-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RA1WHXX1kiTgICJKuVOA/C0I9r41/Ck3/TxitZYt3jboa8zV3sw+uRTLd+rKFuBc dXiV/RJfpuk3iVAosZCqog== 0001341004-06-002080.txt : 20060802 0001341004-06-002080.hdr.sgml : 20060802 20060802165130 ACCESSION NUMBER: 0001341004-06-002080 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060728 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060802 DATE AS OF CHANGE: 20060802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDDERS CORP /DE CENTRAL INDEX KEY: 0000744106 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 222572390 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08831 FILM NUMBER: 06998616 BUSINESS ADDRESS: STREET 1: 505 MARTINSVILLE RD STREET 2: WESTGATE CORPORATE CTR CITY: LIBERTY CORNER STATE: NJ ZIP: 07938-0813 BUSINESS PHONE: 9086048686 MAIL ADDRESS: STREET 1: 505 MARTINSVILLE RD STREET 2: WESTGATE CORPORATE CTR CITY: LIBERTY CORNER STATE: NJ ZIP: 07938-0813 8-K 1 nyc663251.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report(Date of earliest event reported): August 2, 2006(July 28, 2006) Fedders Corporation (Exact Name of Registrant as Specified in its Charter) - -------------------------------------------------------------------------------- Delaware 1-8831 22-2572390 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 505 Martinsville Road Liberty Corner, New Jersey 07938-0813 - -------------------------------------------------------------------------------- Address of Principal Executive Offices) (Zip Code) (908) 604-8686 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) None - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. On July 31, 2006, Fedders Corporation (the "Company") entered into Severance Agreements with five executives, Michael Giordano, Robert L. Laurent, Jr., Kent E. Hansen, Peter Gasiewicz and Warren Emley. The agreements provide for severance payments (2.9x annual salary and average bonus for the past three years) and certain other benefits to the executives in the event of a change in control of the Company. On July 28, 2006, the Company entered into an agreement (the "Extension Agreement") with Sal Giordano, Jr., its Chairman and Chief Executive Officer, the effect of which is to extend his current employment agreement (the "Employment Agreement"), which expires on September 30, 2006, and to amend certain provisions of the Employment Agreement to reflect his change in position with the Company, effective September 30, 2006, from Chief Executive Officer to Executive Chairman. The Extension Agreement amends the Employment Agreement by, among other things, extending the term of the Employment Agreement for one year. The foregoing descriptions of the severance agreements and the Employment Agreement do not purport to be complete and are qualified in their entirety by reference to such agreements. A copy of a form of severance agreement is filed as Exhibit 10.1 hereto and a copy of the Employment Agreement is filed as Exhibit 10.2 hereto, each of which is incorporated by reference herein. Item 9.01. Financial Statements and Exhibits. Exhibits Exhibit No. Description ----------- ----------- 10.1 Form of Severance Agreement by and between Fedders Corporation and the Executive to be named therein 10.2 Employment Agreement between Fedders Corporation and Sal Giordano, Jr., dated July 28, 2006 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FEDDERS CORPORATION By: /s/ Kent E. Hansen ---------------------------- Name: Kent E. Hansen Title: Executive Vice President, Administration and Secretary Date: August 2, 2006 EXHIBIT INDEX Exhibit No. Description ----------- ----------- 10.1 Form of Severance Agreement by and between Fedders Corporation and the Executive to be named therein 10.2 Employment Agreement between Fedders Corporation and Sal Giordano, Jr., dated July 28, 2006 EX-10 2 nyc664213.txt EXHIBIT 10.1 - SEVERANCE AGREEMENT Exhibit 10.1 SEVERANCE AGREEMENT EFFECTIVE FOLLOWING A CHANGE IN CONTROL THIS AGREEMENT, dated July 31, 2006, is made by and between Fedders Corporation, a Delaware corporation (the "Company"), and ________ (the "Executive"). WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: 1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof. 2. Term of Agreement. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, 2007; provided, however, that commencing on January 1, 2008 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred. 3. Company's Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive's employment with the Company following a Change in Control and during the Term. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. 4. The Executive's Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) the last day of the Potential Change in Control Period, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive's employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive's employment for any reason. 5. Compensation Other Than Severance Payments. 5.1 Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive's full-time duties with the Company as a result of a Disability, the Company shall pay the Executive's full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive's employment is terminated by the Company for Disability. 5.2 If the Executive's employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive's full salary to the Executive earned but not yet paid through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company's compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason. 5.3 If the Executive's employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive's normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason. 6. Severance Payments. 6.1 Subject to Section 6.2 hereof, if (i) the Executive's employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 ("Severance Payments"), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this Agreement, the Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive's employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs). For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct. (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to 2.9 times the sum of (i) the Executive's base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the average annual bonus earned by the Executive pursuant to any annual bonus or annual incentive plan maintained by the Company in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Date of Termination or, if higher, immediately prior to the fiscal year in which occurs the first event or circumstance constituting Good Reason. In order to comply with Section 409A, the Severance Payments shall be paid in a lump sum six months and one day following the applicable Date of Termination. The deferred Severance Payments will be paid with interest for the period commencing on the Date of Termination and ending on the actual payment date and will be calculated using an annual rate of 7%. (B) For the eighteen (18) month period immediately following the Date of Termination and in lieu of COBRA continuation health coverage, the Company shall arrange to provide the Executive and his dependents life, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after-tax cost to the Executive than the after-tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, such health insurance benefits shall be provided through a third-party insurer. In order to comply with Section 409A, Executive shall pay the cost of such life, accident and health insurance benefits for the first six months following the Executive's Date of Termination. The Company shall reimburse Executive for the cost of such coverage at the end of the six-month period and shall then provide such coverage to the Executive for the remaining 12 months. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the eighteen (18) month period following the Executive's termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the after-tax cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason. If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than the later of (i) six months and one day following the Executive's Date of Termination or (ii) five (5) business days following such reduction, pay to the Executive the least of (a) the amount of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to the Executive without being, or causing any other payment to be, nondeductible by reason of section 280G of the Code. (C) Notwithstanding any provision of any annual or long term incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement, at the target level, of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period. In order to comply with Section 409A, the payment of any compensation pursuant to this Section 6.1(C), shall be paid to the Executive six months and one day following the Executive's Date of Termination. This deferred payment will be paid with interest for the period commencing on the Date of Termination and ending on the actual payment date and will be calculated using an annual rate of 7%. (D) In addition to the benefits to which the Executive is entitled under each DC Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (i) the amount that would have been contributed thereto by the Company on the Executive's behalf during the three years immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive's compensation (as defined in the DC Pension Plan) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder, and (ii) the excess, if any, of (x) the Executive's account balance under the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that is nonforfeitable under the terms of the DC Pension Plan. In order to comply with Section 409A, any payments made pursuant to this Section 6.1(D), shall be paid to the Executive six months and one day following the Executive's Date of Termination. This deferred payment will be paid with interest for the period commencing on the Date of Termination and ending on the actual payment date and will be calculated using an annual rate of 7%. (E) All restrictions on any restricted stock owned by the Executive shall, at the time the Executive becomes entitled to the Severance Payments provided herein, immediately cease and be of no further force and effect and the Company shall deliver to the Executive the certificate representing shares of such stock. All stock option agreements to which the Executive is a party shall be amended to provide that such agreements shall remain in effect until the expiration of the term thereof, notwithstanding that the Executive has ceased to be an employee of the Company. (F) The Company shall provide the Executive with outplacement services suitable to the Executive's position for a period of two years or, if earlier, until the first acceptance by the Executive of an offer of employment. 6.2 (A) Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive (including any payment or benefit received or to be received in connection with a Change in Control or the termination of the Executive's employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the "Total Payments") would not be deductible (in whole or part), by the Company, an affiliate or Person making such payment or providing such benefit as a result of section 280G of the Code, then, to the extent necessary to make such portion of the Total Payments deductible (and after taking into account any reduction in the Total Payments provided by reason of section 280G of the Code in such other plan, arrangement or agreement), the cash Severance Payments shall first be reduced (if necessary, to zero), and all other Severance Payments shall thereafter be reduced (if necessary, to zero); provided, however, that the Executive may elect to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments. (B) For purposes of this limitation, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a "payment" within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company's independent auditor (the "Auditor"), does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the Code, (iii) the Severance Payments shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clauses (i) or (ii)) in their entirety constitute reasonable compensation for services actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Code, in the opinion of Tax Counsel, and (iv) the value of any noncash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. (C) If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Executive and the Company in applying the terms of this Section 6.2, the Total Payments paid to or for the Executive's benefit are in an amount that would result in any portion of such Total Payments being subject to the Excise Tax, then, if such repayment would result in (i) no portion of the remaining Total Payments being subject to the Excise Tax and (ii) a dollar-for-dollar reduction in the Executive's taxable income and wages for purposes of federal, state and local income and employment taxes, the Executive shall have an obligation to pay the Company upon demand an amount equal to the sum of (i) the excess of the Total Payments paid to or for the Executive's benefit over the Total Payments that could have been paid to or for the Executive's benefit without any portion of such Total Payments being subject to the Excise Tax; and (ii) interest on the amount set forth in clause (i) of this sentence at the rate provided in section 1274(b)(2)(B) of the Code from the date of the Executive's receipt of such excess until the date of such payment. 6.3 The payments provided in subsections (A), (C) and (D) of Section 6.1 hereof shall be made on the date six months and one day following the Executive's Date of Termination; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made upon the later of (i) six months and one day following the Executive's Date of Termination or (ii) five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. 7. Termination Procedures and Compensation During Dispute. Notwithstanding any other provision of this Section 7 or any other provision of this Agreement, for purposes of this Agreement a termination of employment shall only occur if the Executive actually experiences a "separation from service" in accordance with Section 409A. There shall be no separation from service for purposes of this Agreement, and therefore no right to any Severance Payment or other benefits under this Agreement (which are subject to Section 409A), if the Executive continues to provide services as an employee to the Company after a purported termination of employment at an annual rate of 20% or more of the services rendered on average during the immediately preceding three full calendar years of employment and the annual remuneration for such services is at least equal to 20% of the average annual remuneration earned during the final three calendar years of employment. In addition, there also shall be no separation from service if the Executive continues to provide services to the Company in a capacity other than as an employee, if the Executive is providing services at an annual rate of 50% or more of the services rendered on average during the immediately preceding three full calendar years of employment and the annual remuneration for such services is at least equal to 50% of the average annual remuneration earned during the final three calendar years of employment. 7.1 Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. 7.2 Date of Termination. "Date of Termination," with respect to any purported termination of the Executive's employment after a Change in Control and during the Term, shall mean (i) if the Executive's employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive's duties during such thirty (30) day period), and (ii) if the Executive's employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given). 7.3 Dispute Concerning Termination. If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence. 7.4 Compensation During Dispute. If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.2 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. 