EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of this 2nd day of
December, 2002, by and among ERICO Global Company, a Delaware corporation ("the
Company"), and Xxxxxxx X. Xxx ("WHR");
WHEREAS, ERICO Holding Company ("Holdings") and ERICO
International Corporation ("International") previously entered into an agreement
with WHR dated as of December 31, 2001 pursuant to which WHR agreed to serve as
the President of International and its principal subsidiaries (the "Previous
Agreement");
WHEREAS, the Company intends to acquire all of the outstanding
voting stock of Holdings as a result of the closing (the "Closing") of the
transactions contemplated by the Merger Agreement dated as of the date hereof by
and among the Company, EHC Acquisition Corp. and Holdings (the "Merger
Agreement");
AND WHEREAS, the Company and WHR now desire to enter into this
Agreement for the purposes of establishing their relationship after December 31,
2002 (the "Effective Time") and superceding and replacing the Previous Agreement
and all other written and oral agreements between WHR, the Company, Holdings and
International regarding WHR's employment with the Company, Holdings,
International or any of its subsidiaries as of the Effective Time.
THEREFORE, in consideration of the foregoing, including,
without limitation, the cancellation and release of the Previous Agreement at
the Effective Time, and for other good and valuable consideration had and
received, the Company and WHR agree, subject to all of the terms and conditions
hereof as follows:
Duties
1.1. Effective as of the date of the Closing, WHR shall be the
Chairman, Chief Executive Officer and President of the
Company, Holdings, International and its principal
subsidiaries.
1.2. WHR's responsibilities in these positions shall not be
reduced in any material respect, and WHR shall not be
required to relocate his principal office.
Compensation
2.1 WHR shall receive a salary of $620,095 ("Salary") and be
eligible to receive a contingent bonus ("Contingent Bonus")
of a target amount of 75% of salary and a maximum amount of
140% of salary pursuant to the
terms of the bonus plan for senior managers of ERICO adopted
by the Board of Directors.
2.2 In future years the Salary received by WHR shall increase by
the percentage determined in the Xxxxxx Xxxxx Global 50 for
expected salary and bonus increases in the United States for
that year. Exhibit C contains this percentage for the year
2002 as determined by the Xxxxxx Xxxxx Global 50 for
2001/2002.
2.3 WHR and the Company acknowledge that under the Previous
Agreements WHR was entitled to receive a fixed bonus of
$620,095 for 2003, and a fixed bonus annually thereafter for
the life of the contract and any severance period of that
amount escalating pursuant to the Xxxxxx Xxxxx index. On the
date hereof, WHR will receive a payment of $3,000,000 in
complete satisfaction of any claims WHR may have to this
Fixed Bonus payable with respect to any year after 2002. WHR
agrees that upon receipt of such payment, he will have no
further rights or claims to the payment of the Fixed Bonus
payable with respect to any year after 2002.
2.4 WHR will receive the same benefit package as is provided to
the other principal officers of the Company, Holdings,
International and its subsidiaries.
Death or Disability
3.1 In the event that WHR dies or becomes disabled, this
Agreement shall terminate; provided, however, that
notwithstanding the termination hereof the Company shall
continue to pay to WHR or his heirs or beneficiaries the
Salary and the bonus (however calculated) for the twelve
months preceding his death or disability for a period of
three years from and after the date of such death or
disability.
Termination
4.1 Except as provided in Section 3.1 above, the Company may not
terminate this Employment Agreement prior to January 1,
2005. In the event that WHR resigns or retires, this
Agreement shall terminate, and WHR shall not be entitled to
a severance payment.
4.2 In the event that on or after January 1, 2005, the Company
elects to terminate this Agreement for any reason, then WHR
shall receive a severance payment in an amount equal to two
times the sum of the Salary and bonus (however calculated)
earned by WHR in the 12 months preceding such termination.
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Miscellaneous
5.1 Simultaneously with the execution of this Agreement, WHR
shall enter into a Non-Competition Agreement in the form
attached hereto as Exhibit A.
5.2 WHR will devote full time to the Company, Holdings,
International and its subsidiaries (no moonlighting).
Exhibit B lists the companies WHR is a director of or has an
investment interest in (other than the Company, Holdings,
International and its subsidiaries).
5.3 This Agreement shall at the Effective Time terminate,
supersede and render null and void all prior oral and
written agreements, arrangements and understandings between
or among any of the parties hereto, or any of the Company's
or its respective subsidiaries or affiliates, with respect
to the subject matter hereof, including the Previous
Agreement, but not including the Non-Competition Agreement
attached as Exhibit A which shall continue to be in full
force and effect in accordance with its terms. This
Agreement constitutes a complete and exclusive statement of
the terms of the agreement among the parties with respect to
its subject matter. This Agreement may not be amended except
by a written agreement executed by the parties.
5.4 This Agreement will be governed by the laws of the State of
Ohio without regard to conflicts of laws principles, which
would require the application of the law of any other
jurisdiction. Any action or proceeding seeking to enforce
any provisions of, or based on any right arising out of this
Agreement may be brought against any of the parties in the
courts of the State of Ohio, County of Cuyahoga, or, if a
party has or can acquire jurisdiction, in the United States
District Court for the Northern District of Ohio, and the
parties consent to the jurisdiction of such courts (and of
the appropriate appellate courts) in any such action or
proceeding and waive any objection to venue laid therein.
Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in
the world.
5.5 This Agreement will inure to the benefit of, and will be
binding upon the parties hereto and their respective
successors, assigns, heirs, and legal representatives,
including any entity with which the Company may merge or
consolidate or to which all or substantially all of either
of its respective assets or stock may be transferred.
Notwithstanding the immediately preceding sentence, the
duties and covenants of WHR under this Agreement, being
personal, may not be delegated.
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5.6 The parties agreement to take all action required to be
taken to cause the intent of this Agreement to be executed.
5.7 Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms and will mean
"including but not limited to" and "including without
limitation." No provision of this Agreement will be
interpreted for or against any party because that party or
its legal representative drafted the provision.
5.8 If any court of competent jurisdiction holds any provision
of this Agreement invalid or unenforceable, then the other
provisions of this Agreement will remain in full force and
effect. Any provision of this Agreement that is held invalid
or unenforceable only in part will remain in effect to the
extent not held invalid or unenforceable.
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IN WITNESS WHEREOF the Company and WHR each have executed this
Agreement as of the date first above written.
ERICO GLOBAL COMPANY
By: /s/Xxxxxxx X. Xxxxxxxxxxx
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President & Chief Financial Officer
/s/Xxxxxxx X. Xxx
--------------------------------------------------
Xxxxxxx X. Xxx
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Exhibit A
NON-COMPETITION AGREEMENT
Xxxxxxx X. Xxx ("WHR") agrees that for a period of two (2)
years following the termination of his employment with ERICO Global Company or
any of its subsidiaries, including Holdings and International (collectively, the
"Company"), whether voluntary or involuntary and whether initiated by the
Company or WHR, WHR shall not directly or indirectly, personally or with other
employees, agents, or otherwise, or on behalf of any other person, firm or
corporation, do or suffer any of the following:
(i) Engage in any competition with the Company, or any of
its subsidiaries or affiliates, in the business of the
manufacture, design, engineering, or sale of products of
whatever kind now or hereafter manufactured or sold by the
Company, including, without limitation, fastening and hanging
connectors, electrical support systems, facility electrical
protection devices, grounding connector devices, mechanical
rebar splicing devices, concrete reinforcement splices and
anchorages and rail bonds. In the event of an actual or
threatened breach of this provision, the Company shall be
entitled to an injunction restraining WHR from such action and
shall constitute a breach of such provision, and the Company
shall not be prohibited in obtaining such equitable relief
from pursuing any other available remedies for such breach or
threatened breach, including recovery of damages from WHR.
(ii) Employ, assist in employing, or otherwise associate
in business with any present, former or future employee,
officer or agent of the Company or any of the Company's
affiliates or subsidiaries.
(iii) Induce any person who is an employee, officer, agent
or customer of the Company or any of the Company's affiliates
or subsidiaries to terminate their relationship with the
Company or any of the Company's affiliates or subsidiaries.
This Non-competition Agreement supersedes any prior
non-competition agreement, whether written or oral, between the parties.
IN WITNESS WHEREOF, the parties have caused this
Non-competition Agreement, consideration for which is hereby acknowledged, to be
executed this 2nd day of December, 2002.
ERICO GLOBAL COMPANY
By: /s/Xxxxxxx X. Xxxxxxxxxxx
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President & Chief Financial Officer
/s/Xxxxxxx X. Xxx
-------------------------------------------------
Xxxxxxx X. Xxx
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Exhibit B
BOARDS OF DIRECTORS/INVESTMENTS
Xxxxx Mining and Manufacturing, Inc., director and shareholder
Austin Powder Company, director
JDBR Holding Company, LLC, principal, managing director and investor
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Exhibit C
TYPE OF SALARY REVIEW There is a fairly even distribution between
companies awarding increases on a fixed date
basis (55%) and on anniversary dates (45%)
basis.
TYPES OF SALARY INCREASES In the United States the overwhelming majority
GRANTED (% OF MARKET) of companies will award pay increases on a
performance or merit basis.
SALARY 2001 (Actual) 2002 (Projected)
INCREASES (%) --------------------------------------------------------------------------------------
First Third First Third
Quartile Median Quartile Average Quartile Median Quartile Average
--------------------------------------------------------------------------------------
Executive/Top 4.0 4.0 5.0 4.6 4.0 4.0 5.0 4.5
Management
Exempt/Professional 4.0 4.0 4.5 4.4 4.0 4.0 4.5 4.3
Non-exempt/Hourly 4.0 4.0 4.5 4.2 4.0 4.0 4.5 4.2
PERFORMANCE-BASED INCENTIVES At all levels, a mix of company, individual and
AND FINANCIAL PARTICIPATION in many cases small group or team performance
determines the incentive payout. Performance
plans in the US can be discretionary but most
are formula based, so the employee knows at the
beginning of the performance year what the
bonus opportunity can be, given achievement of
individual and company goals. Payouts are
usually made before the end of the first
quarter following the plan year.
Financial participation comes in many forms in
the US including profit sharing plans, employee
savings plans, which may or may not include
matching contributions by the organization, a
number of share ownership schemes including
ESOPs, qualified and non-qualified
discretionary share options, and stock purchase
plans to name a few. Each arrangement has its
own characteristics with respect to
contribution limits and taxation. Participation
in these plans continues to increase across all
employee levels and is increasingly recognized
as a valuable "pay for performance" tool.
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