EXHIBIT 10.7
SEVERANCE AGREEMENT
This Agreement, dated 4 November 1996, is made by and between Rayovac
Corporation (the "Company"), a Wisconsin corporation with its principal business
address at 000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxx 00000, and Xxxx X. Xxxxxx, an
individual residing at 0000 Xxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 (the
"Executive").
BACKGROUND
The Company considers it essential to the best interests of its shareholders to
xxxxxx the continued employment of key managers.
Pursuant to authority invested in him by the Board of Directors of the Company,
Xxxxx X. Xxxxx, the President and Chief Executive Officer of the Company,
negotiated with the Executive the terms of the Executive's employment with the
Company, subject to the execution of a more formal agreement embodying those
terms at a mutually convenient time.
The basic terms of the Executive's employment were set forth in an offer of
employment from the Company's General Counsel, Xxxxx X. Xxxxxxxxx, dated 17
September 1996, a copy of which is attached as Exhibit A.
The Executive and the Company wish to execute this Agreement to formalize
additional terms of the Executive's employment.
UNDERTAKINGS
Now therefore, the parties agree:
1. Term of Agreement. The term of this Agreement (the "Term") shall commence
on the date hereof and shall continue in effect though 4 November 1997;
provided, however, that commencing on 5 November 1997 and each year
thereafter, the Term shall automatically extend one additional year unless,
not later than 30 days prior to the end of the preceding Term, the Company
or the Executive shall give notice not to extend the Term.
2. Severance Payments.
2.1 If the Executive's employment is terminated during the Term (a) by the
Company without Cause (as defined below) or (b) by reason of death or
Disability (as defined below), then the Company shall pay the
Executive the amounts, and provide the Executive the benefits,
described in Section 2.2 (the "Severance Payments").
2.2 (a) The Company shall pay to the Executive as severance, an
amount in cash equal to the sum of (i) the Executive's base
salary as in effect for the fiscal year ending immediately prior
to the fiscal year in which such termination occurs, and (ii) the
annual bonus (if any) earned by the Executive pursuant to any
annual bonus or incentive plan maintained by the Company in
respect of the fiscal year ending immediately prior to the
fiscal year in which the termination occurs, such cash amount to
be paid to the Executive ratably monthly in arrears over the
Non-Competition Period (as defined below).
(b) for the 12-month period immediately following such termination,
the Company shall arrange to provide the Executive and his
dependents insurance benefits substantially similar to those
provided to the Executive and his dependents immediately
prior to the date of termination, at no greater cost to the
Executive than the cost to the Executive immediately prior to
such date. Benefits otherwise receivable by the Executive
pursuant to this Section 2.2(b) shall cease immediately upon
the discovery by the Company of the Executive's breach of the
covenants contained in Sections 5 or 6 hereof. In addition,
benefits otherwise receivable by the Executive pursuant to this
Section 2.2(b) shall be reduced to the extent benefits of the
same type are received by
or made available to the Executive during the 12-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 cost of such benefits to the Executive over such cost
immediately prior to the date of termination.
2.3 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.
2.4 If the Executive's employment with the Company terminates during the
Term, the Executive shall not be required to seek other employment or
to attempt in any way to reduce any amounts payable to the Executive
by the Company pursuant to this Section 2.
3. Termination Procedures. 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 to the other
in accordance with Section 9 hereof. The notice of termination 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.
4. No Rights to Employment. 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 and authorized by
the Board of Directors of the Company, the Executive shall not have any
right to be retained in the employ of the Company.
5. Executive's Covenant Not to Compete.
5.1 During the Non-Competition Period, the Executive will not, directly or
indirectly, in any capacity, either separately, jointly, or in
association with others, as an officer, director, consultant, agent,
employee, owner, principal, partner, or stockholder of any business,
or in any other capacity, engage or have a financial interest in any
business which is involved in the design, manufacturing, marketing, or
sale of batteries or battery operated lighting devices (excepting only
the ownership of not more than 5% of the outstanding securities of a
class listed on an exchange or the Nasdaq Stock Market). For purposes
of this Agreement, the "NonCompetition Period" means the period
beginning on the date hereof and continuing until the date which is
the one-year anniversary of the later to occur of (a) the end of the
Term and (b) the date of termination.
5.2 Without limiting the generality of Section 5.1 above, during the
Non-Competition Period the Executive will not, directly or indirectly,
in any capacity, either separately, jointly, or in association with
others, solicit or otherwise contact any of the Company's customers or
prospects that were customers or prospects of the Company at any time
during the Non-Competition Period if such solicitation or contact is
for the general purpose of selling products that satisfy the same
general needs as any products that the Company had available for sale
to its customers or prospects during the NonCompetition Period.
5.3 During the Non-Competition Period, the Executive shall not, other than
in connection with employment for the Company, solicit the employment
or services of any employee of the Company who is or was an employee
of the Company at any time during the Non-Competition Period. During
the Non-Competition Period, the Executive shall not hire any employee
of Company for any other business.
5.4 If a court determines that the foregoing restrictions are too broad or
otherwise unreasonable under applicable law,
including with respect to time or space, the court is hereby requested
and authorized by the parties to revise the foregoing restrictions to
include the maximum restrictions allowed under the applicable law.
5.5 For purposes of this Section 5 and Section 6, the "Company" refers to
the Company and any incorporated or unincorporated affiliates of the
Company.
