Document:

Exhibit 10.29

 

January 13, 2014

 

Private and Confidential

 

Kenneth Price

[Address]

[Address]

 

Dear Kenneth:

 

Further to recent discussions in respect of your employment with Summer Infant (USA), Inc. (“Summer”), Summer is pleased to offer you a full-time position as President of Global Sales and Marketing commencing on January 13, 2014. This offer is being extended in consideration of the mutual covenants and agreements contained in this letter (“Letter”), which sets forth our mutual understanding and agreement regarding your employment with Summer pursuant to the following terms and conditions.  All offers of employment are conditional, subject to satisfactory results of background investigation, reference checks, pre-employment alcohol and drug tests, and production of documents sufficient to demonstrate identity and authorization to work.

 

Position and Responsibilities:

 

Your employment with Summer will commence on January 13, 2014. Your responsibilities will include, but are not limited to, President of Global Sales and Marketing for Summer and in such capacity you shall generally oversee the sales and marketing of Summer’s  product lines, managing Summer’s sales and marketing staff, assisting Summer in the preparation of sales projections and operating budgets, and such other duties and responsibilities as may from time to time be assigned to you by the President and CEO of Summer, commensurate with your title and position described in this sentence. During your employment you shall report directly to the President and CEO of Summer. The duties and services to be performed by you are collectively referred to herein as the “Services”.

 

You agree that you shall at all times conscientiously perform all of the duties and obligations assigned to you to the best of your ability and experience and in compliance with law. You shall perform your duties mainly out of an office located in your New York home, provided, that, your duties shall include reasonable periodic travel to Summer’s headquarters located in Woonsocket, Rhode Island (expected to be a minimum of 5 days per month), and shall include reasonable travel in the United States and abroad, including attendance at various trade shows, as is reasonably necessary and appropriate to the performance of your duties and responsibilities. Summer will reimburse you

 

 

for your train and/or air travel expenses incurred in traveling to Summer’s headquarters. In addition, Summer will arrange and pay for reasonable accommodations for you in Rhode Island if required.

 

You agree to use your best efforts to promote the interests of Summer and to devote your full business time and energies to the business and affairs of Summer and the performance of your Services. You represent and warrant to Summer that your execution of this Letter and the performance of your Services to Summer shall not violate any obligations you may have to any former employer, person or entity, including, without limitation, any restrictive obligations that would prevent you from the performance of your Services to Summer or any obligation with respect to proprietary or confidential information of any other person or entity.

 

Compensation:

 

You will receive a bi-weekly (every two weeks) base salary of $ 13,461.54 (annualized equivalent of $350,000), subject to applicable withholding and other lawful deductions.

 

In addition to your base salary, you will be eligible to participate in Summer’s annual STI (Short Term Incentive) bonus program with a target equal to 50% of your base salary compensation.  This plan provides the opportunity to earn a bonus up to 100% of your base salary (double your targeted bonus) based on Summer and personal performance.  For calendar year 2014 only, provided that you are employed by Summer on the last calendar day of 2014, you will receive a minimum STI bonus for Plan Year 2014 of $50,000.00, subject to applicable withholding and other lawful deductions, payable on or before April 15, 2015.

 

You will also be eligible to participate in the company’s long-term incentive plan, and, subject to the approval of the Compensation Committee (“Compensation Committee”) of the Board of Directors of Summer Infant, Inc. (“Parent”) will be granted 75,000 stock options, plus 25,000 shares of restricted stock in accordance with the Parent’s 2012 Incentive Compensation Plan.   We have agreed that this restricted stock will vest 100% on the first anniversary from date of grant(commencement date of employment), and the stock options will vest in 3 equal annual installments over a three year period, with the first one-third vesting on the first anniversary from date of grant (commencement date of employment).

 

The specific mix and number of equity awards granted in future years as part of Summer’s annual equity grant program will be determined annually in line with the 2012 Incentive Compensation Plan and at the discretion of the Parent’s Board of Directors.  For fiscal year 2014, you will receive a grant of no less than 37,500 stock options and no less than 12,500 shares of restricted stock if Summer attains a minimum pre-bonus EBITDA threshold of $16 million for fiscal year 2014 performance targets, subject to (i) the approval of the Compensation Committee, the availability of a sufficient number of shares under the 2012 Incentive Compensation Plan at the time of the grant, and (ii) that you are employed by Summer at the time of the grant and at the time when the Parent’s Board of Directors determines that the performance targets for the 2014 fiscal year have been met.  Such equity awards will be granted at a time and in a manner consistent with the overall annual equity grant process for all Summer employees, and EBITDA will be calculated in the same manner as for all annual grants for the 2014 performance year. You understand that awards based on fiscal year 2014 performance will not be eligible for accelerated vesting under the CC Agreement (as hereinafter defined) until such awards have been granted in accordance with the 2012 Incentive Compensation Plan.

 

 

Performance Review and Benefits:

 

You will be eligible for a performance and salary review in February 2015. We have agreed that if Summer attains a minimum pre-bonus EBITDA threshold of $16 million in 2014 (determined in the same manner as the annual equity awards noted above), you will receive a 2015 merit increase to your base salary of not less than 5%.

 

You will also be eligible for Summer’s standard executive benefits subject to plan eligibility requirements. Summer’s current benefits include Medical benefits, Dental benefits, Vision Care, (available the first of the month following your date of hire), a 401K plan and match program (after 90 days), Long-Term Disability (after 90 days), a Flexible Spending Account, a Tuition Reimbursement Program (if eligible), generous Product Discounts and 20 days of Paid Time Off per year, accrued at a rate of 6.15 hours bi-weekly (PTO includes vacation, sick and personal time).

 

Summer will also provide you with a monthly automobile allowance of $750.00 per month, payable via payroll on the last pay date of each month.

 

Governing Law/At Will Employment:

 

Your employment with Summer shall be governed by and interpreted in accordance with the laws of the State of Rhode Island. By execution and delivery of this Letter, you irrevocably submit to and accept the exclusive jurisdiction of the courts in the State of Rhode Island and waive any objection (including any objection to venue or any objection based upon the grounds of forum non conveniens) which might be asserted against the bringing of any such action, suit or other legal proceeding in such courts.

 

While it is Summer’s desire to have a long term employment relationship with you, your employment with Summer is “at will”, in that either you or Summer have the right to terminate the employment relationship at any time, with or without cause.  This status may only be altered by written agreement, which is specific as to all material   terms and is signed by an authorized officer of Summer.  The terms of this employment letter do not, and are not, intended to create either an express and/or implied contract of employment with Summer for a definitive term.

 

Notwithstanding the foregoing, in the event that your employment is terminated by Summer without cause or in the event that you terminate your employment with Summer for Good Reason (as hereinafter defined), then you shall be entitled to receive your base salary, then in effect, for a period of twelve months following the termination of your employment payable in accordance with Summer’s customary payroll periods and practices and shall be less applicable taxes and withholdings (the “Severance Consideration”). You shall not be entitled to receive the Severance Consideration in the event that: (i) you voluntarily leave your employment for whatever the reason other than for Good Reason, (ii) your employment is terminated for Cause (as hereinafter defined), or (iii) as the result of your death or Disability (as hereinafter defined).

 

You acknowledge and agree that Summer’s obligation to pay to you the Severance Consideration shall be conditioned upon you executing a General Release and Termination Agreement in favor of Summer.

