<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
---
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 1, 1995
or
Transition Report Pursuant to Section 13 or 15(d) of the
---
Securities Exchange Act of 1934
Commission File No. 1-9973
THE MIDDLEBY CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 36-3352497
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1400 TOASTMASTER DRIVE, ELGIN, ILLINOIS 60120
- --------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone No., including Area Code (708) 741-3300
---------------------
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 twelve (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
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As of April 28, 1995, there were 8,385,363 shares of the registrant's
common stock outstanding.
<PAGE>
THE MIDDLEBY CORPORATION
QUARTER ENDED APRIL 1, 1995
INDEX
DESCRIPTION PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
BALANCE SHEETS 1
April 1, 1995 and December 31, 1994
STATEMENTS OF EARNINGS 2
April 1, 1995 and April 2, 1994
STATEMENTS OF CASH FLOWS 3
April 1, 1995 and April 2, 1994
NOTES TO FINANCIAL STATEMENTS 4
Item 2. Management's Discussion and Analysis 7
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION 9
<PAGE>
THE MIDDLEBY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
April 1, 1995 Dec. 31, 1994
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<S> <C> <C>
Cash and Cash Equivalents............. $ 1,556,000 $ 667,000
Accounts Receivable, net.............. 18,411,000 18,064,000
Inventories, net...................... 25,017,000 21,116,000
Prepaid Expenses and Other............ 941,000 1,394,000
------------ ------------
Total Current Assets............. 45,925,000 41,241,000
Property, Plant and Equipment, net of
accumulated depreciation of
$12,879,000 and $12,310,000.......... 23,260,000 23,260,000
Excess Purchase Price Over Net Assets
Acquired, net of accumulated
amortization of $3,133,000 and
$3,063,000.......................... 7,985,000 8,055,000
Other Assets.......................... 4,506,000 2,818,000
Investment in Affiliated Companies.... 1,203,000 1,248,000
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Total Assets.............. $ 82,879,000 $ 76,622,000
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Maturities of Long-Term Debt.. $ 1,896,000 $ 1,822,000
Accounts Payable...................... 14,938,000 11,252,000
Accrued Expenses...................... 9,673,000 11,079,000
------------ ------------
Total Current Liabilities........ 26,507,000 24,153,000
Long-Term Debt........................ 45,119,000 42,650,000
Minority Interest and Other
Non-current Liabilities............. 1,837,000 1,782,000
Shareholders' Equity:
Preferred Stock, $.01 par value;
nonvoting; 2,000,000 shares
authorized; none issued........... - -
Common Stock, $.01 par value;
20,000,000 shares authorized;
8,378,000 and 8,366,000 issued
and outstanding in 1995 and
1994, respectively................ 83,000 83,000
Paid-in Capital..................... 24,822,000 24,154,000
Cumulative Translation Adjustment... (416,000) (384,000)
Accumulated Deficit................. (15,073,000) (15,816,000)
------------ ------------
Total Shareholders' Equity........ 9,416,000 8,037,000
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Total Liabilities and
Shareholders' Equity.... $ 82,879,000 $ 76,622,000
------------ ------------
------------ ------------
</TABLE>
See accompanying notes
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<PAGE>
THE MIDDLEBY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
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April 1, 1995 April 2, 1994
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<S> <C> <C>
Net Sales........................... $34,994,000 $31,020,000
Cost of Sales....................... 25,276,000 23,023,000
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Gross Margin................... 9,718,000 7,997,000
Selling and Distribution Expenses... 4,851,000 4,497,000
General and Administrative Expenses. 2,353,000 2,220,000
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Income from Operations......... 2,514,000 1,280,000
Interest Expense.................... 1,184,000 904,000
Other Expense, Net.................. 198,000 177,000
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Earnings before Income
Taxes........................ 1,132,000 199,000
Provision for Income Taxes.......... 389,000 66,000
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Net Earnings................... $ 743,000 $ 133,000
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Earnings Per Common and Common
Equivalent Share.................. $ .09 $ .01
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</TABLE>
See accompanying notes
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<PAGE>
THE MIDDLEBY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
April 1, 1995 April 2, 1994
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<S> <C> <C>
Cash Flows From Operating Activities-
Net earnings........................... $ 743,000 $ 133,000
Adjustments to reconcile net
earnings to cash provided by
operating activities-
Depreciation and amortization........ 724,000 641,000
Utilization of Subsidiary NOL's
credited to paid-in capital
(See Note 2)....................... 320,000 56,000
Changes in assets and liabilities-
Accounts receivable.................. (348,000) 467,000
Inventories.......................... (3,902,000) (1,265,000)
Prepaid expenses and other assets.... 814,000 (373,000)
Accounts payable and other
liabilities........................ 2,281,000 935,000
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Net Cash Provided by Operating
Activities........................... 632,000 594,000
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Cash Flows from Investing Activities-
Additions to property and equipment.... (569,000) (320,000)
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Net Cash Used by Investing
Activities........................... (569,000) (320,000)
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Cash Flows From Financing Activities-
Proceeds from note..................... 15,000,000 -
Proceeds from bank debt................ 31,000,000 -
Repayment of debt...................... (44,055,000) -
Payments of long-term debt............. (5,000) (4,000)
Increase in revolving credit, net...... 603,000 (200,000)
Cost of financing activities........... (1,717,000) -
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Net Cash Provided/(Used) by Financing
Activities........................... 826,000 (204,000)
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Changes in Cash and Cash Equivalents-
Net increase in cash and cash
equivalents.......................... 889,000 70,000
Cash and cash equivalents at
beginning of year.................... 667,000 425,000
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Cash and Cash Equivalents at End
of Quarter........................... $ 1,556,000 $ 495,000
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Interest paid............................ $ 527,000 $ 875,000
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Income taxes paid........................ $ 128,000 $ 23,000
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</TABLE>
See accompanying notes
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THE MIDDLEBY CORPORATION
------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 1, 1995
(Unaudited)
1) Basis of Presentation
The financial statements have been prepared by The Middleby Corporation
(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, although the
Company believes that the disclosures are adequate to make the information
not misleading. These financial statements should be read in conjunction
with the financial statements and related notes contained in the Company's
1994 Annual Report. Other than as indicated herein, there have been no
significant changes from the data presented in said Report.
In the opinion of management, the financial statements contain all
adjustments necessary to present fairly the financial position of the
Company as of April 1, 1995 and December 31, 1994, and the results of
operations and cash flows for the three months ended April 1, 1995 and
April 2, 1994, respectively.
2) Income Taxes
The Company files a consolidated Federal income tax return. In January,
1993, the Company adopted Statement of Financial Accounting Standards No.
109 ("SFAS 109"), Accounting for Income Taxes. SFAS 109 requires the
recognition of deferred tax assets and liabilities for expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. Adoption of SFAS 109 was effected through the
cumulative catch-up method.
The Company has recorded an income tax provision of $389,000 for the fiscal
three months ended April 1, 1995. Although the Company is not a Federal
taxpayer due to its NOL carry-forwards, a tax provision is still required
to be recorded. As a majority of the NOL carry-forwards relate to an old
quasi-reorganization, utilization of the NOL carry-forwards is recorded
as a credit to the tax provision, but is directly credited to paid-in
capital. The utilization of the net operating loss carry-forwards depends
on future taxable income during the applicable carry-forward periods. In
adopting SFAS 109 in 1993, the
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Company recorded a valuation allowance equal to the net deferred tax assets
to reflect the inherent uncertainty in being able to predict future events.
A tax asset of $1,350,000 was established as of December 31, 1994 with a
credit to provision for income taxes of $339,000 and a credit directly to
paid-in capital of $1,011,000. An additional $320,000 of the fiscal first
quarter 1995 tax provision has been credited to paid-in capital. The
reduction in the valuation allowance and increase in shareholders' equity
of $1,350,000 reflects management's judgment as to the Company's ability to
generate taxable income during the carry-forward periods. The remaining
net operating loss and tax credit carry-forwards available to the Company
will be recorded into income and equity at a future date.
3) Earnings Per Share
Earnings per share of common stock are based upon the weighted average
number of outstanding shares of common stock and common stock equivalents.
The treasury stock method is used in computing common stock equivalents,
which included stock options and a warrant issued in conjunction with the
senior secured note. The terms of the warrant provide for the purchase of
250,000 shares at $3 per share, however, under certain conditions, the
warrant terms provide for the purchase of 200,000 shares at $.01 per share.
Earnings per share were computed based upon the weighted average number of
common shares outstanding of 8,661,000 and 8,397,000 for the fiscal
quarters ended April 1, 1995 and April 2, 1994, respectively.
4) Inventories
Inventories are valued using the first-in, first-out method.
Inventories consist of the following:
<TABLE>
<CAPTION>
Apr. 1, 1995 Dec. 31, 1994
------------ -------------
<S> <C> <C>
Raw Materials and Parts $11,030,000 $ 8,404,000
Work in Process 6,268,000 5,866,000
Finished Goods 7,719,000 6,846,000
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$25,017,000 $21,116,000
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----------- -----------
</TABLE>
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<PAGE>
5) Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
Apr. 1, 1995 Dec. 31, 1994
------------ -------------
<S> <C> <C>
Accrued payroll and
related expenses......... $ 3,710,000 $ 4,800,000
Accrued commissions........ 2,047,000 2,191,000
Accrued warranty........... 1,420,000 1,365,000
Accrued interest........... 719,000 62,000
Other...................... 1,777,000 2,661,000
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$ 9,673,000 $11,079,000
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</TABLE>
6) Certain amounts have been reclassified in 1994 to be consistent with the
1995 presentation.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Unaudited).
