of any
disability insurance proceeds actually paid to or for
the benefit of Executive (or his Estate) with respect
to such thirty-six (36) months following the date of
termination under any disability policy the premiums
for which have been paid by Group or any Affiliate.
During such thirty-six (36) months following
termination of this Agreement as a result of
Executive's permanent and total disability, Group shall
maintain at Group's sole expense the life insurance
policies referred to in the second sentence of Section
3.1.3. and in Section 5.4.1.3 if then in force and, in
the event of Executive's death during the thirty-six
(36) months following such termination, shall pay the
death benefit provided for in Section 5.4.1.3
notwithstanding the prior termination of this Agreement
as a result of Executive's total and permanent
disability, in addition to the life insurance benefits
payable to the beneficiaries of the policies referred
to in Section 3.1.3 which shall be payable in the event
11
<PAGE> 13
of Executive's death during such period of thirty-six
(36) months;
5.5.3.2 Medical, Dental and Life Insurance Coverage
Continuation for a period of three (3) years from the
date of termination;
5.5.3.3 Accrued and Unpaid Salary and Expenses;
5.5.3.4 Continuation of each of the medical, dental and other
benefits which Group provides to its permanently
disabled executive employees in accordance with Group's
then existing policy to the extent each benefit is
greater than that specified in this Section 5.5;
5.5.3.5 Outplacement Benefits; and
5.5.3.6 Automobile Benefits for a period of three (3) years
from the date of termination.
6. LETTER OF CREDIT. In order to assure Executive the prompt
payment of amounts due him under Section 5 of this
Agreement, Group agrees to continue to secure and to keep in
place one or more irrevocable letter(s) of credit from Fleet
Bank of Massachusetts, N.A. or another bank reasonably
acceptable to Executive in the initial amount of four (4)
times Executive's Adjusted Salary, in substantially the form
of Exhibit A, or upon other terms reasonably acceptable to
Executive, which shall allow Executive (or his legal
representative) to draw down amounts due him under Section 5
of this Agreement upon certification by Executive (or his
legal representative) that payments are due him pursuant to
this Agreement. The amount of the letter(s) of credit shall
be adjusted at least annually to reflect changes in
Executive's salary, so that it shall at all times be at
least four (4) times the Adjusted Salary. In addition, the
letter(s) of credit (or a separate letter of credit) shall
include an amount which Group, in its reasonable judgment,
determines is necessary to secure Group's obligations under
any stock appreciation right plan or other equity-linked
plan (other than the ESOP), provided, however, that such
amount need not include any amount with respect to stock
options, restricted stock subject to repurchase rights, or
any equity plan giving Executive ownership of shares. An
initial determination of the amount necessary to secure such
equity-linked obligations shall be made on the date of grant
to Executive of such equity-linked right, and the amount
shall subsequently be adjusted at least annually to reflect
the value on such date of such rights. A failure by Group
12
<PAGE> 14
to keep such letter(s) of credit in effect, or to renew or
to make alternate arrangements to secure its obligations in
the amount required hereunder, by way of an escrow
agreement, trust, or other device, which arrangements shall
be reasonably satisfactory to Executive, at least thirty
(30) days prior to the expiration date of the letter(s) of
credit or any such alternate arrangement shall constitute an
event of default under this Agreement entitling Executive,
after written notice to Group and the passage of a ten (10)
day cure period without such default being cured, to all of
the benefits accorded to him in the event of a termination
by Group without Good Cause after a Change of Control
pursuant to Section 5, without, however, the requirement
that Executive terminate his employment hereunder. Group
agrees to notify Executive within three (3) business days of
any failure or inability to maintain or renew such letter(s)
of credit or other device adopted pursuant to this Section.
Notwithstanding the foregoing, at the election of the Board
of Directors of Group by resolution of such Board with at
least two-thirds (2/3) of the then-serving Group directors
who are Group directors as of the date hereof voting in
favor, the obligation to maintain letter(s) of credit shall
be relieved to the extent amounts are contributed to a trust
or trusts under the terms of which such amounts are
specifically earmarked as security for payment of
obligations under this Agreement and are at all times at
least four (4) times the Adjusted Salary. Such trust or
trusts may contain a provision that its funds will be
returned to Group so as to be available to its general
creditors in the event of the bankruptcy of Group. Group
agrees that it will not take any action to prevent, hinder
or delay the exercise by Executive of his rights to exercise
the security provisions provided in this Section 6 and,
further, agrees to cooperate with Executive as may be
necessary to enable Executive to exercise and obtain the
benefits of such security provisions, in the absence of
fraudulent or unlawful conduct on the part of Executive with
respect to such exercise.
7. ADDITIONAL INSURANCE AT GROUP'S OPTION. Group, in its sole
discretion, may apply for and procure in its own name
(whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as Group may
deem advisable, in addition to insurance policies
contemplated by Section 3.1.3 and Section 5.4.1.3.
Executive shall have no right, title, or interest in any
such policies of insurance, except to the extent his Estate
or other persons are specifically named as beneficiaries
thereof. Executive agrees to submit to any medical or other
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<PAGE> 15
examination and to execute and deliver any applications or
other instrument in writing, reasonably necessary to
effectuate such insurance.
8. "GROSS-UP" PAYMENTS. Executive shall be paid an additional
amount ("Gross Up Payment") if any payments ("Payment
Amounts") made to him (or his Estate) by Group or any of its
Affiliates, under this Agreement or otherwise, are subject
to the excise tax imposed by Internal Revenue Code Section
4999 or any successor Internal Revenue Code Section (the
"Section 4999 Tax"). The Gross Up Payment shall be computed
so that Executive (or his Estate) retains a net amount equal
to the Payment Amounts after deduction of any Section 4999
Tax on the Payment Amounts and any Federal, state or local
tax (including any Section 4999 Tax) on the Gross Up
Payment.
For the purposes of determining the amount of the Gross Up
Payment, Executive shall be deemed to pay Federal, State and
local income taxes at the highest marginal rate of taxation
in the calendar year in which the Payment Amounts are
taxable to him under Code Section 4999. State and local
income taxes shall be calculated based upon the state and
locality of Executive's domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by
tax counsel selected and paid for by Group and approved by
Executive. The Gross Up Payment shall be paid within thirty
(30) days of such computation and in no event (without
written consent of Executive) later than the last day of the
calendar year with respect to which the Section 4999 Tax is
imposed.
If such determination is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel
(selected and paid for under the above procedure) shall
represent Executive in any such audit or appeal process
thereafter and compute appropriate adjustments and
additional Gross Up Payments after which Group shall pay
Executive such adjustment, as provided above, and Group
shall reimburse Executive for interest and other tax
penalties, if applicable.
9. Confidentiality, Inventions and Non-Competition.
-----------------------------------------------
9.1 Executive's agreements set forth in this Section 9 shall
survive the expiration or termination of this Agreement and
the termination of his employment with Group for any reason.
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<PAGE> 16
9.2 Executive acknowledges that irreparable injury would be
caused to Group by his breach of any of the provisions of
this Section 9, and agrees that in the event of any such
breach, Group and any of its Affiliates, in addition to such
other rights and remedies as may exist in its favor, may
apply to any court of law or equity having jurisdiction to
enforce the specific performance of the provisions of this
Section 9 and may apply for injunctive relief against any
act which would violate any such provisions.
9.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how",
including, without limitation, techniques, formulae,
designs, developments, projects, technical information and
manufacturing process and distribution methods, relating to,
or concerned with the business of Group and its Affiliates
prior to the termination of this Agreement and their
respective suppliers, customers, stockholders, licensors,
licensees, and other persons or entities with which Group or
its Affiliates has, has had, or may in the future have any
commercial, scientific or technical relationship. During
the term of this Agreement and at all times following the
termination of Executive's employment for any reason,
Executive will not, directly or indirectly, divulge, furnish
or make accessible to anyone (other than as required in the
regular course of his employment by Group or with the
consent of the Board of Directors) such information. The
prohibitions contained in this Section 9.3 shall not apply
to information which is (a) within the domain of the general
public; (b) generally known within the industry or
industries in which Group or its Affiliates is involved; or
(c) independently developed by Executive without utilization
of confidential information gained while in the employ of
Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property
furnished to Executive by Group or any Affiliate of Group or
produced by Executive or others in connection with his
services to Group or any such Affiliate shall be and remain
the sole property of Group. Executive will return and
deliver such property to Group as and when requested by
Group. Copies of documents and records may be kept, but
shall be kept completely confidential to the same extent as
other confidential information of Group. Executive shall
return and deliver all such property upon termination of his
employment for any reason, and Executive will not take with
15
<PAGE> 17
him any such property or any reproduction of such property
upon such termination.
9.4 Any work or research or the results thereof, made or
developed by Executive, alone or in conjunction with others
during the term of his employment, including but without
limitation, any designs, patents, inventions, processes,
know-how or formulae created, invented or conceived during
the period of his employment by Group, whether during or out
of the usual hours of work, which arise out of or are
related to the business, research, or development work or
field of operation of Group, or any of its Affiliates, shall
to the extent of Executive's interest therein be the sole
and exclusive property of Group, shall be disclosed in
writing to Group and to no other person, unless so directed
in writing by the Board of Directors, and Executive hereby
assigns to Group all and any rights which he has or may
acquire in the same. To this end, both during the period of
Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers,
instruments and documents properly required to effect such
assignment to Group or its nominee, to make application
through Group's patent attorney or general counsel at the
expense of Group, for such United States and foreign patents
as may be specified from time to time by Group on
inventions, processes, or formulae which are or become the
property of Group hereunder, and to execute assignments upon
Group's request, for Executive's entire interest in all such
applications to Group or to its nominee without compensation
(other than his usual compensation as an employee of Group)
and Executive agrees to give Group and its patent attorney
or general counsel all reasonable assistance in preparing
such applications, descriptions, and illustrations of each
such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications
or patents resulting therefrom; and further agrees to
execute all lawful papers considered necessary by Group and
do all that Group reasonably requests in order to protect
Group's rights in said inventions, processes, and formulae
or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is
further agreed that Executive's obligations specified
hereunder shall not expire with the termination of this
Agreement or his employment, but Group agrees to pay
Executive a reasonable amount for any time that Executive
spends in such work at Group's request after the termination
of this Agreement or his employment hereunder and agrees to
reimburse Executive for expenses reasonably or necessarily
incurred in connection with such work.
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<PAGE> 18
9.5 In consideration of his continued employment by Group, and
the other benefits accruing to him hereunder, and subject to
the fulfillment by Group of its obligations to Executive
hereunder, either directly or through draw-down under the
letter(s) of credit or other device established pursuant to
Section 6, Executive agrees that during the term hereof and
for a period of twenty-four (24) months following the date
of termination of Executive's employment pursuant to Section
5 provided that Executive has received and is continuing to
receive all payments and benefits required to be paid and
provided to him pursuant to this Agreement (such period of
employment and twenty-four (24) month period being referred
to in this Agreement as the "Non-Competition Period"), he
will not engage or participate, directly or indirectly,
within the United States of America or Canada either as
principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual or
representative capacity whatever, in the conduct or
management of, or own any stock or other proprietary
interest in, or debt of, any business which shall be
competitive with any business which is or was conducted by
Group or any Affiliate of Group, while Executive was an
employee of Group, unless he shall have obtained the prior
written consent of the Board of Directors, and which consent
shall make express reference to this Agreement.
Notwithstanding any other provision in this Section 9,
Executive shall be free without such consent to make
investments, directly or indirectly, in the securities of
any publicly-owned entity if his ownership thereof is
limited to not more than three percent (3%) of the issued
and outstanding securities of any class of securities of
such entity. Executive acknowledges that his skills and
experience are such that he can anticipate finding
employment at an executive level in a wide variety of
industries and represents and agrees that the restrictions
imposed by this Section 9 on employment are necessary for
the protection of the legitimate interests and competitive
position of Group and do not impose undue hardships on
Executive.
9.6 During the Non-Competition Period, Executive shall not,
directly or indirectly, solicit any officer, director,
executive, employee or consultant of Group or any Affiliate
of Group to leave such employment or terminate such
position.
10. Definitions.
-----------
As used in this Agreement, the following terms shall have
the following meanings:
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<PAGE> 19
10.1 "Accrued and Unpaid Salary and Expenses" shall mean such
portion of Executive's Adjusted Cash Salary as has accrued
by virtue of Executive's employment during the period prior
to the date of termination and has not yet been paid,
together with any amounts for expense reimbursement,
vacation accruals and similar items which have been properly
incurred or accrued in accordance with the provisions of
this Agreement prior to the date of termination and have not
yet been paid.
10.2 "Adjusted Salary" shall mean the Adjusted Cash Salary plus
an amount equal to the amount of any salary increase(s)
provided in the form of restricted stock or stock options
beginning on January 1, 1995.
10.3 "Adjusted Cash Salary" shall have the meaning set forth in
Section 3.1.1.
10.4 "Affiliate" shall mean any corporation, joint venture, or
other business enterprise, whether incorporated or
unincorporated, which Group directly, or indirectly through
one or more intermediaries, controls or is controlled by, or
is under common control with.
10.5 "Agreement" shall mean this Amended and Restated
Employment Agreement.
10.6 "Automobile Benefits" shall have the meaning set forth in
Section 5.2.3.6 for the number of years specified in
Sections 5.2.3.6, 5.2.4.6, 5.3.3.1.7, 5.3.4.2.7 and 5.5.3.6,
respectively.
10.7 "Base Salary" shall have the meaning set forth in Section
3.1.1.
10.8 "Board of Directors" shall mean the Board of Directors of
Group.
10.9 "Change of Control" shall mean and shall be deemed to have
occurred (i) if any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended), other than Group or any employee stock
plan of Group, is or becomes the beneficial owner, directly
or indirectly, of securities of Group representing fifteen
percent (15%) or more of the outstanding Common Stock of
Group, or (ii) ten (10) days following the commencement of,
or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by any "person" of fifteen percent
18
<PAGE> 20
(15%) or more of the outstanding Common Stock of Group,
provided, however, that at the conclusion of such ten (10)
day period such person has not discontinued or rescinded his
intention to make such a tender or exchange offer or (iii)
if during any consecutive twelve (12) month period beginning
on or after the date hereof individuals who at the beginning
of such period were directors of Group cease, for any
reason, to constitute at least a majority of the Board of
Directors of Group; or (iv) if a merger of, or consolidation
involving, Group in which Group's stock is converted into
securities of another corporation or into cash shall be
consummated, or a plan of complete liquidation of Group
(whether or not in connection with a sale of all or
substantially all of Group's assets) shall be adopted and
consummated, or substantially all of Group's operating
assets are sold (whether or not a plan of liquidation shall
be adopted or a liquidation occurs), excluding in each case
a transaction solely for the purpose of reincorporating
Group in a different jurisdiction or recapitalizing Group's
stock.
10.10 "Change of Control Notice" shall have the meaning set
forth in Section 5.2.3.
10.11 "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors.
10.12 "Constructive Termination" shall be deemed to have
occurred if and when (i) Executive's Adjusted Salary is
decreased below the level in effect on the date of the last
amendment of this Agreement, or the aggregate Adjusted
Salary and incentive compensation or benefits available to
be earned by Executive is directly or indirectly reduced or
eliminated, or the bonus percentage applicable to
Executive's participation in any compensation or bonus plan
or arrangement is reduced, without Executive's consent,
provided, however, that nothing herein shall be construed to
guarantee Executive's bonus awards if performance is below
applicable targets, or (ii) the importance of Executive's
job responsibilities is reduced without Executive's consent,
or (iii) a proposal is made to relocate Executive to a
location other than Nashua, New Hampshire or the greater
Boston, Massachusetts metropolitan area without his consent.
10.13 "Effective Date" shall have the meaning set forth in the
first paragraph of this Agreement.
10.14 "ESOP" shall mean the Ekco Group, Inc. Employees' Stock
Ownership Plan.
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<PAGE> 21
10.15 "Estate" shall mean Executive's estate, legal
representative or beneficiaries as the context so requires.
10.16 "Executive" shall mean the individual defined as such in
the first paragraph of this Agreement, and shall include the
Estate of such individual where the context so requires.
10.17 "Good Cause" shall mean and be limited to a material
breach of any of Executive's obligations under Section 1 or 9
hereof, or any action by Executive during the term of this Agreement
involving willful malfeasance or gross (but not simple) negligence on
the part of Executive in a material respect. Notwithstanding the
foregoing, following a Change of Control, "Good Cause" shall not
be deemed to have occurred unless (a) the conduct which is the basis
for such material breach is either willful or intentionally unlawful
and (b) Executive shall not have ceased such conduct and cured the
effect thereof, if curable, so that such breach shall no longer be
material within thirty (30) days after Executive shall have received
written notice from Group of Group's intention to terminate
Executive's employment for Good Cause, which notice shall specify in
detail the basis therefor.
10.18 "Gross-Up Payment" shall have the meaning set forth in
Section 8.
10.19 "Group" shall mean Ekco Group, Inc., and its
successors and permitted assigns.
10.20 "Lump Sum Payment Amount" shall mean a cash amount payable
in a lump sum equal to the sum of (a) the Adjusted Salary in effect
immediately prior to the date of such termination, plus (b) the maximum
amount payable to Executive including all cash and the value of all
equity based options and grants of stock except for equity based
options and grants of stock issued pursuant to Section 6.6 of the 1995
Plan (as defined below) (the value of each stock option to be
determined as of the grant date thereof and the value of each grant of
restricted stock to be determined as of the date described hereinbelow
by applying the Black-Scholes model where applicable or another
recognized form of valuation if the Black-Scholes model is not
applicable, with the value ascribed by Group to each such stock option
and grant of restricted stock as of the aforementioned dates to be
conclusively presumed to be the value thereof) under all compensation
and bonus plans and arrangements identified in Sections 3.1.2, 3.1.3
and 3.1.4 for the fiscal year in which
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<PAGE> 22
the date of the termination occurs, plus (c) the value of
the securities, cash or other property which were allocated
to Executive's account in the ESOP for the fiscal year
immediately preceding the fiscal year in which the date of
termination occurs (which shall be in addition to any
distribution from the ESOP to which he is entitled
thereunder), which sum shall be multiplied by the number of
years specified in Sections 5.2.3.1, 5.2.4.1., 5.3.3.1.1 and
5.3.4.2.1, respectively. For purposes of calculating the
amount of clause (b), the maximum payable under any plan
shall generally be the maximum amount actually allocated to
Executive, or if no such allocation was made, the amount, if
any, specifically targeted for Executive. However, for
purposes of calculating the maximum payable under the 1995
Restatement of Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and its Subsidiaries (the
"1995 Plan") for purposes of clause (b), (i) the annual
bonus amount shall be the greatest of (x) the target award
for the current fiscal year, (y) the target award for the
prior fiscal year and (z) the amount of the award paid or
payable with respect to the prior fiscal year, and (ii) the
number of shares of restricted stock awarded as long-term
incentive awards shall be equal to the number of such shares
most recently awarded to Executive as a long-term grant
pursuant to the 1995 Plan divided by the number of blocks in
such grant. Such shares shall be valued as of the date
utilized by Group to calculate the number of shares issued
to Executive, or if such date is not readily ascertainable,
the date of issuance of the shares. Attached hereto and
incorporated herein as Exhibit B is an example ("Example")
detailing the calculation of the Lump Sum Amount utilizing
certain stated assumptions and including other severance
payments. The Example defines the manner and method for
this calculation and for other severance payments and shall
be followed in making severance payments hereunder.
10.21 "Medical, Dental and Life Insurance Coverage Continuation"
shall mean the continuation of the medical, dental and life
insurance coverage which Executive (including his family)
shall have been receiving from Group as of the earlier of
the date of Executive's termination and the date of notice
of termination by either Group or Executive, from the date
of termination until the earlier of (x) Executive's full-
time employment by a third party who offers Executive at
least comparable benefits in the particular benefit category
or (y) the number of years or months specified in Sections
5.2.3.3, 5.2.4.3, 5.3.3.1.3, 5.3.4.2.3 and 5.5.3.2,
respectively, following such date of termination. If and to
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<PAGE> 23
the extent Group is not able to continue the applicable
coverage of Executive under the terms of such group policies
or other policies providing coverage for Executive, Group
shall cooperate with Executive in any actions which may be
necessary to allow Executive, to the extent possible, either
(i) to buy such policy or (ii) to continue insurance
coverage with the insurer writing Group's applicable group
policy outside of Group's group plan or a substitute
reasonably satisfactory to Executive, and in such event,
Group shall pay to Executive 140% of the cost of such
insurance coverage, but in no event more than twice the cost
of such coverage allocable to Executive under the group or
other policy covering him prior to termination.
10.22 "Non-Competition Period" shall have the meaning set forth
in Section 9.5.
10.23 "Outplacement Benefits" shall mean outplacement services
by a professional outplacement firm of Executive's choosing
at the expense of Group, who shall engage such firm directly
on behalf of Executive, provided, however, that Group's
liability with respect to providing such services will be
limited to one-half of Executive's Adjusted Salary.
10.24 "Payment Amount" shall have the meaning set forth in
Section 8.