8. No Mitigation. The Company agrees that, if the Executive's employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, except as specifically provided in Section 6.1(B) hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. 9. Successors; Binding Agreement. 9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. 9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. 10. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive's signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Fedders Corporation 505 Martinsville Road Liberty Corner, NJ 07938 Attention: Vice President and General Counsel 11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration. 12. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 14. Settlement of Disputes; Arbitration. 14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive's claim has been denied. Notwithstanding the above, in the event of any dispute, any decision by the Board hereunder shall be subject to a de novo review by the arbitrator. 14.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Morristown, New Jersey in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. 15. Section 409A Compliance. Notwithstanding any provision in this Agreement to the contrary, it is intended that the Agreement be interpreted in a manner that complies with the requirements of Section 409A. Accordingly, the authority of the [Compensation Committee] to effect such compliance may be implemented (including, without limitation, by unilaterally modifying, with prospective or retroactive effet, the terms of the Agreement to reflect compliance with Section 409A) without regard to the Executive's rights under the Agreement and without the Executive's consent. 16. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below: (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof. (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the Code. (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the Exchange Act. (E) "Board" shall mean the Board of Directors of the Company. (F) "Cause" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists. (G) A "Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred: (I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 25% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of (a) any parent of the Company or the entity surviving such merger or consolidation (b) if there is no such parent, of the Company or such surviving entity; (II) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; (III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation or other entity, other than (i) a merger or consolidation which results in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof at least 51% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or (IV) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of (a) any parent of the Company or of the entity to which such assets are sold or disposed or (b) if there is no such parent, of the Company or such entity. Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock and class B stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (I) "Company" shall mean Fedders Corporation and, except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise. (J) Intentionally omitted (K) "DC Pension Plan" shall mean any tax-qualified, supplemental or excess defined contribution plan maintained by the Company and any other defined contribution plan or agreement entered into between the Executive and the Company which is designed to provide the Executive with supplemental retirement benefits. (L) "Date of Termination" shall have the meaning set forth in Section 7.2 hereof. (M) "Disability" shall mean (i) the Executive's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Executive is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company. (N) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (O) Intentionally omitted (P) "Executive" shall mean the individual named in the first paragraph of this Agreement. (Q) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent which specifically references this Agreement) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (I) through (VII) below to a "Change in Control" as references to a "Potential Change in Control"), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (I), (V), (VI) or (VII) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof: (I) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change in Control other than any such alteration primarily attributable to the fact that the Company may no longer be a public company; (II) a reduction by the Company in the Executive's annual base salary as in effect on the date hereof or as the same may be increased from time to time; (III) the relocation of the Executive's principal place of employment to a location more than 15 miles from the Executive's principal place of employment immediately prior to the Change in Control or the Company's requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company's business to an extent substantially consistent with the Executive's present business travel obligations; (IV) the failure by the Company to pay to the Executive any portion of the Executive's current compensation or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days of the date such compensation is due; (V) the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive's total compensation, including but not limited to the Company's annual incentive plans, or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive's participation relative to other participants, as existed immediately prior to the Change in Control; (VI) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company's pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control (except for across the board changes similarly affecting all executives of the Company and all executives of any Person in control of the Company), the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company's normal vacation policy in effect at the time of the Change in Control; (VII) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof; for purposes of this Agreement, no such purported termination shall be effective; or (VIII) the failure of the Company to obtain the assumption of this Agreement, without limitation or reduction, by any successor to the Company. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. The Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist. (R) Intentionally omitted (S) "Notice of Termination" shall have the meaning set forth in Section 7.1 hereof. (T) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. (U) "Potential Change in Control Period" shall mean the period commencing on the occurrence of a Potential Change in Control and ending upon the occurrence of a Change in Control or, if earlier (I) with respect to a Potential Change in Control occurring pursuant to Section 15(W)(I), immediately upon the abandonment or termination of the applicable agreement, (ii) with respect to a Potential Change in Control occurring pursuant to Section 15(W)(II), immediately upon a public announcement by the applicable party that such party has abandoned its intention to take or consider taking actions which if consummated would result in a Change in Control or (iii) with respect to a Potential Change in Control occurring pursuant to Section 15(W)(III) or (IV), upon the one year anniversary of the occurrence of such Potential Change in Control (or such earlier date as may be determined by the Board). (V) "Potential Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred: (I) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (II) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; (III) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company's then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or (IV) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (W) "Retirement" shall be deemed the reason for the termination by the Executive of the Executive's employment if such employment is terminated in accordance with the Company's retirement policy, including early retirement, generally applicable to its salaried employees. (X) "Section 409A" means the United States federal income tax rules relating to nonqualified deferred compensation plans as provided in Section 409A of the Code, and as such rules may be interpreted in applicable regulations, rulings, pronouncements or other guidance issued by the Internal Revenue Service, Department of Treasury or other governmental entity or person. (Y) "Severance Payments" shall have the meaning set forth in Section 6.1 hereof. (Z) "Tax Counsel" shall have the meaning set forth in Section 6.2 hereof. (AA) "Term" shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein). (BB) "Total Payments" shall mean those payments so described in Section 6.