Document:

EX-10.2 Hamilton Beach/2006 Ann Incent Comp Plan

 

Exhibit 10.2

HAMILTON BEACH/PROCTOR-SILEX

Annual Incentive Compensation Plan – 2006

Introduction 

     Hamilton Beach/Proctor-Silex, Inc. (the “Company”) has established an Annual Incentive
Compensation Plan (the “Plan”) as part of a competitive compensation program for the officers and
key management employees of the Company and its Subsidiaries. This Plan is also referred to as the
Short Term Incentive Compensation Plan.

Plan Objective 

     The Company desires to attract and retain talented employees to enable the Company to meet its
financial and business objectives. The objective of the Plan is to provide an opportunity to earn
annual incentive compensation to those employees whose performance has a significant impact on the
Company’s short-term and long-term profitability.

Administration 

     The Plan is administered by the Committee of the Board of Directors of the Company (the
“Committee”). The Committee:

	a.	 	May amend, modify, or discontinue the Plan.
	 
	b.	 	Will designate Plan Participants.

	c.	 	Will determine the annual performance criteria which generates the incentive compensation
pool.

	d.	 	Will determine the total amount of both the target and actual annual incentive compensation
pool.

	e.	 	Will approve individual incentive compensation Awards to Participants who are officers and
employees above Hay Salary Job Grade 17.

	f.	 	May delegate to the Chief Executive Officer of the Company the power to approve incentive
compensation Awards to Participants in and below Hay Salary Job Grade 17.

	g.	 	Except as determined by the Committee, a Participant must be employed on December 31 of the
Award Term in order to be entitled to receive an Award hereunder. Notwithstanding the
foregoing, the Committee may approve a pro rata incentive compensation Award for Participants
who terminate employment prior to December 31 of the Award Term, provided those Participants
were actively at work for 90 days in the Award Term and whose employment is terminated (1) due
to death, Disability, Retirement or Facility Closure or Partial Closure or under other
circumstances at the recommendation of the Chief Executive Officer of the Company.

     The Committee shall have complete authority to interpret all provisions of this Plan
consistent with law, to prescribe the form of any instrument evidencing any Award granted or paid
under this Plan, to adopt, amend and rescind general and special rules and regulations for its
administration, and to make all other determinations necessary or advisable for the administration
of this Plan. A majority of the Committee shall constitute a quorum, and the action of members of
the Committee present at any meeting at which a quorum is present or acts unanimously approved in
writing, shall be the act of the Committee. All acts and decisions of the Committee with respect
to any questions arising in connection with the administration and interpretation of this Plan,
including the severability of any or all of the provisions hereof, shall be conclusive, final and
binding upon the Company and all present and former Participants and employees and their respective
descendants, successors and assigns. No member of the Committee shall be liable for any such act
or decision made in good faith.

Determination of Corporate Incentive Compensation Pool 

     Each Participant in the Plan will have an individual target incentive compensation percentage
which is determined by the Participant’s Hay Salary Job Grade.

     This percentage is multiplied by the midpoint of the Participant’s Hay Salary Job Grade to
determine his/her individual target incentive compensation Award.

 

 

     The total of the target incentive compensation Awards of all Participants equals the target
corporate incentive compensation pool (the “Target Pool”). The Target Pool is approved at the
beginning of each Award Term by the Committee.

     The actual corporate incentive compensation pool (the “ Actual Pool”) is determined as of the
end of each Award Term based on the Company’s actual performance against specific criteria
established in the beginning of the Award Term by the Committee. The Target Pool is adjusted
upwards or downwards by corporate performance adjustment factors to determine the Actual Pool. In
no event will the actual Pool exceed 150% of the Target Pool, except to the extent that the
Committee elects to increase the Actual Pool by up to 10%, as described below.

     Subject to the Committee’s right to amend or terminate the Plan at any time, it is the intent
of the Plan that the Actual Pool, as determined above, will be the final total corporate incentive
compensation pool. However, the Committee, in its sole discretion, may increase or decrease by up
to 10% the Actual Pool or may approve an incentive compensation pool where there would normally be
no pool due to Company performance which is below the criteria established for the Award Term.

     The Actual and Target Pools exclude commission personnel such as salespersons, regional
general managers, and manufacturers representatives.