11. Arbitration.
-----------
Except with respect to the provisions of Section 9, any
dispute or disagreement arising under or relating to the
provisions of this Agreement, or any breach thereof,
including, without limitation, relating to Section 1 hereof
or to whether a termination of Executive's employment was
with Good Cause, shall be resolved by binding arbitration in
accordance with the Commercial Rules of the American
Arbitration Association or its successor (except as set
forth herein), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. The decision of the arbitrators shall
be made by majority vote and be final and absolute. In any
such arbitration, one arbitrator shall be selected by Group
and one arbitrator shall be selected by Executive. Each
party shall have thirty (30) days from the receipt by one
party of a notice from the other party of submission to
arbitration to choose an arbitrator. A third arbitrator
shall be selected by the two (2) so chosen within ten (10)
days of the selection of the most recently selected of the
two arbitrators so chosen. Failing action within any of
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<PAGE> 24
such periods by any party or the arbitrators, any
unappointed arbitrator or arbitrators shall be appointed by
the American Arbitration Association (or its successor) upon
application of any party or arbitrator. The parties shall
promptly furnish to the arbitrators such information as the
arbitrators may reasonably request. The expenses of any
arbitration proceeding shall be paid by Group (including
Executive's attorney's fees and expenses) if Executive
recovers any amount or otherwise obtains relief in such
proceeding and by Executive (including Group's attorney's
fees and expenses) if Executive initiated arbitration and
there is a specific finding that Executive's claim was
frivolous. In all other circumstances, the expenses of such
arbitration proceeding (not including attorney's fees and
expenses, each party to bear such party's own attorney's
fees and expenses) shall be divided equally. Arbitration
shall take place in Nashua, New Hampshire, or such other
place on which the parties shall agree. This Agreement and
any arbitration proceeding are subject to N.H.R.S.A. ch.
542.
12. General.
-------
12.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
12.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group and Executive, his heirs, executors,
administrators, legal representatives, and permitted
assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group will be informed prior to such event of
the existence of this Agreement. Group shall require any
successor (whether direct or indirect, by purchase, merger,
operation of law, consolidation, assignment or otherwise of
a controlling interest in the business, stock or other
assets of Group) to assume expressly and agree to perform
this Agreement. Failure of Group to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle Executive to such compensation and benefits in the
same amount and on the same terms as he would be entitled
hereunder in the event of a termination without Good Cause
after a Change of Control, except that, for the purposes of
implementation hereof, the date on which any such succession
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<PAGE> 25
becomes effective shall be deemed to be the date on which
Executive becomes entitled to such compensation and benefits
from Group.
12.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by
a duly authorized court of competent jurisdiction, then the
remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not
be affected thereby, and each portion and provision of this
Agreement shall be valid and be enforceable to the fullest
extent permitted by law; and (ii) if any provision, or any
part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby,
Group and Executive agree that the court making such
determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific
words and phrases ("blue-pencilling") and in its reduced or
blue-pencilled form such provision shall then be enforceable
and shall be enforced.
12.4 All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same
in hand, by reputable overnight delivery service or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested,
postage prepaid, as follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: President and Chief
Executive Officer
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other
by like notice.
12.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof. There are no promises, representations,
conditions, provisions or terms related thereto other than
those set forth in this Agreement. This Agreement
supersedes all previous understandings, agreements and
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representations between Group and Executive regarding
Executive's employment by Group, written or oral. The
parties hereto acknowledge the existence of a certain
Restated Employment Agreement dated as of April 18, 1994
between the parties hereto. Upon this Agreement becoming
effective, this Agreement shall replace, supersede and be a
substitute for the Restated Employment Agreement as so
amended.
12.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to
affect the meaning or construction of any provision hereof.
Any references in this Agreement to a section shall be
deemed to include all subsections of that section unless
specifically excluded.
12.7 No failure of Group or Executive to exercise any power
reserved to it or him, respectively, by this Agreement, or
to insist upon strict compliance by Executive or Group,
respectively, with any obligation or condition hereunder,
and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver of Group's or
Executive's right, as the case may be, to demand exact
compliance with any of the terms hereof. Waiver by either
party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar or
different nature, nor shall any delay, forbearance or
omission of either party to exercise any power or right
arising out of any breach or default by the other party of
any of the terms, provisions or covenants hereof, affect or
impair its or his right to exercise the same, nor shall such
constitute a waiver by Group or Executive, as the case may
be, of any right hereunder, or the right to declare any
subsequent breach or default and to terminate this Agreement
prior to the expiration of its term.
12.8 This is a New Hampshire contract and shall be construed
under and be governed in all respects by the law of the
State of New Hampshire.
12.9 Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment
provided for herein be reduced by any compensation earned by
Executive as the result of employment by another employer or
by retirement benefits after the date of termination or
otherwise, except as specifically set forth herein.
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12.10 No amendment or modification to this Agreement shall be effective
unless in writing and signed by both parties hereto. This Agreement
may be executed in any number of counterparts, and each such counterpart
hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be executed and
delivered by its duly authorized officer and its corporate seal to be hereunto
affixed and Executive has hereunto set his hand and seal as of the day and
year first written above in duplicate originals.
EKCO GROUP, INC.
By /S/ ROBERT STEIN
--------------------------------
/S/ JEFFREY A. WEINSTEIN
---------------------------------
Executive
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EXHIBIT A
DOCUMENTARY CREDIT NO.________
DATE OF ISSUE , 199__
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS, N.A. EKCO GROUP, INC.
(Address of Bank) 98 SPIT BROOK ROAD
- ------------------------ SUITE 102
- --------------- NASHUA, NH 03062
- --------------- ATTN:_________
ADVISING BANK: BENEFICIARY:
(Name & Address of Executive)
-----------------------------
_________________
_________________
ACCOUNTING/CURRENCY:
UP TO USD________
UP TO__________
US DOLLARS
DATE AND PLACE OF EXPIRY:
_______, 199- AT THE
ISSUING BANK
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $__________________(_________________US DOLLARS) available by your
draft(s) at SIGHT on Fleet Bank of Massachusetts, N.A.,_______ , Massachusetts
___________effective _______, 199_ and expiring at __________, Massachusetts on
______, 199_ .
Drafts must be accompanied by:
1. The original Letter of Credit and any amendments thereto, if any.
27
<PAGE> 29
2. Your signed statement as follows: "I certify that the amount of my draft
represents funds due me under Section ______ (insert section number) of a
certain Amended and Restated Employment Agreement dated as of , 199__,
between myself and Ekco Group, Inc., as such agreement may hereafter be amended
and/or restated, demand for payment has been made, and payment has not been
received by me from Ekco Group, Inc. or any other source."
Each draft must bear upon its face the clause: "Drawn under Letter of Credit
No. _______, dated of Fleet Bank of Massachusetts, N.A."
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to Fleet Bank
of Massachusetts, N.A.______________, on or before (expiration date)
__________, 199__.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A.,______________, Massachusetts ______________, Attention: _____________,
or if by courier to Fleet Bank of Massachusetts, N.A.,_______________ ,
Massachusetts ______________, Attention _____________, specifically referring
to the number of this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
_________________________ _________________________
Authorized Signature Authorized Signature
28
<PAGE> 30
JEFFREY A. WEINSTEIN EXHIBIT B
<TABLE>
<CAPTION>
ASSUMPTIONS:
- -----------
<S> <C>
Termination on July 15, 1996. 2x or 3x severance benefit, as defined.
Current market value of common stock $15.000
-------
Adjusted cash salary $120,000
1995 salary increase 6,000
1996 salary increase 7,000
-----
Adjusted Salary 133,000
-------
Bonus:
Current year target award $50,000
Target award for prior fiscal year 25,000
Amount paid or payable for prior year 5,000
</TABLE>
Note: Executive elected to take 5% of bonus in cash, 50% in
Restricted Stock and the balance in stock options.
Relocation - Executive is partially relocated when terminated.
Other: Executive participates in the Supplemental Executive Retirement Plan.
Executive is granted stock options and is offered and purchases
Restricted Stock.
Executive participates in Employee Stock Purchase Plan, 401k and ESOP.
<TABLE>
<CAPTION>
TERMINATION BY GROUP WITHOUT GOOD CAUSE
- ---------------------------------------
<S> <C> <C> <C>
LUMP SUM PAYMENT AMOUNT: 2X 3X
-- --
ADJUSTED SALARY $266,000 $399,000
MAXIMUM PAYABLE UNDER 3.1.2
Greatest of this year's target, last year's
target or last year's actual award $50,000 100,000 150,000
Other-completion of relocation per
company policy 3,500 3,500
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
MAXIMUM PAYABLE UNDER 3.1.3
<S> <C> <C> <C>
Supplemental Executive Retirement Plan:
Increase in SERP value during severance period 15,600 21,300
Maximum payable under 3.1.4
Other compensation:
Other Executive bonus plans 0 0
Restricted stock purchase plans:
1995 grant 16,000
Number of years in cycle 5
Annualized grant 3,200
Market value on date of grant $7.500
------
Value of restricted stock 24,000 48,000 72,000
1996 grant 5,000
Number of years in cycle 5
Annualized grant 1,000
Market value on date of grant $8.000
------
Value of restricted stock 8,000 16,000 24,000
Stock option plans:
Grant this fiscal year 9,000
Black Scholes value on date of grant $3.50
-----
Value of option 31,500 63,000 94,500
Other-Employee Stock Purchase Plan:
# shares purchased this fiscal year 1,000
Current market value $15.000
-------
Value of stock 15,000
------
benefit (15% discount from market) 2,250 4,500 6,750
Value of securities allocated to ESOP
account in previous fiscal year
Common shares allocated 863
Preferred shares allocated 1,423
Allocation of unvested forfeited shares 14
--
Total shares allocated 2,300
Current market value $15.000
-------
Value of ESOP shares allocated 34,500
Dividends received not reflected
above 184
---
Total value of ESOP securities
allocated 34,684 69,368 104,052
</TABLE>
30
<PAGE> 32
<TABLE>
<CAPTION>
OTHER PAYMENTS:
<S> <C> <C> <C>
Unpaid salary to date of termination 2,308 2,308
Accrued vacation-weeks 5
Weekly rate 2,308
-----
Total 11,538 11,538
Unreimbursed expenses (if applicable)
Gross up payment (if applicable)
Total payment $559,814 $888,948
======== ========
</TABLE>
31
<PAGE> 1
Exhibit 10.3
------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
DONATO A. DENOVELLIS
AS OF
May 25, 1995
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. Employment 1
2. Principal Location 1
3. Compensation 2
4. Reimbursement of Expenses, Medical
Examinations and Automobile Benefits 3
5. Term and Termination 4
6. Letter of Credit 11
7. Additional Insurance at Group's Option 12
8. Gross-Up Payments 12
9. Confidentiality and Non-Competition 13
10. Definitions 16
11. Arbitration 21
12. General 22
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
-------
<S> <C>
Letter of Credit A
Example of Calculation of Severance Payment B
</TABLE>
N:\WPDATA\JEFF\EMPLOY\91395DDE.WPD
<PAGE> 2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the 25th day of
May, 1995, (the "Effective Date") by and between Ekco Group,
Inc., a Delaware corporation ("Group") with its principal place
of business in Nashua, New Hampshire and Donato A. DeNovellis
("Executive"), of 4 Basswood Lane, Andover, Massachusetts 01810.
WHEREAS, Executive is currently employed by Group pursuant
to an Employment Agreement dated as of April 15, 1994; and
WHEREAS, Group and Executive desire to amend and restate the
terms and conditions of Executive's employment by Group as set
forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained, the parties covenant and agree as
follows:
1. EMPLOYMENT. Group hereby employs Executive and Executive
hereby accepts employment as an executive employee of Group
to perform such executive and managerial services as may be
assigned to him by or under the authority of the Board of
Directors (such term, and all other capitalized terms not
otherwise defined in this Agreement shall have the meaning
set forth in Section 10 of this Agreement), consistent with
such status as an executive employee. Executive agrees to
use his best efforts, skills and abilities faithfully to
promote the interests of Group and to perform such services
as may be required of him by Group from time to time
consistent with his status, to the reasonable satisfaction
of the Board of Directors. Without limiting the generality
of the foregoing, Executive agrees to serve as Executive
Vice President, Finance and Administration, and Chief
Financial Officer (if and so long as he is elected to that
office by the Board of Directors) and to serve without
additional compensation as a director, executive officer or
executive employee of such Affiliates as Group may from time
to time reasonably request. Executive agrees to work
exclusively for Group and such Affiliates as his full-time
employment during the term of this Agreement, except as
Group and Executive may otherwise agree in writing from time
to time.
2. PRINCIPAL LOCATION. Executive shall perform the duties of
his office generally in, and shall not be obligated to
maintain his office in any place other than, Nashua, New
1
<PAGE> 3
Hampshire or within the metropolitan Boston, Massachusetts
area, provided, however, that Executive shall be obligated
to take such trips outside of such area as shall be
reasonably necessary in connection with his duties and Group
shall pay all reasonable costs of travel and living expenses
incurred in connection therewith. Furthermore, if Group's
principal executive office is relocated to a location
outside Nashua, New Hampshire or the greater Boston
metropolitan area, Executive shall, subject to his rights
upon an event of Constructive Termination following a Change
of Control under Section 5.3.4, be obligated to perform his
duties at such relocated principal office and Group shall
pay Executive all reasonable expenses incurred by Executive
in relocating to such new area.
3. Compensation.
------------
3.1 Except as otherwise provided in this Agreement, for his
services and agreements hereunder Executive shall receive
from Group the following compensation:
3.1.1 Salary at the annual rate of Two Hundred Seven Thousand
Dollars ($207,000)(the "Base Salary"), payable in equal
installments in accordance with Group's pay policy and
in any event not less frequently than monthly. The
Base Salary shall be subject to increase from time to
time as determined by the Board of Directors or the
Compensation Committee in its sole discretion pursuant
to a review of Executive's performance by the Board of
Directors or the Compensation Committee, which review
shall be conducted at such time as the Board of
Directors or the Compensation Committee shall
determine, but in any event at least once during each
twelve (12) months of the term of this Agreement. The
Base Salary as from time to time increased is referred
to herein as the "Adjusted Cash Salary."
3.1.2 Such other monetary compensation by way of bonus or
otherwise, if any, as may be determined from time to
time by the Board of Directors or the Compensation
Committee in its sole discretion;
3.1.3 Such fringe benefits (including, without limitation,
vacation time, group life, split-dollar life, long term
and short term disability, medical, dental and other
insurance, retirement, including, but not limited to,
Group's Executive Supplemental Retirement Plan, pension,
profit-sharing and similar plans) as Group may provide
from time to time for its executive employees, whether or
2
<PAGE> 4
not the category of such benefits is addressed in this
Agreement, it being understood that Executive shall be
entitled to the greater of each benefit addressed in this
Agreement and that provided by Group for its executive
employees generally. Group shall in any event, whether or
not such coverage is provided for other executive
employees, provide Executive group life or other life
insurance at its expense with a death benefit equal to at
least four (4) times Executive's Adjusted Salary, in
addition to any other life insurance payable to Executive
or his beneficiaries under this Section 3.1.3, Section
5.4.1.3 below or any life insurance for which Executive
pays premiums; and
3.1.4 Such other compensation pursuant to such executive bonus
plans, restricted stock purchase plans, stock option
plans or other stock plans, available to executive
employees of Group from time to time, as the Board of
Directors or the Compensation Committee may in its sole
discretion determine.
4. Reimbursement of Expenses, Medical Examinations and Automobile
--------------------------------------------------------------
Benefits.
--------
4.1 Group shall reimburse Executive for travel, entertainment and
other business expenses reasonably incurred by him in
connection with the business of Group and its Affiliates to
the extent and in a manner consistent with then Group policy.
4.2 Without limiting the generality of the foregoing Section 4.1,
Group shall furnish Executive with an automobile owned or
leased by Group, comparable in value to the automobile
Executive is provided by Group as of the date hereof, together
with fuel and maintenance, for use by Executive primarily in
connection with the performance by Executive of his duties
under this Agreement and primarily for the benefit of Group.
Unless Executive otherwise agrees, such automobile shall be
exchanged by Group for a new automobile no less frequently
than once every three (3) years or once the automobile's
odometer reaches 50,000 miles or more, whichever occurs first,
during the term of employment of Executive pursuant to this
Agreement and any renewal hereof.
4.3 Group shall reimburse Executive for annual comprehensive
physical examinations, including the costs of any and all
tests, procedures and consultations as may be required by a
medical doctor or doctors chosen by Executive for such
purposes.
3
<PAGE> 5
5. Term and Termination.
--------------------
5.1. TERM. The term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue
until terminated as hereinafter set forth. For the purposes
of this Agreement, the date of termination shall be the
effective date of termination of Executive, rather than the
date of notice thereof.
5.2. Termination by Executive.
------------------------
5.2.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3)
months to Group, which time period may be waived, in
whole or in part, by Group in its discretion in which
event Executive's employment shall end on such earlier
date as agreed by Group and Executive.
5.2.2 Except as provided in Section 5.2.3, if Executive's
employment is terminated pursuant to Section 5.2.1,
Executive shall not be entitled as of the date of
termination to any further compensation under this
Agreement of any kind or nature, except for Accrued and
Unpaid Salary and Expenses.
5.2.3 However, if such notice is given after six (6) months
after but within twenty four (24) months after a Change
of Control (a "Change of Control Notice"), unless such
Change of Control shall have been approved by a
resolution adopted by the Board of Directors with at
least two-thirds (2/3) of the then serving Group
directors who are Group directors as of the date hereof
voting in favor, then upon such termination by
Executive pursuant to Section 5.2.1, Group shall
provide and Executive (or his Estate) shall be entitled
to receive:
5.2.3.1 Within thirty (30) days of the date of such termination
a three (3) year Lump Sum Payment Amount;
5.2.3.2 A Gross-Up Payment as set forth in Section 8 of this
Agreement;
5.2.3.3 Continuation of all fringe benefits referred to in
Section 3.1.3, including, but not limited to, Medical,
Dental and Life Insurance Coverage Continuation for a
period of three (3) years from the date of termination;
5.2.3.4 Accrued and Unpaid Salary and Expenses;
4
<PAGE> 6
5.2.3.5 Outplacement Benefits;
5.2.3.6 The automobile benefits set forth in Section 4.2 of
this Agreement, and the option, exercisable by
Executive at any time prior to the end of the period
set forth below in this Section 5.2.3.6, to purchase
the Group-provided automobile at a price equal to the
greater of (a) the depreciated value as carried on the
books of Group as of the date of purchase, or (b)
eighty percent (80%) of the wholesale value of the
automobile as of the date of purchase ("Automobile
Benefits"). The foregoing Automobile Benefits shall be
for a period of three (3) years from the date of
termination; and
5.2.3.7 In the event of termination as provided in this Section
5.2.3, Executive shall not be entitled to payments
under both this Section 5.2.3 and Section 5.3.4.2. Any
compensation payable under this Section 5.2.3 shall be
paid notwithstanding Executive's total and permanent
disability or death occurring after termination of his
employment hereunder. In the event Executive dies or
becomes totally and permanently disabled after the date
of any such notice but prior to the date of termination
of his employment under this Section 5.2.3, the
provisions of this Section 5.2.3 and not the provisions
of Section 5.4 or 5.5 shall apply, provided that in the
event of Executive's total and permanent disability
during such time, Executive shall also be entitled to
each benefit that Group then provides to its executive
employees upon and during the continuance of total and
permanent disability to the extent such benefit exceeds
those specified in this Section 5.2.3.
5.3. Termination by Group; Change of Control; and Constructive
---------------------------------------------------------
Termination.
-----------
5.3.1 Executive's employment may be terminated at any time by
Group, with or without Good Cause, by written notice to
Executive, effective immediately unless otherwise
stated in such notice.
5.3.2 TERMINATION BY GROUP WITH GOOD CAUSE. In the event
Group shall terminate Executive's employment for Good
Cause, then Executive shall not be entitled as of the
date of termination to any further compensation under
this Agreement of any kind or nature, except for
Accrued and Unpaid Salary and Expenses.
5
<PAGE> 7
5.3.3 Termination by Group Without Good Cause Prior to a
--------------------------------------------------
Change of Control.
-----------------
5.3.3.1 In the event Executive's employment hereunder is
terminated by Group without Good Cause prior to a
Change of Control, then subject to Section 5.3.3.2
Group shall provide and Executive (or his Estate) shall
be entitled to the following:
5.3.3.1.1 A two (2) year Lump Sum Payment Amount payable within
thirty (30) days of the date of termination;
5.3.3.1.2 Executive shall immediately upon termination pursuant
to this Section 5.3.3 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.3.1.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of two (2) years from the
date of termination;
5.3.3.1.4 Accrued and Unpaid Salary and Expenses;
5.3.3.1.5 Outplacement Benefits;
5.3.3.1.6 Gross-Up Payment; and
5.3.3.1.7 Automobile Benefits for a period of two (2) years from
the date of termination.
5.3.3.2 Any compensation payable under this Section 5.3.3 shall
be paid notwithstanding Executive's total and permanent
disability or death subsequent to Group's notice of
termination. In the case of termination of his
employment under this Section 5.3.3, Executive shall
not be entitled as of the date of termination to any
other compensation under this Agreement, except as
provided in this Section 5.3.3, provided that in the
6
<PAGE> 8
event of Executive's total and permanent disability at
such time, Executive shall also be entitled to all of
the benefits Group then provides to its executive
employees upon and during the continuance of total and
permanent disability.
5.3.4 Change of Control; Constructive Termination; Subsequent
-------------------------------------------------------
Termination By Group Without Good Cause.
