Exhibit 10.8
RESTATED EMPLOYMENT AGREEMENT
RESTATED EMPLOYMENT AGREEMENT, dated as of June 17, 1998, by
and between U.S. Industries, Inc., a Delaware corporation, with its principal
office at 000 Xxxx Xxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000 ("USI"), and Xxxxxxx
X. Xxxxxx, residing at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Executive").
W I T N E S S E T H:
WHEREAS, Executive and USI have previously entered into an
employment agreement (the "Employment Agreement");
WHEREAS, Executive is currently employed as Vice President -
Administration of USI;
WHEREAS, USI may relocate its principal executive offices to
Florida; and WHEREAS, USI and Executive desire to amend and restate the
Employment Agreement (the "Restated Employment Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
parties agree as follows:
1. Term of Employment. Executive's employment under this Restated
Employment Agreement commenced on February 22, 1995 (the "Commencement Date")
and will currently expire on February 21, 1999 (the "Employment Term"). Subject
to earlier termination pursuant to Section 7 hereof, the Employment Term shall
be automatically extended for additional terms of successive two (2) year
periods unless USI or Executive gives written notice to the other at least
ninety (90) days prior to the expiration of the then current Employment Term of
the termination of Executive's employment hereunder at the end of such current
Employment Term.
2. Positions. Executive shall serve as the Senior Vice
President-Administration of USI. If requested by the Board of Directors of USI
(the "Board") or the Chairman and so elected by the stockholders of USI,
Executive shall also serve on the Board without additional compensation.
Executive shall also serve, if requested by the Board or the Chairman, as an
executive officer and director of subsidiaries and a director of associated
companies of USI and shall comply with the policy of the Compensation Committee
of the Board (the "Compensation Committee") with regard to retention or
forfeiture of the director's fees.
(a) Executive shall report to any more senior officer of USI as
designated by the Chairman or the President and shall have such duties and
authority, consistent with her position as shall be assigned to her from time to
time by the Board, the Chairman, the President or such other more senior
officers of USI.
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(b) During the Employment Term, Executive shall devote substantially
all of her business time and efforts to the performance of her duties hereunder;
provided, however, that Executive shall be allowed, to the extent that such
activities do not materially interfere with the performance of her duties and
responsibilities hereunder, to manage her passive personal investments and to
serve on corporate, civic, or charitable boards or committees. Notwithstanding
the foregoing, Executive shall not serve on any corporate board of directors if
such service would be inconsistent with her fiduciary responsibilities to USI.
3. Base Salary. During the Employment Term after the date hereof,
USI shall pay Executive a base salary at the annual rate of not less than
$233,500. Base salary shall be payable in each case in accordance with the usual
payroll practices of USI. Executive's Base Salary shall be subject to annual
review by the Board in December of each year and may be increased, but not
decreased, from time to time upon recommendation of the Compensation Committee,
except, prior to a Change in Control, as defined in Section 10 hereof, it may be
decreased proportionately in connection with an across the board decrease
applying to all senior executives of USI. The base salary as determined as
aforesaid from time to time shall constitute "Base Salary" for purposes of this
Restated Employment Agreement.
4. Incentive Compensation. (a) Bonus. For each fiscal year or
portion thereof during the Employment Term which commences after the date
hereof, Executive shall be eligible to participate in an incentive pay plan of
USI established upon recommendation of the Compensation Committee that provides
an annualized cash bonus opportunity with a target bonus potential equal to at
least 70% of Base Salary. For USI's 1998 fiscal year, the target
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bonus potential under the annual incentive pay plan is equal to 60% of Base
Salary, and Executive shall, in the Compensation Committee's discretion, be
entitled to an additional bonus equal to 10% of Base Salary outside of such plan
if the plan targets are achieved.
(b) Restricted Stock. Any restricted stock plan and/or grants shall
provide that the restricted stock granted in 1995 (the "Restricted Stock") and
any other restricted stock that may thereafter be granted to Executive, shall
fully vest on a Change in Control. Furthermore, such plan and/or the grants
shall provide that if Executive retires (voluntarily or involuntarily other than
for Cause) at or after her sixty-second (62nd) birthday with ten (10) or more
years of service with USI or its predecessors (including without limitation HM
Anglo-American Ltd. ("HM")) and, in the case of voluntary retirement, Executive
gives USI at least six (6) months prior written notice of such retirement, an
additional portion of the Restricted Stock and any other restricted stock that
may thereafter be granted to Executive shall become nonforfeitable upon such
retirement. To determine such additional portion of each grant, Executive's
years and partial years of employment with USI during the applicable vesting
period shall be multiplied by two (2) and applied to the applicable vesting
schedule. The additional portion of a grant that shall become nonforfeitable
upon such retirement shall be equal to the amount calculated as aforesaid, less
the portion of the applicable grant which previously became nonforfeitable.
Notwithstanding the foregoing, the Compensation Committee may, in accordance
with terms of the restricted stock plan, vest a larger portion of such
restricted stock upon retirement.
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(c) Options. The options granted to Executive in 1995 (the
"Options") and all options that have or may hereafter be granted to Executive
shall fully vest upon a Change in Control. In addition, any option plan and/or
the grants thereunder shall provide that if Executive retires (voluntarily or
involuntarily other than for Cause) at or after her sixty-second (62nd) birthday
with ten (10) or more years of service with USI or its predecessors (including
without limitation HM) and, in the case of voluntary retirement, Executive gives
USI at least six (6) months prior written notice of such retirement, all options
granted to Executive shall fully vest on the date of such retirement.