 

 

“Cause” means the occurrence of one or more of the following:  (i) your willful and continued failure to substantially perform your Services for Summer, which failure continues for a period of at least thirty (30) days after written demand for substantial performance has been delivered by Summer to you which specifically identifies the manner in which you have failed to substantially perform your Services; (ii) your willful conduct which constitutes misconduct and is materially and demonstrably injurious to Summer, as determined in good faith by a vote of at least two-thirds of the non-Executive directors of the Board at a meeting of the Board at which you are provided an opportunity to be heard; (iii) your being convicted of, or pleading nolo contendere to a felony; or (iv) your being convicted of, or pleading nolo contendere to a misdemeanor based in dishonesty or fraud.

 

“Disability” means that you have been unable to perform the Services as the result of your incapacity due to physical or mental illness, and such inability, at least four (4) weeks after its commencement, is determined to be total and permanent by a physical selected by Summer or its insurers and acceptable to you or your 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 Summer of its intention to terminate your employment.  In the event that you resume the performance of substantially all of the Services hereunder before the termination of your employment becomes effective, the notice of intent to terminate shall automatically be deemed to have been revoked.

 

“Good Reason” means (i) the material diminution in your authority, duties or responsibilities; (ii) if Summer requires  your relocation to a location more than thirty (30) miles from your current home office location as of the commencement date of your employment with Summer; (iii) a material diminution in your annual base salary as in effect immediately prior to such diminution, other than in connection with a general diminution in Summer’s compensation levels and in amounts commensurate with the percentage diminutions of other Summer employees of comparable seniority and responsibility; or (iv) if applicable, any other action or inaction which constitutes a material breach by Summer of an agreement with you pursuant to which you provide services to Summer.

 

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

 

In addition, you will be entitled to protection against a change of control of Summer pursuant to the terms of a Change of Control Agreement in the form attached hereto as Exhibit 1 (the “CC Agreement”). The CC Agreement provides you, upon the occurrence of an event constituting a Change of Control, with certain Severance Benefits (as defined in the CC Agreement). In consideration of the Severance Benefits, you will be required to abide by the restrictive covenants contained in the CC Agreement. As a condition to your employment you will be required to execute and deliver the CC Agreement to Summer on the commencement date of your employment.

 

Employment Documentation:

 

Your employment with Summer is contingent upon your submission of satisfactory proof of your identity and legal authorization to work in the United States as well as completion of all

 

 

employment related forms required by Summer.  If you fail to provide satisfactory documentation, federal law prohibits Summer from hiring you.

 

Expense Reimbursement:

 

Summer will pay and/or reimburse you for all expenses reasonably and necessarily incurred by you in the performance of your services while employed by Summer, including reasonable and customary travel related expenses consistent with Summer’s corporate travel policy. Pursuant to Summer’s corporate travel policy, you may travel business class for air travel having a duration of 5 or more hours of flight time. Such payment/reimbursement shall be made upon presentation of such receipts or other documentation, as Summer customarily requires prior to making such payment or reimbursement.

 

Employment Manual:

 

During your employment with Summer you will be required to abide by Summer’s code of conduct, policies and procedures as set forth in Summer’s Executive manual or as otherwise communicated to you in writing.

 

Restrictive Covenants:

 

Please be advised that by accepting this offer of employment and in consideration of your employment with Summer, the grant of stock options and restrictive stock in accordance with the terms hereof, and the Severance Consideration, you are agreeing to be bound by and adhere to the terms and conditions set forth in Appendix A, attached hereto and incorporated herein, which terms and conditions form a material condition to Summer in extending this Letter to you.

 

Code Section 409A:

 

If any provision of this Letter (or of any payment of compensation, including benefits) would cause you to incur any additional tax or interest under Internal Revenue Code of 1986, as amended (“Code”), Section 409A or any regulations or Treasury guidance promulgated thereunder, Summer  shall, after consulting with you, reform such provision to comply with Code Section 409A; provided that Summer 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 you of the applicable provision without violating the provisions of Code Section 409A.

 

Notwithstanding any provision to the contrary in this Letter, if you are 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 your “separation from service” (as such term is defined in Treasury Regulations issued under Code Section 409A) or (ii) the date of your death (the “Deferral Period”). Upon the expiration of the Deferral Period, all payments and benefits deferred pursuant to this provision (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 you in a lump sum, and

 

 

any remaining payments and benefits due under this Letter 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 you that would not be required to be delayed if the premiums therefor were paid by you, you shall pay the full cost of premiums for such welfare benefits during the Deferral Period and Summer shall pay (or cause to be paid) to you an amount equal to the amount of such premiums paid by you during the Deferral Period promptly after its conclusion.

 

Any reimbursements by Summer to you of any eligible expenses under this Letter that are not excludable from your 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 Summer’s normal policies and the last day of your taxable year 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 you, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.  The right to Taxable Reimbursements, or in-kind benefits, shall not be subject to liquidation or exchange for another benefit.

 

Payment of any Taxable Reimbursements under this Letter must be made by no later than the end of your taxable year following the taxable year in which you remit the related taxes.

 

Legal Expenses:

 

Summer has agreed to make a contribution, not to exceed $5,000.00, towards your legal expenses in reviewing this Letter, Appendix A and Exhibit 1. Payment will be made to your legal counsel following completion and execution of this Letter, Appendix A and Exhibit 1, within 30 days of production to Summer of an appropriate fee breakdown and invoice.

 

SEC Compliance:

 

For purposes of Securities and Exchange Commission (“SEC”) reporting, you will be deemed an “executive officer” and are subject to the rules and requirements of Section 16 of the Securities Exchange Act of 1934.  You understand and agree that you will keep the terms and conditions of your employment confidential until such time as your employment is publicly disclosed by Parent as required by applicable SEC rules and regulations.

 

Return of Letter:

 

We are excited about this opportunity to work with you to build the Summer Brand and Business.  To accept this offer, please sign and date this Letter below (as well as Appendix A and Exhibit 1), keep a copy for your records, and return a copy to Human Resources.  We are extremely confident that your employment with us will prove mutually beneficial and we look forward to having you join our winning team!

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
Summer   Infant USA, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Strozik
    
	
 
    	
 
    
	
 
    	
Name:
    	
Mark   Strozik
    
	
 
    	
Title:
    	
Senior   Vice President / Human Resources
    
				

 

I accept your offer of employment as set forth in this Letter and agree to be bound by the terms and conditions set forth in Appendix A, attached hereto.  I understand that my employment is “at will” and that either you or I can terminate my employment at any time, for any reason.  No oral commitments have been made concerning my employment.

 

	
Kenneth   Price
    	
 
    	
/s/   Kenneth Price
    
	
Executive   Name (please print)
    	
 
    	
Executive   Signature
    
	
 
    	
 
    	
 
    
	
January 14,   2014
    	
 
    	
 
    
	
Date
    	
 
    	
 
    

 

 

APPENDIX A

 

Non-Competition, Non-Disclosure and Developments Agreement

 

This Non-Competition, Non-Disclosure and Developments Agreement (“Agreement”) is entered in this 13th day of January, 2014  (“Effective Date”) by Kenneth Price (“Executive”) for the benefit of Summer (as hereinafter defined) in consideration of: (i) the Executive’s employment with Summer Infant (USA), Inc. (“Summer”), (ii) the grant of the stock options and restricted stock, and (iii) the Severance Consideration all on the terms and conditions set forth in the Letter to which this Agreement is attached. The Executive covenants and agrees as follows:

 

Whenever used herein, the word “Summer shall include the parent company, Summer Infant, Inc., and the subsidiary and affiliated companies, Summer Infant Canada, Limited, Summer Infant Europe Ltd., Summer Infant Asia Limited, Summer Infant Australia Pty Ltd and Born Free, Inc. (collectively “Summer”).

