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.
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
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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.
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"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)
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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.
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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:
Date Percentage of Total Compensation
- --------------- --------------------------------
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%
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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
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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
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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:
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(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.
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(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
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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
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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.
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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
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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.