Determination of Individual Incentive Compensation Awards 

     Hay Salary Job Grades and the corresponding target incentive percentage for each Participant
in the Plan will be established at the beginning of each Award Term and approved by the Committee.
Individual target incentive compensation will then be adjusted by the appropriate pool factor.
Such adjusted individual incentive compensation will then be further modified based on a
Participant’s performance as compared to his individual goals for the year. If a Participant’s
performance during the Award Term is determined to be unsatisfactory, the Committee reserves the
right to reduce the Participant’s Award for the Award Term to zero. The total of all individual
incentive compensation Awards must not exceed the Actual Pool for the Award Term.

Payment Date/Taxes

     Promptly following the Committee’s approval of the final Awards, the Company shall pay the
amount of such Awards to the Participants in cash, subject to all withholdings and deductions
described in the following sentence; provided, however, that (i) no Award shall be payable to a
Participant except as determined by the Committee and (ii) in no event shall the Awards be paid
later than two and one-half months after the close of the Award Term. Any Award paid to a
Participant under this Plan shall be subject to all applicable federal, state and local income tax,
social security and other standard withholdings and deductions.

Definitions

     (a) “Award” means cash paid to a Participant under the Plan for the Award Term in an amount
determined in accordance with the Plan.

     (b) “Award Term” means the period from January 1, 2006 through December 31, 2006.

     (c) “Disability” means an approved application for disability benefits under the Company’s
long term disability plan or under any applicable government program.

     (d) “Facility Closure or Partial Closure” means any layoff which requires a WARN Act notice in
the United States or, in Mexico, any layoff of 50 or more employees.

     (e) “Participant” means any person who is classified by the Company as a salaried employee and in
Hay Salary Job Grades 14 and above, who in the judgment of the Committee occupies a key position in
which his efforts may significantly contribute to the profits or growth of the Company; provided,
however, that the Committee may select any employee who is expected to contribute, or who has
contributed, significantly to the Company’s profitability to participate in the Plan and receive an
Award hereunder; and further provided,

 

 

however, that following the end of the Award Term the Committee may make one or more discretionary
Awards to employees of the Company who were not previously designated as Participants. Directors
of the Company who are also employees of the Company are eligible to participate in the Plan. The
Committee shall have the power to add Participants at any later date in the Award Term if
individuals subsequently become eligible to participate in the Plan; provided that they were first
hired by the Company prior to August 31st of an Award Term. Each Participant shall be
notified that he is eligible to receive an Award and the amount of his target Award. If a
Participant receives a change in salary midpoint, such Participant shall be notified of any
resulting change in his target Award. Notwithstanding the foregoing, in no event shall any person
who is classified by the Company as commissioned personnel be included as a Participant in the Plan
(including, without limitation, salespersons, regional general managers and manufacturers
representatives).

     (f) “Retirement” means a termination of employment with the Company at or after age 60 and the
completion of 10 or more years of service with the Company.

General Plan Provisions

     (a) No Right of Employment. Neither the adoption or operation of this Plan, nor any
document describing or referring to this Plan, or any part thereof, shall confer upon any employee
any right to continue in the employ of the Company, or shall in any way affect the right and power
of the Company to terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan had not been
adopted.

     (b) Governing Law. The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Virginia.

     (c) Miscellaneous. Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of this Plan or any provisions
thereof. The use of the masculine gender shall also include within its meaning the feminine. The
use of the singular shall also include within its meaning the plural, and vice versa.

     (d) American Jobs Creation Act. It is intended that this Plan be exempt from the
requirements of Section 409A of the Internal Revenue Code, as enacted by the American Jobs Creation
Act.

     (e) Limitation on Rights of Participants; No trust. No trust has been created by the
Company for the payment of Awards granted under this Plan; nor have the Participants been granted
any lien on any assets of the Company to secure payment of such benefits. This Plan represents
only an unfunded, unsecured promise to pay by the Company and a Participant hereunder is a mere
unsecured creditor of the Company.

     (f) Payment to Guardian. If an Award is payable to a minor, to a person declared
incompetent or to a person incapable of handling the disposition of his property, the Committee may
direct payment of such Award to the guardian, legal representative or person having the care and
custody of such minor, incompetent or person. The Committee may require such proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate prior to the
distribution of such Award. Such distribution shall completely discharge the Company from all
liability with respect to such Award.