---------------------------------------
5.3.4.1 Immediately upon a Change of Control while Executive is
employed hereunder, and without regard to whether or
not Executive's employment is terminated, whether a
Constructive Termination occurs at such time or
thereafter or the manner of any subsequent termination
of Executive's employment, Executive shall immediately
have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group
which were granted, sold or optioned (subject, if
Executive elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the Change of
Control as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.3.4.2 If following a Change of Control there shall be either
an event of Constructive Termination or termination by
Group of Executive's employment without Good Cause,
then Group shall provide and Executive (or his Estate)
shall be entitled to the following:
5.3.4.2.1 Within ten (10) days of such event a three (3) year
Lump-Sum Payment Amount. For the purposes of this
Section 5.3.4, the time when a Constructive Termination
occurs shall be the day any event occurs which is
included in the definition of Constructive Termination;
5.3.4.2.2 Executive shall immediately upon termination pursuant
to this Section 5.3.4 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
7
<PAGE> 9
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.4.2.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of three (3) years from the
date of termination;
5.3.4.2.4 Accrued and Unpaid Salary and Expenses;
5.3.4.2.5 Outplacement Benefits;
5.3.4.2.6 Gross-Up Payment; and
5.3.4.2.7 Automobile Benefits for a period of three (3) years
from the date of termination.
5.4. Termination upon Death.
----------------------
5.4.1 This Agreement, except for the provisions of Sections
8, 9, 11 and 12, shall terminate upon the death of
Executive, provided that Executive's Estate shall have
the right to receive, and Group shall be obligated to
pay or provide to Executive's Estate the following:
5.4.1.1 Executive's Estate shall immediately upon such
termination have the unconditional, unencumbered and
free right, title and interest in all shares of stock
of Group which were granted, sold or optioned (subject,
if Executive's Estate elects to exercise unexercised
rights, to the obligation to pay the option exercise
price or other purchase price to the extent theretofore
not paid) to Executive by Group at any time prior to
his death as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.4.1.2 All of the benefits Group provides to its executive
employees as provided in Section 3.1.3 to the extent
8
<PAGE> 10
such benefits are greater than those specified in this
Agreement;
5.4.1.3 A lump-sum payment equal to the Adjusted Salary in
effect at the date of death payable no later than sixty
(60) days after the date of death. To secure such
payment, Group may in its discretion maintain life
insurance on Executive's life payable to his Estate or
other beneficiary, which life insurance coverage shall
be in addition to the amount provided for pursuant to
the provisions of Section 3.1.3 above (or any life
insurance for which Executive pays premiums), and to
the extent benefits are paid pursuant to such insurance
coverage maintained by Group under this Section
5.4.1.3, Group's commitment under this Section 5.4.1.3
shall be satisfied; and
5.4.1.4 Accrued and Unpaid Salary and Expenses.
5.5. Termination upon Disability.
---------------------------
5.5.1 This Agreement shall terminate if, by virtue of total
and permanent disability, Executive is unable to
perform his duties hereunder, provided that Executive's
(or his legal representative's) right to receive, and
Group's obligations to pay, amounts as a result of such
termination shall survive any such termination.
5.5.2 The determination that, by virtue of total and
permanent disability, Executive is unable to perform
his duties hereunder shall be made by a physician
chosen by Group and reasonably satisfactory to
Executive (or his legal representative). The cost of
such examination shall be borne by Group. Without
limiting the generality of the foregoing, unless
otherwise agreed, Executive shall be conclusively
presumed to be totally and permanently disabled
hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such
duties for a period of one hundred and eighty (180)
consecutive calendar days or for any periods
aggregating one hundred and eighty (180) days or more
in any twelve (12) month period. For purposes of this
Section 5.5, the date of termination in the event of
such total and permanent disability shall be the
earlier of the date of such physician's examination
pursuant to which such determination is made or the
first business day after which such 180-day period has
expired.
9
<PAGE> 11
5.5.3 In the event of such a termination as a result of
Executive's total and permanent disability, all
compensation hereunder shall terminate, Executive shall
immediately upon such termination have the
unconditional, unencumbered and free right, title and
interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive or his
Estate elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective
date of termination as if all restrictions had lapsed
and all events necessary to vest in Executive such
rights, including the lapsing of time, had occurred,
and Executive shall be entitled to and Group shall pay
to Executive the following:
5.5.3.1 Amounts at the rate of the Adjusted Cash Salary in
effect at the date of such termination, payable in the
manner specified in Section 3.1.1, for a period of
twenty-four (24) months following the date of such
termination at the rate of one-twelfth of such Adjusted
Cash Salary per month, less the amount of any
disability insurance proceeds actually paid to or for
the benefit of Executive (or his Estate) with respect
to such twenty-four (24) months following the date of
termination under any disability policy the premiums
for which have been paid by Group or any Affiliate.
During such twenty-four (24) months following
termination of this Agreement as a result of
Executive's permanent and total disability, Group shall
maintain at Group's sole expense the life insurance
policies referred to in the second sentence of Section
3.1.3. and in Section 5.4.1.3 if then in force and, in
the event of Executive's death during the twenty-four
(24) months following such termination, shall pay the
death benefit provided for in Section 5.4.1.3
notwithstanding the prior termination of this Agreement
as a result of Executive's total and permanent
disability, in addition to the life insurance benefits
payable to the beneficiaries of the policies referred
to in Section 3.1.3 which shall be payable in the event
of Executive's death during such period of twenty-four
(24) months;
5.5.3.2 Medical, Dental and Life Insurance Coverage
Continuation for a period of two (2) years from the
date of termination;
10
<PAGE> 12
5.5.3.3 Accrued and Unpaid Salary and Expenses;
5.5.3.4 Continuation of each of the medical, dental and other
benefits which Group provides to its permanently
disabled executive employees in accordance with Group's
then existing policy to the extent each benefit is
greater than that specified in this Section 5.5;
5.5.3.5 Outplacement Benefits; and
5.5.3.6 Automobile Benefits for a period of two (2) years from
the date of termination.
6. LETTER OF CREDIT. In order to assure Executive the prompt
payment of amounts due him under Section 5 of this
Agreement, Group agrees to continue to secure and to keep in
place one or more irrevocable letter(s) of credit from Fleet
Bank of Massachusetts, N.A. or another bank reasonably
acceptable to Executive in the initial amount of four (4)
times Executive's Adjusted Salary, in substantially the form
of Exhibit A, or upon other terms reasonably acceptable to
Executive, which shall allow Executive (or his legal
representative) to draw down amounts due him under Section 5
of this Agreement upon certification by Executive (or his
legal representative) that payments are due him pursuant to
this Agreement. The amount of the letter(s) of credit shall
be adjusted at least annually to reflect changes in
Executive's salary, so that it shall at all times be at
least four (4) times the Adjusted Salary. In addition, the
letter(s) of credit (or a separate letter of credit) shall
include an amount which Group, in its reasonable judgment,
determines is necessary to secure Group's obligations under
any stock appreciation right plan or other equity-linked
plan (other than the ESOP), provided, however, that such
amount need not include any amount with respect to stock
options, restricted stock subject to repurchase rights, or
any equity plan giving Executive ownership of shares. An
initial determination of the amount necessary to secure such
equity-linked obligations shall be made on the date of grant
to Executive of such equity-linked right, and the amount
shall subsequently be adjusted at least annually to reflect
the value on such date of such rights. A failure by Group
to keep such letter(s) of credit in effect, or to renew or
to make alternate arrangements to secure its obligations in
the amount required hereunder, by way of an escrow
agreement, trust, or other device, which arrangements shall
be reasonably satisfactory to Executive, at least thirty
(30) days prior to the expiration date of the letter(s) of
credit or any such alternate arrangement shall constitute an
11
<PAGE> 13
event of default under this Agreement entitling Executive,
after written notice to Group and the passage of a ten (10)
day cure period without such default being cured, to all of
the benefits accorded to him in the event of a termination
by Group without Good Cause after a Change of Control
pursuant to Section 5, without, however, the requirement
that Executive terminate his employment hereunder. Group
agrees to notify Executive within three (3) business days of
any failure or inability to maintain or renew such letter(s)
of credit or other device adopted pursuant to this Section.
Notwithstanding the foregoing, at the election of the Board
of Directors of Group by resolution of such Board with at
least two-thirds (2/3) of the then-serving Group directors
who are Group directors as of the date hereof voting in
favor, the obligation to maintain letter(s) of credit shall
be relieved to the extent amounts are contributed to a trust
or trusts under the terms of which such amounts are
specifically earmarked as security for payment of
obligations under this Agreement and are at all times at
least four (4) times the Adjusted Salary. Such trust or
trusts may contain a provision that its funds will be
returned to Group so as to be available to its general
creditors in the event of the bankruptcy of Group. Group
agrees that it will not take any action to prevent, hinder
or delay the exercise by Executive of his rights to exercise
the security provisions provided in this Section 6 and,
further, agrees to cooperate with Executive as may be
necessary to enable Executive to exercise and obtain the
benefits of such security provisions, in the absence of
fraudulent or unlawful conduct on the part of Executive with
respect to such exercise.
7. ADDITIONAL INSURANCE AT GROUP'S OPTION. Group, in its sole
discretion, may apply for and procure in its own name
(whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as Group may
deem advisable, in addition to insurance policies
contemplated by Section 3.1.3 and Section 5.4.1.3.
Executive shall have no right, title, or interest in any
such policies of insurance, except to the extent his Estate
or other persons are specifically named as beneficiaries
thereof. Executive agrees to submit to any medical or other
examination and to execute and deliver any applications or
other instrument in writing, reasonably necessary to
effectuate such insurance.
8. "GROSS-UP" PAYMENTS. Executive shall be paid an additional
amount ("Gross Up Payment") if any payments ("Payment
Amounts") made to him (or his Estate) by Group or any of its
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<PAGE> 14
Affiliates, under this Agreement or otherwise, are subject
to the excise tax imposed by Internal Revenue Code Section
4999 or any successor Internal Revenue Code Section (the
"Section 4999 Tax"). The Gross Up Payment shall be computed
so that Executive (or his Estate) retains a net amount equal
to the Payment Amounts after deduction of any Section 4999
Tax on the Payment Amounts and any Federal, state or local
tax (including any Section 4999 Tax) on the Gross Up
Payment.
For the purposes of determining the amount of the Gross Up
Payment, Executive shall be deemed to pay Federal, State and
local income taxes at the highest marginal rate of taxation
in the calendar year in which the Payment Amounts are
taxable to him under Code Section 4999. State and local
income taxes shall be calculated based upon the state and
locality of Executive's domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by
tax counsel selected and paid for by Group and approved by
Executive. The Gross Up Payment shall be paid within thirty
(30) days of such computation and in no event (without
written consent of Executive) later than the last day of the
calendar year with respect to which the Section 4999 Tax is
imposed.
If such determination is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel
(selected and paid for under the above procedure) shall
represent Executive in any such audit or appeal process
thereafter and compute appropriate adjustments and
additional Gross Up Payments as provided above, after which
Group shall pay Executive such adjustment, and Group shall
reimburse Executive for interest and other tax penalties, if
applicable.
9. Confidentiality, Inventions and Non-Competition.
-----------------------------------------------
9.1 Executive's agreements set forth in this Section 9 shall
survive the expiration or termination of this Agreement and
the termination of his employment with Group for any reason.
9.2 Executive acknowledges that irreparable injury would be
caused to Group by his breach of any of the provisions of
this Section 9, and agrees that in the event of any such
breach, Group and any of its Affiliates, in addition to such
other rights and remedies as may exist in its favor, may
apply to any court of law or equity having jurisdiction to
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<PAGE> 15
enforce the specific performance of the provisions of this
Section 9 and may apply for injunctive relief against any
act which would violate any such provisions.
9.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how",
including, without limitation, techniques, formulae,
designs, developments, projects, technical information and
manufacturing process and distribution methods, relating to,
or concerned with the business of Group and its Affiliates
prior to the termination of this Agreement and their
respective suppliers, customers, stockholders, licensors,
licensees, and other persons or entities with which Group or
its Affiliates has, has had, or may in the future have any
commercial, scientific or technical relationship. During
the term of this Agreement and at all times following the
termination of Executive's employment for any reason,
Executive will not, directly or indirectly, divulge, furnish
or make accessible to anyone (other than as required in the
regular course of his employment by Group or with the
consent of the Board of Directors) such information. The
prohibitions contained in this Section 9.3 shall not apply
to information which is (a) within the domain of the general
public; (b) generally known within the industry or
industries in which Group or its Affiliates is involved; or
(c) independently developed by Executive without utilization
of confidential information gained while in the employ of
Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property
furnished to Executive by Group or any Affiliate of Group or
produced by Executive or others in connection with his
services to Group or any such Affiliate shall be and remain
the sole property of Group. Executive will return and
deliver such property to Group as and when requested by
Group. Copies of documents and records may be kept, but
shall be kept completely confidential to the same extent as
other confidential information of Group. Executive shall
return and deliver all such property upon termination of his
employment for any reason, and Executive will not take with
him any such property or any reproduction of such property
upon such termination.
9.4 Any work or research or the results thereof, made or
developed by Executive, alone or in conjunction with others
during the term of his employment, including but without
limitation, any designs, patents, inventions, processes,
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<PAGE> 16
know-how or formulae created, invented or conceived during
the period of his employment by Group, whether during or out
of the usual hours of work, which arise out of or are
related to the business, research, or development work or
field of operation of Group, or any of its Affiliates, shall
to the extent of Executive's interest therein be the sole
and exclusive property of Group, shall be disclosed in
writing to Group and to no other person, unless so directed
in writing by the Board of Directors, and Executive hereby
assigns to Group all and any rights which he has or may
acquire in the same. To this end, both during the period of
Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers,
instruments and documents properly required to effect such
assignment to Group or its nominee, to make application
through Group's patent attorney or general counsel at the
expense of Group, for such United States and foreign patents
as may be specified from time to time by Group on
inventions, processes, or formulae which are or become the
property of Group hereunder, and to execute assignments upon
Group's request, for Executive's entire interest in all such
applications to Group or to its nominee without compensation
(other than his usual compensation as an employee of Group)
and Executive agrees to give Group and its patent attorney
or general counsel all reasonable assistance in preparing
such applications, descriptions, and illustrations of each
such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications
or patents resulting therefrom; and further agrees to
execute all lawful papers considered necessary by Group and
do all that Group reasonably requests in order to protect
Group's rights in said inventions, processes, and formulae
or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is
further agreed that Executive's obligations specified
hereunder shall not expire with the termination of this
Agreement or his employment, but Group agrees to pay
Executive a reasonable amount for any time that Executive
spends in such work at Group's request after the termination
of this Agreement or his employment hereunder and agrees to
reimburse Executive for expenses reasonably or necessarily
incurred in connection with such work.
9.5 In consideration of his continued employment by Group, and
the other benefits accruing to him hereunder, and subject to
the fulfillment by Group of its obligations to Executive
hereunder, either directly or through draw-down under the
letter(s) of credit or other device established pursuant to
Section 6, Executive agrees that during the term hereof and
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<PAGE> 17
for a period of twenty-four (24) months following the date
of termination of Executive's employment pursuant to Section
5 provided that Executive has received and is continuing to
receive all payments and benefits required to be paid and
provided to him pursuant to this Agreement (such period of
employment and twenty-four (24) month period being referred
to in this Agreement as the "Non-Competition Period"), he
will not engage or participate, directly or indirectly,
within the United States of America or Canada either as
principal, agent, employee, employer, consultant,
stockholder, partner or in any other individual or
representative capacity whatever, in the conduct or
management of, or own any stock or other proprietary
interest in, or debt of, any business which shall be
competitive with any business which is or was conducted by
Group or any Affiliate of Group, while Executive was an
employee of Group, unless he shall have obtained the prior
written consent of the Board of Directors, and which consent
shall make express reference to this Agreement.
Notwithstanding any other provision in this Section 9,
Executive shall be free without such consent to make
investments, directly or indirectly, in the securities of
any publicly-owned entity if his ownership thereof is
limited to not more than three percent (3%) of the issued
and outstanding securities of any class of securities of
such entity. Executive acknowledges that his skills and
experience are such that he can anticipate finding
employment at an executive level in a wide variety of
industries and represents and agrees that the restrictions
imposed by this Section 9 on employment are necessary for
the protection of the legitimate interests and competitive
position of Group and do not impose undue hardships on
Executive.
9.6 During the Non-Competition Period, Executive shall not,
directly or indirectly, solicit any officer, director,
executive, employee or consultant of Group or any Affiliate
of Group to leave such employment or terminate such
position.
10. Definitions.
-----------
As used in this Agreement, the following terms shall have
the following meanings:
10.1 "Accrued and Unpaid Salary and Expenses" shall mean such
portion of Executive's Adjusted Cash Salary as has accrued
by virtue of Executive's employment during the period prior
to the date of termination and has not yet been paid,
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<PAGE> 18
together with any amounts for expense reimbursement,
vacation accruals and similar items which have been properly
incurred or accrued in accordance with the provisions of
this Agreement prior to the date of termination and have not
yet been paid.
10.2 "Adjusted Salary" shall mean the Adjusted Cash Salary plus
an amount equal to the amount of any salary increase(s)
provided in the form of restricted stock or stock options
beginning on January 1, 1995.
10.3 "Adjusted Cash Salary" shall have the meaning set forth in
Section 3.1.1.
10.4 "Affiliate" shall mean any corporation, joint venture, or
other business enterprise, whether incorporated or
unincorporated, which Group directly, or indirectly through
one or more intermediaries, controls or is controlled by, or
is under common control with.
10.5 "Agreement" shall mean this Amended and Restated
Employment Agreement.
10.6 "Automobile Benefits" shall have the meaning set forth in
Section 5.2.3.6 for the number of years specified in
Sections 5.2.3.6, 5.3.3.1.7, 5.3.4.2.7 and 5.5.3.6,
respectively.
10.7 "Base Salary" shall have the meaning set forth in Section
3.1.1.
10.8 "Board of Directors" shall mean the Board of Directors of
Group.
10.9 "Change of Control" shall mean and shall be deemed to have
occurred (i) if any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended), other than Group or any employee stock
plan of Group, is or becomes the beneficial owner, directly
or indirectly, of securities of Group representing fifteen
percent (15%) or more of the outstanding Common Stock of
Group, or (ii) ten (10) days following the commencement of,
or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by any "person" of fifteen percent
(15%) or more of the outstanding Common Stock of Group,
provided, however, that at the conclusion of such ten (10)
day period such person has not discontinued or rescinded his
intention to make such a tender or exchange offer or (iii)
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<PAGE> 19
if during any consecutive twelve (12) month period beginning
on or after the date hereof individuals who at the beginning
of such period were directors of Group cease, for any
reason, to constitute at least a majority of the Board of
Directors of Group; or (iv) if a merger of, or consolidation
involving, Group in which Group's stock is converted into
securities of another corporation or into cash shall be
consummated, or a plan of complete liquidation of Group
(whether or not in connection with a sale of all or
substantially all of Group's assets) shall be adopted and
consummated, or substantially all of Group's operating
assets are sold (whether or not a plan of liquidation shall
be adopted or a liquidation occurs), excluding in each case
a transaction solely for the purpose of reincorporating
Group in a different jurisdiction or recapitalizing Group's
stock.
10.10 "Change of Control Notice" shall have the meaning set
forth in Section 5.2.3.
10.11 "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors.
10.12 "Constructive Termination" shall be deemed to have
occurred if and when (i) Executive's Adjusted Salary is
decreased below the level in effect on the date of the last
amendment of this Agreement, or the aggregate Adjusted
Salary and incentive compensation or benefits available to
be earned by Executive is directly or indirectly reduced or
eliminated, or the bonus percentage applicable to
Executive's participation in any compensation or bonus plan
or arrangement is reduced, without Executive's consent,
provided, however, that nothing herein shall be construed to
guarantee Executive's bonus awards if performance is below
applicable targets, or (ii) the importance of Executive's
job responsibilities is reduced without Executive's consent,
or (iii) a proposal is made to relocate Executive to a
location other than Nashua, New Hampshire or the greater
Boston, Massachusetts metropolitan area without his consent.
10.13 "Effective Date" shall have the meaning set forth in the
first paragraph of this Agreement.
10.14 "ESOP" shall mean the Ekco Group, Inc. Employees' Stock
Ownership Plan.
10.15 "Estate" shall mean Executive's estate, legal
representative or beneficiaries as the context so requires.
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<PAGE> 20
10.16 "Executive" shall mean the individual defined as such in
the first paragraph of this Agreement, and shall include the
Estate of such individual where the context so requires.
10.17 "Good Cause" shall mean and be limited to a material
breach of any of Executive's obligations under Section 1 or 9
hereof, or any action by Executive during the term of this Agreement
involving willful malfeasance or gross (but not simple) negligence on
the part of Executive in a material respect. Notwithstanding the
foregoing, following a Change of Control, "Good Cause" shall not be
deemed to have occurred unless (a) the conduct which is the basis for
such material breach is either willful or intentionally unlawful and
(b) Executive shall not have ceased such conduct and cured the effect
thereof, if curable, so that such breach shall no longer be material
within thirty (30) days after Executive shall have received written
notice from Group of Group's intention to terminate Executive's
employment for Good Cause, which notice shall specify in detail the
basis therefor.
10.18 "Gross-Up Payment" shall have the meaning set forth in
Section 8.
10.19 "Group" shall mean Ekco Group, Inc., and its
successors and permitted assigns.