RESULTS OF OPERATIONS
Net sales for the fiscal three months ended April 1, 1995 increased by
$3,974,000 (12.8%) compared to the prior year's three month period ended April
2, 1994. International sales increased 29% in the first quarter over 1994 and
represented 26% of total sales versus 22% in 1994. The increase in sales from
the prior year resulted from the success of several new product programs and
continued recognition by the foodservice industry of the Company's extensive
international sales and service network.
Gross profit increased $1,721,000 (21.5%) for the quarter compared to the prior
year's quarter. As a percentage of net sales, gross margin increased 2.0% to
27.8% for the quarter from the prior year's quarter. The increase in gross
margin is attributable primarily to increased sales volume, the success of new
product programs, improved product mix and operating efficiencies.
Selling, distribution, general and administrative expenses increased $487,000
(7.3%) for the three month period. As a percentage of sales, selling, general
and administrative expenses decreased to 20.6% for the three months ended April
1, 1995, compared to 21.7% for the prior year's three month period. The
improved results reflect leverage of expenses on a higher sales volume.
Interest expense for the fiscal quarter ended April 1, 1995 increased $280,000
(30.9%) compared to the prior year's quarter ended April 2, 1994. The increase
is primarily due to higher prevailing interest rates during the first quarter of
1995 compared to the first quarter of 1994.
The Company recorded net earnings of $743,000 or $.09 per share for the three
month period ended April 1, 1995. This compared to net earnings of $133,000 or
$.01 per share for the three month period ended April 2, 1994. The first
quarter increase in net earnings is attributable to the success of several new
product programs, increased demand in international markets, improved operating
efficiencies, and leverage of operating expenses.
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<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
For the three months ended April 1, 1995, net cash provided by operating
activities before changes in assets and liabilities was $1,787,000 as compared
to $830,000 for the three months ended April 2, 1994. Net cash provided by
operating activities after changes in assets and liabilities was $632,000 as
compared to $594,000 in the prior year-to-date period. Increased operating
earnings and accounts payables were partially offset by increases in receivables
and inventories due to increasing volume.
On January 10, 1995, the Company's subsidiaries consummated a $57,500,000
financing package to replace existing bank debt of $44,000,000 and provide
working capital for future growth. The financing includes a $42,500,000 senior
secured credit facility from a group of lenders led by an affiliate of a major
international bank and a $15,000,000 senior secured note placement with a major
insurance company. The credit facility includes a $15,000,000 five-year term
loan, a $2,500,000 capital expenditure facility, and a $25,000,000 revolving
credit line. The senior secured notes have an eight-year term with payments
beginning in the sixth year and bear interest at 10.99%. A warrant for the
purchase of 250,000 shares of common stock at an exercise price of $3 per share
was issued in conjunction with the notes; however, under certain conditions, the
terms of the warrant provide for the purchase of 200,000 shares at $.01 per
share.
The Company incurred financing costs of $1,717,000 which will be amortized over
the average life of the note and bank debt's term. During the fiscal quarter,
the Company increased its borrowings under the revolving credit agreement by
$2,548,000 for payment of the financing costs and funding of operations.
Management believes the Company has sufficient financial resources available to
meet its anticipated requirements for funds for operations in the current fiscal
year and can satisfy the obligations under its credit and note agreements.
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<PAGE>
PART II OTHER INFORMATION
The Company was not required to report the information pursuant to Items 1
through 6 of Part II of Form 10-Q for any of the three months ended April 1,
1995, except as follows:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits - The following Exhibits are filed herewith:
Exhibit (10)(iii)(a) - Amended and Restated Employment Agreement of
William F. Whitman, Jr., dated January 1,
1995.
Exhibit (10)(iii)(b) - Amended and Restated Employment Agreement of
David P. Riley dated January 1, 1995.
Exhibit (10)(iii)(c) - The Middleby Corporation Retirement Plan for
Independent Directors adopted as of January
1, 1995.
Exhibit (10)(iii)(d) - 1995 Management Incentive Plan.
Exhibit (27) - Financial Data Schedule
b) Reports on Form 8-K - No such reports were filed during the quarter for
which this report is filed.
SIGNATURES
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.
THE MIDDLEBY CORPORATION
------------------------
(Registrant)
Date May 15, 1995 By: /s/ John J. Hastings
------------------------ -------------------------------
John J. Hastings, Executive
Vice President, Chief
Financial Officer and
Secretary
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<PAGE>
AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"AGREEMENT"), dated as of January 1, 1995 by and among The
Middleby Corporation, a Delaware corporation ("TMC"), Middleby
Marshall Inc., a Delaware corporation (the "COMPANY"),
(collectively the "EMPLOYER"), and William F. Whitman Jr.
("WHITMAN") amends and restates in its entirety the Employment
Agreement dated as of March 10, 1978 among the parties hereto
(or their respective predecessors), as modified and clarified as
of such date, and as amended by the Amendment to Employment
Agreement dated December 19, 1983, the Supplement to Employment
Agreement dated May 16, 1984, the Amendment to Employment
Agreement of William F. Whitman, Jr. dated as of January 1, 1991,
the Amendment to Employment Agreement of William F. Whitman, Jr.
dated June 17, 1993, and the Amendment to Employment Agreement of
William F. Whitman, Jr. dated December 23, 1994 (as so amended,
modified, clarified and supplemented, the "ORIGINAL AGREEMENT").
R E C I T A L:
The Employer desires to continue the employment of
Whitman as Chairman of the Board of Directors of TMC and Chairman
of the Board of Directors of the Company; Whitman desires to
continue to serve the Employer in such capacities, all of the
terms and conditions hereinafter provided.
NOW, THEREFORE, the parties hereto hereby amend and
restate the Original Agreement in its entirety as follows:
<PAGE>
1. EMPLOYMENT. The Employer agrees to employ Whitman
and Whitman agrees to be employed by the Employer subject to the
terms and provisions of the Agreement.
2. TERM. The employment of Whitman by Employer as
provided in Section 1 will be for a period commencing on
January 1, 1995 and ending on December 31, 2000, unless sooner
terminated as hereinafter provided.
3. DUTIES. Whitman shall serve as Chairman of the
Board of Directors of TMC and shall have such powers and duties
as may be from time to time prescribed by the Board of Directors
of TMC, provided that the nature of Whitman's powers and duties
so prescribed shall not be inconsistent with Whitman's position
and duties hereunder. Whitman shall also serve as Chairman of
the Board of Directors of the Company reporting only to the Board
of Directors of the Company and shall have the powers and duties
as may from time to time be prescribed by the Board of Directors
of the Company. Whitman shall devote such portion of his time as
shall be necessary to manage the business and affairs of Employer
and shall use his best efforts to advance the best interests of
Employer, provided, however, that Whitman shall be permitted to
invest in real estate and engage in other outside business
activities which are not related to or competitive with the
business and affairs of Employer for which he may receive
compensation, and provided further that such activities do not
unreasonably interfere with the performance of his duties and
obligations hereunder. If elected as such, Whitman shall serve as
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a member of the Executive Committee of the Board of Directors
of TMC and the Company. The Employer shall indemnify Whitman to
the fullest extent permitted by the General Corporation Law of
the State of Delaware, as amended from time to time for all
amounts (including, without limitation, judgments, fines,
settlement payments, expenses and attorneys' fees) incurred or
paid by Whitman in connection with any threatened, pending or
completed action, suit, investigation or proceeding, whether
civil, criminal, administrative or investigative, arising out of
or relating to the performance by Whitman of services for, or the
acting by Whitman as a director, officer or employee of TMC, the
Company, any subsidiary of TMC or the Company or any other person
or enterprise at TMC's or the Company's request. The Company and
TMC shall each use their best efforts to obtain and maintaining
full force and effect during the term of this Agreement
Directors' and Officers' Liability Insurance Policies providing
full and adequate protection to Whitman, for all his capacities,
provided that the Boards of Directors of TMC and the Company
shall have no obligation to purchase such insurance if, in their
opinion, coverage is available only on unreasonable terms.
4. COMPENSATION DURING EMPLOYMENT; RELATED MATTERS.
(a) BASE SALARY. Commencing January 1, 1995, the
Employer shall pay to Whitman a base salary at a rate per annum
not less than $350,000, payable in equal semimonthly installments
during the period of Whitman's employment hereunder. The Boards
of Directors of Employer at least annually will review Whitman's base
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salary and other compensation during the period of his
employment hereunder with a view to the increase thereof based
upon his performance, inflation, then prevailing industry salary
scales and other relevant factors. Any increase in base salary
or other compensation shall in no way limit or reduce any other
obligation of TMC or the Company hereunder and, once established
at an increased specified rate, Whitman's base salary hereunder
shall not thereafter be reduced.
(b) BONUSES. Employer shall establish a bonus pool to
which shall be credited each year beginning January 1, 1995, an
amount equal to 6% of the operating profits of Employer
calculated prior to tax, interest, corporate office and other
allocation charges. Whitman shall be entitled to a distribution
of one-half of such bonus pool subject to the terms and
conditions of the bonus pool program. In addition, Whitman shall
be entitled to a one-half participation in any other bonus or
similar program established by Employer. All such payments shall
be separate from and in addition to the base salary paid under
subsection 4(a).
(c) EXPENSE REIMBURSEMENT. Employer shall reimburse
Whitman for those reasonable, proper and necessary expenses
incurred by him in connection with the business of Employer for
which he submits itemized statements in reasonable detail.