(d) Other Compensation. USI may, upon recommendation of the
Compensation Committee, award to Executive such other bonuses and compensation
as it deems appropriate and reasonable.
5. Employee Benefits and Vacation. (a) During the Employment Term,
Executive shall be entitled to participate in all pension, retirement, savings,
welfare and other employee benefit plans and arrangements and fringe benefits
and perquisites generally maintained by USI from time to time for the benefit of
the senior executives of USI of a materially comparable level, in accordance
with their respective terms as in effect from time to time (other than any
special arrangement entered into by contract with an executive). Notwithstanding
the foregoing, after a Change in Control, during the Employment Term, Executive
shall be entitled to (i) coverage and benefits at least equal in the aggregate
to the benefits provided under the benefit plans and programs, including,
without limitation, any life insurance, medical insurance, disability, pension,
savings, incentive, retirement and other
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plans and programs, of USI applicable to Executive immediately prior to such
Change in Control, and (ii) any fringe benefits and prerequisites of at least
equal value to those provided by USI to Executive immediately prior to the
Change in Control. If Executive is currently provided with a leased automobile
or an automobile allowance, USI shall, as of the date hereof, continue the same
arrangement that currently exists, but reserves the right, upon recommendation
of the Compensation Committee, to modify the arrangement or change the level of
allowances in the future. To the extent permitted under applicable law, USI
shall not treat as compensation to Executive fringes and prerequisites provided
to Executive or the items under Section 6 below.
(b) During the Employment Term, Executive shall be entitled to
vacation each year in accordance with USI's policies in effect from time to
time, but in no event less than four (4) weeks paid vacation per calendar year.
Executive shall also be entitled to such periods of sick leave as is customarily
provided by USI for its senior executive employees.
6. Business Expenses. USI shall reimburse Executive for the travel,
entertainment and other business expenses incurred by Executive in the
performance of her duties hereunder, in accordance with USI's policies as in
effect from time to time.
7. Termination. (a) The employment of Executive under this Restated
Employment Agreement shall terminate upon the occurrence of any of the following
events:
(i) the death of Executive;
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(ii) the termination of Executive's employment by USI due to
Executive's Disability pursuant to Section 7(b) hereof;
(iii) the termination of Executive's employment by Executive
for Good Reason pursuant to Section 7(c) hereof;
(iv) the termination of Executive's employment by USI without
Cause;
(v) the termination of employment by Executive without Good
Reason upon sixty (60) days prior written notice;
(vi) the termination of employment by Executive, with or
without Good Reason during the thirty (30) day period commencing one
(1) year after the Change in Control (such thirty (30) day period
being referred to herein as the "Change in Control Protection
Period"), provided that Executive shall have a right to terminate
employment pursuant to this Section 7(a)(vi) and receive the amounts
under Section 8(c)(A)(i) and (ii) unless, simultaneous with the
Change in Control, USI or the person or entity triggering the Change
in Control delivers to Executive an irrevocable direct pay letter of
credit with regard to the amounts under Section 8(c)(A)(i) and (ii)
and satisfying the requirements of Section 7(g) hereof (and further
provided that the foregoing shall in no way affect full vesting of
Restricted Stock and Options, as well as other restricted stock and
options, if any, upon a Change in Control in accordance with Section
4 hereof);
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(vii) the termination of Executive's employment by USI for
Cause pursuant to Section 7(e);
(viii) The retirement of Executive by USI at or after her
sixty-fifth birthday to the extent such termination is
specifically permitted as a stated exception from applicable
federal and state age discrimination laws based on position and
retirement benefits.
(b) Disability. If, by reason of the same or related physical or
mental reasons, Executive is unable to carry out her material duties pursuant to
this Restated Employment Agreement for more than six (6) months in any twelve
(12) consecutive month period, USI may terminate Executive's employment for
Disability upon thirty (30) days prior written notice, by a Notice of Disability
Termination, at any time thereafter during such twelve (12) month period in
which Executive is unable to carry out her duties as a result of the same or
related physical or mental illness. Such termination shall not be effective if
Executive returns to the full time performance of her material duties within
such thirty (30) day notice period.