     (g) Effective Date. This Plan shall become effective as of January 1, 2006.

2006 Performance Targets

The performance targets for the Plan are attached as an Addendum to this document.EX-10.3 Hamilton Beach/Proctor Long Term Incent

 

Exhibit 10.3

 HAMILTON BEACH/PROCTOR-SILEX, INC.

LONG-TERM INCENTIVE COMPENSATION PLAN

(As Amended and Restated as of January 1, 2006)

1. Effective Date

          The Effective Date of this amendment and restatement of the Hamilton Beach/Proctor-Silex, Inc.
Long-Term Incentive Compensation Plan (the “Plan”) is
January 1, 2006.

2. Purpose of the Plan

          The purpose of this Plan is to further the long-term profits and growth of Hamilton
Beach/Proctor-Silex, Inc. (the “Company”) by enabling the Company to attract and retain key
executive employees by offering long-term incentive compensation to those key executive employees
who will be in a position to make significant contributions to such profits and growth. This
incentive is in addition to annual compensation and is intended to reflect growth in the value of
the Company’s stockholders’ equity.

3. Application of the American Jobs Creation Act (“AJCA”)

          The Awards granted hereunder are subject to the provisions of Code Section 409A, as
enacted by the AJCA. It is intended that the Plan be administered in accordance with the
requirements of Code Section 409A, so as to prevent the inclusion in gross income of any Awards
hereunder in a taxable year that is prior to the taxable year or years in which such Awards would
otherwise be actually paid or made available to the Participant.

4. Definitions

          (a) “Award” shall mean an award of Book Value Units granted to a Participant under this Plan
for an Award Term in an amount determined pursuant to a formula which is established by the
Committee not later than the 90th calendar day of the Award Term.

          (b) “Award Units” shall mean Book Value Units which are issued pursuant to, and with such
restrictions as are imposed by, the terms of this Plan.

          (c) “Award Unit Price” as to any Book Value Unit shall mean the Book Value on the Quarter Date
coincident with or immediately preceding the Grant Date of the Award.

          (d) “Award Term” shall mean the period of one or more years on which an Award is based, as
specified in the Guidelines.

 

 

          (e) “Beneficiary” shall mean the person(s) designated in writing (on a form acceptable to the
Committee) to receive the payment of all Awards hereunder in the event of the death of a
Participant. In the absence of such a designation and at anytime when there is no existing
Beneficiary hereunder, a Participant’s Beneficiary shall be his surviving legal spouse or, if none,
his estate.

          (f) “Book Value” as to any Book Value Unit shall mean an amount determined by the Committee
or, if no amount is set by the Committee, as of any date (i) the stockholders’ equity (as
determined in accordance with generally accepted accounting principles, applied on a consistent
basis) allocable to the Common Stock of the Company, as set forth on the balance sheet of the
Company as of the Quarter Date coincident with or immediately preceding such date, divided by (ii)
the number of Notional Shares existing as of such Quarter Date; provided, however, that Book Value
and/or the number of Notional Shares may be adjusted to such an extent as may be determined by the
Committee to preserve the benefit of the arrangement for holders of Book Value Units and the
Company, if in the opinion of the Committee, after consultation with the Company’s independent
public accountants, changes in the Company’s accounting policies, acquisitions or other unusual or
extraordinary items have materially affected the stockholders’ equity allocable to the Notional
Shares.

          (g) “Book Value Unit” or “Unit” shall mean a right granted pursuant to the terms and
conditions set forth in Section 7.

          (h) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (i) “Committee” shall mean the Compensation Committee of the Company’s Board of Directors or
any other committee appointed by the Company’s Board of Directors to administer this Plan in
accordance with Section 5.

          (j) “Disability” or “Disabled.” A Participant shall be deemed to have a “Disability” or be
“Disabled” if the Participant is determined to be totally disabled by the Social Security
Administration or if the Participant (i) is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less than 12 months, or
(ii) is, by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than 3 months under an
employer-sponsored accident and health plan.

          (k) “Grant Date” shall mean the effective date of an Award, as determined under Section
7(b)(ii) of the Plan.

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          (l) “Guidelines” shall mean the guidelines that are approved by the Committee for each Award
Term for the administration of the Awards granted under the Plan. To the extent that there is any
inconsistency between the Guidelines and the Plan, the Guidelines shall control.