(d) PARTICIPATION IN BENEFIT PLANS. Whitman shall be
entitled to participate in or receive benefits under any pension
plan, profit sharing plan, stock option plan, stock purchase plan
or arrangement, health-and-accident plan, or any other employee
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benefit plan or arrangements made available in the future by TMC
or the Company, or any of their respective subsidiaries, to its
executives and key management employees. Nothing paid to Whitman
under any such plan or arrangement (or under any such plan or
arrangement presently in effect, other than under the bonus pool
program referred to in subsection 4(b) above) shall be deemed or
treated as a payment to Whitman hereunder.
(e) VACATION. Whitman shall be entitled to paid
vacation days in each calendar year determined by the Employer
from time to time, but not less than six weeks in any calendar
year, prorated in any calendar year during Whitman is employed
hereunder for less than an entire year in accordance with the
number of days in such year during which he is so employed.
Whitman shall also be entitled to all paid holidays given by
Employer to their senior executive officers.
(f) MINIMUM SPECIFIED BENEFITS. Notwithstanding
Whitman's participation in any benefit plans under subsection
4(d), Whitman shall be entitled to the minimum specified benefits
listed in Exhibit A hereto during the term of this Agreement and
for a period of one year after termination hereof.
5. REGISTRATION RIGHTS.
(a) DEMAND RIGHTS. Upon the written request of
Whitman at any time, but no more than once during the term of
this Agreement, (which request shall specify the number of shares
of TMC common stock owned by Whitman and which he intends to sell
or dispose of (collectively "TMC SHARES") and terms and
conditions of
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sale or disposal), TMC shall as promptly as is
reasonably possible, prepare, file and use its best efforts to
cause to become effective a registration statement under the
Securities Act of 1933, as amended (the "ACT"), or any similar
statute then in effect, with respect to the TMC Shares and TMC
shall take whatever action may be necessary to permit such sale
or other disposition of the TMC Shares.
(b) INCIDENTAL RIGHTS. If TMC at any time proposes to
file a registration statement covering proposed sales for cash of
any of its equity securities under the Act or any similar federal
statute then in effect, it will give written notice to Whitman
and at the written request of Whitman within twenty days of
receipt of such notice, which request cannot be made more than
twice during the term of this Agreement (which written requests
shall specify the number of TMC Shares intended to be sold or
disposed of and terms and conditions of sale or disposal), TMC
shall use its best efforts to cause such TMC Shares to be
included in the registration statement and take whatever action
is necessary to permit such sale or other disposition.
(c) GENERAL. TMC shall keep effective and maintain
any registration specified in the two immediately preceding
Subsections for a period not exceeding six months as Whitman may
request and from time to time during such period shall amend or
supplement the prospectus used in connection therewith to the
extent necessary to comply with applicable law. TMC shall
furnish Whitman with as many copies of any prospectus (and of any
amended or supplemental
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prospectus) in connection with any such
registration as he may reasonably request and TMC shall, when
requested by Whitman, take any action necessary to permit the
offering of TMC Shares under the securities laws of such states
as he may designate.
(d) EXPENSES. All expenses, disbursements and fees in
connection with any action required to be taken under this
Section 5 shall be borne by TMC and shall not be borne by
Whitman.
(e) LEGAL OPINION. At the time when any registration
statement under the Act pursuant to this Section 5 becomes
effective and at the time of each post effective amendment, TMC
will furnish to Whitman an opinion of counsel reasonably
satisfactory to Whitman to the effect that to the best of the
knowledge of such counsel, (i) no stop order suspending the
effectiveness of the registration statement has been issued and
no proceedings for that purpose have been instituted or are
pending or contemplated under the Act, (ii) the registration
statement and the prospectus as of the effective date of the
registration statement or amendment, as the case may be, appeared
on their face to be appropriately responsive in all material
respects to the requirements of the Act and the applicable rules
and regulations of the Securities and Exchange Commission
thereunder (iii) such counsel have no reason to believe that the
registration statement or the prospectus, as of the effective
date of the registration amendment, as the case may be, contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make
the statements therein not
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misleading, and (iv) the TMC Shares
offered thereunder have been duly authorized and upon issuance
will be fully paid and nonassessable, and it is understood that
counsel need not express any opinion or belief as to the
financial statements or financial data contained in the
registration statement or prospectus and need assume no
responsibility for the accuracy, completeness or fairness of the
statements contained in the registration statement and prospectus
and need assume no responsibility for the accuracy, completeness
or fairness of the statements contained in the registration
statement and prospectus (or any amendment or supplement thereto)
except for those made in the prospectus under the captions
setting forth descriptions of the common stock of TMC and any
underwriting agreement to which the TMC is a party insofar as
they relate to the provisions of statements therein described.
(f) INDEMNIFICATION. TMC hereby agrees to indemnify
Whitman against all losses, claims, damages, liabilities and
expenses and actions (under the Act, common law or otherwise)
caused by any untrue statement or alleged untrue statement of a
material fact contained in any such registration statement or
prospectus (and as amended or supplemented if TMC furnished any
amendments or supplements thereto) or any preliminary prospectus
or caused by any omission or alleged omission to state therein a
material fact required to be stated therein necessary to make the
statements therein not is leading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by any untrue
statement or omission contained in information furnished in
writing
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to TMC by Whitman expressly for use therein. If the
offering pursuant to any such registration statement is made
through underwriters, TMC agrees to enter into an underwriting
agreement in customary form with such underwriters and to
indemnify such underwriters and each person who controls such
underwriters within the meaning of the Act or any similar federal
statute then in effect to the same extent as herein before
provided and as appropriate with respect to the indemnification
of Whitman. In connection with any registration statement in
which Whitman is participating, Whitman will furnish to TMC in
writing such information as shall reasonably be required by
Whitman for use in any such registration statement or prospectus
and Whitman will indemnify TMC, its directors and officers, each
underwriter and each person, if any, who controls TMC or any
underwriter within the meaning of the Act, against any losses,
claims, damages, liabilities and expenses and actions in respect
thereof (under the Act or common law or otherwise) resulting from
any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact
required to be stated in the registration statement or prospectus
and necessary to take the statements therein not misleading, but
only to the extent that such untrue statement or omission is
contained in information so furnished in writing by Whitman
expressly for use therein.
6. TERMINATION.
(a) Whitman's employment hereunder may be terminated
(unless a notice of dispute is given as below provided) upon not
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less than 60 days' written notice by the Boards of Directors of
TMC and the Company to Whitman in the event that Whitman
hereafter (i) shall willfully fail to comply with any of the
material terms of this Agreement, (ii) shall willfully fail to
perform his duties hereunder, or (iii) shall willfully engage, in
his capacity as an executive officer of the Employer, in gross
misconduct injurious to either TMC or the Company, and a vote to
such effect shall have been adopted by not less than a majority
of the directors then in office of TMC or the Company (whichever
is applicable), after reasonable notice to Whitman and an
opportunity for him to be heard before such Board. For purposes
of this Subsection 6(a) no act, or failure to act, on Whitman's
part shall be considered "WILLFUL" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that
his action or omission was in the interest of TMC or the Company.
(b) Whitman's employment hereunder may be terminated
(unless a notice of dispute is given as provided below) upon not
less than 60 days' written notice by the Boards of Directors of
the Employer to Whitman in the event that (i) the Boards shall
have received a written statement from a reputable independent
physician to the effect that Whitman shall have become so
incapacitated as to be unable to resume within the ensuing 12
months his employment hereunder by reason of physical or mental
illness, or (ii) Whitman shall not have substantially performed
his duties hereunder for six consecutive months (exclusive of any
vacation permitted under subsection 4(e) hereof) by reason of any
such physical or mental
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illness; and in the event Whitman's
employment hereunder is terminated pursuant to this Subsection
6(b), commencing with the effective date of such termination, the
Employer shall pay and provide the benefits described in Section
7 below.
(c) If, within thirty days after any notice of
termination is given as provided above, Whitman informs the
Employer in writing that a dispute exists concerning such
termination, such termination shall not occur until the date on
which such dispute is finally resolved, either by mutual written
agreement of the parties, by a binding and final arbitration
award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected). During the
pendency of any dispute pursuant to a notice given pursuant to
this Subsection 6(c), the Employer will continue to pay and
provide to or for Whitman all of the compensation and benefits
provided for during the term of this Agreement, except that,
until such dispute is finally resolved as provided above,
Whitman's base salary shall be paid at the rate of 75% of his
base salary in effect immediately prior to the date of the notice
of termination. If there is a final determination to the effect
that the Employer did not have a proper basis for such
termination, the Employer shall promptly pay or provide to
Whitman the total amount by which his base salary payments were
reduced pursuant to the preceding sentence.
(d) In the event the Employer breaches any of the
provisions of this Agreement in any material respect and such
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breach shall continue after 30 days notice thereof from Whitman,
such breach shall constitute a constructive termination of
Whitman's employment by the Employer in a manner not permitted by
this Agreement, and Whitman may (but shall not be required to)
terminate his employment hereunder. Should Whitman elect to
terminate his employment hereunder upon any such constructive
termination by the Employer, Whitman shall be entitled to receive
on the date of such termination an amount equal to two (2) times
his annual base salary in effect at the date of such breach and
in addition the Employer shall commence to pay and provide the
benefits described in Section 7 below. Should Whitman elect not
to terminate his employment hereunder upon any such constructive
termination by the Employer, Whitman shall be entitled to
continue in the employ of the Employer subject to all of the
terms and provisions of this Agreement for a period of two years
from the date of such breach or until the expiration of the term
hereof, if later.