(c) Termination for Good Reason. A Termination for Good Reason means
a termination by Executive by written notice given within ninety (90) days after
the occurrence of the Good Reason event. For purposes of this Restated
Employment Agreement, "Good Reason" shall mean the occurrence or failure to
cause the occurrence, as the case may be, without Executive's express written
consent, of any of the following circumstances, unless such circumstances are
fully corrected prior to the date of termination specified in the Notice
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of Termination for Good Reason (as defined in Section 7(d) hereof): (i) Any
material diminution of Executive's positions, duties or responsibilities
hereunder (except in each case in connection with the termination of Executive's
employment for Cause or Disability or as a result of Executive's death, or
temporarily as a result of Executive's illness or other absence) or, after a
Change in Control, the assignment to Executive of duties or responsibilities
that are inconsistent with Executive's position; (ii) Removal of, or the
nonreelection of, Executive from the officer positions with USI specified herein
without election to a materially comparable or higher position; (iii) A
relocation of USI's principal executive offices to a location more than both
thirty-five (35) miles from Iselin, New Jersey (or, after USI has relocated its
principal executive offices to Florida to which Executive hereby consents and
waives any right to assert the occurrence of a Good Reason event as a result
thereof, the then location of such principal executive offices) and thirty-five
(35) miles from her residence at the time of the relocation, or a relocation of
Executive to a location more than thirty-five (35) miles from USI's then
principal executive offices; (iv) After a Change in Control, a failure by USI
(A) to continue any bonus plan, program or arrangement in which Executive is
entitled to participate immediately prior to the Change in Control (the "Bonus
Plans"), provided that any such Bonus Plans may be modified at USI's discretion
from time to time but shall be deemed terminated if (x) any such plan does not
remain substantially in the form in effect prior to such modification and (y) if
plans providing Executive with substantially similar benefits are not
substituted therefor ("Substitute Plans"), or (B) to continue Executive as a
participant in the Bonus Plans and Substitute Plans on at least the same basis
as to potential amount of the bonus and substantially the same level of criteria
for achievability thereof as Executive participated in
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immediately prior to any change in such plans or awards, in accordance with the
Bonus Plans and the Substitute Plans; (v) Any material breach by USI of any
provision of this Restated Employment Agreement, including without limitation
Section 11 hereof; (vi) If on the Board at the time of a Change in Control,
Executive's removal from or failure to be reelected to the Board thereafter; or
(vii) Failure of any successor to assume in a writing delivered to Executive
upon the assignee becoming such, the obligations of USI hereunder.
(d) Notice of Termination for Good Reason. A Notice of Termination
for Good Reason shall mean a notice that shall indicate the specific termination
provision in Section 7(c) relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for Termination for Good
Reason. The failure by Executive to set forth in the Notice of Termination for
Good Reason any facts or circumstances which contribute to the showing of Good
Reason shall not waive any right of Executive hereunder or preclude Executive
from asserting such fact or circumstance in enforcing her rights hereunder. The
Notice of Termination for Good Reason shall provide for a date of termination
not less than ten (10) nor more than sixty (60) days after the date such Notice
of Termination for Good Reason is given, provided that in the case of the events
set forth in Section 7(c)(ii) or (iii) the date may be two (2) days after the
giving of such notice.
(e) Cause. Subject to the notification provisions of Section 7(f)
below, Executive's employment hereunder may be terminated by USI for Cause. For
purposes of this Restated Employment Agreement, the term "Cause" shall be
limited to (i) willful misconduct by Executive with regard to USI or its
business; (ii) the refusal of Executive to follow the
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proper written direction of the Board, or a more senior officer of USI, provided
that the foregoing refusal shall not be "Cause" if Executive in good faith
believes that such direction is illegal, unethical or immoral and promptly so
notifies the Board or the more senior officer (whichever is applicable); (iii)
substantial and continuing willful refusal by Executive to attempt to perform
the duties required of her hereunder (other than any such failure resulting from
incapacity due to physical or mental illness) after a written demand for
substantial performance is delivered to Executive by the Board or a more senior
officer of USI which specifically identifies the manner in which it is believed
that Executive has substantially and continually refused to attempt to perform
her duties hereunder; (iv) Executive being convicted of a felony (other than a
felony involving a motor vehicle); (v) the breach by Executive of any material
fiduciary duty owed by Executive to USI; or (vi) Executive's dishonesty,
misappropriation or fraud with regard to USI (other than good faith expense
account disputes).
(f) Notice of Termination for Cause. A Notice of Termination for
Cause shall mean a notice that shall indicate the specific termination provision
in Section 7(e) relied upon and shall set forth in reasonable detail the facts
and circumstances which provide for a basis for Termination for Cause. Further,
a Notification for Cause shall be required to include a copy of a resolution
duly adopted by at least two-thirds of the entire membership of the Board at a
meeting of the Board which was called for the purpose of considering such
termination and which Executive and his representative had the right to attend
and address the Board, finding that, in the good faith opinion of the Board,
Executive engaged in conduct set forth in the definition of Cause herein and
specifying the particulars thereof in reasonable detail. The date of termination
for a Termination for Cause shall be the date indicated in the
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Notice of Termination. Any purported Termination for Cause which is held by a
court not to have been based on the grounds set forth in this Restated
Employment Agreement or not to have followed the procedures set forth in this
Restated Employment Agreement shall be deemed a Termination by USI without
Cause.
(g) The irrevocable direct pay letter of credit required to be
delivered pursuant to Section 7(a)(vi) shall be in amount equal to the amount
Executive would be entitled to under Section 8(c)(A)(i) and (ii) hereof if she
was terminated without Cause upon the Change in Control (the "Occurrence") and
have an expiration date of no less than two (2) years after the Occurrence.
