Exhibit 10.4

 

CHANGE OF CONTROL AGREEMENT

 

This Change of Control Agreement (the “Agreement”), dated and effective as of
February 1, 2010 (the “Effective Date”), is entered into by and between Summer
Infant (USA), Inc., a Rhode Island corporation (the “Company”), and the Employee
of the Company named on the signature page hereto (the “Employee”).

 

Preliminary Statements

 

The Board of Directors of the Company (the “Board”) has determined that it is in
the best interest of the Company and its shareholders to assure itself of the
continued availability of the services of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company.

 

In order to provide the Employee with enhanced financial security and sufficient
encouragement to remain with the Company notwithstanding the possibility of a
Change of Control,  the Board believes that it is imperative to provide the
Employee with certain severance benefits upon a Change of Control.

 

Agreement

 

In consideration of the foregoing premises and the respective covenants and
agreements of the parties set forth below, and intending to be legally bound
hereby, the parties agree as follows:

 

1.             Incentive for Continuous Employment.  If prior to the last day of
the 12th full calendar month following the date of occurrence of an event
constituting a Change of Control (it being recognized that more than one event
constituting a Change of Control may occur in which case the 12-month period
shall run from the date of occurrence of each such event) (i) the Company
terminates the Employee’s employment other than (A) for Cause (as herein
defined), or (B) because of the Employee’s Disability (as defined below) or
death, or (ii) the Employee terminates his employment for Good Reason (as herein
defined) (any such termination in clauses (i) or (ii) being referred to as a
“Payment Event”), then, within ten (10) business days (or such other time as
specified in Section 9(r) hereof) after such termination (the “Payment Date”)
the Employee shall be entitled to receive from the Company a cash payment (the
“Payment”) in one lump sum equal to the sum of: (i) the Payment Percentage
provided for on Schedule 1 attached to this Agreement (“Schedule 1”), multiplied
by the Employee’s annual base salary as in effect at the time of such
termination and (ii) the average of the Employee’s annual cash bonuses from the
Company for the two fiscal years (whether or not paid so long as accrued and
declared by the Company) preceding the fiscal year in which such termination
occurs.  In addition, the Employee shall be entitled to the severance benefits
listed on Schedule 1 (the “Severance Benefits”). The Employee shall not be
entitled to any Payment or any Severance Benefits if the Employee terminates the
Employee’s employment without Good Reason.

 

2.             Definitions.  In addition to the capitalized terms used and
defined elsewhere in this Agreement, the following capitalized terms used in
this Agreement shall, for purposes of this Agreement, have the meanings set
forth below.

 

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“Affiliate” shall mean any Person that, directly or indirectly, controls, is
controlled by or is under common control with such Person, and with respect to
any natural person, includes the members of such person’s immediate family
(spouse, children and parents, whether by blood, marriage or adoption, or anyone
residing in such person’s home).

 

“Cause” shall mean the occurrence of one or more of the following: 
(i) Employee’s willful and continued failure to substantially perform Employee’s
reasonably assigned duties with the Company (other than any such failure
resulting from incapacity due to disability or from the assignment to Employee
of duties that would constitute Good Reason), which failure continues for a
period of at least thirty (30) days after written demand for substantial
performance has been delivered by the Company to the Employee which specifically
identifies the manner in which the Employee has failed to substantially perform
his duties; (ii) Employee’s willful conduct which constitutes misconduct and is
materially and demonstrably injurious to the Company, as determined in good
faith by a vote of at least two-thirds of the non-employee directors of the
Company at a meeting of the Board at which the Employee is provided an
opportunity to be heard; (iii) Employee being convicted of, or pleading nolo
contendere to a felony; or (iv) Employee being convicted of, or pleading nolo
contendere to a misdemeanor based in dishonesty or fraud.

