Document:

EMPLOYMENT AGREEMENT/ HARRY D.SCHULMAN

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (“Agreement”) effective as of May 1, 2004 (“Effective
Date”), made and entered into by and among Applica Incorporated, a Florida
corporation (together with its permitted successors and assigns pursuant to
this Agreement referred to as “Applica”), Applica Consumer Products, Inc., a
Florida corporation (together with its permitted successors and assigns
pursuant to this Agreement referred to as the “Subsidiary”), and Harry D.
Schulman (the “Executive”). Applica and the Subsidiary (collectively, the
“Companies”) and the Executive are sometimes each individually referred to in
this Agreement as a “Party” and are sometimes collectively referred to herein
as the “Parties.” The Companies shall be jointly and severally liable for all
obligations of Applica and the Subsidiary under this Agreement;
provided, however, that it is the understanding of the Parties
that any obligations with respect to payroll matters are the responsibility of
the Subsidiary. In consideration of the mutual covenants and agreements
contained in this Agreement and for other good and valuable consideration, the
receipt of which is mutually acknowledged, Applica, the Subsidiary and the
Executive agree as follows:

     1. Employment/Term. Subject to the termination provisions of this
Agreement, the Companies hereby employ Executive, and Executive agrees to serve
as the President and Chief Executive Officer of the Companies from the
Effective Date and ending on the third anniversary of the Effective Date (the
“Term”) provided, however, that commencing on the third
anniversary of the Effective Date and on each anniversary thereof (each, an
“Extension Date”), the Term shall be automatically extended for an additional
one-year period, unless either Party provides the other Party 180 days prior
written notice before the applicable Extension Date that the Term shall
not be extended.

     2. Position, Duties and Responsibilities.

     (a) During the Term, the Executive shall serve as the President and Chief
Executive Officer of the Companies, with overall responsibility for the
day-to-day and strategic management of the affairs and operations of the
Companies (subject to his duty to report to the Board as described below), and
with such other duties and responsibilities incident to his position as may be
determined from time to time by the Board of Directors of the Companies, which
shall be consistent with the duties and responsibilities customarily performed
by persons holding such position. Except as otherwise required by applicable
law and good corporate governance practices adopted by the Board, all functions
and employees of the Companies shall report directly or indirectly through
subordinates to Executive, and Executive shall report to the Board. Executive
shall serve as a member of each of the Companies’ Boards of Directors and may
be appointed and serve as Chairman of each of the Companies’ Boards of
Directors, and as an officer and/or director of any Affiliates without
additional compensation. The Executive shall devote all of his business time,
attention and skill to the performance of such duties and responsibilities, and
shall use his best efforts to promote the interests of the Companies and any

 

 

Affiliates. The Executive acknowledges that his business time is not
limited to a fixed number of hours per week.

     (b) The Executive shall not be precluded from serving on corporate, civic
or charitable boards or committees (subject to the prior approval of the Board,
which approval shall not be unreasonably withheld) or managing his personal
investments and affairs, provided that such activities do not individually or
in the aggregate, materially interfere with the proper performance of his
duties and responsibilities to the Companies or any Affiliates.

     3. Base Salary. The Executive shall be paid a base salary at an
annual rate (the “Base Salary”) of not less than $700,000.00. Such Base Salary
shall be payable in accordance with the Subsidiary’s customary payroll
practices, but not less than monthly. During the Term, the Base Salary shall
be reviewed periodically and may be increased from time to time as shall be
determined by the Board based on Executive’s performance evaluation after
consultation with Executive. After any such increase, the term Base Salary
shall thereafter refer to the increased amount. Base Salary (including any
increased amount of Base Salary) shall not be reduced at any time without the
express written consent of Executive. Any increase in Base Salary shall not
limit or reduce any other obligation of the Companies to Executive under this
Agreement.

     4. Incentive Bonus. During the Term, the Executive shall be
eligible for an annual performance-based bonus (the “Incentive Bonus”) which
shall be determined by and paid based upon minimum, target and maximum
performance goals to be set by the Compensation Committee in consultation with
the Executive, which may in the sole discretion of the Compensation Committee,
include corporate financial goals such as earnings per share and cash flow and
individual goals such as accomplishing key strategic milestones which are
critical to the Companies’ future and such other criteria as the Compensation
Committee in consultation with the Executive, shall deem appropriate. Such
performance goals shall be determined on or before March 31 of each calendar
year during the Term. The target amount of the Incentive Bonus shall be equal
to 100 percent of Executive’s Base Salary and the maximum amount of the
Incentive Bonus shall be equal to 200 percent of Executive’s Base Salary. The
Incentive Bonus shall be payable in cash in accordance with customary
practices.

     5. Expense Reimbursement and Other Benefits.

     (a) During the term of Executive’s employment hereunder, the Subsidiary,
upon the submission of proper substantiation, by the Executive, including
copies of all relevant invoices, receipts or other evidence reasonably
requested by the Subsidiary, shall reimburse the Executive for all reasonable
expenses actually paid or incurred by the Executive in the course of and
pursuant to the business of the Companies or any Affiliates, including first
class or business class air travel.

     (b) Executive shall participate in the Companies’ Group Health and
Hospitalization Plan, Group Life Insurance Plan, Group Disability Insurance
Plan and all other insurances, or insurance plans (collectively, the “Welfare
Benefits”), and executive benefits and bonuses covering the Companies’ senior
executive officers as are now or may in the future be in

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effect, subject to applicable eligibility requirements. Additionally, the
Companies shall provide the Executive with life insurance in an amount equal to
five times his Base Salary. During the Term, the Companies shall pay for (i)
the Executive’s annual dues in a country club and (ii) tax preparation and
financial planning for the Executive on an annual basis up to a maximum of
$5,000. Notwithstanding anything to the contrary contained in this Agreement,
the Executive shall be entitled to all benefits, including bonuses, paid or
given by the Companies to executive officers of the Companies during the Term,
and nothing contained in this Agreement shall in any way be deemed to limit the
Executive’s receipt of or participation in such benefits, bonuses or benefit
plans or to preclude the Companies from making additional payments, in the form
of bonuses or otherwise, or conferring additional benefits upon the Executive.
Additionally, if in the future either of the Companies adopts a supplemental
executive retirement plan, a deferred compensation plan or similar arrangement,
the Executive shall be entitled to participate in such plan or arrangement on
the terms and conditions consistent with those applicable to senior executive
officers as determined by the Compensation Committee.

     (c) Upon execution of this Agreement, Executive shall be granted an option
under an option agreement in the form attached hereto as Exhibit A, to purchase
500,000 shares of Applica common stock, at a price of $4.16 per share, and
subject to the terms and conditions of the Windmere-Durable Holdings, Inc. 1998
Stock Option Plan. During the Term of this Agreement, the Executive shall also
be eligible to be granted options to acquire shares of Applica common stock
under (and therefore subject to all terms and conditions of ) Applica stock
option plans as then in effect, the applicable stock option agreement granted
pursuant to such plans and all rules and regulations of the Securities and
Exchange Commission applicable to stock option plans. Such options will
contain such restrictions as required by the Board or the applicable committee
of the Board charged with administration of the stock option plan. The number
of shares of common stock subject to the stock options shall be adjusted for
any subsequent stock splits, stock dividends or similar recapitalizations of
the Applica common stock which results in an increase or decrease of the number
of shares of outstanding common stock of Applica in accordance with the terms
of the stock option plan. The number of options and terms and conditions of
options shall be determined in the sole discretion of the Board, or applicable
committee thereof, and shall be based on several factors, including the
performance of Applica on a consolidated basis.

     (d) During the Term, the Companies shall provide Executive with an
automobile or a monthly automobile allowance, such automobile or allowance to
be substantially equal in value to, or greater in value than, the automobile
which is currently being provided to Executive.

     (e) During the Term, the Executive will be entitled to four weeks’ paid
vacation for each year. The Executive will also be entitled to the paid
holidays and other paid leave set forth in the Companies’ policies. Vacation
days and holidays during any fiscal year that are not used by the Executive
during such Fiscal Year may not be carried over and used in any subsequent
Fiscal Year.

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     6. Restrictions.

     (a) During the Term and for a one year period after the termination of the
Term for any reason, the Executive shall not, directly or indirectly, engage in
or have any interest in any sole proprietorship, partnership, corporation or
business or any other person or entity (whether as an officer, director,
partner, agent, security holder, creditor, consultant or otherwise) that
directly or indirectly (or through any affiliated entity) engages in
competition with either of the Companies (for this purpose, any business that
engages in the manufacture or distribution of products similar to those
products manufactured or distributed by the Companies shall be deemed to be a
Competitive Business; provided that such provision shall not apply to the
acquisition by the Executive, solely as an investment, of securities of any
issuer that is registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, and that are listed or admitted for trading
on any United States national securities exchange or that are quoted on the
National Association of Securities Dealers Automated Quotations System, or any
similar system or automated dissemination of quotations of securities prices in
common use, so long as such investment (i) represents no more than 1% of the
aggregate market value of the outstanding capital stock or debt (as applicable)
of such Competitive Business, (ii) does not give Executive any right or
ability, directly or indirectly, to control or influence the policy decisions
or management of such Competitive Business, and (iii) does not create a
conflict of interest between Executive’s duties under this Agreement and his
interest in such investment.

