EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into this 26th day
of September, 1995 between FRANKLIN ELECTRIC CO., INC.,
("Franklin") an Indiana corporation, and Xxxx Xxxx (the
"Executive").
WHEREAS, Executive is employed as Chief Financial
Officer and Secretary of Franklin; Franklin desires to
assure the benefit of Executive's future services; and
Executive is willing to commit to render such services, upon
the terms and conditions set forth below;
NOW THEREFORE, in consideration of the premises and
mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Franklin agrees to employ Executive in
an executive capacity, and Executive agrees to serve
Franklin in such capacity, upon the terms and conditions
hereinafter set forth until his employment is terminated in
accordance with Paragraph 2 hereof.
2. TERMINATION. Either Executive or Franklin may
terminate Executive's employment with Franklin at any time
upon at least 90-days' advance written notice, except that a
termination for Good Cause may become effective immediately
upon notice.
3. COMPENSATION. Franklin shall pay or provide
Executive with the following, and Executive shall accept the
same, as compensation for the performance of his
undertakings and the services to be rendered by him under
this Agreement:
(a) A fixed salary of $160,000 per annum, or such
higher amount as the Board of Directors of Franklin may from
time to time authorize (which amount shall not be reduced
without Executive's written consent), payable in equal
monthly installments;
(b) Such bonus as may be allocated to Executive
by the Compensation Committee of Franklin's Board of
Directors pursuant to the Franklin Officer Bonus Plan, but
not less than $10,000 for the 1995 and $50,000 for the 1996
fiscal years ending December 30, 1995 and December 31, 1996,
respectively.
(c) Participation in Franklin's Stock Option
Plans, as long as such plans remain in effect, and in any
future compensation plans covering executives of comparable
rank.
(d) Participation in Franklin's employee benefit
plans, policies, practices and arrangements in which
Executive is presently eligible to participate as long as
such plans, policies, practices and arrangements remain in
effect, and in any future employee benefit plans and
arrangements covering executives of comparable rank,
including without limitation any defined benefit retirement
plan, excess plan, profit sharing plan, health or dental
plan, disability plan, survivor income plan, or life
insurance plan (collectively, the "Benefit Plans").
(e) Paid vacations and sick leave in accordance
with Franklin's policies respecting same as in effect from
time to time.
(f) All fringe benefits and perquisites offered
by Franklin from time to time to executives of comparable
rank.
4. EXPENSES. Franklin shall promptly pay or reimburse
Executive for all reasonable expenses incurred by Executive
in the performance of duties hereunder.
5. CONDITIONS OF EMPLOYMENT. During the term of this
agreement, Franklin will continue to employ Executive, and
Executive will continue to serve Franklin, as its Chief
Financial Officer and Secretary, with duties and
responsibilities substantially equivalent to those in
effect. Executive shall be furnished office space,
assistance and accommodations suitable to the character of
his position with Franklin and adequate for performance of
his duties. Executive's services shall be performed at
Franklin's principal executive office in Bluffton, Indiana,
except when the nature of Executive's duties hereunder
require reasonable domestic and foreign travel from time to
time.
6. TERMINATION OF EMPLOYMENT. In the event
Executive's employment with Franklin is terminated pursuant
to Paragraph 2, he shall be entitled to receive compensation
for the year of termination and for subsequent periods, if
any, as hereinafter set forth:
(a) If Executive's employment is terminated by
Executive without Good Reason or by Franklin With Good Cause
(i) the effective date of the termination shall be the date
specified in the notice referred to in Paragraph 2, or such
earlier date after the date of such notice as Franklin may
elect, or, if applicable, the date of the Executive's death,
(ii) Executive's compensation under (a) and (b) of Paragraph
3 shall be limited to a pro-rata portion of his basic
compensation for the year of termination, and (iii)
Executive shall continue to be provided with the benefits
under (c), (d), (e) and (f) of Paragraph 3 until the
effective date of the termination;
(b) If Franklin shall terminate Executive's
employment with Franklin without Good Cause, or Executive
shall voluntarily terminate such employment during the
Employment Period with Good Reason, (i) the effective date
of termination shall be the date specified in Paragraph 2 or
such earlier date after the date of such notice as Executive
may elect, (ii) Executive's compensation under (a) and (b)
of Paragraph 3 for the portion of the year of termination
prior to the effective date of termination shall be a pro-
rata portion of his basic compensation for such year,
together with a bonus equal to not less than a pro-rata
portion of his bonus paid or payable for the year prior to
the year of termination, (iii) Executive shall receive as
compensation for the severance period described below an
additional amount computed by annualizing the compensation
which he is to receive pursuant to clause (ii) above, which
shall be payable in the same manner as if his employment had
not terminated except that any bonus payable in the year
following the year of termination for a portion of the prior
year shall be paid not later than 30 days after the end of
the year to which the bonus relates, (iv) Executive shall
continue to be provided with the benefits under (c), (d),
(e) and (f) of Paragraph 3 for the severance period
described below, and (v) any stock options granted to
Executive by Franklin shall be accelerated and become
immediately exercisable in full on the effective date of
termination, subject to any limitations on the order of
exercise which are specifically applicable, and shall,
subject to Subsection (c) hereof, remain exercisable for
such period after the effective date of termination as is
provided under the terms of the options and the plans
pursuant to which they were issued. The severance period
shall be the period beginning on the date of termination and
ending on the earlier of (A) the date which is twelve months
after the date of termination, or (B) the date on which
Executive would attain his normal retirement age (as defined
in the Franklin Electric Co., Inc. Basic Retirement Plan).