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. FEDDERS CORPORATION By: -------------------------------------- Name: Title: -------------------------------------- EXECUTIVE Address: -------------------------------------- -------------------------------------- -------------------------------------- (Please print carefully) The following executives of the Company entered into a Severance Agreement on July 31, 2006: Michael Giordano President and Chief Executive Officer Elect Robert L. Laurent, Jr. Executive Vice President, Finance and Acquisitions and Chief Financial Officer Kent E.Hansen Executive Vice President, Administration and Secretary Peter Gasiewicz, Senior Vice President and President, Fedders North America Warren Emley, Vice President and President, Fedders China EX-10 3 ny664214.txt EXHIBIT 10.2 - EMPLOYMENT AGREEMENT Exhibit 10.2 EMPLOYMENT AGREEMENT between FEDDERS CORPORATION and SAL GIORDANO, JR. EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, by and between FEDDERS CORPORATION, a Delaware corporation having its principal place of business at 505 Martinsville Road, P.O. Box 813, Liberty Corner, New Jersey 07938 (the "Corporation") and SAL GIORDANO, JR., an individual residing at 31 Peachcroft Drive, Bernardsville, NJ 07924 (the "Executive"), WITNESSETH THAT: WHEREAS, effective September 30, 2006, the expiration of Executive's employment agreement with the Corporation (the "Employment Agreement") dated December 14, 2001, the Executive shall step down as the Chief Executive Officer of the Corporation and as mutually agreed between the Corporation and the Executive, such Employment Agreement shall be amended; WHEREAS, the Corporation has determined that is in the best interests of the Corporation and its shareholders for Executive to continue to be employed with the Corporation as the Executive Chairman of the Board; WHEREAS, the Corporation desires to amend the Employment Agreement to provide certain benefits to the Executive as the Executive Chairman of the Board; NOW THEREFORE, in consideration of the mutual promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to the following terms and conditions: ARTICLE I. Term and Duties Section 1.1 Term. This Agreement shall become effective October 1, 2006 and shall continue for a period of one year. Thereafter, if not terminated earlier pursuant to the terms of this Agreement, the term of this Agreement shall be extended so that at each and every remaining moment of time thereafter, the remaining term of this Agreement shall be one year. Section 1.2 Duties. During the term of this Agreement, Executive shall serve as the Executive Chairman of the Corporation. The Executive shall perform such duties as are reasonable, customary for an individual holding such office to perform, and such other duties as are set forth in the Bylaws of the Corporation or as may be agreed to from time to time by Executive. ARTICLE II. Compensation Section 2.1 Basic Compensation (a) During the term of this Agreement, the Corporation shall continue to pay to the Executive an annual base salary (which shall accrue proportionately from day to day) of $625,000 payable in accordance with the Corporation's usual payroll practices with respect to officers of the Corporation. The Executive's base annual salary payable pursuant to this Section 2.1 (including any increases thereof pursuant to Section 2.1(b)) is hereinafter referred to as the Executive's "Basic Compensation." In the event the Board of Directors of the Corporation requests the Executive to serve as an officer or director of a subsidiary, the Executive shall do so without additional compensation. (b) The Corporation and the Executive acknowledge that the Board of Directors of the Corporation (or a duly authorized committee of the Board) shall, from time to time, but no less frequently than approximately annually, review the Executive's Basic Compensation and may increase (but in no event decrease) such compensation by such amounts as the Board (or the authorized committee) deems proper. The criteria which the Board (or the authorized committee) may take into consideration in providing for any such increases are the basic compensation payable to the individuals holding like offices of comparable companies, the Executive's ability and performance, the success achieved by the Corporation, the total economic return to the Corporation's shareholders, increases in the cost of living, and such other criteria as the Board (or the authorized committee) may deem relevant. Section 2.2 Loan. Pursuant to the Employment Agreement, the Corporation made two loans to the Executive. One loan is in the amount of $2 million and a second loan is in the amount of $4 million. Both of these loans shall continue in effect and continue to be governed by the original terms of such loans outlined in Section 2.6 (a) and (b) of the Employment Agreement. No payments by the Executive on the loans shall come due while the Executive remains employed by the Corporation. Unless Section 3.3(a)(ii)(5) of the Agreement applies, the Executive shall repay the principal amounts of the loans (but not any interest that may have been imputed during the employment period) in six equal yearly installments (calculated in a commercially reasonable manner at the time of his termination of employment) over the six-year period immediately following the termination of the Executive's employment. Each yearly installment payment shall be due on the anniversary date of the Executive's termination of employment which occurs in such year. Section 2.3 Incentive, Savings and Retirement Plans. During the term of this Agreement, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other executives of the Corporation. Section 2.4 Welfare Benefit Plans. During the term of this Agreement, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Corporation (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life (including continuation throughout the term of this Agreement of the life insurance policy maintained on the Executive's life for the benefit of his family as of the date of the execution of this Agreement), group life, accidental death and travel accident insurance plans and programs to the extent applicable generally to other executives of the Corporation. The Corporation also shall be required, during the term of this Agreement, to continue its performance obligations under any split dollar life insurance policies maintained with respect to the Executive which are in effect as of the date of the execution of this Agreement. Section 2.5 Retiree Medical Benefits. For the remainder of the Executive's lifetime and his spouse's lifetime following the term of this Agreement, the Corporation shall provide the Executive and his spouse with medical and disability benefits, which benefits shall be substantially similar to those provided to executives who are active employees of the Corporation during the time these retiree medical benefits are provided. Such medical and disability benefits shall be provided to the Executive and his spouse through the purchase of one or more insurance policies. To the extent that such benefits result in taxable income to the Executive, the Executive shall receive a tax