     (b) During the Term and for a one year period after the termination of the
Term for any reason, the Executive shall not at any time divulge, communicate,
use to the detriment of the Companies or for the benefit of any other person or
persons, or misuse in any way, any Confidential Information (as hereinafter
defined) pertaining to the business of the Companies. Any Confidential
Information or data now or hereafter acquired by the Executive with respect to
the business of the Companies (which shall include, but not be limited to,
information concerning the Companies’ financial condition, prospects,
technology, customers, suppliers, sources of leads and methods of doing
business) shall be deemed a valuable, special and unique asset of the Companies
that is received by the Executive in confidence and as a fiduciary, and
Executive shall remain a fiduciary to the Companies with respect to all of such
information. For purposes of this Agreement, “Confidential Information” means
information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Companies whether in tangible
or intangible form(including information conceived, originated, discovered or
developed by the Executive) prior to or after the date hereof, and not
generally known to the public, about the Companies, their business, or their
customers. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict the Executive from disclosing Confidential Information to the extent
required by law. None of the foregoing obligations and restrictions apply to
any Confidential Information that the Executive demonstrates was or became
generally available to the public other than as a result of disclosure by the
Executive.

     (c) During the Term and for a one year period after the termination of the
Term for any reason, the Executive shall not, directly or indirectly, for
himself or for any other person, firm, corporation, partnership, association or
other entity, other than in connection with the performance of Executive’s
duties under this Agreement, (a) employ or attempt to employ or

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enter into any contractual arrangement with any Executive or former
Executive of the Companies, unless such Executive or former Executive has not
been employed by the Companies for a period in excess of six months, (b) call
on or solicit any of the actual or targeted prospective clients of the
Companies on behalf of any person or entity in connection with any business
competitive with the business of the Companies, and/or (c) make known the names
and addresses of such clients or any information relating in any manner to the
Companies’ trade or business relationships with such customers (unless the
Executive can demonstrate that such information was or became generally
available to the public other than as a result of a disclosure by the
Executive).

     (d) All copyrights, patents, trade secrets, or other intellectual property
rights associated with any ideas, concepts, techniques, inventions, processes,
or works of authorship developed or created by Executive during the course of
performing work for the Companies or its customers (collectively, the “Work
Product”) shall belong exclusively to the Companies and shall, to the extent
possible, be considered a work made by the Executive for hire for the Companies
within the meaning of the Copyright Act of 1976, as amended (the “Act”). If
and to the extent that any such Work Product is found as a matter of law not to
be a “work made for hire” within the meaning of the Act, Executive expressly
assigns to the Companies all right, title and interest in and to the Work
Product, and all copies thereof, and the copyright, patent, trademark, trade
secret and all their proprietary rights in the Work Product, without further
consideration, free from any claim, lien for balance due or rights of retention
thereto on the part of Executive. Upon the request of the Companies, the
Executive shall take such further actions, including execution and delivery of
instruments of conveyance, as may be appropriate to give full and proper effect
to such assignment. In the event that the Companies are unable, after
reasonable effort, to secure Executive’s signature on any letters patents,
copyright or other analogous protection relating to Work Product, whether
because of Executive’s physical or mental incapacity or for any other reason
whatsoever, Executive hereby irrevocably designates and appoints the Companies
and their duly authorized officers and agents as his agent and
attorney-in-fact, to act for and on his behalf to execute and file any such
application or applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyright and other
analogous protection with the same legal force and effect as if personally
executed by Executive.

     (e) All books, records, and accounts relating in any manner to the
customers of the Companies, whether prepared by the Executive or otherwise
coming into the Executive’s possession, shall be the exclusive property of the
Companies and shall be returned immediately to the Companies on termination of
the Executive’s employment hereunder or on the Companies’ request at any time.

     (f) For purposes of this Section 6, the term “Companies” also shall
include any Affiliates.

     (g) Executive acknowledges and confirms that (a) the restrictive covenants
contained in this Section 6 are reasonably necessary to protect the legitimate
business interests of the Companies, and (b) the restrictions contained in this
Section 6 (including without limitation the length of the term of the
provisions of this Section 6) are not overbroad, overlong, or unfair

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and are not the result of overreaching, duress or coercion of any kind.
The Executive further acknowledges and confirms that his full, uninhibited and
faithful observance of each of the covenants contained in this Section 6 will
not cause him any undue hardship, financial or otherwise, and that enforcement
of each of the covenants contained herein will not impair his ability to obtain
employment commensurate with his abilities and on terms fully acceptable to him
or otherwise to obtain income required for the comfortable support of him and
his family and the satisfaction of the needs of his creditors. The Executive
acknowledges and confirms that his special knowledge of the business of the
Companies is such as would cause the Companies serious injury or loss if he
were to use such ability and knowledge to the benefit of a competitor or were
to compete with the Companies in violation of the terms of this Section 6. The
Executive further acknowledges that the restrictions contained in this Section
6 are intended to be, and shall be, for the benefit of and shall be enforceable
by, the Companies’ successors and assigns.

     (h) In the event that a court of competent jurisdiction shall determine
that any provision of this Section 6 is invalid or more restrictive than
permitted under the governing law of such jurisdiction, then only as to
enforcement of this Section 6 within the jurisdiction of such court, such
provision shall be interpreted and enforced as if it provided for the maximum
restriction permitted under such governing law.

     (i) If the Executive shall be in violation of any provision of this
Section 6, then each time limitation set forth in this Section 6 shall be
extended for a period of time equal to the period of time during which such
violation or violations occur. If the Companies seek injunctive relief from
such violation in any court, then the covenants set forth in this Section 6
shall be extended for a period of time equal to the pendency of such proceeding
including all appeals by the Executive.

     (j) The provisions of this Section 6 shall survive the termination of this
Agreement, as applicable.

     (k) Companies shall not have any obligation to pay any severance or other
payments to Executive in the event Executive is in material breach of any
covenant set forth in this Section 6 and Executive fails to cure such breach
within ten (10) days following written notice, provided, however, that in the
event Executive’s breach is a result of Executive’s intentional misconduct,
then the Companies shall not be required to provide Executive an opportunity to
cure such breach.

     7. Termination of Employment. Notwithstanding the provisions of
Section 1 of this Agreement, the Executive’s employment shall be terminated
upon the first occurrence of any event set forth below. Except as expressly
provided in this Agreement, all rights and obligations of the Parties shall
terminate as of the Termination Date. Any rights Executive may have (i) to
indemnification under the articles, by-laws, policies or other agreements with
the Companies (including any Affiliates) and (ii) under any policy of directors
and officers liability insurance maintained by the Companies or any Affiliate
that covers or has covered Executive shall survive the termination of this
Agreement. Any amounts payable pursuant to this Section 7 shall be in addition
to all benefits to which the Executive or his family may be entitled to under
any benefit plans, programs or arrangements in which Executive was a
participant during the

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Term. Following Executive’s termination of employment for any reason (or
no reason), Executive will have the benefit of any insurance coverage for any
action or inaction Executive may have taken or failed to take on behalf of the
Companies (or any Affiliates) during Executive’s employment as an officer,
employee or director of the Companies (or any Affiliates). Notwithstanding the
foregoing, no provision of this Agreement shall be interpreted as requiring
Applica, the Subsidiary or any Affiliate to acquire or maintain directors and
officers insurance coverage solely for the benefit of Executive. While he is
an active employee, Executive shall be entitled to coverage to the same extent
as current officers, employees and directors, are covered by insurance pursuant
to the applicable insurance policy or policies as they may exist from time to
time, and while a former employee Executive shall be entitled to coverage to
the same extent as former officers, employees and directors are covered by
insurance pursuant to the applicable insurance policy or policies as they may
exist from time to time.

     (a) Death or Disability. The Executive’s employment shall
terminate automatically upon the Executive’s death or Disability during the
Term. The effective date of termination shall be the date of Executive’s death
or Disability, as the case may be. In the event of termination due to the
Executive’s death or Disability, the Companies shall pay to Executive (or to
Executive’s estate in the event of his death) a cash lump sum payment, within
thirty (30) days of the effective date of termination, equal to the sum of the
following amounts (items 7(a)(i), (ii) and (iii) being referred to as the
“Accrued Obligations”):

     (i) any Base Salary which has been accrued but not paid as of the
effective date of termination; and

     (ii) any accrued and unpaid Incentive Bonus for the Fiscal Year
prior to the effective date of termination which has been earned but not
yet paid prior to the effective date of termination; and

     (iii) reimbursement for all business expenses incurred by the
Executive prior to the effective date of the termination for which the
Executive is entitled to reimbursement pursuant to Section 5(a) that had
not previously been reimbursed; and

     (iv) an amount equal to the higher of: (x) 1.5 times
the Severance Base, or (y) the sum of: (1)
Executive’s Base Salary for the period remaining in the Term and (2)
Executive’s target level Incentive Bonus for the Fiscal Year during which
the termination occurs multiplied by the number of years (including
fractions) remaining in the Term.

     (b) Termination for Cause or Termination by Executive Without Good
Reason. This Agreement may be terminated by the Companies for Cause or by
the Executive, upon at least thirty (30) days’ prior notice to the Companies,
in the absence of Good Reason. The effective date of termination by the
Executive in the absence of Good Reason shall be the date set forth in the
Executive’s notice provided such date is at least thirty (30) days after the
Companies’ receipt of such notice. The effective date of any termination of
Executive’s employment for Cause shall be determined in accordance with the
provisions of Section 22(e) of this Agreement. In the event Executive is
terminated for Cause, or he terminates his employment without Good

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Reason, the Companies shall pay to Executive a cash lump sum payment,
within thirty (30) days of the effective date of termination, of an amount
equal to the Accrued Obligations.