(c) If within one (1) year after a Change in
Control (as defined below), (i) Franklin shall terminate
Executive's employment with Franklin without Good Cause (as
defined below), or (ii) Executive shall voluntarily
terminate such employment with Good Reason (as defined
below), Franklin shall, within 30 days of the termination of
Executive's employment with Franklin, (A) make a lump sum
cash payment to him equal to an amount of Executive's Salary
as would be payable to Executive for the lesser of two years
and the period of time from the date of termination to the
date the Executive attains his normal retirement age (as
defined in the Franklin Electric Co., Inc. Basic Retirement
Plan), and (B) in settlement of the options described in
Subsection (b), make a lump sum cash payment to him equal to
the difference between the aggregate fair market value of
the stock subject to such options as of the date of such
termination and the aggregate exercise price thereof. For
purposes of this Section 1, "Salary" shall mean the greater
of (a) Executive's salary rate in effect on the date of the
Change in Control or (b) Executive's salary rate in effect
on the date his employment with Franklin terminates. Also
in such event, Executive shall, following his termination of
employment, for the period of time used to calculate the
amount of Salary payable pursuant to clause (ii) (A) of this
Subsection (c), continue to be provided with the benefits
under (c), (d), (e) and (f) of Paragraph 3. Franklin agrees
that (y) Executive shall not be required to mitigate his
damages by seeking other employment or otherwise, and (z)
Franklin's obligations hereunder shall not be reduced in any
way by reason of any compensation received by Executive from
sources other than Franklin after the termination of
Executive's employment with Franklin.
(d) In the event that Executive is subject to an
excise tax under Section 4999 of the Internal Revenue Code
of 1986 with respect to any cash, benefits or other property
received in the event of a Change of Control, Franklin shall
reimburse Executive for (i) the Federal excise taxes imposed
under Section 4999, (ii) any interest, penalties and
additions to Federal income tax which are imposed on
Executive with respect to any period ending before the date
on which Franklin remits to Executive or the Internal
Revenue Service the amount necessary to satisfy Executive's
federal tax liability under Section 4999 and which are owed
by Executive as a result of the imposition of such excise
tax, and (iii) any Federal income and excise taxes payable
by Executive as a result of the reimbursement described in
(i) and (ii) above.
(e) For purposes of this section 6:
(1) "Good Cause" shall mean (A) Executive's
death or disability, (B) Executive's fraud, (C) Executive's
misappropriation of, or intentional material damage to, the
property or business of Franklin, or (D) Executive's
commission of a felony.
(2) "Good Reason" shall exist if (A) there
is a significant change in the nature or the scope of
Executive's authority, (B) there is a reduction in
Executive's basic compensation, (C) Franklin changes the
principal location in which Executive is required to perform
services, or (D) there is a reasonable determination by
Executive that, as a result of a change in circumstances
significantly affecting his position, he is unable to
exercise the authority, powers, function or duties attached
to his position.
(3) "Change in control" shall be deemed to
have taken place if (A) a third person, including a "group"
as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, and excluding any person who, as of the date of
this Agreement, is the beneficial owner of shares of
Franklin stock representing 20% or more of the total number
of votes that may be cast for the election of Directors,
becomes the beneficial owner of shares of Franklin stock
representing 20% or more of the total number of votes that
may be cast for the election of Directors, or (B) as the
result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the
foregoing transactions, the persons who immediately prior
thereto were directors of Xxxxxxxx xxxxx to constitute a
majority of the Board of Directors of Franklin.