          (m) “Hay Salary Grade” shall mean the salary grade or points assigned to a Participant by the
Company pursuant to the Hay Salary System, or any successor salary system subsequently adopted by
the Company; provided, however, that for purposes of determining Target Awards for U.S.
Participants, the midpoints of the National Salary ranges shall be used.

          (n) “Key Employee” shall mean a key employee, as defined in Section 416(i) of the Code
(without regard to paragraph (5) thereof) of the Company as long as the stock of NACCO Industries,
Inc. (or a related entity) is publicly traded on an established securities market or otherwise on
the date of the Employee’s Termination of Employment. Key Employees are identified on a Controlled
Group-wide basis and include non-resident alien Employees (whether or not such Employees are
eligible to participate in the Plan). The selected identification date for Key Employees is
December 31st. As such, any Employee who is classified by the Company as a Key Employee
as of December 31st of a particular Plan Year shall maintain such classification for the
12-month period commencing the following April 1st. The Company shall have the sole and
absolute discretion to classify Employees as Key Employees hereunder. To the extent determined by
the Company, such classification may include up to 75 highly compensated Employees (including some
who do not meet the statutory requirements of a Key Employee) as long as such determination is made
in a consistent, reasonable and good faith manner.

          (o) “Maturity Date” shall mean the date established by the Committee with respect to an Award,
as determined under 9(a) of the Plan.

          (p) “Notional Shares” shall mean the number of assumed shares of Common Stock of the Company
as determined by the Committee from time to time in order to implement the purposes of the Plan.
The number of Notional Shares under the Plan (including the Plan as in effect prior to the
Effective Date) shall equal 15 million shares.

          (q) “Participant” shall mean any person who meets the eligibility criteria set forth in
Section 6 and who is granted an Award under the Plan.

          (r) “Quarter Date” shall mean the last business day of each calendar quarter.

          (s) “Retirement” or “Retire” shall mean the termination of a Participant’s employment with the
Company after the Participant has reached age 55 and completed at least 5 years of service.

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          (t) “Target Award” shall mean the dollar value of the Award to be paid to a Participant under
the Plan assuming that the performance targets are met.

          (u) “Termination of Employment” shall mean a separation of service as defined in Code Section
409A (and the regulations and guidance issued thereunder).

          (v) “Unforeseeable Emergency” shall mean an event which results in a severe financial hardship
to the Participant as a consequence of (i) an illness or accident of the Participant, the
Participant’s spouse or a dependent within the meaning of Code Section 152(a), (ii) loss of the
Participant’s property due to casualty or (iii) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant.

5. Administration

          (a) This Plan shall be administered by the Committee. A majority of the Committee shall
constitute a quorum, and the action of members of the Committee present at any meeting at which a
quorum is present, or acts unanimously approved in writing, shall be the act of the Committee. All
acts and decisions of the Committee with respect to any questions arising in connection with the
administration and interpretation of this Plan, including the severability of any or all of the
provisions hereof, shall be conclusive, final and binding upon the Company and all present and
former Participants, all other employees of the Company, and their respective descendants,
successors and assigns. No member of the Committee shall be liable for any such act or decision
made in good faith.

          (b) The Committee shall have complete authority to interpret all provisions of this Plan, to
prescribe the form of any instrument evidencing any Award granted under this Plan, to adopt, amend
and rescind general and special rules and regulations for its administration (including, without
limitation, the Guidelines), and to make all other determinations necessary or advisable for the
administration of this Plan.

6. Eligibility

          Any person who is classified by the Company as a salaried employee of the Company generally at
a Hay Salary Grade of 17 or above (or a compensation level equivalent thereto), who in the judgment
of the Committee occupies an officer or other key executive position in which his efforts may
significantly contribute to the profits or growth of the Company, may be awarded Book Value Units;
provided, however, that (a) directors of the Company who are not classified as salaried employees
of the Company and (b) leased employees (as such term is defined in Code Section 414) shall not be
eligible to participate in the Plan. A

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person who satisfies the requirements of this Section 6
shall become a Participant in the Plan when granted an Award hereunder.