(e) Notwithstanding anything to the contrary contained
in this Agreement, the Board of Directors of the Employer may
terminate Whitman's active employment under this Agreement,
without cause, by giving at least 90 days written notice thereof
to Whitman. In the event of such termination:
(i) Whitman shall be entitled to receive (A) on
the date of such termination an amount equal to two (2) times his
annual base salary in effect at such date; and (B) bonuses as
specified in Subsection 4(b) through the two (2) year period
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commencing on the date of such termination (Any bonus due with
respect to a period of less than a full fiscal year shall be
payable promptly following determination of the operating profits
(before taxes, interest and charges) for such fiscal year in an
amount equal to the bonus calculated as provided in Subsection
4(b) multiplied by a fraction, the numerator of which is the
number of days from the commencement date of such fiscal year to
the Termination Date, and the denominator of which is 365); and
(ii) commencing on the date of such termination,
Whitman shall be entitled to receive the benefits described in
Section 7 below.
(f) In the event that the proportionate share of the
total outstanding voting securities of TMC held by any person
other than Whitman, or held by any group of two or more persons
who agree to act together for the purpose of acquiring, holding,
voting or disposing of the voting securities of TMC and Whitman
is not a member of such group, shall increase after the date
hereof by twenty-five (25) percentage points or more, then at any
time during the two (2) year period immediately following such
increase, Whitman shall have the right, upon written notice to
Employer, to terminate his employment and, upon such termination,
shall be entitled to receive from Employer (i) any and all
accrued but unpaid base salary and other compensation through the
date of termination, (ii) any and all benefits under Subsection
4(b) hereof accrued but unpaid to the date of termination, (iii)
the benefits described in Section 7 hereof, (iv) for a period of
one year
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beginning on the date of termination, all health and
medical benefits which Employer was providing to Whitman
immediately prior to such termination, and (v) as severance pay,
an amount equal to two years of base salary as in effect
immediately prior to such termination, such amount to be payable
in equal monthly installments during the two (2) year period
beginning on the date of termination. Upon such termination, the
provisions of Sections 9, 10 and 11 shall continue in full force
and effect; provided, however, that Whitman shall be bound by the
covenants set forth in Subsection 10(a) as if Employer had
elected to pay the base compensation specified in such Subsection
10(a); provided further that Employer shall not be obligated to
pay such base compensation or any other amount except as provided
above in this Subsection 6(f). This Subsection 6(f) shall apply
upon the occurrence of the events described herein without regard
to Subsection 6(g) hereof.
EXAMPLE: On January 1, 1995, Individual A, a person
other than Whitman, owns 2.42% of the total outstanding voting
securities of TMC. Thereafter Individual A commences a series of
open market purchases, and on March 3, 1996 for the first time
his holdings exceed 27.42% of the total outstanding voting
securities of TMC. Whitman may terminate his employment with
Employer at any time from March 3, 1996 through March 3, 1998,
and upon such termination shall be entitled to those amounts set
forth in this Section 6(f).
(g) Whitman may elect to terminate his active
employment under this Agreement by giving at least 90 days
written notice to
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the Company. Whitman's compensation and other
benefits hereunder shall cease as of the date specified in such
notice, and Whitman shall be entitled to receive from Employer
(i) any and all accrued but unpaid base salary and other
compensation through the date of termination, (ii) any and all
benefits under Subsection 4(b) hereof accrued but unpaid to the
date of termination, and (iii) the benefits described in Section
7 hereof, and the provisions of Sections 9, 10 and 11 shall
continue in full force and effect. This Subsection 6(g) shall
not apply to any termination to which Subsection 6(d) or 6(f)
applies.
7. RETIREMENT.
(a) MONTHLY BENEFITS.
In addition to Whitman's participation in any pension
plan referred to in Subsection 4(d) hereof, the Employer will
after termination of Whitman's employment with the Employer for
any reason or for no reason, pay to Whitman or his designee
retirement benefits (calculated as provided below) in equal
monthly installments commencing on the first day of the month
following the effective date of such termination of employment.
Each monthly installment of retirement benefits shall be in an
amount equal to one-twelfth (1/12) of seventy-five percent (75%)
of Whitman's Total Compensation in effect during the last year of
his employment with the Employer.
In addition, on each anniversary of the date of the
first payment of retirement benefits pursuant to this Subsection
7(a), the Employer shall increase the amount of such retirement
benefits
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payable on and after such anniversary date by a
percentage equal to the percentage increase in the Consumer Price
Index For All Urban Consumers for the twelve (12) month period
then ended. Any such retirement benefits will be reduced,
commencing March 1, 2005, by the amount per month which Whitman
is entitled to receive under the Salaried Retirement Plan of the
Company which was terminated in 1982. Retirement benefits paid
pursuant to this Subsection 7(a) shall be paid to Whitman for his
life, provided, however, that in the event of his death prior to
age seventy-five (75), such retirement benefits shall be paid (or
shall continue, as the case may be) to such beneficiary or
beneficiaries as Whitman shall designate (or in the event of
default of such designation, to his estate) until the first day
of the month in which Whitman would have attained age seventy-
five (75).
For purposes hereof, "Total Compensation" for any year
of employment with the Employer shall mean the sum of (i)
Whitman's base salary from the Employer or any Affiliate in
effect during such year (without regard to any reduction pursuant
to Subsection 6(c) above), plus (ii) the annualized amount of
director's fees payable to Whitman by the Employer or any
Affiliate during such year for services rendered by him. For
purposes hereof, "Affiliate" shall mean (x) Asbury Associates,
Inc., and (y) any other direct or indirect majority- or wholly-
owned subsidiary of the Employer.
(b) HEALTH AND MEDICAL BENEFITS. In addition to the
benefits referred to in Subsection 7(a) hereof, the Employer,
after
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termination of Whitman's employment with the Employer for
any reason or for no reason, shall maintain in full force and
effect for the continued benefit of Whitman and his spouse all
health and medical plans and programs which the Employer
maintains for its senior executives and their families, provided
that such participation is permitted under the general provisions
of such plans and programs, and provided further that the
benefits under such plans and programs shall be secondary to any
governmentally provided benefits. In the event that Whitman's or
his spouse's participation in any such plan or program is barred
or otherwise not permitted, the Employer shall provide health and
medical benefits to Whitman and his spouse substantially similar
to those from which he or she was barred or in which he or she
was otherwise not permitted to participate. The Employer shall
provide such benefits to Whitman and his spouse for their
respective lives. The Employer may self-insure such benefits or
may purchase individual policies or plans to provide such
benefits. If, while eligible for benefits under this Subsection
7(b), Whitman becomes employed by any person and becomes eligible
for health and medical benefits under such employer's health
plan, the Employer shall be relieved, during the period of such
employment and to the extent of the benefits for which Whitman
and his spouse are eligible under such employer's plan, of the
obligation to provide the health and medical benefits described
in this Subsection 7(b). Nothing in this Subsection 7(b) shall
be construed to give Whitman the right
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to continued employment which is not expressly set forth
in this Agreement.
(c) In order to fund and secure the obligations of the
Employer under this Section 7, the Employer agrees at Whitman's
request to purchase within sixty (60) days after the end of each
year of his employment an annuity (from such insurance company as
Whitman may approve) in an amount necessary to fund Employer's
obligations under this Section 7.
8. DISPUTES. If Whitman or the Employer shall
dispute any termination of Whitman's employment hereunder or if
any dispute concerning any payment hereunder shall exist,
(a) either party shall have the right (but not the
obligation), in addition to all other rights and remedies
provided by law, to compel arbitration of the dispute in the City
of New York under the rules of the American Arbitration
Association by giving written notice of arbitration to the other
party within thirty days after notice of such dispute has been
received by the party to whom given, and
(b) if such dispute (whether or not submitted to
arbitration pursuant to subsection (a) above) results in a
determination that (i) the Employer did not have the right to
terminate Whitman's employment under the provisions of this
Agreement, (ii) Whitman did have the right to terminate his
employment under the provisions of this Agreement, or (iii) the
position taken by Whitman concerning payments to Whitman is
correct, as the case may be, the Employer shall promptly pay, or if
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theretofore paid by Whitman, shall promptly reimburse Whitman
for, all costs and expenses (including counsel fees) reasonably
incurred by Whitman in connection with such dispute.
9. PROTECTION OF CONFIDENTIAL INFORMATION
(a) COVENANT. Whitman acknowledges that his
employment by the Employer will, throughout the term of this
Agreement, bring him into close contact with many confidential
affairs of the Employer, including information about costs,
profits, markets, sales, products, key personnel, pricing
policies, operational methods, technical processes and other
business affairs and methods and other information not readily
available to the public and plans for future developments.
Whitman further acknowledges that the business of Employer is or
may hereafter be conducted throughout the world (the
"Territory"), that its products are marketed throughout the
Territory, that Employer competes in nearly all of its business
activities with other organizations which are or could be located
in nearly any part of the Territory and that the nature of the
services and position of Whitman are such that he is capable of
competing with Employer from nearly any location in the
Territory. In recognition of the foregoing, Whitman covenants
and agrees:
(i) That he will keep secret all confidential
matters of Employer and not disclose them to anyone outside of
the Employer, either during or after the term of this Agreement
except with the Employer's prior written consent; and
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(ii) That he will deliver promptly to Employer on
termination of this Agreement, or at any time Employer may so
request, all confidential memoranda, notes, records, reports and
other confidential documents (and all copies thereof) relating to
the Employer's business, which he may then possess or have under
his control.
(b) SPECIFIC REMEDIES. If Whitman commits a breach of
any of the provisions of Subsection 9(a), Employer shall have (i)
the right and remedy to have such provisions specifically
enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach will not provide an
adequate remedy to Employer, and (ii) the right and remedy to
require Whitman to account for and pay over to Employer all
compensation, profits, monies, accruals, increments or other
benefits (collectively "Benefits") derived or received by Whitman
as the result of any transactions constituting a breach of any of
the provisions of Subsection 9(a), and Whitman hereby agrees to
account for and pay over such Benefits to Employer.
