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Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made and entered into this 14th day of
March, 1996, by and between SHOP VAC CORPORATION, a corporation organized
and existing under the laws of the State of New Jersey having its principal
place of business at 0000 Xxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx (hereinafter
referred to as "Corporation") and XXXXXXXX XXXXXX, an individual residing at 00
Xxxxxxxx Xxxx, Xxxxxxx, XX 00000 (hereinafter referred to as "Executive").
WITNESSETH:
WHEREAS, Executive is now serving as Chairman, President and Chief
Executive Officer of the Corporation; and
WHEREAS, in order to induce the Executive to continue in employment
with the Corporation, the Corporation and the Executive desire to enter into an
Agreement setting the terms of Executive's continued employment by Corporation
and providing for certain payments to be made by Corporation to Executive under
certain specific conditions.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, and intending to be legally bound, the parties hereto do hereby agree as
follows:
1. Status of Employment. During the Term of his employment hereunder,
Executive will continue to perform the duties and responsibilities of Chairman,
President and Chief Executive Officer of the Corporation. Executive agrees that
except when prevented by illness, he will at all times faithfully,
industriously, and to the best of his ability, experience and talents, perform
all of the duties that may be required of and from him by Corporation in the
aforesaid capacity or capacities, pursuant to the express and implicit terms
hereof, and that he will devote all of his working hours and his best efforts to
the performance of his duties hereunder, and that he will not, during his
employment by Corporation, become engaged in any other business activity unless
approved by the Board of Directors of the Corporation. Executive agrees that
during the Term he will maintain a work schedule necessary to carry out the
duties and responsibilities of his position.
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2. Term of Employment.
(a) Corporation agrees to employ Executive upon the terms and
conditions of this Employment Agreement, and Executive agrees to so serve, for a
three year term commencing March 1, 1996. The term of this Agreement will
automatically renew each March 1 for an additional three year period unless,
prior to the preceding December 1 within the then current term, either party
shall give written notice of nonrenewal to the other party, in which event this
Agreement shall terminate at the end of the three year period then in effect.
For example, the initial Term of this Agreement is March 1, 1996 through
February 28, 1999. On March 1, 1997, the term of this Agreement extends to
February 29, 2000, unless one of the parties provides written notice of its/his
intent not to renew the Agreement prior to December 1, 1996. The three year
period which is at any point in time then in effect is sometimes hereinafter
referred to as the "Term".
(b) If notice of nonrenewal is given pursuant to (a) of this
Section 2, Executive's employment right hereunder shall automatically terminate
at the close of business on the last day of the then current Term. From and
after the date of this Agreement and prior to the expiration of Executive's
employment hereunder in accordance with the preceding sentence, termination of
Executive's employment may only occur in accordance with paragraphs (c) or (d)
of this Section 2 or in accordance with Section 8 hereof.
(c) Executive shall have the right, at any time, for any
reason during the Term hereof and whether with or without cause, to terminate
his employment hereunder by giving at least thirty (30) days prior written
notice to the Corporation of the effective date of the termination, and as of
such effective date Executive's employment with the Corporation shall cease.
Unless such termination by the Executive is pursuant to Section 8(a) or 8(b)
hereof, in the event of a termination by the Executive pursuant to this Section
2(c), no severance payments or other compensation or fringe benefits are payable
during any period subsequent to the effective date of the termination, except
for base salary and unused vacation days earned by Executive to the date of
termination. If during the Term Executive's employment hereunder is terminated
in accordance with Section 8(a) or Section 8(b) hereof, Executive shall be
entitled to the compensation specified in Section 8 in lieu of the compensation
set forth in this Section 2(c).
(d) Corporation may terminate Executive at any time for good
cause, as determined in good faith by the Board of Directors of the Corporation.
For purposes of this Agreement, good
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cause shall include, but not be limited to, commission of malfeasance in office
constituting dishonesty, conviction of a crime involving moral turpitude or
breach of fiduciary duty owed the Corporation. For purposes of this Agreement,
good cause shall also include the willful failure of the Executive to perform in
accordance with the reasonable directives of the Board of Directors of the
Corporation after at least two (2) written warnings and within ninety (90) days
following the second warning the Executive does not improve his performance to a
level which is satisfactory to the Corporation. In the event of termination
pursuant to this Section 2 (d), Executive shall not be entitled to any pay or
benefits from the Corporation, except as required by law.