 

1.             Consideration for Agreement.

 

Executive acknowledges that he is being hired by Summer as President / Global Sales and Marketing and in connection with his duties and responsibilities at Summer and in consideration of Executive’s promises in this Agreement, Summer will provide Executive with access to certain Confidential Information and the opportunity to develop and maintain relationships and good will with Summer’s customers, vendors, consultants and contractors. Accordingly in consideration of Executive’s employment with Summer, the grant of the stock options and the shares of restricted stock and the Severance Benefits, all on the terms and conditions set forth in the Letter, the Executive hereby agrees with Summer to comply with the terms of this Agreement.

 

2.             Definitions.

 

In addition to the capitalized terms used in the Letter and as 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.

 

“Business Partner” means a supplier, manufacturer, vendor or licensor (person or entity) with whom Summer, Parent or any of their respective Affiliates has a business relationship and with which Executive had business-related contact or dealings, or about which Executive received Confidential Information, during the two years prior to the termination of Executive’s employment with Summer or during Executive’s employment, whichever is the shorter period.   A Business Partner does not include a supplier, manufacturer, vendor or licensor that has fully and finally decided to terminate its business relationship with Summer, Parent or any of their respective Affiliates independent of any conduct or communications by Executive or breach of this Agreement, and which has, in fact, ceased doing any business with Summer, Parent or any of their respective Affiliates.

 

“Competition”  and/or “Engaging in Competition” means providing services to a Competitor of Summer (whether as an Executive, independent contractor, consultant, principal, agent, partner, officer, director, investor, or shareholder, except as a shareholder of less than one

 

 

percent of a publicly traded company) that: (i) are the same or similar in function or purpose to the Services Executive provided to Summer during his employment by Summer, and/or (ii) will likely result in the disclosure of Confidential Information to a Competitor or the use of Confidential Information on behalf of a Competitor.

 

“Competitor” means any person, corporation or other entity that designs, manufactures, sells or distributes infant, juvenile and/or children’s health, safety and wellness products in one or more product categories that are sold by the Company, Parent or any of their respective Affiliates, including, without limitation, products in the monitoring, health and safety, nursery, baby gear, feeding and furniture product categories.

 

“Confidential Information” shall be as defined in Section 3(a) of this Agreement.

 

“Consulting Services” means any activity that involves providing consulting or advisory services with respect to any relationship between the Company, Parent or any of their respective Affiliates, on the one hand, and any third party, on the other hand, and that is likely to result in the use or disclosure of Confidential Information.

 

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

 

“Restrictive Area” refers to the United States, Canada, Mexico, United Kingdom, Australia and any other country where Summer sells its products.

 

“Restricted Period” means the one (1) year period of time after termination of the Executive’s employment with Summer, for whatever the reason of such termination.

 

3.             Restrictive Covenants

 

The Executive acknowledges that in order to assure Summer that it will retain the value of its business relationships, it is reasonable that the Executive be limited in utilizing trade secrets and other confidential information of Summer, Executive’s special knowledge of the business of Summer and Executive’s relationships with customers, suppliers and others having business relationships with Summer in any manner or for any purpose other than the advancement of the interests of Summer, as hereinafter provided.  The Executive acknowledges that Summer would not enter into the Letter and provide the benefits provided for therein without the covenants and agreements of the Executive set forth in this Section 3

 

(a)           Confidentiality.  The Executive acknowledges that in the course of the Executive’s employment with Summer, it is expected that the Executive will have extensive contact with Persons with which Summer 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 Summer, including, without limitation, the following non-public information: trade secrets, proprietary formulations generated, developed or licensed by Summer, manufacturing processes, procedures and techniques, material costing, operating margins, details of customer agreements, new product development, expansion  strategies,  sources of supply, Executive compensation, and confidential information of third parties which is given to Summer pursuant to an obligation or agreement to keep such information confidential or any other information

 

 

relating to Summer that could reasonably be regarded as confidential or proprietary or which is not in the public domain (other than by reason of Executive’s breach of the provisions of this section)  (collectively, “Confidential Information”).  Accordingly, the Executive shall not at any time, either during the time Executive is employed by Summer 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 Summer, except for disclosures by the Executive required by applicable law (but only to the extent Summer is given a reasonable opportunity to object to such disclosure and protect the Confidential Information) to responsible officers of Summer and other responsible Persons who are in a contractual or fiduciary relationship with Summer and who have a need for such information for purposes in the best interests of Summer.  Without limiting the generality of the foregoing, the Executive shall not, directly or indirectly, disclose or otherwise make known to any Person any information as to Summer’s employees and others providing services to the Company, including with respect to their abilities, compensation, benefits and other terms of employment or engagement. The Executive shall keep secret all such matters entrusted to Executive, and Executive shall not use or attempt to use any Confidential Information on behalf of any person or entity other than Summer, or in any manner which may injure or cause loss or may be calculated to injure or cause loss, whether directly or indirectly, to Summer.

 

Further, Executive agrees that, during his employment, Executive shall not make, use, or permit to be used, any notes, memoranda, reports, lists, records, specifications, software programs, data, documentation or other materials of any nature relating to any matter within the scope of the business of Summer or concerning any of its dealings or affairs other than for the benefit of Summer.   Executive further agrees that he shall not, after the termination of his employment, use or permit to be used any such notes, memoranda, reports, lists, records, specifications, software programs, data, documentation or other materials.  All of the foregoing shall be and remain the sole and exclusive property of Summer, and immediately upon the termination of Executive’s employment, Executive shall deliver all of the foregoing, and all copies thereof, to Summer at its main office.

 

(b)           Restriction on Competition.  During the Executive’s employment with Summer and thereafter during the Restricted Period, the Executive shall not, directly or indirectly, whether alone or in association with others, engage in Competition or provide Consulting Services within the Restricted Area.

 

(c)           Non-Interference.  During the Executive’s employment with Summer and thereafter during the Restricted Period, the Executive shall not, interfere with Summer’s relationship with its Business Partners by soliciting or communicating (regardless of who initiates the communication) with a Business Partner to induce or encourage the Business Partner to stop doing business or reduce its business with Summer, unless a duly authorized officer of Summer gives Executive written authorization to do so.  Executive also agrees that during the Non-Interference Period, he will not work on a Summer account on behalf of a Business Partner or serve as the representative of a Business Partner for Summer.  During the Restrictive Period, Executive also will not interfere with Summer’s relationship with any employee of Summer by:  (i) soliciting or communicating with such employee to induce or encourage him or her to leave Summer’s employ (regardless of who first initiates the communication); (ii) helping another person or entity evaluate such employee as an employment candidate; or (iii) otherwise  helping any  person or  entity hire an employee  away from Summer unless a duly authorized  officer of  Summer gives Executive written authorization to do so. Where required by law, the foregoing restriction will only apply to employees with whom Executive

 

 

had material contact or about whom Executive received Confidential Information within the shorter period of Executive’s employment with Summer or during the last two years prior to the termination of Executive’s employment with Summer.