10. RESTRICTION ON COMPETITION.
(a) COVENANT. In recognition of the considerations
described in Subsection 9(a), Whitman covenants and agrees that
(i) during the term of this Agreement and (ii) in the event the
Employer elects to pay Whitman the base compensation specified in
subsection 4(a) for a period of one year following termination of
this Agreement and the Employer is not in default of its
obligations under this Agreement, for a period of one year
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thereafter, he will not knowingly act or conduct himself to the
material detriment of the Employer in a manner which he has
reason to believe is inimical or contrary to the best interest of
the Employer through competition in the Territory materially
detrimental to the Employer. Notwithstanding the above, Whitman
shall not be restricted in any way from investments in real
estate. No breach of the condition of this Subsection 10(a)
other than a knowing, deliberate and material breach shall be
determined to have occurred unless and until Whitman shall have
received written notice from the Employer's Boards of Directors
to refrain from engaging in the conduct alleged to constitute
such breach, specifying the conduct so alleged and unless Whitman
shall thereafter and notwithstanding such notice have continued
to engage in such conduct after a reasonable opportunity to
refrain from
so doing.
(b) REMEDIES. In the event of the violation by Whitman
of any of the covenants of Subsections 9(a) or 10(a), such
violation shall be deemed to be "cause" for termination pursuant
to the terms of Subsection 6(a) hereof, and, in addition, the
Employer shall have the right and remedy to have the provisions
of Subsection 10(a) specifically enforced, it being acknowledged
and agreed that any such violation or threatened violation will
cause irreparable injury to the Employer and that money damages
will not provide an adequate remedy to the Employer.
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11. INDEPENDENCE, SEVERABILITY AND NON-EXCLUSIVITY.
Each of the rights and remedies enumerated in
Subsections 9(b) and 10(b) shall be independent of the other and
shall be in addition to and not in lieu of any other rights and
remedies available to the Employer under the law or in equity.
If any of the covenants contained in Subsections 9(b) or 10(b),
or any part of any of them, is hereafter construed to be invalid
or unenforceable, the same shall not affect the remainder of the
covenant or covenants or rights or remedies which shall be given
full effect without regard to the invalid options. The parties
intend to and do hereby confer jurisdiction to enforce the
covenants contained in Subsections 9(a) and 10(a) upon the courts
of any state of the United States and any other governmental
jurisdiction within the geographical scope of such covenants. If
any of the covenants contained in Subsections 9(a) or 10(a) is
held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the
court making such determination shall have the power to reduce
the duration and/or area of such provision and in its reduced
form said provision shall then be enforceable. No such holding
of unenforceability in one jurisdiction shall bar or in any way
affect the Employer's right to the relief provided above in the
courts of any other state or jurisdiction within the geographical
scope of such covenants as to breaches of such covenants in such
other respective states or jurisdiction, such covenants being,
for this purpose, severable into diverse and independent
covenants.
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12. SUCCESSORS. TMC and the Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of TMC or the Company, by agreement in
form and substance satisfactory to Whitman, to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that TMC or the Company would be required to perform
it if no such succession had taken place. As used in this
Agreement, "EMPLOYER" shall mean TMC and the Company as
hereinbefore defined and any successors to their business and/or
assets as aforesaid which executes and delivers the agreement
provided for in this Section 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of
law.
This Agreement and all rights of Whitman hereunder
shall inure to the benefit of and be enforceable by Whitman's
personal or legal representatives, executors, administrators,
administrators, successors, heirs, distributees, devisees and
legatees. If Whitman should die while any amount would still be
payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Whitman's estate.
13. PROCEEDING UNDER THE BANKRUPTCY ACT. In the event
either TMC or the Company is forced (or voluntarily places
itself) into a proceeding under the Bankruptcy Act, Whitman shall
be entitled to prove a claim for any unpaid portion of his base
salary under Subsection 4(a) through the expiration of the term
hereof
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and, if such claim is not discharged in full in such
proceeding, such claim shall survive any discharge of TMC or the
Company under any such proceeding.
14. NOTICES. All notices, requests, demands and other
communications made or given in connection with this Agreement
shall be in writing and shall be deemed to have been duly given
(a) if delivered, at the time delivered or (b) if mailed, at the
time mailed at any general or branch United States Post Office
enclosed in a registered or certified post-paid envelope
addressed to the address of the respective parties as follows:
TO TMC: 1400 Toastmaster Drive
Elgin, Illinois 60120
Attention: President
To the Company: 1400 Toastmaster Drive
Elgin, Illinois 60120
Attention: President
To Whitman: Capricorn Estate
231 Cleft Road
Mill Neck, New York 11765
or to such other address as the party to whom notice is to be
given may have previously furnished to the other party in writing
in the manner set forth above, provided that notices of changes
of address shall only be effective upon receipt.
15. MODIFICATIONS AND WAIVERS. No provision of this
Agreement may be modified or discharged unless such modification
or discharge is authorized by the Boards of TMC and the Company
and is agreed to in writing and signed by Whitman. No waiver by
either party hereto of any breach by the other party hereto of
any condition or Provision of this Agreement to be Performed by
such
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other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior
or subsequent time.
16. ENTIRE AGREEMENT. This Agreement supersedes all
prior agreements between the parties hereto relating to the
subject matter hereof, and constitutes the entire agreement of
the parties hereto relating to the subject matter hereof.
However, nothing in this Agreement is intended or shall be
interpreted to reduce the rate or eliminate any portion of
Whitman's compensation or benefits in effect under the Original
Agreement immediately prior to the date hereof.
17. LAW GOVERNING. Except as otherwise explicitly
noted, the validity, interpretation, construction, performance
and enforcement of this agreement shall be governed by the laws
of the State of Illinois.
18. INVALIDITY. The invalidity or unenforceability of
any term or terms of this agreement shall not invalidate, make
unenforceable or otherwise affect any other term of this
Agreement which shall remain in full force and effect.
19. HEADINGS. The headings contained herein are for
reference only and shall not affect the meaning or interpretation
of this Agreement.
20. JOINT AND SEVERAL. The liability hereunder of TMC
and the Company shall be joint and several.
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year set forth above.
THE MIDDLEBY CORPORATION
By /s/ David P. Riley
-----------------------------
President
MIDDLEBY MARSHALL INC.
By /s/ David P. Riley
-----------------------------
President
/s/ William F. Whitman, Jr.
-----------------------------
WILLIAM F. WHITMAN, JR.
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EXHIBIT A
1. The use of a current model automobile comparable in
quality and features to that historically provided to Whitman,
the costs of acquisition, maintenance, use and insurance of which
shall be borne by the Employer.
2. The initiation fees, dues and expenses of Whitman's
membership in two country clubs and such luncheon clubs as he may
determine are necessary or appropriate in connection with his
employment hereunder.
3. The costs of a term insurance policy on Whitman's
life, payable to such beneficiary or beneficiaries as Whitman may
designate, in an amount equal to two times Whitman's base salary.
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AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this
"Agreement") made and entered into as of January 1, 1995 by and
between The Middleby Corporation, a Delaware corporation
("Parent"), Middleby Marshall Inc., a Delaware corporation
("Subsidiary") (Parent and Subsidiary collectively being referred
to as the "Employer"), and David P. Riley of Schaumburg, Illinois
("Riley"), restates in its entirety the Employment Agreement
dated as of January 1, 1988, as amended by the Amendment No. 1 to
Employment Agreement of David P. Riley dated as of January 1,
1991, Amendment No. 2 to Employment Agreement of David Riley
dated June 17, 1993, Amendment No. 3 to Employment Agreement
of David Riley dated December 23, 1994, each by and among the
parties hereto (as so amended, the "Original Agreement").
R E C I T A L:
The Employer desires to continue the employment of
Riley as President of the Parent and President and Chief
Executive Officer of the Subsidiary; Riley desires to continue to
serve the Employer in such capacities, all of the terms and
conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, the parties hereto
hereby amend and restate the Original Agreement in its entirety
as follows:
1. EMPLOYMENT OF RILEY. Employer hereby employs Riley, and
Riley hereby accepts employment with Employer, upon and subject
to the terms and conditions hereinafter set forth.
<PAGE>
2. DUTIES OF RILEY.
(a) Riley shall serve in the capacity of President
of the Parent and President and Chief Executive Officer of the
Subsidiary or in such other executive capacities as the Board of
Directors of the Parent and Subsidiary may designate.
(b) Throughout the term of this Agreement Riley
shall devote substantially all of his time and effort as
reasonably may be required for him to perform the duties and
responsibilities to be performed by him under the terms of this
Agreement.
3. COMPENSATION.
(a) BASE SALARY. Commencing January 1, 1995, Employer
shall pay Riley a base salary per annum of not less
than $300,000, payable in accordance with the normal payroll
practices of Employer. If Employer increases Riley's base
salary, such increase or increases shall remain in effect for the
remainder of the term of this Agreement.
(b) BONUS POOL. Employer shall establish a bonus pool
for each fiscal year, to which shall be credited yearly an amount
equal to 6% of the operating profits of Employer (calculated
prior to tax, interest, corporate office and other allocation
charges). Riley shall be entitled to a one-half distribution
share of such yearly bonus pool, subject to the terms and
conditions of the bonus pool program.
(c) EXPENSE ALLOWANCE. Employer shall reimburse Riley
for those reasonable, proper and necessary expenses incurred by him
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in connection with the business of Employer for which he
submits itemized statements in reasonable detail.