 

“Change of Control” shall mean (i) individuals who, as of the Effective Date,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board, provided that any individual becoming a
director subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act of 1934) shall
be considered as though such individual was a member of the Incumbent Board; or
(ii) the approval by the shareholders of the Company of a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions (but not including  an underwritten public offering of the
Company’s common stock or other voting securities (or securities convertible
into voting securities of the Company) for the Company’s own account registered
under the Securities Act of 1933), in each case, with respect to which Persons
who were shareholders of the Company immediately prior to such reorganization,
merger, consolidation or other corporate transaction do not, immediately
thereafter, own more than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated entity’s then outstanding voting securities, or a
liquidation or dissolution of the Company or the sale of all or substantially
all of the assets of the Company (unless such reorganization, merger,
consolidation or other corporate transaction, liquidation, dissolution or sale
is subsequently abandoned or terminated prior to being consummated); or
(iii) the acquisition by any Person, entity or “group”, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, of more
than thirty percent (30%) of either the then outstanding shares of the Company’s
common stock or the combined voting power of the Company’s then outstanding
voting securities entitled to vote generally in the election of directors
(hereinafter referred to as a “Controlling Interest”) excluding any acquisitions
by (x) the Company or any of its Affiliates, (y) any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its Affiliates
or (z) any Person,

 

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entity or “group” that as of the Effective Date owns beneficially (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) a
Controlling Interest.

 

“Disability” shall mean that the Employee has been unable to perform his or her
Company duties as the result of his or her incapacity due to physical or mental
illness, and such inability, at least                      (    ) weeks after
its commencement, is determined to be total and permanent by a physical selected
by the Company or its insurers and acceptable to the Employee or the Employee’s
legal representative (such Agreement as to acceptability not to be unreasonably
withheld).  Termination resulting from Disability may only be affected after at
least thirty (30) days’ written notice by the Company of its intention to
terminate the Employee’s employment.  In the event that the Employee resumes the
performance of substantially all of his or her duties hereunder before the
termination of his or her employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked

 

“Good Reason” shall mean (i) the material diminution in Employee’s authority,
duties or responsibilities; (ii) the relocation of Employee to a location more
than thirty (30) miles from his employment location at the Effective Date;
(iii) a material diminution in the Employee’s annual base salary as in effect
immediately prior to such diminution, other than in connection with a general
diminution in Company compensation levels and in amounts commensurate with the
percentage diminutions of other Company employees of comparable seniority and
responsibility; or (iv) any other action or inaction which constitutes a
material breach by the Company or any of its Affiliates of any agreement under
which the Employee provides services to the Company or any of its Affiliates.

 

No violation described in clauses (i) through (iv) above shall constitute Good
Reason unless the Employee has given written notice to the Company specifying
the applicable clause and related facts giving rise to such violation within
ninety (90) days after the occurrence of such violation and the Company has not
remedied such violation to the Employee’s reasonable satisfaction within thirty
(30) days of its receipt of such notice.

 

“Person” shall mean any natural person or entity with legal status.

 

“Restricted Period” shall mean the period of time after termination of the
Employee’s employment with the Company identified on Schedule 1.

 

3.         RESTRICTIVE COVENANTS.  THE EMPLOYEE ACKNOWLEDGES THAT IN ORDER TO
ASSURE THE COMPANY THAT IT WILL RETAIN THE VALUE OF ITS BUSINESS RELATIONSHIPS,
IT IS REASONABLE THAT THE EMPLOYEE BE LIMITED IN UTILIZING TRADE SECRETS AND
OTHER CONFIDENTIAL INFORMATION OF THE COMPANY, EMPLOYEE’S SPECIAL KNOWLEDGE OF
THE BUSINESS OF THE COMPANY AND EMPLOYEE’S RELATIONSHIPS WITH CUSTOMERS,
SUPPLIERS AND OTHERS HAVING BUSINESS RELATIONSHIPS WITH THE COMPANY IN ANY
MANNER OR FOR ANY PURPOSE OTHER THAN THE ADVANCEMENT OF THE INTERESTS OF THE
COMPANY, AS HEREINAFTER PROVIDED.  THE EMPLOYEE ACKNOWLEDGES THAT THE COMPANY
WOULD NOT ENTER INTO THIS AGREEMENT AND PROVIDE THE BENEFITS PROVIDED FOR HEREIN
WITHOUT THE COVENANTS AND AGREEMENTS OF THE EMPLOYEE SET FORTH IN THIS
SECTION 3.  NOTWITHSTANDING ANYTHING ELSE HEREIN CONTAINED, THE TERM “COMPANY”,
AS USED IN THIS SECTION 3, SHALL REFER TO THE COMPANY AND ITS AFFILIATES AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.