 

(d)           Non-disparagement.  The Executive shall not at any time, either during the time Executive is employed by Summer 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 Summer (including its directors and employees and others providing services to Summer), or any of its products or services, nor shall the Executive 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 Summer or the marketing of such products or services, in each case except as may be required by law, and then only after consultation with Summer to the extent possible.

 

(e)           Assignment of Inventions.  Executive agrees that he will promptly make full written disclosure to Summer, will hold in trust for the sole right and benefit of Summer, and  hereby assigns  to Summer, or  its designee, all  Executive’s right, title, and interest in and to any and all inventions,  original works of authorship, developments,  concepts,  improvements, designs, discoveries,  ideas, trademarks or trade secrets, whether or not patentable or registrable under copyright or similar laws, which Executive may solely or jointly conceive or develop or reduce  to practice,  or cause to be conceived or developed or reduced to practice,  while in the course of his employment for Summer during the period of time Executive is in the employ of Summer and relating to the business of Summer (collectively referred to as “Inventions”).  Executive further acknowledges that all original works of authorship which are made by Executive (solely or jointly with others) within the scope of and during the period of Executive’s employment with Summer and which are protectable by copyright are “works made for hire,” and as such are the sole property of Summer.  Executive understands and agrees that the decision whether or not to commercialize or market any Invention developed by Executive solely or jointly with others is within Summer’s sole discretion and for Summer’s sole benefit and that no royalty will be due to Executive as a result of Summer’s efforts to commercialize or market any such Invention.

 

4.             Remedies.  The Executive 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 Summer and Parent.  The Executive acknowledges that compliance with the restrictions set forth in Section 3 will not prevent Executive from earning a livelihood, and that in the event of a breach by the Executive of any of the provisions of Section 3, monetary damages would not provide an adequate remedy to Summer.  Accordingly, the Executive agrees that, in addition to any other remedies available to Summer, Summer 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 Executive for attorneys’ fees and expenses incurred by it in enforcing these provisions.  In addition to its other rights and remedies hereunder, Summer shall have the right to require the Executive to account for and pay over to it all compensation, profits, money, accruals and other benefits derived or received, directly or indirectly, by the Executive from any breach of the covenants of Section 3, and may set off any such amounts due it from the Executive against any amounts otherwise due Executive from Summer.  If the Executive breaches any covenant 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.             Cooperation.

 

(a)           In the event  that Executive receives  a subpoena, deposition notice, interview request, or other process or order to produce Confidential Information  or any other  property  of Summer, Executive shall  promptly:  (a) notify Summer of the  item, document,  or information   sought   by  such   subpoena,   deposition   notice,  interview   request,  or  other   process  or  order;   (b)  furnish   Summer with a copy of said subpoena, deposition notice, interview request, or other process or order; and (c) provide reasonable cooperation with respect to any procedure that Summer may initiate to protect Confidential Information or other  interests.    If  Summer objects  to the  subpoena,  deposition  notice,  interview  request,  process,  or  order,  Executive shall cooperate  to ensure that there shall  be no disclosure  until the court or other applicable  entity  has ruled upon the objection,  and then only in accordance  with the ruling so made.  If no such objection is made despite a reasonable opportunity to do so, Executive shall be entitled to comply with the subpoena, deposition, notice, interview request, or other process or order provided  that Executive has fulfilled the above obligations.

 

(b)           Executive agrees  to cooperate fully with Summer and their legal counsel  in connection  with any action, proceeding, or  dispute  arising  out  of  matters  with  which  Executive was  directly  or  indirectly  involved  while  serving  as  an  Executive  of  Summer. This cooperation shall include, but shall not be limited to, meeting with, and providing information to, Summer and its legal counsel, maintaining the confidentiality of any past or future privileged communications with Summer’s legal counsel and making himself available to testify truthfully by affidavit, in depositions, or in any other forum on behalf of Summer.  Summer agrees to reimburse Executive for any reasonable and necessary out-of-pocket costs associated with Executive’s cooperation.

 

6.             Entire Agreement/No Reliance/No Modifications.

 

This Agreement sets forth the entire agreement between the parties  hereto and  fully supersede  any and all prior and/or  supplemental understandings, whether  written  or oral,  between  the parties  concerning the subject  matter  of  this  Agreement.    Executive agrees and acknowledges that he has not relied on any representations, promises or agreements of any kind in connection with his decision to accept the terms of this Agreement, except for the representations, promises and agreements herein. Any modification to this Agreement must be made in writing and signed by Executive and Summer’s head of Human Resources or his authorized representative.

 

 

7.             No Waiver.

 

Any waiver by Summer of a breach of any provision of this Agreement, or of any other similar agreement with any other current  or  former  Executive  of  Summer, shall  not operate  or  be construed  as a waiver  of any  subsequent  breach  of such provision or any other provision hereof.

 

8.             Severability.

 

Nothing contained herein shall be construed to require the commission of any act contrary to law. Should there be any conflict between any provisions hereof and any present or future statute, law, ordinance, regulation or other pronouncement having the force of law, the latter shall prevail, but the provision of this Agreement affected thereby shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law, and the remaining provisions of this Agreement shall remain in full force and effect.

 

9.             Survival of Executive’s Obligations.

 

Executive’s obligations under this Agreement shall survive the termination of his employment regardless of the manner of such termination and shall be binding upon Executive’s heirs, personal representatives, executors, administrators and legal representatives.

 

10.          Summer’s Right to Assign Agreement.

 

Executive acknowledges and agrees that Summer has the right to assign this Agreement to its successors and assigns without the need for further agreement or consent by Executive, and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by said successors or assigns.

 

11.          Governing Law.

 

This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Rhode Island.

 

12.          Tolling.

 

In the event Executive violates one of the time-limited restrictions in this Agreement, Executive agrees that the time period for such violated restriction shall be extended by one day for each day he/she have violated the restriction, up to a maximum extension equal to the length of the original period of the restricted covenant.

 

 

IN WITNESS WHEREOF, the Executive has executed this Agreement as of the date set forth below his.

 

 

	
Executive:
    	
 
    
	
/s/   Kenneth Price
    	
 
    
	
Signature
    	
 
    
	
Print Name: 
    	
Kenneth Price
    	
 
    
	
Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
January 14,   2014
    	
 
    
				

 

 

EXHIBIT 1

 

CHANGE OF CONTROL AGREEMENT

 

This Change of Control Agreement (the “Agreement”), dated this        day of January, 2014 (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 (the “Board”) of the parent company, Summer Infant, Inc. (“Parent”), and the Company have determined that it is in the best interest of the Parent, its stockholders and the Company 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 herein defined).

 

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 consummation 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), (a) the Company terminates the Employee’s employment other than (i) for Cause (as herein defined), or (ii) because of the Employee’s Disability (as herein defined) or death, or (b) the Employee terminates his employment for Good Reason (as herein defined) (any such termination in clauses (a) or (b) being referred to as a “Payment Event”), then after such termination the Employee shall be entitled to receive from the Company the following cash payments (together, the “Payments”):  (1) an amount equal to the Employee’s annual Base Salary (as herein defined) multiplied by the payment percentage provided for on Schedule 1 attached to this Agreement (“Schedule 1”), and (2) the amount equal to the Employee’s annual targeted STI  (Short Term Incentive) bonus multiplied by the payment percentage provided for on Schedule 1 attached to this Agreement (“Schedule 1”).

