Exhibit 10.20 |
THE MIDDLEBY CORPORATION |
1400 Toastmaster Drive, Elgin, Illinois 60120 • (847) 741-3300 • Fax (847) 741-9561 |
CONFIDENTIALTHE MIDDLEBY CORPORATION |
(i) To the extent that any amount payable to Employee (hereunder or otherwise) alone or together with other compensation constitutes a “parachute payment” within the meaning of section 280G(b)(2) of the Internal Revenue Code of 1986, as amended, (the “Code”) that would result in some or all of the compensation owed being characterized as “excess parachute payments” (as defined by section 280G(b)(1) of the Code), and would, therefore, be subject to an excise tax under section 4999 of the Code (the “Excise Tax”), the Employer shall pay to the Employee, at the time specified below, that additional amount (the “Gross-Up Payment”) necessary to reimburse Employee for the amount of any (i) Excise Tax, (ii) federal, state and local income and employment taxes (including additional Excise Tax) payable with respect to the Gross-Up Payment, and (iii) interest, penalties or additions to tax payable by the Employee with respect to the Excise Tax or the Gross-Up Payment. For purposes of determining the amount of the Gross-Up Payment, the Employee shall be deemed to pay federal income taxes at the highest marginal rates of taxation applicable to individuals as are in effect in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation applicable to individuals as are in effect in the state and locality of the Employee’s residence, and/or any other state or locality that may be applicable, in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates. |
(ii) The Gross-Up Payments provided for above shall be made upon the earlier of (i) the payment to the Employee of compensation in the nature of a parachute payment or (ii) the imposition upon the Employee or payment by the Employee of any Excise Tax. |
(iii) If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that the Excise Tax is less than the amount taken into account above, the Employee shall repay to the Employer within thirty (30) days of Employee’s receipt of notice of such final determination the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Employee, if such repayment results in a reduction in Excise Tax or a federal, state and local income tax deduction). If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that the Excise Tax exceeds the amount taken into account above (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Employer shall make any additional Gross-Up Payment in respect of such excess within thirty (30) days of the Employer’s receipt of notice of such final determination. |
(iv) Notwithstanding anything contained herein or in the Management Incentive Plan to the contrary, the amount of any payments made pursuant to this Parachute Payments Section shall be excluded from the calculation of EBITDA under the Management Incentive Plan for purposes of determining bonuses thereunder. |
This agreement expires two years from the date first above written (the “Expiration Date”), provided however that such expiration shall not limit or diminish Employee’s rights hereunder which are triggered by (i) involuntary termination of Employee’s employment prior to the Expiration Date, or (ii) voluntary termination of Employee’s employment within the six-month period immediately following a Change of Control if such Change of Control occurs prior to the Expiration Date. |
Agreed: /s/ David B. Baker | David B. Baker, VP and CAO |
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For Middleby: /s/ Selim A. Bassoul | Selim A. Bassoul, President and CEO |
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