 

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(a)           Confidentiality.  The Employee acknowledges that in the course of
the Employee’s employment with the Company, Employee has had and is expected to
continue to have extensive contact with Persons with which the Company has, had
or anticipates having business relationships (including current and anticipated
customers and suppliers), and to have knowledge of and access to trade secrets
and other proprietary and confidential information of the Company, including,
without limitation, the identity of Persons with whom the Company has, had or
anticipates having business relationships, technical information, know-how,
plans, specifications, and information relating to the financial condition,
results of operations, employees, products and services, sources, leads or
methods of obtaining new business, pricing formulae, methods or procedures, cost
of supplies or services and marketing strategies of the Company or any other
information relating to the Company that could reasonably be regarded as
confidential or proprietary or which is not in the public domain (other than by
reason of Employee’s breach of the provisions of this section) (collectively,
the “Confidential Information”), and that such information, even to the extent
it may be developed or acquired by or through the efforts of the Employee,
constitutes valuable, special and unique assets of the Company developed or
acquired at great expense which are the exclusive property of the Company. 
Accordingly, the Employee shall not at any time, either during the time Employee
is employed by the Company or thereafter, use or purport to authorize any Person
to use, reveal, report, publish, transfer or otherwise disclose to any Person,
any Confidential Information without the prior written consent of the Company,
except for disclosures by the Employee required by applicable law (but only to
the extent the Company is given a reasonable opportunity to object to such
disclosure and protect the Confidential Information) to responsible officers of
the Company and other responsible Persons who are in a contractual or fiduciary
relationship with the Company and who have a need for such information for
purposes in the best interests of the Company.  Without limiting the generality
of the foregoing, the Employee shall not, directly or indirectly, disclose or
otherwise make known to any Person any information as to the Company’s employees
and others providing services to the Company, including with respect to their
abilities, compensation, benefits and other terms of employment or engagement. 
Upon the termination of the Employee’s employment with the Company, the Employee
shall promptly deliver to the Company all files, correspondence, manuals, notes,
notebooks, computer diskettes, tapes, reports and copies thereof, and all other
materials relating to the Company’s business, including without limitation any
materials incorporating Confidential Information, which are in the possession or
control of the Employee.

 

(b)           Restriction on Competition.  During the Employee’s employment with
the Company and thereafter during the Restricted Period, the Employee shall not,
and shall not permit any Persons subject to Employee’s direction or control
(including Employee’s Affiliates) to, directly or indirectly, whether alone or
in association with others, as principal, officer, agent, consultant, employee,
director or owner of any corporation, partnership, association or other entity,
or through the investment of capital, lending of money or property, rendering of
services or otherwise, engage in, influence, control, have an interest in or
otherwise become actively involved with any business that competes with the
Company.  The Employee acknowledges that the business of the Company is national
and international in scope, as its current and anticipated customers and
suppliers are located throughout the United States and abroad, and that it is
therefore reasonable that the restrictions set forth in this Section 3(b) not be
limited to any specified geographic area.

 

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(c)           Non-solicitation.  During the Employee’s employment with the
Company and thereafter during the Restricted Period, the Employee shall not, and
shall not permit any Persons subject to Employee’s direction or control
(including Employee’s Affiliates) to, directly or indirectly, on their own
behalf or on behalf of any other Person (except the Company or its Affiliates),
(i) call upon, accept business from, or solicit the business of any Person who
is, or who had been at any time during the preceding twelve months, a customer
or supplier of the Company, (ii) otherwise divert or attempt to divert any
business from the Company, (iii) interfere with the business relationships
between the Company and any of its customers, suppliers or others with whom they
have business relationships or (iv) recruit or otherwise solicit or induce, or
enter into or participate in any plan or arrangement to cause, any Person who is
an employee of, or otherwise performing services for, the Company to terminate
his or her employment or other relationship with the Company, or hire any Person
who has left the employ of or ceased providing services to the Company during
the preceding twelve months.

