Exhibit 10.1
The Middleby Corporation Amended and Restated
Management Incentive Compensation Plan
1. General. The Management Incentive Compensation Plan (hereinafter, the
"Plan" or "MICP"), as amended from time to time, was initially adopted
and approved by the stockholders of The Middleby Corporation ("Company")
in 2001. This document sets forth an amendment and restatement of the
Plan effective as of January 1, 2005.
2. Purpose. The MICP is intended to provide an incentive for superior
performance and to motivate participating employees toward the highest
levels of achievement and business results, to tie their goals and
interests to those of the Company and its stockholders, and to enable the
Company to attract and retain highly qualified executive officers. In
addition, the MICP is intended to preserve the Company's tax deduction
for bonus compensation paid to "covered employees" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") by meeting the requirements for performance-based compensation
under Section 162(m) of the Code.
3. Administration. The MICP shall be administered by the Compensation
Committee of the Company's Board of Directors (the "Board") or a
subcommittee of such committee (the "Committee"). All members of the
Committee shall be persons who qualify as "outside directors" as defined
under Section 162(m) of the Code. The Committee shall have full power and
authority to administer and interpret the provisions of the MICP and to
adopt such rules, regulations, agreements, guidelines and instruments for
the administration of the MICP and for the conduct of its business as the
Committee deems necessary or advisable. Except with respect to matters
which under the Code are required to be determined in the sole and
absolute discretion of the Committee, the Committee shall have full power
to delegate to any officer or employee of the Company the authority to
administer and interpret the procedural aspects of the MICP, subject to
the MICP 's terms, including adopting and enforcing rules to decide
procedural and administrative issues. The Committee may rely on opinions,
reports or statements of officers or employees of the Company or any
subsidiary thereof and of Company counsel (inside or retained counsel),
public accountants and other professional or expert persons. No member of
the Committee shall be liable for any action taken or determination made
in good faith with respect to the MICP.
4. Eligibility. Any officer or key employee of the Company is eligible to
participate in the MICP if selected by the Committee for participation.
5. EBITDA Performance Measure. Payment of bonuses under the MICP to the
Company's executive officers who are "covered employees" as defined under
Section 162(m) of the Code shall be subject to the attainment of
pre-established written performance goals approved by the Committee prior
to the 90th day following the commencement of the Company's fiscal year.
The performance goal shall be the Company's adjusted earnings before
interest, income taxes, depreciation and amortization ("EBITDA") for the
fiscal year. Payment of bonuses to participants in the MICP who are not
"covered employees" may be based on the EBITDA of any subsidiary,
division or segment of the Company. EBITDA goals may include a threshold
level of performance at which no payment will be made, levels of
performance at which specified payments will be made and a maximum level
of performance above which no additional payment will be made. In no
event shall the Committee have the discretion to increase the amount of
incentive compensation that would otherwise become payable to a covered
employee upon the attainment of the EBITDA goal previously established
for such covered employee. The maximum payment that may be made to any
individual under the MICP with respect of any fiscal year shall be
$3,500,000.
6. Calculation of EBITDA. EBITDA shall be determined in the discretion of
the Committee in accordance with Generally Accepted Accounting
Principles. However, EBITDA shall exclude foreign exchange gains/losses
and shall take into account any and all bonuses and incentive
compensation payable to Company employees, including incentive
compensation payable to employees participating under the MICP for the
applicable year. The Committee shall have the authority to make
appropriate adjustments to EBITDA goals to reflect the impact of
extraordinary items not reflected in such goals. For purposes of the
MICP, extraordinary items shall include (1) any profit or loss
attributable to acquisitions or dispositions of stock or assets, (2) any
changes in accounting standards or treatments that may be required or
permitted by the Financial Accounting Standards Board or adopted by the
Company or its subsidiaries after the goal is established, (3) all items
of gain, loss or expense for the year related to restructuring charges
for the Company or its subsidiaries, (4) all items of gain, loss or
expense for the year determined to be extraordinary or unusual in nature
or infrequent in occurrence or related to the disposal of a segment of a
business (including but not limited to any costs allocated to the Company
by any entity that acquires the Company), (5) all items of gain, loss or
expense for the year related to discontinued operations that do not
qualify as a segment of a business as defined in APB Opinion No. 30 (or
successor literature), (6) the impact of capital expenditures, (7) the
impact of share repurchases and other changes in the number of
outstanding shares, (8) fees and expenses associated with a business
transaction such as investment banking fees and/or legal, accounting or
tax planning fees, and (9) such other items as may be prescribed by
Section 162(m) of the Code and the treasury regulations thereunder as may
be in effect from time to time, and any amendments, revisions or
successor provisions and any changes thereto.
7. Performance Period. The performance period with respect to which bonuses
shall be calculated and paid under the MICP shall generally be the fiscal
year of the Company beginning on January 1 and ending on December 31.