 

The Payments will be payable by the Company commencing on the 61st day following the Payment Event, provided that Employee has executed and submitted a release of claims required in Section 9(s) on or before the 60th day following the Payment Event, in installments over the Restricted Period in accordance with the Company’s regular payroll practices.  In addition, the Employee shall be entitled to (i) the immediate vesting of all outstanding equity awards (including restricted stock grants and stock options) and (ii) the severance benefits listed on Schedule 1 (the “Severance Benefits”).  The Employee shall not be entitled to: (A) any Payment, (B) immediate vesting of equity awards or (C) any Severance Benefits if the Employee terminates the Employee’s

 

 

employment without Good Reason, if the Employee’s employment is terminated for Cause or if the Employee’s employment ceases as a result of Employee’s death or Disability.

 

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.

 

“Affiliate” means 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).

 

“Base Salary” means the Employee’s annual base salary as in effect at the time of such termination, and the Base Salary calculated for purposes of this Agreement shall not reflect any voluntary salary reductions that may be in effect at the time of such termination.

 

“Business Partner” means a supplier, manufacturer, vendor or licensor (person or entity) with whom the Company, Parent or any of their respective Affiliates has a business relationship and with which Employee had business-related contact or dealings, or about which Employee received Confidential Information, during the two years prior to the termination of Employee’s employment with the Company or during Employee’s employment, whichever is the shorter period.   A Business Partner does not include a supplier, manufacturer, vendor or licensor that has fully and finally decided to terminate its business relationship with the Company, Parent or any of their respective Affiliates independent of any conduct or communications by Employee or breach of this Agreement, and which has, in fact, ceased doing any business with the Company, Parent or any of their respective Affiliates.

 

“Cause” means 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 Board 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” means (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 Parent’s stockholders, 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 Parent, as such terms are used in 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 stockholders of the Parent of a reorganization, merger, consolidation or other form of corporate transaction or series of transactions (but not including  an underwritten public offering of the Parent’s common stock or other voting securities (or securities convertible into voting securities of the Parent) for the Parent’s own account registered under the Securities Act of 1933), in each case, with respect to which Persons who were stockholders of the Parent 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, (iii) a liquidation or dissolution of the Parent or the sale of all or substantially all of the assets of the Parent (unless such reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned or terminated prior to being consummated); or (iv) 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 fifty percent (50%) of either the then outstanding shares of the Parent’s common stock or the combined voting power of the Parent’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 Parent or any of its Affiliates or (y) any employee benefit plan (or related trust) sponsored or maintained by the Parent or any of its Affiliates.

 

“Competition”  and/or “Engaging in Competition” means providing services to a Competitor of the Company or Parent (whether as an employee, independent contractor, consultant, principal, agent, partner, officer, director, investor, or shareholder, except as a shareholder of less than one percent of a publicly traded company) that: (i) are the same or similar in function or purpose to the services Employee provided to the Company or Parent during his/her employment by the Company, and/or (ii) will likely result in the disclosure of Confidential Information to a Competitor or the use of Confidential Information on behalf of a Competitor.

 

“Competitor” means any person, corporation or other entity that designs, manufactures, sells or distributes infant, juvenile and/or children’s health, safety and wellness products in one or more product categories that are sold by the Company, Parent or any of their respective Affiliates, including, without limitation, products in the monitoring, health and safety, nursery, baby gear, feeding and furniture product categories.

 

“Confidential Information” shall be as defined in Section 3(a) of this Agreement.

 

“Consulting Services” means any activity that involves providing consulting or advisory services with respect to any relationship between the Company, Parent or any of their respective Affiliates, on the one hand, and any third party, on the other hand, and that is likely to result in the use or disclosure of Confidential Information.

 

“Disability” means that the Employee has been unable to perform his or her duties as the result of his or her incapacity due to physical or mental illness, and such inability, at least four (4) 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” means (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) if applicable, any other action or inaction which constitutes a material breach by the Company or any of its Affiliates of an agreement between the Employee and the Company or Parent pursuant to 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” means any natural person or entity with legal status.

 

“Restrictive Area” refers to the United States, Canada, Mexico, United Kingdom, Australia and any other country where the Company sells its products.

 

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

 

3.             Restrictive Covenants.  The Employee has executed the Company’s Non-Competition, Non-Disclosure and Developments Agreement (“Other Restrictive Agreement”).  If (a) a Payment Event occurs or the (b) Employee’s employment is terminated by the Company for Cause following a Change of Control, then the terms and provisions of this Section 3 shall apply rather than the terms and provisions of the Other Restrictive Agreement. If Employee terminates his or her employment without Good Reason following a Change of Control, then the terms and provisions of the Other Restrictive Agreement shall apply rather than the terms and provisions of this Agreement.

 

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, Parent, their respective Affiliates and their respective successors and assigns.

 

 

(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 following non-public information: trade secrets, proprietary formulations generated, developed or licensed by the Company, manufacturing processes, procedures and techniques, material costing, operating margins, details of customer agreements, new product development, expansion  strategies,  sources of supply, employee compensation, and confidential information of third parties which is given to the Company  pursuant to an obligation or agreement to keep such information confidential 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, “Confidential Information”).  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. The Employee shall keep secret all such matters entrusted to Employee, and Employee shall not use or attempt to use any Confidential Information on behalf of any person or entity other than Company, or in any manner which may injure or cause loss or may be calculated to injure or cause loss, whether directly or indirectly, to the Company.

 

Further, Employee agrees that, during his/her employment, Employee shall not make, use, or permit to be used, any notes, memoranda, reports, lists, records, specifications, software programs, data, documentation or other materials of any nature relating to any matter within the scope of the business of the Company or concerning any of its dealings or affairs other than for the benefit of the Company.   Employee further agrees that he/she shall not, after the termination of his/her employment, use or permit to be used any such notes, memoranda, reports, lists, records, specifications, software programs, data, documentation or other materials.  All of the foregoing shall be and remain the sole and exclusive property of the Company, and immediately upon the termination of Employee’s employment, Employee shall deliver all of the foregoing, and all copies thereof, to the Company at its main office.

 

(b)           Restriction on Competition.  During the Employee’s employment with the Company and thereafter during the Restricted Period, the Employee shall not, directly or indirectly, whether alone or in association with others, engage in Competition or provide Consulting Services within the Restricted Area.

 

(c)           Non-Interference.  During the Employee’s employment with the Company and thereafter during the Restricted Period, the Employee shall not, interfere with the Company’s

 

 

relationship with its Business Partners by soliciting or communicating (regardless of who initiates the communication) with a Business Partner to induce or encourage the Business Partner to stop doing business or reduce its business with the Company, unless a duly authorized officer of the Company gives Employee written authorization to do so.  Employee also agrees that during the Non-Interference Period, he/she will not work on a Company account on behalf of a Business Partner or serve as the representative of a Business Partner for the Company.  During the Restrictive Period, Employee also will not interfere with the Company’s relationship with any employee of the Company by:  (i) soliciting or communicating with such employee to induce or encourage him or her to leave the Company’s employ (regardless of who first initiates the communication); (ii) helping another person or entity evaluate such employee as an employment candidate; or (iii) otherwise  helping any  person or  entity hire an employee  away from  the Company  unless a duly authorized  officer of  the Company gives Employee written authorization to do so.   Where required by law, the foregoing restriction will only apply to employees with whom Employee had material contact or about whom Employee received Confidential Information within the shorter period of Employee’s employment with the Company or during the last two years prior to the termination of Employee’s employment with the Company.