6. Secret Processes and Confidential Information
6.1 The Executive will hold in strict confidence and, except as the
Company may authorize or direct, not disclose to any person or use
(except in the performance of his services hereunder) any confidential
information or materials received by the Executive from the Company or
any confidential information or materials of other parties received by
the Executive in connection with the performance of his duties
hereunder. For purposes of this Section 6.1, confidential information
or materials shall include existing and potential customer
information, existing and potential supplier information, product
information, design and construction information, pricing and
profitability information, financial information, sales and marketing
strategies and techniques, and business ideas or practices. The
restriction on the Executive's use or disclosure of the confidential
information or materials shall remain in force until such information
is of general knowledge in the industry through no fault of the
Executive or any agent of the Executive. The Executive also will
return to the Company promptly upon its request any Company
information or materials in the Executive's possession or under the
Executive's control.
6.2 The Executive will promptly disclose to the Company and to no other
person, firm or entity all inventions, discoveries, improvements,
trade secrets, formulas, techniques, processes, know-how and similar
matters, whether or not patentable and whether or not reduced to
practice, which are conceived or learned by the Executive during the
period of the Executive's employment with the Company, either
alone or with others, which relate to or result from the actual or
anticipated business or research of the Company or which result, to
any extent, from the Executive's use of the Company's premises or
property (collectively called the "Inventions"). The Executive
acknowledges and agrees that all Inventions shall be the sole property
of the Company, and the Executive hereby assigns to the Company all of
the Executive's rights and interests in and to all of the Inventions,
it being acknowledged and agreed by the Executive that all the
Inventions are works made for hire. The Company shall be the sole
owner of all domestic and foreign rights and interests in the
Inventions. The Executive will assist the Company at the Company's
expense to obtain and from time to time enforce patents and copyrights
on the Inventions.
6.3 Upon the request of, and, in any event, upon termination of the
Executive's employment with the Company, the Executive shall promptly
deliver to the Company all documents, data, records, notes, drawings,
manuals, and all other tangible information in whatever form which
pertains to the Company, and the Executive will not retain any such
information or any reproduction or excerpt thereof.
7. Successors; Binding Agreement.
7.1 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 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. Failure of the
Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to the Severance Payments,
except that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date
of termina-
tion. For purposes of this Agreement, "Company" shall mean Rayovac
Corporation, a Wisconsin corporation, and shall include any successor
to its business or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
7.2 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.
8. 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 (a) when delivered personally,
(b) upon confirmation of receipt when such notice or other
communication is sent by facsimile or telex, (c) one day after
delivery to an overnight delivery courier, or (d) on the fifth day
following the date of deposit in the United States mail if sent first
class, postage prepaid, by registered or certified mail.
9. Survival. 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 2, 5 and 6 hereof) shall survive such
expiration.
10. Amendment; Waiver. This Agreement may be amended, modified,
superseded, or canceled, and the terms hereof may be waived, only by a
written instrument executed by all of the parties hereto or, in the
case of a waiver, by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time to enforce
the same. No waiver by any party of the beach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any
one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver
of any such breach, or a waiver of the breach of any other term or
covenant contained in this Agreement.
11. Equitable Relief. Breach of any provision of Sections 5 or 6 of this
Agreement would result in irreparable injuries to the Company, the
remedy at law for any such breach will be inadequate, and upon breach
of such provisions, the Company, in addition to all other available
remedies, shall be entitled as a matter of right to injunctive relief
in any court of competent jurisdiction without the necessity of
proving the actual damage to the Company.
12. Entire Agreement. This Agreement constitutes the entire understanding
of the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, discussions, writings, and
agreements between them.
13. 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.
14. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed to be an original but both of which togeth-
er will constitute one and the same instrument.
15. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below;
(a) "Cause" for termination by the Company of the Executive's employment
shall mean (i) the commission by the Executive of any fraud,
embezzlement or other material act of dishonesty with respect to the
Company or any of its affiliates (including the unauthorized
disclosure of confidential or proprietary information of the Company
or any of its affiliates or subsidiaries); (ii) Executive's
conviction of, or plea of guilty or nolo contendere to, a felony or
other crime involving moral turpitude; (iii) Executive's willful
misconduct; (iv) willful failure or refusal by Executive to perform
his duties and responsibilities to the Company or any of its
affiliates which failure or refusal to perform is not remedied
within 30 days after receipt of a written notice from the Company
detailing such failure or refusal to perform; or (v) Executive's beach
of any of the terms of this Agreement or any other agreement between
Executive and the Company which breach is not cured within 30 days
subsequent to notice from the Company to Executive of such breach.
(b) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment, if, as a result of the
Executive's inability to perform his duties by reason of any mental,
physical or other disability for a period of at least 6 consecutive
months (for purposes hereof, "disability" has the same meaning as in
the Company's disability policy), the Company shall have given the
Executive a notice of termination for Disability, and, within 30
days after such notice of termination is given, the Executive shall
not have returned to the full-time performance of the Executive's
duties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
RAYOVAC CORPORATION EXECUTIVE
By: /s/ Xxxxx X. Xxxxx /s/ Xxxx X. Xxxxxx
------------------------------ -----------------------------
Xxxxx X. Xxxxx Xxxx X. Xxxxxx
President