Executive shall be entitled to draw on the letter of credit upon presentation to
the issuing bank of a demand for payment signed by Executive that states that
(i) (A) a Good Reason event has occurred and Executive would be entitled to
payment under Section 8(c) of this Restated Employment Agreement if she elected
to terminate employment for Good Reason or (B) one (1) year and not more than
one (1) year and thirty (30) days has expired since the Occurrence or (C)
Executive is entitled to payment under Section 8(c) of this Restated Employment
Agreement and (ii) assuming the event set forth in (i) entitled her to payment
under Section 8(c) of this Restated Employment Agreement, the amount USI would
be indebted to her at the time of presentation under Section 8(c)(A)(i) and (ii)
if she then was eligible to receive payments under Section 8(c). There shall be
no other requirements (including no requirement that Executive first makes
demand upon USI or that Executive actually terminates employment) with regard to
payment of the letter of credit. To the extent the letter of credit is not
adequate to cover the amount owed to Executive by USI under this Restated
Employment Agreement, is not submitted by Executive or is not paid by the
issuing
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bank, USI shall remain liable to Executive for the remainder owed Executive
pursuant to the terms of this Restated Employment Agreement. To the extent any
amount is paid under the letter of credit it shall be a credit against any
amounts USI then or thereafter would owe to Executive under Section 8(c) of this
Restated Employment Agreement. The letter of credit shall be issued by a
national money center bank with a rating of at least A by Standard and Poors.
USI shall bear the cost of the letter of credit.
8. Consequences of Termination of Employment. (a) Death. If
Executive's employment is terminated during the Employment Term by reason of
Executive's death, the employment period under this Restated Employment
Agreement shall terminate without further obligations to Executive's legal
representatives under this Restated Employment Agreement except for: (i) any
compensation earned but not yet paid, including and without limitation, any
declared but unpaid bonus, any amount of Base Salary or deferred compensation
accrued or earned but unpaid, any accrued vacation pay payable pursuant to USI's
policies and any unreimbursed business expenses payable pursuant to Section 6
which amounts shall be promptly paid in a lump sum to Executive's estate; (ii)
the product of (x) the target annual bonus for the fiscal year of Executive's
death, multiplied by (y) a fraction, the numerator of which is the number of
days of the current fiscal year during which Executive was employed by USI, and
the denominator of which is 365, which bonus shall be paid when bonuses for such
period are paid to the other executives; (iii) subject to Sections 4(b) and (c)
hereof, full accelerated vesting under all outstanding equity-based and
long-term incentive plans (with options remaining outstanding as provided under
the applicable stock option plan and a pro rata payment under any long term
incentive plans based on actual coverage under
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such plans at the time payments normally would be made under such plans); (iv)
subject to Section 9 hereof, any other amounts or benefits owing to Executive
under the then applicable employee benefit plans or policies of USI, which shall
be paid in accordance with such plans or policies; (v) payment on a monthly
basis of six (6) months of Base Salary, which shall be paid to Executive's
spouse, or if she is not married or if he shall predecease her, then to
Executive's estate; and (vi) payment of the spouse's and dependent's COBRA
coverage premiums to the extent, and so long as, they remain eligible for COBRA
coverage, but in no event more than three (3) years. Section 11 hereof shall
also continue to apply.
(b) Disability. If Executive's employment is terminated by reason of
Executive's Disability, Executive shall be entitled to receive the payments and
benefits to which her representatives would be entitled in the event of a
termination of employment by reason of her death, provided that the payment of
Base Salary shall be reduced by the projected amount she would receive under any
long-term disability policy or program maintained by USI during the six (6)
month period during which Base Salary is being paid. Section 11 hereof shall
also continue to apply.
(c) Termination by Executive for Good Reason or for any Reason
During the Change in Control Protection Period or Termination by USI without
Cause or Nonextension of the Term by USI. If (i) outside of the Change in
Control Protection Period, Executive terminates her employment hereunder for
Good Reason during the Employment Term, (ii) a Change in Control occurs and
during the Change in Control Protection Period Executive terminates her
employment for any reason, (iii) Executive's employment with USI is
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terminated by USI without Cause, or (iv) Executive's employment with USI
terminates as a result of USI giving notice of nonextension of the Employment
Term pursuant to Section 1 hereof, Executive shall be entitled to receive (A)
subject to the second and third from last sentences of this Section 8(c), in a
lump sum within five (5) days after such termination (i) two (2) times Base
Salary, (ii) two (2) times the highest annual bonus paid or payable to Executive
for any of the previous two (2) completed fiscal years by USI and its
predecessors, (iii) any unreimbursed business expenses payable pursuant to
Section 6, and (iv) any Base Salary, Bonus, vacation pay or other deferred
compensation accrued or earned but not yet paid at the date of termination; (B)
subject to Sections 4(b) and (c) hereof, (i) vesting of the number of restricted
shares of each grant awarded to Executive equal to (I) the product of (x) the
number of restricted shares awarded to Executive in the grant, multiplied by (y)
a fraction, the numerator of which is the number of months Executive is employed
by USI during the applicable vesting period, and the denominator of which is the
total number of months in the applicable vesting period, less (II) the number of
restricted shares previously vested with regard to such grant, provided that,
however, if Executive's employment is terminated by the Company without Cause
(but for no other reason) Executive shall be vested in the greater of the
foregoing number of restricted shares and the number of restricted shares that
would otherwise be vested on the next vesting date following Executive's
termination of employment and notwithstanding the foregoing, the Compensation
Committee may, at any time and in accordance with the terms of the restricted
stock plan, vest a larger portion of the restricted shares granted to Executive,
(ii) all other equity-based compensation, including Options, that has vested as
of the date of termination in accordance with the applicable vesting schedule
and
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(iii) all benefits payable under the long term incentive plans as determined in
accordance with the terms of such plans; (C) subject to Section 9 hereof, any
