1
EXHIBIT 10.5
CONFIDENTIAL EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into and effective as of January 2,
1998, among RUUD LIGHTING, INC., a Wisconsin corporation ("RLI" or "EMPLOYER"),
ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation ("ADLT"), and XXXX X.
XXXX ("EMPLOYEE");
WITNESSETH:
WHEREAS, RLI and Employee desire to terminate any and all prior
agreements, whether oral or written, between the parties and between Employee
and ADLT relating to Employee's employment; and
WHEREAS, RLI and Employee desire to enter into an Employment Agreement
as set forth herein below to ensure RLI and ADLT of the services of Employee as
Vice Chairman of ADLT and Chief Executive Officer of RLI, and to set forth the
rights and duties of the parties hereto,
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. TERMINATION OF PRIOR AGREEMENTS. RLI and Employee hereby terminate any
and all prior agreements, whether oral or written, between the parties
or ADLT relating to Employee's employment.
2. EMPLOYMENT.
(a) RLI hereby employs Employee, and Employee hereby accepts
employment, upon the terms and conditions hereinafter set
forth.
(b) During the term of this Employment Agreement, (for purposes
hereof, all references to the term of this Employment
Agreement shall be deemed to include all renewals or
extensions hereof, if any), Employee shall devote his full
business time to his employment and shall perform diligently
such duties as are, or may be, required by the Board of
Directors of RLI and the Board of Directors of ADLT or their
designee, which duties shall be within the bounds of
reasonableness and acceptable business standards and ethics.
(c) During the term of this Employment Agreement, Employee shall
not, without the prior written consent of RLI, which shall not
be unreasonably withheld, directly or indirectly, render
services of a business, professional or commercial nature to
any other person or firm, whether for compensation or
otherwise, other than in the performance of duties naturally
inherent in the businesses of RLI or any subsidiary or
affiliate of RLI, including but not limited to ADLT; provided,
however, that Employee may continue (i) to serve on the board
of directors of companies to the extent such service and
service on the ADLT Board of Directors is permitted by law,
and (ii) to render services to and participate in
philanthropic and charitable causes, in each case, in a manner
and to the extent consistent with his past practice.
2
3. TERM AND POSITION.
(a) Subject to the termination provisions contained herein, the
term of this Employment Agreement shall commence as of January
1, 1998 and shall continue for a term of three years from such
date, subject, however, to the provisions of Section 6.
(b) Employee shall serve as Vice Chairman of ADLT and as Chief
Executive Officer of RLI, and in such offices or positions
with ADLT and RLI as shall be agreed upon by Employee and the
Board of Directors of RLI or the Board of Directors of ADLT,
as the case may be, without, however, any change in Employee's
compensation (but such offices or positions shall be
consistent with the office and position stated herein).
(c) Employee shall promptly be appointed to a term on the ADLT
Board of Directors expiring at the ADLT annual meeting in the
year 2000 and be appointed Vice Chairman of ADLT and as a
member of the Executive Committee of the ADLT Board of
Directors.
(d) The principal business office of Employee shall be in Racine,
Wisconsin; provided, however, Employee maintains a residence
and a business office in Florida, from which the Employee may
perform his duties under this Agreement. Employee shall not be
required to relocate without Employee's consent. Employee's
travel expenses for travel to and from the Wisconsin and
Florida offices shall be paid by RLI.
4. COMPENSATION.
(a) Subject to the provisions of this Employment Agreement, for
all services which Employee may render to RLI or ADLT during
the term of this Employment Agreement, Employee shall receive
a salary at the rate of One Hundred Eighty Five Thousand
Dollars ($185,000) per annum for the first year of this
Agreement, which shall be payable in equal, consecutive
biweekly installments.
(b) Provided that Employee satisfactorily performs his services
under this Employment Agreement, Employee shall be entitled to
salary increases from time to time as determined by the
Compensation Committee of ADLT.
(c) Provided that Employee has satisfactorily performed his
services under this Employment Agreement, Employee shall be
eligible for bonuses from time to time as determined by the
Compensation Committee of ADLT.
5. OTHER BENEFITS.
During the term of this Employment Agreement, Employee shall be
entitled to such vacation privileges, life insurance, medical and
hospitalization benefits, and such other benefits as are typically provided to
other executive officers of ADLT and its subsidiaries in comparable positions;
provided, however, that such benefits shall be not less valuable to Employee
than those benefits provided by Employer in the recent past, provided that, on
or after January 1, 1999, any benefit reduction to executive officers of ADLT
may be applied to Employee's non-vacation benefits.
2
3
6. TERMINATION AND FURTHER COMPENSATION.
(a) The employment of Employee under this Employment Agreement,
for the term thereof, may be terminated by the Board of
Directors of RLI or ADLT for cause at any time. For purposes
hereof, the term "cause" shall mean:
(i) Employee's fraud, dishonesty, willful misconduct or
gross negligence in the performance of his duties
hereunder; or
(ii) Employee's material breach of this Agreement, in
whole or in part.