10.20 "Lump Sum Payment Amount" shall mean a cash amount payable
in a lump sum equal to the sum of (a) the Adjusted Salary in effect
immediately prior to the date of such termination, plus (b) the
maximum amount payable to Executive including all cash and the value
of all equity based options and grants of stock except for equity
based options and grants of stock issued pursuant to Section 6.6 of
the 1995 Plan (as defined below) (the value of each stock option to be
determined as of the grant date thereof and the value of each grant of
restricted stock to be determined as of the date described hereinbelow
by applying the Black-Scholes model where applicable or another
recognized form of valuation if the Black-Scholes model is not
applicable, with the value ascribed by Group to each such stock option
and grant of restricted stock as of the aforementioned dates to be
conclusively presumed to be the value thereof) under all compensation
and bonus plans and arrangements identified in Sections 3.1.2, 3.1.3
and 3.1.4 for the fiscal year in which the date of the termination
occurs, plus (c) the value of the securities, cash or other property
which were allocated to Executive's account in the ESOP for the fiscal
year immediately preceding the fiscal year in which the date of
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<PAGE> 21
termination occurs (which shall be in addition to any
distribution from the ESOP to which he is entitled
thereunder), which sum shall be multiplied by the number of
years specified in Sections 5.2.3.1, 5.2.4.1., 5.3.3.1.1 and
5.3.4.2.1, respectively. For purposes of calculating the
amount of clause (b), the maximum payable under any plan
shall generally be the maximum amount actually allocated to
Executive, or if no such allocation was made, the amount, if
any, specifically targeted for Executive. However, for
purposes of calculating the maximum payable under the 1995
Restatement of Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and its Subsidiaries (the
"1995 Plan") for purposes of clause (b), (i) the annual
bonus amount shall be the greatest of (x) the target award
for the current fiscal year, (y) the target award for the
prior fiscal year and (z) the amount of the award paid or
payable with respect to the prior fiscal year, and (ii) the
number of shares of restricted stock awarded as long-term
incentive awards shall be equal to the number of such shares
most recently awarded to Executive as a long-term grant
pursuant to the 1995 Plan divided by the number of blocks in
such grant. Such shares shall be valued as of the date
utilized by Group to calculate the number of shares issued
to Executive, or if such date is not readily ascertainable,
the date of issuance of the shares. Attached hereto and
incorporated herein as Exhibit B is an example ("Example")
detailing the calculation of the Lump Sum Amount utilizing
certain stated assumptions and including other severance
payments. The Example defines the manner and method for
this calculation and for other severance payments and shall
be followed in making severance payments hereunder.
10.21 "Medical, Dental and Life Insurance Coverage Continuation"
shall mean the continuation of the medical, dental and life insurance
coverage which Executive (including his family) shall have been
receiving from Group as of the earlier of the date of Executive's
termination and the date of notice of termination by either Group or
Executive, from the date of termination until the earlier of (x)
Executive's full-time employment by a third party who offers Executive
at least comparable benefits in the particular benefit category or (y)
the number of years or months specified in Sections 5.2.3.3,
5.3.3.1.3, 5.3.4.2.3 and 5.5.3.2, respectively, following such date of
termination. If and to the extent Group is not able to continue the
applicable coverage of Executive under the terms of such group
policies or other policies providing coverage for Executive, Group
shall cooperate with Executive in any actions which may be necessary
to allow Executive, to the extent possible, either
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<PAGE> 22
(i) to buy such policy or (ii) to continue insurance coverage with the
insurer writing Group's applicable group policy outside of Group's
group plan or a substitute reasonably satisfactory to Executive, and
in such event, Group shall pay to Executive 140% of the cost of such
insurance coverage, but in no event more than twice the cost of such
coverage allocable to Executive under the group or other policy
covering him prior to termination.
10.22 "Non-Competition Period" shall have the meaning set forth
in Section 9.5.
10.23 "Payment Amount" shall have the meaning set forth in
Section 8.
10.24 "Outplacement Benefits" shall mean outplacement services
by a professional outplacement firm of Executive's choosing at the
expense of Group, who shall engage such firm directly on behalf of
Executive, provided, however, that Group's liability with respect to
providing such services will be limited to one-half of Executive's
Adjusted Salary.
11. Arbitration.
-----------
Except with respect to the provisions of Section 9, any
dispute or disagreement arising under or relating to the
provisions of this Agreement, or any breach thereof,
including, without limitation, relating to Section 1 hereof
or to whether a termination of Executive's employment was
with Good Cause, shall be resolved by binding arbitration in
accordance with the Commercial Rules of the American
Arbitration Association or its successor (except as set
forth herein), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. The decision of the arbitrators shall
be made by majority vote and be final and absolute. In any
such arbitration, one arbitrator shall be selected by Group
and one arbitrator shall be selected by Executive. Each
party shall have thirty (30) days from the receipt by one
party of a notice from the other party of submission to
arbitration to choose an arbitrator. A third arbitrator
shall be selected by the two (2) so chosen within ten (10)
days of the selection of the most recently selected of the
two arbitrators so chosen. Failing action within any of
such periods by any party or the arbitrators, any
unappointed arbitrator or arbitrators shall be appointed by
the American Arbitration Association (or its successor) upon
application of any party or arbitrator. The parties shall
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<PAGE> 23
promptly furnish to the arbitrators such information as the
arbitrators may reasonably request. The expenses of any
arbitration proceeding shall be paid by Group (including
Executive's attorney's fees and expenses) if Executive
recovers any amount or otherwise obtains relief in such
proceeding and by Executive (including Group's attorney's
fees and expenses) if Executive initiated arbitration and
there is a specific finding that Executive's claim was
frivolous. In all other circumstances, the expenses of such
arbitration proceeding (not including attorney's fees and
expenses, each party to bear such party's own attorney's
fees and expenses) shall be divided equally. Arbitration
shall take place in Nashua, New Hampshire, or such other
place on which the parties shall agree. This Agreement and
any arbitration proceeding are subject to N.H.R.S.A. ch.
542.
12. General.
-------
12.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
12.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group and Executive, his heirs, executors,
administrators, legal representatives, and permitted
assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group will be informed prior to such event of
the existence of this Agreement. Group shall require any
successor (whether direct or indirect, by purchase, merger,
operation of law, consolidation, assignment or otherwise of
a controlling interest in the business, stock or other
assets of Group) to assume expressly and agree to perform
this Agreement. Failure of Group to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle Executive to such compensation and benefits in the
same amount and on the same terms as he would be entitled
hereunder in the event of a termination without Good Cause
after a Change of Control, except that, for the purposes of
implementation hereof, the date on which any such succession
becomes effective shall be deemed to be the date on which
Executive becomes entitled to such compensation and benefits
from Group.
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12.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by
a duly authorized court of competent jurisdiction, then the
remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not
be affected thereby, and each portion and provision of this
Agreement shall be valid and be enforceable to the fullest
extent permitted by law; and (ii) if any provision, or any
part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby,
Group and Executive agree that the court making such
determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific
words and phrases ("blue-pencilling") and in its reduced or
blue-pencilled form such provision shall then be enforceable
and shall be enforced.
12.4 All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same
in hand, by reputable overnight delivery service or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested,
postage prepaid, as follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Executive Vice
President, Secretary and
General Counsel
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other
by like notice.
12.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof. There are no promises, representations,
conditions, provisions or terms related thereto other than
those set forth in this Agreement. This Agreement
supersedes all previous understandings, agreements and
representations between Group and Executive regarding
Executive's employment by Group, written or oral. The
parties hereto acknowledge the existence of a certain
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Employment Agreement dated as of April 15, 1994 between the
parties hereto. Upon this Agreement becoming effective,
this Agreement shall replace, supersede and be a substitute
for the Employment Agreement as so amended.
12.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to
affect the meaning or construction of any provision hereof.
Any references in this Agreement to a section shall be
deemed to include all subsections of that section unless
specifically excluded.
12.7 No failure of Group or Executive to exercise any power
reserved to it or him, respectively, by this Agreement, or
to insist upon strict compliance by Executive or Group,
respectively, with any obligation or condition hereunder,
and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver of Group's or
Executive's right, as the case may be, to demand exact
compliance with any of the terms hereof. Waiver by either
party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar or
different nature, nor shall any delay, forbearance or
omission of either party to exercise any power or right
arising out of any breach or default by the other party of
any of the terms, provisions or covenants hereof, affect or
impair its or his right to exercise the same, nor shall such
constitute a waiver by Group or Executive, as the case may
be, of any right hereunder, or the right to declare any
subsequent breach or default and to terminate this Agreement
prior to the expiration of its term.
12.8 This is a New Hampshire contract and shall be construed
under and be governed in all respects by the law of the
State of New Hampshire.
12.9 Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment
provided for herein be reduced by any compensation earned by
Executive as the result of employment by another employer or
by retirement benefits after the date of termination or
otherwise, except as specifically set forth herein.
12.10 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties
hereto. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be
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deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be
executed and delivered by its duly authorized officer and its
corporate seal to be hereunto affixed and Executive has hereunto
set his hand and seal as of the day and year first written above
in duplicate originals.
EKCO GROUP, INC.
By /S/ ROBERT STEIN
-------------------------------
/S/ DONATO A. DENOVELLIS
---------------------------------
Executive
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EXHIBIT A
DOCUMENTARY CREDIT NO.________
DATE OF ISSUE ______, 199__
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS, N.A. EKCO GROUP, INC.
(Address of Bank) 98 SPIT BROOK ROAD
- ------------------------ SUITE 102
__________________ NASHUA, NH 03062
__________________ ATTN:__________
ADVISING BANK: BENEFICIARY:
(Name & Address of Executive)
-----------------------------
__________________
__________________
ACCOUNTING/CURRENCY:
UP TO USD ________
UP TO _________
US DOLLARS
DATE AND PLACE OF EXPIRY:
________, 199_ AT THE
ISSUING BANK
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $ _________________(________________US DOLLARS) available by your d
raft(s) at SIGHT on Fleet Bank of Massachusetts, N.A.,_________ , Massachusetts
___________effective _______, 199_ and expiring at __________, Massachusetts on
_______, 199_ .
Drafts must be accompanied by:
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<PAGE> 28
1. The original Letter of Credit and any amendments thereto, if any.
2. Your signed statement as follows: "I certify that the amount of my draft
represents funds due me under Section ______(insert section number) of a
certain Amended and Restated Employment Agreement dated as of , 199__,
between myself and Ekco Group, Inc., as such agreement may hereafter be amended
and/or restated, demand for payment has been made, and payment has not been
received by me from Ekco Group, Inc. or any other source."
Each draft must bear upon its face the clause: "Drawn under Letter of Credit
No._______, dated of Fleet Bank of Massachusetts, N.A."
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to Fleet Bank
of Massachusetts, N.A. _____________, on or before (expiration date)________,
199__.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A., ____________, Massachusetts ____________, Attention: ____________, or if
by courier to Fleet Bank of Massachusetts, N.A., _____________ , Massachusetts
____________, Attention ___________, specifically referring to the number of
this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
________________________ ___________________________
Authorized Signature Authorized Signature
27
<PAGE> 29
DONATO DENOVELLIS EXHIBIT B
<TABLE>
<CAPTION>
ASSUMPTIONS:
<S> <C>
Termination on July 15, 1996. 2x or 3x severance benefit, as defined.
Current market value of common stock $15.000
-------
Adjusted cash salary $120,000
1995 salary increase 6,000
1996 salary increase 7,000
-----
Adjusted Salary 133,000
-------
Bonus:
Current year target award $50,000
Target award for prior fiscal year 25,000
Amount paid or payable for prior year 5,000
</TABLE>
Note: Executive elected to take 5% of bonus in cash, 50% in
Restricted Stock and the balance in stock options.
Relocation - Executive is partially relocated when terminated.
Other: Executive participates in the Supplemental Executive Retirement Plan.
Executive is granted stock options and is offered and purchases
Restricted Stock.
Executive participates in Employee Stock Purchase Plan, 401k and ESOP.
<TABLE>
<CAPTION>
TERMINATION BY GROUP WITHOUT GOOD CAUSE
<S> <C> <C> <C>
LUMP SUM PAYMENT AMOUNT: 2X 3X
-- --
ADJUSTED SALARY $266,000 $399,000
MAXIMUM PAYABLE UNDER 3.1.2
Greatest of this year's target, last year's
target or last year's actual award $50,000 100,000 150,000
Other-completion of relocation per
company policy 3,500 3,500
</TABLE>
28
<PAGE> 30
<TABLE>
<CAPTION>
MAXIMUM PAYABLE UNDER 3.1.3
<S> <C> <C> <C>
Supplemental Executive Retirement Plan:
Increase in SERP value during severance period 15,600 21,300
MAXIMUM PAYABLE UNDER 3.1.4
Other compensation:
Other Executive bonus plans 0 0
Restricted stock purchase plans:
1995 grant 16,000
Number of years in cycle 5
Annualized grant 3,200
Market value on date of grant $7.500
------
Value of restricted stock 24,000 48,000 72,000
------
1996 grant 5,000
Number of years in cycle 5
Annualized grant 1,000
Market value on date of grant $8.000
------
Value of restricted stock 8,000 16,000 24,000
Stock option plans:
Grant this fiscal year 9,000
Black Scholes value at date of grant $3.50
-----
Value of option 31,500 63,000 94,500
Other-Employee Stock Purchase Plan:
# shares purchased this fiscal year 1,000
Current market value $15.000
-------
Value of stock 15,000
------
benefit (15% discount from market) 2,250 4,500 6,750
Value of securities allocated to ESOP
account in previous fiscal year
Common shares allocated 863
Preferred shares allocated 1,423
Allocation of unvested forfeited shares 14
--
Total shares allocated 2,300
Current market value $15.000
-------
Value of ESOP shares allocated 34,500
Dividends received not reflected
above 184
---
Total value of ESOP securities
allocated 34,684 69,368 104,052
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
OTHER PAYMENTS:
<S> <C> <C> <C>
Unpaid salary to date of termination 2,308 2,308
Accrued vacation-weeks 5
Weekly rate 2,308
-----
Total 11,538 11,538
Unreimbursed expenses (if applicable)
Gross up payment (if applicable)
Total payment $599,814 $888,948
======== ========
</TABLE>
30
<PAGE> 1
Exhibit 10.4
------------
EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
STUART W. COHEN
AS OF
June 12, 1995
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
1. Employment 1
2. Principal Location 1
3. Compensation 2
4. Reimbursement of Expenses 3
5. Term and Termination 3
6. Services Furnished 10
7. Additional Insurance at Group's Option 10
8. Gross-Up Payments 11
9. Confidentiality and Non-Competition 11
10. Definitions 14
11. Arbitration 19
12. General 20
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
Example of Calculation of Severance Payment A
</TABLE>
<PAGE> 2
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 12th day of June, 1995, (the
"Effective Date") by and between Ekco Group, Inc., a Delaware
corporation ("Group") with its principal place of business in
Nashua, New Hampshire and Stuart W. Cohen ("Executive"), of 3807
RFD Turnberry Lane, Long Grove, Illinois 60047.
WHEREAS, Executive desires to be employed by Group and Group
desires to employ Executive all on the terms and conditions
recited herein;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained, the parties covenant and agree as
follows:
1. EMPLOYMENT. Group hereby employs Executive and Executive
hereby accepts employment as an executive employee of Group
to perform such executive and managerial services as may be
assigned to him by or under the authority of the Board of
Directors (such term, and all other capitalized terms not
otherwise defined in this Agreement shall have the meaning
set forth in Section 10 of this Agreement), consistent with
such status as an executive employee. Executive agrees to
use his best efforts, skills and abilities faithfully to
promote the interests of Group and to perform such services
as may be required of him by Group from time to time
consistent with his status, to the reasonable satisfaction
of the Board of Directors. Without limiting the generality
of the foregoing, Executive agrees to serve as Vice
President, Strategic Planning & Business Development, of
Group (if and so long as he is elected to that office by the
Board of Directors) and to serve without additional
compensation as a director, executive officer or executive
employee of such Affiliates as Group may from time to time
reasonably request. Executive agrees to work exclusively
for Group and such Affiliates as his full-time employment
during the term of this Agreement, except as Group and
Executive may otherwise agree in writing from time to time.
2. PRINCIPAL LOCATION. Executive presently performs the
duties of his office generally in Nashua, New Hampshire and
shall be obligated to take such trips outside of the Nashua,
New Hampshire or metropolitan Boston, Massachusetts area as
shall be reasonably necessary in connection with his duties,
and Group will pay all reasonable costs of travel and living
expenses incurred in connection therewith. Executive
recognizes that his duties hereunder may require significant
1
<PAGE> 3
travel. Executive, subject to his rights under Section
5.3.4, agrees to relocate to any other location in the
United States of America at which Group or an Affiliate has
offices or operations, provided that Executive's job at such
new location involves compensation no less than his existing
compensation and comparable duties. In the event of any
such relocation, Group shall pay Executive all reasonable
expenses incurred by Executive in relocating to such new
area.
3. COMPENSATION.
3.1 Except as otherwise provided in this Agreement, for his
services and agreements hereunder Executive shall receive
from Group the following compensation:
3.1.1 Salary at the annual rate of One Hundred Seventy Five
Thousand Dollars ($175,000) (the "Base Salary"),
payable in equal installments in accordance with
Group's pay policy and in any event not less frequently
than monthly. The Base Salary shall be subject to
increase from time to time as determined by the Board
of Directors or the Compensation Committee in its sole
discretion pursuant to a review of Executive's
performance by the Board of Directors or the
Compensation Committee, which review shall be conducted
at such time as the Board of Directors or the
Compensation Committee shall determine, but in any
event at least once during each twelve (12) months of
the term of this Agreement. The Base Salary as from
time to time increased is referred to herein as the
"Adjusted Cash Salary."
3.1.2 Such other monetary compensation by way of bonus or
otherwise, if any, as may be determined from time to
time by the Board of Directors or the Compensation
Committee in its sole discretion;
3.1.3 Such fringe benefits (including, without limitation,
vacation time, group life, long term and short term
disability, medical, dental and other insurance,
retirement, including, pension, profit-sharing and
similar plans) as Group may provide from time to time
for its executive employees, whether or not the
category of such benefits is addressed in this
Agreement, it being understood that Executive shall be
entitled to the greater of each benefit addressed in
this Agreement and that provided by Group for its
executive employees generally. Group shall in any
2
<PAGE> 4
event, whether or not such coverage is provided for
other executive employees, provide Executive group life
or other life insurance at its expense with a death
benefit equal to at least four (4) times Executive's
Adjusted Salary, in addition to any other life
insurance payable to Executive or his beneficiaries
under Section 5.4.1.3 below or any life insurance for
which Executive pays premiums; and
3.1.4 Such other compensation pursuant to such executive
bonus plans, restricted stock purchase plans, stock
option plans or other stock plans, available to
executive employees of Group from time to time, as the
Board of Directors or the Compensation Committee may in
its sole discretion determine.
4. REIMBURSEMENT OF EXPENSES. Group shall reimburse Executive
for travel, entertainment and other business expenses
reasonably incurred by him in connection with the business
of Group and its Affiliates to the extent and in a manner
consistent with then Group policy.
5. TERM AND TERMINATION.
5.1. TERM. The term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue
until terminated as hereinafter set forth. For the purposes
of this Agreement, the date of termination shall be the
effective date of termination of Executive, rather than the
date of notice thereof.
5.2. TERMINATION BY EXECUTIVE.
5.2.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3)
months to Group, which time period may be waived, in
whole or in part, by Group in its discretion in which
event Executive's employment shall end on such earlier
date as agreed by Group and Executive.
5.2.2 Except as provided in Section 5.2.3, if Executive's
employment is terminated pursuant to Section 5.2.1,
Executive shall not be entitled as of the date of
termination to any further compensation under this
Agreement of any kind or nature, except for Accrued and
Unpaid Salary and Expenses.
5.2.3 However, if such notice is given after six (6) months
after but within twenty four (24) months after a Change
3
<PAGE> 5
of Control (a "Change of Control Notice"), unless such
Change of Control shall have been approved by a
resolution adopted by the Board of Directors with at
least two-thirds (2/3) of the then serving Group
directors who are Group directors as of the date hereof
voting in favor, then upon such termination by
Executive pursuant to Section 5.2.1, Group shall
provide and Executive (or his Estate) shall be entitled
to receive:
5.2.3.1 Within thirty (30) days of the date of such termination
a two (2) year Lump Sum Payment Amount;
5.2.3.2 A Gross-Up Payment as set forth in Section 8 of this
Agreement;
5.2.3.3 Continuation of all fringe benefits referred to in
Section 3.1.3, including, but not limited to, Medical,
Dental and Life Insurance Coverage Continuation for a
period of two (2) years from the date of termination;
5.2.3.4 Accrued and Unpaid Salary and Expenses;
5.2.3.5 Outplacement Benefits; and
5.2.3.6 In the event of termination as provided in this Section
5.2.3, Executive shall not be entitled to payments
under both this Section 5.2.3 and Section 5.3.4.2. Any
compensation payable under this Section 5.2.3 shall be
paid notwithstanding Executive's total and permanent
disability or death occurring after termination of his
employment hereunder. In the event Executive dies or
becomes totally and permanently disabled after the date
of any such notice but prior to the date of termination
of his employment under this Section 5.2.3, the
provisions of this Section 5.2.3 and not the provisions
of Section 5.4 or 5.5 shall apply, provided that in the
event of Executive's total and permanent disability
during such time, Executive shall also be entitled to
each benefit that Group then provides to its executive
employees upon and during the continuance of total and
permanent disability to the extent such benefit exceeds
those specified in this Section 5.2.3.