(d) FRINGE BENEFITS. Notwithstanding Riley's
participation in any benefit plans hereunder, Riley shall be
entitled to the minimum specified benefits, all of which are
directly related to Employer's business, listed in Exhibit A
hereto, throughout the remaining term of his employment hereunder
or as otherwise provided in Section 4(g) hereof.
4. TERM AND TERMINATION.
(a) The term of this Agreement shall commence on
January 1, 1995 and terminate on the Expiration Date (as
hereinafter defined), (i) unless Riley shall sooner die,
whereupon this Agreement shall immediately terminate, or (ii)
unless Riley or Employer shall sooner terminate Riley's
employment as provided for in this Agreement. The Expiration Date
means December 31, 2000 or such earlier date as Employer may set
forth in a written notice to Riley given at least two years prior
to such earlier date.
(b) If the Board of Directors of Employer in the
exercise of good faith judgment determines that Riley has been
grossly incompetent, grossly negligent or dishonest in the
performance of his duties hereunder, or that Riley has been
convicted of a felony, then Employer may terminate Riley's
employment by giving Riley written notice of such termination.
If such termination results from a determination by the Board of
Directors that Riley has been grossly incompetent, then during
the period ending on the earlier to occur of (i) the Expiration Date,
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or (ii) six months after the effective date of such
termination, Riley shall be entitled to his minimum base salary
(exclusive of bonuses, fringe benefits and perquisites), offset
by all compensation earned by Riley from any other source during
such period. If such termination results from a determination by
the Board of Directors that Riley has been grossly negligent or
dishonest or has been convicted of a felony, then Riley shall not
be entitled to any further payments or benefits under this
Agreement following such termination of employment.
(c) If Employer gives notice under Section 4(a)
setting forth an early Expiration Date, Riley's employment
hereunder shall continue, and this Agreement shall remain in full
force and effect, until the early Expiration Date, except that
(i) Riley shall be allowed reasonable time off to search for new
employment, and (ii) if Riley voluntarily terminates employment
with Employer prior to the early Expiration Date, then (A) during
the remainder of the term ending on the early Expiration Date
(the "Foreshortened Term") Riley shall be entitled to his minimum
base salary (exclusive of bonuses, fringe benefits and
perquisites), offset by all compensation earned by Riley from any
other source during the remainder of the Foreshortened Term, and
(B) Employer will continue to provide health insurance for Riley
and his family until the earliest to occur of (x) the early
Expiration Date, (y) one year after Riley voluntarily terminates
employment with Employer, or (z) the date on which Riley obtains
similar insurance from any other source. If at any time during
the Foreshortened Term Riley
-4-
<PAGE>
directly or indirectly performs any
act described in Subsection 7(b)(i), (ii), (iii) or (iv), then
from and after such time Riley will have no further right to any
payments or benefits under this Subsection 4(c).
(d) If Employer relocates its executive offices
outside of the Chicago metropolitan area, and Riley refuses to
move from the Chicago metropolitan area, Riley's employment shall
terminate upon the effective date of a notice from Riley given
not later than 30 days after relocation of Employer's executive
offices. During the period ending on the earlier to occur of (i)
the Expiration Date, or (ii) two years after the date of such
relocation Riley shall be entitled to his minimum base salary
(exclusive of bonuses, fringe benefits and perquisites), offset
by all compensation earned by Riley from any other source during
such period, and Employer will continue to provide health
insurance for Riley and his family until the earlier to occur of
(A) the end of such period, or (B) the date on which Riley
obtains similar insurance from any other source.
(e) If Riley voluntarily terminates his employment
with Employer prior to the Expiration Date and such termination
is not under the circumstances described in Subsection 4(c), 4(d)
or 4(g) of this Agreement, then Riley shall not be entitled to
any further payments or benefits under this Agreement following
such termination of employment.
(f) In the event of Riley's Disability, Employer may
terminate Riley's employment by giving written notice to Riley.
-5-
<PAGE>
"RILEY'S DISABILITY" means Riley's failure to substantially
discharge Riley's duties under this Agreement for 90 days during
any twelve (12) month period as a result of illness, injury,
substance abuse or any other physical or mental incapacity. An
affirmative determination of Riley's Disability shall be made by
a licensed physician (chosen by the Company and approved by
Riley, which approval shall not be unreasonably withheld), which
determination shall be binding upon the parties. In such event
Riley shall be entitled to the following benefits during the
period beginning with the date of such termination and ending
upon the earlier to occur of (i) the second anniversary of such
termination, or (ii) the Expiration Date: (A) 50% (100% during
the first 90 days of such period) of his minimum base salary
(exclusive of bonuses, fringe benefits and perquisites) offset by
any benefits received by Riley during such period from disability
insurance paid for by Employer, and (B) health insurance for
Riley and his family until the end of such period or such earlier
date as Riley obtains similar insurance from any other source.
(g) In the event that the proportionate share of the
total outstanding voting securities of Parent held by any person
(other than Riley or William F. Whitman, Jr.), or held by any
group of two or more persons who agree to act together for the
purpose of acquiring, holding, voting or disposing of the voting
securities of Parent and neither Riley nor William F. Whitman,
Jr. is a member of such group, shall increase after the date
hereof by twenty-five (25) percentage points or more, then at any
time during the two (2)
-6-
<PAGE>
year period immediately following such
increase, Riley shall have the right, upon written notice to
Employer, to terminate his employment and, in connection with
such termination, shall be entitled to receive from Employer (a)
any and all accrued but unpaid base salary through the date of
termination, (b) any and all benefits under the bonus pool
program referred to in Subsection 3(b) hereof accrued but unpaid
to the date of termination, (c) the benefits described in Section
6 hereof, (d) for a period of one year beginning on the date of
termination, all health and medical benefits which Employer was
providing to Riley immediately prior to such termination, and (e)
as severance pay, an amount equal to two (2) years of base salary
as in effect immediately prior to such termination, such amount
to be payable in equal monthly installments during the two (2)
year period beginning on the date of termination. Upon such
termination, the provisions of Section 7 hereof shall continue in
full force and effect. This Subsection 4(g) shall apply upon the
occurrence of the events described herein notwithstanding
Subsection 4(e) hereof. Upon termination pursuant to this
Subsection 4(g), Riley's right to receive all other compensation
or benefits shall immediately terminate except as provided in
this Subsection 4(g) or in Section 6.
Example: On January 1, 1995, Individual A, a person other than
Riley, owns 2.42% of the total outstanding voting securities of
Parent. Thereafter, Individual A commences a series of open
market purchases, and on March 3, 1996 for the first time his
holdings exceed 27.42% of the total outstanding voting securities
of Parent.
-7-
<PAGE>
Riley may terminate his employment with Employer at
any time from March 3, 1996 through March 3, 1998, and upon such
termination shall be entitled to the amounts set forth in this
Subsection 4(g).
5. CONDUCT OF RILEY. Riley understands and agrees that the
business ethics of Employer and personal standards of its
employees must, at all times, be above reproach, and Riley agrees
to conduct himself in a manner to reflect credit upon Employer.
6. RETIREMENT.
(a) MONTHLY BENEFITS. Employer will after Riley's
termination of employment with Employer for any reason or for no
reason, pay to Riley or his designee retirement benefits
(calculated as provided below) in equal monthly installments
commencing on the first day of the month following the later to
occur of (i) the date of such termination of employment, or (ii)
Riley's 55th birthday (whether or not he is then living). Each
monthly installment of retirement benefits shall be in an amount
equal to one-twelfth (1/12) of the percentage of Riley's Total
Compensation in effect during the last year of his employment
with Employer indicated opposite the latest date set forth below
preceding the date of termination of his employment:
<TABLE>
<CAPTION>
Date Percentage of Total Compensation
- --------------- --------------------------------
<S> <C>
January 1, 1995 10%
January 1, 1996 15%
January 1, 1997 20%
January 1, 1998 25%
January 1, 1999 35%
January 1, 2000 40%
January 1, 2001 45%
January 1, 2002 50%
</TABLE>
-8-
<PAGE>
Retirement benefits paid pursuant to this Subsection 6(a) shall
be paid to Riley for his life, provided, however, that in the
event of his death prior to age seventy-five (75), such
retirement benefits, reduced by 50%, shall be paid (or shall
continue, as the case may be) to Riley's spouse until the first
to occur of (i) the death of Riley's spouse, or (ii) the first
day of the month in which Riley would have attained age seventy-
five (75). In addition, on each anniversary of the date of the
first payment of retirement benefits pursuant to this Subsection
6(a), Employer shall increase the amount of such retirement
benefits payable on and after such anniversary date by a
percentage equal to the percentage increase in the Consumer Price
Index For All Urban Consumers for the twelve (12) month period
then ended. In the case of termination of employment under
Subsection 4(f), the Total Compensation amount used for the above-
mentioned formula shall not be affected by the 50% reduction
referred to in Subsection 4(f).
For purposes hereof, "TOTAL COMPENSATION" for any year
of employment with Employer shall mean the sum of (i) Riley's
base salary from Employer or any Affiliate in effect during such
year, plus (ii) the annualized amount of director's fees payable
by Employer or any Affiliate to Riley during such year for
services rendered by him. For purposes hereof, "AFFILIATE" shall
mean (x) Asbury Associates, Inc. and (y) any other direct or
indirect majority- or wholly-owned subsidiary of Employer.