other amounts or benefits due Executive under the then applicable employee
benefit plans of USI as shall be determined and paid in accordance with such
plans, policies and practices; (D) two (2) years of additional service and
compensation credit (at her then compensation level) for pension purposes under
any defined benefit type qualified or nonqualified pension plan or arrangement
of USI, which payments shall be made through and in accordance with the terms of
the nonqualified defined benefit pension arrangement if any then exists, or, if
not, in an actuarially equivalent lump sum (using the actuarial factors then
applying in USI's defined benefit plan covering Executive); (E) two (2) years of
the maximum Company contribution (assuming Executive deferred the maximum amount
and continued to earn her then current salary) under any type of qualified or
nonqualified 401(k) plan (payable at the end of each such year); and (F) payment
by USI of the premiums for Executive and her dependents' health coverage for two
(2) years under USI's health plans which cover the senior executives of USI or
materially similar benefits. Payments under (F) above may at the discretion of
USI be made by continuing participation of Executive in the plan as a terminee,
by paying the applicable COBRA premium for Executive and her dependents, or by
covering Executive and her dependents under substitute arrangements. In the
event that the termination entitling Executive to payments under this Section
8(c) occurs on or after February 22, 2001, but prior to a Change in Control, the
amounts payable under subparts (A)(i) and (ii) of this Section 8(c) beyond one
times the amounts specified shall not be paid in a lump sum, but shall be paid,
subject to Section 9 hereof, in twelve (12) equal monthly installments
commencing one (1) year after such termination. If there is a Change in Control
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thereafter, the amounts, if any, remaining to be paid pursuant to the preceding
sentence (and in accordance with Section 9 hereof) shall be paid in a lump sum
within five (5) days thereafter. In the circumstances of (i) through (iv) above,
Section 11 hereof shall also continue to apply.
(d) Termination with Cause or Voluntary Resignation without Good
Reason or Retirement. If Executive's employment hereunder is terminated (i) by
USI for Cause, (ii) by Executive without Good Reason outside of the Change in
Control Protection Period, or (iii) by USI pursuant to Section 7(a)(viii)
hereof, Executive shall be entitled to receive only her Base Salary through the
date of termination, any earned but unpaid bonus, and any unreimbursed business
expenses payable pursuant to Section 6. Subject to Section 4 hereof, all other
benefits (including without limitation restricted stock and options) due
Executive following such termination of employment shall be determined in
accordance with the plans, policies and practices of USI.
9. No Mitigation; Set-Off. In the event of any termination of
employment under Section 8, Executive shall be under no obligation to seek other
employment and prior to February 22, 2001 or after a Change in Control, there
shall be no offset against any amounts due Executive under this Restated
Employment Agreement on account of any remuneration attributable to any
subsequent employment that Executive may obtain. In the event of any termination
of employment entitling Executive to payments under Section 8(c) hereof on or
after February 22, 2001, and before a Change in Control, there shall be no
offset against any amounts due Executive under this Restated Employment
Agreement on account of any remuneration that Executive receives during the one
(1) year after Executive's employment
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terminates (the "One-Year Period"); but if, at any time after the One-Year
Period, but prior to a Change in Control, Executive is employed on a
substantially full time basis either as an employee or independent contractor
(other than self employed as an independent contractor doing special projects
for unrelated entities or unrelated consulting firms with no project scheduled
to extend, or extending on a substantially full-time basis for more than sixty
(60) days after the end of the One-Year Period) the amounts payable to her under
Section 8(c)(A)(i) and (ii) hereof shall cease. Any amounts due under Section 8
are in the nature of severance payments, or liquidated damages, or both, and are
not in the nature of a penalty. Such amounts are inclusive, and in lieu of any
amounts payable under any other salary continuation or cash severance
arrangement of USI and to the extent paid or provided under any other such
arrangement shall be offset from the amount due hereunder.
10. Change in Control. For purposes of this Restated Employment
Agreement, the term "Change in Control" shall mean (i) any "person" as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
("Act") (other than USI, any trustee or other fiduciary holding securities under
any employee benefit plan of USI, or any company owned, directly or indirectly,
by the stockholders of USI in substantially the same proportions as their
ownership of Common Stock of USI), becoming the "beneficial owner" (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of USI
representing twenty-five percent (25%) or more of the combined voting power of
USI's then outstanding securities; (ii) during any period of two (2) consecutive
years individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has entered
into an agreement with USI to effect a transaction described in clause
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(i), (iii), or (iv) of this paragraph) or a director whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Act)
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board) whose election by the Board or
nomination for election by USI's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of the Board; (iii) the stockholders of USI approve a merger or
consolidation of USI with any other corporation, other than a merger or
consolidation which would result in the voting securities of USI outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the combined voting power of the voting
securities of USI or such surviving entity outstanding immediately after such
merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of USI (or similar transaction) in
which no person acquires more than twenty-five percent (25%) of the combined
voting power of USI's then outstanding securities shall not constitute a Change
in Control of USI; or (iv) the stockholders of USI approve a plan of complete
liquidation of USI or an agreement for the sale or disposition by USI of all or
substantially all of USI's assets other than the sale or disposition of all or
substantially all of the assets of USI to a person or persons who beneficially
own, directly or indirectly, at least fifty percent (50%) or more of the
combined voting power of the outstanding voting securities of USI at the time of
the sale, including but not limited to, any
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entity which is, directly or indirectly, owned (based on normal issue voting
interests or capital interests) after completion of the transaction at least
fifty percent (50%) by the ultimate shareholders of the Company.