5.3. TERMINATION BY GROUP; CHANGE OF CONTROL; AND CONSTRUCTIVE
TERMINATION.
5.3.1 Executive's employment may be terminated at any time by
Group, with or without Good Cause, by written notice to
4
<PAGE> 6
Executive, effective immediately unless otherwise
stated in such notice.
5.3.2 TERMINATION BY GROUP WITH GOOD CAUSE. In the event
Group shall terminate Executive's employment for Good
Cause, then Executive shall not be entitled as of the
date of termination to any further compensation under
this Agreement of any kind or nature, except for
Accrued and Unpaid Salary and Expenses.
5.3.3 TERMINATION BY GROUP WITHOUT GOOD CAUSE PRIOR TO A
CHANGE OF CONTROL.
5.3.3.1 In the event Executive's employment hereunder is
terminated by Group without Good Cause prior to a
Change of Control, then subject to Section 5.3.3.2
Group shall provide and Executive (or his Estate) shall
be entitled to the following:
5.3.3.1.1 A one half (#) year Lump Sum Payment Amount if the
termination occurs on or prior to December 12, 1995 and
if the date of termination occurs thereafter a one (1)
year Lump Sum Payment Amount, each payable within
thirty (30) days of the date of termination;
5.3.3.1.2 On and after December 13, 1995 and thereafter during
the term of this Agreement Executive shall, immediately
upon termination, pursuant to this Section 5.3.3 have
the unconditional, unencumbered and free right, title
and interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive elects
to exercise unexercised rights, to his obligation to
pay the option exercise price or other purchase price
to the extent theretofore not paid) to Executive by
Group at any time prior to the date of termination as
if all restrictions imposed by Group had lapsed and all
events necessary to vest in Executive such rights,
including the lapsing of time, had occurred, and Group
shall take all such actions as may be necessary to
release any then existing restrictions imposed by Group
and waive any rights to repurchase such shares;
5.3.3.1.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of six (6) months from the
date of termination if the date of termination is on or
before December 12, 1995 and thereafter one (1) year
from the date of termination;
5
<PAGE> 7
5.3.3.1.4 On and after December 13, 1995 and thereafter during
the term of this Agreement, Accrued and Unpaid Salary
and Expenses;
5.3.3.1.5 On and after December 13, 1995 and thereafter during
the term of this Agreement, Outplacement Benefits; and
5.3.3.1.6 Gross-Up Payment
5.3.3.2 Any compensation payable under this Section 5.3.3 shall
be paid notwithstanding Executive's total and permanent
disability or death subsequent to Group's notice of
termination. In the case of termination of his
employment under this Section 5.3.3, Executive shall
not be entitled as of the date of termination to any
other compensation under this Agreement, except as
provided in this Section 5.3.3, provided that in the
event of Executive's total and permanent disability at
such time, Executive shall also be entitled to all of
the benefits Group then provides to its executive
employees upon and during the continuance of total and
permanent disability.
5.3.4 CHANGE OF CONTROL; CONSTRUCTIVE TERMINATION; SUBSEQUENT
TERMINATION BY GROUP WITHOUT GOOD CAUSE.
5.3.4.1 Immediately upon a Change of Control while Executive is
employed hereunder, and without regard to whether or
not Executive's employment is terminated, whether a
Constructive Termination occurs at such time or
thereafter or the manner of any subsequent termination
of Executive's employment, Executive shall immediately
have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group
which were granted, sold or optioned (subject, if
Executive elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the Change of
Control as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.3.4.2 If following a Change of Control there shall be either
an event of Constructive Termination or termination by
6
<PAGE> 8
Group of Executive's employment without Good Cause,
then Group shall provide and Executive (or his Estate)
shall be entitled to the following:
5.3.4.2.1 Within ten (10) days of such event a two (2) year Lump-Sum
Payment Amount. For the purposes of this Section 5.3.4, the
time when a Constructive Termination occurs shall be the day
any event occurs which is included in the definition of
Constructive Termination;
5.3.4.2.2 Executive shall immediately upon termination pursuant
to this Section 5.3.4 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.4.2.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of two (2) years from the
date of termination;
5.3.4.2.4 Accrued and Unpaid Salary and Expenses;
5.3.4.2.5 Outplacement Benefits; and
5.3.4.2.6 Gross-Up Payment.
5.4. TERMINATION UPON DEATH.
5.4.1 This Agreement, except for the provisions of Sections
8, 9, 11 and 12, shall terminate upon the death of
Executive, provided that Executive's Estate shall have
the right to receive, and Group shall be obligated to
pay or provide to Executive's Estate the following:
5.4.1.1 Executive's Estate shall immediately upon such
termination have the unconditional, unencumbered and
free right, title and interest in all shares of stock
of Group which were granted, sold or optioned (subject,
if Executive's Estate elects to exercise unexercised
7
<PAGE> 9
rights, to the obligation to pay the option exercise
price or other purchase price to the extent theretofore
not paid) to Executive by Group at any time prior to
his death as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares;
5.4.1.2 All of the benefits Group provides to its executive
employees as provided in Section 3.1.3 to the extent
such benefits are greater than those specified in this
Agreement;
5.4.1.3 A lump-sum payment equal to the Adjusted Salary in
effect at the date of death payable no later than sixty
(60) days after the date of death. To secure such
payment, Group may in its discretion maintain life
insurance on Executive's life payable to his Estate or
other beneficiary, which life insurance coverage shall
be in addition to the amount provided for pursuant to
the provisions of Section 3.1.3 above (or any life
insurance for which Executive pays premiums), and to
the extent benefits are paid pursuant to such insurance
coverage maintained by Group under this Section
5.4.1.3, Group's commitment under this Section 5.4.1.3
shall be satisfied; and
5.4.1.4 Accrued and Unpaid Salary and Expenses.
5.5. TERMINATION UPON DISABILITY.
5.5.1 This Agreement shall terminate if, by virtue of total
and permanent disability, Executive is unable to
perform his duties hereunder, provided that Executive's
(or his legal representative's) right to receive, and
Group's obligations to pay, amounts as a result of such
termination shall survive any such termination.
5.5.2 The determination that, by virtue of total and
permanent disability, Executive is unable to perform
his duties hereunder shall be made by a physician
chosen by Group and reasonably satisfactory to
Executive (or his legal representative). The cost of
such examination shall be borne by Group. Without
limiting the generality of the foregoing, unless
otherwise agreed, Executive shall be conclusively
8
<PAGE> 10
presumed to be totally and permanently disabled
hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such
duties for a period of one hundred and eighty (180)
consecutive calendar days or for any periods
aggregating one hundred and eighty (180) days or more
in any twelve (12) month period. For purposes of this
Section 5.5, the date of termination in the event of
such total and permanent disability shall be the
earlier of the date of such physician's examination
pursuant to which such determination is made or the
first business day after which such 180-day period has
expired.
5.5.3 In the event of such a termination as a result of
Executive's total and permanent disability, all
compensation hereunder shall terminate, Executive shall
immediately upon such termination have the
unconditional, unencumbered and free right, title and
interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive or his
Estate elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective
date of termination as if all restrictions had lapsed
and all events necessary to vest in Executive such
rights, including the lapsing of time, had occurred,
and Executive shall be entitled to and Group shall pay
to Executive the following:
5.5.3.1 Amounts at the rate of the Adjusted Cash Salary in
effect at the date of such termination, payable in the
manner specified in Section 3.1.1, for a period of
twelve (12) months following the date of such
termination at the rate of one-twelfth of such Adjusted
Cash Salary per month, LESS the amount of any
disability insurance proceeds actually paid to or for
the benefit of Executive (or his Estate) with respect
to such twelve (12) months following the date of
termination under any disability policy the premiums
for which have been paid by Group or any Affiliate.
During such twelve (12) months following termination of
this Agreement as a result of Executive's permanent and
total disability, Group shall maintain at Group's sole
expense the life insurance policies referred to in the
second sentence of Section 3.1.3. and in Section
5.4.1.3 if then in force and, in the event of
Executive's death during the twelve (12) months
9
<PAGE> 11
following such termination, shall pay the death benefit
provided for in Section 5.4.1.3 notwithstanding the
prior termination of this Agreement as a result of
Executive's total and permanent disability, in addition
to the life insurance benefits payable to the
beneficiaries of the policies referred to in Section
3.1.3 which shall be payable in the event of
Executive's death during such period of twelve (12)
months;
5.5.3.2 Medical, Dental and Life Insurance Coverage
Continuation for a period of one (1) year from the date
of termination;
5.5.3.3 Accrued and Unpaid Salary and Expenses;
5.5.3.4 Continuation of each of the medical, dental and other
benefits which Group provides to its permanently
disabled executive employees in accordance with Group's
then existing policy to the extent each benefit is
greater than that specified in this Section 5.5; and
5.5.3.5 Outplacement Benefits.
6. SERVICES FURNISHED. Group shall furnish Executive with
office space, secretarial assistance, and such other
facilities and services at Group's facility to which
Executive may be assigned, as shall be suitable to the
Executive's position and adequate for the performance of his
duties as set forth herein.
7. ADDITIONAL INSURANCE AT GROUP'S OPTION. Group, in its sole
discretion, may apply for and procure in its own name
(whether or not for its own benefit) policies of insurance
insuring the life of Executive in such amounts as Group may
deem advisable, in addition to insurance policies
contemplated by Section 3.1.3 and Section 5.4.1.3.
Executive shall have no right, title, or interest in any
such policies of insurance, except to the extent his Estate
or other persons are specifically named as beneficiaries
thereof. Executive agrees to submit to any medical or other
examination and to execute and deliver any applications or
other instrument in writing, reasonably necessary to
effectuate such insurance.
8. "GROSS-UP" PAYMENTS. Executive shall be paid an additional
amount ("Gross Up Payment") if any payments ("Payment
Amounts") made to him (or his Estate) by Group or any of its
Affiliates, under this Agreement or otherwise, are subject
10
<PAGE> 12
to the excise tax imposed by Internal Revenue Code Section
4999 or any successor Internal Revenue Code Section (the
"Section 4999 Tax"). The Gross Up Payment shall be computed
so that Executive (or his Estate) retains a net amount equal
to the Payment Amounts after deduction of any Section 4999
Tax on the Payment Amounts and any Federal, state or local
tax (including any Section 4999 Tax) on the Gross Up
Payment.
For the purposes of determining the amount of the Gross Up
Payment, Executive shall be deemed to pay Federal, State and
local income taxes at the highest marginal rate of taxation
in the calendar year in which the Payment Amounts are
taxable to him under Code Section 4999. State and local
income taxes shall be calculated based upon the state and
locality of Executive's domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by
tax counsel selected and paid for by Group and approved by
Executive. The Gross Up Payment shall be paid within thirty
(30) days of such computation and in no event (without
written consent of Executive) later than the last day of the
calendar year with respect to which the Section 4999 Tax is
imposed.
If such determination is not finally accepted by the
Internal Revenue Service upon audit, then tax counsel
(selected and paid for under the above procedure) shall
represent Executive in any such audit or appeal process
thereafter and compute appropriate adjustments and
additional Gross Up Payments as provided above, after which
Group shall pay Executive such adjustment, and Group shall
reimburse Executive for interest and other tax penalties, if
applicable.
9. CONFIDENTIALITY, INVENTIONS AND NON-COMPETITION.
9.1 Executive's agreements set forth in this Section 9 shall
survive the expiration or termination of this Agreement and
the termination of his employment with Group for any reason.
9.2 Executive acknowledges that irreparable injury would be
caused to Group by his breach of any of the provisions of
this Section 9, and agrees that in the event of any such
breach, Group and any of its Affiliates, in addition to such
other rights and remedies as may exist in its favor, may
apply to any court of law or equity having jurisdiction to
enforce the specific performance of the provisions of this
11
<PAGE> 13
Section 9 and may apply for injunctive relief against any
act which would violate any such provisions.
9.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how",
including, without limitation, techniques, formulae,
designs, developments, projects, technical information and
manufacturing process and distribution methods, relating to,
or concerned with the business of Group and its Affiliates
prior to the termination of this Agreement and their
respective suppliers, customers, stockholders, licensors,
licensees, and other persons or entities with which Group or
its Affiliates has, has had, or may in the future have any
commercial, scientific or technical relationship. During
the term of this Agreement and at all times following the
termination of Executive's employment for any reason,
Executive will not, directly or indirectly, divulge, furnish
or make accessible to anyone (other than as required in the
regular course of his employment by Group or with the
consent of the Board of Directors) such information. The
prohibitions contained in this Section 9.3 shall not apply
to information which is (a) within the domain of the general
public; (b) generally known within the industry or
industries in which Group or its Affiliates is involved; or
(c) independently developed by Executive without utilization
of confidential information gained while in the employ of
Group; provided that Executive shall not have disclosed such
information in violation of this Agreement. All documents,
records, apparatus, equipment and other physical property
furnished to Executive by Group or any Affiliate of Group or
produced by Executive or others in connection with his
services to Group or any such Affiliate shall be and remain
the sole property of Group. Executive will return and
deliver such property to Group as and when requested by
Group. Copies of documents and records may be kept, but
shall be kept completely confidential to the same extent as
other confidential information of Group. Executive shall
return and deliver all such property upon termination of his
employment for any reason, and Executive will not take with
him any such property or any reproduction of such property
upon such termination.
9.4 Any work or research or the results thereof, made or
developed by Executive, alone or in conjunction with others
during the term of his employment, including but without
limitation, any designs, patents, inventions, processes,
know-how or formulae created, invented or conceived during
12
<PAGE> 14
the period of his employment by Group, whether during or out
of the usual hours of work, which arise out of or are
related to the business, research, or development work or
field of operation of Group, or any of its Affiliates, shall
to the extent of Executive's interest therein be the sole
and exclusive property of Group, shall be disclosed in
writing to Group and to no other person, unless so directed
in writing by the Board of Directors, and Executive hereby
assigns to Group all and any rights which he has or may
acquire in the same. To this end, both during the period of
Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers,
instruments and documents properly required to effect such
assignment to Group or its nominee, to make application
through Group's patent attorney or general counsel at the
expense of Group, for such United States and foreign patents
as may be specified from time to time by Group on
inventions, processes, or formulae which are or become the
property of Group hereunder, and to execute assignments upon
Group's request, for Executive's entire interest in all such
applications to Group or to its nominee without compensation
(other than his usual compensation as an employee of Group)
and Executive agrees to give Group and its patent attorney
or general counsel all reasonable assistance in preparing
such applications, descriptions, and illustrations of each
such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications
or patents resulting therefrom; and further agrees to
execute all lawful papers considered necessary by Group and
do all that Group reasonably requests in order to protect
Group's rights in said inventions, processes, and formulae
or to obtain patents thereon, including, without limitation,
continuations, reissues, renewals, and extensions. It is
further agreed that Executive's obligations specified
hereunder shall not expire with the termination of this
Agreement or his employment, but Group agrees to pay
Executive a reasonable amount for any time that Executive
spends in such work at Group's request after the termination
of this Agreement or his employment hereunder and agrees to
reimburse Executive for expenses reasonably or necessarily
incurred in connection with such work.
9.5 In consideration of his continued employment by Group, and
the other benefits accruing to him hereunder, and subject to
the fulfillment by Group of its obligations to Executive
hereunder, either directly or through draw-down under the
letter(s) of credit or other device established pursuant to
Section 6, Executive agrees that during the term hereof and
for a period of twelve (12) months following the date of
13
<PAGE> 15
termination of Executive's employment pursuant to Section 5
provided that Executive has received and is continuing to
receive all payments and benefits required to be paid and
provided to him pursuant to this Agreement (such period of
employment and twelve (12) month period being referred to in
this Agreement as the "Non-Competition Period"), he will not
engage or participate, directly or indirectly, within the
United States of America or Canada either as principal,
agent, employee, employer, consultant, stockholder, partner
or in any other individual or representative capacity
whatever, in the conduct or management of, or own any stock
or other proprietary interest in, or debt of, any business
which shall be competitive with any business which is or was
conducted by Group or any Affiliate of Group, while
Executive was an employee of Group, unless he shall have
obtained the prior written consent of the Board of
Directors, and which consent shall make express reference to
this Agreement. Notwithstanding any other provision in this
Section 9, Executive shall be free without such consent to
make investments, directly or indirectly, in the securities
of any publicly-owned entity if his ownership thereof is
limited to not more than three percent (3%) of the issued
and outstanding securities of any class of securities of
such entity. Executive acknowledges that his skills and
experience are such that he can anticipate finding
employment at an executive level in a wide variety of
industries and represents and agrees that the restrictions
imposed by this Section 9 on employment are necessary for
the protection of the legitimate interests and competitive
position of Group and do not impose undue hardships on
Executive.
9.6 During the Non-Competition Period, Executive shall not,
directly or indirectly, solicit any officer, director,
executive, employee or consultant of Group or any Affiliate
of Group to leave such employment or terminate such
position.
10. DEFINITIONS.
As used in this Agreement, the following terms shall have
the following meanings:
10.1 "Accrued and Unpaid Salary and Expenses" shall mean such
portion of Executive's Adjusted Cash Salary as has accrued
by virtue of Executive's employment during the period prior
to the date of termination and has not yet been paid,
together with any amounts for expense reimbursement,
vacation accruals and similar items which have been properly
14
<PAGE> 16
incurred or accrued in accordance with the provisions of
this Agreement prior to the date of termination and have not
yet been paid.
10.2 "Adjusted Salary" shall mean the Adjusted Cash Salary plus
an amount equal to the amount of any salary increase(s), if
any, provided in the form of restricted stock or stock
options less any sum attributable to the payment of salary
in lieu of automobile benefits (as of the date of this
Agreement that amount is Seven Thousand Dollars ($7,000)).
10.3 "Adjusted Cash Salary" shall have the meaning set forth in
Section 3.1.1.
10.4 "Affiliate" shall mean any corporation, joint venture, or
other business enterprise, whether incorporated or
unincorporated, which Group directly, or indirectly through
one or more intermediaries, controls or is controlled by, or
is under common control with.
10.5 "Agreement" shall mean this Employment Agreement.
10.6 "Base Salary" shall have the meaning set forth in Section
3.1.1.
10.7 "Board of Directors" shall mean the Board of Directors of
Group.
10.8 "Change of Control" shall mean and shall be deemed to have
occurred (i) if any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended), other than Group or any employee stock
plan of Group, is or becomes the beneficial owner, directly
or indirectly, of securities of Group representing fifteen
percent (15%) or more of the outstanding Common Stock of
Group, or (ii) ten (10) days following the commencement of,
or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by any "person" of fifteen percent
(15%) or more of the outstanding Common Stock of Group,
provided, however, that at the conclusion of such ten (10)
day period such person has not discontinued or rescinded his
intention to make such a tender or exchange offer or (iii)
if during any consecutive twelve (12) month period beginning
on or after the date hereof individuals who at the beginning
of such period were directors of Group cease, for any
reason, to constitute at least a majority of the Board of
Directors of Group; or (iv) if a merger of, or consolidation
involving, Group in which Group's stock is converted into
15
<PAGE> 17
securities of another corporation or into cash shall be
consummated, or a plan of complete liquidation of Group
(whether or not in connection with a sale of all or
substantially all of Group's assets) shall be adopted and
consummated, or substantially all of Group's operating
assets are sold (whether or not a plan of liquidation shall
be adopted or a liquidation occurs), excluding in each case
a transaction solely for the purpose of reincorporating
Group in a different jurisdiction or recapitalizing Group's
stock.
10.9 "Change of Control Notice" shall have the meaning set
forth in Section 5.2.3.
10.10 "Compensation Committee" shall mean the Compensation
Committee of the Board of Directors.
10.11 "Constructive Termination" shall be deemed to have
occurred if and when (i) Executive's Adjusted Salary is
decreased below the level in effect on the date of the last
amendment of this Agreement, or the aggregate Adjusted
Salary and incentive compensation or benefits available to
be earned by Executive is directly or indirectly reduced or
eliminated, or the bonus percentage applicable to
Executive's participation in any compensation or bonus plan
or arrangement is reduced, without Executive's consent,
provided, however, that nothing herein shall be construed to
guarantee Executive's bonus awards if performance is below
applicable targets, or (ii) the importance of Executive's
job responsibilities is reduced without Executive's consent,
or (iii) a proposal is made to relocate Executive to a
location other than Nashua, New Hampshire or the greater
Boston, Massachusetts metropolitan area without his consent.
10.12 "Effective Date" shall have the meaning set forth in the
first paragraph of this Agreement.
10.13 "ESOP" shall mean the Ekco Group, Inc. Employees' Stock
Ownership Plan.
10.14 "Estate" shall mean Executive's estate, legal
representative or beneficiaries as the context so requires.
10.15 "Executive" shall mean the individual defined as such in
the first paragraph of this Agreement, and shall include the
Estate of such individual where the context so requires.
10.16 "Good Cause" shall include, but not be limited to,
repeated or serious neglect of duty, dishonesty, conviction
16
<PAGE> 18
of a felony, breach of this Agreement or repeated or serious
violations of corporate rules or regulations. Notwithstanding the
foregoing, following a Change of Control, "Good Cause" shall not be
deemed to have occurred unless (a) the conduct which is the basis for
breach is material and is either willful or intentionally unlawful and
(b) Executive shall not have ceased such conduct and cured the effect
thereof, if curable, so that such breach shall no longer be material
within thirty (30) days after Executive shall have received written
notice from Group of Group's intention to terminate Executive's
employment for Good Cause, which notice shall specify in detail the
basis therefor.