Any termination by reason of the foregoing shall not be in
limitation of any other right or remedy RLI may have under
this Employment Agreement or otherwise.
(b) In the event of (i) termination of the Employment Agreement
for any of the reasons set forth in Subparagraph (a) of this
Section 6, or (ii) if Employee shall voluntarily terminate his
employment hereunder prior to the end of the term of this
Employment Agreement, then in either event Employee shall be
entitled to no further salary, bonus or other benefits under
this Employment Agreement, except as to that portion of any
unpaid salary and other benefits accrued and earned by him
hereunder up to and including the effective date of such
termination. In the event the Employee voluntarily terminates
this Agreement, Employee shall provide 30 days' prior written
notice to RLI of such voluntary termination.
(c) In the event that RLI terminates Employee's employment without
"cause" (as defined herein above) or Employee terminates
employment with "good reason" (as defined below) prior to the
end of the term of this Employment Agreement, then Employee
shall be entitled to all salary and medical benefits for the
remainder of the term of this Employment Agreement all upon
the terms and as set forth herein. At the conclusion of the
term of this Employment Agreement, all salary, medical and
other benefits as set forth herein shall cease. Employee shall
have no other rights and remedies except as set forth in this
Section 6. For purposes hereof, the term "good reason" shall
mean (i) without the express written consent of Employee, a
material reduction of Employee's duties, authority,
compensation, benefits or responsibilities or (ii) a material
breach of this Agreement by RLI or ADLT.
(d) In the event of Employee's death or permanent disability (as
defined herein below) occurring during the term of this
Employment Agreement, this Employment Agreement shall be
deemed terminated for cause and Employee or his estate, as the
case may be, shall be entitled to no further salary or other
compensation provided for herein except as to that portion of
any unpaid salary accrued or earned by Employee hereunder up
to and including the date of death or permanent disability,
and any benefits under any insurance policies or other plans.
(e) "Permanent disability" means the inability of Employee to
perform satisfactorily his usual or customary occupation for a
period of 120 days in the aggregate out of 150 consecutive
days as a result of a physical or mental illness or other
disability which in the written opinion of a physician of
recognized ability and reputation, is likely to continue for a
significant period of time.
3
4
(f) In the event this Employment Agreement is terminated with
cause, before the end of the term, RLI may, in its sole
discretion, notify Employee that RLI intends to continue to
pay all compensation, benefits and monies due under the terms
of the Employment Agreement for the remainder of the term. In
such event, and provided RLI continues to make such payments,
Employee shall continue to be bound by the terms of the
non-competition provisions in Section 7 hereof.
7. COVENANTS REGARDING NON-COMPETITION AND CONFIDENTIAL INFORMATION.
(a) Non-Competition.
(i) Recognizing that Employee will have been involved as
an executive officer of RLI and ADLT and that RLI and
its affiliates, including ADLT, are engaged in the
supply of products and/or services in every state of
the United States and internationally, therefore,
upon termination of his employment, for any reason,
he agrees that he will not, for a period of three
years immediately following such termination, engage,
in the United States or in any country where RLI,
ADLT or any of their affiliates conducts business,
either directly or indirectly on behalf of himself or
on behalf of any employee, consultant, principal,
substantial shareholder or investor, partner or
officer of any corporation, in any business of the
type and character or in competition with the
business carried on by RLI, ADLT or their affiliates
(as conducted on the date Employee ceases to be
employed by RLI in any capacity).
(ii) Employee will not, for a period of three years
immediately following the termination of his
employment, either directly or indirectly or on
behalf of another as an employee, agent, principal,
partnership or other entity, recruit, hire or
otherwise entice any employees of RLI, ADLT or their
affiliates to leave the Employer.
(iii) Employee will not disclose, divulge, discuss, copy or
otherwise use or suffer to be used in any manner, in
competition with, or contrary to the interests of
RLI, ADLT or their affiliates, the customer lists,
manufacturing methods, product research or
engineering data or other trade secrets of RLI, ADLT
or any of their affiliates, it being acknowledged by
Employee that all such information regarding the
business of RLI, ADLT or their affiliates developed,
compiled or obtained by or furnished to Employee
while Employee shall have been employed by or
associated with RLI, ADLT or their affiliates is
confidential information and RLI's, ADLT's or their
affiliates' exclusive property. Employee's
obligations under this Section 7(a)(iii) will not
apply to any information which (A) is known to the
public other than as a result of Employee's acts or
omissions, (B) is approved for release, in writing,
by the Company, (C) is disclosed to Employee by a
third party without restriction, or (D) Employee is
legally required to disclose.
(b) Employee expressly agrees and understands that the remedy at
law for any breach by him of this Section 7 will be inadequate
and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly,
it is acknowledged that upon adequate proof of Employee's
violation of any legally enforceable provision of
4
5
this Section 7, RLI shall be entitled to immediate injunctive
relief and may obtain a temporary order restraining any
threatened or further breach. Nothing in this Section 7 shall
be deemed to limit RLI's remedies at law or in equity for any
breach by Employee of any of the provisions of this Section 7
which may be pursued or availed of by RLI or any of its
affiliates including but not limited to ADLT.