     (c) Other Termination of Employment by the Companies or by Executive in
Connection with a Change of Control. In the event (i) there is a Change of
Control during the Term and (ii) the Executive’s employment is terminated
prior to the earlier of: (x) the expiration of the Term and (y) eighteen
months of the date of such Change of Control (1) by the Companies other than
for death, Disability or Cause, or (2) by the Executive for Good Reason, then
in any such case, the Companies shall pay to Executive a cash lump sum payment
equal to the sum of the following amounts payable within thirty (30) days of
the effective date of termination:

     (i) an amount equal to the Accrued Obligations; and

     (ii) an amount equal to 2.5 times the Severance Base.

     (d) Other Termination of Employment by the Companies or by Executive
Other Than in Connection With a Change of Control. In the event the
Executive’s employment is terminated other than in connection with a Change of
Control (x) by the Companies other than for death, Disability or Cause or (y)
by the Executive for Good Reason, in either case, the Companies shall pay to
Executive a cash lump sum payment equal to the sum of the following amounts
payable within thirty (30) days of the effective date of termination:

     (i) an amount equal to the Accrued Obligations;

     (ii) an amount equal to the higher of: (a) 1.5 times the
Severance Base, or (b) the sum of (2) Executive’s Base Salary for the
period remaining in the Term and (2) Executive’s target level Incentive
Bonus for the Fiscal Year during which the termination occurs multiplied
by the number of years (including fractions) remaining in the Term.

     8. Certain Additional Payments by the Companies.

     (a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any Payment would
be subject to the Excise Tax, then the Companies shall pay to Executive an
additional payment (the “Gross-Up Payment”) in an amount such that, after
payment by the Executive of all taxes (and any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 8(a), if it shall be
determined that the Executive is entitled to the Gross-Up Payment, but that the
Parachute Value of all Payments does not exceed 115% of the Safe Harbor Amount,
then no Gross-Up Payment shall be made to the Executive and the amounts payable
under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of
the amounts payable hereunder, if applicable, shall be made by first reducing
the payments under Section 7(c), unless an alternative method of reduction is
elected by the Executive, and in any event shall be made in such a manner

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as to maximize the Value of all Payments actually made to the Executive.
For purposes of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Agreement (and no other Payments) shall be reduced. If the
reduction of the amount payable under this Agreement would not result in a
reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no
amounts payable under the Agreement shall be reduced pursuant to this Section
8(a).

     (b) All determinations required to be made under this Section 8, including
whether and when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by a nationally recognized accounting firm selected by the Board
(the “Accounting Firm”); provided, that the Accounting Firm’s determination
shall be made based upon “substantial authority” within the meaning of Section
6662 of the Code. The Accounting Firm shall provide detailed supporting
calculations both to the Companies and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment or such
earlier time as is requested by the Companies. All fees and expenses of the
Accounting Firm shall be borne solely by the Companies. Any Gross-Up Payment,
as determined pursuant to this Section 8 shall be paid by the Companies to the
Executive within 5 days of the receipt of the Accounting Firm’s determination.
Any determination by the Accounting Firm shall be binding upon the Companies
and the Executive, unless the Companies obtain an opinion of outside legal
counsel, based upon at least “substantial authority” within the meaning of
Section 6662 of the Code, reaching a different determination, in which event
such legal opinion shall be binding upon the Companies and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by the Companies
should have been made (the “Underpayment”), consistent with the calculations
required to be made hereunder. In the event the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Companies to or for the benefit of
the Executive.

     (c) Definitions. The following terms shall have the following
meanings for purposes of this Section 8.

     (i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the
Code, together with any interest or penalties imposed with respect to such
excise tax.

     (ii) “Parachute Value” of a Payment shall mean the present value as of the
date of the change of control for purposes of Section 280G of the Code of the
portion of such Payment that constitutes a “parachute payment” under Section
280G(b)(2), as determined by the Accounting Firm for purposes of determining
whether and to what extent the Excise Tax will apply to such Payment. The
Payment shall be reduced for reasonable compensation for personal services
rendered by Executive after the change in control (if any) as determined by the
Accounting Firm in accordance with Treasury Regulation Section l.280G-1; Q&A-9
and Q&A 42.

     (iii) A “Payment” shall mean any payment or distribution in the
nature of compensation (within the meaning of Section 280G(b)(2) of the
Code) to or for the benefit of the Executive, whether paid or payable pursuant
to this Agreement or otherwise.

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     (iv) The “Safe Harbor Amount” means 2.99 times the Executive’s “base
amount,” within the meaning of Section 280G(b)(3) of the Code.

     (v) “Value” of a Payment shall mean the economic present value of a
Payment as of the date of the change of control for purposes of Section 280G of
the Code, as determined by the Accounting Firm using the discount rate required
by Section 280G(d)(4) of the Code.

     9. Section 162(m) Limits. Notwithstanding any other provision of
this Agreement, if and to the extent that any remuneration payable by the
Company to the Executive for any calendar year would exceed the maximum amount
of such remuneration that the Company may deduct for that year by reason of
Section 162(m) of the Code, payment of the portion of the remuneration for that
year that would not be so deductible under Section 162(m) shall, in the sole
discretion by the Board, be deferred so that it shall become payable at such
time or times as the Board reasonably determines that it would first not be
subject to loss of deduction by the Company under Section 162(m), with interest
at the “short-term applicable federal rate” as such term is defined in Section
1274(d) of the Code.

     10. Cooperation. The Executive agrees to cooperate with the
Companies, during the Term and for the six (6) years immediately thereafter, by
being reasonably available to testify on behalf of the Companies or any
Affiliate in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Companies, or any
Affiliate, in any such action, suit or proceeding, by providing information and
meeting and consulting at mutually agreeable times and places with the Board or
its representatives or counsel, or representatives or counsel to the Companies,
or any Affiliate, as reasonably requested; provided that such obligation
to cooperate does not unreasonably interfere with Executive’s business or
personal affairs. The Companies agree to reimburse the Executive for all
expenses incurred by the Executive in connection with his provision of
testimony or assistance or other cooperation contemplated by this Section 10
and, to the extent occurring after the end of the Term, to pay him an hourly
fee at a mutually agreed rate for his services under this Section 10.

     11. Assignability; Binding Nature. This Agreement is personal to
the Executive, and, without the prior written consent of the Companies, shall
not be assignable by the Executive other than his rights to payments earned
hereunder which may be transferred by will or the laws of descent and
distribution. No rights or obligations of the Companies under this Agreement
may be assigned or transferred by the Companies without the written consent of
the Executive; except to a successor to the Companies’ business which expressly
assumes the Companies’ obligations in writing. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the Executive’s
heirs and legal representatives and the Companies and their permitted
successors and assigns.

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     12. Representations.

     (a) The Companies represent and warrant that they are fully authorized and
empowered by action of their respective Boards of Directors to enter into this
Agreement, and the performance of the Companies’ obligations under this
Agreement will not violate any agreement between either of them and any other
person, firm or organization.

     (b) The Executive represents and warrants that he is duly authorized to
enter into this Agreement. The Executive represents and warrants that he has
not made, and will not make, except with the prior written approval of the
Board, any contractual or other commitments that may be reasonably expected to
conflict with or prevent his performance in any material respect of any portion
of this Agreement or conflict with the full enjoyment in any material respect
by the Companies of the rights herein granted. Without limiting the generality
of the foregoing, the Executive represents that he is not subject to any
noncompetition, confidentiality or similar agreement with any prior employer
which would conflict with the performance of his duties as contemplated by this
Agreement.

     13. Entire Agreement. This Agreement contains the entire
understanding and agreement between the Parties concerning the subject matter
hereof. This Agreement supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between
the Parties with respect thereto, including, but not limited to the employment
agreement between the Executive and Windmere Durable Holdings, Inc. dated
August 2, 1999.

     14. Amendment or Waiver. No provision in this Agreement may be
amended unless such amendment is agreed to in writing and signed by the
Executive and an authorized officer or director of the Companies. No waiver by
either Party of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same or any
prior or subsequent time. Any waiver must be in writing and signed by the
Executive (if sought to be enforced against the Executive) or an authorized
officer or director of the Companies (if sought to be enforced against the
Companies), as applicable.

     15. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, in whole or in part, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

     16. Survival. The respective rights and obligations of the Parties
hereunder shall survive any termination of the Executive’s employment to the
extent necessary to the intended preservation of such rights and obligations.

     17. Governing Law/Jurisdiction.

     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO ITS CONFLICT OF LAWS RULES.

11

 

     The Parties hereby (i) submit to the exclusive jurisdiction of the courts
of the State of Florida and the U.S. federal courts (sitting in Miami, Florida,
and the U.S. federal courts in the Southern District of Florida), (ii) consent
that any such action or proceeding may be brought in any such venue, (iii)
waive any objection that any such action or proceeding, if brought in any such
venue, was brought in any inconvenient forum and agree not to claim the same,
(iv) agree that any judgment in any such action or proceeding may be enforced
in other jurisdictions and (v) consent to service of process at the address set
forth in Section 19 hereof.

     EACH PARTY HEREBY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A JURY TRIAL IN
RESPECT OF ANY CLAIM, SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.

     18. Withholding. All amounts required to be paid by the Companies
shall be subject to reduction in order to comply with applicable Federal, state
and local tax withholding requirements,. All amounts shall also be subject to
reduction for such additional amounts as may be agreed to by Executive
(i.e., payment of the employee portion of any insurance premiums).

     19. Notices. Any notice given to a Party shall be in writing and
shall be deemed to have been given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is also mailed by registered or certified mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate address and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as Party may designate by notice to
the other Party):

	 	 	 
	If to the Companies:

	 	Applica Consumer Products, Inc.