 

(d)           Nondisparagement.  The Employee shall not at any time, either
during the time Employee is employed by the Company or thereafter, directly or
indirectly, engage in any conduct or make any statement, whether in commercial
or noncommercial speech, disparaging or criticizing in any way the Company
(including its directors and employees and other providing services to the
Company), or any of its products or services, nor shall the Employee engage in
any other conduct or make any other statement that could reasonably be expected
to impair the goodwill of any of them, the reputation of any products or
services of the Company or the marketing of such products or services, in each
case except as may be required by law, and then only after consultation with the
Company to the extent possible.

 

(e)           Exception.  The ownership or control by the Employee or Employee’s
Affiliates, as a passive investor, of up to two percent of the outstanding
voting securities or securities of any class of an entity with a class of
securities registered under the Securities Exchange Act of 1934, as amended,
shall not be deemed to be a violation of the provisions of this Section 3.

 

4.             Remedies.  The Employee agrees that the restrictions set forth in
Section 3, including the length of the Restricted Period, the geographic area
covered and the scope of activities proscribed, are reasonable for the purposes
of protecting the value of the business and goodwill of the Company.  The
Employee acknowledges that compliance with the restrictions set forth in
Section 3 will not prevent Employee from earning a livelihood, and that in the
event of a breach by the Employee of any of the provisions of Section 3,
monetary damages would not provide an adequate remedy to the Company. 
Accordingly, the Employee agrees that, in addition to any other remedies
available to the Company, the Company shall be entitled to seek injunctive and
other equitable relief (without having to post bond or other security and
without having to prove damages or the inadequacy of available remedies at law)
to secure the enforcement of these provisions, and shall be entitled to receive
reimbursement from the Employee for attorneys’ fees and expenses incurred by it
in enforcing these provisions.  In addition to its other rights and remedies
hereunder, the Company shall have the right to require the Employee to account
for and pay over to it all compensation, profits, money, accruals and other
benefits derived or received, directly or indirectly, by the Employee from any
breach of the covenants of Section 3, and may set off any such amounts due it
from the Employee against any amounts otherwise due Employee from the Company. 
If the Employee breaches any covenant

 

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set forth in Section 3, the running of the Restricted Period as to such covenant
only shall be tolled for so long as such breach continues.  It is the desire and
intent of the parties that the provisions of Sections 3 and 4 be enforced in
full; however, if any court of competent jurisdiction shall at any time
determine that, but for the provisions of this paragraph, any part of this
Agreement relating to the time period, scope of activities or geographic area of
restrictions is invalid or unenforceable, the maximum time period, scope of
activities or geographic area, as the case may be, shall be reduced to the
maximum which such court deems enforceable with respect only to the jurisdiction
in which such adjudication is made.  If any other part of this Agreement is
determined by such a court to be invalid or unenforceable, the invalid or
unenforceable provisions shall be deemed amended (with respect only to the
jurisdiction in which such adjudication is made) in such manner as to render
them enforceable and to effectuate as nearly as possible the original intentions
and agreement of the parties.

 

5.             Termination of this Agreement.  This Agreement shall commence on
the Effective Date and terminate on December 31, 2012, provided, however, that
if an event constituting a Change of Control shall occur while this Agreement is
in effect, this Agreement shall automatically be extended for twelve (12) months
from the date the Change of Control occurs; provided that the Company may extend
this Agreement in its sole discretion by written notice to the Employee.  For
purposes of this Section 5 only (and not for purposes of determining whether the
Payment and the Severance Benefits have become payable), a Change of Control
shall be deemed to have occurred if the event constituting a Change of Control
has been consummated on or prior to expiration of the term of this Agreement or
if such event or one or more other events constituting a Change of Control have
not been consummated but the material agreements for any of such events have
been executed and delivered by the parties to any such event on or prior to
expiration of the term of this Agreement (each such event being referred to as a
“Pending Event”). For any Pending Event, this Agreement shall automatically be
extended until such time as the related material agreements have been
unconditionally terminated without consummation of the applicable Pending Event
and if any such Pending Event is consummated pursuant to the related material
agreements (as amended, restated, supplemented or otherwise modified), this
Agreement shall further automatically be extended for twelve (12) months from
the date each such Pending Event is so consummated. For avoidance of doubt and
ambiguity, any event constituting a Change of Control that occurs after
expiration of the term of this Agreement and during any extension of this
Agreement as so extended by virtue of a Pending Event shall not result in this
Agreement being extending after expiration of its term in accordance with the
immediately preceding sentence.