(c) In the event Employee shall violate any legally enforceable
provision of this Section 7 as to which there is a specific
time period during which he is prohibited from taking certain
actions or from engaging in certain activities as set forth in
such provision then, in such event, such violation shall toll
the running of such time period from the date of such
violation until such violation shall cease.
8. RENEWAL.
Not later than six (6) months prior to the termination of this
Agreement, Employer shall be entitled to notify Employee whether it desires to
renew this Employment Agreement with Employee for an additional period of three
(3) years, which notice, if given, shall contain the compensation and other
benefits proposed to be paid and provided to Employee by Employer. For a period
of thirty (30) days after receipt of such notice, Employee shall have the option
to accept such offer of renewal or, in the alternative, shall be entitled to
consult with Employer with respect to different compensation and/or benefits to
be paid and provided to Employee by Employer during said renewal period of
employment. If at the end of said thirty (30) day period Employee and Employer
are unable to agree, then this Employment Agreement shall not be renewed at the
end of the term thereof, unless otherwise agreed to by the parties. In the
event, however, that Employer does not, timely notify Employee of its desire to
renew this Employment Agreement, then this Employment Agreement shall not be
renewed at the end of the term thereof, unless otherwise agreed upon by the
parties.
9. SEVERABLE PROVISIONS.
The provisions of this Employment Agreement are severable and if any
one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
unenforceable provision to the extent enforceable in any jurisdiction shall,
nevertheless, be binding and enforceable.
10. ARBITRATION.
Any controversy or claim arising out of or relating to this Employment
Agreement, or the breach thereof, shall be settled by arbitration by a single
arbitrator in the City of Racine, State of Wisconsin, in accordance with the
Rules of the American Arbitration Association, and judgment upon the award
rendered by the Arbitrator may be entered in any court having jurisdiction
thereof. The Arbitrator shall be deemed to possess the powers to issue mandatory
orders and restraining orders in connection with such arbitration; provided,
however, that nothing in this Section 10 shall be construed so as to deny RLI
the right and power to seek and obtain injunctive relief in a court of equity
for any breach or threatened breach of Employee of any of his covenants
contained in Section 7 hereof.
11. NOTICES.
(a) Each notice, request, demand or other communication ("NOTICE")
by either party to the other party pursuant to this Agreement
shall be in writing and shall be personally delivered
5
6
or sent by U.S. certified mail, return receipt requested,
postage prepaid, or by nationally recognized overnight
commercial courier, charges prepaid, or by facsimile
transmission (but each such Notice sent by facsimile
transmission shall be confirmed by sending a copy thereof to
the other party by U.S. mail or commercial courier as provided
herein no later than the following business day), addressed to
the address of the receiving party or to such other address as
such party shall have communicated to the other party in
accordance with this Section. Any Notice hereunder shall be
deemed to have been given and received on the date when
personally delivered, on the date of sending when sent by
facsimile, on the third business day following the date of
sending when sent by mail or on the first business day
following the date of sending when sent by commercial courier.
(b) If a Notice is to RLI, then such Notice shall be addressed to
Ruud Lighting, Inc., attention of the Board of Directors.
(c) If a Notice is to Employee, then such Notice shall be
addressed to Employee at his home address last known on the
payroll records of RLI.
12. WAIVER.
The failure of either party to enforce any provision or provisions of
this Employment Agreement shall not in any way be construed as a waiver of any
such provision or provisions as to any future violations thereof, nor prevent
that party thereafter from enforcing each and every other provision of this
Employment Agreement. The rights granted the parties herein are cumulative and
the waiver of any single remedy shall not constitute a waiver of such party's
right to assert all other legal remedies available to it under the
circumstances.
13. MISCELLANEOUS.
This Employment Agreement supersedes all prior agreements and
understandings between the parties and may not be modified or terminated orally.
No modification, termination or attempted waiver shall be valid unless in
writing and signed by the party against whom the same it is sought to be
enforced.
14. GOVERNING LAW.
This Employment Agreement shall be governed by and construed according
to the laws of the State of Wisconsin.
6
7
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement on the day and year first set forth above.
WITNESS: RUUD LIGHTING, INC.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxx X. Xxxx
---------------------------- ------------------------------
Name: Name:
---------------------------- ------------------------------
Its:
------------------------------
WITNESS: ADVANCED LIGHTING TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxx
---------------------------- ------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxx X. Xxxxxxx
---------------------------- ------------------------------
Its: CEO
------------------------------
WITNESS:
By: /s/ Xxxxxx Xxxxxxx /s/ Xxxx X. Xxxx
---------------------------- ------------------------------
Name: XXXX X. XXXX
----------------------------
7