3633 Flamingo Road

Miramar, Florida 33027

Attention: General Counsel

Tel: 954-883-1000

Fax: 954-883-1714
	 
	 	 
	With a copy to:

	 	Boies, Schiller & Flexner LLP

10 North Pearl Street

Albany, New York 12207

Attn: Kathleen Franklin

Tel: 518-694-4240

Fax: 518-694-3653
	 
	 	 
	If to the Executive:

	 	Harry D. Schulman

12065 NW 9th Place

Coral Springs, Florida 33071

12

 

	 	 	 
	With a copy to:

	 	Roger C. Siske

Sonnenschein Nath & Rosenthal LLP

8000 Sears Tower

Chicago, IL 60606

Tel: 312-876-8018

Fax: 312-876-7934

Either Party may, from time to time, designate a new address by notice given in
accordance with this Section.

     20. Legal Fees and Expenses. Should any party institute any action
or proceeding to enforce this Agreement or any provision hereof, or for damages
by reason of any alleged breach of this Agreement or of any provision hereof,
or for a declaration of rights hereunder, the prevailing party in any such
action or proceeding shall be entitled to receive from the other party all
costs and expenses, including reasonable attorneys’ fees, incurred by the
prevailing party in connection with such action or proceeding. Within 45 days
following the execution of this Agreement, the Company shall pay Executive’s
reasonable legal fees and expenses incurred in connection with the negotiations
of this Agreement, up to a maximum of $15,000.

     21. Interest on Late Payments. If the Companies do not pay any
cash amount due to Executive under this Agreement within thirty (30) business
days after such amount first became due and owing, interest shall accrue on
such overdue amount from the date it became due and owing until the date of
payment at a rate of interest charged from time to time by the Companies’
principal revolving credit lender, or in the absence of such a lender, at an
annual rate equal to the “Prime Rate” published in The Wall Street Journal
applicable from time to time during the period of such nonpayment; but in no
event more than the highest legally permissible interest rate permitted for
this Agreement by applicable law.

     22. Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.

     23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     24. Facsimiles. For purposes of this Agreement, any copy,
facsimile telecommunication or other reliable reproduction of a writing,
transmission or signature may be substituted or used in lieu of the original
writing, transmission or signature for any and all purposes for which the
original writing, transmission or signature could be used; provided that
such copy, facsimile telecommunication or other reproduction shall be a
complete reproduction of the entire original writing, transmission or
signature, as the case may be.

13

 

     25. Definitions.

     (a) “Accrued Obligations” shall mean the sum of the amounts identified in
Sections 7(a)(i), (ii) and (iii) of this Agreement.

     (b) “Affiliate” shall mean, with respect to the Companies, any entity that
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with Applica or the Subsidiary,
and/or any joint venture in which Applica or the Subsidiary owns 33 1/3% or
more of the voting power and/or equity value.

     (c) “Average Incentive Bonus” shall mean the average of the Incentive
Bonuses paid to the Executive for the three Fiscal Years immediately preceding
the Fiscal Year in which the Termination Date occurs, provided,
however, if the number of completed Fiscal Years beginning on the
Effective Date is (x) at least one but less than three, the Average Incentive
Bonus shall be the Incentive Bonus, if any, earned with respect to the Fiscal
Year(s) of Executive’s employment and (y) less than one, the Average Incentive
Bonus shall be the Incentive Bonus that Executive would have actually earned in
the Fiscal Year in which the Termination Date occurs (if Executive had remained
employed by the Companies and based upon achievement of the performance goals
established for such Fiscal Year).

     (d) “Base Salary” shall mean the base salary that the Executive is
entitled to be paid pursuant to Section 3 of this Agreement, calculated on an
annualized basis.

     (e) “Board” shall mean the Board of Directors of the Applica Incorporated.

     (f) “Cause” shall mean:

     (1) the Executive is convicted of, or pleads guilty or nolo
contendere to, a felony, or other crime (including a misdemeanor)
involving theft, fraud, dishonesty or moral turpitude; or

     (2) any willful violation by Executive of any Federal or State
securities laws, including any certification required under Section 302
or 906 of the Sarbanes-Oxley Act of 2002; or

     (3) any willful violation by Executive of material requirements
under Federal workplace harassment or discrimination laws or internal
Company workplace harassment, discrimination or other workplace written
policy under which such action could be and could reasonably be expected
to be grounds for immediate termination of an executive officer (other
than mere failure to meet performance goals, objectives, or measures); or

     (4) Executive’s intentional failure (including a failure caused by
gross negligence) to cause the Companies or any Affiliates to comply with
applicable law and regulations material to the business of such company
which results in substantial financial detriment to the Companies; or

14

 

     (5) the Executive commits any material breach of the Companies’ Code
of Ethics or Conflict of Interest Policy; or

     (6) Executive’s willful failure to substantially carry out the
duties of his position after a written demand for substantial performance
approved by a resolution of the Board is delivered to the Executive by
the Board;

     (7) Executive’s material failure to cooperate with any governmental
investigation in the manner requested by the Board; or

     (8) Executive breaches any other material term of this Agreement;

provided, that for purposes of clauses (5), (6), (7) and
(8), any act or omission that is curable shall not constitute Cause unless the
Companies give Executive written notice of such act or omission that
specifically refers to this Section and, within 10 days after such notice is
received by Executive, Executive fails to cure such act or omission;

     (g) “Change of Control” shall mean that any of the events listed below has
occurred.

     (1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then-outstanding shares of
common stock of the Applica (the “Outstanding Company Common Stock”) or
(B) the combined voting power of the then-outstanding voting securities
of Applica entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that, for
purposes of this Section 25(g), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from
Applica, provided, that such acquisition does not exceed 30% of the
Outstanding Company Common Stock; (ii) any acquisition by Applica; (iii)
any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by Applica or any Affiliate; or (iv) any acquisition by any
corporation pursuant to a transaction that complies with Sections
25(g)(3)(i), 25(g)(3)(ii) and 25(g)(3)(iii);

     (2) Any time at which individuals who constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election
by Applica’s stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered
as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;

15

 

     (3) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving
Applica or any of its subsidiaries, a sale or other disposition of all or
substantially all of the assets of Applica, or the acquisition of assets
or stock of another equity by Applica or any of its subsidiaries (each, a
“Business Combination”), in each case unless, following such Business
Combination, (i) all or substantially all of the individuals and entities
that were the beneficial owners of the Outstanding Company Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of
the then-outstanding shares of common stock and the combined voting power
of the then-outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation,
a corporation that, as a result of such transaction, owns Applica or all
or substantially all of Applica’s assets either directly or through one
or more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of Applica or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or
more of, respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to
the Business Combination, and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board
providing for such Business Combination; or

     (4) Approval by the stockholders of Applica of a complete
liquidation or dissolution of Applica.

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

     (i) “Code of Ethics” shall mean the Business Ethics and Code of Conduct
Policy adopted by the Board which is in effect at the applicable period of
time.

     (j) “Compensation Committee” shall mean the Compensation Committee of the
Board.

     (k) “Conflict of Interest Policy” shall mean the Conflict of Interest
Policy adopted by the Board which is in effect at the applicable time.

     (l) “Disability” shall mean the Executive’s inability to substantially
perform his duties and responsibilities under this Agreement by reason of any
physical or mental impairment for a period of 90 days or more during any six
month period, or Executive suffers from any physical or mental impairment that
is expected to prevent Executive from performing

16

 

his duties for a period exceeding four (4) months as determined by a
physician selected by the Executive or the Executive’s legal representative,
from a list of at least three (3) qualified, independent physicians selected by
the Board.

     (m) “Fiscal Year” shall mean the fiscal year used in connection with the
preparation of the consolidated financial statements of Applica.

     (n) “Good Reason” shall mean the occurrence of any of the following
events, without the Executive’s express written consent, for any reason other
than Cause or the Executive’s death or Disability:

     (1) Executive’s Base Salary or Incentive Bonus opportunity as described in
Section 4 of this Agreement has been reduced or there is a material reduction
of any type of other compensation or benefit required to be provided to the
Executive pursuant to the provisions of this Agreement which reduction has not
been cured by the Companies within 10 days following written notice delivered
by the Executive to the Companies; provided, however, that any reduction in
benefits that is applicable to all employees of the Subsidiary generally shall
not constitute “Good Reason” for purposes of this Agreement; or

     (2) Executive no longer reports directly to the Board; or

     (3) Companies’ Boards of Directors fail to elect or appoint (or reelect or
reappoint) Executive to the position of President and Chief Executive Officer
of Applica and the Subsidiary; or

     (4) there is any other material diminution in Executive’s duties or
responsibilities, which is not cured by the Companies within 10 days following
written notice delivered by the Executive; or

     (5) there is any other material breach of this Employment Agreement by the
Companies which is not cured by the Companies within 10 days following written
notice delivered by the Executive; or

     (6) except for travel required to properly perform his duties under this
Agreement, the Executive’s services are required to be performed primarily at a
location other than the Applica’s corporate headquarters.

     (o) “Severance Base” shall mean the sum of (1) Base Salary, plus
(2) the higher of (a) Target Incentive Bonus and (b) Average Incentive
Bonus.

     (p) “Target Incentive Bonus” shall mean Executive’s target-level Incentive
Bonus for the Fiscal Year during which the Termination Date occurs.

     (q) “Termination Date” shall mean the effective date of the termination of
Executive’s employment determined pursuant to the provisions of Section 1 or 7
of this Agreement, as applicable.