3. Compensation.
(a) Base Salary. As reasonable compensation for all services
rendered by Executive to the Corporation as a full-time employee during the Term
of his employment hereunder, Executive shall be entitled to receive from the
Corporation, subject to withholding and other applicable employment taxes and
payroll deductions, an annual base salary equal to Eight Hundred Thousand
Dollars ($800,000); and provided, that, during the Term, Executive's base salary
for any calendar year shall be subject to increase by the Corporation, with the
approval of the Board of Directors of the Corporation, based on merit review,
taking into account Executive's performance, responsibilities and any increase
in the cost of living.
(b) Incentive Compensation. It is the intention of the parties
that, in addition to the base salary as described above, Executive shall have
the opportunity to earn additional compensation on an incentive basis. During
the Term of his employment hereunder, Executive shall be eligible to participate
in incentive compensation plans and performance bonuses on the same basis as
other executives, with achievable incentive compensation and bonus awards
subject to the discretion of the Board of Directors of the Corporation.
4. Benefits. During the Term of Executive's employment
hereunder, the Corporation will provide for Executive the following benefits:
(a) Executive shall be entitled to participate in
Corporation's employee benefit and fringe benefit plans available to other
executives, subject, however, to the terms and conditions of those plans and
further subject to any limitations and/or
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qualification conditions imposed on Corporation's employee benefit plans by the
Internal Revenue Code of 1986, as amended.
(b) Executive shall be entitled to twenty-five (25)
days of vacation during each calendar year period, with the specific dates of
vacation days to be mutually agreed upon in advance with the Chief Executive
Officer of the Corporation. Vacation days unused at the end of a calendar may be
carried over and used in a succeeding calendar year. To the extent any vacation
days are unused at the termination of this Agreement, Executive shall be
compensated therefore at the daily rate of his then base salary.
5. Expense Reimbursement. During the Term of his employment
hereunder, Executive shall be entitled to be reimbursed by the Corporation for
such expenses incurred by Executive in furtherance of the Corporation's
business, including reasonable travel and entertainment expenses, as well as
other similar business expenses, subject to reasonable and appropriate
guidelines to be established from time to time by the Board of Directors of the
Corporation for executives of the Corporation. However, for any expense to be
reimbursable, Executive shall be required to maintain such records and account
to the corporation in such manner as may be required under the provisions of the
Internal Revenue Code and any regulations adopted thereunder.
6. Automobile. Corporation shall provide Executive with an
automobile for Executive to use in his position with the Corporation.
Corporation shall pay all reasonable costs of operation of the automobile which
relate to Executive's use of the automobile in furtherance of his position with
the Corporation. The type and model of automobile to be provided to Executive
shall be a type and model acceptable to Executive and the Corporation. Upon
termination of Executive's employment hereunder, other than by the Corporation
for cause, the Corporation shall cause title to the automobile then being used
by Executive to be transferred to the Executive free and clear of any liens or
encumbrances.
7. Country Club. During Executive's employment hereunder,
Executive shall be provided by the Corporation with annual membership dues to
the Williamsport Country Club and the Xxxxx Xxxx Club in New York City.
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8. Certain Terminations.