8. Payment of Bonuses. Payments pursuant to the MICP, if any, shall be made
after the completion of Company's year end audit and only after the
Committee certifies in writing that the EBITDA goals with respect to
which payments are to be made have been attained. As a condition to
receiving a payment, each participant must have been employed by the
Company for a minimum of six months during the Company's fiscal year and
must have been employed on the last day of the Company's fiscal year;
provided, however, that the Committee may elect to pay a pro-rata bonus
(after the year end audit) to any participant whose employment with the
Company was involuntarily terminated prior to the end of the Company's
fiscal year if such participant was otherwise eligible to receive a bonus
hereunder. Notwithstanding anything to the contrary herein, the Committee
may also elect to pay pro-rata bonuses prior to end of the Company's
fiscal year end based upon the achievement of pro-rata EBITDA goals.
Payment of bonuses under the MICP may be subject to such additional
requirements as the Committee may determine, including but not limited
to, the Company's Stock Ownership Plan. Notwithstanding the forgoing,
payments pursuant to the MICP, if any, shall be made no later that the
date which is two and one-half (2 1/2) months following the end of the
fiscal year in which the payment was earned.
9. Change of Control. After the occurrence of a "Change of Control" (as
defined below) of the Company, EBITDA shall be calculated in accordance
with past practice and the terms of the Plan after the completion of the
Company's year end audit; provided, however, that if it shall be
impractical for the Company's EBITDA to be measured after a Change of
Control then a pro-rata bonus shall be paid to participants based on
EBITDA achieved prior to the Change of Control as of the most recent
practicable date prior to the date the Change of Control occurred. If,
after the Change of Control, the members of the Committee are replaced,
the calculation of EBITDA shall be made in consultation with an
individual, who immediately prior to the Change of Control, was serving
on the Committee so as to ensure that EBITDA is calculated in accordance
with past practice and the terms of the Plan and the new members of the
Committee shall certify in writing that EBITDA was calculated in
consultation with such individual and in accordance with past practice
and the terms of the Plan. For purposes of the Plan, a "Change in
Control" shall mean an increase, on or after January 1, 2005, in
ownership to twenty percent (20%) or more of the outstanding voting
securities of the Company held by any person or group of persons who are
acting together for the purpose of acquiring, holding, voting or
disposing of such voting securities; provided, however, that an increase
in ownership to twenty (20%) or more of the outstanding voting securities
of the Company held by a participant or group of persons which includes a
participant who are acting together for the purpose of acquiring,
holding, voting or disposing of such voting securities shall not
constitute a Change in Control.(1)
10. No Right To Continued Employment. Nothing in the MICP or in any bonus
opportunity granted pursuant hereto shall confer upon any participant the
right to continue in the employ of the Company or to be entitled to any
remuneration or benefits not set forth in the MICP or to interfere with
or limit in any way the right of the Company to terminate such
participant's employment.
11. Withholding Taxes. Where a participant or other person is entitled to
receive a payment hereunder, the Company shall have the right either to
deduct from the payment, or to require the participant or such other
person to pay to the Company prior to delivery of such payment, an amount
sufficient to satisfy any federal, state, local or other withholding tax
requirements.
12. Amendment and Termination of the MICP. The Board or the Committee may at
any time and from time to time alter, amend, suspend, or terminate the
MICP in whole or in part; provided that, no amendment that requires
stockholder approval in order for the MICP to continue to comply with
Section 162(m) of the Code shall be effective unless the same shall be
approved by the requisite vote of the shareholders of the Company.
Notwithstanding the foregoing, no amendment shall affect adversely any of
the rights of any participant to receive any bonus following the date the
participant is notified of his bonus opportunity, provided that the
adjustment of EBITDA or the payment of a pro-rata bonus as contemplated
herein are expressly permitted. Unless otherwise determined by the
Committee or the Board, the Company shall seek stockholder re-approval of
the material terms of the EBITDA goal hereunder no later than the first
stockholder meeting of the Company occurring in 2006.
13. Participant Rights. No participant shall have any claim to be granted any
bonus under the MICP, and there is no obligation for uniformity of
treatment for participants.
14. Governing Law. The MICP and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware
without giving effect to the conflict of laws principles thereof.
15. Interpretation. The MICP is designed and intended to comply, to the
extent applicable, with Section 162(m) of the Code, and all provisions
hereof shall be construed in a manner to so comply. Notwithstanding any
provision of the MICP, to the extent that the Committee determines that
the MICP or any bonus opportunity or right of a participant thereunder is
subject to Section 409A of the Code and fails to comply with the
requirements of Section 409A of the Code, the Committee, reserves the
right to amend or terminate the Plan and/or amend, restructure, terminate
or replace the participant's bonus opportunity or right in order to cause
the right to either not be subject to Section 409A of the Code or to
comply with the applicable provisions of such section.
16. Unfunded Status of Awards. The MICP is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments
not yet made to a participant pursuant to a bonus opportunity, nothing
contained in the MICP or any bonus shall give any such participant any
rights that are greater than those of a general creditor of the Company.
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1 For example, on April 16, 2004 individual A (who is not a participant
of the MICP) owns 2.42% of the total outstanding voting securities of
Company. Thereafter, individual A commences a series of open market
and private purchases, and on January 10, 2005 for the first time his
holdings exceed 20% of the outstanding voting securities of the
Company. A Change of Control occurs on January 10, 2005.