Notwithstanding the foregoing sentence, a Change of Control
shall not be deemed to occur by virtue of any transaction in
which Executive is a participant in a group effecting an
acquisition of Franklin if Executive holds an equity
interest in the entity acquiring Franklin at the time of
such acquisition.
7. DISCLOSURE OF CONFIDENTIAL INFORMATION. Without
the consent of Franklin, Executive shall not at any time
divulge, furnish or make accessible to anyone (other than in
the regular course of business of Franklin) any knowledge or
information with respect to confidential or secret
processes, inventions, formulae, machinery, plan, devices or
materials of Franklin or with respect to any confidential or
secret engineering development or research work of Franklin
or with respect to any other confidential or secret aspect
of the business of Franklin. Executive recognizes that
irreparable injury will result to Franklin and its business
and properties, in the event of any breach by Executive of
any of the provisions of this section. In the event of any
breach of any of the commitments of Executive pursuant to
this section, Franklin shall be entitled, in addition to any
other remedies and damages available, to injunctive relief
to restrain the violation of such commitments by Executive
or by any person or persons acting for or with Executive in
any capacity whatsoever.
8. LITIGATION EXPENSES. Franklin shall pay to
Executive all out-of-pocket expenses, including attorneys'
fees, incurred by Executive in connection with any claim or
legal action or proceeding involving this Agreement, whether
brought by Executive or by or on behalf of Franklin or by
another party; provided, however, Franklin shall not be
obligated to pay to Executive out-of-pocket expenses,
including attorneys' fees, incurred by Executive in any
claim or legal action or proceeding in which Franklin is a
party adverse to Executive if Franklin prevails in such
litigation. Franklin shall pay prejudgment interest on any
money judgment obtained by Executive, calculated at the
published prime interest rate charged by Franklin's
principal banking connection, as in effect from time to
time, from the date that payment(s) to him should have been
made under this Agreement.
9. POST TERMINATION PAYMENT OBLIGATIONS ABSOLUTE.
Franklin's obligation to pay Executive the compensation and
to make the other arrangements provided herein to be paid
and made after termination of Executive's employment with
Franklin shall be absolute and unconditional and shall not
be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense
or other right that Franklin may have against him or anyone
else. All amounts so payable by Franklin shall be paid
without notice or demand. Each and every such payment made
by Franklin shall be final and Franklin will not seek to
recover all or any part of such payment from Executive or
from whomsoever may be entitled thereto, for any reason
whatsoever.
10. NOTICES. Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received
and if mailed shall be mailed by United States registered or
certified mail, return receipt requested, addressee only,
postage prepaid. Notice to Franklin shall be addressed to
Franklin Electric Co., Inc. at 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxx 00000. Notices to Executive shall be
addressed to the Executive at his last permanent address as
shown on Franklin's records. Notwithstanding the foregoing,
if either party shall have previously designated a different
address by notice to the other party given in the foregoing
manner, then notices to such party shall be addressed as
designated until the designation is revoked by notice given
in such manner.
11. ENTIRE AGREEMENT. This Agreement contains the
entire understanding between the parties with respect to the
subject matter hereof and cannot be amended, modified or
supplemented in any respect, except by a subsequent written
agreement entered into by both parties hereto.
12. SUCCESSORS. This Agreement may not be assigned by
Franklin except in connection with a merger involving
Franklin or a sale of substantially all of its assets, and
the obligations of Franklin provided for in this Agreement
shall be the binding legal obligations of any successor to
Franklin by purchase (if such successor assumes this
Agreement), merger, consolidation, or otherwise. This
Agreement may not be assigned by Executive during his life,
and upon his death will be binding upon and inure to the
benefit of his heirs, legatees and the legal representatives
of his estate.
13. WAIVER, MODIFICATION AND INTERPRETATION. No
provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in a writing signed by Executive and an
appropriate officer of Franklin empowered to sign the same
by the Board. No waiver by either party at any time of any
breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by
the other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or at
any prior or subsequent time. The validity, interpretation,
construction and performance of this Agreement shall be
governed by the laws of the State of Indiana. The
invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
14. WITHHOLDING. Franklin may withhold from any
payment that it is required to make under this Agreement
amounts sufficient to satisfy applicable withholding
requirements under any federal, state, or local law.
15. HEADLINES. The headings contained herein are for
reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first written above.
FRANKLIN ELECTRIC CO., INC. EXECUTIVE
by XXXXXXX X. XXXXXX XXXX X. XXXX
----------------- ------------