(a) If prior to the expiration of the Term and prior to the
occurrence of a Change in Control, as defined hereafter, the Executive's
employment is terminated (i) by the Corporation without cause or (ii) by
Executive for good reason if, (x) the nature and scope of Executive's duties or
responsibilities with the Corporation are materially reduced from that which he
enjoyed immediately prior thereto, (y) the Corporation's notice of nonrenewal of
this Agreement, or (z) the Corporation should materially breach this Agreement
in any way and fail to correct such breach within 30 days of receipt of a
written notice from Executive specifying the breach and stating that he intends
to terminate his employment hereunder pursuant to this Section 8(a) unless such
breach is cured within 30 days, then Executive shall have no further liability
hereunder and shall receive as liquidated damages, at the election of the
Executive, either:
(i) continuation, for a period of three (3) years following
such termination, (A) of Executive's Cash Compensation, paid in
accordance with the Corporation's normal payroll schedule, and (B) of
life, disability, and accident and health insurance coverages,
reasonably comparable to all available group life, disability and
accident and health insurance coverages in effect for Executive on
the date of termination, offset by any coverages from any subsequent
employment, provided, however, that Executive shall continue to be
responsible for the cost of available insurance coverages following
the termination hereunder to the same extent that he was responsible
for the cost of the insurance coverages prior to such termination;
and provided, further, that Executive shall have no duty to mitigate
his damages hereunder or to seek other employment; or
(ii) (A) a single payment equal to the total Cash
Compensation payable pursuant to (i) (A), above, discounted to
present value calculated at the Applicable Interest Rate (as defined
in paragraph (d) of this Section 8), and (B) continuation, for a
period of three (3) years following such termination, of life,
disability, and accident and health insurance coverages, reasonably
comparable to all available group life, disability and accident and
health insurance coverages in effect for Executive on the date of
termination, offset by any coverage from any subsequent employment,
provided, however, that Executive shall continue to be responsible
for the cost of available insurance coverages following
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such termination to the same extent that he was responsible for the
cost of the insurance coverages prior to such termination; and
provided, further, that Executive shall have no duty to mitigate his
damages hereunder or to seek other employment.
(b) Any of the following events occurring during the Term and
after the date of any Change in Control (as defined in paragraph (d) below)
which occurs during the Term (as defined in Section 2(a) hereof) shall
constitute a "Termination Pursuant to a Change in Control":
(i) Executive's employment is terminated by the Corporation or an
acquiror without cause, or
(ii) One of the following events occurs and Executive thereafter
terminates his employment:
(A) the nature and scope of Executive's duties or
responsibilities with the Corporation or acquiror are
materially reduced from that which he enjoyed immediately
prior to the Change in Control (other than as a result of a
termination for cause); or
(B) Executive's then current base salary is reduced or
material benefits provided in this Agreement (excluding the
reduction or curtailment of benefits which affect all
similarly situated employees), are eliminated; or
(C) Executive is assigned, without his consent, to a
principal place of employment which is more than two hundred
(200) miles from 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx.
(c) Upon any Termination Pursuant to a Change in Control (as
defined in paragraph (b) above), Executive shall have no further liability
hereunder, and shall be entitled, at the election of the Executive, to either of
the following:
(i) continuation for a period of three (3) years from the date
of the Termination Pursuant to a Change in Control (A) of Executive's
Cash Compensation, paid in accordance with the Corporation's normal
payroll schedule; and (B) of life, disability, and accident and health
insurance coverages, reasonably comparable to all
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available group life, disability and accident and health
insurance coverages in effect for Executive on the date of
termination, offset by any coverage from any subsequent
employment; provided, however, that Executive shall continue to
be responsible for the cost of available insurance coverages
following his termination to the same extent that he was
responsible for the cost of the insurance coverages prior to the
Termination Pursuant to a Change in Control; and provided,
further, that Executive shall have no duty to mitigate his
damages hereunder or to seek other employment; or
(ii) (A) a single payment equal to the total Cash Compensation
payable over the required period of salary continuation
specified in (i) (A) above, discounted to present value
calculated at the Applicable Interest Rate, and (B)
continuation, for the same period as would be required pursuant
to (i) (B) above, of life, disability, and accident and health
insurance coverages, reasonably comparable to all available
group life, disability and accident and health insurance
coverages in effect for Executive on the date of termination,
offset by any coverages from any subsequent employment,
provided, however, that Executive shall continue to be
responsible for the cost of available insurance coverages
following his termination to the same extent that he was
responsible for the cost of the insurance coverages prior to the
Termination Pursuant to a Change in Control; and provided,
further, that Executive shall have no duty to mitigate his
damages hereunder or to seek other employment.