 

(d)           Non-disparagement.  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)           Assignment of Inventions.  Employee agrees that he/she will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of Company, and  hereby assigns  to the Company, or  its designee, all  Employee’s right, title, and interest in and to any and all inventions,  original works of authorship, developments,  concepts,  improvements, designs, discoveries,  ideas, trademarks or trade secrets, whether or not patentable or registrable under copyright or similar laws, which Employee may solely or jointly conceive or develop or reduce  to practice,  or cause to be conceived or developed or reduced to practice,  while in the course of his/her employment for the Company during the period of time Employee is in the employ of the Company  and relating to the business of the Company (collectively referred to as “Inventions”).  Employee further acknowledges that all original works of authorship which are made by Employee (solely or jointly with others) within the scope of and during the period of Employee’s employment with the Company and which are protectable by copyright are “works made for hire,” and as such are the sole property of the Company.  Employee understands and agrees that the decision whether or not to commercialize or market any Invention developed by Employee solely or jointly with others is within the Company’s sole discretion and for the Company’s sole benefit and that no royalty will be due to Employee as a result of the Company’s efforts to commercialize or market any such Invention.

 

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 and Parent.  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 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, 2015, provided, however, that (a) 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 and (b) 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.

 

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 equity awards Employee may have been granted by Parent (whether under a Parent incentive compensation plan or outside such plans).  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.

 

7.             Parachute Payments.   If Independent Tax Counsel (as herein defined) 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. The determination of the Independent Tax Counsel under this Section 7 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, “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.

 

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 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 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 Section 9(k) hereof.  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.

 

(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 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)            Exchange Act Requirements.  If the Employee is a “named executive officer” within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules promulgated thereunder, Employee understands and agrees that the payments provided for in this Agreement may be subject to a vote, advisory or otherwise, by the Parent’s stockholders under the Exchange Act and the rules promulgated thereunder, together with additional requirements that

 

 

may be imposed by any stock exchange upon which the Parent’s common stock or other securities are listed from time to time.

 

(j)            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.

 

(k)           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.

 

(l)            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.

 

(m)          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.

 

(n)           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.

 

(o)           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.

 

(p)           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 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).

 

(q)           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.

 

 

(r)           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.

 

(s)            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, Parent and their respective Affiliates and related parties, in such form as the Company may reasonably request, of all claims against the Company, Parent and their respective 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.

 

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/ Mark Strozik
    
	
 
    	
 
    	
Name:
    	
Mark Strozik
    
	
 
    	
 
    	
Title:
    	
SVP/Human   Resources
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Kenneth Price
    
	
 
    	
Name:
    	
Kenneth   Price
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
					

 

 

Schedule 1

 

	
Employee:
    	
 
    	
Kenneth   Price
    
	
 
    	
 
    	
 
    
	
Position/Title:
    	
 
    	
President   of Global Sales & Marketing
    
	
 
    	
 
    	
 
    
	
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   monthsExhibit 10(u)(u)

 

 

STOCK NOTIFICATION AND AWARD AGREEMENT

 

	
Name:
    	
 
    	
Employee ID:
    
	
 
    	
 
    	
 
    
	
Manager   Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Country:
    	
 
    	
 
    

 

	
Grant Date:
    
	
 
    
	
Grant Number:
    
	
 
    
	
Award Amount:
    
	
 
    
	
Award Type/Sub-Type:
    
	
 
    
	
Plan:
    
	
 
    
	
Vesting Schedule:
    

 

Restricted Stock Units

 

THIS STOCK NOTIFICATION AND AWARD AGREEMENT, as of the Grant Date noted above between Hewlett-Packard Company, a Delaware Corporation (“Company”), and the employee named above (“Employee”), is entered into as follows:

 

WHEREAS, the continued participation of the Employee is considered by the Company to be important for the Company’s continued growth; and

 

WHEREAS, in order to give the Employee an incentive to continue in the employ of the Company (or its Affiliates or Subsidiaries), to accept ancillary agreements designed to protect the legitimate business interests of the Company that are made a condition of this award and to participate in the affairs of the Company, the HR and Compensation Committee of the Board of Directors of the Company or its delegates (“Committee”) has determined that the Employee shall be granted restricted stock units representing hypothetical shares of the Company’s common stock (“RSUs”), with each RSU equal in value to one share of the Company’s $0.01 par value common stock (“Shares”), subject to the restrictions stated below and in accordance with the terms and conditions of the Plan named above (“Plan”), a copy of which can be found on the Long-term Incentives website or by written or telephonic request to the Company Secretary.

 

THEREFORE, the parties agree as follows:

 

1.              Grant of Restricted Stock Units.

 

Subject to the terms and conditions of this Stock Notification and Award Agreement and of the Plan, the Company hereby grants to the Employee the number of RSUs set forth above.

 

2.              Vesting Schedule.

 

The interest of the Employee in the RSUs shall vest according to the vesting schedule set forth above, or if earlier, in accordance with Section 8, below. Unless, the provisions of Section 8 apply, the Employee must remain in the employ of the Company on a continuous basis through the close of business on the last Vesting Date, as set forth above, and the Employee must be in compliance with the requirements and conditions provided for in the Plan and this Stock Notification and Award Agreement for the interest of the Employee in the RSUs to become fully vested on that date.

 

3.              Benefit Upon Vesting.

 

Within 75 days of each vesting date set forth on the above vesting schedule, the Company shall deliver or pay, as applicable, to the Employee Shares or a combination of cash and Shares, as the Company determines in its sole discretion, with a value equal to:

 

1

 

(a)         the number of RSUs that have become vested as of such vesting date, multiplied by the fair market value (as defined in the Plan) of a Share on the date on which such RSUs vested; plus

 

(b)         a dividend equivalent payment determined by:

 

(1)         Multiplying, separately, the number of RSUs that became vested as determined in Section 3(a) by the dividend per Share on each dividend payment date between the Grant Date and the applicable vesting date to determine the dividend equivalent amount for each applicable dividend payment date;

 

(2)         dividing the amount determined in (1) above by the fair market value of a Share on the dividend payment to determine the number of additional whole and fractional RSUs to be credited to the Employee; and

 

(3)         multiplying the number of additional RSUs determined in (2) above by the fair market value of a Share on the vesting date to determine the aggregate value of dividend equivalent payments for such vested RSUs;

 

provided, however, that if any aggregated dividend equivalent payments in paragraph (b)(3) above to be delivered in Shares results in a payment of a fractional share, such fractional share shall be rounded up to the nearest whole share.

 

4.              Restrictions.

 

Except as otherwise provided for in this Stock Notification and Award Agreement, the RSUs or rights granted hereunder may not be sold, pledged or otherwise transferred until the RSUs become vested in accordance with the vesting schedule set forth above.  The period of time between the date hereof and the date the RSUs become fully vested is referred to herein as the “Restriction Period.”

