Exhibit 10.1
APPLICA INCORPORATED
EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN
     1. Purpose and Adoption of Plan. Applica Incorporated (“Applica”) hereby
adopts this Applica Incorporated Executive Change of Control Severance Plan as
of the Effective Date (“Plan”). The Board of Directors of Applica is
contemplating a potential change of control of Applica and desires to assure
continuity of its executive management and the continued attention of executive
management to their respective duties without any distraction arising out of the
circumstances surrounding any such change of control.
2. Definitions.
          a. “Base Compensation” shall mean the actual monthly rate of base
salary of a Covered Executive as of the date of a Change of Control.
          b. “Board” shall mean the Board of Directors of Applica.
          c. “Cause” shall be defined in accordance with the employment
agreement then in effect between the applicable Covered Executive and Applica as
of the date of the Consummation of any Change of Control.
          d. “Change of Control” shall be defined in accordance with the
employment agreement then in effect between the Covered Executive and Applica as
of the dated of the Consummation of the such Change of Control.
          e. “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.
          f. “Code of Ethics” shall mean the Business Ethics and Code of Conduct
Policy adopted by the Board which is in effect at the applicable period of time.
          g. “Conflict of Interest Policy” shall mean the Conflict of Interest
Policy adopted by the Board which is in effect at the applicable time.
          h. “Consummate,” “Consummated” and “Consummation” shall each mean the
completion of all conditions precedent necessary to complete a transaction as a
matter of law, including, but not limited to, any required approvals by the
corporation’s shareholders and board of directors, the transfer of legal and
beneficial title to securities or assets and the approval of the transaction by
any applicable domestic or foreign governments or governmental agencies
(excluding any post-closing approvals).

1

--------------------------------------------------------------------------------

 

          i. “Covered Executive(s)” shall mean Brian S. Guptill, Terry L.
Polistina, Harry D. Schulman and David D. Warren.
          j. “Disability” shall be defined in accordance with the employment
agreement then in effect between the applicable Covered Executive and Applica as
of the date of the Consummation of any Change of Control.
          k. “Effective Date” shall mean April 19, 2006.
          l. “Employing Company” shall mean Applica and its affiliates as well
as any successor to Applica or its affiliates which employs a Covered Executive
and assumes its predecessor’s obligations under this Plan.
          m. “Good Reason” shall be defined in accordance with the employment
agreement then in effect between the applicable Covered Executive and Applica as
of the date of Consummation of any Change of Control.
          n. “Severance Period” shall mean the eighteen month period immediately
following the first Change of Control Consummated prior to May 1, 2007.
          o. “Termination Date” shall mean the date on which a Covered Executive
is removed from an Employing Company’s payroll.
     3. Term. This Plan shall commence on the Effective Date. This Plan shall
terminate and no benefits shall be payable hereunder in the event a Change of
Control is not Consummated prior to May 1, 2007.
     4. Severance Compensation. Except as limited by Section 5 of this Plan, in
the event of a Change of Control prior to May 1, 2007, any Covered Executive
whose employment is involuntarily terminated by the Employing Company during the
Severance Period for any reason other than (i) Cause, (ii) death,
(iii) Disability, or whose employment is voluntarily terminated for Good Reason,
shall be entitled to receive:
          a. A monthly cash payment equal to such Covered Executive’s Base
Compensation payable for a period of eighteen (18) consecutive months
immediately following the Executive’s Termination Date.
          b. The Covered Executive and his eligible dependants shall also be
eligible to participate in the group health plan maintained by the Employing
Company during the eighteen (18) month period immediately following the
Executive’s Termination Date unless otherwise specifically provided under such
plan or until the Covered Executive is covered by another employer’s group
health plan. The extended medical coverage afforded to a Covered Executive shall
be determined in accordance with the provisions of such group health plan. Any
group health plan coverage provided under this Section 4(b) shall be a part of
and not in addition to any COBRA coverage which a Covered Executive or his
dependent(s) may elect. In the event a Covered Executive and his dependent(s)
are