(b) HEALTH AND MEDICAL BENEFITS. In addition to the
benefits referred to in Subsection 6(a) hereof, if Riley remains in
-9-
<PAGE>
the employ of Employer until the first to occur of (i) Riley's
55th birthday, or (ii) Riley's death, Employer, after termination
of Riley's employment with Employer for any reason or for no
reason, shall maintain in full force and effect for the continued
benefit of Riley and his spouse all health and medical plans and
programs which Employer maintains for its senior executives and
their families, provided that such participation is permitted
under the general provisions of such plans and programs, and
provided further that the benefits under such plans and programs
shall be secondary to any governmentally provided benefits. In
the event that Riley's or his spouse's participation in any such
plan or program is barred or otherwise not permitted, Employer
shall provide health and medical benefits to Riley and his spouse
substantially similar to those from which he or she was barred or
in which he or she was otherwise not permitted to participate.
Employer shall provide such benefits to Riley and his spouse for
their respective lives. Employer may self-insure such benefits
or may purchase individual policies or plans to provide such
benefits. Such benefits shall be in lieu of and not in addition
to benefits, if any, to which Riley would otherwise be entitled
under Subsection 4(f) hereof. If, while eligible for benefits
under this Subsection 6(b), Riley becomes employed by any person
and becomes eligible for health and medical benefits under such
employer's health plan, Employer shall be relieved, during the
period of such employment, and to the extent of the benefits for
which Riley and his spouse are eligible
-10-
<PAGE>
under such employer's
plan, of the obligation to provide the health and medical
benefits described in this Subsection 6(b).
7. COVENANTS OF RILEY.
(a) CONFIDENTIALITY. During and after the term of
this Agreement or any extension thereof, Riley shall not make any
use, for his own benefit or for the benefit of any person or
entity other than Employer, of any customer information, price
information, supplier information, trade secrets or any other
information or data of or pertaining to Employer, its business or
financial affairs made available to him in the course of his
employment with Employer and not generally known in the industry.
Upon termination of the term of this Agreement or any extension
thereof, for any reason (including expiration of the term,
resignation, disability, or discharge with or without cause),
Riley shall promptly surrender to Employer any and all such
information, trade secrets, data and all other files, records and
other material of or pertaining to Employer, its business and
financial affairs.
(b) RESTRICTIONS FOLLOWING CESSATION OF EMPLOYMENT.
If (1) Riley voluntarily terminates his employment prior to the
Expiration Date and such termination is not under the
circumstances described in Subsection 4(c) or 4(d) above, or (2)
Employer terminates Riley's employment pursuant to Subsection
4(b), then, in either of such events, for a period of twenty-four
(24) months commencing on the date of such termination of
employment, Riley will not, directly or indirectly, do any of the
following:
-11-
<PAGE>
(i) engage in or in any manner be associated, whether as an
officer, director, stockholder, partner, owner, employee or
consultant, with the operation, management, conduct or ownership
of any business which competes with any business conducted by
Employer at the time Riley ceases to be employed by Employer,
except that Riley shall not be prohibited from owning not in
excess of 2% of the voting power of such competing business;
(ii) solicit or accept orders for, or be employed by or
associated in business with any person who solicits or accepts
orders for, commercial food preparation equipment from
(A) any person who was a customer of
Employer at the time Riley ceased to be employed by Employer, or
(B) any person with whom Employer was
negotiating a customer relationship at the time Riley
ceased to be employed by Employer and who becomes a
customer of Employer within three (3) months after the
date Riley ceased to be employed by Employer;
(iii) employ or otherwise associate in business with any
person who is or was an employee or officer of Employer until one
(1) year after the cessation of the employment of such person
with or by Employer; or
(iv) induce any person who is an employee, officer, agent or
consultant of Employer to terminate said relationship.
-12-
<PAGE>
(c) ACKNOWLEDGMENT. Riley acknowledges that (i) he
has carefully considered the nature and scope of the foregoing
restrictions; (ii) such restrictions protect only the legitimate
proprietary interests of Employer; and (iii) enforcement of such
restrictions will not preclude Riley from finding employment
suited to his training and experience.
(d) INJUNCTIVE RELIEF. Riley agrees that his breach
of any of the provisions of this Section 7 may cause Employer
irreparable damage, and that in the event of such breach Employer
is entitled to injunctive relief in addition to damages and any
other relief that may be appropriate.
(e) INDEPENDENT COVENANTS. The covenants of Riley
contained in this Section 7 shall each be construed as an
agreement independent of any other provision in this Agreement,
and the existence of any claim or cause of action of Riley
against Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by
Employer of such covenants.
8. AMENDMENT. This Agreement may be modified or amended only
by a written instrument executed by Employer and Riley.
9. LAW GOVERNING. This Agreement shall be governed by and
construed under the laws of the State of Illinois, regardless of
the residence of Riley or the location of any legal action
brought to enforce this Agreement. Riley and Employer recognize
and agree that this Agreement will be performed partly or wholly
in the State of Illinois and therefore recognize and agree that any
-13-
<PAGE>
action arising out of any breach of this Agreement may be
maintained in the courts of the State of Illinois.
10. MISCELLANEOUS.
(a) This Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, Employer and its successors
and assigns. This Agreement shall inure to the benefit of
Riley's heirs, legatees, legal representatives and any
beneficiary of his designated pursuant to the provisions hereof,
but neither this Agreement nor any right or interest hereunder
shall be assignable by Riley without Employer's prior written
consent.
(b) Payments by Employer to Riley pursuant to the
provisions of this Agreement shall be in addition to, and not in
lieu of, any bonuses that he may receive in accordance with the
compensation policies and practices of Employer and any benefits
to which he may be entitled under any employee benefit plan of
Employer. However, this Agreement shall in no event guarantee
the payment to Riley of any bonuses, benefits under employee
benefit plans maintained by Employer, or any other amounts other
than the payments specifically set forth herein.
(c) Riley agrees that the terms and provisions of this
Agreement are confidential and that he will not disclose any part
thereof to any other person (other than his spouse and
beneficiaries and his attorneys, accountants and advisors)
without the written consent of Employer.
(d) It is not the intention of either party to violate
any public policy or statutory or common law, and if any covenant
-14-
<PAGE>
or condition of this Agreement is held to violate applicable law
or is otherwise held to be unenforceable by a court of competent
jurisdiction, the parties agree and it is their desire that such
court shall substitute in its place a judicially enforceable
covenant or condition as similar as possible to the original, and
that as so modified the covenant or condition shall be binding
upon the parties as if originally set forth herein.
(e) No term or condition of this Agreement shall be
deemed to have been waived nor shall there be any estoppel to
enforce any provision of this Agreement except by written
instrument of the party charged with such waiver or estoppel.
(f) This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original.
(g) All notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been
delivered when delivered personally or deposited in the United
States mail, certified mail, postage prepaid, addressed as
follows:
If to Employer:
The Middleby Corporation
1400 Toastmaster Drive
Elgin, Illinois 60120
Attention: William F. Whitman, Jr.,
Chairman of the Board
If to Riley:
David P. Riley
518 East Kenilworth Lane
Schaumburg, Illinois 60193
or to such other address as either party may designate for itself
by notice as above provided.
-15-
<PAGE>
8. ENTIRE AGREEMENT. This Agreement supersedes all prior
agreements between the parties hereto relating to the subject
matter hereof, and constitutes the entire agreement of the
parties hereto relating to the subject matter hereof. However,
nothing in this Agreement is intended or shall be interpreted to
reduce the rate or eliminate any portion of Riley's compensation
or benefits in effect under the Original Agreement immediately
prior to the date hereof.
9. JOINT AND SEVERAL. The liability hereunder of the
Parent and the Subsidiary shall be joint and several.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the day and year first above
written.
THE MIDDLEBY CORPORATION
and
MIDDLEBY MARSHALL INC.
By: /s/ William F. Whitman, Jr.
-----------------------------
William F. Whitman, Jr.
Chairman
/s/ David P. Riley
-----------------------------
DAVID P. RILEY
-16-
<PAGE>
EXHIBIT A
1. The use of a current model automobile comparable in
quality and features historically provided to Riley, the costs of
acquisition, maintenance, use and insurance of which shall be
borne by Employer.
2. The initiation fees, dues and expenses of Riley's
membership in two country clubs and such luncheon clubs as he may
determine are necessary or appropriate in connection with his
employment hereunder.
3. The costs of a term insurance policy on Riley's
life, payable to such beneficiary or beneficiaries as Riley may
designate, in an amount equal to two times Riley's base salary.
<PAGE>
THE MIDDLEBY CORPORATION
RETIREMENT PLAN FOR
INDEPENDENT DIRECTORS
THIS PLAN is adopted as of January 1, 1995 (the "Effective
Date") by The Middleby Corporation, a Delaware corporation (the
"Company"), for the benefit of its qualifying "Independent
Directors."
WHEREAS, in consideration of the good and valuable services
to be rendered to the Company by Independent Directors and in
order to offer the Independent Directors a package of
remuneration that is competitive with that which they could
expect to secure as directors elsewhere in the Company's
industry, the Company desires to offer Independent Directors this
Retirement Plan; and
WHEREAS, the Company intends that this Plan will be
structured so that Independent Directors will not be subject to
income tax liability with respect to their rights to retirement
benefits until payments are actually received;
NOW THEREFORE, the Company promises as follows:
1. ELIGIBLE DIRECTORS. Every director of the Company will
become a "Participant" in this Plan on the first date on which he
or she concurrently: (i) holds the office of a director; and (ii)
is not an employee of the Company or any of the Company's
subsidiaries, or the Company's parent or any subsidiaries of the
Company's parent ("Affiliates"). A director will be referred to
as an "Independent Director" herein when he or she meets both of
the preceding requirements concurrently. If an Independent
Director loses his or her status as such by virtue of becoming an
employee of the Company or an Affiliate, he or she will lose the
status of a Participant hereunder until such time as he or she
again becomes an Independent Director.