10.17 "Gross-Up Payment" shall have the meaning set forth in
Section 8.
10.18 "Group" shall mean Ekco Group, Inc., and its
successors and permitted assigns.
10.19 "Lump Sum Payment Amount" shall mean a cash amount
payable in a lump sum equal to the sum of (a) the Adjusted Salary in
effect immediately prior to the date of such termination, plus (b) the
maximum amount payable to Executive including all cash and the value
of all equity based options and grants of stock except for equity
based options and grants of stock issued pursuant to Section 6.6 of
the 1995 Plan (as defined below) (the value of each stock option to be
determined as of the grant date thereof and the value of each grant of
restricted stock to be determined as of the date described hereinbelow
by applying the Black-Scholes model where applicable or another
recognized form of valuation if the Black-Scholes model is not
applicable, with the value ascribed by Group to each such stock option
and grant of restricted stock as of the aforementioned dates to be
conclusively presumed to be the value thereof) under all compensation
and bonus plans and arrangements identified in Sections 3.1.2, 3.1.3
and 3.1.4 for the fiscal year in which the date of the termination
occurs, plus (c) the value of the securities, cash or other property
which were allocated to Executive's account in the ESOP for the fiscal
year immediately preceding the fiscal year in which the date of
termination occurs (which shall be in addition to any distribution
from the ESOP to which he is entitled thereunder), which sum shall be
multiplied by the number of years specified in Sections 5.2.3.1,
5.2.4.1., 5.3.3.1.1 and 5.3.4.2.1, respectively. For purposes of
calculating the amount of clause (b), the maximum payable under any
plan shall generally be the maximum amount actually allocated to
17
<PAGE> 19
any, specifically targeted for Executive. However, for purposes of
calculating the maximum payable under the 1995 Restatement of
Incentive Compensation Plan for Executive Employees of Ekco Group,
Inc. and its Subsidiaries (the "1995 Plan") for purposes of clause
(b), (i) the annual bonus amount shall be the greatest of (x) the
target award for the current fiscal year, (y) the target award for the
prior fiscal year and (z) the amount of the award paid or payable with
respect to the prior fiscal year, and (ii) the number of shares of
restricted stock awarded as long-term incentive awards shall be equal
to the number of such shares most recently awarded to Executive as a
long-term grant pursuant to the 1995 Plan divided by the number of
blocks in such grant. Such shares shall be valued as of the date
utilized by Group to calculate the number of shares issued to
Executive, or if such date is not readily ascertainable, the date of
issuance of the shares. Attached hereto and incorporated herein as
Exhibit A is an example ("Example") detailing the calculation of the
Lump Sum Amount utilizing certain stated assumptions and including
other severance payments. The Example defines the manner and method
for this calculation and for other severance payments and shall be
followed in making severance payments hereunder.
10.20 "Medical, Dental and Life Insurance Coverage Continuation"
shall mean the continuation of the medical, dental and life insurance
coverage which Executive (including his family) shall have been
receiving from Group as of the earlier of the date of Executive's
termination and the date of notice of termination by either Group or
Executive, from the date of termination until the earlier of (x)
Executive's full-time employment by a third party who offers Executive
at least comparable benefits in the particular benefit category or (y)
the number of years or months specified in Sections 5.2.3.3,
5.3.3.1.3, 5.3.4.2.3 and 5.5.3.2, respectively, following such date of
termination. If and to the extent Group is not able to continue the
applicable coverage of Executive under the terms of such group
policies or other policies providing coverage for Executive, Group
shall cooperate with Executive in any actions which may be necessary
to allow Executive, to the extent possible, either (i) to buy such
policy or (ii) to continue insurance coverage with the insurer writing
Group's applicable group policy outside of Group's group plan or a
substitute reasonably satisfactory to Executive, and in such event,
Group shall pay to Executive 140% of the cost of such insurance
coverage, but in no event more than twice the cost
18
<PAGE> 20
of such coverage allocable to Executive under the group or
other policy covering him prior to termination.
10.21 "Non-Competition Period" shall have the meaning set forth
in Section 9.5.
10.22 "Payment Amount shall have the meaning set forth in
Section 8.
10.23 "Outplacement Benefits" shall mean outplacement services
by a professional outplacement firm of Executive's choosing at the
expense of Group, who shall engage such firm directly on behalf of
Executive, provided, however, that Group's liability with respect to
providing such services will be limited to one-half of Executive's
Adjusted Salary.
11. ARBITRATION.
Except with respect to the provisions of Section 9, any
dispute or disagreement arising under or relating to the
provisions of this Agreement, or any breach thereof,
including, without limitation, relating to Section 1 hereof
or to whether a termination of Executive's employment was
with Good Cause, shall be resolved by binding arbitration in
accordance with the Commercial Rules of the American
Arbitration Association or its successor (except as set
forth herein), and judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having
jurisdiction thereof. The decision of the arbitrators shall
be made by majority vote and be final and absolute. In any
such arbitration, one arbitrator shall be selected by Group
and one arbitrator shall be selected by Executive. Each
party shall have thirty (30) days from the receipt by one
party of a notice from the other party of submission to
arbitration to choose an arbitrator. A third arbitrator
shall be selected by the two (2) so chosen within ten (10)
days of the selection of the most recently selected of the
two arbitrators so chosen. Failing action within any of
such periods by any party or the arbitrators, any
unappointed arbitrator or arbitrators shall be appointed by
the American Arbitration Association (or its successor) upon
application of any party or arbitrator. The parties shall
promptly furnish to the arbitrators such information as the
arbitrators may reasonably request. The expenses of any
arbitration proceeding shall be paid by Group (including
Executive's attorney's fees and expenses) if Executive
recovers any amount or otherwise obtains relief in such
proceeding and by Executive (including Group's attorney's
fees and expenses) if Executive initiated arbitration and
19
<PAGE> 21
there is a specific finding that Executive's claim was
frivolous. In all other circumstances, the expenses of such
arbitration proceeding (not including attorney's fees and
expenses, each party to bear such party's own attorney's
fees and expenses) shall be divided equally. Arbitration
shall take place in Nashua, New Hampshire, or such other
place on which the parties shall agree. This Agreement and
any arbitration proceeding are subject to N.H.R.S.A. ch.
542.
12. GENERAL.
12.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
12.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group and Executive, his heirs, executors,
administrators, legal representatives, and permitted
assigns. Group agrees that a successor in interest by
merger, operation of law, consolidation, assignment,
purchase or otherwise of a controlling interest in the
business of Group will be informed prior to such event of
the existence of this Agreement. Group shall require any
successor (whether direct or indirect, by purchase, merger,
operation of law, consolidation, assignment or otherwise of
a controlling interest in the business, stock or other
assets of Group) to assume expressly and agree to perform
this Agreement. Failure of Group to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle Executive to such compensation and benefits in the
same amount and on the same terms as he would be entitled
hereunder in the event of a termination without Good Cause
after a Change of Control, except that, for the purposes of
implementation hereof, the date on which any such succession
becomes effective shall be deemed to be the date on which
Executive becomes entitled to such compensation and benefits
from Group.
12.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by
a duly authorized court of competent jurisdiction, then the
remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not
20
<PAGE> 22
be affected thereby, and each portion and provision of this
Agreement shall be valid and be enforceable to the fullest
extent permitted by law; and (ii) if any provision, or any
part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby,
Group and Executive agree that the court making such
determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific
words and phrases ("blue-pencilling") and in its reduced or
blue-pencilled form such provision shall then be enforceable
and shall be enforced.
12.4 All notices and communications required or permitted to be
given hereunder shall be duly given by delivering the same
in hand, by reputable overnight delivery service or by
depositing such notice or communication in the mail, sent by
certified or registered mail, return receipt requested,
postage prepaid, as follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Executive Vice
President, Secretary and General Counsel
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other
by like notice.
12.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof. There are no promises, representations,
conditions, provisions or terms related thereto other than
those set forth in this Agreement. This Agreement
supersedes all previous understandings, agreements and
representations between Group and Executive regarding
Executive's employment by Group, written or oral.
12.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to
affect the meaning or construction of any provision hereof.
Any references in this Agreement to a section shall be
deemed to include all subsections of that section unless
specifically excluded.
21
<PAGE> 23
12.7 No failure of Group or Executive to exercise any power
reserved to it or him, respectively, by this Agreement, or
to insist upon strict compliance by Executive or Group,
respectively, with any obligation or condition hereunder,
and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver of Group's or
Executive's right, as the case may be, to demand exact
compliance with any of the terms hereof. Waiver by either
party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar or
different nature, nor shall any delay, forbearance or
omission of either party to exercise any power or right
arising out of any breach or default by the other party of
any of the terms, provisions or covenants hereof, affect or
impair its or his right to exercise the same, nor shall such
constitute a waiver by Group or Executive, as the case may
be, of any right hereunder, or the right to declare any
subsequent breach or default and to terminate this Agreement
prior to the expiration of its term.
12.8 This is a New Hampshire contract and shall be construed
under and be governed in all respects by the law of the
State of New Hampshire.
12.9 Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment
provided for herein be reduced by any compensation earned by
Executive as the result of employment by another employer or
by retirement benefits after the date of termination or
otherwise, except as specifically set forth herein.
12.10 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be
executed and delivered by its duly authorized officer and its
corporate seal to be hereunto affixed and Executive has hereunto
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<PAGE> 24
set his hand and seal as of the day and year first written above
in duplicate originals.
EKCO GROUP, INC.
By /S/ ROBERT STEIN
------------------------------
/S/ STUART W. COHEN
---------------------------------
Executive
23
<PAGE> 25
STUART COHEN EXHIBIT A
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSUMPTIONS:
- -----------
<S> <C>
Termination on July 15, 1996. 1x or 2x severance benefit, as defined.
Current market value of common stock $15.000
-------
Adjusted cash salary $120,000
Less: car allowance ($7,000)
1995 salary increase 7,000
Adjusted Salary 120,000
--------
Bonus:
Current year target award $50,000
Target award for prior fiscal year 25,000
Amount paid or payable for prior year 5,000
</TABLE>
Note: Executive elected to take 5% of bonus in cash, 50% in
Restricted Stock and the balance in stock options.
Relocation - Executive is partially relocated when terminated.
Other: Executive participates in the Supplemental Executive Retirement Plan.
Executive is granted stock options and is offered and purchases
Restricted Stock.
Executive participates in Employee Stock Purchase Plan, 401k and ESOP.
================================================================================
<TABLE>
<CAPTION>
TERMINATION BY GROUP WITHOUT GOOD CAUSE
- ---------------------------------------
<S> <C> <C> <C>
LUMP SUM PAYMENT AMOUNT: 1x 2x
-- --
ADJUSTED SALARY $120,000 $240,000
MAXIMUM PAYABLE UNDER 3.1.2
Greatest of this year's target, last year's
target or last year's actual award $50,000 50,000 100,000
Other-completion of relocation per
company policy 3,500 3,500
- --------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 26
<TABLE>
<CAPTION>
MAXIMUM PAYABLE UNDER 3.1.3
Supplemental Executive Retirement Plan:
MAXIMUM PAYABLE UNDER 3.1.4
<S> <C> <C> <C>
Other compensation:
Other Executive bonus plans 0 0
Restricted stock purchase plans:
1995 grant 16,000
Number of years in cycle 5
Annualized grant 3,200
Market value on date of grant $7.500
------
Value of restricted stock 24,000 24,000 48,000
------
1996 grant 5,000
Number of years in cycle 5
Annualized grant 1,000
Market value on date of grant $8.000
------
Value of restricted stock 8,000 8,000 16,000
Stock option plans:
Grant this fiscal year 9,000
Black Scholes value at date of grant $3.50
-----
Value of option 31,500 31,500 63,000
Other-Employee Stock Purchase Plan:
# shares purchased this fiscal year 1,000
Current market value $15.000
-------
Value of stock 15,000
------
benefit (15% discount from market) 2,250 2,250 4,500
Value of securities allocated to ESOP
account in previous fiscal year
Common shares allocated 863
Preferred shares allocated 1,423
Allocation of unvested forfeited shares 14
--
Total shares allocated 2,300
Current market value $15.000
-------
Value of ESOP shares allocated 34,500
Dividends received not reflected
above 184
---
Total value of ESOP securities
allocated 34,684 34,684 69,368
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
OTHER PAYMENTS:
<S> <C> <C> <C>
Unpaid salary to date of termination 2,308 2,308
Accrued vacation-weeks 5
Weekly rate 2,308
-----
Total 11,538 11,538
Unreimbursed expenses (if applicable)
Gross up payment (if applicable)
Total payment $287,780 $558,214
======== ========
</TABLE>
26
<PAGE> 1
Exhibit 10.5
------------
FORM OF
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN
EKCO GROUP, INC.
AND
[NAME OF EXECUTIVE]
-------------------
AS OF
May 25, 1995
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
1. Employment 1
2. Principal Location 1
3. Compensation 2
4. Reimbursement of Expenses 3
5. Term and Termination 3
6. Letter of Credit 10
7. Additional Insurance at Group's Option 11
8. Gross-Up Payments 12
9. Confidentiality and Non-Competition 13
10. Definitions 16
11. Arbitration 20
12. General 21
EXHIBIT
-------
Letter of Credit A
Example of Calculation of Severance Payment B
</TABLE>
<PAGE> 2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT made as of the 25th day of May,
1995, (the "Effective Date") by and between Ekco Group, Inc., a Delaware
corporation ("Group") with its principal place of business in Nashua, New
Hampshire and [NAME OF EXECUTIVE] ("Executive"), of [ADDRESS OF EXECUTIVE].
WHEREAS, Executive is currently employed by Group pursuant to an
Employment Agreement dated as of November 6, 1991, as amended; and
WHEREAS, Group and Executive desire to amend and restate the
terms and conditions of Executive's employment by Group as set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained, the parties covenant and agree as follows:
1. EMPLOYMENT. Group hereby employs Executive and Executive hereby
accepts employment as an executive employee of Group to perform
such executive and managerial services as may be assigned to him
by or under the authority of the Board of Directors (such term,
and all other capitalized terms not otherwise defined in this
Agreement shall have the meaning set forth in Section 10 of this
Agreement), consistent with such status as an executive
employee. Executive agrees to use his best efforts, skills and
abilities faithfully to promote the interests of Group and to
perform such services as may be required of 7him by Group from
time to time consistent with his status, to the reasonable
satisfaction of the Board of Directors. Without limiting the
generality of the foregoing, Executive agrees to serve as [JOB
TITLE] of Group (if and so long as he is elected to that office
by the Board of Directors) and to serve without additional
compensation as a director, executive officer or executive
employee of such Affiliates as Group may from time to time
reasonably request. Executive agrees to work exclusively for
Group and such Affiliates as his full-time employment during the
term of this Agreement, except as Group and Executive may
otherwise agree in writing from time to time.
2. PRINCIPAL LOCATION. Executive shall perform the duties of his
office generally in, and shall not be obligated to maintain his
office in any place other than, Nashua, New Hampshire or within
the metropolitan Boston, Massachusetts area, provided, however,
that Executive shall be obligated
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to take such trips outside of such area as shall be reasonably
necessary in connection with his duties and Group shall pay all
reasonable costs of travel and living expenses incurred in
connection therewith. Furthermore, if Group's principal
executive office is relocated to a location outside Nashua, New
Hampshire or the greater Boston metropolitan area, Executive
shall, subject to his rights upon an event of Constructive
Termination following a Change of Control under Section 5.3.4,
be obligated to perform his duties at such relocated principal
office and Group shall pay Executive all reasonable expenses
incurred by Executive in relocating to such new area.
3. COMPENSATION.
3.1 Except as otherwise provided in this Agreement, for his services
and agreements hereunder Executive shall receive from Group the
following compensation:
3.1.1 Salary at the annual rate of [AMOUNT OF CASH SALARY]
Dollars ($_____________)(the "Base Salary"), payable in
equal installments in accordance with Group's pay
policy and in any event not less frequently than
monthly. The Base Salary shall be subject to increase
from time to time as determined by the Board of
Directors or the Compensation Committee in its sole
discretion pursuant to a review of Executive's
performance by the Board of Directors or the
Compensation Committee, which review shall be conducted
at such time as the Board of Directors or the
Compensation Committee shall determine, but in any
event at least once during each twelve (12) months of
the term of this Agreement. The Base Salary as from
time to time increased is referred to herein as the
"Adjusted Cash Salary."
3.1.2 Such other monetary compensation by way of bonus or
otherwise, if any, as may be determined from time to
time by the Board of Directors or the Compensation
Committee in its sole discretion;
3.1.3 Such fringe benefits (including, without limitation,
vacation time, group life, split-dollar life, long term
and short term disability, medical, dental and other
insurance, retirement, including, but not limited to,
Group's Executive Supplemental Retirement Plan,
pension, profit-sharing and similar plans) as Group may
provide from time to time for its executive employees,
whether or not the category of such benefits is
addressed in this
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Agreement, it being understood that Executive shall be
entitled to the greater of each benefit addressed in
this Agreement and that provided by Group for its
executive employees generally. Group shall in any
event, whether or not such coverage is provided for
other executive employees, provide Executive group life
or other life insurance at its expense with a death
benefit equal to at least four (4) times Executive's
Adjusted Salary, in addition to any other life
insurance payable to Executive or his beneficiaries
under this Section 3.1.3, Section 5.4.1.3 below or any
life insurance for which Executive pays premiums; and
3.1.4 Such other compensation pursuant to such executive
bonus plans, restricted stock purchase plans, stock
option plans or other stock plans, available to
executive employees of Group from time to time, as the
Board of Directors or the Compensation Committee may in
its sole discretion determine.
4. REIMBURSEMENT OF EXPENSES. Group shall reimburse Executive for
travel, entertainment and other business expenses reasonably
incurred by him in connection with the business of Group and its
Affiliates to the extent and in a manner consistent with then
Group policy.
5. TERM AND TERMINATION.
5.1. TERM. The term of this Agreement and Executive's employment
hereunder shall commence on the Effective Date and continue
until terminated as hereinafter set forth. For the purposes of
this Agreement, the date of termination shall be the effective
date of termination of Executive, rather than the date of notice
thereof.
5.2. TERMINATION BY EXECUTIVE.
5.2.1 Executive's employment may be terminated at any time by
Executive by written notice of at least three (3)
months to Group, which time period may be waived, in
whole or in part, by Group in its discretion in which
event Executive's employment shall end on such earlier
date as agreed by Group and Executive.
5.2.2 Except as provided in Section 5.2.3, if Executive's
employment is terminated pursuant to Section 5.2.1,
Executive shall not be entitled as of the date of
termination to any further compensation under this
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Agreement of any kind or nature, except for Accrued and
Unpaid Salary and Expenses.
5.2.3 However, if such notice is given after six (6) months
after but within twenty four (24) months after a Change
of Control (a "Change of Control Notice"), unless such
Change of Control shall have been approved by a
resolution adopted by the Board of Directors with at
least two-thirds (2/3) of the then serving Group
directors who are Group directors as of the date hereof
voting in favor, then upon such termination by
Executive pursuant to Section 5.2.1, Group shall
provide and Executive (or his Estate) shall be entitled
to receive:
5.2.3.1 Within thirty (30) days of the date of such termination
a two (2) year Lump Sum Payment Amount;
5.2.3.2 A Gross-Up Payment as set forth in Section 8 of this
Agreement;
5.2.3.3 Continuation of all fringe benefits referred to in
Section 3.1.3, including, but not limited to, Medical,
Dental and Life Insurance Coverage Continuation for a
period of two (2) years from the date of termination;
5.2.3.4 Accrued and Unpaid Salary and Expenses;
5.2.3.5 Outplacement Benefits; and
5.2.3.6 In the event of termination as provided in this Section
5.2.3, Executive shall not be entitled to payments
under both this Section 5.2.3 and Section 5.3.4.2. Any
compensation payable under this Section 5.2.3 shall be
paid notwithstanding Executive's total and permanent
disability or death occurring after termination of his
employment hereunder. In the event Executive dies or
becomes totally and permanently disabled after the date
of any such notice but prior to the date of termination
of his employment under this Section 5.2.3, the
provisions of this Section 5.2.3 and not the provisions
of Section 5.4 or 5.5 shall apply, provided that in the
event of Executive's total and permanent disability
during such time, Executive shall also be entitled to
each benefit that Group then provides to its executive
employees upon and during the continuance of total and
permanent disability to the extent such benefit exceeds
those specified in this Section 5.2.3.
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5.3. TERMINATION BY GROUP; CHANGE OF CONTROL; AND CONSTRUCTIVE
TERMINATION.
5.3.1 Executive's employment may be terminated at any time by
Group, with or without Good Cause, by written notice to
Executive, effective immediately unless otherwise
stated in such notice.
5.3.2 TERMINATION BY GROUP WITH GOOD CAUSE. In the event
Group shall terminate Executive's employment for Good
Cause, then Executive shall not be entitled as of the
date of termination to any further compensation under
this Agreement of any kind or nature, except for
Accrued and Unpaid Salary and Expenses.
5.3.3 TERMINATION BY GROUP WITHOUT GOOD CAUSE PRIOR TO A
CHANGE OF CONTROL.