17

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.

	 	 	 	 	 
	EXECUTIVE 	APPLICA INCORPORATED

 	 
	/s/ Harry D. Schulman 

	/s/ Lisa R. Carstarphen
 	 
	Harry D. Schulman 	By:  Lisa Carstarphen 	 
	 	Its: Corporate Secretary 	 
	 

	 	 	 	 	 
	 	APPLICA CONSUMER PRODUCTS, INC.

 	 
	 	/s/ Lisa R. Carstarphen
 	 
	 	By:  Lisa Carstarphen 	 
	 	Its: Corporate Secretary 	 

18

 

	 	 	 	 	 

Exhibit A

APPLICA INCORPORATED

NON-QUALIFIED STOCK OPTION AGREEMENT

     This Agreement is made effective as of October 12, 2004 (“Grant Date”)
between Applica Incorporated, a Florida corporation (the “Company”) and Harry
D. Schulman (the “Optionee”).

     1. Grant of Option. The Company hereby grants the Optionee an
option (the “Option”) to purchase up to 500,000 shares of the Company’s Common
Stock (the “Shares”) subject to adjustment as set forth in the Plan. The per
share exercise price shall be $4.16 (“Exercise Price”). The Option shall be
subject to the terms and conditions set forth in this Agreement. The Option is
issued pursuant to the Company’s 1998 Stock Option Plan (the “Plan”), which is
incorporated by this reference and made a part of this Agreement. The Option
is Non-Qualified Stock Option. The Optionee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all of the terms and conditions of
this Agreement, the Plan and all applicable laws and regulations.

     2. Definitions. Any capitalized term which is not expressly
defined in this Agreement shall have the meaning assigned to it by the Plan.

     3. Exercise Schedule.

     (a) Except as otherwise provided in Section 3(b) or 3(c) below, or in the
Plan, the Option is exercisable in installments as provided below, which shall
be cumulative. The portion of the Option which has become vested and
exercisable pursuant to this Section 3 is referred to as the “Vested Portion,”
and the portion of the Option which has not yet become vested and exercisable
pursuant to this Section 3 is referred to as the “Non-Vested Portion.” The
Vested Portion may thereafter be exercised by the Optionee, in whole or in
part, at any time or from time to time prior to the expiration of the Option as
provided herein. The following table indicates each date (the “Vesting Date”)
upon which the Optionee shall be entitled to exercise the Option with respect
to the percentage of Shares granted as indicated beside the applicable Vesting
Date, provided that the Optionee has been continuously employed by the Company
and its Subsidiaries through and on the applicable Vesting Date:

	 	 	 	 	 
	Percentage of Shares
	Vesting Date

	33 1/3%
	 	October 12, 2005
	33 1/3%
	 	October 12, 2006
	33 1/3%
	 	October 12, 2007

 

 

     Except as specifically provided in Section 3(b) or 3(c) of this Agreement,
there shall be no proportionate or partial vesting in the periods prior to each
Vesting Date, and all vesting shall occur only on the appropriate Vesting Date.
Upon Optionee’s termination of employment with the Company and its
Subsidiaries, the Non-Vested Portion of the Option shall terminate and be null
and void, and the Vested Portion shall remain exercisable for the period set
forth in Section 4.

     (b) In the event of the Optionee’s termination of employment by the
Company and its Subsidiaries (i) without Cause (other than a result of
Optionee’s death or Disability); or (ii) by the Optionee for Good Reason, the
Option shall become immediately exercisable and fully vested with respect to
all Shares.

     (c) Upon a Change of Control Acceleration Event:

     (i) if the Exercise Price is more than 110% of the Fair Market Value of a
Share as of the date of the Change of Control Acceleration Event, then the
Non-Vested Portion of the Option shall be canceled without payment of any
consideration; or

     (ii) if the Exercise Price is less than 110% of the Fair Market Value of a
Share as of the date of the Change of Control Acceleration Event, then the
Committee may elect, within ten (10) days of such Change of Control
Acceleration Event, to pay Optionee a cash payment equal to the difference
between the aggregate Fair Market Value of the Non-Vested Portion of the Option
Shares and the aggregate Exercise Price of the Non-Vested Portion of the Option
Shares. In the event the Committee fails to exercise its election to make such
cash payment to Optionee, within such ten (10) day period, then the Option
shall become immediately exercisable and fully vested with respect to all
Shares.

     (d) For purposes of this Agreement, a “Change of Control Acceleration
Event shall be deemed to have occurred in the event (i) there is a Change of
Control, and (ii) Optionee’s employment is terminated within eighteen
months of the date of such Change of Control (A) by the Company, and its
Subsidiaries other than for death, Disability or Cause, or (B) by the Optionee
for Good Reason . The terms “Cause,” “Disability,” “Good Reason” and “Change of
Control” shall have the definition set forth in any employment agreement
entered into between the Optionee and the Company or any of its Subsidiaries
which is in effect as of or after the Grant Date (as the same may be amended in
accordance with the terms thereof) or if no such agreement is in effect, each
such term shall have the meaning set forth in the Plan.

     4. Termination of Option.

     (a) Subject to the Provisions of the Plan and this Agreement, the Optionee
may exercise all or any part of the Vested Portion of the Option any time prior
to the earliest of

     (i) three months after the date on which the Optionee’s employment with
the Company and its Subsidiaries is terminated for any reason other than
by reason of (A) Cause, (B) Disability, or (C) death;

2

 

     (ii) immediately upon the termination of the Optionee’s employment with
the Company and its Subsidiaries for Cause;

     (iii) twelve months after the date on which the Optionee’s employment with
the Company and its Subsidiaries is terminated by reason of Disability;

     (iv) twelve months after the date of termination of the Optionee’s
employment with the Company and its Subsidiaries by reason of the death of the
Optionee (or three months after the date on which the Optionee shall die if
such death shall occur during the one year period specified in paragraph (iii)
of this Section 4); or

     (v) the fifth anniversary of the Grant Date.

     5. Method of Payment. Payment of the Exercise Price shall be by
any of the following, or a combination thereof, at the election of the
Optionee: (a) cash; (b) check; or (c) subject to the consent of the Committee
and the terms of the Plan, in shares of Common Stock which have been owned by
the Optionee for at least six months.

     6. Method of Exercise.

     (a) The Vested Portion of the Option shall be exercisable in whole or in
part in accordance with the exercise schedule set forth in Section 0 hereof by
written notice which shall state the election to exercise the Option, the
number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder’s investment intent with
respect to such Shares as may be required by the Company pursuant to the
provisions of the Plan and applicable laws. The written notice shall be
accompanied by payment of the appropriate Exercise Price. This Option shall be
deemed to be exercised after both (a) receipt by the Company of such written
notice accompanied by the Exercise Price payment and (b) arrangements that are
satisfactory to the Committee in its sole discretion have been made for
Optionee’s payment to the Company of the amount that is necessary to be
withheld in accordance with applicable foreign, Federal or state withholding
requirements.

     (b) Upon the Company’s determination that the Option has been validly
exercised as to any Shares, the Company shall issue certificates in the
Optionee’s name for such Shares. However, the Company shall not be liable to
the Optionee for damages relating to any delays in issuing the certificates to
him.

     (c) In the event of the Optionee’s death, the Vested Portion of the
Option shall remain exercisable by the Optionee’s executor or administrator, or
the person or persons to whom the Optionee’s rights under this Agreement shall
pass by will or by the laws of descent and distribution as the case may be (any
of the foregoing, a “Permitted Transferee”). Any heir or legatee of the
Optionee shall take rights herein granted subject to the terms and conditions
hereof. During the Participant’s lifetime, the Option is exercisable only by
the Optionee.

     7. Transferability. The Option may not be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by the Optionee
otherwise than to a Permitted Transferee, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or

3

 

encumbrance shall be void and unenforceable against the Company or any
Subsidiary; provided that the designation of a beneficiary shall not
constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance. No such permitted transfer of the Option to a Permitted
Transferee shall be effective to bind the Company unless the Committee shall
have been furnished with written notice thereof and a copy of such evidence as
the Committee may deem necessary to establish the validity of the transfer and
the acceptance by the Permitted Transferee or Transferees of the terms and
conditions hereof.

     8. No Rights of Stockholders. Neither the Optionee nor any
personal representative (or beneficiary) shall be, or shall have any of the
rights and privileges of, a stockholder of the Company with respect to any
shares of Common Stock purchasable or issuable upon the exercise of the Option,
in whole or in part, prior to the date of exercise of the Option.

     9. No Right to Continued Employment. Neither the Option nor this
Agreement shall confer upon the Optionee any right to continued employment or
service with the Company.

     10. Law Governing. This Agreement shall be governed in accordance
with and governed by the internal laws of the State of Florida.

     11. Interpretation / Provisions of Plan Control. This Agreement is
subject to all the terms, conditions and provisions of the Plan, including,
without limitation, the amendment provisions thereof, and to such rules,
regulations and interpretations relating to the Plan adopted by the Committee
or the Board as may be in effect from time to time. If and to the extent that
this Agreement conflicts or is inconsistent with the terms, conditions and
provisions of the Plan, the Plan shall control, and this Agreement shall be
deemed to be modified accordingly. The Optionee accepts the Option subject to
all the terms and provisions of the Plan and this Agreement. The undersigned
Optionee hereby accepts as binding, conclusive and final all decisions or
interpretations of the Committee or the Board upon any questions arising under
the Plan and this Agreement.