2

--------------------------------------------------------------------------------

 

ineligible to participate in the Employing Company’s group health plan, or the
Employing Company fails to maintain any group health plan, the Employing Company
shall pay the Covered Executive a cash amount equal to the cost of premiums for
group health plan coverage comparable to the coverage provided to the Covered
Executive and his eligible dependents during the eighteen (18) month period
immediately following such Executive’s Termination Date.
     5. No Duplication/Cap on Benefits/Release.
          a. The aggregate amount payable to a Covered Executive pursuant to the
provisions of Sections 4(a) and (b) above, shall be referred to as the
“Severance Compensation.” The amount of severance pay to which a Covered
Executive is entitled pursuant to Section 4 of this Plan shall be equal to the
Severance Compensation less any cash amounts paid or payable to such Covered
Executive under any other retention agreement, employment agreement or other
severance arrangement between the Employing Company and its affiliates and such
Covered Executive. If the Covered Executive is entitled to any notice or payment
in lieu of any notice of termination of employment required by Federal, state or
local law, including but not limited to the Worker Adjustment and Restraining
Notification Act, the Severance Compensation to which the Covered Executive
would otherwise be entitled under this Plan shall be reduced by the amount of
any such payment, in lieu of notice. Notwithstanding any of the foregoing
provisions of this Plan to the contrary, in no event shall the Severance
Compensation be reduced by any amounts payable to any Covered Executive under
any repatriation agreement.
          b. Severance Compensation shall only be payable following the first
Change of Control Consummated prior to May 1, 2007. For purposes of
clarification, in the event there should be more than one Change of Control
Consummated prior to May 1, 2007, only the initial Change of Control shall
trigger payment of Severance Compensation during the Severance Period.
          c. Any payments made pursuant to this Plan shall be conditioned upon
receipt of a written general release by such Covered Executive, in such form as
the Employing Company may require, of any and all claims against the Employing
Company, its affiliates, directors, officers, employees, agents and
representatives, except those arising under this Plan. The initial installment
payment shall be made within ten (10) days following receipt by the Employing
Company of such general release executed by the Covered Executive.
6. Miscellaneous.
          a. The Compensation Committee of the Board (the “Committee”) and its
delegates are authorized to interpret, administer and make all determinations
under this Plan. Such determinations will be binding and conclusive on all
Covered Executives.
          b. Payments made pursuant to this Plan shall be subject to all
federal, state and local income, employment and other taxes required to be
withheld in connection with such payments, in amounts and in a manner to be
determined the discretion of Applica.
          c. This Plan is not and should not be treated as a promise of future
employment, or an employment contract of any kind.

3

--------------------------------------------------------------------------------

 

          d. This Plan constitutes a mere promise by Applica to make payments,
and Covered Executives are only general unsecured creditors of Applica.
          e. To the extent this Plan is subject to Code Section 409A, this Plan
is intended to comply with Code Section 409A and shall be interpreted, operated
and administered accordingly. Applica, however, does not guarantee the tax
treatment of any payments under this Plan including, without limitation,
pursuant to the Code, federal, state or local law. Any taxes imposed on an
employee pursuant to applicable law shall be borne by the Covered Executive and
shall be subject to withholding pursuant to the provisions of Section 6(b)
above. Notwithstanding, the foregoing, to the extent necessary to comply with
Section 409A of the Code, payments to be made following termination of
employment shall not be paid until the six month anniversary of the Covered
Executive’s termination of employment. Any Severance Compensation installment
payments deferred pursuant to the foregoing sentence shall be paid in a lump sum
payment within ten (10) days of such six month anniversary date.
          f. Except as otherwise required by law, no Covered Executive nor any
other person has any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or
convey in advance of actual receipt, the amounts, if any, payable hereunder, or
any part thereof, which are, and all rights to which are expressly declared to
be, nonassignable and nontransferable. No part of the amounts payable shall
prior to tactual payment, be subject to seizure, attachment, garnishment or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owned by any Covered Executive or any other person, be transferable
by operation of law in the event of a Covered Executive or any other person’s
bankruptcy or insolvency or be transferable to a spouse as a result of a
property settlement or otherwise. Notwithstanding the preceding sentences, if a
Covered Executive is indebted to Applica or an affiliate upon his or her death,
Disability or termination of employment, the amount of any payments to be made
to a Covered Executive (or his beneficiary) under this Plan may be reduced, as
determined by the Committee, to the extent of such indebtedness.
          g. This Plan shall be governed by and construed in accordance with the
laws of the State of Florida, without regard to its principles of conflicts of
laws. The section headings herein are for convenience only, and in the event of
any conflict, the text of the Plan, rather than the section headings, controls.
The invalidity and unenforceability of any particular provision of this Plan
shall not affect any other provision, and the Plan shall be construed in all
respects as if such invalid or unenforceable provisions were omitted. Any action
(whether at law, in equity or otherwise) must be commenced within three
(3) years and must be brought in a court of competent jurisdiction sitting in
Miramar, Florida. This three (3) year period shall be computed from the earlier
of (i) the date a final determination denying such benefit, in whole or in part,
is issued; and (ii) the date the cause of action first accrued (as determined
under the laws of the State of Florida without regard to its principles of
conflict of laws).

4