gross-up from the Corporation for these amounts. Section 2.6 Expenses. During the term of this Agreement, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Corporation as in effect generally with respect to other executives of the Corporation. Section 2.7 Fringe Benefits. During the term of this Agreement, the Executive shall be entitled to fringe benefits, including, but not limited to, tax and financial planning services, payment of club dues and use of an automobile and payment of related expenses, in a manner that shall not be less than in accordance with the most favorable plans, practices, programs and policies of the Corporation as in effect on the date of execution of this Agreement and available to the Executive. Section 2.8 Office and Support Staff. During the term of the Agreement and for the remainder of the Executive's lifetime, the Corporation shall provide the Executive with an office or offices at the Corporation's headquarters or at a comparable location with similar office facilities at the Executive's convenience. Such office shall be of a size and with the furnishings and other appointments, and secretarial and other assistance, at least equal to the most favorable of the foregoing as provided at such time with respect to any executive of the Corporation. Section 2.9 Total Compensation. The Executive's "Total Compensation" means the total of (i) Basic Compensation, including amounts the Executive has electively deferred under an arrangement qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code"), the Fedders Supplemental Retirement Plan, or any cafeteria plan under Section 125 of the Code or otherwise, plus (ii) an amount equal to the aggregate cash amounts paid to the Executive as bonuses over the three most recent fiscal years of the Corporation divided by three. ARTICLE III. Termination of Employment Section 3.1 Events of Termination Notwithstanding any other provision of this Section 3.1 or any other provision of this Agreement, a termination of employment shall only occur if the Executive actually experiences a "separation from service" in accordance with Section 409A of the Internal Revenue Code. There shall be no separation from service, and therefore no right to any Severance Payment (as defined below), if the Executive continues to provide services as an employee to the Corporation after a purported termination of employment at an annual rate of 20% of the services rendered on average during the immediately preceding three full calendar years of employment and the annual remuneration for such services is at least equal to 20% of the average annual remuneration earned during the final three calendar years of employment. In addition, there also shall be no separation from service if the Executive continues to provide services to the Corporation in a capacity other than as an employee, if the Executive is providing services at an annual rate of 50% of the services rendered on average during the immediately preceding three full calendar years of employment and the annual remuneration for such services is at least equal to 50% of the average annual remuneration earned during the final three calendar years of employment. (a) Death. The Executive's employment shall terminate automatically upon the Executive's death. (b) Disability. If the Corporation determines in good faith that the Disability of the Executive has occurred during the term of the Agreement (pursuant to the definition of Disability set forth below), it may give the Executive written notice in accordance with Section 5.7 of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Corporation shall terminate effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), provided that, within the thirty (30) days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean (i) the Executive's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Executive is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of Corporation. (c) Without Cause. Notwithstanding any other provision hereunder, the Corporation shall have the right to terminate the Executive's employment hereunder without "Cause" (as defined in Section 3.1(d)) at any time during the term of this Agreement for any reason in the sole discretion of the Corporation upon not less than ninety (90) days' prior written notice to the Executive. (d) Cause. The Corporation may terminate the Executive's employment during the term of this Agreement for Cause at any time. For purposes of this Agreement, "Cause" shall mean: (i) The willful and continued failure of the Executive to perform substantially the Executive's duties with the Corporation (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Corporation's Board, which demand shall specifically identify the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, or (ii) The willful engaging by the Executive in illegal conduct or gross misconduct in connection with the performance of his duties hereunder which is materially injurious to the Corporation. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Corporation's Board, upon the instructions of any senior officer of the Corporation or based upon the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Corporation. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Corporation's Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above and specifying the particulars thereof in detail. (e) Good Reason. The Executive may terminate his employment during the term of this Agreement for Good Reason at any time upon thirty (30) days' notice to the Corporation. For purposes of this Agreement, "Good Reason" shall mean the occurrence, without the Executive's express written consent, of any one or more of the following events: (i) A change in the Executive's titles or duties described in Section 1.2, or any removal of the Executive from, or any failure to re-elect the Executive to, any of such positions, except with the Executive's written consent. (ii) A reduction in the Executive's Basic Compensation or the failure by the Corporation to increase such compensation each year by an amount which at least equals, on a percentage basis, the mean average percentage increase in base salary for all senior officers of the Corporation (other than the Executive) during such year, or the failure by the Corporation to continue to provide prompt payment (or reimbursement to the Executive) of all reasonable expenses incurred by the Executive in connection with the Executive's professional and business activities; (iii) A failure by the Corporation to waive any and all restrictions that might exist on the exercise of any stock options or with respect to the Restricted Stock Awards as of the date of a Change of Control (as defined below); (iv) The failure by the Corporation to include the Executive as a participant in any benefit or compensation plan or arrangement generally available to executives of the Corporation, or the failure by the Corporation to provide the Executive with the number of paid vacation days, holidays and personal days to which the Executive is entitled in accordance with the Corporation's normal leave policy, or the failure of the Corporation to continue its performance obligations under any split dollar life insurance policies maintained with respect to the Executive on the execution date of this Agreement; (v) The failure of the Corporation to obtain the assumption of this Agreement, without limitation or reduction, by any successor to the Corporation; (vi) Any purported termination of the Executive's employment by the Corporation which is not effected pursuant to the express terms of this Agreement, including the Notice of Termination requirements of Section 3.2(a); (vii) The failure of the Corporation to maintain for the benefit and use by the Executive of an office and support staff as contemplated by Section 2.9; ( viii) The failure of the Corporation to pay or reimburse the Executive for any expenses incurred by the Executive as provided in this Agreement; or (ix) The