 

6.             No Alteration of Employment Terms or Status.  Except as expressly
provided in this Agreement, nothing herein shall alter in any way any of the
terms of employment of the Employee, including without limitation the Employee’s
rights with respect to any stock options or other equity based awards Employee
may have been granted under the Summer Infant, Inc. 2006 Performance Equity
Plan.  The Company and the Employee acknowledge that the Employee’s employment
is and shall continue to be “at-will”, as defined under applicable law.  If the
Employee’s employment is terminated for any reason, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement or as may otherwise be established under the
Company’s existing employee benefit plans or policies at the time of
termination.

 

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7.             Parachute Payments. (a) If Independent Tax Counsel (as defined
below) determines that the aggregate payments and benefits provided or to be
provided to the Employee pursuant to this Agreement, and any other payments and
benefits provided or to be provided to the Employee from the Company or any of
its Affiliates or any successors thereto constitute “parachute payments” as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”) (or any successor provision thereto) (“Parachute Payments”) that would
be subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then, except as otherwise provided in the next sentence, such Parachute
Payments shall be reduced to the extent necessary so that no portion thereof
shall be subject to the Excise Tax. If Independent Tax Counsel determines that
the Employee would receive in the aggregate greater payments and benefits on an
after tax basis if the Parachute Payments were not reduced pursuant to this
Section 7(a), then no such reduction shall be made; provided, however, that in
such case the provisions of Sections 7(b)(i) and 7(b)(ii) shall not be
operative. The determination of the Independent Tax Counsel under this
subsection (a) shall be final and binding on all parties hereto. The
determination of which payments or benefits to reduce in order to avoid the
Excise Tax shall be determined in the sole discretion of the Employee; provided,
however, that unless the Employee gives written notice to the Company specifying
the order to effectuate the limitations described above within ten (10) days of
the Independent Tax Counsel’s determination to make such reduction, the Company
shall first reduce those payments or benefits that will cause a
dollar-for-dollar reduction in total Parachute Payments, and then by reducing
other Parachute Payments, to the extent possible, in reverse order beginning
with payments or benefits that are to be paid the farthest in time from the date
the reduction is to be made. Any notice given by the Employee pursuant to the
preceding sentence, unless prohibited by law, shall take precedence over the
provisions of any other plan, arrangement or agreement governing the Employee’s
rights and entitlement to any benefits or compensation. For purposes of this
Section 7(a), “Independent Tax Counsel” shall mean an attorney, a certified
public accountant with a nationally recognized accounting firm, or a
compensation consultant with a nationally recognized actuarial and benefits
consulting firm with expertise in the area of Employee compensation tax law, who
shall be selected by the Company and shall be acceptable to the Employee (the
Employee’s acceptance not to be unreasonably withheld), and whose fees and
disbursements shall be paid by the Company.

 

(b) (i) The Employee shall notify the Company in writing within thirty (30) days
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Employee of an Excise Tax. Upon receipt of such notice, the
Company may, in its sole discretion, contest such claim or provide the Employee
with an additional payment (a “Gross-Up Payment”) intended to reimburse the
Employee for any such Excise Tax and all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties with respect to
such taxes (except to the extent such interest or penalty results from the
Employee’s failure to act in accordance with the Company’s or a Affiliate’s
reasonable directions or the Employee’s failure to exercise due care), or do
nothing. If the Company notifies the Employee in writing that it desires to
contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Employee shall:

 

(A) give the Company any information reasonably requested by the Company
relating to such claim,

 

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(B) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,

 

(C) cooperate with the Company in good faith in order to effectively contest the
claim, and

 