7. Granting of Awards

          The Committee may, from time to time and upon such conditions as it may determine, authorize
the granting of Awards to Participants, which shall be not inconsistent with, and shall be subject
to all of the requirements of, the following provisions:

          (a) Not later than the ninetieth day of each calendar year, the Committee shall approve (i) a
Target Award to be granted to each Participant for such year and (ii) a formula for determining the
amount of each Award, which formula is based upon the Company’s return on total capital employed
for the applicable Award Term.

          (b) Effective no later than April of the calendar year following the Award Term, the Committee
shall approve (i) a preliminary calculation of the amount of each Award based upon the application
of the formula (as in effect at the calculation date) and actual performance to the Target Awards
previously determined in accordance with Section 7(a) and (ii) a final calculation of the amount of
each Award to be granted to each Participant for the Award Term (the “Grant Date” of such Award
being January 1st of the calendar year following the Award Term). The Committee shall
have the power increase or decrease the amount of any Award above or below the amount determined in
accordance with Section 7(b)(i); provided, however, no Award, including any Award equal to the
Target Award, shall be payable under the Plan to any Participant except as determined by the
Committee.

          (c) Calculations of Target Awards shall initially be based on a Participant’s Hay Salary Grade
as of January 1 of the Award Term. However, Target Awards may be changed during or after an Award
Term under the following circumstances: (i) if a Participant receives a change in Hay Salary
Grade, salary midpoint and/or long-term incentive compensation target percentage, such change will
be reflected in a pro-rata Target Award, (ii) employees hired into or promoted to a position
eligible to participate in the Plan (as specified in Section 6 above) during an Award Term will, if
designated as a Plan Participant by the Committee, be assigned a pro-rated Target Award based on
their length of service during an Award Term and (iii) the Committee may increase or decrease the
amount of the Target Award at any time, in its sole and absolute discretion. In order to be
eligible to receive an Award for an Award Term, the Participant must be employed by the Company and
must be a Participant on December 31 of the last year of the Award Term;. Notwithstanding the
foregoing, if a Participant dies, becomes Disabled or Retires during the Award Term, the
Participant shall be entitled to a pro-rata portion of the Award for such Award Term.

5

 

          (d) Each Award shall be granted in the form of Book Value Units. The number of Book Value
Units to be issued to a Participant shall be determined by dividing the amount of the Award by the
Award Unit Price. Notwithstanding any other provision of the Plan, the maximum cash value of the Awards
granted to a Participant under this Plan in a single year shall not exceed $2,250,000.

          (e) Multiple Awards may be granted to a Participant; provided, however, that no two Awards to
a Participant may have identical performance periods.

8. Vesting

All Book Value Units granted pursuant to an Award hereunder shall be immediately 100% vested
as of the Grant Date.

	9.	 	Payment of Awards

(a) Maturity Date.

     (i) In the Guidelines adopted for each Award Term, the Committee shall establish a
Maturity Date for the Book Value Units granted in each Award for such Award Term which shall
generally be the fifth anniversary of the Grant Date of such Award (or such other date
specified in the Guidelines); provided, however, that once established, the Maturity Date of
an Award as specified in the Guidelines may not thereafter be changed.

     (ii) Notwithstanding the foregoing, (A) in the event a Participant dies prior to the
Maturity Date, the Maturity Date of all of the Participant’s outstanding Awards shall be the
date of such Participant’s death and (B) in the event a Participant incurs a Termination of
Employment as a result of becoming Disabled or Retirement prior to the Maturity Date (and
prior to making a deferral election described in Subsection (c) below), the Maturity Date of
all of the Participant’s Awards shall be the date of his Disability or Retirement; provided,
however, that if a Participant who incurs a Termination of Employment on account of
Retirement is a Key Employee, the Participant’s Maturity Date shall be the six month
anniversary of the date of his Termination of Employment (or, if earlier, the date of the
Participant’s death).

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          (b) Payment Date, Form of Payment and Value.

     (i) Payment Date and Form. Unless a Participant timely makes a deferral
election under Subsection (c) of this Section, the Company shall deliver to the Participant
(or, if applicable, his Beneficiary), a check in full payment of the Book Value Units
granted pursuant to each Award as soon as practicable following the Maturity Date of such
Award.