filing of a voluntary or involuntary petition of bankruptcy by or against the Corporation or the insolvency of the Corporation. (f) Voluntary Termination. The Executive shall have the right at any time after one year from the Effective Date to voluntarily terminate his employment by the Corporation (a "Voluntary Termination") for any reason in the sole discretion of the Executive by not less than one year's prior written notice to the Corporation; provided however, a termination by reason of Death, Disability or Good Reason shall not be treated for any purpose hereunder as a Voluntary Termination. Section 3.2 Termination Procedures and Certain Definitions (a) Notice of Termination. Any termination by the Corporation for Cause, without Cause, by reason of Disability or by the Executive for Good Reason or in a Voluntary Termination, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 5.7 of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by the Executive or the Corporation to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Corporation, respectively, hereunder or preclude the Executive or the Corporation, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Corporation's rights hereunder. The Executive's continued employment with the Corporation after a Notice of Termination is provided shall not constitute consent to, or a waiver of any rights with respect to, any circumstance constituting Good Reason hereunder. (b) Date of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Corporation for Cause, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive's employment is terminated by the Corporation other than for Cause or Disability, the Date of Termination shall be the date not less than ninety (90) days after the date on which the Corporation notifies the Executive of such termination, (iii) if the Executive terminates his employment for Good Reason, the Date of Termination shall be the date, not less than thirty (30) days after the date on which the Executive notifies the Corporation of such termination, (iv) if the Executive terminates his employment voluntarily in accordance with and subject to the provisions of Section 3.1(f), the Date of Termination shall be the date, not less than one year after the date on which the Executive notifies the Corporation of such termination, and (v) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. In the case of a Voluntary Termination, the Corporation shall have the option, exercisable by written notice to the Executive within ten (10) days after the Executive's Notice of Termination is provided to the Corporation, to designate any date prior to the expiration of the aforesaid notice as the date on which the Executive shall cease to be an officer of the Corporation, and the effective Date of Termination hereunder shall be any earlier date so designated by the Corporation. (c) Change of Control. A "Change of Control" shall have occurred if: (i) any "person" within the meaning of Section 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), other than the Corporation, a subsidiary of the Corporation, or any employee benefit plan sponsored by the Corporation or any subsidiary of the Corporation, becomes the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of 25% or more of the combined voting power of the class of common equity of the Corporation denominated as Common Stock; (ii) a merger or equivalent combination occurs after which 49% or more of the voting stock of the surviving corporation is held by persons other than former stockholders of the Corporation; or (iii) 20% or more of the Board of Directors are replaced during any 12-month period by directors who were not nominated in the most recent proxy statement of the Corporation's Board of Directors; provided, however, that none of the foregoing events shall be deemed to constitute a Change of Control if such event has been approved by a majority of the Incumbent Board; for purposes of this section, "Incumbent Board" shall mean (a) the individuals who constitute the Board of Directors of the Corporation on October 1, 2006, and (b) any individual elected as a director of the Corporation after October 1, 2006 whose election was approved by a vote of at least three-quarters of the directors then comprising the Incumbent Board, either by specific vote or by approval of the proxy statement of the Corporation in which such individual is named as a nominee for director without objection to such nomination. Section 3.3 Obligations of the Corporation on Termination (a) Termination Upon Death or Disability, Without Cause or for Good Reason. If the Executive's employment is terminated upon his death or Disability, without Cause, for Good Reason or following a Change in Control for any reason: (i) In general. The Corporation shall immediately pay the Executive in cash the amount of Basic Compensation previously earned but not yet paid. (ii) Severance benefits. (1) All stock options and shares of restricted stock granted under the Restricted Stock Awards, which have not already vested, shall immediately vest and any other awards under any other compensatory plan, program or arrangement, if any, shall vest and be paid in full, computed on the assumption that all applicable performance goals for the Executive and the Corporation have been met, using the Date of Termination as the valuation date; (2) The period during which any stock options granted to the Executive under the Stock Compensation Plans may be exercised shall be extended for an additional six months following the end of the exercise period otherwise applicable to such options; (3) The Executive shall be reimbursed for (i) any COBRA payments made by Executive to maintain medical and dental insurance up to 6 additional months for said coverage and (b) the use of one or more executive out-placement services, designated by the Executive and paid for by the Corporation; (4) If the termination does not arise from the Executive's death or Disability, the Corporation shall pay the Executive in a lump sum a "Severance Benefit" in cash equal to 2.9 times the Executive's Total Compensation as of the time of such termination. Payment of such Severance Benefit would ordinarily be made 30 days following Executive's Date of Termination. However, in order to comply with applicable law, including Section 409A of the Internal Revenue Code, such payment shall be deferred and paid 180 days following the applicable Date of Termination. The deferred Severance Payment will be paid with interest for the 180-day payment delay and will be calculated using an annualized rate of 7%. If the termination arises from the Disability of the Executive, the Corporation shall pay the beneficiary (or beneficiaries) designated under the Fedders Supplemental Retirement Plan an amount equal to 2.9 times the Executive's Total Compensation as of the time of such termination in six annual installments with the first installment commencing 180 days following said termination. The remaining five annual installment payments shall be made on the second, third, fourth, fifth and sixth anniversaries of the Executive's Date of Termination. The Severance Payment shall be calculated using a 7% annualized interest rate to reflect the initial six-month delay in payment and that such payments will be made in installments over a period of six years. If the termination arises from the death of the Executive, the Corporation shall pay the beneficiary (or beneficiaries) designated under the Fedders Supplemental Retirement Plan an amount equal to 2.9 times the Executive's Total Compensation as of the time of such termination in six annual installments with the first installment commencing 30 days following said termination. The remaining five annual installment payments shall be made on the second, third, fourth, fifth and sixth anniversaries of the Executive's Date of Termination. The Severance Payment shall be calculated using a 7% annualized interest rate to reflect that such payments will be made