(D) permit the Company to participate in any proceedings relating to the claim;
provided, however, that the Company shall pay (or cause to be paid) directly all
costs and expenses (including any interest and penalties, except to the extent
such interest or penalty results from the Employee’s failure to act in
accordance with the Company’s or an Affiliate’s reasonable directions or the
Employee’s failure to exercise due care) incurred in connection with the contest
and shall indemnify and hold the Employee harmless, on an after-tax basis, for
any Excise Tax or income or other tax, including interest and penalties with
respect thereto (except to the extent such interest or penalty results from the
Employee’s failure to act in accordance with the Company’s or a Affiliate’s
reasonable directions or the Employee’s failure to exercise due care), imposed
as a result of such representation and payment of costs and expenses. The
Company shall control all proceedings taken in connection with such contest;
provided, however, that if the Company directs the Employee to pay such claim
and sue for a refund, the Company shall, unless prohibited by law, advance (or
cause to be advanced) the amount of such payment to the Employee, on an
interest-free basis and shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto (except to the extent such interest or penalty
results from the Employee’s failure to act in accordance with the Company’s or a
Affiliate’s reasonable directions or the Employee’s failure to exercise due
care), imposed with respect to such advance or with respect to any imputed
income with respect to such advance. If the advancement described in the
preceding sentence is prohibited by law, the Company and the Employee shall
cooperate in an effort to determine an alternative approach to payment of the
claim in a manner permitted by applicable law and consistent with the original
intent and economic benefit to the Employee of this provision.

 

(ii) If, after the receipt by the Employee of an amount advanced by the Company 
pursuant to Section 7(b)(i), the Employee becomes entitled to receive a refund
with respect to a payment by the Company with respect to such claim, the
Employee shall, within ten (10) days after the receipt of such refund, pay to
the Company the amount of such refund, together with any interest paid or
credited thereon after taxes applicable thereto.

 

(iii) Notwithstanding anything herein to the contrary, this Section 7(b) shall
be interpreted (and, if determined by the Company to be necessary, reformed) to
the extent necessary to fully comply with the Sarbanes-Oxley Act and
Section 409A of the Code; provided that the Company agrees to maintain, to the
maximum extent practicable, the original intent and economic benefit to the
Employee of the applicable provision without violating the provisions of the
Sarbanes-Oxley Act and Code Section 409A.

 

8.             Code Section 409A.  (a) If any provision of this Agreement (or of
any payment of compensation, including benefits) would cause the Employee to
incur any additional tax or interest under Code Section 409A or any regulations
or Treasury guidance promulgated thereunder, the Company shall, after consulting
with the Employee, reform such provision to

 

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comply with Code Section 409A; provided that the Company agrees to make only
such changes as are necessary to bring such provisions into compliance with Code
Section 409A and to maintain, to the maximum extent practicable, the original
intent and economic benefit to the Employee of the applicable provision without
violating the provisions of Code Section 409A.

 

(b)           Notwithstanding any provision to the contrary in this Agreement,
if the Employee is deemed on the date of termination of employment to be a
“specified employee” within the meaning of that term under Code
Section 409A(a)(2)(B), then with regard to any payment or the provision of any
benefit that is required to be delayed in compliance with
Section 409A(a)(2)(B) such payment or benefit shall not be made or provided
(subject to the last sentence hereof) prior to the earlier of (i) the expiration
of the six (6)-month period measured from the date of the Employee’s “separation
from service” (as such term is defined in Treasury Regulations issued under Code
Section 409A) or (ii) the date of his death (the “Deferral Period”). Upon the
expiration of the Deferral Period, all payments and benefits deferred pursuant
to this Section 8 (whether they would have otherwise been payable in a single
sum or in installments in the absence of such deferral) shall be paid or
reimbursed to the Employee in a lump sum, and any remaining payments and
benefits due under this Agreement shall be paid or provided in accordance with
the normal payment dates specified for them herein. Notwithstanding the
foregoing, to the extent that the foregoing applies to the provision of any
ongoing welfare benefits to the Employee that would not be required to be
delayed if the premiums therefor were paid by the Employee, the Employee shall
pay the full cost of premiums for such welfare benefits during the Deferral
Period and the Company shall pay (or cause to be paid) to the Employee an amount
equal to the amount of such premiums paid by the Employee during the Deferral
Period promptly after its conclusion.