     12. Notices. Any notice given to a party pursuant to this
Agreement shall be in writing and shall be deemed to have been given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is also
mailed by registered or certified mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate address
and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as either party may designate by notice to the other party):

	 	 	 	 	 	 	 
	If to the Company:

	 	Applica Incorporated

3633 Flamingo Road

Miramar, Florida 33027

Attention: Secretary

Tel: 954-883-1000

Fax: 954-883-1714	 	 	 	 

4

 

	 	 	 	 	 	 	 
	If to the Optionee:

	 	Harry D. Schulman

12065 NW 9th Place

Coral Springs, Florida 33071

Either party may, from time to time, designate a new address by notice given in
accordance with this Section.

     13. Securities Laws; Representations.

     (a) Upon the acquisition of any shares of Common Stock pursuant to the
exercise of the Option, the Optionee will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.

     (b) Optionee represents and warrants that Optionee, either alone or
with a representative advisor, has sufficient knowledge and experience in
financial and business matters that Optionee is capable of evaluating the
merits and risks of this Option grant and, in the event such Option is
exercised, the ownership of such shares of Common Stock.

     14. Signature in Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

     15. Facsimiles. For purposes of this Agreement, any copy,
facsimile telecommunication or other reliable reproduction of a writing,
transmission or signature may be substituted or used in lieu of the original
writing, transmission or signature for any and all purposes for which the
original writing, transmission or signature could be used; provided that
such copy, facsimile telecommunication or other reproduction shall be a
complete reproduction of the entire original writing, transmission or
signature, as the case may be.

[End of Text]

5

 

     IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
12th day of October, 2004.

	 	 	 	 	 
	 	APPLICA INCORPORATED

 	 
	 	By:  	
 	 
	 	 	Name:  	Lisa Carstarphen 	 
	 	 	Its:  Corporate Secretary 	 
	 

	 	 	 	 	 
	 	

Harry D. Schulman

 	 
	 	 	 
	 	 	 
	 	 	 
	 

6<PAGE>
                                                                   Exhibit 10.12

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement") is made effective as of
the 30th day of August, 2004, by and between Splinex Technology Inc., a Delaware
corporation with its offices at 550 West Cypress Creek Road, Suite 410, Ft.
Lauderdale, Florida 33309 (the "Corporation"), and Michael Stojda, with a
residence at 19 Rue Lafford, Kirkland, Quebec, Canada H9J3Y3 (the "Executive").

         WHEREAS, the Corporation desires to retain the Executive in the
position described herein, and the Executive desires to assume such position, on
the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements made herein, and intending to be legally bound hereby, the
Corporation and the Executive agree as follows:

         1. EMPLOYMENT; DUTIES.

                  (a) EMPLOYMENT AND EMPLOYMENT PERIOD. The Corporation will
commence the employment of the Executive beginning September 1, 2004 (the
"Commencement Date") and shall continue to employ the Executive until September
1, 2007 (the "Initial Term"). Executive's employment shall then automatically
renew for subsequent one year periods following the termination of the Initial
Term or any subsequent term, unless either party gives written notice to the
other at least 90 days prior to the termination of such period of its intent not
to extend or renew this Agreement. The Corporation's timely election not to
extend or renew this Agreement (in accordance with the this subsection (a))
shall not trigger the severance obligation provided herein. The Initial Term and
all subsequent terms are referred to herein as the "Employment Period."

                  (b) OFFICES, DUTIES AND RESPONSIBILITIES. The Executive shall
hold the title of Chief Executive Officer ("CEO") and President of the
Corporation. The Executive shall report to the Board of Directors of the
Corporation (the "Board"). The Executive's office shall be at the Corporation's
headquarters at 550 West Cypress Creek Road, Suite 410, Ft. Lauderdale, Florida
33309; provided that, during the Initial Term, the Corporation acknowledges and
agrees that Executive will be traveling to and from his family home in Montreal
and will, during this period, from time-to-time discharge his duties from such
home, as long as such travel (and the discharge of such duties from Montreal)
does not materially or unreasonably interfere with his ability to perform his
duties hereunder. (To facilitate reasonable business needs to expedite the
commencement of Executive's employment hereunder, the Corporation agrees to
reimburse the Executive for actual, documented, reasonable expenses for such
travel and for lodging in South Florida for the first three months of the
Initial Term, not to exceed $3,000 per month.) During the term of this
Agreement, the Executive shall serve as a member of the Board.

                  (c) DEVOTION TO INTERESTS OF THE CORPORATION. Except as
expressly authorized by the Board, until the effective date of notice of
termination of this Agreement by either the Executive or the Corporation or the
end of the Employment Period, the Executive shall render his business services
solely in the performance of his duties hereunder. The Executive shall use his

<PAGE>

best efforts to promote the interests and welfare of the Corporation.
Notwithstanding the foregoing, it is agreed that Executive may serve as a member
of boards of directors of corporate, civic and/or charitable organizations with
the prior written consent of the Board, which consent shall not be unreasonably
withheld.

         2. BASE COMPENSATION AND FRINGE BENEFITS.

                  (a) BASE COMPENSATION. The Corporation shall pay the Executive
a base salary at the rate of $275,000 per year paid bi-monthly at the
Corporation's normal payroll intervals, with deduction of such amounts as may be
required to be withheld under applicable law and regulations. Annual increases
to this base salary shall be as determined by the Board at the beginning of each
Fiscal Year of the Corporation, beginning April 1, 2005 (for the 2006 Fiscal
Year); provided, however, that such base salary shall be increased by at least
10% per annum each Fiscal Year of the Employment Period, beginning April 1, 2006
(for the 2007 Fiscal Year); provided further, that the Corporation shall not be
obligated to increase the Executive's salary during any severance period.
Executive's bases salary, as increased in accordance with the terms of this
subsection (a), is referred to herein as "Base Salary."

                  (b) FRINGE BENEFITS. The Executive shall be entitled to
eligibility for enrollment in the Corporation's medical, dental and life
insurance plans in accordance with the available coverage thereunder. All other
benefits generally available to regular full-time employees will be made
available to the Executive pursuant to the applicable personnel policies of the
Corporation. In addition, the Executive shall receive fringe benefits generally
available to other senior executives of the Corporation and approved by the
Board. Executive shall be entitled to four (4) weeks paid vacation per year.

                  (c) BONUS COMPENSATION. The Executive shall have an annual
target bonus equal to 100% of the Executive's Base Salary ("Target Bonus"). The
bonus will be based on achievement of certain Corporation-specific and
Executive-specific performance objectives, mutually agreed upon between the
Board and the Executive in good faith each Fiscal Year of the Employment Period.
If such agreement is not reached in any Fiscal Year, the bonus for such Fiscal
Year shall be at least 20% of the Executive's Base Salary. The Executive's bonus
for the remainder of Fiscal Year 2005, which ends the last day of March, 2005,
will be based on meeting the corporate revenue objectives identified on Schedule
I hereto and shall be prorated based on a fraction, the numerator of which is
the number of days remaining in the 2005 Fiscal Year starting with the
Commencement Date and the denominator of which is 365.

                  (d) PAYMENTS FOR RELOCATION. The Corporation will reimburse
the Executive for actual, documented, reasonable costs associated with
relocating to Florida, including without limitation transportation of household
goods, vehicles and persons, import duties, closing costs, broker fees, and fees
for tax preparation and negotiation of this Agreement, not to exceed an
aggregate of $45,000. The Executive must relocate to South Florida within 12
months.

                  (e) ADDITIONAL EQUITY COMPENSATION.

                           (1) The Corporation shall grant to the Executive (i)
         400,000 shares of outstanding shares of

                                       2
<PAGE>

         Corporation common stock that shall be subject to a lapsing right of
         forfeiture which right shall lapse 1/12th per month over the 12 month
         period beginning with the Commencement Date ("Restricted Stock"), (ii)
         an option to purchase 2,000,000 of the outstanding shares of the
         Corporation's common stock which will have an exercise equal to twenty
         cents ($0.20) per share; and (iii) 1,500,000 of the outstanding shares
         of the Corporation's common stock, which will have an exercise price
         equal to fifty cents ($0.50) per share. The grants in (ii) and (iii)
         are referred to collectively herein as the "Option" or "Options." The
         parties hereto agree and understand that the Corporation is
         consummating a merger between the Corporation and Ener1 Acquisition
         Corporation (the "Merger") and filing a registration statement on Form
         S-1 with the Securities Exchange Commission and that, on the date the
         Merger is consummated (the "Issue Date"), a stock split may occur. All
         references to shares and options in this Agreement assume that the
         Merger will be consummated and the registration completed and that as a
         result 100,000,000 shares are issued and outstanding. If for any reason
         (including without limitation the failure of the Corporation to
         consummate the Merger or complete the filing) the number of issued and
         outstanding shares is not 100,000,000, the number of shares underlying
         the Restricted Stock grant and the Option (along with each Option's
         exercise price),shall be adjusted accordingly and in accordance with
         the provisions of subsection (e)(4) herein. The Corporation shall issue
         the Restricted Stock and the Options as soon as reasonably practicable
         after the Commencement Date, but in no event later than the earliest to
         occur of the Issue Date or the date on which the Merger is terminated.
         For purposes of clarification and to diminish doubt, the granting of
         Restricted Stock or Options hereunder are not conditioned upon the
         consummation of the Merger or the successful filing of the S-1 and such
         grants shall be made by the Corporation (in accordance with the terms
         hereof) whether or not such Merger is consummated or the S-1 completed.