5.3.3.1 In the event Executive's employment hereunder is
terminated by Group without Good Cause prior to a
Change of Control, then subject to Section 5.3.3.2
Group shall provide and Executive (or his Estate) shall
be entitled to the following:
5.3.3.1.1 A one (1) year Lump Sum Payment Amount payable within
thirty (30) days of the date of termination;
5.3.3.1.2 Executive shall immediately upon termination pursuant
to this Section 5.3.3 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.3.1.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of one (1) year from the date
of termination;
5.3.3.1.4 Accrued and Unpaid Salary and Expenses;
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5.3.3.1.5 Outplacement Benefits; and
5.3.3.1.6 Gross-Up Payment
5.3.3.2 Any compensation payable under this Section 5.3.3 shall
be paid notwithstanding Executive's total and permanent
disability or death subsequent to Group's notice of
termination. In the case of termination of his
employment under this Section 5.3.3, Executive shall
not be entitled as of the date of termination to any
other compensation under this Agreement, except as
provided in this Section 5.3.3, provided that in the
event of Executive's total and permanent disability at
such time, Executive shall also be entitled to all of
the benefits Group then provides to its executive
employees upon and during the continuance of total and
permanent disability.
5.3.4 CHANGE OF CONTROL; CONSTRUCTIVE TERMINATION; SUBSEQUENT
TERMINATION BY GROUP WITHOUT GOOD CAUSE.
5.3.4.1 Immediately upon a Change of Control while Executive is
employed hereunder, and without regard to whether or
not Executive's employment is terminated, whether a
Constructive Termination occurs at such time or
thereafter or the manner of any subsequent termination
of Executive's employment, Executive shall immediately
have the unconditional, unencumbered and free right,
title and interest in all shares of stock of Group
which were granted, sold or optioned (subject, if
Executive elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the Change of
Control as if all restrictions imposed by Group had
lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.3.4.2 If following a Change of Control there shall be either
an event of Constructive Termination or termination by
Group of Executive's employment without Good Cause,
then Group shall provide and Executive (or his Estate)
shall be entitled to the following:
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5.3.4.2.1 Within ten (10) days of such event a two (2) year
Lump-Sum Payment Amount. For the purposes of this
Section 5.3.4, the time when a Constructive Termination
occurs shall be the day any event occurs which is
included in the definition of Constructive Termination;
5.3.4.2.2 Executive shall immediately upon termination pursuant
to this Section 5.3.4 have the unconditional,
unencumbered and free right, title and interest in all
shares of stock of Group which were granted, sold or
optioned (subject, if Executive elects to exercise
unexercised rights, to his obligation to pay the option
exercise price or other purchase price to the extent
theretofore not paid) to Executive by Group at any time
prior to the date of termination as if all restrictions
imposed by Group had lapsed and all events necessary to
vest in Executive such rights, including the lapsing of
time, had occurred, and Group shall take all such
actions as may be necessary to release any then
existing restrictions imposed by Group and waive any
rights to repurchase such shares;
5.3.4.2.3 Medical, Dental and Life Insurance Coverage
Continuation for a period of two (2) years from
the date of termination;
5.3.4.2.4 Accrued and Unpaid Salary and Expenses;
5.3.4.2.5 Outplacement Benefits; and
5.3.4.2.6 Gross-Up Payment.
5.4. TERMINATION UPON DEATH.
5.4.1 This Agreement, except for the provisions of Sections
8, 9, 11 and 12, shall terminate upon the death of
Executive, provided that Executive's Estate shall have
the right to receive, and Group shall be obligated to
pay or provide to Executive's Estate the following:
5.4.1.1 Executive's Estate shall immediately upon such
termination have the unconditional, unencumbered and
free right, title and interest in all shares of stock
of Group which were granted, sold or optioned (subject,
if Executive's Estate elects to exercise unexercised
rights, to the obligation to pay the option exercise
price or other purchase price to the extent theretofore
not paid) to Executive by Group at any time prior to
his death as if all restrictions imposed by Group had
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lapsed and all events necessary to vest in Executive
such rights, including the lapsing of time, had
occurred, and Group shall take all such actions as may
be necessary to release any then existing restrictions
imposed by Group and waive any rights to repurchase
such shares.
5.4.1.2 All of the benefits Group provides to its executive
employees as provided in Section 3.1.3 to the extent
such benefits are greater than those specified in this
Agreement;
5.4.1.3 A lump-sum payment equal to the Adjusted Salary in
effect at the date of death payable no later than sixty
(60) days after the date of death. To secure such
payment, Group may in its discretion maintain life
insurance on Executive's life payable to his Estate or
other beneficiary, which life insurance coverage shall
be in addition to the amount provided for pursuant to
the provisions of Section 3.1.3 above (or any life
insurance for which Executive pays premiums), and to
the extent benefits are paid pursuant to such insurance
coverage maintained by Group under this Section
5.4.1.3, Group's commitment under this Section 5.4.1.3
shall be satisfied; and
5.4.1.4 Accrued and Unpaid Salary and Expenses.
5.5. TERMINATION UPON DISABILITY.
5.5.1 This Agreement shall terminate if, by virtue of total
and permanent disability, Executive is unable to
perform his duties hereunder, provided that Executive's
(or his legal representative's) right to receive, and
Group's obligations to pay, amounts as a result of such
termination shall survive any such termination.
5.5.2 The determination that, by virtue of total and
permanent disability, Executive is unable to perform
his duties hereunder shall be made by a physician
chosen by Group and reasonably satisfactory to
Executive (or his legal representative). The cost of
such examination shall be borne by Group. Without
limiting the generality of the foregoing, unless
otherwise agreed, Executive shall be conclusively
presumed to be totally and permanently disabled
hereunder if for reasons involving mental or physical
illness or physical injury he fails to perform such
duties for a period of one hundred and eighty (180)
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consecutive calendar days or for any periods
aggregating one hundred and eighty (180) days or more
in any twelve (12) month period. For purposes of this
Section 5.5, the date of termination in the event of
such total and permanent disability shall be the
earlier of the date of such physician's examination
pursuant to which such determination is made or the
first business day after which such 180-day period has
expired.
5.5.3 In the event of such a termination as a result of
Executive's total and permanent disability, all
compensation hereunder shall terminate, Executive shall
immediately upon such termination have the
unconditional, unencumbered and free right, title and
interest in all shares of stock of Group which were
granted, sold or optioned (subject, if Executive or his
Estate elects to exercise unexercised rights, to his
obligation to pay the option exercise price or other
purchase price to the extent theretofore not paid) to
Executive by Group at any time prior to the effective
date of termination as if all restrictions had lapsed
and all events necessary to vest in Executive such
rights, including the lapsing of time, had occurred,
and Executive shall be entitled to and Group shall pay
to Executive the following:
5.5.3.1 Amounts at the rate of the Adjusted Cash Salary in
effect at the date of such termination, payable in the
manner specified in Section 3.1.1, for a period of
twelve (12) months following the date of such
termination at the rate of one-twelfth of such Adjusted
Cash Salary per month, LESS the amount of any
disability insurance proceeds actually paid to or for
the benefit of Executive (or his Estate) with respect
to such twelve (12) months following the date of
termination under any disability policy the premiums
for which have been paid by Group or any Affiliate.
During such twelve (12) months following termination of
this Agreement as a result of Executive's permanent and
total disability, Group shall maintain at Group's sole
expense the life insurance policies referred to in the
second sentence of Section 3.1.3. and in Section
5.4.1.3 if then in force and, in the event of
Executive's death during the twelve (12) months
following such termination, shall pay the death benefit
provided for in Section 5.4.1.3 notwithstanding the
prior termination of this Agreement as a result of
Executive's total and permanent disability, in addition
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to the life insurance benefits payable to the
beneficiaries of the policies referred to in Section
3.1.3 which shall be payable in the event of
Executive's death during such period of twelve (12)
months;
5.5.3.2 Medical, Dental and Life Insurance Coverage
Continuation for a period of one (1) year from the date
of termination;
5.5.3.3 Accrued and Unpaid Salary and Expenses;
5.5.3.4 Continuation of each of the medical, dental and other
benefits which Group provides to its permanently
disabled executive employees in accordance with Group's
then existing policy to the extent each benefit is
greater than that specified in this Section 5.5; and
5.5.3.5 Outplacement Benefits.
6. LETTER OF CREDIT. In order to assure Executive the prompt
payment of amounts due him under Section 5 of this Agreement,
Group agrees to continue to secure and to keep in place one or
more irrevocable letter(s) of credit from Fleet Bank of
Massachusetts, N.A. or another bank reasonably acceptable to
Executive in the initial amount of two and one-half (2 1/2)
times Executive's Adjusted Salary, in substantially the form of
Exhibit A, or upon other terms reasonably acceptable to
Executive, which shall allow Executive (or his legal
representative) to draw down amounts due him under Section 5 of
this Agreement upon certification by Executive (or his legal
representative) that payments are due him pursuant to this
Agreement. The amount of the letter(s) of credit shall be
adjusted at least annually to reflect changes in Executive's
salary, so that it shall at all times be at least two and
one-half (2 1/2) times the Adjusted Salary. In addition, the
letter(s) of credit (or a separate letter of credit) shall
include an amount which Group, in its reasonable judgment,
determines is necessary to secure Group's obligations under any
stock appreciation right plan or other equity-linked plan (other
than the ESOP), provided, however, that such amount need not
include any amount with respect to stock options, restricted
stock subject to repurchase rights, or any equity plan giving
Executive ownership of shares. An initial determination of the
amount necessary to secure such equity-linked obligations shall
be made on the date of grant to Executive of such equity-linked
right, and the amount shall subsequently be adjusted at least
annually to reflect the
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value on such date of such rights. A failure by Group to keep
such letter(s) of credit in effect, or to renew or to make
alternate arrangements to secure its obligations in the amount
required hereunder, by way of an escrow agreement, trust, or
other device, which arrangements shall be reasonably
satisfactory to Executive, at least thirty (30) days prior to
the expiration date of the letter(s) of credit or any such
alternate arrangement shall constitute an event of default under
this Agreement entitling Executive, after written notice to
Group and the passage of a ten (10) day cure period without such
default being cured, to all of the benefits accorded to him in
the event of a termination by Group without Good Cause after a
Change of Control pursuant to Section 5, without, however, the
requirement that Executive terminate his employment hereunder.
Group agrees to notify Executive within three (3) business days
of any failure or inability to maintain or renew such letter(s)
of credit or other device adopted pursuant to this Section.
Notwithstanding the foregoing, at the election of the Board of
Directors of Group by resolution of such Board with at least
two-thirds (2/3) of the then-serving Group directors who are
Group directors as of the date hereof voting in favor, the
obligation to maintain letter(s) of credit shall be relieved to
the extent amounts are contributed to a trust or trusts under
the terms of which such amounts are specifically earmarked as
security for payment of obligations under this Agreement and are
at all times at least two and one-half (2 1/2) times the
Adjusted Salary. Such trust or trusts may contain a provision
that its funds will be returned to Group so as to be available
to its general creditors in the event of the bankruptcy of
Group. Group agrees that it will not take any action to
prevent, hinder or delay the exercise by Executive of his rights
to exercise the security provisions provided in this Section 6
and, further, agrees to cooperate with Executive as may be
necessary to enable Executive to exercise and obtain the
benefits of such security provisions, in the absence of
fraudulent or unlawful conduct on the part of Executive with
respect to such exercise.
7. ADDITIONAL INSURANCE AT GROUP'S OPTION. Group, in its sole
discretion, may apply for and procure in its own name (whether
or not for its own benefit) policies of insurance insuring the
life of Executive in such amounts as Group may deem advisable,
in addition to insurance policies contemplated by Section 3.1.3
and Section 5.4.1.3. Executive shall have no right, title, or
interest in any such policies of insurance, except to the extent
his Estate or other persons are specifically named as
beneficiaries
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thereof. Executive agrees to submit to any medical or other
examination and to execute and deliver any applications or other
instrument in writing, reasonably necessary to effectuate such
insurance.
8. "GROSS-UP" PAYMENTS. Executive shall be paid an additional
amount ("Gross Up Payment") if any payments ("Payment Amounts")
made to him (or his Estate) by Group or any of its Affiliates,
under this Agreement or otherwise, are subject to the excise tax
imposed by Internal Revenue Code Section 4999 or any successor
Internal Revenue Code Section (the "Section 4999 Tax"). The
Gross Up Payment shall be computed so that Executive (or his
Estate) retains a net amount equal to the Payment Amounts after
deduction of any Section 4999 Tax on the Payment Amounts and any
Federal, state or local tax (including any Section 4999 Tax) on
the Gross Up Payment.
For the purposes of determining the amount of the Gross Up
Payment, Executive shall be deemed to pay Federal, State and
local income taxes at the highest marginal rate of taxation in
the calendar year in which the Payment Amounts are taxable to
him under Code Section 4999. State and local income taxes shall
be calculated based upon the state and locality of Executive's
domicile in said calendar year.
The determination of the amount of the Section 4999 Tax and
whether such Section 4999 Tax is payable shall be made by tax
counsel selected and paid for by Group and approved by
Executive. The Gross Up Payment shall be paid within thirty
(30) days of such computation and in no event (without written
consent of Executive) later than the last day of the calendar
year with respect to which the Section 4999 Tax is imposed.
If such determination is not finally accepted by the Internal
Revenue Service upon audit, then tax counsel (selected and paid
for under the above procedure) shall represent Executive in any
such audit or appeal process thereafter and compute appropriate
adjustments and additional Gross Up Payments as provided above,
after which Group shall pay Executive such adjustment, and Group
shall reimburse Executive for interest and other tax penalties,
if applicable.
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9. CONFIDENTIALITY, INVENTIONS AND NON-COMPETITION.
9.1 Executive's agreements set forth in this Section 9 shall survive
the expiration or termination of this Agreement and the
termination of his employment with Group for any reason.
9.2 Executive acknowledges that irreparable injury would be caused
to Group by his breach of any of the provisions of this Section
9, and agrees that in the event of any such breach, Group and
any of its Affiliates, in addition to such other rights and
remedies as may exist in its favor, may apply to any court of
law or equity having jurisdiction to enforce the specific
performance of the provisions of this Section 9 and may apply
for injunctive relief against any act which would violate any
such provisions.
9.3 Executive recognizes that he now has knowledge of and/or may
hereafter gain knowledge of, confidential information, trade
secrets, confidential processes, confidential patentable or
unpatentable inventions or confidential "know how", including,
without limitation, techniques, formulae, designs, developments,
projects, technical information and manufacturing process and
distribution methods, relating to, or concerned with the
business of Group and its Affiliates prior to the termination of
this Agreement and their respective suppliers, customers,
stockholders, licensors, licensees, and other persons or
entities with which Group or its Affiliates has, has had, or may
in the future have any commercial, scientific or technical
relationship. During the term of this Agreement and at all
times following the termination of Executive's employment for
any reason, Executive will not, directly or indirectly, divulge,
furnish or make accessible to anyone (other than as required in
the regular course of his employment by Group or with the
consent of the Board of Directors) such information. The
prohibitions contained in this Section 9.3 shall not apply to
information which is (a) within the domain of the general
public; (b) generally known within the industry or industries in
which Group or its Affiliates is involved; or (c) independently
developed by Executive without utilization of confidential
information gained while in the employ of Group; provided that
Executive shall not have disclosed such information in violation
of this Agreement. All documents, records, apparatus, equipment
and other physical property furnished to Executive by Group or
any Affiliate of Group or produced by Executive or others in
connection with his services to Group or any such Affiliate
shall be and remain the sole property of Group. Executive will
return and deliver such property to Group as and when requested
by
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Group. Copies of documents and records may be kept, but shall
be kept completely confidential to the same extent as other
confidential information of Group. Executive shall return and
deliver all such property upon termination of his employment for
any reason, and Executive will not take with him any such
property or any reproduction of such property upon such
termination.
9.4 Any work or research or the results thereof, made or developed
by Executive, alone or in conjunction with others during the
term of his employment, including but without limitation, any
designs, patents, inventions, processes, know-how or formulae
created, invented or conceived during the period of his
employment by Group, whether during or out of the usual hours of
work, which arise out of or are related to the business,
research, or development work or field of operation of Group, or
any of its Affiliates, shall to the extent of Executive's
interest therein be the sole and exclusive property of Group,
shall be disclosed in writing to Group and to no other person,
unless so directed in writing by the Board of Directors, and
Executive hereby assigns to Group all and any rights which he
has or may acquire in the same. To this end, both during the
period of Executive's employment and at all times thereafter,
Executive agrees to execute all necessary papers, instruments
and documents properly required to effect such assignment to
Group or its nominee, to make application through Group's patent
attorney or general counsel at the expense of Group, for such
United States and foreign patents as may be specified from time
to time by Group on inventions, processes, or formulae which are
or become the property of Group hereunder, and to execute
assignments upon Group's request, for Executive's entire
interest in all such applications to Group or to its nominee
without compensation (other than his usual compensation as an
employee of Group) and Executive agrees to give Group and its
patent attorney or general counsel all reasonable assistance in
preparing such applications, descriptions, and illustrations of
each such invention, process, or formula and in connection with
proceedings relating thereto or to such other applications or
patents resulting therefrom; and further agrees to execute all
lawful papers considered necessary by Group and do all that
Group reasonably requests in order to protect Group's rights in
said inventions, processes, and formulae or to obtain patents
thereon, including, without limitation, continuations, reissues,
renewals, and extensions. It is further agreed that Executive's
obligations specified hereunder shall not expire with the
termination of this Agreement or his employment, but Group
agrees to pay
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Executive a reasonable amount for any time that Executive spends
in such work at Group's request after the termination of this
Agreement or his employment hereunder and agrees to reimburse
Executive for expenses reasonably or necessarily incurred in
connection with such work.
9.5 In consideration of his continued employment by Group, and the
other benefits accruing to him hereunder, and subject to the
fulfillment by Group of its obligations to Executive hereunder,
either directly or through draw-down under the letter(s) of
credit or other device established pursuant to Section 6,
Executive agrees that during the term hereof and for a period of
twelve (12) months following the date of termination of
Executive's employment pursuant to Section 5 provided that
Executive has received and is continuing to receive all payments
and benefits required to be paid and provided to him pursuant to
this Agreement (such period of employment and twelve (12) month
period being referred to in this Agreement as the
"Non-Competition Period"), he will not engage or participate,
directly or indirectly, within the United States of America or
Canada either as principal, agent, employee, employer,
consultant, stockholder, partner or in any other individual or
representative capacity whatever, in the conduct or management
of, or own any stock or other proprietary interest in, or debt
of, any business which shall be competitive with any business
which is or was conducted by Group or any Affiliate of Group,
while Executive was an employee of Group, unless he shall have
obtained the prior written consent of the Board of Directors,
and which consent shall make express reference to this
Agreement. Notwithstanding any other provision in this Section
9, Executive shall be free without such consent to make
investments, directly or indirectly, in the securities of any
publicly-owned entity if his ownership thereof is limited to not
more than three percent (3%) of the issued and outstanding
securities of any class of securities of such entity. Executive
acknowledges that his skills and experience are such that he can
anticipate finding employment at an executive level in a wide
variety of industries and represents and agrees that the
restrictions imposed by this Section 9 on employment are
necessary for the protection of the legitimate interests and
competitive position of Group and do not impose undue hardships
on Executive.
9.6 During the Non-Competition Period, Executive shall not, directly
or indirectly, solicit any officer, director,
15
<PAGE> 17
executive, employee or consultant of Group or any Affiliate of
Group to leave such employment or terminate such position.
10. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
10.1 "Accrued and Unpaid Salary and Expenses" shall mean such portion
of Executive's Adjusted Cash Salary as has accrued by virtue of
Executive's employment during the period prior to the date of
termination and has not yet been paid, together with any amounts
for expense reimbursement, vacation accruals and similar items
which have been properly incurred or accrued in accordance with
the provisions of this Agreement prior to the date of
termination and have not yet been paid.
10.2 "Adjusted Salary" shall mean the Adjusted Cash Salary plus an
amount equal to the amount of any salary increase(s) provided in
the form of restricted stock or stock options beginning on
January 1, 1995.
10.3 "Adjusted Cash Salary" shall have the meaning set forth in
Section 3.1.1.
10.4 "Affiliate" shall mean any corporation, joint venture, or other
business enterprise, whether incorporated or unincorporated,
which Group directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with.
10.5 "Agreement" shall mean this Amended and Restated Employment
Agreement.
10.6 "Base Salary" shall have the meaning set forth in Section 3.1.1.
10.7 "Board of Directors" shall mean the Board of Directors of Group.
10.8 "Change of Control" shall mean and shall be deemed to have
occurred (i) if any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than Group or any employee stock plan of Group,
is or becomes the beneficial owner, directly or indirectly, of
securities of Group representing fifteen percent (15%) or more
of the outstanding Common Stock of
16
<PAGE> 18
Group, or (ii) ten (10) days following the commencement of, or
announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in the beneficial
ownership by any "person" of fifteen percent (15%) or more of
the outstanding Common Stock of Group, provided, however, that
at the conclusion of such ten (10) day period such person has
not discontinued or rescinded his intention to make such a
tender or exchange offer or (iii) if during any consecutive
twelve (12) month period beginning on or after the date hereof
individuals who at the beginning of such period were directors
of Group cease, for any reason, to constitute at least a
majority of the Board of Directors of Group; or (iv) if a merger
of, or consolidation involving, Group in which Group's stock is
converted into securities of another corporation or into cash
shall be consummated, or a plan of complete liquidation of Group
(whether or not in connection with a sale of all or
substantially all of Group's assets) shall be adopted and
consummated, or substantially all of Group's operating assets
are sold (whether or not a plan of liquidation shall be adopted
or a liquidation occurs), excluding in each case a transaction
solely for the purpose of reincorporating Group in a different
jurisdiction or recapitalizing Group's stock.