in installments over a period of six years. (5) The Corporation shall release the Executive from his obligations to the Corporation under the loans described in Section 2.3. In the event of the Executive's death, any amounts payable under this Agreement shall be paid to the beneficiary (or beneficiaries) designated by the Executive under the Fedders Supplemental Retirement Plan and in such amounts or proportions as the Executive shall so designate. If no beneficiary is designated by the Executive or if none shall survive the Executive, then any amounts payable under this Agreement shall be paid to the Executive's surviving spouse, if any, or, if no such surviving spouse exists, to the Executive's estate. (iii) Disability. (1) If, following a Disability termination, the Executive becomes entitled to and receives disability benefits under any disability payment plan sponsored and maintained by the Corporation, the amount otherwise payable by the Corporation to the Executive pursuant to Section 3.3(a) shall be reduced, on a dollar-for-dollar basis, but not below zero, by the amount of any such disability benefits received by him, but only to the extent such benefits are attributable to payments made by the Corporation. (2) The Executive shall have the right in his sole discretion after the Disability Effective Date to engage in regular employment (whether as an employee of another entity or as a self-employed person) and shall have no obligation to perform further services for the Corporation. (b) Voluntary Termination or Termination for Cause In case of a Voluntary Termination or a Termination for Cause, the Executive shall be entitled to his Basic Compensation accrued to the Date of Termination, and any other benefits under the Corporation's employee benefit plans, including the Supplemental Retirement Plan, or awards vested prior to such date, including, without limitation, his right to exercise any vested stock options. Except as otherwise provided in this Agreement or under any employee benefit plan maintained by the Corporation, the Corporation shall have no further obligations to the Executive. (c) Gross Up Payments. (i) If, on account of the termination of the Executive following a Change in Control, the "Severance Payment" (as defined below) paid by the Corporation to the Executive pursuant to this Agreement constitutes an "excess parachute payment" within the meaning of Section 280G of the Code subject to the tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Corporation shall pay to the Executive an additional amount (the "Gross Up Payment") such that the amount paid or transferred to the Executive after deduction of any Excise Tax on the Severance Payment, and any federal, state and local income tax, employment tax and Excise Tax upon the Gross Up Payment, shall be equal to the Severance Payment. For purposes of this Section 3.3(c) only, "Severance Payment" shall mean any payment or other benefit paid pursuant to this Agreement, including all payments made from the Fedders Supplemental Retirement Plan. Any Gross Up Payment shall not be made to the Executive earlier than 180 days from the Executive's Date of Termination. (ii) For purposes of determining whether any portion of a Severance Payment will be subject to the Excise Tax and the amount of such Excise Tax, (A) the Severance Payment and payments provided for in Section 3.3(c)(i) shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280(G)(b)(1) of the Code shall be treated as subject to the Excise Tax, unless and to the extent that tax counsel selected by the Corporation's independent auditors and acceptable to the Executive is of the opinion that the Severance Payment (in whole or in part) does not constitute a "parachute payment" or such "excess parachute payment" (in whole or in part) represents reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the allocable base amount within the meaning of Section 280G(b)(3) of the Code, or the Severance Payment is otherwise not subject to the Excise Tax, (B) the amount of the Severance Payment that is treated as subject to the Excise Tax shall be equal to the lesser of (X) the total amount of the Severance Payment and (Y) the amount of "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code (after applying clause (A) above), (C) any Gross Up Payment pursuant to Section 3.3(c)(i) shall be treated as subject to the Excise Tax in its entirety and (D) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Corporation's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. (iii) If in circumstances described in Section 3.3(c)(i), by reason of the filing by the Executive of an amended tax return, an audit by the Internal Revenue Service or other taxing authority, or a final determination by a court of competent jurisdiction, it is determined that "excess parachute payments" exceeding those previously reported in his tax returns were received by the Executive and as a result an additional Excise Tax (the "Additional Excise Tax") shall become due, the Corporation shall pay the Executive an additional amount (the "Subsequent Gross Up Payment") such that the amount paid or transferred to the Executive, after deduction of (A) any Additional Excise Tax and (B) on an after tax basis, any interest, additions and penalties with respect to the Additional Excise Tax and (C) any federal, state and local income tax, employment tax and Excise Tax upon the Subsequent Gross Up Payment and (D) the payments provided for in Section 3.3(c)(i), shall be equal to the Severance Payment. (iv) Any Gross Up Payment required hereunder shall be made at least ten days prior to the due date (without regard to extensions) of the Executive's federal income tax return for the year with respect to which the "excess parachute payment" is deemed made under the Code. Any Subsequent Gross Up Payment required hereunder shall be made to the Executive within 30 days after the amount thereof is determined. Notwithstanding the two immediately preceding sentences, the Executive shall pay any federal, state and local tax or taxes and employment taxes required to be withheld from the Executive's wages (within the meaning of Section 3121 and 3402 of the Code) with respect to the "excess parachute payment" and any such tax or taxes paid by the Corporation to the Internal Revenue Service or state or local taxing authority shall constitute payment to the Executive. (v) If the Excise Tax is finally determined (whether by the filing of an amended tax return by the Executive, by audit of the Internal Revenue Service or other taxing authority, or by a final determination of a court of competent jurisdiction) to be less than the amount paid to or on behalf of the Executive under the provisions of Sections 3.3(c)(i)-(iv) and the overpayment is refunded to the Executive, the Executive shall repay to the Corporation, promptly following the receipt of the refund, the portion of the Gross Up Payment (and/or Subsequent Gross Up Payment) attributable to such reduction of the Excise Tax (plus the portion attributable to federal, state and local income tax and employment taxes imposed on the portion being repaid by the Executive but only to the extent that the repayment may result in a tax benefit to the Executive under Section 1341 of the Code and similar provisions of applicable state and local law). (vi) The provisions of this Section 3.3(c) shall inure to the benefit of the Executive during the Term of this Agreement regardless of whether or not his employment is terminated, and if the Executive's employment is terminated, the rights and obligations of the Executive and the Corporation under this Section 3.3(c) shall survive the termination of this Agreement. ARTICLE IV. Purpose Section 4.1 Purpose. The Corporation recognizes that the Executive is a key executive of the Corporation and is expected to be a factor in the growth and success of the Corporation. The Corporation also recognizes that the continued success of the Corporation depends, to a