 

(c)           Any reimbursements by the Company to the Employee of any eligible
expenses under this Agreement that are not excludable from the Employee’s income
for Federal income tax purposes (the “Taxable Reimbursements”) shall be made by
no later than the earlier of the date on which they would be paid under the
Company’s normal policies and the last day of the taxable year of the Employee
following the year in which the expense was incurred.  The amount of any Taxable
Reimbursements, and the value of any in-kind benefits to be provided to the
Employee, during any taxable year of the Employee shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other
taxable year of the Employee.  The right to Taxable Reimbursements, or in-kind
benefits, shall not be subject to liquidation or exchange for another benefit.

 

(d)           Payment of any Taxable Reimbursements under this Agreement must be
made by no later than the end of the taxable year of the Employee  following the
taxable year of the Employee in which the Employee remits the related taxes.

 

9.             Miscellaneous.

 

(a)           Entire Agreement.  This Agreement (including Schedule 1) sets
forth the entire understanding of the parties with respect to the subject matter
hereof and merges and supersedes any prior or contemporaneous agreements
(whether written or oral) between the parties pertaining thereto, including
without limitation any prior agreements, arrangements, understandings or
commitments of any nature whatsoever relating to severance payments or

 

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other compensation in connection with termination of Employee’s employment.  The
Employee acknowledges that he has read and understands the provisions of this
Agreement.  The Employee further acknowledges that he has been given an
opportunity for his legal counsel to review this Agreement and that the
provisions of this Agreement are reasonable.

 

(b)           Amendment.  This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.

 

(c)           Waiver.  No waiver by any party of any of its rights under this
Agreement shall be effective unless in writing and signed by the party against
which the same is sought to be enforced.  No such waiver by any party of its
rights under any provision of this Agreement shall constitute a waiver of such
party’s rights under such provisions at any other time or a waiver of such
party’s rights under any other provision of this Agreement.  No failure by any
party hereto to take any action against any breach of this Agreement or default
by another party shall constitute a waiver of the former party’s right to
enforce any provision of this Agreement or to take action against such breach or
default or any subsequent breach or default by such other party.

 

(d)           Successors and Assigns.  The Employee shall not have the right to
assign Employee’s rights or obligations hereunder.  The Company shall not have
the right to assign its rights or obligations under this Agreement without the
prior written consent of the Employee, except in accordance with subsection
(j) below.  Subject to the foregoing, this Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their legal representatives,
heirs, successors and permitted assigns.  Except as otherwise specifically
provided herein, the rights and obligations of the parties under this Agreement
shall be unaffected by a Change of Control of the Company.

 

(e)           Additional Acts.  The Employee and the Company shall execute,
acknowledge and deliver and file, or cause to be executed, acknowledged and
delivered and filed, any and all further instruments, agreements or documents as
may be necessary or expedient in order to consummate the transactions provided
for in this Agreement and do any and all further acts and things as may be
necessary or expedient in order to carry out the purpose and intent of this
Agreement.

 

(f)            Communications.  All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been given at the time personally delivered, on the business day following
the day such communication is sent by national overnight delivery service, upon
electronic confirmation of recipient’s receipt of a facsimile of such
communication, or five days after being deposited in the United States mail
enclosed in a registered or certified postage prepaid envelope, return receipt
requested, and addressed to the recipient at the address set forth beneath the
recipient’s signature to this Agreement, or sent to such other address as a
party may specify by notice to the other party in accordance herewith, provided
that notices of change of address shall only be effective upon receipt.

 

(g)           Severability.  If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, such invalidity
or unenforceability shall not affect the validity and enforceability of the
other provisions of this Agreement and the provision

 

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held to be invalid or unenforceable shall be enforced as nearly as possible
according to its original terms and intent to eliminate such invalidity or
unenforceability.