10.9 "Change of Control Notice" shall have the meaning set forth in
Section 5.2.3.
10.10 "Compensation Committee" shall mean the Compensation Committee
of the Board of Directors.
10.11 "Constructive Termination" shall be deemed to have occurred if
and when (i) Executive's Adjusted Salary is decreased below the
level in effect on the date of the last amendment of this
Agreement, or the aggregate Adjusted Salary and incentive
compensation or benefits available to be earned by Executive is
directly or indirectly reduced or eliminated, or the bonus
percentage applicable to Executive's participation in any
compensation or bonus plan or arrangement is reduced, without
Executive's consent, provided, however, that nothing herein
shall be construed to guarantee Executive's bonus awards if
performance is below applicable targets, or (ii) the importance
of Executive's job responsibilities is reduced without
Executive's consent, or (iii) a proposal is made to relocate
Executive to a location other than Nashua, New Hampshire or the
greater Boston, Massachusetts metropolitan area without his
consent.
17
<PAGE> 19
10.12 "Effective Date" shall have the meaning set forth in the first
paragraph of this Agreement.
10.13 "ESOP" shall mean the Ekco Group, Inc. Employees' Stock
Ownership Plan.
10.14 "Estate" shall mean Executive's estate, legal representative or
beneficiaries as the context so requires.
10.15 "Executive" shall mean the individual defined as such in the
first paragraph of this Agreement, and shall include the Estate
of such individual where the context so requires.
10.16 "Good Cause" shall mean and be limited to a material breach of
any of Executive's obligations under Section 1 or 9 hereof, or
any action by Executive during the term of this Agreement
involving willful malfeasance or gross (but not simple)
negligence on the part of Executive in a material respect.
Notwithstanding the foregoing, following a Change of Control,
"Good Cause" shall not be deemed to have occurred unless (a) the
conduct which is the basis for such material breach is either
willful or intentionally unlawful and (b) Executive shall not
have ceased such conduct and cured the effect thereof, if
curable, so that such breach shall no longer be material within
thirty (30) days after Executive shall have received written
notice from Group of Group's intention to terminate Executive's
employment for Good Cause, which notice shall specify in detail
the basis therefor.
10.17 "Gross-Up Payment" shall have the meaning set forth in Section
8.
10.18 "Group" shall mean Ekco Group, Inc., and its successors and
permitted assigns.
10.20 "Lump Sum Payment Amount" shall mean a cash amount payable in a
lump sum equal to the sum of (a) the Adjusted Salary in effect
immediately prior to the date of such termination, plus (b) the
maximum amount payable to Executive including all cash and the
value of all equity based options and grants of stock except for
equity based options and grants of stock issued pursuant to
Section 6.6 of the 1995 Plan (as defined below) (the value of
each stock option to be determined as of the grant date thereof
and the value of each grant of restricted stock to be determined
as of the date described hereinbelow by applying the
Black-Scholes model where applicable or another recognized form
of
18
<PAGE> 20
valuation if the Black-Scholes model is not applicable, with the
value ascribed by Group to each such stock option and grant of
restricted stock as of the aforementioned dates to be
conclusively presumed to be the value thereof) under all
compensation and bonus plans and arrangements identified in
Sections 3.1.2, 3.1.3 and 3.1.4 for the fiscal year in which the
date of the termination occurs, plus (c) the value of the
securities, cash or other property which were allocated to
Executive's account in the ESOP for the fiscal year immediately
preceding the fiscal year in which the date of termination
occurs (which shall be in addition to any distribution from the
ESOP to which he is entitled thereunder), which sum shall be
multiplied by the number of years specified in Sections 5.2.3.1,
5.2.4.1., 5.3.3.1.1 and 5.3.4.2.1, respectively. For purposes
of calculating the amount of clause (b), the maximum payable
under any plan shall generally be the maximum amount actually
allocated to Executive, or if no such allocation was made, the
amount, if any, specifically targeted for Executive. However,
for purposes of calculating the maximum payable under the 1995
Restatement of Incentive Compensation Plan for Executive
Employees of Ekco Group, Inc. and its Subsidiaries (the "1995
Plan") for purposes of clause (b), (i) the annual bonus amount
shall be the greatest of (x) the target award for the current
fiscal year, (y) the target award for the prior fiscal year and
(z) the amount of the award paid or payable with respect to the
prior fiscal year, and (ii) the number of shares of restricted
stock awarded as long-term incentive awards shall be equal to
the number of such shares most recently awarded to Executive as
a long-term grant pursuant to the 1995 Plan divided by the
number of blocks in such grant. Such shares shall be valued as
of the date utilized by Group to calculate the number of shares
issued to Executive, or if such date is not readily
ascertainable, the date of issuance of the shares. Attached
hereto and incorporated herein as Exhibit B is an example
("Example") detailing the calculation of the Lump Sum Amount
utilizing certain stated assumptions and including other
severance payments. The Example defines the manner and method
for this calculation and for other severance payments and shall
be followed in making severance payments hereunder.
10.20 "Medical, Dental and Life Insurance Coverage Continuation" shall
mean the continuation of the medical, dental and life insurance
coverage which Executive (including his family) shall have been
receiving from Group as of the earlier of the date of
Executive's termination and the date of notice of termination by
either Group or Executive, from the date of termination until
the earlier of (x) Executive's full-
19
<PAGE> 21
time employment by a third party who offers Executive at least
comparable benefits in the particular benefit category or (y)
the number of years or months specified in Sections 5.2.3.3,
5.3.3.1.3, 5.3.4.2.3 and 5.5.3.2, respectively, following such
date of termination. If and to the extentGroup is not able to
continue the applicable coverage of Executive under the terms of
such group policies or other policies providing coverage for
Executive, Group shall cooperate with Executive in any actions
which may be necessary to allow Executive, to the extent
possible, either (i) to buy such policy or (ii) to continue
insurance coverage with the insurer writing Group's applicable
group policy outside of Group's group plan or a substitute
reasonably satisfactory to Executive, and in such event, Group
shall pay to Executive 140% of the cost of such insurance
coverage, but in no event more than twice the cost of such
coverage allocable to Executive under the group or other policy
covering him prior to termination.
10.21 "Non-Competition Period" shall have the meaning set forth in
Section 9.5.
10.22 "Outplacement Benefits" shall mean outplacement services by a
professional outplacement firm of Executive's choosing at the
expense of Group, who shall engage such firm directly on behalf
of Executive, provided, however, that Group's liability with
respect to providing such services will be limited to one-half
of Executive's Adjusted Salary.
10.23 "Payment Amount" shall have the meaning set forth in Section 8.
11. ARBITRATION.
Except with respect to the provisions of Section 9, any dispute
or disagreement arising under or relating to the provisions of
this Agreement, or any breach thereof, including, without
limitation, relating to Section 1 hereof or to whether a
termination of Executive's employment was with Good Cause, shall
be resolved by binding arbitration in accordance with the
Commercial Rules of the American Arbitration Association or its
successor (except as set forth herein), and judgment upon the
award rendered by the arbitrator or arbitrators may be entered
in any court having jurisdiction thereof. The decision of the
arbitrators shall be made by majority vote and be final and
absolute. In any such arbitration, one arbitrator shall be
selected by Group and one arbitrator shall be selected by
Executive. Each party shall have thirty (30) days from the
receipt by one
20
<PAGE> 22
party of a notice from the other party of submission to
arbitration to choose an arbitrator. A third arbitrator shall
be selected by the two (2) so chosen within ten (10) days of the
selection of the most recently selected of the two arbitrators
so chosen. Failing action within any of such periods by any
party or the arbitrators, any unappointed arbitrator or
arbitrators shall be appointed by the American Arbitration
Association (or its successor) upon application of any party or
arbitrator. The parties shall promptly furnish to the
arbitrators such information as the arbitrators may reasonably
request. The expenses of any arbitration proceeding shall be
paid by Group (including Executive's attorney's fees and
expenses) if Executive recovers any amount or otherwise obtains
relief in such proceeding and by Executive (including Group's
attorney's fees and expenses) if Executive initiated arbitration
and there is a specific finding that Executive's claim was
frivolous. In all other circumstances, the expenses of such
arbitration proceeding (not including attorney's fees and
expenses, each party to bear such party's own attorney's fees
and expenses) shall be divided equally. Arbitration shall take
place in Nashua, New Hampshire, or such other place on which the
parties shall agree. This Agreement and any arbitration
proceeding are subject to N.H.R.S.A. ch. 542.
12. GENERAL.
12.1 This Agreement is personal and shall in no way be subject to
assignment by Executive.
12.2 This Agreement shall be binding upon and shall inure to the
benefit of Group and its successors and assigns either by
merger, operation of law, consolidation, assignment, purchase or
otherwise of a controlling interest in the business of Group and
Executive, his heirs, executors, administrators, legal
representatives, and permitted assigns. Group agrees that a
successor in interest by merger, operation of law,
consolidation, assignment, purchase or otherwise of a
controlling interest in the business of Group will be informed
prior to such event of the existence of this Agreement. Group
shall require any successor (whether direct or indirect, by
purchase, merger, operation of law, consolidation, assignment or
otherwise of a controlling interest in the business, stock or
other assets of Group) to assume expressly and agree to perform
this Agreement. Failure of Group to obtain such assumption and
agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall
21
<PAGE> 23
entitle Executive to such compensation and benefits in the same
amount and on the same terms as he would be entitled hereunder
in the event of a termination without Good Cause after a Change
of Control, except that, for the purposes of implementation
hereof, the date on which any such succession becomes effective
shall be deemed to be the date on which Executive becomes
entitled to such compensation and benefits from Group.
12.3 The parties intend this Agreement to be enforced as written.
However, (i) if any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a duly
authorized court of competent jurisdiction, then the remainder
of this Agreement, or the application of such portion or
provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall
be valid and be enforceable to the fullest extent permitted by
law; and (ii) if any provision, or any part thereof, is held to
be unenforceable because of the duration of such provision or
the area covered thereby, Group and Executive agree that the
court making such determination shall have the power to reduce
the duration and/or area of such provision, and/or to delete
specific words and phrases ("blue-pencilling") and in its
reduced or blue-pencilled form such provision shall then be
enforceable and shall be enforced.
12.4 All notices and communications required or permitted to be given
hereunder shall be duly given by delivering the same in hand, by
reputable overnight delivery service or by depositing such
notice or communication in the mail, sent by certified or
registered mail, return receipt requested, postage prepaid, as
follows:
If sent to Group: Ekco Group, Inc.
98 Spit Brook Road
Nashua, New Hampshire 03062
Attention: Executive Vice
President, Secretary and
General Counsel
If sent to Executive: To Executive's
last address in
the records of Group
or such other address as either party furnishes to the other by
like notice.
22
<PAGE> 24
12.5 This Agreement constitutes the entire agreement and
understanding between the parties in relation to the subject
matter hereof. There are no promises, representations,
conditions, provisions or terms related thereto other than those
set forth in this Agreement. This Agreement supersedes all
previous understandings, agreements and representations between
Group and Executive regarding Executive's employment by Group,
written or oral. The parties hereto acknowledge the existence
of a certain Employment Agreement dated as of November 6, 1991,
as amended, between the parties hereto. Upon this Agreement
becoming effective, this Agreement shall replace, supersede and
be a substitute for the Restated Employment Agreement as so
amended.
12.6 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect
the meaning or construction of any provision hereof. Any
references in this Agreement to a section shall be deemed to
include all subsections of that section unless specifically
excluded.
12.7 No failure of Group or Executive to exercise any power reserved
to it or him, respectively, by this Agreement, or to insist upon
strict compliance by Executive or Group, respectively, with any
obligation or condition hereunder, and no custom or practice of
the parties at variance with the terms hereof, shall constitute
a waiver of Group's or Executive's right, as the case may be, to
demand exact compliance with any of the terms hereof. Waiver by
either party of any particular default by the other party hereto
shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar or
different nature, nor shall any delay, forbearance or omission
of either party to exercise any power or right arising out of
any breach or default by the other party of any of the terms,
provisions or covenants hereof, affect or impair its or his
right to exercise the same, nor shall such constitute a waiver
by Group or Executive, as the case may be, of any right
hereunder, or the right to declare any subsequent breach or
default and to terminate this Agreement prior to the expiration
of its term.
12.8 This is a New Hampshire contract and shall be construed under
and be governed in all respects by the law of the State of New
Hampshire.
12.9 Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other
23
<PAGE> 25
employment or otherwise, nor shall the amount of any payment
provided for herein be reduced by any compensation earned by
Executive as the result of employment by another employer or by
retirement benefits after the date of termination or otherwise,
except as specifically set forth herein.
12.10 No amendment or modification to this Agreement shall be
effective unless in writing and signed by both parties hereto.
This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall
constitute but one agreement.
IN WITNESS WHEREOF, Group has caused this Agreement to be
executed and delivered by its duly authorized officer and its corporate seal to
be hereunto affixed and Executive has hereunto set his hand and seal as of the
day and year first written above in duplicate originals.
EKCO GROUP, INC.
By___________________________
______________________________
Executive
24
<PAGE> 26
<TABLE>
EXHIBIT A
<S> <C>
DOCUMENTARY CREDIT NO.________
DATE OF ISSUE __________ , 199__
ISSUING BANK: APPLICANT:
FLEET BANK OF MASSACHUSETTS, N.A. EKCO GROUP, INC.
(Address of Bank) 98 SPIT BROOK ROAD
- ------------------------------ SUITE 102
NASHUA, NH 03062
- ------------------------------
ATTN:-------------------
- ------------------------------
ADVISING BANK: BENEFICIARY:
(Name & Address of Executive)
-----------------------------
-----------------------------
-----------------------------
ACCOUNTING/CURRENCY:
UP TO USD
--------------------
UP TO
------------------------
US DOLLARS
DATE AND PLACE OF EXPIRY:
, 199 AT THE
------------- --
ISSUING BANK
</TABLE>
Dear Sir:
By the order of Ekco Group, Inc. we hereby open in your favor our Irrevocable
Credit for the account of Ekco Group, Inc. for a sum or sums not exceeding a
total of US $____________________________ (_________________________________ US
DOLLARS) available by your draft(s) at SIGHT on Fleet Bank of Massachusetts,
N.A.,__________________________, Massachusetts _________ effective
____________, 199__ and expiring at ______________________, Massachusetts on
______________, 199__.
Drafts must be accompanied by:
25
<PAGE> 27
1. The original Letter of Credit and any amendments thereto, if any.
2. Your signed statement as follows: "I certify that the amount of my
draft represents funds due me under Section _____ (insert section number) of a
certain Amended and Restated Employment Agreement dated as of ,
199__, between myself and Ekco Group, Inc., as such agreement may hereafter be
amended and/or restated, demand for payment has been made, and payment has not
been received by me from Ekco Group, Inc. or any other source."
Each draft must bear upon its face the clause: "Drawn under Letter of Credit
No. _____________, dated ________________ of Fleet Bank of Massachusetts, N.A."
We hereby agree with you that drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored if presented to Fleet Bank
of Massachusetts, N.A. _________________________________ , on or before
(expiration date) ______________, 199__.
This Letter of Credit sets forth in full terms of our undertaking, and this
undertaking shall not in any way be modified, amended or limited by reference
to any document, instrument or agreement referred to herein or in which this
Letter of Credit is referred to or to which this Letter of Credit relates,
except for the certificate and the sight draft referred to herein and any such
reference shall not be deemed to incorporate herein by reference any document,
instrument or agreement, except for such certificate and such sight draft.
Communications with respect to this Letter of Credit shall be in writing and
shall be addressed to us, if by registered mail to Fleet Bank of Massachusetts,
N.A., _______________________, Massachusetts __________________, Attention:
________________, or if by courier to Fleet Bank of Massachusetts, N.A.,
______________________________________________, Massachusetts
__________________, Attention _________________________, specifically
referring to the number of this Letter of Credit.
Except so far as otherwise expressly stated herein, this Letter of Credit is
subject to the "Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication 500 and engages us in
accordance with its terms.
------------------------- -------------------------
Authorized Signature Authorized Signature
26
<PAGE> 28
<TABLE>
[NAME OF EMPLOYEE] EXHIBIT B
<S> <C>
ASSUMPTIONS:
- ------------
Termination on July 15, 1996. 1x or 2x severance benefit, as defined.
Current market value of common stock $15.000
-------
Adjusted cash salary $120,000
1995 salary increase 6,000
1996 salary increase 7,000
-----
Adjusted Salary 133,000
-------
Bonus:
Current year target award $ 50,000
Target award for prior fiscal year 25,000
Amount paid or payable for prior year 5,000
<FN>
Note: Executive elected to take 5% of bonus in cash, 50% in
Restricted Stock and the balance in stock options.
Relocation - Executive is partially relocated when terminated.
Other: Executive participates in the Supplemental Executive Retirement Plan.
Executive is granted stock options and is offered and purchases Restricted Stock.
Executive participates in Employee Stock Purchase Plan, 401k and ESOP.
</TABLE>
<TABLE>
TERMINATION BY GROUP WITHOUT GOOD CAUSE
- ---------------------------------------
<CAPTION>
LUMP SUM PAYMENT AMOUNT: 1x 2x
-- --
<S> <C> <C>
ADJUSTED SALARY $133,000 $266,000
MAXIMUM PAYABLE UNDER 3.1.2
Greatest of this year's target, last year's
target or last year's actual award $50,000 50,000 100,000
Other-completion of relocation per
company policy 3,500 3,500
</TABLE>
27
<PAGE> 29
<TABLE>
<S> <C> <C> <C>
MAXIMUM PAYABLE UNDER 3.1.3
Supplemental Executive Retirement Plan:
Increase in SERP value during severance period 15,600 21,300
MAXIMUM PAYABLE UNDER 3.1.4
Other compensation:
Other Executive bonus plans 0 0
Restricted stock purchase plans:
1995 grant 16,000
Number of years in cycle 5
Annualized grant 3,200
Market value on date of grant $ 7.500
-------
Value of restricted stock 24,000 24,000 48,000
-------
1996 grant 5,000
Number of years in cycle 5
Annualized grant 1,000
Market value on date of grant $ 8.000
-------
Value of restricted stock 8,000 8,000 16,000
-------
Stock option plans:
Grant this fiscal year 9,000
Black Scholes value at date of grant $ 3.50
-------
Value of option 31,500 31,500 63,000
Other-Employee Stock Purchase Plan:
# shares purchased this fiscal year 1,000
Current market value $15.000
-------
Value of stock 15,000
-------
benefit (15% discount from market) 2,250 2,250 4,500
Value of securities allocated to ESOP
account in previous fiscal year
Common shares allocated 863
Preferred shares allocated 1,423
Allocation of unvested forfeited shares 14
-------
Total shares allocated 2,300
Current market value $15.000
-------
Value of ESOP shares allocated 34,500
Dividends received not reflected
above 184
-------
Total value of ESOP securities 34,684 34,684 69,368
allocated
OTHER PAYMENTS:
Unpaid salary to date of termination 2,308 2,308
Accrued vacation-weeks 5
Weekly rate 2,308
-------
Total 11,538 11,538
</TABLE>
28
<PAGE> 30
<TABLE>
<S> <C> <C>
Unreimbursed expenses (if applicable)
Gross up payment (if applicable)
Total payment $316,380 $605,514
======== ========
</TABLE>
29
<PAGE> 31
<TABLE>
EKCO GROUP, INC.
----------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
SCHEDULE
--------
Each of the following employees of the Company has an
Amended and Restated Employment Agreement with the Company which
is substantially identical in form to the foregoing Form of
Amended and Restated Employment Agreement except as to job title,
Base Salary and certain references to participation in Company
plans, and except in Mr. Whaley's Agreement the majority of
obligations are to be performed by Woodstream Corporation and his
life insurance benefit is a specified amount:
<CAPTION>
Name and Job Title Base Salary
------------------ -----------
<S> <C>
Harry E. Whaley $176,528
President, Woodstream Corporation
Brian R. McQuesten $113,700
Controller
Linda R. Millman $112,550
Associate General Counsel
& Assistant Secretary
</TABLE>
30
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> OCT-01-1995
<EXCHANGE-RATE> 1
<CASH> 213
<SECURITIES> 0
<RECEIVABLES> 59,399
<ALLOWANCES> 1,163
<INVENTORY> 53,461
<CURRENT-ASSETS> 125,962
<PP&E> 91,230
<DEPRECIATION> 36,173
<TOTAL-ASSETS> 330,585
<CURRENT-LIABILITIES> 49,640
<BONDS> 132,716
<COMMON> 3,510
0
185
<OTHER-SE> 134,520
<TOTAL-LIABILITY-AND-EQUITY> 330,585
<SALES> 203,464
<TOTAL-REVENUES> 203,464
<CGS> 140,889
<TOTAL-COSTS> 179,526
<OTHER-EXPENSES> 3,326
<LOSS-PROVISION> (208)
<INTEREST-EXPENSE> 10,454
<INCOME-PRETAX> 10,243
<INCOME-TAX> 4,651
<INCOME-CONTINUING> 5,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,592
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