                           (2) The Option issued pursuant to subsection
         (e)(1)(ii) shall vest 1/36th per month from the Commencement Date. The
         Option issued pursuant to subsection (e)(1)(iii) shall 100% vest on the
         first to occur of the Corporation achieving cumulative sales revenues
         of $50,000,000 or the fifth anniversary of the Commencement Date.

                           (3) Notwithstanding anything contained herein to the
         contrary, the right of forfeiture on the Restricted Stock shall 100%
         lapse (vest) and 100% of the then remaining unvested shares subject to
         the Option will automatically vest upon the occurrence of a Change of
         Control (as defined at Section 3).

                           (4) Except as specifically provided herein, the
         Option granted pursuant to subsection 2(e)(1)(ii) above will be granted
         subject to the terms, definitions and provisions of the Splinex
         Technology Inc. 2004 Stock Option Plan (the "Option Plan"), and to the
         extent permissible under Section 422 of United States Internal Revenue
         Code and to the extent agreed to between Executive and the Board, shall
         be incentive stock options. The Restricted Stock and all Options
         granted hereunder shall be also granted pursuant to a restricted stock
         or stock option agreement mutually agreeable to Executive and the
         Board. All Restricted Stock and Options issued under this Agreement
         shall be adjusted for mergers, stock splits, stock spin-offs, reverse
         stock splits and similar events. All shares subject to issued
         Restricted Stock or Options granted hereunder will have customary
         piggyback

                                       3
<PAGE>

         registration rights to be registered at the time the Corporation
         registers shares pursuant to the Option Plan and tag-along rights.

         3. CHANGE OF CONTROL DEFINED. The term "Change of Control" means any
change in control of the Corporation, including a merger or consolidation of the
Corporation with any other entity in which the Corporation is not the surviving
Corporation or in any transaction in which persons who are not a majority of the
stockholders of the Corporation prior to such transaction acquire the power to
appoint a majority of the Corporation's directors; PROVIDED, HOWEVER, that,
without in any way limiting the foregoing, a Change of Control shall be deemed
to have occurred if:

                  (a) Any "person" (as such term is defined in Sections 13(d)(3)
         and Section 14(d)(3) of the Securities Exchange Act of 1934, as amended
         (the "Exchange Act")), other than the Corporation, any majority-owned
         subsidiary of the Corporation, or any compensation plan of the
         Corporation or any majority-owned subsidiary of the Corporation,
         becomes the "beneficial owner" (as such term is defined in Rule 13d-3
         of the Exchange Act), directly or indirectly, of securities of the
         Corporation representing thirty percent (30%) or more of the combined
         voting power of the Corporation; provided, however, that an increase in
         beneficial ownership of one or more of the beneficial owners as of the
         Commencement Date as reported in the filings of the Corporation with
         the Securities and Exchange Commission, shall not be deemed a Change of
         Control;

                  (b) A change in the composition of the Board occurring within
         a two-year period, as a result of which a majority of the directors are
         not Incumbent Directors. "Incumbent Directors" (for purposes of this
         provision, the Executive will be deemed an Incumbent Director) will
         mean directors who either (i) are members of the Board as of the
         Commencement Date, or (ii) are elected, or nominated for election, to
         the Board with the affirmative votes of at least a two-thirds majority
         of the Board at the time of such election or nomination, or whose
         election is confirmed by two-thirds of the Board; or

                  (c) The stockholders of the Corporation at any time approve
         (i) a sale, reorganization, merger, or consolidation with respect to
         which persons who were the stockholders of the Corporation immediately
         prior to such sale, reorganization, merger, or consolidation do not
         immediately thereafter own more than fifty percent (50%) of the
         combined voting power entitled to vote generally in the election of the
         directors of the sold, reorganized, merged or consolidated entity; (ii)
         a liquidation or dissolution of the Corporation; or (iii) the sale of
         all or substantially all of the assets of the Corporation.

         4. TRADE SECRETS. The Executive shall not use (except for the benefit
of the Corporation while employed hereunder) or disclose to anyone any of the
Corporation's trade secrets or other confidential information. The term "trade
secrets or other confidential information" includes, by way of example, matters
of a technical nature, such as scientific, trade and engineering secrets,
"know-how," formulae, secret processes, recipes or machines, inventions,
computer programs (including documentation of such programs) and research
projects, and matters of a business nature, such as proprietary information
about costs, profits, markets, sales, lists of customers, and other information
of a similar nature to the extent not available to the public, and

                                       4
<PAGE>

plans for future development. After termination of this Agreement, the Executive
shall not use or disclose trade secrets or other confidential information unless
such information (a) becomes a part of the public domain other than through a
breach of this Agreement or (b) is disclosed to the Executive by a third party
who is entitled to receive and disclose such information.

         5. RETURN OF DOCUMENTS AND PROPERTY. Upon the end of the Employment
Period or upon the effective date of notice of the Executive's or the
Corporation's election to terminate this Agreement, or at any time upon the
request of the Corporation, the Executive (or his heirs or personal
representatives) shall deliver to the Corporation (a) all documents and
materials containing trade secrets or other confidential information relating to
the business and affairs of the Corporation, and (b) all documents, materials
and other property belonging to the Corporation, which in either case are in the
possession or under the control of the Executive (or his heirs or personal
representatives).

         6. DISCOVERIES AND WORKS. (a) All discoveries and works made or
conceived by the Executive during his employment by the Corporation, jointly or
with others, that relate to the Corporation's activities shall be owned by the
Corporation. The term "discoveries and works" includes, by way of example,
inventions, computer programs (including documentation of such programs),
technical improvements, processes, drawings and works of authorship. The
Executive shall (i) promptly notify, make full disclosure to, and execute and
deliver any documents requested by, the Corporation to evidence or better assure
title to such discoveries and works in the Corporation, (ii) assist the
Corporation in obtaining or maintaining for itself at its own expense United
States and foreign patents, copyrights, trade secret protection or other
protection of any and all such discoveries and works, and (iii) promptly
execute, whether during his employment by the Corporation or thereafter, all
applications or other endorsements necessary or appropriate to maintain patents
and other rights for the Corporation and to protect its title thereto. Set forth
on Schedule II attached hereto is a list of inventions, patented or unpatented,
including a brief description thereof, which are owned by the Executive, which
the Executive conceived or made prior to his employment by the Corporation and
which are excluded from this Agreement.

                  (b) In addition to the above, the Executive shall keep a log
of all technical work performed by the Executive for the purposes of the
Corporation's evaluation of the technical work and determination of whether such
work produces patentable inventions (and for the protection of the Corporation's
interest therein. The log shall be the confidential and proprietary property of
the Corporation, and the Executive shall keep the log current and available to
the Corporation at all times.

         7. TERMINATION; RESIGNATION.

                  (a) PARTIES' RIGHTS TO TERMINATE. The Executive may terminate
this Agreement by resignation at any time, upon 90 days' prior written notice
(the "Notice Period"), and the Corporation may terminate this Agreement with
"cause," as defined below, or without cause upon 90 days' prior written notice.
"Cause" shall mean (i) the continued, willful and deliberate failure of the
Executive to perform his duties as set forth in this Agreement or as may be
reasonably imposed from time to time on the Executive by law (whether or not
reasonable) or the Board, provided such duties are consistent with his position,
in a manner substantially consistent with the manner

                                       5
<PAGE>

prescribed by the Board (other than any such failure resulting from incapacity
due to physical or mental illness), (ii) the engaging by the Executive in
misconduct materially and demonstrably injurious to the Corporation, (iii) the
conviction of the Executive for commission of a felony, whether or not such
felony was committed in connection with the Corporation's business, or (iv) the
circumstances described in Section 8 hereof, in which case the provisions of
Section 8 shall govern the rights and obligations of the parties; provided,
however, that the Board shall (x) by two-thirds of the members of the Board,
excluding the Executive, make a reasonable determination that the Executive has
breached one of the preceding provisions, (y) provide the Executive with an
opportunity to cure during the Notice Period any curable breaches referred to in
(i) and (ii) of this subsection and (z) make a final determination that one or
more of such provisions have been breached and not cured prior to termination.

                  (b) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. In
the event the Corporation terminates this Agreement for "cause" or the Executive
resigns without "good reason," as defined herein, the Executive's rights
hereunder shall cease as of the effective date of such termination, except as
otherwise provided in Section 8, and Executive shall be entitled to payment of
all amounts of Base Salary, any bonus payments actually earned but unpaid,
accrued but unused vacation, reimbursements for appropriate expenses incurred
prior to the termination date, and any other amounts payable under Corporation
policy or applicable law that are due or accrued as of the termination date.

                  (c) TERMINATION WITHOUT CAUSE OR WITH GOOD REASON. In the
event that the Corporation terminates Executive's employment without cause or
the Executive terminates his employment for good reason, the Corporation shall
pay, or cause to be paid, to the Executive, in addition to any amounts paid or
payable under any other agreements between the Corporation and the Executive
(but not in duplication of other cash or installment payment severance
benefits), (i) an amount equivalent to twelve months of the Executive's Base
Salary hereunder, plus (ii) a percentage of Base Salary equal to the percentage
of Base Salary paid to the Executive as a bonus for the immediately preceding
Fiscal Year (provided that, if Executive's employment terminates on or after a
Change of Control, the bonus payable will be the greater of (X) the amount
payable as a bonus under this subsection (ii) without regard to this proviso or
(Y) 50% of the Target Bonus for the Fiscal Year in which the termination
occurs), plus (iii) payment of the employer's share of any group health
insurance under COBRA for the period during which severance is paid. The amounts
in (i) and (ii) above shall be paid in installments at the Corporation's normal
payroll intervals, with deduction of such amounts as may be required to be
withheld under applicable law and regulations, during the twelve month period
following the termination date. The Executive shall not be required to mitigate
the amount of any payment provided for in this Subsection (c) by seeking other
employment or otherwise. In addition, all Restricted Stock and Options and any
other option or restricted stock granted to Executive, except any Option granted
under Section 2(e)(1)(iii) or other option or restricted stock which vests upon
any condition other than the passage of time, shall vest immediately.