significant degree, upon the effective performance of the Executive's duties as set forth in this Agreement. Therefore, one of the primary purposes of this Agreement is to provide for the long-term financial security of the Executive and his family so that he will be better able to direct his undivided attention to the successful performance of his duties on behalf of the Corporation. Section 4.2 Corporate Opportunity. Except as to such actions within the ordinary course of the Executive's employment by the Corporation which the Executive in good faith believes to be in the best interests of the Corporation, the Executive shall not at any time during the term of the Agreement or two years thereafter, without the prior written consent of the Corporation: (i) request or advise any supplier, or other person, firm, partnership, association, corporation or business organization, entity or enterprise having business dealings with the Corporation or any subsidiary or affiliate of the Corporation to withdraw, curtail or cancel such business dealings; or (ii) disclose to any competitor or potential competitor of the Corporation or any subsidiary or affiliate of the Corporation, any trade secret, know-how or knowledge relating to costs, products, equipment, merchandising and marketing methods, business plans, or research results used by, or useful to, the Corporation or any subsidiary or affiliate of the Corporation; (iii) induce or attempt to influence any executive of the Corporation or any subsidiary or affiliate of the Corporation to terminate, or in any way violate the terms of, his or her employment; or (iv) directly or indirectly engage in any business in competition with the business of the Corporation or its subsidiaries. ARTICLE V. Miscellaneous Section 5.1 Enforceability. If the scope of any provision of this Agreement is too broad to permit enforcement of such provision to its fullest extent, then such provision shall be enforced to the maximum extent permitted by applicable law, and, if necessary, the scope of any such provision may be judicially modified (to the extent necessary in any proceeding brought to enforce such provision) and thereafter fully enforced. Section 5.2 Remedies The parties acknowledge that the remedy at law for any breach of any party's obligations hereunder would be inadequate and consent to the granting of temporary and permanent injunctive relief in any proceeding brought to enforce any of such provisions without the necessity of proof of actual damages; provided, however, that the foregoing shall not be construed to limit any other right or remedy available to the Corporation or the Executive at law or in equity, and all such rights and remedies shall be cumulative to the extent permitted by applicable law, and the exercise of any one or more of such rights or remedies shall be without prejudice to the exercise of any other such right or remedy. Section 5.3 Resignation as Board Member Upon the termination of his employment for any reason, the Executive hereby agrees that he shall simultaneously submit his resignation as a member of the Board of Directors of the Corporation in writing on or before the date he ceases to be an Executive of the Corporation. If the Executive fails or neglects to submit such resignation in writing, the Corporation shall be permitted to deem the Executive to have submitted his written resignation as such member effective on the same date that the Executive ceases to be an executive of the Corporation. If the Executive continues to serve as a member of the Board at the request of the Board after his termination of employment, the Executive shall be entitled to all benefits provided to other Board members who are not employees of the Corporation; provided that Severance Payments, if any, shall only be paid to Executive if his termination of employment is considered a separation from service as described in Section 3.1 of this Agreement. Section 5.4 No Offset; Enforcement of Agreement The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation may have against the Executive or others, except as provided in Section 3.3(a)(iii). In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. The Corporation agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2) of the Code and amounts sufficient to reimburse the Executive for all tax liabilities due in respect of such payments of legal fees and expenses; provided however, if an action brought by the Executive, or if the Executive's defense of an action brought by the Corporation, is finally determined adversely to the Executive by a court of competent jurisdiction, the Executive shall refund amounts paid by the Corporation for legal fees, taxes and interest pursuant to this Section 5.4. Section 5.5 Assignment by the Executive; Successors (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) Except as is otherwise herein expressly provided, this Agreement shall inure to the benefit of and be binding upon the Corporation, its successors and assigns, and upon the Executive, his spouse, heirs, executors and administrators, provided, however, that the obligations of the Executive hereunder shall not be delegated. (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. As used in this Agreement, "Corporation" shall mean Corporation as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. Section 5.6 Waiver Failure of either party hereto to insist upon strict compliance by the other party with any term, covenant or condition hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment or failure to insist upon strict compliance with any right or power hereunder at any one time or more times be deemed a waiver or relinquishment of such right or power at any other time or times. Section 5.7 Notice Any notice required or desired to be given pursuant to this Agreement shall be sufficient if in writing sent by registered or certified mail to the addresses set forth above or to such other address as any party hereto may designate in writing, transmitted by hand delivery or by registered or certified mail to the other; provided, the failure by the Executive to observe the notice provisions hereof shall not in any way limit, reduce or affect the Executive's rights and benefits hereunder. Section 5.8 Applicable Law This Agreement shall be governed by the laws of the State of New Jersey. Section 5.9 Taxes The Corporation may deduct from all amounts paid under this Agreement all federal, state, local and other taxes required by law to be withheld with respect to such payments. Section 5.10 Entire Agreement The parties hereto agree that this Agreement (together with, to the extent benefits or rights are otherwise affected by this Agreement, any employee benefit plan maintained or sponsored by the Corporation) contains the entire understanding and agreement between them and superseded all previous agreements and arrangements, if any, relating to the employment of the Executive, including, but not limited to the employment agreement, dated October 1, 1997 between the Executive and the Corporation and the Employment Agreement (except with respect to Sections 2.6 (a) and 2.6(b) which shall continue to apply to the outstanding loans referenced in Section 2.3 of this Agreement), between the Executive and the Corporation. This Agreement shall not be amended, modified or supplemented in any respect except by an agreement in writing signed by the Executive and the Corporation. IN WITNESS WHEREOF, the Corporation and the Executive have duly executed this Agreement. ON BEHALF OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF FEDDERS CORPORATION Witness: /s/ Kent E. Hansen By: /s/ Howard S. Modlin - ---------------------- ---------------------------------- Howard S. Modlin Date: July 28, 2006 Date: July 28, 2006 Witness: EXECUTIVE /s/ Gerald Gordon /s/ Sal Giordano, Jr. - ---------------------- -------------------------------------- Sal Giordano, Jr. Date: July 28, 2006 Date: July 28, 2006 -----END PRIVACY-ENHANCED MESSAGE-----