     (ii) Value. For Participants who are employed on the Maturity Date, the value
of the Book Value Units shall be based on the Book Value as of the Quarter Date  
on or immediately preceding the Maturity Date. For Participants who incur a Termination of
Employment for reasons other than Disability or Retirement, the value of the Book Value
Units shall be based on the Book Value as of the Quarter Date coincident with or immediately
preceding the date of Termination (despite the fact that such amounts are not paid until the
Maturity Date). For Participants who die or incur a Termination of Employment due to
Disability or Retirement, the value of such Book Value Units shall be based on the Book
Value as of the Quarter Date coincident with or immediately preceding the Maturity Date;
provided, however, that if a Participant who incurs a Termination of Employment on account
of Retirement is a Key Employee whose payment is delayed for 6 months, the value of the Book
Value Units shall be based on the Book Value as of the Quarter Date coincident with or
immediately preceding the payment date.

          (c) Deferral Option. A Participant may make an irrevocable election to defer receipt
of 100% of an Award granted to him for a particular Award Term. A separate deferral election may
be made with respect to each Award granted under the Plan. Such a deferral election must be made,
in writing, on a form approved by the Committee and (i) will not be valid unless the election is
made at least 12 months prior to the Maturity Date of the Award and (ii) will not be given effect
until at least 12 months after the date on which such election is made. If a valid and timely
deferral election is made with respect to an Award, the payment of such Award will automatically be
deferred until the 10th anniversary of the Grant Date of such Award. Awards that are
subject to such a deferral election shall continue to be valued in accordance with the terms of the
Plan until the date of payment. Awards that are deferred until the 10th anniversary of
the Grant Date shall be paid as soon as practicable thereafter in the form of a single, lump-sum
payment and shall be based on the Book Value as of the Quarter Date coincident with or immediately
preceding such date. Notwithstanding the foregoing, any deferral election under this Subsection
(c) shall automatically terminate (and shall be of no further effect) upon a Participant’s death or
Termination of Employment due to Disability and payment of all such deferred Awards 

7

 

shall be made as soon as practicable following the date of such death or Termination of
Employment due to Disability, based on the Book Value as of the Quarter Date coincident with or
immediately preceding such date.

          (d) Notwithstanding the foregoing, the Committee may at any time, upon written request of the
Participant, cause to be paid to such Participant an amount equal to all or any part of the
Participant’s Awards, if the Committee determines, based on such reasonable evidence that it shall
require, that such a payment or payments is necessary for the purpose of alleviating the
consequences of an Unforeseeable Emergency occurring with respect to the Participant. Payments
made on account of an Unforeseeable Emergency shall be permitted only to the extent the amount does
not exceed the amount reasonably necessary to satisfy the emergency need (plus an amount necessary
to pay taxes and penalties reasonably anticipated as a result of the distribution) and may not be
made to the extent such Unforeseeable Emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent
such liquidation would not itself cause severe financial hardship).

10. Amendment, Termination and Adjustments

          (a) The Committee, in its sole and absolute discretion, may alter or amend this Plan from time
to time; provided, however, that no such amendment shall, without the consent of a Participant,
affect the amount of any outstanding Award or any Award Units of such Participant.

          (b) The Committee, in its sole and absolute discretion, may terminate this Plan in its
entirety at any time; provided that, except as provided in this Subsection (b), no such termination
shall, without the consent of a Participant, affect the amount of any outstanding Award or any
Award Units of such Participant. Except as otherwise provided in an amendment to the Plan, all
Target Awards and Awards granted prior to any termination of this Plan shall continue to be subject
to the terms of this Plan. Notwithstanding the foregoing, upon a complete termination of the Plan,
the Committee, in its sole and absolute discretion, shall have the right to change the time of
distribution of Participants’ Award Units under the Plan, including requiring that all such Award
Units be immediately distributed in the form of lump sum cash payments (but only to the extent such
change is permitted by Code Section 409A).

          (c) Any amendment or termination of the Plan shall be in the form of a written instrument
executed by an officer of the Company on the order of the Committee. Such amendment or termination
shall become effective as of the date specified in the instrument or, if no such date is specified,
on the date of its execution.

          (d) The Committee may make or provide for an adjustment in the total number of Award Units to
be issued under this Plan as the Committee in its sole discretion, exercised in good faith, may
determine is equitably required to reflect (i) any stock dividend, stock split, combination of
shares, recapitalization or any

8

 

other change in the capital structure of the Company, (ii) any merger, consolidation,
spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other
distribution of assets, issuance of rights or warrants to purchase securities, or (iii) any other
corporate transaction or event having an effect similar to any of the foregoing.