 

(h)           Withholding Taxes.  The Company may withhold from amounts payable
under this Agreement such federal, state and local taxes as are required to be
withheld pursuant to any applicable law or regulation and the Company shall be
authorized to take such action as may be necessary in the opinion of the
Company’s counsel to satisfy all obligations for the payment of such taxes.

 

(i)            Governing Law.  The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Rhode Island applicable to agreements made and to be performed entirely in such
state, without regard to the conflict of laws principles of such state.

 

(j)            Consolidation, Merger or Sale of Assets.  If the Company
consolidates or merges into or with, or transfers all or substantially all of
its assets to, another entity the term “Company” as used in this Agreement shall
mean such other entity and this Agreement shall continue in full force and
effect. In the case of any transaction in which a successor would not by the
foregoing provision or by operation of law be bound by this Agreement, the
Company shall require such successor expressly and unconditionally to assume and
agree to perform the Company’s obligations under this Agreement, in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place.

 

(k)           Headings.  The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.

 

(l)            Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.  In the event that any
signature to this Agreement is delivered by facsimile transmission or email
attachment, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or email-attached signature page were an
original thereof.

 

(m)          Litigation; Prevailing Party.  If any litigation is instituted
regarding this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party, and the non-prevailing party shall pay, all reasonable
fees and expenses of counsel for the prevailing party.

 

(n)           Waiver of Jury Trial.  Each party hereto knowingly, irrevocably
and voluntarily waives its right to a trial by jury in any litigation which may
arise under or involving this Agreement.

 

(o)           Venue; Jurisdiction.  If any litigation is to be instituted
regarding this Agreement, it shall be instituted in the state and federal courts
located in Providence County, Rhode Island, and each party irrevocably consents
and submits to the personal jurisdiction of such courts in any such litigation,
and waives any objection to the laying of venue in such courts.  Service of
process in any such litigation shall be effective as to any party if given to
such party

 

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by registered or certified mail, return receipt requested, or by any other means
of mail that requires a signed receipt, postage prepaid, mailed to such party as
provided in Section 9(f).

 

(p)           Remedies Cumulative.  No remedy made available by any of the
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity.

 

(q)           No Duty to Mitigate.  The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source.

 

(r)           Release.  Notwithstanding any provision herein to the contrary,
the Company shall not have any obligation to pay (or cause to be paid) any
amount or provide any benefit under this Agreement unless and until the Employee
executes, within sixty (60) days after a Payment Event, a release of the Company
and its Affiliates and related parties, in such form as the Company may
reasonably request, of all claims against the Company and its Affiliates and
related parties relating to the Employee’s employment and termination thereof
and unless and until any revocation period applicable to such release has
expired.

 

[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties hereto have each duly executed this Agreement as
of the date set forth above.

 

 

COMPANY:

 

 

 

 

 

SUMMER INFANT (USA), INC.

 

 

 

 

 

By:

/s/ Jason Macari

 

 

Name: Jason Macari

 

 

Title: President and Chief Executive Officer

 

 

 

EMPLOYEE:

 

 

 

 

 

/s/ Joseph Driscoll

 

Joseph Driscoll

 

5 Dicaro Road

 

Hopkinton, MA 01748

 

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Schedule 1

 

Employee:

 

Joseph Driscoll

 

 

 

Position/Title:

 

CFO

 

 

 

Payment Percentage:

 

100%

 

 

 

Severance Benefits:

 

For a period commencing with the month in which termination of employment shall
have occurred and ending - 12 months thereafter, the Employee and, as
applicable, the Employee’s covered dependents shall be entitled to all benefits
under the Company’s welfare benefit plans (within the meaning of Section 3(1) of
the Employee Retirement Income Security Act of 1974, as amended), as if the
Employee were still employed during such period, at the same level of benefits
and at the same dollar cost to the Employee as is in effect at the time of
termination. If and to the extent that equivalent benefits shall not be payable
or provided under any such plan, the Company shall pay or provide (or cause to
be paid or provided) equivalent benefits on an individual basis. The benefits
provided in accordance herewith shall be secondary to any comparable benefits
provided to the Employee and, as applicable, the Employee’s covered dependents
by another employer of the Employee.

 

 

 

Restricted Period:

 

12 months

 

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