11. Indemnification. (a) USI and any other entity that becomes USI
agree that if Executive is made a party to or threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that she is or was a
director or officer of USI, such other company and/or any other affiliate of any
of such companies, or is or was serving at the request of any of such companies
as a director, officer, member, employee, fiduciary or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including, without limitation, service with respect to employee benefit plans,
whether or not the basis of such Proceeding is alleged action in an official
capacity as a director, officer, member, employee, fiduciary or agent while
serving as a director, officer, member, employee, fiduciary or agent, she shall
be indemnified and held harmless by the applicable company to the fullest extent
authorized by Delaware law (or, if other than USI, the law applicable to such
company), as the same exists or may hereafter be amended, against all Expenses
incurred or suffered by Executive in connection therewith, and such
indemnification shall continue as to Executive even if Executive has ceased to
be an officer, director, member, fiduciary or agent, or is no longer employed by
USI, and shall inure to the benefit of her heirs, executors and administrators.
This amendment and restatement shall not release Xxxxxx PLC ("PLC"), HM or any
of their affiliates from any indemnity or other obligation under Sections 11 of
the Employment Agreement prior to this amendment and restatement.
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(b) As used in this Restated Employment Agreement, the term
"Expenses" shall include, without limitation, damages, losses, judgments,
liabilities, fines, penalties, excise taxes, settlements and costs, attorneys'
fees, accountants' fees, and disbursements and costs of attachment or similar
bonds, investigations, and any expenses of establishing a right to
indemnification under this Restated Employment Agreement.
(c) Expenses incurred by Executive in connection with any Proceeding
shall be paid by USI in advance upon request of Executive and the giving by
Executive of any undertakings required by applicable law.
(d) Executive shall give USI notice of any claim made against her
for which indemnity will or could be sought under this Restated Employment
Agreement. In addition, Executive shall give USI such information and
cooperation as it may reasonably require and as shall be within Executive's
power and at such times and places as are reasonably convenient for Executive.
(e) With respect to any Proceeding as to which Executive notifies
USI of the commencement thereof:
(i) USI will be entitled to participate therein at its own
expense; and
(ii) Except as otherwise provided below, to the extent that it may
wish, USI jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
Executive.
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Executive also shall have the right to employ her own counsel in such action,
suit or proceeding and the fees and expenses of such counsel shall be at the
expense of USI.
(f) USI shall not be liable to indemnify Executive under this
Restated Employment Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. USI shall not settle any action
or claim in any manner which would impose any penalty or limitation on Executive
without Executive's written consent. Neither USI nor Executive will unreasonably
withhold or delay their consent to any proposed settlement.
(g) The right to indemnification and the payment of expenses
incurred in defending a Proceeding in advance of its final disposition conferred
in this Section 11 shall not be exclusive of any other right which Executive may
have or hereafter may acquire under any statute, provision of the certificate of
incorporation or by-laws of USI, agreement, vote of stockholders or
disinterested directors or otherwise.
(h) Each entity which is or becomes USI hereunder agrees to obtain
Officer and Director liability insurance policies covering Executive and shall
maintain at all times following the Commencement Date and during the Employment
Term coverage under such policies in the aggregate with regard to all officers
and directors, including Executive, of an amount not less than $20 million. USI
and each other entity which becomes USI shall maintain for a six (6) year period
commencing on the date Executive ceases to be an employee of such entity,
Officer and Director liability insurance coverage for events occurring during
the period Executive was an employee or director of such entity in the same
aggregate amount and under
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the same terms as are maintained for its active officers and directors. The
phrase "in the same aggregate amount and under the same terms" shall include the
same level of self-insurance by PLC or USI as shall be maintained for active
officers and directors.
12. Special Tax Provision. (a) Anything in this Restated Employment
Agreement to the contrary notwithstanding, in the event that any amount or
benefit paid, payable, or to be paid, or distributed, distributable, or to be
distributed to or with respect to Executive by USI (whether pursuant to the
terms of this Restated Employment Agreement or any other plan, arrangement or
agreement with USI, any person whose actions result in a change of ownership
covered by Internal Revenue Code (the "Code") Section 280G(b)(2) or any person
affiliated with USI or such person) as a result of a change in ownership of USI
or a direct or indirect parent thereof (other than in all instances PLC, Xxxxxx
Industries ("HI") or HM) covered by Code Section 280G(b)(2) (collectively, the
"Covered Payments") is or becomes subject to the excise tax imposed by or under
Section 4999 of the Code (or any similar tax that may hereafter be imposed),
and/or any interest or penalties with respect to such excise tax (such excise
tax, together with such interest and penalties, is hereinafter collectively
referred to as the "Excise Tax"), USI shall pay to Executive an additional
amount (the "Tax Reimbursement Payment") such that after payment by Executive of
all taxes (including, without limitation, any interest or penalties and any
Excise Tax imposed on or attributable to the Tax Reimbursement Payment itself),
Executive retains an amount of the Tax Reimbursement Payment equal to the sum of
(i) the amount of the Excise Tax imposed upon the Covered Payments, and (ii)
without duplication, an amount equal to the product of (A) any deductions
disallowed for federal, state or local income tax purposes because of the
inclusion
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of the Tax Reimbursement Payment in Executive's adjusted gross income, and (B)
the highest applicable marginal rate of federal, state or local income taxation,
respectively, for the calendar year in which the Tax Reimbursement Payment is
made or is to be made. The intent of this Section 12 is that (a) Executive,
after paying her federal, state and local income tax and any payroll taxes on
Executive, will be in the same position as if she was not subject to the Excise
Tax under Section 4999 of the Code and did not receive the extra payments
pursuant to this Section 12 and (b) that Executive should never be
"out-of-pocket" with respect to any tax or other amount subject to this Section
12, whether payable to any taxing authority or repayable to USI, and this
Section 12 shall be interpreted accordingly. For the avoidance of doubt, none of
PLC, HI nor HM shall in any event be liable for any payments due as a result of
a change in ownership (within the meaning of Code Section 280G(b)(2)) of USI
after the Spinoff.