	11.	 	General Provisions

          (a) No Right of Employment. Neither the adoption or operation of this Plan, nor any
document describing or referring to this Plan, or any part thereof, shall confer upon any employee
any right to continue in the employ of the Company, or shall in any way affect the right and power
of the Company to terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan had not been
adopted.

          (b) Governing Law. The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Virginia, except when preempted by federal law.

          (c) Liability for Payment/Expenses.

     (i) The Company shall be liable for the payment of any Award to or on behalf of such
Participant.

     (ii) Expenses of administering the Plan shall be paid by the Company.

          (d) Assignability. No Award granted to a Participant under this Plan shall be
transferable by him for any reason whatsoever; provided, however, that upon the death of a
Participant the right to the proceeds of an Award may be transferred to a Beneficiary.

          (e) Taxes. There shall be deducted from each payment under the Plan the amount of any
tax required by any governmental authority to be withheld and paid over to such governmental
authority for the account of the person entitled to such payment.

          (f) Limitation on Rights of Participants; No Trust.

     (i) No trust has been created by the Company for the payment of Book Value Units
granted under this Plan; nor have the grantees of Book Value Units been granted any lien on
any assets of the Company to secure payment of such benefits. This Plan represents only an
unfunded, unsecured

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promise to pay by the Company, and the Participants and Beneficiaries
are merely unsecured creditors of the Company.

     (ii) Notwithstanding any provision of the Plan to the contrary, the Company shall not
be required to make any payment hereunder to any Participant or Beneficiary if the Company
is “Insolvent” at the time such payment is due to be made or if the payment would jeopardize
the solvency of the Company, provided that the payment shall be made during the first
calendar year in which the funds of the Company are sufficient to make the payment without
jeopardizing the solvency of the Company. For purposes of the Plan, the Company shall be
considered Insolvent at such time as it is unable to pay its debts as they mature or is
subject to a pending voluntary or involuntary proceeding as a debtor under the United States
Bankruptcy Code (or similar foreign law).

          (g) Payment to Guardian. If an Award is payable to a minor, to a person declared
incompetent or to a person incapable of handling the disposition of his property, the Committee may
direct payment of such Award to the guardian, legal representative or person having the care and
custody of such minor, incompetent or person. The Committee may require such proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate prior to the
distribution of such Award. Such distribution shall completely discharge the Company from all
liability with respect to such Award.

(h) Miscellaneous.

     (i) Headings. Headings are given to the sections of this Plan solely as a convenience
to facilitate reference. Such headings, numbering and paragraphing shall not in any case be
deemed in any way material or relevant to the construction of this Plan or any provisions
thereof.

     (ii) Construction. The use of the masculine gender shall also include within
its meaning the feminine. The use of the singular shall also include within its meaning the
plural, and vice versa.

     (iii) Time of Payment/Processing. All payments under the Plan shall be made
on, or as soon as practicable after, the specified payment date (and, in any event, no later
than December 31 of the year that includes the specified payment date or, if later, by the
15th day of the third calendar month following the specified payment date).
Notwithstanding the foregoing, if the calculation of the amount payable for the Awards is
not administratively practicable due to events beyond the control of the Company and the
Participant, the payment shall be made during the first calendar year in which the payment
is administratively practicable.

10

 

     (iv) Acceleration of Payments. Notwithstanding any provision of the Plan to
the contrary, payments of Awards hereunder may be accelerated (i) to the extent necessary
to comply with a certificate of divestiture (as defined in Code Section 1043(b)(2)), (ii)
to the extent necessary to pay the FICA taxes imposed under Code Section 3101, and the
income withholding taxes related thereto or (iii) if the Plan (or a portion thereof) fails to satisfy the requirements of Code Section
409A; provided that the amount of such payment may not exceed the amount required to be
included as income as a result of the failure to comply with Code Section 409A.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	HAMILTON BEACH/PROCTOR-SILEX, INC.
	 
	 	 	 	 	 	 	 	 
	March
30, 2006 

	 	 	 	By: 	 	/s/ Charles A. Bittenbender 	 	 
	 

	 	 	 
	 

	 	 
	 

Date:

	 	 	 	        Charles A.
Bittenbender
Title: Assistant Secretary
	 

	 	 

11

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