 

5.              Custody of Restricted Stock Units.

 

The RSUs subject hereto shall be held in escrow in a restricted book entry account with the Company’s transfer agent in the name of the Employee.  Upon termination of the Restriction Period, if the Company determines, in its sole discretion, to deliver Shares pursuant to Section 3 above, such Shares shall be released into an unrestricted book entry account with the Company’s transfer agent; provided, however, that a portion of such Shares shall be surrendered in payment of required withholding taxes in accordance with Section 12 below, unless the Company, in its sole discretion, establishes alternative procedures for the payment of required withholding taxes.

 

6.              No Stockholder Rights.

 

RSUs represent hypothetical Shares.  During the Restriction Period, the Employee shall not be entitled to any of the rights or benefits generally accorded to stockholders.

 

7.              Termination of Employment.

 

Except as otherwise provided for in this Stock Notification and Award Agreement, if the Employee’s employment with the Company is terminated at any time for any reason prior to the lapse of the Restriction Period, all unvested RSUs granted hereunder shall be forfeited by the Employee.

 

8.              Disability or Retirement of the Employee.

 

If the Employee’s termination of employment is due to the Employee’s total and permanent disability or retirement, in accordance with the applicable retirement policy, all outstanding and unvested RSUs shall immediately vest subject to the condition that the Employee shall have executed a current Agreement Regarding Confidential Information and Proprietary Developments (“ARCIPD”) that is satisfactory to the Company, and shall not engage in any conduct that creates a conflict of interest in the opinion of the Company.

 

9.              Death of the Employee.

 

In the event of the Employee’s death prior to the end of the Restriction Period, then within 75 days of the Employee’s death the Employee’s estate or designated beneficiary shall have the right to receive a pro rata payment of cash, Shares or combination of cash and Shares, as the Company determines in its sole discretion.  In the event of the Employee’s death after the vesting date but prior to the payment associated with such the RSUs, then within 75 days of the Employee’s death payment for such RSUs shall be made to the Employee’s estate or designated beneficiary.

 

10.       Deferral of Compensation.

 

Payments made pursuant to this Plan and this Stock Notification and Award Agreement are intended to comply with or qualify for an exemption from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).  The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Stock Notification and Award Agreement to ensure that all RSU Awards are made in a manner that complies with Section 409A (including, without limitation, the avoidance of penalties thereunder), provided however, that the Company makes no representations that the RSU Awards will be exempt from any penalties that may apply under Section 409A and makes no undertaking to preclude Section 409A from applying to this RSU Award.

 

11.       Accelerated or Delayed Delivery.

 

Notwithstanding anything in this Stock Notification and Award Agreement to the contrary, the Company, in its sole discretion may accelerate or delay the delivery of any RSUs. If the RSUs are subject to Section 409A, such acceleration or delay shall be only under the circumstances, and to the extent, permitted by Section 409A.  Further, in the event the Company elects to accelerate

 

2

 

delivery of any RSUs subject to Section 409A or pay cash in exchange for the cancellation of any RSUs subject to Section 409A as the result of a Change in Control pursuant to the Plan such acceleration or exchange shall only be effective to the extent the event constitutes a change in control event for purposes of Section 409A. In all other circumstances delivery will be made in accordance with the normal vesting schedule.

 

12.       Taxes.

 

(a)         The Employee shall be liable for any and all taxes, including income tax, social insurance, payroll tax, payment on account, employer taxes or other tax-related items related to the Employee’s participation in the Plan and legally applicable to or otherwise recoverable from the Employee (such as fringe benefit tax) by the Company and/or the Employee’s employer (the “Employer”) whether incurred at grant, vesting, sale, prior to vesting or at any other time (“Tax-Related Items”).  In the event that the Company or the Employer is required, allowed or permitted to withhold taxes as a result of the grant or vesting of RSUs, or subsequent sale of Shares acquired pursuant to such RSUs, or due upon receipt of dividend equivalent payments, the Employee shall surrender a sufficient number of whole Shares, make a cash payment or make adequate arrangements satisfactory to the Company and/or the Employer to withhold such taxes from Employee’s wages or other cash compensation paid to the Employee by the Company and/or the Employer at the election of the Company, in its sole discretion, or, if permissible under local law, the Company may sell or arrange for the sale of Shares that Employee acquires as necessary to cover all applicable required withholding taxes that are legally recoverable from the Employee (such as fringe benefit tax) and required social security contributions at the time the restrictions on the RSUs lapse, unless the Company, in its sole discretion, has established alternative procedures for such payment. However, with respect to any RSUs subject to Section 409A, the Employer shall limit the surrender of Shares to the minimum number of Shares permitted to avoid a prohibited acceleration under Section 409A. The Employee will receive a cash refund for any fraction of a surrendered Share or Shares in excess of any and all Tax-Related Items.  To the extent that any surrender of Shares or payment of cash or alternative procedure for such payment is insufficient, the Employee authorizes the Company, its Affiliates and Subsidiaries, which are qualified to deduct tax at source, to deduct from the Employee’s compensation all Tax-related Items.  The Employee agrees to pay any Tax-Related Items that cannot be satisfied from wages or other cash compensation, to the extent permitted by law.

 

To avoid negative accounting treatment, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates.  If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Employee is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Employee’s participation in the Plan.

 

(b)         Regardless of any action the Company or the Employer takes with respect to any or all Tax-Related Items, the Employee acknowledges and agrees that the ultimate liability for all Tax-Related Items is and remains the Employee’s responsibility and may exceed the amount actually withheld by the Company or the Employer.  The Employee further acknowledges that the Company and/or the Employer: (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this grant of RSUs, including, but not limited to, the grant, vesting or settlement of RSUs, the subsequent delivery of Shares and/or cash upon settlement of such RSUs or the subsequent sale of any Shares acquired pursuant to such RSUs and receipt of any dividends or dividend equivalent payments; and (ii)  notwithstanding Section 10, do not commit to and are under no obligation to structure the terms or any aspect of this grant of RSUs to reduce or eliminate the Employee’s liability for Tax-Related Items or to achieve any particular tax result.  Further, if the Employee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable or tax withholding event, as applicable, the Employee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.  The Employee shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Employee’s participation in the Plan or the Employee’s receipt of RSUs that cannot be satisfied by the means previously described.  The Company may refuse to deliver the benefit described in Section 3 if the Employee fails to comply with the Employee’s obligations in connection with the Tax-Related Items.

 

(c)          In accepting the RSUs, the Employee consents and agrees that in the event the RSUs become subject to an employer tax that is legally permitted to be recovered from the Employee, as may be determined by the Company and/or the Employer at their sole discretion, and whether or not the Employee’s employment with the Company and/or the Employer is continuing at the time such tax becomes recoverable, the Employee will assume any liability for any such taxes that may be payable by the Company and/or the Employer in connection with the RSUs.  Further, by accepting the RSUs, the Employee agrees that the Company and/or the Employer may collect any such taxes from the Employee by any of the means set forth in this Section 12.  The Employee further agrees to execute any other consents or elections required to accomplish the above, promptly upon request of the Company.