2. ELIGIBILITY FOR BENEFITS. Each Participant will become
entitled to benefits under this Plan when he or she retires from
the Board at the annual meeting following the date he or she
attains age 70; provided, however, that if a director had
attained age 70 prior to the Effective Date, he or she will be
entitled to benefits hereunder upon his or her retirement from
the Board. Only those who are Independent Directors at the time
of such retirement will be eligible for benefits hereunder.
<PAGE>
3. BENEFITS PAYABLE. Each Participant who becomes
entitled to benefits hereunder will be paid, each calendar
quarter, 25% of his or her last annual retainer received prior to
retirement. "Last annual retainer" will mean the annual rate of
the retainer payable in the year of the Participant's retirement
from the Board and not the retainer payments actually made to the
Participant in the twelve months immediately preceding retirement
unless, coincidentally, the Participant's retirement coincides
with the end of a year over which retainer rates are set. Fees
received for acting as a committee chairperson will not be
included as part of the Participant's "Last annual retainer."
Payments hereunder will be made on the first day of each calendar
quarter beginning with the calendar quarter that begins with or
next follows the date of the Participant's retirement from the
Board. Payments will be made over a period equal in length to
the number of full "Years of Service" rendered by the Participant
to the Company as an Independent Director.
4. YEARS OF SERVICE. For the purposes of paragraph 3 and
as a limitation on the period over which payments hereunder will
be made, no more than ten Years of Service as an Independent
Director will be taken into account. For the purpose of
calculating benefits, Years of Service will be measured in 365-
day periods beginning with the date on which the Participant
first becomes an Independent Director and ending on the date he
or she retires from the Board. Only the last period of
uninterrupted service as an Independent Director will be
considered for determining a Participant's Years of Service and
service as an Independent Director that preceded a period of
service as an employee/director will be ignored. Periods of
service as an Independent Director that were performed prior to
the Effective Date will be considered Years of Service hereunder,
subject to the other rules contained herein.
5. SURVIVOR'S RIGHTS. There will be no survivor's rights
under this Plan and if a Participant should die before all
payments owed under paragraph 3 are made, the Company will have
no further obligation to make any additional payments hereunder
with respect to that Participant.
6. FORFEITURES. If a Participant ceases to be a director
of the Company prior to attaining age 70 and for any reason
including, but not limited to death, disability, contraction of
the size of the Board, liquidation of the Company without a
successor in interest, resignation or failure to be reelected,
nothing will be owed to him or her under this Plan. If a
Participant attains pay status and the Company subsequently
determines that he or she breached a fiduciary duty to the
Company or its Affiliates while acting as a director, or
committed fraud or an act of gross misconduct against the Company
or any of its affiliates while an employee of the same, nothing
will thereafter be owed to such Participant or his/her
beneficiary hereunder.
7. NO FUNDING, NO ALIENATION. The Company will not be
obligated to make any investment or to set aside any funds to
discharge its obligation hereunder. If the Company does decide
to make investments or set aside funds to facilitate its obligation
2
<PAGE>
to pay benefits, the Participants and their
beneficiaries will not have a special or preferred interest in
such investment assets. Those assets will not be registered in
the Participants' names and will always remain the property of
the Company, even after Participants becomes entitled to payments
of benefits. The Participants' rights and the rights of their
beneficiaries under this Plan will be no greater than those of
any other general unsecured creditor of the Company. The
Participants and their beneficiaries may not assign, pledge,
encumber or in any other way attempt to anticipate their rights
under this Plan, and any attempt to do so will not bind the
Company and will not be honored by the Company.
8. CHANGE IN CORPORATE FORM. Subject to the provisions of
paragraph 9, this Plan shall be binding upon the Company and upon
its successor in interest after any merger, acquisition of the
Company, entry into receivership or other reorganization;
provided, however, that in anticipation of a merger of the
Company with, or an acquisition of the Company by an entity that
is not controlled by the individuals who or entity(ies) that
control the Company prior to such merger or acquisition, the
Company may, in its discretion, discharge its obligation to make
payments hereunder through an immediate lump sum payment.
9. WITHHOLDING AND PAYROLL TAXES. The gross amounts that
are described above as amounts owed by the Company will be
reduced by any required income, payroll or other tax withholding,
the ultimate incident to which is imposed by law upon the payee.
10. AMENDMENT AND TERMINATION. The provisions of this Plan
may be amended and the Plan may be terminated by the Company, but
only in a writing and only with respect to future accruals of
benefits, such that the effect of an amendment will be to
terminate future crediting of additional Years of Service and a
Participant's entitlement to benefits will be determined by his
or her status as an Independent Director upon attaining age 70
and retiring.
11. MISCELLANEOUS.
(a) Nothing in this Plan will give the Participant a separate
right to continued status as a director of the Company.
(b) Nothing in this Agreement will be deemed as the Company's
guarantee or promise to any Participant of any particular tax
treatment for the credits or payments referred to herein.
(c) This Agreement will be construed and governed under the laws
of the State of Illinois.
3
<PAGE>
(d) Any notice, election or communication referred to herein
will be in writing and will be hand delivered or mailed to the
last known address of the recipient.
(e) This Plan will not affect or impair the rights and
obligations of the parties under any other contract or
arrangement entered into between them: provided, however, that
amounts credited to Participants hereunder will not be considered
part of their compensation for the purposes of the Company's
pension, profit-sharing, 401(k), life insurance, long term
disability, vacation, bonus or other relevant program under which
benefits are calculated in reference to compensation.
THE MIDDLEBY CORPORATION
By: /s/ David P. Riley
-----------------------
David P. Riley
Its President and
Chief Executive Officer
4
<PAGE>
Exhibit II
CONFIDENTIAL
THE MIDDLEBY CORPORATION
MANAGEMENT INCENTIVE PLAN
CORPORATE STAFF
1995
ELIGIBILITY
To be eligible, an employee must be employed by the Company on the last day of
the fiscal year and have been in such incentive position a minimum of six (6)
months. If the employee works in such position for the minimum of six (6)
months, but less than twelve (12) months, the incentive compensation will be
prorated (i.e., seven months = 7/12). Incentive compensation is computed on the
employee's base salary as of the beginning of the year (January 1, 1995).
INCENTIVE PAYMENTS
Incentive compensation will be paid upon completion of the audited fiscal year
results of the Company, usually on or about March 1. Incentive compensation
awards under the 1995 Management Incentive Plan for certain positions are
subject to the conditions of The Middleby Corporation Stock Ownership Plan.
INCENTIVE CATEGORY
The incentive compensation will be based on the achievement of the following
category versus defined objective levels:
EARNINGS BEFORE INTEREST AND TAXES (EBIT) - Defined as Operating Profit less
other income or expense. EBIT includes the expense of the corporate and
operating division incentive compensation pools and excludes the expenses of The
Middleby Corporation entity. It is the intent of the Company that incentive
compensation is to be self-funded at the operating division level.
INCENTIVE COMPUTATION
The incentive compensation award will be computed based on the achieved level of
the objective (i.e. EBIT) and the designated percentage of the participant's
base salary. If the achieved level is between the plateaus, an extrapolation of
the percentage of salary will be computed.
The percentage of base salary (as of January 1, 1995) for incentive compensation
if 100% of the 1995 MIP objective is achieved and the maximum percentage for
your position are detailed on Attachment I.
INCENTIVE OBJECTIVES
Attachment II provides the MIP objective for the current fiscal year. The
objectives are correlated with the Operating Plan. A percentage of incentive
achievement for each objective is set for each level of the above categories.
These percentages do not necessarily increment or decrement in an arithmetical
progression.
<PAGE>
2
ATTACHMENT I
THE MIDDLEBY CORPORATION
1995 MANAGEMENT INCENTIVE PLAN
LEVEL: CORPORATE EXECUTIVE VICE PRESIDENT
PERCENT OF BASE SALARY (AS OF 1/1/95) IF 100% ACHIEVEMENT- 50%
MAXIMUM PAYOUT AS PERCENT OF BASE SALARY - 100%
INCENTIVE CATEGORY WEIGHTING-
EBIT- 100%
AWARD IS SUBJECT TO THE CONDITIONS OF THE MIDDLEBY CORPORATION STOCK OWNERSHIP
PLAN
- -------------------------------------------------------------------------------
LEVEL: CORPORATE VICE PRESIDENT
PERCENT OF BASE SALARY (AS OF 1/1/95) IF 100% ACHIEVEMENT- 30%
MAXIMUM PAYOUT AS PERCENT OF BASE SALARY- 60%
INCENTIVE CATEGORY WEIGHTING-
EBIT- 100%
AWARD IS SUBJECT TO THE CONDITIONS OF THE MIDDLEBY CORPORATION STOCK OWNERSHIP
PLAN
<PAGE>
3
ATTACHMENT II
<TABLE>
<CAPTION>
1995 MIP OBJECTIVES
EBIT OBJECTIVE ($000'S)
EBIT $ EVP'S VP'S
-------- ----- -----
<S> <C> <C> <C>
1994 ACTUAL $ 7,993
1995 MIP 100% OBJECTIVE $10,000
% OF SALARY IF AT 100% MIP OBJECTIVE 50% 30%
MAXIMUM BONUS % OF SALARY 100% 60%
OBJECTIVE LEVELS/% OF BASE SALARY
$ 6,750 5% 3%
7,250 10% 6%
7,750 20% 12%
8,500 30% 18%
9,250 40% 24%
10,000 50% 30%
10,400 60% 36%
10,800 70% 42%
11,200 80% 48%
11,600 90% 54%
12,000 100% 60%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
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0
0
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</TABLE>