(d) Definitions. As used in this Section:
(i) "Cash Compensation" shall mean Executive's annual base
salary in effect at the time of a termination, plus any bonus or
incentive compensation earned by Executive for the calendar year
immediately preceding the date of the termination.
(ii) "Applicable Interest Rate" shall mean the weekly average
yield on United States Treasury securities adjusted to a
constant maturity of three (3) years, as made available by the
Federal Reserve Board, effective on the date of any termination.
(iii) "Change in Control" shall mean the occurrence of, or
execution of agreements providing for, a merger,
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consolidation, acquisition, reorganization, sale of all or
substantially all of the assets or other similar event, or a
"Significant Stock Acquisition", of the Corporation; provided,
however, that any merger, consolidation, acquisition or
reorganization, or execution of an agreement providing for any
of the foregoing transactions, involving Corporation as a
constituent corporation in the transaction if, upon the
effectiveness of such transaction, Corporation is a surviving
corporation and there has not been, or, in the case of the
execution of an agreement therefore, there is not contemplated
in such agreement, a change in a majority of Corporation's Board
of Directors shall not constitute a "Change in Control" for
purposes of this Section 8. For purposes of this Agreement, a
"Significant Stock Acquisition" of the Corporation shall have
occurred if, at any time during the Term, more than 35% of the
votes attributed to the Corporation's outstanding equity
securities shall be acquired by any corporation, person or group
other than Corporation or another wholly-owned subsidiary of
Corporation. "Group" shall mean persons who act in concert as
described in Section 13(d) (2) of the Securities Exchange Act of
1934, as amended.
(e) Benefits Exclusive. The Executive acknowledges that, in the
event of termination of Executive's employment during the Term of his employment
hereunder pursuant to paragraph (a) or (b) of this Section 8, the payments and
benefits to be made or provided to Executive pursuant to this Section 8 are to
be in full satisfaction of the Corporation's obligations to Executive under this
Employment Agreement and, in such an event, Executive shall not be entitled to
any other payments or benefits, whether pursuant to this Agreement or otherwise,
except as otherwise required by applicable law.
9. Waiver. Failure by either party to insist upon strict compliance
with any of the terms, covenants or conditions hereof shall not be deemed a
waiver of such terms, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any time or from time to time
be deemed a waiver or relinquishment of such right or power at any other time or
times.
10. Notices. All notices required or permitted by this Employment
Agreement shall be in writing and shall be deemed to
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have been given upon delivery in person or upon deposit in certified or
registered United States mail, return receipt requested, postage prepaid, to the
following address of the party to whom notice is being given or to such other
address of which notice shall have been given pursuant to this paragraph:
To Executive: Xxxxxxxx Xxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
To Corporation: Shop Vac Corporation
0000 Xxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000-0000
11. Binding Effect. All of the terms, provisions and conditions of this
Employment Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and assigns.
12. Governing Law and Severability. This Employment Agreement shall be
construed, interpreted and applied according to the laws of the Commonwealth of
Pennsylvania. All covenants and provisions contained herein, and any part
thereof, are severable, and in the event that any such covenant or provision, or
any part thereof, shall be held to be invalid by a court of competent
jurisdiction, this Employment Agreement shall be interpreted as if such invalid
covenant or provision, or part thereof, was not contained herein.
13. Entire Agreement. This Employment Agreement contains the entire
agreement of the parties hereto with respect to the employment of Executive by
the Corporation and will supersede all prior agreements. This Employment
Agreement may not be modified or amended, in whole or in part, except by an
instrument in writing signed by all of the parties hereto.
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IN WITNESS WHEREOF, the following parties have caused their signatures
and seals to be hereunto affixed to this Employment Agreement as of the day
first above written.
ATTEST: SHOP VAC CORPORATION
/s/ Xxxx Xxxx By: /s/ W. Xxxx Xxxxxxx
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Secretary Executive Vice President and
(SEAL) Chief Financial Officer
WITNESS: EXECUTIVE:
/s/ Xxxxx A Grill /s/ Xxxxxxxx Xxxxxx
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Xxxxxxxx Xxxxxx (SEAL)
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