                  (d) Good reason means (i) a Change of Control; (ii) a
reduction of the Executive's duties, title (including failure of Executive to be
the President or CEO of the Corporation), position, reporting status, or
responsibilities; (iii) a reduction by the Board of the Executive's Base Salary
as in effect immediately prior to such reduction; (iv) relocation of the

                                       6
<PAGE>

Corporation's principal place of business after the Executive relocates to South
Florida; or (v) a material breach by the Company of this Agreement. The
Corporation shall have the ability to cure any action that constitutes good
reason in (d)(ii)-(iv) herein during the Notice Period.

         8. DISABILITY; DEATH. (a) If, prior to the expiration or termination of
the Employment Period, the Executive shall be unable to substantially perform
his duties by reason of disability or impairment of health for at least three
consecutive calendar months, the Corporation shall have the right to terminate
this Agreement by giving written notice to the Executive to that effect, but
only if at the time such notice is given such disability or impairment is still
continuing. After giving such notice, (i) the Employment Period shall terminate
with the payment of the Executive's base compensation for the month in which
notice is given and the payment of a PRO RATA portion of any bonus that would
have been payable to Executive under Section 2(c) had he not become disabled,
(ii) the Restricted Stock and all unvested Options (and any other option or
restricted stock granted to him) will vest in full on the effective date of
termination and (with respect to the Option or any option) expire 6 months after
the effective date of termination, and (iii) all of the Executive's benefits
under this Agreement shall terminate, except that the Executive shall receive
such accidental disability benefits to which the Executive may be entitled under
the plans of the Corporation then in effect. In the event of a dispute as to
whether the Executive is disabled within the meaning of this Section 8(a),
either party may from time to time request a medical examination of the
Executive by a doctor appointed by the Chief of Staff of a hospital selected by
mutual agreement of the parties, or as the parties may otherwise agree, and the
written medical opinion of such doctor shall establish a presumption as to
whether the Executive has become disabled and the date when such disability
arose. Such presumption shall become binding and conclusive upon the parties
unless, within 20 days of the date of receipt of such written medical opinion,
the party disputing such opinion provides a contrary written medical opinion
from two doctors appointed by the same Chief of Staff which appointed the first
doctor, in which event the opinions of the latter two doctors shall become
binding and conclusive upon the parties. The cost of any such medical
examinations shall be borne by the Corporation, except that the Executive shall
bear the cost of any medical examinations sought in order to rebut a presumption
of disability.

                  (b) If, prior to the expiration or termination of the
Employment Period, the Executive shall die, the Corporation shall pay to the
Executive's estate (or to the revocable living trust previously specified by the
Executive) his base compensation through the end of the month in which the
Executive's death occurred and a PRO RATA portion of any bonus (if any) that
would have been payable to the Executive under Section 2(c) had his death not
occurred, at which time the Employment Period shall terminate without further
notice. In addition, (i) the Restricted Stock and all unvested Options (and any
other option or restricted stock granted to him) will vest in full on the date
of death and all Options (and any other option) granted to him will expire 6
months after the date of death, and (ii) all of the Executive's benefits under
this Agreement shall terminate, except that the Executive's estate shall receive
such accidental death benefits to which the Executive may be entitled under the
plans of the Corporation then in effect.

                  (c) Nothing contained in this Section 8 shall impair or
otherwise affect any rights and interests of the Executive under any
compensation plan or arrangement of the Corporation which may be adopted by the
Board.

                                       7
<PAGE>

         9. NON-COMPETION/NON-SOLICITATION. (a) During the term of this
Agreement and for a period of one year following the termination of this
Agreement, the Executive will not compete, directly or indirectly, with the
Corporation, or any of its parent corporations, subsidiaries or affiliates, in
the businesses of the Corporation, including, without limitation, the
Corporation's software businesses. Such restriction shall include, but not be
limited to, ownership (direct or indirect, including without limitation by a
member of the Executive's family) of any interest in a business that is in
competition (as described above) with the Corporation, and being an officer,
shareholder, director, executive or contractor of or consultant to any such
business, whether or not for compensation; provided that, the foregoing shall
not prohibit Executive from owning five percent (5%) or less of the outstanding
equity securities of any corporation or entity, nor shall it prohibit him from
owning any interest, whether as a creditor or stockholder, in the Corporation.
The Executive further agrees that, during the above period, he will not, in any
capacity, except in connection with the performance of services hereunder,
either separately, jointly or in association with others, directly or indirectly
solicit or contact, with regard to a business competitor of the Corporation, any
of the Corporation's agents, suppliers, customers or prospects, as shown by the
Corporation's records, that were agents, suppliers, customers or prospects of
the Corporation at any time during the year immediately preceding the
termination of employment hereunder, where the purpose of such solicitation or
contact is to compete with, or is intended to compete with, the Corporation. The
Executive further agrees that, during the above period, he will not, in any
capacity, either separately, jointly or in association with others, directly or
indirectly, solicit any of the Corporation's executives, employees, or
consultants.

                  (b) If a court determines that the foregoing restrictions are
too broad or otherwise unreasonable under applicable law, including with respect
to time or space, the court is hereby requested and authorized by the parties
hereto to revise the foregoing restrictions to include the maximum restrictions
allowed under the applicable law. The Executive expressly agrees that breach of
the foregoing would result in irreparable injuries to the Corporation, that the
remedy at law for any such breach will be inadequate and that upon breach of
this provision, the Corporation, in addition to all other available remedies,
shall be entitled as a matter of right to seek injunctive relief in any court of
competent jurisdiction.

         10. ENFORCEMENT. The Executive agrees that the Corporation's remedies
at law for any breach or threat of breach by him of the provisions of Sections
4, 5, 6 and 9 hereof will be inadequate, and that the Corporation shall be
entitled to an injunction or injunctions (and temporary restraining orders and
preliminary injunctions, as the case may be) to prevent breaches of the said
provisions and to enforce specifically the terms and provisions thereof, in
addition to any other remedy to which the Corporation may be entitled at law or
equity.

         11. SEVERABILITY. Should any provision of this Agreement be determined
to be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this Agreement, and any such unenforceability or prohibition in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

                                       8
<PAGE>

         12. ASSIGNMENT. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. The Corporation's rights and
obligations under this Agreement shall be assignable by the Corporation,
including as incident to the transfer, by merger or otherwise, of all or
substantially all of the business of the Corporation. In the event of any such
assignment by the Corporation, all rights of the Corporation hereunder shall
inure to the benefit of the assignee.

         13. NOTICES. Any notice required or permitted under this Agreement
shall be deemed to have been effectively made or given if in writing and
personally delivered or mailed properly addressed in a sealed envelope, postage
prepaid by certified or registered mail. Unless otherwise changed by notice,
notice shall be properly addressed to Executive if addressed to:

                           Michael Stojda
                           19 Rue Lafford
                           Kirkland, Quebec, Canada H9J3Y3
with a copy to:
                           Peter J. Marathas, Jr.
                           Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.
                           One Financial Center
                           Boston, MA  02111
                           Facsimile: (617) 348-1788

and properly addressed to the Corporation if addressed to:

                           Kevin P. Fitzgerald
                           Director
                           Splinex Technology, Inc.
                           550 West Cypress Creek Road, Suite 410
                           Ft. Lauderdale, Florida 33309
                           Facsimile: (954) 660-6561

with a copy to:
                           Curtis A. Wolfe
                           General Counsel
                           Splinex Technology, Inc.
                           550 West Cypress Creek Road, Suite 410
                           Ft. Lauderdale, Florida 33309
                           Facsimile: (954) 229-7595

         14. AWARD TO PREVAILING PARTY IN DISPUTE. In the event either of the
parties to this Agreement commences any action or proceeding arising out of, or
relating in any way to, this Agreement, the prevailing party shall be entitled
to recover, in addition to any other relief awarded to such party, his or its
costs, expenses and reasonable attorneys' fees.

         15. ADDITIONAL DOCUMENTS TO BE EXECUTED BY THE EXECUTIVE. The
obligations of the Corporation under this Agreement shall be subject to the
execution and delivery, by the Executive, of the Corporation's Business Code of
Conduct, and other standard in-processing documentation

                                       9
<PAGE>

normally required of all incoming employees. The obligations of the Executive
thereunder shall be additive and complementary to the Executive's obligations
hereunder.

         16. INDEMNIFICATION. Executive shall be eligible for indemnification to
the fullest extent permitted under the Corporation's by-laws and covered by
directors and officers insurance coverage and indemnifications for acts and
omissions in accordance with the Corporation's applicable policies.

         17. MISCELLANEOUS. This Agreement constitutes the entire agreement, and
supersedes all prior agreements, of the parties hereto relating to the subject
matter hereof, and there are no written or oral terms or representations made by
either party other than those contained herein. The validity, interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Florida. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.

         IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement effective as of the day and year first above written.

SPLINEX TECHNOLOGY INC.                     EXECUTIVE

By:
    ---------------------------------       ------------------------------------
Name:  Kevin P. Fitzgerald                  Michael Stojda
Title: Director

                                       10

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