(b) Except as otherwise provided in Section 12(a), for purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(i) such Covered Payments will be treated as "parachute
payments" (within the meaning of Section 280G(b)(2) of the Code) and such
payments in excess of the Code Section 280G(b)(3) "base amount" shall be
treated as subject to the Excise Tax, unless, and except to the extent
that, USI's independent certified public accountants appointed prior to
the change in ownership covered by Code Section 280G(b)(2) or legal
counsel (reasonably acceptable to Executive) appointed by such
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public accountants (or, if the public accountants decline such appointment
and decline appointing such legal counsel, such independent certified
public accountants as promptly mutually agreed on in good faith by USI and
Executive) (the "Accountant"), deliver a written opinion to Executive,
reasonably satisfactory to Executive's legal counsel, that Executive has a
reasonable basis to claim that the Covered Payments (in whole or in part)
(A) do not constitute "parachute payments", (B) represent reasonable
compensation for services actually rendered (within the meaning of Section
280G(b)(4) of the Code) in excess of the "base amount" allocable to such
reasonable compensation, or (C) such "parachute payments" are otherwise
not subject to such Excise Tax (with appropriate legal authority, detailed
analysis and explanation provided therein by the Accountants); and
(ii) the value of any Covered Payments which are non-cash
benefits or deferred payments or benefits shall be determined by the
Accountant in accordance with the principles of Section 280G of the Code.
(c) For purposes of determining the amount of the Tax Reimbursement
Payment, Executive shall be deemed:
(i) to pay federal, state and/or local income taxes at the
highest applicable marginal rate of income taxation for the calendar
year in which the Tax Reimbursement Payment is made or is to be
made, and
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(ii) to have otherwise allowable deductions for federal, state
and local income tax purposes at least equal to those disallowed due
to the inclusion of the Tax Reimbursement Payment in Executive's
adjusted gross income.
(d) (i) (A) In the event that prior to the time Executive has filed
any of her tax returns for the calendar year in which the change in ownership
event covered by Code Section 280G(b)(2) occurred, the Accountant determines,
for any reason whatever, the correct amount of the Tax Reimbursement Payment to
be less than the amount determined at the time the Tax Reimbursement Payment was
made, Executive shall repay to USI, at the time that the amount of such
reduction in Tax Reimbursement Payment is determined by the Accountant, the
portion of the prior Tax Reimbursement Payment attributable to such reduction
(including the portion of the Tax Reimbursement Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the portion of the
Tax Reimbursement Payment being repaid by Executive, using the assumptions and
methodology utilized to calculate the Tax Reimbursement Payment (unless
manifestly erroneous)), plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code.
(B) In the event that the determination set forth in (A)
above is made by the Accountant after the filing by Executive of any of her tax
returns for the calendar year in which the change in ownership event covered by
Code Section 280G(b)(2) occurred but prior to one (1) year after the occurrence
of such change in ownership, Executive shall file at the request of USI an
amended tax return in accordance with the Accountant's determination, but no
portion of the Tax Reimbursement Payment shall be required to be refunded to USI
26
until actual refund or credit of such portion has been made to Executive, and
interest payable to USI shall not exceed the interest received or credited to
Executive by such tax authority for the period it held such portion (less any
tax Executive must pay on such interest and which she is unable to deduct as a
result of payment of the refund).
(C) In the event Executive receives a refund pursuant to
(B) above and repays such amount to USI, Executive shall thereafter file for
refunds or credits by reason of the repayments to USI.
(D) Executive and USI shall mutually agree upon the
course of action, if any, to be pursued (which shall be at the expense of USI)
if Executive's claim for refund or credit is denied.
(ii) In the event that the Excise Tax is later determined by
the Accountants or the Internal Revenue Service to exceed the amount taken into
account hereunder at the time the Tax Reimbursement Payment is made (including
by reason of any payment the existence or amount of which cannot be determined
at the time of the Tax Reimbursement Payment), USI shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalties
payable with respect to such excess) once the amount of such excess is finally
determined.