 

13.       Data Privacy Consent.

 

The Employee understands that the Company, its Affiliates, its Subsidiaries and the Employer hold certain personal information about the Employee, including, but not limited to, name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs, options or any other entitlement to shares of stock awarded, canceled, purchased, exercised, vested, unvested or outstanding in the Employee’s favor for the exclusive purpose of implementing, managing and administering the Plan (“Data”). The Employee understands that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Employee’s country or elsewhere and that the recipient

 

3

 

country may have different data privacy laws and protections than the Employee’s country. HP is committed to protecting the privacy of the Employee’s Data in such cases. By contract with both the HP affiliate and with HP vendors, the people and companies that have access to the Employee’s Data are bound to handle such data in a manner consistent with the HP Privacy Policy and law. HP also performs due diligence and audits on its vendors in accordance with good commercial practices to ensure their capabilities and compliance with those commitments.

 

The Employee may request a list with the names and addresses of any potential recipients of the Data by contacting the local human resources representative. The Employee understands that Data will be held only as long as is necessary to implement, administer and manage participation in the Plan.

 

14.       Plan Information.

 

The Employee agrees to receive copies of the Plan, the Plan prospectus and other Plan information, including information prepared to comply with laws outside the United States, from the Long-term Incentives website referenced above and stockholder information, including copies of any annual report, proxy and Form 10-K, from the investor relations section of the HP website at www.hp.com.  The Employee acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Company Secretary. The Employee hereby consents to receive any documents related to current or future participation in the Plan by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

15.       Acknowledgment and Waiver.

 

By accepting this grant of RSUs, the Employee acknowledges and agrees that: (i) the Plan is established voluntarily by the Company, it is discretionary in nature and, subject to Section 18(d), may be modified, amended, suspended or terminated by the Company at any time; (ii) the grant of RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of Shares or RSUs, or benefits in lieu of Shares or RSUs, even if Shares or RSUs have been granted repeatedly in the past; (iii) all decisions with respect to future grants, if any, will be at the sole discretion of the Company and/or the Committee; (iv) the Employee’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Employee’s employment relationship at any time and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;  (v)  the Employee is participating voluntarily in the Plan; (vi)  RSUs and their resulting benefits are extraordinary items that are outside the scope of the Employee’s employment contract, if any; (vii) RSUs and their resulting benefits are not intended to replace any pension rights or compensation; (viii) RSUs and their resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments insofar as permitted by law and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary or Affiliate; (ix) this grant of RSUs will not be interpreted to form an employment contract or relationship with the Company, and furthermore, this grant of RSUs will not be interpreted to form an employment contract with the Employer or any Subsidiary or Affiliate;  (x) the future value of the underlying Shares is unknown and cannot be predicted with certainty; (xi) no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from termination of Employee’s employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws), and in consideration of the grant of the RSUs to which the Employee is otherwise not entitled, the Employee irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Employee shall be deemed irrevocably to have agreed not to pursue such claim and to have agreed to execute any and all documents necessary to request dismissal or withdrawal of such claims; (xii) notwithstanding any terms or conditions of the Plan to the contrary, in the event of termination of the Employee’s employment (whether or not in breach of local labor laws), the Employee’s right to receive benefits under this Stock Notification and Award Agreement after termination of employment, if any, will be measured by the date of termination of Employee’s active employment and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); (xiii) the Committee shall have the exclusive discretion to determine when the Employee is no longer actively employed for purposes of the RSUs; and (xiv) if the Company determines that the Employee has engaged in misconduct prohibited by applicable law or any applicable policy of the Company, as in effect from time to time, or the Company is required to make recovery from the Employee under applicable law or a Company policy adopted to comply with applicable legal requirements, then the Company may, in its sole discretion, to the extent it determines appropriate and to the extent permitted under applicable law, (a) recover from the Employee the proceeds from RSUs vested up to three years prior to the Employee’s termination of employment or any time thereafter, (b) cancel the Employee’s outstanding RSUs, and (c) take any other action required or permitted by applicable law.

 

16.       No Advice Regarding Grant.

 

The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Employee’s participation in the Plan, or the Employee’s acquisition or sale of the underlying Shares.  The Employee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.

 

17.       Additional Eligibility Requirements Permitted.

 

In addition to any other eligibility criteria provided for in the Plan, the Company may require that the Employee execute a separate document agreeing to the terms of a current ARCIPD in a form acceptable to the Company and/or that the Employee be in compliance with the ARCIPD throughout the entire vesting period and through the date the RSU is to be awarded or settled. If such

 

4

 

separate document is required by the Company and the Employee does not accept it within 75 days of the Grant Date or such other date as of which the Company shall require execution of a current ARCIPD in its discretion, this RSU Award shall be cancelled and the Employee shall have no further rights under this Stock Notification and Award Agreement.

 

18.       Miscellaneous.

 

(a)         The Company shall not be required to treat as owner of RSUs and any associated benefits hereunder, any transferee to whom such RSUs or benefits shall have been transferred in violation of any of the provisions of this Stock Notification and Award Agreement.

 

(b)         The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Stock Notification and Award Agreement.

 

(c)          Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to the Employee at his address then on file with the Company.

 

(d)         The Plan is incorporated herein by reference. The Plan and this Stock Notification and Award Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Employee with respect to the subject matter hereof, other than the terms of any severance plan applicable to the Employee that provides more favorable vesting, and may not be modified adversely to the Employee’s interest except by means of a writing signed by the Company and the Employee.  Notwithstanding the foregoing, nothing in the Plan or this Stock Notification and Award Agreement shall affect the validity or interpretation of any duly authorized written agreement between the Company and the Employee under which an Award properly granted under and pursuant to the Plan serves as any part of the consideration furnished to the Employee.  This Stock Notification and Award Agreement is governed by the laws of the state of Delaware.

 

(e)          If the Employee has received this or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

 

(f)           The provisions of this Stock Notification and Award Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

(g)          Notwithstanding Section 18(f), the Company’s obligations under this Stock Notification and Award Agreement and the Employee’s agreement to the terms of an ARCIPD, if any, are mutually dependent.  In the event that the Employee’s ARCIPD is breached or found not to be binding upon the Employee for any reason by a court of law, then the Company will have no further obligation or duty to perform under the Plan or this Stock Notification and Award Agreement.

 

(h)         Any capitalized terms not defined herein shall have the same meaning they have in the Plan.

 

(i)             Appendix.

 

Notwithstanding any provisions in this Stock Notification and Award Agreement, the grant of the RSUs shall be subject to any special terms and conditions set forth in the Appendix to this Stock Notification and Award Agreement for the Employee’s country.  Moreover, if the Employee relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to the Employee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan.  The Appendix constitutes part of this Stock Notification and Award Agreement.

 

(j)            Imposition of Other Requirements.

 

The Company reserves the right to impose other requirements on the Employee’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Employee to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

(k)         All rights granted and/or Shares delivered under this Stock Notification and Award Agreement are subject to claw back under the Company policy as in effect from time to time.

 

5

 

HEWLETT-PACKARD COMPANY

 

	
 
    	
 
    
	
Meg Whitman
    	
 
    
	
CEO   and President
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Tracy   Keogh
    	
 
    
	
Executive   Vice President, Human Resources
    	
 
    

 

RETAIN THIS STOCK NOTIFICATION AND AWARD AGREEMENT FOR YOUR RECORDS

 

Important Note:  Your award is subject to the terms and conditions of this Stock Notification and Award Agreement and to HP obtaining all necessary government approvals.  If you have questions regarding your award, please discuss them with your manager.

 

6

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