(iii) In the event of any controversy with the Internal
Revenue Service (or other taxing authority) under this Section 12, subject to
subpart (i)(D) above, Executive shall permit USI to control issues related to
this Section 12 (at its expense), provided that such
27
issues do not potentially materially adversely affect Executive, but Executive
shall control any other issues. In the event the issues are interrelated,
Executive and USI shall in good faith cooperate so as not to jeopardize
resolution of either issue, but if the parties cannot agree Executive shall make
the final determination with regard to the issues. In the event of any
conference with any taxing authority as to the Excise Tax or associated income
taxes, Executive shall permit the representative of USI to accompany her and
Executive and her representative shall cooperate with USI and its
representative.
(iv) With regard to any initial filing for a refund or any
other action required pursuant to this Section 12 (other than by mutual
agreement) or, if not required, agreed to by USI and Executive, Executive shall
cooperate fully with USI, provided that the foregoing shall not apply to actions
that are provided herein to be at the sole discretion of Executive.
(e) The Tax Reimbursement Payment, or any portion thereof, payable
by USI shall be paid not later than the fifth (5th) day following the
determination by the Accountant, and any payment made after such fifth (5th) day
shall bear interest at the rate provided in Code Section 1274(b)(2)(B). USI
shall use its best efforts to cause the Accountant to promptly deliver the
initial determination required hereunder and, if not delivered, within ninety
(90) days after the change in ownership event covered by Section 280G(b)(2) of
the Code, USI shall pay Executive the Tax Reimbursement Payment set forth in an
opinion from counsel recognized as knowledgeable in the relevant areas selected
by Executive, and reasonably acceptable to USI, within five (5) days after
delivery of such opinion. The amount
28
of such payment shall be subject to later adjustment in accordance with the
determination of the Accountant as provided herein.
(f) USI shall be responsible for all charges of the Accountant and
if (e) is applicable the reasonable charges for the opinion given by Executive's
counsel.
(g) USI and Executive shall mutually agree on and promulgate further
guidelines in accordance with this Section 12 to the extent, if any, necessary
to effect the reversal of excessive or shortfall Tax Reimbursement Payments. The
foregoing shall not in any way be inconsistent with Section 12(d)(i)(D) hereof.
13. Legal and Other Fees and Expenses. In the event that a claim for
payment or benefits under this Restated Employment Agreement is disputed, the
Company shall pay all reasonable attorney, accountant and other professional
fees and reasonable expenses incurred by Executive in pursuing such claim,
provided Executive is successful with regard to a material portion of her claim.
14. Miscellaneous.
(a) Governing Law. This Restated Employment Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
without reference to principles of conflict of laws.
(b) Entire Agreement/Amendments. This Restated Employment Agreement,
as amended and restated herein, and the instruments contemplated herein, contain
the entire understanding of the parties with respect to the employment of
Executive by USI from and
29
after the date hereof and supersedes any prior agreements between USI and
Executive (but not the terms of, or rights under, any equity or benefits plans
or grants existing on the date hereof nor the obligations of PLC, HM or their
affiliates under Section 11 of this Restated Employment Agreement prior to this
amendment and restatement). There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein and therein.
This Restated Employment Agreement may not be altered, modified, or amended
except by written instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict
adherence to any term of this Restated Employment Agreement on any occasion
shall not be considered a waiver of such party's rights or deprive such party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Restated Employment Agreement. Any such waiver must be in writing
and signed by Executive or an authorized officer of USI, as the case may be.
(d) Assignment. This Restated Employment Agreement shall not be
assignable by Executive. This Restated Employment Agreement shall be assignable
by USI only to an acquiror of all or substantially all of the assets of USI,
provided such acquiror promptly assumes all of the obligations hereunder of USI
in a writing delivered to Executive and otherwise complies with the provisions
hereof with regard to such assumption.
(e) Successors; Binding Agreement; Third Party Beneficiaries. This
Restated Employment Agreement shall inure to the benefit of and be binding upon
the personal
30
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees legatees and permitted assignees of the parties hereto.
(f) Communications. For the purpose of this Restated Employment
Agreement, notices and all other communications provided for in this Restated
Employment Agreement shall be in writing and shall be deemed to have been duly
given (i) when faxed or delivered, or (ii) two business days after being mailed
by United States registered or certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the initial page of
this Restated Employment Agreement, provided that all notices to USI shall be
directed to the attention of the Senior Vice President, General Counsel and
Secretary of USI, or to such other address as any party may have furnished to
the other in writing in accordance herewith. Notice of change of address shall
be effective only upon receipt.
(g) Withholding Taxes. USI may withhold from any and all amounts
payable under this Restated Employment Agreement such Federal, state and local
taxes as may be required to be withheld pursuant to any applicable law or
regulation.
(h) Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of Executive's employment to the
extent necessary to the agreed preservation of such rights and obligations.
(i) Counterparts. This Restated Employment Agreement may be signed
in counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
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(j) Headings. The headings of the sections contained in this
Restated Employment Agreement are for convenience only and shall not be deemed
to control or affect the meaning or construction of any provision of this
Restated Employment Agreement.
(k) Executive's Representation. Executive represents and warrants to
the USI that there is no legal impediment to her performing her obligations
under this Restated Employment Agreement and neither entering into this Restated
Employment Agreement nor performing her contemplated service hereunder will
violate any agreement to which she is a party or any other legal restriction.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Restated Employment Agreement as of the day and year first above written.
U.S. INDUSTRIES, INC.
By: /s/ Xxxxxx X. XxxXxxx
-------------------------------
Name: Xxxxxx X. XxxXxxx
Title: Senior Vice President
/s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx
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